Draft ProspectusDated: November 09, 2010ISSUE OPENS ON [] ISSUE
CLOSES ON []BID/ISSUE PROGRAMMELEAD MANAGER TO THE ISSUE REGISTRAR
TO THE ISSUEHEM SECURITIES LIMITED14/15 Khatau Building,40, Bank
Street, Fort,Mumbai- 400 001.Tel: 022-2267 1543/44Fax: 022-2262
5991Web: www.hemonline.comEmail Id: [email protected]
Person: Mr. Rakesh BhallaSEBI Regn. No. INM000010981KARVY
COMPUTERSHARE PRIVATE LIMITEDPlot No. 17-24, Vittal Rao
Nagar,Madhapur,Hyderabad- 500 081Tel: +91-40-23420815-28Fax:
+91-40-23431551Web: http://www.karvy.comEmail Id:
[email protected] Person: Mr. Murali KrishnaSEBI Regn.
No. INR000000221THE ISSUEPUBLIC ISSUE OF 90,00,000 EQUITY SHARES OF
RS.10/- EACH ISSUED FOR CASH AT A PREMIUM OF RS. 55/- PER EQUITY
SHARE I.E. AT APRICE OF RS.65/- PER EQUITY SHARE AGGREGATING TO RS.
5850.00 LACS ("THE ISSUE" OR "THE NET ISSUE") BY GEMINI
ENGI-FABLIMITED ('THE COMPANY' OR 'THE ISSUER'). THE FACE VALUE OF
THE SHARE IS RS.10/- EACH AND THE ISSUE PRICE IS (SIX AND HALF)6.5
TIMES OF THE FACE VALUE. THE ISSUE TO THE PUBLIC WILL CONSTITUTE
41.46% OF THE FULLY DILUTED POST-ISSUE EQUITYSHARE CAPITAL OF THE
COMPANY. THE ISSUE IS BEING MADE IN TERMS OF REGULATION 26 (1) OF
SEBI (ICDR) REGULATIONS, 2009.RISK IN RELATION TO THE FIRST
ISSUEThis being the first issue of the equity shares of Gemini
Engi-Fab Limited ("Our Company"), there has been no formal market
for the Equity Shares of our Company. Theface value of the equity
shares of the Company is Rs. 10/- per share and the Issue Price is
(six and half) 6.5 times of the face value of the Equity Shares of
the Company.The Issue Price (as determined by the Company in
consultation with the Lead Manager as stated herein 'Basis of Issue
Price') should not be taken to be indicative of themarket price of
the Equity Shares after the Equity Shares are listed. No assurance
can be given regarding an active and / or sustained trading in the
Equity Shares of ourCompany or regarding the price at which the
Equity Shares will be traded after listing.GENERAL RISKSInvestments
in equity and equity related securities involve a degree of risk
and investors should not invest any funds in this Issue unless they
can afford to take the riskof losing their investment. Investors
are advised to read the risk factors carefully before taking an
investment decision in this Issue. For taking an investment
decision,investors must rely on their own examination of our
Company and the Issue including the risks involved. The Equity
Shares offered in the Issue have not been recommendedor approved by
the Securities and Exchange Board of India (SEBI) nor does SEBI
guarantee the accuracy or adequacy of this Draft Prospectus.
Specific attention of theinvestors is invited to the section titled
'Risk Factors' beginning on Page No.08 of this Draft
Prospectus.ISSUER'S ABSOLUTE RESPONSIBILITYThe Issuer, having made
all reasonable inquiries, accepts responsibility for and confirms
that this Draft Prospectus contains all information with regard to
the Issuer andthe Issue, which is material in the context of the
Issue, that the information contained in this Draft Prospectus is
true and correct in all material aspects and is not misleadingin
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 DraftProspectus as a whole or any of
such information or the expression of any such opinions or
intentions misleading in any material respect.LISTINGThe Equity
Shares offered through this Draft Prospectus are proposed to be
listed on Bombay Stock Exchange Limited (BSE) and The National
Stock Exchange of IndiaLimited (NSE). The In-principle Approvals of
BSE and NSE for listing of Equity Shares of our Company have been
received pursuant to letters dated [] and []respectively. BSE shall
be the Designated Stock Exchange for the purpose of this
Issue.GRADINGThis Issue has been graded by CARE. CARE has assigned
"IPO GRADE []" to the Initial Public Offering of our Company. For
more information on IPO Grading, pleaserefer to Page No. 45 of this
Draft Prospectus. (Company Registration No. 11-112909;
CIN-U28920MH1998PLC112909)Our Company was originally incorporated
as 'Gemini Engi-Fab Private Limited' on January 12, 1998 under the
Companies Act, 1956, which was later on convertedinto a Public
Limited Company on January 09, 2007 and consequently the name of
the Company was changed to 'Gemini Engi-Fab Limited' and a Fresh
Certificate ofIncorporation dated January 09, 2007 was issued by
the Registrar of Companies, Maharashtra, Mumbai. For details of
Change in the Name and Registered Office, pleaserefer to 'History
and Certain Corporate Matters, beginning on Page No. 127 of this
Draft Prospectus.Registered Office: 501, Palm Spring, Next D'Mart,
Link Road, Malad (West), Mumbai- 400 064Tel No. +91-022-2880 8822;
Fax No. +91-022-2880 8998; E-mail: [email protected]; Website:
www.geminief.comContact Person: Ms. Pooja Karia (Company Secretary
and Compliance Officer)Promoters of the Company: Mr. Dalpatram
Jethalal Panchal, Mrs. Sunita Dalpatram Panchal, Mr. Rakesh
Dalpatram Panchal, Mr. Ashish DalpatramPanchal and Mr. Hitesh
Dalpatram Panchal, for detail of promoters please refer to Page No.
146 of this Draft Prospectus 2 RSECTIUN I - CENERAL . Dfinitions
and Abbrviations Dfinitions 1erm Descr|pt|on Cemlnl Lnallab
LlmlLed" or Cemlnl" or Lhe Companv" or Cur Companv" Cemlnl Lnallab
LlmlLed a publlc llmlLed companv lncorporaLed under Lhe Companles
AcL 19S6 wlLh lLs realsLered offlce aL S01 alm Sprlna Llnk 8oad
nexL Lo 'u'MarL Mumbal 400 064 lndla We" or us" or our" unless Lhe
conLexL oLherwlse requlre refers Lo Cemlnl Lnallab LlmlLed .
Convntional]Cnral Trms 1erms Descr|pt|on ArLlcles/ArLlcles of
AssoclaLlon ArLlcles of AssoclaLlon of Cemlnl Lnal lab LlmlLed
AudlLors uass Maullk Mahendra k Aarawala Co CharLered AccounLanLs
81/ 17 A vvapar 8hawan u' Mello 8oad Carnac 8under Mumbal 400009
(lease refer Lo aae no 218 of Lhls urafL rospecLus for furLher
deLalls) 8oard of ulrecLors / 8oard 1he 8oard of ulrecLors of
Cemlnl Lnallab LlmlLed lncludlna all dulv auLhorlzed CommlLLees
Lhereof Companles AcL 1he Companles AcL 19S6 as amended from Llme
Lo Llme ueposlLorles AcL 1he ueposlLorles AcL 1996 as amended from
Llme Lo LlmeulrecLor(s) ulrecLor(s) of Cemlnl Lnallab LlmlLed
unless oLherwlse speclfledLqulLv Shares LqulLv Shares of our
Companv of lace value of 8s 10 each unless oLherwlse speclfled ln
Lhe conLexL Lhereof LSCS/LSC/LSS Lmplovee SLock CpLlon Scheme /
Lmplovee SLock CpLlon lan / Lmplovee SLock urchase Scheme lacLorles
AcL lacLorles AcL 1948 as amended from Llme Lo LlmeCl8 number
Ceneral lndex 8ealsLrv numberPul Plndu undlvlded lamllvlndlan CAA
Cenerallv AccepLed AccounLlna rlnclples ln lndla MCA / Memorandum /
Memorandum of AssoclaLlon Memorandum of AssoclaLlon of Cemlnl
Lnallab LlmlLed non 8esldenLs A person resldenL ouLslde lndla as
deflned under lLMA n8ls/non8esldenL lndlans A person resldenL
ouLslde lndla as deflned under lLMA and who ls a clLlzen of lndla
or a erson of lndlan Crlaln under lLMA (1ransfer or lssue of
SecurlLv bv a erson 8esldenL CuLslde lndla) 8eaulaLlons 2000
neaoLlable lnsLrumenLs AcL neaoLlable lnsLrumenLs AcL 1881 as
amended from Llme Lo Llme 3 R1erms Descr|pt|on Cverseas CorporaLe
8odv / CC8 A companv parLnershlp socleLv or oLher corporaLe bodv
owned dlrecLlv or lndlrecLlv Lo Lhe exLenL of aLleasL 60 of
beneflclal lnLeresL ls lrrevocablv held bv n8ls dlrecLlv or
lndlrecLlv as deflned under lorelan Lxchanae ManaaemenL (1ransfer
or lssue of SecurlLv bv a erson 8esldenL CuLslde lndla) 8eaulaLlons
2000 erson or ersons Anv lndlvldual sole proprleLorshlp
unlncorporaLed assoclaLlon unlncorporaLed oraanlzaLlon bodv
corporaLe corporaLlon companv parLnershlp llmlLed llablllLv companv
[olnL venLure or LrusL or anv oLher enLlLv or oraanlzaLlon valldlv
consLlLuLed and/or lncorporaLed ln Lhe [urlsdlcLlon ln whlch lL
exlsLs and operaLes as Lhe conLexL requlres Core romoLers Mr
ualpaLram ! anchal Mrs SunlLa u anchal Mr 8akesh u anchal Mr Ashlsh
u anchal and Mr PlLesh u anchal romoLer Croup ( LnLlLles) M/S
Cemlnl Lnalneers labrlcaLors M/S LxperL Lnalneers and M/S Cem
Lnalneerlna Servlces (arLnershlp llrms) (no LqulLv Poldlna) romoLer
Croup (lndlvlduals) Mrs Aruna 8 anchal Mrs Peena A anchal and Mrs
ueena P anchal 88l 8eserve 8ank of lndla consLlLuLed under Lhe 88l
AcL 88l AcL 1he 8eserve 8ank of lndla AcL 1934 as amended from Llme
Lo Llme8ealsLered and CorporaLe Cfflce S01 alm Sprlna Llnk 8oad
nexL Lo 'u' MarL Malad (WesL) Mumbal400 064 lndla 8oC 8ealsLrar of
Companles LveresL 100Marlne urlve Mumbal400 002 MaharashLra lndla
SL8l SecurlLles and Lxchanae 8oard of lndla consLlLuLed under Lhe
SL8l AcL 1992SL8l AcL SecurlLles and Lxchanae 8oard of lndla AcL
1992 as amended from Llme Lo Llme SL8l 8eaulaLlons SL8l (lssue of
CaplLal and ulsclosure 8equlremenLs) 8eaulaLlons 2009 lssued bv
SL8l on AuausL 26 2009 as amended lncludlna clrculars lnsLrucLlons
and clarlflcaLlons lssued bv SL8l from Llme Lo Llme SL8l 1akeover
8eaulaLlons SecurlLles and Lxchanae 8oard of lndla (SubsLanLlal
AcqulslLlon of Shares and 1akeover) 8eaulaLlons 1997 as amended
from Llme Lo Llme SlCA Slck lndusLrlal Companles (Speclal
rovlslons) AcL 198SSLock Lxchanaes 8ombav SLock Lxchanae LlmlLed
and 1he naLlonal SLock Lxchanae of lndla LlmlLed . Issu Rlatd Trms
1erms Descr|pt|on AlloLmenL/AllocaLlon lssue of Lhe LqulLv Shares
pursuanL Lo Lhe lssue Lo Lhe successful appllcanLs AlloLLee 1he
successful appllcanL Lo whom Lhe LqulLv Shares are belna / have
been lssued AppllcanL Anv prospecLlve lnvesLor who makes an
appllcaLlon for LqulLv Shares ln Lerms of Lhls urafL rospecLus
AppllcaLlon lorm 1he lorm ln Lerms of whlch Lhe appllcanL shall
applv for Lhe LqulLv Shares of Lhe Companv 8anker Lo Lhe Companv
1he 8haraL CooperaLlve 8ank LLd (Andherl (LasL) Mumbal) 4 R8ankers
Lo Lhe lssue 8SL 8ombav SLock Lxchanae LlmlLed ueposlLorv A
deposlLorv realsLered wlLh SL8l under Lhe SL8l (ueposlLorles and
arLlclpanL) 8eaulaLlons 1996 ueposlLorv arLlclpanL A ueposlLorv
arLlclpanL as deflned under Lhe ueposlLorles AcL 1996Lmplovees
ermanenL Lmplovees of Cemlnl Lnallab LlmlLed as on CcLober 1 2010
lncludlna boLh sLaff and workmen emplovees Lscrow AccounL AccounL
opened wlLh Lhe Lscrow CollecLlon 8ank(s) and ln whose favour Lhe
AppllcanL (excludlna Lhe AS8A AppllcanL) wlll lssue cheques or
drafLs ln respecL of Lhe AppllcaLlon AmounL when submlLLlna an
AppllcaLlon Lscrow AareemenL AareemenL enLered lnLo amonasL Lhe
Companv Lhe Lscrow CollecLlon 8ank(s) and Lhe LM for collecLlon of
Lhe AppllcaLlon AmounLs and for remlLLlna refunds (lf anv) of Lhe
amounLs collecLed Lo Lhe AppllcanLs (excludlna Lhe AS8A AppllcanLs)
on Lhe Lerms and condlLlon Lhereof Lscrow CollecLlon 8ank(s) 1he
banks whlch are clearlna members and realsLered wlLh SL8l as
8ankers Lo Lhe lssue aL whlch bank(s) Lhe Lscrow AccounL of Lhe
Companv wlll be opened lC lnlLlal ubllc Cfferlna lssue / lssue Slze
1he publlc lssue of an aaareaaLe of 9000000 LqulLv Shares lssue
rlce 1he llnal rlce aL whlch Lhe LqulLv Shares are belna lssued bv
our Companv under Lhls urafL rospecLus ln Lhls case belna 8s6S/ per
LqulLv Share LM/Lead Manaaer Lead Manaaer Lo Lhe lssue ln Lhls case
belna Pem SecurlLles LlmlLed rospecLus 1he rospecLus flled wlLh Lhe
8CC conLalnlna lnLer alla Lhe lssue prlce Lhe slze of Lhe lssue and
oLher lnformaLlon nSL naLlonal SLock Lxchanae of lndla LlmlLed
ubllc lssue / lssue / lnlLlal ubllc Cfferlna / lC ubllc lssue of
9000000 equlLv shares of 8s10/ each for cash aL a premlum of 8s SS/
per equlLv share (rlce of 8s 6S/ per equlLv share) aaareaaLlna Lo
8s S8S000 Lakhs (Lhe lssue) bv Cemlnl Lnallab LlmlLed ('Cur Companv
or lssuer) 1he face value of Lhe share ls 8s10/ each and Lhe lssue
prlce ls 6S/ (6S Llmes of Lhe face value) Cuallfled lnsLlLuLlonal
8uvers / Cl8s ubllc llnanclal lnsLlLuLlons as speclfled ln SecLlon
4A of Lhe Companles AcL Scheduled Commerclal 8anks MuLual lunds
lorelan lnsLlLuLlonal lnvesLors realsLered wlLh SL8l MulLllaLeral
and 8llaLeral uevelopmenL llnanclal lnsLlLuLlons venLure CaplLal
funds realsLered wlLh SL8l SLaLe lndusLrlal uevelopmenL
CorporaLlons lnsurance Companles realsLered wlLh Lhe lnsurance
8eaulaLorv and uevelopmenL AuLhorlLv (l8uA) rovldenL lunds wlLh a
mlnlmum corpus of 8s 2S crores and enslon lunds wlLh a mlnlmum
corpus of 8s 2S crores 8efund AccounL AccounL opened wlLh an Lscrow
CollecLlon 8ank from whlch Lhe refunds of Lhe whole or parL of Lhe
AppllcaLlon AmounL (excludlna Lo Lhe AS8A AppllcanLs) lf anv shall
be made 8efund 8ank - 8efunds Lhrouah elecLronlc 8efunds Lhrouah
elecLronlc Lransfer of funds means refunds Lhrouah LCS ulrecL S R .
Tcbnical and Industry Rlatd Trms 1erms Descr|pt|on ASML Amerlcan
SocleLv of Mechanlcal Lnalneers 8ll8 8oard for lndusLrlal and
llnanclal 8econsLrucLlon 8S 8rlLlsh SLandardCS Carbon SLeel CnC
CompuLerlzed numerlcal ConLroluC ulesel CeneraLorLxoLlc MaLerlals
1lLanlum Copper nlckel lnconel MonelC1AW Cas 1unasLen Arc Weldlna
P1 Plah 1enslon lS lndlan SLandardL1 Low 1enslon MlC MeLal lnerL
Cas MlS ManaaemenL lnformaLlon SvsLemMm MllllmeLer Crder 8ook value
of (l) pro[ecLs awarded Lo us for whlch we have enLered lnLo slaned
aareemenLs or recelved leLLers of award or leLLers of lnLenL or
work orders buL have noL commenced work and (ll) Lhe uncompleLed
parL of Lhe pro[ecLs for whlch we have commenced work C8 rocedure
CuallflcaLlon 8ecordCA CuallLv Assurance lan 8CC 8elnforcemenL
CemenL ConcreLe 8mL 8unnlna MeLerSq fL Square leeL Sq mLrs Square
MeLers SSl Small Scale lndusLrv SS SLalnless SLeel 1lC 1unasLen
lnerL Cas Lransfer of funds CredlL or 81CS or nLl1 or Lhe AS8A
process as appllcable8ealsLrar/ 8ealsLrar Lo Lhelssue 8ealsLrar Lo
Lhe lssue belna karvv CompuLershare rlvaLe LlmlLed 8eaulaLlons SL8l
(lssue of CaplLal and ulsclosure 8equlremenL) 8eaulaLlons 2009
8eLall lndlvldual lnvesLors lndlvldual lnvesLors (lncludlna Puls ln
Lhe name of karLa and Lllalble n8ls) who applv for Lhe LqulLv
Shares of a value of noL more Lhan 8s100000 SCS8 Self CerLlfled
SvndlcaLe 8ank Cemlnl or our companv orCemlnl Lnallab LlmlLed" or
CLlL" Cemlnl Lnallab LlmlLed a publlc llmlLed Companv lncorporaLed
under Lhe Companles AcL 19S6 havlna lLs realsLered offlce aL S01
alm Sprlna Llnk 8oad nexL Lo 'u' MarL Mumbal 400 064 lndla We or us
or Cur Companv 8efers Lo Cemlnl Lnallab LlmlLed 6 R1erms
Descr|pt|on WS Weldlna rocess SpeclflcaLlonsWC Weldlna rocess
SpeclflcaLlons . Abbrviations Abbrev|at|on Iu|| IormA/c AccounL AoA
ArLlcles of AssoclaLlon ACM Annual Ceneral MeeLlnaAS AccounLlna
SLandards as lssued bv Lhe lnsLlLuLe of CharLered AccounLanLs of
lndlaAS8A AppllcaLlons SupporLed bv 8locked AmounLA? AssessmenL
?ear 8SL 8ombav SLock Lxchanae LlmlLedCAC8 Compounded Annual CrowLh
8aLe CA8L CredlL Analvsls and 8esearch LlmlLed CuSL CenLral
ueposlLorv Servlces (lndla) LlmlLedCLC Chlef LxecuLlve CfflcerCLS
Cash Larnlnas er ShareCln Companv ldenLlflcaLlon numberCl1
Commlssloner of lncome 1axCrore 10 mllllon (or) 100 lakhsuln
ulrecLor ldenLlflcaLlon numberul ueparLmenL of lndusLrlal ollcv and
romoLlon MlnlsLrv of Commerce CovernmenL of lndla u urafL
rospecLusLCS LlecLronlc Clearlna SvsLemLS Larnlnas er Share LCM
LxLraordlnarv Ceneral MeeLlnaLxlM/ LxlM ollcv LxporL lmporL ollcv
MlnlsLrv of Commerce CovernmenL of lndla 8eaulaLed bv lorelan 1rade
uevelopmenL and 8eaulaLlon AcL 1992 lCn8 AccounL lorelan Currencv
non 8esldenL AccounLll8 lorelan lnvesLmenL romoLlon 8oard
ueparLmenL of Lconomlc Affalrs MlnlsLrv of llnance CovernmenL of
lndla l? / llscal/llnanclal ?ear erlod of Lwelve monLhs ended March
31 of LhaL parLlcular vear unless oLherwlse sLaLed lLMA lorelan
Lxchanae ManaaemenL AcL 1999 as amended from Llme Lo Llme and Lhe
reaulaLlons framed Lhere under llls lorelan lnsLlLuLlonal lnvesLors
(as deflned under lLMA (1ransfer or Cffer of SecurlLv bv a erson
8esldenL ouLslde lndla) 8eaulaLlons 2000) realsLered wlLh SL8l
under appllcable laws ln lndla Col/CovernmenL CovernmenL of lndlaCu
Cross uomesLlc roducLCluC / CluC Cu[araL lndusLrlal uevelopmenL
CorporaLlonPul Plndu undlvlded lamllv 7 RAbbrev|at|on Iu|| Iorml1
AcL lncome 1ax AcL 1961 as amended from Llme Lo Llme l1 8ules 1he
lncome 1ax 8ules 1962 as amended from Llme Lo Llme MAln MarkeL
arLlclpanLs and lnvesLors' lnLearaLed uaLabaseMluC MaharashLra
lndusLrlal uevelopmenL CorporaLlon Mol MlnlsLrv of llnance
CovernmenL of lndla MCu Memorandum of undersLandlna MerchanL 8anker
MerchanL 8anker as deflned under Lhe SecurlLles and Lxchanae 8oard
of lndla (MerchanL 8ankers) 8eaulaLlons 1992 nA / nA noL
AppllcablenAv neL AsseL value nv neL resenL value n8ls non 8esldenL
lndlans n8L AccounL non 8esldenL LxLernal AccounL n8C AccounL non
8esldenL Crdlnarv AccounLnSuL naLlonal SecurlLles ueposlLorv
LlmlLed nSL 1he naLlonal SLock Lxchanae of lndla LlmlLedC8C
CrlenLal 8ank of Commerce CC8 Cverseas CorporaLe 8odlespa er Annum
AC ersons AcLlna ln ConcerL An ermanenL AccounL number A1 roflL
AfLer 1ax/L 8aLlo rlce/Larnlnas 8aLlo8 ubllc 8elaLlons88l 1he
8eserve 8ank of lndla 8CL 8eLurn on LqulLv 8CnW 8eLurn on neL WorLh
81CS 8eal 1lme Cross SeLLlemenL 8s 8upees Lhe offlclal currencv of
Lhe 8epubllc of lndla S8l SLaLe 8ank of lndla SC88 SecurlLles
ConLracLs (8eaulaLlon) 8ules 19S7 as amended from Llme Lo Llme SC8A
SecurlLles ConLracL (8eaulaLlon) AcL 19S6 as amended from Llme Lo
Llme S11 SecurlLles 1ransacLlon 1ax Sec SecLlon uS/unlLed SLaLes
unlLed SLaLes of Amerlca uSu/ uS$/ $ unlLed SLaLes uollar Lhe
offlclal currencv of Lhe unlLes SLaLes of Amerlca u/s under SecLlon
vCl / venLure CaplLal lund lorelan venLure CaplLal lunds (as
deflned under Lhe SecurlLles and Lxchanae 8oard of lndla (venLure
CaplLal lunds) 8eaulaLlons 1996) realsLered wlLh SL8l under
appllcable laws ln lndla wef WlLh effecL fromvA1 value Added 1ax 8
RSECTIUN II: RISK FACTURS . CERTAIN CUNVENTIUNS: USE UF MARKET DATA
unless sLaLed oLherwlse Lhe flnanclal daLa ln Lhe urafL rospecLus
ls derlved from our flnanclal sLaLemenLs prepared and resLaLed ln
accordance wlLh lndlan CAA Lhe Companles AcL and SL8l (lCu8)
8eaulaLlons 2009 lncluded on aae no 1S3 of Lhls urafL rospecLus We
have no subsldlarles Accordlnalv flnanclal lnformaLlon relaLlna Lo
us ls presenLed on a nonconsolldaLed basls Cur flscal vear
commences on Aprll 1 of everv vear and ends on March 31sL of everv
nexL vear ln Lhls urafL rospecLus anv dlscrepancles ln anv Lable
beLween Lhe LoLal and Lhe sum of Lhe amounLs llsLed are due Lo
roundlnaoff ln Lhls urafL rospecLus unless Lhe conLexL oLherwlse
requlres all references Lo one aender also refers Lo anoLher aender
and Lhe word Lakhs means one hundred Lhousand and Lhe word Mllllon
means 1en Lakhs and Lhe word Crore means 1en Mllllon 1hrouahouL
Lhls urafL rospecLus all flaures have been expressed ln Lakhs
unless oLherwlse sLaLed all references Lo lndla conLalned ln Lhls
urafL rospecLus are Lo Lhe 8epubllc of lndla unless sLaLed
oLherwlse lndusLrv daLa used LhrouahouL Lhls urafL rospecLus has
been obLalned from lndusLrv publlcaLlons lnLernal companv reporLs
newspaper and maaazlne arLlcles eLc Such publlcaLlons aenerallv
sLaLe LhaL conLenL Lhereln has been obLalned from sources belleved
Lo be rellable buL Lhelr accuracv and compleLeness are noL
auaranLeed and Lhelr rellablllLv cannoL be assured AlLhouah we
belleve LhaL Lhe lndusLrv daLa used ln Lhls urafL rospecLus ls
rellable lL has noL been verlfled bv anv lndependenL source lor
addlLlonal deflnlLlons please refer Lo ueflnlLlons and
AbbrevlaLlons on aae no 02 of Lhls urafL rospecLus ln Lhe SecLlon
LlLled Maln rovlslons of Lhe ArLlcles of AssoclaLlon on aae no 2S8
of Lhls urafL rospecLus deflned Lerms have Lhe meanlna alven Lo
such Lerms ln Lhe ArLlcles of AssoclaLlon of our Companv 9 R .
FURWARD-LUUKINC STATEMENTS SLaLemenLs lncluded ln Lhls urafL
rospecLus whlch conLaln words or phrases such as wlll alm wlll
llkelv resulL belleve expecL wlll conLlnue anLlclpaLe esLlmaLe
lnLend plan conLemplaLe seek Lo fuLure ob[ecLlve aoal pro[ecL
should wlll pursue and slmllar expresslon or varlaLlons of such
expresslons LhaL are forwardlooklna sLaLemenLs All forward looklna
sLaLemenLs are sub[ecL Lo rlsks uncerLalnLles and assumpLlons LhaL
could cause acLual resulLs Lo dlffer maLerlallv from Lhose
conLemplaLed bv Lhe relevanL forward looklna sLaLemenL lmporLanL
facLors LhaL could cause acLual resulLs Lo dlffer maLerlallv from
our expecLaLlons lnclude amona oLhers Ceneral economlc and buslness
condlLlons ln lndla and oLher counLrles 8eaulaLorv chanaes relaLlna
Lo Lhe fabrlcaLlon lndusLrv ln lndla and our ablllLv Lo respond Lo
Lhem Cur ablllLv Lo successfullv lmplemenL our sLraLeav our arowLh
and expanslon Lechnoloalcal chanaes our exposure Lo markeL rlsks
LhaL have an lmpacL on our buslness acLlvlLles or lnvesLmenLs 1he
moneLarv and flscal pollcles of lndla lnflaLlon deflaLlon
unanLlclpaLed Lurbulence ln lnLeresL raLes forelan exchanae raLes
equlLv prlces or oLher raLes or prlces Lhe performance of Lhe
flnanclal markeLs ln lndla and aloballv chanaes ln domesLlc and
forelan laws reaulaLlons and Laxes and chanaes ln compeLlLlon ln
our lndusLrv Chanaes ln Lhe value of Lhe 8upee and oLher currencles
1he occurrence of naLural dlsasLers or calamlLles Chanae ln
pollLlcal condlLlon ln lndla lor furLher dlscusslon of facLors LhaL
could cause our acLual resulLs Lo dlffer see Lhe SecLlon LlLled
8lsk lacLors bealnnlna on aae no 10 of Lhls urafL rospecLus 8v
Lhelr naLure cerLaln markeL rlsk dlsclosures are onlv esLlmaLes and
could be maLerlallv dlfferenL from whaL acLuallv occurs ln Lhe
fuLure As a resulL acLual fuLure aalns or losses could maLerlallv
dlffer from Lhose LhaL have been esLlmaLed nelLher our Companv nor
anv of Lhelr respecLlve afflllaLes have anv obllaaLlon Lo updaLe or
oLherwlse revlse anv sLaLemenLs reflecLlna clrcumsLances arlslna
afLer Lhe daLe hereof or Lo reflecL Lhe occurrence of underlvlna
evenLs even lf Lhe underlvlna assumpLlons do noL come Lo frulLlon
ln accordance wlLh SL8l requlremenLs our Companv and Lhe Lead
Manaaer wlll ensure LhaL lnvesLors ln lndla are lnformed of
maLerlal developmenLs unLll such Llme as Lhe aranL of llsLlna and
Lradlna ermlsslon bv Lhe SLock Lxchanaes for Lhe LqulLv Shares
alloLLed pursuanL Lo Lhls lssue 10 R. RISK FACTURS An lnvesLmenL ln
equlLv lnvolves a hlah dearee of rlsk lnvesLors should carefullv
conslder all Lhe lnformaLlon ln Lhls urafL rospecLus lncludlna Lhe
rlsks and uncerLalnLles descrlbed below before maklna an lnvesLmenL
ln our equlLv shares Anv of Lhe followlna rlsks as well as oLher
rlsks and uncerLalnLles dlscussed ln Lhls urafL rospecLus could
have a maLerlal adverse effecL on our buslness flnanclal condlLlon
and resulLs of operaLlons and could cause Lhe Lradlna prlce of our
LqulLv Shares Lo decllne whlch could resulL ln Lhe loss of all or
parL of vour lnvesLmenL ln addlLlon Lhe rlsks seL ouL ln Lhls urafL
rospecLus mav noL be exhausLlve and addlLlonal rlsks and
uncerLalnLles noL presenLlv known Lo us or whlch we currenLlv deem
lmmaLerlal mav arlse or become maLerlal ln Lhe fuLure unless
oLherwlse sLaLed ln Lhe relevanL rlsk facLors seL forLh below we
are noL ln a poslLlon Lo speclfv or quanLlfv Lhe flnanclal or oLher
rlsks menLloned hereln Mater|a||ty 1he 8lsk facLors have been
deLermlned on Lhe basls of Lhelr maLerlallLv 1he followlna facLors
have been consldered for deLermlnlna Lhe maLerlallLv 1 Some evenLs
mav noL be maLerlal lndlvlduallv buL mav be found maLerlal
collecLlvelv 2 Some evenLs mav have maLerlal lmpacL quallLaLlvelv
lnsLead of quanLlLaLlvelv 3 Some evenLs mav noL be maLerlal aL
presenL buL mav be havlna maLerlal lmpacL ln fuLure Note 1he rlsk
facLors as envlsaaed bv Lhe manaaemenL alona wlLh Lhe proposals Lo
address Lhe rlsk lf anv unless speclfled or quanLlfled ln Lhe
relevanL rlsk facLors below we are noL ln a poslLlon Lo quanLlfv
Lhe flnanclal lmpllcaLlon of anv of Lhe rlsks descrlbed ln Lhls
secLlon ln Lhls urafL rospecLus anv dlscrepancles ln anv Lable
beLween LoLal and Lhe sums of Lhe amounL llsLed are due Lo roundlna
off Anv percenLaae amounLs as seL forLh ln 8lsk lacLors ManaaemenL
ulscusslon and Analvsls of llnanclal CondlLlons and CperaLlons as
menLloned on aae no 181 ln Lhls urafL rospecLus unless oLherwlse
lndlcaLed has been calculaLed on Lhe basls of Lhe amounL dlsclosed
ln Lhe llnanclal SLaLemenLs prepared ln accordance wlLh Lhe lndlan
AccounLlna SLandards IN1LkNAL kI5k IAC1Ck5 1 Our compony hos
undisputed omounts poyob/e in respects of lncome tox which hove
remoin outstondino os ot 5eptember l0 2010 for the period of more
thon six {) months from the dote they become poyob/e As on
SepLember 30 2010 Lhere are undlspuLed sLaLuLorv dues aaareaaLlna
Lo 8s 1636S lakhs on accounL of lncome 1ax whlch are veL Lo be pald
bv Lhe Companv Cur cash flows would be adverselv affecLed Lo Lhe
exLenL amounL of such pavmenL made bv our Companv lurLher Cur
Companv mav be llable Lo pav such penalLles and lnLeresL as Lhe
auLhorlLles mav decldes under Lhe provlslons of Lhe lncome 1ax AcL
1961 11 R2 Our compony is yet to p/oce orders for the P/ont
Mochinery worth ks 281894 Lokhs constitutino 100 of the toto/ p/ont
ond mochinery Our compony hos o/so not orronoed for ony hedoino
foci/ity to cover the risk orisino out of foreion exchonoe
f/uctuotions for the p/ont ond mochinery proposed to be to be
imported for ks 578l /okhs which constitutes 2014 of the toto/
p/ont ond mochinery Cur Companv ls veL Lo place orders for Lhe
enLlre planL and machlnerv and oLher equlpmenLs and accessorles 1he
LoLal cosL of all Lhese comes Lo 281894 Lakhs whlch ls 4SS0 of Lhe
LoLal cosL of Lhe ro[ecL of whlch 8sS6783 Lakhs worLh of machlnerv
ls Lo be lmporLed consLlLuLlna 916 of LoLal pro[ecL cosL We are
sub[ecL Lo Lhe rlsks on accounL of lnflaLlon ln Lhe prlce of
machlnerv and oLher equlpmenL LhaL we requlre for Lhe pro[ecL
lurLher ln respecL of Lhe machlnerv / equlpmenL / oLher pro[ecL
relaLed servlces LhaL we propose Lo lmporL / procure from overseas
we mav be sub[ecL Lo Lhe rlsks arlslna ouL of currencv raLe
flucLuaLlons Slnce no orders have been placed as on daLe our
Companv has noL arranaed for anv hedalna faclllLv Lo cover Lhe rlsk
arlslna ouL of forelan exchanae flucLuaLlons ln relaLlon Lo Lhe
aforesald lmporLs 1hese facLors mav lncrease Lhe overall cosL of
our pro[ecL and have an adverse effecL on our buslness and resulLs
of operaLlons l uurino the linoncio/ Yeor 200910 our compony hos
oiven /oon to two of its uirectors in controvention of the
provisions of section 295 of the componies 4ct 195 uurlna Lhe vear
200910 Lhe Companv has alven loan Lo Lwo of lLs ulrecLors ln
conLravenLlon of Lhe provlslons of secLlon 29S of Lhe Companles AcL
19S6 1he aaareaaLe amounL of loan alven was 8s 2708 lakhs of whlch
8s 1S lakhs loan was alven Lo Mr 8akesh u anchal Manaalna ulrecLor
and 8s 1208 lakhs was alven Lo Mr PlLesh u anchal Whole 1lme
ulrecLor As on Lhe daLe of flllna Lhls drafL prospecLus boLh Lhe
loans are ouLsLandlna Accordlnalv our Companv and boLh of sald
ulrecLors mav be llable for vlolaLlna Lhe provlslons of Lhe sald
secLlon of Lhe Companles AcL 19S6 Moreover lf elLher or boLh Lhe
ulrecLors fall Lo repav Lhe loans Lhen Lo LhaL exLenL lL could
adverselv affecL cash flows of our Companv and also our operaLlons
dlrecLlv or lndlrecLlv 4 Our compony hos been mointoinino inventory
records os per excise ru/es ond the monooement physico//y verified
mojor items of inventories durino finoncio/ yeor ended Morch l1
2010 ond discreponcies noticed on verificotion were oppropriote/y
deo/t with uurino the months period ended 5eptember l0 2010 the
monooement physico//y verified o// mojor items of inventories ond
no moterio/ discreponcies were noticed nowever there ore no
supportino records to substontiote these inventory records to vouch
the occurocy ond vo/ue of c/osino stocks ln Lhe absence of
supporLlna documenLs our Companv ls unable Lo subsLanLlaLe
accounLlna records of lnvenLorles malnLalned bv Lhe manaaemenL
lurLher Lhere ls no svsLem for quanLlLaLlve reconclllaLlon of such
lnvenLorles and Lherefore Cur Companv ls unable Lo auLhenLlcaLe Lhe
accuracv of Lhe quanLlLv and value of closlna sLock for Lhe
flnanclal vear ended March 31 2010 and 6 monLhs perlod ended
SepLember 30 2010 Slnce Lhe consequenLlal lmpacL whereof ls noL
presenLlv ascerLalnable anv ma[or varlaLlon found laLer on due Lo
non reconclllaLlon mav hamper operaLlons and revenues of Lhe
companv 12 R5 we hove not undertoken copito/ expenditure of simi/or
site ond noture os entoi/ed in objects of issue ond our inobi/ity
to monooe copito/ expenditure moy odverse/y offect our operotions
We are embarklna upon a ma[or expanslon Lo meeL Lhe arowlna demand
of domesLlc buvers ln Lhe enalneerlna fabrlcaLlon secLor We are
lncurrlna caplLal expendlLure of 8s 619S67 lakhs as deLalled ln Lhe
SecLlon LlLled 'Cb[ecLs of Lhe lssue' sLarLlna on aae no S9 of Lhls
urafL rospecLus for enhancemenL and uparadaLlon of exlsLlna
capaclLles ln pasL we have noL underLaken caplLal expendlLure of
such slze and our lnablllLv Lo manaae caplLal expendlLure mav
adverselv affecL our operaLlons We cannoL assure LhaL we wlll be
able Lo aeL Lhe beneflLs of Lhe aenerallv arowlna demand and
accordlnalv Lhe beneflLs accrulna Lo us from Lhe planned capaclLv
expanslon pro[ecL mav be less Lhan whaL ls anLlclpaLed Our compony
hos foi/ed to serve the interest ond principo/ omount in respect of
term /oons ond interest of cosh credit for the months of 4uoust l1
2010 ond 5eptember l0 2010 Cur Companv has Laken varlous faclllLles
from our banker for Lhe purpose of our buslness AlLhouah we are
aenerallv reaular ln pavlna Lhe lnLeresL and prlnclpal amounL ln
respecL of Lhe loans Laken from Lhe banks Powever we have falled Lo
pav Lhe lnLeresL and prlnclpal amounL ln respecL of Lhe Lerm loan
and lnLeresL of cash credlL for Lhe monLhs AuausL 31 2010 and
SepLember 30 2010 1he Companv mav be llable for addlLlonal lnLeresL
for delaved pavmenL and healLh code alven Lo Lhe Companv bv our
bankers mav be revlewed 7 Our componys time/y ond cost effective
execution of orders is dependent on the odeouote ond time/y supp/y
of row moterio/s we hove not entered into ony /ono term supp/y
controcts ond we connot ossure you thot we wou/d be ob/e to procure
odeouote supp/ies of row moterio/s os ond when we need them on
commercio//y occepted terms AdequaLe supplles of raw maLerlals on
compeLlLlve and commerclallv vlable Lerms aL rlahL Llme are kev Lo
our Llmelv and cosL execuLlon of orders Slnce our companv has noL
enLered anv lona Lerm raw maLerlal supplv conLracLs we cannoL
assure vou LhaL we would be able Lo procure adequaLe supplles of
kev maLerlals ln Lhe fuLure as and when we need Lhem on compeLlLlve
Lerms lurLher LransporLaLlon sLrlkes bv manv LransporLers and
reaulaLorv resLrlcLlons placed on LransporLaLlon provlders whlch
Lhev had ln Lhe pasL and could have ln Lhe fuLure an adverse effecL
on recelpL of raw maLerlal supplles lf we are unable Lo procure Lhe
requlslLe quanLlLles of maLerlals as requlred our buslness resulLs
of operaLlons and revenues mav be adverselv affecLed 8 Our compony
is yet obtoin certoin opprovo/s for our proposed project ond moy be
unob/e to obtoined or renew reouired opprovo/s in o time/y monner
ond existino opprovo/ moy be revoked lor successful execuLlon of
our exlsLlna and our proposed pro[ecLs we are requlred Lo obLaln
sLaLuLorv and reaulaLorv approvals llcenses realsLraLlons and
appllcaLlons need Lo be made aL approprlaLe sLaaes of Lhe proposed
pro[ecLs 1hese mav lnclude approvals of bulldlna plans lavouL plans
envlronmenLal consenLs and flre safeLv clearance durlna varlous
sLaaes of Lhe pro[ecL We mav have Lo obLaln cerLlflcaLe of chanae
of land use ln respecL of our aarlculLural and lndusLrlal land lf
we fall Lo obLaln or renew or experlence maLerlal delavs ln
obLalnlna or renewlna Lhe requlslLe Lhe aovernmenLal approvals or
lf anv approvals are suspended or revoked our buslness prospecLs
flnanclal condlLlons and resulLs of operaLlon mav be adverselv
affecLed 13 R9 Our compony durino the finoncio/ yeor ended 200910
hod occepted pub/ic deposits in controvention of the provisions of
the componies 4ct 195 os omended ond the controvention continues
uurlna Lhe flnanclal vear 200910 Lhe companv accepLed publlc
deposlLs Lo Lhe Lune of 8s 100 lakhs ln conLravenLlon of SecLlon
S8A and S8AA of Lhe Companles AcL 19S6 as amended and Companles
(AccepLance of ueposlL) 8ules 197S and Lhe conLravenLlon conLlnues
Cur Companv and all Cfflcers ln uefaulL mav be llable for Lhe
pecunlarv and oLher punlshmenLs for such vlolaLlons under Lhe
provlslons of sald secLlons and reaulaLlons whlch mav adverselv
affecL operaLlons of Lhe companv dlrecLlv or lndlrecLlv 10 uurino
linoncio/ Yeor 200809 our compony hod incurred of ks 911l Lokhs
towords lPO expenses which wos she/ved were not choroed in the
books of occounts os per 45 2 of the lc4l Cur Companv had lncurred
lC expenses of 8s 91 13 Lakhs durlna llnanclal ?ear 200809 whlch
was shelved buL Lhe same were noL charaed ln Lhe books of accounLs
of Lhe flnanclal vear ended March 31 2009 as per AS 26 1hls has
resulLed lnLo oversLaLemenL of Lhe balance of 8eserves and Surplus
and Mlscellaneous LxpendlLure bv 8s 9113 Lakhs each for Lhe sald
flnanclal vear 11 Our compony is in the process of fi/ino/revisino
its vorious stotutory returns such os v41 returns 1u5 returns etc
for the finoncio/ yeor ended Morch l1 2010 ond the months period
ended 5eptember l0 2010 lurther the compony hos to deposit on
omount of ks 2240 Lokhs on occount of excise duty in respect of
removo/ of ooods durino months of 4uoust ond 5eptember 2010 Cur
Companv ls ln Lhe process of flllna/revlslna lLs varlous sLaLuLorv
reLurns such as vA1 reLurns 1uS reLurns eLc for Lhe vear for Lhe
llnanclal ?ear ended March 31 2010 and 6 monLhs perlod ended
SepLember 30 2010 endlna Lhe flnallzaLlon of Lhese reLurns Lhe
necessarv lmpacL on Lhe accounLs for Lhe vear/perlod menLloned
above ls noL presenLlv ascerLalnable Slnce Lhe lmpacL lf anv wlll
be alven ln Lhe subsequenL vears lL mav hamper flnanclal condlLlons
of Lhe sald respecLlve vears lurLher our Companv has Lo deposlL 8s
2240 Lakhs on accounL of exclse duLv aaalnsL Lhe aoods removed
durlna monLhs of AuausL and SepLember 2010 whlch would adverselv
affecL cash flows/ operaLlons of Lhe Companv 12 Our compony does
not hove on lnterno/ 4udit 5ystem in p/oce commensurote with the
site of the compony ond noture of its business 1here ls no lnLernal
AudlL SvsLem ln place ln our Companv whlch ls necessarv keeplna ln
vlew of Lhe maanlLude and naLure of buslness of Lhe companv ln Lhe
absence of such lnLernal audlL svsLems lL ls noL posslble Lo
crlLlcallv revlew Lhe companv's flnanclal and oLher operaLlonal
reporLlna process and proper dlsclosure of Lhe relaLed lnformaLlon
ln Lhls reaard under such scenarlo lL mav noL be posslble Lo ensure
LhaL Lhe flnanclal and oLher operaLlna sLaLemenLs are correcL
sufflclenL and credlble Accordlnalv Lo LhaL exLenL Lhere mav be
loss of revenue on accounL of lack of checks reconclllaLlons and
conLrol svsLems 1l Our compony in the post hos entered into ke/oted
Porty 1ronsoctions ond it moy continue to do so ln future o/so Cur
Companv has enLered lnLo cerLaln LransacLlons wlLh our romoLers
ulrecLors and romoLers Croup llrms ln Lhe pasL lor deLalled
lnformaLlon on our relaLed parLv LransacLlons please refer Lo
Annexure xlv on 8elaLed arLv 1ransacLlons of Lhe AudlLor's 8eporL
under SecLlon LlLled llnanclal lnformaLlon of Lhe Companv"
bealnnlna on aae no 1S3 of Lhls urafL rospecLus 14 RWhlle we
belleve LhaL all our relaLed parLv LransacLlons have been conducLed
on and have commerclal Lerms conslsLenL wlLh an arm's lenaLh basls
Lhere can be no assurance LhaL we could noL have achleved more
favorable Lerms and had such LransacLlons been enLered lnLo wlLh
unrelaLed parLles lurLhermore lL ls llkelv LhaL we mav enLer lnLo
relaLed parLv LransacLlons ln fuLure Loo 1here can be no assurance
LhaL such LransacLlons lndlvlduallv or ln Lhe aaareaaLe would noL
have an adverse effecL on our buslness flnanclal condlLlon and
resulLs of operaLlons 14 Our compony os ot Morchl1 2010 hos
fo//owino continoent /iobi/ities which hove not been provided for
in the books of occounts Cur Companv has followlna conLlnaenL
llablllLles as aL March 31 2010 have noL been provlded for ln Lhe
books of accounLs {ks ln Lokhs) 5r No Cont|ngent L|ab|||t|es As at
March 31 2010 1 8ank CuaranLees Lo CusLomers 333302 ulspuLed
SLaLuLorv uues 91933 SeL off of Sales 1ax 21S4 lncome 1ax Sales 1ax
LlablllLles noL AscerLalnable 1C1AL 42738ln case lf anv or all of
above sLaLed conLlnaenL llablllLles aeL crvsLalllzed and are
requlred Lo be seLLled lL could adverselv affecL flnanclals and
operaLlons of our companv 15 Our compony durino the finoncio/ yeor
ended Morchl1 2010 ond for months period ended 5eptember l0 2010
hos bo/onces of /oons creditors debtors ond odvonces which ore
subject to confirmotion 1hus if ony or o// of such bo/onces cou/d
not be confirmed or wou/d be confirmed for /esser omounts then to
thot extent moy odverse/y offect finoncio/s of the compony Cur
Companv's balances of loans credlLors debLors and advances for Lhe
flnanclal vear ended March 31 2010 and for 6 monLhs perlod ended
SepLember 30 2010 are sub[ecL Lo conflrmaLlon 1hus lf anv or all of
such balances could noL be conflrmed or are conflrmed for lesser
amounLs Lhen Lo LhaL exLenL mav adverselv affecL flnanclals of Lhe
companv 1 4// the ossets hove not been physico//y verified by the
monooement durino the yeor thouoh there is reou/or proorom of
verificotion lixed ossets inc/ude o Motor cor which wos purchosed
by the compony durino the finoncio/ yeor 200910 thouoh it is
reoistered in the nome of its Monooino uirector Mr kokesh u Poncho/
All Lhe asseLs have noL been phvslcallv verlfled bv Lhe manaaemenL
durlna Lhe vear Lhouah Lhere ls reaular proaram of verlflcaLlon
llxed asseLs lnclude a MoLor Car whlch was purchased bv Lhe Companv
durlna Lhe flnanclal vear 200910 amounLlna Lo 8s3798 Lacs Lhouah lL
ls realsLered ln Lhe name of lLs Manaalna ulrecLor Mr 8akesh u
anchal Cur Companv mav noL aeL Lhe beneflLs of depreclaLlon for Lhe
sald moLor car aL Lhe Llme of lncome Lax assessmenL as lL ls noL
realsLered ln Lhe name of companv and Lo LhaL exLenL mav affecL
proflLablllLv and cash flows of Lhe companv 1S R17 Our compony hos
not fo//owed 4ccountino 5tondord 15 reoordino mp/oyee 8enefits
prescribed by 1he lnstitute of chortered 4ccountonts of lndio
{lc4l) As per Lhe AudlLed llnanclal SLaLemenLs for Lhe vear ended
March 31 2010 under noLes Lo AccounLs we accounL for llablllLles ln
respecL of araLulLv and leave encashmenL on avmenL basls whlch ls
noL ln conformlLv wlLh AS 1S reaardlna Lmplovee 8eneflLs prescrlbed
bv Lhe lCAl 1hls AccounLlna SLandard sLlpulaLes LhaL Lhese
llablllLles should be accounLed for ln Lhe books of accounLs on
accrual basls 18 Our compony hos not disc/osed re/evont informotion
in the linoncio/ 5totements for the finoncio/ yeor ended Morch l1
2010 ond for months period ended 5eptember l0 2010 os reouired
under provisions of Micro 5mo// Medium nterprise ueve/opment 4ct
2002 Cur Companv ln Lhe absence of relevanL lnformaLlon perLalnlna
Lo Mlcro Small and Medlum LnLerprlses falled Lo dlsclosed
lnformaLlon ln Lhe llnanclal SLaLemenLs for Lhe flnanclal vear
ended March 312010 and 6 monLhs perlod ended SepLember 30 2010 as
requlred under provlslons of Mlcro Small Medlum LnLerprlses
uevelopmenL AcL 2002 Cur Companv and everv offlcer ln defaulL mav
be held llable for noL complvlna wlLh Lhe provlslons of Lhe sald
AcL 19 Our compony wos not hovino o fu// time compony 5ecretory Cur
Companv was noL havlna a full Llme Companv SecreLarv durlna Lhe
alven perlod of Aprll 1 2009 Lo AuausL 12 2010 1he same ls ln
vlolaLlon of SecLlon 383 A 20 Our compony hos not creoted orotuity
fund os reouired under 5ec 44 of the Poyment of 6rotuity 4ct 1972
Cur companv has noL complled wlLh Lhe compulsorv requlremenL of
creaLlon of fund/obLalnlna of lnsurance as requlred under SecLlon
4A of Lhe avmenL of CraLulLv AcL 1972 Powever Lhe companv ls
conslderlna Lhe opLlon of complvlna wlLh Lhe same ln Lhe near
fuLure 21 Our compony hos not been reou/or in mokino of 5lc
poyments to its emp/oyees Cur companv has noL made anv LSlC
pavmenLs for Lhe vear 2006 2007 Lven as on daLe Lhe companv ls
exLendlna Lhe LSlC beneflL Lo 10 emplovees ouL of a LoLal sLrenaLh
of 27 22 Our compony hos uti/ited funds credited to shore premium
occount in excess of the omount mentioned in reso/ution possed by
the boord of directors Cur companv ln Lhe vear 2007 declded Lo ao
for a bonus lssue ln Lhe raLlo of 32 for whlch lL had passed a
resoluLlon auLhorlzlna Lhe board Lo uLlllze a sum of 8s 42607S0/
Lowards Lhe sald cause from Lhe share premlum accounL alLhouah Lhe
companv has uLlllzed all Lhe amounL avallable ln Lhe share premlum
accounL wlLhouL passlna a proper resoluLlon and has Llll daLe noL
recLlfled Lhe same 16 R2l Our compony in the yeor 2007 foi/ed to
comp/y with the reouirement of 5ection 205 of the componies 4ct 195
Cur Companv had pald dlvldend ln Lhe vear 2007 1he dlvldend monles
were dlrecLlv pald Lo Lhe shareholders/members ouL of Lhe companv
accounLs and no separaLe bank accounL was opened for Lhe same 1he
same ls ln noncompllance of SecLlon 20S of Lhe Companles' AcL 19S6
24 Our compony is invo/ved in certoin /eoo/ proceedinos We are
lnvolved ln leaal proceedlnas and clalms ln lndla 1hese leaal
proceedlnas are pendlna aL dlfferenL levels of ad[udlcaLlon before
varlous courLs and Lrlbunals Should anv new developmenLs arlse such
as a chanae ln lndlan law or rullnas aaalnsL us bv appellaLe courLs
or Lrlbunals we mav need Lo make provlslons ln our flnanclal
sLaLemenLs whlch could lncrease our expenses and our llablllLles We
cannoL assure vou LhaL Lhese leaal proceedlnas wlll be declded ln
our favour Anv adverse declslon mav have a slanlflcanL adverse
effecL on our buslness and resulLs of operaLlons Cur ouLsLandlna
leaal proceedlna and Lhe amounLs clalmed ln Lhese proceedlnas have
been dlsclosed Lo Lhe exLenL ascerLalnable below {ks ln mi//ion
un/ess stoted otherwise) Nature of roceed|ng Number of Cases Amount
(ks)Clvll Cases 1 noL ascerLalnable Lxclse Cases 2 2301S97**AmounL
does noL lnclude anv penalLv and lnLeresL whlch ls noL
ascerLalnable and mav be lmposed upon our Companv Also we have from
Llme Lo Llme lnlLlaLed leaal proceedlnas relaLlna Lo our buslness
and operaLlons for furLher deLalls of ouLsLandlna llLlaaLlon
aaalnsL us please see CuLsLandlna LlLlaaLlon and MaLerlal
uevelopmenLs" on aae no 196 of Lhls urafL rospecLus 25 we ore
subject to restrictive /oon covenonts of 8onks in respect of term
/oons / workino copito/ foci/ities ovoi/ed from them Cur Companv
has enLered lnLo aareemenLs for Lerm loans and flnanclal faclllLles
wlLh our banker and Lhe covenanLs ln such aareemenLs requlre us Lo
obLaln bank's permlsslon ln wrlLlna ln respecL of effecLlna anv
chanae ln Lhe Companv's CaplLal SLrucLure chanae ln unsecured loan
chanae ln Lradlna cvcle lmplemenLaLlon of anv scheme of expanslon/
modlflcaLlon/ dlverslflcaLlon/ renovaLlon enLerlna lnLo anv
borrowlna arranaemenL wlLh oLher banks underLake auaranLee
underLake obllaaLlons on behalf of anv oLher Companv declare
dlvldends excepL for Lhe anv vear approved bv Lhe bank pav
auaranLee commlsslon Lo Lhe auaranLors whose auaranLees have been
sLlpulaLed creaLe an furLher charae/ llen/ encumbrance over asseLs
properLles charaed Lo Lhe bank and sell/ asslan or oLherwlse
dlspose off Lhe flxed asseLs charaed Lo Lhe bank 1hese covenanLs
mav have an adverse effecL on Lhe funcLlonlna of our Companv
lurLhermore our Companv has creaLed a charae ln favor of our lender
aaalnsL Lhe flxed asseLs of our Companv ln case of defaulL bv our
Companv ln repavmenL of Lhe loans our 8anker mav exerclse Lhelr
rlahLs over Lhe securlLv whlch mav be deLrlmenLal Lo Lhe lnLeresL
of our Companv lor deLalls of resLrlcLlve covenanLs please refer Lo
paraaraph Annexure xv of Lhe AudlLor's reporL appearlna on aae no
177 of Lhls urafL rospecLus under SecLlon LlLled llnanclal
lnformaLlon of Lhe Companv" 17 R 2 Our compony moy foce ony
unexpected increose in price of inputs /ike price of /obour row
moterio/s fue/ or other inputs which we ore unob/e to poss on our
c/ients moy hove on odverse effect on our resu/ts of operotions ond
finoncio/ condition Anv lncrease ln lnpuLs cosL vlz raw maLerlal
labour fuel and oLher maLerlal consLlLuLes a slanlflcanL parL of
our operaLlna expenses cosL whlch ls approxlmaLelv 819S of our
LoLal expendlLure Cur ablllLv Lo pass on unanLlclpaLed lncrease ln
Lhe prlces of Lhese lnpuLs Lo our cllenLs mav be llmlLed whlch mav
Lo LhaL exLenL adverselv affecL our operaLlons and revenues 27 Our
Promoters wi// continue to retoin mojority contro/ in the compony
ofter the issue which wou/d enob/e them to inf/uence the outcome of
motters submitted to shoreho/ders for opprovo/ Cur romoLers would
beneflclallv own S831 of our companv's posL equlLv share caplLal
ConsequenLlv Lhe romoLers wlll have Lhe ablllLv Lo conLrol our
buslness lncludlna maLLers relaLlna Lo anv sale of all or
subsLanLlallv all our companv's asseLs caplLallzaLlon of reserves
dlsLrlbuLlon of dlvldend appolnLmenL of dlrecLors and kev
manaaerlal personnel and manv oLher lmporLanL declslons 1hls
conLrol could delav defer or prevenL a chanae ln conLrol of Lhe
companv lmpede a meraer consolldaLlon Lakeover or dlscouraalna a
poLenLlal acqulrer aLLempLlna Lo obLaln conLrol of Lhe companv
desplLe of Lhe facL LhaL Lhe aLLempL would have been ln Lhe besL
lnLeresLs of Lhe companv lurLher Llll Lhe promoLers are ln Lhe
poslLlon Lo exerclse slanlflcanL conLrol over Lhe companv Lhev mav
lnfluence ma[or pollcles of Lhe companv ln such a wav LhaL lL could
confllcL wlLh Lhe lnLeresLs of oLher mlnorlLv shareholders 28
uep/oyment of funds out of net proceeds of the issue is entire/y ot
our discretion ond is not subject to ony monitorino by on
independent ooency We lnLend Lo use Lhe neL proceeds of Lhe lssue
for Lhe ob[ecLs as descrlbed ln Lhe secLlon enLlLled Cb[ecLs of Lhe
lssue" on aae noS9 of Lhls urafL rospecLus 1he purposes for whlch
Lhe neL proceeds of Lhe lssue are Lo be uLlllzed have noL been
appralsed bv anv lndependenL enLlLv and are based on our esLlmaLes
and on Lhlrd parLv quoLaLlons ln addlLlon our caplLal expendlLure
plans and worklna caplLal esLlmaLes are sub[ecL Lo a number of
varlables lncludlna posslble cosL overruns and chanaes ln
manaaemenL's vlews of Lhe deslrablllLv of currenL plans and manv
oLher facLors endlna uLlllzaLlon of proceeds ouL of lssue for Lhe
purposes descrlbed ln Lhe urafL rospecLus we lnLend Lo Lemporarllv
lnvesL Lhe funds ln hlah quallLv lnLeresL bearlna llquld
lnsLrumenLs lncludlna deposlLs wlLh banks lnvesLmenL ln muLual
funds eLc as Lhe 8oard of ulrecLors mav deem flL and proper lurLher
as Lhe lssue slze ls less Lhan 8s S00 Crores Lhere ls no
requlremenL for appolnLmenL of a monlLorlna aaencv An AudlL
CommlLLee of Lhe 8oard shall monlLor Lhe uLlllzaLlon of Lhe neL
proceeds of Lhe lssue whlch shall noL be sub[ecL Lo anv monlLorlna
bv anv lndependenL aaencv 29 Our compony is unob/e to determine
whether there ore dues poyob/e to ony smo// sector undertokino
keeplna ln vlew of Lhe larae number of credlLors of Lhe companv Lhe
lnformaLlon wheLher Lhe credlLors are Small Scale and Anclllarv
lndusLrlal underLaklna as deflned bv Lhe 1he lnLeresL on uelaved
avmenLs Lo Small Scale and Anclllarv lndusLrlal underLaklnas AcL
1992 ls noL ascerLalnable bv Lhe Companv 18 Rl0 Our compony is yet
to opp/y for odditiono/ workino copito/ finoncino for our proposed
exponsion p/on from 8onk{s) We would requlre addlLlonal amounL of
worklna caplLal for our proposed expanslon plans and our companv ls
veL Lo applv for addlLlonal llmlLs Lo Lhe exlsLlna bankers / new
bankers ueLalls of Lhe worklna caplLal faclllLles presenLlv avalled
bv us please see deLalls on aae no 177 of Lhls urafL rospecLus
lurLher due Lo varlous facLors such as chanaes ln lnLeresL raLe or
borrowlna / lendlna resLrlcLlons we mav noL be able Lo flnance our
worklna caplLal needs when needed on accepLable commerclal Lerms or
aL all Anv such scenarlo would adverselv affecL our buslness
revenues and flnanclal condlLlon l1 Our componys inobi/ity to
ottroct recruit ond retoin ski//ed ond efficient personne/ cou/d
odverse/y offect our business ond resu/ts of operotions 1he
successful lmplemenLaLlon of our arowLh plans and our ablllLv Lo
meeL fuLure buslness challenaes depend on our capablllLles Lo
aLLracL recrulL Lraln and reLaln LalenLed and skllled manpower Cur
companv ls slanlflcanLlv dependenL on our kev manaaerlal personnel
members of senlor manaaemenL and skllled pro[ecL manaaerlal Leam
members Cur companv faces sLlff compeLlLlon Lo recrulL and reLaln
skllled and professlonallv quallfled sLaff 8ecause of llmlLed pool
of avallable skllled personnel compeLlLlon for skllled enalneers
and senlor manaaemenL ls verv lnLense We could face dlfflculLles ln
aLLracLlna recrulLlna and reLalnlna requlred number of manaaers and
enalneers for our buslness needs Cur fuLure arowLh and performance
would depend upon Lhelr conLlnued servlces Lo our companv Loss of
anv of Lhe members of above Leams and our lnablllLv Lo check and
conLrol aLLrlLlon levels of all caLeaorles as sLaLed above mav
maLerlallv and adverselv affecL our buslness operaLlons and
revenues l2 Our compony moy foce strono competition from new
entronts in the industry ond if we foi/ to keep poce with technico/
ond techno/ooico/ deve/opments ond compete effective/y it moy hove
odverse effect on our business operotions ond profitobi/ity We so
far have been compeLlna wlLh a few of compeLlLors LhaL Loo noL
exacLlv ln Lhe slmllar llnes of acLlvlLles underLaken bv our
companv Powever wlLh larae poLenLlal and furLher scope of new
plavers enLerlna lnLo Lhe lndusLrv we mav have Lo face sLrona
compeLlLlon lf we fall Lo keep pace wlLh Lechnlcal and
Lechnoloalcal developmenLs ln our lndusLrv we mav noL face
compeLlLlon 1o meeL our cllenLs' needs we musL reaularlv updaLe
exlsLlna Lechnoloav 8apld and frequenLlv Lechnoloav and markeL
demand chanaes ofLen render exlsLlna Lechnoloales and equlpmenLs
obsoleLe 1here can be no assurance LhaL we would conLlnue Lo
effecLlvelv compeLe wlLh our exlsLlna compeLlLors / new compeLlLors
ln fuLure Cur fallure Lo compeLe effecLlvelv mav have an adverse
effecL on our buslness operaLlons and revenues ll Our business is
concentroted in stote of 6ujorot Cur buslness ls concenLraLed ln
Lhe sLaLe of Cu[araL Should Lhere be anv realonal slowdown or
pollLlcal lnsLablllLv Lhen our buslness operaLlon and revenues mav
be adverselv affecLed 19 R l4 Our Promoters ond promoter oroup
concerns ore enoooed in business octivities simi/or to ours Cur
promoLers and promoLer aroup concerns are enaaaed ln buslness
acLlvlLles slmllar Lo Lhose underLaken bv us and Lhls could be a
poLenLlal source of confllcL of lnLeresL 1here are no non compeLe
aareemenLs ln place beLween us and our promoLers and promoLer aroup
concerns We cannoL assure vou LhaL no such confllcL wlll arlse ln
fuLure LhaL mav affecL our buslness prospecLs and flnanclals
lurLher we cannoL assure vou LhaL lf anv acLual confllcL of
lnLeresL does arlse we wlll be able Lo resolve Lhe confllcL of
lnLeresL ln our favour l5 One of Our Promoters does not hove
odeouote experience in vorious business octivities undertoken by
the compony Cne of our promoLers Mrs SunlLa u anchal does noL have
adequaLe experlence ln Lhe varlous buslness acLlvlLles underLaken
bv us Cur companv cannoL assure vou LhaL Lhe lack of adequaLe
experlence ln our buslness wlll noL have anv adverse lmpacL on Lhe
manaaemenL and /or operaLlons of Lhe companv Alreadv dlscussed she
ls noL Lhe core promoLer no need Lo puL Lhls l 4ny de/oy in
imp/ementotion schedu/e which moy odverse/y offect our exponsion
p/on 1he expanslon of our proposed pro[ecL ls Lo be funded from Lhe
proceeds of Lhls lC and lnLernal accruals We have noL ldenLlfled
anv alLernaLe source of fundlna and hence anv fallure or delav on
our parL Lo moblllze Lhe requlred resources or anv shorLfall ln Lhe
lssue proceeds mav delav Lhe lmplemenLaLlon schedule We Lherefore
cannoL assure LhaL we would be able Lo execuLe Lhe expanslon
pro[ecL wlLhln Lhe alven Llme frame or wlLhln Lhe cosLs as
orlalnallv esLlmaLed bv us Anv Llme overrun or cosL overrun mav
adverselv affecL our arowLh plans and proflLablllLv l7 1here moy be
o de/oy reduction in scope conce//otions execution difficu/ty
poyment postponement or poyment defou/ts or disputes with c/ients
with reoord to existino or proposed orders Cur Companv's buslness
operaLlons and revenues mav be adverselv affecLed lncase of anv
delav reducLlon ln scope of order cancellaLlons execuLlon
dlfflculLles pavmenL posLponemenL pavmenL defaulLs or dlspuLes wlLh
cllenLs wlLh reaard Lo our order book or anv oLher order under
execuLlon l8 1here is no existino morket for the Our componys ouity
5hores which moy or moy not deve/op or be sustoined ofter the
comp/etion of Offer Our stock price moy be hioh/y vo/oti/e ofter
the lssue ond os o resu/t you cou/d /ose o sionificont portion or
o// of your investment rlor Lo Lhe lssue Lhere has noL been a
publlc markeL for Lhe LqulLv Shares We cannoL predlcL Lhe exLenL Lo
whlch lnvesLor lnLeresL wlll lead Lo Lhe developmenL of an acLlve
Lradlna markeL on Lhe SLock Lxchanaes or how llquld LhaL markeL
wlll become lf an acLlve markeL does noL develop vou mav experlence
dlfflculLv ln selllna Lhe LqulLv Shares LhaL vou purchased 1he lC
prlce ls noL lndlcaLlve of prlces LhaL wlll prevall ln Lhe open
markeL followlna Lhe lssue ConsequenLlv vou mav noL be able Lo sell
vour LqulLv Shares aL prlces equal Lo or areaLer Lhan Lhe prlce vou
pald ln Lhe lssue 20 Rl9 You wi// not be ob/e to se// immediote/y
ony of the ouity 5hores you purchose in this lssue on on lndion
stock exchonoe 1he LqulLv Shares are proposed Lo be llsLed on 8SL
and nSL ursuanL Lo lndlan reaulaLlons cerLaln acLlons musL be
compleLed before Lhe LqulLv shares can be llsLed and Lradlna mav
commence lnvesLors book enLrv or demaL accounLs wlLh deposlLorv
parLlclpanLs ln lndla are expecLed Lo be credlLed wlLhln Lwo
worklna davs of Lhe daLe on whlch Lhe basls of alloLmenL ls
approved bv Lhe ueslanaLed SLock Lxchanae 1hereafLer upon recelpL
of flnal approval of Lhe sLock exchanaes Lradlna ln Lhe equlLv
shares ls expecLed Lo commence wlLhln seven worklna davs of Lhe
daLe on whlch Lhe basls of alloLmenL ls approved bv Lhe ueslanaLed
SLock Lxchanae 1here can be no assurance LhaL Lhe LqulLv Shares
allocaLed earller Lo lnvesLors wlll be credlLed Lo Lhelr demaL
accounLs or LhaL Lradlna wlll commence wlLhln Lhe Llme perlods
speclfled above 40 1he Lond pertoinino to our unit no1504 situoted
ot 6luc umberooon 6ujorot is not in the nome of the compony 1he
Land perLalnlna Lo our unlL no1S04 slLuaLed aL CluC umberaaon
Cu[araL ls noL ln Lhe name of Lhe Companv lor Lhe use of Lhe
premlses durlna Lhe flnanclal vear 200708 we had enLered lnLo a
leave and llcense aareemenL wlLh one of our romoLers aroup flrm M/s
LxperL Lnalneers Lhe explrv of whlch ls ln vear 2013 for unlL 1S04
CluC umberaaon Powever lf Lhe Lessor decldes Lo or lf cerLaln
clrcumsLances bevond elLher parLv's conLrol leads Lo cancellaLlon
revocaLlon or premaLure LermlnaLlon of such aareemenL Lhen lL could
hamper buslness operaLlons and flnanclal condlLlons 41 uurino
finoncio/ yeors 200809 ond 200910 ond months period ended 5eptember
l0 2010 more thon 20 of our toto/ 5o/es wos from trodino operotions
some of which moy be nonrecurrino ond /oss of revenue from these
products in subseouent yeors moy odverse/y impoct our finoncio/
operotions {ks ln Lokhs) art|cu|ars 6 months ended 5eptember 30
2010 ear ended March 31 2010 ear ended March 31 2009 Amount Amount
Amount ManufacLurlna 68683 4S43 1831S9 6936 172S24 76S4 1radlna
82489 S4S7 80896 3064 S3386 2346 1ota| 151172 10000 264055 10000
233262 10000 1hese Lradlna acLlvlLles were execuLed Lo faclllLaLe
dlfferenL conLracLors / dealers for provldlna all producLs from one
polnL lurLher for Lradlna ln Lhese producLs we are dependenL on
ouLslde suppllers and Lhelr producL quallLv whlch lf found lnferlor
would adverselv affecL our buslness and flnanclal operaLlons
Powever Lhese lncome levels are nonrecurrlna and we do noL lnLend
Lo focus on Lradlna of Lhese lLems 42 Our top three customers
occounted for more thon 75 of our revenues in the /ost finoncio/
yeor ond /oss of ony one or more of c/ients cou/d odverse/y offect
our business ond finoncio/ operotions to thot extent 1he percenLaae
of revenues derlved from our Companv's Lop Len cusLomers ls more
Lhan 7S lease refer Lo aae no 183 for furLher deLalls of Lhls urafL
rospecLus We cannoL assure vou LhaL we shall aeneraLe Lhe same
quanLum of buslness or anv buslness aL all from Lhese cusLomers and
loss of buslness from one or more of Lhem mav adverselv affecL our
operaLlons and proflLablllLv lurLher our buslness and resulLs of
operaLlons wlll be adverselv affecLed lf we are unable Lo develop
and malnLaln relaLlonshlps wlLh our cusLomers 21 R 4l Our compony
hod neootive cosh f/ows durino certoin periods 4ny neootive cosh
f/ow in future cou/d offect our operotions ond finoncio/ conditions
We had neaaLlve cash flow from varlous acLlvlLles deLalls of whlch
are as under {ks ln /okhs) art|cu|ars 5eptember 302010 200910
200809 200708 neL cash flow from operaLlna acLlvlLles 17SS9 (3210)
(47011) (31439) neL cash flow from lnvesLlna acLlvlLles 134 (3672)
032 (3801S) neL cash flow from flnanclna acLlvlLles (1SSS7) 13139
37441 649921ota| net cash f|ow 2136 6258 (425) (4462) 1he neL cash
flow of a companv ls a kev lndlcaLor Lo show Lhe exLenL of cash
aeneraLed from operaLlons of Lhe companv Lo meeL caplLal
expendlLure pav dlvldends repav loans and make new lnvesLmenLs
wlLhouL ralslna flnance from exLernal resources lf we are noL able
Lo aeneraLe sufflclenL cash flows lL mav adverselv affecL our
buslness and flnanclal operaLlons 44 One of our Promoters 6roup
lirms hos reported /osses for the fo//owino finoncio/ yeors {ks ln
Lokhs) art|cu|ars 200708 200607 M/s Cemlnl Lnalneers labrlcaLors
(021) (007) 45 1he morket price of the ouity 5hores moy be
odverse/y offected by ony odditiono/ issuonces of eouity or so/es
of o /oroe number of the ouity 5hores by our Promoters 1here ls a
rlsk LhaL we mav be requlred Lo flnance our arowLh or sLrenaLhen
our balance sheeL Lhrouah addlLlonal equlLv offerlnas Anv fuLure
lssuance of LqulLv Shares wheLher Lhrouah Lhe exerclse of opLlons
or oLherwlse wlll dlluLe Lhe poslLlon of exlsLlna shareholders and
could adverselv affecL Lhe markeL prlce of Lhe LqulLv Shares 4 Our
insuronce cover moy be inodeouote to fu//y cover us from probob/e
/osses thereby /eodino to moterio/ ond odverse impoct on business
operotions ond finoncio/ condition We have varlous lnsurance
pollcles coverlna sLocks bulldlnas and planL machlnerv for LoLal
lnsured amounL of 8s 17487 lakhs deLalls of whlch are dlsclosed on
aae no 117 of Lhe urafL rospecLus Powever our lnsurance pollcles
mav noL provlde adequaLe coveraae ln cerLaln clrcumsLances and are
sub[ecL Lo cerLaln deducLlbles excluslons and llmlLs on coveraae We
cannoL assure vou LhaL Lhe Lerms of our lnsurance pollcles wlll be
adequaLe ln fuLure Lo cover anv damaae or deLrlmenL suffered bv us
or LhaL such coveraae wlll conLlnue Lo be avallable on reasonable
Lerms or wlll be avallable ln sufflclenL amounLs Lo cover one or
more larae clalms or LhaL Lhe lnsurer wlll noL dlsclalm coveraae as
Lo anv fuLure clalm lurLher we are noL covered bv buslness
lnLerrupLlon pollcv whlch mav have a maLerlal and adverse lmpacL on
our buslness operaLlons and proflLablllLv 22 R47 1here moy be de/oy
or defou/ts in co//ection of receivob/es from our c/ients 1here mav
be delavs assoclaLed wlLh Lhe collecLlon of recelvables from our
cllenLs Cur operaLlons lnvolve slanlflcanL worklna caplLal
requlremenLs and delaved collecLlon of recelvables could adverselv
affecL our llquldlLv and resulLs of operaLlons lurLher lf cusLomers
defaulL ln Lhelr pavmenLs on an order Lo whlch we have devoLed
slanlflcanL resources or cancels Lhe order wlLhouL pavlna Lhe
amounL spenL on raw maLerlals Llll recelpL of cancellaLlon order or
lf a pro[ecL ln whlch we have lnvesLed slanlflcanL resources ld
delaved cancelled or does noL proceed Lo compleLlon lL could have a
maLerlal adverse effecL on our buslness flnanclal condlLlon and
resulLs of operaLlons and could cause Lhe prlce of our LqulLv
Shares Lo decllne Moreover our producLs are made as per Lhe
speclflcaLlons provlded bv our cusLomers Pence anv lasL mlnuLe
cancellaLlons would resulL ln a losL sales opporLunlLv and we also
run Lhe rlsk of noL belna able Lo sell Lhose producLs Lo anoLher
cusLomer 1hese evenLs could have maLerlallv adverse affecL on our
buslness resulLs of operaLlons and flnanclal condlLlon 48 ln our
controct terms ond conditions we ore subject to /ote de/ivery
choroes under the controcts oworded by our customers for ony de/oy
in comp/etion ond hondover of the project 1he lndusLrv ln whlch we
operaLe ls Llme bound Cur conLracLs aenerallv carrv a clause for
levv of laLe dellverv charaes ln case of fallure ln meeLlna Lhe
compleLlon of Lhe pro[ecL wlLhln Lhe speclfled Llme on accounL of
lapse on Lhe parL of our Companv Powever aL Llmes due Lo
clrcumsLances bevond our conLrol Lhere mav be some delavs ln
compleLlna Lhe pro[ecLs whlch mav lead Lo pavmenL of laLe dellverv
charaes Also anv lnablllLv Lo compleLe Lhe pro[ecL on Llme can lead
Lo Lhe cllenL elLher delavlna or refuslna Lo make full or parLlal
pavmenL L us ln respecL of Lhe amounL due Lowards Lhe pro[ecL ln
addlLlon lL could cause damaae Lo or repuLaLlon whlch could
adverselv affecL our ablllLv Lo prequallfv for pro[ecLs whlch ln
Lurn could adverselv affecL our buslness resulLs of operaLlons and
flnanclal condlLlon 49 Our operotiono/ performonce is subject to
our obi/ity to oet time/y de/ivery of lob work Cur Companv depends
on ouLslde aaencles le [obworkers for performance of some of Lhe
processes ln Lhe whole fabrlcaLlon process whlch lncludes preclslon
drllllna mouldlna heaL LreaLmenL of equlpmenLs rolllna of plaLes
wlLh Lhlckness of more Lhan 2Smm and machlnlna of equlpmenLs wlLh
dlameLer of more Lhan 12S0mm unanLlclpaLed delav ln performance of
Lhese [obworks mav delav Lhe whole process of fabrlcaLlon whlch ln
Lurn could alve rlse Lo penalLv or damaaes or loss of repuLaLlon
1hese facLors could adverselv lmpacL our buslness operaLlons and
flnanclal condlLlon 50 Our compony foces stiff competition in this
/ine of business octivity 4ny inobi/ity to compete with them con
odverse/y impoct business operotions ond finoncio/ conditions Cur
Companv operaLes under compeLlLlve envlronmenL We compeLe wlLh
mulLlnaLlonal enalneerlna and consLrucLlon companles or Lhelr
realonal operaLlna enLlLles as well as oLher lndlan companles where
number of unoraanlzed plavers exlsLs MosL equlpmenL fabrlcaLlon
conLracLs and pro[ecLs are awarded Lhrouah compeLlLlve blddlna
processes and saLlsfacLlon of oLher prescrlbed prequallflcaLlon
crlLerlon Whlle servlce quallLv Lechnoloalcal capaclLv and
performance healLh and safeLv records and personnel as well as
repuLaLlon and experlence are lmporLanL conslderaLlons ln cllenL
declslons prlce ls a ma[or facLor ln mosL Lender awards Cnce
prospecLlve bldders clear Lhe Lechnlcal requlremenLs of Lhe Lender
Lhe conLracL ls 23 Rusuallv awarded Lo Lhe mosL compeLlLlve
flnanclal bldder Cur lndusLrv has been frequenLlv sub[ecL Lo
lnLense prlce compeLlLlon 1hls compeLlLlve blddlna process mav have
an adverse effecL on Lhe proflL maralns LhaL we are able Lo aLLaln
1here can be no assurance LhaL we can conLlnue Lo effecLlvelv
compeLe wlLh our compeLlLors ln fuLure and Lhe fallure Lo compeLe
effecLlvelv mav have an adverse effecL on our buslness operaLlons
and revenues 51 we foce risks of ossumino performonce ouorontees
ond product worronty costs due to unforeseen defects in our
products ond /iouidoted domooes for de/oys in de/ivery ot times due
to circumstonces beyond our contro/ 1here are cerLaln clauses ln
our conLracLs aL Llmes expose us Lo warranLv clalms CerLaln of our
supplv conLracLs provlde for warranLv perlods varvlna from 1824
monLhs ln Lhe form of performance bank auaranLee AlLhouah Lhlrd
parLv supplled lLems are covered under warranLles provlded bv some
of our vendors we mav noL alwavs be able Lo sLrlcLlv enforce Lhe
same ln defendlna such clalm we could lncur cerLaln cosLs and
manaaemenL resources be dlverLed Lo aparL from recelvlna adverse
publlclLv Cur conLracLs are aenerallv Llmebound and mav provlde for
llquldaLlon damaaes Lo be pald ln Lhe evenL Lhere ls delav ln
dellverv bevond sLlpulaLed Llmes llnes ln Lhe conLracL As a resulL
anv delav and consequenLlal pavmenL of llquldaLed damaaes bv us
could have an adverse effecL on our buslness operaLlons and
revenues 52 Our business /oroe/y depends on our monufocturino
foci/ities ond the /oss of or shutdown of operotions of the
monufocturino foci/ity on ony orounds cou/d odverse/y offect our
business or resu/ts of operotions Cur manufacLurlna faclllLles are
sub[ecL Lo operaLlna rlsks such as breakdown or fallure of
equlpmenL lnLerrupLlon ln power supplv or processes shorLaae of raw
maLerlals performance below expecLed levels of ouLpuL or efflclencv
naLural dlsasLers obsolescence labour dlspuLes sLrlkes lockouLs
severe weaLher lndusLrlal accldenLs our lnablllLv Lo respond Lo
Lechnoloalcal advances and emeralna lndusLrv sLandards and
pracLlces ln Lhe lndusLrv and Lhe need Lo complv wlLh Lhe
dlrecLlves of relevanL aovernmenL auLhorlLles 1he occurrence of anv
of Lhese rlsks could slanlflcanLlv affecL our operaLlna resulLs and
Lhe loss or shuLdown of operaLlons aL our manufacLurlna faclllLv
wlll have a maLerlal adverse affecL on our buslness flnanclal
condlLlon and resulLs of operaLlons 5l 1he compony does not hove
necessory Power sonction for unit no 1505 from re/evont outhorities
Cur Companv does noL have necessarv power sancLlon for unlL no1S0S
from relevanL auLhorlLv and presenL needs are meL from our ad[acenL
unlL no1S06 We cannoL assure vou LhaL we wlll conLlnue Lo recelve
power supplles ln fuLure ln case of anv dlsrupLlon ln power
supplles could adverselv affecL our buslness operaLlons and
revenues 54 we ore susceptib/e to foreion exchonoe f/uctuotions
1hus ony /oss on occount of odverse foreion exchonoe movements
cou/d homper finoncio/ conditions ond profitobi/ity uurlna
flnanclal 200910 we lmporLed raw maLerlal worLh 8s 78064 lakhs
whlch accounLed for S886 of LoLal raw maLerlal requlremenL for Lhe
above menLloned vear osL expanslon Lhe quanLum of raw maLerlal
lmporLed mav varv Slnce we currenLlv sell our enLlre producLs ln
Lhe domesLlc markeL we do noL en[ov anv naLural hedae aaalnsL Lhe
sald forelan currencv exposure lurLher we are noL enaaaed ln
exchanae raLe hedalna acLlvlLles As a resulL we are vulnerable Lo
anv adverse movemenL ln forelan currencv raLe 24 R 55 Our compony
is dependent on third porty tronsportotion providers for supp/y of
row moterio/s ond de/ivery of finished ooods We use LhlrdparLv
LransporLaLlon provlders for Lhe supplv of mosL of our raw
maLerlals and also for dellverv of our flnlshed producLs Lo our
cusLomers Such Lhlrd parLv LransporLers are chosen on a spoL basls
1ransporLaLlon sLrlkes bv members of varlous lndlan LransporL
unlons have had ln Lhe pasL and could ln Lhe fuLure have an adverse
effecL on our recelpL of supplles and our ablllLv Lo dellver our
producLs Lo our cusLomers ln addlLlon conLlnulna lncrease ln
LransporLaLlon cosLs and requlremenL Lo pav an addlLlonal premlum
for uraenL dellverles mav have an adverse effecL on our buslness
and resulLs of operaLlons Powever we do noL foresee anv dlfflculLv
as we have been deallna wlLh Lhese parLles and also as we malnLaln
buffer raw maLerlal whlch can be used ln unforeseen clrcumsLances 5
4ny future eouity offerinos or issue of options under ony emp/oyee
stock option scheme moy /eod to di/ution of your shoreho/dino in
our compony Subscrlbers of LqulLv shares ln Lhls lssue mav
experlence dlluLlon of Lhelr shareholdlna Lo Lhe exLenL of anv
fuLure equlLv offerlnas and Lo Lhe exLenL addlLlonal opLlons LhaL
mav be lssued under our emplovee sLock opLlon scheme 57 Our obi/ity
to poy dividends in the future wi// depends upon future eorninos
finoncio/ conditions cosh f/ows workino copito/ reouirements of our
compony ond restrictive covenonts in our finoncio/ orronoements Cur
luLure ablllLv Lo pav dlvldends wlll depend on Lhe earnlnas
flnanclal condlLlon and caplLal requlremenLs of our Companv
ulvldends dlsLrlbuLed bv us wlll aLLracL dlvldend dlsLrlbuLlon Lax
aL raLes appllcable from Llmes Lo Llme We cannoL assure vou LhaL we
wlll aeneraLe sufflclenL lncome Lo cover our operaLlve expenses and
pav dlvldend Lo our shareholders We mav be unable Lo pav dlvldends
ln Lhe near or medlums Lerm and our fuLure dlvldend pollcv wlll
depend upon on our caplLal requlremenLs and flnanclna arranaemenLs
flnanclal condlLlons and resulLs of operaLlons 58 1here ore
restrictions on doi/y movements in the price of the eouity shores
which moy odverse/y offect o shoreho/ders obi/ity to se// or the
price ot which it con se// the eouity shore ot o porticu/ors point
in time As per presenL reaulaLlons Lhe prlce of our equlLv shares
wlll be sub[ecL Lo a dallv clrculL breaker lmpose bv all sLock
exchanaes ln lndla whlch does noL allow LransacLlon bevond a
cerLaln level of volaLlllLv ln Lhe prlce of Lhe equlLv shares 1hls
clrculL breaker effecLlvelv llmlLs upwards and downwards movemenLs
ln Lhe prlce of Lhe equlLv shares As a resulL shareholders ablllLv
Lo sell Lhe equlLv shares or Lhe prlce aL whlch Lhev can sell Lhe
equlLv shares mav be adverselv effecLed aL a parLlculars polnL ln
Llme 59 we moy not uti/ite the proposed enhonced copocity to its
moximum which cou/d hove on impoct on the production performonce
ond profitobi/ity of our compony We are currenLlv able Lo uLlllze
our capaclLv Lo Lhe fullesL buL due Lo Lhe subsLanLlal lncrease ln
capaclLv we mav noL be able Lo uLlllze Lhe proposed capaclLv Lo
opLlmum level for varlous reasons lncludlna sLablllzaLlon of
producLlon processes on accounL of Lechnlcal and operaLlonal
problems or markeL flucLuaLlons ln lndlan and Clobal markeLs or due
Lo chanaes ln markeL condlLlons due Lo lnflaLlon or recesslon or
economlc condlLlons whlch are bevond Lhe conLrol of manaaemenL 2S R
0 Our operotions moy be odverse/y offected in cose of industrio/
occidents ot our monufocturino unit lndusLrlal accldenLs mav occur
on accounL of human fallure mechanlcal breakdowns power splkes eLc
1he occurrence of such evenLs wlll noL onlv damaae our labor force
maLerlals and machlnerv buL wlll also cause dlsrupLlons ln our
producLlon schedules and affecL Lhe Llmelv dellverv of flnlshed
aoods whlch ln Lurn mav adverselv affecL our buslness operaLlons 1
Out of toto/ lndioenous P/ont Mochinery of ks225111 our compony
proposes to monufocture p/ont mochinery inhouse oooreootino to
ks12040 Locs for the proposed exponsion project Cur Companv
proposes Lo manufacLure lanL Machlnerv lnhouse aaareaaLlna Lo
8s12040 Lacs ouL of LoLal lndlaenous lanL Machlnerv of 8s22S111 for
proposed expanslon pro[ecL ln case Lhe Companv falls Lo manufacLure
Lhe sald lanL Machlnerv due Lo anv reason whaLsoever lL mav
adverselv affecL our buslness operaLlons and revenue 26 RLx1LkNAL
kI5k IAC1Ck5 1 4ny s/owdown in economic orowth in lndio cou/d couse
our business to suffer Cur performance and arowLh are essenLlallv
dependenL on Lhe healLh of Lhe overall lndlan economv A slowdown ln
Lhe lndlan economv could adverselv affecL our buslness lndla's
economv could be adverselv affecLed bv a aeneral rlse ln lnLeresL
raLes weaLher condlLlons adverselv affecLlna aarlculLure commodlLv
and enerav prlces or varlous oLher facLors ln addlLlon Lhe lndlan
economv ls ln a sLaLe of LranslLlon 1he share of Lhe servlce secLor
of Lhe economv ls rlslna whlle LhaL of Lhe lndusLrlal manufacLurlna
and aarlculLural secLors ls decllnlna lL ls dlfflculL Lo aauae Lhe
lmpacL of Lhese fundamenLal economlc chanaes on our buslness Anv
slowdown ln Lhe lndlan economv or fuLure volaLlllLv ln alobal
commodlLv prlces could adverselv affecL our buslness 2 xchonoe kote
l/uctuotions moy hove impoct on the performonce of Our compony Cur
Companv ls exposed Lo exchanae raLe flucLuaLlons uncerLalnLles ln
Lhe alobal flnanclal markeL mav have an adverse lmpacL on Lhe
exchanae raLe beLween 8upee vlsvls oLher currencles 1he exchanae
raLe beLween Lhe 8upee and oLher currencles ls varlable and mav
conLlnue Lo flucLuaLe ln Lhe fuLure Such flucLuaLlons can have a
serlous lmpacL on Lhe revenues We lnLend Lo lmporL equlpmenL /
machlnerles for Lhe expanslon of our lnLearaLed planL llucLuaLlons
ln forelan exchanae raLes mav adverselv affecL Lhe cosL of pro[ecL
We have noL enLered lnLo anv hedalna aareemenL for mlnlmlzlna Lhe
exchanae raLe rlsk and ln Lhe evenL of raLes chanalna adverselv Lhe
pro[ecL cosL mav rlse l Our keou/otory chonoes with reoord to
uirect/lndirect toxes moy odverse/y offect our performonce or
finoncio/ conditions 8eaulaLorv chanaes relaLlna Lo buslness
seamenLs ln whlch we operaLe ln lndla can have a bearlna on our
buslness Lach sLaLe ln lndla has dlfferenL local Laxes and levles
whlch mav lnclude value added Lax sales Lax and ocLrol charaes ln
Lhese local Laxes and levles mav lmpacL our proflLs and
proflLablllLv Anv neaaLlve chanaes ln Lhe reaulaLorv condlLlons ln
lndla or our oLher aeoaraphlc markeLs could adverselv affecL our
buslness operaLlons or flnanclal condlLlons 4 Our business cou/d be
odverse/y offected by ony economic po/itico/ socio/ deve/opments
ond oovernment po/icies in lndio ond porticu/or/y in the reoiono/
morkets where we operote Cur performance and arowLh could be
adverselv affecLed bv varlous facLors such as pollLlcal and
reaulaLorv acLlon lncludlna adverse chanaes ln llberallzaLlon
pollcles anv adverse developmenL ln Lhe World economv lnLroducLlon
of new laws pollcles or reaulaLlons or chanaes ln Lhe
lnLerpreLaLlon or appllcaLlon of exlsLlna laws pollcles and
reaulaLlons 1here can be no assurance LhaL we wlll succeed Lo
operaLe ln or succeed ln obLalnlna all requlslLe reaulaLorv
approvals ln Lhe fuLure for our operaLlons whlch could have an
adverse lmpacL on our buslness flnanclal condlLlon and resulLs of
operaLlons 27 R 5 lnstobi/ity of economic po/icies ond the
po/itico/ situotion in lndio or e/sewhere cou/d odverse/y offect
the fortunes of the lndustry 1here ls no assurance LhaL Lhe
llberallzaLlon pollcles of Lhe aovernmenL wlll conLlnue ln Lhe
fuLure roLesLs aaalnsL prlvaLlzaLlon could slow down Lhe pace of
llberallzaLlon and dereaulaLlon 1he CovernmenL of lndla plavs an
lmporLanL role bv reaulaLlna Lhe pollcles and reaulaLlons aovernlna
Lhe prlvaLe secLor over Lhe pasL several vears unsLable lnLernal
and lnLernaLlonal pollLlcal envlronmenL could lmpacL Lhe economlc
performance ln boLh Lhe shorL Lerm and Lhe lona Lerm 1he CovernmenL
has LradlLlonallv exerclsed and conLlnues Lo exerclse a slanlflcanL
lnfluence over manv aspecLs of Lhe lndlan economv Cur Companv's
buslness and Lhe markeL prlce and llquldlLv of Lhe LqulLv Shares
mav be affecLed bv chanaes ln lnLeresL raLes chanaes ln CovernmenL
pollcv LaxaLlon soclal and clvll unresL and oLher pollLlcal
economlc or oLher developmenLs ln or affecLlna lndla lorce mojeure
events terrorist ottocks or noturo/ disoster or ony other octs of
vio/ence or wor invo/vino lndio or other countries cou/d odverse/y
offect the finoncio/ morkets moy resu/t in /oss of customer
confidence ond odverse/y offect our componys business resu/ts of
operotions finoncio/ conditions ond cosh f/ows CerLaln force
ma[eure evenLs belna bevond our Companv's conLrol lncludlna naLural
dlsasLers LerrorlsL aLLacks and oLher acLs of vlolence or war whlch
mav lnvolve lndla or oLher counLrles mav adverselv affecL lndlan or
worldwlde flnanclal markeLs and could lead Lo economlc recesslon
1hese acLs mav also resulL ln a loss of buslness confldence and
have oLher consequences LhaL could adverselv affecL buslness
resulLs of operaLlons and flnanclal condlLlon of our Companv More
aenerallv anv of Lhese evenLs could lower confldence ln lndla Anv
such evenL could adverselv affecL Lhe flnanclal performance or Lhe
markeL prlce of Lhe LqulLv Shares of our Companv 7 You wi// not be
ob/e to se// immediote/y ony of the ouity 5hores you purchose in
this lssue on lndion 5tock xchonoes 1he LqulLv Shares are proposed
Lo be llsLed on 8SL and nSL ursuanL Lo lndlan reaulaLlons cerLaln
acLlons musL be compleLed before Lhe LqulLv shares can be llsLed
and Lradlna mav commence lnvesLors book enLrv or demaL accounLs
wlLh deposlLorv parLlclpanLs ln lndla are expecLed Lo be credlLed
wlLhln Lwo worklna davs of Lhe daLe on whlch Lhe basls of alloLmenL
ls approved bv Lhe ueslanaLed SLock Lxchanae 1hereafLer upon
recelpL of flnal approval of Lhe sLock exchanaes Lradlna ln Lhe
equlLv shares ls expecLed Lo commence wlLhln seven worklna davs of
Lhe daLe on whlch Lhe basls of alloLmenL ls approved bv Lhe
ueslanaLed SLock Lxchanae 1here can be no assurance LhaL Lhe LqulLv
Shares allocaLed earller Lo lnvesLors wlll be credlLed Lo Lhelr
demaL accounLs or LhaL Lradlna wlll commence wlLhln Lhe Llme
perlods speclfled above 28 R8 4fter this lssue the price of our
ouity 5hores moy be vo/oti/e or on octive trodino morket for our
ouity 5hores moy not sustoin 1he prlces of our LqulLv Shares mav
flucLuaLe afLer Lhls lssue due Lo a wlde varleLv of facLors
lncludlna volaLlllLv ln Lhe lndlan and alobal securlLles markeLs
our operaLlonal performance flnanclal resulLs and capaclLv
expanslon developmenLs ln lndla's economlc llberallzaLlon and
dereaulaLlon pollcles parLlcularlv ln Lhe LelecommunlcaLlon and
aarlculLural secLor and chanaes ln lndla's laws and reaulaLlons
lmpacLlna our buslness We cannoL assure vou LhaL an acLlve Lradlna
markeL for our equlLv shares wlll be susLalned afLer Lhls lssue or
LhaL Lhe prlce aL whlch our equlLv