1. careers
2. career planning

Preliminary Placement Document
Subject to Completion
Not for circulation
Private and confidential
Serial No.
This Preliminary Placement Document is not complete and may be changed. We may not sell any securities described herein or accept an offer to buy such
securities until this Preliminary Placement Document is delivered in final form. This Preliminary Placement Document is not an offer to sell any securities and is
not soliciting an offer to subscribe for or buy securities in any jurisdiction where such offer or sale is not permitted.
MOLD – TEK PACKAGING LIMITED
Mold – Tek Packaging Limited was incorporated in the Republic of India under the provisions of Companies Act, 1956 on February 28, 1997 with Registration No. 026542. Our
Company’s corporate identification number is L21022TG1997PLC026542. For details of change of our name, see “General Information” on page 197. Our Registered Office: 8
– 2 – 293/82/A/700, Ground Floor, Road No. 36, Jubilee Hills, Hyderabad – 500 033, Telangana, India. Tel: +91 40 –4030 0300; Fax: +91 40 – 4030 0328; Email:
[email protected]
Mold – Tek Packaging Limited (the “Company” or “Issuer”) is issuing [●] equity shares of face value `10 each (the “Equity Shares”) at a price of ` [●] per Equity Share (the
“Issue Price”), including a premium of ` [●] per Equity Share, aggregating ` [●] Lacs (the “Issue”).
ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “SEBI ICDR REGULATIONS”) AND SECTION 42 OF THE COMPANIES ACT, 2013 AND THE
RULES MADE THEREUNDER.
THIS ISSUE AND THE DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL BUYERS
AS DEFINED UNDER THE SEBI ICDR REGULATIONS (“QIBs”) IN RELIANCE UPON CHAPTER VIII OF THE SEBI ICDR REGULATIONS AND SECTION 42
OF THE COMPANIES ACT, 2013, READ WITH RULE 14 OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014. THIS
PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE BUYER AND DOES NOT CONSTITUTE AN OFFER OR INVITATION
OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA OTHER
THAN TO QIBs. THIS PRELIMINARY PLACEMENT DOCUMENT WILL BE CIRULATED ONLY TO SUCH QIBs WHOSE NAMES ARE RECORDED BY OUR
COMPANY PRIOR TO MAKING AN INVITATION TO SUBSCRIBE TO EQUITY SHARES.
YOU MAY NOT AND ARE NOT AUTHORIZED TO (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2)
REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS
PRELIMINARY PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY
RESULT IN A VIOLATION OF THE SEBI ICDR REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.
Invitations for subscription of the Equity Shares shall only be made pursuant to this Preliminary Placement Document together with the respective Application Form (as defined
hereinafter), the Placement Document and the Confirmation of Allocation Note. See the section “Issue Procedure” beginning on page 139. The distribution of this Preliminary
Placement Document or the disclosure of its contents without our Company‟s prior consent to any person other than Qualified Institutional Buyers (as defined in the SEBI ICDR
Regulations) and persons retained by Qualified Institutional Buyers to advise them with respect to their purchase of the Equity Shares is unauthorized and prohibited. Each
prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Preliminary
Placement Document or any documents referred to in this Preliminary Placement Document.
INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THIS ISSUE UNLESS
THEY ARE PREPARED TO RISK LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY READ
THE SECTION “RISK FACTORS” BEGINNING ON PAGE 35 BEFORE MAKING AN INVESTMENT DECISION IN THIS ISSUE. EACH PROSPECTIVE
INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES TO IT OF AN INVESTMENT IN THE EQUITY
SHARES PROPOSED TO BE ISSUED PURSUANT TO THIS PRELIMINARY PLACEMENT DOCUMENT.
Our Company‟s outstanding Equity Shares are listed on the BSE Limited (the “BSE” or “Stock Exchange”). The closing price of the outstanding Equity Shares on the BSE on
January 29, 2015 was ` 233.80 per Equity Share. We have received in-principle approval under clause 24(a) of the Listing Agreement to list our Equity Shares from the BSE.
Application will be made for the listing of the Equity Shares offered through this Preliminary Placement Document on the BSE. The BSE assume no responsibility for the
correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchange should not be taken as an
indication of the merits of the business of our Company or the Equity Shares.
OUR COMPANY HAS PREPARED THIS PRELIMINARY PLACEMENT DOCUMENT SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH
THE PROPOSED ISSUE.
A copy of this Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter)) has been delivered to the BSE. A copy of the
Placement Document (which will include disclosures prescribed under Form PAS-4 (as defined hereinafter)) will be filed with the BSE. Our Company shall also make the requisite
filings with the Registrar of Companies, Andhra Pradesh & Telangana, Hyderabad (the “RoC”) and the Securities and Exchange Board of India (“SEBI”) within the stipulated
period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014.
This Preliminary Placement Document has not been reviewed by SEBI, the Reserve Bank of India (the “RBI”), the Stock Exchange, the RoC or any other regulatory or
listing authority. The Equity Shares offered in the Issue have not been recommended or approved by SEBI, nor does SEBI guarantee the accuracy or adequacy of this
Preliminary Placement Document. This Preliminary Placement Document has not been and will not be registered as a prospectus with any Registrar of Companies in
India, will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. This
Preliminary Placement Document will be circulated or distributed to Qualified Institutional Buyers (as defined in the SEBI ICDR Regulations), only and will not
constitute an offer to any other class of investors in India or any other jurisdiction.
Information on our Company‟s website or any website directly or indirectly linked to our Company‟s website or the websites of the Book Running Lead Managers or its affiliates
does not form part of this Preliminary Placement Document and prospective investors should not rely on such information contained in, or available through, such websites.
The Equity Shares being offered and sold in this Issue have not been and will not be registered under the U.S. Securities Act of 1933, as amended (“U.S. Securities Act”), and
may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and
applicable state securities laws. The Equity Shares are only being offered and sold outside the United States in reliance on Regulation S under the U.S. Securities Act ("Regulation
S"). For a description of these and certain further restrictions on offers, sales and transfers of the Equity Shares and distribution of this Preliminary Placement Document, see
“Distribution and Solicitation Restrictions”, “Notice to Investors”, and “Transfer Restrictions” beginning on pages 152, 2 and 156, respectively.
This Preliminary Placement Document is dated January 30, 2015.
BOOK RUNNING LEAD MANAGERS
EMKAY GLOBAL FINANCIAL SERVICES LIMITED
7th Floor, The Ruby, Senapati Bapat Marg, Dadar - West,
Mumbai – 400028, Maharashtra, India
CENTRUM CAPITAL LIMITED
Centrum House, CST Road, Vidyanagari Marg, Kalina, Santacruz – East
Mumbai – 400098, Maharashtra, India
Preliminary Placement Document
TABLE OF CONTENTS
Page
NOTICE TO INVESTORS ....................................................................................................................................................................... 2
REPRESENTATIONS BY INVESTORS ................................................................................................................................................ 3
ENFORCEMENT OF CIVIL LIABILITIES ........................................................................................................................................ 10
CERTAIN CONVENTIONS, CURRENCY PRESENTATION AND FINANCIAL DATA ............................................................... 11
INDUSTRY AND MARKET DATA ....................................................................................................................................................... 12
FORWARD-LOOKING STATEMENTS .............................................................................................................................................. 13
EXCHANGE RATES .............................................................................................................................................................................. 15
DEFINITIONS AND ABBREVIATIONS .............................................................................................................................................. 16
DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES ACT, 2013 .................. 21
SUMMARY OF THE ISSUE .................................................................................................................................................................. 24
SUMMARY OF BUSINESS .................................................................................................................................................................... 27
SUMMARY FINANCIAL INFORMATION......................................................................................................................................... 29
RISK FACTORS ...................................................................................................................................................................................... 35
MARKET PRICE INFORMATION ...................................................................................................................................................... 52
USE OF PROCEEDS ............................................................................................................................................................................... 55
CAPITALIZATION STATEMENTS..................................................................................................................................................... 56
CAPITAL STRUCTURE ........................................................................................................................................................................ 57
DIVIDEND POLICY ............................................................................................................................................................................... 59
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ....... 60
INDUSTRY ............................................................................................................................................................................................... 82
BUSINESS ................................................................................................................................................................................................ 92
REGULATIONS AND POLICIES ........................................................................................................................................................106
BOARD OF DIRECTORS AND SENIOR MANAGEMENT .............................................................................................................118
PRINCIPAL SHAREHOLDERS...........................................................................................................................................................133
ISSUE PROCEDURE .............................................................................................................................................................................139
PLACEMENT .........................................................................................................................................................................................150
DISTRIBUTION AND SOLICITATION RESTRICTIONS...............................................................................................................152
TRANSFER RESTRICTIONS ..............................................................................................................................................................156
INDIAN SECURITIES MARKET ........................................................................................................................................................157
DESCRIPTION OF THE EQUITY SHARES ......................................................................................................................................161
TAXATION .............................................................................................................................................................................................167
LEGAL PROCEEDINGS.......................................................................................................................................................................191
INDEPENDENT AUDITORS ................................................................................................................................................................196
GENERAL INFORMATION ................................................................................................................................................................197
FINANCIAL STATEMENTS ................................................................................................................................................................199
DECLARATION .....................................................................................................................................................................................200
DECLARATION IN ACCORDANCE WITH FORM PAS - 4 ...........................................................................................................201
1
Preliminary Placement Document
NOTICE TO INVESTORS
Our Company has furnished and accepts full responsibility for the information contained in this Preliminary
Placement Document and to the best of its knowledge and belief, having made all reasonable enquiries, confirms
that this Preliminary Placement Document contains all information with respect to our Company and the Equity
Shares, which is material in the context of the Issue. The statements contained in this Preliminary Placement
Document relating to our Company and the Equity Shares are, in material respects, true and accurate and not
misleading. The opinions and intentions expressed in this Preliminary Placement Document with regard to our
Company and the Equity Shares are honestly held, have been reached after considering all relevant circumstances,
are based on information presently available to our Company. There are no other facts in relation to our Company
and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this
Preliminary Placement Document misleading in any material respect. Further, all reasonable enquiries have been
made by our Company to ascertain such facts and to verify the accuracy of all such information and statements.
The Book Running Lead Managers ("BRLMs") has not separately verified the information contained in this
Preliminary Placement Document (financial, legal or otherwise). Accordingly, neither the BRLMs nor any of their
members, employees, counsel, officers, directors, representatives, agents or affiliates makes any express or implied
representation, warranty or undertaking, and no responsibility or liability is accepted by the BRLMs, or any of their
respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates in connection
with its investigation of as to the accuracy or completeness of the information contained in this Preliminary
Placement Document or any other information supplied in connection with the Equity Shares. Each person receiving
this Preliminary Placement Document acknowledges that such person has relied on neither the BRLMs or on any of
their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates or on any
person affiliated with the BRLMs in connection with its investigation of the accuracy of such information or its
investment decision, and each such person must rely on its own examination of our Company and the merits and
risks involved in investing in the Equity Shares. Any prospective investor should not construe anything in this
Preliminary Placement Document as legal, business, tax, accounting or investment advice.
No person is authorized to give any information or to make any representation not contained in this Preliminary
Placement Document and any information or representation not so contained must not be relied upon as having been
authorized by or on behalf of our Company or the BRLMs. The delivery of this Preliminary Placement Document at
any time does not imply that the information contained in it is correct as at any time subsequent to its date.
The Equity Shares have not been approved, disapproved or recommended by any regulatory authority. No
regulatory authority has passed on or endorsed the merits of this Issue or the accuracy or adequacy of this
Preliminary Placement Document. Any representation to the contrary is a criminal offence in certain
jurisdictions.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any
jurisdiction, except in compliance with the applicable laws of such jurisdiction.
The Equity Shares have not been and will not be registered under the U.S. Securities Act, and may not be
offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the U.S. Securities Act and applicable state securities laws. The Equity
Shares are only being offered and sold outside the United States in reliance on Regulation S.
The distribution of this Preliminary Placement Document and the issue of the Equity Shares in certain jurisdictions
may be restricted by law. As such, this Preliminary Placement Document does not constitute, and may not be used
for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is
not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has
been taken by our Company and the BRLMs this would permit an offering of the Equity Shares or distribution of
this Preliminary Placement Document in any country or jurisdiction, other than India, where action for that purpose
is required. Accordingly, the Equity Shares in this Issue may not be offered or sold, directly or indirectly, and
neither this Preliminary Placement Document nor any Issue material in connection with the Equity Shares issued
pursuant to this Issue may be distributed or published in or from any country or jurisdiction, except under
2
Preliminary Placement Document
circumstances that will result in compliance with any applicable rules and regulations of any such country or
jurisdiction. Please refer to the section titled Transfer Restrictions on page 156.
The information contained in this Preliminary Placement Document has been provided by our Company and other
sources identified herein. Distribution of this Preliminary Placement Document to any person other than the
investors specified by the BRLMs or their representatives, and those persons, if any, retained to advise such investor
with respect thereto, is unauthorised, and any disclosure of its contents, without prior written consent of our
Company, is prohibited. Any reproduction or distribution of this Preliminary Placement Document, in whole or in
part, and any disclosure of its contents to any other person is prohibited. Each prospective investor, by accepting
delivery of this Preliminary Placement Document agrees to observe restrictions contained in this Placement
Document, and to make no copies or circulation of this Preliminary Placement Document or any documents referred
to in this Preliminary Placement Document.
In making an investment decision, prospective investors must rely on their own examination of our Company and
the terms of the Issue, including merits and risk involved. Investors should not construe the contents of this
Preliminary Placement Document as business, legal, tax, accounting or investment advice. Investors should consult
their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In
addition, neither our Company nor the BRLMs is making any representation to any offeree or subscriber of such
Equity Shares pursuant to this Issue, regarding the legality of an investment in the Equity Shares by such offeree or
subscriber under applicable legal, investment or similar laws or regulations. Each subscriber of the Equity Shares in
the Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our
Company under Indian law, including Chapter VIII of the SEBI ICDR Regulations and Section 42 of the Companies
Act, 2013, and that it is not prohibited by SEBI or any other statutory authority from buying, selling or dealing in the
securities including the Equity Shares. Each subscriber of the Equity Shares in the Issue also acknowledges that it
has been afforded an opportunity to request from our Company and review information relating to our Company and
the Equity Shares.
This Preliminary Placement Document contains summaries of certain terms of certain documents, which summaries
are qualified in their entirety by the terms and conditions of such document.
The information on our Company's website www.moldtekplastics.com or any website directly or indirectly linked to
our Company's website or the website of the BRLMs or their affiliates does not constitute or form part of this
Preliminary Placement Document. Prospective investors should not rely on such information contained in, or
available through, such websites.
REPRESENTATIONS BY INVESTORS
References herein to "you" or "your" is to the prospective investors in the Issue.
By bidding for and/or subscribing to any Equity Shares under this Issue, you are deemed to have represented,
warranted, acknowledged and agreed to our Company and the BRLMs, as follows:

You are a qualified institutional buyer as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations
("QIB"), and not excluded pursuant to Regulation 86(1)(b) of the SEBI ICDR Regulations, having a valid and
existing registration under applicable laws and regulations of India, and undertake to acquire, hold, manage or
dispose of any Equity Shares that are allocated to you for the purposes of your business in accordance with
Chapter VIII of the SEBI ICDR Regulations, the Companies Act and all other applicable laws, including
reporting obligations;

You are authorized to consummate the subscription of the Equity Shares in the Issue in compliance with all
applicable laws and regulations;

If you are not a resident of India, but a QIB, you are an Eligible FPI (as defined hereinafter) or an FII (including
a sub-account other than a sub-account which is a foreign corporate or a foreign individual) having a valid and
existing certificate of registration with SEBI under the applicable laws in India or a multilateral or bilateral
development financial institution or an FVCI, in each case having a valid and existing registration with the
3
Preliminary Placement Document
SEBI under the applicable laws in India or a multilateral or bilateral development financial institution, and are
eligible to invest in India under applicable law, including the Foreign Exchange Management (Transfer or Issue
of Security by a Person Resident Outside India) Regulations, 2000, as amended, and any notifications, circulars
or clarifications issued thereunder, and have not been prohibited by the SEBI or any other regulatory authority,
from buying, selling or dealing in securities;

You will make all necessary filings with appropriate regulatory authorities, including RBI, as required pursuant
to applicable laws;

If you are allotted Equity Shares pursuant to the Issue, you shall not, for a period of one year from date of
Allotment, sell the Equity Shares so acquired, except on the floor of the Stock Exchange, see the section
“Transfer Restrictions” beginning on page 156;

You have made, or been deemed to have made, as applicable, the representations set forth under the section
“Transfer Restrictions” and “Distribution and Solicitation Restrictions” beginning on pages 156 and 152,
respectively;

You are aware that the Equity Shares have not been, and will not be, registered under the Companies Act, the
SEBI regulations or under any other law in force in India. This Preliminary Placement Document has not been
verified or affirmed by the SEBI, RBI, the Stock Exchange, RoC or any other regulatory or listing authority and
will not be filed with the Registrar of Companies or any other regulatory or listing authority and is intended
only for use by QIBs. This Preliminary Placement Document has been filed with the Stock Exchange and will
be displayed on the websites of our Company and the Stock Exchange. Our Company shall make the requisite
filings with the RoC and the SEBI within the stipulated period as required under the Companies Act, 2013 and
the Companies (Prospectus and Allotment of Securities) Rules, 2014;

You are entitled to subscribe for such Equity Shares under the laws of all relevant jurisdictions which apply to
you and that you have fully observed such laws and obtained all such governmental and other consents in each
case which may be required thereunder and complied with all necessary formalities, formalities, to enable you
to commit to participation in the Issue and to perform your obligations in relation thereto (including, without
limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorizations to
agree to the terms set out or referred to in this Preliminary Placement Document), and will honour such
obligations;

You confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by
our Company or our agents ("Company Presentations") with regard to our Company or the Issue; or (ii) if you
have participated in or attended any Company Presentations: (a) you understand and acknowledge that the
BRLMs may not have knowledge of the statements that our Company or our agents may have made at such
Company Presentations and are therefore unable to determine whether the information provided to you at such
Company Presentations may have included any material misstatements or omissions and accordingly you
acknowledge that the BRLMs has advised you not to rely in any way on any information that was provided to
you at such Company Presentations, and (b) confirm that, to the best of your knowledge, you have not been
provided any material information that was not publicly available;

Neither our Company nor the BRLMs or their respective shareholders, directors, officers, employees, counsel,
representatives, agents or affiliates are making any recommendation to you or advising you regarding the
suitability of any transactions that you may enter into in connection with the Issue. Your participation in the
Issue is on the basis that you are not and will not be a client of the BRLMs. None of the BRLMs or any of their
respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates do not have
any duty or responsibility to you for providing the protection afforded to its clients or customers or for
providing advice in relation to the Issue and is in no way acting in a fiduciary capacity;

You are a sophisticated investor and have such knowledge and experience in financial, business and investment
matters as to be capable of evaluating the merits and risks of an investment in the Equity Shares. You are
experienced in investing in private placement transactions of securities of companies in a similar nature of
4
Preliminary Placement Document
business, similar stage of development and in similar jurisdictions. You or any accounts for which you are
subscribing for the Equity Shares (i) are each able to bear the economic risk of your investment in the Equity
Shares, (ii) will not look to our Company and/or the BRLMs or any of their respective shareholders, directors,
officers, employees, counsel, representatives, agents or affiliates for all or part of any such loss or losses that
may be suffered in connection with the Issue, including losses arising out of non-performance by our Company
of any of its obligations or any breach of any representations and warranties by our Company, whether to you or
otherwise, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for
liquidity with respect to the investment in the Equity Shares and (v) have no reason to anticipate any change in
your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you
or them of all or any part of the Equity Shares. You acknowledge that an investment in the Equity Shares
involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. You are
seeking to subscribe to the Equity Shares in the Issue for your own investment and not with a view to resell or
distribute;

You are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered
to the general public. Further, you are aware and understand that the allotment of the Equity Shares shall be on a
discretionary basis at the discretion of our Company and the BRLMs;

You have made, or been deemed to have made, as applicable, the representations set forth under " Distribution
and Solicitation Restrictions" and "Transfer Restrictions" beginning on pages 152 and 156, respectively;

You understand that the Equity Shares have not been and will not be registered under the Securities Act or
within any securities regulatory authority of any state of the U.S. and accordingly, may not be offered or sold
within the U.S., except in reliance on an exemption from the registration requirements of the Securities Act;

You have been provided a serially numbered copy of this Preliminary Placement Document and have read this
Preliminary Placement Document in its entirety; including, in particular, the section titled "Risk Factors"
beginning on page 35;

All statements other than statements of historical fact included in this Preliminary Placement Document,
including, without limitation, those regarding our Company‟s financial position, business strategy, plans and
objectives of management for future operations (including development plans and objectives relating to our
Company‟s business), are forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could cause actual results to be materially different
from future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding our Company‟s present and
future business strategies and environment in which our Company will operate in the future. You should not
place undue reliance on forward-looking statements, which speak only as at the date of this Preliminary
Placement Document. Our Company assumes no responsibility to update any of the forward-looking statements
contained in this Preliminary Placement Document;

That in making your investment decision, (i) you have relied on your own examination of our Company and the
terms of the Issue, including the merits and risks involved, (ii) you have made and will continue to make your
own assessment of our Company, the Equity Shares and the terms of the Issue, (iii) you have relied upon your
own investigations and resources in deciding to invest in the Equity Shares, (iv) you have consulted with your
own independent counsel and advisors or otherwise have satisfied yourself concerning, without limitation, the
effects of local laws, including any applicable securities law and (v) you have relied solely on the information
contained in this Preliminary Placement Document and no other disclosure or representation by our Company
or any other party and (vi) you have received all information that you believe is necessary or appropriate in
order to make an investment decision in respect of our Company and the Equity Shares;

You are aware that if you are Allotted more than five per cent of the Equity Shares in the Issue, our Company
shall be required to disclose your name and the number of the Equity Shares allotted to you to the Stock
Exchange and the Stock Exchange will make the same available on their websites and you consent to such
5
Preliminary Placement Document
disclosures; also, if you are a top ten shareholder in our Company, our Company will be required to make a
filing with the RoC within 15 days of the change, as per Section 93 of the Companies Act, 2013;

Neither the BRLMs nor any of their respective shareholders, directors, officers, employees, counsel,
representatives, agents or affiliates, have provided you with any tax advice or otherwise made any
representations regarding the tax consequences of the Equity Shares (including but not limited to the Issue and
the use of the proceeds from the Equity Shares). You will obtain your own independent tax advice from a
reputable service provider and will not rely on the BRLMs or any of their respective shareholders, directors,
officers, employees, counsel, representatives, agents or affiliates when evaluating the tax consequences in
relation to the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity
Shares). You waive, and agree not to assert, any claim against our Company, the BRLMs, or any of their
shareholders, directors, officers, employees, counsel, representatives, agents or affiliates with respect to the tax
aspects of the Equity Shares or as a result of any tax audits by tax authorities, wherever situated;

If you are acquiring the Equity Shares to be issued pursuant to the Issue, for one or more managed accounts,
you represent and warrant that you are authorised in writing by each such managed account to subscribe to the
Equity Shares for each managed account and to make (and you hereby make) the representations, warranties,
acknowledgements and agreements herein for and on behalf of each such account, reading the reference to
"you" to include such accounts;

You are not a "Promoter" (as defined under the SEBI ICDR Regulations) of our Company or any of its affiliates
and are not a person related to the Promoters, either directly or indirectly and your bid does not directly or
indirectly represent the Promoter or Promoter Group or person related to the Promoters of our Company;

You have no rights under a shareholders' agreement or voting agreement with the Promoters or persons related
to the Promoters, no veto rights or right to appoint any nominee director on the Board of Directors of our
Company other than such rights acquired in the capacity of a lender not holding any Equity Shares of our
Company, which shall not be deemed to be a person related to the Promoter;

You have no right to withdraw your Bid after the Bid/Issue Closing Date (as defined hereinafter);

You are eligible, including without any limitation under any applicable law or regulation, to apply for and hold
the Equity Shares Allotted to you together with any Equity Shares held by you prior to the Issue. You further
confirm that your aggregate holding upon such issue of the Equity Shares shall not exceed the level permissible,
as per any applicable law or regulation;

The Bids submitted by you would not eventually result in triggering a tender offer under the Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the
"Takeover Code");

To the best of your knowledge and belief, together with other QIBs in the Issue that belong to the same group or
are under common control as you, the allotment under the present Issue shall not exceed 50% of the Issue. For
the purposes of this representation: (a) the expression 'belong to the same group' shall derive meaning from the
concept of 'companies under the same group' as provided in sub-section (11) of Section 372 of the Companies
Act, 1956 (the "Companies Act"); and (b) "control" shall have the same meaning as is assigned to it by
Regulation 2(1)(e) of the Takeover Code;

You shall not undertake any trade in the Equity Shares credited to your depository participant account or
beneficiary account until such time that the final listing and trading approvals for the Equity Shares is issued by
the BSE, as applicable;

You are aware that in-principle approval under Clause 24(a) of the Listing Agreement has been received from
the BSE and application for final listing and trading approval shall be made after allotment of Equity Shares.
There can be no assurance that such final approvals for listing and trading in the Equity Shares will be obtained
6
Preliminary Placement Document
in time, or at all. Our Company shall not be responsible for any delay or non-receipt of such final approvals or
any loss arising from such delay or non-receipt;

You are aware and understand that the BRLMs have entered into a Placement Agreement with our Company
whereby the BRLMs has, subject to the satisfaction of certain conditions set out therein, agreed to manage the
Issue and use reasonable efforts to procure subscriptions for the Equity Shares on the terms and conditions set
forth therein;

That the contents of this Preliminary Placement Document are exclusively the responsibility of our Company
and that neither the BRLMs nor any person acting on its behalf has, or shall have, any liability for any
information, representation or statement contained in this Preliminary Placement Document or any information
previously published by or on behalf of our Company and will not be liable for your decision to participate in
this Issue based on any information, representation or statement contained in this Preliminary Placement
Document or otherwise. By accepting a participation in this Issue, you agree and confirm that you have neither
received nor relied on any other information, representation, warranty or statement made by or on behalf of the
BRLMs or our Company or any other person and, to the greatest extent permitted by law, neither the BRLMs
nor our Company nor any other person will be liable for your decision to participate in the Issue based on any
other information, representation, warranty or statement that you may have obtained or received, whether
contained in this Preliminary Placement Document or otherwise;

As stated in the preceding clause herein, the only information you are entitled to rely on, and on which you have
relied on, in committing yourself to acquire the Equity Shares is contained in this Preliminary Placement
Document, such information being all that you deem necessary to make an investment decision in respect of the
Equity Shares. You have neither received nor relied on any other information given or representations,
warranties or statements made by the BRLMs (including any view, statement, opinion or representation
expressed in any research published or distributed by the BRLMs or their respective affiliates or any view,
statement, opinion or representation expressed by any staff (including research staff) of the BRLMs or its
affiliates) or our Company and the BRLMs will not be liable for your decision to accept an invitation to
participate in the Issue based on any other information, representation, warranty or statement;

You agree to indemnify and hold our Company and the BRLMs and their respective officers, directors,
affiliates, associates and representatives harmless from any and all costs, claims, liabilities and expenses
(including legal fees and expenses) arising out of or in connection with any breach of the representations and
warranties in this section and the sections titled "Distribution and Solicitation Restrictions" and "Transfer
Restrictions" beginning on pages 152 and 156, respectively. You agree that the indemnity set forth in this
paragraph shall survive the resale of the Equity Shares by or on behalf of the managed accounts;

You shall comply with all applicable laws and regulations including making of necessary filings with any
Governmental authority having jurisdiction with regard thereto;

That each of the representations, warranties, acknowledgements and agreements set forth above shall continue
to be true and accurate at all times up to and including the Allotment and listing and trading of the Equity
Shares;

That our Company, the BRLMs, and their respective affiliates and others will rely on the truth and accuracy of
the foregoing representations, warranties, acknowledgements and undertakings, which are irrevocable;

That you are eligible to invest in India under applicable law, including the Foreign Exchange Management
(Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended from time to
time, and any notifications, circulars or clarifications issued thereunder, ("Security Regulations"), and have not
been prohibited by the SEBI from buying, selling or dealing in securities;

You understand that the BRLMs do not have any obligation to purchase or acquire all or any part of the Equity
Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or incurred by you
for any reason whatsoever in connection with the Issue, including non-performance by our Company of any of
7
Preliminary Placement Document
our respective obligations or any breach of any representations or warranties by our Company, whether to you
or otherwise;

That each of the acknowledgements and agreements set out above shall continue to be true and accurate at all
times up to and including the allotment of the Equity Shares and the listing and commencement of trading of
Equity Shares, wherever the context may require.

You agree that any dispute arising in connection with the Issue will be governed by and construed in accordance
with the laws of India, and the courts in Hyderabad, India shall have exclusive jurisdiction to settle any disputes
which may arise out of or in connection with this Preliminary Placement Document and the Placement
Document;
OFFSHORE DERIVATIVE INSTRUMENTS
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of
Regulation 22 of the SEBI FPI Regulations (as defined hereinafter), FPIs (which includes FIIs), other than Category
III Foreign Portfolio Investor (as defined hereinafter) and unregulated broad based funds, which are classified as
Category II foreign portfolio investor (as defined under the SEBI FPI Regulations) by virtue of their investment
manager being appropriately regulated, may issue, subscribe or otherwise deal in offshore derivative instruments (as
defined under the SEBI FPI Regulations as any instrument, by whatever name called, which is issued overseas by an
FPI against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as
its underlying) (all such offshore derivative instruments are referred to herein as "P-Notes") directly or indirectly,
only in the event that (i) such offshore derivative instruments are issued only in favour of those entities which are
regulated by any appropriate foreign regulatory authorities in the countries of their incorporation; and (ii) such
offshore derivative instruments are issued after compliance with „know your client‟ norms. An FPI is also required
to ensure that no issue or transfer of any offshore derivative instrument is made by or on behalf of it to any persons
that are not regulated by an appropriate foreign regulatory authority.
P-Notes have not been and are not being offered or sold pursuant to this Preliminary Placement Document. Neither
this Preliminary Placement Document nor the Placement Document contains or will contain any information
concerning P-Notes, or the issuer(s) of any such P-Notes, including, without limitation, any information regarding
any risk factors relating thereto.
Any P-Notes that may be issued are not securities of our Company and do not constitute any obligations of, claims
on, or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the
establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any PNotes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our
Company. Our Company does not make any recommendation as to any investment in P-Notes and does not accept
any responsibility whatsoever in connection with any P-Notes.
Any P-Notes that may be issued are not securities of the BRLMs and do not constitute any obligations of, or claims
on, the BRLMs. Affiliates of the BRLMs which are FPIs may purchase, to the extent permissible under law, the
Equity Shares in the Issue, and may issue P-Notes in respect thereof.
Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate
disclosure as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the
issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any PNotes or any disclosure related thereto. Prospective investors are urged to consult with their own financial,
legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether PNotes are issued in compliance with applicable laws and regulations.
8
Preliminary Placement Document
DISCLAIMER CLAUSE OF THE STOCK EXCHANGE
As required, a copy of this Preliminary Placement Document has been submitted to the BSE. The BSE does not in
any manner:
(1)
warrant, certify or endorse the correctness or completeness of any of the contents of this Preliminary
Placement Document;
(2)
warrant that our Company's Equity Shares issued pursuant to this Issue will be listed or will continue to be
listed on the Stock Exchange; or
(3)
take any responsibility for the financial or other soundness of our Company, its Promoters, its management
or any scheme or project of our Company;
The filing of this Preliminary Placement Document should not for any reason be deemed or construed to mean that
this Preliminary Placement Document has been cleared or approved by the BSE. Every person who desires to apply
for or otherwise acquires any Equity Shares of our Company pursuant to this Issue may do so pursuant to an
independent inquiry, investigation and analysis and shall not have any claim against the BSE whatsoever by reason
of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition,
whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.
9
Preliminary Placement Document
ENFORCEMENT OF CIVIL LIABILITIES
Our Company is a public limited company incorporated under the laws of India. All of our directors, senior
management personnel and executive officers of our Company are residents of India and a substantial portion of the
assets of such persons and of our Company are located in India. As a result, it may be difficult or may not be
possible for investors to effect service of process upon our Company or such persons outside India or to enforce
judgments obtained against such parties outside India.
Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of
Civil Procedure, 1908 (the "Civil Code") on a statutory basis. Section 13 of the Civil Code provides that a foreign
judgment shall be conclusive regarding any matter directly adjudicated upon between the same parties or parties
litigating under the same title, except:
(a)
(b)
(c)
(d)
(e)
(f)
where the judgment has not been pronounced by a court of competent jurisdiction;
where the judgment has not been given on the merits of the case;
where it appears on the face of the proceedings that the judgment is founded on an incorrect view of
international law or a refusal to recognize the law of India in cases to which such law is applicable;
where the proceedings in which the judgment was obtained were opposed to natural justice;
where the judgment has been obtained by fraud; or
where the judgment sustains a claim founded on a breach of any law than in force in India.
Under the Civil Code, a court in India shall, upon the production of any document purporting to be a certified copy
of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the
contrary appears on record.
India is not a signatory to any international treaty in relation to the recognition or enforcement of foreign judgments.
However Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior
court (within the meaning of such Section), in any country or territory outside India which the Government has by
notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the
judgment had been rendered by the relevant court in India. Under Section 14 of the Civil Procedure Code, a court in
India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume
that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record; but
such presumption may be displaced by proving want of jurisdiction. However, Section 44A of the Civil Code is
applicable only to monetary decrees not being of the same nature as amounts payable in respect of taxes, other
charges of a like nature or of a fine or other penalties and does not include arbitration awards.
A few countries like the United Kingdom of Great Britain and Northern Ireland, Republic of Singapore and Hong
Kong, amongst others, have been declared by the Central Government to be reciprocating territories for the purposes
of Section 44A and do not include arbitration awards.
A judgment of a court in a country which is not a reciprocating territory may be enforced only by a suit upon the
judgment and not by proceedings in execution. Such a suit must be filed in India within three years from the date of
the foreign judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that
a court in India would award damages on the same basis as a foreign court if an action was brought in India.
Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court were of the view that
the amount of damages awarded was excessive or inconsistent with the public policy of India. Further, any judgment
or award for payment of amounts denominated in a foreign currency would be converted into Rupees on the date of
such judgment or award and not on the date of payment. A party seeking to enforce a foreign judgment in India must
obtain approval from the RBI to execute such a judgment or to repatriate outside India any amount recovered, and
we cannot assure that such approval will be forthcoming within a reasonable period of time, or at all, or that
conditions of such approvals would be acceptable. It is unlikely that an Indian court would enforce foreign
judgments that would be contrary to or in violation of Indian law. We cannot assure you that Indian courts and/or
authorities would not take a longer amount of time to adjudicate and conclude similar proceedings in their respective
jurisdictions.
10
Preliminary Placement Document
CERTAIN CONVENTIONS, CURRENCY PRESENTATION AND FINANCIAL DATA
Our Company publishes its financial statements in Indian Rupees. Our Company's financial statements included
herein have been prepared in accordance with accounting principles generally accepted in India, or Indian GAAP
and the Companies Act, 2013 and have been audited by the Auditors in accordance with the applicable generally
accepted auditing standards in India prescribed by the ICAI. Unless otherwise indicated, all financial data in this
Preliminary Placement Document are derived from our Company's financial statements prepared in accordance with
Indian GAAP. Indian GAAP differs in certain significant respects from International Financial Reporting Standards
("IFRS"), U.S GAAP and other international accounting systems. Our Company does not quantify the impact of
U.S. GAAP or International Financial Reporting Standards ("IFRS") on the financial data included in this
Preliminary Placement Document, nor does our Company provide a reconciliation of its financial statements to U.S.
GAAP or IFRS. Accordingly, the degree to which the financial statements prepared in accordance with Indian
GAAP included in this Preliminary Placement Document will provide meaningful information is entirely dependent
on the reader‟s familiarity with the respective accounting practices. Any reliance by persons not familiar with Indian
accounting practices on the financial disclosures presented in this Preliminary Placement Document should
accordingly be limited. See the section "Risk Factors" beginning on page 35.
Our Company's Fiscal commences on April 1 of each year and ends on March 31 of the succeeding year; so all
references to a particular Fiscal are to the twelve-month period ended on March 31 of that year. The audited
financial statements of our Company for the years ended March 31, 2012, March 31, 2013 and March 31, 2014 and
limited reviewed financial results for the quarter and six months ended September 30, 2014, are prepared in
accordance with Indian GAAP, are included in this Preliminary Placement Document and are referred to herein as
the "Financial Statements".
In this Preliminary Placement Document, all references to „you‟, „your‟, „offeree‟, „purchaser‟, „subscriber‟,
„recipient‟, „investors‟, „prospective investors‟ and „potential investor‟ are to the prospective investors in Equity
Shares issued pursuant to the Issue, all references to „India‟ are to the Republic of India and all references to the
„Government‟ or „GoI‟ or the „Central Government‟ or the „State Government‟ are to the Government of India,
central or state, as applicable (unless the context otherwise requires). All references to "Rupees", " `", “Re.” and
"Rs." are to the currency of India. All references to "U.S. dollars", "dollars", "$", "USD" and "US$" are to the
currency of the United States of America. References to the words "Lakh" or "Lacs" mean "100 thousand", the word
"million" means "10 lakh" and the word "billion" means "1,000 million".
In this Preliminary Placement Document, certain monetary amounts have been subject to rounding adjustments;
accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which
precede them. Further, for the purpose of maintaining standardization in the presentation of data in this Preliminary
Placement Document, figures and amounts have been reflected as “lakhs” and may have been subjected to rounding
off adjustments upto two places.
11
Preliminary Placement Document
INDUSTRY AND MARKET DATA
Information regarding markets, market size, market share, market position, growth rates and other industry data
pertaining to our Company's business contained in this Preliminary Placement Document consists of
estimates/forecasts based on data reports compiled by professional organisations and analysts, on data from
recognized industry sources, other external sources, and on our Company's knowledge of the markets in which our
Company operates. The statistical information included in this Preliminary Placement Document has been
reproduced from various trade, industry and Government publications and websites. Our Company confirm that
such information and data has been accurately reproduced, and that as far as we are aware and are able to ascertain
from information published by third parties, no facts have been omitted that would render the reproduced
information inaccurate or misleading.
This data is subject to change and cannot be verified with complete certainty due to limits on the availability and
reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many cases,
there is no readily available external information (whether from trade or industry associations, Government bodies
or other organisations) to validate market-related analysis and estimates, so our Company have relied on internally
developed estimates.
None of the Company, the BRLMs or any of their respective affiliates and advisors or any other person connected
with the Issue has independently verified this information and neither our Company nor the BRLMs make any
representation regarding the accuracy or completeness of such data. Industry sources and publications generally state
that the information contained therein has been obtained from sources 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 sources and publications are also prepared
based on information as of specific dates and may no longer be current or reflect current trends. Accordingly, the
BRLMs and we do not take any responsibility for the data, projections, forecasts, conclusions or any other
information contained in this section. Certain information contained herein pertaining to prior years is presented in
the form of estimates as they appear in the respective reports/ source documents. The actual data for those years may
vary significantly and materially from the estimates so contained. Similarly, while our Company believes its internal
estimates to be reasonable, such estimates have not been verified by any independent source and our Company
cannot assure potential investors as to their accuracy.
The extent to which the market and industry data used in this Preliminary Placement Document is meaningful
depends on the reader‟s familiarity with and understanding of the methodologies used in compiling such data.
12
Preliminary Placement Document
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Preliminary Placement Document that are not statements of historical facts
constitute „forward-looking statements‟. These statements express views of the management of our Company and
expectations based upon certain assumptions regarding trends in the Indian and international financial markets and
regional economies, the political climate in which our Company operates and other factors. Prospective investors
can identify forward-looking statements by the use of forward-looking terminology, including the words "aim",
"anticipate", "believes", "continue", "can", "could" "estimates", "expects", "intends", "may", "will", "plans",
"objective", "potential", "project", "pursue", "shall", "will likely result", "will continue", "will achieve", "is likely" or
"should" or, in each case, their negative or other variations or comparable terminology or by discussions of
strategies, plans, objectives, goals, future events or intentions. However, these are not the exclusive means of
identifying forward- looking statements.
All statements regarding our Company's expected financial condition and results of operations, business plans
projects under execution, orders-in-hand and prospects are forward-looking statements. These forward-looking
statements include statements as to our Company's business strategy, revenue and profitability and other matters
discussed in this Preliminary Placement Document regarding matters that are not historical facts. They appear in a
number of places throughout this Preliminary Placement Document and include statements regarding the intentions,
beliefs or current expectations of our Company concerning, among other things, the results of operations, financial
condition, liquidity, prospects, growth, strategies and dividend policy of our Company and the industry in which we
operate.
By their nature, forward-looking statements contained in this Preliminary Placement Document (whether made by
our Company or any third party) are predictions and involve known and unknown risks and uncertainties because
they relate to events, and depend on circumstances, and assumptions and other factors that may cause the actual
results, performance or achievements of our Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements or other projections..
Forward-looking statements are not guarantees of future performance. Our Company's actual results of operations,
financial condition, liquidity, dividend policy and the development of the industry in which we operate may differ
materially from the impression created by the forward-looking statements contained in this Preliminary Placement
Document. In addition, even if the results of operations, financial condition, liquidity and dividend policy of our
Company and the development of the industry in which we operate are consistent with the forward-looking
statements contained in this Preliminary Placement Document, those results or developments may not be indicative
of results or developments in subsequent periods.
Important factors that could cause actual results and property valuations to differ materially from our expectations
include, but are not limited to, the following:













the effect of changes in our accounting policies;
our ability to manage our growth effectively;
our ability to meet our capital expenditure requirements;
any loss, shutdown or slowdown of operations at any of our manufacturing facilities or underutilisation of
our manufacturing capacities;
any changes in competitors‟ pricing, loss of any significant customer and other competitive strategies;
any fluctuation in the price or the availability of plastic granules and crude oil;
outcome of legal or regulatory proceedings to which we, are a party to or might become involved in;
our ability to finance its business and growth;
any increase in competition in the sectors/areas in which we operate;
general economic and business conditions in the markets in which we operate;
our success in research and development initiative in relation to new products;
extensive government regulation in jurisdictions where we operate, and our inability to obtain, maintain or
renew our statutory and regulatory permits and approvals required; and
other factors discussed in this Preliminary Placement Document, including "Risk Factors".
13
Preliminary Placement Document
Additional factors that could cause actual results, performance or achievements to differ materially include, but are
not limited to, those discussed under "Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" beginning on pages 35, 60 and 92 respectively. These
forward-looking statements speak only as of the date of this Preliminary Placement Document. Our Company and
the BRLMs expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any
forward-looking statement contained herein to reflect any changes in our Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such statements are based.
The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of the
management of our Company, as well as the assumptions made by, and information currently available to, the
management of our Company. Although our Company believes that the expectations reflected in such forwardlooking statements are reasonable at this time, we cannot assure investors that such expectations will prove to be
correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking
statements. In any event, these statements speak only as of the date of this Preliminary Placement Document or the
respective dates indicated in this Preliminary Placement Document and our Company undertakes no obligation to
update or revise any of them, whether as a result of new information, future events, changes in assumptions or
changes in factors affecting these forward looking statements or otherwise. If any of these risks and uncertainties
materialise, or if any of our Company's underlying assumptions prove to be incorrect, our Company's actual results
of operations or financial condition could differ materially from that described herein as anticipated, believed,
estimated or expected. All subsequent written and other forward-looking statements attributable to our Company in
this Preliminary Placement Document are expressly qualified in their entirety by reference to these cautionary
statements.
14
Preliminary Placement Document
EXCHANGE RATES
Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency
equivalent of the Rupee price of the Equity Shares on the Stock Exchange. These fluctuations will also affect the
conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.
The following table sets forth information with respect to the exchange rates between the Rupee and the U.S. dollar
(in ` per US$ 1.00), for the periods indicated. The exchange rates are based on the reference rates released by the
RBI, which are available on the website of the RBI. No representation is made that any Rupee amounts could have
been, or could be, converted into U.S. dollars at any particular rate, the rates stated below, or at all.
On January 29, 2015, the exchange rate (the RBI reference rate) was ` 61.50 to US$ 1.00.
Period End
Average(1)
High
(` Per US$1.00)
Low
FY Ended:
March 31, 2014
March 31, 2013
March 31, 2012
60.10
54.39
51.16
60.50
54.45
47.95
68.36
57.22
54.24
53.74
50.56
43.95
Quarter Ended:
December 31, 2014
September 30, 2014
June 30, 2014
March 31, 2014
63.33
61.61
60.09
60.10
62.00
60.59
59.77
61.79
63.75
61.61
61.12
62.99
61.04
59.72
58.43
60.10
Month ended:
December 31, 2014
63.33
62.75
63.75
61.85
November 30, 2014
61.97
61.70
62.10
61.39
October 31, 2014
61.40
61.34
61.75
61.04
September 30, 2014
61.61
60.86
61.61
60.26
August 31, 2014
60.47
60.90
61.56
60.43
July 31, 2014
60.25
60.06
60.33
59.72
________________
Source: www.rbi.org.in
(1)
Represents the average of the reference rates released by the RBI on every working day of the relevant period
No representation is made that the Rupee amounts actually represent such amounts in U.S. dollars or could have
been or could be converted into U.S. dollars at the rates indicated, any other rates, or at all.
15
Preliminary Placement Document
DEFINITIONS AND ABBREVIATIONS
Unless otherwise defined or the context otherwise indicates or requires, certain capitalized terms used in this
Preliminary Placement Document have the meanings set forth below. References to any legislation, act or regulation
shall, unless the context otherwise requires, be to such legislation, act or regulation as amended as on the date of this
Preliminary Placement Document:
Term
"Mold–Tek
Packaging
Limited", " Mold–Tek "
"MTPL" "Issuer" and "the
Company"
Articles or Articles of
Association
Auditors
Board of Directors or Board
Committee
Director(s)
Equity Shares or Shares
ESOP Plan
QIP Committee
Memorandum or
Memorandum of
Association
Promoter Group
Registered Office
Registrar of Companies or
RoC
Unit – I
Unit – II
Unit – III
Unit – IV
Unit – V
Unit – VI
Unit – VII
"We", "us" and "Our
Company"
Description
Unless the context otherwise indicates or implies, refers to Mold–Tek Packaging
Limited, a public limited company incorporated under the Companies Act, 1956
and having its registered office at at 8 – 2 – 293/82/A/700, Ground Floor, Road
No. 36, Jubilee Hills, Hyderabad – 500 033 , Telangana, India.
The articles of association of our Company, as amended.
M/s. Praturi & Sriram, Chartered Accountants, the statutory auditor of our
Company.
The board of directors of our Company and any committee constituted thereof.
The committee of the Board of Directors.
The director(s) of our Company.
The equity shares of our Company of face value ` 10 each.
MTPL Employees Stock Option Scheme
The QIP committee of the Board of Directors described in “Board of Directors
and Senior Management” beginning on page 118
The memorandum of association of our Company, as amended.
Promoter group of our Company as per the definition provided in Regulation
2(1)(zb) of the SEBI ICDR Regulations.
The registered office of our Company located at 8 – 2 – 293/82/A/700, Ground
Floor, Road No. 36, Jubilee Hills, Hyderabad – 500 033 , Telangana, India.
The Registrar of Companies, Andhra Pradesh & Telangana, Hyderabad.
Located at Annaram Village, Near Air Force Academy, Jinnaram Mandal, Medak
District, Telangana
Located at Survey No. 164/Part, Dommarapochampally village, Quthbullapur
Mandal, Ranga Reddy District, Telangana
Located at Survey No. 160 – A, 161 – 1 & 161 – 5, Kund Falla, Behind Hotel
Hilltop, Near Costal Highway, Bhimpore, Nani Daman, Daman
Located at Survey No. 79, Alinagar, Jinnaram Mandal, Mendak District,
Telangana
Located at Survey numbers 110/ 1A1, 110/1A, Street No.1, Onnalvadi Village,
Krishnagiri District, Tamil Nadu - 635125
Located at Survey No. 586 to 589/Part, Dundigal Village, Near SGS Ashram,
Quthbullapur Mandal, Ranga Reddy District, Telangana
Located at Gat No. 656, Khandala - Lonand Road, Mhavashi Village, Dhawad
Wadi, Khandala, Satara District, Maharashtra
Unless the context otherwise indicates or implies, refers to Mold–Tek Packaging
Limited and our business transferred to Mold – Tek Packaging Limited pursuant
to scheme of arrangement between Teck–Men Tools Private Limited, Mold–Tek
Technologies Limited, Our Company and their respective shareholders approved
by the High Court of Hyderabad vide its order dated July 25, 2008
Issue related Terms
16
Preliminary Placement Document
Term
Allocated or Allocation
Allottees
Allotment
Application or Bid
Application Form or Bid
cum Application Form
Bidder
Bidding / Issue Period
Book
Running
Lead
Managers/BRLMs
BSE
CDSL
CAN or Confirmation of
Allocation Note
Closing Date
Cut-off Price
Eligible FPIs
Escrow Agreement
Escrow Bank
Escrow Cash Account/
Escrow Account
Floor Price
SEBI ICDR Regulations
Issue
Issue Closing Date or Bid
Closing Date
Issue Opening Date or Bid
Opening Date
Issue Price
Issue Size
Listing Agreement
NSDL
NSE
Pay-in Date
Description
The allocation of Equity Shares following the determination of the Issue Price to
QIBs on the basis of Application Forms submitted by such QIBs, in consultation
with the BRLMs and in compliance with Chapter VIII of the SEBI ICDR
Regulations.
Successful Bidders to whom Equity Shares are issued and Allotted pursuant to the
Issue.
The issue and allotment of Equity Shares pursuant to this Issue.
Indication of interest from a QIB to subscribe for a specified number of Equity
Shares in this Issue on the terms set out in the Application Form to our Company.
The form, including all revisions and modifications thereto, pursuant to which a
QIB submits an Application.
Any prospective investor, being a QIB, who makes a Bid pursuant to the terms of
the Preliminary Placement Document and the Application Form.
The period between the Bid/Issue Opening Date and Bid/Issue Closing Date,
inclusive of both dates, during which prospective Bidders can submit Bids.
Emkay Global Financial Services Limited and Centrum Capital Limited
BSE Limited.
Central Depository Services (India) Limited
Note or advice or intimation to successful Bidders confirming Allocation of
Equity Shares to such successful Bidders after determination of the Issue Price
and requesting payment for the entire applicable Issue Price for all Equity Shares
Allocated to such successful Bidders.
On or about [•], 2015, the date on which the Allotment is expected to be made.
The Issue Price of the Equity Shares, which shall be determined by our Company,
in consultation with the BRLMs.
FPIs that are eligible to participate in the Issue and does not include qualified
foreign investors and Category III Foreign Portfolio Investors (who are not
eligible to participate in the Issue)
The Escrow Agreement dated January 29, 2015, by and between our Company,
Escrow Bank and the BRLMs in relation to the Issue.
ICICI Bank Limited
The non-interest bearing, no-lien, escrow bank account without any cheque or
overdraft facilities opened by our Company with the Escrow Bank under the
arrangement between our Company and the Escrow Bank for receiving the share
application amount from the successful Bidders.
The floor price of ` 231.75 per Equity Share, calculated in accordance with
Regulation 85 of the SEBI ICDR Regulations.
The Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, as amended.
The offer, issue and allotment of [•] Equity Shares to QIBs, pursuant to Chapter
VIII of the SEBI ICDR Regulations and the provisions of Companies Act, 2013
and Private Placement Provisions.
[•], 2015, the date on which our Company (or the BRLMs on behalf of our
Company) shall cease acceptance of Application Forms.
January 30, 2015, the date on which our Company (or the BRLM on behalf of our
Company) shall commence acceptance of Application Forms.
The price per Equity Share of ` [•].
The issue of [•] Equity Shares aggregating ` [•] Lacs.
The agreement entered into between our Company and the BSE in relation to
listing of the Equity Shares on the Stock Exchange.
The National Securities Depository Limited.
The National Stock Exchange of India Limited
The last date specified in the CAN for payment of application monies by the
17
Preliminary Placement Document
Term
Placement Agreement
Placement Document
Preliminary Placement
Document
QIB or Qualified
Institutional Buyer
QIP
Regulation S
Relevant Date
SEBI
SEBI Act
SEBI FPI Regulations
Stock Exchange
STT
U.S. Securities Act
Description
QIBs.
The Placement Agreement, dated January 29, 2015, among our Company and the
BRLMs.
The placement document to be issued by our Company in accordance with
Chapter VIII of the SEBI ICDR Regulations and Section 42 of the Companies
Act, 2013 and the rules thereunder.
This preliminary placement document issued in accordance with Chapter VIII of
the SEBI ICDR Regulations and Section 42 of the Companies Act, 2013 and the
rules thereunder.
Any Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of Chapter
VIII of the SEBI ICDR Regulations and the rules thereunder.
Private placement to QIBs under Chapter VIII of the SEBI ICDR Regulations and
Section 42 of the Companies Act, 2013 and the Rules made thereunder.
Regulation S, as defined under the U.S. Securities Act.
January 30, 2015, date of the meeting of the QIP Committee duly authorised by
the Board of Directors deciding to open the Issue.
The Securities and Exchange Board of India.
The Securities and Exchange Board of India Act, 1992, as amended.
Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations,
2014.
BSE.
Securities Transaction Tax
The U.S. Securities Act of 1933, as amended.
Business and Industry Related Terms
Terms
ACF
ATF
CM
DG Set
EBM
EPCG
FMCG
HDPE
HSD
IBM
IM
IML
LDPE
LLDPE
LPG
MSME
MMT
PET
PP
PPCP
Robots
Description
Activated Carbon Filter
Aviation Turbine Fuel
Compression Molding
Diesel generator set
Extrusion Blow Molding
Export Promotion Capital Goods
Fast Moving Consumer Goods
High Density Polyethylene
High speed diesel
Injection Blow Molding
Injection Molding
In – Mold Labelling
Low Density Polyethylene
Linear low-density polyethylene
Liquefied Petroleum Gas
Micro Small and Medium Enterprise
Million Metric Tonne
Polyethylene Terephthalate
Polypropylene
Polypropylene Co Polymer
A mechanical and artificial agent guided by a computer program and circuit
Conventional and General Terms
Terms
AGM
Description
Annual General Meeting
18
Preliminary Placement Document
Terms
AIF
APVAT
AS
CAGR
Chapter VIII
Civil Code or Code
Companies Act
Companies Act, 1956
Companies Act, 2013
CSR
Depositories Act
Depository
Depository Participant
DIN
EBITDA
EGM
EPF&MP Act
FDI
FEMA
FEMA Regulations
FII
FII Regulations
Financial Year or Fiscal
Year or Fiscal or FY
Form PAS-4
FPI
FPI Regulations
FVCI
GAAP
GDP
GoI or Government
ICAI
IFRS
Income Tax Act or IT Act
India
Description
Alternate Investment Funds(as defined under the Securities and Exchange Board of
India (Alternative Investment Fund) Regulations, 2012) registered with the SEBI under
applicable laws in India
Andhra Pradesh Value Added Tax Act, 2005
Accounting Standards as issued by the Institute of Chartered Accountants of India.
Compounded Annual Growth Rate
Refers to Chapter VIII of the SEBI (ICDR) Regulations, 2009 that deals with Qualified
Institutions Placement, and as amended from time to time
The Code of Civil Procedure, 1908 of India, as amended
Companies Act, 1956 or the Companies Act, 2013, as applicable
Companies Act, 1956 and the rules made thereunder (without reference to the
provisions thereof that have ceased to have effect upon notification of the Notified
Sections)
Companies Act, 2013 and the rules made thereunder, to the extent in force pursuant to
notification of the Notified Sections
Corporate Social Responsibility
The Depositories Act, 1996, as amended
A depository registered with SEBI under the SEBI (Depositories and Participant)
Regulations, 1996, as amended
A depository participant as defined under the Depositories Act
Director Identification Number
Earnings before interest, tax, depreciation and amortization
Extraordinary General Meeting
Employee Provident Funds and Miscellaneous Provisions Act, 1952
Foreign Direct Investment in an Indian company, in accordance with applicable law
The Foreign Exchange Management Act, 1999, as amended and the Regulations
framed thereunder
The Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2000 and amendments thereto.
Foreign Institutional Investor as defined under Section 2(f) the Securities and
Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as
amended, registered with SEBI under applicable laws in India
Securities and Exchange Board of India (Foreign Institutional Investors) Regulations,
1995, as amended
A period of twelve months ending March 31 of that particular year, unless otherwise
stated
Form PAS-4 as prescribed under the Companies (Prospectus and Allotment of
Securities) Rules, 2014
Foreign Portfolio Investors, as defined under Regulation 2(1)(h) of the Securities And
Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014
Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations,
2014
Any foreign venture capital investor (as defined under the Securities and Exchange
Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended)
registered with the SEBI under applicable laws in India.
Generally Accepted Accounting Principles
Gross Domestic Product
Government of India, unless otherwise specified
The Institute of Chartered Accountants of India
International Financial Reporting Standards
The Income Tax Act, 1961 of India, as amended
The Republic of India
19
Preliminary Placement Document
Terms
Indian GAAP
Insider Trading
Regulations
Lakh/ Lac/Lacs
Minimum Wages Act
Mutual Fund
Non-Resident Indian(s) or
NRI
Notified Sections
PAN
PAT
PBT
Portfolio Investment
Scheme/PIS
Private
Placement
Provisions
` or Re. or Rs. or Rupees
or INR
RBI
State
State Government
Takeover Code
UK
USA
$ or U.S. dollar or USD or
US$
VAT
VCF
Description
Generally accepted accounting principles followed in India
The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992, as amended
One hundred thousand
Minimum Wages Act, 1948, as amended
A mutual fund registered with SEBI under the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996, as amended
Non-Resident Indian, as defined under FEMA
Sections of the Companies Act, 2013 that have been notified by the Government of
India
Permanent Account Number
Profit after tax
Profit before tax
The portfolio investment scheme of RBI specified in Schedule 2 of the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000, as amended.
Section 42 of the Companies Act, 2013, read with Rule 14 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014
Indian Rupee
The Reserve Bank of India
Any state in the Republic of India
Government of a State
The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011, as amended
United Kingdom of Great Britain and Northern Ireland
United States of America
The currency of the United States
Value Added Tax
A venture capital fund as defined under the erstwhile Securities and Exchange Board of
India (Venture Capital Funds) Regulations, 1996
20
Preliminary Placement Document
DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES
ACT, 2013
The table below sets out the disclosure requirements as provided in Form PAS-4 and the relevant pages in this
Preliminary Placement Document where these disclosures, to the extent applicable, have been provided.
Sr.
No.
1.
a.
b.
c.
d.
e.
f.
g.
(i)
(ii)
(iii)
(iv)
h.
2.
a.
b.
c.
d.
e.
f.
g.
(i)
(ii)
(iii)
(iv)
(v)
h.
i.
j.
k.
3.
a.
b.
Disclosure Requirements
Relevant Page of
this Preliminary
Placement
Document
GENERAL INFORMATION
Name, address, website and other contact details of our Company indicating both
Registered Office and corporate office
Date of incorporation of our Company
Business carried on by our Company and its subsidiaries with the details of branches
or units, if any.
Brief particulars of the management of our Company.
Names, addresses, DIN and occupations of the Directors.
Management‟s perception of risk factors
Details of default, if any, including therein the amount involved, duration of default
and present status, in repayment of:
Statutory dues;
Debentures and interest thereon;
Deposits and interest thereon; and
Loan from any bank or financial institution and interest thereon.
Names, designation, address and phone number, email ID of the nodal/ compliance
officer of our Company, if any, for the private placement offer process.
PARTICULARS OF THE OFFER
Date of passing of board resolution.
Date of passing of resolution in the general meeting, authorising the offer of
securities.
Kinds of securities offered (i.e. whether share or debenture) and class of security.
Price at which the security is being offered including the premium, if any, along with
justification of the price.
Name and address of the valuer who performed valuation of the security offered.
Amount which our Company intends to raise by way of securities.
Terms of raising of securities:
Duration, if applicable;
Rate of dividend;
Rate of interest;
Mode of payment; and
Repayment.
Proposed time schedule for which the offer letter is valid.
Purposes and objects of the offer.
Contribution being made by the promoters or directors either as part of the offer or
separately in furtherance of such objects.
Principle terms of assets charged as security, if applicable.
DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,
LITIGATION ETC
Any financial or other material interest of the directors, promoters or key managerial
personnel in the offer and the effect of such interest in so far as it is different from
the interests of other persons.
Details of any litigation or legal action pending or taken by any Ministry or
21
202
197
93 – 106
118 – 132
118 – 121
35 – 51
NIL
NIL
NIL
NIL
202
197
197
24
24
Not Applicable
55
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
17
55
55
Not Applicable
131 – 132
196
Preliminary Placement Document
Sr.
No.
c.
d.
e.
f.
g.
4.
a.
(i)(a)
(b)
(c)
(A)
(B)
(d)
(ii)
b.
c.
d.
e.
f.
Disclosure Requirements
Relevant Page of
this Preliminary
Placement
Document
Department of the Government or a statutory authority against any promoter of the
offeree company during the last three years immediately preceding the year of the
circulation of the offer letter and any direction issued by such Ministry or
Department or statutory authority upon conclusion of such litigation or legal action
shall be disclosed.
Remuneration of Directors (during the current year and last three financial years).
Related party transactions entered during the last three financial years immediately
preceding the year of circulation of offer letter including with regard to loans made
or, guarantees given or securities provided.
Summary of reservations or qualifications or adverse remarks of auditors in the last
five financial years immediately preceding the year of circulation of offer letter and
of their impact on the financial statements and financial position of our Company
and the corrective steps taken and proposed to be taken by our Company for each of
the said reservations or qualifications or adverse remark.
Details of any inquiry, inspections or investigations initiated or conducted under the
Companies Act or any previous company law in the last three years immediately
preceding the year of circulation of offer letter in the case of company and all of its
subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines
imposed, compounding of offences in the last three years immediately preceding the
year of the offer letter and if so, section-wise details thereof for our Company and all
of its subsidiaries.
Details of acts of material frauds committed against our Company in the last three
years, if any, and if so, the action taken by our Company.
FINANCIAL POSITION OF THE COMPANY
The capital structure of our Company in the following manner in a tabular form:
The authorised, issued, subscribed and paid up capital (number of securities,
description and aggregate nominal value);
Size of the present offer; and
Paid up capital:
After the offer; and
After conversion of convertible instruments (if applicable);
Share premium account (before and after the offer).
The details of the existing share capital of the issuer company in a tabular form,
indicating therein with regard to each allotment, the date of allotment, the number of
shares allotted, the face value of the shares allotted, the price and the form of
consideration.
Provided that the issuer company shall also disclose the number and price at which
each of the allotments were made in the last one year preceding the date of the offer
letter separately indicating the allotments made for considerations other than cash
and the details of the consideration in each case.
Profits of our Company, before and after making provision for tax, for the three
financial years immediately preceding the date of circulation of offer letter.
Dividends declared by our Company in respect of the said three financial years;
interest coverage ratio for last three years (Cash profit after tax plus interest
paid/interest paid).
A summary of the financial position of our Company as in the three audited balance
sheets immediately preceding the date of circulation of offer letter.
Audited Cash Flow Statement for the three years immediately preceding the date of
circulation of offer letter.
Any change in accounting policies during the last three years and their effect on the
profits and the reserves of our Company.
22
126 – 127
F–1
79
79
196
57
24
57
57
Not Applicable
57
57 -58
58
F–1
59
31 -32
32 - 33
64
Preliminary Placement Document
Sr.
No.
5.
a.
b.
c.
Disclosure Requirements
Relevant Page of
this Preliminary
Placement
Document
A DECLARATION BY THE DIRECTORS THAT
Our Company has complied with the provisions of the Act and the rules made
thereunder.
The compliance with the Act and the rules does not imply that payment of dividend
or interest or repayment of debentures, if applicable, is guaranteed by the Central
Government.
The monies received under the offer shall be used only for the purposes and objects
indicated in the Offer letter.
23
201
Preliminary Placement Document
SUMMARY OF THE ISSUE
The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and
is qualified in its entirety by, the more detailed information appearing elsewhere in this Preliminary Placement
Document, including under the sections “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue Procedure” and
“Description of the Equity Shares”.
Issuer
Face value
Issue Price per Equity Share
Issue Size
Date of Board Resolution
Date of Shareholders’ Resolution
Floor Price
Equity Shares issued and
outstanding immediately prior to
the Issue
Equity Shares issued and
outstanding immediately after the
Issue
Eligible Investors
Listing
Issue Procedure
Transferability Restrictions
Ranking
Mold – Tek Packaging Limited
` 10 per Equity Share
[•]
The issue of up to [•] Equity Shares aggregating ` [•] Lacs.
A minimum of 10 % of the Issue Size i.e. [•] Equity Shares shall be available
for Allocation to Mutual Funds only, and [•] Equity Shares shall be available
for Allocation to all QIBs, including Mutual Funds. If no Mutual Fund is
agreeable to take up the minimum portion mentioned above, such minimum
portion or part thereof may be Allotted to other eligible QIBs.
November 19, 2014
December 24, 2014
` 231.75 per Equity Share, calculated in accordance with Regulation 85 of
the SEBI ICDR Regulations. Under the SEBI ICDR Regulations, the Issue
Price cannot be lower than the Floor Price subject to discount of not more
than 5% on the Floor Price which may be considered by our Company.
1,13,42,176 Equity Shares at a face value of `10 per share.
[•] Equity Shares at a face value of `10 per share.
QIBs as defined in regulation 2(1)(zd) of the SEBI ICDR Regulations and
Chapter VIII of the SEBI ICDR Regulations. Only QIBs which are FIIs and
Eligible FPIs are permitted to participate in this Issue. The list of QIBs to
whom the Preliminary Placement Document and Application Form is
delivered, determined by the BRLMs in consultation with our Company, at
their sole discretion.
For further details, see the sections “Issue Procedure – Qualified
Institutional Buyers” and “Transfer Restrictions” beginning on pages 139
and 157 respectively.
(i) Applications for approval, in terms of Clause 24(a) of the listing
agreements with the Stock Exchange were made and (ii) the application for
final listing and trading approval, for listing and admission of the Equity
Shares and for trading on the Stock Exchange, will be made only after
Allotment of the Equity Shares in the Issue.
The Issue is being made only to QIBs in reliance on Section 42 of the
Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and
Allotment of Securities) Rules, 2014 and Chapter VIII of the SEBI ICDR
Regulations. For further details, see the section titled “Issue Procedure” on
page 139.
The Equity Shares being allotted pursuant to this Issue cannot be sold for a
period of one year from the date of Allotment, except if sold on the floor of
the Stock Exchange. For further details, see the section “Transfer
Restrictions” beginning on page 156
The Equity Shares being issued in the Issue are subject to the provisions of
our Memorandum and Articles of Association and shall rank pari passu in all
respects with the existing Equity Shares, including with respect to dividend
24
Preliminary Placement Document
Use of Proceeds
Lock-up
Risk Factors
rights. Shareholders will be entitled to dividends and other corporate benefits,
if any, declared by us after the Closing Date, in compliance with the
Companies Act, 2013. Shareholders may attend and vote in shareholders‟
meetings in accordance with the provisions of the Companies Act, 2013.
Please see the section “Description of the Equity Shares” beginning on page
161.
The gross proceeds of the Issue are expected to be approximately ` [•] Lacs.
The net proceeds from the Issue, after deducting fees, commissions and
expenses of the Issue, will be approximately ` [•] Lacs. For further details,
please see the section “Use of Proceeds” beginning on page 55.
Our Company has agreed that it will not, without the prior written consent of
the BRLMs (which such consent shall not be unreasonably withheld), for the
period commencing from the date of the Placement Agreement and ending 90
days from the Closing Date, directly or indirectly: (a) issue, offer, lend, sell,
pledge, contract to sell or issue, sell any option or contract to purchase,
purchase any option or contract to sell or issue, grant any option, right or
warrant to purchase, lend or otherwise transfer or dispose of, directly or
indirectly, any Equity Shares, or any securities convertible into or exercisable
or exchangeable for Equity Shares or publicly announce an intention with
respect to any of the foregoing; (b) enter into any swap or other agreement
that transfers, directly or indirectly, in whole or in part, any of the economic
consequences of ownership of Equity Shares or any securities convertible
into or exercisable or exchangeable for Equity Shares; or (c) publicly
announce any intention to enter into any transaction whether any such
transaction described in (a) or (b) above is to be settled by delivery of Equity
Shares, or such other securities, in cash or otherwise.
Our Promoters have agreed that without the prior written consent of the
BRLMs (which such consent shall not be unreasonably withheld), it will not,
during the period commencing from the date of the Placement Agreement
and ending 90 days after the date of allotment of the Issue Shares, directly or
indirectly: (a) sell, lend, pledge, contract to sell, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or
any securities convertible into or exercisable or exchangeable for Equity
Shares or publicly announce an intention with respect to any of the
foregoing; (b) enter into any swap or other agreement that transfers, directly
or indirectly, in whole or in part, any of the economic consequences of
ownership of Equity Shares or any securities convertible into or exercisable
or exchangeable for Equity Shares; or (c) deposit Equity Shares with any
other depositary in connection with a depositary receipt facility, or (d) enter
into any transaction (including a transaction involving derivatives) having an
economic effect similar to that of an issue, offer, sale or deposit of the Equity
Shares in any depository receipt facility; or (e) publicly announce any
intention to enter into any transaction whether any such transaction described
in (a) to (d) above is to be settled by delivery of Equity Shares, or such other
securities, in cash or otherwise; provided however that the foregoing
restrictions will (i) not be applicable to any pledge or mortgage of the Equity
Shares already existing on the date of the Placement Agreement or transfer of
such existing pledge or mortgage; (ii) not be applicable on issuance of Equity
Shares pursuant to the ESOP Scheme; and (iii) not restrict the existing
shareholders of our Company from acquiring or purchasing any Equity
Shares in our Company, directly or indirectly, in accordance with and subject
to applicable laws.
For a discussion of certain risks in connection with an investment in the
Equity Shares, please see the section “Risk Factors” beginning on page 35.
25
Preliminary Placement Document
Security codes:
ISIN: INE893J01011
BSE Code: 533080
26
Preliminary Placement Document
SUMMARY OF BUSINESS
We are a packaging solution company mainly engaged in the manufacturing of rigid plastic packaging containers
through Injection molding technology for paints, lubes, oils, food, FMCG and other sectors including cosmetics and
pharmaceutical. We develop, design and manufacture standard airtight and pilfer – proof pails as well as customized
containers to meet our customer‟s packaging requirements. We believe, we are the leaders in injection molded rigid
packaging containers in India. We have introduced certain world class packaging products in India for paints, oil,
lubricants, food and FMCG industries through continuous innovation.
We decorate our products using screen printing, heat transfer labelling technique and In – Mold labelling, which is
one of the modern and premium container decoration techniques globally. In late 2011, we started developmental
work on IML manufacturing through imported labels and Robots. IML provides various benefits of packaging
including higher brand recall as the labels do not get separated. These IML labels provide better aesthetics and the
process eliminates labour and saves space required for production. We believe we are the pioneers to introduce IML
concept using in house Robots, at a reasonable cost in India.
We have seven manufacturing units, four at Telangana and one each at Tamil Nadu, Maharashtra and Daman. We
also operate state of the art tool room to make complex molds and to develop Robots. We believe that we have
developed our reputation and image as innovator in packaging solution for the segments we serve. In recognition of
our technical excellence, we received “Tech Savvy SME” and “Best SME” awards from ICICI- CNBC TV 18 and
Crisil awards for the year 2013.
Our products mainly cater to four business segments viz (i) paint industry (ii) lubes & oil industry,(iii) food and (iv)
FMCG. Our products are available in different size and shapes viz circular, rectangular, curving and special shapes
as per customer requirement. For the financial year 2014, our Company derived approximately ` 16,440 lacs gross
revenue from paints, ` 10,470 lacs, from lubes and oils and ` 441 lacs from food and ` 1,182 lacs from FMCG and
other sectors. Our Company derived 19.76 per cent of total income from IML technology in the financial year 2014
compared to 0.54 per cent of total income in the financial year 2011. As on December 31, 2014, our total pail
manufacturing capacity is over 25,000 metric ton and label manufacturing capacity is 3 lacs meter in a single shift.
Pursuant to a Scheme of Arrangement between Teckmen Tools Private Limited, Mold-Tek Technologies Limited
erstwhile MTPPL, and Mold Tek Plastics Limited, the plastic packaging division was transferred to our Company
with effect from July 25, 2008. For further information on Scheme of Arrangement, see “Key milestone” beginning
on page 93. However, our roots can be traced back to the year 1985, when Mold – Tek Plastics Private Limited
(“MTPPL”) was promoted by two technocrats, Janumahanti Lakshmana Rao and Adivishnu Subramanyam, (“Core
Promoters”) to manufacture rigid plastic packaging products with units located at then Andhra Pradesh. Our Core
Promoters with experience in tool room started working towards continuous innovation and introduced various new
concepts in packaging industry.
In the early nineties, we introduced plastic pail packaging concept used for paint industry which has succeeded to
gradually replace the tin packaging for paints. Since 1997-1998, we introduced plastic containers for lubricant
packaging with innovative “pull up spout” and also developed new concepts including single and double lock pails.
We pioneered pull up spouts for the lube industry and developed COSMOS/ULTIMO pails with better tamper
evidence and leak proof features. Over a period of time such packaging replaced tin and metal can packs which was
used in lube packing. In the year 1998, we applied for a patent for this innovation of pull up spout with tamper proof
seal which was granted in the year 2007. In 2011, we started developmental work on IML decoration through
Robots which provide various benefits of packaging including higher brand recall. Commercial production of IML
was started in 2012. We have also applied for process patent for an innovation an airtight pilfer proof and tamper
evident seal locking mechanism of containers with tamper proof lid having injection mold spout for containers. All
our products are customized and manufactured as per customer requirements. In 2013, we succeeded in developing
our in-house Robots and IML label printing capabilities for IML which gave a cost advantage compared to imported
Robots and IML labels. Thus we believe we are innovator and pioneers in Indian Rigid Plastic Packaging.
We have in-house research and development division and in-house tool-room for designing and development of new
products, complex molds and Robots. Our tool room with Swiss and German machinery enables us to design and
27
Preliminary Placement Document
develop complex molds including 2-8 cavities molds, for our customers. Our tool-room enables us to undertake
repair and maintenance of our mold and Robots. Our continuous focus on this area enables us to innovate and create
new packaging solutions and cater to the customized needs of our customers with a reasonable time period. We have
installed various designing and tool room machines for new product development at cheaper cost without affecting
quality of the products. Due to our in house capabilities, we can customise and install an integrated manufacturing
unit anywhere to meet particular customer requirements. As on December 31, 2014, we have developed thirty one
(31) Robots which are currently deployed at our six manufacturing units.
We are committed to providing quality products to our customers and in this relation hold various quality
accreditations including ISO 9001:2008 quality certification for manufacture and supply of injection molded plastics
packaging containers, pails, closures and component and FSSC 22000: 2011, the food safety management system
certification applicable to manufacture of in-mold labelled plastic containers and lids for packaging for food
industry. We maintain strict hygiene standard in our manufacuring facilities for products catering to the Food and
FMGC sector. We regularly conduct drop test with the help of testing machines before the batch is approved for
sale. We have recently received "Quality Champion Award" from Asian Paints Limited, for the exemplary quality
performance during the period April 2012 to September, 2014.
As on December 31, 2014, our Company had 411 permanent employees and 823 employees on contract at various
locations. Our total income has grown at CAGR of 21.01% from ` 17,456 lacs in the financial year 2012 to ` 25,563
lacs in the financial year 2014. Our PAT has grown at CAGR of 1.98 % from ` 948 lacs in the financial year 2012 to
` 986 lacs in the financial year 2014.
28
Preliminary Placement Document
SUMMARY FINANCIAL INFORMATION
The following tables set forth selected financial information derived from the audited financial statements as of and
for Fiscals 2012, 2013 and 2014, and the unaudited interim financial statements of our Company as of and for the
quarter and six months period ended September 30, 2014 and September 30, 2013. This financial information has
been prepared in accordance with the Companies Act and the SEBI ICDR Regulations and presented in “Financial
Statements” on page 199. The selected financial information presented below should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial
Statements” on pages 60 and 199.
Reference is made in this Preliminary Placement Document to non-GAAP financial measures, primarily EBITDA,
which for any period has been calculated after considering impact of depreciation and amortisation and financial
costs to profit before tax. Our management believes that EBITDA and other non-GAAP financial measures provide
investors with additional information about our performance, as well as ability to incur and service debt and make
capital expenditures, and are measures commonly used by investors. The non-GAAP financial measures described
herein are not a substitute for Indian GAAP measures of earnings and may not be comparable to similarly titled
measures reported by other companies due to differences in the way these measures are calculated.
Unaudited Financial results for the Quarter & Six months ended September 30, 2014
Quarter Ended
September 30,
2014
Particulars
Gross Sales / Operating Income
8,839
Less: Excise Duty
(` In lacs)
Half year
Ended
September 30,
2014
17,193
928
1,802
7,912
15,391
6
26
7,918
15,417
69
191
5,156
10,000
d) Staff cost
540
1,056
e) Depreciation
208
410
f) Selling & Distribution Expenses
565
1,126
g) Other expenditure
482
944
7,021
13,728
Profit before Interest & Exceptional Items (3-4)
897
1,689
Interest and Financial Charges
211
422
0
0
Profit before tax (5-6-7)
686
1267
Provision for Current Tax
231
435
Provision for Deferred Tax
-5
-12
Net Profit after tax (8-9)
460
844
7
7
454
837
Net Sales / Income from operations
Other Income
Total Income (1+2)
Expenditure
a) (Increase) / decrease in stock in trade / work in progress
b) Consumption of Materials
Total Expenditure (a+b+c+d+e+f+g)
Extraordinary item
Prior period Items
Net Profit after tax & Prior Period items
29
Preliminary Placement Document
Paid up Equity Share Capital, Equity Shares of `10 each.
1,134
Half year
Ended
September 30,
2014
1,134
Reserves excluding revaluation reserves (excluding interim dividend & Tax
thereon)
4,963
4,963
Quarterly/Half yearly - Basic
- Diluted
Annualised
- Basic
4.02
4.01
16.07
7.41
7.41
14.83
- Diluted
16.06
14.82
Quarter Ended
September 30,
2014
Particulars
Basic & Diluted Earnings per share (Face value of `10)
Statement of Assets & Liabilities as at September 30, 2014
(` In lacs)
As at September 30, 2014
(Unaudited)
Particulars
EQUITY AND LIABILITIES
1. SHAREHOLDER'S FUNDS
(a) Share Capital
1,134
(b) Reserves & Surplus
4,963
6,097
Sub Total - Shareholder's Funds
2. NON-CURRENT LIABILITIES
1,590
(a) Long-term borrowings
(b) Other Long-term Liabilities
28
(c) Deferred Tax Liabilities (Net)
425
(d) Long-term Provisions
137
2,180
Sub Total - Non-Current Liabilities
3. CURRENT LIABILITIES
(a) Short-term borrowings
5,150
(b) Trade Payables
1,101
(c) Other Current Liabilities
1,498
(d) Short-term Provisions
646
Sub Total - Current Liabilities
8,395
16,673
TOTAL - EQUITY AND LIABILITIES
ASSETS
1. NON-CURRENT ASSETS
(a) Fixed Assets
7,064
(i) Tangible Assets
(ii) Capital Work-in-Progress
379
(iii) Leasehold building
19
30
Preliminary Placement Document
As at September 30, 2014
(Unaudited)
316
Particulars
(b) Non-Current Investments
(c) Long-term loans & Advances
310
(d) Other Non-Current Assets
55
8,143
Sub Total - Non-Current Assets
2. CURRENT ASSETS
(a) Inventories
3,236
(b) Trade Receivables
4,773
(c) Cash and cash equivalents
64
(d) Short-term loans & Advances
429
(e) Other Current Assets
28
8,530
Sub Total - Current Assets
16,673
TOTAL – ASSETS
BALANCE SHEET AS AT 31st MARCH, 2014, 2013, 2012
(` In lacs)
Particulars
EQUITY AND LIABILITIES
I.
Note
As at
31.03.2014
As at
31.03.2013
As at
31.03.2012
1. SHAREHOLDERS' FUNDS
(a) Share Capital
3
1,128
1,125
1,122
(b) Reserves & Surplus
4
4,122
3,784
3,510
(a) Long-term borrowings
5
1,949
2,182
1,274
(b) Other Long-term Liabilities
6
22
23
18
(c) Long-term Provisions
7
117
102
74
(c) Deferred Tax Liabilities (Net)
8
437
122
0
(a) Short-term borrowings
9
4,602
4,466
3,848
(b) Trade Payables
10
1,741
1,128
1,047
(c) Other Current Liabilities
11
1,586
1,034
548
(c) Short-term provisions
12
856
525
16,560
14,491
721
12,162
2. NON-CURRENT LIABILITIES
3. CURRENT LIABILITIES
Total
II.
ASSETS
1. NON-CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets
13
7,184
7,005
4,661
(ii) Capital Work-in-Progress
13
249
259
1,082
31
Preliminary Placement Document
Particulars
(iii) Leasehold building
As at
31.03.2014
Note
As at
31.03.2013
As at
31.03.2012
13
20
23
24
(b) Non-Current Investments
14
316
316
316
(c) Long-term loans & Advances
15
246
201
352
(d) Other Non-Current Assets
16
41
48
33
(a) Inventories
17
2,829
2,361
2,025
(b) Trade Receivables
18
4,220
3,503
2,862
(c) Cash and cash equivalents
19
61
43
28
(d) Short-term loans & Advances
20
736
700
750
(e) Other Current Assets
21
658
32
16,560
14,491
28
12,162
2. CURRENT ASSETS
TOTAL
STATEMENT OF PROFIT AND LOSS FOR THE YEARS ENDED 31 st MARCH, 2014, 2013, 2012
(` In lacs)
Particulars
Note
2013-14
2012-13
2011-12
I. INCOME
a) Sales
Domestic Sales
Less: Excise Duty
Export Sales
Net Sales
28,386
21,250
19,006
3021
2,266
1,743
147
218
167
25,512
19,202
17,430
b) Other Income
22
51
31
26
c) Changes in Inventories
23
385
385
(97)
25,948
19,618
17,359
TOTAL
II. EXPENDITURE
Material Consumed
24
17,212
12,845
11,541
Employees Remuneration & Benefits
25
1,967
1,532
1,347
Selling & Distribution Expenses
26
1,878
1,477
1,298
Interest & Financial Charges
27
840
580
380
Other Expenses
28
1,887
1,730
1,034
Preliminary Expenses Written Off
29
1
4
5
Depreciation
13
695
546
441
24,480
18,714
16,046
TOTAL
32
Preliminary Placement Document
Particulars
Note
2013-14
III. Profit Before Prior Period Adjustments & Tax
2012-13
2011-12
1,468
904
1,313
Prior Period Adjustments
30
19
23
15
Extraordinary item
30
60
0
0
1,389
881
1,298
Provision for Current Tax
436
181
365
Provision for Deferred Tax
46
122
0
V. Profit Transferred to Balance Sheet
907
578
933
Earning per share - BEPS
8.05
5.14
10.33
8.00
5.09
8.21
IV. Profit Before Tax
- DEPS
(` In lacs)
CASH FLOW STATEMENT FOR THE YEARS ENDED 31ST MARCH, 2014, 2013, 2012
PARTICULARS
A. CASH FLOW FROM OPERATIONS
Net Profit as per P&L Account
Adjustment for:
Depreciation
Preliminary Expenses & Deferred Expenses
Interest Paid
Operating Profit Before Working Capital
Changes
Adjustment for :
Trade and other receivables
Inventories
Trade Payables
Other Liabilities & Short Term Provisions
Loans & Advances & Others
Non-current Assets
Cash Generated from Operations
B. CASH FLOW FROM INVESTMENT
ACTIVITIES
Purchase of Fixed Assets
Sale/Destroyed of Fixed Assets
Sale/ Transfer of investments
Capital Work in Progress and pending
capitalization
2013-14
2012-13
1,468
718
1
840
1,559
904
569
4
580
3,027
(717)
(468)
613
771
(662)
(39)
(502)
2525
C. CASH FLOW FROM FINANCING
ACTIVITIES
Warrants Application Money
Earlier years Excess Dividend Provision
adjustment
33
1,153
(884)
1641
1,313
456
5
380
2,057
(640)
(335)
80
89
45
133
(628)
1,429
(3,135
)
222
0
(1,114)
220
0
10
2011-12
823
841
2,154
(619)
(247)
504
(144)
(267)
(23)
(797)
1,357
(1,522
)
25
(10)
(2,090)
(661)
(707)
0
0
(380)
65
0
0
(2,213)
(856)
Preliminary Placement Document
Particulars
Share Capital
Securities Premium & Capital Reserve
Employee Stock Expenses Outstanding
Provision for taxation
Provision for Proposed Dividend
Additions/ Repayment of Loans
Provision for corporate Dividend Tax
Interest Paid
Prior period & Extraordinary Items
Note
2013-14
3
4
12
20
(6)
3
(436)
(303)
(338)
(281)
29
1882
(58)
(46)
(840)
(580)
(54) (1,623)
(23)
Net Increase/(Decrease) in Cash & Cash
Equivalents
D. Opening Balance of Cash & Cash Equivalents
E. Closing Balance of Cash & Cash Equivalents
18
43
61
34
2012-13
676
15
28
43
2011-12
322
1127
11
(365)
(561)
1206
(91)
(380)
(15)
874
17
10
28
Preliminary Placement Document
RISK FACTORS
This section describes the risks that we currently believe may materially affect our business and operations. You
should carefully consider the following, in addition to any forward-looking statements and the cautionary
statements in this Preliminary Placement Document and the other information contained in this Preliminary
Placement Document, before making any investment decision relating to the Equity Shares. Prospective investors
should read this section in conjunction with the sections "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations as per Financial Statements", as well as other
financial and statistical information contained in this Preliminary Placement Document. The risks described
below are not the only ones relevant to us or the Equity Shares. Additional risks may be unknown to us and some
risks that we do not currently believe to be material could later turn out to be material. Although we will seek to
mitigate or minimize these risks, one or more of a combination of these risks could materially and adversely
impact our business, financial condition and results of operations. Investors should pay particular attention to
the fact that our Company is an Indian company and is subject to a legal and regulatory regime which in some
respects may be different from that applicable in other countries. Investors should consult tax, financial and legal
advisors about the particular consequences of an investment in the Issue.
RISKS RELATING TO OUR COMPANY
Internal Risk Factors
1.
Our Company's business is dependent on few customers. Any loss of such customers or a significant
reduction in purchases by such customers could adversely affect our business, results of operations and
financial conditions.
Our Company is dependent on few customers, including multi- national paint and lubricant companies. Our top
10 customers accounted for 81.75 per cent, 75.49 per cent and 79.59 per cent of our gross sales for the FY 2014,
FY 2013 and FY 2012 respectively. Though we do not have any long-term agreement with our significant
customers, we have been their vendor for over five years. We have not observed in any reduction in contribution
by top ten customers in absolute terms in last three years. The loss of any significant customer or a significant
reduction in demand from such customers could have an adverse effect on our business, results of operations and
financial conditions. We normally provide credit period of less than sixty days, however any delay in payments by
such customers over the usual payment cycles may also affect the results of our operations and financial
conditions. There can be no assurance that our business relationships with our key customers would continue in
similar manner.
2.
Any inability to pass on increased price of key raw material, polymer, used for manufacturing our
products may affect our profitability.
The key raw material used for manufacturing our products is polymers which are PPCP, PP, HDPE and LLDPE.
Raw material consumed as a percentage of total revenue was 50.1 per cent, 50 per cent, 50.9 per cent for the FY
2012, FY 2013 and FY 2014 respectively. The average prices for PPCP/PP increased from ` 82 per kg to ` 130
per kg from FY 2012 to FY 2014 which is currently in the range of `88 for the month December, 2014. Any
fluctuation in the international price of crude oil affects the price of polymers. In FY 2014, we spent ` 14,533 lacs
for 14,455 tonnes of polymer in comparison to Fiscal 2012, where we spent ` 9,649 lacs for 12,217 tonnes of
polymer. Further, any fluctuations in the demand and/or supply of polymers may impact its purchase price. We do
not have any long term supply agreement with any of our raw material suppliers. Although we enter into short
term contracts with some of our suppliers for rates, we may be unable to enter into such contracts at all times in
future.
In terms of our understating with most of our customers, we have flexibility to pass on raw-material cost
fluctuations to them through monthly pricing arrangements. However any inability to pass on the increased costs
of polymers to our customers in future, may affect our profitability.
35
Preliminary Placement Document
3.
Our key raw material, polymer is manufactured by few players domestically, hence we are dependant on a
few suppliers.
Key raw materials required by us include PPCP/PP, HDPE and LDPE/LLDPE which are manufactured in India by oil
PSUs, Reliance Industries Limited (“RIL”) and others. In FY 2014, we spent ` 14,533 lacs for 14,455 tonnes of
polymer in comparison to Fiscal 2012, where we spent ` 9,649 lacs for 12,217 tonnes of polymer. For FY 2014
our consumption of PPCP/PP, HDPE and LDPE/LLDPE was 12,997 tonnes, 115 tonnes, 1,297 tonnes
respectively. We procure over 90 per cent, of polymers required by us through delcredere agents of RIL in the FY
2014. Hence, we are significantly dependent on them for supply of polymer which is a key raw material in
manufacturing our products. Though we do not have any long term agreements with our key supplier, we enter into
annual MoUs with them for purchase of polymer quantity. Due to our long standing relationship with such suppliers, we
believe we procure polymer at competitive rates. If the supplier is unable to supply polymer to us on commercially
reasonable terms or quantity we require, it may adversely affect our production schedule and we may have to purchase
polymer at a higher rate from the market, which may affect our profitability.
4.
We incur investments from time to time on our R & D and we may not be able to derive adequate benefits
from such investments.
We operate in the industry which requires continuous technology upgrade for manufacturing products and
research activities to stay ahead of the market. We currently have centralised integrated tool room where we
develop, repair molds. While we believe our centralised tool room provides us with advantage like early
development of products at cheaper cost, but cannot assure that we will be able to develop products acceptable to
our customers. We will continue to make investments on R & D including and not limited to developing our
Robots, new molds and processes as we depend significantly on such processes for upgrading our technologies
and processes from time to time. We capitalise part of salary of our Deputy Managing Director, Adivishnu
Subramanyam, who devotes considerable time to develop new design and technologies at our tool room. These R
& D activities are critical since it may improve demand for our product and our profitability, if the same proves to
be successful. We cannot guarantee that we may be able to derive adequate benefits from these R & D activities
and will be able to reap profits from our investments in the same. In addition, shifts in customer demand may
render existing technologies and machinery obsolete, requiring additional capital expenditures and/or write-downs
of assets.
5.
Our growth prospect may suffer if we fail to anticipate and develop new products and enhance existing
products in order to keep pace with rapid changes in customer preferences and the industry on which we
focus.
We believe we were among first few companies to introduce the pail packaging containers for the paint industry
which has over the years replaced the tin packaging containers. Further, we have successfully adopted „In-mold
labelling‟ technology which enable us to produce a picture quality decoration on the molds produced by us. Our
business is characterized by constant product innovation due to rapid technological change, evolving industry
standards and customer preferences. To compete successfully in the packaging industry, we must be able to
identify and respond to changing demands and preferences in packaging industry. While we believe that our in
house tool room and centralised R&D gives us competitive advantage and helped us in reaching current level. We
cannot assure that our new products may always gain buyer acceptance and we will always be able to achieve
competitive products to meet customer expectations. Failure to identify and respond to changes in consumer
preferences could, among other things, limit our ability to differentiate our products, adversely affect consumer
acceptance of our products and could have impact on our growth prospect.
6.
Any inability on our part to successfully maintain quality standards could adversely impact our business.
Quality of our product is very important for our customers and their brands equity. Our product goes through various
quality checks at various stages including random sampling check, drop test and/or any tenth order lot check. We supply
our packaging products to paints, oil and lubricant, food and FMCG industries and other industries each of which have
36
Preliminary Placement Document
different product specifications. Our manufacturing plants are ISO: 9001:2008 and FSSC 22000: 2011 certified. We
maintain utmost hygiene standards in our manufacturing facilities serving food and FMCG sectors. We ensure that our
products are tested for various application tests such as load, impact, strength, durability, wear and fatigue etc., in line
with certain international standards. Failure of our products to meet prescribed quality standards may results in rejection
and reworking of product hence any failure on our part to successfully maintain quality standards for our products may
affect our customer demands or preference which may negatively affect our business.
7.
Our Company’s growth depends up on growth in paints and oil and lubricant industries.
For FY 2012, FY 2013 and FY 2014, our Company derives 97.13 per cent, 94.88 per cent and 94.31 per cent of
gross sales from paints and oil and lubricant segment. Our revenue from paint segment has grown from ` 8,600
lacs in the FY 2012 to ` 16,440 lacs in the FY 2014 showing a growth of 91.16 percentages. Similarly our
revenue from oil and lubricant segment has grown from ` 10,024.2 lacs in the fiscal 2012 to ` 10,470 lacs in the
fiscal 2014 shows a growth of 4.45 percentages. Thus we are dependent on the paints and oil and lubricant
industry for majority of our revenue. With introduction of IML containers, we are able to cater to food and FMCG
sectors also. Any slowdown in growth of the paints and oil and lubricant industry or demand of our products by
paint and oil and lubricant industry may affect our growth.
8.
We may be unable to effectively implement our growth strategies or manage our growth.
Our gross sale has grown at a CAGR of 21.01 per cent from ` 17,456 lacs in the FY 2012 to ` 25,563 lacs in the
FY 2014. Our growth has been a result of our growth strategies over the year and success of our design
capabilities and innovations. We propose to make further investments to improvise our designing capabilities and
innovation to increase sales of our products. Our growth strategy involves risks and difficulties, many of which
are beyond our control and, accordingly, there may be no assurance that we will be able to complete our plans on
schedule or at all, or without incurring additional unforeseen material capital expenditure. Any inability on our
part to manage our growth effectively or to ensure the continued adequacy of our current systems to support our
growth strategy could have an adverse effect on our growth plans. Furthermore, if market conditions change or if
our operations do not generate sufficient funds or for any other reasons, we may decide to delay, modify or forgo
some aspects of our growth strategy which could have a material and adverse effect on our business prospects.
9.
Our customers’ requirements to locate our manufacturing units in close proximity to their facilities may
require capital expenditure and we may not be able to manage our manufacturing units at various
locations effectively.
Currently we are operating from seven different manufacturing units which include four manufacturing units
located at Telangana and one each at Tamil Nadu, Maharashtra and Daman. To serve our customers, we have
established integrated pail manufacturing units at Satara, Maharashtra and Hosur, Tamil Nadu which are close
proximity to our customers units. We incur capital expenditure to set up new facilities in proximity to our
customers. In the event that any of our customers' facilities are moved from their current locations, we may not be
able to utilize our manufacturing unit efficiently.
Our Company is and will continue to evaluate various location options for its expansion plans preferably closer to
the customers. Our ability to set up and manage effectively our new manufacturing facilities in the future, will
depend on a variety of factors including availability of sufficient capital, procurement of land, receipt of relevant
approvals, availability of sufficient skilled employee and labour base. Costs associated with such expansion plan
may effect our business, financial condition and results of operations. Further, we cannot assure that we will be
able to manage all our manufacturing units at various locations effectively.
10. We face the risk of our designs getting copied and product being sold at lower prices in the market
resulting in us losing out on premium pricing.
37
Preliminary Placement Document
We have an internal design team that design and develop plastic molded pakaging containers, pails, closures,
pharmaceutical and food packaging containers. Our design team studies the market before preparing designs,
molds or colour of these packaging products. As at December 31, 2014, we are the registered proprietor of 20
designs of our products registered with the Controller General of Patents, Designs and Trade Marks under the
provisions of the Design Act, 2000 and the Design Rules, 2001. In addition, we have 1 patent registered and 2
pending patent applications in India. We also own trademark that contribute to the identity and the recognition of
our corporate brand, product and service brands globally. Our intellectual property rights may not be adequately
protected against third party infringement.
Due to the popularity of designs and colour of our containers, we face the risk of our design getting copied by our
competitors. If our designs are imitated with poor quality and sold at cheaper rates in the market, we may lose
some of our customers to such competitors, which will in turn adversely affect our business and results of
operations. Further, any copy of our designs with our logo, will erode our brand value.
11. If we are unable to adapt to technological changes coupled with changes in industry trends and
preferences our business and results of operations may be adversely affected.
Our future success will depend on our ability to respond to technological advances in the businesses in which we
operate, on a cost-effective and timely basis. The development and implementation of such technology entails
significant technical and business risks. There can be no assurance that we will continuously implement/adopt
new technologies effectively or will be able to respond in timely manner.
Recently, our Company has successfully adopted „In-mold labelling‟ technology which enables us to produce a
picture quality decoration on the molds produced by us. We believe that we are among the few companies which
have been successful in development of various new technologies which are commercially adopted. To compete
effectively in the rigid packaging industry, we must be able to develop and produce new products to meet our
customers‟ demand in a timely manner or to identify and understand evolving industry trends and preferences and
develop new products to meet our customers‟ demands. If we are unable, to adapt in a timely manner to industrial
trends and preferences, customer requirements or technological changes, our business and financial performance
could be adversely affected.
12. Failure to meet our production timelines may impact our reputation and could also lead to cancellation of
our orders.
We manufacture diverse products for our customers including lubricant containers, paint containers, food
container and bulk containers in different size, shape and modules manufacture through various technologies
including IML as per the requirements of our customers. Most of our customers give us production schedule for
thirty days but few give production schedule for less than two weeks. We are expected to supply varying
quantities at different points in time, as per the given schedule. Our operations are streamlined to take into
account delivery schedule. We also provide performance guarantees to our clients which require us to complete
the orders within a specified time frame.While a certain amount of time is always calculated as buffer and we
keep raw material for about two to three weeks, any serious disruption in our manufacturing units will impact our
ability to meet our production timelines and may impact our reputation and could also lead to cancellation of our
orders.
13. Any shortage or non-availability of electricity may adversely affect our profitability.
Our quality of product and efficiency of production of our manufacturing units are dependent on uninterrupted
supply of quality power. We depend on power supplied by the State electricity board for our manufacturing
facility requirements. Some of our manufacturing units are equipped with diesel generator set for alternative
source of power. We have faced power supply deficiency including scheduled power disruptions in some of our
manufacturing units in the past due to which led to alternate source of power. For the FY 2012, FY 2013 and FY
2014, we have consumed ` 106.54 lacs units, ` 112.17 lacs units and ` 119 lacs units of electricity of which we
38
Preliminary Placement Document
have generated ` 11.76 lacs units, ` 19.76 lacs units and ` 7 lacs units of electricity from own generation through
diesel generator set. The average cost of generation of electricity from diesel generator set is ` 11.15, ` 15.56 and
` 15.22 for Fiscal 2012, 2013 and 2014 respectively, whereas the average cost of electricity purchase from
electricity board is ` 4.50, ` 6.51 and ` 7.32 for Fiscal 2012, 2013 and 2014 respectively. To meet the power
supply deficiency, we have also entered into a purchase of power through Indian Energy Exchange for electricity
consumptions of our manufacturing units. If we do not get uninterrupted quality power for our manufacturing
units from electricity board, it may increase the manufacturing cost of our products and affect our profitability.
14. We are dependent on our Chairman and Managing Director, Deputy Managing Directors and senior
management to manage our current operations and meet future business challenges.
Our future success is dependent on our Chairman and Managing Director, Janumahanti Lakshmana Rao, Deputy
Managing Directors, Adivishnu Subramanyam and Pattabhi Venkateswara Rao and other senior management to
maintain strategic direction, manage current operations and risk profile and meet future business challenges,
including the planned expansion and the addition of new businesses. Our Chairman and Managing Director has
more than three decades of experience in business and its management and is the visionary of our Company and
involved in formulation of corporate strategy and planning, overall execution and management, and concentrates
on the growth of our Company.
Our Deputy Managing Director Adivishnu Subramanyam has more than three decades of experience in designing
and manufacturing of molds and overall in charge of in – house tool room which plays very vital role in
developing products for our rigid packaging business.
Our Deputy Managing Director, Pattabhi Venkateswara Rao has over 27 years of experience and involved in
planning and leadership for purchase and marketing department in order to meet the goals of the marketing plan
of our Company. The expertise, experience and services of our Company's current Chairman and Managing
Director and Deputy Managing Directors and senior management are integral to our business. Our Company does
not maintain key man insurance and the loss of, or inability to attract or retain, such persons could adversely
affect our business and results of operations.
Although, most of the other senior management of our Company have been employed with us for over a decade,
our Company does not enter into employment agreements with the senior management personnel who are
therefore not obligated to work for our Company for any specified period. If one or more of these key personnel
are unwilling or unable to continue in their present positions, we may not be able to replace them with persons of
comparable skill and expertise promptly or at all, and we may not be able to further augment our management
team appropriately and this could have a material adverse effect on our business, results of operations and
financial condition.
15. Our supplies to food and FMCG segments requires us to meet additional hygiene and food safety norms.
For FY 2012, FY 2013 and FY 2014, our Company derives 2.86 per cent, 5.12 per cent and 5.69 per cent of gross
sales from food and FMCG segments. Food and FMCG segment requires stringent norms to be followed for
maintaining the quality and hygiene. Our units are approved with FSSC 22000: 2011, the food safety management
system applicable to manufacture of in-mold labelled plastic containers and lids for packaging product for food
and FMCG products. Any failure to meet additional hygiene and food safety norms, may hamper our ability to get
repeat order and or add new customers in the food and FMCG segments which may affect our growth and
profitability.
16. We are subject to risks associated with rejection of supplied products and consequential claims including
product liability costs.
Defects, if any, in our products could lead to rejection of supplied products and consequential financial claims and
could require us to undertake service actions. As per the terms of our agreements with few clients, these actions
39
Preliminary Placement Document
could require us to expend considerable resources in rectifying and/or addressing these problems, to absorb costs
incurred by our customers in addressing such problems. We are currently not covered by insurance for any
product liability claims and hence any such liability could have an adverse impact on our results of operations.
Though there have not been any significant rejection and claims experienced by our Company in past, we cannot
assure you that no such claims will be made against us in the future or that such claims will be settled in our
favour. Any such successful claims could adversely affect our results of operations and cash flow.
17. Any discontinuance or non-availability of tax benefits being enjoyed by us or our inability to comply with
related requirements may have an adverse effect on our profitability and cash flow.
Our manufacturing unit at Satara, Maharashtra enjoys sales tax refund facilities at the rate of twenty five per cent
on sales tax paid by our Company. In Daman, our manufacturing unit enjoys benefits of sales tax exemption on
sale effected between interstate trade or commerce to a registered dealer or the government of good manufactured,
processed or assembled. In the past we enjoyed certain tax incentives in connection with our manufacturing
facilities at Telangana for deferred tax benefit which is being currently repaid.
In the event of any discontinuance or non-availability of tax benefits, the effective tax rates payable by our
Company may increase and consequently our profitability and cash flow may be adversely affected. For further
details of the tax benefits available to our Company, please refer to chapter titled "Taxation” beginning on page
167.
18. Our Company did not have whole time company secretary in the past. Such non-compliances may result
into penalties or other action on our Company by the statutory authorities.
The paid up capital of our Company was increased to ` 794.58 lacs on September 29, 2008 pursuant to which our
Company was required to comply with Section 383(A) of the Companies Act, 1956 in as much as appointing a
whole-time secretary. Our Company was not in compliance with the requirements of the Section 383(A) of the
Companies Act, 1956 for the period from September 30, 2008 to December 18, 2011 and from July, 2012 to
December 2014. However, our Company has submitted letter dated August 10, 2012 to Institute of Company
Secretaries of India, Hyderabad requesting for a whole time secretary with exposure in secretarial and legal
matters and knowledge of labour laws. Our Company has appointed Priyanka Rajora, Company Secretary on
January 3, 2015. Further, our Company has delayed in complying with reporting requirements such as registration
of special resolutions, returns of allotment of shares, filing of annual returns etc., as required under the Companies
Act to the RoC. Such delay/non-compliance in the future may render us liable statutory penalties.
19. As the securities of our Company are listed on a stock exchange in India, our Company and our promoters
are subject to certain obligations and reporting requirements under SEBI Insider Trading Regulations,
Takeover Code and listing agreement. Any non compliances/delay in complying with such obligations and
reporting requirements may render us/our promoters liable to prosecution and/or penalties.
Our Company and our promoters are subject to certain obligations and reporting requirements under SEBI Insider
Trading Regulations, Takeover Code and listing agreement such as submission of interest or holding by the
directors and officers of our Company etc. Though our Company and our promoters endeavour to comply with all
such obligations/reporting requirements, there have been certain instances of non-compliance and delays in
complying with such obligations/reporting requirements. Any such delays or non-compliance would render our
Company/our promoters to prosecution and/or penalties. Although our Company/our promoters have not received
any communication from the stock exchanges or any authority in this regard, there could be a possibility that
penalties may be levied against our Company/our promoters for certain instances of non-compliance and delays in
complying with such obligations/reporting requirements. Further, in some instances our Company/our promoter
do not have acknowledgement of receipt of Stock Exchange in respect of certain filings or reporting made by
them under the Takeover Code and SEBI Insider Trading Regulations due to which they may not be in a position
to ascertain or evidence compliances with such reporting requirements.
40
Preliminary Placement Document
20. Our Company is involved in certain legal and other proceedings. An adverse outcome in such proceedings
may have an adverse effect on our financials.
Our Company is currently involved in certain legal proceedings in India. These legal proceedings are pending at
different levels of adjudication before various courts and tribunals. We can give no assurance that these legal
proceedings will be decided in our favour and we may incur significant expenses and management time in such
proceedings and may have to make provisions in our financial statements, which could increase our expenses and
liabilities. If any new developments arise, for example, rulings against us by the appellate courts or tribunals, we
may face losses and may have to make provisions in our financial statements, which could increase our expenses
and our liabilities. If such claims are determined against us, there could be an adverse effect on our financials.
Details of the total number of proceedings pending against our Company are mentioned below:
Litigation filed against us:
Nature of cases/claims
Tax
Tax Notice
Legal Notice
* To the extent quantifiable.
Number of cases
outstanding
6
2
1
Amount involved (` in Lacs)*
Number of cases
outstanding
1
4
Amount involved (` in Lacs)*
46
112.95
2.52
Litigation filed by our Company:
Nature of cases/claims
Tax
Civil
* To the extent quantifiable.
16.3
34.62
For further details of these legal proceedings, please refer to chapter titled “Legal Proceedings” beginning on
page 191.
21. We have contingent liabilities and our financial condition could be adversely affected if any of these
contingent liabilities materializes.
As of September 30, 2014, contingent liabilities disclosed in the notes to our audited financial statements
aggregated ` 94.02 lacs. Set forth below are our contingent liabilities that had not been provided for as of
September 30, 2014:
Amount (` in Lacs)
45.00
49.02
94.02
Nature of contingent liability
Bank Guarantees
Export obligations
Total
In the event that any of these contingent liabilities materialize, our financial condition may be adversely affected.
22. We may face a risk on account of not meeting our export obligations. Our failure to fulfil these export
obligations in full may make us liable to pay duty proportionate to unfulfilled obligation along with the
interest.
We have obtained licenses under Export Promotion Capital Goods Scheme (“EPCG”). As per the licensing
requirement under the said scheme, we are required to export goods of a definite amount, failing which we will
41
Preliminary Placement Document
have to make payment to the Government of India equivalent to the duty saved by us along with the interest. As
on September 30, 2014 the duty saved thereon is ` 49.02 lacs. Though in the past we have not been penalised for
non-fulfilment of the export obligations under the EPCG Scheme; there can be no assurance that we would be
able to meet the export obligations in the future. In case we fail to fulfil these export obligations in full; we will
have to pay duty proportionate to unfulfilled obligation along with the interest.
23. There is audit qualification in our Company’s Financial Statements for the Financial Year 2013.
Our Company‟s statutory auditor qualified their auditors‟ report on our Company‟s financial statement for
Financial Year 2013 as follows:
“Short provision of deferred tax liability in accordance with Accounting Standard 22 issued by ICAI, ` 269.92
Lakhs pertaining to earlier years impacting noncurrent liabilities, reserves & surplus and prior period items.”
For further information, please see the section titled „Financial Statements‟ on page 199 of this Preliminary
Placement Document.
24. Restrictive financial and other covenants may limit our operations and financial flexibility.
As at September 30, 2014, our Company had total borrowings of ` 6,768.18 lacs, which includes short term
borrowings of ` 5,150.15 Lacs, long term borrowings of ` 1,590.48 Lacs and other long term borrowings of `
27.55 Lacs. Some of our Company's financing agreements and debt arrangements set limits on and/or require
prior approval of lenders before, among other things, pledging assets as security, making investments and other
restricted payments, selling assets, effecting any consolidations or mergers, making acquisitions, hedging,
undergoing a change of control, declaring dividends, dilution of shareholding of promoters including no reduction
in number of shares held by the promoter and making substantial changes to the nature of the business. In
addition, certain covenants may limit our Company's ability to borrow additional funds or to incur additional
liens. Such restrictions or limitations may adversely limit our Company's operations and financial flexibility, and
adversely affect its business growth. For further details of our borrowings please refer to chapter titled „Financial
Statements’ beginning on page 199.
25. Any downgrading of our Company's debt ratings could adversely affect our profitability.
Our Company's term loans have been reaffirmed by ICRA as [ICRA] BBB (Stable). Our Company's long term
fund based and short-term non fund based have been reaffirmed/ assigned by ICRA as [ICRA] BBB (Stable) and
[ICRA] A2 respectively.
However, there is no certainty that in the future, our Company's ratings would not be downgraded and any
downgrading in its credit ratings may increase interest rates for refinancing outstanding debt, which would
increase our Company's financing costs, and adversely affect its ability to raise new capital on a competitive
basis, which may adversely affect our Company's profitability and future growth. As at September 30, 2014, our
Company had total borrowings of ` 6,083.01 Lacs, which includes short term borrowings of ` 5,150.15 Lacs, long
term borrowings of ` 932.86 Lacs. As of March 31, 2014 total borrowing was ` 6,418 Lacs and our company paid
total interest of ` 840 Lacs for Fiscal 2014. Our borrowing is varying rate of interest which ranges from 11 per
cent to 12.75 per cent depending on bank tenure and type of facilities.
26. Certain government/statutory approvals/certifications/licenses may have expired or renewal/fresh
applications for the same are pending before the concerned authorities. Any failure to obtain them in a
timely manner or at all may adversely affect our operations.
We require certain statutory and regulatory permits, licenses and approvals to operate our business and require
renewing some of them on periodic basis and need to apply for some of them for expansion. We have made
renewal or new applications for certain approvals or licenses that have expired or that are required for our
42
Preliminary Placement Document
business but have not yet been received. In the future as well, our Company will be required to renew such
permits, licenses and approvals, and obtain new permits, licenses and approvals in order to carry on current
business operations and for any proposed new operations or expansions. While we believe that we will be able to
renew or obtain such permits, licenses and approvals as and when required, there can be no assurance that the
relevant authorities will issue or renew any of such permits, licenses or approvals in the timeframe anticipated by
it or at all. Such non-issuance or non-renewal or non – availability may result in the interruption of our business
operations and may have a material adverse effect on our results of operations and any present or future
expansions. Further, in the event any of such approvals or licenses or any renewals thereof are refused to be
granted to us, we may be required to temporarily discontinue our relevant operations for want of such approvals
or licenses.
27. Extensive environmental, health and safety laws and regulations may result in increased liabilities and
capital expenditure.
Our operations are subject to various environmental and safety laws including industry specific regulations,
including those governing the generation, handling, storage, use, management, transportation and disposal of, or
exposure to, environmental pollutants or hazardous materials resulting from our manufacturing processes. For
instance, we require approvals under the Water (Prevention and Control of Pollution) Act, 1974 and the Air
(Prevention and Control of Pollution) Act, 1981, in order to establish and operate our manufacturing facilities in
India. Further, we have not applied for consent to operate under the Water (Prevention and Control of Pollution)
Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981 for our manufacturing Unit – V and Unit –
VI.
We would also incur additional costs and liabilities related to compliance with these laws and regulations. We are
subject to various central, state and local environmental, health and safety laws and regulations concerning issues
such as damage caused by air emissions, wastewater discharges, solid and hazardous waste handling and disposal.
These laws and regulations are increasingly becoming stringent and may in the future create substantial
environmental compliance or remediation liabilities and costs. These laws can impose liability for noncompliance, with health and safety regulations or clean up liability on generators of hazardous waste and other
substances that are disposed of either on or off-site, regardless of fault or the legality of the disposal activities.
28. The shutdown of operations at our manufacturing units could have a material adverse effect on our
results of operations and financial condition.
Our manufacturing units are subject to operating risks, such as labour disputes, natural disasters and accidents,
etc. The occurrence of any of these risks could affect our operations by causing production at one or more
facilities to shut down. Our Company has suffered fire accident in Daman Unit in the financial year 2013 – 2014,
due to which some fixed and current assets were damaged and which had disrupted the manufacturing unit for
seven days which suffered a net loss of ` 60 lacs after a claim settled by insurance company considering net
realisable value of scrap at ` 14 Lacs. No assurance can be given that one or more of the factors mentioned above
will not occur, and this could have a material adverse effect on our results of operations and financial condition.
29. We engage contract labour for carrying out certain of our operations and we may be held liable for paying
the wages of such workers in the event of default by the independent contractor.
We appoint independent contractors who in turn engage on-site contract labour for performance of certain of our
operations in our manufacturing units. We engage 823 contract labourers through our contractors on a regular
basis based on the requirements of our manufacturing units. Although we do not engage these labourers directly,
we may be held responsible for any wage payments to be made to such labourers in the event of default by such
independent contractors. Any difficulties in managing contract labour may have an adverse impact on our results
of operations.
43
Preliminary Placement Document
30. Our Promoters or members of our Promoter Group may pledge or dispose of the Equity Shares held by
them which may adversely impact the trading price of our Equity Shares.
There is no restriction on our Promoters and members of the Promoter Group to dispose, transfer or pledge their
Equity Shares, and our Promoters and / or members forming part of the Promoter Group may at any time pledge
or dispose of the Equity Shares held by them including immediately after listing of Equity Shares pursuant to this
Issue. In the event of creation of such a pledge, the pledgee may exercise the right of acquiring, selling or
otherwise disposing of such Equity Shares if the pledgor fails to abide by the terms and conditions of the pledge
so created. Any transfer / sale of Equity Shares by our Promoter and / or members forming part of the Promoter
Group will lead to a dilution of the Promoter holding in our Company which may adversely impact the trading
price of our Equity Shares.
31. Our ability to pay dividends in the future may be affected by any material adverse effect on our future
earnings, financial condition or cash flows.
Our Company has paid ` 561.77 lacs, ` 225.32 lacs and ` 339.29 lacs for the FY 2012, FY 2013 and FY 2014
respectively as dividend to our shareholders. Our ability to pay dividends in future will depend on our earnings,
financial condition and capital requirements and capital expenditure. We are required to obtain consents from our
lenders prior to the declaration of dividend as per the terms of the agreements executed with them. In the past, we
have written to our lenders requesting for their consent to declare dividend but have not received any response
thereof. We may be unable to pay dividends in the near or medium term, and our future dividend policy will
depend on our capital requirements and financing arrangements in respect of our operations, financial condition
and results of operations. For further details, please refer to the chapter titled “Dividend Policy” beginning on
page 59. Further we cannot assure you that our dividend yields maintain our past practice.
32. We have entered into related party transactions in the past and may continue to do so in future.
For the Fiscal 2014, our Company has entered into certain related party transactions with the promoters, directors
and promoter group. The total amount of related party transactions as on March 31, 2014 aggregate outstanding to
` 74 lacs. While our Company believe that all such transactions have been conducted on an arm‟s length basis and
are accounted as per Accounting Standard 18, however there can be no assurance that we could not have achieved
more favourable terms had such transactions not been entered into with related parties. Furthermore, it is likely
that we may enter into related party transactions in the future. For further details please refer to the section titled
„Financial Statements’ beginning on page 199.
33. We are a labour intensive industry and hence may face labour disruptions and other planned and
unplanned outages that would interfere with our operations.
Our Company‟s activities are labour intensive. As on December 31, 2014, our company has 823 labourers hired
through contractors. Strikes and other labour action may have an adverse impact on our operations, though we
have not experienced any such labour disruption in the past. We cannot guarantee that we will not experience any
strike, work stoppage or other industrial action in the future. Any such event could disrupt our operations
impacting profitability.
34. Some of the premises from which we operate or are used by our Company for the purposes of our
operations are situated at lease hold premises. Any termination of the relevant lease or leave and license
agreements in connection with such properties or our failure to renew the same could adversely affect our
operations.
Premises used by our Company at Unit – V are taken on a long – term leasehold basis from third party. The
premises used for our Unit – VI, Depot – I, Depot – II, Depot – III and Depot – IV and industrial sheds located at
Hosur, Tamil Nadu are taken on the basis of short term lease agreements. Further Mumbai branch office (Sales) is
taken on the basis of short-term leave and license basis from third party. Further the Unit – VI used by our
44
Preliminary Placement Document
Company is taken on the lease basis from our Chief Financial Officer, Seshu Kumari Adivishnu for the period of
five years from July 2, 2010 and paid a rent of ` 10 lacs for the FY 2014. Most of the short term lease deeds are
not registered. There can be no assurance that these agreements will be renewed upon expiry or on terms and
conditions acceptable to us. Any failure to renew these agreements or procure new premises will increase our
costs or may force us to look out for alternative premises which may not be available or which may be available at
more expensive prices. Any or all of these factors may have a material adverse effect upon our operation and
profitability.
35. Our insurance coverage may not be adequate to protect us against all potential losses to which we may be
subject to, and this may have a material adverse effect on our business and financial condition.
We maintain insurance for a variety of risks, including risks relating to fire, special perils, burglary, etc., and other
similar risks. However, there can be no assurance that any claim under the insurance policies maintained by us
will be honoured fully, in part or on time. Our Company has suffered fire accident in Daman Unit in the FY 2014,
due to which some fixed and current assets were damaged and which had disrupted the manufacturing unit for 7
days which suffered a net loss of ` 60 lacs after a claim settled by insurance company considering net realisable
value of scrap at ` 14 lacs. Any liability in excess of our insurance limits could result in additional costs, which
would reduce our profits. Further, we may be subject to claims arising from alleged, suspected or actual defects in
the products that we manufacture, which may require us to conduct product recalls, due to alleged, suspected or
actual defects in end product manufactured by them for their own customers. In the event that any significant
product liability, performance improvement or replacement claims are brought against us, which are not covered
by insurance or result in recoveries in excess of our insurance coverage, it may adversely affect our business,
financial condition, results of operations and prospects.For details, see the section titled “Business - Insurance”
beginning on page 103.
36. We are dependent on third party transportation providers for the supply of raw materials and delivery of
our products and any failure on part of such providers to meet their obligations could have an adverse
effect on our profitability and results of operation.
As a manufacturing business, our success depends on the smooth supply and transportation of the various raw
materials required for our manufacturing units and of our products from our manufacturing units to our customers,
both of which are subject to various uncertainties and risks. We are dependent on third party transport providers
for transportation of raw material from our suppliers to our manufacturing units and for delivery of our finished
products to our customers. Transportation cost constituted 4.61 per cent, 4.87 per cent and 3.80 per cent of our net
sales for FY 2012, FY 2013 and FY 2014, respectively. Many of our customers work on just in time principle and
maintain very low level of inventory of pails. An increase in freight costs or the unavailability of adequate
infrastructure for transportation of our products to our customers may have an adverse effect on our profitability
and results of operation.
37. We have not entered into any definitive agreements for the utilization of net proceeds from this Issue.
Subject to compliance with applicable laws and regulations, we intend to use the net proceeds of the Issue for
additional capital expenditure, augmenting working capital requirement and general corporate purposes.
However, we have not placed orders or entered into any definitive agreements to utilize the net proceeds of this
Issue.
External Risk Factors
38. The Companies Act, 2013 has effected significant changes to the existing Indian company law framework
and the SEBI has introduced changes to the listing agreement, which are effective from October 1, 2014,
which may subject us to greater compliance requirements and increase our compliance costs
45
Preliminary Placement Document
A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and have come
into effect from the date of their respective notification, resulting in the corresponding provisions of the
Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect significant
changes to the Indian company law framework, such as in the provisions related to issue of capital (including
provisions in relation to issue of securities on a private placement basis), disclosures in offer document, corporate
governance norms, accounting policies and audit matters, related party transactions, introduction of a provision
allowing the initiation of class action suits in India against companies by shareholders or depositors, a restriction
on investment by an Indian company through more than two layers of subsidiary investment companies (subject
to certain permitted exceptions), prohibitions on loans to directors, insider trading and restrictions on directors and
key managerial personnel from engaging in forward dealing. We may also need to spend, in each financial year, at
least 2.0% of our average net profits during the three immediately preceding financial years towards corporate
social responsibility activities and disclose our corporate social responsibility policies and activities on our
website. As a result of the changes brought about by the Companies Act, 2013 to the provisions relating to
accounting policies, going forward, we may also be required to apply a different rate of depreciation. Further, the
Companies Act, 2013 imposes greater monetary and other liability on our Company and Directors for any noncompliance. To ensure compliance with the requirements of the Companies Act, 2013, we may need to allocate
additional resources, which may increase our regulatory compliance costs and divert management attention.
The Companies Act, 2013 has introduced certain additional requirements which do not have corresponding
provisions under the Companies Act, 1956. Accordingly, we may face challenges in interpreting and complying
with such requirements due to limited jurisprudence in respect of the relevant provisions. In the event our
interpretation of such provisions of the Companies Act, 2013 differs from, or contradicts with, any judicial
pronouncements or clarifications issued by the Government in the future, we may face regulatory actions or we
may be required to undertake remedial steps. Additionally, some of the provisions of the Companies Act, 2013
overlap with other existing laws and regulations (such as the corporate governance norms and insider trading
regulations issued by the SEBI). Recently, the SEBI issued revised corporate governance guidelines which are
effective from October 1, 2014. We may face difficulties in complying with any overlapping requirements.
Further, we cannot currently determine the impact of the provisions of the Companies Act, 2013 or the revised
SEBI corporate governance norms, which are yet to come in force. Any increase in our compliance requirements
or in our compliance costs may have an adverse effect on our business and results of operations.
39. Terrorist attacks, civil disturbances, wars, regional and communal conflicts, natural disasters, fuel
shortages, epidemics and labour strikes in India and elsewhere in Asia may have a material adverse effect
on our Company's business and on the market for securities in India.
India has experienced civil and social unrest, terrorist attacks such as the attacks in November 2008 and July 2011
in the city of Mumbai, and other acts of violence. If such tensions occur in places where we operate or in other
parts of the country, leading to overall political and economic instability, it could adversely affect our business,
future financial performance, cash flows and the market price of our Equity Shares. Southern Asia has also, from
time to time, experienced instances of civil unrest, political tensions and hostilities among neighbouring countries.
Additionally, any of these events could lower confidence in India‟s economy and create a perception that
investments in companies with Indian operations involve a high degree of risk, which could have a material
adverse effect on the price of the Equity Shares. Any discontinuation of business or loss of profits due to such
extraneous factors may affect our operations. Further, our operations are dependent on our ability to protect our
facilities and infrastructure from fire, explosions, floods, typhoons, earthquakes, power failures and other similar
events. India has experienced natural disasters such as earthquakes, a tsunami, floods and droughts in the past few
years.
40. Compliance with fresh and changing corporate governance and public disclosure requirements may add
compliance requirements.
Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure,
SEBI regulations and Indian stock market listing regulations have increased the complexity of our compliance
46
Preliminary Placement Document
obligations. These new or changed laws, regulations and standards may be subject to varying interpretations.
Their application in practice may evolve over time as new guidance is provided by regulatory and governing
bodies. Ongoing revisions to such governance standards could result in continuing uncertainty regarding
compliance matters and higher costs of compliance. Our efforts to comply with evolving laws, regulations and
standards in this regard may result in increased general and administrative expenses and cause a diversion of
management resources and time. If we fail to comply with new or changed laws, regulations or standards, our
reputation and business may be harmed.
41. Statistical and industry data in this Preliminary Placement Document may be incomplete or unreliable
Statistical and industry data used throughout this Preliminary Placement Document has been obtained from
various government and industry publications. We believe the information contained herein has been obtained
from sources that are reliable, but we have not independently verified it and the accuracy and completeness of this
information is not guaranteed and its reliability cannot be assured. The market and industry data used from these
sources may have been reclassified by us for purposes of presentation. In addition, market and industry data
relating to India, its economy or its industries may be produced on different bases from those used in other
countries. As a result data from other market sources may not be comparable. The extent to which the market and
industry data presented in this Preliminary Placement Document is meaningful will depend upon the reader's
familiarity with and understanding of the methodologies used in compiling such data.
Further, this market and industry data has not been prepared or independently verified by us or the BRLMs or any
of their respective affiliates or advisors. Such data involves risks, uncertainties and numerous assumptions and is
subject to change based on various factors. Accordingly, investment decisions should not be based on such
information.
42. Our business and activities are regulated by the Competition Act, 2002.
The Competition Act, 2002, as amended (the “Competition Act”) seeks to prevent practices that could have an
appreciable adverse effect on competition. Under the Competition Act, any arrangement, understanding or action
in concert between enterprises, whether formal or informal, which causes or is likely to cause an appreciable
adverse effect on competition in India is void and may attract substantial penalties. Any agreement among
competitors, or practice or decision in relation to, enterprises or persons engaged in identical or similar trade of
goods or provision of services which directly or indirectly determines purchase or sale prices, limits or controls
production, supply, markets, technical development, investment or provision of services, shares markets or
source of production or provision of services by way of allocation of geographical area, types of goods or services
or number of customers in the relevant market or directly or indirectly results in bod rigging or collusive bidding
is presumed to have an appreciable adverse effect on competition. The Competition Act also prohibits the abuse
of a dominant position by any enterprise. Provisions of the Competition Act relating to acquisitions, mergers or
amalgamations of enterprises that meet certain asset or turnover thresholds and regulations issued by the
Competition Commission of India with respect to notification requirements for such combinations became
effective in June 2011. Further our acquisitions, mergers or amalgamations may require the prior approval of the
Competition Commission of India, which may not be obtained in a timely manner or at all.
If we are affected, directly or indirectly, by the application or interpretation of any provision of the Competition
Act, any enforcement proceedings initiated by the Competition Commission of India, any other relevant authority
under the Competition Act, any claim by any party under the Competition Act or any adverse publicity that may
be generated due to scrutiny or prosecution by the Competition Commission of India, our business and financial
performance may be materially and adversely affected. Further the Competition Commission of India has extraterritorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if
such agreement, conduct or combination has an appreciable adverse effect on competition in India. However, we
cannot predict the impact of the provisions of the Competition Act on the agreements entered into by us at this
stage.
47
Preliminary Placement Document
43. Investors in the Equity Shares may not be able to enforce a judgment of a foreign court against our
Company, its directors or executive officers.
All of our directors and key managerial personnel are residents of India and all or substantial portion of our assets
are located in India. As a result, it may be difficult for investors outside India to effect service of process upon us,
our directors, executive officers or such experts in countries outside India, including the United States, or enforce,
in Indian courts, judgments obtained in foreign courts, against us or such persons or entities. See “Enforcement of
Civil Liabilities” beginning on page 10.
44. Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.
Our Articles of Association, which include regulations applicable to our Board of Directors, and Indian law
govern our corporate affairs. Legal principles relating to these matters and the validity of corporate procedures,
directors' fiduciary duties and liabilities, and shareholders' rights may differ from those that would apply to a
company incorporated in another jurisdiction. Shareholders' rights under Indian law may not be as extensive as
shareholders' rights under the laws of other countries or jurisdictions. Investors may have more difficulty in
asserting their rights as our shareholders than as shareholders of a corporation in another jurisdiction.
45. Conditions in Indian stock exchanges may affect the price or liquidity of the Equity Shares.
The Indian stock exchanges have, in the past, experienced substantial fluctuations in the prices of their listed
securities. The Indian stock exchanges have experienced problems that, if they continue or recur, could affect the
market price and liquidity of the securities of Indian companies, including the Equity Shares. Problems in the past
included temporary exchange closures to manage extreme market volatility, broker defaults, settlement delays and
strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time
imposed restrictions on the trading of certain securities and limitations on price movements and margin
requirements. Furthermore, disputes have occurred from time to time between listed companies, stock exchanges
and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.
46. There may be less company information available in Indian securities markets than in securities markets
in certain other countries.
There is a difference between the level of regulation, disclosure and monitoring of the Indian securities markets
and the activities of investors, brokers and other participants in markets in the United Kingdom, the United States
and certain other economies. The SEBI is responsible for monitoring, ensuring and improving disclosure and
other regulatory standards for the Indian securities markets and has issued regulations and guidelines on
disclosure requirements, insider trading and other matters. Investors may, however, have access to less
information about our business, results of operations and financial conditions, on an on-going basis, than investors
would have in the case of companies subject to reporting requirements of certain other countries.
47. The trading price of the Equity Shares may be subject to volatility and investors may not be able to sell the
Equity Shares at or above the Issue Price.
The trading prices of publicly traded securities may be highly volatile. Factors affecting the trading price of the
Equity Shares include:





variations in our operating results;
announcements of new products, joint ventures, strategic alliances or agreements by us or by our competitors;
increases and decreases in our customer base;
recruitment or departure of key personnel;
favourable or unfavourable reports concerning the rigid packaging industry in general, or in relation to our
business and operations;
48
Preliminary Placement Document



changes in the estimates of our operating results or changes in recommendations by any securities analysts
that elect to research and report on the Equity Shares;
the adoption or modification of regulations, policies, procedures or programs applicable to the business; and
market conditions affecting the rigid packaging industry generally and the economy as a whole.
In addition, if the stock markets experience a loss of investor confidence, the trading price of the Equity Shares
could decline for reasons unrelated to our business, results of operations or financial condition. The trading price
of the Equity Shares might also decline in reaction to events that affect other companies in our industry, even if
these events do not directly affect us. Any of these factors, among others, could materially and adversely affect
the price of the Equity Shares.
48. Significant differences exist between Indian GAAP and other accounting principles, such as U.S. GAAP
and IFRS, which may be material to the financial statements prepared and presented in accordance with
Indian GAAP contained in this Preliminary Placement Document.
Our audited financial statements contained in this Preliminary Placement Document have been prepared and
presented in accordance with Indian GAAP. Indian GAAP differs from accounting principles and auditing
standards with which prospective investors may be familiar in other countries, such as U.S. GAAP and IFRS.
Significant differences exist between Indian GAAP and U.S. GAAP and IFRS, which may be material to the
financial information prepared and presented in accordance with Indian GAAP contained in this Preliminary
Placement Document. Accordingly, the degree to which the financial information included in this Preliminary
Placement Document will provide meaningful information and is dependent on your familiarity with Indian
GAAP and the Companies Act. Any reliance by persons not familiar with Indian GAAP on the financial
disclosures presented in this Preliminary Placement Document should accordingly be limited.
49. There is no guarantee that the Equity Shares issued pursuant to this Issue will be listed on the Stock
Exchange in a timely manner.
In accordance with Indian law and regulations and the requirements of the Stock Exchange, in principle and final
approvals for listing and trading of the Equity Shares issued pursuant to this Issue will not be applied for or
granted until after the Equity Shares have been issued and allotted. Approval for listing and trading will require all
relevant documents authorising the issuing of Equity Shares to be submitted. Accordingly, there could be a failure
or delay in listing the Equity Shares on the Stock Exchange. If there is a delay in obtaining such approvals, we
may not be able to credit the Equity Shares allotted to the investors to their depository participant accounts or
assure ownership of such Equity Shares by the investors in any manner promptly after the Closing Date. In any
such event, the ownership of the investors over Equity Shares allotted to them and their ability to dispose of any
such Equity Shares may be restricted. For further information on issue procedure, see “Issue Procedure”
beginning on page 139.
50. An investor will not be able to sell any of the Equity Shares subscribed in this Issue other than across a
recognised Indian stock exchange for a period of 12 months from the date of issue of the Equity Shares.
Our Company‟s Equity Share are currently listed on BSE limited. We have applied for listing of Equity Shares on
NSE. Pursuant to the SEBI ICDR Regulations, for a period of 12 months from the date of the issue of the Equity
Shares under this Issue, QIBs subscribing to the Equity Shares may only sell their Equity Shares through Stock
Exchange mechanism and may not enter into any off market trading in respect of these Equity Shares. Further,
allotment to FVCIs, VCFs and AIFs are subject to applicable rules and regulations, including in relation to lockin. We cannot be certain that these restrictions will not have an impact on the price and liquidity of the Equity
Shares.
51. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.
49
Preliminary Placement Document
Under current Indian tax laws and regulations, capital gains arising from the sale of equity shares in an Indian
company are generally taxable in India. Any gain realised on the sale of listed Equity Shares on a stock exchange
held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax
("STT") has been paid on the transaction. STT will be levied and collected by the domestic stock exchange on
which the Equity Shares are sold. Any gain realised on the sale of Equity Shares held for more than 12 months to
an Indian resident, which are sold other than on a recognised stock exchange and on which no STT has been paid,
will be subject to long term capital gains tax in India. Further, any gain realised on the sale of listed Equity Shares
held for a period of 12 months or less will be subject to short term capital gains tax in India. Capital gains arising
from the sale of the Equity Shares will be exempt from taxation in India in cases where such exemption is
provided under a treaty between India and the country of which the seller is resident. Generally, Indian tax treaties
do not limit India's ability to impose tax on capital gains. As a result, residents of other countries may be liable for
tax on a gain upon the sale of the Equity Shares in India as well as in their own jurisdiction if not supported by a
treaty of such jurisdiction. For further information see "Taxation" beginning on page 167.
52. A third party could be prevented from acquiring control of us because of the anti-takeover provisions
under Indian law.
There are provisions in Indian law that may discourage a third party from attempting to take control of us, even if
a change in control would result in the purchase of our Equity Shares at a premium to the market price or would
otherwise be beneficial to our shareholders. Indian takeover regulations contain certain provisions that may delay,
deter or prevent a future takeover or change in control of us. Disclosure and mandatory bid obligations for listed
Indian companies under Indian law are governed by the specific regulations in relation to substantial acquisition
of shares and takeover under the Takeover Code. Since we are an Indian listed company, the provisions of the
Takeover Code apply to us.
53. We and our investors resident outside India are subject to foreign investment restrictions under Indian law
which may adversely affect our Company's operations and its ability to freely sell the Equity Shares.
Securities Exchange Board of India has notified the SEBI (Foreign Portfolio Investors) Regulations, 2014 on
January 7, 2014, repealing the SEBI (Foreign Institutional Investors) Regulations 1995. SEBI notified the SEBI
FPI Regulations pursuant to which the existing classes of portfolio investors namely „foreign institutional
investors‟ and „qualified foreign investors‟ will be subsumed under a new category namely „foreign portfolio
investors‟ or „FPIs‟. RBI on March 13, 2014 amended the FEMA Regulations and laid down conditions and
requirements with respect to investment by FPIs in Indian companies.
An FII who holds a valid certificate of registration from the SEBI shall be deemed to be an FPI until the expiry of
the block of three years for which fees have been paid as per the Securities and Exchange Board of India (Foreign
Institutional Investors) Regulations, 1995. An FII or a sub-account may participate in the Issue, until expiry of its
registration as an FII or sub-account or until it obtains a certificate of registration as an FPI, whichever is earlier.
If the registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may, subject
to payment of conversion fees as applicable under the SEBI FPI Regulations, participate in the Issue. An FII or
sub-account shall not be eligible to invest as an FII after registering as an FPI under the SEBI FPI Regulations.
54. SEBI operates an index-based market-wide circuit breaker. Any operation of a circuit breaker may
adversely affect a shareholder's ability to sell, or the price at which it can sell, the Equity Shares at a
particular point in time.
We are subject to an index-based market-wide circuit breaker generally imposed by the SEBI on Indian stock
exchanges. This may be triggered by an extremely high degree of volatility in the market activity (among other
things). Due to the existence of this circuit breaker, there can be no assurance that shareholders will be able to sell
the Equity Shares at their preferred price or at all at any particular point in time. This may have an adverse effect
on our operations and business.
50
Preliminary Placement Document
55. Any future issuance of Equity Shares may dilute the shareholding of investors and any future sales of
Equity Shares by our major shareholders may adversely affect the trading price of the Equity Shares.
The future issuance of Equity Shares by us, or the disposal of Equity Shares by any of our major shareholders,
including by the Promoters, lenders that have received a pledge of our Equity Shares as security and are seeking
to enforce such security, or the perception that such issuance or sales may occur, may significantly affect the
trading price of the Equity Shares. Except for the restrictions described in the sections “Placement” and
“Description of the Shares”, there is no restriction on our ability to issue Equity Shares or the ability of any of
our shareholders to dispose of, pledge or otherwise encumber their Equity Shares, and there can be no assurance
that we will not issue Equity Shares or that our shareholders will not dispose of, pledge or otherwise encumber
their Equity Shares. Future issuances of Equity Shares may dilute the shareholding of the investors and may
adversely affect the trading price of the Equity Shares. Subject to applicable law, such securities may also be
issued at prices below the then market price of the Equity Shares.
56. The market value of an investor’s investment may fluctuate due to the volatility of the Indian securities
markets.
Indian securities markets are more volatile than the securities markets in certain countries which are members of
the OECD. Stock Exchanges in India have in the past experienced substantial fluctuations in the prices of listed
securities. For example, in May 2006, Indian stock exchanges witnessed substantial volatility as the BSE and the
NSE, India‟s main stock exchanges, halted trading for one hour on May 22, 2006 after their respective indices fell
more than 10%. The market price of our Ordinary Shares could fluctuate significantly as a result of market
volatility. The Indian Stock Exchanges have experienced problems which, if they were to continue or recur, could
affect the market price and liquidity of the securities of Indian companies, including the equity shares. These
problems have included temporary exchange closures, broker defaults, settlement delays and strikes by brokerage
firm employees. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed
restrictions on trading in certain securities, limitations on price movements and margin requirements.
Furthermore, from time to time, disputes have occurred between listed companies and stock exchanges and other
regulatory bodies, which in some cases may have had a negative effect on market sentiment.
51
Preliminary Placement Document
MARKET PRICE INFORMATION
Our Equity Shares are listed and traded on BSE. The stock market data presented below is given for the BSE. As
on the date of this Preliminary Placement Document, our Company has 1,13,42,176 Equity Shares of face value `
10 each issued, subscribed and paid up.
On January 29, 2015, the closing price of the Equity Shares on the BSE was ` 233.80 per Equity Share.
The following tables set forth the reported high, low, the number of Equity Shares traded and the total trading
volume on the dates on which such high and low prices were recorded and the average closing prices of the
Equity Shares, on the BSE during the FY s ended March 31, 2014, March 31, 2013 and March 31, 2012.
The high, low and average market prices of our Equity Shares during the preceding three fiscal years
FY
2014
FY
2013
FY
2012
Fiscal
High DateNumber Volume on
Year/Period (`)(1) of
of
date of
high Equity high (`)
Shares
traded
on date
of high
2014(12-7- 46.65 11-1,92,952
2013(4) to
Feb84,20,314
31-3-2014)
14
2014(1-451 151
2013 to 11May51
7-2013(4))
13
2013 (27-7- 58.4 4- 75,823
2012(5) to
Oct43,18,543
31-3-2013)
12
2013 (1-461 91211
2012 to 26Apr70,801
7-2012(5))
12
2012 (20-3- 63.6 23- 27,276
2012(6) to
Mar16,85,630
31-3-2012)
12
2012 (9-1- 69.5 14-1,85,509
2012(7) to
Feb1,23,94,339
19-312
2012(6))
2012 (2179.5 14-2,02,374
10-2011(8) to
Nov1,51,99,357
8-1-2012(7))
11
2012 (18-7- 68.45 3- 52,319
2011(9) to
Aug35,45,475
20-1011
2011(8))
2012 (1-463 14- 64,297
2011 to 17Jul39,59,531
7-2011(9))
11
Low
(`)(2)
Date
of
low
29.1
26Nov13
26Jun13
28Mar13
21Jun12
28Mar12
20Jan12
32.35
36
51
55.3
52.75
49
52.6
47.65
322
15,837
15,83,663
6,764
8,15,54,294
5,84,305
3,53,304 55.59
38,284
3,24,36,957
2,37,627
22,37,803 59.33
34,145
4May11
7,670
52
27,38,583
5,89,141 49.87
33,698
High prices are based on the Intraday High prices
72,789
10,718 37.66
20Dec11
26Sep11
Source: www.bseindia.com
Notes:
1.
Number Volume Average
Total volume of
of on date
price Equity Shares traded
Equity of low (`) for the in the Fiscal/period
Shares
Fiscal
(`)
No. of
traded
Year
Shares
(`)(3)
on date
of low
6,019
14,52,865
1,98,035 36.20
5,61,69,513
1,40,27,881
15,87,733
18,83,638 58.16
9,53,28,340
17,55,343 60.71
21,71,956
14,00,08,141
686,181 60.04
21,39,272
13,17,77,477
12,363
15,52,997
3,76,092 54.27
8,60,01,459
Preliminary Placement Document
2.
3.
4.
5.
6.
7.
8.
9.
Low prices are based on the Intraday Low prices
Average prices are based on the average of closing prices
Allotment of 22950 Equity Shares under the ESOP Scheme; which commenced trading on Stock Exchange
from 12-7-13
Allotment of 37800 Equity Shares under the ESOP Scheme; which commenced trading on Stock Exchange
from 27-7-12
Allotment of 1925000 Equity Shares against conversion of warrants; which commenced trading on Stock
Exchange from 20-3-12
Allotment of 9125 Equity Shares under the ESOP Scheme; which commenced trading on Stock Exchange
from 9-1-12
Allotment of 1240000 Equity Shares against conversion of warrants; which commenced trading on Stock
Exchange from 21-10-11
Allotment of 46625 Equity Shares under the ESOP Scheme; which commenced trading on Stock Exchange
from 17-7-11
Monthly high, low and average prices and trading volumes of our Equity Shares for the six months preceding the
date of filing of this Preliminary Placement Document.
High Date Number Volume on Low
(`)(1)
of
of
date of (`)(2)
high Equity high (`)
Month,
Shares
Year/Period
traded
on date
of high
December-14
260 5-Dec- 84,621
200.25
14
2,16,92,244
November-14
October-14
September-14
241
3- 62,629
212
Nov1,46,23,409
14
251.6 29- 1,37,571
178.55
Oct-14
3,33,47,749
202
23- 2,69,723
130.05
Sep5,36,56,197
14
August-14(6- 128.45 19- 2,10,424
96.1
8-2014(4) to
Aug2,59,57,990
31-8-2014)
14
August-14(1103
5- 6,03,163
71.6
8-2014 to 5-8Aug6,03,08,553
2014(4))
14
July-14
76 31- 57,675
52.1
Jul-14
42,51,882
Date
of
low
17Dec14
26Nov14
17Oct14
1Sep14
8Aug14
1Aug14
14Jul-14
Number Volume on Average
Total volume of
of date of low
price Equity Shares traded
(`) for the in the Fiscal/period
Equity
Shares
Fiscal
(`)
No. of
traded
Year
Shares
(`)(3)
on date
of low
88,168
9,01,490
1,87,44,341 232.87
21,15,51,932
53,462
1,19,15,604 227.22
9,75,336
22,20,56,314
1,41,18,365 208.40
21,33,794
46,09,19,176
3,37,13,658 165.76
31,14,889
51,34,93,834
4,10,63,043 113.35
26,99,944
30,59,22,433
75,766
2,46,144
4,00,012
1,88,353
9,45,802
1,46,68,869 90.35
6,831
8,94,95,734
9,67,689
3,72,197
60.71
6,25,89,656
Source: www.bseindia.com
Notes:
1.
2.
3.
4.
High prices are based on the Intraday High prices
Low prices are based on the Intraday Low prices
Average prices are based on the average of closing prices
Allotment of 39,800 Equity Shares under the ESOP Scheme; which commenced trading on Stock Exchange
from 6-8-14
53
Preliminary Placement Document
Market Price on the first working day following the Board meeting approving the Qualified Institution Placement,
in this case being November 19, 2014
Date
November 20, 2014
Price of the Equity Shares (`)
Volume (number of Equity Shares traded)
Volume (` In Lacs)
BSE
High
Open
225.2
231.75
44,350
1,00,74,293
Low
Close
222
223.75
Sources: www.bseindia.com
Volume of business transacted during the preceding three Fiscal years and the last six months on the Stock
Exchange
Period
Fiscal Year, 2014
Fiscal Year, 2013
Fiscal Year, 2012
BSE
Number of Equity Shares Traded
15,25,654
21,67,968
76,89,585
December, 2014
November, 2014
October, 2014
September, 2014
August, 2014
July, 2014
9,01,490
9,75,336
21,33,794
31,14,889
36,45,746
9,67,689
54
Volume (`)
5,89,08,096
11,39,91,251
46,71,43,298
21,15,51,932
22,20,56,314
46,09,19,176
51,34,93,834
39,54,18,167
6,25,89,656
Preliminary Placement Document
USE OF PROCEEDS
The gross proceeds from the Issue will be ` [●] Lacs. The net proceeds from the Issue after deducting fees,
commissions and expenses of approximately ` [●] Lacs, will be approximately ` [●] Lacs. (“Net Proceeds”)
Subject to compliance with applicable laws and regulations, our Company intends to use the net proceeds of the
Issue primarily for additional capital expenditure, augmenting working capital requirement and general corporate
purposes and any other purposes as may be permissible under applicable law.
In accordance with the decision of our Company‟s Board and as permissible under applicable laws and
Government policies, our Company‟s management will have the flexibility in deploying the net proceeds received
by our Company from the Issue. Pending utilisation of the Net Proceeds for the purposes described above, our
Company intends to temporarily invest the funds in bank deposits, high quality interest/dividend bearing liquid
instruments, including money market mutual funds, as approved by the Board in accordance with the investment
policy and applicable laws.
Our Promoters or Directors are not making any contribution either as part of the Issue or separately in furtherance
of the Objects of the Issue.
55
Preliminary Placement Document
CAPITALIZATION STATEMENTS
Our authorized capital is ` 1,450 Lacs divided into 145 Lacs Equity Shares of ` 10 each. As of the date of this
Preliminary Placement Document 1,13,42,176 Equity Shares of ` 10 each were paid up.
The following table sets forth our Company‟s capitalisation and total debt as on September 30, 2014(based on our
unaudited consolidated interim financial statements), and as adjusted to give effect to the Issue. This table should
be read with the section “Management’s discussion and analysis of financial condition and results of
operations” and other financial information contained in the section “Financial Statements” beginning on page
60 and 199 respectively.
(` In Lacs)
As of September 30, 2014
Particulars
Actual (Unaudited)
As Adjusted for the Issue*
Loan Funds
Short term borrowings1
5,150.15
Long term borrowing2
932.86
[●]
[●]
Total Indebtedness (A)
6,083.01
Shareholders’ Funds
Share Capital
Share Premium
Reserves and Surplus (excluding Share Premium) 3
Total Shareholders’ Funds (B)
1,134.22
2,360.50
2,602.68
6,097.40
[●]
[●]
[●]
[●]
Total Capitalisation (A) + (B)
12,180.41
¹ Short term borrowings does not include trade payable and other current liabilities (other current liabilities
includes current maturities of long term borrowings)
2
Long term borrowings does not include unsecured which is mentioned below, other long term liabilities and
deferred tax liabilities. Our Company is enjoying deferment of sales tax amounting to ` 657.62 Lacs which is
grouped under long term borrowings as unsecured loans.
3
Reserves and surplus is net of adjustments for estimated issue expenses of approximately ` [●]
*: Will be inserted once the Issue Price is determined
56
Preliminary Placement Document
CAPITAL STRUCTURE
The Equity Share capital of our Company, as on the date of this Preliminary Placement Document is set forth
below:
No.
A.
B.
C.
D.
E.
Amount (In ` Lacs)
Aggregate nominal value
Particulars
Authorised Share Capital
1,45,00,000 Equity Shares of ` 10 each
1,450.00
Issued, Subscribed and Paid-Up Share Capital before the Issue
1,13,42,176 Equity Shares of ` 10 each
1,134.22
Present Issue in terms of this Preliminary Placement
Document(a)
Issue of [●] Equity Shares of ` 10 each
[●]
Issued, Subscribed and Paid-Up Share Capital after the Issue
[●] Equity Shares of ` 10 each
[●]
Securities Premium Account
Before the Issue
After the Issue(b)
2,360.50
[●]
Notes:
(a) The Issue has been authorised by the Board of Directors vide a resolution passed at its meeting held on November
19, 2014 and by the shareholders of our Company vide a special resolution passed pursuant to sections 42 and
62(1)(c) of the Companies Act at the EGM held on December 24, 2014.
(b) The Securities Premium Account after the Issue is calculated net of adjustments for estimated issue expenses of
approximately ` [●].
History of Equity Share Capital of our Company
Date of
Allotment / Fully
Paid-up
On incorporation
No. of Equity
Shares allotted
Issue Price
(` )
200
Face
value
(` )
10
Nature of
consideration
Nature of Allotment
10.00
Cash
10
10
10
10.00
10.00
-
46,625
10
26.00
Cash
Cash
Other than
cash
Cash
12,40,000
10
40.00
Cash
Subscription
to
Memorandum
of
Association
Preferential Allotment
Preferential Allotment
Pursuant to the scheme of
arrangement*
Allotment against exercise
of options granted under
ESOP Scheme
Preferential Allotment
March 25, 1999
July 5, 2007
September 29,
2008
July 6, 2011
19,800
30,000
79,45,776
September 7,
2011
December 19,
9,125
10
26.00
Cash
Allotment against exercise
57
Preliminary Placement Document
Date of
Allotment / Fully
Paid-up
2011
No. of Equity
Shares allotted
Face
value
(` )
Issue Price
(` )
Nature of
consideration
Nature of Allotment
of options granted under
ESOP Scheme
February 4, 2012
19,25,000
10
45.80
Cash
Preferential Allotment
July 5, 2012
37,800
10
26.00
Cash
Allotment against exercise
of options granted under
ESOP Scheme
June 28, 2013
22,950
10
26.00
Cash
Allotment against exercise
of options granted under
ESOP Scheme
June 13, 2014
25,100
10
26.00
Cash
Allotment against exercise
of options granted under
ESOP Scheme
July 25, 2014
39,800
10
26.00
Cash
Allotment against exercise
of options granted under
ESOP Scheme
*Allotment of 79,45,776 Equity Shares of our Company pursuant to scheme of arrangement between Teck–Men
Tools Private Limited, Mold–Tek Technologies Limited, Our Company and their respective shareholders
approved by the High Court of Hyderabad vide its order dated July 25, 2008.
1.
Equity Shares issued for consideration other than cash by our Company
In the last one year preceding the date of this Preliminary Placement Documents, our Company has not issued any
Equity Shares for consideration other than cash.
2.
Employees’ Stock Option Plan
Pursuant to a resolution passed by the Board of Directors of our Company in its meeting held on January 12, 2010
and shareholders of our Company in its Extra-Ordinary General Meeting held on February 9, 2010, our Company
adopted the “MTPL Employees Stock Option Scheme” (“ESOP Scheme”). The ESOP Scheme have been
designed by our Company to create participative environment contributing to the growth of employees as part of
our Company‟s growth plans, rewarding the eligible employees for their contribution to the success of our
Company and to attract and retain talented employees. As on December 31, 2014, our Company has granted
2,02,000 options convertible into 2,02,000 Equity Shares under ESOP Scheme, which represents 1.78 % of the
pre-Issue paid-up equity capital of our Company, of which 13,750 have lapsed, 1,81,400 have been exercised and
6,850 are outstanding.
58
Preliminary Placement Document
DIVIDEND POLICY
Our Company generally declares and pays dividends in the fiscal year following the year as to which they relate.
Under the Companies Act, an Indian company may pay dividends only upon a recommendation by its board of
directors and approval by a majority of its shareholders at the annual general meeting. Shareholders may decrease,
but not increase, the amount of dividend recommended by the board of directors. In addition, as is permitted by
the Articles of Association of our Company, the Board may declare and pay interim dividends. Under the
Companies Act, a company may pay dividends only out of its profits in the year in which the dividend is declared
or out of the undistributed profits or reserves of prior fiscal years or out of both. Our lending arrangements as well
as the agreements governing our indebtedness with our lenders contain certain restrictive covenant that restricts
declaration of dividends without the prior written consent of the lenders.
The following table sets forth details regarding the dividend paid by our Company on the Equity shares for Fiscal
Years 2014, 2013 and 2012:
Particulars
Face Value of Equity Shares ( ` per share)
Total Dividend on Equity Shares (` per share)
Total Dividend on Equity Shares (` in Lacs)
Dividend Distribution Tax (` in Lacs)
Dividend Payout Ratio (%)*
* Dividend per share divided by earning per share
Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012
10.00
10.00
10.00
3.00
2.00
5.00
339.29
225.32
561.77
57.66
36.55
91.13
37.28
38.91
48.40
Future Dividends
Our Company has no formal policy relating to payment of dividends. Amounts paid as dividends in the past are
not reflective of any future dividends, which are subject to the recommendation of the Board based on various
factors and the approval of our Company‟s shareholders. Investors are cautioned not to rely on past dividends as
an indication of our Company‟s future performance or for an investment in the Equity Shares. The form,
frequency and amount of future dividends will depend on our revenues, cash flows, financial condition (including
capital position) and other factors and shall be at the discretion of our Board and subject to the approval of our
shareholders.
When dividends are declared, all the shareholders whose names appear in the share register as on the “record
date” or “book closure date” are entitled to be paid dividend declared by our Company. Any shareholder who
ceases to be a shareholder prior to the record date, or who becomes a shareholder after the record date, will not be
entitled to the dividend declared by our Company.
Investors are cautioned not to rely on past dividends as an indication of the future performance of our Company or
for an investment in the Equity Shares offered in the Issue.
For a summary of certain Indian tax consequences of dividend distributions to shareholders, see the section
“Taxation” beginning on page 167.
59
Preliminary Placement Document
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We discuss below our historical results of operations and financial condition as of and for the years ended March
31, 2012, 2013 and 2014, for the six-month periods ended September 30, 2013 and September 30, 2014 and our
assessment of the factors that may affect our prospects and performance in future periods.
You should read the following discussion in conjunction with audited financial statements for our Company for
Fiscal 2014, 2013 and 2012 and unaudited but reviewed financial statements for the six-month periods ended
September 30, 2013 and September 30, 2014, including annexures, schedules, and notes thereto and the report
thereon appearing in this Preliminary Placement Document are prepared in accordance with the Companies Act
and Indian GAAP, in each case, to comply with the Accounting Standards notified under Section 211(3C) of the
Companies Act, 1956 (the "CA 1956") (which continues to be applicable in respect of Section 133 of the
Companies Act, 2013 (the "CA 2013") in terms of General Circular 15/2013 dated 13 September 2013 of the
Ministry of Corporate Affairs) and the relevant provisions of the CA 1956 or CA 2013, as applicable. Indian
GAAP differs in certain material respects with IFRS and U.S. GAAP. Accordingly, the degree to which the
financial statements in this Preliminary Placement Document will provide meaningful information to a
prospective investor in countries other than India is entirely dependent on the reader's level of familiarity with
Indian accounting practices.
Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year
are to the 12 month period ended March 31 of that year. For purposes of the discussion below, the term
“FY2012” refers to the year ended March 31, 2012; the term “FY2013” refers to the year ended March 31,
2013; the term “FY2014” refers to the year ended March 31, 2014; the term “H1-2014” refers to the six-month
period ended September 30, 2013 and the term “H1-2015” refers to the six-month period ended September 30,
2014. In this section only, any reference to "we,” "us" or "our" refers to the Company.
This discussion contains forward-looking statements that involve risks and uncertainties and reflects our current
view with respect to future events and financial performance. See “Risk Factors” and “Forward-Looking
Statements”. Our actual results may differ materially from those anticipated in these forward-looking statements
as a result of any number of factors, including those set forth in this section and in the sections “Risk Factors”
and “Forward-Looking Statements” on pages 35 and 13.
I.
COMPANIES OVERVIEW
We are a packaging solution company mainly engaged in the manufacturing of rigid plastic packaging containers
through Injection molding technology for paints, lubes, oils, food, FMCG and other sectors including cosmetics
and pharmaceutical. We develop, design and manufacture standard airtight and pilfer – proof pails as well as
customized containers to meet our customer‟s packaging requirements. We believe, we are the leaders in injection
molded rigid packaging containers in India. We have introduced certain world class packaging products in India
for paints, oil, lubricants, food and FMCG industries through continuous innovation.
We decorate our products using screen printing, heat transfer labelling technique and In – Mold labelling, which
is one of the modern and premium container decoration techniques globally. In late 2011, we started
developmental work on IML manufacturing through imported labels and Robots. IML provides various benefits
of packaging including higher brand recall as the labels do not get separated. These IML labels provide better
aesthetics and the process eliminates labour and saves space required for production. We believe we are the
pioneers to introduce IML concept using in house Robots, at a reasonable cost in India.
We have seven manufacturing units, four at Telangana and one each at Tamil Nadu, Maharashtra and Daman. We
also operate state of the art tool room to make complex molds and to develop Robots. We believe that we have
developed our reputation and image as innovator in packaging solution for the segments we serve. In recognition
60
Preliminary Placement Document
of our technical excellence, we received “Tech Savvy SME” and “Best SME” awards from ICICI- CNBC TV 18
and Crisil awards for the year 2013.
Our products mainly cater to four business segments viz (i) paint industry (ii) lubes & oil industry, (iii) food and
(iv) FMCG. Our products are available in different size and shapes viz circular, rectangular, curving and special
shapes as per customer requirement. For the financial year 2014, our Company derived approximately ` 16,440
lacs gross revenue from paints, ` 10,470 lacs, from lubes and oils and ` 441 lacs from food and ` 1,182 lacs from
FMCG and other sectors. Our Company derived 19.76 per cent of total income from IML technology in the
financial year 2014 compared to 0.54 per cent of total income in the financial year 2011. As on December 31,
2014, our total pail manufacturing capacity is over 25,000 metric ton and label manufacturing capacity is 3 lacs
meter in a single shift.
Pursuant to a Scheme of Arrangement between Teckmen Tools Private Limited, Mold-Tek Technologies Limited
erstwhile MTPPL, and Mold Tek Plastics Limited, the plastic packaging division was transferred to our Company
with effect from July 25, 2008. For further information on Scheme of Arrangement, see “Key milestone”
beginning on page 94. However, our roots can be traced back to the year 1985, when Mold – Tek Plastics Private
Limited (“MTPPL”) was promoted by two technocrats, Janumahanti Lakshmana Rao and Adivishnu
Subramanyam, (“Core Promoters”) to manufacture rigid plastic packaging products with units located at then
Andhra Pradesh. Our Core Promoters with experience in tool room started working towards continuous
innovation and introduced various new concepts in packaging industry.
In the early nineties, we introduced plastic pail packaging concept used for paint industry which has succeeded to
gradually replace the tin packaging for paints. Since 1997-1998, we introduced plastic containers for lubricant
packaging with innovative “pull up spout” and also developed new concepts including single and double lock
pails. We pioneered pull up spouts for the lube industry and developed COSMOS/ULTIMO pails with better
tamper evidence and leak proof features. Over a period of time such packaging replaced tin and metal can packs
which was used in lube packing. In the year 1998, we applied for a patent for this innovation of pull up spout with
tamper proof seal which was granted in the year 2007. In 2011, we started developmental work on IML
decoration through Robots which provide various benefits of packaging including higher brand recall.
Commercial production of IML was started in 2012. We have also applied for process patent for an innovation an
airtight pilfer proof and tamper evident seal locking mechanism of containers with tamper proof lid having
injection mold spout for containers. All our products are customized and manufactured as per customer
requirements. In 2013, we succeeded in developing our in-house Robots and IML label printing capabilities for
IML which gave a cost advantage compared to imported Robots and IML labels. Thus we believe we are
innovator and pioneers in Indian Rigid Plastic Packaging.
We have in-house research and development division and in-house tool-room for designing and development of
new products, complex molds and Robots. Our tool room with Swiss and German machinery enables us to design
and develop complex molds including 2-8 cavities molds, for our customers. Our tool-room enables us to
undertake repair and maintenance of our mold and Robots. Our continuous focus on this area enables us to
innovate and create new packaging solutions and cater to the customized needs of our customers with a
reasonable time period. We have installed various designing and tool room machines for new product
development at cheaper cost without affecting quality of the products. Due to our in house capabilities, we can
customise and install an integrated manufacturing unit anywhere to meet particular customer requirements. As on
December 31, 2014, we have developed thirty one (31) Robots which are currently deployed at our six
manufacturing units.
We are committed to providing quality products to our customers and in this relation hold various quality
accreditations including ISO 9001:2008 quality certification for manufacture and supply of injection molded
plastics packaging containers, pails, closures and component and FSSC 22000: 2011, the food safety management
system certification applicable to manufacture of in-mold labelled plastic containers and lids for packaging for
food industry. We maintain strict hygiene standard in our manufacuring facilities for products catering to the Food
and FMGC sector. We regularly conduct drop test with the help of testing machines before the batch is approved
61
Preliminary Placement Document
for sale. We have recently received "Quality Champion Award" from Asian Paints Limited, for the exemplary
quality performance during the period April 2012 to September, 2014.
As on December 31, 2014, our Company had 411 permanent employees and 823 employees on contract at various
locations. Our total income has grown at CAGR of 21.01% from ` 17,456 lacs in the financial year 2012 to `
25,563 lacs in the financial year 2014. Our PAT has grown at CAGR of 1.98 % from ` 948 lacs in the financial
year 2012 to ` 986 lacs in the financial year 2014.
II.
SIGNIFICANT FACTORS AFFECTING OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Set out below are some of the more significant factors that have affected our results of operations in the past, as
well as factors that are currently expected to affect our results of operations in the foreseeable future. These
factors include:
Diversification of our Product Portfolio and success of our innovations
As part of our strategy for growth and product portfolio diversification, we have been constantly investing our
resources into R&D efforts to come with innovative products, packaging solutions and their processes. We
believe that our efforts will enable us to expand our product offerings, enable us serve multiple industries and help
us to be one of the leading players in rigid packaging solutions.
We believe that the packaging business in India presents opportunities for revenue growth as well as profitability.
We believe we were among first few companies to introduce the pail packaging containers for the paint industry
which has over the years replaced the tin packaging containers. Further, we have successfully adopted “In-mold
labelling” technology which enables us to produce a picture quality decoration on the molds produced by us. Our
business is characterized by constant product innovation due to rapid technological change, evolving industry
standards and customer preferences. To compete successfully in the packaging industry, we must be able to
identify and respond to changing demands and preferences in packaging industry. While we believe that our in
house tool room and R&D division gives us competitive advantage and helped us in reaching current level. We
cannot assure that our new products may always gain buyer acceptance and we will always be able to achieve
competitive products to meet customer expectations. Failure to identify and respond to changes in consumer
preferences could, among other things, limit our ability to differentiate our products, adversely affect consumer
acceptance of our products and could have impact on our growth prospect.
We believe that our existing infrastructure, manufacturing capabilities, distribution network, client relationships
and access to technology and know-how will be effectively complemented by our R&D efforts to enable us to
diversify our product offerings and increase operating efficiencies.
Raw Material Availability and Cost
The key raw material used for manufacturing our products is polymers which are PPCP, PP, HDPE and LLDPE.
Raw material Consumed as a percentage of total revenue was 50.1 per cent, 50 per cent, 50.9 per cent for the FY
2012, FY 2013 and FY 2014 respectively. The average prices for PPCP/PP increased from ` 82 per kg to ` 130
per kg from FY 2012 to FY 2014 which is currently in the range of `88 for the month December, 2014. Any
fluctuation in the international price of crude oil affects the price of polymers. In FY 2014, we spent ` 14,533 lacs
for 14,455 tonnes of polymer in comparison to Fiscal 2012, where we spent ` 9,649 lacs for 12,217 tonnes of
polymer. Further, any fluctuations in the demand and/or supply of polymers may impact its purchase price. We do
not have any long term supply agreement with any of our raw material suppliers. Although we enter into short
term contracts with some of our suppliers for rates, we may be unable to enter into such contracts at all times in
future.
62
Preliminary Placement Document
In terms of our understating with most of our customers, we have flexibility to pass on raw-material cost
fluctuations to them through monthly pricing arrangements. However any inability to pass on the increased costs
of polymers to our customers in future, may affect our profitability
Performance of the Industries and Sectors in which our Products are used
We are a packaging company providing packaging solutions to various industries. Our rigid packaging solutions
are primarily used in paints, lubes, oil, food and fast moving consumer goods sectors.
For FY 2012, FY 2013 and FY 2014, our Company derived 97.13 per cent, 94.88 per cent and 94.31 per cent of
revenue from paints and oil and lubricant segment. Our revenue from paint segment has grown from ` 8,600 lacs
in the FY 2012 to ` 16,440 lacs in the FY 2014 showing a growth of 91.16 percentages. Similarly our revenue
from oil and lubricant segment has grown from ` 10,024.2 lacs in the fiscal 2012 to ` 10,470 lacs in the fiscal
2014 shows a growth of 4.45 percentages. Thus we are dependent on the paints and oil and lubricant industry for
our majority in revenue. With introduction of IML containers, we are able to cater to food and FMCG sectors
also. Any slowdown in growth of the paints and oil and lubricant industry or demand of our products by paint and
oil and lubricant industry may affect our growth.
Our business can get benefitted from the increasing usage/shift to plastic packaging and recognition of in-mould
labelling as brand building solutions. In addition, we continue to introduce new products from time to time to
address specific consumer demands and are working towards continuous innovation to introduce alternative
packaging solutions which may add to our revenues.
Capacity Utilization and Operating Efficiencies
As on December 31, 2014, our total pail manufacturing capacity is over 25,000 metric ton and label
manufacturing capacity is 3 lacs meter in a single shift. Higher capacity utilization results in greater production
volumes and higher sales, and allows us to spread our fixed costs over a higher number of units sold, thereby
increasing our profit margins.
We continuously focus on improving our operational efficiencies and reducing operating costs in order to improve
our results of operations. We also focus on investing in research & development efforts in our in-house tool room
to continually upgrade the quality and functionality of our products and manufacturing processes addressing
specific customer requirements and market segments and to improve operational efficiencies. Such investment is
also expected to result in significant reduction in operating costs including a decrease in employee costs as our
facilities will be significantly more mechanized. We have also made incremental improvements to our equipment
and moulds over the past few years to increase utilisation rates as well as operational efficiencies.
Relationships with key clients
Our Company is dependent on few customers, including multi- national paint and lubricant companies. Our top
10 customers accounted for 81.75 per cent, 75.49 per cent and 79.59 per cent of our gross sales for the FY 2014,
FY 2013 and FY 2012 respectively. Though we do not have any long-term agreement with our significant
customers, we have been their vendor for over five years. We have not observed in any reduction in contribution
by top ten customers in absolute terms in last three years. The loss of any significant customer or a significant
reduction in demand from such customers could have an adverse effect on our business, results of operations and
financial conditions. We normally provide credit period of less than sixty days, however any delay in payments by
such customers over the usual payment cycles may also affect the results of our operations and financial
conditions. There can be no assurance that our business relationships with our key customers would continue in
similar manner.
63
Preliminary Placement Document
We have been able to retain our customers and have grown along with them. Our relationship with them and our
ability to get repeat orders or acquire additional share for supplies to our key clients can directly affect our
financial performance
Competition
We sell our products in highly competitive markets. In order to remain competitive, we must continuously strive
to innovate, reduce our costs of production, transportation and distribution and improve our operating efficiencies.
If we fail to do so, other producers may be able to sell better products or products at lower prices, which may have
an adverse effect on our market share and results of operations. We believe that our manufacturing facilities, wide
range of products and ability to provide comprehensive solutions closer to our customers provide us certain
competitive advantages.
Our ability to implement our growth strategies
Our gross sale has grown at a CAGR of 21.01 per cent from ` 17,456 lacs in the FY 2012 to ` 25,563 lacs in the
FY 2014. Our growth has been a result of our growth strategies over the year and success of our design
capabilities and innovations.
We propose to make further investments to improvise our designing capabilities and innovation to increase sales
of our products. Going forward, our growth strategy includes shifting our current customers to IML decorated
containers and expanding our presence in the Food segment through IML technology. We plan to increase our
processing capacity, modernise and expand our Tool Room capability.
Our growth strategy involves risks and difficulties, many of which are beyond our control and, accordingly, there
may be no assurance that we will be able to complete our plans on schedule or at all, or without incurring
additional unforeseen material capital expenditure. Any inability on our part to manage our growth effectively or
to ensure the continued adequacy of our current systems to support our growth strategy could have an adverse
effect on our growth plans. Furthermore, if market conditions change or if our operations do not generate
sufficient funds or for any other reasons, we may decide to delay, modify or forgo some aspects of our growth
strategy which could have a material and adverse effect on our business prospects.
Other factors beyond those identified above may materially affect our results of operations. For further
details, see the sections entitled "Risk Factors" and "Business" in this Preliminary Placement Document.
III.
SIGNIFICANT ACCOUNTING POLICIES TO THE BALANCE SHEET AND PROFIT & LOSS
ACCOUNT, ESTIMATES AND JUDGMENTS
Significant accounting policies are policies that are important for both the portrayal of our financial condition and
results of operations and which require management‟s most subjective judgments. In order to provide an
understanding about our management‟s judgment about the most appropriate accounting policy to be followed for
complex transactions and future events, we have identified certain accounting policies as critical accounting
policies.
We have not changed any of our accounting policies during the last three Financial Years.
While all aspects of our financial statements and accounting policies should be understood in assessing our
current and expected financial condition and results of operations, we believe that the following critical
accounting policies warrant additional attention:
A. Method of Accounting
64
Preliminary Placement Document
a.
The Financial Statements are prepared on a going concern basis with historical costs, in accordance with the
Accounting Standards specified in sub section (3C) of Section 211 of the Companies Act 1956, to the extent
applicable to the Company.
b.
The company generally recognizes income and expenditure on an accrual basis except those with significant
uncertainties.
c.
The preparation of financial statements requires the management of the company to make estimates and
assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of
the date of the financial statements and the reported income and expenses during the reporting period.
Management believes that the estimates used in the preparation of the financial statements are prudent and
reasonable. Future results could differ from these estimates.
B. Fixed Assets:
a.
Fixed Assets are stated at original cost including taxes, freight and other incidental expenses related to
acquisition/installation and after adjustment of CENVAT benefits in accordance with Accounting Standards
10 and 26 issued by ICAI. Interest/financing costs on borrowed funds attributable to assets are treated in
accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India (ICAI).
b.
Expenditure not specifically identified to any asset and incurred in respect of Fixed Assets not commissioned
is carried forward as expenditure pending allocation and forms part of Capital work in progress.
C. Depreciation
Straight-line method of depreciation is adopted on the basis of and at rates prescribed by Schedule XIV to the
Companies Act, 1956 except for leasehold buildings, wherein depreciation is provided on the basis of estimated
useful life.
Residual values of assets depreciated on straight line basis to the extent of assets not in use, and/or discarded
having outlived their utility are charged off during the year.
D. Impairment of Assets
The company periodically tests its assets for impairment and if the carrying values are found in excess of value in
use the same is charged to profit and loss account as per AS 28. The impaired loss charged to profit and loss
account will be reversed to that extent in the year in of change in estimate of value in use.
E. Investments
Investments are either classified as current or Long-term based on the Management‟s intention at the time of
purchase. Long term Investments are carried in the books of accounts at cost of acquisition. Current Investments
are carried in the books of accounts at the lower of cost and fair value. Decline in market value of long term and
current investments, if any are considered in accordance with Accounting Standard 13
F. Inventories
Inventories are valued as follows:
Raw Material
Finished Goods
At lower of applicable weighted average of landed cost net of CENVAT
benefits, or market value
At lower of applicable weighted average cost (including conversion costs) or
market value.
65
Preliminary Placement Document
Work in Process
Returned Goods
Moulds
Consumables, Packing & Bought
outs
At applicable weighted average cost including conversion costs to the stage
of manufacture
At applicable Raw Material Cost net of estimated reprocessing cost.
At cost including conversion costs after providing for appropriate wear &
tear.
At Cost.
Cost - includes material cost, labour, factory overheads and depreciation and excludes interest on borrowings.
G. Interest and Financial Charges
a.
Documentation, Commitment and Service Charges other than for term loans are spread over the tenure of the
finance facility.
b.
Interest on Hire Purchase finance is charged to Profit and Loss Account as per Accounting Standard accounting
for leases issued by ICAI.
H. Loans under Deferred Credit / Hire Purchase
The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of
agreements will be cancelled in favor of the Company. The cash price of assets thus financed is capitalized and
the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of
future interest is reflected as deferred interest under Loans & Advances.
I. Revenue Recognition
Turnover includes Excise Duties, Sales Tax/VAT collections, and freight recoveries; reduced by sale returns and
Quantity discounts. Excise duty is excluded as a separate line item. Dividend income is recognized when right to
receive is established. Interest income is recognized on time proportion basis taking into account the amount
outstanding and the rate applicable.
J.
Employee Benefits
A. Gratuity
Post-employment and other long term benefits are recognized as an expense in the statement of profit and loss for
the year in which the employee has rendered services. The expense is recognized at the present value of the
amounts payable determined based on Actuarial valuation.
In accordance with the payment of Gratuity Act, 1972, our Company provides for gratuity, a defined benefit
retirement plan (“the Gratuity plan”) covering eligible employees of the Company. The Gratuity plan provides a
lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee‟s salary and the tenure of employment with the group.
Liabilities with regard to the Gratuity plan are determined by actuarial valuation at each Balance sheet date using
the projected unit credit method as per the Accounting Standard 15. The Company contributes the ascertained
liabilities to the „Mold-Tek Packaging Limited Employees Gratuity Trust‟ (The Trust). Trustees administer
contributions made to the Trust and contributions are deposited in a scheme with Life Insurance Corporation as
permitted by the Law.
B. Provident Fund
66
Preliminary Placement Document
Eligible employees of the company receive provident fund benefits, a defined contribution plan. Contributions of
the company as employer are expensed as incurred/accrued.
C. Liability for Leave Encashment
Leave encashment in accordance with the policy of the company and are provided based on the actuarial valuation
as pronounced in Accounting Standard 15 of Institute of Chartered Accountants of India (“ICAI”).
D. Employee share based payments
Measurement and disclosure of the employee share-based payment plans is done in accordance with Securities
Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the guidance note on Accounting for Employee Share Based Payments', issued by the ICAI. The excess
of market value of the stock on the date of grant over the exercise price of the option is recognized as deferred
employee stock compensation and is charged to profit and loss account on straight-line method over the vesting
period of the options or on exercising of the options. The unamortized portion of cost is shown under stock
options outstanding. In case of lapsed options the compensation expenses charged earlier are reversed along with
balance of deferred employee compensation pertaining to such lapsed options.
E. Foreign Currency Transactions
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the
transaction. Exchange gains or losses on recognition of transaction within the accounting year relating to fixed
assets are capitalized while in respect of others the impact is recognized in the Profit and Loss Account.
Outstanding monetary transactions denominated in foreign currencies at the year end are restated at year end
rates.
F. Taxes on Income
Provision for current tax is made in accordance with the provisions of the Income-tax Act, 1961. Deferred tax
provisioning on account of timing difference between taxable & accounting income, is made in accordance with
Accounting Standard 22 issued by the Institute of Chartered Accountants of India.
G. Miscellaneous Expenditure
Preliminary expenses are amortized over a period of 5 years.
H. Leases
Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to
ownership are classified as finance leases. The rental obligations, net of interest charges, are reflected in loans and
Advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified as
operating leases and recorded as expenses as and when payments are made over the lease term.
I.
Earnings per Share
The Basic earnings per share (“BEPS”) is calculated by dividing the net profit or loss for the year attributable to
equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares
outstanding during the year. The diluted Earnings per share (“DEPS”) is calculated after adjusting the weighted
average number of Equity shares to give effect to the potential equity shares on the fully convertible warrants
outstanding.
J.
Contingent Liabilities & Assets
67
Preliminary Placement Document
Provisions involving substantial degree of estimation in measurement are recognized when there is a present
obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent
liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed
in the financial statements.
IV.
PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE
INCOME
Our income consists of (a) Sales, (b) other income and (c) Changes in inventories.
Sales
Our sales/total sales, comprises of Domestic Sales (Net of Excise Duty) and Export Sales of our products viz.
Thin wall and other packaging products.
Other Income
Our other income generally includes (a) sale of scrap, (b) dividend income from current investments, (c) rent
income, (d) income from exchange rate fluctuation and (e) interest income.
Changes in inventories of finished goods and work-in-progress
This comprises difference in closing stock and opening stock of Work in Process and Finished Stock/Sales-intransit of our products
EXPENDITURE
Material Consumed
Our expenditure in connection with raw material consumed including PPCP/PP, LDPE/LLDPE, HDPE, LG Hips
& Engage, consumables, other packing materials etc.
Employee benefit expenses
Our personnel expenses comprise expenditure in connection with (i) Salaries, wages, allowances and bonus, (ii)
contribution to provident fund and ESIC, (iii) welfare expenses, (iv) Gratuity & Leave Encashment, (v) Directors
Remuneration & Perquisites and (vi) Employee Compensation Expenses (ESOS).
Selling and Distribution Expenses
Our Selling and Distribution expenses comprise expenses in connection with (i) Carriage outward, (ii) Sales
promotion & commission, (iii) Advertisement expenses and (iv) Sales Tax.
Interest and Financial Charges
Our interest and financial charges comprise bank charges and interest paid on term loans, working capital
facilities and HP Loans and other finance charges.
Other Expenses
68
Preliminary Placement Document
Our other expenses comprise mainly of administrative and other expenses in connection with Power & Fuel, Job
work charges, Repairs & Maintenance, Rent, Rates & Taxes, Insurance, Communication Expenses, Electricity
Charges, Foreign Travel, Travelling and conveyance, Printing & Stationery, Repairs to Buildings, Repairs to
Others, Professional charges, Payment to Auditors, Bank Charges, Loss on Sale of Assets, Provision for Bad
Debts, Exchange Rate Fluctuation, General Expenses.
Preliminary Expenses Written Off
Preliminary expenses are amortized over a period of 5 years. Accordingly preliminary expenses are written off
and form part of our expenses.
Depreciation
Depreciation on all assets is provided on straight line method in accordance with and in the manner specified in
Schedule XIV to the Companies Act, 1956, except for leasehold buildings wherein depreciation is provided on the
basis of estimated useful life.
Prior Period Adjustments and Extraordinary items
This comprise of adjustments mainly on account of deferred tax liability pertaining to earlier years, leave
encashment pertaining to earlier years, any refunds received or any other extraordinary items.
V.
REVIEW OF FINANCIAL RESULTS
The following table sets forth our statements of profits and losses for the six month period ended September 30,
2014 and September 30, 2013, the components of which are also expressed as a percentage of total income for the
periods indicated:
Amount (In ` Lacs except EPS)
Half Year Ended
30-Sep-14
As a % of
Total
Revenue
30-Sep-13
As a % of
Total
Revenue
I. INCOME
a) Sales
Domestic Sales
Less: Excise Duty
Net Domestic Sales
16,906.82
13,644.43
1,802.17
1,457.38
15,104.65
99.20%
12,187.05
97.89%
286.32
1.88%
89.84
0.72%
15,390.97
101.09%
12,276.89
98.61%
26.29
0.17%
37.51
0.30%
Export Sales
Total Sales
b) Other Income
c) Changes in Inventories
(191.49)
-1.26%
135.12
1.09%
15,225.77
100.00%
12,449.52
100.00%
Material Consumed
9,999.74
65.68%
8,171.11
65.63%
Employees Remuneration & Benefits
1,055.72
6.93%
955.15
7.67%
Selling & Distribution Expenses
1,126.43
7.40%
917.29
7.37%
TOTAL
II. EXPENDITURE
69
Preliminary Placement Document
Half Year Ended
30-Sep-14
Other Expenses
As a % of
Total
Revenue
As a % of
Total
Revenue
30-Sep-13
944.26
6.20%
946.26
7.60%
2,099.62
13.79%
1,459.71
11.73%
422.28
2.77%
405.57
3.26%
0.23
0.00%
0.29
0.00%
409.95
2.69%
337.03
2.71%
13,958.61
91.68%
11,732.70
94.24%
1,267.16
8.32%
716.82
5.76%
6.76
0.04%
34.03
0.27%
1,260.40
8.28%
682.79
5.48%
Provision for Current Tax
435.47
2.86%
229.23
1.84%
Provision for Deferred Tax
-12.24
-0.08%
11.23
0.09%
V. Profit Transferred to Balance Sheet
837.17
5.50%
442.33
3.55%
Earnings per share (Annualized) - BEPS
14.83
-
7.86
-
DEPS
14.82
-
7.79
-
EBITDA
Interest & Financial Charges
Preliminary & Deferred Expenses Written Off
Depreciation
TOTAL
III. Profit Before Prior Period Adjustments &
Tax
Prior Period Adjustments
Extraordinary item
IV. Profit Before Tax
The following table sets forth our statement of profits and losses for the last three financial years, the components
of which are also expressed as a percentage of total revenue for the periods indicated:
Amount (In ` Lacs except EPS)
st
31
March
2014
As a %
of Total
Revenue
st
31
March
2013
As a %
of Total
Revenue
31st
March
2012
As a %
of Total
Revenue
I. INCOME
a) Sales
Domestic Sales
Less: Excise Duty
Net Domestic Sales
Export Sales
Total Sales
b) Other Income
c) Changes in Inventories
TOTAL
28,386.30
21,250.41
19006.27
3,021.50
2,266.08
1,743.45
25,364.80
97.75%
18,984.33
96.77%
17,262.82
99.45%
147.46
0.57%
218.2
1.11%
167.23
0.96%
25,512.26
98.32%
19,202.53
97.88%
17,430.05
100.41%
50.8
0.20%
30.32
0.15%
25.8
0.15%
385.24
1.48%
385.19
1.96%
(97.13)
-0.56%
25,948.30
100.00%
19,618.04
100.00%
17,358.72
100.00%
70
Preliminary Placement Document
31st
March
2014
As a %
of Total
Revenue
31st
March
2013
As a %
of Total
Revenue
31st
March
2012
As a %
of Total
Revenue
II. EXPENDITURE
Material Consumed
Employees
Remuneration
&
Benefits
Selling & Distribution Expenses
17,212.11
66.33%
12,845.55
65.48%
11,540.84
66.48%
1,967.54
7.58%
1,532.44
7.81%
1,346.70
7.76%
1,878.21
7.24%
1,477.41
7.53%
1,297.60
7.48%
1,886.67
7.27%
1,729.54
8.82%
1034.4
5.96%
3,003.77
11.58%
2,033.10
10.36%
2,139.18
12.32%
839.93
3.24%
579.74
2.96%
380.17
2.19%
0.59
0.00%
3.76
0.02%
5.1
0.03%
695.59
2.68%
546.05
2.78%
441.04
2.54%
24,480.64
94.34%
18,714.49
95.39%
16,045.85
92.44%
1,467.66
5.66%
903.55
4.61%
1,312.87
7.56%
18.42
0.07%
22.54
0.11%
14.77
0.09%
60.23
0.23%
0
1,389.01
5.35%
881.01
4.49%
1,298.10
7.48%
Provision for Current Tax
436.15
1.68%
181.27
0.92%
365.01
2.10%
Provision for Deferred Tax
45.44
0.18%
121.76
0.62%
0
907.42
3.50%
577.98
2.95%
933.09
Other Expenses
EBDITA
Interest & Financial Charges
Preliminary & Deferred Expenses
Written Off
Depreciation
TOTAL
III. Profit Before Prior Period
Adjustments & Tax
Prior Period Adjustments
Extraordinary item
IV. Profit Before Tax
V. Profit Transferred to Balance
Sheet
Earnings per share (Annualized) BEPS
DEPS
8.05
0
5.14
8.00
-
5.09
5.38%
10.33
-
8.21
-
Results for the Six months ended September 30, 2014 compared to the results for the Six months ended
September 30, 2013
Sales
Our total sales increased by 25.37% in H1-2015 to ` 15,390.97 Lacs from ` 12,276.89 Lacs in H1-2014, this
increase in sales was primarily due to better performance of domestic sales as well as exports sales. For H1-2015
exports sales grew over 218.70% compared to H1-2014 primarily on account of export of our IML products to
United Arab Emirates country for customers in Oil & FMCG industry. For H1-2015 domestic sales increased by
over 23.94% compared to H1-2014 primarily on account of higher demand of our IML products for paints
industry. The IML products which has higher realisation, contributed over 29 % of our total sales for H1-2015
compared to 18% in H1-2014 which is testimony of acceptance of our IML product and its quality.
Other Income
71
Preliminary Placement Document
Other income as percentage of total income reduced from 0.30% for H1-2014 to 0.17% for H1-2015 primarily
due to higher total sales and lower other income for H1-2015. Other income decreased by 29.91% to ` 26.29 Lacs
during H1-2015 from ` 37.51 Lacs in H1-2014.
Changes in Inventories
There was a reduction on account of change in Inventory levels to ` -191.49 Lacs during H1-2015 from ` 135.12
Lacs in H1-2014, primarily on account of increased demand from customers which resulted in lower inventory
holding.
Total Income
Total income increased by 22.30% in H1-2015 to `15,225.77 Lacs from ` 12,449.52 Lacs in H1-2014, primarily
due to an increase in our sales as explained above.
Material consumed
Even though the Company witnessed considerable growth in sales, the material consumption ratio remained the
same around 66%. As we are shielded with price escalation clause for most of our supplies, the impact of change
in Raw material price has not affected our consumption ratio while our efficiency remained the same in increased
volumes and turnover.
Employee Remuneration & Benefits
Employee remuneration & benefits increased to ` 1,055.72 Lacs during H1-2015 from ` 955.15 Lacs for H12014. This increase was primarily due to annual salary increments to employees and compensation paid to whole
time director However the Employee remuneration & benefits as percentage of total income reduced from 7.67%
in H1-2014 to 6.93% of in H1-2015.
Selling & Distribution Expenses
Selling & Distribution expenses increased to `1,126.43 Lacs for H1-2015 from `917.29 Lacs for H1-2014. Our
selling expenses accounted for 7.40% of the Total Income in H1-2015 at about the same levels of 7.37% in H12014. This marginal increase was primarily due to higher sales tax expenses effecting local sales from depots
established in the vicinity to major customers, compensated by reduced transportation cost.
Other expenses
Other expenses were ` 944.26 Lacs for H1-2015 at about same levels as ` 946.26 Lacs in H1-2014 despite
increase in sales.
Total Expenses
Total expenditure increased to ` 13,958.61 Lacs during H1-2015 from ` 11,732.70 Lacs for H1-2014. While the
sales has gone up by 25.37% the expenditure has increased by 18.97% resulting in better margins which is due to
stable non-operating costs and on account of increase in overall operations and factors mentioned above.
EBITDA
EBITDA increased by 43.84% from ` 1,459.71 Lacs in H1-2014 to ` 2,099.62 Lacs in H1-2015 whereas The
EBITDA margins improved from 11.73% in H1- 2014 to 13.79% in H1- 2015 on account of increase in fixed
costs (Employee cost) not being to the tune of increase in Total Sales of 25.37% and due to reduction in power &
fuel costs forming part of other expenses which are variable in nature due to steps adopted by company.
72
Preliminary Placement Document
Interest & Financial Charges
Our interest and finance costs increased by 4.12% during H1-2015 to ` 422.28 Lacs from ` 405.57 Lacs in H12014, due to higher borrowing for H1-2015 for meeting working capital requirement. Interest costs are at 2.77%
of the Total Income in H1-2015 as against 3.26% in H1-2014 on account of increased sales. The total debt as on
30 September 2013 was ` 6,351.77 Lacs which increased to 6,759.76 Lacs on 30 September 2014
Depreciation
Depreciation and amortization expense increased by 21.64% to ` 409.95 Lacs for H1-2015 from ` 337.03 Lacs for
H1-2014, primarily as a result of depreciation on new manufacturing facility commissioned at Satara and new
assets added to one of the units at Hyderabad.
Prior Period Adjustments and Extraordinary items
Prior period adjustments of ` 6.76 Lacs were made in H1-2015 as against ` 34.03 Lacs H1-2014. There were no
extra ordinary items reported during these periods.
PBT
There was an increase of 84.60% in our PBT from ` 682.79 Lacs in H1-2014 to ` 1,260.40 Lacs in H1-2015. The
PBT margins have improved from 5.48% in H1-2014 to 8.28% in H1- 2015 mainly on account of factors
mentioned above
Tax Expense
Tax expense increased to ` 423.23 Lacs for the H1-2015 as against `240.46 Lacs for H1-2014, due to higher PBT.
PAT
Our PAT has increased by 89.26% from ` 442.33 Lacs in H1-2014 to ` 837.17 Lacs in H1-2015. There has been
an improvement in our PAT margins from 3.55% in H1-2014 to 5.50% in H1- 2015 mainly on account of factors
mentioned above.
Financial Year 2014 compared with Financial Year 2013
Sales
Our Total Sales increased by 32.86% to ` 25,512.26 Lacs in FY 2014 as against ` 19,202.53 Lacs for the FY
2013, this increase in sales was primarily driven by domestic sales after introduction of innovative In-mould
Label decorative pails and thin wall products. Out of the above, the export sales are comprises to `147.46 Lacs
during FY 2014 as against ` 218.20 Lacs which is 0.57 % and 1.11 % respectively of our Total Income. Though
the export turnover is reduced by 32.42% has nominal impact due to lower volumes. For FY 14 domestic sales
increased by over 33.61% compared to FY2013 primarily on account of higher demand of our IML products for
paints industry. The IML products contributed over 19% of our total sales for FY 2014 compared to 14% in
FY2013 which is testimony of acceptance of our IML product and its quality. For FY 2014 we sold 3.84 Crores
pails compared to 3.09 Crores pails for FY2013 showing a growth of 24%.
Other Income
Other income increased by 67.55% to ` 50.80 Lacs for the FY 2014 from ` 30.32 Lacs for the FY 2013, primarily
on account of product development charges. Other income as percentage of total income increased from 0.15%
73
Preliminary Placement Document
for FY 2013 to 0.20% for FY 2014 primarily due to higher growth in other income for FY 2014 compared to FY
2013 due to lower base.
Changes in Inventories
The change in inventory was at about the same levels in absolute terms at ` 385.24 Lacs for FY 2014 and `
385.19 Lacs for the FY 2013.
Total Income
Total income increased by 32.27% to ` 25,948.30 Lacs for the FY 2014 from ` 19,618.04 Lacs for the FY 2013,
primarily due to an increase in our sales as explained above.
Material consumed
Material consumption cost increased by 33.99% to ` 17,212.11 Lacs for the FY 2014 from ` 12,845.55 Lacs for
the FY 2013, primarily due to increased sales. The material consumed accounted for 66.33% of the Total Income
in FY 2014 compared to 65.48% in FY 2013 on account of higher raw material prices due to increasing crude
prices and raw material mix. The average raw material cost increased by over 13% for FY 2014 compared to FY
2013. For FY 2014 we consumed 144.56 Lacs ton of key raw materials like PP/LDPE/HDPE/LG Hips of raw
material compared to 121.46 lacs tones of key raw material in FY 2013 whereas the average cost of Key raw
material cost was ` 100.5 per tonne for FY 2014 compared to ` 88.25 per tonne for FY 2013 showing an increase
of over 13%.
Employee Remuneration & Benefits
Employee remuneration & benefits increased by 28.39% to ` 1,967.54 Lacs for FY 2014 from ` 1,532.44 Lacs for
FY2013. This increase was primarily due to higher outlay on salaries, welfare expenses, gratuity and increased
Director‟s remuneration and perquisites. Employee Remuneration & Benefits accounted for 7.58% of the Total
Income in FY2014 compared to 7.81% in FY2013 showing an improvement of 23 basis points, which was
primarily on account of higher sales growth as on March 31, 2014
Selling & Distribution expense
Selling and distribution expenses increased by 27.13% to `1,878.21 Lacs in FY2014 from ` 1,477.41 Lacs for FY
2013 primarily due to increased outlay for sales tax. Our Selling & Distribution expenses accounted for 7.24% of
the Total Income in FY 2014 compared to 7.53% in FY 2013, showing improvement of 29 basis points mainly on
account of lower sales promotion and commission expenses.
Other expenses
In spite of other expenses increased by 9.09% to `1,886.67 Lacs in FY2014 from `1,729.54 Lacs in FY2013, the
other expenses as % of total Income decreased from 8.82% in FY 2013 to 7.27% in FY 2014 on account of higher
sales and sales growth The increase in other expenses was primarily on account of power & fuel expenses, repairs
& maintenance, loss on account of sale of assets and bad debts written off.
Total Expenses
Total expenditure increased by 30.81% in FY2014 to ` 24,480.64 Lacs from ` 18,714.49 Lacs in FY2013. The
increase is primarily attributable to increased sales.
EBITDA
74
Preliminary Placement Document
There was an increase of 47.74% in our EBITDA from ` 2,033.10 Lacs in FY2013 to ` 3,003.77 Lacs in FY
2014. In spite of higher material consumed expenses, EBITDA margins improved from 10.36% in FY2013 to
11.58% in FY 2014 mainly on account of lower other expenses percentage due to production efficiency and better
realisation on account of product mix by increase in IML container sale and stabilised production process
enabling decrease in operating costs.
Interest & Financial Charges
As at FY 2014 our serviceable borrowing stands at ` 6418 Lacs compared to borrowing of ` 6265 Lacs as at FY
2013. Our interest and finance costs increased by 44.88% to `839.93 Lacs for FY 2014 from ` 579.74 Lacs in FY
2013, on account of full year interest on loans taken for expansion have been charged to revenues post
commencement of commercial production, and higher average working capital loan taken. Our interest and
finance cost accounted for 3.24% of the Total Income in FY 2014 as against 2.96% in FY 2013.
Depreciation
Depreciation and amortization expense increased by 27.39% to ` 695.59 Lacs for FY 2014 from ` 546.05 Lacs
for FY 2013, primarily full year depreciation for in fixed assets added in previous year on account of operation of
new facilities at Daman and Satara and capitalisation of Capital works in progress. Though in FY 2014 we added
gross block of ` 1,114 Lacs compared to addition of `3135 Lacs mostly on account of building and plant &
machinery added for new facility at Daman and Satara, the depreciation stood on the higher side as major part of
the capitalisation took place towards the end of FY 2013.
Prior Period Adjustments and Extraordinary items
Prior period adjustments of ` 18.42 Lacs were made in FY 2014 as against ` 22.54 Lacs in FY 2013. Prior period
deferred tax liability, leave encashment refund received from electricity department pertaining to earlier years,.
There was an extraordinary item of ` 60.23 Lacs in FY 2014 which is the net loss suffered by the company after
insurance claim and considering the net realizable value of partially damaged materials valued at `14 Lacs.
PBT
PBT increased by 57.66% from ` 881.01 Lacs in FY 2013 to ` 1,389.01 Lacs in FY 2014. The PBT margins have
improved from 4.49% in FY 2013 to 5.35% in FY 2014 mainly on account of factors mentioned above.
Tax Expense
Tax expense increased to ` 481.59 Lacs for FY 2014 as against `303.03 Lacs for FY 2013, due to higher PBT
PAT
Our PAT increased by 57% from ` 577.98 Lacs in FY 2014 to ` 907.42 Lacs in FY 2013. There has been an
improvement in our PAT margins by 18.64% from 2.95% in FY 2013 to 3.50% in FY 2014 mainly on account of
higher PBT. This is inspite of providing a net loss of ` 60 Lacs due to the fire accident in the FY 2013 at our
Company‟s Daman unit.
Financial Year 2013 compared with Financial Year 2012
Total Income
Sales
75
Preliminary Placement Document
Our Net Sales increased by 10.17% to `19,202.53 Lacs for the FY 2013 from `17,430.05 Lacs for the FY 2012,
this increase in sales was primarily driven by overall increase in our domestic and export sales after take-off of
innovative IML decorative pails.
Our exports sales increased by over 30.48% for FY 2013 compared to FY 2012. For FY 2013 domestic sales
increased by over 9.97% compared to FY2012 primarily on account of higher demand of our products form lubes
and oil industry. The IML products contributed over 14% of our total sales for FY 2013 compared 5.19%to FY
2012 which is testimony of acceptance of our IML product and its quality.
Other Income
Other income increased by 17.52% to `30.32 Lacs for the FY2013 from ` 25.80 Lacs for the FY 2012, primarily
on account exchange rate fluctuations and interest income. Other income as percentage of total Income remained
constant around 0.15% for FY 2013 and FY 2012
Total Income
Total income increased by 13.02% to `19,618.05 Lacs for the FY 2013 from `17,358.72 Lacs for the FY 2012,
primarily due to an increase in our sales as explained above.
Material consumed
Material consumption cost increased by 11.31% to `12,845.55 Lacs for the FY 2013 from `11,540.84 Lacs for the
FY 2012, primarily due to increased sales. The material consumed accounted to 65.48% in FY 2013 of the Total
Income in FY2013 showing marginal decrease from 66.48% in FY 2012 inspite of higher raw material prices and
due to increasing crude prices with change in raw material mix and arrangement with customers for price
escalation clause. The Average raw material cost increased by over 11% for FY 2013 compared to FY 2012. For
FY 2013 we consumed 121.46 Lacs ton of key raw materials like PP/LDPE/HDPE/LG Hips of raw material
compared to 122.18 Lacs tones of key raw material in FY 2012 whereas the average cost of key raw material was
` 88.25 per tonne for FY 2013 compared to ` 78.97 per tonne for FY 2012 showing an increase of over 11%.
Employee Remuneration & Benefits
Employee remuneration & benefits increased by 13.79% to `1,532.44 Lacs for FY 2013 from `1,346.70 Lacs for
FY 2012. This increase was primarily due to higher outlay on salaries, welfare expenses, gratuity and increased
Director‟s remuneration and perquisites. This expense head accounted to 7.81% of the Total Income in FY 2013
around the same levels as 7.76% in FY2012.
Selling & Distribution expense
Selling & Distribution expenses increased by 13.86% to ` 1,477.41 Lacs for FY 2013 from ` 1,297.60 Lacs for
FY2012. This increase was primarily due to increased outlay for carriage outwards and sales tax. Our selling
expenses accounted for 7.53% of the Total Income in FY 2013 compared to 7.48% in FY 2012.
Other expenses
Other expenses increased by 67.20% to `1,729.54 Lacs for FY2013 from ` 1,034.40 Lacs for FY2012. The
increase was primarily on account of increased manufacturing expenses like power and fuel due to power
problems in Andhra Pradesh, hence resorted to DG sets and other power sources and repair and maintenance apart
from some increase in administrative expenses.
Total Expenses
76
Preliminary Placement Document
Total expenditure increased by 16.63% to `18,714.49 Lacs for the FY 2013 from `16,045.85 Lacs for the FY
2012. The increase is primarily attributable to increased sales and increased manufacturing expenses.
EBITDA
Our EBITDA declined by 4.96% from ` 2,139.18 Lacs in FY 2012 to ` 2,033.10 Lacs in FY 2013. The EBITDA
margins also reduced 12.32% in FY 2012 to 10.36% in FY 2013 mainly on account of increase in power cost due
to power problems in Andhra Pradesh, hence resorted to DG sets and other power sources We have incurred a
huge cost due to acute shortage of power and resulting alternative sources like diesel for internal generation of
power to support the production requirements.
Interest & Financial Charges
Finance costs increased by 52.49% to ` 579.74 Lacs for FY 2013 from `380.17 Lacs for FY 2012, due to
increased borrowings for expansion of Daman plant and new units in Maharashtra. Our interest and finance cost
accounted for 2.96% of the Total Income in FY2013 as against 2.19% in FY2012. For FY 2013 our borrowing
was ` 6264.97 Lacs compared to borrowing of `4,295.82 Lacs for FY 2012.
Depreciation
Depreciation and amortization expense increased by 23.81% to ` 546.05 Lacs for FY 2014 from ` 441.04 Lacs
for FY 2012, primarily as a result of additions in fixed assets on account of new facilities at Daman and Satara
and higher capitalisation of work in progress. In FY 2013 we added gross block of ` 3134 Lacs mostly on account
of building and plant and machinery added for new facility at Daman and Satara compared to addition of `1522
Lacs In FY 2012.
Prior Period Adjustments and Extraordinary items
Prior period adjustments of ` 22.54 Lacs were made in FY 2013 as against ` 14.77 Lacs in FY 2012. Prior period
adjustments in FY 2013 mainly included gratuity pertaining to earlier years for Whole time Directors. There was
no extraordinary item reported during these periods.
PBT
There was a decline of 32.13% in our PBT from ` 1,298.10 Lacs in FY 2012 to ` 881.01 Lacs in FY 2013. The
PBT margins also deteriorated from 7.48% in FY 2012 to 4.49% in FY 2013 mainly on account of increase in
power and finance cost and depreciation expenses on account of new facilities being added.
Tax Expense
Tax expense decreased to `303.03 Lacs for the FY 2013 from `365.01 Lacs for FY 2012 due to reduced profits.
PAT
Our PAT reduced by 38.06% from ` 933.09 Lacs in FY 2012 to ` 577.98 Lacs in FY2013. There has also been a
decline in our PAT margins from 5.38% in FY 2012 to 2.95% in FY2013 mainly on account of steep increase in
power and financial cost.
CASH FLOW
The table below summarizes our cash flows for the Financial Years 2014, 2013 and 2012:
77
Preliminary Placement Document
(` In Lacs)
CONSOLIDATED SUMMARY CASH FLOW STATEMENT
31st March 2014
Net Profit Before Tax and Extraordinary items
31st March 2013
31st March 2012
904
1,313.
1,468
ADJUSTMENT FOR
Depreciation
Preliminary Expenses & Deferred Expenses
Interest Paid
718
569
456
1
4
5
840
1559
580
1,153
380
841
Operating Profit Before Working Capital Changes
3,027
2,057
2,154
Net Cash Flow from Operating Activities (1)
2525
1429
1357
Net Cash Flow from Investing Activities (2)
-884
-2090
-2213
-1623
676
874
18
15
17
Net Cash Raised From Financing Activities (3)
Net Changes in Cash & Cash Equivalent (1+2+3)
Cash Flow from Operating Activities
Net cash generated from operating activities increased to ` 2,525 Lacs for the FY 2014 from ` 1,429 Lacs for the
FY2013 on accounts of increased depreciation and interest payments, increased profits, increase in trade payables,
increase in other liabilities and short term provision
Net cash generated from operating activities increased to `1,429 Lacs for the FY 2013 from `1,357 Lacs for the
FY 2012 on account of increased depreciation and interest payments primarily due to reduced trade payables,
loans & advances and other liabilities.
Cash Flow from Investing Activities
Net cash used in investing activities was ` 884 Lacs for FY 2014, primarily on account of purchase of fixed assets
for capacity addition and expansion and moulds additions
Net cash used in investing activities was ` 2,090 Lacs for FY 2013, primarily on account of purchase of fixed
assets new units‟ setup at Daman and Satara
Cash Flow from Financing Activities
Net cash used for financing activities was ` 1,623 Lacs for FY 2014, comprising mainly of interest payment and
dividend and taxation provisions.
Net cash generated from financing activities was ` 676 Lacs for FY 2013, primarily comprising of increased
borrowings taken from banks.
78
Preliminary Placement Document
VI.
DEBT- EQUITY RATIO & INTEREST COVERAGE RATIO
Total Debt Equity ratio
Long-term Debt Equity
Ratio
March 31, 2014
1.25
0.37
March 31, 2013
1.35
0.44
March 31, 2012
1,11
0.28
Interest Coverage Ratio
A
B
C
D
E=
(C+
D)/
D
Profit / (Loss) after Tax
Depreciation / Amortisation
Cash profits (A+B)
Finance costs
Interest coverage ratio
Fiscal year ending
March 31, 2014
907.42
695.59
1,603.01
839.93
Fiscal year ending
March 31, 2013
577.98
546.05
1,124.03
579.74
(` in Lacs)
Fiscal year ending
March 31, 2012
933.09
441.04
1,374.13
380.17
2.91
2.94
4.61
Summary of reservations or qualification or adverse remarks in the auditors’ report in the last five Financial
Years immediately preceding the year of filing the Preliminary Placement Document and of their impact on the
financial statements and financial position of our Company and the correct steps taken and proposed to be
taken by our Company for each of the said reservations or qualifications or adverse remark
There are no reservations or qualifications or adverse remarks in the auditors‟ report in the last five Financial
Years immediately preceding the year of filing this Preliminary Placement Document except for the following
appearing in the annual report for the FY 2012-13.
“Short provision of deferred tax liability in accordance with Accounting Standard 22 issued by ICAI, `.269.92
Lacs pertaining to earlier years impacting noncurrent liabilities, reserves & surplus and prior period items.”
Change in Accounting Policies during the last three years and their effect on the profits and the reserves of
our Company
There have been no changes in the accounting policies during the last three financial years of our Company
ending March 31, 2014, 2013 and 2012
Recent Developments
To our knowledge, except as otherwise disclosed in this Preliminary Placement document, there is no subsequent
development after the date of our financial statements contained in this Preliminary Placement document which
adversely affects, or is likely to affect adversely, our operations or profitability, or the value of our assets, or our
ability to pay our material liabilities within the next 12 months.
VII.
RISK AND CONCERNS
Business Concentration risk
Risks arise from a dependence on particular customers, suppliers, products or markets. An over reliance on a
customer or on a supplier for a substantial part of our business increases our vulnerability to delivery and sales
and could lead to significant margin pressure. A dependence on certain markets could make us susceptible to
swings in customer demand or changes in the market environment.
79
Preliminary Placement Document
We are actively pursuing opportunities around various industry segments and the geographies in which we
operate Building strong relationships with customers to be a valuable and reliable business partner for them is
one of the guiding principles of our Company which has enables us to retain our key clients.
Raw Material Sourcing
We source 99% of our raw material requirements from India and 1% from imports.
Interest Rates
Our borrowing is varying rate of interest which ranges from 11 per cent to 12.75 per cent depending on bank
tenure and type of facilities.
VIII.
LIQUIDITY AND CAPITAL RESOURCES
Our Company‟s primary liquidity needs have been to finance the growth of its business and expenditures. Our
Company has historically financed the majority of its working capital, capital expenditure and other requirements
through its operating cash flow & borrowings.
IX.
BORROWINGS
To fund our working capital and capital expenditure requirements, we enter into long-term and short-term credit
facilities. As of March 31, 2014, our outstanding total borrowings amounted to ` 6,550.56 Lacs as detailed in the
following table:
Particulars
Long - Term Borrowing
Secured
Un-secured
Amount (` in Lacs)
1,948.99
1,201.56
747.42
Current maturities of long term borrowing
X.
729.33
Short - Term Borrowing
Secured
Un-secured
4,601.57
4,601.57
0
Total
7,279.89
CONTINGENT LIABILITIES
a. Bank guarantees:
The Company has provided bank guarantees to the tune of `44.54 Lacs comprising of bid securities and
performance guarantees given to its customers / prospective customers.
b. Export Obligations:
The Company has a cumulative export obligation to the tune of $18.17 Lacs (`933.99 Lacs) as on 31st March
2014
80
Preliminary Placement Document
c. No contingent liability is considered towards rebates availed on power bills in earlier years and short payments
arising as a consequence thereof.
d. As of September 30, 2014, contingent liabilities disclosed in the notes to our audited financial statements
aggregated ` 94.02 Lacs. Set forth below are our contingent liabilities that had not been provided for as of
September 30, 2014
Amount (` in Lacs)
45.00
Nature of contingent liability
Bank Guarantees
XI.
Export obligations
49.02
Total
94.02
OFF BALANCE SHEET ARRANGEMENTS
We do not have any material off balance sheet arrangements.
XII.
RELATED PARTY TRANSACTIONS
For details in relation to the related party transactions entered into by our Company during the last three Financial
Years as per the requirements of AS-18 issued by the ICAI see the section titled "Financial Statements" on page
199.
XIII.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies in the last 3 years.
XIV.
USE OF ACCOUNTING ESTIMATES
The preparation of the financial statements in conformity with Indian GAAP requires management to make
estimates and assumptions that affect reported amount of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial statements and amount of income and expenses
during the year of account.
81
Preliminary Placement Document
INDUSTRY
The information presented in this section has been obtained from publicly available documents from various
sources, including officially prepared materials from the Government of India and its various ministries, industry
websites and publications, and other third party reports. Industry websites and publications generally state that
the information contained therein has been obtained from sources believed to be reliable but their accuracy and
completeness are not guaranteed and their reliability cannot be assured. Although we believe industry, market
and government data used in this Preliminary Placement Document is reliable, it has not been independently
verified and hence 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.
Neither we, nor any other person connected with this Issue has verified this information.
Statements in this section that are not statements of historical fact constitute “forward-looking statements”. Such
forward-looking statements are subject to various risks, assumptions and uncertainties and certain factors could
cause actual results or outcomes to differ materially.
Indian Economy and GDP
The GDP growth in the first half of the 2014-15 is estimated at 5.5 per cent as against 4.9 per cent during the
same period of previous year. As per the quarterly estimates of Gross Domestic Product (GDP) for the second
quarter(July-September) of 2014-15, released by CSO (on November 28, 2014), GDP growth at factor cost at
constant (2004-05) prices is estimated at 5.3 per cent as against 5.2 per cent in Q2 of 2013-14.
Source: http://finmin.nic.in/stats_data/monthly_economic_report/2014/indnov14.pdf
India has the second largest GDP among emerging economies based on purchasing power parity (PPP). The
country is the 4th largest economy in terms of purchasing power parity (PPP).
Source: http://www.indiapack.org/
At the sectoral level growth rates are 3.2 per cent for agriculture and allied sectors, 2.2 per cent for industry sector
and 7.1 per cent for service sector in second quarter of FY 2014-15.
Overall growth in the Index of Industrial Production (IIP) was (-) 4.2 per cent during October 2014 as compared
to a decline of 1.2 in October 2013. During April-October 2014-15, IIP growth was 1.9 per cent as compared to
0.2 per cent growth in April- October 2013-14.
Eight core infrastructure industries registered 6.3 per cent growth in October 2014 as compared to decline of 0.1
per cent in October 2013. During April-October 2014-15, these sectors grew by 4.3 per cent as compared to 4.2
per cent growth during April-October2013-14.
82
Preliminary Placement Document
Source: http://finmin.nic.in/stats_data/monthly_economic_report/2014/indnov14.pdf
Indian Packaging industry
The packaging industry in India is one of the fastest growing industries which have its influence on all industries,
directly or indirectly. The Indian packaging industry is growing continuously. The total worth is about USD 24.6
billion in 2011. However, there is great growth potential since India‟s per capita consumption of packaging is
only 4.3 kgs whereas neighbouring Asian countries like China and Taiwan show about 6 kgs and 19 kgs,
respectively. This clearly indicates that there are many more commodities which need to be marketed in packaged
condition and thus, a great business opportunity stands for the Indian packaging industry.
Moreover, the Indian retail market is the 5th largest retail destination, globally and has been ranked the second
most attractive emerging market for investment. The market is expected to rise to USD 1.3 trillion by 2015.
The key trends for rapid growth of the Indian packaging industry are as follows:





India‟s retail growth and increased consumption of consumer products is driving the demand for packaging
in the country.
India is the sixth largest packaging market in the world, with sales of USD 24.6 billion in 2011.
The packaging industry is expected to grow at a CAGR of 12.3% , to become the fourth largest global
market, with sales of USD 43.7 billion in 2016.
The Indian food processing market is one of the largest in the world in terms of production, consumption
and growth prospects.
India‟s per capita annual packaging expenditure was USD 20 in 2011, which is significantly lower than the
top 20 market average of USD 347.6. The low per capita expenditure offers a huge business opportunity for
packaging companies.
Source: http://www.indiapack.org/
It is estimated that more than 80% of packaging in India constitutes rigid packaging. The remaining 20%
comprises flexible packaging.
Source: The Indo-Italian Chamber of Commerce and Industry – Report on Packaging Industry in India
Within the next five years the ratio will be 3:1 (75% rigid packaging and 25% flexible packaging).
83
Preliminary Placement Document
Contribution of packaging industry in Indian economy
The sales turnover of Indian packaging industry is likely to touch $43.7 billion by 2016, according to Indian
Institute of Packaging (IIP). The total turnover of the packaging industry in India at present is $27.6 billion and
expected to grow to around $43.7 billion by 2016, whereas the global turnover is about $550 billion. The
packaging industry was growing at 12% per annum in India as against the global growth rate of 5%.
There are roughly 22,000 packaging companies in the country--from raw material manufacturers to machinery
suppliers to ancillary material and nearly 85 per cent of them are MSMEs.
India's per capita consumption of packaging is only 4.3 kg per person per annum, as against Germany's 42 kg and
China's 20 kg, which is very low compared to global standards. Initiatives are needed to convert the large
unpacked commodities into processed and packed and well-presented commodities. There is a scope for
innovation, entrepreneurship as well as logistical advancements.
Source: http://www.business-standard.com/article/companies/indian-packaging-industry-likely-to-touch-44-bnby-2016-113012200588_1.html
Types of packaging
a. Functions of Packages:
Protective Function
 Shock, Drop,
 Pressure, Vibration
 Heat,
 Water or Moisture
Convenient Function
 Transportation,
 Stocking (User, Ware House), Image,
Design, Size Protection,
 After Re-Use Productivity
Graphic Design
 Design
 Colour
 Size
Psychological Function
 Attraction
b. Classification of Packaging:
1.
By Shape (Form or Size)
Heavy Packaging (Large)
 Container
 Wooden Packs
Medium Packaging (Middle)
 Carton Box
 Woven Bag
Can, Barrel, Tub
Light Packaging (Small)
 Flexible Packaging
 Bottles, Can (Small)
Paper Container
84
Preliminary Placement Document
2.





3.





4.
By Methods (Way of Packing)





Vacuum Packaging
Aseptic Packaging
Retortable Packaging
Shrink Packaging
Strip Packaging
Gas Flush Packaging
Moisture – Proof Packaging
Blister Packaging
Skin Packaging
Tamper – Evidence Packaging
 Others
By Contents




Food Packaging
Cosmetics Packaging
Powder Packaging
Toiletry Packaging
Others
Drug Packaging
Liquid Packaging
Clothing Packaging
Dangerous Packaging
By Materials
Rigid Packaging
Bottle, Metal Can
 Wooden Box
 Pails, Containers, Tubs
 Metal Box, etc

Semi Rigid Packaging
 Carton Box
Plastic Bottle
Flexible Packaging
 Paper, Plastic
 Film, Alu- Foil
Cellophane
Source: The Indo-Italian Chamber of Commerce and Industry- Report on Packaging Industry in India
Rigid packaging industry has seen a shift towards plastic drums and containers. However, the demand in the
packaging industry is expected to be driven by flexible packaging, especially the flexible intermediate bulk
container, which is expected to grow at 20% over the next five years. This is made possible by the advanced
technology which offers enhanced performance while maintaining supply chain efficiency.
Packaging Decision of the Manufacturer
A lot of factors affect the packaging decision of a manufacturer of products, which may include:
a. The cost of packaging,
b. The function-ability of packaging i.e. the ability to meet its defined objectives of containment, protection,
communication, convenience and marketing of the product
c. The role that the packaging plays in enhancing the value of its products.
d. Brand enhancement/ differentiation
e. Technology in use
Source: Report on Packaging – March 2014 by Onicra Credit Rating Agency of India
Packaging Products decorative techniques for Paint, Lubricants, Food Industry includes:Screen Printing
85
Preliminary Placement Document
Screen printing is arguably the most versatile of all printing processes. It can be used to print on a wide variety of
substrates, including paper, paperboard, plastics, glass, metals, fabrics, and many other materials including paper,
plastics, glass, metals, nylon and cotton. Some common products from the screen printing industry include
posters, labels, decals, signage, and all types of textiles and electronic circuit boards. The advantage of screen
printing over other print processes is that the press can print on substrates of any shape, thickness and size.
A significant characteristic of screen printing is that a greater thickness of the ink can be applied to the substrate
than is possible with other printing techniques. This allows for some very interesting effects that are not possible
using other printing methods. Because of the simplicity of the application process, a wider range of inks and dyes
are available for use in screen printing than for use in any other printing process.
Source: http://www.pneac.org/printprocesses/screen/
Heat Transfer
Heat transfer films have rapidly captured the attention of vendors in the past few years. Heat transfer is a process
where the image is transferred to the product by heat and pressure. The carrier film winds on the other side as a
wastage which can be later recycled. The foil which is transferred to the product sticks to it like skin and is
generally non-tamperable. The labels are supplied in roll-form to the client where with the help of the applicator
machine they can proceed with the application on the final product. The label consists of a protective coating,
release coating, ink (which can be used for making image) and transfer coating. Transfer coat melts when it is
subjected to hot temperature of 200- 225 Centigrade and release coat helps to keep the ink or the image intact and
release from the base substrate. There are many products which can be decorated by this method. For instance a
heavy usage is seen in office and school stationery products, household plastic wares, industrial elements like
paints and lubricant containers and so on. Heat transfer films are a widely used and preferred technology which
beautifies your product and increases its shelf recognition. But with the advancement in the technology and the
science of labeling, research continues for an extreme labeling solution which brings us to IML.
Termed as the “The ultimate labeling solution”, it proves it worth at all levels. IML is the use of paper or plastic
labels during the manufacturing of containers by blow molding, injection molding, or thermoforming processes.
The label serves as the integral part of the final product, which is then delivered as pre-decorated item. Combining
the decoration process with the molding process cuts the total cost to an amazing count.
In-mould labelling
In-mould labelling (“IML”) was initially designed for blow molding. Through the developments using injection
molding or thermoforming has increased the efficiency of the labeling process. The original concept involves
coating the reverse side of the label with a heat seal layer, followed by a substrate material in which heat resistant
ink is applied to. A heat resistant coating of lacquer is then applied. This process eliminates the need to flame treat
the bottles prior labeling to achieve adequate adhesion.
There are several techniques for conducting the In-mold labeling process. Vacuum and compressed air can be
used to handle the labels, also static electricity can be used. Electrostatic charging electrodes charge a label while
it is being transferred to the moulding machine, so that when the label is placed on the tool and released by the
labeling robot, it will wrap itself onto the tool. Most robot systems for placement of labels are not required for
specific moulding machines and can be used with up to date presses with fast clamping systems
Labels may be paper or a similar material to the molded product. Polypropylene or polyethylene is commonly
used as label material, with a thickness of 40 to 70 microns. Cavitated label material is also used. This is a
sandwich material, having a spongy layer bonded between two very thin solid layers. An advantage of cavitated
film is better conformance to small-radius curves on a product. Laminated film can be used to decorate products,
yielding high wear-resistance. This type of film has the printed surface protected by a second layer of film, with a
86
Preliminary Placement Document
thickness of 30 or 40 microns .Products using this type of label might include picnic-ware, mouse-mats, or
internal automotive component
In-mould labeling is a popular method of decorating injection for plastic bottles. IML can provide greater
decorating options than other methods. Multi-color screen printed and dry offset lithography printed graphics are
used to produce products with higher quality graphics than available with other decorating methods. Injection
moulding is widely used for thin wall containers such as ice-cream tubes, paint and lubricant containers,
household products as well as various cosmetic containers wherein suitable products for blow molding are in the
food industry used for edible oil containers, personal care products, toiletries such as hand wash bottles, liquid
detergents and so on. IML is of luxurious advantage as it can be used over complex shapes which are difficult to
print and label otherwise. Apart from that, IML process eliminates the labeling step and all associated equipment
and labour and has excellent recycling capabilities. It is deeply believed businesses with best technology,
advanced machineries and highly skilled professionals yield favorable results. Superior technology is the key to
success along with the work force that understands it and derives the best out of it. Knowledge of technologies
like Heat-transfer process and In-mould labelling, can surely help beat all the odd.
Source: Plastindia Foundation – In-house Journal dated May 2013, Volume 39
Growth in paint, Lubricants, Food & FMCG Industry
Paints
Indian paint industry is likely to surge from the current level of about `. 40,600 crore to about `. 62,000 crore by
2016 witnessing a breath taking double digit compound annual growth rate (CAGR) of about 20%.
Some of the major reasons for the rise in the paint industry are awareness about environment and increases in
disposable income are leading to demand for premium paints. India is the second largest consumer of paint in
Asia.
The Indian paint industry has seen a gradual shift in the preferences of people from the traditional whitewash to
higher quality paints like emulsions and enamel paints. Tthe rural market has grown at a rate of around 20% a
year (in financial year 2014). Increase in sales outside metros, as rural India's incremental consumption
expenditure is witnessing a handsome growth. And, the rural sector has a major share of the decorative paints
segment. Thus, any benefit to the rural sector for improving the dispensable income is directly co-related to the
growth of the paint industry‟s growth.
Besides, decorative paints are marketing savvy products backed by large advertisement campaigns and dealership
networks. In FY14, per capita consumption of paint increased to a little over four kg, of which the decorative
segment contributed 73 per cent at ` 29,638 crore. The remaining ` 10,962 crore was contributed by the industrial
segment.Demands for decorative paints arise from household paintings, architectural and other display products.
The demand for paint increases during festive seasons as compared to other periods”.
The decorative paint market has been further segmented into emulsions, enamel, distemper and cement paints.
The industrial paint markets are segmented into automotive coating, high performance coating, powder coating
and coil coating. The unorganised sector controls around 35 per cent of the paint market. In the unorganised
segment, there are about 2,500 units having small and medium sized paint manufacturing plants.
Factsheet




Indian paint industry valued at ` 40,600 crore (in 2013-14).
The market estimated around ` 62,000 crore by 2016.
Decorative paints accounted for 73%, remaining being industrial.
The per capita paint consumption estimated to be 4 kg.
87
Preliminary Placement Document
Source: Publication titled “Domestic paint Industry to cross `. 62,000 crore mark by 2016-17” dated September
4, 2014 by Assocham
Specialty chemicals
Specialty chemical segment in India is poised for substantial growth and offers immense potential for investment
as well as employment generation This industry will reach value of $38 billion by the end of XII Five Year Plan.
It is estimated that additional investment of $ 7-10 billion is feasible in this segment over the XIIth plan period
which could generate additional direct employment of quarter of a million people and much more indirect
employment.
Source: Indian Chemical Industry – XIIth Five Year Plan by Planning Commission of India
Lubricants and Oil
India is the fifth largest lubricant market globally in volume terms behind the US, China, Russia and Japan. India
is a net base oil deficit market and many additives used in lubricants are mostly imported. Volume consumption
of lubricants in India has consistently declined over past few years as a result of improving lubricant and engine
quality. In addition the year 2013 was accompanied by slower GDP growth rate and subdued industrial activity
that also affected the industry margins.
The lubricants usage can be divided in two key segments – Automotive and Industrial. The demand for
automotive lubricants in India is driven by growth in vehicle population and the consumption of industrial
lubricants is highly correlated with Index of Industrial Production (IIP). Automotive lubricants typically are
88
Preliminary Placement Document
higher margin products compared to industrial lubricants. Majority of automotive lubricants demand is derived
from commercial vehicles (CVs) and tractors, largely dominated by diesel engines. Process oils are the biggest
contributor within industrial lubes.
In the Indian market, lubricants are sold broadly through three channels- Original Equipment Manufacturers
(“OEMs”), petrol pumps and bazaar/retail trade. Bazaar trade is the most profitable amongst the distribution
channels and consists of spare part shops, dedicated lubricant dealers, mechanic workshops and service centers.
Source:http://www.culrav.org/pr/indian-automotive-industrial-lubricants-market-trends-opportunities-201419.php
Production of petroleum products from Indian refineries has gone up from 217.736 MMT in 2012-13 to 220.756
MMT during 2013-14 i.e. higher by 1.39% as compared to the previous year. During the year, keeping pace with
the economic growth trend, the consumption of petroleum products in India has grown by only 0.73% and rose to
158.197 MMT during 2013-14. Consumption of LPG increased by 4.71%, petroleum coke increased by 14.96%,
MS by 8.79% and ATF by 4.44% during 2013-14, whereas the consumption of Naphtha declined by 6.79%,
Kerosene 4.49%, HSD by 1.03%, Fuel oil by 19.11% and lube by 9.55% over the previous financial year 201213.
Production of petro products
Source: http://petroleum.nic.in/docs/pngstat.pdf
89
Preliminary Placement Document
Oil Prices
Source: http://petroleum.nic.in/docs/pngstat.pdf
Food Industry





India‟s food processing sector ranks fifth in the world in exports, production and consumption.
Major parts of the food processing sector are milled grain, sugar, edible oils, beverages and dairy products.
The contribution of the food processing industry to the gross domestic product at FY 2004-05 prices in FY
2012-13 amounts to ` 845.22 Billion. India‟s food processing industry has grown annually at 8.4% for the
last 5 years, up to FY 2012-13.
The value addition of the food processing sector as a share of GDP manufacturing was 9.8% in 2012-13.
Investment in registered food processing sector had grown by 20.1% at the end of 2012.
The number of registered processing factories has increased from 35,838 in FY 2010-11 to 36,881 in FY
2011-12, marking a growth rate of 2.9%.
90
Preliminary Placement Document

The industry is also one of the largest employment creators, with growth in direct employment in the
organised food processing sector standing at 6.05% between FY 2010-11 and FY 2011-12.
Food is the biggest expense for an urban Indian household. About 38.6% of the total consumption
expenditure of households was spent on food in FY 2011-12.
The total household expenditure on the purchase of food items in FY 2012-13 was ` 11 Trillion. An
average household in India spent ` 41,856 on food.


Growth drivers

Liberalization and the growth of organized retail have made the Indian market more attractive for global
players. With a large agricultural sector, abundant livestock and cost competitiveness, India is fast
emerging as a sourcing hub of processed food.

A population of 1.2 Billion people, with the world‟s highest youth population – India has 572 Million
people under the age of 24.

Rising income levels and a growing middle class.

One-third of the population will be living in urban areas by the year 2020.

Increasing desire for branded food as well as increased spending power.

Large and distinct consumer brackets to support customised offerings, new categories and brands within
each segment.

Consumption in India is driven towards packaged and ready-to-eat foods.

Favourable economic and cultural transformation and a shift in attitudes and lifestyles have consumers
experimenting with different cuisine, tastes and new brands. There is an awareness and concern for
wellness and health, for high protein, low-fat, wholegrain, organic food.

Processed food exports and related products have been rising steadily, the main destinations being the
Middle East and Southeast Asia.

India is a global outsourcing hub, with large retailers sourcing from India owing to abundant raw
materials, supply and cost advantages.

National Food Processing Policy aims to increase the level of food processing from 10% in the year 2010
to 25% in the year 2025.

Food Processing is recognized as a priority sector in the new manufacturing policy of the year 2011.

The National Mission on Food Processing and the Ministry of Food Processing Industries have launched
a new centrally sponsored scheme in April 2012, for implementation through state and union territory
governments.

The basic objective of the National Mission on Food Processing is decentralization of the
implementation of food processing related schemes for ensuring substantial participation of state and
union territory government
Source: http://www.makeinindia.com/sector/food-processing/
91
Preliminary Placement Document
BUSINESS
Some of the information contained in the following discussion, including information with respect to our plans
and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the
section “Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements
and also the section “Risk Factors” for a discussion of certain factors that may affect our business, financial
condition or results of operations. Our actual results may differ materially from those expressed in or implied by
these forward-looking statements. Our fiscal year ends on March 31 of each year, so all references to a particular
Fiscal are to the twelve-month period ended March 31 of that year.
The financial figures used in this chapter, unless otherwise stated, have been derived from our Company’s audit
reports for the relevant years.
Overview
We are a packaging solution company mainly engaged in the manufacturing of rigid plastic packaging containers
through Injection molding technology for paints, lubes, oils, food, FMCG and other sectors including cosmetics
and pharmaceutical. We develop, design and manufacture standard airtight and pilfer – proof pails as well as
customized containers to meet our customer‟s packaging requirements. We believe, we are the leaders in injection
molded rigid packaging containers in India. We have introduced certain world class packaging products in India
for paints, oil, lubricants, food and FMCG industries through continuous innovation.
We decorate our products using screen printing, heat transfer labelling technique and In – Mold labelling, which
is one of the modern and premium container decoration techniques globally. In late 2011, we started
developmental work on IML manufacturing through imported labels and Robots. IML provides various benefits
of packaging including higher brand recall as the labels do not get separated. These IML labels provide better
aesthetics and the process eliminates labour and saves space required for production. We believe we are the
pioneers to introduce IML concept using in house Robots, at a reasonable cost in India.
We have seven manufacturing units, four at Telangana and one each at Tamil Nadu, Maharashtra and Daman. We
also operate state of the art tool room to make complex molds and to develop Robots. We believe that we have
developed our reputation and image as innovator in packaging solution for the segments we serve. In recognition
of our technical excellence, we received “Tech Savvy SME” and “Best SME” awards from ICICI- CNBC TV 18
and Crisil awards for the year 2013.
Our products mainly cater to four business segments viz (i) paint industry (ii) lubes & oil industry, (iii) food and
(iv) FMCG. Our products are available in different size and shapes viz circular, rectangular, curving and special
shapes as per customer requirement. For the financial year 2014, our Company derived approximately ` 16,440
lacs gross revenue from paints, ` 10,470 lacs, from lubes and oils and ` 441 lacs from food and ` 1,182 lacs from
FMCG and other sectors. Our Company derived 19.76 per cent of total income from IML technology in the
financial year 2014 compared to 0.54 per cent of total income in the financial year 2011. As on December 31,
2014, our total pail manufacturing capacity is over 25,000 metric ton and label manufacturing capacity is 3 lacs
meter in a single shift.
Pursuant to a Scheme of Arrangement between Teckmen Tools Private Limited, Mold-Tek Technologies Limited
erstwhile MTPPL, and Mold Tek Plastics Limited, the plastic packaging division was transferred to our Company
with effect from July 25, 2008. For further information on Scheme of Arrangement, see “Key milestone”
beginning on page 93. However, our roots can be traced back to the year 1985, when Mold – Tek Plastics Private
Limited (“MTPPL”) was promoted by two technocrats, Janumahanti Lakshmana Rao and Adivishnu
Subramanyam, (“Core Promoters”) to manufacture rigid plastic packaging products with units located at then
Andhra Pradesh. Our Core Promoters with experience in tool room started working towards continuous
innovation and introduced various new concepts in packaging industry.
92
Preliminary Placement Document
In early nineties, we introduced plastic pail packaging concept used for paint industry which has succeeded to
gradually replace the tin packaging for paints. Since 1997-1998, we introduced plastic containers for lubricant
packaging with innovative “pull up spout” and also developed new concepts including single and double lock
pails. We pioneered pull up spouts for the lube industry and developed COSMOS/ULTIMO pails with better
tamper evidence and leak proof features. Over a period of time such packaging replaced tin and metal can packs
which was used in lube packing. In the year 1998, we applied for a patent for this innovation of pull up spout with
tamper proof seal which was granted in the year 2007. In 2011, we started developmental work on IML
decoration through Robots which provide various benefits of packaging including higher brand recall.
Commercial production of IML was started in 2012. We have also applied for process patent for an innovation an
airtight pilfer proof and tamper evident seal locking mechanism of containers with tamper proof lid having
injection mold spout for containers. All our products are customized and manufactured as per customer
requirements. In 2013, we succeeded in developing our in-house Robots and IML label printing capabilities for
IML which gave a cost advantage compared to imported Robots and IML labels. Thus we believe we are
innovator and pioneers in Indian Rigid Plastic Packaging.
We have in-house research and development division and in-house tool-room for designing and development of
new products, complex molds and Robots. Our tool room with Swiss and German machinery enables us to design
and develop complex molds including 2-8 cavities molds, for our customers. Our tool-room enables us to
undertake repair and maintenance of our mold and Robots. Our continuous focus on this area enables us to
innovate and create new packaging solutions and cater to the customized needs of our customers with a
reasonable time period. We have installed various designing and tool room machines for new product
development at cheaper cost without affecting quality of the products. Due to our in house capabilities, we can
customise and install an integrated manufacturing unit anywhere to meet particular customer requirements. As on
December 31, 2014, we have developed thirty one (31) Robots which are currently deployed at our six
manufacturing units.
We are committed to providing quality products to our customers and in this relation hold various quality
accreditations including ISO 9001:2008 quality certification for manufacture and supply of injection molded
plastics packaging containers, pails, closures and component and FSSC 22000: 2011, the food safety management
system certification applicable to manufacture of in-mold labelled plastic containers and lids for packaging for
food industry. We maintain strict hygiene standard in our manufacuring facilities for products catering to the Food
and FMGC sector. We regularly conduct drop test with the help of testing machines before the batch is approved
for sale. We have recently received "Quality Champion Award" from Asian Paints Limited, for the exemplary
quality performance during the period April 2012 to September, 2014.
As on December 31, 2014, our Company had 411 permanent employees and 823 employees on contract at various
locations. Our total income has grown at CAGR of 21.01% from ` 17,456 lacs in the financial year 2012 to `
25,563 lacs in the financial year 2014. Our PAT has grown at CAGR of 1.98 % from ` 948 lacs in the financial
year 2012 to ` 986 lacs in the financial year 2014.
Key milestones
The following table sets forth the key events and milestones in the history of our Company:
Financial Year
1985
1991
1993
1998
1998
2006
2007
Event
Mold – Tek Plastics Private Limited (“MTPL”) was incorporated by our Core Promoters
Commenced manufacturing of plastic pails
MTPL went public through an Initial Public Offer
Introduced plastic containers for lubricant packaging with innovative “pull up spout”. Also
developed new concepts including single and double lock pails.
Applied for a patent for the innovation of pull up spout with tamper proof seal
Introduced cosmos model pails with improvised tamper proof system
Granted a patent for the innovation of pull up spout with tamper proof seal
93
Preliminary Placement Document
Financial Year
2008
2010
2011
2012
2013
2014
Event
High Court of Judicature, Andhra Pradesh at Hyderabad by its order dated July 25, 2008 has
approved the Scheme of Arrangement between Teckmen Tools Private Limited, the Transferor
Company, Mold-Tek Technolgies Limited, the Transferee Company and the Demerged
Company and Moldtek Plastics Limited, the Resulting Company
Name of Moldtek Plastics Limited was changed to Mold–Tek Packaging Limited with effect
from March 12, 2010
Introduced IML decoration and also auto filling lines, and pails for anti-counterfeit lid
Won Indiastar 2012 award by Indian Packaging Industry for “Castrol New Generation ACF Pail
Lid”
Succeeded in developing in-house Robots and IML label printing capabilities for IML
Won SME of the year – Emerging India Award, 2013 by ICICI Bank and CNBC TV 18.
Won Tech – Savvy SME of the year – Emerging India Award, 2013 by ICICI Bank and CNBC
TV 18.
Received "Quality Champion Award" from Asian Paints Limited, for the exemplary quality
performance during the period April 2012 to September, 2014
OUR COMPETITIVE STRENGTHS
We believe that the following are our primary competitive strengths:
In house development and adoption of latest technology
We believe that we are among the few companies in packaging industry who have been successful in
development of various new technologies which are commercially viable. In early nineties, we introduced plastic
pail packaging concept for paint industry which has succeeded to gradually replace the tin packaging for paints.
Subsequently, we introduced plastic containers for lubricant packaging with innovative “pull up spout” and also
developed new concepts including single & double lock pails. We pioneered pull up spouts for the lube industry
and developed COSMOS/ULTIMO pails with better tamper evidence and leak proof features. In the year 1998,
we applied for a patent for this innovation of pull up spout with tamper proof seal which was granted in the year
2007. In late 2011, we started developmental work on IML manufacturing through Robots which provide various
benefits of packaging including higher brand recall. Commercial production of IML was started in 2012. We have
also applied for process patent for an innovation an airtight pilfer proof and tamper evident seal locking
mechanism of containers with tamper proof lid having injection mold spout for containers and tamper proof lid
having spout for containers and process for its manufacture. In 2013, we succeeded in developing our in-house
Robots and IML label printing capabilities for IML which gave a cost advantage compared to imported Robots
and IML labels. We have in-house capabilities for complex mold making (2-8 cavities molds), label printing,
container making and labelling. Our dedicated in – house tool room along with our research and development
design division and equipped manufacturing facilities are the key to our business model. Our continuous success
gives us the strength to believe that we are equipped to deliver innovative packaging solutions. This helps us to
get repeat orders and add new customers. Our model makes it feasible for us to customise our machines and set up
our facilities anywhere to meet customer requirements.
Integrated business model with centralised tool room to design, develop, manufacture, maintenance of molds
and Robots
We are one amongst the few players in the rigid plastic packaging industry to have in – house tool room facilities.
We have developed a centralised tool room to design, develop, manufacture and maintain the molds and Robots
which is used for manufacturing variety of products with different size, shape and models with various decoration
technologies. Our in-house tool room is equipped with 3 – dimensional CNC machine from USA, supported by
latest CAD/CAM facilities which enable us to design and develop complex molds including 2 – 8 cavities molds.
Centralised tool room enables quick Robot and mould maintenance to ensure uninterrupted supplies. We are also
equipped with an in-house offset and automatic silk screening multi – color process printing facilities. We have
94
Preliminary Placement Document
been successful in developing Robots required for the IML decorations in-house, providing us cost advantage and
a better competitive positioning. Our centralised tool room, strong design division and manufacturing facilities
provide us with the capability to become an integrated manufacturing company from mold designing – mold
making – decoration with different technologies – to final product supply. Our integrated business model helps us
in introducing newer products and capturing better market share of the industry we operate.
Our presence in the plastic pail packaging segment for over two decades
We are engaged in packaging business since 1985 and started our pail packaging segment in the year 1991. Our
presence in this segment since over two decades has helped us to understand the constant changing needs and
demands of our customers. On account of this long-standing presence in the Indian market and with constant
improvement and adoption of technologies, augmented with quality, we believe that we enjoy considerable brand
equity and reliability in the industry where we operate. Our core competency lies in understanding the changing
trends, the needs of our clients and accordingly manufacture quality products to suit their requirements. We have
successfully adopted „In-mold labelling‟ technology which enables us to produce a picture quality decoration on
the products. We have been recognised by various awards in the packaging segment such as Indiastar 2012 award
by Indian Packaging Institute for “Castrol New Generation ACF Pail /Lid”. We have also won SME of the year –
Emerging India Award, 2013 and Tech – Savvy SME of the year – Emerging India Award, 2013 sponsored by
ICICI Bank and CNBC TV 18. Our experience helped us to achieve “preferred vendor” status from several key
customers which ensures repeat orders.
Our products cater to diverse industries such as lubes and oil, paints, food and FMCG industry
We are engaged in the manufacturing of rigid plastic packaging containers for lubes and oils, paints, food and
FMCG industry including cosmetics, pharmaceuticals etc. We manufacture standard airtight and pilfer proof pails
as well as customised pails. Paint and lubricant industry contributes majority of our sales, however we have
started adding clienteles in the food and FMCG segments with our IML capablity. In FY 2014, we derived 57.62
per cent of our revenue from paints segment, 36.69 per cent from lube and oil segments, 1.55 per cent from food
segment and 4.44 per cent from FMCG and other sectors as compared to 44.9 per cent, 52.29 per cent, 0.53 per
cent and 2.34 per cent, respectively in FY 2012.
We have FSSC 22000: 2011 acrediation, the food safety management system certification applicable to
manufacture of in-mold labelled plastic containers and lids for packaging for food industry. This has further
enabled us to expand our product offering and helped our growth by adding new customers from diverse industry.
Strategically located manufacturing facilities in India
We currently have seven manufacturing units which include four units at Telangana and one each at Tamil Nadu,
Maharashtra and Daman. All our manufacturing units are vertically integrated incorporating all the major
processes required for pail manufacturing. Our units at Hosur, Krisnagiri District, Tamil Nadu, Satara, Khandala,
Maharashtra and Daman were strategic initiative to cater needs to our key customers around that region. Our IML
model makes it feasible for us to customise our machines and set up our facilities anywhere to meet customer
requirements. A strategically located manufacturing unit allows us to achieve greater economies of scale and cost
efficiencies, reduce logistics cost, manage product flow and eliminate duplication of business functions. This also
helps us in acquiring new customers and repeat orders from our customers.
Our quality standards and recognition
We have comprehensive quality management systems across the value chain right from procurement of raw
materials till delivery of final products to the customer‟s location. We have undertaken various initiatives and
adopted various systems and processes in order to augment our commitment to focus on quality which is crucial
for our business. Each of our manufacturing units is well equipped with modern quality checking and testing
equipment‟s for quality assurance. We have received various quality accreditations including ISO 9001:2008
95
Preliminary Placement Document
quality certificateion for manufacture and supply of injection molded plastics pakaging containers, pails, closures
and components and FSSC 22000: 2011, the food safety management system certification applicable to
manufacture of in-mold labelled plastic containers and lids for packaging for food industry. Some of our customer
has accredited us highly on their quality parameters. An early stage engagement is normally followed with orders
and repeats if development is commercially acceptable. We have won Indiastar 2012 award by Indian Packaging
institue for “Castrol New Generation ACF Pail /Lid”. We have also won SME of the year – Emerging India
Award, 2013 and Tech – Savvy SME of the year – Emerging India Award, 2013 sponsored by ICICI Bank and
CNBC TV 18. We have recently received "Quality Champion Award" from Asian Paints Limited, for the
exemplary quality performance during the period April 2012 to September, 2014. Our awards for quality are
testimony of compliance with quality standards and help us in getting repeat orders from our customers.
Experienced Management with strong industry expertise
Our management team has considerable experience in the packaging industry, with our Core Promoters having
extensive technical, commercial and marketing skills and around three decades of experience in the industry. The
members of our senior management have diverse skills which have helped us to grow and develop products faster.
Our Chairman and Managing Director holds a bachelor‟s degree in engineering and post graduate from Indian
Institute of Management, Bangalore and has developed our business and operations since inception. A team led
by our Deputy Managing Director, Adivishnu Subramanyam are responsible for in-house research and
development division and in-house tool-room for designing and development of new products with the help of
Robots. Our management team's skills include marketing, sales management, strategic sourcing, supply chain
management, domestic capital raising and implementing expansion projects. We believe that our experienced and
dynamic senior management team have been key to our success. The vision and foresight of our management
enables us to explore and seize new opportunities and to introduce new products to capitalize on the growth
opportunities in packaging industry.
For further details of our key managerial personnel, please refer to chapter titled „Board of Directors and Senior
Management‟ beginning on page 118.
OUR STRATEGIES
Our strategy is to build upon our competitive strengths and business opportunities to become one of the leading
rigid packaging companies in the world. Our objective is to improve and consolidate our position in the
manufacturing and marketing of rigid plastic packaging products. We intend to achieve this by implementing the
following strategies:
Continued focus on innovation
We recognize the importance of continued innovation in packaging products to cater the needs of various
customers. As part of our efforts, we have been continuously working towards enhancing the utility and feature of
our existing products and create new packaging products. We introduced pail packaging for paint industry in early
nineties followed by IML technology for packaging products for our customers in 2011. We are in process of
developing and testing multipurpose square packing air tight containers for edible oil and air and moisture barrier
containers for food segment as a part of our innovation efforts. We intend to continue our focus on innovation and
to expand our existing product offerings to cater diverse industries
Focus on cost reduction and improving cost efficiency
Focus on cost reduction and improving cost efficiency in our manufacturing processes is a key for our business.
Through our research and innovation, we have adopted various cost reduction measure including installation of
high speed machines, using oil based paints, in house development of molds, IML label and Robots etc. We have
built 31 Robots which are used to produce complex multi-cavity molds and IML decoration (both 2D and 3D).
IML packaging requires lesser space and lower labour costs leading to lower investments and better performance.
96
Preliminary Placement Document
We believe with increase in demand for IML containers, we will enjoy better operating and cost efficiency. We
intend to continue our focus on cost reduction and cost efficiency coupled with superior quality through
innovation to become a preferred supplier for our customers.
Getting closer to our customer plants
Currently we have seven manufacturing units strategically located in Telangana, Tamil Nadu, Daman and
Maharashtra. Our units at Hosur, Krisnagiri District, Tamil Nadu, Satara, Khandala, Maharashtra and Daman
were strategic initiative to cater needs to our key customers around that region. IML technology requires much
lesser space than traditional screen printing, which make it feasible for us to undertake installation of plants closer
to the customers. We intend to set up additional manufacturing unit in different geographical regions closer to our
customers for better efficiency, transportation and timely delivery of our products. We will focus on establishing
and increasing new manufacturing units for efficiency and growth.
Increasing contribution from food, FMCG industry and IML products
We currently derive less than 6 per cent of our revenue from food and FMCG industry. With customisation of
IML technology and quality accreditation, we have been able to make headway in food and FMCG industry. IML
products are hygienic and are made without any human contact making them best suited for food and FMCG
packaging and offer better margins. As pioneers in the IML in India we are in a better position to leverage our
experience and increase contribution from this segment .We believe that diversification towards food and FMCG
industry will enable us to participate in the growth of different sectors and mitigate our dependence on one
segment. Further we are also encouraging our current customers who are using screen printing and heat transfer
labelling to shift to IML packaging products.
Continue to invest in research and design to develop new products
We have been focusing on research and innovation with our in-house dedicated division. We introduced pail
packaging for paint industry in early nineties which has gradually succeeded in replacing tin packaging over the
period of time. We also introduced pails with spouts for lube oils. Later, we have introduced the IML technology
for packaging products which we believe will replace screen printing technology used for decoration over period
of time. Currently we are in process of developing and testing multipurpose square shaped air tight containers for
edible oil. We are developing air and moisture barrier packing pails with IML technology as a new packaging
solution for the food segment which would have the potential to replace glass packing if successful. We have also
worked along with our customers for developing new products from conceptualisation stage, which is testimony
of our innovation skills. We intend to continue providing such customised products to meet varied requirements
of our customers. We will consistently invest in research and design to innovate and develop new products and
become preferred solution provider for our customers.
Enhance product quality
A good quality product is the foundation for a good brand. As mentioned above, we have the ISO 9001:2008 and
FSCC 22000: 2011certifications. We believe that consistency of quality products can only be achieved by process
orientation. This process orientation assists us in increasing our efficiency and maintaining the quality of the
products. We continue to use modern technology and equipments to track the quality of inputs as well as outputs.
Our focus on quality will help us in retaining our customers and adding new ones.
DESCRIPTION OF OUR PRODUCTS
Our Company‟s core competency lies in providing products that are focused on the specific customers‟ needs. We
are engaged in the manufacturing of rigid plastics packaging containers for paints, lubes and oils, cosmetics,
pharmaceuticals, food and FMCG sector through various technologies including Robotic IML decoration as per
97
Preliminary Placement Document
the requirements of our customers. We manufacture standard airtight and pilfer – proof pails as well as
customised pails for our customers.
Our product includes:

Lubricant Containers;

Paint Containers;

Other containers in different size, shape and models for FMCG; and

Food Containers.
The income from our various lines of businesses including intra sales in Fiscal 2014, 2013 and 2012 is
summarized in the table below:
Line of Business
Income (` in lacs)
Fiscal 2013
Per cent
Fiscal 2014
Per cent
10,470
36.69
11,315
16,440
441
600
57.62
1.55
2.10
582
28,533
2.04
100
Lubricant
Containers
Paint Containers
Food Containers
Bulk Containers
(FMCG)
Others
Total
Per cent
52.71
Fiscal
2012
10,024.2
9,053
219
600
42.17
1.02
2.79
8,600.06
101.45
165.81
44.85
0.53
0.86
281
21,468
1.31
100
281.98
19,173.5
1.47
100
52.28
MANUFACTURING UNITS
Plant
Location
Activity
Unit – I
Annaram Village, Near Air Force
Academy, Jinnaram Mandal, Medak
District, Telangana
Survey
No.
164/Part,
Dommarapochampally
village,
Quthbullapur Mandal, Ranga Reddy
District, Telangana
Survey No. 160 – A, 161 – 1 & 161 – 5,
Kund Falla, Behind Hotel Hilltop, Near
Costal Highway, Bhimpore, Nani Daman,
Daman
Survey No. 79, Alinagar, Jinnaram
Mandal, Mendak District, Telangana
Manufacturing
of plastic pails
Unit – II
Unit – III
Unit – IV
Unit – V
Unit – VI
Survey numbers 110/ 1A1, 110/1A, Street
No.1, Onnalvadi Village, Krishnagiri
District, Tamil Nadu - 635125
Survey No. 586 to 589/Part, Dundigal
Village, Near SGS Ashram, Quthbullapur
Mandal, Ranga Reddy District, Telangana
98
(In metric tonne, except described)
Installed
Utilised
Capacity per Capacity per
annum
annum
8,675
6,500
Manufacturing
of plastic pails
3,900
2,345
Manufacturing
of plastic pails
7,525
4,320
Manufacturing
of plastic pails
Manufacturing
of plastic pails
1,250
830
650
135
Label printing
3 million
meters
2.10 million
meter
Preliminary Placement Document
Unit – VII
Gat No. 656, Khandala - Lonand Road,
Mhavashi
Village,
Dhawad
Wadi,
Khandala, Satara District, Maharashtra
Manufacturing
of plastic pails
3,000
2,499
MANUFACTURING PROCESS
Our Company has installed machineries possessing different technologies required in the manufacturing process
which vary from product to product. We mainly offer three kinds of decoration options to our customers a) In–
Mold Labelling; b) Screen Printing; and c) Heat Transfer Label.
Brief manufacturing process of our products
As explained in the process flow chart above, the main steps in the manufacturing process involves:
Raw Material and Procurement:
Main Raw materials involved in our manufacturing process include Poly Propylene Co – polymer, High Density
Poly Ethylene, Low Density Polyethylene and Linear Low Density Polyethylene etc. which are procured mainly
from domestic market. We have not entered into any long term supply agreements for procurement of any of our
raw materials.
Injection Molding:
Injection molding consists of high pressure injection of the melted plastic into a mold which shapes the polymer
into the desired shape. In this process, plastic granules are fed into the hopper of an injection molding machine
from where it flows into a barrel having a reciprocating screw. The barrel is surrounded by band heaters, and the
screw„s rotation pushes the granule along the length of the barrel, so the granules reach a molten state. Once
melted, the material is injected, under pressure, into the mold where it confirms the shape of the mold. The mold
is temperature controlled, by circulating water through it. Once the part is cooled, the mold is opened and the part
ejected. The mold is then closed and ready for the next shot.
In–Mold Labelling (“IML”)
IML is increasingly being preferred in the packaging industry due to its attractiveness and better durability
compared to screen printing and heat transfer technologies. Further, IML is also suitable for food and FMCG
segments due to minimal human contact and contamination during the production process and the packaging is
suitable for direct to fill operations. In IML robot place IML label into the mold prior to injecting the plastic. It is
single step process wherein both molding and labelling take place simultaneously. IML decorated thin wall
containers are suitable for storage conditions like microwave, dishwasher and the deep freeze. These are used for
food and FMCG products packaging world over. The IML operations are hands free as handling is done by
Robots and the label becomes an integral part of the pail and offers better look and more colour options. As inks
99
Preliminary Placement Document
are sandwiched between two layers of film, the decoration is fully scratched free and resistant from the effects of
sunlight and air. This can be applied on 100% area at 360 degree. We have set up integrated IML solution with in
house label manufacturing and die-cutting machines to enable quick production of IML labels at low cost. IML
Production Process is based on full automation and ensures faster turnaround:
Screen Printing
In screen printing, we transfer ink onto the pail by squeeze pressure as per the design and specifications required
by our customers. Screen printing technology can print 330 to 340 degrees around a cylindrical shape in one
application on the pail. In this process we squeeze ink through exposed screen to the surface of the mold. Screen
printing is economical when compared to other decoration options. We have automatic screen printing machines
which ensure us to better alignment of different colour on the pails. It is the most economical decoration but has
restrictions in picture or decoration quality. We use this technique for decorating/ printing design for paints and
lubricant pails, however we do not use this methodology for food and FMCG product containers. The process of
screen printing involves printing colours one after the other with an interval of 3-4 hours for drying. Hence
multicolour printing of 5-6 colours may take 2-3 days for a batch production with movement of pails from one
station to other for drying thus involving much more space and labour as compared to other decoration
techniques.
Heat Transfer Labelling
In heat transfer labelling process, we transfer the design that is printed on the release layer on to the object by
Heat transfer machine. When heat is applied, the printed design will be transferred to the containers. We have in
house heat transfer labelling facilities and also label printing facilities. Heat Transfer labelling is a post molding
operation involving different machines and labour. Heat Transfer labelling gives 80% coverage of print on the
product and the printed surface is susceptible to scratching and sun fading.
Quality Check
We are quality-centric company. We follow systematic online quality control, clean rooms at manufacturing and
packing and GMP practices. Our quality assurance system is constantly being developed and extended in order to
enhance customer satisfaction. We have hourly and daily checks and reports to monitor all aspects of quality and
critical dimensions. To ensure system control, we conduct internal quality audit with frequency of once in every
three months and take corrective and preventive action to close out action for those non-conformances identified.
Our products are used by blue-chip and multinational companies and therefore the product requires high
precision, low dimensional variations and great stability on the filling lines. We have proven our ability not only
in meeting these standards and also in offering assistance to our customers.
KEY CUSTOMERS
Currently, we supply rigid containers primarily to paints and lube-oil companies in India. Our key customers
include names like Asian Paints Limited, Castrol India Limited, Kansai Nerolac Paints Limited, Indian Oil
Corporation Limited amongst others. We also cater to some large companies in food and FMCG sector. The
details of our customers, in terms of contribution towards our total sales, are as follows:
(` in Lacs)
100
Preliminary Placement Document
Particulars
Top Customer
Top five customers
Top ten customers
Fiscal 2014
7,577
19,834
23,325
Fiscal 2013
4,276
12,959
16,206
Fiscal 2012
3,746
11,993
15,325
UTILITIES AND INFRASTRUCTURE FACILITIES:
RAW MATERIAL MANAGEMENT
Most of the raw materials required for production are readily available in local and international markets. The
basic raw materials required for our manufacturing units include PPCP, PP, HDPE and LLDPE which are
procured mainly from domestic market. We procure most of our raw material requirement from Reliance
Industries Limited. We also procure some raw materials from domestic companies like Indian Oil Corporation
Limited apart from limited imports. Our raw material consumption is 56.10 per cent of our total revenue. Our total
raw material consumption for the Financial Year 2014 is ` 14,553 lacs which includes the imported material
worth ` 20 lacs (0.14 % of total consumption) and indigenous material worth ` 14,533 lacs (99.8 per cent of total
consumption). The raw material price had witnessed steep increase in financial year 2013 – 2014 due to increase
in the price of crude oil and global economic slowdown. There has been a steep fall in the raw material prices
during the last few months. We have flexibility to pass on raw-material cost fluctuations to most of our customers
through monthly pricing arrangements.
QUALITY STANDARDS AND ASSURANCE
Our Company is committed to providing quality products to our customers and endeavour to maintain a quality
system, which provides products and services in a timely manner and at competitive prices to the satisfaction of
customers by meeting their specified and implied needs. We are also committed to continually improve this
quality system.
We have implemented quality assurance management systems and procedures that are aimed to ensure
consistency in the standard of our products across various areas of our business operations. Our manufacturing
facilities operate in strict adherence with ISO 9001:2008 quality certificateion for manufacture and supply of
injection molded plastics pakaging containers, pails, closures and components. We also received FSSC 22000:
2011certification for the food safety management system certification applicable to manufacture of in-mold
labelled plastic containers and lids for packaging for food industry. Our products are generally inspected, tested
and certified for quality in-house. We regularly conduct batch wise tests on all our products for examining their
strength, quality aspects etc. We regularly do drop test with the help of testing machines and other machines
before the batch is approved for sale. We continue to strive to upgrade and customise to meet our customers'
specific requirements, to have edge on competitors and to deliver quality products which give customer
satisfaction. We invest in upgrading our equipment and technology and add new equipment from time to time.
RESEARCH, TECHNOLOGY AND DEVELOPMENT
We have an in-house tool room equipped with 3 – dimensional CNC machine from USA, supported by latest
CAD/CAM facilities. We are also equipped with an in-house offset and automatic silk screening multi – color
process printing facilities. Our manufacturing units are enabled with „In-mold labelling‟ („IML‟) technology
which empower us to produce a picture quality images on pails. We have installed Robots from Taiwan in the
year 2011 and gained expertise in IML technology. We have developed technology to produce in house labels and
even Robots at competitive cost. As on date of this Preliminary Placement Document, we have 31 Robots.
Through this technology we place the pre-printed labels in the molds before the plastic flow into the mold below
the label thereby fusing the label while molding itself. The aforementioned design and development capabilities
enable us to develop new products and modify our existing range of products to meet the requirements of our
customers and the rigid packaging industry in general. As on date of this Preliminary Placement Document, we
have also established 8 cavity fast cycle hot runner molds and Robots for production of IML decorated small
101
Preliminary Placement Document
containers for food and FMCG applications. This division aims at conferring competitive advantages through
optimal solutions, shorter cycles and better quality.
POWER, WATER AND OTHER UTILITIES
We purchase power from state electricity board for operations of our manufacturing units. We also have our own
diesel generator sets at some of our manufacturing unit for power back up in case of failure in supply of power by
the state electricity board. In order to hedge cost of purchased electrical power, we have obtained permission from
Andhra Pradesh Electricity Board for purchase of private power through Indian Energy Exchange for our
manufacturing Unit – I and II. We have also entered Memorandum of Undertaking with third parties for purchase
of electricity through Indian Energy Exchange for our Unit – I, Survey numbers 55A, 70, 71 and 72, Near
Airforce Academy, Annaram Village, Narsarpur, Medak and Unit – II, Survey number 164/Part, Dommara
Pochampally, Quthbullapur Mandal, Ranga Reddy. We purchase water from local municipal corporations, private
parties as well as have own bore-wells in some of the plants.
MARKETING, SALES AND DISTRIBUTION
Our marketing strategy is based on the product type and end user segment. The marketing and business
development is headed by our Deputy Managing Director, P Venkateshwara Rao. Our CMD, J. Lakshamana Rao
also overlooks marketing and is involved in framing strategies, target, future growth and new product ideas.P.V.
Rao personally leads negotiations, oversees execution of customer orders and takes lead in business development
and planning. The marketing team is based at our Company„s office at Hyderabad and Mumbai and coordinate
with customers for their requirements and sales orders.
Our Company produces and sells products to lubes & oil industry, paint industry, food and FMCG sector. Our
marketing department closely tracks the growth and future plans of companies in such industries. Our marketing
team then analyses such data at regular interval and accordingly formulates our marketing and business
development plan. Our marketing team is in regular contact with the end user industry personnel for their existing
and future requirement of packaging. These sales orders are being communicated to our manufacturing units for
their production plan and monitor the dispatch schedule and ultimately ensure timely delivery of materials. We
have long term business relationship and understanding with our customers since we customise the products
according to their requirements. In order to reduce transportation and time we establish plants closer to customers
manufacturing units.
COMPETITION
The rigid packaging industry is highly fragmented in nature with large number of unorganised players. However
among all packaging segments injection molding is most complex in technology. Especially producing closely
tolerated pails and air tight caps require high quality moulds which many small molders cannot afford or have in
house technology. IML requires integration of mold, machine and Robot for smoother production. We have an
established track record on adoption of latest technology and development of in – house technical capabilities to
control production cost, which is a source of competitive advantage for us and also acts as barrier to entry for the
new entrants to a great extent. We established IML label production in house to reduce variable costs and our in
house Robots manufacturing ensures steep reduction in our fixed costs. Like any other company, our Company
also faces competition from many others. Our Company faces competition from players like Hitech Plast Limited,
Jolly Containers etc. which are also into rigid plastic packaging products and catering to similar end customer
segments.
MANPOWER
We consider our employee strength as a critical factor to our success. We have drawn up a comprehensive human
resource strategy that addresses key aspects of human resource development. Our work processes and skilled
resources together with our strong management team have enabled us to successfully implement our growth
102
Preliminary Placement Document
plans. We have several initiatives to train and develop employees in building skills and capabilities. As of
December 31, 2014, we had 411 employees across all of our manufacturing units and offices.
The break-up of employees of our Company can be summarised as follows:
Departments
Management
Sales and Marketing
Research and Design
Legal and Human Resources
Finance and Accounts
Manufacturing
Total
As on December 31, 2014
11
14
31
10
21
324
411
In addition, we also engage upto 823 contract labourers through our contractors on a contract basis on a regular
basis based on the requirements of our manufacturing units.
We have not entered into any collective bargaining agreements with our employees. We have not entered into any
union agreement with our workmen. We have not experienced any material strikes, work stoppages, labour
disputes or actions by or with our employees,
ENVIRONMENT, HEALTH AND SAFETY
We are committed to complying with applicable occupational health, safety and environmental regulations and
other requirements in our operations. We believe that accidents and occupational health illness cases and hazards
can be significantly reduced through the proactive and systematic approach including risks and hazards
identification, assessment, analysis and control and by providing appropriate training to employees and
contractors. We work proactively towards minimizing or eliminating the impact of hazards to people and the
environment.
The objective of our safety measures is to achieve zero accidents. To achieve this objective, we have proactive
approach of risk management such as risk elimination, substitution and control by implementing engineering
measures. Safety induction trainings to new entrants and periodical trainings to all employees and contractors is
our continuous activity. We involve our employees in safety management system through constant consultations
and communication.
CORPORATE SOCIAL RESPONSIBILITY
Our Company‟s Corporate Social Responsibility (“CSR”) agenda reflects its social conscience and commitments
to the community and society at large. We have constituted a Corporate Social Responsibility committee
comprising Janumahanti Lakshmana Rao as a Chairman, Adivishnu Subramanyam, Pattabhi Venkateswara Rao
and Pillarisetty Shyam Sunder Rao as members. The committee is responsible for formulating and monitoring the
CSR policy of our Company.
INSURANCE
We generally maintain insurance covering our assets and operations at levels that we believe to be appropriate for
our business at reinstatement values. We maintain a standard fire and special perils policy, which covers loss and
damage due to fire, lightning, riot, strike and similar perils. We maintain Standard Fire and Special perils policy,
which cover standard Fire and special perils including material damage by aircraft, lightening, riot or strikes;
damages caused due to Insured‟s own vehicle or by earthquake. We also maintain burglary policy for our stocks
such as raw materials, stock in process, finished goods, semi–finished goods, stores, films, inks paints,
consumables, and cylinders. In addition, we maintain Marine Cargo Open policy that covers loss or damage to all
103
Preliminary Placement Document
items pertaining to our finished goods for loss or damage incurred during air, marine and inland transits. We
maintain workmen‟s compensation policies for our employees and workers. We also maintain a group personal
accident policy, nagriksuraksha individual policy schedule and group health insurance (family floater basis) for
our employees at our all units and offices.
We believe that the insurance coverage availed by us is reasonably sufficient to cover all anticipated risks
associated with our operations, but however there can be no assurance that the insurances taken by us would be
adequate to cover all risks and losses.
PROPERTIES
Our registered office is located at 8 – 2 – 293/82/A/700, Ground Floor, Road No. 36, Jubilee Hills, Hyderabad –
500 033, Telangana, India .
As of December 31, 2014, we had 4 warehouses including distribution centers across India. We operate seven
manufacturing facilities in India, the details of which are set forth in the following table:
Property
Unit – I
Address
Owned/ leasehold
Survey numbers 54,55A, 70, 71 and 72, Near Airforce Academy,
Owned
Annaram Village, Narsarpur, Medak District, Telangana- 502313
Unit – II
Survey number 164/Part, Dommara Pochampally, Quthbullapur
Owned
Mandal, Ranga Reddy District. Telangana- 5000043
Unit – III
Survey numbers 160/A, 160/B, 161/1, Kund Falia, B/H Hotel Hill
Owned
Top, Bhimpore Daman, Daman and Diu - 396210
Unit – IV
Survey number 79, Alinagar, Narsapur, Medak District,
Owned
Telangana - 502313
Unit – V
Survey numbers 110/ 1A1, 110/1A, Street No.1, Onnalvadi
Leasehold
Village, Krishnagiri District, Tamil Nadu - 635125
Unit – VI
Survey numbers 586- 589/ Part, Near SGS Ashram, Dundigal
Leasehold
Village, Ranga Reddy District, Telangana- 500043
Unit – VII
Gat No. 656, Khandala to Lonand Road, Mhavashi, Dhawad
Owned
Wadi, Satara, Maharashtra- 412802
Depot – I
2/1330, Sholinganallur Road, Perumbakkam, Chennai, Tamil
Leasehold
Nadu - 600100
Depot – II
G-21, UPSIDC Industrial Area, Jainpur, Kanpur Dehat, Uttar
Leasehold
Pradesh - 209311
Depot – III
P-12, Hide Road, Kolkata, West Bengal - 700043
Leasehold
Depot – IV
Survey number 110/1E, Street No. 1, Onnalvadi Village,
Leasehold
Krishnagiri District, Tamil Nadu - 635125
Mumbai
Shop Number 1, Ground Floor, Badridham Co-operative Housing
Leasehold
Office
Society Limited, Sant Janabhai Road, Vile Parle (East), Mumbai 400057, Maharashtra
Two
Survey Number 110/1E (Shed- A) and Survey Number 110/1
Leasehold
Industrial
(Shed- B) at Hosur Taluk, Krishnagiri District, Tamil NaduSheds
635125
Other
Shed No. D – 177, Phase – III, D. A, Jeedimetla, Ranga Reddy,
Owned*
District, Telangana- 500043
*Our Company has received this property, pursuant to scheme of arrangement between Teck–Men Tools Private
Limited, Mold–Tek Technologies Limited, Our Company and their respective shareholders approved by the High
Court of Hyderabad vide its order dated July 25, 2008, however we have not applied for the change of ownership
of this property before the relevant authorities and same is still in the name of Mold–Tek Technologies Limited.
104
Preliminary Placement Document
The terms of the leases executed by us are varied. In most of the lease agreements executed by us, there is an
option to renew the lease for a further period, usually at an increased rate of rent.
INTELLECTUAL PROPERTY RIGHTS
We create and own certain valuable intellectual property assets. We own or hold licenses to use certain patents,
design and trademarks. Our intellectual property assets include:
-
Patents and patent applications related to our innovations and product offerings;
Trademarks related to our brands; and
Design of our product offerings.
We protect our competitive position by, among other methods, filing patent applications to protect technology and
improvements that it considers important for the development of our products. In the year 1998, we have applied
for a patent for an invention entitled a pull up spout with temper proof seal which was granted in the year 2007.
We have also applied for patent for an invention of an airtight pilfer proof and temper evident seal locking
mechanism of containers with lid and a temper proof lid having spout for containers and process for its
manufactures. As at December 31, 2014, we are the registered proprietor of 20 designs of our products registered
with the Controller General of Patents, Designs and Trade Marks under the provisions of the Design Act, 2000
and the Design Rules, 2001. In addition, we have 1 patent registered and 2 pending patent applications in India.
We also own various trademarks and service marks that contribute to the identity and the recognition of our
corporate brand, product and service brands globally. These trade and service marks are integral to our business,
and the loss of any of these intellectual property rights could have a material adverse effect on our business.
105
Preliminary Placement Document
REGULATIONS AND POLICIES
The following description is a summary of relevant regulations and policies as prescribed by the Government of
India and other regulatory bodies that applicable to our Company. The information detailed below has been
obtained from various legislations, including rules and regulations promulgated by regulatory bodies, and the
bye laws of the respective local authorities that are available in the public domain.This description is based on
the current provisions of Indian law, which are subject to change or modification or interpretation by subsequent
legislative, regulatory, administrative or judicial decisions. The laws set out herein below and their description
are not exhaustive, and are only intended to provide general information to Investors and is neither designed nor
intended to be a substitute for professional legal advice.
Legal Metrology (Packaged Commodities) Rules, 2011
The Legal Metrology (Packaged Commodities) Rules, 2011 has been framed under section 52(2) (j) and (q) of the
Legal Metrology Act, 2009 and has, since, been amended several times.
As per section 2(j) of the Legal Metrology Act, Pre-packaged commodity means a commodity which without the
purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product
contained therein has a pre-determined quantity. According to Rule 3 Legal Metrology (Packaged Commodities)
Rules, 2011 are not applicable to:
a)
packages of commodities containing quantity more than 25 kg or 25 liters excluding cement and fertilizer
sold in bags up to 50 kg
b) packaged commodity meant for institutional and industrial consumers.
As per Rule 4 of the Legal Metrology (Packaged Commodities) Rules, 2011 every commodity which is prepacked for sale must bear declarations. Rule 6 of the said rules provides that every packaged commodity must
bear declarations such as name or address of the manufacturer, common or generic names of the commodity
contained in the package, net quantity of the commodity, the month or year in which the commodity is packaged,
the retail sale price, etc. Rule 11(4) provides that the declaration of quantity in relation to commodities which are
likely to undergo significant variation in weight or measures on account of environmental or other conditions, like
all kinds of soaps, lotions, cream (other than cream of milk), may be qualified by the words “When packed”.
Andhra Pradesh VAT Act, 2005
The Act provides that every dealer in the state of Andhra Pradesh who opts to be registered for VAT must make
an application for being registered under the Act not later than fifteen days who will be liable to pay tax on every
sale of goods in the State. An input tax credit will be allowed to the VAT dealer for the tax in respect of all
purchases of taxable goods, made by that dealer during the tax period, if such goods are for use in the business of
the VAT dealer. However no such input tax credit can be availed on works contracts, transfer of a business as a
whole, sale of exempted goods except when such goods are sold in the course of export or exported outside the
territory of India, exempt sale and transfer of exempted goods on consignment basis. Every dealer registered
under the Act, shall submit such return or returns, along with proof of payment of tax in such manner, within the
prescribed time period. Every VAT dealer will be entitled to a refund of tax if the input tax credit exceeds the
amount of tax payable subject to the condition that the exports have been made outside the territory of India.
Andhra Pradesh Factories and Establishments Act, 1974
The Act applies to the factories established in the state of Andhra Pradesh wherein every employee shall be
allowed in each calendar year a holiday of one whole day on the 26th January, 1st May, the 15th August and the
2nd October and four other holidays each of one whole day for such festivals. Where an employee works on any
holiday allowed under Section 3, he shall, at his option, be entitled to twice the wages for such day and to avail
106
Preliminary Placement Document
himself of a substituted holiday with wages on one of the three days immediately before or after the day on which
he so works.
Every employer shall maintain a register and it shall be produced whenever it is required by the Inspector having
jurisdiction over the area, however no separate register needs to be maintained if the Inspector having jurisdiction
over the area in which the factory establishment is situated is satisfied that the particulars required are contained
in any other register maintained by the employer. A strict vigil is reserved on the employers by imposing a
penalty of one hundred and fifty rupees and for a second and subsequent offence may extend to seven hundred
and fifty rupees.
Daman VAT Act, 2005
The Act extends to the union territory of Daman and Diu, The tax which shall be payable on every sale of goods
effected by a dealer – (a) on and from the day on which the dealer was required to be registered under this Act; or
(b) during the period he is registered as a dealer under this Act. Every dealer, whose liability to pay tax under this
Act has ceased or whose certificate of registration has been cancelled, shall, if his turnover calculated from the
commencement of any year (including the year in which the registration has been cancelled), at any subsequent
day exceeds the taxable quantum within such year, be liable to pay such tax on and from the date on which his
turnover subsequently exceeds the taxable quantum, on all sales effected by him on and after that day. Every
registered dealer, who is liable to pay tax under this Act, shall furnish to the Commissioner such returns in the
prescribed form for each tax period and by such dates as may be prescribed.
Tamil Nadu Value Added Tax Act, 2006
The Act provides that every dealer, other than a casual trader or agent of a non-resident dealer, whose total
turnover for a year is not less than rupees five lacs and every casual trader or agent of a non-resident dealer,
whatever be his total turnover, for a year, shall pay tax under this Act. There is a provision for reversal of tax
credit which prescribes that a selling dealer who has received back the goods as a result of sales return or
unfructified sale, the output tax paid or payable thereon will be reduced, adjusted or refunded in the prescribed
manner. An appeal can be preferred by an aggrieved person to the deputy commissioner within thirty days from
the date of the order.
Maharashtra Value Added Tax Act, 2002
As per the act, every dealer, who holds a valid or effective certificate of registration or licence or, who is liable to
pay tax under any of the earlier laws, if his turnover of sales or purchases has, in the said year under any of such
earlier laws, exceeded rupees five lakh, or who was an importer in the said year and his turnover of sales or
purchases exceeds rupees one lakh would be liable to pay tax, till his certificate or licence is duly cancelled under
this Act. The Act contains provisions for set off or refund of the whole tax, exemption & refund and appeal
provisions to deputy or joint commissioners or to the tribunal.
Uttar Pradesh Value Added Tax, 2008
The Act extends to the state of Uttar Pradesh and provides for the levy of Value Added Tax on purchases of any
taxable goods on the turnover of purchase. Every dealer must obtain a registration certificate issued by the
registering authority for which an application must be preferred within thirty days from the date on which such
dealer has become so liable. A tax return must be submitted on the self assessed turnover and tax. The Act
contains provisions for tax audit, search and seizure, penalty, appeal, review and revision.
West Bengal Value Added Tax Act, 2003
The Act provides establishment of a West Bengal Value Added Tax Settlement Commission and proceedings
before such commission, liability to pay tax on the transfer of property in goods involved in the execution of
107
Preliminary Placement Document
works contract and registration procedure by a dealer who will deemed to be registered within one hundred and
twenty days from the appointed day.
Tamil Nadu Fire Service Act, 1985
The Act is applicable to the state of Tamil Nadu, it provides for the appointment of a Director and Members of
Fire Service who would be vested with the power to carry out the superintendence and control of fire service. The
Act contains stringent provisions by barring the members of fire service to engage in any other office other than
his duties under the act. The powers vested with such members would include the following in case of an
occurrence of a fire in any area in the state of Tamil Nadu:
a.
b.
c.
d.
e.
remove or order any other Member of Fire Service to remove, any person who interferes with or impedes
the operation for extinguishing, or preventing the spread of, fire, or for saving life or property;
close any street or passage in or near which a fire is burning;
to extinguish or prevent the spread of fire or cause them to be broken through or pulled down as the
occasion demands, doing as little damage as possible;
require the authority in charge of water supply in the area to fill static water tanks generally, or to regulate
the water mains so as to provide water at a specified pressure at the place where fire has broken out;
utilise the water of any stream, cistern, well or tank or of any available source of water for the purpose of
extinguishing or preventing the spread of such fire.
General Laws:
Employment & Labour Related Laws
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“the EPFMP Act”)
The EPFMP Act is applicable to the establishment employing more than 20 employees and as notified by the
government from time to time. All the establishments under the EPFMP Act are required to be registered with the
appropriate Provident Fund Commissioner. Also, in accordance with the provisions of the EPFMP Act, the
employers are required to contribute to the employees‟ provident fund the prescribed percentage of the basic
wages, dearness allowances and remaining allowance (if any) payable to the employees. The employee shall also
be required to make the equal contribution to the fund.
Recently, the Ministry of Labour & Employment, Government of India (MLE) has issued notifications and made
amendments to the Employees‟ Provident Fund Scheme, 1952 (EPF), Employees‟ Pension Scheme, 1995 (EPS)
and Employees‟ Deposit Linked Insurance Scheme, 1976 (EDLI) effective from September 1, 2014. The key
amendments are as below:
The statutory wage ceiling under the EPF, EPS and EDLI has been increased from ` 6,500 to ` 15,000
per month.
b) For the financial year 2014-15, the minimum pension is fixed at ` 1,000/- per month for the members of
the EPS or their nominee/ widow, etc.
c) Effective September, 1, 2014, all new EPF members shall not become a member of EPS, if their pay is
more than ` 15,000/ month at the time of joining. In other words, no allocation towards pension fund will
be made for such new members and the entire employee and employer contribution will go to the
provident fund account.
d) The insurance benefit under the EDLI has been increased by 20% in addition to the existing admissible
benefits.
a)
Employees’ State Insurance Act, 1948 (the “ESI Act”)
108
Preliminary Placement Document
All the establishments to which the ESI Act applies are required to be registered under the ESI Act with the
Employees State Insurance Corporation. This Act requires all the employees of the establishments to which this
Act applies to be insured in the manner provided there under. Employer and employees both are required to make
contribution to the fund. The return of the contribution made is required to be filed with the Employee State
Insurance department.
As per the Employees State Insurance (Amendment) Act, 2010 wherein the following provisions were inserted:
The scope the definition of “dependent” was widened to include legitimate or adopted son who has not
attained the age of twenty five years.
b) The definition of employee now includes apprentices appointed under standing orders but excludes only the
apprentices appointed under the Apprentices Act 1961.
c) The distinction of segregating factories into 2 categories has been removed and all those factories are covered
if they employ ten or more persons irrespective whether run with power or without power.
d) The limit of funeral expenses has been revised to ` 10,000/a)
Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 is the main legislation for investigation and settlement of all industrial disputes.
The Act enumerates the contingencies when a strike or lock-out can be lawfully resorted to, when they can be
declared illegal or unlawful, conditions for laying off, retrenching, discharging or dismissing a workman,
circumstances under which an industrial unit can be closed down and several other matters related to industrial
employees and employers. According to the Industrial Disputes Act, 1947, the term 'industrial dispute' means
"any dispute or difference between employers and employers, or between employers and workmen, or between
workmen and workmen, which is connected with the employment or non-employment, or the terms of
employment or with the conditions of labour, of any person”. The basic objectives of the Industrial Disputes Act,
1947 are:a) To provide a suitable machinery for the just, equitable and peaceful settlement of industrial disputes.
b) To promote measures for securing and preserving amity and good relations between employers and
employees.
c) To prevent illegal strikes and lockouts.
d) To provide relief to workers against layoffs, retrenchment, wrongful dismissal and victimisation.
e) To promote collective bargaining.
f) To ameliorate the conditions of workers.
g) To avoid unfair labour practices.
The above act provides for the statutory machinery for conciliation and adjudication of industrial disputes such as
conciliation officers, a board of conciliation, courts of inquiry, labour courts, industrial tribunals, etc.
Factories Act, 1948
The Factories Act, 1948, as amended (the “Factories Act”), defines a „factory‟ to be any premises on which on
any day in the previous 12 months, 10 or more workers are or were working and on which a manufacturing
process is being carried on or is ordinarily carried on with the aid of power; or at least 20 workers are or were
working on any day in the preceding 12 months and on which a manufacturing process is being carried on or is
ordinarily carried on without the aid of power. State governments prescribe rules with respect to the prior
submission of plans, their approval for the establishment of factories and the registration and licensing of
factories.
The Factories Act provides that the „occupier‟ of a factory (defined as the person who has ultimate control over
the affairs of the factory and in the case of a company, any one of the directors) shall ensure the health, safety and
welfare of all workers while they are at work in the factory, especially in respect of safety and proper maintenance
109
Preliminary Placement Document
of the factory such that it does not pose health risks, the safe use, handling, storage and transport of factory
articles and substances, provision of adequate instruction, training and supervision to ensure workers‟ health and
safety, cleanliness and safe working conditions.
If there is a contravention of any of the provisions of the Factories Act or the rules framed thereunder, the
occupier and manager of the factory may be punished with imprisonment for a term of up to two years or with a
fine up to `100,000/- or with both, and in case of contravention continuing after conviction, with a fine of up to `
1,000/- per day of contravention. In case of a contravention which results in an accident causing death or serious
bodily injury, the fine shall not be less than ` 25,000 in the case of an accident causing death, and ` 5,000/- in the
case of an accident causing serious bodily injury.
The Ministry of Labour and Employment proposes to amend the Factories Act, 1948 vide Office Memorandum
dated June 5, 2014 wherein it is proposed to redefine the term “hazardous process” as a process in which a
hazardous substance is used and the term “hazardous substance” would have the same meaning as assigned in the
Environment Protection Act, 1986. An Occupier would now be required to take permission from the State
Government for expansion of a factory within certain prescribed limits. Various safety precautions have been
taken by the State Government to prevent persons to enter any confined space unless a written certificate has been
given by a competent person and such person is wearing a suitable breathing apparatus. The occupier of a factory
which is engaged in a hazardous process is required to inform the Chief Inspector within 30 days before the
commencement of such process. An Inquiry Committee will be appointed by the Central Government to inquire
into the standards of health and safety observed in the factory.
Contract Labour (Regulation and Abolition) Act, 1970
The Contract Labour (Regulation and Abolition) Act, 1970, as amended (the “CLRA”), requires establishments
that employ or have employed on any day in the previous 12 months, 20 or more workmen as contract labour to
be registered and prescribes certain obligations with respect to the welfare and health of contract labour.
The CLRA requires the principal employer of an establishment to which the CLRA applies to make an application
to the registering officer in the prescribed manner for registration of the establishment. In the absence of
registration, contract labour cannot be employed in the establishment. Likewise, every contractor to whom the
CLRA applies is required to obtain a licence and not to undertake or execute any work through contract labour
except under and in accordance with the licence issued.
To ensure the welfare and health of the contract labour, the CLRA imposes certain obligations on the contractor
including the establishment of canteens, rest rooms, drinking water, washing facilities, first aid facilities, other
facilities and payment of wages. However, in the event the contractor fails to provide these amenities, the
principal employer is under an obligation to provide these facilities within a prescribed time period. Penalties,
including both fines and imprisonment, may be imposed for contravention of the provisions of the CLRA.
Minimum Wages Act, 1948
State governments may stipulate the minimum wages applicable to a particular industry. The minimum wages
may consist of a basic rate of wages and a special allowance; or a basic rate of wages and the cash value of the
concessions in respect of supplies of essential commodities; or an all-inclusive rate allowing for the basic rate, the
cost of living allowance and the cash value of the concessions, if any. Workmen are to be paid for overtime at
overtime rates stipulated by the appropriate government.
Contravention of the provisions of this legislation may result in imprisonment for a term up to six months or a
fine up to ` 500 or both.
The Ministry of Labour and Employment have vide Office Memorandum dated June 17, 2014 proposed certain
amendments to the Minimum Wages Act, 1948 which include the revision of the minimum wages payable to the
110
Preliminary Placement Document
employees at intervals of not exceeding 5 years due to the rise in the Consumer Price Index; All scheduled
employments need not be individually represented in the Advisory Boards/Committees/Sub-Committees.
Workmen’s Compensation Act, 1923
The Workmen‟s Compensation Act, 1923 ("WCA") has been enacted with the objective to provide for the
payment of compensation to workmen by employers for injuries by accident arising out of and in the course of
employment, and for occupational diseases resulting in death or disablement. The WCA makes every employer
liable to pay compensation in accordance with the WCA if a personal injury/disablement/loss of life is caused to a
workman (including those employed through a contractor) by accident arising out of and in the course of his
employment. In case the employer fails to pay compensation due under the WCA within one month from the date
it falls due, the commissioner appointed under the WCA may direct the employer to pay the compensation
amount along with interest and may also impose a penalty.
Payment of Bonus Act, 1965
Pursuant to the Payment of Bonus Act, 1965, as amended (the “Bonus Act”), an employee in a factory or in any
establishment where 20 or more persons are employed on any day during an accounting year, who has worked for
at least 30 working days in a year is eligible to be paid a bonus.
Contravention of the provisions of the Bonus Act by a company is punishable with imprisonment for a term of up
to six months or a fine of up to ` 1,000 or both, against persons in charge of, and responsible to our Company for
the conduct of the business of our Company at the time of contravention.
Payment of Gratuity Act, 1972
Under the Payment of Gratuity Act, 1972, as amended (the “Gratuity Act”), an employee who has been in
continuous service for a period of five years will be eligible for gratuity upon his retirement or resignation,
superannuation or death or disablement due to accident or disease. However, the entitlement to gratuity in the
event of death or disablement will not be contingent upon an employee having completed five years of continuous
service. The maximum amount of gratuity payable may not exceed ` 350,000/-.
An employee in a factory is said to be „in continuous service‟ for a certain period notwithstanding that his service
has been interrupted during that period by sickness, accident, leave, absence without leave, lay-off, strike, lockout or cessation of work not due to the fault of the employee. The employee is also deemed to be in continuous
service if the employee has worked (in an establishment that works for at least six days in a week) for at least 240
days in a period of 12 months or 120 days in a period of six months immediately preceding the date of reckoning.
Payment of Wages Act, 1936
Payment of Wages Act, 1936 contains provisions as to the minimum wages that are to be fixed by the appropriate
Governments for the employees, fixation and revision for the minimum wages of the employees, entitlement of
bonus to the employees, fixing the payment of wages to workers and ensuring that such payments are disbursed
by the employers within the stipulated time frame and without any unauthorized deductions.
Trade Unions Act, 1929
The legislation regulating these trade unions is the Indian Trade Unions Act, 1926. The Act deals with the
registration of trade unions, their rights, their liabilities and responsibilities as well as ensures that their funds are
utilised properly. It gives legal and corporate status to the registered trade unions. It also seeks to protect them
from civil or criminal prosecution so that they could carry on their legitimate activities for the benefit of the
working class. The Act is applicable not only to the union of workers but also to the association of employers.
111
Preliminary Placement Document
According to the Trade Unions Act, 1926, 'trade union' means "any combination, whether temporary or
permanent, formed primarily for the purpose of regulating the relations between workmen and employers or
between workmen and workmen or between employers and employers, or for imposing restrictive conditions on
the conduct of any trade or business, and includes any federation of two or more trade unions. The registered trade
unions are required to submit annual statutory returns to the Registrar regarding their membership, general funds,
sources of income and items of expenditure and details of their assets and liabilities, etc
As per the Trade Union (Amendment) Act, 2001 a trade union will be registered only if at least ten per cent or one
hundred of the workmen, whichever is less, engaged or employed in the establishment or industry with which it is
connected are the members of such Trade Union on the date of making of application for registration and not less
than seven persons as its members, who are workmen engaged or employed in the establishment or industry with
which it is connected.
Shops and Commercial Establishments Acts
The Shops and Establishments Act, 1953 was enacted to provide statutory obligation and rights to employees and
employers in the unorganised sector of employment, i.e. shops and establishments. It is applicable to all persons
employed in an establishment with or without wages, except the members of the employer's family. It is a State
legislation and each State has framed its own rules for the Act.
The State Government can exempt, either permanently or for a specified period, any establishments from all or
any provisions of this Act. The Act provides for compulsory registration of shop/ establishment within thirty days
of commencement of work and all communications of closure of an establishment within 15 days from its closing.
It also lays down the hours of work per day and week as well as the guidelines for spread-over, rest interval,
opening and closing hours, closed days, national and religious holidays, overtime work, etc.
Maternity Benefit Act
The Act was enacted for protecting the dignity of motherhood by providing complete and healthy care to women
and her child when she is unable to perform her duty due to health condition. The Act applies to every factory,
shop or establishment wherein 10 or more persons are employed. The Act prescribes a 84 days leave before or
after the delivery, medical bonus of ` 1,000/-, pay for 6 weeks before or after the child birth within 48 hours of
request, an additional leave with pay upto one month, miscarriage of six weeks leave with an average pay.
Industries (Development and Regulation) Act, 1951
Under the New Industrial Policy dated July 24, 1991, all industrial undertakings are exempt from licensing except
for certain industries such as distillation and brewing of alcoholic drinks, cigars and cigarettes of tobacco and
manufactured tobacco substitutes, all types of electronic aerospace and defense equipment, industrial explosives
including detonating fuses, safety fuses, gun powder, nitrocellulose and matches and hazardous chemicals and
those reserved for the small scale sector. An industrial undertaking, which is exempt from licensing, is required to
file an Industrial Entrepreneurs Memorandum (“IEM”) with the Secretariat for Industrial Assistance, Department
of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, and no further
approvals are required.
Tax Related Legislations
Value Added Tax (“VAT”) Act and Rules, 2008
The levy of Sales Tax within the state is governed by the Value Added Tax Act and Rules 2008 (“the VAT Act”)
of the respective states. The VAT Act has addressed the problem of Cascading effect (double taxation) that were
being levied under the hitherto system of sales tax. Under the current regime of VAT the trader of goods has to
pay the tax (VAT) only on the Value added on the goods sold. Hence VAT is a multi-point levy on each of the
112
Preliminary Placement Document
entities in the supply chain with the facility of set-off of input tax- that is the tax paid at the stage of purchase of
goods by a trader and on purchase of raw materials by a manufacturer. Only the value addition in the hands of
each of the entities is subject to tax. Periodical returns are required to be filed with the VAT Department of the
respective States by the Company.
Income Tax Act, 1961
Income Tax Act, 1961 is applicable to every Domestic / Foreign Company whose income is taxable under the
provisions of this Act or Rules made under it depending upon its “Residential Status” and “Type of Income”
involved. U/s 139(1) every Company is required to file its Income tax return for every Previous Year by 31st
October of the Assessment Year. Other compliances like those relating to Tax Deduction at Source, Fringe
Benefit Tax, Advance Tax, and Minimum Alternative Tax and the like are also required to be complied by every
Company.
Central Excise Act, 1944
The Central Excise Act, 1944 seeks to impose an excise duty on excisable goods which are produced or
manufactured in India. The rate at which such a duty is imposed is contained in the Central Excise Tariff Act,
1985.However, the Indian Government has the power to exempt certain specified goods from excise duty by
notification.
Central Sales Tax Act, 1956
a.
b.
The Central Sales Tax Act, 1956 governs the levy of sales tax for the whole of India on the sale or purchase of
goods generally or on any specified goods expressly mentioned in that behalf.
Every dealer, who in the course of inter-State trade or commercesells to the Government any goods; or
sells to a registered dealer other than the Government
shall be liable to pay tax under this Act, which shall be two per cent of his turnover or at the rate applicable to the
sale or purchase of such goods inside the appropriate State under the sales tax law of that State, or, as the case
may be, under any enactment of that State imposing value added tax, whichever is lower.
Intellectual Property Rights
Trademarks
Trademarks have been defined by Trade Related Intellectual Property (TRIPs) as any sign, or any combination of
signs capable of distinguishing the goods or services of one undertaking from those of other undertakings. Such
distinguishing marks constitute subject matter under TRIPs. TRIPs provide that initial registration and each
renewal of registration shall be for a term of not less than ten years and the registration shall be renewable
indefinitely. Compulsory licensing of trademarks is not permitted. In light of the changes in trade and commercial
practices, globalisation of trade, the need for simplification and harmonisation of trademark registration systems
etc., the Indian Parliament undertook a comprehensive review of the Trade and Merchandise Marks Act, 1958 and
replaced the same with the a new legislation viz The Trade Marks Act, 1999. This Act makes trademarks law
compatible with TRIPs and also harmonises it with international systems and practices.
Design Act, 2000
Industrial designs refer to creative activity which result in the ornamental or formal appearance of a product and
design right refers to a novel or original design that is accorded to the proprietor of a validly registered design.
Industrial designs are an element of intellectual property. The minimum standards of protection of industrial
113
Preliminary Placement Document
designs have been provided for, under the TRIPS Agreement. As a developing country, India has already
amended its national legislation to provide for these minimal standards.
The essential purpose of design law it to promote and protect the design element of industrial production. It is also
intended to promote innovative activity in the field of industries. The existing legislation on industrial designs in
India is contained in the Designs Act, 2000 and this Act will serve its purpose well in the rapid changes in
technology and international developments. India has also achieved a mature status in the field of industrial
designs and in view of globalization of the economy, the present legislation is aligned with the changed technical
and commercial scenario and made to conform to international trends in design administration.
Under the Designs Act, 2000, designs of articles, which serve the purpose of visual appeal, are registrable. The
designs should represent a shape, configuration, pattern, or ornamentation of an article. The design should be
capable of being applied to an article to enhance its appeal to the eye e.g. shape of pen, combs, pressure cooker or
ornamentation on carpet etc. which add only aesthetic value of the article.
Design should be incorporated to the article by an industrial process or means. Therefore mere painting of natural
scene will not be considered as a subject matter for registration. Designs, which are solely functional, or the
principle or the mode of construction of an article shall not be the subject matter of registration.
Designs Rules, 2001
In the Third Schedule of Designs Rules, 2001 the classification of goods has been mentioned. Classification is
based on Locarno Agreement. Only one class number is to be mentioned in one particular application. The
classification of goods is on the basis of articles. Articles are grouped into 32 classes and further divided into subclasses. The classification of articles is function oriented (e.g. class 1- Foodstuffs, class 2- Articles of clothing and
haberdashery class 3- Travel goods, cases, parasols and personal belongings etc.) A design cannot be registered in
more than one class. The design should be new or original, not previously published or used in any country before
application for registration; The design should relate to the feature of a shape, configuration, pattern or
ornamentation applied or applicable to any article; The design should be applied or applicable to any article by
way of any industrial process or means; The design should be visible on the finished article; The design should
not be a mode or principle of construction or operation or anything, which is a functional component of the
device; The design should not comprise of a trademark or property mark or artistic work as defined under the
Copyright Act; The design should not be contrary to public order or morality.
Patents Act, 1970
The Patents Act, 1970 (“Patents Act”) governs the patent regime in India. Historically, India granted patent
protection only to processes and not to products in respect of food, medicine or drugs. However, as a signatory to
the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”), India was required to ensure
that its patent laws were in compliance with the TRIPS by January 1, 2005. Under this new patent regime, India is
required to recognize product patents as well as process patents.
In addition to broad requirement that an invention satisfy the requirements of novelty, utility and non-obviousness
in order for it to avail patent protection, the Patents Act further provides that patent protection may not be granted
to certain specified types of inventions and materials even if they satisfy the above criteria. The term of a patent
granted under the Patents Act is for a period of twenty years from the date of filing of the application for the
patent. The Patents Act deems that computer programs per se are not „inventions‟ and are therefore, not entitled to
patent protection. This position was diluted by The Patents Amendment Ordinance, 2004, which included the
following as patentable subject matter:
a.
b.
Technical applications of computer programs to industry; and
Combinations of computer programs with the hardware.
114
Preliminary Placement Document
However, the Patents Amendment Act, 2005 does not include this specific amendment and consequently, the
Patents Act, as it currently stands, disentitles computer programs per se from patent protection. The public use or
publication of an invention prior to the making of an application for a patent, may disentitle the said invention to
patent protection on the grounds of lack of novelty. Under the Patents Act, an invention will be regarded as
having ceased to be novel (and hence not patentable), inter alia, by the existence of:
a.
b.
c.
d.
any earlier patent on such invention in any country;
prior publication of information relating to such invention;
an earlier product showing the same invention; or
a prior disclosure or use of the invention that is sought to be patented.
Following its amendment by the Patents Amendment Act, 2005, the Patents Act permits opposition to grant of a
patent to be made, both pre-grant and post-grant. The grounds for such patent opposition proceedings, inter alia,
include lack of novelty, inventiveness and industrial applicability, non-disclosure or incorrect mention of source
and geographical origin of biological material used in the invention and anticipation of invention by knowledge
(oral or otherwise) available within any local or indigenous community in India or elsewhere.
The proviso to section 11A (7) has been introduced in the Patents Act to provide protection to those Indian
enterprises which have made significant investment and have been producing and marketing a product prior to
January 1, 2005, for which a patent has been granted through an application made under section 5(2) of the
Patents Act and have continued to manufacture the product covered by the patent on the date of grant of the
patent. In such a case, the patent-holder shall only be entitled to receive reasonable royalty from such enterprises
and cannot institute infringement proceedings against such enterprises.
Under section 47 of the Patents Act, the patent is only conditional and it enables the GoI to import, make or use
any patent for its own purpose. In the case of drugs, the GoI can also import patented drugs for the purpose of
public health distribution. This is complimented by sections 100 and 101 of the Patents Act. Compulsory
licensing is also provided under Chapter XVI in order to protect public interest and mainly public health.
The Patents Act also prohibits any person resident in India from applying for patent for an invention outside India
without making an application for the invention in India. Following a patent application in India, a resident must
wait for six weeks prior to making a foreign application or may obtain the written permission of the Controller of
Patents to make foreign applications prior to this six week period. Patents are territorial by nature, as a result of
which an invention patented in one country does not enjoy protection in another country. The Patent Cooperation
Treaty to which India is a signatory tries to fill this lacuna to an extent and makes it possible to seek patent
protection for an invention simultaneously in each of a large number of countries through a single application
process.
Environment Regulations
Our Company is subject to Indian laws and regulations concerning environmental protection. The principal
environmental regulations applicable to industries in India are the Water (Prevention and Control of Pollution)
Act, 1974, the Water Access Act, 1977, the Air (Prevention and Control of Pollution) Act, 1981, the Environment
Protection Act, 1986 and the Hazardous Wastes (Management and Handling) Rules, 1989. Further, environmental
regulations require a company to file an Environmental Impact Assessment (EIA) with the State Pollution Control
Board (PCB) and the Ministry of Environment and Forests (MEF) before undertaking a project entailing the
construction, development or modification of any plant, system or structure. If the PCB approves the project, the
matter is referred to the MEF for its final determination. The estimated impact that a particular project might have
on the environment is carefully evaluated before granting clearances. When granting clearance, conditions may be
imposed and the approving authorities may direct variations to the proposed project.
The Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008
115
Preliminary Placement Document
The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008, as amended
(Hazardous Wastes Rules), which superseded the Hazardous Wastes (Management and Handling) Rules, 1989,
state that the occupier will be responsible for safe and environmentally sound handling of hazardous wastes
generated in his establishment. The hazardous wastes generated in the establishment of the occupier should be
sent or sold to a recycler or re-processor or re-user registered or authorised under the Hazardous Wastes Rules or
should be disposed of in an authorised disposal facility. The Ministry of Environment and Forests has been
empowered to deal with the trans-boundary movement of hazardous wastes and to grant permission for transit of
hazardous wastes through any part of India. No import of hazardous waste is permitted in India. The State
Government, occupier, operator of a facility or any association of the occupier will be individually or jointly or
severally responsible for, and identify sites for, establishing the facility for treatment, storage and disposal of
hazardous wastes for the State Government.
Water (Prevention and Control of Pollution) Act, 1974
The Water Pollution Act aims to prevent and control water pollution. This legislation provides for the constitution
of a Central Pollution Control Board and State Pollution Control Boards. The functions of the Central Board
include coordination of activities of the State Boards, collecting data relating to water pollution and the measures
for the prevention and control of water pollution and prescription of standards for streams or wells. The State
Pollution Control Boards are responsible for the planning for programmes for prevention and control of pollution
of streams and wells, collecting and disseminating information relating to water pollution and its prevention and
control; inspection of sewage or trade effluents, works and plants for their treatment and to review the
specifications and data relating to plants set up for treatment and purification of water; laying down or annulling
the effluent standards for trade effluents and for the quality of the receiving waters; and laying down standards for
treatment of trade effluents to be discharged. This legislation debars any person from establishing any industry,
operation or process or any treatment and disposal system, which is likely to discharge trade effluent into a
stream, well or sewer without taking prior consent of the State Pollution Control Board.
The Central and State Pollution Control Boards constituted under the Water Pollution Act are also to perform
functions as per the Air Pollution Act for the prevention and control of air pollution. The Air Pollution Act aims
for the prevention, control and abatement of air pollution. It is mandated under this Act that no person can,
without the previous consent of the State Board, establish or operate any industrial plant in an air pollution control
area.
Environment Protection Act, 1986
The Environment Protection Act has been enacted for the protection and improvement of the environment. The
Act empowers the central government to take measures to protect and improve the environment such as by laying
down standards for emission or discharge of pollutants, providing for restrictions regarding areas where industries
may operate and so on. The central government may make rules for regulating environmental pollution. The
Environmental Impact Assessment Notification dated September 14, 2006 read with notification dated December
1, 2009 and April 4, 2011, issued under the Environmental Protection Act and the Environment (Protection)
Rules, 1986, requires prior approval of the Ministry of Environment and Forests, GoI if any new project in certain
specified areas is proposed to be undertaken. To obtain environmental clearance, a no objection certificate must
first be obtained from the applicable regulatory authority. The environment clearance (for commencement of the
project) is valid for up to 30 years for mining projects and five years for all other projects and activities. This
period of validity may be extended by the concerned regulator for up to five years.
The Public Liability Insurance Act, 1991 (the “Public Liability Act”) imposes liability on the owner or controller
of hazardous substances for any damage arising out of an accident involving such hazardous substances. A list of
hazardous substances covered by the legislation has been enumerated by the Government by way of a notification.
The owner or handler is also required to take out an insurance policy insuring against liability under the
legislation. The rules made under the Public Liability Act mandate that the employer has to contribute towards the
116
Preliminary Placement Document
environment relief fund, a sum equal to the premium paid on the insurance policies. The amount is payable to the
insurer.
117
Preliminary Placement Document
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Overview
Our Board currently consists of (8) Directors. Our senior management team is under the overall supervision and
control of our Board, and is responsible for our day-to-day operations. Our Articles of Association provide that
the number of directors shall not be less than three or more than 12. Further, our Articles of Association provides
that one-third of the strength of the Board of Directors shall be 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 at every AGM. A retiring
Director shall be eligible for re-appointment.
The Companies Act, 2013, provides that not less than two-thirds of the total number of directors, excluding the
independent directors, shall be liable to retire by rotation. One-third of the directors shall automatically retire
every year at the annual general meeting and shall be eligible for re-appointment. The directors to retire by
rotation shall be decided based on those who have been longest in office, and as between persons appointed on the
same day, the same shall be decided by mutual agreement or by draw of lots. On account of the recent enactment
of the Companies Act, 2013, the Board of Directors of the Company presently does not include requisite number
of directors liable to retire by rotation. Our Company will take necessary steps to comply with the applicable
provisions of the Companies Act, 2013. The independent directors may be appointed for a maximum of two terms
of up to five consecutive years each; however, such directors are eligible for re-appointment after the expiry of
three years of ceasing to be an independent director provided that such directors are not, during the three year
period, appointed in or associated with our Company in any other capacity, either directly or indirectly. Any
reappointment of independent directors, inter alia, shall be on the basis of performance evaluation report and
requires the approval of the shareholders by way of a special resolution.
Our Board of Directors
The following table sets forth details regarding the Board as on the date of this Preliminary Placement Document:
Sr.
No.
1.
Name, Address, Occupation, DIN, Term and Nationality
Janumahanti Lakshmana Rao
Age (in
years)
55
1.
Address: Plot No. 321–K , Road No. 26, Jubilee Hills,
Hyderabad – 500 034, Telangana, India
Other Directorships
Mold-Tek
Limited; and
Technologies
2.
Right Angle Real Estates
Limited Liability Partnership
1.
Mold–
Limited
Designation: Chairman and Managing Director
Occupation: Business
DIN: 00649702
Term: April 1, 2014 to March 31, 2019
Nationality: Indian
2.
60
Adivishnu Subramanyam
Address: H. No. 8-2-268-V/20, 20A, Vivekananda
Enclave, Sagar Society, Road No. 3, Banjara Hills,
Hyderabad – 500 034, Telangana, India
118
Tek
Technologies
Preliminary Placement Document
Sr.
No.
Name, Address, Occupation, DIN, Term and Nationality
Age (in
years)
Other Directorships
Designation: Deputy Managing Director
Occupation: Business
DIN: 00654046
Term: April 01, 2014 to March 31, 2019, liable to retire by
rotation
Nationality: Indian
3.
1.
57
Pattabhi Venkateswara Rao
Mold–
Limited
Address: H. No. 7-1-214/4/1,2 and 3, Sree Nilayam,
Dharamkaran Road, Ameerpet, Hyderabad – 500016,
Telangana, India
Designation: Deputy Managing Director
Occupation: Business
DIN: 01254851
Term: April 01, 2014 to March 31, 2019, liable to retire by
rotation
Nationality: Indian
4.
80
Janumahanti Mytraeyi
Address: Plot No. 321, K Road No. 26, Jubilee Hills,
Hyderabad – 500034, Telangana, India
Designation: Non – Executive and Non – Independent
Director
Occupation: Business
DIN: 01770112
Term: Liable to retire by rotation
Nationality: Indian
119
NIL
Tek
Technologies
Preliminary Placement Document
Sr.
No.
5.
Name, Address, Occupation, DIN, Term and Nationality
Talupunuri Venkateswara Rao
Age (in
years)
58
1.
Pallavi Homes Private Limited;
Address: 3-12-2, 3rd lane, Jute Mill Ring Road, Old
Pattabhipuram, Guntur – 522006, Telangana, India
2.
Transmedia
Technologies
(A.P.) Private Limited;
Designation: Non – Executive and Independent Director
3.
Bhavyabharati
Limited;
4.
Manam
Limited;
5.
Pallavi
Sudha‟s
Private Limited;
6.
Pallavisudha
Limited
1.
Mold–
Tek
Limited;
2.
C-TA
Software
Limited; and
3.
Vigilant
Computechnologies
Private Limited
1.
Sri
Prakash
Vidyaniketan
Private Limited; and
2.
Chitturi Agro and Lactating
Foods Private Limited
Occupation: Professional
DIN: 00572657
Term: September 30, 2014 to September 29, 2019
Nationality: Indian
6.
Other Directorships
73
Pillarisetty Shyam Sunder Rao
Address: H. No. 1-3-183/40/149, Sri Lakshmi Nilayam,
Thallabasti, Secunderabad – 500080, Telangana, India
Designation: Non – Executive and Independent Director
Occupation: Professional
Softsols
Infotech
Infra
Private
Solutions
Private
Technologies
Private
DIN: 01770064
Term: September 30, 2014 to September 29, 2019
Nationality: Indian
7.
43
Vasu Prakash Chitturi
Address: D. No. 9-5-67/5-15, Flat no. 601, Annapurna
Apartments, Opposite TSR Apartments, Sivajipalem,
Visakhapatnam – 530017, Telangana, India
Designation: Non – Executive and Independent Director
Occupation: Professional
DIN: 02196411
Term: September 30, 2014 to September 29, 2019
Nationality: Indian
8.
53
Nadimpalli Varma Nelladri Venkata
Address: Flat No. 202, Vishnu Towers, 8th Street, Jaya
120
Nil
Preliminary Placement Document
Sr.
No.
Name, Address, Occupation, DIN, Term and Nationality
Age (in
years)
Other Directorships
Prakash Nagar, Yellareddyguda, Ameerpet, Hyderabad –
500016, Telangana, India
Designation: Non – Executive and Independent Director
Occupation: Professional
DIN: 02861521
Term: September 30, 2014 to September 29, 2019
Nationality: Indian
Brief Profiles
Janumahanti Lakshmana Rao
Janumahanti Lakshmana Rao is the Chairman and Managing Director of our Company. He holds a bachelor‟s
degree in civil engineering from Sri Venkateswara University, Tirupati, Andhra Pradesh which he cleared in first
class with distinction. He also holds a post graduate diploma in management from the Indian Institute of
Management, Bangalore. He has over 30 years of work experience. He has been associated with our Company
since August 27, 2008 and is conversant with all aspects of management and looks after day to day affairs of our
Company.
Adivishnu Subramanyam
Adivishnu Subramanyam is the Deputy Managing Director of our Company. He holds a bachelor‟s degree in
mechanical engineering from Karnataka Regional Engineering College, University of Mysore. He holds a
diploma course in practical injection molding from Central Institute of Plastics Engineering and Technology,
Chennai. He has over 30 years of work experience. He has been associated with our Company since August 27,
2008 and he manages the function of production, planning and control of manufacturing activities and also
oversees Computer Numerical Control programming and machine and mold manufacturing activities of our
Company.
Pattabhi Venkateswara Rao
Pattabhi Venkateswara Rao is the Deputy Managing Director of our Company. He holds a bachelor‟s degree in
arts from Osmania University. He has over 27 years of work experience. He was awarded with Pride of India
Award for outstanding individual achievements and distinguished survives to the nation and Gold Medal for
Excellence from Citizens Integration Peace Society. He has been associated with our Company since August 27,
2008 and he looks after the commercial and marketing aspects of our business.
Janumahanti Mytraeyi
Janumahanti Mytraeyi is a Non – Executive and Non- Independent Director of our Company. She holds a
bachelor‟s degree in science from Andhra University, Visakhapatnam. She has over 50 years of work experience.
She has been associated with our Company since August 27, 2008.
Talupunuri Venkateswara Rao
Talupunuri Venkateswara Rao is a Non – Executive and Independent Director of our Company. He holds a
master‟s degree in science from Andhra University, Visakhapatnam. He also holds a degree of doctor of
121
Preliminary Placement Document
philosophy from Andhra University, Visakhapatnam. He was a former Deputy Commissioner of Commercial
Taxes, Government of Andhra Pradesh. He has over 28 years of work experience. He has been associated with
our Company since August 27, 2008.
Pillarisetty Shyam Sunder Rao
Pillarisetty Shyam Sunder Rao is a Non – Executive and Independent Director of our Company. He holds a
bachelor‟s degree in commerce from Andhra University, Visakhapatnam. He is a qualified chartered accountant
and a member of Institute of Chartered Accountants of India. He is also a qualified Company Secretary. He has
over 36 years of experience in the field of accounts. He has been associated with our Company since January 31,
2009.
Vasu Prakash Chitturi
Vasu Prakash Chitturi is a Non – Executive and Independent Director of our Company. He has over 10 years of
experience in the teaching profession and is the founder of Sri Prakash Vidyaniketan Private Limited. He has been
associated with our Company since July 12, 2010.
Dr. Nadimpalli Venkata Nelladri Varma
Dr. Nadimpalli Venkata Nelladri Varma is a Non – Executive and Independent Director of our Company. He
holds a MBBS degree from Andhra University, Vishakhapatnam and is a registered medical practitioner and has
been issued with a Medical Registration Certificate from the Andhra Pradesh Medical Council. He has also
completed a post graduate course in chemistry – cardio thoracic surgery from the Nizam‟s Institute of Medical
Sciences, Hyderabad, Andhra Pradesh and a post graduate course in master of science – general surgery from
Kasturba Medical College, Manipal. He has over 25 years of experience in medical profession. He has been
associated with our Company since October 31, 2009.
Relationship with other Directors
Except for Janumahanti Lakshmana Rao who is son of Janumahanti Mytraeyi and Adivishnu Subramanyam who
is brother – in – law of Janumahanti Lakshmana Rao none of our directors are related to each other.
Borrowing powers of the Board
Our Board of Directors including any committee thereof vide a resolution dated September 30, 2014 is authorised
to borrow money, without limitation, from any bank or public financial institution, eligible foreign lender or
entities and authorities, credit suppliers and any other securities such as floating rate notes, syndicated loans and
debentures, commercial papers, short term loans and through credit from official agencies or by way of
commercial borrowings for an aggregate amount not exceeding ` 25,000 lacs notwithstanding the money
borrowed may exceed the aggregate of the paid – up share capital and free reserves.
Interest of our Directors
All of our Directors, other than the Chairman and Managing Director and the Deputy Managing Directors of our
Company may be deemed to be interested to the extent of fees payable to them for attending Board or Board
committee meetings as well as to the extent of reimbursement of expenses payable to them. The Chairman and
Managing Director and the Deputy Managing Directors of our Company may be deemed to be interested to the
extent of remuneration paid to them for services rendered as the officers of our Company.
Our Chairman and Managing Director, Janumahanti Lakshmana Rao may be interested in the appointment of
Janumahanti Navya Mythri (daughter of Janumahanti Lakshmana Rao), holding place of profit as Assistant
Finance Controller in our Company and receiving remuneration and reimbursement of expenses as per approval
122
Preliminary Placement Document
of shareholders‟ and Central Government under the relevant provisions of the Companies Act. Further, our
Chairman and Managing Director, Janumahanti Lakshmana Rao and our Deputy Managing Director, Adivishnu
Subramanyam may be interested in the appointment of Seshu Kumari Adivishnu, holding place of profit as Chief
Financial Officer in our Company and receiving remuneration and reimbursement of expenses as per approval of
shareholders‟ and Central Government under the relevant provisions of the Companies Act.
Shareholding of Directors
All of the Directors may also be regarded as interested in any Equity Shares held by them (as detailed below) and
also to the extent of any dividend payable to them and other distributions in respect of such Equity Shares held by
them:
Following are the details of Equity Shares held by our Directors as on December 31, 2014:
Name of the Director
Janumahanti Lakshmana Rao
Talupunuri Venkateswara Rao
Adivishnu Subramanyam
Number of Equity Shares held as
on December 31, 2014
12,62,262
89,000
10,14,562
Per cent of Total Number of
Outstanding Equity Shares
11.13%
8.95%
8.95%
Pattabhi Venkateswara Rao
Pillarisetty Shyam Sunder Rao
Janumahanti Mytraeyi
1,17,948
2,520
29,520
1.04%
0.02%
0.26%
Except as otherwise stated in this Preliminary Placement Document, our Company has not entered into any
contract, agreement or arrangement during the preceding two years from the date of this Preliminary Placement
Document in which any of the Directors are interested, directly or indirectly, and no payments have been made to
them in respect of any such contracts, agreements, arrangements which are proposed to be made with them.
Further, no Director has taken any loans from our Company as on March 31, 2014.
Terms of appointment of our Executive Directors
Janumahanti Lakshmana Rao – Chairman and Managing Director
Janumahanti Lakshmana Rao has been re-appointed as the Chairman and Managing Director for a period of five
years with effect from April 1, 2014 pursuant to a shareholders resolution dated September 30, 2013.
The details of remuneration which is being paid to Janumahanti Lakshmana Rao are as under:
Category
Basic Salary
Perquisites and Allowances
Commission
Particulars
Salary of ` 6.33 lacs per month in the scale of ` 6.33 lacs – ` 1 lac - ` 8.33 lacs to
be drawn either from Mold – Tek Packaging Limited or Mold – Tek Technologies
Limited and the balance from Mold – Tek Technologies Limited
In addition to salary, he shall be entitled to perquisites and allowances like
accommodation (furnished or otherwise) or house rent allowances in lieu thereof,
reimbursement of expenses or allowance for gas, electricity, water, furnishing
etc., medical reimbursement, leave travel allowances, club fee, and such other
perquisites and allowances as per our Company‟s rule.
The total cost of aforesaid perquisites, allowances and other benefits including
rent or house rent allowance shall be restricted to 50 % of salary per month.
In addition to salary and perquisites, he shall be entitled to commission at the rate
123
Preliminary Placement Document
Other Benefits
of 1.50% of the net profits of our Company as per the provisions of the
Companies Act.
Provident and Superannuation Fund: our Company‟s contribution to the provident
fund, superannuation fund or annuity fund to the extent these either singly or put
together are not taxable under the Income Tax Act, 1961. The said contribution
will not be included in the computation of the ceiling on remuneration.
Gratuity: gratuity payable shall not exceed one half month‟s salary for each
completed year of services and will not be included in the computation of the
ceiling on remuneration.
Leave Encashment: encashment of leave at the end of the tenure in accordance
with the rules of our Company.
Provision of Car and Telephone: He shall be entitled to a motor car for use on
Company‟s business and telephone at residence. However, use of car for private
purpose and personal long distance calls on telephone shall be billed by our
Company to him.
He shall be entitled to reimbursement of entertainment expenses, travelling,
boarding and lodging expenses actually and properly incurred for the business of
our Company.
He shall not be eligible for any sitting fees of our Company‟s board/committee
meetings.
The remuneration of Janumahanti Lakshmana Rao was approved by the Ministry of Corporate Affairs,
Government of India vide its letter dated March 18, 2014. As per the letter, Janumahanti Lakshmana Rao to be
received a total remuneration of ` 1,10,04,523 including commission from Mold-tek Technologies Limited as
well as our Company as per resolution passed by the members of the two companies for the period October 01,
2014 to September 30, 2015 and ` 1,26,55,201 including commission from Mold-tek Technologies Limited as
well as our Company as per the resolution passed by the members of the two companies for the period October
01, 2015 to September 30, 2016 which may be drawn by him either from our Company or from Mold-tek
Technologies Limited or partly from our Company or remaining from Mold-tek Technologies Limited.
Adivishnu Subramanyam – Deputy Managing Director
Adivishnu Subramanyam was re-appointed as the Deputy Managing Director for a period of five years with effect
from April 1, 2014 pursuant to a resolution passed by the shareholders at the annual general meeting held on
September 30, 2013.
The details of remuneration which is being paid to Adivishnu Subramanyam are as under:
Category
Basic Salary
Perquisites and Allowances
Particulars
Salary of ` 6.05 lacs per month in the scale of ` 6.05 lacs – ` 0.90 lacs - ` 7.85
lacs
In addition to salary, he shall be entitled to perquisites and allowances like
accommodation (furnished or otherwise) or house rent allowances in lieu thereof,
reimbursement of expenses or allowance for gas, electricity, water, furnishing
etc., medical reimbursement, leave travel allowances, club fee, and such other
perquisites and allowances as per our Company‟s rule.
The total cost of aforesaid perquisites, allowances and other benefits including
124
Preliminary Placement Document
Commission
Other Benefits
rent or house rent allowance shall be restricted to 50 % of salary per month.
In addition to salary and perquisites, he shall be entitled to commission at the rate
of 1% of the net profits of our Company as per the provisions of the Companies
Act.
Provident and Superannuation Fund: our Company‟s contribution to the provident
fund, superannuation fund or annuity fund to the extent these either singly or put
together are not taxable under the Income Tax Act, 1961. The said contribution
will not be included in the computation of the ceiling on remuneration.
Gratuity: gratuity payable shall not exceed one half month‟s salary for each
completed year of services and will not be included in the computation of the
ceiling on remuneration.
Leave Encashment: encashment of leave at the end of the tenure in accordance
with the rules of our Company.
Provision of Car and Telephone: He shall be entitled to a motor car for use on
Company‟s business and telephone at residence. However, use of car for private
purpose and personal long distance calls on telephone shall be billed by our
Company to him.
He shall be entitled to reimbursement of entertainment expenses, travelling,
boarding and lodging expenses actually and properly incurred for the business of
our Company.
He shall not be eligible for any sitting fees of our Company‟s board/committee
meetings.
The remuneration of Adivishnu Subramanyam was approved by the Ministry of Corporate Affairs, Government
of India vide its letter dated March 31, 2014. As per the letter, Adivishnu Subramanyam to be received a total
remuneration of ` 1,10,99,743 including commission from Mold-tek Technologies Limited as well as our
Company as per resolution passed by the members of the two companies for the period October 01, 2014 to
September 30, 2015 and ` 1,27,64,704/- including commission from Mold-tek Technologies Limited as well as
our Company as per the resolution passed by the members of the two companies for the period October 01, 2015
to September 30, 2016 which may be drawn by him either from our Company or from Mold-tek Technologies
Limited or partly from our Company or remaining from Mold-tek Technologies Limited.
Pattabhi Venkateswara Rao – Deputy Managing Director
Pattabhi Venkateswara Rao was re-appointed as the Deputy Managing Director for a period of five years with
effect from April 1, 2014 pursuant to a resolution passed by the shareholders at the annual general meeting held
on September 30, 2013. Further remuneration of Pattabhi Venkateswara Rao was revised at the Annual General
Meeting held on September 30, 2014, with effect from September 1, 2014, on the following terms and conditions
subject to the approval of the Central Government:
The details of remuneration which is being paid to Pattabhi Venkateswara Rao are as under:
Category
Basic Salary
Perquisites and Allowances
Particulars
Salary of ` 4.10 lacs per month for the period from September 1, 2014 to March
31, 2015 and ` 4.50 lacs per month for the period from April 1, 2015 to March 31,
2016.
In addition to salary, he shall be entitled to perquisites and allowances like
125
Preliminary Placement Document
accommodation (furnished or otherwise) or house rent allowances in lieu thereof,
reimbursement of expenses or allowance for gas, electricity, water, furnishing
etc., medical reimbursement, leave travel allowances, club fee, and such other
perquisites and allowances as per our Company‟s rule.
Commission
Other Benefits
The total cost of aforesaid perquisites, allowances and other benefits including
rent or house rent allowance shall be restricted to 50 % of salary per month.
In addition to salary and perquisites, he shall be entitled to commission at the rate
of 0.5 % of the net profits of our Company as per the provisions of the Companies
Act.
Provident and Superannuation Fund: our Company‟s contribution to the provident
fund, superannuation fund or annuity fund to the extent these either singly or put
together are not taxable under the Income Tax Act, 1961. The said contribution
will not be included in the computation of the ceiling on remuneration.
Gratuity: gratuity payable shall not exceed one half month‟s salary for each
completed year of services and will not be included in the computation of the
ceiling on remuneration.
Leave Encashment: encashment of leave at the end of the tenure in accordance
with the rules of our Company.
Provision of Car and Telephone: He shall be entitled to a motor car for use on
Company‟s business and telephone at residence. However, use of car for private
purpose and personal long distance calls on telephone shall be billed by our
Company to him.
He shall be entitled to reimbursement of entertainment expenses, travelling,
boarding and lodging expenses actually and properly incurred for the business of
our Company.
He shall not be eligible for any sitting fees of our Company‟s board/committee
meetings.
Remuneration of our Directors
The remuneration expended by our Company to its Executive Directors in the Fiscal 2015 (For the period April 1,
2014 up to December 31, 2014), Fiscal 2014, Fiscal 2013 and Fiscal 2012 is stated below:
(` in Lacs)
Financial Year
Total Remuneration
Fiscal Year 2014 (April 1, 2014 till December 31, 2014 )
Janumahanti Lakshmana Rao
30.17
Adivishnu Subramanyam
85.22
Pattabhi Venkateswara Rao
58.33
Fiscal 2014
Janumahanti Lakshmana Rao
34.38
Adivishnu Subramanyam
93.29
Pattabhi Venkateswara Rao
76.34
Fiscal 2013
Janumahanti Lakshmana Rao
33.00
Adivishnu Subramanyam
83.93
Pattabhi Venkateswara Rao
52.17
126
Preliminary Placement Document
Financial Year
Fiscal 2012
Janumahanti Lakshmana Rao
Adivishnu Subramanyam
Pattabhi Venkateswara Rao
Total Remuneration
16.93
94.67
63.66
Non-Executive Directors’ Sitting Fees
The following table sets forth all sitting fees expended by our Company to the current Non-Executive Directors
for the period April 1, 2014 up to December 31, 2014, the Fiscal 2014, Fiscal 2013 and Fiscal 2012:
(` in Lacs)
Name of Director
For the 9 months’
Fiscal 2014
Fiscal 2013
Fiscal 2012
period
ended
December
31,
2014
Janumahanti Mytraeyi
Nil
0.10
0.10
0.45
Talupunuri Venkateswara
0.30
0.20
0.05
0.20
Rao
Pillarisetty Shyam Sunder
0.45
0.40
0.40
0.25
Vasu Prakash Chitturi
0.10
Nil
0.05
Nil
Nadimpalli
Venkata
0.05
0.15
0.15
0.05
Nelladri Varma
Service Tax on Sitting fees
0.08
Nil
Nil
Nil
Total
98.03
0.85
0.75
0.95
The criteria for making payment of remuneration to the Non-executive Directors are as follows:
a.
As on March 31, 2014 an amount of ` 0.85 lacs per meeting was paid towards sitting fee for attending meetings of
the Board to the non-executive Directors in accordance with Rule 10B of the Companies (Central Government‟s)
General Rules and Forms, 1956, as amended.
Corporate Governance
Our Company has been complying with the requirements of applicable law, including the Listing Agreement and
the SEBI guidelines, in respect of corporate governance including constitution of the Board of Directors and
committees thereof.
The Board of Directors presently consists of eight directors. In compliance with the requirements of the Equity
Listing Agreements and the Companies Act, the Board of Directors includes four independent Directors. The
corporate governance framework, inter alia, is based on an effective independent Board, separation of the Board‟s
supervisory role from the executive management team and constitution of committees of the Board, as required
under law. The Board of Directors functions either as a full Board or through various committees constituted to
oversee specific operational areas.
Committee of the Board of Directors
The Board of Directors has five committees, which have been constituted and function in accordance with the
relevant provisions of the Companies Act and the Listing Agreement: (i) Audit Committee, (ii) Remuneration
Committee, (iii) Shareholders/ Investors‟ Grievance Committee, (iv) QIP Committee and (v) CSR Committee.
The following table sets forth the details of the members of the aforesaid committees:
127
Preliminary Placement Document
Committee
Audit Committee
Remuneration Committee
Shareholders/
Committee
QIP Committee
CSR Committee
Investors‟
Grievance
Members
Pillarisetty
Shyam Sunder Rao (Chairman), Talupunuri
Venkateswara Rao, Vasu Prakash Chitturi and Dr. Nadimpalli
Venkata Nelladri Varma
Pillarisetty Shyam Sunder Rao (Chairman), Talupunuri
Venkateswara Rao, Vasu Prakash Chitturi and Dr. Nadimpalli
Venkata Nelladri Varma
Pillarisetty Shyam Sunder Rao (Chairman), Talupunuri
Venkateswara Rao, Vasu Prakash Chitturi and Dr. Nadimpalli
Venkata Nelladri Varma
Janumahanti
Lakshmana
Rao
(Chairman),
Adivishnu
Subramanyam and Pattabhi Venkateswara Rao.
Janumahanti
Lakshmana
Rao
(Chairman),
Adivishnu
Subramanyam, Pattabhi Venkateswara Rao and Pillarisetty Shyam
Sunder Rao
128
Preliminary Placement Document
ORGANIZATION STRUCTURE
129
Preliminary Placement Document
Key Managerial Personnel
In addition to our Chairman and Managing Director and Deputy Managing Directors, our key managerial
personnel include:
Seshu Kumari Adivishnu, aged 54 years, is the Chief Financial Officer of our Company and is responsible for
managing and supervising overall financial matters of our Company. She holds a bachelor‟s degree in science
from Andhra University, Visakhapatnam. She has over 18 years of experience in financial matters. She has been
associated with our Company since 1996.
Srinivas Madireddy, aged 48 years, is the Chief General Manager – Works of our Company and is responsible
for operation of manufacturing units of our Company. He holds a bachelor‟s degree in mechanical engineering
from Osmania University, Hyderabad. He has over 18 years of work experience. He has been associated with our
Company since 1990 and has been promoted to his current designation in 2014.
Alluri Venkatipathi Raju, aged 54 years, is the Deputy General Manager – Plant of our Company and is
responsible for operation of Unit I of our Company. He holds a bachelor‟s degree in Commerce from Dantuluri
Narayana Raju College, Bhimavaram, Andhra Pradesh. He has over 10 years of work experience. He has been
associated with our Company since 1998 and has been promoted to his current designation in 2011.
Srinivas Volaity, aged 49 years, is the General Manager – New Projects of our Company and is responsible for
handling all techno commercial aspects of our Company. He holds a bachelor‟s degree in science from Osmania
University, Hyderabad. He also holds a post graduate diploma in marketing management from Osmania
University, Hyderabad. He has over 20 years of work experience. He has been associated with our Company since
2011.
Tata Sai baba, aged 54 years, is the General Manager (Operations) of our Company and is responsible for the
operations of our Daman unit. He holds a bachelor‟s degree in arts from Andhra University, Visakhapatnam and
has been conferred with the award of annual associate membership of the Institute of Marketing Management,
New Delhi. He has over 20 years of work experience. He has been associated with our Company since October 5,
1999 and has been promoted to his current designation in 2008.
Mohan Padmanabhan, aged 48 years, is the Senior General Manager – Marketing and Coordination of our
Company and is responsible for the marketing activities of our Company. He holds a bachelors‟ degree in science
(chemistry) from the University of Madras. He has over 10 years of work experience. He has been associated with
our Company since 2004 and has been promoted to his current designation in 2014.
Rajeshwar Rao Musuku, aged 45 years, is the General Manager – Commercial and Plant Operations of our
Company and is responsible for overseeing the production processing operations and Commercial Operations and
Planning at our units. He holds a bachelor‟s degree in mechanical engineering from Nagpur University. He has
over 15 years of work experience. He has been associated with our Company since 1996 and has been promoted
to his current designation in 2012.
V. Poornachandra, aged 35 years, is the Senior Manager – Tool Room of our Company and is responsible for
managing tool room in our Company. He holds a diploma in mechanical engineering from the State Board of
Technical Education and Training, Hyderabad. He also holds a post – diploma course in tool design from the
Central Institute of Tool Design, Hyderabad. He has over 10 years of work experience. He has been associated
with our Company since l999 and has been promoted to current designation in 2011.
Janumahanti Navya Mythri, aged 26 years, is the Assistant Finance Controller of our Company and is
responsible for supervising accounts and financial matters of our Company. She is a qualified Chartered
130
Preliminary Placement Document
Accountant and is a member of the Institute of Chartered Accountants of India. She has over 2 years of work
experience. She has been associated with our Company since 2011.
Tangellapally Manoj Babu, aged 34 years, is the Manager – Quality Assurance of our Company and is
responsible for overseeing the quality assurance requirements at Unit I of our Company. He holds a master‟s
degree in science (Micro Biology) from Swami Ramanand Teerth Marathwada University, Nanded and a
bachelor‟s degree in science from Osmania University, Hyderabad. He has over 5 years of work experience. He
has been associated with our Company since 2014.
Priyanka Rajora, aged 22 years, is the Company Secretary and Compliance Officer of our Company and is
responsible for handling secretarial matters in our Company. She holds a bachelor‟s degree in commerce from
Osmania University, Hyderabad. She is a qualified company secretary and is a member of the Institute of
Company Secretaries of India. She has been associated with our Company since 2015.
Relationship with Directors and other Key Managerial Personnel
Janumahanti Navya Mythri is the daughter of Janumahanti Lakshmana Rao, granddaughter of Janumahanti
Mytraeyi and niece of Adivishnu Seshu Kumari. Further, Adivishnu Seshu Kumari is the sister of Janumahanti
Lakshmana Rao and wife of Adivishnu Subramanyam. Except as mentioned above, none of our key managerial
personnel are related to the directors or with each other.
Interests of Key Managerial Personnel
Except for Adivishnu Seshu Kumari who is in receipt of rent from our Company with respect to the agreement
our Company has entered into with respect to properties our Company is currently using and as stated in
“Financial Statements – Related Party Transactions” beginning on page 199, and to the extent of remuneration
or benefits to which they are entitled as per the terms of their appointment and reimbursement of expenses
incurred by them in the ordinary course of business, our Company‟s key managerial personnel do not have any
other interest in our Company.
Shareholding of Key Managerial Personnel
Following are the details of Equity Shares held by our key managerial personnel as on December 31, 2014:
Name of the Key
Managerial
Personnel
Seshu Kumari
Adivishnu
Srinivas Maidireddy
Alluri Venkatipathi
Raju
Srinivas Volaity
Tata Sai Baba
Mohan Padmanabhan
Rajeshwar Rao
Musuku
V. Poorna Chandra
Janumahanti Navya
Mythri
Tangellapally Manoj
Babu
Number of Equity
Shares held as on
December 31, 2014
Total ESOPs
granted
3,88,591
Per cent of total
number of
outstanding
Equity Shares
3.43
Nil
ESOPs
outstanding as on
December 31,
2014
Nil
2,18,518
17,088
1.93
0.15
Nil
6000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
10,000
9,000
5,000
Nil
Nil
Nil
Nil
3,266
71,862
0.03
0.63
6,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
131
Preliminary Placement Document
Priyanka Rajora
Nil
Nil
Nil
Nil
Payment or Benefit to Directors and Key Managerial Personnel of our Company
The perquisites and allowances that may be payable to the Directors are in accordance with the Companies Act,
2013. The perquisites and allowances that may be payable to the key managerial personnel of our Company are in
accordance with our Company‟s human resources policies. Except as disclosed above, our Directors and key
managerial personnel are not entitled to any other non-salary related amount or benefit.
Related Party Transactions
Related party transactions entered by our Company during the last three Financial Years are determined in
accordance with Accounting Standard 18 issued by the ICAI. For further details, see the section “Financial
Statements – Related Party Transactions” beginning on page 199.
Employees’ Stock Option Plan
Pursuant to a resolution passed by the Board of Directors of our Company in its meeting held on January 12, 2010
and shareholders of our Company in its Extra-Ordinary General Meeting held on February 9, 2010, our Company
adopted the “MTPL Employees Stock Option Scheme” (“ESOP Scheme”). The ESOP Scheme have been
designed by our Company to create participative environment contributing to the growth of employees as part of
our Company‟s growth plans, rewarding the eligible employees for their contribution to the success of our
Company and to attract and retain talented employees. As of December 31, 2014, our Company has granted
2,02,000 options convertible into 2,02,000 Equity Shares under ESOP Scheme, which represents 1.78 % of the
pre-Issue paid-up equity capital of our Company, of which 13,750 have lapsed, 1,81,400 have been exercised and
6,850 are outstanding. For further details please refer to the chapter titled „Capital Structure‟ beginning on page
57.
Loans to Directors and Key Managerial Personnel
As on the date of this Preliminary Placement Document, there are no amounts which are due to our Company,
from any of its Directors or key managerial personnel in the nature of loans and advances. Our Company has not
given any guarantees in favour of any Director or any key managerial personnel.
Policy on disclosure and internal procedure for prevention of insider trading
Regulation 12(1) of the SEBI Prohibition of Insider Trading Regulation applies to our Company and its
employees and requires our Company to implement a code of internal procedures and conduct for the prevention
of insider trading. Our Company has implemented a code of conduct for prevention of insider trading in
accordance with the SEBI Prohibition of Insider Trading Regulations.
Other Confirmations
Except as stated above in “Interest of our Directors” and “Interests of Key Managerial Personnel”, none of our
Directors or any Key Managerial Personnel of our Company has any financial or other material interest in this
Issue and there is no effect of such interest in so far as it is different from the interests of other persons.
132
Preliminary Placement Document
PRINCIPAL SHAREHOLDERS
The table below represents the shareholding pattern of our Company in accordance with clause 35 of the Listing
Agreement, as on December 31, 2014:
Category
Shareholder
of
(A) Shareholding of
Promoter
and
Promoter Group
Indian
a. Individual/Hindu
Undivided Family
b.
Central
Government/ State
Governments
c. Bodies Corporate
d.
Financial
Institutions / Banks
e.
Any
other
(Specify)
Sub Total A(1)
Foreign
a. Individual (Non
resident Individuals /
Foreign individuals)
b. Bodies Corporate
c. Institutions
d. Qualified Foreign
Investor
e.
Any
other
(Specify)
Sub Total A(2)
Total shareholding
of Promoter and
Promoter
Group
(A)= (A)(1) +(A)(2)
(B)
Public
Shareholding
(I) Institutions
a. Mutual Funds/
UTI
b.
Financial
No.
of
Shareholders
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of Total No.
of Shares
Shares pledged or
otherwise
encumbered
As a %
of
(A+B)
As a % of
(A+B+C)
Number
of shares
As a
% of
Total
No. of
Shares
34
48,43,312
48,43,312
42.70
42.70
0
0.00
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0
0
0.00
0.00
0
0
0
0.00
0.00
0
0.00
0
34
0
48,43,312
0
48,43,312
0.00
42.70
0.00
42.70
0
0
0.00
0.00
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0
0
0
0.00
0.00
0.00
0
0
0
0.00
0.00
0
0.00
0
0
0
0.00
0.00
0
0.00
34
48,43,312
48,43,312
42.70
42.70
0
0.00
0
1
0
5,760
0
5,760
0.00
0.05
0.00
0.05
0
0.00
133
Preliminary Placement Document
Category
Shareholder
of
Institutions / Banks
c.
Central
Government/ State
Governments
d. Venture capital
Funds
e.
Insurance
Companies
f.
Foreign
Institutional
Investors
g. Foreign Venture
Capital Investors
h. Qualified Foreign
Investor
i.
Any
other
(Specify) - Foreign
Banks
Sub Total B(1)
B
(2)
NonInstitutions
a. Bodies Corporate
b. Individuals
(i)
Individual
Shareholders holding
Nominal
Share
Capital upto `1 Lac
(ii)
Individual
Shareholders holding
Nominal
Share
Capital in excess of
`1 Lac
c. Any other
(i) NRI
(ii) Clearing Member
Sub Total B(2)
Total
Public
Shareholding (B)=
(B)(1)+(B)(2)
TOTAL (A) + (B)
No.
of
Shareholders
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of Total No.
of Shares
Shares pledged or
otherwise
encumbered
As a %
of
(A+B)
As a % of
(A+B+C)
Number
of shares
As a
% of
Total
No. of
Shares
0
0
0
0.00
0.00
0
0
0
0.00
0.00
0
0
0
0.00
0.00
1
3,64,841
3,64,841
3.22
3.22
0
0
0
0.00
0.00
0
0
0
0.00
0.00
0
2
0
3,70,601
0
3,70,601
0.00
3.27
0.00
3.27
0
0.00
241
13,95,624
13,89,094
12.30
12.30
0
0.00
9,441
28,80,061
26,79,816
25.39
25.39
0
0.00
54
16,76,973
15,51,973
14.79
14.79
0
0.00
166
50
9,952
1,51,329
24,276
61,28,263
1,51,329
24,276
57,96,488
1.33
0.21
54.03
1.33
0.21
54.03
0
0
0
0.00
0.00
0.00
9,954
9,988
64,98,864
1,13,42,176
61,67,089
1,10,10,401
57.30
100.00
57.30
100.00
0
-
0.00
-
134
Preliminary Placement Document
Category
Shareholder
of
No.
of
Shareholders
(C) Shares held by
Custodians
and
against
which
Depository Receipts
have been issued
(1) Promoter and
Promoter Group
(2) Public
Sub Total C
Grand Total
(A) + (B) + ( C)
1.
2.
3.
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of Total No.
of Shares
Shares pledged or
otherwise
encumbered
As a %
of
(A+B)
As a % of
(A+B+C)
Number
of shares
As a
% of
Total
No. of
Shares
-
-
0
0
0
0
0
-
0.00
0.00
0
9,988
1,13,42,176
1,10,10,401
100.00
100.00
Notes: For determining public shareholding for the purpose of clause 40A.
For definition of Promoter and Promoter Group, refer to clause 40A.
Public Shareholding
The following table contains information as on December 31, 2014 concerning persons belonging to the Promoter
and Promoter Group category:
Sr. No.
(I)
Name
of
the
Shareholder (II)
Details of Shares held
No. of Shares
held
(III)
1.
2.
3.
4.
5.
6.
J Lakshman Rao
Adivishnu
Subramanyam
Janumahanti Sudha
rani
A. Seshu kumari
N Padmavathi
Madireddi Srinivas
Encumbered shares (*)
As a %
(A+B+C)
(IV)
12,62,262
10,14,562
of
Number
of
shares
(V)
As a
%
(VI) =
(V)/
(III)
*100
As a % of
Grand
Total
(A+B+C)
11.13
8.95
0
0
0.00
0.00
0.00
5.82
0
0.00
Total
Shares
(including
underlying
shares
assuming
full
conversion
of warrants
and
Convertible
securities)
as a % of
diluted
share
capital
11.13
8.95
0.00
6,60,019
3,88,591
2,62,600
2,18,518
3.43
2.32
1.93
135
0
0
0
0.00
0.00
0.00
5.82
0.00
0.00
0.00
0.00
3.43
2.32
1.93
Preliminary Placement Document
Sr. No.
(I)
Name
of
the
Shareholder (II)
Details of Shares held
No. of Shares
held
(III)
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
Pattabhi Sai Lakshmi
Adivishnu Lakshmi
Mythri
Pattabhi
Venkateswara Rao
Adhivishnu
Durga
Sundeep
J Bhujanga Rao
Janumahanti Navya
Mythri
Janumahanti
Rana
Pratap
Sathya
Sravya
Janumahanti
N V Prasad
Golukonda Satyavati
Sarada Janumanti
J Mytraeyie
Swetha
Mythri
Janumahanti
K Veeranna
Kotteshwara
Rao
Madireddy
G Prasanna Kumar
Madireddi Hyma
J Pratap Kumar
Seshupriya Vemula
K V Rama Rao
P Appa Rao
TOTAL
Encumbered shares (*)
As a %
(A+B+C)
(IV)
1,26,831
of
Number
of
shares
(V)
As a
%
(VI) =
(V)/
(III)
*100
As a % of
Grand
Total
(A+B+C)
1.12
0.85
0
0
0.00
0.00
0.00
1.04
0
0.00
96,000
Total
Shares
(including
underlying
shares
assuming
full
conversion
of warrants
and
Convertible
securities)
as a % of
diluted
share
capital
1.12
0.85
0.00
1,17,948
1.04
0.00
1.04
1,18,231
1,00,210
0.88
0.63
0
0
0
0.00
0.00
0.00
71,862
1.04
0.00
0.00
0.88
0.63
0.00
0.64
0
0.00
72,947
0.64
0.00
0.64
72,034
45,265
36,433
29,640
29,520
22,017
18,394
15,120
14,360
13,845
13,830
11,086
11,041
146
48,43,312
0
0.00
0.40
0.32
0.26
0.26
0.19
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.16
0.13
0
0
0.00
0.00
0.13
0.12
0.12
0.10
0.10
0.00
42.70
0
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.64
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.40
0.32
0.26
0.26
0.19
0.16
0.13
0.13
0.12
0.12
0.10
0.10
0.00
42.70
(*) The term “encumbrance” has the same meaning as assigned to it in regulation 28(3) of the SAST Regulations,
2011.
The following table contains information as on December 31, 2014 concerning each person in the “Public”
category, who holds more than 1% or more of the Total number of Shares:
136
Preliminary Placement Document
Sr.
No.
1.
Name of the
Shareholder
Passage
To
India Master
Fund Limited
UNO Metals
Limited
AKG Finvest
Limited
Dolly Khanna
Mold-Tek
Packaging
LimitedUnclaimed
Suspense
Account
Dinero Wealth
Advisors
Private
Limited
Dr.
Kotagiri
Venkata Appa
Rao
Total:
2.
3.
4.
5.
6.
7.
No.
of
Shares
held
Shares
as % of
Total
No. of
Shares
3,64,841
2,80,000
Details of warrants
Number
of
warrants
held
Details of
securities
Number of
convertible
securities
held
convertible
0
0
%
w.r.t
total
number of
convertible
securities
of
the
same class
Total
shares
(including underlying
shares assuming full
conversion
of
warrants
and
convertible
securities) as a % of
diluted share capital
0
As a %
total
number
of
warrants
of
the
same
class
0
0
0
0
0
3.22
2.47
0
0
0
0
2.47
0
0
0
0
0
0
0
0
1.15
1.04
0
0
0
0
1.56
0
0
0
0
1.03
0
0
0
0
12.94
3.22
2.47
2,80,000
1,30,780
2.47
1.15
1,17,466
1.04
1,76,872
1,17,172
14,67,131
1.56
1.03
12.94
The following table contains information as on December 31, 2014 concerning persons (together with PAC)
belonging to the category “Public” and holding more than 5% of the total number of Equity Shares:
Sr.
No.
1.
Name of the
Shareholder
NIL
No. of
Shares
held
Shares
as % of
Total
No. of
Shares
0
0
Details of warrants
Number
of
warrants
held
0
As a %
total
number
of
warrants
of
the
same
class
0
The table below represents the detail of locked in shares:
137
Details of
securities
Number of
convertible
securities
held
convertible
0
0
%
w.r.t
total
number of
convertible
securities
of
the
same class
Total
shares
(including underlying
shares assuming full
conversion
of
warrants
and
convertible securities)
as a % of diluted
share capital
0
Preliminary Placement Document
Sr. No.
Name of the shareholder
Number of
shares
Locked-in shares as a (%) percentage of total
number of shares
1.
2.
J Lakshman Rao
Adivishnu Subramanyam
N Padmavati
M Srinivas
P Venkateswara Rao
Total
5,00,000
4.41
4,00,000
60,000
75,000
50,000
10,85,000
3.53
0.53
0.66
0.44
9.57
3..
4.
5.
Details of Depository Receipts (DRs) as on December 31, 2014
Sr.
No.
1.
Type of Outstanding DR
(ADRs, GDRs, SDRs, etc.)
No. of
Outstanding DRs
No. of Shares
Underlying
Outstanding DRs
Nil
Shares Underlying Outstanding
DRs as % of Total No. of Shares
0.00
0.00
Total
Details of holding of Depository Receipts (DRs), where underlying shares held by 'promoter / promoter group' are
in excess of 1% of the total number of shares as on December 31, 2014.
Sr.
No.
1.
Name of the
DR Holder
Nil
Type of Outstanding DR
(ADRs, GDRs, SDRs,
etc.)
-
No. of Shares Underlying
Outstanding DRs
Shares Underlying Outstanding
DRs as a % of Total No. of Shares
-
0.00
0.00
Total
138
Preliminary Placement Document
ISSUE PROCEDURE
The following is a summary intended to present a general outline of the procedure relating to the application,
bidding, payment, Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure
followed in the Issue may differ from the one mentioned below, and investors are presumed to have apprised
themselves of the same from our Company or the BRLMs. Investors that apply in this Issue will be required to
confirm and will be deemed to have represented to our Company, the BRLMs and their respective directors,
officers, agents, advisors, affiliates and representatives that they are eligible under all applicable laws, rules,
regulations, guidelines and approvals to acquire Equity Shares and will not offer, sell, pledge or transfer the
Equity Shares to any person who is not eligible under applicable laws, rules, regulations, guidelines and
approvals to acquire Equity Shares. Our Company and the BRLMs and their respective directors, officers, agents,
advisors, affiliates and representatives accept no responsibility or liability for advising any investor on whether
such investor is eligible to acquire Equity Shares. Investor is advised to inform themselves of any restrictions or
limitations that may be applicable to them. See the sections ―Distribution and Solicitation Restrictions‖ and
―Transfer Restrictions‖ beginning on pages 152 and 156, respectively.
Qualified Institutions Placement
The Issue is being made to QIBs in reliance upon Chapter VIII of the SEBI ICDR Regulations and Private
Placement Provisions under Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014, through the mechanism of a QIP wherein, our Company, a
listed company in India may issue equity shares to QIBs provided that:

the shareholders of the issuer have passed a special resolution approving such QIP. Such special resolution must
specify (a) that the allotment of securities is proposed to be made pursuant to the QIP; and (b) the Relevant Date;

equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, are listed on a
recognised stock exchange in India having nation-wide trading terminals for a period of at least one year prior to
the date of issuance of notice to its shareholders for convening the meeting to pass the above-mentioned special
resolution;

the aggregate of the proposed issue and all previous QIPs made by the issuer in the same financial year does not
exceed five times the net worth (as defined in the SEBI ICDR Regulations) of the issuer as per the audited
balance sheet of the previous financial year;

the issuer shall be in compliance with the minimum public shareholding requirements set out in the SCRR;

the issuer shall have completed allotments with respect to any prior offer or invitation made by the issuer or shall
have withdrawn or abandoned any prior invitation or offer made by the issuer;

the issuer shall offer to each Allottee at least such number of the securities in the issue which would aggregate to
at least ` 20,000 calculated at the face value of the securities;

the offer must be made through a private placement offer letter and an application form serially numbered and
addressed specifically to the QIB to whom the offer is made and is sent within 30 days of recording the names of
such QIBs;

the offering of securities by issue of public advertisements or utilisation of any media, marketing or distribution
channels or agents to inform the public about the issue is prohibited
139
Preliminary Placement Document
At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or
any part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs.
Bidders are not allowed to withdraw their Bids after the Issue Closing Date.
Additionally, there is a minimum pricing requirement under the SEBI ICDR Regulations. The Floor Price shall
not be less than the average of the weekly high and low of the closing prices of the Equity Shares of the same
class of the Equity Shares of the Issuer quoted on the stock exchange during the two weeks preceding the
Relevant Date. However, a discount of up to 5% of the Floor Price is permitted in accordance with the provisions
of the SEBI ICDR Regulations.
The “Relevant Date” referred to above, for Floor Price, will be the date of the meeting in which the Board of
Directors or any committee duly authorised by the Board of Directors or QIP Committee decides to open the Issue
and “stock exchange” means any of the recognised stock exchange in India on which the equity shares of the
issuer of the same class are listed and on which the highest trading volume in such equity shares has been
recorded during the two weeks immediately preceding the Relevant Date.
Our Company has applied for and received the in-principle approval of the Stock Exchange under Clause 24 (a)
of its Listing Agreements for the listing of the Equity Shares on the Stock Exchange. Our Company has also
delivered a copy of this Preliminary Placement Document to the Stock Exchange.
Our Company shall also make the requisite filings with the RoC and SEBI within the stipulated period as required
under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014.
The Issue has been authorized by (i) the Board pursuant to a resolution passed on November 19, 2014 and (ii) the
shareholders, pursuant to a resolution passed at the EGM held on December 24, 2014.
The Equity Shares will be Allotted within 12 months from the date of the shareholders‟ resolution approving the
QIP and within 60 days from the date of receipt of subscription money from the successful Bidders. For details of
refund of application money, please see the section ―Issue Procedure – Pricing and Allocation – Designated
Date and Allotment of Equity Shares‖ beginning on page 147.
The Equity Shares issued pursuant to the QIP must be issued on the basis of this Preliminary Placement
Document and the Placement Document that shall contain all material information including the information
specified in Schedule XVIII of the SEBI ICDR Regulations and the requirements prescribed under Form PAS-4
of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Pursuant to the provisions of Section 42
of the Companies Act, 2013 and the rules made thereunder for a transaction that is not a public offering (i.e. a
private placement), an invitation or offer may be made to such number of persons not exceeding two hundred,
excluding QIBs and employees of a company. Hence, there is no restriction on the number of QIBs that may
apply in this Issue. The Preliminary Placement Document and the Placement Document are private documents
provided to only select investors through serially numbered copies and are required to be placed on the website of
the concerned Stock Exchange and of our Company with a disclaimer to the effect that it is in connection with an
issue to QIBs and no offer is being made to the public or to any other category of investors.
The minimum number of allottees for each QIP shall not be less than:
two, where the issue size is less than or equal to ` 25,000 Lacs; and
five, where the issue size is greater than ` 25,000 Lacs.
No single allottee shall be allotted more than 50 % of the issue size.
140
Preliminary Placement Document
QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee. For
details of what constitutes “same group” or “common control”, please see the section ―Issue Procedure—
Application Process—Application Form‖ beginning on page 144.
Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment
except on the floor of a recognised stock exchange in India. Allotments made to FVCIs, VCFs and AIFs in the
Issue are subject to the rules and regulations that are applicable to them, including in relation to lock-in
requirements.
The Equity Shares offered hereby have not been and will not be registered under the U.S. Securities Act and may
not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws.
Accordingly, the Equity Shares are being offered and sold outside the United States in reliance on Regulation S.
For a description of certain restrictions on transfer of the Equity Shares, please see “Transfer Restrictions”.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any
such jurisdiction, except in compliance with the applicable laws of such jurisdiction.
Issue Procedure
1.
Our Company and BRLMs shall circulate serially numbered copies of this Preliminary Placement Document and
the serially numbered Application Form, either in electronic or physical form, to the QIBs and the Application
Form will be specifically addressed to such QIBs. In terms of Section 42(7) of the Companies Act, 2013, our
Company shall maintain complete records of the QIBs to whom the Preliminary Placement Document and the
serially numbered Application Form have been dispatched. Our Company will make the requisite filings with the
RoC and SEBI within the stipulated time period as required under the Companies Act, 2013 and the Companies
(Prospectus and Allotment of Securities) Rules, 2014.
2.
The list of QIBs to whom the Bid-cum-Application Form is delivered shall be determined by our Company in
consultation with the BRLMs. Unless a serially numbered Preliminary Placement Document along with the
serially numbered Application Form is addressed to a particular QIB, no invitation to subscribe shall be deemed
to have been made to such QIB. Even if such documentation were to come into the possession of any person other
than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person and
any application that does not comply with this requirement shall be treated as invalid. Our Company shall
intimate the Bid/Issue Opening Date to the Stock Exchange.
3.
QIBs may submit an Application Form, including any revisions thereof, during the Bidding Period to the BRLMs.
4.
Bidders shall submit Bids for, and our Company shall issue and allot to each successful Allottee at least such
number of Equity Shares in the Issue which would aggregate to ` 20,000 calculated at the face value of the Equity
Shares.
5.
Bidders will be required to indicate the following in the Application Form:

name of the QIB to whom Equity Shares are to be Allotted;

number of Equity Shares Bid for;

price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate that
they are agreeable to submit a Bid at “Cut-off Price”; which shall be any price as may be determined by our
Company in consultation with the BRLMs at or above the Floor Price or the Floor Price net of such discount as
approved in accordance with SEBI ICDR Regulations;
141
Preliminary Placement Document

details of the depository account to which the Equity Shares should be credited; and

a representation that it is outside the United States, and it has agreed to certain other representations set forth in
the Application Form.
Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign
individual will be considered as an individual QIB and separate Application Forms would be required
from each such sub-account for submitting Bids. FIIs or sub-accounts of FIIs are required to indicate SEBI
FII/ sub-account registration number in the Application Form.
6.
Once a duly completed Application Form (including the revision of bids) is submitted by a QIB, such Application
Form constitutes an irrevocable offer and cannot be withdrawn after the Issue Closing Date. The Issue Closing
Date shall be notified to the Stock Exchange and the QIBs shall be deemed to have been given notice of such date
after receipt of the Application Form.
7.
The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names
of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in
respect of each scheme of the Mutual Fund registered with SEBI. Upon receipt of the Application Form, after the
Issue Closing Date, our Company shall determine the final terms, including the Issue Price of the Equity Shares to
be issued pursuant to the Issue in consultation with the BRLMs. Upon determination of the final terms of the
Equity Shares, the BRLMs will send the serially numbered CAN along with the Placement Document to the QIBs
who have been Allocated the Equity Shares. The dispatch of a CAN shall be deemed a valid, binding and
irrevocable contract for the QIB to pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The
CAN shall contain details such as the number of Equity Shares Allocated to the QIB and payment instructions
including the details of the amounts payable by the QIB for Allotment of the Equity Shares in its name and the
Pay-In Date as applicable to the respective QIB. Please note that the Allocation will be at the absolute discretion
of our Company and will be based on the recommendation of the BRLMs.
8.
Pursuant to receiving a CAN, each successful Bidder shall be required to make the payment of the entire
application monies for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer
to our Company‟s designated bank account by the Pay-In Date as specified in the CAN sent to the respective
successful Bidder. No payment shall be made by successful Bidder in cash. Please note that any payment of
application money for the Equity Shares shall be made from the bank accounts of the relevant QIBs applying for
the Equity Shares. Monies payable on Equity Shares to be held by joint holders shall be paid from the bank
account of the person whose name appears first in the application. Pending Allotment, all monies received for
subscription of the Equity Shares shall be kept by our Company in a separate bank account with a scheduled bank
and shall be utilised only for the purposes permitted under the Companies Act, 2013.
9.
Upon receipt of the application monies from the QIBs, our Company shall Allot Equity Shares as per the details
in the CANs sent to the successful Bidder.
10. After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository participant
accounts of the successful Bidders, our Company shall apply to the Stock Exchange for listing approvals. Our
Company will intimate to the Stock Exchange the details of the Allotment and apply for approval for final listing
of the Equity Shares on the Stock Exchange prior to crediting the Equity Shares into the beneficiary account
maintained with the Depository Participant by the successful Bidder.
11. After receipt of the listing approval of the Stock Exchange, our Company shall credit the Equity Shares Allotted
pursuant to this Issue into the Depository Participant accounts of the respective Allottees.
12. Our Company will then apply for the final trading approval from the Stock Exchange.
142
Preliminary Placement Document
13. The Equity Shares that would have been credited to the beneficiary account with the Depository Participant of the
QIBs shall be eligible for trading on the Stock Exchange only upon the receipt of final trading and listing approval
from the Stock Exchange.
14. Upon receipt of intimation of final trading and listing approval from the Stock Exchange, our Company shall
inform the Allottees of the receipt of such approval. Our Company and the BRLMs shall not be responsible for
any delay or non-receipt of the communication of the final trading and listing permissions from the Stock
Exchange or any loss arising from such delay or non-receipt. Final listing and trading approvals granted by the
Stock Exchange are also placed on its website. QIBs are advised to apprise themselves of the status of the receipt
of the permissions from the Stock Exchange or our Company.
Qualified Institutional Buyers
Only QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations and not otherwise excluded pursuant
to Regulation 86(1)(b) of the SEBI ICDR Regulations are eligible to invest. Currently, under Regulation 2(1)(zd)
of the SEBI ICDR Regulations, a QIB means:















alternate investment funds registered with SEBI
Eligible FPIs;
foreign venture capital investors registered with SEBI;
insurance companies registered with Insurance Regulatory and Development Authority;
insurance funds set up and managed by army, navy or air force of the Union of India;
insurance funds set up and managed by the Department of Posts, India;
multilateral and bilateral development financial institutions;
Mutual Fund;
pension funds with minimum corpus of ` 2,500 Lacs;
provident funds with minimum corpus of ` 2,500 Lacs;
public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the
Companies Act, 2013);
scheduled commercial banks;
state industrial development corporations;
the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the
Government of India published in the Gazette of India; and
venture capital funds registered with SEBI;
FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs are
permitted to participate through the portfolio investment scheme under Schedule 2 and Schedule 2A of
FEMA Regulations respectively, in this Issue. FIIs and Eligible FPIs are permitted to participate in the
Issue subject to compliance with all applicable laws and such that the shareholding of the FPIs and FIIs
does not exceed specified limits as prescribed under applicable laws in this regard. Other eligible nonresident QIBs shall participate in the Issue under Schedule 1 of the FEMA Regulations and shall make the
payment of application money through the foreign currency non-resident (FCNR) account and not through
the special non-resident rupee (SNRR) account.
In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which
means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to exceed
10% of our post-Issue Equity Share capital. Further, in terms of the FEMA Regulations, the total holding by each
FPI shall be below 10% of the total paid-up Equity Share capital of our Company and the total holdings of all
FPIs put together shall not exceed 24% of the paid-up Equity Share capital of our Company. The aggregate limit
of 24% may be increased up to the sectoral cap by way of a resolution passed by the Board of Directors followed
by a special resolution passed by the shareholders of our Company.
143
Preliminary Placement Document
Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which
may be specified by the Government from time to time.
An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of the
block of three years for which fees have been paid as per the SEBI FII Regulations. An FII or sub-account (other
than a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until the
expiry of its registration as a FII or sub-account, or until it obtains a certificate of registration as FPI, whichever is
earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may,
subject to payment of conversion fees under the SEBI FPI Regulations, participate in the Issue. An FII or subaccount shall not be eligible to invest as an FII after registering as an FPI under the SEBI FPI Regulations.
In terms of the FEMA Regulations, for calculating the aggregate holding of FPIs in a company, holding of all
registered FPIs as well as holding of FIIs (being deemed FPIs) shall be included. FPI‟s investing in this Issue
should ensure that they are eligible under the applicable law or regulation to apply in this Issue.
Allotments to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable to
them, including in relation to lock-in requirements.
Under Regulation 86(1)(b) of the SEBI ICDR Regulations, no Allotment shall be made pursuant to the Issue,
either directly or indirectly, to any QIB being, or any person related to, the Promoter. QIBs which have all or any
of the following rights shall be deemed to be persons related to the Promoters:



rights under a shareholders‟ agreement or voting agreement entered into with the Promoter or persons related to
the Promoter;
veto rights; or
a right to appoint any nominee director on the Board.
Provided, however, that a QIB which does not hold any shares in our Company and which has acquired the
aforesaid rights in the capacity of a lender shall not be deemed to be related to the Promoters.
Our Company and the BRLMs are not liable for any amendment or modification or change to applicable
laws or regulations, which may occur after the date of this Preliminary Placement Document. QIBs are
advised to make their independent investigations and satisfy themselves that they are eligible to apply.
QIBs are advised to ensure that any single application from them does not exceed the investment limits or
maximum number of Equity Shares that can be held by them under applicable law or regulation or as
specified in this Preliminary Placement Document. Further, QIBs are required to satisfy themselves that
their Bids would not eventually result in triggering a tender offer under the Takeover Code, and the QIB
shall be solely responsible for compliance with the provisions of the Takeover Code, SEBI (Prohibition of
Insider Trading) Regulations, 1992 and other applicable laws, rules, regulations, guidelines and circulars.
A minimum of 10% of the Equity Shares in the Issue shall be allotted to Mutual Funds. If no Mutual Fund
is agreeable to take up the minimum portion as specified above, such minimum portion (or part thereof not
so taken up) may be allotted to other QIBs.
Note: Affiliates or associates of the BRLMs who are QIBs may participate subject to the Issue in compliance with
applicable laws.
Application Process
Application Form
144
Preliminary Placement Document
QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by our
Company and the BRLMs in either electronic form or by physical delivery for the purpose of making a Bid
(including revision of a Bid) in terms of this Preliminary Placement Document.
By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to the
terms of this Preliminary Placement Document, the QIB will be deemed to have made the following
representations and warranties and the representations, warranties and agreements made under the sections
“Notice to Investors”, “Representations by Investors”, “Distribution and Solicitation Restrictions” and
“Transfer Restrictions” beginning on pages 2, 3, 152, and 156, respectively:
1.
The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI ICDR Regulations and is not
excluded under Regulation 86 of the SEBI ICDR Regulations, has a valid and existing registration under the
applicable laws in India (as applicable) and is eligible to participate in this Issue;
2.
The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or indirectly
and its Application Form does not directly or indirectly represent the Promoter or Promoter Group or persons
related to the Promoter;
3.
The QIB confirms that it has no rights under a shareholders‟ agreement or voting agreement with the Promoter or
persons related to the Promoter, no veto rights or right to appoint any nominee director on the Board other than
those acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoter;
4.
The QIB acknowledges that it has no right to withdraw its Application after the Issue Closing Date;
5.
The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one year from
Allotment, sell such Equity Shares otherwise than on the Stock Exchange;
6.
The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further confirms
that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations
applicable to the QIB;
7.
The QIB confirms that its Bids would not eventually result in triggering a tender offer under the Takeover Code;
8.
The QIB confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to it pursuant
to the Issue, together with other Allottees that belong to the same group or are under common control, shall not
exceed 50 per cent of the Issue Size. For the purposes of this representation:

The expression „belong to the same group‟ shall derive meaning from the concept of „companies under the same
group‟ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

„Control‟ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code;
9.
The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account maintained with
the Depository Participant until such time that the final listing and trading approvals for the Equity Shares are
issued by the Stock Exchange.
QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PERMANENT ACCOUNT
NUMBER, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT
IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION
FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS
EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR
THIS PURPOSE, ELIGIBLE SUB ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN
INDEPENDENT QIB.
145
Preliminary Placement Document
IF SO REQUIRED BY THE BRLMs, THE QIB SUBMITTING A BID, ALONG WITH THE
APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO THE
BRLMs TO EVIDENCE THEIR STATUS AS A "QIB" AS DEFINED HEREINABOVE.
IF SO REQUIRED BY THE BRLMs, COLLECTION BANK(S) OR ANY STATUTORY OR
REGULATORY AUTHORITY IN THIS REGARD, INCLUDING AFTER ISSUE CLOSURE, THE QIB
SUBMITTING A BID AND/OR BEING ALLOTTED EQUITY SHARES IN THE ISSUE, WILL ALSO
HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO FULFILL THE KNOW YOUR CUSTOMER
(KYC) NORMS.
Demographic details such as address and bank account will be obtained from the Depositories as per the
Depository Participant account details given above.
The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the
QIB to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding contract
on the QIB upon issuance of the CAN by our Company in favour of the QIB.
Bids by Mutual Funds
The bids made by the asset management companies or custodian of Mutual Funds shall specifically state the
names of the concerned schemes for which the Bids are made. Each scheme/fund of a mutual fund registered with
SEBI, will have to submit separate Application Form.
Each mutual fund will have to submit separate Application Forms for each of its participating schemes. Such
applications will not be treated as multiple bids provided that the bids clearly indicate the scheme for which the
bid has been made. However, for the purpose of calculating the number of allotters/applicants, various schemes of
the same mutual fund will be considered as a single allottee/applicant.
Demographic details like address, bank account among other will be obtained from the Depositories as per the
demat account details given above.
As per the current regulations, the following restrictions are applicable for investments by Mutual Funds:
No Mutual Fund scheme shall invest more than 10% of its net asset value in Equity Shares or equity related
instruments of any company provided that the limit of 10% shall not be applicable for investments in case of
index funds or sector or industry specific funds. No Mutual Fund under all its schemes should own more than
10% of any company's paid-up capital carrying voting rights.
The above information is given for the benefit of the Bidders. We and the BRLMs are not liable for any
amendments or modification or changes in applicable laws or regulations, which may happen after the date of this
Preliminary Placement Document. Bidders are advised to make their independent investigations and ensure that
the number of Equity Shares Bid for do not exceed the applicable limits under the applicable laws and regulations.
Submission of Application Form
All Application Forms must be duly completed with information including the name of the QIB, the price and the
number of Equity Shares applied for. All Application Forms duly completed along with payment and a copy of
the PAN card or PAN allotment letter shall be submitted to the BRLMs either through electronic form or through
physical delivery at the following address:
Name
Address
Contact Person
Email
Phone (Telephone and Fax)
Emkay
7th Floor, The Ruby,
Rajesh Ranjan
[email protected]
Tel : +91 22 66121212
146
Preliminary Placement Document
Global
Financial
Services
Limited
Centrum
Capital
Limited
Senapati Bapat Marg,
Dadar - West,
Mumbai - 400028
Deepak Yadav
Centrum House, CST
Road, Vidyanagari
Marg, Kalina,
Santacruz (East)
Mumbai – 400098
Aanchal Wagle
Fax: +91 22 66121299
[email protected]
Sugandha
Kaushik
Tel: + 91 22 4215 9000
Fax: +91 22 4215 9707
The BRLMs shall not be required to provide any written acknowledgement of receipt of the Application Form.
Permanent Account Number or PAN
Each QIB should mention its PAN allotted under the IT Act in the Application Form. The copy of the PAN card
or PAN allotment letter is required to be submitted with the Application Form. Applications without this
information will be considered incomplete and are liable to be rejected. QIBs should not submit the GIR number
instead of the PAN as the Application Form is liable to be rejected on this ground.
Pricing and Allocation
Build-up of the Book
The QIBs shall submit their Bids (including the revision of bids) within the Bidding Period to the BRLMs through
the Application Form. Such Bids cannot be withdrawn after the Issue Closing Date. The book shall be maintained
by the BRLMs.
Price Discovery and Allocation
Our Company, in consultation with the BRLMs, shall determine the Issue Price, which shall be at or above the
Floor Price. However, our Company may offer a discount of not more than five % on the Floor Price in terms of
Regulation 85 of the SEBI ICDR Regulations.
After finalization of the Issue Price, our Company shall update this Preliminary Placement Document with the
Issue details and file the same with the Stock Exchange as the Placement Document.
Method of Allocation
Our Company shall determine the Allocation in consultation with the BRLM on a discretionary basis and in
compliance with Chapter VIII of the SEBI ICDR Regulations. Bids received from the QIBs at or above the Issue
Price shall be grouped together to determine the total demand.
The Allocation to all such QIBs will be made at the Issue Price. Allocation shall be decided by us in consultation
with the BRLMs on a discretionary basis. Allocation to Mutual Funds for up to a minimum of 10 % of the Issue
Size shall be undertaken subject to valid Bids being received at or above the Issue Price.
THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BRLMs IN RESPECT OF
ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS MAY NOTE THAT
ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE DISCRETION OF OUR
COMPANY IN CONSULTATION WITH THE BRLMs AND QIBS MAY NOT RECEIVE ANY
ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE
THE ISSUE PRICE. NEITHER OUR COMPANY NOR THE BRLMs ARE OBLIGED TO ASSIGN ANY
REASON FOR ANY NON-ALLOCATION.
147
Preliminary Placement Document
CAN
Based on the Application Forms received, our Company, in consultation with the BRLMs, in their sole and
absolute discretion, shall decide the successful Bidder to whom the serially numbered CAN shall be sent, pursuant
to which the details of the Equity Shares Allocated to them and the details of the amounts payable for Allotment
of such Equity Shares in their respective names shall be notified to such successful Bidder. Additionally, a CAN
will include details of the relevant Escrow Account into which such payments would need to be made, address
where the application money needs to be sent, Pay-In Date as well as the probable designated date, being the date
of credit of the Equity Shares to the respective successful Bidder‟s account.
The successful Bidders would also be sent a serially numbered Placement Document either in electronic form or
by physical delivery along with the serially numbered CAN. The dispatch of the serially numbered Placement
Document and the serially numbered CAN to the QIBs shall be deemed a valid, binding and irrevocable contract
for the QIB to furnish all details that may be required by Company and the BRLMs and to pay the entire Issue
Price for all the Equity Shares Allocated to such QIB.
QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be Allotted
to them pursuant to the Issue.
Bank Account for Payment of Application Money
Our Company has opened an escrow bank account; the “Mold–Tek Packaging Limited – QIP Escrow Account”
with ICICI Bank Limited in terms of the arrangement among our Company, the BRLMs and ICICI Bank Limited
as escrow bank. The QIB will be required to deposit the entire amount payable for the Equity Shares Allocated to
it by the Pay-In Date as mentioned in, and in accordance with, the respective CAN.
Payments are to be made only through electronic fund transfer.
Note: Payments through cheques are liable to be rejected.
If the payment is not made favoring “Mold–Tek Packaging Limited – QIP Escrow Account” within the time
stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be cancelled. Pending
Allotment, our Company undertakes to utilise the amount deposited in “Mold–Tek Packaging Limited – QIP
Escrow Account” only for the purposes of (i) adjustment against Allotment of Equity Shares in the Issue; or (ii)
repayment of application money if our Company is not able to Allot Equity Shares in the Issue.
In case of cancellations or default by the QIBs, our Company, the BRLMs have the right to reallocate the Equity
Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion subject to the
compliance with the requirements of the Companies Act, 2013 and the SEBI ICDR Regulations.
Designated Date and Allotment of Equity Shares
The Equity Shares will not be Allotted unless the QIBs pay the amount payable as mentioned in the CAN issued
to them to the “Mold–Tek Packaging Limited – QIP Escrow Account” as stated above. Subject to the satisfaction
of the terms and conditions of the Placement Agreement, our Company will ensure that the Allotment of the
Equity Shares is completed by the Designated Date provided in the CAN for the Eligible QIBs who have paid the
aggregate subscription amounts as stipulated in the CAN. The Equity Shares in the Issue will be issued and
Allotment shall be made only in dematerialized form to the Allottees. Allottees will have the option to rematerialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories
Act.
148
Preliminary Placement Document
Our Company, at its sole discretion, reserves the right to cancel the Issue at any time up to Allotment without
assigning any reason whatsoever. Post the Allotment and credit of Equity Shares into the QIBs‟ Depository
Participant accounts, our Company will apply for final trading and listing approvals from the Stock Exchange.
In the case of QIBs who have been Allotted more than five (5) per cent of the Equity Shares in the Issue, our
Company shall disclose the name and the number of the Equity Shares Allotted to such QIB to the Stock
Exchange and the Stock Exchange will make the same available on their website.
The Escrow Bank shall release the monies lying to the credit of the Escrow Cash Account to our Company after
Allotment of Equity Shares to QIBs.
In accordance with the Companies Act, 2013, in the event that our Company is unable to issue and Allot the
Equity Shares offered in the Issue or there is a cancellation of the Issue within 60 days from the date of receipt of
application money from a successful Bidder, our Company shall repay the application money within 15 days from
expiry of 60 day period, failing which our Company shall repay that money to such successful Bidders with
interest at the rate of 12 per cent per annum from expiry of the 60th day. The application money to be refunded by
us shall be refunded to the same bank account from which application money was remitted by the QIBs.
Other Instructions
Right to Reject Applications
Our Company, in consultation with the BRLMs, may reject Bids, in part or in full, without assigning any reason
whatsoever. The decision of our Company and the BRLMs in relation to the rejection of Bids shall be final and
binding.
Equity Shares in Dematerialized form with NSDL or CDSL
The Allotment of the Equity Shares in the Issue shall be only in dematerialized form (i.e., not in physical
certificates but be fungible and be represented by the statement issued through the electronic mode). A QIB
applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary account with a
Depository Participant of either NSDL or CDSL prior to making the Bid. Allotment to a successful QIB will be
credited in electronic form directly to the beneficiary account (with the Depository Participant) of the QIB.
Equity Shares in electronic form can be traded only on the stock exchange having electronic connectivity with
NSDL and CDSL. The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised
form only for all QIBs in the demat segment of the respective Stock Exchange.
Our Company and the BRLMs will not be responsible or liable for the delay in the credit of Equity Shares to be
issued pursuant to the Issue due to errors in the Application Form or otherwise on part of the QIBs.
Release of funds to our Company
The Escrow Bank shall not release the monies lying to the credit of the "Mold–Tek Packaging Limited – QIP
Escrow Account" till such time, that it receives an instruction in pursuance to the Escrow Agreement, along with
the Listing approval of the Stock Exchange for the Equity Shares offered in the Issue.
149
Preliminary Placement Document
PLACEMENT
Placement Agreement
The BRLMs have entered into a placement agreement dated January 29, 2015 with us (the “Placement
Agreement”), pursuant to which the BRLMs have agreed to procure, on a reasonable efforts basis, QIBs to
subscribe for Equity Shares to be issued pursuant to the Issue, pursuant to Chapter VIII of the SEBI ICDR
Regulations and Section 42 of the Companies Act, 2013 and the rules made thereunder.
The Placement Agreement contains customary representations and warranties as well as indemnities from us and
is subject to certain conditions and termination provisions contained therein.
Applications will be made to list the Equity Shares and admit them to trading on the Stock Exchange. No
assurance can be given as to the liquidity or sustainability of the trading market for the Equity Shares, the ability
of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will
be able to sell their Equity Shares.
This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the Registrar
of Companies in India and no Equity Shares will be offered in India or overseas to the public or any members of
the public in India or to any class of investors other than QIBs.
In connection with the Issue, the BRLMs (or their affiliates) may, for their own accounts, enter into asset swaps,
credit derivatives or other derivative transactions relating to the Equity Shares at the same time as the offer and
sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the BRLMs may
hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the
Issue and no specific disclosure will be made of such positions. Affiliates of each of the BRLMs may purchase
Equity Shares and be allocated Equity Shares for proprietary purposes and not with a view to distribution or in
connection with the issuance of offshore derivative instruments.
The BRLMs and certain of their affiliates have in past provided, currently provide and may in the future from
time to time provide, investment banking, general financing and banking and advisory services to our Company
and our affiliates for which they have in the past received, currently receive and may in the future receive,
customary fees.
Lock-up
Our Company has agreed that it will not, without the prior written consent of the BRLMs (which such consent
shall not be unreasonably withheld), for the period commencing from the date of the Placement Agreement and
ending 90 days from the Closing Date, directly or indirectly: (a) issue, offer, lend, sell, pledge, contract to sell or
issue, sell any option or contract to purchase, purchase any option or contract to sell or issue, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or
any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention
with respect to any of the foregoing; (b) enter into any swap or other agreement that transfers, directly or
indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities
convertible into or exercisable or exchangeable for Equity Shares; or (c) deposit Equity Shares with any other
depositary in connection with a depositary receipt facility, or (d) enter into any transaction (including a
transaction involving derivatives) having an economic effect similar to that of an issue, offer, sale or deposit of
the Equity Shares in any depository receipt facility; or (e) publicly announce any intention to enter into any
transaction whether any such transaction described in (a) to (d) above is to be settled by delivery of Equity Shares,
or such other securities, in cash or otherwise.
150
Preliminary Placement Document
Our Promoters have agreed that without the prior written consent of the BRLMs (which such consent shall not be
unreasonably withheld), it will not, during the period commencing from the date of the Placement Agreement and
ending 90 days after the date of allotment of the Issue Shares, directly or indirectly: (a) sell, lend, pledge, contract
to sell, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise
transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or
exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing; (b) enter
into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic
consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for
Equity Shares; or (c) deposit Equity Shares with any other depositary in connection with a depositary receipt
facility, or (d) enter into any transaction (including a transaction involving derivatives) having an economic effect
similar to that of an issue, offer, sale or deposit of the Equity Shares in any depository receipt facility; or (e)
publicly announce any intention to enter into any transaction whether any such transaction described in (a) to (d)
above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise; provided
however that the foregoing restrictions will (i) not be applicable to any pledge or mortgage of the Equity Shares
already existing on the date of the Placement Agreement or transfer of such existing pledge or mortgage;(ii) not
be applicable on issuance of Equity Shares pursuant to the ESOP Scheme; and (iii) not restrict the existing
shareholders of our Company from acquiring or purchasing any Equity Shares in our Company, directly or
indirectly, in accordance with and subject to applicable laws.
151
Preliminary Placement Document
DISTRIBUTION AND SOLICITATION RESTRICTIONS
The distribution of this Preliminary Placement Document and the offer, sale or delivery of the Equity Shares is
restricted by law in certain jurisdictions. Persons who come into possession of this Preliminary Placement
Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to
observe such restrictions. This Preliminary Placement Document may not be used for the purpose of an offer or
sale in any circumstances in which such offer or sale is not authorized or permitted.
General
No action has been taken or will be taken that would permit a public offering of the Equity Shares to occur in any
jurisdiction, or the possession, circulation or distribution of this Preliminary Placement Document or any other
material relating to the Company or the Equity Shares in any jurisdiction where action for such purpose is
required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this
Preliminary Placement Document nor any offering materials or advertisements in connection with the Equity
Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will
result in compliance with any applicable rules and regulations of any such country or jurisdiction and will not
impose any obligations on our Company or the BRLMs. The Issue will be made in compliance with the applicable
SEBI ICDR Regulations. Each purchaser of the Equity Shares in the Issue will be required to make, or be deemed
to have made, as applicable, the acknowledgments and agreements as described under the section “Transfer
Restrictions” on page 156.
India
This Preliminary Placement Document may not be distributed, directly or indirectly, in India or to residents of
India and any Equity Shares may not be offered or sold, directly or indirectly, in India to, or for the account or
benefit of, any resident of India except as permitted by applicable Indian laws and regulations, under which an
offer is strictly on a private and confidential basis and is limited to eligible QIBs. This Preliminary Placement
Document is neither a public issue nor a prospectus under the Companies Act or an advertisement and should not
be circulated to any person other than to whom the offer is made.
Bahrain
The Issue is a private placement in Bahrain. Therefore, it is not subject to the regulations of the Central Bank of
Bahrain that apply to public offerings of securities, and the extensive disclosure requirements and other
protections that these regulations contain. This Preliminary Placement Document is therefore intended only for
accredited investors. The financial instruments offered by way of private placement may only be offered in
minimum subscriptions of $100,000 (or equivalent in other currencies). The Central Bank of Bahrain assumes no
responsibility for the accuracy and completeness of the statements and information contained in this Preliminary
Placement Document and expressly disclaims any liability whatsoever for any loss howsoever arising from
reliance upon the whole or any part of the contents of this Preliminary Placement Document. To the best of our
Company‟s board of directors‟ and management‟s knowledge and belief, who have taken all reasonable care to
ensure that such is the case, the information contained in this Preliminary Placement Document is in accordance
with the facts and does not omit anything likely to affect the reliability of such information.
European Economic Area
In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive
(each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is
or was implemented in that Relevant Member State (the “Relevant Implementation Date”), the Equity Shares
may not be offered or sold to the public in that Relevant Member State prior to the publication of a prospectus in
relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State
or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that
152
Preliminary Placement Document
Relevant Member State, all in accordance with the Prospectus Directive (defined below) and the 2010 Amending
Directive (defined below), except that the Equity Shares, with effect from and including the Relevant
Implementation Date, may be offered to the public in that Relevant Member State at any time:
(a) to persons or entities that are “qualified investors” as defined in the Prospectus Directive or, if that Relevant
Member State has implemented the 2010 Amending Directive, as defined in the 2010 Amending Directive;
(b) to (i) fewer than 100 natural or legal persons (other than “qualified investors” as defined in the Prospectus
Directive); or (ii) if that Relevant Member State has implemented the 2010 Amending Directive, fewer than 150
natural or legal persons (other than “qualified investors” as defined in the 2010 Amending Directive), in each case
subject to obtaining the prior consent of the BRLMs; and
(c) in any circumstances falling within Article 3(2) of the Prospectus Directive as amended (to the extent
implemented in that Relevant Member State) by Article 1(3) of the 2010 Amending Directive, provided that no
such offering of Equity Shares shall result in a requirement for the publication by our Company or the BRLMs of
a prospectus pursuant to Article 3 of the Prospectus Directive as amended (to the extent implemented in that
Relevant Member State) by Article 1(3) of the 2010 Amending Directive.
For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any
Equity Shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to
decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive”
means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State
and the expression “2010 Amending Directive” means Directive 2010/73/EU and includes any relevant
implementing measure in each Member State.
Neither our Company nor the BRLMs has authorised, nor do they authorise, the making of any offer of Equity
Shares through any financial intermediary on their behalf, other than offers made by our Company or the BRLMs.
Hong Kong
The Preliminary Placement Document has not been reviewed or approved by any regulatory authority in Hong
Kong. In particular, this Preliminary Placement Document has not been, and will not be, registered as a
“prospectus” in Hong Kong under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap
32) (“CO”) nor has it been authorized by the Securities and Futures Commission (“SFC”) in Hong Kong pursuant
to the Securities and Futures Ordinance (Cap 571) (“SFO”). Recipients are advised to exercise caution in relation
to the Offer. If recipients are in any doubt about any of the contents of this Preliminary Placement Document, they
should obtain independent professional advice.
The Preliminary Placement Document does not constitute an offer or invitation to the public in Hong Kong to
acquire any Equity Shares nor an advertisement of the Equity Shares in Hong Kong. The Preliminary Placement
Document must not be issued, circulated or distributed in Hong Kong other than:

to “professional investors” within the meaning of the SFO and any rules made under that ordinance
(“Professional Investors”); or

in other circumstances which do not result in this Preliminary Placement Document being a prospectus as defined
in the CO nor constitute an offer to the public which requires authorization by the SFC under the SFO.
Unless permitted by the securities laws of Hong Kong, no person may issue or have in its possession for issue,
whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Equity Shares,
which is directed at, or the content of which is likely to be accessed or read by, the public of Hong Kong other
153
Preliminary Placement Document
than with respect to the Equity Shares which are or are intended to be disposed of only to persons outside Hong
Kong or only to Professional Investors.
Any offer of the Equity Shares will be personal to the person to whom relevant offer documents are delivered, and
a subscription for the Equity Shares will only be accepted from such person. No person who has received a copy
of this Preliminary Placement Document may issue, circulate or distribute this Preliminary Placement Document
in Hong Kong or make or give a copy of this Preliminary Placement Document to any other person. No person
allotted Equity Shares may sell, or offer to sell, such Shares to the public in Hong Kong within six months
following the date of issue of such Equity Shares.
Kuwait
The Issue has not been approved by the Kuwait Central Bank or the Kuwait Ministry of Commerce and Industry,
nor has our Company received authorisation or licensing from the Kuwait Central Bank or the Kuwait Ministry of
Commerce and Industry to market or sell the Equity Interests within Kuwait. Therefore, no services relating to
the offering, including the receipt of applications and/or the allotment of Equity Shares may be rendered within
Kuwait by our Company or persons representing our Company.
Oman
This Preliminary Placement Document and the Equity Shares offered under it are issued and governed by the laws
of India.
No offer or marketing of the Equity Shares has been or will be made by our Company within the Sultanate of
Oman and no subscription for Equity Shares may or will be effected or undertaken within the Sultanate of Oman.
Our Company does not have a presence or representation in the Sultanate of Oman and any purchase of the Equity
Shares will be deemed to be made in and under the laws of India.
By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands,
acknowledges and agrees that this Preliminary Placement Document has not been registered or approved by the
Central Bank of Oman, the Oman Ministry of Commerce and Industry, the Oman Capital Market Authority or any
other authority in the Sultanate of Oman, and neither our Company nor the BRLMs is authorized or licensed by
the Central Bank of Oman, the Oman Ministry of Commerce and Industry, the Oman Capital Market Authority or
any other authority in the Sultanate of Oman, to market or sell the Equity Shares within the Sultanate of Oman.
The Equity Shares offered under this Preliminary Placement Document have not and will not be listed on any
stock exchange in the Sultanate of Oman.
Mauritius.
The Equity Shares may not be offered or sold, directly or indirectly, to the public in Mauritius. Neither this
Preliminary Placement Document nor any offering material or information contained herein relating to the offer
of Equity Shares may be released or issued to the public in Mauritius or used in connection with any such offer.
This Preliminary Placement Document does not constitute an offer to sell Equity Shares to the public in Mauritius
and is not a prospectus as defined under the Companies Act 2001.
Singapore
The Preliminary Placement Document has not been and will not be registered as a prospectus with the Monetary
Authority of Singapore (“MAS”) under the Securities and Futures Act (Chapter 289) of Singapore (“SFA”).
Accordingly, the Equity Shares may not be offered or sold, or made the subject of an invitation for subscription or
purchase nor may this Preliminary Placement Document or any other document or material in connection with the
offer or sale, or invitation for subscription or purchase of the Equity Shares be circulated or distributed, whether
154
Preliminary Placement Document
directly or indirectly, in Singapore other than (i) to an “institutional investor” within the meaning of Section 274
of the SFA and in accordance with the conditions of an exemption invoked under Section 274, (ii) to a relevant
person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the
conditions specified in Section 275, of the SFA, or (iii) other pursuant to, and in accordance with the conditions
of, any other applicable provision of the SFA.
Where the Equity Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of
which is to hold investments and the entire share capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose
is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, shares,
debentures and units of shares and debentures of that corporation or the beneficiaries‟ rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the Equity Shares pursuant to an offer made under Section 275 except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person defined in Section 275(2) of the SFA, or to any person
pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that
corporation or such rights or interest in that trust are acquired at a consideration of not less than S$200,000 (or its
equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by
exchange of securities or other assets, and further for a corporation, in accordance with the conditions specified in
Section 275 of the SFA; (2) where no consideration is or will be given for the transfer; or (3) where the transfer is
by operation of law.
155
Preliminary Placement Document
TRANSFER RESTRICTIONS
The Equity Shares Allotted in the Issue are not permitted to be sold for a period of one year from the date of
Allotment, except on the Stock Exchange. Due to the following restrictions, investors are advised to consult legal
counsel prior to making any resale, pledge or transfer of the Equity Shares, except if the resale of the Equity
Shares is by way of a regular sale on the Stock Exchange.
United States of America
The Equity Shares offered in the Issue have not been and will not be registered under the U.S. Securities Act or
any state securities laws in the United States and may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance
with any applicable state securities laws.
Each purchaser of the Equity Shares, by accepting delivery of this Preliminary Placement Document, will be
deemed to:

Represent and warrant to our Company, the BRLMs and its affiliates that the offer and sale of the Equity
Shares to it is in compliance with all applicable laws and regulations.

Represent and warrant to our Company, the BRLMs and its affiliates that it was outside the United States
(within the meaning of Regulation S) at the time the offer of the Equity Shares was made to it and it was
outside the United States (within the meaning of Regulation S) when its buy order for the Equity Shares
was originated.

Represent and warrant to our Company, the BRLMs and its affiliates that it did not purchase the Equity
Shares as a result of any directed selling efforts (as defined in Regulation S).

Acknowledge that the Equity Shares have not been and will not be registered under the U.S. Securities Act
or any state securities laws in the United States and warrant to our Company, the BRLMs and its respective
affiliates that it will not offer, sell, pledge or otherwise transfer the Equity Shares except in an offshore
transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available
exemption from registration under the U.S. Securities Act and in accordance with all applicable securities
laws of the States of the United States and any other jurisdiction, including India.

Represent and warrant to our Company, the BRLMs and its respective affiliates that if it acquired any of
the Equity Shares as fiduciary or agent for one or more investor accounts, it has sole investment discretion
with respect to each such account and that it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such account.

Acknowledge that our Company, the BRLMs and its respective affiliates, and others will rely upon the
truth and accuracy of the foregoing acknowledgements, representations and warranties and warrant to our
Company and the BRLMs that if any such acknowledgements, representations or warranties deemed to
have been made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly
notify our Company and the BRLMs.
Any resale or other transfer, or attempted resale or other transfer, of the Equity Shares made other than in
compliance with the above-stated restrictions will not be recognized by our Company.
156
Preliminary Placement Document
INDIAN SECURITIES MARKET
The information in this section has been extracted from documents available on the website of SEBI and the Stock
Exchange and has not been prepared or independently verified by our Company or the BRLMs or any of their
respective affiliates or advisors.
India has a long history of organized securities trading. In 1875, the first stock exchange was established in
Mumbai.
Indian Stock Exchanges
Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the
Ministry of Finance, Capital Markets Division, under the Securities and Exchange Board of India Act, 1992, as
amended (the “SEBI Act”), the Securities Contracts (Regulation) Act, 1956, as amended (the “SCRA”) and the
Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”). On June 20, 2012, SEBI, in exercise of
its powers under the SCRA and the SEBI Act notified the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate inter alia the recognition,
ownership and internal governance of stock exchanges and clearing corporations in India together with providing
for minimum capitalisation requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules
along with various rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of
stock exchanges, the qualifications for membership thereof and the manner, in which contracts are entered into,
settled and enforced between members of the stock exchanges.
The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and
intermediaries in the securities markets, promote and monitor self-regulatory organisations and prohibit fraudulent
and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public
companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies, buybacks of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds,
foreign institutional investors, foreign portfolio investors, credit rating agencies and other securities market
participants have been notified by the SEBI.
Most of the stock exchanges have their own governing board for self regulation. The BSE and the NSE together
hold a dominant position among the stock exchanges in terms of the number of listed companies, market
capitalization and trading activity.
Listing and delisting of Securities
The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws
including the Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued
by the SEBI and the Listing Agreements of the respective stock exchanges. The SCRA empowers the governing
body of each recognised stock exchange to suspend trading of or withdraw admission to dealings in the securities
of a listed company for a breach of or non – compliance with, any of the conditions or breach of company‟s
obligations under such Listing Agreement or for any reason, subject to the issuer receiving prior written notice of
the intent of the exchange and upon granting of a hearing in the matter. SEBI also has the power to amend such
Listing Agreements and bye-laws of the stock exchanges in India, to overrule a stock exchange‟s governing body
and withdraw recognition of a recognized stock exchange.
SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in
relation to the voluntary and compulsory delisting of equity shares from the stock exchanges. In addition, certain
amendments to the SCRR have also been notified in relation to delisting. SEBI has, in its board meeting on
November 19, 2014, approved certain amendments to the Delisting Regulations, pursuant to which delisting shall
be considered successful only when the shareholding of the acquirer together with the shares tendered by public
shareholders reaches 90% of the total share capital of the company, and if atleast 25% of the number of public
157
Preliminary Placement Document
shareholders, holding shares in dematerialised mode as on the date of the meeting of the board of directors of the
company approving the delisting proposal, tender in the reverse book building process. Among other
amendments, timelines for completing the delisting process have been reduced from 137 calendar days
(approximately 117 working days) to 76 working days, and an option has been provided to the acquirer to delist
the shares of the company directly through the Delisting Regulations pursuant to triggering the Takeover Code
has been provided. In addition, certain amendments to the SCRR have also been notified in relation to delisting.
Pursuant to an amendment dated June 4, 2010 to the SCRR, all listed companies (except public sector companies)
are required to maintain a minimum public shareholding of at least 25 %. Any listed company which had public
shareholding of less than 25% at the time of commencement of the amendment dated June 4, 2010 to the SCRR
was required to increase its public shareholding to at least 25 % within a period of three years from the date of
such commencement. The SCRR also provides that if the public shareholding in a listed company falls below 25
% at any time, such company is required to bring the public shareholding to 25% within a maximum period of 12
months from the date of such fall in the manner prescribed by the SEBI. Consequently, a listed company may be
delisted from the stock exchanges for not complying with the minimum public shareholding requirement. Our
Company is in compliance with this minimum public shareholding requirement.
Disclosures under the Companies Act, 2013 and Listing Agreements
Public limited companies are required under the Companies Act and the Listing Agreements to prepare, file with
the registrar of companies and circulate to their shareholders audited annual accounts which comply with the
disclosure requirements and regulations governing their manner of presentation and which include sections
relating to corporate governance under the Companies Act, related party transactions and management‟s
discussion and analysis as required under the Listing Agreement. In addition, a listed company is subject to
continuing disclosure requirements pursuant to the terms of its Listing Agreement with the relevant stock
exchange.
Index-Based Market-Wide Circuit Breaker System
In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed stock exchanges to
apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index
based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index
movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading halt
in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by
movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached earlier.
With effect from October 1, 2013, the Stock Exchanges, shall on a daily basis translate the 10 %, 15 % and 20 %
circuit breaker limits of market wide index variation based on the previous days‟ closing level of the index.
In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise
price bands of 20 % movements either up or down for all scrips in the compulsory rolling settlement. However,
no price bands are applicable on scrips on which derivative products are available or scrips included in indices on
which derivative products are available.
The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.
Margin requirements are imposed by stock exchanges that are required to be maintained by the stockbrokers.
BSE
BSE was established in 1875 and is the oldest stock exchange in India. In 1956, it became the first stock exchange
in India to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into
its present status as one of the premier stock exchanges of India. Pursuant to the BSE (Corporatisation and
Demutualisation) Scheme 2005 of the SEBI, with effect from August 19, 2005, the BSE was incorporated and is
now a company under the Companies Act.
158
Preliminary Placement Document
Stock Market Indices
The two indices which are generally used in tracking the aggregate price movements on BSE are the Sensex and
the BSE 100 Index. The BSE Sensitive Index, or the Sensex, consists of listed shares of 30 large market
capitalization companies. The companies are selected on the basis of market capitalization, liquidity and industry
representation. The Sensex was first compiled in 1986 with the fiscal year ended March 31, 1979. The BSE 100
Index (formerly the BSE National Index) contains listed shares of 100 companies, including the 30 in the Sensex,
with 1983-1984 as the base year.
Trading Hours
Trading on the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST (excluding the 15
minutes pre-open session from 9:00 a.m. to 9:15 a.m. that has been introduced recently). The BSE is closed on
public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash
and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.;
and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the trading
hours
Trading Procedure
In order to facilitate smooth transactions, the BSE replaced its open outcry system with the BSE Online Trading
(BOLT) facility in 1995. This totally automated screen based trading in securities was put into practice nationwide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles
and improving efficiency in back-office work.
Internet-based Securities Trading and Services
Internet trading takes place through order routing systems, which route client orders to exchange trading systems
for execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant
stock exchange and also have to comply with certain minimum conditions stipulated by SEBI. Internet trading is
possible on both the “equities” as well as the “derivatives” segments of the NSE.
Takeover Code
Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as
amended (the “Takeover Code”), which provides specific regulations in relation to substantial acquisition of
shares and takeover. Once the equity shares of a company are listed on a stock exchange in India, the provisions
of the Takeover Code will apply to any acquisition of the company‟s shares/voting rights/control. The Takeover
Code prescribes certain thresholds or trigger points in the shareholding a person or entity has in the listed Indian
company, which give rise to certain obligations on part of the acquirer. Acquisitions up to a certain threshold
prescribed under the Takeover Code mandate specific disclosure requirements, while acquisitions crossing
particular thresholds may result in the acquirer having to make an open offer of the shares of the target company.
The Takeover Code also provides for the possibility of indirect acquisitions, imposing specific obligations on the
acquirer in case of such indirect acquisition.
Prohibition of Insider Trading Regulations
The SEBI (Prohibition of Insider Trading) Regulations, 1992 (“SEBI Prohibition of Insider Trading
Regulations”) have been notified by SEBI to prohibit and penalize insider trading in India. An insider is, among
other things, prohibited from dealing in the securities of a listed company when in possession of unpublished
price sensitive information.
159
Preliminary Placement Document
The SEBI Prohibition of Insider Trading Regulations also provide disclosure obligations for shareholders holding
more than a pre-defined percentage, and directors and officers, with respect to their shareholding in the company,
and the changes therein. The definition of “insider” includes any person who has received or has had access to
unpublished price sensitive information in relation to securities of a company or any person reasonably expected
to have access to unpublished price sensitive information in relation to securities of a company and who is or was
connected with the company or is deemed to have been connected with the company.
Further, SEBI has notified the Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 2015 on January 15, 2015 for expanding the scope of connected persons, introducing new concepts
such as generally available information and exemption for due diligence and streamlining disclosures. The
notified regulations shall come into force on the one hundred and twentieth day from the date of its publication in
the Official Gazette. Under the new rules, it is intended that a connected person is one who has a connection with
the company that is expected to put him in possession of unpublished price sensitive information. Immediate
relatives and other categories of persons specified above are also presumed to be connected persons but such a
presumption is a deeming legal fiction and is rebuttable. This definition is also intended to bring into its ambit
persons who may not seemingly occupy any position in a company but are in regular touch with the company and
its officers and are involved in the know of the company‟s operations. It is intended to bring within its ambit those
who would have access to or could access unpublished price sensitive information about any company or class of
companies by virtue of any connection that would put them in possession of unpublished price sensitive
information.
Depositories
In August 1996, the Indian Parliament enacted the Depositories Act 1996 (the “Depositories Act”) which
provides a legal framework for the establishment of depositories to record ownership details and effect transfers
in electronic book-entry form. The SEBI framed regulations in relation to the formation and registration of such
depositories, the registration of participants and the rights and obligations of the depositories, participants,
companies and beneficial owners. The depository system has significantly improved the operation of the Indian
securities markets.
Derivatives (Futures and Options)
Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in
February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA.
Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a
separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock
exchange functions as a self-regulatory organisation under the supervision of the SEBI.
160
Preliminary Placement Document
DESCRIPTION OF THE EQUITY SHARES
Set forth below is certain information relating to our share capital, including a brief summary of some of the
provisions of the Memorandum and Articles of Association, the Companies Act and certain related laws of India.
Prospective investors are urged to read the Memorandum and Articles of Association carefully, and consult with
their advisers, as the Memorandum and Articles of Association and applicable Indian law, and not this summary,
govern the rights attached to the Equity Shares.
General
Our authorized capital is ` 1,450 Lacs divided into 145 Lacs Equity Shares of ` 10 each. As of the date of this
Preliminary Placement Document, 1,13,42,176 Equity Shares of ` 10 each are paid up and outstanding.
Dividend
Under the Companies Act, 2013, unless the board recommends the payment of a dividend, the shareholders at a
general meeting have no power to declare any dividend. Subject to certain conditions specified in the Companies
Act, 2013, no dividend can be declared or paid by a company for any financial year except out of the profits of the
company for that year determined in accordance with the provisions of the Companies Act, 2013 or out of the
undistributed profits of previous Fiscal Years or out of both, arrived at in accordance with the provisions of the
Companies Act, 2013, or out of money provided by the Central Government or a state Government for payment
of dividend by our Company in pursuance of a guarantee given by that government. Pursuant to the Listing
Agreement, listed companies are required to declare and disclose their dividends on per share basis only. The
dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and
paid to shareholders in proportion to the paid-up value of their equity shares as at the record date for which such
dividend is payable. In addition, the board may declare and pay interim dividends. Under the Companies Act,
2013, dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is
specified as the “record date” or “book closure date”. No shareholder is entitled to a dividend while unpaid calls
on any of his equity shares are outstanding. Dividends must be paid within 30 days from the date of the
declaration and any dividend that remains unpaid or unclaimed after that period must be transferred within seven
days to a special unpaid dividend account held at a scheduled bank. Any money that remains unpaid or unclaimed
for seven years from the date of such transfer must be transferred by our Company to the Investor Education and
Protection Fund established by the Government and thereafter any claim with respect thereto will lapse.
Our Company may, before the declaration of any dividend in any financial year, transfer such percentage of its
profits for that financial year as it may consider appropriate to the reserves of our Company. The Companies Act,
2013 and the Companies (Declaration of Dividend) Rules, 2014, provide that if the profit for a year is insufficient,
the dividend for that year may be declared out of free reserves, subject to certain conditions prescribed under
those legislations.
Capitalization of Reserves
As provided in our Articles of Association, our directors may from time to time set apart any and such portion of
the profits of our Company as they think fit, as reserve fund applicable at their discretion for the liquidation of any
debentures, debts or other liabilities of our Company, for equalization of dividends, or for any other purposes as
our Company with full power to employ the assets constituting the reserve fund in the business of our Company
and without being bound to keep the same separate from the other assets. Our Directors may also carry forward
any profit which they may think prudent not to divide, without setting them aside as a reserve.
Any issue of bonus shares by a listed company would be subject to the guidelines issued by the SEBI. The
relevant SEBI guidelines prescribe that no company shall, pending conversion of compulsorily convertible
securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of such
compulsorily convertible securities, through a proportionate reservation of shares. Further, in order to issue bonus
161
Preliminary Placement Document
shares, a company should not have defaulted in the payment of interest or principal in respect of fixed deposits
and interest on existing debentures or principal on redemption thereof and should have sufficient reason to believe
that it has not defaulted in respect of any statutory dues of the employees. The declaration of bonus shares in lieu
of a dividend cannot be made. A bonus issue may be made out of free reserves built out of genuine profits or
share premium collected in cash and not from reserves created by revaluation of fixed assets.
The issue of bonus shares must take place within fifteen days from the date of approval by the board, if the
articles of association of a company do not require such company to seek shareholders‟ approval for capitalization
of profits or reserves for making bonus issues. If a company is required to seek shareholders‟ approval for
capitalization of profits or reserves for making bonus issues, then the bonus issue should be implemented within
two months from the date of the board meeting wherein the decision to issue bonus shares was taken subject to
shareholders‟ approval.
Pre-emptive Rights and Alteration of Share Capital
Subject to the provisions of the Companies Act, 2013, our Company can increase its share capital by issuing new
equity shares. Such new equity shares must be offered to existing shareholders registered on the record date in
proportion to the amount paid-up on those equity shares at that date. The offer shall be made by notice specifying
the number of equity shares offered and the date (being not less than fifteen days and not exceeding thirty days
from the date of the offer) after which the offer, if not accepted, will be deemed to have been declined. After such
date the Board may dispose of the equity shares offered in respect of which no acceptance has been received, in
such manner as they think is not disadvantageous to the shareholders and our Company. The offer is deemed to
include a right exercisable by the person concerned to renounce the shares in favor of any other person provided
that the person in whose favor such shares have been renounced is approved by the Board in their absolute
discretion.
However, under the provisions of the Companies Act, 2013 and the Companies (Share Capital and Debentures)
Rules, 2014, new shares may be offered to any persons, whether or not those persons include existing
shareholders or employees to whom shares are allotted under a scheme of employees stock options, either for cash
or for consideration other than cash, if a special resolution to that effect is passed by the shareholders of our
Company in a general meeting. The issue of the Equity Shares pursuant to the Issue has been approved by a
special resolution of our Company‟s shareholders and such shareholders have waived their pre-emptive rights
with respect to such Equity Shares.
Our Company‟s issued share capital may, among other things, be increased by the exercise of warrants attached to
any of our Company‟s securities entitling the holder to subscribe for shares. Our Articles of Association provide
that our Company may consolidate or divide all or any of our Company‟s share capital into shares of larger
amount than its existing shares. Our Company may convert all or any of its fully paid up shares into stock and
reconvert that stock into fully paid up shares of any denomination. Our Company can also alter its share capital by
way of a reduction of capital, in accordance with the Companies Act, 2013.
General Meetings of Shareholders
Our Company must hold its annual general meeting each year within 15 months of the previous annual general
meeting and within six months after the end of each accounting year. The RoC may extend this period in special
circumstances at our Company‟s request. The Board may convene an extraordinary general meeting of
shareholders when necessary and shall convene such a meeting at the request of a shareholder or shareholders
holding in the aggregate not less than 10% of issued paid-up capital of our Company.
Written notices convening a meeting setting out the date and place of the meeting and its agenda must be given to
members at least 21 days prior to the date of the proposed meeting and where any special business is to be
transacted at the meeting an explanatory statement shall be annexed to the notice as required under the Companies
Act, 2013. A general meeting may be called after giving shorter notice if consent is received, in writing or by
162
Preliminary Placement Document
electronic mode, from shareholders holding not less than 95% of our Company‟s paid-up capital. Our Company‟s
general meetings are held in Hyderabad.
A listed company intending to pass a resolution relating to matters such as, but not limited to, an amendment in
the objects clause of the memorandum of association, a buy-back of shares under the Companies Act, 2013, the
giving of loans or extending a guarantee in excess of limits prescribed under the Companies Act, 2013 is required
to pass the resolution by means of a postal ballot instead of transacting the business in the general meeting of our
Company. A notice to all the shareholders must be sent along with a draft resolution explaining the reasons
thereof and requesting them to send their assent or dissent in writing on a postal ballot within a period of thirty
days from the date of such notice. Shareholders may exercise their right to vote at general meetings or through
postal ballot by voting through e-voting facilities in accordance with the circular dated April 17, 2014 issued by
the SEBI and the Companies Act, 2013. Under the Companies Act, 2013, unless, the Articles of Association
provide for a larger number: (i) five shareholders present in person, if the number of shareholders as on the date of
meeting is not more than 1,000; (ii) 15 shareholders present in person, if the number of shareholders as on the
date of the meeting is more than 1,000 but up to 5,000; and (iii) 30 shareholders present in person, if the number
of shareholders as on the date of meeting exceeds 5,000, shall constitute a quorum for a general meeting of our
Company. The quorum requirements applicable to shareholder meetings under the Companies Act, 2013 have to
be physically complied with.
Voting Rights
Subject to the provisions of the Companies Act, 2013 and our Articles of Association, votes may be given either
personally or by proxy, and in the case of a body corporate, a duly authorized representative under Section 113of
the Companies Act, 2013, shall be entitled to exercise the same powers on behalf of the corporation as if it were
an individual member of the company. At a general meeting upon a show of hands, every member holding shares
and entitled to vote and present in person has one vote. Upon a poll, the voting rights of each Shareholder entitled
to vote and present in person or by proxy is in the same proportion to such Shareholder‟s share of the paid-up
equity capital of our Company.
Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require
that the votes cast in favor of the resolution must be at least three times the votes cast against the resolution. The
Companies Act, 2013 provides that to amend the articles of association of a company, a special resolution is
required to be passed in a general meeting.
A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles of
Association. The instrument appointing a proxy is required to be lodged with us at least 48 hours before the time
of the meeting, or in case of a poll, not less than 24 hours before the time appointed for taking the poll. A
shareholder may, by a single power of attorney, grant a general power of representation regarding several general
meetings of shareholders. Any shareholder may appoint a proxy. A corporate shareholder is also entitled to
nominate a representative to attend and vote on its behalf at general meetings. A proxy may not vote except on a
poll and does not have a right to speak at meetings. A shareholder which is a legal entity may appoint an
authorized representative who can vote in all respects as if a member both on a show of hands and a poll.
The Companies Act, 2013 allows our Company to issue shares with differential rights as to dividend, voting or
otherwise, subject to certain conditions. In this regard, the law requires that for a company to issue shares with
differential voting rights, our Company must have, inter alia, had distributable profits in terms of the Companies
Act, 2013 for the last three financial years and our Company must not have defaulted in filing annual accounts
and annual returns for the immediately preceding three financial years.
Register of Shareholders and Record Dates
The Company is obliged to maintain a register of shareholders at its Registered Office, unless a special resolution
is passed in a general meeting authorizing the keeping of the register at any other place within the city, town or
163
Preliminary Placement Document
village in which the Registered Office is situated or any other place in India in which more than one-tenth of the
total shareholders entered in the register of members reside. Our Company recognizes as shareholders only those
persons whose names appear on the register of shareholders and cannot recognize any person holding any share or
part of it upon any express, implied or constructive trust, except as permitted by law. In the case of shares held in
physical form, transfers of shares are registered on the register of shareholders upon lodgment of the share
transfer form duly complete in all respects accompanied by a share certificate or, if there is no certificate, the
letter of allotment in respect of shares transferred together with duly stamped transfer forms. In respect of
electronic transfers, the depository transfers shares by entering the name of the purchaser in its books as the
beneficial owner of the shares. In turn, the name of the depository is entered into our Company‟s records as the
registered owner of the shares. The beneficial owner is entitled to all the rights and benefits as well as the
liabilities with respect to the shares held by a depository.
For the purpose of determining the shareholders, the register may be closed for periods not exceeding 45 days in
any one year or 30 days at any one time at such times, as the Board may deem expedient in accordance with the
provisions of the Companies Act, 2013. Under the Listing Agreement of the Stock Exchange on which our
Company‟s outstanding shares are listed, our Company may, upon at least seven working days‟ advance notice to
stock exchange, set a record date and/or close the register of shareholders in order to ascertain the identity of
shareholders. The trading of shares and the delivery of certificates in respect thereof may continue while the
register of shareholders is closed.
Under the Companies Act, 2013, our Company is also required to maintain a register of debenture holders and a
register of any other security holders.
Annual Report and Financial Results
The annual report must be presented at the annual general meeting. The report includes financial information, a
corporate governance section and management‟s discussion and analysis and is sent to our Company‟s
shareholders.
Under the Companies Act, 2013, our Company must file its balance sheet and profit and loss account with the
Registrar of Companies within thirty days from the date of the annual general meeting. The Companies Act, 2013
also requires listed companies to place their financial statements, including consolidated financial statements, if
any, and all other documents required to be attached thereto, on their website. As required under the Listing
Agreement, copies are required to be simultaneously sent to the Stock Exchange on which the shares are listed.
Our Company must also publish its financial results in at least one English language daily newspaper circulating
in the whole or substantially the whole of India and also in a daily newspaper published in the language of the
region of the Registered Office (i.e., Telugu).
Transfer of Equity Shares
Shares held through depositories are transferred in the form of book entries or in electronic form in accordance
with applicable SEBI regulations. These regulations provide the regime for the functioning of the depositories and
their participants and set out the manner in which the records are to be kept and maintained and the safeguards to
be followed in this system. Transfers of beneficial ownerships of shares held through a depository are exempt
from stamp duty.
The SEBI requires that for trading and settlement purposes shares should be in book-entry form for all investors,
except for transactions that are not made on a stock exchange and transactions that are not required to be reported
to the stock exchange.
The securities of our Company are freely transferable, subject to the provisions of the Companies Act, 2013. If a
public company without sufficient cause refuses to register a transfer of shares within thirty days from the date on
which the instrument of transfer or intimation of transmission, as the case may be, is delivered to our Company,
164
Preliminary Placement Document
the transferee may appeal to our Company Law Board seeking to register the transfer. Our Company Law Board
is proposed to be replaced with the National Company Law Tribunal with effect from a date that is yet to be
notified.
Pursuant to the Listing Agreement, in the event that a transfer of shares is not effected within 15 days or where
our Company has failed to communicate to the transferee any valid objection to the transfer within the stipulated
time period of 15 days, our Company is required to compensate the aggrieved party for the opportunity loss
caused by the delay.
A transfer may also be by transmission. Subject to the provisions of the Articles, any person becoming entitled to
shares in consequence of the death or insolvency of any member may, upon producing such evidence as may from
time to time properly be required by the Board, be registered as a member in respect of such shares, or may,
subject to the regulations as to transfer contained in the Articles, transfer such shares. Our Articles of Association
provide that our Company shall charge no fee for registration of transfer, transmission, probate, succession
certificate and letters of administration, certificate of death or marriage, power of attorney or other similar
document.
Acquisition by us of our own Equity Shares
A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by
an approval of at least 75% of its shareholders, voting on it in accordance with the Companies Act, 2013 and
sanctioned by the High Court of competent jurisdiction (or the National Company Law Tribunal once it is
notified). Subject to certain conditions, a company is prohibited from giving, whether directly or indirectly and
whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose
of or in connection with a purchase or subscription made or to be made by any person for any shares in our
Company or its holding company. However, pursuant to the Companies Act, 2013, a company has been
empowered to purchase its own shares or other specified securities out of its free reserves, the securities premium
account or the proceeds of any fresh issue of shares or other specified securities (other than the kind of shares or
other specified securities proposed to be bought back) subject to certain conditions, including:

the buy-back should be authorized by our Articles of Association;

a special resolution has been passed in a general meeting authorizing the buy-back (in the case of listed
companies, by means of a postal ballot);

the buy-back is limited to 25% of the total paid-up capital and free reserves provided that the buy-back of equity
shares in any financial year shall not exceed 25% of its total paid-up equity capital in that financial year;

the debt owed by our Company is not more than twice the capital and free reserves after such buy-back; and

the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of Securities)
Regulations 1998, as amended.
A board resolution will constitute sufficient corporate authorization for a buy-back that is for less than 10% of the
total paid-up equity capital and free reserves of our Company. A company buying back its securities is required to
extinguish and physically destroy the securities so bought back within seven days of the last date of completion of
the buy-back. Further, a company buying back its securities is not permitted to buy back any securities for a
period of one year from the buy-back or to issue the same kind of shares or specified securities for six months
subject to certain limited exceptions. Every buy-back must be completed within a period of one year from the date
of passing of the special resolution or resolution of the board of directors, as the case may be.
A company is also prohibited from purchasing its own shares or specified securities through any subsidiary
company including its own subsidiary companies or through any investment company. Further, a company is
165
Preliminary Placement Document
prohibited from purchasing its own shares or specified securities, if our Company is in default in the repayment of
deposit or interest, in the redemption of debentures or preference shares, in payment of dividend to a shareholder,
in repayment of any term loan or interest payable thereon to any financial institution or bank or in the event of
non-compliance with certain other provisions of the Companies Act, 2013.
Liquidation Rights
Subject to the rights of creditors, of employees and of the holders of any other shares entitled by their terms of
issue to preferential repayment over the shares, in the event of winding up of our Company, the holders of the
Equity Shares are entitled to be repaid the amounts of capital paid-up or credited as paid-up on such shares. All
surplus assets after payments due to employees, the holders of any preference shares and other creditors belong to
the holders of the Equity Shares in proportion to the amount paid-up or credited as paid-up on such shares
respectively at the commencement of the winding-up.
166
Preliminary Placement Document
TAXATION
The information provided below sets out the possible tax benefits available to the shareholders in a summary
manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership
and disposal of equity shares under the current tax laws presently in force in India. Several of these benefits are
dependent on us or our shareholders fulfilling conditions prescribed under relevant tax laws. We may not choose
to fulfill such conditions. This information is not exhaustive or comprehensive and is not intended to be a
substitute for professional advice. Investors are advised to consult their own tax consultant with respect to the tax
implications of an investment in the Equity Shares. Investors should note that a draft of the Direct Tax Code Bill
has been placed before the Indian Parliament. If that law comes into effect, there could be an impact on the tax
provisions mentioned below.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX
IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY
SHARES IN YOUR PARTICULAR SITUATION.
The following is based on the provisions of the Income-tax Act, 1961 (“the Act”) as of the date hereof. The Act is
amended every fiscal year.
STATEMENT OF TAX BENEFITS
The Board of Directors,
Mold-tek Packaging Limited,
Plot No 700, Jubilee Hills,
Road No.36,
Hyderabad – 500 034
Dear Sirs,
Subject: Statement of Possible Tax Benefits with respect to proposed Qualified Institutional placement
We hereby certify that the enclosed annexure states the possible tax benefits available to Mold-tek
Packaging Limited (“the Company”) and to the shareholders of the Company under the provisions of the
Income -tax Act,1961 and Wealth-tax Act, 1957 (collectively referred to as “Tax Laws”), presently in force
in India for the Financial Year (“FY”) 2014-15 – Assessment Year (“AY”) 2015-16. Several of these
benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the
relevant Tax Laws. Hence, the ability of the Company or its shareholders to derive tax benefits is
dependent upon fulfilling such conditions, based on business imperatives the Company faces in the future,
the Company may or may not choose to fulfill.
The enclosed statement discusses key tax benefits including potential benefits. The benefits listed below 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 a professional tax advice. A potential investor is advised to consult
their own tax consultant with respect to the tax implications of an investment in the equity shares, particularly
in view of the fact that certain recently enacted legislation may not have a direct legal precedent or may have a
different interpretation on the benefits, which an investor can avail.
We do not express any opinion or provide any assurance as to whether:
 The Company or its shareholders will continue to obtain these benefits in future; or
 The conditions prescribed for availing the benefits have been / would be met.
167
Preliminary Placement Document
The contents of this annexure are based on information and explanations obtained from the Company and
on the basis of our understanding of the business activities and operations of the Company an d the
provisions of the Tax Laws. The same shall be subject to notes to this annexure.
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 change from
time to time. We do not assume responsibility to update the views consequent to such changes.
This report is intended solely for your information and for the inclusion in the Letter of Offer in connection
with the proposed Qualified Institutional Placement (QIP) of the shares of the Company and is not to be used,
referred to or distributed for any other purpose without our prior written consent.
For
Praturi and Sriram
Chartered Accountants
Firm Registration No. 002739S
K. Sriram
Partner
Membership No. 037821
Place: Hyderabad
Date:26/01/2015
168
Preliminary Placement Document
STATEMENT OF TAX BENEFITS AVAILABLE TO MOLD-TEK PACKAGING LIMITED (“THE
COMPANY”) AND ITS SHAREHOLDERS
The information provided below sets out the possible tax benefits available to the Company and its shareholders
in a summary manner only and is not a complete analysis or listing of all potential tax consequences of
purchase, ownership and disposal of equity shares, under the Tax Laws presently in force in India. It is not
exhaustive or comprehensive analysis and is not intended to be a substitute for professional advice.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX
IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY
SHARES IN YOUR PARTICULAR SITUATION.
The following is based on the provisions of the Income-tax Act, 1961 (“the Act”) as of the date hereof. The
Act is amended every fiscal year.
1.
Levy of Income Tax
Tax implications under the Act are dependent on the residential status of the tax payer. We
summarize herein below the provisions relevant for determination of residential status of a tax payer.
1.1
Residential status of an Individual –
As per the provisions of the Act, an individual is considered to be a resident in India during any
Financial Year (“FY”) if he or she is present in India for:
a)
A period or periods aggregating to 182 days or more in that FY; or
b) a period or periods aggregating to 60 days or more in that FY and for a period or periods aggregating
to 365 days or more within the four preceding years; or
In the case of a citizen of India or a person of Indian origin living outside India who comes on a visit to
India in any previous year, the limit of 60 days under point (b) above shall be read as 182 days.
In the case of a citizen of India who leaves India as member of the crew of an Indian ship or for the
purposes of employment outside India in any previous year, the limit of 60 days under point (b)
above, shall be read as 182 days.
Subject to complying with certain prescribed conditions, individuals may be regarded as “Resident but
not ordinarily resident”.
1.2
Residential status of a company –
A company is resident in India if it is formed and incorporated under the Companies Act, 1956 or the
control and management of its affairs is situated wholly in India.
1.3
Residential status of
Persons (“AOP”) –
a
Hindu
Undivided
Family
(“HUF”), firm or
Association
of
A HUF, firm or other AOP or every other person is resident in India except when the control and
management of its affairs is situated wholly outside India.
A person who is not a resident in India would be regarded as “Non-Resident”.
169
Preliminary Placement Document
1.4
Residential status of every other person –
Every other person is resident in India in a FY in every case except when the control and management of
his affairs is situated wholly outside India.
1.5
Scope of taxation
In general, a person who is "resident'' in India in a FY is subject to tax in India on its global income. In
the case of a person who is "non-resident'' in India, only the income that is received or deemed to be
received or that accrues or is deemed to accrue or arise to such person in India is subject to tax in India.
In the instant case, the income from the equity shares of the Company would be considered to accrue or
arise in India, and would be taxable in the hands of all categories of tax payers irrespective of their
residential status unless specifically exempt (e.g. Dividend). However, a relief may be available
under applicable Double Taxation Avoidance Agreement (“DTAA”) to certain non- residents/ investors.
Tax Considerations
As per the taxation laws in force, the tax benefits / consequences as applicable, to the Company and the
perspective shareholders are stated as under. Several of these benefits are dependent on the Company or
its shareholders fulfilling the conditions prescribed under the relevant Tax Laws. Hence, the ability of
the Company or its shareholders to derive the tax benefits is dependent upon the fulfilling such
conditions:
2.
Benefits available to the Company - Under the Act
2.1
Special Tax Benefits
There are no Company specific special tax benefits available to the company. Tax benefits mentioned
below in 2.2 are general tax benefits available to all the companies subject to fulfillment of specified
conditions.
2.2
General Tax Benefits
2.2.1
As per Section 10(34) of the Act, any income received by the Company by way of dividends on
which Dividend Distribution Tax (“DDT”) has been paid shall not form part of the total income of the
Company and accordingly would be exempt from tax in its hands.
Under Section 14A of the Act, no deduction is permitted in respect of expenditure incurred in relation to
earning of income which is not chargeable to tax including dividends exempt under Section 10(34) of
the Act. The expenditure relatable to “exempt income” needs to be determined in accordance with the
provisions specified in Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962 (“the
Rules”).
However, the Company would be liable to pay DDT at 15% (plus applicable surcharge and education
cess and secondary & higher education cess) on the total amount declared, distributed or paid as
dividends. In calculating the amount of dividend on which DDT is payable, dividends (if any,
received by the Company during the tax year and subject to fulfillment of the conditions), shall be
reduced by:
dividends received by the domestic company from a subsidiary of the Company (A
company shall be a subsidiary of another company, if such other company, holds more than half in
nominal value of the equity share capital of the company); and where such subsidiary is a domestic
170
Preliminary Placement Document
company, it has paid tax payable under section 115-O (DDT) or where such subsidiary is a specified
foreign company, the tax is payable under section 115BBD by the domestic company.
As per the proviso to this section, the same amount of dividend would not be taken into account for
reduction more than once.
Further, with effect from 1 October 2014, the Company would be liable to pay DDT at 15% (plus
applicable surcharge and education cess and secondary & higher education cess) on grossed up
distributable amount i.e. the amount distributed and the DDT amount.
As per the provisions of section 94(7) of the Act, losses arising from transfer/sale 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.
“Record date” means such date as may be fixed by the company for the purposes of entitlement of the
holder of securities to receive dividend.
2.2.2
As per Section 10(35) of the Act, the following income shall be exempt in the hands of the Company:
I)
Income received in respect of the units of a Mutual Fund specified under clause (23D) of Section
10; or
ii) Income received in respect of the units from the Administrator of the Specified undertaking; or
iii) Income received in respect of units from the specified company.
However, as per the proviso to section 10(35), the above provisions are not applicable to any income
arising from transfer of units of the Administrator of the specified undertaking or of the specified
company or of a mutual fund.
2.3
Computation of capital gains
2.3.1 Capital assets may be categorized into short-term capital assets and long-term
Capital assets based on the period for which they are held by a tax payer.
Shares in a company or listed securities or units or zero coupon bonds are considered as long -term
capital assets if they are held for a period more than 12 months immediately preceding date of
transfer. Consequently, capital gains arising on sale of these assets are considered as “long-term
capital gains”.
Capital gains arising on sale of these assets held for a period of 12 months or less are considered as
“short-term capital gains”.
However, with effect from AY 2015-16, an unlisted security and a unit of a mutual fund (other than an
equity oriented mutual fund) shall be a short-term capital asset if it is held for not more than thirty- six
months. It is further provided that, if the unlisted shares and units of a non-equity-oriented mutual fund
are transferred during the period from April 1, 2014 to July 10, 2014, then such shares/units would
continue to be characterized as long-term capital assets, if they have been held for a period of more
than12 months (instead of more than 36 months).
2.3.2 As per Section 10(38) of the Act, capital gains arising from transfer of a long-term capital asset being an
equity share in the Company or a unit of an equity oriented fund, where the transaction of sale is
chargeable to Securities Transaction Tax (“STT”), shall be exempt from tax in the hands of the
Company.
171
Preliminary Placement Document
For this purpose “Equity oriented fund” means a fund –
I)
Where the investible funds are invested by way of equity shares in the domestic companies to the
extent of more than 65% of the total proceeds of such funds; and
ii) Which has been set up under a scheme of a Mutual fund specified under Section 10(23D)?
However, the long-term capital gains arising on sale of share or units referred above shall not be
reduced while calculating the book profit under the provisions of Section 115JB of the Act. In other
words, such book profit shall include the long-term capital gain as referred to in Section 10(38) of the
Act and the Company will be required to pay MAT @ 18.5% (plus applicable surcharge, education cess
and secondary & higher education cess) on such book profit.
2.3.3 Section 48 of the Act, (which prescribes the mode of computation of capital gains) provides for deduction
of cost of acquisition / improvement and expenses incurred in connection with the transfer of a capital
asset from the sale consideration to arrive at the amount of capital gains.
However, in respect of long-term capital gains (as defined in Para 2.3.1 above), a deduction of
indexed cost of acquisition/improvement is available.
Indexed cost of acquisition means an amount which bears to the cost of acquisition the same
proportion as Cost Inflation Index (CII) for the year in which the asset is transferred bears to the CII for
the first year in which the asset was held by the taxpayer or for the year beginning on April 1, 1981,
whichever is later.
In other words indexed cost of acquisition is computed as under:
Cost of acquisition X CII of the FY in which the asset is transferred/ CII of the FY in which the asset
was first held by the tax payer or for the year beginning on April 1, 1981 whichever is later.
2.3.4
As per the provisions of Section 112 of the Act, long-term capital gains (as defined in Para 2.3.1 above)
[to the extent not exempt under Section 10(38) of the Act] would be subject to tax in the hands of the
Company at the rate of 20% (plus applicable surcharge, education cess and secondary & higher
education cess).
However, as per the proviso to Section 112(1) of the Act, if the tax on long-term capital gains
resulting from transfer of listed securities or units [to the extent not exempt under Section 10(38) of
the Act], calculated at the rate of 20% (with indexation benefit) exceeds the tax on long-term gains
computed at the rate of 10% (without indexation benefit), then such gains are chargeable to tax at the
concessional rate of 10% (without indexation benefit) (plus applicable surcharge, education cess and
secondary & higher education cess ).
However, with effect from AY 2015-16 section 112(1) of the Act provides that tax on long-term capital
gains resulting from transfer of listed securities (other than unit) [to the extent not exempt under Section
10(38) of the Act], calculated at the rate of 20% (with indexation benefit) exceeds the tax on long-term
gains computed at the rate of 10% (without indexation benefit), then such gains are chargeable to tax at
the concessional rate of 10% (without indexation benefit) (plus applicable surcharge, education cess and
secondary & higher education cess ). It is further provided that, the benefit of the proviso shall continue
to be available for the long-term capital assets, being units of Mutual Funds, transferred between April 1,
2014 and July 10, 2014.
2.3.5
As per the provisions of Section 111A of the Act, short-term capital gains (as defined in Para 2.3.1
above) on sale of equity shares or units of an equity oriented fund where the transaction of sale is
chargeable to STT shall be subject to tax at a rate of 15% (plus applicable surcharge, education cess and
secondary & higher education cess). Short-term capital gains arising from transfer of shares, other than
172
Preliminary Placement Document
those covered by Section 111A of the Act, would be subject to tax at the rate as applicable to the
Company i.e. 30% (plus applicable surcharge, education cess and secondary & higher education
cess).
2.3.6
Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains
arising to the Company would be exempt from tax if such capital gains are invested within 6 months
after the date of such transfer in long term specified assets, being bonds issued by:
a)
National Highway Authority of India constituted under Section 3 of The National Highway
Authority of India Act, 1988; or
b)
Rural Electr ificatio n Corporation Limited, the C o m p a n y formed and registered under
the Companies Act, 1956.
The investment made in such bonds during any FY cannot exceed ` 5,000,000.
However, with effect from AY 2015-16, it is provided that the investment made by an assessee in the
long-term specified asset, out of capital gains arising from transfer of one or more original asset, during
the financial year in which the original asset is transferred and in the subsequent financial year does not
exceed ` 5,000,000.
If only a part of the capital gains is invested, the exemption available shall be in the same proportion as
the cost of long term specified assets bears to the whole of the capital gain. However, in case the long
term specified assets are transferred or converted into money within 3 years from the date of its
acquisition, the amount of capital gains so exempt shall be chargeable to tax during the year of such
transfer or conversion.
As long term capital gains covered under Section 10(38) of the Act are exempt from tax, there is no
requirement to invest under Section 54EC of the Act in such cases.
2.3.7 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 record date and such person sells/redeems the original units within nine months of the
record date and continues to hold or any of the bonus units , 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.
Set off and carry forward of capital loss
2.3.8 Under section 70(2) of the Act, the Company can set off short term capital loss against other short term
capital gain or long term capital gain. Under section 70(3) of the Act, the Company can set off long
term capital loss against other long term capital gain.
2.3.9
Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off
against capital gains (whether short term or long term) of subsequent years (up to 8 years).
Unabsorbed long term capital loss can be carried forward and set off against long term capital gains
only in of subsequent years (up to 8 years). However, as per Section 80 of the Act, the unabsorbed
capital loss can be carried forward only when the return of income has been filed within the time
prescribed under section 139(1) of the Act.
2.3.10
Under section 79 of the Act, the carry forward and set off of business losses of a listed company
would not be impacted on a change in shareholding pattern of the company.
Computation of business income
173
Preliminary Placement Document
2.4
Depreciation allowance
2.4.1
Under Section 32(1) of the Act, the Company can claim depreciation allowance at the prescribed rates in
respect of the following assets:


2.4.2
Tangible assets being building, machinery, plant or furniture;
Intangible assets being know-how, patents, copyrights, trademarks, licenses, franchises or any
other business or commercial rights of similar nature acquired on or after April 1, 1998.
As per provision of Section 32(1) (ixia) of the Act, the Company is entitled to claim additional
depreciation at the rate of 20% of the actual cost of any new machinery or plant acquired and installed
after 31 March 2005. However, no deduction is allowed in respect of:
a)
Ships and Aircraft;
b) Any machinery or plant which, before its installation by the company, was used either within or
outside India by any other person;
c) Any machinery or plant installed in any office premises or any residential accommodation,
including accommodation in the nature of a guest-house;
d) Any office appliances or road transport vehicles; or
e) Any machinery or plant, the whole of the actual cost of which is allowed as a
deduction(whether as depreciation or otherwise) in computing the income under the head
“Profits and gains from business and profession” of any one FY.
2.5
Carry forward of unabsorbed depreciation, unabsorbed business losses
2.5.1 Under Section 32(2) of the Act, the Company can carry forward and set off unabsorbed depreciation of one
FY and adjusted against income of subsequent years.
2.5.2
Under Section 72 of the Act, unabsorbed business loss, if any can be carried forward and set off
against business profits of subsequent years (up to 8 years) subject to prescribed conditions. However, as
per Section 80 of the Act, the unabsorbed business loss can be carried forward only when the
return of income has been filed within the time prescribed under section 139(1) of the Act.
2.6
Investment in new plant and machinery
Under Section 32AC of the Act, the Company is entitled to a deduction of 15% of actual cost of “new
assets” acquired and installed after March 31, 2013 but before April 1, 2015subject to fulfillment of
prescribed conditions. The aggregate amount of actual cost of new assets should exceed ` 100 cores.
The term “new asset” means any new plant and machinery but does not include:





Ships and Aircraft;
Any machinery or plant which, before its installation by the company, was used either within or
outside India by any other person;
Any machinery or plant installed in any office premises or any residential accommodation,
including accommodation in the nature of a guest-house;
Any office appliances including computers or computer software
Any vehicle; or
174
Preliminary Placement Document

Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether as
depreciation or otherwise) in computing the income under the head “Profits and gains from business
and profession” of any one FY.
With effect from AY 2015-16, the Company is entitled to a deduction of 15% of actual cost of “new
assets” acquired and installed after March 31, 2014 but before April 1, 2017 subject to fulfillment of
prescribed conditions. The aggregate amount of actual cost of new assets should exceed ` 25crores.
If any new asset acquired and installed by the Company is sold/transferred, except in connection with
the amalgamation or demerger, within a period of five years from the date of its installation, the
amount of deduction allowed in respect of such new asset shall be deemed to be the income of the
Company chargeable under the head "Profits and gains of business or profession" of the financial year in
which such new asset is sold, in addition to taxability of gains, arising on account of transfer of such
new asset.
Potential tax benefits
2.7
Deduction of expenditure on scientific research
2.7.1
Under Section 35(1)(I) and Section 35(1)(iv) of the Act, the Company is eligible for deduction in
respect of any revenue or capital expenditure (other than expenditure on the acquisition of any land)
incurred on scientific research related to its business.
2.7.2
Under Section 35(1)(ii) of the Act, the Company can claim weighted deduction of one and three
fourth times (175%) of any sum paid to an approved research association (which has as its object, the
undertaking of scientific research) or to a university, college or other institution to be used for scientific
research.
2.7.3
Under Section 35(1)(ixia) of the Act any sum paid to a company registered in India (which has as its
main object the conduct of scientific research and development) and is approved by the prescribed
authority can be claimed as deduction to the extent of one and one fourth times(125%) of the amount so
paid.
2.7.4 Under section 35(1)(iii) the Company is eligible for a deduction of one and one fourth times (125%) of
the sum paid to a research association, university, college or other institution to be used for
research in social science or statistical research. This weighted deduction is available to amounts paid to
approved research association, university, college or institution.
2.7.5
The company is eligible for weighted deduction of 200% under Section 35(2AA) in respect of
payments to a National Laboratory, university or Indian Institute of Technology in respect of
approved programs of scientific research. The weighted deduction is available provided the sum is paid
with specific direction that it is used for approved programs of scientific research.
2.8
Deduction of expenditure on eligible projects or scheme
As per the provisions of section 35AC of the Act, the Company is eligible for deduction of any
expenditure incurred towards payment of any sum to a public sector company or local authority or an
association or institution approved by the National Committee for carrying out any eligible project or
scheme, subject to prescribed conditions.
2.9
Amortization of certain expenditure
2.9.1 Under Section 35D of the Act, a company is eligible for deduction in respect of specified preliminary
expenditure incurred by it in connection with extension of its undertaking or in connection with
175
Preliminary Placement Document
setting up new unit for an amount equal to 1/5th of such expenditure over 5 successive AYs subject to
conditions and limits specified in that Section.
2.9.2
Specified expenditure includes expenditure in connection with the issue, for public
subscription, of shares in or debentures of the company, being underwriting commission,
brokerage and charges for drafting, typing, printing and advertisement of the prospectus.
2.9.3
Under Section 35DDA of the Act, the company is eligible for deduction in respect of payments made to
its employees in connection with his voluntary retirement for an amount equal to 1/5th of such
expenses over 5 successive AYs subject to conditions specified in that Section.
2.10
Expenditure on skill development project
As per section 35CCD, the Company would be entitled to a deduction of one and a half times of an
amount of expenditure (not being expenditure in the nature of cost of any land or building) incurred on
any skill development project notified by the Central Board of Direct Taxes (“CBDT”) in
accordance with the guidelines as may be prescribed.
2.11
MAT credit
Under Section 115JAA of the Act, tax credit is allowed in respect of MAT paid under Section 115JB of
the Act for any AY commencing on April 1, 2006 and any subsequent AY.
The credit eligible for carry forward is the difference between MAT paid and the amount of tax payable
computed as per the normal provisions of the Act.
The credit is available for set off only when tax becomes payable under the normal provisions of the
Act. The brought forward tax credit can be utilized to the extent of difference between the tax payable
under the normal provisions of the Act and tax payable under MAT for that year. Credit in respect of
MAT paid is available for set-off up to 10 AYs immediately succeeding the AY for which the MAT
credit initially arose.
2.12
Deduction for donations
The Company is entitled to a deduction under Section 80G of the Act in respect of amounts
contributed as donations to various charitable institutions and funds covered under that Section, subject
to the fulfillment of conditions prescribed therein. Please note that no deduction shall be allowed under
Section 80G of the Act for any sum exceeding ` 10,000 unless such sum is paid by any mode other than
cash.
2.13
Benefit of double taxation avoidance agreement (DTAA)
Under the provisions of section 90 of the Act, the Company shall be eligible for claiming credit of taxes
paid by it on incomes in the foreign countries with which the Government of India has entered into
DTAA. The tax credit shall be available as per the provisions of relevant DTAA.
Section 91 of the Act provides for unilateral relief in respect of taxes paid on incomes in the foreign
countries with which no DTAA exists. Under the provisions of said section, the Company shall be
entitled to deduction from the income tax of sum calculated on such doubly taxed income at the
Indian rate of tax or rate of tax in the foreign country whichever is lower.
2.14
Dividends received from a specified foreign company
176
Preliminary Placement Document
As per section 115BBD of the Act, dividends received from a specified foreign company in which
equity shareholding is 26 per cent or more shall be taxed at the rate of 15 per cent ((plus applicable
surcharge, education cess and education cess). However, while computing income, any expenditure
incurred for earning such dividends shall not be allowed as deduction from such dividends
With effect from 1st October, 2014, for the purpose of determination of tax payable as per the
provisions of section 115-O, any amount by the way of dividend as referred to in sub section (1) of
section 115-O as reduced by the amount referred to sub section (1a) of section 115-O shall be increased
by such amount as would, after reduction of the tax on such increased amount at the rate specified in
sub-section (1) be equal to the net distributed profits.
2.15
As per Section 36(1) (xv) of the Act, the STT paid by the tax payer in respect of the taxable securities
transactions entered into in the course of business during the FY will be allowable as 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”.
3.
Benefits available to resident shareholders under the Act
3.1
Dividend income
Under Section 10(34) of the Act, any income earned by way of dividends from the Company would be
exempt from tax in the hands of the shareholders, if such dividends are subject to DDT under Section
115-O of the Act.
However, as per the provisions of section 94(7) of the Act, losses arising from transfer/sale 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. “Record date” means such date as may be fixed by the company for the
purposes of entitlement of the holder of securities to receive dividend.
As per the provisions of section 14A of the Act, no deduction would be allowed in respect of
expenditure incurred in relation to earning of dividend income which is exempt from tax.
3.2
Computation of capital gains
3.2.1
As per the provisions of section 2(42A) of the Act, the shares held in a company or any other security
listed on a recognized stock exchange will be considered as short term capital asset if they are held for a
period of 12 months or less immediately preceding date of their transfer. If the period of holding of
shares is more than 12 months immediately preceding date of transfer, they will be treated as long
term capital asset.
The capital gain/loss on sale of short term capital assets is regarded as short term capital loss. The
capital gain/loss on sale of long term capital assets is regarded as long term capital loss.
However, with effect from AY 2015-16, an unlisted security and a unit of a mutual fund (other than an
equity oriented mutual fund) shall be a short-term capital asset if it is held for not more than thirty- six
months. It is further provided that, if the unlisted shares and units of a non-equity-oriented mutual fund
are transferred during the period from April 1, 2014 to July 10, 2014, then such shares/units would
continue to be characterized as long-term capital assets, if they have been held for a period of more
than12 months (instead of more than 36 months).
3.2.2
According to Section 10(38) of the Act, long-term capital gains on sale of equity shares, where the
transaction of sale is chargeable to STT, shall be exempt from tax.
177
Preliminary Placement Document
However, in case of a shareholder being a company, gains arising from transfer of above referred
long-term capital asset shall be taken into account for computing the book profit for the purposes of
computation of MAT under Section 115JB of the Act.
3.2.3
Section 48 of the Act, (which prescribes the mode of computation of capital gains) provides for
deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of
a capital asset from the sale consideration to arrive at the amount of capital gains.
However, in respect of long-term capital gains, a deduction of indexed cost of acquisition/improvement
is available.
Indexed cost of acquisition means the means an amount which bears to the cost of acquisition the
same proportion as Cost Inflation Index (CII) for the year in which the asset is transferred bears to the
CII for the first year in which the asset was held by the taxpayer. In other words indexed cost of
acquisition is computed as under:
Cost of acquisition X CII of the FY in which the asset is transferred/ CII of the FY in which the asset
was first held by the tax payer.
3.2.4
As per the provisions of Section 112 of the Act, long-term capital gains (to the extent not exempt
under Section 10(38) of the Act) would be subject to tax in the hands of the shareholders at the rate of
20% (plus applicable surcharge, education cess and secondary & higher education cess).
As per the proviso to Section 112(1) of the Act, if the tax on long-term capital gains resulting from
transfer of listed securities [to the extent not exempt under Section 10(38) of the Act], calculated at
the rate of 20% (with indexation benefit) exceeds the tax on long-term gains computed at the rate of
10% (without indexation benefit), then such gains are chargeable to tax at the concessional rate of
10% (without indexation benefit) (plus applicable surcharge, education cess and secondary & higher
education cess ).
However, with effect from AY 2015-16, section 112(1) of the Act provides that tax on long-term
capital gains resulting from transfer of listed securities (other than unit) [to the extent not exempt
under Section 10(38) of the Act], calculated at the rate of 20% (with indexation benefit) exceeds the tax
on long-term gains computed at the rate of 10% (without indexation benefit), then such gains are
chargeable to tax at the concessional rate of 10% (without indexation benefit) (plus applicable
surcharge, education cess and secondary & higher education cess ). It is further provided that, the
benefit of the proviso shall continue to be available for the long-term capital assets, being units of
Mutual Funds, transferred between April 1, 2014 and July 10, 2014.
3.2.5
As per the provisions of Section 111A of the Act, short-term capital gains on sale of equity shares where
the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus applicable
surcharge, education cess and secondary & higher education cess).
Short-term capital gains arising from transfer of shares of the Company, other than those covered by
Section 111A of the Act, would be subject to tax as calculated under the normal provisions of the Act.
3.2.6
Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains
arising on the transfer of equity shares of the Company (other than those covered by section 10(38) of
the Act) would be exempt from tax if such capital gains are invested within 6 months after the date of
such transfer in specified assets, being bonds issued by:
a)
National Highway Authority of India constituted under Section 3 of The National Highway
Authority of India Act, 1988;
178
Preliminary Placement Document
b)
Rural Electrification Corporation Limited, the Company formed and registered under the
Companies Act, 1956.
The investment made in such bonds during any FY cannot exceed ` 5, 000,000.
However, with effect from AY 2015-16, it is provided that the investment made by an assessee in the
long-term specified asset, out of capital gains arising from transfer of one or more original asset, during
the financial year in which the original asset is transferred and in the subsequent financial year does not
exceed ` 5,000,000.
If only a part of the capital gains is invested, the exemption available shall be in the same proportion as
the cost of long term specified assets bears to the whole of the capital gain. However, in case the long
term specified assets are transferred or converted into money within 3 years from the date of its
acquisition, the amount of capital gains so exempt shall be chargeable to tax during the year of such
transfer or conversion.
3.2.7
As per the provisions of Section 54F of the Act, long term capital gains [which are not covered under
Section 10(38)] arising from the transfer of any capital asset (not being residential house property) held
by an Individual or Hindu Undivided Family (“HUF”) will be exempt from tax, if net consideration is
utilized, within a period of one year before or two year after the date of transfer, for purchase of a
residential house, or for construction of a residential house within three years. The exemption is
available subject to fulfillment of prescribed conditions.
With effect from AY 2015-16, section 54F provides that the exemption is available if the investment is
made in purchase or construction of one residential house situated in India.
3.2.8
Under section 70(2) of the Act, the short term capital loss can be set off against other short term
capital gain or long term capital gain. Under section 70(3) of the Act, the long term capital loss can be set
off against other long term capital gain.
3.2.9
Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off
against capital gains (whether short term or long term) of subsequent years ( upto 8 years).
Unabsorbed long term capital loss can be carried forward and set off against long term capital gains
only in of subsequent years (upto 8 years). However, the unabsorbed capital loss can be carried forward
only when the return of income has been filed within the time prescribed under section 139(1) of
the Act.
3.3
Deduction of STT while computing business income
As per Section 36(1) (xv) of the Act, the STT paid by the tax payer in respect of the taxable securities
transactions entered into in the course of business during the FY will be allowable as 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”.
3.4
Income from other sources
As per the provisions of section 56(2) (vii) of the Act, where any property, other than immovable
property (including shares) is received by an individual/ HUF: I)
without consideration and the aggregate fair market value of such property exceeds ` 50,000, or
179
Preliminary Placement Document
ii) For a consideration which is less than the aggregate fair market value of such property by at least `
50, 000, then the difference between fair market value and consideration paid will be taxable as
income from other sources.
This provision is applicable only if shares are held by the shareholders as a capital asset.
This provision is not applicable where shares are received in any of the following modes, namely –
1) From any relative;
2) On the occasion of marriage of the individual;
3) Under a will or by way of inheritance;
4) In contemplation of death of the payer or donor;
5) From any local authority as defined in Explanation to Section 10(20);
6) From any fund or foundation or university or other educational institution or hospital or other
medical institution or any trust or institution referred to in Section 10(23C); or
7) From any trust or institution registered under Section 12AA.
3.5
Any Income received by any person for or a behalf of the New Pension System Trust is exempt from tax
and is also not subject to DDT.
3.6
Under Section 10(32) of the IT Act, any income of minor children who is a shareholder of the Company
clubbed in the total income of the parent under Section 64(1A) of the IT Act, will be exempt from tax to
the extent of `1,500 per minor child whose income is so included in the income of the parent.
4.
Benefits available to Non-resident shareholders (Other than Foreign Institutional Investors)
under the Act:
4.1
Dividends exempt under Section 10(34) of the Act
Under Section 10(34) of the Act, any income earned by way of dividends from the Company would be
exempt from tax in the hands of the shareholders, if such dividends are subject to DDT under Section
115-O of the Act.
However, as per the provisions of section 94(7) of the Act, losses arising from transfer/sale 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. “Record date” means such date as may be fixed by the company for the
purposes of entitlement of the holder of securities to receive dividend.
As per the provisions of section 14A of the Act, no deduction would be allowed in respect of
expenditure incurred in relation to earning of dividend income which is exempt from tax.
4.2
Computation of capital gains
4.2.1
As per the provisions of section 2(42A) of the Act, the shares held in a company or any other security
listed on a recognized stock exchange will be considered as short term capital asset if they are held for a
period of 12 months of less immediately preceding date of their transfer. If the period of holding of
shares is more than 12 months immediately preceding date of transfer, they will be treated as long
term capital asset.
180
Preliminary Placement Document
The capital gain/loss on sale of short term capital assets is regarded as short term capital loss. The
capital gain/loss on sale of long term capital assets is regarded as long term capital loss.
However, with effect from AY 2015-16, an unlisted security and a unit of a mutual fund (other than an
equity oriented mutual fund) shall be a short-term capital asset if it is held for not more than thirty- six
months. It is further provided that, if the unlisted shares and units of a non-equity-oriented mutual fund
are transferred during the period from April 1, 2014 to July 10, 2014, then such shares/units would
continue to be characterized as long-term capital assets, if they have been held for a period of more
than12 months (instead of more than 36 months).
4.2.2
According to Section 10(38) of the Act, long-term capital gains on sale of equity shares, where the
transaction of sale is chargeable to STT, shall be exempt from tax.
However, in case of shareholder being a company and liable to MAT in India, gains arising on
transfer of above referred long term capital asset shall not be reduced in computing the “book profit” for
the purposes of computation of MAT under Section 115 JB of the Act.
4.2.3 First proviso to section 48 of the Act contains special provisions relating to computation of capital gains,
in the hands of non-residents arising from transfer of shares of an Indian company which were
purchased in foreign currency.
In such a case, the capital gains are computed by converting the cost of acquisition, expenditure incurred
wholly and exclusively in connection with transfer and the full value of consideration into the same
foreign currency that was initially used to purchase of such shares. The capital gain so computed in the
original foreign currency is reconverted into Indian Rupees at the prescribed exchange rate. The
said manner of computing capital gains is used in respect of capital gains accruing or arising from every
reinvestment thereafter in and sale of shares of an Indian company.
The non-resident shareholders are not entitled to indexation benefit (for a detailed discussion on
indexation, refer Para 2.4.3 above).
4.2.4 As per the provisions of Section 112 of the Act, long-term capital gains (to the extent not exempt under
Section 10(38) of the Act) would be subject to tax in the hands of the shareholders at the rate of 20%
(plus applicable surcharge, education cess and secondary & higher education cess).
As per the proviso to Section 112(1) of the Act, if the tax on long-term capital gains resulting from
transfer of listed securities [to the extent not exempt under Section 10(38) of the Act], calculated at
the rate of 20% (with indexation benefit) exceeds the tax on long-term gains computed at the rate of
10% (without indexation benefit), then such gains are chargeable to tax at the concessional rate of
10% (without indexation benefit) (plus applicable surcharge, education cess and secondary & higher
education cess).
However, with effect from AY 2015-16, section 112(1) of the Act provides that tax on long-term
capital gains resulting from transfer of listed securities (other than unit) [to the extent not exempt
under Section 10(38) of the Act], calculated at the rate of 20% (with indexation benefit) exceeds the tax
on long-term gains computed at the rate of 10% (without indexation benefit), then such gains are
chargeable to tax at the concessional rate of 10% (without indexation benefit) (plus applicable
surcharge, education cess and secondary & higher education cess ). It is further provided that, the
benefit of the proviso shall continue to be available for the long-term capital assets, being units of
Mutual Funds, transferred between April 1, 2014 and July 10, 2014.
4.2.5
As per the provisions of Section 111A of the Act, short-term capital gains on sale of equity shares
where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus
applicable surcharge, education cess and secondary & higher education cess).
181
Preliminary Placement Document
Short-term capital gains arising from transfer of shares of the Company, other than those covered by
Section 111A of the Act, would be subject to tax as calculated under the normal provisions of the Act.
4.2.6
Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains
arising on the transfer of equity shares of the Company (other than those covered by section 10(38) of
the Act) would be exempt from tax if such capital gains are invested within 6 months after the date of
such transfer in specified assets, being bonds 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.
The investment made in such bonds during any FY cannot exceed ` 5, 000,000.
However, with effect from AY 2015-16, it is provided that the investment made by an assessee in the
long-term specified asset, out of capital gains arising from transfer of one or more original asset, during
the financial year in which the original asset is transferred and in the subsequent financial year does not
exceed ` 5,000,000.
If only a part of the capital gains is invested, the exemption available shall be in the same proportion as
the cost of long term specified assets bears to the whole of the capital gain. However, in case the long
term specified assets are transferred or converted into money within 3 years from the date of its
acquisition, the amount of capital gains so exempt shall be chargeable to tax during the year of such
transfer or conversion.
4.2.7
As per the provisions of Section 54F of the Act, long term capital gains [which are not covered under
Section 10(38)] arising from the transfer of any capital asset (not being residential house property) held
by an Individual or Hindu Undivided Family (“HUF”) will be exempt from tax, if net consideration is
utilized, within a period of one year before or two year after the date of transfer, for purchase of a
residential house, or for construction of a residential house within three years. The exemption is
available subject to fulfillment of prescribed conditions.
With effect from AY 2015-16, section 54F provides that the exemption is available if the investment is
made in purchase or construction of one residential house situated in India.
4.2.8
Under section 70(2) of the Act, the short term capital loss can be set off against other short term
capital gain or long term capital gain. Under section 70(3) of the Act, the long term capital loss can be set
off against other long term capital gain.
4.2.9
Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off
against capital gains (whether short term or long term) of subsequent years ( up to 8 years).
Unabsorbed long term capital loss can be carried forward and set off against long term capital gains
only in of subsequent years (up to 8 years). However, the unabsorbed capital loss can be carried forward
only when the return of income has been filed within the time prescribed under section 139(1) of
the Act.
4.3
Deduction of STT while computing business income
As per Section 36(1) (xv) of the Act, the STT paid by the tax payer in respect of the taxable securities
transactions entered into in the course of business during the FY will be allowable as 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”.
182
Preliminary Placement Document
4.4
As per the provisions of section 56(2) (vii) of the Act, where any property, other than immovable
property (including shares) is received by an individual/ HUF: I)
without consideration and the aggregate fair market value of such property exceeds ` 50,000, or
ii) For a consideration which is less than the aggregate fair market value of such property by at least `
50, 000, then the difference between fair market value and consideration paid will be taxable as
income from other sources.
This provision is applicable only if shares are held by the shareholders as a capital asset.
This provision is not applicable where shares are received in any of the following modes, namely –
I) from any relative;
ii) On the occasion of marriage of the individual;
iii) Under a will or by way of inheritance;
iv) In contemplation of death of the payer or donor;
v) From any local authority as defined in Explanation to Section 10(20);
vi) From any fund or foundation or university or other educational institution or hospital or other
medical institution or any trust or institution referred to in Section 10(23C); or
vii) From any trust or institution registered under Section 12AA.
4.5
Under Section 10(32) of the IT Act, any income of minor children who is a shareholder of the Company
clubbed in the total income of the parent under Section 64(1A) of the IT Act, will be exempt from
tax to the extent of `1,500 per minor child whose income is so included in the income of the parent.
4.6
4.6.1
Special benefit available to Non-resident Indian shareholders
In addition to some of the general benefits available to non-resident shareholders, where “specified
assets” (as defined in Section 115C (f) of the Act, which includes equity shares in the Company)
have been subscribed or acquired or purchased by Non-Resident Indians, they have the option of
being governed by the provisions of Chapter XII-A of the Act, which inter alia entitles them to the
benefits mentioned below.
As per section 115C (e) of the Act, a “non-resident Indian” (NRI) has been defined to mean an
individual being citizen of India or person of Indian origin who is not a resident.
4.6.2
4.6.3
As per the provisions of section 115E of the Act, investment income (income derived from specified
assets other than dividends referred to in section 115O) or income from long- term capital gains on
transfer of assets other than specified asset shall be taxable at the rate of 20% in the hands of a NRI.
Income by way of long term capital gains in respect of a specified asset shall be chargeable to income
tax at the rate of 10%. The rates would be increased by the applicable rate of surcharge education cess
and secondary & higher education cess.
Under provisions of Section 115F of the Act, any long term capital gains arising from the transfer of
shares of the Company acquired in convertible foreign exchange shall be exempt from tax if the
whole or any part of the net consideration (consideration less expenditure incurred wholly and
183
Preliminary Placement Document
exclusively on transfer) is reinvested within six months of the date of the transfer in any “specified
assets” or savings certificates referred to in clause (4B) of section 10.
If only a part of the net consideration is reinvested, the exemption shall be proportionately reduced.
The amount so exempted shall be chargeable to tax as “capital gains” subsequently, if the specified
assets or savings certificate are transferred or converted into money within three years from the date of
their acquisition. The taxability shall arise in the year in which the transfer or conversion, as the case
may be, takes place.
4.6.4 As per the provisions of section 115D, no deduction is allowed for any expenditure or allowance under
any provision of the Act in computing the investment income of the NRI. Further no deduction is
allowed to NRI under chapter VIA against investment income or income by way of long term capital
gains. The benefit of indexation is also not available.
4.6.5
As per the provisions of Section 115G of the Act, NRIs are not required to furnish a return of income
under Section 139(1) of the Act, if:
i)
Their income chargeable under the Act consists of only investment income or long term capital
gains arising from the transfer of specified asset or both and;
ii)
Tax deductible at source has been deducted as per the provisions of Chapter XVII-B of the Act
from the income.
4.6.6
As per the provision of Section 115H of the Act, where a person who is NRI in any FY, becomes
assessable as resident in India in respect of total income of any subsequent year, the provisions of
Chapter XII-A shall continue to apply to him in relation to the investment income derived from any
foreign exchange asset being an assets specified in sub clause (ii), (iii), (iv) or (v) of Section
115(C)(f) for that AY and for every subsequent AY until there is transfer or conversion into money of
such asset. For this provision to apply, NRI is required to file a declaration along with his return of
income for the AY in which he becomes assessable as resident in India.
4.6.7
As per section 115A of the Act, where the total income of a Non-resident (not being a company) or of a
foreign company includes dividends (other than dividends referred to in section 115O of the Act), tax
payable on such income shall be aggregate of amount of income-tax calculated on the amount of
income by way of dividends included in the total income, at the rate of 20 per cent (plus applicable
surcharge and education cess).
4.6.8
In accordance with Section 115I of the Act, where a NRI opts not to be governed by the provisions of
Chapter XII-A for any AY, his total income for that AY (including income arising from investment in
the company) will be computed and tax will be charged according to the other provisions of the Act.
4.7
Taxability as per DTAA
4.7.1
The tax rates and consequent taxation mentioned above will be further subject to any benefits
available under the DTAA, if any, between India and the country or any specified territory in which the
non-resident has fiscal domicile.
As per the provisions of Section 90(2) of the Act, the provision of the DTAA would prevail over the
provisions of the Act to the extent they are more beneficial to the non-resident.
4.7.2
As per provisions of section 90(4) of the Act, a non-resident, shall not be entitled to claim any relief
under DTAA, unless a certificate of his being a resident in any country outside India or specified
territory outside India, as the case may be has been obtained by him from the government of that
184
Preliminary Placement Document
country or specified territory. In other words, the non-resident tax payers shall be entitled to be
governed by the provisions of the DTAA only when they obtain a tax residency certificate from the
government of their country of residence.
In addition, as per the provisions of section 90(5) of the Act, a non-resident shall also provide
prescribed documents.
5.
Benefits available to Foreign Institutional Investors (“FIIs”) under the Act
5.1
Dividends exempt under Section 10(34) of the Act
Under Section 10(34) of the Act, any income earned by way of dividends from the Company would be
exempt from tax in the hands of the shareholders, if such dividends are subject to DDT under Section
115-O of the Act.
However, as per the provisions of section 94(7) of the Act, losses arising from transfer/sale 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. “Record date” means such date as may be fixed by the company for the
purposes of entitlement of the holder of securities to receive dividend.
As per the provisions of section 14A of the Act, no deduction would be allowed in respect of
expenditure incurred in relation to earning of dividend income which is exempt from tax.
5.2
Taxability of capital gains
5.2.1
As per the provisions of Section 115AD of the Act, FIIs will be taxed on the capital gains that are not
exempt under Section 10(38) of the Act at the rates as follows:
Nature of income
Rate of tax (%)
Long term capital gain [other than the long term capital gain covered
by the provisions of section 10(38)]
10
Short term capital gain (other than the short term capital gain
covered by the provisions of section 111A)
30
The above tax rates would be increased by the applicable rate of surcharge education cess and
secondary & higher education cess.
The benefits of indexation and foreign currency fluctuation protection are not available to an FII.
The above mentioned capital gains are not subject to tax deduction at source as per the provisions of
section 196D (2) of the Act.
5.2.2
According to Section 111A of the Act, short-term capital gains on sale of equity shares where the
transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus applicable
surcharge, education cess and secondary & higher education cess) in addition to the other requirements,
as specified in the Section.
185
Preliminary Placement Document
5.3
Capital gains- not subject to Income- tax
5.3.1
According to Section 10(38) of the Act, long-term capital gains on sale of equity shares, where the
transaction of sale is chargeable to STT, shall be exempt from tax.
However, in case of shareholder being a company and liable to MAT in India, gains arising on
transfer of above referred long term capital asset shall not be reduced in computing the “book profit” for
the purposes of computation of MAT under Section 115 JB of the Act.
5.3.2
Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains
arising on the transfer of equity shares of the Company (other than the long term capital gain covered by
the provisions of section 10(38)) would be exempt from tax if such capital gains is invested within
6 months after the date of such transfer in specified assets, being bonds issued by:
a)
National Highway Authority of India constituted under Section 3 of The National Highway
Authority of India Act, 1988;
b)
Rural Electrification Corporation Limited, the Company formed and registered under the
Companies Act, 1956.
The investment made in such bonds during any FY cannot exceed ` 5, 000,000. However, with effect
from AY 2015-16, it is provided that the investment made by an assessee in the long-term specified
asset, out of capital gains arising from transfer of one or more original asset, during the financial year in
which the original asset is transferred and in the subsequent financial year does not exceed `
5,000,000.
If only part of the capital gain is so reinvested, the exemption available shall be in the same
proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in
case the specified asset is transferred or converted into money within 3 years from the date of its
acquisition, the amount so exempted shall be chargeable to tax during the year of such transfer or
conversion.
5.3.3
Under section 70(2) of the Act, the short term capital loss can be set off against other short term
capital gain or long term capital gain. Under section 70(3) of the Act, the long term capital loss can be set
off against other long term capital gain.
5.3.4
Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off
against capital gains (whether short term or long term) of subsequent years (upto 8 years).
Unabsorbed long term capital loss can be carried forward and set off against long term capital gains
only in of subsequent years (upto 8 years). However, the unabsorbed capital loss can be carried forward
only when the return of income has been filed within the time prescribed under section 139(1) of
the Act.
5.4
Income from Business Profits
As per Section 36(1) (xv) of the Act, the STT paid by the tax payer in respect of the taxable securities
transactions entered into in the course of business during the FY will be allowable as 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”.
5.5
Taxability as per DTAA
5.5.1
The tax rates and consequent taxation mentioned above will be further subject to any benefits
available under the DTAA, if any, between India and the country or any specified territory in which the
non-resident has fiscal domicile.
186
Preliminary Placement Document
As per the provisions of Section 90(2) of the Act, the provision of the DTAA would prevail over the
provisions of the Act to the extent they are more beneficial to the non-resident.
5.5.2
As per provisions of section 90(4) of the Act, a non-resident, shall not be entitled to claim any relief
under DTAA, unless a certificate of his being a resident in any country outside India or specified
territory outside India, as the case may be has been obtained by him from the government of that
country or specified territory. In other words, the non-resident tax payers shall be entitled to be
governed by the provisions of the DTAA only when they obtain a tax residency certificate from the
government of their country of residence.
In addition, as per the provisions of section 90(5) of the Act, a non-resident shall also provide
prescribed documents.
6.
Benefits available to Mutual Funds under the Act
6.1
As per the provisions of Section 10(23D) of the Act, any income of:
a ) A mutual fund registered under the Securities and Exchange Board of India Act, 1992 or
regulation made there under.
b)
Mutual Funds set up by public sector banks or public financial institutions or authorized by the
Reserve Bank of India would be exempt from income-tax, subject to the conditions as the
Central Government may by notification in the Official Gazette specify in this behalf.
However, the Mutual Funds would be required to pay tax on distributed income to unit holders as per
the provisions of Section 115R of the Act.
6.2
As per Section 10(35) of the Act, the following income shall be exempt in the hands of the Company:
I)
Income received in respect of the units of a Mutual Fund specified under clause (23D) of
Section10; or
ii) Income received in respect of the units from the Administrator of the Specified undertaking; or
iii) Income received in respect of units from the specified company.
However, as per the proviso to section 10(35), the above provisions are not applicable to any income
arising from transfer of units of the Administrator of the specified undertaking or of the specified
company or of a mutual fund.
6.3
Under Section 14A of the Act, no deduction is permitted in respect of expenditure incurred in relation to
earning of income which is not chargeable to tax including dividends exempt under Section
10(34) of the Act. The expenditure relatable to “exempt income” needs to be determined in
accordance with the provisions specified in Section 14A of the Act read with Rule 8D of the
Income-tax Rules, 1962. (“The Rules”)
6.4
As per the provisions of section 94(7) of the Act, losses arising from transfer/sale 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.
“Record date” means such date as may be fixed by the company for the purposes of entitlement of the
holder of securities to receive dividend.
187
Preliminary Placement Document
7.
7.1
Benefits available to Venture Capital Companies/Funds
Under Section 10(23FB) of the Act, any income of Venture Capital Companies or Venture Capital Funds
registered with the Securities and Exchange Board of India, from investment in a venture capital
undertaking would be exempt from income tax, subject to conditions specified therein. “Venture
capital undertaking” means:
A venture capital undertaking as defined in clause (n) of the regulation 2of Securities and
or
Exchange Board of India (Venture Capital Funds) Regulations, 1996
A venture capital undertaking as defined in clause (as) of sub regulation (1) of regulation 2of
Alternate Investment Fund Regulations.
7.2
Under Section 14A of the Act, no deduction is permitted in respect of expenditure incurred in relation to
earning of income which is not chargeable to tax including dividends exempt under Section 10(34) of the
Act. The expenditure relatable to “exempt income” needs to be determined in accordance with the
provisions specified in Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962.
(“The Rules”)
7.3
As per the provisions of section 94(7) of the Act, losses arising from transfer/sale 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.
“Record date” means such date as may be fixed by the company for the purposes of entitlement of the
holder of securities to receive dividend.
7.4
According to Section 115U of the Act, any income accruing or arising to or received by a person from
his investment in venture capital companies/ funds would be taxable in his hands in the same manner as
if it were the income accruing/ arising/ received by such person had the investments been made
directly in the venture capital undertaking.
7.5
Further, as per Section 115U(5) of the Act, the income accruing or arising to or received by the Venture
Capital Company/ Funds from investments made in a Venture Capital Undertaking if not paid or
credited to a person (who has made investments in a Venture Capital Company/ Fund) shall be deemed
to have been credited to the account of the said person on the last day of the previous year in the same
proportion in which such person would have been entitled to receive the income had it been paid in the
previous year.
8.
Benefits available under the Wealth-tax Act, 1957
Asset as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in
companies and hence, shares are not liable to wealth tax.
9.
Benefits available under the Gift-tax Act, 1958
Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. However as per the
provisions of Section 56(2)(vii) of the Act, value of any property including shares and securities
received without consideration or for inadequate consideration will be included in the total income of
the recipient and be subject to tax, unless exempt(for detailed discussion, refer Para 3.4 above).
10.
Loss under the head “Capital Gains”
In general terms, loss arising from transfer of a capital asset in India can only be set off against capital
gains. Long term capital loss arising on sale of equity shares not subjected to STT during a year is
188
Preliminary Placement Document
allowed to be set-off only against long term capital gains. A short term capital loss can be set off against
capital gains whether short term or long term. To the extent that the loss is not absorbed in the year of
transfer, it may be carried forward for a period of 8 years immediately succeeding the year for which the
loss was first determined and may be set off against the capital gains assessable for such subsequent
years. In order to set off a capital loss as above, the investor (resident/ non- resident) is required to file
appropriate and timely income-tax returns in India.
11.
TAX DEDUCTION AT SOURCE
No income tax is deductible at source from income by way of capital gains arising to a resident
shareholder under the present provisions of the IT Act. 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 LTCG exempt
u/s 10(38)) may be subject to withholding of tax at the rate under the domestic tax laws or under the tax
laws or under the DTAA, whichever is beneficial to the assessee, unless a lower withholding tax
certificate is obtained from the tax authorities. However, the non-resident investor will have to furnish a
certificate of his being a resident in a country outside India and a suitable declaration for not having a
fixed base in India, to get the benefit of the applicable DTAA and such other document as may be
prescribed as per the provision of section 90(4) of IT Act. The withholding tax rates are subject to the
recipients of income obtaining and furnishing a permanent account number (PAN) to the payer, in the
absence of which the applicable withholding tax rate wouldbe the higher of the applicable rates or 20%,
under section 206AA of the Act.
Notes:
1)
The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary
manner only and is not a complete analysis or listing of all potential tax consequences of the
purchase, ownership and disposal of equity shares;
2)
The above Statement of Possible Direct Tax Benefits sets out the possible tax benefits available to the
Company and its shareholders under the current Tax Laws presently in force in India. Several of these
benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the
relevant Tax Laws;
3)
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, 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;
4)
In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further
subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between
India and the country/specified territory (outside India) in which the non-resident has fiscal domicile;
5)
The stated benefits will be available only to the sole/first named holder in case the shares are held by
joint shareholders;
6)
The tax rates (including rates for tax deduction at source) mentioned in this Statement is applicable for
FY2014-15(AY 2015-16) and is exclusive of surcharge, education cess and higher education cess.
Surcharge @ 10% of income tax is applicable in case of individuals where total income under the Act
exceeds `1 crore.
Surcharge @ 5% is applicable in case of resident companies where total income under the Act
exceeds ` 1 crore and is up to ` 10 crore. If the total income of the resident companies exceeds ` 10
crore, surcharge would be leviable @ 10%.
189
Preliminary Placement Document
In case of foreign companies, surcharge @ 2% is applicable in case of where total income under the Act
exceeds ` 1 crore and is up to ` 10 crore. If the total income exceeds `10 crore, surcharge would be
leviable @ 5%.
7)
We have not considered the provisions of Direct Tax Code Bill 2010 for the purpose of this
Statement.
For Praturi and Sriram
Chartered Accountants
Firm Registration No. 002739S
K. Sriram
Partner
Membership No. 037821
Place: Hyderabad
Date: 26/01/2015
190
Preliminary Placement Document
LEGAL PROCEEDINGS
Our Company is involved in various legal proceedings, which involve matters pertaining to, amongst others, tax,
civil and other disputes. The section below describes the legal proceedings, which singly or in aggregate, could
have a material adverse effect on our Company.
Following is a brief summary of the legal proceedings involving our Company and our Promoters as on date of this
Preliminary Placement Document.
Litigations/Proceedings pending against our Company
Tax Cases
1.
An Appeal (“Appeal”) has been filed by our Company (“Appellant”) against the Assistant Commissioner
Income Tax, Circle 16 (2), Hyderabad (“Respondent”) before the Commissioner of Income Tax (Appeal),
Hyderabad (“CIT - A”), against the order dated December 31, 2010 under section 143 (3) of the I T. Act
(“Impugned Order”) of the Respondent under the Income Tax Act, 1961 (“I. T. Act”) and the rules formulated
thereunder.
The Respondent had, vide Impugned Order, disallowed certain general expenses viz ` 17,88,127 towards loss on
sale of assets was disallowed and added back stating the same was not an allowable expenditure and a sum of `
3,72,620 towards expenses incurred on the merger/demerger scheme was disallowed and added back stating the
same was not an allowable revenue expenditure, thereby re-computing the total income. Accordingly a notice of
demand dated December 31, 2010 under section 156 of the I. T. Act for sum of ` nil was issued to the Appellate for
the assessment year 2008 – 2009.
The Appeal has been filed on the grounds, inter alia, that:
Respondent erred in non- consideration of business loss of Appellant upto the assessment year 2007 – 2008
before the setoff of unabsorbed depreciation against taxable income of the year;
(ii)
Respondent erred in the adjustment and set off of carried forward business losses and depreciation as a
consequences thereof;
(iii)
Respondent erred in not passing an order quantifying the amount of minimum alternate tax payable under
section 115 JB for the said assessment year;
(iv)
Respondent erred in not giving credit of advanced tax, tax deducted at source and other taxes remitted by the
Appellant and did not recognise and thereby denied the refund legitimately due to the Appellant with regard to tax
paid and the interest applicable thereon.
(i)
The Appeal is currently pending before the CIT – A.
2.
An Appeal bearing number T A 661 of 2011 (“Appeal”) has been filed by our Company (“Appellant”) against
the State of Andhra Pradesh (“Respondent”) before the Sale Tax Appellate Tribunal, Andhra Pradesh (“STAT”),
against the order dated May 31, 2011 (“Impugned Order”) passed by the Appellate Deputy Commissioner,
Hyderabad (“ADC”).
ADC had, vide Impugned Order, dismissed the appeal filed by the Appellant against the proceedings of the
Commercial Tax Officer, Hyderabad wherein the excess input tax credit claim by the Appellant was rejected for the
tax period falling under the year 2006 – 2007. The Commercial Tax Officer, Hyderabad vide its order dated March
31, 2010 rejected the claim of excess input tax credit of `5,19,186 by the Appellant on the ground that input tax
credit has not been claimed during the relevant period that is January 2006 to March 2006 but claimed in the month
of April, 2006 and VAT 213 has not been filed as per the rule 236 (a) of the APVAT Rules, 2005. The Commercial
Tax Officer, Hyderabad also denied the input tax credit to the extent of ` 2,36,968 in respect of other than raw
material.
191
Preliminary Placement Document
The Appeal has been filed on the grounds, inter alia, that orders of ADC are illegal, arbitrary and contrary to law
and ADC failed to deal with contentions of the Appellant in a proper perspective. The Appeal is currently pending
before the Sale Tax Appellate Tribunal, Andhra Pradesh.
3.
An Appeal bearing number 158 of 2010 (“Appeal”) has been filed by our Company (“Appellant”) against the
State of Andhra Pradesh (“Respondent”) before the Sale Tax Appellate Tribunal, Andhra Pradesh (“STAT”),
against the order dated October 30, 2009 (“Impugned Order”) passed by the Appellate Deputy Commissioner,
Hyderabad (“ADC”).
ADC had, vide Impugned Order, dismissed the appeal filed by the Appellant against the proceedings of the
Commercial Tax Officer, Hyderabad wherein the excess input tax credit claim of the Appellant was rejected for the
tax period falling under the year 2006 – 2007. The Commercial Tax Officer vide its order dated February 18, 2008
rejected the claim of excess input tax credit of `11,29,228 with reference to Form VAT 200 returns for the year 2005
– 2006 on the grounds that the Form 200 –B filed by the Appellant was not in time.
The Appeal has been filed on the grounds, inter alia, that there is strictly no time limit is prescribed for filing of
Form 200 – B, unlike other returns like Form 200, 200 – C, 213, 230, Rules 20 (4) (b), (5c), (6), (7), 8 (b), 9(b)
nowhere say that Form 200 – B, must be filed along with Form 200 unlike Form – 200A and ADC failed to see the
merit of the case. The Appeal is currently pending before the Sale Tax Appellate Tribunal, Andhra Pradesh.
4.
An Appeal bearing number 157 of 2010 (“Appeal”) has been filed by our Company (“Appellant”) against the
State of Andhra Pradesh (“Respondent”) before the Sale Tax Appellate Tribunal, Andhra Pradesh (“STAT”),
against the order dated October 30, 2009 (“Impugned Order”) passed by the Appellate Deputy Commissioner,
Hyderabad (“ADC”).
ADC had, vide Impugned Order, dismissed the appeal filed by the Appellant against the proceedings of the
Commercial Tax Officer, Hyderabad wherein the excess input tax credit claim of the Appellant was rejected for the
tax period falling under the year 2005 – 2006. The Commercial Tax Officer vide its order dated February 18, 2008
rejected the claim of excess input tax credit of `5,58,366 with reference to Form VAT 200 returns for the year 2005
– 2006 on the grounds that the Form 200 –B filed by the Appellant was not in time.
The Appeal has been filed on the grounds, inter alia that there is strictly no time limit is prescribed for filing of
Form 200 – B, unlike other returns like Form 200, 200 – C, 213, 230, Rules 20 (4) (b), (5c), (6), (7), 8 (b), 9(b)
nowhere say that Form 200 – B, must be filed along with Form 200 unlike Form – 200A and ADC failed to see the
merit of the case. The Appeal is currently pending before the Sale Tax Appellate Tribunal, Andhra Pradesh.
5.
An Appeal bearing number T. A. Nos. 1124 of 2007 (“Appeal”) has been filed by our Company (“Appellant”)
against the State of Andhra Pradesh (“Respondent”) before the Sale Tax Appellate Tribunal, Andhra Pradesh
(“STAT”), against the order dated December 2, 2004 (“Impugned Order”) passed by the Additional Commissioner
(Central Tax), Hyderabad (“ACCT”) in respect of the Assessment Year 1996 – 1997 (APGST).
ACCT had, vide Impugned Order, dismissed the appeal filed by the Appellant against the proceedings of the
Commercial Tax Officer, Hyderabad wherein ACCT revised the matter in relation to facility of deferment, on the
basis of production as available in the final eligibility certificate. The dispute is pertaining to quantum of eligibility
for sales tax deferment arising due to alleged misconduct of the base production.
The Appellant has filed said Appeals on the grounds, inter alia, that the ACCT erred in revising the order of
Appellate Deputy Commissioner who is categorically found that the base turnover fixed for the unit – I is 390 MTs
and the base production fixed at 1148 MTs for first expansion of unit I is 1,148 MTs and directed adjustment of the
excess tax paid during the said period to the subsequent assessment year in view of the reduction of base production
for first expansion of unit I and the ACCT ought to have seen since the base production fixed for the Unit – I is 390
MTs, the liability is only upto 390 MTs and production over and above 390 MTs the Unit – I is entitled to avail the
incentive granted under the final eligibility certificate. The intention of the Government in granting eligibility
certificate to the expansion units fixing the base turnover cannot be understood in isolation and the ACCT
misinterpreted the scheme of incentive and grossly erred in observing that the notification of deferment does not
192
Preliminary Placement Document
provide adjustment and tax refunds. The ACCT failed to consider the fact of pendency of revision before the High
Court on the issue of levy of turnover tax under section 5 A on the turnover eligible to tax under section 5 F. The
ACCT also failed to consider that the section 5 – F and 5 – A are independent charging sections with non – obstinate
clause and hence the question of levy of turnover tax on the turnover under section 5F does not arise. Further, the
Appellant vide a letter dated September 5, 2013 made a request to the Sale Tax Appellate Tribunal, Andhra Pradesh
for withdrawal of said case as the repayment of sale tax deferment for the assessment year 1996 – 1997 was already
started. The Appeal is currently pending before the Sale Tax Appellate Tribunal, Andhra Pradesh.
6.
An Appeal bearing number T. A. Nos. 1125 of 2007 (“Appeal”) has been filed by our Company (“Appellant”)
against the State of Andhra Pradesh (“Respondent”) before the Sale Tax Appellate Tribunal, Andhra Pradesh
(“STAT”), against the order dated December 2, 2004 (“Impugned Order”) passed by the Additional Commissioner
(Central Tax), Hyderabad (“ACCT”) in respect of the Assessment Year 1996 – 1997 (CST).
ACCT had, vide Impugned Order, dismissed the appeal filed by the Appellant against the proceedings of the
Commercial Tax Officer, Hyderabad wherein ACCT revised the matter in relation to facility of deferment, on the
basis of production as available in the final eligibility certificate. The dispute is pertaining to quantum of eligibility
for sales tax deferment arising due to alleged misconduct of the base production.
The Appellant has filed said Appeals on the grounds, inter alia, that the ACCT erred in revising the order of
Appellate Deputy Commissioner who is categorically found that the base turnover fixed for the unit – I is 390 MTs
and the base turnover fixed at the first expansion of unit I is 1,148 MTs and directed adjustment of the excess tax
paid during the said period to the subsequent assessment year in view of the reduction of base production for first
expansion of unit I and the ACCT ought to have seen since the base production fixed for the Unit – I is 390 MTs, the
liability is only upto 390 MTs and production over and above 390 MTs the Unit – I is entitled to avail the incentive
granted under the final eligibility certificate. The intention of the Government in granting eligibility certificate to the
expansion units fixing the base turnover cannot be understood in isolation and the ACCT misinterpreted the scheme
of incentive and grossly erred in observing that the notification of deferment does not provide adjustment and tax
refunds. The ACCT ought to have seen that whatever the tax paid in the excess to the liability after availing the
incentive the same is liable to be refunded or adjusted at the option of the assesse under section 33. Further, the
Appellant vide a letter dated September 5, 2013 made a request to the Sale Tax Appellate Tribunal, Andhra Pradesh
for withdrawal of said case as the repayment of sale tax deferment for the assessment year 1996 – 1997 was already
started. The Appeal is currently pending before the Sale Tax Appellate Tribunal, Andhra Pradesh.
Litigation/ proceedings filed by our Company
Tax Proceedings
1.
Our Company has filed a Writ Petition No. 9963 of 2007 before the High Court of Andhra Pradesh, Hyderabad
against the Commercial Tax Officer, Hyderabad and Others seeking to declare Rule 37(2) (h) of the Andhra Pradesh
Value Added Tax Rules 2005 to be ultra vires the Section 13(2) (a) of the Andhra Pradesh Value Added Tax Act,
2005 (“APVAT”) and to set aside the endorsement of the Commercial Tax Officer, Hyderabad (“CTO”) dated
March 12, 2007 refusing to entertain the application for sale tax credit filed by the Company on March 5, 2007
(“Impugned Order”).
Our Company filed the sale tax credit claim in Form 115 for ` 16,30,409 on April 7, 2005 before the CTO under
Section 13(2) (a) of the APVAT pertaining to goods purchased during April 1, 2004 and March 31, 2005. However
by endorsement dated October 6, 2005, the CTO rejected the request observing that the form 115 has not been
received as per the office records. The CTO‟s order was upheld by Appellate Deputy Commissioner, Punjagutta
Division and later on by the Sale Tax Appellate Tribunal. Aggrieved by the said order, our Company has filed Tax
Revision Application under Section 34 of the APVAT before the Sale Tax Appellate Tribunal, however the said
application was not entertained on the grounds that the appeal was already rejected by the Sale Tax Appellate
Tribunal. Therefore our Company has preferred an appeal before the High Court of Andhra Pradesh. The Writ
Petition is currently pending before the High Court of Andhra Pradesh.
Civil Proceedings
193
Preliminary Placement Document
1.
A suit bearing O S number 806 of 2011 has been filed by our Company (“Plaintiff”) against B Prasad and
Others (“Defendants”) before the Court of District Judge, Ranga Reddy District, L B Nagar for recovery of sum of
` 11,64,000.
The Petitioner has filed the suit O S number 115 of 2003 before IV Additional District Judge, Ranga Reddy District
for specific performance against the Defendants in respect of land admeasuring 2000.4 square yards bearing plot no.
61/D/11(Part – I) situated at Industrial Development Area, Jeedimetla, Quthubullapur Mandal, Ranga Reddy District
for non-compliance of agreement of sale deed dated August 2, 2000. The Additional District Judge, Ranga Reddy
District vide its order dated December 17, 2006 directed the Defendants to execute and register the sale deed of the
said property in favour of the Plaintiff by receiving balance consideration of ` 6,00,000. The Plaintiff deposited `
6,00,000 in the Court of District Judge, however the Defendants failed to execute the sale deed in favour of the
Plaintiff and the Court has executed the sale deed in favour of Plaintiff. It was also alleged that the Defendant
created a mortgage by obtaining working capital loan and education loan from Andhra Bank on the said property
and failed to repay the outstanding due to Andhra Bank (one of the Defendant). Further, the Plaintiff has also paid `
11,64,000 to Andhra Bank as one time settlement amount to clear the outstanding amount on the said property.
Hence, the Plaintiff has filed the suit against Defendants for recovery of ` 11,64,000.
A written statement has been filed by the Defendants on January 23, 2013 wherein Defendants have denied all the
allegations made by the Plaintiff. Further Plaintiff has filed an Interim Application No. 1587 of 2011 in O. S. Mo.
806 of 2011 against the Defendants before the IX Additional District Judge, Ranga Reddy District for recovery of `
6,00,000 with an interest accrued thereon as on June 13, 2011 laying in the credit of O S No 115 of 2003. The Suit is
currently pending before the Court of District Judge, Ranga Reddy District, L B Nagar.
2.
A suit bearing O S number 1256 of 2012 has been filed by our Company (“Plaintiff”) against Patanjali Ayurved
Limited (“Defendant”) under Order VII rule 1 and 2 read with section 26 of the Civil Procedure Code, 1908 before
the Court of Senior Civil Judge, Hyderabad for recovery of sum of ` 5,65,427 along with the interest at the rate of 24
% per annum. The Defendant has failed to make payment of ` 3,74,745 pertaining to purchase order dated January
23, 2010 and invoices dated April 7, 2010, April 11, 2010, June 13, 2010, June 15, 2010 and June 24, 2010 which
includes the balance due amount of invoice dated February 2, 2010. Hence, the Plaintiff has filed the suit against for
Defendants for recovery of ` 5,65,427. The Suit is currently pending before the Court of Senior Civil Judge,
Hyderabad.
3.
A suit bearing O S number 251 of 2012 has been filed by our Company (“Plaintiff”) against Biomax Life
Sciences Limited (“Defendant”) under Order VII rule 1 and 2 read with section 26 of the Civil Procedure Code,
1908 before the Court of Senior Civil Judge, Hyderabad for recovery of sum of ` 2,23,796 along with the interest at
the rate of 24 % per annum. The Plaintiff Defendant has failed to make payment of ` 2,23,796 pertaining to purchase
orders dated August 31, 2010, November 13, 2010, November 15, 2010, November 17, 2010, November 19, 2010
and November 20, 2010. The Suit is currently pending before the Court of Senior Civil Judge, Hyderabad.
4.
A suit bearing number 576 of 2004 has been filed by our Company (“Plaintiff”) against Yash Plastomet
(Private) Limited and Others (“Defendants”) before the High Court of Judicature, Mumbai for restraining the
Defendants for using the registered designs of the Plaintiff in relation to the 20 litter‟s pails. The Plaintiff has filed
applications and obtained certificate for registration for design for LID, Container without Lid, Container Lid,
Container, Spout, Lid in classes 3, 09 – 02, 09 – 03 and 09 – 07 of the respective design registered under the Design
Act (“Registered Design”). The Plaintiff has alleged that the Defendants have copied the Registered Design of the
Plaintiff in relation to the 20 litter‟s pails. The Plaintiff has inter alia prayed that the to restrain the Defendants, their
agents from applying or causing to be applied to containers or to any articles falling in the class in which Plaintiff
design have been registered and to restrain the Defendants from manufacturing, selling, exposing for sale,
distribution the Defendants bucket, containers, lid, pail, which are made in accordance with the artistic work
duplicated in Registered Design and to pass an order to pay to the Plaintiff a sum of ` 15,09,000 by way of damages
or in the alternative. The Suit is currently pending before the High Court of Judicature, Mumbai.
Notices received by our Company
194
Preliminary Placement Document
1.
Our Company has received a notice for intimation under section 143 (1) of the Income Tax Act, 1961 dated
March 17, 2011 for Assessment Year 2010 – 2011, whereby Assistant Commissioner Income Tax, Bangalore has
raised the demand of ` 2,23,550 from our Company.
2.
Our Company has received a notice for intimation under section 143 (1) of the Income Tax Act, 1961 dated
September 18, 2010 for Assessment Year 2009 – 2010, whereby Assistant Commissioner Income Tax, Bangalore
has raised the demand of ` 1,10,71,190 from our Company.
3.
A summon bearing no. AP/PTC/0020782/000/Enf 501/Damages/198 dated June 26, 2014 was issued by the
Assistant Provident Fund Commissioner, Patancheru to our Company to appear for hearing under section 14B of
EPF and MP Act, 1952 and for payment of interest under section 7Q for belated remittance made during the period
between April 1, 1996 and June 26, 2014. The summon was issued for payment of ` 2,40,193 on account of delay
payment made by our Company for the period from April 1, 1996 to June 26, 2014.
Litigation Involving our Promoters
There are no litigations or legal actions pending or taken by any Ministry or Department of the Government or a
statutory authority against the Promoters of our Company during the last three years immediately preceding year of
this Preliminary Placement Document.
Proceedings under the Companies Act
There has been no inquiry, inspection or investigations initiated or conducted against the Company under the
Companies Act, 2013 or any previous company law in the last three years immediately preceding the year of
circulation of this Preliminary Placement Document. Further, there have not been any prosecutions filed (whether
pending or not), fines imposed, compounding of offences under the Companies Act, 2013 or any previous company
law, in the last three years immediately preceding the year of circulation of this Preliminary Placement Document
with respect to the Company.
Material Frauds against the Company
There have been no material frauds committed against the Company in the last three years.
195
Preliminary Placement Document
INDEPENDENT AUDITORS
Our Company‟s current statutory auditors, M/s. Praturi & Sriram, Chartered Accountants, are independent auditors
with respect to our Company as required by the Companies Act and in accordance with the guidelines issued by the
Institute of Chartered Accountants of India. Further, M/s. Praturi & Sriram, Chartered Accountants, have audited
financial statements as of and for the years ended March 31, 2014, 2013 and 2012, and have applied limited
procedures in accordance with professional standard in India with respect to our unaudited reviewed financial results
as of and for the quarter and six months period ended September 30, 2014, whose reports are included in this
Preliminary Placement Document. Please see the section, “Financial Statements” beginning on page 199.
196
Preliminary Placement Document
GENERAL INFORMATION
1.
Our Company was originally incorporated as „Tresure Paks Private Limited‟ a private limited company under
the Companies Act, 1956 pursuant to Certificate of Incorporation dated February 28, 1997 bearing
registration number 026542 issued by the Assistant Registrar of Companies, Andhra Pradesh. Our Company
was converted into a public limited company and the name of our Company was changed to „Tresure Paks
Limited‟ pursuant to a fresh certificate of incorporation consequent upon change of name on conversion to
public limited company dated August 10, 2007 issued by the Assistant Registrar of Companies, Andhra
Pradesh, Hyderabad. Subsequently, the name of our Company was changed to „Moldtek Plastics Limited‟
pursuant to a fresh certificate of incorporation consequent upon change of name dated August 20, 2007 issued
by the Assistant Registrar of Companies, Andhra Pradesh, Hyderabad. Thereafter, the name of our Company
was changed to its present name „Mold–Tek Packaging Limited‟ pursuant to a fresh certificate of
incorporation consequent upon change of name dated March 12, 2010 issued by the Assistant Registrar of
Companies, Andhra Pradesh, Hyderabad. Our corporate identification number is L21022TG1997PLC026542.
2.
As of the date of this Preliminary Placement Document, our authorized capital is ` 1,450 Lacs divided into
145 Lacs Equity Shares of ` 10 each. As of the date of this Preliminary Placement Document, 1,13,42,176
Equity Shares of ` 10 each are paid up and outstanding.
3.
Our Registered Office is located at 8–2–293/82/A/700, Ground Floor, Road No. 36, Jubilee Hills, Hyderabad
– 500 033, Telangana, India.
4.
Under our Memorandum of Association, our principal objects are to carry out the business described in the
section “Business” beginning on page 92. The objects are set out in Clause III of our Memorandum of
Association.
5.
The Issue was authorized and approved by our Board of Directors by resolutions dated November 19, 2014
and approved by our shareholders by resolutions dated December 24, 2014.
6.
Our Company has received in-principle approvals under Clause 24(a) of the Listing Agreements for the issue
of the Equity Shares from the BSE on January 30, 2015. We will apply for final approvals to list our Equity
Shares to be issued in the Issue on the BSE.
7.
Copies of our Memorandum and Articles of Association will be available for inspection during usual business
hours on any weekday (except Saturdays and public holidays) at our Registered Office.
8.
Other than as set forth in this Preliminary Placement Document, there has been no significant change in our
financial results since March 31, 2014, the date of our last audited financial statements.
9.
Except as disclosed in this Preliminary Placement Document, we are not involved in any material legal
proceedings and we are not aware of any threatened legal proceedings, which, if determined adversely, could
result in a material adverse effect on our business, financial condition or results of operations.
10. The Company has obtained necessary consents, approvals and authorisations required in connection with the
Issue.
11. M/s. Praturi & Sriram, Chartered Accountants have audited our financial statements as of and for the years
ended, March 31, 2014, March 31, 2013 and March 31, 2012 and conducted limited review, and issued report
for the six months and quarter ended September 30, 2014 and have provided their consent for inclusion of
their reports in relation thereto in this Preliminary Placement Document.
12. We confirm that we are in compliance with minimum public shareholding requirements under the terms of
our Listing Agreements with the BSE.
13. Our Company and the BRLMs accept no responsibility for statements made otherwise than in this
Preliminary Placement Document and anyone placing reliance on any other source of information, including
our website www.moldtekplastics.com, would be doing so at his or her own risk.
197
Preliminary Placement Document
14. The Floor Price for the Issue is ` 231.75 per Equity Share calculated in accordance with Regulation 85 of the
SEBI ICDR Regulations. Our Company may offer a discount of not more than 5% on the Floor Price in terms
of Regulation 85 of the SEBI ICDR Regulations.
198
Preliminary Placement Document
FINANCIAL STATEMENTS
INDEX
Sr.
No.
1.
2.
3.
4.
Contents
Page No.
Auditor‟s limited review report on the unaudited financial statements as of and for the
quarter ended September 30, 2014.
Unaudited financial statements as of and for the half year ended September 30, 2014.
Auditor‟s Report on the reformatted audited financial statements as of and for Fiscals 2014,
2013 and 2012.
Reformatted audited financial statements as of and for Fiscals 2014, 2013 and 2012.
199
F–1
F–2
F–5
F – 12
Preliminary Placement Document
Auditor’s limited review report on the unaudited financial statements as of and for the
quarter ended September 30, 2014
The Board of Directors
M/s. Mold-Tek Packaging Limited
Hyderabad
1.
We have reviewed the accompanying statement of unaudited financial results of M/s.Mold-Tek Packaging
Limited for the quarter ended 30th September ,2014 except for the disclosures regarding „Public
Shareholding‟ and „Promoter and Promoter Group Shareholding‟ which have been traced from disclosures
made by the management and have not been audited by us. This statement is the responsibility of the
Company‟s Management and has been approved by the Board of Directors/ committee of Board of
Directors. Our responsibility is to issue a report on these financial statements based on our review.
2.
We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, „Review
of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the
Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to
obtain moderate assurance as to whether the financial statements are free of material misstatement. A
review is limited primarily to inquiries of company personnel and analytical procedures applied to financial
data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do
not express an audit opinion.
3.
Based on our review conducted except as above, nothing has come to our attention that causes us to believe
that the accompanying statement of unaudited financial results prepared in accordance with recognition and
measurement principles laid down in Accounting Standard 25 “Interim Financial Reporting” issued under
the companies (Accounting Standards) Rules,2006 which continue to apply as per section 133 of the
Companies Act,2013,read with Rule 7 of the companies (Accounts)Rules,2014 and other recognised
accounting practices and policies generally accepted in India has not disclosed the information required to
be disclosed in terms of Clause 41 of the Listing Agreement with the stock Exchange including the manner
in which it is to be disclosed, or that it contains any material misstatement.
For PRATURI & SRIRAM.
Chartered Accountants
(Firm Registration No.002739S)
Sri Raghuram Praturi
Partner
Hyderabad
Member ship No.221770
30th October, 2014
F-1
Preliminary Placement Document
Unaudited Financial results for the Quarter & Six months ended 30.09.2014
(` In lacs)
Quarter Ended
30.09.2014
Half year
Ended
30.09.2014
Gross Sales / Operating Income
8839
17193
Less: Excise Duty
928
1802
Net Sales / Income from operations
7912
15391
6
26
7918
15417
69
191
b) Consumption of Materials
5156
10000
d) Staff cost
540
1056
e) Depreciation
208
410
f) Selling & Distribution Expenses
565
1126
g) Other expenditure
482
944
Total Expenditure (a+b+c+d+e+f+g)
7021
13728
Profit before Interest & Exceptional Items (3-4)
897
1689
Interest and Financial Charges
211
422
0
0
Profit before tax (5-6-7)
Provision for Current Tax
686
231
1267
435
Provision for Deffered Tax
-5
-12
Net Profit after tax (8-9)
Prior period Items
460
7
844
7
Net Profit after tax & Prior Period items
454
837
Paid up Equity Share Capital, Equity Shares of `10 each.
1134
1134
Reserves excluding revaluation reserves (excluding interim dividend & Tax
thereon)
4963
4963
Quaterly/Half yearly - Basic
- Diluted
Annualised
- Basic
4.02
4.01
16.07
7.41
7.41
14.83
- Diluted
16.06
14.82
Particulars
Other Income
Total Income (1+2)
Expenditure
a) (Increase) / decrease in stock in trade / work in progress
Extrodinary item
Basic & Diluted Earnings per share (Face value of `10)
F-2
Preliminary Placement Document
Statement of Assets & Liabilities as at 30.09.2014
(` In lacs)
As at 30.09.2014
(Unaudited)
Particulars
EQUITY AND LIABILITIES
1. SHAREHOLDER'S FUNDS
(a) Share Capital
1134
(b) Reserves & Surplus
4963
6097
Sub Total - Shareholder's Funds
2. NON-CURRENT LIABILITIES
1590
(a) Long-term borrowings
(b) Other Long-term Liabilities
28
(c) Deferred Tax Liabilities (Net)
425
(d) Long-term Provisions
137
2180
Sub Total - Non-Current Liabilities
3. CURRENT LIABILITIES
(a) Short-term borrowings
5150
(b) Trade Payables
1101
(c) Other Current Liabilities
1498
(d) Short-term Provisions
646
Sub Total - Current Liabilities
8395
16673
TOTAL - EQUITY AND LIABILITIES
ASSETS
1. NON-CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets
7064
(ii) Capital Work-in-Progress
379
(iii) Leasehold building
19
(b) Non-Current Investments
316
(c) Long-term loans & Advances
310
(d) Other Non-Current Assets
55
8143
Sub Total - Non-Current Assets
2. CURRENT ASSETS
(a) Inventories
3236
(b) Trade Receivables
4773
(c) Cash and cash equivalents
64
(d) Short-term loans & Advances
429
(e) Other Current Assets
28
8530
Sub Total - Current Assets
F-3
Preliminary Placement Document
As at 30.09.2014
(Unaudited)
Particulars
16673
TOTAL – ASSETS
F-4
Preliminary Placement Document
FINANCIAL STATEMENTS
The Board of Directors
Mold-Tek Packaging Limited
Plot No. 700, Road No. 36,
Jubilee Hills, Hyderabad – 500 033
Telangana, India.
Financial statements for the year ended 31st March 2014, 31st March 2013 and 31st March, 2012:
We have examined the accompanying audited financial statements of Mold-Tek Packaging Limited comprising the
Balance Sheet as at 31st March 2014, 31st March 2013 and 31st March 2012, the Statement of Profit and Loss and
Cash flow statement for the year ended 31st March 2014, 31st March 2013 and 31st March, 2012 and a Summary of
significant accounting policies and other explanatory information (hereinafter referred as the financial statements)
annexed to this report, for the purposes of inclusion in the Preliminary Placement Document and the Placement
Document prepared by the Company in connection with the proposed Qualified Institutions Placement (the “QIP”)
of its Equity shares (the “Offering”) in accordance with provisions of Chapter VIII of the Securities and Exchange
Board of India (Issue of Capital and Disclosure Requirements) Regulation, 2009, as amended from time to time (the
“ICDR Regulations”) and initialled by us for identification.
The Financial Statements have been extracted/ reformatted from the audited Financial Statements for the years
ended 31st March 2014, 31st March 2013 and 31st March, 2012 which were audited by us (“the Audited Financial
Statements”), and have been adopted by the Board of Directors on 29 th May 2014, 27th May 2013 and 29th May
2012 respectively. The above Financial Statements have been prepared to reflect the significant accounting policies
and notes and other explanatory information adopted by the Company as at 31st March 2014, 31st March 2013 and
31st March 2012 respectively.
Auditors Responsibility:
The Financial Statements for the years ended 31st March 2014, 31st March 2013 and 31st March 2012 are extracted /
reformatted from the Audited Financial Statements for the respective years and our opinion stated herein is based on
our enclosed opinions dated 29th May 2014, 27th May 2013 and 29th May 2012 respectively for each of those years.
Accordingly, any events subsequent to the dates as stated above have not been considered / adjusted for those
respective years.
Other Matters:
This letter should not in any way be construed as a re-issuance or re-dating of any of the previous audit reports
issued by us nor should this be construed as a new opinion on any of the financial statements referred to herein.
This letter along with the our enclosed Audit reports but for Annexure referred to in paragraph 1 of our Report
(CARO) dated 29th May 2014, 27th May 2013 and 29th May 2012, the extracted financial statements, related notes
and schedule is intended solely for your information and for inclusion in the documents prepared in connection with
the Offering and is not to be used, referred to or distributed for any other purpose, without prior written consent.
For Praturi and Sriram
Chartered Accountants
Firm Reg. No. 002739S
Place: Hyderabad
Date: 29.01.2015.
F-5
Preliminary Placement Document
Auditor’s Report and Financial Statements for the years ended March 31, 2014
To the Members of
M/s. Mold-Tek Packaging Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Mold-Tek Packaging Limited, which comprise the
Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year 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 read with the General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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 from material misstatement.
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, subject to the above
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:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;
b) in the case of the Profit and Loss Account, of the profit/ loss for the year ended on that date; and
c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1.
As required by the Companies (Auditor‟s Report) Order, 2003 issued by the Central Government of India
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 and 5 of the Order.
2.
As required by section 227(3) of the Act, we report that:
F-6
Preliminary Placement Document
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 and proper returns adequate for the purposes of our audit
have been received from branches not visited by us.
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 accountand with the returns received from branches not visited by
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
read with the General Circular 15/2013 dated 13 September, 2013 and Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act,2013; and
e)
On the basis of written representations received from the directors as on March 31, 2014, and taken on
record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from
being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies
Act, 1956.
For PRATURI & SRIRAM
Chartered Accountants
(Firm Registration No.002739S)
Sri Raghuram Praturi
Hyderabad
Partner
29th May, 2014
Membership No. 221770
F-7
Preliminary Placement Document
Auditor’s Report and Financial Statements for the years ended March 31, 2013
To the Members of M/s. Mold-Tek Packaging Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Mold-Tek Packaging Limited, which comprise the
Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year 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 from material misstatement.
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, subject to the above
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 subject to the following:
Short provision of deferred tax liability in accordance with Accounting Standard 22 issued by ICAI, `.269.92 Lakhs
pertaining to earlier years impacting noncurrent liabilities, reserves & surplus and prior period items.
a)
In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;
b) In the case of the Profit and Loss Account, of the profit/ loss for the year ended on that date; and
c)
In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
F-8
Preliminary Placement Document
1.
As required by the Companies (Auditor‟s Report) Order, 2003 issued by the Central Government of India
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 and 5 of the 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 and proper returns adequate for the purposes of our audit
have been received from branches not visited by us.
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 returns received from branches not visited by
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 PRATURI & SRIRAM
Chartered Accountants
(FirmRegistrationNo.002739S)
Sri RaghuramPraturi
Partner
Membership No. 221770
Hyderabad
27th May, 2013
F-9
Preliminary Placement Document
Auditor’s Report and Financial Statements for the years ended March 31, 2012
The Members
M/s. Mold-Tek Packaging Limited
We have audited the attached Balance Sheet of Mold-Tek Packaging Limited as at 31st March, 2012, and also the
Profit and loss Account and Cash flow Statement of the company for the year ended on that date annexed thereto.
These financial statements are the responsibility of the company‟s management and our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require
that we 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 also includes assessing the accounting principles used and significant estimates
made by management as well as evaluating the overall presentation of the financial statements. We believe that our
audit provides a reasonable basis for our opinion.
1.
As required by the Companies (Auditor‟s Report) Order, 2003, issued by the Central Government of India,
in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure, a statement on the
matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.
2.
Further to our comments in the annexure referred to above, 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 purposes of our audit;
b.
In our opinion, proper books of accounts, as required by law, have been kept by the company so far as
appears from our examination of those books.
c.
The Balance Sheet, Profit and loss and Cash Flow Statement dealt with by this report are in agreement
with the books of accounts;
d.
In our opinion, these financial statements have been prepared in compliance with the applicable
accounting standards referred to in sub-clause (3C) of section 211 of the Companies Act, 1956;
e.
On the basis of the written representations received from the directors as on 31 st March,2012, and
taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 st
March, 2012 from being appointed as a director in terms of clause (g) of sub section (1) of Section 274
of the Companies Act,1956; and
f.
In our opinion and to the best of our information and according to the explanations given to us, the said
accounts give the information required by the Companies Act, 1956 in the manner so required and give
a true and fair view in conformity with the accounting principles generally accepted in India:
i. In the case of the Balance Sheet, of the state of affairs of the company as at 31 st March, 2012
ii. In the case of Profit and Loss Account, of the profit of the Company for the year ended on
that date; and
iii. In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended
on that date.
For PRATURI & SRIRAM
Chartered Accountants
(FirmRegistrationNo.002739S)
F-10
Preliminary Placement Document
Sri RaghuramPraturi
Partner
Membership No. 221770
Hyderabad
29th May, 2012
F-11
Preliminary Placement Document
Note: Refer to Annual Reports of the Company which are available in Company’s Website & BSE website
for Annexure to Auditor’s Report.
BALANCE SHEET AS AT 31st MARCH, 2014, 2013, 2012
(` In lacs)
*I.
Particulars
EQUITY AND LIABILITIES
Note
As at
31.03.2014
As at
31.03.2013
As at
31.03.2012
1. SHAREHOLDERS' FUNDS
(a) Share Capital
3
1128
1125
1122
(b) Reserves & Surplus
4
4122
3784
3510
(a) Long-term borrowings
5
1949
2182
1274
(b) Other Long-term Liabilities
6
22
23
18
(c) Long-term Provisions
7
117
102
74
(c) Deferred Tax Liabilities (Net)
8
437
122
0
(a) Short-term borrowings
9
4602
4466
3848
(b) Trade Payables
10
1741
1128
1047
(c) Other Current Liabilities
11
1586
1034
548
(c) Short-term provisions
12
856
525
16560
14491
721
12162
2. NON-CURRENT LIABILITIES
3. CURRENT LIABILITIES
Total
II.
ASSETS
1. NON-CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets
13
7184
7005
4661
(ii) Capital Work-in-Progress
13
249
259
1082
(iii) Leasehold building
13
20
23
24
(b) Non-Current Investments
14
316
316
316
(c) Long-term loans & Advances
15
246
201
352
(d) Other Non-Current Assets
16
41
48
33
(a) Inventories
17
2829
2361
2025
(b) Trade Receivables
18
4220
3503
2862
(c) Cash and cash equivalents
19
61
43
28
(d) Short-term loans & Advances
20
736
700
750
(e) Other Current Assets
21
658
32
16560
14491
28
12162
2. CURRENT ASSETS
TOTAL
F-12
Preliminary Placement Document
STATEMENT OF PROFIT AND LOSS FOR THE YEARS ENDED 31 st MARCH, 2014, 2013, 2012
(` In Lakhs)
Particulars
Note
2013-14
2012-13
2011-12
I. INCOME
a) Sales
Domestic Sales
Less: Excise Duty
Export Sales
Net Sales
28386
21250
19006
3021
2266
1743
147
218
167
25512
19202
17430
b) Other Income
22
51
31
26
c) Changes in Inventories
23
385
385
(97)
25948
19618
17359
TOTAL
II. EXPENDITURE
Material Consumed
24
17212
12845
11541
Employees Remuneration & Benefits
25
1967
1532
1347
Selling & Distribution Expenses
26
1878
1477
1298
Interest & Financial Charges
27
840
580
380
Other Expenses
28
1887
1730
1034
Preliminary Expenses Written Off
29
1
4
5
Depreciation
13
695
546
441
24480
18714
16046
1468
904
1313
TOTAL
III. Profit Before Prior Period Adjustments & Tax
Prior Period Adjustments
30
19
23
15
Extraordinary item
30
60
0
0
1389
881
1298
Provision for Current Tax
436
181
365
Provision for Deferred Tax
46
122
0
V. Profit Transferred to Balance Sheet
907
578
933
Earning per share - BEPS
8.05
5.14
10.33
8.00
5.09
8.21
IV. Profit Before Tax
- DEPS
F-13
Preliminary Placement Document
MOLD-TEK PACKAGING LIMITED
CASH FLOW STATEMENT FOR THE YEARS ENDED 31ST MARCH, 2014, 2013, 2012
(` In lacs)
PARTICULARS
A. CASH FLOW FROM OPERATIONS
Net Profit as per P&L Account
Adjustment for:
Depreciation
Preliminary Expenses & Deferred Expenses
Interest Paid
Operating Profit Before Working Capital
Changes
Adjustment for :
Trade and other receivables
Inventories
Trade Payables
Other Liabilities & Short Term Provisions
Loans & Advances & Others
Non-current Assets
Cash Generated from Operations
B. CASH FLOW FROM INVESTMENT
ACTIVITIES
Purchase of Fixed Assets
Sale/Destroyed of Fixed Assets
Sale/ Transfer of investments
Capital Work in Progress and pending
capitalization
C. CASH FLOW FROM FINANCING
ACTIVITIES
Warrants Application Money
Earlier years Excess Dividend Provision
adjustment
Share Capital
Securities Premium & Capital Reserve
Employee Stock Expenses Outstanding
Provision for taxation
Provision for Proposed Dividend
Additions/ Repayment of Loans
Provision for corporate Dividend Tax
Interest Paid
Prior period & Extraordinary Items
2013-14
2012-13
1468
718
1
840
1559
904
569
4
580
3027
(717)
(468)
613
771
(662)
(39)
(502)
2525
(1114)
220
0
10
2011-12
1153
456
5
380
2057
(640)
(335)
80
89
45
133
(628)
1429
(3135)
222
0
(884)
1641
1313
823
2154
(619)
(247)
504
(144)
(267)
(23)
(2090)
(661)
(707)
0
(380)
65
3
12
(6)
(436)
(338)
29
(58)
(840)
(54)
0
4
20
3
(303)
(281)
1882
(46)
(580)
(23)
0
322
1127
11
(365)
(561)
1206
(91)
(380)
(15)
Net Increase/(Decrease) in Cash & Cash
Equivalents
18
D. Opening Balance of Cash & Cash Equivalents
43
E. Closing Balance of Cash & Cash Equivalents
61
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
K. Method of Accounting
2011-12:
F-14
(797)
1357
(1522)
25
(10)
0
(1623)
841
676
15
28
43
(2213)
(856)
874
17
10
28
Preliminary Placement Document
a.
The Financial Statements are prepared on a going concern basis with historical costs, in accordance with
the Accounting Standards specified in sub section (3C) of Section 211 of the Companies Act 1956, to the
extent applicable to the Company.
b.
The company generally recognizes income and expenditure on an accrual basis except those with
significant uncertainties.
c.
The preparation of financial statements requires the management of the company to make estimates and
assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as
of the date of the financial statements and the reported income and expenses during the reporting period.
Management believes that the estimates used in the preparation of the financial statements are prudent and
reasonable. Future results could differ from these estimates.
d.
For the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act, 1956 is
applicable to the Company for presentation and disclosures in financial statements. The company has
reclassified the previous year‟s figures in accordance with the revised Schedule VI as applicable in the
current year.
2012-13:
a. The Financial Statements are prepared on a going concern basis with historical costs, in accordance with
the Accounting Standards specified in sub section (3C) of Section 211 of the Companies Act 1956, to the
extent applicable to the Company.
b. The company generally recognizes income and expenditure on an accrual basis except those with
significant uncertainties.
c. The preparation of financial statements requires the management of the company to make estimates and
assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as
of the date of the financial statements and the reported income and expenses during the reporting period.
Management believes that the estimates used in the preparation of the financial statements are prudent and
reasonable. Future results could differ from these estimates.
2013-14:
a. The Financial Statements are prepared on a going concern basis with historical costs, in accordance with
the Accounting Standards specified in sub section (3C) of Section 211 of the Companies Act 1956, to the
extent applicable to the Company.
b.
The company generally recognizes income and expenditure on an accrual basis except those with
significant uncertainties.
c.
The preparation of financial statements requires the management of the company to make estimates and
assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as
of the date of the financial statements and the reported income and expenses during the reporting period.
Management believes that the estimates used in the preparation of the financial statements are prudent and
reasonable. Future results could differ from these estimates.
L. Fixed Assets:
F-15
Preliminary Placement Document
2011-12, 2012-13 & 2013-14:
a.
Fixed Assets are stated at original cost including taxes, freight and other incidental expenses related to
acquisition/installation and after adjustment of CENVAT benefits in accordance with Accounting
Standards 10 and 26 issued by ICAI. Interest/financing costs on borrowed funds attributable to assets
are treated in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants
of India (ICAI).
b.
Expenditure not specifically identified to any asset and incurred in respect of Fixed Assets not
commissioned is carried forward as expenditure pending allocation and forms part of Capital work in
progress.
M. Depreciation
2011-12, 2012-13 & 2013-14:
Straight-line method of depreciation is adopted on the basis of and at rates prescribed by Schedule XIV to the
Companies Act, 1956 except for leasehold buildings, wherein depreciation is provided on the basis of estimated
useful life.
Residual values of assets depreciated on straight line basis to the extent of assets not in use, and/or discarded
having outlived their utility are charged off during the year.
N. Impairment of Assets
2011-12:
An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment
loss is charged to profit and loss account in the year in which an asset is identified as impaired. An impairment
loss recognized in prior accounting period is reversed if there has been a change in the estimate of the
recoverable amount.
2012-13:
In the opinion of the management there are no assets of the company carried in the financial statements
whose value in use stands diminished vis-à-vis their carrying cost, and hence no provision is considered
necessary.
2013-14:
The company periodically tests its assets for impairment and if the carrying values are found in excess of
value in use the same is charged to profit and loss account as per AS 28. The impaired loss charged to profit
and loss account will be reversed to that extent in the year in of change in estimate of value in use.
O. Investments
2011-12, 2012-13 & 2013-14:
Investments are either classified as current or Long-term based on the Management‟s intention at the time
of purchase. Long term Investments are carried in the books of accounts at cost of acquisition. Current
Investments are carried in the books of accounts at the lower of cost and fair value. Decline in market
value of long term and current investments, if any are considered in accordance with Accounting Standard
13
P. Inventories
2011-12, 2012-13 & 2013-14:
Inventories are valued as follows:
Raw Material
Finished Goods
Work in Process
At lower of applicable weighted average of landed cost net of
CENVAT benefits, or market value
At lower of applicable weighted average cost (including conversion
costs) or market value.
At applicable weighted average cost including conversion costs to the
F-16
Preliminary Placement Document
Returned Goods
Moulds
Consumables, Packing & Bought
outs
stage of manufacture
At applicable Raw Material Cost net of estimated reprocessing cost.
At cost including conversion costs after providing for appropriate wear
& tear.
At Cost.
Cost - includes material cost, labour, factory overheads and depreciation and excludes interest on borrowings.
Q. Interest and Financial Charges
2011-12, 2012-13 & 2013-14:
c.
Documentation, Commitment and Service Charges other than for term loans are spread over the tenure of
the finance facility.
d.
Interest on Hire Purchase finance is charged to Profit and Loss Account as per Accounting Standard
Accounting for leases issued by ICAI.
R. Loans under Deferred Credit / Hire Purchase
2011-12, 2012-13 & 2013-14:
The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of
agreements will be cancelled in favor of the Company. The cash price of assets thus financed is capitalized and
the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of
future interest is reflected as deferred interest under Loans & Advances.
S. Revenue Recognition
2011-12:
Revenue is recognized only when it can be reliably measured and is reasonable to expect ultimate collection.
Revenue from operations includes sale of goods, sales tax, VAT, excise duty, adjusted for discounts and sale
returns. Dividend income is recognized when right to receive is established. Interest income is recognized on
time proportion basis taking into account the amount outstanding and rate applicable.
2012-13 &2013-14:
Turnover includes Excise Duties, Sales Tax/VAT collections, and freight recoveries; reduced by sale returns and
Quantity discounts. Excise duty is excluded as a separate line item. Dividend income is recognized when right to
receive is established. Interest income is recognized on time proportion basis taking into account the amount
outstanding and the rate applicable.
T. Employee Benefits
2011-12:
a. Gratuity & Provident Fund
Post-employment and other long term benefits are recognized as an expense in the statement of profit and loss
for the year in which the employee has rendered services. The expense is recognized at the present value of the
amounts payable determined based on actuarial valuation.
In accordance with the Payment of Gratuity Act, 1972, Mold-Tek provides for gratuity, a defined benefit
retirement plan ('the Gratuity plan') covering eligible employees of the Company. The gratuity plan provides a
lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee's salary and the tenure of employment with the group.
Liabilities with regard to the gratuity plan are determined by actuarial valuation at each balance sheet date using
the projected unit credit method as per the Accounting Standard 15. The Company contributes the ascertained
liabilities to a scheme with Life Insurance Corporation as permitted by the law.
Eligible employees of the company receive provident fund benefits, a defined contribution plan. Contributions of
the Company as employer are expensed as incurred/accrued.
b. Liability for Leave Encashment
Leave encashment also considered as long term liability and provided for on the basis of actuarial valuation,
estimated during the year.
c. Employee share based payments
F-17
Preliminary Placement Document
Measurement and disclosure of the employee share-based payment plans is done in accordance with Securities
Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the guidance note on Accounting for Employee Share Based Payments', issued by the Institute of
Chartered Accountants of India (ICAI). The excess of market value of the stock on the date of grant over the
exercise price of the option is recognized as deferred employee stock compensation and is charged to profit and
loss account on straight-line method over the vesting period of the options. The unamortized portion of cost is
shown under stock options outstanding.
2012-13 & 2013-14:
a. Gratuity
Post-employment and other long term benefits are recognized as an expense in the statement of profit
and loss for the year in which the employee has rendered services. The expense is recognized at the
present value of the amounts payable determined based on Actuarial valuation.
In accordance with the payment of Gratuity Act, 1972, Mold-Tek provides for Gratuity, a defined
benefit retirement plan (“the Gratuity plan”) covering eligible employees of the Company. The
Gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation
or termination of employment, of an amount based on the respective employee‟s salary and the tenure
of employment with the group.
Liabilities with regard to the Gratuity plan are determined by actuarial valuation at each Balance sheet
date using the projected unit credit method as per the Accounting Standard 15. The Company
contributes the ascertained liabilities to the „Mold-Tek Packaging Limited Employees Gratuity Trust‟
(The Trust). Trustees administer contributions made to the Trust and contributions are deposited in a
scheme with Life Insurance Corporation as permitted by the Law.
b.
c.
d.
Provident Fund
Eligible employees of the company receive provident fund benefits, a defined contribution plan.
Contributions of the company as employer are expensed as incurred/accrued.
Liability for Leave Encashment
Leave encashment in accordance with the policy of the company and are provided based on the actuarial
valuation as pronounced in Accounting Standard 15 of ICAI.
Employee share based payments
Measurement and disclosure of the employee share-based payment plans is done in accordance with
Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 and the guidance note on Accounting for Employee Share Based Payments',
issued by the Institute of Chartered Accountants of India (ICAI). The excess of market value of the stock
on the date of grant over the exercise price of the option is recognized as deferred employee stock
compensation and is charged to profit and loss account on straight-line method over the vesting period of
the options or on exercising of the options. The unamortized portion of cost is shown under stock options
outstanding. In case of lapsed options the compensation expenses charged earlier are reversed along with
balance of deferred employee compensation pertaining to such lapsed options.
U. Foreign Currency Transactions
2011-12, 2012-13 & 2013-14:
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the
transaction. Exchange gains or losses on recognition of transaction within the accounting year relating to fixed
assets are capitalized while in respect of others the impact is recognized in the Profit and Loss Account.
Outstanding monetary transactions denominated in foreign currencies at the year-end are restated at year end
rates.
F-18
Preliminary Placement Document
V. Taxes on Income
2011-12:
Provision for current tax is made in accordance with the provisions of the Income-tax Act, 1961. Deferred tax
provisioning on account of timing difference between taxable & accounting income, is made in accordance
with Accounting Standard 22 issued by the Institute of Chartered Accountants of India. Deferred tax asset is
not recognized in the books.
2012-13 & 2013-14:
Provision for current tax is made in accordance with the provisions of the Income-tax Act, 1961. Deferred tax
provisioning on account of timing difference between taxable & accounting income, is made in accordance
with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.
W. Miscellaneous Expenditure
2011-12, 2012-13 & 2013-14:
Preliminary expenses are amortized over a period of 5 years.
X. Leases
2011-12:
Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to
ownership are classified as finance leases. The amount recorded is the lesser of the present value of the
cumulative minimum lease rentals along with other incidental expenses during the lease term or the asset's fair
value.
2012-13 & 2013-14:
Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to
ownership are classified as finance leases. The rental obligations, net of interest charges, are reflected in loans
and Advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified
as operating leases and recorded as expenses as and when payments are made over the lease term.
Y. Earnings per Share
2011-12, 2012-13 & 2013-14:
The Basic earnings per share (“BEPS”) is calculated by dividing the net profit or loss for the year
attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of
equity shares outstanding during the year. The diluted Earnings per share (“DEPS”) is calculated after
adjusting the weighted average number of Equity shares to give effect to the potential equity shares on the
fully convertible warrants outstanding.
Z. Contingent Liabilities & Assets
2011-12 & 2013-14:
Provisions involving substantial degree of estimation in measurement are recognized when there is a
present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the notes.
NOTES TO THE BALANCE SHEET & PROFIT AND LOSS ACCOUNT
2. 2011-12:
The previous period‟s figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current
year financial statements and are to be read in relation to the amounts and other disclosures relating to the
current year.
F-19
Preliminary Placement Document
2012-13 & 2013-14:
The previous period‟s figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
However the previous year financials are true and fair and are free from material misstatements. Accordingly,
amounts and other disclosures for the preceding year are included as an integral part of the current year
financial statements and are to be read in relation to the amounts and other disclosures relating to the current
year.
3.
SHARE CAPITAL
As at
31.03.2014
As at
31.03.2013
(` In Lakhs)
As at
31.03.2012
1350
1350
1350
Equity shares of `10 each
1128
1125
1122
TOTAL
1128
1125
1122
SHARE CAPITAL
1. Authorized:
1,35,00,000 Equity Shares of `10 each
2. Issued, Subscribed & Paid-up :
3.1 79,95,776 equity shares out of the issued, subscribed and paid up share capital were allotted in the financial year
2008-09 pursuant to the Scheme of arrangement without payments being received in cash.
3.2 12,40,000 equity shares of ` 10 each issued at a premium of `30 per share on 7thSeptember, 2011 by way of
preferential offer.
3.3 19,25,000 equity shares of ` 10 each issued at a premium of `35.80 per share on 4th February, 2012 by way of
preferential offer.
3.4 46,625 equity shares of ` 10 each issued at a premium of ` 52.95 per share on 6th July, 2011 by way of
Employee Stock Option Scheme.
3.5 9,125 equity shares of ` 10 each issued at a premium of `52.95 per share on 19th
December, 2011 by way of
Employee Stock Option Scheme.
3.6 37,800 equity shares of ` 10 each issued at a premium of ` 52.95 per share 10th July, 2012 by way of Employee
Stock Option Scheme
3.7 22,950 equity shares of ` 10 each issued at a premium of ` 52.95 per share 29th June, 2013 by way of Employee
Stock Option Scheme
Disclosure pursuant to Note no. 6(A) of Part I of Schedule VI to the Companies Act, 1956
The reconciliation of the number of shares outstanding is set out below
As at 31.03.2014
Particulars
Shares outstanding at the
beginning of the year
Add: Shares Issued on
exercise of Employee
Stock Option Scheme
Shares Issued on exercise
of warrants by
preferential offer
Shares outstanding at the
end of the year
As at 31.03.2013
As at 31.03.2012
Number
`
Number
`
Number
`
1,12,54,326
11,25,43,260
1,12,16,526
11,21,65,260
79,95,776
79,95,7760
22,950
2,29,500
37,800
3,78,000
55,750
5,57,500
-
-
-
-
31,65,000
3,16,50,000
1,12,77,276
11,27,72,760
1,12,54,326
11,25,43,260
1,12,16,526
11,21,65,260
The details of Shareholders holding more than 5% shares
Name of Shareholder
As at 31.03.2014
As at 31.03.2013
F-20
As at 31.03.2012
Preliminary Placement Document
No. of
Shares
% Held
No. of
Shares
% Held
No. of
Shares
% Held
J Lakshmana Rao
12,61,476
11.19
12,61,476
11.2
12,60,627
11.24
A. Subramanyam
10,14,562
9
10,14,562
9.01
10,14,562
9.05
J Sudharani
6,60,019
5.85
5,70,019
5.06
5,51,990
4.92
MTPL Employee Stock Option Scheme
2011-12
2,02,000 Options have been granted to employees on 4 th June 2010 under the Employees Stock Option scheme, in
accordance with the guidelines issued by Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999, at ` 26 per option.
The Discount value (` 36.95) of Option is accounted as deferred Employee Compensation which is either amortized
on a straight line basis over the vesting period or on the basis of option exercised whichever is earlier.
During the year 55,750 number of shares have been allotted to the employees against options exercised by them.
The Deferred Employee Compensation of ` 21 lakhs pertaining to such options exercised during the year have been
charged off to the Statement of Profit and Loss.
2012-13:
In respect of 2,02,000 Options granted to employees on 4 th June 2010 under the Employees Stock Option scheme, in
accordance with the guidelines issued by Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999, at ` 26 per option , the Discount value (` 36.95) of Option
is accounted as deferred Employee Compensation, amortized on a straight line basis over the vesting period.
During the year, 37,800 shares have been allotted to the employees against options exercised by them. 2500 options
pertaining to the employees left during the year have been lapsed in accordance with the scheme, as they have not
exercised the option as on the date of their resignation.
2013-14:
In respect of 2,02,000 Options granted to employees on 4 th June 2010 under the Employees Stock Option scheme, in
accordance with the guidelines issued by Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999,at ` 26 per option , the Discount value (` 36.95) of Option
is accounted as deferred Employee Compensation, amortized on a straight line basis over the vesting period.
During the year, 22,950 shares have been allotted to the employees against options exercised by them. 9150 options
pertaining to the employees left during the year have been lapsed in as they have not exercised the option as on the
date of their resignation and the employee compensation expenses pertaining these lapsed options, charged earlier
against profits of the company have been reversed along with the balance of deferred employee compensation
pertaining to those options.
As at
As at
As at
PARTICULARS
31.03.2014
31.03.2013
31.03.2012
Options Outstanding, beginning of the year
1,05,950
1,46,250
2,02,000
Add: Granted
-
-
-
Less: Exercised
22,950
37,800
55,750
Less: Lapses
9,150
2,500
-
Options Outstanding, end of the year
73,850
1,05,950
1,46,250
WARRANTS APPLICATION MONEY
2011-12:
a. During the year, on 7th September, 2011 the Company allotted 12,40,000 equity shares against fully
Convertible Warrants. (12,40,000 warrants were allotted at a price of ` 40 comprising nominal value of `
10 and premium of ` 30 each on 10th March, 2010).
F-21
Preliminary Placement Document
On 4th February 2012 the Company allotted 19,25,000 equity shares against fully convertible warrants.
(22,40,000 Fully Convertible Warrants were allotted at a price of ` 45.80 per Warrant comprising nominal
value of ` 10 and premium of ` 35.80 on 6th August 2011). The balance of 3,15,000 warrants are forfeited.
The application money received against forfeited warrants ` 36 lakhs (25% of the issue price of the
warrants) is transferred to Capital reserve account.
(` In Lakhs)
4.
RESERVES & SURPLUS
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
b.
1.Capital Reserve
Opening Balance
Add: During the Year
49
49
0
49
0
13
49
36
49
2. Securities Premium
Opening Balance
Add: During the Year
2314
12
2294
2326
20
1203
2314
1091
2294
3. General Reserve
Opening Balance
Add: Transfer from Profit for the year
4. Share Options Outstanding
Account
Opening Balance
Add: Current Year Transfer
Less: Written back in current year
759
136
672
895
87
532
759
140
33
30
19
5
17
31
11
27
14
33
21
672
30
5. Surplus
Opening Balance
Less: Deferred Tax of before
demerger
Add: Pervious Year Dividend Excess
Provision
Add: Profit/(Loss) for the year
Less: Appropriations
a. Interim dividend on Equity
Shares
b. Proposed final dividend on
Equity Shares
c. Tax on Dividend @16.995%
d. General Reserve
TOTAL
629
465
324
244
0
0
65
0
0
907
1357
578
1043
933
169
112
280
169
169
280
58
46
91
136
(532)
4122
87
(414)
3784
140
1257
(792)
3510
2011-12:
The Board of Directors at its Meeting held on May 29, 2012 as recommended a final dividend of ` 2.5 per
equity share of ` 10 each in addition to the interim dividend of ` 2.50 per equity share declared on 13th
February, 2012.
2012-13:
The Board of Directors in their Meetings held on May 15 th, 2013 and 27th May, 2013 have recommended an
Interim dividend of ` 1 and a final dividend of ` 1.5 per equity share.
2013-14:
F-22
Preliminary Placement Document
The Board of Directors in their Meeting held on May 14 th, 2014and 29th May, 2014 has recommended an
Interim dividend of ` 1.5 and a final dividend of ` 1.5 per equity share.
During the year the company has adjusted an amount of ` 245 lakhs towards deferred tax liability pertaining to
the period prior to demerger, from the opening balance of surplus account.
5.
LONG TERM BORROWINGS
(` In lakhs)
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
Particulars
NonCurrent
Current
NonCurrent
Current
NonCurrent
Current
(i) Secured Loans
- Term loan from Banks
- Hire Purchases Loans
1183
601
1304
434
238
106
18
14
16
45
51
54
1201
615
1320
479
289
159
748
114
862
124
985
87
1949
729
2182
603
12,74
246
(ii) Unsecured Loans
- Sales Tax Deferment
TOTAL
The amounts shown under the column “current” above pertains to repayment commitments of the company during the
next 12 months.
2011-12:
5.1 Secured Loans
Long Term loan facilities from the Banks
The Company has availed 2 Long term loan facilities from ICICI Bank Limited totaling ` 450 lakhs
Repayment schedule for Term Loan 1 amounting to ` 100 lakhs was completed during the year. Schedule for
repayment against Term Loan 2 amounting to ` 449lakhs has commenced from March, 2011 (repayable in 18
quarterly installments).
The above loans are secured by way of pledge/ first charge on the following assets of the company:
a) Land measuring 11586 Sqmtrs& Building in Sy No. 160A, 161/1, 161/5, 160B of Bhimpore Village &
Panchayat, Nani Daman, Daman Taluk & District, belonging to the Company
b) Other Fixed Assets of the Company located at Daman
Vehicle Loans
The Company is availing 11 vehicle loans from various financial institutions of which repayment schedule for
10 vehicles is 36 monthly installments while the loan on 11 th vehicle is repayable in 60 monthly installments.
Loan installments amounting to ` 54 lakhs payable with the next 12 months (April 2012 to March 2013) have
been grouped under current liabilities.
5.2 Unsecured Loans
F-23
Preliminary Placement Document
The Govt. of Andhra Pradesh has extended to the Company, the incentive of sales tax deferral scheme
pursuant to which, the sales tax attributable to the sales effected out of production is deferred (interest-free) for
maximum period of 14 years or 2010 whichever is earlier. The sales tax payment deferred in each year is
repayable over equal number of years commencing form the year in which the deferment period expires.
The company has availed this scheme for production of its 2 nd expansion at Annaram unit and
Dommarapochampally unit.The company has completed its deferment 14 years period for its Annaram unit
and has commenced the repayments. Repayment ofsales tax deferment availed on Dommarapochampally unit
will commence from 1st
April
2014. The total Sales Tax Deferral amount as on 31 st March 2012
stands at ` 1073 lakhs
2012-13:
5.1 Secured Loans
Term Loans from Bank:
In addition to the existing Long term loan from ICICI Bank, CITI bank has sanctioned a Term loan of ` 1500
Lakhs during the year for the purpose of new facility at Satara& Daman, repayable in 48 Monthly installments
commencing from May 2013.
As at the year end the company has a total secured term borrowings of ` 1738 Lakhs (ICICI Bank ` 238 Lakhs
and CITI Bank ` 1500 Lakhs). The same have been classified under non-current (` 1304 Lakhs) and current
liabilities (` 434 Lakhs).
The following assets of the Company are impacted by the said securitization:
a.
Citi Bank has First exclusive charge by way of Equitable Mortgage on the factory Land & Buildings
situated at Survey No.82/2A, Mhavashi Village, Khandala (Taluk), Satara District, Maharastra State,
belonging to the Company.
b.
Citi Bank has First exclusive charge on Plant & Machinery and other fixed assets of Satara Plant.
c.
Both ICICI Bank and Citi Bank have Equal Paripassu charge by way of Equitable Mortgage on the
factory Land & Building situated at Survey No.160/A, 161/1, 161/5, Bhimpore Village, Nani Daman, Diu
& Daman, belonging to the Company (for only term loan of ` 17137.89 lakhs from both the banks).
d.
Both ICICI bank and Citi Bank have First Paripassu charge on plant & Machinery and other
movable fixed assets of Daman Plant.
e.
Second PariPassu charge on present and future stocks and book debts of the Company
f.
Movable Fixed Assets of the Company except Daman
Hire Purchase Loans:
The Company has been availing Hire purchase loans for Vehicles from various financial institutions with a
tenor of 36 to 60 Installments. As at the year end, the company has total Hire Purchase Loans of ` 61 Lakhs
which have been classified under non-current liabilities (` 16 Lakhs) and current liabilities (` 45 Lakhs).
5.2 Unsecured Loans
The Govt. of Andhra Pradesh has extended the Company, the incentive of sales tax deferral scheme pursuant
to which the sales tax payment attributable to the sales affected out of production is deferred (interest-free) for
a period of 14 years. The company has availed this scheme for production facility of its 2 nd expansion at
Annaram unit for ` 751 Lakhs and production facility at Dommarapochampally unit for ` 422 lakhs.
F-24
Preliminary Placement Document
The sales tax payment deferred in each year is repayable after the expiry of the deferment period. The
company has completed its 14 years period for both these units. The company has been repaying installments
of the deferred sales tax in accordance with the scheme. The total Sales Tax Deferral amounts as on 31 st
March 2013 stand at ` 986 Lakhs classified under noncurrent (` 862 lakhs) and current liabilities (` 124 lakhs).
(` 124 lakhs was paid as on the date of approval of accounts by Board of Directors).
2013-14:
5.1 Secured Loans
Term Loans from Bank:
As at the year end the company has a total secured term borrowings of `1784 Lakhs (ICICI Bank ` 612 Lakhs
(includes ` 600 Lakhs borrowed during the reported year for modernization of existing facilities) and CITI
Bank ` 1172 Lakhs). The same have been classified under non-current (`1183 Lakhs) and current liabilities
(`601 Lakhs).
The following assets of the Company are impacted by the said securitization:
a.
Citi Bank has First exclusive charge by way of Equitable Mortgage on the factory Land & Buildings
situated at Survey No.82/2A, Mhavashi Village, Khandala (Taluk), Satara District, Maharastra State,
belonging to the Company.
b.
Citi Bank has First exclusive charge on Plant & Machinery and other fixed assets of Satara Plant.
c.
Both ICICI Bank and Citi Bank have Equal Paripassu charge by way of Equitable Mortgage on the
factory Land & Building situated at Survey No.160/A, 161/1, 161/5, Bhimpore Village, Nani Daman, Diu
& Daman, belonging to the Company (for only term loan of1304 lakhsfrom both the banks).
d.
Both ICICI bank and Citi Bank have First Paripassu charge on plant & Machinery and other
movable fixed assets of Daman Plant.
e.
Second PariPassu charge on present and future stocks and book debts of the Company
f.
Movable Fixed Assets of the Company except Daman
Hire Purchase Loans:
The Company has been availing Hire purchase loans for Vehicles from various financial institutions with a
tenor of 36 to 60 Installments. As at the year end, the company has total Hire Purchase Loans of `32 Lakhs
which have been classified under non-current liabilities (`18 Lakhs) and current liabilities (`14 Lakhs).
5.2 Unsecured Loans
The Govt. of Andhra Pradesh has extended the Company, the incentive of sales tax deferral scheme pursuant
to which the sales tax payment attributable to the sales effected out of production is deferred (interest-free) for
a period of 14 years. The company has availed this scheme for production facility of its 2 nd expansion at
Annaram unit for ` 751 Lakhs and production facility at Dommarapochampally unit for ` 422 lakhs.
The sales tax payment deferred in each year is repayable after the expiry of the deferment period. The
company has completed its 14 years period for both these units. The company has been repaying installments
F-25
Preliminary Placement Document
of the deferred sales tax in accordance with the scheme. The total Sales Tax Deferral amounts as on 31st
March 2014 stand at ` 862 Lakhs classified under noncurrent ` 748 and current liabilities ` 114 lakhs (` 114
Lakhs paid on 20.04.2014).
6. OTHER LONG TERM LIABILITIES
(` In lakhs)
As at
31.03.2014
As at
31.03.2013
As at
31.03.2012
3
3
-
19
20
18
PARTICULARS
Deposits from strongpet amalgamation
Deposits Collected from Job workers & Employees
TOTAL
22
23
18
The above figures include security deposits collected from Job workers & Employees which will be repaid on
successful completion of contracted terms.
7. LONG TERM PROVISIONS
(` In lakhs)
As at 31st March
Particulars
Gratuity
2014
2013
85
83
74
Leave Encashment
32
19
0
117
102
74
TOTAL
2012
2012-13:
The employees‟ gratuity fund scheme managed by a Trust (Life Insurance Corporation of India) is a defined plan.
The Present Value of obligation is determined based on actuarial valuation as per Accounting Standard 15.
2013-14:
The employees‟ gratuity fund scheme managed by a Trust (Life Insurance Corporation of India) is a defined plan.
The Present Value of obligation is determined based on actuarial valuation as per Accounting Standard 15.
With respect to leave encashment the company has an existing provision of ` 25 Lakhs at the beginning of the year.
In the absence of actuarial valuation, the company during the year has provided the differential amount of `14 Lakhs
(`16 Lakhs Less Paid during the year 2 Lakhs - current value of accumulated leaves to date `39 Lakhs towards the
end of the year) of which the value pertaining to earlier years `9 Lakhs has been considered in prior period
adjustment.
Reconciliation of Employee Benefits
(` In Lakhs)
As at 31.03.2014
Particulars
Balance at beginning of year
Benefits paid
Current service cost
As at 31.03.2013
As at 31.03.2012
Gratuity
93
Leave
Encashment
25
Gratuity
83
Leave
Encashment
21
Gratuity
74
Leave
Encashment
1
(8)
(2)
1
(2)
0
(1)
85
23
82
19
74
-
17
7
11
6
9
21
F-26
Preliminary Placement Document
Prior Period Adjustments
-
9
-
-
-
-
Balance as on 31st March
102
39
93
25
83
21
Reconciliation of Gratuity Funded at Life Insurance Corporation of India
(` In lakhs)
As at
As at
As at
31.03.2014
31.03.2013
31.03.2012
PARTICULARS
Opening balance as on 1st April
25
13
Amount Credited towards Fund
9
11
12
(9)
(1)
-
Interest Credited for the Year
2
2
1
Closing Balance as on 31st March
27
25
13
Amount paid as Claim
8.
DEFERRED TAX LIABILITY (NET)
2012-13:
The Company has a cumulative deferred tax liability of `392 lakhs of which an amount of `122 lakhs pertaining the
current year have been recognized, and the balance amount of `270 lakhs pertaining to earlier years have not been
considered.
2013-14:
The cumulative deferred tax liability as on 31 st March 2014 stands at of ` 437 lakhs which includes an amount of `
244 lakhs pertaining to liability prior to demerger. The same has been now adjusted to Reserves and Surplus
account. In addition to the existing opening provision of ` 122 Lakhs towards deferred Tax liability, the company
during the year has provided ` 46 Lakhs. An amount of ` 25 lakhs pertaining to earlier years (post demerger) which
was underprovided in earlier years, has been considered as Prior period adjustments.
10. SHORT TERM BORROWINGS
PARTICULARS
As at 31.03.2014
As at 31.03.2013
(` In lakhs)
As at 31.03.2012
Secured Loans
- ICICI Bank Cash Credit
1558
1409
1411
- Yes Bank Cash Credit
545
0
0
- CITI Bank Cash Credit
2499
Over Draft
- ICICI Bank
0
- CITI Bank
0
4602
2457
3866
100
0
4602
500
1937
3348
0
600
4466
500
500
3848
2011-12:
The Company entered in to multiple banking facility by availing fund based working capital requirements from
CITI bank while earlier entire facilities (fund and non-fund) were availed from ICICI bank Limited. The Company
during the year under review has been sanctioned/availed working capital facility of ` 2,000 lakhs from CITI Bank
Limited and ` 1,500 lakhs (1450 lakhs Fund based and 50 lakhs Non fund based) from ICICI bank Limited (making
a total of ` 3,500 lakhs), against ` 2800 lakhs in the previous financial year.
2012-13:
F-27
Preliminary Placement Document
The Company is availing multiple banking facilities for working capital requirements from Citibank & ICICI Bank.
The Company during the year under review has been sanction/availed working capital facility of ` 2500 lakhs
(totally fund based) from Citibank and ` 1550 lakhs (fund based facilities is Rs.1500 lakhs and non-fund based
facility is Rs.50 lakhs) from ICICI Bank (making a total of ` 4050 lakhs), against ` 3500 lakhs in the previous
financial year.
2013-14:
The Company under multiple banking facilities is availing working capital requirements from Citi Bank & ICICI
Bank and Yes Bank. During the year the Company has availed a working capital of ` 600 lakhs from Yes Bank Ltd.
As at the year end, the Company has a total secured short term borrowings of ` 4,650 lakhs comprising of `
1550lakhs from ICICI Bank (`1,500 lakh fund based &` 50 lakhs non-fund based), ` 2,500 lakhs of fund based
limits from CITI Bank and ` 600 lakhs of fund based limits from Yes bank, (Previous year ` 4,050 lakhs - ` 4,000
lakhs fund based and ` 50lakhs Non fund based).
Working Capital facilities from the Banks are secured by hypothecation on the following Assets of the
company:
`
2011-12 & 2012-13:
a)
First Paripassu charge to both banks by way of hypothecation of the borrower‟s entire current assets which
inter-alia include stocks of raw material, work in process, finished goods, Consumable Stores & Spares
and such other movables including Book debts, outstanding monies, receivables both present and future of
such form satisfactory to the bank.
b) First Paripassu charge to both banks by way of hypothecation of the borrower‟s Movable Fixed Assets of
the Company (Except those specifically charged for the Termloans).
c)
First Paripassu charge to both Banks by way of Equitable Mortgage on the following Immovable Assets of
the company
1. First Charge by way of equitable mortgage of land measuring 6.5125 acres &building in Sy.No
54,55/A,70, 71&72 of Annaram Village Near Air Force Academy, Jinnaram Mandal, Medak District,
A.P., belonging to the company.
2.
First Charge by way of Equitable Mortgage of Land Measuring 6413 Sq. Yards & and building in
Sy.No. 164 part,Dammarapochampally Village, Qutubullapur,
R R District, A.P., belonging to the
company.
3.
First charge by way of equitable mortgage of land measuring 1066.63 Sq. Yards & Buildings in Plot
No. D-177 phase III, IDA, Jeedimetla, Qutballapur Mandal, R.R. District. A.P. belonging to the
company.
4.
First charge by way of equitable mortgage of ground floor, Cellar area of building bearing Municipal
No. 8-2-293/82/A/700&700/1 on Plot No. 700 forming part of S.Y. No. 120(New) of Shaikpet Village
and S.Y. No 102/1 of Hakimpet Village admeasuring 3653 SFT of the office space presently occupied
by the vendee 50% or 930 SFT of reception area of 1860 SFT all in relevance to the ground Floor 400
Sq.Yards out of 1955 Sq.Yds situated within the approved layout of the Jubilee Hills Co-operative
House Building Ltd at Road No. 36 Jubilee hills, belonging to the Company.
d) Personal Guarantees of J. LakshmanaRao, A. Subrahmanyam, P.VenkateswaraRao and J. Mytreyi directors
of the Company
2013-14:
a) First Paripassu charge to three banks by way of hypothecation of the borrower‟s entire current assets which
inter-alia include stocks of raw material, work in process, finished goods, Consumable Stores & Spares
F-28
Preliminary Placement Document
and such other movables including Book debts, outstanding monies, receivables both present and future of
such form satisfactory to the bank.
b) First Paripassu charge to ICICI & CITI banks and Second Paripassu charge to Yes Bank by way of
hypothecation of the borrower‟s Movable Fixed Assets of the Company (Except those specifically charged
for the Term loans).
c)
First Paripassu charge to ICICI & CITI Bank by way of Equitable Mortgage on the following Immovable
Assets of the company
1. First Charge by way of equitable mortgage of land measuring 6.5125 acres &building in Sy.No
54,55/A,70, 71&72 of Annaram Village Near Air Force Academy, JinnaramMandal, Medak District,
Telengana belonging to the company.
2. First Charge by way of Equitable Mortgage of Land Measuring 6413 Sq. Yards & and building in
Sy.No. 164 part, Dammarapochampally Village, Qutubullapur, R R District, Telengana belonging to
the company.
3. First charge by way of equitable mortgage of land measuring 1066.63 Sq. Yards & Buildings in
Plot No. D-177 phase III, IDA, Jeedimetla, Qutballapur Mandal, R.R. District. Telengana belonging to
the company.
4. First charge by way of equitable mortgage of ground floor, Cellar area of building bearing
Municipal No. 8-2-293/82/A/700&700/1 on Plot No. 700 forming part of S.Y. No. 120(New) of
Shaikpet Village and S.Y. No 102/1 of Hakimpet Village admeasuring 3653 SFT of the office space
presently occupied by the vendee 50% or 930 SFT of reception area of 1860 SFT all in relevance to the
ground Floor 400 Sq.Yards out of 1955 Sq.Yds situated within the approved layout of the Jubilee Hills
Co-operative House Building Ltd at Road No. 36 Jubilee hills, Hyderabad belonging to the Company.
d) Personal Guarantees of J. Lakshmana Rao, A. Subrahmanyam, P.Venkateswara Rao and J. Mytreyi
directors of the Company
11. TRADE PAYABLES
(Rs in Lakhs)
PARTICULARS
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
1431
843
783
310
285
264
TOTAL
1741
Creditor balances are subject to confirmation and Reconciliation.
12. OTHER CURRENT LIABILITIES
1128
1047
Creditors for Goods
Creditors for Expenses
As at
31.03.2014
729
PARTICULARS
Current maturities of long term debt (Refer Note No. 6)
(Rs in Lakhs)
As at
As at
31.03.2013
31.03.2012
246
603
Duties & Taxes (Including Excise & Service Tax)
98
17
28
Advances received from Customers
66
31
32
5
5
60
57
53
221
204
85
Interest Accrued but not due
Unpaid Dividend
Outstanding Expenses Payable
F-29
0
Preliminary Placement Document
As at
31.03.2014
254
PARTICULARS
Provision for Daman Unit Building Repair
TDS Payable
As at
31.03.2013
-
10
139
8
109
1586
1034
548
14
Employee salaries, benefits & contributions Payable
TOTAL
As at
31.03.2012
93
2011-12:
Unpaid dividend includes an amount of ` 39 lakhs comprising unpaid dividend accounts of various years and an
amount of `14 Lakhs transferrable to a proposed employee trust in terms of the Scheme of Arrangement sanctioned
by the Hon‟ble High Court of Andhra Pradesh.
2012-13:
Unpaid dividend balance of ` 57 lakhs is comprising of previous years and includes „17 Lakhs pending transfer to
trust in terms of the Scheme of Arrangement sanctioned by the Hon‟ble Court of Andhra Pradesh.
2013-14:
Unpaid dividend balance of ` 60 lakhs, pertains to dividend relating to earlier years which includes `18 Lakhs
pending transfer to trust in terms of the Scheme of Arrangement sanctioned by the Hon‟ble High Court of Andhra
Pradesh.
Provision for Daman unit buildings is pertaining to repairs for damages caused due to fire accident which is based on
the estimated cost mentioned in insurance surveyors report.
13. SHORT TERM PROVISIONS
(Rs in Lakhs)
As at
As at
As at
PARTICULARS
31.03.2014
31.03.2013
31.03.2012
17
11
Provision for Gratuity (unfunded)
9
7
6
21
Provision for proposed dividend & tax thereon
396
327
326
Provision for Current year income Tax
436
181
365
856
525
721
Provision for Leave encashment (unfunded)
TOTAL
14. Fixed assets
(Rs in Lakhs)
Particulars
Gross carrying Amount
As on
As on As on
31.03. 31.03. 31.03.
2014
2013
2012
Depreciation for the
Year
201314
201213
2011
-12
Accumulated
depreciation
Upto
Upto
31.03. 31.03. Upto31.
2014
2013 03.2012
Net Carrying amount
As on As on As on
31.03. 31.03. 31.03.
2014
2013
2012
711
659
676
0
0
0
0
0
0
711
659
676
Buildings
leasehold
improvements
2158
2006
826
66
47
27
293
227
230
1865
1779
595
30
30
28
3
3
3
10
7
4
20
23
24
Plant & Machinery
5433
5351
4318
415
341
300
2270
2077
1741
3163
3274
2576
Moulds
1453
1177
883
146
109
81
708
576
467
745
601
416
342
346
173
28
22
14
123
98
87
219
248
86
106
85
45
9
6
3
29
21
15
77
64
31
54
39
21
5
3
2
12
7
5
42
32
16
Land
electrical Installations
Works equipments &
instruments
office equipments
F-30
Preliminary Placement Document
computers & software
124
101
42
17
13
4
42
25
12
82
76
30
Furniture & Fixtures
117
99
51
6
5
2
24
19
15
93
80
35
Vehicles
271
255
242
23
22
19
84
63
42
187
192
200
Total
10799
less: Depreciation transferred to
capitalisation
10148
7305
718
569
456
3595
3119
2618
7204
7028
4685
23
23
15
695
546
441
Depreciation for the year
(Rs in
Lakhs
)
Capital Work in Progress &
Expenditure pending allocation
Particulars
As on
01.04.
2013
As on
01.04.2
012
As on
01.04.
2011
203
326
56
259
CWIP- Unit
1,2,4 & 6
CWIPDaman
(New)
Total
Additions During the
year
Capitalized during the
year
As on
31.03.2
014
As on
31.03.
2013
As on
31.03.
2012
201314
201213
201112
201314
201213
201112
175
790
1887
1531
757
2010
1381
236
203
326
757
201
314
424
565
357
1124
9
13
56
757
1082
376
1104
2311
2096
1114
3135
1390
249
259
1082
2011-12:
During the year, the Company has acquired 1.85 acres of Land in Satara at a cost of `133 lakhs for construction of a
modern plant, which is ongoing.
The Company added new Machinery to the tune of `1039 lakhs for its modernization at all units which includes
IML containers at unit 1. This capital expenditure will also facilitate expansion in pail production capacity at all
existing units.
2012-13:
During the year, the Company has started operations at Daman &Satara new facilities.
During the year, the Company has sale of Land with constructed building at Daman Old Unit an amounting of `209
Lakhs
All residual values of assets not in use and/or having outlived their utility have been charged off as per AS 28
Impairment of Assets.
2013-14:
In the opinion of the management there are no assets of the company carried in the financial statements whose value in
use stands diminished vis-à-vis their carrying cost, and hence no provision or charge off is considered necessary.
15. NON-CURRENT INVESTMENTS
(Rs.In lakhs)
As at
31.03.2014
PARTICULARS
As at
31.03.2013
As at
31.03.2012
In Equity Shares (quoted) (at cost)
423433
Equity Shares of Mold-Tek Technologies Ltd
TOTAL
2011-12:
F-31
316
316
316
316
316
316
Preliminary Placement Document
The company at the beginning of the year had 4,07,933 equity shares of Mold-Tek Technologies Ltd (MTTL)
carried at a value of `307Lakhs stated as long term investments. During the year the company has purchased from
open market 15,500 equity shares of MTTL at a cost of `10 Lakhs. All these shares are classified as “Long term
Investments”.
16. LONG TERM LOANS AND ADVANCES
(Rs.In lakhs)
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
PARTICULARS
(Unsecured and Considered Good)
Deposits to Government Bodies
79
77
56
Capital Advances
85
51
211
Other Deposits
82
73
84
TOTAL
246
201
352
2011-12:
Capital Advances include Unit-3 Building Advances is `50 lakhs, advance of `33 lakhs for 33KV work at Unit-1,
advance of `95 lakhs issued for IML Label cutting, lamination & Slitting machine and `31 lakhs issued towards
Satara plant advances
2012-13:
Deposits with government bodies include amounts parked as security deposit with Electricity department (Rs.71
lakhs) of various state governments wherein the manufacturing facilities are situated.
Capital advances include advance paid for Nano printing machine of Rs.7 Lakhs and Rs.10 Lakhs paid towards
Satara Land.
Other deposits include EMD& security deposits of Rs.46 lakhs with customers and rental deposits of Rs.23 lakhs.
2013-14:
Deposits with Government bodies include amounts parked as security deposit with Electricity departments (`78
Lakhs) of state governments where in the manufacturing facilities are situated. Other deposits include EMD and
Security Deposits of `54 lakhs with customers and Rental deposits of `25 Lakhs. Capital advances includes
payment of `70 lakhs for acquisition machinery and `15 lakhs for acquiring licenses and implementing ERP.
17. OTHER NON – CURRENT ASSETS
(Rs.In lakhs)
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
PARTICULARS
-
1
5
27
25
13
Deferred Interest
5
5
10
Margin Money
9
17
5
TOTAL
41
48
33
Preliminary Expenses
Employee Gratuity Trust (Funded)
18. INVENTORIES
(Rs.In lakhs)
PARTICULARS
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
Raw Materials
533
570
727
Finished Goods
640
458
268
Work in Process
983
787
575
Packing Material & Consumable Stores
577
471
14
0
364
0
Residue damaged by fire
F-32
Preliminary Placement Document
PARTICULARS
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
82
75
91
2829
2361
2025
Sale in Transit (value of goods at cost)
TOTAL
2011-12,2012-13,2013-14:
Inventory quantities & values as at the balance sheet date are as certified by the management
2013-14:
Material damaged in fire includes damaged raw material, work in progress, finished goods and metal scrap which
are stated at net realizable value. The company has settled excise duty claims on these damaged stocks including
metal remains as per the prevailing excise law.
19.
TRADE RECEIVABLES
(Rs.In
lakhs)
PARTICULARS
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
(Unsecured)
Over Six Months
Considered Good
42
43
54
Considered Doubtful
33
11
Provision for Doubtful Debts
(33)
14
(14)
(11)
4178
3460
2808
0
0
0
Others
Considered Good
Considered Doubtful
TOTAL
4220
3503
2862
2011-12:
Sundry debtors are subject to confirmation and reconciliation. Sundry Debtors include an amount of `65 lakhs
outstanding for more than 6 months against which a provision for `11 lakhs has been made. Management
expresses confidence in the recovery of the balance over dues.
2012-13:
Sundry debtors are subject to confirmation and realization. Sundry Debtors include an amount of `57 lakhs
outstanding for more than 6 months against which a provision for `14 lakhs has been made. However, the
management expresses confidence in the recovery of the balance over dues.
2013-14:
Sundry debtors are subject to confirmation and reconciliation. Sundry Debtors include an amount of `75lakhs
outstanding for more than 6 months against which a provision for `33 lakhs has been made, and doubtful debts
amounting `21 lakhs written off during the year. However, the management expresses confidence in the recovery
of the balance over dues.
20.
CASH AND CASH EQUIVALENTS
(Rs.In lakhs)
PARTICULARS
As at 31.03.2014
As at 31.03.2013
As at 31.03.2012
4
3
2
57
40
26
61
43
28
Cash in hand
Current & Dividend Accounts
TOTAL
21.
SHORT TERM LOANS AND ADVANCES
(Rs.In lakhs)
F-33
Preliminary Placement Document
As at
31.03.2014
PARTICULARS
As at
31.03.2013
As at
31.03.2012
(Unsecured and Considered Good)
Deposits with Excise Authorities
220
212
139
Advance Tax & TDS Receivable
347
278
457
Prepaid Expenses
39
26
27
Staff Advances
20
20
15
110
168
114
0
(4)
(2)
736
700
750
Advance to suppliers
Mold-Tek Technologies Limited (Related party)
TOTAL
22.
OTHER CURRENT ASSETS
As at
31.03.2014
625
PARTICULARS
Fire Insurance Claim Receivable
Interest Receivable on Electricity Deposits
Others (Employee welfare Trust)
TOTAL
As at
31.03.2013
As at
31.03.2012
0
0
5
4
0
28
28
28
658
32
28
2011-12:
96,480 shares of Mold-Tek Plastics Limited, vested in your company in accordance with the scheme of arrangement
approved by the Hon‟ble High Court of Andhra Pradesh, are pending the transfer into a separate trust.
2012-13:
96,480 shares of Mold-Tek Plastics Limited, vested in the company in accordance with the scheme of arrangement
approved by the Hon‟ble High Court of Andhra Pradesh, are pending for transfer into a separate trust along with
dividend for F.Y. 2007-08, F.Y. 2008-09, F.Y. 2009-10, F.Y.2010-11 and 2011-12.
2013-14:
The company during the financial year suffered fire accident in its Daman unit, due to which a few fixed and current
assets were damaged either partially or completely. The company lodged a final claim for `699 Lakhs against which
an amount of `625 Lakhs has been settled for by the insurance company, leaving damaged stock to the company
which is valued at `14 lakhs (included under inventories), resulting in a net loss of `60 Lakhs (reported under
extraordinary items).
96,480 shares of Mold-Tek Plastics Limited, vested in the company in accordance with the scheme of arrangement
approved by the Hon‟ble High Court of Andhra Pradesh, are pending for transfer into a separate trust along with
dividend for F.Y. 2007-08, F.Y. 2008-09, F.Y. 2009-10, F.Y.2010-11, F.Y.2012-13 and 2013-14.
23. OTHER INCOME
(Rs. In lakhs)
Year Ended
2014
2013
2012
2
1
1
Dividend Received
24
2
9
0
2
4
0
2
6
Exchange Rate Fluctuation
5
10
6
Interest Received
9
14
11
Particulars
Sale of Scrap & Others
Product Development Charges
Rent Received
TOTAL
2012-13:
51
F-34
31
26
Preliminary Placement Document
During the year the company has received interest from Moldtek Technologies Limited of Rs.6 lakhs,at
prevailing cash credit borrowing rate.
23. CHANGES IN INVENTORIES OF FINISHED GOODS & WORK-IN-PROCESS
(Rs. In lakhs)
Year ended
Particulars
2014
2013
2012
(i) Finished Goods
Opening Stocks
533
Closing Stocks
722
359
189
423
533
174
359
(65)
(ii) Work in Process
Opening Stocks
787
Closing Stocks
9831
576
196
TOTAL
608
787
211
385
575
(33)
385
(97)
24. MATERIAL CONSUMED
(Rs. In lakhs)
Year ended
2014
2013
2012
Raw Material
Opening Stocks
570
727
591
Add: Purchases
14496
10563
9785
Less: Closing Stocks
533
14533
570
10720
726
9649
Master Batch
463
466
313
Handles
712
648
607
Printing Material
901
558
346
54
38
271
16663
12430
11186
Consumables & Spares
117
52
38
Packing Materials
432
363
317
17212
12845
11541
Others
Total
25. EMPLOYEE REMUNERATION & BENEFITS
(Rs. In lakhs)
Year Ended
2014
Particulars
Salaries, Wages, Allowances & Bonus
Contribution to Provident Fund & ESIC
Welfare Expenses
F-35
2013
2012
1623
1248
1054
54
47
45
110
84
66
Preliminary Placement Document
Year Ended
2014
Particulars
Gratuity & Leave Encashment
Directors Remuneration & Perquisites
2013
24
17
8
151
119
143
5
17
31
1967
1532
1347
Employee Compensation Expenses (ESOS)
TOTAL
2012
Managerial Remuneration:
Particulars of remuneration paid/payable to Directors
(Rs.InLakhs)
Particulars
Salary and Allowances
Medical Reimbursement
Electricity & Water
Other Perquisites
Commission
Leave encashment
Gratuity
Sitting Fee
Total
2013-14
177
3
4
5
8
6
1
1
205
2012-13
165
1
2
1
15
1
185
2011-12
129
1
2
9
34
1
176
2011-12:
Excludes a sum of `19 lakhs capitalized during the year allocated for expansion of facilities (31 st March, 2011:
`16 lakhs) and a sum of `15 lakhs paid towards leave encashment for earlier years which is accounted under
Prior period items.
2012-13:
Remuneration includes a sum of `50 lakhs capitalized during the year.
Pending approval of Central government, remuneration to Deputy Managing Director is paid as per previously
approved limits.
A sum of `15 lakhs paid towards Gratuity for earlier years is not included above, the said amount accounted
under Prior period Adjustments.
2013-14:
Director Remuneration & Perquisites include an amount of `6 Lakhs pertaining to leave encashment of the reported
year.
Remuneration includes a sum of `54 lakhs capitalized during the year.
26. SELLING & DISTRIBUTION EXPENSES
(Rs. In lakhs)
Year Ended
2014
Particulars
Carriage Outwards
Sales Promotion & Commission
Advertisement Expenses
Sales Tax
TOTAL
2013
2012
970
935
808
19
32
38
2
1
16
887
509
436
1878
1477
1298
27. INTEREST & FINANCIAL CHARGES
(Rs. In lakhs)
F-36
Preliminary Placement Document
Year Ended
2014
Particulars
2013
2012
Interest on Term Loans
262
133
61
Interest on Working Capital
533
434
309
45
13
11
Interest on HP loans and other financial charges
380
TOTAL
840
580
2011-12:
Interest on working capital excludes a sum of ` 58 lakhs as costs pertaining to acquisition, erection and construction
new facilities at Daman, arrived based on weighted average cost of capital as per Accounting standard 16.
2012-13:
Excludes a sum of ` 10 lakhs Working Capital interest and ` 80 lakhs Term-Loan Interest capitalized during the year
on Daman &Satara units as per Accounting standard 16.
28. OTHER EXPENSES
(Rs. In lakhs)
Year Ended
2014
Particulars
2013
2012
Manufacturing Expenses
Power & Fuel
927
883
Job work charges
219
248
-
Repairs & Maintenance - Machinery
129
110
95
39
35
14
Rent
60
53
48
Rates & Taxes
22
17
14
Insurance
31
27
14
Communication Expenses
40
30
33
Electricity Charges
19
15
13
Foreign Travel
14
29
16
Travelling and conveyance – others
87
64
Printing & Stationery
22
71
20
Repairs to Buildings
8
6
11
104
74
Repairs & Maintenance - Moulds
547
Administrative Expenses
Repairs to Others
19
Professional charges
25
73
20
Payment to Auditors
9
8
7
Bank Charges
28
21
18
Loss on Sale of Assets
28
12
8
Provision for Bad Debts
41
14
-
2
3
-
33
35
22
Exchange Rate Fluctuation
General Expenses
TOTAL
1887
F-37
1730
17
1034
Preliminary Placement Document
Payments to Auditor
(Rs. In lakhs)
Particulars
2014
Year Ended
2013
2012
7
2
9
6
2
8
6
1
7
Statutory Audit & tax audit Fee including Quarterly
reviews
Retainer fee for tax and other matters
Total
29. PRELIMINARY & DEFERRED EXPENSES WRITTEN OFF
(Rs. In lakhs)
Year Ended
2014
Particulars
Opening Balance at beginning of the year
2013
2012
1
5
10
Add : Additions
0
0
0
Less: Written off During the Year
1
4
5
0
1
TOTAL
5
30. PRIOR PERIOD ADJUSTMENTS - EXTRAORDINARY ITEM
2011-12:
Prior period items includes a sum of `15 lakhs pertaining to leave encashment for earlier years ending tenure
till 2008, now paid to whole time directors of the company.
2012-13:
It includes Gratuity of `15 Lakhs pertaining to earlier years for whole time directors.
2013-14:
Prior period adjustments include deferred tax liability of `25 Lakhs pertaining to earlier years (post demerger),
`9 Lakhs against leave encashment for employees pertaining to earlier years and income of `23 lakhs refunds
received from electricity department against payments of previous year.
The net loss suffered by the company of `60 lakhs after considering the net realizable value of partially
damaged material at `14 lakhs. The amount has been reported as extraordinary item as per Para 4.2 of AS 5.
31. EVENTS OCCURING AFTER THE BALANCE SHEET – 2013-14
2013-14:
All the numbers have been considered in the financial statements as per Para 3.2 of AS 4.
32. CONTINGENT LIABILITIES
2011-12:
a.
b.
Bank guarantees:
The Company has provided bank guarantees to the tune of `47 lakhs comprising of bid securities and
performance guarantees.
Export Obligations:
Guarantee Bonds issued in favour of the Customs Authorities amounting to ` 59 lakhs for fulfillment of
export obligations of USD 4 Lakhs equivalent to `190 Lakhs for import of machinery against licenses
granted under EPCG Scheme. The Company has to fulfill the said export obligation by March 13, 2020.
F-38
Preliminary Placement Document
The Company has fulfilled export obligations of USD 9 lakhs in the name of erstwhile Mold-Tek
Technologies Limited, up to March 31, 2011. However, the Redemption of the guarantee bonds to that
extent is in process.
c.
No contingent liability is considered towards rebates availed on power bills in earlier years and short
payments arising as a consequence thereof.
2012-13:
a)
Bank guarantees:
The Company has provided bank guarantees to the tune of `44 lakhs comprising of bid securities and
performance guarantees given to its customers / prospective customers.
b)
Export Obligations:
The Company has a cumulative export obligation to the tune of $18 Lakhs ( `866 Lakhs) (as on 31st
March 2013) the particulars of which are as below:
i. Of the total obligation $9 Lakhs (`407 Lakhs) was against the licenses utilized against import of
machinery by erstwhile Mold-Tek Technologies Limited. The company has fulfilled the export
obligations against these licenses by March 31, 2011. The details have been submitted to
customs department for redemption of licenses. During the year licenses amounting to $3 Lakhs
(`146 Lakhs) have been redeemed and awaiting the redemption of the balance $6 Lakhs ( `261
Lakhs).
ii.
Further, Licenses granted under EPCG Scheme for import of machinery for which guarantee
bonds valuing `96 Lakhs were issued to customs department. The company has an export
obligation of $9 Lakhs (`459 Lakhs) against the licenses utilized for imports. During the year
under review the Company has fulfilled an obligation amounting to $3 Lakhs ( `154 Lakhs) and
the balance export obligation of $6 Lakhs (`305 Lakhs) has to be fulfilled by March 31, 2020.
c)
No contingent liability is considered towards rebates availed on power bills in earlier years and short
payments arising as a consequence thereof.
2013-14:
a.
Bank guarantees:
The Company has provided bank guarantees to the tune of `45 lakhs comprising of bid securities and
performance guarantees given to its customers / prospective customers.
b.
Export Obligations:
The Company has a cumulative export obligation to the tune of $18 Lakhs (`934 Lakhs) as on 31st
March 2014 the particulars of which are as below:
i. Of the total obligation $9 Lakhs (`407 Lakhs) was against the licenses utilized against import of
machinery by erstwhile Mold-Tek Technologies Limited. The company has fulfilled the export
obligations against these licenses by March 31, 2011. The details have been submitted to
customs department for redemption of licenses. Including the licenses amounting to $ 3 Lakhs
redeemed in the previous year, further licenses amounting to $2 Lakhs (`98 Lakhs) have been
redeemed during the year and redemption licenses for the balance $4 Lakhs ( `163 Lakhs) is
awaited.
ii.
c.
Further, Licenses granted under EPCG Scheme for import of machinery for which guarantee
bonds valuing `96 Lakhs were issued to customs department. The company has an export
obligation of $9 Lakhs (`527 Lakhs) against these licenses utilized for imports. The Company
till the end of the year under review has fulfilled an obligation amounting to $6 Lakhs ( `308
Lakhs) including that of $3 lakhs (`161 Lakhs) fulfilled during this year. The balance export
obligation of $3 Lakhs (`219 Lakhs) has to be fulfilled by March 31, 2020.
No contingent liability is considered towards rebates availed on power bills in earlier years and short
payments arising as a consequence thereof
F-39
Preliminary Placement Document
33.
Earnings per Share
Particulars
Profit available for equity share holders `
Weighted Average number of equity shares outstanding
for BEPS
Weighted Average number of potential equity shares,
warrants and ESOP‟s outstanding
Weighted Average number of equity shares for DEPS
-Earning per share – Face Value of `10
- Basic `
- Diluted `
34.
2013-14
90741787
11271743
2012-13
57798281
11244591
2011-12
93309496
9031278
73850
105950
146250
11345593
8.05
8.00
11350541
5.14
5.09
11362776
10.33
8.21
Additional information pursuant to the provisions of paragraph 3, 4C and 4D of Part II of Schedule VI
to the Companies Act,1956.
a. Production, Sales and Stocks (Qty in Nos.)
2013-14:
Opening
Production
Closing
Plastic Components
Stocks
including
Stocks
Sales
01.04.2013
reprocessing
31.03.2014
Pails
1101378
38949804
1569689
38481493
Thin wall
25373
7634186
408470
7251089
Others
16261
16261
2012-13:
Plastic Components
Pails
Thin wall
Pet
Others
2011-12:
Plastic Components
Pails
Caps
Thin wall
Pet
Others
Opening
Stocks
01.04.2012
900940
205870
125919
16261
Production
including
reprocessing
31181616
11175611
245000
Closing
Stocks
31.03.2013
1101378
25373
16261
Opening
Stocks
01.04.2011
954596
883593
158119
16261
Production
including
reprocessing
30186281
30347474
2455748
8284
125000
Closing
Stocks
31.03.2012
900940
900940
205870
125919
16261
F-40
Sales
30981178
11356108
125919
245000
Sales
30093655
30192696
2249878
40484
125000
Preliminary Placement Document
b. Consumption of Materials
Particulars
2013-14
Kgs
` Lakhs
PPCP/PP
12997001
13056
LDPE/LLDPE
1297566
1316
HDPE
115354
112
LG Hips & Engage
45161
49
Consumables
118
Packing Materials
431
Others
2130
2012-13
Kgs
` Lakhs
10559750
9345
1294216
1123
220307
183
71692
69
52
363
1710
2011-12
Kgs
` Lakhs
10168797
8116
1225758
903
791734
31579
585
Total
12145965
12217868
c.
14455082
17212
CIF Value of Imports
Particulars
Raw Materials & Bopp Film
Capital Goods & Maintenance Spares
Others
Total
d.
2013-14
53
113
166
2012-13
72
135
6
213
(Rs
in
Lakhs)
2011-12
93
455
6
553
Earnings in Foreign Currency (on accrual basis)
Particulars
2013-14
FOB Value of Exports
e.
12845
147
2012-13
218
(Rs
in
Lakhs)
2011-12
167
Expenditure in Foreign Currency
Particulars
2013-14
Travelling
14
2012-13
29
(Rs
in
Lakhs)
2011-12
16
35. Operating Leases
The Company has entered into operating lease agreements for Factory Buildings at Hosur (Tamil Nadu)
&Dundigal (Andhra Pradesh). The maximum obligations on non-cancelable operating leases payable as per the
minimum lease rentals stated in the respective agreements for tenor are as follows:
(Rs in Lakhs)
Particulars
2013-14
2012-13
2011-12
Lease expense for the year
14
10
Minimum lease payments:
33
282
Not later than one year
Later than one year but not
later than five years
17
285
Later than five years
36.
-
Related Party Disclosures
F-41
44
38
317
1537
11541
Preliminary Placement Document
1.
Related Parties and Nature of Relationship
a.
Mold-Tek Technologies Limited
Associate
b.
Friends Packaging Private Limited
Relative of director
c.
Tarus Industries
Relative of director
d.
Capricorn Industries
Relative of director
e.
J.S. Sundaram& Co
Relative of director
2.
Key Management Personnel
a.
J. Lakshmana Rao
b.
A. Subrahmanyam
c.
P. Venkateswara Rao
Chairman & Managing Director
Dy. Managing Director
Dy. Managing Director
3. Relatives of Key Management Personnel
A. SeshuKumari
J. NavyaMythri
Related Party Transactions
Particulars
Finance Controller
Assistant Finance Controller
(Rs.In lakhs)
Relative of Key Management
Personnel
Key management personnel
Related Party
2013-14
2012-13
201112
182
165
164
0
19
74
131
82
-
8
0
0
2013-14
2012-13
2011-12
2013-14
2012-13
2011-12
A. Subrahmanyam
93
84
95
P. Venkateswara Rao
76
52
64
J. Lakshmana Rao
34
33
17
Gratuity & Leave
encashment
J. Lakshmana Rao
1
0
0
A. Subrahmanyam
3
8
0
P. Venkateswara Rao
2
6
0
J. Lakshmana Rao
25
32
62
A. Subrahmanyam
20
25
51
P. Venkateswara Rao
2
3
6
Purchases
Friends
Industries
Packaging
Tarus Industries
Capricorn Industries
Services Rendered
J.S.Sundaram& co
Remuneration
Dividend
F-42
Preliminary Placement Document
Particulars
Relative of Key Management
Personnel
Related Party
2013-14
2012-13
201112
2013-14
2012-13
2011-12
A. SeshuKumari
8
10
29
J. NavyaMythri
0
0
0
A. SeshuKumari
11
11
10
J. NavyaMythri
7
4
0
10
8
5
Key management personnel
2013-14
2012-13
2011-12
J. Lakshmana Rao
956
840
840
A. Subrahmanyam
713
720
720
P. Venkateswara Rao
77
51
51
J. Mytreyi
40
93
93
Salaries
Rent paid
A. SeshuKumari
Rent Received
Friends
Industries
Packaging
2
2
2
Personal
Guarantee
given to Bank
Other Transactions
Mold Tek Technologies
Limited
4
(2)
2
25
11
14
Capricorn Industries
0
4
0
J.S.Sundaram& co
3
0
0
Mold Tek Technologies
Limited
0
4
2
4
(6)
5
Out Standing Payable
as at 31st March 2013
Friends
Industries
Packaging
Interest
Mold Tek technologies
limited
F-43
Preliminary Placement Document
DECLARATION
Our Company certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the SEBI ICDR
Regulations have been complied with and no statement made in this Preliminary Placement Document is contrary to
the provisions of Chapter VIII and Schedule XVIII of the SEBI ICDR Regulations and that all approvals and
permissions required to carry on our business have been obtained, are currently valid and have been complied with.
Our Company further certifies that all the statements in this Preliminary Placement Document are true and correct.
Signed by
Janumahanti Lakshmana Rao
Chairman and Managing Director
Date: January 30, 2015
Place: Hyderabad
200
Preliminary Placement Document
DECLARATION IN ACCORDANCE WITH FORM PAS - 4
We the Board of Directors of the Company certify that:
(a) the Company has complied with the provisions of the Companies Act, 2013 and the rules made thereunder;
(b) the compliance with the Companies Act, 2013 and the rules does not imply that payment of dividend or interest or
repayment of debentures, if applicable, is guaranteed by the Central Government; and
(c) the monies received under the offer shall be used only for the purposes and objects indicated in the Preliminary
Placement Document (which includes disclosures prescribed under Form PAS-4).
Signed by
________________
Janumahanti Lakshmana Rao
Chairman and Managing Director
I am authorized by the QIP Committee of the Board of Directors of the Company dated January 30, 2015 to sign this
form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the
subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form
and in the attachments thereto is true, correct and complete and no information material to the subject matter of this
form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to
the Memorandum of Association and Articles of Association.
It is further declared and verified that all the required attachments have been completely, correctly and legibly
attached to this form.
Signed by
Janumahanti Lakshmana Rao
Date: January 30, 2015
Place: Hyderabad
201
Preliminary Placement Document
ISSUER
MOLD–TEK PACKAGING LIMITED
REGISTERED OFFICE OF THE ISSUER
8– 2 – 293/82/A/700, Ground Floor
Road No. 36, Jubilee Hills
Hyderabad – 500 033, Telangana, India
Website: www.moldtekplastics.com, CIN : L21022TG1997PLC026542
Contact Person: Priyanka Rajora, Company Secretary and Compliance Officer
ADDRESS OF THE COMPLIANCE OFFICER
Priyanka Rajora
8– 2 – 293/82/A/700, Ground Floor
Road No. 36, Jubilee Hills
Hyderabad – 500 033, Telangana, India
Tel: +91 40 –4030 0300, Fax: +91 40 – 4030 0328, Email: [email protected]
BOOK RUNNING LEAD MANAGERS
EMKAY GLOBAL FINANCIAL SERVICES
LIMITED
7th Floor, The Ruby, Senapati Bapat Marg
Dadar - West, Mumbai – 400028
Maharashtra, India
CENTRUM CAPITAL LIMITED
Centrum House, CST Road, Vidyanagari Marg, Kalina,
Santacruz (East), Mumbai – 400098
Maharashtra, India
LEGAL ADVISORS TO THE ISSUE
M/s. Crawford Bayley & Co.
State Bank Buildings, 4th Floor
N.G.N. Vaidya Marg, Fort
Mumbai – 400 023
Maharashtra, India
STATUTORY AUDITOR
M/s. Praturi & Sriram
Chartered Accountants
201, Sapthagiri Residency
1–10–98/A, Chikoti Gardens
Begumpet
Hyderabad – 500 016
Telangana, India
202