UTTAM GALVA STEELS LIMITED - RathiUttam Galva Steels Limited – Placement Document 4 purpose is...

Placement Document Not for Circulation Serial Number: [●]

UTTAM GALVA STEELS LIMITED

(Incorporated in the Republic of India, as a company with limited liability under the Companies Act, 1956 with Registration No. 35806 of 1984-85 and Corporate Identification Number L27104MH1985PLC035806)

Uttam Galva Steels Limited (the "Company") is issuing up to 2,00,00,000 Equity Shares of face value `10 each (the "Equity Shares") at a

price of `80 per Equity Share, including a premium of `70 per Equity Share, aggregating up to `160 crore ("Placement").

PLACEMENT IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED.

THIS PLACEMENT AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED ("SEBI REGULATIONS"). THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR 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 QUALIFIED INSTITUTIONAL BUYERS ("QIB"), AS DEFINED UNDER THE SEBI REGULATIONS. Invitations, offers and sales of Equity Shares shall only be made pursuant to this Placement Document, the Bid cum Application Form and the Confirmation of Allocation Note. The distribution of this Placement Document or the disclosure of its contents without our Company’s prior consent to any person, other than QIBs and persons retained by QIBs to advise them with respect to their purchase of our Equity Shares, is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents referred to in this Placement Document. Please see the section titled "Placement Procedure". This Placement Document has not been reviewed by the Securities and Exchange Board of India, the Reserve Bank of India, the BSE Limited (the "BSE") and the National Stock Exchange of India Limited (the "NSE" and together with BSE, "Stock Exchanges") or any other regulatory or listing authority and is intended only for use by QIBs. This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India and 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. Our Company, having made all reasonable enquiries, accepts responsibility for this Placement Document and confirms that this Placement Document contains all information with regard to our Company and this Placement, as required by Chapter VIII read together with Schedule XVIII of the SEBI Regulations. Our Company further confirms that the information contained in this Placement Document is true and correct in all material respects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held, and that there are no other facts the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Investments in equity and equity-related securities involve a degree of risk and prospective investors should not invest in this Placement unless they are prepared to take the risk of losing all or part of their investment. Prospective investors are advised to carefully read the section titled "Risk Factors" of this Placement Document before making an investment decision in this Placement. Each prospective investor is advised to consult its advisors about the particular consequences to it of an investment in our Equity Shares being issued pursuant to this Placement Document. The information on our Company’s website or any website directly or indirectly linked to our Company’s website does not form part of this Placement Document and prospective investors should not rely on such information contained in, or available through, such websites. All of our Company’s outstanding Equity Shares are listed on BSE and NSE. Applications shall be made for listing of our Equity Shares offered through this Placement Document on the Stock Exchanges. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of our Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or our Equity Shares.

YOU MAY NOT AND ARE NOT AUTHORIZED TO (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS. A copy of this Placement Document has been delivered to the Stock Exchanges. A copy of the Placement Document will be filed with the Stock Exchanges. THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED PLACEMENT OF THE EQUITY SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT. Our Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US 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 US Securities Act and in accordance with applicable US state securities laws. Our Equity Shares are only being offered and sold outside the United States in reliance on Regulation S under the US Securities Act ("Regulation S"). For further details, please refer to the section titled "Distribution and Solicitation Restrictions" and the section titled "Transfer Restrictions" of this Placement Document

This Placement Document is dated March 26, 2013.

Global Coordinator and Book Running Lead Manager

Anand Rathi Advisors Limited

10th Floor, " D" Wing, Trade Tower Kamala Mills Compound, Senapati Bapat Marg,

Lower Parel, Mumbai - 400 013, India. (T): +91 22 6626 6666 | (F): +91 22 6626 6700

Email: [email protected] Contact Person: Akshay Bhandari / Jitendra Verma

TABLE OF CONTENTS

Page

NOTICE TO INVESTORS ......................................................................................................................................... 3 CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL DATA, MARKET AND INDUSTRY DATA, CURRENCY OF PRESENTATION AND EXCHANGE RATES ........................................................... 11 FORWARD LOOKING STATEMENTS ................................................................................................................ 13 ENFORCEMENT OF CIVIL LIABILITIES ........................................................................................................... 14 DEFINITIONS AND ABBREVIATIONS............................................................................................................... 15 SUMMARY OF THE PLACEMENT ...................................................................................................................... 22 SUMMARY OF BUSINESS .................................................................................................................................... 24 SUMMARY FINANCIAL INFORMATION .......................................................................................................... 26 RISK FACTORS ....................................................................................................................................................... 34 MARKET PRICE INFORMATION ........................................................................................................................ 57 USE OF PROCEEDS ................................................................................................................................................ 60 CAPITALISATION .................................................................................................................................................. 61 DIVIDEND POLICY ................................................................................................................................................ 62 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .......................................................................................................................................................... 63 INDUSTRY OVERVIEW ........................................................................................................................................ 79 BUSINESS OVERVIEW.......................................................................................................................................... 90 FINANCIAL INDEBTEDNESS ............................................................................................................................ 109 REGULATIONS AND POLICIES ........................................................................................................................ 130 BOARD OF DIRECTORS AND MANAGEMENT ............................................................................................. 135 PRINCIPAL SHAREHOLDERS ........................................................................................................................... 144 PLACEMENT PROCEDURE ................................................................................................................................ 146 PLACEMENT ......................................................................................................................................................... 158 DISTRIBUTION AND SOLICITATION RESTRICTIONS ................................................................................ 159 TRANSFER RESTRICTIONS ............................................................................................................................... 162 INDIAN SECURITIES MARKET ......................................................................................................................... 163 DESCRIPTION OF THE SHARES ....................................................................................................................... 166 TAXATION ............................................................................................................................................................ 172 LEGAL PROCEEDINGS ....................................................................................................................................... 178 GENERAL INFORMATION ................................................................................................................................. 182 INDEPENDENT ACCOUNTANTS ...................................................................................................................... 184 FINANCIAL STATEMENTS ................................................................................................................................ 185 DECLARATION .................................................................................................................................................... 191

Uttam Galva Steels Limited – Placement Document

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NOTICE TO INVESTORS Our Company has furnished and accepts full responsibility for the information contained in this Placement Document and confirms that, to its best knowledge and belief and after having made all reasonable enquiries, this Placement Document contains all information with respect to our Company, its material associates and the Equity Shares which is material in the context of the Placement. The statements contained in this Placement Document relating to our Company, its material associates and the Equity Shares are true and accurate and not misleading, the opinions and intentions expressed in this Placement Document with regard to our Company, its material associates and the Equity Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to our Company and are based on reasonable assumptions. There are no other facts in relation to our Company, its material associates and the Equity Shares, the omission of which would, in the context of the Placement, make any statement in this 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. Anand Rathi Advisors Limited, Global Coordinator and Book Running Lead Manager ("GC-BRLM") to this Placement has not separately verified the information contained in this Placement Document (financial, legal or otherwise). Accordingly, neither the GC-BRLM nor any of its shareholders, directors, officers, employees, counsel, representatives, agents or affiliates makes any express or implied representation, warranty or undertaking and they accept no responsibility or liability with respect to the accuracy or completeness of the information contained in this Placement Document or any other information supplied in connection with the Equity Shares. Each person receiving this Placement Document acknowledges that such person has not relied on the GC-BRLM or any of its shareholders, directors, officers, employees, counsel, representatives, agents or affiliates 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, its Subsidiaries and joint ventures and the merits and risks involved in investing in the Equity Shares. Prospective investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. No person has been authorized to give any information or to make any representation not contained in this 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 GC-BRLM. The delivery of this Placement Document at any time does not imply that the information contained in it is correct as at any time subsequent to the date of this Placement Document. The Equity Shares have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any state securities commission in the United States or the securities commission of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority. None of these authorities has passed on or endorsed the merits of the Placement or the accuracy or adequacy of this Placement Document. Any representation to the contrary is a criminal offence in the United States and may be a criminal offence in other jurisdictions. The distribution of this Placement Document and the Placement may be restricted by law in certain jurisdictions. As such, this 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. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering material 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. No action has been taken by our Company or the GC-BRLM which would permit an offering of the Equity Shares or distribution of this Placement Document in any jurisdiction where action for that


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purpose is required. For further details, please see "Distribution and Solicitation Restrictions" and "Transfer Restrictions". In making an investment decision, investors must rely on their own examination of our Company and the terms of the Placement, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning the Placement. In addition, neither our Company nor the GC-BRLM are making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations. Each purchaser of the Equity Shares in the Placement is deemed to have acknowledged, represented and agreed that it is a Qualified Institutional Buyer (as defined under the SEBI Regulations) and is eligible to invest in India and in the Equity Shares under Indian law, including Chapter VIII of the SEBI Regulations and that it is not prohibited by the SEBI or any other statutory authority from buying, selling or dealing in securities. Each purchaser of Equity Shares in the Placement 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. The information on our Company’s website www.uttamgalva.com, or on the website of GC-BRLM does not constitute nor form a part of this Placement Document.

Representations by Investors By purchasing any Equity Shares under the Placement, you are deemed to have represented, warranted, acknowledged and agreed to us and the GC-BRLM as follows: • you are a qualified institutional buyer ("QIB") as defined under Regulation 2(1)(zd) of the

SEBI Regulations, have a valid and existing registration under applicable laws of India (as applicable), 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 Regulations;

• that you are permitted by all applicable laws to acquire the Equity Shares; • if you are allotted Equity Shares pursuant to the Placement, you shall, for a period of one year

from allotment, sell the Equity Shares so acquired only on the Stock Exchanges; as per current regulations, any sale by way of a "bulk deal" or "block deal" in accordance with the procedures prescribed by SEBI and the relevant recognized stock exchange shall also be treated as a sale on a recognized stock exchange;

• you are aware that the Equity Shares have not been, and will not be, registered under

Companies Act, 1956, as amended (the "Companies Act"), the SEBI Regulations or under any other law in force in India. This Placement Document has not been verified or affirmed by the SEBI or the Stock Exchanges and will not be filed or registered with the Registrar of Companies. This Placement Document has been filed with the Stock Exchanges and has been displayed on the websites of our Company and the Stock Exchanges;

• you are entitled to subscribe for the 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;


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• you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and that you have all necessary capacity and have obtained all necessary consents and authorities to enable you to commit to this participation in the Placement 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 authorities to agree to the terms set out or referred to in this Placement Document) and will honor such obligations;

• neither our Company nor the GC-BRLM nor any of their respective shareholders, directors,

officers, employees, counsel, representatives, agents or affiliates is making any recommendation to you, advising you regarding the suitability of any transactions it may enter into in connection with the Placement; your participation in the Placement is on the basis that you are not and will not be a client of either of the GC-BRLM and that the GC-BRLM nor any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates has any duty or responsibilities to you for providing the protection afforded to their clients or customers or for providing advice in relation to the Placement and is in no way acting in a fiduciary capacity to you;

• you confirm that in the event you have attended any presentation by our Company or its

authorised representatives ("Company Presentations") where the GC-BRLM or its authorised representatives are not present,(a) you understand and acknowledge that the GC-BRLM may not have knowledge of the statements that our Company or its authorised representatives may have made at such Company Presentations and GC-BRLM is therefore unable to determine whether the information provided to you at such Company Presentations may have included any material mis-statements or omissions, and, accordingly you acknowledge that the GC-BRLM have 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;

• you are aware and understand that the Equity Shares are being placed only with QIBs and are

not being offered to the general public and the allotment of the Equity Shares shall be on a discretionary basis;

• you have made, or been deemed to have made, as applicable, the representations set forth in

the section "Transfer Restrictions"; • you are purchasing the Equity Shares in reliance on Regulation S under the US Securities Act; • you have been provided a serially numbered copy of this Placement Document and have read

this Placement Document in its entirety; • that in making your investment decision (i) you have relied on your own examination of our

Company and the terms of the Placement, including the merits and risks involved, (ii) you have made your own assessment of our Company, the Equity Shares and the terms of the Placement, (iii) you have consulted your own independent advisors (including tax advisors) or otherwise have satisfied yourself concerning, without limitation, the effects of local laws and taxation matters, (iv) you have relied solely on the information contained in this Placement Document and no other disclosure or representation by our Company or the GC-BRLM; and (v) 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 have such knowledge and experience in financial and business matters as to be capable of


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evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for which you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to our Company, the GC-BRLM or 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, (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;

• that where you are acquiring the Equity Shares for one or more managed accounts, you

represent and warrant that you are authorized in writing, by each such managed account to acquire the Equity Shares for each managed account and to make (and you hereby make) the representations, 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 and are not a person related to the promoters or to group companies of

any of the promoters of our Company, either directly or indirectly and your bid does not directly or indirectly represent the promoter or promoter group or persons related to the promoters of our Company or to group companies of any of 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 or to group companies of any of the promoters of our Company, 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, the acquisition of which shall not deem you to be a promoter, a person related to the promoter or to group companies of any of the Promoters of our Company;

• you have no right to withdraw your bid after the Bid Closing Date; • you are eligible to bid and hold Equity Shares so allotted together with any Equity Shares

held by you prior to the Placement. You further confirm that your holding upon the issue of the Equity Shares shall not exceed the level permissible as per any applicable 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 Placement that

belong to the same group or are under common control as you, the allotment under the present Placement shall not exceed 50% of the Placement. For the purposes of this representation: a) the expression "belongs to the same group" shall be interpreted by applying the

concept of "companies under the same group" as provided in sub-section (11) of Section 372 of the Companies Act; and

b) "Control" shall have the same meaning as is assigned to it under Regulation 2 of the Takeover Code;

• you shall not undertake any trade in the Equity Shares credited to your Depository Participant

account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges;


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• you are aware that applications shall be made to the Stock Exchanges after the Allotment of the Equity Shares in the Placement for approvals for listing and admission of the Equity Shares to trading on the Stock Exchanges’ market for listed securities and there can be no assurance that such approvals will be obtained on time or at all;

• you are aware and understand that the GC-BRLM will have entered into a memorandum of

understanding with our Company whereby the GC-BRLM have, subject to the satisfaction of certain conditions set out therein, undertaken to use its reasonable endeavors as an agent of our Company to seek to procure subscriptions for the Equity Shares in the Placement;

• that the contents of this Placement Document are exclusively the responsibility of our

Company and that neither the GC-BRLM nor any person acting on its behalf has, or shall have, any liability for any information, representation or statement contained in this 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 the Placement based on any information, representation or statement contained in this Placement Document or otherwise. By accepting a participation in the Placement, 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 either of the GC-BRLM or our Company or any other person and neither the GC-BRLM, nor our Company or any other person will be liable for your decision to participate in the Placement based on any other information, representation, warranty or statement that you may have obtained or received;

• that you are eligible to invest in India under applicable laws, including the Foreign Exchange

Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended, and have not been prohibited by the SEBI or any other regulatory authority from buying, selling or dealing in securities;

• that the only information you are entitled to rely on, and on which you have relied in

committing yourself to acquire the Equity Shares, is contained in this Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares and that you have neither received nor relied on any other information given or representations, warranties or statements made by the GC-BRLM or our Company and the GC-BRLM will not be liable for your decision to accept an invitation to participate in the Placement based on any other information, representation, warranty or statement;

• you understand that the GC-BRLM has no obligation to purchase or acquire all or any part of

the Equity Shares purchased by you in the Placement or to support any losses directly or indirectly sustained or incurred by you for any reason whatsoever in connection with the Placement, including non-performance by our Company of any of its respective obligations or any breach of any representations or warranties by our Company, whether to you or otherwise;

• you agree to indemnify and hold our Company and the GC-BRLM 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, warranties, acknowledgements and agreements in this paragraph. You agree that the indemnity set forth in this section shall survive the resale of the Equity Shares by or on behalf of the managed accounts;

• 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; and


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• that our Company, the GC-BRLM, their respective affiliates and others will rely on the truth

and accuracy of the foregoing representations, warranties, acknowledgements and agreements which are given to the GC-BRLM on its own behalf and on behalf of our Company and are irrevocable.


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Off-Shore Derivative Instruments (P-Notes) Subject to compliance with all applicable Indian laws, rules, regulations and approvals in terms of Regulation 15A(1) of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended, FIIs (as defined hereinafter), including FII affiliates of the GC-BRLM may issue or otherwise deal in offshore derivative instruments such as participatory notes, equity-linked notes or any other similar instruments against Equity Shares allocated in the Placement (all such offshore derivative instruments are referred to herein as "P-Notes"), for which they may receive compensation from the purchasers of such instruments. P-Notes may only be issued to entities which are regulated by appropriate foreign regulatory authorities, subject to compliance with "know your customer" requirements. In terms of the FII Regulations, on and from May 22, 2008, no sub account of an FII is permitted to, directly or indirectly, issue P-Notes An FII shall also ensure that no further issue or transfer of any instrument referred to above is made to any person other than such entities regulated by appropriate foreign regulatory authorities. P-Notes have not been and are not being offered or sold pursuant to this Placement Document. This Placement Document does not contain any information concerning any P-Notes or the issuer(s) of any 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, claim 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 P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated our Company. Our Company and the GC-BRLM do not make any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of the GC-BRLM and do not constitute any obligations of, or claim on the GC-BRLM. 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 P-Notes 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 P-Notes are issued in compliance with applicable laws and regulations.


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Disclaimer Clause of the Stock Exchanges As required, a copy of this Placement Document has been submitted to the Stock Exchanges. The Stock Exchanges do not in any manner: 1. warrant, certify or endorse the correctness or completeness of any of the contents of this

Placement Document; 2. warrant that our Company’s Equity Shares will be listed or will continue to be listed on the

Stock Exchanges; or 3. take any responsibility for the financial or other soundness of this Company, its management

or any scheme or project of this Company, and the filing of this Placement Document should not for any reason be deemed or construed to mean that this Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquires any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges 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.


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CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL DATA, MARKET AND INDUSTRY DATA, CURRENCY OF PRESENTATION AND EXCHANGE RATES

Certain Conventions In this Placement Document, unless the context otherwise indicates or implies, references to: • "you", "purchaser", "subscriber", "recipient", "investors" and "potential investor" are to the

prospective investors of the Equity Shares issued pursuant to this Placement. • "India" are to the Republic of India and the "Government" or the "Central Government" or the

"State Government" are to the Government of India ("GOI"), central or state, as applicable. Financial Data Our Company, its Subsidiaries and its Joint Ventures prepare their financial statements in accordance with Indian Generally Accepted Accounting Principles ("Indian GAAP"). Indian GAAP differs in certain respects from International Financial Reporting Standards ("IFRS") and US Generally Accepted Accounting Principles ("US GAAP"). We do not provide a reconciliation of our financial statements to IFRS or US GAAP. Also, see the chapter on "Risk Factors". In this Placement Document, certain monetary thresholds 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. Our Financial Year commences on April 1 of each year and ends on March 31 of the succeeding year, so all references to a particular "fiscal year" or "Fiscal" are to the twelve-month period ended on March 31 of that year. Our audited standalone and consolidated financial statements for the years ended March 31, 2012 and 2011 (the "Audited Financial Statements") that appear in the Placement Document were prepared in accordance with Indian GAAP. The unaudited standalone and consolidated financial results (limited reviewed) for the nine period ended December 31, 2012 (the "Reviewed Financial Statements") that appear in the Placement Document have been prepared by our Company in accordance with Indian GAAP. The Audited Financial Statements and the Reviewed Financial Statements are collectively referred to herein as the "Financial Statements"). Market and Industry Data Market and industry data used in this Placement Document has been obtained from market research, publicly available information and industry publications. Industry publications generally state that the information that they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of that information is not guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed to be reliable, have not been independently verified and neither our Company nor the GC-BRLM makes any representation as to the accuracy of that information. Currency of Presentation All references in this Placement Document to "Rupees", "`", "Rs" and "Indian Rupees" are to Indian Rupees, the official currency of India. All references to "US$", "US Dollar", "US Dollars", "USD" or "$" are to United States Dollars, the official currency of the United States of America; Euro is to Euro, the currency used in the European Union; and "AED" or "Dirhams" are to United Arab Emirates Dirhams, the currency of the United Arab Emirates. Exchange Rates


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Fluctuations in the exchange rate between the Rupee and the US Dollar will affect the US Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into US Dollars of any cash dividends paid in Rupees on the Equity Shares.


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FORWARD LOOKING STATEMENTS All statements contained in this Placement Document that are not statements of historical fact constitute "forward-looking statements". Investors can generally identify forward-looking statements by terminology such as "aim", "anticipate", "believe", "continue", "estimate", "expect", "intend", "may", "objective", "plan", "potential", "project", "pursue", "shall", "should", "will", "would", or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All statements regarding our expected financial condition and results of operations, business plans, including potential acquisition and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, our revenue and profitability and other matters discussed in this Placement Document regarding matters that are not historical facts. These forward-looking statements and any other projections contained in this Placement Document (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Important factors that could cause our actual results, performance or achievements to differ materially include, but are not limited, to those discussed under the sections "Risk Factors", "Management’s Discussion and Analysis of Financial Condition and Results of Operations", "Industry Overview" and "Business Overview". Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under the sections "Risk Factors", "Management’s Discussion and Analysis of Financial Condition and Results of Operations", "Industry Overview" and "Business Overview". The forward-looking statements contained in this Placement Document are based on the beliefs of management, as well as the assumptions made by, and information currently available to, management. Although we believe that the expectations reflected in such forward-looking 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. If any of these risks and uncertainties materialize, or if any of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.


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ENFORCEMENT OF CIVIL LIABILITIES Our Company is a company incorporated with limited liability under the laws of India. All our Subsidiaries are incorporated in India. Our Company’s Directors and key managerial personnel are residents of India and all the assets of our Company are located in India. As a result, it 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, as amended ("Civil Code"). Section 13 of the Civil Code provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except: • 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 then in force in India. India is not a party 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 a District court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of amounts payable in respect of taxes, other charges of a similar nature or of a fine or other penalties and does not include arbitration awards. The United Kingdom, Singapore and Hong Kong have been declared by the Government to be reciprocating territories for the purposes of Section 44A of the Civil Code, but the United States has not been so declared. A judgment of a court of a country which is not a reciprocating territory may be enforced only by a suit upon the judgment and not by proceedings in execution. The suit has to be filed in India within three years from the date of the 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 it viewed the amount of damages awarded as excessive or inconsistent with Indian public policy. A party seeking to enforce a foreign judgment in India is required to obtain the approval of the Reserve Bank of India to repatriate outside India any amount recovered pursuant to the execution of such a judgment. In addition, any judgment denominated in a foreign currency would be converted into Indian rupees on the date of the judgment and not on the date of payment.


15

DEFINITIONS AND ABBREVIATIONS Unless otherwise defined or the context otherwise indicates or requires, certain capitalized terms used in this Placement Document have the meanings set forth below: Company Related Terms

Term Description "Company" or "Uttam Galva Steels Limited" or "We" or "us" or "our"

Uttam Galva Steels Limited, a public limited company incorporated under the Companies Act and having its registered office at Uttam House, 69, P. D’Mello Road, Mumbai, 400009, Maharashtra, India, unless the context otherwise requires, Uttam Galva Steels Limited, its Subsidiaries, joint ventures and associates on a consolidated basis.

Articles/Articles of Association Articles of Association of our Company, as amended

Auditors / Statutory Auditors The statutory auditors of our Company being, M/s Prakkash Muni & Associates, Chartered Accountants

Board of Directors/Board The board of directors of our Company or any committee constituted thereof

Director(s) The director(s) on the Board, as appointed from time to time

Equity Shares Equity shares of our Company of face value `10 each

Memorandum/Memorandum of Association

The memorandum of association of our Company, as amended

Registered Office The registered office of our Company is located at Uttam House, 69, P. D’Mello Road, Mumbai, 400009

Registrar of Companies/RoC The Registrar of Companies, Mumbai, Maharashtra

ArcelorMittal ArcelorMittal Netherlands B.V. (an indirect 100% subsidiary of ArcelorMittal Group)

Subsidiaries The subsidiaries and step down subsidiaries of our Company, namely, (a) Uttam Galva Holdings Limited in Dubai, (b) Atlantis International Services Limited in British Virgin Islands, (c) Uttam Galva Steels Netherlands BV, Netherland, (d) Neelraj International Trade Limited, British Virgin Island, and (e) Uttam Galva Steels FZE, UAE; and (f) Ferro Zinc International FZE, UAE.


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Placement Related Terms

Term Description Allocated or Allocation The allocation of Equity Shares following the determination of the

Placement Price to QIBs on the basis of Bid cum Application Forms submitted by them, in consultation with the GC-BRLM and in compliance with Chapter VIII of the SEBI Regulations

Allotment / Allotted Unless the context otherwise requires, the issue and allotment of Equity Shares pursuant to this Placement

Allottees QIBs who are allotted Equity Shares of our Company pursuant to this Offering

Bid An offer, including all revisions and modifications thereto, from a QIB on the terms set out in the Bid cum Application Form to our Company, to subscribe for a specified number of Equity Shares in the Placement

Bid Closing Date March 26, 2013, the date on which our Company (or the GC-BRLM on behalf of our Company) shall cease acceptance of Bid cum Application Forms

Bid cum Application Form The form pursuant to which a QIB submits a Bid

Bid Opening Date The date on which our Company (or the GC-BRLM on behalf of our Company) shall commence acceptance of Bid cum Application Forms

Bidder

QIBs who have made a bid

Bidding Period The period between the Bid Opening Date and Bid Closing Date inclusive of both dates during which QIBs can submit their Bids

BSE BSE Limited

CAN or Confirmation of Allocation Note

The note, advice or intimation to not more than 49 QIBs confirming the Allocation of Equity Shares to such QIBs after the determination of the Placement Price and requiring such QIBs to pay the entire Placement Price for all the Equity Shares allocated to such QIBs

Closing Date The date on which the Allotment is expected to be made

Companies Act The Companies Act, 1956, as amended

Cut-off Price The Placement Price of the Equity Shares which shall be determined by our Company, in consultation with the GC-BRLM

Escrow Agent / Escrow Bank Yes Bank Limited


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Term Description

Escrow Agreement The agreement among our Company, the Escrow Agent and the GC-BRLM in relation to the Placement

Escrow Bank Account/ Escrow Account

A bank account opened by our Company with Escrow Bank in terms of the arrangement between our Company, the GC-BRLM and the Escrow Bank, into which the application monies payable by QIBs in connection with subscription to Equity Shares pursuant to the Placement shall be deposited

FII Foreign Institutional Investor (as defined under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended) registered with the SEBI under applicable laws in India

FII Regulations SEBI (Foreign Institutional Investor) Regulations, 1995

Floor Price The floor price of `76.48 per Equity Share, calculated in accordance with the Chapter VIII SEBI Regulations and below which the Equity Shares shall not be Allotted in the Placement

GC-BRLM The Global Coordinator and Book Running Lead Manager, in this case being Anand Rathi Advisors Limited

NSE National Stock Exchange of India Limited

Pay-in Date The last date specified in the CAN sent to QIBs

Placement The offer and sale of the Equity Shares, on a private placement basis, to Qualified Institutional Buyers only, pursuant to Chapter VIII of the SEBI Regulations

Placement Agreement The agreement entered between our Company and the GC-BRLM pursuant to which certain arrangements are agreed to in relation to the Placement

Placement Document The Placement Document dated March 26, 2013 issued in accordance with Chapter VIII of the SEBI Regulations, containing, interalia, the Placement Price, the size of the Placement and certain other information

Placement Price A price per Equity Share of `80, which shall be equal to or more than the Floor Price

Placement Size The placement of up to 2,00,00,000 Equity Shares aggregating to `160 crore

Preliminary Placement Document

The Preliminary Placement Document dated March 25, 2013 issued in accordance with Chapter VIII of the SEBI Regulations

QIB or QIBs or Qualified A Qualified Institutional Buyer (as defined under Regulation


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Term Description Institutional Buyers 2(1)(zd) of the SEBI Regulations)

Regulation S Regulation S, as defined under the US Securities Act

SEBI Securities and Exchange Board of India

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

SEBI Regulations The Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009, as amended including instructions and clarifications issued by SEBI from time to time

Stock Exchanges BSE and NSE

US Securities Act

The US Securities Act of 1933, as amended

Uttam Galva Steels QIP - Escrow Account

A special bank account opened by our Company with the Escrow Agent in accordance with the Escrow Agreement

Technical / Industry Related Terms

Term Description AHSS Advanced High Strength Steel

AWC Automatic Width Control

BAF Batch Annealing Process

CR Cold Rolled Steel

CRCA Cold Rolled Closed Annealed

DEPB Duty Entitlement Pass Book Scheme

DFIA Duty Free Import Authorisation

DRI Direct Reduced Iron

GA Galvannealing

GP Galvanized Plain

GC Galvanised Corrugated

HEC High Efficiency Combustion

HR Hot Rolled Steel


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Term Description HSS High Speed Steel

IEM Industrial Enterprises Memo

NSP National Steel Policy

PLTCM Picking Line Tandem Cold Mill

R & D Research and Development

TOC Thin Organic Coating

General Terms/Abbreviations

Term Description AGM Annual General Meeting

AS Accounting Standards issued by the ICAI

CAGR Compounded Annual Growth Rate

CDSL Central Depository Services (India) Limited

Civil Code The Code of Civil Procedure, 1908, as amended

Crore/Cr.

Ten million

Delisting Regulations The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, as amended

Depositories Act The Depositories Act, 1996, as amended

Depository A depository registered with SEBI under the Securities and Exchange Board of India (Depositories and Participant) Regulations, 1996, as amended

Depository Participant A depository participant as defined under the Depositories Act

DIPP Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India

EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation

EPA The Environment (Protection) Act, 1986, as amended

EPS Earnings Per Share, i.e., profit after tax for a fiscal year divided by the weighted average outstanding number of Equity Shares during that fiscal year


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Term Description FDI Foreign Direct Investment

FEMA The Foreign Exchange Management Act, 1999, as amended, and the

rules and regulations issued thereunder

FIPB The Foreign Investment Promotion Board

FBWC Fund Based Working Capital Limit

FVCI Foreign Venture Capital Investors (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

FY / Fiscal Financial Year

GAAP Generally Accepted Accounting Principles

GOI Government of India

GDP Gross Domestic Product

ICAI The Institute of Chartered Accountants of India

IFRS International Financial Reporting Standards

Indian GAAP Generally accepted accounting principles followed in India

Insider Trading Regulations The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended

IT Act or the Income Tax Act The Income Tax Act, 1961, as amended

JV Joint Venture

LIBOR London Inter Bank Offered Rate

MAT Minimum alternative tax

Million / Mn Million

Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended

NIFTY A basket of 50 constituent stocks traded on NSE representing a sample of large, liquid and representative companies

NFBWC Non Fund Based Working Capital


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Term Description NRI Non Resident Indian

NSDL The National Securities Depository Limited

p.a. Per annum

PAN Permanent Account Number

PAT Profit After Tax

PBT Profit Before Tax

PLR Prime Lending Rate

RBI The Reserve Bank of India

SCRA The Securities Contracts (Regulation) Act, 1956, as amended

SCRR The Securities Contracts (Regulation) Rules, 1957, as amended

SENSEX A basket of 30 constituent stocks traded on BSE representing a

sample of large, liquid and representative companies

SICA The Sick Industrial Companies (Special Provisions) Act, 1985, as amended

STT Securities transaction tax

Takeover Code The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended

US GAAP Generally accepted accounting principles in the United States of America


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SUMMARY OF THE PLACEMENT The following is a general summary of the terms of the Placement. This summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information appearing in this Placement Document, including under the sections "Risk Factors", "Use of Proceeds", "Placement", "Placement Procedure" and "Description of the Shares".

Our Company Uttam Galva Steels Limited

Placement Price per Equity Share `80

Placement Size The placement of up to 2,00,00,000 Equity Shares aggregating

`160 crore

Equity Shares outstanding prior to the Placement

12,22,60,103 equity shares of `10 each

Equity Shares outstanding after the Placement

14,22,60,103 Equity Shares

Eligible Investors QIBs as defined under Regulation 2(1)(zd) of the SEBI Regulations

Listing Our Company shall make applications to each of the Stock Exchanges to obtain the listing and trading of the Equity Shares offered through this Placement Document

Transferability Restrictions The Equity Shares being allotted pursuant to this Placement shall not be sold for a period of one year from the date of Allotment other than on the recognized stock exchanges, on which the Equity Shares are listed

Closing The Allotment of the Equity Shares offered pursuant to this Placement, which is expected to occur on or about March 28, 2013 (the "Closing Date")

Ranking The Equity Shares being issued in the Placement are subject to the provisions of the Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by our Company after the Closing Date, in compliance with the Companies Act, the listing agreements and other applicable laws and regulations.

Use of Proceeds The gross proceeds of this Placement are expected to be approximately `160 crore. Subject to compliance with applicable laws and regulations, we intend to use the proceeds of the Placement to augment our long term resources for future expansion, to meet our long term working capital requirement and to meet general corporate business purposes of our Company. For further details, please refer to the chapter on "Use of Proceeds"


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Risk Factors For a discussion of certain risks in connection with investment

in the Equity Shares, please see the section "Risk Factors".

Security codes ISIN: INE699A01011 BSE Code: 513216 NSE Code: UTTAMSTL


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SUMMARY OF BUSINESS

Our Company is a producer of Cold Rolled Closed Annealed ("CRCA") steel and Galvanized Plain Steel ("GP"). Our Company is into the business of procuring hot rolled steel ("HR") and processing it into CR and further into GP and Colour Coated Coils. In galvanized coils we specialize in making ultra thin sheets. The excess capacity of CR which is not used for galvanizing is converted to value added grades in CRCA coils, cut to length sheets and also sold as full hard CR in the overseas markets. We have a annual installed production capacity of 7,50,000 MT, 90,000 MT and 9,60,000 MT of Galavinsed steel, Colour Coated steel and Cold Rolled steel respectively We export our products to 147 countries in the world while our manufacturing operations are based in India. In Fiscal 2012, 24.03% of our total sales were from exports while the remaining 75.97% was from the domestic market. Our Company’s major customers are from the construction, automotive, consumer goods, material handling and general engineering industries. We have a wide and diversified customer base in various markets such as the USA, Australia, France, Germany, Greece and UK, amongst others. Our Company established the ‘Uttam Suraksha’ GC brand (Galvanised Corrugated Roofing Sheets) for the construction segment which is well recognised in Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka and Chattisgarh. Our Company's manufacturing facilities are located at Khopoli, in the state of Maharashtra, India, which is close to JNPT and Mumbai port. This provides our Company with easy access to imports and exports of raw materials and finished goods. A close proximity to these ports gives us an advantage of lower transportation costs. In Fiscal 2012 and 2011 and the nine month period ending December 31, 2012, our Company recorded standalone net revenues of `5171.60 crores, `5040.81 crores and `4,957.32 crores, respectively. Our Company recorded a standalone profit after tax in Fiscal 2012 and 2011 and the nine month period ending December 31, 2012 of `77.96 crores, `76.77 crores and `33.36 crores, respectively. Our Company has received various EEPC Awards from the Ministry of Commerce and Industry, Government of India under various categories. Competitive Strengths Our Company believes that it has the following competitive strengths that assist it in maintaining its position in the export markets and will help to achieve its goal to become a leader in the industry: (a) Cost competitiveness; (b) Access to raw materials; (c) Wide product range and flexible production facilities; (d) Strong promoters and experienced management team; (e) Own Captive Power Plants; (f) Diversified customer base; and (g) Synergies pursuant to association with ArcelorMittal.

Divisions of the Company The Company has broadly three divisions which can be described as follows:


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(a) Cold Rolling Division (b) Galvanising Division (c) Colour Coating Division Cold Rolling Division: Cold rolling is the process of converting hot rolled steel coil into cold rolled coils/sheets. Cold rolled products are sub divided into cold rolled full hard ("CRFH") and cold rolled closed annealed ("CRCA") coils/sheets. Our Company has cold rolling mills /lines, that is a 20HI, 6HI, 4HI and twin stand 6HI (wider width) mill. Galvanising Division: Galvanisation is the process of applying a protective zinc coating to steel or iron, in order to prevent rusting. Our Company has at present 3 galvanising lines, that is: (a) CGL at Donvat (b) CGL at Pali Road Complex (Dahivali) and (c) Wet galvanising line ("WGL") at Pali Road Complex (Dahivali). The raw material for this process is cold rolled strip in coil form. Our Company uses hot dip galvanising technology. This is a continuous galvanising line producing galvanised strip steel in either coil or sheet form. Galvanised products are primarily used in automobile, white goods (for example A/C, refrigerators), construction and engineering applications. Rolled strip is heated in a non-ox furnace followed by galvanising with molten zinc and other alloys. Colour Coating Line Division The colour coating line products paint coated strips in either coil or sheet form. The raw material for this process is galvanised steel strip in coils. In this process primer and paint is applied on one or both sides in the same or different colours as per the customer’s specifications. After coating the coils are cured in an oven. Colour coated products have much longer life than GP products, and have different applications ranging from construction to engineering applications. Our Subsidiaries There are five wholly-owned Subsidiary Companies of the Company namely (a) Uttam Galva Holdings Limited in Dubai, (b) Atlantis International Services Limited in British Virgin Islands, (c) Uttam Galva Steels Netherlands BV in Netherland and (d) Neelraj International Trade Limited in British Virgin Island. (e) Uttam Galva Steels FZE. Further, Uttam Galva Holdings Limited has incorporated a downstream wholly owned subsidiary company namely Ferro Zinc International FZE in Jebel Ali Free Zone in United Arab Emirates.

Ferro Zinc International FZE,

Dubai

UttamGalva Steels (FZE)

UAE

UttamGalva Holdings Ltd,

Dubai

Atlantis International

Services Ltd, BVI*

UttamGalva Steels,

Netherlands

NeelrajInternational Trade Ltd,BVI*

UttamGalva Steels Limited


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SUMMARY OF FINANCIAL INFORMATION The selected audited standalone and consolidated financial information for Fiscal2012 and Fiscal 2011 and the standalone and consolidated reviewed financial statementsfor the nine month period ended December 31, 2012 and December 31, 2012 included in the Placement Document. The selected audited standalone and consolidated balance sheet data and profit and loss data for Fiscal2012 and 2011 and the standalone and consolidated Reviewed Financial Statements data for nine month period ended December 31, 2012 and December 31, 2012set forth below have been derived from our Company’s audited financial statements and limited review reports for such years and for such periods, which have been prepared in accordance with Indian GAAP and have been audited by the statutory auditors of our Company, M/s Prakkash Muni & Associates, Chartered Accountants. Neither the information set forth below nor the format in which it is presented should be viewed as comparable to information prepared in accordance with IAS/IFRS or other accounting principles. Indian GAAP differs in certain material respects from IAS, IFRS and US GAAP. The selected Financial Statements set forth below should be read in conjunction with "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements included in the Placement Document.


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STANDALONE BALANCE SHEET AS AT MARCH 31, 2012 and MARCH 31, 2011

(` in crores) Particulars March 31, 2012 March 31, 2011

EQUITY AND LIABILITIES Shareholders’ Funds

(a) Share Capital 122.26 122.26(b) Reserves and Surplus 902.75 824.79

1,025.01 947.05Non Current Liabilities

(a) Long Term Borrowings 1,971.06 1,761.95(b) Deferred Tax Liabilities 121.70 86.92(c) Other Long Term Liabilities 347.48 0.00(d) Long Term Provisions 11.55 11.41

2,451.79 1,860.28Current Liabilities

(a) Short Term Borrowings 45.35 257.39(b) Trade Payables 1,426.66 1,728.97(c) Other Current Liabilities 873.46 615.50(d) Short Term Provisions 13.74 -7.38

2,359.21 2,594.48 5,836.01 5,401.81ASSETS Non Current Assets

(a) Fixed Assets (i) Tangible Assets 2,898.74 1,819.34(ii) Capital Work-in-Progress 378.69 967.49

3,277.43 2,786.83(b) Non Current Investments 12.02 8.89(c) Long Term Loans and Advances 87.16 68.04(d) Other Non Current Assets 23.89 22.00

3,400.50 2,885.76Current Assets

(a) Inventories 1,085.14 1,365.98(b) Trade Receivables 557.84 723.60(c) Cash and Cash equivalents 131.26 67.59(d) Short Term Loans and Advances 661.27 358.88

2,435.51 2,516.05

Total 5,836.01 5,401.81


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STANDALONE STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2012 AND MARCH 31, 2011

(` in crores) Particulars March 31, 2012 March 31, 2011CONTINUING OPERATIONS Revenue from Operations (Gross) 5475.38 5329.84 Less: Excise Duty 303.78 289.03 Revenue from Operations (Net) 5171.60 5040.81 Expenses

(a) Cost of Materials Consumed 3177.22 3107.63 (b) Purchase of Traded Goods 620.80 1,351.57 (c) Changes in Inventories of Finished

Goods, Work-in-Progress and Stock-in-Trade312.82 (342.35)

(d) Employee Benefits Expense 67.50 61.80 (e) Other Expenses 487.32 420.90

Total 4665.66 4599.55 Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)

505.94 441.26

Finance Costs 245.21 212.24 Depreciation and Amortisation Expense 127.37 119.41 Other Income 7.64 3.93 Profit Before Tax (PBT) 141.00 113.54 Tax Expense:

Current Tax 28.21 21.54 Wealth Tax 0.05 0.05 Net Current Tax 28.26 21.60 Deferred Tax 34.78 15.17

Total 63.04 36.77 Profit for the Year 77.96 76.77 Earnings Per Share (EPS)

Basic & Diluted 6.38 6.28


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STANDALONE CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2012 AND MARCH 31, 2011

(` in crores)

PARTICULARS March 31,

2012 March 31,

2011CASH FLOW FROM OPERATING ACTIVITIES Net Profit/(Loss) Before Tax and Extraordinary Items 141.00 113.53 Provision for Doubtful Debts (0.31) (0.00)Adjustments for Depreciation 127.37 119.41 (Profit) / Loss on Sale of Assets 0.19 0.07 Interest Income (2.53) (3.34)Interest & Financial Charges 245.21 212.24 Operating Profit Before Working Capital Changes 510.93 441.91 Adjustments for : (Increase)/Decrease in Trade and other Receivables (148.90) (338.21)(Increase)/Decrease in Inventories 280.84 (716.61)Increase/(Decrease) in Trade Payables and Other Liabilities 40.83 1,135.66 Cash Generated from Operations 683.69 522.75 Direct Taxes Paid (Net of Refunds) (17.10) (33.10)Cash Flow from Operating Activities 666.59 489.66 CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (618.55) (401.51)Sale of Fixed Assets 0.38 - Purchase of Investments / Investments in Subsidiaries (3.12) (0.87)Interest/Dividend Received 2.53 3.34 Net Cash Used in Investing Activities (618.75) (399.04) CASH FLOW FROM FINANCING ACTIVITIES : Securities Premium received - (21.39)Redemption / Conversion of FCCB - (68.37)Proceeds from Long Term Borrowings 1,050.00 1,139.58 Repayments of Long Term Borrowings (788.36) (816.23)Interest & Financial Charges Paid (236.68) (173.62)Gain / (Loss) on Forward Contracts (8.53) (38.62)Proceeds/(Repayments) of Deferred Sales Tax Loan/ICD/Unsecured Loans (0.60) (200.60)Net Cash Generated from Financing Activities 15.83 (179.25) Net Increase in Cash & Cash Equivalents (A+B+C) 63.67 (88.64)Cash & Cash Equivalents (Opening) 67.59 156.23 Cash & Cash Equivalents (Closing) 131.26 67.59 Notes: 1. Cash Flow Statement has been prepared following the indirect method except in case of

interest paid / received, dividend paid / received, purchase and sale of Investments which have been considered on the basis of actual movements of cash with necessary adjustments in the corresponding assets and liabilities.

2. Purchase of Fixed Assets includes movement of Capital Work in Progress between the beginning and end of the year and net of Creditors for Capital Expenditure.

3. Cash and Cash Equivalents represent Cash & Bank balances and bank deposits only.


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CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2012 and MARCH 31, 2011

(` in crores) Particulars March 31, 2012 March 31, 2011EQUITY AND LIABILITIES Shareholders’ Funds

(a) Share Capital 122.26 122.26(b) Reserves and Surplus 884.45 829.42

1,006.71 951.68Non Current Liabilities

(a) Long Term Borrowings 2,229.12 1,901.43(b) Deferred Tax Liabilities 122.28 87.20(c) Other Long Term Liabilities 97.96 0.00(d) Long Term Provisions 11.55 11.41

2,460.91 2,000.04Current Liabilities

(a) Short Term Borrowings 397.58 257.39(b) Trade Payables 1,206.61 1,588.10(c) Other Current Liabilities 874.85 615.97(d) Short Term Provisions 16.44 -5.38

2,495.48 2,456.08 5,963.10 5,407.80ASSETS Non Current Assets

(a) Fixed Assets (i) Tangible Assets 2,906.15 1,827.94(ii) Capital Work-in-Progress 378.69 967.49(iii) Intangible assets under development 0.61

3,285.45 2,795.43(b) Non Current Investments 5.58 3.59(c) Long Term Loans and Advances 72.66 65.92(d) Other Non Current Assets 23.89 22.00

3,387.58 2,886.94Goodwill on Consolidation 1.14 0.59Current Assets

(a) Inventories 1,085.16 1,366.03(b) Trade Receivables 638.18 723.60(c) Cash and Cash equivalents 193.46 69.64(d) Short Term Loans and Advances 657.58 361.00

2,574.38 2,520.27 5,963.10 5,407.80


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CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2012 AND MARCH 31, 2011

(` in crores) Particulars March 31, 2012 March 31, 2011 CONTINUING OPERATIONS Revenue from Operations (Gross) 5,951.16 5,329.84Less: Excise Duty 303.78 289.03Revenue from Operations (Net) 5,647.38 5,040.81 Expenses

(a) Cost of Materials Consumed 3,177.22 3,099.80(b) Purchase of Traded Goods 1,082.08 1,351.57(c) Changes in Inventories of Finished Goods,

Work-in-Progress and Stock-in-Trade 312.82 -342.35

(d) Employee Benefits Expense 67.50 62.00(e) Other Expenses 488.34 420.71

Total 5,127.96 4,591.73Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) 519.42 449.08

Finance Costs 261.93 218.26Depreciation and Amortisation Expense 128.57 120.78Other Income 7.62 3.81Profit Before Tax (PBT) 136.54 113.85Tax Expense:

Current Tax 28.42 21.70MAT Credit (0.11) Wealth Tax 0.05 0.05Net Current Tax 28.36 21.75Deferred Tax 35.08 15.46

Total 63.44 37.21Profit for the Year 73.10 76.64 Earnings Per Share (EPS)

Basic & Diluted 5.98 6.27


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CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2012 AND MARCH 31, 2011

PARTICULARS March 31, 2012

March 31, 2011

CASH FLOW FROM OPERATING ACTIVITIES Net Profit/(Loss) Before Tax and Extraordinary Items 136.54 113.85Provision for Doubtful Debts (0.31) 0.00Adjustments for Depreciation 128.57 120.78(Profit) / Loss on Sale of Assets 0.19 0.07Interest Income (2.53) (3.34)Interest &Fianacial Charges 261.93 218.26Operating Profit Before Working Capital Changes 524.39 449.62Adjustments for : (Increase)/Decrease in Trade and other Receivables (211.20) (321.40)(Increase)/Decrease in Inventories 280.88 (719.89)Increase/(Decrease) in Trade Payables and Other Liabilities 46.97 1,161.04 Cash Generated from Operations 641.03 569.37Direct Taxes Paid (Net of Refunds) (17.35) (33.11)Prior Period Expenses (Net) 0.00 3.25Cash Flow from Operating Activities 623.68 539.52 CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (618.55) (402.17)Sale of Fixed Assets 0.38 0.26Purchase of Investments / Investments in Subsidiaries (1.99) (0.01)Sale of Investments 0.00 0.00Interest/Dividend Received 2.53 3.34 Net Cash Used in Investing Activities (617.62) (398.58) CASH FLOW FROM FINANCING ACTIVITIES : Securities Premium received 0.00 (20.79)Redemption / Conversion of FCCB 0.00 (68.37)Proceeds from Long Term Borrowings 1,305.78 1,139.58Repayments of Long Term Borrowings (789.21) (817.09)Interest & Financial Charges Paid (253.40) (179.64)Gain / (Loss) on Forward Contracts (8.53) (38.62)Proceeds/(Repayments) of Deferred Sales Tax Loan/ICD/Unsecured Loans (136.88) (248.27)

Net Cash Generated from Financing Activities 117.76 (233.21) Net Increase in Cash & Cash Equivalents (A+B+C) 123.82 (92.27)Cash & Cash Equivalents (Opening) 69.64 161.91Cash & Cash Equivalents (Closing) 193.46 69.64


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Notes: 1. Cash Flow Statement has been prepared following the indirect method except in case of

interest paid / received, dividend paid / received, purchase and sale of Investments which have been considered on the basis of actual movements of cash with necessary adjustments in the corresponding assets and liabilities.

2. Purchase of Fixed Assets includes movement of Capital Work in Progress between the beginning and end of the year and net of Creditors for Capital Expenditure.

3. Cash and Cash Equivalents represent Cash & Bank balances and bank deposits only.


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RISK FACTORS An investment in equity shares involves significant risks. You should not invest in the Placement unless you are prepared to accept the risk of losing all or part of your investment. You should consult with your tax, financial, legal and other advisors about the particular consequences to you of an investment in the Equity Shares. You should carefully consider the risks described below before making an investment decision. If any of the risks described below actually occur, our business, prospects, financial condition and results of operation could be seriously harmed, the trading price of our Equity Shares could decline, and you may lose all or part of your investment. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify financial implications of any of the risks mentioned below. Any prospective investor in, and purchaser of, our shares should pay particular attention to the fact that we are governed in India by a legal and regulatory environment which in some material respects may be different from that which prevails in other countries. Prior to making an investment decision, prospective investors and purchasers should carefully consider all of the information contained in the Placement Document (including the consolidated financial statements included in the Placement Document) Risks relating to our Company 1. A slower than expected recovery of the global economy or a renewed global recession could

have a material adverse effect on the steel industry and our Company.

Our Company’s Business and operations are affected by international, national and regional economic conditions. Starting in September 2008, a steep downturn in the global economy, sparked by uncertainty in credit markets and deteriorating consumer confidence sharply reduced global demand for steel products. This has had a negative effect on our Company’s results of operations. Although the global economy has shown signs of recovery since the end of 2009 and in 2010, with a certain degree of recovery and stabilisation of steel prices, should the recovery falter, the outlook of companies in the steel industry could again worsen. In particular, a renewed recession or period of lower growth or lower public spending on infrastructure in Europe or in the United States, or significantly slower growth or the spread of recessionary conditions to emerging economies that are substantial consumers of steel (such as China, Brazil, Russia and India, as well as other emerging Asian markets, the Middle East and the commonwealth of independent states regions could have a negative would have a material adverse effect on the steel industry.

An uneven recovery, with positive growth limited to certain regions, or excluding key markets of our Company would also have an adverse effect on our Company’s business, results of operations, financial conditions and prospects. Continued financial weakness among substantial consumers of steel products, such as the automotive industry and the construction industry, or the bankruptcy of any large companies in such industries, would exacerbate the negative trend in market conditions. Protracted declines in steel consumption caused by poor economic conditions in one or more of our Company’s major markets or by the deterioration of the financial condition of our key customers would have a material adverse effect on demand for our products and hence on our Company’s business and results of operations.


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2. The steel industry is highly cyclical and a decrease in steel prices may have an adverse effect on our Company’s results of operations.

Steel prices are volatile which reflects the highly cyclical nature of the global steel industry. Steel prices fluctuate based on macroeconomic factors, including, amongst others, consumer confidence, employment rates, interest rates and inflation rates, in the economies in which the steel producers sell their products and are sensitive to the trends of particular industries, such as the automotive, construction, packaging, appliance, machinery, equipment and transportation industries, which are among the biggest consumers of steel products. When downturns occur in these economies or sectors, our Company may experience decreased demand for our products, which may lead to a decrease in steel prices. Over the past few years, the demand for our products has fluctuated and may fluctuate in the future due to a number of factors which are beyond the control of our Company. Our production has varied from year to year, depending upon demand and consolidation in the industry. Unfavorable changes in the demand due to changes in consumer preferences, governmental policies, or other factors may adversely affect the steel industry and our Company’s business and results of operations. In the past, the depressed state of steel prices has adversely affected the businesses and results of operations of steel producers and processors generally, including our Company, resulting in lower revenues and margins and write downs of finished steel products and raw material inventories. In addition, the volatility, length and nature of business cycles affecting the steel industry have become increasingly unpredictable, and the recurrence of another major down turn in the industry may have a material adverse impact on our Company’s business, results of operations, financial condition and prospects.

Additionally, substantial decreases in steel prices during periods of economic weakness have not always been balanced by commensurate price increases during periods of economic strength. Even though here has been a recovery of steel prices, a sustained price recovery most likely requires a broad economic recovery, in order to underpin an increase in real demand for steel products by end users.

3. Developments in the competitive environment in the steel industry could have an adverse

effect on our Company’s competitive position and hence our business, financial condition, results or prospects.

Our Company believes that the key competitive factors affecting our business include product quality, changes in manufacturing technology, workforce skill and productivity, cash operating costs, pricing power with large buyers, access to outside funds, the degree of regulation and access to low-cost raw materials. Although our Company believes that it is a competitive manufacturer, it cannot assure prospective investors that it will be able to compete effectively against our current or emerging competitors with respect to each competitive factor. Larger competitors may also use their resources, which may be greater than our Company, in variety of ways, including by making additional acquisitions, investments in product development and capacity expansion. If the trend towards consolidation continues, our Company could be placed in a disadvantageous competitive position relative to other companies in the industry and our business, results of operations, financial condition and prospects could be materially and adversely affected.


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4. Our business is greatly affected by price volatility, which is largely the result of high fixed costs characteristic of the steel industry.

The production/processing of steel is capital intensive, with a high proportion of fixed costs to total costs. As at March 31, 2012, the capacity utilisation for our Galvanised capacity, Colour Coated and Cold rolled coils is 76.26%, 78.15% and 63.92% respectively. Steel producers/processors generally seek to maintain high capacity utilization. If capacity exceeds demand, there is a tendency for prices to fall sharply, if supply is largely maintained. Conversely, expansion of capacity requires long lead times so that, if demand grows strongly, prices increase rapidly, as unutilized capacity cannot be brought on line as quickly. The result can be substantial price volatility. While we have taken steps to reduce operating costs, we may be negatively affected by significant price volatility, particularly in the event of excess production capacity in the global and domestic steel market, and incur operating losses as a result of the same.

5. Our Company has substantial indebtedness and will continue to have substantial

indebtedness, debt service obligations and restrictive covenants to comply with. Further increase in interest rates could impact our profitability and cash flows. This could adversely affect our business, growth and financial condition of our Company.

As at February 28, 2013, our Company had a total outstanding indebtedness of `4228.15 crore comprising of long term loans, working capital loans, corporate loans and other indebtedness. Our Company has entered into various financing arrangements that grant our lenders certain rights to determine how we operate our business, which, among other things, restrict our ability to raise additional debt or equity, make investments, engage in transactions with affiliates, sell assets or acquire other businesses etc. These debt obligations are secured by a combination of security interests over our assets, hypothecation of movables and future receivables. There can be no assurance that we will be able to comply with these financial or other covenants in terms of the loan agreements in the future. Defaults under or violation of, any of our financing arrangements could have adverse consequences to our business and results of operations and consequently to our shareholders. These factors would adversely affect our results of operations and financial condition. Also, we may have to dedicate a substantial portion of our cash flow from operations to make payments under the financing documents, thereby reducing the availability of our cash flow to fund capital expenditures, meet working capital requirements and use for other general corporate purposes. Such defaults may also result a decline in the trading price of the Equity Shares and you may lose all or part of your investment. If the lenders of the outstanding loans declare an event of default simultaneously, we may be unable to pay our debts as they fall due. For details of our total outstanding loans, see "Financial Indebtedness".

Our financial obligations and contractual commitments may have other important consequences for our business and results of operations, including: (a) making our Company more vulnerable to adverse changes in economic conditions,

government regulation or in the competitive environment; (b) limiting our Company’s ability to borrow additional amounts for working capital,

capital expenditure acquisitions, debt service requirements, execution of our business strategy or other purposes;

(c) requiring our Company to arrange for refinancing of debt as it matures, which may not be available on terms favourable to our Company or be available at all;

(d) materially impacting our Company’s ability to pay dividends in the future; and (e) exacerbating the impact of foreign currency movements on the profitability and cash


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flows of our Company. 6. Some of our Company’s financing documents require our Company to obtain consents

from its lenders for undertaking this Placement, which have not been obtained as of the date hereof.

Under the terms of some of its financing documents, our Company requires a written consent from its lenders prior to undertaking, amongst other things, any action that would change the capital structure of our Company and prior to implementation of expansion plans. As of the date hereof, our Company has intimated the lenders of its intention to undertake the Placement and our Company has applied for such consents from its lenders in regard to respective facilities from them, as applicable. There can be no assurance that lenders will grant our Company the required consents on time or at all. A failure to obtain such consents may lead to the termination of credit facilities and the acceleration of all amounts due under the relevant facilities.

Undertaking the Placement without lender consents constitutes a default by our Company under the relevant financing documents and will entitle the respective lenders to call a default against our Company, enforce remedies under the terms of the financing documents.

7. Our Company has outstanding securities that are convertible into Equity Shares and it may

issue additional securities of our Company. Upon the issuance of any additional Equity Shares or upon the exchange, exercise or conversion of securities exchangeable for, exercisable for or convertible into Equity Shares, your shareholdings may be diluted.

Our Company has in the past issued, and may in the future issue, Equity Shares or securities, exercisable for or convertible into Equity Shares in order to, among other reasons, fund capital expenditures, acquisitions and working capital. ICICI had converted the balance overdue interest of `9.55 crores up to September 30, 2000 into optionally fully convertible loans ("OFCL") which are convertible into equity shares at par, anytime during the currency of the facility. The OFCL is repayable in one installment on March 15, 2015 and is secured by a first mortgage charge on all immovable and movable properties of our Company on a pari passu basis. As at December 31, 2012, we have OFCLs outstanding amounting to `9.55 crore.

Upon the issuance of Equity Shares, whether directly or upon exchange, exercise or conversion of securities exchangeable for, exercisable for or convertible into Equity Shares, the shareholdings of our Company’s shareholders may be diluted and the prevailing market price of our Equity Shares could be depressed. Any belief that our Company will issue Equity Shares, equity-linked products or securities exchangeable for, exercisable for or convertible into Equity Shares could depress the market price of our Company’s equity shares.

8. Future issuances of Equity Shares would dilute your holdings. Further any future sales of

Equity Shares by us or any of our major shareholders may adversely affect the market price of our Equity Shares. Any future issuances of Equity Shares by us, including through, among other things, a follow-on public offering, preferential allotment or shares, warrants and other instruments convertible into equity shares, issuances of stock options, or any perception by investors that such issuances or sales might occur may lead to the dilution of investor shareholding in our Company or affect the trading price of the Equity Shares and could affect our ability to raise capital through an offering of our securities.


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The market price of our Equity Shares could decline as a result of future sales of a large number of our Equity Shares by us or by any of our major shareholders. Additionally, the perception that such sales may occur might make it more difficult for our shareholders to sell their Equity Shares in the future at a time and at a price that they deem appropriate.

9. Conflicts of interest may arise out of common business objects shared by our Company and

certain companies controlled/promoted by our Promoters.

Our Promoters have interests in, and have promoted, other companies and entities that may compete with us and have operations similar to ours within the steel industry. There is no undertaking or non-compete agreements made by our Promoters or any companies/entities promoted by Promoters not to compete with our business. In addition, there is no requirement or undertaking for our Promoters or any companies/entities promoted by Promoters to conduct or direct any opportunities in the steel industry only to or through us. As a result, conflicts of interest may arise in allocating or addressing business opportunities and strategies amongst our Company, our Promoters and other any companies/entities promoted by Promoters in circumstances where our interests differ from theirs. There can be no assurance that our Promoters or any companies/entities promoted by Promoters will not compete with our existing business or any future business that we may undertake.

10. Our Company may experience difficulties in expanding our business into additional

geographic markets.

We currently export our products to 147 countries in the world. In respect of expanding our exports in other geographies and to establish offices in such countries we may not have adequate expertise in undertaking business activities in such jurisdictions. The culture, regulatory practices, business practices and customs, cost structures and expected sale prices in these jurisdictions where we plan to expand our operations may differ in material respects from those jurisdictions in which we currently operate. In addition, as we enter new markets and geographical areas, we are likely to compete with local players who have an established local presence, are more familiar with local regulations, business practices and customs, and have stronger relationships with local contractors and/or relevant government authorities, all of which may give them a competitive advantage over us.

11. Our success depends on our senior management and our ability to attract and retain our

key personnel and skilled manpower.

Our success depends on the continued services and performance of the members of our Board of directors, management team and other key employees. If one or more members of our senior management team were unable or unwilling to continue in their present positions, those persons could be difficult to replace and our business could be adversely affected. Competition for senior management in the steel industry in India is intense, and we may not be able to retain our existing senior management and skilled manpower or attract and retain new senior management and skilled manpower in the future. As such, any loss of our senior management personnel or key employees could adversely affect our business, results of operations and financial condition and would require us to devote substantial time, cost and energy to find a suitable replacement.


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12. Our Company had negative cash flows from operating, financing and investing activities in certain years. As per our standalone financial statements, our cash flows from operating, financing and investing activities were negative in certain fiscals as mentioned below:

(` in crores) Particulars Fiscal 2011 Fiscal 2012 Net cash from / (used in) operating activities

489.66 666.59

Net cash from / (used in) investing activities (399.04) (618.75)Net cash from / (used in) financing activities

(179.25) 15.83

Net increase in cash and cash equivalents (88.64) 63.67

Any negative cash flow in future could affect adversely affect our operations and financial conditions and the trading price of our Equity Shares. For further details, please refer to the chapter titled "Financial Indebtedness".

13. Our consolidated financial results may be materially and adversely affected by the

performance of our Subsidiaries.

Our subsidiaries are primarily in the businesses of trading of steel and metal products including mild, high carbon spring, high speed tools alloys and stainless steel metals. We cannot provide any assurance that our subsidiaries will be able to efficiently operate such businesses and generate sufficient earnings and cash flow. In the event that our subsidiaries are not being able to effectively operate and manage such businesses, our Company’s consolidated financial results may be materially and adversely affected.

14. Our business may be affected due to disputes with our contract labour

We employ contract labour for execution of our projects and the number of contract labourers may vary from time to time depending on the nature and quantum of work involved. We enter into contracts with independent contractors for completion of specified work. Any disputes with the contract labourers may delay the execution of our projects and may affect our business and results of operations.

15. Litigation relating to our Company could adversely affect our business and financial

condition.

We are defendants in legal proceedings incidental to our business and operations. These legal proceedings are pending at different levels of adjudication before various courts and tribunals in India. The amounts claimed in these proceedings have been disclosed to the extent ascertainable, excluding contingent liabilities and include amounts claimed jointly and severally from us and other parties.

Should any new developments arise, such as a change in Indian law or rulings against our Company by appellate courts or tribunals, we may need to make provisions in our financial statements that could increase our expenses and current liabilities.

For details of outstanding legal proceedings and litigations against us please refer to the chapter titled "Legal proceedings"


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16. Our Company may not be able to successfully manage the growth of our operations and consequently our financial conditions and results of operations may be adversely affected.

Our Company has been rapidly expanding our operations in recent years. As we grow, we must continue to improve our managerial, technical and operational knowledge and allocation of resources. A principal component of our strategy is to continue to grow by expanding the size and geographical scope of our existing businesses. This growth strategy will place significant demands on our management, financial and other resources. It will require us to continuously develop and improve our operational, financial and internal controls. Continuous expansion increases the challenges involved in financial management, recruitment, training and retaining high quality human resources, preserving our culture, values and entrepreneurial environment and developing and improving our internal administrative infrastructure. An inability to manage such growth could disrupt our business prospects, impact our financial condition and adversely affect our results of operations. There can be no assurance that we will be able to implement or manage any of these growth plans successfully. In order to fund our ongoing operations and future growth, we need to have sufficient internal sources of liquidity or access to additional financing from external sources. Further, we will be required to manage relationships with a greater number of suppliers, service providers, lenders and other third parties and any failure to do so would affect our results of operations.

17. Our business is operating under various laws which require us to obtain approvals from the

concerned statutory/regulatory authorities in the ordinary course of business, and if we are unable to obtain these approvals and the renewals, our business could be adversely affected.

Certain statutory and regulatory permits and approvals are required for our business. Laws or regulations in India and other countries in which we operate may require us to obtain licenses, consents or permits in order to conduct our operations. Additionally, in the future, we may be required to renew such permits and approvals and obtain new permits and approvals for our operations. There can be no assurance that the relevant authorities will issue any of such permits or approvals in the time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations.

18. Compliance with, and changes in, safety, health and environmental and labor laws and

regulations may adversely affect our business, financial condition and results of operations.

Our Company’s businesses are subject to numerous laws, regulations and contractual commitments relating to the environment as our operations generate a large quantity of pollutants and wastes, some of which are hazardous. Our Company is governed by laws and regulations concerning air emissions, waste-water discharges, solid and hazardous waste material handling and disposal, and the investigation and remediation of contamination or other environmental restoration. The risk of substantial costs and liabilities related to compliance with these laws and regulations is an inherent part of our business. Facilities currently operated by our Company, or where wastes have been disposed or materials extracted, are all subject to risk of environmental cost and liabilities, which includes the costs or liabilities relating to the investigation and remediation of past or present contamination or other environmental restoration. In addition, future conditions and contamination may


41

develop, arise or be discovered that create substantial environmental compliance, remediation or restoration liabilities and costs. Despite our Company’s efforts to comply with environmental laws and regulations, violations of such laws or regulations can result in civil and/or criminal penalties being imposed, the suspension of permits, requirements to curtail or suspend operations, lawsuits by third parties and negative reputational effects. There can be no assurance that substantial costs and liabilities will not be incurred in the future.

An increase in the requirements of environmental laws and regulations, increasingly strict enforcement thereof by governmental authorities, or claims for damages to property or injury to persons resulting from the environmental impacts of our Company’s operation could prevent or restrict our operations, as it requires the expenditure of significant funds to bring our Company into compliance, involve the imposition of clean-up requirements and reporting obligations, and give rise to civil and/or criminal liability. There can be no assurance that any such legislation, regulation or private claim will not have a material adverse effect on our business, financial condition or results of operations. In the event that production at any of our facilities is partially or wholly disrupted due to any sanction, our Company’s business could suffer significantly and our results of operations and financial conditions could be adversely affected.

19. Changes in technology may render our current technologies obsolete or require us to make

substantial capital investments.

Although we attempt to maintain the latest international technology standards, the technology requirements for businesses in the industries that we operate are subject to continuing change and development. Some of our existing technologies and processes may become obsolete, performing less efficiently compared to newer and better technologies and processes in the future. The cost of upgrading or implementing new technologies, upgrading our existing equipment or expanding our capacity could be significant and could adversely affect our results of operations.

20. Our Company has contingent liabilities as at March 31, 2012. If any of these contingent

liabilities actually occur, they may adversely impact our profitability and may have a material adverse effect on our results of operations and financial condition. Our Company has contingent liabilities as at March 31, 2012 and the details of the contingent liabilities in our consolidated financials are provided in the table below.

(` in crores)

Particulars As at March 31, 2012 March 31, 2011

Letters of Credit outstanding 698.58 591.93Bank Guarantees 130.25 92.54Estimated amount of contracts remaining to be executed on capital account and not provided for

126.02 60.04

If any of these contingent liabilities materialise, they may adversely impact our profitability and may have a material adverse effect on our results of operations and financial condition.


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21. Our Company has issued a corporate guarantee to banks and government authorities on behalf of others, which if invoked would materially adversely affect our financial. As at March 31, 2012, we have given corporate guarantee aggregating to `442.64 crores to various banks and government authorities. The aforementioned guarantees relate to supply of goods to government authorities. If such guarantees are invoked, and if the parties are unable to repay the principal amount or the interest thereon, we may be compelled to pay the entire or part of the amount secured thereby. Any such invocation of the aforesaid guarantee would adversely affect our financial conditions and results of operations.

22. Our Promoter and Promoter Group will continue to retain majority shareholding in our

Company after this Placement, which will allow them to exercise significant influence over our Company. Our Company cannot assure you that our Promoter will always act in our or your best interest.

As of December 31, 2012, 70.83% of our issued and outstanding Equity Shares are currently beneficially owned by our Promoters and Promoter Group (including the ArcelorMittal, our Co-Promoters). Upon completion of this Placement, our Promoter and Promoter Group will own 70.83% of our post-Placement Equity Share capital, assuming full subscription of this Placement. Accordingly, our Promoter will continue to exercise significant influence over our Company’s business policies and affairs and all matters requiring shareholders’ approval, including the composition of our Board of Directors, the adoption of amendments to our memorandum and articles of association, the approval of mergers, strategic acquisitions or joint ventures or the sales of substantially all of our assets, and the policies for dividends, lending, investments and capital expenditures. This concentration of ownership also may delay, defer or even prevent a change in the control of our Company and may make some transactions more difficult or impossible without the support of these shareholders. The interests of the Promoter as our controlling shareholders could conflict with our interests or the interests of our other shareholders. We cannot assure you that our Promoters will act to resolve any conflicts of interest in our or your favor.

23. The ArcelorMittal, our Co-Promoters, have certain special rights under the Co-promotion

Agreementt dated September 4, 2009 which the other shareholders of our Company do not have. Such rights give them an ability to exert significant control over us.

Pursuant to a Co-Promotion Agreement September 4, 2009 (the "Co-Promotion Agreement"), the ArcelorMittal have become the co-promoters of our Company ("Co-promoters") and have been given some special rights including but not limited to right to appoint one-half of the non-independent directors, special quorum in the meeting of the Board of directors being a minimum of one nominee director of the Co-promoters. The Co-promoters have also been given a tag along right and right of first refusal.

Further, affirmative voting rights on the business plan, dissolution, amendment of charter documents, corporate restructuring (entering into partnership and joint ventures), employee and director compensation, related party transactions, capital expenditures or investments in excess of identified thresholds, issuance or buy-back of securities and loans in excess of an identified threshold have been given to the Co-promoters pursuant to which decisions on such matters shall be taken only with the consent of representatives/ nominee directors of the Indian Promoters and Co-promoters.

Currently, as required under the Co-Promotion Agreement, our Company has not amended the Articles of Association. However, our Company has received an approval from our


43

shareholders for incorporating any such changes. In the event that ArcelorMittal exercises such rights, it would have an ability to exert significant control over our Company. The interests of the Co-promoters as controlling shareholders could conflict with our interests or the interests of our other promoters and shareholders.

24. Our Company may not have sufficient insurance coverage for all possible economic losses.

Our Company’s operations are subject to inherent risks such as fire, strikes, loss-in-transit of our products, cash-in transit, accidents and natural disasters to our factories, offices, stock and our captive power plant. In addition, many of these operating and other risks may cause personal injury, damage to or destruction of our properties and may result in suspension of operations and the imposition of civil or criminal penalties. Whilst we believe that we maintain adequate insurance coverage amounts for our business and operations, our insurance policies do not cover all risks and are subject to exclusions and deductibles. If any or all of our factories, offices, and captive power plant are damaged in whole or in part, our operations, totally or partially, may get interrupted for a temporary period. There can be no assurance that our insurance policies will be adequate to cover the losses that may be incurred as a result of such interruption or the costs of repairing or replacing the damaged facilities. Our Company’s inability to procure and/or maintain adequate insurance cover in connection with our business could adversely affect our operations and profitability. Should an uninsured loss or a loss in excess of insured limits occur, we would lose the capital invested in and the anticipated revenue from the affected property. Losses suffered due to inadequate coverage may have a material adverse impact on our Company’s business, results of operations and financial condition.

Further, our Company does not maintain key-man insurance for any of its key personnel and loss of services of such key personnel may have an adverse effect on our business, financial condition and results of operations.

25. Our Company has e entered into certain related-party transactions and continue to rely on

our Associate companies for certain activities.

Our Company has entered and may continue to enter into a number of related-party transactions with our Associate Companies. While we believe that all our related-party transactions have been conducted on an arm’s length basis, we cannot assure you that we could not have achieved more favorable terms had such transactions been entered into with unrelated parties. Such transactions or any future transactions with related parties may potentially involve conflicts of interest and may impose certain liabilities on our Company. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our business, prospects, results of operations and financial condition, including because of potential conflicts of interest or otherwise.

26. Any downgrading of India’s sovereign rating by a domestic or international rating agency

could adversely affect our business.

Any adverse revisions to India’s sovereign ratings for domestic and international debt by domestic or international rating agencies may adversely affect our Company’s ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing is available. This could harm our business and financial performance, ability to obtain financing for capital expenditures and the price of our Equity Shares.


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27. Our offices and other premises from which we operate are not owned by us.

Our Company does not own the premises on which our registered office and other offices are located. Our Company operates from rented and leased premises. Apart from the properties owned by our Company, various premises are leased in relation to our operations. If any of the owners of these premises do not renew the agreements pursuant to which our Company has occupied the premises or such renewal of agreements are on terms and conditions unfavorable to our Company then, we may suffer a disruption in our operations and incur costs related to moving offices, which could adversely affect our Company’s business, prospects, financial condition and results of operations.

28. Some of our Company’s lease agreements have certain irregularities.

Some of our Company’s offices are on lease or on rent from various parties. Some of our lease/ rent agreements have certain irregularities such as inadequate stamping and/or non registration of deeds and agreements and improper execution of lease deeds. The effect of inadequate stamping and non-registration is that the document is not admissible as evidence in legal proceedings, and parties to that agreement may not be able to legally enforce the same, except after paying a penalty for inadequate stamping and non-registration. In the event of any dispute arising out of such unstamped or inadequately stamped and/or unregistered lease agreements, we may not be able to effectively enforce our leasehold rights arising out of such agreements which may have a material and adverse impact on the business of our Company.

29. An unexpected loss, shutdown or slowdown of operations at any of our Company’s

facilities could have a material adverse effect on our Company’s results of operations and financial conditions.

Our Company is subject to operating risks such as the breakdown or failure of equipment, power supply interruptions, facility obsolescence or disrepair, labour disputes, natural disasters and industrial accidents. The occurrence of these risks could affect our Company’s results of operations by causing production at one or more facilities to shutdown or slowdown. No assurance can be given that one or more of the factors mentioned above will not occur, which could have a material adverse on our Company’s results of operations and financial conditions.

Additionally, our manufacturing processes depend on certain critical equipment including but not limited to operations equipment may, on occasion, be out of service as a result of unanticipated failures, which could require our Company to close part or all of the relevant manufacturing facility. Any interruption in production capability may require our Company to make significant and unanticipated capital expenditures to affect repairs which could have a negative effect on the profitability and cash flows. Any sustained disruptions to our Company’s business could also result in a loss of customers. Any or all of these occurrences could adversely affect our Company’s Business, results of operations, financial conditions and prospects.

30. Our Company has applied for registration of certain trademarks in its name. Until such

registrations are granted, we may not be able to prevent un-authorised use of such trademarks by third parties, which may lead to the dilution of our goodwill. Our Company has filed applications for registration of 126 trademarks, under the Trademarks Act, 1999 ("Trademarks Act"), some of which are currently pending approval from the


45

Registrar of Trademarks. Some of the various trademarks registered by our Company including but not limited to "Uttam Chatra Chaya", "Uttam Suraksha Kavach" and "Uttam Suraksha" have recently expired and our Company is in the process of renewing the same. There can be no assurance that our trademark applications will be registered or renewed. Pending the registration of these trademarks we may have a lesser recourse to initiate legal proceedings to protect our intellectual property. Further, our applications for the registration of certain trademarks may be opposed by third parties, and we may have to incur significant cost in relation to these oppositions. In the event the Company is unable to obtain registrations due to opposition by third parties or if any injunctive or other adverse order is issued against our Company in respect of any of our trademarks for which we have applied for registration, we may not be able to avail the legal protection or prevent unauthorised use of such trademarks by third parties, which may adversely affect our goodwill and business.

31. Competition from other materials, or changes in the products or manufacturing processes

of customers that our Company’s products, could reduce market prices and demand for steel products that we manufacture and thereby reduce our Company’s cashflow and profitability.

In various applications, steel competes with other material that may be used as substitutes, such as aluminum (particularly in the automobile industry), cement, composites, glass, plastic and wood. Government regulatory initiatives mandating or incentivising the use of such materials in lieu of steel, whether for environmental or other reasons, as well as the development of other new substitutes for steel products, could significantly reduce market prices and demand for steel products and thereby reduce our Company’s cashflow and profitability. Additionally, the industry that we operate in i.e the steel industry is characterised by evolving technology standards that require improved quality, changing customer specifications and wide fluctuations in product supply and demand. The products or manufacturing processes of customers who use our products change from time to time due to improved technologies or product enhancements. These changes may require us to develop new products and enhancements for our product line to keep pace with the evolving standards, our customers specifications and quality standards in a timely and cost effective manner. If we cannot keep pace with the market changes and produce steel products then, it may reduce our cash flow and profitability.

32. Our Company may undertake in the future, strategic acquisitions, which may be difficult to

integrate, and may end up being unsuccessful.

Our Company may from time to time pursue in the future, acquisitions. Our ability to achieve the benefits it anticipates from future acquisitions will depend in part upon whether it is able to integrate the acquired businesses with the rest of our Company in an efficient and effective manner. The integration and the achievement of synergies requires, among other things, coordination of business development and procurement efforts, manufacturing improvements and employee retention, hiring and training policies, as well as the alignment of products, sales and marketing operations, compliance and control procedures, research and development activities and information and software systems. Any difficulties encountered in combining operations could result in higher integration costs and lower savings than expected. Integration of certain operations also requires the dedication of significant management resources, and time and costs devoted to the integration process may divert management’s attention from day to day business.


46

Additionally, future acquisitions may require our Company to incur or assume substantial new debt, expose it to future funding obligations and expose it to integration risks, and our Company cannot assure prospective investors that such acquisitions will contribute to our profitability. The failure to successfully integrate an acquired business or the inability to realise the anticipated benefits of such acquisitions could materially and adversely affect our Company’s business, results of operations, financial conditions and prospects.

33. Our Company faces risks relating to our joint ventures.

Our Company also has entered into, and may from time to time in the future enter into, joint venture agreements. Our Company may have limited control of these companies and therefore may be unable to require that these joint ventures sell assets or return invested capital, make additional capital contributions or take any other action. If there is a disagreement between our Company and our partners in a joint venture regarding the business and operations of the project, we cannot assure you that we will be able to resolve such disagreement in a manner that will be in the best interest of our Company. These limitations may adversely affect our ability to obtain the economic and other benefits it seeks from participating in these products.

Our Company’s joint venture partners may have economic or business interests or goals that are inconsistent with our Company; or may take actions contrary to our Company’s instructions, requests, policies or objectives; or may be unable or unwilling to fulfill their obligations; have financial difficulties; our have disputes with our Company as to their rights, responsibilities and obligations. Any of these and other factors may have an adverse affect our Company’s business, results of operations, financial condition and operation.

Risks Related to Investment in Indian Companies 34. Significant differences exist between Indian GAAP and other accounting principles such as

IFRS, which may be material to investors’ assessment of our financial condition.

Our financial statements, including the financial statements provided in this Placement Document are prepared in accordance with Indian GAAP, which differs in certain respects from IFRS and US GAAP. As a result, our consolidated financial statements and reported earnings could be different from those which would be reported under IFRS or US GAAP. Such differences may be material. We have not attempted to quantify the impact of US GAAP or IFRS on the financial data included in this Placement Document, nor do we provide a reconciliation of our financial statements to US GAAP or IFRS. Each of US GAAP and IFRS differs in significant respects from Indian GAAP. In addition, this Placement document does not include any information in relation to the differences between Indian GAAP and IFRS or US GAAP. Accordingly, the degree to which the Indian GAAP financial statements included in this Placement Document will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices. Had the financial statements and other financial information been prepared in accordance with IFRS or US GAAP, the results of operations and financial position may be materially different. Because differences exist between Indian GAAP and IFRS or US GAAP, the financial information in respect of our Company contained in this Placement Document may not be comparable with the financial information of other companies that prepare their financial information in accordance with IFRS or US GAAP. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Placement Document should accordingly be limited. Potential investors should consult their own professional advisors for an understanding of these differences between Indian GAAP and IFRS or US GAAP, and how such differences might affect the financial information contained herein.


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35. Our failure to successfully adopt IFRS or a variation thereof, Indian Accounting Standards ("IND AS") namely could have a material adverse effect on the price of our Equity Shares.

Public companies in India, including our Company, may be required to prepare annual and interim financial statements under IFRS or a variation thereof. The ICAI has released a near-final version of IND AS titled First Time Adoption of Indian Accounting Standards and the Ministry of Corporate Affairs of the Indian Government on February 25, 2011, has notified that IND AS will be implemented in a phased manner and the date of such implementation will be notified at a later date. As of the date of this Placement Document, the MCA has not notified the date of implementation of IND AS. There is not yet a significant body of established practice for forming judgments regarding our implementation and application. Additionally, IND AS has fundamental differences with IFRS and therefore financial statements prepared under IND AS may be substantially different from financial statements prepared under IFRS. Our Company cannot assure you that our financial condition, results of operations, cash flow or changes in shareholders’ equity will not appear materially different under IND AS from that under Indian GAAP or IFRS. As our Company adopts IND AS reporting, it may encounter difficulties in the on-going process of implementing and enhancing our management information systems. Our Company cannot assure you that our adoption of IND AS will not adversely affect our Company’s reported results of operations or financial condition and any failure to successfully adopt IND AS in accordance with the prescribed timelines may materially and adversely affect our Company’s financial position and results of operations.

36. Our Company’s business and activities may be further regulated by the Competition Act,

2002 ("Competition Act") and any adverse application or interpretation of the Competition Act could materially and adversely affect our Company’s business, financial condition and results of operation.

The Competition Act seeks to prevent business practices that have or are likely to have an appreciable adverse effect on competition in India and has established the Competition Commission of India (the "CCI"). Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which has or is likely to have an appreciable adverse effect on competition is void and attracts substantial penalties. Any agreement which, directly or indirectly determines purchase or sale prices, limits or controls the production, supply or distribution of goods and services, or shares a market by way of geographical area or number of customers is presumed to have an appreciable adverse effect on competition. The provisions of the Competition Act relating to the regulation of certain acquisitions, mergers or amalgamations, which have a material adverse effect on competition and regulations with respect to notification requirements for such combinations, came into force on June 1, 2011. Therefore, it is difficult to predict the impact of the Competition Act on our Company’s growth and expansion strategies. If our Company is affected, directly or indirectly, by the application or interpretation of any provision of the Competition Act or any enforcement proceedings initiated by the CCI or any adverse publicity that may be generated due to scrutiny or prosecution by the CCI, it may adversely affect our Company’s business, results of operations, financial condition, prospects and the trading price of our Equity Shares.

37. Any disruption of India’s infrastructure could have a material adverse effect on our results

of operations.

India’s physical infrastructure is less developed than that of many developed nations. Any congestion or disruption in its port, rail and road networks, electricity grid, communication systems or any other public facility could disrupt normal business activity. Any deterioration


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of India’s physical infrastructure would harm the national economy, disrupt the transportation of goods and supplies, and add costs to doing business in India. These problems could interrupt our business operations, which could have an adverse effect on our results of operations and financial condition.

38. Political, economic and social developments in India could adversely affect our business

operations.

The market price and liquidity of our Equity Shares may be affected by foreign exchange rates and controls, interest rates, political instability, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. Since 1991, successive Indian Government has pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the Government and state governments in the Indian economy in relation to producers, consumers and regulators has remained significant. The current Central Government, which came to power in May 2009, is headed by the Indian National Congress and is a coalition of several political parties. The current Government is expected to announce policies and take initiatives that support economic liberalization and deregulation. However, there can be no assurance that the present Government, or any Government elected in the future, will continue the policies of previous Governments and it cannot be assured that liberalization policies will continue in the future. The Government may also pursue other policies which could have a material adverse effect on our business. A significant change in the Government’s or state government’s economic liberalization and deregulation policies could materially adversely affect business and economic conditions in India generally and our business and financial condition and prospects in particular.

39. It may not be possible for you to enforce any judgment obtained outside India against our

Company, our management or any of our respective affiliates in India, except by way of a suit in India on such judgment.

Our Company is incorporated under the laws of India and all the directors and executive officers of our Company reside in India. Nearly all our Company’s assets, and the assets of our directors and officers, are located in India. As a result, you may be unable to (a) effect service of process outside India upon our Company and such other persons or entities; or enforce in courts outside of India judgments obtained in such courts against our Company and such other persons or entities. Section 44A of the Indian Code of Civil Procedure, 1908, as amended, provides that where a foreign judgment has been rendered by a court 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. The United Kingdom has been declared by the Government to be a reciprocating territory for the purposes of Section 44A of the Indian Code of Civil Procedure, 1908. However, the United States has not been declared by the Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a court in the United States may be enforced in India only by a suit upon the judgment, subject to Section 13 of the Indian Code of Civil Procedure, 1908, and not by proceedings in execution. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it is of the view that the amount of damages awarded is excessive or inconsistent with the Indian practice. A party seeking to enforce a foreign judgment in India is required to


49

obtain prior approval from the RBI under FEMA to repatriate any amount recovered. See "Enforcement of Civil Liabilities."

40. You may be restricted in your ability to exercise pre-emptive rights under Indian law and

may be adversely affected by future dilution of your ownership position.

Under the Companies Act, a company incorporated in India must offer its holders of equity shares pre-emptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages before the issuance of any new equity shares, unless the pre-emptive rights have been waived by adoption of a special resolution by holders of three-fourths of the shares which are voted on the resolution or if we have obtained Government approval to issue without such rights. However, if the law of the jurisdiction you are in does not permit you to exercise your pre-emptive rights without our Company filing an offering document or registration statement with the applicable authority in the jurisdiction you are in, you will be unable to exercise your pre-emptive rights unless we make such a filing. If we elect not to make such a filing, the new securities may be issued to a custodian, who may sell the securities for your benefit. The value such custodian would receive upon the sale of such securities, if any, and the related transaction costs cannot be predicted. To the extent that you are unable to exercise pre-emptive rights granted in respect of the Equity Shares held by you, your proportional interest in our Company would be reduced.

41. The Indian economy has sustained varying levels of inflation in the recent past.

The majority of our Company’s direct costs are incurred in India. India has experienced very high levels of inflation during certain periods in the recent past. In the event of a high rate of inflation, our costs, such as salaries, materials costs, travel costs and related allowances, which are typically linked to general price level, may increase. However, we may not be able to increase the tariffs that we charge from the users of the toll roads that we operate to preserve operating margins. Accordingly, high rates of inflation in India could increase our operating costs and decrease our operating margins, which could have an adverse effect on our results of operations.

42. A third party could be prevented from acquiring control of our Company 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 over us, even if a change in control would result in the purchase of your Equity Shares at a premium to the market price or would otherwise be beneficial to you. Under the Indian takeover regulations, an acquirer has been defined as any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights or control over a company, whether individually or acting in concert with others. These provisions may discourage or prevent certain types of transactions involving an actual or threatened change in control of our Company. For more information, see the section on "The Securities Market of India – Takeover Code" in this placement document.

43. Force majeure events, terrorist attacks or war or conflicts involving India or other

countries could adversely affect the financial markets and adversely affect our business.

Any major hostilities involving India, or other acts of violence including civil unrest or terrorist attacks, or events that are beyond our control, could have an adverse effect on the operations of services provided in India. The terrorist attacks will negatively affect business sentiments as well, as trade between countries could adversely affect our business and


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profitability. Also, India may enter into armed conflict or war with other countries. The consequences of any armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business. From time to time, South Asia has experienced instances of civil unrest and hostilities among neighbouring countries. Military activity or terrorist attacks could adversely affect the Indian economy by disrupting communications and making travel more difficult. Such events could also create a perception that investments in Indian companies involve a higher degree of risk. This, in turn, could have an adverse effect on the market for securities of Indian companies, including the Equity Shares, and on the market for our services.

44. Natural calamities could have a negative effect on the Indian economy and adversely affect

our business and the price of our Equity Shares.

India has experienced natural calamities such as earthquakes, tsunami, floods and drought in the past few years. The extent and severity of these natural disasters determines their effect on the Indian economy. For example, as a result of drought conditions in the country during Fiscal 2003, the agricultural sector recorded negative growth for that period. The erratic progress of the monsoon in Fiscal 2004 affected sowing operations for certain crops. Further prolonged spells of scanty rainfall or other natural calamities could have a negative effect on the Indian economy, adversely affecting our business and the price of our Equity Shares.

45. An outbreak of an infectious disease or any other serious public health concerns in Asia or

elsewhere could adversely affect our business.

The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern, such as swine influenza or the NDM-1 superbug, could have a negative impact on the global economy, financial markets and business activities worldwide, which could adversely affect our business. Although, we have not been adversely affected by such outbreaks in the past, we can give you no assurance that a future outbreak of an infectious disease or any other serious public health concern will not have a material adverse effect on our Company’s business.

46. Our Company’s ability to raise foreign capital may be constrained by Indian law.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit our financing sources for our Company including for projects under development or acquisitions and other strategic transactions. This could constrain our ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, there can be no assurance that our Company will be granted the required approvals without onerous conditions, or at all. Any limitations on our ability to raise foreign debt may have a material adverse impact on our business, financial condition, results of operations and prospects.

47. The prices and trading volumes of our equity shares on the Indian Stock Exchanges may

fluctuate after this Placement.

The prices and trading volumes of our equity shares on the Indian Stock Exchanges may fluctuate after this Placement as a result of several factors, including volatility in the Indian and global securities market; our operations and performance; the performance of our competitors, the infrastructure and the steel industry and the perception in the market about investments in the industries in which we operate; changes in the estimates of our performance or recommendations by financial analysts; significant developments in India’s


51

economic liberalization and deregulation policies; and significant developments in India’s fiscal regulations. There can be no assurance that the prices at which the Equity Shares are initially traded will correspond to the prices at which the Equity Shares will trade in the market subsequent to this Placement.

48. The price of our equity shares may experience significant fluctuations on the Indian Stock

Exchanges.

The price of our Equity Shares may experience significant fluctuation on the Indian Stock Exchanges. In recent years, price and volume fluctuations on the Indian Stock Exchanges have been significant and such fluctuations have often been unrelated or disproportionate to the operating performance of companies whose securities are traded on the Indian Stock Exchanges. The trading price of the Equity Shares could also be subject to significant volatility in response to, among other factors: • our Company’s results of operations and performance; delays in the schedule for the

development projects and any resultant cost and time overruns caused by such delays; • supply and demand of steel, manufacturing, technology and financial services in India

and in the international markets generally; • our ability to successfully implement our strategy, and growth and expansion plans; • changes in laws and regulations, or any interpretation thereof, that apply to our

business; • changes in the value of the Rupee against major global currencies and other currency

changes; • changes in the Indian and international interest rates; • any adverse outcome in the legal or regulatory proceedings in which we are involved; • changes in any global conditions and situations affecting India and the industries in

which we operate; and • changes in political and economic conditions in India. • volatility in the Indian and global securities market; • changes in the estimates of our performance or recommendations by financial

analysts; • adverse media reports on our Company or the Indian steel industry;

Risks related to our Equity Shares and the trading market 49. The Indian securities market may be more volatile and provide less information on listed

companies than securities markets in developed countries.

The Indian securities markets are more volatile than the securities markets in certain countries which are members of the OECD. The Indian Stock Exchanges have, in the past, experienced substantial fluctuations in the prices of listed securities. On May 18, 2009, trading on the Indian Stock Exchanges was halted for the day after excessive volatility in the Indian securities market. The Indian Stock Exchanges (including the BSE) have experienced problems which, if such or similar problems 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 brokers. 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. There is a lower level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and


52

other participants than in certain OECD countries. In 1992, the SEBI received statutory powers to assist in carrying out its responsibility for improving disclosure and other regulatory standards for the Indian securities markets. Subsequently, the SEBI has prescribed certain regulations and guidelines in relation to disclosure requirements, insider dealing and other matters relevant to the Indian securities markets. There may, however, be less publicly-available information about Indian companies than is regularly made available by public companies in certain OECD countries. As a result, investors may have access to less information about our business, financial condition and results of operation and those of our competitors that are listed on Indian Stock Exchanges, on an ongoing basis, than an investor may have access to in the case of companies subject to reporting requirements of other countries.

50. An active market for our equity shares may not be sustained, which may cause the price of

our Equity Shares to fall.

While our equity shares have been traded on the BSE and the NSE, there can be no assurance regarding the continuity of the existing active or liquid market for our equity shares, the ability of the investors to sell their Equity Shares or the prices at which investors may be able to sell their Equity Shares. In addition, the market for equity securities in emerging markets has been subject to disruptions that have caused volatility in the prices of securities similar to our equity shares. There can be no assurance that the market for our equity shares will not be subject to similar disruption. Any disruption in these markets may have an adverse effect on the market price of the Equity Shares.

51. There is no guarantee that our Equity Shares will remain listed on the BSE and the NSE in

a timely manner or at all, and any trading closures at the BSE and the NSE may adversely affect the trading price of our equity shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until after the Equity Shares have been issued and allotted. The approval will require all other relevant documents authorizing the issuing of the Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the BSE and the NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the US Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future.

52. You will not be able to sell immediately on an Indian stock exchange any of the Equity

Shares you purchase in the Placement.

An in -principle approval has been received for the Equity Shares to be sold pursuant to this Placement to be listed on NSE and BSE. Pursuant to Indian regulations, certain actions must be completed before the Equity Shares can be listed and trading may commence. Investors’ book entry, or "demat" accounts with depository participants in India are expected to be credited within two working days of the date on which the allotment is made. Thereafter, upon receipt of final approval of the Stock Exchanges (if granted), trading in the Equity Shares is expected to commence within seven working days. There can be no assurance that the Equity Shares allocated earlier to investors will be credited to such investor’s demat account, or that trading will commence, within the time periods specified above.


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53. An investor will not be able to sell any of our Equity Shares purchased in the Placement other than on a recognized Indian stock exchange for a period of 12 months from the date of issue of such Equity Shares.

Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of our Equity Shares in the Placement, investors purchasing our Equity Shares in the Placement may only sell their shares on the BSE or the NSE and may not enter into any off-market trading in respect of our Equity Shares. We cannot be certain that these restrictions will not have an impact on the price of our Equity Shares.

54. There may be less information available about companies listed on Indian securities

markets than companies listed on securities markets in other countries.

There may be less publicly available information about Indian public companies, including our Company, than regularly disclosed by public companies in other countries with more mature securities markets. There is a difference between the level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants in those markets, and that of markets in other more developed economies. SEBI is responsible for setting standards for disclosure and other regulatory standards for the Indian securities markets. While SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters, there may be less publicly available information about Indian companies than is regularly made available by public companies in many developed economies. As a result, you may have access to less information about our Company’s business, results of operations and financial condition, and those of our competitors that are listed on Indian stock exchanges, on an ongoing basis, than you may in the case of companies subject to the reporting requirements of other more developed countries.

55. Conditions in the Indian securities market may affect the price or liquidity of our Equity

Shares.

The Indian securities markets are smaller and more volatile than securities markets in more developed economies. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. Indian stock exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies. These problems have included temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, from time to time, disputes have occurred between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. Similar problems could occur in the future and, if they do, they could harm the market price and liquidity of our Equity Shares.

56. Economic developments and volatility in securities markets in other countries may cause

the price of our equity shares to decline.

The Indian economy and its securities markets are influenced by economic developments and volatility in securities markets in other countries. Investors’ reactions to developments in one country may have adverse effects on the market price of securities of companies located in other countries, including India. For instance, the economic downturn globally has adversely affected market prices in the world’s securities markets, including the Indian securities


54

markets. Negative economic developments, such as rising fiscal or trade deficits, or a default on sovereign debt, in other emerging market countries may affect investor confidence and cause increased volatility in Indian securities markets and indirectly affect the Indian economy in general.

57. You may be liable for capital gains tax.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if securities transaction tax ("STT") has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realized on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognized stock exchange and on which no STT has been paid, will be subject to long-term capital gains tax in India. Further, any gain realized on the sale of listed equity shares held for a period of 12 months or less will be subject to 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 the exemption from taxation in India 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 in India as well as in their own jurisdiction on a gain upon the sale of Equity Shares. See "Taxation".

58. You may be subject to certain foreign exchange regulations of India.

Under the foreign exchange regulations currently in force in India, transfer of equity shares between non residents and residents are freely permitted only if they comply with the pricing guidelines specified by the RBI. If the Equity Shares sought to be transferred are not in compliance with such pricing guidelines then the prior approval of the RBI shall be required. Additionally, shareholders who seek to convert the Rupee proceeds from a sale of Equity Shares in India into foreign currency and repatriate that foreign currency from India will have to comply with the guidelines issued in this regard. Further, prior to such repatriation (of sale proceeds), a no objection/tax clearance certificate from the income tax authority would be required. Our Company cannot assure investors that any required approval from the RBI or any other Government agency can be obtained on any particular terms or at all.

59. Government regulation of foreign ownership of Indian securities may have an adverse

effect on the price of the Equity Shares.

Foreign ownership of Indian securities is subject to regulation by the Government of India. Under foreign exchange regulations currently in effect in India, the RBI must approve the sale of the Equity Shares from a non-resident of India to a resident of India if the sale does not meet the requirements of the circular of the RBI dated October 4, 2004. The RBI must approve the conversion of the Rupee proceeds from any such sale into foreign currency and repatriation of that foreign currency from India unless the sale is made on a recognized stock exchange in India through a stock broker at the market price. As provided in the foreign exchange controls currently in effect in India, the RBI will approve the price at which the Equity Shares are transferred based on a specified formula, and a higher price per share may not be permitted. The approval from the RBI or any other government agency may not be obtained on terms favorable to a non-resident investor in a timely manner or at all. Because of possible delays in obtaining requisite approvals, investors in the Equity Shares may be prevented from realizing gains during periods of price increases or limiting losses during


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periods of price declines. 60. There are restrictions on daily movements in the price of the Equity Shares, which may

adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

Subsequent to listing, our Company will be subject to a daily circuit breaker imposed on listed companies by all stock exchanges in India which does not allow transactions beyond certain volatility in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our Company’s circuit breaker is set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The Stock Exchanges are not required to inform our Company of the percentage limit of the circuit breaker from time to time, and may change it without our knowledge. This circuit breaker would effectively limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding the ability of shareholders to sell the Equity Shares or the price at which shareholders may be able to sell their Equity Shares.

61. Currency exchange rate fluctuations may affect the value of the Equity Shares.

The exchange rate between the Rupee and other foreign currencies, including the United States Dollar, British Pound, the Euro, the Hong Kong dollar and the Singapore dollar, has changed in recent years and may fluctuate substantially in the future. If you purchase Rupees to purchase our Equity Shares, fluctuations in the exchange rate between the Rupee and the foreign currency with which you purchased the Rupees may affect the value of your investment in our Equity Shares. Specifically, if there is a change in relative value of the Rupee to a foreign currency, each of the following values may also be affected: • the foreign currency equivalent of the Rupee trading price of our Equity Shares in

India; • the foreign currency equivalent of the proceeds that you would receive upon the sale

in India of any of our Equity Shares; and • the foreign currency equivalent of cash dividends, if any, on our Equity Shares, which

will be paid only in Rupees. You may be unable to convert Rupee proceeds into a foreign currency of your choice. In addition, the rate at which any such conversion could occur may fluctuate. In addition, our market valuation could be affected by the devaluation of the Rupee if investors in jurisdictions outside India analyze our value based on the Rupee equivalent of some other currency.

62. Our Company cannot guarantee the accuracy of facts and other statistics with respect to

India, the Indian economy, and the Indian steel industry contained in this Placement Document.

Facts and other statistics in this Placement Document relating to India, the Indian economy and the Indian infrastructure industry have been derived from various government publications and obtained in communications with various Indian government agencies that our Company believes to be reliable. However, our Company cannot guarantee the quality or reliability of such source of materials. While our Company’s directors have taken reasonable care in the reproduction of the information, they have not been prepared or independently


56

verified by our Company, the GC-BRLM or any of our Company’s or their respective affiliates or advisers and, therefore, our Company makes no representation as to the accuracy of such facts and statistics, which may not be consistent with other information compiled within or outside India. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice and other problems, the statistics herein may be inaccurate or may not be comparable to statistics produced for other economies and should not be unduly relied upon. Further, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as may be the case elsewhere. In all cases, investors should give consideration as to how much weight or importance they should attach to or place on such facts or statistics.


57

MARKET PRICE INFORMATION The equity shares of our Company are currently listed on BSE and NSE. The stock market data given below is for periods subsequent to such date. As on the date of the Placement Document our Company has 12,22,60,103 Equity Shares of face value `10 each issued, subscribed and paid up. The table set forth below is for the periods that indicate the high and low prices of our Equity Shares and also the volume of trading activity. 1) The high, low and average market prices of our Equity Shares during the preceding

three years. Year Ending March 31

BSE Date High (`) Volume

on date of High (No. of shares)

Date Low (`)

Volume on date of Low (No. of shares)

Average Price

for the Year / Period (`) *

Total Volume for the Year / Period (No. of Equity Shares)

April 1, 2012 to March 22 , 2013

January 30, 2013

121.75

2982241

November 30, 2012

58.00

72338

68.97

25130139

2012 April 20, 2011

127.35 220199 December 20, 2011

48.30 11802 84.25 6890614

2011 October 21, 2010

165.20 187340 February 10, 2011

100.50 33685 125.00 32876611

2010 September 09, 2009

137.85 5263019 April 01, 2009

28.70 36251 88.60 101742535

* Average of daily closing prices Source: www.bseindia.com Year Ending March 31

NSE Date High

(`) Volume on date of High (No. of shares)

Date Low (`)


Average Price

for the Year / Period (`) *

Total Volume for the Year / Period (No. of Equity Shares)

April 1, 2012 to March 22 , 2013

January 30, 2013

121.70

5767173

November 30, 2012

57.05

261706

68.98

57446309

2012 April 20, 2011 127.15 399101 December 20, 2011

48.45 10143 84.24 14866800

2011 October 21, 2010 165.35 341423 February 10, 2011

100.55 65869 125.09 64447816

2010 September 09, 2009 138.25 2131017 April 01, 2009 28.80 78236 88.62 158802626

*- Average of daily closing prices


58

Source: www.nseindia.com 2) Monthly high and low prices on the Stock Exchanges for the six months preceding the

date of filing of the Placement Document. Month BSE

Date High (`)

Volume on date of High

(No. of shares)

Date Low (`)


Average Price

for the Month / Period (`) *

March 01, 2013 to March 22, 2013

March 21, 2013

80.05

40732

March 4, 2013

65.60

21329

74.78

February 2013 February 01, 2013 107.50 760193 February 28, 2013

69.95 31270 85.64

January 2013 January 30, 2013 121.75 2982241 January 11, 2013

63.90 47976 78.02

December 2012 December 20, 2012 69.60 894676 December 03, 2012

58.20 23748 62.55

November, 2012

November 07, 2012 63.00 63392 November 30, 2012

58.00 72338 60.56

October, 2012 October 08, 2012 67.35 115990 October 30, 2012

59.35 4566 63.92

September, 2012

September 28, 2012 64.00 42612 September 03, 2012

58.05 37814 60.41

*- Average of daily closing prices Source: www.bseindia.com Month NSE

Date High (`)

Volume on date of High

(No. of shares)

Date Low (`)


Average Price

for the Month / Period (`) *

March 01, 2013 to March 22, 2013

March 21, 2013

80.05

133483

March 4, 2013

65.85

39067

74.92

February 2013 February 01, 2013 107.35 1466353 February 28, 2013

70.30 87912 85.68

January 2013 January 30, 2013 121.70 5767173 January 11, 2013

63.95 98341 78.02

December 2012 December 20, 2012 70.20 2013361 December 03, 2012

58.15 67950 62.60

November, 2012

November 07, 2012 63.30 199841 November 30, 2012

57.05 261706 60.44

October, 2012 October 08, 2012 67.45 315374 October 30, 2012

59.55 14708 63.93

September, 2012

September 28, 2012 63.95 68637 September 03, 2012

57.95 73645 60.40

*- Average of daily closing prices Source: www.nseindia.com Notes


59

• In the above data provided, High, Low and Average prices are of the daily closing prices. • In case of two days with same closing price, the date with higher volume has been considered. 3) Market Price on the first working day following the Board Meeting approving the

Qualified Institution Placement i.e. on February 27, 2013: Date BSE NSE

Open

High

(`)

Low (`)

Close (`)

Traded Volume (No. of Shares)

Turnover

(` in Cr.)

Open

(`)

High

(`)

Low (`)

Close

(`)

Traded

Volume (No.

of Shares

)

Turnover

(` in Cr.)

February 27, 2013

77.10 77.10 70.25 72.40 48664 0.35 73.75 74.85 70.25 72.50 111395 0.81

Source: www.bseindia.com , www.nseindia.com 4) Volume of business transacted during the last six months on the Stock Exchanges.

Month BSE NSE Total Volume of

Securities Traded (No. of shares)

Total Value of Securities

Transacted

Total Volume of Securities Traded

(No. of shares)

Total Value of Securities

Transacted

(` In Cr.) (` In Cr.) March 01, 2013 to March 22, 2013

504388

3.84

1409102 10.77

February, 2013 4995854 48.18 10827026 103.74

January, 2013 10747050 110.04 25135594 254.66

December, 2012 2884563 19.03 6879742 45.37

November ,2012 378945 2.31 1321595 8.00

October 2012 508740 3.36 1319875 8.72

September, 2012 358703 2.19 819908 5.01

Total 20378243 188.95 46303740 425.5

Source: www.bseindia.com , www.nseindia.com


60

USE OF PROCEEDS The total gross proceeds of the Placement will be `160 crore. Subject to compliance with applicable laws and regulations, we intend to use the proceeds of the Placement to augment the long term resources for future expansion, to meet long term working capital requirement and to meet general corporate business purposes of the Company. In accordance with the policies set up by the Board of Directors of our Company and as permissible under applicable laws and government policies, the management of our Company will have the flexibility in deploying the proceeds received from this Placement. Pending utilization for the purposes described above, our Company intends to use the proceeds to temporarily invest in credit worthy instruments, including money market mutual funds and deposits with banks and corporate or park the proceeds in our cash credit accounts and, overdraft accounts. Such investments would be in accordance with the investment policies approved by the Board of Directors from time to time.


61

CAPITALISATION The following table shows our Company’s standalone capitalisation as at March 31, 2012. This table should be read in conjunction with our Company’s standalone financial statements as of March 31, 2012 and the related notes, the section "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and other financial statements and information contained in this Placement Document.

(` in crores) Standalone Capitalisation Statement As at March 31, 2012

Pre Placement Post Placement SHAREHOLDERS’ FUNDS Equity Share Capital 122.26 122.26Fresh issue for QIP - 20.00Reserves and Surplus 902.75 902.75Additional Share Premium on fresh issue for QIP - 140.00Total Shareholders’ Funds (A) 1025.01 1185.01 LOAN FUNDS Long Term Debt (B) 1971.06 1971.06Short Term Debt 214.57 214.57Any other Debt - -Total Debt (C) 2185.63 2185.63Total Capitalisation 3210.64 3370.64Total Debt / Equity Ratio (C/A) 2.13 1.84Total Long Term Debt / Equity Ratio (B/A) 1.923 1.66


62

DIVIDEND POLICY Under the Companies Act, an Indian company pays dividends upon a recommendation by its board of directors and approval by a majority of the shareholders at the annual general meeting. The declaration and payment of dividends, as recommended by the board of directors, will depend on a number of factors, including but not limited to the results of operations, capital requirements, general financial condition, contractual restrictions, applicable Indian legal restrictions and other factors considered relevant by the board of directors. Under the Companies Act, dividends may be paid out of profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves of previous financial years or out of both. The Board may also from time to time pay interim dividend. Our Company has not declared any dividends for the past three years. The amounts paid or not paid as dividends in the past are not necessarily indicative of the dividend policy of our Company or dividend amounts, if any, in the future. 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 of directors and subject to the approval of our shareholders. For a summary of certain Indian and United States federal tax consequences of dividend distributions to shareholders, see the section "Taxation". For a description of our regulation of dividends, see the section "Description of the Shares".


63

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our financial statements are prepared in conformity with Indian GAAP. Indian GAAP differs in certain significant respects from IFRS, US GAAP and other accounting principles and auditing standards in other countries with which prospective investors may be familiar. The degrees to which the financial statements included in the Placement Document will provide meaningful information, is dependent on the reader’s level of familiarity with Indian accounting practices, Indian GAAP, the Companies Act and the SEBI Regulations. Any reliance on the financial disclosures presented in the Placement Document by persons not familiar with these Indian practices, law and rules should be limited. We have not attempted to explain these differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on the financial data herein. Our actual results and the timing of selected events could differ materially from those anticipated in forward-looking statements contained in this discussion as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this Placement Document. See the section entitled "Forward Looking Statements". Our Financial Year ends on March 31 of each year, so all references to a particular "Financial Year" or "Fiscal" are to the 12-month period ended March 31 of that year. Overview Our Company is a producer of Cold Rolled Closed Annealed ("CRCA") steel and Galvanized Plain Steel ("GP"). Our Company is into the business of procuring hot rolled steel ("HR") and processing it into CR and further into GP and Colour Coated Coils. In galvanized coils we specialize in making ultra thin sheets. The excess capacity of CR which is not used for galvanizing is converted to value added grades in CRCA coils, cut to length sheets and also sold as full hard CR in the overseas markets. We have a annual installed production capacity of 7,50,000 MT, 90,000MT and 9,60,000 MT of Galavinsed steel, Colour Coated steel and Cold Rolled steel respectively We export our products to 147 countries in the world while our manufacturing operations are based in India. In Fiscal 2012, 24.03% of our total sales were from exports while the remaining 75.97% was from the domestic market. Our Company’s major customers are from the construction, automotive, consumer goods, material handling and general engineering industries. We have a wide and diversified customer base in various markets such as the USA, Australia, France, Germany, Greece and UK, amongst others. Our Company established the ‘Uttam Suraksha’ GC brand (Galvanised Corrugated Roofing Sheets) for the construction segment which is well recognised in Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka and Chattisgarh. Our Company's manufacturing facilities are located at Khopoli, in the state of Maharashtra, India, which is close to JNPT and Mumbai port. This provides our Company with easy access to imports and exports of raw materials and finished goods. A close proximity to these ports gives us an advantage of lower transportation costs. In Fiscal 2012 and 2011 and the nine month period ending December 31, 2012, our Company recorded standalone net revenues of `5171.60 crores, `5040.81 crores and `4,957.32 crores, respectively. Our Company recorded a standalone profit after tax in Fiscal 2012 and 2011 and the nine


64

month period ending December 31, 2012 of `77.96 crores, `76.77 crores and `33.36 crores, respectively. Our Company has received various EEPC Awards from the Ministry of Commerce and Industry, Government of India under various categories. KEY FACTORS AFFECTING OUR FINANCIAL CONDITION AND OUR RESULTS OF OPERATIONS • Our results of operations and performance; delays in the schedule for the development

projects and any resultant cost and time overruns caused by such delays; • supply and demand of steel, manufacturing, technology and financial services in India and in

the international markets generally; • our ability to successfully implement our strategy, growth and expansion plans; • changes in laws and regulations, or any interpretation thereof, that apply to our business; • changes in the value of the Rupee against major global currencies and other currency

fluctuation; • changes in the Indian and international interest rates; • any adverse outcome in the legal or regulatory proceedings in which we are involved; • changes in any global conditions and situations affecting India and the industries in which we

operate; • changes in political and economic conditions in India; • Volatility in the Indian and global securities market; • Changes in the estimates of our performance or recommendations by financial analysts; and • Adverse media reports on our Company or the Indian steel industry. SIGNIFICANT ACCOUNTING POLICIES A. On a Standalone Basis as on March 31, 2012 1. (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on a going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.


65

(c) Revenue Recognition:

The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

2. Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the

time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by ‘foreign exchange cover’ with banks are booked

at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at

the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances are treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange

Rate prevailing at the year end, and such gain / loss is considered as finance cost.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency

contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

3. Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as


66

accrued on date of realignment of realigned term debts and provided in the relevant financial year.

4. Employee Benefits:

(a) Short Term Employee Benefits All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

(b) Long Term Employee Benefits

(i) The Company has taken Group Gratuity Policy with the Life Insurance Corporation of India (LIC) for future payment of Gratuities. Any deficit in Plan Assets managed by LIC and as compared to the Actuarial Liability is recognized as a liability immediately.

(ii) Leave Encashment benefit shall be accrued at the year end.

5. The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-progress Pending capitalization under fixed asset.

(b) Interest on Loans is capitalized up to the date on which the asset is 'put to use’. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted / reimbursements.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

6. Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation. (b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies /

taxes. Depreciation on such assets is claimed on ‘reduced’ cost. (c) Depreciation on fixed assets has been provided on straight line method at the rates

specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is 'Put to Use’.

1.06A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets


67

to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

7. Investment:

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

8. Inventories: (a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method) (ii) Work-in-Process- At Material Cost plus labour and other appropriate

portion of production and administrative overheads and depreciation.

(iii) Finished Goods- At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc.- At Cost (v) Arising’s- At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded

Warehouses. (ii) Finished goods include stock-in-transit at Docks awaiting Shipment and

stocks with consignees. (iii) Inventory includes goods lying with third party / job workers / consignees.

9. Provision for Taxation

Income tax expense is the aggregate amount of Current tax, Wealth Tax and Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act. Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

10. Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 ‘Earning per Share’ issued by the ICAI. Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

11. Accounting for Provisions, Contingent liabilities and Contingent Assets (a) In conformity with AS-29, ‘Provisions, Contingent Liabilities and Contingent

Assets’, issued by the Institute of Chartered Accountants of India. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be


68

required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of

which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised

because: 1) It is not probable that an outflow of resources embodying economic

benefits will be required to settle the obligation; or 2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may

result in the recognition of income that may never be realised.

12. Export entitlements / obligations: (a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports

as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Entitlement Pass Book Scheme (DEPB) and

Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head: (i) Sales: Export incentives (ii) Raw material consumed (iii) Stores and Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to

‘Accounting Standard 9 on Revenue Recognition’, (AS-9) with reference to certainty of collectability of such export incentives.

13. (a) Sales are recognised at the time of despatch to customers / endorsement of documents

and includes Central Excise Duty; as may be applicable. (b) Finished goods captively consumed as packing materials are excluded from sales.

Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

14. Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax

(MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.


69

15. Cold Rolled (C.R.) Coils Production excludes C.R. baby coils produced. 16. Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

17. Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when

goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities. (i) Inventory valuation

1. Finished goods in the plant at the close of the year are valued inclusive of excise duty.

2. Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise

Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

18. Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at year end are appropriately accounted along with material cost in Profit and Loss Account.

19. Inter Unit transactions are eliminated to the extent possible. B. On a Consolidated Basis as on March 31, 2012 1. Accounting Policies:

Most of the accounting policies of the holding Company and that of the subsidiary’s are similar.

2. Principal for Consolidation:

The consolidated financial statements relate to Uttam Galva Steels Limited and its subsidiary companies. The consolidated financial statements have been prepared on following basic: (a) The financial statement of the company and its subsidiary companies have been

consolidated on a line-by-line basis by adding together the book value of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transaction resulting in unrealized profit and losses as per accounting standard 21-"consolidated financial statement" notified by companies (accounting standard) rules, 2006.

(b) In case of foreign subsidiaries, being non integral operation, revenue items are consolidated at the average rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of the year. Any exchange difference


70

arising on consolidation is recognised in the foreign currency translation reserve. (c) The difference between the cost of investments in the subsidiaries and joint ventures,

and the company's share of net assets at the time of acquisition of shares in subsidiaries and joint ventures is recognised in financial statement as Goodwill or Capital Reserve as the case may be.

(d) Interest in joint venture have been accounted by using the proportionate consolidation method as per accounting standard 27 –"financial reporting of interest in joint venture " notified by companies(accounting standards) Rules 2006.

(e) The financial statement of the subsidiaries, associates and joint ventures consolidated are drawn up to the same reporting date as that of the company i.e.31st March, 2012.

3. The list of Subsidiary Companies & Joint Venture, which forms part of Consolidation and the

company’s holdings therein are as under:

Sr. No.

Name of the Company Country of Incorporation

% of Holding

A. SUBSIDIARIES 1. Uttam Galva Holdings Limited Dubai 100 % 2. Ferro Zinc International FZE. Dubai 100 % 3. Atlantis International Services Limited B.V.I 100 % 4 Uttam Galva Steels , Netherlands BV Netherland 100% 5 Neelraj International Trade Limited B.V.I 100% B. JOINT VENTURE 1. Texturing Technology Private Limited (TTPL) India 50 % 2 Moira Madhujore Coal Limited India 28.74% 3.1. All companies under consolidation, depreciation is charged on Straight Line Method (SLM),

where as in case of TTPL depreciation of `1.19 Crore is charged on Written Down Value Method (WDV), which is 0.93 % of total depreciation.

4. The audited financial statements of foreign subsidiaries have been prepared in accordance

with the Generally Accepted Accounting Principle of its Country of Incorporation or International Financial Reporting Standards.

5. Previous Year's figures are regrouped and rearranged wherever necessary.


71

SUMMARY OF OUR CONSOLIDATED RESULTS OF OPERATIONS The table below sets forth our Company’s consolidated profit and loss information for the Financial Year ended March 31, 2012 and 2011:

(` in crores)

Particulars March 31, 2012

% of Revenue

from Operation

Growth in 2012 from 2011

March 31, 2011

% of Revenue

from Operation

CONTINUING OPERATIONS

Revenue from Operations (Gross)

5,951.16 105.38% 11.66% 5,329.84 105.73%

Less: Excise Duty 303.78 5.38% 5.10% 289.03 5.73%Revenue from Operations (Net)

5,647.38 100.00% 12.03% 5,040.81 100.00%

Expenses (a) Cost of Goods Sold 4,572.12 80.96% 11.27% 4,109.02 81.51%(b) Employee Benefits Expense

67.50 1.20% 8.87% 62.00 1.23%

(c) Other Expenses 488.34 8.65% 16.07% 420.71 8.35%Total 5,127.96 90.80% 11.68% 4,591.73 91.09%Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)

519.42 9.20% 15.66% 449.08 8.91%

Finance Costs 261.93 4.64% 20.01% 218.26 4.33%Depreciation and Amortisation Expense

128.57 2.28% 6.45% 120.78 2.40%

Other Income 7.62 0.13% 100.06% 3.81 0.08%Profit Before Tax (PBT) 136.54 2.42% 19.93% 113.85 2.26%Tax Expense: Current Tax 28.42 0.50% 30.96% 21.70 0.43% MAT Credit (0.11) 0.00% -- - 0.00% Wealth Tax 0.05 0.00% -4.73% 0.05 0.00% Net Current Tax 28.36 0.50% 30.38% 21.75 0.43% Deferred Tax 35.08 0.62% 127.00% 15.46 0.31%Total 63.44 1.12% 70.49% 37.21 0.74%Profit for the Year 73.10 1.29% -4.62% 76.64 1.52% Description of Income and Expenditure Income Our total income consists of revenue from operations

Income from Operations: Income from operations comprises income from activities that are directly related to our main business and share of income from subsidiaries and jointly controlled entities. Revenues are from the sale of the following products: a) Galvanised Coils / Sheets / Slit Coils; ii) Colour Coated Coils / Sheets / Slit Coils and iii) Cold Rolled Coils / Sheets / Slit Coils.


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Expenditure Our total expenditure consists of the following items: • Cost of Goods Sold; • Employee Benefit Expenses • Other Expenses • Financial Cost; and • Depreciation & Amortisation Expenses Cost of Goods sold Cost of goods sold includes cost of raw material consumed, purchase of finished goods and direct expenses. Employee Benefit Expense Employee benefit expense includes expenses such as directors remuneration, salary to employees, bonus, gratuity and staff welfare expenses. Other Expenses Other expenses incurred by our Company primarily includes expenses such as rent, power and fuel, advertisement and sales promotion, packing material, repair maintenance, security expenses, travelling and conveyance, legal and professional fees and printing and stationery amongst others. Finance Cost Finance charges include interest on term loans, working capital loan, vehicle loans, interest on unsecured loan and bank charges. Depreciation and Amortisation Depreciation costs are the depreciation charges on our capital expenditure. Our fixed assets primarily includes plant and machinery, building, housing complex, such as vehicles, leasehold improvements, electrical installations, furniture and fixtures, office equipment, computer software. Results of Operations Fiscal 2012 compared with Fiscal 2011 Total Income Income from operations for Fiscal 2012 was `5,647.38 crores in comparison to `5,040.81crores for Fiscal 2011 which is an increase of 12.03%. This increase can be primarily attributed to an increase in the volume of finished steel products sold during Fiscal 2012 to 571953 MT which was an increase of 2.8% of total volume of finished steel products sold in Fiscal 2011. Additionally, our Company has successfully commissioned a power plant of 60 Megawatt (2 x 30 MW) capacity for its captive use. It commenced commercial production of the power plant from March 1, 2012. The power plant is currently running at full capacity and the steam and power generated is consumed by our Company to the extent required and the balance power is sold. For Fiscal 2012 we had revenues of 66.92 crores from sale of power.


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Cost of Goods Sold The cost of goods sold expenses increased in Fiscal 2012 to `4,572.12 crores from `4,109.02 crores in Fiscal 2011, an increase of 11.27%. This increase is primarily attributable to corresponding increase in operations. Further, as a percentage of income from operations the cost of goods sold stood at 80.96% in Fiscal 2012 which was a marginal decrease from 81.51% in Fiscal 2011. This decrease was due to various cost efficiency measures taken by the company including commencement of power plant. Personnel Expenses Employment cost was `67.50 crores in Fiscal 2012 compared to `62.00 crores in Fiscal 2011 an increase of 8.87%. The increase in cost reflects a general increase in salaries and wages. Other Expenses Other expenses are `488.34 crores in Fiscal 2012 as against `420.71 crores in Fiscal 2011, an increase of 16.07%. The breakdown of the other expenses is set forth below:

(` in crores)

Particulars March 31, 2012

% of Revenue from Operation

March 31, 2011

% of Revenue from Operation

Manufacturing Expenses 292.85 5.19% 221.65 4.40% Selling & Distribution Expenses 150.10 2.66% 155.32 3.08%

Administration Expenses 45.39 0.80% 43.74 0.87% Total Others Expenses 488.34 8.65% 420.71 8.35%

EBITDA EBITDA increased by 15.66%, i.e. `519.42 crores in Fiscal 2012 from `440.08 crores in Fiscal 2011. The EBITDA margin increased to 9.20% of our revenue from operation in Fiscal 2012 as against 8.91% in Fiscal 2011 primarily due to a decrease in cost of goods sold. Finance Expenses Interest and finance expenses for Fiscal 2012 was `261.93 crores as compared to `218.26 crores in Fiscal 2011, an absolute increase of 20.01%. The increase was primarily due to bank charges and commission, Bank commission, Factoring charges and increase in working capital limits. Depreciation Depreciation for Fiscal 2012 was `128.57 crores as compared to `120.78 crores in the previous year. The increase in depreciation in Fiscal 2012 of 6.45% over Fiscal 2011 is due to the purchase of new plant and machinery, factory building and office premises and also from the commencement of the power plant. As a percentage to revenue from operations it has reduced from 2.40% to 2.28% since the last fiscal. Profit Before Tax and Profit After Tax Our profit before tax increased by `22.69 crores, an increase of 19.93% from `113.85 crores, in Fiscal 2011 to `136.54 crores in Fiscal 2012. The profit before tax margins have marginally increased from


74

2.26% in Financial Year 2011 to 2.42% in Fiscal 2012. Our profit after tax decreased by `3.54 crores or 4.62% from `76.64 crores in Fiscal 2011 to `73.10 crores in Fiscal 2012. LIQUIDITY AND CAPITAL RESOURCES Cash Flows The table below summarizes our Company’s cash flow statements on a consolidated basis:

(` in crores) Particulars Financial Year 2012 Financial Year

2011 Net cash generated from / (used in) operating activities 623.68 539.52Net cash (used in) investing activities (617.62) (398.58)Net cash generated from financing activity 117.76 (233.21)Net Increase / (decrease) in cash and cash equivalents at the end of the year

123.82 (92.27)

Operating Activities Net cash generated from operating activities was `623.68 crores for Fiscal 2012. Net cash generated from operating activities consisted mainly of cash generated on account of net profit before tax and extraordinary items of `136.54 crores and an outflow of `116.65 crores on account of working capital changes. Further, we have had a significant decrease in inventories from `(719.89) crores in Fiscal 2011 to `280.88 crores in Fiscal 2012 and a significant increase in loans and advances given from `(321.40) crores in Fiscal 2011 to `(211.20) crores as of Fiscal 2012. In Fiscal 2011, net cash generated in operating activities was `539.52 crores. Net cash used in operating activities consisted mainly of net profit before tax of `113.85 crores and an inflow of `119.76 crores on account of working capital changes. Investing Activities Net cash used in investing activities was `(617.62) crores for Fiscal 2012, which primarily included `618.55 crores towards additions to fixed assets including capital work in progress. Net cash used in investing activities was `(398.58) crores for the Fiscal 2011, which primarily included `402.17 crores towards purchase of fixed assets. Financing Activities Net cash generated from financing activities for Fiscal 2012 was `117.76 crores which primarily includes proceeds from long term borrowings of `516.57 crores. There was an outflow towards finance charges amounting to `253.40 crores. Net cash generated from financing activities for the Fiscal 2011 was `(233.21) crores which primarily includes proceeds from long term borrowings of `322.49 crores and repayment of deferred sales tax loan/inter corporate deposits/unsecured loans of `248.27 crores and an outflow of `179.64 crores towards finance charges.


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Select Balance Sheet items on a consolidated basis: The below is the table showing selected items of our balance sheet as on dates indicated

(` in crores) Particulars As at March 31, 2012 As at March 31, 2011

Non Current Assets 3,387.58 2,886.94Current Assets 2,574.38 2,520.27Non Current Liabilities 2,460.91 2,000.04Current Liabilities 2,495.48 2,456.08Shareholders’ Funds 1,006.71 951.68 Non Current Assets Non current assets includes fixed assets, non current investments, long term loans and advances and other not currents assets. Further our fixed assets include tangible assets, capital work-in process and intangible assets. Our total fixed assets were `3,285.45 crores and `2,795.43 crores as at Fiscal 2012 and Fiscal 2011 respectively. The increase in fixed assets is due to the purchase of new fixed assets and capitalization of captive power plant. The breakdown of the fixed asset is set forth below:

(` in crores)

Particulars As at March 31, 2012

As at March 31, 2011

Tangible Assets 2,906.15 1,827.94Capital Work-in-Progress 378.69 967.49Intangible assets under development 0.61 --

Total 3,285.45 2,795.43 Our non current investments, long term loans and advances and other not currents assets were `5.58 crores, `72.66 crores and `23.89 crores in Fiscal 2012 and `3.59 crores, `65.92 crores, `22.00 crores in Fiscal 2011 respectively. Current assets Current assets include inventories, trade receivable, cash and cash equivalents and short term loans and advances and were `2,574.38 crores and `2,520.27 crores in Fiscal 2012 and Fiscal 2011 respectively. The breakdown of the current assets is set forth below:


Inventories 1,085.16 1,366.03Trade Receivables 638.18 723.60 Cash and Cash equivalents 193.46 69.64Short Term Loans and Advances

657.58 361.00

Total 2,574.38 2,520.27 Non Current Liabilities Our non current liabilities were `2,460.91 crores and `2,000.04 crores in Fiscal 2012 and Fiscal 2011 respectively. Our non current liabilities include long term borrowing, deffered tax liabilities, other


76

long term liabilities, long term provisions. The breakdown of the non current liabilities is set forth below:


Long Term Borrowings 2,229.12 1,901.43 Deferred Tax Liabilities 122.28 87.20Other Long Term Liabilities 97.96 0.00 Long Term Provisions 11.55 11.41Total 2,460.91 2,000.04 Current Liabilities Our non current liabilities were `2,495.48 crores and `2,456.08 crores in Fiscal 2012 and Fiscal 2011 respectively. Our current liabilities include short term borrowing, trade payable, other current liabilities and short term provision. The breakdown of the current liabilities is set forth below:


Short Term Borrowings 397.58 257.39 Trade Payables 1,206.61 1,588.10 Other Current Liabilities 874.85 615.97 Short Term Provisions 16.44 (5.38)Total 2,495.48 2,456.08 Shareholders Funds Our shareholders funds were `1,006.71 crores and `951.68 for Fiscal 2012 and Fiscal 2011 respectively. The breakdown of the shareholders funds is set forth below:


Share Capital 122.26 122.26Reserves and Surplus 884.45 829.42Total 1,006.71 951.68 Indebtedness Our total borrowings have increased from `2797.06 crores in Fiscal 2012 from `2,273.59 crores in Fiscal 2011 due to increases in secured long term borrowing from banks and financial institutions of `1942.03 crores in Fiscal 2012 from `1677.65 crores as of previous year and increased in other unsecured long term borrowing `257.45 crores in Fiscal 2012 from `138.55 crores in Fiscal 2011 and increases in short term borrowing of `397.58 crores in Fiscal 2012 from `257.39 crores in Fiscal 2011. Pursuant to certain of our financing agreements, we have some restrictive covenants which require us to obtain consent of our lenders, for further details please refer the section entitled ‘Risk Factors’.


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OFF-BALANCE SHEET LIABILITIES The following table sets forth contingent liabilities of our Company on a consolidated basis, not provided for, as at March 31, 2012 and March 31, 2011:

(` in crores) Sr. No.

Particulars As at March 31, 2012

As at March 31, 2011

(a) Letter for Credit Outstanding 698.58 591.93(b) Bank Guarantees 130.25 92.54

(c) Estimated amount of contract remaining to be execute on capital account and not provided for 126.02 60.04


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QUARTERLY RESULTS The table below sets forth our Company’s unaudited financial results (limited reviewed) for the nine month ended December 31, 2012 and December 31, 2011 on a standalone basis:

(` in crores)

Particulars

Nine Month Period

December 31, 2012

% of Revenue

from Operation

Growth in Dec-12

from Dec-11

Nine Month Period

December 31, 2011

% of Revenue

from Operation

CONTINUING OPERATIONS Revenue from Operations (Gross) 5,235.26 105.61% 25.96% 4,156.24 105.75%Less: Excise Duty 277.94 5.61% 22.92% 226.11 5.75% Revenue from Operations (Net) 4,957.32 100.00% 26.14% 3,930.12 100.00% Expenses (a) Cost of Materials Consumed 2,747.30 55.42% 14.62% 2,396.90 60.99% (b) Purchase of Traded Goods 1,424.06 28.73% 150.85% 567.70 14.44% (c) Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade

(152.49) -3.08% -156.01% 272.24 6.93%

(d) Employee Benefits Expense 57.44 1.16% 18.41% 48.51 1.23% (e) Other Expenses 438.40 8.84% 42.88% 306.84 7.81% Total 4,514.71 91.07% 25.68% 3,592.19 91.40% Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)

442.61 8.93% 30.97% 337.93 8.60%

Finance Costs 237.77 4.80% 25.31% 189.75 4.83% Depreciation and Amortisation Expense 137.21 2.77% 46.79% 93.47 2.38%

Other Income 4.78 0.10% 227.51% 1.46 0.04% Profit Before Tax (PBT) 72.41 1.46% 28.90% 56.17 1.43% Tax Expense: Current Tax 14.54 0.29% 117.95% 6.67 0.17% Deferred Tax 24.51 0.49% 112.05% 11.56 0.29% Total 39.05 0.79% 114.21% 18.23 0.46% Profit for the Year 33.36 0.67% -12.09% 37.94 0.97%


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INDUSTRY OVERVIEW The information set forth in this section is based on publicly available information, which has not been independently verified by our Company or the GC-BRLM to the Placement, or any of their respective affiliates and advisors. None of us, the GC-BRLM or any other person connected with the Placement has verified this information. Industry sources and publications generally state that the report has been published for general information purposes and that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and accordingly, investment decisions should not be based on such information. Several reports also expressly disclaim legal responsibility and liability of the person/ organisation preparing the report for any loss or damage resulting from the contents of such reports. Accordingly, we and the GC-BRLM 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. Overview of the Indian Economy India’s population is approximately 1.2 billion, second only to china. India had an estimated gross domestic product (the "GDP") of approximately US$4.4 trillion 2011 (based on purchasing power parity) which made it the fourth largest national economy in the world after the United States, China and Japan (excluding the European Union). The Indian economy has averaged a growth rate of over 8.0% during the five year period between Fiscal 2007 and Fiscal 2011. In Fiscal 2010, the Indian economy rebounded robustly from the global financial crisis in large part because of strong domestic demand and growth exceeded 8.0% year-on-year in real terms. (Source: The World Factbook 2012. Washington D.C.: Central Intelligence Agency 2012) The Indian economy has been adversely affected by some spill-over effects of the global economic slowdown coupled with domestic pressures. In Fiscal 2012, the Indian economy registered a growth rate of 6.5% (GDP at factor cost), down from 8.4% in Fiscal 2011. The loss of growth momentum that started in Fiscal 2012 has extended into Fiscal 2013, though the pace of deceleration slowed in the first quarter. GDP at Factor Cost had decreased from 8.0% in the first quarter of Fiscal 2012 to 5.3% in the second quarter of Fiscal 2013. This was mainly driven by the growth in construction, community social and personal services and Mining and quarrying. During 2012-13 (April-November) industrial growth slowed to 1.0 per cent. Barring a spike in October 2012 due to a favorable base effect and festival-related pick-up in production, growth was disappointing across sectors. Growth in eight core infrastructure industries decelerated to 3.5 per cent during April-November 2012 compared to 4.8 per cent during the corresponding period of the previous year. According to the RBI, the expected GDP growth rate for Fiscal 2013 is approximately 5.8%. (Source: RBI, Macroeconomic and Monetary Developments: third Quarter Review 2012-13 (the RBI Q3 2013 Macroeconomic and Monetary Review). The Reserve Bank’s 60th round of the Industrial Outlook Survey (http://www.rbi.org.in/IOS60) conducted during third quarter of 2012-13 showed marginal improvement in the business sentiments of the manufacturing sector. Financing from external commercial borrowings (ECB) and foreign currency convertible bonds (FCCB) also showed a small increase in the total cost of projects sanctioned in second quarter of 2012-13. However, the amount of sanctioned assistance was much lower than during the corresponding quarter of the previous year. The rupee had recovered in September 2012 due to the announcement of various measures of reform by the government and increasing global risk appetite. However, challenged by concerns relating to high current account


80

deficit and uncertainty regarding domestic growth, the rupee again showed a downtrend during October and November 2012 and subsequently remained range bound (`54.2–55.1 per US dollar) in December 2012. (Source: RBI, Macroeconomic and Monetary Developments: third Quarter Review 2012-13 (the RBI Q3 2013 Macroeconomic and Monetary Review)´ The Global Steel Industry Steel will probably remain the world’s one of the most important engineering materials for a long time to come. With strong backward and forward linkages, the steel industry is an engine of economic growth and a symbol of economic prosperity. Moreover, steel is vital to the nation’s economic security as it is extensively used in strategic areas such as defence, power, atomic energy, and in creation of social and economic infrastructure of the country. Steel is a cornerstone and also one of the key drivers for the world’s economy. Steel is at the core of the green economy, in which economic growth and environmental responsibility work hand in hand. World crude steel production reached 1,548 megatonnes (MT) for Fiscal 2012, up by 1.2% compared to 2011. The growth came mainly from Asia and North America while crude steel production in the EU (27) and South America decreased in 2012 compared to 2011. n December 2012, world crude steel production for the 62 countries reporting to the World Steel Association (Worldsteel) was 121.3 MT, an increase of 2.4% compared to December 2011. The crude steel capacity utilisation ratio of the 62 countries in December 2012 declined to 73.2% compared to 76.1% in November 2012. The average capacity utilization ratio in 2012 was 78.8% compared to 80.7% in 2011. (source: www.worldsteel.org) In December 2012, world crude steel production for the 62 countries reporting to the World Steel Association was 121.3 million tonnes, an increase of 2.4% compared to December 2011. The crude steel capacity utilisation ratio of the 62 countries in December 2012 declined to 73.2% compared to 76.1% in November 2012. The average capacity utilization ratio in 2012 was 78.8% compared to 80.7% in 2011. The details of the top ten steel producers of the world are provided in the table below: Rank Country 2012

(Million tonnes) 2011

(Million tonnes) 2012/2011(%)

1 China 716.5 694.8 3.1 2 Japan 107.2 107.6 -0.3 3 United States 88.6 86.4 2.5 4 India 76.7 73.6 4.3 5 Russia 70.6 68.9 2.5 6 South Korea 69.3 68.5 1.2 7 Germany 42.7 44.3 -3.7 8 Turkey 35.9 34.1 5.2 9 Brazil 34.7 35.2 -1.5 10 Ukraine 32.9 35.3 -6.9 Indian Steel Industry Overview Even though steel is a freely traded commodity, large scale dependence of a growing economy like India on imported steel may make the economy vulnerable to uncertainty in global supply, export policies of different countries and volatility in international prices. For India, the case for domestic


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production of steel is even stronger due to indigenous availability of resources and a need to minimize strain on its current account balance. In fact, the revealed comparative advantages of labour and raw material have the potential of making India a leading exporter of steel in the world. (Source: Draft report for the National Steel Policy 2012) Besides achieving the rank of the 4th largest global crude steel producer in 2011 (provisional), India has also made a mark globally in the production of sponge iron/direct reduced iron (DRI). Courtesy a mushrooming growth of coal-based sponge iron units in key mineral-rich pockets of the country, domestic production of sponge iron increased rapidly, enabling the country to achieve and maintain the number one position in the global market. (Source: Annual Report, Ministry of Steel, 2011-12) The production of finished steel (Including alloy and non alloy) in India remained increased from 56.08 Million Tonnes in Fiscal 2008 to 66.01 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the production of finished steel in India was 52.06 Million Tonnes. From Fiscal 2008 to Fiscal 2011, production of finished steel in India grew at a CAGR of 5.59%.

Production of Total Finished Steel in India

Figures in Million Tonnes (Source: Ministry of Steel (Annual Report 2011-2012)) The real consumption of total finished steel in India remained increased from 52.13 Million Tonnes in Fiscal 2008 to 65.61 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the real consumption of total finished steel in India was 50.87 Million Tonnes. From Fiscal 2008 to Fiscal 2011, real consumption of total finished steel in India grew at a CAGR of 7.97%.

Real Consumption of Total Finished Steel

Figures in Million Tonnes

56.08 57.1660.62

66.01

52.06

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 Upto Dec‐11

52.13 52.35

59.3465.61

50.87

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00



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(Source: Ministry of Steel (Annual Report 2011-2012)) The production of CR Coils/Sheets/Strips in India increased from 4.44 Million Tonnes in Fiscal 2008 to 5.76 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the production of CR Coils/Sheets/Strips in India was 4.29 Million Tonnes. From Fiscal 2008 to Fiscal 2011, production of CR Coils/Sheets/Strips steel in India grew at a CAGR of 9.08%.

Production of CR Coils/Sheets/Strips

Figures in Million Tonnes (Source: Ministry of Steel (Annual Report 2011-2012))

Import and Export CR Coils/Sheets/Strips in India

Figures in ‘000 Tonnes (Source: Ministry of Steel (Annual Report 2011-2012)) The production of GP/GC sheets in India remained increased from 4.38 Million Tonnes in Fiscal 2008 to 5.60 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the production of GP/GC Sheets in India was 4.43 Million Tonnes. From Fiscal 2008 to Fiscal 2011, production of GP/GC Sheets in India grew at a CAGR of 8.50%.

4.44 4.62

5.91 5.76

4.29

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00


821710

892

1,126 1,155

510

341 345283

210

0

200

400

600

800

1,000

1,200

1,400


Import Export


83

Production of GP/GC Sheets in India

Figures in Million.Tonnes (Source: Ministry of Steel (Annual Report 2011-2012))

Import and Export of GP/GC Sheets in India

Figures in ‘000.Tonnes (Source: Ministry of Steel (Annual Report 2011-2012)) In 2010 India’s per capita consumption of steel was only 51.7 Kgs as against the world average of 202.7 kgs. A massive investment to the tune of $ 1 trillion dollars has been envisaged during the Twelfth five year plan in the infrastructure sector. Besides, there is a greater emphasis on the growth of the manufacturing sector in India. This augurs well for expansion of the base of steel consumption in the economy. A rough estimate of incremental demand for steel in the country works out approximately to 40 million tonnes in infrastructure alone. (Source: Report of the working group on steel industry for the Twelfth Five Year Plan)

4.38 4.55

5.62 5.60

4.43

0.00

1.00

2.00

3.00

4.00

5.00

6.00


2,0261,849

1,287 1,250

939

268 294 292 331 264

0

500

1,000

1,500

2,000

2,500


Export Import


84

Recent Growth Rates of Production of Selected Steel Consuming Industry Groups:

(Source: Report of the Working Group on Steel Industry for the Twelfth Five Year Plan (2012 – 2017), Ministry of Steel) The National Steel Policy had set a production target 110 million tonnes to be achieved by 2019-20. The Indian steel industry may achieve double digit growth in consumption and surpass this production target by 2016-17 well ahead of the target date. An assessment of assessment of finished steel of production has been worked out at 115.3 million tonnes in 2016-17. (Source: Report of the working group on steel industry for the Twelfth Five Year Plan) Domestic Scenario In spite of being one of the largest producers of steel in the world, India has been lagging behind other major steel producing countries in terms of intensity of steel usage in overall economic activities (i.e., per unit of GDP) or per capita consumption of steel. There is a tremendous potential for improvement in the domestic steel consumption given the economy‘s large untapped markets especially in rural areas. This is reflected in the steady rise in consumption levels over the last few years at a rate faster than the world average growth rate. (Source: Annual Report, Ministry of Steel, 2011-12) For the domestic steel industry, the 10th five year Plan (2002-07) was a period of fast-paced growth with significant increases in both steel production and consumption. Therefore, business expectations at the time of formulation of the 11th plan (2007-12) were largely optimistic and this was justified in the performance of the industry in the initial years of the plan period. In fact, the first year of the plan i.e. 2007-08 had been a year of high growth for the industry. However, with onset of the global economic downturn the same pace could not be maintained in the second year i.e. 2008-09. Like all other manufacturing industries, steel making is also largely market driven and therefore was affected directly by the adverse global market conditions. Fortunately, the sector was able to contain the rate of deceleration thanks to the timely policy interventions and counter-cyclical stimulus of fiscal and monetary packages announced by the government and more importantly by the inherent stability of the Indian economy itself. As a result, by the beginning of the third year i.e. 2009-10 there were signs of recovery with stable and strong growth rates in both steel production and consumption. The growth rates have, since then, remained steady and over the last two years i.e. since 2009-10, have matched the pre-crisis levels in both production and consumption with simultaneous acceleration in capacity additions.


85

As per the report of the Working Group on Steel for the 12th Five Year Plan, there exist many factors which carry the potential of raising the per capita steel consumption in the country, currently estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others. The World Steel Association, which has been monitoring production, consumption, etc of steel industry in each country since the 1980‘s, also projects short-range outlook for steel at regular intervals. These projections are inclusive of demand for alloys and stainless steel and take into account contemporary developments affecting steel demand. A look at the data provided by JPC shows that the consumption of alloys and stainless steel has been hovering between 3 and 3.5MT over the past few years. For projecting total demand by the end of the 12th Five Year Plan, the Working Group decided to add 5 Million Tonnes of alloy and stainless steel (phased progressively year-wise over the entire period) to the demand for finished carbon steel projected for the terminal year 2016-17. Products Steel is an iron based mixture containing two or more metallic and/or non metallic elements usually dissolving into each other when molten. Since it is an iron based alloy as per its end use requirement other than iron it may contain one or more other elements such as carbon, manganese, silicon, nickel, lead, copper, chromium, etc. For example, stainless steel (a type of steel) mainly contains chromium that is normally more than 10.5 percent with/without nickel or other alloying elements. Steel is produced using Steel Melting Shop that includes converter, open hearth furnace, electric arc furnace and electric induction furnace. There are broadly two types of steel according to its composition: alloy steel and non-alloy steel. Alloying steel is produced using alloying elements like manganese, silicon, nickel, chromium, etc. Non-alloy steel has no alloying component in it except that are normally present such as carbon. Non-alloy steel is mainly of three types viz. mild steel (contains up to 0.3% carbon), medium steel (contains between 0.3-0.6% carbon) and high steel (contains more than 0.6% carbon). All types of steel other than mild steel are called special steel. It is mainly because a special care is taken in order to maintain particular level of chemical composition in such steel. This process gives different properties to the steel according to its composition. In India, non-alloying steel constitutes about 95 percent of total finished steel production, and mild steel has large share in it. (Source: Based on the "Glossary of Terms/ Definitions commonly used in Iron & Steel Industry" by Ministry of Steel, Government of India. http://steel.nic.in/Glossary-I.pdf)

HR and CR Steel Industry


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Plate, HR Coils, Pipes Plate consumption went up by 22% and 24% in 2006-07 and 2007-08, respectively. Subsequently, the growth rates came down steeply due to tardy growth in ship building activity and delayed commencement of power projects - both Thermal and Hydel. However, oil and gas sector is poised for high growth because of which demand for API plates is increasing. Also pre-fabricated structural segment is exhibiting good growth potential. Taking into account all these factors, an annual average growth rate of 7.5% has been adopted for projecting future consumption of plates (against 6% observed in the past). Consumption of HR coils has grown by 7.5% annually in the past 6 years driven primarily by a 9.7% growth in Manufacturing IIP. The Government has come out with a new Manufacturing Policy aimed at creating conditions necessary to enable India‘s manufacturing sector to enhance its share in GDP from the current 16% to 25% and to achieve a growth of 11 – 12% in the coming years. Keeping these initiatives in view, a marginally higher growth rate of 9% has been assumed as against the observed growth rate of 7.5% in the past 5 years. Consumption of pipes went up by 32% in 2010-11. Prior to this quantum increase in the course of a single year, consumption of pipes declined by 15% in 2009-10 after growing by 15% and 14% in the two preceding years of 2007-08 and 2008-09, respectively. Oil and Gas sector is the major user of pipes which is growing at an average rate of 15 – 18 %. Keeping in view the massive potential in oil & gas sector, an annual average growth rate of 12% has been adopted for projecting the demand for pipes over the 12th Plan period. (Source: Report of the working group on steel industry for the Twelfth Five Year Plan) Hot Rolling Technology Hot strip rolling Several state-of-the-art rolling mills have been set up by the Indian steel plants and others are in the process of acquiring such mills. Some plants are practicing latest techniques like Hot Charging of Slabs, though partially Compact Strip Processing etc in hot rolling areas and reaping benefits in terms of productivity and energy conservation. Schedule-free rolling, high pressure descalers, AWC (Automatic Width Control), Use of HSS rolls, Hydraulically controlled AGC for gauge accuracy, Finishing stands with level-2 automation, Roll cross pair, Edge pre-heaters, Ultra Fast Cooling in ROT and edge masking system are other developments designed to improve the productivity, quality and rolling efficiency. Improvement in heating efficiency and reduction in fuel consumption in reheat furnaces can be achieved by installation of HEC regenerative burner, which also has a favourable effect on CO2 emission. Hot Finishing Facility The hot rolled steel requirements of automotive customers are shifting to high strength steels with wider and thinner sections. Flatness and surface quality becomes extremely important when thin gauge hot rolled sheets replace cold rolled steels. Thin gauges (2 mm) and soft grades are prone to coil breaks and edge waviness. Hot finishing facility such as skin pass mill is required to correct these problems and also provide the following benefits: • Opportunity for inspection and removal / rectification of defective portions. • Parting of coil as when required. • Improving the coil winding, when it is telescopic.


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Cold rolling and finishing Tandem Mill To improve the gauge consistency and shape, work roll bending, CVC crown, intermediate roll shifting, Feedback & Feed forward gauge control, Hydraulically operated AGC, sophisticated X Ray gauges and Level-2 automation system have been introduced. Most of the above have been adopted by the Steel Producers, who supply steel for high-end applications. To improve the overall yield and reduce scrap, PLTCM (pickling line tandem cold mill) has been installed. Producers supplying steel for surface critical automotive and appliance applications may adopt the PLTCM concept to derive the benefits of improved yield. Though some of the older plants are still operating with sulphuric acid pickling, most of the newer plants have adopted more efficient hydrochloric acid pickling. Other developments in the Pickling area are Tension Levelers (to loosen the scale for faster pickling), shallow / fully granite blocks, turbo pickling, acid less pickling, Acid Regeneration System, Auto Inspection etc. These processes facilitate quality and improved productivity Continuous annealing Batch annealing process (BAF) presently employed in Indian mills has limitation in terms of productivity, yield and production of high strength steel grades. Besides, the batch annealing process introduces certain defects, which reduce the overall yield. To address these limitations of BAF, Japanese mills developed the continuous annealing process in the 70‘s. The Continuous Annealing Technology has spread worldwide because of its inherent advantages vis-à-vis the BAF in terms of higher yield, productivity and ability to produce high strength grades. These benefits are the main drivers to switch from BAF to Continuous Annealing Lines.

Galvanized Flat Steel

Hot Rolled Steel Industry

Finished Sector

Retail

Cold Rolled Steel

Steel Service Centre

Construction

Infrastructure & Transport

Engineering

LPG Cylinders

Others*

* Ship Building, Pressure Vessels, Offshore Structures, Packaging& Fabrication

Cold Rolled Steel Industry

Finished Sector

Galvanized Steel

End – Users Segments

Automotive

Construction

Electrical & Electronics

Furniture

Packaging

White Goods

Others*

* Agriculture, Engineering, Ship Building, Pressure Vessels, Offshore Structures&

Fabrication


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Galvanized coils and sheets are used extensively in various applications. Some of the common uses in various industries are: Galvanized Flat Steel Market Segmentation

Galvanising Research is in progress to improve the corrosion performance, aesthetic look and above all achieve considerable reduction in the production cost and reduce environmental impact through a host of innovative primary and secondary coatings. Primary coatings generally are metallic coatings and few examples in this category are, ZnMgAl, Al-Si (also called Alusi), Zn-Ni and flash coats. Secondary coatings are organic or inorganic coating, primarily applied to improve the formability, weldability and paintability e.g. Ni-Mn phosphate coating (also called L coat), thin organic coating (TOC), Nano-hybrid silica sol-gel etc. Adverse environmental impact of Cr6+ led to the development of new secondary coatings i.e. Cr3+ and Cr-free passivation on the galvanized sheet/strip. Fretting corrosion is a serious problem in galvanized steels and it occurs due to interwrap vibrations, which take place during surface transportation through long distances. Secondary coatings help reduce fretting corrosion problem as well. Galvannealing Galvannealing (GA) is a proven technology for the production of coated steel for automotive panels. GA sheets are considered better than GI on account of their superior weldability and hence most of the Korean and Japanese auto producers prefer GA to GI, in spite of the cost advantage of GI steel. Production of low strength grades by Galvannealing process is well established. However, the production of high strength steel (HSS / AHSS) needs careful selection of chemistry and good understanding of the oxidation characteristics of the alloying elements. Any error due to wrong selection of alloying elements leads to the occurrence of bare spots in the zinc coating and after GA treatment; the surface reveals the uncoated regions clearly, thereby making the product unsuitable for the auto application. Research in the area of zinc coating without bare spots will trigger the development of HSS for high end application of automotive. Zn-Mg alloy coatings are found to be superior to the current GI and the corrosion resistance of newly developed coating is reported to be more than two times that of ordinary GI. Zn-Mg coating is currently used for the construction application in Europe. Due to the superiority of the new coating with respect to powdering characteristics, it is likely to replace GA in near future. Zn-Mg coating also

Galvanized Flat Steel

Finished Sector

Coated Steel

End – Users Segments

Automotive

Construction

Infrastructure & Transport

Furniture

Packaging

White Goods

Others*

* Agriculture, Engineering & Fabrication


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has a good potential to replace the conventional Zn-Al (galvalume) coatings. ((Source: Report of the Working Group on Steel Industry for the Twelfth Five Year Plan (2012 – 2017), Ministry of Steel) Human Resources Steel industry requires technical manpower from different engineering disciplines and varying knowledge levels. Technical personnel are required for various activities such as operation, project, engineering (design), maintenance, technology and R&D. Depth of knowledge and expertise required to perform the assigned job depend upon the hierarchical level and the department in which the employee is placed. The persons in the supervisory cadre are required to have, at least, a diploma in engineering and they pick up their required professional skills over a period of time from shop floor training and various other training opportunities provided. They operate the machinery and supervise the shift level operations. For senior positions the industry requires engineering graduates who should possess (a) Good understanding of technology in the respective engineering discipline; (b) Ability to adapt to the rigours of manufacturing sector (job rotation) and (c) Ability to manage resources optimally. (Source: Report of the Working Group on Steel Industry for the Twelfth Five Year Plan (2012 – 2017), Ministry of Steel) Government Initiatives Some initiatives taken by the Government in the past concerning the steel industry include the following: • 100% foreign direct investment (FDI) through the automatic route is allowed in the sector • Large infrastructure projects in Public-Private Partnership (PPP) mode are being formed • The Government is encouraging research and development (R&D) activities in the steel sector • Reduced custom duty and other favourable measures • The Government of India has framed the National Steel Policy (NSP) to encourage the steel

industry to reach global benchmarks in terms of quality, cost and efficiency The Union Budget of 2013-2014 • The 12th Plan projects an investments of USD 1 trillion or `55,00,000 crore in infrastructure. • The Government will encourage Infrastructure Debt Fund (IDF) and allow some institutions

to raise tax free bonds upto `50,000 crore which is 100 percent more than the current year. • Some of the provisions included in the Union Budget 2013-14 for the steel industry were as

follows • Reduction of basic customs duty (from 5% to 2%) and countervailing duty (CVD) (from 6%

to 2%) on imported bituminous coal. • Flat rolled products of iron or non alloy steel, plated or coated with zinc to be exempted from

export duty retrospectively from March 1, 2011.

(Source:http://indiabudget.nic.in/ub2013-14/cen/dojstru1.pdf; http://pib.nic.in/archieve/others/2013/feb/benglish.pdf)


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BUSINESS OVERVIEW In this section, unless the context otherwise requires, any reference to "our Company" is to Uttam Galva Steels Limited on a standalone basis and any reference to "we, us and our" is to Uttam Galva Steels Limited, its Subsidiaries, joint ventures and associates on a consolidated basis. Unless otherwise stated, all financial and other data regarding our Company’s business and operations presented in this section is on a consolidated basis. Our Company is a producer of Cold Rolled Closed Annealed ("CRCA") steel and Galvanized Plain Steel ("GP"). Our Company is into the business of procuring hot rolled steel ("HR") and processing it into CR and further into GP and Colour Coated Coils. In galvanized coils we specialize in making ultra thin sheets. The excess capacity of CR which is not used for galvanizing is converted to value added grades in CRCA coils, cut to length sheets and also sold as full hard CR in the overseas markets. We have a annual installed production capacity of 7,50,000 MT, 90,000 MT and 9,60,000 MT of Galavinsed steel, Colour Coated steel and Cold Rolled steel respectively We export our products to 147 countries in the world while our manufacturing operations are based in India. In Fiscal 2012, 24.03% of our total sales were from exports while the remaining 75.97% was from the domestic market. Our Company’s major customers are from the construction, automotive, consumer goods, material handling and general engineering industries. We have a wide and diversified customer base in various markets such as the USA, Australia, France, Germany, Greece and UK, amongst others. Our Company established the ‘Uttam Suraksha’ GC brand (Galvanised Corrugated Roofing Sheets) for the construction segment which is well recognised in Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka and Chattisgarh. Our Company's manufacturing facilities are located at Khopoli, in the state of Maharashtra, India, which is close to JNPT and Mumbai port. This provides our Company with easy access to imports and exports of raw materials and finished goods. A close proximity to these ports gives us an advantage of lower transportation costs. In Fiscal 2012 and 2011 and the nine month period ending December 31, 2012, our Company recorded standalone net revenues of `5171.60 crores, `5040.81 crores and `4,957.32 crores, respectively. Our Company recorded a standalone profit after tax in Fiscal 2012 and 2011 and the nine month period ending December 31, 2012 of `77.96 crores, `76.77 crores and `33.36 crores, respectively. Our Company has received various EEPC Awards from the Ministry of Commerce and Industry, Government of India under various categories. Competitive Strengths Our Company believes that it has the following competitive strengths that assists it in maintaining its position in the export markets and will help to achieve its goal to become a leader in the industry: Cost competitiveness Our Company believes that our integrated production facilities, high capacity utilization and productivity and low employee costs help to make us a cost competitive producer of CR and GP/GC products. In Fiscal 2012 , it achieved capacity utilization of CR and GP facilities at Khopoli of 63.92% and 76.26%, respectively. We have placed, and continue to place emphasis on reduction of


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costs by cycle time reduction, optimizing inventories and improving logistics at its production facilities. In addition, our relatively low employee costs add to our cost competitiveness. Access to raw materials: Our Company has access to a stable supply of HR coils, the key raw material we require in our production processes. Currently, our Company sources HR from the international as well as the local market depending on the price. Import of coils is also a viable option due to proximity to both JNPT and Mumbai port. ArcelorMittal is a co-promoter of our Company due to which our Company may have their support in enabling an assured supply of raw materials at competitive prices Wide product range and flexible production facilities Our Company’s manufacturing facilities have the flexibility to produce various grades of GP/GC sheets with different specifications relating to width, thickness, finish and weight of a product, which enhances our ability to be competitive. We produce value-added products such as wide-width thin gauge coils, ultra thin coils, which help us to improve the realization of our products. We manufacture customised products for niche applications like white goods, auto components, engineering products, and have also been able to smoothly shift production lines towards such product categories. Further, a significant portion of our Company's GP/GC coils/sheets are in the higher value added thin gauge segment. This process line provides flexibility to allow it to be used for other coats lamination in addition to regular modified products thereby giving us further flexibility. Strong promoters and experienced management team We have a strong set of promoters in the Miglani Family and ArcelorMittal. Rajinder Miglani has over 40 years of experience in dealing in steel and related products and more than two decades of experience in manufacturing CR and GP/GC products. ArcelorMittal, the co-promoters of our Company, is a part of the ArcelorMittal Group which is a leading steel maker spread over different geographies of the world. Apart from extensive R&D and cutting edge technology in our industry, it has sizeable captive supplies of raw materials and a global distribution network. Our Company’s senior management team comprises of members with extensive experience and professional qualifications in the steel industry. Our management team also has extensive knowledge of the Indian Steel industry and regulatory environment. We invest substantial resources in employee training and development. Their rich experience and understanding of our Company have been instrumental in the growth of our Company. Own Captive Power Plants Our Company has established coal-based thermal power plants for captive consumption at our facilities at Khopoli with a total installed capacity of 60 MW, which are currently operational. In addition to reducing expenses pertaining to power, reduction of reliance on electricity from the state and assisting in synergies with the production process, it has provided additional revenues from sale of surplus power thereby resulting in increased profitability for our Company. Diversified customer base Our ability to provide customised products at competitive prices and with relatively short delivery times has enabled us to earn customer loyalty. We have a large customer base within India and across


92

the world in various segments. We export our wide range of products to over 147 countries including USA, Europe, Africa, Russia, CIS countries and have a wide and loyal customer base. We also share a strong relationship with our customers. We have been supplying our products to some customers for more than 10 years. These customers are balanced over various product categories thereby de-risking our Company from dependence on any single category of products. We have customers in the original equipment manufacturer, appliances and general engineering markets. Our Company has set-up a service centre at its plant that helps cater to specific needs of the customers resulting in customer loyalty. Synergies pursuant to association with ArcelorMittal ArcelorMittal is a co-promoter of our Company pursuant to the Co-Promotion Agreement dated September 4, 2009. We have benefits from our strong linkage with ArcelorMittal and other entities of the ArcelorMittal group (collectively the "ArcelorMittal Group") on raw material sourcing, management support, marketing network and technical collaboration in product initiatives. a. Sourcing of Raw Materials

The strong global network of ArcelorMittal Group and their manufacturing facilities which is spread across the world, manufactures various grades of raw material required by us. They provideus with a consistent supply of various grades of steel on a consignment basis. Obtaining the correct raw material is of utmost importance in maintaining the quality of value-added products manufactured by us. Our Company has been able to expand our product range with the availability of wide range / grades of raw material.

b. Marketing Collaboration

We sell our products in domestic as well as overseas market. Apart from our sales, our Company uses ArcelorMittal Group’s marketing network to sell its products across the globe. With the assistance of ArcelorMittal Group, our Company has been able to secure contracts from various overseas customers, helping our Company to widen our customer base in the global market.

c. Technological Assistance

ArcelorMittal Group is one of the world’s leading steel and mining company. It is the leading supplier of quality steel products in all major markets including automotive, construction, household appliances and packaging industry. It has a dedicated research & development team. The research and development team of the ArcelorMittal Group has helped our Company in improving our productivity in our existing units. Due to this, our Company has been able to expand our product range and produce high grades and better value added product thereby catering to a wider customer base across the world.

Divisions of the Company The Company has broadly three divisions which can be described as follows: (d) Cold Rolling Division (e) Galvanising Division (f) Colour Coating Division


93

Cold Rolling Division: Cold rolling is the process of converting hot rolled steel coil into cold rolled coils/sheets. Cold rolled products are sub divided into cold rolled full hard ("CRFH") and cold rolled closed annealed ("CRCA") coils/sheets. Our Company has cold rolling mills /lines, that is a 20HI, 6HI, 4HI and twin stand 6HI (wider width) mill. Galvanising Division: Galvanisation is the process of applying a protective zinc coating to steel or iron, in order to prevent rusting. Our Company has at present 3 galvanising lines, that is: (a) CGL at Donvat (b) CGL at Pali Road Complex (Dahivali) and (c) Wet galvanising line ("WGL") at Pali Road Complex (Dahivali). The raw material for this process is cold rolled strip in coil form. Our Company uses hot dip galvanising technology. This is a continuous galvanising line producing galvanised strip steel in either coil or sheet form. Galvanised products are primarily used in automobile, white goods (for example A/C, refrigerators), construction and engineering applications. Rolled strip is heated in a non-ox furnace followed by galvanising with molten zinc and other alloys. Colour Coating Line Division The colour coating line products paint coated strips in either coil or sheet form. The raw material for this process is galvanised steel strip in coils. In this process primer and paint is applied on one or both sides in the same or different colours as per the customer’s specifications. After coating the coils are cured in an oven. Colour coated products have much longer life than GP products, and have different applications ranging from construction to engineering applications. Application of Products Our Company has an entire range of cold rolling mills i.e. 20-Hi, 6-Hi, 4-Hi and twin stand reversible 6-Hi mill. It can process HR coils of different grades, thicknesses and widths and can also meet the

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95

Our Joint Ventures We have two joint ventures namely, Texturing Technology Private Limited, Moira Madhujore Coal Limited. We have also entered into a joint venture agreement with Liberty Commodities Limited to form a joint venture in Srilanka. History Our Company is the flagship company of the Uttam Group and has significant interests in the areas of various metals including steel. Our Company was incorporated in March 1985 as a public limited company. The name of our Company was changed from Uttam Galva Steels Limited to Uttam Steel Limited on May 18, 1993 and thereafter changed it again to Uttam Galva Steels Limited on January 23, 2002. Currently, the shares of the Company are listed on the BSE and NSE. Our Company’s Secured, Redeemable, Non-Convertible Debentures are listed on the Wholesale Debt Market (WDM) segment of BSE. Our Company was originally promoted by the Miglani Family led by Rajinder Miglani. The promoters of our Company along with our Company entered into a Co-Promotion Agreement dated September 4, 2009 with ArcelorMittal Netherlands B.V. (an indirect 100% subsidiary of ArcelorMittal) and acquired 33.80% stake in our Company in February 2010 to become Co-Promoters of our Company. The major events in the history of our Company are as set out herein below:

FY Event 1985 • Our Company was incorporated as a public limited company 1988 • Initial Public issue of Equity Shares 1999 • Increase in capacity of Galvanized by 1,50,000 TPA and Cold Rolling by 100,000 TPA 2004 • Increase in capacity of Galvanized by 20,000 TPA and Cold Rolling by 150,000 TPA 2005 • Increase in capacity of Galvanized by 1,30,000 TPA and Cold Rolling by 50,000 TPA

2006 • Increase in capacity of Galvanized by 50,000 TPA and Cold Rolling by 1,50,000 TPA • Addition of new division Colour Coating with capacity of by 60,000 TPA • Issue of FCCB for ~ $ 44 Million.

2007 • Increase in capacity of Colour Coating by 24,000 TPA and Cold Rolling by 1,50,000

TPA • Issue of GDR for ~ $ 20 Million.

2008 • Increase in capacity of Galvanized by 3,50,000 TPA, Colour Coating by 6,000 TPA and Cold Rolling by 1,50,000 TPA

2009 • Increase in capacity of Cold Rolling by 60,000 TPA • Scheme of Arrangement of Amalgamation between Uttam Steel and Power Limited and

our Company 2010 • Arcelor Mittal joined as Co-Promoter.

2012

• Commencement of Captive Power Plant for 60 MW. • Our Company has received of 17 EEPC Awards from the Ministry of Commerce and

Industry, Government of India under various categories for for its exports outstanding exports performance. Export Promotion Council – Government of India.

Awards and Certificates Our Company has received various awards, a few notable ones are mentioned below:


96

Sr. No.

Authority Particulars of the Award

1. Det Norske Veritas Certification B.V.

Our Company received a certificate for conforming to the ISO 9001: 2008 Quality Management System Standard on September 7, 2010. The certificate is valid up to September 7, 2013.

2. EEPC, India Our Company received a Special Trophy for excellence in EPO Services for the year 2011 – 2012

3. EEPC, India Our Company received an award for Export Excellence (Western Region) for the year 2008 - 2009

4. EEPC, India Our Company received the Star Performer Award for Outstanding Contribution to Engineering Exports in the Product Group for the year 2008 – 2009

5. EEPC, India Our Company received an award for Export Excellence (Western Region) for the year 2006- 2007

6. EEPC, India Our Company received the Star Performer Award for Outstanding Contribution to Engineering Exports in the Product Group for the year 2007 – 2008

7. EEPC, India Our Company received an award for Star Performer as Large Enterprise for the year 2006 - 2007

8. EEPC, India

Our Company received an award for Star Performer as Large Enterprise for the year 2005 – 2006

9. EEPC, India Our Company received an award for Export Excellence (Western Region) for the year 2004- 2005

10. EEPC, India Our Company received an award for Export Excellence as well as the All India Trophy for Highest Exporters for the year 2003 – 2004

11. EEPC, India Our Company received the Top Exporters Trophy for the year 2003 – 2004


13. EEPC, India Our Company received the All India Trophy for Highest Exporters for the year 2000 - 2001


15. EEPC, India Our Company received the Highest Exporter’s Trophy for the year 1999 – 2000

16. EEPC, India Our Company received the Highest Exporter’s Trophy for the year 1998 - 1999

17. EEPC, India Our Company received an award for Export Excellence (Western Region) for the year 1997 – 1998

Strategy Our Company’s long term strategy is to be a leading producer of CR and GP and it aims to become a "One Stop Shop" for all steel flat products, customised as per the customer’s requirements. Continued focus on consistently meeting quality standards so and ensuring product acceptance by customers Our Company shares a strong relationship with several of its customers and has been supplying our products to them for over a decade. Our Company’s reputation in the industry and our long standing


97

product quality ensures customer loyalty and continued loyalty from our customers. We intend to continue to focus on the quality standards of our products in order to retain our current customers and target new customers. Attract, train and retain qualified personnel Our Company believes that maintaining quality, minimising costs, ensuring timely delivery and completion of proposed projects depend largely upon the technical skill and workmanship of our employees and adoption of latest technology. As competition for qualified personnel increases, our Company intends to focus on training our staff and honing their skills. Our Company continuously strives to train its workforce to enhance the knowledge of its employees and equip them with the latest skill sets. The Company has also undertaken certain motivational programs for our employees, such as, the reward-recognition-respect program. To use our Company and ArcelorMittal Groups’s synergies for mutual benefit. ArcelorMittal is a co-promoter of our Company. Our Company benefits from its strong linkage with ArcelorMittal for raw material sourcing, management support, marketing network and technical collaboration in its product initiatives. This may be further leveraged for mutual benefits of both the companies. This would aid our Company in deepening its global footprint. We intend to continue to use the combined experience, track record, commercial relationships and brand recognition of both companies to expand our operations into more products in the value chain. Maintain market position in the Indian steel sector Our Company intends to maintain our market position in the Indian steel sector by continuing to focus on maintenance and improvement of its current operations. Our Company intends to leverage its experience, market position and experience across various markets. Focus on Research & Development Product and process development is a continuous on-going exercise along with experimenting in the development of new processes and new products. Our Company will focus on research and development, which it believes would add value to existing products and processes thereby allowing us to focus on higher value added products and also to attain manufacturing excellence. Manufacturing Process Details of our Company’s manufacturing process are set below: Cold Rolling Mill Process An HR coil is slit to the required width in a HR slitter. After this operation the material is processed in a pickling line to remove all the iron oxide scales. The pickling line is provided with a water seal and gas scrubber to ensure that no noxious vapours enter the environment. All effluents are treated in an acid regeneration plant. The pickled coils are then sent to a 20HI, 6HI or 4HI cold rolling mill for cold reduction. The mills are capable of reducing the original thickness in a number of stages. When the required thickness is achieved, the coil is taken out of the mill.


98

The surface of the strip is cleaned and is suitable for further processing in the strip cleaning line. In order to reduce the hardness, the material is sent to an annealing furnace for heat treatment in a protective nitrogen atmosphere. After annealing, the coils are then taken to a 4HI skin pass mill to correct the shape and improve its metallurgical properties. The shape of the coil is further corrected in a tension leveling line and then cut to sheets of the required length. The CR coils are then cut as per the requirements of the customer or as per the standards of our Company on a CR slitter machine. After slitting the CR coils are packed and dispatched. The abovementioned cold rolling mill process can also be explained with the help of a flow chart set out below:

Continuous Galvanizing Line ("CGL") Process Our Company has a continuous galvanizing line producing galvanized strip steel in either coil or sheet form. The raw material for the process is cold rolled strip in coils. These coils are cleaned of the protective oil film or grease by an alkaline spray degreasing system. The strip surface is subsequently pre-heated by passing it through a non-ox type furnace. After the surface activation is completed, the strip passes through the galvanizing bath predominantly consisting of molten zinc and other alloying elements. The accuracy of coating is measured after the strip emerges from the galvanising bath. After galvanizing, the coating is solidified in a cooling tower using air and then using cold water in a quench tank. Thereafter, the product is either skin-passed or tension leveled and subsequently passivated. The end product after this process is steel which is galvanised with a uniform coating having an uniform spangle finish. The end product can be either in coil form or cut to length in sheet form. The product is then packed and is ready for dispatch.


99

Colour Coating Line Process Colour coating line produces coated strip in either coil or sheet form. The raw material for the process is galvanized steel strip in coils. The base metal is unwound, cleaned, treated and rinsed. The first coat is usually of a primer, which is applied over the strip surface. A topcoat is tailored to meet a customer’s specifications. The metal can be coated on one or both sides in same or different colours. After each coating the coil is cured in an oven, which has an incinerator and an oxidizer. The coating is measured and the accuracy of the coating is verified after which the string is recoiled and ready for dispatch. The end product can either be in the form of a coil, sheets or slit coil. A profiling line is capable of supplying profile sheets of various shapes and lengths. Coated coils are fed to the roll former from an un-coiler and cut to the required length by a profile cutter and thereafter stacked in bundles. Coated coils are fed on an un-coiler mandrel and slitted into different widths by a slitting head and re-wound in slit coil form as per the customer’s requirement. The colour coating line process can also be explained with the help of a flow chart set below:

Acid Regeneration Process ("ARP") The waste pickle liquor ("WPL") generated during the processing of HR in the pickling line, is fed to the flushed bed reactor after achieving the required density by pumping it through a venturi. As the temperature in the reactor is very high the WPL is split into iron oxide and HCl gas and iron oxide is produced. The HCl gas, generated in the flush bed reactor, passes through a cyclone separator. Fine iron dust is dropped in the cyclone separator and the HCl gas moves to an absorber via a venturi. In the absorber, HCl gas moves upward and water is introduced thereby absorbing the HCl gas and producing hydrochloric acid. The concentrated acid is collected, stored and reused for pickling. Marketing of our Products a) Exports: While our Company exports its products to 147 countries in the world, its manufacturing operations are based in India. In Fiscal 2012, 24.03% of our total sales were from exports to various countries. Our Company exports to customers from the construction, automotive, consumer goods, material


100

handling and general engineering industries. As at March 31, 2012, our Company has serviced 240 export customers internationally in 62 countries. Our Company sells a majority of our products to customers in USA and in the Indian markets. Our Company’s largest export clients in USA are in the automotive and packaging industries. In Fiscal 2012, gross sales to customers in USA and India accounted for approximately `447.16 crores and `4159 crore respectively. The details of the same have been provided in the table below:

(` in crores) Financial Year ending March 31, 2012

% of Gross Sales March 31, 2011

% of Gross Sales

USA 447.16 8.17 344.47 6.46 India 4159.00 75.96 3731.00 70.00 Others 868.54 15.87 1254.53 23.54 The details of the countries our Company exports to is provided in the map below:

b) Domestic sales: Our Company also focuses on the domestic market in India and opportunities are to are Company due to rapid urbanization, improved and growing per capita income level, increased availability of bank finance and need for improvement of public transport in semi-urban and rural areas. Continuous efforts have been made by our Company in establishing the ‘Uttam Suraksha’ GC (Galvanised Corrugated Roofing Sheets) brand in the construction segment and also in increase its penetration in rural and urban areas. These brands is recognised in its segment in markets like Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka and Chattisgarh. In the original equipment manufacturer (OEM) market, our Company has been focusing on high growth and profitable segments such as automotives and appliances and has thus moved up the value chain in these markets. While in the Automotive segment, our Company has established itself in the two and four wheeler (Passenger and Commercial) market in western India.

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102

Khopoli Ownership Khopoli-Pali Road Village - Dahivali Taluka-Khalapur Dist. – Raigad Maharashtra

Our Company’s existing plants and related facilities including worker accommodation are at Khopoli, Raigad, Maharashtra and is spread over 200 acres of land all of which is owned by our Company on a freehold basis. Apart from the registered office at Mumbai, we have marketing and sales offices offices in Keonjhar, Orissa, Pune, Hyderabad, New Delhi Bangalore, Chennai, Hyderabad, Ahmedabad and Indore which are on lease or rent. Quality control Quality control tests are carried out at various stages in the production cycle from the testing of raw materials to the finished product. Our Company has been awarded quality systems certification. Our Company also has in place an integrated quality management plan which comprises control standards, safety standards and environmental standards. Information Technology Our Company believes that the Information Technology department ("IT Department") performs a crucial function in creating and maintaining scalable, cost effective and sustainable operating models for our various business groups and segments. Our Company has built, and continues to enhance, our IT systems in order to create competitive advantages for our Company, and thereby enables us to achieve and maintain optimum levels of operational efficiency. Our Company has recently adopted SAP, a enterprise resource planning software in order to ensure, smooth running of day-to-day operations, address evolving regulatory standards and mitigate industry specific risks. Our Company is in the process of implementing the same and has undertaken training program to enable the IT department to effectively use the SAP software. Research and Development Our Company’s research and development program is focused on analytical and experimental work to enhance the quality of our existing products and also to develop new products. A well-established research and development team helps our Company in the development of different steel grades at regular intervals. It gets involved in customer re-engineering projects and helps customers in saving costs and in improving product performance. With the availability of facilities, the research and development department seeks to be proactive in meeting customer requirements by improving processes and by new product development. Intellectual Property Our Company has made applications for the registration of 126 trademarks including but not limited to its name and logo in various classes, some of which are pending registration. Some of the various trademarks registered by our Company are "Uttam Chatra Chaya", "Uttam Suraksha Kavach" and "Uttam Suraksha" among others. We understand the importance of intellectual property and constantly strive to create new intellectual property and also protect our existing intellectual property.


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Business Environment Our Company is committed towards controlling the environmental impact of steel making, in accordance with both international and domestic standards that govern air emissions, waste water discharges and solid waste handling and disposal. The steel industry in India is subject to numerous laws and regulations regarding pollution control. In the last three years, our Company has not been subject to any material legal proceedings or disputes with any environmental protection authorities in India. Our Company has obtained all relevant environmental and pollution-related clearances for its plants and operates our facilities in line with the statutory norms and the limits laid down by the Maharashtra Pollution Control Board. During the last three years, there have been no material incidents or accidents relating to our Company in which hazardous substances have leaked into the surrounding land, groundwater, rivers or air. Employees As of December 31, 2012, our Company had approximately 1500 employees on their payrolls and contract labour of approximately 1200 workers per day depending on the requirement. Function No of EmployeesCMD Department 13Finance & Accounts 59Marketing 96Production – Plant 1243Purchase Department 18Company Secretary & Legal Department 24Human Resource and Administration 17Projects 24IT 6Total 1500 Insurance Our Company believes that it maintains adequate insurance schemes, covering its business operations and its employees from various risks. Our Company maintains such protection through a combination of insurance policies purchased from external insurers. Our Company, including its plants and facilities, is insured against a range of risks, including material damage, Fire and Special Perils etc. Corporate Social Responsibility As our operations have expanded, our Company has retained a collective focus on various areas of corporate sustainability that impact people, environment and the society at large. Founded on the philosophy that society is not just another stakeholder in its business, but the prime purpose of it, our Company, across its various operations is committed to making a positive contribution to the society. As a policy, our Company promotes and encourages economic, social and educational development within its communities while providing active support to local initiatives for the upliftment of society in general.


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Subsidiaries of Our Company Set forth below is a brief description of our subsidiaries. Uttam Galva Holdings Limited ("UGHL") UGHL is a wholly owned subsidiary of our Company. It was incorporated as an offshore company with limited liability in Dubai. UGHL has its registered office at LOB 15- 514, PO Box 17870, Jebel Ali Free Zone Dubai, U.A.E. UGHL is engaged in the business of trading of steel and metal products including mild, high carbon spring, high speed tools alloys, stainless steel metals. The authorized and paid up share capital of UGHL is USD 2,72,480. The company has allotted 10,000 equity shares to our Company. The financial information pertaining to UGHL for the Fiscal 2012 is provided below: Particulars Amount (in `)Capital 1,39,39,123Reserves (22,95,597)Total Assets 1,40,08,747Total Liabilities 23,65,221Turnover -Profit before taxation (70,829)Profit after taxation (70,829)

The following are the name of the directors of UGHL: No. Name of Directors Position 1 Rajinder Miglani Director 2 Anuj R Miglani Director 3 Ankit Miglani Director

Neelraj International Trade Limited ("NITL") NITL is a wholly owned subsidiary of our Company. It was incorporated in British Virgin Islands and has its registered office at Kingston chambers, P.O box 173. Road town Tortola British Virgin Islands. NITL is engaged in the business of trading of steel and metal products including mild, high carbon spring, high speed tools alloys, stainless steel metals. The authorized and paid up share capital of NITL is USD 50,000. The company has allotted one equity share to our Company. The financial information pertaining to NITL for Fiscal 2012 is provided below: Particulars Amount (in `)Capital 25,57,825Reserves 33,09,467Total assets 2,62,00,41,075Total liabilities 2,61,41,73,783


105

Turnover 31,89,504Profit before taxation 31,14,968Profit after taxation 31,14,968

The following are the name of the directors of NITL: No. Name of Directors Position 1 Rajinder Miglani Director 2 Ankit Miglani Director

Atlantis International Services Company Limited ("AISL") AISL is a wholly owned subsidiary of our Company.AISL was incorporated in the British Virgin Islands and has its registered office at Kingston chambers, P.O box 173. Road Town, Tortola British Virgin Islands with company number 1534673. AISL is engaged in the business of trading of steel and metal products including mild, high carbon spring, high speed tools alloys and stainless steel metals. The authorized and paid up share capital of UGHL is USD 50,000. The company has allotted 5,000 equity shares to our Company. The financial information pertaining to AISL for Fiscal 2012 is provided below: Particulars Amount (in `)Capital 25,57,825Reserves (3,29,16,292)Total assets 1,81,53,73,169Total liabilities 1,84,57,31,636Turnover 3,67,74,06,848Profit before taxation (88,93,835)Profit after taxation (88,93,835)

The following are the name of the Directors of AISL: No. Name of Directors Position 1 Ankit Miglani Director 2 Trevor Campbell Smith Director

Uttam Galva Steels Netherlands BV ("UGSN") UGSN is a wholly owned subsidiary of our Company. UGSN was incorporated in the Netherlands with its registered office at oudegracht 202,1811CR Alkammar,Netherlands BV. UGSN is engaged in the business of trading of steel and metal products including mild, high carbon spring, high speed tools alloys, stainless steel metals. UGSN has an authorised share capital of USD1,19,520 and the paid up capital of the company is USD23,906. The company has allotted 18,000 equity shares to our Company. The financial information pertaining to UGSN for the Fiscal 2012 is provided below:


106

Particulars Amount Capital 12,22,947Reserves (3,67,30,586)Total assets 2,15,71,36,547Total liabilities 2,19,26,44,186Turnover 1,95,08,21,325Profit before taxation (3,42,43,736)Profit after taxation (3,42,43,736)

The following are the name of the Directors of UGSN: No. Name of Directors Position 1 Ankit Miglani Director 2 Anuj R Miglani Director

Ferro Zinc International FZE ("Ferro") Ferro is a step down subsidiary of UGHL. It was formed as free zone establishment with limited liability on October 23, 2008 with the main objective of trading in various segments in the metal industry including building metal products, pre-fabricated houses, pipes and fittings, insulation and protection materials, workshop equipment, machinery and spare parts, metal alloys, basic steel products, basic non ferrous metal products, metal drums and barrels, metal cans and containers, cargo containers, metal ores. Raghavendra Kumar Aggarwal is the manager of Ferro which is based out of Dubai and has its registered office at Office No. LB 03016, Jebel Ali, Dubai. It has an authorised and issued capital of USD 272480. Our company has been alloted one share. The financial information pertaining to Ferro for Fiscal 2012 is provided below: Particulars Amount (in `)Capital 1,39,39,123Reserves 4,22,36,597Total Assets 1,93,71,75,363Total Liabilities 18,80,99,643Turnover 4,06,46,45,327Profit before taxation (1,46,32,255)Profit after taxation (1,46,32,255)

The following are the name of the Directors of Ferro: No.

Name of Director Position

1 Rajinder Uttamchand Miglani Director 2 Anuj R Miglani Director 3 Ankit Miglani Director

The company is controlled and managed by Raghvendra Kumar Agarwal


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Uttam Galva Steels Limited FZE ("UGSL") UGSL is a wholly owned subsidiary of our Company. It was incorporated in Ras Al Khaimah, United Arab Emirates and was registered with the Government of Ras Al Khaimah, United Arab Emirates on November 21, 2012 as a Free Zone Establishment with limited liability with its registered office at : PO Box- 16111, Ras Al Khaimah, United Arab Emirates. Our Company is the registered holder of one share of the value AED100,000. Brij Bhushan Handa is the Manager of UGSL. Joint Venture Companies Set forth below is a brief description of our joint venture companies, which we believe is significant to our business. Moira Madhujore Coal Limited Moira Madhujore Coal Ltd. ("MMCL") is a joint venture between our Company, Ramsarup Industries Limited, Adhunik Corporation Limited, Howrah Gases Limited, Vikash Metal and Power Limited and ACC Limited. MMCL was incorporated in India and has its registered office at 16/S, Block A, New Alipore, Kolkata, West Bengal. MMCl was established for bidding of coal blocks and for distributing the output amongst the Joint Venture Partners. As at March 31, 2012, MMCL had an authorised share capital of `1,00,00,000. The financial information pertaining to MMCL for the Fiscal 2012 is provided below: Particulars Amount (in `)Capital 56,19,660Reserves 403,80,858Total assets 4,89,40,560Total liabilities 9,99,092Turnover 15,01,879Profit before taxation 11,61,858Profit after taxation 7,44,858

Following are Directors of MMCL: No. Name of Directors Position 1 Rajendra Kumar Mittal Director 2 Saket Agrawal Director 3. Jugal Agarwal Director 4. Aashish Jhunjhunwala Director 5. Ankit Miglani Director 6. Mahesh Kumar Agarwal Director 7. Akkash Patni Director 8. Vikash Patni Director 9. Rajiv Prasad Director 10. Vivek Chawla Alternate director


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11. Sunil Dodani Director The following table contains brief details of the shareholding percentage of MMCL:

Sr. No. Name of our Company Percentage of voting rights 1. Uttam Galva Steel Limited 28.75 2. Ramsarup Industries Limited 4.79 3. Adhunik Corporation Limited 19.17 4. Howrah Gases Limited 9.58 5. Vikash Metal and Power Limited 23.32 6. ACC Limited 14.38 Total 100.00 Texturing Technology Private Limited Texturing Technology Private Limited ("TTPL") is our joint venture with Court Holdings (Europe) Limited a Canadian company. TTPL was incorporated in India and has its registered office at Uttam Galva Steels Ltd., Ground Floor, Administrative Block, Khopoli, Pen Road, Donwat, Khalapur, Raigad – 410202, Maharashtra. TTPL is authorised to carry on the process of electro chrome deposition, electro discharge texturing, grinding, chock bearing, galvanising, powder coating, impregnating with any material and lamination of steel and steel products and also setting up plant and machinery for the aforementioned purpose. As at March 31, 2012, TTPL had an authorised share capital of `10,00,00,000. The financial information pertaining to TTPL for the Fiscal 2012 is provided below: Particulars Amount (in `) Capital 60,400,000 Reserves 2,21,97,403 Total assets 17,23,97,168 Total liabilities 8,25,97,403 Turnover 6,84,13,432 Profit before taxation 1,94,61,340 Profit after taxation 1,19,32,s075 Following are the Directors of TTPL: Particulars Amount (in `) Suzanne Weir Court DirectorJeffrey Parry Thomas Director Mangilal Agrawal Director Sunil Prakash Additional director Following is the shareholding pattern of TTPL: Sr. No. Percentage of voting rights 1. Court Holdings (Europe) Limited 50% 2. Uttam Galva Steels Limited 50%


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FINANCIAL INDEBTEDNESS

The following is a summary of our Company’s indebtedness as on February 28, 2013:

(` in crores) Sr. No.

Nature of Borrowing

Sanctioned amount

Amount outstanding

1. Secured Borrowings a. Working Capital Facilities (FBWC + NFBWC) 2505.40 1969.34 b. Term Loans 2478.01 2157.51

2. Unsecured Borrowings 451.96 101.30 Total 5435.37 4228.15

1. Secured Borrowings

As on February 28, 2013 the aggregate outstanding secured borrowing of our Company is `4,126.85 crores. Our Company has availed secured loans from various lenders collectively referred to as ("Lenders"). a) Working Capital Arrangements by our Company

Working Capital Consortium Facility aggregating to `2505.40 crores

(` in crores)

Lender Amount Sanctioned

Date(s) of financing documents

Amount outstanding as

on February 28, 2013 (FBWC +

NFBWC)

Repayment Schedule and Interest

State Bank of India

FBWC of 156.00 and NFBWC of 873.50

Facility sanctioned vide Master Facility Agreement ("MFA") dated July 16, 2011 and renewed vide sanction letter dated February 13, 2013.

774.31

12 (twelve) months Interest Interest Rate for FBWC at 2.75% above Base Rate.

Canara Bank FBWC Limit of 86.00 and NFBWC of 490.50

Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated March 21, 2012.

464.32 12 (twelve) months Interest Our Company shall pay interest at the rate of base rate plus 3%.

ICICI Bank FBWC Limit of 16.75 and NFBWC of

Facility sanctioned vide MFA dated July 16, 2011 and renewed vide

18.28 12 (twelve) months


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NFBWC)


23.25 sanction letter dated May 31, 2012.

Interest Our Company shall pay interest at the rate of base rate plus 2.75%.

Punjab and Maharashtra Co-operative Bank

FBWC Limit of 1.75 and NFBWC of 8.35

Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated March 26, 2012.

(5.43) 12 (twelve) months Interest Our Company shall pay interest at the rate of 12.20.

Punjab National Bank


Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated October 15, 2012.


Bank of Baroda FBWC Limit of 30.00 and NFBWC of 91.10

Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated June 1, 2012.

91.66 12 (twelve) months Interest Our Company shall pay interest at the rate of base rate plus 2.50%.

Indian Overseas Bank


Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated August 25, 2012.



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NFBWC)


Union Bank of India


Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated September 25, 2012.


IDBI Bank FBWC Limit of 17.50 and NFBWC of 108.90

Facility sanctioned vide MFA dated July 16, 2011 and renewed vide sanction letter dated July 4, 2012.

185.20 12 (twelve) months Interest Our Company shall pay interest at the rate of base rate plus 2.50%.

*Note: Out of the above outstanding amount, `129.31 crores pertain to outstanding bank guarantees issued in favour of third parties. Description of Security and terms under the Master Facility Agreement: The facilities are secured by: (i) Primary Security: a first charge, by way of hypothecation, on the whole of the current assets

of our Company. (ii) Guarantees: Personal guarantee of Rajinder Miglani and Praveen Miglani. The following is the summary of key terms under the Master Facility Agreement: Negative Covenants

(i) Our Company can only utilize the credit facilities sanctioned by the Lenders for meeting its

working capital requirements and for no other purpose.

(ii) Our Company shall not without the consent of the Lenders: a) change our Company’s capital structure. b) avail of any credit facility or accommodation for our Company’s working capital

requirement from any other bank or financial institution or any person, firm or company in any manner;

c) formulate any scheme of amalgamation or reconstruction; d) undertake any new project, implement any scheme of expansion, or acquire any fixed

assets, other than incurring routine capital expenditure; e) invest by way of share capital in or lend or advance funds to or place deposits, with


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any other concerns (including group companies); normal trade credit or security deposits in the normal course of business or advances to employees can however be extended;

f) undertake any guarantee obligations on behalf on any company or other company (including group company);

g) declare any dividend on our Company’s share capital, if our Company fails to meet its obligations to pay the interest and/or commission and/or installment(s) and/or other moneys payable to the Lenders, so long as our Company is in such default.

b) Term Loan Facilities availed by our Company

i) Term Loan under Consortium aggregating to `1400 crores.

(` in crores) Lender Amount

Sanctioned


Amount outstanding as on February 28, 2013


Axis Bank Limited

Rupee Term Loan of `100.00

Facility sanctioned vide Master Facility Agreement ("MFA") dated July 19, 2011 and sanction letter dated July 6, 2011.

91.25 36 (thirty six) structured quarterly instalments Interest Our Company shall pay interest at the rate of base rate plus 2.75%.

Bank of Baroda


Facility sanctioned vide MFA dated July 19, 2011 and last modified by sanction letter dated June 1, 2012.


Dena Bank Rupee Term Loan of `50.00

Facility sanctioned vide MFA dated July 19, 2011 and sanction letter dated March 24, 2011.


Export - Import Bank of India


Facility sanctioned vide MFA dated July 19, 2011 and sanction letter dated July 6, 2011.

45.63 36 (thirty six) structured quarterly instalments Interest Our Company shall pay interest at the


113





rate of base rate plus 2.75%.

Oriental Bank of Commerce


Facility sanctioned vide MFA dated July 19, 2011 and sanction letter dated May 23, 2011.




Facility sanctioned vide MFA dated July 19, 2011 and last modified by sanction letter dated October 15, 2012.


Syndicate Bank Rupee Term Loan of `225.00

Facility sanctioned vide MFA dated July 19, 2011 and sanction letter dated April 1, 2011.


State Bank of Hyderabad


Facility sanctioned vide MFA dated July 19, 2011 and sanction letter dated March 14, 2011.

250.94 36 (thirty six) structured quarterly instalments Interest Our Company shall pay interest at the rate of base rate plus 2%.

State Bank of India


Facility sanctioned vide MFA dated July 19, 2011 and last modified by sanction letter dated February 13, 2013.



114

Description of Security and terms under the Master Facility Agreement: The facilities are secured by:

(i) Primary Security:

(a) a first charge, by way of an equitable mortgage, on all, present and future, immoveable properties of our Company except packing machine supplied by PESMEL, Finland and assets pertaining to Satarda Project of our Company;

(b) a first charge, by way of hypothecation, on all, present and future, moveable assets of our Company, including but not limited to plant and machinery, machinery spares, tools and accessories except packing machine supplied by PESMEL, Finland and assets pertaining to Satarda Project of our Company

(ii) Guarantees: Personal guarantee of Rajinder Miglani

The following is the summary of key terms under the Master Facility Agreement:

Negative Covenants Our Company shall not without the prior written consent of the Lenders do the following:

a) create, incur, assume or suffer to exist any security interest upon or with respect to any

property, revenues or assets of our Company; b) effect any change in the capital structure of our Company, including proposed equity and debt

patterns or issue equity or preference capital, any securities convertible into or exchangeable for our Company’s equity or preference capital and any rights to subscribe for or to purchase, or any option for the purchase of, or any agreements, arrangements or understandings providing for the issuance of, or any calls, commitments or claims of any character relating to, our Company’s equity or preference capital;

c) undertake any indebtedness or repay any unsecured indebtedness; d) all unsecured indebtedness shall at all times be subordinated to this facility; e) lend money or credit or make deposits with or advances to any entity, or purchase or acquire

any stock, share obligations or securities of, or any other interest in, or make any capital contribution to, or acquire all or substantially all of the assets of, any other entity or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets of any entity;

f) convey, sell, lease, let or otherwise dispose of in any other manner (or agree to do any of the foregoing) all or any part of our Company’s property or assets charged to the Lenders;

g) wind up, liquidate or dissolve our Company’s affairs or enter into any transaction or formulate any scheme for merger, compromise, consolidation, amalgamation, reconstruction or reorganization;

h) undertake, expressly or by implication, including through provision of indemnities, support letters, letter of comfort or otherwise, any guarantee obligations;

i) make any restricted payments; j) permit or cause or recognize or take any action with respect to the transfer of equity shares by

the promoters if as a result of transfer of the equity shares the promoters jointly and together cease to control our Company or take any action which results in a change in the management structure of our Company;

k) enter into or agree to enter into any long term contracts or partnerships, profit-sharing arrangements, royalty agreements or any other agreements or arrangements whereby our Company's income or profits or the financial condition of our Company is, or might be,


115

adversely affected; l) enter into any transaction, nor have any commitment with any entity, other than on an arm’s

length basis; m) change our Company’s accounting system other than to IFRS as and when required under

applicable law; n) undertake any new project other than the business our Company presently conducts or

substantially change the general nature or scope of the business our Company presently conducts or undertake any expansion of our Company’s current operations or adversely change our Company’s financial condition from that which existed on the date of this Agreement;

o) utilise the proceeds of this facility for any other purpose; p) use, maintain, operate, occupy or grant any rights in respect of the use, maintenance,

operation or occupancy of any of our Company’s assets and property which (a) may be in contravention of applicable law including environment, health and social security laws and regulations, (b) violates any legal requirements in any respect or which may constitute a public or private nuisance, and (c) make voidable or cancelable, or increase the premium of, any insurance then in force with respect to our Company’s assets;

q) agree, authorise or otherwise consent to any proposed settlement, resolution or compromise of any litigation, arbitration or other dispute with any person;

r) pay commission, fees or any other charges to the promoters, directors, managers or other affiliates of our Company in connection with any such person furnishing any guarantee, counter-guarantee or indemnity or any other instrument or security on behalf of our Company or for any liability relating to or for purposes of this Agreement;

s) cease, or threaten to cease, to carry on our Company’s business or all or any part of the assets required or essential for our Company’s business or operations;

t) amend or modify our Company’s memorandum of association and articles of association ii) State Bank of India


Sanctioned




State Bank of India

Corporate Loan of `100.00

Facility Agreement dated 23 March 2012 between State Bank of India and our Company

100.00 5 (five) years from the date of first disbursement Interest Our Company shall pay interest at the rate of base rate plus 2.75%.

Description of Security and terms under the Facility Agreement: The facility is secured by: (i) Primary Security

First pari passu charge on our Company’s movable and immovable assets, except packing machine supplied by PESMEL, Finland and assets pertaining to Satarda Project of our


116

Company. (ii) Guarantee: Personal Guarantee of Rajinder Miglani

The following is the summary of key terms under the facility agreement with State Bank of India:

Negative Covenants Our Company shall not without the prior written consent of the lender do the following: (i) wind up, liquidate or dissolve our Company’s affairs or enter into any transaction or

formulate any scheme for merger, compromise, consolidation, amalgamation, reconstruction or reorganization;

(ii) undertake any new project other than the business our Company presently conducts or substantially change the general nature or scope of the business our Company presently conducts or undertake any expansion of our Company’s current operations or adversely change our Company’s financial condition from that which existed on the date of this agreement;

(iii) declare or pay any dividend or authorise or make any distribution to our Company’s shareholders;

(iv) permit or cause or recognize or take any action with respect to any withdrawal of funds brought into our Company by the promoters of our Company.

iii) Vijaya Bank


Sanctioned (` in cr.)


Amount outstanding as on February 28, 2013 (`in cr.)


Vijaya Bank Rupee Term Loan of `150.00

Facility Agreement dated May 30, 2012 between Vijaya Bank and our Company

150.00 24 (twenty four) equal quarterly installments commencing after a moratorium of 12 (twelve) months Interest Our Company shall pay interest at the rate of base rate plus 2.75%.


First pari passu charge on all fixed assets of our Company.


117

The following is the summary of key terms under the facility agreement with Vijaya Bank:

Negative Covenants Our Company shall not without the prior written consent of the lender do the following: a) entering into any borrowing arrangements with any other lenders; b) creating any further charge over assets secured in favour of Vijaya Bank; c) making repayments of any loans; d) effecting any change in our Company’s capital structure or management; e) formulating any scheme of amalgamation or reconstitution; f) implementing any scheme of expansion or acquire any fixed assets; g) investing, lending or place deposits with any other concerns including any associates or

subsidiaries of our Company; h) undertaking any guarantee obligations; i) declaring any dividends.

iv) ICICI Bank Limited


Sanctioned




ICICI Bank Limited


Facility Agreement dated November 25, 2011 between ICICI Bank and our Company

225.00 28 (twenty eight) equal quarterly installments Interest Our Company shall pay interest at the rate of base rate plus 2%.


First pari passu charge on all movable and immovable fixed assets of our Company

The following is the summary of key terms under the facility agreement with ICICI Bank: Negative Covenants Our Company shall not without the prior written consent of the lender do the following: a) create, incur, assume or suffer to exist any security interest upon or with respect to any

property, revenues or assets of our Company; b) create, contract, incur or undertake any indebtedness in any manner whatsoever; c) declare or pay any dividend or authorise or make any distribution to our Company’s


118

shareholders; d) convey, sell, lease, let or otherwise dispose of in any other manner (or agree to do any of the

foregoing) all or any part of our Company’s property or assets charged to ICICI; e) formulate any scheme for merger, compromise, consolidation, amalgamation, reconstruction

or reorganization. v) ICICI Bank Limited Lender Amount



Amount outstanding as on February 28, 2013 (` in cr.)*


ICICI Bank Limited


Facility Agreement dated February 18, 2011 between ICICI Bank and our Company

37.50 8 (eight) equal half yearly installments starting from June 30, 2012 Interest Our Company shall pay interest at the rate of base rate plus 2.85%.


First pari passu charge by way of mortgage on all the movable and fixed assets of our Company.

The following is the summary of key terms under the facility agreement with ICICI Bank:

Negative Covenants Our Company shall not without the prior written consent of the lender do the following: a) declare or pay any dividend or authorise or make any distribution to our Company’s

shareholders; b) formulate any scheme for merger, compromise, consolidation, amalgamation, reconstruction

or reorganization. vi) ICICI Bank Limited Lender Amount



Amount outstanding as on February 28, 2013 (` in cr.)*


ICICI Bank Limited

Optionally Fully Convertible

Facility restructured and modified by letter dated April 26, 2001.

9.55 Repayable in one installment on March 15, 2015


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Loan (OFCL) of `9.55

Interest Our Company shall pay interest at the rate of 0.0001%

Description of Security: The facility is secured by: (i) Primary Security (a) First pari passu charge by way of mortgage on all immovable and movable properties of our

Company; and (b) Pledge of shares by the Promoters of our Company. vii) Syndicated Term Loan Credit Facility of US$50 million


Sanctioned (US$ in mn.)




State Bank of India

Term Loan of US$8.50

Facility sanctioned by Master Facility Agreement ("MFA") dated December 27, 2006

14.04 11 (eleven) unequal consecutive half yearly installments Interest Our Company shall pay interest at the rate of LIBOR plus 2.4%.

Bank of Baroda Term Loan of US$7.50

Facility sanctioned by MFA dated December 27, 2006


ICICI Bank Limited



12.39 11 (eleven) unequal consecutive half


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Lender Amount Sanctioned (US$ in mn.)




yearly installments Interest Our Company shall pay interest at the rate of LIBOR plus 2.4%.

*UCO Bank Term Loan of US$6.50



Canara Bank Term Loan of US$6.00



SBI International (Mauritius) Limited




Hua Nan Commercial Bank Limited



4.95 11 (eleven) unequal consecutive half


121

Lender Amount Sanctioned (US$ in mn.)




(Singapore)

yearly installments Interest Our Company shall pay interest at the rate of LIBOR plus 2.4%.

Indian Bank (Singapore)




PT Bank Madiri (Persero) TBK (Hong Kong)




*Note: Pursuant to the Master Facility Agreement dated December 27, 2006 the original party for this sanction was ABN Amro Bank N.V.

Description of Security and terms under the Master Facility Agreement: The facilities are secured by:

(i) Primary Security

First charge over movable and immovable assets of our Company.

The following is the summary of key terms under the MFA:


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Negative Covenants Our Company shall not without the prior written consent of the Lenders do the following: a) sell, transfer or otherwise dispose of our Company’s assets; b) change the general nature of our Company’s business; c) enter into any amalgamation, demerger, merger or reconstruction; d) engage in investments over and above US$10,000,000 (United States Dollars ten million); e) declare any dividends. viii) Nordea Bank AB


Sanctioned (US$ in mn.)




Nordea Bank AB Term Loan of US$10.006

Facility Agreement dated October 29, 2007 between Nordea Bank AB and our Company as mentioned in the Security Trustee Agreement dated October 29, 2007.

6.89 16 half yearly installments ending on November, 2015. Interest Our Company shall pay interest at the rate of 0.8765% per annum.

Description of Security The facility is secured by:

(i) Primary Security

Exclusive charge on our Company’s Full Coil Packing Line situated at Khopoli, Mumbai. (ii) Guarantees: Personal guarantees of Rajinder Miglani and Praveen Miglani respectively. ix) IFCI Limited




Amount outstanding as on February 28, 2013 (` in cr.)


IFCI Limited Zero Coupon Bonds of `11.10

Facility restructured and last modified by letter dated April 19, 2006.

4.44 5 annual installments ending in July, 2014


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Yield to maturity Our Company shall pay interest at the rate of 12.5% per annum.

Description of Security The facilities are secured by: (i) Primary Security

First charge on all movable and immovable assets of our Company, except packing machine supplied by PESMEL Finland.

Negative Covenants Our Company shall not without the prior written consent of IFCI do the following: (i) declare or pay any dividend or authorise or make any distribution to our Company’s

shareholders; (ii) prepay any of our Company’s loans to any other lenders;

(iii) dispose of any movable or immovable assets of our Company; (iv) extend any advances or unsecured loans to any subsidiaries or make any inter corporate

deposits.

x) Life Insurance Corporation of India

Lender Amount Sanctioned (`in cr.)




Life Insurance Corporation of India (LIC)

Zero Coupon Bonds of `7.73

Facility restructured and last modified by letter dated March 4, 2004.

3.09 5 annual installments ending in July, 2014 Yield to maturity: Our Company shall pay interest at the rate of 9% per annum.

Description of Security The facilities are secured by: (ii) Primary Security



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(iii) Collateral Security

Pledge of sponsor shareholding

(iv) Guarantees: Personal guarantees of Rajinder Miglani and Praveen Miglani respectively. Negative Covenants Our Company shall not without the prior written consent of LIC do the following: (i) diversify our Company’s business; (ii) undertake any new projects; (iii) transfer funds to group companies or any other associate entities; (iv) undertake any new long term debts; (v) enter into any new contracts or agreements with any third parties.

xi) United India Insurance Company Limited


Sanctioned




United India Insurance Company Limited

Zero Coupon Term Loan of `0.30

Facility restructured and last modified by letter dated February 2, 2005.

0.12 3 (three) equal annual installments commencing from March 15, 2010 Yield to maturity: Our Company shall pay interest at the rate of 9% per annum.

Description of Security The facilities are secured by: (i) Primary Security


xii) General Insurance Corporation of India

Lender Amount

Sanctioned





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General Insurance Corporation of India (GIC)

Zero Coupon Term Loan of `0.225

Facility restructured and last modified by letter dated January 6, 2003.

0.09 5 (five) annual installments commencing from June 15, 2000 and ending on June 15, 2014 Yield to maturity: Our Company shall pay interest at the rate of 15% per annum

Description of Security The facility is secured by: (i) Primary Security


(ii) Collateral Security

Pledge of sponsor shareholding

(iii) Guarantees: Personal guarantees of Rajinder Miglani and Praveen Miglani respectively.

xii) Infrastructure Development Finance Company Limited (IDFC) Lender Amount

Sanctioned


Amount outstanding as on February 28, 2013 *


IDFC Rupee Term Loan of `81.00

Facility Agreement dated September 2, 2008 between Infrastructure Development Finance Company Limited and our Company

60.75 28 (twenty eight) equal quarterly installments starting from July 1, 2011 Interest Our Company shall pay interest at the rate of base rate plus 2.37%.

Description of Security and terms under the Facility Agreement: The facility is secured by:


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(i) Primary Security • First pari passu charge on all immovable properties of our Company pertaining to the

Khopoli Project; • First pari passu charge on all movable assets of our Company pertaining to the Khopoli

Project; • First pari passu charge on all intangible assets of our Company pertaining to the Khopoli

Project.

(ii) Guarantees: Personal guarantees of Rajinder Miglani. The following is the summary of key terms under the facility agreement with IDFC: Negative Covenants Our Company shall not without the prior written consent of IDFC do the following: a) effect any change in the capital structure of our Company; b) prepay any subordinated facilities; c) redeem any preference shares issued by our Company; d) engage in any acts or things which may constitute public nuisance; e) lend money or credit or make deposits with or advances to any entity,; f) convey, sell, lease, let or otherwise dispose of in any other manner (or agree to do any of the

foregoing) all or any part of our Company’s property or assets charged to IDFC; g) wind up, liquidate or dissolve our Company’s affairs or enter into any transaction or

formulate any scheme for merger, compromise, consolidation, amalgamation, reconstruction or reorganization;

h) undertake any guarantee obligations; i) undertake any new project other than the business our Company presently conducts or

substantially change the general nature or scope of the business our Company presently conducts or undertake any expansion of our Company’s current operations or adversely change our Company’s financial condition from that which existed on the date of this Agreement;

j) pay commission, fees or any other charges to the promoters, directors, managers or other affiliates of our Company in connection with any such person furnishing any guarantee, counter-guarantee or indemnity or any other instrument or security on behalf of our Company or for any liability relating to or for purposes of this Agreement;

k) amend or modify our Company’s memorandum of association and articles of association.

Note: Our Company has created 2 (two) separate charges in favour of IDFC with respect to this facility. Our Company is in the process of making the requisite filing for satisfaction of the charge created by our Company on September 2, 2008.

a) Non-Convertible Debentures (NCDs)

Our Company issued 2,000 11.25% Coupon Rate Secured Redeemable NCDs of face value of `10,00,000 each and of the aggregate nominal value of `200.00 crores out of which `100.00 crores was through green shoe option on privately placed basis. A Debenture Trustee Deed cum Mortgage Deed ("Debenture Deed") was entered into by our Company and Axis Trustee Services Limited ("Debenture Trustee") on June 21, 2010. The NCDs were allotted as following:


127

Lender Amount Sanctioned (` in cr.)




Canara Bank 500 NCDs aggregating to `50.00

Debenture Deed dated June 21, 2010.

50.00 Redeemable in 4 (four) equal half yearly instalments commencing from September 25, 2013 Interest Our Company shall pay interest at the rate of 11.25%.

Allahabad Bank 500 NCDs aggregating to `50.00

50.00


250 NCDs aggregating to `25.00

25.00

Syndicate Bank 200 NCDs aggregating to `20.00

20.00

United Bank of India


15.00

Vijaya Bank 100 NCDs aggregating to `10.00

10.00

Corporation Bank


10.00

Oriental Bank of Commerce


10.00

Bank of Maharashtra


10.00

Description of Security and terms under the Debenture Deed: The facilities are secured by: (i) Primary Security • First pari passu charge on all fixed assets of our Company, except assets pertaining to the

Captive Power Plant and Packing Line

The following is the summary of key terms under the Debenture Deed:


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Negative Covenants Our Company shall not without the prior consent of the Debenture Trustee:

a) remove any fixed assets or pull down any building or other structures forming a part of the

secured land; b) declare any dividends; c) sell or dispose of the secured land or create any charge or lien on the same.

Note: Our Company created a charge for an amount of `120,000,000 in favour of Unit Trust of India on April 27, 1995 with the Charge ID 80064743. This charge has been satisfied and our Company is in the process of making the requisite filing for satisfaction of the said charge.

2. Unsecured Borrowings As on February 28, 2013 the aggregate outstanding unsecured borrowing of our Company is `101.30 crores. The details of our unsecured borrowings are as follows: (i) Unsecured working capital facilities of `250.00 crores availed from Yes Bank

Our Company pursuant to a sanction letter ("Yes Bank Sanction Letter") dated January 29, 2013 availed fund based and non fund based facilities of `250.00 crores from Yes Bank ("Yes Bank Facility") for import of raw materials, spare parts, components, capital goods and for other working capital requirements of our Company. The following are the key terms set out in the Sanction Letter: (a) The Yes Bank Facility shall be repayable within 6 months of the sanction. (b) Our Company has given an undated cheque for the facility amount to Yes Bank. (c) Rajinder Miglani has given a personal guarantee for the Yes Bank Facility. As on February 28, 2013, `100.00 crores of the said facility remains outstanding.

(ii) Unsecured working capital facilities of `94.00 crores availed from IDBI Bank ("IDBI")

Our Company pursuant to a sanction letter ("IDBI Sanction Letter") dated July 4, 2012 availed non fund based facilities of `94.00 crores from IDBI ("IDBI Facility") for working capital requirements of our Company. The IDBI Facility shall be repayable before May 29, 2013. As on February 28, 2013, there are no amounts outstanding for this facility.

(iii) Unsecured working capital facilities of `100.00 crores availed from ICICI Bank Limited

("ICICI")

Our Company pursuant to a sanction letter ("ICICI Sanction Letter") dated May 31, 2012 availed non fund based facilities of `100.00 crores from ICICI ("ICICI Facility") for procurement of raw materials, consumable stores, spares and tools and normal capital expenditure of our Company. The ICICI Facility shall be repayable with 1 (one) year. As on February 28, 2013, there are no amounts outstanding for this facility.


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(iv) Unsecured interest free loan of `7.86 crores from SICOM Limited sanction letter March 31, 1999 Our Company pursuant to a sanction letter dated March 31, 1999 was sanctioned an unsecured interest free loan of `7.86 crores by SICOM Limited. As on February 28, 2013, `1.20 crores of the said loan remains outstanding.

(v) Unsecured loan of `0.10 crores from Balaji Infra Projects Limited Our Company is paying interest at the rate of 12% per annum and the loan is repayable by our Company on demand. As on February 28, 2013, `0.10 crores of the said loan remains outstanding.


130

REGULATIONS AND POLICIES The following is a summary of certain relevant regulations and policies that are currently applicable to the business carried on by us. The regulations and policies set out below are not exhaustive and are only intended to give general information to investors and are neither designed nor intended to be a substitute for professional advice. Our Company is governed by various legislations as applicable to us and our units at Khopoli, in Maharashtra. Some of the key regulations applicable to us are summarised hereunder. Environmental Regulations A company has to comply with the provisions of the Environmental Protection Act, 1986, relevant Forest Conservation Acts, Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste (Management and Handling) Rules, 1989. A company is required to obtain and maintain statutory clearances relating to pollution control and environment in relation to its power projects. The Environment Impact Assessment Notification S.O. 1533, issued on September 14, 2006 (the "EIA Notification") under the provisions Environment (Protection) Act 1986, prescribes that new construction projects require prior environmental clearance of the Ministry of Environment and Forests, GoI. The environmental clearance must be obtained from the Ministry of Environment and Forests, GoI according to the procedure specified in the EIA Notification. No construction work, preliminary or other, relating to the setting up of a project can be undertaken until such clearance is obtained. The Public Liability Insurance Act, 1991, imposes liability on the owner or controller of hazardous substances for any damage arising out of any accident involving such hazardous substances. A list of "hazardous substances" covered by the legislation has been enumerated by the GOI by way of a notification. The owner or handler is also required to take out an insurance policy insuring against liability under the legislation. Industries Legislation Factories Act, 1948 (the "Factories Act") The Factories Act provides for a healthy working environment for the workers/ labourers. It not only regulates the health, safety, welfare and other working conditions of workers in the factory, but also the working hours of the workers and labourers. 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 defence 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.


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The Indian Boilers Act, 1923 and the Indian Boiler Regulations, 1950 The Indian Boilers Act, 1923 provides for mainly for the safety of life and Property of persons from the danger of explosions of steam boilers and for achieving uniformity in registration and inspection during operation and maintenance of boilers in India. Labour and Employees Related Statutes Industrial Disputes Act, 1947 (the "Industrial Dispute Act") and Industrial Dispute (Central) Rules, 1957 (the "Industrial Dispute Rules") Industrial Dispute Act provides for the investigation and settlement of industrial disputes. It also contains various provisions to prohibit strikes and lock-outs, declaration of strikes and lock-outs as illegal and provisions relating to lay-off and retrenchment and closure, Conciliation and adjudication of industrial disputes by; Conciliation Officers, a Board of Conciliation, Courts of Inquiry, Labour Courts, Industrial Tribunals and a National Industrial Tribunal. The Contract Labour (Regulation and Abolition Act), 1970 (the "Contract Labour Act") The Contract Labour Act has been enacted to regulate the employment of contract labour in certain establishments and for matters connected therewith. The Contract Labour Act provides for the constitution of central and state advisory Boards to advise the concerned governments on matters arising out of the administration of the Labour Act. Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the "EPF act") Under the EPF Act, compulsory provident fund, family pension fund and deposit linked insurance are payable to employees in factories and other establishments. The EPF Act provides that an establishment employing more than 20 persons, either directly or indirectly, in any capacity whatsoever, is either required to constitute its own provident fund or subscribe to the statutory employee’s provident fund. The employer of such establishment is required to make a monthly contribution to the provident fund equivalent to the amount of the employee’s contribution to the provident fund. It is also required that a company maintains prescribed records and registers and filing of forms with the concerned authorities. The EPF Act also prescribes penalties if payments are avoided. Employees covered under the act include contract labour but exclude apprentices, trainees, directors, working partners, domestic servants and contractors. Establishments can seek exemption from any or all the provisions of the EPF Act. Employees State Insurance Act, 1948 (the "ESI Act") The ESI Act provides for the provision of benefits to employees in case of sickness, maternity and employment injury. Under the act, employees receive medical relief, cash benefits, maternity benefits, pension to dependents of deceased workers and compensation for fatal or other injuries and diseases. Payments are made through a contributory fund. It applies to all factories including Government factories (excluding seasonal factories), which employ 10 or more employees and carry on a manufacturing process with the aid of power (20 employees where manufacturing process is carried out without the aid of power). The ESI Act can also be extended to shops and establishments. Generally, shops and establishments employing more than 20 employees as defined by the ESI Act, are covered by the ESI Act.


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Minimum Wages Act, 1948 (the "Minimum Wages Act")

The Minimum Wages Act as amended, provides a framework for state governments in India to stipulate a minimum wage applicable for a particular industry. The minimum wage 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. The Minimum Wages Act specifically provides that workmen must be paid for overtime at overtime rates stipulated by the Government. Contravention of the provisions of the Minimum Wages Act may result in imprisonment for a term up to 6 (six) months or a fine up to `500, or both.

Payment of Bonus Act, 1965 (the "Payment of Bonus Act") The object of the Bonus Act is to provide for the payment of bonus (linked with profit or productivity) to persons employed in certain establishments and matters connected therewith. The Bonus Act extends to the whole of India and is applicable to every factory and to every establishment wherein 20 or more workers are employed on any day during an accounting year. Under the Payment of Bonus Act, an employee who has worked for a period of at least 30 (thirty) working days in a year is eligible for bonus. The employees must be paid a minimum bonus which must be paid irrespective of the existence of any allocable surplus. In case the allocable surplus exceeds the minimum bonus payable, then the employer must pay bonus proportionate to the salary or wage earned during that period, subject to a maximum of 20% of such salary or wage. The maximum bonus must not exceed `3,500. Contravention of the provisions of the Payment of Bonus Act may result in imprisonment for a term up to 6 (six) months or a fine up to `1,000, or both. Payment of Gratuity Act, 1972 (the "Gratuity Act") The Gratuity Act provides for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. The Gratuity Act enforces the payment of 'gratuity', a reward for long service, as a statutory retiral benefit. The Gratuity Act prescribes that employees employed in factories, shops and other establishments who have put in continuous service of 5 (five) years, in the event of their superannuation, retirement, resignation, death or disablement due to accidents or diseases. The rule of ‘five year continuous service’ is relaxed in case of death or disablement of an employee. An employee is deemed to be in ‘continuous service’ for a period of at least 240 (two hundred and forty) days in a period of 12 (twelve) months or 120 (one hundred and twenty) days in a period of 6 (six) months immediately preceding the date of reckoning, whether or not such service has been interrupted during such period by sickness, accident, leave, absence without leave, lay-off, strike, lock-out or cessation of work not due to the fault of the employee. Gratuity is calculated at the rate of 15 days’ wages for every completed year of service with the employer. Presently, an employer must make a maximum gratuity payout of `1,000,000 for an employee. The Payment of Wages Act (the "Payment of Wages Act") The Payment of Wages Act aims at regulating the payment of wages to certain classes of employed persons. It provides for the imposition of fines and deductions and lays down wage periods and time and mode of payment of wages. Thus, the Payment of Wages Act ensures payment of wages in a particular form at regular intervals without unauthorized deductions.


133

Maternity Benefit Act, 1961 The purpose of the Maternity Benefit Act, 1961 is to regulate the employment of pregnant women in certain establishments for certain periods and to ensure that they get paid leave for a specified period before and after childbirth, or miscarriage or medical termination of pregnancy. It provides, inter alia, for payment of maternity benefits, medical bonus and prohibits the dismissal of and reduction of wages paid to pregnant women. Contravention of the Maternity Benefit Act may result in imprisonment for a term for not less than three months and up to one year and/or a fine not less than `2,000 and up to `5000. Intellectual Property Rights Regulations Trade Marks Act, 1999 (the "Trademarks Act") The Trade Marks Act governs the statutory protection of trademarks in India. In India, trademarks enjoy protection under both statutory and common law. Indian trademark law permits registration of trademarks for goods and services so as to indicate a connection in the course of trade between the goods and some person having the right as proprietor to use the mark. A ‘mark’ may consist of a word or invented word, signature, device, letter, numeral, brand, heading, label, name written in a particular style and so forth. The Trademarks Act governs the registration, acquisition, transfer and infringement of trademarks and remedies available to a registered proprietor or user of a trademark. The registration of a trademark is valid for a period of 10 (ten) years and may be renewed in accordance with the specified procedure. Currently, a person desirous of obtaining registration of his trademark in other countries must make separate applications in different languages and disburse different fees in the respective countries. The Madrid Protocol, administered by the International Bureau of the World Intellectual Property Organization ("WIPO"), of which India is a member, aims to facilitate global registration of trademarks by enabling nationals of member countries to secure protection of trademarks by filing a single application with one fee and in one language in their country of origin. This in turn is transmitted to the other designated countries through the WIPO. Tax related Legislation Central Excise Act, 1944 (the "Central Excise Act") The Central Excise Act 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. Value Added Tax, 2005 (the "VAT Act") The levy of Sales Tax within the state is governed by the VAT Act and Rules of the respective states. VAT has resolved 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 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.


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Income Tax Act, 1961 (the "Income Tax Act") Income Tax Act, 1961 is applicable to every Domestic / Foreign Company whose income is taxable under the provisions of this Act or Rules made thereto 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 the Previous Year by October of the Assessment Year .Other compliances like those relating to Tax Deduction at Source, Fringe Benefit Tax, Advance Tax, Minimum Alternative Tax and like are also required to be complied by every Company. Customs Act, 1962 (the "Customs Act") The provisions of the Customs Act and rules made there under are applicable at the time of import of goods into India or at the time of export of goods. Any Company requiring to import or export any goods is first required to get itself registered and obtain an IEC (Importer Exporter Code). Central Sales Tax Act, 1956 (the "Central Sales Act") In accordance with the Central Sales Tax Act, every dealer registered under the Central Sales Act shall be required to furnish a return in Form I (Monthly/ Quarterly/ Annually), as required by the sales tax laws of the state in which the assessee resides, together with treasury challan or bank receipt in token of the payment of taxes due. Miscellaneous Shops and Establishments Act, 1948 (the "Shops and Establishment Act")

The Shops and Establishments Act was enacted to regulate the conditions of work and employment in shops, commercial establishments, and residential hotels, restaurants, eating houses, theatres, other places of public amusement or entertainment and other establishments. The Shops and Establishments Act regulates the working hours, intervals, leaves for the shops and commercial establishments. It also seeks to protect the health and safety of employees in shops and commercial establishments by setting down standards of cleanliness, ventilation, lighting, precautions against fire and first aid. Professional Tax Professional tax is applicable to those citizens of India who are either involved in any profession, or trade, calling or employment. Every person liable to pay such tax (other than a person earning salary or wages, in respect of whom the tax is payable by the employer), shall obtain a certificate of enrolment from the department of sales tax. The Each State Government of each state is responsible empowered with the responsibility of for structuring as well as formulating the respective professional tax criteria and is also required to collect funds through professional tax.


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BOARD OF DIRECTORS AND MANAGEMENT The composition of the Board of Directors is governed by the provisions of the Companies Act and the Listing Agreements. The Articles of Association provide that the number of directors shall not be less than three or more than 12 unless otherwise approved in a general meeting. Pursuant to the Companies Act, not less than two-thirds of the total number of directors shall be persons whose period of office is subject to retirement by rotation and one third of such directors, or if their number is not three or a multiple of three, then the number nearest to one-third, shall retire from office at every annual general meeting. The following is the details of the Board of Directors as at the date of this Placement Document:

Name Age Nature of directorship DIN Director since Rajinder Miglani 67 Chairman 00286788 December 30, 1988 Satya Pal Talwar 73 Independent Director 00059681 May 09, 2009 Pandurang Kakodkar 76 Independent Director 00027669 September 10, 1999 Shirish Parikh 74 Independent Director 00941756 September 12, 1987 Om Parkash Gahrotra 66 Independent Director 00936696 January 21, 2012 Swarna Prabha Sukumar

62 Director (Nominee – LIC) 01327918 September 22, 2009

Anuj R Miglani 39 Managing Director 00287097 November 10, 2001 Ankit Miglani 34 Deputy Managing Director 00444956 July 29, 2005 Ashok Kumar Mahendru

67 Whole Time Director (Commercial)

00286892 October 28, 2005

Sharad Tudekar 75 Whole Time Director (Works) 00138678 October 28, 2005 Brief Biographies of our Directors: Rajinder Miglani Rajinder Miglani, aged 67, is the Chairman of our Company. He holds a Bachelors degree in Science and has over than 46 years of experience in the Steel Industry. He is an Industrialist and joined the Board as the Promoter Director. He has been associated with our Company since its incorporation in 1985. Satya Pal Talwar Satya Pal Talwar, aged 73, is the Director of our Company. He holds a Bachelor’s degree in Arts and a Bachelor’s degree in Law. He is also a Certified Associate of the Indian Institute of Bankers. He has an experience of more than 43 years in operational and policy formulation in Commercial & Central Banking. He has served as the 'Chairman and Managing Director' of renowned Banks such as Bank of Baroda, Union Bank of India and Oriental Bank of Commerce. He has also held the coveted position of deputy Governor of the RBI from 1994 to 2001. He joined the Board of our Company in May 2009. Pandurang Kakodkar Pandurang Kakodkar, aged 76, is the Director of our Company. He holds a Masters degree in Arts (Economics). He has more than 50 years of experience in Banking Sector. He is a retired Chairman of SBI. He joined the Board of our Company in September 1999. Shirish Parikh


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Shirish Parikh, aged 74 years, is a Director of our Company. He holds a Bachelor’s degree in Civil Engineering. He has professional experience of more than 54 years in the Steel Industry. He joined the Board of our Company in September 1987. Om Parkash Gahrotra Om Parkash Gahrotra, aged 66 years, is a Director of our Company. He is a member of the Indian Administrative Service (IAS). He belongs to the 1969 batch of Maharashtra Cadre of the IAS. He retired as an Additional Chief Secretary to the Government of Maharashtra. He has worked as Senior Executive Director of the Securities and Exchange Board of India (SEBI) and was a SEBI Nominee on the Board of Directors of the NSE. He has a professional experience of more than 40 years. He joined the Board of our Company in January 2012. Swarna Prabha Sukumar Swarna Prabha Sukumar, aged 62 years, is a nominee Director of LIC on our Board. She holds a Bachelor’s degree in Science. She has an experience of more than 33 years in LIC. She retired as Executive Director, U&R Department, LIC. She joined the Board of our Company in September 2009. Anuj R Miglani Anuj R Miglani, aged 39 years, is the Managing Director of our Company. He holds a Bachelor’s degree in Mechanical Engineering from Imperial College of Science and Technology, London. He manages the overall operations at the works and also plays a significant role in overall management of our Company. He joined the Board of our Company in November 2001. Ankit Miglani Ankit Miglani, aged 34 years, is the Deputy Managing Director of our Company. He holds a Bachelor’s degree in Economics with specialization in Finance from Wharton School, University of Pennsylvania, Philadelphia, U.S.A. He currently looks after all major commercial functions such as finance and accounts, international marketing and purchase of critical raw materials. He joined the Board of our Company in July, 2005. Ashok Kumar Mahendru Ashok Kumar Mahendru, aged 67, is the Director (Commercial) of our Company. He holds a Bachelor’s degree in Technology and FIE & MIMA. He joined our Company in 1995 and was appointed as the Executive Director of our Company from April 1, 1999. He looks after the commercial aspects of the company. He has over 46 years of experience in Steel Industry. He joined the Board of our Company in October, 2005. Sharad Tudekar Sharad Tudekar, aged 75, is the Director (Works) of our Company. He is a graduate engineer in Metallurgy from Pune University. He has an experience of over 51 years in the steel industry. He joined our Company in 1998 as President (Works-Donvat and PRC) and was appointed as an executive director with effect from April 1, 2000. He joined the Board of our Company in October, 2005. Corporate Governance


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Our Company believes that it is in compliance with the requirements of applicable corporate governance regulations, including the listing agreement between our Company and the Stock Exchanges ("Listing Agreement") in respect of the constitution of the Board of Directors and the various committees of the Board of Directors of our Company. The corporate governance framework is based on an effective independent Board of Directors, separation of the supervisory role of the Board of Directors from the executive management team and constitution of the committees of the Board of Directors, as required under applicable law. As a listed company, we are in compliance with the applicable provisions of the Listing Agreement pertaining to corporate governance, including appointment of independent directors and constitution of Committees. The Board of Directors functions either as a full Board or through various committees constituted to oversee specific operational areas. Our Company’s management provides the Board of Directors with detailed reports on a periodic basis. Committees of the Board of Directors There are 5 Board level committees of our Company, which have been constituted and function in accordance with the relevant provisions of the Companies Act and the Listing Agreement. These are (i) Audit Committee, (ii) Shareholders’/ Investors’ Grievance Committee, (iii) Remuneration Committee (iv) Committee of Directors, and (v) QIP Issue Committee. A brief note on each Committee, its scope and composition is given below: Audit Committee The audit committee was re-constituted at the meeting of the Board of Directors on January 21, 2012. The committee consists of three independent directors.

Name Designation in Committee Nature of DirectorshipShirish Parikh Chairman Independent DirectorPandurang Kakodkar Member Independent DirectorOm Parkash Gahrotra Member Independent Director The terms of reference and powers of the audit committee are as mentioned in Clause 49 II (A) to (E) of the Listing Agreement entered into with the Stock Exchanges and read with Section 292A of the Companies Act. It includes overseeing our Company’s financial reporting process, reviewing with the management, the financial statements and adequacy of the internal audit function, internal contract and to discuss significant internal audit findings, statutory compliances and issues related to risk management and compliances. All members of the Audit Committee are Non-Executive Independent Directors. They are financially literate and possess sound knowledge of accounts, audit, finance etc. The Executive Chairman, Director (Finance) and CFO, the internal auditor and the representatives of statutory auditors are invitees to the meetings of the audit committee. The cost auditors appointed by the Company u/s 233B of the Companies Act, 1956 attends the audit committee meeting whenever the cost audit report is discussed. The heads of various operations are invited to the meetings, as and when required. R Agrawal, Senior Vice President & Company Secretary acts as the Secretary of the Audit Committee. Shareholders’/ Investors’ Grievance Committee


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The Committee was re-constituted at the meeting of the Board of Directors on May 30, 2011. The Committee is looking after the Shareholders’ / Investors’ Grievance and redressal of investors’ / shareholders’ complaints related to transfer of shares, non-receipt of balance sheets, non-receipt of declared dividends etc. The committee consists of two directors, one of whom is an Independent Director.

Name Designation in Committee Nature of Directorship Shirish Parikh Chairman Independent Director Ashok Kumar Mahendru Member Whole Time Director R Agrawal – Sr. Vice President & Company Secretary of our Company acts as the Secretary to the Committee. Our Company resolved seven complaints from the shareholders that were received during the three month period ended December 31, 2012. There are no outstanding complaints as on December 31, 2012. Remuneration / Compensation Committee The Committee was re-constituted at the meeting of the Board of Directors on January 21, 2012. The committee comprises of three Independent Directors.

Name Designation in Committee Nature of Directorship Shirish Parikh Chairman Independent Director Ashok Kumar Mahendru Member Independent Director Swarna Prabha Sukumar Member Independent Director Pursuant to Clause 49 of the Listing Agreement and Schedule XIII to the Companies Act, 1956, the terms of reference of the Remuneration Committee is to determine our Company’s policy on remuneration payable to the Executive Directors including pension, and any compensation payments and also to approve payment of remuneration to the Managing or Whole Time Directors. Committee of Directors The Committee was re-constituted at the meeting of our Board of Directors on May 30, 2011, wherein the Board has delegated all powers conferred on the Board to this committee. The committee comprises of three Directors of whom one is an Independent Director.

Name Designation in Committee Nature of Directorship Rajinder Miglani Chairman Executive Chairman Ashok Kumar Mahendru Member Whole Time Director Shirish Parikh Member Independent Director QIP Issue Committee The Committee was constituted at the meeting of our Board on February 26, 2013 wherein the Board delegated all powers conferred on it for raising funds through this Placement. The committee comprises of three Directors of whom one is an Independent Director while the quorum is two directors.

Name Designation in Committee Nature of Directorship


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Name Designation in Committee Nature of Directorship Rajinder Miglani Chairman Executive Chairman Ashok Kumar Mahendru Member Whole Time Director Shirish Parikh Member Independent Director Policy on Disclosures and Internal Procedure for Prevention of Insider Trading Pursuant to Regulation 12(1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992, our Company has implemented a code of internal procedures and conduct for prevention of insider trading, to comply with such regulations. Shareholding of the Directors Our Company’s Articles of Association do not require our Directors to hold any qualification shares in our Company. The table below sets forth the number of Equity Shares held by the Directors of our Company, as at December 31, 2012:

Name and Designation

Designation Number of Equity Shares

Percentage of Total Outstanding Equity

Shares Rajinder Miglani Chairman 13,91,855 1.13Satya Pal Talwar Director -- --Pandurang Kakodkar Director -- --Shirish Parikh Director 53,300 --Om Parkash Gahrotra Director -- --Swarna Prabha Sukumar

Director (Nominee – LIC)

-- --

Anuj R Miglani Managing Director 13,02,094 1.06Ankit Miglani Deputy Managing

Director 13,00,000 1.06

Ashok Kumar Mahendru

Director (Commercial) -- --

Sharad Tudekar Director (Works) -- -- Compensation of Directors The Remuneration Committee determines and recommends to the Board, the compensation of the Directors and managers. The table below sets forth the details of the sitting fees and commission paid to the Directors during the year ended March 31, 2012:

(Amount in `) Name Salary Sitting Fee Total

Rajinder Miglani 1,11,00,000 -- 1,11,00,000Satya Pal Talwar -- 10,000 10,000Pandurang Kakodkar -- 40,000 40,000Shirish Parikh -- 1,04,000 1,04,000Narayan Datar* -- 51,000 51,000Swarna Prabha Sukumar -- 50,000 50,000Anuj R Miglani 1,15,00,000 -- 1,15,00,000Ankit Miglani 1,15,00,000 -- 1,15,00,000


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Name Salary Sitting Fee Total Ashok Kumar Mahendru 36,00,000 -- 36,00,000SharadTudekar 36,00,000 -- 36,00,000* Om Parkash Gahrotra was appointed on the Board of Directors after the demise of Narayan Datar. Following are the current details of remuneration of the executive directors of our Company. Rajinder Miglani (a) `10,00,000 per month by way of salary, perquisites and other allowances. (b) Contribution to Provident Fund and Superannuation Fund as per rules of our Company. (c) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of

service. (d) Leave and encashment of leave as per the rules of our Company. (e) Free use of car with driver and free telephone facility at the residence of the director for the

business of our Company. (f) Such other benefits and amenities as may be provided by our Company to other senior

officers from time to time. (g) Our Company shall pay to or reimburse the Chairman all costs, charges and expenses that

may have been or may be incurred by him for the purpose of or on behalf of our Company. In the event of the loss or inadequacy of profit in any financial year during his tenure as the Chairman, the aforesaid remuneration will be treated as minimum Remuneration subject to approval of Central Government, if any, as may be required. Anuj R Miglani (a) `10,00,000 per month by way of salary, perquisites and other allowances. (b) Contribution to Provident Fund and Superannuation Fund as per rules of our Company. (c) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of

service. (d) Leave and encashment of leave as per the rules of our Company. (e) Free use of Car with driver and free telephone facility at the residence of the Director for the

business of our Company. (f) Such other benefits and amenities as may be provided by our Company to other senior

officers from time to time. (g) Our Company shall pay to or reimburse the Managing Director all costs, charges and

expenses that may have been or may be incurred by him for the purpose of or on behalf of our Company.

In the event of the loss or inadequacy of profit in any financial year during his tenure as the Managing Director, the aforesaid remuneration will be treated as minimum remuneration subject to approval of Central Government, if any, as may be required. Ankit Miglani (a) `10,00,000 per month by way of salary, perquisites and other allowances. (b) Contribution to Provident Fund and Superannuation Fund as per rules of our Company. (c) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of

service. (d) Leave and encashment of leave as per the rules of our Company. (e) Free use of car with driver for the business of our company and free telephone facility at the


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director’s residence. (f) Such other benefits and amenities as may be provided by our Company to other senior

officers from time to time. In the event of the loss or inadequacy of profit in any financial year during his tenure as the Deputy Managing Director, the aforesaid remuneration will be treated as minimum remuneration. Further, our Company shall pay to or reimburse to the Deputy Managing Director all costs, charges and expenses that may have been or may be incurred by him for the purpose of or on behalf of our Company. Ashok Kumar Mahendru (a) ` 3, 00,000 per month by way of salary, perquisites and other allowances. (b) Contribution to Provident Fund and Superannuation Fund as per rules of our Company. (c) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of

service. (d) Leave and encashment of leave as per the rules of our Company. (e) Free use of car with driver for the business of our Company and free telephone facility at the

residence of the director. (f) Such other benefits and amenities as may be provided by our Company to other senior

officers from time to time. (g) Our Company shall pay to or reimburse the director all costs, charges and expenses that may

have been or may be incurred by him for the purpose of or in behalf of our Company. In the event of the loss or inadequacy of profit in any financial year during his tenure as a Director (Commercial), the aforesaid remuneration will be treated as minimum remuneration subject to approval of Central Government. The variation and increase in the remuneration of all Whole-Time Directors shall not exceed 10% of the net profits of the Company and the limits specified in the Schedule XIII of the Companies Act, 1956. The appointment of the director may be terminated at any time by giving 60 days notice. Sharad Tudekar (a) `3, 00,000 per month by way of salary, perquisites and other allowance. (b) Contribution to provident fund and superannuation fund as per rules of our Company. (c) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of

service. (d) Leave and encashment of leave as per the rules of our Company. (e) Free use of car with driver for the business of our Company and free telephone facility at

Residence. (f) Such other benefits and amenities as may be provided by our Company to other senior

officers from time to time. (g) Our Company shall pay to or reimburse the Director all costs, charges and expenses that may

have been or may be incurred by him for the purpose of or on behalf of our Company. In the event of the loss or inadequacy of profit in any financial year during his tenure as the Director (Works), the aforesaid remuneration will be treated as minimum remuneration subject to approval of Central Government. The variation and increase in the remuneration of all Whole-Time Directors shall not exceed 10% of the net profits of the Company and the limits specified in the Schedule XIII of the Companies Act. The appointment of the director may be terminated at any time by giving 60 days notice.


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Interest of Directors All Directors, including independent Directors, may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them. The Directors, including independent Directors, may also be regarded as interested in the Equity Shares, if any, held by them and also to the extent of any dividend payable to them and other distributions in respect of the shares of our Company. The Directors, including independent Directors, may also be regarded as interested in Shares held by or that may be subscribed by and allotted to the companies, firms and trust, in which they are interested as directors, members, partners and trustees. All of the Directors may be deemed to be interested in the contracts, agreements/ arrangements entered into or to be entered into by our Company with any company in which they hold directorships or any partnership firm in which they are partners, as declared in their respective capacity. Except as otherwise stated in this Placement Document in "Notes to Accounts", our Company has not entered into any contract, agreements, arrangements during the preceding two years from the date of this Placement Document in which the Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements, arrangements which are proposed to be made with them. Our Directors have not taken any loans from our Company. For details, please see "Financial Statements". There are no other pecuniary relationships or transactions between the Directors and our Company. Borrowing Powers of the Board of Directors Pursuant to the approval of the shareholders of our Company dated July 26, 2008, the Board of Directors is authorized to borrow up to an aggregate amount not exceeding `5000 Crores. Senior Management Personnel of our Company Following are our senior management personnel: Sunil Prakash Sunil Prakash, aged 58 years, is the Director and Chief Executive Officer of our Company. He has a Bachelor’s degree in Metallurgical Engineering from IT, Banaras Hindu University, Varanasi. He has completed a one year senior leadership management programme from INSEAD, France. He has about 37 years experience in the sales, marketing and operations verticals in the steel and automotive industry. He has worked with various organizations like Tata Steel, JSW, Tata Motors, Ispat Industries, Escorts and LML.


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Gursharn Sawhney Gursharn Sawhney, aged 59 years, is the Director (Finance) and Group Chief Financial Officer of our Company. He has a Bachelor’s degree in Science. He is a qualified Chartered Accountant from the Institute of Chartered Accountants of India and a qualified Company Secretary from the Institute of Company Secretaries of India. He also has a post graduate diploma in business management from XLRI. He has over 36 years of experience in finance and accounts with Companies like Batliboi and Company and Ispat Industries. He specializes in project financing. R Agrawal R Agrawal, aged 53 years, is a senior vice president and the company secretary of our Company. He has a Masters degree in Commerce and is a qualified Company Secretary from the Institute of Company Secretaries of India. He has over 30 years of experience in company secretarial and legal functions of organisations like J.L Morison, Rasoi Group, Ashoka Cement (Steel Division) and K. Raheja Group. Shareholding of the Key Managerial Personnel The table below sets forth the number of Equity Shares held by the key managerial personnel of our Company, as at December 31, 2012:

Name and Designation

Designation Number of Equity Shares

Percentage of Total Outstanding

Equity Shares Sunil Prakash Director and Chief Executive Officer -- 0.00Gursharn Sawhney Director (Finance) and Group Chief

Financial Officer 14,234 0.00

R Agrawal Senior Vice President and Company Secretary

-- 0.00

Organisational Structure


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PRINCIPAL SHAREHOLDERS The following table presents information regarding the ownership of the Equity Shares as of December 31, 2012.

Category of Shareholder No. of Shareholders

Total No. of Shares

Total No. of Shares held in Dematerialized

Form

Total Shareholding as a % of total No. of

Shares

Shares pledged or

otherwise encumbered

As a % of

(A+B)

As a % of

(A+B+C)

Number of

shares

As a % of Total No. of Shares

Shareholding of Promoter and Promoter Group

Indian

Individuals/ Hindu Undivided Family

8 5961700 5961700 4.88 4.88 0.00 0.00

Bodies Corporate 5 39304520 39304520 32.15 32.15 2502500 6.37 Sub Total(A)(1) 13 45266220 45266220 37.02 37.02 2502500 5.53 Foreign Bodies Corporate 1 41327931 41327931 33.80 33.80 0.00 0.00

Sub Total(A)(2) 1 41327931 41327931 33.80 33.80 0.00 0.00 Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2)

14 86594151 86594151 70.83 70.83 2502500 2.89

Public shareholding Institutions Mutual Funds/ UTI 17 37800 0 0.03 0.03 0.00 0.00 Financial Institutions / Banks 11 18595 7995 0.02 0.02 0.00 0.00 Foreign Institutional Investors

17 18663253 18648353 15.27 15.27 0.00 0.00

Sub-Total (B)(1) 45 18719648 18656348 15.31 15.31 0.00 0.00

Non-institutions Bodies Corporate 456 2139571 2087816 1.75 1.75 0.00 0.00 Individuals i. Individual shareholders holding nominal share capital up to Rs 1 lakh

28504 7981221 6744029 6.53 6.53 0.00 0.00

ii. Individual shareholders holding nominal share capital in excess of `1 lakh.

72 3100447 2983947 2.54 2.54 0.00 0.00

Any Other (specify) Clearing Members 131 450880 450880 0.37 0.37 0.00 0.00 Trusts 2 800 800 0.00 0.00 0.00 0.00 NRI/OCBs 408 3273385 418828 2.68 2.68 0.00 0.00 Sub-Total (B)(2) 29573 16946304 12686300 13.86 13.86 0.00 0.00 Total Public Shareholding (B)= (B)(1)+(B)(2)

29618 35665952 31342648 29.17 29.17 0.00 0.00

TOTAL (A)+(B) 29632 122260103 117936799 100.00 100.00 2502500 2.05


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As of December 31, 2012, the shareholding of our Promoter and Promoter Group was as follows: Name of the shareholder Details of Shares held

Encumbered shares (*) Details of warrants

Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital

Number of shares held

As a % of grand total (A) +(B) +( C )

No. As a percentage

As a % of grand total (A)+(B)+(C) of sub-clause (I)(a )

Number of warrants held

As a % total number of warrants of the same class

Ankit Miglani 1300000 1.06 0 0.00 0.00 0 0.00 1.06 Anuj R Miglani 1302094 1.07 0 0.00 0.00 0 0.00 1.07Archana Miglani 307500 0.25 0 0.00 0.00 0 0.00 0.25 Neelam Rajinder Miglani 1127501 0.92 0 0.00 0.00 0 0.00 0.92 Priyanka Miglani 307500 0.25 0 0.00 0.00 0 0.00 0.25 Rajinder Uttamchand Miglani

1391855 1.14 0 0.00 0.00 0 0.00 1.14

Sheetal Miglani 203750 0.17 0 0.00 0.00 0 0.00 0.17 Sudiksha Miglani - Minor (U/G Anuj R Miglani)

21500 0.02 0 0.00 0.00 0 0.00 0.02

Archisha Investments Pvt. Ltd.

5849878 4.78 0 0.00 0.00 0 0.00 4.78

Sainath Trading Company Pvt. Ltd.

3323600 2.72 0 0.00 0.00 0 0.00 2.72

Kredence Multi Trading Ltd. 14921063 12.20 0 0.00 0.00 0 0.00 12.20 Uttam Exports Pvt. Ltd. 7324379 5.99 2502500 0.00 0.00 0 0.00 5.99 Shree Uttam Steel & Power Ltd.

7885600 6.45 0 0.00 0.00 0 0.00 6.45

Arcelormittal Netherlands BV

41327931 33.80 0 0.00 0.00 0 0.00 33.80

Total 86594151 70.83 2502500 2.89 2.05 0 0.00 70.83 Each person or entity known to our Company other than the Promoters and Promoter group entities which beneficially own more than 1% of its outstanding Equity Shares as of December 31, 2012 is listed below. Each shareholder identified below is both the holder on record and the beneficial owner with sole power to vote and invest the Equity Shares listed next to its name below: Name of the shareholder Number of

shares held Shares as a percentage of total number of shares

Details of warrants Details of convertible securities

Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital

Number ofwarrants held

As a %total number ofwarrants ofthe sameclass

Number ofconvertible securities held

% w.r.t total number of convertible securities of the same class

Cresta Fund Limited 12061801 9.87 0 0 9.87 Prime India Investment Fund Ltd. 5912833 4.84 0 0 4.84Sanjeev Gupta 2714700 2.22 0 0 2.22 As on December 31, 2012 there were no locked-in shares and outstanding depository receipts.


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PLACEMENT PROCEDURE Below is a summary intended to present a general outline of the procedure relating to the bidding, payment, allocation and allotment of the Equity Shares. The procedure followed in the Placement may differ from the one mentioned below and prospective Investors are assumed to have apprised themselves of the same from our Company or the GC-BRLM. Prospective Investors are advised to inform themselves of any restrictions or limitations that may be applicable to them. For further details, see the sections "Distribution of Shares", "Distribution and Solicitation Restrictions" and "Transfer Restrictions". Qualified Institutions Placements The Placement is being made in reliance upon Chapter VIII of the SEBI Regulations mechanism of Qualified Institutions Placement ("QIP"), whereunder an Indian listed company may issue and allot equity shares/fully convertible debentures/partly convertible debentures/ non-convertible debt instruments along with warrants or any other security (excluding warrants) which are convertible into or exchangeable with equity shares at a later date in a QIP to QIBs as defined in Regulation 2(l) (zd) of the SEBI Regulations, provided that: • A special resolution approving the QIP has been passed by its shareholders. Such special

resolution must specify that that the allotment of securities is proposed to be made pursuant to the QIP;

• equity shares of the same class of such company are listed on a stock exchange in India that

has nation-wide trading terminals for a period of at least one year as on the date of issuance of notice to its shareholders for convening the general meeting to pass the special resolution; and

• such company complies with the minimum public shareholding requirements set out in

Securities Contracts (Regulations) Rules, 1957. The aggregate of the proposed Qualified Institutions Placement and all previous Qualified Institutions Placements made in the same financial year shall not exceed five times the net worth of the issuer as per the audited balance sheet of the previous financial year. The relevant date for the determination of Floor Price for the issue of the Equity Shares means the date of the meeting in which our Board or any Committee thereof decides to open the Placement. Our Company has applied for and received in-principle approvals from BSE and NSE vide their letters dated March 25, 2013 and March 25, 2013 under Clause 24(a) of the Listing Agreement for the listing of the Equity Shares proposed to be issued pursuant to the Issue on the Stock Exchanges. We have filed a copy of the Preliminary Placement Document and the Placement Document with the Stock Exchanges. There is a minimum pricing requirement calculated in accordance with Regulation 85 of the SEBI Regulations. The Floor Price of the Equity Shares shall not be less than the average of the weekly high and low of the closing prices of the related equity shares of such issuer quoted on the stock exchange during the two weeks preceding the relevant date. Pursuant to an amendment to the SEBI Regulations, an issuer may offer a discount of not more than 5% on the price calculated for the QIP as above, subject to the approval of the shareholders by a special resolution pursuant to Regulation 82(a) of the SEBI Regulations. We are thus entitled to provide a discount on the price calculated for the QIP.


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The ‘relevant date’ referred to above means the date of the meeting in which the board of our Company or the committee of directors duly authorised by the board of our Company decides to open the proposed Placement; and the "stock exchange" means any of the recognised stock exchanges in which the equity shares of the Placement of the same class are listed and on which the highest trading volume in such shares has been recorded during the two weeks immediately preceding the relevant date. 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. QIBs are not allowed to withdraw their Bids after the closure of the Placement. Equity shares must be allotted within twelve months from the date of the shareholders resolution approving the QIP. The equity shares issued pursuant to the QIP must be issued on the basis of a placement document that shall contain all material information including the information specified in Schedule XVIII of the SEBI Regulations. The preliminary placement document and placement document are private documents provided to select investors (not more than 49) through serially numbered copies and is required to be placed on the website of the concerned stock exchange and of the issuer 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. Pursuant to the provisions of Section 67 of the Companies Act, for a transaction that is not a public offering, an invitation or offer cannot be made to more than 49 persons. The minimum number of allottees for each QIP shall not be less than: • two, where the issue size is less than or equal to `250 crore; and • five, where the issue size is greater than `250 crore. No single allottee shall be allotted more than 50% of the issue size. QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee. The issuer shall furnish a copy of the Preliminary Placement Document and this Placement Document to each stock exchange on which its Equity Shares are listed. The aggregate of the proposed qualified institutions placement shall be made in the same financial year and shall not exceed five times the networth of the issuer in accordance with the audited balance sheet of the previous financial year. Securities/ Equity Shares allotted to a QIB pursuant to a QIP shall not be sold/ transferred for a period of one year from the date of allotment, except on a recognized stock exchange in India. Placement Procedure 1. Our Company and the GC-BRLM shall circulate the serially numbered Preliminary

Placement Document, the Placement Document, the Bid-cum Application Form and the Placement Document either in electronic form or physical form to not more than 49 QIBs identified by it in consultation with our GC-BRLM.

2. The list of QIBs to whom the Bid cum Application Form is to be delivered shall be

determined by the GC-BRLM in consultation with our Company. The GC-BRLM shall deliver to such QIBs Bid Cum Application Form. Unless a serially numbered Preliminary Placement Document along with the 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


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recipient, no offer or invitation to offer shall be deemed to have been made to such person. 3. Our Company shall intimate the Bid Opening Date to the Stock Exchanges. 4. QIBs may submit their Bids through Bid cum Application Form including any revision

thereof, during the bidding period to the GC-BRLM. 5. QIBs may submit such Bid cum Application Forms to the GC-BRLM and would have to

indicate the following in the Bid Cum Application Form: a) Full Official name of the QIB to whom Equity Shares are to be Allotted; b) Number of Equity Shares Bid for; c) Price at which they are agreeable to subscribe for the Equity Shares, provided that

QIBs may also indicate that they are agreeable to submit Bid cum Application Form at Cut-off Price (i.e. the Placement Price of the Equity Shares which shall be determined by our Company in consultation with the GC-BRLM at or above the Floor Price); and

d) The details of the depository account(s) to which the Equity Shares should be credited.

Note: Each sub-account of an FII, other than a sub-account which is a foreign corporate or foreign individual, will be considered as an individual QIB and separate Bid cum Application Forms would be required from each such sub-account for submitting Bids. FIIs or sub-accounts of FIIs, are required to indicate the SEBI FII/ sub-account registration no. in the Bid cum Application Form

6. Once a duly filled Bid cum Application Form is submitted by a QIB, such Bid cum

Application Form constitutes an irrevocable offer and cannot be withdrawn after the Bid Closing Date. The Bid may be revised till Bid Closing Date, for which the QIB will have to revise the Bid in a Revision Form available with GC-BRLM. Revision Forms received after the closure of the Placement on Bid Closing Date by giving intimation to the Stock Exchanges shall not be considered as valid and the original Bid will stand.

7. Upon receipt of the duly completed Bid cum Application Forms received from the QIBs who

have received serially numbered Preliminary Placement Document, our Company shall, in consultation with the GC-BRLM, after the Bid Closing Date, decide: (i) the price at which the Equity Shares will be offered ("Placement Price"), which shall

be at or above the Floor Price subject to the discount as mentioned earlier and; (ii) the number of Equity Shares to be issued, in each case, in consultation with the GC-

BRLM. Our Company shall notify the Stock Exchanges of the Placement Price. On determination of the Placement Price, the GC-BRLM will send the Confirmation of Allocation Note ("CAN") to the QIBs to whom an allocation shall be made. The dispatch of the CAN shall be deemed a valid, binding and irrevocable contract for the QIBs to pay the entire Placement Price for all the Equity Shares allocated to such QIBs. The CAN shall contain details of the number of Equity Shares Allocated to the QIB, the payment instructions, including details of the amount payable by the QIB for the allotment of Equity Shares in its name, and the Pay-In Date as applicable to the respective QIB. The decision of our Company and the GC-BRLM in this regard shall be at their sole and absolute discretion, and may not be proportionate to the number of Equity Shares applied for.

8. The bid Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed

to have been given notice of such date after the receipt of the Bid cum Application Form.


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9. QIBs shall make payment of the entire application monies to the Escrow Account of our Company by the Pay-In-Date as specified in the CAN sent to the respective QIBs.

10. Upon receipt of the application monies from the QIBs, the Board of Directors or a duly

constituted committee of our Company will approve Allotment of the Equity Shares pursuant to a Board resolution, as per the details provided in their respective CANs. Our Company shall not allot Equity Shares to more than 49 QIBs to whom an invitation or offer has been made. Our Company shall intimate to the Stock Exchanges of the details of the Allotment.

11. After adopting the Allotment resolution and prior to crediting the Equity Shares into the

Depository Participant Accounts of the QIBs, our Company shall apply for listing approval of the BSE and NSE for listing of the Equity Shares.

12. After receipt of the listing approval of the BSE and NSE, our Company shall credit the Equity

Shares into the Depository Participant accounts of the QIBs in accordance with the details submitted by the QIBs in the Bid cum Application Form.

13. Our Company shall then apply for the final trading permissions from the Stock Exchanges. 14. The Equity Shares that have been so allotted and credited to the Depository Participant

accounts of the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of final trading approval from the Stock Exchanges.

15. As per the applicable laws, the Stock Exchanges shall notify the final trading permissions,

which are ordinarily available on their websites, and our Company shall communicate the receipt of the final trading permissions from the Stock Exchanges to those QIBs to whom the Equity Shares have been allotted. Our Company and the GC-BRLM shall not be responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay or non receipt. QIBs are advised to appraise themselves of the status of the receipt of the permissions from the Stock Exchanges or our Company.

Qualified Institutional Buyers Only QIBs as defined in Regulation 2(l) (zd) of the SEBI Regulations, and not otherwise excluded pursuant to Regulation 86 of Chapter VIII of the SEBI Regulations, are eligible to invest. (i) mutual fund, venture capital fund and foreign venture capital investor registered with the

SEBI; (ii) a foreign institutional investor and sub-account (other than a sub-account which is a foreign

corporate or foreign individual), registered with the SEBI; (iii) a public financial institution as defined in section 4A of the Companies Act, 1956; (iv) a scheduled commercial bank; (v) a multilateral and bilateral development financial institution; (vi) a state industrial development corporation; (vii) an insurance company registered with the Insurance Regulatory and Development Authority; (viii) a provident fund with minimum corpus of twenty five crore rupees; (ix) a pension fund with minimum corpus of twenty five crore rupees; (x) 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; (xi) insurance funds set up and managed by army, navy or air force of the Union of India; (xii) Insurance funds set up and managed by the Department of Posts, India; and (xiii) Alternative investment funds registered with SEBI.


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Please note that pursuant to amendments to the SEBI Regulations, a sub-account that is a foreign corporate or foreign individual is no longer included under the definition of a QIB. Under Regulation 86 of Chapter VIII of the SEBI Regulations, no allotment shall be made, either directly or indirectly, to any QIB who is a promoter or any person related to the promoter(s) of our Company. For this purpose, any QIB who has all or any of the following rights shall be deemed to be a person related to the promoters: • rights under a shareholders’ agreement or voting agreement entered into with

promoters of our Company or persons related to the promoters of our Company; • veto rights; or • the right to appoint a nominee director on the Board of our Company, unless a QIB has acquired any of these rights in its capacity as a lender to our Company and such QIB does not hold any shares in our Company.

FIIs are permitted to participate through the portfolio investment scheme. FIIs are permitted to participate in the Placement, subject to compliance with all applicable laws and such that the shareholding of the FII does not exceed the specified limits as prescribed under the applicable laws in this regard. No single FII can hold more than 10% of the post Placement paid-up capital of our Company. In respect of an FII investing in our Equity Shares on behalf of its sub accounts, the investment on behalf of each sub account shall not exceed 10% of our Company’s total paid up capital or 5% of the total paid up capital of our Company in case such sub account is a foreign corporate or an individual. Under the portfolio investment scheme, the overall holding of Equity Shares to FIIs on a repatriation basis should not exceed 24% of post issue paid up capital of a company. However, the limit of 24% can be raised up to the permitted sectoral cap for our Company after approval of the Board and shareholders of our Company. As on the date of this Placement Document, our Company has raised the limit upto 100% of post issue paid up capital of our Company, provided that the shareholding of each FII, on its own account and on behalf of each of the SEBI approved sub-account, in our Company, shall not exceed 10% of the total paid up capital of our Company.

Our Company and the GC-BRLM are not liable for the summary of legal provisions as stated herein and any amendments or modification or changes in applicable laws or regulations, which may occur after this Placement Document is filed with the Stock Exchanges. QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to Bid. QIBs are advised to ensure that any single Bid cum Application Form 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 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 QIBs shall be solely responsible for the Takeover Code, SEBI (Prohibitions of Insider Trading) Regulations, 1992, and other applicable laws, rules, regulation, guidelines and circulars. As per the SEBI Regulations, A minimum of 10% of the Equity Shares in the Placement 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.


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Note: Affiliates or associates of the GC-BRLM who are QIBs may participate in the Placement in compliance with applicable laws. Bid/Issue Programme Bidding Period: BID/ISSUE OPENS ON MARCH 25, 2013 BID/ISSUE CLOSES ON MARCH 26, 2013 Application and Bidding Bid cum Application Form QIBs shall only use the specified serially numbered Bid cum Application Form supplied by the GC-BRLM in either electronic form or by physical delivery for the purpose of making a Bid (including revision of a Bid) in accordance with the terms of the Preliminary Placement Document or the Placement Document. By making a Bid (including the revision thereof) for Equity Shares pursuant to the terms of the Preliminary Placement Document and the Placement Document, each QIB will be deemed to have made the following representations and warranties and the representations, warranties and agreements made under the sections and paragraphs "Notice to Investors", "Distribution and Solicitation Restrictions" and "Transfer Restrictions" a. the QIB confirms that it is a Qualified Institutional Buyer ("QIB") in terms of Regulation

2(1)(zd) of the SEBI Regulations, have a valid and existing registration under the applicable laws in India (as applicable) and is eligible to participate in this Placement;

b. the QIB confirms that it is not a promoter and is not a person related to the promoters, either

directly or indirectly, and its Bid does not directly or indirectly represent the promoter or promoter group or persons related to the promoters of our Company;

c. the QIB confirms that it has 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 our Company other than that acquired in the capacity of a lender not holding any Equity Shares which shall not be deemed to be a person related to the promoters;

d. the QIB has no right to withdraw its Bid after the Bid Closing Date; e. the QIB confirms that if allotted Equity Shares pursuant to this Placement Document, it shall,

for a period of one year from allotment, sell the Equity Shares so acquired only on the recognised Stock Exchanges;

f. the QIB confirms that the QIB is eligible to Bid and hold Equity Shares so allotted and

together with any Equity Shares held by the QIB prior to the Placement and the QIB further confirms that the holdings of the QIB, do not and shall not, exceed the level permissible as per any applicable regulations;

g. the QIB confirms that the Bid would not eventually result in triggering an open offer under


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the Takeover Code; h. that to the best of its knowledge and belief together with other QIBs in the Placement that

belong to the same group or are under common control, the allotment to the QIB or such group of QIBs shall not exceed 50% of the aggregate amount of the Placement. For the purposes of this statement: (i) the expression "belongs 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

(ii) Control" shall have the same meaning as is assigned to it under Clause (c) of sub-regulation (1) of Regulation 2 of the Takeover Code;

i. The QIB shall not undertake any trade in the Equity Shares credited to its Depository

Participant account until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges.

QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, SUB-ACCOUNTS OF A FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB. IF SO REQUIRED BY THE GC-BRLM, THE QIB SUBMITTING A BID, ALONG WITH THE BID CUM APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO THE GC-BRLM TO EVIDENCE THEIR STATUS AS A "QIB" AS DEFINED HEREINABOVE. IF SO REQUIRED BY THE GC-BRLM, COLLECTION BANK(S) OR ANY STATUTORY OR REGULATORY AUTHORITY IN THIS REGARD, INCLUDING AFTER PLACEMENT CLOSURE, THE QIB SUBMITTING A BID AND/OR BEING ALLOTTED EQUITY SHARES IN THE PLACEMENT, 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 the QIBs shall be deemed a valid, binding and irrevocable offer for the QIB to pay the entire Placement Price for its share of Allotment (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. The QIBs may also be sent a serially numbered Preliminary Placement Document either in electronic form or by physical delivery. Bids by Mutual Funds The Bids made by the asset management companies or custodian of MFs shall specifically state the names of the concerned schemes for which the Bids are made. Each scheme/fund of a mutual fund will have to submit separate Bid-cum-Application Form. In case of a MF, a separate Bid can be made in respect of each scheme of the MF registered with SEBI and such Bids in respect of more than one scheme of the MF will not be treated as multiple Bids


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provided that the Bids clearly indicate the scheme for which the Bid has been made. However, for the purpose of calculating the number of allottees/applicants, various schemes of the same mutual fund will be considered as a single allottee/applicant. As per the current regulations, the following restrictions are applicable for investments by MFs: No MF 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 index funds or sector or industry specific funds. No MF 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. Our Company and the GC-BRLM are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of the 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 Bid cum Application Form All Bid cum Application Forms shall be duly completed including price and the number of Equity Shares Bid. All Bid cum Application Forms duly completed along with copy of the PAN card shall be submitted to the GC-BRLM. The Bid cum Application Form shall be submitted within the bidding Period to the GC-BRLM either in electronic form or through physical delivery at the following address: Anand Rathi Advisors Limited 10th Floor, " D" Wing, Trade Tower, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400013, India. Tel: +91 22 6626 6666 Fax: +91 22 6626 6700 E-mail: [email protected] Contact Person: Akshay Bhandari/ Jitendra Verma The GC-BRLM shall not be required to provide any written acknowledgement of the same. Pricing and Allocation Build up of the Book QIBs shall submit their Bids (including the revision of their bids) through the Bid cum Application Form within the Bidding Period to the GC-BRLM who shall maintain the Book. Price discovery and allocation Our Company, in consultation with the GC-BRLM, shall finalise the Placement Price which shall be at or above the Floor Price. The Issuer may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85 of the SEBI regulations. After finalisation of the Placement price, our Company has updated the Preliminary Placement Document with the Placement details and has filed the final Placement Document with the Stock Exchanges.


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Method of Allocation Our Company shall determine the allocation in consultation with the GC-BRLM in compliance with Chapter VIII of the SEBI Regulations. Bids received from QIBs at or above the Floor Price shall be grouped together to determine the total demand. Any allocation to all such QIBs will be made at the Placement Price. Allocation shall be decided by our Company in consultation with the GC-BRLM on a discretionary basis for a maximum of 49 Investors. Allocation to Mutual Funds for up to a minimum of 10% of the aggregate amount of the Placement shall be undertaken subject to valid Bids being received at or above the Placement Price. THE DECISION OF OUR COMPANY AND THE GC-BRLM 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 AND QIBS MAY NOT RECEIVE ANY ALLOCATION, EVEN IF THEY HAVE SUBMITTED VALID BIDS AT OR ABOVE THE PLACEMENT PRICE. NEITHER OUR COMPANY NOR THE BOOK RUNNING LEAD MANAGER ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION. No single allottee shall be allotted more than 50% of the aggregate amount of the Placement Size. Provided further that QIBs belonging to the same group or those who are under common control shall be deemed to be a single allottee for the purpose of this clause. For details of what constitutes same group or common control see "Application and Bidding - Bid cum Application Form". The maximum number of Allottees of Equity Shares shall not be greater than 49 Allottees. Further, the Equity Shares shall be allotted within 12 months from the date of the shareholders resolution approving the Placement. Confirmation of Allocation Notes (CAN) Based on the Bid cum Application Forms received, our Company and the GC-BRLM will decide the list of QIBs 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 by them for Allotment of the Equity Shares in their respective names shall be notified to such Investors. Additionally, the CAN would include details of the bank account(s) for transfer of funds if done electronically, address where the application money needs to be sent, Pay-In Date as well as the probable designated date ("Designated Date"), being the date of credit of the Equity Shares to the investor’s account, as applicable to the respective QIBs. The eligible QIBs 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 CAN by the QIB shall be deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the GC-BRLM and to pay the entire Placement Price for all the Equity Shares allocated to such QIB.


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QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB-ACCOUNTS OF A FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB. Each scheme or fund of a mutual fund will have to submit separate Bid cum Application Forms. Demographic details like address, bank account etc. will be obtained from the Depositories in accordance with the demat account details given above. By submitting the Bid cum Application Form, the QIB will be deemed to have made the representations and warranties as specified under the section, "Notice to Investors" and further that such QIB shall not undertake any trade in the Equity Shares credited to its depository participant account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges. QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated /allotted to them pursuant to this Placement. Company Account for Payment of Application Money Our Company has opened a Escrow bank account with Yes Bank Limited, acting as the Escrow Agent (the "Uttam Galva Steels - QIP Escrow Account") in terms of the arrangement between our Company, the GC-BRLM and the Escrow bank. The QIBs, to whom CAN is sent, will be required to deposit the entire amount payable for the Equity Shares allocated to it by the Pay-In Date as mentioned in the respective CANs. If the payment is not made favoring the Escrow Cash Account within the time stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be cancelled. In case of cancellations or default by the QIBs, our Company, in consultation with the GC-BRLM has the right to reallocate the Equity Shares at the Placement Price among existing or new QIBs at its sole and absolute discretion, subject to compliance with the requirement of ensuring that the Application Forms are sent to not more than 49 QIBs. Payment Instructions The payment of application money shall be made by the QIBs in the name of — "Uttam Galva Steels - QIP Escrow Account" as per the payment instructions provided in the CAN. QIBs may make payment through cheques or electronic fund transfer, or such as other mode as may be required by GC-BRLM. Note- Payment of the amounts through outstation cheques are liable to be rejected. Cheques shall be only payable at Mumbai Designated Date and Allotment of Equity Shares 1. The Equity Shares will not be allotted unless the QIBs pay the amount payable as

mentioned in the CANs issued to them, into the Escrow Cash Account with the collection bank as stated above.


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2. Subject to the satisfaction of the terms and conditions of the Placement Agreement, our

Company will ensure that the Allotment of the Issue Shares (as such term is defined in the Placement Agreement) is completed by the Designated Date provided in the CAN for the QIBs who have paid the aggregate subscription amounts as provided in the CANs.

3. In accordance with the SEBI Regulations, Equity Shares will be issued and Allotment

shall be made only in the dematerialized form to the Allottees. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act, 1996.

4. The Company reserves the right to cancel the Placement at any time up to Allotment

without assigning any reasons whatsoever. 5. Post Allotment and credit of Equity Shares into the QIBs Depository Participant account,

our Company will apply for final trading permission on the Stock Exchanges. 6. In the unlikely event of any delay in the Allotment or credit of Equity Shares, or receipt

of trading or listing approvals or cancellation of the Placement, no interest or penalty would be payable by our Company or the GC-BRLM. On cancellation of the Placement, monies received from investors in the Placement shall be refunded within a reasonable time, without interest or penalty as stated above.

Other Instructions Permanent Account Number or PAN Each QIB should mention its PAN allotted under the IT Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the Bid cum Application Form. Bid cum Application Forms without PAN will be considered incomplete and are liable to be rejected. It is to be specifically noted that applicants should not submit the GIR number instead of the PAN as the Bid cum Application Form is liable to be rejected on this ground. Right to Reject Applications Our Company, in consultation with the GC-BRLM, may reject Bids, in part or in full, without assigning any reasons whatsoever. The decision of our Company and GC-BRLM in relation to the rejection of Applications shall be final and binding. Equity Shares in dematerialised form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the allotment of Equity Shares pursuant to the Placement shall be only in dematerialised form (i.e., not in the form of physical certificates but to be fungible and to be represented by the statement issued through the electronic mode). a. A QIB applying for Equity Shares must have at least one beneficiary account with

either of the Depository Participants of either NSDL or CDSL prior to making the Bid. b. Allotment to a successful QIB will be credited in electronic form directly to the

beneficiary account (with the Depository Participant) of the QIB.


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c. Equity Shares in electronic form can be traded only on the stock exchanges having

electronic connectivity with NSDL and CDSL. All stock exchanges where our Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

d. The trading of our Equity Shares would be in dematerialised form only for all QIBs in

the demat segment of the respective Stock Exchanges. e. Our Company shall not be responsible or liable for the delay in the credit of Equity

Shares due to errors in the Bid cum Application Form or on the part of the QIBs Release of funds to our Company The Escrow Bank shall not release the monies lying to the credit of the "Uttam Galva Steels - QIP Escrow Account" till such time, that it receives an instruction in pursuance to the Escrow Agreement, along with the Listing and trading approval of the Stock Exchanges for the Equity Shares offered in the Placement.


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PLACEMENT Placement Agreement The GC-BRLM has entered into a Placement Agreement with our Company (the "Placement Agreement"), pursuant to which the GC-BRLM has agreed to use reasonable efforts to procure QIBs to subscribe for the Equity Shares to be issued pursuant to Chapter VIII of the SEBI Regulations, to QIB's in reliance of Regulation S under the Securities Act. The Placement Agreement contains customary representations and warranties, as well as indemnities from our Company and is subject to certain conditions and termination provisions in accordance with the terms contained therein. Applications shall be made to list the Equity Shares and admit them to trading on the Stock Exchanges. 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. The Preliminary Placement Document and this 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 any other class of investors other than QIBs. In connection with the Placement, the GC-BRLM (or affiliates) may enter into, for own accounts, 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 GC-BRLM may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Placement and no specific disclosure will be made of such positions. Affiliates of the GC-BRLM may purchase Equity Shares and be allocated Equity Shares. See also the section "Notice to Investors". From time to time, the GC-BRLM and their affiliates have provided, and continue to provide, financial advisory, investment banking and other services to us, our shareholders and our affiliates in the ordinary course of their business, for which they have received and may continue to receive fees and commissions.


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DISTRIBUTION AND SOLICITATION RESTRICTIONS The distribution of this Placement Document or any offering material and the offering, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this Placement Document or any offering material are advised to consult with their own legal advisors as to what restrictions may be applicable to them and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or invitation in any circumstances in which such offer or invitation 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 Placement Document or any other material relating to our Company or our Equity Shares in any jurisdiction where action for such purpose is required. Accordingly, our Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering materials or advertisements in connection with our 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. The Issue will be made in compliance with the applicable SEBI Regulations. Each purchaser of the Equity Shares in the Placement will be required to make, or be deemed to have made, as applicable, the acknowledgments and agreements as described under ―"Transfer Restrictions". European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State") an offer to the public of any Equity Shares which are the subject of the placement contemplated by this Placement Document may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any Equity Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (a) to legal entities which are authorised or regulated to operate in the financial markets or, if not

so authorised or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity which has two or more of (1) an average of at least 250 employees during

the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last (or, in Sweden, in its last two) annual or consolidated accounts;

(c) by the GC-BRLM to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the GC-BRLM for any such offer; or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Equity Shares shall result in a requirement for the publication by the Book Running Lead Manager of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an "offer 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 any Equity Shares to be offered so as to enable an investor to decide to purchase any Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure


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in each Relevant Member State. This offer is for the intended recipients only and may not in any way be forwarded to the public in Sweden. Accordingly, the GC-BRLM represents, warrants and agrees that it has not offered or sold and will not offer or sell Equity Shares in Sweden in a manner that would require the registration of a prospectus by the Swedish Financial Supervisory Authority according to the Financial Instruments Trading Act. Hong Kong No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, by means of any document, other than to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance, or in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. No document, invitation or advertisement relating to the Equity Shares has been issued or may be issued, whether in Hong Kong or otherwise, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the laws of Hong Kong) other than with respect to Equity Shares which are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance. Japan The Equity Shares have not been and will not be registered under the Financial Instruments and Exchange Law (the "Financial Instruments and Exchange Law"). No Equity Shares have, directly or indirectly, been offered or sold, and may not, directly or indirectly, be offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and in compliance with any Financial Instruments and Exchange Law other relevant laws, regulations and governmental guidelines of Japan. United Kingdom The GC-BRLM has represented and agreed that: • it has only communicated or caused to be communicated and will only communicate or cause to

be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Market Act 2000 (the "FSMA")) received by it in connection with the issue or sale of the Equity Shares in circumstances in which Section 21(1) of the FSMA does not apply to it; and

• it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom.

United States The Equity Shares have not been and will not be registered under the US Securities Act and subject to certain exceptions, may not be offered or sold within the United States. The Equity Shares are being offered and sold outside of the United States in reliance on Regulation S to persons who are able to make the representations and undertakings summarised under "Transfer Restrictions and Purchaser


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Representations". Terms used in this paragraph have the meanings given to them by Regulation S under the US Securities Act. In addition, until 40 days after the first date upon which the Equity Shares were bona fide offered to the public, an offer of the Equity Shares within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the US Securities Act. Singapore The Book Running Lead Manager has acknowledged that this Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the GC-BRLM has represented and agreed that it has not offered or sold any Equity Shares or caused such Equity Shares to be made the subject of an invitation for subscription or purchase and will not offer or sell such Equity Shares or cause such Equity Shares to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Placement Document or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Equity Shares, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (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) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. This Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Placement Document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of any Shares may not be circulated or distributed, nor may any Equity Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (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) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where 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, securities (as defined in Section 239(1) of the SFA) 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 of the SFA except: (i) to an institutional investor or to a relevant person defined in Section 275(2) of the

SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(ii) where no consideration is or will be given for the transfer; (iii) where the transfer is by operation of law; or (iv) as specified in Section 276(7) of the SFA.


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TRANSFER RESTRICTIONS Due to the following restrictions, investors are advised to consult legal counsel prior to making any resale, pledge or transfer of the Equity Shares. The Equity Shares have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as defined in Regulation S), 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. Accordingly, the Placement Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. Purchasers of the Placement Shares in this Placement are not permitted to sell the Placement Shares for a period of one year from the date of allotment except on recognized Stock Exchanges. Subject to the foregoing: Each purchaser of Placement Shares outside the United States pursuant to Regulation S under the Securities Act, by accepting delivery of this Placement Document and our Company’s Placement Shares, will be deemed to have represented and agreed as follows: • It is authorized to consummate the purchase of the Equity Shares in compliance with all

applicable laws and regulations.

• It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer acknowledges) that such Equity Shares have not been and will not be registered under the US Securities Act.

• It certifies that either (A) it is, or at the time the Equity Shares are purchased will be, the

beneficial owner of the Equity Shares and is located outside the United States (within the meaning of Regulation S) or (B) it is a broker-dealer acting on behalf of its customer and its customer has confirmed to it that (i) such customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is located outside the United States (within the meaning of Regulation S).

• It agrees that it will not offer, sell, pledge or otherwise transfer such 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 US Securities Act and in accordance with all applicable securities laws of the States of the United States and any other jurisdiction, including India.

• It acknowledges that we, the GC-BRLM and its affiliates, and others will rely upon the truth

and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations or agreements deemed to have been made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly notify us. Any resale or other transfer, or attempted resale or other transfer, made other than in compliance with the above-stated restrictions will not be recognized by us.


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INDIAN SECURITIES MARKET The information in this section has been extracted from publicly available documents from various sources, including officially prepared materials from the SEBI, BSE and NSE, and has not been prepared or independently verified by our Company or the GC-BRLM or any of their respective affiliates or advisors. The Indian Securities Market India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the number of listed companies, market capitalisation and trading activity. Stock Exchange Regulation Indian stock exchanges are regulated primarily by SEBI, as well as by the Government of India acting through the Ministry of Finance, Capital Markets Division, under the SCRA and the SCRR, which, along with 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 and enforced between members of the stock exchanges. The SEBI Act, under which the SEBI was established by the Government of India, granted powers to SEBI to promote, develop and regulate the Indian securities markets, including stock exchanges and other financial intermediaries in the capital markets, to protect the interests of investors, to promote and monitor self-regulatory organisations, to prohibit fraudulent and unfair trade practices and insider trading and to regulate substantial acquisitions of shares and takeovers of companies. SEBI has also issued regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisition of shares and takeovers of companies, buyback of securities, delisting of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, FIIs credit rating agencies and other capital market participants. Listing The listing of securities on recognised stock exchanges in India is regulated by the applicable Indian laws including Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines issued by SEBI and the Listing Agreements. Under the SCRR, the governing body of each stock exchange is empowered to suspend trading of or dealing in a listed security for breach by a listed company of its obligations under such Listing Agreement or for any other reason, subject to such company receiving prior notice of such intent of the stock exchange and upon granting of a hearing in the matter. In the event that a suspension of a company’s securities continues for a period in excess of 90 days, our Company may appeal to the Securities Appellate Tribunal against the suspension. SEBI has the power to vary or veto a stock exchange decision in this regard. SEBI also has the power to amend such Listing Agreements and the bye-laws of stock exchanges in India. Delisting of Securities SEBI has, pursuant to a notification dated June 10, 2009, notified the SEBI (Delisting of Equity Shares) Regulations, 2009 in relation to the voluntary and compulsory delisting of securities from the stock exchanges. In addition, certain amendments to the SCRR have also been notified in relation to delisting.


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Minimum Level of Public Shareholding All listed companies are required to ensure that their minimum level of public shareholding remains at or above 25%. Index-Based Market-Wide Circuit Breaker System In order to restrict abnormal price volatility in any particular stock, 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 coordinated 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. 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. 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. Recognized 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 paid by the stockbrokers. BSE Established in 1875, it 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. NSE The NSE was established by financial institutions and banks to serve as a national exchange and to provide nationwide on-line satellite-linked screen-based trading facilities with electronic clearing and settlement for securities including government securities, debentures, public sector bonds and units. The NSE was recognised as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. NSE has a wide network in major metropolitan cities, screen based trading and a central monitoring system. Trading Hours Currently, trading on both BSE and NSE normally occurs Monday through Friday, between 9:00 a.m. and 3:30 p.m. BSE and NSE are closed on public holidays. Internet-Based Securities Trading and Services SEBI approved internet trading in January 2000. Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution. This permits clients throughout the country to trade using brokers’ internet trading systems. Stock brokers interested in providing this service are required to apply for permission to the relevant stock exchange and to comply with certain minimum conditions stipulated by SEBI and other applicable laws. NSE became the first exchange to grant approval to its members for providing Internet-based trading services. Internet trading is possible on both the ‘equities’ as well as the ‘derivatives’ segments of the NSE.


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Trading Procedure In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (BOLT) facility in 1995. This totally automated screen based trading in securities was put into practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and improving efficiency in back-office work. NSE also provides on-line trading facilities through a fully automated screen based trading system called ‘National Exchange for Automated Trading’ (NEAT). Takeover Code 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. Since our Company is an Indian listed company, the provisions of the Takeover Code apply to our Company. The Takeover Code prescribes certain thresholds or trigger points that give rise to these obligations. Insider Trading Regulations Specific regulations have been notified by SEBI to prohibit and penalize insider trading in India. An insider is, inter alia, prohibited from dealing in the securities of a listed company when in possession of unpublished price sensitive information. Depositories The Depositories Act provides a legal framework for the establishment of depositories to record ownership details and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, inter alia, the formation and registration of such depositories, the registration of participants as well as 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 SCRA Rules and the SEBI Act. The SCRA was amended in February 2000 and derivative 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.


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DESCRIPTION OF THE 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 legislation of India. General The authorized capital of our Company is `1,75,00,00,000 divided into 17,50,00,000 Equity Shares of `10 each. As of the date of this Placement Document 12,22,60,103 Equity Shares of `10 each are issued and outstanding. Dividend Under the Companies Act, 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, no dividend can be declared or paid by a company for any financial year except out of the profits of the company determined in accordance with the provisions of the Companies Act or out of the undistributed profits or reserves of previous fiscal years or out of both, arrived at in accordance with the provisions of the Companies Act. Pursuant to a recent amendment 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 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, 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 shares are outstanding. Dividends must be paid within thirty 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. Under the Companies Act the Companies (Transfer of Profits to Reserves) Rules, 1975, as amended, a company may pay a dividend in excess of 10% of its paid-up capital in respect of any fiscal, out of the profits of that financial year only after it has transferred to its reserves a certain percentage of its profits for that year ranging between 2.50% and 10% depending on the percentage of dividend proposed to be declared in that year. The Companies Act and the Companies (Declaration of Dividend out of Reserves) Rules, 1975, as amended, further provides that if the profit for a year is insufficient, the dividend for that year may be declared out of accumulated profits from previous years which have been transferred to reserves, subject to certain conditions prescribed under those legislations. Capitalization of Profits As provided in the Articles of Association of our Company, our Company in a general meeting (on recommendation of the Board) may resolve that it is desirable to capitalize any part of the amount for the time being standing to the credit of our standing to the credit of the company’s reserves; and that such sum be accordingly set free for distribution in the specified manner amongst the shareholders who would have been entitled thereto and distributed by way of dividend and in the same proportions.


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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 convertible securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of such convertible securities, through a proportionate reservation of shares. Further, in order to issue bonus 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. 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. Alteration of Share Capital Subject to the provisions of the Companies Act, our Company can increase its share capital by issuing new shares. Such new shares must be offered to existing shareholders registered on the record date in proportion to the amount paid-up on those shares at that date. The offer shall be made by notice specifying the number of shares offered and the date (being not less than fifteen days from the date of the offer) after which the offer, if not accepted, will be deemed to have been declined. After such date our Board may dispose of the shares offered in respect of which no acceptance has been received, in such manner as they think most beneficial to 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, new shares may be offered to any persons, whether or not those persons include existing shareholders, if a special resolution to that effect is passed by the shareholders of the company in a general meeting. The issue of the Equity Shares pursuant to this Placement 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. The Articles of Association provide that our Company may consolidate and divide our Company’s share capital or cancel shares which have not been taken up by any person. Our Company can also alter its share capital by way of a reduction of capital, subject to, any incident authorised in accordance with the Companies Act. 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 Registrar of Companies 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 our Company’s issued and paid-up capital.


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Written notices convening a meeting setting out the date and place of the meeting and its agenda must be given to members at least twenty one 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. A general meeting may be called after giving shorter notice if consent is received from all shareholders, in the case of an annual general meeting, and from shareholders holding not less than 95% of our Company’s paid-up capital, in the case of any other general meeting. A listed public 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, the giving of loans or extending a guarantee in excess of limits prescribed under the Companies Act (and guidelines issued thereunder) is required to pass the resolution by means of a postal ballot instead of transacting the business in the general meeting of the 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. Under the Companies Act, the quorum for our Company’s general meetings is five members present in person or by proxy. Voting Rights At a general meeting upon a show of hands, every member holding shares and entitled to vote and present in person has one vote subject to any restrictions for the time being attached to any class of shares. 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 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. 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 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 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, the company must have, inter alia, had distributable profits in terms of the Companies Act for a period of three financial years and the company must not have defaulted in filing annual accounts and annual returns for the immediately preceding three years. Register of Members and Record Dates Our Company is obliged to maintain a register of members at its Registered Office or at some other place in the same city. Our Company recognizes as shareholders only those persons whose names appear on the register of members 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 members upon lodgment of the


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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. Under the listing agreements of the Stock Exchanges on which our Company’s outstanding shares are listed, our Company may, upon at least seven working days’ advance notice to such stock exchanges, 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, our Company is also required to maintain a register of debenture 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 the company’s shareholders. Under the Companies Act, a company must file the annual report with the Registrar of Companies within 30 days from the date of the annual general meeting. As required under the listing agreements with the stock exchanges, copies are required to be simultaneously sent to the stock exchanges. The Company must also file its financial results in at least one English language daily newspaper circulating the whole or substantially the whole of India and also in a newspaper published in the language of the region where the registered office of the Company is situated. The Company files certain information on-line, including its Annual Report, financial statements and the shareholding pattern statement, in accordance with the requirements of the listing agreements and as may be specified by SEBI from time to time. Transfer of 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 shares are freely transferable, subject only to the provisions of the Companies Act under which, if a transfer of shares contravenes any provisions of the SEBI Act or the regulations made thereunder or the SICA, or any other law, the Company Law Board may, on an application made by the company, a depository incorporated in India, an investor, SEBI or a participant, direct any depository or company to rectify the register or records. If a company without sufficient cause refuses to register a transfer of shares within two months from the date of which the instrument of transfer or intimation of transfer,


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as the case may be, is delivered to the company, the transferee may appeal to the Company Law Board seeking to register the transfer. The Company Law Board may, in its discretion, issue an interim order suspending the voting rights attached to the relevant shares before completing its investigation of the alleged contravention. Under the Companies (Second Amendment) Act 2002, the 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. Further, SICA is sought to be repealed and the Board of Industrial and Financial Reconstruction, as constituted under the SICA, is to be replaced with the National Company Law Tribunal, set up under the Companies Act. Pursuant to the listing agreements, in the event that a transfer of shares is not effected within the relevant time period, our Company is required to compensate the aggrieved party for the opportunity loss caused by the delay. The Companies Act provides that shares or debentures of a public listed company shall be freely transferable. However, the Articles of Association provide for certain restrictions on the transfer of shares, including granting power to the Board in certain circumstances to decline to register or acknowledge the transfer of, or the transmission by operation of law of the right to, any shares or other securities issued by our Company. A transfer may also be by transmission. Subject to the provisions of our Company’s 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. The 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 our Company of its own 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 and sanctioned by the High Court of competent jurisdiction. 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 the company or its holding company. However, pursuant to certain amendments to the Companies Act, 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 the Articles of Association of the company; • 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; • the debt owed by the 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. A company buying back its securities is required to extinguish and physically destroy the securities so bought


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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. 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 prohibited from purchasing its own shares or specified securities, if the 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. Liquidation Rights Subject to the provisions of the Companies Act, if our Company shall be wound up and the assets available for distribution among the members as such shall be less than sufficient to repay the whole of the paid up capital such assets shall be distributed so that, as nearly, as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of winding up, on the shares held by them respectively. And if in winding up, the assets available for distribution among the members shall be more than sufficient to repay the whole the Capital paid up at the commencement of the winding up the excess shall be distributed amongst the members in proportion to the capital paid-up at the commencement of the winding up or which ought to have been paid up on the shares held by them respectively.


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TAXATION

To, The Board of Directors, Uttam Galva Steels Limited, Uttam House, 69 P D’Mello Road, Carnac Bunder, Mumbai – 400 009 Dear Sirs,

Statement of Possible Tax Benefits available to our Company and its potential shareholders i.e.

Qualified Institutional Buyers (“QIB”) We hereby report that the enclosed Annexure, prepared by Uttam Galva Steels Limited states the possible tax benefits available to the Company and QIBs under the Income-tax Act, 1961 and Wealth Tax Act, 1957, presently in force in India. Several of these benefits are dependent on the Company or QIBs fulfilling the conditions prescribed under the relevant provisions of the Act. Hence, the ability of the Company or QIB to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the Company may or may not choose to fulfill. The benefits discussed in the enclosed Annexure are not exhaustive. The preparation of the contents stated in the enclosed Annexure is the responsibility of the Company’s management. We are informed that the enclosed Annexure is only intended to provide general information to the investors and hence is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether: i. the conditions prescribed for availing the benefits, where applicable have been / would be met with;

or ii. the Company or its shareholders will continue to obtain these benefits in future. The contents of the enclosed Annexure and our opinion are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. FOR PRAKKASH MUNI & ASSOCIATES CHARTERED ACCOUNTANTS FIRM REGISTRATION NO: 111792W PRAKKASH MUNI PARTNER MEMBERSHIP NO: 30544 Place: Mumbai Date: 22nd March 2013 Certificate No. : 2013/03/03


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Annexure: Statement of possible tax benefits available to Uttam Galva Steels Limited and qualified institutional buyers I. Benefits available to the Company under the Income-tax Act, 1961 (“Act”) (A) Special tax benefits 1. The company is eligible for deduction under section 80 I A of the Income-tax Act, 1961 as the

company has its own Captive Power Plant (CPP). Profits derived from CPP would be 100 % exempt from tax for a period of 10 years out of 15 initial assessment years commencing from 1st April, 2011.

(B) General tax benefits 1. The Company will be entitled to claim depreciation allowance at the prescribed rates on assets

under Section 32 of the Act. Further, subject to fulfillment of conditions prescribed in Section 32(1)(iia) of the Act, the Company will be entitled to claim accelerated depreciation of 20 per cent of the actual cost of certain new machinery or plant which has been acquired and installed after 31st March, 2005. If, however, the assets are put to use for less than 180 days in the year in which they are acquired, the rate of accelerated depreciation will be 10 per cent. Unabsorbed depreciation, if any, for any assessment year can be carried forward and set off against any source of income in subsequent assessment years as per Section 32 of the Act.

2. As per Section 10(34) of the Act, any income by way of dividend received from domestic companies referred to in Section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April, 2003 by domestic companies) on the shares held by the Company will be exempt from tax.

3. As per Section 14A of the Act expenses incurred in relation to income which does not form part of the total income under the Act will not be allowed as a deduction.

4. Under section 10(38) of the Act, the long term capital gains arising on transfer of equity shares in any other company or units of an equity oriented funds, which are chargeable to securities transaction tax, are exempt from tax in the hands of the Company. However, the said exemption will not be available to the Company while computing the book profit and income tax payable under Section 115JB.

5. As per the provisions of section 112(1)(b) of the Act, other long-term capital gains arising to the company are subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per the proviso to that section, the long-term capital gains resulting from transfer of listed securities or units or zero coupon bonds are subject to tax at the rate of 20% worked out after considering indexation benefit (plus applicable surcharge and education cess), which would be restricted to 10% worked out without considering indexation benefit (plus applicable surcharge and education cess).

6. As per the provisions of section 111A of the Act, short-term capital gains arising to the company from transfer of equity shares in any other company or of units of any equity oriented fund (as defined in section 10(38) of the Act), are subject to tax @ 15% (plus applicable surcharge and education cess), if such a transaction is subjected to securities transaction tax.

7. Short-term capital gains arising from transfer of shares held in the Company not covered


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under point (6) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess.).

8. In accordance with and subject to the conditions specified in section 54EC of the Act, the company would be entitled to exemption from tax on long-term capital gain if such capital gain is invested (maximum investment permitted is rupees fifty lakhs), in any of the long term specified assets (hereinafter referred to as the “new asset”) to the extent and in the manner prescribed in the said section. However if the new asset is transferred or converted into money or takes any loan or advance on the security of such specified assets at any time within a period of three years from the date of its acquisition, the amount of capital gains for which exemption is availed earlier, would become chargeable to tax as long term capital gains in the year in which such new asset is transferred or converted into money.

9. Under Section 50B of the Act, the Company will be entitled to claim the benefit of special provision for computation of capital gain arising in case of the transfer of an undertaking/business on slump sale basis.

10. The Company will be 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 fulfillment of conditions prescribed therein.

11. As per Section 74 of the Act, short-term capital loss suffered by the Company during the financial year will be allowed to be set-off against short-term as well as long-term capital gains of the same year. Balance loss, if any, which cannot be set-off will be allowed to be carried forward for eight years for claiming set-off against subsequent years’ short-term as well as long-term capital gains. Long-term capital loss suffered during the year will be allowed to be set-off against long-term capital gains only. Balance loss, if any, which cannot be set-off will be allowed to be carried forward for eight years for claiming set off against subsequent years long-term capital gains.

12. Under section 115JAA(1A) of the Act, credit is allowed in respect of any minimum alternate tax (‘MAT’) paid under section 115JB of the Act for any assessment year commencing on or after April 1, 2006. Tax credit eligible to be carried forward will be the difference between MAT paid and the tax computed as per the normal provisions of the Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up to 10 years succeeding the year in which the MAT credit is allowed.

II. Benefits available to QIB shareholders of the Company a) Shareholders being Foreign Institutional Investors (‘FIIs’) 1. As per Section 10(34) of the Act, any income by way of dividend received from domestic

companies referred to in Section 115-O of the Act (i.e. dividends declared, distributed or paid on or after 1st April, 2003 by domestic companies) will be exempt from tax in the hands of shareholders subject to provisions of Double Taxation Avoidance Agreement.

2. Income arising on transfer of the shares of the company will be exempt under Section 10(38)

of the Act if the said shares are long-term capital assets and securities transaction tax has been charged on the said transaction.

3. Under Section 115AD(1)(b)(iii) of the Act, income by way of long-term capital gains arising

from the transfer of shares held in the company not covered under point (2) above will be


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chargeable to tax at the rate of 10% (plus applicable surcharge and education cess).

4. Under Section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising on transfer of the shares of the company will be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess) as per the provisions of Section 111A of the Act if securities transaction tax has been charged on the said transaction.

5. Under Section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising from the transfer of shares held in the company not covered under point (4) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess).

6. The benefit of indexation and foreign currency fluctuation protection as provided by Section 48 of the Income-tax Act is not applicable to FIIs while computing capital gains. Further, if gross total income of FII’s includes any short-term capital gains referred to above, deduction under chapter VI-A of the Income-tax Act shall be allowed from the gross total income as reduced by such short-term capital gains.

7. Under the provisions of Section 90(2) of the Act, a FII will be governed by the provisions of the Agreement for Avoidance of Double Taxation (AADT) between India and the country of residence of the FII if the said provisions are more beneficial than the provisions under the Act.

8. Where the business income of shareholder includes profits and gains arising from transactions on which securities transaction tax has been charged, such securities transaction tax shall be a deductible expense from business income as per the provisions of Section 36(1)(xv) of the Act.

b) Shareholders being Mutual Funds: Under Section 10(23D) of the Act, any income earned by a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992, or a Mutual Fund set up by a public sector bank or a public financial institution, or a Mutual Fund authorised by the Reserve Bank of India would be exempt from income-tax, subject to such conditions as the Central Government may by notification in the Official Gazette specify in this behalf. c) Shareholders being Provident Funds: Under Section 10(25) of the Act any income received by the trustees on behalf of a recognized provident fund or on behalf of an approved superannuation fund or on behalf of an approved gratuity fund will be exempt from income tax. Further, the interest earned on securities by provident fund to which the Provident Funds Act, 1925 applies, and any capital gains of the fund arising from the sale, exchange or transfer of securities will also be exempt from tax. d) QIB resident shareholders other than those discussed above 1. As per Section 10(34) of the Act, any income by way of dividend received from domestic

companies referred to in Section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April, 2003 by domestic companies) will be exempt from tax in the hands of shareholders.

2. As per Section 14A of the Act expenses incurred in relation to income which does not form

part of the total income under the Act will not be allowed as a deduction.


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3. Income arising on transfer of the shares of the company will be exempt under Section 10(38)

of the Act if the said shares are long-term capital assets and securities transaction tax has been charged on the said transaction.

4. The long-term capital gains accruing to the shareholders of the company from the transfer of

the shares of the company otherwise than as mentioned in point (3) above shall be chargeable to tax at the rate of 20% (plus applicable surcharge and education cess) of the capital gains computed after indexing the cost of acquisition or at the rate of 10% (plus applicable surcharge and education cess) of the capital gains computed before indexing the cost of acquisition, whichever is lower.

5. Short-term capital gains arising on transfer of the shares of the company will be chargeable to

tax at the rate of 15% (plus applicable surcharge and education cess) as per the provisions of Section 111A of the Act if securities transaction tax has been charged on the said transaction.

6. Short-term capital gains arising from the transfer of shares held in the company not covered

under point (5) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess).

7. In accordance with, and subject to the conditions, including the limit of investment of `5.0

million, and to the extent specified in Section 54EC of the Act, long-term capital gains arising on transfer of the shares of the company not covered under point (3) above will be exempt from capital gains tax if the gains are invested within six months from the date of transfer in the purchase of long-term specified assets.

8. Where the business income of shareholder includes profits and gains from transactions on

which securities transaction tax has been charged, such securities transaction tax shall be a deductible expense from business income as per the provisions of Section 36(1)(xv) of the Act.

III. Benefits available under the Wealth tax Act, 1957: 1. ‘Asset’ as defined under Section 2(ea) of the Wealth-tax Act, 1957 does not include shares in

companies and hence, the shares of the Company held by a shareholder are not liable to wealth-tax.

2. Since the provisions of The Gift Tax Act, 1958 have ceased to apply with effect from October

1,1998, gift of shares made on or after October 1, 1998 will not be liable to Gift Tax under the Gift Tax Act, 1958. However, pursuant to the Finance Act, 2009, Section 56 of the Act has been amended to provide that the value of any property, including shares and securities, received without consideration or for inadequate consideration (from persons or in situations other than those exempted under section 56 (vii) of the Act) will be included in the computation of total income of the recipient and be subject to tax.

Notes:

(i) All the above benefits are as per the current tax law and will be available only to the sole/ first named holder in case the shares are held by joint holders.

(ii) In view of the individual nature of tax consequences, each investor is advised to consult their own tax advisor with respect to specific tax consequences of his/her participation in the


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scheme.

(iii) The above statement of possible direct tax benefits set 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.


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LEGAL PROCEEDINGS Except as disclosed in the following paragraphs, our Company is not subject to, any pending legal proceedings which our Company considers to be potentially material to its respective business. This section contains details of material legal proceedings which have a monetary implication of over `10 lakhs. Our Company is involved in legal proceedings and claims in India that are incidental to its business. These legal proceedings are pending at different levels of adjudication before various courts and other competent authorities and include Civil proceedings, Criminal proceedings under Negotiable Instruments Act and revenue proceedings. While no assurance can be given, we believe that, none of the litigation or legal proceedings in which we are currently involved, except as stated below could reasonably be expected to have a material adverse effect on our business, financial condition or results of operations. Litigation Proceedings Pending Against our Company Civil Proceedings (a) Akram Ali Sheikh, the proprietor of M/s Kaak Packaging has filed a civil suit before the

Court of Civil Judge (S.D.), Thane on November 3, 2011 against our Company for an amount of `18,31,033.93 along with 18% interest thereon from the date of filing of this suit. The suit has been filed by Akram Ali Sheikh for alleged non-payment by our Company for edge boards valued at `18,31,033.93 supplied to our Company between June 12, 2009 and July 24, 2009. Our Company in its reply has contended that it has already paid in excess of what was supplied and was entitled to a refund of the excess amount paid till date.

(b) Central Warehousing Corporation ("CWC") has filed an Arbitration Petition against our

Company before the High Court of Bombay on August 18, 2010. Our Company, CWC and MSTC Limited had entered into a tripartite agreement dated July 24, 2002 ("Agreement") for supply of hot rolled coils or other items as agreed by the parties. Subsequently, the management rates payable to CWC were revised and it has been alleged that our Company had failed to pay the management fees since 2004 thereby aggregating to an amount of `74,97,473. CWC filed an Arbitration Petition claiming the said amount and the arbitrator passed an order on May 25, 2010 ("Award") disallowing the claim of CWC. Being aggrieved by the Award, CWC filed an Arbitration petition before the High Court of Bombay to quash and set aside the said Award.

(c) Tong Mei Industrial ("Tong Mei") and AXA Belgium SA have jointly filed a civil suit

against our Company and 11 other parties on December 8, 2003 before the High Court of Bombay claiming USD 277,833.00 along with 10% interest thereon from the date of filing of suit to date of realisation. Our Company had entered into a contract with Compansid SA for sale of 84 Steel Coils weighing 420.82 kilograms (the "Steel Coils"), Compansid SA further sold the Steel Coils to M/s Tong Mei who in turn sold it to other parties. These Steel Coils were loaded into 17 containers through CMA CGM Societe, a shipping and logistics company. On receipt of the consignment of Steel Coils, Tong Mei found Steel Coils stored in all containers had suffered extensive damage. Atlantis International Services, the claim agents/surveyor issued report stating that the extent of damages at USD 266,016.15. The report also stated that the damage was due to the negligence of CMA CGM Societe. However, the petition contends that our Company being the supplier, is vicariously liable.


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Litigation Proceedings Initiated by our Company (a) Our Company has filed a summary suit against S.D.L. Steels Private Limited ("SDL Steels")

on June 19, 2010 before the High Court of Bombay for a claim of `12,81,189.25 including 18% interest thereon. SDL Steels had placed an order with our Company for supply of HR trimming unpickled materials for a value of `34,72,894.36. SDL Steels had made a payment of `2,401,027.49 to our Company. However, a balance payment of `1,071,866.87is outstanding. Our Company had issued a notice to SDL Steel on March 20, 2010 seeking balance payments. However, SDL steels failed to make payments due to which the Company has filed this suit.

(b) Our Company has filed Company Petition for winding-up of Renuka Press Fab Private

Limited ("Renuka Press") before High Court of Bombay on December 17, 2004. Our Company had been supplying/delivering C.R.C.A. sheets to Renuka Press from time to time. Renuka Press had to make a payment of `58,58,928 to our Company for goods supplied and failed to pay for the same in spite of repeated reminders. Our Company issued a winding up-notice on Renuka Press on March 7, 2003 seeking payment of `62,62,649.20 along with interest thereon, failing which our Company would initiate winding-up proceedings against Renuka Press. However, Renuka Press failed to make the payments and our Company was constrained to file a winding-up petition in the Court. The High Court, vide order dated February 7, 2007 allowed the petition and has passed a winding-up order against Renuka Press.

(c) Our Company has filed an appeal against the order of the Presiding Officer, Debt Recovery

Tribunal dated September 30, 2008 passed in favour of Bank of India and others. Our Company had purchased Land bearing Survey no.48 Hissa No.2, Survey No.45 Hissa No.3, Survey no.48 Hissa No 3, Survey No.48, Hissa no IB-1 and Survey no.45 Hissa No.4 situated at Village Dahiwali Taluka Khalapur District Raigad (collectively referred to as "Properties") from Shriram Pharmaceuticals and Chemicals Private Limited. These properties were duly registered in the name of our Company and were also updated in the revenue records. Consequently, it came to the knowledge of our Company that Bank of India had filed a case against other respondents for recovery of their outstanding amount. The recovery officer vide order dated July 12, 2004, allowed the attachment of these Properties in favour of Bank of India. Thereafter our Company filed an application before Debt Recovery Tribunal II, Mumbai and contended that they were a bonafide purchaser for value and hence had valid title to the Properties. Though the Tribunal declared that our Company is a bonafide purchaser, it rejected the application of the Company to set aside the attachment order. Hence, our Company has filed this appeal.

(d) Our Company has filed a Summary Suit against Anagram System ("Anagram") before the

City Civil Court of Bombay on June 19, 2010. As per purchase order dated October 25, 2007, Anagram had purchased 53,460 MT of pre-painted galvanized alloy sheets of USD 77,743.80 from our Company under the duty free export to special economic zone scheme. Anagram had made initial payment of USD 28,000 towards the said purchase of alloy sheets with USD 49,743.80 to be paid later. Since Anagram failed to pay the balance amount, our Company issued a legal notice on May 29, 2010 thereby seeking payment of USD 71,174 as on May 31, 2010 along with further interest at the rate of 18%. Despite this notice, Anagram failed to pay the outstanding amount due to which our Company filed this petition.

Outstanding Litigation pertaining to land (a) Dilip Pundalik and certain other people ("Dilip Pundalik Group") had filed a petition before


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the Court of Civil Judge Junior Division, Khalapur seeking injunction and declaration. Dilip Pundlik Group claimed that the property owned by Suresh Pundalik was sold to our Company by way of undue influence and hence the sale deed executed between the parties is not binding on them while our Company has denied the claim and has contended that the sale deed is enforceable. Thereafter, Dilip Pundalik and Group, filed an application for issuance of summons to Meena Bam, who is also our Company’s counsel in this matter, as a witness, as she was in a position to identify the parties on the question of enforceability of sale deed. Our Company has, in its reply, stated that she cannot be summoned as an witness in this case. The court allowed the said application by an order dated October 20, 2011. Pursuant thereto, our Company has filed a writ petition before the High Court of Bombay against the order dated October 20, 2011 passed by the Civil Judge, Junior Division, Khalapur. The High Court of Bombay has granted ad-interim injunction in the issuance of summons to Beena Bam as a witness.

(b) Rajendra Ramchandra Gujar/ Gujarathi has filed a civil suit before the Court of Civil Judge,

Senior Division, Panvel against 41 parties including our Company with respect to sale of property bearing survey no.34/1 and 34/2 admeasuring total area 8.35 acres and survey no.35/1 admeasuring 7.61 acres ("Property"). On June 1, 2006, our Company had purchased the Property from Tarabai Shah and 4 others (who are also co-defendants and are referred as "Sellers") by way of a registered sale deed. Rajendra Gujjar claimed that he is the legal owner of the Property and that the Sellers were not entitled to sell the Property to our Company. He also claimed that the sale deed was not legal and that our Company is not a bonafide purchaser. Our Company has filed its Written Statement contending that it had purchased the Property from the Sellers with due care, caution and after diligence and that it is a bonafide purchaser of the property and is currently pending before the court.

(c) Ankit Miglani has filed a civil suit for specific performance and for injunction along with a

claim of `1,34,500 before the Civil Judge, Junior Division, Khalapur on December 12, 2012. In 2007, Ankit Miglani had entered into a tenancy agreement with Vinu Deshmukh as the property falls under the Bombay Tenancy Act. Ankit Miglani has stated that he had made full payment with respect to property to Vinu Deshmukh on the faith that the sale deed in accordance with their understanding would be executed soon. However, with a passage of time, the land rates have increased and now Vinu Deshmukh has refused to execute the sale deed claiming increased rates for the property.

(d) In 2008, our Company had purchased property aggregating to 7 acre 4 Guntha in Survey no

40/1 and Survey no 39/5 Village Dahiwali, Taluka Khalapur, District Raigad ("Property") from Dipali Patil. The Property had devolved upon Dipali Patil on the death of her husband, Digamber Patil who was entitled to ½ share in the Property pursuant to a will from his grandfather, Sayaji Patil. Dipali Patil sold her share in the Property to our Company. Namdev Patil, Dipali Patil’s father in law and his family members claim a share in the Property and have filed numerous suits in the courts at Khalapur in this regard.

Pending Tax Litigations: (a) The Office of Commissioner of Central Excise, Raigad has issued a show cause notice to our

Company on January 5, 2009 demanding payment of excise duty amounting to `64,84,307 for the period from December 2007 to June 2008 on the ground that that zinc dross is dutiable as the process amounts to manufacture. By an order dated February 4, 2010, the Commissioner of Central Excise, Raigad confirmed the central excise duty of `64,84,307 and ordered the recovery along with a equivalent penalty of `64,84,307 for contravention under Rule 25 of Central Excise Rules. Our Company has filed an appeal on May 4, 2010 before the Central,


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Excise and Service Tax Appellate Tribunal, Western Zonal Branch challenging the order which is presently pending.

(b) The Office of Commissioner of Central Excise, Raigad Commissionerate had issued a show

cause notice on January 6, 2009 to the Company demanding payment of excise duty amounting to `30,82,563 for the period from December 2007 to June 2008 on the ground that that zinc dross is dutiable as the process amounts to manufacture. By an order dated May 5, 2010, the Additional Commissioner of Central Excise, Raigad confirmed a duty of `30,82,563 and ordered for the recovery of the same along with an equivalent penalty of `30,82,563. Our Company has now filed an appeal before the Commissioner of Customs and Central Excise (Appeals)-II which is presently pending.


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GENERAL INFORMATION 1. Our Company was incorporated under the laws of the Republic of India on March 29, 1985 as

Uttam Galva Steels Limited as a public company. Our Corporate Identity Number is L27104MH1985PLC035806.

2. As of the date of the Placement Document, the authorized capital of our Company is

`1,75,00,00,000 divided into 17,50,00,000 Equity Shares of face value of `10 each and paid-up capital of `1,22,26,01,030 comprising of 12,22,60,103 Equity Shares of `10 each were issued and are outstanding.

3. Our Company’s registered office is situated at Uttam House, 69, P. D’Mello Road, Mumbai,

400009. 4. The Placement was authorized and approved by our Company’s Board of Directors on

February 26, 2013 and by the shareholders of our Company in the Extra Ordinary General Meeting held on March 23, 2013.

5. Our Company has applied for and received in-principle approvals from BSE and NSE vide

their letters dated March 25, 2013 under Clause 24(a) of the Listing Agreement. We shall apply for the final listing and trading permissions to list and trade the Equity Shares on BSE and NSE after Allotment in the Placement.

6. Copies of the Memorandum and Articles of Association will be available for inspection on

any weekday (except Saturdays, Sundays and public holidays) during the Bidding Period at the Registered Office of our Company between 11.00 am and 04.00 pm.

7. Other than as set forth in this Placement Document, we have obtained all approvals and

authorizations required in connection with the Placement. 8. Other than as set forth in this Placement Document, there has been no significant change in

our Company’s financial position since December 31, 2012, the date of its last published unaudited financial results.

9. Except as disclosed in this Placement Document, our Company is not involved in any legal

proceeding and our Company is not aware of any threatened legal proceeding, which if determined adversely, could result in a material adverse effect on the business, financial condition or results of operations of our Company.

10. M/s Prakkash Muni & Associates, Chartered Accountants, have audited the standalone and

consolidated financial statements of our Company as of and for the years ended March 31, 2012 and 2011 and have reviewed the standalone and consolidated financial statements of our Company and have consented to the inclusion of their report in this Placement Document.

11. Our Company and the GC-BRLM accept no responsibility for statements made otherwise

than in the Placement Document and anyone placing reliance on any other source of information, including our website www.uttamgalva.com,would be doing so at his or her own risk.

12. Our Company confirms that it is in compliance with the minimum public shareholding

requirements as required under the terms of the listing agreements with the Stock Exchanges.


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13. The Floor Price for the Placement is `76.48 per Equity Share of face value of `10 each. The Floor Price is calculated in accordance with Regulation 85 of the SEBI Regulations.


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INDEPENDENT ACCOUNTANTS Prakkash Muni & Associates, Chartered Accountants, have audited the standalone and consolidated financial statements of our Company as of and for the years ended March 31, 2012 and 2011. The audited standalone and consolidated financial statements as of and for the years ended March 31, 2012 and 2011 were prepared in accordance with the Indian GAAP. Further the unaudited financial results (limited reviewed) for the third quarter ended December 31, 2012 that appears in the Placement Document has been prepared by our Company pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges in India and as disclosed to the Stock Exchanges for the quarter ended December 31, 2012.


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FINANCIAL STATEMENTS Sr. No. Particulars Page No.1. Limited Review Results and the report thereon as on December 31, 2012

on Standalone financial statements. 186

2. Auditors’ report on the financial statements as appearing in the Placement Document

188

3. Auditors’ Report and Standalone financial statements, thereon for the Financial Year ended March 31, 2012

F-1

4. Auditors’ Report and Consolidated financial statements, thereon for the Financial Year ended March 31, 2012

F-26


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AUDITORS’ REPORT ON THE LIMITED REVIEWED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012

To, The Secretary, Mumbai Stock Exchange, Mumbai. Dear Sir, We have reviewed the accompanying statement of unaudited financial results of M/s. Uttam Galva Steels Limited for the period ended 31st December 2012 except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors/ Committee of Board of Directors. Our responsibility is to issue a report on these financial statements based on our review. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2400, engagements to Review Financial Statements issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and an analytical procedure applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of unaudited financial results prepared in accordance with applicable accounting standards and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement. For PRAKKASH MUNI & ASSOCIATES CHARTERED ACCOUNTANTS FIRM REGISTRATION NO. 111792W Sd/- PRAKKASH R. MUNI PARTNER MEMBERSHIP NO. 30544 Place: Mumbai Date: 8th February, 2013


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AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS To, The Board of Directors, Uttam Galva Steels Limited In terms of the appointment for the purpose of certification of the financial information of Uttam Galva Steels Limited (the "Company") annexed to this report, which is required to be prepared in accordance with Chapter VIII read with Schedule XVIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the "SEBI Regulations"), issued by Securities and Exchange Board of India (‘SEBI’) in pursuance of section 30 of the Securities and Exchange Board of India Act, 1992, as amended from time to time, we state as follows: 1. The financial statements referred to in this report are to be included in the Preliminary

Placement Document / Placement Document of the Company in connection with proposed issue of shares to Qualified Institutional Buyers (‘QIBs’) pursuant to an Issue under Chapter VIII – Qualified Institutions Placement of SEBI Regulations.

2. We, Prakkash Muni & Associates, Chartered Accountants have audited the attached

Standalone Balance Sheet of Uttam Galva Steels Limited hereinafter as at March 31, 2012 and 2011, the Standalone Statement of Profit and Loss Account for the years ended on those dates and the Standalone Cash Flow statement for the years ended March 31, 2012 and 2011, the accompanying schedules, notes to accounts along with accounting policies for the years ended March 31, 2012 and March 31, 2011 cumulatively referred to as "Standalone Financial Statements"

3. We, have audited the attached Consolidated Balance Sheet of Uttam Galva Steels Limited and

for its subsidiaries namely Uttam Galva Holdings Limited, Ferro Zinc International FZE, Atlantis International Services Limited, Uttam Galva Steels, Netherlands BV, Neelraj International Trade Limiteds’ Balance Sheets are audited by Zenith Certified, Chartered Accountant and its joint ventures namely Texturing Technology Private Limited’s Balance sheet is audited by K.S. Aiyer& Co. and Moira Madhujore Coal Limited’s Balance Sheet is audited by G.P. Agrawal & Co. (hereinafter together referred to as the "UGSL Group") as at March 31, 2012 and 2011, the Consolidated Statement of Profit and Loss Account for the years ended on those dates and the Consolidated Cash Flow statement for the years ended March 31, 2012 and 2011, the accompanying schedules, notes to accounts along with accounting policies for the years ended March 31, 2012 and March 31, 2011 cumulatively referred to as "Consolidated Financial Statements"

4. The summary financial statements have been extracted from the Consolidated Financial Statements for the years ended March 31, 2012 and March 31, 2011 and Standalone Financial Statements for the year ended March 31, 2012 and 2011, which were audited by us.

5. The Consolidated Financial Statements and Standalone Financial Statements are the

responsibility of the management of the Company and have been prepared by the management on the basis of separate financial statements and other financial information relating to the separate entities. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The financial statements have been prepared by the management of Uttam Galva Steels Limited in accordance with the requirements of Accounting Standards issued by the Institute of Chartered Accountants of India.


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6. We have performed such tests and procedures, which, in our opinion, were necessary for our reporting to you. These procedures include comparison of the annexed financial information with the Company’s audited financial statements. Based on such procedures carried out by us and review of the records produced to us and the information and explanations given to us by the Company’s management, and our comments in the foregoing paragraphs, we confirm that nothing has come to our attention to show non-compliance with the SEBI Regulations.

7. We have conducted our audit in accordance with the 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 prepared, in all material respects, in accordance with an identified financial reporting framework and 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

8. We report that the Consolidated Financial Statements have been prepared by the Company in

accordance with the requirements of Accounting Standard (AS) 21, ‘Consolidated Financial Statements’, Accounting Standard (AS) 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’ and Accounting Standard (AS) 27, ‘Financial Reporting of Interests in Joint Ventures’ and on the basis of separate audited financials statements of the Company, its subsidiaries, and its joint ventures.

9. Based on our audit and examining the following documents, and to the best of our

information and according to the explanations given to us, in our opinion, the following statements give a true and fair view and are in conformity with the generally accepted accounting principles in India:

a. the Consolidated Balance Sheets of Uttam Galva Steels Limited and its subsidiaries and

Joint Ventures as at March 31, 2012 and March 31, 2011. b. the Consolidated Statement of Profit and Loss Accounts and Consolidated Cash Flow

Statements for years ended March 31, 2012 and March 31, 2011. c. accompanying notes to accounts along with accounting policies for the Consolidated

Financial Statements for the years ended March 31, 2012 and March 31, 2011 d. the summary of Consolidated Financial Statements for the years ended March 31, 2012

and March 31, 2011

e. the Standalone Balance Sheets of Uttam Galva Steels Limited as at March 31, 2012 and March 31, 2011.

f. the Standalone Statement of Profit and Loss Accounts and Standalone Cash Flow

Statements for years ended March 31, 2012 and March 31, 2011. g. accompanying notes to accounts along with accounting policies for the Standalone

Financial Statements for the years ended March 31, 2012 and March 31, 2011 h. the summary of Standalone Financial Statements for the years ended March 31, 2012 and

March 31, 2011


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i. Capitalization Statement on Standalone Financial Statements as at March 31, 2012

10. This report should not in any way be construed as a reissuance or re-dating of any of the

previous audit reports issued by us.

11. This report is intended solely for your information and for the Company to comply with the provisions of Chapter VIII read with Schedule XVIII of the SEBI Regulations and may not be suitable for any other purpose. The report is not to be used, referred to or distributed for any other purpose.

12. In the Consolidated Balance Sheet the following subsidiaries and Joint Ventures are included

Sr. No. Name of the Subsidiaries

Consolidated 31-03-2011 31-03-2012

1. Uttam Galva Holdings Limited Yes Yes 2. Atlantis International Services Company Limited Yes Yes 3. Uttam Galva Steels Netherlands BV Yes Yes 4. Ferro Zinc International FZE* Yes Yes 5. Neelraj International Trade Limited BV No Yes 6. Texturing Technology Private limited Yes Yes 7. Moira Madhujore Coal limited Yes Yes

*Ferro Zinc International FZE is a 100% step down subsidiary of Uttam Galva Holdings Limited.

For Prakkash Muni & Associates CHARTERED ACCOUNTANTS Firm Registration No.: 111792W Prakkash R. Muni PARTNER Membership No.: 30544 Place: Mumbai Date: 8th March 2013 Certificate No. : 2013/03/01

Uttam Galva Steels Limited

CONSOLIDATED FINANCIAL STATEMENTS

OF

UTTAM GALVA STEELS LIMITED

FOR THE FINANCIAL YEAR

ENDED MARCH 31, 2012 F-26


191

DECLARATION Our Company certifies that all relevant provision of the Chapter VIII of the SEBI Regulations have been complied with and no statement made in this Placement Document is contrary to the provisions of the Chapter VIII and Schedule XVIII of the SEBI Regulations and that all approvals and permissions required to carry on its business have been obtained, are currently valid and have been complied with. Our Company further certifies that all the statements in this Placement Document are true and correct. Anuj R Miglani Managing Director Date: March 26, 2013 Place: Mumbai


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THE ISSUER

UTTAM GALVA STEELSLIMITED

REGISTERED OFFICE OF OUR COMPANY

Uttam Galva Steels Limted Uttam House,

69, P. D’Mello Road, Mumbai, 400009

(T): + 91 22 6656 3500 | (F): +91 22 2348 5025

GLOBAL COORDINATOR AND BOOKRUNNING LEAD MANAGER

Anand Rathi Advisors Limited

10th Floor, " D" Wing, Trade Tower Kamala Mills Compound, Senapati Bapat Marg

Lower Parel, Mumbai - 400 013, India (T): +91 22 6626 6666 | (F): +91 22 6626 6700

Contact Person: Akshay Bhandari / Jitendra Verma

DOMESTIC LEGAL COUNSEL TO THE PLACEMENT

Rajani Associates

204-207, Krishna Chambers 59, New Marine Lines

Mumbai 400020 Maharashtra, India

(T): +91 22 4096 1000 | (F): +91 22 4096 1010

STATUTORY AUDITORS

M/s Prakkash Muni & Associates 303, The Eagle’s Flight,

Suren Road Off Andheri Kurla Road Andheri-East, Mumbai 400093

Maharashtra, India (T): +91 22 6630 0900 | | (F): +91 22 6630 0990

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