lakshmi precision screws limited

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DRAFT LETTER OF OFFER
(Private & Confidential)
For Equity Shareholders of the Company Only
LAKSHMI PRECISION SCREWS LIMITED
(Originally incorporated as Lakshmi Precision Screws Private Limited on 27/12/1968. Thereafter the name of the
company was changed to Lakshmi Precision Limited on 20/08/1971 and fresh certificate of incorporation was
obtained from the Registrar of Companies, Delhi & Haryana.)
Registered Office
:
46/1 Mile Stone, Hissar Road, Rohtak - 124001, Haryana
Tel: (91-1262) 248790, Fax: (91-1262) 249922.
Contact Person : H.P.S.Chugh
E-mail: [email protected] , Website: www.lpsindia.com
OFFER FOR 40,16,667 EQUITY SHARES OF RS.10/- EACH FOR CASH AT PREMIUM OF RS. 40/PER SHARE (I.E. AT A PRICE OF RS. 50/- PER SHARE) AGGREGATING TO RS. 2008.33 LACS ON
A RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE
RATIO OF 2 (TWO) EQUITY SHARE FOR EVERY 3 (THREE) EQUITY SHARES (I.E. 2:3) OF RS.
10/- EACH HELD ON THE RECORD DATE (I.E. __________). THE ISSUE PRICE OF RS.50/- PER
EQUITY SHARE IS FIVE (5) TIMES OF THE FACE VALUE.
GENERAL RISKS
Investment in equity and equity related securities involve a degree of risk and investors should not invest any
funds in this issue unless they can afford to take the risk of losing their investment. Investors are advised to read
the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision,
investors must rely on their own examination of the Issuer and the Issue including the risks involved. The
securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor
does SEBI guarantee the accuracy or the adequacy of this document.
The attention of investors is drawn to the statement of Risk Factors appearing on page nos. (iv) to (vii) of
this Letter of Offer.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Letter of Offer
contains all information with regard to the Issuer and the Issue, which is material in context of the Issue, that the
information contained in this Letter of Offer 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.
LISTING
The existing Equity shares of the company are already listed on The Stock Exchange, Mumbai (BSE) and The
Delhi Stock Exchange (DSE).. The Company has received in-principle approval from BSE and DSE vide their
letter nos. _____________ dated _____ and ______ for listing of the equity share being issued in terms of this
Letter of Offer.
LEAD MANAGER TO THE ISSUE
REGISTRAR TO THE ISSUE
MCS LIMITED
Sri Venkatesh Bhavan
W-40, Phase-II, Okhla Industrial Area
New Delhi – 110 020
Tel.: (011) 26384909 Fax: (011) 26384907
e-mail : [email protected]
SEBI Regn. No.: INR 000000056
307, Regent Chambers,
Nariman Point, Mumbai - 400 021.
Tel. : (022) 2202 5230 Fax : (022) 2283 5467
Website: www.keynoteindia.net
E-mail: [email protected]
SEBI Regn. No.: INM 000003606
AMBI Regn No: AMBI/040
ISSUE OPENS ON
LAST DATE FOR RECEIVING
REQUESTS FOR SPLIT FORMS
[•]
[•]
ISSUE CLOSES ON
[•]
II. TABLE OF CONTENTS
SECTION
III
IV
V
VI
VII
VIII
IX
X
XI
XII
XIII
XIV
XV
XVI
XVII
CONTENTS
DEFINITIONS AND ABBREVIATIONS
RISK FACTORS
INTRODUCTION
Industry Summary
Business Summary
GENERAL INFORMATION
Details of Board of Directors
Issue Management Team
CAPITAL STRUCTURE OF THE COMPANY
OBJECT OF THE ISSUE
Object of the Issue
Cost of Project & Means of Finance
Basis of Issue Price
Tax Benefits
ABOUT THE ISSUER COMPANY
Industry Overview
Business Overview
Details of the Business of the Company
HISTORY OF THE COMPANY
Brief History
Main Objects of the Company
MANAGEMENT OF THE COMPANY
Board of Directors
Corporate Governance
Details of Key Managerial Persons
PROMOTERS
Details of Promoters
Other Ventures Promoted By Promoters
FINANCIAL INFORMATION
Auditors Report
Management’s Discussion and Analysis of Financial Condition and Result of
Operations
LEGAL AND OTHER INFORMATION
Outstanding Litigations and Defaults
Government Approvals
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
Prohibition by SEBI
Disclaimer Clause
Listing
Stock Market data for shares of the Company
OFFERING INFORMATION
OTHER INFORMATION
Material Contracts and Documents for Inspections
Declarations
ii
Page Nos.
iii
iv
1
1
4
5
7
12
12
15
17
21
22
22
27
27
29
30
33
34
34
36
65
67
68
69
69
69
71
73
75
88
89
III. DEFINITIONS/ABBREVIATIONS
GENERAL TERMS
Act
Articles
Board
Designated Stock
Exchange /BSE
CAF
CDSL
Company/ LPSL
DSE
EGM
EPS
Equity Shareholders
:
:
:
:
The Companies Act, 1956 and subsequent amendments thereof
Articles of Association of Lakshmi Precision Screws Limited
Board of Directors of Lakshmi Precision Screws Limited
The Stock Exchange, Mumbai.
:
:
:
:
:
:
:
Composite Application Form
Central Depository Services (India)Ltd.
Lakshmi Precision Screws Limited / The Issuer Company.
Delhi Stock Exchange Association Limited
Extra Ordinary General Meeting.
Earning Per Share
Equity shareholders of the Company whose names appear as:
ƒ Beneficial owners as per the list to be furnished by the depositories in
respect of the Equity Shares held in the electronic form and
ƒ On the Register of Members of the Company in respect of the Equity
Shares held in physical form.
FCNR Account
FEMA
FERA
FII
IFI/FI
Letter of Offer
Memorandum
NAV
NSDL
NRI
OCB
Offer/Issue
:
:
:
:
:
:
:
:
:
:
:
:
RBI
Record Date
Rights Entitlement
:
:
:
SEBI
:
Foreign Currency Non Resident Account.
The Foreign Exchange Management Act, 1999
Foreign Exchange Regulation Act , 1973
Foreign Institutional Investors registered with SEBI under applicable laws.
Indian Financial Institution.
This Letter of Offer dated ___________
Memorandum of Association of Lakshmi Precision Screws Limited
Net Asset Value
National Securities Depository Ltd.
Non Resident Indian.
Overseas Corporate Bodies
Offer for 40,16,667 Equity Shares of Rs. 10/- each for cash at a premium of
Rs.40/- per share (i.e. at a price of Rs.50/- per share) aggregating to Rs.
2008.33 Lacs on a rights basis to the existing equity shareholders of the
Company in the ratio of TWO equity shares for every THREE equity
shares held (i.e. 2:3) as on [•]
Reserve Bank of India
[•]
The number of Equity Shares that an Equity Shareholder is entitled to
under this Letter of Offer in proportion to his/ her/ its existing shareholding
in the Company as on the record date.
Securities and Exchange Board of India.
COMPANY/INDUSTRY RELATED TERMS
A2LA
NABL
OHSAS
:
American Association of Laboratory Accredation
National Accreditation Board of Laboratory
Occupational Health and Safety Assessment Series
iii
IV. RISK FACTORS
The investors should consider the following risk factors together with all other information included in this Letter
of Offer carefully, in evaluating the Company and its business before making any investment decision. Any
projections, forecasts and estimates contained herein are forward looking statements that involve risks and
uncertainties. Such statements use forward looking terminology like “may”, “believes”, “will”, “expect”,
“anticipate”, “estimate”, “plan” or other similar words. The Company’s actual results could differ from those
anticipated in these forward looking statements as a result of certain factors including those, which are set forth in
the “Risk Factors” below.
The Letter of Offer also includes statistical data regarding the Fasteners industry. This data has been obtained
from industry publications, reports and other sources that the Company and the Lead Manager believes to be
reliable. Neither the Company nor the Lead Manager has independently verified such data. The Managements’
proposal to address the risks have been enumerated wherever applicable.
INTERNAL RISK FACTORS
1.
There are litigations / disputes / cases pending against the Company
Labour related cases :
•
Seven labour related proceedings are pending before various authorities such as Industrial Tribunal –
cum labour court Rohtak and Labour Commissioner, Rohtak, for reinstatement of services of the
workers and they are at various stages of hearing. No amount is involved in these cases.
Show Cause Notices from Excise Department
•
A show cause notice no. V(150)CEX.prev/off/74/98/477 dated 12/01/2000 has been issued against the
company for raw material shortage 27000 kgs. Order has been issued by the Assistant Commissioner for
payment of Rs. 1,12,320/ with a penalty payment of Rs.10,000/-.
Management Proposal
The Company has already paid the amount of demand along with the penalty due and has filed an appeal with
the Customs, Excise, Service Tax Appellate Tribunal (CESTAT), Delhi against the order. The matter is
pending before the tribunal.
2.
Risk relating to Import policy
About 40% of the Company’s total requirement of raw materials, spare parts and components during the year
2004-05 was met out of imports. The Company expects to meet a part of its future requirements also through
imports. The prices of the same are therefore subject to overall exchange fluctuations and government
policies relating to import availability of foreign exchange.
3.
Factory License
The existing factory licenses of the Company for Plant I & Plant II has expired on 31.12.2004.
Management Proposal
The Company has applied for renewal of the said license. The approval is expected any time as no query is
pending as on date.
4.
Renewal of Consent regarding pollution control
The consent from Haryana State Pollution Control Board (HSPCB) has been expired on 31/03/2005. The
same has not been renewed yet.
Management Proposal
The Company has applied vide their letter dated 25/02/2005 to HSPCB for renewal of consent under Air,
Water and Hazardous Waste Act. The consent is now awaited.
5.
The success of the Company is substantially dependent on the management team.
The success of business of the Company is substantially dependent on its management team and key
personnel and their leaving the Company could adversely affect the business. Further, the ability to maintain
the position substantially depends on the ability to attract, motivate and retain such personnel.
iv
Management Proposal
The Company has a comprehensive Human Resources policy and has been able to retain its key management
team in the past.
6.
There was shortfall in the performances vis-à-vis projections made in relation to the previous Rights
Issue made in the year 1993.
The Company had come out with their previous Rights Issue in the year 1993. The Company had made
certain projections on the operating and financial performances in relation to last rights issue based on then
prevailing situation. However, due to various reasons, the projections could not be achieved. For further
details, please refer to page (72) of this Letter of Offer.
7.
As on 31/03/2005, the Company has some contingent liabilities detailed below, determination of which
against the Company may adversely affect the financial position.
(Rs. in Lacs)
Sr.
Particulars
31/03/2005
No.
1
Estimated amount of capital contracts remaining to be executed and not
81.00
provided for (net of advances)
2
Letter of credits and guarantees obtained from bank (Net of margin money)
228.00
3
Liabilities against legal undertakings/ bonds executed in favour of DGFT on
113.00
account of export obligation undertaken by the Company against advance and
import licenses under EPCG Scheme.
4
Income tax liabilities on account of appeals filed by Income Tax Department in
101.00
Punjab & Haryana High Court, Chandigarh
8.
Unsecured loans are repayable on demand basis
As on 31/03/2005, the Company has outstanding unsecured loans aggregating Rs.1479.63 Lacs repayable on
demand basis. Unscheduled demand of these loans and payments thereof, may impact company’s liquidity
positions.
Management Proposal
The unsecured loans represent the funds brought in by the promoters from time to time towards working
capital requirements . The amount of these loans will be adjusted to the extent of their rights entitlement and
subscription to unsubscriped portion in the present rights issue.
9.
Appraisal
The cost of project has not been appraised by any institution or external agency.
EXTERNAL RISK FACTORS
1.
Change in Technology
Technology plays a vital role in manufacturing plants. The Company’s failure or inability to adopt any
change in technology might place its competitors at an advantage in terms of cost, efficiency and timely
delivery of final products.
2.
Competition
The Company operates in a globally competitive business environment. Increasing competition may force the
Company to reduce prices of its products, which may reduce the revenues and margins and/or also decrease
its market share, either of which could have an adverse effect on the business, financial condition and
operations of the Company.
3.
Change in Import & Export Regulation
Any change in regulations, domestic or international, having an impact on the steel market and its inputs will
affect the industry as a whole. Such changes may be in the nature of introduction of quota, tariff barrier,
subsidies etc. and could adversely affect the business, financial condition and the operations of the Company.
v
4.
A slowdown in economic growth in India could cause the business to suffer
Any slowdown in the growth of Indian economy or future volatility in global commodity prices, could
adversely affect the business, including the future financial performance, shareholders’ funds and ability to
implement strategy and the price of the Equity Shares.
5.
Significant change in the Government’s economic liberalization and deregulation policies
The Government of India has traditionally exercised and continues to exercise a dominant influence over
many aspects of the economy. Its economic policies have had and could continue to have a significant effect
on public and private sector entities, including the Company, and on market conditions and prices of Indian
securities, including in the future on Company’s Equity Shares. The present Government, which was formed
after the Indian parliamentary elections in April-May 2004, is headed by the Indian National Congress and is
a coalition of several political parties. Any significant change in the Government’s policies or any political
instability in India could adversely affect the business and economic conditions in India and could also
adversely affect the business, future financial performance and the price of Company’s Equity Shares.
6.
Terrorist attacks and other acts of violence or war involving India.
Terrorist attacks and other acts of violence or war may negatively affect the Indian stock markets and also
adversely affect the global financial markets. These acts may also result in a loss of business confidence and
have other consequences that could adversely affect the business, results of operations and financial
condition.
India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as
other adverse social, economic and political events in India could have an adverse impact on the Company.
Military activity or terrorist attacks in the future could influence the Indian economy by disrupting
communications and making travel and transportation more difficult. Such political tensions could create a
greater perception that investments in Indian companies involve a higher degree of risk. This, in turn, could
have a material adverse effect on the market for securities of Indian companies, including the Equity Shares
and on the market for the products.
7.
Decline in India’s foreign exchange reserves.
At present, India’s foreign exchange reserve is the sixth largest in the world. A decline in forex reserves could
result in reduced liquidity and higher interest rates in the Indian economy. Reduced liquidity or an increase in
interest rates in the economy following a decline in foreign exchange reserves could adversely affect business
and financial performance of the Company and the price of Equity Shares.
8.
Downgrading of India’s debt rating.
Any adverse revisions to India’s credit ratings for domestic and international debt by international rating
agencies may adversely impact the ability to raise additional financing from domestic & overseas markets,
and the interest rates and other commercial terms at which such additional financing is available. This could
have a material adverse effect on the business and financial performance and adversely affect the ability to
raise resources at competitive rates.
9.
Sensitivity to the economy and extraneous factors
The Company’s performance is highly correlated to the performance of the economy and the financial
markets. The health of the economy and the financial markets in turn depends on the domestic economic
growth, state of the global economy and business and consumer confidence, among other factors. Any event
disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of
the Company.
HIGHLIGHTS :
1.
2.
3.
4.
5.
6.
Thirty Seven years old company engaged in the manufacture of Precision fasteners
Company is the 2nd largest manufacturer of fasteners in the country.
The Company is accredited with the latest International Standards in Quality, Environment, Health and
Safety namely ISO/ TS 16949:2002, ISO-14001-2004, OHSAS–18001:1999 and ISO-IEC-17025.
The Company has in-house capabilities to develop new products/ tools and has strength in technological
upgradation.
The Company has been successful in meeting competitive global customers requirements and is tier - I
supplier to global OEM customers.
The products of the Company have been accepted in the overseas markets including developed countries.
As a part of its strategy, the Company is focusing on exports in a big way.
vi
NOTES :
1.
Pre-issue Networth (as on 31/03/2005)
Pre-issue Net Asset value (as on 31/03/2005)
Issue Size
:
Cost per share to the promoter
:
:
Rs.3700.77 Lacs
Rs.61.42 per share
Offer for 40,16,667 Equity Shares of Rs. 10/- each for
cash at a premium of Rs.40/- per share (i.e. at a price of
Rs.50/- per share) aggregating to Rs. 2008.33 Lacs on
a rights basis.
Rs. 22.51
2.
There is no interest of promoters/directors/key management personnel other than reimbursement of expenses
incurred or normal remuneration or benefits.
3.
There are no transaction since past 6 months on the stock exchange in the shares of the Company by the
Promoters/Directors of the Company.
4.
Related party disclosures: For details please refer to page no. (47) .
5.
The lead manager and the Company shall update this Letter of Offer and keep the shareholders/public
informed of any material changes till the listing and trading commencement.
vii
V. INTRODUCTION
Industry Summary
Fasteners, commonly known as Nuts, Bolts & Screws find application in Automobile, Agriculture and Engineering
Industries. Thus Heavy and Medium Commercial Vehicles Light Commercial Vehicles, Utility Vehicles, Cars,
Three Wheelers, Tractors, Heavy Earth Moving Equipments, Machine Tools, Textile Machinery, Railways,
Defence Power, Telecommunication, Aircraft’s Spacecrafts, Air-Conditioning and Refrigeration etc. need fasteners
for sub or main assembly. In fact there is no assembly complete without fasteners.
The automotive industry is the largest end-user of fasteners with the remaining demand coming from sectors like
textile machinery, railway locomotives, construction, computer hardware and general engineering. Industrial
fasteners, accounting for 40% of the total demand, are more oriented towards the retail markets. OEM segment is
mainly dominated by organized players due to high intensity of capital and technology.
With economy on an uptrend, all users industries are performing well. Fasteners industry is evolving from
commodities to customized market since most auto manufacturers have different design specifications for their
assemblies.
Business Summary
Lakshmi Precision Screws (LPS) has a wide product range covering around 6000 variants. The company excels in
high value, customized products for automotive and industrial OEMs due to strong engineering capability and is a
single source supplier to many customers. The company has successfully developed critical products for customers
such as Maruti, Hero Honda, L & T John Deere, Tata Motors, Bajaj Auto, TVS Motors, Yamaha, M&M, Honda
Scooters, Eicher Motors, Swaraj Mazda and most of the other automotive multinational joint ventures in India. It has
also got self certifications from Ford Tractors, LMW, Tata Motors, etc.
The company is a leading exporter of fasteners and its global customers include Volvo, Visteon Bosch, John Deere,
Textron, etc. Its facilities have been accredited in Mechanical & Chemical Testing by A2LA USA to meet Fastener
Quality Act of USA. Exports contributed 38.77% of sales in FY 04 and 43.52% of sales in FY 05.
Demand from the domestic automotive and industrial sectors is likely to grow on a sustained basis. The company
has long-standing relationships with most of the automotive and industrial OEMs. It is further penetrating into the
major customer accounts to grab a larger share of their requirements. In-house R&D and strategic partnerships with
Bossard of Switzerland, Textron of USA, Fairchild of Australia, etc are enabling the company to provide the latest
fastening solutions.
Production Facilities
The company operates from its two plants at Rohtak in Haryana. The installed capacities, capacity utilizations and
actual production of both the units for the years 2001,2002,2003,2004 and 2005 are as follows:
Particulars
# Licenced Capacity
Units
M. Tons
2005
14500
2004
14500
2003
14500
2002
14500
2001
14500
## Installed Capacity
@ Actual Production
M. Tons
M. Tons
Lac/ Nos.
%
13520
9398
(4784)
70
12200
7900
(4014)
65
12200
6934
(3371)
57
12200
6424
(3067)
53
12200
6165
(3260)
51
Capacity Utilization
# Licensing Capacity is as per the Industrial Entrepreneur Memorandum filed with SIA, Ministry of Industry,
Government of India, New Delhi.
# # Installed capacity is as certified by the Chairman and Managing Director.
@ Actual production is on the basis of raw materials consumed less scrap.
1
Issue Details
Offer for 40,16,667 Equity Shares of Rs. 10/- each for cash at a premium of Rs.40/- per share (i.e. at a price of
Rs.50/- per share) aggregating to Rs. 2008.33 Lacs on a rights basis to the existing equity shareholders of the
Company in the ratio of two equity shares for every three equity shares held on record date [•]. The face value of
the Equity Shares is Rs. 10/- per share and the Issue Price (Rs.50/-) is 5 times of the face value.
Summary of Consolidated Financial Data
Please read the following data in conjunction with the detailed Auditors’ report on page 36 under the heading
‘FINANCIAL INFORMATION’
(Rs. In Lacs)
Description
As at 31st March
2005
2004
2003
2002
Total Income
15704.08
12421.16
10312.71
8787.17
PAT
578.66
423.04
241.99
104.41
Networth
4180.68
3730.78
3335.42
2952.21
Consolidated Turnover
15547.93
16000
12327.95
Rs.in Lacs
14000
12000
10000
9905.79
8157.57
8000
6000
4000
2000
0
2002
2003
2004
2005
Year
Consolidated PAT
578.66
600
423.04
Rs.in Lacs
500
400
241.99
300
200
104.41
100
0
2002
2003
2004
Year
2
2005
Dear shareholder(s),
Pursuant to the resolution passed by the shareholders in the Extraordinary General Meeting (EGM) held on
25/06/2005, the Company is authorized to raise resources upto Rs. 2008.33 Lacs .
Issue of 40,16,667 Equity Shares of Rs. 10/- each for cash at a premium of Rs.40/- per share (i.e. at a price of
Rs.50/- per share) aggregating to Rs. 2008.33 Lacs on a rights basis to the existing equity shareholders of the
Company in the ratio of two equity shares for every three equity shares held on record Date [•]. The face value of
the Equity Shares is Rs. 10/- per share and the Issue Price (Rs.50/-) is 5 times the face value.
VI. GENERAL INFORMATION
Name of the Company
:
LAKSHMI PRECISION SCREWS LIMITED
Registered Office
:
Branch offices
:
Registration No.
:
46/1 Mile Stone, Hissar Road, Rohtak - 124001, Haryana
Tel: (91-1262) 248790/249920, Fax: (91-1262) 249922.
E-mail: [email protected] , Website: www.lpsindia.com
ƒ 146, New Cycle Market, Jhandewalan Extension, New Delhi –
110055. Tel: (011) 23527642.
ƒ 153-Wing-A, Mittal Tower, Nariman Point, Mumbai – 400 021.
Tel: (022) 22821918.
ƒ 8, Canning Street, 3rd Floor, Room No.303, Kolkata- 700001,
Tel: (033) 22210754.
ƒ 305-A, Mittal Tower, 3rd Floor, M.G.Road, Bangalore-560001,
Tel: (080) 5588587.
ƒ 1/284, Transport Nagar, Agra, Uttar Pradesh, Tel: (0562)2600060.
H-4977 of 1968-69
Contact person:
Address of the
Registrar of Companies
:
:
H.P.S.Chugh
Registrar of Companies NCT of Delhi and Haryana
B-Block Paryavaran Bhawan, CGO Complex, Lodhi Road,
New Delhi – 110003
IMPORTANT
1.
This Issue is pursuant to the resolution passed by the shareholders in the EGM held on 25/06/2005.
2.
This Issue is applicable to such Equity Shareholders whose names appear as beneficial owners as per the list to
be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register
of Members of the Company at the close of business hours on the Record Date [•].
3.
Your attention is drawn to the section on risk factors starting from page no. (v ) of this Letter of Offer.
4.
Please ensure that you have received the CAF with this Letter of Offer.
5.
Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in
the CAFs. The instructions contained in the CAF are an integral part of this Letter of Offer and must be
carefully followed. An application is liable to be rejected for any non compliance of the Letter of Offer or the
CAF.
6.
All enquiries in connection with this Letter of Offer or CAFs should be addressed to the Registrar to the Issue,
quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the
CAFs.
7.
The Lead Manager and the Company shall make all information available to the Equity Shareholders and no
selective or additional information would be available for a section of the Equity Shareholders in any manner
whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with
SEBI.
8.
All the legal requirements as applicable till the filing of the Letter of Offer with the Designated Stock Exchange
have been complied with.
3
BOARD OF DIRECTORS
The Board of Directors of the Company comprises of:
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Mr. Lalit Kumar Jain (Chairman & Managing Director),
Mr. Dinesh Kumar Jain ( Vice Chairman & Managing Director)
Mr. Vijay Kumar Jain (Whole Time Director)
Mr. Rajesh Jain (Non Executive Director )
Smt. Sushila Devi Jain (Non Executive Director)
Mr. Jamshedji Rustomji Desai (Non Executive Independent Director)
Mr. Babulal S. Aggarwal (Non Executive Independent Director)
Mr. Keshwa Nand Rattan (Non Executive Independent Director)
Dr. Dharmendra Bhandari (Non Executive Independent Director - ICICI- Nominee)
Mr. Dipak Jain (Non Executive Independent Director)
BRIEF DETAILS OF DIRECTORS OF THE COMPANY
Mr. Lalit Kumar Jain
Mr. Lalit Kumar Jain an Engineering Graduate, aged 50 years is having an experience of 30 years as an industrialist.
He has qualified distance learning management course from Australia and attended various business programmes at
IBS, Hyderabad and other places. He is member of Haryana State Council, CII and member of Executive Committee
of ACMA. He has a wide experience of project management, finance, technology, marketing, HRD and better
quality management. He has contributed on matters relating to Corporate Governance, communicating with
stakeholders and holding of high-level reviews of corporate strategy and corporate planning. His comprehensive
industrial exposure brings highly valued insights in strategy and brand building of the Company.
Mr. Dinesh Kumar Jain
Mr.Dinesh Kumar Jain a Commerce Graduate, aged 56 years is having an experience of 36 years as an industrialist.
He has a wide experience in the field of finance, banking, sales/marketing, HRD, excise and taxation. He has been
involved in various initiatives undertaken by the Company from time to time.
Mr. Vijay Kumar Jain
Mr. Vijay Kumar Jain a Graduate, aged 48 years is having an experience of 30 years as an industrialist. He has a
wide experience in the field of finance, purchase, projects implementation, general administration, environment
protection and eco-friendliness.
Mr. Rajesh Jain
Mr. Rajesh Jain an engineering graduate, aged 46 years is having an experience of 25 years as an industrialist. He
has a wide experience in the field of marketing, finance, technology and HRD. He has attended various business
programmes at IBS Hyderabad and 3 years Owners & President Management Programme (OPM) at Harward
Business School U.S.A. He has pioneered the exports in LPS and contributed greatly in promotion of ancillary
units.
Smt. Sushila Devi Jain
Smt.Sushila Devi Jain, aged 71 years is a Matriculate. She has expertise in general management.
Mr. Jamshedji Rustomji Desai
Mr. Jamshedji Rustomji Desai, aged 71 years is an Engineering graduate (Mech.). He is an industrialist having 45
years of experience in various fields. He has been the Chairman of Kelvinator of India Ltd..
Mr. Babulal S. Aggarwal
Mr. Babulal S. Aggarwal, aged 68 years is an graduate. He is an industrialist having 33 years of experience with the
Company.
Mr. Keshwa Nand Rattan
Mr. K.N. Rattan aged 63 years has done B.Sc., M.I.E.PG Diploma in Project Management and has 36 years of
varied experience in mass production precision industries at various levels including Shop Floor Management,
Industrial Engineering, Project Planning & Implementation and General Management.
Dr. Dharmendra Bhandari
Dr.. Dharmendra Bhandari aged 49 years is a Chartered Accountant. He has 24 years of experience in the field of
Banking, Finance, Taxation and Audit. He has also authored various books and written articles in national and
international newspapers and magazines on matters relating to current economic issues.
4
Mr. Dipak Jain
Mr. Dipak Jain, aged 47 years, is holding Ph.D in marketing, M.S. in Operation research and M.S. in Mathematical
statistics. He has vast experience in the field of teaching in Marketing research, new products & services, product
design and development market segmentation and competitive market structure analysis. He is the dean of Kellogg
University, USA
Compliance Officer
H.P.S. Chugh
Company Secretary
Hissar Road, Rohtak – 124001, Haryana,
Tel: (1262) 248790,/ 249920 Fax: (1262) 249922
Email: [email protected]
Bankers to the Company
ICICI bank
ICICI Bank Towers, NBCC Place,
Bhishma Pitamah Marg, Pragati Nagar,
New Delhi – 110003.
Tel: (011) 24390000
Fax: (011) 24390070
Industrial Development Bank of India
72-73, Sector 17-B, Bank Square,
Chandigarh – 160017.
Tel: (0172) 2702976
Fax: (0172) 2703409
State Bank of Patiala
Commercial Branch,
2nd Floor, Chandralok Building, 36, Janpath,
New Delhi – 110001.
Tel: (011) 23357617
Fax: (011) 23354365
Canara Bank
193, Civil Lines, Rohtak
Tel: (01262) 250140
Fax: (01262) 253949
ABN AMRO Bank N.V.
Hasalaya Building, 15 Barakhamba Road
New Delhi – 110001
Tel. No.(011) 52121212
Fax No. (011) 52121213
ISSUE MANAGEMENT TEAM
Registrars to the Issue
MCS LIMITED
Sri Venkatesh Bhavan
W-40, Phase-II, Okhla Industrial Area
New Delhi – 110 020
Tel.: (011) 26384909 Fax: (011) 26384907
e-mail : [email protected]
SEBI Regn. No.: INR 000000056
Lead Manager to the Issue
307, Regent Chambers
Nariman Point, Mumbai – 400 021
Tel: (022) 22025230, Fax: (022) 22835467
Website: www.keynoteindia.net
E-mail: [email protected]
SEBI Regn No: INM 000003606
Contact Person: Mr. Satish Mangutkar
Bankers to the Issue
To be appointed
Auditors to the Company
N. G. Gupta & Co.
Chartered Accountants
85/86 Jadodia Market
Kharibaoli, Delhi - 110006
Tel No.(011) 23951614
Fax No.(011) 22016191
Email: [email protected]
5
INTERSE ALLOCATION OF RESPONSIBILITIES
Not Applicable
CREDIT RATING/DEBENTURE TRUSTEE
This being an issue of Rights equity shares, no Credit Rating or appointment of Debenture Trustee is required.
MONITORING AGENCY
Not Applicable
APPRAISING ENTITY
Not Applicable
MINIMUM SUBSCRIPTION
i)
If the Company does not receive the minimum subscription of 90% of the issued amount on the date of closure
of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having
been returned unpaid or withdrawal of applications, the Company shall forthwith refund the entire subscription
amount received within 42 days from the date of closure of the issue .
ii)
If there is a delay beyond 8 days after the Company becomes liable to pay the subscription amount (i.e. 42
days after closure of the issue), the Company shall pay interest for the delayed period at rates prescribed under
sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
UNDERWRITING/ STANDBY SUPPORT
This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue.
ISSUE SCHEDULE
ISSUE OPENS ON
[•]
LAST DATE FOR RECEIVING
REQUESTS FOR SPLIT FORMS
[•]
6
ISSUE CLOSES ON
[•]
VII. CAPITAL STRUCTURE OF THE COMPANY
No. of shares
As at March 31, 2005 ( Pre issue and adjusted for Post issue)
Aggregate
Nominal
Value
(Rs.)
A. Authorized Capital
1,49,70,000 equity shares of Rs. 10/- each
30,000 9.5 % Cumulative Redeemable Preference Shares of Rs.10/- each
14,97,00,000
3,00,000
B. Issued, Subscribed & Paid-up Capital
60,25,000 equity shares of Rs. 10/- each
6,02,50,000
C. Present Rights Issue
40,16,667 equity shares of Rs. 10/- for a cash at a premium of Rs. 40/- per
Equity Share.
4,01,66,670
D. Post Issue Capital
1,00,41,667 equity shares of Rs. 10/- each
10,04,16,670
E. Share Premium Account
Before the Offer
After the Offer
7,59,40,000
23,66,06,680
Note:
Changes in the Authorized Capital since 1982 are as follows:
Date
18/10/1982
28/09/1990
11/11/1995
Increased from
Rs.110.00 Lacs divided into 11,00,000
equity shares of Rs.10/- each.
Rs.200.00 Lacs divided into 20,00,000
equity shares of Rs.10/- each.
Rs.400.00 Lacs divided into 40,00,000
equity shares of Rs.10/- each.
7
Increased to
Rs.200.00 Lacs divided into 20,00,000
equity shares of Rs.10/- each.
Rs.400.00 Lacs divided into 40,00,000
equity shares of Rs.10/- each.
Rs.1500.00
Lacs
divided
into
1,49,70,000 equity shares of Rs.10/each and 30,000 (9.5%) Cumulatiive
Redeemable Preference shares of
Rs.10/- each.
Notes to Capital Structure:
1)
Details of present Equity Share Capital are as follows:
Date of
Allotment
Face
Value
(Rs.)
10*
Issue
Price
(Rs.)
10*
18/12/1969
20/12/1969
10*
20/11/1970
02/03/1971
03/03/1971
12/03/1971
19/03/1971
02/04/1971
10/03/1972
20/07/1973
28/03/1979
24/07/1979
10/09/1980
28/09/1981
03/12/1981
05/12/1981
08/12/1981
08/11/1982
20/12/1983
15/09/1993
24/12/1997
29/10/1998
27/12/1968
2000
Cumulative
No. of
shares
2000
10*
28000
12000
30000
42000
10*
10*
10*
10*
10*
10*
10*
10*
10*
10*
10
10
10
10
10
10
10
10
10*
10*
10*
10*
10*
10*
10
10
10
10
NIL
10
30
25.40
8000
4000
2000
4000
4000
36000
20000
10000
20000
30000
50000
20000
80000
10000
10000
350000
750000
2175000
1600000
50000
54000
56000
60000
64000
100000
120000
130000
150000
180000
230000
250000
330000
340000
350000
700000
1450000
3625000
5225000
10
19.75
800000
6025000
6025000
6025000
Total
No. of
Shares
Nature of
allotment
Consideration
Subscriber to
Memorandum
of Association
Allotment to
promoter
group
----do--------do-----
Cash
----do--------do--------do--------do--------do--------do--------do--------do--------do--------do----Bonus Issue
Public Issue
Rights Issue
Preferential
Issue
Preferential
Issue
% to Post Issue
Capital
(%)
0.02
Cash
0.28
0.12
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Bonus
Cash
Cash
Cash
0.08
0.04
0.02
0.04
0.04
0.36
0.20
0.10
0.20
0.30
0.50
0.20
0.80
0.10
0.10
3.49
7.47
21.66
15.93
Cash
7.97
60.00
* These shares were issued at the face value of Rs. 100/- and were converted into Rs. 10/- per share on 14/04/1981
2.
The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable
3.
Present Rights Issue :
Type of Instrument
Ratio
Face Value (Rs.)
No. of shares
Issue Price (Rs.)
Consideration
Equity Shares
2:3
10/-
40,16,667
50/-
Cash
8
4.
Pre & Post issue shareholding pattern of the Company is given below:Category
Pre-issue shareholding
No. of shares
%
Post-issue shareholding
No. of shares
%
A.
Promoter's Holding
Indian Promoters & their relatives
41,15,316
68.30
68,58,860
68.30
Sub Total
41,15,316
68.30
68,58,860
68.30
B.
Non-Promoters Holding
1) Institutional Investors
a. Mutual Funds and UTI
1,500
0.02
2,500
0.02
b. Banking, Financial Institution /
1,875
0.03
3,125
0.03
Insurance Companies
c. FIIs
2,250
0.04
3,750
0.04
Sub Total
5,625
0.09
9,375
0.09
2) Others
Private Corporate Bodies
3,08,698
5.12
5,14,497
5.12
Indian Public
15,79,541
26.23
26,32,568
26.23
NRIs
15,820
0.26
26,367
0.26
Any Other
Sub Total
19,04,059
31.61
31,73,432
31.61
Grand Total
60,25,000
100.00
100,41,667
100.00
*Investor are requested to refer para on ‘Fractional entitlement’ on page no. 78. The total number of shareholders in
the company are 7470.
5.
The shareholding pattern of the promoter group is as detailed below:
Particulars
a) Promoters/Directors
b) Immediate relatives of promoters
(Spouse, parent, child, brother, sister)
c) Company in which 10% or more of the
share capital is held by the promoter his
immediate relative firm or HUF in which
the promoter or his immediate relative is a
member.
d) Company in which the Company
mentioned in (c) above holds 10% or more
of the share capital
e) HUF in which aggregate share of the
promoter and his immediate relatives is
equal or more than 10% of the total
Total
Present
No. of Equity
% of
Shares of
Present
Rs.10/- each
Capital
Post Rights
No. of Equity
% of
Shares of
post issue
Rs.10/- each
capital
2318318
1770798
38.48
29.39
3863863
2951330
38.48
29.39
-
-
-
-
-
-
-
-
26200
0.43
43667
0.43
4115316
68.30
6858860
68.30
The promoters/directors/associates intend to subscribe to their entitlement in this rights issue in full. In case of
under subscription promoters/directors/associates have undertaken vide their letter dated 13/07/2005 to
subscribe to unsubscribed portion in full. Presuming no subscription is received from other shareholders the
promoters’ shareholding shall increase to 80.98% of the post rights issue equity capital of the Company.
The allotment to the promoters/ directors, if they subscribe to unsubscribed portion as undertaken will result in
public shareholding falling below the permissible minimum level as specified in the listing condition or listing
agreement. In such case the promoter(s) of the company will make an offer for sale of their holdings in terms of
clause (17.2) of SEBI (Delisting of Securities) Guidelines – 2003 so that the public shareholding is raised to the
minimum level specified in the listing agreement or in the listing conditions within a period of 3 months.
The Promoters/Directors of LPS have brought in funds by way of unsecured loans to the extent of Rs.1479.63
Lacs. The promoters have given their consent to adjust the said loan against their Rights entitlement to the
extent of Rs 1371.77 Lacs. The money brought in by the Promoters/Directors will be adjusted against the share
9
application money due from them towards their subscription in the rights issue and also towards subscription to
un-subscribed portion, if any, in the present rights issue.
6.
The Company has not issued any warrant, option, convertible loan, debenture or any other securities convertible
at a later date into equity, which would entitle the holders to acquire further equity shares of the Company.
7.
Equity shares of the Company are being traded in compulsory dematerialized mode. The market lot of the
equity shares is 1 (one).
8.
There are no transactions in the securities of the Company during preceding 6 months which were
financed/undertaken directly or indirectly by the promoters, their relatives, their group companies or associates
or by the above entities directly or indirectly through other persons.
9.
The ten largest shareholders two years prior to the date of filing of this Letter of Offer with Stock Exchange are
as follows :
Sr.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Name of the Shareholders
Number of
Equity Shares
801023
695760
669335
528362
307749
151200
150300
118900
110250
103237
3635116
Mr. Rajesh Jain
Mr. Lalit Kumar Jain
Mr. Vijay Kumar Jain
Mr. Nikhlesh Kumar Jain
Mrs. Sushila Devi Jain
Mr. Dinesh Kumar Jain
Ms. Deepa Jain
Ms. Sandhya Jain
Mr. Saurab Jain
Mr. Sudesh Kumar Jain
Total
Percentage of
shareholding
13.29
11.55
11.11
8.77
5.11
2.51
2.49
1.97
1.83
1.71
60.34
10. The ten largest shareholders as on 10 days prior to the date of filing of the Letter of Offer with Stock Exchanges
are as follows :
Sr.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Name of the Shareholders
Number of
Equity Shares
802023
695760
669335
528362
307749
151200
150300
118900
110250
103237
3636116
Mr. Rajesh Jain
Mr. Lalit Kumar Jain
Mr. Vijay Kumar Jain
Mr. Nikhlesh Kumar Jain
Mrs. Sushila Devi Jain
Mr. Dinesh Kumar Jain
Ms. Deepa Jain
Ms. Sandhya Jain
Mr. Saurab Jain
Mr. Sudesh Kumar Jain
Total
Percentage of
shareholding
13.31
11.55
11.11
8.77
5.11
2.51
2.49
1.97
1.83
1.71
60.35
11. The ten largest shareholders as on the date of filing of the Letter of Offer with Stock Exchanges are as follows :
Sr.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Name of the Shareholders
Number of
Equity Shares
802023
695760
669335
528362
307749
151200
150300
118900
110250
103237
3636116
Mr. Rajesh Jain
Mr. Lalit Kumar Jain
Mr. Vijay Kumar Jain
Mr. Nikhlesh Kumar Jain
Mrs. Sushila Devi Jain
Mr. Dinesh Kumar Jain
Ms. Deepa Jain
Ms. Sandhya Jain
Mr. Saurab Jain
Mr. Sudesh Kumar Jain
Total
10
Percentage of
shareholding
13.31
11.55
11.11
8.77
5.11
2.51
2.49
1.97
1.83
1.71
60.35
12. The Company/Promoters/Directors/Lead Merchant Bankers have not entered into buyback or similar
arrangements for purchase of securities issued by the Company.
13. The equity shares of the company are of face value of Rs.10/- and marketable lot is 1 (one). At any given time
there shall be only one denomination for the shares of the Company and the disclosures and accounting norms
specified by SEBI from time to time will be complied with.
14. The Company shall not make any further issue of capital whether by way of issue of bonus shares, preferential
allotment, rights issue or public issue or in any other manner during the period commencing from the
submission of the Letter of Offer to SEBI for the Rights Issue till the securities referred in the Letter of Offer
have been listed or application money refunded on account of failure of the issue.
15. The Company does not propose to alter the capital structure by way of split or consolidation of the
denomination of the shares or the issue of shares on a preferential basis or issue of bonus or rights or further
public issue of shares or any other securities within a period of six months from the date of opening of the
present issue.
16. The entire issue price is to be paid on application hence there will be no partly paid up shares arising out of this
issue.
11
VIII. OBJECTS OF THE ISSUE
The objects of the present issue of equity shares are:
1.
2.
To meet the Long Term Working Capital requirements of the Company.
To meet the expenses of the issue
Cost of project
Total
(Rs. In Lacs)
1958.33
50.00
2008.33
Total
(Rs. In Lacs)
2008.33
2008.33
Long term working capital
Issue expenses
Means of Finance
Rights Issue
Note :
DETAILED BREAK UP OF THE COST OF THE PROJECT
1.
Working Capital Requirement
Details of Current Assets & current Liabilities
Sr.No.
(A)
1
2
3
4
5
6
7
8
9
Particulars
for the year ended march----->
CURRENT ASSETS
Raw materials
a).Imported
month's consumption
b).Indigenous
month's consumption
Other consumable spares (excluding those included in 1 above)
a).Imported
month's consumption
b).Indigenous
month's consumption
Stock -in- process
month's cost of production.
Finished goods
month's cost of sales
Receivables other than export/deferred (incl. bills purchased/discounted
by bank)
month's domestic sales
Export receivables ( incl. bills purchased & discounted)
month's export sales
Packing material
Scrap
Other current assets (incl. cash & bank balances & deferred receivables
due within 1 yr.)
Total current assets
12
(Rs.in Lacs)
Audited
2005
650.00
5.89
641.00
2.26
125.00
11.90
2126
45.88
1007.00
1.07
2097
2.27
2265.00
2.80
1103.00
2.41
132.00
91.00
1396.00
11633.00
Sr.No.
(B)
12
13
14
15
Particulars
for the year ended march----->
CURRENT LIABILITIES
(other than bank borrowings for working capital)
Creditors for purchase raw materials / stores /cons.items.
a).Imported
month's purchase
b).Indigenous
month's purchase
Advances from customers.
Statutory liabilities
Other current liabilities incl. short term borrowings, unsecured loans,
dividend payable, installment of term loan etc.)
Total current liabilities
Audited
2005
490.00
4.52
2714.14
5.31
54.44
299.02
1499.62
5057.22
Computation of Maximum Permissible Bank Finance
Based on the audited financials for the period ended 31/03/2005, the computation of maximum permissible bank
finance for working capital as per company’s estimates is as follows:
Sr.
No.
1
2
3
4
5
6
7
8
(Rs. in Lacs)
Amount
Particulars
Total current Assets
Other current liabilities
Working capital gap
Minimum stipulated net working capital [25% total current
assets or 25% of Net Working Capital Gap (Export
Receivables to be excluded under both methods)
Actual projected Net Working Capital (as per CMA data)
Item 3 minus item 4
Item 3 minus item 5
Maximum permissible bank finance
(Item 6 to 7 whichever is lower)
11633
5057
6576
2633
3202
3943
3374
3374
Bank Limit
The company enjoys working capital facilities from existing banker, Canara Bank to the extent of Rs. 3350 Lacs
(fund based) and Rs.2100 Lacs (non fund based).
Minimum Stipulated Net Working Capital
Based on the audited accounts as on 31/03/2005 the required Net Working Capital (NWC) will be Rs.2633 Lacs.
The Company proposes to provide for said NWC as follows:
¾
¾
Proceeds of Rights issue
Internal Accruals
:
:
Rs.1958.33 Lacs
Rs.674.67 Lacs
The promoters and associates have already brought in funds amounting to Rs.1479.63 Lacs from time to time in the
form of unsecured loans towards working capital requirements. The promoters have given their consent to adjust the
said loan against their Rights entitlement to the extent of Rs.1371.77 Lacs. The money brought in by the
Promoters/Directors will be adjusted against the share application money due from them towards their subscription
in the rights issue and also towards subscription to un-subscribed portion, if any, in the present rights issue.
13
2.
Issue Expenses
The break up of issue expenses is as given below:
Sr.
No.
1
2
3
Particulars
Fees to the intermediaries
Printing & Stationery and Postage expenses
Advertisement and other Miscellaneous Expenses
Total
Amount
(Rs. in Lacs)
25.00
15.00
10.00
50.00
APPRAISAL
The project is not being appraised by any Bank or Financial Institution.
SCHEDULE OF IMPLEMENTATION
The proceeds of this rights issue will be deployed on working capital requirements in the normal course of the
business.
SOURCES & DEPLOYMENT OF FUNDS
The company has already spent an amount of Rs.1479.63 Lacs towards working capital requirement on an ongoing
basis . M/s N.G. Gupta & Co., Chartered Accountants, and Statutory Auditors of the Company have certified vide
their certificate dated 12/07/2005 that the company has utilized the unsecured loans of RS. 835.40 lacs from
promoters and Rs. 644.23 lacs from others outstanding as on 31.3.2005 towards working capital margin
requirements. The aforesaid sums were raised as per stipulation of lending financial institutions and banks.
INTERIM USE OF FUNDS
Pending deployment the funds raised through the rights issue would be deployed by the company judiciously in the
secured fixed deposits and other short term secured investment opportunities.
BASIC TERMS OF THE ISSUE
Face Value
Each Equity Share has the face value of Rs. 10/-.
Issue Price
Each Equity Share is being offered at a price of Rs. 50/- (including a
premium of Rs. 40/- per share).
Entitlement Ratio
The Equity Shares are being offered on rights basis to the existing Equity
Shareholders of the Company in the ratio of 2 (Two) Equity Shares for
every 3 (Three) Equity Shares held as on the Record Date.
Market Lot
The market lot for the Equity Shares in dematerialised mode is one. In
case of physical certificates, the Company would issue one certificate for
the Equity Shares allotted to one folio (“Consolidated Certificate”).
Terms of Payment
100% of the issue price i.e. Rs. 50/- shall be payable on Application.
14
BASIS FOR ISSUE PRICE
Qualitative Factors
1.
2.
3.
4.
5.
6.
Thirty Seven years old company engaged in the manufacture of Precision fasteners
Company is the 2nd largest manufacturer of fasteners in the Country.
The Company is accredited with the latest International Standards in Quality, Environment, Health and Safety
namely ISO/ TS 16949:2002, ISO-14001-2004, OHSAS–18001:1999 and ISO-IEC-17025.
The Company has in-house capabilities to develop new products/ tools and has strength in technological
upgradation.
The Company has been successful in meeting competitive global customers requirements and is tier - I
suppliers to global OEM customers.
The products of the Company have been accepted in the overseas markets including developed countries. As a
part of its strategy, the Company is focusing on exports in a big way.
Quantitative Factors (based upon adjusted Profit and Loss Account)
(a)
Earnings Per Share (EPS)
Year ended 31st March
2002-03
2003-04
2004-05
Weighted Average EPS
(b)
EPS(Rs)
2.44
4.77
6.69
5.34
Price Earning Ratio (PE)
Offer Price of
Rs.50/- per
share
7.47
9.36
P/E(based on EPS on 31/03/2005)
P/E(based on weighted average EPS)
(c)
Wts
1
2
3
Return on Networth (RONW)
Year
2002-03
2003-04
2004-05
Weighted Average RONW
RONW(%)
4.76
8.55
10.89
8.30
Wts
1
2
3
Minimum RONW required to maintain pre-issue EPS (at price of
Rs.50/-)
11.77 %
(d)
(e)
Net Asset Value (NAV)
NAV (pre issue) (Rs.)
61.42
NAV (post issue) (at price of Rs.50/-) (Rs.)
56.85
15
(f)
Industry P/E Ratio
Highest
Lowest
Average
(Source: Capital Market Jul 4 – 17, 2005, Sector : Fasteners)
(g)
18.5
8.6
17.2
Comparison of key ratios with the companies of comparable size in the same industry group
Name of the
company
FV
(Rs.)
Sales as on
31/03/2005
(Rs.in Cr.)
138.07
108.8
686.1
EPS
LPS
10/6.69
Sterling Tools Ltd
10/21.90
Sundram Fasteners
1/5.40
Ltd..**
*Based on Unaudited results as on 31/03/2005
** Based on Audited results as on 31/12/2004
(Source: Capital Market Jul 4 – 17, 2005, Sector : Fasteners)
MP
as on 14/07/2005
81.05
215.40
134.15
P/E
12.11
9.83
24.84
The last traded price of the equity share as on 15/07/2005 was Rs. 82.00 which is at a P/E multiple of 12.26 times
(based on EPS of 31/03/2005) which is 28.72% lower than the average P/E multiple of the other companies in the
sector.
The Issue Price of Rs. 50/- per share is 5 times the Face Value of Rs. 10/- per share of the equity shares being issued.
The minimum Return on Networth required to maintain pre-issue EPS of Rs. 6.69 is 11.77% whereas the Company
has already earned an RONW of 10.89% for the period ended 31/03/2005. The offer price of Rs.50/- is 7.47 times the
pre-issue EPS, which is lower than the Average P/E multiple for the industry sector in which the Company operates.
The offer price is at 38.31% discount to the present market price of the shares of the company.
Considering the above qualitative and quantitative factors, the issue price of Rs.50/- per equity share is justified.
16
TAX BENEFITS TO THE COMPANY AND ITS MEMBERS
The Company has been advised by M/s. N.G. Gupta & Co. auditors of the Company vide their certificate dated
12/07/2005, that under the Income Tax Act, 1961 and other Laws, the following tax benefits inter alia will be
available to the Company and Shareholders of the Company. The extract of the certificate is as follows:
The Board of Directors
Lakshmi Precision Screws Limited
46/1 Mile Stone, Hisar Road,
Rohtak – 124001 (Haryana)
Dear Sirs,
We hereby report that the enclosed annexures state the possible tax benefits available to Lakshmi Precision Screws
Limited and its shareholders under the current tax laws presently in force in India. Several of these benefits are
dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws.
The benefits discussed below are not exhaustive. This statement is only intended to provide general information to
the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the
individual nature of the tax consequences and the changing tax laws, each investor is advised to consider in his/her
own case the tax implications of an investment in the shares.
We neither express any opinion nor provide any assurance as to whether:
• the company or its shareholder will continue to obtain these benefits in future: or
• the conditions prescribed for availing the benefits have been/would be met with.
The contents of this annexure are based on information, explanation and representation obtained from the company
and on the basis of our understanding of the business activities and operations of the company.
A. TAX BENEFIT AVAILABLE TO THE COMPANY UNDER INCOME TAX ACT, 1961
1.
Under section 32 of the Act, the company is entitled to depreciation on (i) tangible assets being building,
machinery, plant and furniture, and (ii) intangible assets being know-how, patents, copy rights, trade mark,
licenses, franchisees or any other business or commercial rights of similar nature acquired on or after the 1st
day of April, 1998 for the use thereof in the company’s business. Further, the company is entitled to
additional depreciation @ 20% of the actual cost of plant and machinery acquired and installed after the
31st day of March, 2005 under the provisions of section 32(1)(iia) of the Income Tax Act, 1961.
2.
Under section 35 of the Act and subject to the provisions therein, the company would be entitled to
deduction in respect of expenditure laid out or expended on scientific research relating to its business.
3.
Under section 10(34) of the Act, dividend income referred to in section 115-O is exempt from tax in the
hands of the company.
4.
Under section 10(36) of the Act, income arising from transfer of long term capital asset, being an eligible
equity share in a company purchased on or after 1st day of March 2003 and before the 1st day of March
2004 and held for a period of twelve months or more is exempt from tax in the hands of the company.
5.
Under section 10(38) of the Act, income arising from transfer of long-term capital asset, being an equity
share in a company or unit of an equity oriented fund is exempt from tax, where the transaction of such sale
has been entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 being
Securities Transacting Tax (STT) has come into force i.e. on or after October 1st , 2004 and such
transaction is chargeable to STT under that Chapter.
6.
Under section 111A of the Act, the short term capital gain on transfer of equity share or units of an equity
oriented fund shall be chargeable to tax @ 10% (plus applicable surcharge and education cess), if the
transaction of such sale has been entered into on or after the date on which Chapter VII of the Finance (No.
2) Act, 2004 being Securities Transaction Tax (STT) has come into force i.e. on or after October 1, 2004
and such transaction is chargeable to STT under that Chapter. Deductions under Chapter VI-A of the Act
are not available on such income.
17
7.
Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of
long term capital assets shall be taxed at the rate of 20% (plus applicable surcharge and education cess)
after indexation as provided in the second proviso to section 48 of the Act, However, in case of listed
securities or unit or zero coupon bond, the long term capital gain (not covered under section 10(36) *
10(38) of the Act) can be taxed at 10% (plus applicable surcharge and education cess) without indexation,
at the option of shareholder. Deductions under chapter VI-A of the Act are not available on such income.
A.2 : UNDER THE WEALTH ACT, 1957
The company is liable to pay wealth tax as per the provisions of Wealth Tax Act, 1957 at the rate of 1% in
respect of certain assets owned by the company subject to the basic exemption of Rs. 15 lacs.
B. TAX BENEFITS AVAILABLE TO THE MEMBERS UNDER THE INCOME TAX ACT, 1961
B.1 TO RESIDENT MEMBERS:
1.
under section 10(34) of the Act, dividend income referred to in section 115-O is exempt from tax in the
hands of the shareholders.
2.
Under section 10(38) of the Act, income arising from transfer of long-term capital asset, being an equity
share in a company or unit of an equity oriented fund is exempt from tax, where the transaction of such sale
has been entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 being
Securities Transacting Tax (STT) has come into force i.e. on or after October 1st , 2004 and such
transaction is chargeable to STT under that Chapter.
3.
Under section 10(23D) of the Act, Mutual Funds set up by Public Sector Banks or Public Financial
Institution or Mutual Funds registered under the Securities and Exchange Board of India or authorized by
the Reserve Bank of India, subject to the conditions specified therein, are eligible for exemption from
income-tax on all their income, including income from investment in the shares of the company subject to
provisions of Chapter XII-E of the Income Tax Act, 1961.
4.
Under section 111A of the Act, the short term capital gain on transfer of equity share or units of an equity
oriented fund shall be chargeable to tax @ 10% (plus applicable surcharge and education cess), if the
transaction of such sale has been entered into on or after the date on which Chapter VII of the Finance (No.
2) Act, 2004 being Securities Transaction Tax (STT) has come into force i.e. on or after October 1, 2004
and such transaction is chargeable to STT under that Chapter. Deductions under Chapter VI-A of the Act
are not available on such income.
5.
Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of
long term capital assets shall be taxed at the rate of 20% (plus applicable surcharge and education cess)
after indexation as provided in the second proviso to section 48 of the Act, However, in case of listed
securities or unit or zero coupon bond, the long term capital gain (not covered under section 10(36) *
10(38) of the Act) can be taxed at 10% (plus applicable surcharge and education cess) without indexation,
at the option of shareholder. Deductions under chapter VI-A of the Act are not available on such income.
6.
In accordance with section 54EC of the Act and subject to the conditions specified therein, in case where
the long term capital gains are invested within a period of six months after the date of such transfer in
specified bonds mentioned under that section, the capital gain arising therefrom will be exempt from tax.
The amount so exempt from tax shall, however, be chargeable to tax subsequently, if the new asset is
transferred or converted into money within three years from the date of their acquisition.
7.
In accordance with section 54ED of the Act and subject to the conditions specified therein, long term
capital gains arising on transfer of the shares in the company shall be exempt from tax if the capital gains
are invested within a period of six months from the date of such transfer, in the acquisition of specified
equity shares mentioned under that section. The amount so exempt from tax shall, however, be chargeable
to tax subsequently, if the new asset is transferred or converted into money within one year from the date of
their acquisition.
8.
In accordance with section 54F of the Act and subject to the conditions therein, long term capital gains
arising on transfer of shares in the company held by an individual or HUF shall be exempt from tax if the
net sale consideration is utilized within a period of one year before or two years after the date of transfer for
18
purchase of a new residential house, or for construction of a residential house within a period of three years
from the date of transfer.
9.
In terms of section 10(32) of the Act, any income of minor child clubbed in the total income of the parent
under section 64(IA) of the Act, shall be exempt to the extent such income does not exceed Rs. 1500/- in
respect of each such child, in accordance with, and subject to the provisions of the respective sections.
B.2 TO NON-RESIDENTS MEMBERS:
1.
Under section 10(34) of the Act, dividend income referred to in section 115-O of the Act is exempt from
tax in the hands of the shareholders
2.
Under section 10(38) of the Act, income arising from transfer of long-term capital asset, being an equity
share in a company or unit of an equity oriented fund is exempt from tax, where the transaction of such sale
has been entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 being
Securities Transacting Tax (STT) has come into force i.e. on or after October 1st , 2004 and such
transaction is chargeable to STT under that Chapter.
3.
Under the first proviso to section 48 of the Act, in case of a non-resident, in computing the capital gains
arising from transfer of shares of the company acquired in convertible foreign exchange (as per exchange
control regulations) protection is provided from fluctuation in the value of rupee in terms of foreign
currency in which the original investment was made. Cost indexation benefits will not be available in such
a case. However, the capital gain will be taxed as per the provisions of section 111A or 112 of the Act as
applicable.
4.
Under section 111A of the Act, the short term capital gain on transfer of equity share or units of an equity
oriented fund shall be chargeable to tax @ 10% (plus applicable surcharge and education cess), if the
transaction of such sale has been entered into on or after the date on which Chapter VII of the Finance (No.
2) Act, 2004 being Securities Transaction Tax (STT) has come into force i.e. on or after October 1, 2004
and such transaction is chargeable to STT under that Chapter. Deductions under Chapter VI-A of the Act
are not available on such income.
5.
Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of
long term capital assets shall be taxed at the rate of 20% (plus applicable surcharge and education cess)
after indexation as provided in the second proviso to section 48 of the Act, However, in case of listed
securities or unit or zero coupon bond, the long term capital gain (not covered under section 10(36) *
10(38) of the Act) can be taxed at 10% (plus applicable surcharge and education cess) without indexation,
at the option of shareholder. Deductions under chapter VI-A of the Act are not available on such income.
6.
As per the provisions of section 115A of the Act, in the case of a non resident or a foreign company, the tax
payable on dividends other than dividends referred to in section 115-O of the Act shall be 20% (plus
applicable surcharge and education cess) of such income. It shall not be necessary for such assessee to
furnish the Return of Income if their only source of income is investment income and tax has been
deducted at source from such income under the provisions of chapter XVII B of the Act.
7.
In accordance with section 54EC of the Act and subject to the conditions specified therein, in case where
the long term capital gains are invested within a period of six months after the date of such transfer in
specified bonds mentioned under that section, the capital gain arising therefrom will be exempt from tax.
The amount so exempt from tax shall, however, be chargeable to tax subsequently, if the new asset is
transferred or converted into money within three years from the date of their acquisition.
8.
In accordance with section 54ED of the Act and subject to the conditions specified therein, long term
capital gains arising on transfer of the shares in the company shall be exempt from tax if the capital gains
are invested within a period of six months from the date of such transfer, in the acquisition of specified
equity shares mentioned under that section. The amount so exempt from tax shall, however, be chargeable
to tax subsequently, if the new asset is transferred or converted into money within one year from the date of
their acquisition.
9.
In accordance with section 54F of the Act and subject to the conditions therein, long term capital gains
arising on transfer of shares in the company held by an individual or HUF shall be exempt from tax if the
net sale consideration is utilized within a period of one year before or two years after the date of transfer for
19
purchase of a new residential house, or for construction of a residential house within a period of three years
from the date of transfer.
B.3 SPECIAL PROVISIONS FOR NON-RESIDENT INDIAN (NRI) MEMBERS:
1.
A Non-Resident Indian(i.e. individual being a citizen of India or person of Indian origin) has the option to
be governed by the special provisions of chapter XII-A of the Act, according to which:
2.
Under section 115E of the Act, where shares in a company are subscribed for in convertible foreign
exchange by a non-resident Indian then income from long term capital gain (not covered under section
10(36) & 10(38) of the Act) on transfer of shares shall be charged to tax @ 10% (plus applicable surcharge
and education cess) without indexation as per first proviso to section 48 of the Act.
3.
Under section 115F of the Act, the long term capital gains arising from the transfer of shares of a company,
where these were acquired in convertible foreign exchange, shall be exempt from tax provided that the net
consideration is invested in any specified asset(including share in the company) within six months after the
date of transfer of the asset. The amount so exempt from tax shall, however, be chargeable to tax
subsequently, if the new asset is transferred or converted into money within three years from the date of
their acquisition.
4.
Under section 115G of the Act, a non resident Indian is not required to file a Return of Income under
section 139(1) of the Act, if his total income consists only of income from investments or long term capital
gains earned on transfer of such investments or both and tax has been deducted at source from such income
under the provisions of chapter XVII B of the Act.
5.
Under section 115I of the Act, a non resident Indian has the option of not being governed by the special
provisions of chapter XII-A for any assessment year by furnishing his return of income under section 139
of the Act declaring therein that the provisions of this chapter shall not apply to him for that assessment
year.
B.4 SPECIAL PROVISIONS FOR FOREIGN INSTITUTIONAL INVESTORS:
Under section 115AD of the Act Foreign Institutional Investors (FIIs) will be charged to tax as under:
(i)
On income (other than income by way of dividend referred to in section 115-O of the Act) from shares
in the company shall be taxable @ 20% (plus applicable surcharge and education cess)
(ii)
On long term capital gains (not covered under section 10(38) of the Act) arising from transfer of shares
in the company shall be taxable @ 10% (plus applicable surcharge and education cess)
(iii)
On short term capital gain arising from the transfer of shares in the company shall be taxable @ 30%
(plus applicable surcharge and education cess). However, if such transfer is covered by section 111A
of the Act, tax shall be payable @ 10% (plus applicable surcharge and education cess)
B.5 TO VENTURE CAPITAL COMPANIES/FUNDS
In terms of section 10(23FB) of the Act, all Venture capital companies/funds registered with Securities and
Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on all
their income, including income from sale of shares of the company.
B.6 UNDER WEALTH TAX ACT, 1957
1.
Shares in a company are not covered under the definition of ‘Assets’ under section 2(ea) of the Wealth Tax
Act, 1957 and accordingly are not liable to wealth tax.
NOTES:
1.
All the above benefits are as per the current tax law as amended by the Finance Act, 2005 and will be
available only to the sole/first named holder in case the shares are held by joint holders.
2.
In respect of non-resident the tax rate and the consequent taxation mentioned above shall be further subject to
any benefits available under the double taxation avoidance agreement, if any.
3.
In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax
advisor with respect to specific tax consequences of his/her participation in the scheme.
20
IX. ABOUT ISSUER COMPANY
INDUSTRY OVERVIEW
The information presented in this section has been extracted from publicly available documents from various
sources, including officially prepared materials from the Government and its various ministries and has not been
prepared or independently verified by the Issuer or the Lead Manager.
Fasteners, commonly known as Nuts, Bolts & Screws find application in Automobile, Agriculture and Engineering
Industries. Thus Heavy and Medium Commercial Vehicles Light Commercial Vehicles, Utility Vehicles, Cars,
Three Wheelers, Tractors, Heavy Earth Moving Equipments, Machine Tools, Textile Machinery, Railways,
Defence Power, Telecommunication, Aircraft’s Spacecrafts, Air-Conditioning and Refrigeration etc. need fasteners
for sub or main assembly. In fact there is no assembly complete without fasteners. The Fastener industry size is
estimated at Rs. 1200 crores p.a and LPS share in the market is around 12%.
Markets Trends & Challenges
1)
2)
3)
4)
5)
6)
7)
8)
Domestic Auto Industry is expected to grow @ 8-10 % pa
Auto OEMs seek special range and development capability from manufacturers
Value Addition Capability to become a Differentiator
Import Duty Reduction – mainly for standard Fasteners Market
Expected Strengthening of Rupee may hit Export attractiveness.
Substitute products (Plastic Fasteners/ No Fasteners) for small instrumentation industry –(weak threat)
Optimizing the Degree of Vertical Integration (for Value Addition Capabilities) crucial
Very strong Bargaining Power of the Raw Material (Steel) Industry as against the Negotiating Power of the
Fastener Industry
The Products
Fasteners can mainly be put in two main categories:
a.
b.
Made to Stock – Standard Products – 40%
Made to Order – Special Products – 60%
Standard Products are supplied to actual users through distributors/ dealers and special products are supplied directly
to Original Equipment Manufacturers (OEMs).
Added to this is the huge replacement market, mainly automobile replacement market, where fasteners used as
original equipment, are needed for replacement during repairs and maintenance. The replacement market also
known as secondary market is serviced by distributors/ dealers/ retailers.
The Manufacturers
The main players in organized sector are Sundaram Fasteners Ltd., LPS, Precision Fasteners Limited, Sterling
Tools Ltd., Pooja Forgings Ltd. There are number of small players in organized and unorganized sector. However
due to strict quality and delivery norms of the user Industries, not many can deliver the goods because heavy
investment needed in plant & machinery, secondary operations, testing and measuring equipments, tools, dies,
gauges, raw materials, etc.
In view of the above, OEMs insist for quality audits, certifications like ISO-9002, QS-9000, ISO-14000, OHSAS
18001 leading to self-certification. Products of self-certified manufacturers like LPS are not subjected to inspections
at OEMs and are straight way sent to assembly line.
The Future
The future prospect of fasteners industry is bright, though the competition will put pressure on margins. The entry of
MNCs like Volvo, General Motors, FIAT, Toyota, Hyundai, L&T, JD, New Holland, Honda has already infused
tough competition for existing players like TELCO, AL, MUL, HML, M&M, TAFE, Eicher, Escorts, PTL, Swaraj,
Hero Honda, Kinetic, etc. The pressure will travel down to competent suppliers. It will lead to survival of the fittest.
21
To be fittest fasteners manufacturers will need to ensure 100% schedule adherence, zero defects volume production
and of course very competitive price.
BUSINESS OVERVIEW
Lakshmi Precision Screws (LPS) has a wide product range covering around 6000 variants. The company excels in
high value, customized products for automotive and industrial OEMs due to strong engineering capability and is a
single source supplier to many customers. The company has successfully developed critical products for customers
such as Maruti, Hero Honda, L & T John Deere, Tata Motors, Bajaj Auto, TVS Motors, Yamaha, M&M, Honda
Scooters, Eicher Motors, Swaraj Mazda and most of the other automotive multinational joint ventures in India. It has
also got self certifications from Ford Tractors, LMW, Tata Motors, etc.
The company is a leading exporter of fasteners and its global customers include Volvo, Visteon Bosch, John Deere,
Textron, etc. Its facilities have been accredited in Mechanical & Chemical Testing by A2LA USA to meet Fastener
Quality Act of USA. Exports contributed 38.77% of sales in FY 04 and 43.52% of sales in FY 05.
The company has long-standing relationships with most of the automotive and industrial OEMs. It is further
penetrating into the major customer accounts to grab a larger share of their requirements. In-house R&D and
strategic partnerships with Bossard of Switzerland, Textron of USA, Fairchild of Australia, etc are enabling the
company to provide the latest fastening solutions.
The turnover of the company has increased gradually from Rs.16 Lacs in its initial year to Rs.138 crores in the
financial year 2004-05.
DETAILS OF THE BUSINESS OF THE COMPANY
Location of the project
The Company operates from 2 plants which are both situated at Hissar Road, Rohtak, Haryana which is around 60
kms from Delhi. Both the plants are located at near Delhi-Hissar National Highway, thereby providing easy
transportation with the raw material and the consumer markets.
Present Capacities and utilization thereof for the year 2004-05
Particulars
Units
# Licenced Capacity
M. Tons
## Installed Capacity
@ Actual Production
M. Tons
M. Tons
Lac/ Nos.
%
Capacity Utilization
Year
ended 2005
14500
13520
9398
(4784)
70
Plant & Machinery
The Company has well equipped Fastener plants. The plants are technologically upgraded from time to time by
balancing of the equipments. New technology and process available is adopted and implemented.
22
Manufacturing Process
The Company has been manufacturing the high tensile fasteners for the past 34 years and over the period has
developed expertise in the production, planning and control of the process. The brief description of the
manufacturing process followed by the company is as per the chart given below :
Collaboration
Detailed Joint Ventures / collaboration agreement
The details of various collaborations entered by the company are as given herein under :
1.
LPS-Bossard Pvt. Ltd. :
This a joint venture company of LPS and Bossard. AG of Switzerland. The company has entered into a joint
venture agreement on 26th June 1997 with Bossard AG. Bossard is a company subsisting under the laws of
Switzerland and has its principal office at Steinhausertrasse, 70, Postfach, CH-6305, Zug, Switzerland. In the joint
venture 51% share capital is held by Bossard and 49% is held by LPS. The present directors of the company are
Mr. Rajesh Jain, Mr. Lalit Kumar Jain and Mr. Scott Wright Mac Meekin.
This venture gives state of the art fastening solution/ technology to customers in India. The latest inventory
management technique through logistic support is also provided by through this venture.
Brief financials of the company :
Particulars
(year ending 31st March )
Operating and other Income
Profit / (loss) before tax (PBT)
Profit / (loss)after tax (PAT)
Equity Share Capital
Reserves and Surplus/ (Accumulated losses)
Earning per share (EPS)
Rs.
Book Value (Face value of Rs.10/- per share) Rs.
23
2003-04
2002-03
2311.56
337.01
210.57
480.00
582.99
4.39
17.72
1958.61
324.32
199.79
480.00
480.72
4.16
16.01
(Rs. in Lacs)
2001-02
1587.46
456.12
288.57
480.00
297.03
6.01
22.15
2.
LPS Bossard Information Systems Pvt. Ltd.
Date of Incorporation: 21/11/1997
Names of Directors:. Mr. Rajesh Jain, Mr. Lalit Kumar Jain, Mr. Scott Wright Mac Meekin,
Business: To design & development of computer & non computer based software.
Brief financials of the company :
Particulars (year ending 31st March )
Operating and other Income
Profit / (loss) before tax (PBT)
Profit / (loss)after tax (PAT)
Equity Share Capital
Reserves and Surplus/ (Accumulated losses)
Earning per share (EPS)
Rs.
Book Value (Face value of Rs.10/- per share) Rs.
3.
2003-04
13.02
(0.65)
(0.65)
37.70
5.59
2002-03
11.14
(1.85)
(1.85)
37.70
5.76
(Rs. in Lacs)
2001-02
5.99
(4.81)
(4.81)
37.70
6.25
Recoil PTY Ltd. :
The company has entered into a distributor agreement dated 26.11.1996 with Recoil PTY Ltd. a corporation existing
under the laws of Commonwealth of Australia. Recoil has its principal office and place of business at 20 Stamford
Road, Oakleigh Victoria 3166, Australia. Recoil has appointed LPS to sell and promote its products as given
hereunder on an exclusive basis with the exception of Panchsheel fasteners for Delhi Territory. The products
included are Recoil, Fix-a-thread, Plugsaver, Studsaver, Keysert, Re-grip amd Drill-out
4.
Textron Inc. :
'LPS' has entered into a licensing agreement dated 20.08.1998 with CAMCAR Division of Textron Inc, a Delaware
Corporation having a place of business at 600 Eighteenth Avenue, Rockford, Illinois for manufacturing and
marketing 'Torx®' brand of proprietary products. Textron is a 10 billion USD multi-specialty company, with 1.8
billion USD as revenue from fastening division. Torx® drive systems enhances product reliability. increases
productivity and reduces total assembly costs.
Infrastructure Facilities
1.
Raw materials
The raw material required for the manufacture of High Tensile Fastener is wire/wire rods, bright bars and SS bars.
The Company presently sources its raw materials from both imported and indigenous suppliers . The imports are
sourced from Dongbu Steel Co. (South Korea), Chunzu and Tycoons Bio Steel etc. The major domestic suppliers of
raw material include Mukund Ltd., Raj Ratna Metal Ltd. , Bharat Steel Yard Ltd. , Sunflag & Iron and Steel Co Ltd.
, Panch Mahal Steel and Vardhman Special. Steels, etc.
The raw material is easily available in the open market and the enhanced requirement shall also be met from the
existing suppliers. Accordingly, no problem is envisaged in this regard. In order to meet the quality specifications of
certain domestic and international clients the company would continue to import a part of its requirement of raw
materials, etc.
2.
Utilities
Water: The arrangement have been made for supply of water through tube wells and a Reverse Osmosis ( RO) plant
and small quantity of water for drinking is arranged through tankers.
Power:. The Company has arrangement of power supply from Uttar Haryana Bijli Vitran Nigam Limited. The
company has sanctioned load of 4.7 MW for both the plants. In addition the company has standby arrangement
through DG sets having capacity of 6.20 MW.
Environmetal: The manufacturing process involves generation of lubricants and coolants as the significant effluents
and the same do not require any special arrangements for disposal. Effluents from present facilities are collected in
24
tanks which is evaporated. The Company has a NOC from the Haryana State Pollution Control Board for the
existing facility.
3.
Manpower
The Company’s present work force of 1131 personnel comprises of 48 Managers/Supervisors, 179 Skilled labour
and 904 semi-skilled/Unskilled labours. The present manpower will be rationalized to have efficiencies and cost
savings.
Products
The product range manufactured by the company can be categorized in two types :
1.
2.
Standard Products
Special Products.
Standard Products : Under this category the company manufactures the following :
ƒ
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ƒ
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Socket Head Cap Screws / CSK / SSS/ /Hex Wrenches
Slotted / Hex / Shoulder screws
Hex Nuts
Dowel Pins
Hex/Bi Hex Flange Screws
Special Products : Under this category company manufactures the following
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Torx and Clamp
Compressor Bolt
Con rod Bolts
Collar Bolts and Axles
Pivot Pin Transmission Bolt
C.R. Bolt,
Gear Shaft and Drive Shaft
Durlock Screw
Wheel Bolt and Stud
Ball Pins, Ball rods
Engine Fastener
Hex Bolts and Axles
Cylinder Head Bolt
Special Customized products (Cold / Hot forged) requiring various secondary operations
MARKETING STRATEGY
A qualified team so meticulously plans our marketing strategy that LPS products continue to occupy a premier position at
the National/International level. The manufacturing range includes both Standard as well as Special fasteners and
Company’s customer base, consists of major OEMs in the country including MNCs such as Maruti, L & T John Deere,
Tata Motors, Hero Honda, Honda Motorcycles & Scooters, Mahindra & Mahindra, Bajaj Auto, Volvo, Visteon, TVS
Motors, Cummins India Ltd., Godrej Ltd., Ashok Leyland, MICO, Eicher Motors, Bajaj Auto, Escorts, Kinetic
Engineering, Swaraj Mazda, Kirloskar, QH Talbros, New Holland Tractors and many more.
The Company has a wide distribution network with offices in all the major Industrial townships of India. Apart from OEM
customers the Company we also has a good dealer network to cater to replacement market all over the country. The
strong marketing team of 30 field sales professionals ably supports the above customers and 20 internal sales professionals
in turn support them.
The Company has a very strong presence in international market through a network of distribution channel spread across
the globe with major focus in United States and Europe. The Company is focusing development of OEM supplies to the
top automobile manufacturers in USA and Europe
With constant efforts put in by the marketing team LPS is the only fastener manufacturer in India to have presence in all
the 2 Wheeler manufactures in India. The Company is in pursuit of adding new customers to its portfolio every year with
varied range of fasteners and has been growing @ over 25 % compound growth annually for the past 3 years.
25
The company in the last 2 –3 years has consciously started penetrating into cold forged components market also and has
tasted very encouraging results from customers like Sona Somic Lemforder, Q H Talbros Ltd, Mico Bosch & TVS
Motors.
Future Prospects
LPSis looking in for new technology transfers to enable it to venture into areas of self tapping screws, various types
of surface finish and other cold forged components
The existing products are expected to grow at the rate of 25% for the next 2-3 years, The Company has minimum
one year`s commitment from its existing customers and does not foresee any reduction in the same.
More and more international buyers / companies are looking at India for their domestic and international
requirements of High Tensile Fasteners and Cold forged components
Competition
The Company has established globally its product quality and commercial competitiveness. This has been achieved
with the continuing measures in employment of improved technology to match with the competitors’ as well as the
satisfaction of its end users / customers. The Company has upgraded its plant and equipment to keep pace with the
above.
The Company has embarked a radical change in sourcing the most updated technology in its sphere of activities. The
Company is expected to mantle itself and present to the industry the latest state of art in all its process. The
Company has already taken measures for acquiring the skills needed to scale the demands of the growth in response
to the business climate.
Principal Competitors
•
•
•
•
•
Sundram Fasteners limited.
Sterling Tools Limited
Precision Fasteners Ltd.
Pooja Forging Ltd
SKS Fasteners Ltd.
Property
The Company has its registered office at 46/1 Mile Stone, Hissar Road, Rohtak, Haryana 124 001 and also has
corporate offices at New Delhi, Mumbai, Kolkata, Bangalore and Agra.
Purchase of Property
The company is not proposing to purchase any property in the form of building or other structures from the proceeds
of the present rights issue.
26
X. HISTORY OF THE COMPANY
BRIEF HISTORY
Lakshmi Precision Screws Ltd. is promoted by Shri Bimal P. Jain, Shri D.K. Jain & Associates, was incorporated on
27/12/1968 as a Private Limited company and was converted into a Public Limited company on 20/08/1971. The
Company commenced commercial business in the same year with the manufacture of high tensile fasteners (viz
cold forged headcap screws). The Company thereafter continuously increased its product range to include hot and
cold forged bolts and screws with an installed capacity of 13,520 M.T. in 2005. The Company is today a leading
manufacturer of industrial fasteners and supplying products in the replacement & original equipment market.
Milestones achieved by LPS
Year
1972
1988
1991-93
1993
1995
1996
1996
1998
1998
1999
2000
2001
2001
2002
2003
2003
2004
Achievements
Established as LPS in technical tie-up with Richard Bergner, Germany
Established as Exporter
Continuously received Regional export award from EEPC
Established Plant II
A2LA and NABL Accreditations
ISO 9002 Certification
Technical tie-up with SUNIL Machinery Corp., South Korea, for Quality, Productivity &
Development of Automotive Parts
Marketing tie-up with RECOIL Pty. Australia
Joint venture with BOSSARD- AG, Switzerland
License to manufacture & market Torx brand of proprietary products from Textron Inc. USA
QS – 9000 : 1998 Certification
ISO/TS 16949 : 1999 Certification
ISO 14001 Certification
Golden Peacock Environment Management Award
VOLVO Global Supplier Certification
ISO / TS 16949 (version 2002) Certification
Recommended for OHSAS 18001 certification
MAIN OBJECT OF THE COMPANY
The main objects of the company are as follows:
(As set out in the Memorandum and Articles of Association of the Company)
a.
To produce, prepare, manufacture, purchase, sell, import, export and generally to deal in Allen Cap Screws,
Grub Screws, Machine Screws, High Tensile Bolts and Nuts, Special Turned parts and commercial quality Bolt,
Nuts, Screws, and other Special Formed Components made out of ferrous and non-ferrous metals.
b.
To manufacture, buy, sell, exchange, install, work, alter, improve, import or export and otherwise deal in all
kinds of Plant, Machinery, Apparatus, Tools, Substances, Materials and things necessary or convenient for
carrying of any of the business which the Company is authorized to carry on.
c.
To carry on any other Business, whether manufacturing or otherwise which may seem to the Company, capable
of being conveniently carried on in connection with the above or calculating directly or indirectly to enhance
value or render profitable any of the Company’s properties or Rights.
27
SUBSIDIARIES OF THE COMPANY:
Indian Fasteners Limited:
Date of Incorporation: 07/08/1986
Names of Directors:. Mr. Rajesh Kumar Jain, Mr. Lalit Kumar Jain, Mr. Vijay Kumar Jain, Mr. Dinesh Kumar Jain
,Mr. Sudesh Kumar Jain.
Business: Manufacturing of fasteners on job work basis.
(Rs.in Lacs)
Particulars (year ending 31st March )
2004-05
2003-04
2002-03
Operating and other Income
25.27
23.66
20.93
Profit / (loss) before tax (PBT)
14.47
13.41
9.81
Profit / (loss)after tax (PAT)
11.53
11.01
6.29
Equity Share Capital
71.56
71.56
71.56
Reserves and Surplus
68.05
56.51
45.50
Earning per share (EPS) (Rs.)
1.61
1.54
0.88
Book Value (Face value of Rs.10/- per share) Rs.
19.51
17.90
16.36
SHAREHOLDERS AGREEMENT
There is no separate agreement between any shareholder and Company.
STRATEGIC/ FINANCIAL PARTNERS
The company does not have any strategic/financial partner.
28
XI. MANGEMENT OF THE COMPANY
BOARD OF DIRECTORS
Name & Address
Mr. Lalit Kumar Jain,
Chairman & Managing
Director
S/o. Late Sh. B.P. Jain
Nav Bharat House
Railway Road,
Rohtak-124 001.
Business
Mr. Dinesh Kumar Jain,
Vice
Chairman
&
Managing Director
S/o Late Sh Sripal Jain
764/28, Bharat Colony
Model Town,
Rohtak-124 001. Business
Mr. Vijay Kumar Jain,
Whole Time Director
S/o. Late Sh. B.P. Jain
Nav Bharat House
Railway Road,
Rohtak-124 001.
Business
Mr. Rajesh Jain,
Director
S/o. Late Sh. B.P. Jain
Nav Bharat House
Railway Road,
Rohtak-124 001.
Business
Age
Qualification
Other Directorship
50
B.E. (Mech.)
ƒ
ƒ
ƒ
ƒ
Indian Fasteners Ltd.
Amit Screws Pvt. Ltd.
LPS Bossard Pvt. Ltd.
LPS Bossard Information
Systems Pvt. Ltd.
30
Exp.
In
the
Company
(Yrs.)
25
57
Comm.
Graduate
ƒ
Indian Fasteners Ltd.
36
36
49
Graduate
ƒ
ƒ
Indian Fasteners Ltd.
Amit Screws Pvt. Ltd.
30
30
47
B.E. (Tech.)
ƒ
ƒ
ƒ
ƒ
Indian Fasteners Ltd.
Amit Screws Pvt. Ltd.
LPS Bossard Pvt. Ltd.
LPS Bossard Information
Systems Pvt. Ltd.
Sudhir Automotive Ind.
Pvt. Ltd.
LPS Fasteners & Wires
Pvt. Ltd.
J.C. Fasteners Ltd.
25
25
36
36
33
33
ƒ
ƒ
ƒ
Smt. Sushila Devi Jain,
Director
W/o Late Sh. B.P. Jain
Nav Bharat House
Railway Road,
Rohtak-124 001.
Business
Mr. Babulal S. Aggarwal
Director
S/o. Late Sh. S.M.
Aggarwal
C/o. Shree Vinayak Enter.
3/42, Daga Chambers, 11,
Narayan Dhuru Cross
Lane, Mumbai – 400 003.
Business
72
Matric
Total
Exp.
(in yrs.)
NIL
69
Graduate
ƒ
Jajodia Steel Mills P Ltd.
29
Name & Address
Mr. Jamshedji Rustomji
Desai, Director
S/o. Late Sh. Rustomji
Desai
2,
Central
Avenue,
Maharani Bagh, New Delhi
– 110 065.
Business
Dr. Dharmendra
Bhandari, Director
S/o. Sh. R.C. Bhandari
B-44, Hari Marg, Opp.
Kardhani Shopping Centre,
Malviya Nagar, Jaipur –
302 017.
Profession
Mr. Kashwa Nand
Rattan, Director
S/o. Sh. J. D. Rattan
C-1876, Palam Vihar,
Gurgaon – 122 017.
Profession
Mr. Dipak Jain,
Director
S/o. Sh. J.C. Jain
L-13, Model Town,
Rohtak – 124 001.
Service
Age
72
Qualification
Other Directorship
B.E. (Tech.)
ƒ
ƒ
49
C.A.
ƒ
ƒ
ƒ
ƒ
ƒ
63
48
B.Sc., M.I.E.
&
PG
Diploma
Exp.
(in yrs.)
ABN AMRO Securities
(India) Pvt. Ltd.
TROPICANA Enterprises
Pvt. Ltd.
45
Exp.
In the
Company
23
Infund Management
Birla Corporation
Punjab
Alkalies
and
Chemicals Ltd.
Welspun India Limited
Suraj
Diamonds
&
Jewellery Ltd.
24
4
36
4
26
4
NIL
Ph.D.
in
Mkt., M.S. in
OR & M.S.
in M.S.
NIL
COMPLIANCE OF CORPORATE GOVERNANCE
(a) Company’s Philosophy on Corporate Governance
In the context of modern business environment where the stakeholders are scattered all over the country, the
company feels that their participation and involvement in the affairs of the Company can be achieved only
through professional approach and better corporate governance. The Company has recognized its importance
long before the introduction of clause 49 of the listing agreement and has always believed in self-discipline and
adherence to proper and efficient system. The Company fully realizes the rights of its shareholders to
information on the performance of the Company and considers itself a trustee of its shareholders. The Company
provides detailed information on various issues concerning the company’s business and financial performance
to its shareholders. The entire process begins with the functioning of the Board of Directors, with leading
professionals and experts serving as independent Directors and represented in the various Board Committees.
Systematic attempt is made to eliminate informational asymmetry between executive and non-executive
directors.
Key elements in the Corporate Governance transparency, accountability and equity, in all facets of its
operations, and all interactions with its stakeholders, including the shareholders, employees, the Government
and the Bankers.
(b) Board of Directors
Composition of Board
The Board consists of ten Directors in a pool of collective knowledge from various disciplines like Engineering,
Finance, Business Management, Corporate Planning, etc. The Board has been constituted in a manner, which
will result in an appropriate composition of Executive, Non-Executive and Independent Directors. The NonExecutive Directors play active role in the meetings of the Board and are associated with the various Board
Committees. The Non-Executive Directors bring independent judgment in the Board’s deliberations and
decisions. The Board meets regularly and is responsible for the proper management of the Company. Presently,
30
the Company’s Board comprises of 10 members, out of which 7 are Non-Executive Directors and out of 7 NonExecutive Directors 5 are independent Directors including one nominee of financial institutions.
(c) Audit Committee and Composition:
The Audit Committee consists of three Non-Executives Independent Directors and one Non-Executive Director,
to review various areas of audit and accounts. All these Directors have good knowledge of Finance, Accounts
and Company Law. The terms of reference of the Audit Committee as stipulated by the Board of Directors are
as contained in Clause 49 of the Listing Agreement and Section 292A of the Companies, Act, 1956. The Audit
Committee would assure to the Board adherence of adequate internal control and financial disclosure and other
acts conforming to the requirements of Listing Agreement with the Stock Exchanges. The Company Secretary
acts as the Secretary of the Committee. The Auditors and other executives generally attend the meetings on the
invitation.
(d) Remuneration Committee and Composition:
To review, assess and recommend the appointment of executive and non-executive directs from time to time, to
periodically review the remuneration package of the executive directors and recommend suitable revision to the
Board to record compensation to the non-executive directors in accordance with the Companies Act
The Remuneration Committee of the Board was formed which comprises of 3 non-executive Directors:
Name of Member
Mr.Jasmshedji Rustomji Desai
Mr.Rajesh Jain
Mr.Keshwa Nand Ratan
1.
Status
Chairman
Member
Member
Remuneration Policy
Remuneration of employees largely consists of base remuneration and perquisites. The components of the
total remuneration vary for different cadres and are governed by industry pattern, qualifications and
experience of the employee, responsibilities handled by him, individual performance etc. The objectives of
the remuneration policy are to motivate employees to excel in their performance, recognize their
contribution, retain talent in the organization and reward merit.
2.
Details of remuneration paid in the financial year 2004-2005:
(a) Executive Directors:
Managing Director/
Whole Time Director
Mr.Lalit Kumar Jain
Mr.Dinesh Kumar Jain
Mr.Vijay Kumar Jain
Total
Salary
(Rs.)
14,40,000
14,40,000
14,40,000
43,20,000
Perquisites
(Rs.)
3,60,000
3,60,000
3,60,000
10,80,000
Retirement Benefits
(Rs.)
1,72,800
1,72,800
1,72,800
5,18,400
(b) Non-Executive Directors:
The non-executive Directors are paid sitting fee of Rs.1000/- per Board/ Committee Meeting attended:
Name of the Directors
Mr.Rajesh Jain
Mrs.Sushila Devi Jain
Mr.Jamshedji Rustomji Desai
Mr.Babula S. Aggarwal
Mr.Dharmendra Bhandari
Mr.Keshwa Nand Rattan
Mr.Dipak Jain
Rs.
29000
6000
7000
4000
6000
8000
NIL
(e) Share Transfer and Investor Grievance Committee:
To approve transfer/transmission of shares, issue of duplicate certificates and certificates after
split/consolidation/renewal. The “Share Transfer Committee and Investor Grievances Committee” has been
looking into investor grievances and to suggest remedies and measures for improvement. The Share Transfer
and Investors Grievance Committee were constituted by the Board of Directors.
31
As required by the Stock Exchanges, the Company has appointed Mr.H.P.S. Chugh, Company Secretary as the
Compliance Officer to monitor the transfer process and liaison with the regulatory authorities. The Company
complies with the various requirements for the listing agreements and the depositories with respect to transfer of
shares, the requisite certificates are sent to them within the prescribed time.
SHAREHOLDING OF DIRECTORS
Name & Address
Mr. Lalit Kumar Jain
Mr. Dinesh Kumar Jain
Mr. Vijay Kumar Jain
Mr. Rajesh Jain
Smt. Sushila Devi Jain
Mr. Babulal S. Aggarwal
Mr. Jamshedji Rustomji Desai,
Dr. Dharmendra Bhandari
Mr. Kashwa Nand Rattan
Mr. Dipak Jain
Number of Shares
695760
151200
669335
802023
307749
2700
1000
NIL
500
2000
INTEREST OF DIRECTORS
All the Directors may be deemed to be interested to the extent of reimbursement of expenses, if any, payable to
them under the articles. The Directors may also be deemed to be interested to the extent of the shares, if any, held by
them or by the relatives or by firms or companies of which any of them is a partner and a Director/ Member
respectively and the shares if any, out of the present Offer that may be subscribed for and allotted to them or their
relatives or any Company in which they are Directors / members of firms in which they are partners.
CHANGE IN BOARD OF DIRECTORS
There has been no change in the Board of Directors since past three years.
MANAGEMENT ORGANISATION CHART
Board of Directors
Vice Chairman
BUSINESS DEV
OPERATIONS
CMD
QA/QMS/LAB
FINANCE
MATERIALS
AVP
AVP
AVP
FORGING & SEC
FINISHING
SALES ADMIN
BUSINESS DEV.
G.M.
G.M.
G.M.
G.M.
HEAT TREATMENT
PPC
MAINTENANCE
AGM
AGM
AGM
Whole-Time
Director
D&D
LAB/ STD. ROOM
DGM
GM
Corp. HR & IR
& Admn
AVP
32
AVP
PROJECTS & PED
MANAGER
HOQ
FINANCE
AGM
CORP.
PLANNING
HRD & Admn
AGM
IT
AVP
Company
Secretary
DETAILS OF KEY MANAGERIAL PERSONNEL
The Company is managed by its Board of Directors, assisted by qualified professionals, with vast experience in the
field of production/finance/distribution/marketing and corporate laws. Following are the key functionaries in the
different divisions of the Company:
The detail of our key managerial personnel are as follows:
Name
Designation &
Functional Area
Age
Mr. Sudesh Kumar Jain
Mr. B. B. Chhabra
Mr. S. P. Arya
Mr. Sanjay Narula
Mr. R.K. Aggarwal
Mr. H. P. S. Chugh
Marketing
AVP (Technical)
AVP (IT)
AVP (Quality)
AVP (Corporate)
Company Secretary &
DGM (Finance)
GM (Marketing)
GM (Sales)
GM (Production)
GM (Operation)
54
56
47
40
41
42
B.E. (Mech.)
B.E. (Mech.), MBA
B. Sc.
B.E. (Mech.)
FCA
FCA and FCS
31
31
21
18
18
16
Exp.
in the
Company
(in years)
31
1
1
1
2 months
11
47
56
59
26
Diploma Mech. Engg.
Diploma Mech. Engg.
B.E. (Mech.)
Bachelorn
Information System
Bachelor
in
Management
BBA
MBA
25
24
35
3
2
4
19
3
3
3
3
3
3
3
Mr. V. K. Malhotra
Mr. Jitendra Pande
Mr. R.P. Khanna
Mr. Gagan Jain
Mr. Gautam Jain
GM
(Business
Development)
24
Mr. Amit Kumar Jain
Mr. Nikhlesh Jain
GM (Exports)
GM ( Sales)
27
30
Qualification
Exp.
(in yrs.)
All the abovementioned key managerial personnel are permanent employees of our company. The remuneration of
each of our key managerial personnel is as per the provisions of Section 217(2A) of the Companies Act, 1956.
Changes in Key Managerial Personnel
Name
Mr. S.K. Bansal
Mr. R.K. Aggarwal
Designation &
Functional Area
AVP (Finance)
AVP (Corporate)
Age
Qualification
43
41
FCA and FCS
FCA
Exp.
in the
Company
2 Years
2 months
The Company has not issued any Employee Stock Option Scheme to its employees till date.
33
Nature
Resigned
Joined
XII. PROMOTERS
OTHER DETAILS OF PROMOTER
Name, Designation,
Functions/
and Address
overall experience
Mr. Lalit Kumar Overall control on
affairs
of
the
Jain,
Chairman
& Company.
Managing Director
Nav Bharat House
Railway Road,
Rohtak-124 001.
Mr. Dinesh Kumar
Jain,
Vice Chairman &
Managing Director
764/28, Bharat Colony
Model Town,
Rohtak-124 001.
Mr. Vijay Kumar
Jain,
Whole Time Director
Nav Bharat House
Railway Road,
Rohtak-124 001.
Mr. Rajesh Jain,
Director
Nav Bharat House
Railway Road,
Rohtak-124 001.
PAN/Bank Account No./Voter ID
/Passport No./Driving License No.
PAN: AALPJ5520B
Bank A/C No. 016801501944
Bank: ICICI Bank Ltd
Passport No: E3941771
Control on affairs of
the Company. .
PAN: AALPJ5511G
Bank A/C No. 016801000002
Bank: ICICI Bank Ltd
Passport No: B1956659
Broad
functional
responsibilities
as
advised
by
the
Board.
PAN: AALPJ5515C
Bank A/C No. 016801500500
Bank: ICICI Bank Ltd
Passport No: B5090182
Driving Licence No.: 46933/RSD
NonDirector
PAN: AALPJ551B
Bank A/C No. 016801000342
Bank: ICICI Bank Ltd
Passport No: F1084560
Executive
Photograph
COMMON PURSUITS
There are no conflict of interest between the issuer company and its associates except to the extent of job work
being done by these associates on behalf of the issuer company
OTHER VENTURES OF THE PROMOTERS
1.
Sudhir Automotive Industries (P) Ltd.
Date of Incorporation: 17/06/1988
Names of Directors: Mr. Sudhir Kumar Jain, Mrs. Madhu Jain, Mr. Rajesh Jain, Mrs. Sandhya Jain.
Business: Manufacturing of SS Bolts & Nuts, and job work of LPS.
(Rs. in Lacs)
Particulars
2003-04
2002-03
2001-02
(year ending 31st March )
Operating and other Income
908.72
749.36
591.65
Profit / (loss) before tax (PBT)
43.76
26.99
26.36
Profit / (loss)after tax (PAT)
27.75
16.50
16.35
Equity Share Capital
26.14
26.14
26.14
Reserves and Surplus/ (Accumulated losses)
133.02
103.95
92.70
Earning per share (EPS)
Rs.
10.61
6.36
6.25
Book Value (Face value of Rs.10/- per share) Rs.
60.88
49.76
45.46
34
2.
Amit Screws Private Ltd.
Date of Incorporation: 04/06/1992
Names of Directors: Mr. Lalit. Kumar .Jain , Mr. Rajesh Jain, Mr. Vijay Kumar Jain and Mrs. Mridula Jain
Business: Job work of LPS.
(Rs. in Lacs)
Particulars
2003-04
2002-03
2001-02
(year ending 31st March )
Operating and other Income
7.91
10.94
12.02
Profit / (loss) before tax (PBT)
0.75
1.73
2.33
Profit / (loss)after tax (PAT)
0.45
1.08
1.56
Equity Share Capital
23.63
23.63
23.63
Reserves and Surplus/ (Accumulated losses)
2.71
2.26
4.48
Earning per share (EPS)
Rs.
0.19
0.46
0.66
Book Value (Face value of Rs.10/- per share) Rs.
11.16
10.97
11.89
3.
Hanumat Wires Udyog Private Limited:
Date of Incorporation: 23/08/1988
Names of Directors: Mr. S.C. Seth and Mr. Gagan Mongia
Business: Job work of drawing of all type of wires and wire products.
Particulars
(year ending 31st March )
Operating and other Income
Profit / (loss) before tax (PBT)
Profit / (loss)after tax (PAT)
Equity Share Capital
Reserves and Surplus/ (Accumulated losses)
Earning per share (EPS)
Rs.
Book Value (Face value of Rs.10/- per share) Rs.
4.
2002-03
107.33
3.21
2.04
34.64
45.99
0.59
22.28
110.02
3.49
2.18
34.64
43.94
0.63
22.68
(Rs. in Lacs)
2001-02
91.03
2.96
1.90
34.64
41.76
0.55
22.06
J.C. Fasteners Limited:
Date of Incorporation: 05/08/1994
Names of Directors:Mr. Rajesh Jain , Mr.Atul Jain and Mrs. Renu Jain
Business: : Job work of heat treatment and plating ..
Particulars
(year ending 31st March )
Operating and other Income
Profit / (loss) before tax (PBT)
Profit / (loss)after tax (PAT)
Equity Share Capital
Reserves and Surplus/ (Accumulated losses)
Earning per share (EPS)
Rs.
Book Value (Face value of Rs.10/- per share) Rs.
5.
2003-04
(Rs. in Lacs)
2001-02
2003-04
2002-03
261.19
2.80
2.80
163.50
15.97
10
193.19
(1.51)
(1.51)
163.50
10
193.15
(2.33)
(2.33)
163.50
10
2002-03
53.89
1.62
1.11
8.00
4.15
0.14
1.52
(Rs.in Lacs)
2001-02
40.14
1.53
1.07
8.00
4.19
0.13
1.52
LPS Fasteners and Wires Private Limited :
Date of Incorporation: 27.08.1980
Names of Directors. Mr. Rajesh Jain and Mr. Sudesh Kumar Jain
Business: Job work of LPS .
Particulars (year ending 31st March )
Operating and other Income
Profit / (loss) before tax (PBT)
Profit / (loss)after tax (PAT)
Equity Share Capital
Reserves and Surplus/ (Accumulated losses)
Earning per share (EPS)
Rs.
Book Value (Face value of Rs.10/- per share) Rs.
35
2003-04
50.79
1.35
1.06
8.00
4.55
0.13
1.57
XIII. FINANCIAL INFORMATION
AUDITORS REPORT
The Board of Directors
Lakshmi Precision Screws Limited
46/1 Mile Stone, Hisar Road,
Rohtak – 124001 (Haryana)
Dear Sirs,
We have examined the financial information of Lakshmi Precision Screws Limited (The Company) annexed to this
report which has been prepared in accordance with the requirements of;
i)
ii)
iii)
Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (the Act);
The Securities and Exchange Board of India (Disclosure and Investor Protection Board of India (SEBI)
and amendments made thereto from time to time in pursuance of section 11 of the Securities and
Exchange Board of India Act, 1992; and
The instructions received from the Company, requesting us to examine the financial information
referred to above and proposed to be included in the Letter of Offer of the Company in connection with
its proposed rights issue of equity shares.
Financial information of the Company
1.
We have examined the attached Statement of Adjusted Assets and Liabilities of the Company as at March 31,
2001,2002,2003,2004 and 2005 (Annexure-1) and the accompanying Statement of Adjusted Profits and Losses
and adjusted cash flow statements of the Company for the financial year(s) ended on March 31,
2001,2002,2003,2004 and 2005 (Annexure – II) as prepared by the Company and approved by a Committee of
the Board of Directors. These statements reflect the assets and liabilities and profits and losses for each of the
relevant years as extracted from the balance sheet and profit and loss account for these years audited by us.
Based on our examination of the above financial statements, we confirm that the relevant extracts of Balance
Sheet , Profit & Loss Account and cash flow statement as enclosed in Annexure I and II of this report have been
made after giving effect to the following:
•
•
•
The impact of changes in accounting policies adopted by the company have been disclosed
with retrospective effect.
The impact of qualification in the auditor’s report where applicable has been adjusted.
The impact of extra ordinary items has been disclosed separately in the financial statements.
2.
We further report that as per the books and records produced to us, the company has paid dividend for the
financial year(s) ended on March 31,2002, and 2004 and has proposed dividend @ 15% for the financial year
ended 31st March 2005 on the equity shares. Further , the proposed dividend for the financial year ended March
31, 2003 was written back in the financial year ended March 31,2004. The company has not issued any
preference shares and had no other class of shares during these years. The statement of dividend paid is annexed
as annexure III to this report.
3.
We have examined the following financial information relating to the Company, proposed to be included in the
Letter of Offer, as approved by the Committee of the Board of Directors of the Company and attached to the
report:
i.
ii.
iii.
iv.
v.
The significant accounting policies followed by the Company and notes pertaining to the Summary
Statements, enclosed as Annexure-IV
Summary of Accounting Ratios based on the adjusted profits relating to earnings per share, net asset
value and return on net worth, enclosed as Annexure-V.
Statement of Capitalisation as at March 31, 2005(Pre Issue) and as adjusted for this issue (Post Issue)
subject to reliance being placed on management representation in respect of post issue figures
contained in the Statement of Capitalisation, enclosed as Annexure-VI.
Statement of Tax Shelter, enclosed as Annexure-VII.
The details of transactions with the related parties in accordance with the Accounting Standard 19 –
Related Party Disclosure issued by Institute of Chartered Accountants of India (refer note 14 (a) and
(b) in Annexure-IV).
36
4.
In accordance with para 6.18.3 of the SEBI guidelines, also attached are restated consolidated financial
statements of company’s subsidiaries and proportionate interests in joint ventures in annexure VIII to this
report. We did not carry out the audit of the financial statements of the subsidiary Indian Fasteners Limited and
the Joint ventures. The financial statements of the subsidiary have been audited by other auditors whose report
has been furnished to us, and in our opinion, in so far as it relates to the amounts included in respect of such
subsidiary is based solely on the report of the other auditor. Similarly the figures of the joint ventures have been
incorporated, based on the their provisional financial statements.
The significant accounting policies and notes pertaining to the consolidated financial Statements, are enclosed
as Annexure-IX
5.
This report is intended solely for your information and for inclusion in the Letter of Offer in connection with
the proposed rights issue of the Company and is not to be used, referred to or distributed for any other pupose
without our prior written consent.
for N.G. Gupta & Co.
Chartered Accountants
Sd/V.P.Bansal
Partner
Date : 12th July 2005
Place : Delhi
37
ANNEXURE-I
STATEMENT OF ASSETS AND LIABILITIES (As at March 31)
Sr.
No.
1
PARTICULARS
FIXED ASSETS
Gross Block
Less: Depreciation
Add: Capital Work – in – Progress
Less : Revaluation Reserve
Net Block
2
INVESTMENTS
3
CURRENT ASSETS, LOANS AND ADVANCES
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
4
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities and Provisions
(Rs.in Lacs)
2005
2001
2002
2003
2004
5739.80
3273.28
2466.52
172.05
0.00
2638.57
6029.92
3644.04
2385.88
111.50
0.00
2497.38
6453.89
4031.82
2422.07
47.74
0.00
2469.81
7085.57
4485.55
2600.02
49.40
0.00
2649.42
7927.07
4946.71
2980.36
153.91
0.00
3134.27
328.44
376.44
376.44
376.44
383.62
4257.63
2384.97
462.18
489.74
98.06
7692.58
5392.56
2454.56
555.74
523.49
71.01
8997.36
6224.69
2436.44
418.50
595.08
16.86
9691.57
6462.24
2866.08
484.11
642.98
7.60
10463.01
6868.63
3368.48
517.37
873.40
5.12
11633.00
2102.80
2102.80
6894.56
2665.94
2665.94
7025.63
3579.92
3579.92
6883.09
4098.21
4098.21
7534.79
5
NET CURRENT ASSETS (3 - 4)
1932.77
1932.77
5759.81
6
TOTAL OF ASSETS = (1+2+5)
8726.82
9768.38
9871.88
9908.95
11052.68
7
8
9
10
11
LIABILITIES
LOAN FUNDS
Secured Loans
Unsecured Loans
TOTAL OF LOANS FUNDS (7+ 8)
DEFERRED TAX LIABILITY
TOTAL LIABILITIES (9 + 10)
4665.44
854.31
5519.75
0.00
5519.75
5368.69
1161.93
6530.62
271.76
6802.38
4832.68
1687.71
6520.39
264.83
6785.22
4560.52
1737.71
6298.23
251.98
6550.21
5190.19
1882.97
7073.16
278.75
7351.91
12
NET WORTH (6 – 11)
3207.07
2966.00
3086.66
3358.74
3700.77
13
14
NET WORTH REPRESENTED BY
SHARE CAPITAL
RESERVES AND SURPLUS
Less Revaluation Reserve
602.50
2653.87
0.00
3256.37
49.30
602.50
2499.25
0.00
3101.75
135.75
602.50
2585.04
0.00
3187.54
100.88
602.50
2871.61
0.00
3474.11
115.37
602.50
3172.52
0.00
3775.02
74.25
3207.07
2966.00
3086.66
3358.74
3700.77
15
16
MISCELLANEOUS EXPENDITURE
(to the extent not written off or adjusted)
NET WORTH (13+14-15)
38
ANNEXURE-II
STATEMENT OF PROFITS AND LOSSES (adjusted and recasted) for the year ended March 31
(Rs.in Lacs)
2005
Particulars
INCOME
Sales :
a. of products manufactured by the Company
b. of products traded in by the Company
Total (a + b)
Other income
(Less)/Add: (Decrease)/Increase in Inventories
TOTAL
2001
2002
2003
2004
8293.40
46.23
8339.63
155.21
504.70
8999.54
8108.94
48.63
8157.57
239.77
626.46
9023.80
8897.10
57.21
8954.31
100.88
275.13
9330.32
11138.25
58.55
11196.80
109.14
-52.85
11253.09
13738.42
68.46
13806.88
116.37
-46.06
13877.19
EXPENDITURE
Raw Materials consumed
Finished goods purchased
Staff Costs
Other manufacturing expenses
Administration Expenses
Selling and Distribution Expenses
Depreciation
Interest
Miscellaneous expenditure written off
TOTAL
2830.30
39.33
1310.96
2365.66
537.50
513.24
385.56
747.28
2.95
8732.78
2610.55
89.70
1465.87
2428.96
578.01
412.81
392.38
816.35
2.95
8797.58
2614.90
101.11
1666.40
2548.30
632.82
436.84
413.46
691.31
2.95
9108.09
3333.55
86.49
1863.36
3153.89
693.05
537.36
458.79
677.67
2.95
10807.11
4723.29
169.73
2059.71
3682.18
901.25
535.18
465.56
674.20
0.46
13211.56
266.76
82.86
0.00
183.90
226.22
48.83
11.49
165.90
222.23
75.40
0.00
146.83
445.98
158.66
0.00
287.32
665.63
235.77
26.76
403.10
0.00
0.00
0.00
183.90
0.00
0.00
0.00
165.90
6.93
0.00
0.00
153.76
12.84
60.25
7.72
368.13
0.00
0.00
0.00
403.10
0.00
0.00
0.00
1480.66
1664.56
60.25
0.00
275.00
1664.56
1495.21
60.25
7.72
0.00
1495.21
1581.00
72.30
9.26
8.00
1581.00
1859.57
90.38
11.81
22.00
1859.57
2138.48
Net Profit before tax and Extraordinary items
Less: Provision for Tax
Add: Deferred Tax Adjustment
Net Profit before Extraordinary Items
Extraordinary items
Add : Excess provision of earlier years/deferred tax
tax liability written back
Proposed Dividend written back
Corporate Dividend tax written back
Net Profit/(Loss) after Extraordinary items
Less:
Proposed Dividend
Corporate Dividend tax
Transfer to General Reserve
Balance brought forward from previous year
BALANCE CARRIED FORWARD
39
ANNEXURE – II
STATEMENT OF ADJUSTED CASH FLOW
A.
B.
C.
Particulars (Year ended March 31)
CASH FLOW FROM OPERATING
ACTIVITIES:
Net profit before tax
Adjustments for:
Depreciation
Foreign exchange fluctuation
Interest expense
Lease rentals
Provision for diminution in value of investment
(Profit)/ loss on sale of fixed assets (net)
Interest income
Misc. expenses written off
Income tax refund
Provision for Bad and Doubtful Debts
Fire brigade donated to MC, Rohtak
Dividend income
Transfer from Capital-grant-in-aids
Operating profit before working
capital changes
Adjustments for changes in:
Trade and other receivables
Inventories
Trade payables
Cash generated from operations
Interest and financial charges
Direct taxes paid
Net cash from operating activities
CASH FLOW FROM INVESTING
ACTIVITIES:
Purchase of fixed assets
Sales of fixed assets
Investments purchased
Investments realised
Income tax refund
Deferred payment interest and technical know
how fee written off
Deferred payment interest and technical know
how fee during the year
Dividend income
Interest received
Net cash used in investing activities
CASH FLOW FROM FINANCING
ACTIVITIES:
Application money, allotment money and calls in
arrears (including share premium) received
Proceeds from long term borrowings
Repayment of long term borrowings
Proceeds from short term borrowings
Repayment of short term borrowings
Changes in cash credit/ overdraft account
40
(Rs.in Lacs)
2005
2001
2002
2003
2004
266.76
226.22
222.23
445.98
665.63
385.56
0
747.27
0
0
0.07
-60.76
2.95
-25.21
0
0
0
0
1316.64
392.38
0
816.35
0
0
-4.11
-62.08
2.95
-0.29
0
0
-4.82
0
1366.6
413.46
0
691.31
0
0
-3.38
-56.55
2.95
-1.54
0
0
0
0
1268.48
458.79
0
677.67
0
0
1.56
-57.51
2.95
-7.10
4.35
3.87
0
0
1530.556
465.56
0
674.20
0
0
-0.07
-47.24
0.46
0
3.81
0
-47.04
0
1715.31
270.54
-490.67
10.63
1107.14
-756.68
-76.26
274.20
-76.29
-1134.93
165.22
320.60
-816.43
-43.36
-539.19
0.68
-832.13
551.35
988.38
-694.56
-55.00
238.82
-472.62
-237.55
805.10
1625.49
-676.49
-59.00
890.00
-734.15
-406.39
428.88
1003.65
-688.03
-146.00
169.62
-466.54
1.62
-220.68
0
25.21
19.92
-263.52
16.45
-48.00
0
-0.29
30.00
-390.38
7.86
0
0
1.54
44.29
-644.58
0.73
0
0
7.11
38.9
-952.24
1.90
-7.18
0
0
50.66
0
-119.39
-12.36
-56.34
-9.99
0
60.76
-579.71
4.82
62.08
-317.85
0
41.78
-307.27
0
53.03
-601.15
47.04
39.15
-830.66
611.81
-563.6
0
0
0
1945.06
-1691.99
0
0
0
62.86
-531.04
0
0
0
1262.54
-1450.31
0
0
0
451.79
-614.20
200.00
-66.67
0
Contd…..
Particulars (Year ended March 31)
Repayment of finance lease liabilities
Deposit from Directors and others
Repayment to Directors and others
Interest paid
Dividend paid
Contibution toward charity reserve received (net)
Net cash used in financing activities
Net increase/ (decrease) in cash and cash
equivalents
Cash and cash equivalents (opening balance)
Cash and bank balances
Cash and cash equivalents (closing balance)
Cash and bank balances
2001
0
380.40
0
0
-0.02
0
428.59
2002
0
318.73
0
0
-60.26
0
511.54
2003
0
525.78
0
0
-58.56
0
-0.96
2004
0
85
-35
0
-1.07
0
-138.84
2005
0
12.02
-0.09
0
-80.63
0
-97.78
123.08
-345.50
-69.41
150.01
-758.82
-2659.87
704.57
-2294.40
462.18
-2294.40
462.18
-2733.46
555.74
-2733.46
555.74
-2665.63
418.5
-2665.63
418.5
-2581.23
484.11
-2581.23
484.11
-3373.31
517.37
ANNEXURE – III
STATEMENT OF DIVIDEND PAID
PARTICULARS
UNIT
2000-01
2001-02
Total Paid up Capital
Rupees
60250000
60250000
Number of shares
Number
6025000
6025000
Nominal Value of each share
Rupees
10
10
Paid-up value of each share
Rupees
10
10
Dividend paid
Rupees
0
6025000
Dividend per share
Rupees
0
1
Dividend rate
Percentage
0
10
Note: Dividend for the financial year 2004-2005 @ 15% is proposed .
2002-03
60250000
6025000
10
10
0
0
0
2003-04
60250000
6025000
10
10
7230000
1.2
12
2004-05
60250000
6025000
10
10
9037500
1.5
15
ANNEXURE IV
SIGNIFICANT ACCOUNTING POLICIES, CONTINGENT LIABILITIES AND NOTES
A) SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Convention
The Accounts have been prepared on historical cost convention on accrual basis in accordance with the
requirements of the Companies Act, 1956 and applicable statutes and to comply with the Accounting
Standards referred to in Section 211(3C) of the Companies Act, 1956.
b) Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of inward freight, duties and taxes and incidental
expenses related to acquisition upto the date of installation .Cost of Fixed Assets are further adjusted by the
amount of Modvat/ Cenvat credit availed and fluctuations in foreign exchange rate.
c)
Depreciation
Depreciation on fixed assets have been provided on triple shift basis rates as provided in Schedule XIV of
the Companies Act, 1956 on written down value method except in case of Plant-II which was setup in the
year 1993 where depreciation has been provided on straight-line method. Depreciation on assets for the
value not exceeding Rs.5000/- has been provided @100%. Depreciation on technical know-how has been
provided @25% as per Income Tax Rules.
d) Revenue Recognition
Domestic sales are recognized at the point of despatch of goods to the customers. The sales are accounted
for net of trade discount, sales tax and excise duty. Export sales are recognized at the time of clearance of
goods and approval from Excise Authorities. Other Income is accounted for on accrual basis. Dividend
income is accounted for when the right to receive the payment is established.
e)
Foreign Currency Transactions
Foreign currency denominated monetary liabilities incurred for the acquisition of fixed assets are translated
at the exchange rate prevailing on the Balance Sheet date. The net variation arising out of the said
transaction are adjusted to the cost of fixed assets. Other monetary assets and liabilities denominated in
41
foreign currency are similarly translated. All exchange gains/ losses other than those relating to fixed assets
arising out of such transactions are taken to the Profit and Loss account.
f)
Inventories
Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of
Semi-finished goods at 65% less on the price-list and finished goods have been valued at 55% less on the
price-list and special items have been valued at 30% less in case of semi-finished goods and 20% less in the
case of finished goods of the selling price; since exact cost is not ascertainable. Excise duty payable on
finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the
valuation of finished goods and scrap materials.
g) Investments
Investments are long term and stated at cost. Provision for diminution in value of investments is made to
recognize the decline in value of investments, if in the opinion of management, the decline is permanent in
nature.
h) Retirement Benefits
In respect of payment of gratuity to employees, the contributions are being made to the trust established
under the group gratuity scheme of Life Insurance Corporation of India, Contribution to provident fund are
accounted for on the basis of relevant fund rules. Provision is made for the unutilized leave due to
employees as at the end of the year.
i)
Research and Development
Intangible Assets arising from development are not recognized since the asset is not identifiable and future
economic benefits from the assets are not probable. Expenditure on research is recognized as an expense
when it is incurred. Research and development cost include salaries and other related cost of personnel, cost
of materials and services consumed and other overhead costs related to research and development.
j)
Borrowing Costs
Borrowing Cost that are attributable to the acquisition for construction of qualifying assets are capitalized
as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time
to get ready for intended use. All other borrowing cost are charged to revenue.
k) Excise Duty
Excise duty has been accounted on the basis of both, payments made in respect of goods cleared as also the
provision made for goods lying in the warehouses.
l)
Miscellaneous Expenditure
Expenditure on increase in capital is being amortized over a period of ten years.
m) Taxes on Income
Current tax is determined on the amount of tax payable in respect of taxable income for the period.
Deferred tax is recognized, subject to consideration of prudence, on timing difference, being difference
between taxable and accounting income/ expenditure that originate in one period and are capable of
reversal in one or more subsequent period(s).
n) Prior Period Items
Prior Period Expenses/Income is accounted for under the respective heads. Material items, if any, are
disclosed separately by way of note.
o) Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision should be made for impairment loss
on fixed assets by considering the indications that an impairment loss may have occurred and where the
recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on
fixed assets is made for the difference. Recoverable amount is generally measured using discounted
estimated cash flows.
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining
useful life.
p) Contingent Liabilities and Provisions
Contingent Liabilities are disclosed by way of notes and are not recognized as an item of expense in the
profit and loss account. Contingent gains are not recognized. Provisions are recognized as liability only
when they can be measured by using a substantial degree of estimation and where present obligation of the
enterprise arise from past events, the settlement of which is expected to result in an outflow of resources
embodying economics benefits.
42
B) CONTINGENT LIABILITIES:
Sl.
no
1.
2.
3.
4.
Particulars
Estimated amount of capital contracts
remaining to be executed and not
provided for (net of advances)
Letter of credits and guarantees obtained
from bank (Net of margin money)
Liabilities against legal undertakings/
bonds executed in favour of DGFT on
account of export obligation undertaken
by the Company against advance and
import licenses under EPCG Scheme.
Income tax liabilities on account of
appeals filed by Income Tax Department
in Punjab & Haryana High Court,
Chandigarh
(Lac/Rs.)
2001
2005
2004
2003
2002
81
315
96
63
38
228
1330
759
285
176
113
226
275
18
250
101
101
101
101
101
C) NOTES
1. Changes in accounting policies and recasting effects
a)
Valuation of closing stocks of finished goods: The excise duty payable on finished goods and scrap is
considered as an element of cost at the time of manufacture and is included in the value of closing stocks of
finished goods and scrap. However during the accounting years 2000-2001 and 2001-2002, the excise duty
payable was considered only at the time of clearance of goods from the factory and was hence not included
in the value of closing stocks of finished goods and scrap. The financial statements for the accounting years
2000-2001 and 2001-2002 have been recast so as to bring in line with the present policy of the company of
considering excise duty as an element of cost at the time of manufacture. Accordingly, a sum of
Rs.1,85,10,462/- for the accounting year 2000-2001 and Rs.2,44,88,462/- for the accounting year 20012002 has been included in the value of inventories of finished goods and scrap materials and a
corresponding provision for excise duty payable for aforesaid years have been made. The same shall have
no impact on the profits for the relevant years.
b) Valuation of closing stocks of Raw Materials: As per the present accounting policy of the company, the
balance with excise department comprising of CENVAT balance, balance in PLA account and CENVAT
balance of capital goods is being deducted from the cost of closing stocks of raw materials . However
during the accounting year 2000-2001, the closing stock of raw material was taken at a gross value without
deduction of the aforesaid balance with excise department. In line with present accounting policy of the
company, the balance with excise department amounting to Rs.63,12,192/- has been reduced from the
figure of closing stock of raw materials for the financial year 2000-2001 . The adjusted profit for the year
2000-2001 has correspondingly been reduced by Rs 63,12,192/- . Further , the opening stock for the
financial year 2001-2002 stands reduced by the aforesaid figure and therefore the profit has increased by
Rs.63,12,192/- after adjustment.
c)
Treatment of Packing Expenses; The packing expenses are treated as a part of manufacturing expenses.
However for the accounting years 2000-2001 and 2001-2002 packing expenses amounting to
Rs.1,41,03,148/- and Rs.1,41,05,755/- respectively were treated as a part of selling and distribution
expenses. The figures of accounting years 2000-2001 and 2001-2002 have been recast so as to include the
figures of packing expenses in manufacturing expenses. The same shall have no impact on adjusted profits
for those years.
d) Treatment of Directors’s sitting fee; The director’s sitting fee expenses are treated as a part of office and
administration expenses. However for the accounting years 2002-2003 and 2003-2004, the same amounting
to Rs55000/- and Rs.60000/- respectively were treated as a part of Managerial Remuneration. The figures
of accounting years 2002-2003 and 2003-2004 have been recast so as to include the figures of director’s
sitting fee under office and administration expenses. The same shall have no impact on adjusted profits for
those years.
43
2.
In terms of joint venture agreement entered into with Bossard AG, Switzerland on 26.06.1997, the company has
invested a sum of Rs.23520190/- in LPS Bossard Private Limited towards allotment of 2352019 Equity Shares
of Rs.10/- each and a sum of Rs.1847490/- in LPS Bossard Information Systems Private Limited towards
allotment of 184749 Equity Shares of Rs.10/- each, towards 49% holding in the aforesaid Companies.
3.
That the balance with central excise department includes balance in central excise account at head office, duty
paid on stocks lying at the branches and with consignees.
4.
Provision for unclaimed bonus to ex-employees has not been made, since the amount is not ascertainable.
5. Secured Loans
A. Term Loans
Name of the
Bank/ Date
of Sanction
Nature of
Loan
Loan
Sanctioned
(Rs. in Lacs)
Loan
Outstanding as
on
31.3.2005
(Rs. in Lacs)
Rate
Interest
ICICI Bank
05.02.2004
Rupee
Term Loan
Rs. 500 Lacs
Rs. 473.75 Lacs
State Bank of
Patiala
23.12.2003
Rupee
Term
Loan-take
over
the
loan
of
ICICI Bank
limited
Rs. 1160 Lacs
Availed
amount
Rs.1065.84
Lacs
Industrial
Development
Bank of India
Limited
16.01.2001
Rupee
Term Loan
ICICI Bank
Limited
Hire
Purchase
Loans
Repayment
Schedule
Security
Offered
10%
15
equal
instalments of Rs.
31.30 Lacs
each and one
installment
of
30.50
Lacs
commencing from
15.03.05
to
15.12.08
Refer
note no 1
Rs. 799.60 Lacs
9.50%at
monthly
rests
15
quarterly
installments
of
Rs. 66.63 Lacs
and
one
installment
of
Rs.66.34
Lacs,
commencing
from15.5.2004 to
15.3.2008
Refer
note no 1
Rs. 500 Lacs
Rs. 240 Lacs
11.00%
w.e.f
1.10.2004
4
quarterly
installments of Rs
5.00 Lacs each
commencing from
1.4.2002 and 16
quarterly
installments
of
Rs. 30 Lacs each
commencing from
01.04.03
to
1.1.2007.
Refer
note no 1
Rs.134.45
Lacs
Rs.94.92 Lacs
6.9338%
(revised rate
w.e.f
31.3.2005)
Equated monthly
installments
Refer
note no.2
44
of
Repayment
Schedule
Security
Offered
Interest free
Quarterly
installments as per
schedule
commencing from
01.04.03
to
31.03.07
Refer
note no.3
11.00%
Five
Quarterly
installments as per
schedule
commencing from
14.02.04
to
14.02.06
Refer
note no.4
Name of the
Bank/ Date
of Sanction
Nature of
Loan
Loan
Sanctioned
(Rs. in Lacs)
Loan
Outstanding as
on
31.3.2005
(Rs. in Lacs)
Rate
Interest
Director
of
Industries,
Haryana
20.3.1997,
26.3.1998,
31.3.1999,
31.3.2000,
31.3.2001,
28.3.2002.
31.3.2003
Haryana State
Industrial
Development
Corporation
14.08.2003
Sales tax
deferment
Rs.332 Lacs
Rs.169.99 Lacs
Deferred
payment
against
purchase of
industrial
plots
Rs.96.53 Lacs
Rs.38.61 Lacs
of
NOTES
1.
Term loans from ICICI Bank Limited, State Bank of Patiala and IDBI are secured by way of pari-passu charge
against first mortgage and charge on all the company’s immoveable and moveable properties, both present
and future, subject to the charges created/ to be created in the favour of the company’s bankers on
current assets for
securing borrowings for working capital requirements
and
irrevocable and
unconditional personal guarantees of Shri L.K.Jain, D.K.Jain, V.K. Jain and Rajesh Jain, Directors of the
Company and Nikhlesh Jain son of Shri D.K. Jain, Director of the Company. Rupee loan of Rs.5 crores
sanctioned by IDBI for long term working capital is further secured by way of first charge on land measuring
9904 sq. yards belonging to Indian Fasteners Limited, a subsidiary company.
2.
Loans from ICICI Bank Ltd. under hire purchase scheme are secured by hypothecation of specific assets
and on personal guarantees of the Directors of the Company.
3.
Term Loan from Director of Industries, Haryana is in respect of interest free loan sanctioned to the Company
on conversion of deferred amount of the sales tax which is secured by way of pari-passu second charge on fixed
assets alongwith the Canara Bank.
4.
Deferred payment credit are in respect of 2 nos. industrial plots purchased from HSIDC in Manesar Haryana.
B. (i) Working Capital Facilities
Name of the
Bank/ Date
of Sanction
Nature of
Loan
Loan
Sanctioned
(Rs. in Lacs)
Loan
Outstanding as
on
31.3.2005
(Rs. in Lacs)
Rate
Interest
of
Canara Bank
31.01.2005
Fund
Based
Rs.3350 Lacs
Rs.3373.31
Lacs
Non Fund
Based
Rs.2100 Lacs
[BPLR
+
1.25%] p.a
on Domestic
Credits and
8%
on
Export
Credits
Repayment
Schedule
-
Security
Offered
Refer
note
foot
Note:
Working capital limit from Canara Bank is secured against hypothecation of raw materials, semi-finished goods,
finished goods, stores and spares, receivables, both present and future and also secured by pari-passu second charge
on all the fixed assets of the Company including plant and machinary, land and building (present and future) of
W.D.V. of Rs. 2649.42 Lacs on 31.03.2004 and guaranteed by S/Shri L.K. Jain, D. K. Jain, V. K. Jain, Rajesh Jain,
45
Smt. Sushila Devi Jain, Director of the Company and Shri Nikhlesh Jain son of Shri D.K. Jain, Director of the
Company and Shri Saurabh Jain and Gaurav Jain sons of Shri S.K. Jain, brother of Shri D.K. Jain, Director of the
Company and Corporate guarantee of Indian Fasteners Limited, a subsidiary company
Working capital limits from Canara Bank are further secured by way of equitable mortgage of land measuring
10640 sq. yards situated at Rohtak in the name of Smt. Sushila Devi Jain, Director of the Company, agricultural
land measuring 4.5 acre situated at Delhi road in the names of Shri Nikhlesh Jain son of Shri D.K.Jain , Director of
the Company, Shri Saurabh Jain and Gaurav Jain sons of Shri S.K. Jain, brother of Shri D.K. Jain, Director of the
Company and second charge on plots of land (5 nos.) measuring 107464 sq.yards situated at Rohtak owned by the
Company.
6. ANAYLSIS OF SUNDRY DEBTORS
PARTICULARS
For a period exceeding
six months
less than six months
UNIT
Rupees
Rupees
Less: Provision for doubtful debts Rupees
Due from associate companies
Due from others
Rupees
Rupees
Less: Provision for doubtful debts Rupees
2000-01
2001-02
2002-03
2003-04
2004-05
23711946 17236907 17366260 15116419 32114535
214785003 228219532 226277927 271926467 305114960
238496949 245456439 243644187 287042886 337229495
0
0
0
434789
381239
238496949 245456439 243644187 286608097 336848256
5030608
4786825
3024670
2487659
1844658
233466341 240669614 240619517 284555227 335384837
238496949 245456439 243644187 287042886 337229495
0
0
0
434789
381239
238496949 245456439 243644187 286608097 336848256
7. ANAYLSIS OF LOANS AND ADVANCES
PARTICULARS
Due from associate companies
Others
UNIT
Rupees
Rupees
2000-01
2001-02
2002-03
2003-04
2004-05
14428 1628800 2418753 2492052 1980307
48959947 50720625 57089206 61805472 85359500
48974375 52349425 59507959 64297524 87339807
8. STATEMENT OF OTHER INCOME
PARTICULARS
UNIT
Rent
Rupees
Job work Receipts
Rupees
Interest income ( Gross)
Rupees
Income Tax Refund
Rupees
Dividend Income from associates Rupees
Duty Drawback
Rupees
Profit on sale of assets
Rupees
Exchange rate variation
Rupees
Miscellaneous Receipts
Rupees
9.
2000-01
2001-02
2002-03
2003-04
2004-05
1760400 2156400 2198400 2108400 2128400
0 2935272 1059993 3113658
866897
4315925 4051720 3456211 3642302 2595578
2520706
29242
154017
710512
0
0
481550
0
0 4704038
4527296 12972590 2398269
56683
0
0
34429
450462
0
7406
0
0
0
0
6947
2396660 1316167
370676 1282190 1327749
15520987 23977370 10088028 10913745 11637015
In the opinion of the Managing Directors and Whole time Director, current assets, loans and advances have a
value on realization in the ordinary course of business at least equal to the amount at which they are stated and
the provision for all known liabilities have been made.
46
10. The break-up of managerial remuneration is as under: -
Chairman and Managing Director:
Salary
House Rent Allowance
Contribution towards P.F.
Vice Chairman and Managing
Director:
Salary
House Rent Allowance
Contribution towards P.F.
Whole Time Director:
Salary
House Rent Allowance
Contribution towards P.F.
Total
2005
(In Rs)
2004
(In Rs)
2003
(In Rs)
2002
(In Rs)
2001
(In Rs)
15,60,000
3,90,000
1,87,200
21,37,200
14,40,000
3,60,000
1,72,800
19,72,800
14,40,000
3,60,000
1,72,800
19,72,800
14,40,000
3,60,000
1,72,800
19,72,800
6,00,000
1,50,000
72,000
8,22,000
15,60,000
3,90,000
1,87,200
21,37,200
14,40,000
3,60,000
1,72,800
19,72,800
14,40,000
3,60,000
1,72,800
19,72,800
14,40,000
3,60,000
1,72,800
19,72,800
6,00,000
1,50,000
72,000
8,22,000
15,60,000
3,90,000
1,87,200
21,37,200
64,11,600
14,40,000
3,60,000
1,72,800
19,72,800
59,18,400
14,40,000
3,60,000
1,72,800
19,72,800
59,18,400
14,40,000
3,60,000
1,72,800
19,72,800
59,18,400
6,00,000
1,50,000
72,000
8,22,000
19,72,000
11. As no commission is payable to any Director (including Managing Directors), the computation of profit u/s 349
of Companies Act, 1956 has not been made.
The break-up of deferred tax assets and deferred tax liabilities is as under: Deferred tax liability
a)
b)
on account of difference in rates and method of
depreciation
on account of different treatment of in
payments under I.T. Act,1961
Deferred tax liability
- at the end of year (net)
- for the year
(Rs.in Lacs)
2003
2002
25776538 26468750
2005
24737212
2004
24286030
3137573
912346
706038
706914
27874785
25198376
26482576
27175664
27874785
2676409
25198376
(1284200)
26482576
(693088)
27175664
1148849
12. Segment Reporting
The company is in the business of manufacture of high tensile fasteners. Since the company is operating in a
single line of product and there being no reportable segment, the requirements of Accounting Standard – 17 on
‘Segment Reporting’ are not applicable to the company.
13. (a) Related Party Transactions
As per Accounting Standard No.18 issued by the Institute of Chartered Accountants of India, related parties in
terms of the said standard are disclosed below: (a) Names of Related parties and description of relationship:
1.
2.
Subsidiary
Associates
(i) Indian Fasteners Limited
(i) Amit Screws Pvt. Ltd.
(ii) Hanumat Wire Udyog Pvt. Ltd.
(iii) J C Fasteners Ltd.
(iv) LPS Bossard Pvt. Ltd. (Joint Venture)
(v)
LPS Bossard Information System Pvt. Ltd. (Joint
Venture)
(vi) LPS Fasteners & Wires Pvt. Ltd.
(vii) Nav Bharat Industries
(viii) Nav Bharat Agencies
47
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
Shiv Industries
Swadesh Engineering Industries
Sudhir Automotive Industries Pvt. Ltd.
United Engineers
Universal Enterprises
CQP Consultants
(i)
(ii)
(iii)
(iv)
(v)
Shri Lalit Kumar Jain
Shri Dinesh Kumar Jain
Shri Vijay Kumar Jain
Shri Rajesh Jain
Smt. Sushila Devi Jain
3.
Key Management Personnel
4.
Relative of key Management Personnel
(i) Shri S.K. Jain (Brother of Shri D.K. Jain)
(ii) Shri Nikhlesh Jain (S/o. Shri D.K. Jain)
(iii) Shri Amit Jain (S/o. Shri V.K. Jain)
(iv) Shri Gagan Jain (S/o. Shri L.K. Jain)
(v) Shri Gautam Jain (S/o. Shri L.K. Jain)
(vi) Smt. Rita Jain (W/o. Shri L.K. Jain)
(vii) Smt. Deepa Jain (W/o. Shri V.K. Jain)
(b) Transactions
S. No
Particulars
1
2
3
4
5
6
7
8
9
10
11
Sale of goods
Purchase of goods
Rent received
Rent paid
Professional Charges
Interest received
Investments
Job work received
Dividend Received
Job work paid
Loan from Directors/ Others
12
13
13
14
Loan to Directors
Electricity Expenses Received
Remuneration paid
Interest to Directors/ Others
2005
-
(Lac/Rs.)
Subsidiaries
Associates
2004 2003
2002
2005 2004 2003
2002
- 533.28 315.67 183.50 201.16
- 119.37 48.44 70.00
72.98
- 21.28 21.08 21.98
21.06
7.20
4.80
4.80
4.80
49.00
- 15.49
6.05
4.81
1.26
4.08 10.28 930.27 917.11 721.84 677.62
-
-
-
-
-
-
-
-
-
-
-
-
2.90
-
-
-
-
-
-
-
-
-
-
-
-
3.65
-
-
Total
- 1.26
Balance receivable at the year
end
Balance due at the year end
15.39 15.39
4.08
-
15 Share Application Money
48
14.16
15.09 1611.40 1329.14 1008.17 1026.62
- 18.45 27.53 83.76
47.87
18.28 349.22
92.09 216.10
303.12
S. No
Particulars
1
2
3
4
5
6
7
8
9
10
11
Sale of goods
Purchase of goods
Rent received
Rent paid
Professional Charges
Interest received
Investments
Job work received
Dividend Received
Job work paid
Loan from Directors/
Others
Loan to Directors
Remuneration paid
Interest
to
Directors/
Others
Share Application Money
Total
Balance receivable at the
year end
Balance due at the year end
12
13
14
15
(b)
Key Management Personnel
2005 2004
2003
2002
11.46
2.04
0.51
1.35
2.40
3.07
2.90
2.30
1.02
(Lac/Rs.)
Relatives of Key Management
Personnel
2005 2004 2003 2002
- 201.16
- 72.98
- 21.06
4.80
- 49.00
4.82
687.89
29.75 242.73
16.29
11.00 49.25
-
-
59.18
15.24
6.11
59.18
-
59.18
-
21.50 12.72
7.28 19.11
7.86
-
16.29
59.18
-
95.08 111.51 310.83
19.80 27.09 24.19
75.47
-
39.78 81.08
-
7.86 1117.18
- 64.16
64.12
14.06
961.40
36.68 929.34
- 713.87
-
- 323.62
Analysis of Unsecured Loans
Details of Unsecured Loans including FDR's from Promoters & Others
Sr.
No.
(A)
1
2
3
4
(B)
5
6
7
8
9
10
11
12
13
14
15
16
17
(C)
Particulars
Directors
Smt. Sushila Devi Jain
Mr. Lalit Kumar Jain
Mr. Vijay Kumar Jain
Mr. Rajesh Jain
Sub Total (A)
Others
Mrs. Rita Jain
Mrs. Deepa Jain
Mr. Nikhlesh Jain
Mr. Gaurav Jain
Mr. Saurabh Jain
Mr. Gagan Jain
Mr. Gautam Jain
Mr. Amit Kumar Jain
Ms. Chandni Jain
L.K. Jain & Sons
V.K. Jain & Sons
Rajesh Jain & Sons
Mrs. Arun Jain
Sub Total (B)
From Banks
Grand Total (A+B+C)
As at March As at March
31, 2001
31, 2002
As at March
31, 2003
(Amount in Rs.)
As at March As at March
31, 2004
31, 2005
0
20738596
10350812
21509855
52599263
0
20738596
18325812
29484855
68549263
138000
25133596
25000812
42549855
92822263
138000
25133596
26000812
44524855
95797263
138000
25133596
26102890
44515386
95889872
100000
0
17215000
12580
3853531
206790
0
10305585
37
4847
1530
21000
0
31720900
1110465
85430628
100000
0
29056111
0
0
4194290
3987500
10305585
0
0
0
0
0
47643486
0
116192749
100000
285000
35001111
4175000
3025000
8419290
8787500
16155585
0
0
0
0
0
75948486
0
168770749
100000
285000
36976111
4175000
3025000
9844290
9337500
13630585
0
0
0
0
600000
77973486
0
173770749
100000
285000
36976111
4175000
3025000
9844290
9337500
14730585
0
0
0
0
600000
79073486
13333334
188296692
49
14. In accordance with Accounting Standard 28 ‘ Impairment of Assets’ issued by the Institute of Chartered
Accountants of India and made applicable from 1st day of April, 2004, the Company has assessed the potential
generation of economic benefits from its business units as on the balance sheet date and is of the view that
assets employed in continuing business are capable of generating adequate returns over their useful lives in the
usual course of business; there is no indication to the contrary and accordingly, the management is of the view
that no impairment provision is called for in these accounts.
15. Additional information pursuant to the provisions of paragraphs 3,4C and 4D of Part II of Schedule VI to the
Companies Act, 1956 (as certified by the Chairman and Managing Director)
Particulars
Unit
a) Turnover
Finished Goods
Machine Screws
Scrap Materials
Lac/ Nos.
M. Tons
b) Raw Materials
Consumed
Wire/ Wire Rods
M. Tons
Bright Bars
M. Tons
Stainless Steel Bars/ M. Tons
Wire/Wire Rods
2005
2004
2003
2002
2001
Qty Lac/Rs. Qty Lac/Rs. Qty Lac/Rs. Qty Lac/ Qty Lac/Rs.
Rs.
4738
1967
13570 4275
237 1859
13807
11037 3492
160 1624
11197
8837 2991 8042 3229
117 1527 116 1246
8954
8158
8263
77
8340
10509
496
536
3791 8330
199 936
733 481
2580 7542
301 449
453 378
2145 6819 2193 6766
125 497 145 429
345 351 336 607
2059
118
591
11541
4723 9747
3334 8369
2615 7667 2674 7802
2768
c) Opening Stocks
Finished Goods
Lac/ Nos.
Finished Goods in Lac/ Nos.
Transit
Semi finished Goods Lac/ Nos.
Scrap Materials
M. Tons
381
1
1921
3
448
4
1875
18
496
3
1648
8
433 1296
2
10
458
4
1218
11
396
281
1286
28
3238
543
293
1373
25
3291
575
482
1325
35
3016
524 1282
764
46
2634
457
396
1086
24
2339
Purchases
Semi-finished Goods Lac/ Nos.
67
170
170
44
86
86
42
101
101
90
90
9
39
39
489
6
2073
24
381
1
1921
3
448
4
1875
18
496 1648
3
8
433
2
1296
10
395
457
-
1007
88
3192
396
281
-
1286
28
3238
543
293
-
1373
25
3291
575 1325
482
35
3016
524
764
-
1282
46
25
2659
Closing Stocks
Finished Goods
Lac/ Nos.
Finished Goods in Lac/ Nos.
Transit
Semi finished Goods Lac/ Nos.
Scrap Materials
M. Tons
Stock Damaged
M. Tons
50
39
16. a) LICENCED CAPACITY,INSTALLED CAPACITY AND PRODUCTION
# Licenced Capacity
M. Tons
## Installed Capacity
@ Actual Production
M. Tons
M. Tons Lac/ Nos.
Capacity Utilization
%
2005
14500
2004
14500
2003
14500
2002
14500
2001
14500
13520
9398
(4784)
70
12200
7900
(4014)
65
12200
6934
(3371)
57
12200
6424
(3067)
53
12200
6165
(3260)
51
# Licensing Capacity is as per the Industrial Entrepreneur Memorandum filed with SIA, Ministry of Industry,
Government of India, New Delhi.
# # Installed capacity is as certified by the Chairman and Managing Director.
@ Actual production is on the basis of raw materials consumed less scrap.
b) C.I.F. VALUE OF IMPORTS
Finished Goods
Raw Material (Wire/ Wire rods)
Tooling Steel, Stores and Spares
Capital Goods
Lac/ Rs.
Lac/ Rs.
Lac/ Rs.
Lac/ Rs.
2005
31
1295
100
278
2004
17
1212
45
6
2003
21
848
70
36
4873
4342
3348
2002
12
533
44
109
2001
19
768
46
94
c) EARNING IN FOREIGN EXCHANGE
F.O.B. value of exports
Lac/ Rs.
2957
3553
d) EXPENDITURE IN FOREIGN CURRENCY
Loan repayments
(through ICICI)
Interest and Commitment charges
(through ICICI and IDBI)
Foreign Travelling
Royalty
Books, members and other payments
Professional & Legal Charges
Contribution and Subscription
e) Dividend paid in foreign currency:
Lac/ Rs.
Nil
39
171
169
204
Lac/ Rs.
Lac/ Rs.
Lac/ Rs.
Nil
95.75
2.61
1
41
1
8
50
4
24
32
6
46
51
nil
Lac/ Rs.
Lac/ Rs.
Lac/ Rs.
0.40
3.48
0.66
20
Nil
Nil
9
nil
nil
6
nil
nil
7
nil
nil
Nil
f) VALUE
OF IMPORTED
AND INDIGENOUS RAW MATERIALS, SPARE PARTS AND
COMPONENTS CONSUMED AND PERCENTAGE THEREOF
Particular
Lac/
Rs.
Raw Materials
Imported
Indigenous
Tools Dies and
Spares
Imported
Indigenous
2005
%
Lac/
Rs.
2004
%
Lac/
Rs.
2003
%
Lac/
Rs.
2002
%
Lac/
Rs.
2001
%
1887
2836
4723
40
60
100
1088
2246
3334
33
67
100
698
1917
2615
27
73
100
828
1846
2674
31
69
100
1250
1517
2767
45
55
100
78
604
682
11
89
100
35
581
616
6
94
100
72
287
359
20
80
100
44
206
250
18
82
100
48
275
323
15
85
100
g) Generic names of principal products, services of Company
Product Description
Machine Screws
51
I.T.C. code
73181500
ANNEXURE V
ACCOUNTING RATIOS
PARTICULARS
Earning per Share (EPS) (Rs.)
Net Asset Value (NAV) (Rs per share)
Return on Net Worth (RONW) (%)
UNIT
2001
2002
2003
2004
2005
Rupees
Rupees
Percentage
3.05
53.23
5.73
2.75
49.23
5.59
2.44
51.23
4.76
4.77
55.75
8.55
6.69
61.42
10.89
Definition of ratios
Earning per share
=
{Adjusted Profit / (loss) after tax as per Statement of Adjusted Profits
and Losses} / {Weighted average number of shares}
Net asset value
=
{Net worth as per Statement of Adjusted Assets and Liabilities } /
{Weighted average number of shares}
Return on net worth
=
{Adjusted Profit / (loss) after tax as per Statement of Adjusted Profits
and Losses} / {Net worth as per Statement of Adjusted Assets and Liabilities}
Calculations
EARNING PER SHARE
Profit after tax ( adjusted)-before
extraordinary items
Shares
Earning per share
NET ASSETS VALUE
Share Capital
Reserves and Surplus (adjusted)
UNIT
2000-01
2001-02
2002-03
2003-04
2004-05
Rs/lacs
In lacs
Rupees
183.90
60.25
3.05
165.90
60.25
2.75
146.83
60.25
2.44
287.32
60.25
4.77
403.10
60.25
6.69
Rs/lacs
Rs/lacs
602.5
2499.25
3101.75
135.75
2966.00
602.5
2585.04
3187.54
100.88
3086.66
602.5
2871.61
3474.11
115.37
3358.74
602.5
3172.52
3775.02
74.25
3700.77
Less: Miscellaneous Expenditure
Net worth
Rs/lacs
Rs/lacs
602.5
2653.87
3256.37
49.30
3207.07
Number of shares
Net Assets Value
RETURN ON NET WORTH
Profit after tax ( adjusted)-before
extraordinary items
Net Worth
Return on net worth
In lacs
Rupees
60.25
53.23
60.25
49.23
60.25
51.23
60.25
55.75
60.25
61.42
183.90
3207.07
5.73
165.90
2966.00
5.59
146.83
3086.66
4.76
287.32
3358.74
8.55
403.10
3700.77
10.89
Rs/lacs
Rs/lacs
Percentage
52
ANNEXURE VI
CAPITALISATION STATEMENT
Particulars
A. Total Debts
B. Short term debts
- Secured loans
From banks on cash credit Accounts
- Unsecured loans
(excluding Fixed Deposits of more than one year tenure and loans from
directors and relatives as per stipulations of lending financial institutions and
banks)
Total Short Term Debts
C. Long term debts (A-B)
D. Shareholders’ funds
Equity Shares Capital
Preference Share Capital
Reserves and Surplus net of revaluation reserve
Total shareholders’ funds
E. Long Term Debts / Equity (C/D)
(Rs. in lacs)
Pre-issue as at
as adjusted
31.03.2005
for the issue
7073.15
5701.38
3373.31
403.33
3373.31
403.33
3776.64
3296.51
3776.64
1924.74
602.50
3172.52
3775.02
0.87:1
1004.17
4779.19
5783.35
0.33:1
Notes:
1. Fixed Deposits from public amounting to Rs 270 Lacs are due within a year.
2. Unsecured loans from promoters and others amounting to Rs.1479.63 Lacs as on 31.3.2005 are as per
stipulations of lending financial institutions and banks.
3. Calculations:
A. Short Term Debts
Pre Issue
a) Working Capital Limits
b) Fixed Deposits from Public
c) ABN Amro Bank
Total (A)
337331192
27000000
13333334
377664526
B. Long Term Debts
Pre Issue
a) ICICI-Term Loan
b) State Bank of India
c) IDBI Bank
d) ICICI - Other Loan
e) Director of Industries
f) HSIDC
g) Unsecured Loans
- From Directors
82539872
- From Others
64423486
Total (B)
Total (A+B)
53
Post Right
Issue
337331192
27000000
13333334
377664526
Post Right
Issue
47375000
79960001
24000000
9492468
16999258
3861000
47375000
79960001
24000000
9492468
16999258
3861000
147963358
329651085
707315611
10786158
192473885
570138411
C Calculation of share capital- post right issue
Existing number of equity shares
Ratio of right issue
Number of shares to be offered in right issue
Total number of shares post right issue
Nominal value of each share
Total Paid-up capital post right issue
6025000
2:3
4016667
10041667
10
100416667
D Calculation of unsecured loans of promoters and others- post issue
Total equity shares offered to promoters and others on right basis
Price of each share ( including premium of Rs .40/-)
Total Proceeds required
Total balance outstanding in unsecured loan as on 31.3.2005
Less: Conversion of loan in lieu of proceeds as above
Balance outstanding in unsecured loan accounts after the proposed
right issue
2743544
50
137177200
147963358
137177200
10786158
E. Calculation of Reserves and Surplus - Post right issue
Reserves and surplus as on 31.3.2005
Share premium on issue of right shares ( 4016667 x 40/- )
Total Reserves and surplus-post right issue
54
317252092
160666667
477918759
ANNEXURE - VII
TAXATION STATEMENT
A1
A2
A
B1
B2
B
C1
C2
C
D1
D1
D2
D2
D
E
F
Previous year ending
Assessment Year
Income taxable at regular rates
Income taxable at special rates
Profit before tax as per books
Income tax debited
Deferred tax adjustment
Profit after tax as per books
Tax Rate - Regular
Tax Rate - Special
Effective Tax Rate
Tax at regular rates
Tax at special rates
Total tax payable on books profits
adjustments
Adjustments
Timing differences
Difference between tax base and book base
of fixed assets Dep - as per Income tax
Act + Technical Know-how -Dep. As per
Companies Act, Different treatment of
items under income tax act
Total Timing differences
Permanent Differences
Income tax debited
Deferred tax adjustment
Income tax refund
Adjustments made in Profit and loss
account
Other adjustments
Expenses disallowable - Donation &
Charity
Income exempt from tax - u/s 80HHC
Others - Claim u/s 80G
Dividend income (exempt)
Total Permanent Differences
Total Adjustment (D1 plus D2)
Tax Savings on adjustments
Tax adjustment on opening tax liabilities
Total tax ( C) +(E)
31-Mar-01
2001-2002
212.76
266.76
82.86
0.00
183.90
39.55%
0.00%
39.55%
72.73
-
31-Mar-02
2002-2003
138.65
226.22
48.83
11.49
165.90
35.70%
0.00%
35.70%
80.76
-
31-Mar-03
2003-2004
156.35
222.23
75.40
0.00
146.83
36.75%
0.00%
36.75%
53.96
-
31-Mar-04
2004-2005
434.98
445.98
158.66
0.00
287.32
35.88%
0.00%
35.88%
103.07
-
31-Mar-05
2005-2006
575.85
665.63
235.77
26.76
403.10
36.59%
0.00%
36.59%
147.50
-
72.73
80.76
53.96
103.07
147.50
(48.56)
(31.26)
19.32
35.80
(79.52)
(48.56)
(31.26)
19.32
35.80
(79.52)
82.86
0.00
(25.21)
48.83
11.49
(0.29)
75.40
0.00
(1.54)
158.66
0.00
(7.11)
235.77
26.76
0.00
63.12
59.00
(63.12)
(8.74)
0.00
(52.44)
0.00
9.67
0.00
32.17
0.96
(103.15)
(0.16)
0.00
77.42
28.86
11.41
1.68
(41.32)
(0.02)
(4.82)
(56.31)
(87.57)
(31.26)
49.50
2.95
(31.84)
(2.33)
0.00
(9.80)
9.52
3.50
57.46
6.77
(53.75)
(2.37)
0.00
111.87
147.67
52.98
156.05
7.45
0.00
(2.87)
(47.04)
252.24
172.72
63.20
210.71
84.15
55
ANNEXURE-VIII
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
Sr. No
PARTICULARS
1
FIXED ASSETS
Gross Block
Less: Depreciation
(Rs. in Lacs)
As at March 31
2004
2005
Add: Capital Work – in – Progress
Less : Revaluation Reserve
Net Block
2
INVESTMENTS
Less: Investment in Joint Venture Companies
3
CURRENT ASSETS, LOANS AND ADVANCES
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
4
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities and Provisions
7412.74
4589.47
2823.27
49.40
0.00
2872.67
8317.15
5080.64
3236.51
153.91
0.00
3390.42
328.63
253.68
74.95
339.50
253.68
85.82
6657.59
3122.56
663.20
666.50
8.64
11118.49
7112.61
3758.52
676.79
919.26
5.48
12472.66
4337.04
4337.04
8135.62
5
NET CURRENT ASSETS (3 - 4)
3714.06
3714.06
7404.43
6
TOTAL OF ASSETS = (1+2+5)
10352.05
11611.86
7
8
9
10
11
LIABILITIES
LOAN FUNDS
Secured Loans
Unsecured Loans
TOTAL OF LOANS FUNDS (7+ 8)
DEFERRED TAX LIABILITY
Minority Interest
4568.34
1737.71
6306.05
273.34
41.88
5201.09
1882.97
7084.06
296.20
45.65
12
13
TOTAL LIABILITIES (9 + 10 + 11 )
NET WORTH (6 – 12)
6621.27
3730.78
7425.91
4185.95
14
NET WORTH REPRESENTED BY
SHARE CAPITAL
Less: Investment in Joint Venture Companies
856.18
253.68
602.50
3252.05
0.00
3854.55
115.63
856.18
253.68
602.50
3657.89
0.00
4260.39
74.44
8.14
3730.78
0.00
4185.95
15
RESERVES AND SURPLUS
Less Revaluation Reserve
16
MISCELLANEOUS EXPENDITURE
(to the extent not written off or adjusted)
PROFIT AND LOSS ACCOUNT
NET WORTH (13+14-15-16)
17
18
56
ANNEXURE-VIII
CONSOLIDATED STATEMENT OF PROFITS AND LOSSES (adjusted and recasted)
PARTICULARS (FOR THE YEARS ENDED MARCH 31)
INCOME
Sales :
a. of products manufactured by the Company
b. of products traded in by the Company
Total (a + b)
Other income
Share in associates
(Less)/Add: (Decrease)/Increase in Inventories
TOTAL
EXPENDITURE
Raw Materials consumed
Finished goods purchased
Staff Costs
Other manufacturing expenses
Administration Expenses
Selling and Distribution Expenses
Depreciation
Interest
Miscellaneous expenditure written off
TOTAL
Net Profit before tax and Extraordinary items
Less: Provision for Tax
Add: Deferred Tax Adjustment
Net Profit before Extraordinary Items
Extraordinary and prior period items
Add : Excess provision of earlier years/deferred tax
tax liability written back
Proposed Dividend written back
Corporate Dividend tax written back
Less: Prior period adjustments
Proposed Dividend
Corporate Dividend tax
Depreciation
Provision for Tax- Current tax
- Deferred tax
Transfer to General Reserve
Net Profit/(Loss) after Extraordinary and prior period items
Less: Appropriations for current year
Proposed Dividend
Corporate Dividend tax
Transfer to General Reserve
Balance brought forward from previous year
BALANCE CARRIED FORWARD
57
2004
(Rs. in Lacs)
2005
11142.65
1185.30
12327.95
139.41
5.67
-51.88
12421.15
13744.06
1803.87
15547.93
149.89
3.69
2.57
15704.08
3333.54
724.76
1948.34
3153.25
821.61
624.19
486.89
693.54
3.01
11789.13
632.02
224.61
-2.78
410.19
4723.29
1274.83
2167.12
3682.39
1063.70
657.49
498.96
689.34
0.52
14757.64
946.44
346.46
23.63
576.35
12.84
60.25
7.72
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
491.00
47.04
6.03
2.15
1.96
-0.77
10.32
509.63
72.30
9.26
8.00
1797.61
2199.05
90.38
11.81
22.00
2199.05
2584.49
SCHEDULE-IX
SIGNIFICANT ACCOUNTING POLICIES, CONTINGENT LIABILITIES AND NOTES
A) SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Convention
The Accounts have been prepared on historical cost convention on accrual basis in accordance with the
requirements of the Companies Act, 1956 and applicable statutes and to comply with the Accounting
Standards referred to in Section 211(3C) of the Companies Act, 1956.
b) Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of inward freight, duties and taxes and incidental
expenses related to acquisition up to the date of installation. Costs of Fixed Assets are further adjusted by
the amount of Modvat / Cenvat credit availed and fluctuations in foreign exchange rate.
c)
Depreciation
Depreciation on fixed assets have been provided on triple shift basis rates as provided in Schedule XIV of
the Companies Act, 1956 on written down value method except in case of Plant-II which was setup in the
year 1993 where depreciation is provided on straight-line method. Depreciation on assets for the value not
exceeding Rs.5000/- has been provided @100%. Depreciation on technical know-how has been provided
@25% as per Income Tax Rules.
d) Revenue Recognition
Domestic sales are recognized at the point of dispatch of goods to the customers. The sales are accounted
for net of trade discount, sales tax and excise duty. Export sales are recognized at the time of clearance of
goods and approval from Excise Authorities. Other Income is accounted for on accrual basis. Dividend
income is accounted for when the right to receive the payment is established.
e)
Foreign Currency Transactions
Foreign currencies denominated monetary liabilities incurred for the acquisition of fixed assets are
translated at the exchange rate prevailing on the Balance Sheet date. The net variation arising out of the
said transaction are adjusted to the cost of fixed assets. Other monetary assets and liabilities denominated in
foreign currency are similarly translated. All exchange gains/ losses other than those relating to fixed assets
arising out of such transactions are taken to the Profit and Loss account.
f)
Inventories
Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of
Semi-finished goods at 65% less on the price-list and finished goods have been valued at 55% less on the
price-list and special items have been valued at 30% less in case of semi-finished goods and 20% less in the
case of finished goods of the selling price; since exact cost is not ascertainable. Excise duty payable on
finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the
valuation of finished goods and scrap materials.
g) Investments
Investments are long term and stated at cost. Provision for diminution in value of investments is made to
recognize the decline in value of investments, if in the opinion of management, the decline is permanent in
nature. Investment in associates has been accounted for as per Accounting Standard (AS-16) accounting for
investments in associates.
h) Retirement Benefits
In respect of payment of gratuity to employees, the contributions are being made to the trust established
under the group gratuity scheme of Life Insurance Corporation of India, contribution to provident fund are
accounted for on the basis of relevant fund rules. Provision is made for the unutilized leave due to
employees as at the end of the year.
i)
Research and Development
Intangible Assets arising from development are not recognized since the asset is not identifiable and future
economic benefits from the assets are not probable. Expenditure on research is recognized as an expense
when it is incurred. Research and development cost include salaries and other related cost of personnel, cost
of materials and services consumed and other overhead costs related to research and development.
58
l)
Borrowing Costs
Borrowing Cost that are attributable to the acquisition for construction of qualifying assets are capitalized
as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time
to get ready for intended use. All other borrowing cost are charged to revenue.
k)
Excise duty
Excise duty has been accounted on the basis of both, payments made in respect of goods cleared as also the
provision made for goods lying in the warehouses.
l)
Miscellaneous Expenditure
Expenditure on increase in capital and right issue expenses are being amortized over a period of ten years.
m) Taxes on Income
Current tax is determined on the amount of tax payable in respect of taxable income for the period.
Deferred tax is recognized, subject to consideration of prudence, on timing difference, being difference
between taxable and accounting income/ expenditure that originate in one period and are capable of
reversal in one or more subsequent period(s).
n) Prior Period Items
Prior Period Expenses/Income is accounted for under the respective heads. Material item, if any, are
disclosed separately by way of note.
o) Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision should be made for impairment loss
on fixed assets by considering the indications that an impairment loss may have occurred and where the
recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on
fixed assets is made for the difference. Recoverable amount is generally measured using discounted
estimated cash flows.
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining
useful life.
p) Leases
Assets taken on Finance Lease are accounted for as assets of the Company. Lease rentals payable are
apportioned between principal and interest using the internal rate of return method and finance charge is
recognized accordingly.
q) Contingent Liabilities & Provisions
Contingent Liabilities are disclosed by way of notes and are not recognized as an item of expenses in the
profit and loss account. Contingent gains are not recognized. Provisions are recognized as liability only
when they can be measured by using a substantial degree of estimation and where present obligation of the
enterprise arise from past events, the settlement of which is expected to result in an outflow of resources
embodying economics benefits.
B)
CONTINGENT LIABILITIES:
Sr.
no
1
2
3
4
5
(Lac/Rs.)
2004
Particulars
2005
Estimated amount of capital contracts remaining to be executed and not
provided for (net of advances)
Letter of credits and guarantees obtained from bank (Net of margin
money)
Liabilities against legal undertakings/ bonds executed in favour of
DGFT on account of export obligation undertaken by the Company
against advance and import licenses under EPCG Scheme.
Bills Discounted
(Secured against hypothecation of fixed assets excluding computer
software and vehicles. Further secured against book debts both present
and future and 10% margin money)
Income tax liabilities on account of appeals filed by Income Tax
Department in Punjab & Haryana High Court, Chandigarh
81
315
236
1331
113
226
262
146
101
101
59
C) NOTES
1
In accordance with Accounting Standard (AS-21) on “Consolidated Financial Statements” issued by the
Institute of Chartered Accountant of India, the Consolidated Financial Statements of Lakshmi Precision
Screws Limited include the financial statements of its subsidiary company Indian Fasteners Limited. The
particulars of subsidiary are as under:Name:Country of Incorporation:Group Shareholding:-
2
Indian Fasteners Limited
India
67.295%
The significant associate companies consolidated in the consolidated financial statements in accordance
with Accounting Standard (AS-23) “Accounting for investment in associates in consolidated Financial
Statements” are as under:Name of the associate Company
J.C. Fasteners Limited
Hanumat Wire Udyog Private Limited
3
Country of Incorporation
India
India
Proportion of ownership
interest
42.81%
21.7765%
a. The company had entered into Joint venture agreement with Bossard AG, Switzerland on 26.06.1997
and invested a sum of Rs.23520190/- in LPS Bossard Pvt. Ltd. towards allotment of 2352019 equity shares
of Rs.10/- each and a sum of Rs.1847490/- in LPS Bossard Information System Pvt. Ltd. towards allotment
of 184749 equity shares of Rs.10/- each, towards 49% holding in the aforesaid Companies. The particulars
of the Joint Venture are as under: Sl
No.
Name of the associate Company
Country
of
Incorporation
1
2
LPS Bossard Private Limited
LPS Bossard Information Systems Private Limited
India
India
Proportion
of
ownership interest as
on 1st March, 2005
49%
49%
LPSBPL and LPSBISPL stand for LPS Bossard Private Limited Information Systems Private Limited
respectively the financial statements presented above. The financial statements of LPS Bossard Private
Limited and LPS Bossard Information System Private Limited which are jointly controlled entities with
Bossard AG, Switzerland, have been accounted for as per the proportionate consolidation method as
prescribed by AS-27 on `Financial Reporting of Interest in Joint Ventures` issued by the Institute of
Chartered Accountants of India. For this purpose the proportionate share of the joint venture are added line
by line to the assets, liabilities, income and expenditure on the basis of their provisional figures.
b. During the previous year ending 31st March 2004, the proportionate figures of LPSBPL and LPSBISPL
were consolidated on the basis of their provisional financial statement. The variation arising out of the
audited figures for the ended 31st March, 2004 of the respective joint venture companies have been shown
as a prior period (adjustment) items in the profit & loss appropriation account for the year ended 31st
March, 2005.
4
Principles of consolidation:
a.
The consolidated financial statements have been prepared based on line-by-line consolidation of the
profit and loss account and the balance sheet of the company and its subsidiary after eliminating intra
group balances and unrealized profits/losses in any on intra group transactions.
b.
Reporting of joint ventures has been prepared using uniform accounting policies except in case of
charge of deprecation on fixed assets in case of joint ventures where depreciation is charged on SLM
basis at the following rates:
Sr.
no.
Particulars of Fixed Assets
1
2
3
4
Computer Hardware
Computer Hardware
Office Equipments
Machinery & Equipments
Depreciation as per SLM
basis in LPS Bossard Private
Limited.
20%
33%
5%
5%
60
Depreciation as per SLM
basis in LPS Bossard
Information
Systems
Private Limited.
20%
33%
5%
-
5
6
7
Furniture and Fixtures
Vehicle
Leasehold Improvements
10%
9.5%
(over the period of lease)
-
The proportionate share of depreciation charged and net block of fixed assets are incorporated on the
basis of depreciation rates as enumerated above.
c.
Minority interest’s share of net assets of consolidated subsidiaries for the year is identified and
presented in the consolidated balance sheet separate from liabilities and the equity of the Company’s
shareholders.
d.
In case of associates where the Company directly or indirectly through subsidiaries holds more than
20% of equity, Investments in associates are accounted for using equity method in accordance with
Accounting Standard (AS-23) “Accounting for investments in associates in consolidated financial
statements” issued by the Institute of Chartered Accountants of India.
e.
The Company accounts for its share in the change in the net assets of the associates, post acquisition,
after eliminating unrealized profits and losses resulting from transactions between the Company and its
associates to the extent of its share, through its profit and loss account to the extent such change is
attributable to the associates profit and loss account and through its reserves for the balance, based on
available information.
f.
The difference between the cost of investment in the associates and the share of net assets at the time of
acquisition of shares in the associates is identified in the financial statements as Goodwill or Capital
Reserve as the case may be.
As far as possible, the consolidated financial statements are prepared using uniform accounting policies for like
transactions and other events in similar circumstances and are presented in the same manner as the Company’s
separate financial statements.
5
The break-up of deferred tax assets and deferred tax liabilities is as under: Deferred tax liability
a) on account of difference in rates and method of depreciation
Share in Joint Venture Company
b) on account of different treatment of certain payments under I.T.
Act,1961
Share in Joint Venture Company
Deferred tax liability
- at the end of year (net)
- for the year (written back)
6
7
Earning per share – Basic and Diluted
Profit after tax
Weighted number of Equity Shares outstanding during the year
Earning per share
The effect of dilution on equity shares for the issue of shares on right
basis will be considered with effect from the record date.
2005
26208838
(Lac/Rs.)
2004
25688817
1553586
3137573
1504416
927421
-1279877
29620120
-786757
27333897
29620120
2363262
27333897
(1562208)
57635209
6025000
9.57
42304115
6025000
7.02
Segment Reporting
The company is in the business of manufacture of high tensile fasteners. Since the company is operating in
a single line of product and there being no reportable segment, the requirements of Accounting Standard –
17 on ‘Segment Reporting’ are not applicable to the company. The requirements of Segment Reporting are
also not applicable to the subsidiary company and joint venture since the same are operating in a single line
of product.
61
8
Related Party Transactions
As per Accounting Standard No.18 issued by the Institute of Chartered Accountants of India, related parties
in terms of the said standard are disclosed below: (a) Names of Related parties and description of relationship:
1.
Subsidiary
(i)
2.
Associates
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
Amit Screws Pvt. Ltd.
Hanumat Wire Udyog Pvt. Ltd.
J C Fasteners Ltd.
LPS Bossard Pvt. Ltd. (Joint Venture)
LPS Bossard Information System Pvt. Ltd. (Joint
Venture)
LPS Fasteners & Wires Pvt. Ltd.
Nav Bharat Industries
Nav Bharat Agencies
Shiv Industries
Swadesh Engineering Industries
Sudhir Automotive Industries Pvt. Ltd.
United Engineers
Universal Enterprises
CQP Consultants
(i)
(ii)
(iii)
(iv)
(v)
Shri Lalit Kumar Jain
Shri Dinesh Kumar Jain
Shri Vijay Kumar Jain
Shri Rajesh Jain
Smt. Sushila Devi Jain
3.
Key Management Personnel
4.
Relative of key Management Personnel
(c) Transactions
Sr.
Particulars
No
1.
2.
3.
4.
5.
6.
7.
8.
9.
Sale of goods
Purchase of goods
Rent received
Rent paid
Professional Charges
Interest received
Job work
i d paid
Job work
Loan from
Directors/Others
Indian Fasteners Limited
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Subsidiaries
2005
-
2004
1.26
-
Shri S.K. Jain (Brother of Shri D.K. Jain)
Shri Nikhlesh Jain (S/o. Shri D.K. Jain)
Shri Amit Jain (S/o. Shri V.K. Jain)
Shri Gagan Jain (S/o. Shri L.K. Jain)
Shri Gautam Jain (S/o. Shri L.K. Jain)
Smt. Rita Jain (W/o Shri L.K. Jain)
Smt. Deepa Jain (W/o Shri V.K. Jain)
Associates
2005
533.28
119.37
21.28
7.20
930.27
-
Key
Management
Personnel
2004
315.6
48.44
21.08
4.80
15.49
917.1
- 1
2005
11.46
1.35
3.07
1.02
2004
2.04
2.40
2.90
29.75
(Lac/Rs.)
Relatives of
Key
Management
Personnel
2005 2004
11.00 49.25
10.
Remuneration paid
-
-
-
-
64.12
59.18
21.50
12.72
11.
Interest to
Directors/ Others
-
-
-
-
14.06
15.24
7.28
19.11
62
12.
9
Share
Application
Total
Balance receivable at
the year end
-
1.26
-
1611.40
18.45
3.65
1326.24
27.53
95.08
19.80
111.51
27.09
39.78
-
81.08
-
Balance due at the
year end
15.39
15.39
349.22
92.09
961.40
36.68
713.87
-
In accordance with Accounting Standard 28 ‘ Impairment of Assets’ issued by the Institute of Chartered
Accountants of India and made applicable from 1st day of April, 2004, the Company has assessed the
potential generation of economic benefits from its business units as on the balance sheet date and is of the
view that assets employed in continuing business are capable of generating adequate returns over their
useful lives in the usual course of business, there is no indication to the contrary and accordingly, the
management is of the view that no impairment provision is called for in these accounts.
10 Provisions are recognized for expenses such as gratuity, income tax, wealth tax, leave encashment and
bonus to employees. The provisions are recognized on the basis of past events and the probable settlement
of the present obligation as a result of the past events during the financial year 2005-06.
The movements in provisions are as under:
1
Carrying amount as on 01.04.2004
2
Additional provisions made during the financial year 2004-05 including
increase to existing provisions.
3
Amounts used (incurred and charged against the provisions) during the
financial year 2004-05.
4
Unused amounts reversed during the financial year 2004-05
5
Carrying amounts of provisions as on 31.03.2005
(Lac/Rs.)
187
247
182
05
247
for N.G. Gupta & Co.
Chartered Accountants
Sd/V.P.Bansal
Partner
Date : 12th July 2005
Place : Delhi
63
SWOT ANALYSIS
1.
STRENGTHS
•
•
•
•
•
•
•
2.
WEAKNESSES
•
•
3.
High Inventory/ Finance Cost
Low overall equipment effectiveness levels.
OPPORTUNITIES
•
•
•
•
4.
Over 37 years of experience in manufacturing of Precision fasteners.
In-house capability for all manufacturing processes.
Technological competence for special fasteners.
International Certifications/ Accreditations.
Established, growing and profitable Company.
Strong Export backup.
Rich talent pool.
Domestic Auto Industry is expected to grow @ 8-10 % pa
Auto OEMs seek special range and development capability from manufacturers.
Value Addition Capability to become a Differentiator.
Expected Strengthening of Rupee may hit Export attractiveness.
THREATS
•
•
•
•
Substitute products (Plastic Fasteners/ No Fasteners) for small instrumentation industry.
Duty reduction & Competition from China.
High manpower Cost.
Competitor’s growth in OEM’s
64
MANAGEMENT DISCUSSION AND ANALYSIS
Overview of the business of the Company
Lakshmi Precision Screws (LPS) has a wide product range covering around 6000 variants. The company excels in
high value, customized products for automotive and industrial OEMs due to strong engineering capability and is a
single source supplier to many customers. The company has successfully developed critical products for customers
such as Maruti, Hero Honda, L & T John Deere, Tata Motors, Bajaj Auto, TVS Motors, Yamaha, M&M, Honda
Scooters, Eicher Motors, Swaraj Mazda and most of the other automotive multinational joint ventures in India. It has
also got self certifications from Ford Tractors, LMW, Tata Motors, etc.
The company is a leading exporter of fasteners and its global customers include Volvo, Visteon Bosch, John Deere,
Textron, etc. Its facilities have been accredited in Mechanical & Chemical Testing by A2LA USA to meet Fastener
Quality Act of USA. Exports contributed 38.77% of sales in FY 04 and 43.52% of sales in FY 05.
Demand from the domestic automotive and industrial sectors is likely to grow on a sustained basis. The company
has long-standing relationships with most of the automotive and industrial OEMs. It is further penetrating into the
major customer accounts to grab a larger share of their requirements. In-house R&D and strategic partnerships with
Bossard of Switzerland, Textron of USA, Fairchild of Australia, etc are enabling the company to provide the latest
fastening solutions.
Significant Developments subsequent to the last financial year
In the opinion of the Directors, there have not arisen since the date of the last financial statements disclosed in the
Letter of Offer, any circumstances that materially and adversely affect or is likely to affect the trading or
profitability of the Company, or the value of its assets, or its ability to pay liabilities within the next 12 months.
Results of Operations
Results of operations for the last three years are as follows:
Year ended
Gross Turnover
Income
Net Profit / (Loss) before tax and
extraordinary items
Net Profit / (Loss) After Tax
Net Profit/(Loss) After Extraordinary Item
31/03/2005
13806.88
13877.19
665.63
31/03/2004
11196.80
11253.09
445.98
(Rs.in Lacs)
31/03/2003
8954.31
9330.32
222.23
403.10
403.10
287.32
368.13
146.83
153.76
Comparison of Results of Operation
Financial year 2004-05 : During the year the Company has recorded 23% growth in sales and 9.50% growth in net
profit. This is due to the fact that Fastener industry is evolving from commodities to customized market since most
auto manufacturers have different design specifications for their assemblies. The Company has strong order book
for domestic and export markets.
Financial year 2003-04 : This was a very good year for the overall industry. Due to phenomenal improvement in
economic scenario the company achieved a significant growth in the domestic and international market. The
turnover of the Company increased by 25% with the export sales charting an increase of 30%. The net profit and
earning per share (EPS) increased by an amazing 95% during the year.
Financial year 2002-03 : The Company maintained its growth and enjoyed a leading position in fasteners industry.
The sales increased by 10% over the previous year. The net profit for the year substantially increased by 50% over
the previous year. This growth is attributed to the Company’s serious efforts towards maintaining highest quality
standards of its products, cost reduction, productivity improvement and customer satisfaction.
♦
Unusual or infrequent events or transactions
ƒ Technology plays a vital role in manufacturing plants. The Company’s failure or inability to adopt any
change in technology might place its competitors at an advantage in terms of cost, efficiency and timely
delivery of final products.
65
ƒ
♦
Any significant change in the Government’s policies or any political instability in India could adversely
affect the business and economic conditions in India and could also adversely affect the business, future
financial performance
Significant economic changes
Any slowdown in the growth of Indian economy or future volatility in global commodity prices, could
adversely affect the business, including the future financial performance, shareholders’ funds and ability to
implement strategy and the price of the Equity Shares.
♦
Known trends or uncertainties that have had or are expected to have a material adverse impact on
income from operations
Nil
♦
Changes in relationship between costs and revenues
The changes in the prices of major raw material like Wire, Wire Rods, Bright bars and SS Bars etc would have
a significant bearing on the revenues of the Company.
♦
Extent to which material increases in revenues are due to increased volumes, introduction of new
projects.
The issue proceeds would be deployed on the working capital requirement for the exiting capacities and no new
project is envisaged at present.
♦
Total revenue of the industry segment in the which the Company operates.
The Company operates in only one industry segment which is manufacturing of fasteners.
♦
Seasonality of business
The business of the Company is not seasonal.
♦
Dependence on single or few suppliers/customers
The Company is not dependent on single supplier or customer for its purchase of raw material or sale of
finished goods.
♦
Competitive Conditions
The Company operates in a globally competitive business environment. Increasing competition may force the
Company to reduce prices of its products, which may reduce the revenues and margins and/or also decrease its
market share, either of which could have an adverse effect on the business, financial condition and operations of
the Company.
Risk relating to Foreign Exchange
The Company imports raw material used for production which subjects it to foreign exchange exposure. The
fluctuations in foreign exchange rates might have an impact on the financial performance of the Company.
66
XIV. LEGAL AND OTHER INFORMATION
Save as stated herein under, the Company, have not defaulted in meeting any of its statutory or institutional dues
and have made all payments/refunds on fixed deposits or no proceedings have been initiated against the Company,
for any of the offences specified in paragraph 1 of Part I of Schedule XIII of the Companies Act, 1956. Further,
there are no disputes/litigations towards tax liabilities or criminal prosecutions against the Company and its
Directors for any offence, economic or otherwise civil litigations against the Company and its Directors, there are
no material disputes/legal actions other than those disclosed below.
There are no pending proceedings initiated for economic offences against the Company. No disciplinary action/
investigation has been taken by the SEBI against the Company, its subsidiaries and sponsored institutions and its
respective directors.
OUTSTANDING LITIGATIONS AGAINST THE COMPANY AND DIRECTORS
Labour related cases :
•
Seven labour related proceedings are pending before various authorities such as Industrial Tribunal – cum
labour court Rohtak and Labour Commissioner, Rohtak, for reinstatement of services of the workers and
they are at various stages of hearing. No amount is involved in these cases.
Show Cause Notices from Excise Department
•
A show cause notice no. V(150)CEX.prev/off/74/98/477 dated 12/01/2000 has been issued against the
company for raw material shortage 27000 kgs. Order has been issued by the Assistant Commissioner for
payment of Rs. 1,12,320/ with a penalty payment of Rs.10,000/-.
OUTSTANDING LITIGATIONS FILED BY THE COMPANY
Civil proceeding filed by the company for recovery
•
•
•
LPS has filed a suit in the Court of Civil Judge (Senior Division) Rohtak against M/s. Boving Fouress Ltd.
for recovery of an amount totaling to Rs. 1,98,272 along with interest till payment towards goods supplied
by the company. The case has been filed on 28.10.2003 and is pending in the court.
LPS has filed a suit in the Court of Civil Judge (Senior Division) Rohtak against M/s. Neyveli Lignite
Corporation Ltd. for recovery of an amount of Rs. 22,879 along with interest till payment towards goods
supplied by the company. The case has been filed on 13.11.2002 and is pending in the court.
LPS has filed a suit in the Court of Civil Judge (Senior Division) Rohtak against M/s. Trumac Engineering
Coy, Pvt. Ltd. for recovery of an amount of Rs. 80,000 along with interest till payment towards goods
supplied by the company. The case has been filed on 08.05.2003 and is pending in the court.
Cases relating to Decrees pending execution
•
•
•
•
•
A decree has been passed on 02.09.2004 in respect civil suit no. 824 dt. 10.05.2002/04.06.2004filed by LPS
against M/s. Young Industries. As per the decree an amount of Rs. 32,532 including interest is to be
received by LPS. The decree is pending execution.
A decree has been passed on 13.01.2005 in respect civil suit no. 390/1 of 18.12.01 filed by LPS against
M/s. Indian Trading Enterprises. As per the decree an amount of Rs.16,000 along with interest @ 21%
from the date of filing of the suit till the date of realization of the amount has to be received by LPS. The
decree has been forwarded for execution.
A decree has been passed on 27.11.2003 in respect civil suit no. 132 of 18-3-2002 filed by LPS against
M/s. Nucon Engineering Pvt. Ltd. As per the decree an amount of Rs. 1,23,852 including interest is to be
received by LPS. The decree has been transferred for execution to the Chief Civil Judge, Distt. Court,
Hyderabad.
A decree has been passed on 28.01.2003 in respect civil suit no. 172 of 18-5-2001 filed by LPS against
M/s. Southern Switch Gears Ltd. As per the decree an amount of Rs.58,148/- including interest is to be
received by LPS. The decree is pending execution.
A decree has been passed on 01.11.2003 in respect of suit no.389/1 of 2001 filed by LPS against M/s.
Bharat Industries Suppliers, Chennai. As per the decree an amount of Rs.1,07,000/- plus interest @21% p.a.
Cost etc. is to be received by LPS. The decree is pending for execution.
67
•
A decree has been announced in respect of suit filed by LPS against M/s. Southern Railway. As per the
decree an amount of Rs.50,000/- along with interest is receivable by LPS and the copy of the decree still to
be received from the court. The decree is pending for execution.
Criminal proceedings
•
LPS has filed a suit on 20.11.2001 for criminal proceeding u/s 138 of the Negotiable Instruments Act, for
dishonour of two cheques amounting to Rs. 30164/-. Arguments on this case still pending and the hearing is
fixed on 09.07.2005.
MATERIAL DEVELOPMENTS AFTER THE DATE OF THE LAST BALANCE SHEET
There are no material developments after the date of the last Balance Sheet.
ADVERSE EVENTS
There are no adverse events affecting the operations of the Company occurring within one year prior to the date of
filing of the offer document with the Registrar of Companies/Regional Stock Exchange.
GOVERNMENT APPROVALS
The important licenses and approvals/consents procured by the Company are as follows :
ƒ
ƒ
ƒ
ƒ
ƒ
Industrial License no. 212 (84) dated 31/05/1984 for manufacture of Precision Machine Screws from Ministry
of Industry, Government of India.
License no.QSC/L-002321.2 for Quality System Certification from Bureau of Indian Standards to manufacture
and supply of High Tensile and Precision Fasteners.
Certificate of Importer-Exporter Code (IEC) no. 3393002155 from Ministry of Commerce, Government of
India.
License no.122 from district magistrate to import and store petroleum class B.
The Factory license of the Company for plant I & plant II has expired on 31.12.2004. The Company has applied
for renewal of the same. The approval is expected at any time as no query is pending as on date.
The consent under Water/Air/H.W.M. for Company’s manufacturing units has expired on 31/03/2005. The
Company has applied to Haryana State Pollution Control Board for the renewal of the same. The consent is awaited.
Besides this the Company also obtained following certificates:
•
•
•
•
•
Certificate under ISO 9001:2000 for manufacturing facility at Plant II from Underwriters laboratories Inc.
(UL).
Certificate under ISO/TS 16949:2002 for manufacturing facility at Plant II from Underwriters laboratories Inc.
(UL).
Certificate of accreditation in accordance with standard ISO/IEC 17025:1999 from National Accreditation
Board for Testing and Calibration Laboratories, Department of Science & Technology, India.
ISO 14001:1996 for Environmental Management System at Plant II from Underwriters laboratories Inc. (UL).
OHSAS 18001:1999 for Occupational Health and Safety management System at Plant II from Underwriters
laboratories Inc. (UL).
Besides this the Company has received all the necessary permissions and approvals from the Government and
various non-Government agencies for conducting business. No further approvals from any Government Authority
are required by the Company to undertake the activities save and except those approvals which may be required to
be taken in the normal course of business from time to time. It must be understood that in granting the above
approvals the Government of India and Reserve Bank of India does not undertake any responsibility for the
financial soundness of the undertaking or for the correctness of any of the statements made or opinions expressed in
this regard.
68
XV. OTHER REGULATORY AND STATUTORY DISCLOSURES
AUTHORITY FOR THE PRESENT ISSUE
The Board of Directors at their meeting held on 31/01/2005 have approved the right issue of the equity shares of the
Company of Rs 10/- per equity share to the existing holders of equity shares in the ratio of shares held by them on a
date to be announced by the Board (Record Date) for a total amount of around Rs 2008.33 Lacs at price of Rs 50/per equity share i.e. at a premium of Rs 40/- per equity share, pursuant to the special resolution passed in the Extra
Ordinary General Meeting of the shareholders of the Company held on 25/06/2005 authorising the Board of the
Company to raise capital upto Rs 2008.33 Lacs.
PROHIBITION BY SEBI
The Company, its Promoters, Directors or any of the Company’s associates or group companies with which the
Directors of the Company are associated as Directors or Promoters have not been prohibited from accessing the
capital market under any order or direction passed by SEBI.
ELIGIBILITY
The Lakshmi Precision Screws Ltd. is an existing listed Company. It is eligible to offer this Rights Issue in terms of
Clause 2.4(iv) of the SEBI (DIP) Guidelines, 2000.
The promoters, their relatives, LPSL, group companies are not detained as willful defaulters by RBI/ Government
authorities and there are no violations of securities laws committed by them in the past or pending against them.
DISCLAIMER CLAUSE
AS REQUIRED A COPY OF THIS LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO
BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS LETTER OF OFFER TO SEBI
SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN
CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR
THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS
PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR
OPINIONS EXPRESSED IN THE OFFER DOCUMENT. LEAD MANAGER M/S. KEYNOTE
CORPORATE SERVICES LIMITED, HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE
LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI
GUIDELINES FOR DISCLOSURES AND INVESTOR PROTECTION IN FORCE FOR THE TIME
BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED
DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS
PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL
RELEVANT INFORMATION IN THE LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED
TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS
RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD
MANAGER, M/S. KEYNOTE CORPORATE SERVICES LIMITED HAS FURNISHED TO SEBI A DUE
DILIGENCE CERTIFICATE DATED 18/07/2005 IN ACCORDANCE WITH SEBI (MERCHANT
BANKERS) REGULATION 1992 WHICH READS AS FOLLOWS:
(I) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE
FINALISATION OF THE LETTER OF OFFER PERTAINING TO THE SAID ISSUE.
(II) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS
DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF
THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED
PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS
MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY.
69
WE CONFIRM THAT:
(A) THE LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH THE
DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
(B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE
GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANOTHER
COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH;
(C) THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE
TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE
INVESTMENT IN THE PROPOSED ISSUE; AND
(D) BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER ARE
REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID.
THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER ABSOLVE THE COMPANY
FROM ANY LIABILITIES UNDER SECTION 63 OF THE COMPANIES ACT, 1956, OR FROM THE
REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE
REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE
RIGHT TO TAKE UP AT ANY POINT OF TIME, WITH THE LEAD MANAGER FOR ANY
IRREGULARITIES OR LAPSES IN THE LETTER OF OFFER.
THE PROMOTERS / DIRECTORS OF LPSL VIZ. MR.LALIT KUMAR JAIN, MR. DINESH KUMAR
JAIN, MR. VIJAY KUMAR JAIN, MR. RAJESH JAIN, SMT. SUSHILA DEVI JAIN, MR. JAMSHEDJI
RUSTOMJI DESAI, MR. BABULAL S. AGGARWAL, MR. KESHWA NAND RATTAN, MR.
DHARMENDRA BHANDARI, MR. DIPAK JAIN DECLARE AND CONFIRM THAT NO
INFORMATION/MATERIAL LIKELY TO HAVE A BEARING ON THE DECISION OF INVESTORS IN
RESPECT OF THE SHARES OFFERED IN TERMS OF THIS LETTER OF OFFER HAS BEEN
SUPPRESSED WITHHELD AND / OR INCORPORATED IN THE MANNER THAT WOULD AMOUNT
TO MIS-STATEMENT/MISREPRESENTATION AND IN THE EVENT OF ITS TRANSPIRING AT ANY
POINT IN TIME TILL ALLOTMENT/REFUND, AS THE CASE MAY BE, THAT ANY
INFORMATION/MATERIAL HAS BEEN SUPPRESSED/WITHHELD AND/ OR AMOUNTS TO A MISSTATEMENT/MIS-REPRESENTATION, THE PROMOTERS/DIRECTORS UNDERTAKE TO REFUND
THE ENTIRE APPLICATION MONIES TO ALL SUBSCRIBERS WITHIN 7 DAYS THEREAFTER
WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 63 OF THE COMPANIES ACT.
CAUTION STATEMENT / COMPANY DISCLAIMER
The Issuer Company accepts no responsibility for statements made otherwise than in this Letter of Offer or in the
advertisement or in any other material issued by or at the instance of the Company and the Lead Manager and any
one placing reliance on any other source of information would be doing so at his/her/their own risks.
DISCLAIMER IN RESPECT OF JURISDICTION
This offer is being made in India to persons resident in India (including Indian nationals resident in India who are
majors, Hindu Undivided Families, companies, corporate bodies and societies registered under the applicable laws
in India and authorised to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions,
commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the
Societies Registration Act, 1860, or any other Trust law and who are authorised under their constitution to hold and
invest in shares) and to NRIs, OCBs and FIIs as defined under the Indian laws. This Offer Document does not,
however, constitute an offer to sell or an invitation to subscribe to securities issued hereby in any other jurisdiction.
Any person into whose possession this Offer Document comes is required to inform himself about and to observe
any such restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s)
in India only.
No action has been or will be taken to permit a public offering in any jurisdiction where action would be required
for that purpose, except that this Offer Document has been submitted to the SEBI. Accordingly, the equity shares
represented thereby may not be offered or sold, directly or indirectly, and this Offer Document may not be
distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction.
Neither the delivery of Offer Document nor any sale hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of Lakshmi Precision Screws Ltd. since the date hereof or
that the information contained herein is correct as of any time subsequent to this date.
70
LISTING
The existing equity shares of the Company are listed on stock exchanges Mumbai (BSE) and Delhi Stock
Exchange(DSE).
If the permissions to deal in and for an official quotation of the equity shares are not granted by the stock exchange,
the Company shall forthwith repay, without interest, all monies received from the applicants. In case of delay
interest shall be paid in accordance with the provisions of Section 73 of the Act.
DISCLAIMER CLAUSE OF THE STOCK EXCHANGE, MUMBAI (BSE)
The Stock Exchange, Mumbai (the Exchange.) has given vide its letter dated [•] permission to the Company to use
the Exchange’s name in this draft Letter of Offer as one of the stock exchanges on which this Company’s securities
are proposed to be listed. The Exchange has scrutinized this draft Letter of Offer for its limited internal purpose of
deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner:
(i)
(ii)
(iii)
Warrant, certify or endorse the correctness or completeness of any of the contents of this draft Letter of
Offer; or
Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange;or
Take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company; and its should not for any reason be deemed or
construed that this draft Letter of Offer has been cleared or approved by the Exchange.
Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to
independent inquiry, investigation and analysis and shall not have any claim against the Exchange 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.
DISCLAIMER CLAUSE OF THE DELHI STOCK EXCHANGE (DSE)
As required, a copy of this draft Letter of Offer has been submitted to The Delhi Stock Exchange (hereinafter
refereed to as DSE). DSE has given vide its letter dated [•] permission to the Issuer to use the Exchange’s name in
this draft Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed.
The Exchange has scrutinized this draft Letter of Offer for its limited internal purpose of deciding on the matter of
granting the aforesaid permission to this Issuer. It is to be distinctly understood that the aforesaid permission given
by DSE that this draft Letter of Offer has been cleared or approved by DSE; nor does it in any manner warrant,
certify or endorse the correctness or completeness of any of the contents of this draft Letter of Offer nor does it
warrant that the Issuer’s securities will be listed or will continue to be listed on the Exchange nor does it take any
responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or
project of this Issuer.
FILING
A copy of this Letter of Offer has been filed with SEBI, Mittal Court, “B” Wing, Nariman Point, Mumbai – 400021,
The Stock Exchange, Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai (BSE) (Designated Stock Exchange)
and The Delhi Stock Exchange Association Ltd., DSE House, 3/1 Asaf Ali Road, New Delhi – 110002
The Company has received ‘in-principle’ approval for issue of the new shares from the BSE, & DSE vide their
letters dated _________________.
IMPERSONATION
Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the
Companies Act, 1956 which is reproduced below:
"Any person who(a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares
therein, or
(b) otherwise induces a Company to allot or register any transfer of shares therein to him, or any other
person in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years."
71
CONSENTS
Consents in writing of the Directors, Auditors, Lead Manager, Registrar to the Issue, to act in their respective
capacities have been obtained and filed with Stock Exchanges at the time of filing this Letter of Offer and such
consents have not been withdrawn up to the time of delivery of the Letter of Offer for registration with the stock
exchanges.
The Auditors of the Company have given their written consent for the inclusion of their Report in the form and
content as appearing in the Letter of Offer and also the tax benefits accruing to the Company and its members and
such consents and reports have not been withdrawn up to the time of delivery of the Letter of Offer for registration
with the Stock Exchanges.
EXPERT OPINION
The Company has not obtained any expert opinion for this issue.
EXPENSES OF THE ISSUE
Sr.
No.
1
2
3
Particulars
Amount
(Rs. In Lacs)
25.00
15.00
10.00
50.00
Fees to Lead Manager, Registrar, Auditor, Banker and Legal Advisor
Printing & Stationery and Postage expenses
Advertisement, travel and other Miscellaneous Expenses
Total
UNDERWRITING COMMISSION, BROKERAGE AND SELLING COMMISSION
No Underwriting, Brokerage and selling Commission will be payable for this issue.
PREVIOUS ISSUE OTHER T HAN FOR CASH
The Company has issued 3,50,000 equity shares of Rs.10/- each as bonus issue as on 08/11/1982
COMMISSION AND BROKERAGE ON PREVIOUS ISSUE
The Company has not paid any commission or brokerage on previous issue.
PREVIOUS ISSUE
The Company had come out with a rights issue of 21,75,000 Equity Shares of Rs. 10/- each for cash at a premium
of Rs, 20 per share aggregating to Rs. 652.50 lacs. The issue opened on July 8, 1993 and closed on August 6, 1993.
The object of the issue was to part finance the expansion project of the company of increasing the capacity for
manufacture of High Tensile Fasteners from 5000 tpa to 7500 tpa and to part finance the working capital
requirements of the company.
PROMISE VIS-À-VIS PERFORMANCE
The promise-v/s-performance in respect of the above said Rights issue was as under:
Particulars
Installed Capacity
Production
Capacity
Utilization
Total Income(net)
Profit before int
dep & tax
Interest
31/03/1993
Promises Actual
5000
5000
3000
3016
60%
60%
31/03/1994
Promises
Actual
6250
7500
3875
3556
62%
57%
31/03/1995
Promises Actual
7500
7500
4750
4897
63.3%
65%
(Rs.in Lacs.)
31/03/1996
Promises
Actual
7500
8500
4875
6529
65%
77%
2808
431
3127
483
3624
598
4082
600
4440
785
5586
742
4556
819
7398
1036
235
273
318
253
410
277
396
397
72
Deprecation
Profit before Tax
(PBT)
Profit after
Tax(PAT)
Gross cash Profit
Dividend
Rate
Equity Share
Capital
Reserves &
Surplus
EPS(Rs/Share)
Book
Value(Rs/Share)
71
125
90
120
110
170
110
237
150
225
170
295
141
283
224
415
80
59
137
148
188
225
201
299
151
22
15%
145
149
23
16%
145
247
45
12.5%
363
258
44
18%
356
338
45
12.5%
363
395
65
18%
362
342
45
12.5%
363
523
73
20%
363
443
427
947
945
970
1126
1113
1354
5.52
40.55
4.07
39.45
3.77
36.09
4.16
36.63
5.18
36.72
6.22
41.10
5.54
4066
8.24
47.27
STOCK MARKET DATA FOR SHARES OF THE COMPANY
The following is the movement of the existing equity share of the Company listed and traded on The Stock
Exchange Mumbai (BSE). The equity shares of the Company are not traded on Delhi Stock Exchange. Information
regarding the Company's share prices at BSE is as given below:
Particulars
2002
2003
2004
Jan. 05
Feb. 05
Mar. 05
Apr.05
May 05
June 05
High
(Rs)
19.80
43.50
70.40
64.95
70
75.40
68.30
103.00
101.90
High
Date
08/07/2002
26/12/2003
29/12/2004
03/01/2005
02/02/2005
07/03/2005
04/04/2005
20/05/2005
02/06/2005
Volume
on date
of high
(no of
shares)
10,962
17,915
16,392
11,489
56,785
38,787
7,120
56,380
39,931
Low
(Rs)
5.85
8.60
15.25
49.05
60.10
56.40
50.50
65.50
86.65
Low
Date
06/02/2002
24/03/2003
23/03/2004
25/01/2005
17/02/2005
29/03/2005
26/04/2005
2/05/2005
1406/2005
Volume
on date
of Low
(no of
shares)
150
2,350
1,413
1,390
6,045
4,785
8,663
7,146
45,849
Average
Price
(Rs.)
12.83
26.05
42.83
57.00
65.05
65.90
59.40
84.25
94.28
Total
Volume
2,23,497
10,45,782
28,42,818
1,52,053
3,03,787
3,49,620
1,08,112
5,72,054
3,36,142
Week end price of equity Shares of LPS on the Mumbai Stock Exchange
Week ended
24/06/2005
01/07/2005
08/07/2005
15/07/2005
Price (Rs)
84.40
83.10
81.30
82.00
The market price of LPS as on 01/02/2005 immediately after the date on which the resolution of the Board of
Directors approving the issue was passed i.e. 31/01/2005 is Rs.67.75. The market price of LPS as on 27/06/2005
immediately after the date of EGM(25/06//2005) was Rs.84.05.
REDRESSAL OF INVESTOR GRIEVANCES
The investor grievances against the Company will be handled by the Registrars and Transfer Agents in consultation
with the secretarial department of the Company. To handle the grievances received, the Company has appointed
Shri H.P.S. Chugh Company Secretary as a Compliance Officer. He will supervise redressal of complaints received
from the investors at the office of the Company as well as the Registrars to the Issue and ensure timely settlement.
The company normally resolves various kinds of investor grievances within a period of 15 days.
73
All grievances related to the issue may be addressed to the Registrar to the issue quoting the application No.
(including prefix), Number of preference shares applied for, amount paid on application, date, Bank and branch/
Collection centre where application was submitted .
CHANGE IN AUDITORS
There has been no change in Auditors of the Company since its inception.
CAPITALISATION OF RESERVES OR PROFITS
The company has issued 350000 equity shares of Rs.10/- each by way of bonus shares by capitalization of general
reserves in the following manner.
Date of Bonus Issue
08/11/1982
Ratio
1:1
No of shares issued
3,50,000 Equity shares of Rs 10/- each
REVALUATION OF ASSETS
The Company has not revalued any of its fixed assets since inception.
74
XVI. OFFERING INFORMATION
TERMS OF THE ISSUE
The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this
draft Letter of Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from
the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI,
guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of
India and/or other statutory authorities and bodies from time to time, Listing Agreements entered into by the
Company with Stock Exchanges, terms and conditions as stipulated in the allotment advise or letter of allotment or
Security Certificate and rules as may be applicable and introduced from time to time, the FEMA and the Letters of
Allotment/Equity Shares to be issued. Over and above such terms and conditions, the Equity Shares shall also be
subject to applicable laws, guidelines, notifications and regulations relating to issue of capital and listing of
securities issued from time to time by SEBI, the Government of India, RBI and or other authorities.
RANKING OF EQUITY SHARES
The new equity shares proposed to be issued shall rank in all respects pari-passu with existing fully paid up equity
shares save and except that the new equity shares shall not rank for dividend, if any, declared or paid by the
Company in any period prior to the financial year in which they are allotted and in subsequent financial year, they
shall rank for dividend, if any, declared or paid in proportion to the amount paid up thereon.
PAYMENT OF DIVIDEND
The dividend is paid to all the eligible shareholders in terms of the provisions of the Companies Act, 1956 with
regard to payment of dividend. The unclaimed dividend if any are transferred to Investor Protection Fund as
prescribed under the Companies Act.
FACE VALUE
The Face Value of equity shares of the company is Rs.10/-.
ISSUE PRICE
The equity shares of the Rs. 10/- each are being issued at a price of Rs. 50/- per share in the present rights issue.
RIGHTS OF EQUITY SHAREHOLDERS
The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when
issued. Further, the rights of the above and other holders of shares are subject to the provisions of the Companies
Act, 1956 the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer and
other laws as applicable from time to time.
MARKET LOT
The market lot for the Equity Shares held in the demat mode is one share. In case of physical certificate, the
Company would issue one certificate for the equity shares allotted to one person (“Consolidated Certificate”). In
respect of consolidated certificate, the Company will, only upon request from the equity shareholder, split & return
such consolidated certificate into smaller denomination within 7 days time in conformity with the clause 3 of the
Listing Agreement. No fee would be charged by the Company for splitting the consolidated certificate.
NOMINATION
In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can
nominate any person by filling the relevant details in the CAF in the space provided for this purpose.
The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being
individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as
the case may be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the
Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same rights to
75
which he would be entitled if he/she were the registered holder of the Equity Shares. Where the nominee is a minor,
the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become
entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A
nomination shall stand rescinded upon the sale/disposal of the Equity Share by the person nominating. A buyer will
be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold the Equity
Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders.
Fresh nominations can be made only in the prescribed form available on request at the Registered Office of the
Company located at 46/1 Mile Stone, Hissar Road, Rohtak - 124001, Haryana, India or such other place at such
addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant
portion in the CAF. Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has
(have) already registered the nomination with the Company, no further nomination need to be made for Equity
Shares to be allotted in this Issue under the same folio.
In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate
nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective
Depository Participant of the applicant would prevail. If the applicant requires to change the nomination,
they are requested to inform their respective Depository Participant.
MINIMUM SUBSCRIPTION
iii) If the Company does not receive the minimum subscription of 90% of the issued amount on the date of closure
of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having
been returned unpaid or withdrawal of applications, the Company shall forthwith refund the entire subscription
amount received within 42 days from the date of closure of the issue.
iv)
If there is a delay beyond 8 days after the Company becomes liable to pay the subscription amount (i.e. 42
days after closure of the issue), the Company shall pay interest for the delayed period at rates prescribed under
sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
DISPOSAL OF ODD LOTS
The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The
Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity
Shareholder.
ENTITLEMENT RATIO
The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio
of Two Equity Shares for every Three equity shares held as on the Record Date.
BASIS OF THE OFFER
The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names
appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in
the electronic form and on the Register of Members of the Company in respect of Equity Shares held in the physical
form at the close of business hours on the Record Date. The Company has in consultation with the Designated Stock
Exchange fixed the Record Date for determining the shareholders who are entitled to receive this offer for Equity
shares on a rights basis. The Equity Shares are being offered for subscription in the ratio of Two Equity Share for
every Three Equity Shares held by the Equity Shareholders. The shareholders whose names appear as beneficial
owners as per the list furnished by the depositories in respect of the Equity Shares held in electronic form and on the
register of members of the Company in respect of the shares held in physical form on [•] at the close of business
hours shall be entitled to the equity shares on the Rights basis in the ratio of Two equity share for every Three equity
shares held by them.
OPTION TO SUBSCRIBE
Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in
dematerialized (electronic) form at the option of the applicant. Our Company has signed a tripartite agreement with
National Securities Depository Limited (NSDL) and MCS on 26/12/2000 and with Central Depository Services
76
(India) Limited (CDSL) and MCS on 26/12/2000, which enables the Investors to hold and trade in securities in a
dematerialised form, instead of holding the securities in the form of physical certificates.
RIGHTS ENTITLEMENT
As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the
register of members as an equity shareholder of the Company on the Record Date, you are entitled to this Rights
Offer. The number of Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF and
as shown in part A of the enclosed CAF.
FRACTIONAL ENTITLEMENT
On applying the rights may lead to fractional entitlement to some of the shareholders. Fractional entitlement(s), if
any, shall be ignored. However, shareholders in whose cases fractions are ignored will be given preference of one
additional Equity Share subject to availability if they apply for additional Equity shares.
JOINT-HOLDERS
Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed (so far as the
company is concerned) to hold the same as joint-tenants with benefits of survivorship subject to provisions
contained in the Articles.
OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/ APPLICANTS
Presently 15,820 equity shares aggregating to 0.26% of the present issued capital are held by NRIs/FIIs/OCBs on
repatriation basis. Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall
be, inter alia, subject to the conditions imposed from time to time by the RBI under the FEMA in the matter of
refund of application moneys, allotment of Equity Shares, issue of Letter of Allotment / share certificates, payment
of interest, dividends, etc. General permission has been granted to any person resident outside India to apply shares
offered on rights basis by an Indian Company in terms of FEMA and the rules and regulations there under. Vide
notification dated June 18, 2003, bearing number FEMA 94/2003, RBI has granted general permission to Indian
companies to issue rights/bonus shares to existing non-resident shareholders. The existing non-resident shareholders
may apply for issue of additional shares and the Company may allot the same subject to the condition that the
overall issue of shares to non-residents in the total paid up capital does not exceed the sectoral cap. In other words,
non-residents may subscribe for additional shares over and above shares offered on rights basis by the company and
renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribe for
additional shares over and above the shares offered on rights basis by the Company and also renounce the shares
offered either in full or part thereof in favour of a person named by them. The Equity Shares issued under the Rights
Issue and purchased by NR shall be subject to the same conditions including restrictions in regard to the
repatriability as are applicable to the previously held Equity Shares against which Equity Shares under the Rights
Issue are issued.
However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued by the RBI), such
shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the Rights
Issue. Accordingly, shareholders/ applicants who are OCBs and wishing to participate in the Rights Issue would be
required to submit approvals in relation thereto from the FIPB and the RBI. The Board of Directors may at its
absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of
Equity Shares, payment of dividend etc. to the Equity Shareholders who are NR.
NOTICES
All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English
national daily with wide circulation, one Hindi national daily with wide circulation and/or, will be sent by ordinary
post to the registered holders of the Equity Share(s) from time to time.
ISSUE OF DUPLICATE EQUITY SHARE CERTIFICATE
If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares
are fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the
same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible.
77
If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to
the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the
Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued.
PRINTING OF BANK PARTICULARS ON REFUND ORDERS
As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the
particulars of the applicant’s bank account are mandatorily required to be given for printing on refund orders. Bank
account particulars will be printed on the refund orders / refund warrants, which can then be deposited only in the
account specified. The Company will in no way be responsible if any loss occurs through these instruments falling
into improper hands either through forgery or fraud.
OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDERS
The Equity Shareholders will be having the following five options:
•
•
•
•
•
Apply for his entitlement in part
Apply for his entitlement in part and renounce the other part
Renounce his entire entitlement
Apply for his entitlement in full
Apply for his entitlement in full and apply for additional Equity Shares
HOW TO APPLY
For Resident Indian Shareholders on Non-Repatriation basis
Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be
completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by
the Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal
applications as per instructions given in the draft Letter of Offer. Payment should be made in cash (not more than
Rs.20,000) or by cheque/bank draft/ drawn on any bank (including a co-operative bank) which is situated at and is a
member or a sub-member of the bankers clearing house located at the centre where the CAF is submitted and which
is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal
orders will not be accepted and CAFs accompanied by such cheques/money orders/postal orders are liable to be
rejected.
For Non-Resident Shareholders on Non-Repatriation basis
Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter
alia, be subject to the conditions as may be imposed from time to time by the Reserve Bank of India, in the matter of
Refund of application moneys, allotment of Equity Shares, issue of Letters of Allotment/ certificates/ payment of
dividends etc. For NRIs holding shares on non-repatriation basis, payment may also be made by way of cheque
drawn on Non-Resident Ordinary (NRO) Account maintained in Mumbai or Rupee Draft purchased out of NRO
Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of shares will be on
non-repatriation basis. If the payment is made by a draft purchased from an NRO account, an Account Debit
Certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account,
should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is
liable to be rejected. All cheques/bank drafts accompanying the CAFs should be crossed. A/c Payee Only. and made
payable to “LPS - Rights Issue - NR” The CAF duly completed together with the amount payable on application
must be deposited with the collecting bank/collection centres indicated on the reverse of the CAF, on or before the
close of banking hours on or before the Issue closing date. A separate cheque or bank draft must accompany each
CAF. Reference number of CAF should be mentioned on the reverse of the Cheque/Draft. New Demat account shall
be opened for holders who have had a change of status from Resident Indian to NRI.
The CAF consists of four parts:
Part A : Form for accepting the Equity Shares offered and for applying for additional Equity Shares
Part B : Form for renunciation
Part C : Form for application for renouncees
Part D : Form for request for split application forms
78
Acceptance of Offer
You may accept the Offer and apply for the Equity Shares offered, either in full or in part by filling Block III of Part
A of the enclosed CAF and submit the same along with the application money payable to the bankers to the Issue or
any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the
Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at
centers not covered by the branches of collecting banks can send their CAF together with the demand draft, net of
demand draft and postal charges, payable at Mumbai to the Registrar to the Issue by registered post. Such
applications sent to anyone other than the Registrar to the Issue are liable to be rejected.
You may apply for the equity shares offered wholly or in part by filling in the enclosed CAF and submitting the
same along with the application money to the Bankers to the Issue or its designated branches on or before the
closure of the subscription list. The CAF should be complete in all respects, as explained in the INSTRUCTIONS
indicated in the CAF. The CAF should not be detached under any circumstances, otherwise the application(s) will
be rejected forthwith.
Application for additional equity shares
You are also eligible to apply for additional equity shares over and above the number of equity shares offered to you
provided you have applied for all the shares offered to you without renouncing them in full or in part. However, the
additional equity shares cannot be renounced in full or in part, in favour of any other person(s).
If you desire to apply for additional equity shares, you may fill in the number of additional equity shares in Part A of
the CAF. The allotment of additional equity shares will be at the sole discretion of the Board on an equitable basis
with reference to the number of Equity Shares held by you on the Record Date in consultation with The Designated
Stock Exchange. In the case of requests for additional equity shares by Non Residents, the allotment will be subject
to the approval of Reserve Bank of India. The Board may reject any application for additional equity shares without
assigning any reasons thereof.
Renunciation
You may renounce all or any of the equity shares, you are entitled to in favour of any individual, limited companies,
or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders,
trust or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust
laws and is authorised under its constitution to hold shares in a company), minors (unless acting through natural or
legal guardians), Partnership Firms, or their nominees, or any of them will not be accepted.
Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining
requisite approval(s) of the Reserve Bank of India (RBI) and the said permission must be attached to the CAF.
Procedure for renunciation
(i) To Renounce in WHOLE
If you wish to renounce this offer in whole, please complete PART 'B' of the CAF enclosed with the Letter of Offer
for the number of equity shares renounced and deliver the CAF duly signed to the person(s) in whose favour the
equity shares are so renounced. All joint holders must sign as per specimen signatures recorded with the Company
at the place provided for the purpose and in the same order.
The person(s), in whose favour the offer has been renounced (renouncees) should complete and sign PART C of the
CAF. In case of joint renouncees, all joint renouncees must sign.
(ii) To Renounce in PART
If you wish to either accept this offer in part and renounce the balance of this offer the CAF must first be split into
the requisite number of forms, by applying to the Registrar to the Issue. Please indicate your requirement of split
forms in the space provided for this purpose in PART D of the CAF and return the entire CAF to the Registrar to the
Issue so as to reach them latest by the close of business hours on or before the last date for receiving requests for
split forms i.e. _____________.
If you wish to apply for equity shares jointly with any person(s) who is/are not already joint holder(s) with you, then
it would amount to renunciation and the procedure of renunciation as mentioned above shall have to be followed.
79
Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure as stated
above shall have to be followed.
Further, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute
and unqualified discretion to reject any such request for allotment of equity shares from renouncee(s) without
assigning any reason thereof save where the equity shares have been renounced in favour of a person who is already
a member of the Company.
[
Please note that:
a)
Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been
made. If used, this will render the application invalid.
b) Only the person to whom this Letter of Offer has been addressed and NOT the renouncees shall be entitled
to split forms. Forms once split cannot be resplit.
Request for spilt forms:
•
Request for Split Forms should be addressed to the Registrar to the Issue so as to reach them on or before the
last date for receiving of request for split forms by filling in PART D of the CAF.
Requests for Split Forms will be entertained only once.
•
You may exercise any one of the following options with regard to the equity shares offered to you, using the
enclosed CAF :
Sr.
No
1.
2.
3.
4.
Options available
Action Required
Accept whole or part of the equity shares
offered to you without renouncing the
balance
Fill in and sign Part A indicating in Block III of Part A
the number of equity shares accepted. If you accept all
the equity share offered in Block II of Part A you may
apply for additional equity shares. Indicate in Block IV
the additional equity shares applied for.
Fill in and sign Part B indicating the number of equity
shares renounced in Block VII and handover the ENTIRE
FORM to the renouncee. The renouncee/ joint
renouncee(s) must fill in and sign Part C of CAF.
Fill in and sign Part D for the Split Form and send the
ENTIRE CAF to the Registrar to the Issue.
Renounce all the equity shares offered to you
to one person (joint renouncees are deemed as
one person) without your applying for any of
the equity shares offered to you.
Accept a part of your entitle
ment and renounce the balance or part of it to
one or more Renouncee(s).
OR
Renounce your entitlement or part of it to one
or more persons (joint renouncees are deemed
as one person).
On receipt of Split Forms :
a For the equity shares you are accepting, fill in and
sign Part A.
For the equity shares you are renouncing fill in and
b sign Part B indicating the number of equity shares
renounced in Block VII. Each of the renouncees
should fill in and sign Part C.
Note: If application is made jointly with any other person(s) who is/are not already joint holders or change in the
sequence of names of joint holders, it will amount to renunciation and the procedure mentioned in (2) above will
have to be followed.
For applicants residing at places other than designated Bank Collecting branches.
Applicants residing at places other than the cities where the Bank collection centres have been opened should send
their completed CAF by registered post/speed post to the Registrars to the Issue, MCS. alongwith demand drafts, net
of demand draft and postal charges, payable at New Delhi in favour of “LPS - Rights Issue” crossed “A/c Payee
only” so that the same are received on or before closure of the Issue i.e. ___________.
The Company will not be liable for any postal delays and applications received through mail after the closure of the
Issue are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other
manner except as mentioned below.
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All application forms duly completed together with cash/cheque/demand draft for the application money
must be submitted before the close of the subscription list to the Bankers to the Issue named herein or to any
of its branches mentioned on the reverse of the CAF. The CAF alongwith application money must not be sent
to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above.
The applications are required to strictly adhere to these instructions. Failure to do so could result in the
application being liable to be rejected by the Company, the Lead Manager and the Registrar not having any
liabilities to such applicants.
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a
duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID
number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate
CAF should reach the Registrar to the Issue within 15 days from the Issue Opening Date. Please note that those who
are making the application in the duplicate form should not utilize the original CAF for any purpose including
renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements, he / she
shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the
applications.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF
may make an application to subscribe to the Rights Issue on plain paper, along with a Demand Draft payable at
Mumbai which should be drawn in favour of the Company and send the same by registered post directly to the
Registrar to the Issue.
The application on plain paper, duly signed by the applicants including joint holders, in the same order as per
specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing
Date (i.e. _______) and should contain the following particulars:
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
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Name of Issuer, being Lakshmi Precision Screws Limited.
Name and address of the Equity Shareholder including joint holders
Registered Folio Number/ DP and Client ID no.
Number of shares held as on Record Date i.e. (•).
Certificate numbers and distinctive numbers, if held in physical form
Number of Rights Equity Shares entitled
Number of Rights Equity Shares applied for out of entitlement
Number of additional Equity Shares applied for, if any
Total number of Equity Shares applied for
Total amount paid at the rate of Rs. 50/-per Equity Share
Particulars of cheque/draft
Savings/Current Account Number and name and address of the Bank where the Equity Shareholder will be
depositing the refund order
Applications for a total value of Rs, 50,000 or more, i.e. where the total number of securities applied for
multiplied by the Issue price, is Rs. 50,000 or more the applicant or in the case of application in joint names,
each of the applicants, should mention his/her PAN number allotted under the Income-Tax Act, 1961 and also
submit a photocopy of the PAN card(s) or a communication from the Income Tax authority indicating allotment
of PAN (“PAN Communication”) along with the application for the purpose of verification of the number.
Applicants who do not have PAN are required to provide a declaration in Form 60/ Form 61 prescribed under
the I.T. Act along with the application. Applications without this photocopy/ PAN Communication/declaration
will be considered incomplete and are liable to be rejected.
In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank and
branch.
Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the
Company
Payment in such cases, should be through a demand draft, net of demand draft and postal charges, payable at
Mumbai be drawn in favour of “LPS - Rights Issue” crossed “A/c Payee only”. Please note that those who are
making the application on plain paper shall not be entitled to renounce their rights and should not utilize the
original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates
any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture of
81
amounts remitted along with the applications. The Company shall refund such application amount to the
applicant without any interest thereon.
Quoting of PAN/GIR no. in the application forms
Where an application is for allotment of securities in response to a rights issue, for a total value of Rs. 50,000/- or
more i.e. the total number of securities applied for multiplied by the issue price, is Rs. 50,000/- or more the applicant
or in the case of applications in joint names, each of the applicants, should mention his/her permanent account
number (PAN) allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR number
and the Income-Tax Circle/Ward/District. In case neither the permanent account number nor the GIR number has
been allotted, the fact of non-allotment should be mentioned in the application forms. Application forms without
this information will be considered incomplete and are liable to be rejected.
Note on cash payment (section 269 ss)
Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against applications
for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account
Payee’ bank drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in contravention of
this provision, the application is liable to be rejected.
Last date for submission of CAF
The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is
________. If the relevant CAF together with amount payable there under is not received by the Bankers/Registrar to
the Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Letter of Offer
shall be deemed to have been declined and the Board shall be at liberty to dispose of the equity shares hereby
offered as provided under "Basis of Allotment".
Incomplete application
CAFs which are not complete or are not accompanied with the application money amount payable are liable to be
rejected.
MODE OF PAYMENT
For Resident Applicants
Payment(s) must be made by cheque/demand draft and drawn on any bank (including a co-operative bank) which is
situated at and is a member or a sub-member of the Bankers' Clearing House located at the centre where the CAF is
submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money
orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such
instruments will be rejected.
Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send
their applications but not having collection centres should send their application by Registered Post, ONLY to the
Registrar to the Issue, MCS, enclosing a demand draft drawn on a clearing Bank and payable at Mumbai ONLY net
of bank charges and postal charges, before the closure of the issue.
Such cheque/drafts should be payable to "(Name of The Bank)-A/c – LPS - RIGHTS ISSUE". All cheques/
drafts must be crossed 'A/c Payee only’. No receipt will be issued for the application money received. However,
the Collection Centre receiving the application will acknowledge receipt of the application by stamping and
returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal
delay/ loss in transit on this account.
For Non-Resident Applicants/ FIIs
Payments by Non-Resident Shareholders will be accepted by Indian Rupee Drafts purchased abroad or
cheques/drafts drawn on Non-Resident External Account (NRE Account) or Foreign Currency Non-Resident
Account (FCNR Account) maintained anywhere in India but payable at Mumbai or by Telegraphic Transfer in
favour of the collecting Bankers by the concerned shareholders.
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However, in case shares are held on a non-repatriable basis, payment may also be made by cheque /draft drawn on
Non-Resident Ordinary Account (NRO A/c.) maintained anywhere in India but payable at Mumbai. Such
cheques/drafts should be drawn in favour of " LPS - RIGHTS ISSUE – NRI/FII” payable at Mumbai, India and
shall be crossed A/c. Payee Only, Banker’s Certificate regarding source of payment must be submitted with the
CAFs wherever necessary.
The CAF alongwith cheques/drafts should be deposited with any of the branches of the Bankers to the Issue
nominated for this purpose. The certificate of inward remittance, if any, must be sent only to the Registrar to the
Issue, MCS, quoting the details of folio no. and the name and address of the branch of the Bankers to the Issue
where CAF has been deposited before the closure of the issue.
Application will not be accepted by the Lead Manager or by the Company
RIGHTS ENTITLEMENT
As your name appears in the Register of Members of the Company on the Record Date, you are entitled to this
Rights Offer on the basis mentioned above. The number of equity shares to which you are entitled as a Shareholder
of the Company is shown in Part A of the CAF.
TERMS OF PAYMENT
The entire amount of Rs. 50/- per share is payable on application by all shareholders/applicants.
FORFEITURE
The allotment shall be made only on receipt of full application money as mentioned in “Terms of Payment”. As
such there will be no partly paid-up shares emerging from this issue & hence no requirement of any forfeiture.
APPLICATION UNDER POWER OF ATTORNEY
In case of applications under Power of Attorney or by Limited Companies or Bodies Corporates or Societies
registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case
may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may
be, must be lodged separately by registered post at the office of the Registrar to the Issue simultaneously with the
submission of the CAF, indicating the serial number of the CAF and the name of the bank and the branch office
where the application is submitted within 10 days of closure of the offer, failing which the application is liable to be
rejected. In case the Power of Attorney is already registered with the Company, then the same need not be furnished
again. However, the serial number of the Registration under which the Power of Attorney has been registered with
the Company must be mentioned below the signature of the Applicant.
BANK DETAILS OF THE APPLICANT
The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current Account
Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print the
said details in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank Account
details has now been made mandatory and applications not containing such details are liable to be rejected.
APPLICATION NUMBER ON THE CHEQUE/DEMAND DRAFT
To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first
applicant on the reverse of the cheque / demand draft.
GENERAL
(a) All applications should be made on the printed CAF provided by the Company and should be complete in all
respects. Applications which are not complete in all respects or are made otherwise than as herein provided or
not accompanied by proper application money in respect thereof will be refunded without interest.
(b) Please read the instructions in the enclosed CAF carefully.
(c) ALL COMMUNICATIONS IN CONNECTION WITH YOUR APPLICATION FOR THE EQUITY SHARES
INCLUDING ANY CHANGE IN YOUR REGISTERED ADDRESS SHOULD BE ADDRESSED TO THE
REGISTRAR TO THE ISSUE.
83
(d) Application Forms must be filled in ENGLISH in BLOCK LETTERS.
(e) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to the
constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be
attested by a Notary Public or a Special Executive Magistrate under his/her official seal.
(f) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order
and as per the specimen signatures recorded with the Company.
(g) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on
the application form and all communications will be addressed to him/her. To prevent any fraudulent
encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account
number and the name of the bank and its branch with whom such account is held in the space provided in the
CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without
this information are liable to be rejected.
(h) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A,B,C and D of
the Application Form(s) is /are detached or separated, such application will forthwith be rejected.
(i) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned
elsewhere in this Letter of Offer and not to the Company, the Registrar or the Lead Manager.
(j) Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any
matter or thing herein contained and claimed by either party against the other shall be instituted or adjudicated
upon or decided solely by the appropriate Court where Registered Office of the Company is situated.
(k) The last date for receipt of CAF alongwith the amount payable is _________. However, the Board will have the
right to extend the same for such period as it may determine from time to time, but not exceeding 60 days from
the date of opening of the subscription list. If the CAF together with the amount payable thereunder is not
received by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such
date as may be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been
declined and the Board shall be at liberty to dispose the Rights hereby offered.
For further instructions please read CAF carefully.
DEMATERIALISATION
As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized
form i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through
electronic mode. The equity shares of LPS are traded in the demat segment The Company has entered into a
tripartite agreement dated 26/12/2000 with the National Securities Depository Ltd. (NSDL) and MCS (Registrar
and Transfer Agent) for dematerialisation of the equity shares of the Company. The Company has also entered into a
tripartite agreement dated 26/12/2000 with the Central Depository Services Limited (CDSL) and MCS for
dematerialisation of the equity shares of the Company. The ISIN No. granted to the equity shares of the Company is
ISIN INE651C01018
An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat
mode must have atleast one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL
registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the
Beneficiary Account Number and Depository Participant’s ID Number) appearing under the head “Request for
shares in electronic form” in the CAF.
Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the
total number of equity shares applied for. In case of partial allotment, shares will first be allotted in
electronic form and the balance, if any, will be allotted in physical form.
Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint
holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository.
No separate application for demat and physical shares is to be made. If such applications are made the application
for physical shares will be treated as multiple applications and rejected accordingly. It may be noted that electronic
shares can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL.
Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue
The applicant is responsible for the correctness of the applicants demographic details given in the share application
form vis-à-vis those with his/her DP. Equity shares allotted in demat mode will be credited directly to the respective
Beneficiary Account.
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DISPOSAL OF APPLICATION AND APPLICATION MONEY
No receipt will be issued for application money received. However, the Bankers to the Issue receiving the CAF(s)
will acknowledge its receipt by stamping and returning the acknowledgement slip at the bottom of each CAF. In the
event of shares not being allotted in full, the excess amount paid on application will be refunded to the applicant
within six weeks of the date of closure of the issue. The Board reserves its full, unqualified and absolute right to
accept or reject any application in whole or in part and in either case without assigning any reason. In case an
application is rejected in full, the whole of the application money received will be refunded and where an
application is accepted in part the excess money will be refunded after adjusting the money payable for the shares
allotted. All refunds will be made within six weeks of the date of closing of the Subscription List.
BASIS OF ALLOTMENT
In the event of the issue being oversubscribed, the basis of allotment will be made only within the overall size of the
Rights Issue, as stated in the Letter of Offer and the Board will proceed to allot the equity shares in consultation
with the designated stock exchange in the following order of priority:
1.
Full allotment to the Shareholders who have applied for their Rights entitlement, either in full or in part and also
the renouncee(s) who have applied for equity shares renounced in their favour either in full or in part (subject to
the other provisions contained under the paragraph titled “Renunciation”).
2.
Allotment to the shareholders who have applied for additional equity shares provided that they have applied for
all the equity shares offered to them, provided there is a surplus after making full allotment under (1) above.
The allotment of such additional equity shares will be made as far as possible on the basis of the equity shares
held as on the Record Date.
3.
Allotment to the renouncees who have applied for all the equity shares renounced in their favour and have
applied for additional equity shares, as the Board may in its absolute discretion deem fit, provided there is a
surplus after making full allotment (1) and (2) above.
4.
Allotment to any other person as the Board may in their absolute discretion deem fit, provided there is a surplus
after making full allotment under (1), (2), (3) above.
The unsubscribed portion of the equity shares, if any, offered to the shareholders after considering the application
for Rights/Renunciation and additional equity shares, as above, shall be disposed off at the sole discretion of the
Board of Directors of the Company.
In case of oversubscription the allotment would be done in a proportionate manner in consultation with the
designated Stock Exchange.
ALLOTMENTS/REFUNDS
A) For applications made by Cheques/Drafts
The Company will issue and dispatch letter of allotment/securities certificate and/or letter of regret alongwith the
refund orders or credit the allotted securities to the respective beneficiaries account, if any, within a period of six
weeks from the date of closure of issue. If such money is not repaid with 8 days from the day the company becomes
liable to pay it, the company shall pay that money with interest as stipulated under Section 73 of the Companies Act,
1956. Refunds, if any, will be made alongwith Allotment Letters and /or Regret Letters by refund order / pay order
drawn on the Bankers to the Company and will be despatched within 6 weeks from the date of closure of Issue, by
Registered Post if the amount of such refund exceeds Rs.1500/-. Such cheque refund order / pay order will be
payable at par during their validity period at all centres where the applications are received. In case of joint
applications, Refund Orders, if any, will be made out in the First applicant's name and all communication will be
addressed to the person whose name appears on the CAF.
B) For application by Non-Resident Indians / Foreign Institutional Investors (FIIs)
In case of Non-Resident Indians/FIIs who remit their application money from funds held in NRE/FCNR/NRO
Accounts, refund/payment of interest and other disbursements, if any, shall be credited to such account, details of
which should be furnished in the column provided for that purpose in the CAF. In case of non-residents who remit
85
their application money through Indian Rupee drafts purchased from abroad, refunds/payments of interest and other
disbursements, if any, will be made in US dollars at the exchange rate prevailing at such time, subject to the
permission of the RBI. The Company will not be responsible for any loss on account of exchange fluctuations for
converting the Indian Rupees amount into US Dollars.
INTEREST IN CASE OF DELAY IN ALLOTMENT / DESPATCH
The Company agrees that it shall pay interest at the rate of 15% per annum if the allotment has not been made
and/or the equity share allotment letters/refund orders have not been despatched and relevant equity shares have not
been credited to the beneficiary account of the investors within 30 days from the date of closure of the issue.
All the pay orders / refund orders and Letter(s) of Allotment / Share Certificates will be despatched to the first
named / sole applicant at his / her own risk. The Refund Orders will be payable at par in India at all the centres
where the applications were originally accepted. The instruments will be marked “Account Payee Only” and in the
name of the sole/first applicant. Bank charges, if any, for encashing such refund orders / pay orders will be payable
by the applicants.
DESPATCH OF REFUND ORDERS
The Company has given an undertaking that the requisite funds will be made available to the Registrar for
complying with the requirement of despatch of refund orders / allotment letters. The Company shall ensure despatch
of refund orders of value over Rs.1,500/- by Registered Post only and adequate funds will be made available to the
Registrar.
UNDERTAKING
The Board of Directors of LPS state that: i)
ii)
iii)
iv)
v)
vi)
All the complaints in respect of the Rights Issue shall be attended to by the Company expeditiously and
satisfactorily.
That the Company shall take necessary steps for the purpose of getting the securities listed on the concerned
stock exchange within the specified time.
That the Company shall apply in advance for the listing of equity shares.
That the funds required for despatch of refund orders/ allotment letters/ certificates by registered post shall be
made available to the Registrar to the Issue by the Company.
That the certificates of the securities/ refund orders to the non-resident Indians shall be despatched within
specified time.
That no further issue of securities shall be made till the securities offered through this Letter of Offer are listed
or till the application money is refunded on account of non-listing, undersubscription etc.
UTILISATION OF ISSUE PROCEEDS
The Board of Directors declares that:
i.
The funds received against this Issue will be transferred to a separate Bank Account other than the Bank
Account referred to sub-section (3) of Section 73 of the Act.
ii. Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the
Balance Sheet of the Company indicating the purpose for which such moneys has been utilised.
iii. Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate
separate head in the Balance Sheet of the Company indicating the form in which such unutilised moneys
have been invested.
The funds received against this Issue will be kept in a separate Bank Account and the Company will not have any
access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the
minimum subscription of 90% of the Issue has been received by the Company.
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XVII. OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS
The Contracts referred to in para (A) below (not being contracts entered into in the ordinary course of the business
carried on by the Company or entered into more than two years before the date of this Letter of Offer) which are or
may be deemed material, have been entered into by the Company.
The contracts together with the documents referred to in paragraph (B) below, copies of all of which have been
attached to the copy of this Letter of Offer which has been delivered to the Stock Exchange, Mumbai (BSE) may be
inspected at the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on any working day from the
date of this Letter of Offer until the closing of the subscription list.
A. MATERIAL DOCUMENTS
1.
2.
3.
4.
5.
Copy of Memorandum of Understanding dated 14/07/2005 between the Company and Keynote Corporate
Services Limited, Manager to the Issue.
Copy of Memorandum of Understanding dated 24/05/2005 between the Company and MCS., Registrar to the
Issue.
Copy of Tri- Partite Agreement dated 26/12/2000 between the Company, MCS and National Securities
Depository Limited.
Copy of Tri-Partite Agreement dated 26/12/2000 between the Company, MCS and Central Depository Services
(India) Limited.
Joint Venture Agreement dated 26/06/1997 between LPS and Bossard International AG, Switzerland.
B. DOCUMENTS FOR INSPECTION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Copy of Memorandum and Articles of Association of the Company.
Copy of Letter of Offer dated 31/05/1993 for issue equity shares on rights issue.
Copies of Annual reports of LPS for the year 2000-01, 2001-02, 2002-03, 2003-04.and the Balance sheet and
Profit and Loss account for the year ended 31.03.2005
Copy of notice for EGM dated 25/06/2005 and extract of minutes of EGM passing resolution under Sec.
81(1A) of Companies Act, 1956.
Copy of resolution dated 31/01//2005 passed by the Board of Directors authorizing the proposed rights issue.
Copy of certificate dated 12/07/05 issued by N G Gupta & Co, Chartered Accountants and Statutory Auditors
of the Company in terms of Part II Schedule II of The Companies Act 1956 including capitalisation statement,
taxation statement and accounting ratios.
Copy of letter dated 12/07/05 received from N G Gupta & Co., Chartered Accountants and Statutory Auditors
of the Company advising the company on the tax benefits available to the company and its shareholders.
Copy of letter dated 12/07/05 received from N G Gupta & Co , Chartered Accountants regarding Sources &
deployment of funds.
Copies of various Undertakings received from the Company.
Copy of term loan sanction letter no. DA3(179)/324 dated 16/01/2001 from IDBI.
Copy of term loan sanction letter no. DL/3742 dated 05/02/2004 & letter no. DL/1711 dated 28/12/2004 from
ICICI Bank.
Copy of term loan sanction letter no. CB/AMT-IV/BK/3150 dated 23/12/2003 from State Bank of India.
Copy of term loan sanction letter no. CA/04/2612 dated 29/11/2004 from ABN Amro Bank.
Copy of letter no. 72/CR/S-1014/05/Vk dt. 31/01/2005 from Canara Bank for renewal & enhancement of
fund based and non-fund based working capital limits.
Copy of MoA and Annual report for the year ended 31/03/2002, 31/03/2003 and 31/03/2004 of following
Companies
¾ Indian Fasteners Limited
¾ Sudhir Automotive Industries (P) Ltd.
¾ Amit Screws Private Ltd.
¾ Hanumat Wires Udyog Private Limited
¾ J.C. Fasteners Limited
¾ LPS Fasteners and Wires Private Limited
¾ LPS-Bossard Pvt. Ltd.
¾ LPS Bossard Information Systems Pvt. Ltd.
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16. List of pending litigations/disputes against the Company and filed by the Company.
17. Copy of in-principle approval received from BSE and DSE vide their letter nos. _____________ dated
__________ ,
18. Copy of SEBI observation letter No. ___________ dated ___________.
DECLARATION
That all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been
complied with and no statement made in Letter of Offer is contrary to the provisions of the Companies Act, 1956
and rules thereunder.
Yours Faithfully
By the order of Board of Directors
Lakshmi Prescision Screws Limited
Sd/Mr. Lalit Kumar Jain (Chairman & Managing Director)
Mr. Dinesh Kumar Jain ( Vice Chairman & Managing Director)
Mr. Vijay Kumar Jain (Whole Time Director)
Mr. Rajesh Jain (Non Executive Director )
Smt. Sushila Devi Jain (Non Executive Director)
Mr. Jamshedji Rustomji Desai (Non Executive Independent Director)
Mr. Babulal S. Aggarwal (Non Executive Independent Director)
Mr. Keshwa Nand Rattan (Non Executive Independent Director)
Dr. Dharmendra Bhandari (Non Executive Independent Director - ICICI- Nominee)
Mr. Dipak Jain (Non Executive Independent Director)
Place:
Date:
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