LETTER OF OFFER BALRAMPUR CHI NI MILLS … and Confidential For Equity Shareholders of the Company...

Private and Confidential For Equity Shareholders of the Company Only

BALRAMPUR CHINI MILLS LIMITED (Incorporated on 14th July, 1975 under the Companies Act, 1956)

Registered Office: “FMC Fortuna”, 2nd Floor, 234/3A, A.J.C.Bose Road, Kolkata- 700 020. The registered office was earlier located at ‘Akashdeep’, 5, Lower Rawdon street, Calcutta – 700 020 and was changed to

its present location with effect from 16.11.1992. Phone: (033) 22474749, Fax: (033) 22403083

E-mail: [email protected] Website: www.chini.com Issue of 2276678 Equity Shares of Rs.10/- each for cash at a premium of Rs.250/- per share aggregating to Rs.5919.36 lacs on Rights Basis to the existing Equity Shareholders of the Company in the ratio of twelve equity shares for every one hundred equity shares held as at closure on 22nd July 2004.

GENERAL RISKS

Investment in equity and equity related securities involves a degree of risk and investors should not invest any funds in this offer 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 offering. For taking an investment decision investors must rely on their own examination of the Issuer and the Offer 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 adequacy of this document.

The attention of the investors is drawn to the statement of Risk Factors appearing on Page nos. iii to xviii of this Letter of Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY

"The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the offer document is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make 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 ARRANGEMENTS

The existing Equity Shares of the Company are listed on The Stock Exchange, Mumbai (BSE) the Designated Stock Exchange, The Calcutta Stock Exchange Association Limited (CSE), The National Stock Exchange of India Ltd (NSE) and The Delhi Stock Exchange Association Limited (DSE). The Company will make applications to these Stock Exchanges for permission to deal in and for an official quotation in respect of the equity shares arising from this issue In-principle approval for listing has been obtained from BSE vide their letter dated 8 th May 2004, NSE vide their letter dated 13th April 2004, CSE vide their letter dated 21st May 2004 and DSE vide their letter dated 24th May 2004.

Issue opens on Last date for receipt of requests for split forms Issue closes on 19th August 2004 4th September 2004 18th September 2004

LEAD MANAGER TO THE ISSUE REGISTRARS TO THE ISSUE

LODHA CAPITAL MARKETS Lodha Capital Markets Limited Herbert House, 13/3 Strand Road Calcutta: 700 001 Telephone: (033) 2243 4831/ 4832 Fax: (033) 22482956 E mail: [email protected]

C. B. Management Services Private Limited P-22, Bondel Road Calcutta 700 019 Tel: (033) 2280 6692 – 94 Fax: (033) 22470263 E-mail: [email protected]

LETTER OF OFFER

LEAD MANAGER TO THE ISSUE

Enam Financial Consultants Private Limited

809 – 812, Dalmal Towers, Nariman Point

Mumbai – 400 021

Telephone: (022) 5638 1800

Fax: (022) 5638 1810

E Mail: [email protected]

TABLE OF CONTENTS

RISK ENVISAGED BY THE MANAGEMENT AND PROPOSALS, IF ANY, TO ADDRESS THE RISKS ......... iii

I. GENERAL INFORMATION ................................................................................................................. 1

II. CAPITAL STRUCTURE OF THE COMPANY....................................................................................... 9

III. TERMS OF THE PRESENT ISSUE ....................................................................................................15

IV. PARTICULARS OF THE ISSUE.....................................................................................................29

V. COMPANY, MANAGEMENT AND PROJECT .....................................................................................31

VI. FINANCIAL PERFORMANCE OF THE COMPANY FOR THE LAST FIVE YEARS ...........................55

VII. STOCK MARKET DATA ................................................................................................................76

VIII. MANAGEMENT DISCUSSIONS AND ANALYSIS OF PAST PERFORMANCE ................................79

IX. JUSTIFICATION OF ISSUE PRICE ................................................................................................82

X. OUTSTANDING LITIGATION, DEFAULTS, ADVERSE EVENTS & MATERIAL DEVELOPMENTS.......84

XI. RISK ENVISAGED BY THE MANAGEMENT AND PROPOSALS, IF ANY, TO ADDRESS THE RISKS ..... 97

XII. EXPERT OPINION, MATERIAL CONTRACTS AND OTHER DOCUMENTS: .................................112

XIII. WORKING RESULTS AND OTHER INFORMATION.....................................................................115

XIV. DECLARATION...........................................................................................................................116

ii

Glossary

Act The Companies Act 1956

AGM Annual General Meeting

BCML / The Issuer / Company

Balrampur Chini Mills Limited

Board Board of Directors of Issuer including any committee constituted for this purpose

CAF Composite Application Form

CEGAT Customs Excise and Gold Control Appellate Tribunal

CDSL Central Depository Services (India) limited

DP Depository Participant

Designated Stock Exchange

The Stock Exchange, Mumbai

EGM Extraordinary General Meeting

Enam Enam Financial Consultants Private Limited

FCNR A/c Foreign Currency Non-Resident A/c

FEMA Foreign Exchange Management Act, 1999

FII / FIIs Foreign Institutional Investor(s)

Issue / Rights Issue 2276678 equity shares of Rs.10/- each for cash at a premium of Rs.250/- per share offered to the existing equity shareholders of the Company through this Letter of Offer in the ratio of 12 rights equity shares for every 100 equity shares held as on 22nd July 2004.

ISMA Indian Sugar Mills Association

KLPD Kilo Litre per day

Lead Manager(s) Lodha Capital Markets Limited and / or Enam Financial Consultants Private Limited, as the context may require.

LCM Lodha Capital Markets Limited

NAV Net Asset Value

NRI Non Resident Indian

NRE A/c Non-resident External A/c

NRO A/c Non-resident Ordinary A/c

NSDL National Securities Depository limited

Offer document Letter of Offer circulated to the equity shareholders of the Company

PAN Permanent Account Number

PAT Profit after Tax

RBI The Reserve Bank of India

SAP State Advisory Price

SMP Statutory Minimum Price

SEBI Securities and Exchange Board of India

TCD Metric Tons crushed per day

U.P Uttar Pradesh

iii

RISK ENVISAGED BY THE MANAGEMENT AND PROPOSALS, IF ANY, TO ADDRESS THE RISKS

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 Sugar industry. This data has been obtained from various industry publications, reports and other sources that the Company and the Lead Manager believe to be reliable. Neither the Company nor the Lead Manager has independently verified such data. Internal Risk Factors

1. The funds raised through this issue are proposed to be used to augment the long-term working capital resources of the Company by substituting part of the short term loans taken to meet the working capital gap with long term funds. However, the requirement of funds has not been appraised by any Bank / Financial Institution. Thus, there will be no monitoring of the funds raised through the issue and the deployment of funds will be left entirely to the Company.

Management Proposal

The Company has, in the past, undertaken various projects, which have been implemented successfully. The funds raised through the Rights Issue would be used for meeting the long-term working capital requirements and the Company undertakes to ensure proper utilisation of proceeds.

2. The Supreme Court vide its order dated 5th May 2004 overruled the earlier judgement of High Court, Allahabad and upheld the earlier judgement of High Court, Lucknow that state government has the power to fix price of sugarcane [State Advisory Cane Price or SAP]. The state government, in view of this judgement, proposes to recover the difference between the state advised price and the price paid by the sugar mills to the cane growers for the sugar seasons 1996-97, 2002-03 and 2003-04.Such liability for the years 1996-97 and 2003-04 in respect of the Company is expected to be around 1971 lacs in aggregate. In case of season 2002-03, an interim stay granted by High Court, Allahabad is still subsisting

Management Proposal

U.P.Sugar Mills Association has moved the High Court, Allahabad against the proposed recovery action of the state government, on the ground that the aforesaid judgement of the Supreme Court does not give the power to the state government to fix SAP with retrospective effect. While the High Court, Allahabad has not granted any interim relief, it has ruled that the sugar mills may approach the court in case the state government initiates any recovery action against the sugar mills.

Also, U.P.Sugar Mills Association has moved a review petition to the Supreme Court in respect of its aforesaid order, and this review petition is pending.

3. The sundry debtors have increased from Rs. 1522.09 lacs in 2002-03 to 2187.36 lacs during 2003-04.

Management Proposal

During the year 2003-04, the Company’s power plant at Haidergarh, chemical plant at Babhnan and bio-compost plants at Babhnan commenced operations. This was also the first full year of commercial operation of the power plant of the Company at Balrampur, which was commissioned on 08.03.2003. The commencement of commercial operations at these new units has been the major reason for increase in debtors during the year. In case of power, receivables are 2-3 months as the power is sold to State Electricity Board. Such increase in debtors is in normal course of business and does not present any risk or weakness of the business of the Company.

4. As on 31.03.2004, the deferred tax liability is Rs. 8438.51 lacs and has increased over the past five years.

iv

Management Proposal

The increase in deferred tax liabilities over the past 5 years should be seen in conjunction with the increase in fixed assets. Over the period ending 31st March 1999 to 31st March 2004, the gross block of fixed assets has increased from Rs.28988.57 lacs to Rs.74427.72 lacs. This has resulted in higher depreciation charge [Rs. 6649.58 lacs in 1999 to Rs.20031.99 lacs as on 31.03.2004]. The increase in deferred tax liabilities is due to the higher tax shield available on such higher depreciation charge. This is as per the provisions of Accounting Standard 22 stipulated by the Institute of Chartered Accountants of India. The deferred tax liability thus represents the impact of the timing difference between the depreciation for accounting and taxation purposes on such higher tax shield available during the current year. As such, this increase in deferred tax liabilities will not have any adverse impact in the year such timing difference is reversed.

5. There has been no transaction in the securities of the Company for around last three years at DSE.

Management Proposal

The equity shares of the company are listed and actively traded at NSE & BSE. These stock exchanges provide screen based trading which is widely accessible from various parts of the Country.

6. The licences under the Prevention of Food Adulteration Act for Balrampur and Tulsipur Sugar units and approval for pressure vessels for Haidergarh Division have expired during the year.

Management Proposal

Application for renewal of the same has already been made, except for the approval for pressure vessels for Haidergarh division, which will be made at the start of crushing season as per the usual practice.

7. Two of the Promoter Group Companies/ Associate Companies namely Online Art Dotcom Limited and E-commodities Limited respectively have incurred losses in the last 2 years of operation

Management Proposal

These are new ventures and are still in their initial phases of business.

8. Contingent Liabilities not provided for as on 31st March 2004 are as follows: Rs. Lacs

a. Differential cane price for the sugar seasons 1978-79 and 1979-80 pending disposal of the Writs filed by the Company in Hon’ble High Court, Calcutta

32.93

b. No provision has been made for interest on excess amount of levy sugar for sugar season 1982-83 realised as per Court Order against which TDR of Rs.25.54 lacs has been deposited with a Bank

25.54

c. Claims for compensation against land acquired for the Chemical Unit which has been disputed by the Company

Amount not ascertained

d. Claims against the Company not acknowledged as debts 437.97

e. Bank Guarantee furnished in respect of excise duty rebate 20.39

Management Perception

The above contingent liabilities are in normal course of business.

9. The major outstanding litigation concerning the Company [ exclusive of those covered separately as risk factors and contingent liabilities] are as follows :

Litigations against the Company

A. Pertaining to Securities Laws – Nil

v

B. Pertaining to Criminal Laws

1. Three nos. criminal applications are pending against the Company before Lucknow Bench of Hon’ble High Court at Allahabad. These applications have been filed by the State of U.P. in the year 1994 against the orders dated 28.06.1993 of Additional Chief Judicial Magistrate in the cases filed under sections 5,11, and 12 of U.P Sheera Niyantran Adhiniyam, 1964. The Assistant Excise Commissioner had filed these cases in 1990-91 and 1991-92 against the company for deterioration in the quality of molasses. The Additional Chief Judicial Magistrate acquitted the various officials of the Company and the state of U.P has preferred the appeals against the said judgment. The cases are pending for hearing. The amount of liability is not ascertainable.

2. Apart from the above, 2 cases are pending in respect of criminal complaints filed against the employees of the Company for accidents caused by them. These were filed in 1999 and 2002 and the amount of liability involved is not ascertainable.

C. Pertaining to Labour Laws

1. Two Nos. criminal cases have been filed by District Magistrate, Balrampur in the year 1997 against the Company under Section 3/14(1) of Child Labour (Prohibition and Regulation) Act in the Court of Chief Judicial Magistrate, Gonda for allegedly employing 24 minors in the factory. These cases are pending in the said court. Further, the District Magistrate, Balrampur served a notice dated 1.11.97 on the Company asking the Company to provide employment to family members of the abovementioned alleged child labourers. The Company has filed a suit for injunction against the aforesaid order dated 1.11.97 in the court of Civil Judge (Senior Division), Gonda.

Also, a notice dated 04.08.1997 was issued by Deputy Labour Commissioner, Faizabad to deposit Rs.4.80 lacs, against which the Company has filed a suit in the court of civil Judge ( Senior Division) Gonda for permanent injunction against the recovery of the amount claimed in the said notice and declaring the same void and invalid.

2. A writ petition has been filed with the Lucknow Bench of Allahabad High Court against the award dated 19.02.1990 of Presiding Officer, Labour Court, Lucknow by the Swantantra Chini Mills Karamchari Union. The Union demanded that 56 workmen be given their due status as seasonal / permanent as per work performed by them, which was not accepted in the aforesaid adjudication award. The Union has moved the writ petition for quashing the award of the Labour Court and re-instatement of workmen with full back wages and consequential benefits, including continuity of service. The case is pending for hearing. The amount involved is not ascertainable.

3. The Deputy Labour Commissioner [DLC], Faizabad issued a show-cause notice to the Company on 12.08.1991 purporting to take action against the Company for violating the provisions of notification dated 03.02.1972. This notification issued by the State Government, U.P prohibited sugar factories in the state to undertake certain activities by contract labour and was applicable to 71 privately owned sugar factories situated in U.P only. The Company filed its reply to the show cause notice, but the DLC insisted upon taking action against the Company. The Company has filed a writ petition no. 6 of 1992 in the High Court of Allahabad, Lucknow Bench and has obtained stay against the operation of the said notification. The case is pending for hearing and amount involved is not ascertainable.

4. The Labour Court, Gorakhpur passed an order dated 19.04.1993 against the Company by which the termination of one Sheetla Prasad, driver, based on domestic enquiry was set aside. The service of the said employee was terminated on the grounds of disobedience, negligence and indiscipline. The Labour Court also ordered a fresh enquiry in the case. The Company filed a writ petition no. 6448 of 1993 with the High Court of Allahabad, Lucknow Bench against the order of the Labour Court. The matter is pending and the Company has obtained a stay against the said order.

5. The Chini Mill Mazdoor Sangh had moved an application for arbitration [51/98] with Labour Court, Faizabad regarding declaration of 191 casual workers as seasonal workers and payment of benefits as applicable to seasonal workers. The award of the Arbitrator dated 28.09.2001 was against the claimants. The said Union has appealed for cancellation of the said award.

vi

D. Pertaining to Statutory Authorities

Sl.No.

Parties to the Suit

Case No. / Court

Background Present Status Amount (Rs Lacs)

Central Excise

1 Commissioner Central Excise V/s Balrampur Chini Mills Limited.

40/R-Gonda/FZD/ 2001/330 Dt. 22-01-2001

Demand Cum Show cause notice for Rs.15.78 lacs received from Additional Commissioner Central Excise, Allahabad for duty on sale and removal of waste and scrap generated out of modvatabale capital goods without payment of excise duty for the period 01-01-96 to 31-03-2000

A sum of Rs.1.34 lacs has been deposited and reply submitted on 16-03-2001. Hearing has been held on 25-09-2001 and Judgment is awaited.

14.44

2 Commissioner Central Excise V/s

Balrampur Chini Mills Limited.

VI(MP)Dem(12) Adj.-84 /2003 1849 Dt. 30-09-2003

The Commissioner, Central Excise, Allahabad served a demand cum show cause notice dated 29.09.2003 claiming duty of Rs 10.88 lacs being 8% on sale value of Bio-Compost of Rs 135.98 lacs for the period 2000-2001 to 2002-2003 upto August 2002

The Commissioner has imposed duty of Rs. 10.88 lacs along with interest and penalty. The Company filed its defence reply on 30.10.2003. The Commissioner Central Excise vide his order dated 30.01.2004 confirmed the demand and penalty of equivalent amount, against which the Company is proceeding to file Second appeal in CESTAT.

21.74

vii

3 Commissioner Central Excise

V/s


13/Offence/Seizure/23/94/44

Dt. 07-09-94

In the year 1993-94 some quantity of molasses flowed out from Tank No. 4 at Balrampur Unit, in respect of which the Company filed an application for remission of excise duty. Central Excise Department issued a show cause notice dated 05.06.1995 demanding excise duty of Rs. 6.30 lacs in respect of 10495 qtls. of molasses. Assistant Commissioner Central Excise Faizabad and subsequently the Commissioner Appeals and the CEGAT have decided the case against the Company.

The Company has filed Reference Application no. 12 of 2003 under Sec 35H of Central Excise Act 1944 in High Court Allahabad.

6.30



13 of 2002 Reference Application under Sec 35H

Utilisation of CENVAT Credit in the Paper and Chemical Division against despatches of Sugar and Molasses

The Company applied for common Central Excise Registration for Paper, Chemical and Sugar Division, on 7.04.2001, which was rejected by the Commissioner on 24.08.201. The Company filed an appeal in CEGAT on 18.10.2001 against the order of the Commissioner and received a favourable judgement 05.12.2001. The Department has filed a writ in Allahabad High Court against the order of CEGAT, which was dismissed on 23.05.2003. The Department has now filed Reference Application under Sec 35 H in Allahabad High Court.

504

viii

Sl.No.

Parties to the Suit

Case No. / Court




VI (17) 209/2000/X-3/1331 Dt. 23-04-2001

The Central Excise Commissioner issued a demand-cum-show cause notice against the application filed by the Company for remission of duty on 103863 qtls of molasses destroyed due to auto-combustion in May 2000. The Commissioner raised a duty demand of Rs. 51.93 lacs

The Company filed its defence reply dated 18.05.2001. The Commissioner passed an order rejecting the remission application and confirming the duty demand of Rs. 5193165 lacs. The Company has filed Second Appeal in CESTAT on 10.02.2004

51.93

6 Additional Commissioner Central Excise, Allahabad

1/ Demand/ 95/ 482 dated 23.11.1995

The assistant Commissioner, Central Excise, Faizabad raised a demand cum show cause notice regarding Modvat credit on gunny bags, differential duty on duty paid molasses stored in kuccha pits and modvat credit on capital goods, aggregating to Rs. 7.38 lacs

The matter is pending and hearing is awaited. The Company has already reversed an amount of Rs. 0.46 lacs.

6.92

7 Commissioner Central Excise v/s Balrampur Chini Mills Limited.

VI(MP)Dem(12)Adj.136/03/161/Dt.14-01-04

The Commissioner Central Excise Allahabad served a demand cum show cause notice dated 14.01.2004 claiming duty of Rs. 43.16 lacs being 8% on sale value of bagasse for the period 2000-01 to 2002-03.

The company has filed reply on 10.02.2004 and date of personal hearing is awaited.

43.16

E In respect of Overdue Amounts – Nil

F. In respect of money claims / recovery suits pending against the Company

1. Tulsipur Sugar Co. Ltd. v/s Commissioner, Faizabad Division

In the sugar season 1982-83, the Company purchased cane from Sahakari Ganna Vikas Samiti Limited, Tulsipur. The Cane Control Order 1966 provides that payment for any cane purchase should be made within 14 days of purchase and any delay beyond 14 days shall bear interest. The SMP for sugarcane for the season 1982-83 was fixed at Rs. 14.84 per quintal while the Sate Government of U.P advised a price of Rs. 20.50 [the SAP]. The Company paid the SMP and the difference between the SMP and the SAP was paid as an advance towards additional price to be fixed at the end of the sugar season under Rule 5A of the Cane Control Order 1966.The Company also clarified to the said

ix

seller that it would not be liable for payment of interest on the additional price. The said buyer raised a claim on 06.10.1989 with Deputy Cane Commissioner [who were appointed as sole arbitrators under U.P Cane Supply Rules 1954] for Rs. 18.74 lacs as interest on delayed payment of arrears. The Company objected to such arbitration, not being a party to any arbitration agreement. The Deputy Cane Commissioner by its order dated 31.07.1993 upheld the claim of the Company for Rs. 18.74 lacs. The Company has filed a writ petition [769 of 94] with High Court of Allahabad, Lucknow Bench for quashing of the said award. The Company has been granted stay against recovery of the said amount.

2. The Collector, Gonda levied additional stamp duty vide his order dated 19.06.2003 in respect of 3 agricultural plots purchased by the Company in March 1997 at Village Bahlolpur and sent a recovery certificate, disputing the valuation of the said land as agricultural land. The Company has filed the writ petition with High Court of Allahabad, Lucknow Bench for quashing the aforesaid order and recovery certificate. The Company has filed rejoinder affidavit and has secured a stay against the recovery of the said amount.

G. Other cases

S.No.

Parties to the Suit

Case No. / Court

Background Present Status Amount

[ Rs. Lacs]

1. Smt. Kumari

vs.

Balrampur Chini Mills & Others

D.J. [Motor Vehicle Claims] Balrampur

The case was filed by Smt. Kumari regarding the claim for death of her husband in an accident on 02.02.2000 in which the Company’s tanker was involved.

The case is pending for filing of evidence and the next hearing is fixed on 05.08.2004

6.29

2. State vs. R.K. Bhatnagar, driver

Case No.90/2002 C.J.M. Balramapur

Case filed against driver of the Company due to a road accident by the company's vehicle.

The case is fixed for appearance and charge on 18.08.2004.

Not Ascertainable

3. Smt. Malka Devi vs. BCM & Insurance Co.

MAC No.370/2003 Motor Accidents Claims Tribunal Sitapur

Case filed for compensation against death of the claimants husband in road accident at Sidhauli, Sitapur by Company’s vehicle.

The case is Fixed for evidence of claimant on 18.08.2004

8.75

4. Smt. Rama Devi vs. BCM & Insurance Co.

MAC No.283/2003 Motor Accidents Claims Tribunal, Sitapur

Case filed for compensation against death of the claimants husband in road accident at Sidhauli Sitapur by Company’s vehicle.

Fixed for evidence of claimant on 18.08.2004

8.75

x

5. Ashesh Sewa Santhan vs.

State of U.P, BCML & UPPCB

W.P. 3046/2003

High Court

Lucknow

Public interest petition was filed in 2003 with the allegation of pollution by BCML’s Sugar & Chemical Division by way of discharge of effluent in river Rapti and sought prohibition on the discharge of effluent by the Company, and taking penal action against the Company.

The case is pending for hearing.

Not Ascertainable

6. U.P. Pollution Control Board, Lucknow

vs.

Tulsipur Sugar Co. & Others

Civil Appeal No 64 of 1964 pending before High Court, Lucknow Bench, Lucknow

Originally Criminal Complainant case no 78 of 93 was filed by U.P. Pollution Control Board, Lucknow before the Special Judicial Magistrate (Pollution Control) U.P. Lucknow on the ground that the Company had no water consent as required under law and was draining the water of mill area in public river etc. Tulsipur Sugar Co. contested the case, which was decided on 13.10.93 by the court concerned.

Notices have been issued to the concerned parties and is pending for hearing.

Nil

xi

6 contd.

The court upheld the company guilty of offence and imposed fine of Rs. 6000/- which was deposited by the Company within time. The court did not impose any action or liability on the Directors / Officials of the Company. The U.P. Pollution Control Board, Lucknow filed the present appeal before the High Court, Lucknow Bench, challenging the order of Trial Court with the prayer that officers of the company, who were responsible for the offence should also be punished

7. Daya Shankar Tripathi

Vs.

Secretary U.P. Pollution Control Board, Lucknow & Others incl. Tulsipur Sugar Co.

W.P. No. 963 MR. of 2000 pending before High Court Lucknow. Bench.

This writ petition has been filed by one of the resident of Tulsipur with the allegation that due to polluted water of the Chini Mill and dust thrown through the Chimney of the mill people residing nearby are facing hardship and becoming seriously ill.

The Hon’ble High Court, Lucknow Bench, has issued notices and the same is pending and counter affidavit is to be filed by the Company.

Not Ascertainable

8. Union of India vs. BSM [presently BCML, [Babhnan] through GM & Others

1547/87, 1548/87 1549/87, Special Judge Gonda

A complaint was filed u/s 3 and 7 of Essential Commodities Act in respect of sugar sample found below grade than marked by District Cane Officer on 30.06.1976.

High Court Lucknow has stayed the proceedings of Lower Court. The case is pending.

Not Ascertainable

xii

9. Vijai Kumar V/s BCML, Babhnan

420/2003 with Civil Judge, Junior Division, Gonda

An appeal was filed under order 39, Rule 1 of CPC on behalf of a minor Vijai Kumar , contesting that being a minor, is not capable of executing the deed for registration of land purchased by the Company. The suit was filed for restraining the defendants to stop construction on the purchased land.

The court granted an interim stay order against the Company, which was vacated on 03.05.2003. An appeal has been filed against the said order on 08.08.2003 The Company has filed its objections in the case and the case is pending.

Not Ascertainable

10. Ambika Tiwari V/s ID Mittal, BCML

318/2000 Special Judge C/ST

The Company purchased 2.1 acres land at Babhnan for Rs. 2.63 lacs on 12.04.96 and commenced construction on the same. The petitioner disputed the title of the seller in respect of 0.09 acres of the said land and filed the suit for permanent injunction and cancellation of the sale deed of the land.

Pending for hearing

Not Ascertainable

11. Sheetal Singh V/s

DJ Gonda Collector Gonda, BCMB Unit: Babhnan

2559/96 Lucknow Bench of High Court at Allahabad

The petitioner had filed Civil Appeals No.27/95 & 28/95 with District Judge, Gonda for stopping godown construction on a part of the land in the cart yard of Babhnan unit. The petitioner’s claim was rejected against which he has filed a writ for injunction and restraining the said construction work, payment of compensation and employment in the Company for at least one family member.

The case is pending admission.

Not Ascertainable

Apart from the major cases mentioned above, 5 cases are pending where the aggregate amount involved is Rs.4.35 lacs. Also,4 cases are pending where the aggregate amount involved is not ascertainable.

xiii

Litigations filed by the Company

Sl.No.

Parties to the Suit

Case No. / Court

Background Present Status Amount [Rs. Lacs]

Miscellaneous Cases

1. BCML

vs.

Dynamatic Technologies Ltd.

State Consumer Forum,

State of U.P, Lucknow

The Company had placed an order on Dynamatic Technologies Ltd for bagasse-compactor machine. The respondent supplied the machine after undue delay and the machine supplied was defective. The Company filed the compliant for recovery of the costs of the said machine along with charges & cost of foundation.

The case is pending for written statement of the respondent and hearing

Rs 16.39 lacs plus 18% interest on Rs. 1.44 lacs from 17.07.97 and from 17.02.98on balance amount plus Rs. 2.00 lacs as damages

2

BCML vs.

UPPCL

234/ 2003

Consumer Forum

Balrampur O.S. No.123 of 2002 pending before Civil Judge (SD) Balrampur

The Company applied to UPPCL for permanent disconnection of electric lines at Balrampur factory since it was meeting its power requirements from its co-generation plant. UPPCL did not proceed on the Company’s application on the grounds that an amount of Rs. 5.60 lacs is due from the Company for the period September 2000 to August 2001 as additional surcharge. In respect of the said amount, the Company has filed a suit dated 07.04.2003, which is pending, and stay order against the recovery is in operation. The Company filed the present suit with Consumer Forum for permanent disconnection and for recovery of Rs. 4.35 lacs [being bills raised and collected by UPPCL for the period after disconnection application] and damages of Rs. 1.50 lacs.

Permanent disconnection allowed by court order. The present suit is pending for recovery of amount of bills which have been charged after the date of disconnection. The case is pending for hearing on 12.08.2004.

5.85

xiv

Sl.No.

Parties to the Suit

Case No. / Court


3 Tulsipur Sugar Company Ltd. V/s State of U.P

W.P.No. 1942 of 2003, High Court of Allahabad, Lucknow Bench

The Company had obtained the lease of land aggregating to over 8.21 acres from Nagar Panchayat, Tulsipur for facilitating discharge of effluent water of its effluent treatment plant in the nala situated in the said land. The Company paid yearly rentals upto financial year 2002-03.The Secretary, Nagar Vikas , U.P vide his order dated 22.10.2002 cancelled the aforesaid lease and S.D.O Tulsipur was ordered to take possession of the said plot. The Company has filed the writ petition to quash the said orders. The court has granted a stay on 18.06.2003 against dispossessing the Company from the said land.

Pending for counter affidavit of the opposite party and hearing.

Not ascertainable

4

Tulsipur Sugar Company & Others

Vs.

Union of India

W.P. No. 2327 of 83 pending before High Court, Lucknow Bench

In the year 1982-83 the price of levy sugar was fixed at higher rate. Subsequently Central Govt. reduced price of levy sugar and the Department issued letter of refund of difference in the price paid by them. By filling the writ petition the Company challenged the demand and recovery of the amount. The Company deposited the amount claimed under the direction of High Court by way of a fixed deposit, which will be encashed subject to the decision of the High Court.

The case was dismissed in default in appearance of the parties on 04.07.03. The Company has already moved an application for restoration before the High Court which is pending for hearing.

15.00

xv

5 B.C.M.L vs. State of U.P and others

Writ Petitions 348(M.B) of 1997, 269(MB) of 1997 and 68/1998 at High Court at Allahabad, Lucknow Bench

The Company has filed this writ petition against the State of U.P, Secretary Excise and others to restrain them for levy and recovery of administrative charges on molasses produced by the Company in its own distillery. Also, the Company has applied for recovery of administrative charges for seasons 1995-96, to 1997-98 aggregating to Rs. 39.22 lacs.

The Company has been granted stay against recovery of administrative charges, subject to furnishing a bank guarantee of Rs. 5 lacs. The cases are pending for final arguments.

39.22

6 B.C.M.L v/s Balrampur Nagar Palika Parishad, Balrampur

Civil Suit No. 579 / 1997 in Court of Civil Judge (Senior Division), Gonda

Balrampur Nagar Palika Parishad served a notice-dated 25.09.1997 on the Company claiming Rs. 6 lacs as damages to the environment being caused by effluent discharge in suawo nala. The Company filed the suit against the said notice. for declaring the same illegal and permanent injunction restraining the recovery and not to interfere with discharge of treated effluent of the company in suawo nala.

Hearing fixed for 20.10.2004

Nil

7 BCML v/s State of U.P

313/95 with Civil Judge, Gonda

Public Works Department, U.P [ PWD] issued a notice to the Company for dismantling construction on Company’s land, on the plea of encroachment on their land. The Company has filed the suit for permanent injunction against PWD , restraining them from interfering with the Company’s possession of the said land and dismantling any construction on the same.

The Court has granted a stay against the dismantling proposed by PWD. The case is pending.

Not ascertainable

xvi


Writ Petition No. 3472 (MB) of 2003 at High Court at Allahabad, Lucknow Bench

The District Magistrate, Basti obtained consent of the Company by alleged coercion for purchase of cane from Munderwa Cane Union and crushing more cane by the Company. The Company had already purchased 16.33 lac quintals of cane from the areas falling under the said Union. The Company filed the suit for directing the Cane Commissioner and other officials not to force the Company to crush any more cane (as it had already crushed 156.22 lac quintals of cane , being more than allotted quantity) and not to take any coercive action against the Company.

The company has secured a stay against any possible coercive action. The counter affidavits have been filed and the suit is pending hearing.

Not ascertainable

9 BCML v/s Branch Manager, United India Insurance Co. Ltd.

District Consumer Protection Forum , Gonda

175/2001

176/2001

177/2001

178/2001

Various claims have been filed by the Company against the insurance company in respect of interest on delayed payments and pending claims raised under various insurance policies purchased by the Company.

In respect of the claim raised for insurance liability, the case is pending hearing. The cases relating to claim for interest on delayed payments of claims are pending final order.

12.48

Note:

1. Apart from the major cases listed above, 24 cases have been filed by the Company where the aggregate amount involved is Rs. 23.35 lacs. Also 33 cases are pending in respect of which the amount involved is not ascertainable.

2. 17 cases regarding labour matters are pending in respect of which the amount involved is not ascertainable.

3. 10 excise cases, including demands and show cause notices are pending in respect of which the aggregate amount involved is Rs. 19.41 lacs. Also, 3 cases are pending in respect of which the amount involved is not ascertainable.

There are no pending litigations / defaults / disputes / outstanding claims in respect of other promoter group / associate companies.

External Risk Factors

1. Sugar Industry in India is a controlled industry and the Government controls the cane prices [through Statutory Minimum Price mechanism] and also the quantity of sugar to be sold in free markets [by the levy sugar mechanism].

xvii

As such, the performance of the companies in Sugar industry is dependent on Government policy.

2. Availability of Sugar cane, the major raw material, amongst other factors, depends on the monsoon conditions, which affects the production and recovery. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane yield and hence sugar production.

3. Competition from existing established companies and future entrants into the industry.

4. The performance of the Company may be affected by a number of factors beyond its control including political and economic developments both in India and worldwide. Terrorist attacks and other acts of violence or war may negatively affect the domestic as well as the overseas markets. These acts may also result in a loss of business confidence, make travel and other services more difficult and ultimately affect the Company’s business, financial conditions and results of operations.

5. The business of the Company is subject to the regulations of Government of India. A change in the Government’s economic liberalization and deregulation policies could affect business and economic conditions in India and the business of the Company in particular.

Notes:

1. The net worth of the Company as on 31.03.2004 is Rs.27533.57 Lacs after excluding Revaluation Reserve and the issue size is Rs.5919.36 lacs.

2. The book value of the equity shares of the Company as on 31.03.2004 is Rs.145.00 per equity share excluding revaluation reserve.

3. The promoters of the Company / other companies in the promoter group, apart from normal commercial transactions and their shareholding in the Company, have no other interests in the Company either by itself or through their interests in other companies in the promoter group.

The directors of the company, apart from reimbursement of expenses incurred, sitting fees and directors commission and in case of Managing Director, Joint Managing Director and the Whole-time Directors of the Company, remuneration payable in accordance with the provisions of the Companies Act, 1956 and their shareholding in the company if any, in the normal course of business have no other interest in the company except for the commercial transaction between the company and the companies/firms in which directors are interested.

The above transactions are fully disclosed in the register maintained under section 301 of the Act. These transactions are certified by the statutory auditors as being transacted at a price, which are reasonable, having regard to the prevailing market prices of the goods, material or services involved.

4. Details of Inter-related party transactions

The related party disclosures as per Accounting Standard 18 issued by The Institute of Chartered Accountants of India, as on 31.03.2004 are as follows:

(i) Names of related parties and description of relationships

(a) Associates Avantika Ganna Private Limited E-Commodities Limited (b) Key Managerial Personnel [KMP] Shri Vivek Saraogi – Managing Director Smt. Meenakshi Saraogi – Joint Managing Director Shri R.N.Misra – Whole –time Director Shri K.N.Ranasaria – Whole –time Director* (c) Relatives of KMP Shri K.N.Saraogi – Chairman (Non-Executive) and

relative of Managing Director and Joint Managing Director

xviii

(d) Enterprises over which KMP and their relatives have substantial interest

Udaipur Cotton Mills Company Limited

Ranger Apparel Export Private Limited Online Art Dotcom Limited Kamal Nayan & Co.

*Shri K.N.Ranasaria was appointed as a Whole Time Director of the Company w.e.f. 12th May 2003 and accordingly, has been considered as a KMP for the subsequent period.

(ii) Transactions with Related Parties

Rs. Lacs

Sl.No.

Particulars Associates KMP (Key

management personnel)

Enterprises over which KMP and their relatives

have substantial Interest

Relatives of KMP

Total

1. Purchases of goods 2003-04 - - 1.43 - 1.43 2002-03 - - 3.56 - 3.56 2001-02 - - 928.83 - 928.83 2. Finance –ICD taken 2003-04 243.50 - - - 243.50 2002-03 190.00 - - - 190.00 2001-02 109.00 - 42.53 - 151.53 - Interest paid 2003-04 9.13 - - - 9.13

2002-03 12.24 - - - 12.24 2001-02 5.49 - 0.94 - 6.43

3. Rendering/ (Receiving) of services

2003-04 - 121.53 - 1.46 122.99

2002-03 - 109.12 - 0.81 109.93 2001-02 (0.01) 116.79 - - 116.78 4. Outstanding payable, net

of receivable 2003-04 13.95 49.60 - 0.89 64.44

2002-03 121.45 48.00 0.19 0.63 170.27 2001-02 50.38 53.00 6.67 - 110.05 5. The cost per share in the proposed issue for the promoters is Rs.260/- per share. 6. Kindly refer page no. 15 for details of purchase / sale of the Company’ shares by the Promoter Group /

Directors of the Company.

HIGHLIGHTS

1. An established, profit making and dividend paying Company.

2. Company is focussed on sugar business and related activities involving profitable utilization of by-products of sugar manufacture, thereby achieving value addition by full forward integration.

3. The company has power generation facilities at its Balrampur and Haidergarh units which utilise bagasse, a by-product of sugar manufacture to produce power for captive consumption as well as sale, thus providing cost advantage as well as a revenue stream.

4. Integrated complex at Haidergarh unit commissioned during the year 2003-04, comprising a 4000 TCD sugar unit and a 20.25 MW power plant, resulting in aggregate crushing capacity of the Company of 29000 TCD.

NOTE:

THE INVESTORS ARE ADVISED TO REFER TO THE PARA ON “JUSTIFICATION OF ISSUE PRICE” BEFORE MAKING AN INVESTMENT IN THIS ISSUE.

1

BALRAMPUR CHINI MILLS LIMITED

Registered Office: “FMC Fortuna”, 2nd Floor, 234/3A, A.J.C.Bose Road, Kolkata- 700 020 Phone: (033) 22474749, Fax: (033) 22403083 E-mail: [email protected] Website: www.chini.com

Dear Shareholder(s),

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on 30th January 2004 and adopted by Shareholders under provisions of Section 81 of the Act at the Extra-ordinary General Meeting held on 9th March 2004, it has been decided to make an offer of 2276678 equity shares of Rs.10 each at a premium of Rs. 250 per share for cash in the ratio of 12 (twelve) equity shares for every 100 (One hundred) equity shares held aggregating to Rs 5919.36 lacs on a Rights Basis to the existing Equity Shareholders of the Company as at the end of business hours on 22nd July , 2004

I. GENERAL INFORMATION

Name and Address of the Registered Office of the Company.

BALRAMPUR CHINI MILLS LIMITED

Registered Office: “FMC Fortuna”, 2nd Floor, 234/3A, A.J.C.Bose Road, Kolkata- 700 020 Telephone No. (033) 22474749 Fax No. (033) 22403083 E-mail: [email protected] Website: www.chini.com

Eligibility for the Issue

This being an issue of equity shares to the existing shareholders of the Company on a rights basis, the Company is exempt from the eligibility norms in terms of sub-clause (iv) of Clause 2.4 of SEBI (DIP) Guidelines.

The Company, its Directors, any of the associates or the group companies of the Company and companies with which Directors of the Company are associated as Director or Promoters have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. None of the directors of the promoter companies have been prohibited from accessing the capital markets under any order or direction passed by SEBI.

Government Approvals

The Company has received all the necessary permissions and approvals from the Government and various Government agencies for the existing activities except for licence under the Prevention of Food Adulteration Act for Balrampur and Tulsipur Sugar units and approval for pressure vessels for Haidergarh Division which have expired during the year. Application for renewal of the same has already been made, except for the approval for pressure vessels for Haidergarh division, which will be made at the start of crushing season.

No further approvals from any Government authority/Reserve Bank of India (RBI) are required by the Company to undertake the existing activities, save and except those approvals, which may be required to be taken in the normal course of business from time to time.

The Central Government / RBI accepts no responsibility for the financial soundness or correctness of the statements made in the Letter of Offer.

Filing

The Letter of Offer has been filed with the Head Office of SEBI at Mumbai, and also with the Stock Exchanges at Calcutta, Mumbai, Delhi and the National Stock Exchange.

2

Listing Arrangements

The existing Equity Shares of the Company are listed on The Stock Exchange, Mumbai (BSE), The Calcutta Stock Exchange Association Limited (CSE), The National Stock Exchange of India Ltd (NSE) and The Delhi Stock Exchange Association Limited (DSE). The Company will make applications to these Stock Exchanges for permission to deal in and for an official quotation in respect of the equity shares arising from this issue. In-principle approval for listing has been obtained from BSE vide their letter dated 8th May 2004, NSE vide their letter dated 13th April 2004, CSE vide their letter dated 21st May 2004 and DSE vide their letter dated 24th May 2004.

In case permission to deal in and for an official quotation of the equity shares of the Company is not granted by any of the concerned Stock Exchange(s), the Company shall forthwith repay without interest all monies received from applicants in pursuance of this Letter of Offer. In case of delay, interest shall be paid in accordance with the provisions of Section 73 of the Act.

Issue Schedule

The Issue will open for subscription at the commencement of banking hours and close at the close of banking hours on the dates indicated below:

Offer Opens on Last date for receiving request for split forms

Offer closes on

19th August 2004 4th September 2004 18th September 2004

SEBI DISCLAIMER CLAUSE

"IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT 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 MERCHANT BANKER, LODHA CAPITAL MARKETS LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURES AND INVESTOR PROTECTION) GUIDELINES 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 OFFER DOCUMENT, THE LEAD MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MERCHANT BANKER, LODHA CAPITAL MARKETS LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 19th MARCH 2004 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS 1992 WHICH READS AS FOLLOWS :

1. 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 OFFER DOCUMENT PERTAINING TO THE SAID ISSUE;

2. 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.

WE CONFIRM THAT:

(a) THE OFFER DOCUMENT FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPER 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 ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

3

(c) THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE.

3. WE CONFIRM THAT BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE PROSPECTUS ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID.

THE FILING OF OFFER DOCUMENT DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR 68 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 MERCHANT BANKER(S) ANY IRREGULARITIES OR LAPSES IN OFFER DOCUMENT."

Disclaimer with respect to Jurisdiction

This Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Kolkata, India only.

The Letter of Offer has been filed with SEBI, Mittal Court, ‘A’ Wing, Nariman Point, Mumbai – 400021, for its observations. The Letter of Offer has been filed with the Designated Stock Exchange as per the requirements of the law.

Disclaimer from the Issuer Company

It should be noted that the Company accept no responsibility for statements made otherwise than in the Letter of Offer or in the advertisement or any other material issued by or at the instance of the Company and that anyone placing reliance on any other source of information would be doing so at his/her/their own risk.

All information shall be made available by the Lead Manager and the Issuer to the public and investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever.

Disclaimers of Stock Exchanges The stock exchanges where the equity shares of the Company are listed have been forwarded copies of this Letter of Offer.. Disclaimer Clause of BSE

“The Stock Exchange, Mumbai (“the Exchange”) has given vide its letter dated 8th May 2004 permission to the Company to use the Exchange’s name in this Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinised this Letter of Offer for its limited internal purpose of deciding on the matter granting the aforesaid permission to this Company. The Exchange does not in any manner

i). warrant certify or endorse the correctness or completeness of any of the contents of this Letter of Offer, or

ii). warrant that this Company’s securities will be listed or will continue to be listed on the Exchange, or

iii). 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 it should not for any reason be deemed or construed that this Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquire 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 any other reason whatsoever”. Disclaimer Clause of NSE

As required, a copy of this letter of offer has been submitted to National Stock Exchange of India Limited (hereinafter referred to as NSE). NSE has given vide its letter dated 13th April 2004 permission to the Issuer to use the Exchange’s

4

name in this letter of offer as one of the stock exchange on which this Issuer’s securities are proposed to be listed. The Exchange has scrutinized this 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 NSE should not in any way be deemed or construed that the letter of offer has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this letter of offer; nor does it warrant that this 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 Issuer, its promoters, its management or any scheme or project of this Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer 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 any other reason whatsoever.

Disclaimer Clause of CSE The Calcutta Stock Exchange association Ltd.(“the Exchange”) has given its permission to the Company to use the name of the Exchange in the Offer Document as one of the Stock Exchanges on which the company’s securities are proposed to be listed. The Exchange has scrutinized this Offer Document for their limited internal purpose of deciding on the matter of granting the aforesaid permission to the Company. The exchange does not in any manner:

(1) warrant, certify or endorse the correctness or completeness of any of the contents of this Offer Document or

(2) warrant that the Company’s securities will be listed or will continue to be listed on the Exchange, or

(3) take any responsibility for the financial or other soundness of the Company , its promoters, its management or any scheme or project of the company.

and it should not, for any reason be deemed or construed that this Letter of Offer has been cleared by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this issuer may do so pursuant to an independent inquiry or any 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 DSE The Delhi Stock Exchange limited has given its no objection to the company vide letter dated May 24 2004 to use the name of the Exchange in this Offer Document as one of the Stock Exchanges on which the company’s securities are proposed to be listed. The Delhi Stock Exchange has scrutinized this Offer Document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the company and has also relied on the in principle approval given by the Stock Exchange, Mumbai and the National Stock Exchange of India Ltd. The Delhi Stock Exchange Association Limited does not in any manner:- iWarrant, certify or endorse the correctness or completeness of any of the contents of this Offer Document iWarrant that this company’s securities will be listed or will continue to be listed on DSE iTake any responsibility for the financial or other soundness of this Company, Promoters, Management of

any Scheme or Project of this Company. And it should not be, for any reason be deemed or construed that this Offer Document has been cleared or approved by DSE. 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 claims against DSE, 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 in the Offer Document or any other reason whatsoever. Important:

1. The issue of equity shares in the manner mentioned hereunder has been authorised at the Board Meeting held on 30th January 2004 and approval of shareholders at their EGM held on 9th March 2004.

5

2. Subscription received against this issue would be kept in separate bank accounts and the Company would not have access to such funds unless it has received a minimum subscription of 90% of the issue, and the permission of The Stock Exchange, Mumbai (being the Designated Stock Exchange) to use the amount of subscription received. The Company will obtain the permission of The Stock Exchange, Mumbai by producing sufficient documentary evidence of subscription to the extent of 90%after closure of the issue, to utilise the funds collected as per the present issue.

3. This offer is being made to the existing Equity Shareholders of the Company (hereinafter referred to as “shareholders”) whose names appear on the register of members / list of beneficial owners as at the end of business hours on 22nd July, 2004..

4. Please read this Letter of Offer and instructions contained in the accompanying Composite Application Form (hereinafter referred as the “CAF”) carefully before filling in the CAF.

5. The instructions contained in the CAF are an integral part of this Letter of Offer and must be followed carefully, otherwise the application is liable to be rejected.

6. All inquiries/communication in connection with this Letter of Offer and the accompanying CAF including requests for Split Application Forms should be addressed to the Registrars to the issue quoting the name of the Sole/First Shareholder, the registered folio number / Client ID No. and the CAF number as mentioned in the CAF.

Under no circumstances should any request be sent to the Lead Manager(s) to the issue or to the Company.

7. The Issue shall be kept open for a minimum period of 30 (thirty) days but not exceeding 60 (sixty) days.

8. In terms of Section 6(3)(b) of the Foreign Exchange Management Act 1999, the RBI has given general permission to Indian Companies to offer securities to a person resident outside India on a rights basis subject to terms and conditions stipulated under para 6 of the notification no. FEMA 20/2000-RB dated 3rd May 2000.

9. As per the regulation 6(2) of the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 2000, framed under the Foreign Exchange Management Act, 1999 general permission has been granted to Indian companies to offer securities on a rights basis to persons resident outside India.

Applications in fictitious names

As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, 1956 (hereinafter referred to as the Act) 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.”

Minimum Subscription

If the Company does not receive the minimum subscription of 90% and/ or if the subscription level falls below 90% after the closure of the issue on account of the cheques having been returned unpaid or withdrawal of applications, the Company shall refund the entire subscription amount received within 42 days from the date of closure of the issue.

If there is any delay in the refund of the application money by more than 8 days after the Company becomes liable to pay the amount (i.e. forty two days after the closure of the issue), the Company shall pay interest for the delayed period, at prescribed rates under sub-section (2) and (2A) of section 73 of the Companies Act, 1956.

6

Letters of Allotment / Refund Orders:

The Company will issue or credit the allotted securities to the respective DP accounts or dispatch the Letter(s) of Allotment /Share Certificates / Letter(s) of Regret/Refund Orders if any, within a period of six weeks from the date of closure of the issue. If such money is not repaid within eight days from the day the Company becomes liable to pay it, the Company and every director of the company who is an officer in default shall on and from the expiry of the 8th day be jointly and severally liable to repay that money with interest @15% p.a.

Letters of Allotment / Share Certificates / Refund Orders above the value of Rs. 1500/- will be despatched by Registered Post/Speed Post to the sole / first applicant’s registered address. However, Refund Orders for value not exceeding Rs. 1500/- shall be sent to the applicants under Postal Certificate. Such cheques or pay orders will be payable at par at all the centres where the applications were originally accepted and will be marked “A/c payee” and would be drawn in the name of the sole / first applicant. Adequate funds will be made available to the Registrar to the Issue for dispatch of Letters of Allotment / Share Certificates / Letter of Regret / Refund Orders. .

In case the Company issues Letter of Allotment, the corresponding Share Certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be stipulated by Company Law Board under section 113 of the Companies Act 1956 and other applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for Share Certificates.

Interest in case of delay in dispatch of allotment letters / refund orders

(a) The Company agrees that as far as possible, allotment of the equity shares shall be made within 30 days of the closure of the Issue; and

(b) The Company shall pay interest at the rate of 15 per cent per annum if the allotment has not been made and/or the Letters of Allotment/Refund Orders have not been dispatched to the investors within 30 days from the date of the closure of the Issue, for the delayed period beyond 30 days.

Corporate Governance

The Company has complied with SEBI Guidelines in respect of Corporate Governance especially with respect to broad basing of Board of Directors and constitution of Board committees:

Details of Corporate Governance and these Committees are provided on Page 47 and 48 of this document.

Issue Management Team

Lead Managers To The Issue

Lodha Capital Markets Limited

Herbert House, 13/3 Strand Road

Calcutta: 700 001

Telephone: (033) 2243 4831/ 32

Fax: (033) 2248 2956

E-mail: [email protected]

Enam Financial Consultants Private Limited

809 – 812, Dalmal Towers, Nariman Point

Mumbai – 400 021

Telephone : (022) 5638 1800

Fax : (022) 5638 1810

E Mail : [email protected]

Statement of Inter-se allocation of Responsibilities

Inter-se Allocation Agreement of responsibility between Lodha Capital Markets Limited [LCM] and Enam Financial Consultants Private Limited [Enam] as demarked and submitted to the Board in terms of Clause 5.3.2 of SEBI (DIP) Guidelines 2003 is as follows:

7

Activity Responsibility Coordinator 1. Capital structuring with the relative components and

formalities such as composition of debt and equity, type of instruments.

LCM LCM

2. Drafting and Design of the offer document LCM LCM

3. Due-Diligence for the proposed issue LCM LCM

4. Advertisement / publicity material including newspaper advertisements and brochure / memorandum containing salient features of the offer document.

LCM LCM

5. Designated Lead Merchant Banker to ensure compliance with the Guidelines for Disclosure and Investor Protection and other stipulated requirements and completion of prescribed formalities with Stock Exchange, Registrar of Companies and SEBI.

LCM LCM

6. Marketing of the issue, which will cover, inter alia, formulating marketing strategies, preparation of publicity budget, arrangements for selection of

(i) ad-media,

(ii) centres of holding conferences of brokers, investors etc.

(iii) bankers to issue

(iv) collection centres

(v) brokers to issue and

(vi) distribution of publicity and issue material including application form and brochure, and deciding on the quantum of issue material.

LCM / Enam Enam

7. Selection of various agencies connected with issue, namely Registrars to Issue, printers and advertising agencies.

LCM LCM

8. Follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of the issue, based on the correct figures.

LCM / Enam Enam

9. Follow up and co-ordination with Institutional shareholders for subscription in the Issue.

Enam Enam

8

Activity Responsibility Coordinator

10. Other post-issue activities involving essential follow-up steps, including

Finalisation of basis of allotment etc

Weeding out of multiple applications

Listing of equity shares

Despatch of certificates and refunds,

Coordination with the various agencies connected with the work such as registrars to the issue, bankers to the issue, and the bank handling refund business.

Submission of statutory reports to SEBI

Enam Enam

REGISTRAR TO THE ISSUE

CB Management Services Private Limited

P-22, Bondel Road, Calcutta – 700 019

Telephone: (033) – 2280 6692 – 94

Fax: (033) – 2247 0263


BANKERS TO THE ISSUE

HDFC Bank Limited

42/6 Hemant Basu Sarani

Mangalam B

Kolkata – 700 020

Auditors

G.P.Agarwal & Co.

Chartered Accountants

7A, Kiran Shankar Ray Road

Kolkata – 700 001

Legal Advisor To The Issue

Khaitan & Co.

9, Old Post Office Street

Calcutta: 700 001

COMPLIANCE OFFICER

Mr. S. K. Agrawala

Company Secretary, Balrampur Chini Mills Limited

“FMC Fortuna”, 2nd Floor, 234/3A, A.J.C Bose Road

Calcutta – 700020

Telephone: (033) 22474749

Fax : (033) 22403083


Note: The investors’ attention is invited to contact the Compliance Officer in case of any pre-issue/post-issue related problems such as non- receipt of letters of offer /Share Certificates/refund orders etc.

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Credit Rating

This being an issue of equity shares, no credit rating is required.

Undertaking by the Company

The Company undertakes:

a. that the complaints received in respect of the Issue shall be attended to by the Issuer Company expeditiously and satisfactorily

b. that all steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within 7 working days of finalisation of basis of allotment

c. that the funds required for dispatch of refund orders / allotment letters / share certificates by registered post shall be made available to the Registrar to the Issue by the Issuer Company

d. that the certificates of the securities / demat credit / refund orders to the non-resident Indians shall be despatched within specified time.

e. that no further issue of securities shall be made till the securities offered through this offer document are listed or till the application moneys are refunded on account of non-listing, under-subscription etc.

Utilisation of Issue Proceeds

The Board of Directors of the Company certifies that:

(i) All monies received out of this Issue of Equity Shares to the shareholders shall be transferred to a separate Bank account other than the Bank account referred to in sub-section (3) of Section 73 of the Act.

(ii) Details of all monies utilised out of the Issue referred to in sub-item (i) shall be disclosed under an appropriate separate head in the Balance Sheet of the Company indicating the purpose for which such monies had been utilised; and

(iii) Details of all unutilised monies out of the Issue, if any, referred to in sub-item (i) shall be disclosed under the appropriate separate head in the Balance Sheet of the Company indicating the form in which such unutilised monies have been invested.

II. CAPITAL STRUCTURE OF THE COMPANY

(The capital structure of the Company as on 29th July 2004 is as follows)

No of Shares Description Nominal

Value (Rs)

Aggregate Value

(Rs)

A. Authorised

4,00,00,000 Equity Shares of Rs. 10/- each 40,00,00,000

25,00,000 Preference Shares of Rs.100/- each 25,00,00,000

Total 65,00,00,000

B. Issued, Subscribed & Paid Up Capital

1,89,72,315 Equity Shares of Rs. 10/- each 1,89,723,150

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C. Present Issue

Rights Issue in terms of this Letter of Offer

2276678 Equity Shares of Rs.10/- each for cash at a premium of Rs.250/- per share on a Rights-basis to the existing shareholders of the Company in the ratio of 12(Twelve) Equity Shares for every 100 (One Hundred) Equity Shares held.

2,27,66,780 59,19,36,280

D. Subscribed & Paid Up Capital after the Rights Issue (assuming full subscription)

21248993 Equity Shares of Rs. 10/- each 21,24,89,930

E. Share Premium

Before the Rights Issue 333716865

After the Rights Issue 902886365

The paid-up capital (pre-issue) is Rs.18.97 crores.

NOTES TO THE CAPITAL STRUCTURE

1. The total number of members of the Company as on 29th July 2004 is 13787 .

2. The details of built up of the subscribed and paid-up share capital of the Company are as follows:

Date of

Allotment

Particulars No. of Shares

Issued (Face

Value Rs 10)

Total No. of Shares

Total paid up Capital (Rs.)

Incorporation

[1975-76]

Equity share capital on Incorporation 200000 200000 2000000

1978-79 Public Issue at par vide prospectus dated 29.12.1978

100000 300000 300000

1985-86** Bonus Issue in ratio 1:2 150000 450000 4500000



1992-1993 Issued in favour of UTI in conversion of 15% debentures at a premium of Rs.70/- per share

31250 1831250 18312500

1993-1994* Private Placement to mutual funds, FII and Indian corporates at a premium of Rs. 516 per share

500000 2331250 23312500

1994-1995** Bonus issue in ratio 6:5 2797500 5128750 51287500

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1994-1995 Allotted to members of Babhnan Sugar Mills Ltd. in ratio 2:5 by virtue of Scheme of Amalgamation

2375560 7504310 75043100

1996-1997** Bonus issue in ratio 3:2 11256465 18760775 187607750

1999-2000 Allotted to members of Tulsipur Sugar Co. Ltd. in ratio 1:7 by virtue of the Scheme of Amalgamation

208721 18969496 189694960

2000-2001 Allotted to NRI shareholders of Tulsipur Sugar Co. Ltd. in ratio 1:7 by virtue of the Scheme of Amalgamation following an approval from RBI

2819 18972315 189723150

Total 18972315

* The aforesaid private placement by way of preferential allotment [ in the year 1994] was made in accordance with all applicable laws, regulations, and other statutory requirements.

** These bonus issues were made in accordance with all applicable laws, regulations, and other statutory requirements

Summary

No. of Shares %

Original Issue on incorporation 200000 1.05

Issue to public by prospectus 100000 0.53

Bonus Issue 15553965 81.98

Issued to Financial Institutions on Conversions of Debentures 31250 0.17

Issued to FII / MFs / Indian corporates on Private placement 500000 2.64

Allotted under Scheme of Amalgamation 2587100 13.63

Total 18972315 100

As on date, there are no partly-paid up shares.

3. The shareholding pattern of the Company

Existing

(As on 29th July 2004)

After The Rights Issue (**)

Entity

No. of Shares

% No. of Shares

%

A. Promoters Holding

1. Promoter Group 7021098 37.01 7863630 37.01

2. Other Directors 29358 0.15 32881 0.15

Sub Total 7050456 37.16 7896511 37.16

B. Non-promoter holding

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3. Institutional holding

a.Public Financial Institutions and Banks 1504934 7.93 1685526 7.93

b.Mutual Funds 3827177 20.17 4286438 20.17

c.Foreign Institutional Investors 927549 4.89 1038855 4.89

Sub-total 6259660 32.99 7010819 32.99

4.Others

a.NRIs/OCBs 26926 0.14 30518 0.14

b. Bodies Corporate 2034327 10.72 2278446 10.72

c.Public and Others 3600946 18.98 4033060 18.98

Sub-total 5662199 29.84 6342024 29.84

Total 18972315 100.00 21248993 100.00

**Assuming that all shareholders subscribe to their rights entitlements in full. In case of under-subscription Promoters and their relatives / associates will subscribe to additional shares to make the issue fully subscribed and to that extent the post-Rights issue holdings of the Promoter Group will be different from the above.

4. Details of top 10 shareholders

a) The top 10 shareholders of the Company as on 29th July 2004

Sl. No Name of the Shareholder No. of shares Percentage of

Shareholding

1. Shri Kamal Nayan Saraogi 2785529 14.68

2. Smt. Meenakshi Saraogi 1201920 6.34

3. Life insurance Corporation of India 1129558 5.95

4. Vashuki Agencies Pvt. Ltd 1056646 5.57

5. Administrator of the Specified Undertaking of the Unit Trust of India – US64

947208 4.99

6. Smt. Sumedha Saraogi 886850 4.67

7. HSBC Global Investment Funds A/c HSBC Globeinvt. Funds Mauritius Ltd.

491802 2.59

8. Smt. Stuti Dhanuka 447500 2.36

9. HSBC Equity Fund 439300 2.32

10. Smt. Satyawati Saraogi 407410 2.15

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b) The top 10 shareholders of the Company as on 29th July 2002

Sl. No Name of the Shareholder No. of shares

Percentage of Shareholding


2. Unit Trust of India 1713521 9.03

3. Life insurance Corporation of India 1479090 7.80

4. Smt. Menakshi Saraogi 1201920 6.34

5. Vashuki Agencies Private Limited 1022971 5.39


7. Udaipur Cotton Mills Company Limited 852771 4.49

8. Meenakshi Mercantiles Limited 659408 3.48



c) The top 10 shareholders of the Company as on 19th July 2004

Sl. No Name of the Shareholder No. of shares Percentage of

Shareholding



3 Life insurance Corporation of India 1129558 5.95

4 Vashuki Agencies Pvt. Ltd 1056646 5.57

5 Administrator of the Specified Undertaking of the Unit Trust of India – US64

947208 4.99

6 Smt. Sumedha Saraogi 886850 4.67

7 HSBC Global Investment Funds A/c HSBC Globeinvt. Funds Mauritius Ltd.

491802 2.59

8 Smt. Stuti Dhanuka 447500 2.36

9 HSBC Equity Fund 439300 2.32

10 Smt. Satyawati Saraogi 407410 2.15

5. The Promoter Group including Directors and their Associates hold 7050456 Equity Shares of face value of Rs.10/- each as on 29th July 2004 which constitutes 37.16 % of the aggregate Equity Share Capital of the Company.

6. The details of the shareholding of the Promoter Group as on 29th July 2004 is as follows

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Promoter No. of shares held

Percentage (%)


2. Shri Vivek Saraogi 393080 2.07





7. Master Karan Saraogi 343365 1.81

8. Ms. Avantika Saraogi 343265 1.81

9. Udaipur Cotton Mills Co. Ltd. 152771 0.81

10. Meenakshi Mercantiles Ltd. 59408 0.31

Total (a) 7021098 37.01

Other Directors (b) 29358 0.15

Total (a+b) 7050456 37.16

7. Details of Equity Shares held by Present Promoter Group of BCML and lock- in period are as follows:

The entire share capital of the Company at inception was held by Balrampur Sugar Company Limited. In the year 1979, the Company made its initial public offering, alongwith an offer for sale by the then promoters. The present promoter group held 81265 equity shares after the public issue. Since then the details of their shareholding are as follows:

Date of Allotment

No. of Equity Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment

Date on which fully

paid-up

Date up to which locked-in

14.12.1986 82906 10.00 - Bonus Issue N.A N.A

01.09.1990 303870 10.00 - Bonus Issue N.A N.A

30.11.1992 607740 10.00 - Bonus Issue N.A N.A

23.08.1994 1458432 10.00 - Bonus Issue N.A N.A

27.03.1995 901250 10.00 - Issued on merger of Babhnan

Sugar Mills Limited

N.A N.A

03.07.1996 5341921 10/- - Bonus Issue N.A N.A

Apart from the above, the net sales as on 29.07.2004 (total sales less total purchases by the Promoter Group during the period) constitute 1756286 Equity Shares of face value Rs.10 each.

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The Equity Shares allotted/ held by the present promoter group are fully paid up and are not under any lock in.

The provisions relating to promoters contribution and lock-in period are not applicable to rights issue as per clause 4.10.1(c) of SEBI (DIP) Guidelines.

8. The Promoter Group has confirmed to the Company that they intend to subscribe to their rights entitlement in full.

9. In the event of under subscription, the Promoters along with the Promoter Group intend to apply for additional shares to make the rights issue fully subscribed to the extent of 100% of the offer. Allotment of shares against the promoters & their relative’s application(s) for additional shares in excess of their respective rights entitlements will be governed by the first proviso to Regulation 3(1)(b) of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations [SEBI (SAST) Regulations].

10. The promoters undertake to comply with Clause 17 of Securities & Exchange Board of India (Delisting of Securities) Guidelines 2003 in case the non-promoter holding in the Company falls below the level required for continuous listing requirement.

11. No shares have been issued for consideration other than cash except 2375560 equity shares allotted to members of Babhnan Sugar Mills Ltd. in ratio 2:5 by virtue of Scheme of Amalgamation and 211540 equity shares allotted to members of Tulsipur Sugar Co. Ltd. in ratio 1:7 by virtue of the Scheme of Amalgamation.

12. The Promoter Group/Directors of the Company have not entered into any other purchase or sale transactions of the Company’s shares in the last six months other than the following :

Name of the Promoter / Director

Nature of Transaction Number of Shares

Date Price per share [Rs.]

S.B.Budhiraja Purchase of shares in open market

400 17.02.2004 283/-

13. The Promoters, Directors and Lead Manager to the Issue have not entered into any buy-back, standby or similar arrangements for the securities being issued through this Letter of Offer except otherwise mentioned elsewhere in the Letter of Offer.

14. There are no bridge loans or any other financial arrangements made which will be repaid out of the proceeds of the current issue except for those mentioned under the para “Objects of the Issue”.

15. The shareholders of the Company do not hold any warrant option or convertible loan or any other security, which will entitle them to acquire further shares of the Company.

16. At any given time, there shall be only one denomination of equity shares of the Company, and the issuer shall comply with such disclosure and accounting norms specified by SEBI.

17. The company undertakes that there shall be no 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 Letter of Offer to SEBI for 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.

18. The Company presently does not have any intention or proposal to alter its capital structure within a period of six months from the date of opening of the issue, by way of split / consolidation of the denomination of the shares, or issue of shares on a preferential basis or issue of rights or further public issue of shares or any other securities

III. TERMS OF THE PRESENT ISSUE

The Equity Shares now being offered are subject to the provisions of the Act, the Memorandum and Articles, conditions of the RBI approval, if required, the terms of the Offer Document, and Composite Application Form and other terms and conditions as may be incorporated in the Share Certificates/Letters of Allotment and other documents/certificates that may be executed in respect of the Equity Shares. Further to the above, the equity shares shall also be subject to laws as

16

applicable, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by SEBI/Government of India/Stock Exchange/RBI and/or other authorities, as in force on the date of the offer and to the extent applicable.

AUTHORITY FOR THE ISSUE

The present issue of equity shares is being made pursuant to the resolution adopted by the Shareholders under provisions of section 81 of the Act at the Extra-ordinary General Meeting held on 9th March 2004 and the resolution of the Board of Directors adopted at the meeting of the Board held on 30th January 2004.

BASIS OF OFFER

2276678 equity shares of Rs. 10/- each for cash at a premium of Rs.250/- per share in the ratio of twelve equity shares for one hundred equity shares held aggregating to Rs. 5919.36 lacs are being offered on a Rights Basis to the existing Equity Shareholders of the Company whose names appear as beneficial owners as per the list furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Company in respect of shares held in physical form at the close of business hours on.22nd July, 2004 being the last day prior to book closure.

FRACTIONAL ENTITLEMENT

The entitlements, if fractional, will be rounded off to the next higher integer. Any extra share, if required for the rounding off purpose, will be adjusted against promoters’ entitlements.

RIGHTS ENTITLEMENT

As an Equity Shareholder of the Company on 22nd July 2004, you are entitled to this Rights Offer. The number of equity shares to which you are entitled is shown in Block 2 of Part A of the enclosed Composite Application Form [CAF]. In case of Shareholders having holdings in both physical and electronic form, separate CAFs have been mailed.

INTEREST IN CASE OF DELAY IN DESPATCH OF ALLOTMENT LETTERS/REFUND ORDERS

The company agrees that as far as possible allotment of securities offered to the shareholders shall be made within 30 days of the closure of the issue. The company further agrees that it shall pay interest @15% per annum if the allotment letters / refund orders have not been despatched to the applicants within 30 days from the date of the closure of the issue.

OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/APPLICANTS

Applications received from NRIs and non-residents for Allotment of Equity Shares shall be inter-alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 2000 (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 purchase shares offered on rights basis by an Indian Company in terms of FEMA.

PRINCIPAL TERMS AND CONDITIONS OF THE ISSUE

The equity shares being issued as per this issue are subject to the terms of this Letter of Offer, the terms and conditions contained in the CAF, the Memorandum and Articles of Association of the Company, provisions of the Act and the RBI approval under the Foreign Exchange Management Act (if any), other applicable Acts, and the Letters of Allotment / Debenture Certificates and Share Certificates arising out of conversion or other documents and the Guidelines issued from time to time by the Government of India and Securities and Exchange Board of India and Stock Exchanges where these securities are proposed to be listed.

17

DESCRIPTION OF THE INSTRUMENT

Face value and Issue price

Each equity share is of the face value of Rs.10/- and is being offered at a price of Rs.260/- per share (including a premium of Rs.250/- per share).

Ranking

The equity shares shall rank pari-passu in all respects with the existing Equity Shares of the Company.

Terms of payment

The entire issue price of Rs. 260 /- per equity share is payable on application. The same will be apportioned as under:

Face Value (Rs) Share Premium (Rs.) Total (Rs)

On application 10/- 250/- 260 / -

MARKET LOT

The market lot for equity shares in dematerialised form is 1. In case of physical certificates, the Company would issue one certificate to one person (consolidated certificate). In respect of the consolidated certificate, the Company will split the same in smaller lots only upon receipt of a request. The Company shall split the consolidated certificate into smaller denomination within 7 days from the date of request from equity shareholder. No fees for splitting the consolidated certificate but stamp duty payable, if any, will be borne by the equity shareholders.

ACCEPTANCE OF OFFER

You may accept and apply for the equity shares offered wholly or in part by filling in Block 3 of Part A of the enclosed CAF indicating at the relevant place the number of equity shares applied for and submit the same along with the application money to any branch of the Bankers to the Issue mentioned on the reverse of the CAF before the close of banking hours on 18th September, 2004 or such extended period as may be determined by the Board or its duly authorised committee. In case of shareholders having holdings in both physical and electronic form, you will have to make separate applications for the respective portion of holdings. You are however free to opt for allotments of rights shares in electronic form even in respect of shares currently held in physical form. Appropriate provisions for this have been made in the CAF.

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 Equity Shares offered to you without renouncing them in whole or in part in favour of any other person(s).

The application for additional Equity Shares shall be considered and allotment shall be made at the absolute discretion of the Board of Directors of the Company and in consultation if necessary with the Designated Stock Exchange. This allotment of additional equity shares will be made on an equitable basis with reference to number of shares held by you on 22nd July 2004. .

A renouncee can apply for additional shares but cannot renounce further.

If you desire to apply for additional Equity Shares, please indicate your requirement by filing in the number of additional Equity Shares in Block 4 of Part ‘A’ of the CAF. Renouncees can apply for additional equity shares by filling Block 9 of Part ‘A’ of CAF.

18

RENUNCIATION

As an Equity Shareholder as at the end of business hours on 22nd July 2004, you have the right to renounce your entitlement to the Equity Shares in full or in part in favour of any other person(s) including individuals, Limited Companies, Statutory Corporations/Institutions, Trusts (registered under the Indian Trusts Act 1882), Societies ( registered under Societies Registration Act, 1860 or other applicable laws) or any other legal entity constituted by written Instruments and authorised under its constitution to hold Equity Shares in a Company. Renouncee(s) need not be an existing member of the Company. However, renunciation(s) in favour of minors (unless represented by the guardian), partnership firms, HUFs, will not be accepted. Joint renunciation in favour of more than three individuals will not be accepted.

Any renunciation from Resident(s) to Non-Resident(s), from Non-Resident(s) to Resident(s) or from Non-Resident(s) to other Non-Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining necessary approval of the RBI under the provisions of the Foreign Exchange Management Act and other applicable laws and the said permission should be attached with the CAF.

A request for allotment of equity shares by all the renouncee(s) in whose favour you renounce your rights to the equity shares offered to you shall be subject to the condition that the Board or its duly authorised committee shall have absolute discretion to reject any, such request for allotment without assigning any reason whatsoever.

A person in whose favour the equity shares are renounced has no further right to renounce.

Procedure for renunciation and application thereof

To Renounce in Whole

If you wish to renounce this Offer in whole, please complete Part B of the CAF. In the case of joint holdings, all joint holders must sign as per the specimen signatures recorded with the Company and in the same order. The person(s) in whose favour your offer has been renounced should complete and sign Part C of the CAF. In case of joint Renouncees, all joint Renouncees must sign.

To Renounce in Part

If you wish to accept part of the equity shares offered to you and renounce the balance or renounce the equity shares in favour of two or more separate Renouncees (or sets of Renouncees), the CAF must first be split by applying to the Registrars to the Issue. Please indicate your requirement of Split Forms in the space provided for the purpose in Part D of the CAF and send the entire CAF to the Registrars to the issue so as to reach them latest by the close of business hours on 4th September, 2004. On receipt of required number of Split Forms, the procedure as mentioned above will have to be followed.

Change in and/or Introduction of additional name(s)

If you wish to apply for equity shares jointly with any other person(s), not more than three, who is/are not already joint holders with you, it will amount to renunciation and the procedure as mentioned above will have to be followed. 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.

Please also note the following:

Part A of the CAF must not be used by any person(s) in whose favour this offer has been renounced. This will render the application invalid.

A person in whose favour the equity shares are renounced has no further right to renounce.

Split Forms

Only, the person or persons to whom the Letter of Offer is originally addressed and not a nominee of any of them or the

19

renouncee (s) shall be entitled to obtain Split Application Forms.

Split Forms cannot be re-split.

Request for Split should be made only on the prescribed Split Form i.e Part D of CAF and the same will be entertained only once.

BASIS OF ALLOTMENT

The Basis of allotment shall be finalized by the Board of Directors in consultation with BSE in the following order of priority:

1. Full allotment to the Equity Shareholders who have applied for their rights entitlements either in full or in part and also to renouncees who have applied in full or in part for the Equity Shares renounced in their favour. (subject to other provisions contained under the paragraph entitled 'Renunciation' mentioned earlier in this Letter of Offer).

2. Allotment to Equity Shareholders, who having applied for all the shares offered to them as rights have also applied for additional Equity Shares, provided there is surplus after making full allotment under (1) above. The allotment of such additional Equity Shares shall be made as far as possible on an equitable basis with reference to number of Equity Shares held on 22nd July 2004, within the overall size of rights issue in consultation with BSE.

3. Allotment to renouncees who having applied for all the shares renounced in their favour have applied for additional shares, provided there is a surplus remaining after (1) and (2) above.

4. Allotment to any other person as the Board may in its absolute discretion deem fit provided there is a surplus available after making full allotment under (1), (2) and (3) above.

In the event of over subscription, allotment will be made only within the overall size of the Rights Issue. The Company shall retain no over subscription.

OVERSUBSCRIBED/UNSUBSCRIBED EQUITY SHARES

Any equity shares remaining unsubscribed, after allotment in the manner mentioned above, will be disposed off by the Board or its duly authorised committee in such manner as it may, in its absolute discretion deem fit in the best interest of the Company and the decision of the Board or its duly authorised committee in this regard shall be final and binding.

In the event of over subscription the basis of allotment will be finalised in consultation with the Designated Stock Exchange i.e. BSE.

COMMUNICATION OF ALLOTMENT

The allotment of equity shares in this issue will be communicated to the allottees concerned by Registered Post within 6 weeks from the last date fixed by the Company for submission of application for Rights. The intimation of Allotment in electronic mode may be sent by ordinary post. The allottees are requested to preserve the letters of allotment, issued if any, to be exchanged later for Equity Share Certificate(s).

ALLOTMENT/ADJUSTMENT OF EXCESS APPLICATION MONEY/ REFUNDS

The Company will issue and dispatch letters of allotment/ securities certificates and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any within a period of six weeks from the Date of Closure of the Issue. If such money is not repaid within 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 Act. Letters of allotment/ securities certificates/ refund orders above the value of Rs.1,500 will be dispatched by Registered Post/ Speed Post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1,500 shall be sent to the applicants under Postal Certificate. Such cheques or pay orders will be payable at par at all the centres where the applications were originally accepted and will be marked “A/c payee” and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for the dispatch of Letters of allotment/ securities certificates and refund orders. In case the Company issues Letters of allotment, the corresponding Share

20

Certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act, 1956 or other applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for the Security Certificates.

Cheques/Drafts/Pay Orders for refunds will be payable at par during their validity period at all the Centres where applications are accepted. Bank charges, if any, for encashment of such cheques/drafts/pay orders will be payable by the applicant.

In case of joint applications, refunds, if any, will be made out in the First Applicant's name and communication will be addressed to the First Applicant.

For Non-resident applicants, refunds, if any, will be made as under:

i) In case of Non-residents who remit their application money from funds held in NRE / FCNR Accounts, refunds and other disbursements, if any, shall be credited to such account details of which should be furnished in the appropriate columns in the CAF.

ii) In case of NRIs who remit their application money through Indian Rupee drafts from abroad, refunds and other disbursements, if any, shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. Such refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian rupees will be converted into foreign exchange at the rate of exchange prevailing on the date of refund. The exchange risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk.

LAST DATE FOR SUBMISSION OF CAF

If applications are not made in the enclosed CAF or in the manner as explained under the heading 'Application on plain paper' or if such applications are not received by the Bankers to the Issue or any of their branches specified in the CAF or the Registrars as the case may be, by the close of banking hours on 18th September, 2004 or such extended date as may be determined by the Board or its duly authorised committee, but not exceeding 60 days from the date of the opening of the issue, together with the remittance for amount payable on application , the acceptance of the Offer of the equity shares herein shall be deemed to have been declined, and such equity shares shall be disposed off by the Board or its duly authorised committee in the manner they may deem fit.

MINIMUM SUBSCRIPTION

If the Company does not receive the minimum subscription of 90% of the issue, the Company shall refund the entire subscription amount received within 42 days from the date of closure of the issue. If there is any delay in the refund of the application money by more than 8 days after the Company becomes liable to pay the amount (i.e. forty two days after the closure of the issue), the Company shall pay interest for the delayed period, at prescribed rates under sub-section (2) and (2A) of section 73 of the Companies Act, 1956.

INSTRUCTIONS FOR APPLICANTS

HOW TO APPLY

Applications for equity shares should be made only on the enclosed Composite Applications Forms (CAF) provided by the Company or on blank papers in case of non-receipt of CAF. The enclosed CAF should be completed in all respects in its entirety as per instructions mentioned in the CAF before submission to the bankers to the issue whose names appear on the reverse of the CAF. CAF should not be detached under any circumstances. Detailed instructions as to how to apply have been given in the enclosed CAF. Applications will not be accepted by the Lead Managers to the issue or by the Registrars to the issue or by the Company at any of its offices. However, postal applications and applications on plain paper will be accepted only by the Registrars to the issue.

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You can exercise any of the following options with regard to the equity shares offered to you by using the enclosed CAF:

OPTIONS AVAILABLE ACTION REQUIRED

1. Accept your entitlement to all or part of the equity shares offered to you

Fill in and sign Part A only [ all joint holders must sign]

2. Accept your entitlement in full and apply for additional equity shares.

Fill in and sign Part A including Block 3 relating to the acceptance of entitlement and Block 4 relating to additional Equity Shares (All joint holders must sign)

3. Accept only a part of your entitlement of the Equity Shares offered ( without renouncing the balance)

Fill in and sign Part A (All joint holders must sign)

4.Renounce your entitlement to all the equity shares offered to you to one person. [Joint-renouncees are considered as one]

Fill in and sign Part B [ all joint holders must sign] indicating the number of equity shares renounced and hand it over to the renouncee. The Renouncee must fill in and sign Part C only [ all joint renouncees must sign].

5. Accept a part of your entitlement of the equity shares offered to you and renounce the balance to one or more renouncees.

OR

Renounce your entitlement of all the equity shares to more than one renouncee

Fill in and sign Part D [ all joint holders must sign] for the required number of Split Forms and send the entire CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Forms.

On receipt of the Split Forms take action as indicated below.

iFor the Equity Shares you wish to accept, if

any, fill in and sign Part A.

iFor the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the renouncees. Each of the renouncees should fill in and sign Part C for the Equity Shares accepted by them. Renouncee can apply for additional shares by filling Block 9.

6.Introduce a joint holder or change the sequence of joint holders.

This will be treated as a renunication. Fill in and sign Part B and the renouncees must fill in and sign Part C.

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NOTES:

1. Last date for receiving requests by the Company for Split Forms is 4th September, 2004. Split forms cannot be re-split.

2. Renouncee(s) are not entitled to obtain split forms.

3. While applying for or renouncing equity shares, joint holders must sign in the same order as per the records of the Company.

4. The applicant should state the CAF number on the reverse of the instrument through which the payment is being made.

5. Cheques/Demand Drafts returned/dishonoured will not be re-presented and the accompanying application form will not be considered for allotment.

6. Applications accompanied by cheques dated beyond the closure date will not be considered for allotment.

7. The application should be completed in all respects in its entirety as explained in the instructions indicated in the said CAF before submission to the 'Bankers to the Issue' or their branches specified at the back of the CAF. No part of the CAF should be detached under any circumstances.

You must insert particulars relating to your Savi ngs/Current Bank Account Number and the name of the Bank with whom such account is held, in the box provided for this purpose in the Composite Application Form to enable the Registrars to print the details in the refund orders after the names of the payee(s). Applications not containing the above details are liable for rejection.

AVAILABILITY OF DUPLICATE CAF

In case the CAF is not received or has been misplaced by the applicant, the applicant may request the Registrar for a duplicate CAF on or before 18th September, 2004 by furnishing the registered folio number and his/her full name and address. In case both the original and duplicate are lodged for subscription, allotment will be made on the basis of the duplicate form and the original will be ignored.

APPLICATION ON PLAIN PAPER

Shareholders who have not received the original CAF can obtain duplicate forms from the Registrar. In case a Shareholder is unable to obtain a duplicate CAF, application may be made on a blank paper furnishing the following details.

§ Name and address of the Shareholder including joint holder

§ Registered folio number or DP ID Number and Client ID Number

§ Number of Equity Shares held as on 22.07.2004.

§ Certificate number(s) and distinctive numbers.

§ Number of equity shares entitled to

§ Total number of equity shares applied for

§ Total amount paid on application at the rate of Rs.260 /- per equity share.

§ Particulars of Cheque drawn on local bank at Calcutta/ Draft payable at Calcutta sent with the application.

§ PAN/ GIR No. and Income tax circle/ ward, district where the application is for shares of total value of Rs 50000/- or more.

§ Savings/ Current Account number and name and address of the bank where the shareholder will be depositing the refund order.

The application, along with the Cheque / Draft, mentioning the above details should be sent to the Registrars to the Issue by Registered Post to reach on or before the last date for submission of the CAF i.e. 18th September, 2004.

However, it should be noted that the shareholders making the application otherwise than on the standard CAF shall not be

23

entitled to renounce their rights and should not utilise the CAF for any purpose, including renunciation, even if it is received subsequently. If the shareholder violates any of these requirements, then both the applications as stated above would be liable to be rejected and the money payable along with the application would be refunded and no interest will be paid thereon.

PAYMENTS - HOW TO BE MADE

RESIDENT INDIAN SHAREHOLDERS

Payments should be made in Cash or Cheque or Demand Draft drawn on any Bank (including a Co-operative Bank), which is situated at and is a member or a sub-member of the Banker's 'Clearing House' located at the Centres (indicated in the CAF) where the Application is accepted. A separate Cheque/Demand Draft should accompany each Application. Outstation cheques / drafts will not be accepted and application(s) accompanied by such cheques / drafts will be rejected.

Money orders, postal orders, outstation cheques or demand draft, cheques/drafts drawn on banks not participating in the 'clearing' will not he accepted and applications accompanied with such instruments will be rejected. Only one mode of payment per application will be accepted.

All cheques or demand drafts accompanying the application must be crossed “A/c Payee Only” and drawn in favour of the Bankers to the Issue and marked “HDFC Bank Limited A/c BCML Rights Issue”. You are requested to mention the CAF Number on the reverse of the Cheque/Draft. No separate receipts will be issued for the application money. However, the Bankers to the Issue receiving the Application Form will acknowledge receipt of the application by stamping and returning to the applicant the Acknowledgement Slip at the bottom of each Application Form. For further instructions, please read the CAF carefully. In case payment is effected in contravention of the conditions mentioned herein, the application money will be refunded and no interest will be paid thereon. The Company is not responsible for any postal loss in transit on this account.

Shareholders / Renouncees residing at places other than those mentioned in CAF and not having collection centres in their city should send their application by Registered Post Only to the Registrar to the Issue, CB Management Services Private Limited, P-22, Bondel Raod, Calcutta – 700 019 enclosing a demand draft drawn on a clearing bank and payable at Calcutta only, net of bank charges and postal charges, so as to reach them before the closure of the issue.

NON-RESIDENT SHAREHOLDERS

Non-Resident Shareholders holding shares on non-repatriation basis

Payments may also be made by way of Cheque drawn on Non-Resident Ordinary (NRO) Account or Rupee Draft purchased out of NRO Account payable at Calcutta. In such cases, the allotment of shares will be on non-repatriation basis. If the payment is made by a draft purchased from a NRO account, an Account Debit Certificate from the banks issuing the draft, confirming that the draft has been issued by debiting the NRO account should be enclosed with the CAF. In absence of the above, the application shall be considered incomplete and is liable to be rejected.

Non-Resident Shareholders holding shares on repatriation basis

Payment by NRIs / FIIs / Foreign Investors must be made by demand draft / Cheque payable at Kolkata or funds remitted from abroad in any of the following ways:

(a) By Indian Rupee Draft purchased from abroad, drawn on any Bank at Kolkata or funds remitted from abroad

(b) By Cheque / draft drawn on a Non-Resident External [NRE] or FCNR Account maintained in Kolkata

(c) An Indian Rupee Draft purchased out of NRE / FCNR Account maintained anywhere in India and payable at Kolkata.

(d) FIIs registered with SEBI must remit funds from special non-resident rupee deposit accounts.

All cheques / drafts submitted by NRIs / FIIs / Foreign Shareholders should be drawn only in favour of the Bankers to the Issue “HDFC Bank Limited A/c BCML Rights Issue NR” and should be crossed “A/c payee only” .

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If the payment is made by a draft purchased from NRE / FCNR accounts, an Account Debit Certificate from the banks issuing the draft, confirming that the draft has been issued by debiting the NRE / FCNR account should be enclosed with the CAF. In absence of the above, the application shall be considered incomplete and is liable to be rejected.

Payment from NRI's / FIIs etc on repatriation basis should come through external source only and the payments through NR (O) a/c will not be permitted.

Applicants should deposit their applications with the Calcutta Office of the Registrars to the Issue. Application from NRI’s will not be accepted at any centre other than the Calcutta office of the Registrar.

In case of Non-residents who remit their application money from funds held in NRE / FCNR Accounts, refunds and other disbursements, if any, shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In case of NRIs who remit their application money through Indian Rupee drafts from abroad, refunds and other disbursements, if any, shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in convertible foreign exchange equivalent to Indian rupees to be refunded, at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange fluctuation for converting the Rupee amount into US Dollars or for the collection charges charged by the applicant’s bankers.

In case of applications by overseas Companies, and other Corporate bodies owned predominantly by Non-Resident individuals of Indian Nationality/Origin, a certificate in the prescribed Form OAC/OAC-1 from an overseas Auditor/Chartered Accountant/Certified Public Accountant should be submitted along with the application.

For further Instructions please read the CAF carefully.

APPLICATION (S) WILL NOT BE ACCEPTED BY THE LEAD MANAGER TO THE ISSUE OR THE COMPANY. ALL APPLICANTS ARE ADVISED TO SEND IN THE DULY COMPLETED APPLICATION ALONG WITH THE RELEVANT DOCUMENTS / PAYMENT INSTRUMENTS TO THE REGISTRARS TO THE ISSUE.

STOCKINVESTS

Reserve Bank of India vide its notification No. DBOD NO.FSC.BC.42/24.47.001/2003-04 dated 5th November 2003 has withdrawn the Stockinvest scheme. The investors are therefore not allowed to apply through stockinvest.

APPLICATION BY POST

Applicants residing at places where there are no collecting branches may send their application by post. All applicants who wish to send in their applications by post should mail their applications by Registered Post only accompanied with a Demand Draft / Cheque net of demand draft / postal charges drawn in favour of the Bankers to the Issue and marked “HDFC Bank Limited A/c BCMLRights Issue” on a local bank at Calcutta at the following address:

Registrars’ Address: - CB Management Services Private Limited P-22, Bondel Road, Calcutta – 700 019 Telephone: (033) – 2280 6692 – 94 Fax: (033) – 2247 0263

The Company would not, in any way, be liable for postal delays, and applications received through mail after closure of Issue date will be returned to the applicants. Application sent by post, thus shall be at the sole risk of the applicant in regard to delayed receipt/ non-receipt of the applications by the Company. Applications by mail should not be sent to any other address except as mentioned above.

DISPOSAL OF APPLICATION AND APPLICATION MONEY

The Board or its duly authorised committee reserves (at its sole, absolute and uncontrolled discretion and without assigning any reason) the right to accept or reject any application in whole or in part in consultation with BSE. If any

25

application is rejected in full, the whole of the application money received will be refunded and where an application is rejected in part the balance of the application money will be refunded to the first named applicant within six weeks from the closing of the subscription list.

No interest will be paid on application monies received.

Note: The Company shall ensure despatch of refund orders of value over Rs.1500/- and share certificates by Registered Post only and adequate funds for the purpose shall be made available to the Registrars by the issuer Company.

GENERAL INFORMATION

NOMINATION FACILITY

The shareholders shall have the right to nominate any person to whom his shares/debentures shall vest in the event of his death. Where the shares are held by more than one person jointly, the joint holders may together nominate a person to whom all rights in shares/debentures of the Company shall vest in the event of the death of all joint holders. Such nomination shall be in the form and in such manner as prescribed by Section 109A of the Companies Act 1956.

DEPOSITORY OPTION TO INVESTORS

The equity shares of BCML have been under compulsory dematerialised trading for all investor, by SEBI with effect from March 2000.

1. The Company has entered into bipartite agreements with National Securities Depository Limited (NSDL) and with Central Depositories Services (India) Limited (CDSL)

2. Investors have an option to seek allotment of Equity Shares in electronic and / or physical mode.

3. The application form shall contain space for indicating number of shares subscribed for in demat and physical shares or both. Such an option if exercised should be indicated in the relevant blocks in the Composite Application Form itself.

4. No separate applications for demat and physical shares are to be made. If such application is made, the applications for physical shares will be treated as multiple applications and rejected accordingly.

5. In case of partial allotment, allotment will be done in demat option for the shares sought in demat and balance, if any, will be allotted in physical shares.

6. Investors who wish to apply for Equity Shares in electronic form need to have at least one Beneficiary Account with a Depository Participant prior to the application. Shareholders making application in joint names in the Demat mode should ensure that they have the Demat Account in the same sequence as given in the application form.

7. Allotment Advice / Refund Orders will be directly sent to the investors by the Registrars.

8. If incomplete/incorrect investor account details are given in the application form, it may result in issuance of physical Equity Share Certificate.

9. Responsibility for correctness of applicant’s demographic details given in the Application Form vis-à-vis those with his/her Depository Participant would rest with the investor.

10. Shares in electronic form can be traded only on Stock Exchange having electronic connectivity with NSDL or CSDL.

INVESTORS MAY KINDLY NOTE THAT TRADING IN THE SHARES OF THE COMPANY IN THE STOCK EXCHANGES SHALL BE IN DEMATERLISED FORM ONLY

OTHER INFORMATION

§ In case of joint holders, all joint holders must sign in the same order as per the specimen signature recorded with the Company.

§ In case of applications under a Power of Attorney or by limited companies or bodies corporate or societies, the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be together with a certified true copy thereof along with a copy of Memorandum and Articles of Association or a copy of its bye-laws, as the case may be, must be lodged for scrutiny separately indicating the Serial No. of the Application Form with

26

the Registrars to the issue. In no case should these papers be attached to the application submitted to the Bankers to the issue.

§ The Application Form must be filled in English and all required details must be given in block letters.

§ Thumb impression or signature in languages other than English and Hindi must be attested by Magistrate or Notary Public or a Special Executive Magistrate under his official seal.

§ Please communicate any change in your address separately to the Registrars to the Issue.

§ All communications should be addressed to the Registrars to the issue.

§ The Board or its duly authorised committee will have a right to extend the date of the closure of Issue for such period as it may determine from time to time but not exceeding a period of 60 days from the date of opening of the issue.

§ The applicant should mention the Folio No. / Client ID No. & DP ID No. and the Composite Application Form number on the reverse of the instrument through which payment is made.

§ Applicants are advised that it is mandatory for them to indicate in the space provided in the application form, details regarding their Savings Bank/Current Account Numbers and the name of the branch of the bank that they want to be included in the refund instrument. Applications not containing such details will be rejected.

§ As per Notification No. FEMA 20/200-RB dated 3rd May 2000 and FEMA/76/2002-RB dated 12th November 2002; the RBI has given general permission to Indian Companies to issue Rights Shares to Non-resident Indians. Hence the Company does not need an in-principal approval from RBI for issue of shares to Non-resident Indians, on a repatriation basis within the sectoral cap prescribed under FEMA.

§ Where an application is for allotment of equity shares 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 allotted under the Income Tax Act, 1961 or where the same has not been allotted, the GIR number or the Income Tax Circle/Ward/District should be mentioned. In case where neither the permanent account number nor the GIR number has been allotted, the fact of non-allotment should be mentioned in the application form. Application forms without this information will be considered incomplete and will be liable to be rejected.

§ In case payment is affected in contravention of the conditions mentioned herein, the application is liable to be rejected and money refunded without Interest.

§ Having regard to provisions of Section 269SS of the Income Tax Act, 1961, the subscription against the Equity Shares application for an amount of Rs. 20,000/- or more should not be effected in cash and must be offered only by an A/c. payee Cheque/Bank Draft. In case payment is effected in contravention of the provisions, the application is liable to be rejected and application money will be refunded without interest.

§ Split Forms cannot be re-split.

§ Only the person(s) to whom shares have been offered and not renouncee(s) shall be entitled to obtain Split Forms.

§ As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, 1956 (hereinafter referred to as “the Act”) 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

TAX BENEFITS

A. Benefits available to the Company:

There is no additional benefit arising to the Company under the Income Tax Act, 1961 by issue of Right Equity Shares to the existing shareholders.

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B. Benefits to the Shareholders of the Company

1. Resident Shareholders

a) Under Section 112 of the Income Tax Act, 1961 and other relevant provision of the Act long-term capital gains arising on transfer of shares in the company i.e. if shares are held for a period exceeding 12 months shall be concessionally taxed at the flat rate of 20% (plus applicable surcharge) (after indexation as provided in the second proviso to section 48) or at 10% plus applicable surcharge (without indexation), at the option of the shareholder.

b) Under Section 54EC of the Income Tax Act, long-term capital gains tax arising on transfer of the shares to the Company shall be exempt from capital gains tax to the extent such gains are invested within six months from the date of transfer in the purchase of any specified bonds issued by the National Bank for Agriculture and Rural Development (NABARD), the National Highway Authority of India (NHAI), the National Housing Bank (NHB), the Rural Electrification Corporation Ltd. (REC) and Small Industrial Development Bank of India (SIDBI).

c) Under Section 54ED of the Income Tax Act, long-term capital gains tax arising on transfer or the shares of the Company shall be exempt from capital gains tax if the gains are invested within six months from the date of transfer in equity shares forming part of an eligible issue of capital.

d) Under Section 54F of the Income Tax Act, long-term capital gains tax arising on transfer of the shares of the Company held by an individual or Hindu Undivided Family shall be exempt from capital gains tax if the net sales considerations is utilized, within a period of one year before, or two years after the date of transfer, in the purchase of a new residential house, or for construction of a residential house within three years after the date of takeover.

e) Dividends distributed by the Company shall be exempt from tax. However, the Company will be liable to pay dividend distribution tax @ 12.5% of the dividend distributed.

f) In terms of section 10(32) of the Income Tax Act, any income of minor children clubbed in the total income of the parent under section 64(1A), shall be exempt to the extent such income does not exceed Rs.1,500/- in respect of each such child, in accordance with, and subject to the provisions of respective sections.

2. Non-Resident Indians/ Non-Residents:

(Other than FIIs and foreign venture Capital Investors)

A Non-Resident Indian (i.e. an individual being a citizen of India or person of Indian origin) has an option to be governed by the provisions of Chapter XII-A of the Income Tax Act, 1961 if he opts so:

a) Under section 115E of the Income Tax Act, 1961 capital gains arising to a non-resident on transfer of shares in the Company subscribed to in a convertible Foreign Exchange and held for a period exceeding 12 months shall be taxed at a concessional flat rate 10% (without indexation benefit) (plus applicable surcharge).

b) Under the provisions of section 115F of the Income Tax Act, 1961 long term capital gains arising to a non-resident Indian from the transfer of shares of the Company subscribed to in a convertible Foreign Exchange shall be exempt from Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so invested, the exception shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted within three years from the date of their acquisition.

c) Under provisions of Section 115G of the Income Tax Act, 1961 it shall not be necessary for a Non-Resident Indian to furnish his return of income if his only source of income is investment income or long term capital gains or both arising out of assets acquired, purchased or subscribed in convertible foreign exchange and tax deductible at source has been deducted there from.

d) Under Section 115I of the Income Tax Act, 1961, a Non-Resident Indian may opt not to be governed by the provision of Chapter XII-A for any Assessment Year by furnishing his Return of Income under Section 139 of the Income Tax Act declaring therein that the provisions of this chapter shall not apply to him for that assessment year and if he does so the provision of this chapter shall not apply to him instead the other provisions of the Income Tax shall apply.

e) Under Section 48 of the Income Tax Act, capital gains arising out of transfer of capital assets being shares in

28

the Company shall be computed by converting the cost of acquisition, expenditure in connection with such transfer and full value of the consideration received or accruing as a result of the transfer into the same foreign currency in which the shares were originally purchased and such gains are reconverted into Indian currency.

f) Under Section 112 of the Income Tax, 1961 and other relevant provisions of the Act, long term capital gains arising on transfer or shares in the Company i.e. if shares are held for a period exceeding 12 months shall be concessionally taxed at the flat rate of 20% (plus applicable surcharge) (after indexation as provided in the second proviso in Section 48) or at 10% (plus applicable surcharge) (without indexation), at the option of the shareholder.

g) Under Section 54EC of the Income Tax Act, long-term capital gains tax arising on transfer of the shares of the Company shall be exempt from capital gains tax to the extent such gains are invested within six months from the date of transfer in the purchase of any specified bonds issued by the National Bank of Agriculture and Rural Development (NABARD), the National Highway Authority of India (NHAI), the National Housing Bank (NHB), the Rural Electrification Corporation Ltd., (REC) and Small Industrial Development Bank of India (SIDBI).

h) Under Section 54ED of the Income Tax Act, long-term capital gains tax arising on transfer of the shares of the Company shall be exempt from capital gains tax if the gains are invested within six months from the date of transfer in equity shares forming part of an eligible issue of capital.

i) Under Section 54F of the Income Tax Act, long-term capital gains tax arising on transfer of the shares of the Company held by an individual or Hindu Undivided Family shall be exempt from capital gains tax if the net sales consideration is utilized, within a period of one year before, or two years after the date of transfer, in the purchase of a new residential house, or for construction of a residential house within three years.

j) No income tax is deductible at source under the present provisions of the Income Tax Act, where the Assessing Officer issues a certificate in Form 15, on an application by a non-resident shareholder in Form 13, on satisfaction that the total income of the shareholder justifies on deduction of tax at source as per the provisions of Section 197(1) of the Income Tax Act. In all other cases, wherever applicable, tax would be deducted at the rate of tax as per the relevant provisions of the Income Tax Act, or as per the double taxation avoidance treaties, whichever is lower.

3. Foreign Institutional Investors (FIIs)

In accordance with the provisions of section115AD of Income Tax Act, FIIs will be taxed at the rate of 20% on income received from security in the company, (other than dividends referred to in section 115O), at the rate of 10% on long term capital gains arising on the sale of the shares of the company. Such taxes will be subject to applicable surcharge.

4. Mutual funds

Under Section 10(23D) of the Income Tax Act, subject to the provisions of Chapter XII-E, any income earned by a mutual fund set up by a public sector bank or a public financial institution or registered under Securities & Exchange Board of India or authorised by The Reserve Bank of India will be exempt from income tax, subject to such conditions as the Central Government may by notification in the Official Gazette in this behalf.

C. Benefits available under the Wealth –tax Act, 1957

Asset as defined under Section 2(ea) of the Wealth-tax Act, 1957 do not include shares in companies and hence, the share of the Company is not liable to wealth-tax.

D. Benefits available under the Sales Tax Act

There is a proposal to introduce Value Added Tax (VAT), which would replace the existing state sales tax. The benefit in form of exemption is likely to undergo a change in VAT is introduced. The empowered Committee of State Finance Ministers have recommended that all benefits in the form of exemption be converted into deferral of Sales tax.

Notes:

All the above benefits will be available only to the sole/ first named holder in case the shares are held by joint holders.

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In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to benefits available under the Double Taxation Avoidance Agreements, if any, between India and country in which the non-resident has fiscal domicile.

In view of the individual nature of tax consequence, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her participation in the scheme.

IV. PARTICULARS OF THE ISSUE

Objects of the Issue

The objects of the present issue of equity shares are:

1. To augment the long term working capital resources of the Company by substituting part of the short term loans taken to meet the working capital gap with long term funds

2.To meet the expenses of the issue.

The objects of the present issue of equity shares are:

Fund Requirement Amount

[Rs. Lacs]

To augment the long term working capital resources of the Company by substituting part of the short term loans taken to meet the working capital gap with long term funds

5869.36

To meet the expenses of the issue 50.00

Total 5919.36

WORKING CAPITAL REQUIREMENTS

As per the Credit Monitoring Appraisal (CMA) submitted by the Company to its banker, State Bank of India, for the year 2003–04, the total working capital requirement of the company is given hereunder. The future working capital estimates have not been assessed by any bank / Institution and are based on company’s estimates.

Rs. Lacs

Year ending March 31 2003

2004

Current Assets Stock of Raw Materials, WIP and Finished Goods 27950.36 39755.14 Stores 2150.51 2530.31 Sundry Debtors 1522.01 2167.13 Cash & Bank 345.12 661.21 Other Current Assets 1554.20 3381.38 Others 47.72 559.88 Total Current Assets ( A ) 33569.92 49055.05 Current Liabilities Sundry Creditors 5706.00 4681.97 Dividend Payable 1222.26 2193.40 Term loan payable within one year 1695.00 3162.69 Other Current Liabilities 3836.00 5295.11 Total Current Liabilities ( B ) 12459.26 15333.17

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Working capital gap ( A – B ) 21100.66 33721.88 Bank borrowings as on 31.03.03/ 31.03.2004 15804 18000.58 Balance 5306.66 15721.30

The Company has projected that its working capital requirement has increased significantly in view of expansion projects undertaken in the past two years with a total outlay of Rs 19000 lacs approximately, the details of which are as follows:

Rs Lacs

60 KLPD Distillery at Babhnan 3000

Greenfield integrated complex at Haidergarh, UP with Sugar capacity of 4000 TCD and Cogeneration Power plant of 20.25 MW

16000

Total 19000

The working capital gap of Rs.15721.30 lacs (as mentioned in the table earlier) is proposed to be partly funded through the unutilised portion of the bank limits which are presently of Rs 20100 lacs, short term unsecured loans of Rs. 8000 lacs from mutual funds (as disclosed under the head Details of Unsecured Loans taken from mutual funds) and internal accruals.

The Company now proposes to augment its long-term working capital resources and issue proceeds to the tune of Rs. 5869.36 lacs will be utilised to partly repay the short term unsecured loans from mutual funds as aforesaid.

Present Working Capital Facility available to the Company

As on date, SBI has sanctioned fund based working capital facility of Rs. 20100 lacs of which the outstanding amount as on 31st March 2004 was Rs. 18000.58 lacs. This cash credit account is secured by hypothecation of stock of sugar, sugar in process and other current assets including book debts both present and future and 3rd charge by way of joint equitable mortgage on Company’s immovable and movable properties and also guaranteed by some of the directors of the Company.

BREAK-UP OF ISSUE EXPENSES

The issue expenses are estimated at Rs.50.00 lacs. The estimated break-up is as follows :

Particulars Amount Rs. Lacs

Fees to Lead Managers, Registrars, Auditors, Bankers and Legal Advisors 30

Printing & Stationery and postage expenses 12

Advertisement, travel and other Miscellaneous Expenses 8

Total 50

No part of the issue proceeds will be paid as consideration to promoter, directors, key managerial personnel, associate or group companies.

DETAILS OF UNSECURED LOANS TAKEN FROM OTHER BODIES CORPORATES

The company has taken short term loans from mutual funds in the form of Mibor linked Unsecured Non convertible Debentures to meet part of the working capital requirements. The face value of debentures is Rs. 100,00,000. These debentures are of 89 days duration subject to daily put and call option with option of further roll over. The details of these

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Mibor Linked debentures as on 31.03.2004 are as follows:

Particulars Rs. Lacs

1. Reliance A/c Liquid Fund 1000

2. Prudential ICICI –Liquid Plan 2000


4. Reliance A/c Liquid Fund 1000


Total 8000

Deployment of funds pending utilisation

The issue proceeds, pending utilisation, will be invested in debt schemes of mutual funds and fixed deposits with banks.

V. COMPANY, MANAGEMENT AND PROJECT

HISTORY

Balrampur Chini Mills Limited was incorporated on 14th July 1975 under the Companies Act 1956 as a wholly owned subsidiary company of Balrampur Sugar Company Limited [BSCL] and obtained the certificate of commencement of business on 26th July 1975. The registered office was earlier located at ‘Akashdeep’, 5, Lower Rawdon Street, Calcutta – 700 020 and was changed to its present location, [FMC Fortuna’, 2nd Floor, 234/3A, A.J.C.Bose Road, Calcutta – 700 020] with effect from 16.11.1992.

BSCL transferred to the Company under an indenture of conveyance dated 21st February 1976, with effect from 1st July 1975,the land, building and other assets and entire staff of its Balrampur Sugar Factory and also leased out to the Company all plant and machinery and electrical installation under a Deed of Lease for a period of eight years. Under an agreement dated 20th April 1978 the Company purchased the said plant, machinery and electrical installation earlier taken on lease at their written down value as appearing in the books of BSCL as on 30th June 1983. The initial capacity of the sugar factory was 800 TCD. The capacity of the Balrampur unit has since been expanded to the present capacity of 11000 TCD.

In 1990, the Company acquired the controlling stake in Babhnan Sugar Mill Ltd. The Company undertook expansion –cum-modernisation programmess of Babhnan sugar factory and consequently the crushing capacity was increased from 2500 TCD in the year 1992-93 to 8000 TCD completed in phases during the year 1999-2000. With a view to derive benefits of synergy and scale, Babhnan Sugar Mills Ltd. was amalgamated with the Company with effect from 1st April 1994.

In April 1998, the Company acquired the controlling stake in Tulsipur Sugar Co. Ltd., a profit making sugar Company located near Balrampur in Eastern U.P with an installed capacity of 2500 TCD. Tulsipur Sugar Co. Ltd. was merged with the Company with effect from 1st April 1999.The crushing capacity of Tulsipur Sugar was subsequently expanded to 6000 TCD.

Integrated sugar complex at Haidergarh, having a sugar plant of 4000 TCD capacity and bagasse based co-generation power plant of 20.25 MW capacity was commissioned during the year 2003-04.

Previous issue by the Company

The last issue of the Company was the public issue of 100000 equity shares of Rs.10/- each and 5000 11% redeemable shares and the offer for sale of 100000 equity shares of Rs.10/- each for cash at par by erstwhile promoter Balrampur Sugar Company Limited vide the prospectus dated 29th December 1978.

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Revaluation of Assets

Land, Building, Plant & Machinery, Railway Siding and Tubewell of the Balrampur unit were revalued as on 30th June 1988 on market value / replacement cost and the increase in value due to revaluation amounting to Rs.513.18 was credited to revaluation reserve.

Land, building, plant and machinery of Tulsipur unit were revalued as at 31st March 1999 on net replacement value and the increase in value due to revaluation amounting to Rs. 1921.08 lacs was credited to revaluation reserve in the books of erstwhile Tulsipur Sugar Company Limited [ since merged with the Company].

Conversion of Loan into Equity Shares

Unit Trust of India [UTI] had entered into an agreement with the Company for subscription to debentures of Rs.50 lacs, As per this agreement, UTI had the option of converting the Debentures into Equity Shares at any time after 6 months from the date of subscription ( 24.04.1986) but before maturity (23.04.1993). Debentures worth Rs.25 lacs were converted into 31250 equity shares of Rs.10/- each at a premium of Rs.70/- per share on 12.02.1993

MAIN OBJECTS

The main objects of the Company more specifically stated in the Memorandum of Association of the Company inter alia are:

1. To carry on the business of sugar manufacture and refinery and the business of buyers, sellers and dealers of sugar and refinery products

2. To purchase manufacture, produce, refine, prepare, import, sell and generally to deal in sugar, sugar-beets, sugarcane, molasses, syrups, alcohol and all products or by-products thereof and food products generally and in connection there with to acquire, construct and operate sugar or other works, to plant, cultivate, produce and raise or purchase sugarcane, maize, sugar beets and other allied crops and to transact such other work or business as may be proper or necessary in connection with the above objects or any of them.

3. (i) To carry on the business of manufacturers, distillers, purifiers, mixers, blenders, grinder, pulverizers, analysts workers, miners, packers, stores, importers, exporters, commission agents, representatives, Brokers, distributors, traders, suppliers and dealers of and in all kind of light, fine and heavy chemicals, organic and inorganic chemicals, vegetable oils and fats, wines and liquors, detergents, soaps, disinfectants and their by-products and wastes. Also to deal in fertilizers and manures.

(ii) To carry on the business of leasing and hire purchase finance and to provide on lease or on hire purchase all types of industrial and office equipment, plant & machinery, vehicles, land and buildings.

(iii) To acquire by purchase, lease exchange or otherwise land, buildings and hereditements of any tenure of description and any estate or interest therein and any rights over or connected with land so situate and to turn the same to account by preparing building sites and by constructing, reconstructing, altering, improving, decorating, furnishing and maintaining office, flats and houses.

4. To carry on the business of sale, distribution, generation, co-generation of all forms of energy and / or power by installation of Power Plant or otherwise and / or power from hydel, conventional and / or non-conventional sources including setting up of the facilities for distribution of all forms of power and energy and also to buy, sale power from / to any person, Government of India, any Municipal or local authority, company or person(s) in India or elsewhere and to transfer power to its own units for captive use.

Changes in Memorandum of the Company

Date Change

31.01.1976 Increase in Authorised Capital from Rs. 5 lacs to Rs. 25 lacs

28.10.1977 Increase in Authorised Capital from Rs. 25 lacs to Rs. 100 lacs

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04.04.1986 Increase in Authorised Capital from Rs. 100 lacs to Rs. 225 lacs.

30.12.1986 Amendment to Objects clause by addition of following clauses :

To carry on the business of manufacturers, distillers etc.

To carry on the business of leasing & hire-purchase, finance etc.

To acquire land and turn the same to account by preparing building, sites etc.



16.07.1998 Reclassification of Authorised Capital.


30.07.2001 Amendment to Objects clause by addition of following clause :

To carry on the business of sale, distribution, generation, co-generation of all forms of energy and / or power by installation of power plant or otherwise and / or power from hydel conventional and / or non-conventional sources including setting up of the facilities for distribution of all forms of power and energy and also to buy , sale power from / to any person, Government of India , any Municipal or local authority, company or person(s) in India or elsewhere and to transfer power to its own units for captive use.

PRESENT BUSINESS

The Company is presently engaged in the business of manufacture and sale of Sugar, distillery, power and bio-compost. The divisions of the Company are as follows:

Division Location Sugar Balrampur Tulsipur Babhnan Haidergarh Power Balrampur Haidergarh Distillery Balrampur Babhnan Bio-compost Balrampur Babhnan

Sugar Division

The sugar units of the Company are presently located at Balrampur, Tulsipur, Babhnan and Haidergarh.

The aggregate installed capacity for sugar units of the Company is 29000 TCD as follows:

Unit Installed Capacity [TCD] Balrampur 11000 Babhnan 8000 Tulsipur 6000 Haidergarh 4000 Total 29000

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Distillery Division

In 1995, the Company set up a 60 KLPD Distillery at Balrampur for production of industrial alcohol, using the molasses of sugar factories. In January 2001, the capacity of the distillery was expanded to 100 KLPD. The production of potable alcohol commenced in August 2001. The Company commenced production of Anhydrous Alcohol in August 2002. In February 2004, the Company commissioned a new distillery at Babhnan for production of Industrial Alcohol and Ethanol.

Power Division

The Company commissioned a bagasse based co-generation power plant of 19.55 MW capacity at Balrampur in March 2003.

Another bagasse based 20.25 MW co-generation power plant has been set up at the integrated complex at Haidergarh and the plant has commenced power generation from 1st November 2003.

Power from both the power plants of the Company is being supplied to Uttar Pradesh Power Corporation Limited under the Power Purchase Agreement (PPA) entered with them.

Bio-compost Division

The Company has installed organic manure manufacturing facility at the Balrampur Unit. The press mud of sugar manufacturing process and the spent wash of distillery is utilised to manufacture organic manure sold under the brand name Bhumi Shakti.

The Company’s first integrated complex has been commissioned at Haidergarh in November 2003 comprising a 4000 TCD sugar mill and 20.25 MW power plant.

RAW MATERIALS

Sugarcane is the principal raw material for manufacture of sugar. In the present regulated system, each sugar mill has a command area, which presently is the area covered by a radius of 15 kilometres from the factory. Each sugar mill is required to procure sugar cane from its command area. Sugar cane procured from farmers is supplied to factories in two ways:

(i) At Gate: farmers deliver sugar cane at the gate of sugar mill

(ii) At Cane Procurement Centres: sugar Cane is delivered by farmers at Cane Procurement Centres set up by the sugar mills.

PRODUCTS

Sugar

Sugar is produced from the evaporation of the juice that is extracted from the crushed cane. This is widely used as a sweetener in food and beverages. The principal portion of sugar sold within India is packaged in jute gunny bags.

Molasses

Molasses is a by-product generated from the manufacture of sugar. It can either be sold untreated or can be used as the principal feedstock for the manufacture of alcohol and ethanol and a host of downstream chemicals.

Alcohol

Molasses is distilled to produce rectified spirit, extra neutral alcohol, denatured spirit, potable alcohol and ethanol

Ethanol – Ethanol has been established as an alternative automotive fuel from international experience. Ethanol is a relatively clean fuel and replaces MTBE (Methyl Tertiary Butyl Ethyl), which can potentially contaminate the ground water. Ethanol is an effective oxygenate with twice as much oxygen as other widely used oxygenates such as MTBE. Besides, ethanol has near-zero sulphur content.

In early 2002, the Indian government permitted an ethanol-gasoline blend of up to five percent within India. The blend (ethanol plus gasoline) helps fuel combust more completely and reduces vehicle monoxide emissions by 15 to 20 percent. The result is a substantial net reduction in CO2/CO/particulate/hydrocarbon emissions,

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The increased use of ethanol is a renewable and environmentally friendly alternative to the consumption of the crude and petroleum products.

Bagasse

Bagasse, generated as a by-product, can be used in two ways - as paper and the generation of electricity. The Company uses bagasse as a feedstock for generation of electricity by burning it in boilers.

Power

Since bagasse has a high calorific value, it is also used in the generation of electricity, which substitutes the conventional thermal alternative and eliminates the emission of greenhouse gases. The Company has two co-generation plants to generate power from bagasse

Organic Manure

Spent wash, an effluent generated from the processed molasses, is used with press mud for the production of organic manure. This is gaining popularity at the expense of fertilizers with a high chemical content. This bio-fertilizer is manufactured by spraying the non-disposable spent wash over the press mud. The product is best suited for tea cultivation.

PRODUCTION PROCESS

The manufacturing of sugar begins with receiving harvested sugar cane at the factory. The prompt dispatch of cane to factory is an important determinant of the yield – the shorter the distance and faster the crushing, the higher the yield and vice versa. The cane is weighed at the factory gate on platform type weighbridges. This has the weight recording arrangement linked to a computer system, which records the gross and net weights as well as the price payable to the farmer(s). Cart cane is unloaded directly into the cane carrier and tractor trolley whereas truck cane is unloaded with the help of overhead travelling cranes.

The sugarcane is uniformly fed to the fibrizor to prepare the same for efficient milling. The prepared cane is then passed through the four / five milling tandem for the initial grinding. The juice extracted is strained and the crushed cane separated from the juice is returned to the mill tandem. Bagasse from the last mill is conveyed to the boilers as fuel by means of a carrier system.

The mixed juice from the milling plant is mechanically screened, followed by double sulphitation process. The juice is then heated to about 70 degrees centigrade in rapid flow vertical juice heater to maintain good co-efficient of heat transfer. The heated juice is limed and sulphised in a continuous juice sulphiter and then heated to 105 degree centigrade and passed through a flash tank for the removal of gas and air before letting it into continuous clarifier, where the settling of mud floc takes place. Accumulated mud from the mud boot is separately withdrawn by gravity flow. Clear juice is withdrawn from the upper regions through the overflow box for further treatment.

Clarified juice from the clarifier is further heated to around 15 degree centigrade in a plate heat exchange, before being pumped for thickening. Vapour from the 2nd effect is used to heat the pans. A quintuple effect evaporator is used for the final thickening of the juice into syrup. The syrup at 60-65 degree centigrade is further bleached by passing it through a continuous syrup sulphitation vessel and pumped to pan supply tanks at the pan floor.

Intensive exhaustion takes place in the pans before crystallization. Air-cooled crystallisers are used for proper crystallisations. After the mother liquor in the massecuite is exhausted to the optimum limit i.e maximum sugar from the mother liquor has been transferred to sugar crystals, the two constituents are separated in the centrifuges. The sugar is washed thoroughly with super heated wash in stages within the centrifugal baskets.

The sugar discharged from the centrifuges is conveyed, dried and cooled by multi tray hoppers. The sugar is then screened in a grader so as to separate fine and lumps. Sugar is thereafter sack filled, stitched and conveyed to sugar warehouses.

UTILITIES

Power

The power requirements of the Company are met by power generation using bagasse, a by-product of sugar manufacture. Bagasse is burnt in boilers to generate steam. Steam is then passed thorough turbines for generation of electricity and exhaust is used for sugar manufacturing process.

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Pollution Control / Environmental Clearances

The company has received the necessary consents and approvals under applicable pollution control laws.

Product Brands

The Company has introduced branded and packaged sugar for retail consumers in the year 2002-2003 with a view to secure enhanced brand positioning and brand recall. This is also expected to provide value addition and improved realisations. The Company is selling packaged sugar under the brand name ‘Balrampur’. The Company has developed a marketing network of 400 distributors across the country for packaged sugar.

The bio-compost produced as a by-product from press mud of sugar mills and spent wash of the distillery is marketed under the brand name ‘Bhumi Shakti’.

Human Resources

The total number of employees of the Company is about 2983, including skilled, unskilled seasonal and managerial personnel. The employee distribution is as follows:

Location No. of employees Corporate Office 151 Balrampur 1102 Babhnan 750 Tulsipur 725 Haidergarh 248 Others 7 Total 2983

INDUSTRY, COMPETITION AND FUTURE PROSPECTS

Sugar is amongst the second largest agro processing industries in India and comprises of 507 established sugar factories. 45 Million farmers and their families besides a large mass of agricultural labour are involved in sugar cane cultivation and its harvesting operations. Over 5 lac workmen are directly employed. The industry thus caters to over 7.5 % of rural population. By way of sugar cane price about Rs.16000 Crores are disbursed amongst farmers directly. Besides, its annual contribution to the Central State exchequers by way of taxes is around Rs.1800 crores. The industry is quite fragmented and total production of 202 lacs tones was achieved by 453 sugar units in 2002-2003 with a combined installed capacity of 185 lac tons.

The industry does not depend on fossil fuel but generates its own renewable sources of energy. It also generates surplus power through co-generation for use by consumers in interior rural areas. It has the potential to generate 5000 MW surplus power and reduce import bill of petroleum products by 5% by manufacture of ethanol. As against this, the industry has a combined installed capacity of 750 MW of co-generated power. The power is required to be sold to the state grid and tariffs are also fixed by the State Governments.

The Indian sugar industry has been highly regulated by both the Central and State Governments, who control the price of sugarcane, distribution and pricing of sugar and also the by-products (molasses). However, during the last few years there has been a gradual reduction in the regulations and it is expected that the regulations would be further eased in the coming years. In August 1998, the sugar industry was delicensed but it was stipulated that the distance between two sugar mills should be maintained at 15 kms. Thus, the sugar mills are now free to expand their capacities

The Central Government before the onset of crushing season declares a minimum cane price known as the Statutory Minimum Cane Price (SMP) based on estimated cost of production as recommended by Commission on Agricultural Costs and Prices (CACP). In addition, the State Governments announce a State Advisory Price (SAP), which has generally been higher than the SMP. As per current practice the Government has been increasing the SMP and the SAP in every season.

As regards the sale of sugar there exists a dual pricing system whereby a certain percentage of the sugar produced by the sugar mills, known as ‘levy sugar’, is procured by the Government for the Public Distribution System (PDS) at a

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subsidized price called the ‘levy price’ and the balance sugar production is allowed for free sale in the open market and is known as ‘free sale sugar’. From February 2001 the levy requirement was reduced by the Government to 15% (from 30%) and the levy price increased to Rs.11,250/- per tonne (from Rs.11,110/- per tonne). In March 2002 the levy was reduced to 10% and the levy price was fixed at Rs.12,152/- per tonne.

While the price for the free sale sugar is dependent on market forces, the sugar factories can sell sugar in open market only in quantities released by the Government every month for each factory.

The total offtake of sugar in domestic as well as export markets during last 3 years was as follows:

Lac Tonnes

2000-2001 2001-02 2002-03

Domestic Market 162.45 165.21 183.43

Export Market 12.44 10.53 15.00

Source: ISMA website, Statement on production, despatches and stock and ISMA Handbook of Sugar Statistics, July 2003

MARKET AND MARKETING ARRANGEMENTS

Transportation cost plays an important role to determine the markets in which sugar from a particular production unit can be sold. The Company sells sugar through a network of agents, who in turn sell to wholesellers. Trade settlements are usually on cash basis. The company sells its sugar in Eastern Uttar Pradesh, parts of Bihar, West Bengal and North East. Sugar is old as per monthly quotas released by the Sugar Directorate, Ministry of Consumer Affairs, Food & Public Distribution, and Government of India. Levy component of sugar [10% of sugar production] is procured by Government Agencies at levy price.

The Company is supplying ethanol to petroleum companies. The petroleum companies invite tenders for procurement of ethanol in which the Company participates.

The Company is selling surplus power to Uttar Pradesh Power Corporation Limited (UPPCL) under a Power Purchase Agreement valid for 10 years.

EXPORTS

Export of sugar depends on production, international price and domestic demand. The exports of sugar by the Company during previous few years are as follows:

Year Export Quantity [MT]

2000-2001 18585

2001-2002 Nil

2002-2003 Nil

2003-2004 20885

Credit Rating

ICRA has assigned rating of “A1+” category to the commercial paper and short-term debt of the Company. Credit rating for Non-convertible debentures of the Company has also been assigned “MAA” by ICRA.

SUBSIDIARIES

The company has no subsidiary companies:

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PROMOTERS AND THEIR BACKGROUND

The Company has been promoted by the Saraogi family. As informed by the Company, the present promoters of the Company are Shri Kamal Nayan Saraogi, Shri Vivek Saraogi and Smt. Meenkashi Saraogi.

1. Shri Kamal Nayan Saraogi

Voter ID Number: Not Available

Driving License Number: WB-01-029481

Shri Kamal Nayan Saraogi, Chairman of the Company is aged around 60 years and is a graduate in Commerce. He promoted the Company in 1975 and has experience of over 37 years in the sugar industry. He does not hold directorship in any other company.

2. Shri Vivek Saraogi

Voter ID Number: WB/23/146/168287

Driving License Number: WB-01-041658

Shri Vivek Saraogi, Managing Director of the Company is around 38 years of age. Shri Vivek Saraogi is a commerce graduate and joined the Company 1987. He is a past President of the Indian Sugar Mills Association. He was also the Chairman of Indian Sugar and General Industry Export Import Corporation Limited and is a

director of Indian Sugar Exim Corporation Limited, Dwarikesh Sugar Industries Limited and Riga Sugar Company Limited.

3. Smt Meenakshi Saraogi

Voter ID Number: Not Available

Driving License Number: Not Available

Smt. Meenakshi Saraogi, Joint Managing Director is around 60 years of age and is an arts graduate. Smt Saraogi has been associated with the Company since 1981 and looks after factory operations. She does not hold directorship in any other company

Disclosure

The Company hereby confirms that the Permanent Account Number, Bank Account Number and Passport Number of the promoters have been submitted to the Stock Exchanges on which securities are proposed to be listed, at the time of filing of the offer document to them.

The promoter group companies / associate companies / other ventures of promoters [including sole proprietorship / firms promoted by the Promoters] are as follows:

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Promoter Group Companies Activities Undertaken

1. Meenakshi Mercantiles Limited Investment & finance

2. Udaipur Cotton Mills Company Limited Investment & finance

3. Ranger Apparel Export Private Limited Manufacturing and export of ready made garments

4. Odimco Technologies Private Limited Distribution of online lottery

5. Online Art Dotcom Limited Media business

Associate Companies

1. Avantika Ganna Private Limited Investment & trading

2. E-commodities Limited On-line commodity exchange

Sole Proprietorship Firm

1. Kamal Nayan & Co. Trading & investment

MANAGEMENT AND ORGANISATION

Shri K.N. Saraogi is the Chairman of the Company. Shri Vivek Saraogi, Managing Director and Smt. Meenakshi Saraogi, Joint Managing Director look after the day-to-day affairs of the Company under the superintendence, control and direction of the Board of Directors.

A team of well-qualified and experienced professionals in technical, financial and administrative fields assists the Managing Director.

Shri K.N.Ranasaria, Whole time Director is associated with the company since its inception and has more than 40 years experience in the sugar industry.

Shri R.N.Misra, Whole time Director joined the Company since inception and has been involved in all departments of company’s workings.

MANAGERIAL COMPETENCE

The Board of Directors of the Company are as given below:

Particulars of the Board of Directors as on 29th July 2004

Name Residential Address

Date of Birth

Date of Appointment

Occupation Other Directorship

Shri Kamal Nayan Saraogi [Chairman]

7,Lower Rawdon Street Calcutta – 700 020

06.01.1944 14.07.1975 Industrialist Nil

Shri Vivek Saraogi [Managing Director]

7, Lower Rawdon Street Calcutta – 700 020

05.02.1966 03.07.1987 Industrialist Dwarikesh Sugar Industries Ltd Riga Sugar Co.Ltd. Indian Sugar Exim Corporation Ltd.

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Date of Birth

Date of Appointment


Smt. Meenakshi Saraogi [Joint Managing Director]

7, Lower Rawdon Street Calcutta – 700 020

04.03.1944 06.03.1981 Industrialist Nil

Shri Suresh Kumar Neotia

7/2, Queens Park, Calcutta – 700 019

08.09.1936 18.12.1984 Industrialist RKBK Ltd Dwarikesh Sugar Industries Ltd Gujrat Ambuja Cement Ltd. Boutique Hotels India Ltd. Ambuja Cement Eastern Ltd. Ambuja Cement Rajasthan Ltd. Ambuja Cement India Ltd. Gajraj Securities & Services Pvt.Ltd. RKBK Automobiles Pvt. Ltd. Section 25 Companies Ganpati Medical Institute Ambuja Educational Institute Ambuja Cement Foundation

Shri R.K.Choudhury

403, Suryakiran

4, Ashoka Road

Kolkata - 700027

26.01.1936 01.08.1975 Advocate Puja Corporation Ltd. Khaitan Consultants Ltd. RKDK International Ltd. Suryakiran Apartment Services Pvt.Ltd. Upper Ganges Sugar & Industries Ltd. Reliance Bengal Industries Ltd. Keventer Agro Ltd. Lynx Machinery & Commercials Ltd. Birla VXL Limited India Steamship Co.Ltd. The Pratappur Sugar & Industries Ltd. Warden Synplast Pvt.Ltd. Elpro International Ltd.

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Date of Birth

Date of Appointment


Shri Sudhir Jalan

Jalan House 9, Alipore Road Kolkata - 700 027

07.11.1944 08.09.1977 Industrialist Bells Softech Ltd. Bells Softech Inc. Bikanna Commercial Co.Ltd. Rasoi Ltd. Meenakshi Tea Co. Ltd Sublime Agro Ltd. The Shajahanpur Electric Supply Co.Ltd. The Sirpur Paper Mills Ltd. SES (India) Ltd. SICPA India Ltd. Brar Properties & Holdings Pvt.Ltd.

Shri S.B.Budhiraja

3, Sukhchain Marg, DLF Qutab Enclave – I, Gurgaon, Haryana - 122002

23.03.1931 27.12.1993 Manag-ement Consultant

Banaras House Ltd. JCL International Ltd. KLG Systel Ltd. Neuland Laboratories Ltd. Sushramika Pvt.Ltd. Hindustan Sanitaryware & Industries Ltd.

Shri M.M.Mukherjee

105, Sundernagar, New Delhi – 110 003

09.03.1944 28.10.2002 Service Nil

Shri Naresh Chandra, I.A.S(retd)

C/4/4053, Vasant Kunj, New Delhi – 110 070

01.08.1934 12.05.2003 Indian Admini-strative Service (Retired)

Hindustan Motors Ltd. Haldia Petrochemicals Ltd. Bajaj Auto Ltd. The Lord Krishna Bank Ltd. Media Content & Communications Services India Pvt.Ltd. Linde Process Technologies India Pvt.Ltd. ACC Ltd. Vedant Resources Plc, U.K

Shri K.N.Ranasaria [Whole-time Director]

7C, Middleton Street, Kolkata – 700 071

15.12.1934 12.05.2003 Service Linc Pen & Plastics Ltd.

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Date of Birth

Date of Appointment


Shri R.N.Misra [Whole-time Director]

Balrampur Chini Mills Ltd,

P.O Balrampur, Dist.Balrampur U.P

02.07.1937 24.09.1988 Service Nil

Change in directors and auditors of the Company during the last three years

i) Change in Directors

Name of the Director Date of Appointment

Date of Cessation

Remarks

Shri B.K.Biyani 14.07.2000 29.07.2003 Resigned

Ms.N.Prasad 14.05.2001 06.02.2003 Resigned

Shri A.Ramamurthy 30.07.2001 28.10.2002 Resigned

Shri B.P.Mandal 09.06.2000 27.06.2001 Ceased [IDBI Nominee]

Shri J.L.Bajaj 30.03.1998 14.03.2001 Resigned

Shri M.M.Mukherjee 28.10.2002 - Appointed

Shri Naresh Chandra 12.05.2003 - Appointed

Shri K.N.Ranasaria 12.05.2003 - Appointed

ii) Auditors:

There was no change in the Auditors during the last three years.

Brief Profile of Board of Directors

1. Shri Kamal Nayan Saraogi, Chairman of the Company is aged 60 years and is a graduate in Commerce. He promoted the Company in 1975 and has experience of over 38 years in the sugar industry.

2. Shri Vivek Saraogi, Managing Director of the Company is 38 years of age. Shri Vivek Saraogi is a commerce graduate and joined the Company in 1987. He is a past President of the Indian Sugar Mills Association.

3. Smt. Meenakshi Saraogi, Joint Managing Director is 60 years of age and is an arts graduate. Smt Saraogi has been associated with the Company since 1981 and looks after factory operations.

4. Shri Suresh Neotia, Director is 68 years of age and is a law graduate from Calcutta University. Shri Neotia is the co-founder and Chairman of Gujrat Ambuja Cements Limited and has served on board of several leading Indian companies. Shri Neotia is a collector of India art and is the president of Anamika Kala Sangam, founder of Padatik and a trustee of Victoria Memorial Trust.

5. Shri Sudhir Jalan, Director is 59 years of age and is a commerce graduate and an MBA from IIM, Calcutta. He is a past president of FICCI [Federation of Indian Chambers of Commerce and Industry] and has presided over several associations such as the Indian Chambers of Commerce and Industry, Indian Council of Arbitration, All India Organisation of Employers etc.

6. Shri R.K.Choudhury, Director is 68 years of age. Shri Choudhury is a leading advocate based in Kolkata and has wide experience in the matters of taxation, corporate planning and international arbitration. He is on the Board of Directors

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of various industrial houses of India. He is a member of International Bar Association, Supreme Court Bar association, Bar Council of India and Indian Council of Arbitration. He is also associated with various social and philanthropic organizations.

7. Shri S.B.Budhiraja, Director is 73 years of age. Shri Budhiraja is a gold medallist in Mechanical engineering from the University of Roorkee and is an independent management consultant. He was the youngest ever Managing Director of Indian Oil Corporation from 1974 to 1978. He has also been the Managing Director of IBP, Balmer Lawrie and Indian Oxygen. He is a fellow of the All India Management Association and the Institute of Management Consultants of India. He was the President, Indian Chamber of Commerce, Kolkata in 1989-90 and the Chairman, CII Eastern Region in 1988-89.

8. Shri M.M.Mukherjee, Director is 60 years of age and is a university rank holder in Political Science from Calcutta University and also holds an associate diploma from Insurance Institute of India, Mumbai. He joined Life Insurance Corporation of India in 1966 and at present is the Zonal Manager In-charge of LIC operations in Northern Zone, New Delhi.

9. Shri Naresh Chandra, Director is 70 years of age. Shri Chandra joined the Indian Administrative Service in 1956 and has held many posts, including the Secretary and the Cabinet Secretary to Government of India, Senior Advisor to Prime Minister of India, Governor of Gujarat and Ambassador of India to the U.S.A. At present, Shri Chandra is the Chairman, Committee on Corporate Governance set up by Union Ministry of Finance and Company Affairs.

10. Shri K.N.Ranasaria, Whole time Director is 70 years of age and has more than 40 years experience in the sugar industry. Shri Ranasria holds an M.A (Sahityaratna) and is associated with the company since its inception.

11. Shri R.N.Misra, Whole time Director is 67 years of age. Shri Misra is a M.A in Geography and has 40 years of experience in sugar industry. He joined the Company since its inception and has been involved in all departments of company’s workings.

All the above directors, except Shri Vivek Saraogi, Smt.Meenakshi Saraogi, Shri K.N.Ranasaria and Shri R.N.Misra [ being managing / whole time directors] are liable to retire by rotation as per the provisions of Companies Act 1956.

Details of remuneration of Managing / Whole time directors for the year ended 31st March 2004

Salary (Rs.) Benefits (Rs.) Commission (Rs.) Total (Rs.)

Shri Vivek Saraogi, Managing Director

2400000 585803 2400000 5385803

Smt. Meenakshi Saraogi, Joint Managing Director

2400000 679077 2400000 5479077

Shri R.N.Misra, Whole-time Director

481417 73965 - 555382

Shri K.N.Ranasaria, Whole-time Director

828387 337583 - 1165970

Apart from sitting fees, Non-executive directors are paid commission within the overall limit of Rs. 7.50 lacs for all the non-executive directors.

Details of Remuneration and terms of appointment of Managing / Whole-time Directors.

1. Shri Vivek Saraogi, Managing Director

Shri Vivek Saraogi was re-appointed as the Managing Director of the Company by the Board of Directors at their meeting held on 14.05.2001 and this was approved by the shareholders at the annual general meting held on 30.07.2001. The re-appointment is for a period of 5 years effective from 1st April 2001. The terms and conditions of appointment are as follows :

a). Salary : Rs.200000 per month

44

b). Commission : 1% of the net profit of the Company subject to a ceiling of Rs. 24 lacs per annum

c). Perquisites

i)Medical Reimbursements

: Reimbursement of actual medical expenses in India and / or abroad and including hospitalisation, nursing home and surgical charges for himself and family.

ii)Leave Travel Concession

; Reimbursement of actual travelling expenses for proceeding on leave once in a year in respect of himself and family to any destination in India or abroad

iii). Leave ; One month leave for eleven months service

iv).Personal accident Insurance

; Premium upto Rs.15000/- per annum

v).Medical Insurance

: As per Company’s rule

vi) Club Fee : Reimbursement of membership fee for clubs in India and abroad including admission and life membership fees.

vii) Provident Fund : As per Company’s rule

viii). Gratuity : ½ months salary for each completed year of service

ix). Car : Company’s car with driver for official use

x).Telephone : Telephone facility at the residence including cell phone.

Explanation : Perquisites shall be evaluated as per Income Tax Rules wherever applicable and in absence of any such rules perquisites shall be evaluated at actual cost.

Overall remuneration: The aggregate of salary, commission and perquisites in any one financial year shall not exceed the limits prescribed from time to time under section 198, 309 and other applicable provisions of the Companies Act 1956 read with Schedule XIII, Part II Section-I of the said Act. In the event of absence or inadequacy of profits during the period Shri Vivek Saraogi shall be paid the above remuneration as minimum remuneration subject to the limit prescribed under Section-II, Part II of Schedule XIII of the Companies Act 1956.

2. Smt. Meenakshi Saraogi, Joint Managing Director

Smt. Meenakshi Saraogi was re-appointed as the Joint Managing Director of the Company by the Board of Directors at their meeting held on 28.10.2002 and this was approved by the shareholders at the annual general meting held on 29.07.2003. The re-appointment is for a period of 5 years effective from 1st October 2002. The terms and conditions of appointment are as follows :


b). Commission : 1% of the net profit of the Company subject to a ceiling of Rs. 24 lacs per annum

c). Perquisites

i).Housing : Free accommodation at the Factory subject to deduction of 10% of the Salary

45

ii)Medical Reimbursements

: Reimbursement of actual medical expenses in India and / or abroad and including hospitalisation, nursing home and surgical charges for herself and family.

iii)Leave Travel Concession

; Reimbursement of actual travelling expenses for proceeding on leave once in a year in respect of herself and family to any destination in India or abroad

iv).Leave ; One month leave for eleven months service

v).Personal accident Insurance

; Premium upto Rs.15000/- per annum

vi).Medical Insurance

: As per Company’s rule

vii) Club Fee : Reimbursement of membership fee for clubs in India and abroad including admission and life membership fees.

viii) Provident Fund : As per Company’s rule

ix). Gratuity : ½ months salary for each completed year of service

x). Car : Company’s car with driver for official use

xi).Telephone : Telephone facility at the residence including cell phone.

Explanation : Perquisites shall be evaluated as per Income Tax Rules wherever applicable and in absence of any such rules perquisites shall be evaluated at actual cost.

Overall remuneration: The aggregate of salary, commission and perquisites in any one financial year shall not exceed the limits prescribed from time to time under section 198, 309 and other applicable provisions of the Companies Act 1956 read with Schedule XIII, Part II Section-I of the said Act. In the event of absence or inadequacy of profits during the period Smt. Meenakshi Saraogi shall be paid the above remuneration as minimum remuneration subject to the limit prescribed under Section-II, Part II of Schedule XIII of the Companies Act 1956.

3. Shri K.N.Ranasaria, Whole-time Director

Shri K.N.Ranasaria was appointed as a Whole-time Director of the Company by the Board of Directors at their meeting held on 12.05.2003 and this was approved by the shareholders at the annual general meting held on 29.07.2003. The appointment is for a period of 3 years effective from 12th May 2003. The terms and conditions of appointment are as follows :


b). Perquisites

i).Bonus ; 20% of the salary

ii) Medical Reimbursements

: For self and family subject to a ceiling of one month of salary.

iii) Leave Travel Concession

; Reimbursement upto one months salary for himself and family.

iv). Leave ; One month leave for eleven months’ service – leave encashment as per Company’s rules

46

v) Club Fee : Reimbursement of membership fee for clubs in India

vi).Electricity : Subject to a ceiling of 5% of the salary

vii) Provident Fund : As per Company’s rule

viii). Gratuity : ½ months salary for each completed year of service

ix). Car : Company’s car with driver for official use

x).Telephone : Telephone facility at the residence including cell phone.

Explanation : Personal long distance calls on telephone and use of car for personal purpose shall be billed by the Company. Perquisites shall be evaluated as per Income Tax Rules wherever applicable and in absence of any such rules perquisites shall be evaluated at actual cost.

Overall remuneration: The aggregate of salary, commission and perquisites in any one financial year shall not exceed the limits prescribed from time to time under section 198, 309 and other applicable provisions of the Companies Act 1956 read with Schedule XIII, Part II Section-I of the said Act. In the event of absence or inadequacy of profits during the period Shri K.N.Ranasaria shall be paid the above remuneration as minimum remuneration subject to the limit prescribed under Section-II, Part II of Schedule XIII of the Companies Act 1956.

4. Shri R.N.Misra, Whole-time Director

Shri R.N.Misra was re-appointed as a Whole-time Director of the Company by the Board of Directors at their meeting held on 17.05.2004 and this was approved by the shareholders at the annual general meting held on 29.07.2004. The re-appointment is for a period of 2 years effective from 1st July 2004. The terms and conditions of appointment are as follows :


b). Housing : Free accommodation subject to deduction of 10% of the salary

c). Medical Reimbursements

: For self and family subject to a ceiling of 4% of salary in a year.

d). Electricity and water ; Free of charge

e). Leave Travel Concession

; One month salary for eleven month’s service

f). Provident Fund : As per the Rules of the Company

g). Gratuity : 15 days salary for each completed year of service

h). Telephone : Telephone facility at the residence. Personal long distance calls on telephone shall be reimbursed to the Company.

i) Leave : As per Rules of the Company.

Explanation : Perquisites shall be evaluated as per Income Tax Rules wherever applicable and in absence of any such rules perquisites shall be evaluated at actual cost. Total perquisites shall be restricted to an amount equivalent to annual salary.

In the event of absence or inadequacy of profits during the aforesaid period Shri R.N.Misra shall be paid the above remuneration as minimum remuneration. The above remuneration is subject to the limit prescribed under Section-II, Part II of Schedule XIII of the Companies Act 1956.

The shareholdings of the Directors [other than promoters] in the Company as on 29.07.2004 are as follows:

47

No. of shares held

Shri R.K.Choudhury 5000

Shri S.K.Neotia 2500

Shri S.B.budhiraja 400

Shri R.N.Misra 2350

Shri K.N.Ranasaria 19108

Corporate Governance

The Company has complied with SEBI Guidelines in respect of Corporate Governance especially with respect to broad basing of the Board of Directors, and constitution of the following committees:

- Audit Committee

The Audit Committee of the Company comprises entirely of independent, non-executive directors, possessing knowledge of corporate finance, accounts and company laws. The chairman of the committee is an independent, non-executive director nominated by the Board.

The constitution of the Audit Committee as on 30th June 2004 is as follows:

1. Shri S.B.Bhudhiraja – Chairman

2. Shri Naresh Chandra – Vice Chairman

3. Shri S.K.Neotia

4. Shri Sudhir Jalan

5. Shri M.M.Mukharjee

The role and terms of reference of the Audit Committee covers the matters specified under clause 49 of the Listing Agreement and Section 292A of the Companies Act 1956, besides other terms as may be referred by the Board. Key terms of reference include ( but are not limited to) the following :

a). To hold discussions with auditors

b). To oversee the financial reporting process

c). To recommend the appointment and removal of external auditor.

d). To critically review the accounting standards.

e).To review, alongwith auditors, the adequacy of internal control systems in the Company

f). To review the adequacy of internal audit

g). To review the Company’s financial and risk management policies.

- Share Transfer Committee

The Share Transfer Committee of the Company deals with various matters relating to share transfer / transmission, issue of duplicate share certificates, approving the split and consolidation requests and other matters relating to transfer and registration of shares.

The members of the committee are:

1. Shri Kamal Nayan Saraogi - Chairman


3. Smt. Meenakshi Saraogi

4. Shri S.K.Neotia

5. Shri Sudhir Jalan

48

6. Shri R.K.Choudhury

- Shareholder / Investor Grievances Committee

The Shareholder / Investor grievances committee oversees the redressal of shareholders and investors grievances in relation to transfer of shares, non-receipt of annual report, non-receipt of dividend etc.

The members of the committee are:

1. Shri Sudhir Jalan - Chairman

2. Shri Naresh Chandra


Key Managerial Personnel

The key managerial personnel of the company heading various functions are as under:

N a m e Age Date of Joining

Designation Qualifications Last Employment

Experience in years*

Remuneration

[Rs.Lacs]**

Corporate Office, Calcutta

1.Shri Kishor Shah 40 24.01.1994 Chief Financial Officer

A.C.A Manager Accounts &

Finance- Keventer Agro

Ltd.

16 [10] 7.99

2.Shri S.K.Agrawala

49 01.01.1995 Company Secretary

B.Com (Hons), AASM, FICWA,

FCS

Secretary – Birla Cotton Spinning &

Weaving Mills Ltd.

27 [24] 7.00

Balrampur Sugar Division

3. Mr.P.K.Shrawat 58 08.04.2004 Chief General Manager

B.Sc, B.Sc Engg(Mecheni

cal)

New Swadeshi

Sugar Mills Ltd.

33[31] -

4. Shri N.K.Khetan 45 01.06.1989 Senior General Manager

[Commercial]

B.Com, FCA Partner, G.P.Agarwal

& Co.

15 [15] 13.12

Power Division

5.Shri B.S.Chamarthy

41 06.06.2003 Deputy General Manager

B.Tech Bannari Amman

Sugars Ltd.

22[22] 2.86

Distillery Division

49




Remuneration

[Rs.Lacs]**

6.Shri N.D.Tiwari 58 23.12.2001 General Manager

B.Sc. Synthetics & Chemicals

Ltd.

31[25] 4.58

7.Shri S.S. Singh 47 26.10.2002 Distillery Manager

M.Sc, D.I.F.A.T Daurala Distillery

19[19] 3.71

Bio-Compost Division

8.Dr.Arvind Krishna

52 15.03.2002 General Manager

M.Sc, Ph.D Consultant, National Botanical Research Institute, Lucknow

30[30] 3.40

Unit: Babhnan Sugar Division

9. Shri P.R.Singh 55 25.07.2003 Chief General Manager

B.Com, L.L.B, PGDBM

J.K.Industries Ltd.

37[37] 12.09

10.Shri G.L.Khetan 45 01.11.1990 Senior General Manager

[Commercial]

B.Com (Hons), FCA

Hindustan Development Corporation

Limited

16[13] 11.99

Unit: Tulsipur Sugar Division

11. Shri P.C.Bansal

59 01.06.2000 Senior General Manager

B.Sc, B.E Pratappur Sugar Co.Ltd

36 [36] 8.29

12. Shri Ajay Agarwal

35 08.11.1996 Finance Controller

B.Com, LLB, ACA

Triveni Engineering & Industries

Ltd.

10[10] 4.17

Unit: Haidergarh Sugar Division

13. Shri K.P.Singh 48 16.09.2002 Senior General Manager

B.E (Mechanical Engineering)

Ghaghara Sugar Ltd.

26(26) 10.02

14. Shri Sanjay Agarwal

34 16.08.1998 General Manager

(Finance & Administratio

n)

B.Com (Hons), ACA

Partner – M/s G.P.agrawal &

Co., Chartered

Accountants

10(7) 8.08

Power Division

50




Remuneration

[Rs.Lacs]**

15. Shri Anil Gupta 41 24.03.2003 Deputy General Manager

Diploma in M.E, B.O.E

Thermax Ltd. 21(21) 3.92

*The figures in parentheses indicates the no. of years of experience in the functional industry.

** For the financial year 2003-04

All the above are the permanent employees of the Company and are on the rolls of the Company.

Changes in Key management personnel during last 3 years

Name Designation Reason Date of Appointment / Cessation

1 Shri I.D.Mittal Group General Manager

Resigned 12.07.2002

2 Dr.A.C.Mishra Chief General Manager Death 02.07.2003

3 Shri Mohan Sharma Chief General Manager Resigned 10.04.2004

4 Shri P.K.Shrawat Chief General Manager Appointed 08.04.2004

Shareholding of Key Managerial Personnel

Name No. of shares held

Shri Kishor Shah 500

Shri S.K.Agrawala 25

Shri N.K.Khetan 7250

Shri S.S.Singh 1200

Shri G.L.Khetan 2025

None of the directors / key managerial personnel are inter-related except Shri K.N.Saraogi, Smt. Meenakshi Saraogi and Shri Vivek Saraogi.

PROMOTER GROUP / ASSOCIATE COMPANIES / OTHER VENTURES OF PROMOTERS

1. Meenakshi Mercantiles Limited

Meenakshi Mercantiles Limited [MML] was incorporated on 2nd July 1985 . The Company is engaged in the business of investment and finance. The shares of the Company are listed on Guwahati Stock exchange. The key financials of MML for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2004 2003 2002 Equity share capital 248.80 248.80 248.80 Reserves & Surplus 1605.05 233.83 201.13 Sales and Other Income 4192.23 294.89 180.91 Profit (Loss) after Tax 1371.21 32.92 58.5

51

Earning per share (Rs.) 55.11 1.32 2.35 Net asset Value per share (Rs.) 74.51 19.40 18.08

There has been no trading in the shares of the Company during last 6 months.

Board of Directors

The Board of Directors of the Company is as follows:

Mr.M.P.Seksaria Mr.J.K.Bajaj Mr. S.C.Sharma Mr.Rohit Bothra

Shareholding pattern of the Company as on 30.06.2004 is as follows:

No. of Shares % of Shareholding Promoters 1373100 55.19 Private Corporate Bodies 269800 10.84 Indian Public 845100 33.97 2488000 100

There are no pending litigations / defaults / disputes / outstanding claims in respect of the Company.

2. Udaipur Cotton Mills Company Limited

Udaipur Cotton Mills Company Limited [UCML] was incorporated on 10th of July 1961 and is engaged in the business of investment and finance. The shares of the Company are listed on Uttar Pradesh Stock Exchange Association Limited, Kanpur. The key financials of UCML for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2004 2003 2002 Equity share capital 285.56 285.56 285.56 Reserves & Surplus 1889.71 256.21 156.91 Sales and Other Income 5138.92 488.83 213.60 Profit (Loss) after Tax 1633.49 99.32 68.33 Earning per share (Rs.) 57.20 3.48 2.39 Net asset Value per share (Rs.) 76.17 18.97 15.49

There has been no trading in the shares of the Company during last 6 months.

Board of Directors


Mr.M.P.Seksaria Mr.J.K.Bajaj Mr. S.C.Sharma Mr.Rohit Bothra

Shareholding pattern of the Company as on 30.06.2004 is as follows:

No. of Shares % of Shareholding Promoters 1772000 62.05

52

Private Corporate Bodies 286972 10.05 Indian Public 796698 27.90 2855670 100


3. Online Art Dotcom Limited

Online Art Dotcom Limited [OADL] was incorporated on 15th November 2000 and is engaged in the media business. The shares of the Company are not listed on any Stock Exchange. The key financials of OADL for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2003 2002 2001

Equity share capital 10.00 0.01 0.00

Reserves & Surplus 0 0 0

Sales and Other Income 9.92 0.00 0.00

Profit (Loss) after Tax (7.85) (0.04) 0.00

Earning per share (Rs.) (7.85) (40.00) 0.00

Net asset Value per share (Rs.) 9.54 -30.00 0.00

The promoters hold 50% of the shares of the Company

Board of Directors


Mr R S Khandelwal Mr Manak Choudhary Mr Gautam Guha Majumdar There are no pending litigations / defaults / disputes / outstanding claims in respect of the Company.

4. Ranger Apparel Export Private Limited

Ranger Apparel Export Private Limited [RAEPL] was incorporated on 5th June 1996 and is engaged in the business of manufacturing and export of ready made garments. The shares of the Company are not listed on any Stock Exchange. The key financials of RAEPL for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2004 2003 2002


Reserves & Surplus 560.36 572.60 539.89


53

Profit (Loss) after Tax 2.36 85.77 325.38

Earning per share (Rs.) 0.006 0.25 0.94

Net asset Value per share (Rs.) 26.29 26.40 25.69

The promoters hold 98.98% of the shares of the Company

Board of Directors


Mr Udit Dhanuka Ms Stuti Dhanuka

Contingent Liabilities as on 31.03.2004

Bank Guarantees given for import of raw material / machineries under Advance License Scheme against fulfilment of export obligations –Rs. 7.92 lacs


5. Odimco Technologies Private Limited

Odimco Technologies Private Limited [Odimco] was incorporated in 1998 and is engaged in the business of distribution of online lottery. The shares of the Company are not listed on any Stock Exchange. The key financials of Odimco for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2003 2002 2001




Profit (Loss) after Tax 0.24 (0.08) (0.10)

Earning per share (Rs.) 2.35 -0.78 -50.00


The promoters hold 27% of the shares of the Company

Board of Directors


Mr Sanjay Goenka Mr Ashish Goenka Mr SameerThukral Ms Sumedha Saraogi


6. E-commodities Limited

54

E-commodities Limited [ECL] was incorporated on 3rd April 2000 and is engaged in the business of on-line commodity exchange. The shares of the Company are not listed on any Stock Exchange. The key financials of ECL for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2003 2002 2001




Profit (Loss) after Tax (19.76) (227.47) (141.60)

Earning per share (Rs.) (0.38) (6.19) (3.85)


BCML holds 14.42% of the shares of the Company

Board of Directors


Mr S L Jain Mr Vinay Kumar Gupta Mr. P Ram Prabhu


7. Avantika Ganna Private Limited

Avantika Ganna Private Limited [AGPL] was incorporated on 31st May 1994 and is engaged in the business of investment and trading. The shares of the Company are not listed on any Stock Exchange. The key financials of AGPL for the previous 3 financial years [based on the audited financial statements] are as follows:

Rs. Lacs

As at 31st March

2003 2002 2001


Reserves & Surplus 137.63 99.59 85.44


Profit (Loss) after Tax 38.04 14.15 5.93

Earning per share (Rs.) 7.61 2.83 1.19


BCML hold 39.34% and the promoter group holds 0.78% of the shares of the Company

55

Board of Directors


Mr Kishor Shah Mr Dixit Arya Mr Mukesh Jain


8. Kamal Nayan & Co.

Kamal Nayan & Co. is a sole proprietorship firm owned by Shri Kamal Nayan Saraogi. The firm is engaged in trading and investment activities.

Rs. lacs

As at 31st March

2004 2003 2002

Capital 2805.97 948.45 697.25

Profit during the year 1941.63 262.23 197.49


Details Of Issues Made By Other Listed Group Companies During The Last 3 Years

1. As per the Companies Act 1956 under section 370 (1B)

There are no such companies

2. Issues made by other listed group / promoter companies in the past three years


VI. FINANCIAL PERFORMANCE OF THE COMPANY FOR THE LAST FIVE YEARS

A. AUDITOR’S REPORT ON FINANCIAL STATEMENTS The Board of Directors Balrampur Chini Mills Limited FMC Fortuna, 234/3A, A.J.C. Bose Road, Kolkata – 700 020. Dear Sirs, We have examined the financial information of Balrampur Chini Mills Limited, “the Company” (Part I to Part VII annexed herewith) for the five financial years ended 31st March 2004, being the last date upto which the financial statements of the company, which are the responsibility of the company’s management, have been made up, and audited and reported upon by us. In terms of the requirements of:

(a) Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 and

b) The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 19, 2000 in pursuance of Section 11 of SEBI Act, 1992, “the SEBI Guidelines”, clarification XIII and XIV issued by SEBI, and

(c) The instructions dated20.07.2004 received from Balrampur Chini Mills Limited requesting us to issue

a report as statutory auditors of the Company relating to the offer document being issued by the Company in connection with the Rights Issue Offer of equity shares of Balrampur Chini Mills Limited.

We report as under:

56

The profits and the assets and liabilities of the company for the and as at the end of each of the five financial years ended 31st March 2004 have been arrived at, after making such adjustments or regroupings as were, in our opinion, appropriate, and the same, subject to the notes given thereto, are as set out hereunder. In our opinion the financial information of Balrampur Chini Mills Limited set out in this report, read with the respective Significant Accounting Policies and after making such adjustments or regrouping as were, in our opinion, appropriate, and the same, subject to the notes given thereto, have been prepared in accordance with Part II of Schedule II of the Companies Act, 1956 and the SEBI Guidelines. Our this Report, is being provided solely for the use of Balrampur Chini Mills Limited for the purpose of inclusion in the said Offer Document in connection with the Rights Issue Offer of the equity shares of the company. This Report may not be used or relied upon by, or disclosed, referred to or communicated by yourself (in whole or in part) to, any third party for any purpose other than the stated use, except with our written consent in each instance, and which consent, may be given, only after full consideration of the circumstances at that time.

Yours faithfully, For G.P. Agrawal & Co. Chartered Accountants

Place: Kolkata Date : 29th July 2004 sd/-

[Ajay Agrawal) Membership No. 17643

Partner.

B. ADJUSTED PROFIT & LOSS ACCOUNT OF BCML FOR LAST FIVE YEARS

The audited Profit / Loss account of the Company for each of the last five financial years ended 31st March 2004 are given below. These have been arrived at after making such adjustments/ regroupings as considered appropriate in the auditors’ opinion and read together with the notes set out in Para 1.2 given thereunder:

Rs/ Lacs

STATEMENT OF ADJUSTED PROFIT & LOSS YEAR ENDED 31st MARCH

1999-2000 2000-2001 2001-2002 2002-2003 2003-04

INCOME

Sales of products manufactured by the company 39347.97 61388.39 54894.64 66758.42 85384.92

Other Income 223.14 278.70 208.55 216.37 609.63.

Increase/(Decrease) in Stock 7861.91 (1748.88) 1743.94 852.29 11599.26

Profit Transferred from Farm Account 2.45 4.26 2.99 2.84 (0.64)

Total Income 47435.47 59922.47 56850.12 67829.92 97593.17

EXPENDITURE

Raw Material Consumed 28570.27 35835.53 32730.14 39503.72 58844.23

Staff Costs 2105.70 2432.45 2466.18 2858.76 3514.16

Other Manufacturing & Administrative Expenses 3950.80 4915.68 5263.21 7124.14 9510.23

Selling & Distribution Expenses 297.00 440.35 554.34 765.00 1028.14

57

STATEMENT OF ADJUSTED PROFIT & LOSS YEAR ENDED 31st MARCH

1999-2000 2000-2001 2001-2002 2002-2003 2003-04

Excise Duty 5188.88 3759.09 6347.50 10255.74 11565.58

Interest & other Financial Charges 2870.34 2962.74 1691.45 1355.00 1979.64

Managerial Remuneration 51.68 53.60 115.37 114.12 129.03

Transfer to Storage Fund for Molasses 10.88 9.38 6.70 10.21 13.44

Share Issue Expenses Written off 14.91 14.91 14.91 14.91 7.41

43060.46 50423.73 49189.80 62001.60 86591.86

Net Profit before Depreciation, Taxation and Extraordinary Items 4375.01 9498.74 7660.32 5828.32 11001.31

Depreciation 1688.04 2078.98 2016.77 2127.67 3022.70

Net Profit before Taxation and Extraordinary Items 2686.97 7419.76 5643.55 3700.65 7978.61

Tax 45.00 450.00 909.79 791.10 1887.92

Net Profit before Extraordinary Items 2641.97 6969.76 4733.76 2909.55 6090.69

Extraordinary Items - - - -

Net Profit after Extraordinary Items 2641.97 6969.76 4733.76 2909.55 6090.69

C. STATEMENT OF ASSETS AND LIABILITIES

The audited statement of assets & liabilities of the Company for each of the last five financial years ended 31st March 2004 are given below. These have been arrived at after making such adjustments/ regroupings as considered appropriate in the auditors’ opinion in accordance with Schedule XI of SEBI DIP Guidelines, 2000 and read together with the notes given hereunder:

(Rs. In lacs)

As at 31st March

2000 2001 2002 2003 2004

A S S E T S

Fixed Assets

Gross Block 42034.01 45935.79 47976.13 57047.92 74615.09

Less: Provision for Depreciation 11132.22 13178.45 15147.55 17104.44 20040.88

Net Block 30901.79 32757.34 32828.58 39943.48 54574.21

Less: Revaluation Reserve (95.21) (89.40) (49.94) (18.24) (18.24)

Net Block after adjustment for:

58

As at 31st March

2000 2001 2002 2003 2004

Revaluation Reserve (i) 30806.58 32667.94 32778.64 39925.24 54555.97

Investment (ii) 32.28 107.28 129.40 128.58 96.56

Current Assets, Loans & Advances

Current Assets

Inventories 28821.04 27301.42 28910.77 30614.24 42800.14

Sundry Debtors 1142.74 1331.88 1289.50 1522.09 2187.36

Cash & Bank Balances 143.36 168.10 883.27 345.12 661.21

Loans & Advances 853.34 596.14 1814.64 3996.58 3586.69

Total (iii) 30960.48 29397.54 32898.18 36478.03 49235.40

A: Total Assets (i) + (ii)+(iii) 61799.34 62172.76 65806.22 76531.85 103887.93

L I A B I L I T I E S

Current Liabilities 6864.24 8915.33 13247.57 11691.59 12378.95

Provisions 3082.59 1598.61 1661.54 1205.40 2169.97

Total (iv) 9946.83 10513.94 14909.11 12896.99 14548.92

Deferred Tax (v) - - 6665.49 7156.59 8438.51

Loan Funds

(i) Secured 26352.75 25730.46 22358.06 29275.66 39504.57

(ii) UnSecured 3448.52 542.73 61.85 3634.22 13876.09

Total (vi) 29801.27 26273.19 22419.91 32909.88 53380.66

Preference Capital (vii) 2500.00 500.00 - -

B: Total Liabilities (iv)+(v)+(vi)+(vii)

42248.10 37287.13 43994.51 52963.46 76368.09

Net Assets (A-B) 19551.24 24885.63 21811.71 23568.39 27519.84

REPRESENTED BY

Equity Capital 1897.23 1897.23 1897.23 1897.23 1897.23

Reserve & Surplus 17808.77 23122.44 19994.15 21704.22 25648.26


Reserve 17713.56 23033.04 19944.21 21685.98 25630.02

59

As at 31st March

2000 2001 2002 2003 2004

(Net of Revaluation Reserve) 17713.56 23033.04 19944.21 21685.98 25630.02

Less: Miscellaneous Expenditure (Share issue Expenses) 59.55 44.64 29.73 14.82 7.41

Net Worth 19551.24 24885.63 21811.71 23568.39 27519.84

D. SUMMARY OF ADJUSTMENT MADE IN THE FINANCIAL STATEMENTS

Adjustments in profit & loss account

The following Expenses/ Income have been adjusted in the Profit & Loss account of the relevant financial year in accordance with Part II of Schedule II of the Companies Act, 1956 and the SEBI Guidelines

YEAR ENDED 31ST MARCH

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004

Profit as per audited accounts 2306.80 4782.18 4734.25 2951.14 6048.57 Adjustment on Account of: Stock Valuation 2944.56 (38.41) 16.36 - - Depreciation 4.00 4.57 (17.46) - - Excise Duty (2612.24) 2074.77 - - - Staff Costs - 144.07 - - -

Other Manufacturing & Administrative Expenses (3.72) (1.14) 0.61 (41.59) 42.12

Adjustment relating to earlier year 2.57 3.72

- - -

Total of adjustments 335.17 2187.58 (0.49) (41.59) 42.12 Profit after adjustments 2641.97 6969.76 4733.76 2909.55 6090.69

Adjustments in the Balance Sheet

The following amounts have been adjusted from the value of assets and liabilities as per the audited Balance Sheets of the respective years to arrive at the comparative statement of assets and liabilities Expenses/ Income have been adjusted in the Profit & Loss account of the relevant financial year in accordance with Part II of Schedule II of the Companies Act, 1956 and the SEBI Guidelines

(Rs. /Lacs)

AS ON 31ST MARCH

2000 2001 2002 2003 2004 Inventory 22.05 (16.36) - - -

Current Liabilities 145.22 (1.43) (2.04) 39.55 (2.57)

Provisions 2074.77 - - - -

60

Reserves (2193.94) (6.36) (6.85) (48.44) (6.32)

Provision for Depreciation (4.00) (8.57) 8.89 8.89 8.89

E. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES BETWEEN 1.4.98 TO 31.12.03 The effect of following changes in accounting policies except that relating to Deferred Tax accounting have been incorporated with retrospective effect in the statement of Profit & Loss account and Assets & Liabilities covered under this report to provide the financial information on a uniform basis. 12. From the year 1999-2000, the method of valuation of arriving at the cost for the purpose of valuation of

closing stock of finished goods has been changed to comply with the requirement of Accounting Standard - 2 which has become mandatory from that year.

13. Till the accounting year ended 31st March 2000 excise duty on closing stock of Finished Goods, by-products lying at factory was not being included in the value of closing stock. However, this treatment had no impact in the profitability.

14. Based on the opinion of the Expert Advisory Committee of The Institute of Chartered Accountants of India, in respect of seasonal and controlled industries like sugar, interest is not been considered as a component of cost for the purpose of valuation of closing stock of sugar from the year 2000-01 and onwards.

15. In the year 2000-01 the balance of gratuity liability for the past services (upto 31st March 1999) of the employees of Tulsipur Sugar Co. Ltd. which was amalgamated with the company with effect from 1st April 1999, has been fully provided during the year as against provision made in the previous year to the extent of payment to the approved gratuity fund

16. In order to follow a uniform method, the company has changed during the year 2001-02, the method of providing depreciation from written down value method to straight line method as prescribed in Schedule XIV to the Companies Act, 1956 in respect of fixed assets acquired prior to 1st November 1986 in Babhnan Unit and fixed assets other than plant and machinery acquired prior to 1st April, 1999 in respect of Tulsipur Unit

17. Upon the applicability of Accounting Standard - 22 with effect from 1.4.2001 deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

F. SIGNIFICANT ACCOUNTING POLICIES:

The accounts are prepared under the historical cost convention and materially comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India. The significant accounting policies followed by the Company are stated below:

1. Fixed Assets

a. Fixed Assets are stated at their original cost adjusted by revaluation of Land, Building, Plant and Machinery, Railway Siding and Tubewell of the Balrampur Unit as on 30th June, 1988 and Land, Building & Plant and Machinery of Tulsipur Unit as on 31st March, 1999. Cost includes acquisition price, attributable expenses and pre operational expenses including finance charges, wherever applicable.

b. Depreciation on Fixed Assets is provided on Straight Line method in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956 (as amended).

c. Expenditure during construction period

Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are being treated as Pre-operative expenses pending allocation to the assets, and are shown under "Capital Work in Progress".

d. Leasehold land are not depreciated.

2. Investments

61

Long Term Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value of long term investments.

3. Inventories

a. Inventories (other than By-products, Scrap and Standing crop) are valued at lower of cost or net realisable value. The cost of Inventories is computed on a weighted average/FIFO basis. The cost of finished goods and work-in-process includes cost of conversion and other cost incurred in bringing the Inventories to their present location and condition.

b. By-products (Molasses & Bagasse), Scrap and Standing Crop are valued at net realisable value.

4. Revenue Recognition

a. Gross turnover is net of sales tax and inclusive of excise duty.

b. Sales include inter unit transfers.

c. Dividend income is accounted for in the year it is declared.

d. All other income are accounted for on accrual basis.

5. Expenses

All the expenses are accounted for on accrual basis.

6. Retirement Benefits

Gratuity and Leave encashment benefit is accounted for on the basis of actuarial valuation.

7. Share Issue expenses

These are amortised over ten years.

8. Insurance Claims

Accounted for on settlement of claims.

9.Government Grants

Government Grants in the nature of export subsidies are credited to Profit and Loss Account under “Other Income” or deducted from related expenses.

10. Foreign Currency Transactions

a. Assets and Liabilities related to foreign currency transactions (other than those covered under forward contract) remaining outstanding at the year-end are translated at the year-end rate. Foreign currency transactions covered under forward contract are accounted for at contracted rate. The effect of exchange rate fluctuations in respect of Fixed Assets is adjusted with the cost of the respective asset, whereas in respect of Monetary Assets the same is taken to Profit and Loss Account.

b. Transactions in Foreign Exchange in respect of Income/Expenditure items are recorded at the exchange rate at which the transaction is carried out.

c. Transactions covered by cross currency swap contracts are accounted for on the date of settlement.

11. Research & Development

Revenue Expenditure incurred on cane development is charged off in the year it is incurred.

12. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

62

G. ADJUSTED RESERVES & SURPLUS

Rs. Lacs

As on 31st March

2000 2001 2002 2003 2004

Revaluation Reserves 95.21 89.40 49.94 18.24 18.24

Surplus on Amalgamation

Capital Redemption Reserve 0.00 2000.00 2500.00 2500.00 2500.00

Other Capital Reserve 84.42 84.42 84.42 84.42 84.42

Share Premium 3337.17 3337.17 3337.17 3337.17 3337.17

Debenture redemption Reserve 40.00 20.00 - - -

Investment Allowance Reserve 208.89 40.00 - - -

General Reserve 15882.89 17132.89 13537.19 15287.19 19187.19

Profit & Loss Account (1868.61) 384.38 444.55 431.02 487.64

Storage Fund for Molasses 28.80 34.18 40.88 46.18 33.60

Sub Total 17808.77 23122.44 19994.15 21704.22 25648.26


Total 17713.56 23033.04 19944.21 21685.98 25630.02

H. FINANCIAL TERMS OF SECURED LOANS

(Rs. / lacs)

AS ON 31ST MARCH 2004 Name of Bank/Institution

Sanctioned Amount

Rate of Interest

(%)

Principal Out-

standing as on

31.03.2004

Nature of Security Repayment Schedule

A Term Loan

63

1 HDFC Bank Ltd 1996.80 8.75 665.60 Term Loans from HDFC Bank Ltd. of Rs.665.60 lacs [and Government of India Rs.237.54 lacs as shown at Point 14 below] are secured by way of joint equitable mortgage on Company's immovable properties and hypothecation of moveable properties of Balrampur and Babhnan Sugar Units on pari-passu basis [except book debts], both present and future, and subject to charge on current assets created to secure the working capital limits and also guaranteed by some of the Directors of the Company

The principal term debt will be repaid in 3 yearly instalments commencing from 10th April 2002

2 HDFC Bank Ltd 3500.00 6.50 3500.00 Term Loan from HDFC Bank Ltd Rs.3500.00 lacs is secured/ to be secured by way of first mortgage of deposit of title deeds on fixed assets of the Company located at Haidergarh on pari passu basis, a first charge by way of hypothecation on movable assets and second charge by way of hypothecation of current assets associated with Haidergarh Unit and also guaranteed by some of the directors of the Company.

The Principal term debt will be repaid in 6 quarterly installments commencing from July 2003

3 ICICI Bank Ltd 2500.00 10.34 1875.00 Term Loans from ICICI Bank Ltd. Rs.1875.00 lacs is secured by way of first mortgage on Company's immovable properties and hypothecation of moveable properties, both present and future, pertaining to the Company's cogeneration unit at Balrampur, subject to charge on current assets (including book debts) to be created for securing the working capital limits.

The Principal term debt will be repaid in four yearly Installments commencing from 15th

December 2003

64

4

International Finance Corporation Washington (IFC)

6999.00 5.83 6999.00 Term loan from IFC, Washington Rs.6999.00 lacs is secured / to be secured by (i) a first mortgage by way of deposit of title deeds on Fixed Assets of the company located at Haidergarh (“Haidergarh Unit”), (pari passu charge with HDFC Bank in case of Haidergarh Unit), (ii) an exclusive first mortgage by way of deposit of title deeds on fixed assets of distillery and bio-mass fertilizer facility at Babhnan (“Babhnan Unit”) (iii) a first charge by way of hypothecation of moveable assets associated with Haidergarh Unit and second charge by way of hypothecation on current assets originating from production at Haidergarh unit (pari passu charge with HDFC Bank in case of Haidergarh Unit) and (iv) an exclusive first charge by way of hypothecation on moveable assets and second charge by way of hypothecation on current assets of distillery and bio-compost fertilizer facility at Babhnan unit. The Term Loan from IFC, Washington is already guaranteed by some of the directors of the company.

The Principal term debt will be repaid in Ten Half yearly Installments commencing from 15th July 2005

5 Cooperative Centrale Raiffesisen Boeremleembank

4581.50 2.07 4581.50 Term loan from CCRB , Singapore Rs.4581.50 lacs is secured first pari passu charge on the existing fixed assets of sugar units situated at Balrampur, Babhnan and Tulsipur.

The Principal term debt will be repaid in Three yearly Installments commencing from 22nd

August 2005

65

6 Government of India, (SDF)

785.00 9 785.00 Term Loan from SDF is secured by way of second charge by way of joint equitable mortgage on company's immovable properties and hypothecation of moveable properties of Balrampur, Babhnan and Tulsipur units both present and future.

The Principal term debt will be repaid in five yearly installments commencing from 24th

September 2004

7 Government of India,(SDF)

622.83 9 622.83 - Do - The Principal term debt will be repaid in Five yearly Installments commencing from 22nd July 2005


2210.64 9 2210.64 -Do-

The Principal term debt will be repaid in five yearly Installments commencing from 30th July 2007.


22.17 9 5.54 Term Loan from SDF is secured by way of bank guarantee

The Principal term debt will be repaid in Four yearly Installments commencing from 20th January 2002


85.35 6 21.34 Term Loan from SDF is secured by way of bank guarantee of State Government.

The Principal term debt will be repaid in Four yearly Installments commencing from 10th November 2001.

66

11 Government of India, (GOI) (Free of Interest)

341.00 - 237.54 Term Loans from HDFC Bank Ltd. Rs. 665.60 lacs ( as shown at point no.1 above) & Government of India Rs. 237.54 lacs are secured by way of joint equitable mortgage on Company's immovable properties and hypothecation of moveable properties of Balrampur and Babhnan Sugar Units on pari-passu basis [except book debts], both present and future, and subject to charge on current assets created to secure the working capital limits and also guaranteed by some of the Directors of the Company.

The Principal term debt will be repaid in twenty yearly Installments commencing from 30th September 2001.

WORKING CAPITAL LOAN

1 State Bank of India 20100.00 10.35% 18000.58 Cash Credit Account with SBI is secured by hypothecation of stock of sugar, sugar in process and other current assets including book debts both present and future and 3rd charge by way of joint equitable mortgage on company's movable and immovable properties and also guaranteed by some of the directors of the Company

-

I. MATERIAL NOTES ON ACCOUNTS

1(a) Pursuant to the Scheme of Amalgamation sanctioned by the Hon'ble High Court, Calcutta Tulsipur Sugar Co. Ltd (TSCL) has been amalgamated with the company with effect from 1st April 1999. Pursuant to the said scheme, the company has taken over all the properties and assets, duties, liabilities and obligations of every kind, nature and descriptions of TSCL and has in consideration thereof agreed to issue (one) fully paid up equity share of Rs.10/- each of the company against 7(Seven) fully paid up equity share of Rs.10/- each of TSCL. The account for the year have been prepared after giving effect to the aforesaid amalgamation. Since the amalgamation is in the nature of merger, the accounting entries have been passed under the pooling of interest method.

(b) Pursuant to the above, 211540 Equity Shares of Rs.10/- each have been issued as fully paid up shares of the company to the shareholders of TSCL (after adjustment of 36,25,623 Equity Shares of TSCL held by the company which stands cancelled due to amalgamation) without payment being received in cash.

67

As on 31.03.2004

(Rs./Lacs) 2. (a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for 741.06 (b) Advances paid against above 125.55 3. Contingent liabilities not provided for in respect of:

(a) Differential cane price for the sugar seasons 1978-79 and 1979-80 pending

disposal of the Writs filed by the Company in Hon'ble High Court, Kolkata 32.93

(b) No provision has been made for interest on excess amount of levy sugar for sugar season 1982-83 realised as per Court Order against which TDR of Rs. 25.54 Lacs has been deposited with a Bank 25.54

(c) Claims for compensation against land acquired for the Chemical unit which

has been disputed by the Company Amount Not Ascertained

(d) Claims against the Company not acknowledged as debts 437.97 (e) Bank Guarantee furnished in respect of excise duty rebate 20.39 4. Excess amount of Levy sugar received to date for various sugar seasons as per

orders of Hon'ble High Court has not been credited to the Profit & Loss A/c, as the matter is sub-judice. 96.98

5. Acquisition of land admeasuring 22.02 acres at Balrampur has been disputed and the matter is sub-judice. 6. Sales include inter-unit transfers Rs.5350.22 Lacs (Previous year Rs.3272.14 Lacs). 7. The Supreme Court has recently overruled the interim judgement of Allahabad

High Court and held that the State Government has the power to fix State Advisory Cane Price (SAP) over and above the Statutory Minimum Price (SMP) fixed by the Central Government. The ruling of the Supreme Court is contrary to the general perception prevailing amongst legal luminaries. Hence it is generally opined that this is a fit case for the industry to seek review thereof and / or curative action. The Uttar Pradesh Sugar Mills Association has already initiated suitable action in this regard.

8. Earnings per Share - The numerators and denominators used to calculate Basic/ Diluted Earnings per Share:

68

(Rs. Lacs)

(a) Amount used as the numerator 2003-04 2002-03 2001-02

Profit after tax 6090.69 2909.55 4733.76

Less: Preference Dividend including corporate tax - - 27.06

Total (A) 6090.69 2909.55 4706.70

(b) Basic/weighted average number of Equity Shares

used as the denominator - (B) 18972315 18972315 18972315

(c) Nominal value of Equity shares (Rs.) 10.00 10.00 10.00

(d) Basic/diluted Earnings per share - (A/B) (Rs.) 32.10 15.34 24.81

9. Segment information as per Accounting Standard - 17 is given below

i) Information about Primary Business Segment

(Rs lacs)

Sugar Alcohol Co-gen eration

Others Unall-ocated

Total

Revenue External 2003-04 64607.51 11932.30 4029.54 74.34 - 80643.69 2002-03 51685.05 11880.31 71.72 68.41 - 63705.49 2001-02 46707.91 6574.10 - 39.18 - 53321.19 Inter Segment 2003-04 2854.63 - 707.21 51.80 3613.64 2002-03 2098.51 - - 70.09 - 2168.60 2001-02 1425.19 - - 41.24 - 1466.43 Intra Segment 2003-04 - 1736.58 - - 1736.58 2002-03 - 1103.54 - - - 1103.54 2001-02 - 318.56 - - - 318.56 Total revenue 2003-04 67462.14 13668.88 4376.75 126.14

- 85993.91

2002-03 53783.56 12983.85 71.72 138.50 - 66977.63 2001-02 48133.10 6892.66 - 80.42 - 55106.18 Result Segment Result 2003-04 7137.10 1447.74 2107.68 (10.21) 10682.31 2002-03 4393.33 1311.47 (14.51) 20.12 - 5710.41 2001-02 7146.05 774.65 - 14.10 - 7934.80 Less: Unallocated expenditure net of unallocated income

2003-04 - - - - 724.06 724.06

69


Others Unall-ocated

Total

2002-03 - - - - 654.76 654.76 2001-02 - - - - 599.80 599.80 Interest 2003-04 - - - - 1979.64 1979.64 2002-03 - - - - 1355.00 1355.00 2001-02 - - - - 1691.45 1691.45 Profit before tax 2003-04 7137.10 1447.74 2107.68 (10.21) (2703.70) 7978.61 2002-03 4393.33 1311.47 (14.51) 20.12 (2009.76) 3700.65 2001-02 7146.05 774.65 - 14.10 (2291.25) 5643.55 Tax Current Tax 2003-04 - - - - - 606.00 2002-03 - - - - - 300.00 2001-02 - - - - - 440.00 Deferred Tax 2003-04 - - - - - 1281.92 2002-03 - - - - - 491.10 2001-02 - - - - - 469.79 Profit after tax 2003-04 - - - - - 6090.69 2002-03 - - - - - 2909.55 2001-02 - - - - - 4733.76


Others Unall-ocated

Total

Other Information Segment Assets 2003-04 80226.43 7914.85 14532.17 548.18 684.54 103906.17 2002-03 63557.87 5542.94 6323.52 364.61 761.15 76550.09 2001-02 56365.43 4120.22 1166.23 375.89 3828.39 65856.16 Segment Liabilities 2003-04 8116.83 966.82 131.23 29.08 13743.47 22987.43 2002-03 7939.08 651.09 437.54 21.70 11004.17 20053.58 2001-02 8667.41 409.66 31.36 20.75 12445.42 21574.60 Capital expenditure 2003-04 8060.63 2360.45 7097.01 202.12 44.90 17765.11 2002-03 1412.17 685.24 6038.12 13.47 58.64 8207.64 2001-02 588.80 1419.01 122.18 4.46 15.77 2150.22 Depreciation 2003-04 2236.22 210.29 539.72 13.89 31.18 3031.30 2002-03 1889.45 199.11 29.21 13.15 29.41 2160.33

70

2001-02 1864.92 113.07 - 11.56 27.22 2016.77 Non cash expense other than depreciation

2003-04 31.61 0.06 47.51 79.18

2002-03 76.77 2.16 - - 23.38 102.31 2001-02 6.70 - - - 14.91 21.61

ii) The company does not have any Secondary Business Segment.

10. Related party disclosures as per Accounting Standard - 18 is given below:

(Rs lacs)

Sl.No.

Particulars Associates Key Management

Personnel (KMP)

Enterprises over which

KMP and their relatives have

substantial Interest

Relatives of KMP

Total

1. Purchases of goods 2003-04 - - 1.43 - 1.43 2002-03 - - 3.56 - 3.56 2001-02 - - 928.83 - 928.83 Finance –ICD taken 2003-04 243.50 - - - 243.50 2002-03 190.00 - - - 190.00 2001-02 109.00 - 42.53 - 151.53 - Interest paid 2003-04 9.13 - - - 9.13

2002-03 12.24 - - - 12.24 2001-02 5.49 - 0.94 - 6.43

3. Rendering/ (Receiving)

of services 2003-04 - 121.53 - 1.46 122.99


of receivable 2003-04 13.95 49.60 0.89 64.44

2002-03 121.45 48.00 0.19 0.63 170.27 2001-02 50.38 53.00 6.67 - 110.05

Note: Names of related parties and description of relationship:

a) Associates: Avantika Ganna Pvt. Limited and E-commodities Limited. b) Key Managerial Personnel (KMP) : Mr. Vivek Saraogi - Managing Director Mrs. Meenakshi Saraogi - Joint Managing Director

Mr. R. N. Misra - Whole Time Director Mr. K.N.Ranasaria - Whole Time Director (w.e.f. May 2003)

c) Relatives of KMP: Mr. K. N. Saroagi - Chairman (Non Executive) and relative of

71

Managing Director and Joint Managing Director

d) Enterprises over which KMP and their relatives have substantial interest:


Ranger Apparel Export Private Limited Online Art Dotcom Limited Kamal Nayan &Co.

Shri K.N.Ranasaria was appointed as a Whole Time Director of the Company w.e.f. 12th May 2003 and accordingly, has been considered as a KMP for the subsequent period.

J. SUBSIDIARIES

The Company does not have any subsidiary

K. DIVIDEND

Dividends declared by the company in respect of the five financial years ended 31st March are as under.

(Rs/Lacs)

Year ended 31st March

1999-2000 2000-2001 2001-2002 2002-2003 2003-04

A.On Equity Shares:

No. of shares of Rs.10/- each 18972315 18972315 18972315 18972315 18972315

Rate of Dividend

Interim 4.00 - - -

Final - 7.00 8.50 5.50 10.00

Amount of Dividend 751.85 1328.06 1612.65 1043.48 1897.23

Corporate Tax on Dividend 82.70 135.46 - 133.67 243.08

Total Amount of Dividend 834.55 1463.52 1612.65 1177.15 2140.31

B.On Preference Shares

No. of shares of Rs.100/- Each 2500000 500000@ - - -

Rate of Dividend 9.75 9.00* 9.00 - -

Amount of Dividend 75.46 157.47 24.53 - -

Corporate Tax on Dividend 9.55 34.66 2.50 - -

Total Amount of Dividend 85.01 192.13 27.03 - -

Notes: @ 20,00,000 Preference Shares has been redeemed on 24.10.2000

5,00,000 Preference Shares has been redeemed on 09.12.2001

* Rate of Preference dividend was changed to 9% wef. 01.10.2000

L. MAJOR CHANGES IN BUSINESS ACTIVITIES

72

1. The Company acquired a majority stake of 71% in Tulsipur Sugar Company Limited in 1998, which became a subsidiary of the company in March 1999. Thereafter, it was merged with the company w.e.f 01.04.1999 increasing the total crushing capacity to 20500 TCD.

2. The company increased its sugar crushing capacity in all the three units as given below

Units 1999-2000 2003-04

Balrampur TCD 10000 11000

Babhnan TCD 5500 8000

Tulsipur TCD 5000 6000

Haidergarh TCD - 4000

3. The company introduced branded & packaged sugar in 2002-2003. For this purpose a refinery was setup in Tulsipur at a capital cost of Rs.300.00 Lacs.

4. The 40 KLPD Ethanol Plant was commissioned in August 2002 and commenced supply to oil companies for blending with petrol. The Government of India has permitted 5% blend of alcohol in automotive fuel in the year 2002-2003. The company has also commissioned a 60 KLPD distillery at Babhnan in February 2004 to enhance its alcohol capacity to 160 KLPD with a view to profitably utilize the entire molasses production of the sugar division in-house.

5. The Company has commissioned an integrated complex at Haidergarh (Uttar Pradesh), comprising a 4000 TCD sugar mill in December 2003 and a 20.25 MW power plant in November 2003. The by-products generated from the sugar plant will be used to feed the distillery and the power plant. The Company commenced supply of electricity to Uttar Pradesh Power Corporation Limited as per the Power Purchase Agreement signed with them. The Plant complies with all parameters of the Kyoto Protocol and is accordingly eligible to receive carbon emission benefits.

6. The co-generation power plant of 19.55 MW was commissioned at Balrampur in March 2003 for utilization of surplus bagasse. The company commenced supply of electricity to Uttar Pradesh Power Corporation Limited as per the Power Purchasing Agreement signed with them. The plant complies with all parameters of the Kyoto Protocol and is accordingly eligible to receive carbon emission benefits.

M. INVESTMENTS

Rs/ Lacs

31.03.2003 31.03.2004

Aggregate Book Vale of Unquoted Investment 128.58 96.56

Total 128.58 96.56

N. DEBTORS

Age-wise analysis of sundry debtors as on 31.03.2003 and 31.03.2004 are as given below:

Rs. In Lacs

Particulars As on 31.03.2003 As on 31.03.2004

More than 6 months 53.68 63.42

Less than 6 months 1468.41 2123.94

73

O. LOANS & ADVANCES

Rs. In Lacs

As on 31.03.2003 As on 31.03.2004

L O A N S

To Bodies Corporate 3.77

ADVANCES Advances recoverable in cash or in kind or for value to be received or pending adjustment 788.53 1621.02 Advance against Capital Assets 2880.72 125.55

Excise Duty & Cane Purchase Tax Advance 278.13 1283.40 Security Deposit 45.43 556.72

Total 3996.58 3586.69

P. CASH FLOW STATEMENT

2002-03 2003-04

A Cash Flow from operating activities

Net Profit before tax and extra ordinary items 3700.65 7978.61

Adjustments for:

Depreciation 2127.67 3022.70

Share Issue Expenses written off 14.91 7.41

Interest (Net) 1355 .00 1979.64

Provision for Diminution in value of Investment - 32.00

Dividend received - (54.09)

Loss on sale/discard of Fixed Assets 74.36 52.35

Molasses Storage Fund written back (4.92) (26.02)

Transferred to Molasses Storage Fund ____10.21 3577.23 13.44 5027.43

7277.88 13006.04

Adjustments for:

Trade and other receivables (1920.12) (242.87)

Inventories (1703.36) (12184.83)

Trade payable (1568.29) (5191.77) 402.36 (12025.34)

Cash generated from operations 2086.11 980.70

74

Direct Taxes paid/refund (320.65) (598.33)

Cash Flow before extra ordinary items 1765.46 382.37

Extra ordinary items - -

Net Cash from operating activities 1765.46 382.37

B Cash flow from investment activities

Purchase of Fixed Assets (9447.97) (17756.51)

Sale of Fixed Assets 103.40 50.73

Sale of Investments 0.82 0.02

Dividend received 0.00 54.09

Interest on long term Investments 0.07 18.87

Net cash from investing activities (9343.65) (17632.80)

C Cash flow from financing activities

Proceeds from long term borrowings 6900.00 12580.50

Repayment of long term borrowings (267.68) (4548.02)

Proceeds from other borrowings 3857.65 12438.30

Interest Paid (1355.07) (1722.58)

Dividend paid (1612.65) (1177.17)

Net cash from financing activities 7522.25 17571.03

Net Increase/(decrease) in cash & cash equivalent (A+B+C) (55.94) 320.60

Opening cash and cash equivalents 269.45 213.51

Closing cash and cash equivalents 213.51 534.11

Q. COMPUTATION OF INCOME TAX

Rs/lacs

Year 1999-00 2000-01 2001-02 2002-03 2003-04 Tax rate (including surcharge) 38.50% 39.55% 35.70% 36.75% 35.875% Profit as per audited accounts after Depreciation but before Taxation & Extra Ordinary Items 2686.97 7419.76 5643.55 3700.65 7978.61

75

Tax at actual rate 1034.48 2934.52 2014.75 1359.99 2862.33 Adjustments : Difference between tax depreciation and book depreciation (2073.54) (1961.84) (917.09) (2238.59) (4425.18) Other Adjustments (1274.64) (5339.83) (3064.84) (1503.05) (2539.93) Net Adjustment (3348.18) (7301.67) (3981.93) (3741.64) (6965.11) Tax savings on adjustments (1289.05) (2887.81) (1421.55) (1375.05) (2498.73) Taxation on Extraordinary Items - - - - - Income Tax for the year ( As per MAT) - 443.43 432.04 294.90 606.00

R. FINANCIAL RATIOS

Particulars 1999-00 2000-01 2001-02 2002-03 2003-04 A Earning per Share (Rs.) (G/A) 13.48 35.72 24.81 15.34 32.10 B Net Asset value per Share (Rs.)(E/A) 103.05 131.17 114.97 124.23 145.05 C Return on Networth (%) (G/E) 13.08 27.24 21.58 12.35 22.13 A. Equity Shares (No. of Shares) 18972315 18972315 18972315 18972315 18972315 (Rs./lacs) B. Equity Capital (i) 1897.23 1897.23 1897.23 1897.23 1897.23 C. Reserves & Surplus 17808.77 23122.44 19994.15 21704.22 25648.26 Less: Revaluation Reserve (95.21) (89.40) (49.94) (18.24) (18.24) D. Total Reserve & Surplus (ii) 17713.56 23033.04 19944.21 21685.98 25630.02 Less: Misc. Expenditure (iii) 59.55 44.64 29.73 14.82 7.41 E. Net Worth (i+ii+-iii) 19551.24 24885.63 21811.71 23568.39 27519.84 F Profit after Tax 2641.97 6969.76 4733.76 2909.55 6090.69

Less: Preference Dividend (Including Corporate tax) 85.01 192.13 27.06 - -

G Profit after Tax (Net of Dividend on Preference Share) 2556.96 6777.63 4706.70 2909.55

6090.69

S. CAPITALISATION STATEMENT

Rs. Lacs

Particulars Pre Issue as at

31.03.2004 Adjusted for the

Rights Issue *

(Immediately after the

issue)

76

Debt: Short Term Debts 34283.87 34283.87 Long Term Debts 19096.79 19096.79 Total Debts 53380.66 53380.66

Shareholders Funds: Share Capital 1897.23 2124.90 Reserve & Surplus (Excluding Revaluation Reserve) 25630.02 31321.71 Less: Miscellaneous expenditure 7.41 7.41 Total Shareholders Funds 27519.84 33439.20 Long Term Debt/Equity 0.69 0.57

*Assuming 100% subscription to Equity Shares

All the notes to accounts, significant accounting policies as well as Auditors’ qualifications have been incorporated.

In the opinion of the directors, save and except as mentioned elsewhere in this document, no circumstances have arisen since the date of the last financial statement that materially and adversely affected or is likely to affect the trading or profitability of the Company or the value of its assets or its ability to pay its liabilities within the next twelve months.

T. CAPACITY UTILIZATION

Capacity Utilisation for the Year ended 31st March

Products Unit

Installed Capacity as on 31.03.04 2000-2001 2001-2002 2002-2003

2003-2004

Sugar TCD 29000 85.18% 90.80% 89.85% 88.70%

Alcohol KLPD 160 85.90% 83.90% 88.62% 92.63%

Bio Compost M.T 48000 7.26% 39.08% 51.28% 55.47%

Power M.W 39.80 - - 28.71% 74.55%

U. Details of Unsecured Loans taken by the Company as on 31.03.2004

Rs.Lacs

From Bodies Corporate – Group Companies 12.00

From Banks 5864.09

From Others [ MIBOR – linked debentures ]* 8000.00

Unsecured loan of Rs.12.00 lacs has been taken from Avantika Ganna Private Limited, a promoter group company. The loan carries an interest rate of 7% and is repayable on demand.

*Details of the MIBOR linked debentures have been disclosed under the head ‘Details of Unsecured Loans taken from other Bodies Corporate’ on page 31.

VII. STOCK MARKET DATA

The Equity Shares of the Company are listed on the Stock Exchanges at The Stock Exchange, Mumbai (BSE), The

77

Calcutta Stock Exchange Association Limited (CSE), The National Stock Exchange of India Ltd (NSE) and The Delhi Stock Exchange Association Limited (DSE). There has been no trading in the equity shares of the Company on DSE during the last three years, as confirmed by the respective Exchange.

AS PER THE NATIONAL STOCK EXCHANGE, MUMBAI

Price for the last three years

Year High Low Average Date Price

(Rs.) Volume (Nos)

Date Price (Rs) Volume (Nos)

(Rs)

2001 13.02.2001 113.00 44813 23.11.2001 65.00 4876 92.98 2002 08.07.2002 158.40 42431 15.01.2002 80.25 56953 117.69 2003 23.12.2003 304.95 59756 25.03.2003 96.10 7027 165.76

2. Price for the last six months

Month High Low Date Price

(Rs) Volume (Nos)

Date Price (Rs) Volume (Nos)

January 2004 02-01-2004 294.00 52558 23-01-2004 225.15 37849 February 2004 20-02-2004 296.00 31638 03-02-2004 244.10 87025 March 2004 05-03-2004 314.00 117800 15-03-2004 285.00 30424 April 2004 22-04-2004 525.00 96482 01-04-2004 304.00 18605 May 2004 03-05-2004 450.00 75183 17-05-2004 255.00 99174 June 2004 03-06-2004 314.00 17607 24-06-2004 252.50 23089

The high and low prices of the Company’s shares as quoted on the National Stock Exchange, Mumbai on 3rd February, 2004 immediately after the Board of Directors approved the Rights issue at the meeting held on 30th January, 2004 was as follows:

Date High (Rs) Low (Rs)

03-02-2004 268.00 244.10

Volume of shares traded in the last six months

Month Volume (Nos.) January 2004 675621 February 2004 762812 March 2004 451217 April 2004 1192905 May 2004 1734699 June 2004 477537

Source: www.nseindia.com

78

AS PER THE STOCK EXCHANGE, MUMBAI

1. Price for the last three years


(Rs.) Volume (Nos.)

Date Price (Rs) Volume (Nos.)

(Rs)

2001 13.02.2001 115.00 28461 17.09.2001 67.00 3774 91.00 2002 08.07.2002 158.40 9118 23.01.2002 83.20 495 120.80 2003 29.12.2003 304.00 25011 27.01.2003 97.00 2930 200.50


Month High Low

Date Price (Rs)

Volume (Nos.)


January 2004 02-01-2004 295.00 42360 23-01-2004 225.00 11717

February 2004 13-02-2004 299.90 57008 03-02-2004 246.00 14960

March 2004 05-03-2004 319.40 8935 15-03-2004 281.00 16428

April 2004 22-04-2004 458.65 24748 01-04-2004 302.05 6406

May 2004 04-05-2004 446.00 11735 17-05-2004 252.00 14901

05-05-2004 446.00 92516

June 2004 07-06-2004 304.00 3261 24-06-2004 253.00 6205

The high and low prices of the Company’s shares as quoted on the Stock Exchange, Mumbai on 3rd February, 2004 immediately after the Board of Directors approved the Rights issue at the meeting held on 30th January, 2004 was as follows:

Date High (Rs) Low (Rs)

03-02-2004 266.00 246.00

Volume of shares traded in the last six months

Month Volume (Nos.)

January 2004 367727

February 2004 238767

March 2004 169201

April 2004 628558

May 2004 640785

June 2004 182219

Source: www.bseindia.com

79

AS PER THE CALCUTTA STOCK EXCHANGE ASSOCIATION LIMITED

Price for the last three years


(Rs.) Volume (Nos.)


(Rs)

2001 30-05-2001 109.50 5208 17-09-2001 71.40 100 97.00 2002 05-07-2002 152.00 400 01-02-2002 85.00 212 112.80 2003 12-11-2003 205.50 1070 26-03-2003 92.10 38010 126.55


There was no trading in the shares of the Company on CSE during last six months i.e January to June 2004.

There was no trading in the shares of the Company on CSE on 3rd February, 2004 immediately after the Board of Directors approved the Rights issue at the meeting held on 30th January, 2004.

The Promoter Group/Directors of the Company have not entered into any other purchase or sale transactions of the Company’s shares in the last six months other than the purchase of 400 shares at a price of Rs. 283/- per share by Shri S.B.Budhiraja on 17.02.2004 .

VIII. MANAGEMENT DISCUSSIONS AND ANALYSIS OF PAST PERFORMANCE

Analysis of Income and Sales trend for the last three years (after making necessary adjustments)

Rs in lacs

For the year ending 31.3.2002 31.3.2003 31.03.2004

Sales 54894.64 66758.42 85384.92

Net Profit before Interest, Depreciation, Extra ordinary Items & Tax

9351.77 7183.32 12980.95

Net Profit before Taxation and Extra ordinary Items 5643.55 3700.65 7978.61

Net Profit after Tax & Extra ordinary Items 4733.76 2909.55 6090.69

The Company achieved a turnover of Rs.85384.92 lacs during the year 2003-04 as compared to Rs.66758.42 lacs during the preceding year 2002-03, registering an increase of 27.90%. This was mainly due to increase in sugar sale quantity from 36.68 lac quintals in 2002-03 to 46.43 lac quintals in 2003-04, signifying an increase of 26.58%.

The operating profit (before interest, depreciation and tax) increased from Rs. 7183.32 lacs in 2002-2003 to Rs.12980.95 lacs in 2003-04, signifying an increase of 80.70%. This can be attributed mainly to higher cane crushing and production in sugar units. Total production was 54.33 lac quintals as against 40.05 lacs quintals during 2002-03..

The net profit for the year 2003-04 stood at Rs. 6090.69 lacs as compared to Rs.2909.55 lacs in the previous year, representing a growth of 109.33%.

The Company undertook initiatives to utilize by-products – molasses and bagasse – to produce alcohol and power.

With a view to attain value addition over its existing alcohol capacity [of 100 KLPD of rectified spirit], the 40 KLPD Ethanol Plant of the Company at Balrampur distillery was commissioned in August 2002 and commenced supply to oil companies for blending with petrol. In the year 2002-2003, the Government of India has permitted 5% blend of alcohol in automotive fuel. The Company has also commissioned a 60 KLPD distillery at Babhnan in February 2004 to enhance its alcohol capacity to 160 KLPD with a view to profitably utilise the entire molasses production of the Sugar Divisions in-house.

The Company has commissioned an integrated sugar complex at Haidergarh (Uttar Pradesh), comprising a 4000 TCD sugar mill and a 20.25 MW power plant. The by-products generated from the sugar plant will be used to feed the

80

distillery at Babhnan and the power plant at Haidergarh. The power is being sold to UPPCL under the Power Purchase Agreement (PPA) signed with them.

The co-generation power plant of 19.55 MW was commissioned at Balrampur in March 2003 for utilization of surplus bagasse. The Company commenced supply of electricity to Uttar Pradesh Power Corporation Limited as per the Power Purchase Agreement signed with them. The plant complies with all parameters of the Kyoto Protocol and is accordingly eligible to receive carbon emission benefits.

Economic Environment and Company Performance

Sugar Industry is controlled to a large extent by both the Central and State governments. The government controlled the capacity of mills, the price of sugarcane, distribution and pricing of sugar and also the by-products (molasses). However, during the last few years there has been a gradual reduction in the regulations and it is expected that the regulations would be further eased in the coming years. In September 1998, the sugar industry was delicensed but it was stipulated that the distance between two sugar mills should be maintained at 15 kms. Progressive de-regulation has resulted in the ratio of levy to free sugar from 10:90, as against 40:60 a few years ago.

Cane generally constitutes around 65-70% of the total cost of the manufacture of sugar. The price of cane is related to recovery and state administered prices (which vary from state to state). The procurement price of cane by mills is controlled by the Central Government notification on the Statutory Minimum Price [SMP], which is based on minimum recovery of 8.5% with proportionate increase in the prices for higher recovery. For this purpose, the Country is divided in 17 geographical zones. The Central Government before the onset of crushing season declares the SMP. In addition, the State Governments announce State Advisory Price (SAP), which has generally been higher than the SMP. As per current practice the Government has been increasing the SMP and the SAP in every season. For season 2003-04, SMP of sugercane was fixed at Rs.73.00 per quintal linked to a base recovery rate of 8.5% with a premium for higher recovery, compared to Rs.69.50 per quintal in the previous year. In case of Balrampur, Babhnan Tulsipur and Haidergarh, the SMP was fixed as under:

Factory Season 2002-03

Rs.

Season 2003-04

Rs.

Balrampur 81.80 90.00

Babhnan 84.26 90.00

Tulsipur 79.34 84.90

Haidergarh Not Applicable 86.16

For the year 2003 – 2004, the state government granted a total relief of Rs.2.50 per quintal of sugar cane in form of Cane Purchase Tax and Society Commission, which was passed on to the farmers. Thus, the final sugar cane price paid by the Company was Rs. 92.50, 92.50, 87.40 and Rs.88.76 per quintal for Balrampur, Babhnan Tulsipur and Haidergarh factories respectively.

As regards the sale of sugar there exists a dual pricing system whereby a certain percentage of the sugar [at present 10%] produced by the sugar mills, known as ‘levy sugar’, is procured by the Government for the Public Distribution System (PDS) at a subsidized price called the ‘levy price’ and the balance sugar production is allowed to be sold in the open market and is known as ‘free sale sugar’. While the price for the free sale sugar is dependent on market factors, the Government releases ‘free sale quota’ every month to be sold by the mills in open market.

The area under sugar cane cultivation has increased over past few years due to increase in SAP fixed by State Governments over the period and sugarcane production has increased accordingly. Thus, the production of sugar increased from 182 lac tonnes in 1999-2000 to around 202 lac tonnes in 2002-03 and is estimated to be lower at around 140-145 lac tonnes during 2003-04 season. As against this, consumption increased from 155 lac MT in 1999-2000 to

81

184 lac MT in 2002-03. Presently, domestic consumption is placed at around 180-185 lac tonnes while exports are expected to be about 3 lac tonnes.

The decline in sugar production is due to inadequate rainfall in the major sugar producing regions in Maharashtra, Tamil Nadu and Karnataka. As a result, output in Maharashtra is expected to decline from 62 lac tonnes in the 2002-03 sugar season to 32 lac tonnes in the 2003-04 season. Production was lower in eastern and central U.P as well. The fall in sugar output is expected to result in the industry releasing its inventory and improved realisations consequently. .

Industry ex-factory free sale sugar realisations (net of excise duty) are as follows:

Year [Sugar Season] Average Price [Rs/ Quintal]

1998-99 1320

1999-2000 1338

2000-2001 1316

2001-2002 1268

2002-2003 1119

2003-04 1232

Source: ISMA

Unusual or Infrequent events or Transactions

There have been no unusual or infrequent transactions in the year ended 31st March 2004.

Significant Economic Changes

The management does not foresee any significant economic changes concerning the Sugar industry in the immediate future, which might have an impact on the profitability or operations of the Company, other than the changes in government policies, changes in demand / supply of sugarcane and such other changes which are in usual course of business.

Known Trends or Uncertainties

Sugar is a cyclical business and is dependent to a large extent on the availability of sugarcane. Also, the output of sugar, an agro-based product is influenced by climatic conditions. The Company has consistently increased its crushing capacity and has diversified into power and alcohol to achieve value addition and reduce dependence on its core product.

Future Relationship between Costs and Revenues

In sugar industry, costs depend upon sugar cane prices, which account for upto 70% of the costs. The revenue depends on Government policies relating to sugarcane pricing as well as free sale quotas, international markets, and availability of sugar. The Company’s future sale prices will be determined by the demand-supply situation, government policies and sugarcane availability and prices.

Turnover from the Company's major industry segments

The Company operates in the following industry segments: Sugar, Alcohol, Power (Co-generation) and Others (Bio-compost). The contribution of these divisions to the total turnover of the Company is as under:

Division Sales for the year 2003-2004 (Rs. lacs) (%)

Sugar 62501.46 73.20

Alcohol 13644.31 15.98

Power 4530.85 5.31

82

Bio-compost 125.31 0.15

Molasses & others 4582.99 5.37

Total 85384.92 100.00

Status of any publicly announced new products or business segments

The company has not announced any new products or business segments.

Seasonality of the business

Sugar production is dependent on the availability and quality of cane. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane crop and hence sugar production.

Competitive Conditions

BCML is one of the lowest cost producers of sugar in India and is one of the most profitable players in the sugar industry. The Company has redefined its business model to profitably use its by-products – bagasse and molasses for power generation and alcohol production respectively – to obtain sustainable profits.

The company is not dependent on a single or few suppliers or customers.

Statement by the Directors

There are no material developments after the date of the latest balance sheet save and except as stated elsewhere in this document, that are likely to materially affect the performance and the prospects of the Company.

The Company has neither discontinued any of its existing business nor commenced any new business during past years, except the following units / plants which were commissioned during the year 2003-04:

4Integrated sugar complex at Haidergarh, having a sugar plant of 4000 TCD capacity and bagasse based co-generation power plant of 20.25 MW capacity

4Distillery of 60 KLPD capacities to produce industrial alcohol and ethanol at Babhnan Sugar Factory

Details Of Issues Made By Other Listed Group Companies During The Last 3 Years

1. As per the Companies Act 1956 under section 370 (1B)


2. Issues made by other listed group / promoter companies in the past three years


IX. JUSTIFICATION OF ISSUE PRICE

The following factors have been considered while arriving at the Issue price of Rs 260/- per Equity Share

Qualitative Factors:

1. An established, profit making and dividend paying Company.

2. Company is focussed on sugar business and related activities involving profitable utilization of by-products of sugar manufacture, thereby achieving value addition by full forward integration.

3. The company has power generation facilities at its Balrampur and Haidergarh units which utilise bagasse, a by-product of sugar manufacture to produce power for captive consumption as well as sale, thus providing cost advantage as well as a revenue stream.

4. Integrated complex at Haidergarh unit commissioned during the year 2003-04, comprising a 4000 TCD sugar unit and a 20.25 MW power plant, resulting in aggregate crushing capacity of 29000 TCD and fully forward integrated plant.

Quantitative Factors

Key Financials for the last five years:

83

Rs/ Lacs

For the year ending 31.03.2000 31.03.2001 31.03.2002 31.03.2003 31.03.2004

Total Income 47435.47 59922.47 56850.12 67829.92 97593.17

Net Profit before Depreciation, Taxation and Extra ordinary Items

4375.01 9498.74 7660.32 5828.32 11001.31

Net Profit after Extra ordinary Items & Tax

2641.97 6969.76 4733.76 2909.55 6090.69

Dividend (%) 40% 70% 85% 55% 100%

Earning per share 13.48 35.72 24.81 15.34 32.10

Basis of Issue Price

1. Adjusted Earnings Per Share.

Year Rs

2001-2002 24.81

2002-2003 15.34

2003-2004 32.10

Weighted average 25.29

2. Price / Earning Ratio (P/E) in relation to Issue price –

(a) Based on 2003-2004 EPS -- 8.10

(b) Industry P/E*

(I) Highest 24.1 (ii) Lowest 8.6 (iii) Average 9.5

(*Source: Dalal Street Journal Vol.XIX. No.14 (June 28 – July 11, 2004)

3. Return On Net worth

Year % 2001-2002 21.58% 2002-2003 12.35% 2003-2004 22.13 Weighted average 18.78%

4. Minimum Return on Total Net worth after Issue needed to maintain EPS at Rs 32.10 – 20.40%

5. Net Asset Value (NAV)

a) As at 31.3.2003 - Rs 124.23 b) As at 31.03.2004 - Rs.145.05 c) After Issue Assuming 100% subscription to the Rights Issue. Issue Price NAV after Issue Rs. 260/- per share Rs. 157.37

84

6. Comparison of accounting ratios of the Company with the peer group for the full year

Company EPS (Rs) P/E Ratio RONW (%) Book Value per share [Rs.]

Balrampur Chini Mills Ltd. 31.9 8.6 25.60% 124.6

Bajaj Hindustan Ltd. * 3.2 11.3 22.86% 14.0

Dhampur Sugar Mills Ltd. 1.2 24.1 12.63% 9.5

Dharani Sugar & Chemicals Ltd. -0.6 - -5.45% 11.0

Monnet Industries Ltd. -0.1 - -0.06% 165.3

Rajshree Sugars & Chemicals Ltd. 2.4 10.8 9.72% 24.7

Sakthi Sugars Ltd. -19.6 -16.03% 122.3

Thiru Arooran Sugars Ltd. -13.5 -16.63% 81.2

Ugar Sugar Works Ltd. -2.1 -2.92% 72.0

*Face Value Re.1 per share

Source: Dalal Street Journal Vol.XIX. No.14 (June 28 to July 11, 2004)

X. OUTSTANDING LITIGATION, DEFAULTS, ADVERSE EVENTS & MATERIAL DEVELOPMENTS




1. Three nos. criminal applications are pending against the Company before Lucknow Bench of Hon’ble High Court at Allahabad. These applications have been filed by the State of U.P. in the year 1994 against the orders dated 28.06.1993 of Additional Chief Judicial Magistrate in the cases filed under sections 5,11, and 12 of U.P Sheera Niyantran Adhiniyam, 1964. The Assistant Excise Commissioner had filed these cases in 1990-91 and 1991-92 against the company for deterioration in the quality of molasses. The Additional Chief Judicial Magistrate acquitted the various officials of the Company, and the state of U.P has preferred the appeals against the said judgment. The cases are pending for hearing. The amount of liability is not ascertainable.




Also, a notice dated 04.08.1997 was issued by Deputy Labour Commissioner, Faizabad to deposit Rs.4.80 lacs, against which the Company has filed a suit in the court of Civil Judge ( Senior Division) Gonda for permanent injunction against the recovery of the amount claimed in the said notice and declaring the same void and invalid.

2. A writ petition has been filed with the Lucknow Bench of Allahabad High Court against the award dated 19.02.1990 of Presiding Officer, Labour Court, Lucknow by the Swantantra Chini Mills Karamchari Union. The Union demanded that 56 workmen be given their due status as seasonal / permanent as per work performed by them, which was not

85

accepted in the aforesaid adjudication award. The Union has moved the writ petition for quashing the award of the Labour Court and re-instatement of workmen with full back wages and consequential benefits, including continuity of service. The case is pending for hearing. The amount involved is not ascertainable.

3. The Deputy Labour Commissioner [DLC], Faizabad issued a show-cause notice to the Company on 12.08.1991 purporting to take action against the Company for violating the provisions of notification dated 03.02.1972. This notification issued by the State Government, U.P prohibited sugar factories in the state to undertake certain activities by contract labour and was applicable to 71 privately owned sugar factories situated in U.P only. The Company filed its reply to the show cause notice, but the DLC insisted upon taking action against the Company. The Company has filed a writ petition no. 6 of 1992 in the High Court of Allahabad, Lucknow Bench and has obtained stay against the operation of the said notification. The case is pending for hearing and amount involved is not ascertainable.




Sl.No.

Parties to the Suit

Case No. / Court


Central Excise


40/R-Gonda/FZD/ 2001/330 Dt. 22-01-2001


A sum of Rs.1.34 has been deposited and reply submitted on 16-03-2001. Hearing has been held on 25-09-2001 and Judgment is awaited.

14.44

86

Sl.No.

Parties to the Suit

Case No. / Court




VI(MP)Dem(12) Adj.-84 /2003 1849 Dt. 30-09-2003


The Commissioner has imposed duty of Rs. 10.88 lacs along with interest and penalty. The Company filed its defence reply on 30.10.2003. The Commissioner Central Excise vide his order dated 30.01.2004 confirmed the demand and penalty of equivalent amount, against which the Company is proceeding to file Second appeal in CESTAT.

21.74


V/s



Dt. 07-09-94

In the year 1993-94 some quantity of molasses flowed out from Tank No. 4 at Balrampur Unit, in respect of which the Company filed an application for remission of excise duty. Central Excise Department issued a show cause notice dated 05.06.1995 demanding excise duty of Rs. 6.30 lacs in respect of 10495 qtls. of molasses. Assistant Commissioner Central Excise Faizabad and subsequently the Commissioner Appeals and the CEGAT have decided the case against the Company.


6.29

87

Sl.No.

Parties to the Suit

Case No. / Court






The Company applied for common Central Excise Registration for Paper, Chemical and Sugar Division, on 7.04.2001, which was rejected by the Commissioner on 24.08.201. The Company filed an appeal in CEGAT on 18.10.2001 against the order of the Commissioner and received a favourable judgement 05.12.2001. The Department has filed a writ in Allahabad High Court against the order of CEGAT, which was dismissed on 23.05.2003. The Department has now filed Reference Application under Sec 35 H in Allahabad High Court.

504



VI (17) 209/2000/X-3/1331 Dt. 23-04-2001


The Company filed its defence reply dated 18.05.2001. The Commissioner passed an order rejecting the remission application and confirming the duty demand of Rs. 5193165 lacs. The Company has filed Second Appeal in CESTAT on 10.02.2004

51.93

88

Sl.No.

Parties to the Suit

Case No. / Court



1/ Demand/ 95/ 482 dated 23.11.1995

The assistant Commissioner, Central Excise, Faizabad raised a demand cum show cause notice regarding Modvat credit on gunny bags, differential duty on duty paid molasses stored in kuccha pits and modvat credit on capital goods, aggregating to Rs. 7.38 lacs


Rs. 6.92 lacs


VI(MP)Dem(12)Adj.136/03/161/Dt.14-01-04



43.16




In the sugar season 1982-83, the Company purchased cane from Sahakari Ganna Vikas Samiti Limited, Tulsipur. The Cane Control Order 1966 provides that payment for any cane purchase should be made within 14 days of purchase and any delay beyond 14 days shall bear interest. The SMP for sugarcane for the season 1982-83 was fixed at Rs. 14.84 per quintal while the Sate Government of U.P advised a price of Rs. 20.50 [the SAP]. The Company paid the SMP and the difference between the SMP and the SAP was paid as an advance towards additional price to be fixed at the end of the sugar season under Rule 5A of the Cane Control Order 1966.The Company also clarified to the said seller that it would not be liable for payment of interest on the additional price. The said buyer raised a claim on 06.10.1989 with Deputy Cane Commissioner [who were appointed as sole arbitrators under U.P Cane Supply Rules 1954] for Rs. 18.74 lacs as interest on delayed payment of arrears. The Company objected to such arbitration, not being a party to any arbitration agreement. The Deputy cane Commissioner by its order dated 31.07.1993 upheld the claim of the Company for Rs. 18.74 lacs. The Company has filed a writ petition [769 of 94] with High Court of Allahabad, Lucknow Bench for quashing of the said award. The Company has been granted stay against recovery of the said amount.


89

G. Other case s

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]

1. Smt. Kumari

vs.




The case is pending for filing of evidence and next hearing is fixed on 05.08.2004.

6.29





Not Ascertainable





8.75





8.75



W.P. 3046/2003

High Court

Lucknow

Public interest petition was filed in 2003 with the allegation of pollution by BCML’s Sugar & Chemical Division by way of discharge of effluent in river Rapti and sought prohibition on the discharge of effluent by the Company, and taking penal action against the Company.


Not Ascertainable

90

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]


vs.



Originally Criminal Complainant case no 78 of 93 was filed by U.P. Pollution Control Board, Lucknow before the Special Judicial Magistrate (Pollution Control) U.P. Lucknow on the ground that the Company had no water consent as required under law and was draining the water of mill area in public river etc. Tulsipur Sugar Co. contested the case, which was decided on 13.10.93 by the court concerned.


Nil


91

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]

7. Daya Shankar Tripathi

Vs.

Secretary U.P. Pollution Control Board, Lucknow & Others incl. Tulsipur Sugar Co.


This W.P. has been filed by one of the resident of Tulsipur with the allegation that due to polluted water of the Chini Mill and dust thrown through the Chimney of the mill people residing nearby are facing hardship and becoming seriously ill.


Not Ascertainable





Not Ascertainable





Not Ascertainable




Pending for hearing

Not Ascertainable

92

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]






Not Ascertainable

Apart from the major cases mentioned above, 5 cases are pending where the aggregate amount involved is Rs.4.35 lacs. Also,.4 cases are pending where the aggregate amount involved is not ascertainable.

93


Sl.No.

Parties to the Suit

Case No. / Court


Miscellaneous Cases

1. BCML

vs.






Rs 16.39 lacs plus 18% interest on Rs. 1.44 lacs from 17.07.97 and from 17.02.98on balance amount plus Rs. 2.00 lacs as damages

2

BCML vs.

UPPCL

234/ 2003

Consumer Forum


The Company applied to UPPCL for permanent disconnection of electric lines at Balrampur factory since it was meeting its power requirements from its co-generation plant. UPPCL did not proceed on the Company’s application on the grounds that an amount of Rs. 5.60 lacs is due from the Company for the period September 2000 to August 2001 as additional surcharge. In respect of the said amount, the Company has filed a suit dated 07.04.2003, which is pending, and stay order against the recovery is in operation. The Company filed the present suit with Consumer Forum for permanent disconnection and for recovery of Rs. 4.35 lacs [being bills raised and collected by UPPCL for the period after disconnection application] and damages of Rs. 1.50 lacs.

Permanent disconnection allowed by court order. The present suit is pending for recovery of amount of bills which have been charged after the date of disconnection The case is pending for hearing on 12.08.2004.

Rs.5.85 lacs

94

Sl.No.

Parties to the Suit

Case No. / Court






Not ascertainable

4


Vs.

Union of India


In the year 1982-83 the price of levy sugar was fixed at higher rate. Subsequently Central Govt. reduced price of levy sugar and the Department issued letter of refund of difference price paid by them. By filling the writ petition the Company challenged the demand and recovery of the amount. The Company deposited the amount claimed under the direction of High Court by way of a fixed deposit, which will be encashed subject to the decision of the High Court.


15.00

95

Sl.No.

Parties to the Suit

Case No. / Court




The Company has filed this writ petition against the Sate of U.P, Secretary Excise and others to restrain them for levy and recovery of administrative charges on molasses produced by the Company in its own distillery. Also, the Company has applied for recovery of administrative charges for seasons 1995-96, to 1997-98 aggregating to Rs. 39.22 lacs.


39.22




Hearing fixed for 20.10.2004

Nil





Not ascertainable

96

Sl.No.

Parties to the Suit

Case No. / Court






Not ascertainable



175/2001

176/2001

177/2001

178/2001



Rs. 12.48 lacs

Note:





INTEREST OF THE PROMOTERS, SUBSIDIARIES AND DIRECTORS

1. The promoters and the subsidiaries of the company / other companies in the promoter group, apart from normal commercial transactions and their shareholding in the company and their shareholding in the company, have no other

97

interests in the company either by itself or through their interests in other companies in the promoter group. The directors of the company, apart from reimbursement of expenses incurred, sitting fees and directors commission and in case of Managing Director Joint Managing Director and Whole-time Directors of the company, remuneration payable in accordance with the provisions of the Companies Act, 1956 and their shareholding in the company if any, in the normal course of business have no other interest in the company except for the commercial transaction between the company and the companies/firms in which directors are interested. The above transactions are fully disclosed in the register maintained under section 301 of the Act. These transactions are certified by the statutory auditors as being transacted at a price, which are reasonable, having regard to the prevailing market prices of the goods, material or services involved.

2. Transactions entered into by the company with promoter group companies during the year ended 31st March 2004 are detailed under the heading “Details of Inter-related Party Transaction” on Page 70.

3. No loans and advances were granted by BCML to promoters, and companies in which directors are interested.

MATERIAL DEVELOPMENT There are no material developments after the date of the latest Balance Sheet that are likely to materially affect the performance and the prospects of the Company. All known and identified liabilities have been acknowledged and accounted for and necessary disclosures made in the Letter of Offer. ADVERSE EVENTS The Directors opine that to the best of their knowledge and ability, as on date no circumstances have arisen since the date of the last financial statement that materially and adversely affect or are likely to affect the operations of the Company or the value of its assets or the ability to pay its liabilities within the next 12 months. DEFAULTS The Company has not defaulted in payment of any dues to Institutions / Banks etc. XI. RISK ENVISAGED BY THE MANAGEMENT AND PROPOSALS, IF ANY, TO ADDRESS THE

RISKS 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 Sugar industry. This data has been obtained from various industry publications, reports and other sources that the Company and the Lead Manager believe to be reliable. Neither the Company nor the Lead Manager has independently verified such data. Internal Risk Factors 1. The funds raised through this issue are proposed to be used to augment the long-term working capital

resources of the Company by substituting part of the short term loans taken to meet the working capital gap with long term funds. However, the requirement of funds has not been appraised by any Bank / Financial Institution. Thus, there will be no monitoring of the funds raised through the issue and the deployment of funds will be left entirely to the Company. Management Proposal The Company has, in the past, undertaken various projects, which have been implemented successfully. The funds raised through the Rights Issue would be used for meeting the long-term working capital requirements and the Company undertakes to ensure proper utilisation of proceeds.

2. The Supreme Court vide its order dated 5th May 2004 overruled the earlier judgement of High Court, Allahabad and upheld the earlier judgement of High Court, Lucknow that state government has the power to fix price of sugarcane [State Advisory Cane Price or SAP]. The state government, in view of this judgement, proposes to recover the difference between the state advised price and the price paid by the sugar mills to the cane growers for the sugar seasons 1996-97, 2002-03 and 2003-04.Such liability for the years 1996-97 and 2003-04 in respect of the Company is expected to be around 1971 lacs in aggregate. In case of season 2002-03, an interim stay granted by High Court,

98

Allahabad is still subsisting

Management Proposal

U.P.Sugar Mills Association has moved the High Court, Allahabad against the proposed recovery action of the state government, on the ground that the aforesaid judgement of the Supreme Court does not give the power to the state government to fix SAP with retrospective effect. While the High Court, Allahabad has not granted any interim relief, it has ruled that the sugar mills may approach the court in case the state government initiates any recovery action against the sugar mills.

Also, U.P.Sugar Mills Association has moved a review petition to the Supreme Court in respect of its aforesaid order, and this review petition is pending.

3. The sundry debtors have increased from Rs. 1522.09 lacs in 2002-03 to 2187.36 lacs during 2003-04.

Management Proposal

During the year 2003-04, the Company’s power plant at Haidergarh, chemical plant at Babhnan and bio-compost plants at Babhnan commenced operations. This was also the first full year of commercial operation of the power plant of the Company at Balrampur, which was commissioned on 08.03.2003. The commencement of commercial operations at these new units has been the major reason for increase in debtors during the year. In case of power, receivables are 2-3 months as the power is sold to State Electricity Board. Such increase in debtors is in normal course of business and does not present any risk or weakness of the business of the Company.

4. As on 31.03.2004, the deferred tax liability is Rs. 8438.51 lacs and has increased over the past five years.

Management Proposal

The increase in deferred tax liabilities over the past 5 years should be seen in conjunction with the increase in fixed assets. Over the period ending 31st March 1999 to 31st March 2004, the gross block of fixed assets has increased from Rs.28988.57 lacs to Rs.74427.72 lacs. This has resulted in higher depreciation charge [Rs. 6649.58 lacs in 1999 to Rs.20031.99 lacs as on 31.03.2004]. The increase in deferred tax liabilities is due to the higher tax shield available on such higher depreciation charge. This is as per the provisions of Accounting Standard 22 stipulated by the Institute of Chartered Accountants of India. The deferred tax liability thus represents the impact of the timing difference between the depreciation for accounting and taxation purposes on such higher tax shield available during the current year. As such, this increase in deferred tax liabilities will not have any adverse impact in the year such timing difference is reversed.

5. There has been no transaction in the securities of the Company for around last three years at DSE.

Management Proposal

The equity shares of the company are listed and actively traded at NSE & BSE. These stock exchanges provide screen based trading which is widely accessible from various parts of the Country.

6. The licences under the Prevention of Food Adulteration Act for Balrampur and Tulsipur Sugar units and approval for pressure vessels for Haidergarh Division have expired during the year.

Management Proposal

Application for renewal of the same has already been made, except for the approval for pressure vessels for Haidergarh division, which will be made at the start of crushing season as per the usual practice.

7. Two of the Promoter Group Companies/ Associate Companies namely Online Art Dotcom Limited and E-commodities Limited respectively have incurred losses in the last 2 years of operation

Management Proposal

These are new ventures and are still in their initial phases of business.

8. Contingent Liabilities not provided for as on 31st March 2004 are as follows: Rs. Lacs

a. Differential cane price for the sugar seasons 1978-79 and 1979-80 pending disposal of the Writs filed by the Company in Hon’ble High Court, Calcutta

32.93

99

b. No provision has been made for interest on excess amount of levy sugar for sugar season 1982-83 realised as per Court Order against which TDR of Rs.25.54 lacs has been deposited with a Bank

25.54

c. Claims for compensation against land acquired for the Chemical Unit which has been disputed by the Company

Amount not ascertained

d. Claims against the Company not acknowledged as debt 37.97

e. Bank Guarantee furnished in respect of excise duty rebate 20.39

Management Perception

The above contingent liabilities are in normal course of business.

9. The major outstanding litigation concerning the Company [ exclusive of those covered separately as risk factors and contingent liabilities] are as follows :




1. Three nos. criminal applications are pending against the Company before Lucknow Bench of Hon’ble High Court at Allahabad. These applications have been filed by the State of U.P. in the year 1994 against the orders dated 28.06.1993 of Additional Chief Judicial Magistrate in the cases filed under sections 5,11, and 12 of U.P Sheera Niyantran Adhiniyam, 1964. The Assistant Excise Commissioner had filed these cases in 1990-91 and 1991-92 against the company for deterioration in the quality of molasses. The Additional Chief Judicial Magistrate acquitted the various officials of the Company, and the state of U.P has preferred the appeals against the said judgment. The cases are pending for hearing. The amount of liability is not ascertainable.




Also, a notice dated 04.08.1997 was issued by Deputy Labour Commissioner, Faizabad to deposit Rs.4.80 lacs, against which the Company has filed a suit in the court of civil Judge ( Senior Division) Gonda for permanent injunction against the recovery of the amount claimed in the said notice and declaring the same void and invalid.

2. A writ petition has been filed with the Lucknow Bench of Allahabad High Court against the award dated 19.02.1990 of Presiding Officer, Labour Court, Lucknow by the Swantantra Chini Mills Karamchari Union. The Union demanded that 56 workmen be given their due status as seasonal / permanent as per work performed by them, which was not accepted in the aforesaid adjudication award. The Union has moved the writ petition for quashing the award of the Labour Court and re-instatement of workmen with full back wages and consequential benefits, including continuity of service. The case is pending for hearing. The amount involved is not ascertainable.

3. The Deputy Labour Commissioner [DLC], Faizabad issued a show-cause notice to the Company on 12.08.1991 purporting to take action against the Company for violating the provisions of notification dated 03.02.1972. This notification issued by the State Government, U.P prohibited sugar factories in the state to undertake certain activities by contract labour and was applicable to 71 privately owned sugar factories situated in U.P only. The Company filed

100

its reply to the show cause notice, but the DLC insisted upon taking action against the Company. The Company has filed a writ petition no. 6 of 1992 in the High Court of Allahabad, Lucknow Bench and has obtained stay against the operation of the said notification. The case is pending for hearing and amount involved is not ascertainable.




Sl.No.

Parties to the Suit

Case No. / Court


Central Excise


40/R-Gonda/FZD/ 2001/330 Dt. 22-01-2001


A sum of Rs.1.34 lacs has been deposited and reply submitted on 16-03-2001. Hearing has been held on 25-09-2001 and Judgment is awaited.

14.44



VI(MP)Dem(12) Adj.-84 /2003 1849 Dt. 30-09-2003


The Commissioner has imposed duty of Rs. 10.88 lacs along with interest and penalty. The Comp-any filed its defence reply on 30.10.2003. The Commissioner Central Excise vide his order dated 30.01.2004 confir-med the demand and penalty of equivalent amount, against which the Company is proce-eding to file Second appeal in CESTAT.

21.74

101

Sl.No.

Parties to the Suit

Case No. / Court



V/s



Dt. 07-09-94

In the year 1993-94 some quantity of molasses flowed out from Tank No. 4 at Balrampur Unit, in respect of which the Company filed an application for remission of excise duty. Central Excise Department issued a show cause notice dated 05.06.1995 demanding excise duty of Rs. 6.30 lacs in respect of 10495 qtls. of molasses. Assistant Comm-issioner Central Excise Faizabad and subsequently the Commissioner Appeals and the CEGAT have decided the case against the Company.


6.29





The Company applied for common Central Excise Registration for Paper, Chemical and Sugar Division, on 7.04.2001, which was rejected by the Commissioner on 24.08.201. The Company filed an appeal in CEGAT on 18.10.2001 against the order of the Commissioner and received a favour-able judgement 05.12.2001. The Department has filed a writ in Allahabad High Court against the order of CEG-AT, which was dismissed on 23.05.2003. The Department has now filed Reference Application under

504

102

Sl.No.

Parties to the Suit

Case No. / Court


35 H in Allahabad High Court.



VI (17) 209/2000/X-3/1331 Dt. 23-04-2001


The Company filed its defence reply dated 18.05.2001. The Commissioner passed an order rejecting the remis-sion application and confirming the duty demand of Rs. 5193165 lacs. The Company has filed Second Appeal in CESTAT on 10.02.2004

51.93


1/ Demand/ 95/ 482 dated 23.11.1995

The assistant Comm-issioner, Central Excise, Faizabad raised a demand cum show cause notice regarding Modvat credit on gunny bags, differential duty on duty paid molasses stored in kuccha pits and modvat credit on capital goods, aggregating to Rs. 7.38 lacs


6.92


VI(MP)Dem(12)Adj.136/03/161/Dt.14-01-04



43.16




In the sugar season 1982-83, the Company purchased cane from Sahakari Ganna Vikas Samiti Limited, Tulsipur. The Cane Control Order 1966 provides that payment for any cane purchase should be made within 14 days of purchase and any delay beyond 14 days shall bear interest. The SMP for sugarcane for the season 1982-83 was fixed at Rs. 14.84 per quintal while the Sate Government of U.P advised a price of Rs. 20.50 [the SAP]. The Company paid the SMP and the difference between the SMP and the SAP was paid as an advance towards additional price to be fixed at the end of the sugar season under Rule 5A of the Cane Control Order 1966.The Company also clarified to the said

103

seller that it would not be liable for payment of interest on the additional price. The said buyer raised a claim on 06.10.1989 with Deputy Cane Commissioner [who were appointed as sole arbitrators under U.P Cane Supply Rules 1954] for Rs. 18.74 lacs as interest on delayed payment of arrears. The Company objected to such arbitration, not being a party to any arbitration agreement. The Deputy cane Commissioner by its order dated 31.07.1993 upheld the claim of the Company for Rs. 18.74 lacs. The Company has filed a writ petition [769 of 94] with High Court of Allahabad, Lucknow Bench for quashing of the said award. The Company has been granted stay against recovery of the said amount.


G. Other cases

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]

1. Smt. Kumari

vs.




The case is pending for filing of evidence and the hearing is fixed on 05.08.2004.

6.29





Not Ascertainable





8.75





8.75

104

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]



W.P. 3046/2003

High Court

Lucknow

Public interest petition was filed in 2003 with the allegation of pollution by BCML’s Sugar & Chemical Division by way of disch-arge of effluent in river Rapti and sought prohi-bition on the discharge of effluent by the Company, and taking penal action against the Company.


Not Ascertainable


vs.



Originally Criminal Comp-lainant case no 78 of 93 was filed by U.P. Pollution Control Board, Lucknow before the Special Judicial Magistrate (Pollution Cont-rol) U.P. Lucknow on the ground that the Company had no water consent as required under law and was draining the water of mill area in public river etc. Tulsipur Sugar Co. contested the case, which was decided on 13.10.93 by the court concerned.


Nil

105

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]


7. Daya Shankar Tripathi Vs. Secretary U.P. Pollution Control Board, Lucknow & Others incl. Tulsipur Sugar Co.


This writ petition has been filed by one of the resident of Tuls-ipur with the allegation that due to polluted water of the Chini Mill and dust thrown through the Chimney of the mill people residing nearby are facing hardship and becoming seriously ill.


Not Ascertainable





Not Ascertainable

106

S.No.

Parties to the Suit

Case No. / Court


[ Rs. Lacs]





Not Ascertainable




Pending for hearing

Not Ascertainable






Not Ascertainable

Apart from the major cases mentioned above, 5 cases are pending where the aggregate amount involved is Rs.4.35 lacs. Also.4 cases are pending where the aggregate amount involved is not ascertainable.

107


Sl.No.

Parties to the Suit

Case No. / Court


Miscellaneous Cases

1. BCML

vs.






Rs 16.39 lacs [plus 18% interest on Rs. 1.44 lacs from 17.07.97 and from 17.02.98on balance amount plus Rs. 2.00 lacs as damages

2

BCML vs.

UPPCL

234/ 2003

Consumer Forum


The Company applied to UPPCL for permanent disconnection of electric lines at Balrampur factory since it was meeting its power requirements from its co-generation plant. UPPCL did not proceed on the Company’s application on the grounds that an amount of Rs. 5.60 lacs is due from the Company for the period September 2000 to August 2001 as additional surcharge.

Permanent disconnection allowed by court order. The present suit is pending for recovery of amount of bills which have been charged after the date of disconnection The case is pending for hearing on 12.08.2004.

5.85

In respect of the said amount, the Company has filed a suit dated 07.04.2003, which is pending, and stay order against the recovery is in operation. The Company filed the present suit with Consumer Forum for permanent disconnection and for recovery of Rs. 4.35 lacs [being bills raised and collected by UPPCL for the period after disconnection application] and damages of Rs. 1.50 lacs.

108

Sl.No.

Parties to the Suit

Case No. / Court






Not ascertainable

4


Vs.

Union of India


In the year 1982-83 the price of levy sugar was fixed at higher rate. Subsequently Central Govt. reduced price of levy sugar and the Department issued letter of refund of difference price paid by them. By filling the writ petition the Company challenged the demand and recovery of the amount. The Company deposited the amount claimed under the direction of High Court by way of a fixed deposit, which will be encashed subject to the decision of the High Court.


15.00

109



The Company has filed this writ petition against the Sate of U.P, Secretary Excise and others to restrain them for levy and recovery of administrative charges on molasses produced by the Company in its own distillery. Also, the Company has applied for recovery of administrative charges for seasons 1995-96, to 1997-98 aggregating to Rs. 39.22 lacs.


39.22




Hearing fixed for 20.10 2004

Nil





Not ascertainable

110





Not ascertainable



175/2001

176/2001

177/2001

178/2001



Rs. 12.48 lacs

Note:





External Risk Factors

1. Sugar Industry in India is a controlled industry and the Government controls the cane prices [through Statutory Minimum Price mechanism] and also the quantity of sugar to be sold in free markets [ by the levy sugar mechanism].

111

As such, the performance of the companies in Sugar industry is dependent on Government policy.

2. Availability of Sugar cane, the major raw material, amongst other factors, depends on the monsoon conditions, which affects the production and recovery. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane yield and hence sugar production.

3. Competition from existing established companies and future entrants into the industry.

4. The performance of the Company may be affected by a number of factors beyond its control including political and economic developments both in India and worldwide. Terrorist attacks and other acts of violence or war may negatively affect the domestic as well as the overseas markets. These acts may also result in a loss of business confidence, make travel and other services more difficult and ultimately affect the Company’s business, financial conditions and results of operations.

5. The business of the Company is subject to the regulations of Government of India. A change in the Government’s economic liberalization and deregulation policies could affect business and economic conditions in India and the business of the Company in particular.

Notes:

1.The net worth of the Company as on 31.03.2004 is Rs.27533.57 Lacs after excluding Revaluation Reserve and the issue size is Rs.5919.36 lacs.

2.The book value of the equity shares of the Company as on 31.03.2004 is Rs.145.00 per equity shareexcluding revaluation reserve.

3. The promoters of the Company / other companies in the promoter group, apart from normal commercial transactions and their shareholding in the Company, have no other interests in the Company either by itself or through their interests in other companies in the promoter group.

The directors of the company, apart from reimbursement of expenses incurred, sitting fees and directors commission and in case of Managing Director, Joint Managing Director and the Whole-time Directors of the Company, remuneration payable in accordance with the provisions of the Companies Act, 1956 and their shareholding in the company if any, in the normal course of business have no other interest in the company except for the commercial transaction between the company and the companies/firms in which directors are interested.

The above transactions are fully disclosed in the register maintained under section 301 of the Act. These transactions are certified by the statutory auditors as being transacted at a price, which are reasonable, having regard to the prevailing market prices of the goods, material or services involved.

4. Details of Inter-related party transactions

The related party disclosures as per Accounting Standard 18 issued by The Institute of Chartered Accountants of India as on 31.03.2004 are as follows:

(i) Names of related parties and description of relationships

(a) Associates Avantika Ganna Private Limited E-Commodities Limited (b) Key Managerial Personnel [KMP] Shri Vivek Saraogi – Managing Director Smt. Meenakshi Saraogi – Joint Managing Director Shri R.N.Misra – Whole –time Director Shri K.N.Ranasaria – Whole –time Director* (c) Relatives of KMP Shri K.N.Saraogi – Chairman (Non-Executive) and

relative of Managing Director and Joint Managing Director

(d) Enterprises over which KMP and their relatives have substantial interest


Ranger Apparel Export Private Limited

112

Online Art Dotcom Limited Kamal Nayan & Co.

*Shri K.N.Ranasaria was appointed as a Whole Time Director of the Company w.e.f. 12th May 2003 and accordingly, has been considered as a KMP for the subsequent period.

(ii) Transactions with Related Parties

Rs. Lacs

Sl.No.

Particulars Associates KMP (Key

management personnel)

Enterprises over which KMP and their relatives

have substantial Interest

Relatives of KMP

Total

1. Purchases of goods 2003-04 - - 1.43 - 1.43 2002-03 - - 3.56 - 3.56 2001-02 - - 928.83 - 928.83 2. Finance –ICD taken 2003-04 243.50 - - - 243.50 2002-03 190.00 - - - 190.00 2001-02 109.00 - 42.53 - 151.53 - Interest paid 2003-04 9.13 - - - 9.13

2002-03 12.24 - - - 12.24 2001-02 5.49 - 0.94 - 6.43

3. Rendering/ (Receiving) of services

2003-04 - 121.53 - 1.46 122.99


of receivable 2003-04 13.95 49.60 - 0.89 64.44

2002-03 121.45 48.00 0.19 0.63 170.27 2001-02 50.38 53.00 6.67 - 110.05 5.The cost per share in the proposed issue for the promoters is Rs.260/- per share.

6.Kindly refer page no. 15 for details of purchase / sale of the Company’ shares by the Promoter Group / Directors of the Company.

XII. EXPERT OPINION, MATERIAL CONTRACTS AND OTHER DOCUMENTS:

The Company has obtained the following expert opinions, which are included in the Letter of Offer.

M/s G.P.Agarwal & Co, the Company’s Auditors have given their written consent for the inclusion as to the Tax Benefits as advised by them and appearing in the Letter of Offer. Such consent and reports have not been withdrawn up to the time of signing of this Letter of Offer.

Option to subscribe

Save as otherwise stated elsewhere in this Letter of Offer, the Company has not entered nor does it propose to enter into any contract or arrangement whereby any option or preferential right of any kind has been or is proposed to be given, to any person to subscribe for any Equity Shares of the Company now offered for subscription.

Option to receive the rights equity shares in Demat form

Applicants have the option to subscribe and hold the equity shares either in electronic form or in physical form.

113

Applicants must indicate in the application form the no. of shares they wish to receive in dematerialised and physical form out of the total number of shares applied for. In case of partial allotment, shares will first be allotted in dematerialised form and the balance shares, in excess of the applicants request for equity shares in demat form will be allotted in physical form. Shareholders opting to receive equity shares in physical form will be issued a consolidated shares certificate for all the equity shares allotted to them in this offer. Investor Grievance Redressal System The investor grievances against the Company are handled by the Share Department of the Company. The Share Department of the Company has adequate staff and systems for speedy redressal of the investor grievance. It normally takes 7 days from the date of receipt of the complaint from disposal of investor grievances. As per the information received from the Investor Grievance Cell of SEBI, Calcutta there are no investor grievances remaining pending against the Company upto 15th July 2004. To handle the grievances received, the Company has appointed Shri S. K. Agrawala, Company Secretary as the Compliance Officer. He is stationed at the Registered Office of the Company. He supervises redressal of complaints received from the investors and ensures timely settlement. Purchase of Property There is no property which the company has purchased or acquired or proposes to purchase or acquire, which is to be paid for, wholly or partly, out of the proceeds of the present issue or the purchase or acquisition of which has not been completed on the date of issue of this offer document other than ; a. the contracts for purchase or acquisition of whereof were entered into , or may be entered into, in the

ordinary course of the Company’s business, such contract not being made in contemplation of the contract; or

b. property in respect of which the amount of consideration is not material. The Company has not purchased any property in which any of its Directors had or have any direct or indirect interest or in respect of any payment thereof. The Company has no plans , at present, to acquire any running business out of the proceeds of the issue.

Issue of shares otherwise than for cash There have not been any issue for consideration other than cash, other than those disclosed under notes to capital structure [ Kindly refer page no.10 and 11] Capitalisation of Reserves or Profits Save and except the issue of bonus shares as mentioned in the Built-up of Share Capital Statement on pages 10 / 11 of the letter of offer, the Company has not capitalised the reserves or profits since its inception. Revaluation of Assets Land, Building, Plant & Machinery, Railway Siding and Tubewell of the Balrampur unit were revalued as on 30th June 1988 on market value / replacement cost and the increase in value due to revaluation amounting to Rs.513.18 was credited to revaluation reserve. Land, building, plant and machinery of Tulsipur unit were revalued as at 31st March 1999 on net replacement value and the increase in value due to revaluation amounting to Rs. 1921.08 lacs was credited to revaluation reserve in the books of erstwhile Tulsipur Sugar Company Limited [ since merged with the Company]. Payment or benefit to the Directors and officers of the Company No amount or benefit has been paid or given to any Director or Officer of the Company except their normal remuneration and / or reimbursement for the services rendered to the Company to which they are entitled or may become entitled to under the provisions of the Companies Act or otherwise in accordance with law. Business relationship with other companies in the promoter group The Company does not have any business relationship with other companies in the promoter group except certain commercial transactions, details of which are disclosed at Page 70 ‘Related Party Transactions’ in this Letter of Offer.

114

Rights of the equity shareholders 1. Right to receive dividend 2. Right to attend general meeting and exercise voting powers, unless prohibited by law 3. Right to vote either personally or by proxy

The details regarding lien on shares, process of modification of rights, forfeiture of shares and transfer of shares are contained in the Memorandum and Articles of Association of the Company a copy of which is included in material documents open for inspection.

STATUTORY AND OTHER INFORMATION

Consents

Consents in writing of: (a) the Directors, the Company Secretary, the Auditors, Legal Advisors to the Issue, and Bankers to the Issue; and (b) Lead Manager to the Issue, Bankers to the Issue, legal Advisor to the Issuer and Registrars to the Issue to act in their respective capacities, have been obtained and filed along with a copy of the Offer Document with the SEBI, as required under Section 60 of the Act and such consents have not been withdrawn up to the time of delivery of the Offer Document.

M/s. G.P.Agarwal & Co, Chartered Accountants, Auditors of the Company, have given their written consent to the inclusion of their Report in the form and context in which it appears in the Offer Document and such consent and report have not been withdrawn up to the time of delivery of the Offer Document.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% and/ or if the subscription level falls below 90% after the closure of the issue on account of the cheques having been returned unpaid or withdrawal of applications, the Company shall refund the entire subscription amount received within 42 days from the date of closure of the issue.

If there is any delay in the refund of the application money by more than 8 days after the Company becomes liable to pay the amount (i.e. forty two days after the closure of the issue), the Company shall pay interest for the delayed period, at prescribed rates under sub-section (2) and (2A) of section 73 of the Companies Act, 1956.

Material Contracts and Documents and time and place of their inspection

The following Contracts, which are or may be deemed material have been entered into by the Company

These contracts and also the documents for inspection referred to hereunder may be inspected at the Company’s Registered Office at: FMC Fortuna, 234/3A, A.J.C.Bose Road, Calcutta – 700 020 from the date of the Letter of Offer until the date of closure of the subscription list.

Material Contracts

1. Memorandum of Understanding (MOU) between the Company and Lead Managers to the Issue namely, Lodha Capital Markets Limited dated 8th March 2004.

2. Memorandum of Understanding (MOU) between the Company and Lead Managers to the Issue namely, Enam Financial Consultants Private Limited dated 18th March 2004.

3. Memorandum of Understanding entered into between the Company and the Registrars to the Issue namely, C.B. Management Services Private Limited dated 8th March 2004.

Other Documents

1. Memorandum and Articles of Association of the Company.

2. Certificate of Incorporation dated 14th July, 1975

3. Letter dated 29th July 2004 from M/s. G.P.Agarwal & Co, Chartered Accountants, Auditors of the Company, regarding the tax benefits available to the Company and its members.

4. Statutory Auditors report dated 29th July 2004.

5. Copy of resolution passed at the Board meeting held on 30th January 2004 regarding the terms of the Rights issue.

6. Copies of Annual Reports of the company for the last five years.

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7. Consents of the Lead Manager, Advisors, Registrars, Auditors, Legal Advisors and Bankers to the issue.

8. Resolution authorising the issue of rights shares passed at the Extraordinary General Meeting held on 9th March 2004.

9. Application for listing to BSE, NSE, DSE and CSE

10. In-principle approval letters received from BSE, NSE, DSE and CSE

11. Observation Letter dated 21st June 2004 received from SEBI

XIII. WORKING RESULTS AND OTHER INFORMATION

Information as required to be given vide Ministry of Finance, Government of India Circular No. F2/ SE/ 76 dated 5th February, 1977 as amended vide their Circular of even number dated 8th March, 1977 is given below:

a) Working results of the Company (unaudited) for the period from 01.04.2004 to 30.06.2004)

(Rs. In lacs)

1. Sales (Net of Excise) 21026

2. Other Income 32

3. Total Expenditure 15960

4. Gross Surplus/(Deficit) before Interest Depreciation & Taxation 5098

5. Interest 798

6. Depreciation 878

7. Provision for Taxation 910

8. Net Profit/ (Loss) after Tax 2512

b) There are no material changes and commitments affecting the financial position of the Company since the period ended 31st March 2004.

c) Share prices

Weekend prices of equity shares of the Company for the last four weeks quoted at BSE

Week ended Closing Price (Rs.)

02.07.2004 289.50

09.07.2004 304.10

16.07.2004 296.00

23.07.2004 313.00

d) Current market price (cum –rights) of the equity shares of the Company on BSE during the period between January 2004 to June 2004 were -

Highest: Rs.458.65 on 22.04.2004

Lowest: Rs. 225.00 on 23.01.2004

Closing Market price of the equity shares on BSE, as on 29.07.2004 was Rs.335.55 per share (Ex rights).

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XIV. DECLARATION

THE COMPANY ACCEPTS NO RESPONSIBILITY FOR STATEMENTS MADE OTHERWISE THAN IN THE LETTER OF OFFER OR IN THE ADVERTISEMENT OR ANY OTHER MATERIAL ISSUED BY OR AT THE INSTANCE OF THE ISSUER AND THAT ANYONE PLACING RELIANCE ON ANY OTHER SOURCE OF INFORMATION WOULD BE DOING SO AT HIS OWN RISK.

NO STATEMENT MADE IN THIS FORM SHALL CONTRAVENE ANY OF THE PROVISIONS OF THE COMPANIES ACT, 1956 AND THE RULES MADE THEREUNDER. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH.

THE DISCLOSURES MADE IN THIS LETTER OF OFFER ARE TRUE AND CORRECT.

By Order of the Board of Directors

For Balrampur Chini Mills Limited.

Kamal Nayan Saraogi

Chairman

Vivek Saraogi

Managing Director

Meenakshi Saraogi

Joint Managing Director

S.K.Neotia

Director

*R.K.Choudhury

Director

Sudhir Jalan

Director

S.B.Budhiraja

Director

M.M.Mukherjee

Director

*Naresh Chandra

Director

K.N.Ranasaria

Whole-time Director

R.N.Misra

Whole-time Director

Kishor Shah

Chief Financial Officer

* through his duly constituted attorney Shri Vivek Saraogi

Place: Calcutta

Date: 29th July 2004

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LETTER OF OFFER BALRAMPUR CHI NI MILLS … and Confidential For Equity Shareholders of the Company...

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Transcript of LETTER OF OFFER BALRAMPUR CHI NI MILLS … and Confidential For Equity Shareholders of the Company...