ADITYA BIRLA NUVO LIMITED

Description
We believe that as a consolidated Company, our continuing efforts on brand building have resulted in the development
and strengthening of a range of strong, distinctive brands like ‘Louis Philippe’, ‘Van Heusen’, ‘Allen Solly’, ‘Peter England’
in Garment business, ‘RAY ONE’ in the Rayon business, ‘Birla Carbon’ in the Carbon Black business, ‘Linen Club’ in the
Textile business and ‘Shaktiman’ in the Fertilizer business, which we believe enables us to derive benefits in the market
space, through greater consumer confidence and in certain cases a premium pricing for our various products as against
our competitors. We believe we are able to leverage our brands to launch new products and extend into new product
categories like transforming our brands in Garments business from pure shirts brands to wardrobe brands by introducing
range of products namely suits, jackets, t-shirts, accessories etc, which are further being transformed to life style brands
by introducing perfumes, shoes. Also, Allen Solly mainly a men’s brand was extended to offer women apparels. We
believe that in the process of building these brands we have gained valuable insight into our clients / consumer
behaviour, which we leverage and utilize to drive business in today’s competitive markets. Our brands have also won
various awards and recognitions in both national and international forums.
Integrated Manufacturing

Letter of Offer
Dated : December 15, 2006
For Equity Shareholders of
the Company
ADITYA BIRLA NUVO LIMITED
(Originally incorporated as The Indian Rayon Corporation Limited on September 26, 1956 under the Companies Act, 1956
as a public limited company. The Company’s name was changed to Indian Rayon and Industries Limited on January 23,
1987 and subsequently to Aditya Birla Nuvo Limited on October 27, 2005. The registered office of the Company was shifted
from Mumbai to its present location on December 13, 1961. For further details see “History of the Company and Other
Corporate Matters” on page 65 of this Letter of Offer.
Registered Office: Indian Rayon Compound, Veraval - 362 266, Tel: + 91 2876-245711 Fax: + 91 2876-243220
Corporate Office: Aditya Birla Center, ‘A’ Wing, 4th Floor, S.K. Ahire Marg, Worli, Mumbai 400 030.
Tel: + 91 22 24995000/ 66525000 Fax: + 91 22 24995821/ 66525821
Contact Person: Mr. Devendra Bhandari – Company Secretary and Compliance Officer
E-mail: [email protected]; Website: www.adityabirlanuvo.co.in
FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY ONLY
LETTER OF OFFER
ISSUE OF 98,26,638 EQUITY SHARES OF RS.10 EACH AT A PREMIUM OF RS.783 PER EQUITY
SHARE FOR AN AMOUNT AGGREGATING RS. 779.25 CRORES TO THE EQUITY
SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF TWO EQUITY SHARES FOR EVERY
SEVENTEEN EQUITY SHARES HELD ON THE RECORD DATE i.e. DECEMBER 8, 2006
(“ISSUE”). THE ISSUE PRICE IS 79.3 TIMES OF THE FACE VALUE OF THE EQUITY SHARE.
GENERAL RISKS
Investments in equity and equity related securities involve a degree of risk and Investors should not invest any funds in
this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors
carefully before taking an investment decision in this Issue. For taking an investment decision, Investors must rely on their
own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or
approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of
this document. Investors are advised to refer to “Risk Factors” on page viii of this Letter of Offer before making an
investment in this Issue.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains
all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information
contained in this Letter of Offer is true and correct in all material respects and is not misleading in any material respect,
that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of
which makes this Letter of Offer as a whole or any such information or the expression of any such opinions or intentions
misleading in any material respect.
LISTING
The existing Equity Shares of the Company are listed on the Bombay Stock Exchange Limited (“BSE”) and The National
Stock Exchange of India Limited (“NSE”). The Company has received “in-principle” approvals from BSE and the NSE for
listing the Equity Shares arising from this Issue vide letters dated October 4, 2006 and October 5, 2006 respectively. The
BSE shall be the Designated Stock Exchange.
LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE
ISSUE PROGRAMME
Enam Financial Consultants
Private Limited
801/802, Dalamal Towers
Nariman Point, Mumbai 400 021
Tel: +91 22 6638 1800
Fax: +91 22 2284 6824
Email: [email protected]
Website: www.enam.com
Contact Person: Mr. Sachin K. Chandiwal
DSP Merrill Lynch Limited
Mafatlal Centre, 10th Floor
Nariman Point, Mumbai 400 021
Tel: + 91 22 6632 8000
Fax: + 91 22 2204 8518
Email: [email protected]
Website: www.dspml.com
Contact Person: Mr. Kartik Desai
Intime Spectrum Registry Limited
C13, Pannalal Silk Mills Compound,
LBS Marg, Bhandup (West),
Mumbai-400 078
Tel: + 91 22 2596 0320
Fax: + 91 22 2596 0329
Email: [email protected]
Contact Person: Mr. Vishwas Attawar
C M Y K
C M Y K
ISSUE OPENS ON
LAST DATE FOR REQUEST FOR
SPLIT APPLICATION FORMS
ISSUE CLOSES ON
DECEMBER 26, 2006 JANUARY 9, 2007 JANUARY 25, 2007
TABLE OF CONTENTS
ABBREVIATIONS & TECHNICAL TERMS ............................................................................................................ iv
RISK FACTORS .................................................................................................................................................... viii
SUMMARY .............................................................................................................................................................. 1
THE ISSUE ............................................................................................................................................................. 7
SELECTED FINANCIAL INFORMATION ................................................................................................................ 8
GENERAL INFORMATION.................................................................................................................................... 10
CAPITAL STRUCTURE ......................................................................................................................................... 16
OBJECTS OF THE ISSUE.................................................................................................................................... 25
BASIS FOR ISSUE PRICE ................................................................................................................................... 28
STATEMENT OF TAX BENEFITS........................................................................................................................ 30
INDUSTRY OVERVIEW........................................................................................................................................ 35
OUR BUSINESS ................................................................................................................................................... 41
REGULATIONS AND POLICIES ........................................................................................................................... 60
HISTORY OF THE COMPANY AND OTHER CORPORATE MATTERS............................................................... 65
DIVIDENDS ........................................................................................................................................................... 80
MANAGEMENT..................................................................................................................................................... 81
PROMOTER .......................................................................................................................................................... 97
GROUP COMPANIES .......................................................................................................................................... 101
OUR SUBSIDIARIES ........................................................................................................................................... 112
OUR JOINT VENTURE COMPANIES .................................................................................................................. 132
RELATED PARTY TRANSACTIONS ................................................................................................................... 138
AUDITORS REPORT ........................................................................................................................................... 145
STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY............................................................... 228
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITIONS AND
RESULTS OF OPERATIONS............................................................................................................................... 230
MATERIAL DEVELOPMENTS ............................................................................................................................. 247
DESCRIPTION OF CERTAIN INDEBTEDNESS .................................................................................................. 249
OUTSTANDING LITIGATIONS AND DEFAULTS................................................................................................. 255
GOVERNMENT APPROVALS ............................................................................................................................. 335
STATUTORY AND OTHER INFORMATION......................................................................................................... 346
TERMS OF THE ISSUE....................................................................................................................................... 358
MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ............................................................................. 375
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION...................................................................... 381
DECLARATION .................................................................................................................................................... 383
i
NO OFFER IN THE UNITED STATES
The rights and the shares of the Company have not been and will not be registered under the United States Securities
Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold,
resold or otherwise transferred within the United States of America or the territories or possessions thereof (the
‘‘United States’’ or ‘‘U.S.’’) or to, or for the account or benefit of, “U.S. Persons” (as defined in Regulation S under the
Securities Act (‘‘Regulation S’’), except in a transaction exempt from the registration requirements of the Securities
Act. The rights referred to in this Letter of Offer are being offered in India, but not in the United States. The offering
to which this Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any
shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said shares or
rights. Accordingly, this Letter of Offer should not be forwarded to or transmitted in or into the United States at any
time.
Neither the Company nor any person acting on behalf of the Company will accept subscriptions from any person,
or the agent of any person, who appears to be, or who the Company or any person acting on behalf of the Company
has reason to believe is, a resident of the United States and to whom an offer, if made, would result in requiring
registration of this Letter of Offer with the United States Securities and Exchange Commission. The Company is
informed that there is no objection to a United States shareholder selling its rights in India. Rights may not be
transferred or sold to any U.S. Person.
ii
ADITYA BIRLA NUVO LIMITED
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA
Unless stated otherwise, the financial information used in this Letter of Offer is derived from the Company’s
consolidated restated financial statements as of March 31 for the years ended 2006, 2005, 2004, 2003 and 2002
and the six months ended September 30, 2006 prepared in accordance with Indian GAAP and the Companies Act,
1956 and consolidated restated in accordance with applicable SEBI Guidelines, as stated in the report of our statutory
Auditors M/s. Khimji Kunverji & Co., and M/s. S. R. Batliboi & Co., included in this Letter of Offer.
Unless stated otherwise, throughout this Letter of Offer, all figures have been expressed in crores, though certain
figures are also expressed in millions.
Our fiscal year commences on April 1 and ends on March 31 of the next year. Unless stated otherwise, reference
herein to a fiscal year (eg. fiscal 2006), is to the fiscal year ended March 31 of a particular year.
All references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India.
In this Letter of Offer, any discrepancies in any table between the total and the sum of the amounts listed may be
due to rounding off.
Market and industry data used in this Letter of Offer, has been obtained from industry publications and
governmental sources. Industry publications generally state that the information contained in those
publications has been obtained from sources believed to be reliable and that their accuracy and completeness
are not guaranteed and their reliability cannot be assured. Although we believe market data used in this
Letter of Offer is reliable, it has not been independently verified.
iii
FORWARD-LOOKING STATEMENTS
We have included statements in this Letter of Offer which contain words or phrases such as “will”, “aim”, “is likely
to result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”,
“objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions, that
are “forward looking statements”.
All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual
results to differ materially from those contemplated by the relevant forward-looking statement. Important factors
that could cause actual results to differ materially from our expectations include but are not limited to:
General economic and business conditions in the markets in which we operate and in the local, regional and
national economies;
Increasing competition in or other factors affecting the industry segments in which our Company operates;
Changes in laws and regulations relating to the industries in which we operate;
Our ability to meet our capital expenditure requirements and/or increase in capital expenditure;
Fluctuations in operating costs and impact on the financial results;
Our ability to attract and retain qualified personnel;
Changes in technology in future;
Changes in political and social conditions in India or in countries that we may enter, the monetary policies of
India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other
rates or prices;
The performance of the financial markets in India and globally; and
Any adverse outcome in the legal proceedings in which we are involved.
For a further discussion of factors that could cause our actual results to differ, please refer to the sections titled
“Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be
materially different from what actually occurs in the future. As a result, actual future gains or losses could materially
differ from those that have been estimated. Neither the Company nor the Lead Managers nor any of their respective
affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after
the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come
to fruition. In accordance with SEBI / Stock Exchanges requirements, the Company and Lead Managers will ensure
that investors in India are informed of material developments until the time of the grant of listing and trading
permission by the Stock Exchanges.
iv
ADITYA BIRLA NUVO LIMITED
ABBREVIATIONS & TECHNICAL TERMS
In this Letter of Offer, the terms “we”, “us”, “our”, “the Company” or “ABNL”, unless the context otherwise implies,
refer to Aditya Birla Nuvo Limited and its subsidiaries and joint ventures. All references to “Rs.” or “INR” refer to
Rupees, the lawful currency of India, “Cad $” refer to Canadian Dollar, “USD” or “US$” refer to the United States
Dollar, the lawful currency of the United States of America. References to the singular also refers to the plural and
one gender also refers to any other gender, wherever applicable, and the words “Lakh” or “Lac” mean “100 thousand”
and the word “million” means “10 lakh” and the word “crore” means “10 million” or “100 lakhs” and the word “billion”
means “1,000 million” or “100 crores”. Any discrepancies in any table between the total and the sums of the amounts
listed are due to rounding off.
General Terms and Abbreviations
Act The Companies Act, 1956 and amendments thereto
ADR American Depository Receipt
AGM Annual General Meeting
Articles Articles of Association of the Company
AS Indian Accounting Standard
Auditor M/s. Khimji & Kunverji & Co. and M/s. S. R. Batliboi & Co.
AY Assessment Year
Board or Board of Directors Board of Directors of Aditya Birla Nuvo Limited
BSE Bombay Stock Exchange Limited
Capital or Share Capital Share Capital of the Company
CDSL Central Depository Services (India) Limited
Companies Act The Companies Act, 1956 and amendments thereto
DP Depository Participant
Equity Share(s) or Share(s) The equity share of the Company having a face value of Rs. 10 unless
otherwise specified in the context thereof.
Equity Shareholder means a holder of Equity Shares
FCD Fully Convertible Debenture
FEMA Foreign Exchange Management Act, 1999
FI Financial Institutions
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws
FY / Fiscal Financial Year ending March 31 or December 31, as the case maybe
GDR Global Depository Receipt
GOI Government of India
Issuer Aditya Birla Nuvo Limited, a company incorporated under the Indian
Companies Act, 1956 having its registered office at Indian Rayon
Compound, Veraval – 362 266, Gujarat.
IT Act The Income Tax Act, 1961 and amendments thereto
ITAT Income Tax Appellate Tribunal
MAT Minimum Alternate Tax
v
Memorandum Memorandum of Association of the Company
MoU Memorandum of Understanding
NBFC Non Banking Finance Company
NCD Non Convertible Debenture
NIC National Industry Classification
NR Non Resident
NRI(s) Non Resident Indian(s)
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
OCB Overseas Corporate Bodies
PCD Partly Convertible Debenture
RBI The Reserve Bank of India
ROC Registrar of Companies at Ahmedabad, Gujarat located at C.G.O.
Complex, Opp. Rupal Park, Near Ankur Bus Stop, Naranpura, Ahmedabad
– 380 013.
SEBI Securities and Exchange Board of India
SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments
thereto
SEBI Guidelines The SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued
by SEBI on January 19, 2000 read with amendments issued subsequent
to that date
SIA Secretariat of Industrial Assistance
Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 as amended.
Issue Related Terms and Abbreviations
ABNL Aditya Birla Nuvo Limited
BGFL Birla Global Finance Limited
CAF Composite Application Form
Designated Stock Exchange The designated stock exchange for the Issue shall be the BSE.
Draft Letter of Offer Draft Letter of Offer dated September 22, 2006 filed with SEBI for its
comments
Grasim Grasim Industries Limited
Hindalco Hindalco Industries Limited
ICRA I C R A Limited
IDEA IDEA Cellular Limited
IGFL Indo Gulf Fertilisers Limited
Investor(s) Shall mean the holder(s) of Equity Shares of the Company as on the
Record Date, i.e. December 8, 2006 and Renouncees
vi
ADITYA BIRLA NUVO LIMITED
IRIL Indian Rayon and Industries Limited
Issue Issue of 98,26,638 Equity Shares of Rs.10 each for cash at a premium
of Rs. 783 per share on rights basis to existing Equity Shareholders of
the Company in the ratio of two Equity Share(s) for every seventeen
Equity Share(s) held on the Record Date being December 8, 2006 for an
amount aggregating Rs. 779.25 crores
Issue Closing Date January 25, 2007
Issue Opening Date December 26, 2006
Issue Price Rs. 793 per Equity Share
Letter of Offer Letter of Offer dated December 15, 2006 as filed with the Stock
Exchanges after incorporating SEBI comments on the Draft Letter of Offer
Our Joint Ventures Birla Sun Life Asset Management Company Limited, Birla Sun Life
Distribution Company Limited, Birla Sun Life Trustee Company Private
Limited, IDEA Cellular Limited
Our Subsidiaries Aditya Birla Telecom Limited, Aditya Vikram Global Trading House Limited,
A V Transworks, Alpha Garments Private Limited, Birla Global Finance
Company Limited, BGFL Corporate Finance Private Limited, Birla
Insurance Advisory Services Limited, Birla Sunlife Insurance Company
Limited, Birla Technologies Limited, Crafted Clothing Private Limited,
English Apparels Private Limited, Harwood Garments Private Limited,
Laxminarayan Investment Limited, Madura Garments Exports Limited,
The Minacs Group (U.S.A), Minacs GmbH (Germany), Millman Insurance,
Minacs Kft. (Hungary), Minacs Limited (UK), Minacs Worldwide Inc.,
Minacs Worldwide S.A. de C.V. (Mexico), Transworks Inc., TransWorks
Information Services Limited, PSI Data Systems Limited, Transworks
BPO Philippines Inc., Birla NGK Insulators Private Limited, formerly our
joint venture company which is now a subsidiary of our Company.
PSI PSI Data Systems Limited
Promoters Kumar Mangalam Birla, Birla Group Holding Private Limited and TGS
Investment and Trade Private Limited.
Record Date December 8, 2006
Registrar to the Issue or Registrar Intime Spectrum Registry Limited
Renouncees Shall mean the persons who have acquired Rights Entitlements from
Equity Shareholders
Rights Entitlement The number of Equity Shares that a shareholder is entitled to in proportion
to his/her shareholding in the Company as on the Record Date
Stock Exchange(s) Shall refer to the BSE and NSE where the Shares of the Company are
presently listed
vii
Technical and Industry Terms and Abbreviations
BSNL Bharat Sanchar Nigam Limited
BPO Business Process Outsourcing
BSIDC Bihar State Industrial Development Corporation
CBFS Carbon Black Feedstock
Cenvat Central Value Added Tax
CESTAT Customs, Excise, Service Tax Appellate Tribunal
GDP Gross Domestic Product
EBOs Exclusive Brand Outlets
EPFO Employee’s Provident Fund Organization
EPS Earnings Per Share
GAIL Gas Authority of India Limited
IEC International Electro Chemical
JPC J&P Coats Limited
LNG Liquefied Natural Gas
MCL Madura Coats Limted
MBOs Multi Brand Outlets
Modvat Modified Value Added Tax
MTNL Mahanagar Telephone Nigam Limited
MU Million Units
MVA Million Volts per Annum
MW Mega Watt
NAV Net Asset Value
OEM Original Equipment Manufacturer
PAT Profit After Tax
PBIT Profit Before Interest and Tax
RGWP Rayon Grade Wooden Pulp
RPS Retention Price Scheme
SCN Show cause notice
SPCB State Pollution Control Board
TDSAT Telecom Disputes Settlement and Appellate Tribunal
TIDCO Tamil Nadu Industrial Development Corporation Limited
TNEB Tamil Nadu Electric Board
tpa Tons per annum
TRAI Telecom Regulatory Authority of India
VFY Viscose Filament Yarn
viii
ADITYA BIRLA NUVO LIMITED
RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all the information in
this Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity
Shares. If any of the following risks actually occur, our business, results of operations and financial condition could
suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. The financial
and other implications of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk
factors mentioned below. However there are a few risk factors where the impact is not quantifiable and hence the
same has not been disclosed in such risk factors. The numbering of the risk factors has been done to facilitate
ease of reading and reference and does not in any manner indicate the importance of one risk factor over other.
Unless otherwise stated, the financial information used in this section is derived from our consolidated audited
financial statements under Indian GAAP, as restated.
Internal Risk Factors
1. We have been involved in violations of securities laws.
We and certain of our subsidiaries and Group companies and joint venture companies have been involved in
violations of securities laws. We have received warnings and paid penalties in relation to some of these violations.
For further details, see the section titled “Outstanding Litigations and Defaults” on page 255 of this Letter of Offer.
In the future, we may receive further warnings and / or SEBI and/or the stock exchanges may initiate proceedings
against us. Any such action could have a material adverse impact on our business or cause the price of our Equity
Shares to decline.
2. We are involved in litigation proceedings and we cannot assure you that we will prevail in these actions.
There are outstanding litigations against us, our directors, our Promoters, our subsidiaries, joint venture
companies and group companies. We are defendants in legal proceedings incidental to our business and
operations. These legal proceedings are pending at different levels of adjudication before various courts and
tribunals. Should any new developments arise, such as a change in Indian law or rulings against us by appellate
courts or tribunals, we may need to make provisions in our financial statements, which could adversely impact
our business results. Furthermore, if significant claims are determined against us and we are required to pay
all or a portion of the disputed amounts, it could have a material adverse effect on our business and profitability.
The details of litigations against us are tabulated as under:There are 10 criminal cases filed against us, two
of which have also been filed against our directors Kumar Mangalam Birla, B. R. Gupta and S.K. Mitra. Three
cases have also been filed against Kumar Mangalam Birla as Chairman of Grasim Industries Limited.
There are 107 labour related cases filed against us for claims aggregating Rs. 8.08 crores.
There are 49 civil cases filed against us for claims aggregating Rs. 1.99 crores.
There are 60 income tax related appeals for claims aggregating approximately Rs. 92.63 crores against the
Company.
There are 133 claims for amounts aggregating Rs. 31.66 crores in relation to central excise claims against
the Company.
There are eight claims for amounts aggregating Rs. 2.12 crores in relation to customs claims against the
Company.
There are 58 claims for amounts aggregating Rs. 13.37 crore issued by the sales tax authorities.
There are 20 claims for amounts aggregating to Rs. 10.12 crores and 2 cases for amounts aggregating to
US$ 4,61,554 in respect of other taxes, fees and cesses.
ix
There are six claims for amounts aggregating to Rs. 3.03 crores in respect of service tax.
We are involved in two arbitration proceedings for claims aggregating approximately Rs. 7.88 crores. There
are 213 other arbitration proceedings initiated by the Company at various locations aggregating to Rs. 3.9909
crores.
Two cases have been filed in relation to transfer or transmission of our shares, where we have been named
as a party.
There are 19 other cases filed against us for claims aggregating approximately to Rs. 2.96 crores and one
case amounting to US$ 4,30,347.50.
A criminal case has been filed against the Bank of Rajasthan and B.R. Gupta, as a director of the Bank of Rajasthan
under section 120B, 406 and 420 of the Indian Penal Code for the alleged non receipt of 90,000 shares that were
allotted pursuant to a rights offering of the Bank of Rajasthan to a Krishna K. Parwal of HRB Floriculture Limited.
For details please refer to the section titled “Outstanding Litigations and Material Developments” on page 255 of
this Letter of Offer.
3. A significant portion of our energy requirements are met by our own power plants and any disruption to
these operations could increase our production costs or may result in shutting down our plants.
We require a substantial amount of electricity for our business. We have captive power plants for our Fertilizers
and Rayon division and we also source power from the state electricity boards, which cater to some of our energy
requirements. Additionally, our plants are equipped with diesel generator sets to provide back up power. If our power
plants were not able to supply the requisite amounts of electricity for our production process for any reason, we
would need to increase our reliance on the state electricity boards. The cost of such purchased power would be
higher, thereby adversely impacting our cost of production and profitability.
While in the past we have not faced any problems with sourcing our energy requirement from our captive power
plants, there can be no assurance that we shall not continue to do so in the future. Any disruption in the supply of
power can cause disruption to our manufacturing operations and may affect our profitability.
4. We face significant competition in all our businesses.
We are a diversified conglomerate with business interests either directly or indirectly in textiles, garments, rayon,
carbon black or through our joint ventures and subsidiaries such as insurance, telecommunication, information
technology, IT enabled services, insulators etc. In each of these business segments we face substantial competition
from various players. Some of our competitors are larger than us and have greater financial resources. They may
also benefit from greater economies of scale and operating efficiencies. Maintaining or increasing our market share
will depend on effective marketing initiatives including advertising spend and our ability to anticipate and respond
to various competitive factors affecting the industry, including our ability to improve our manufacturing process,
protect our manufacturing technique, introduce new products and respond to pricing strategies by competitors,
changes in technology and changes in customer preferences. Failure by us to compete effectively could have a
material adverse effect on our business and profitability.
We expect competition to continue to be intense as our existing competitors expand their operations and provide
new products.
5. Compliance with and changes in, safety, health and environmental laws and regulations may adversely
affect our results of operations and our financial condition.
We are subject to a broad range of safety, health and environmental laws and regulations in certain business areas
in which we operate. Our manufacturing facilities located in India are subject to Indian laws and government regulations
on safety, health and environmental protection. These laws and regulations impose controls on our air and water
discharges, noise levels, storage handling, discharge and disposal of chemicals, employee exposure to hazardous
x
ADITYA BIRLA NUVO LIMITED
substances and other aspects of our operations and products. We have incurred, and expect to continue to incur,
operating costs to comply with such laws and regulations. In addition, we have made and expect to continue to
make capital expenditures on an ongoing basis to comply with safety, health and environmental laws and regulations.
The discharge of our raw materials that are chemical in nature or of other hazardous substances or other pollutants
into the air, soil or water may nevertheless cause us to be liable to the Government of India or the State Governments
where our manufacturing facilities are located, or to third parties. In addition, we may be required to incur costs to
remedy the damage caused by such discharges or pay fines or other penalties for non-compliance.
Safety, health and environmental laws and regulations in India, in particular, have been increasing in stringency
and it is possible that they will become significantly more stringent in the future. For example, our carbon black
business is exposed to many environmental obligations which are onerous in nature. The industry is considered a
polluting industry across the globe as a result of which, certain governments have closed down carbon black
producing industries. Any adverse change in policy with respect to the carbon black business, depending on the
nature of such a policy change, it may affect our business and profitability.
There can be no assurance that we will not become involved in future litigation or other proceedings or be held
responsible in any litigation or proceedings relating to safety, health and environmental matters in the future, the
costs of which could be material. Clean-up and remediation costs of our sites and related litigation could adversely
affect our business and profitability.
These hazards can cause personal injury and loss of life, catastrophic damage to or destruction of property and
equipment and environmental damage and could result in a suspension of operations and the imposition of civil or
criminal penalties. The loss or shutdown over an extended period of operations at any of our plant would have a
material adverse effect on us.
6. Certain of our and our joint ventures’ businesses belong to industries which are heavily regulated.
The fertilizer industry is a heavily regulated industry. Sale prices of fertilizers is fixed by the Government of India
(Department of Agriculture & Cooperation) under the Fertilizer (Control) Order, 1985 (the “FCO”), issued under the
Essential Commodities Act, 1955. FCO provides that the Central Government may, with a view to regulating equitable
distribution of fertilizers and making fertilizers available at fair prices, fix the maximum prices at which fertilizer
may be sold by a manufacturer by notification. Urea, which is our sole product in the fertilizer segment, is covered
under statutory price control.Our presence is mainly in the north of India. This may affect our ability to price our
products and therefore our business and profitability.
The telecommunications industry in India is subject to significant Government regulation. In the past, there has
been significant uncertainty concerning the ambit and impact of many liberalization and deregulation measures
introduced by the Government of India. While these measures have been challenged from time to time, including
vide litigations, many service providers, may not be able to properly evaluate whether a proposed initiative will
ultimately be implemented. Our joint venture’s licenses reserve broad discretion to the DoT to influence the conduct
of business by giving it the right to unilaterally modify, at any time, the terms and conditions of the licenses and
take over networks or terminate or suspend the licenses in the interests of national security or in the public interest
or in the event of a national emergency, war or similar situation. Under the terms of the licenses, the Government
of India may also impose certain penalties including suspension, revocation or termination of a license or suspension
of a license, in the event of default by the licensee. Our Joint venture’s licenses are for fixed terms of 20 years and
there can be no assurance that any of the licenses will be renewed, or renewed on the same or better terms.
Accordingly, Government regulation and supervision could require the joint venture to enter into transactions or
conduct its business in a manner that may not be in the best interests of our shareholders.
Any changes in the rules and regulations or requirements by the Government of India could cause us significant
capital expenditure and damage. We may have a loss of revenue and market share if there are any changes in the
Government of India’s policies.
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7. The success of our business is substantially dependent on our management team and operational
workforce; our inability to retain them could adversely affect our businesses.
Being one of the most diversified conglomerate in India, we are especially dependent on the experience and the
continued efforts of the senior members of our management team, The loss of one or more members of our senior
management team would impact the relationships with our clients, our ability to obtain, retain and execute important
engagements and our ability to maintain and grow our revenues. Competition for senior management in our operation
industries is intense, and we may not be able to recruit and retain suitable persons to replace the loss of any of
our senior managers in a timely manner.
Our ability to sustain our growth depends, in large part, on our ability to attract, train, motivate and retain highly
skilled personnel. We believe that there is significant demand for personnel who possess the skills needed in our
business areas. Our inability to hire and retain additional qualified personnel will impair our ability to continue to
expand our business. An increase in the rate of attrition for our experienced employees, would adversely affect
business. We cannot assure you that we will be successful in recruiting and retaining a sufficient number of personnel
with the requisite skills to replace any personnel who leave. Further, we cannot assure you that we will be able to
re-deploy and re-train our personnel to keep pace with continuing changes in our businesses. The loss of the services
of such personnel and our inability to hire and retain additional qualified personnel may have an adverse effect on
our business, financial condition and results of operations.
8. Our business operations may be interrupted due to a natural disaster, or a systems failure in our facilities.
Our manufacturing units and our business operations are vulnerable to damage or interruptions in operations due to
adverse weather conditions, earthquakes, tsunami, fires, explosions, power loss, software flaws, viruses,
transmission cable cuts or similar events. Any failure of our systems or any shutdown of any part of our
manufacturing units, networks, operations because of operational disruption, natural disaster such as flood or
earthquake, or otherwise, could disrupt our services and result in significant costs.
While we have not in the past experienced any interruptions, either due to a natural disaster or a systems failure,
there can be no assurance that business continuity plans we have developed to cover material breakdowns or
damage to our manufacturing units, network or critical operating equipment will be sufficient to maintain our operations
in all circumstances.
9. We require substantial amounts of capital for our business operations, and the failure to obtain additional
financing in the form of debt or equity may materially and adversely affect our ability to grow and our future
profitability.
Certain of our businesses are capital intensive, requiring substantial capital to maintain and operate. We also require
significant amounts of capital to market and distribute our services and products, to develop new services and
products and to develop and implement new technologies. To the extent our capital expenditure requirements exceed
our available resources, we will be required to seek additional debt or equity financing. Additional debt financing
could increase our interest cost and require us to comply with additional restrictive covenants in our financing
agreements.
We cannot assure you that we will be able to raise additional financing on acceptable terms in a timely manner or
at all. Our failure to renew existing funding or to obtain additional financing on acceptable terms in a timely manner
could adversely impact our planned capital expenditure, business and profitability.
10. Our indebtedness could adversely affect our financial condition and results of operations.
We have entered into agreements with certain banks and financial institutions for short term loans and long term
loans. Some of these agreements contain certain restrictive covenants, such as requiring consent of the lenders
inter alia, for issuance of new shares, creating further encumbrances on our assets, disposing of our assets, declaring
dividends or incurring capital expenditures beyond certain limits. Some of these borrowings also contain covenants
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ADITYA BIRLA NUVO LIMITED
which limit our ability to make any change or alteration in our capital structure, make investments, effect any scheme
of amalgamation or restructuring. In addition, certain of these borrowings contain financial covenants, which require
us to maintain, among other matters, specified net worth to assets ratio, debt service cover ratio, and maintenance
of security coverage. There can be no assurance that we will be able to comply with these financial or other covenants
or that we will be able to obtain the consents necessary to take the actions we believe are necessary to operate
and grow our business.
11. We require certain registrations and permits from government and regulatory authorities in the ordinary
course of business and the failure to obtain them in a timely manner or at all may adversely affect our
operations.
We require certain registrations and permits for operating our business, including factory license, approvals to store
hazardous substances and environmental clearances, which we have applied for. For more information, see
“Government Approvals” on page 335 of this Letter of Offer. If we fail to obtain approval of any of these registrations
and permits in a timely manner, or at all, our business may be adversely affected and our directors and officers
may be subjected to civil or criminal proceedings.
12. Some of our Promoter Group companies are engaged in business activities similar to ours and hence
potential conflicts of interest arise.
Some of our Promoter Group companies are engaged in business activities similar to those undertaken by our
Company and this could be a potential source of conflict of interest. For example, Grasim Industries Limited
(“Grasim”) and Bihar Caustics & Chemicals Limited (“BCCL”) are both engaged in the manufacture of caustic soda,
an activity that the Company is also present in. Further, the Company and Grasim are also enaged in the manufacture
of worsted yarn. Additionally, we manufacture carbon black which is also manufactured by certain of our Promoter
Group companies situated abroad. While we have not in the past faced any actual conflict, we cannot assure you
that no such conflict will arise in the future that may affect our financial conditions and prospects. Further, we
cannot assure you that if any actual conflict of interest does arise, we will be able to resolve the conflict of interest
in our favour.
13. Conflicts of interest exist and may arise among us, certain members of our management and certain
members of our Board who are also members on the board or management of certain of our Promoter
Group companies and our subsidiaries.
Conflicts of interest exist and may arise in the future as a result of the relationships among us and our Promoter
Group companies and subsidiaries. The resolution of these conflicts may not always be in our best interest or that
of our shareholders. Further, our Directors and management may be forced to divide their time and resources which
could impact their efficiency. Further, these individuals may face conflicts which may adversely affect our financial
conditions and prospects.
14. Our Promoters will continue to retain majority control in the Company after the Issue, which will enable
them to influence the outcome of matters submitted to shareholders for approval.
Upon completion of the Issue, the Promoters will beneficially own 38.30% of our post-Issue equity share capital.
As a result, the Promoters will have the ability to control our business including matters relating to any sale of all
or substantially all of our assets, the timing and distribution of dividends and the election or termination of appointment
of our officers and Directors. This control could delay, defer or prevent a change in control of the Company, impede
a merger, consolidation, takeover or other business combination involving the Company, or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of the Company even if it is in the
Company’s best interest.
In addition, for so long as the Promoters continue to exercise significant control over the Company, they may
influence the material policies of the Company in a manner that could conflict with the interests of our other
xiii
shareholders. The Promoters may have interests that are adverse to the interests of our other shareholders and
may take positions with which we or our other shareholders do not agree.
15. Our insurane coverage may not adequately protect us against certain operational risks to or claims by
our employees, and we may be subject to losses that might not be covered in whole or in part by existing
insurance coverage.
We maintain insurance for a variety of risks, including, among others, for risks relating to fire, burglary and certain
other losses and damages. We also carry director and officer liability insurance.
There are various other types of risks and losses for which we are not insured, such as loss of business,
environmental liabilities and natural disasters, because they are either uninsurable or not insurable on commercially
acceptable terms. Should an uninsured loss or a loss in excess of insured limits occur, we could incur liabilities,
lose capital invested in that property or lose the anticipated future income derived from that business or property,
while remaining obligated for any indebtedness or other financial obligations related to our business. Any such loss
could result in an adverse effect on our financial conditions and prospects.
16. We have broad discretion in the use of the proceeds of this Issue and you may not necessarily agree
with how we use such proceeds.
Subject to compliance with applicable laws and regulations, we intend to use the entire net proceeds received from
the Issue for repayment of some of our debt. Some of these debts may be subject to pre-payment penalties. However,
the management will have the discretion and the flexibility to deploy some of the funds from the net Issue proceeds
towards general corporate purposes including funding acquisitions as and when the opportunities arise. For further
details please see the chapter titled “Objects of the Issue” on page 25 of this Letter of Offer.
In accordance with the policies set up by our Board, the management will have flexibility in deploying the proceeds
received by us from the Issue. Pending utilization for the purpose described above, we intend to temporarily invest
funds in money market mutual funds and deposits with banks. Such investments would be in accordance with the
investment policies approved by the Board from time to time.
17. Most of our workers are represented by labour unions and any labour unrest at our manufacturing units
could have an adverse effect on our financial conditions and prospects.
A significant number of our employees in India are members of labour unions. These unions are specific to the
local area in which each plant is situated and are not currently national organisations. If our relationship with our
employees deteriorates and there is labour unrest resulting in a work stoppage, slowdown or a strike, our production
facilities may not be able to continue operations at the normal level, or at all. The workers of the rayon division,
Veraval went on an illegal strike on November 14, 2001 which was called off on January 21, 2002 after a settlement
with the workers. While we believe that we maintain good relationship with our employees, there can be no assurance
that we will not experience future disruptions to our operations due to disputes or other problems with our work
force which may adversely affect our business.
18. We may undertake strategic acquisitions or investments, which may prove to be difficult to integrate
and manage or may not be successful.
In the future, we may consider making strategic acquisitions of other companies whose resources, capabilities and
strategies are complementary to and likely to enhance our business operations in the different regions in which we
operate. It is possible that we may not identify suitable acquisition or investment candidates, or if we do identify
suitable candidates, that we may not complete those transactions on terms commercially acceptable to us or at
all. The inability to identify suitable acquisition targets or investments or the inability to complete such transactions
may adversely affect our competitiveness or our growth prospects.
If we acquire another company we could face difficulties integrating the acquired operations. In addition, the key
personnel of the acquired company could decide not to work for us. These difficulties could disrupt our ongoing
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ADITYA BIRLA NUVO LIMITED
business, distract our management and employees and increase our expenses. There can be no assurance that
we will be able to achieve the strategic purpose of such an acquisition or operational integration or our targeted or
any acceptable return on such an investment.
19. We may have difficulty in managing our future growth and the profitability as a result of our diversified
businesses. Some of our businesses operate in the un-organised sector.
We are currently directly or indirectly engaged in various businesses including rayon, carbon black, garments, textiles,
insurance, BPO, telecommunications and insulators. As a result of the diversity of our business, our management
requires considerable expertise in managing a diversified business. Managing such varied business makes forecasting
our future revenue and operating results difficult, which may impair our ability to manage our business and your
ability to assess our prospects. In addition, our cost controls, internal controls, and accounting and reporting systems
must be integrated and upgraded to support our diversified businesses. In order to manage and integrate our diversified
businesses effectively we will be required, amongst other things, to implement and continue to improve our
operational, financial and management systems, to continue to develop the management skills of our managers
and to continue to train, motivate and manage our employees. If we are unable to manage our growth and our
diversified operations, our ability to optimise the success of our business strategy and to capitalise on future business
opportunities could be affected.
In addition, some of our businesses, such as the insulator business, are in the un-organized sectors for which
there is no industry data available. In many cases, there is no readily available external information (whether from
trade or industry associations, government bodies or other organizations) to validate market-related analyses and
estimates, so we rely on internally developed estimates. While we believe our internal estimates to be reasonable,
such estimates have not been verified by any independent sources and we cannot assure you as to their accuracy.
20. Certain of our plants are located at remote locations, thus increasing the cost of transportation.
Some of our plants are located at remote locations. The distance between the place of manufacturing and location
of demand leads to increase in the overall cost of transportation. Any difficulty in logistics, increase in freight cost,
oil prices, and transportation strikes could impact our supplies of raw materials and deliveries of our products to
our customers thus adversely affecting our market share and our financial conditions.
Certain significant risk factors pertaining to each of our businesses are as under:
Our Garment Business
1. The garment industry is a consumer industry and our ability to maintain a high market share will depend
on our ability to identify and introduce popular designs.
Our success depends upon our ability to forecast, anticipate and respond to changing consumer preferences and
fashion trends in a timely manner. Any failure by us to identify and respond to such emerging trends in consumer
preferences could have a material adverse effect on our business and profitability.
As such, we operate in a highly creative and fashion-oriented business. Any inability on our part to understand
prevailing global trends or to forecast changes well in time may affect our growth prospects. Further, long-term
contracts are not usual in the garment industry, as end user preferences depend very much on the current fashion
trends. This dependence on fashion subjects us to various uncertainties. Also, the range of the products in our
garment business changes according to the season therefore the business of our Company is seasonal to that
extent.
2. Our business depends on our ability to obtain and retain quality retail spaces.
A majority of our retail stores are not owned by us. We take property on lease which may or may not be renewed.
Typically we enter into franchisee or re-seller agreements with store owners under which we permit such stores to
xv
use our brands subject to certain conditions, including sale of our products exclusively. The renewal or termination
of the franchise agreement is dependent on the performance of the franchisee. The termination of our leases, or
disputes that may arise with store owners may result in closure of our stores, thus affecting our business and
profitability.
Our success in the garment business depends on our ability to identify and acquire quality retail space at the right
time and at right cost. Delays in the development of our retail real estate or cost overruns may adversely affect our
business and profitability.
3. The success of our business is dependent on supply chain management.
We strive to keep optimum inventory at our stores and distribution centres to control our working capital requirements.
Inefficient supply chain management may lead to unavailability of merchandise, unavailability of range of apparels
and may provide a disappointing retail experience to the customer. Ensuring shelf availability for our products warrants
quick turnaround time and high level of coordination with suppliers. Inefficient supply chain management could
adversely affect our results of operations.
4. Raw materials including fabric which constitutes the largest component of our material costs is sourced
from external suppliers based on our assessment of periodic requirements.
Fabric forms the major raw material for our business. Any delay in supply or non-conformance to quality requirements
by our suppliers or increase in the prices of the same or decrease in the availability of the same for whatever
reason can impact our ability to meet our customer requirements and thus adversely impact our profitability and
our results of operations. Further, non-availability of required raw materials or any other item of production in the
desired quantity and quality at the right time may adversely affect our sales commitment and profitability.
Our VFY (Rayon) Business
1. Wood pulp our main raw material for our VFY business is regulated and is in short supply.
The main raw material in the production of VFY is wood pulp. International environmental regulations currently strictly
regulate the cutting of wood which is a scarce product due to historical deforestation. Moreover, the cost of wood
pulp is steadily increasing. The cost of raw material during FY 2005 has increased by 25% and remained stable in
FY 2006. This increase in the cost of raw material has led to reducing our margins in the past and may continue in
the future, affecting our financial condition and results of operations.
2. Our rayon plant is old and may require high maintenance cost and modernization for maintaining
productivity and quality.
Our rayon plant is more than forty years old and may require high maintenance cost and modernization for maintaining
productivity and quality. Any shut down for maintenance or break downs in the plant may halt all production, which
may affect our profits.
Our Carbon Black Business
1. The pricing of CBFS is subject to variation and depends on a number of factors beyond our control.
CBFS is a significant raw material for our carbon black business. CBFS is a product of the crude oil distillation
process. The price of oil is highly dependent on a number of factors, including worldwide supply and demand levels,
energy policies of governments and oil-producing cartels, weather, competitiveness of alternative energy sources,
global economic and political developments and the trading patterns of the commodity futures markets. Changes in
oil prices will have an impact on our raw material costs. Crude oil prices have been rising globally for the last two
years and may continue to do so in the future, affecting the cost of our primary raw material and thus business and
profitability.
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ADITYA BIRLA NUVO LIMITED
Our Fertilizer Business
1. Seasonal nature of our Fertilizer Business
Our fertilizer business is seasonal in nature depending on crop cultivation patterns, with a major portion of our
sales arising in the first and second quarter of the financial year. The Company registers the maximum of its sales
during Kharif season (April to September) as compared to the Rabi Season.
Further, the demand for fertilizers is heavily dependant upon the monsoons. In the event that there is less rainfall
or excess rainfall in a given year which will affect the crop produce for that particular year, the demand for fertilizer
will be significantly lower than the demand in a year with normal monsoons. The occurrence of any failure of the
monsoons in the future could have a negative impact on our fertilizer business and profitability.
2. Our production depends substantially on one raw material.
We use natural gas as our main raw material in the production of urea, a nitrogen based fertilizer. Currently
approximately 96% of our natural gas and/Regasified Liquid Natural Gas is sourced from GAIL. In the event that
our contracts for natural gas and/or Regasified Liquid Natural Gas are terminated, we will be required to seek
alternative sources for natural gas. We cannot assure you that we shall be able to obtain natural gas and Regasified
Liquid Natural Gas at rates that are similar to the rates we currently procure it at. Any such termination or shortage
may have an adverse impact on our business and profitability.
Our Textile Business
1. Our raw material are sourced from Western Europe, Australia and New Zealand and any increase in import
duties or tariffs may adversely affect our financial condition and results of our operations.
Raw material for our textiles business is sourced from abroad. Flax fibre is imported from Western Europe and raw
wool from Australia and New Zealand, polyester fibre is sourced from within India and is also imported from the Far
East and Europe while polyester filament yarn is imported from the Far East. Since our raw material is primarily
imported, import duties and tariffs imposed by the Government on the import of these material has a significant
effect on our raw material cost. Any increase in import duties or other import tariffs on raw materials will increase
our costs and affect our results of operations.
2. Our current textile unit is old and the technology utilized in the unit is not the most modern and advanced.
Our machinery in the Rishra plant is outdated and this leads to added maintenance costs. We may at a future date
have to incur significant capital expenditure on the same thus affecting our financial condition.
Our Financial Services Business
1. Material changes in the regulations that govern us could cause our business to suffer and the price of
our Equity Shares to decline.
Birla Global Finance Company Limited and Laxminarayan Investments Limited, our subsidiaries which operate in
the financial services sector are registered with the Reserve Bank of India (“RBI”) as a Non Banking Financial
Company (“NBFC”). NBFCs in India are subject to detailed supervision and regulation by the RBI. In addition, as an
NBFC we are subject generally to changes in Indian law, as well as to changes in regulation and government policies
and accounting principles. See the section titled “Regulations and Policies” on page 60 of this Letter of Offer for
more details.
We are required by the RBI to maintain specified minimum capital adequacy ratios as well as to maintain liquid
assets in the form of investment in approved securities and unencumbered term deposits. The RBI also requires
us to make provisions in respect of non performing assets.
xvii
The laws and regulations governing us have changed recently and may change in the future and any such changes
could adversely affect our business, our future financial performance and the price of our Equity Shares, by requiring
a restructuring of our activities, increasing costs or otherwise.
4. Certain of our subsidiaries and/or Joint Ventures have incurred losses.
Certain of our subsidiaries and joint ventures have incurred losses in recent years, as set-forth in the table below:
(Rs. Crores)
Name of the company Year ending March 31,
2004 2005 2006
Our Subsidiaries
Birla Sunlife Insurance Company Limited (77.74) (60.61) (61.13)
PSI Data Systems Limited (12.37) (2.05) (1.45)
Birla Technologies Limited (8.51) (0.51) 2.79
Alpha Garments Private Limited 0.40 0.38 (0.46)
Birla Global Finance Company Limited 12.19 (1.58) (1.48)
BGFL Corporate Finance Private Limited 0.02 0.03 (0.01)
Birla NGK Insulators Limited * (14.15) (25.33) (3.62)
Our Joint Ventures
IDEA Cellular Limited (236.40) 75.90 211.77
*Formerly, our joint venture company which is now a subsidiary of the Company.
Contingent liabilities
Contingent Liabilities not provided for September 30, 2006, on standalone basis is as follows:
a) Claims against the Company not acknowledged as debts
(i) Income Tax Rs. 29.25 Crores
(ii) Customs Duty Rs. 2.56 Crores
(iii) Excise Duty Rs. 31.60 Crores
(iv) Sales Tax Rs. 9.51 Crores
(v) Service Tax Rs. 2.23 Crores
(vi) Others Rs. 27.44 Crores
b) Uncalled Liability on shares partly paid up Rs. 29.37 Crores
c) Bills discounted/rediscounted with banks Rs. 52.88 Crores
d) Corporate Guarantees given to Banks/Financial Institutions for
loans taken/Preference Shares issued by subsidiary/other companies Rs. 419.77 Crores
e) Customs duty on capital goods and raw materials imported under advance
licensing / EPCG scheme, against which export obligation is to be fulfilled Rs. 6.88 Crores
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ADITYA BIRLA NUVO LIMITED
5. One of our Group companies, Shree Digvijay Cements Limited, has been referred to the Board for Industrial
and Financial Reconstruction
In 1989, due to the erosion of its net worth by accumulated losses, Shree Digvijay Cements Limited (“Shree Digvijay”),
one of our Group companies, became a sick industrial company and a reference was made to the Board for Industrial
and Financial Reconstruction (“BIFR”). Shree Digvijay was de-registered from the BIFR in 1992. Later in 1999 the
company was again referred to the BIFR. Pursuant to an order of the BIFR dated March 10, 2006, the company
has recently concluded a rights issue. For further details, please refer to the section titled “Group Companies” on
page 101 of this Letter of Offer.
Certain significant risk factors pertaining to the businesses of our subsidiaries are as under (hereinbelow
wherever “we”, “us”, “our” is mentioned, it should be read as pertaining to the respective subsidiary.) Any
adverse impact to the business and revenue of the subsidiaries would affect our profitability and revenue
on a consolidated basis and also pose risk to the amount we have invested in such subsidiaries. The risk
factors set out below are applicable to the specified subsidiary, are not exhaustive and are merely indicative
of the risks that may be faced by such subsidiary.
Life Insurance
1. Some of our scheme offer a minimum guaranteed rate of return which depends on our ability to earn
high returns on our investors investments.
Some of our schemes offer a minimum guaranteed rate of return. Our ability to offer these returns profitably to
investors depends on our ability to earn high returns on their investments. We typically invest these sums in
government securities, money market securities, listed equity shares, bonds and mutual funds. We may not generate
enough returns on our investments to pay the guaranteed return, affecting our profitability directly.
2. Our unit linked Insurance schemes are subject to investment risk.
We offer various schemes such as unit linked insurance plans, group mutual fund investments with insurance cover
etc. Our ability to attract or retain customers will depend on the rates of return that we earn. These rates of return
depend on the performance of various investments made by us, including listed equity shares, government securities,
money market securities, bonds and mutual funds. If these investments do not perform as per our customers’
expectations, we may lose market share, affecting our financial results and operations.
3. The life insurance market in India has historically been dominated by the Life Insurance Corporation.
Subsequent to the opening up of the insurance sector, stiff competition from several new entrants has led to eroding
margins in the insurance industry. We cannot guarantee that we will be able to gain or retain our market share.
Insulator business
1. Our main customers are the Government, Railways Department and State Electricity Boards which are
generally allocated a budget on an annual basis. Any reduction in the budget allocated to the respective
departments can have a material adverse effect on our revenues.
Government, Railways and State Electricity Boards are our major customers for insulators. Typically, government
bodies are allocated a budget by the relevant government departments. These budgetary allocations are revised on
an annual basis. Any reduction in the budget that is allocated to any of these customers will result in them reducing
their spending on insulators which will adversely affect our business, impact our profitability and revenues.
2. Wastage of raw material in our production process of insulators adds to the cost of the product and a
loss to our general profitability.
Our insulators go through a stringent quality control tests and hence the number of rejects in the production keeps
our cost high. The rejects will lead to high amount of wastage and increase in our overall costs. This will directly
xix
affect our profit margins and might make the business economically not viable. To reduce wastage cost the production
of our product has to be efficiently conducted without any compromise on the quality of our product. To maintain
our profitability we might have to incur huge capital expenditure in the future.
The technology plays a very important role in the insulator business. Our technology in the future might get obsolete
and our existing plant might not be of any use. We may have to incur significant capital expenditure on technology.
Business Process Outsourcing and Information Technology Business
1. We derive a significant portion of our revenues from a limited number of clients.
In the fiscal years ended March 31, 2005 and 2006, our five largest clients accounted for 69% and 66% respectively,
of our revenues. Since there is significant competition for the services we provide and we are typically not an
exclusive service provider to our large clients, the level of revenues from our largest clients could vary from year
to year. There are a number of factors, other than our performance, which may not be predictable that could cause
the loss of a client. Accordingly, we cannot guarantee that existing clients will continue to use our services at
historical levels and commissions or if at all. Our clients may also decide to reduce spending on outsourcing services
because of economic pressures and other factors, internal and external, relating to their business. Any significant
reduction in demand for our services from our largest clients, any requirement to lower the prices we charge these
clients or the loss or financial difficulties of these clients could have a material adverse effect on our business,
results of operations, financial condition and cash flows.
2. Our client contracts can typically be terminated without cause and with little or no notice or payment of
penalty, which could negatively impact our revenues and profitability.
Our agreements with clients are typically without any commitment to a specific volume of business or future work.
Our business is dependent on the decisions and actions of our clients, and there are a number of factors that are
outside our control, which might result in the termination of a project or the loss of a client. Our clients may demand
price reductions and / or decide to change their outsourcing strategy by moving more work in-house or to our
competitors. Any of these factors could adversely affect our revenues and profitability.
3. Any disruption in infrastructure and other utilities could harm our ability to provide our services.
Our outsourcing operations are dependent upon our ability to protect our proprietary software and client information
maintained in our facilities against damage that may be caused by fire, natural disasters, power failure,
telecommunications failures, computer viruses, acts of sabotage or terror and other emergencies. In the event we
experience a temporary or permanent interruption at one or more of our facilities, through casualty, operating
malfunction or other acts, we may be unable to provide the services we are contractually obligated to deliver. This
could result in us being required to pay contractual damages to some clients or allow some clients to terminate or
renegotiate their contracts. Notwithstanding contingency plans and precautions taken to protect us and our clients
from events that could interrupt delivery of services, there can be no assurance that such interruptions would not
result in a prolonged interruption in our ability to provide support services to our clients. Additionally, we maintain
property and business interruption insurance; however, such insurance may not adequately compensate us for any
losses we may incur.
4. Unauthorized disclosure of sensitive or confidential client and client’s customer data, whether through a
breach of our computer systems or otherwise, could expose us to protracted and/or costly litigation and
cause us to lose clients.
We take precautions to protect confidential client and client’s customer data. However, if any person, including any
of our employees or subcontractors, penetrates our network security or otherwise misappropriates sensitive data,
we could be subject to significant liability claims from our clients or their own customers for breaching contractual
confidentiality provisions or privacy laws. Further, penetration of the network security of our data centres could
have a negative impact on our reputation, which could harm our business.
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ADITYA BIRLA NUVO LIMITED
5. Our business and profitability may be negatively affected if we are not able to anticipate rapid changes
in technology, or innovate and diversify our product offerings in response to market challenges.
Our business depends on the continued growth in the use of information technology and outsourcing services in
business by our clients and prospective clients and their customers and suppliers. The growth in the use of
information technology and outsourcing services and consequently the demand for, and the prices of, our services
may decline in challenging economic environments, which we have experienced in the recent past. Our success
depends on our continued ability to innovate and to develop and implement information technology and outsourcing
services and solutions that anticipate and keep pace with rapid and continuing changes in technology, industry
standards and client preferences. Our success also depends on our ability to proactively manage our portfolio of
technology alliances. Telecommunications and computer technologies are changing rapidly and are characterized
by short product life cycles, so we must anticipate technological developments. While we believe that our performance
in the past has been influenced by our ability to successfully respond to these challenges, we cannot be certain
that we will successfully anticipate or respond to future market developments on a timely basis. Any one of these
circumstances could have a material adverse effect on our ability to obtain and successfully complete client
engagements.
6. Our clients may seek to reduce their dependence on India for outsourcing and services or take advantage
of the services provided in countries with labour costs similar to or lower than India.
Clients who presently outsource a significant proportion of their BPO services requirements to vendors in India
may, for various reasons, including to diversify geographic risk, seek to reduce their dependence on one country.
We expect that future competition will increasingly include firms with operations in other countries, especially those
countries with labour costs similar to or lower than India, such as China, the Philippines and countries in Eastern
Europe. Since wage costs in our industry in India are increasing, our ability to compete effectively will become
increasingly dependent on our reputation, the quality of our services and our expertise in specific industries.
7. Political opposition to offshore outsourcing in the United States could adversely affect our business.
Recently, offshore outsourcing has been the subject of intense political debate and has come under increased
government scrutiny within the United States due to its perceived association with loss of jobs in the United States.
Several U.S. state governments have recently implemented or are actively considering implementing restrictions
on outsourcing by U.S. state government entities to offshore IT services providers. We currently do not provide any
significant back-office services to U.S. federal or state government entities, and do not have any significant contracts
with such entities.
In addition, private companies in the U.S. have been experiencing attention and pressure from their employees and
customers regarding their outsourcing practices. Some companies have bowed to this social and political pressure
and have modified, reduced or eliminated their use of outsourcing services as part of their public relations efforts.
Any changes in the United States to public opinion, existing laws or the enactment of new legislation restricting
offshore outsourcing, particularly by private companies, may adversely impact our business and profitability.
8. Valuations in industries related to information technology may be high and not sustained in the future.
The valuations in the IT industry are presently high and may not be sustained in future and may also not be reflective
of future valuations for the industry.
Certain significant risk factors pertaining to the businesses of our joint venture are as under (hereinbelow
wherever “we”, “us”, “our” is mentioned, it should be read as pertaining to the respective joint venture.)
Any adverse impact to the business and revenue of the joint venture would affect our profitability and revenue
on a consolidated basis and also pose risk to the amount we have invested in such joint ventures. The risk
factors set out below are applicable to the specified joint venture, are not exhaustive and are merely indicative
of the risks that may be faced by such joint venture.
xxi
Telecommunications business through IDEA Cellular Limited
1. We have experienced and are likely to continue to experience subscriber churn, which may result in a
loss of future revenue and an inability to recoup costs.
Continued competition from other telecommunications service providers has resulted in, and may continue to result
in, a high level of deactivation among our subscribers. Customer deactivation, or churn, leads to loss of future
revenues from customers who disconnect or fail to renew services and also the inability to recoup any unrecovered
costs incurred in acquiring the customer, such as handset subsidies or other promotional arrangements. A higher
incidence of subscriber churn may also result from various other factors, some of which are beyond our control.
We may not be able to control subscriber churn, and a significant increase in subscriber churn may materially
adversely affect our results of operations.
2. The Government is both a regulator and a provider of telecommunications services.
Our business is subject to competition from the Government-controlled companies, BSNL and MTNL. These
companies are targeting and increasing their coverage of mobile telecommunications services. While the TRAI, as
the regulator, and the TDSAT, as the appellate authority, have been granted certain powers to ensure a level playing
field among the various service providers, there can be no assurance that the TRAI or any regulatory authority in
India will ensure a level playing field among BSNL, MTNL and private network service providers, such as us. Failure
by the TRAI or any regulatory authority in India to ensure a level playing field may adversely affect our business.
3. Rapid technological changes may increase competition and render our technologies, products or services
obsolete.
The telecommunications industry is characterized by rapid improvements in the diversity and sophistication of
technologies and services offered and we expect this trend to continue. As a result, technologies currently being
developed, or which may be developed in the future, by both our existing competitors as well as new entrants into
the mobile telecommunications industry in India, whether through obtaining UAS Licenses, acquisitions or investments,
may adversely impact our competitiveness. The development and application of new technologies involves time,
substantial cost and risks. Our competitors may be more effective than us at developing, marketing or deploying
new technologies, products and services. We cannot predict how emerging and future technological changes will
affect our operations or the competitiveness of our services. Similarly, the technologies we employ may become
obsolete or subject to intense competition from new technologies in the future. If we fail to develop, obtain timely
access to, or successfully implement new technologies and equipment, or if we fail to obtain the necessary licenses
to provide services using these new technologies, we may lose subscribers and market share and experience a
decrease in revenues.
4. We are dependent on interconnection arrangements with our competitors’ networks and associated
infrastructure as well as roaming arrangements with other telecommunications service providers.
Our ability to provide commercially viable telecommunications service depends, in part, upon our interconnection
arrangements with other telecommunications service providers. In particular, we are dependent on interconnection
with our competitors’ mobile, fixed-line and long distance networks and associated infrastructure for the successful
operation of our business. There can be no assurance that we will have unrestricted access to other networks, or
that the quality of those networks will not deteriorate in the future, each of which will have an adverse impact on
our ability to offer telecommunication services and could adversely affect our business.
Revenues from domestic and international roaming, as well as the ability to provide roaming for our subscribers,
are important to our business and results of operations. We are dependent upon roaming agreements with other
telecommunications service providers as a source of revenues when other telecommunications service providers’
customers roam on our networks, and as a service to our customers when roaming on the networks of other
telecommunications service providers or on our own networks outside of their home license areas. If these roaming
agreements were to terminate, or if the other telecommunications service providers were to deploy incompatible
xxii
ADITYA BIRLA NUVO LIMITED
technologies, our roaming revenues and profits may be materially reduced. In addition, if regulations in India are
amended such that our ability to charge for domestic roaming is materially impacted, our roaming revenues would
be reduced. Furthermore, if there are changes in our ability to provide roaming for our subscribers travelling abroad,
our roaming revenues would be reduced, and we could experience subscriber dissatisfaction and increased churn.
Each of these occurrences could have a material adverse effect on our financial condition and results of operation.
We may not be able to maintain and expand these sharing arrangements on terms that are commercially acceptable
to us and a disruption in these arrangements could have a material adverse effect on our financial condition and
the results of our operations.
External Risk Factors
1. A slowdown in economic growth in India could cause our business to suffer.
The Indian economy has shown sustained growth over the last few years with gross domestic products (“GDP”)
growing at 6.9% in fiscal 2005 and 8.5% in fiscal 2004. In its mid-term review of annual policy published on October
25, 2005, the RBI stated that its GDP growth forecast for fiscal 2006 is between 7.0% to 7.5% as a result of a
pick-up in agricultural output and increased momentum in other sectors, and its inflation forecast for fiscal 2006 is
between 5.0% to 5.5%. However, any slowdown in the Indian economy could adversely affect our financial
performance.
2. A significant change in the Government of India’s economic liberalization and deregulation policies could
disrupt our business and cause the price of our Equity Shares to decline.
Our assets and customers are predominantly located in India. The Government has traditionally exercised and
continues to exercise a dominant influence over many aspects of the economy. Its economic policies have had
and could continue to have a significant effect on private sector entities, including us, and on market conditions
and prices of Indian securities, including the Equity Shares. Any significant change in the Government’s policies or
any political instability in India could adversely affect business and economic conditions in India and could also
adversely affect our business, our future financial performance and consequently the market price of our Equity
Shares.
3. The performance of the Company is linked to the stability of policies and the political situation in India.
The role of the Indian Central and State Governments in the Indian economy on producers, consumers and regulators
has remained significant over the years. Since 1991, the Government of India has pursued policies of economic
liberalization, including significantly relaxing restrictions on the private sector. Certain members of the current coalition
Government have been protesting against the privatization measures being undertaken by the Government of India.
The Company cannot assure that these liberalization policies will continue in the future. Protests against privatization
could slowdown the pace of liberalization and deregulation. The rate of economic liberalization could change, and
specific laws and policies affecting companies engaged in manufacturing of commodity products, foreign investment,
currency exchange rates and other matters affecting investment in Company’s securities could change as well.
The withdrawal of one or more of these parties from a coalition Government can result in political instability. Any
political instability could delay the reform of the Indian economy and could have a material adverse effect on the
market for Equity Shares of the Company and on the market for the products.
While we hedge currency exposures from time to time, as part of our risk management activities, our profitability
may be significantly affected by exchange rate fluctuations between the Canadian Dollar, U.S. Dollar and the Indian
Rupee. Further, our hedging arrangements may, at times, limit the benefits of favorable exchange rate movements.
In addition, the policies of the Reserve Bank of India may change from time to time and this may impact our ability
to adequately hedge our foreign currency exposures.
xxiii
4. Political instability or a change in economic liberalization and deregulation policies could seriously harm
business and economic conditions in India generally and our business in particular.
In recent years, the government of India has pursued policies of economic liberalization, including significantly
relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the
Indian economy as producers, consumers and regulators has remained significant. The current ruling coalition, elected
in May 2004, has announced policies and taken initiatives that support the continued economic liberalization policies
that have been pursued by the previous governments. We cannot predict the government of India’s liberalization
policies and we cannot assure you that they will continue in the future.
Notes to risk factors:
1. Net worth of the Company on a consolidated basis as on September 30, 2006 is Rs. 2,300.62 crores. The
Issue is of an amount aggregating Rs. 779.25 crores. The net asset value per share on a consolidated basis
as on September 30, 2006 is Rs. 275.51.
2. This Issue is of 98,26,638 Equity Shares of Rs. 10 each for cash at a premium of Rs. 783 per Equity Share
on rights basis to the existing Equity Shareholders of the Company in the ratio of two Equity Shares for every
seventeen Equity Shares held on the Record Date i.e. December 8, 2006 in terms of this Letter of Offer.
3. We had entered into certain related party transactions as disclosed in the section titled “Related Party
Transaction” on page 138 of this Letter of Offer.
4. Before making an investment decision in respect of this Issue, you are advised to refer to the section titled
‘Basis for Issue Price’ on page 28 of this Letter of Offer.
5. Please refer to the sub section titled ‘Basis of Allotment’ on page 367 of this Letter of Offer for details on
basis of allotment.
6. Average cost of acquisition of Equity Shares of our Company by our promoters is as under:
For Birla Group Holdings Private Limited, average cost of acquisition is Rs.86.17 per equity share and for
TGS Investment and Trade Private Limited, average cost of acquisition is Rs. 203.40 per equity share. Mr.
Kumar Mangalam Birla was allotted 4,083 equity shares consequent to the amalgamati on of BGFL with the
Company.
Name of the Date of Details of Number of Shares in Cost of
shareholder Transaction the transaction Equity erstwhile Acquisition
Shares of IGFL and
Rs.10 each BGFL
Kumar Mangalam April 24, 2006 Allotted on 133 400 Cost of
Birla, Karta of AVKM amalgamation acquisition of
Birla HUF of IGFL with 400 shares of
the Company erstwhile
IGFL was
Rs. 17,608
xxiv
ADITYA BIRLA NUVO LIMITED
Name of the Date of Details of Number of Shares in Cost of
shareholder Transaction the transaction Equity erstwhile Acquisition
Shares of IGFL and
Rs.10 each BGFL
Kumar Mangalam July 18, 2006 Allotted on 4,083 12,250 Cost of
Birla amalgamation of acquisition of
BGFL with the 12,250 shares
Company of erstwhile
BGFL was
3,89,375
7. For transactions in Equity Shares of the Company by the Promoter Group and Directors of the Company in
the last six months, please refer to the section titled ‘Capital Structure’ on page 16 of this Letter of Offer.
8. We and the Lead Managers are obliged to keep this Letter of Offer updated and inform the public of any
material change/development.
9. You may contact the Lead Managers for any complaints pertaining to the Issue including any clarification or
information relating to the Issue. Lead Managers obliged to provide the same to you.
10. The Company changed its name from Indian Rayon and Industries Limited to Aditya Birla Nuvo Limited on
October 27, 2005 since the Company has diversified business interests and it was felt that the new name
reflects the conglomerate status of the Company.
1
SUMMARY
Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the 12-month period
ended March 31 of that year. In this section, any reference to “we”, “us” or “our” refers to Aditya Birla Nuvo Limited. Unless
otherwise stated, the financial information used in this section is derived from our consolidated audited financial statements
under Indian GAAP, as restated.
We are the flagship Company of the Aditya Birla Group, which is currently one of the largest business groups in India in
terms of market capitalisation. Aditya Birla Nuvo Limited (formerly known as Indian Rayon and Industries Limited) is the
Aditya Birla Group’s most diversified conglomerate, with a consolidated net turnover of Rs. 4830.34 crores for fiscal 2006.
We were incorporated in 1956 and are listed on the Bombay Stock Exchange Limited and National Stock Exchange of
India Limited.
We believe we are one of India’s leading players in our key business segments, such as viscose filament yarn (“VFY”),
carbon black, branded garments, fertilizers, textiles and domestic marketing of insulators. Through our subsidiaries and
joint ventures we are also engaged in other business segment, such as life insurance, telecommunication, information
technology services, business process outsourcing (BPO), asset management, manufacture of insulator and other financial
services.
The following chart illustrates our value business and high growth business as on September 30, 2006;
The following chart illustrates our consolidated revenue mix as on March 31, 2006.

Value Businesses High Growth Businesses
Textiles
Rayon
Fertiliser Carbon
Black
Insulator Subsidiaries Garments Financial
Services JV
Telecom
JV
Mutual Fund
Life Insurance
Distribution
IT
ITeS

Ot h er s
( Rs 11 Cr )
0%
Tel ec om
( Rs 388
Cr )
8%
BPO
( Rs 162
Cr )
3%
Fi n anc i al
Ser v i c es
( Rs. 7 1 Cr )
1%
Li f e
I n sur anc e
( Rs 13 98
Cr )
29%
Ga r ment s
( Rs 621
Cr )
13%
I nsu l at or s
( Rs 249
Cr )
5%
Fer t i l i ser s
( Rs 369
Cr )
8%
Tex t i l es
( Rs 525
Cr )
11%
Car bon
Bl a c k ( Rs
5 64 Cr )
12 %
I T
Ser v i c e s
( Rs 86 Cr )
2%
Ray on
( Rs 386
Cr )
8 %
2
ADITYA BIRLA NUVO LIMITED
Given below are the brief profiles of our various businesses:
Garments
We believe we are one of India’s largest branded apparel Company through our Madura Garments Division, with
brands like Louis Philippe, Van Heusen, Allen Solly, Peter England, and SF Jeans retailed through our franchisees
and other multi brand outlets. We have retail space spread over 3.3 lakh square feet across India as of September
30, 2006. As at March 31, 2006, ABNL has 164 stores across the country, including 112 exclusive brand outlets.
In the half year ended September 30, 2006, the revenue generated from the Garments business was Rs. 406.64
crore, which was 11.87% of our total revenue and the PBIT of the business was Rs. 33.18 crore, which is 10.21%
of our total PBIT. In fiscal 2006, the segment revenue generated from the Garment business was Rs. 620.56 crore,
which was 12.85% of our total revenue and the PBIT of the business was Rs. 33.09 crore, which is 8.91% of our
total PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Garment business was
Rs. 472.62 crore, which was 14.82% of our total revenue and the PBIT was Rs. 13.23 crore.
Carbon Black
We believe we are one of the largest producers of carbon black in India with a manufacturing capacity of 170,000
mtpa, as on March 31, 2006 spread across two manufacturing units. One of our units is located in Renukoot, Uttar
Pradesh, and has a capacity of 80,000 mtpa. The other unit is located in Gumidipoondi in Tamil Nadu with an
installed capacity of 90,000 mtpa. We market carbon black under the ‘Birla Carbon’ brand.
Pursuant to a consent order from the Tamil Nadu Pollution Control Board under section 21, the Gumidipoondi unit
has begun work on brownfield expansion of 55,000 MT which is likely to be completed by June 2007.
In the half year ended September 30, 2006, we produced 91,030 mt and sold 90,500 mt of Carbon Black. The
revenue generated from the Carbon Black business was Rs. 360.70 crore, which was 10.53% of our total revenue
and the PBIT of the business was Rs. 54.84 crore, which is 16.86% of our total PBIT. In fiscal 2006, we produced
175,080 mt as compared to 164,025 mt in fiscal 2005. The segment revenue generated from the Carbon Black
business was Rs. 564.21 crore, which was 11.68% of our total revenue and the PBIT was Rs. 75.85 Crore, which
is 20.41% of our total PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Carbon
Black business was Rs. 467.25 crore, which was 14.65% of our total revenue and the PBIT was Rs. 60.32 Crore.
Textiles
We are present in three segments of textiles namely Linen segment (flax yarn, linen fabrics), Worsted segment
(wool tops, worsted yarn) and synthetic segment. We are a sizeable player in Linen and worsted segment. Our
installed capacity as on September 30, 2006 is 8,184 spindles of flax yarn, 22,348 spindles of worsted yarn and
47,940 spindles of synthetic yarn. We also have capacity of 8,000 tpa in wool combing and 62 looms for weaving
of linen fabrics. We plan to increase our capacity in the case of flax spinning by 7,000 spindles and for fabric
manufacture by 50 looms. Our manufacturing units are located at Rishra and Midnapur in West Bengal. Flax and
worsted yarn are marketed under ‘Jaya Shree’ brand and Linen Fabrics under the brand ‘Linen Club’.
In the half year ended September 30, 2006, the revenue generated from the Textile business was Rs. 306.48 crore,
which was 8.95% of our total revenue and the PBIT of the business was Rs. 28.19 crore, which is 8.66% of our
total PBIT. In fiscal 2006, the segment revenue generated from the textile business was Rs. 524.88 crore, which
was 10.87% of our total revenue and the PBIT was Rs. 41.44 crore, which is 11.15% of our total PBIT of Rs. 371.55
crore. In fiscal 2005, the segment revenue generated from the textile business was Rs. 456.12 crore, which was
14.30% of our total segment revenue and the PBIT was Rs. 19.79 crore.
Rayon
We believe we are one of the largest producers of Viscose Filament Yarn (VFY) in India with a capacity of 16,000
mtpa. Our Rayon Division is located at Veraval in Gujarat and also has capacity to manufacture Caustic Soda and
allied chemicals. We market our VFY product under ‘RAY ONE’ brand. We have 36.5 MW power plant for captive
consumption as at September 30, 2006.
In half year ended 30th September 2006, VFY production stood at 8,824 mt while caustic production stood at
33,426 mt. In fiscal 2006, we have produced 17,233 mt of VFY as compared to 16,420 mt in fiscal 2005. In fiscal
2006 we have produced 57,051 mt of caustic soda as compared to 45,457 mt in fiscal 2005.
3
In the half year ended September 30, 2006, the segment revenue generated from the Rayon business was Rs.
224.56 crore, which was 6.56% of our total revenue and the PBIT of the business was Rs. 52.40 crore, which is
16.11% of our total PBIT. In fiscal 2006, segment revenue generated from the Rayon business was Rs. 385.55
crore, which was 7.98% of our total revenue and the PBIT was Rs. 64.22 crore, which is 17.28% of our total PBIT
of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Rayon business was Rs. 352 crore,
which was 11.04% of our total revenue and the PBIT was Rs. 66.32 crore.
Fertilizer
We are one of the producers of urea in India with re-assessed capacity of 864,600 mtpa on March 31, 2006. Our
manufacturing unit is located at Jagdishpur, Uttar Pradesh, in the heartland of the North Indian Gangetic agricultural
belt. We market our products under the ‘Shaktiman’ Brand and also deal in traded products to meet the farmers’
requirements.
In the half year ended September 30, 2006, the segment revenue generated from the Fertilisers business was Rs.
351.02 crore, which was 10.25% of our total revenue and the PBIT of the business was Rs. 35.49 crore, which is
10.92% of our total PBIT. In fiscal 2006, the segment revenue generated from the Fertilizer business was Rs.
368.98 crore, which was 7.64% of our total revenue and the PBIT was Rs. 51.52 crore, which is 13.87% of our total
PBIT of Rs. 371.55 crore. This represents 7 months working of the fertilizer unit, which became a division of the
Company with effect from September 1, 2005 pursuant to the merger of Indo Gulf Fertilizers Limited with us.
Insulator (Domestic Marketing unit)
We manufacture insulators through our subsidiary Birla NGK Insulators Limited. Our Company enjoys marketing
rights of insulators in India.
In the half year ended September 30, 2006, the segment revenue generated from the insulator domestic marketing
business on standalone basis was Rs. 52.24 crore and the PBIT on standalone basis was Rs. 14.26 crore. In fiscal
2006, the segment revenue generated from the insulator domestic marketing business on standalone basis was Rs.
135.89 crore and the PBIT on standalone basis was Rs. 30.32 crore. In fiscal 2005, the segment revenue generated
from the insulator domestic marketing business on standalone basis was Rs. 100.12 crore and the PBIT on
standalone basis was Rs. 21.52 crore.
Financial Services
Under our Financial Services business we provide services mainly in Collateral financing and Corporate financing
which include amongst other Intial Public Offering (“IPO”) financing, Loan against Shares and Bill Discounting.
However, a certain portion of this business is now being pursued by us through our subsidiary Birla Global Finance
Company Limited.
In the half year ended September 30, 2006, the segment revenue generated from the Financial Services business
on standalone basis was Rs. 20.28 crore and the PBIT on standalone basis was Rs. 6.58 crore. In fiscal 2006, the
segment revenue generated from the Financial Service business on standalone basis was Rs. 31.64 crore and the
PBIT on standalone basis was Rs. 11.38 crore. This represents 7 months working of the financial services business,
which has became a division of the Company w.e.f. September 1, 2005 pursuant to the merger of Birla Global
Financial Limited with us.
The brief profile of our Subsidiary and Joint Venture businesses are given below:
Our Subsidiaries
Life Insurance (through Birla Sun Life Insurance Co. Limited)
We have a presence in life insurance through our subsidiary Birla Sun Life Insurance Company Limited wherein
we hold 74% shareholding and rest is with our joint venture partner, Sun Life Financial Incorporated, Canada. As
on March 31, 2006 Birla Sun Life Insurance Co. Limited (“BSLI”) is the fifth largest private sector player in the life
insurance business in terms of premium collected. (Source: Insurance Regulatory and Development Authority –
Journal – May 2006)
In the half year ended September 30, 2006, the segment revenue generated from the Life Insurance business was
Rs. 745.89 crore, which was 21.77% of our total revenue and the PBIT of the business was negative Rs. 40.96
4
ADITYA BIRLA NUVO LIMITED
crore. In fiscal 2006, the segment revenue generated from the Insurance business was Rs. 1398.48 crore, which
was 28.95% of our total revenue and PBIT was negative Rs. 57.94 crore. In fiscal 2005, the segment revenue
generated from the Insurance business was Rs. 956.19 crore, which was 29.98% of our total revenue and PBIT
was negative Rs. 60.03 crore.
Insulators (through Birla NGK Insulators Limited)
We are present in the business of manufacturing insulators in India through our subsidiary Birla NGK Insulators
Limited, formerly a joint venture company which has now become a subsidiary of our Company. We believe that
our subsidiary is one of the largest producers of Insulators in India with an installed capacity of 36,000 mtpa as on
March 31, 2006. Its production facilities are located at Halol in Gujarat and Rishra in West Bengal.
In the half year ended September 30, 2006, the segment revenue generated from the Insulator business was Rs.
49.41 crore and the PBIT of the business was negative Rs. 0.92 crore. In fiscal 2006, the segment revenue
generated from the Insulators business was Rs. 113.3 crore and the PBIT was Rs. 0.89 crore. In fiscal 2005, the
segment revenue generated from the Insulator business was Rs. 84.41 crore and the PBIT was negative Rs. 11.70
crore.
Business Process Outsourcing (BPO) (through TransWorks Information Services Limited (“TransWorks”))
We entered the BPO business through our acquisition of 100% stake in TransWorks in July 2003 and had a
capacity of 2,245 seats as on September 30, 2006. TransWorks provides a complete blend of Customer Relation
Management services - inbound customer service, including technical support, email / web-chat support, and
outbound telemarketing. BPO services include transaction processing, finance and accounting related services.
TransWorks has recently acquired Minacs Worldwide Incorporated, a Canadian BPO provider. For further details in
relation to the acquisition of Minacs see the section titled ‘History and other Corporate matters of the Company’
section on page no. 65 of this Letter of Offer.
In the half year ended September 30, 2006, the segment revenue generated from the BPO business was Rs.
263.52 crore, which was 7.69% of our total revenue and the PBIT of the business was Rs. 20.97 crore, which is
6.45% of our total PBIT. In fiscal 2006, the segment revenue generated from the BPO business was Rs. 162.05
crore, which was 3.35% of our total revenue and the PBIT was Rs. 28.15 crore, which is 7.58% of our total PBIT of
Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the BPO business was Rs. 107.78 crore,
which was 3.38% of our total revenue and the PBIT was Rs. 2.47 crore.
Information Technology (through PSI Data Systems Limited)
We forayed into the Information Technology sector through the acquisition of 70.35% stake in PSI Data Systems
(“PSI”) in 2001. PSI’s service offerings include application/ product development, enhancement, maintenance, and
migration/re-engineering. PSI has its primary focus in the banking and financial sector by providing both corporate
and retail banking services and also provides insurance, hi tech solutions and manufacturing and retail solutions.
In the half year ended September 30, 2006, the segment revenue generated from the IT Services business was Rs.
46.68 crore, which was 1.36% of our total revenue and the PBIT of the business was Rs. 2.81 crore, which is
0.86% of our total PBIT. In fiscal 2006, the segment revenue generated from the IT Services business was Rs.
85.77 crore, which was 1.78% of our total revenue and the PBIT was Rs. 3.78 crore, which is 1.02% of our total
PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the IT Services business was Rs.
82.02 crore, which was 2.57% of our total revenue and has incurred a loss of Rs. 0.55 crore at PBIT.
Our Joint Venture
Telecommunication (through IDEA Cellular Limited (“IDEA”))
We are present in the business of mobile telecommunication through joint venture in IDEA Cellular Limited (IDEA),
our share being 35.7%. Other Promoter Group companies namely Grasim Industries Limited, Hindalco Industries
Limited and Birla TMT Private Limited holds 29.4% as on December 04, 2006. IDEA is the fourth largest mobile
telephony service providers in India in the GSM segment with over 10.4mn subscribers as on September 30, 2006.
IDEA provides mobile telephony service in 11 circles, operating in Maharashtra (including Goa but excluding
Mumbai metro), Gujarat, Madhya Pradesh, Andhra Pradesh, Delhi metro service area, Kerala, Haryana, Uttar
Pradesh (West), Rajasthan, Himachal Pradesh and Uttar Pradesh (East). IDEA has recently received a letter of
intent for award of licence to provide unified access services in the Mumbai Metro service area.
5
In the half year ended September 30, 2006, the segment revenue generated from the Telecom business was Rs.
562.38 crore, which was 16.42% of our total revenue and the PBIT of the business was Rs. 104.28 crore, which is
32.09% of our total PBIT. In fiscal 2006, the segment revenue generated from the Telecom business was Rs.
388.32 crore, which was 8.04% of our total revenue and the PBIT was Rs. 73.10 crore, which is 19.67% of our total
PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Telecom business was Rs. 96.91
crore, which was 3.04% of our total revenue and the PBIT was Rs. 16.69 crore. We have, during the current fiscal
year, enhanced our holding in IDEA Cellular Limited from 4.28% to 20.74% in September 2005 and from 20.74%
to 35.74% in June 2006.
Asset Management (through Birla Sun Life Asset Management Co. Limited)
We are present in the Asset Management business through our joint venture with Sun Life Financials of Canada
wherein we hold 50% shareholding. Birla Sun Life Asset Management Co. Limited had domestic assets under
Management of Rs. 14,615 crores as on September 30, 2006 (Source: Association of Mutual Funds in India
website) and is one of the oldest private players in the industry.
The consolidated revenues (net of excise and inter segment) from each of our business segments for the periods
stated are as follows:
Sr. Business
No. Segment Business Segment Revenues Fiscal Year Ended March 31,
2004 2005 2006 H1 FY2007
Rs. % Rs. % Rs. % Rs. %
(in crores) (in crores) (in crores) (in crores)
1 Garment 391.68 16.29 472.62 14.82 620.56 12.85 406.64 11.87
2 Carbon Black 340.30 14.15 467.25 14.65 564.21 11.68 360.70 10.53
3 Textiles 397.00 16.51 456.12 14.30 524.88 10.87 306.48 8.95
4 Rayon 335.17 13.94 352.00 11.04 385.55 7.98 224.56 6.55
5 Fertilizers * NA NA NA NA 368.98 7.64 351.02 10.25
6 Insulators 154.35 6.42 184.53 5.79 249.19 5.16 101.65 2.97
7 Financial Service * NA NA NA NA 70.97 1.47 52.18 1.52
8 Life Insurance 545.26 22.68 956.19 29.98 1,398.48 28.95 745.89 21.77
9 Business Process 57.28 2.38 107.78 3.38 162.05 3.35 263.52 7.69
Outsourcing
10 IT Services 85.98 3.58 82.02 2.57 85.77 1.78 46.68 1.36
11 Telecommunication 55.56 2.31 96.91 3.04 388.32 8.04 562.38 16.42
12 Others 41.66 1.73 13.70 0.43 11.37 0.24 4.11 0.12
TOTAL 2,404.24 100.00 3,189.11 100.00 4,830.33 100.00 3,425.81 100.00
Our Strengths
A Diversified Business Portfolio
We have a strong portfolio of diversified businesses across manufacturing and services, in most of which we have a
significant market presence. Our business portfolio also has a blend of high growth and emerging businesses, and stable
and mature businesses. This allows us to de-risk ourselves from the dynamics of any particular industry and has also
helped us generate cash flows from our mature businesses, which we have been able to invest in our emerging
businesses to create value for shareholders.
6
ADITYA BIRLA NUVO LIMITED
Strong Brands
We believe that as a consolidated Company, our continuing efforts on brand building have resulted in the development
and strengthening of a range of strong, distinctive brands like ‘Louis Philippe’, ‘Van Heusen’, ‘Allen Solly’, ‘Peter England’
in Garment business, ‘RAY ONE’ in the Rayon business, ‘Birla Carbon’ in the Carbon Black business, ‘Linen Club’ in the
Textile business and ‘Shaktiman’ in the Fertilizer business, which we believe enables us to derive benefits in the market
space, through greater consumer confidence and in certain cases a premium pricing for our various products as against
our competitors. We believe we are able to leverage our brands to launch new products and extend into new product
categories like transforming our brands in Garments business from pure shirts brands to wardrobe brands by introducing
range of products namely suits, jackets, t-shirts, accessories etc, which are further being transformed to life style brands
by introducing perfumes, shoes. Also, Allen Solly mainly a men’s brand was extended to offer women apparels. We
believe that in the process of building these brands we have gained valuable insight into our clients / consumer
behaviour, which we leverage and utilize to drive business in today’s competitive markets. Our brands have also won
various awards and recognitions in both national and international forums.
Integrated Manufacturing
We have sizeable integrated manufacturing facilities for most of our businesses with access to captive power and in
house manufacturing of key inputs like caustic soda for VFY, wool top for worsted yarns, and ammonia for urea. Our
manufacturing base helps us to have a control on our production and also allow us to manufacture high quality products
on an efficient basis and at low cost. We believe our facilities help us to substantially reduce new product /design
development time and cost and ensure continued availability of our products to customers.
Focus on Quality
We believe that we have established our reputation as a reliable manufacturer of products. All of our units namely carbon
black, textile, fertilizer, rayon, insulator. We have received various accreditations for our manufacturing units. For more
details on the various certifications received by us, please refer to the section titled “History and Corporate matters” on
page 65 of this Letter of Offer.
Track record of handling large projects and successful acquisitions
Since our inception, we have implemented several expansions at our existing facilities as well as greenfield projects. We
have also successfully completed and integrated several acquisitions, including the acquisition/merger of Madura Garments,
PSI Data Systems, TransWorks, and Indo Gulf Fertilizer to name a few. We believe that our knowledge of multiple
businesses, acquisition experience and project management expertise positions us to leverage emerging opportunities in
all the segments of our businesses.
Experienced Management and Technical Team
Our management team across our businesses brings with them experience in their respective business segments. We
believe that our management team is well placed to provide strategic leadership and direction to explore new emerging
opportunities in these sectors as well as constantly improve our current operations. We have witnessed low attrition of
key management personnel and have also recruited several professionals with domain expertise in critical areas. We
believe these provide us with a significant competitive edge.
OUR STRATEGY
We have managed a diversified portfolio of businesses over a period of time classified into two broad segments i.e. “High
Growth Businesses” and “Value Businesses”. While the high growth businesses have potential to grow and expand
requiring funds to meet their plans, value businesses are those businesses, which have matured and are generating
stable surplus. Our strategy is to increase the share of High growth businesses in total revenue by deploying surplus
cash from Value businesses to grow the high growth businesses.
7
THE ISSUE
Equity Shares proposed to be issued by the Company 98,26,638 Equity Shares
Rights Entitlement Two Equity Shares for every Seventeen Equity Shares held
on the Record Date
Record Date December 8, 2006
Issue Price per Equity Share Rs. 793
Equity Shares outstanding prior to the Issue 83,504,386 Equity Shares of Rs. 10/- each
Equity Shares outstanding after the Issue 9,33,31,024 fully paid up Equity Shares
Terms of the Issue For more information, see “Terms of Issue” on page 358 of
this Letter of Offer.
8
ADITYA BIRLA NUVO LIMITED
SELECTED FINANCIAL INFORMATION
The following table sets forth our selected financial information derived from our restated consolidated financial statements
as of and for the period ended September 30, 2006 and for the fiscal years ended March 31, 2006, 2005, 2004, 2003
and 2002. These financial statements have been prepared in accordance with Indian GAAP and the Companies Act and
the annual financial statements have been restated as described in the auditors’ report included therewith, in the section
titled “Restated Consolidated Financial Statements” beginning on page 200 of this Letter of Offer. The selected financial
information presented below should be read in conjunction with our financial statements, the notes thereto and the
section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on
page 230 of this Letter of Offer.
Restated Summary Statement of Assets and Liabilities of the Group as at
Rs. Crores
September March March March March March
30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
A Fixed Assets:
Goodwill on Consolidation 2871.05 961.36 185.25 153.83 104.85 81.14
Gross Block 6086.43 4,187.33 1,914.73 1,656.63 1,513.02 1,388.99
Less: Depreciation 3082.92 2,199.54 867.52 718.52 577.93 521.76
Net Block 3003.51 1,987.79 1,047.21 938.11 935.09 867.23
Assets Held for disposal - - - - - 13.52
Capital Work in Progress 320.99 169.80 62.29 55.51 14.02 11.15
6195.55 3,118.95 1,294.75 1,147.45 1,053.96 973.04
B Investments 3210.65 2,916.92 1,468.63 876.33 342.53 335.25
C Deferred Tax Assets 7.31 0.79 - - - -
D Current Assets, Loans and Advances
Inventories 556.46 551.37 377.90 293.70 264.06 266.45
Sundry Debtors 873.34 518.38 330.39 243.82 190.77 239.87
Cash and Bank Balance 271.11 186.94 88.72 86.87 72.86 31.11
Loans and Advances 902.20 793.29 141.97 126.49 154.01 122.92
Interest accrued on investments 8.35 8.73 5.48 3.86 2.00 2.05
2611.46 2058.71 944.46 754.74 683.70 662.40
E Liabilities and Provisions
Secured Loans 4,059.38 1,525.18 699.33 551.15 372.23 498.67
Unsecured Loans 956.88 839.45 62.16 37.16 64.47 34.63
Policyholders fund 2,856.59 2,378.37 1,212.28 539.07 110.14 19.81
Fund for Future appropriations 0.03 0.03 0.03 0.03 0.03 -
Deferred Tax Liabilities 166.11 169.47 125.66 127.60 128.35 101.20
Minority Interest 142.07 43.20 27.63 27.79 19.40 37.41
Advance Against Equity - - - - 4.76 -
Current Liabilities and Provisions 1,543.29 1041.17 466.03 415.43 313.71 235.18
9724.35 5996.87 2593.12 1698.23 1013.09 926.90
F Net Worth (A+B+C+D-E) 2,300.62 2,098.50 1,114.72 1,080.29 1,067.10 1,043.79
G Represented by
Share Capital 83.50 59.89 59.88 59.88 59.88 59.88
Share Capital Suspense - 23.61 - - - -
Preference Share Capital 172.62 100.17 20.70 20.70 16.07 -
Reserves 2,044.50 1,914.83 1,034.14 1,002.74 999.52 994.72
Less: Miscellaneous Expenditure - - - 3.03 8.37 10.81
Reserves (Net of Miscellaneous Expenditure) 2,044.50 1,914.83 1,034.14 999.71 991.15 983.91
Net Worth / Shareholders fund 2,300.62 2,098.50 1,114.72 1,080.29 1,067.10 1,043.79
9
Restated Summary Statement of Profit and Loss Account of the Group:
Rs. Crores
For the For the For the For the For the For the
6 months Year ended Year ended Year ended Year ended Year ended
ended Sept March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
INCOME
Sale of Goods manufactured and Services 3,441.96 4,836.72 3,220.95 2,475.12 1,911.08 1,607.20
Sale of Goods Traded 67.00 149.78 104.52 76.76 8.23 9.16
Income from Operations 3,508.96 4,986.50 3,325.47 2,551.88 1,919.31 1,616.36
Less: Excise Duty 83.15 156.16 136.36 147.64 155.27 139.51
Net Income from Operations 3425.81 4,830.34 3,189.11 2,404.24 1,764.04 1,476.85
Other Income 35.33 33.26 19.05 19.88 18.39 17.13
Increase /(Decrease) in Stocks 19.00 47.30 14.41 19.80 (0.11) (10.68)
Total 3,480.14 4,910.90 3,222.57 2,443.92 1,782.32 1,483.30
EXPENDITURE
Cost of Materials 917.58 1,502.25 1,044.54 861.48 714.38 679.09
Salaries, Wages and Employee Benefits 415.72 434.46 320.13 261.78 221.26 152.63
Manufacturing, Selling and Other Expenses 1,113.97 1,368.99 912.42 719.08 556.95 471.48
Actuarial Liabilities of Policyholders Fund 506.29 989.47 684.12 397.44 91.17 18.87
Interest and Other Finance Expenses (Net) 140.57 103.83 36.93 32.35 40.75 48.88
Depreciation/Amortisation 186.52 224.97 127.34 121.76 103.42 81.81
Marketing / Technical know how
expenditure written off - - 2.95 5.08 5.05 3.93
Total 3,280.65 4,623.97 3,128.43 2,398.97 1,732.98 1,456.69
Profit before Exceptional items and Tax 199.49 286.93 94.14 44.95 49.34 26.61
Exceptional Items
Less: Loss / (Gain) due to Exceptional
Items 0.90 4.04 7.65 (17.26) 10.28 (1.33)
Profit after Exceptional items 198.59 282.89 86.49 62.21 39.06 27.94
Provision for Taxation - Current Tax 56.61 96.81 45.78 45.28 10.72 6.46
- Deferred Tax 4.83 (5.51) (1.94) 4.05 27.15 25.61
- Fringe Benefit Tax 3.80 8.19 - - - -
Provision for Tax for Earlier Years written
back (0.15) (5.37) (0.07) - (11.48) -
Net Profit before Minority Interest 133.50 188.77 42.72 12.88 12.67 (4.13)
Minority Interest in the loss of Consolidated
Subsidiaries (10.51) (14.90) (15.76) (20.21) (24.02) (14.16)
Share of Profit/(Loss) of Associate 0.46 0.37 0.24 - - -
Net Profit 144.47 204.04 58.72 33.09 36.69 10.03
Balance brought forward (281.18) 5.27 3.88 39.97 43.08 54.46
Adjustment due to AS-15 (8.14) - - - - -
Impact of Change in Ownership Interest /
Amalgamation on Balance brought forward - 286.70 0.15 4.61 (64.34) -
Transfer from Debenture Redemption
Reserve - 25.00 - 48.34 32.96 5.96
Transfer from General Reserve 0.05 0.04 - - - -
Transfer from Investment Allowance
Reserve - - - - 37.00 -
Profit available for Appropriation (144.80) 521.05 62.75 126.01 85.39 70.45
APPROPRIATIONS
Proposed Dividend - 41.75 23.95 23.95 22.45 19.76
Corporate Tax on Proposed Dividend - 7.11 3.42 3.07 2.88 -
General Reserve 0.03 753.25 25.00 75.07 20.00 7.50
Debenture Redemption reserve - - 5.00 - - -
Investment Reserve - - - 19.95 - -
Special Reserve 0.04 0.12 0.11 0.09 0.09 0.11
Surplus/(Deficit) carried to Balance Sheet (144.87) (281.18) 5.27 3.88 39.97 43.08
Total (144.80) 521.05 62.75 126.01 85.39 70.45
10
ADITYA BIRLA NUVO LIMITED
GENERAL INFORMATION
Dear Shareholder(s),
Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on September 11, 2006,
it has been decided to make the following offer to the Equity Shareholders of the Company, with a right to renounce:
ISSUE OF 98,26,638 EQUITY SHARES OF Rs. 10 EACH AT A PREMIUM OF RS. 783 PER EQUITY SHARE FOR AN
AMOUNT AGGREGATING RS. 779.25 CRORE TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO
OF TWO EQUITY SHARES FOR EVERY SEVENTEEN EQUITY SHARES HELD ON THE RECORD DATE i.e. DECEMBER
8, 2006 (“ISSUE”). THE ISSUE PRICE IS 79.3 TIMES OF THE FACE VALUE OF THE EQUITY SHARE.
REGISTERED OFFICE OF THE COMPANY CORPORATE OFFICE OF THE COMPANY
Aditya Birla Nuvo Limited Aditya Birla Nuvo Limited
Indian Rayon Compound, Aditya Birla Centre,
Veraval, Gujarat 362 266 ‘A’ Wing, 4th Floor,
Tel: + 91 2876 245711 S.K. Ahire Marg,
Fax: +91 2876 243220 Worli, Mumbai 400 030
Website: www.adityabirlanuvo.co.in Tel: + 91 22 24995000/ 66525000
Fax: + 91 22 24995821/ 66525821
Email: [email protected]
Registration No: 04 - 1107
Corporate Identification Number: L17199GJ1956PLC001107
ADDRESS OF THE ROC
The Registrar of Companies – Gujarat
C.G.O. Complex,
Opp. Rupal Park,
Near Ankur Bus Stop,
Naranpura, Ahmedabad – 380 013.
The Equity Shares of the Company are listed on the BSE and the NSE.
Board of Directors
Name Age Address
Mr. Kumar Mangalam Birla 39 ‘ADITYAYAN’, 20, Carmichael Road, Mumbai 400 026.
Mrs. Rajashree Birla 61 ‘ADITYAYAN’, 20, Carmichael Road, Mumbai 400 026.
Mr. H. J. Vaidya 79 501, Everest Chambers, Off Mount Pleasant Road, Malabar Hill, Mumbai
400 006
Mr. B. L. Shah 85 ‘Manisha’, 69A Napean Sea Road, Mumbai 400 006.
Mr. P. Murari 72 2, Gilchrist Avenue, Off Harrington Road, Chetpet, Chennai 600 031.
Mr. B. R. Gupta 66 Flat No. 6, Ground Floor, Sheetal Apartment, Apna Ghar, Unit No. 9, Shree
Swami Samarth Nagar, Lokhandwala, Andheri (W), Mumbai – 400 053.
Ms. Tarjani Vakil 70 A-1, Ishwardas Mansion, Nana Chowk, Mumbai 400 007.
Mr. Vikram Rao 56 No. 395, 16th Main, III Block, II A Cross Koramangala, Bangalore 560 034.
Mr. S. C. Bhargava 61 1305, Dosti Aster (Dosti Acres), New Uphill Link Road, Antop Hill, Wadala
(E), Mumbai 400 037.
Mr. G. P. Gupta 65 101, Kaveri “B” Wing, Neelkanth Valley, 7th Road, Rajawadi, Ghatkopar
East, Mumbai – 400 077
11
Mr. S. K. Mitra 58 1201, Phoenix Tower, B Wing, Senapati Bapat Marg, Lower Parel, Mumbai
400 030.
Dr. Rakesh Jain 45 1101/2, Wing A, Quantum Park, Gulab Nagar, Union Park Road, Khar (W),
Mumbai 400 052.
Mr. K. K. Maheshwari 51 22, Chitrakoot Co Op Housing Society, Altamount Road, Mumbai 400 026.
Mr. Adesh Kumar Gupta 50 701, Tagore Avenue, Tagore Road, Santracruz (W), Mumbai 400 054.
Dr. Bharat K. Singh * 60 1 Kumaram, Ground Floor, 10 Worli Sea Face, Mumbai 400 018
* Appointed as Managing Director of the Company with effect from November 1, 2006 in place of Mr. Sanjeev Aga.
For more details regarding our Directors please refer to “Management” on page 81 of this Letter of Offer.
Company Secretary and Compliance Officer
Mr. Devendra Bhandari
Aditya Birla Nuvo Limited
Aditya Birla Centre, ‘A’ Wing, 4th Floor,
S.K. Ahire Marg, Mumbai – 400 030.
Tel: + 91 22 24995000/ 66525000
Fax: + 91 22 24995821/ 66525821
Email: [email protected]
Investors may contact the Compliance Officer for any pre-Issue / post-Issue related matters.
Bankers of the Company
State Bank of India ICICI Bank Limited
Madame Cama Road, 3rd Floor, ICICI Bank Towers, 4th Floor,
State Bank Bhavan, North Tower, Bandra Kurla Complex,
Nariman Point, Mumbai - 400021 Mumbai - 400 051
Tel: 022 2280 1351 Tel: 022 2653 7512
Fax: 022 2281 0962 Fax: 022 2653 1374
Email: [email protected] Email: [email protected]
United Bank of India HDFC Bank Limited
25, Sir P.M. Road, Fort, 2nd Floor, Trade World New Building,
Mumbai - 400 001 Kamala Mills, Senapati Bapat Marg,
Tel: 022 2287 3656 Lower Parel, Mumbai - 400 013
Fax: 022 2288 6909 Tel: 022 2490 2862 Fax: 022 2496 8135
Email: [email protected] Email: [email protected]
Canara Bank IDBI Limited
Sir P.M. Road, Fort, 224, Mittal Court, A - Wing,
Mumbai - 400 001 Nariman Point, Mumbai - 400 021
Tel: 022 2287 1667 Tel: 022 6658 8114
Fax: 022 2287 1181 Fax: 022 6658 8111
Email: [email protected] Email: [email protected]
Corporation Bank Standard Chartered Bank
Earnest House,1st Floor, 90, M.G. .Road, 2nd Floor,
Nariman Point, Mumbai - 400 021 Mumbai - 400 023
Tel: 022 2287 6009 Tel: 022 2269 0249
Fax: 022 2285 1284 Fax: 022 2262 4912
Email: [email protected] Email: [email protected]
12
ADITYA BIRLA NUVO LIMITED
Punjab National Bank Bank of America N.A.
102-105, Raheja Chambers, 1st Floor, Express Towers, Nariman Point
Nariman Point, Mumbai - 400 021 Mumbai - 400 021
Tel: 022 2202 2280 Tel: 022 6632 3020
Fax: 022 2202 6072 Fax: 022 2204 5740
Email: [email protected] Email: [email protected]
UCO Bank The Hong Kong & Shanghai Banking
Mafatlal Centre, 1st Floor, Corporation Limited
Nariman Point, Mumbai 400 021 52/60, M.G. Road, Mumbai - 400 023
Tel: 022 2205 6449 Tel: 022 2268 1092
Fax: 022 2202 5338 Fax: 022 2263 1980
Email: [email protected] Email: [email protected]
Central Bank of India CitiBank N. A.
Chandermukhi, 7th Floor, 7th Floor, Plot C-61, G- Block
Nariman Point, Mumbai - 400 021 Bandra Kurla Complex, Mumbai - 400 051
Tel: 022 2204 3973 Tel: 022 2653 5698
Fax: 022 2285 2657 / 56361919 Fax: 022 4006 5847
Email: [email protected] Email: [email protected]
State Bank of Saurashtra Union Bank of India
Gresham House, Sir P.M. Road Union Bank Bhavan, 1st Floor,
Fort, Mumbai - 400 001 239, Vidhan Bhavan Marg,
Tel: 022 2261 3976 Nariman Point, Mumbai - 400 021
Fax: 022 2261 2554 Tel: 022 2287 1827
Email: [email protected] Fax: 022 2285 5037
Email: [email protected]
BNP Paribas UTI Bank Limited
French Bank Building, 62, Maker Tower “F”, 13th Floor,
Homji Street, Mumbai - 400 001. Cuffe Parade, Mumbai - 400 005.
Tel: 022 2265 2791 Tel: 022 2218 8748
Fax: 022 2267 9710 Fax: 022 5655 0555
Email: [email protected] Email: [email protected]
Deutsche Bank ABN Amro Bank N.V.
DB House, Hazarimal Somani Marg, Sakhar Bhavan, 4th Floor,
Fort, Mumbai 400 001. Nariman Point, Mumbai 400 021.
Tel: 022 6658 4775 Tel: 022 6632 2440
Fax: 022 2207 5944 Fax: 022 6637 2449
Email: [email protected] Email: [email protected]
Calyon Bank Bank of Baroda
12th Floor, Hoechst House, 10/12, Mumbai Samachar Marg,
Nariman Point, Fort, Mumbai – 400 001.
Mumbai - 400 021. Tel: 022 2204 8649
Tel: 022 6631 9077 Fax: 022 2204 0494
Fax: 022 6635 1813 Email: [email protected]
Email: [email protected]
Bank of India Dena Bank
Bank of India Building, 4th Floor, 17, Horniman Circle,
70/80, Mahatma Gandhi Road, Mumbai 400 001.
Mumbai 400 023. Tel: 022 2266 2703
Tel: 022 2267 1152 Fax: 022 2266 2188
Fax: 022 2265 0634 Email: [email protected]
Email: [email protected]
13
Issue Management Team
Lead Managers to the Issue
Enam Financial Consultants Private Limited
801/802, Dalamal Towers
Nariman Point, Mumbai 400 021
Tel: +91 22 6638 1800
Fax: +91 22 2284 6824
Email: [email protected]
Website: www.enam.com
Contact Person: Sachin K. Chandiwal
DSP Merrill Lynch Limited
Mafatlal Centre, 10th Floor
Nariman Point, Mumbai 400 021
Tel: + 91 22 6632 8000
Fax: + 91 22 2204 8518
Email: [email protected]
Website: www.dspml.com
Contact Person: Mr. Kartik Desai
The statement of inter se allocation of responsibilities for this Issue between is as follows:
No. Activities Responsibility Coordinator
1. Capital structuring with the relative components and formalities such as ENAM DSP ENAM
composition of debt and equity, type of instruments
2. Drafting and Design of the offer document and of advertisement / ENAM DSP ENAM
publicity material including newspaper advertisements and brochure /
memorandum containing salient features of the offer document. The
designated Lead Merchant Banker shall ensure compliance with the
Guidelines for Disclosure and Investor Protection and other stipulated
requirements and completion of prescribed formalities with Stock
Exchange and SEBI.
3. Retail/Non-institutional marketing strategy which will cover, inter alia, ENAM DSP ENAM
preparation of publicity budget, arrangements for selection of
(i) ad-media, (ii) centres of holding conferences of brokers, investors etc.
(iii) bankers to the issue, (iv) collection centres, (v) distribution of publicity
and issue material including application form and letter of offer
4. Institutional marketing strategy ENAM DSP DSP
5. Selection of various agencies connected with the issue, namely ENAM DSP ENAM
Registrars to the Issue, printers, monitoring agency and
advertisement agencies
6. Follow-up with bankers to the issue to get quick estimates of ENAM DSP DSP
collection and advising the issuer about closure of the issue,
based on the correct figures
7. The post-issue activities will involve essential follow-up steps, which must ENAM DSP DSP
include finalisation of basis of allotment / weeding out of multiple
applications, listing of instruments and dispatch of certificates and refunds,
with the various agencies connected with the work such as registrars to
the issue, bankers to the issue, and bank handling refund business. Even
if many of these post-issue activities would be handled by other
intermediaries, the designated Lead Merchant Banker shall be responsible
for ensuring that these agencies fulfill their functions and enable him to
discharge this responsibility through suitable agreements with the issuer
Company.
14
ADITYA BIRLA NUVO LIMITED
Legal Advisor to the Company
Amarchand & Mangaldas & Suresh A. Shroff & Co.
Peninsula Chambers
Peninsula Corporate Park
Ganpatrao Kadam Marg
Lower Parel
Mumbai 400 013
Tel: +91 22 2496 4455
Fax: +91 22 2496 3666
Legal Advisor to the Lead Managers
AZB & Partners
Express Towers, 23rd Floor
Nariman Point
Mumbai – 400 021
Tel: + 91 22 6639 6880
Fax: + 91 22 6639 6888
Email: [email protected]
International Legal Counsel
Sidley Austin
Woolgate Exchange,
25, Basinghall Street,
London EC2V 5HA,
DX Number 580 London City
Tel: +44 (0) 20 7360 3600
Fax: + 44 (0) 20 7626 7937
Email: [email protected]
Auditors of the Company
M/s. Khimji Kunverji & Co.
Chartered Accountants
Suite 52, Bombay Mutual Building
Sir P.M. Road, Fort
Mumbai - 400 001
Tel : +91 22 2266 2550
Fax: +91 22 2266 4045
M/s. S. R. Batliboi & Co.
Chartered Accountants
Express Towers,
6th Floor, Nariman Point,
Mumbai – 400 021
Tel: + 91 22 2287 6485
Fax: +91 22 2287 6401
Registrar to the Issue
Intime Spectrum Registry Limited
C13, Pannalal Silk Mills Compound,
LBS Marg,
Bhandup (West), Mumbai-400 078
Tel: + 91 22 2596 0320
Fax: + 91 22 2596 0329
15
Note: Investors are advised to contact the Registrar to the Issue/ Compliance Officer in case of any pre-issue/post-issue
related problems such as non-receipt of Letter of Offer/letter of allotment/ share certificate(s)/ refund orders.
Monitoring Agency
IDBI Bank,
IDBI Tower,
WTC Complex,
Cuffe Parade,
Mumbai-400 005
Tel: +91 22 5655 3355
Fax: +91 22 2218 1294
Bankers to the Issue
HDFC Bank Limited
2nd Floor, Process House,
Kamala Mills, Senapati Bapat Marg,
Lower Parel, Mumbai - 400 013
Tel: 022 2498 8972
Fax: 022 2496 3871
Email: [email protected]
The Hong Kong & Shanghai Banking Corporation Limited
52/60, M.G. Road, Mumbai - 400 023
Tel: 022 2268 5568
Fax: 022 2262 3890
Email: [email protected]
Credit rating
This being an issue of Equity Shares, no credit rating is required.
No Offer in the United States
The rights and the shares of the Company are not registered under the United States Securities Act, 1933, as amended,
and the Issue is not, and under no circumstances is to be construed as, an offering of any shares or rights for sale in the
United States of America or the territories or possessions thereof. For further details please see “Terms of the Issue” on
page 358 of this Letter of Offer.
16
ADITYA BIRLA NUVO LIMITED
CAPITAL STRUCTURE
Aggregate nominal Aggregate Value
value (In Rs. Crore) at Issue Price
(In Rs. Crore)
Authorised share capital
12,00,00,000 Equity Shares of Rs. 10/- each 120.00
5,00,000 Redeemable Preference Shares of Rs. 100/- each 5.00
Issued, subscribed and paid-up capital
8,35,04,386* Equity Shares of Rs. 10/- each, fully paid up 83.50
Present Issue being offered to the Equity Shareholders
through the Letter of Offer
98,26,638 Equity Shares of Rs. 10/- each at a premium of 779.25
Rs. 783 i.e. at a price of Rs. 793**
Paid up capital after the issue
9,33,31,024 Equity Shares of Rs. 10/- each**
Share Premium Account
Existing share premium account 403.52
Share premium account after the issue 1,164.34
1.* Includes
- 13,75,500 equity shares allotted pursuant to contracts for consideration other than cash.
- 2,33,74,207 shares issued as bonus shares by Capitalisation of Reserves and Securities Premium.
- 33,82,295 shares represented by Global Depository Receipts.
- 1,50,30,935 equity shares allotted pursuant to Scheme of Amalgamation of Indo Gulf Fertilizers Limited (IGFL) in
the ratio of one share of the Company for every three equity shares of IGFL, out of which 10,585 equity shares are
kept in abeyance.
- 85,83,479 equity shares allotted pursuant to Scheme of Amalgamation of Birla Global Finance Limited (BGFL) in
the ratio of one share of the Company for every three equity shares of BGFL, out of which 10,747 equity shares are
kept in abeyance.
2. In addition to the issued, subscribed and paid up capital of 8,35,04,386 equity shares, issue of 14,691 equity
shares excluding bonus shares (one bonus equity share for every two equity shares held by the shareholders of
the Company) thereon is in abeyance pursuant to the provisions of Section 206A of the Companies Act, 1956. On
issuance, these shares will also be entitled for rights equity shares to be issued pursuant to this Letter of Offer.
** This includes the rights entitlements on the 14,691 shares that have been kept in abeyance along with their bonus
entitlements of 7,345.
17
Notes to the Capital Structure
1a. Build up of Equity Share Capital as on December 1, 2006 is as follows:
Date of No. of Face Issue Cumulative Consider- Remarks
Allotment Equity Value Price Paid-up ation
Shares (Rs.) per capital
Allotted share (Rs.)
(Rs.)
Upto December 25,18,020* 10 - 2,51,80,200 Cash / Other Cumulative paid up capital as on
31, 1975 than cash December 31, 1975
January 1, 1976 9,83,630 10 - 3,50,16,500 Other than Issued to Jayshree Textile Industries
Cash Limited Shareholders on merger with
Indian Rayon Corporation Limited
December 7, 1979 8,75,410 10 0 4,37,70,600 Other than Bonus Shares issued in the ratio of 1:2
Cash
September 15, 1982 9,92,944 10 20 5,37,00,040 Cash 5th Series PCD Conversion
June 30, 1983 15,00,000 10 28 6,87,00,040 Cash 7th Series Debenture Part A
Conversion
September 30, 92,84,762 10 50 16,15,47,660 Cash 11th Series FCD 1st Conversion
1987
June 30, 1988 92,84,762 10 50 25,43,95,280 Cash 11th Series FCD 2nd Conversion
January 31, 1994 55,53,087 10 730 30,99,26,150 Cash G.D.R. issued
April 1, 1994 50,17,617 10 170 36,01,02,320 Cash Zero Interest FCD 1st Conversion
April 1, 1994 16,20,000 10 200 37,63,02,320 Cash Zero Interest FCD (Promoters)
July 8, 1994 62,779 10 170 37,69,30,110 Cash Zero Interest FCD 2nd Conversion
(Right)
July 8, 1994 4,848 10 170 37,69,78,590 Cash Zero Interest FCD Conversion **
October 7, 1994 1,67,104 10 170 37,86,49,630 Cash Zero Interest FCD 3rd Conversion
(Right)
October 7, 1994 1,602 10 170 37,86,65,650 Cash Zero Interest FCD Conversion **
December 19, 1994 16,674 10 170 37,88,32,390 Cash Zero Interest FCD 4th Conversion
(Right)
January 28, 1995 52,44,624 10 200 43,12,78,630 Cash Detachable Warrant 1st Conversion
January 28, 1995 17,80,000 10 200 44,90,78,630 Cash Detachable Warrant (Promoters)
March 31, 1995 27,271 10 170 44,93,51,340 Cash Zero Interest FCD 5th Conversion
(Right)
March 31, 1995 29,391 10 200 44,96,45,250 Cash Detachable Warrant 2nd Conversion
(Right)
September 29, 1995 6,986 10 170 44,97,15,110 Cash Zero Interest FCD 6th Conversion
(Right)
March 26, 1996 1,069 10 170 44,97,25,800 Cash Zero Interest FCD Conversion **
March 26, 1996 1,030 10 200 44,97,36,100 Cash Detachable Warrant Conversion **
November 29, 10,784 10 170 44,98,43,940 Cash Zero Interest FCD 7th Conversion
1996 (Right)
18
ADITYA BIRLA NUVO LIMITED
Date of No. of Face Issue Cumulative Consider- Remarks
Allotment Equity Value Price Paid-up ation
Shares (Rs.) per capital
Allotted share (Rs.)
(Rs.)
November 29, 450 10 200 44,98,48,440 Cash Detachable Warrant 3rd Conversion
1996 (Right)
March 31, 1997 150 10 170 44,98,49,940 Cash Zero Interest FCD Conversion **
March 31, 1997 40 10 200 44,98,50,340 Cash Detachable Warrant Conversion **
August 7, 1997 1,790 10 170 44,98,68,240 Cash Zero Interest FCD Conversion **
August 7, 1997 1,190 10 200 44,98,80,140 Cash Detachable Warrant Conversion **
October 15, 1997 2,24,94,007 10 0 67,48,20,210 Other than Bonus Shares issued in the ratio of 1:2
Cash
May 13, 1998 340 10 170 67,48,23,610 Cash Zero Interest FCD Conversion **
May 13, 1998 340 10 200 67,48.27,010 Cash Detachable Warrant Conversion **
May 13, 1998 340 10 0 67,48,30,410 Other than Bonus Shares issued **
Cash
October 29, 1999 -76,06,419 10 Refer 59,87,66,220 Buyback Equity Shares bought back
Note
1b
March 21, 2000 40 10 170 59,87,66,620 Cash Zero Interest FCD Conversion **
March 21, 2000 40 10 200 59,87,67,020 Cash Detachable Warrant Conversion **
March 21, 2000 40 10 0 59,87,67,420 Other than Bonus Shares issued **
Cash
March 31, 2004 1,720 10 170 59,87,84,620 Cash Zero Interest FCD Conversion **
March 31, 2004 1,720 10 200 59,88,01,820 Cash Detachable Warrant Conversion **
March 31, 2004 1,720 10 0 59,88,19,020 Other than Bonus Shares issued **
Cash
June 30, 2004 230 10 170 59,88,21,320 Cash Zero Interest FCD Conversion **
June 30, 2004 230 10 200 59,88,23,620 Cash Detachable Warrant Conversion **
June 30, 2004 230 10 0 59,88,25,920 Other than Bonus Shares issued **
Cash
October 19, 2004 450 10 170 59,88,30,420 Cash Zero Interest FCD Conversion **
October 19, 2004 450 10 200 59,88,34,920 Cash Detachable Warrant Conversion **
October 19, 2004 450 10 0 59,88,39,420 Other than Bonus Shares issued **
Cash
March 9, 2005 280 10 170 59,88,42,220 Cash Zero Interest FCD Conversion **
March 9, 2005 280 10 200 59,88,45,020 Cash Detachable Warrant Conversion **
March 9, 2005 280 10 0 59,88,47,820 Other than Bonus Shares issued **
Cash
July 6, 2005 1,490 10 170 59,88,62,720 Cash Zero Interest FCD Conversion **
July 6, 2005 1,490 10 200 59,88,77,620 Cash Detachable Warrant Conversion **
July 6, 2005 1,490 10 0 59,88,92,520 Other than Bonus Shares issued **
Cash
January 12, 2006 220 10 170 59,88,94,720 Cash Zero Interest FCD Conversion **
January 12, 2006 220 10 200 59,88,96,920 Cash Detachable Warrant Conversion **
January 12, 2006 220 10 0 59,88,99,120 Other than Bonus Shares issued **
Cash
19
Date of No. of Face Issue Cumulative Consider- Remarks
Allotment Equity Value Price Paid-up ation
Shares (Rs.) per capital
Allotted share (Rs.)
(Rs.)
April 3, 2006 20 10 170 59,88,99,320 Cash Zero Interest FCD Conversion **
April 3, 2006 20 10 200 59,88,99,520 Cash Detachable Warrant Conversion **
April 3, 2006 20 10 0 59,88,99,720 Other than Bonus Shares issued **
Cash
April 24, 2006 1,5030,935 10 - 74,92,09,070 Other than Shares allotted on Amalgamation of
cash IGFL-in the ratio of one share of the
Company for every three shares of IGFL
July 18, 2006 85,83,479 10 - 83,50,43,860 Other than Shares allotted on Amalgamation of
cash BGFL-in the ratio of one share of the
Company for every three shares of
BGFL
Total 8,35,04,386 83,50,43,860
* includes 3,91,870 equity shares allotted as fully paid up pursuant to contracts other than cash.
** which were earlier kept in abeyance.
1b. Details of Equity Shares Bought Back as on December 1, 2006.
(i) Buy-back of Equity Shares of the Company of face value of Rs. 10/- each.
Time Period No. of Shares Average Price (In Rs.) Total Amount (In Rs. Crore)
September - October - 1999 7,606,419 85.00 64.65
2. Cumulative Redeemable Preference Shares
There are no issued cumulative redeemable preference shares as on date of this Letter of Offer and the Company
has not made any issue or redemption of cumulative redeemable preference shares in the preceding ten years.
3. Current shareholding pattern of the Company as on December 1, 2006
Category of Shareholder Pre issue Post issue
Shareholding of Promoter and Total number Total Total number Total
Promoter Group of shares shareholding of shares shareholding
as a as a
percentage percentage
of total of total
number number of
of shares shares
Indian
Individuals/ Hindu Undivided Family 1,20,870 0.15 1,35,090 0.15
Central Government/ State Government(s) 0 0.00 0.00
Bodies Corporate 3,18,58,307 38.15 3,56,06,343 38.15
Financial Institutions/ Banks 0 0.00 0.00
Any Others(Specify) 0 0.00 0.00
Sub Total(A) 3,19,79,177 38.30 3,57,41,433 38.30
20
ADITYA BIRLA NUVO LIMITED
Category of Shareholder Pre issue Post issue
Shareholding of Promoter and Total number Total Total number Total
Promoter Group of shares shareholding of shares shareholding
as a as a
percentage percentage
of total of total
number number of
of shares shares
Foreign
Total Shareholding of Promoter and 3,19,79,177 38.30 3,57,41,433 38.30
Promoter Group (A)
Public shareholding
Institutions
Mutual Funds/ UTI 83,48,112 10.00 93,30,242 10.00
Financial Institutions / Banks 74,29,707 8.90 83,03,790 8.90
Insurance Companies 28,70,735 3.44 32,08,468 3.44
Foreign Institutional Investors 1,05,78,621 12.67 1,18,23,164 12.67
Any Other (specify )
Foreign Banks 6,660 0.01 7,443 0.01
Sub-Total (B)(1) 2,92,33,835 35.01 3,26,73,107 35.01
Non-institutions
Bodies Corporate 27,51,739 3.30 30,75,473 3.30
Individuals 1,49,37,568 17.88 1,66,94,928 17.88
Any Other (specify)
Non Resident 12,09,505 1.45 13,51,799 1.45
OCBs 10,267 0.01 11,474 0.01
Sub-Total (B) (2) 1,89,09,079 22.64 2,11,33,674 22.64
Total Public Shareholding (B) = (B)(1)+(B)(2) 4,81,42,914 57.65 5,38,06,781 57.65
TOTAL (A)+(B) 8,01,22,091 95.95 8,95,48,214 95.95
Shares held by Custodians and against
which Depository Receipts have been issued 33,82,295 4.05 37,80,212 4.05
GRAND TOTAL (A)+(B)+(C) 8,35,04,386 100 9,33,28,426 100
21
4. Details of the shareholding of the Promoters, Promoter Group and directors of the promoter companies of the
Company as on December 1, 2006.
Name of the Shareholder Total Shares % of pre issue capital
Promoter
Mr. Kumar Mangalam Birla 4,083 0.00
Birla Group Holdings Private Limited 30,02,628 3.6
TGS Investment and Trade Private Limited 1,17,88,648 14.1
Promoter Group
Mr. Kumar Mangalam Birla Karta of AVKM Birla HUF 133 0.00
Mrs. Rajashree Birla 113,073 0.1
Ms. Neerja Birla 1,890 0.00
Ms. Vasavadatta Bajaj 1,691 0.00
Trapti Trading & Investments Private Limited 17,04,444 2.0
Turquoise Investments & Finance Private Limited 26,05,560 3.1
Birla Consultants Limited 27,620 0.03
Birla Industrial Finance (India) Limited 26,710 0.03
Birla Industrial Investment (India) Limited 5,720 0.01
ECE Industries Limited 1,05,568 0.1
Grasim Industries Limited 29,64,111 3.5
Heritage Housing Finance Limited 6,01,546 0.7
Hindalco Industries Limited 76,63,535 9.1
IGH Holding Private Limited 75,049 0.09
Manav Investment and Trading Co. Limited 1,03,989 0.1
Mangalam Services Limited 40,850 0.0
Pilani Investment & Ind. Corpn. Limited 1,65,753 0.2
Umang Commercial Co. Limited 9,76,576 1.1
Directors of the Promoter Companies
Mr. Sushil Agarwal 6 0.0
Mr. G. K. Tulsian 3,400 0.0
Mr. L. K. Daga 225 0.0
22
ADITYA BIRLA NUVO LIMITED
5. Details of the transactions in Equity Shares by the Promoters and the Promoter Group during the last six
months
Name of the Date of Details of the Number of Aggregate
shareholder Transaction transaction Equity Shares of Price (in Rs.)
Rs. 10 each)
Mr. Kumar Mangalam Birla July 18, 2006 Allotted on Amalgamation of BGFL 4,083 N.A
the Company
Mrs. Rajashree Birla July 18, 2006 Allotted on Amalgamation of BGFL 5,855 N.A
with the Company
Mrs. Neerja Birla July 18, 2006 Allotted on Amalgamation of BGFL 1,750 N.A
with the Company
Mrs. Vasavadatta Bajaj July 18, 2006 Allotted on Amalgamation of BGFL 1,458 N.A
with the Company
June 8, 2006 Purchased in demat form 19,028 1,05,03,496.16
TGS Investment and July 18, 2006 Allotted on amalgamation of BGFL 33,85,315 N.A
Trade Private Limited with the Company
Turquoise Investment and July 18, 2006 Allotted on amalgamation of BGFL 6,921 N.A
Finance Private Limited with the Company
Trapti Trading and July 18, 2006 Allotted on amalgamation of BGFL 7,470 N.A
Investments Private Limited with the Company
Birla Group Holdings July 18, 2006 Allotted on amalgamation of BGFL 29,65,054 N.A
Private Limited with the Company
IGH Holding Private Limited June 9, 2006 Market Purchase 4,867 27,98,598.96
June 12, 2006 Market Purchase 665 3,79,784.69
June 13, 2006 Market Purchase 50,968 2,82,74,226.63
June 14, 2006 Market Purchase 18,044 99,99,504.27
June 15, 2006 Market Purchase 505 2,82,960.34
Umang Commercial June 30, 2006 Market Purchase 60 33,000
Company Limited
6. Top ten Shareholders
a) Top ten shareholders as on December 1, 2006.
Name of the Shareholder Total Shares % of pre issue capital
TGS Investment And Trade Private Limited* 1,17,88,648* 14.12
Hindalco Industries Limited 76,63,535 9.18
Life Insurance Corp. Of India. 73,95,079 8.86
Fid Funds (Mauritius) Limited 42,60,314 5.10
Templeton Mutual Fund (through its various scheme) 34,80,830 4.17
Citibank N.A. ADR Department-Ny, As Depository 33,82,295 4.06
Birla Group Holding Private Limited 30,02,628 3.60
Grasim Industries Limited 29,64,111 3.55
Turquoise Investment and Finance Private Limited 26,05,560 3.12
UTI Mutual Funds - (through its various scheme) 2,13,1970 2.55
*Out of which 33,33,333 equity shares are under Lock-in up to August 25, 2007.
23
b. Top ten shareholders as on November 24, 2006
Name of the Shareholder Total Shares % of pre issue capital
TGS Investment and Trade Private Limited 1,17,88,648* 14.12
Hindalco Industries Limited 76,63,535 9.18
Life Insurance Corp. of India. 73,95,079 8.86
Fid Funds (Mauritius) Limited 42,60,314 5.10
Templeton Mutual Fund (through its various scheme) 35,32,503 4.56
Citibank N.A. ADR Department-Ny, As Depository 33,82,295 4.06
Birla Group Holding Private Limited 30,02,628 3.60
Grasim Industries Limited 29,64,111 3.5
Turquoise Investment and Finance Private Limited 26,05,560 3.12
UTI Mutual Funds - (through its various scheme) 21,31,970 2.55
*Out of which 33,33,333 equity shares are under Locked-in up to August25, 2007.
c. Top Ten shareholders as on November 30, 2004
Name of the Shareholder Total Shares % of pre issue capital
Hindalco Industries Limited 76,63,535 12.80
Life Insurance Corporation of India 6,65,55,178 11.11
Templeton Mutual Fund (through its various scheme) 41,22,216 6.88
Citibank N.A ADR Department-Ny, As Depository 32,86,781 5.49
Grasim Industries Limtied 29,64,111 4.95
Turquoise Investment and Finance Private Limited 25,98,639 4.34
Trapti Trading and Investments Private Limited 16,96,974 2.83
General Insurance Corporation of India 16,59,529 2.77
Administrator of The Specified Undertaking of The 10,35,448 1.73
UTI-Unit Scheme 1964
Umang Commercial Company Limited 9,76,163 1.63
7. Employee Stock Option Scheme
The Board of Directors of the Company in its meeting held on December 7, 2006 considered and approved the
ABNL Employee Stock Option Scheme (the “ESOS”) for granting options to eligible employees of the Company and
its subsidiaries. The Board constituted an ESOS Compensation Committee for the purposes of implementing,
administering and supervising the ESOS in accordance with the provisions of the Securities and Exchange Board
of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The Board also granted
its approval under section 81 (1A) of the Companies Act and other applicable provisions for granting, offering and
issuing in one or more tranches to such eligible employees of the Company or its subsidiaries as may be decided
by the ESOS Compensation Committee not more than 4,75,000 equity shares of the Company being 0.57% of the
paid-up equity share capital of the Company on the terms and conditions mentioned in the ESOS. The ESOS will
now be placed before the shareholders of the Company for their approval.
8. The present issue being a rights issue, as per extant SEBI guidelines, the requirement of Promoters’ contribution
and lock-in are not applicable.
24
ADITYA BIRLA NUVO LIMITED
9. The Company has not availed of “bridge loans” to be repaid from the proceeds of the issue for incurring expenditure
on the Objects of the Issue.
10. The Promoters and Directors of the Company and Lead Managers of the Issue have not entered into buy-back,
standby or similar arrangements for any of the securities being issued through this Letter of Offer.
11. The terms of issue to Non-Resident Equity Shareholders / Applicants have been presented under the section
“Terms of the Issue” on page 358 of this Letter of Offer.
12. At any given time, there shall be only one denomination of the Equity Shares of the Company. The Equity
Shareholders of the Company do not hold any warrant, option or convertible loan or debenture, which would entitle
them to acquire further shares in the Company.
13. No further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or public issue or in
any other manner which will affect the Company, shall be made, except issue of upto 14,691 equity shares
excluding bonus shares (one bonus equity share for every two equity shares held by the shareholders of the
Company) thereon which are in abeyance pursuant to the provisions of Section 206A of the Companies Act, 1956,
during the period commencing from the filing of the Letter of Offer with the SEBI and the date on which the Equity
Shares issued under the Letter of Offer are listed or application moneys are refunded on account of the failure of
the Issue. Further, presently the Company does not have any intention to alter the equity capital structure by way
of split/ consolidation of the denomination of the shares on a preferential basis or issue of bonus or rights or public
issue of shares or any other securities within a period of six months from the date of opening of the Issue.
14. The Issue will remain open for 30 days. However, the Board will have the right to extend the Issue period as it may
determine from time to time but not exceeding 60 days from the Issue Opening Date.
15. The Promoters have confirmed that along with relatives and the companies controlled by the Promoters (together
hereinafter referred to as “Promoter” in this clause) intend to subscribe to the full extent of their entitlement in the
Issue. The Promoter reserves the right to subscribe to their entitlement in the Issue either by themselves, their
relatives or a combination of entities controlled by them, including by subscribing for renunciation if any made
within the promoter group to another person forming part of the promoter group. The Promoter also intends to apply
for additional Equity Shares in the Issue, such that at least 90% of the Issue is subscribed. As a result of this
subscription and consequent allotment, the Promoter may acquire shares over and above their entitlement in the
Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement
of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoter, if
any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso
to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the
section on “Objects of the Issue” on page 25 of this Letter of Offer, there is no other intention/purpose for this Issue,
including any intention to delist the Company, even if, as a result of allotments to the Promoter, in this Issue, the
Promoter shareholding in the Company exceeds their current shareholding. The Promoter intends to subscribe to
such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoter of any unsubscribed
portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other
applicable laws prevailing at that time relating to continuous listing requirements.
16. We have 155,397 members as on December 8, 2006.
25
OBJECTS OF THE ISSUE
We intend to deploy the net proceeds from the Issue of Rs. 770.65 crores after meeting Issue expenses of approximately
Rs. 8.60 Crores for prepayment/repayment of debts, and for general corporate purposes including acquisitions and
strategic investments in line with our growth strategy.
The main objects and objects incidental or ancillary to the main objects as set out in our Memorandum of Association
enable us to undertake our existing activities and the activities for which funds are being raised by us through this Issue.
The fund requirement and deployment is based on internal management estimates and has not been appraised by any
bank or financial institution.
The fund requirement is based upon our growth plans and restructuring of our capital. In view of the dynamic nature of
the industry segments we operate in, we may have to revise our growth plans from time to time and consequently our
fund requirement may also change.
The details of the proceeds of the Issue are summarised below:
Particulars Estimated Amount (In Rs. Crore)
Gross proceeds of the Issue 779.25
Issue related expenses* 8.60
Net Proceeds of the Issue 770.65
* The details of Issue related expenses are provided later within this section of the Letter of Offer.
Utilization of the Issue Proceeds
1. Prepayment/Repayment of Debt
The Company intends to utilize at least Rs. 621.45 crores of the net proceeds of the Issue towards prepayment/
repayment of a portion of debt as given below. The Company may vary this amount depending upon the situation
since some of the Company’s financing arrangements contain provisions relating to prepayment penalties. The
Company will approach the banks/financial institutions/lenders or clients after the completion of this Issue for pre-
payment of some of the above high-cost loans/advances. Some of the loan documents provide for payment of pre-
payment penalties and the Company may have to pay such excess amounts. The Company will take these provisions
into consideration in prepaying/repaying its debt from the proceeds of the Issue.
We intend to utilize the proceeds of the issue by September 2007 based on our current business plan. In view of
the dynamic nature of the industry that we operate in, we may have to revise our business plans from time to time
and implementation of projects might have to be rescheduled due to varied reasons. In the event of a change, the
extent of utilisation of funds may be preponed or postponed depending on the business requirements.
Details of our debt outstanding that we intend to repay/prepay have been provided in the table below:
Sr . Name of t he Dat e of Amount Pur pose of Loan Pr epayment Pr epayment Mi ni mum
No . Lender Avai l ment ( Rs. Opt i on Penal t y not i ce
Cr or es) peri od f or
pr epayment
1 Citibank N.A. 19-Jan-06 75.00 On quarterly Nil One month
interest reset
For refinancing the loans date
taken earlier for financing
the cost of acquisition
20-Jan-06 25.00 of equity shares of Idea On other dates On the terms N.A.
Cellular Limited. to be agreed
upon.
26
ADITYA BIRLA NUVO LIMITED
Sr . Name of t he Dat e of Amount Pur pose of Loan Pr epayment Pr epayment Mi ni mum
No . Lender Avai l ment ( Rs. Opt i on Penal t y not i ce
Cr or es) peri od f or
pr epayment
2 Citibank N.A. 18-May-06 50.00 For financing the cost of On annual interest Nil One month
acquisition of equity shares reset date
of Idea Cellular Limited.
18-May-06 50.00 On other dates On the terms N.A.
to be agreed
upon.
3 Bank of Baroda 31-May-06 45.00 For refinancing the loans On annual interest Nil One month
taken earlier or for financing, reset date
the cost of acquisition of
equity shares of Idea
Cellular Limited.
6-Jun-06 180.00 On other dates Prepayment N.A.
premium of
0.50% p.a.
for the period
of prepay-
ment on the
loan amount
prepaid
4 State Bank of India 12-Jun-06 160.00 For financing the cost of On annual interest Nil 30 days
acquisition of equity shares reset date
of Idea Cellular Limited.
18-Aug-06 150.00 For replenishment of own On other dates On the terms N.A.
fund to finance Idea to be agreed
acquisition. upon.
5 Industrial 29-Aug-06 190.00 For refinancing the loans On annual interest Nil 15 days
Development Bank taken earlier or for financing, reset date
of India the cost of acquisition of
equity shares of Idea
Cellular Limited.
On other dates On the terms N.A.
to be agreed
upon.
6 Bank of 19-Jan-06 50.00 For refinancing the loans On expiry of Nil -
America N.A. taken earlier for financing rollover period
the cost of acquisition of
equity shares of Idea
Cellular Limited.
On other dates On the terms -
to be agreed
upon.
7 IGEC Loan Trust 3-May-06 215.00 For financing the cost of Nil N.A. N.A.
acquisition of equity shares
of Idea Cellular Limited,
for refinancing the existing
debt and / or for general
corporate purpose.
8 Commercial Paper 21-Apr-06 100.00 General Corporate Purpose Nil N.A. N.A.
9 Commercial Paper 8-May-06 50.00 General Corporate Purpose Nil N.A. N.A.
10 Commercial Paper 10-May-06 100.00 General Corporate Purpose Nil N.A. N.A.
11 Commercial Paper 10-May-06 50.00 General Corporate Purpose Nil N.A. N.A.
27
2. General Corporate Purposes including acquisitions, investments in subsidiaries, and/or joint ventures
The Company proposes to use the proceeds of the Issue towards the repayment of debt as specified above.
However, the management will have the discretion and the flexibility to deploy funds from the net Issue proceeds
amounting to Rs. 150 crore towards general corporate purposes including funding acquisitions as and when the
opportunities arise.
The Company believes that it will derive benefits from its investment in such SPVs, subsidiaries, acquisitions and
joint ventures. The Company has not yet identified such vehicles through which it will invest or the form of investment
and there is no assurance of any future dividends / returns from such investments. The management, in accordance
with the policies established by the Board, will have flexibility in applying the portion of the net proceeds allocated
for investments in such vehicles and for general corporate purposes.
3. Issue Related Expenses
The Issue related expenses include, among others, issue management fees, printing and distribution expenses,
legal fees, registrar and depository fees, advertisement expenses, stamp duty etc. The estimated Issue expenses
are as follows:
Activity Expense (Rs. crores)
Lead management fees 3.90
Advertising expenses 0.10
Printing, postage and stationery 1.09
Other (Registrar’s fees, stamp duty, legal fees etc) 3.51
Total estimated Issue expenses 8.60
Interim Use of Proceeds
Pending utilization of issue proceeds, the management, in accordance with the policies set up by the Board, will have the
flexibility in deploying the proceeds received from the present Issue and during this period we intend to temporarily invest
the funds in interest/dividend bearing liquid instruments including money market mutual funds, temporary reduction of
overdraft facilities and deposits with banks for the necessary duration. Such investments would be in accordance with
investment policies approved by the Board from time to time.
Monitoring of Utilization of Funds
IDBI Bank, has been appointed as the monitoing agency to monitor the utilization of the Issue proceeds. We will disclose
the utilisation of Issue proceeds under a separate head in our balance sheets for fiscal 2007 and fiscal 2008 and provide
details, if any in relation to all such proceeds of the Issue that have not been utilised thereby also indicating investments,
if any of such unutilised proceeds of the Issue.
No part of the Issue proceeds will be paid by the Company as consideration to the Ppromoters, the Directors, the
Company’s key management personnel or companies promoted by the Promoters except in the usual course of business.
28
ADITYA BIRLA NUVO LIMITED
BASIS FOR ISSUE PRICE
Investors should also refer to the section “Risk Factors” and “Auditors’ Report” to get a more informed view before making
the investment decision. The price per share has been provided for Rs. 10/- share face value.
Qualitative Factors
A Diversified Business Portfolio
We have a strong portfolio of diversified businesses across manufacturing and services, in most of which we have a
significant market presence. Our business portfolio also has a blend of high growth and emerging businesses, and stable
and mature businesses. This allows us to de-risk ourselves from the dynamics of any particular industry and has also
helped us generate cash flows from our mature businesses, which we have been able to invest in our emerging
businesses to create value for shareholders.
Strong Brands
We believe that as a consolidated Company, our continuing efforts on brand building have resulted in the development
and strengthening of a range of strong, distinctive brands like ‘Louis Philippe’, ‘Van Heusen’, ‘Allen Solly’, ‘Peter England’
in Garment business, ‘RAY ONE’ in the Rayon business, ‘Birla Carbon’ in the Carbon Black business, ‘Linen Club’ in the
Textile business and ‘Shaktiman’ in the Fertilizer business, which we believe enables us to derive benefits in the market
space, through greater consumer confidence and in certain cases a premium pricing for our various products as against
our competitors. We believe we are able to leverage our brands to launch new products and extend into new product
categories like transforming our brands in Garments business from pure shirts brands to wardrobe brands by introducing
range of products namely suits, jackets, t-shirts, accessories etc, which are further being transformed to life style brands
by introducing perfumes, shoes. Also, Allen Solly mainly a men’s brand was extended to offer women apparels. We
believe that in the process of building these brands we have gained valuable insight into our clients / consumer
behaviour, which we leverage and utilize to drive business in today’s competitive markets. Our brands have also won
various awards and recognitions in both national and international forums.
Integrated Manufacturing
We have sizeable integrated manufacturing facilities for most of our businesses with access to captive power and in
house manufacturing of key inputs like caustic soda for VFY, wool top for worsted yarns, and ammonia for urea. Our
manufacturing base helps us to have a control on our production and also allow us to manufacture high quality products
on an efficient basis and at low cost. We believe our facilities help us to substantially reduce new product /design
development time and cost and ensure continued availability of our products to customers.
Focus on Quality
We believe that we have established our reputation as a reliable manufacturer of products in all of our units, namely
carbon black, textile, fertilizer, rayon and insulator. We have received various accreditations for our manufacturing units.
For more details on the various certifications received by us, please refer to the section titled “History and Corporate
matters” on page 65 of this Letter of Offer.
Track record of handling large projects and successful acquisitions
Since our inception, we have implemented several expansions at our existing facilities as well as greenfield projects. We
have also successfully completed and integrated several acquisitions, including the acquisition/merger of Madura Garments,
PSI Data Systems, TransWorks, and Indo Gulf Fertilizer to name a few. We believe that our knowledge of multiple
businesses, acquisition experience and project management expertise positions us to leverage emerging opportunities in
all the segments of our businesses.
Experienced Management and Technical Team
Our management team across our businesses brings with them experience in their respective business segments. We
believe that our management team is well placed to provide strategic leadership and direction to explore new emerging
opportunities in these sectors as well as constantly improve our current operations. We have witnessed low attrition of
key management personnel and have also recruited several professionals with domain expertise in critical areas. We
believe these provide us with a significant competitive edge.
29
Quantitative Factors
Information presented in this section is derived from our condsolidated audited restated financial statements prepared in
accordance with Indian GAAP.
1. Weighted average earnings per share (EPS)
Financial Period EPS (Rs.) Weight
Year ended March 31, 2004 5.15 1
Year ended March 31, 2005 9.43 2
Year ended March 31, 2006 27.09 3
Weighted Average 17.54
2. Price Earnings Ratio (P/E Ratio)
a. P/E based on the year ended March 31, 2006: 27.43 times
We have diversified businesses; hence there is no other listed company as peer group.
3. Weighted average return on net worth
Financial Period Return on Net Worth (%) Weight
Year ended March 31, 2004 3.06 1
Year ended March 31, 2005 5.27 2
Year ended March 31, 2006 9.72 3
Weighted Average 7.12
4. Minimum Return on Increased Net Worth required to maintain Pre-Issue EPS.
The minimum return on increased net worth required to maintain pre-Issue EPS of Rs. 27.09 as on March 31, 2006
is 8.23%.
5. Net Asset Value (NAV)
a. NAV per Equity Share at March 31, 2006 is Rs. 251.30 per share. NAV per Equity Share at September 30,
2006 is Rs. 275.51.
b. NAV per Equity Share after the Issue is Rs. 329.07.
c. Issue Price per Equity Share is Rs. 793.
d. NAV per Equity Share for the year ended March 31, 2004, 2005 and 2006 is as follows:
Financial Period Net Asset Value per Equity Share (Rs.) Weight
Year ended March 31, 2004 180.40 1
Year ended March 31, 2005 186.14 2
Year ended March 31, 2006 251.30 3
Weighted Average 217.76
6. Comparison of Accounting Ratios for the year ended March 31, 2006 with other listed companies
We have diversified businesses; hence there are no other listed companies that form part of our peer group.
The Lead Managers believe that the Issue Price of Rs.793 is justified in view of the above qualitative and quantitative
parameters. See the section titled “Risk Factors” on page viii of this Letter of Offer and the financials of the
Company including important profitability and return ratios, as set out in the Auditors Report on page145 of this
Letter of Offer a more informed view.
30
ADITYA BIRLA NUVO LIMITED
STATEMENT OF TAX BENEFITS
The following key tax benefits are available to the Company and the prospective shareholders under the current direct
tax laws in India.
The tax benefits listed below are the possible benefits available under the current tax laws presently in force in India.
Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the
relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax benefits is dependent upon
fulfilling such conditions, which based on business imperatives it faces in the future, it may not choose to fulfill. This
Statement is only intended to provide the tax benefits to the company & its shareholders in a general and summary
manner and does not purport to be a complete analysis or listing of all the provisions or possible tax consequences of
the subscription, purchase, ownership or disposal etc. of shares. In view of the individual nature of tax consequence and
the changing tax laws, each investor is advised to consult his/ her own tax adviser with respect to specific tax implications
arising out of their participation in the issue.
1. Key benefits available to the Company under the Income-tax Act, 1961 (‘the Act’)
A) BUSINESS INCOME:
i. Depreciation
The Company is entitled to claim depreciation on specified tangible and intangible assets owned by it and
used for the purposes of its business under section 32 of the Act
In case of any new plant and machinery (other than ships and aircraft) that will be acquired by the company,
the company is entitled to a further sum equal to twenty per cent of the actual cost of such machinery or plant
subject to conditions specified in section 32 of the Act.
Unabsorbed depreciation if any, for an Assessment Year (AY) can be carried forward & set off against any
source of income in subsequent AYs as per section 32 of the Act
ii Preliminary Expenditure:
As per Section 35D, the Company is eligible for deduction in respect of specified preliminary expenditure
incurred by the Company in connection with extension of its industrial undertaking or in connection with
setting up a new industrial unit for an amount equal to 1/5th of such expenses over 5 successive AYs subject
to conditions and limits specified in that section.
iii Expenditure incurred on voluntary retirement scheme:
As per Section 35DDA, the Company is eligible for deduction in respect of payments made to its employees
in connection with his voluntary retirement for an amount equal to 1/5th of such expenses over 5 successive
AYs subject to conditions specified in that section
iv Expenditure on Scientific Research:
As per Section 35, the Company is eligible for -
(a) deduction in respect of any expenditure (not being expenditure on acquisition of land) on scientific
research related to the business subject to conditions specified in that section
(b) deduction in respect of any expenditure (not being expenditure on acquisition of land) on scientific
research on in-house research and development facility as approved by prescribed authority provided
that the company enters into an agreement with the prescribed authority for co-operation in such research
and development facility and for audit of the accounts maintained for that facility for an amount equal to
one and one fourth of such expenditure and subject to conditions specified in that section
31
v. Deductions under Chapter VI-A of the Act:
As per section 80-IA and 80-IB, the company is eligible for deduction of an amount equal to specified per
cent of the profits and gains derived by specified industrial undertakings for such number of assessment
years as may be specified subject to the conditions specified in that section.
vi. Carry forward of business loss
Business losses if any, for any AY can be carried forward and set off against business profits for eight
subsequent AYs.
vii. MAT Credit:
As per section 15JAA(1A), the company is eligible to claim credit for Minimum Alternate Tax (“MAT”) paid for
any AY commencing on or after April 1, 2006 against normal income tax payable in subsequent A.Ys. MAT
credit shall be allowed for any A.Y. to the extent of difference between the tax computed as per the normal
provisions of the Act for that A.Y. and the MAT which would be payable for that A.Y. Such MAT credit will be
available for set-off up to 5 years succeeding the A.Y. in which the MAT credit initially arose.
B) CAPITAL GAINS:
i. Long Term Capital Gain (LTCG)
LTCG means capital gain arising from the transfer of a capital asset being Share held in a company or any
other security listed in a recognised stock exchange in India or unit of the Unit Trust of India or a unit of a
mutual fund specified under clause (23D) of section 10, held by an assessee for more than 12 months.
In respect of any other capital assets, LTCG means capital gain arising from the transfer of an asset, held by
an assessee for more than 36 months.
Short Term Capital Gain (STCG)
STCG means gain arising out of transfer of capital asset being share held in a company or any other security
listed in a recognised stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund
specified under clause (23D) of section 10, held by an assessee for 12 months or less.
In respect of any other capital asset, STCG means capital gain arising from the transfer of capital asset, held
by an assessee for 36 months or less.
ii. LTCG capital arising on transfer of equity shares or units of an equity oriented fund (as defined) which has
been set up under a scheme of a Mutual Fund specified under Section 10 (23D), on a recognized stock
exchange on or after October 1, 2004 are exempt from tax under Section 10(38) of the Act provided the
transaction is chargeable to securities transaction tax (STT) and subject to conditions specified in that section
iii. As per second proviso to section 48, LTCG arising on transfer of capital assets, other than bonds and
debentures excluding capital indexed bonds issued by Government, is to be computed by deducting the
indexed cost of acquisition and indexed cost of improvement from the full value of consideration.
iii. a As per section 112, LTCG is taxed @20% plus applicable surcharge thereon and 2% education cess on
tax plus Surcharge (if any) {hereinafter referred to as applicable SC + EC}.
iii. b However as per proviso to section 112(1), if such tax payable on transfer of listed securities/units/Zero
coupon bonds exceeds 10% of the LTCG, without availing benefit of indexation, the excess tax will be
ignored.
iv. As per section 111A of the Act, STCG arising on sale of equity shares or units of equity oriented mutual fund
(as defined) under Section 10(23D), on a recognized stock exchange are subject to tax at the rate of 10 per
cent (plus applicable SC + EC), provided the transaction is chargeable to STT.
v. As per section 71 read with section 74, Short-term capital loss arising during a year is allowed to be set-off
against short-term as well as long-term capital gains of the said year. Balance loss, if any, should be carried
forward and set-off against short-term as well as long-term capital gains for subsequent 8 years.
32
ADITYA BIRLA NUVO LIMITED
vi. As per section 71 read with section 74, Long-term capital loss arising during a year is allowed to be set-off
only against long-term capital gains. Balance loss, if any, should be carried forward and set-off against
subsequent year’s long-term capital gains for subsequent 8 year.
vii. Under section 54EC of the Act, capital gains arising on the transfer of a long-term capital asset will be exempt
from capital gains tax if such capital gains are invested within a period of 6 months after the date of such
transfer in specified bond issued by the following and subject to the conditions specified therein –
National Highways Authority of India constituted under section 3 of National Highways Authority of India
Act, 1988
Rural Electrification Corporation Limited, a company formed and registered under the Companies Act,
1956
If only part of the capital gains is so reinvested, the exemption shall be proportionately reduced.
However, if the new bonds are transferred or converted into money within three years from the date of their
acquisition, the amount so exempted shall be taxable in the year of transfer.
C) Income from Other Sources
Dividend income:
Dividend (both interim and final) income, if any, received by the Company on its investment in shares of another
Domestic Company shall be exempt from tax under Section 10(34) read with Section 115-O of the Act
Income received in respect of units of a Mutual Fund specified under Section 10(23D) of the Act shall be exempt
from tax under Section 10(35) of the Act, subject to such income not arising from transfer of units in such Mutual
Fund.
D) Others
To the extent the funds raised from the proposed Right Offer of Equity Shares are utilized to reduce the debts
raised for investment purposes, the corresponding interest expenses of the company will be reduced and the
consequential disallowance of such interest expenses under section 14A of the Act will be reduced.
2. Key benefits available to the Members of the Company
2.1 Resident Members
a Dividend income:
Dividend (both interim and final) income, if any, received by the resident shareholder from a domestic company
is exempt under Section 10(34) read with Section 115O of the Act.
b Capital gains:
i. Benefits outlined in Paragraph 1(B) above are also applicable to resident shareholders. In addition to
the same, the following benefits are also available to resident shareholders.
ii. As per Section 54F of the Act, LTCG arising from transfer of shares will be exempt from tax if net
consideration from such transfer is utilized within a period of one year before, or two years after the
date of transfer, in purchase of a new residential house, or for construction of residential house within
three years from the date of transfer and subject to conditions and to the extent specified therein.
c Rebate:
In terms of Section 88 E of the Act, STT paid by a shareholder in respect of taxable securities transactions
(i.e. transaction which is chargeable to STT) entered into in the course of business would be eligible for
rebate from the amount of income-tax on the income chargeable under the head ‘Profits and Gains under
Business or Profession’ arising from taxable securities transactions subject to conditions and limits specified
in that section.
33
2.2 Key Benefits available to Non-Resident Member
a Dividend income:
Dividend (both interim and final) income, if any, received by the non-resident shareholders from a domestic
company shall be exempt under section 10(34) read with Section115-O of the Act
b Capital gains:
Benefits outlined in Paragraph 2.1(b) above are also available to a non-resident shareholder except that as
per first proviso to Section 48 of the Act, the capital gains arising on transfer of capital assets being shares of
an Indian Company need to 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. The resultant gains thereafter need to
be reconverted into Indian currency. The conversion needs to be at the prescribed rates prevailing on dates
stipulated. Further, the benefit of indexation as provided in second proviso to section 48 is not available to
non-resident shareholders
c Rebate:
Benefits outlined in Paragraph 2.1.c above are also applicable to the non-resident shareholder
d Tax Treaty Benefits:
As per Section 90 of the Act, the shareholder can claim relief in respect of double taxation if any as per the
provision of the applicable double tax avoidance agreements
e Special provision in respect of income / LTCG from specified foreign exchange assets available to Non
resident Indians under Chapter XII-A
i. Non-Resident Indian (NRI) means a citizen of India or a person of Indian origin who is not a resident.
Person is deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was
born in undivided India
ii. Specified foreign exchange assets includes shares of an Indian company acquired/purchased/subscribed
by NRI in convertible foreign exchange
iii As per section 115E, income [other than dividend which is exempt under section 10(34)] from investments
and LTCG from assets (other than specified foreign exchange assets) shall be taxable @ 20% (plus
applicable SC + EC). No deductions in respect of any expenditure allowance from such income will be
allowed and no deductions under chapter VI-A will be allowed from such income
iv. As per section 115E, LTGC arising from transfer of specified foreign exchange assets shall be taxable
@ 10% (plus applicable SC + EC).
v. As per section 115F, such LTCG shall be exempt under section 115F, in the proportion of the net
consideration from such transfer being invested in specified assets or savings certificates within six
months from date of such transfer, subject to further conditions specified under section 115F
vi. As per section 115G, if the income of a NRI taxable in India consist only of income / LTCG from such
shares and tax has been properly deducted at source in respect of such income in accordance with the
Act, it is not necessary for the NRI to file return of income under section 139
vii. As per section 115H, the NRI can opt not to be governed by provisions of chapter XII-A for any A.Y. by
declaring the same in the return of income filed under section 139 in which case the normal benefits as
available to non-resident shareholders will be available
2.3 Key Benefits available to Foreign Institutional Investors (FIIs)
1 Dividend income:
Dividend (both interim and final) income, if any, received by the shareholder from the domestic company shall
be exempt under Section 10(34) read with Section 115O of the Act
2 Capital Gains:
i. Under Section 115AD, income (other than income by way of dividends referred in Section 115-O)
received in respect of securities (other than units referred to in Section 115AB) shall be taxable at the
34
ADITYA BIRLA NUVO LIMITED
rate of 20% (plus applicable SC & EC). No deduction in respect of any expenditure /allowance shall be
allowed from such income
ii. Under Section 115AD, capital gains arising from transfer of securities (other than units referred to in
Section 115AB), shall be taxable as follows:
As per section 111A, STCG arising on transfer of securities where such transaction is chargeable
to STT, shall be taxable at the rate of 10% (plus applicable SC & EC). STCG arising on transfer
of securities where such transaction is not chargeable to STT, shall be taxable at the rate of 30%
(plus applicable SC & EC)
LTCG arising on transfer of securities where such transaction is not chargeable to STT, shall be
taxable at the rate of 10% (plus applicable SC & EC). The benefit of indexation of cost of acquisition,
as mentioned under 1st and 2nd proviso to section 48 would not be allowed while computing the
capital gains
2.3.3. Exemption of capital gains from income-tax
i. LTCG arising on transfer of securities where such transaction is chargeable to STT is exempt from tax
under Section 10(38) of the Act
ii. Benefit of exemption under Section 54EC shall be available as outlined in Paragraph1 (B)(viii) above
2.3.4 Rebate:
Benefit as outlined in Paragraph 2.1.c. above are also available to FIIs
2.3.5 Tax Treaty Benefits:
As per Section 90 of the Act, a shareholder can claim relief in respect of double taxation, if any, as per the
provision of the applicable double tax avoidance agreements
2.4 Key Benefits available to Mutual Funds
As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under the
Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by
public sector banks or public financial institutions and Mutual Funds authorized by the Reserve Bank of India,
would be exempt from income tax, subject to the prescribed conditions
2.5 Key Benefits available to Venture Capital Companies/ Funds
As per the provisions of section 10(23FB) of the Act, income of
Venture Capital Company which has been granted a certificate of registration under the Securities and
Exchange Board of India Act, 1992 and notified as such in the Official Gazette; and
Venture Capital Fund, operating under a registered trust deed or a venture capital scheme made by Unit
Trust of India, which has been granted a certificate of registration under the Securities and Exchange Board
of India Act, 1992 and notified as such in the Official Gazette set up for raising funds for investment in a
Venture Capital Undertaking, is exempt from income tax.
3. Wealth Tax Act, 1957
Shares in a company held by a shareholder are not treated as an asset within the meaning of Section 2(ea) of
Wealth Tax Act, 1957; hence, wealth tax is not leviable on shares held in a company
4. The Gift Tax Act, 1957
Gift of shares of the company made on or after October 1, 1998 are not liable to Gift tax
Notes:
a) All the above benefits are as per the current tax law and will be available only to the sole/ first named holder in
case the shares are held by joint holders
b) In respect of non-residents, the tax rates and the consequent taxation mentioned above will be further subject to
any benefits available under the relevant DTAA, if any, between India and the country in which the non-resident
has fiscal domicile
c) In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor
with respect to specific tax consequences of his/her participation in the scheme.
35
INDUSTRY OVERVIEW
India is the 4th largest economy in the world in terms of Purchasing Power Parity (PPP), after USA, China and Japan. The
economy has grown steadily since economic reforms were initiated in the early ‘90s. The GDP has averaged a growth of
around 6% p.a. in the last 10 years and has picked up further momentum in the last few years, achieving between 6 to
8.4% growth. In 2003, India became the second fastest growing economy in the world with a growth rate of 8.2%. With
the rising incomes, per capita GDP is slated to double by 2014. (Source: Images Yearbook Volume I No. II, dt. December
31, 2005).
One of the key developments during India’s growth path has been a favorable shift towards the services sector, which
now accounts for almost 50% of the total GDP. This is being led by services such as IT, telecommunications, healthcare
and retailing. The retail industry contributes roughly 30% to the Indian GDP. According to Images-KSA estimates, private
final consumption in India was estimated at Rs. 16,900 bn (USD 375 bn) in 2003-2004. Of this retail sales contributed
almost 55% of the total consumption expenditure i.e. Rs. 9300 bn (USD 205 bn). Private consumption is expected to rise
to approximately Rs. 18,500 bn by 2005-06. (Source: Images Yearbook Volume I No. II, dt. December 31, 2005)
Our Company has a diversified product portfolio. The products range belongs to diversified industries across manufacturing
and services, with mature as well as emerging businesses. Some of the lines of our business are Garments, Rayon,
Carbon Black, Insulators, Textiles, Fertilizers, Financial Services, Software, Insurance, Telecom, BPO. This diversified
portfolio helps us to mitigate the down cycles in one business with upsides in our other business.
Garments
The garment industry is currently driven by local consumption and export orders. The industry can broadly be classified
into branded and non branded garment segment. The domination of branded garments is clearly visible in metros, grade
I and grade II cities, the unbranded garments are flourishing in the rural market. The broad segments can be further
bifurcated for men, women and kids. The surge in retail business has created its own impact on the garment industry.
The country has witnessed a retail boom in the shape of MBOs, EBOs, Department Stores and Hyper markets. The
number of Malls in the countrty is expected to increase from 158 malls (in 2005) to 500 malls (in 2010). (Source:
Technopak Analysis, Presentation to the Company)
The international garments industry over the past few years has gone through many changes. The restrictions laid by
European Union and United States of America on China till 2007 and 2008 respectively have fueled strong growth from
other countries. Due to this global scenario many companies of Indian origin have cashed in on these opportunities. The
European Union has imposed restriction on China from September 2005, while United States has imposed restriction
from October 2005. This has led to a slow down in the exports from China and in turn led to an increase of exports from
India.
The economy has seen a rapid growth in the last 3 years. The impact of this growth can be seen on the swelling middle
class. Estimated 55% of the total population of 1.08 Billion (2005) is below the age of 25 years. This directly creates a
potential demand for garments. The demographics reveal that 6% of total urban and 5% of rural areas spend on clothing
out of their total disposable income in 2005. The garment business in estimated at Rs 51000 Crores in the urban area,
Rs 37000 Crores in rural areas in 2005 and it is anticipated to grow up to Rs 100000 Crores in urban and Rs 65000
Crores in rural area by 2010. (Source: Technopak Analysis, Presentation to the Company).
The garment industry is flooded with many domestic and international brands. The consumers have a wide variety to
choose from. Many domestic brand manufacturers have entered joint ventures or have taken up the right to sell international
brands in the domestic market. Some adventures foreign brand has independently launched themselves in the market.
Availability of retail place and visibility have become a crucial issue for these players.
The domestic market has been witnessing an annual growth rate of 10%. The industry has seen consolidation in the last
few years. The players are focusing on branded segment.
The garment industry has witnessed new entrants from both the domestic and international segment, which could lead to
reduction in margins. The industry is expected to consolidate in the future and the branded garment segment is expected
to have a larger market share as the awareness towards branded apparel is on rise.
36
ADITYA BIRLA NUVO LIMITED
Viscose Filament Yarn (Rayon)
Viscose Filament Yarn is an inexpensive substitute for the precious and expensive silk fibre. Unlike most man-made
fibres, Rayon is not synthetic. It is made from wood pulp, cellulose based raw material, which is naturally occurring,
relatively inexpensive, and is a renewable resource. As a result, Rayon’s properties are more similar to those of natural
cellulosic fibres, such as cotton or linen, than those of thermoplastic, petroleum-based synthetic fibres such as nylon or
polyester.
VFY could see a significant rise in its demand because of the following factors: -
1. Excise duty on VFY has been reduced and the prices of cotton fibre has increased thus making VFY more
competitive.
2. Blended fibre in trend.
3. Anti-dumping duty has been imposed on China, thus making imports more expensive and less profitable.
In 2005-06 the domestic demand of viscose rose by 3.7%. In the past VFY players have enjoyed higher margins. But in
recent times the prices of substitutes have reduced and thus the outlook on VFY will be stable. The raw material costs
are expected to be high due to high level of caustic soda prices and firm pulp prices.
Gujarat, Tamil Nadu, Delhi and Maharashtra are the major markets for viscose filament yarn. It is used as an inferior
substitute for silk, as it looks quite similar to silk.
State 2003-04 (%) 2004-05 (%) 2005-06 (%)
Delhi 9.44 9.60 9.24
Gujarat 43.94 42.73 47.43
Haryana 4.13 4.56 4.33
Karnataka 4.60 3.71 3.61
Maharashtra 9.28 8.51 8.56
Punjab 4.84 7.06 5.16
Tamil Nadu 12.33 13.02 12.17
Others 11.44 10.04 9.50
Total 100.00 100.00 100.00
(Source: Association of Man-made Fibre Industry of India, Bulletin)
The below graph indicate the price of VFY (including excise and delivery charges) over nine years. The prices are for
120 denier bright yarn.
Rs/KG
(Source: Association of Man-made Fibre Industry of India, Bulletin)
150
160
170
180
190
200
210
220
230
240
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Apr-06 Jun-06
37
Currently, the VFY industry consists of five players. Century Textiles is the largest player with about 29 per cent capacity
share. The other players are NRC, Aditya Birla Nuvo, Kesoram Industries and Baroda Rayon. Market share in terms of
production is given in the pie chart.
(Source: Association of Man-made Fibre Industry of India, Bulletin)
The industry can expect stable demand and reasonable demand over the next 5 years.
Carbon Black
The major demand for carbon black is from the tyre and rubber industry. Any changes in the automobile sector will have
a direct impact on the domestic and international carbon black industry.
International
In the last few years the prices of carbon black feedstock (CBFS) cost has increased substantially, from an average of
$180 per tonne in 2004-05 to $300 per tonne in 2005-06. The prices of carbon black has increased in line with the
increase in crude prices, but industry players have not been able to pass on the cost due to relatively low bargaining
power with customers.
Domestic
In the domestic market, the tyre industry is the largest consumer of carbon black is expected to grow around 9-10% in
2006-07 due to increase in replacement market growth and heavy growth in car and two wheeler segments.
As the demand for carbon black is mainly arising from tyre industry, which consumes 65% of the total production. Carbon
black, which accounts for 35% by weight and 16% by the value of raw materials used for making automobile tyres,
follows the growth trends in the tyre industry which in turn is dependent on the automobile industry.
Currently, the Carbon Black industry consists of five players. Philips Carbon Black limited is the largest player with about
44 per cent production share in India. The other players are Aditya Birla Nuvo, Continental, Cabot India Limited and
Ralson.
Capacity share in terms of production of 2005-06
(Source: Association of Carbon Black Manufacturers of India)
Aditya
Birla
Nuvo
33%
National
Rayon
26%
Baroda
Rayon
6%
Century
Rayon
35%
Philips
Carbon
Black
44% Continental
11%
NUVO
35%
Cabot India
9%
Ralson
1%
38
ADITYA BIRLA NUVO LIMITED
Exports also plays a significant role in the carbon black industry. Over the years it has been observed that nearly 1/5th
part of the production is exported. The global tyre and auto ancillary industry plays a very crucial role in the export of
carbon black.
Carbon Black demand is directly dependent on the overall economy of the country. An increase in infrastructure, consumer
and corporate spending on automobiles will directly impact the industry. However, volatile CBFS prices have a great
bearing on the margins of the business.
Fertilizers
Agriculture accounts for 22% of GDP and provides sustenance to two-thirds of our population; besides this it provides
crucial backward and forward linkage to the rest of the economy. Over the years five years plans have laid stress on self
sufficiency, the direct impact of which is the rise in food grains from a modest 52 million MT in 1951-52 to 232.31 million
MT in 2004-05. The success of the agricultural sector is largely credited to the use of fertilizers, hybrid variety of seeds
and better irrigation facility. (Source: Annual Report 2005-06 Government of India, Department of Fertilizers, Ministry of
Chemicals and Fertilizers)
The fertilizer industry made a humble beginning in 1906 and gained impetus during the green revolution during the late
sixties. Fertilizers provide the basic nutrients to soil, which replenishes the deficiency in the soil. They can be in three
forms chemical fertilizers, bio-fertilizers and farm manure. Chemical fertilizer supplies nutrients like nitrogen, phosphorus
and potassium, however the concentration in chemical fertilizers is expressed as a percentage of total nitrogen, available
phosphate and soluble. (Source: Annual Report 2005-06 Government of India, Department of Fertilizers, Ministry of
Chemicals and Fertilizers)
Public, cooperative and private sector have historically played a crucial role in increasing the installed capacity of
fertilizers.
Sector-wise, Nutrient-wise Installed Capacity of Fertilizer Manufacturing Units as on October 31, 2005.
(N – Nitrogenous Nutrients and P – Phosphatic Nutrients)
Sr. Sector Capacity (lakh M.T.) Percentage Share
No. N P N P
1 Public Sector 34.98 4.20 29.00 7.50
2 Cooperative Sector 28.44 9.10 23.60 16.20
3 Private Sector 57.19 42.90 47.40 76.30
Total 120.61 56.20 100.00 100.00
[Source : Annual Report 2005-06, Government of India, Department of Fertilizers, Ministry of Chemicals and Fertilizers]
Urea is a widely utilized fertilizer across the globe. Urea is the only fertilizer under price and partial movement control of
Government of India. Allocation of urea was restricted to 50% of production of re-assessed capacity of each manufacturer
during Kharif 2005 and Rabi 2005-06, the rest of the quantity can be sold by manufacturer anywhere in the country at
notified maximum retail price.
[Source : Annual Report 2005-06, Government of India, Department of Fertilizers, Ministry of Chemicals and Fertilizers]
The international urea prices are often subjected to volatility. The international market is very sensitive to demand and
supply scenario. Actions are taken by the government for securing additional supply of urea by permitting economically
efficient indigenous units to produce beyond their reassessed capacity to substitute imports. In FY 2006 the country has
57 large size fertilizer units manufacturing a wide range of fertilizers, of these there are 29 urea units.
[Source : Annual Report 2005-06, Government of India, Department of Fertilizers, Ministry of Chemicals and Fertilizers]
The source of energy in the production of Urea is very crucial. Efforts are being made by the Government and private
players to find alternative sources like liquefied natural gas, coal gasification etc. to overcome the constraints in the
domestic availability of cheap and clean feedstock, particularly for the production of urea.
39
To support a growing population like ours and to remain self sufficient in food grains, fertilizers will play a very crucial
role.
Textiles
The Indian Textile industry has a very overwhelming presence in the economic life of the country. Apart from providing
basic necessities of life, the textile industry also plays a pivotal role through its contribution to industrial output, employment
generation and export earnings to the country. Currently it contributes to 14% to industrial production, 4% of GDP and
16% to country’s export earnings. Textile is the second largest employment provider after agriculture. [Source: Ministry of
Textile; Annual Report 2005-06]
The Textile industry can be broadly classified into hand spun and hand woven sector on one end of the spectrum and
the capital intensive, sophisticated mill on the other side. The major sectors forming part of the textile industry include the
organized cotton/ man made fibre textile mill industry; man made fibre filament yarn industry, the decentralized power
loom sector woollen textile, silk industry, handloom industry, handicraft industry, jute industry and textile exports. (Source:
Ministry of Textile; Annual Report 2005-06). Domestic consumption of textiles in India is currently low by international
standards.
Linen Segment: Linen is a natural fabric produced from natural fibres, i.e., flax. Flax fibre is grown mainly in Belgium and
France. In India, ABNL is the major player in linen spinning business.
Worsted Segment: The woolen industry in the country is small in size and scattered. It is primarily located in Punjab,
Haryana, Rajasthan, U.P., Maharashtra and Gujarat, with 40% of units being located in Punjab, 27% in Haryana, 10% in
Rajasthan, while the remaining 23% is located in the rest of the states.
Synthetic segment: Synthetic textiles comprise about 50 per cent of the global textile market. Indian synthetic industry,
however, is not well entrenched.
Financial Services
Post economic liberalization in 1991 the Indian financial services industry has experienced significant growth. During the
last decade, there has been a considerable broadening and deepening of the Indian financial markets. Indian markets
have witnessed introduction of newer financial instruments and products over the years. Existing sectors have been
opened to new private players. This has given a strong impetus to the development and modernization of the financial
services sector. The entry of new players has resulted in a more sophisticated range of financial services being offered
to corporate and retail customers which has compelled the existing players to upgrade their product offerings and
distribution channels.
The financial services marketplace is experiencing a profound change as thirty million people in the middle class are
entering their prime saving and investing years. These people are willing to use advanced communication tools, such as
computers and telephones, and want to take charge of their personal investment decisions.
The Indian capital markets have witnessed a transformation over the last decade. India now finds its place amongst some
of the most sophisticated and largest markets of the world. With over 20 million shareholders, India has the third largest
investor base in the world after the USA and Japan. Over 9,000 companies are listed on Indian stock exchanges. The
Indian capital market is significant in terms of the degree of development, volume of trading and its tremendous growth
potential.
Opportunities offered in the retail financial services sector are coupled with several challenges. The sector requires
extremely effective distribution systems that are capable of offering flexibility and convenience to the customer, while
maintaining cost-efficiency. There has been a clear shift towards those entities that are able to offer products and
services in the most innovative and cost efficient manner. The financial sector will need to adopt a customer-centric
business focus. It will also have to create value for its shareholders as well as its customers, competing for the capital
necessary to fund growth as well as for customer market share.
Investors want to utilize the favorable primary market conditions to invest in IPO. Investors who don’t have their own
resources can resort to IPO financing. Bank and NBFC provide loans to investors to invest in IPO. The IPO funding is
done on many criteria like the credit worthiness of the investor, the quality of the promoter coming out with the issue, the
money market condition in the market and overall performance of the stock market. Enthusiasm showed by investors has
led to developing new products to take advantage of the stock market rise and to put the excess liquidity in the industry
to fruitful use.
40
ADITYA BIRLA NUVO LIMITED
Insulators
India historically has been a power deficient country. The sector’s growth has been adversely affected due to paucity of
funds, high level of transmission, commercial losses, outdated and ageing network, lack of formal grid discipline and
bureaucratic policies. As of 2005-06 the total installed capacity is to the tune of 1,26,839 MW. The per capita consumption
of power is 606 KWH/ per year in 2005-06, which is abysmally low compared to many developed nations. Rural
electrification has been a concern for many decades. As per the 1991 Census there are 593732 villages and as on May
30, 2006 only 439502 villages have been electrified. This leaves 26% of the villages yet to be electrified. Metropolitan
cities are witnessing load shedding, which hampers productivity and adds to economic cost. The power sector will
require additional investment over the years to fulfill the government’s vision of power for all till 2012. Some of the allied
industries will gain from the development of the power sector.
In the power sector, India is going through a sea change. The country is facing a huge demand and supply gap. The
expected investment in power sector to support the growing industry and population is to the tune of Rs. 9,00,000 crores.
As per the tenth five-year plan (2002-2007) capacity addition projected is 41,110 MW. In the eleventh five year plan
(2007-2012) is anticipated to be in tune of 60,769 MW. The expansion of the power sector will directly benefit the
insulator business.
An insulator is a material or object which contains no movable electrical charges. When a voltage is placed across an
insulator, no charges flow, so no electric current appears. Its products include hollow, solid core, disc, pin/post insulators
which are mainly used in transmission and distribution of electricity and related equipment.
The Indian insulator industry is largely fragmented in the organized and unorganized sectors. The organized sector has
the major market share. Over the years with rural electrification on rise, there has been an increase in the demand of
Disc from transmission sector. It is anticipated that the demand for the insulator is to increase at a CAGR of 12%.
41
OUR BUSINESS
Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the 12-month period
ended March 31 of that year. In this section, any reference to “we”, “us” or “our” refers to Aditya Birla Nuvo Limited.
Unless otherwise stated, the financial information used in this section is derived from our consolidated audited financial
statements under Indian GAAP, as restated.
INTRODUCTION
We are the flagship company of the Aditya Birla Group, which is currently one of the largest business groups in India in
terms of market capitalisation. Aditya Birla Nuvo Limited (formerly known as Indian Rayon and Industries Limited) is the
Aditya Birla Group’s most diversified conglomerate, with a consolidated net turnover of Rs. 4830.34 crores for fiscal 2006.
We were incorporated in 1956 and are listed on the Bombay Stock Exchange Limited and the National Stock Exchange
of India Limited.
We believe we are one of India’s leading players in our key business segments, such as viscose filament yarn (“VFY”),
carbon black, branded garments, fertilizers, textiles and domestic marketing of insulators. Through our subsidiaries and
joint ventures we are also engaged in other business segment, such as life insurance, telecommunication, information
technology services, business process outsourcing (BPO), asset management, manufacture of insulator and other financial
services.
The following chart illustrates our value business and high growth business as on September 30, 2006;

Value Businesses
High Growth Businesses
Textiles
Rayon
Fertiliser Carbon
Black
Insulator Subsidiaries Garments Financial
Services JV
Telecom
JV
Mutual Fund
Life Insurance
Distribution
IT
ITeS
42
ADITYA BIRLA NUVO LIMITED
The following chart illustrates our consolidated revenue mix as on March 31, 2006.
Given below are the brief profiles of our various businesses:
Garments
We believe we are one of India’s largest branded apparel company through our Madura Garments Division, with
brands like Louis Philippe, Van Heusen, Allen Solly, Peter England, and SF Jeans retailed through our franchisees
and other multi brand outlets. We have retail space spread over 3.3 lakh square feet across India as of September
30, 2006. As at March 31, 2006, ABNL has 164 stores across the country, including 112 exclusive brand outlets.
In the half year ended September 30, 2006, the revenue generated from the Garments business was Rs. 406.64
crore, which was 11.87% of our total revenue and the PBIT of the business was Rs. 33.18 crore, which is 10.21%
of our total PBIT. In fiscal 2006, the segment revenue generated from the Garment business was Rs. 620.56 crore,
which was 12.85% of our total revenue and the PBIT of the business was Rs. 33.09 crore, which is 8.91% of our
total PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Garment business was Rs.
472.62 crore, which was 14.82% of our total revenue and the PBIT was Rs. 13.23 crore.
Carbon Black
We believe we are one of the largest producers of carbon black in India with a manufacturing capacity of 170,000
mtpa, as on September 30, 2006 spread across two manufacturing units. One of our units is located in Renukoot,
Uttar Pradesh, and has a capacity of 80,000 mtpa. The other unit is located in Gumidipoondi in Tamil Nadu with an
installed capacity of 90,000 mtpa. We market carbon black under the ‘Birla Carbon’ brand.
Pursuant to a consent order from the Tamil Nadu Pollution Control Board under section 21, the Gumidipoondi unit
has begun work on brownfield expansion of 55,000 MT which is likely to be completed by June 2007.
In the half year ended September 30, 2006, we produced 91,030 mt and sold 90,500 mt of Carbon Black. The
revenue generated from the Carbon Black business was Rs. 360.70 crore, which was 10.53% of our total revenue
and the PBIT of the business was Rs. 54.84 crore, which is 16.86% of our total PBIT. In fiscal 2006, we produced
175,080 mt as compared to 164,025 mt in fiscal 2005. The segment revenue generated from the Carbon Black
business was Rs. 564.21 crore, which was 11.68% of our total revenue and the PBIT was Rs. 75.85 crore, which
is 20.41% of our total PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Carbon
Black business was Rs. 467.25 crore, which was 14.65% of our total revenue and the PBIT was Rs. 60.32 crore.
Textiles
We are present in three segments of textiles namely Linen segment (flax yarn, linen fabrics), Worsted segment
(wool tops, worsted yarn) and synthetic segment. We are a sizeable player in Linen and worsted segment. Our
installed capacity as on September 30, 2006 is 8,184 spindles of flax yarn, 22,348 spindles of worsted yarn and
47,940 spindles of synthetic yarn. We also have capacity of 8,000 tpa in wool combing and 62 looms for weaving
of linen fabrics. We plan to increase our capacity in the case of flax spinning by 7,000 spindles and for fabric
manufacture by 50 looms. Our manufacturing units are located at Rishra and Midnapur in West Bengal. Flax and
worsted yarn are marketed under ‘Jaya Shree’ brand and Linen Fabrics under the brand ‘Linen Club’
In the half year ended September 30, 2006, the revenue generated from the Textile business was Rs. 306.48 crore,
which was 8.95% of our total revenue and the PBIT of the business was Rs. 28.19 crore, which is 8.66% of our
total PBIT. In fiscal 2006, the segment revenue generated from the textile business was Rs. 524.88 crore, which was

Ot h er s
( Rs 11 Cr )
0%
Te l ec om
( Rs 3 88
Cr )
8 %
BP O
( Rs 16 2
Cr )
3 %
Fi na nc i al
Ser v i c e s
( Rs. 7 1 Cr )
1%
Li f e
I n su r an c e
( Rs 13 98
Cr )
2 9%
Gar men t s
( Rs 62 1
Cr )
13%
I n su l a t o r s
( Rs 24 9
Cr )
5%
Fe r t i l i ser s
( Rs 36 9
Cr )
8%
Tex t i l es
( Rs 5 25
Cr )
11%
Ca r bo n
Bl a c k ( Rs
56 4 Cr )
12%
I T
Se r v i c e s
( Rs 86 Cr )
2%
Ra y o n
( Rs 38 6
Cr )
8%
43
10.87% of our total revenue and the PBIT was Rs. 41.44 crore, which is 11.15% of our total PBIT of Rs. 371.55
crore. In fiscal 2005, the segment revenue generated from the textile business was Rs. 456.12 crore, which was
14.30% of our total segment revenue and the PBIT was Rs. 19.79 crore.
Rayon
We believe we are one of the largest producers of Viscose Filament Yarn (VFY) in India with a capacity of 16,000
mtpa. Our Rayon Division is located at Veraval in Gujarat and also has capacity to manufacture Caustic Soda and
allied chemicals. We market our VFY product under ‘RAY ONE’ brand. As at September 30, 2006, we have
36.5MW power plant for captive consumption.
In the half year ended September 30, 2006, VFY production stood at 8,824 mt while caustic production stood at
33,426 mt. In fiscal 2006, we have produced 17233 mt of VFY as compared to 16420 mt in fiscal 2005. In fiscal
2006 we have produced 57051 mt of caustic soda as compared to 45457 mt in fiscal 2005.
In the half year ended September 30, 2006, the revenue generated from the Rayon business was Rs. 224.56 crore,
which was 6.56% of our total revenue and the PBIT of the business was Rs. 52.4 crore, which is 16.11% of our
total PBIT. In fiscal 2006, segment revenue generated from the Rayon business was Rs. 385.55 crore, which was
7.98% of our total revenue and the PBIT was Rs. 64.22 crore, which is 17.28% of our total PBIT of Rs. 371.55
crore. In fiscal 2005, the segment revenue generated from the Rayon business was Rs. 352 crore, which was
11.04% of our total revenue and the PBIT was Rs. 66.32 crore.
Fertilizer
We are one of the producers of urea in India with re-assessed capacity of 864,600 mtpa on March 31, 2006. Our
manufacturing unit is located at Jagdishpur, Uttar Pradesh, in the heartland of the North Indian Gangetic agricultural
belt. We market our products under the ‘Shaktiman’ Brand and also deal in traded products to meet the farmers’
requirements.
In the half year ended September 30, 2006, the revenue generated from the Fertilisers business was Rs. 351.02
crore, which was 10.25% of our total revenue and the PBIT of the business was Rs. 35.49 crore, which is 10.92%
of our total PBIT. In fiscal 2006, the segment revenue generated from the Fertilizer business was Rs. 368.98 crore,
which was 7.64% of our total revenue and the PBIT was Rs. 51.52 crore, which is 13.87% of our total PBIT of Rs.
371.55 crore. This represents 7 months working of the fertilizer unit, which became a division of the Company with
effect from September 1, 2005 pursuant to the merger of Indo Gulf Fertilizers Limited with us.
Insulators (Domestic Marketing unit)
We manufacture insulators through our subsidiary Birla NGK Insulators Limited. Our Company enjoys marketing
rights of insulators in India.
In the half year ended September 30, 2006, the segment revenue generated from the insulator domestic marketing
business on standalone basis was Rs. 52.24 crore and the PBIT loan standalone basis was Rs. 14.26 crore. In
fiscal 2006, the segment revenue generated from the insulator domestic marketing business on standalone basis
was Rs. 135.89 crore and the PBIT on standalone basis was Rs. 30.32 crore. In fiscal 2005, the segment revenue
generated from the insulator domestic marketing business on standalone basis was Rs. 100.12 crore and the PBIT
on standalone basis was Rs. 21.52 crore.
Financial Services
Under our Financial Services business we provide services mainly in Collateral financing and Corporate financing
which include amongst others Initial Public Offering (“IPO”), financing, loan against Shares and Bill Discounting.
However, a certain portion of this business is now being pursued by us through our subsidiary Birla Global Finance
Company Limited.
In the half year ended September 30, 2006, the segment revenue generated from the Financial Services business
on standalone basis was Rs. 20.28 crore and the PBIT on standalone basis was Rs. 6.58 crore. In fiscal 2006, the
segment revenue generated from the Financial Service business on standalone basis was Rs. 31.64 crore and the
PBIT on standalone basis was Rs. 11.38 crore. This represents 7 months working of the financial services business,
which has became a division of the Company w.e.f. September 1, 2005 pursuant to the merger of Birla Global
Financial Limited with us.
44
ADITYA BIRLA NUVO LIMITED
Brief Profiles of our Subsidiary and Joint Venture businesses are given below:
Our Subsidiaries
Life Insurance (through Birla Sun Life Insurance Co. Limited)
We have a presence in life insurance through our subsidiary Birla Sun Life Insurance Company Limited wherein
we hold 74% shareholding and rest is with our joint venture partner, Sun Life Financial Incorporated, Canada. As
on March 31, 2006 Birla Sun Life Insurance Co. Limited (“BSLI”) is the fifth largest private sector player in the life
insurance business in terms of premium collected. (Source: Insurance Regulatory and Development Authority –
Journal – May 2006)
In the half year ended September 30, 2006, the segment revenue generated from the Life Insurance business was
Rs. 745.89 crore, which was 21.77% of our total revenue and the PBIT of the business was negative Rs. 40.96
crore. In fiscal 2006, the segment revenue generated from the Insurance business was Rs. 1398.48 crore, which
was 28.95% of our total revenue and PBIT was negative Rs. 57.94 crore. In fiscal 2005, the segment revenue
generated from the Insurance business was Rs. 956.19 crore, which was 29.98% of our total revenue and PBIT
was negative Rs. 60.03 crore.
Insulators (through Birla NGK Insulators Limited)
We are present in the business of manufacturing insulators in India through Birla NGK Insulators Private Limited,
formerly our joint venture company which has now become a subsidiary of our Company. We believe that Birla
NGK Insulators Limited is one of the largest producers of Insulators in India with an installed capacity of 36,000
mtpa as on March 31, 2006. Its production facilities are located at Halol in Gujarat and Rishra in West Bengal.
In the half year ended September 30, 2006, the segment revenue generated from the Insulator business was Rs.
49.41 crore and the PBIT of the business was negative Rs. 0.92 crore. In fiscal 2006, the segment revenue
generated from the Insulators business was Rs. 113.3 crore and the PBIT was Rs. 0.89 crore. In fiscal 2005, the
segment revenue generated from the Insulator business was Rs. 84.41 crore and the PBIT was negative Rs. 11.70
crore.
Business Process Outsourcing (BPO) (through TransWorks Information Services Limited (“TransWorks”))
We entered the BPO business through our acquisition of 100% stake in TransWorks in July 2003 and had a
capacity of 2,245 seats as on September 30, 2006. TransWorks provides a complete blend of Customer Relation
Management services - inbound customer service, including technical support, email / web-chat support, and
outbound telemarketing. BPO services include transaction processing, finance and accounting related services.
TransWorks has recently acquired Minacs Worldwide Incorporated, a Canadian BPO provider. Further details about
TransWorks acquisition of Minacs is provided in the ‘History and other corporate matters of the Company’ section
on page 65 of this Letter of Offer.
In the half year ended September 30, 2006, the segment revenue generated from the BPO business was Rs.
263.52 crore, which was 7.69% of our total revenue and the PBIT of the business was Rs. 20.99 crore, which is
6.45% of our total PBIT. In fiscal 2006, the segment revenue generated from the BPO business was Rs. 162.05
crore, which was 3.35% of our total revenue and the PBIT was Rs. 28.15 crore, which is 7.58% of our total PBIT of
Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the BPO business was Rs. 107.78 crore,
which was 3.38% of our total revenue and the PBIT was Rs. 2.47 crore.
Information Technology (through PSI Data Systems Limited)
We forayed into the Information Technology sector through the acquisition of 70.35% stake in PSI Data Systems
(“PSI”) in 2001. PSI’s service offerings include application/ product development, enhancement, maintenance, and
migration/re-engineering. PSI has its primary focus in the banking and financial sector by providing both corporate
and retail banking services and also provides insurance, hi tech solutions and manufacturing and retail solutions.
In the half year ended September 30, 2006, the segment revenue generated from the IT Services business was Rs.
46.68 crore, which was 1.36% of our total revenue and the PBIT of the business was Rs. 2.81 crore, which is
0.86% of our total PBIT. In fiscal 2006, the segment revenue generated from the IT Services business was Rs.
85.77 crore, which was 1.78% of our total revenue and the PBIT was Rs. 3.78 crore, which is 1.02% of our total
PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the IT Services business was Rs.
82.02 crore, which was 2.57% of our total revenue and has incurred a loss of Rs. 0.55 crore at PBIT.
45
Our Joint Venture
Telecommunication (through IDEA Cellular Limited (“IDEA”))
We are present in the business of mobile telecommunication through joint venture in IDEA Cellular Limited (IDEA),
our share being 35.7%, Other Promoter Group Companies namely Grasim Industries Limited, Hindalco Industries
Limited and Birla TMT Private Limited holds 29.4% as on December 04, 2006. IDEA is the fourth largest mobile
telephony service providers in India in the GSM segment with over 10.4 mn subscribers as on September 30, 2006.
IDEA provides mobile telephony service in 11 circles, operating in Maharashtra (including Goa but excluding
Mumbai metro), Gujarat, Madhya Pradesh, Andhra Pradesh, Delhi metro service area, Kerala, Haryana, Uttar
Pradesh (West), Rajasthan, Himachal Pradesh and Uttar Pradesh (East). IDEA has recently received a letter of
intent for award of licence to provide unified access services in the Mumbai Metro service area.
In the half year ended September 30, 2006, the segment revenue generated from the Telecom business was Rs.
562.38 crore, which was 16.42% of our total revenue and the PBIT of the business was Rs. 104.28 crore, which is
32.09% of our total PBIT. In fiscal 2006, the segment revenue generated from the Telecom business was Rs.
388.32 crore, which was 8.04% of our total revenue and the PBIT was Rs. 73.10 crore, which is 19.67% of our total
PBIT of Rs. 371.55 crore. In fiscal 2005, the segment revenue generated from the Telecom business was Rs. 96.91
crore, which was 3.04% of our total revenue and the PBIT was Rs. 16.69 crore. We have, during the current fiscal
year, enhanced our holding in IDEA Cellular Limited from 4.28% to 20.74% in September 2005 and from 20.74%
to 35.74% in June 2006.
Asset Management (through Birla Sun Life Asset Management Co. Limited)
We are present in the Asset Management business through our joint venture with Sun Life Financials Inc of
Canada wherein we hold 50% shareholding. Birla Sun Life Asset Management Co. Limited had domestic Assets
under Management of Rs 14,615 crores as on September 30, 2006 (Source: Association of Mutual Funds in India
website) and is one of the oldest private players in the industry.
The consolidated revenues (net of excise and inter segment) from each of our business segments for the periods stated
are as follows:
(in crores)
Business Segment Revenues
Sr. Business Fiscal Year Ended March 31,
No. Segment 2004 2005 2006 H1 FY 2007
Rs. (in % Rs. (in % Rs. (in % Rs. (in %
crores) crores) crores) crores)
1 Garment 391.68 16.29 472.62 14.82 620.56 12.85 406.64 11.87
2 Carbon Black 340.30 14.15 467.25 14.65 564.21 11.68 360.70 10.53
3 Textiles 397.00 16.51 456.12 14.30 524.88 10.87 306.48 8.95
4 Rayon 335.17 13.94 352.00 11.04 385.55 7.98 224.56 6.55
5 Fertilizers * NA NA NA NA 368.98 7.64 351.02 10.25
6 Insulators 154.35 6.42 184.53 5.79 249.19 5.16 101.65 2.97
7 Financial Service * NA NA NA NA 70.97 1.47 52.18 1.52
8 Life Insurance 545.26 22.68 956.19 29.98 1,398.48 28.95 745.89 21.77
9 Business Process
Outsourcing 57.28 2.38 107.78 3.38 162.05 3.35 263.52 7.69
10 IT Services 85.98 3.58 82.02 2.57 85.77 1.78 46.68 1.36
11 Telecommunication 55.56 2.31 96.91 3.04 388.32 8.04 562.38 16.42
12 Others 41.66 1.73 13.70 0.43 11.37 0.24 4.11 0.12
TOTAL 2,404.24 100.00 3,189.11 100.00 4,830.33 100.00 3425.81 100.00
46
ADITYA BIRLA NUVO LIMITED
Our Strengths
A Diversified Business Portfolio
We have a strong portfolio of diversified businesses across manufacturing and services, in most of which we have a
significant market presence. Our business portfolio also has a blend of high growth and emerging businesses, and stable
and mature businesses. This allows us to de-risk ourselves from the dynamics of any particular industry and has also
helped us generate cash flows from our mature businesses, which we have been able to invest in our emerging
businesses to create value for shareholders.
Strong Brands
We believe that as a consolidated Company, our continuing efforts on brand building have resulted in the development
and strengthening of a range of strong, distinctive brands like ‘Louis Philippe’, ‘Van Heusen’, ‘Allen Solly’, ‘Peter England’
in Garment business, ‘RAY ONE’ in the Rayon business, ‘Birla Carbon’ in the Carbon Black business, ‘Linen Club’ in the
Textile business and ‘Shaktiman’ in the Fertilizer business, which we believe enables us to derive benefits in the market
space, through greater consumer confidence and in certain cases a premium pricing for our various products as against
our competitors. We believe we are able to leverage our brands to launch new products and extend into new product
categories like transforming our brands in Garments business from pure shirts brands to wardrobe brands by introducing
range of products namely suits, jackets, t-shirts, accessories etc, which are further being transformed to life style brands
by introducing perfumes, shoes. Also, Allen Solly mainly a men’s brand was extended to offer women apparels. We
believe that in the process of building these brands we have gained valuable insight into our clients / consumer
behaviour, which we leverage and utilize to drive business in today’s competitive markets. Our brands have also won
various awards and recognitions in both national and international forums. For a detailed description of various awards
and recognitions won by the Company, please refer to the section titled “History and Certain Other Corporate Matters” on
page 65 of this Letter of Offer.
Integrated Manufacturing
We have sizeable integrated manufacturing facilities for most of our businesses with access to captive power and in
house manufacturing of key inputs like caustic soda for VFY, wool top for worsted yarns, and ammonia for urea. Our
manufacturing base helps us to have a control on our production and also allow us to manufacture high quality products
on an efficient basis and at low cost. We believe our facilities help us to substantially reduce new product /design
development time and cost and ensure continued availability of our products to customers.
Focus on Quality
We believe that we have established our reputation as a reliable manufacturer of products in all of our units namely
carbon black, textile, fertilizer, rayon and insulator. We have received various accreditations for our manufacturing units.
For more details on the various certifications received by us, please refer to the section titled “History and Corporate
matters” on page 65 of this Letter of Offer.
Track record of handling large projects and successful acquisitions
Since our inception, we have implemented several expansions at our existing facilities as well as greenfield projects. We
have also successfully completed and integrated several acquisitions, including the acquisition/merger of Madura Garments,
PSI Data Systems, TransWorks, and Indo Gulf Fertilizer to name a few. We believe that our knowledge of multiple
businesses, acquisition experience and project management expertise positions us to leverage emerging opportunities in
all the segments of our businesses.
Experienced Management and Technical Team
Our management team across our businesses brings with them experience in their respective business segments. We
believe that our management team is well placed to provide strategic leadership and direction to explore new emerging
opportunities in these sectors as well as constantly improve our current operations. We have witnessed low attrition of
key managerial personnel and have also recruited several professionals with domain expertise in critical areas. In the
last five years, only three key managerial personnel have left the Company due to resignation. We believe these provide
us with a significant competitive edge.
47
OUR STRATEGY
We have managed a diversified portfolio of businesses over a period of time classified into two broad segments i.e. “High
Growth Businesses” and “Value Businesses”. While the high growth businesses have potential to grow and expand
requiring funds to meet their plans, value businesses are those businesses, which have matured and are generating
stable surplus. Our strategy is to increase the share of High growth businesses in total revenue by deploying surplus
cash from Value businesses to grow the high growth businesses.
Our business segments
1. Garments
We believe we are one of the largest branded apparel Company through our Madura Garments Division with
brands like Louis Philippe, Van Heusen, Allen Solly, Peter England, SF Jeans. We have retail space close of 3.3
lakhs square feet located across India. Recently, we transferred contract business our wholly owned subsidiary for
contract export of apparels to capitalize on the growing outsourced garment manufacturing business from India
which services international brands.
The following table sets forth, our actual production and sales, and net revenue from our Garment unit during fiscal
2004, 2005 and 2006 and the period ended September 30, 2006:
(in crores)
Particulars Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Turnover (net of excise duty) (Rs. in crore) 391.7 472.6 620.6 406.6
Products
We have a portfolio of brands that we believe caters to different segments of the garments market. Each of our
brands is uniquely positioned to cater to different consumer segments. Collectively our brands cater to varying
needs like premium casuals/party wear, semi-premium office, semi-premium casuals, and accessories. The brands
offered by us are Louis Philippe, Van Heusen, Allen Solly, Peter England, SF Jeans, and Byford.
Raw material and Production process
Fabric and other components such as zips, threads, buttons and chemicals are our main raw materials. We have
authorized a few suppliers for each of the above-mentioned raw material categories to ensure quality consistency.
The fabric is sourced from mills in India. We also source the fabric from distributors appointed by the mills to reduce
the delivery time and for effective inventory management. Each fabric sample is checked for quality standards; tear
and tensile strength, colour fastness by our technicians in our in-house quality laboratory. Other components like
zippers, buttons, rivets, thread etc are either sourced from manufacturers in India or are imported. The chemicals
used in our business include imported enzymes and dyes, which are sourced from authorized dealers in India.
Since these stocks are readily available with most of our suppliers, our inventory at the shop floor is low. We
outsource our production activity to our subsidiary.
Marketing and Distribution
To enhance visibility and to ensure maximum footfalls, our stores are located in malls and high streets of the major
metros, mini metros and large cities with prominent locations. The Exclusive Brand Outlets, stores in which the
respective brands are sold from provides exclusive display. Plant Fashion stores display and sell all our premium
brands. Trouser town is focused more on the concept of displaying and selling trousers across our various brands.
We have a dispersed national distribution network comprising exclusive stores, department stores, retailers, and
multi-brand outlets. We use both traditional channels like wholesalers and modern channels like national chain
stores and exclusive stores to promote our products across India and other markets.
2. Carbon Black
Our Hi Tech carbon division is into manufacturing furnace grade carbon black and selling it through the ‘Birla
Carbon’ brand. We believe we are one of the largest producer of carbon black in India. We have a manufacturing
facility at Renukoot in Uttar Pradesh having an installed capacity of 80,000 mtpa and at Gummidipoondi in Tamil
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ADITYA BIRLA NUVO LIMITED
Nadu having an installed capacity of 90,000 mtpa making our combined capacity of 170,000 mtpa. We believe we
are one of the low cost producers and our Gummidipoondi plant has the coastal location advantage for import of
raw materials and export of finished products.
The following table sets forth, our actual production and sales, and net revenue from our carbon black unit during
the year ended March 31, 2004, 2005 and 2006 and the period ended September 30, 2006:
Particulars Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Production (Tonnes) 118,707 164,025 175,080 91,030
Sales Volumes (Tonnes) 118,182 165,095 175,944 90,500
Net Turnover (net of excise duty) (in Rs. Crore) 340.3 467.3 564.2 360.7
Products
We manufacture different types of furnace grade carbon black, hard carbon black, soft carbon black, semi soft
carbon black and extra soft carbon black. Depending on the type carbon black has a vide range of applications in
tyre and non-tyre segments viz. conveyor belts, inks, paints amongst others. In the manufacture of carbon black,
steam is produced as a by-product. Depending upon the type of CBFS used, the amount of steam produced varies.
The steam generated is used for power generation at Gummidipoondi, which is sold to Tamil Nadu Electric Board
(TNEB) while in Renukoot the generated steam is sold to Hindalco Industries Limited, one of our group companies.
Raw material and Manufacturing process
Carbon Black is produced through the thermal decomposition of oils with high carbon contents at high temperatures.
Generally the oil is called Carbon Black Feed Stock (CBFS) and is one of the products from crude oil distillation
process. Our manufacturing technology uses the distributed control system. We believe process automation ensures
quality consistency in the manufacturing of carbon black also, the manufacturing process envisages conserving
heat energy for productive utilisation through downstream processes. We have a research and development centre,
which is primarily engaged in determining new grades of carbon black and in the improvement of our current
grades.. The entire requirement of CBFS for our Gummidipoondi plant is met through imports whereas the requirement
for the Renukoot plant is met through local sources and imports. Production of carbon black requires thermal and
electrical energy, which is met through the captive production and generation.
Marketing and distribution
Carbon Black is a key input for the tyre and rubber industry. It finds minor application in non-rubber industries also
like paints, dyes, inks and coatings etc.
3. Textiles
We are present in three segments of textile namely Linen segment (flax yarn, linen fabrics), Worsted segment (wool
tops, worsted yarn) and synthetic segment. We are a sizeable player in Linen and worsted segment. Our installed
capacity as on September 30, 2006 is 8,184 spindles of flax yarn, 22,348 spindles of worsted yarn and 47,940
spindles of synthetic yarn at September 30, 2006. We also have a capacity of 8,000 tpa in wool combing and 62
looms for weaving of linen fabrics. Our manufacturing units are located at Rishra and Midnapur in West Bengal.
Flax and worsted yarn are marketed under ‘Jaya Shree’ brand and Linen Fabrics under the brand ‘Linen Club’. We
are in process of downsizing the synthetic segment. We are in the process of divesting Rajshree Synthetics
division, at Midnapur.
The following table sets forth, our actual production and sales, and net revenue from our Textile unit during fiscal
2004, 2005 and 2006 and the period ended September 30, 2006:
(Rs. crores)
Particulars Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Production (Tonnes) 14,421 15,445 19,190 9,373
Sales Volumes (Tonnes) 14,594 15,686 18,867 9,670
Net Turnover (net of excise duty) 397.00 456.10 524.90 306.50
49
Products
Linen yarn is used for weaving, knitting and industrial purposes. Natural-grace, elegance, trendy and bold vibrant
weave make linen most suitable for traditional and fashionable apparel, furnishing and bed linen. Worsted yarns
are spun from the finest quality Merino wool from Australia and New Zealand, the wool and wool-blended yarns are
suitable for weaving, knitting - flatbed, circular and socks and upholstery / furnishing sectors. Linen Fabric is used
for men’s and women’s wear and Polyester/Viscose blended woven designs. It is also used for flame resistance
fabrics for apparel, industrial and defense use. Synthetic yarn is used for apparel and industrial applications.
Raw Material and manufacturing process
For manufacturing different products we use various types of Fibres as well linen yarn as raw material. In case of
flax yarn flax fibre is sorted and then combed before being drawn into threads. The threads are then twisted and
after boiling and bleaching, are spun into yarn, which is dried and wound onto spindles. In case of worsted yarn,
wool fibre is re-combed and drawn and twisted into threads, which are spun into yarn. The method of producing
fabrics varies according to the fabric produced. The Rishra plant is a composite plant encompassing both spinning
and weaving. It has three types of spinning systems for flax, worsted and synthetic yarns and a process house
equipped with bleaching dyeing and finishing facilities which can handle both fabrics and all types of fibers and
yarns.
Marketing and distribution
The textiles division sells its products both within India and for export. Domestic sales of flax yarn are to a small
number of companies manufacturing fabrics and garments for export and local use. The textiles division’s domestic
sales of worsted yarn are to the companies and also to the unorganised sector.
In contrast the domestic customer bases for synthetic yarns and fabrics are more fragmented. The textile division is
in direct contact with major corporate customers. Overseas sales are made through sales agents located in most of
the textile division’s overseas markets.
4. Rayon
Our rayon yarn division is situated at Veraval in Gujarat. It is one of the oldest units of the Company set up in 1963.
We are the second largest producer of Viscose Filament Yarn (VFY) in India (Source: Association of Man Made
Fibre of India) with an installed capacity of 16,000 mtpa. AS on September 30, 2006 we have an installed capacity
of 72,000 mtpa of caustic soda and a captive power plant with an installed capacity of 36.5 MW forming part of the
rayon business. We market our product under the ‘RAY ONE’ brand.
The following table sets forth, our actual production and sales, and net revenue from our VFY and Chlor alkali
products during fiscal 2004, 2005 and 2006 and the period ended September 30, 2006:
(Rs. Crores)
Particular Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Production (Tonnes) 16,060 16,420 17,233 8,824
Sales Volumes (Tonnes) 15,694 16,445 17,380 8,463
Net Turnover (net of excise duty) (in Rs. Crore) 335.2 352.0 385.6 224.6
- VFY (in Rs. Crore) 261.9 250.3 260.4 142.6
- Chlor alkali (in Rs. Crore) 73.3 101.7 125.2 82.0
Product
Fabric made with VFY feels like cotton, drapes like wool and has the luster and feel of silk. VFY is used by
manufacturers of apparel, saris, upholstery and suit linings amongst others.
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ADITYA BIRLA NUVO LIMITED
Raw material and Manufacturing Process
The main raw material in the production of VFY is wood pulp. The other raw materials’ include sulphuric acid,
carbon disulphide and caustic soda. The rayon yarn division uses imported wood pulp. Sulphuric acid, carbon
disulphide, and caustic soda as raw material. The plant uses approximately 9000 kilolitres of water a day for
washing the yarn. The production of each metric tonne of VFY at the plant requires approximately 3,600 kwh of
electricity. The plant has a captive power plant of 36.5 MW.
VFY is produced by the treatment of wood pulp with various chemicals including caustic soda, carbon disulphide
and sulphuric acid. Caustic soda is added to the wood pulp, which is then aged for eight hours. A viscose liquid is
created by adding carbon disulphide and caustic soda. If coloured yarn is required dyes are added. The cellulose
is drawn through platinum-gold spinderettes to form a continuous filament yarn. After washing the yarn, it is dried
with hot air and steam before being packaged for dispatch. The plant has two production lines. These are intended
to work 24 hours per day and 365 days a year. Maintenance is carried out on an on-going basis with the spinning
machines receiving a major overhaul every eight years on a rotational basis. Output varies according to the denier
of the yarn being produced. The rayon yarn division has updated, maintained and modernized the equipment
installed at the plant and all the process is controlled by the process automation software.
Marketing and distribution
The rayon division’s sales are principally domestic. Customers are mostly small and medium scale businesses in
the handloom and power loom sectors. The customer base is therefore highly fragmented. The pricing of VFY is
determined on a monthly basis and varies from area to area and location wise as it is dependent upon demand
and yarn denier etc.
5. Fertilizer
Indo Gulf Fertiliser, one of our divisions, is among the largest and most cost-efficient private sector fertilizer companies
in India. Indo Gulf’s plant is located at Jagdishpur, near Lucknow in Uttar Pradesh, in the heart of the fertile,
agriculture intensive Indo-Gangetic plain in Uttar Pradesh. Indo Gulf manufactures and markets urea, a nitronnenous
fertiliser. In operation since November 1988, the capacity of this urea plant currently stands at 864,600 tones per
annum (tpa). Indo Gulf is the first fertilizer company in India to receive the ISO 14001 certification for environment
management systems. (back up). Our Fertilizer Plant is registered with United Nations Framework Convention on
Climate Change (UNFCC). Indo Gulf is the first plant in fertiliser industry to sell the Carbon Credit. It has sold
62,000 CER, which has accrued upto December 2005. Indo Gulf won the “Deming Application Prize” in the year
2004 becoming the first fertilizer plant in India to do so.
The following table sets forth, our actual production and sales, and net revenue from our Fertilizer unit for seven
months ended March 31, 2006 and the period ended September 30, 2006: :
Particular 7 months 2005-06 H1 FY07
Production (MT) 575,646 466,145
Sales (MT) 563,914 479,558
Revenue (Rs. in crore) 369.0 351.0
Products
Our main product is urea. As a part of new product development we have introduced neem-coated urea in the
market. It is very popular amongst farmers and we believe this product will help us to achieve major market share
in the regions we operate. However, non-recognition of additional manufacturing cost by the Govt. so far despite
persuasion would continue to mean additional cost without any specific advantage especially in the present scenario
where production of urea in the country is not more than the demand.
Raw material and Manufacturing process
We use natural gas for the production of urea. Naphtha can also be used as fuel in lieu of gas when there is
insufficient availability of gas. The ratio of feed and fuel in the overall energy consumption is about 70:30.
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Ammonia is one of the main ingredients in the production of urea. The production of ammonia occurs in two stages.
The de-sulphurised natural gas is mixed with steam and passed through the primary reformer for reforming reaction.
The gas from the primary reformer remains with methane content of approximately 11%. Further reforming takes
place in the secondary reformer where process air is introduced, to provide a hydrogen-nitrogen ratio of 3:1, which
is suitable for ammonia synthesis. This mixture of gases leaving the secondary reformer at 990 degrees centigrade
is then passed through the waste heat boiler where high-pressure steam is generated. After the waste heat
recovery process, the gas mixture, consisting of hydrogen, nitrogen, carbon monoxide and carbon dioxide, along
with a small percentage of methane and argon, is sent to the shift converter catalysts, to convert carbon monoxide
to carbon dioxide. Carbon dioxide gas is removed in the carbon dioxide removal section of the plant by absorption
of potassium carbonate solution. The pure hydrogen and nitrogen mixture in the 3:1 ratio, after compression, is then
sent to the ammonia converter, where ammonia is formed.
In this process, Carbon Dioxide and liquid ammonia obtained from the Ammonia Plant are fed to the Urea Reactor
operating at temperature of 190°C and pressure of 150 Kg/Cm2, through multistage compressor and plunger
pumps respectively. In the Reactor, Carbon Dioxide reacts with liquid Ammonia to form Urea. The liquid outlet of
the Urea reactor containing Urea, unconverted Ammonia, Carbamate and water of reaction is sent to a high-
pressure stripper, where the solution is heated by medium pressure steam. Ammonia and Carbon Dioxide are
removed from the Urea and Carbamate solution. The solution containing 46% weight of Urea and Carbamate
leaving the stripper is further processed in two stage decomposers with steam as heating media to obtain 72%
Urea Solution.
The Urea solution is further concentrated in vacuum concentrators in order to get 99.7% Urea melt, which is
pumped to the spinning Prilling Bucket, located at the top of Prilling Tower, to get Urea prills. The Urea prills are
cooled and collected at the bottom of the Prilling Tower by a rotary scrapper and sent to Urea Bagging Plant
through a system of conveyors.
Marketing and distribution
Our marketing areas include Uttar Pradesh, Bihar, Jharkhand and West Bengal. Due to the location of our plants
that is located in the agricultural belt, logistics and supply costs are reduced due to local competition.
We have a network of area offices, buffer godowns, stock points, wholesalers, retailers, and a service centre
network, manned by field officers and agronomists. We offer our trader constituents services offered to dealers and
retailers such as servicing the dealers’ network by regular scheduled visits, transparent policies, fair trade practices
and assured quality products and regular training programmes for dealers and retailers on maintaining compliance
with applicable government regulations, basic intelligence on the use of fertilisers, crop protection chemicals, etc.
6. Insulator
The insulator business was de-merged in Fiscal 2003 to develop special high-rated insulators and upgrade the
quality and operating efficiencies of our then existing operations. We entered into a joint venture for manufacturing
with NGK Insulators, Japan, leader in this sector called Birla NGK Insulators Limited. In 2006, Birla NGK Insulators
Limited became a subsidiary company. We propose to change the name of the company to Aditya Birla Insulators
Limited, subject to necessary approvals. Our Company enjoys marketing rights of insulators in India.
The following table sets forth, net revenue from our Insulators domestic marketing business:
Particular Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Revenue (Rs. Crores) 72.5 100.1 135.9 52.2
Marketing and distribution
Insulators are used in the transmission and distribution of electricity. Porcelain insulators have an expected life of
approximately 20-25 years. Demand for insulators is therefore closely linked to new electricity generation and
distribution capacity. In addition to government owned generation capacity deregulation of the industry and easy
clearance of additional capacity / green field expansion, has allowed private sector and foreign operators to set up
mega power generation facilities. This may result in a further increase in generating and capacity and need for
higher transmission and distribution resulting to an increase in demand for insulators.
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ADITYA BIRLA NUVO LIMITED
7. Financial Services
We provide a range of products and services, including loan products, fee and commission-based products and
services. Our services include loan against securities, initial public offering funding, and bill discounting. However,
a certain portion of this business is now being pursued by us through our subsidiary Birla Global Finance Company
Limited.
The following table sets forth, our actual net revenue from our financial services business for seven months ended
March 31, 2006 :
Particular 7 months 2005-06 H1 FY07
Revenue (Rs. Crores) 31.6 20.3
Loan against securities
We provide loan against share to individual / corporate clients. Loans are available to high-networth individuals,
members of stock exchanges, promoters, corporates etc. for their varying needs such as further investments, creeping
acquisitions and takeovers.
IPO financing
We provide loans for applications in IPOs of equity / equity linked issues. Our “Exclusive Share Loan Application
Scheme” provides a single window clearance for application.
Bill Discounting
Bill discounting involves financing of short-term trade receivables through negotiable instruments. These negotiable
instruments can then be discounted with other banks if required, providing us with required liquidity.
Businesses of our Subsidiaries
Life Insurance through Birla Sun Life Insurance Company Limited (“BSLI”)
We have presence in life insurance through our subsidiary Birla Sun Life Insurance Company Limited wherein we
hold 74% shareholding and rest is with our joint venture partner, Sun Life Financial Incorporated, Canada. BSLI’s
sole focus has been to ‘create value’ for all its stakeholders - namely, policyholders, employees and shareholders.
This has been driven through customer-focus comprehensive products, a portfolio mix, strong risk management
practices and a multi channel distribution capability in both individual and group insurance.
The following table sets forth, key metrics and total premium income of BSLI during fiscal 2004, 2005 and 2006
(Rs. Crores)
Particular Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Individual Life Policies Sold (‘000) 155.4 192.3 265.8 104.9
Asset Under Management (Rs. Crores) 639.9 1,333.0 2,554.8 3,080.8
Total Premium Income (Rs. Crores) 537.5 915.4 1,259.7 601.6
First Year Premium 449.8 717.1 678.1 320.1
Renewal Premium 87.7 294.2 581.6 281.5
BSLI have direct sales force of more than 25,000 licensed insurance advisors working through more than 110
branches in major cities and towns of India as of September 30, 2006. The Company’s insurance advisors have
qualified for the prestigious Million Dollar Round Table (MDRT), COT and TOT, some of the highest international
honors in the life insurance industry, in all the years of its operations.
53
The current range of products offered by BSLI includes:
Term Product
Birla Sun Life Term
Term with return of premium Plan
Unit Linked Insurance Plan
Flexi Plan (with various options)
Classic Life Premier
Life Companion
Prime Life & Prime Life Premier
Simply Life
Birla Sun Life Bima Kavach Yojana
Group Product
Birla Sun Life Group Protection Solutions
Birla Sun Life Social Development Plan
Birla Sun Life Group Gratuity Plan
Birla Sun Life Group Superannuation Plan
Birla Sun Life One Year Renewable Group Term Insurance Plan
Birla Sun Life Credit Guard Plan
Insulator business (through Birla NGK Insulators Limited)
We are present in the insulator business through our subsidiary Birla NGK Insulators Limited, formerly a joint
venture company, with an installed capacity of 36,000 tpa. Its production facilities are located at Halol in Gujarat
and Rishra in West Bengal. The Rishra plant began production in 1967 and the Halol plant in 1981.
The following table sets forth, our actual production and sales and net revenue of the Insulator business during
fiscal 2004, 2005 and 2006 and the period ended September 30, 2006:
(Rs. Crores)
Particular Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Production (Tons) 23,941 25,449 25,501 9,289
Sales Volumes (Tons) 24,967 24,412 26,065 10,840
Revenue (Rs. Crore) 163.7 168.8 226.6 98.8
Our share in Revenue (Rs. Crore) 81.8 84.4 113.3 49.4
% equity stake at the end of the year 50% 50% 50% 50%
Products
Birla NGK Insulators Limited produces a varied product range for overhead transmission lines and sub-station
equipment, including the entire spectrum of transmission and distribution insulators for power systems up to 800 KV
AC and HVDC, lightening arrestors of all ranges and other specialty products.
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ADITYA BIRLA NUVO LIMITED
Business Process Outsourcing (through TransWorks Limited (“TransWorks”))
We entered the business of business process outsourcing (BPO) through the acquisition of TransWorks Limited in
July 2003 with the Group’s strategic interest in being a leader in the offshore Business Process Outsourcing/
Customer Relation Management space. TransWorks has recently acquired Minacs Worldwide Incorporated, Canada’s
leading BPO provider. Recently pursuant to share purchase agreement Trans. Works has allotted 27,53,333 (11.72%
of share capital) equity shares to the RHCP TXW Investment Inc. We have, on November 6, 2006, incorporated a
subsidiary in Philippines called TransWorks Information Services Limited.
The following table sets forth, total employees and net revenue of Trans Works business (excluding Minacs) during
fiscal 2004, 2005 and 2006:
(Rs. Crores)
Particular Fiscal 2004* Fiscal 2005 Fiscal 2006 H1 FY07
Employees (Nos) 1,846 3,234 4,114 3,613
Revenue (Rs. Crores) 57.3 107.8 162.1 97.5
Voice 47.6 87.7 127.6 63.4
Non-Voice 9.7 20.1 34.5 34.1
*Acquired transfer in July, 2004
Processes
TransWorks has adopted the COPC-2000 standard across the services center wherein Mumbai center has been re-
certified to the COPC-2000 Standard (Release 3.4) while the Bangalore center has secured the highest Baseline
Assessment score earned to date by any organization using the COPC-2000 Gold Standard (Release 3.3). We also
have ISO 9001:2000 certifications for our process, BS7799.SOX compliant processes and SAS70 Type II audit
clearance. In addition, TransWorks adheres to stringent data security norms (ISO 17799, GLBA, DPA and Safe
Harbor).
Information Technology (through PSI Data Systems Limited (“PSI”))
Our foray in the Information Technology sector was through the acquisition of PSI Data Systems (“PSI”) in 2001. PSI
offers software solutions across application management, product development and engineering, migration/ re-
engineering, independent verification and validation, and other professional services. PSI has its primary focus in
the banking and financial sector by providing both corporate and retail banking services and also provides insurance,
hi tech solutions and manufacturing and retail solutions.
The following table sets forth, net revenue of IT Services subsidiary during fiscal 2004, 2005 and 2006;
(Rs. Crores)
Particular Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Revenue (Rs. Crores) 86.0 82.0 85.8 46.7
Software 76.9 77.7 79.5 46.3
Hardware 9.1 4.4 6.3 0.4
PSI’s mission is to be a best-in-class, end-to-end IT solutions partner to our clients in the markets of our choice.
With a focus on the banking and high tech markets globally, PSI offers software solutions across application
management, product development and engineering, migration/ re-engineering, independent verification and validation
(IV&V), and other professional services.
Our centers of insight architect and reinforce a portfolio of solutions that deliver business value across an enterprise.
These centers of insight continuously fine-tune our capabilities by developing best practices, methodologies, process
approaches, frameworks and value propositions that deliver value to clients. Currently our centers work in enterprise-
impacting areas like BPM, SOA, Testing solutions, Enterprise Applications and Data warehousing, and technology
areas such as Microsoft, J2EE and SmallTalk.
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PSI is a SEI CMM Level 5 Company. It deploys a global service delivery framework to offer clients flexible engagement
models. Quality benchmarks like ISO:9001 Quality Management System and ISO 27001 Information Security
Management System translates PSI processes into quality that enables our clients experience improved operations,
quality and efficiency.
Businesses of Joint Venture
Telecommunications Business (through IDEA Cellular Limited (“IDEA”))
Our foray in the telecom sector has been through the joint venture in IDEA Cellular Limited (IDEA). IDEA operates
in 11 circles namely Maharashtra (including Goa but excluding Mumbai metro), Gujarat, Madhya Pradesh, Andhra
Pradesh, Delhi metro service area, Kerala, Haryana, U.P. (West), Rajasthan, Himachal Pradesh and U.P. (East). We
have over 10.4 million subscribers as on September 30, 2006. IDEA has recently received a letter of intent for
award of licence to provide unified access services in the Mumbai Metro service area.
The following table sets forth, subscribers and net revenue of Telecommunication JV during fiscal 2004, 2005 and
2006:
(Rs. Crores)
Particular Fiscal 2004 Fiscal 2005 Fiscal 2006 H1 FY07
Subscribers (Million) 3.78 5.07 7.37 10.4
Revenue (Rs Crores) 1,296.6 2,255.71 2,965.49 1,909.8
Our Share in Revenue (Rs Crores) 55.6 96.9 388.3 562.4
% equity holding at the end of year 4.3% 4.3% 20.7% 35.7%
Products and Services
IDEA offers GSM based services in eight circles in India. We also offer domestic roaming to our GSM mobile
subscribers and also to our network partners with whom we share networks. We have currently tied up with certain
international service providers and are in the process of tying up with more international operators which would
enable us to commence International roaming in the near future at competitive cost. We provide our GSM mobile
subscribers with short messaging services, national and international long distance services and call management
services (including call forwarding and caller identification services).
IDEA provides value added services for its GSM mobile subscriber, which includes information based services,
entertainment and communication based services. IDEA was the first Company to demonstrate and commercially
launch the next generation EDGE technology for Delhi Circle. IDEA has been a pioneer in technology usage by
employing satellite connectivity to reach inaccessible rural areas in Madhya Pradesh.
IDEA has entered into an agreement with various players where they don’t have reach to provide national roaming
facilities for their customers. IDEA also has an international tie-up for its customer who travels abroad for continuous
network and connectivity.
Marketing and distribution
IDEA markets its services under ‘IDEA’ brand name. IDEA uses a multi-channel distribution strategy, deployed
through a network of franchisees, distributors and retailers, to make our products and services available to our
subscribers. For its various services, IDEA pays a fixed commission/ margin to their retailers and franchisees with
graded incentives based on volumes and choice of tariff plans. These commissions are however subject to reversal
and adjustments, in the event subscriber discontinues services within a period of six months of activation of
services.
Mutual Funds (through Birla Sun Life Asset Management Company Limited (“BSLAMC”))
Our foray in to asset management services is through the joint venture with Sun Life Finanical Inc. of Canada
wherein we have 50% stake in it. As on September 30, 2006, BSLAMC manage Rs 14,615 Crores of assets, with
an investor base of around 0.1 crore.
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ADITYA BIRLA NUVO LIMITED
Our joint venture offers a range of investment options, which include sector specific equity schemes, income plans,
debt and treasury products, and offshore funds. It currently has a range of 58 investment schemes including two
offshore funds, designed to cater to every need of the investor. We also offer portfolio advisory services for high
net-worth investors, which is a rapidly growing business segment for the Company. We are India’s first asset
management Company to be awarded the ISO 9001:2000 certification by DNV Netherlands.
Marketing
There has been a growth in the financial planners in India for the retail well as for the HNI category. The growth is
been seen mainly in the non-conventional segment, which comprises of new breed of financial planners. We have
entered into arrangements with select banks to distribute their products through their branch network. At present we
cover around 1700 branches through this tie-up.
Distribution: Birla Sun Life Distribution Limited (“BSDL”) is a wealth management company with a thrust on
investments and insurance planning by delivering wealth management solutions individually created for its clients.
Our foray in to this business is through the joint venture with Sun Life Financial Incorporated Canada wherein we
have 50% stake in it. With the ideal culmination of knowledge, expertise and experience, BSDL offers investment
advisory and financial products distribution through its all-India network. The products range covers Mutual Funds,
Government of India Relief Bonds, Bonds of public financial institutions, select Fixed Deposits and initial public
offerings of equity and debt securities. It also distributes life insurance products of Birla Sun Life Insurance, through
a wholly owned subsidiary.
Insurance Advisory: Birla Insurance Advisory Services Limited (“BIASL”) was incorporated in 2001 to enter in to
general insurance broking. With the opening up of the general insurance sector to the private players, the regulatory
body IRDA has introduced general insurance broking services in the country. The Company is a leading general
insurance broker in India. Headquartered in Mumbai, the Company already has a presence in Delhi, Kolkata and
Hyderabad.
Our Competition
We face competition in our all businesses. There are few producers of VFY in India. In rayon industry we face
competition from established Indian and International brands operating in India and other markets where we are
present. In our Insulator business our competitors are Bharat Heavy Electricals Limited (BHEL) and W.S. Industries
Limited. We experience intense competition in providing mobile services. Our ability to compete successfully depends,
in part, on our ability to anticipate and respond to competitive factors affecting the various industries.
Other Corporate Functions
Insurance
We maintain insurance policies with leading Indian insurers. All our principal places of business, including our
plants / units are covered by industrial risk, fire, theft, group mediclaim, group accident insurance, workmen
compensation policy, cash in transit, stock insurance, in transit insurance of sales, capital stock insurance, marine
cargo open insurance and vehicle insurance policies. Our plant and machinery such as mills, pans, boiler, motors,
tube wells, and office equipment are covered by insurance. We also maintain business interruption insurance and
terrorism is specifically excluded from all our policies.
Human Resources and Employee Training
The Company (on a standalone basis) had 8,335 employees as of March 31, 2006. Our success depends to a
great extent on our ability to recruit, train and retain high quality professionals. Accordingly, we place special
emphasis on the human resources function in our Company. We believe that development of our people is essential
for growth of the organization. Accordingly, emphasis is laid on development of entrepreneurial skills through work
independence, freedom of expression and ownership of actions and decision at all levels.
Unions
We believe that we have harmonious relationships with our worker unions. Most of our units have unions that are
registered under the Trade Union Act, 1926. Presently, there is strike at our subsidiary, Birla NGK Insulators Limited
located at Halol which commenced on August 3, 2006. The Government of Gujarat has referred the dispute for
57
adjudication before the Industrial Tribunal, Vadodara and prohibited the strike by the workers. However, the workers
have not resumed work yet.
Environmental compliance
National environmental standards in India are drafted by the Central Pollution Control Board and the Ministry of
Environment and Forests, Government of India and are enforced by various pollution boards and pollution control
committees. Each of our manufacturing facilities requires various environmental clearances.
We have conducted our business in accordance with a comprehensive environmental policy and environment
management system. Our environmental policy is based on the following principles:
achieving and maintaining a leading role in environmental management;
consideration of environmental requirements in all business decisions;
continuous consideration and adoption of environmental policies in our business units;
adoption of environmental management practices; and
compliance with statutory norms and requirements.
Emission and Effluent Management
While deciding the appropriate technology for our projects, we integrate a number of environmental measures into
the plant design. In order to keep emissions, effluents and ambient air quality within acceptable limits, we use
equipment and systems such as effluent treatment plants, wet scrubbers and electro-static precipitators. We also
utilize water management system for control of the effluent quality through recycling, as well as for conservation of
water. In order to keep pace with changing environmental regulation norms and to ensure compliance with statutory
requirements in the field of pollution control on a sustained basis, we also undertake renovation, modernization and
retrofitting and upgrading of pollution, monitoring and control facilities in our manufacturing units.
Corporate Social Responsibility
We are aware of our corporate social responsibilities and have made significant efforts to preserve the environment
in and around our various plants and units. As a socially responsible corporate, we believe that great emphasis
should be placed on social and community service. This attitude has allowed us to engage in numerous social
activities with the wholehearted support of our employees.
Risk management and Internal control system
We are engaged in diversified businesses. The risk events are identified, assessed, mitigated and monitored for
each business separately.
Our risk management approach comprises three key elements, which are as follows:
1. Risk identification: External and internal risk events that must be managed are identified in the context of each
business’ strategy and specific business objectives. These risk events are assessed by senior managers of the
business on defined criteria and prioritized for development of risk mitigation plans. Broadly risks are classified into
Strategic, Operations, Financial and Knowledge risks, which are further drilled down to market structure, process,
systems, legal, governance and people culture.
(i) Risk mitigation: This steps comprises developing of a mitigation plan for the risks identified and to be treated
on priority.
(ii) Risk monitoring and assurance: Key risks are managed through a structure that cascades across the
corporate and business. At the corporate level, the Risk Management committee is responsible for the risk
management process and reviewing the implementation and effectiveness of mitigation plans.
Apart from business risks, the Company is exposed to risks on account of interest rate, foreign exchange, commodity
pricing and regulatory changes, the details of which are as follows;
Foreign Exchange Risk: We have policy to hedge our long-term as well as short-term foreign exchange exposures
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ADITYA BIRLA NUVO LIMITED
to minimize foreign exchange risk. We have formulated a policy to hedge short term foreign exposure, however our
long-term exposures are fully hedged.
Interest Rate Risk: We have mixed basket of fixed and floating rate borrowings, both in rupee and foreign
currency. We use derivatives for foreign currency borrowings to hedge interest rate risk and minimize interest cost.
Commodity Price Risk: We are exposed to the risk of price fluctuation on raw materials as well as finished goods
in all our products. We mitigate our risk after considering the inventory levels and normal correlation in the price of
raw materials and finished goods.
Insurance
The Company has the following insurance policies for its business. These insurance policies have been taken by
the Company’s various units. The types of insurance policies that have been taken by the Company are as follows:
1. Comprehensive Mega Risks Policy
2. Stand Alone Terrorism Insurance Policy
3. Standard Fire and Special Perils Policy
4. Marine Open Policy
5. Consequential Loss (Fire policy)
6. Money in Transit Policy
7. Burglary Policy
8. Policy on Building, Plant and Machinery
9. Fire, Lightning and Damage Policy
10. Policy on Raw Materials and Finished Items
11. Policy on Stocks in Various Godowns, Port
Internal Control System:
We have adequate internal control system across various profit centers, with regard to efficiency of operations,
financial reporting, compliance with applicable laws and regulations, etc. Our Internal Control System is supplemented
by extensive audits conducted by the Corporate Audit Cell.
We have strong Management Information System (MIS) as control mechanism. All of our operating parameters are
monitored and controlled.
Safety, Health and Environmental Regulation and Initiatives
We are subject to extensive, evolving and increasingly stringent safety, health and environmental laws and regulations
governing our manufacturing processes and facilities. Such laws and regulations address, among other things, air
emissions (particularly volatile organic compounds), wastewater discharges, the generation, handling, storage,
transportation, treatment and disposal of chemicals, materials and waste, workplace conditions and employee
exposure to hazardous substances. We have incurred, and expect to continue to incur, operating costs to comply
with such laws and regulations. In addition, we have made and expect to make capital expenditures on an ongoing
basis to comply with safety, health and environmental laws and regulations. While we believe we are in compliance
in all material respects with all applicable safety, health and environmental laws and regulations, the discharge of
our raw materials that are chemical in nature or of other hazardous substances or other pollutants into the air, soil
or water may nevertheless give rise to liabilities to the Government of India or the relevant State Governments and
Union Territories where our manufacturing facilities are located. In addition, we may be required to incur costs to
remedy the damage caused by such discharges or pay fines or other penalties for non-compliance.
Further, the adoption of new safety, health and environmental laws and regulations, new interpretations of existing
laws, increased governmental enforcement of environmental laws or other developments in the future may require
that we make additional capital expenditures or incur additional operating expenses in order to maintain our current
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operations, curtail our manufacturing activities or take other actions that could have a material adverse effect on our
financial condition, results of operations and cash flow. Safety, health and environmental laws and regulations in
India, in particular, have been increasing in stringency and it is possible that they will become significantly more
stringent in the future. The measures we implement in order to comply with these new laws and regulations may
not be deemed sufficient by governmental authorities or our compliance costs may significantly exceed current
estimates. If we fail to meet environmental requirements, we may also be subject to administrative, civil and criminal
proceedings by governmental authorities, as well as civil proceedings by environmental groups and other individuals,
which could result in substantial fines and penalties against us as well as orders that could limit or halt our
operations. See “Risk Factors” on page viii of this Letter of Offer for more details.
To help maintain the health and safety of our employees, we provide employees at our facilities with periodic safety
check-ups, safety equipment and continually update and distribute safety manuals.
Intellectual Property
As of August 30, 2006 the Company is the owner or registered user of several trademarks such as Peter England,
Allen Solly, Louis Philippe, Van Heusen, Pyroguard, Kirtiman, Shaktiman, etc. and copyrights such as Planet
Fashion, Peter England Logo, Louis Philippe Logo, etc. The Company is also the owner or registered user of
trademarks in various countries outside India. The Company considers the above intellectual property relevant to its
operations.
Further there are certain trademarks which are pending registration. There are also trademark applications filed by
the Company in various countries against which opposition proceedings are going on.
Properties and Facilities
Our Registered Office is located at Indian Rayon Compound, Veraval-362 266, Gujarat, India and our corporate
office is located at Aditya Birla Center, ‘A’ Wing, 4th Floor, S.K. Ahire Marg, Worli, Mumbai 400 030.
The land on which Registered Office of the Company is situated has been acquired on permanent basis under an
alienable tenure as per Letter No. 5161/89797 from the Revenue and Agriculture Department dated November 1,
1962 from the government of Gujarat by an agreement with the Collector of Junagarh dated November 17, 1962.
The Company occupies the corporate office pursuant to an agreement with Hindalco Industries Limited and Grasim
Industries Limited dated March 28, 2005 which provides that the lands are of leasehold tenure being held under a
perpetual lease from the Municipal Corporation of Greater Bombay and are to be used as the corporate headquarters
of the Aditya Birla Group of companies. The Company has obtained 21% undivided share, right, title and interest in
this property for a consideration of Rs. 29.9 crores. Further, consequent to merger of BGFL and IGFL with the
Company, the Company has acquired further 6% undivided share, right, title and interest in this property.
We have several manufacturing units across the country. While we own the premises for some of these units, some
of these units are on long term leases, including some leases with governmental entities. We also occupy several
other premises on ownership or leasehold bases for residential use by our staff.
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REGULATIONS AND POLICIES
FERTILIZER INDUSTRY RELATED LEGISLATION
Pricing Scheme for urea
A New Pricing Scheme (“NPS”) for urea units in the place of retention price scheme (“RPS”) was notified on January 30,
2003. The NPS has come into effect from April 1, 2003. It aims to encourage the urea units to achieve internationally
competitive levels of efficiency, besides bringing in greater transparency and simplification in subsidy administration.
Under NPS, escalation / de-escalation, over the group base price, is given in respect of variable costs related to changes
in the price of feedstock, fuel, purchased power and water. Under the scheme no reimbursement is allowed in respect of
investments made by a unit or improvement in its operations nor are the gains as a result of operational efficiencies to
be mopped up.
The NPS is being implemented in three stages. Stage –I was of one year duration from April 1, 2003 to March 31, 2004
and Stage II was of two years duration from April 1, 2004 to March 31, 2006. The modalities of Stage –III were to be
decided by the department after review of the implementation of Stage-I and Stage-II. For reviewing the effectiveness of
Stage I and Stage II of NPS and formulating a policy beyond stage II, the department of fertilizers constituted a working
group. The Working Group was asked to examine issues pertaining to formulation of policy especially with regard to
nature, pricing and availability, demand and supply of Urea up to the 11th five year plan, fixing milestones for conversion
of existing naphtha and FO/LSHS based units to NG/LNG, feedstock policy, mode of determination and methodology of
payment of concessions to urea units, de-control of movement and distribution of area, balanced fertilization through
Urea pricing etc. The working group has submitted its recommendations which are being examined by the department.
The Fertilizer (Control) Order, 1985
Urea is the only fertilizer under price and partial movement control of government. The Department of Fertilizers is
entrusted with the responsibility of ensuring movement, distribution and allocation of controlled fertilizer, i.e. urea, from
various fertilizer plants and ports in accordance with the State-wise assessment made by the Department of Agriculture
and Co-operation.
The sale prices of controlled fertilizers are fixed by the Government of India (Department of Agriculture and Cooperation)
under the Fertilizer (Control) Order, 1985 (“FCO”), issued under the Essential Commodities Act, 1955. The FCO provides
that the Central Government may, with a view to regulating equitable distribution of fertilizers and making fertilizers
available at fair prices, by notification in the official gazette, fix the maximum prices at which any fertilizer may be sold by
a dealer, manufacturer etc. The FCO further provides that every dealer, who makes or offers to make a retail sale of any
fertilizers, shall prominently display in his place of business:
the quantities of opening stock of different fertilizers held by him on each day; and
a list of prices or rates of such fertilizers fixed under clause 3 and for the time being in force.
The FCO provides that the Central Government may, with a view to secure equitable distribution and availability of
fertilizers to the farmers in time, by notification in the Official Gazette, direct any manufacturer/importer to sell the fertilizers
produced by him in such quantities and in such State or States and within such period as may be specified in the said
notification. The FCO also requires manufacturers/importers, pool handling agencies to comply with certain packaging
and marking requirements. In addition FCO has laid down the quality parameters like amongst others size distribution,
moisture content, nitrogen content which are required to be maintained to ensure good and right quality product is sold
to farmers.
TEXTILE RELATED LEGISLATION
The Textile Committee Act, 1963
The functions of the Committee shall generally be to ensure by such measures, as it thinks fit, standard qualities of
textiles both for internal marketing and export purposes and the manufacture and use of standard type of textile machinery.
The Committee may undertake, assist and encourage, scientific, technological and economic research in textile industry
and textile machinery; promote export of textiles and textile machinery; establish or adopt or recognize standard
specifications for textiles and packing materials used in the packing of textiles or textile machinery, export and for internal
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consumption and affix suitable marks on such standardized varieties of textiles and packing materials. It may specify the
type of quality control or inspection which will be applied to textiles or textile machinery; provide for training in the
techniques of quality control to be applied to textiles or textile machinery, provide for the inspection and examination of
textiles, textile machinery at any stage of manufacture and also while it is in use at mill-heads, packing materials used in
the packing of textiles or textile machinery.
For the purpose of enabling the Committee to assess the amount of the duty of excise levied the Committee shall, by
notification in the Gazette of India, fix the period in respect of which assessments shall be made and every manufacturer
shall furnish to the Committee a return, not later than fifteen days after the expiry of the period to which the return relates,
specifying the total quantity of textiles or textile machinery manufactured by him during the said period and such other
particulars as may be prescribed.
Trade and Merchandise Marks Act, 1958
Under this Act, a trade mark may be registered in respect of any or all of the goods comprised in a prescribed class of
goods. Any question arising as to the class within which any goods fall shall be determined by the Registrar whose
decision in the matter shall be final. Subject to the other provisions of this Act, the registration of a trademark, if valid,
give to the registered proprietor of the trademark the exclusive right to the use of the trademark in relation to the goods
in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the
manner provided by this Act. One time registration of trademark/logo is required. The registration of a trade mark shall be
for a period of seven years, but may be renewed when due. under sections 29 and 30 of the Act are the remedies given
against infringement of registered trademark/logo.
ENVIRONMENTAL LEGISLATION
Introduction
The three major statutes in India which seek to regulate and protect the environment against pollution related activities in
India are the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act,
1981 and the Environment Protection Act, 1986. The basic purpose of these statutes is to control, abate and prevent
pollution. In order to achieve these objectives, Pollution Control Boards (PCBs), which are vested with diverse powers to
deal with water and air pollution, have been set up in each state. The PCBs are responsible for setting the standards for
maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking
investigations to ensure that industries are functioning in compliance with the standards prescribed. These authorities
also have the power of search, seizure and investigation if the authorities are aware of or suspect pollution. All industries
and factories are required to obtain consent orders from the PCBs, which are indicative of the fact that the factory or
industry in question is functioning in compliance with the pollution control norms laid down. These are required to be
renewed annually.
Water (Prevention and Control of Pollution) Act, 1981
The Water (Prevention and Control of Pollution) Act, 1981(Water Act) prohibits the use of any stream or well for disposal
of polluting matter, in violation of standards set down by the State Pollution Control Board (SPCB).The Water Act also
provides that the consent of the SPCB must be obtained prior to opening of any new outlets or discharges, which is likely
to discharge sewage or effluent. In addition, the Water (Prevention and Control of Pollution) Cess Act, 1977 (Water Cess
Act) requires a person carrying on any industry to pay a cess in this regard. The person in charge is to affix meters of
prescribed standards to measure and record the quantity of water consumed. Furthermore, a monthly return showing the
amount of water consumed in the previous month must also be submitted.
Air (Prevention and Control of Pollution) Act, 1981
Air (Prevention and Control of Pollution) Act, 1981 (Air Act) under which any individual, industry or institution responsible
for emitting smoke or gases by way of use as fuel or chemical reactions must apply in a prescribed form and obtain
consent from the state pollution control board prior to commencing any mining activity. The SPCB is required to grant
consent within four months of receipt of the application. The consent may contain conditions relating to specifications of
pollution control equipment to be installed.
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ADITYA BIRLA NUVO LIMITED
Hazardous Wastes (Management and Handling) Rules, 1989
The Hazardous Wastes (Management and Handling) Rules, 1989 (Rules) fix the responsibility of the occupier and the
operator of the facility that treats hazardous wastes to properly collect, treat, store or dispose the hazardous wastes
without adverse effects on the environment. Moreover, they must take steps to ensure that persons working on the site
are given adequate training and equipment for performing their work. When an accident occurs in a hazardous site or
during transportation of hazardous wastes, then the SPCB has to be immediately alerted. If, due to improper handling of
hazardous waste, any damage is caused to the environment, the occupier or the operator of the facility will have to pay
for the necessary remedial and restoration expenses.
LABOUR LEGISLATION
Employees Provident Funds and Miscellaneous Provisions Act, 1952
The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the “PF Act”) ensures compulsory provident
fund, family pension fund and deposit linked insurance in factories and other establishments for the benefits of the
employees. The rate of contribution has been fixed at 12%. Presently an employee at the time of joining the employment and
getting wages up to Rs.6500/- is required to become a member of the employees’ provident fund organization (the
“EPFO”), established in accordance with the provisions of the PF Act. Now an employee is eligible for membership of
fund from the very first date of joining a covered establishment. The Act inter alia provides for:
grant of exemption from the operation of the scheme/s framed under the Act to an establishment, to a class of
employees and to an individual employee, on certain conditions.
appointment of inspector to secure compliance under the Act and the Schemes framed there under.
mode of recovery of money due from employers.
The funds established under the PF Act vest in and are administered by the Central Board of Trustees and functions
within the overall regulatory control of the Central Government.
Factories Act, 1948
The Factories Act, 1948 (the “Factories Act”) defines a ‘factory’ to cover any premises which employs ten or more workers
and in which manufacturing process is carried on with the aid of power and any premises where there are at least twenty
workers even though there is or no electrically aided manufacturing process being carried on. Each State Government
has rules in respect of the prior submission of plans and their approval for the establishment of factories and registration
and licensing of factories.
The Factories Act provides that an occupier of a factory i.e. the person who has ultimate control over the affairs of the
factory and in the case of a company, any one of the directors, must ensure the health, safety and welfare of all workers.
There is a prohibition on employing children below the age of fourteen years in a factory. The occupier and the manager
of a factory may be punished with imprisonment for a term up to two years or with a fine up to one lakh rupees or with
both in case of contravention of any provisions of the Factories Act or rules framed there under and in case of a
contravention continuing after conviction, with a fine of up to one thousand rupees per day of contravention.
Payment of Gratuity Act, 1972
Under the Payment of Gratuity Act, 1972 (the “Gratuity Act”), an employee in a factory is deemed to be in ‘continuous
service’ for a period notwithstanding that his service has been interrupted during that period by sickness, accident, leave,
absence without leave, lay-off, strike, lock-out or cessation of work not due to the fault to of the employee, or the
employee has worked at least two hundred and forty days in a period of twelve months or one hundred and twenty days
in a period of six months immediately preceding the date of reckoning. An employee who has been in continuous service
for a period of five years will be eligible for gratuity upon his retirement, superannuation, death or disablement. The
maximum amount of gratuity payable must not exceed three lakh and fifty thousand rupees.
Payment of Bonus Act, 1965
An employee in a factory who has worked for at least 30 working days in a year is eligible to be paid bonus. ‘Allocable
surplus’ is defined as 67% of the available surplus in the financial year, before making arrangements for the payment of
dividend out of profit. The minimum bonus fixed by the statute must be paid irrespective of the existence of any allocable
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surplus. If allocable surplus exceeds minimum bonus payable, then the employer must pay bonus proportionate to the
salary or wage earned during that period, subject to a maximum of twenty per cent of such salary or wage. Contravention
of the provisions of the act is punishable by imprisonment up to six months or a fine up to one thousand rupees or both.
Maternity Benefit Act, 1961
The Maternity Benefit Act, 1961 provides that a woman who has worked for at least eighty days in the twelve months
preceding her expected date of delivery is eligible for maternity benefits. Under the Maternity Benefit Act, a woman
working in a factory may take leave for six weeks immediately preceding her scheduled date of delivery and for this
period of absence she must be paid maternity benefit at the rate of the average daily wage. The maximum period during
which a woman shall be paid maternity benefit is twelve weeks. Women entitled to maternity benefit are also entitled to
medical bonus of two hundred and fifty rupees. Contravention of the Act is punishable by imprisonment up to one year
or a fine up to five thousand rupees or both.
Minimum Wages Act, 1948
The State Governments may stipulate the minimum wages applicable to a particular industry. The minimum wages
generally consist of a basic rate of wages, cash value of supplies of essential commodities at concession rates and a
special allowance, the aggregate of which reflects the cost of living index as notified in the Official Gazette. Workers are
to be paid for overtime at overtime rates stipulated by the appropriate Government. Any contravention may result in
imprisonment up to six months or a fine up to five hundred rupees.
Workmen’s Compensation Act, 1923
If personal injury is caused to a workman by accident during employment, his employer would be liable to pay him
compensation. However, no compensation is required to be paid if the injury did not disable the workman for three days
or the workman was at the time of injury under the influence of drugs or alcohol, or willfully disobeyed safety rules.
Where death results from the injury the workman is liable to be paid the higher of fifty per cent of the monthly wages
multiplied by the prescribed relevant factor (which bears an inverse ratio to the age of the affected workman, the
maximum of which is 228.54 for a worker aged 16 years) or Rupees Eighty Thousand. Where permanent total disablement
results from injury the workman is to be paid the higher of sixty per cent of the monthly wages multiplied by the
prescribed relevant factor or Rupees Ninety Thousand. The maximum wage which is considered for the purposes of
reckoning the compensation is Rupees Four Thousand Rupees.
Contract Labour (Regulation and Abolition) Act
Companies use the services of contractors who in turn employ contract labour whose number exceeds twenty in respect
of some of the sites. Accordingly, such Companies are regulated by the provisions of the Contract Labour (Regulation
and Abolition) Act, 1970 which requires the Company to be registered as a principal employer and prescribes certain
obligations with respect to welfare and health of contract labour.
BPO RELATED LEGISLATION
Introduction
Companies in the business process outsourcing (“BPO”) industry in India are subject to various regulations and policies.
A large portion of the BPO sector in India is regulated under the terms of the Software Technology Parks Scheme, which
permits the establishment of units engaged in information technology enabled products and services (ITES). Several
State governments have also enacted specific legislations in this regard, including by way of various incentives to
investors to set up ITES units within the respective state. Unlike in the US, there is no law regulating telemarketing in
India. However, a public interest litigation has been filed in the Supreme Court of India seeking a law to ban ‘uncalled
for’ telemarketing calls. In addition, certain state benefits have also been granted which include permissions to work on
national holidays, women working on night shifts, offices to function 24 hours a day through the year, IT employment
promotion schemes, rebates/waivers in relation to payments for transfer of property and registration (including for purchase/
lease of premises), waiver of conversion fee for land, entry tax exemptions, labour law relaxations, exemption from state
pollution control requirements and commercial usage of electricity amongst others.
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Data Protection
India has currently not enacted any legislation in relation to data protection. A committee has been set up to examine the
need for data protection legislation in India. The recommendations of the Committee have not yet been made public.
INSURANCE RELATED LEGISLATION
The Insurance Regulatory and Development Authority Act, 1999
The Insurance Regulatory and Development Authority Act, 1999 (“IRDA”) was enacted to provide for the establishment of
an authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the
insurance industry and for matters connected therewith or incidental thereto. The IRDA grants powers to the authority so
constituted to frame rules and regulations for controlling the insurance industry in India. In addition, the Insurance Act,
1938 prescribes the minimum paid up capital requirements of rupees one hundred crores in case of a person carrying on
the life and general insurance business, foreign shareholding being limited to 26%, notification of a change in the
shareholding pattern of the company of more than 1%.
TELECOMMUNICATIONS RELATED LEGISLATION
Telecom Regulatory Authority of India Act, 1997
In January 1997, an ordinance was issued for the establishment of the Telecommunications Regulatory Authority of India,
or TRAI, an autonomous body with quasi-judicial powers to regulate telecommunications services in India. This ordinance
was replaced in March 1997 by the Telecommunications Regulatory Authority of India Act, 1997, or the TRAI Act. Later
a need was felt to delegate the powers to adjudicate disputes to a separate distinct body and thus, the TRAI Act was
amended by the Telecommunications Regulatory Authority of India (Amendment) Act, 2000, pursuant to which such
powers have been vested in the Telecommunications Disputes Settlement and Appellate Tribunal, or TDSAT. The
regulatory functions of TRAI fall into two broad categories – recommendatory and mandatory which include amongst
others introduction of new service providers; terms and conditions of licenses to be awarded to service providers;
revocation of licenses; measures to facilitate competition and promote efficiency in the operation of telecommunications
services; right to intervene in exceptional circumstances, such as non-compliance of TRAI regulation or discriminatory or
predatory nature of tariff plans; ensuring compliance with the terms and conditions of licenses; fixing the terms and
conditions of interconnection arrangements between service providers etc.
NON BANKING FINANCIAL COMPANIES RELATED LEGISLATION
The Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 (“Prudential Norms Directions”)
specify that every NBFC shall, after taking into account the degree of well defined credit weaknesses and extent of
dependence on collateral security for realization, classify its lease/ hire purchase assets, loans and advances and any
other forms of credit into different classes as specified. The Prudential Norms Directions also require every NBFC to
make provisions against sub-standard assets, doubtful assets and loss assets, after taking into account the time lag
between an account becoming non-performing, its recognition as such, the realization of the security and the erosion
over time in the value of security charged.
If there is change in management and control of an NBFCs, prior public notice should be given 30 days before effecting
the sale, or transfer of the ownership by sale of shares, or transfer of control, whether with or without sale of shares or
by way of amalgamation/merger of an NBFC with another NBFC or a non-financial company by the NBFC and also by
the transferor, or the transferee. Prior public notice shall be given by the NBFC and also by the transferor or the
transferee or jointly by the parties concerned. Further, it is now mandatory for a company to obtain Certificate of Registration
(“CoR”) from the RBI before commencing or to carry on business of a non-banking financial institution. It has also been
specified that all NBFCs should submit a certificate from their statutory auditors every year to the effect that they continue
to undertake the business of NBFI thereby requiring them to hold CoR granted by the Bank under Section 45-IA of the
RBI Act, 1934.
“The RBI, on November 30, 2006 has issued a press release containing draft guidelines (“Draft NBFC Guidelines”)
which propose to, inter alia, regulate non-deposit taking NBFCs with an asset size of Rs. 100 crores or more (“Systemically
Important NBFCs”). The Draft NBFC Guidelines contain several provisions which seek to impose certain requirements in
respect of Systemically Important NBFCs, including in relation to maintenance of minimum capital adequacy ratios, single
and group exposure norms, etc.”
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HISTORY OF THE COMPANY AND OTHER CORPORATE MATTERS
Our Company is a part of the Aditya Birla Group and was incorporated on September 26, 1956 as The Indian Rayon
Corporation Limited under the provisions of the Companies Act, 1956 with its registered office at United Bank of India
Building, 2nd Floor, Sir Pherozshah Mehta Road, Mumbai 400 001, India. Our registered office was shifted from Mumbai
to its present location on December 13, 1961. Subsequently on January 23, 1987 the name of the Company was
changed from The Indian Rayon Corporation Limited to Indian Rayon and Industries Limited as we had diversified into
various businesses such as textiles, insulators and cements. Subsequently over a period of time due to the diversification
of our business and our foray into new businesses, the name of our Company did not reflect the complete nature of the
businesses we were involved in. Subsequently on October 27, 2005 the name of the Company was changed to Aditya
Birla Nuvo Limited. The new name reflects our conglomerate status as we have various diversified businesses directly or
through our subsidiaries / Joint Venture companies such as the Garments business, Carbon Black, Information Technology,
Business Process Outsourcing, Life Insurance, Financial services and Telecom business. The Equity Shares of our
Company were first listed on the BSE on December 8, 1987 and thereafter on the NSE on September 5, 1995.
Milestones achieved by our Company in the last ten years are mentioned below:
Year Event
1956 The Indian Rayon Corporation Limited was incorporated in Mumbai on September 26, 1956
1961 The registered office of the Company was shifted from Bombay to Veraval (Gujarat)
1963 The Company commenced manufacturing of viscose filament yarn at Veraval with technical collaboration
from Von Kohom International.
1966 Birlas acquired The Indian Rayon Corporation Limited
1976 Jaya Shree Textiles & Industries Limited was amalgamated with our Company
1981 Jaya Shree Insulators’ second unit at Halol goes on stream with the installed capacity of 6,000 tones p.a.
1984 Our Company entered the cement business by setting up a manufacturing plant at Malkhed in Karnataka
with initial capacity of 5.4 lac tonnes pa, which was further expanded to 18 lac tonnes pa.
1987 Our Company was renamed as Indian Rayon and Industries Limited to reflect our multi-fold activities on
January 23, 1987
1988 Company ventured into carbon black business by setting up Hi-Tech Carbon (Renukoot).
Copromoted Mangalore Refineries and Petrochemicles Limited (MRPL)
1990 Company installed white cement plant at Khariakhanagar, Rajasthan.
1995 Company ventured into Sea Water Magnesia and set up a plant at Chippada Village in Andhra Pradesh
to manufacture high purity refractory grade magnesia. But due to continued slump in the domestic market
the operations were halted on December 28, 1998 and a complete exit on October 1, 1999.
1998 Our cement business was demerged and transferred to Grasim Industries Limited. Production commenced
at our Hi-Tech Carbon’s second carbon black plant at Gummidipoondi, Tamil Nadu.
1999 Buy Back of shares from shareholders.
2000 Company acquired Madura Garments. Pursuant to this acquisition we have acquired brands like Louis
Phillipe, Van Heusen, Allen Solly, Peter England, Byford and San Frisco.
2001 Our Company entered into a joint venture with Sun Life Insurance Incorporated of Canada. Joint Venture
has commenced operations under Birla Sun Life Insurance Company Limited.
Our Company acquired PSI Data Systems Limited from Groupe Bull S.A., France. The Company is listed
and is involved in Information Technology Services.
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ADITYA BIRLA NUVO LIMITED
2002 Our insulators business is hived off to a separate joint venture with NGK Insulators Limited, to form Birla
NGK Insulators Limited effective from August 1, 2002.
2003 Company entered Business Process Outsourcing with the acquisition of Trans Works Limited.
2005 The name of the Company was changed from Indian Rayon and Industries Limited to Aditya Birla Nuvo
Limited on October 27, 2005.
2005 Our Company increased its stake in Idea Cellular Limited from 4.28% to 20.74%
2006 Our Company increased its stake in Idea Cellular Limited from 20.74% to 35.74%
Indo Gulf Fertilizers Limited (IGFL) was amalgamated with the Company with effect from April 3, 2006
pursuant to Scheme of Amalgamation. The ratio was 1 (one) equity share of Rs. 10/- each of ABNL for
every 3 (three) equity shares of Rs. 10/- each fully paid-up held by the shareholders in IGFL.
Birla Global Finance Limited (BGFL) was amalgamated with the Company with effect from June 30, 2006
pursuant to Scheme of Amalgamation. The ratio was 1 (one) equity share of Rs. 10/- each of ABNL for
every 3 (three) equity shares of Rs. 10/- each fully paid-up held by the shareholders in BGFL.
Company acquired Minacs Worldwide Inc. through our subsidiary TransWorks Information Services Limited.
Birla NGK Insulators Limited, a joint venture company, became a subsidiary of our Company. We propose
to change the name of Birla NGK Insulators Limited to Aditya Birla Insulators Limited, subject to necessary
approvals.
Achievements
Some of the key achievements / awards received in fiscal 2006 are as follows:
First prize in Textile Sector for Energy Conservation for VFY from the Ministry of Power, New Delhi.
Second prize in Chemical Sector for safety from GRENTECH Foundation
Second prize in Textile Sector for Safety from Gujarat Safety Council.
Madura Garments Division
Awarded ‘The Best Retailer of the Year’ for the fashion segment at the second Reid & Taylor awards in the India
Retail Summit Best Franchiser in the fashion awarded by Franchising World.
Clothing Manufacturers Association of India (CMAI) Awards
‘Louis Philippe’ was adjusted the Best Formal Wear brand.
Madura Garments -- Most Admired Apparel Company
Madura Garments -- got the Clothing Company of the year
Images Fashions Awards
For third consecutive time, Madura Garments awarded Best Apparel Company
‘Allen Solly’ won the award for the Best Smart Casual Brand
‘Van Heusen’ got the award for the Best Trouser Brand
HI-Tech Carbon Division, Renukoot
The division was declared Winner of “Gold Award” in Chemical Sector for outstanding achievement in Environment
Management at sixth Annual Greentech Environment Excellence Award 2004-05.
Winner of “Gold Award” in chemical sector for outstanding achievements in safety management at fifth Greentech
Safety Award 2006.
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HI-Tech Carbon Division, Gummidipoondi
The Division was declared as winner of ‘Gold Award’ in Chemical Sector for outstanding achievement in Safety
management at 4th Annual Greentech Safety Award 2004-05.
Indo-Gulf Fertilizer
Suraksha Puraskar 2004 from the National Safety Council of India, for its exemplary safety standards.
The business world FICCI-SEDF Corporate Social Responsibility Award 2005, for making a difference to the
marginalized sectors of Society.
Main Objects of our Company
Objects of our Company: -
Our objects inter-alia as contained in our Memorandum of Association include:
1. To carry on the business of manufacturing, buying, selling, importing, exporting, distributing, processing, exchanging,
converting, altering, twisting or otherwise handling or dealing in cellulose, viscose rayon yarns and fibres, synthetic
fibres and yarns, staple fibre yarns and such other fibres or fibrous materials, transparent paper and auxiliary
chemical products, allied products, by-products or substances or substitutes for all or any of them or yarn or yarns
for textile or other use as the Company may deem necessary expedient or practicable.
2. To manufacture and deal in all kinds of cotton, linen, silk, worsted and ortla goods and goods made of jute, hemp,
flax, cellulosic fibres, metallic fibres, glass fibres, protein fibres, rubber fibres, rayons, polyesters, all kinds of synthetic
polymers and other fibres or fibrous substances natural or otherwise; to purchase cotton or all other fibrous materials
either in the raw or manufactured state, to gin, comb, prepare, spin, double, twist, wind, bleach, dye, finish and do
other processes, connected with or incidental to the general manufacture of the same; to manufacture and deal in
all kinds of yarn and thread including covered elastic thread and covered rubber thread from any or all of the said
fibres or fibrous substances, required for any of the purposes or weaving, sewing, knitting, embroidery, tapestry,
hosiery, texturising and all other special purposes in which any or all such yarns and threads could be used; to
weave or otherwise manufacture, buy and sell and deal in all kinds of fabric whether textile, filter, netted, knitted,
looped, bonded or otherwise made out of the said yarns or fibres; to manufacture and deal as a wholesaler,
retailer, distributor, exporter, broker, trader, agent, franchisee etc. in all kinds of garments, dresses, hosiery etc.
made from out of the said yarns, fibres and fabrics for every kind of use; to make vitriol, bleaching and dyeing
materials; to operate as dyers, printers, bleachers, finishers and dressers; to purchase material for and to purchase
or manufacture blocks, spools, bobbins, cones, boxes, tickets, labels, wrappers, show cards, machines, tools and
other appliances required in and connected with the said business; and to trade in, deal in, sell and dispose of the
articles purchased and manufactured by the Company and to carry on any other operations and activities of
whatsoever kind and nature in relation or incidental to hereinabove.
3. To carry on all or any of the business of the manufacturers of and dealers and workers in cement, lime, plasters,
mortar, concrete, whitings, casks, sacks, minerals, clay, earth, gravel, sand, coke, fuel, artificial stone and builders
requisites of all kinds.
4. To carry on the business of electrical engineers, electricians, engineers, contractors, manufacturers, constructors,
suppliers of and dealers in electrical and other appliances, cables, wirelines, dry-cells, accumulators, lamps and
works and to generate, accumulate, distribute and supply electricity for the purposes of light, heat-motive power and
for all other purposes for which electrical energy can be employed and to manufacture and deal in all apparatus
and things required for or capable of being used in connection with the generation, distribution, supply, accumulation
and employment of electricity including in the term electricity all power that may be directly or indirectly derived
therefrom or may be incidentally hereafter discovered in dealing with electricity.
5. To carry on trade or business in India or elsewhere of manufacturing, producing, preparing, fertilizers of all types,
heavy chemicals and their by-products and derivatives and mixtures thereof.
6. To carry on in India or in any part of the world, the business of processing converting, producing, manufacturing,
formulating, using, buying, acquiring, storing, packaging, selling, transporting, distributing, importing, exporting and
disposing all types of fertilizers, chemicals, heavy chemicals, bio-chemicals, acids, alkalies, agrochemicals and their
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ADITYA BIRLA NUVO LIMITED
by-products, derivatives and mixtures thereof, applications in bio-technology, maintaining and rendering assistance
and services of all and every kind of any description for selling, exchanging, altering, improving and dealing in
artificial and other fertilizers, heavy chemicals, agro-chemicals and their by products of every description.
7. To carry on business as an Investment Company and to underwrite and sub-underwrite, to invest in with or without
interest or security and acquire by gift or otherwise and hold, sell, buy or otherwise deal in shares, debentures,
debenture stocks, bonds, units, obligations and securities issued or guaranteed by Indian or Foreign Governments,
States, Dominions, Sovereigns, Municipalities or Public Authorities or bodies and shares, stocks, debentures,
debenture stock, bonds, obligations and securities issued and guaranteed by any company, corporation, firm or
person whether incorporated or established in India or elsewhere and to manage shares, stocks, securities, finance
subject to necessary Government approval and to deal with and turn to account the same, however the Company
shall not carry on any Chit fund activities or business of banking or insurance within the Banking Regulation Act,
1949 or the Insurance Act.
8. To finance the Industrial Enterprises and to provide venture capital, seed capital, loan capital and to participate in
equity / preference share capital or to give guarantees on behalf of the company in the matter and to promote
companies engaged in industrial and Trading Business and to act as Financial consultants, brokers, underwriters,
promoters, dealers, agents and to carry on the business of share broking and general brokers for shares, debentures,
debenture-stocks bonds, Units, obligations, securities, commodities, bullion currencies and to manage the funds of
any person or company by investment in various avenues like Growth Fund, income Fund, Risk Fund, Tax Exempt
Fund, Pension/Superannuation Funds and to pass on the benefits of portfolio investments to the investors as
dividends, bonus, interest, etc and to provide a complete range of personal financial services like investment
planning, estate planning, tax planning, portfolio management, consultancy/ counseling service in various fields,
general administrative, commercial financial, legal e conomic, labour, industrial public relations, scientific technical
direct and indirect taxation and other levies, statistical, accountant, quality control, data processing by acquiring/
purchasing sophisticated office machineries such as computers, tabulators, addressing machines etc.
9. To promote industrial finance by way of advances, deposits or lend money, securities and properties to or with any
company, body, corporate, firm, person or association whether falling under the same management or otherwise,
with or without security and on such terms as may be determined from time to time; and to carry on and undertake
the business of finance, investment and trading, hire-purchase, leasing and to finance lease operations of all kinds,
purchasing, selling, hiring or letting on hire all kinds of plant and machinery and equipment that the Company may
think fit and to assist in financing of all and every kind of description of hire-purchase or deferred payment or
similar transactions and to subsidise, finance or assist in subsidizing or financing the sale and maintenance of any
articles, goods and commodities of all and every kind of description upon any terms whatsoever and to purchase
or otherwise deal in all forms of movable property including plant and machinery, equipment, ships, aircraft,
automobiles, computers, and all consumer, commercial and industrial items and to lease or otherwise deal with any
of them in any manner whatsoever including resale thereof regardless of whether the property purchased and
leased be new and/or used.
Changes in our Memorandum of Association –
During the last ten years, the following changes have been made to our Memorandum of Association:
Date of shareholder approval Changes
July 15, 1997 Increase in authorized capital of the Company to Rs.100 crores divided into 85
crores Equity shares of Rs. 10/- each and 15 lacs Redeemable preference shares
of Rs. 100 each, with power to the Company to increase or reduce the capital for
the time being into several classes.
May 26, 2000 Insertion of new clause 4(a) in Clause III of Objects clause of Memorandum of
Association and approval under section 149(2A) for starting new business of the
Company.
October 27, 2005 Change of name of the Company from Indian Rayon and Industries Limited to
Aditya Birla Nuvo Limited duly approved by a special resolution passed by means
of a Postal ballot by the shareholders.
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Date of shareholder approval Changes
November 16, 2005 Insertion of new clause 30F in clause III of the objects clause of Memorandum of
Association consequent to approval of the Scheme of Amalgamation between
Indo Gulf Fertiliser Limited and the Company and confirmed by Hon’ble High
Court of Gujarat vide its order dated January 10, 2006
November 16, 2005 Insertion of new clause 30G in clause III of the objects clause of Memorandum of
Association consequent to approval of the Scheme of Amalgamation between
Birla Global Finance Limited and the Company and confirmed by Hon’ble High
Court of Gujarat vide its order dated January 10, 2006
August 17, 2006 Increase in authorized capital of the Company from Rs.100 crores to Rs.125 crores
divided into 12 crores Equity shares of Rs. 10/- each and 5 lacs Redeemable
preference shares of Rs. 100 each, with power to the Company to increase or
reduce the capital for the time being into several classes.
The details of the capital raised by our Company are given in the section titled “Capital Structure” on page 16 of this
Letter of Offer.
Summary of Key Agreements
We have detailed below the key provisions of certain agreements for acquisitions, investments and disinvestments.
Certain of these agreements were entered into by the Company under the name Indian Rayon and Industries Limited.
With effect from October 27, 2005, the Company has changed its name to Aditya Birla Nuvo Limited (“ABNL”). Further,
certain of these agreements were originally entered into by Indo Gulf Fertilizers Limited which has subsequently merged
with ABNL.
Our Acquisitions and Amalgamations
1. Jaya Shree Textiles and Industries Limited
Following the approval of the High Courts of Judicature of Gujarat and Calcutta, Jaya Shree Textiles and Industries
Limited (“Jaya Shree”) was merged with ABNL with effect from December 31, 1975.
The equity shareholders of Jaya Shree received one equity share of Rs. 100 each of ABNL for every ten fully paid
up equity shares of Rs. 10 held by them in Jaya Shree.
2. Madura Garments
Pursuant to an agreement dated December 21, 1999 between Madura Coats Limited (MCL), ABNL and J & P
Coats Limited (“JPC”), ABNL has acquired the business of MCL’s division “Madura Garments” as a going concern
with all its assets and liabilities and also the right of users in India whether as licensee or as a registered user of
the foreign mark for a consideration of Rs. 1,892.3 million. ABNL has also acquired exclusive rights worldwide in
respect of trademarks owned by MCL. Additionally, MCL shall use best efforts to ensure that all agency, dealership
and franchisee contracts enjoyed by MCL in respect of various trademarks that are assigned in favour of ABNL.
3. PSI Data Systems Limited
Pursuant to a share purchase agreement dated June 25, 2000, between Bull SA and ABNL, ABNL has acquired
50.35% of the issued share capital of PSI Data Systems Limited for a cash sum of Rs. 710,086,050.
4. TransWorks Information Services Private Limited
Pursuant to a share purchase agreement dated June 20, 2003 between Chryscapital I, LLC (Seller), Mr. Rizwan
Koita (Seller and Promoter), Mr. Jagdish Moorjani (Seller and Promoter) and ABNL, ABNL acquired the entire
shareholding in TransWorks Information Services Private Limited (“TransWorks”).
As per the terms of the agreement, the Promoters are obliged not to solicit any employee of either TransWorks or
its subsidiaries or solicit away business from customers of TransWorks or its subsidiaries.
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ADITYA BIRLA NUVO LIMITED
5. Amalgamation of Indo Gulf Fertilisers Limited
Following the approvals of the High Courts of Judicature of Gujarat and Allahabad, Indo Gulf Fertilisers Limited
(“IGFL”) was merged with ABNL with effect from September 1, 2005 and the debts, liabilities, duties and obligations
of IGFL were transferred to ABNL.
The equity shareholders of IGFL received one equity share of Rs. 10 each of ABNL for every three fully paid up
equity shares of Rs. 10 held by them in IGFL.
6. Amalgamation of Birla Global Finance Limited
Pursuant to the approvals of the High Court of Judicature of Bombay and Gujarat, Birla Global Finance Limited
BGFL”) was merged with ABNL with effect from September 1, 2005 and the debts, liabilities, duties and obligations
of BGFL were transferred to ABNL.
The equity shareholders of BGFL received one equity share of Rs. 10 each of ABNL for every three fully paid up
equity shares of Rs. 10 held by them in BGFL.
7. Acquisition of Minacs Worldwide Inc.
Transworks Information Services Limited (“Parentco”), AV Transworks Limited (“Offeror”) and Minacs Worldwide Inc.
(“Minacs”) entered into a support agreement dated June 23, 2006 to facilitate the acquisition of the common shares
of Minacs by the Offeror.
As per the agreement, the Offeror is obligated to make a public announcement (“Offer”) of its intention to purchase
all outstanding common shares, including common shares to be issued on the exercise of rights pursuant to
options and financial warrants on the basis of USD 5.50 per common share. The Open Offer concluded on August
18, 2006 and the Offeror has acquired a 97.51% stake in Minacs.
Material Agreements
1. Agreement between ABNL and Universal McCann, a division of McCann-Erickson India Private Limited
ABNL and Universal McCann, a division of McCann-Erickson India Private Limited (the “Agency”) have entered into
an agreement dated July 18, 2005 pursuant to which the Agency has agreed to provide certain services to ABNL
including media planning, buying advertising space and time on behalf of ABNL in all media.
The term of the agreement was originally from April 1, 2005 for a period of one year. The parties have by a letter
dated August 10, 2006 agreed to extend the agreement for a period of one year i.e. March 31, 2007 on the same
terms and conditions.
2. Agreement between GAIL (India) Limited and ABNL
ABNL (Indo Gulf Fertilizers Limited which subsequently merged with ABNL) and GAIL (India) Limited (“Seller”) have
entered into an agreement dated September 10, 2004 for the purchase of natural gas (regasified LNG) from the
Seller for the fertilizer plant located at Jagdishpur in UP.
The Seller has entered into a Gas Sales and Purchase Agreement with Petronet LNG Limited (“Petronet”) to
purchase natural gas regasified at Petronet’s Dahej Terminal and purchased from Raslaffan LNG Limited.
The agreement is for a basic period till January 1, 2009 and may be extended in accordance with the terms of the
agreement.
The agreement provides that the Seller shall ensure that the gas delivered meets the specifications. As envisaged
under the agreement, the Seller may offer gas which does not meet the specifications but ABNL shall have
discretion in deciding whether or not to accept the gas which does not meet the specifications. The Seller may, at
its discretion, may offer the gas to ABNL in excess of the agreed amount on the same terms and conditions as
contained in the agreement.
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3. Distribution Agreement between Esprit Macao Commercial Offshore Limited and ABNL through its division
Madura Garments for use of the licensed mark “ESPRIT”
Pursuant to an agreement dated December 20, 2004, Esprit Macao Commercial Offshore Limited (“Esprit Macao”)
has granted a license to ABNL for the use of its licensed marks, for the distribution, promotion and sale of its
products in the territory of India excluding any duty free areas. The Agreement is valid until June 30, 2012. Esprit
Macao has granted to ABNL an exclusive license to establish and maintain retail stores in the territory of India
using the licensed trademarks solely in connection with the retail sale of specific apparel and apparel-related
accessories, products which Esprit Macao has approved for distribution, promotion and retail sale by ABNL to end-
consumers; but only so long as such products must be purchased, procured or sourced from designated sources.
ABNL is under an obligation to follow the procedures which are consistent with the reputation and prestige of the
licensed mark which shall include amongst others the right to develop or manufacture any products and alter the
style of any products or promote or distribute the products to consumers through mail-order, electronic commerce or
direct marketing or otherwise exploit the products or the licensed mark on the internet, television, or other electronic
means of communication without the prior written approval of Esprit Macao.
4. Agreement between ABNL and Fisheye Creative Solutions Private Limited
Madura Garments, a unit of Aditya Birla Nuvo Limited (“ABNL”) and Fisheye Creative Solutions Private Limited
(“Fisheye Solutions”) entered into an advertising services agreement dated September 21, 2006. Fisheye Solutions
will render advertising services to ABNL in return for a retainer fee of Rs. 1,50,000 per month for the period June
2006 to March 2007. The term of this agreement shall run for a period of one year from June 1, 2006 to March 31,
2007.
5. Agreement between ABNL and Genesis Colours Private Limited
Aditya Birla Nuvo Limited (“ABNL”) and Genesis Colours Private Limited (“Consignor”) entered into a Consignment
Facilitation Agreement (the “Consignment Agreement”) on May 8, 2006. The Consignor has acquired a license to
use some of ABNL’s brand names in relation to neck ties, scarves and bow ties, which are marketed by the
Consignor under the brand names ‘Louis Philippe’, ‘Van Heusen’, ‘Allen Solly’ and ‘Peter England’ (“Products”) by
way of a trademark license agreement dated April 1, 2006 between ABNL and the Consignor. The Consignor has
requested ABNL to facilitate the dispatch and sale of the Products manufactured by it under ABNL’s brand names
through the showrooms (where the Products shall be displayed and sold) situated in various parts of India. The
Products shall be owned by the Consignor at all times till sold. The Consignment Agreement commenced on April
1, 2006 and will be operative up to March 31, 2009 and thereafter may be renewed on mutually agreed terms.
6. Agreement between ABNL and Genesis Colours Private Limited
Aditya Birla Nuvo Limited (“ABNL”) and Genesis Colours Private Limited (“Genesis”) entered into a trademark
license agreement (“Trademark Agreement”) on April 1, 2006. ABNL has agreed to grant a non-exclusive license to
Genesis to use ABNL’s licensed trade marks such as Louis Philippe, Allen Solly, Peter England, Van Heusen
(“Licenses Trademarks”) to sell, distribute or otherwise carry out retail trading of goods. Genesis shall use the
Licensed Trademarks only in accordance with instructions and in such form and manner as may be approved in
writing by ABNL. Genesis has agreed to pay ABNL a royalty fee for the license. The Trademark for Louis Phillippe
and Allen Solly has been licensed for the territory of India, UAE, Muscat, Qatar, Bahrain, Kuwait, Sri Lanka and
Bangladesh and for Peter England and Van Heusen, the Trade Mark has been licensed for the territory of India.
The Trademark Agreement commenced on April 1, 2006 and will be operative up to March 31, 2009.
7. Agreement between ABNL and Biren N. Vaidya
Aditya Birla Nuvo Limited (“ABNL”) and Biren N. Vaidya (“Licensee”) entered into a trademark license agreement
(“Trademark Agreement”) dated December 15, 2005. ABNL has granted the Licensee an exclusive license to use
the brands Allen Solly, Peter England, Louis Philippe (“Schedule A1 Trade Marks”) and artistic works pertaining to
the Schedule A1 Trade Marks in respect of fashion watches for men and women, including wrist-watches with
straps, pocket watches with chains, such fashion watches made of metals, alloys of metals, plastics, rubber,
polyurethane, glass, crystals, precious and/or semi-precious stones (not including gem and/or jewellery articles,
ornaments or allied articles) and/or allied materials and/or derivatives, and/or any combinations thereof (“Goods”)
only in India, UAE, Qatar, Bahrain, Kuwait, any other country as may be notified by ABNL at its sole option and
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ADITYA BIRLA NUVO LIMITED
discretion. ABNL has further granted the Licensee a license to use Van Heusen (“Schedule A2 Trade Marks”) and
artistic works pertaining to the Schedule A2 Trade Marks in respect of Goods in the territory of India. The Licensee
shall pay royalty to ABNL as per terms agreed. The Trademark Agreement shall be effective from December 1,
2005 for a period of 5 years until November 30, 2010 and thereafter may be renewed on mutually agreed terms.
8. Agreement between ABNL and Sierra Industrial Enterprises Private Limited
Aditya Birla Nuvo Limited (“ABNL”) and Sierra Industrial Enterprises Private Limited (“Licensee”) entered into a
trademark licensed user agreement (“Trademark Agreement”) dated December 15, 2005. ABNL has granted the
Licensee an exclusive license to use the brands Allen Solly, Peter England, Louis Philippe (“Schedule A1 Trade
Marks”) and artistic works pertaining to the Schedule A1 Trade Marks in respect of men’s and ladies footwear,
including but not limited to shoes, boots, slip-ons, slippers, sandals, flip-flops and the like, made of leather, artificial
leather, nylon, gore-tex, poly urethanes, other allied materials and combinations thereof (“Goods”) only in India,
UAE, Qatar, Bahrain, Kuwait, any other country as may be notified by ABNL at its sole option and discretion to the
Licensee from time to time. ABNL has further granted the Licensee a license to use Van Heusen (“Schedule A2
Trade Mark”) and artistic works pertaining to the Schedule A2 Trade Mark in respect of Goods in the territory of
India. The Licensee shall pay royalty to ABNL as per terms agreed. The Trademark Agreement shall be effective
from February 1, 2006 for a period of seven years until January 31, 2013.
9. Agreement between ABNL and St. Divyal
Aditya Birla Nuvo Limited (“ABNL”) and St. Divyal (“Licensee”) entered into a trademark license agreement (“Trademark
Agreement”) dated January 3, 2005. ABNL has granted the Licensee a non-exclusive trademark of the brand Peter
England in respect of men’s cufflinks and tiepins (“Goods”) in India. The Licensee shall pay royalty to ABNL as per
terms agreed. The Trademark Agreement shall be effective from January 1, 2005 for a period of three years and
three months until March 31, 2008.
10. Stabilization Agreement between ABNL, Idea Cellular Limited and JM Morgan Stanley Limited
The Company (the “Green Shoe Lender”) has entered into a stabilization agreement (the “Stabilization Agreement”)
with Idea Cellular Limited (“Idea”) and JM Morgan Stanley Limited (“JMMS”) dated December 4, 2006. Idea proposes
to make an initial public offering of equity shares of Rs. 10 each aggregating Rs. 2,500 Crores (the “Equity Shares”)
of Idea (the “Issue”) excluding the Equity Shares comprised within the green shoe option portion. In accordance
with Chapter VIII-A of the SEBI Guidelines, Idea has appointed JMSS as the stabilizing agent, to perform the
functions envisaged in the Stabilization Agreement, including price-stabilizing after listing, if required. The Company,
a shareholder and promoter of Idea has agreed to act as the green shoe lender under the Stabilization Agreement.
In its capacity as the Green Shoe Lender, the Company has agreed to lend to JMSS Equity Shares up to an
aggregate amount of Rs. 375 Crores (“the Over Allotment Shares”) of the Issue for the purpose of stabilization to
be conducted in accordance with Chapter VIII-A of the SEBI Guidelines. The Equity Shares available for allocation
under the Green Shoe Option will be available for allocation to qualified institutional buyers, non-institutional
bidders and retail individual bidders in the ratio of 60:10:30, assuming full demand in each category. The monies
received from the applications for Equity Shares in the Issue against the over allotment shall be kept in a green
shoe option bank account (the “GSO Demat Account”), i.e, an account used only for the purpose of stabilization of
the post listing price of the Equity Shares.
The Green Shoe Lender shall have the following rights and obligations:
(i) The Green Shoe Lender has undertaken to execute and deliver all necessary documents and give all
necessary instructions to procure that all rights, title and interest in the Over Allotment Shares shall pass to
JMSS/GSO Demat Account free from all liens, charges and encumbrances.
(ii) The Green Shoe Lender will not recall or create any lien or encumbrance on the Over Allotment Shares till
the expiry of seven business days from the end of the stabilization period, i.e., period commencing from the
date of obtaining the trading/listing permission from BSE and NSE for the Equity Shares in the Issue and
ending thirty days thereafter unless terminated earlier by JMMS in accordance with the Stabilization Agreement.
(iii) The Green Shoe Lender is required to comply with the SEBI Guidelines and all other applicable securities
laws in the performance of its responsibilities under the Stabilization Agreement.
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According to the terms of the Stabilization Agreement, Idea shall pay the Green Shoe Lender the consideration Re. One
of the product of the Issue price and the number of Equity Shares lent by the Green Shoe Lender.
Joint Venture Agreements
(i) Birla NGK Insulators Limited
1. Joint Venture Agreement between ABNL and NGK Insulators Limited
ABNL and NGK Insulators Limited, Japan (“NGK”) entered into an agreement dated August 15, 2002 wherein
it was provided that ABNL will transfer its insulator division at Halol and Rishra (Jaya Shree Insulators
division) as a going concern into the new company to be formed with share capital of Rs. 25 crores pursuant
to a scheme of arrangement of demerger. The agreement provided that the separate private limited company
shall be called Birla NGK Insulators Limited (“Birla NGK”) and its registered office shall be located at Halol.
The agreement provides that the subscribed and issued capital of the company shall be held by ABNL and
NGK in the ratio of 50:50.
The agreement provides that NGK and ABNL may nominate an entity (an associate) to which they can
transfer their shareholding of up to 10% out of their own shareholding.
The agreement provides that both parties shall be equally responsible for the management of Birla NGK and
may nominate four directors each and appoint alternate directors for the same. Further, to constitute quorum,
one nominee director of each ABNL and NGK must be present. ABNL’s nominee shall be the chief executive
officer and the NGK nominee shall be the co-chief executive officer.
The agreement provides that neither party shall sell or transfer its shares for a period of seven and a half
years from the closing of the transaction. If either party desires to sell all of its shares, it shall first offer the
same to the other party at a price as decided by an accountant (Prescribed Price) taking into consideration
the replacement cost of fixed assets, future prospects of Birla NGK. If the party refuses the offer, the sale may
be made to a third party who is acceptable to the remaining party at a price equal to or higher than the
Prescribed Price.
The agreement also provides for rights of first refusal as well as tag along rights for both parties.
The agreement provides that during the term of the agreement, neither party shall directly or indirectly or
through its group company enter into any joint venture with any other party to set up any business in India in
respect of the insulator business.
The joint venture agreement has been terminated with effect from November 29, 2006 pursuant to an agreement
between Aditya Birla Nuvo Limited, Laxminarayan Investment Limited, NGK Insulators Private Limited and
Birla NGK Insulators Limited.
2. Marketing Agreement between Birla NGK Insulators Private Limited and ABNL
Birla NGK Insulators Private Limited (“Birla NGK”) and ABNL have entered into a marketing agreement dated
February 6, 2003 for the purpose of sale, distribution, marketing and promotion by ABNL of the goods of Birla
NGK.
According to the terms of the agreement, Birla NGK undertakes that all sales in the territory shall be made
exclusively to ABNL and grants to ABNL an exclusive royalty free license to use the trademarks available for
use by ABNL for sale, marketing and promotion of the goods in India and agrees that during the term of the
agreement, Birla NGK shall not sell, use or authorize any entity or person other than ABNL to use its
trademarks within the territory of India in connection with the goods. Further, neither Birla NGK nor ABNL
shall cause the goods to be either directly or indirectly exported outside India during the term of the agreement.
The agreement provides that neither party shall be liable for any incidental, indirect, special or consequential
losses irrespective of whether this liability arises in tort, contract or otherwise and each party shall indemnify
the other for any losses due to misrepresentation, breach of the agreement, negligence or misconduct.
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ADITYA BIRLA NUVO LIMITED
3. Agreement between Aditya Birla Nuvo Limit, Laxminarayan Investment Limited, NGK Insulators Limited
and Birla NGK Insulators Limited
Aditya Birla Nuvo Limited (“ABNL”), Laxminarayan Investment Limited (“LNIL”), NGK Insulators Limited (“NGK”)
and Birla NGK Insulators Private Limited (“Birla NGK”) (together, “the Parties”) have entered into a Share
Transfer and Termination Agreement (“Share Transfer Agreement”) dated November 17, 2006. ABNL along
with LNIL subscribed to and held 12,500,000 shares amounting to 50% of total issued equity shares of Birla
NGK. NGK subscribed to 11,250,000 shares representing 45% of the equity capital of Birla NGK pursuant to
a Subscription Agreement (the “Subscription Agreement”) dated February 6, 2003. Under the Share Transfer
Agreement 11,250,000 equity shares shall be sold by NGK to ABNL and LNIL. ABNL and NIL will pay NGK
US$14.5 million for the equity shares of Birla NGK. Of the total, ABNL shall purchase 8,250,000 equity shares
from NGK and pay NGK US$ 10.65 million while LNIL shall purchase 3,000,000 equity shares from NGK and
pay NGK US$ 3.85 million. Except as provided in the Share Transfer Agreement, on and from December 26,
2006 (the “Completion Date”) the Parties shall be released from all obligations (except those already accrued
prior to the Completion Date) towards each other under various agreements entered into between them with
regard to Birla NGK’s operations (including any joint venture, marketing and know-how agreements) and shall
be held harmless in this regard.
4. Agreement between Aditya Birla Nuvo Limited, Laxminarayan Investment Limited, Mitsubishi Corporation
and Birla NGK Insulators Limited
Aditya Birla Nuvo Limited (“ABNL”), Laxminarayan Investment Limited (“LNIL”), Mitsubishi Corporation
(“Mitsubishi”) and Birla NGK Insulators Private Limited (“Birla NGK”) (together, “the Parties”) have entered into
a Share Purchase Agreement (“Share Purchase Agreement”) dated November 17, 2006. ABNL along with
LNIL subscribed to and held 12,500,000 shares amounting to 50% of total issued equity shares of Birla NGK.
Mitsubishi entered into a share subscription agreement dated February 6, 2003 with the Company and has
subscribed to and paid for 1,250,000 shares of Birla NGK. Under the terms of the Share Purchase Agreement,
1,000,000 equity shares held by Mitsubishi will be sold to LNIL at a consideration of US$ 2 million with a put
option on the balance 250,000 equity shares on the same terms and conditions as under the Share Purchase
Agreement. Except as provided in the Share Purchase Agreement, on and from December 26, 2006 (the
“Completion Date”) the Parties shall be released from all obligations (except those already accrued prior to
the Completion Date) towards each other under various understandings between them with regard to Birla
NGK and Birla NGK’s operations and the Parties shall be held harmless in this regard.
The above two agreements have been consummated with effect from November 29, 2006.
(ii) Idea Cellular Limited
1. Share Purchase Agreement between Tata Industries Limited, Aditya Birla Nuvo Limited and Birla TMT
Holdings Private Limited
Tata Industries Limited (“TIL”), ABNL and Birla TMT Holdings Private Limited (“Birla TMT”) (ABNL and TMT
together, the Purchasers) have entered into a share purchase agreement dated June 1, 2006 whereby TIL
has sold to ABNL 16,94,64,541 equity shares in Idea Cellular Limited (Idea) representing 7.5% of the equity
capital of Idea.
2. Sponsor Support Agreement between Birla TMT Holdings Private Limited, Hindalco Industries Limited,
Grasim Industries Limited, ABNL, Aditya Birla Telecom Limited, Industrial Development Bank of India
Limited, Idea Cellular Limited, Idea Mobile Communications Limited, BTA Cellcom Limited and Idea
Telecommunications Limited
Birla TMT Holdings Private Limited (“Birla TMT”), Hindalco Industries Limited (“HIL”), Grasim Industries Limited
(“GIL”), ABNL, Aditya Birla Telecom Limited (“Aditya Telecom”), (collectively the Sponsors), Idea Cellular Limited
(“Idea”), Idea Mobile Communications Limited (“IMCL”), BTA Cellcom Limited (“BTA Cellcom”) (collectively the
Borrowers), Idea Telecommunications Limited (“ITL”) and Industrial Development Bank of India Limited (“IDBI”),
have entered into a sponsor support agreement dated August 8, 2006. The agreement provides for the
following:
75
I. Pledge of shares aggregating to 51% of the paid up equity capital of Idea and ABNL has pledged
46,85,97,140 equity shares pursuant to this obligation.
II. Cash support undertaking aggregating to Rs.90 crores to be provided to Idea in certain situations for
various circles in which Idea is operating. ABNL’s share against this obligation is Rs. 59.29 crores.
Non-Disposal Undertaking (NDU) to the extent of 25% paid up equity share capital of Idea. The Company has
provided a NDU for 16,94,64,541 equity shares.
The sponsor support agreement dated October 30, 2003 will terminate since the Company has executed
fresh sponsor support agreement dated August 8, 2006 along with other sponsors of Borrower. pursuant to
which -
a) the Company has undertaken Non Disposal undertaking to the extent of 51% paid up equity share
capital of Idea along with other Sponsors; has undertaken Non Disposal undertaking to the extent of
51% paid up equity share capital of the borrower along with other Sponsors
b) to infuse funds, in case borrower is not able to infuse fresh capital upto Rs 550 crores by March 31,
2007 which will further increase to the extent of redemption of preference shares of borrower, if any.
Preference shares issued by Idea Cellular Limited
The Company has executed Indemnity-cum-Undertaking (Indemnity) on August 3, 2006 in favour of various
holders of Preference Shares issued by Idea Cellular Limited (Idea) to meet the obligations in respect of
these shares. Pursuant to the said undertaking, the Company is obliged to pay to the holders of Preference
Shares of Idea, the face value of the shares, along with accumulated dividend, both existing as well as future
accumulation thereon in case of ICL’s failure to pay these amount to the holders of these shares on due
dates or exercise of call option by August 3, 2007 or in accordance with the terms of the Indemnity or on
happening of certain events as mentioned therein. The obligation undertaken by the Company is Rs. 272.65
crores comprising of 178 Preference Shares of Rs.1 crore each and accumulated dividend of Rs.94.65 crores
as on 3rd August 3, 2006.
3. Governance and Exit Rights Agreement between Aditya Birla Nuvo Limited, Birla TMT Holdings Private
Limited and P5 Asia Investment (Mauritius) Limited dated October 23, 2006
Subsequent to the purchase of 330,000,000 equity shares of Idea Cellular Limited (“Idea”) by P5 Asia
Investment (Mauritius) Limited (“Providence”), Aditya Birla Nuvo Limited (“ABNL”), Birla TMT Holdings Private
Limited (“Birla TMT”) and Providence have entered into an agreement dated October 23, 2006 (the “Governance
and Exit Rights Agreement”) relating to the general governance and the affaires of Idea. The Governance and
Exit Rights Agreement is an agreement between the shareholders of Idea and Idea is not party to this
agreement. The shareholders have agreed that as long as Idea has not completed an initial public offering of
its equity shares (the “Idea IPO”) and Providence holds at least 10% of the equity shares of Idea, ABNL and
Birla TMT shall procure that Idea seeks prior consent of Providence to effect corporate actions such as any
merger, amalgamation or acquisition. Similarly, ABNL and Birla TMT shall procure that Idea seeks prior
consent of Providence must be obtained before Idea enters a new line of business or increases its indebtedness
beyond Rs. 68 billion.
The Governance and Exit Rights Agreement provides that until the earlier of the completion of the Idea IPO
and the later of the first anniversary of the date of the Governance and Exit Rights Agreement and the
adoption of the articles of association, ABNL and Birla TMT shall procure that none of their affiliates shall
transfer any shares or other securities of Idea to any person or persons acting in concert at a price that has
not been approved by Providence.
Under the Governance and Exit Rights Agreement, ABNL has agreed to indemnify Providence from and
against any and all claims, demands, liabilities, obligations, losses, fines, costs arising out of any inaccuracy
or breach of any fundamental warranty provided by ABNL. Further, the Governance and Exit Rights Agreement
provides that except in the case of fraud, gross negligence or wilful default, ABNL shall not be required to
indemnify Providence for an amount exceeding Rs. 18,480,000,000. Further, any claims, except those arising
out of fraud, gross negligence or wilful default, must be brought against ABNL within two years from the
effective date of the Governance and Exit Rights Agreement.
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ADITYA BIRLA NUVO LIMITED
The Governance and Exit Rights Agreement also provides that in case Idea wishes to issue further shares,
each of the parties to the Governance and Exit Rights Agreement shall have the right, but not the obligation,
to purchase its pro-rata portion. Further, except in the case of a transfer permitted under the Governance and
Exit Rights Agreement, if either ABNL or Birla TMT wish to transfer equity shares in Idea to any person, they
shall give Providence the right to participate in this sale in its pro-rata portion.
The Governance and Exit Rights Agreement also provides that in case the Idea IPO is completed and
Providence wishes to transfer more than 1% of the equity shares of Idea on an exchange in an underwritten
block sale or accelerated book building process, Providence shall give notice of the same to ABNL and
Providence and ABNL shall discuss the possibility of ABNL acquiring those equity shares. However, these
discussions will not involve any discussion of the price to be paid for the equity shares.
Further, under the terms of the Governance and Exit Rights Agreement, ABNL and Birla TMT have agreed to
use their best efforts to procure that the Idea IPO is completed by September 1, 2007.
Shareholders Agreements
1. Shareholders’ Agreement between ABNL and Birla Global Finance Limited and Birla Group Holdings
Private Limited and Sun Life (India) Insurance Investments Inc. and Sun Life Assurance Company of
Canada and Birla Sun Life Insurance Company Limited
ABNL, Birla Global Finance Limited (“BGFL”), Birla Group Holdings Private Limited (“Birla Group Holdings”),
Sun Life (India) Insurance Investments Inc. (“Sun Life India”), Sun Life Assurance Company of Canada (“Sun
Life of Canada”) and Birla Sun Life Insurance Company Limited (“Birla Sun Life”) have entered into a
shareholders’ agreement dated February 1, 2001.
The agreement provides that Birla Sun Life shall not issue any additional shares or any instrument which
would entitle the holder to participate in the profits of Birla Sun Life or in its net assets upon its winding up,
dissolution or termination of its existence, other than shares issued in accordance with the provisions of this
agreement.
All parties have agreed that only upon written notice of six months or such shorter period being issued by
Birla Sun Life the decision to offer new shares, options to purchase shares or securities convertible into
shares shall be taken, provided that the purpose of the same shall be restricted to meeting solvency or other
regulatory requirements.
Additionally, Birla Sun Life shall offer a right of first refusal to the shareholders on a pro rata basis based
upon the number of shares beneficially owned by the shareholders.
ABNL and BGFL shall be entitled to nominate directors.
The agreement provides for several non-compete provisions. The agreement provides that no party which is
a direct or indirect shareholder and for a period of two years after ceasing to be a direct or indirect shareholder,
may either alone or in conjunction with any individual, firm, company, association or other entity whether as
principal, agent or shareholder carry on, advise, or be engaged in, concerned with or interested in, any
undertaking in India which is in whole or in part competitive with any of the business carried on, directly or
indirectly by Birla Sun Life or any subsidiary thereof. Additionally, the agreement provides that neither party
shall solicit or attempt to solicit any suppliers or customers or employees away from Sun Life or any subsidiary
thereof.
The parties shall cause Sun Life India or other members of the Sun Life Group to maintain the largest equity
position then permitted for shareholders under Indian law who are treated as foreign or whose ability to
participate in any business in India is otherwise restricted by Indian law.
The shareholders cannot transfer their shares for the first five years from the date of allotment of the shares
under this agreement. The shareholders are permitted to mortgage, create a security interest in, pledge or
otherwise encumber any shares owned by them as security for a bona fide loan from a bank at any time
during the term of the agreement, upon receiving the written consent of a member of the other group.
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2. Shareholders Agreement between Sun Life (India) AMC Investments Inc., Sun Life Assurance Company
of Canada, Birla Global Finance Limited as BGFL, Birla Group Holdings Private Limited and Birla Capital
International Trustee Company Limited
Sun Life (India) AMC Investments Inc. (“Sun Life India”), Sun Life Assurance Company of Canada (“Sun Life”),
Birla Global Finance Limited (“BGFL”), Birla Group Holdings Private Limited (“Birla Group Holdings”) and Birla
Capital International Trustee Company Limited (the “Trustee Company”) have entered into a shareholders
agreement dated May 19, 1999.
The board shall consist of a majority of independent directors along with nominees of each of the shareholders.
If at any time Indian law requires that Indian citizens/corporations hold more than 50% of the Trustee Company
(“Indian Ownership Change”), the parties shall cause Sun Life India to maintain the then largest equity
position permitted for shareholders who are treated as foreign shareholders. If Sun Life India is required to
sell shares to comply with Indian Ownership Change, the excess shares held by Sun Life India in the Trustee
Company shall be sold to BGFL. In the event that the law permits Sun Life India to increase its stake
subsequently, the parties have agreed to a methodology for the same.
If BGFL and Sun Life India cannot agree to terms and conditions of the sale, Sun Life India may sell shares
to any third party acceptable to BGFL (acting reasonably) provided that Sun Life India shall not sell the
excess shares to a third party at a price lower than at which the shares were offered to BGFL. It is further
provided that if BGFL and Sun Life India cannot find a purchaser then they may affect an offering to the public
to ensure compliance with Indian Ownership Change or the Trustee Company may itself purchase the shares
at a price not lower than the price at which the shares were offered to BGFL. If these options do not
materialize, Sun Life India may put the shares held by them to BGFL as per the terms of the agreement.
The agreement provides that the Trustee Company shall not, without prior written consent of the shareholders,
issue any further shares or any instrument which by its terms would entitle the holder to participate in the
profits of the Trustee Company or in its net assets.
The agreement provides for rights of first refusal and piggyback rights for both parties.
The parties have also agreed to a methodology through which to terminate the agreement if either party so
desires.
The agreement provides that none of the shareholders shall directly or indirectly without prior written consent
of the other as long as they are a shareholder of the Trustee Company and for two years after they cease to
be a shareholder of the Trustee Company be engaged in business carried on directly or indirectly by the
Trustee Company or its subsidiaries or solicit any customers or suppliers or employees of the Trustee Company
and its subsidiaries.
(iii) TransWorks Information Services Limited
1. Share Subscription Agreement between RHCP TXW Investment Inc. and TransWorks Information Services
Limited and Shareholders Agreement between RHCP TXW Investment Inc., Reichmannhauer Capital
Partners Inc., ABNL and TransWorks Information Services Limited
RHCP TXW Investment Inc. (“Investor”) and TransWorks Information Services Limited (“TransWorks”) have
entered into a share subscription agreement dated September 7, 2006 whereby the Investor has subscribed
to shares in TransWorks such that following the subscription by the Investor, the Investor holds 10-15% of the
equity share capital of TransWorks on a fully diluted basis.
The consideration for the transaction is a sum of twenty million Canadian dollars.
Pursuant to the share subscription agreement, the Investor, Reichmannhauer Capital Partners Inc.(“RHCP”),
ABNL and TransWorks have entered into a shareholders agreement dated September 7, 2006 to govern the
conduct of the business of TransWorks.
The shareholders agreement gives the Investor the right to nominate a director on the board of TransWorks.
Further, the agreement provides for rights of first refusal as well as tag along rights for ABNL and the Investor.
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ADITYA BIRLA NUVO LIMITED
The shareholders agreement also provides for pre-emptive rights and states that TransWorks may not issue
any shares or other securities convertible into shares unless a pro rata equivalent number of shares /other
securities are first offered by TransWorks at a price per share equal to the fair market value thereof to ABNL
and the Investor.
Logo Agreements
(i) Rising Sun Logo Trademark
Aditya Birla Management Corporation Limited (“Licensor”) and Aditya Birla Nuvo Limited (“ABNL”) have
entered into a licensed user agreement (the “User Agreement”) dated December 1, 2005. The Licensor
is the proprietor of the trademark ‘The Rising Sun Logo’ (“Rising Sun Trademark”) pending for registration
and the owner of the copyright in the artistic work in the logo of the Rising Sun Trademark (“Artwork”).
The Licensor has granted a non-exclusive, royalty-free license to ABNL to use the Rising Sun Trademark
and the Artwork in respect of goods described in Schedule 1 attached to the User Agreement in India.
ABNL shall not use the Rising Sun Trademark as part of its corporate name or domain name unless
expressly permitted in writing by the Licensor. The Rising Sun Trademark and the Artwork and all rights
therein and the goodwill pertaining thereto shall belong exclusively to the Licensor. The User Agreement
shall be effective from the date of the User Agreement and shall be valid till the Rising Sun Trademark
is valid and subsisting.
The Rising Sun Trademark has also been licensed to other Aditya Birla Group companies.
(ii) Aditya Birla Nuvo Trademark
Aditya Birla Management Corporation Limited (“Licensor”) and Aditya Birla Nuvo Limited (“ABNL”) have
entered into a licensed user agreement (the “User Agreement”) dated December 1, 2005. The Licensor
is the proprietor of the trademark ‘Aditya Birla Nuvo’ (“Nuvo Trademark”) pending for registration. The
Licensor has granted an exclusive, royalty-free license to ABNL to use the Nuvo Trademark in respect
of goods described in Schedule 1 attached to the User Agreement in India. ABNL may use the Nuvo
Trademark as part of its corporate name or domain name. The Nuvo Trademark and all rights therein
and the goodwill pertaining thereto shall belong exclusively to the Licensor. The User Agreement shall
be effective from the date of the User Agreement and shall be valid till the Nuvo Trademark is valid and
subsisting.
Rights to the trademark “Aditya Birla” are with the Licensor and ABNL has been licensed the Aditya Birla
Nuvo since it is a part of the Aditya Birla Group.
Disinvestments
1. Scheme of Arrangement with Grasim Industries Limited
Pursuant to a scheme of arrangement, ABNL (“Transferee Company”) transferred its grey cement and
white cement undertakings, including other related plants on a going concern basis along with right, title
and interest in the business to Grasim Industries Limited (“Grasim”) with effect from September 1, 1998.
The equity shareholders of ABNL received 3 equity shares of Rs. 10 each of Grasim for every 10 (ten)
fully paid up equity shares of Rs. 10 held by them in ABNL.
2. Transfer of Jaya Shree Insulator Division
ABNL transferred its business, undertakings, properties and liabilities as on August 1, 2002 pertaining
to its Jaya Shree Insulator Division, on a going concern basis, together with all its assets and liabilities
to Vikram Insulators Limited (Transferee Company, now known as Birla NGK Insulators Private Limited).
In consideration for the transferred business, the Transferee Company has allotted to ABNL 1,24,90,000
equity shares of the face value of Rs.10 each at par and debentures of an amount being the rupee
equivalent of U.S. Dollars 2,50,00,000.
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3. Business Transfer Agreement between ABNL and BGH Exim Limited
ABNL and BGH Exim Limited (“Transferee”) entered into an agreement dated April 29, 2004 whereby
the Transferee acquired the Global Exports and Marketing Division of ABNL based in Kolkata on a
going concern basis together with all its assets, liabilities, debts, obligations, present and future liabilities
and employees as of March 31, 2004 with effect from April 1, 2004.
The agreement provides that the Transferee may continue to use the name of ABNL for a period of
three years from closing date for the various purposes related to its business. The Transferee shall be
liable for the benefit and any damages etc out of the use of the name of ABNL for the transactions and
in documents.
The consideration for the acquisition is Rs. 54,900,000.
4. Business Transfer Agreement between ABNL and Madura Garments Exports Limited
ABNL and Madura Garments Exports Limited have entered into a business transfer agreement dated
September 1, 2006 whereby the ABNL sold, transferred and assigned the business relating to the
ABNL’s contract export activities i.e. contract exports which are undertaken on a job work basis as a
going concern for a consideration of Rs. 34.50 crores.
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ADITYA BIRLA NUVO LIMITED
DIVIDENDS
We have been a dividend paying Company and have paid dividends in each of the last five years. The following are the
dividend payouts in last five years by our Company:
F. Y. Dividend per Equity Amount (In Rs. Crore) (
1
)
Share of Rs. 10 each
(Amount in Rs.)
2001-2002 3.30 19.76
2002-2003 3.75 22.45
2003-2004 4.00 23.95
2004-2005 4.00 23.95
2005-2006 5.00 41.75
(
1
) Excluding dividend tax where applicable
We do not have a formal dividend policy. Dividend amounts are determined from year to year in accordance with the
Board’s assessment with our earnings, cash flow, financial conditions and other factors prevailing at the time.
The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if
any, in the future.
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MANAGEMENT
Board of Directors
The following table sets forth details regarding our Board of Directors as on December 1, 2006: -
Sr. Name, Designation, Nationality Age Other Directorships in companies
No. Address, Occupation and Term (years)
1. Mr. Kumar Mangalam Birla Indian 39 1. Aditya Birla Chemicals (Thailand) Limited
Designation : Chairman 2. Aditya Birla Management Corporation Limited
Non Executive Director 3. Alexandria Carbon Black Co. S. A.E., Egypt.
{promoter} 4. Birla Sun Life AMC Limited
ADITYAYAN 5. Birla Group Holdings Private Limited
20, Carmichael Road 6. Birla Sun Life Insurance Company Limited
Mumbai 400 026. 7. Century Textile Company Limited, Thailand
Occupation: Industrialist. 8. Century Textiles and Industries Limited
First appointed on 9. Essel Mining and Industries Limited
September 23, 1992. 10. Grasim Industries Limited
Date of Birth: June 14, 1967 11. Gwalior Properties and Estates Private Limited
12. Global Holdings Private Limited
13. G. D. Birla Medical Research & Education
Foundation
14. Hindalco Industries Limited
15. Idea Cellular Limited
16. India Advantage Fund Limited, Mauritius.
17. Indo-Phil Textiles Mills Inc., Philippines
18. Indo-Thai Synthetics Company Limited,
Thailand
19. PSI Data Systems Limited
20. P.T. Elegant Textile Industry, Indonesia
21. P.T. Indo Bharat Rayon, Indonesia
22. P.T. Indo Liberty Textiles, Indonesia
23. Pan Century Edible Oils Sdn. Bhd., Malaysia
24. Pan Century Oleo Chemicals Sdn. Bhd.,
Malaysia
25. Rajratna Holdings Private Limited
26. Reserve Bank of India
27. Seshasayee Properties Private Limited
28. Thai Acrylic Fiber Company Limited, Thailand
29. Thai Carbon Black Public Company Limited,
Thailand
30. Thai Peroxide Company Limited, Thailand
31. Thai Polyphosphate & Chemicals Company
Limited, Thailand
32. Thai Rayon Public Company Limited, Thailand
33. Trapti Trading & Investments Private Limited
34. Transworks Information Services Limited
35. Turquoise Investments and Finance Private
Limited
36. TGS Investment & Trade Private Limited
37. Ultra Tech Cement Limited
38. Vikram Holdings Private Limited
39. Vaibhav Holdings Private Limited
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ADITYA BIRLA NUVO LIMITED
Sr. Name, Designation, Nationality Age Other Directorships in companies
No. Address, Occupation and Term (years)
2. Mrs. Rajashree Birla Indian 61 1. Aditya Birla Chemicals (Thailand) Limited
Designation : Non Executive Director 2. Aditya Birla Health Services Limited
ADITYAYAN 3. Alexandria Carbon Black Co. S.A.E., Egypt.
20, Carmichael Road 4. Birla Group Holdings Private Limited
Mumbai 400 026 5. Essel Mining and Industries Limited
Occupation : Industrialist 6. Century Textile Company Limited, Thailand.
First appointed on March 14, 1996. 7. Grasim Industries Limited
Date of Birth: September 15, 1945 8. Gwalior Properties and Estates Private Limited
9. Global Holdings Private Limited
10. G. D. Birla Medical Research & Education
Foundation
11. Hindalco Industries Limited
12. IGH Holding Private Limited
13. Idea Cellular Limited
14. Indo-Phil Textiles Mills Inc., Philippines
15. Indo-Thai Synthetics Company Limited, Thailand
16. P.T. Elegant Textile Industry, Indonesia
17. P.T. Indo Bharat Rayon, Indonesia
18. Pan Century Edible Oils Sdn. Bhd., Malaysia
19. Pan Century Oleo Chemicals Sdn. Bhd.,
Malaysia
20. Rajratna Holdings Private Limited
21. Seshasayee Properties Private Limited
22. Thai Acrylic Fiber Company Limited,Thailand
23. Thai Carbon Black Public Company Limited,
Thailand
24. Thai Peroxide Company Limited, Thailand
25. Thai Polyphosphate & Chemical Company
Limited, Thailand
26. Thai Rayon Public Company Limited, Thailand
27. Trapti Trading & Investments Private Limited
28. Turquoise Investments and Finance Private
Limited
29. TGS Investments & Trade Private Limited
30. Ultra Tech Cement Limited
31. Vikram Holding Private Limited
32. Vaibhav Holdings Private Limited
3. Mr. H.J. Vaidya Indian 79 1. Industrial Estates (P) Limited
Designation : Independent Director.
501, Everest Chambers,
Off. Mount Pleasant Road,
Malabar Hill, Mumbai 400 006.
Occupation : Industrialist
First appointed on July 14, 1967.
Date of Birth: March 14, 1927
4. Mr. B. L. Shah Indian 85 1. Aditya Birla Health Services Limited
Designation : Non Executive Director 2. Aditya Vikram Global Trading House Limited,
”Manisha” 69A, Nepean Sea Road Mauritius
Mumbai 400 006. 3. Grasim Electronics Limited
Occupation : Retired Executive 4. G. D. Birla Medical Research & Education
First Appointed on April 15, 1975. Foundation
Date of Birth: March 31, 1921 5. Indian Aluminium Company Limited
6. Trapti Trading and Investments Private Limited
7. Western India Sponge Iron Company Limited
83
Sr. Name, Designation, Nationality Age Other Directorships in companies
No. Address, Occupation and Term (years)
5. Mr. P. Murari Indian 72 1. Aban Offshore Limited
Designation : Independent Director 2. Adayar Gate Hotel Limited
2 Gilchrist Avenue, Off Harrington Road 3. Bajaj Auto Limited
Chetpet, Chennai 600 031, 4. Bhoruka Power Corporation Limited
Occupation : IAS (Retd.), 5. Credit Capital AMC Limited
First appointed on January 28, 2000 6. Glaxo Smithkline Consumer Healthcare Limited
Date of Birth: August 19, 1934 7. Great Eastern Energy Corporation Limited
8. HEG Limited
9. Moving Picture Company (India) Limited
10. South Asian Petrochem Limited
11. SMV Consultants Private Limited
12. XPRO India Limited
13. Strategic Weighing Systems Limited
6. Mr. B.R. Gupta Indian 66 1 Bank of Rajasthan Limited
Designation : Independent Director 2. HOV Services Limited
Flat No. 6 Ground Floor, 3. IDBI Capital Market Services Limited
Sheetal Apartment, Apna Ghar, 4. J B F Industries Limited
Unit No. 9, Shree Swami Samarath 5. OTCEI Securities Limited
Nagar, Lokhandwala Andheri(West), 6. Prudential ICICI AMC Limited
Mumbai 400053. 7. Sentient Advisors (Private) Limited
Occupation: Retired Executive
First appointed on
January 28, 2000.
Date of Birth: February 15, 1940
7 Ms. Tarjani Vakil Indian 70 1. Asian Paints Limited
Designation : Independent Director. 2. Alkyl Amines and Chemicals Limited
A-1, Ishwardas Mansion, Nana Chowk 3. DSP Merrill Lynch Trustee Co. Private Limited
Mumbai 400 007. 4. Idea Cellular Limited
Occupation : Consultant. 5. I-Flex Solution Limited
First appointed on July 27, 2000. 6. Mahindra Intertrade Limited
Date of Birth: October 30, 1936 7. IDEA Mobile Communication Limited
8 Mr. Vikram Rao Indian 56 1. Aditya Vikram Global Trading House Limited,
Designation: Whole Time Director. Mauritius
No. 395, 16th Main, III BlockIIA Cross, 2. Madura Garments Exports Limited
Koramangala, Bangalore 560034. 3. Aditya Birla Management Corporation Limited,
Occupation: Management Executive 4. Aditya Birla Retail Limited
First appointed on October 30, 2001
Date of Birth: September 10, 1950
9. Mr. S.C. Bhargava Indian 61 1. All Bank Finance Limited
Designation : Independent director 2. Bank of Maharashtra
1305, Dosti Aster (Dosti Acres) 3. DCM Shriram Consolidated Limited
New Uphill Link Road 4. Escorts Limited
Off S.M. Road, Antop Hill, 5. IL & FS Insurance & Risk Management Services
Wadala (East), Mumbai 400 037. Limited
Occupation : Retired Executive 6. IL & FS Academy for Insurance & Finance
First appointed on April 29, 2004. Limited
Date of Birth: July 20, 1945 7. Jai Prakash Power Ventures Limited
8. Jaypee Cements Limited
9. Jay Prakash Associates Limited
10. J P Enterprise Limited
11. Mudra Lifestyle Limited
12. OTC Exchange of India Limited
13. OTC Securities Limited
14. Swaraj Engine Limited
15. Srei Venture Capital Limited
16. UTI AMC (Private) Limited
84
ADITYA BIRLA NUVO LIMITED
Sr. Name, Designation, Nationality Age Other Directorships in companies
No. Address, Occupation and Term (years)
10 Mr. G. P. Gupta Indian 65 1. Birla Sun Life Insurance Company Limited
Designation : Independent Director 2. EMKAY Share & Stock Brokers Limited
101 Kaveri B Wing 3. Hindustan Aeronautics Limited
Neelkanth Valley, 7th Road, Rajawadi 4. Jammu & Kashmir Bank Limited
Ghatkopar (E), Mumbai 400 077. 5. M P Power Generation Company Limited
Occupation: Retired Executive. 6. NTPC Limited
First appointed on April 27, 2005. 7. PTC India Limited
Date of Birth: January 11, 1941 8. Power Finance Corporation Limited
9. Shree Digvijay Cement Company Limited
10. Su-Raj Diamonds and Jewellery Limited
11. Swaraj Engines Limited
12. SIDBI Venture Capital Limited
11. Mr. S. K. Mitra Indian 58 1. Aditya Birla Management Corporation Limited
Designation: Whole Time Director 2. Birla Sun Life Asset Management Company
1201, Phoenix Tower B Wing, Limited
Senapati Bapat Marg, 3. Birla Sun Life Distribution Company Limited
Lower Parel, 4. Birla Sun Life Insurance Company Limited
Mumbai 400 030 5. Birla Insurance Advisory Services Limited
Occupation : Company Executive 6. Birla Global Asset Finance Company Limited
First appointed on October 1, 2005. 7. Birla Securities Limited
Date of Birth: January 16, 1948 8. BGFL Corporate Finance Private Limited
9. Birla Sun Life AMC Limited, Mauritius
12. Dr. Rakesh Jain Indian 45 1. Aditya Birla Science & Technology Company
Designation : Whole Time Director Limited
1101/2, “A” Wing, Quantum Park, 2. Aditya Birla Chemicals (Thailand) Limited
Union Park Road, Khar (W) 3. Birla NGK Insulators Limited
Mumbai 400 052. 4. Alexandria Carbon Black Co. S.A.E., Egypt
Occupation: Company Executive 5. Liaoning Birla Carbon Company Limited China
First appointed on October 1, 2005. 6. Thai Carbon Black Public Company Limited,
Date of Birth: January 19, 1961 Thailand
7. Thai Polyphosphate & Chemicals Company
Limited, Thailand
13. Mr. K. K. Maheshwari Indian 51 1. Aditya Birla Chemical (Thailand) Limited
Designation : Whole Time Director 2. Aditya Birla Science & Technology Company
22, Chitrakoot Co-operative Limited
Housing Society Limited 3. Bihar Caustic & Chemicals Limited
Altamount Road 4. Laxminarayan Investment Limited
Mumbai 400 026 5. Tanfac Industries Limited
Occupation : Company Executive 6. Aditya Birla Management Corporation Limited
First appointed on October 1, 2005. 7. Thai Peroxide Company Limited, Thailand
Date of Birth: March 01, 1955 8. Thai Polyphosphate & Chemical Company
Limited, Thailand
14. Mr. Adesh Kumar Gupta Indian 50 1. Aditya Birla Telecom Limited
Designation: Whole Time Director & CFO 2. Aditya Vikram Global Trading Housing Limited
701 Tagore Avenue, 3. Birla Technologies Limited
Tagore Road, Santacruz (W), 4. Birla NGK Insulators Limited
Mumbai 400 054. 5. Laxminarayan Investment Limited
Occupation: Company Executive 6. Madura Garments Exports Limited
First appointed on October 1, 2005. 7. PSI Data Systems Limited
Date of Birth: September 11, 1956 8. Transworks Information Services Limited
9. Minacs Worldwide Inc., Canada.
10. Birla Insurance Advisory Services Limited
15. Dr. Bharat K. Singh Indian 60 1. Aditya Birla Management Corporation Limited
Designation : Managing Director 2. Aditya Birla Power Company Limited
1 Kumaram, Ground Floor, 3. Rosa Power Supply Company Limited
10 Worli Sea Face, Mumbai 400 018. 4. Birla NGK Insulators Limited
Occupation: Management Executive 5. PSI Data Systems Limited
First appointed on November 1, 2006. 6. Birla Technologies Limited
Date of Birth: July 23, 1946
85
Brief Biography of Our Directors
Mr. Kumar Mangalam Birla, Chairman of the Aditya Birla Group, was appointed as Chairman of our Company in June
1995. He was first appointed as a Director on the Board of our Company on September 23, 1992.
Mr. Birla also serves as a Director on the Board of the Group’s International Companies spanning Thailand, Indonesia,
Malaysia, Philippines and Egypt. Mr. Birla holds several key and responsible positions on various regulatory and
professional Boards. He is Director of the Central Board of Directors of the Reserve Bank of India, Chairman of the
Advisory Committee constituted by the Ministry of Company Affairs; Member of the Prime Minister of India’s Advisory
Council on Trade and Industry; Chairman of the Board of Trade reconstituted by the Union Minister of Commerce and
Industry; Member of The Government of Uttar Pradesh’s High Powered Investment Task Force; Member of The National
Council of the Confederation of Indian Industry (CII); and Member of the Apex Advisory Council of The Associated
Chambers of Commerce and Industry of India.
Additionally, he is on the Board of the G.D. Birla Medical Research & Education Foundation, and a Member of the Board
of Governors of the Birla Institute of Technology & Science (BITS), Pilani, and the prestigious Indian Institute of Management,
Ahmedabad as well. He is a Member of the London Business School’s Asia Pacific Advisory Board, which provides
counsel on the School’s strategy and curriculum. He is “Honorary Fellow” of the London Business School (LBS), a title
conferred upon him by the Governing Board of the LBS. In recognition of his exemplary contribution to Indian business,
The Banaras Hindu University awarded the D.Litt (Honoris Causa) Degree to him. A Chartered Accountant and earned
an MBA (Masters in Business Administration) from the London Business School, London.
Mrs. Rajashree Birla was appointed on our Board of Directors on March 14, 1996. She is a Director on the Board of all
the major Aditya Birla Group of Companies; viz., Grasim, Hindalco, Aditya Birla Nuvo and UltraTech Cement Limited.
Additionally, Mrs. Birla serves as a Director on the Board of the Aditya Birla Group’s International Companies spanning
Thailand, Indonesia, Philippines and Egypt. As Chairperson of the Aditya Birla Centre for Community Initiatives and Rural
Development, the apex body responsible for development projects, Mrs. Birla oversees the Group’s social and welfare
driven work across 30 companies.
She is the Chairperson of the Advisory Board of the University of Kanchipuram. She is Member of the Advisory Board of
“The Research Society For The Care, Treatment and Training of Children in Need of Special Care”, Mumbai, and also a
Trustee of “Population First”, India, and of BAIF Development Research Foundation, Pune. Mrs. Birla is a Member of the
prestigious Tirumala Tirupathi Devasthanams Development Advisory Council. Mrs. Birla is a Member of the Executive
Committee of the Gandhi Smriti and Darshan Samiti. As a patron of arts and culture, Mrs. Birla heads the “Sangeet Kala
Kendra”, as its President. Born and raised in Madurai, Mrs. Birla studied arts, graduating from the Loretto College at
Calcutta.
Mr. H. J. Vaidya, a Science Graduate, was appointed to our Board of Directors on July 14, 1967. He was a member of
the Working Committee and an Office Bearer of the All India Manufacturers Organisation. He is on the board of Industrial
Estates Private Limited and was previously on the boards of Jeevan Limited and Bombay Sales & Agencies Private
Limited. Mr. Vaidya was a representative of the Employer’s Representative of the Indian Delegation to the International
Labour Organisation (ILO) Annual conventions Geneva in the years 1981, 1982 and 1984.
Mr. B.L. Shah is a Commerce Graduate and has worked in several companies on various posts reaching to the position
of President and Director of the Company. He had a successful career with the Aditya Birla Group Company till2003
when he retired from service. He was also previously on the board of Tanfac Industries Limited. Presently he is looking
after social activities of various trusts belonging to the Aditya Birla Group.
Mr. P. Murari is a retired IAS Officer. He was Secretary to the President of India before retiring from service in September,
1992. He is presently the Advisor to the President, Federation of Indian Chamber of Commerce & Industry. He has held
several key positions in the Government, both at the Central and the State, various institutions and professional bodies
and served on their boards as Director/ Governor of Councils. Mr. Murari was a director on the board of several
companies including Smithkline Beecham Consumer Healthcare Limited, Seagrams India Limited and CIMCO Birla
Limited. He is also the Chairman of the Investor Relation & Finance Committee of the Company.
Mr. B. R. Gupta was appointed to our Board of Directors on January 28, 2000. He is a Post Graduate in Arts, Law and
a Graduate Fellow of Insurance Institute of India and is former Executive Director of Life Insurance Corporation of India
and was also on the board of Mahindra & Mahindra Limited. He has very rich and varied experience as Investment
Consultant and as a Director on the Boards of several companies.
86
ADITYA BIRLA NUVO LIMITED
Ms. Tarjani Vakil, a Post Graduate in Arts, was appointed to our Board of Directors on July 27, 2000. Ms. Vakil retired
from the position of Chairperson and Managing Director of Exim Bank in 1996. She was earlier on the board of Bharat
Heavy Electricals Limited and KEC International Limited. Ms. Vakil is on the board of several companies and is also the
Chairperson of Audit Committee of the Company.
Mr. Vikram Rao, B.E. Chemical from REC Suratkal and MBA from XLRI, Jamshedpur, was appointed to our Board of
Directors on October 30, 2001. Before joining the Aditya Birla Group in 1999, Mr. Rao was President. Arvind Mills
Limited. At present he looks after the Garments and Textiles Business of the Company and the Group.
Mr. S. C. Bhargava was appointed to Board of Directors on April 29, 2004 and is a representative of Life Insurance
Corporation of India on the Board of the Company. He is a Chartered Accountant with more than 32 years of experience
and was previously on the board of Asset Care Enterprises Limited. Mr. Bhargava is also a director on the board of
several companies.
Mr. G. P. Gupta, a Post Graduate in Commerce was appointed to our Board of Directors on April 27, 2005. He is the
former Chairman and Managing Director of IDBI and former Chairman of UTI. He has varied experience in the areas of
general management, financial management, banking, industrial and financial restructuring. Mr. Gupta is a Director on
the Board of several companies.
Mr. Adesh Kumar Gupta was appointed by the Board of Directors as a Whole-time Director and Chief Financial Officer
(CFO) w.e.f from October 1, 2005. Mr. Gupta is a Chartered Accountant and Company Secretary and has been associated
with the Company and the Aditya Birla Group for a number of years. He was earlier holding the positions of Senior
President and CFO in the Company.
Mr. K.K. Maheshwari, M. Com and a Chartered Accountant, has been associated with the Company and the Group for
a number of years and is presently in charge of the Viscose Filament Yarn and Caustic Soda plants of the Company at
Veraval as also the Chemical Business and Global Trading Business of the Aditya Birla Group. He was previously the
Manager of the Company.
Mr. S.K. Mitra was appointed by the Board of Directors as an Additional Director w.e.f. October 1, 2005. Mr. Mitra is
M.Sc., MBA (USA) and was the Managing Director of erstwhile Birla Global Finance Limited w.e.f. July 15, 1994. He has
considerable experience in corporate finance, investment banking and fund management. Mr. Mitra has been instrumental
in entering into various joint ventures with Sun Life Financial of Canada and overseeing the operations of the joint
Ventures. He is on the Board of several companies including Birla Sun Life Insurance Co. Limited, a subsidiary of the
Company.
Dr. Rakesh Jain was appointed as an Additional Director w.e.f. October 1, 2005 on the Board of Directors of Aditya Birla
Nuvo Limited (ABNL) and subsequently he was appointed as Whole-time Director of ABNL w.e.f. April 3, 2006. Mr.
Rakesh Jain was holding position as Managing Director of erstwhile Indo Gulf Fertilisers Limited (IGFL) prior to its
amalgamation with ABNL. Mr. Rakesh Jain is M.Tech from IIT Kharagpur and Ph.D from University of Akron in the United
States. He has rich experience in the areas of business development, strategy formulation and technology management.
He started his career in GE Electro Materials, Coshoston OH. Before joining IGFL, he was holding the position of
President and CEO for India and South Asia in GE Plastics. He has about 19 years of global experience in USA, Europe
and Asia in different capacities such as Business Leader, Global Manufacturing Leader and Six Sigma Leader in GE
Group. Presently, he is the “Business Head” of the Carbon Black Business of ABNL as well as of the Group.
Dr. Bharat K. Singh was appointed as the Managing Director of the Company with effect from November 1, 2006. Dr.
Bharat Singh is a Mechanical Engineer from the University of Burdwan. He completed his Post Graduation in Business
Management from the Indian Institute of Management, Kolkata and has a Doctoral Degree from Jamnalal Bajaj Institute
of Management Studies, Mumbai. He joined the Aditya Birla Group in 1996. He has over thirty years of work experience
in several Operational and Strategic roles in organizations such as the ITC Group, Sandoz (India) Limited, RPG Enterprises
and Mohan Meakin Distilleries Limited. Dr. Bharat K. Singh is also a Director on the Board of Aditya Birla Management
Corporation Limited.
87
Compensation of our Directors
The following tables set forth all compensation paid by us to our directors for the fiscal year ended March 31, 2006.
Non-Executive Directors
Name of Director Commission Sitting Fees Total
Amount (Rs.) Meetings Amount (Rs.) Amount (Rs.)
Attended
Mr. Kumar Mangalam Birla 95,38,000 5 1,00,000 96,38,000
Mrs. Rajashree Birla 4,77,000 5 1,00,000 5,77,000
Mr. H.J. Vaidya 7,75,000 7 1,40,000 9,15,000
Mr. B.L. Shah 5,87,000 7 1,40,000 7,27,000
Mr. B.R. Gupta 7,87,000 9 1,80,000 9,67,000
Mr. P. Murari 6,68,000 8 1,60,000 8,28,000
Ms. Tarjani Vakil 8,58,000 10 2,00,000 10,58,000
Mr. Vikram Rao* 3,82,000 4 80,000 4,62,000
Mr. G.P. Gupta 4,53,000 5 1,00,000 5,53,000
Mr. S. C. Bhargava** 4,77,000 5 1,00,000 5,77,000
Mr. S.K. Mitra - 3 60,000 60,000
Mr. Rakesh Jain - 3 60,000 60,000
*Mr. Vikram Rao has been appointed as Whole Time Director of the Company with effect from November 1, 2006
**Paid to Life Insurance Corporation of India, which has nominated Mr. Bhargava
B. Executive Director
Name of Director All elements of Performance Total
remuneration bonus
package
Amount (Rs.) Amount (Rs.) Amount (Rs.)
Mr. Adesh Kumar Gupta 37,70,415 NIL 37,70,415
Mr. K.K. Maheshwari 64,45,937 NIL 64,45,937
Dr. Bharat K. Singh* NA NA NA
Mr. Vikram Rao* NA NA NA
* These Directors have been appointed during financial year 2006-07.
Note
1. No Director is related to any other Director on the Board, except for Mr. Kumar Mangalam Birla and Mrs.
Rajashree Birla, who are son and mother respectively.
2. The Company has a policy of not advancing any loans to its Directors except to Executive Directors in the
course of normal employment.
3. On merger of Indo Gulf Fertillisers (IGFL) and Birla Global Limited (BGFL) with the Company w.e.f Appointed
Date i.e. September 1, 2005, Rs.88,16,960 and Rs. 26,67,123 being remuneration paid (from September 1,
2005 to March 31, 2006) to Mr. Rakesh Jain and Mr. S.K. Mitra respectively in their capacity as Managing
Directors of erstwhile IGFL & BGFL respectively were debited in the Company’s Profit & Loss Account.
4. The Company does not have any scheme for grant of stock options to its Directors or Employees.
5. The appointment of Managing/ Whole Time Directors is subject to termination by three months notice in
writing by either side.
88
ADITYA BIRLA NUVO LIMITED
Shareholding of Our Directors in our Company
The following table details the shareholding of our Directors in their personal capacity and either as sole or first holder,
as at the date of this Letter of Offer.
Name of Directors Number of Number of
Equity Shares Equity Shares
(Pre-Issue) (Post-Issue)**
Mr. Kumar Mangalam Birla 4,216* 4,711
Mrs. Rajashree Birla 1,13,073 1,26,375
Mr. H J Vaidya 5,797 6,479
Ms. Tarjani M Vakil 156 174
Mr. S C Bhargava 200 223
Mr. Adesh Kumar Gupta 4,768 5,328
Mr. G. P. Gupta 300 335
* 133 equity shares are held in the name of Mr. Kumar Mangalam Birla Karta of AVKM Birla HUF.
** The number of shares for the column entitled Number of Equity Shares (Post-Issue) has been calculated assuming full
subscription to rights entitlement in this Issue.
Changes in Our Board of Directors during the last three years
Name Date of Appointment Date of Cessation Reason
Mr. H.V. Lodha August 2, 2003 October 27, 2004 Resignation
Mr. S.C. Bhargava April 29, 2004 - Appointed as Director
Mr. G.P. Gupta April 27, 2005 - Appointed as Director
Mr. Sanjeev Aga May 1, 2005 October 31, 2006 Ceased to be Managing Director
Mr. Adesh Kumar Gupta October 1, 2005 - Appointed as Wholetime Director
Mr. K.K. Maheshwari October 1, 2005 - Appointed as Wholetime Director
Mr. S.K. Mitra* October 1, 2005 - Appointed as Wholetime Director
w.e.f. July 1, 2006
Mr. Rakesh Jain* October 1, 2005 - Appointed as Wholetime Director
w.e.f. April 3, 2006
Dr. Bharat K. Singh November 1, 2006 - Appointed as Managing Director
Mr. Vikram Rao November 1, 2006 - Appointed as Whole Time Director
*Mr. S. K. Mitra and Mr. Rakesh Jain were earlier appointd as Additional Directors with effect from October 1, 2005.
89
Terms of appointment of our Managing Director and Whole time Directors are as follows;
The terms and conditions of the appointment of Mr. S.K. Mitra are set out below:-
Mr. S.K. Mitra
Remuneration:
Basic Salary Rs. 6,42,100/- p.m. with such annual increment(s) as the
Chairman / Board may decide
Special Pay Rs. 6,16,120/- p.m. with such annual increment(s) as the
Chairman / Board may decide
Performance Linked Pay / Long-Term As may be approved by the Chairman / Board.
Incentive compensation
Perquisites:
Housing Accommodation Company’s owned/hired/ leased accommodation or House Rent Allowance
@ 50% of the Basic Salary in lieu of Company provided accommodation
Gas/Fuel/ Water/ Electricity / Reimbursement of expenses on actual, pertaining to gas, fuel, water, electricity
Telephone/Upkeep & Maintenance and telephones as also reasonable reimbursement of upkeep and
Expense maintenance expenses in respect of such accommodation
Medical Expenses Reimbursement of actual medical expenses for self and family.
Leave Travel Expenses/ Allowances Once in a year for self and family, subject to a ceiling of one month’s basic
salary.
Travelling Spouse accompanying on any official domestic and overseas trip will be
governed as per the policy of the Group
Provident Fund/ Superannuation Fund As per Rules of the Company.
/Leave Encashment /Gratuity/ Personal
Accident Insurance/
Gratuity Gratuity as applicable to Senior Executives of the Aditya Birla Group, including
continuity of service for time served elsewhere, within the Group
Car Two Cars for use on Company’s business
Club Club fees for two clubs.
The aggregate of the salary, special pay, allowances and perquisites in any financial year shall be subject to the limits
prescribed from time to time under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read
with Schedule XIII to the said Act as may for the time being, be in force, or otherwise as may be permissible at law.
Subject as aforesaid, Mr. S. K. Mitra shall be governed by such other Rules as are applicable to the Senior Executives
of the Company from time to time.
So long as Mr. S. K. Mitra function as the Whole time Director of the Company, he will not be subject to retirement by
rotation.
Where in any financial year comprised by the period of appointment, the Company has no profits or its profits are
inadequate, the foregoing amount of remuneration and benefits shall be paid or given to the Whole time Director in
accordance with the applicable provisions of Schedule XIII of the Companies Act, 1956 and subject to the approval of the
Central Government, wherever required.
90
ADITYA BIRLA NUVO LIMITED
Terms and conditions of the appointment of Mr. K. K. Maheshwari and Mr. Adesh Kumar Gupta are set out below:-
Mr. K.K. Maheshwari Mr. Adesh Kumar Gupta
Remuneration:
Basic Salary Rs. 4,43,342/- p.m. with such annual Rs. 2,34,942/- p.m. with such annual
increment(s) as the Board may decide increment(s) as the Board may decide
Special Pay Rs. 4,10,258/- p.m. with such annual Rs. 2,27,361/- p.m. with such annual
increment(s) as the Board may decide increment(s) as the Board may decide
Servant/ Gardener Salary Upto Rs. 36,000/- p.a. -
Performance Linked Pay / As may be approved by the Board
Long-Term Incentive
compensation
Perquisites:
Housing Accommodation Rent free furnished accommodation and expenses for the upkeep and
maintenance thereof
Leave Travel Expenses/ Allowances Once in a year for self and family, subject to a ceiling of one month’s basic
salary.
Medical Expenses Reimbursement of actual medical expenses for self and family.
Provident Fund/ Superannuation
Fund /Annuity Fund/ Leave
Encashment /Gratuity/ Personal
Accident Insurance/ Car/ Telephone As per Rules of the Company.
Entertainment, Travelling and all Reimbursement of entertainment travelling and all other expenses incurred
other expenses for the business of the Company.
Club Club fees for two clubs. Club fees for one club.
Subject as aforesaid, Mr. K.K. Maheshwari and Mr. Adesh Kumar Gupta will be governed by such other existing Services
Rules of the Company as may be in force from time to time, which will also include Stock Option Plan, if any, which may
be instituted during their tenure of office as Whole time Directors.
In the event of loss or inadequacy of profits in any year, the remuneration including the perquisites as aforesaid will be
paid to Mr. K. K. Maheshwari and Mr. Adesh Kumar Gupta in accordance with the applicable provisions of Schedule XIII
to the Act.
So long as Mr. K. K. Maheshwari and Mr. Adesh Kumar Gupta functions as the Whole time Directors of the Company
they shall not be subject to retirement by rotation and shall not be paid any sitting fees for attending the meetings of the
Board or any Committee thereof.
91
Terms and Conditions of appointment of Mr. Rakesh Jain as Whole-time Director.
A. Remuneration:
Basic Salary Rs. 6,30,159/- per month with such increment(s) as may be decided by the
Chairman/Board.
Special Allowance Rs. 2,70,795/- per month with such increment(s) as may be decided by the
Chairman/Board
Performance Bonus/ Long Term Linked to the achievement of targets as may be decided by the Chairman/
Incentive Compensation Board
B. Perquisites:
Housing Accommodation Company’s owned/hired/leased accommodation or House Rent Allowance
as per the Company’s policy subject to a maximum of 50% of the Basic
Salary in lieu of Company provided accommodation, along with benefits of
gas, fuel, water, electricity, telephones as also upkeep of and maintenance
of such accommodation.
Hard Furnishing Worth Rs.3 lacs every 3 years in direct proportion to the period of his
employment.
Leave Travel Allowance Once in a year for self and family, subject to a ceiling of one month’s basic
salary.
Travelling Spouse accompanying on any official domestic and overseas trip will be
governed as per the policy of the Group
Medical Reimbursement Reimbursement of domiciliary expenses incurred in India for self and family
at actuals. Reimbursement of additional medical insurance premium upto
US$ 3000 per annum for self and family and hospitalization expenses not
covered under the insurance policy for self and family at actuals.
Club Fees Fees of one corporate club in India (including admission and membership
fee)
Superannuation Fund/Provident Fund As per the rules applicable to senior executive of the Company
Leave encashment As per the rules of the Company
Gratuity As the Payment of Gratuity Act on completion of five years of continuous
service with the group.
Personal Accident Insurance Coverage of Rs.50 lacs for self as per the Rules of the Company
Car Two cars for use on Company’s business as per the policy of Aditya Birla
Group.
Education allowance Rs. 24,000/- per annum
For purpose of Gratuity, provident fund, superannuation fund and other like benefits, if any, such as leave balance due,
the service of Dr. Rakesh Jain, Whole Time Director will be considered as continuous service with the Company from the
date of his joining the Aditya Birla Group and termination of the appointment or renewal will not be considered as a
break in service.
Subject to the aforesaid, Dr. Rakesh Jain will be governed by such other existing services rules of the Company as may
be in force from time to time.
In the event of loss or inadequacy of profits in any year, the remuneration including the perquisites as aforesaid will be
paid to Mr. Rakesh Jain in accordance with the applicable provisions of Schedule-XIII to the Act.
92
ADITYA BIRLA NUVO LIMITED
So long as Mr. Rakesh Jain functions as the Whole time Director of the Company, he shall not be subject to retirement
by rotation and shall not be paid any sitting fees for attending the meetings of the Board or any Committee thereof.
However, Mr. Rakesh Jain may get the sitting fees paid / payable to other directors for attending meetings of Board of
Directors / Committee of subsidiaries of the Company or companies promoted by the Aditya Birla Group.
Terms and conditions of the appointment of Dr. Bharat K. Singh and Mr. Vikram Rao are set out below:-
A. Remuneration:
Dr. Bharat K. Singh Mr. Vikram Rao
Basic Salary Rs. 7,57,500/- per month with such Rs. 4,12,400/- per month with such
increment(s) as may be decided by annual increment(s) as the
the Chairman of the Board/ Board, Chairman of the Board/Board may
subject to a ceiling of decide subject to a ceiling of
Rs. 12,00,000/- per month. Rs. 6,50,000/- per month.
Special Pay Rs. 3,53,080/- per month with such Rs. 5,40,000/- per month with such
increment(s) as Chairman of the annual increment(s) as Chairman of
Board/ Board may decide subject the Board/Board may decide subject
to a ceiling of Rs. 6,00,000/- to a ceiling of Rs. 8,00,000/- per
per month. month.
Performance Linked Pay / Long-Term As may be decided by the As may be decided by the
Incentive compensation Chairman of the Board / Board Chairman of the Board/Board
subject to a maximum of subject to a maximum of
Rs.65,00,000/- p.a. Rs.50,00,000/- p.a.
Education Allowance Rs.6,000/- p.a.
B. Perquisites:
Housing Accommodation Company’s owned/hired/ leased accommodation or Housing Rent Allowance
@50% of Basic Salary in lieu of Company provided accommodation
Reimbursement of expenses Reimbursement of expenses on actuals, pertaining to gas, fuel, water,
electricity and telephones as also reasonable reimbursement of upkeep and
maintenance of such accommodation.
Medical Expenses Reimbursement of actual medical Reimbursement of actual medical
expenses incurred for self and expenses incurred in India for self
family. and family.
Leave Travel Expenses/ Allowances For self and family in accordance For self and family in accordance
with the Rules of the Company, with rules of the Company, subject
subject to a maximum of to a maximum of one month’s basic
Rs. 75,000/- per annum. salary.
Travelling Spouse accompanying on any official domestic and overseas trip
will be governed as per the policy of Group.
Club Club fees for one corporate club in India.
Provident Fund/ Superannuation Fund As per Rules of the Company.
/ Leave Encashment / Personal
Accident Insurance/ Gratuity
Car Two cars for use on Company’s business as per the rules of Aditya Birla
Group.
The aggregate of the salary, special pay, allowances and perquisites in any financial year shall be within the limits
prescribed from time to time under sections 198, 309, 310 and the other applicable provisions of the Companies Act,
1956 read with Schedule XIII to the said act as maybe for the time being, be in force.
93
So long as Dr. Bharat K. Singh and Mr. Vikram Rao function as Managing Director and Whole Time Director respectively,
they shall not be paid any sitting fees for attending meetings of the Board of the Company or any Committee thereof.
So long as Dr. Bharat K. Singh functions as the Managing Director of the Company he shall not be subject to retirement
by rotation. However, the appointment of Mr. Vikram Rao will be subject to retirement by rotation.
The next salary increment and annual performance linked bonus will be due on July 1, 2007.
Where in any financial year comprised by the period of appointment, the Company has no profits or its profits are
inadequate, the foregoing amount of remuneration and benefits shall be paid or given to the Managing/Whole Time
Director in accordance with the applicable provisions of Schedule XIII of the Companies Act, 1956 and subject to the
approval of the Central Government, wherever required.
Subject as aforesaid, Dr. Bharat K. Singh and Mr. Vikram Rao will be governed by such other Rules as are applicable
to the Senior Executives of the Company from time to time.
Corporate Governance
“Though we are complying with the provisions of Clause 49 of the Listing Agreement, in letter, SEBI has advised us to
comply with the same in sprit and have 50% of the Board as independent directors. We will take up the matter for
consideration at our next Board Meeting”.
There are two Board level Committees in our Company, which have been constituted and function in accordance with the
relevant provisions of the Act and the Listing Agreement. These are (i) Audit Committee, and (ii) Investor Relations and
Finance Committee. A brief on each Committee, its scope, composition and meetings for the current year is given below:
(i) Audit Committee
Members
Ms. Tarjani Vakil, Chairperson
Mr. P. Murari,
Mr. B.R. Gupta, and
Mr. G.P. Gupta
Mr. Devendra Bhandari, Company Secretary, acts as the Secretary of the Audit Committee in terms of Clause 49 of
the Listing Agreement.
Mr. G.P. Gupta was inducted as member of the Audit Committee by the Board of Directors in its meeting held on
October 27, 2005.
The Audit Committee is comprised of four independent directors only. In the fiscal 2006 the Audit Committee met
four times.
Scope and terms of reference
The scope of the Audit Committee in companies is defined under Clause 49 of the Listing Agreement dealing with
Corporate Governance and the provisions of the Act. The Audit Committee acts as a link between the management,
the statutory, cost and internal auditors and the Board of Directors and oversees the financial reporting s.
(ii) Investors Relations and Finance Committee
Members
Mr. P. Murari (Chairman)
Mr. H.J. Vaidya
Mr. B.L. Shah; and
Dr. Bharat K. Singh
The Investor Relations and Finance Committee is comprised of two independent Director, one non-executive director
and one executive director.
Scope and Terms of Reference
The Committee was constituted in terms of the mandatory requirement of Clause 49 of the Listing Agreement to
look into the redressal of grievances of investors like non receipt of share certificates, non-receipt of balance sheet,
non-receipt of dividend warrants etc. During the year 2005-06, our Company received 53 complaints from shareholders
and regulatory authorities etc., all of which stand resolved as on March 31, 2006. In the fiscal 2006 the Investor
Relations and Finance Committee met one times.
94
ADITYA BIRLA NUVO LIMITED
Remuneration Committee
The Company does not have a Remuneration Committee as the remuneration of the Managing/Whole-time Director is
determined by the Chairman/Board.
Key Managerial Personnel
The details of our key managerial personnel are as follows:
Name Age Desi gnati on Qualifications Previous Total Relevant Date of Gross
Employment years of Experience Joi ni ng Salary*
Experie- (Years) (i n Rs. )
nce
Dr. Bharat K. Singh 60 Managing Director B.E., MBA-IIM Kolkata Aditya Birla Management 36 36 October 1, 2006 NA**
Corp. Limited
Mr. Adesh Kumar Gupta 49 Whole-time B.Com. F.C.S., Birla Global Finance Limited 27 27 April 1 , 1999 83,17,629
Director and Chief F.C.A.
Financial Officer
Mr. K.K. Maheshwari 51 Whole-time M.Com. F.C.A. Thai Polyphosphate and 29 18 April 1, 2001 1,53,36,065
Director Chemicals Co. Limited, Thailand
Mr. Vikram Rao 56 Whole-time B.E (Chem.), MBA Grasim Industries Limited 31 31 October 31, 2001 NA#
Director
Mr. Rakesh Jain 45 Whole-time M.Tech GE Plastics India Limited 18 14 February 10, 2003 88,99,762
Director (Rubber Tech.), Ph.D
Mr. S.K. Mitra 57 Whole-time M.Sc., M.B.A.(USA) GIC Asset Management 34 34 July 16, 1994 26,67,123
Director Co. Limited
Mr. Devendra Bhandari 53 Sr. Vice President B.Com. F.C.S., Indo Gulf Fertilisers Limited 25 25 March 1, 2002 29,48,203
& Company C.A (Inter)
Secretary
Mr. S. S. Rathi 48 Executive President B.Com, F.C.A Grasim Industries Limited 24 15 June 15, 1991 34,89,093
– Hi Tech Carbon
- Gumidipondi
Mr. K.C. Jhanwar 49 Sr. Executive FCA; CS (Inter) Aditya Cement/Vikram Cement/ 26 3 September 1, 2003 55,23,052
President - Indian Grasim Industries Limited
Rayon (Caustic
Operation &
Marketing and
power plant
Mr. V. G. Somani 51 President – B. Com; FCA P T Sunrise 27 27 October 1, 2006 NA**
Indian Rayon Bumi Textile-ndonesia
Mr. S.K. Jain 56 Sr. President – B.Com, FCA Grasim Industries Limited. 31 0.5 July 1, 2006 NA**
Indo Gulf Fertilizers
Mr. J.C. Soni 53 President – B.Sc , ACA Grasim Industries Limited 28 28 March 4. 2004 40,90.526
Jaya Shree Textile
Mr. Devashish Chatterji 41 Unit Head – B.Tech-(Mech), Procter & Gamble. USA 18 10 June 30, 2006 NA**
Hi Tech Carbon, C.Engg (I), AMIE,
Renukoot 2AE Merchant Marine
Mr. Hemachandra 44 President – Madura B.Com, PGDBM Country Manager – South 21 7 January 7, 2004 68,06,980
Jhaveri Garments Asia – Nike Inc.
* The remuneration of each of our key personnel for year ended March 31, 2006 and is as per the statement pursuant
to Section 217(2A) of the Act and the Companies (Particulars of Employees) Rules, 1975.
** These employees have joined recently
# He was appointed Non-Executive Director on October 31, 2001 and has been re-designated as a Whole Time
Director with effect from November 1, 2006.
All the abovementioned key managerial personnel are permanent employees of our Company.
95
Management Organizational Structure Chart
The organization structure of our Company is given below:
Shareholding of key managerial personnel in our Company
Name of Key Managerial Personnel No. of Equity Shares held (Pre-Issue)
Mr. Sanjeev Aga Nil
Mr. Adesh Kumar Gupta 4768
Mr. K.K. Maheshwari Nil
Mr. Rakesh Jain Nil
Mr. S.K. Mitra Nil
Mr. Devendra Bhandari 121
Mr. V. G. Somani Nil
Mr. K.C. Jhanwar 437
Mr. J. C. Soni 193
Dr. Bharat K. Singh Nil
Interest of promoters, Directors and key managerial personnel
Except as stated in “Related Party Transactions” on page 138 of this Letter of Offer, and to the extent of shareholding in
our Company, our promoters and promoter group do not have any other interest in our business.
Shri KumarMangalam
Birla
Non – ExecutiveChairman
Board of Directors

Investor Relations &
Finance Committee

2 Independent, 1 Non-
Executive, 1 Executive
Audit Committee

4 Independent, Non-
Executive
AdeshKumar Gupta
WholeTime
Director & CFO
K.K. Maheshwari
WholeTime
Director
Dr. Bharat K. Singh
ManagingDirector
RakeshJain
WholeTime
Director
S.K. Mitra
WholeTime
Director
Fertilisers
J agdishpur
JayaShreeTextiles,
Rishra
MaduraGarments,
Bangalore Hi – TechCarbon
Renukoot/
Gummdipondi
Insulator s
Domestic
Marketing
Financial Services,
Mumbai
Indian Rayon
Division, Veraval
VikramRao
WholeTime
Director
96
ADITYA BIRLA NUVO LIMITED
All Directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending
meetings of the Board or a Committee. The Managing Director and other Whole-time Directors will be interested to the
extent of remuneration paid to him for services rendered by him as officer of the Company. All our directors may also be
deemed to be interested to the extent of Equity Shares, if any, already held by them or their relatives in the Company, or
that may be subscribed for and allotted to them, out of the present Issue in terms of the Letter of Offer and also to the
extent of any dividend payable to them and other distributions in respect of the said Equity Shares. The Directors may
also be regarded as interested in the Equity Shares, if any, held by or that may be subscribed by and allotted to the
companies, firms and trust, in which they are interested as directors, members, partners and/or trustees.
The key managerial personnel of our Company do not have any interest in our Company other than to the extent of the
remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses
incurred by them during the ordinary course of business and to the extent of the Equity Shares held by them in our
Company, if any.
Except as stated otherwise in this Letter of Offer, we have not entered into any contract, agreement or arrangement
during the preceding two years from the date of this Letter of Offer in which our Directors are interested directly or
indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are
proposed to be made to them. Our Directors and our key managerial personnel have not taken any loan from our
Company.
Changes in our key managerial employees during the last three years
Name Designation Date of joining/leaving Reasons
Mr. Prakash Nedungadi President October 15, 2003 Resigned from Madura Garments
Mr. Hemchandra Javeri President January 7, 2004 Appointed as President of Madura
Garment
Mr. Anil Kumar Sr. Executive President February 28, 2004 Retired from Hi-Tech Carbon,
Gummdipondi
Mr. J.C.Soni President March 4, 2004 Appointed as President of
Jaya Shree Textiles
Mr. A. N. Chaudhary President March 6, 2004 Retired from Jay Shree Textiles
Mr. N.L. Jain Executive President August 31, 2004 Retired from Indo Gulf Fertilizer
Mr. Sanjeev Aga Managing Director May 1, 2005 Appointed as the Managing Director
Mr. K.K. Maheshwari Wholetime Director October 1, 2005 Resigned as Manager w.e.f.
April 1, 2005, Appointed as Whole
Time Director w.e.f. October 1, 2005
Mr. Adesh Kumar Gupta Wholetime Director October 1, 2005 Appointed as the Whole Time Director
& CFO
Mr. Rakesh Jain Wholetime Director April 3, 2006 Appointed as Whole Time Director
w.e.f. April 3, 2006
Mr. S.K. Jain Sr. President July 1, 2006 Appointed as Senior President of Indo
Gulf Fertilizer
Mr. Devashish Chatterji Unit Head June 30, 2006 Appointed as unit head of Hi-Tech
Carbon, Renukoot
Mr. S.K. Mitra Wholetime Director July 1, 2006 Appointed as the Whole Time Director
Mr. S.N. Jajoo Executive President July 31, 2006 Transferred from Indo Gulf Fertilizers
Mr. G. S. Mishra Unit Head September 1, 2006 Transfered from Hi Tech Carbon
Renukoot
Dr. Bharat K. Singh Managing Director November 1, 2006 Appointed as Managing Director
97
PROMOTERS
Promoters
The promoters of our Company are (i) Mr. Kumar Mangalam Birla; (ii) Birla Group Holdings Private Limited; and (iii) TGS
Investment and Trade Private Limited.
Mr. Kumar Mangalam Birla
Mr. Kumar Mangalam Birla, aged 39 was, appointed Chairman of the Aditya Birla Group in
1995 and, serves as Chairman of all of the Aditya Birla Group’s blue-chip companies in
India, including our Company. For more details see the section on “Management” on page
81 of this Letter of Offer.
The Promoter’s PAN, bank account number and passport number have been provided to the BSE and the NSE. However,
the Promoter does not have either a Voter ID or a Driving Licence Number.
Birla Group Holdings Private Limited
Birla Group Holdings Private Limited (“BGHPL”) (formerly RSN Holdings Limited) was incorporated on November 21,
1980 under the Companies Act, 1956. It’s name was changed from RSN Holdings Limited to Birla Group Holdings
Private Limited on December 7, 1998. The main object of BGHPL is making investments and granting loans. Mr. Kumar
Mangalam Birla is the promoter of BGHPL who directly and indirectly controls and holds a majority of the shares in
BGHPL. The registered office of the company is situated at Industry House, 159 Churchgate Reclamation, Mumbai – 400
020.
Board of Directors
Mr. Kumar Mangalam Birla;
Mrs. Rajashree Birla;
Mr. Suresh Tapuriah;
Mr. L K Daga; and
Mr. P K Jajodia.
The audited financials of the company for the last three years are as under:
Rs. in Crore (except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Total Income 2.81 4.37 4.04
Profit after Tax (1.74) (1.03) (1.58)
Equity Share Capital (Par value Rs. 100 per share) 0.02 0.02 0.02
Reserves & Surplus 38.87 40.62 41.65
Earnings per share (Rs.) (16,157.14) (13,209.15) (15,481.27)
Book Value per share 1,60,730.02 1,67,934.78 1,72,191.56
The company being a private limited company, its shares are not listed on any stock exchange.
98
ADITYA BIRLA NUVO LIMITED
There have been no overdue/ defaults to any banks/ financial institutions.
BGHPL, either itself or through its subsidiaries, holds significant equity holdings in various Aditya Birla Group companies.
BGHPL has the following significant subsidiaries:
a) Trapti Trading and Investments Private Limited
b) Turquoise Investments and Finance Private Limited
c) TGS Investment and Trade Private Limited.
(ii) TGS Investment and Trade Private Limited
TGS Investment and Trade Private Limited (“TGS”) was incorporated on May 09, 2002 under the provisions of the
Companies Act, 1956. The registered office of the company is situated at 71A, Mittal Chambers, Nariman Point, Mumbai
– 400 021. The main business of the company is that of making long term investments and granting loans to corporates
and other entities.
Board of Directors
Mr. Kumar Mangalam Birla;
Mrs. Rajashree Birla;
Mr. G K Tulsian; and
Mr. Sushil Agarwal
The company is a subsidiary of Birla Group Holdings Private Limited and a part of the Aditya Birla Group of companies.
The audited financials of the company for the last three years are as under:
Rs. in crores (except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Total Income 12.70 10.31 4.99
Profit after Tax 1.52 5.99 1.49
Equity Share Capital (Par value Rs. 10 per share) 2.26 2.26 2.26
Reserves & Surplus 537.86 372.51 259.05
Earnings per share (Rs.) 5.02 25.25 6.17
Book Value per share 2,389.92 1,658.27 1,156.25
The company being a private limited company, its shares are not listed on any stock exchange.
There have been no overdue/ defaults to any banks/ financial institutions.
TGS holds significant equity holdings in major Aditya Birla Group Companies.
We confirm that the Permanent Account Numbers, Bank Account Numbers, the Company Registration Numbers and the
address of the Registrar of Companies where the BGHPL and TGS are registered have been submitted to the Stock
Exchanges on which securities are proposed to be listed at the time of filing the Draft Letter of Offer with them.
Companies with which the promoters have disassociated in the last three years:
The Promoters have not dissociated themselves from any company in the last three years.
99
Interests of Promoters in the Company
Except as stated in “Related Party Transactions” on page 138 of this Letter of Offer, and to the extent of shareholding in
our Company, our Promoters and promoter group do not have any other interest in our business.
Promoter Group
Relatives of the Promoter that are part of the promoter group:
The following relatives form part of our promoter group:
Sr. Name Relationship No. of shares Percentage of
No. as of holding
September
1, 2006
1. Mrs. Rajashree Birla Mother of Mr. Kumar Mangalam Birla 113,073 0.14%
2. Mrs. Vasavadatta Bajaj Sister of Mr. Kumar Mangalam Birla 1,691 0.00%
3. Mrs. Neerja Birla Wife of Mr. Kumar Mangalam Birla 1,890 0.00%
4. Ms. Ananyashree Birla Minor daughter of Mr. Kumar Mangalam Birla Nil Nil
5. Master Aryaman Vikram Birla Minor son of Mr. Kumar Mangalam Birla Nil Nil
6. Ms. Advaietsha Birla Minor daughter of Mr. Kumar Mangalam Birla Nil Nil
The Equity Shares are held by our promoters through companies, trusts, HUFs owned/controlled by them. The ventures
forming part of the promoter group include:
Sr. No. Name of promoter group Ventures
1 Aditya Birla Health Services Limited
2 Applause Bhansali Films Private Limited
3 Applause Entertainment A P Private Limited
4 Applause Entertainment Private Limited
5 BGH Exim Limited
6 BGH Properties Private Limited
7 Birla Consultants Limited
8 Birla Industrial Finance (India) Limited
9 Birla Industrial Investments (India) Limited
10 Birla Insurance Advisory Services Limited
11 Birla TMT Holdings Private Limited
12 Century Enka Limited
13 ECE Industries Limited
14 Essel Mining & Industries Limited
15 Global Holding Private Limited
16 Grasim Industries Limited
17 Gwalior Properties and Estates Private Limited
18 Heritage Housing Finance Limited
100
ADITYA BIRLA NUVO LIMITED
Sr. No. Name of promoter group Ventures
19 HGI Industries Limited
20 Hindalco Industries Limited
21 IGH Holdings Private Limited
22 Idea Cellular Limited
23 Infocyber (India) Private Limited
24 Manav Investment & Trading Company Limited
25 Mangalam Carbide Limited
26 Mangalam Services Limited
27 Pilani Investment and Industries Corporation Limited
28 Rajratna Holdings Private Limited
29 Rohit Industrial Organics Private Limited
30 Sheshasayee Properties Private Limited
31 Tanfac Industries Limited
32 Trapti Trading & Investments Private Limited
33 Turquoise Investments and Finance Private Limited
34 Udyog Services Limited
35 Umang Commercial Company Limited
36 Vaibhav Holdings Private Limited
37 Vikram Holdings Private Limited
38 Kanishtha Finance And Investments Private Limited
39 Aditya Birla Retail Limited
For details of shareholding of our Promoters and promoter group, refer to the section “Capital Structure” on page 16 of
this Letter of Offer.
101
GROUP COMPANIES
The details of our top five listed Group companies, in terms of market capitalization, and details of our Group companies
with negative net worth or losses, are as under:
1. Hindalco Industries Limited
Hindalco Industries Limited (“HIL”) is a member of the Aditya Birla Group and was incorporated on December 15,
1958 as the Hindustan Aluminium Corporation Limited under the provisions of the Companies Act, 1956 with its
registered office at Industry House, 6th Floor, 159 Churchgate Reclamation, Mumbai 400 020, India. Its registered
office was later changed to Century Bhavan, 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai 400025, effective
from September 1, 1970. The name was changed from Hindustan Aluminium Corporation Limited to Hindalco
Industries Limited on October 9, 1989.
The company is a producer of aluminium and copper in India. It is also one of the leading metals and mining
companies in India.
Shareholding as of September 30, 2006
S. No. Name of the Shareholder No. of shares Percentage of holding
1 Promoters 31,05,48,773 26.79%
2 Banks, FIs, Mutual Funds and FIIS 29,45,70,894 25.41%
3 Private Bodies Corporate 7,92,22,230 6.83%
4 Resident Individuals 17,32,83,279 14.95%
5 NRIs / OCBs 4,19,90,064 3.62%
6 Others 25,96,53,761 22.40%
Total 115,92,69,001 100.00%
Directors as on September 30, 2006
1. Mr. Kumar Mangalam Birla;
2. Mrs. Rajashree Birla;
3. Mr. D. Bhattacharya;
4. Mr. A.K. Agarwala;
5. Mr. C.M. Maniar;
6. Mr. E.B. Desai;
7. Mr. S.S. Kothari;
8. Mr. M.M. Bhagat;
9. Mr. K. N. Bhandari; and
10. Mr. N.J. Jhaveri.
102
ADITYA BIRLA NUVO LIMITED
Financial Performance
The operating results of Hindalco Industries Limited for fiscal 2006, 2005 and 2004 are as hereunder:-
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 11,396.48 9,523.12 6,208.35
Other income 243.91 270.05 240.01
Profit After Tax (PAT) 1,655.55 1,329.36 838.93
Equity Capital 98.57 92.78 92.48
Reserves (excl. revaluation reserves) 9,507.69 7,573.80 6,765.42
Basic Earning per Share (EPS) 16.79 13.48 9.07
Book value per Share (of Re. 1/- each) 97.40 82.54 73.92
Share Quotation
The shares are listed on BSE and NSE. The details of the highest and lowest price on BSE and NSE during the
preceding six months are as follows:
BSE NSE
Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
May 2006 251.40 165.05 251.3 164.90
June 2006 184.80 139.00 184.00 138.65
July 2006 184.75 151.40 184.70 151.00
August 2006 178.40 155.10 178.00 155.05
September 2006 187.00 165.00 187.00 164.00
October 2006 191.4 168.1 192.4 168.1
November 2006 190.75 171.20 190.90 170.80
Source: BSE, NSE website
The company has not made any public or rights issue in the last three years other than as provided below and
there has been no change in the capital structure during the last six months. It has not become a sick company
under the meaning of SICA and is not under winding up.
Details of the last public/ rights issue made
The company issued 231,521,031 equity shares of Re. 1 each pursuant to a Letter of Offer dated November 25,
2005 on a rights basis.
The proceeds of the issue were applied for the objects of the issue as disclosed in the Letter of Offer for the said
issue, i.e. expansion of existing facilities at Muri, Belgaum, and Hirakud, undertaking greenfields projects for alumina
and aluminium facilities. There were no deviations from the objects on which the issue proceeds were utilized.
Mechanism for redressal of investor grievance
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Typically, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the company.
103
2. Grasim Industries Limited
Grasim Industries Limited (“Grasim”) was incorporated on August 25, 1947 under the Gwalior Companies Act, (1 of
Samvat 1963) in the name of Gwalior Rayon Silk Manufacturing (Weaving) Company Limited. The company changed
its name to Grasim Industries Limited on July 22, 1986. Grasim’s businesses today comprises of Viscose Staple
Fibre (“VSF”), cement, sponge iron, chemicals and textiles. The registered office of the company is at Birlagram,-
Nagda 456331, Madhya Pradesh.
Shareholding as of September 30, 2006
S. No. Name of the Shareholder No. of shares Percentage of holding
1 Promoters 22,980,868 25.07%
2 Banks, FIs, Mutual Funds and FIIs 40,046,299 43.68%
3 Private Corporate Bodies 32,69,112 3.57%
4 Resident Individuals 1,18,61,179 12.94%
5 NRIs/ OCBs 35,46,005 3.87%
6 Others (GDRs) 99,70,191 10.87%
Total 9,16,73,654 100.00%
Directors as on September 30, 2006
1. Mr. Kumar Mangalam Birla;
2. Mrs. Rajashree Birla;
3. Mr. M. L. Apte;
4. Mr. B. V. Bhargava;
5. Mr. R. C. Bhargava;
6. Mr. Y. P. Gupta;
7. Mr. S. B. Mathur;
8. Mr. C. Shroff;
9. Mr. S. G. Subrahmanyan;
10. Mr. S. K. Jain; and
11. Mr. D. D. Rathi.
Financial Performance
The operating results of Grasim for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 6,620.51 6,229.26 5,213.21
Other income 204.24 187.19 229.29
Profit After Tax (PAT) 863.21 885.71 779.26
Equity Capital 91.69 91.69 91.69
Reserves (excl. revaluation reserves) 4,886.11 4,231.96 3,513.83
Basic Earning per Share (EPS) 94.14 96.60 84.99
Book value per Share (of Rs. 10 each) 542.90 471.55 393.23
104
ADITYA BIRLA NUVO LIMITED
Share Quotation
The shares are listed on BSE and NSE. The details of the highest and lowest price on BSE and NSE during the
preceding six months are as follows:
BSE NSE
Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
May 2006 2,605 1,550 2,609 1,550
June 2006 1,949 1,462 1,951 1,455
July 2006 2,150 1,804 2,150 1,803
August 2006 2,294 2,033 2,299 2,020
September 2006 2,540 2,230 2,544.45 2,235.6
October 2006 2,768.9 2,483.1 2,769.85 2,483.1
November 2006 2806.4 2663.75 2806.9 2662.6
Source : BSE, NSE website
There has been no change in capital structure in the last six months and the company has not made any public or
rights issue in the last three years. It has not become a sick company under the meaning of SICA and is not under
winding up.
Mechanism for redressal of investor grievance
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Generally, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the company.
3. Ultra Tech Cement Limited
UltraTech Cement Limited (“UCL”) is a member of the Aditya Birla Group and a subsidiary of Grasim Industries
Limited. UCL was incorporated on August 24, 2000 under the Companies Act, 1956 in the name of L&T Cement
Limited and the name was changed to Ultra Tech Cemco Limited with effect from November 19, 2003. The
company changed its name to Ultratech Cement Limited on October 14, 2004. It manufactures and markets ordinary
portland cement, portland blast furnace slag cement and portland pozzolana cement, The registered office of the
company is B Wing, Ahura Center, 2nd Floor, Mahakali Caves Road, Andheri (East) Mumbai 400 093.
Shareholding as of September 30, 2006
S . No. Name of the Shareholder No. of shares Percentage of holding
1 Promoters 6,50,81,310 52.28%
2 Banks, FIs, Mutual Funds and FIIs 1,32,26,217 10.62%
3 Private Corporate Bodies 1,73,31,754 13.92%
4 Resident Individuals 2,02,35,605 16.26%
5 NRIs/OCBs 7,85,952 0.63%
6 Others 78,25,041 6.29%
Total 12,44,85,879 100.00%
105
Directors as on September 30, 2006
1. Mr. Kumar Mangalam Birla;
2. Mrs. Rajashree Birla;
3. Mr. R. C. Bhargava;
4. Mr. Y. M. Deosthalee;
5. Mr. G. M. Dave;
6. Mr. Y. P. Gupta;
7. Dr. S. Misra;
8. Mr. V. T. Moorthy;
9. Mr. J. P. Nayak;
10. Mr. S. Rajgopal; and
11. Mr. D. D. Rathi.
Financial Performance
The operating results of UCL for fiscal 2006, 2005 and 2004 are as hereunder.
(in Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 3,299.45 2,606.90 2,251.13
Other income 37.00 21.07 59.59
Profit After Tax (PAT) 229.76 2.85 38.83
Equity Capital 124.49 124.40 124.40
Reserves (excl. revaluation reserves) 913.78 942.73 950.54
Basic Earning per Share (EPS) 18.46 0.23 3.12
Book value per Share (of Rs. 10 each) 83.40 85.78 86.41
Share Quotation
The shares are listed on BSE and NSE. The details of the highest and lowest price on BSE and NSE during the
preceding six months are as follows:
BSE NSE
Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
May 2006 883.90 585.00 900.00 588.00
June 2006 751.85 500.50 749.45 495.00
July 2006 761.00 599.00 760.00 600.00
August 2006 781.40 699.00 781.40 710.20
September 2006 921.40 762.20 922.00 762.00
October 2006 919.75 860.00 940.00 848.00
November 2006 919.35 880.35 920.7 879.35
Source: BSE, NSE website
There has been no change in capital structure in the last six months and the company has not made any public or
rights issue in the last three years. It has not become a sick company under the meaning of SICA and is not under
winding up.
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ADITYA BIRLA NUVO LIMITED
Mechanism for redressal of investor grievance
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Typically, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the Company.
4. Tanfac Industries Limited
Tanfac Industries Limited is a public limited company and was incorporated on December 20, 1972 under the
Companies Act, 1956 in the name of Tamil Nadu Fluorine and Allied Chemicals Limited. The company’s registered
office is located at SIPCOT Industrial Complex, 14, Cuddalore, Tamil Nadu – 607 005. The company changed its
name to Tanfac Industries Limited on July 29, 1992. The company is a joint venture between the Tamil Nadu
Industrial Development Corporation Limited (TIDCO) and the Aditya Birla Group of companies, viz., Grasim Industries
Limited, Hindalco Industries Limited and Pilani Investment Industries Corporation Limited. The company started
commercial production in the year 1985.
The company has a production facility at SIPCOT Industrial Complex, Cuddalore, Tamil Nadu, for the manufacture
of chemicals including aluminium fluoride, anhydrous hydrofluoric acid, cryolite, speciality fluorides, sulphuric acid
and oleum.
Directors as on September 30, 2006
1. Mr. S. Ramasundaram;
2. Mr. A.K. Agarwala;
3. Mr. V.T. Moorthy;
4. Mr. K.K. Maheshwari;
5. Mr. A.M. Swaminathan;
6. Mr. K.R. Viswanathan;
7. Mr. M.R. Sivaraman; and,
8. Dr. P. Ram.
Shareholding as of September 30, 2006
Sr. No. Name of Share holder No. of shares Percentage of holding
1. Promoters 5,083,652 50.96%
2. Banks, FIs, Mutual Funds and FIIs 10,550 0.11%
3. Private Corporate Bodies 504,656 5.06%
4. Resident Individuals 4,264,436 42.75%
5. NRIs / OCBs 32,356 0.32%
6. Others 79,350 0.80%
Total 9,975,000 100.00%
107
Financial Performance
The operating results of Tanfac Industries Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 110.73 84.07 70.56
Other income 4.54 4.06 4.95
Profit after tax 1.03 0.35 3.39
Equity capital 9.98 9.98 9.98
Reserves 26.52 26.35 34.36
Basic Earnings per share 1.03 0.35 3.40
Book value per Share (of Rs. 10 each) 36.59 36.41 44.44
Share Quotation
The shares are listed on BSE. The details of the highest and lowest price on BSE and NSE during the preceding
six months are as follows:
BSE
Month High (Rs.) Low (Rs.)
May 2006 48.35 35.05
June 2006 39.50 27.15
July 2006 32.55 26.70
August 2006 47.40 30.65
September 2006 51.90 43.55
October 2006 47.90 41.85
November 2006 39.80 34.40
Source: BSE website
There has been no change in capital structure in the last six months. The company has not made any public or
rights issue in the last three years. It has not become a sick company under the meaning of SICA and is not under
winding up.
Mechanism for redressal of investor grievance
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Typically, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the Company.
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ADITYA BIRLA NUVO LIMITED
5. Bihar Caustic & Chemicals Limited
Bihar Caustic & Chemicals Limited (“BCCL”) is an Aditya Birla Group company. It was incorporated under the
Companies Act, 1956 on July 20, 1976, as a joint venture between the Bihar State Industrial Development Corporation
(“BSIDC”) and the Aditya Birla Group and its registered office is at Garhwa Road P. O., Rehla - 822 124, Dist.
Palamau.
The main business of BCCL is manufacturing Caustic Soda, Liquid Chlorine and Hydrochloric Acid.
Directors as on September 30, 2006
1. Mr. A. K. Agarwala;
2. Mr. S.V. Haribhakti;
3. Mr. K. K. Maheshwari;
4. Mr. Ajoy Nath Jha;
5. Mr. B. Choudhuri;
6. Mr. P.P. Sharma; and
7. Mr. P. N. Ojha.
Shareholding as on September 30, 2006
S. No. Name of the Shareholder No. of shares Percentage of holding
1. Promoters 1,51,97,987 64.99%
2. Banks, FIs, Mutual Funds and FIIs 10,000 0.04%
3. Private Corporate Bodies 11,26,196 4.82%
4. Resident Individuals 69,03,396 29.51%
5. NRIs/OCBs 1,14,181 0.49%
6. Others 34,740 0.15%
Total 2,33,86,500 100.00%
Financial performance
The operating results of Bihar Caustic & Chemicals Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 111.50 107.96 93.36
Other income 6.82 2.20 1.92
Profit after tax 26.15 26.45 8.63
Equity capital 23.39 23.39 23.37
Reserves 87.56 61.92 37.58
Basic Earnings per share 11.18 11.31 4.84
Book value per Share (of Rs. 10 each) 46.42 34.86 24.22
109
Share Quotation
The shares are listed on BSE and NSE. The details of the highest and lowest price on BSE and NSE during the
preceding six months are as follows:
BSE NSE
Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
May 2006 86.25 56.00 85.90 59.40
June 2006 63.55 40.05 62.50 39.50
July 2006 60.75 48.00 54.00 45.50
August 2006 60.00 52.80 60.90 52.50
September 2006 63.00 53.00 64.00 51.50
October 2006 64.30 52.10 58.25 51.50
November 2006 51.35 45.25 51.65 45.30
Source : BSE, NSE website
The company has not made any public or rights issue in the last three years other than as provided below and
there has been no change in the capital structure during the last six months. It has not become a sick company
under the meaning of SICA and is not under winding up.
Details of the last public/ rights issue made
The company issued 1,56,00,000 equity shares of Rs. 10/- each pursuant to a letter of offer dated January 30, 2003
on a rights basis in the ratio of 2:1.
Mechanism for redressal of investor grievance
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Typically, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the company.
6. HGI Industries Limited
HGI Industries Limited is a member of the Aditya Birla Group. It was incorporated on June 06, 1944. Its registered
office is located at Industry House, 10, Camac Street, Kolkata – 700017.
Shareholding as of September 30, 2006
S. No Name of the Shareholder No. of shares Percentage of holding
1. Promoters 663,570 17.52%
2. Banks, FIs, Mutual Funds and FIIs 15,92,842 42.05%
3. Private Corporate Bodies 9,39,754 24.81%
4. Resident Individuals 5,90,827 15.60%
5. NRI / OCB 662 0.02%
Total 3,787,655 100%
Board of Directors as on September 30, 2006
1. Mr. J. P. Kanoria;
2. Mr. A. K Newar;
3. Mr. Y. Daga;
4. Mr. P. Dutta; and
5. Mr. R. Kastia.
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ADITYA BIRLA NUVO LIMITED
Financial Performance
The operating results of the company for fiscal 2006, 2005 and 2004 are as hereunder.
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.00 0.00 26.39
Other income 0.48 0.54 0.92
Profit / (Loss) after Tax (PAT) 0.24 0.13 (5.04)
Equity Capital 3.79 3.79 3.79
Reserves (excl. revaluation reserves) (3.86) (4.10) (4.23)
Basic Earning per Share (EPS) 0.64 0.35 (13.31)
Book Value per share (of Rs. 10 each) (0.18) (0.82) (1.17)
Share Quotation
The shares are listed on Calcutta Stock Exchange. There have been no trading during the year hence high and
low data is not available. There has been no change in capital structure in the last six months.
The company has not made any public or rights issue in the last three years. It has not become a sick company
under the meaning of SICA and is not under winding up.
Company referred to BIFR
7. Shree Digvijay Cement Company Limited.
Shree Digvijay Cement Company Limited is a member of the Aditya Birla Group. It was incorporated on November
6, 1944 and its registered office is located at Digvijaygram 361 140, Via: Jamnagar (Gujarat). The company is into
cement manufacture with a capacity of 1.07 Million Tpa.
Shareholding as of September 30, 2006
S. No Name of the Shareholder No. of shares Percentage of holding
1. Promoters 7,58,36,793 53.67%
2. Banks, FIs, Mutual Funds and FIIs 3,40,075 0.40%
3. Private Corporate Bodies 1,11,86,506 7.92%
4. Resident Individuals 5,36,62,519 37.97%
5. Others 2,86,717 0.20%
Total 14,13,12,610 100.00%
Board of Directors as on September 30, 2006
1. Mr. K. D. Agarwal;
2. Mr. S. Misra;
3. Mr. O. P. Puranmalka;
4. Mr. S. K. Maheshwari;
5. Mr. R. C. Bhargava; and
6. Mr. G. P. Gupta.
111
Financial Performance
The operating results of the company for fiscal 2006, 2005 and 2004 are as hereunder.
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 30, 2004
(6 months)
Net Sales 214.39 88.89 153.20
Other income 4.82 2.03 6.80
Profit / (Loss) after Tax (PAT) 48.79 (9.99) 3.83
Equity Capital 7.46 7.46 7.46
Reserves (excl. revaluation reserves) (151.93) (200.72) (190.73)
Basic Earning per Share (EPS) 65.44 (13.40) 5.14
Book Value per share (of Rs. 10/- each) (193.81) (259.25) (245.85)
Share Quotation
The shares are listed on the BSE. The details of the highest and lowest price on BSE during the preceding six
months are as follows:
BSE
Month High (Rs.) Low (Rs.)
May 2006 45.40 34.70
June 2006 34.95 23.75
July 2006 38.00 21.40
August 2006 30.00 25.50
September 2006 36.90 25.50
October 2006 40.90 33.00
November 2006 35.95 28.25
The company has not made any public or rights issue in the last three years other than as provided below and
there has been no change in the capital structure during the last six months. The company was referred to BIFR for
the first time in 1989.
Details of the last public/ rights issue made
The company issued 134,184,780 equity shares of Rs. 10/- each pursuant to a letter of offer dated May 17, 2006
on a rights basis in the ratio of 18:1.
Mechanism for redressal of investor grievance
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Typically, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the company.
112
ADITYA BIRLA NUVO LIMITED
OUR SUBSIDIARIES
We have twenty six subsidiaries which are listed below:
1. Aditya Birla Telecom Limited;
2. Aditya Vikram Global Trading House Limited;
3. A V Transworks Limited (Canada);
4 Alpha Garments Private Limited;
5. Birla Global Finance Company Limited;
6. BGFL Corporate Finance Private Limited;
7. Birla Insurance Advisory Services Limited;
8. Birla Sunlife Insurance Company Limited;
9. Birla Technologies Limited;
10. Crafted Clothing Private Limited;
11. English Apparels Private Limited;
12. Harwood Garments Private Limited;
13. Laxminarayan Investment Limited;
14. Madura Garments Exports Limited;
15. The Minacs Group (U.S.A);
16. Minacs GmbH (Germany);
17. Millman Insurance (Canada);
18. Minacs Kft. (Hungary);
19. Minacs Limited (UK)
20. Minacs Worldwide Inc. (Canada),
21. Minacs Worldwide S.A. de C.V. (Mexico);
22 Transworks Inc. (USA);
23. TransWorks Information Services Limited;
24. PSI Data System Limited;
25. Transworks BPO Philippines Inc.; and
26. Birla NGK Insulators Limited
1. Aditya Birla Telecom Limited
Aditya Birla Telecom Limited was incorporated on December 20, 2005. Its registered office is situated at A-4, Aditya
Birla Centre, S.K. Ahire Marg, Worli, Mumbai - 400 030. The company is pursuing opportunities in the fast growing
telecom sector which are not pursued by the Aditya Birla Group JV, telecom company viz. Idea Cellular Limited.
The main object of the company is to carry on business of basic telephone services, cellular telephone, unified
access and other value added services. The company has received a Letter of Intent on November 21, 2006 for
award of licence to provide Unified Access Services in Bihar Service Areas.
113
Directors as on October 31, 2006
1. Mr. Sanjeev Aga;
2. Mr. Adesh Kumar Gupta;
3. Mr. Manoj Kedia; and
4. Mrs. Pinky Mehta.
Shareholding as of October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings (%)
Aditya Birla Nuvo Limited 9,997,500 99.98
Laxminarayan Investment Limited 2,500 0.02
Total 10,000,000 100.00
Financial performance
The operating results of Aditya Birla Telecom Limited for fiscal 2006 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for the period ended March 31, 2006
Net Sales 0.00
Other income 0.15
Profit / (Loss) after tax (0.14)
Equity Capital 10.00
Reserve (0.14)
Basic Earning per share (0.58)
Book value per share (of Rs. 10/- each) 9.86
The equity shares of Aditya Birla Telecom Limited are not listed and it has not made any public or rights issue in
the preceding three years. It has not become a sick company under the meaning of SICA and it is not referred for
winding up.
By a letter dated November 22, 2006, Aditya Birla Nuvo Limited has recorded its agreement for sale of its investment
in its subsidiary Aditya Birla Telecom Limited by Idea Cellular Limited for an aggregate consideration of Rs. 10
Crores.
2. Aditya Vikram Global Trading House Limited
Aditya Vikram Global Trading House Limited is based in Mauritius. It was incorporated on December 21, 1999 and
its registered office is located at IFS Court, Twenty-Eight, Cybercity, Ebene, Mauritius.
The main object of the company is to carry on business of general traders, merchants, credit traders, manufacturers
agents, insurance brokers, consultants and many other ancillary businesses.
Directors as on October 31, 2006
1. Mr. B. L. Shah;
2. Mr. Adesh Kumar Gupta;
3. Mr. C.B. Lala;
4. Mr. K. D. Joory; and
5. Mr. Vikram Rao.
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ADITYA BIRLA NUVO LIMITED
Shareholding as of October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings (%)
Aditya Birla Nuvo Limited 850,000 100%
Total 850,000 100%
Financial performance
The operating results of Aditya Vikram Global Trading House Limited fiscal 2006, 2005 and 2004 are as hereunder.
(In US$ millions except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.00 0.00 1.33
Other income 0.04 0.01 0.00
Profit after tax 0.02 (0.002) (0.22)
Equity Capital 0.85 0.85 0.85
Reserve 0.25 0.23 0.23
Basic Earning per share 0.03 (0.002) (0.26)
Book value per share (of USD 1) 1.30 1.27 1.27
The equity shares of Aditya Vikram Global Trading House Limited are not listed and it has not made any public or
rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it has
not been referred for winding up.
3. A V Transworks Limited
A V TransWorks Limited (formerly known as 1694976 Ontario Limited) was acquired on June 16, 2006 and its
registered office is located at 79, Wellington Street West Suite 3000, Toronto Dominion Center, Toronto, Ontario
M5K1N2, Canada.
It is the holding company of Minacs Worldwide Inc.
Directors as on October 31, 2006
1. Mr. S. Ganapathi;
2. Mr. P. Pathak; and
3. Mr. A. Cockwell.
Shareholding as on October 31, 2006
The company is a wholly owned subsidiary of Trans Works Information Services Limited.
Name of the shareholder No. of shares held Percentage of holdings
Trans Works Information Services Limited 12,70,00,001 100%
Total 12,70,00,001 100%
4. Alpha Garments Private Limited (AGL)
Alpha Garments was incorporated on January 20, 1995 with its registered office at 288/2 Dodda Bengur, Bangalore-
560068.
115
The main object of the company is to manufacture, process, buy, sell and deal in all types of wearing apparels or
readymade garments made up of all kinds of fabric and other ancillary businesses.
Directors as on October 31, 2006
1. Mr. N.V. Balachandar;
2. Mr. N.P. Singh;
3. Mr. R. Rama Rao; and
4. Mr. Anil Rustogi.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings (%)
Madura Garments Export Limited 80,008 100%
Total 80,008 100%
Financial performance
The operating results of Alpha Garments Private Limited for fiscal 2006, 2005 and 2004 are as hereunder.
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 18.90 22.60 12.80
Other income 0.03 0.01 0.08
Profit after tax (0.46) 0.38 0.40
Equity Capital 0.08 0.08 0.08
Reserve 0.60 1.08 0.74
Basic Earning per share (59.35) 43.22 44.69
Book value per share (of Rs. 10 each) 85.24 144.59 102.24
The equity shares of Alpha Garments Private Limited are listed and it has not made any public or rights issue in the
preceding three years. It has not become a sick company under the meaning of SICA and it is not referred for
winding up.
5. Birla Global Finance Company Limited
Birla Global Finance Company Limited (formerly Birla Global Asset Finance Company Limited) was incorporated
under the Act on August 28, 1991 and its registered office is at Apeejay, 2nd Floor, Shahid Bhagat Singh Road,
Fort, Mumbai - 400 001. Birla Global Finance Limited is engaged in loan syndication and asset backed finance.
The main object of the company is to finance industrial enterprises and to lend and advance money to such
persons, firms, or companies and upon such terms and subject to such conditions as may seem expedient.
Directors as on October 31, 2006
1. Mr. B. N. Puranmalka;
2. Mr. S. K. Mitra; and
3. Mr. D. J. Kakalia.
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ADITYA BIRLA NUVO LIMITED
Shareholding as on October 31, 2006
Name of Shareholder No. of shares held Percentage of holding
Aditya Birla Nuvo Limited 3,09,64,841 100.00%
Laxminarayan Investment Limited 1 0.00%
Total 30,964,842 100.00%
Financial performance
The operating results of Birla Global Finance Company Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 4.95 3.00 12.92
Other income 0.20 0.09 0.65
Profit after tax (1.48) (1.58) (12.19)
Equity Capital 7.26 7.26 24.22
Reserve (6.48) (5.00) 28.15
Basic Earning per share (2.04) (2.16) (5.03)
Book value per share (of Rs. 10/- each) 1.08 3.12 21.63
The equity shares of Birla Global Finance Company Limited are not listed and it has not made any public or rights
issue in the preceding three years. It has not become a sick company under the meaning of SICA and it has not
been referred for winding up.
6. BGFL Corporate Finance Private Limited
BGFL Corporate Finance Private Limited was incorporated under the Companies Act, 1956 on May 17, 1996 and
its registered office is at Apeejay, 2nd Floor, Shahid Bhagat Singh Road, Fort, Mumbai - 400 001. BGFL Corporate
Finance Private Limited is engaged in loan syndication and arranges long-term and short-term funds for its clients.
Directors as on October 31,2006
1. Mr. S.K. Mitra;
2. Mr. S. Agarwal; and
3. Mr. K.G Ajmera.
Shareholding pattern as on October 31, 2006
Name of Shareholder No. of shares Percentage of holding
Aditya Birla Nuvo Limited 510,000 100.00%
Total 510,000 100.00%
117
Financial performance
The operating results of BGFL Corporate Finance Private Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.91 0.13 0.03
Other income 0.02 0.02 0.03
Profit after tax (0.01) 0.03 0.02
Equity Capital 0.01 0.01 0.01
Reserve 0.36 0.37 0.31
Basic Earning per share (11.00) 34.07 16.74
Book value per share (of Rs.10/- each) 348.28 354.30 294.82
The equity shares of BGFL Corporate Finance Private Limited are not listed and it has not made any public or
rights issue in the preceeding three years. It has not become a sick company under the meaning of SICA and it has
not been referred for winding up.
7. Birla Insurance Advisory Services Limited
Birla Insurance Advisory Services Limited (“BIASL”) was incorporated on December 26, 2001 with its registered
office at Apeejay, 2nd Floor, Shahid Bhagat Singh Road, Fort, Mumbai - 400 001. The company is a leading
general insurance broker in India with a presence in Mumbai, Delhi, Kolkata and Hyderabad. BIASL has tied-up
with all the insurers in the country, public as well as private. The company aims at being a leader in product
innovation with technically sound business service to cater to specific customer needs. BIASL has standard and
innovative products for its clients from large to medium enterprises, from both the public and private sectors.
Analyzing the customers’ need, optimizing insurance cover and assisting in claim settlement, are the priority areas
for BIASL. The main object of the company is to carry on the business of insurance broking as per the IRDA
Regulations, 2002.
Directors as on December 01, 2006
1. Mr. B.N. Puranmalka;
2. Mr. S.K. Mitra;
3. Mr. M.M. Bhagat;
4. Mr. G.K. Tulsian;
5. Mr. Rajesh Mundra and
6. Mr. Adesh Kumar Gupta
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
BGFL Corporate Finance Private Limited 1,350,054 50.02%
Infocyber India (Private) Limited 1,349,946 49.98%
Total 2,700,000 100.00%
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ADITYA BIRLA NUVO LIMITED
Financial performance
The operating results of Birla Insurance Advisory Services Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 7.59 5.08 3.08
Other income 0.20 0.05 0.06
Profit after tax 2.70 1.51 0.90
Equity Capital 2.70 0.60 0.60
Reserve 2.86 2.41 0.94
Basic Earning per share 10.01 25.18 15.08
Book value per share (of Rs.10/- each) 20.51 49.69 24.99
The equity shares of Birla Insurance Advisory Services Limited are not listed and it has not made any public or
rights issue in the preceeding three years. It has not become a sick company under the meaning of SICA and it has
not been referred for winding up.
8. Birla Sunlife Insurance Company Limited
Birla Sunlife Insurance Company Limited was incorporated on August 4, 2000 having its registered office at 6th
Floor, Vaman Centre, Makhwana Road, Off Andheri-Kurla Road, Near Marol Naka, Andheri (E) , Mumbai - 400 059.
It started its operations in March 2001 after receiving its registration license from IRDA in January 2001. BSLI’s core
strategy has been to ‘create value’ for all its stakeholders - namely, policyholders, employees and shareholders.
This has been driven through innovative and customer focused products such as unit-linked insurance products
and a multi channel distribution capability in individual and group insurance. The main object of the company is to
carry on life insurance business.
Directors as on October 31, 2006
1. Mr. Kumar Mangalam Birla;
2. Mr. D. Stewart;
3. Mr. G.M. Comerford;
4. Mr. S. K. Mitra;
5. Mr. B. N. Puranmalka;
6. Mr. G.P. Gupta;
7. His Highness Maharaja Gaj Singh;
8. Mr. S. N. Talwar;
9. Mr. Sanjeev Aga; and
10. Mr. S. Rajotte.
119
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Aditya Birla Nuvo Limited 41,25,50,000 74%
Sun Life Financial (India) Insurance Investments Inc. 14,49,50,000 26%
Total 55,75,00,000 100%
Financial performance
The operating results of Birla Sunlife Insurance Company Limited for fiscal 2006, 2005 and 2004 are as hereunder.
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 1,398.78 956.19 545.27
Other income 9.36 7.36 4.61
Profit after tax (61.13) (60.61) (77.74)
Equity Capital 460.00 350.00 290.00
Reserve (304.86) (243.73) (183.12)
Basic Earning per share (1.33) (1.73) (2.68)
Book value per share (of Rs.10/- each) 3.37 3.04 3.69
The equity shares of Birla Sunlife Insurance Company Limited are not listed and it has not made any public or
rights issue in the preceeding three years. It has not become a sick company under the meaning of SICA and it has
not been referred for winding up.
9. Birla Technologies Limited
Birla Technologies Limited is the 100% subsidiary of PSI Data Systems Limited. It was incorporated on August 18,
2000 having its registered office at 2nd Floor, Fairwinds, Embassy Golf Links Business Park, Intermediate Ring
Road,–Bangalore - 560 071. BTL offerings include developing, improving, or licensing computer software, computer
hardware and Program packages and also provide a wide variety of software implementation services including
custom application development, application set up etc. The main object of the company is to carry on in India or
elsewhere business of developing, improving, designing, importing or exporting computer software, hardware and
other ancillary business activity.
Directors as on December 1, 2006
1. Mr. Adesh Kumar Gupta
2. Mr. A. Thiagarajan
3. Mr. Dev Bhattacharya and
4. Dr. Bharat K. Singh
Share holding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
PSI Data Systems Limited 9,80,03,500 100%
Total 9,80,03,500 100%
120
ADITYA BIRLA NUVO LIMITED
Financial performance
The operating results of Birla Technologies Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 30.47 24.02 37.61
Other income 0.25 0.95 0.83
Profit/ (Loss) after tax 2.79 (0.51) (8.51)
Equity Capital 9.80 9.80 9.80
Reserve (19.23) (22.03) (21.52)
Basic Earning per share 2.85 (0.52) (8.68)
Book value per share (of Rs. 10 each) (9.62) (12.47) (11.96)
The equity shares of Birla Technologies Limited are not listed and it has not made any public or rights issue in the
preceding three years. It has not become a sick company under the meaning of SICA and it has not been referred
for winding up.
10. Crafted Clothing Private Limited
Crafted Clothing Private Limited was incorporated on June 20, 1996 having its registered office at No.527/1, Marsur
Village, Marsur post, Anekal Taluk, Bangalore-562106. It is engaged in the business of manufacture of shirts with
a state of art facilities. The main object of the company is to manufacture, process, buy, sell and deal in all types
of wearing apparels or readymade garments made up of all kinds of fabric and other ancillary businesses.
Directors as on October 31, 2006
1. Mr. H. G. Javeri;
2. Ms. Pinky Mehta; and
3. Mr. Devendra Bhandari.
Shareholding pattern as on October 31, 2006
Name of Shareholder No. of shares held Percentage of holding
Laxminarayan Investment Limited 5,00,000 100%
Total 5,00,000 100%
Financial performance
The operating results of Crafted Clothing Private Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 23.19 9.34 8.72
Other income 1.07 0.72 0.48
Profit after tax 0.98 0.16 0.50
Equity Capital 0.50 0.50 0.50
Reserve 0.07 (0.91) (1.07)
Basic Earning per share 8.42 (8.03) 3.41
Book value per share (of Rs. 10 each) 11.44 (8.56) (11.80)
121
The equity shares of Crafted Clothing Private Limited are not listed and it has not made any public or rights issue
in the preceding three years. It has not become a sick company under the meaning of SICA and it has not been
referred for winding up.
11. English Apparels Private Limited
English Apparels Private Limited was incorporated on July 13, 1989, having its registered office at No.52/2,
Bilvardhahalli, Jignihobli, Anekal Taluk, Bangalore-562083. It is engaged in the business of manufacture of Garments
with a state of art facilities. The main object of the company is to manufacture, process, buy, sell and deal in all
types of wearing apparels or readymade garments made up of all kinds of fabric and other ancillary businesses.
Directors as on October 31, 2006
1. Mr. R. Swaminathan;
2. Mr. Y. N. Jaisimha; and
3. Mr. Shireesh Jain.
Shareholding pattern as on October 31, 2006
Name of Shareholder No. of shares held Percentage of holding
Crafted Clothing Private Limited 60,066 100%
Total 60,066 100%
Financial performance
The operating results of English Apparels Private Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 3.48 3.56 2.94
Other income 0.02 0.12 0.03
Profit after tax 0.14 0.04 0.02
Equity Capital 0.06 0.06 0.06
Reserve 0.26 0.13 0.11
Basic Earning per share 23.00 4.95 3.98
Book value per share (of Rs. 10 each) 53.52 31.59 27.75
The equity shares of English Apparels Private Limited are not listed and it has not made any public or rights issue
in the preceding three years. It has not become a sick company under the meaning of SICA and it has not been
referred for winding up.
12. Harwood Garments Private Limited
Harwood Garments Private Limited is a company incorporated on January 01, 1982 having its registered office at
MMI Compound, 9th Mile, Bhattarahalli, Virgonagar post,–Bangalore - 562049. It is engaged in the business of
manufacture of Garments with a state of art facilities. The main object of the company is to manufacture, process,
buy, sell and deal in all types of wearing apparels or readymade garments made up of all kinds of fabric and other
ancillary businesses.
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ADITYA BIRLA NUVO LIMITED
Directors as on October 31, 2006
1. Mr. N. P. Singh;
2. Mrs. S. Vasudevan; and
3. Mr. B. S. S. Shetty.
Shareholding pattern as on October 31, 2006
Name of Shareholder No. of shares Percentage of holding
Crafted Clothing Private Limited 83,404 100%
Total 83,404 100%
Financial performance
The operating results of Harwood Garments Private Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 10.45 9.06 7.56
Other income 0.08 0.10 0.15
Profit after tax 0.08 0.12 0.05
Equity Capital 0.08 0.08 0.08
Reserve 0.45 0.37 0.27
Basic Earning per share 9.73 13.92 6.08
Book value per share (of Rs. 10/- each) 63.45 54.86 42.07
The equity shares of Harwood Garments Private Limited are not listed and it has not made any public or rights
issue in the preceding three years. It has not become a sick company under the meaning of SICA and it has not
been referred for winding up.
13. Laxminarayan Investment Limited
Laxminarayan Investment Limited was incorporated under the Act on August 4, 1994 and its registered office is at
Indian Rayon Compound, Veraval, Gujarat - 362 266. Laxminarayan Investment Limited is registered with the RBI
as a NBFC. The main object of the company is to carry on the business of an investment company.
Directors as on October 31, 2006
1. Mr. Adesh Kumar Gupta;
2. Mr. K.K. Maheshwari; and
3. Mr. Manoj Kedia.
Shareholding as on October 31, 2006
Name of Shareholder No. of shares held Percentage of holding
Aditya Birla Nuvo Limited 11,093,000 100%
Total 11,093,000 100%
123
Financial performance
The operating results of Laxminarayan Investment Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.98 0.96 0.94
Other income 0.07 0.03 0.02
Profit / (Loss) after tax 0.59 0.52 0.45
Equity Capital 11.09 11.09 11.09
Reserve 3.85 3.26 2.74
Basic Earning per share 0.53 0.47 0.40
Book value per share (of Rs. 10/- each) 13.47 12.94 12.47
The equity shares of Laxminarayan Investment Limited is not listed and it has not made any public or rights issue
in the preceding three years. It has not become a sick company under the meaning of SICA and it has not been
referred for winding up.
14. Madura Garments Exports Limited
Madura Garments Exports Limited is a company incorporated on December 6, 1994 under the Companies Act,
1956 in the state of Karnataka having its registered office at 62/2A & 2B, Papappana Agrahara, Naganathapura,
Bangalore 560068. It is engaged in the business of manufacture of shirts with a state of art facilities and a work
force of around 1700 employees with production capacity of around 30 lacs shirts per annum. The main object of
the company is to manufacture, process, buy, sell and deal in all types of wearing apparels or readymade garments
made up of all kinds of fabric and other ancillary businesses.
Directors as on October 31, 2006
1. Mr. Vikram Rao;
2. Mr. N.V. Balachandar;
3. Mr. Adesh Kumar Gupta; and
4. Mr. V. Srikrishnan.
Shareholding as on October 31, 2006
Name of Shareholder No. of shares Percentage of holding
Aditya Birla Nuvo Limited 1,47,50,000 96.53%
Laxminarayan Investment Limited 5,30,008 3.47%
Total 1,52,80,008 100.00%
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ADITYA BIRLA NUVO LIMITED
Financial performance
The operating results of Madura Garments Export Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 25.68 17.74 5.63
Other income 0.07 0.02 0.03
Profit / (Loss) after tax (0.21) 0.05 0.04
Equity Capital 0.53 0.08 0.08
Reserve (0.00) 0.21 0.20
Basic Earning per share (9.15) 2.16 1.14
Book value per share (of Rs. 10 each) 10.00 35.62 34.44
The equity shares of Madura Garments Exports Limited are not listed and it has not made any public or rights issue
in the preceding three years. It has not become a sick company under the meaning of SICA and it has not been
referred for winding up.
15. TransWorks Information Services Limited
TransWorks Information Services Limited was incorporated on March 19, 1995 with its registered office at Teritex
Building, Opp. Chandivali Petrol Pump, Saki Vihar Road, Saki Naka, Andheri–Kurla Road, Mumbai 400072.
TransWorks provides a complete blend of CRM services - inbound customer service, including technical support,
email / web-chat support, and outbound telemarketing. BPO services include transaction processing as well as
finance and accounting related services. TransWorks serves 22 clients, 12 of them are Fortune 500, across US,
Canada, UK, and Australia. Recently the company has transferred 11.72% of share capital of TransWorks Limited
to RHCP TXW Investment Inc.
The main object of the company is to carry on and undertake the business of setting up and operating centres for
sales and customer interaction services and business process outsourcing and other value added services.
Directors as on October 31, 2006
1. Mr. Kumar Mangalam Birla,
2. Mr. Sanjeev Aga;
3. Mr. Adesh Kumar Gupta;
4. Mr. A.Thiagarajan;
5. Mr. Philio Reichmann;
6. Mr. Frank Hauer; and
7. Mr. Dev Bhattacharya.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Aditya Birla Nuvo Limited 20,738,378 88.28%
RHCP TXW Investment Inc. 2,753,333 11.72%
Total 23,491,711 100.00%
125
Financial performance
The operating results of TransWorks Information Services Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 163.30 108.23 29.41
Other income 0.70 0.19 0.05
Profit/ (Loss) after tax 26.36 0.94 (4.21)
Equity Capital 1.57 1.57 1.57
Reserve 51.35 24.49 26.56
Basic Earning per share 16.75 0.59 (2.73)
Book value per share (of Re. 1/- each) 33.63 16.56 17.88
The equity shares of Trans Works Information Services Limited are not listed and it has not made any public or
rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it has
not been referred for winding up.
16. PSI Data Systems Limited
PSI Data Systems Limited was incorporated on January 22, 1976 having its registered office at 2nd Floor, Fairwinds,
Embassy Golf Links Business Park, Intermediate Ring Road, Bangalore - 560 071. PSI is the global information
technology services arm of the Group. It operates from offices in the US, UK, France, Germany and Japan, with fully
equipped delivery centres in India at Bangalore. The main object of the company is to design, develop and
manufacture micro processor modules, Systems and Mini and Micro computer based systems, Electronic
Instrumentation systems and other value added services.
Directors as on December 1, 2006
1. Mr. Kumar Mangalam Birla;
2. Mr. G. Dave;
3. Mr. Adesh Kumar Gupta;
4. Mr. D. Ratha;
5. Mr. A. Thiagarajan;
6. Mr. Dev Bhattacharya, and
7. Dr. Bharat K. Singh
Shareholding Pattern as on October 31, 2006 is as follows;
Name of the shareholder No. of shares held Percentage of holdings
Aditya Birla Nuvo Limited 53,15,109 70.40%
Banks, FIs, Mutual Funds and FIIs 6,008 0.08%
Private Bodies Corporate 572,907 7.59%
Resident Individuals 13,82,563 18.31%
Others 2,73,747 3.62%
Total 7,550,334 100.00%
126
ADITYA BIRLA NUVO LIMITED
The highest and lowest market price of shares during the preceding six months:
BSE
Month High (Rs.) Low (Rs.)
May 2006 196.50 127.60
June 2006 146.85 107.55
July 2006 145.50 118.50
August 2006 155.50 121.00
September 2006 150.60 135.00
October 2006 142.50 126.65
November 2006 125.00 120.10
Source: BSE Website
Financial performance
The operating results of PSI Data Systems Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 59.80 59.80 49.68
Other income 0.61 0.79 0.61
Profit/ (Loss) after tax (1.45) (2.05) (12.37)
Equity Capital 7.55 7.55 7.55
Reserve (18.67) (17.23) (15.18)
Basic Earning per share (1.91) (2.71) (16.38)
Book value per share (of Rs. 10 each) (14.73) (12.82) (10.10)
Mechanism for redressal of investor grievances
The company has a Shareholders/ Investor Grievance Committee which meets as and when required, to deal and
monitor redressal of complaints from shareholders relating to transfers, non receipt of balance sheet, non receipt of
dividend declared etc. Generally, the investor grievances are dealt within a fortnight of receipt of the complaint from
the investor. As of March 31, 2006, there are nil investor grievance pending against the company.
It has not made any public or rights issue in the preceding three years. It has not become a sick company under
the meaning of SICA and it has not been referred for winding up.
17. Minacs Worldwide Inc.
Minacs Worldwide Inc is subsidiary of A V Transworks w.e.f August 2006 which is in turn 100% subsidiary of
TransWorks Information Services Limited. It was incorporated on April 23, 1987 having its registered office at 180
Duncan Mill Road, 7th Floor Toronto, Ontario M3B 1Z6. Minacs provides customized business process outsourcing
(BPO) solutions focused on three core areas: contact center solutions, integrated marketing services and back office
administration. It combines its expertise to improve revenue, customer service, and operating margin for its clients.
With approximately 6,000 employees from locations in Canada, the US and Europe, Minacs has established
successful practices with clients in the automotive, financial services, telecom, technology, and government sectors.
The main object of the company is to carry on in India or elsewhere business of developing, improving, designing,
importing or exporting computer software, hardware and other ancillary business activity.
127
Directors as on October 31, 2006
1. Dr. Norm Betts;
2. Mr. Dev Bhattacharya;
3. Mr. Gary Comerford;
4. Ms. Janet Ecker;
5. Mr. Adesh Kumar Gupta;
6. Mr. Atul Kunwar; and
7. Mr. Philip Reichmann.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
A V TransWorks Limited 22,893,105 100%
Total 22,893,105 100.00%
Financial performance
The operating results of Minacs Worldwide Inc for fiscal 2005, 2004 and 2003 are as hereunder:
(In million Cnd $ except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003
Net Sales 290.51 274.83 265.55
Profit/ (Loss) after tax 2.88 1.79 (9.93)
Equity Capital 36.21 36.10 36.07
Reserve (15.77) (19.38) (20.06)
Basic Earning per share 0.13 0.08 (0.46)
Book value per share 0.94 0.77 0.73
Net Asset Value per Share 5.08 4.55 4.75
18. The Minacs Group (U.S.A)
Minacs US is the 100% subsidiary of Minacs Worldwide Inc. It was incorporated in September 1997 with its
registered office at Wilmington, Delaware. The main object of the company is to carry on call centre services. It
became a subsidiary consequent to the acquisition of Minacs Worldwide Inc. by A V Transworks in August 2006.
Directors as on October 31, 2006
1. Mr. Bruce Simmonds;
2. Mr. Gerry McDonald; and
3. Mr. Eric Greenwood.
128
ADITYA BIRLA NUVO LIMITED
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings (%)
Minacs Worldwide Inc. 100 100%
Total 100 100%
19. Minacs GmbH (Germany)
Minacs Germany is a 100% owned subsidiary of Minacs Limited. It was incorporated in August 2000 with its
registered office in Russelheim, Germany. The main object of the company is to carry on customer relationship
management centres. It became subsidiary consequent to acquisition of Minacs Worldwide Inc. by A V Transworks
in August 2006.
Directors as on October 31, 2006
1. Mr. Eric Greenwood; and
2. Mr. Paul Niewohner.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Minacs Limited 1 100%
Total 1 100%
20. Millman Insurance
Millman Insurance is an inactive subsidiary of Minacs Worldwide Inc. It was incorporated in April 1993 with its
registered office at Toronto, Ontario. The main object of the company is to carry on call centre services. It became
a subsidiary consequent to acquisition of Minacs Worldwide Inc. by A V Transworks in August 2006.
Director as on October 31, 2006
1. Mr. Eric Greenwood.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Minacs Worldwide Inc. 49 49%
Robert Nishimura 51 51%
Total 100 100%
21. Minacs Kft. (Hungary)
Minacs Hungary is the wholly owned subsidiary of Minacs Germany. It was incorporated in October 2003 with its
registered office in Budapest, Hungary. The main object of the company is to carry on call centre activities. It
became subsidiary consequent to acquisition of Minacs Worldwide Inc. by A V Transworks in August 2006.
Directors as on October 31, 2006
1. Mr. Paul Niewoehner; and
2. Mr. Roy Kolotylo.
Share holding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Minacs Germany 2900 97%
Julius Minacs 100 3%
Total 3000 100%
129
22. Minacs Limited (UK)
Minacs UK is a wholly owned subsidiary of Minacs Worldwide Inc. It was incorporated in July 1996 with its
registered office in Oxford, England. The main object of the company is to carry on general business services. It
became subsidiary consequent to acquisition of Minacs Worldwide Inc. by A V Transworks in August 2006.
Directors as on October 31, 2006
1. Mr. Gerry McDonald;
2. Mr. Eric Greenwood; and
3. Mr. Paul Niewohner.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Minacs Worldwide Inc. 1000 100%
Total 1000 100%
23. Minacs Worldwide S.A. de C.V. (Mexico)
Minacs Mexico is an inactive wholly owned subsidiary of Minacs Worldwide Inc. It was incorporated in April 2001
with its registered office in Toluca, Mexico. The main object of the company is to carry on call centre services. It
became subsidiary consequent to acquisition of Minacs Worldwide Inc. by A V Transworks in August 2006.
Directors as on October 31, 2006
1. Mr. Eric Greenwood
Share holding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Minacs Worldwide Inc. 499 99%
Minacs US 1 1%
Total 500 100%
24. TransWorks Inc
It is the fully owned subsidiary of TransWorks Information Services Limited situated in the United States of America.
It was incorporated on October 3, 2000 with its registered office at 1999 South Bascom Avenue, Suite 700,
Campbell, CA 95008, USA.
Directors as on October 31, 2006
1. Mr. Tanvir Ali Khan; and
2. Mr. Atul Kunwar.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
TransWorks Information Services Limited 700,000 100.00%
Total 700,000 100.00%
130
ADITYA BIRLA NUVO LIMITED
Financial performance
The operating results of Transworks Inc for fiscal 2006, 2005 and 2004 are as hereunder:
(In US$ millions except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.89 0.77 1.52
Other income 0.00 0.00 0.00
Profit after tax 0.04 0.03 0.05
Equity Capital 0.70 0.70 0.70
Reserve 0.14 0.10 0.07
Basic Earning per share 0.06 0.04 0.08
Book value per share (of USD 1/- each) 1.20 1.14 1.08
The equity shares of TransWorks Inc are not listed.
25. Transworks BPO Philippines Inc
This company is a subsidiary of TransWorks Information Services Limited and was incorporated on November 3,
2006. It’s registered office is located at 1800 Eastwood Ave, Bldg, 10/F Eastwood City, Cyberpark , 188 E. Rodriguez
Jr. Ave Bagumbayan Q.C. Philippines.
Directors as on November 15, 2006:
1. Mr. Sanjeev Aga
2. Mr. Dev Bhattacharya
3. Mr. Adesh Kumar Gupta
4. Mr. Atul Kunwar
Shareholders as on November 15, 2006:
Name of the shareholder No. of shares held Percentage of holdings
TransWorks Information Services Limited 12,500 100.00%
Total 12,500 100.00%
Financial Performance
Since the company has been recently incorporated, financial results for the last three years are not available.
26. Birla NGK Insulators Limited
The company was incorporated on November 05, 2002 with its registered office at P.O. Meghasar, Taluka Halol,
District Panchmahal, Gujarat – 389 330. It was formed with the de-merger of Aditya Birla Nuvo’s insulator business.
The main object of the company is to carry on business of manufacture, process, produce and carry on ancillary
business in insulators.
131
Directors as on November 29, 2006:
1. Dr. Bharat K. Singh;
2. Mr. Sanjeev Aga;
3. Mr. Adesh Kumar Gupta;
4. Mr. J. Dua; and
5. Dr. Rakesh Jain.
Shareholding as on November 29, 2006
Name of the shareholder No. of shares held Percentage of holdings
Aditya Birla Nuvo Limited 2,07,40,000 82.96%
Mitsubishi Corporation 2,50,000 1%
Laxminarayan Investments Limited 40,10,000 16.04%
Total 2,50,00,000 100%
Financial Performance
The operating results of the company for fiscal 2004, 2005 and 2006 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 226.60 168.83 163.67
Other income 0.98 0.96 3.32
Profit after tax (3.62) (25.33) (14.15)
Equity Capital 25.00 25.00 25.00
Reserve 69.77 73.39 98.72
Basic Earning per share (1.45) (10.13) (5.66)
Book value per share 37.95 39.36 49.49
The equity shares of the Birla NGK Insulators Limited are not listed. The company was incorporated as a 50:50
joint venture between Aditya Birla Nuvo Limited and NGK Insulators Limited, Japan and has recently become a
subsidiary of our Company. The company has not made any public or rights issue in the preceding three years. It
has not become a sick company under the meaning of SICA and it has not been referred for winding up.
132
ADITYA BIRLA NUVO LIMITED
OUR JOINT VENTURE COMPANIES
1. IDEA Cellular Limited
IDEA Cellular Limited was incorporated on March 14, 1995 as Birla Communications, which was later changed to
Birla AT&T Communication on May 13, 1996, which was later changed to Birla Tata AT&T Communication on
November 6, 2001. The name of the company was changed to the present name on April 29, 2002. Its registered
office is at Suman Towers, Plot No. 18, Sector – 11, Gandhinagar – 382 011.
The main object of the company is to provide basic telephone services, cellular services and provide many other
value added services.
Directors as on October 31, 2006
1. Mr. Kumar Mangalam Birla;
2. Mrs Rajashree Birla;
3. Mr. Sanjeev Aga;
4. Mr. Debu Bhattacharya;
5. Mr. Saurabh Misra;
6. Mr. M.R. Prasanna;
7. Mr. A. Thiagarajan;
8. Ms. Tarjani Vakil; and
9. Mr. Mohan Gyani.
Shareholding pattern as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Birla TMT Holdings Private Limited 47,68,89,830 21.11
Aditya Birla Nuvo Limited 80,75,26,221 35.74
Hindalco Industries Limited 22,83,40,226 10.11
Grasim Industries Limited 17,10,13,894 7.57
Goodison Investments Limited 3,84,56,441 1.70
[formerly AIG (Mauritius) LLC]
Monet Limited 8,95,00,000 3.96
Wagner Limited 10,15,00,000 4.49
Rembrandt Limited 33,00,00,000 14.60
Others 1,63,00,594 0.72
Total 2,25,95,27,206 100.00
133
Financial Performance
The operating results of IDEA Cellular for fiscal 2004, 2005 and 2006 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 2965.49 2255.71 1296.59
Other income 24.39 17.11 16.29
Profit after tax 211.77 75.90 (236.41)
Equity Capital 2,259.53 2,259.53 2,259.53
Reserve (1,608.93) (1,820.70) (1,896.60)
Basic Earning per share 0.74 0.10 (1.32)
Book value per share (of Rs. 10 each) 2.88 1.94 1.61
The equity shares of the IDEA Cellular Limited are not listed. There has not been any change in the capital
structure in the last six months. The Company has not made any public or rights issue in the preceding three years.
It has not become a sick company under the meaning of SICA and it has not been referred for winding up.
2. Birla Sun Life Asset Management Company Limited
Birla Sun Life Asset Management Company Limited the investment manager of Birla Mutual Fund, is a joint venture
between the Aditya Birla Group and the Sun Life Financial Services of Canada. It was incorporated on September
5, 1994 with its registered office at Ahura Centre, 2nd Floor, Tower A, 96/A-d, Mahakali Caves Road, Andheri
(East), Mumbai 400093.
The main object of the company is to act as Investment Manager of Mutual Funds, and providing other financial
services.
Directors as on October 31, 2006
1. Mr. Kumar Mangalam Birla;
2. Mr. D. Stewart;
3. Mr. A.Goenka;
4. Mr. N.N. Jambusaria;
5. Mr. S.K. Mitra;
6. Mr. S.S. Raman;
7. Mr. N. C. Singhal and
8. Mr. S. Rajotte.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings (%)
Aditya Birla Nuvo Limited 89,99,980 50.00%
Sun Life (India) AMC Investments Inc. 90,00,000 50.00%
Others 20 0.00%
Total 1,80,00,000 100.00%
134
ADITYA BIRLA NUVO LIMITED
Financial Performance
The operating results of Birla Sun Life Asset Management Company Limited for fiscal 2004, 2005 and 2006 are as
hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 74.45 72.23 71.15
Other income 0.61 0.86 0.77
Profit after tax 19.90 19.69 15.35
Equity Capital 18.00 18.00 18.00
Reserve 49.17 46.71 32.15
Basic Earning per share 11.06 10.94 8.53
Book value per share (of Rs. 10 each) 37.31 35.95 27.86
The equity shares of the Birla Sun Life Asset Management Company Limited are not listed. There has not been any
change in the capital structure in the last six months. The Company has not made any public or rights issue in the
preceding three years. It has not become a sick company under the meaning of SICA and it is not referred for
winding up.
3. Birla Sun Life Distribution Company Limited
Birla Sun Life Distribution Company Limited (“BSDL”) is a joint venture between the Aditya Birla Group and Sun
Life Financial Services of Canada. It was incorporated on June 13, 1997, having its registered office at ‘Industry
House’ 1st Floor, 159, Churchgate Reclamation, Mumbai – 400 020.
BSDL is a leading wealth management & investment advisory services company with a thrust on investments and
insurance planning, by delivering wealth management solutions individually created for its clients. With the ideal
culmination of knowledge, expertise and experience, BSDL offers investment advisory and financial products
distribution through its all-India network. The products range covers Mutual Funds, Government of India Relief
Bonds, select Fixed Deposits and initial public offerings of equity and debt securities. It also distributes life insurance
products of Birla Sun Life Insurance through its wholly owned subsidiary.
Directors as on October 31, 2006
1. Mr. B.N. Puranmalka;
2. Mr. S.K. Mitra;
3. Mr. G. Comerford; and
4. Mr. S. Rajotte.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings
Aditya Birla Nuvo Limited 35,87,499 50%
Sun Life (India) Distribution Investments Inc. 35,87,500 50%
Total 71,74,999 100%
135
Financial Performance
The operating results of Birla Sun Life Distribution Company Limited for fiscal 2004, 2005 and 2006 are as
hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 24.67 16.72 21.35
Other income 0.64 0.90 1.80
Profit after tax 3.14 2.03 4.82
Equity Capital 7.75 7.75 8.50
Reserve 5.29 4.83 8.83
Basic Earning per share 4.06 2.40 4.92
Book value per share (of Rs. 10 each) 16.81 16.23 20.35
The equity shares of the Birla Sun Life Distribution Company are not listed. There has not been any change in the
capital structure in the last six months. The Company has not made any public or rights issue in the preceding
three years. It has not become a sick company under the meaning of SICA and it is not referred for winding up.
4. Birla Sun Life Trustee Company Private Limited
Birla Sunlife Trustee Company Private Limited is the trustee of Birla Sunlife Mutual Fund. It was incorporated on
September 23, 1994 with its registered office at 801/802 Ashoka Estate, 24, Barakhamba Road, New Delhi – 110
001.
The main object of the company is to act as a trustee for mutual funds.
Directors as on October 31, 2006
1. Mr. P. Anubhai;
2. Dr. V. Arunachalam;
3. Mr. G. Das;
4. Mr. B.N. Puranmalka; and
5. Mr. S. Talwar.
Shareholding as on October 31, 2006
Name of the shareholder No. of shares held Percentage of holdings (%)
Aditya Birla Nuvo Limited 9,950 49.75%
Birla Global Finance Company Limited 10 0.05%
Birla Group Holdings Limited 10 0.05%
Sun Life (India) AMC Investment Inc. 10,000 50.00%
BGFL Corporate Finance Pvt. Limited 10 0.05%
Others 20 0.10%
Total 20,000 100.00%
136
ADITYA BIRLA NUVO LIMITED
Financial Performance
The operating results of Birla Sunlife Trustee Company Pvt Limited for fiscal 2004, 2005 and 2006 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.05 0.05 0.05
Other income 0.00 0.00 0.01
Profit after tax 0.00 0.00 (0.00)
Equity Capital 0.02 0.02 0.02
Reserve 0.11 0.11 0.10
Basic Earning per share 1.81 1.37 (0.60)
Book value per share (of Rs. 10 each) 66.00 64.19 62.35
The equity shares of the Birla Sunlife Trustee Company Private Limited are not listed. There has not been any
change in the capital structure in the last six months. The Company has not made any public or rights issue in the
preceding three years. It has not become a sick company under the meaning of SICA and it has not been referred
for winding up.
Our Associate Company
1. Birla Securities Limited
Birla Securities Limited was incorporated under the Act on May 26, 1994 and its registered office is at Apeejay, 2nd
Floor, Shahid Bhagat Singh Road, Fort, Mumbai – 400001. The company is engaged in stock broking and stock
trading business.
Directors as on October 31, 2006
1. Mr. S.K. Mitra;
2. Mr. K.G. Ajmera; and
3. Mr. A.C. Dalal.
Shareholding pattern as on October 31, 2006
Name of Shareholder No. of shares Percentage of holding
Aditya Birla Nuvo Limited 4,95,800 50%
Ascent Advisory Services Private Limited 4,95,800 50%
Total 9,91,600 100%
137
Financial performance
The operating results of Birla Securities Limited for fiscal 2006, 2005 and 2004 are as hereunder:
(In Rs. Crores except per share data)
Particulars As at and for As at and for As at and for
the year ended the year ended the year ended
March 31, 2006 March 31, 2005 March 31, 2004
Net Sales 0.00 0.13 0.31
Other income 0.01 0.57 0.00
Profit after tax 0.00 0.05 0.05
Equity Capital 0.99 0.99 0.99
Reserve (3.93) (3.94) (4.01)
Basic Earning per share 0.02 0.53 0.55
Book value per share (29.66) (29.79) (30.50)
The equity shares of the Birla Securities Limited are not listed. There has not been any change in the capital
structure in the last six months. The Company has not made any public or rights issue in the preceding three years.
It has not become a sick company under the meaning of SICA and it has not been referred for winding up.
138
ADITYA BIRLA NUVO LIMITED
RELATED PARTY TRANSACTION
List of Related Parties:
I. Parties where control exists - Subsidiaries: -
Aditya Birla Telecom Ltd. (w.e.f. 24th December 2005)
Alpha Garments Pvt Ltd. (AGL) (Subsidiary of MGEL w.e.f. 15th February 2006)
Aditya Vikram Global Trading House Ltd. (AVGTHL)
Birla Sun Life Insurance Co. Ltd. (BSLICL)
Birla Technologies Ltd. (Subsidiary of PSI) (w.e.f. February 2002)
BGFL Corporate Finance Pvt. Ltd. (BGCFPL) (w.e.f. 1st September 2005)
Birla Global Finance Company Ltd. (BGFCL) (w.e.f. 1st September 2005)
Birla Insurance Advisory Services Ltd. (BIASL) (Subsidiary of BGCFPL) (w.e.f. 1st September 2005)
Laxminarayan Investment Ltd. (LIL)
Madura Garments Export Limited (MGEL) (w.e.f. 26th October 2005)
PSI Data Systems Ltd. (PSI) (w.e.f. September 2001)
PSI Kalinga Ltd. (Subsidiary of PSI) (for 2001-02)
Rajnidhi Finance Ltd. (Subsidiary of LIL) (upto 2002-03)
Transworks Information Services Ltd. (TW) (w.e.f. June 2003)
Transworks Inc. USA (Subsidiary of TW) (w.e.f June 2003)
AV TransWorks Ltd., Canada (Subsidiary of TW) (w.e.f. 16th June, 2006)
Minacs Worldwide Inc. Canada (MWI) (Subsidiary of AV TransWorks) (w.e.f 18th August, 2006)
The Minacs Group (Subsidiary of MWI)
Minacs Worldwide S.A. de C.V. (Subsidiary of MWI)
Millman Insuranc. (Subsidiary of MWI)
Minacs Limited (Subsidiary of MWI)
The Minacs GmbH (Subsidiary of Minacs Ltd)
Minacs Kft. (Subsidiary of Minacs GmbH)
Crafted Clothing Pvt. Ltd. (CCPL) (w.e.f. 3rd August, 2006)
English Apparels Pvt. Ltd. (EAPL) (Subsidiary of CCPL) (w.e.f. 3rd August, 2006)
Harwood Garments Pvt. Ltd. (HGPL) (Subsidiary of CCPL) (w.e.f. 3rd August, 2006)
II. Other Parties with whom the Company has entered into transactions during the year:
Joint Ventures
BIRLA-NGK Insulators Pvt. Ltd. (BNIPL)
Birla Sun Life Distribution Company Limited (BSDL) (w.e.f. 1st September 2005)
Birla Sun Life Asset Management Company Limited (BSAMC) (w.e.f. 1st September 2005)
Birla Sun Life Trustee Company Private Limited (BSTPL) (w.e.f. 1st September 2005)
Bina Power Supply Co Ltd (for 2001-02)
IDEA Cellular Limited (IDEA)
Indo Gulf Corp Ltd (for 2001-02)
Mangalore Refinery & Petro Chemicals Ltd (for 2001-02)
Rosa Power Supply Co Ltd. (for 2001-02)
139
Associates
Alpha Garments Pvt Ltd (for 2001-02)
Birla Securities Ltd. (BSL) (w.e.f. 1st September 2005)
Crafted Clothing Pvt. Ltd. (CCPL) (from 2001-02 to June 2004 and again from 26th October 2005 to 2nd August
2006)
Classical Menswear Pvt Ltd (for 2001-02)
Design Knitwear Pvt Ltd (for 2001-02)
English Apparels Pvt Ltd. (EAPL) (for 2001-02 and again from 15th February 2006 to 2nd August 2006)
Europa Garments Pvt Ltd (for 2001-02)
Harwood Garments Pvt Ltd. (HGPL) (for 2001-02 and again from 15th February 2006 to 2nd August 2006)
Perfect Apparels Pvt Ltd (for 2001-02)
Key Management Personnel & their relatives and enterprises having common key management personnel
Shri Sanjeev Aga – Managing Director (from 2005-06)
Shri Adesh Kumar Gupta – Whole Time Director (from 2005-06)
Shri K.K. Maheshwari – Whole Time Director (Manager till 2004-05)
Shri Rakesh Jain – Whole Time Director (w.e.f 3rd April, 2006)
Shri S.K. Mitra – Whole Time Director (w.e.f 1st July, 2006)
Relatives of Key Management Personnel
Mrs. Usha Gupta (Wife of Shri Adesh Kumar Gupta)
Mrs. Sharda Maheshwari (Wife of Shri K.K. Maheshwari)
Mrs. Sushmita Mitra (Wife of Shri S.K. Mitra)
Enterprises having common Key Management Personnel
Shri Sanjeev Aga – Managing Director
M/s. Sapte Investments (P) Ltd.
Shri K.K. Maheshwari – Whole Time Director
M/s. Tanfac Industries Ltd.
140
ADITYA BIRLA NUVO LIMITED
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ADITYA BIRLA NUVO LIMITED
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145
AUDITORS REPORT
The Board of Directors
Aditya Birla Nuvo Limited
A-4, Aditya Birla Centre
Near Old Passport Office
Worli, Mumbai 400 020
Dear Sirs,
We have examined the Financial Information of ADITYA BIRLA NUVO LIMITED (hereinafter referred to as ‘the Company’)
for the six month period ended September 30, 2006 and for each of the financial years ended on March 31, 2006, 2005,
2004, 2003, 2002 prepared by the Company and approved by the Board of Directors for the proposed Rights Issue, in
accordance with the requirements of:
a. paragraph B(1) of Part II of Schedule II to the Companies Act, 1956 (hereinafter referred to as ‘the Act’);
b. the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (‘the Guidelines’)
and the clarifications issued by the Securities and Exchange Board of India (hereinafter referred to as ‘the ‘SEBI’)
on January 19, 2000 as amended upto May 08, 2006, in pursuance of Section 11 of the Securities and Exchange
Board of India Act, 1992;
c. the terms of reference received from the Company; and
d. the Guidance Note on Reports in Company Prospectuses and Guidance Note on Audit Reports/Certificates on
Financial Information in Offer Documents issued by the Institute of Chartered Accountants of India
The financial information furnished in this report is based on the financial statements which have been jointly audited by
us for the six months period ended September 30, 2006 and for the financial years ended March 31, 2006, 2005 and
2004 and jointly audited by one of us viz. Khimji Kunverji & Co., Chartered Accountants jointly with M/s. Lodha & Co.,
Chartered Accountants (together referred to as ‘the previous joint auditors’) for the financial years ended March 31, 2003
and 2002 and this report, in so far as it relates to the amounts included for the years ended March 31, 2003 and 2002
is concerned, is based solely on the financial statements audited by and the reports of the previous joint auditors. The
Branch Auditors’ reports for six month period ended September 30, 2006, and each of these years were forwarded to the
respective joint auditors and were appropriately dealt with by them while issuing their respective audit opinions on the
financial statements of the Company.
Financial information as per audited financial statements:
We have examined the,
(i) Annexed restated Summary Statement of Assets and Liabilities of the Company as at September 30, 2006, March
31, 2006, 2005, 2004, 2003 and 2002 (See Annexure 1 of this report);
(ii) Annexed restated Summary Statement of Profit and Loss of the Company for six months period ended September
30, 2006 and for the years ended March 31, 2006, 2005, 2004, 2003 and 2002 (See Annexure 2 of this report);
(iii) Annexed restated Summary Statement of Cash Flows of the Company for six months period ended September 30,
2006 and for the years ended March 31, 2006, 2005, 2004, 2003 and 2002 (See Annexure 3 of this report).
Based on our examination of these Summary Statements, we confirm that:
The accounting policies applied as at September 30, 2006 and for the six months period then ended and also for
each of the years ended March 31, 2006, 2005, 2004, 2003 and 2002 are materially consistent based on Accounting
Standards then existing. Accordingly, no adjustments on account of changes in accounting policies have been
made to the audited financial statements for years presented;
There are no material prior period items requiring adjustment in the Summary Statements in the above mentioned
years.
146
ADITYA BIRLA NUVO LIMITED
There are no extraordinary items which need to be disclosed separately in the Summary Statements; and
There are no qualifications in the auditors’ reports, which require any adjustments to the Summary Statements.
The Summary of Significant Accounting Policies for the six months period ended September 30, 2006 and selected Notes
to Audited Financial Statements of the Company are enclosed in Annexure 4 to this report.
Other Financial Information:
At your request, we have examined the following financial information relating to the Company, proposed to be included
in the offer document, as approved by the Board of Directors of the Company and annexed to this report :
i. Capitalization Statement as at September 30, 2006, enclosed in Annexure 5.
ii. Statement of accounting ratios based on the adjusted profits relating to earnings per share, net asset value, return
on net worth, enclosed in Annexure 6.
iii. Details of Secured and Unsecured Loans, enclosed in Annexure 7.
iv. Details of Loans taken and assets charged as securities, enclosed in Annexure 8 A.
v. Detail of loans only to the extent of purpose of loan taken earlier and utilization for the same purpose, enclosed in
Annesure 8 B.
vi. Details of Investments, enclosed in Annexure 9.
vii. Details of Sundry Debtors and Loans and Advances, enclosed in Annexure 10.
viii. Details of Related Party Transactions, enclosed in Annexure 11.
ix. Details of Segment Reporting, enclosed in Annexure 12.
x. Details of items of Other Income, enclosed in Annexure 13.
xi. Statement of Tax Shelters, enclosed in Annexure 14.
xii. Details of Contingent Liabilities, enclosed in Annexure 15.
xiii. Details of rate of dividend paid by the Company, enclosed in Annexure 16.
In our opinion, the financial information as disclosed in the annexure to this report, read with the respective significant
accounting policies and notes disclosed in Annexure 4 has been prepared in accordance with Part II of Schedule II of the
Act and the Guidelines.
This report should not, in any way be construed as a re-issuance or re-dating of any of the previous audit reports issued
by the auditors for the respective years nor should this report be construed as a new opinion on any of the financial
statements referred to herein.
This report is intended solely for your information and for inclusion in the Offer Document in connection with the proposed
Rights Issue of the Company and is not to be used, referred to or distributed for any other purpose without our prior
written consent.
For Khimji Kunverji & Co. For S.R. Batliboi & Co.
Chartered Accountants Chartered Accountants
per Shivji K. Vikamsey per Hemal R. Shah
Partner Partner
Membership No: 2242 Membership No: 42650
Place: Mumbai Place: Mumbai
Date: December 01, 2006 Date: December 01, 2006
147
Annexure - 1
Restated Summary Statement of Assets and Liabilities of the Company as at
Rs. Crores
September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
A Fixed Assets:
Gross Block 2577.82 2461.81 1418.74 1301.31 1177.54 1242.14
Less: Depreciation 1497.33 1448.74 663.49 588.53 501.55 491.30
Net Block 1080.49 1013.07 755.25 712.78 675.99 750.84
Capital Work in Progress 96.29 122.45 55.03 24.69 8.09 10.92
Assets Held for disposal - - - - - 13.52
1176.78 1135.52 810.28 737.47 684.08 775.28
B Investments 3064.96 1675.79 699.66 741.63 514.30 439.79
C Current Assets, Loans and Advances
Inventories 504.91 526.33 355.00 276.91 245.42 265.43
Sundry Debtors 487.29 415.44 260.90 186.41 151.20 223.26
Cash and Bank Balance 20.35 20.32 9.41 13.27 41.30 14.20
Interest accrued on investments - - - - 0.02 0.06
Loans and Advances 619.41 664.18 103.88 93.50 145.85 112.28
1631.96 1626.27 729.19 570.09 583.79 615.23
D Liabilities and Provisions
Secured Loans 2071.60 1084.21 493.03 405.81 266.32 443.47
Unsecured Loans 894.55 479.36 - - 1.58 15.66
Deferred Tax Liability 162.69 167.70 125.52 127.51 126.42 101.20
Current Liabilities and Provisions 446.49 498.70 266.52 251.14 223.94 189.99
3575.33 2229.97 885.07 784.46 618.26 750.32
E Net Worth (A+B+C-D) 2298.37 2207.61 1354.06 1264.73 1163.91 1079.98
F Represented by
Share Capital 83.50 59.89 59.88 59.88 59.88 59.88
Share Capital Suspense
(Refer Note D of Annexure 4) - 23.61 - - - -
Reserves and Surplus 2214.87 2124.11 1294.18 1207.80 1110.91 1030.91
Less : Misc. Expenditure - - - (2.95) (6.88) (10.81)
Reserves (Net of Miscellaneous
Expenditure) 2214.87 2124.11 1294.18 1204.85 1104.03 1020.10
Net Worth / Shareholders fund 2298.37 2207.61 1354.06 1264.73 1163.91 1079.98
Note:
The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated
Summary Statements, as appearing in Annexure 4 to this report.
For and behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
148
ADITYA BIRLA NUVO LIMITED
Annexure - 2
Restated Summary Statement of Profit and Loss of the Company
Rs. Crores
For the six For the For the For the For the For the
months year year year year year
ended ended ended ended ended ended
September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
INCOME
Sale of Goods manufactured and
Services by the Company 1697.69 2645.05 1887.67 1643.98 1588.69 1540.98
Sale of Goods Traded 59.41 141.34 100.37 73.63 4.66 9.16
Income from Operations 1757.10 2786.39 1988.04 1717.61 1593.35 1550.14
Less: Excise Duty 77.43 144.34 127.20 140.22 150.93 139.51
Net Income from Operations 1679.67 2642.05 1860.84 1577.39 1442.42 1410.63
Other Income 31.84 23.38 9.72 14.23 10.00 9.13
Increase /(Decrease) in Stocks 19.29 47.32 11.16 21.01 3.87 (10.01)
Total 1730.80 2712.75 1881.72 1612.63 1456.29 1409.75
EXPENDITURE
Cost of Materials 897.11 1447.57 999.60 816.30 686.81 677.41
Salaries, Wages and Employee Benefits 100.58 164.03 124.97 117.43 122.83 120.10
Manufacturing, Selling and Other Expenses 424.69 657.75 493.00 421.08 406.46 420.23
Interest and Other Finance Expenses (Net) 76.51 55.80 18.73 14.82 21.72 45.73
Total 1498.89 2325.15 1636.30 1369.63 1237.82 1263.47
Profit before Depreciation /Amortisation
and Exceptional items 231.91 387.60 245.42 243.00 218.47 146.28
Depreciation/Amortisation 63.26 111.81 77.74 77.59 67.81 69.61
Marketing / Technical know how
expenditure written off - - 2.95 3.93 3.93 3.93
Profit before Exceptional items and Tax 168.65 275.79 164.73 161.48 146.73 72.75
Exceptional Items
VRS Cost/ expense (0.88) (4.04) (9.54) - - (7.58)
Gain/(loss) on sale of long term strategic
investment/Transfer of business (net) 0.20 - 1.89 19.95 (18.66) -
Surplus in respect of assets held for disposal - - - - - 8.91
Profit after Exceptional items before tax 167.97 271.75 157.08 181.43 128.07 74.08
Provision for Taxation - Current Tax 52.00 92.97 45.35 44.25 9.00 5.00
- Deferred Tax 4.27 (6.91) (1.99) 5.90 25.22 25.61
- Fringe Benefit Tax 1.69 4.25 - - - -
Provision for Tax for Earlier Years
written back - (5.49) - - (11.48) -
Net Profit after Tax 110.01 186.93 113.72 131.28 105.33 43.47
149
Balance brought forward 0.45 323.56 267.21 209.64 79.68 57.52
Amount Transferred on Amalgamation of
IGFL and BGFL - 262.57 - - - -
Transfer from Debenture Redemption
Reserve - 25.00 - 48.33 32.96 5.96
Transfer from Investment Allowance Reserve - - - - 37.00 -
Profit available for Appropriation 110.46 798.06 380.93 389.25 254.97 106.94
APPROPRIATIONS
Proposed Dividend - 41.75 23.95 23.95 22.45 19.76
Corporate Tax on Proposed Dividend - 5.86 3.42 3.07 2.88 -
General Reserve - 750.00 25.00 75.07 20.00 7.50
Debenture Redemption Reserve - - 5.00 - - -
Investment Reserve - - - 19.95 - -
Surplus Carried to Balance Sheet 110.46 0.45 323.56 267.21 209.64 79.68
Total 110.46 798.06 380.93 389.25 254.97 106.94
Note:
The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated
Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
Rs. Crores
For the six For the For the For the For the For the
months year year year year year
ended ended ended ended ended ended
September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
150
ADITYA BIRLA NUVO LIMITED
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153
Annexure 4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & SUMMARY OF SELECTED NOTES TO ACCOUNTS OF THE
COMPANY TO THE RESTATED SUMMARY STATEMENTS
The Summary of Significant Accounting Policies and Significant Selected Notes of Audited Financial Statements for the
year/period ended September 30, 2006, March 31, 2006, 2005, 2004, 2003 and 2002 are given below:
A. SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost convention, on an accrual basis and in accordance
with the applicable accounting standards.
FIXED ASSETS
Fixed assets are stated at cost, less accumulated depreciation and impairment loss if any. Cost comprises the
purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
DEPRECIATION / AMORTIZATION
a) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in
the Schedule XIV of the Companies Act, 1956 except stated hereunder:
Estimated useful life
Capital Expenditure on assets not owned - 5 years
Office Computers - 4 years
Vehicles - 5 years
Assets at Showrooms - 5 years
Furniture, Fixtures and Equipments - 6 years
Leasehold Land/Improvements - Over the primary period of the lease
Catalyst - On the estimated life as technically assessed
(ranging from 1.5 to 3 years)
b) INTANGIBLE ASSETS ARE AMORTIZED AS UNDER:
Trademarks/ Brands - 10 years
Specialized Software - 3 years
Goodwill - Not being amortized
c) Depreciation on the Fixed Assets added/disposed off/discarded during the year is provided on pro-rata basis
with reference to the month of addition/disposal/discarding.
“Continuous process plants” are classified based on technical assessment and depreciation is provided accordingly.
Depreciation on the amounts capitalized on account of foreign exchange fluctuation is provided prospectively over
residual life of the assets.
IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment
based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its
recoverable value. An impairment loss if any, is charged to Profit and Loss Account in the year in which an asset
is identified as impaired. Reversal of impairment losses recognized in prior years is recorded when there is an
indication that the impairment losses recognized for the assets no longer exist or have decreased.
154
ADITYA BIRLA NUVO LIMITED
BORROWING COST
Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost
of such asset up to the date when such assets are ready for its intended use.
Other borrowing costs are charged to the Profit & Loss Account.
TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign
currency monetary items are reported using closing rate of exchange at the year-end. Other items, like fixed assets,
inventories, investments in equity shares are carried in terms of historical cost using the exchange rate at the date
of transaction. Premium/Discount in respect of forward foreign exchange contract is recognized over the life of the
contracts. Exchange differences attributable to the acquisition of fixed assets outside India are adjusted to the cost
of the respective assets.
DERIVATIVE INSTRUMENTS
The Company uses derivative financial instruments such as forward exchange contracts, currency swaps and
interest rate swaps to hedge its risks associated with foreign currency fluctuations and interest rate. Currency and
interest rate swaps are accounted in accordance with their contract.
INVESTMENTS
Current Investments are stated at lower of cost and fair value. Long-term investments are stated at cost after
deducting provisions made, if any, for permanent diminution in the value.
INVENTORIES
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However,
these items are considered to be realizable at cost if the finished products in which they will be used, are expected
to be sold at or above cost.
Work in progress and finished goods are valued at lower of cost and net realizable value. Finished goods and
work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present
location and condition.
Cost of inventories is computed on a weighted average/FIFO basis.
Proceeds in respect of sale of raw materials/stores are credited to the respective heads. Obsolete, defective and
unserviceable inventory is duly provided for.
GOVERNMENT GRANTS
Government Grants are recognized when there is reasonable assurance that the same will be received. Revenue
grants are recognized in the Profit & Loss account. Capital grants relating to specific fixed assets are reduced from
the gross value of the respective fixed assets. Other capital grants are credited to capital reserve.
REVENUE RECOGNITION
Sales are recorded net of trade discounts, rebates and include excise duty.
Income from service is recognized as they are rendered based on agreements/arrangements with the concerned
parties.
Fertilizer price support under Group Concession and other Scheme of Government of India is recognized based on
management’s estimate taking into account known policy parameters and input price escalation/de-escalation.
Dividend income on investments is accounted for when the right to receive the payment is established.
RETIREMENT BENEFITS
Retirement benefits in the form of Provident Fund and Superannuation Schemes are charged to the Profit & Loss
Account on accrual basis.
155
Gratuity liability under the Payment of Gratuity Act is accrued and funded on the basis of an actuarial valuation
made at the end of each financial year.
Provision for accrued leave encashment is made on the basis of actuarial valuation at the end of each financial
year.
Actuarial Gain and losses are recognized in the Profit & Loss Account.
TAXATION
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in
accordance with the Income Tax Act, 1961.
The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax
rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from
timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.
Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such deferred
tax asset can be realized against future taxable profits.
Fringe Benefit Tax is provided in accordance with the provisions of the Income Tax Act, 1961.
LEASES
Leases where significant portion of risk and reward of ownership are retained by the Lessor are classified as
Operating Leases and lease rentals thereon are charged to Profit and Loss account.
HIRE PURCHASE / LEASING:
i. Finance charges on Hire Purchase business are computed on reducing balance method on the basis of
implicit rate of return.
ii. Hire purchase stock is valued at agreement values less installments due. Unmatured finance charges are
reduced from the stock on Hire.
iii. Lease rental income in respect of leased assets acquired prior to 1st April, 2001 is equalized as per guidelines
issued by the Institute of Chartered Accountants of India.
iv. Finance income on lease transactions entered into on or after 1st April, 2001 is accounted by applying the
interest rate implicit in the contract which is in accordance with Accounting.
Standard 19 - “Accounting for Leases” on leasing transactions for recognizing the finance income at a
constant periodic rate of return on net investment outstanding.
v. Delayed payment/penal charges in respect of hire purchase/lease business are accounted for on the basis of
certainty of collection. Prompt payment rebates are determined and accounted on timely payment of all
installments.
vi. Escalation claims in respect of Hire purchase/Lease transactions linked to change in prime lending rates are
accounted for as and when settled.
CONTINGENT LIABILITIES
Contingent Liabilities are not provided for and are disclosed by way of notes.
Show cause notices are considered as contingent liabilities only when they are converted into demands.
Department appeals in respect of cases won by the Company are also considered as Contingent Liabilities.
B. SIGNIFICANT CHANGE IN ACCOUNTING POLICIES
On “AS – 26 Intangible Assets” becoming mandatory from 1st April 2003, Intangible Assets of the Reporting
Company namely Trade Marks / Brands were required to be amortized over a period of 10 years as against
amortization being done till 31st March 2003 by the Reporting company for such assets over 15 years. In accordance
with the transitional provision of the Accounting Standard, Rs 13.40 Crores being the difference of the amount
amortizable over amount already amortized pertaining to these assets was provided, Rs 4.80 Crores being the tax
156
ADITYA BIRLA NUVO LIMITED
implication thereon was reduced from opening deferred tax liability. The amount of Rs 8.60 Crores was adjusted to
opening balance of General Reserve. Had this change not been made in FY 2003-2004, the profit for the year (net
of taxes) would have been higher by Rs 11.24 Crores. The accounts have not been restated for the earlier periods
to factor the impact of the aforesaid standard.
Effective April 1, 2006 the company adopted the revised Accounting Standard-15 on Employee Benefits. Pursuant
to the adoption, the incremental liability at the beginning of the year amounting to Rs 2.38 crores (Net of tax) in
respect of Gratuity Liability and Rs 14.86 crores (net of tax in respect of compensated absence liability) and
Rs 2.01 crores (net of tax) in respect of pension liability, has been adjusted against general reserve.
C. SIGNIFICANT CHANGE IN ACCOUNTING ESTIMATES
The Company has in FY 2005-2006, revised the estimated useful lives of office equipments, Showroom Assets and
assets acquired on amalgamation of IGFL and BGFL from the life / rates as per Schedule XIV of the Companies
Act, 1956 to the useful life as stated in the Accounting Policy of Depreciation and Amortization. Consequently
additional depreciation of Rs 5.58 Crores has been charged to the Profit and Loss for the year.
The Company has in FY 2003-2004, revised its estimated useful lives from the life / rates of office Computers,
Vehicles and Furniture & Fixtures as per the Schedule XIV of the Companies Act, 1956 to useful life as stated in
accounting policy of Depreciation and Amortization w.e.f 1st April 2003. Consequently, additional depreciation of Rs
6.16 Crores has been charged to Profit and Loss Account for the year.
D. AMALGAMATION OF INDO GULF FERTILIZERS LIMITED (IGFL) AND BIRLA GLOBAL FINANCE LIMITED (BGFL)
WITH THE COMPANY
Pursuant to the Schemes of Amalgamation (the Schemes) under sections 391 to 394 of the Companies Act, 1956,
with effect from September 1, 2005 (the Appointed Date) Indo Gulf Fertilizers Limited (igfl) and Birla Global Finance
Company Limited (BGFL) have been merged with the Company.
The Effective date of the Scheme for merger of IGFL as approved by Hon’ble High Court of Gujarat on January 10,
2006 and Hon’ble High Court of Allahabad on March 27, 2006, is April 3, 2006. IGFL was in the business of
manufacturing of Fertilizers and Chemicals.
The Scheme for merger of BGFL has been approved by Hon’ble High Court of Mumbai on 27th January 2006 and
Hon’ble High Court of Gujarat on 17th June 2006 and is effective from 30th June 2006. BGFL was in the business
of Financial Services.
The Schemes are operative from the Appointed date i.e. 1st September 2005.
In terms of the Schemes, all assets and liabilities of IGFL and BGFL have been transferred and stand vested with
the Company with effect from the Appointed Date at their respective book values on that date. Both the companies
carried on all their businesses and activities for the benefit of and in trust for, the Company from the Appointed
date. Thus, the profit or income accruing or arising to IGFL and BGFL, or expenditure or losses arising or incurred
by them from the Appointed date are treated as the profit or income or expenditure or loss as the case may be, of
the Company. The Schemes have accordingly been given effect to in these accounts.
The amalgamations have been accounted for under the “Pooling of Interest method” as prescribed by Accounting
Standard 14 – Accounting for Amalgamation (AS 14) issued by the Institute of Chartered Accountants of India
(ICAI). Accordingly, the assets, liabilities and reserves of IGFL and BGFL have been taken over at their book values
on the Appointed Date, subject to adjustments specified in the respective Scheme of Amalgamation.
157
In terms of the Schemes, the Company has acquired assets having Net Book Value of Rs. 723.90 Crores, as
detailed hereunder:
(Rs. Crores)
BGFL IGFL Total
Fixed Assets (Net including CWIP) 15.73 223.98 239.71
Investments 27.82 450.72 478.54
Current Assets 736.76 97.47 834.23
Total Assets 780.31 772.17 1552.48
Less:
Loans 295.92 9.76 305.68
Deferred Tax Liability 1.68 51.36 53.04
Current Liabilities and Provisions 386.90 82.96 469.86
Total Liabilities 684.50 144.08 828.58
Net Book Value 95.81 628.09 723.90
The difference between the consideration of Rs. 23.61 Crores (being face value of Equity Shares of the Company
issued) for amalgamation and the Net Book Value, after adjusting reserves of IGFL and BGFL and expenses
incidental to the Schemes or its implementation (net of tax) is transferred to General Reserve, in accordance with
the respective Scheme, as detailed hereunder:
BGFL IGFL Total
Net Book Value 95.81 628.09 723.90
Less: Securities Premium considered as Securities Premium
of the Company 30.00 - 30.00
Less: Special Reserve considered as Special Reserve
of the Company 19.46 - 19.46
Less: Capital Reserve considered as Capital Reserve
of the Company - 0.25 0.25
Less: General Reserve considered as General Reserve
of the Company 0.78 340.00 340.78
Less: Profit and Loss account considered as Profit and Loss
account of the Company 19.82 242.75 262.57
70.06 583.00 653.06
Balance 25.75 45.09 70.84
Less: Amalgamation Expenses (Net of Tax) 4.12 5.62 9.74
Less: Issue of Equity Shares 8.58 15.03 23.61
The balance transferred to General Reserve of the Company 13.05 24.44 37.49
1,50,30,935 and 85,83,479 Equity Shares of Rs. 10 each of the Company are to be issued to the shareholders of
IGFL and BGFL respectively in the ratio of 1 (one) fully paid-up Equity Share of Rs.10 each of the Company for
every 3 (three) fully paid-up Equity Shares of Rs.10 each held in IGFL and BGFL. Pending allotment, an amount of
Rs 23.61 Crores has been shown under Share Capital Suspense Account as at March 31, 2006. These shares
were subsequently issued on April 24, 2006 to shareholders of IGFL and on 18th July 2006 to shareholders of
BGFL.
Name of the Amalgamating Number of Equity % of IGFL & Number of % of
Company Shares of IGFL BGFL Equity Equity Shares of Company’s
& BGFL Shares the Company Equity Shares
Exchanged Exchanged
IGFL 4,50,92,803 100 % 1,50,30,935 25.10%
BGFL 2,57,50,439 100% 85,83,479 14.33%
158
ADITYA BIRLA NUVO LIMITED
E. Other Disclosures
In FY 2006, the company has agreed to acquire employees stock option issued by Transworks at shadow prices on
fulfilling conditions specified in their stock option plan. The commitment of options outstanding as on September 30,
2006 works out to Rs.1.63 Crores.
Derivatives Contract outstanding as at September 30, 2006
(a) Foreign currency exposures, which are hedged as at September 30, 2006
Particulars Currency Amount in Foreign Currency Purpose
Currency & Interest Rate Swap USD 30,000,000 Hedging of Loans
Currency & Interest Rate Swap Jyen 4,264,850,000 Hedging of Loans
Buyers Credit USD 35,554,314 Hedging of Loans
Forward Contracts USD 40,452,885 Hedging Purpose
Jyen 185,000,000 Hedging Purpose
Euro 576,500 Hedging Purpose

All the above contracts are for hedging purpose and not for Speculation
(b) Foreign currency exposures, which are not hedged as at September 30, 2006
Amount in Foreign Currency Payable Receivables Net
United States Dollar (USD) 28,054,705 18,176,692 (9,878,013)
EURO 35,462 541,679 506,217
Great Britain Pound (GBP) 7,686 202,218 194,532
Australian Dollar ($) 975 975
Exceptional items:
For the six For the Year For the Year For the Year For the Year For the Year
moonths ended ended Maarch 31, ended March, 31 ended March31, ended March31, ended March31,
Sept. 30, 2006 2006 2005 31, 2004 31, 2003 31, 2002
Vol unt ary Ret i rement Cost (VRS) 0. 88 4. 04 9. 54 - - 7. 58
( Pr of i t ) / Loss on Sal e of Long Ter m I nvest ment s - - 2. 12 (19.95) 57. 08 -
( Gai n) on Sal e of Gl obal Expor t Di vi si on - - (4.01) - - -
(Gai n) on Transf er of Cont ract Export Busi ness (0.20) - - - - -
(Gai n) on Demerger of I nsul at or Di vi si on - - - - (38.42) -
( Pr of i t ) on sal e of asset s hel d f or di sposal - - - - - (8.91)
Total 0.68 4.04 7.65 (19.95) 18.66 (1.33)
Deferred Tax Liability / (Asset) as at September 30, 2006 comprise timing differences on account of:
Description Amount
Depreciation 188.91
Expenditure / Provisions allowable (26.22)
162.69
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
159
Annexure - 5
Statement of Capitalization as at September 30, 2006
Rs. Crores
Particulars Pre-issue Adjusted
as at 30th for Issue
September, 2006
Borrowings:
Short Term 1283.22 1283.22
Long Term 1682.93 912.28
Total Debts 2966.15 2,195.50
Shareholders funds
Equity Share Capital 83.50 93.33
Reserves and surplus
Capital Reserve 2.86 2.86
Captial Redemption Reserve 7.60 7.60
Securities Premium Account 403.52 1,164.34
General Reserve 1,670.48 1,670.48
Investment Reserve 19.95 19.95
Surplus as per Profit & Loss Account 110.46 2,214.87 110.46 2,975.69
Total Shareholders Funds 2,298.37 3,069.02
Long Term Debt / Equity Ratio 0.73 0.30
Notes:
1. Short term debt is considered as debts having original repayment term not exceeding 12 months.
2. Long-term debt is considered as debt other than short-term debt, as defined above.
3. The figures disclosed above are based on the restated summary financial statements of Aditya Birla Nuvo Limited
as at September 30, 2006.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
160
ADITYA BIRLA NUVO LIMITED
Annexure - 6
Statement of Accounting Ratios of the Company
Rs. in Crores (Except Per Share Data)
Particulars Financial Years
For the six For the Year For the Year For the Year For the Year For the Year
months ended ended March ended March ended March ended March ended March
Sept. 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
1. Net Profit after Tax 110.01 186.93 113.72 131.28 105.33 43.46
2. Weighted average number of
Equity Shares outstanding during
the year / period
a) Basic 83,504,385 73,603,988 59,884,782 59,881,902 59,876,742 59,876,742
b) Diluted 83,526,422 73,626,085 59,912,008 59,913,424 59,931,614 59,934,013
3. Number of Equity Shares
outstanding at the end of
the year / period 83,504,386 83,504,326 59,884,782 59,881,902 59,876,742 59,876,742
4. Net Worth 2,298.37 2,207.61 1,354.06 1,264.73 1,163.91 1,079.98
Accounting Ratios
Earning per Share
Basic (1) / (2a) 13.17 25.40 18.99 21.92 17.59 7.26
Diluted (1) / (2b) 13.17 25.39 18.98 21.91 17.58 7.25
Return on Net worth (1) / (4) - % 4.79% 8.47% 8.40% 10.38% 9.05% 4.02%
Net Asset Value Per Share (4) / (3) 275.24 264.37 226.11 211.20 194.38 180.37
Note:
1) The ratios have been computed as under:
Basic earnings per share (Rs.) Net profit after tax, as restated, attributable to equity shareholders
Weighted average number of equity shares outstanding during the year /
period
Diluted earnings per share (Rs.) Net profit after tax, as restated, attributable to equity shareholders
Weighted average number of dilutive equity shares outstanding during the
year / period
Return on Net worth (%) Net profit after tax, as restated
Net worth, as restated, at the end of the year/ period
Net asset value per share (Rs.) Net worth, as restated, at the end of the year/ period
Number of equity shares outstanding at the end of the year / period
2) The above statement should be read with the Significant Accounting Policies and selected notes to accounts for
restated Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
161
Annexure - 7
Details of Secured and Unsecured Loans of the Company as at
A) Details of Secured Loans
Rs. Crores
Particulars September March March March March March
30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
Debentures - - 50.00 50.00 156.66 242.59
Loan from Banks 1,806.03 822.75 315.60 276.07 70.07 166.41
Other Loans:
Deferred Sales Tax Loan 67.67 61.17 44.43 31.47 22.59 14.47
Others 197.90 200.29 83.00 48.27 17.00 20.00
2,071.60 1,084.21 493.03 405.81 266.32 443.47
B) Details of Unsecured Loans
Particulars September March March March March March
30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
Fixed Deposits 3.58 4.89 - B 1.54 2.88
Short Term Loans from:
Banks 90.00 225.00 - - - -
Other Loans from:
Banks 50.00 50.00 - - - -
Others 745.01 195.01 - - 0.04 12.78
Loan from Related Parties 5.96 4.46 - - - -
894.55 479.36 - - 1.58 15.66
B - Figures of Rs 50,000 or less have been represented by B
Notes:
1) There is no outstanding unsecured loan from Promoters / Group company / Associate company as at September
30, 2006.
2) The details of principal terms and conditions of the secured loans and unsecured loans outstanding as at September
30, 2006 are disclosed in Annexure 8.
3) The above statement should be read with the Significant Accounting Policies and selected notes to accounts for
restated Summary Statements, as appearing in Annexure 4 to this report.
For and on behlaf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
162
ADITYA BIRLA NUVO LIMITED
Annexure 8
A. Details of Loan Taken and Assets of the Company charged as securities as at September 30, 2006
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
Long Term –
Secured
JPY 327.9
mln.
13.05 29-Jun-05 13.05 5.98 Bullet payment 29-Jun-08 Secured by way of
fi rst pari - passu
charge created by
hypothecati on of
movabl e properti es
(except current
assets) si tuated at
Veraval , Ri shra,
Jagdi shpur (Argon
Gas) and Renukoot,
subj ect to pri or
charge(s) created on
certai n assets i n
favour of a Financial
Institution.
ABN Amro
Bank
JPY 335.4
mln.
13.06 29-Jul-05 13.06 6.03 Bullet payment 29-Jul-08 ABN Amro
Bank
JPY 334.5
mln.
13.05 10-Aug-05 13.05 5.98 Bullet payment 10-Aug-08 ABN Amro
Bank
45.00 45.00 31-May-06 45.00 8.494 10 equal half
yearly
installments
from 31st
May 2007.
2007 to
2011
Term Loan secured
by way of second
pari -passu charge
created by way of
hypothecati on of
movable fixed assets
located at Veraval,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot, Bangalore
and Mumbai and
current assets (save
and except
investments) of the
Company located at
Veraval , Ri shra,
J a g d i s h p u r ,
R e n u k o o t ,
Gu mmi d i p o o n d i ,
Bangal ore and
Mumbai and mortgage
of i mmovabl e
properti es of the
company situated at
Veraval , Ri shra,
Renukoot and
Jagdi shpur (Argon
Gas).
Bank of Baroda
180.00 180.00 6-Jun-06 180.00 8.602 Bank of Baroda
163
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
JPY 511
mln.
22.49 15-Mar-05 22.49 5.96 Bullet payment 15-Mar-10 Secured by way of
fi rst pari -passu
charge created by
hypothecati on of
movabl e properti es
(save and except
current assets) of the
Company situated at
Gummidipoondi.
BNP Paribas
JPY 523.3
mln.
21.77 9-May-05 21.77 6.81 Bullet payment 9-May-10 BNP Paribas
JPY
573.75
mln.
23.38 8-Aug-06 23.38 7.91 Bullet payment 8-Aug-11 To be secured by
way of fi rst pari -
passu charge created
by way of mortgage
over i mmovabl e
properties and a first
pari-passu charge by
way of hypothecation
of movable properties
(save and except
stocks and book
debts) of the
Company situated at
Gummidipoondi.
BNP Paribas
JPY 585.5
mln
23.31 6-Sep-06 23.31 7.67 Bullet payment 6-Sep-11 BNP Paribas
75.00 75.00 19-Jan-06 75.00 7.11 8 equal
quarterly
installments of
Rs. 937.5
lacs each
from 19th
April 2007.
2007 to
2009
Term Loan secured
by way of second
pari -passu charge
created by way of
hypothecati on of
movable fixed assets
located at Veraval,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot, Bangalore
and Mumbai and cur-
rent assets (save and
except investments)
of the Company lo-
cated at Veraval ,
Rishra, Jagdishpur,
R e n u k o o t ,
Gummidipoondi, Ban-
galore and Mumbai
and mortgage of im-
movable properties of
the company situated
at Veraval , Ri shra,
Renukoot and
Jagdi shpur (Argon
Gas).
Citibank N.A.
25.00 25.00 20-Jan-06 25.00 7.12 8 equal
quarterly
installments of
Rs. 312.5
lacs each
from 19th
April 2007.
Citibank N.A. 2007 to
2009
164
ADITYA BIRLA NUVO LIMITED
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
50.00 50.00 18-May-06 50.00 8.40 12 half yearly
i nst al l ment s
from 18th No-
vember 2007.
First 8 install-
ments of
R s . 2 2 8 . 7 5
l acs, next 2
installments of
Rs.850 l acs
and next 2 in-
stal l ments of
Rs. 735 l acs
each.
2007 to
2013
Term Loan secured
by way of second
pari -passu charge
created by way of
hypothecati on of
movable fixed assets
located at Veraval,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot, Bangalore
and Mumbai and cur-
rent assets (save and
except investments)
of the Company lo-
cated at Veraval ,
Rishra, Jagdishpur,
R e n u k o o t ,
Gummidipoondi, Ban-
galore and Mumbai
and mortgage of im-
movable properties of
the company situated
at Veraval , Ri shra,
Renukoot and
Jagdi shpur (Argon
Gas).
Citibank N.A.
50.00 50.00 18-May-06 50.00 8.65 Citibank N.A.
100.00 100.00 22-Feb-06 100.00 7.40 Bullet payment 22-Feb-11 Term Loan secured by
way of first pari-passu
charge by way of
hypothecati on of
movable fixed assets
of the Ferti l i ser
Di vi si on of the
Company situated at
Jagdishpur
Corporation
Bank
165
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
Term Loans secured
by way of exclusive
first charge on assets
acqui red there-
against.
8.00 8.00 24-Jan-02 3.64 7.00 2003 to
2008
Export Import
Bank of India
11 equal half
yearly
installments of
Rs. 72.72730
lacs each
from 15th
December
2003.
Term Loans secured
by way of exclusive
first charge on assets
acqui red there-
against.
5.00 5.00 23-Mar-04 6.40 7.00 2006 to
2013
Export Import
Bank of India
16 equal half
yearly
installments of
Rs.42.6875
lacs each
from 20th
June 2006.
Secured by way of
fi rst pari -passu
charge created by
hypothecati on of
movabl e properti es
(except Current as-
sets) of the Company
si tuated at
Gummidipoondi.
JPY
1073.5
mln.
45.56 29-Dec-03 45.56 5.07 29-Dec-08 HSBC Bank plc Bullet
Payment
Term loans secured
by way of first pari-
passu charge created
by mortgage of the
immovable properties
of the Company situ-
ated at Veraval ,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot and hy-
pothecation of mov-
ables (except books
debts) at these loca-
tions.
25.00 25.00 28-Sep-05 25.00 7.2525 2007 to
2015
Industrial
Development
Bank of India
Limited
17 half yearly
installments
from 1st July
2007. 1st four
installments of
Rs.25 lacs
each, next 4
installments of
Rs.50 lacs
each, next 4
installments of
Rs.150 lacs
each and
next 5
installments of
Rs.320 lacs
each.
Term Loan to be
secured by way of
second charge on all
the immovable and
movabl e (i ncl udi ng
current assets)
properti es of the
company.
190.00 190.00 29-Aug-06 190.00 9.03 2010 to
2012
Industrial
Development
Bank of India
Limited
4 equal half
yearly
installments
from 1st
October 2010.
1.83 1.83 05-Jul-04
166
ADITYA BIRLA NUVO LIMITED
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
Term loans secured
by way of first pari-
passu charge created
by mortgage of the
immovable properties
of the Company
situated at Veraval,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot and
hypothecati on of
movables (save and
except books debts)
at these locations.
30.00 30.00 23-Mar-04 26.26 6.50 2006 to
2013
Life Insurance
Corporation of
India
16 equal half
yearly
installments
from 1st April
2006.
Term loans secured
by way of first pari-
passu charge created
by mortgage of the
immovable properties
of the Company
situated at Veraval,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot and
hypothecati on of
movables (save and
except books debts)
at these locations.
10.00 10.00 1-Oct-04 49.50 7.00 2006 to
2014
Life Insurance
Corporation of
India
16 half yearly
installments
from 1st
October 2006.
1st four
installments of
Rs.50 lacs
each, next 4
installments of
Rs.100 lacs
each, next 4
installments of
Rs.300 lacs
each and
next 4
installments of
Rs.800 lacs
each.
Term loans secured
by way of first pari-
passu charge created
by mortgage of the
immovable properties
of the Company
situated at Veraval,
Ri shra, Jagdi shpur
(Argon Gas),
Renukoot and
hypothecati on of
movables (save and
except books debts)
at these locations.
50.00 50.00 10-Aug-05 50.00 7.47 2007 to
2015
Life Insurance
Corporation of
India
17 half yearly
installments
from 10th
August 2007.
1st four
installments of
Rs. 100 lacs
each, next 4
installments of
Rs. 200 lacs
each, next 4
installments of
Rs. 600 lacs
each and
next 5
installments of
Rs.1280 lacs
each.
50.00 50.00 9-Dec-05 50.00 7.5064 Life Insurance
Corporation of
India
40.00 40.00 28-Oct-04
167
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
Forei gn Currency
Loan secured by way
of excl usi ve fi rst
charge created by
hypothecati on of
Brand Rights / Trade
mark acquired there-
against.
US $ 8
mln.
36.24 19-Jan-04 13.59 4.22 2004 to
2007
State Bank of
India
8 equal half
yearly
installments of
US $ 1 million
each from
25th April
2004.
Term Loan secured
by way of exclusive
first charge created
by hypothecation of
Brand Rights / Trade
mark and movabl e
properti es at
Bangalore and first
pari -passu charge
created by
hypothecation of the
movabl e properti es
(except current
assets) at Veraval,
Ri shra, Jagdi shpur
and Renukoot,
subj ect to pri or
charge(s) created on
certai n assets i n
favour of a Financial
Institution.
100.00 100.00 30-Nov-05 100.00 7.0544 30-Nov-10 State Bank of
India
Bullet
Payment
Term Loan to be
secured by way of
second pari -passu
charge to be created
by way of
hypothecation and/ or
mortgage of the
movabl e and/or
immovable properties.
160.00 160.00 12-Jun-06 160.00 8.9718
2007 to
2011
State Bank of
India
4 equal half
yearly
installments of
Rs.4000 lacs
each from
13th
December
2010.
150.00 150.00 18-Aug-06 150.00 8.9718 State Bank of
India
9 equal half
yearly
installments of
Rs. 1667 lacs
each from
19th August
2007
2010 to
2012
168
ADITYA BIRLA NUVO LIMITED
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
Term Loans secured
by way of exclusive
first charge on assets
acqui red there
against.
0.05 0.05 27-Oct-04 0.03 7.61 2004 to
2009
Ford Credit
Kotak Finance
59 monthly
installments
Term Loans secured
by way of exclusive
first charge on assets
acqui red there-
against.
0.11 0.11 24-Feb-05 0.05 8.25 2005 to
2008
ICICI Bank
Limited
35 monthly
installments
Term Loans secured
by way of exclusive
first charge on assets
acqui red there-
against.
0.14 0.14 31-Jan-05 0.06 4.09 2005 to
2007
ICICI Bank
Limited
35 monthly
installments
Term Loans secured
by way of exclusive
first charge on assets
acqui red there-
against.
0.06 0.06 30-Mar-05 0.03 8.25 2005 to
2008
ICICI Bank
Limited
35 monthly
installments
Term Loans secured
by way of exclusive
first charge on assets
acqui red there-
against.
0.07 0.07 18-Apr-05 0.04 5.80 2005 to
2008
ICICI Bank
Limited
35 monthly
installments
To be secured by
way of fi rst pari -
passu charge over
the fixed assets of
Rayon Division.
30.60 30.60 1-Jul-97 Sales Tax Loan
from GIIC
To be secured by
way of second pari-
passu charge over
the fixed assets of
Carbon Black Plant at
Gummidipoondi.
37.07 37.07 1-Mar-00 37.07 Sales Tax Loan
from SIPCOT
1624.84 1592.93 Total – Long
Term Secured
30.60 Nil Six equal
yearly
installments
2007 to
2012
Nil 10 years from
the date of
deferral
2010 to
2020
169
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
N.A. 50.00 50.00 7-Oct-05 50.00 7.25 7-Oct-102
Long term –
Unsecured
Bullet
Payment
Industrial
Development
Bank of India
Limited
40.00 40.00 28-Sept,
-05
40.00 7.00 23-Feb-07 Bullet
Payment
Industrial
Development
Bank of India
Limited
90.00 90.00 Total - Long
Term
Unsecured
1714.84 1682.93 LONG TERM
Worki ng Capi tal
Borrowi ngs are
secured by
hypothecati on of
i nventori es, book
debts and other
movabl es, both
present and future,
hel d as current
assets excluding the
current assets of
Rajashree Syntex at
Midnapur.
500.00 500.00 478.67
Short term –
Secured
Working Capital
Borrowings
500.00 478.67
3.58 3.58 7-10
Short Term -
Unsecured
Fixed Deposits
50.00 50.00 7.35 Bank of
America
19-Jan-06
40.00 40.00 7.65 Bank of
America
22-Sept-06
Inter-Corporate
Deposits
4.23 4.23 7.00 Birla Insurance
Advisory Ltd.
1.52 1.52 7.00 BGFL
Corporate
Finance Pvt.
Ltd.
N.A.
On going
basis
Various
rates
Payable on
demand
N.A.
Various
dates
1-3 years 2007 to
2010
N.A.
Repayable by
19-Jan-o7 at
the option of
the borrower
By 19-Jan-
07
N.A.
Bullet
Payment
20 Oct-06 N.A.
1-Jan-06 90 days plus
call
90 days
plus call
N.A.
0.22 0.22 7.00 Birla Insurance
Advisory Ltd.
22-Feb-06 90 days plus
call
90 days
plus call
N.A.
29-May-06 90 days plus
call
90 days
plus call
N.A.
170
ADITYA BIRLA NUVO LIMITED
Lender Original
Amount
INR
Amount
(Rs.
Crores)
Date of
Availment
Amount
Outstanding
as on 30th
September
‘06
Effective
Rate (%)
Repayment
Terms
Repayment
Period
Security
215.00 215.00 8.00 IGEC Loan
Trust
Commercial
Papers
804.55 804.55 Total - Short
Term
Unsecured
3-May-06
1304.55 1283.22 SHORT TERM
3019.39 2966.15 GRAND
TOTAL
Bullet
Payment
4-May-07 N.A.
100.00 100.00 7.95 CP-01 21-Apr-06
Payable on
Maturity
20-Apr-07 N.A.
50.00 50.00 7.60 CP-02 8-May-06
Payable on
Maturity
8-May-07 N.A.
100.00 100.00 7.10 CP-03 10-May-06
Payable on
Maturity
9-Feb-07 N.A.
50.00 50.00 7.65 CP-04 10-May-06
Payable on
Maturity
8-Feb-07 N.A.
75.00 75.00 7.96 CP-05 29-Aug-06
Payable on
Maturity
29-Aug-07 N.A.
25.00 25.00 8.00 CP-06 20-Sep-06
Payable on
Maturity
28-Feb-07 N.A.
20.00 20.00 7.15 CP-07 25-Sep-06
Payable on
Maturity
24-Nov-06 N.A.
20.00 20.00 7.28 CP-08 26-Sep-06
Payable on
Maturity
24-Jan-07 N.A.
50.00 50.00 7.35 CP-09 27-Sep-06
Payable on
Maturity
6-Mar-07 N.A.
171
Sr.
No.
Name of Lender
Amount
(Rs.
Crores)
Date of
Availment
Purpose of Loan
Prepayment
Option
Minimum
notice period
for
prepayment
B. Details of Loans proposed to be repaid/prepaid from the proceeds of the issue :
1 Citibank N.A. 19-Jan-06 75.00 For refinancing the
loans taken earlier
for fi nanci ng the
cost of acquisition
of equity shares of
Idea Cel l ul ar
Limited.
On quarterly
interest reset
date
Nil
Prepayment
Penalty
One month
20-Jan-06 25.00 On other
dates
On the terms to
be agreed upon
N.A.
2 Citibank N.A. 18-May-06 50.00 For financing the
cost of acquisition
of equity shares of
Idea Cel l ul ar
Limited.
On annual
interest reset
date
Nil One month
18-May-06 50.00 On other
dates
On the terms to
be agreed upon
N.A.
3 Bank of Baroda 31-May-06 45.00 For refinancing the
loans taken earlier
or for financing, the
cost of acquisition
of equity shares of
Idea Cel l ul ar
Limited.
On annual
interest reset
date
Nil One month
6-Jun-06 180.00 On other
dates
P r e p a y me n t
premi um of
0.50% p.a. for
the peri od of
prepayment on
the loan amount
prepaid
N.A.
4 12-Jun-06 160.00 For financing the
cost of acquisition
of equity shares if
Idea Cel l ul ar
Limited
On annual
interest reset
date
Nil 30 days
18-Aug-06 150.00 On other
dates
On the terms to
be agreed upon.
N.A.
State Bank of India
5 29-Aug-06 190.00 For financing the
loan taken earlier or
for fi nanci ng the
cost of acquisition
of equity shares of
Idea Cel l ul ar
Limited
On annual
interest reset
date
Nil 15 days
Industrial
Development Bank
of India
On other
dates
On the terms to
be agreed upon.
N.A.
For replenishment
of own fund to
fi nance Idea
acquisition
172
ADITYA BIRLA NUVO LIMITED
Sr.
No.
Name of Lender
Amount
(Rs.
Crores)
Date of
Availment
Purpose of Loan
Prepayment
Option
Minimum
notice period
for
prepayment
Prepayment
Penalty
6 19-Jan-06 50.00 For refinancing the
loans taken earlier for
financing the cost of
acquisition of equity
shares of Idea
Cellular Limited.
On expiry of
r o l l o v e r
period
Nil -
Bank of Ameri ca
N.A.
7 3-May-06 215.00 For financing the cost
of acquisition of equity
shares of Idea
Cellular Limited , for
refi nanci ng the
existing debt and / or
for general corporate
purpose.
Nil N.A. N.A.
IGEC Loan Trust
On other
dates
On the terms to
be agreed upon.
-
8 21-Apr-06 100.00 General Corporate
Purpose
Nil N.A. N.A. Commercial Paper
9 8-May-06 50.00 General Corporate
Purpose
Nil N.A. N.A. Commercial Paper
10 10-May-06 100.00 General Corporate
Purpose
Nil N.A. N.A.
Commercial Paper
11 10-May-06 50.00 General Corporate
Purpose
Nil N.A. N.A. Commercial Paper
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
Note :
1. The above loans are utilized for the stated purpose.
2. The proceeds of the issue (net of expenses) will be utilized for the pre-payment of some of the above loans.
3. The above statement should be read with the Significant Accounting Policies and selected notes to accounts for
restated Summary Statements, as appearing in Annexure 4 to this report.
173
Annexure - 9
Restated Summary Statement of Investments as at Rs. Crores
September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
LONG TERM INVESTMENTS
Non Trade
Government Securities (Quoted)
ITI Limited M-I Series Bonds 5.00 5.00 - - - -
Government Securities (Unquoted)
6 & 7 Years National SavingS Certificates 0.01 0.01 0.01 B B B
12 Years National Defence Certificates - - - - B B
Other Investments (Fully Paid up) :
QUOTED
Equity Shares:
HGI Industries Ltd. - - - * 3.46 3.46 3.46
Industrial Development Bank of India - - - - 3.69 3.69
UNQUOTED
16% NCD of Mangalore Refinery and
Petrochemicals Ltd. - - - - 0.98 0.98
Equity Shares:
Gwalior Properties and Estates Ltd. - - - 1.45 1.45 1.45
Seshashayee Properties Ltd. - - - 1.64 1.64 1.64
Turquoise Investments & Finance Ltd. - - - 3.66 3.66 3.66
Trapti Trading & Investments Ltd. - - - 3.77 3.77 3.77
Trade Investments
QUOTED
Equity Shares :
Indo-Gulf Corporation Ltd. - - - - - 45.85
Indo-Gulf Fertiliser Ltd. - - - - 9.40 -
Mangalore Refinery and Petrochemicals
Ltd. (MRPL) - - - - - 65.10
Hindalco Industries Limited (Hindalco)
Fully Paid up 36.45 36.45 36.45 36.45 36.45 -
Partly paid up @ Rs. 0.25 per share 9.79 9.79 - - - -
Century Enka Ltd. - - - 1.25 1.25 1.25
UNQUOTED
Equity Shares :
Birla NGK Insulators Private Limited
(Birla NGK) 12.49 12.49 12.49 12.49 12.49 -
Idea Cellular Ltd (Idea) 2,130.81 757.91 96.82 96.82 88.82 88.82
Birla Securities Limited (Net of provision 0.01 0.01 - - - -
in diminution in value of Rs. 2.52 Crores)
Birla Sun Life Distribution Company
Limited 3.59 3.87 - - - -
Birla Sun Life Trustee Company Private
Limited 0.01 0.01 - - - -
174
ADITYA BIRLA NUVO LIMITED
Rs. Crores
September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
Birla Sun Life Asset Management
Company Limited 14.31 14.31 - - - -
Aditya Birla Science & Technology Ltd 0.01 - - - - -
Preference Shares
UNQUOTED
7% Redeemable, Cumulative Pref.
Shares of
Crafted Clothing Pvt. Ltd. 5.70 5.70 5.70 5.70 - -
3.50% Cumulative Redeemable
Preference Shares of Aditya Birla Health
Services Ltd. 15.00 15.00 7.50 - - -
Investment in Subsidiary Companies:
Equity Shares
QUOTED
PSI Data Systems Ltd. 100.30 100.30 100.30 100.28 100.28 100.29
UNQUOTED
Aditya Vikram Global Trading House Ltd.,
Mauritius 3.70 3.70 3.70 3.70 3.70 3.70
Birla Global Finance Company Limited 3.92 3.92 - - - -
Birla Global Finance Company Limited** 23.70 - - - - -
BGFL Corporate Finance Private Limited 1.51 0.01 - - - -
Birla Sun Life Insurance Company Ltd.
(Birla Sunlife) 386.30 341.90 260.50 216.10 134.70 105.00
Birla Sun Life Insurance Company Ltd.
(Birla Sunlife)** 27.75 - - - - -
Laxminarayan Investment Ltd. 11.09 11.09 11.09 11.09 11.09 11.09
Transworks Information Services Ltd. 218.78 68.78 68.78 68.78 - -
Rajnidhi Finance Ltd. - - - - 0.04 0.04
Aditya Birla Telecom Ltd. 10.00 10.00 - - - -
Madura Garment Exports Ltd. 24.75 - - - - -
Preference Shares
UNQUOTED
7% Cumulative, Redeemable Preference
Shares of PSI Data Systems Ltd. 15.00 15.00 15.00 15.00 - -
Total Long Term Investments 3,059.96 1,415.25 618.34 581.64 416.87 439.79
CURRENT INVESTMENTS
(Non Trade and Fully paid up)
Mangalore Refinery and Petrochemicals
Ltd. (MRPL) B B - - - -
Units of Mutual Funds 5.00 260.54 81.32 159.99 97.43 -
Total Current Investments 5.00 260.54 81.32 159.99 97.43 -
GRAND TOTAL 3,064.96 1,675.79 699.66 741.63 514.30 439.79
Aggregated Costs - Quoted 151.54 151.54 136.75 141.44 154.54 219.65
- UnQuoted 2,913.42 1,524.25 562.91 600.19 359.76 220.14
Aggregate Market Value - Quoted 397.18 419.41 259.39 226.59 123.20 183.32
175
B - Figures of Rs 50,000 or less have been represented by B
* Net of Provision in Diminution in value Rs 3.03 Crores in FY 2004-2005
** Investment made pursuant to right issue pending allotment as on 30.09.06
Notes
1) Market/Book values of certain long term quoted and unquoted investments aggregating are lower than its cost.
Considering the strategic and long-term nature of the aforesaid investments and asset base & business plan of the
investee companies, in the opinion of the management, the decline in the market/book value of the aforesaid
investments is of temporary nature, requiring no provision.
2) An amount of Rs.19.95 Crores is lying in “Investment Reserve” is to be used to meet the diminution other than
temporary, if any, that may arise in the future, in the value of present and future long term strategic investments
3) Transfer of investments in IDEA Cellular Limited (IDEA)/Birla Sunlife Insurance Co. Ltd./Birla NGK Insulator Limited
(BNIPL)/Birla Sun Life Asset Management Company Ltd. (BSLAMC)/Birla Sun Life Distribution Company Ltd. (BSDL)/
Birla Sun Life Trustee Company Pvt Ltd. is restricted by the terms contained in their respective joint venture
agreements. Non-disposal undertakings for BNIPL and Transworks Information Services Ltd. (TW) investment has
also been provided to certain Banks for credit facilities extended by them to BNIPL / TW.
4) 468,597,140 equity shares of IDEA are pledged with certain lenders to secure loan extended by them to IDEA and
the said loan was fully paid off. The pledge on these shares was released on 12th October 2006. 807,526,221 equity
shares, of IDEA are subject to non-disposal undertaking in favour of the said lenders to secure the loan by them to
IDEA.
5) Pursuant to the Shareholders’ Agreement entered into with the Joint Venture partner, the Company has in respect of
Birla Sun Life Insurance Company Limited agreed to infuse its share of capital from time to time to meet the solvency
requirement prescribed by the regulatory authority.
Note
The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated
Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
176
ADITYA BIRLA NUVO LIMITED
Annexure - 10
Restated Summary Statement of Sundry Debtors and Loans & Advances of the Company as at
A) Sundry Debtors
Rs. Crores
PARTICULARS September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
Due for period exceeding six
months 12.48 10.82 3.33 2.10 3.06 15.76
Others 474.81 404.62 257.57 184.31 148.14 207.50
TOTAL 487.29 415.44 260.90 186.41 151.20 223.26
Amount due from related parties 15.45 14.73 10.59 10.05 4.45 3.90
B) Details of Loans and Advances
Rs. Crores
PARTICULARS September March 31, March 31, March 31, March 31, March 31,
30, 2006 2006 2005 2004 2003 2002
Bills of Exchange 59.71 59.34 - - - -
Loan Against Collateral Security 157.87 233.22 - - - -
Advances recoverable in cash or
in kind or for value to be received 94.08 105.35 74.01 63.25 56.83 69.72
Deposits 280.50 242.11 18.32 20.56 83.92 33.17
Balance with Central Excise, Custom
& Port Trust etc. 27.25 24.16 11.55 9.69 5.10 9.39
TOTAL 619.41 664.18 103.88 93.50 145.85 112.28
Amount due from related parties 209.85 41.31 2.68 7.52 46.40 11.09
As at September 30, 2006 Loan and Advances include:
a) Advances towards equity of the following companies, to be allotted by them on substantial progress in implementation
of their respective projects after procuring all regulatory approval etc.
Rosa Power Supply Co. Ltd. 0.62
Bina Power Supply Co. Ltd. 3.14
b) Interest bearing deposits given to Aditya Birla Power Company Limited (ABPCL), a project development
company in respect of which the Company has also been given a right of first refusal to participate in
equity of the projects being developed by ABPCL. 3.62
c) Interest bearing deposits given to Aditya Birla Management Corporation Limited (ABMCL) a company
limited by guarantee formed to provide a common pool of facilities and resources to its members,
with a view to optimize the benefits of specialization and minimize cost to each member. The Company’s
share of expenses under the common pool has been accounted for under the appropriate heads. 10.40
d) During the period the company has granted subordinate debt of Rs 25 crores to its wholly owned subsidiary Birla
Global Finance Company Limited. The interest on aforesaid sub-ordinate debt is subordinate to interest on external
borrowings. At the financial year-end interest on aforesaid loan will be converted into principal. The principal
amount is recoverable only after the external borrowing is repaid in full.
177
Note:
The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated
Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
178
ADITYA BIRLA NUVO LIMITED
Annexure - 11
List of Related Parties:
I. Parties where control exists - Subsidiaries: -
Aditya Birla Telecom Ltd. (w.e.f. 24th December 2005)
Alpha Garments Pvt Ltd. (AGL) (Subsidiary of MGEL w.e.f. 15th February 2006)
Aditya Vikram Global Trading House Ltd. (AVGTHL)
Birla Sun Life Insurance Co. Ltd. (BSLICL)
Birla Technologies Ltd. (Subsidiary of PSI) (w.e.f. February 2002)
BGFL Corporate Finance Pvt. Ltd. (BGCFPL) (w.e.f. 1st September 2005)
Birla Global Finance Company Ltd. (BGFCL) (w.e.f. 1st September 2005)
Birla Insurance Advisory Services Ltd. (BIASL) (Subsidiary of BGCFPL) (w.e.f. 1st September 2005)
Laxminarayan Investment Ltd. (LIL)
Madura Garments Export Limited (MGEL) (w.e.f. 26th October 2005)
PSI Data Systems Ltd. (PSI) (w.e.f. September 2001)
PSI Kalinga Ltd. (Subsidiary of PSI) (for 2001-02)
Rajnidhi Finance Ltd. (Subsidiary of LIL) (upto 2002-03)
Transworks Information Services Ltd. (TW) (w.e.f. June 2003)
Transworks Inc. USA (Subsidiary of TW) (w.e.f June 2003)
AV TransWorks Ltd., Canada (Subsidiary of TW) (w.e.f. 16th June, 2006)
Minacs Worldwide Inc. Canada (MWI) (Subsidiary of AV TransWorks) (w.e.f 18th August, 2006)
The Minacs Group (Subsidiary of MWI)
Minacs Worldwide S.A. de C.V. (Subsidiary of MWI)
Millman Insuranc. (Subsidiary of MWI)
Minacs Limited (Subsidiary of MWI)
The Minacs GmbH (Subsidiary of Minacs Ltd)
Minacs Kft. (Subsidiary of Minacs GmbH)
Crafted Clothing Pvt. Ltd. (CCPL) (w.e.f. 3rd August, 2006)
English Apparels Pvt. Ltd. (EAPL) (Subsidiary of CCPL) (w.e.f. 3rd August, 2006)
Harwood Garments Pvt. Ltd. (HGPL) (Subsidiary of CCPL) (w.e.f. 3rd August, 2006)
II. Other Parties with whom the Company has entered into transactions during the year:
Joint Ventures
BIRLA-NGK Insulators Pvt. Ltd. (BNIPL)
Birla Sun Life Distribution Company Limited (BSDL) (w.e.f. 1st September 2005)
Birla Sun Life Asset Management Company Limited (BSAMC) (w.e.f. 1st September 2005)
Birla Sun Life Trustee Company Private Limited (BSTPL) (w.e.f. 1st September 2005)
Bina Power Supply Co Ltd (for 2001-02)
IDEA Cellular Limited (IDEA)
Indo Gulf Corp Ltd (for 2001-02)
Mangalore Refinery & Petro Chemicals Ltd (for 2001-02)
Rosa Power Supply Co Ltd. (for 2001-02)
179
Associates
Alpha Garments Pvt Ltd (for 2001-02)
Birla Securities Ltd. (BSL) (w.e.f. 1st September 2005)
Crafted Clothing Pvt. Ltd. (CCPL) (from 2001-02 to June 2004 and again from 26th October 2005 to 2nd August
2006)
Classical Menswear Pvt Ltd (for 2001-02)
Design Knitwear Pvt Ltd (for 2001-02)
English Apparels Pvt Ltd. (EAPL) (for 2001-02 and again from 15th February 2006 to 2nd August 2006)
Europa Garments Pvt Ltd (for 2001-02)
Harwood Garments Pvt Ltd. (HGPL) (for 2001-02 and again from 15th February 2006 to 2nd August 2006)
Perfect Apparels Pvt Ltd (for 2001-02)
Key Management Personnel & their relatives and enterprises having common key management personnel
Shri Sanjeev Aga – Managing Director (from 2005-06)
Shri Adesh Kumar Gupta – Whole Time Director (from 2005-06)
Shri K.K. Maheshwari – Whole Time Director (Manager till 2004-05)
Shri Rakesh Jain – Whole Time Director (w.e.f 3rd April, 2006)
Shri S.K. Mitra – Whole Time Director (w.e.f 1st July, 2006)
Relatives of Key Management Personnel
Mrs. Usha Gupta (Wife of Shri Adesh Kumar Gupta)
Mrs. Sharda Maheshwari (Wife of Shri K.K. Maheshwari)
Mrs. Sushmita Mitra (Wife of Shri S.K. Mitra)
Enterprises having common Key Management Personnel
Shri Sanjeev Aga – Managing Director
M/s. Sapte Investments (P) Ltd.
Shri K.K. Maheshwari – Whole Time Director
M/s. Tanfac Industries Ltd.
180
ADITYA BIRLA NUVO LIMITED
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184
ADITYA BIRLA NUVO LIMITED
Annexure 12
Restated Statement of Segment Reporting of the Company
Segments have been identified in line with the Accounting Standard on Segment Reporting (AS17), taking into account
the organizational structure as well as differential risk and returns of these segments.
Primary Segment Composition
Garments Garments
Rayon VFY and Chemicals
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Textiles Spun Yarn, Fabrics
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The Company considers secondary segment based on revenues within India as Domestic Revenues and outside India
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period to acquire assets based on secondary segment have not been disclosed.
185
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194
ADITYA BIRLA NUVO LIMITED
Annexure - 13
Restated Summary Statement of Other Income of the Company
Rs. Crores
For the six For the Year For the Year For the Year For the Year For the Year
months ended ended March ended March ended March ended March ended March Nature of
Sep. 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 item
Other Income:
Rent Received 0.90 1.74 0.91 0.62 0.94 0.88 Recurring
Income from Investments:
Dividend on long term Trade 12.78 5.52 2.73 3.26 5.13 4.98 Recurring
Dividend on long term others - - - 0.06 0.08 0.07 Recurring
Dividend from Current
Investments 2.88 11.02 3.68 5.42 - - Recurring
Profit/(Loss) on sale of
Investments (Net) Long Term 0.68 0.02 - (0.61) (0.02) (0.52) Non
Recurring
Profit/(Loss) on sale of
Investments (Net) Current 5.66 2.52 0.60 1.80 1.43 0.29 Recurring
Sale of Certified Emission
Reduction 6.95 - - - - - Recurring
Other Miscellaneous income
(Net) 1.99 2.56 1.80 3.68 2.44 3.43 Non
Recurring
Total 31.84 23.38 9.72 14.23 10.00 9.13
Note:
The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated
Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
195
Annexure - 14
Statement of Tax Shelter of the Company
Rs. Crores
For the six For the Year For the Year For the Year For the Year For the Year
months ended ended March ended March ended March ended March ended March
Sep 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
A Net Profit/ (Loss) before current and
deferred taxes, as restated 167.95 271.76 157.08 181.43 128.07 74.07
Income Tax rates applicable
(including surcharge and education cess) 33.66% 33.66% 36.59% 35.88% 36.75% 36.75%
Tax at applicable rate (A) 56.53 91.47 57.48 65.10 47.07 27.22
Adjustments
B Permanent Differences
Permanent Allowances/(Disallowances)
as per Income Tax Act (Net) (2.68) 16.07 16.26 39.83 12.06 18.59
Total (B) (2.68) 16.07 16.26 39.83 12.06 18.59
C Timing Differences
Difference between Tax Depreciation
and Book Depreciation (including loss
on sale of depreciable asset) 14.35 (17.02) 15.99 6.24 12.53 26.28
Depreciation
Other Allowances /(Disallowances) as
per Income-tax Act (Net) 1.83 (3.50) 0.90 4.57 (3.70) (14.68)
Set off of unabsorbed depreciation as
per Income-tax Act - - - 29.61 43.85
Total (C) 16.18 (20.52) 16.89 10.81 38.44 55.45
D Net Adjustments (B+C) 13.50 (4.45) 33.15 50.64 50.50 74.04
E Tax Savings thereon (E) 4.54 (1.50) 12.13 18.17 18.56 27.22
F Taxation Charge - Current (A-E) 51.99 92.97 45.35 46.93 28.51 -
G Incremental tax due to Minimum
Alternate Tax (MAT) - - - - 5.00
H Set off of MAT credit available from
earlier Years - - - (2.68) (19.51) -
I Total current taxes (F+G+H) 51.99 92.97 45.35 44.25 9.00 5.00
J Deferred tax Debit/(Credit) (CxTax Rate) 5.45 (6.91) 5.69 3.88 13.79 20.38
K Impact due to MAT Credit - - - 2.68 19.51 -
L Impact of change in tax rate and review of
opening deferred tax Asset/Liability (net) (1.18) - (7.68) (0.65) (3.01) 2.85
M Impact of Transfer of Insulator Division - (5.04)
N Impact of Revalution of Asset of SEA
Water Magnesia Division 2.38
O Deferred Tax Adjustment in Profit and
Loss A/c 4.27 (6.91) (1.99) 5.91 25.25 25.61
Note:
1. The company has not recogni zed deferred tax asset i n respect of carri ed forward l ong term capi tal l osses of
Rs. 96.21 crores as on 31st March 2006 (the tax amount where of could vary depending upon the nature of capital gains be
realized in future).
2. The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated Summary
Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
196
ADITYA BIRLA NUVO LIMITED
Annexure - 15
Statement of Contingent Liabilities of the Company as at
Rs. Crores
Sep 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
1. Estimated amount of contracts remaining
to be executed on capital account and
not provided for (Net of advances) 195.79 110.13 122.74 15.18 5.15 7.18
2. Contingent Liabilities not provided for:
a) Claims against the Company not
acknowledged as debts
i) Income-tax 29.25 29.20 34.79 39.22 0.67 6.28
ii) Custom Duty 2.56 2.54 1.51 1.38 1.46 2.02
iii) Excise Duty 31.60 36.90 27.38 25.10 39.97 35.94
iv) Sales Tax 9.51 7.44 5.83 7.58 - -
v) Service Tax 2.23 0.47 - - - -
vi) Others 27.44 27.39 18.08 20.10 23.69 28.91
b) Uncalled Liability on shares partly
paid up 29.37 29.37 - - - -
c) Bills discounted / rediscounted with
Banks 52.88 62.30 50.67 56.27 37.57 57.21
d) Corporate Guarantees given to
Banks/Financial Institutions for loans
taken/Preference Shares issued by
subsidiary/other companies 419.77 292.85 170.64 139.42 110.42 78.65
e) Customs duty on capital goods and
raw materials imported under
advance licensing / EPCG scheme,
against which export obligation is to
be fulfilled 6.88 15.43 4.19 10.49 4.63 6.78
f) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage
of fertilisers dispatched was required to be supplied in Jute Bags up to 31.08.2001. The Company made
conscious efforts to use jute-packaging material as required under the Act. However, due to non-availability of
material as per the Company’s product specifications as well as due to strong customer resistance to use of
Jute Bags, the specific percentage could not be adhered to. The Company has received a show cause notice,
against which a writ petition has been filed with the High Court, which is awaiting for hearing. The Company
has been advised that the said levy is bad in law.
Note:
The above statement should be read with the Significant Accounting Policies and selected notes to accounts for restated
Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
197
Annexure - 16
Statement of Rates of Dividend paid by the Company in respect of the period/ year ended
Financial Years
Particulars March 31, March 31, March 31, March 31, March 31,
2006 2005 2004 2003 2002
Number of Equity Shares 83,504,326 59,884,782 59,881,902 59,876,742 59,876,742
Face Value Per Share (Rs.) 10.00 10.00 10.00 10.00 10.00
Paid up Value Per Share (Rs.) 10.00 10.00 10.00 10.00 10.00
Rate of Dividend -% 50.00% 40.00% 40.00% 37.50% 33.00%
Total Dividend Paid / Proposed
(Rs. In Crores) 41.75 23.95 23.95 22.45 19.76
Corporate Dividend Tax (Rs. in Crores) 5.86 3.42 3.07 2.88 N.A.
Note:
1. The amount paid as dividend in the past is not indicative of dividend policy of the Company in the future.
2. The figure disclosed above are based on the financial statements of the company.
3. The above statement should be read with the Significant Accounting Policies and selected notes to accounts for
restated Summary Statements, as appearing in Annexure 4 to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
198
ADITYA BIRLA NUVO LIMITED
The Board of Directors
Aditya Birla Nuvo Limited
A-4, Aditya Birla Centre
Near Old Passport Office
Worli, Mumbai 400 020
Dear Sirs,
We have examined the Consolidated Financial Information (‘CFI’) of Aditya Birla Nuvo Limited (hereinafter referred to as
‘the Company’) and its Subsidiaries, Joint Ventures and Associates [together referred to as ‘the Group’], as stated in Note
No.3 of Annexure–I, annexed to this report for each of the financial period ended on September 30, 2006 and financial
years ended on March 31, 2006, 2005, 2004, 2003 and 2002, prepared by the Company and approved by the Board of
Directors for the proposed Rights Issue, in accordance with the requirements of:
e. paragraph B of Part II of Schedule II to the Companies Act, 1956 (hereinafter referred to as ‘the Act’);
f. the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (‘the Guidelines’)
and the clarifications issued by the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) on
January 19, 2000 as amended upto May 08, 2006, in pursuance of Section 11 of the Securities and Exchange
Board of India Act, 1992;
g. the terms of reference received from the Company; and
h. the Guidance Note on Reports in Company Prospectuses and Guidance Note on Audit Reports/ Certificates on
Financial Information in Offer Documents issued by the Institute of Chartered Accountants of India.
The CFI is based on the Consolidated Financial Statements (CFS) of the Group which have been jointly audited by us for
the financial period ended September 30, 2006 and financial period ended September 30, 2006 and financial years
ended on March 31, 2006, 2005 and 2004 and audited by one of us i.e. Khimji Kunverji & Co., Chartered Accountants
jointly with Lodha & Co., Chartered Accountants (together referred to as ‘the previous joint auditors) for the financial
years ended March 31, 2003 and 2002 and this report, in so far as it relates to the amounts included for the years ended
March 31, 2003 and 2002 is based solely on the financial statements and the reports of the previous joint auditors. The
Branch Auditors’ reports for the each of these period and years were forwarded to the respective joint auditors of the
Company and were appropriately dealt with by them while issuing their respective audit opinions on the financial
statements of the Company.
Included in the CFS of the Group are certain entities whose assets and revenues for the financial period ended September
30, 2006 and financial years ended on March 31, 2006, 2005, 2004, 2003 and 2002 as detailed below, were not jointly
audited by us or the previous joint auditors. These were audited by either of us or by one of the previous joint auditors
or by either of us or the previous statutory auditors jointly with other auditors or by other auditors. This report, in so far
as it relates to the amounts included in respect of those entities and period and years, is based solely on financial
statements audited under the Act and reports issued by the respective auditors.
(Rs. in Crores)
Financial Period / Years
Particulars September 30, March 31, March 31, March 31, March 31, March 31,
(Not jointly audited by us) 2006 2006 2005 2004 2003 2002
Assets 4130.75 1586.89 1906.04 1122.28 614.40 292.43
Revenues 973.08 790.03 1337.60 832.50 330.01 74.22
Further, included in the CFS for the period ended September 30, 2006 & year ended March 31, 2006 are Assets of
Rs.1227.68 crores and Rs. Nil Crores respectively and revenues of Rs.781.75 Crores and Rs.54.76 Crores respectively,
which are based on financial statements certified by Management of respective subsidiaries / joint ventures and on the
foreign currency translation of two foreign subsidiaries done by the management of the company as mentioned in Note
Nos. 14, 15 & 16 of Annexure I. This report, in so far as it relates to the above amounts included is based solely on
financial statements certified by the respective managements.
Financial information as per audited financial statements:
We have examined the,
(i) Annexed restated Summary Statement of Assets and Liabilities of the Group as at September 30, 2006 March 31,
2006, 2005, 2004, 2003 and 2002 (See Annexure A of this report);
199
(ii) Annexed restated Summary Statement of Profit and Loss of the Group for the period ended September 30, 2006 &
years ended March 31, 2006, 2005, 2004, 2003 and 2002 (See Annexure B of this report);
(iii) Annexed restated Summary Statement of Cash Flows of the Group for the period ended September 30, 2006 &
years ended March 31, 2006, 2005, 2004, 2003 and 2002 (See Annexure C of this report).
Based on our examination of these Summary Statements, we confirm that:
The accounting policies applied as at and for each of the period ended September 30, 2006 & years ended
March 31, 2006, 2005, 2004, 2003 and 2002 are materially consistent based on Accounting Standards then
existing. Accordingly, no adjustments on account of changes in accounting policies have been made to the
audited financial statements for period & years presented;
There are no material prior period items requiring adjustment in the summary statements in the above
mentioned period & years.
There are no extraordinary items which need to be disclosed separately in the summary statements; and
There are no qualifications in the auditors’ reports, which require any adjustments to the summary statements.
The summary of Significant Accounting Policies for the period ended September 30
th
2006 and the selected Notes to the
Audited financial Statements, of the Group are enclosed as Annexure I to this report.
Other Financial Information:
At your request, we have examined the following financial information relating to the Group, proposed to be included in
the offer document, as approved by the Board of Directors of the Company and annexed to this report:
i. Capitalization Statement as at September 30, 2006, enclosed in Annexure D.
ii. Statement of accounting ratios based on the restated profits relating to earnings per share, net asset value, return
on net worth, enclosed in Annexure E.
iii. Details of Investments, enclosed in Annexure F.
iv. Details of Sundry Debtors and Loans and Advances, enclosed in Annexure G.
v. Details of Related Party Transactions, enclosed in Annexure H.
vi. Details of Segment Reporting, enclosed in Annexure J.
vii. Details of items of Other Income, enclosed in Annexure K.
viii. Details of Contingent Liabilities, enclosed in Annexure L.
In our opinion, the CFI as disclosed in the annexures to this report, read with the respective Significant Accounting
Policies and Notes disclosed in Annexure I, and after making adjustments and re-groupings as considered appropriate
and disclosed in Annexure M, has been prepared in accordance with Part II of Schedule II of the Act and the Guidelines.
This report should not, in any way be construed as a reissuance or redacting of any of the previous audit reports issued
by the auditors for the respective period & years nor should this report be construed as a new opinion on any of the
financial statements referred to herein.
This report is intended solely for your information and for inclusion in the Offer Document in connection with the proposed
Offer of the Company and is not to be used, referred to or distributed for any other purpose without our prior written
consent.
For Khimji Kunverji & Co. For S.R. Batliboi & Co.
Chartered Accountants Chartered Accountants
per Shivji K. Vikamsey per Hemal R. Shah
Partner Partner
Membership No: 2242 Membership No: 42650
Place: Mumbai Place: Mumbai
Date: December 01, 2006 Date: December 01, 2006
200
ADITYA BIRLA NUVO LIMITED
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure - A
Restated Summary Statement of Assets and Liabilities of the Group as at Rs. Crores
Sep 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
A Fixed Assets:
Goodwill on Consolidation 2,871.05 961.36 185.25 153.83 104.85 81.14
Gross Block 6,086.43 4,187.33 1,914.73 1,656.63 1,513.02 1,388.99
Less: Depreciation 3,082.92 2,199.54 867.52 718.52 577.93 521.76
Net Block 3,003.51 1,987.79 1,047.21 938.11 935.09 867.23
Assets Held for disposal - - - - - 13.52
Capital Work In progress 320.99 169.80 62.29 55.51 14.02 11.15
6,195.55 3,118.95 1,294.75 1,147.45 1,053.96 973.04
B Investments 3,210.65 2,916.92 1,468.63 876.33 342.53 335.25
C Deferred Tax Assets 7.31 0.79 - - - -
D Current Assets, Loans and Advances
Inventories 556.46 551.37 377.90 293.70 264.06 266.45
Sundry Debtors 873.34 518.38 330.39 243.82 190.77 239.87
Cash and Bank Balance 271.11 186.94 88.72 86.87 72.86 31.11
Loans and Advances 902.20 793.29 141.97 126.49 154.01 122.92
Interest accrued on investments 8.35 8.73 5.48 3.86 2.00 2.05
2,611.46 2,058.71 944.46 754.74 683.70 662.40
E Liabilities and Provisions
Secured Loans 4,059.38 1,525.18 699.33 551.15 372.23 498.67
Unsecured Loans 956.88 839.45 62.16 37.16 64.47 34.63
Policyholders fund 2,856.59 2,378.37 1,212.28 539.07 110.14 19.81
Fund for Future appropriations 0.03 0.03 0.03 0.03 0.03 -
Deferred Tax Liabilities 166.11 169.47 125.66 127.60 128.35 101.20
Minority Interest 142.07 43.20 27.63 27.79 19.40 37.41
Advance Against Equity - - - - 4.76 -
Current liabilities and Provisions 1,543.29 1,041.17 466.03 415.43 313.71 235.18
9,724.35 5,996.87 2,593.12 1,698.23 1,013.09 926.90
F Net Worth (A+B+C+D-E) 2,300.62 2,098.50 1,114.72 1,080.29 1,067.10 1,043.79
G Represented by
Share Capital 83.50 59.89 59.88 59.88 59.88 59.88
Share Capital Suspense
(Refer Note 12 (e) of Annexure I) - 23.61 - - - -
Preference Share Capital 172.62 100.17 20.70 20.70 16.07 -
Reserves 2,044.50 1,914.83 1,034.14 1,002.74 999.52 994.72
Less : Misc. Expenditure - - - 3.03 8.37 10.81
Reserves (Net of Miscellaneous
Expenditure) 2,044.50 1,914.83 1,034.14 999.71 991.15 983.91
Net Worth / Shareholders fund 2,300.62 2,098.50 1,114.72 1,080.29 1,067.10 1,043.79
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
201
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure - B
Restated Summary Statement of Profit and Loss of the Group
Rs. Crores
For the six For the Year For the Year For the Year For the Year For the Year
months ended ended March ended March ended March ended March ended March
Sep. 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
INCOME
Sale of Goods manufactured and Services
by the Group 3,441.96 4,836.72 3,220.95 2,475.12 1,911.08 1,607.20
Sale of Goods Traded by the Group 67.00 149.78 104.52 76.76 8.23 9.16
Income from Operations 3,508.96 4,986.50 3,325.47 2,551.88 1,919.31 1,616.36
Less: Excise Duty 83.15 156.16 136.36 147.64 155.27 139.51
Net Income from Operations 3,425.81 4,830.34 3,189.11 2,404.24 1,764.04 1,476.85
Other Income 35.33 33.26 19.05 19.88 18.39 17.13
Increase /(Decrease) in Stocks 19.00 47.30 14.41 19.80 (0.11) (10.68)
Total 3,480.14 4,910.90 3,222.57 2,443.92 1,782.32 1,483.30
EXPENDITURE
Cost of Materials 917.58 1,502.25 1,044.54 861.48 714.38 679.09
Salaries, Wages and Employee Benefits 415.72 434.46 320.13 261.78 221.26 152.63
Manufacturing, Selling and Other Expenses 1,113.97 1,368.99 912.42 719.08 556.95 471.48
Actuarial Liabilities of Policyholders Fund 506.29 989.47 684.12 397.44 91.17 18.87
Interest and Other Finance Expenses (Net) 140.57 103.83 36.93 32.35 40.75 48.88
Depreciation/Amortisation 186.52 224.97 127.34 121.76 103.42 81.81
Marketing / Technical know how
expenditure written off - - 2.95 5.08 5.05 3.93
Total 3,280.65 4,623.97 3,128.43 2,398.97 1,732.98 1,456.69
Profit before Exceptional items and Tax 199.49 286.93 94.14 44.95 49.34 26.61
Exceptional Items
Less: Loss / (Gain) due to Exceptional Items 0.90 4.04 7.65 (17.26) 10.28 (1.33)
Profit after Exceptional items 198.59 282.89 86.49 62.21 39.06 27.94
Provision for Taxation - Current Tax 56.61 96.81 45.78 45.28 10.72 6.46
- Deferred Tax 4.83 (5.51) (1.94) 4.05 27.15 25.61
- Fringe Benefit Tax 3.80 8.19 - - - -
Provision for Tax for Earlier Years written
back (0.15) (5.37) (0.07) - (11.48) -
Net Profit before Minority Interest 133.50 188.77 42.72 12.88 12.67 (4.13)
Minority Interest in the loss of Consolidated
Subsidiaries (10.51) (14.90) (15.76) (20.21) (24.02) (14.16)
Share of Profit/(Loss) of Associate 0.46 0.37 0.24 - - -
Net Profit 144.47 204.04 58.72 33.09 36.69 10.03
Balance brought forward (281.18) 5.27 3.88 39.97 43.08 54.46
Adjustment due to AS-15
(Refer Note 8 of Annexure-I) (8.14) - - - - -
202
ADITYA BIRLA NUVO LIMITED
Impact of Change in Ownership Interest /
Amalgamation on Balance brought forward - 286.70 0.15 4.61 (64.34) -
Transfer from Debenture Redemption
Reserve - 25.00 - 48.34 32.96 5.96
Transfer from General Reserve 0.05 0.04 - - - -
Transfer from Investment Allowance Reserve - - - - 37.00 -
Profit available for Appropriation (144.80) 521.05 62.75 126.01 85.39 70.45
APPROPRIATIONS
Proposed Dividend - 41.75 23.95 23.95 22.45 19.76
Corporate Tax on Proposed Dividend - 7.11 3.42 3.07 2.88 -
General Reserve 0.03 753.25 25.00 75.07 20.00 7.50
Debenture Redemption Reserve - - 5.00 - - -
Investment Reserve - - - 19.95 - -
Special Reserve 0.04 0.12 0.11 0.09 0.09 0.11
Surplus/(Deficit) carried to Balance Sheet (144.87) (281.18) 5.27 3.88 39.97 43.08
Total (144.80) 521.05 62.75 126.01 85.39 70.45
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
Rs. Crores
For the six For the Year For the Year For the Year For the Year For the Year
months ended ended March ended March ended March ended March ended March
Sep. 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
203
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206
ADITYA BIRLA NUVO LIMITED
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure -D
Capitalisation Statement of the Group as at September 30, 2006
Rs. Crores
Particulars Pre-issue as at Adjusted for Issue
30th September 2006
Borrowings:
Total Borrowings 5016.26 4245.61
Shareholders funds:
Equity Share Capital 83.50 93.33
Preference Share Capital 172.62 172.62
Capital Reserve on Consolidation 14.89 14.89
Capital Reserve 2.86 2.86
Capital Fund 0.01 0.01
Capital Redemption Reserve 8.74 8.74
Securities Premium Account 459.01 1,219.83
General Reserve 1,676.74 1,676.74
Investment Reserve 19.95 19.95
Special Reserve 0.83 0.83
Credit/(Debit) fair value change account 0.04 0.04
Amalgamation Reserve 4.14 4.14
Employee Stock options outstanding 0.91 0.91
Foreign Currency Translation Reserve 1.25 1.25
Surplus as per Profit & Loss Account (144.87) (144.87)
Reserves and surplus 2,044.50 2805.32
Total Shareholders Funds 2,300.62 3,071.27
Total Borrowings / Equity Ratio 2.18 1.38
Notes:
The figures disclosed above are based on the Restated Summary statements of Aditya Birla Nuvo Limited as at September
30, 2006.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
207
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure - E
Statement of Accounting Ratios of the Group
Rs. In Crores (Except Per Share Data)
Particulars Financial Years
For the six For the Year For the Year For the Year For the Year For the Year
months ended ended March ended March ended March ended March ended March
Sep. 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
1. Net Profit after tax 144.47 204.04 58.72 33.09 36.69 10.03
Less: Dividend on Preference Shares 5.19 4.64 2.27 2.24 1.47 -
Net Profit attributable to equity
shareholders 139.28 199.40 56.44 30.85 35.22 10.03
2. Weighted average number of Equity
Shares outstanding during the year /
period
a) Basic 83,504,385 73,603,988 59,884,782 59,881,902 59,876,742 59,876,742
b) Diluted 83,526,422 73,626,085 59,912,008 59,913,424 59,931,614 59,934,013
3. Number of Equity Shares outstanding
at the end of the year / period 83,504,386 83,504,326 59,884,782 59,881,902 59,876,742 59,876,742
4. Net Worth 2,300.62 2,098.50 1,114.72 1,080.29 1,067.10 1,043.79
Accounting Ratios
Earning per Share
Basic (1) / (2a) 16.68 27.09 9.43 5.15 5.88 1.68
Diluted (1) / (2b) 16.68 27.08 9.42 5.15 5.88 1.67
Return on Net worth (1) / (4) - % 6.28% 9.72% 5.27% 3.06% 3.44% 0.96%
Net Asset Value Per Share (4) / (3) 275.51 251.30 186.14 180.40 178.22 174.32
Note:
1) The ratios have been computed as under:
Basic earnings per share (Rs.) Net profit as restated attributable to equity shareholders
Weighted average number of equity shares outstanding during the
year / period
Diluted earnings per share (Rs.) Net profit as restated attributable to equity shareholders
Weighted average number of dilutive equity shares outstanding
during the year / period
Return on Net worth (%) Net profit after tax as restated
Net worth as restated at the end of the year/ period
Net asset value per share (Rs.) Net worth as restated at the end of the year/ period
Number of equity shares outstanding at the end of the year / period
2) The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
208
ADITYA BIRLA NUVO LIMITED
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure - F
Details of the Investment of the Group as at
Rs. Crores
Sep 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
LONG TERM INVESTMENTS
Government Securities/Bonds 833.39 841.20 599.46 324.39 88.47 44.66
Debentures/Bonds 814.40 485.85 188.76 86.10 17.22 0.98
Mutual Funds 0.01 0.01 - - - -
Equity 1,000.12 719.54 304.33 59.26 83.72 222.21
Other Investments 17.81 101.22 35.26 122.05 15.14 15.18
SHORT TERM INVESTMENTS
Government Securities/Bonds 29.90 14.27 65.13 6.49 19.36 20.81
Debentures/Bonds 40.19 60.14 10.02 - - 15.03
Mutual Funds 226.56 426.95 150.57 202.45 105.02 11.29
Other Investments 248.27 267.74 115.10 75.59 13.60 5.09
Total 3,210.65 2,916.92 1,468.63 876.33 342.53 335.25
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
209
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure - G
Details of Sundry Debtors and Loans & Advances of the Group as at
(A) SUNDRY DEBTORS
Rs. Crores
PARTICULARS Sep 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
Due for period exceeding six months 23.12 16.57 5.27 5.27 10.59 17.85
Others 850.22 501.81 325.12 238.55 180.18 222.02
TOTAL 873.34 518.38 330.39 243.82 190.77 239.87
Amount due from related parties 0.13 0.28 0.36 0.37 0.36 0.20
(B) LOANS AND ADVANCES
Rs. Crores
PARTICULARS Sep 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
Bills of Exchange 111.31 59.34 - - - -
Loan Against Collateral Security 323.54 233.22 - - - -
Advances recoverable in cash or in kind or
for value to be received 305.50 182.35 95.13 80.93 72.51 72.00
Deposits 133.05 291.34 33.31 35.21 75.77 40.79
Balance with Central Excise, Custom & Port
Trust etc. 28.80 27.04 13.53 10.35 5.73 10.13
TOTAL 902.20 793.29 141.97 126.49 154.01 122.92
As at September 30, 2006 Loan and Advances include:
a) Advances towards equity of the following companies, to be allotted by them on substantial progress
in implementation of their respective projects after procuring all regulatory approval etc.
Rosa Power Supply Co. Ltd. 0.62
Bina Power Supply Co. Ltd. 3.14
b) Interest bearing deposits given to Aditya Birla Power Company Limited (ABPCL), a project development
company in respect of which the Company has also been given a right of first refusal to participate in
equity of the projects being developed by ABPCL. 3.62
c) Interest bearing deposits given to Aditya Birla Management Corporation Limited (ABMCL) a company
limited by guarantee formed to provide a common pool of facilities and resources to its members, with
a view to optimize the benefits of specialization and minimize cost to each member. The Company’s
share of expenses under the common pool has been accounted for under the appropriate heads. 10.40
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
210
ADITYA BIRLA NUVO LIMITED
ADITYA BIRLA NUVO LIMITED - CONSOLIDATED Annexure - H
Details of Related party transaction of the Group
Rs. Crores
For the six For the For the For the For the For the
months Year ended Year ended Year ended Year ended Year ended
Sep 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
1. Remuneration paid to Mr. Sanjeev Aga,
Mr. Adesh Kumar Gupta,
Mr. K.K. Maheshwari,
Mr. Rakesh Jain and Mr. S. K. Mitra 5.33 2.88 0.96 0.84 0.75 2.10
2. Rent paid to Mrs Usha Gupta
(Wife of Mr. Adesh Kumar Gupta) 0.05 0.02 - - - -
Mrs Sharda Maheshwari (Wife of Mr K.
K. Maheshwari) and Mrs Sushmita Mitra
(Wife of Mr. S. K. Mitra)
3. Housing deposit Given to
Mrs. Usha Gupta
(Wife of Mr. Adesh Kumar Gupta),
Mrs Sharda Maheshwari
(Wife of Mr. K.K. Maheshwari) and
Mrs Sushmita Mitra
(Wife of Mr. S. K. Mitra) 4.50 3.05 - - - -
4. Sale of Goods and Services to
M/s Tanfac Industries Limited 0.58 2.02 3.30 4.52 3.42 3.54
5. Amount Receivable -
M/s Tanfac Industries Limited 0.13 0.28 0.36 0.37 0.36 0.20
6. Sale of Fixed Assets -
M/s Tanfac Industries Limited - - - - - 0.01
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
211
Annexure - I
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & SUMMARY OF SELECTED NOTES TO ACCOUNTS OF THE
GROUP TO THE RESTATED SUMMARY STATEMENTS
The Summary of Significant Accounting Policies and Significant Selected Notes of Audited Financial Statements are given
below:
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION
The Consolidated Financial Statements (CFS) are prepared in accordance with Accounting Standard (AS) 21
“Consolidated Financial Statements”, AS-23 “Accounting for Investments in Associates in Consolidated Financial
Statements” and AS-27 “Financial Reporting of Interests in Joint Ventures” issued by the Institute of Chartered
Accountants of India (ICAI).
2. PRINCIPLES OF CONSOLIDATION
a) The CFS comprises the financial statement of Aditya Birla Nuvo Ltd. (The Reporting Company) and its
Subsidiaries, Joint Ventures and Associates. The financial statements of all the companies are in line with
generally accepted accounting principles in India.
b) Inter company transactions have been eliminated on consolidation
3. COMPANIES INCLUDED IN CONSOLIDATION
Count ry of Pr opor t i on Pr opor t i on Pr opor t i on Pr opor t i on Pr opor t i on Pr opor t i on
of of owner- of owner- of owner- of owner- of owner- of owner-
i ncorpo- shi p i nter- shi p i nter- shi p i nter- shi p i nter- shi p i nter- shi p i nter-
rat i on est as on est as on est as on est as on est as on est as on
30th Sept. 31st Mar. 31st Mar. 31st Mar. 31st Mar. 31st Mar.
2006 2006 2005 2004 2003 2002
SUBSI DI ARI ES
Aditya Birla Telecom Ltd. India 100.00% 100.00% — — — —
(w.e.f. 24th December 2005)
Alpha Garments Pvt. Ltd. India 100.00% 100.00% — — — —
(AGL) (Subsidiary of MGEL
w.e.f. 15th February 2006)
Aditya Vikram Global Trading Mauritius 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
House Limited (AVGTHL)
Birla Sun Life Insurance India 74.00% 74.00% 74.00% 74.00% 74.00% 70.00%
Company Limited (BSLI)
Birla Technologies Limited India 70.40% 70.40% 70.40% 70.35% 70.35% 70.29%
(Subsidiary of PSI)
(w.e.f 6th February 2002)
Laxminarayan Investment India 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Limited (LIL)
Rajnidhi Finance Ltd India — — — — 100.00% 100.00%
(Subsidiary of LIL merged
with LIL w.e.f 1st April 2003)
Madura Garments Export India 100.00% 100.00% — — — —
Limited (MGEL)
(w.e.f. 26th October, 2005)
212
ADITYA BIRLA NUVO LIMITED
PSI Data Systems Limited
(PSI) (w.e.f 24th October 2001) India 70.40% 70.40% 70.40% 70.35% 70.35% 70.35%
Transworks Information India 88.28% 100.00% 100.00% 100.00% — —
Services Ltd. (TW) (100%
w.e.f July 2003; 88.28%
w.e.f 7th September 2006)
Transworks Inc USA 88.28% 100.00% 100.00% 100.00% — —
(Subsidiary of TW)
(w.e.f July 2003)
AV TransWorks Ltd. (AVTL) Canada 88.28% — — — — —
(Subsidiary of TW w.e.f.
16th June 2006)
Minacs Worldwide Inc (MWI) Canada 85.30% — — — — —
(Subsidiary of AV TW w.e.f
18th August 2006)
The Minacs Group USA 85.30% — — — — —
(Subsidiary of MWI)
Minacs Worldwide S.A. de Mexico 85.30% — — — — —
C.V. (Subsidiary of MWI)
Millman Insuranc. Canada 85.30% — — — — —
(Subsidiary of MWI)
Minacs Limited UK 85.30% — — — — —
(Subsidiary of MWI)
The Minacs GmbH Germany 85.30% — — — — —
(Subsidiary of Minacs Ltd)
Mi nacs Kft. (Subsi di ary Hungary 85.30% — — — — —
of Mi nacs GmbH)
BGFL Corporate Finance India 100.00% 100.00% — — — —
Pvt. Ltd. (BGCFPL)
(w.e.f 1st September 2005)
Birla Global Finance India 100.00% 100.00% — — — —
Company Ltd. (BGFCL)
(w.e.f 1st September 2005)
Birla Insurance Advisory India 50.01% 50.01% — — — —
Services Ltd. (BIASL)
(Subsidiary of BGCFPL)
(w.e.f 1st September 2005)
Crafted Clothing Pvt. Ltd. India 100.00% — — — — —
(CCPL) (Subsidiary of LIL
w.e.f. 3rd August 2006)
English Apparels Pvt Ltd. India 100.00% — — — — —
(EAPL) (Subsidiary of CCPL
w.e.f. 3rd August 2006)
Harwood Garments Pvt Ltd.
(HGPL) (Subsidiary of CCPL
w.e.f. 3rd August 2006) India 100.00% — — — — —
213
JOI NT VENTURES
Birla NGK Insulators Limited India 50.00% 50.00% 50.00% 50.00% 48.98% —
(BNIPL) (w.e.f 1st
August 2002)
IDEA Cellular Limited (IDEA) India 35.74%* 20.74%* 4.28% 4.28% 4.15% —
(*Acquired additional stake of
16.46% on 28th September
2005 and 15.00% on
20th June 2006)
Birla Sun Life Distribution India 49.99% 49.99% — — — —
Company Limited (BSDL)
(w.e.f 1st September 2005)
Birla Sun Life Asset India 50.00% 50.00% — — — —
Management Company
Limited (BSAMC) (w.e.f 1st
September 2005)
Birla Sun Life Trustee India 49.80% 49.80% — — — —
Company Private Limited
(BSTPL) (w.e.f 1st
September 2005)
ASSOCI ATES
Crafted Clothing Pvt. Ltd. India — 48.00% — 48.00% 48.00% —
(CCPL) (from 2001-02 to
June 2004 and again from
26th October 2005 to
2nd August 2006)
English Apparels Pvt Ltd. India — 49.99% — — — —
(EAPL) (for 2001-02 and
again from 15th February 2006
to 2nd August 2006)
Harwood Garments Pvt Ltd. India — 47.00% — — — —
(HGPL) (for 2001-02 and again
from 15th February 2006 to
2nd August 2006)
Birla Securities Ltd. (BSL) India 50.00% 50.00% — — — —
(w.e.f. 1st September 2005)
4. ACCOUNTING POLICIES
Most of the accounting policies of the Reporting Company and that of its Subsidiaries, Joint Ventures and Associates
are similar. However, since certain Subsidiaries / Joint Ventures / Associates are in the business and countries
which are distinct from that of the Reporting Company and function in a different regulatory environment, certain
accounting policies in respect of investment, depreciation /amortization etc. differ. The accounting policies of all the
Companies are in line with generally accepted accounting principles in countries in which the Companies operate.
5. FOREIGN SUBSIDIARIES
In the case of AVGTHL & TW Inc, the financial statements have been translated into Indian rupees in accordance
with AS – 11 (Revised) “The Effects of Changes in Foreign Exchange Rates” considering the operations as integral.
The balance sheet items have been translated at closing rate while the share capital has been translated at the
transaction date. The income and expenditure items have been translated at the average rate for the year / period.
Exchange Gain / (Loss) are recognized in the Profit and Loss account.
214
ADITYA BIRLA NUVO LIMITED
In case of AVTL and Minacs Worldwide Inc, the operations are considered as non-integral. The financial statements
have been converted in Indian Rupees at the following exchange rates:
a) Revenue and Expenses: At the average exchange rate during the period
b) All Assets and Liabilities: Exchange rate prevailing at the end of the period
c) Share Capital & Reserves: Exchange rate prevailing at the end of the period
The resultant translation exchange difference has been transferred to foreign currency translation reserve.
B. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES
6. On AS–26 “Intangible Assets” becoming mandatory from 1st April 2003, Intangible Assets of the Reporting Company
namely Trade Marks / Brands were required to be amortized over a period of 10 years as against amortization
being done till 31st March 2003 by the Reporting company for such assets over 15 years. In accordance with the
transitional provision of the AS, Rs 13.40 Crores being the difference of the amount amortizable over amount
already amortized pertaining to these assets was provided, Rs 4.80 Crores being the tax implication thereon was
reduced from opening deferred tax liability. The amount of Rs 8.60 Crores was adjusted to opening balance of
General Reserve. Had this change not been made in FY 2003-2004, the profit for the year (net of taxes) would
have been higher by Rs 11.24 Crores. The accounts have not been restated for the earlier periods to factor the
impact of the aforesaid standard.
7. Accounting for Associates and proportionate share of Joint Ventures were not included in consolidation for the
Financial Year (FY) 2001-02 as the AS 23-”Accounting for Investments in Associates” and AS 27- “Financial Reporting
of Interest in Joint Ventures” became applicable from 01.04.2002.
8. Effective April 1, 2006 the Indian entities in the Group have adopted the revised AS-15 on Employee Benefits.
Pursuant to the adoption, the incremental liability at the beginning of the year amounting to Rs 2.38 crores (Net of
tax) in respect of Gratuity Liability and Rs 14.86 crores (net of tax in respect of compensated absence liability) and
Rs 2.01 crores (net of tax) in respect of pension liability, has been adjusted against general reserve and Rs 0.37
crores (Net of tax) in respect of Gratuity Liability and Rs 5.32 crores (net of tax in respect of compensated absence
liability) and Rs 2.45 crores (net of tax) in respect of pension liability, has been adjusted against opening balance
of Profit and Loss Account.
C. SIGNIFICANT CHANGES IN ACCOUNTING ESTIMATES
9. The Reporting Company has in FY 2005-2006, revised the estimated useful lives of office equipments, Showroom
Assets and assets acquired on amalgamation of IGFL and BGFL from the life / rates as per Schedule XIV of the
Companies Act, 1956. Consequently additional depreciation of Rs 5.58 Crores has been charged to the Profit and
Loss for the year.
10. During FY 2003-2004, the Reporting Company has acquired brand rights/ trademarks amounting to Rs. 42.14
Crores (net) from AVGTHL, a subsidiary company which are being amortized over a period of 10 years, as it was
lower than their estimate economic useful life determined by an independent evaluation and legal option. The
difference between book value and the acquisition value in the books of AVGTHL was shown as loss on sale of
fixed assets.
11. During FY 2003-2004, the Reporting Company has revised its estimated useful lives on fast depreciating items like
Office Computers, Vehicles and Furniture & Fixtures w.e.f 1st April 2003, from the life / rates as per the Schedule
XIV of the Companies Act 1956. Consequently, additional depreciation of Rs 6.16 Crores has been charged to
Profit and Loss Account for the year ended 31st March 2004.
D. AMALGAMATION OF INDO GULF FERTILIZERS LIMITED (IGFL) AND BIRLA GLOBAL FINANCE LIMITED (BGFL)
WITH THE REPORTING COMPANY
12. a) Pursuant to the Schemes of Amalgamation (the Schemes) under sections 391 to 394 of the Companies Act,
1956, with effect from September 1, 2005 (the Appointed Date) IGFL and BGFL, have been merged with the
Reporting Company. The Effective date of the Scheme for merger of IGFL & BGFL is April 3rd, 2006 and June
30th, 2006 respectively.
215
b) 1,50,30,935 and 85,83,479 Equity Shares of Rs. 10 each of the Reporting Company were to be issued to the
shareholders of IGFL and BGFL respectively in the rationof 1 (one) fully paid-up Equity Share of Rs.10 each
of the Reporting Company for every 3 (three) fully paid-up Equity Shares of Rs. 10 each held in IGFL and
BGFL. Pending allotment, an amount of Rs. 23.61 Crores has been shown under Share Capital Suspense
Account as at March 31
st
, 2006. These shares were subsequently issues on April 24
th
, 2006 to shareholders
of IGFL and on July 18
th
, 2006 to shareholders of BGFL.
E. RESTATEMENT OF ACCOUNTS
13. In FY 2001-2002 the Net Deficit of policyholders account in BSLI was considered in the consolidated profit and loss
account. In the Annexure ‘M’ containing financial statement, the same has been restated / regrouped with gross
income and expenditure accounts being considered in respective heads of account. The aforesaid restatement /
regrouping does not have any impact on the consolidated profits of the year.
F. OTHER DISCLOSURES
14. The Financial Statements of BGCFPL, BGFCL, BIASL, BSDL, BSAMC, BSTPL and BSL have been audited for the
year ended 31st March 2006. For the purpose of CFS, the results for the seven months period ended 31st March
2006 have been derived from the Twelve Month audited figures of the year ended 31st March 2006 by reducing
there from unaudited figures for the five months period ended 31st August 2005.
Further, for MGEL and AGL the results for six months and three months ended 31st March 2006 respectively have
been derived from the Twelve Month audited figures of the year ended 31st March 2006 by reducing unaudited
figures till the dates of their respective acquisitions.
15. The Financial Statements of CCPL, HGL and EAL have been audited for the period ended 30th September 2006.
For the purpose of CFS, the results for the three months period ended 30th September 2006 have been derived
from the Six Month audited figures of the period ended 30th September 2006 by reducing therefrom management
certified figures for the three months period ended 30th June 2006.
The Financial Statements of IDEA have been audited for the period ended 30th September 2006. For the purpose
of CFS, management certified results for the period ended 20th June 2006 have been consolidated at 20.74% and
balance of the audited results for the period thereafter till 30th September 2006 have been consolidated at 35.74%.
16. The CFS for the period includes financial statements of AVTL & MWI that are certified by management of the
respective companies.
Further for MWI, management certified consolidated accounts have been considered for the nine months period
ended 30th September 2006 and the figures of Profit and Loss Account from 17th August 2006, the date of it
becoming Subsidiary till 30th September 2006 has been derived by reducing the management certified Profit &
Loss Account for the period ended 17th August 2006.
The management certified CFS of Minacs Worldwide Inc which reflects the consolidation of The Minacs Group,
Minacs Worldwide S.A. de C.V., Millman Insuranc., Minacs Limited, The Minacs GmbH and Minacs Kft as at 30th
September 2006 have been converted by the management to comply with Generally Accepted Accounting Principles
in India.
Rs. Crores
Consolidated
September 30, 2006
17. Deferred Tax (Assets)/ Liability at the year end comprise timing difference on account of
Depreciation 219.80
Expenditure/Provisions allowable (61.00)
Total 158.80
Reflected as Deferred Tax Liability 166.11
Reflected as Deferred Tax Asset (7.31)
Net Deferred Tax Liability 158.80
216
ADITYA BIRLA NUVO LIMITED
18. EXCEPTIONAL ITEMS:
Rs. Crores
For the six For the year For the year For the year For the year For the year
months ended ended March ended March ended March ended March ended March
Sept 30, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
Voluntary Retirement Cost (VRS) 0.88 4.04 9.54 - - 7.58
(Gain)/Loss on Sale of
Long Term Investments - - 2.12 (19.95) 57.08 -
Gain on Sale of Global Export Division - - (4.01) - - -
Gain on Demerger of Insulator Division - - - - (38.42) -
Surplus on assets held for disposal - - - - - (8.91)
Refund of interest etc. from
Department of Telecom - - - - (3.37) -
Writing back of provision in respect - - - - (5.01) -
of custom duty on equipment and
interest thereon
Loss on disposal of Assets - - - 3.84 - -
Refund of overseas Income Taxes - - - (1.15) - -
Restructuring Expenses 0.02 - - - - -
Total 0.90 4.04 7.65 17.26 10.28 1.33
19. Figures have been regrouped / rearranged wherever necessary.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
217
Aditya Birla Nuvo Limited - Consolidated Annexure J
Statement of Segment Information
Segments have been identified in line with the Accounting Standard (AS) – 17 on ‘Segment Reporting’, taking into
account the organizational structure as well as differential risk and returns of these segments.
Garments Garments
Rayon VFY and Chemicals
Carbon Black Carbon Black
Insulator Insulators, Bushings, Lighting & Surge Arrestors
Textiles Spun Yarn, Fabrics
Fertilizers Fertilizers
Financial Services Retail Asset Finance, Corporate Finance, Capital Market, Syndication, Insurance Advisory,
Asset Management, Brokerage Income
Software Software Services
Insurance Life Insurance Services
Telecom Telecommunication Services
BPO BPO Services
The Reporting Company considers secondary segment based on revenues within India as Domestic Revenues and
outside India as Export Revenues. Since assets are used interchangeably, carrying amount of assets and cost incurred
during the period to acquire assets based on secondary segment have not been disclosed.
218
ADITYA BIRLA NUVO LIMITED
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224
ADITYA BIRLA NUVO LIMITED
Aditya Birla Nuvo Limited – Consolidated Annexure - K
Details of Items of Other Income of the Group
Rs. Crores
For the six For the For the For the For the For the
months Year ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
Dividend on
Long Term Investments:
- Trade 7.70 3.27 2.73 3.26 5.13 4.98
- Others 0.01 0.05 0.01 0.28 0.09 0.07
Dividend on
Current Investments 3.45 11.38 3.72 5.50 - -
Profit / (Loss) on sale
of Investments (Net):
- Long term 0.08 0.01 - (0.62) (0.03) (0.52)
- Current 6.49 3.22 0.81 2.07 1.46 0.32
Investment Income -
Shareholders Fund 6.47 9.36 7.36 4.61 7.94 8.37
Miscellaneous Income 11.13 5.97 4.42 4.78 3.80 3.91
Total 35.33 33.26 19.05 19.88 18.39 17.13
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
225
Aditya Birla Nuvo Limited - Consolidated Annexure - L
Statement of Contingent Liabilities of the Group as at
Rs. Crores
September 30, March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2004 2003 2002
1. Estimated amount of
contracts remaining
to be executed on
capital account and
not provided for
(Net of advances) 416.27 170.03 124.30 29.18 9.12 7.31
2. Contingent Liabilities
not provided for:
a) Claims against the
Company not
acknowledged as debts
i) Income-tax 35.00 34.09 36.45 40.47 0.70 6.28
ii) Custom Duty 2.56 2.54 2.47 2.01 1.07 2.02
iii) Excise Duty 32.91 37.87 28.11 43.21 41.98 35.94
iv) Service Tax 2.23 1.65 - - - -
v) Others 62.10 45.46 29.47 30.33 32.54 32.84
b) Bills discounted /
rediscounted with
Banks 58.10 69.06 55.21 60.97 41.05 57.21
c) Corporate Guarantees
given to Banks/
Financial Institutions
for loans taken/
Preference Shares
issued by subsidiary/
other companies 5.00 5.00 53.68 22.22 97.66 77.03
d) Customs duty on
capital goods and
raw materials
imported under
advance licensing /
EPCG scheme,
against which
export obligation
is to be fulfilled 74.75 54.79 41.78 39.67 4.95 6.79
e) Dividend on
cumulative
preference shares 72.25 38.28 6.03 3.76 1.47
f) Uncalled Liability on
shares partly paid up 29.37 29.37 - - - -
g) Others 4.59 4.75 14.90 4.44 0.41 -
226
ADITYA BIRLA NUVO LIMITED
h) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of
fertilisers dispatched was required to be supplied in Jute Bags up to 31.08.2001. The Company made conscious
efforts to use jute-packaging material as required under the Act. However, due to non-availability of material as per
the Company’s product specifications as well as due to strong customer resistance to use of Jute Bags, the specific
percentage could not be adhered to. The Company has received a show cause notice, against which a writ petition
has been filed with the High Court, which is awaiting for hearing. The Company has been advised that the said
levy is bad in law.
Note:
The above statement should be read with the Significant Accounting Policies and Selected Notes on Accounts for
Restated Summary Statements, as appearing in Annexure I to this report.
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
227
Aditya Birla Nuvo Limited - Consolidated Annexure - M
Adjustments and Regroupings considered appropriate in Consolidated Financial Statements
1) As per Accounting Standard (AS) - 27, Birla Sun Life Insurance Company Limited (BSLI) was consolidated as a
Joint Venture in F.Y. 2002-2003. However, based on the limited revision of AS-27 BSLI was consolidated as
Subsidiary in F.Y. 2003-2004 and the previous year figures were restated. The Consolidated Financial Information
is based on aforesaid restatement.
2) In F.Y. 2001-2002 the Net Deficit of Policy Holders account of BSLI of Rs. 43.50 Crores was considered in Profit
and Loss Account. For better comparison with the subsequent year’s figures, the same has been regrouped with
the gross income and expenditure accounts being considered in the respective heads of account.
Regrouping is as under:
Rs. Crores
Heads of Account Amount
Income
Income from Operation 19.31
Other Income 8.37
Total Income 27.68
Expenditure
Salaries, Wages and Employees Benefits 10.57
Manufacturing, Selling and Other Expenses 36.53
Actuarial Liabilities 18.87
Depreciation 5.21
Total Expenses 71.18
Net Deficit of Policy Holders account 43.50
For and on behalf of the Board of Directors
For Aditya Birla Nuvo Limited
Dr. Bharat K. Singh Adesh Kumar Gupta
Managing Director Whole time Director & CFO
Mumbai, December 01, 2006 Mumbai, December 01, 2006
228
ADITYA BIRLA NUVO LIMITED
STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY
Our Equity Shares are listed on the BSE and NSE. As our shares are actively traded on the BSE and NSE, our stock
market data have been given separately for each of these Stock Exchanges.
The high and low closing prices recorded on the BSE and NSE for the preceding three years and the number of Equity
Shares traded on the days the high and low prices were recorded are stated below:
BSE
Year High Date of High Volume Low Date of Low Volume Average
ending (Rs.) on date (Rs.) on date price for
March 31 of high of low the year
(no. of (no. of (Rs.)
Shares) Shares)
2004 279.9 December 30 2004 53899 74.5 April 1 2005 22165 174.50
2005 469 March 11 2005 14405 180 May 17 2004 71751 290.65
2006 777 February 7 2005 15447 388.5 May 2, 2005 17890 576.97
April 1, 2006 1123.92 November 30, 2006 28435 531.39 June 13, 2006 15041 789.76
to November
30, 2006
NSE
Year High Date of High Volume Low Date of Low Volume Average
ending (Rs.) on date (Rs.) on date price for
March 31 of high of low the year
(no. of (no. of (Rs.)
Shares) Shares)
2004 278.7 December 30 2003 105256 75.25 April 1, 2003 26759 174.54
2005 462.8 February 28 2005 127039 181 May 17, 2004 98905 290.83
2006 776.7 February 7, 2006 17759 387 May 2, 2005 38068 577.72
April 1, 2006 1122.62 November 30, 2006 79830 523.32 June 13 , 2006 48764 790.94
to November
30, 2006
229
The high and low prices and volume of Equity Shares traded on the respective dates during the last six months is as
follows:
BSE
Month, High Date of High Volume Low Date of Low Volume Average
Year (Rs.) on date (Rs.) on date price for
of high of low the year
(no. of (no. of (Rs.)
Shares) Shares)
May 2006 1000 May 5, 2006 31094 695.35 May 31, 2006 30771 835.07
June 2006 798 June 30, 2006 9768 510.05 June 9, 2006 46611 644.57
July 2006 739.95 July 4, 2006 6707 625.1 July 24, 2006 8340 682.35
August 2006 859 August 22, 2006 40296 702 August 2, 2006 16445 744.87
September 871 September 29, 79940 795.5 September 01, 3110 826.63
2006 2006 2006
October 983.95 October 31, 2006 31024 850 October 19, 4165 896.81
2006
November 1123.92 November 30, 2006 28435 958.79 November 03, 49418 1019.66
2006 2006
NSE
Month, High Date of High Volume Low Date of Low Volume Average
Year (Rs.) on date (Rs.) on date price for
of high of low the year
(no. of (no. of (Rs.)
Shares) Shares)
May 2006 980 May 5, 2006 22720 683 May 31, 2006 59112 839.64
June 2006 761.1 June 28, 2006 21160 500 June 9, 2006 72993 643.80
July 2006 775.4 July 4, 2006 10078 601.1 July 24, 2006 162568 683.36
August 2006 862 August 25, 2006 7201 706 August 2, 2006 31593 745.95
September 871 September 29, 2006 41475 790 September 25, 13191 828.16
2006 2006
October 2006 985 October 31, 2006 118024 819.6 October 16, 13292 898.20
2006
November 1122.62 November 30, 2006 79830 960.38 November 03, 35308 1020.89
2006 2006
The market price was Rs. 812.50 on BSE on September 12, 2006, the trading day immediately following the day on
which Board meeting was held to finalize the offer price for the Issue.
The market price was Rs. 813.50 on NSE on September 12, 2006, the trading day immediately following the day on
which Board meeting was held to finalize the offer price for the Issue.
230
ADITYA BIRLA NUVO LIMITED

Value Businesses
High Growth Businesses
Textiles
Rayon
Fertiliser Carbon
Black
Insulator Subsidiaries Garments Financial
Services JV
Telecom
JV
Mutual Fund
Life Insurance
Distribution
IT
ITeS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion on financial conditions and results of operations together with audited consolidated
financial statements (as restated) for the years ended 31st March 2004, 31st March 2005 and 31st March 2006 including
schedules, annexure and notes thereto and reports thereon, which appear elsewhere in this Letter of Offer.
Unless otherwise indicated, references in this discussion and analysis to our results of operations or financial condition
for a specified year are to our fiscal year ended March 31, 2004, 2005 and 2006. In this section, any reference to “we”,
“us” or “our” refers to Aditya Birla Nuvo Limited and its subsidiaries, joint ventures and associates.
OVERVIEW OF OUR BUSINESS
Our various businesses as mentioned below can be divided into two categories. Value Businesses and High Growth
Businesses. The value businesses are the businesses, which generate cash for the company and are in the mature
stage. The high growth businesses are the businesses, which require cash to fund their growth plans. The high growth
businesses also include our investments in Joint ventures.
We achieved a turnover of Rs. 4,830.34 crore in fiscal 2006, an increase of 51.46% over the turnover in fiscal 2005
which was Rs. 3189.11 crore. Our earnings before interest, tax, depreciation and amortisation (EBITDA) was Rs. 615.73
crore, which was an increase of 135.60% over fiscal 2005, when it was Rs.261.36 crore. Our profit before tax and non-
recurring income also increased by 204.79% at Rs. 286.93 crore as compared to Rs. 94.14 crore and our profit after tax
was Rs. 204.04 crore as compared to Rs. 58.72 crore in fiscal 2005, which was an increase of 247.48%.
231
SUMMARY OF OPERATIONS
Consolidated Restated Statement of Profit and Loss
Rs. Crores
PARTICULARS For the For the For the Half Year
year ended year ended year ended Ended
March 31, March 31, March 31, Septem-
2004 2005 2006 ber 30,
2006
INCOME
Income from Operations 2,551.88 3,325.47 4,986.50 3,508.96
Less: Excise Duty 147.64 136.36 156.16 83.15
Net Sales 2,404.24 3,189.11 4,830.34 3,425.81
Other Income 19.88 19.05 33.26 35.33
Total 2,424.12 3,208.16 4,863.60 3,461.14
EXPENDITURE
(Increase) /decrease in Stocks (19.80) (14.41) (47.30) (19.00)
Cost of Materials 861.48 1,044.54 1,502.25 917.58
Salaries, Wages and Employee Benefits 261.78 320.13 434.46 415.72
Manufacturing, Selling and Other Expenses 719.08 912.42 1,368.99 1,113.97
Actuarial Liabilities 397.44 684.12 989.47 506.29
Interest and Other Finance Expenses (Net) 32.35 36.93 103.83 140.57
Depreciation/Amortization 121.76 127.34 224.97 186.52
Marketing / Technical know-how expenditure written off 5.08 2.95 0.00 0.00
Sub Total 2,379.17 3,114.02 4,576.67 3,261.65
Profit before Extraordinary items and Tax 44.95 94.14 286.93 199.49
Extraordinary Items (Net) 17.26 (7.65) (4.04) (0.90)
Profit before Tax 62.21 86.49 282.89 198.59
Provision for Current Tax 45.28 45.78 96.81 56.61
Provision for Deferred Tax 4.05 (1.94) (5.51) 4.83
FBT-Fringe Benefit Tax 0.00 0.00 8.19 3.80
Provision for Tax for Earlier Years written back 0.00 (0.07) (5.37) (0.15)
Net Profit after Tax before Minority Interest 12.88 42.72 188.77 133.50
Minority Interest (20.21) (15.76) (14.90) (10.51)
Share of Profit/(Loss) of Associate 0.00 0.24 0.37 0.46
Net Profit 33.09 58.72 204.04 144.47
232
ADITYA BIRLA NUVO LIMITED
Consolidated Restated Statement of Assets and Liabilities as at
Rs. Crores
PARTICULARS March 31, March 31, March 31, Septem-
2004 2005 2006 ber 30,
2006
Fixed Assets:
Gross Block 1,656.63 1,914.73 4,187.33 6,086.43
Less: Depreciation 718.52 867.52 2,199.54 3,082.92
Net Block 938.11 1,047.21 1,987.79 3,003.51
Capital Work In progress 55.51 62.29 169.80 320.99
Assets Held for disposal 0.00 0.00 0.00 0.00
Goodwill (arising on Consolidation of Accounts) 153.83 185.25 961.36 2,871.05
Sub Total (A) 1,147.45 1,294.75 3,118.95 6,195.55
Investments (B) 876.33 1,468.63 2,916.92 3,210.65
Deferred Tax Assets (C) 0.79 7.31
Current Assets, Loans and Advances
Inventories 293.70 377.90 551.37 556.46
Sundry Debtors 243.82 330.39 518.38 873.34
Cash and Bank Balance 86.87 88.72 186.94 271.11
Interest accrued on investments 3.86 5.48 8.73 8.35
Loans and Advances 126.49 141.97 793.29 902.20
Sub-total (D) 754.74 944.46 2058.71 2,611.46
Secured Loans 551.15 699.33 1,525.18 4,059.38
Unsecured Loans 37.16 62.16 839.45 956.88
Deferred Tax liability 127.60 125.66 169.47 166.11
Policyholders fund 539.07 1,212.28 2,378.37 2,856.59
Fund for Future appropriations 0.03 0.03 0.03 0.03
Minority Interest 27.79 27.63 43.20 142.07
Current Liabilities 373.54 425.54 962.42 1,442.62
Provisions 41.89 40.49 78.75 100.67
Sub-total (E) 1,698.23 2,593.12 5,996.87 9,724.35
Net Worth (A+B+C-+D-E) 1,080.29 1,114.72 2,098.50 2,300.62
Share Capital 59.88 59.88 59.89 83.50
Share Capital Suspense 0.00 0.00 23.61 0.00
Preference Share Capital 20.70 20.70 100.17 172.62
Reserves and Surplus 1,002.74 1,034.14 1,914.83 2,044.50
Advance against Equity 0.00 0.00 0.00 0.00
Less: Misc. expenditures (to the extent not written off) 3.03 0.00 0.00 0.00
Net Worth 1,080.29 1,114.72 2,098.50 2,300.62
233
Overview of our various businesses
Garments
We believe we are one of India’s largest branded apparel Company through our Madura Garments Division, with
brands like Louis Philippe, Van Heusen, Allen Solly, Peter England, and SF Jeans retailed through our franchisees
and other multi brand outlets. We have retail space spread over 3 lakh square feet across India as of September
30, 2006. As at March 31, 2006, ABNL has 164 stores across the country, including 112 exclusive brand outlets.
Carbon Black
We believe we are one of the largest producers of carbon black in India with a manufacturing capacity of 170,000
mtpa, as on March 31, 2006 spread across two manufacturing units. One of our units is located in Renukoot, Uttar
Pradesh, and has a capacity of 80,000 mtpa. The other unit is located in Gumidipoondi in Tamil Nadu with an
installed capacity of 90,000 mtpa. We market carbon black under the ‘Birla Carbon’ brand.
Pursuant to a consent order from the Tamil Nadu Pollution Control Board under section 21, the Gumidipoondi unit
has begun work on brownfield expansion of 55,000 MT which is likely to be completed by June 2007.
Textiles
We are present in three segments of textiles namely Linen segment (flax yarn, linen fabrics), Worsted segment
(wool tops, worsted yarn) and synthetic segment. We are a sizeable player in Linen and worsted segment. Our
installed capacity as on September 30, 2006 is 8,184 spindles of flax yarn, 22,348 spindles of worsted yarn and
47,940 spindles of synthetic yarn. We also have capacity of 8,000 tpa in wool combing and 62 looms for weaving
of linen fabrics. We plan to increase our capacity in the case of flax spinning by 7,000 spindles and for fabric
manufacture by 50 looms. Our manufacturing units are located at Rishra and Midnapur in West Bengal. Flax and
worsted yarn are marketed under ‘Jaya Shree’ brand and Linen Fabrics under the brand ‘Linen Club’.
Rayon
We believe we are one of the largest producers of Viscose Filament Yarn (VFY) in India with a capacity of 16,000
mtpa. Our Rayon Division is located at Veraval in Gujarat and also has capacity to manufacture Caustic Soda and
allied chemicals. We market our VFY product under ‘RAY ONE’ brand. As at September 30, 2006, we have 36 MW
power plant for captive consumption.
Fertilizer
We are one of the producers of urea in India with re-assessed capacity of 864,600 mtpa on March 31, 2006. Our
manufacturing unit is located at Jagdishpur, Uttar Pradesh, in the heartland of the North Indian Gangetic agricultural
belt. We market our products under the ‘Shaktiman’ Brand and also deal in traded products to meet the farmers’
requirements.
Insulator (Domestic Marketing unit)
We are present in the insulators business through our subsidiary, Birla NGK Insulators Limited. Our Company
enjoys marketing rights of insulators in India.
Financial Services
Under our Financial Services business we provide services mainly in collateral financing and corporate financing
which include amongst other Initial Public Offering (“IPO”) financing, Loan against Shares and Bill Discounting.
However, a certain portion of this business is now being pursued by us through our subsidiary Birla Global Finance
Company Limited.
The brief profile of our Subsidiary and Joint Venture businesses are given below:
Our Subsidiaries
Life Insurance (through Birla Sun Life Insurance Co Limited)
We have a presence in life insurance through our subsidiary Birla Sun Life Insurance Company Limited wherein
we hold 74% shareholding and rest is with our joint venture partner, Sun Life Financial Incorporated, Canada. As
234
ADITYA BIRLA NUVO LIMITED
on March 31, 2006 Birla Sun Life Insurance Co. Limited (“BSLI”) is the fifth largest private sector player in the life
insurance business in terms of premium collected. (Source: Insurance Regulatory and Development Authority –
Journal – May 2006)
Insulators (through Birla NGK Insulators Limited )
We are present in the business of manufacturing insulators through our subsidiary Birla NGK Insulators Private
Limited. We believe that our subsidiary Birla NGK Insulators Limited is one of the largest producers of Insulators in
India with an installed capacity of 36,000 mtpa as on March 31, 2006. Its production facilities are located at Halol
in Gujarat and Rishra in West Bengal.
Business Process Outsourcing (BPO) (through TransWorks Information Services Limited (“TransWorks”))
We entered the BPO business through our acquisition of 100% stake in TransWorks in July 2003 and had a
capacity of 2,245 seats as on September 30, 2006. TransWorks provides a complete blend of Customer Relation
Management services - inbound customer service, including technical support, email / web-chat support, and
outbound telemarketing. BPO services include transaction processing, finance and accounting related services.
TransWorks has recently acquired Minacs Worldwide Incorporated, a Canadian BPO provider. Further details about
TransWorks acquisition of Minacs is provided in the ‘History and other corporate matters of the Company’ section on
page 65 of this Letter of Offer.
Information Technology (through PSI Data Systems Limited)
We forayed into the Information Technology sector through the acquisition of 70.35% stake in PSI Data Systems
(“PSI”) in 2001. PSI’s service offerings include application/ product development, enhancement, maintenance, and
migration/re-engineering. PSI has its primary focus in the banking and financial sector by providing both corporate
and retail banking services and also provides insurance, hi tech solutions and manufacturing and retail solutions.
Our Joint Venture
Telecommunication (through IDEA Cellular Limited (“IDEA”))
We are present in the business of mobile telecommunication through joint venture in IDEA Cellular Limited (IDEA),
our share being 35.7% as at September 30, 2006,. Other Promoter Group companies namely Grasim Industries
Limited, Hindalco Industries Limited and Birla TMT Private Limited holds 29.4% as on December 4, 2006. IDEA is
the fourth largest mobile telephony service providers in India in the GSM segment with over 10.4 mn subscribers as
on September 30, 2006. IDEA provides mobile telephony service in 11 circles, operating in Maharashtra (including
Goa but excluding Mumbai metro), Gujarat, Madhya Pradesh, Andhra Pradesh, Delhi metro service area, Kerala,
Haryana, Uttar Pradesh (West), Rajasthan, Himachal Pradesh and Uttar Pradesh (East). Idea has recently received
a letter of intent for award of licence to provide unified access services in the Mumbai Metro service area.
Asset Management (through Birla Sun Life Asset Management Co. Limited)
We are present in the Asset Management business through our joint venture with Sun Life Financials of Canada
wherein we hold 50% shareholding. Birla Sun Life Asset Management Co. Limited had domestic assets under
Management of Rs 14,615 crores as on September 30, 2006 (Source: Association of Mutual Funds in India
website) and is one of the oldest private players in the industry.
235
The consolidated revenues (net of excise and inter segment) from each of our business segments for the periods stated
are as follows:
(in crores)
Business Segment Revenue Fiscal year Ended March 31,
2004 2005 2006 H1 FY 2007
Sr. Business Rs. (in. % Rs. (in. % Rs. (in. % Rs. (in. %
No. Segment Crores) Crores) Crores) Crores)
1 Garment 391.68 16.29 472.62 14.82 620.56 12.85 406.64 11.87
2 Carbon Black 340.30 14.15 467.25 14.65 564.21 11.68 360.70 10.53
3 Textiles 397.00 16.51 456.12 14.30 524.88 10.87 306.48 8.95
4 Rayon 335.17 13.94 352.00 11.04 385.55 7.98 224.56 6.55
5 Fertilizers * NA NA NA NA 368.98 7.64 351.02 10.25
6 Insulators 154.35 6.42 184.53 5.79 249.19 5.16 101.65 2.97
7 Financial Service * NA NA NA NA 70.97 1.47 52.18 1.52
8 Life Insurance 545.26 22.68 956.19 29.98 1,398.48 28.95 745.89 21.77
9 Business Process 57.28 2.38 107.78 3.38 162.05 3.35 263.52 7.69
Outsourcing
10 IT Services 85.98 3.58 82.02 2.57 85.77 1.78 46.68 1.36
11 Telecommunication 55.56 2.31 96.91 3.04 388.32 8.04 562.38 16.42
12 Others 41.66 1.73 13.70 0.43 11.37 0.24 4.11 0.12
TOTAL 2,404.24 100.00 3,189.11 100.00 4,830.33 100.00 3,425.81 100.00
Our Significant Accounting Policies
A. ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost convention, on an accrual basis and in accordance with
the applicable accounting standards.
FIXED ASSETS
Fixed assets are stated at cost, less accumulated depreciation and impairment loss if any. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working condition for its intended use.
DEPRECIATION / AMORTIZATION
a) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in the
Schedule XIV of the Companies Act, 1956 except stated hereunder.
Estimated useful life
Capital Expenditure on assets not owned - 5 Years
Office Computers - 4 Years
Vehicles - 5 years
Assets at Showrooms - 5 years
Furniture, Fixtures and Equipments - 6 years
Leasehold Land/Improvements - Over the primary period of the lease
236
ADITYA BIRLA NUVO LIMITED
b) INTANGIBLE ASSETS ARE AMORTIZED AS UNDER:
Trademarks/ Brands - 10 years
Specialized Software - 3 years
Goodwill - Not being amortized.
c) Depreciation on the Fixed Assets added/disposed off/discarded during the year is provided on pro-rata basis with
reference to the month of addition/disposal/discarding.
“Continuous process plants” are classified based on technical assessment and depreciation is provided accordingly.
Depreciation on the amounts capitalized on account of foreign exchange fluctuation is provided prospectively over
residual life of the assets.
IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based
on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable
value. An impairment loss if any, is charged to Profit and Loss Account in the year in which an asset is identified as
impaired. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the
impairment losses recognized for the assets no longer exist or have decreased.
BORROWING COST
Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of
such asset up to the date when such assets are ready for its intended use.
Other borrowing costs are charged to the Profit and Loss Account.
Translation of Foreign Currency items
Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign
currency monetary items are reported using closing rate of exchange at the year-end. Other items, like fixed assets,
inventories, investments in equity shares are carried in terms of historical cost using the exchange rate at the date of
transaction. Premium/Discount in respect of forward foreign exchange contract is recognized over the life of the contracts.
Exchange differences attributable to the acquisition of fixed assets outside India are adjusted to the cost of the respective
assets.
Derivative Instruments
Our Company uses derivative financial instruments such as forward exchange contracts, currency swaps and interest rate
swaps to hedge its risks associated with foreign currency fluctuations and interest rate. Currency and interest rate swaps
are accounted in accordance with their contract.
Investments
Current Investments are stated at lower of cost and fair value. Long term investments are stated at cost after deducting
provisions made, if any, for permanent diminution in the value.
Inventories
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, these items
are considered to be realizable at cost if the finished products in which they will be used, are expected to be sold at or
above cost.
Work in progress and finished goods are valued at lower of cost and net realizable value. Finished goods and work-in-
progress include costs of conversion and other costs incurred in bringing the inventories to their present location and
condition.
Cost of inventories is computed on a weighted average/FIFO basis.
Proceeds in respect of sale of raw materials/stores are credited to the respective heads. Obsolete, defective and
unserviceable inventory is duly provided for.
237
Government Grants
Government Grants are recognized when there is reasonable assurance that the same will be received. Revenue grants
are recognized in the Profit and Loss account. Capital grants relating to specific fixed assets are reduced from the gross
value of the respective fixed assets. Other capital grants are credited to capital reserve.
Revenue Recognition
Our sales are recorded net of trade discounts, rebates and include excise duty.
Income from service is recognized as they are rendered based on agreements/arrangements with the concerned parties.
Fertilizer price support under Group Concession and other Scheme of Government of India is recognized based on
management’s estimate taking into account known policy parameters and input price escalation/deescalation.
Dividend income on investments is accounted for when the right to receive the payment is established.
Retirement Beneits
Retirement benefits in the form of Provident Fund and Superannuation Schemes are charged to the Profit and Loss
Account on accrual basis.
Gratuity liability under the Payment of Gratuity Act is accrued and funded on the basis of an actuarial valuation made at
the end of each financial year.
Provision for accrued leave encashment is made on the basis of actuarial valuation at the end of each financial year.
Taxation
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance
with the Income Tax Act, 1961.
The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates
and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing
differences are recognized to the extent there is reasonable certainty that these would be realized in future.
Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such deferred tax
asset can be realized against future taxable profits.
Fringe Benefit Tax is provided in accordance with the provisions of the Income Tax Act, 1961.
Leases
Leases where significant portion of risk and reward of ownership are retained by the Lessor are classified as Operating
Leases and lease rentals thereon are charged to Profit and Loss account.
Hire purchase/leasing:
i. Finance charges on Hire Purchase business are computed on reducing balance method on the basis of implicit
rate of return.
ii. Hire purchase stock is valued at agreement values less installments due. Unmatured finance charges are reduced
from the stock on Hire.
iii. Lease rental income in respect of leased assets acquired prior to 1st April, 2001 is equalized as per guidelines
issued by the Institute of Chartered Accountants of India.
iv. Finance income on lease transactions entered into on or after 1st April, 2001 is accounted by applying the interest
rate implicit in the contract which is in accordance with Accounting Standard 19 - “Accounting for Leases” on
leasing transactions for recognizing the finance income at a constant periodic rate of return on net investment
outstanding.
v. Delayed payment/penal charges in respect of hire purchase/lease business are accounted for on the basis of
certainty of collection. Prompt payment rebates are determined and accounted on timely payment of all installments.
238
ADITYA BIRLA NUVO LIMITED
vi. Escalation claims in respect of Hire purchase/Lease transactions linked to change in prime lending rates are
accounted for as and when settled.
Contingent Liability
Contingent Liabilities are not provided for and are disclosed by way of notes.
Show cause notices are considered as contingent liabilities only when they are converted into demands.
Department appeals in respect of cases won by the Company are also considered as Contingent Liabilities.
BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL
The Consolidated Financial Statements (CFS) are prepared in accordance with Accounting Standard 21 (AS) “Consolidated
Financial Statements”, AS-23 “Accounting for Investments in Associates in Consolidated Financial Statements” and AS-
27 “Financial Reporting of Interests in Joint Ventures” issued by the Institute of Chartered Accountants of India.
PRINCIPLES OF CONSOLIDATION
a) The CFS comprises the financial statement of Aditya Birla Nuvo Limited (The Reporting Company) and its Subsidiaries,
Joint Ventures and Associates. The financial statements of all the companies are in line with generally accepted
accounting principles in India.
b) Inter company transactions have been eliminated on consolidation.
COMPANIES INCLUDED IN CONSOLIDATION
Country of Proportion of Proportion of
incorporation ownership ownership
interest as on interest on
31st Mar. 06 31st Mar. 05
SUBSIDIARIES
Aditya Birla Telecom Limited (w.e.f. 24th December 2005) India 100.00% —
Alpha Garments Private Limited (AGL)
(Subsidiary of MGEL w.e.f. 15th February 2006) India 100.00% —
Aditya Vikram Global Trading House Limited (AVGTHL) Mauritius 100.00% 100.00%
Birla Sun Life Insurance Company Limited (BSLI) India 74.00% 74.00%
Birla Technologies Limited (Subsidiary of PSI) India 70.40% 70.40%
Laxminarayan Investment Limited (LIL) India 100.00% 100.00%
Madura Garments Export Limited (MGEL)
(w.e.f. 26th October, 2005) India 100.00% —
PSI Data Systems Limited (PSI) India 70.40% 70.40%
Transworks Information Services Limited (TW) India 100.00% 100.00%
Transworks Inc (Subsidiary of TW) USA 100.00% 100.00%
From 1st September, 2005:
BGFL Corporate Finance Private Limited (BGCFPL) India 100.00%
Birla Global Asset Finance Company Limited (BGAFCL) India 100.00%
Birla Insurance Advisory Services Limited (BIASL)
(Subsidiary of BGCFPL) India 50.00%
239
Country of Proportion of Proportion of
incorporation ownership ownership
interest as on interest on
31st Mar. 06 31st Mar. 05
JOINT VENTURE
Birla NGK Insulators Limited (BNIPL) India 50% 50%
IDEA Cellular Limited (IDEA)
(4.28% upto September 28th, 2005) India 20.74% 4.28%
From 1st September, 2005:
Birla Sun Life Distribution Company Limited (BSDL) India 49.99%
Birla Sun Life Asset Management Company Limited (BSAMC) India 50.00%
Birla Sun Life Trustee Company Private Limited (BSTPL) India 49.80%
ASSOCIATE
Crafted Clothing Private Limited (CCPL)
(w.e.f. 26th October 2005) India 48.00% —
English Apparels Private Limited (EAPL)
(w.e.f. 15th February 2006) India 49.99% —
Harwood Garments Private Limited (HGPL)
(w.e.f. 15th February 2006) India 47.00% —
Birla Securities Limited (BSL)
(w.e.f. 1st September 2005) India 50.00%
The associate companies namely Crafted Clothing Private Limited (CCPL), English Apparels Private Limited (EAPL),
Harwood Garments Private Limited (HGPL) have become our wholly owned subsidiaries w.e.f August, 2006.
ACCOUNTING POLICIES
Most of the accounting policies of the Reporting Company and that of its Subsidiaries, Joint Ventures and Associates are
similar. However, since certain Subsidiaries / Joint Ventures / Associates are in the business which are distinct from that
of the Reporting Company and function in a different regulatory environment, certain accounting policies in respect of
investment, depreciation /amortisation etc. differ. The accounting policies of all the Companies are in line with generally
accepted accounting principles in India.
RESULTS OF OPERATION
Analysis of Income and Sales trend for the last three financial years ended March 31.
(Rs. Crores)
Fiscal 2004 Fiscal 2005 Fiscal 2006
Total Income 2,424.12 3,208.16 4,863.60
Profit before Depreciation/Amortization. Exceptional items 171.79 224.43 511.90
Technical know-howand
Profit before Exceptional items and Tax 44.95 94.14 286.93
Net profit after and minority interest 33.09 58.72 204.04
240
ADITYA BIRLA NUVO LIMITED
Comparison of Results of Operation
Comparison of the fiscal 2006 and fiscal 2005
Net Income from operations
Total income comprises of income from operation and other income. Income from operation will consist of income from 5
joint venture and 9 subsidiaries. The total income has increased from Rs 3,189.11 crores as on 31st March 2005 to Rs
4,830.34 crores as on 31st March 2006, which is an increase of 51.5%. This increase is on the basis of all round growth
across businesses supported by increased stake in Idea Cellular Limited, merger of Indo Gulf Fertilisers and Birla Global.
Our subsidiaries and joint venture contributed 45.3% to the consolidated revenue.
(Rs. crores)
Income from Operations Fiscal 2006 Fiscal 2005
Income from Sale of Products 2,845.11 2,045.52
Income from Services 1,903.15 1,207.64
Income from Financial Services 70.97 Nil
Export Benefit 16.72 23.54
Other Income 150.55 48.77
Total 4,986.50 3,325.47
Less: Excise duty 156.16 136.36
Net Income from Operations 4,830.34 3,189.11
Other Income
Other income has increased by 75% from Rs 19.05 crores for Fiscal 2005 to Rs 33.26 crores for Fiscal 2006 which is a
percentage increase of 74.6%. This increase is mainly due to the merger of Indo Gulf Fertilisers, which had a cash
surplus of Rs. 450 crores.
Operating Expenditure
The operating expenses has shown an increase of 45% from Rs 2,946.80 crores for Fiscal 2005 to Rs 4,247.87 crores
for Fiscal 2006. The increase is briefly explained below:
a) The increase in cost of raw material is in line with the increase in revenue of manufacturing businesses namely
Rayon, Garments, Carbon Black, Textiles and Insulators. Further, with the merger of Indo Gulf, the cost of raw
material increased by Rs. 206.06 crores.
b) The increase in the staff expenses is partly due to increase in salaries across the board and also due to merger of
Indo Gulf and Birla Global along with their subsidiaries has led to rise in staff expenses. Further, increase in equity
stake in IDEA has also contributed to increase in staff expenses.
c) The increase in manufacturing, selling expenses and other expenses is mainly due to merger of Indo Gulf and Birla
Global along with their subsidiaries and also due to the increase in equity stake in IDEA.
Profit before Interest, Depreciation/Amortisation, Tax and Exceptional items
There is an increase of 135.6% from Rs. 261.36 crores for Fiscal 2005 as compared to Rs. 615.73 crores for Fiscal 2006.
This increase is due to the overall increase in revenue and better operating efficiencies. Also, the merger of BGFL and
IGFL and increase of equity stake in IDEA has contributed to the increase in profit.
Interest Expenses
The interest expenses have increased by nearly 181.2% from Rs. 36.93 crores for Fiscal 2005 as compared to Rs.
103.83 crores for Fiscal 2006. This is due to the increase in the total borrowings during the period from Rs. 761.5 crores
to Rs. 2,365 crores. Total borrowings have increased manifold due to:
241
a) Merger of Birla Global effective September 1, 2006, which is in the business of borrowing and lending.
b) Borrowings made by ABNL for investment in IDEA.
c) Increase in equity stake in IDEA from 4.28% to 20.74%, which has high debt.
Depreciation and Amortisation
There is an increase in the depreciation by 72.7% from Rs. 130.29 crores for Fiscal 2005 as compared to Rs. 224.97
crores for Fiscal 2006. This increase is due to the acquisition of assets, consequent to the merger of IGFL and increase
in equity stake in IDEA on consolidated basis.
Net Profit after minority interest
The net profit has increased by 247% from Rs. 58.72 crores for Fiscal 2005 as compared to Rs. 204.04 crores for Fiscal
2006 on account of merged entity, new revenue centers added, better operating efficiencies and increase in equity stake
of IDEA. During the year, the Company made a provision of Rs. 96.81 crores towards current tax against Rs. 45.78
crores in the previous year due to higher profits. Also, Rs. 8.19 crores was paid towards Fringe Benefit Tax, which was
non-existent in the previous year.
Preference Share Capital
During the year the Company’s preference capital increased from Rs. 20.70 crores to Rs. 100.17 crores due to increase
in equity stake in IDEA cellular from 4.28% to 20.74% in September 2005.
Secured and Unsecured Loan
During the financial year 2006 the outstanding loan has increased to the tune of 210% from Rs. 761.49 crores as on
March 31, 2005 as compared to Rs. 2364.63 crores as of March 31, 2006. This is due to expansion and merger, which
the Company has undertaken. This makes the Company reasonably leveraged.
Fixed Assets
Fixed assets have increased from Rs. 1109.50 crores as on March 31, 2005 as compared to Rs. 2157.59 crores as of
March 31, 2006 on account of capital expenditure in various businesses mainly in Rayon and Textiles. Further, the
merger of IGFL and BGFL along with increase in equity stake in IDEA led to increase in fixed assets.
Investments
During the year, we have increased investment in both short term and long term investment. The investment portfolio
stood at Rs.2916.92 crores as on 31st March 2006 compared to Rs 1,468.63 crores as on 31st March 2005, a percentage
increase of 98%.
The consolidated revenue has crossed US$1 billion in the fiscal year 2005-06. The revenue breakup is as follows:
Others
0%
Tel ecom
8%
BPO
3%
Financi al
Services
1%
Life
Insurance
29%
Garments
13%
Insulators
5%
Fertilisers
8%
Textiles
11%
Carbon
Bl ack
12%
IT Services
2%
Rayon
8%
Others
0%
BPO
3%
IT Services
3%
Life
Insurance
30%
Garments
15%
Insulators
6%
Textiles
14%
Carbon
Black
15%
Telecom
3%
Rayon
11%
FISCAL 2006 FISCAL 2005
242
ADITYA BIRLA NUVO LIMITED
Comparison of the fiscal 2005 and fiscal 2004
Net Income from Operations
The net income has increased from Rs 2404.24 crores in Fiscal 2004 to Rs.3189.11 crores in Fiscal 2005. This is an
increase of 32.6%. This increase was due to the better performance across each business segment particularly Life
Insurance, BPO, Carbon Black and Telecom.
Other Income
The other income has been more or less at the same level.
Operating Expenditure
The operating expenditure has increased by 32.2% in Fiscal 2005 compared to Fiscal 2004. This increase is due to the
increase in the products produced and sold which is reflected in the increase in revenues. The increase in staff cost is
partly due to yearly upward revision of salaries and wages accompanied by cost of hiring new employees especially in
the growth businesses like BPO and Life Insurance. Manufacturing and selling expenses have increased in line with the
overall expenses.
Profit before Interest, Depreciation/Amortisation, Tax and Exceptional items
The profit before Interest, depreciation/amortization, tax and exceptional items is at Rs. 261.36 crores in Fiscal 2004
compared to Rs. 204.14 in Fiscal 2003. There is a growth of 28.0% compared to the last financial year.
Interest Expenses
The net interest expense is showing increment of 14.2%. This is due to the lower interest income as the surplus funds
were used for meeting working capital and capex requirement.
Depreciation and Amortisation
There is a marginal increase in depreciation due to capex. The Company had provided additional depreciation of Rs. 6.2
crores in fiscal 2004, pursuant to change in accounting estimate.
Net Profit
The net profit along with its subsidiaries and joint venture has shown an increase of 77.5% mainly driven by Garments,
Textiles, BPO and Telecom businesses and curtailment of losses in IT business.
Secured and unsecured Loans
Our Company has increased the percentage of secured and unsecured loan. The secured loan has increased from Rs
551.15 crores as on Fiscal 2004 to Rs 699.33 crores as on Fiscal 2005 and the unsecured loan has increased from Rs
37.16 crores in Fiscal 2004 to Rs 62.16 crores.
Fixed Assets
Fixed assets have increased to the tune of 11.6%. Major Capex incurred were capacity addition of 1,000 tpa in VFY,
doubling of wool combing facility to 8,000 tpa, new Corporate office, rapid expansion of seats in BPO and strengthening
of networks in Telecom.
Working Capital
The working capital of the Company is showing an increase of 41.0%. This increase is due to the increase in sales aided
by new capacities going on stream.
Investments
Increase in investments in Fiscal 2005 compared to Fiscal 2004 to the tune of 67% is on account of investments made
on behalf of policyholders.
243
Comparison of the fiscal 2003 and fiscal 2004
Net Income from Operations
The net income has increased from Rs 1764.04 crores in Fiscal 2003 to Rs. 2404.24 crores in Fiscal 2004. This is an
increase of 36.29%. This increase was due to better performance of Life Insurance, Garments and Textiles business. We
had acquired TransWorks, our BPO subsidiary in July 2003, which further contributed to growth.
Other Income
The other income has shown marginal growth.
Operating Expenditure
The operating expenditure has increased 40% in Fiscal 2004 as compared to Fiscal 2003. This increase is due to the
increase in the products produced and sold mainly in Garments, Textiles and Insulators, which is reflected in the increase
in revenues. The marginal increase in staff cost is hiring of new employees mainly in Life Insurance business. Further,
with the acquisition of TransWorks new employees were added leading to increased salaries.
Profit before Interest, Depreciation/Amortisation, Tax and Exceptional items
The profit before Interest, depreciation/amortization, tax and exceptional items is Rs. 204.14 crores in Fiscal 2004 as
compared to Rs. 198.56 crores in Fiscal 2003. This growth was supported by higher profits in Garments, Carbon Black
and Telecom business and lower losses in IT Services business. The growth was however subdued due to lower profit in
Rayon business and higher losses in Insulators and Life Insurance business.
Interest Expenses
The net interest expense has shown a decrease of 20.60%. This was due to the reduction in unsecured loan.
Depreciation and Amortisation
There is marginal increase in depreciation due to capex mainly in Garments and Life Insurance business. Further the
acquisition of TransWorks increased the depreciation charge. The increase compared to last year is to the tune of 16.9%.
Net Profit
The net profit along with subsidiaries and joint ventures has shown a decrease of 9.8% mainly because of lower profits
in Rayon business and higher losses in Life Insurance and Insulators business.
Secured and unsecured Loans
Our Company has increased the percentage of secured and unsecured loans. The secured loans have increased from
Rs 372.23 crores as on Fiscal 2003 to Rs 551.75 crores as on Fiscal 2004 and the unsecured loans have decreased
from Rs 64.47 crores in Fiscal 2003 to Rs 37.16 crores in Fiscal 2004.
Fixed Assets
Fixed assets have increased to the tune of 4.69%. Major capex incurred during the year were expansion of Carbon Black
capacity and increase of networks in Idea. Further, acquisition of TransWorks, our BPO subsidiary added to the fixed
assets.
Working Capital
The working capital of the Company was showing a decrease of 8.3%. This decrease is due to the increase in current
liabilities and decrease in Loans and advances.
244
ADITYA BIRLA NUVO LIMITED
Cash Flow Analysis
Rs. Crores
PARTICULARS March 31, 2004 March 31, 2005 March 31, 2006
SOURCES OF CASH
Cash flow from operations (Net of Tax) 157.71 190.22 502.04
Change in valuation of liabilities in respect of life policies 397.44 684.12 989.47
Proceeds from issue of Shares to Minority 27.90 15.60 28.60
Proceeds from Borrowings 154.05 173.96 710.59
Others 14.88 19.25 24.11
Total 751.98 1,083.15 2254.81
USES OF CASH
Net Capital Expenditure 171.09 242.82 412.63
Investments (Net) 546.72 636.16 1413.48
Increase/(Decrease) in Working Capital (45.07) 138.04 212.72
Dividend paid 25.33 27.08 27.31
Interest Expenses (Net) 39.91 37.16 100.84
Increase/(Decrease) in Cash and Cash Equivalents 14.00 1.89 87.83
Total 751.98 1,083.15 2254.81
Cash Flow Statement Analysis
Comparison of Fiscal 2006 and Fiscal 2005
Cash flow from operation
Cash flow from operation increased from Rs. 190.22 crores to Rs. 502.04 crores due to higher net profit, depreciation and
interest expenses as explained earlier.
Change in valuation of liabilities in respect of life policies
In the Life Insurance business, reserves are created to meet the future outflow on account of claims made by the
policyholders. The same has increased in line with the growth in the business.
Proceeds from issue of Shares to Minority
In the life insurance business, Rs. 110 crores was infused towards share capital in fiscal 2006 against Rs. 60 crores in
fiscal 2005. The Life insurance business has stepped up its expansion plan in the fiscal 2006 requiring higher capital.
Proceeds from Borrowings
The proceeds from borrowings increased from Rs. 173.96 crores to Rs. 710.59 crores due to investments in Idea Cellular
and Birla Sun Life Insurance apart from ongoing capital expenditure.
Net Capital Expenditure
Net capital expenditure has increased compared to the last financial year on account of capital expenditure in various
businesses mainly in Rayon, Textiles and Telecom businesses.
Investments (Net)
Long Term Strategic Investment includes increase in equity stake in Idea Cellular and infusion of share capital in Birla
Sun Life Insurance among others.
245
Interest Expenses (Net)
The net interest expenses have increased from Rs 37.16 crores to Rs 100.84 crores in fiscal 2006. This is due to the
increase in the total borrowings from Rs. 761.5 crores to Rs. 2,365 crores. Total borrowings have increased manifold due
to:
a) Merger of Birla Global effective September 1, 2006, which is in the business of borrowing and lending.
b) Borrowings made by ABNL for investment in IDEA.
c) Increase in equity stake in IDEA from 4.28% to 20.74%, which has high debt.
Comparison of Fiscal 2005 and Fiscal 2004
Cash flow from operation
Cash flow from operation increased from Rs. 157.71 crores to Rs. 190.22 crores due to higher net profit as explained
earlier.
Change in valuation of liabilities in respect of life policies
In the Life Insurance business, reserves are created to meet the future outflow on account of claims made by the
policyholders. The same has increased in line with the growth in the business.
Proceeds from issue of Shares to Minority
In the life insurance business, Rs. 60 crores was infused towards share capital in fiscal 2005 against Rs. 110 crores in
fiscal 2004.
Proceeds from Borrowings
The proceeds from borrowings increased from Rs. 154.05 crores to Rs. 173.96 crores due to ongoing capital expenditure
and routine working capital requirement.
Net Capital Expenditure
Net capital expenditure has increased compared to the last financial year on account of capital expenditure in various
businesses mainly in Rayon and Textiles businesses.
Interest Expenses (Net)
The interest expenses have decreased from Rs 39.91 crores to Rs 37.16 crores in fiscal 2005. This is due to the lower
interest rate prevailing in the market.
Quantitative and Qualitative Disclosures about Market Risk
Currency Exchange Rates
While our principal revenues are in Rupees, we have also borrowed funds in JPY. Principal and interest payments on
these borrowings are denominated in JPY. In addition, we are exposed to foreign exchange fluctuations in respect of
international trade of products and services. We hedge our exposure at an appropriate time based on professional advice
for maximum benefits. However, we cannot assure that it will always work out in our favour and fully protect us from
foreign exchange exposure.
Interest Rates
Financing costs are the most important expenditure. We are subject to risks arising from changes in interest wherever the
prescribed interest rates are not fixed. Further, interest on working capital finance is quite material in our case. As a
mitigation of risk, all our businesses are much less working capital intensive and further, through optimal use of other
instruments, we try to keep the cost of working capital lower.
Off-Balance Sheet Arrangements
Some of our operating leases for our plants and machinery and office premises are not reflected in our balance sheet. As
of June 30, 2006, we were not a financial guarantor of obligations of any unconsolidated entity, and we were not a party
246
ADITYA BIRLA NUVO LIMITED
to any material off-balance sheet obligation or arrangement except as stated as contingent liability in our audited financial
statements.
Significant Developments after June 30, 2006 that may affect the Future of our Operations
Except as stated in this offer document and in compliance with AS 4, to our knowledge no circumstances have arisen
since the date of the last financial statements as disclosed in this offer document which materially and adversely affect or
are likely to affect, the trading and profitability of the Company and our subsidiary (taken as a whole), or the value of the
consolidated assets or their ability to pay their material liabilities within the next 12 months.
Unusual or Infrequent Events or Transactions
There have been no other events or transactions to our knowledge, which may be described as “unusual” or “infrequent”,
except as disclosed as non-recurring items in the section titled “Management Discussion and Analysis of Financial
Conditions and Results of Operations”.
Seasonality of Businesses
Fertilisers business is seasonal in nature depending on crop cultivation patterns, with a major portion of sales arising in
the first and second quarter of the financial year. The business registers the maximum of its sales during Kharif season
(April to September) as compared to Rabi season.
Significant Economic/ Regulatory Changes
Except as described in section “Regulations and Policies” in this offer document, there have been no significant economic/
regulatory changes.
Known Trends or Uncertainties
Except as described in this offer documents in general and the section titled “Risk Factors” and “Management Discussion
and Analysis of Financial Conditions and Results of Operations”, in particular, to our knowledge, there are no known
trends or uncertainties that have or had or expected to have any material adverse impact on revenues or income of our
Company from continuing operations.
Future Relationship between Cost and Income
There is no future relationship between cost and income that will have a material adverse impact on the operations and
finances of our Company.
New Products or Business Segment
To our knowledge, there are no new products or business segments, which are planned by our Company.
Competitive Conditions
Refer to the sections titled “Our Business” and “Risk Factors” regarding competition on pages 41 and viii respectively of
this Letter of Offer.
247
MATERIAL DEVELOPMENTS
Recent Developments
Information as required by the Government of India, Ministry of Finance circular No. F2/5/SE/76 dated February 5, 1977
as amended vide their circular of even number dated March 8, 1977:
1. Working Results of the Company on Standalone basis.
Unaudited Financial results for the period ended October 31, 2006:
(In Rs. crore)
Total Sales 1,948.95
Other Income 32.04
Total Income 1,980.99
PBDIT 353.75
Interest (net of income) 93.52
Provision for Depreciation 74.31
Provision for Tax 67.06
Profit After Tax 118.86
2. Save as stated elsewhere in the Letter of Offer, there are no material changes and commitments, which are likely
to affect the financial position of the Company since September 30, 2006 (i.e. last date up to which audited
information is incorporated in the Letter of Offer)
3. a) Week end prices of Equity Shares of the Company for the last four weeks on the BSE and NSE are as below:
Week Ended on Closing Rate BSE (Rs.) Closing Rate NSE (Rs.)
November 17, 2006 1,072.75 1,058.15
November 24, 2006 1,108.95 1,103.00
December 1, 2006 1151.45 1151.50
December 8, 2006 1202.65 1203.30
b) Highest and Lowest Price of the Equity Share of the Company on BSE and NSE during the period April 1,
2005 to March 31, 2006 (for the last year):
Highest (Rs.) Date Lowest (Rs.) Date
BSE 777.0 February 7, 2005 388.5 May 2, 2005
NSE 776.7 February 7, 2006 387.0 May 2, 2005
4. The Board of Directors of the Company has by way of a resolution dated October 19, 2006 approved the merger
of the Rajshree Gases division with the Indo Gulf Fertilizers division with effect from October 1, 2006. Pursuant to
this merger, all properties, assets and liabilities/obligations of the Rajshree Gases division shall stand transferred to
the Indo Gulf Fertilisers division.
5. Pursuant to an agreement dated November 17, 2006 between Aditya Birla Nuvo Limited (“ABNL”), Laxminarayan
Investment Limited, NGK Insulators Limited (“NGK”) and Birla NGK Insulators Private Limited (“Birla NGK”), the joint
venture between forming Birla NGK shall be terminated and Birla NGK will become a subsidiary of ABNL. It will be
known by its new name ‘Birla NGK Insulators Limited’. This arrangement will take effect from December 26, 2006
(“Completion Date”) or such earlier date as may be mutually decided by ABNL and NGK in writing. There will be a
cooling off period of six months from the Completion Date. The marketing and know-how agreement signed between
ABNL and NGK shall stand terminated upon termination of their joint venture agreement. There would be no further
rights and obligations attaching to ABNL and NGK except those already accrued prior to the Completion Date.
248
ADITYA BIRLA NUVO LIMITED
Consequent to the acquisition of Birla NGK by ABNL from NGK, Birla NGK has become a subsidiary of ABNL by
virtue of section 3(iv) (c) of the Companies Act, 1956. It is proposed to change the name of Birla NGK Insulators
Limited to Aditya Birla Insulators Limited , subject to neccessary approval(s).
6. By a letter dated November 22, 2006, Aditya Birla Nuvo Limited has agreed to the acquisition of its subsidiary
Aditya Birla Telecom Limited by Idea Cellular Limited for an aggregate consideration of Rs. 10 Crores.
7. Pursuant to the terms of the agreement between P5 Asia Investment (Mauritius) Limited (“Providence”), Aditya Birla
Nuvo Limited (“ABNL”) and Birla TMT Holdings Limited (“Birla TMT”) dated October 23, 2006 (the “Governance and
Exit Rights Agreement”) relating to the general governance and the affairs of Idea, ABNL has agreed to indemnify
Providence from and against any and all claims, demands, liabilities, obligations, losses, fines, costs arising out of
any inaccuracy or breach of any fundamental warranty. Further, the Governance and Exit Rights Agreement provides
that except in the case of fraud, gross negligence or wilful default, ABNL shall not be required to indemnify
Providence for an amount exceeding Rs. 18,480,000,000. Further, any claims, except those arising out of fraud,
gross negligence or wilful default, must be brought against ABNL within two years from the effective date of the
Governance and Exit Rights Agreement. For further details, please see the section titled “History of the Company
and other Corporate Matters” on page 65 of this Letter of Offer.
249
DESCRIPTION OF CERTAIN INDEBTEDNESS
1. Our long term secured borrowings on a standalone basis as on September 30, 2006 are as follows:
Lender Total Date Effective Repayment Security
sanc- of Rate of Terms
tioned availment Interest (%)
Amount
(Rs./Crs)

ABN Amro Bank 13.05 June 29, 2005 5.98 Secured by way of first pari-passu
ABN Amro Bank 13.06 July 29, 2005 6.03
charge created by hypothecation of
ABN Amro Bank 13.05 August 10, 2005 5.98
Bullet payment movables properties (except current
assets) situated at Veraval, Rishra,
Jagdi shpur (Argon Gas) and
Renukoot, subject to prior charge(s)
created on certain assets in favour of
a Financial Institution
Bank of Baroda 45.00 May 31, 2006 8.494 10 equal half Term Loan secured by way of second
yearly install- pari-passu charge created by way of
ments from hypothecation of movable fixed assets
May 31, 2007. located at Veraval, Rishra, Jagdishpur
(Argon Gas), Renukoot, Bangalore
and Mumbai and current assets (save
180.00 June 6, 2006 8.602 10 equal half and except i nvest ment s) of t he
yearly install- Company located at Veraval, Rishra,
ments from Jagdishpur, Renukoot, Gummidipoondi,
May 31, 2007. Bangalore and Mumbai and mortgage
of i mmovabl e properti es of the
company situated at Veraval, Rishra,
Renukoot and Jagdi shpur (Argon
Gas).
BNP Paribas 22.49 Mar 15, 2005 5.96
Bullet payment
Secured by way of first pari-passu
charge created by hypothecation of
BNP Paribas 21.77 May 9, 2005 6.81 movable properties (Save and except
Current assets) of the Company
situated at Gummidipoondi.
BNP Paribas 23.38 Aug 8, 2006 7.91 To be secured by way of first pari-
passu charge created by way of
Bullet Payment mortgage over immovable properties
BNP Paribas 23.31 Sep 6, 2006 7.67 and a first pari-passu charge by way
of hypothecation of movable properties
(save and except stocks and book
debts) of the Company situated at
Gummidipoondi.
Citibank N A 75.00 January 19, 2006 7.11 Eight equal Term Loan secured by way of second
quarterly install- pari-passu charge created by way of
ments of hypothecation of movable fixed assets
Rs.937.5 lacs located at Veraval, Rishra, Jagdishpur
each. (Argon Gas), Renukoot, Bangalore
and Mumbai and current assets (save
Citibank N A 25.00 January 20, 2006 7.12 Eight equal and except i nvest ment s) of t he
quarterly install- Company located at Veraval, Rishra,
ments of Jagdishpur, Renukoot, Gummidipoondi,
Rs. 312.5 lacs Bangalore and Mumbai and mortgage
each from April of i mmovabl e pr oper t i es of t he
19, 2007 company situated at Veraval, Rishra,
Renukoot and Jagdi shpur (Argon
Gas).
250
ADITYA BIRLA NUVO LIMITED
Citibank N.A. 50.00 May 18, 2006 8.40 12 half yearly Term Loan secured by way of
Citibank N.A. 50.00 May 18, 2006 8.65
installments second pari-passu charge created
from by way of hypothecati on of
November18, movable fixed assets located at
2007. First 8 Veraval , Ri shra, Jagdi shpur
installments (Argon Gas), Renukoot, Bangalore
of Rs.228.75 and Mumbai and current assets
lacs, next 2 (save and except investments) of
installments the Company located at Veraval,
of Rs.850 lacs Gummidipoondi, Bangalore and
and next 2 Mumbai and mortgage of
installments i mmovabl e properti es of the
of Rs. 735 lacs company si tuated at Veraval ,
each. Rishra, Renukoot and Jagdishpur
(Argon Gas).
Corporation Bank 100.00 February 22 2006 7.40 Bullet payment Term Loan secured by way of first
pari -passu charge by way of
hypothecation of movable fixed
assets of the Fertiliser Division of
the Company si tuated at
Jagdishpur.
Export Import Bank 8.00 January 24 2002 7.00 11 equal half Term Loans secured by way of
of India yearly install- exclusive first charge on assets
ments of acquired there-against
Rs.72.72730
lacs each fronm
December 15,
2003
Export Import Bank 5.00 March 23 2006 7.00 16 equal half Term Loans secured by way of
of India yearly install exclusive first charge on assets
1.83 July 05 2004 ments of acquired there-against
Rs.42.6875
lacs each from
June 20, 2006
Hongkong Bank Plc 45.56 December 29 5.07 Bullet payment Secured by way of first pari-passu
2003 charge created by hypothecation of
movable properties (except Current
assets) of the Company situated at
Gummidipoondi.
Lender Total Date Effective Repayment Security
sanc- of Rate of Terms
tioned availment Interest (%)
Amount
(Rs./Crs)
251
Industrial 25.00 September 28, 7.2525 17 half yearly Term loans secured by way of first
Development Bank 2005 installments pari -passu charge creat ed by
of India Limited from July 1, mor t gage of t he i mmovabl e
2007. 1st four properties of the Company situated
installments of at Veraval , Ri shra, Jagdi shpur
Rs.25 lacs ( Ar gon Gas) , Renukoot and
each, next 4 hypothecation of movables (except
installments of books debts) at these locations.
Rs.50 lacs each,
next 4 install-
ments of
Rs.150 lacs
each and next
5 installments
of Rs.320 lacs
each.
Industrial 190.00 August 29, 9.03 4 equal half Term Loan to be secured by way of
Development Bank 2006 yearly install- second charge on all the immo-
of India Limited ments from vabl e and movabl e (i ncl udi ng
October 1, 2010. current assets) properties of the
company
Life Insurance 30.00 March 23, 2004 6.50 16 equal half Term loans secured by way of first
Corporation of India yearly install- pari -passu charge creat ed by
ments from mortgage of the immovable proper-
April 1, 2006 ties of the Company situated at
Veraval, Rishra, Jagdishpur (Argon
Gas), Renukoot and hypothecation
of movabl es (save and except
books debts) at these locations.
Life Insurance 10.00 October 1, 2004 7.00 16 half yearly Term loans secured by way of first
Corporation of India installments pari -passu charge creat ed by
from October mortgage of the immovable proper-
Life Insurance 40.00 October 28, 2004 7.00 1, 2006. 1st ties of the Company situated at
Corporation of India four installments Veraval, Rishra, Jagdishpur (Argon
of Rs.50 lacs Gas), Renukoot and hypothecation
each, next 4 of movabl es (save and except
installments of books debts) at these locations.
Rs.100 lacs
each, next 4
installments
of Rs.300 lacs
each and next
4 installments
of Rs.800 lacs
each.
Lender Total Date Effective Repayment Security
sanc- of Rate of Terms
tioned availment Interest (%)
Amount
(Rs./Crs)
252
ADITYA BIRLA NUVO LIMITED
Life Insurance 50.00 August 10, 2005 7.47 17 half yearly Term loans secured by way of first
Corporation of India instalments pari -passu charge creat ed by
from August 10, mortgage of the immovable proper-
2007. 1st fourt ties of the Company situated at
installment of Veraval, Rishra, Jagdishpur (Argon
Rs.100 lacs Gas), Renukoot and hypothecation
Life Insurance 50.00 December 9, 7.5064 each, next 4 of movabl es (save and except
Corporation of India 2005 installments of books debts) at these locations.
Rs.200 lacs
each, next 4
installments
of Rs.600
lacs each and
next 5 install-
ments of
Rs.1280 lacs
each.
State Bank of India 36.24 January 19, 4.22 8 equal half Foreign Currency Loan secured by
2004 yearly install- way of excl usi ve f i rst charge
ments of US created by hypothecation of Brand
$ 1 million Rights / Trade mark acquired there-
each from against.
April 25, 2004.
State Bank of India 100.00 November30, 7.0544 Bullet Payment Term Loan secured by way of
2005 exclusive first charge created by
hypothecation of Brand Rights /
Trade mark and movable properties
at Bangalore and first pari-passu
charge created by hypothecation of
the movable properties (except
current assets) at Veraval, Rishra,
Jagdishpur and Renukoot, subject
to prior charge(s)created on certain
assets i n favor of a Fi nanci al
Institution.
State Bank of India 160.00 June 12, 2006 8.9718 4 equal half Term Loan to be secured by way of
yearly install- second pari-passu charge to be
ments of created by way of hypothecation
Rs.4000 lacs and/ or mortgage of the movable
each from and/or immovable properties.
December 13,
2010.
State Bank of India 150.00 August 18, 2006 8.9718 9 equal half Term Loan to be secured by way of
yearly install- second pari-passu charge to be
ments of created by way of hypothecation
Rs. 1667 lacs and/ or mortgage of the movable
each from and/or immovable properties.
August 19, 2007
Ford Credit Kotak 0.05 October 27, 2004 7.61 59 Monthly
Finance installments.
Lender Total Date Effective Repayment Security
sanc- of Rate of Terms
tioned availment Interest (%)
Amount
(Rs./Crs)
253
ICICI Bank 0.11 February 24, 8.25 35 equal
2005 Monthly
installments.
Term Loans secured by way of
ICICI Bank 0.14 January 31, 2005 4.09 35 equal exclusive first charge on assets
Monthly acquired there-against
installments.
ICICI Bank 0.06 March 30,2005 8.25 35 equal
Monthly
installments.
ICICI Bank 0.07 April 18, 2005 5.80 35 equal
Monthly
instalments.
Sales Tax Loan from 30.60 July 1, 1997 Nil 6 equal yearly To be secured by way of second
GIIC Installment pari-passu charge over the fixed
assets of Carbon Black Plant at
Gummidipoondi
Sales Tax Loan from 37.07 March 1, 2000 Nil Ten years from To be secured by way of second
SIPCOT the date of pari-passu charge over the fixed
deferral assets of Carbon Black Plant at
Gummidipoondi
Lender Total Date Effective Repayment Security
sanc- of Rate of Terms
tioned availment Interest (%)
Amount
(Rs./Crs)
254
ADITYA BIRLA NUVO LIMITED
Our unsecured loan outstanding as on September 30, 2006 are as follows:
(Rs. Crores)
Lender Date of availment As on September
30, 2006
Fixed Deposits Various Dates 3.58
Bank of America January 19,2006 50.00
Bank of America September 22, 2006 40.00
Industrial Development Bank of India October 7, 2005 50.00
Industrial Development Bank of India September 28, 2005 40.00
IGEC Loan Trust May 3, 2006 215.00
Commercial Papers
CP-01 April 21, 2006 100.00
CP-02 May 08, 2006 50.00
CP-03 May 10, 2006 100.00
CP-04 May 10, 2006 50.00
CP-05 August 29, 2006 75.00
CP-06 September 20, 2006 25.00
CP-07 September 25,2006 20.00
CP-08 September 26, 2006 20.00
CP-09 September 27, 2006 50.00
Inter Corporate Deposits
Birla Insurance Advisory Limited January 1, 2006 4.23
Birla Insurance Advisory Limited February 22, 2006 0.22
BGFL Corporate Finance Private Limited May 29, 2006 1.52
The loan agreement provide for certain negative and restrictive covenants that are summarized below;
1. It is provided that the Company shall not pay any dividend to its shareholders if it is in default under a loan
agreement.
2. It is provided that the Company shall not without prior written consent of its lenders enter into any merger, consideration
or amalgamation.
3. It is provided that the lender may appoint a nominee director on the Board of the Company in the event of a default under
the loan.
4. It is provided that in case of default, the lenders shall have the right to convert at its option the whole of the outstanding
amount of the loans intpo fully paid up equity shares of the Company. option the whole of the outstanding amount of the
loans into fully paid up equity shares of the Company.
255
OUTSTANDING LITIGATIONS AND DEFAULTS
Except as described below, there are no outstanding litigation, suits or criminal or civil prosecutions, proceedings or tax
liabilities against our Company, our Directors, our Promoters or group companies and there are no defaults, non payment
of statutory dues, over dues to banks/ financial institutions, defaults against banks/ financial institutions/ small scale
undertaking(s), defaults in dues payable to holders of any debentures, bonds or fixed deposits, issued by our Company
(including past cases where penalties may or may not have been awarded and irrespective of whether they are specified
under paragraph (i) of part 1 of Schedule XIII of the Companies Act, 1956). The following are the outstanding or pending
litigations or suits or proceedings against the Company involving a claim of Rupees 0.1 Crore and more, and criminal
complaints or cases, defaults, non-payment or overdues of statutory dues, proceedings initiated for any economic or civil
offences and disciplinary action taken by SEBI or stock exchanges against the Company, its subsidiaries and other group
companies and the outstanding or pending litigations or suits or proceedings against the subsidiaries and other group
companies. The compiled position of claims against the Company involving an amount of less than Rupees 0.1 Crores
are given separately.
A. CRIMINAL CASES
I) Criminal cases filed against the Company:
i. The Factory Inspector has filed criminal case No. 3153/98 before the Judicial Magistrate First Class,
Veraval against S.S. Bhatia of the Company under the Factories Act, 1948 in connection with Chlorine
Gas leakage on September 12, 1997. S.S. Bhatia expired long back and the matter has not been listed
for further hearing.
ii. The Factory Inspector has filed criminal case No. 910/01 before the Judicial Magistrate First Class,
Veraval against C.L. Das (Factory Manager) of the Company, under section 32 (a) of Factories Act 1948
in connection with a fatal accident involving late Dhana Suda on December 13, 2000 who was on
contract labour for fabrication work. No order has been passed as yet and the matter is currently
pending.
iii. The Government Labour Officer has filed criminal complaint No. 687/05 before the Judicial Magistrate
First Class, Veraval against K.C. Jhanwar (Executive President) and Arvind Jain (Vice President) of the
Company under Industrial Disputes Act, 1947, Rules in connection with violation of the Industrial Disputes
Act, 1947 and Rules for not conducting ‘JMC’ election. No order has been passed as yet and the matter
is currently pending.
iv. The Apprentice Advisor & Deputy Director (Training) Regional Office, Rajkot has filed criminal case
No.1036/05 before the Court of the First Class Judicial Magistrate, Veraval against the Company on the
grounds of filling a lower number of apprentices than as required under the allotted quota. The amount
involved is Rs. 0.0212 Crores. No order has been passed as yet and the matter is currently pending.
v. Big Shot Universe has filed criminal appeal No. 15004/2006 in the Court of the Additional Sessions
Judge, Bangalore against a fine of Rs. 0.247 Crores imposed on them by the Additional Chief Metropolitan
Magistrate for issuing a cheque of Rs. 0.2 Crores to the Company, which got dishonoured. No order has
been passed as yet and the matter is currently pending.
vi. Little England has filed criminal appeal No. 1444/2006 in the Fast Track Court VIII, Bangalore challenging
the judgment passed against them by the Additional Chief Metropolitan Magistrate, Bangalore for issuing
a cheque of Rs. 0.084 Crores to the Company, which got dishonoured. No order has been passed as
yet and the matter is currently pending.
vii. Orissa Mining Corporation Limited has filed appeal No. 9 of 2004 in the Court of the Sessions Judge,
Koraput at Jeypore against order dated November 4, 2003 of the Sub-Divisional Judicial Magistrate.
Orissa Mining Corporation Limited had filed criminal case No. 17/2002 under sections 447, 379 and
420 of the Indian Penal Code against the Company and two officials D. Bhandari and K.B.R. Murthy in
the Court of the Sub-Divisional Judicial Magistrate, Koraput which alleged that the Company trespassed
into their area with an intention to cheat and forcibly took their machines and other valuable equipments
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ADITYA BIRLA NUVO LIMITED
from the mining site without the permission of Orissa Mining Corporation Limited. The Court set aside
the impugned order of the Sub-Divisional Judicial Magistrate and ordered the lower court to proceed
according to law. The Company has filed an application in the High Court of Orissa under section 482
of the Criminal Procedure Code to quash the complaint filed by the Orissa Mining Corporation Limited.
No order has been passed as yet and the matter is currently pending.
viii. The Chief Agricultural Officer, Faridkot has filed a criminal complaint No. 22/95 dated January 20, 1995
before Additional Sessions Judge, Faridkot against K.K. Aggarwal, (General Manager), partners of the
distributor and salesman of Ashok Kumar Garg and Company for violation of Section 19 (i) (a) of
Fertiliser Control Order, 1985. The Chief Agricultural Officer, Moga (“CAO”) has filed a supplementary
complaint dated March 18, 2004 before the Additional Sessions, Moga and has mentioned that Indo
Gulf Fertilisers and Chemicals Corporation Limited along with others is responsible under section 24 of
the Fertiliser Control Order, 1985. On June 17, 1993 the fertilizer inspectors took a sample of ‘D.A.P.
18:46%’ from a shop in Baghapurana and after analysis of the sample found it to be non-standardized.
The manufacturer of the sample is Indo Gulf Fertilizers and Chemicals Corporation Limited (“IGFL”). It
has also been prayed that IGFL is liable under section 10 of the Essential Commodities Act, 1955 and
may be impleaded as an additional accused. A revision petition has been filed by the Company before
the High Court at Chandigarh and the Court has stayed the proceedings of the trial court at Moga. The
matter is currently pending.
ix. Charanjeet Singh had filed case No. 2339/02 against Kumar Mangalam Birla, S.K. Mitra and an
exemployee of the Lucknow Branch Ashish Goel in the Court of the Metropolitan Magistrate, Kanpur for
cheating, mischief and causing damage under sections 417, 418, 419 and 420 of the Indian Penal
Code in relation to a hire purchase transaction of the Company. The Company then filed criminal
miscellaneous petition nos. 8607/03 and 8608/03 on behalf of Kumar Mangalam Birla and S.K. Mitra in
the High Court at Allahabad under section 482 of the Criminal Procedure Code, 1973 against Charanjeet
Singh. A second-hand Maruti was taken under hire purchase from the Company but Charanjeet Singh
alleged that registration papers were not given to him and as a result he could not use the car as a taxi.
He thus suffered losses and requested the Court of the Metropolitan Magistrate, Kanpur to summon
Kumar Mangalam Birla and S.K. Mitra and try and convict them. The High Court at Allahabad granted a
stay on the proceedings at the Court of the Metropolitan Magistrate, Kanpur vide its order dated October
16, 2003. The stay is still in force and there are no further developments in the case.
x. B.N. Sharma, a fixed deposit holder has filed a criminal complaint under section 138 of the Negotiable
Instruments Act, 1881 against the Company, the Chairman and S.K. Mitra, the then Managing Director of
the erstwhile Birla Global Finance Limited (“BGFL”- now part of the Company) for an amount of
Rs. 2,83,000 in the Court of the Metropolitan Magistrate, Karkadooma, Delhi. The Court ordered for
issuance of process against the Company, the Chairman and S.K. Mitra. The Company has filed criminal
revision petition under section 397 read with section 399 of Criminal Procedure Code against B.N.
Sharma in the Court of Additional Sessions Judge, Karkardooma, Delhi for setting aside the impugned
order for issue of process dated February 28, 2005 passed by the Court of Metropolitan Magistrate,
Karkardooma, Delhi and for staying the proceedings before the trial court. This case does not concern
Kumar Mangalam Birla as he was not the Chairman of BGFL when the case was filed. The matter is
currently pending.
II) Criminal cases filed by the Company:
i. The Company has filed case No. 2582/92 under section 418, 465 and 468 of the Indian Penal Code in
the Court of Judicial Magistrate, First Class at Veraval against Beeline Shipping Agencies Private Limited
and its Managing Director (accused) for delivery of cargo, which was less than the figure stated in the
bill of lading and invoice, and for forging documents to defeat the complaint of the Company. The
Company has requested the Court to issue a process/non-bailable warrant against the accused and
punish the accused according to law. No order has been passed as yet and the matter is currently
pending.
ii. The Company has filed Case Nos. 349/03 against an ex-employee Gopal Sharma under section 630 of
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the Companies Act, 1956 in the Court of the Judicial Magistrate First Class at Veraval for failure to
vacate the quarters allotted to him despite being dismissed by the Company. No order has been passed
as yet and the matter is currently pending.
iii. The Company has filed criminal appeal No. 379/06 to 395/06 against 17 ex-employees under section
630 of the Companies Act, 1956 in the High Court of Gujarat at Ahmedabad for failure to vacate the
quarters allotted to them despite being dismissed by the Company. The Company has appealed against
order dated December 4, 2004 passed by the District and Sessions Judge in Case Nos. 1140/05 to
1156/05. No order has been passed as yet and the matter is currently pending.
iv. The Company has filed a criminal case No. 3324 of 2005 against Ralson Carbon Black Limited in the
Court of the Chief Metropolitan Magistrate, Robertsganj, Sonebhadra (Uttar Pradesh) alleging non-
payment of Rs. 0.0335 Crores due to cheque given by the accused getting bounced. The Company has
requested the Court to punish the offence under sections 139 and 141 of the Negotiable Instruments
Act, 1881 and section 420 of the Indian Penal Code and to impose a penalty of twice the amount and
pay the amount in lieu of the dishonoured cheque to the Company. No order has been passed as yet
and the matter is currently pending.
v. The Company has filed 15 cases against Ralson Carbon Black Limited in the Court of Chief Metropolitan,
Magistrate, Patiala House Court, New Delhi under section 138 of the Negotiable Instruments Act, 1881
and under section 420 of the Indian Penal Code for the aggregate recovery of Rs. 2.25 Crores. No order
has been passed as yet and the matter is currently pending.
vi. The Company has filed case No. 796/2004 against Ezy Slides Fastener and another (defendants) under
section 467 of the Indian Penal Code in the Court of the Additional Chief Metropolitan Magistrate,
Bangalore. The defendants were suppliers from whom the Company purchased zips and other accessories.
Over time the transactions between the Company and the defendants reduced but the defendants
forged the signatures of the officials of the Company and fabricated documents. The defendants have
also asked the Company to pay Rs. 0.0252 Crores as central sales tax payable on purchase made by
the Company from the defendants. The Company has now filed a criminal complaint for fraud and
forgery. No order has been passed as yet and the matter is currently pending.
vii. The Company has filed case No. 3443/2003 against R.S. Enterprises and another in the Court of the
Additional Chief Metropolitan Magistrate, Bangalore under section 138 of the Negotiable Instruments
Act, 1881 for dishonour of cheque amounting to Rs. 0.059 Crores. No order has been passed as yet
and the matter is currently pending.
viii. The Company has filed case No. 348/2004 against Vasanth Colour Labs in the Court of the Additional
Chief Metropolitan Magistrate, Bangalore under section 138 of the Negotiable Instruments Act, 1881 for
dishonour of cheque amounting to Rs. 0.05 Crores. No order has been passed as yet and the matter is
currently pending.
ix. The Company has filed case No. 14586/2004 against Narang Agencies in the Court of the Additional
Chief Metropolitan Magistrate, Bangalore under section 138 of the Negotiable Instruments Act, 1881 for
dishonour of cheque amounting to Rs. 0.0663 Crores. No order has been passed as yet and the matter
is currently pending.
x. The Company has filed case No. 2022/2004 against Anupam in the Court of the Additional Chief
Metropolitan Magistrate, Bangalore under section 138 of the Negotiable Instruments Act, 1881 for
dishonour of cheque amounting to Rs. 0.0057 Crores. No order has been passed as yet and the matter
is currently pending.
xi. The Company has filed case No. CR/472/2006 against Sarathi Spinning Mills in the Court of the
Additional Chief Judicial Magistrate, Serampore, Hooghly alleging dishonour of cheque issued under
clause (b) of the proviso to section 138 of the Negotiable Instruments Act, 1881. Sarathi Spinning Muills
had issued a cheque amounting to Rs. 0.002 Crores to the Company, which was dishonoured. The
Company has requested the Court to prosecute the defendant as it deems fit. The matter is currently
pending.
xii. The Company has filed Case No. CR/556/2006 against Sarathi Spinning Mills in the Court of the
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ADITYA BIRLA NUVO LIMITED
Additional Chief Judicial Magistrate, Serampore, Hooghly alleging dishonour of cheque issued under
clause (b) of the proviso to sectiom 138 of the Negotiable Instruments Act, 1881. Sarathi Spinning Mills
had issued a cheque amounting to Rs. 0.005 to the Company, which was dishonoured. The Company
has requested the Court to prosecute the defendant as it deems fit. The matter is currently pending.
xiii. The Company has filed Case No. CR/619/2006 against Sarathi Spinning Mills in the Court of the
Additional Chief Judicial Magistrate, Serampore, Hooghly alleging dishonour of cheque issued under
clause (b) of the proviso to section 138 of the Negotiable Instruments Act, 1881. Sarathi Spinning Mills
had issued a cheque amounting to Rs. 0.0125 Crores to the Company, which was dishonoured. The
Company has requested the Court to prosecute the defendant as it deems fit. The matter is currently
pending.
xiv. The Company has filed Case No. CR/632/2006 against Sarathi Spinning Mills in the Court of the
Additional Chief Judicial Magistrate, Serampore, Hooghly alleging dishonour of cheque issued under
clause (b) of the proviso to section 138 of the Negotiable Instruments Act, 1881. Sarathi Spinning Mills
had issued a cheque amounting to Rs. 0.0150 Crores to the Company, which was dishonoured. The
Company has requested the Court to prosecute the defendant as it deems fit. The matter is currently
pending.
xv. The Company has filed Case No. CR/633/2006 against Sarathi Spinning Mills in the Court of the
Additional Chief Judicial Magistrate, Serampore, Hooghly alleging dishonour of cheque issued under
clause (b) of the proviso to section 138 of the Negotiable Instruments Act, 1881. Sarathi Spinning Mills
had issued a cheque amounting to Rs. 0.0126 Crores to the Company, which was dishonoured. The
Company has requested the Court to prosecute the defendant as it deems fit. The matter is currently
pending.
xvi. The Company has filed Case Nos. 94/2000, 95/2000, 98/2000, 99/2000, 100/2000, 101/2000, 102/2000,
133/2000, 134/2000, 135/2000, 395/2001, 396/2001 against Orissa Industries Limited, Rourkela
(defendants) and its Directors before the Chief Metropolitan Magistrate, Vishakhapatnam under section
138 of the Negotiable Instruments Act, 1881 for the dishonour of cheques amounting to Rs. 3.03 Crores.
The accused purchased sea water magnesia from the Company and issued the latter cheques for the
said amount, which got dishonoured. The Company has requested the Court to sentence the defendants
to a maximum period of imprisonment allowed under the Act and to direct the defendants to pay the
Company twice the amount covered by the cheque or as the Court thinks fit. No order has been passed
as yet and the matter is currently pending.
xvii. The Company has filed case No. 3900/2003 against Agarwal Traders and others in the Court of the
Chief Judicial Magistrate, Lucknow under section 138 of the Negotiable Instruments Act, 1881 for
dishonour of cheque amounting to Rs. 0.2677 Crores. No order has been passed as yet and the matter
is currently pending.
xviii. The Company has filed case No. 02/03 against Modern Fertilizers and others in the Court of the Chief
Judicial Magistrate, Kolkata under section 138 of the Negotiable Instruments Act, 1881 for dishonour of
cheque amounting to Rs. 0.0075 Crores. No order has been passed as yet and the matter is currently
pending.
xix. The Company has filed case No. 625/2005 against Harihar Prasad Barnwal and others in the Court of
the Chief Judicial Magistrate, Lucknow under section 138 of the Negotiable Instruments Act, 1881 for
dishonour of cheque amounting to Rs. 0.152 Crores. No order has been passed as yet and the matter
is currently pending.
xx. The Company has filed case No. 866/2005 against Vinod Kumar & Company and others in the Court of
the Chief Judicial Magistrate, Lucknow under section 138 of the Negotiable Instruments Act. 1881 for
dishonour of cheque amounting to Rs. 0.0535 Crores. No order has been passed as yet and the matter
is currently pending.
xxi. The Company has filed two criminal cases in the courts at Kolkata amounting to Rs. 0.124 Crores. The
cases have been filed under section 138 of the Negotiable Instruments Act, 1881 in regards to dishonour
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of cheques. No order has been passed as yet and the matters are currently pending.
xxii. The Company has filed a criminal case relating to dishonour of cheque under section.138 of the
Negotiable Instruments Act, 1881 amounting to Rs. 0.081 Crores issued by a customer. Out of the said
amount Rs. 0.41 Crores has been received. No order has been passed as yet and the matter is
currently pending.
xxiii. The Company has filed 32 other criminal cases at various forums in the country. The matters are
currently pending.
xxiv. There are approximately 2343 other criminal cases filed by the Company under section 138 of the
Negotiable Instruments Act, 1881 pending at various forums in the country aggregating to Rs. 9.69
Crores. The matters are currently pending.
xxv. The Company has filed a criminal complaint No. 327/91 in the Court of First Class, Judicial Magistrate,
Veraval on March 21, 1990 against Mr. Rajeev Agarwal for recovery of 250 duplicate shares and the
benefits thereon. Despite selling off original shares, Mr. Rajeev Agarwal applied for issue of 250 duplicate
shares which were issued to him. The matter is currently pending.
B. LABOUR SUITS
I) a) Labour suits filed against the Company in excess of Rs. 0.1 Crores:
i. The workmen/unions have filed adjudication case No. 206/2001 before the Industrial Tribunal, Rajkot
against the Company for demanding wages for the period of partial strike from November 5, 2001 and
total strike from November 14, 2001 to January 21 2002. The amount under adjudication is Rs. 4.68
Crores. The Company has submitted that the workmen/unions are not entitled to claim wages for that
period. No order has been passed as yet and the matter is still pending.
ii. An industrial dispute I.E. No.136/2005 has been raised by the workmen of Perfect Apparels Private
Limited against the management of Perfect Apparels Private Limited. The Company was also made a
party to the same dispute. It was alleged that the Company was controlling and supervising the
management of Perfect Apparels Private Limited and the latter was one of the units of the Company,
hence, the management of the Company was also responsible for the illegal and unjustified closure of
Perfect ApparelsPrivate Limited. It was also contented that the Company be requested to reinstate all
the workers of Perfect Apparels Private Limited with continuity of service, full back wages and all other
consequential benefits. The Company has filed a counter statement dated April 17, 2006. The matter is
currently pending.
I) b) Labour suits filed against the Company for less than Rs. 0.1 Crores:
i. There are 105 other labour related cases which have been filed against the Company for claims
aggregating to Rs. 3.4 Crores. All the matters are currently pending.
II) Labour suits filed by the Company for less than Rs. 0.1 Crores: :
i. The Company has filed two labour related cases before the High Court at Ahmedabad against Labour
Court judgements aggregating to Rs. 0.0911 Crores. No order has been passed as yet and the matters
are currently pending.
C. INCOME-TAX PROCEEDINGS
Appeals filed by the Company before the Commissioner of Income Tax (Appeal)
The Company has filed
i. an appeal before the Commissioner of Income Tax (Appeals), Mumbai against order dated March 30,
2005 of the Assistant Commissioner of Income Tax, Mumbai for the assessment year 2002-03 aggregating
tax impact of approximately Rs. 6.18 Crores, on the issues of rural development expenditure, live stock
expenditure, cenvat on closing stock of inputs, depreciation on rollover charges, expenses disallowed
under section 14A, leave salary provision and deduction under section 80 HHC from MAT income. No
order has been passed as yet and the appeal is currently pending.
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ADITYA BIRLA NUVO LIMITED
ii. The Company has filed an appeal before the Commissioner of Income Tax (Appeals), Mumbai against
order dated January 31, 2006 of the Assistant Commissioner of Income Tax, Mumbai for the assessment
year 2003-04 aggregating tax impact of approximately Rs. 3.76 Crores, on the issues of rural development
expenditure, live stock expenditure, cenvat on closing stock of inputs, depreciation on rollover charges,
expenses disallowed under section 14A, leave salary provision, deduction under section 80 HHC and
deduction under section 80 IA/80IB, etc. No order has been passed as yet and the appeal is currently
pending.
iii. The Company has filed an appeal before the Commissioner of Income Tax (Appeals), Mumbai against
order dated January 31, 2006 of the Joint Director of Income Tax, (OSD, International Taxation), Mumbai
for the assessment year 2003-04 aggregating tax impact of approximately Rs. 0.22 Crores, on the
issues of levying interest under section 234 (B), not to grant exemption under section 10 (6A) and
penalty proceedings under section 271 (1)(c). No order has been passed as yet and the appeal is
currently pending.
iv. The Company has filed three appeals before the Commissioner of Income Tax (Appeals), Mumbai
against orders under section 143(3) read with section 263 passed by the Assistant Commissioner of
Income Tax, Mumbai, dated August, 18, 2006 for assessment years 1987-88, 2001-02 and 2002-03
aggregating tax impact of Rs. 0.16 Crores. No order has been passed as yet and the matter is currently
pending.
Appeals filed by the Company before the Income Tax Appellate Tribunal:
i. The Company has filed appeal No. ITA/3111/m/06 dated May 18, 2006 before the Income Tax Appellate
Tribunal, against the order of the Assistant Commissioner of Income Tax, Mumbai for the assessment
year 1987-88 aggregating tax impact of approximately Rs. 0.0047 Crores on the issues of disallowance
of payments made to school. No order has been passed as yet and the matter is currently pending.
ii. The Company has filed appeal No. ITA/2876/B/93 dated April 27, 1993 before the Income Tax Appellate
Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the assessment
year 1989-90 aggregating tax impact of approximately Rs. 2.2608 Crores, inter alia upholding the order
of the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. investment
allowance, travelling expenses incurred by foreign citizens, amounts transferred from revaluation reserves,
etc. Appeal has been heard and waiting for the order to come.
iii. The Company has filed appeal No. ITA/4345/M dated May 3, 1993 before the Income Tax Appellate
Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the assessment
year 1990-91 aggregating tax impact of approximately Rs. 2.1713 Crores, inter alia upholding the order
of the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. investment
allowance, loss on sale of debenture travelling expenses incurred by foreign citizens, unclaimed balances
written back, amounts transferred from revaluation reserves, etc. Appeal has been heard and waiting for
the order to come.
iv. The Company has filed appeal No. ITA/6962/M/95 dated August 3, 1995 before the ITAT, against order
of the Commissioner of Income Tax (Appeals), Mumbai for the assessment year 1991-92 aggregating
tax impact of approximately Rs. 0.1533 Crores, inter alia upholding the order of the assessing officer on
the issues of disallowances of certain expenses and deductions, i.e. guest house expenses, travelling
expenses incurred by foreign citizens, unclaimed balances written back. No order has been passed as
yet and the matter is currently pending.
v. The Company has filed appeal No. ITA/8742/M/95 dated November 10, 1995 before the Income Tax
Appellate Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the
assessment year 1992-93 aggregating tax impact of approximately Rs. 1.11 Crores, inter alia upholding
the order of the assessing officer on the issues of disallowances of certain expenses and deductions,
i.e., payments made to school, guest house expenses, sales conference expenses, travelling expenses
incurred by foreign citizens and unclaimed balances written back. No order has been passed as yet and
the matter is currently pending.
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vi. The Company has filed appeal No. ITA/3792/M/97 dated May 29, 1997 before the Income Tax Appellate
Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the assessment
year 1993-94 aggregating tax impact of approximately Rs. 0.2830 Crores, inter alia upholding the order
of the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. payments
made to school, guest house expenses, sales conference expenses, unclaimed balances written back,
and entertainment expenses. No order has been passed as yet and the matter is currently pending.
vii. The Company has filed appeal No. ITA/2326/M/01 dated April 17, 2001 before the Income Tax Appellate
Tribunal, against order of the Commissioner of Income Tax (Appeals), Mumbai for the assessment year
1994-95 aggregating tax impact of approximately Rs. 0.5947 Crores, inter alia upholding the order of
the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. payments
made to school, guest house expenses, sales conference expenses, unclaimed balances written back ,
disallowance under section 40A(3) and entertainment expenses. No order has been passed as yet and
the matter is currently pending.
viii. The Company has filed appeal No. ITA/3207/M/02 dated May 28, 2002 before the Income Tax Appellate
Tribunal, against order the Commissioner of Income Tax (Appeals), Mumbai for the assessment year
1995-96 aggregating tax impact of approximately Rs. 0.3393 Crores, inter alia upholding the order of
the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. payments
made to school, guest house expenses, rural development expenses, sales conference expenses,
disallowance under section 40A(3) and entertainment expenses. No order has been passed as yet and
the matter is currently pending.
ix. The Company has filed appeal No. 6421/M/02 dated November 25, 2002 before the Income Tax Appellate
Tribunal, against order of the Commissioner of Income Tax (Appeals), Mumbai for the assessment year
1996-97 aggregating tax impact of approximately Rs. 0.4667 Crores, inter alia upholding the order of
the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. payments
made to school, guest house expenses, rural development expenses, sales conference expenses and
entertainment expenses. No order has been passed as yet and the matter is currently pending.
x. The Company has filed appeal No. ITA/6422/M/02 dated November 25, 2002 before the Income Tax
Appellate Tribunal, against order the Commissioner of Income Tax (Appeals), Mumbai for the assessment
year 1997-98 aggregating tax impact of approximately Rs. 0.5037 Crores, inter alia upholding the order
of the assessing officer on the issues of disallowances of certain expenses and deductions, i.e. payments
made to school, guest house expenses, rural development expenses, sales conference expenses and
entertainment expenses. No order has been passed as yet and the matter is currently pending.
xi. The Company has filed appeal No. ITA/6668/M/03 dated October 13, 2003 before the Income Tax
Appellate Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the
assessment year 1998-99 aggregating tax impact of approximately Rs. 0.1171 Crores, inter alia upholding
the order of the assessing officer on the issues of disallowances of payments made to school. No order
has been passed as yet and the matter is currently pending.
xii. The Company has filed appeal No. ITA/6669/M/03 dated October 13, 2003 before the Income Tax
Appellate Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the
assessment year 1999-00 aggregating tax impact of approximately Rs. 0.1025 Crores, inter alia upholding
the order of the assessing officer on the issues of disallowances of payments made to school. No order
has been passed as yet and the matter is currently pending.
xiii. The Company has filed appeal No. ITA/5421/M/05 dated August 10, 2005 before the Income Tax
Appellate Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the
assessment year 2000-01 aggregating tax impact of approximately Rs. 1.0473 Crores, inter alia upholding
the order of the assessing officer on the issues of disallowances of share buy back expenses and
depreciation on goodwill. No order has been passed as yet and the matter is currently pending.
xiv. The Company has filed appeal No. ITA/5422/M/05 dated August 10, 2005 before the Income Tax
Appellate Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the
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ADITYA BIRLA NUVO LIMITED
assessment year 2001-02 aggregating tax impact of approximately Rs. 1.76 Crores inter alia upholding
the order of the assessing officer on the issues of disallowances of deduction under section 80HHC. No
order has been passed as yet and the matter is currently pending.
xv. The Company has filed appeal No. ITA/3113/M/06 dated May 18, 2006 before the Income Tax Appellate
Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai for the assessment
year 2002-03 aggregating tax impact of approximately Rs. 0.0756 Crores inter alia upholding the order
of the assessing officer on the issues of disallowances of payments made to school. No order has been
passed as yet and the matter is currently pending.
xvi. The Company has filed three miscellaneous appeals before the Income Tax Appellate Tribunal, against
the order of the ITAT, Mumbai for the assessment years 1999-2000 and 2000-2001 aggregating tax
impact of approximately Rs. 0.0072 Crores. No order has been passed as yet and the matter is currently
pending.
Appeals filed by the Income Tax Department before the Income Tax Appellate Tribunal:
i. The Income Tax Department has filed appeal No. ITA/3000/B/93 dated May 3, 1993 before the Income
Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1989-90 aggregating tax impact of
approximately Rs. 1.91 Crores, inter alia on the issue of allowance of certain expenses i.e. gift expenses,
travelling expenses, expenses on guest house, debenture issue expenses, investment allowance on
certain items, etc. Appeal has been heard and waiting for the order to come.
ii. The Income Tax Department has filed appeal No. ITA/4631/M dated May 10, 1995 before the Income Tax
Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals), Mumbai
received by the Company for the assessment year 1990-91 aggregating tax impact of approximately Rs.
2.0424 Crores, inter alia on the issue of allowance of certain expenses i.e. gift expenses, expenses on
guest house, change in method of closing stock, debenture issue expenses, investment allowance on
certain items, provision for gratuity liability of earlier years, etc. Appeal has been heard and waiting for
the order to come.
iii. The Income Tax Department has filed appeal No. ITA/6953/M/95 dated August 3, 1995 before the
Income Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1991-92 aggregating tax impact of
approximately Rs. 0.4378 Crores, inter alia on the issue of allowance of certain expenses i.e. gift
expenses, travelling expenses, expenses on guest house, and debenture issue expenses. No order has
been passed as yet and the matter is currently pending.
iv. The Income Tax Department has filed appeal No. ITA/8528/M/95 dated November 25, 1995 before the
Income Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1992-93 aggregating tax impact of
approximately Rs. 0.4646 Crores, inter alia on the issue of allowance of certain expenses, i.e. gift
expenses, travelling expenses, expenses on guest house and debenture issue expenses. No order has
been passed as yet and the matter is currently pending.
v. The Income Tax Department has filed appeal No. ITA/3503/M/97 dated May 20, 1997 before the Income
Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1993-94 aggregating tax impact of
approximately Rs. 3.2843 Crores, inter alia on the issue of allowance of certain expenses, i.e. gift
expenses, expenses on guest house, change in method of closing stock, entertainment expenses relating
to certain employee, etc. No order has been passed as yet and the matter is currently pending.
vi. The Income Tax Department has filed appeal No. ITA/2604/M/2000 dated May 1, 2001 before the
Income Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1994-95 aggregating tax impact of
approximately Rs. 0.3084 Crores, inter alia on the issue of allowance of certain expenses i.e. gift
expenses and debenture issue expenses. No order has been passed as yet and the matter is currently
pending.
263
vii. The Income Tax Department has filed appeal No. ITA/3614/M/02 dated June 14, 2002 before the Income
Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1995-96 aggregating tax impact of
approximately Rs. 5.422 Crores, inter alia on the issue of allowance of certain expenses i.e. gift expenses,
deduction of interest on borrowed fund, and entertainment expenses relating to certain employees. No
order has been passed as yet and the matter is currently pending.
viii. The Income Tax Department has filed appeal No. ITA/6836/M/02 dated December 9, 2002 before the
Income Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1996-97 aggregating tax impact of
approximately Rs. 3.6743 Crores, inter alia on the issue of allowance of certain expenses i.e. gift
expenses, deduction of interest on borrowed fund, entertainment expenses relating to certain employees
and debenture issue expenses. No order has been passed as yet and the matter is currently pending.
ix. The Income Tax Department has filed appeal No. ITA/41/M/03 dated January 3, 2003 before the Income
Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 1997-98 aggregating tax impact of
approximately Rs. 14.7415 Crores, inter alia on the issue of allowance of certain expenses, i.e. gift
expenses, deduction of interest on borrowed fund and entertainment expenses relating to certain
employee. No order has been passed as yet and the matter is currently pending.
x. The Income Tax Department has filed appeal No. ITA/5561/M/05 dated August 26, 2005 before the
Income Tax Appellate Tribunal, against the favourable order of the Commissioner of Income Tax (Appeals),
Mumbai received by the Company for the assessment year 2000-01 aggregating tax impact of
approximately Rs. 0.0821 Crores, inter alia on the issue of allowance of certain expenses, i.e. payments
made to school, disallowance under section 14A, premium paid on redemption of debenture, marketing
and technical know-how expenses and expenses on buy back of shares. No order has been passed as
yet and the matter is currently pending.
xi. The Income Tax Department has filed appeal No. ITA/5530/M/05 dated August 25, 2005 before the
Income Tax Appellate Tribunal, against the order of the Commissioner of Income Tax (Appeals), Mumbai
for the assessment year 2001-02 aggregating tax impact of approximately Rs. 1.1603 Crores, inter alia
on the issue of allowance of certain expenses, i.e. disallowance under section14A and disallowance
under section 80 HHC. No order has been passed as yet and the matter is currently pending.
Appeals filed by the Income Tax Department before the Supreme Court of India:
i. The Income Tax Department has filed an appeal before the Supreme Court against the order of High
Court, Mumbai for the assessment year 1990-91 on the issue of clause III of first provision to section
143 (1)(a) of the Income Tax Act. No order has been passed as yet and the matter is currently pending.
Appeals filed by the Company before the High Court, at Mumbai:
i. The Company has filed three cases before the High Court at Mumbai for amounts aggregating to
Rs. 0.047 Crores. No order has been passed as yet and the matter is currently pending.
Appeals filed by the Income Tax Department before the High Court, at Mumbai:
i. The Income Tax Department has filed eight cases before the High Court at Mumbai for amounts
aggregating to Rs. 0.123 Crores. No order has been passed as yet and the matter is currently pending.
Income-tax cases in respect of IGFL
Pursuant to a scheme of amalgamation approved by the High Court of Allahabad at Lucknow and Gujarat at
Ahmedabad, all businesses of IGFL have been amalgamated with the Company.
i. The Office of Assistant Commissioner of Income Tax, Lucknow issued a revised notice of demand dated
April 28, 2006 ordering the Company to pay a sum of Rs. 2.43 Crores under section 154 read with
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ADITYA BIRLA NUVO LIMITED
section 143 (3) of the Income Tax Act, 1961. The Company was also issued a show cause notice on
March 31, 2006 under section 274 read with section 271 (1)(c) of the Income Tax Act, 1961 for concealing
the particulars of income or furnishing inaccurate particulars of such income as discussed in the
assessment order passed under section 143 (3). The demand has been recovered from refunds due to
Indo Gulf Corporation Limited (since amalgamated with Hindalco Industries Limited). The Company has
gone in appeal to the Commissioner of Income Tax (Appeals), Lucknow against additions/disallowances
made in the assessment. The show cause proceedings have been stayed till the disposal of the appeal.
The matter is currently pending.
Income-tax and interest-tax cases in respect of BGFL
Pursuant to a scheme of amalgamation approved by the High Court of Mumbai and High Court of Gujarat at
Ahmedabad, all businesses of BGFL have been amalgamated with the Company.
Income Tax:
Appeals filed by the Income Tax Department before the High Court at Mumbai
i. The Income Tax Department has filed appeal no. 695/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1994-95 which allowed an appeal by the
Company on the issue of allocation of interest pertaining to dividend income having aggregate tax
impact of Rs.0.19 Crores plus interest thereon. No order has been passed as yet and the matter is
currently pending.
ii. The Income Tax Department has filed appeal no. 668/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1995-96 which allowed an appeal by the
Company on the issue of allocation of interest pertaining to dividend income having aggregate tax
impact Rs. 0.03 Crores plus interest thereon. No order has been passed as yet and the matter is
currently pending.
iii. The Income Tax Department has filed appeal no. 669/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1997-98 which allowed an appeal by the
Company on the issue of deduction under section 35D of the Income Tax Act, 1961 and allowance of
corporate membership fees paid to clubs as revenue expenditure having an aggregate tax impact of
Rs.0.19 Crores plus interest thereon. No order has been passed as yet and the matter is currently
pending.
iv. The Income Tax Department has filed appeal no. 1567/05 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1998-99 which allowed an appeal by the
Company on the issue of allowance of corporate membership fees paid to clubs as revenue expenditure
having an aggregate tax impact of Rs.0.03 Crores. No order has been passed as yet and the matter is
currently pending.
v. The Income Tax Department has filed appeal no. 1593/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1992-93 which allowed an appeal by the
Company on the issue of depreciation on gas cylinder purchased and leased back to seller having an
aggregate tax impact of Rs. 0.26 Crores. No order has been passed as yet and the matter is currently
pending.
vi. The Income Tax Department has filed appeal no. 1448/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 2000-01 which allowed an appeal by the
Company on the issue of reopening of assessment under section 263 of Income Tax Act and accepting
Company's contention that receipt of goodwill is liable for tax as long term capital gain having an
aggregate tax impact of Rs. 17.85 Crores. No order has been passed as yet and the matter is currently
pending.
Appeals filed by the Company before the Income Tax Appellate Tribunal
i. The Company has filed two appeals before the Income Tax Appellate Tribunal against the order of the
Commissioner of Income Tax (Appeals), Mumbai for the assessment year 2000-01 where Commissioner
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of Income Tax (Appeals) has upheld the order of assessing officer disallowing deduction of initial issue
expenses, share issue expenses, diminution in value of investments, reversal of provision for doubtful
debts and levy of interest under section 234C of the Income Tax Act, 1961 before allowing for minimum
alternate tax credit having aggregate tax impact of Rs.0.27 Crores plus interest thereon and a levy of
Rs. 0.22 Crores towards penalty under section 271(1)(c) of the Income Tax Act, 1961. No order has
been passed as yet and the matter is currently pending.
ii. The Company has filed an appeal before the Income Tax Appellate Tribunal against the order of the
Commissioner of Income Tax (Appeals), Mumbai for the assessment year 2001-02 where Commissioner
of Income Tax (Appeals) has upheld the order of assessing officer disallowing deduction of share issue
expenses and bad debts written off having an aggregate tax of Rs.0.17 Crores plus interest thereon and
a levy of Rs.0.19 Crores towards penalty under section 271 (1)(c) of the Income Tax Act, 1961. No order
has been passed as yet and the matter is currently pending.
Interest Tax:
Appeals filed by the Income Tax Department before the High Court at Mumbai
i. The Income Tax Department has filed appeal no. 1110/05 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1995-96 which had allowed an appeal by
the Company against the order of the assessing officer. The matter in contention deals with interest on
debentures and bonds as chargeabl e to i nterest tax havi ng an aggregate tax i mpact of
Rs. 0.01 Crores plus interest thereon. No order has been passed as yet and the matter is currently
pending.
ii. The Income Tax Department has filed appeal no. 1111/05 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1996-97 which had allowed an appeal by
the Company against the order of the assessing officer. The matter in contention deals with interest on
debentures, government securities and bonds as chargeable to interest tax having an aggregate tax
impact of Rs. 0.08 Crores plus interest thereon. No order has been passed as yet and the matter is
currently pending.
iii. The Income Tax Department has filed appeal no. 142/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1997-98 which had allowed an appeal by
the Company against the order of the assessing officer. The matter in contention deals with interest on
debentures, government securities and bonds as chargeable to interest tax having an aggregate tax
impact of Rs. 0.1 Crores plus interest thereon. No order has been passed as yet and the matter is
currently pending.
iv. The Income Tax Department has filed appeal no. 472/06 in the High Court at Mumbai against the order
of the Income Tax Appellate Tribunal for the assessment year 1999-2000 which had allowed an appeal
by the Company against the order of the assessing officer. The matter in contention deals with interest
on debentures, government securities, bonds and penal charges on delayed payment of equated monthly
instalment (EMI) in hire purchase business as chargeable to interest tax having an aggregate tax impact
of Rs. 0.24 Crores. No order has been passed as yet and the matter is currently pending.
Appeals filed by the Company before the Income Tax appellate Tribunal
i. The Company has filed an appeal before the Income Tax Appellate Tribunal against the order of the
Commissioner of Income Tax (Appeals), Mumbai for the assessment year 1998-99 having an aggregate
tax impact of Rs. 0.11 Crores plus interest thereon. The Commissioner had upheld the order of the
assessing officer which dealt with interest on debentures, government securities and bonds as chargeable
to interest tax. No order has been passed as yet and the matter is currently pending.
D. CIVIL CASES
I) a) Civil cases filed against the Company in excess of Rs. 0.1 Crores:
i. Rayon Mazdoor Sangh, representing the workmen of the Company has filed special civil application no.
5101 of 1998 against the Company in the High Court of Gujarat at Ahmedabad alleging non-payment
of exceptional bonus in the years 1982-83 and 83-84 by the Company. Rayon Mazdoor Sangh has also
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ADITYA BIRLA NUVO LIMITED
alleged that the calculation of bonus made by the Company was not legal and did not comply with the
provisions of the Payment of Bonus Act. It was admitted by the Company as sole witness that the
balance sheet and profit and loss account were not audited annul accounts and were prepared only for
the purpose of calculation of bonus. The Industrial Tribunal at Rajkot rejected the claim of Rayon
Mazdoor Sangh. Rayon Mazdoor Sangh has thus requested the Court to quash and set aside the
judgment of the Tribunal and order the Company to pay bonus of 20% with interest at 15.5% per annum
compounded every three months from the date till the amount fell due for the years 1982-82 and 1983-
84. The difference in bonus was Rs. 0.244 Crores. Rayon Mazdoor Sangh has also requested for interim
relief of an ad hoc amount equivalent to one-month wages towards bonus for the years 1982-83 and
1983-84. No order has been passed as yet and the matter is currently pending.
ii. Biba Chemical has filed civil suit no. 4666 of 1992 against the Company in the Tis Hazari Courts, Delhi
asking for the recovery of damages and bank guarantee. Biba Chemical was the agent of the Company
and promoted and secured sales of varieties of carbon black products. Biba Chemical has alleged that
the Company terminated the agency agreement between them illegally and he lost money due to the
breaches committed by the Company. He has claimed Rs. 0.1894 Crores as damages. No order has
been passed as yet and the matter is currently pending.
iii. Orissa Mining Corporation has filed money suit no. 220/2003 - Class III against the Company in the
Court of the Civil Judge (Senior Division), Bhubaneswar alleging non-payment of minimum guaranteed
commission of Rs. 0.1 Crores per annum as per terms and conditions of the agreement between the
plaintiff and the Company dated June 1, 1996. The total amount requested for by Orissa Mining
Corporation is Rs. 0.41 Crores. No order has been passed as yet and the matter is currently pending.
iv. Sikand and Company and its partners Anil Sikand and Vikram Sikand (plaintiffs) have filed civil suit no.
50 of 2005 against Santosh Dogra and the Company in the High Court of Himachal Pradesh at Shimla
for recovery of Rs. 0.101 Crores. The plaintiffs have alleged that they sold and delivered to Santosh
Dogra a vehicle on the alleged assurance of the Company that it will finance Santosh Dogra for the
same. It is also alleged by the plaintiffs that the Company thereafter did not finance Santosh Dogra as
a result of which they did not receive the payment towards the sale of the vehicle. The plaintiffs now
request the Court for the said amount, which includes interest. No order has been passed as yet and
the matter is currently pending.
v. Sikand and Company and its partners Anil Sikand and Vikram Sikand (plaintiffs) have filed civil suit no.
51 of 2005 against Sandeep Kanwar and the Company in the High Court of Himachal Pradesh at
Shimla for recovery of Rs. 0.101 Crores. The plaintiffs have alleged that they sold and delivered to
Sandeep Kanwar a vehicle on the alleged assurance of the Company that it will finance Sandeep
Kanwar for the same. It is also alleged by the plaintiffs that the Company thereafter did not finance
Sandeep Kanwar as a result of which they did not receive the payment towards the sale of the vehicle.
The plaintiffs now request the Court for the said amount, which includes interest. No order has been
passed as yet and the matter is currently pending.
vi. Sikand and Company and its partners Anil Sikand and Vikram Sikand (plaintiffs) have filed civil suit no.
52 of 2005 against Ashok Sharma and the Company in the High Court of Himachal Pradesh at Shimla
for recovery of Rs. 0.101 Crores. The plaintiffs have alleged that they sold and delivered to Ashok
Sharma a vehicle on the alleged assurance of the Company that it will finance Ashok Sharma for the
same. It is also alleged by the plaintiffs that the Company thereafter did not finance Ashok Sharma as
a result of which they did not receive the payment towards the sale of the vehicle. The plaintiffs now
request the Court for the said amount, which includes interest. No order has been passed as yet and
the matter is currently pending.
vii. Namita Samantaray has filed money suit no. 143 of 2001 against the Company in the Court of Civil
Judge, Senior Division, Bhubaneswar for a decree of Rs. 0.3036 Crores towards damage sustained by
her. There was a hire purchase agreement between Namita Samantaray and the Company for the
purchase of a contessa car. The first key of the vehicle was lost by Namita Samantaray and she has
alleged that the Company did not hand over the second key and necessary documents of the car even
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though the entire money with excess was allegedly paid to the Company as a result of which they were
unable to ply the vehicle thereby causing business loss and mental agony. No order has been passed
as yet and the matter is currently pending.
I) b) Civil cases filed against the Company for less than Rs. 0.1 Crores:
i. The Consumer Education and Research Society, Ahmedabad has filed special civil application no. 7063
of 1988 against all the major industries of Gujarat including the Company in the High Court of Gujarat
at Ahmedabad alleging non-compliance with the provisions of the Task Force which was set up to
oversee safety measures in various industries dealing with hazardous/toxic materials. The Consumer
Education and Research Society has requested the Court to issue any appropriate writ to make the
Company comply with the provisions of the Task Force. No order has been passed as yet and the
matter is currently pending.
ii. Deepakkumar Jayantilal Shah, a shareholder of the Company, filed civil suit no. 787 of 1994 before the
City Civil Court at Ahmedabad asking for relief in the nature of a temporary injunction against an issue
of debentures on a preferential allotment basis to Hindalco Industries Limited, Grasim Industries Limited
and Indo-Gulf Fertilizers Corporation Limited and restraining the Company from converting fully convertible
debentures due for conversion. The Court, by its order dated April 21, 1995, rejected the application for
temporary injunction. A notice of motion and rejoinder filed by him was rejected by the Court on August
20, 1996. In 1997, the Company issued bonus shares and the Court, on January 27, 1998, rejected the
prayer by Deepakkumar Jayantilal Shah to restrain the Company from allotting bonus shares against
the debentures issued on a preferential basis. The main suit has not been dismissed and the matter is
currently pending.
iii. There are 40 other civil cases filed against the Company aggregating to Rs. 0.54 Crores. No order has
been passed as yet and the matters are currently pending.
II) Civil Cases filed by the Company:
i. The Company has filed civil appeal no. 1914/94 in the High Court of Gujarat at Ahmedabad against the
judgment of the Trial Court at Bhavnagar, which had allowed the respondent Gulabchand C. Shah to
recover his money against the Company under a contract of lifting coal ash. The amount involved is Rs.
0.1257 Crores plus interest. Gulabchand C. Shah had claimed damages for non-performance by the
Company under a contract for delivery of coal ash to the former. The Company has appealed against
the decision of the Trial Court. No order has been passed as yet and the matter is currently pending.
ii. The Company has filed special civil application no. 2834 /1997 in the High Court of Gujarat at
Ahmedabad against Municipal Corporation of Surat for charging the Company excess octroi of Rs. 1.26
Crores from February 2, 1997 and also inserting an explanation in the octroi rules by which octroi will
be levied at 100% of the sale value of the goods. No order has been passed as yet and the matter is
currently pending.
iii. The Company has filed case no. 80/2002 before the Gujarat Electricity Regulatory Commission against
the Gujarat Electricity Board for demanding Rs. 1.1664 Crores for an increase in the power supply of
the Company from 11 KV class to 66 KV class. This demand, if allowed, will require the Company to
develop facilities, which will cost more than Rs 1.3 Crores aggregating to total expenses of more than
Rs 2.5 Crores. The Company has requested the Court to drop this demand. No order has been passed
as yet and the matter is currently pending.
iv. The Company has filed appeal no. 256/2004 against the Executive Engineer, Junagadh and others
(respondents) before the Collector, Junagadh against an order by the respondents for claiming water
charges for drawing of water from Company's well near Umrethi. The amount involved is Rs. 2.26
Crores. The Company has requested the Collector to quash the order. The appeal has been accepted
and remanded back to Executive Engineer, Junagadh.
v. The Company has filed special civil application no. 357/2006 in the High Court of Gujarat at Ahmedabad
against the State of Gujarat, Veraval-Patan Joint Municipality and others (respondents) for arbitrarily
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amending the municipal house tax and charging an excess tax of Rs. 0.145 Crores. The Company has
requested the Court to quash and set aside the amended order and stay the operation and execution
of the tax bill. The Court has granted an interim stay dated January 13, 2006 on the condition that the
Company pay Rs. 0.05 Crores to one of the respondents within 15 days of the stay. The matter is still
pending for final hearing.
vi. The Company has filed a petition under sections 433 (e), 434 (1)(a) and 439 of the Companies Act,
1956 against Modi Rubber Limited in the High Court at Allahabad. Modi Rubber Limited had placed
orders with the Company for the purchase of carbon black worth Rs. 2.072 Crores during the period
April 2001 to September 2001. The payment as regards the order was supposed to be made within 90
days from the date of invoice/dispatch as per the terms and conditions of the dispatch. The Company
delivered various quantities of carbon black on different occasions to Modi Rubber Limited and submitted
the invoices. The Company has alleged that Modi Rubber Limited failed to make the payment and has
requested the Court to pass interim orders to restrain Modi Rubber Limited from alienating and/or
transferring and/or selling and/or creating third party rights in the assets of Modi Rubber Limited. The
Company has also requested the Court to pass orders as it deems fit. No order has been passed as yet
and the matter is currently pending.
vii. The Company has filed suit no. 4185/2001 against Milan Mens Wear in the Court of the City Civil Judge
at Bangalore. Milan Mens Wear had been doing business with the Company since 1992 by purchasing
the Company's branded garments and selling the same through its show room at Mumbai. The Company
claims that the total amount due to them including interest is Rs. 0.1263 Crores. Milan Mens Wear has
failed to make the payment in spite of reminders. The Company has prayed for a sum of Rs. 0.1263
Crores with interest at 18% per annum from the date of suit to date of payment in full. Milan Mens Wear
has filed a counterclaim for Rs. 0.3664 Crores. No order has been passed as yet and the matter is
currently pending.
viii. The Company has filed O.S. no. 514/2005-06 against Vasanth Colour Labs and others in the Court of
the City Civil Judge at Bangalore under Order VII Rule 1 read with section 26 of the Code of Civil
Procedure. Vasanth Colour Labs and others were the landlords of the premises in which the Company
was previously situated. These premises were leased to the Company. The lease expired on December
31, 2002 and the Company left the premises. Vasanth Colour Labs and others have, in principle,
admitted to refund the security deposit but did not pay the entire amount. The Company has thus filed
this suit for recovery of money amounting to Rs. 0.26 Crores plus interest. No order has been passed as
yet and the matter is currently pending.
ix. The Company has filed O.S. no. 2121/2006 against Big Shot Universe and others in the Court of the
City Civil Judge at Bangalore under Order VII Rule 1 read with section 26 of the Code of Civil Procedure.
Big Shot Universe and others were customers of the Company and owed the Company Rs. 0.4916
Crores for business done between the two. Big Shot Universe and others gave the Company a cheque
which came back unpaid. The Company thus filed a criminal case against the defendants and also filed
a suit for recovery of money amounting to Rs. 0.4916 Crores plus interest. No order has been passed
as yet and the matter is currently pending.
x. The Company has filed civil suit no. 164 of 2005 against TOMAR Limited of U.K. in the High Court at
Kolkata alleging non-payment of money for goods sold. The Company manufactured and shipped goods
to TOMAR Limited under a contract but TOMAR Limited took delivery of goods without payment. The
amount involved is Rs. 0.182 Crores plus interest on the said sum from June 26, 2005 till realization
and demurrage as well. The Company has requested the Court to order TOMAR Limited to pay the said
amount. No order has been passed as yet and the matter is currently pending.
xi. The Company has filed civil petition no. 123/94 against Kanishka Tyres and Tubes Limited in the High
Court of Delhi at New Delhi alleging non-payment of Rs. 0.205 Crores for the supply of yarn. Kanishka
Tyres and Tubes Limited is under heavy debt and hence the Company has thus requested the Court to
wound up the respondent company. The Court has ordered for winding up of Kanishka Tubes and Tyres
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Limited. The Official Liquidator attached to the Court is appointed as the liquidator to the Company.
xii. The Company through its agent Keshav D. Prasad has filed civil suit no. 799 of 1995 against Punjab
Soot Gola Factory in the High Court of Delhi at New Delhi alleging non-payment of Rs. 0.16 Crores plus
interest for supply of yarn. The Company has requested the Court to order Punjab Soota Gola Factory to
make payment. No order has been passed as yet and the matter is currently pending.
xiii. The Company has filed an appeal in 1998 against the State of Uttar Pradesh, U.P. State Textile Corporation
Limited and others in the High Court at Allahabad for the recovery of money under section 96 of the
Civil Procedure Code. The State of Uttar Pradesh had filed a case against the Company for an amount
involving Rs. 0.2413 Crores. No order has been passed as yet and the matter is currently pending.
xiv. Girija Shanker Agarwal, a firm (defendant 1) was appointed wholesaler for the fertilizer products of the
Company. The Company demanded confirmed irrevocable revolving letter of credit for smooth and
guaranteed payments for the materials to be supplied to it on credit from time to time. The Central Bank
of India (defendant 2) established without recourse to the drawer its confirmed irrevocable revolving
letter of credit for Rs. 0.05 Crores. Against the supply of fertilisers during the period August-September
2001, a sum of Rs. 0.2276 Crores remained due to the Company from the defendants 1 & 2. The
Company has filed regular suit no. 316 of 2002 before Civil Judge (Senior Division), Lucknow praying
for a decree of Rs. 0.2276 Crores against the defendants 1& 2, out of which decree for Rs. 0.16 Crores
be passed against the defendants 1, 2 and 3 jointly and severally (defendant no 3 is Girija Shanker
Agarwal, proprietor of the firm Girija Shanker Agarwal) or against any of the defendants as the Court
may deem fit and proper. The Company has also prayed for interest per annum upon Rs. 0.2276 Crores
till the date of actual realization of amount. The matter is currently pending.
xv. The Company has filed 117 other civil cases aggregating to Rs. 22.576 Crores. No order has been
passed as yet and the matters are currently pending.
E. CENTRAL EXCISE CASES
I) Central excise cases, appeals and show-cause cum demand notices in excess of Rs. 0.1 Crores:
i. The Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no. 29/R/Renukoot
II/MZP/2001-2002 dated May 2, 2001 to the Company demanding an aggregate sum of Rs. 0.4938
Crores for the assessment period April 1996 to August 1996. The Company availed modvat credit on
inputs of Rs. 9.3 Crores. Out of this some of the inputs were used for generating steam, which was sold
to Hindalco Industries Limited. The amount assessed refers to the above items used in the manufacture
of steam. Customs, Excise and Service Tax Appellate Tribunal had decided the case in favour of the
Company. An appeal was made against this order in the High Court at Allahabad and the matter is
currently pending.
ii. The Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no. 138/Range-
Renukoot II MZP/2001-2002 dated September 3, 2001 to the Company demanding an aggregate sum
of Rs. 0.51 Crores for the assessment period September 1996 to March 2000. The Company is using
carbon black feed stock to manufacture different grades of carbon black. It manufactures both dutiable
and exempted goods while availing modvat/cenvat credit facility and is therefore required to pay an
amount equal to 8% of the price of the exempted goods at the time of clearance of such goods in case
they do not maintain separate inventory regarding receipt, issue and disposal of cenvatable goods used
in or relation to manufacture of dutiable and exempted final product. It was alleged that the Company
did not maintain separate inventory and sold steam to Hindalco Industries Limited, Renukoot without
payment of excise duty on inputs used in steam. There is dispute regarding the input items used in
steam and thus the assessment. The matter is currently pending with Commissioner (Appeals) Central
Excise, Allahabad.
iii. The Deputy Commissioner of Central Excise, Mirzapur issued a show-cause notice bearing no. 19/R/
Sonbhadra/MZP/2002-2003 dated October 3, 2002 to the Company demanding an aggregate sum of
Rs. 0.176 Crores for the assessment period October 2001 to July 2002. The Company is using carbon
black feed stock to manufacture different grades of carbon black. It manufactures both dutiable and
exempted goods while availing modvat/cenvat credit facility and is therefore required to pay an amount
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ADITYA BIRLA NUVO LIMITED
equal to 8% of the price of the exempted goods at the time of clearance of such goods in case they do
not maintain separate inventory regarding receipt, issue and disposal of cenvatable goods used in or
relation to manufacture of dutiable and exempted final product. It was alleged that the Company did not
maintain separate inventory and sold steam to Hindalco Industries Limited, Renukoot without payment
of excise duty on inputs used in steam. There is dispute regarding the input items used in steam and
thus the assessment. The matter is currently pending with Commissioner (Appeals) Central Excise,
Allahabad.
iv. The Deputy Commissioner of Central Excise, Mirzapur issued a show-cause notice bearing no. V (3)
Demand 103/02/1468 dated August 22, 2003 to the Company demanding an aggregate sum of Rs.
0.2795 Crores for the assessment period August 2002 to July 2003. The Company is using carbon
black feed stock to manufacture different grades of carbon black. It manufactures both dutiable and
exempted goods while availing modvat/cenvat credit facility and is therefore required to pay an amount
equal to 8% of the price of the exempted goods at the time of clearance of such goods in case they do
not maintain separate inventory regarding receipt, issue and disposal of cenvatable goods used in or
relation to manufacture of dutiable and exempted final product. It was alleged that the Company did not
maintain separate inventory and sold steam to Hindalco Industries Limited, Renukoot without payment
of excise duty on inputs used in steam. There is dispute regarding the input items used in steam and
thus the assessment. The matter is currently pending with Commissioner (Appeals) Central Excise,
Allahabad.
v. The Additional Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no.
VI(MP)DEM(12)Adj-81/04/6148 dated September 2, 2004 to the Company demanding an aggregate
sum of Rs. 0.399 Crores for the assessment period August 2003 to July 2004. The Company is using
carbon black feed stock to manufacture different grades of carbon black. It manufactures both dutiable
and exempted goods while availing modvat/cenvat credit facility and is therefore required to pay an
amount equal to 8% of the price of the exempted goods at the time of clearance of such goods in case
they do not maintain separate inventory regarding receipt, issue and disposal of cenvatable goods used
in or relation to manufacture of dutiable and exempted final product. It was alleged that the Company
did not maintain separate inventory and sold steam to Hindalco Industries Limited, Renukoot without
payment of excise duty on inputs used in steam. There is dispute regarding the input items used in
steam and thus the assessment. The matter is currently pending with Commissioner (Appeals) Central
Excise, Allahabad.
vi. The Additional Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no. VI
(MP) DEM(12)Adj-128/05/5917 dated August 26, 2005 to the Company demanding an aggregate sum
of Rs. 0.4289 Crores for the assessment period August 2004 to June 2005. It manufactures both dutiable
and exempted goods while availing modvat/cenvat credit facility and is therefore required to pay an
amount equal to 8% of the price of the exempted goods at the time of clearance of such goods in case
they do not maintain separate inventory regarding receipt, issue and disposal of cenvatable goods used
in or relation to manufacture of dutiable and exempted final product. It was alleged that the Company
did not maintain separate inventory and sold steam to Hindalco Industries Limited, Renukoot without
payment of excise duty on inputs used in steam. There is dispute regarding the input items used in
steam and thus the assessment. The matter is currently pending with Commissioner (Appeals) Central
Excise, Allahabad.
vii. The Additional Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no. 45/
R-Renukoot II MZP/2001-2002 dated May 25, 2001 to the Company demanding an aggregate sum of
Rs. 0.19 Crores for the assessment period May 1996 to March 2001. The Company converts
demineralised water into steam, which it uses to generate electricity. This electricity is used captively in
factory and also consumed in township, which is not part of the factory. This generation of electricity
consumed in a township is not exempt from modvat, which the Company claimed and thus a demand
for the amount given above. The Company has appealed against the assessment and the matter is
currently pending before the High Court at Allahabad.
viii. The Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no. VI (MP)/ Dem
(12) Adj-09/43(99)/9621 dated November 7, 2000 to the Company demanding an aggregate sum of Rs.
271
0.73 Crores for the assessment period October 1994 to March 1996. The Company took modvat credits
on the inputs used for manufacturing of Carbon Black, which was cleared under CT 2 without payment
of duty. The credit given has been reversed under provisions of Rule 57-I of Central Excise Rules.
CEGAT had given the decision in favour of the Company. An appeal was made against this order in the
High Court at Allahabad and the matter is currently pending.
ix. The Company has filed an appeal bearing reference no. HTC/BC/2001-2002 dated November 5, 2001
with Commissioner (Appeal) Central Excise, Allahabad against the claim of refund rejected by Assistant
Commissioner, Excise, Mirzapur for Rs. 0.18 Crores, which is equal to 8% of the value of steam, sold to
Hindalco Industries Limited. The Company is of the view that this amount was wrongly taken from them,
as there is a charge of 8% on modvatable inputs and off gasses on which the above amount is charged
cannot be treated as one. No order has been passed as yet and the appeal is currently pending.
x. The Additional Commissioner of Central Excise, Allahabad issued a show-cause notice bearing no.
VI(MP)DEM(12)Adj-47/06/4576 dated August 1, 2006 to the Company demanding an aggregate sum of
Rs. 0.5545 Crores for the assessment period July 2005 to June 2006. The Company is using carbon
black feed stock to manufacture different grades of carbon black. It manufactures both dutiable and
exempted goods while availing modvat/cenvat credit facility and is therefore required to pay an amount
equal to 8% of the price of the exempted goods at the time of clearance of such goods in case they do
not maintain separate inventory regarding receipt, issue and disposal of cenvatable goods used in or
relation to manufacture of dutiable and exempted final product. The Company has maintained separate
inventory and sold steam to Hindalco Industries Limited, Renukoot on payment of the duty on inputs
used in steam. There is dispute regarding the item used in manufacture of steam and thus the assessment.
The matter is currently pending with Commissioner (Appeals) Central Excise, Allahabad.
xi. The Commissioner of Central Excise, Bangalore has filed an appeal in the High Court of Karnataka
against an order by CESTAT, which quashed an order by the Bangalore Commissioner demanding the
Company to pay excise duty of Rs. 2.08 Crores plus penalty of Rs. 2.08 Crores under section 11AC of
the Central Excise Act, 1944 and Rs. 0.21 Crores under Rule 25 of the Central Excise Rules, 1944. The
duty was demanded under the proviso to section 11A (1) of the Central Excise Act, 1944, allegedly
payable on the Ready Made Garments during the period from May 1, 2001 to January 31, 2003. The
Company imported certain varieties of men's shirts in bulk, which were then subjected to refinishing
work. It is alleged that the Company suppressed the fact of refinishing work, which amounts to
manufacture. This contravenes provisions of Rules 4, 5, 6, 8, 20, 11 and 12 of Central Excise Rules,
2001. Thus the show cause notice was issued by the Commissioner. No order has been passed as yet
and the matter is currently pending. The High Court disposed off the Department Appeal on the ground
that the Tribunal had only remanded the matter to the Commissioner. The High Court has further directed
the Commissioner to decide the question of 'manufacture and other attendant issues'. The Company
was directed to appear before the Commissioner on September 25, 2006 and the Commissioner has
been directed to complete the adjudication proceedings within four months. The Company had appeared
on September 25, 2006 before the Commissioner and the latter has directed the Company to file written
submission and to appear for personal hearing on December 19, 2006.
xii. The Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice bearing
c.no. V-55/15/62-CE/Cal-II/Adjn/91/14050G dated March 25, 1991 to the Company demanding an
aggregate sum of Rs. 0.148 Crores for the assessment period March 86 to March 90 in respect of the
alleged Industrial fabrics, which attract duty under Chapter 59 and not as man-made fabrics. No order
has been passed as yet and the matter is pending before the Joint Commissioner of Central Excise,
Kolkata.
xiii. The Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice bearing
c.no. V-3204 (15) 82-CE/Cal-II/Adjn./85/790E dated June 3, 1991 to the Company demanding an aggregate
sum of Rs. 1.62 Crores for the assessment period March 86 to September 88 in respect of the alleged
mixing of dyes with different amounts of duty, amounts to manufacture and is hence liable to duty. No
order has been passed as yet and the matter is pending before the Commissioner of Central Excise,
Kolkata.
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ADITYA BIRLA NUVO LIMITED
xiv. The Joint Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice
bearing no. 86/CE/KOL-IV/Rishra/R-V/Adjn./2002 dated August 20, 2002 to the Company demanding an
aggregate sum of Rs. 0.1227 Crores for the assessment period February 28, 1999 to May 11, 1999 in
respect of the alleged demand of Special duty at the rate of 6% adv. is payable on captive consumption
of fabrics and twisted yarn cleared after Finance Bill 1999 and final approval of the same. No order has
been passed as yet and the matter is pending before the Joint Commissioner of Central Excise, Kolkata.
xv. The Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice bearing
no. 3/92-93 dated May 4, 1992 to the Company demanding an aggregate sum of Rs. 0.1315 Crores for
the assessment period May 1991 to March 1992 in respect of the alleged demand of duty payable on
10s polyester yarn used as intermediate product in the manufacture of Hosepipe and the same cannot
be cleared duty free under Rule 191 B and Rule 191BB. No order has been passed as yet and the
matter is pending before the Joint Commissioner of Central Excise, Kolkata.
xvi. The Additional Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice
bearing c.no. 55 (15) 36/CE/KOL-IV/Adjn/2004/51 dated June 18, 2004 to the Company demanding an
aggregate sum of Rs. 0.16 Crores for the assessment period from July 1, 2000 to March 31, 2004 in
respect of the alleged demand of duty on delivery and handling charges collected at Mumbai and
Ludhiana Depots at the rate of 2.36% and 1% respectively but as per present Rule 7 of Valuation Rule,
2000 read with section 4(3)(d) duty is to be paid on total realization. No order has been passed as yet
and the matter is pending before the Additional Commissioner of Central Excise, Kolkata.
xvii. The Commissioner, Central Excise, Kolkata has filed CEXA no. 8 of 2000 against the Company in the
High Court at Kolkata, Special Jurisdiction, Original Side and has requested the Court to give a ruling
on,whether central excise duty is chargeable at each and every stage of processing or at the last stage,
whether the Company is entitled to modvat credit and the entire exercise is revenue neutral and why
the demand for the period May 20, 1994 will not stand as notification was issued from August 11, 1994.
The Company bought grey cotton and grey man-made fabrics from outside parties for dyeing, on receipt
of processing charges and paying duty at the process stage. Before dyeing, grey fabrics were at first
subjected to bleaching. Exemption from payment of central excise duty was withdrawn from May 20,
1994 and on the same date modvat scheme was extended to the cotton and man-made fabrics. Exemption
from payment of duty for captive consumption was extended again on August 11, 1994 in case of man-
made and cotton fabrics. So there was no exemption from May 20, 1994 to August 10, 1994. Therefore
the Company was liable to pay central excise duty at the bleaching stage for the said period, which
amounted to Rs. 0.2229 Crores. The Company was exempt from paying duty by Customs Excise and
Gold (Control) Appellate Tribunal. The Commissioner asked the Court to rule on the above points and
also order the Company to pay central excise duty if the Court rules in favour of the Commissioner. No
order has been passed as yet and the matter is currently pending.
xviii. The Assistant Commissioner of Central Excise, Kolkata-IV Commissionerate issued 11 show-cause
notices to the Company demanding an aggregate sum of Rs. 0.1614 Crores for the assessment period
from April 1, 1994 to August 1, 1999 in respect of the alleged demand of duty on differential value of
flax yarn, captively consumed for manufacture of flax fabrics as well as sold in the market. The matter
has been remanded back to the Commissioner (Appeals) for fresh hearing which is currently pending.
xix. The Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice bearing
no. 23/CE/R-V/Rishra/Adjn/Commr./2005 dated March 31, 05 to the Company demanding an aggregate
sum of Rs. 0.5772 Crores for the assessment period from April 2001 to September 2004 in respect of
the alleged demand of duty at the rate of 8% on sale of wool grease which is an exempted product but
no separate account is maintained for modvatable inputs used for production of dutiable and exempted
product. No order has been passed as yet and the matter is pending before the Commissioner of
Central Excise, Kolkata.
xx. The Commissioner of Central Excise, Kolkata-IV Commissionerate issued 4 show-cause notice's to the
Company bearing nos. 6/97-98 dated June 16, 1997; 20/07-98 dated January 9; 1998, 1/98-99 dated
April 2; 1998 and 1/99-2000 dated May 26, 1999 demanding an aggregate sum of Rs. 0.2216 Crores
for the assessment period from August 1997 to April 1999 in respect of the alleged demand of duty on
273
sale of fabrics to Indian Navy without payment of duty but no modvat credit reversed on inputs used for
said goods. No order has been passed as yet and the matter is pending before Customs Excise and
Sales Tax Appellate Tribunal.
xxi. The Joint Commissioner of Central Excise, Kolkata-IV Commissionerate issued a show-cause notice
bearing no. 09/CE/R-V/Rishra/Kol-IV/Adjn/2005 dated March 3, 2006 to the Company demanding an
aggregate sum of Rs. 0.17 Crores for the assessment period April 2001 to February 2003 in respect of
the alleged demand of duty chargeable as per Valuation Rule 8 on sale of inputs to Raja Shree Syntax.
Duty is payable on additional cost of 15%. No order has been passed as yet and the matter is pending
before the Joint Commissioner of Central Excise, Kolkata.
xxii. The Company has filed appeal no.46/2002 (V) CE against an order of the Assistant Commissioner,
Central Excise, Vishakhapatnam before the Commissioner (Appeals) of Customs and Central Excise,
Vishakhapatnam for modvat credit on capital goods. The Assistant Commissioner had disallowed the
credit in his order no. 02/2002 dated April 5, 2002. The Assistant Commissioner ordered the Company
to show-cause as to why modvat credit of Rs. 10.22 Crores availed irregularly in contravention of rules
57Q, 57T read with rule 52A of the Central Excise Rules, 1944 should not be disallowed and where
credit has already been utilized, the amount equivalent to it should not be recovered under rule 57U of
the said rules. The Assistant Commissioner also imposed a penalty of Rs. 0.4 Crores under rule 13 of
CENVAT Credit Rules, 2001. The Company has requested the Court to set aside the order and allow
the Company to get modvat credit on capital goods. No order has been passed as yet and the matter
is currently pending.
xxiii. The Company has filed appeal no. E/2231/04-Mum against an order of the Commissioner of Central
Excise, Vishakhapatnam before the Customs, Excise and Service Tax Appellate Tribunal. The
Commissioner of Central Excise, Vishakhapatnam disallowed modvat credit of Rs. 0.7761 Crores to the
Company on the grounds that there was no declaration under Rule 57 (H) of Central Excise Rules,
1944 and that the credit was taken irregularly. The Commissioner had also imposed penalty of Rs. 0.005
Crores under Rule 57 (I)/Rule 173Q of Central Excise Rules, 1944. CESTAT, Mumbai granted a Stay
Order against the order of the respondent and the matter is currently pending.
xxiv. The Company has filed appeal no. 96/2004(V-I)CEx against an order of the Additional Commissioner of
Central Excise, Vishakhapatnam before Commissioner of Customs and Central Excise (Appeals),
Vishakhapatnam. The Additional Commissioner of Central Excise, Vishakhapatnam disallowed modvat
credit of Rs. 0.5217 Crores to the Company under section 57 (A) (G) (H) (I) of Central Excise Rules,
1944 vide his adjudication order no. 30/03-04 dated May 13, 2004. The respondent contends that the
Company took excess credit of 15% in place of 10% on LSHS, LDO and also took credit without
evidence of duty paying documents. The Company has contended that out of the above amount Rs.
0.386 Crores was already paid before the order of the Additional Commissioner of Central Excise was
passed and a further amount of Rs. 0.0042 Crores was paid later. The remaining amount of Rs. 0.1289
Crores is already covered by an earlier order of the Commissioner and an appeal against that has
been filed before Central Excise and Service Tax (Appeals) Tribunal. The Additional Commissioner of
Central Excise has also imposed a penalty of Rs. 0.001 Crores. The Company wants the impugned
order to be set aside. No order has been passed as yet and the matter is currently pending.
xxv. The Company has filed appeal no. 107/2002(V)CE against an order of the Assistant Commissioner of
Central Excise, Vishakhapatnam before Commissioner of Customs and Central Excise (Appeals),
Vishakhapatnam. The Assistant Commissioner vide adjudication order no. 5/2002 dated August 8, 2002
rejected a claim for rebate of duty under Rule 3 (4) of CENVAT Credit Rules of Rs. 0.3352 Crores
claimed on capital goods exported to Iran on payment of duty. The Assistant Commissioner has said that
the Company is not the manufacturer of the goods and the goods were not cleared from the factory of
the original manufacture and therefore can't be considered as a clearance of goods from the factory of
manufacture and thus no rebate is allowed to the Company. The respondent states that the Company
made an attempt to encash their unutilized cenvat credit by way of rebate, which is not permitted under
any of the rules or provisions of the Central Excise Act. The Company wants the impugned order to be
set aside. No order has been passed as yet and the matter is currently pending.
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ADITYA BIRLA NUVO LIMITED
xxvi. The Commissioner, Central Excise, Chennai issued show-cause notice bearing no. 69/04 dated October
20, 2004 to the Company demanding Rs. 0.5527 Crores for the assessment period 2004-05. It was
alleged that the Company availed cenvat credit on turbo generator assembled at site by supplier even
when it was not eligible to avail of the same under rule 3 of the Cenvat Credit Rules, 2002 as the
Company was not the manufacturer of the turbo generator set. The Commissioner ordered the Company
to show-cause as to why cenvat credit should not be recovered from them. The Commissioner also
proposed to impose interest and penalty under the Cenvat Credit Rules, 2002. The Company has
requested the Commissioner for the show-cause notice to be set aside. The matter is currently pending.
xxvii. The Commissioner, Central Excise, Chennai issued show-cause notice bearing no. 74/04 dated November
30, 2004 to the Company demanding Rs. 0.2685 Crores for the assessment period 2004-05. It was
alleged that the Company availed cenvat credit even when it was not eligible to avail of the same under
rule 3 of the Cenvat Credit Rules, 2002. The Commissioner ordered the Company to show-cause as to
why cenvat credit should not be recovered from them. The Commissioner also proposed to impose
interest and penalty under the Cenvat Credit Rules, 2002. The Company has requested the Additional
Commissioner for the show-cause notice to be set aside. The matter is currently pending.
xxviii. The Company has appealed under section 35 of the Central Excise Act, 1944 against order no. 13/2003
dated March 28, 2003 of the Assistant Commissioner of Central Excise before the Commissioner (Appeals)
Central Excise, Kolkata. As per the rules prevalent during the material period the appellants had been
submitting the duty paying documents (duplicate copy with transporters) to the range superintendent for
the purpose of examination and defacement by the proper Central Excise Authority. A file containing
duplicate copies of the invoices dated December 18, 1995 were misplaced. The said file along with
invoices was produced in the office of the Superintendent of Central Excise for verification purpose but
the invoices were not defaced. The Company requested the Superintendent to permit them for production
of original copies of the invoices for defacing work. The submission was accepted and a request was
made to the Assistant Commissioner to grant them permission. The Company then received a show-
cause notice which alleged that the Company had taken modvat credit of Rs. 0.4539 Crores during the
above period wrongly in as much as they failed to produce the transporters copies of the invoices. The
Assistant Commissioner ordered for the recovery of the entire credit availed of by the Company under
Rule 57 (I) of the Central Excise Rules read with section 11 (A) of the Central Excise Act, 1944 and
also imposed a penalty of Rs. 0.1 Crores. No order has been passed as yet and the matter is currently
pending.
xxix. The Company appealed against order no. 04/2002-03 dated February 27, 2003 of the Assistant
Commissioner of Central Excise, Rishra before the Commissioner (Appeals) Central Excise, Kolkata.
The Assistant Commissioner alleged that the Company had availed modvat credit after the expiry of 6
months from the date of issue of invoice on steel rounds. The Company thus contravened provisions of
rule 57A read with rule 57G of Central Excise Rules, 1944. The Assistant Commissioner thus disallowed
modvat credit of Rs. 0.0947 Crores under rule 57I of the Central Excise Rules, 1944 and also imposed
a penalty of Rs. 0.0947 Crores under rule 173(Q)(1) of the said rules. The Commissioner rejected the
appeal of the Company. The Company has filed appeal no. BNIPNL/CE/Appeals/CESTAT/04 dated April
1, 2004 against the rejection order of the Commissioner before the Customs, Excise and Service Tax
(Appellate) Tribunal, Kolkata. The matter is currently pending.
xxx. The Assistant Commissioner of Central Excise, Kolkata issued show-cause notice bearing c.no. CE-13
(2)/Demand/JSI/R-VI/Improper Invoice/97/176 dated February 6, 1997 alleging clearance of 37112
numbers of electrical insulators for the assessment period August 96 to September 1996 under cover of
invalid invoices which resulted in non-payment of Central Excise Duty of Rs. 0.1472 Crores. The Assistant
Commissioner ordered the Company to show-cause as to why this duty should not be recovered from
them under Rule 9 (2) of the Central Excise Rules, 1944 read with section 11 (A) of the Central Excise
Act, 1944. A penalty has also been proposed under Rule 173 (Q) of the said Rules. The Company has
written to the Assistant Commissioner for the show-cause notice to be dropped. No order has been
passed as yet and the matter is currently pending.
275
xxxi. The Additional Commissioner of Central Excise, Kolkata issued show-cause notice bearing c.no. M(15)
112/CE/Cal-II/Adjn/97/3089-T dated May 12, 2000 which alleged that the Company contravened the
provisions of Rules 57 (A) read with 57 (G) of the Central Excise Rules 1944 and wrongly and wilfully
availed of and utilized inadmissible modvat credit of Rs. 0.1021 Crores towards payment of Central
Excise Duty on clearance of their product 'Electrical Insulator'. The Additional Commissioner ordered the
Company to show-cause as to why this duty should not be recovered from them under Rule 57 (I) of the
Central Excise Rules, 1944 read with section 11 (A) of the Central Excise Act, 1944. A penalty has also
been proposed under Rule 57 (I)(4) of the said Rules and interest charged at prescribed rate of Rule
57 (I) (5) of the Central Excise Rules, 1944 read with section 11 (A) (B) of the Central Excise Act, 1944.
The Company has written to the Additional Commissioner for the show-cause notice to be dropped. No
order has been passed as yet and the matter is currently pending.
xxxii. The Assistant Commissioner of Central Excise, Rishra Division issued show-cause cum demand notice
bearing no. 39/CE/Cal-IV/Adj./2001 dated March 2, 2001 which alleged contravention of the provisions
of Rule 57(CC)(1) of the Central Excise Act, 1944. It is alleged that the Company evaded payment of
duty of Rs. 0.13 Crores during the period February 22, 2000 to March 31, 2000 by not paying 8% of the
price of their manufactured exempted products at the time of clearance although they availed of the full
amount of cenvat credit on the inputs used in the manufacture of the exempted final products. The
Assistant Commissioner ordered the Company to show-cause as to why this duty should not be recovered
from them under section 11(A)(1) of the Central Excise Rules, 1944 read with Rule 57(A)(D) and
57(A)(H) of the Central Excise Act, 1944 and/or erstwhile Rule 57(I) of the said Rules. A penalty has
also been proposed under Rule 173(Q) of the said Rules. The Company has written to the Assistant
Commissioner for the show-cause notice to be dropped. No order has been passed as yet and the
matter is currently pending.
xxxiii. The Company filed appeal no. E-742/02 against order no. 32/CH-48/Commissioner/CE/Cal-IV/Adjn/2002
datedJuly 11, 2002 passed by the Commissioner of Central Excise, Kolkata before the Customs, Excise
& Gold (Control) Appellate Tribunal, East Zonal Bench, Kolkata. The Order alleged that the Company did
not include freight and insurance charges in the assessable value when delivering goods at buyer's
destination and rather declared sale of their product at factory gate. Thus the Company evaded Central
Excise duties of Rs. 1.9 Crores for the period September 26, 1996 to July 31, 2001 and thereby
contravened the provisions of section 4(1)(a)(1a) and section 4(1)(a) of the Central Excise Act 1944 and
Central Excise (Valuation) Rules, 1975. The Commissioner ordered the Company to show-cause as to
why this duty should not be recovered from them under section 11(A)(i) of the Central Excise Act, 1944.
A penalty of Rs. 1.9 Crores has also been imposed under s 11(A)(C) of the said Act. The appeal has
been allowed and the impugned order set aside and the matter remanded to the Commissioner to
decide the matter afresh in the light of a new ruling by the Supreme Court.
xxxiv. The Assistant Commissioner of Central Excise, Kolkata issued show-cause notice bearing C.no. CE-13/
1/Demand/Freight and Insurance/R-VI/2001/214 dated September 4, 2002 which alleged non-inclusion
of freight and insurance charges in the assessable value at the time of removal of goods from factory
premises. It has been alleged that the Company evaded central excise duties of Rs. 0.3928 Crores in
contravention of section 4(1)(a)(1a) and section 4(1)(a) of the Central Excise Act 1944 and Central
Excise (Valuation) Rules, 1975. The Assistant Commissioner ordered the Company to show-cause as to
why this duty should not be recovered from them under section 11(A)(1) of the Central Excise Act, 1944.
A penalty of Rs. 0.3928 Crores has also been imposed under s 11(A)(C) of the said Act. The Company
has written to the Assistant Commissioner for the show-cause notice to be dropped. No order has been
passed as yet and the matter is currently pending.
xxxv. The Assistant Commissioner of Central Excise, Kolkata issued show-cause notice bearing no. 2/2003-04
dated May 30, 2003 which alleged non-inclusion of freight and insurance charges in the assessable
value at the time of removal of goods from factory premises. It is alleged that the Company evaded
central excise duties of Rs. 0.2775 Crores in contravention of section 4(1)(a)(1a) and section 4(1)(a) of
the Central Excise Act 1944 and Central Excise (Valuation) Rules, 1975 and 2000. The Assistant
Commissioner ordered the Company to show-cause as to why this duty should not be recovered from
them under section 11(A)(1) of the Central Excise Act, 1944. The Company has written to the Assistant
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ADITYA BIRLA NUVO LIMITED
Commissioner for the show-cause notice to be dropped. No order has been passed as yet and the
matter is currently pending.
xxxvi. The Director General of Central Excise Intelligence, East Zonal Unit, Kolkata issued show-cause notice
bearing no. DGCEI F. no. 12/EZU/KOL/2002/1639 dated July 21, 2003 which alleged that the Company
was not entitled to the benefit of exemption of Rs. 1.036 Crores under Notification no. 108/95 dated
August 28, 1995 in respect of the excisable goods manufactured and cleared by them consigned to the
projects financed by the Japan Bank of International Co-operation. The DGCIE ordered the Company to
show-cause to the Commissioner, Central Excise, Kolkata as to why this duty should not be recovered
from them under section 11(A)(1) of the Central Excise Act, 1944. A penalty has also been proposed
under Rule 173(Q) of the said Rules read with section 11(A)(C) of the said Act. The Company has
written to the Commissioner for the show-cause notice to be dropped. No order has been passed as yet
and the matter is currently pending.
xxxvii. The Additional Commissioner, Central Excise, Kolkata issued show-cause notice bearing no. 10/CE/R-
IV/RIS/Kol.IV/Adjn/04 dated May 21, 2004 which alleged that the Company did not include charges of
'Type Test' in the assessable value in accordance with the provisions of the Central Excise Rules, 1944.
The Company thus contravened the provisions of section 4(i)(a) and 4(3)(d) of Central Excise Act, 1944
and Rules 4,6 of Central Excise (no.2) Rules 2001 and 2002. The Company has been charged of
evading central excise duty of Rs. 0.2146 Crores. The Additional Commissioner ordered the Company to
show-cause as to why this duty should not be recovered from them under section 11(A)(1) of the
Central Excise Act, 1944. A penalty of Rs. 0.2146 Crores has also been imposed under section 11(A)(C)
of the said Act and Rule 25 of Central Excise (no.2) Rules 2001 and 2002. The Company has written to
the Additional Commissioner for the show-cause notice to be dropped. No order has been passed as
yet and the matter is currently pending.
xxxviii. The Commissioner, Central Excise, Kolkata issued show-cause notice bearing no. 21/CE/R-VI/Rishra/
Adjn.2005 dated March 29, 2005 which alleged that the Company evaded central excise duty of Rs.
0.9518 Crores for clandestine manufacture and removal of goods during 2000-01 and 2001-02 by wilful
misstatement, fraud and contravention of Rules 9, 52(A), 53, 54 173(G) and 226 of the Central Excise
Rules, 1944, Rules 4, 8, 10, 11 and 12 of the Central Excise (no. 2) Rules 2001 and 2002. The
Commissioner ordered the Company to show-cause as to why this duty should not be recovered from
them under section 11(A) of the Central Excise Act, 1944. A penalty of has also been proposed under
section 11(A)(C) of the said Act and Rule 25 of Central Excise (no. 2) Rules 2001 and 2002. The
Company has written to the Commissioner for the show-cause notice to be dropped. No order has been
passed as yet and the matter is currently pending.
xxxix. The Additional Commissioner, Central Excise, Kolkata issued show-cause notice bearing no. 19/CE/R-
VI/Ris/Kol.IV/Adjn/2004 dated September 9, 2004 which alleged that the Company collected excess
amount in the name of freight and insurance charges which resulted in under valuation and consequently
short levy of duty of Rs. 0.2349 Crores for the period July 2000 to December 2003. The Company thus
contravened Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules,
2000and section 4(1)(a) of the Central Excise Act, 1944. The Additional Commissioner ordered the
Company to show-cause as to why this duty should not be recovered from them under section 11(A) of
the Central Excise Act, 1944. A penalty of Rs. 0.2349 Crores has also been imposed under section
11(AC) of the said Act and Rule 25 of Central Excise (no. 2) Rules 2001. The Company has written to
the Additional Commissioner for the show-cause notice to be dropped. No order has been passed as
yet and the matter is currently pending.
xxxx. The Additional Commissioner, Central Excise, Kolkata issued show-cause notice bearing no. 27/CE/
R.VI/Rishra/Kol-IV/Adjn/06 dated July 31, 2006 which alleged non-inclusion of freight and insurance
charges in the assessable value at the time of removal of goods from factory premises. The Company
thus contravened the provisions of S 4 of the Central Excise Act, 1944 read with rule 7 of the Central
Excise Rules, 2000. The Additional Commissioner alleged that the Company evaded central excise and
education cess of Rs. 0.2833 Crores for the period September 1, 2005 to March 31, 2006. The Company
has written to the Additional Commissioner for the show-cause notice to be dropped. No order has been
passed as yet and the matter is currently pending.
277
II) Excise cases for less than Rs. 0.1 Crores:
i. There are 93 other central excise cases filed against the Company. The amount involved in these cases is Rs.
3.047 Crores. No order has been passed as yet and the matters are currently pending.
F. CUSTOMS
I) Customs duty cases in excess of Rs. 0.1 Crores:
i. The Company has filed writ petition no. 1023/1991 against the Union of India, Collector of Customs and
others in the High Court at Mumbai for the recovery of Rs. 0.2656 Crores in respect of customs duty at
normal rate of duty on filter bags, which were imported by the Company on concessional rate of duty.
No order has been passed as yet and the matter is currently pending.
ii. The Commissioner of Customs, Bangalore has issued show-cause notice c.no. VIII/10/20/2006 dated
March 3, 2006 to the Company demanding an aggregate sum of Rs. 1 Crore. The Company had
obtained two advance licenses for import of polyester/cotton-blended fabrics under Duty Exemption
Scheme. The said fabrics were imported duty-free in terms of notification no. 30/97 Cus dated April 1,
1997. As per the licenses the products to be imported were supposed to be 'men's shirts (full sleeves)'
but in reality 'trouser fabrics' were imported. The Company exported some of these trousers by availing
the export benefits under DEPB/drawback scheme while the balance was diverted to the domestic
market. The show-cause notice alleged that the Company violated the provisions of the EXIM Policy
1997-2002 and the conditions of the advance licenses and hence the demand. The Company has
replied to the show-cause notice requesting it to be dropped. The matter is currently pending.
iii. The Company has filed constitutional writ jurisdiction no. 3015 of 1987 against the Union of India and
the Collector and Asst. Collector of Customs (respondents) in the High Court at Kolkata for levying a
duty of 85% on two imported consignments when the duty should have been only 55%. The increase in
duty is Rs. 0.27 Crores. This happened because the duty was increased in the 1987-88 Budget before
the consignment reached Kolkata whereas the duty was only 55% when the consignment was booked.
The Company has requested the Court to declare that increase in duty does not apply to the
consignments in question and also asking the respondents to withdraw the purported assessment and
not collect duty of more than 55%. The Court dismissed the petition of the Company. The Company is in
the process of filing an appeal against the order of dismissal..
iv. The Commissioner of Customs, Kolkata has filed civil appeal no. 8371/2002 against the order of CEGAT
in the Supreme Court of India, which had set aside the stay application of the Commissioner. The
Commissioner had ordered the Company to pay duty on three consignments, which were not re-
exported under notification no. 158/95. This notification stipulated the conditions for clearance 'duty free'
of such re-imported goods for eventual re-export after repairs, re-conditioning etc., provided certain
conditions for re-export including a period of time of six months are met. One out of the three
consignments was exported under DEEC scheme and the other two under DEPB scheme. The
Commissioner of Customs had asked for duty on these three consignments aggregating to Rs. 0.3962
Crores. No order has been passed as yet and the matter is still pending.
II) Aggregate of customs duty cases for less than Rs. 0.1 Crores:
i. There are two other cases filed against the Company. The amount involved in these cases aggregates
to Rs. 0.157 Crores. No order has been passed as yet and the matters are currently pending.
ii. The Company has filed two other writ applications before the High Court at Kolkata against decisions
by the Department of Customs. The total disputed amount in the above two cases is Rs. 0.0329 Crores.
No order has been passed as yet and the matters are currently pending.
G. SERVICE TAX
I) Service Tax cases, appeals and show-cause cum demand notices in excess of Rs. 0.1 Crores:
i. The Commissioner of Service Tax, Bangalore issued show-cause notice c.no. IV/16/24/2006 ST Adjn/
4185 dated May 4 2006 to the Company under section 84 of Finance Act, 1994 demanding an aggregate
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service tax amounting to Rs. 0.7378 Crores. The Company had entered into an agreement with Aditya
Birla Global Trading House Limited, Mauritius under which the latter, a foreign company provided technical
assistance/information and transfer of technical know-how to the former. As the foreign company was not
resident in India, the Company was required under Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 to
pay service tax in terms of section 68 and to get themselves registered with the Department under
section 69 of the Finance Act, 1994. The Company did neither and thus contravened both the above
sections. The Assistant Commissioner of Service Tax issued show-cause notice in the first instance but
the proceedings were finally dropped. The Commissioner of Service Tax then issued a show-cause
notice again saying that dropping of proceedings was not proper and the said service tax in terms of
section 84 of the Finance Act, 1994 along with interest and penalty under section 76, 77 and 78 of the
said Act would be imposed on the Company. The Company has replied to the show-cause notice
requesting it to be dropped.
The Company attended a personal hearing on August 31, 2006 with the Commissioner, of Service Tax,
Bangalore, who vide his order dated September 14, 2006 confirmed the amount of Rs. 0.7378 Crores
and levied a penalty of Rs. 0.75 Crores under section 78 of Service Tax and Rs. 1000 under section 77
of the Service Tax Act. The Company is in the process of filing an appeal before the Appellate Tribunal,
Bangalore against this order.
ii. The Additional Commissioner, Service Tax, Kolkata issued show cause notice bearing c.no. V(5)61/ST-
Adjn/Addl.Commr/06/2358 dated March 23, 2006, which alleged that the Company wrongly availed the
benefit of exemption notification no. 32/2004-ST dated December 12, 2004 and violated section 68(1) of
the Chapter V/VA of Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994. This resulted in
short payment of Service tax and education Cess of Rs. 0.298 Crores during the period January 2005
to December 2005. The Additional Commissioner ordered the Company to show-cause as to why this
duty should not be recovered from them under section 68(1) and 75 of the Finance Act, 1994. A penalty
of has also been proposed for the contravention of the said Act. The Company has written to the
Additional Commissioner for the show-cause notice to be dropped. No order has been passed as yet
and the matter is currently pending.
iii. The Company has filed appeal no. ST/138/06/MUM dated June 5, 2006 and stay application no. ST/
STAY-1844/06-MUM against an order of Commissioner of Central Excise & Customs, Vadodara-II dated
January 25, 2006 confirming the demand of service tax amounting to Rs. 0.2239 Crores from the
Company under section 73 (1) (a) of the Finance Act, 1994 and also the interest on it at the applicable
rate as per the provisions of section 75 of Finance Act, 1994. By the same order the Company has also
been ordered to pay penalty of Rs. 500 under section 75 (a) of Finance Act, 1994, penalty of Rs. 1000
under section 77 of Finance Act, 1994, penalty at the rate of Rs.100 per day under section 76 of
Finance Act, 1994 for the period July 1, 2003 to July 8, 2004 and penalty of Rs. 0.2239 Crores under
section 78 of Finance Act, 1994. CESTAT ordered for dispensing off with pre-deposit of penalty amounts
during the pendency of the appeal.
iv. The Commissioner of Service Tax, Chennai issued a show-cause notice dated October 20, 2006 for
denial of exemption availed under GTA amounting to Rs. 0.745 Crores. The Commissioner also ordered
the Company to show-cause as to why interest and penalty should not be imposed under sections 75,
76 and 78 of the Finance Act, No order has been passed as yet and the matter is currently pending.
II) Service tax cases for less than Rs. 0.1 Crores:
i. There are two other cases filed against the Company. The amount involved in these cases aggregates
to Rs. 0.0535 Crores. No order has been passed as yet and the matters are currently pending.
H. SALES TAX
I) Sales Tax cases, appeals and show-cause cum demand notices in excess of Rs. 0.1 Crores:
i. The Company has filed an appeal before the Joint Commissioner of Sales Tax (Appeals) Rajkot against
order no. 4045/46 dated October 30, 2002 of the Assistant Commissioner of Sales Tax, Junagadh. The
Company was ordered to pay Rs. 0.906 Crores for the assessment period 2000-01 in respect of purchase
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tax, interest and penalty. No order has been passed as yet and the matter is currently pending.
ii. The Company has filed an appeal before the Joint Commissioner of Sales Tax (Appeals) Rajkot against
order no. 3075/76 dated September 29, 2003 of the Assistant Commissioner of Sales Tax, Junagadh.
The Company was ordered to pay Rs. 0.49 Crores for the assessment period 2001-02 in respect of
purchase tax, and interest. No order has been passed as yet and the matter is currently pending.
iii. The Company has filed an appeal before the Sales Tax Tribunal, Bangalore (Karnataka) against various
orders issued over the years by sales tax authorities. The Company was ordered to pay Rs. 0.2333
Crores for the assessment period 1981-82 to 1986-87 in respect of local sales tax and interest. No
demand has been received as yet and the matter is currently pending.
iv. The Company has filed special civil application no. 13554 of 2006 in the High Court of Gujarat against
public circular dated September 2, 2005 issued by the Sales Tax Commissioner of Gujarat, thereby
declaring earlier circular dated February 2, 2001 as void ab initio, and disallowance of concession on
sale/purchase of fuel. The impact of rescinding the concession retrospectively may result in a demand of
Rs. 5.34 Crores. No demand has been received as yet and the matter is currently pending.
v. The Company has appealed before the West Bengal Appellate & Revisional Board against the assessment
of Rs. 0.1441 Crores under the Bengal Finance (Sales Tax) Act, 1941 for the accounting year 1992-93.
No order has been passed as yet and the matter is currently pending.
vi. The Company has appealed before the West Bengal (Appellate) & Revisional Board against the
assessment of Rs. 0.1441 Crores under the Central Sales Tax Act, 1956 for the accounting year 1998-
99. No order has been passed as yet and the matter is currently pending.
vii. The Company has appealed before the Deputy Commissioner against the assessment of Rs. 0.704
Crores under the Central Sales Tax Act, 1956 for the accounting year 2000-01. No order has been
passed as yet and the matter is currently pending.
viii. The Company has appealed before the Deputy Commissioner against the assessment of Rs. 0.723
Crores under the Central Sales Tax Act, 1956 for the accounting year 2002-03. No order has been
passed as yet and the matter is currently pending.
ix. The Company has filed appeal TMP no. 408/2004 in TA no. 1413/2004 against the order of Commercial
Tax Officer, Vishakhapatnam in the Sales Tax Appellate Tribunal, Hyderabad. The Company manufactured
sea water magnesia but due to the dumping of goods from China it had to close down its business
permanently. The Company sold of its assets and availed sales tax deferment of Rs. 1.06 Crores. The
Commercial Tax Officer ordered the Company to pay deferred tax, which was objected to by the Company.
The Company appealed before the same Tribunal in another appeal against this order but nonetheless
paid the tax. That matter is currently pending. In the meantime the Commercial Tax Officer issued a
notice under section 16 (3) of A.P.G.S.T. Act demanding interest of Rs. 0.3372 Crores which was cut
down to Rs. 0.1357 Crores by the Appellate Deputy Commissioner (CT), Vishakhapatnam on appeal.
The Company has appealed against this demand of Rs. 0.1357 Crores. The Tribunal has granted a stay
in respect of Rs. 0.1 Crores subject to payment of remaining Rs. 0.0357 Crores. The main appeal is yet
to be listed for hearing.
x. The Assistant Commissioner Commercial Taxes, Corporate Division, West Bengal passed assessment
order 04 (CD-107) 2002-03 for the four quarters ending March 31, 2001 ordering the Company to pay
a sum of Rs. 0.238 Crores under the West Bengal Sales Tax Act, 1994. The Deputy Commissioner
Commercial Taxes vide his order dated May 29, 2006 has decided the appeal by reducing the demand
from Rs. 0.238 Crores to Rs. 0.1284 Crores. The Company is in the process of filing an appeal against
the aforesaid order.
xi. The Company has appealed against assessment order 23 (CD-107)/2002-03, for the four quarters
ending March 31, 2002 before the Deputy Commissioner, Commercial Taxes, Corporate Division, West
Bengal. The Company has requested for a stay petition against the demand of Rs. 0.418 Crores. No
order has been passed as yet and the matter is currently pending.
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ADITYA BIRLA NUVO LIMITED
xii. The Company has appealed before the West Bengal Appellate & Revisional Board against an assessment
of Rs. 0.132 Crores under the Central Sales Tax Act, 1956 for the accounting year 1995-96. This liability
arose on account of freight charges and the Deputy Commissioner (Appellate) had disallowed further
appeal. No order has been passed as yet and the matter is currently pending.
xiii. The Company has appealed before the West Bengal Appellate & Revisional Board against an assessment
of Rs. 0.147 Crores under the Central Sales Tax Act, 1956 for the accounting year 1997-98. This liability
arose on account of freight charges and the Deputy Commissioner (Appellate) had disallowed further
appeal. There is also a liability on account of non-receipt of 'STD' forms and a penalty has also been
imposed. No order has been passed as yet and the matter is currently pending.
xiv. The Company has appealed before the West Bengal Appellate & Revisional Board against an assessment
of Rs. 0.157 Crores under the Central Sales Tax Act, 1956 for the accounting year 1998-99. This liability
arose on account of freight charges and the Deputy Commissioner (Appellate) had disallowed further
appeal. There is also a liability on account of non-receipt of 'STD' forms. No order has been passed as
yet and the matter is currently pending.
xv. The Company has appealed before the Deputy Commissioner (Appellate) against the assessment of
Rs. 0.137 Crores under the Central Sales Tax Act, 1956 for the accounting year 1999-2000. This liability
arose on account of freight charges and there is also a liability on account of non-receipt of 'STD' forms.
No order has been passed as yet and the matter is currently pending.
xvi. The Company has appealed before the Deputy Commissioner (Appellate) against the assessment of
Rs. 0.145 under the Central Sales Tax Act, 1956 for the accounting year 2000-01. This liability arose on
account of freight charges and there is also a liability on account of non-receipt of 'STD' forms. No order
has been passed as yet and the matter is currently pending.
xvii. The Company has appealed before the Deputy Commissioner (Appellate) against the assessment of
Rs. 0.124 under the Central Sales Tax Act, 1956 for the accounting year 2001-02. This liability arose on
account of freight charges and there is also a liability on account of non-receipt of 'STD' forms. No order
has been passed as yet and the matter is currently pending.
xviii. The Company has appealed before the Deputy Commissioner (Appellate) against the assessment of
Rs. 0.317 Crores under the Central Sales Tax Act, 1956 for the accounting year 2002-03. This liability
arose on account of freight charges and there is also a liability on account of non-receipt of 'STD' forms.
No order has been passed as yet and the matter is currently pending.
xix. The Company has filed case no. W.P. no. 11 of 1995 in the High Court at Kolkata against an order of the
Commissioner of Commercial Taxes, West Bengal demanding payment from the Company of Rs. 1.6749
Crores. No order has been passed as yet and the matter is currently pending.
II) Sales tax cases for less than Rs. 0.1 Crores:
i. There are 39 other cases filed against the Company involving a total amount aggregating to Rs. 1.17
Crores. No order has been passed as yet and the matters are currently pending.
J. Other Taxes, Fees and Cess
I) Cases, appeal and show-cause demand notices in excess of Rs. 0.1 Crores:
i. The Assessing Officer, Textile Committee, Coimbatore passed an order dated April 7, 2000 confirming
cess demand of approximately Rs. 1.33 Crores under Textiles Committee (Cess) Rules, 1975 for the
period 1981-82 to 1998-99 on the Company. The order held the Company to be a manufacturer for the
purpose of applicability of cess under the Textiles Committee Act read with Textiles Committee (Cess)
Rules, 1975. The Company filed an appeal before the Textile Committee Cess Appellate Tribunal, Mumbai
against the above order. The Tribunal confirmed the order passed by the Assessing Officer. The Company
has filed a writ petition no. 817 of 2006 in the High Court at Mumbai against the order of the Appellate
Tribunal. Pursuant to an interim order dated March 21, 2006 of the High Court, the Company has been
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ordered to deposit a sum of Rs. 0.7 Crores and a bank guarantee of Rs. 0.6266 Crores with the
Assessing Officer, Textiles Committee, Coimbatore. The Company has paid the amount and furnished
the bank guarantee on April 10, 2006 as per the order. The matter is currently pending.
ii. The Company has filed an appeal before the Appellate Tribunal under the Textile Cess Act, Mumbai
against the Textile Committee's seven demand notices all dated January 2, 2006 and one demand
notice dated February 14, 2006 issued to the Company demanding cess of approximately Rs. 1.19
Crores on account of the failure of the Company to submit monthly returns in accordance with Rule 4 of
the Textiles Committee (Cess) Rules, 1975. Meanwhile the Textile Committee Coimbatore initiated recovery
proceedings through Deputy Commissioner, Bangalore South Taluk. The Company appealed to the High
Court of Karnataka to stay the recovery proceeding pending disposal of the appeal before the Appellate
Tribunal, Mumbai. The Court passed an interim order November 10, 2006 ("Order") granting a stay on
recovery of the cess amount provided that the Company deposit Rs. 0.6 Crores within four weeks of the
Order and also furnish security for the balance amount.
iii. The Company has filed W.P. no. 7832 (W) of 2005 against the State of West Bengal in the High Court
at Kolkata for allegedly claiming land revenue of Rs. 0.2032 Crores under the Land Revenue Act. The
Company has submiited that the revenue imposed by the impugned Act has been imposed in an
arbitrary manner. In the year 2003 the rate of revenue was again increased some 50 times. The Company
has requested the Court to issue a writ in the nature of mandamus ordering the State of West Bengal
and their agents to act and proceed in accordance with law and not to give effect to the impugned
demand of revenue. The High Court passed a stay order in favour of the Company and the Company is
in the process of depositing the tax as per old rates.
iv. The Company has filed complaint case no. 118/2002 against the United India Insurance Company
Limited before the State Consumer Dispute Redressal Commission, Lucknow alleging that the United
India Assurance Company Limited illegally repudiated the Company's request for refund of the premium
amount. The Company had taken a policy, which entitled the Company to a refund of the premium up to
a maximum of 50% downward of the sum insured. The policy was issued on estimated gross profit of
Rs. 13.40 Crores but as actual profit was less than the estimated profit and so the Company requested
the opposite party to refund the premium on the difference between the two. Thus the Company requested
for a refund of Rs. 0.1874 Crores plus interest. No order has been passed as yet and the matter is
currently pending.
v. The Bank of Rajasthan has filed case no. 483 of 1995 against the Company before the Debt Recovery
Tribunal, Delhi. The Company got usance promissory notes discounted from the Bank of Rajasthan. The
Company paid the amount due on the said notes late and failed to pay overdue interest for delayed
payment. The Company is further liable to pay amounts due under other promissory notes as well. The
total amount involved is Rs. 0.1738 Crores. The Bank has requested the Tribunal to pass a decree in
favour of the Bank for the said amount along with interest. No order has been passed as yet and the
matter is currently pending.
vi. Modern Malleables has filed appeal no. 124 of 2000 against the Company and the Uttar Pradesh State
Electricity Board in the High Court at Kolkata. The Company entered into an agreement with Modern
Malleables for acquiring suspension hardware fittings and double tension hardware fittings required to
be supplied to the Uttar Pradesh State Electricity Board. Modern Malleables alleged that as a result of
lockout declared in the factory of the Company, Modern Malleables was forced to withhold supply to the
Company. Modern Malleables also alleged that the Company agreed to Modern Malleables supplying
hardware directly to the Company and that the Company would pay Modern Malleables the bills raised
by the latter. The total amount asked for by Modern Malleables including sales tax liability, special
customs duty, interest, damages, etc. amounts to Rs. 5.92 Crores. No order has been passed as yet and
the matter is currently pending.
vii. The Company has filed a case in the High Court at Kolkata dated July 14, 1998 against General
Furnace Construction Private Limited, Australia The Company had placed orders with General Furnace
for supply and commissioning of two shuttle kilns. General Furnace represented that the kilns were of
superior quality but the performance of the kilns was entirely unsatisfactory. Despite efforts General
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ADITYA BIRLA NUVO LIMITED
Furnace was unable to rectify the defects and the Company rejected the kilns. The Company demanded
repayment of Rs. 129.11 Crores for the kilns but General Furnace refused to take back the kilns and
repay the money. The Company has requested the Court for a decree of Rs. 129.11 Crores against
General Furnace as well as interim interest and interest on judgment. No order has been passed as yet
and the matter is currently pending.
viii. The Company has filed an appeal in the High Court at Kolkata against Modern Malleables Limited. On
or about February 28, 1994, the Uttar Pradesh State Electricity Board (UPSEB) placed an order on the
Company for supply of several insulators and hardware fittings. The Company then placed an order with
Modern Malleables for supply of hardware fittings as per specifications of UPSEB. It was agreed between
the Company and Modern Malleables that delivery of the said goods to UPSEB would commence in
November 1994 and be completed by May 1995. Time was always of the essence of the contract.
Modern Malleables failed to supply the entire hardware fittings contracted for to UPSEB. Further the
goods supplied were alleged to be of substandard and unsatisfactory quality. The Company had to
procure additional goods to supply to UPSEB. It has now requested the Court to order Modern Malleables
to pay Rs. 1.62 Crores to the Company for the additional cost of procuring the said goods. It has also
requested the Court for interest at 24% to be paid on the said amount from November 1, 1997. The
Company also claims damages of Rs. 2 Crores. No order has been passed as yet and the matter is
currently pending.
ix. The Company has sent a legal notice to the West Bengal State Electricity Board demanding Rs. 0.82
Crores on account of interest on delayed payment against IDBI re-discounting scheme.
x. The Enforcement Directorate, Department of Revenue, Government of India issued show-cause notice T-
4/90-B/SDE/AKB/2002 (SCN II) dated May 20, 2002 to the Company and its employees including Adesh
Kumar Gupta (then Joint President of BGFL, currently director of the Company) for violating various
sections under Foreign Exchange Regulation Act read with Foreign Exchange Management Act amounting
to US$ 2,37,554. The Company was in money changing business in 1994-95 and released foreign
currencies and travellers cheques to Al Haque Travels, Al Falak Tours and Travels and Classic Tours
and Travels under basic travel quota in the names of different persons during the period June 1995 to
September 1995. It is alleged that the Company released the above foreign currencies/travellers cheques
without following the terms and conditions laid down by the Reserve Bank of India for issue of foreign
currency/travellers cheques. The Additional Commissioner of Income Tax and Adjudicating Officer under
the Foreign Exchange Regulation Act, Mumbai heard the matter. The Additional Commissioner by his
order dated June 10, 2005 dropped the charges against Adesh Kumar Gupta and another employee of
the Company but imposed a penalty of Rs. 0.081 Crores against the Company. The Company has filed
appeal no. 716 of 2005 before the Appellate Tribunal for Foreign Exchange, New Delhi against the
order of the Additional Commissioner. The Company paid the penalty and requested the Tribunal to
quash and set aside the order dated June 10, 2005 passed by the Additional Commissioner and also
to stay the impugned order. The Tribunal by its order dated April 7, 2006 granted a stay against the
impugned order. The matter is currently pending.
xi. The Enforcement Directorate, Department of Revenue, Government of India issued show-cause notices
No. T-F/132/SDE-AKB/B/2002 (SCN III) 5331 and T-F/132/SDE-AKB/B/2002(SCN III) 5331 T-4/132/SDE-
AKB/B/2002 (SCN IV) 5323 dated May 29, 2002 to the erstwhile Birla Global Finance Limited (BGFL)
(now merged with the Company) and its officials Adesh Kumar Gupta (then Joint President of BGFL,
currently director of the Company), Madhavan Menon, Atul Jain, Madhav Vengurlekar, Gajanand Agarwal,
Orlando D'Souza and Jaswant Puthran for alleged non-compliance of provision of section 7 (4) read
with section 6 (4) and section 6 (5) and section 49 of Foreign Exchange Regulation Act, 1973 and have
thereby rendered themselves liable to be proceeded against under section 50 of Foreign Exchange
Regulation Act, 1973 read with section 49 (3) and section 49 (4) of Foreign Exchange Management Act,
1999, while issuing foreign exchange of US$ 1,16,200 and US$ 1,07,800 to Jairam Exports and Vikas
Exports respectively under an authorization granted by the Reserve Bank of India. As per submissions
made by Company, the alleged contraventions, if any had been committed by the junior employees of
the company for their own benefit without any knowledge or neglect of the Company or its senior
officers including Adesh Kumar Gupta and therefore the proceedings may be dropped against them.
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II) Other Tax, Fees and Cess cases below Rs. 0.1 Crores:
i. There are 11 other tax, fee, cess cases filed against the Company or orders against which the Company
has appealed aggregating to Rs. 0.987 Crores. No order has been passed as yet and the matters are
currently pending.
K. Miscellaneous Cases
I) Cases, appeals and notices against the Company:
i. Tamil Nadu Pollution Control Board served proceedings no. T9/TNPCB/F.2690/TVLR/06 dated April 6,
2006 against the Company for contravening the instructions of a previous order ordering the Company
to install a scrubbing system for the emission from the main boiler for power generation. The Company
thus contravened section 21 of the Air (Prevention and Control of Pollution) Act, 1981 as amended in
1987 and was directed to show cause as to why penal action should not be taken against it under
section 37 of the said Act and why directions under section 31 A should not be issued for closure of the
unit, stoppage of power and water supply etc. The Company has requested the Chairman, Tamil Nadu
Pollution Control Board to set aside the order. No order has been passed as yet and the matter is
currently pending.
ii. Mohammad Salman has filed writ petition no. 996/1993 against the Company and other parties in the
High Court at Allahabad, Lucknow Bench. The petition is against non-compliance of the assurance
given by the Company and the other parties to provide a job to Mohammad Salman in 'Indo Gulf
Fertilizers and Chemicals Corporation Limited', a unit of the Company while acquiring the agricultural
plots of Mohammad Salman. Mohammad Salman also alleged violation of Articles 14 and 16 of the
Constitution on the ground that he has been discriminated against while others similarly situated have
been granted jobs. Mohammad Salman has prayed for a writ of mandamus asking Indo Gulf Fertilizers
and Chemicals Corporation Limited to provide a job to him in Class III. No order has been passed as
yet and the matter is currently pending.
iii. Basheer Ahmad has filed writ petition no. 9955/1993 against the Company and other parties in the High
Court at Allahabad, Lucknow Bench. The petition is against non-compliance of the assurance given by
the Company and the other parties to provide a job to Basheer Ahmad in 'Indo Gulf Fertilizers and
Chemicals Corporation Limited', a unit of the Company while acquiring the agricultural plots of Basheer
Ahmad. Basheer Ahmad also alleged violation of Articles 14 and 16 of the Constitution on the ground
that he has been discriminated against while others similarly situated have been granted jobs. Basheer
Ahmad has prayed for a writ of mandamus asking Indo Gulf Fertilizers and Chemicals Corporation
Limited to provide a job to the former in Class III. No order has been passed as yet and the matter is
currently pending.
iv. The Indo Gulf Employees Union has filed writ petition no. 1761 of 1993 against the Company and
others in the High Court of Judicature at Allahabad, Lucknow Bench. The Indo Gulf Employees Union
has prayed for a writ, order or direction in the nature of mandamus, commanding the Company and
others not to stop the Indo Gulf Employees Union to demonstrate, protest and assemble to raise their
voice about their grievances before the management. The Indo Gulf Employees Union has also prayed
for quashing the judgments of lower courts so far they prohibit the petitioner to protest and to raise
voice about their grievances at the distance of 150 meters. No order has been passed as yet and the
matter is currently pending.
v. Savitri Singh and others in claim petition no. 429 of 2000 have applied as legal representative for the
grant of compensation on account of death of R.B. Singh who died in a motor vehicle accident. The
amount of compensation being claimed is Rs. 0.25 Crores. The vehicle involved in the accident was
originally registered in the name of the Company. Savitri Singh and others have filed an application for
impleadment of the Company as a defendant in the claim petition claiming that the vehicle was registered
in the name of the Company at the time of the accident. No order has been passed as yet and the
matter is currently pending.
vi. Mata Pher Singh has filed suit no. 995 of 1994 for mandatory and permanent injunction against the
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Company and has sought the relief of injunction restraining the Company from making any obstruction
or interference in the worship of Devi Anjana Ma in the temple situated with in the premises of the
Company's factory. Mata Pher Singh has also prayed for the relief of mandatory injunction directing the
Company to remove the wall of the Factory and after removing debris from there allow the plaintiff to
worship in the Devi ANjana Ma Temple. No order has been passed as yet and the matter is currently
pending.
vii. Pradeep Kumar has filed suit no.1932 of 1999 in the City Civil Court, Kolkata against the Unit Trust of
India and others. The Company has also been made a party to the suit. Pradeep Kumar has prayed for
a declaration that he is the owner of the 2500 Master Gain Units under a scheme of the Unit Trust of
India and is entitled to all rights issues, bonus, dividend or any other benefit, if any, declared, in respect
of the same of which 2,300 Master Gain Units were wrongfully transferred. Pradeep Kumar has asked
for a direction to the Unit Trust of India to issue duplicate certificates in lieu of the original unit certificates
and has prayed for an injunction restraining the Unit Trust of India and the transfer agency to transfer
and/or to deal with the said 2500 Unit Master Gain-1992. No order has been passed as yet and the
matter is currently pending.
viii. Ram Lakhan Sharma has filed suit no. 192/97 in the Court of Additional Civil Judge, Sultanpur to
perform puja at Anjani Mata Temple situated inside the factory premises. The contention of Ram Lakhan
Sharma is that plot no. 1988 on which Anjani Mata Temple was constructed originally belonged to his
father and his father had constructed the Anjani Mata Temple. No order has been passed as yet and the
matter is currently pending.
ix. Raies Ahmed has filed case no. 81/2006 against the Company under sections 33 and 39 of the Uttar
Pradesh Land Revenue Act, 1901 for correction in the revenue records pertaining to land comprised in
plot no. 1341 situated at Sapthin Village, Musafirkhana, Sultanpur. The Company has claimed that the
land belongs to the Company. The Company is yet to file its written statement in the matter. No order
has been passed as yet and the matter is currently pending.
x. Pradeep Singh has filed suit no. 355/05 before Civil Judge, Sultanpur praying for issue of injunction
thereby restraining the Company from forceful eviction of Pradeep Singh from the Company's house in
the township. Pradeep Singh had also applied for interim injunction against the Company. The Court by
its order dated January 28, 2006 dismissed the application for the interim injunction. Against the order
dated January 28, 2006 Pradeep Singh has filed miscellaneous civil appeal no. MCA 10/06 before the
District Judge, Sultanpur. No order has been passed as yet and the matter is currently pending.
xi. Ministry of Electricity, Syrian Arab Republic, PEDEEE, Damascus, Syria had written three letters dated
August 18,1998,April 16,2000 & June 10, 2000 to the Company asking them to pay US$ 2,28,000 as
penalty, arrived upon in contract no. 443/EXT/1994 for the delay in supply of 20 K.V. Long Rod Insulators
and Support Insulators Medium Voltage and also vide letter dated November 6,2000 to pay a sum of
US$ 4204.8 as penalty, arrived upon in Contract No: 60/EXT/DIS/96 for the delay in supply of Lightning
Arresters 66 K.V. The Ministry has filed a case against company before Syrian Arab Republic, State
Council Court of Administrative Prosecution, Damascus, Syria. In addition to the above two contracts,
the Ministry has also filed case against five more contracts relating to supplies made from Rishra unit.
The total amount of claim involved under seven contracts signed between the parties is US $ 4,27,713
out of which US$ 1,95,509 relates to Insulator, Rishra Unit for five contracts and US$ 2,32,204 relates
to supplies made by Insulator, Halol unit for two contracts. No order has been passed as yet and the
matters are currently pending.
The Company was also asked vide fax letter dated April 27, 2002 (the "Faxed Letter") to pay US$
2,362.5 as penalty arrived upon in contract no. 125/EXT/2000 for the delay in supply of 20KV indoor
post insulator porcelain type and US$ 272 as penalty of containers. No case has been filed against the
Company for the amounts asked for in the Faxed Letter.
xii. Indo Gulf Fertilizers Limited was merged with the Company pursuant to the orders dated January 10,
2006 and March 27, 2006 respectively of the Gujarat High Court and the Allahabad High Court, Lucknow
Bench. Vishweshwar Madhavrao Raste, a shareholder of ABNL had opposed the sanction of the scheme
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of amalgamation between the Company and Indo Gulf Fertilizers Limited in the Allahabad High Court
on the ground that the scheme was not genuine or bonafide. The Allahabad High Court overruled his
objections. Vishweshwar Madhavrao Raste did not file any objections to the sanction of the scheme in
the Gujarat High Court. In the meantime the scheme of amalgamation was fully implemented and
shares of the Company were issued and allotted to the shareholders of erstwhile Indo Gulf Fertilizers
Limited. Vishweshwar Madhavrao Raste has subsequently filed an appeal in the Allahabad High Court,
Lucknow Bench, which is currently being heard.
xiii. Birla Global Finance Limited was merged with the Company pursuant to the orders dated January 27,
2006 and June 17, 2006 respectively of the High Court at Mumbai and the Gujarat High Court.
Vishweshwar Madhavrao Raste, a shareholder of the Company had opposed the sanction of the scheme
of amalgamation between ABNL and Birla Global Finance Limited and his objections were overruled by
both the High Courts. In the meantime the scheme was fully implemented and shares of the Company
were issued and allotted to the shareholders of the erstwhile Birla Global Finance Limited. Vishweshwar
Madhavrao Raste has subsequently filed an appeal in the Gujarat High Court to stay the order passed
by the Gujarat High Court on June17, 2006. This appeal has been rejected by the High Court on
December 1, 2006.
Although Ramniranjan Kedia Tourism Services Private Limited and Vishal Kedia did not oppose the
sanction of the scheme of amalgamation between ABNL and Birla Global Finance Limited in the High
Court at Mumbai, they have since filed company application no. 525 of 2006 in the High Court at
Mumbai seeking the recall of the order sanctioning the scheme and for a declaration that the scheme is
not bonafide, is unjust and contrary to public interest. This application is pending in the High Court at
Mumbai.
xiv. SEBI issued a letter to the erstwhile Birla Global Finance Limited, now amalgamated with the Company
("BGFL") alleging violation of Regulation 6(2) of the Takeover Code in the year 1997 and the Company
has agreed to settle the same by settlement consent order. SEBI had introduced a Regularization
Scheme, 2002 (the "Scheme") for non-compliance with Regulation 6 & 8 of the Securities and Exchange
Board of India (Substantial Acqusition of Shares and Takeovers) Regulations, 1997 in the year 2002-03
and BGFL did not avail of the Scheme. SEBI vide its letter dated July 21, 2004 imposed a penalty on
BGFL under section 15A of SEBI Act, 1992 and also informed BGFL that they were liable for prosecution
under section 24 of the SEBI Act, 1992. SEBI also decided to consider the request of BGFL or consent
order if BGFL was willing to pay a penalty of Rs. 25,000. BGFL vide its letter dated August 19, 2004
consented to pay the penalty and was also willing to waive their right to a hearing under rule 4(5) of
SEBI (Procedure for Holding Inquiries and Importing of Penalties by Adjudicating Officer) Rules, 1995. In
this regard Final Order is awaited from SEBI pursuant to which penalty will be paid, if any.
xv. Praveen Goyal has filed a case before the District Consumer Disputes Redressal Forum, Panipat for
transfer of resultant 33 Company shares allotted on 100 shares of the erstwhile Birla Global Finance
Limited ("BGFL") along with a compensation of Rs. 0.0075 Crores on account of deficient and negligent
services. Praveen Goyal had lodged 100 shares of erstwhile BGFL vide his letter July 8, 2006 with MCS
Limited for transfer in his favour. The transfer could not be effected before July 17, 2006, the record date
and the corresponding shares of the Company were allotted in the name of the original registered
holder. The Company has requested the original holder to return the 33 shares allotted. The matter is
currently pending.
xvi. Tata Industries Limited has initiated proceedings against Grasim Industries Limited alleging breach of
the shareholders agreement dated December 15, 2000 in relation to the equity shares of Idea Cellular
Limited. This litigation has been disclosed under the litigation involving Grasim Industries Limited on
page 314 of this Letter of Offer. If the litigation is decided against Grasim Industries Limited, this could
have a material adverse effect on our Company as Idea Cellular Limited is our joint venture company.
II) Cases and appeals by the Company:
i. The Company has filed an appeal dated March 6, 2006 before the Chairman and Appellate Committee
of the Gujarat Pollution Control Board, Gandhinagar against the Member Secretary of the Gujarat Pollution
Control Board to quash and set aside an order demanding water cess of Rs. 0.0402 Crores under
section 13 of the Water Cess Act against assessment order no. 5883 dated February 10, 2006 for the
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ADITYA BIRLA NUVO LIMITED
assessment year 2004-05. The Company has requested for a 25% rebate to be allowed as provided in
the Act and cess rate be charged on the lower side applicable to those industries which have effluent
treatment facilities in their plant. The Company has also requested the Appellate Committee for ad-
interim relief to direct the Member Secretary not to recover the bill amount of water cess and interest on
the bill. No order has been passed as yet and the matter is currently pending.
ii. The Company has filed W.A. no. 1332 of 2004 against the Government of Andhra Pradesh and others
(respondents) in the High Court of Andhra Pradesh at Hyderabad. The appeal is against the order of the
Single Judge dated June 23, 2004 passed in W.P. no. 6957 of 2001 filed by the Company against the
order of the General Manager, District Industries centre cancelling the eligibility certificate granting
rebate in electricity. The Company got 25% rebate in power bills for its unit in Vishakhapatnam. The
maximum rebate for a total of 3 years was Rs. 0.5 Crores. The respondents issued an eligibility certificate
to the Company granting the rebate. The Company started commercial production in February 1998 and
full rebate was availed by the Company in June, July and August. It then started paying for electricity at
the normal tariff. The Company had to close in December 1998 due to adverse market conditions. The
respondents then cancelled the eligibility certificate granted and adjusted the rebate of Rs. 0.5 Crores
retrospectively from excess deposit lying in the account of the Company. The Company now appeals
against this cancellation. The order of the Single Judge has been suspended and the main case is yet
to be listed for hearing.
iii. The Company has filed an appeal with the Secretary, Electricity, Government of Tamil Nadu to set aside
the order of the Chief Electrical Inspector to the Government of Tamil Nadu who had issued demand
bearing no. 14931/A1/2004 dated June 8, 2005 to the Company demanding an aggregate sum of Rs.
2.47 Crores and interest thereon for electricity tax and additional electricity tax under Tamil Nadu Electricity
(Taxation on Consumption) Act, 1962 and Tamil Nadu Tax on Consumption or Sale of Electricity Act,
2003. The demand under the above two Acts pertains to the period July 1999 to January 2005. The
Company has also filed a writ petition in the High Court at Chennai challenging the enactment of Tamil
Nadu Tax on Consumption or Sale of Electricity Act, 2003 by the Government of Tamil Nadu in
contravention of the objects of The Electricity Act, 2003 of Central Government. No order has been
passed as yet and the matter is currently pending.
iv. The Company has filed writ petition W.P. no. 192 (MB) of 1999 against orders of the Deputy Director,
Electricity Safety who had issued a recovery certificate to the Collector, Sultanpur against the Company
for the recovery of Rs. 0.2009 Crores alleged to be due from the Company as payment of electricity duty
pertaining to the period January 1997 to July 1997. The Company was further ordered to pay a sum of
Rs. 0.02009 Crores in the office of Tehsildar as 10% collection charges being imposed for collecting the
amount of money deposited by the Company. The Company was also ordered to pay a sum of Rs.
0.0295 Crores towards the interest on the ground that it had delayed the payment of electricity duty. The
Company has paid both electricity duty as well as the collection charges but has not paid the amount
claimed as interest. The High Court in its interim order dated January 15, 1999 held that if the Company
deposits half the amount of the interest and furnishes a bank guarantee for the remaining amount, the
amount shall not be recovered from the Company. 50% of the amount has been paid by the Company
and for the balance amount of Rs. 0.01475 Crores a bank guarantee has been given.
v. The Company has filed writ petition no. 6290 (M/B) of 2002 against Union of India and others in the
High Court at Allahabad, Lucknow Bench. The writ is against the order dated August 14, 2002 whereby
the Jute Commissioner had issued a direction for personal appearance by the Company for violation of
the order issued by the Government of India under section 3 (1) of the Jute Packaging Materials
(Compulsory use in Packing Commodities Act, 1987). The Company has prayed for a writ, order or
direction in the nature of Certiorari quashing the impugned notice dated August 14, 2002 and the
earlier show cause notices dated August 1, 1997, July 14, 2000 and May 24, 2001. No order has been
passed as yet and the matter is currently pending.
vi. The Company has filed writ petition 2945 (MS)/2002 against the order dated January 24, 2002 of the
Government of Uttar Pradesh transferring the case of Vinay K. Mandal from Labour Court, Faizabad to
Labour Court, Lucknow on the ground that the same is in violation of section 6 (G) of Uttar Pradesh
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Industrial Disputes Act, 1947. The respondent no. 4, Vinay K. Mandal had moved an application thereby
filing a conciliation case under the provisions of Uttar Pradesh Industrial Disputes Act, 1947. The
appropriate authority made a reference under section 4(K) of the Act to the Labour Court, Faizabad. On
the basis of said reference adjudication case no. 41 of 1994 was registered in the Labour Court,
Faizabad. Due to the retirement of the Presiding Officer in the Labour Court, Faizabad, respondent no. 1,
the State of Uttar Pradesh had transferred the case from Faizabad to Labour Court, Kanpur. In the
meantime the government had appointed the Presiding Officer at Labour Court, Faizabad and in view of
the said fact by means of order dated December 11, 2000 the matter was again transferred to Labour
Court, Faizabad. However, by an order dated January 24, 2002, the government had again transferred
the case from Labour Court, Faizabad to Labour Court, Lucknow. The matter is currently pending.
vii. The Company has filed special leave petition no. 1357-58 of 2-5 in the Supreme Court of India against
final judgement and order dated October 1, 2004 passed by the High Court at Allahabad in civil
miscellaneous writ petition nos. 25309 of 1998 and 20242 of 2001. H.L. Sharma, the respondent had
filed case no. 56 of 2000 under section 33-C(2) of the Industrial Disputes Act, 1947 before Labour
Court, Allahabad requesting Rs. 0.039 Crores as wages for the period April 3, 1992 to May 31, 2000.
The Labour Court ordered the Company to pay the said wages and this order was challenged by the
Company in the High Court at Allahabad. The High Court dismissed the appeal of the Company and so
the present appeal. The High Court had asked the Company to deposit half the amount in the Labour
Court, which was done by the Company. The respondent moved an application before the Labour Court
for withdrawal of this deposited sum and the Labour Court has directed the Company to explain as to
why this sum should not be released to the respondent. The Company has requested the Court for an
ad-interim order directing the Labour Court not to release the deposited sum to the respondent and
pass other orders which the Court may deem fit. No order has been passed as yet and the matter is
currently pending.
viii. The Company has filed case no. 128/05 for permanent injunction in the Court of Civil Judge (Senior
Division), Sultanpur for restraining the members of the Indo Gulf Fertiliser Employees Union (defendant)
from staging dharna, gherao, demonstration, meeting etc. with in the radius of 500 meters of the
Company's premises. The Company made an application praying for an ad-interim exparte injunction
order and the same was refused. The Company has preferred a revision petition against the order dated
April 4, 2005 of Civil Judge (Senior Division), Sultanpur by which the Civil Judge has ordered for
issuance of notice to the defendant instead of passing an ad-interim exparte injunction order on
application moved by the Company. The District Judge by his order dated April 21, 2005 has accepted
the revision petition and has ordered that the record of the original suit be returned back to the lower
court. The defendant has also been asked not to interfere with the day to day working of the Company
and also not to disturb the law and order in the premises of the Company. The matter is currently
pending.
ix. Essar Steel Limited has filed writ petition no. 3938 of 2002 before the High Court at Delhi challenging
certain decisions of Gas Authority of India Limited to make changes in the gas supply being made to its
industrial unit in order to fully comply with the directions of the Supreme Court. The said writ petition has
been transferred to the Supreme Court in transfer case no. 78 of 2002. On January 23, 2004 the
Company's oral application for intervention in the matter was allowed and it was directed that the
Company may file its affidavit in reply to the contention of Essar Steel Limited. The Company has
submitted that Gas Linkage Committee/Gas Authority of India Limited have misconstrued the Supreme
Court's order dated April 5, 2002 with regard to the priority of allocation of gas enjoyed by fertilizers,
particularly along the HBJ pipeline and has read the same order as a directive that after making the
necessary allocation of CNG to the transport sector in Delhi and in the other air polluted cities of India,
the balance available natural gas may be allocated to industries with preference to public sector units
and power projects. The Company has further submitted that all the grounds raised by Essar Steel
Limited in the present petition do not have any legal basis or force. The Company has further submitted
that there is no legal basis for re-conversion of the fall back basis allotment to Essar Steel and Reliance
Industries Limited into firm basis allotment as prayed by these companies in their respective transfer
cases. The Company has prayed for the dismissal of the transfer cases filed by above two units. No
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ADITYA BIRLA NUVO LIMITED
order has been passed as yet and the matter is currently pending.
x. The Company has filed a writ in the High Court at Allahabad against show-cause notice no. K/Inspection-
4/21-13433-31 dated March 22, 2001 issued by the Deputy Regional Director, Employee's State Insurance
Corporation, Kanpur for recovery of Rs. 0.1090 Crores from the Company as amount payable in respect
of employees under section 45(A) of the Employee's State Insurance Act, 1948 for the period January
2000 to February 2001. The matter is currently pending.
xi. The Company has filed five cases against the Employee State Insurance Corporation for demand
notices issued by the Corporation amounting to an aggregate amount of Rs. 0.053 Crores. No order has
been passed as yet and the matters are currently pending.
xii. The Company had purchased 12.5% Government of India stock for an aggregate value of Rs. 0.21
Crores through Birla Sunlife Securities Limited from Mafatlal Securities Limited, the respondent. The
Company lodged the said securities for transfer in its name, which was rejected on the ground that it
was a bad delivery. The Company called upon the respondent to cure the bad delivery either by refund
of amount along with interest or replacement of securities, which the respondent failed to do. The
Company initiated arbitration proceedings before the arbitrator of National Stock Exchange who passed
an award in favour of the Company. However the respondents appealed against the award in a Court
of a Single Judge at the High Court at Mumbai who said that the award does not stand on the ground
that no reasons were adduced to the award. The Company then filed an appeal against the stay in the
High Court at Mumbai and requested the Court to enable the arbitrator to furnish reasons in support of
his findings. The matter is currently pending.
L. Arbitration Proceedings
i. The Company has filed A.O.P. no. 871/2006 against Hindustan Petroleum Corporation Limited, the first
respondent and D.V. Subba Rao, the arbitrator and the second respondent in the Court of the District Judge
at Vishakhapatnam. The Company had entered into a supply agreement ("Agreement") dated March 26, 1997
with the first respondent for supply of low sulphur heavy stock and other liquid fuels to the Company. The
Agreement was to remain valid for a period of 20 years and further renewable for a period of ten years. As
per the arbitration clause in the Agreement, the second respondent had to make the arbitration award in
writing and publish the same within a period of six months after entering upon the reference or within such
time as mutually extended by the parties. The Company had agreed to pay the first respondent Rs 0.0105
Crores per month under the Agreement in return for storage tank facilities provided by the first respondent at
the Company's site. When the Company had to close down, the first respondent contended that it was
obligatory for the Company to buy the storage tanks under clause eight of the Agreement. The first respondent
filed an arbitration application in the High Court of Andhra Pradesh claiming Rs. 1.19 Crores for the storage
tanks and other charges. The second respondent was appointed the sole arbitrator by the High Court. The
Company contends that the time under which arbitration was to be decided expired and the arbitration
automatically got terminated. The Company has now appealed for a declaration by the District Judge of the
expiry of the arbitration clause between the Company and the first respondent and to restrain the second
respondent from proceeding under the arbitration clause of the Agreement. No order has been passed as yet
and the matter is currently pending.
ii. The Company had appointed Sanjiv Traders as wholesaler for the district of Etah under a wholesale agreement
dated April 1, 2003 for the products/fertilizers manufactured and marketed by the Company. There was an
outstanding balance of Rs. 0.1074 Crores due and payable by Sanjiv Traders to the Company as on March
31, 2004. The Company referred the dispute for adjudication to arbitration as per clause 22 of the wholesale
agreement. The matter is currently pending.
iii. Arbitration is going on between the Company and Richardson & Cruddas Limited (R&C) arising out of a
dispute under two contracts entered into between them in regard to erection of two electricity transmission
lines. The Company has claimed against R&C for outstanding bills, retention money and labour charges for
additional work. The Arbitration Tribunal by its order directed R&C to pay the Company on or before July 31,
2002, Rs. 1.0878 Crores in respect of bills due for payment on the Jamshedpur-Rourkela line and Rs. 0.457
Crores on the Durgapur-Jamshedpur line, subject to verification whether the payments made directly by
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Power Grid Corporation of India Limited directly to the Corporation have been given credit for by the Company
and deducting the amounts, if any, for which such credit has not been given by the Company in making its
claim. The Arbitration Tribunal also directed R&C to pay Rs. 0.2369 Crores in respect of the Jamshedpur-
Rourkela line and Rs. 0.2367 crores in respect of the Durgapur- Jamshedpur line withheld by it by way of
retention money and a sum of Rs. 0.01 Crores towards the cost of arbitration proceedings. The award has
been granted but R&C is sick under Board for Industrial and Financial Reconstruction and the payment is still
pending.
iv. Arbitration is going on between the Company and the Himachal Pradesh State Electricity Board (the "Board")
for a claim of liquidated damages by the Company against the Board. The amount involved is Rs. 0.1191
Crores. No order has been passed as yet and the matter is currently pending.
v. The Company has initiated arbitration proceedings against Ram Niranjan Kedia Tourism Services Private
Limited (RNK). The Company had extended hire purchase and loan facility to RNK. After the hire purchase
and loan agreements were entered into, RNK failed to make regular payment of the equated monthly
instalments (EMI) due. The cheques given by RNK were dishonoured. In view of the above, after following
proper procedure, the Company took possession of some of the vehicles. The Company filed five arbitration
claims before the Arbitral Tribunal of Indian Merchant's Chamber (IMC) and the arbitration was before the
sole arbitrator his Lordship justice M.H. Kania (former Chief Justice of India). The Company also filed arbitration
petition nos. 271, 378, 379 and 381 of 2001 in the High Court at Mumbai seeking various reliefs under
section 9 of the Arbitration and Conciliation Act, 1996. By an ad-interim order dated May 2 2001, the Court
appointed the Court Receiver, High Court, Mumbai to take possession of the vehicles of RNK. Pursuant to the
order of the High Court of Mumbai dated August 28, 2001 the petitions were made absolute and the ad-
interim order was made final. The Company has claimed Rs. 1.743 Crores from RNK with interest under the
arbitration proceedings.
RNK has filed counter-claims claiming Rs 6.69 Crores towards alleged wrongful possession of the vehicles
by the Company, replacement value of the vehicles with further interest till payment and/or realization and
have alleged that the Company has suppressed the true facts in their claims. RNK has disputed the Company's
right under the hire purchase and loan agreements to take possession of the vehicles. RNK has further
alleged that even if the Company had any right, the Company did not follow the mandatory procedure under
section 51 (5) of the Motor Vehicles Act, 1988. RNK has contended that due to the alleged illegal repossession
of the vehicles by the Company, RNK was entitled to raise debit notes on the Company on account of loss of
business and profit. The Company has disputed RNK's claims and has returned the debit notes to RNK. RNK
has claimed that even though the nomenclature of the agreement signed between RNK and the Company
was that of a hire purchase, in reality RNK was at all material times the owner of the vehicles. RNK has
further contended that the claims of the Company are false and frivolous and should be dismissed and has
prayed for an award declaring that RNK are the owners of the vehicles and for an order to the Company to
return the vehicles. Arbitration proceedings have not yet concluded.
vi. There are 210 other arbitration proceedings initiated by the Company at various forums in the country
aggregating to Rs. 1.736 Crores.
Litigation involving ABNL and Ramniranjan Kedia Tourism Services Private Limited
Complaints before SEBI
Ramniranjan Kedia Tourism Services Private Limited (“RNK”) had issued three letters dated October 10, 2006, October
13, 2006 and October 30, 2006 inter alia to SEBI alleging that there were certain proceedings involving RNK which were
not included in the draft letter of offer filed with SEBI. The Company has filed replies with SEBI providing its response to
the allegations made by RNK. Copies of the letters filed with RNK and the responses filed by the Company are available
for inspection at the registered office of the Company. Copies of the letters and our responses are included under the
heading “Material Documents for Inspection”.
Appeal before the Securities Appellate Tribunal
RNK has filed an appeal before the Securities Appellate Tribunal in relation to the issue of observations by SEBI on the
draft letter of offer and non disclosure of the details of the various litigations involving RNK. The appeal is pending
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ADITYA BIRLA NUVO LIMITED
admission. The next date of hearing is December 21, 2006.
Disclosures in relation to other litigation involving RNK
i. In relation to one of the eight cases under section 138 of the Negotiable Instruments Act, 1881 filed by BGFL
against RNK.
Mr. Kamal Kumar Kedia and Mr. Vishal Kedia directors of RNK have filed an application on September 20, 2005 for
initiating proceedings for prosecution of BGFL for contempt under Section 195 of Cr.P.C. before the Court of the
Metropolitan Magistrate at Andheri, Mumbai, which is pending for disposal.
ii. There are two writ petitions filed by Sumaya Auto wherein BGFL and RNK are the counter parties. There is one writ
petition filed by BGFL wherein RNK and Sumaya Auto are the counter parties. These cases are included in the
aggregate number of civil cases filed by and against ABNL on page 269 and 267 of this Letter of Offer. The details
of the writ petitions are as follows:
RNK had taken finance facility in the form of hire purchase and loan from BGFL (now merged with ABNL). Thereafter,
due to defaults on RNK’s part, BGFL repossessed the vehicles as per the provisions contained in the hire purchase
and loan agreements. Out of the vehicles repossessed by BGFL, 5 vehicles were sold to M/s. Sumaya Auto.
Subsequently M/s. Sumaya Auto got the said vehicles transferred in their own name. Due to this RNK made an
application before the Dy. RTO (PEN), which passed its order dated May 21, 2001 canceling the transfer of vehicles
to M/s. Sumaya Auto.
The said order was challenged through a writ petition before the High Court of Bombay sby Sumaya Auto. Also,
RNK preferred an appeal against the said order before the Deputy Transport Commissioner, which through its order
dated December 6, 2001 negated the charge in favour of BGFL and made RNK sole owner of the 5 vehicles. This
order dated December 6, 2001 was challenged by both BGFL and Sumaya Auto through two separate Writ Petitions
before the High Court at Mumbai. The learned single judge of Bombay High Court passed a common order in all
three writ petitions dated June 7, 2002 wherein a court receiver was appointed and Sumaya Auto was made the
agent of the Court Receiver to be in possession of the vehicles without any security and royalty. This order was
appealed by RNK under three letter’s patent appeal before the division bench of High Court at Mumbai. The said
division bench through its order dated July 31, 2003 upheld the order dated June 7, 2002. Thereafter, RNK
preferred a special leave petition before the Supreme Court of India, which was summarily dismissed vide order
dated December 3, 2003.
iii. There is a police report which refers to BGFL, in the matter of investigation of transfer of vehicles to Sumaya Auto,
based on a criminal complaint filed by RNK. BGFL is not named in the FIR. Two ex-employees of BGFL were
named in the police report who have applied for, and been granted, anticipatory bail.
iv. ABNL has received an order from the Appellate Authority viz the Chief Controlling Revenue Authority Maharashtra
State Pune in relation to deficient stamp duty and penalties on agreements executed between RNK and BGFL. As
the original agreements are in possession of the Police, due to which the Company has not been able to deposit
the same.
v. The statutory auditor of the erstwhile BGFL and ABNL received a letter from the lawyers to RNK alleging fraud not
disclosed in the BGFL auditor report for financial year March 31, 2005.
vi. There is allegedly an appeal filed by RNK in the High Court of Gujarat in relation to the amalgamation order of the
High Court of Gujarat in respect of ABNL and BGFL. A copy of the appeal has not been served on ABNL.
I. Small Scale Undertakings
For total outstanding dues to small scale undertakings as on March 31, 2006, see “Auditors Report” on page 145
of this Letter of Offer.
II. Group Companies
Material litigations involving our five group companies is as provided below:-
1. Hindalco Industries Limited
(A) Criminal cases filed against Hindalco:
i. The Central Excise Department., Madurai has launched prosecution in CCZ26/99 against Indal and A.
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Jayagopal, Manager, Indal for alleged evasion of excise duty in the Sessions Court, Madurai. Indal filed an
application under section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC") in
Crl 17682/02 in the Madras High Court to quash the said proceedings. A stay order with respect to the
proceedings in the Sessions Court has been granted by the Madras High Court on July 26, 2002. The
proceedings in the High Court have been transferred to the Madurai bench. The next date of hearing has not
been listed.
ii. The State of Jharkhand has filed case bearing No. Crl 83/ 92 in the Court of the Sessions Judge, Ranchi in
relation to private land transfer in the Lohardaga. The case has been filed against the former Mines Manager
of the Company, A C Julka. Proceeding has commenced in the court of the CJM, Gumla. Julka will appear in
the Court on dates as will be fixed by the Court from time to time. Lohardaga unit is taking required steps.
iii. Deolal Sahu has filed a case bearing compensation case no. 216/99 against Hindalco on December 8, 1999
in the Court of the additional District and Sessions Judge, Lohardaga under section 140 of the Motor Vehicles
Act for compensation of Rs. 25,000 due to loss caused in a jeep accident. Petition under section 140 of the
MV Act for the interim relief was decided in favour of the claimants. The matter is now pending for hearing of
the petition under section 166 of MV Act. The claim amount is Rs. 0.03 Crores.
iv. The Mining Officer, Lohardaga, Jharkhand has filed criminal case no. 1/1999 in the Sessions Court against
Hindalco for alleged encroachment of public road in the mines. Hindalco moved the Jharkhand High Court in
Crl Misc no. 8892/1999. The matter is pending in the High Court. The next date of hearing has not been listed.
The Deputy Commissioner, Lohardaga has filed separate proceedings in relation to the alleged encroachment,
which was decided against Hindalco. Hindalco appealed against the aforesaid order to the Commissioner,
which was also rejected. Hindalco has filed Writ Petition no. 3/2002 in the High Court of Ranchi against the
aforesaid order of the Commissioner. The matter is pending.
v. The District Forest Officer, Kolhapur has filed a criminal case No. 78/1998 in the Radhnagiri Court, Maharashtra
against the Mines Manager and others for alleged breach of forest laws while mining. The matter is pending.
vi. The Inspector of Factories launched prosecution against Hindalco in Crl No. 15240/87 in the Court of the
Magistrate, Thane under the Factories Act, 1948 for failing to appoint a Welfare Officer by the Unit Kalwa Foil,
as required by the statute. The matter is pending.
vii. The Inspector of Factories filed criminal prosecution in Crl. No. 893/1988 under the relevant provisions of the
Factories Act, 1948 against Hindalco pursuant to an explosion in the powder section of the Kalwa plant. The
said matter is pending in the Court of the Chief Judicial Magistrate, Thane.
viii. Bitain Nagesia and Sangeeta Nagesia have filed compensation case no. 24/04 and 27/04 respectively against
Hindalco in the Court of the District and Sessions Judge, Lohardaga under section 140 of the Motor Vehicles
Act claiming a compensation of Rs. 50,000 on account of the fact that their family member was killed in a
motor accident caused by a dumper truck belonging to Hindalco. The matter is pending for appearance of the
claimants' witnesses.
ix. R. N Tiwari and dismissed Badli workmen of Potroom Plant II have filed Crl.Misc. No. 5479/2000 against
Hindalco, the State and others in the Allahabad High Court. Before this, a criminal complaint No.2361/99 was
filed by Hindalco against the said R.N Tiwari under section 630 of the Companies Act, 1956 in the Court of
the Spl. CJM, Allahabad on grounds of encroachment of land of Hindalco. The concerned workman challenged
the maintainability and proceedings of the said case by challenging summoning order dated September 25,
1999 in Criminal Revision No. 116/2000 before the Sessions Judge Allahabad, which was rejected by the
Court vide order dated July 25, 2000. Aggrieved by the said order, he filed the present petition under section
482 of the Criminal Procedure Code challenging the orders dated September 25, 1999, July 25, 2000 and
January 6, 2000 passed by the Sessions Judge Allahabad. The High Court Allahabad stayed the proceedings
in Case No. 2361/99 vide order dated October 10, 2000. Counter has been filed. The matter is pending.
Before the High Court at Allahabad, to be listed in next cause list.
x. Ram Lal Rajbhar has filed a criminal miscellaneous petition no. 4301/2001 against the State of Uttar Pradesh
and Hindalco in the Allahabad High Court challenging the order of the Additional Sessions Judge, Allahabad
in criminal revision no. 1801/2001 which went against the Petitioner. The petitioner, formerly a workman in
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Hindalco, was the accused in Crl. Complaint no. 2360/99 filed in the Court of Spl. CJM Allahabad under
section 630 of the Companies Act by Hindalco on the grounds that the concerned workman encroached upon
Hindalco's land after his dismissal. He challenged the summoning order dated September 25, 1999 and the
maintainability of the same in criminal revision 1801/2001 before Addl. Session Judge Allahabad on the
ground that the land in question has been purchased by his wife and she is in possession over the land as
owner. The said revision was rejected by the Court vide order dated July 25, 1999. Aggrieved by the order of
Addl. Session Judge Allahabad, the petitioner has filed the instant case. The wife of Ram Lal Rajbhar has
also filed a civil suit No. 25/93 before Civil Judge (Senior Division) Sonbhadra, which is pending. The High
Court vide its interim order dated August 16, 2001 stayed the proceedings before the magistrate. A counter
affidavit has been filed in this regard, but no rejoinder has been filed. The matter is pending before the High
Court to be listed in next cause list.
xi. The State of Uttar Pradesh has filed Criminal Case No. 569/90 before the Munsif-Magistrate, Dudhi against
I.N Kapoor, who is the Factory Manager of the Renusagar Power Division on the grounds of non-compliance
of standing orders of Hindalco in respect of classification of workmen, termination of service and notification
on notice board of the name of officers appointed for granting leave of absence to workmen. The said I.N.
Kapoor has filed Cri. Misc. App. No. 14722/92 in the Allahabad High Court. The High Court has issued a
stay order staying the proceedings in 569/90 vide order dated November 18, 1992. The matter has not been
listed for further hearing.
xii. The State of Uttar Pradesh has filed Criminal Case No. 1834/91 before the Munsif-Magistrate, Dudhi against I.N.
Kapoor and S.S. Kothari as Occupier of the Renusagar Power Division for non-compliance rules relating to
methods of work as prescribed and causing the fatal accident of Late Prabhat Chander Sharma on April 10, 1990.
S.S. Kothari and factory manager of Hindalco have filed cri. misc. app. no. 14721/92 in the Allahabad High Court,
which has issued a stay order staying the proceedings in 1834/91 vide order dated November 18, 1992. The
matter was not listed for further hearing.
xiii. The State of Uttar Pradesh has filed Criminal Case No. 1866/91 against I.N. Kapoor and S.S. Kothari for non-
compliance of sections 7 (A) and 36 of Factories Act and U.P. Rules 1950 leading to the fatal accident of Late
Shankar Dayal Sharma on December 13, 1990. S.S. Kothari and factory manager of Hindalco have filed, Cri. Misc.
App. No. 14736/92 in the Allahabad High Court, which has issued a stay order staying the proceedings in 1866/
91 vide order dated November 18, 1992. The matter has not been listed for further hearing.
xiv. The State of Uttar Pradesh has filed case no. 3658/2003 in the Court of the CJM, Sonbhadra at Robertsganj
against Colonel Pushpendra Singh and others on the grounds that on May 24, 2003, the accused, who are
security guards in Hindalco attacked some miscreants who were attempting to hinder the task of repairing the
boundary wall of Hindalco. Cross FIRs were filed by both sides. A charge sheet against Hindalco Security Officers
was filed under sections 147, 148, 149, 307, 504, 506 and 427 of the I.PC. The CJM, vide order dated August 5,
2003 issued summons to the said security officers. Against this order, Hindalco Security Officials filed Criminal
Revision No. 3194/2003 before the Allahabad High Court, which vide its order dated November 5, 2003 stayed
the operation of order dated August 5, 2003 passed by CJM. Against this order, Hindalco Security Officials filed
writ petition No 3057 of 2003, which vide its order dated June 5, 2003 stayed the operation of order dated August
5, 2003 passed by CJM. By order dated July 12, 2004 the matter before the High Court is to be listed in next cause
list. The stay order issued in criminal revision has been extended till the hearing of the writ petition. At present the
proceedings of the case at C.J.M court has been stayed and matter before the High Court is to be listed in next
cause list. The criminal revision is pending before the High Court at Allahabad. In a related case, the Civil Judge
(Junior Division) Sonebhadra, has passed an ad interim injunction against the interference with the property of
Hindalco against the respondents in the abovementioned petition. This civil case has been disposed off in
company's favour on 31.05.05
xv. The State of Uttar Pradesh has filed case No. 1484/94 against K.K. Rathi in the court of the C.J(JD)-Dudhi. The
matter arose because the security guard Tribhuvan Singh killed a Kabari by firing at him with a company gun. He
was acquitted by Sessions Court on December 22, 1993. A criminal case was subsequently filed against K.K.Rathi
, who is the licensee of the gun on behalf of Hindalco. The Court of C.J.M.,-Sonbhadra vide order dated March 19,
1991 summoned K.K Rathi for appearance before the court. K.K Rathi filed Criminal Revision No. 454/91 before
the High Court at Allahabad against this order of summons by the CJM and for quashing of proceedings. The High
Court at Allahabad vide order dated October 7, 1995, stayed the operation of the order of CJM exempting
293
personal appearance before the court. The order is effective till date and case is pending before Munsif, Dudhi for
trial.
xvi. The State of Jharkhand has filed Case No. F 23/99 against N.K.Birla and twelve others of Manduapat Mines on
July 16, 1999 in the Court of the SDJM, Lohardaga under sections 26 and 63 of the Indian Forests Act and 2, 3A,
and 3B of Forest Conservation Act for illegal mining and loading of illegally mined out bauxite on a truck from
expired lease area of Manduapat mines on the instructions of N.K.Birla and the Mines Manager. A criminal
miscellaneous No.7767/99(R) was filed by the accused in the Jharkand High Court to pray for the quashing of the
said proceedings in the SDJM on October 12, 1999. The Cr. Misc was heard and admitted on April 18, 2000,
whereby the High Court stayed the proceedings of lower court. The matter is currently pending.
xvii. The State of Jharkhand has filed case no. F 32/2001 and F 37/2001 against V. K Agarwal and others of Pakhar
Mines on November 10, 2001 under sections 25 and 26 (d) of I.F. Act and F.C. Act in the Court of the CJM
Lohardaga alleging that Hindalco loaded various trucks with bauxite inside the Pakhar Bauxite Mines despite the
letter from District Forest Officer (DFO) bearing No. 722 dated February 13, 2001, which directed Hindalco not to
transport bauxite out of the said mine. The matter is currently pending.
xviii. The State of Jharkhand has filed a case in C I 12/2001 in the Court of the CJM, Gumla against R Mishra and others
of Gurdari mines on February 18, 2001 under sections 33, 41 and 42 of Indian Forest Act for illicit felling of Sal Tree
and loading on Dumper. The Court is awaiting sanction of D.F.O. because the forest department had only sent the
offence report in the court of CJM for information of the case. The CJM can take cognizance only after sanction of
D.F.O, which is still awaited.
xix. The State of Jharkhand has filed a case in C I 43/2001 in the Court of the CJM, Gumla against Aikat and others of
Jalim and Sanai Mines and others on May 9, 2001 under section 33 of the IF Act on the grounds of illegal mining
from Jalim P.F. Plot No.562, outside lease area and loading on a Truck. On February 20, 2002, Hindalco filed a
quashing petition no. Cr.M.P. No.252 of 2002 in the Jharkhand High Court at Ranchi which was heard and
admitted on July 29, 2002 whereby the Court stayed the proceedings of lower Court. Now the quashing petition
is pending at Jharkhand High Court at Ranchi for final hearing. The matter is currently pending.
xx. The District Forest Officer ("DFO") Ranchi West Division has filed two confiscation cases in no. 7/2000 against V.K.
Agarwal on February 18, 2001 and 1/2005 against G.M.(M.O) and others on March 3, 2005 under section 52 of the
IF Act on the grounds of illegally loading firewood from forest area on a Dumper and alleging Forest offence under
33 of I.F.Act and 2 of F.C.Act committed by using Dumpers respectively before the, D.F.O Ranchi. 7/2000 is pending
for hearing in D.F.O. Court, Lohardaga. With respect to the matter bearing no. 1/2005, Hindalco had filed W.P.(Cr)
No.146/05 in the Jharkhand High Court, Ranchi on April 19, 2005 against the order dated March 3, 2005 of the
D.F.O. This writ petition was partly heard on May 12, 2005 and the High Court ordered to stay the confiscation
proceedings of case No.01/05 pending in the court of D.F.O. Now the writ petition is pending in High Court for
further hearing.
xxi. The State of Jharkhand has filed case no. C I 06/05 against A.K. Sinha and others on February 26, 2005
under section. 33 of I.F.Act and Sec.2 of F.C.Act in the Court of the CJM, Gumla on the grounds that the said
AK Sinha and others were constructing a road in Kathupani P.F.of Gurdari after clearing bushes. The CJM is
awaiting sanction of D.F.O as he cannot take cognizance of the offence without the sanction of the District
Forest Officer.
xxii. Sri Radhey Shyam, who was a worker in the Industrial Engineering Department (painting section), died due
to a fall from a height of 20 feet on March 27, 1978 on the factory premises. The factory Inspector made the
necessary investigations and launched a prosecution case no. 665/80 in the Court of the Judicial Magistrate
Dudhi against D.N Himmatramka as the occupier of the Factory on grounds of violation of several provisions
of the Factories Act. The Magistrate decided the matter in favor of the said D.N Himmatramka vide order dated
May 20, 1981. The State has filed an appeal against the said order in GA no. 2764/81 in the High Court of
Allahabad. The matter is pending before the High Court.
xxiii. R.P Chaubey has filed criminal application no. 2466/2004 under section 482 of the CrPC in the High Court at
Allahabad. The matter is relating to the death of Amrit Chaubey, an employee of Hindalco on October 17,
2001 who met with a fatal accident in Remelt shop. The brother of the deceased employee, filed an application
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under section 156 (3) of Criminal Procedure Code in the Court of CJM, Sonbhadra stating that that the Crane
Operator RP Chaubey deliberately caused the death of the deceased in collusion with Senior officials of
Hindalco and therefore, directions be issued for registration of case by Police for investigation. By order dated
December 24, 2001, the CJM directed the Police to investigate the matter. A criminal misc application no
4886/02 was filed by Hindalco before the High Court at Allahabd. Allowing the application on May 20, 2002,
the judge stayed the arrest of the accused till the submission of the police report. The police had filed a report
under section 173 2) of the Criminal Procedure Code. On the basis of the investigation report, the Police
registered a chargesheet only against the applicant R.P Chaubey and exonerated the other named officers of
Hindalco on January 17, 2002. Subsequently, case No. 2046/02 was registered under sections 287 and 304A
of IPC against Shri RP Chaubey in the Court of CJM, Sonbhadra. RP Chaubey filed application no. 2466/
2004 under section 482 of the CrPC challenging the registration of the chargesheet. The Court, vide its order
dated March 26, 2004 has stayed the proceedings in the case No. 2046/2002 pending before CJM Court,
Sonbhadra till further orders. A counter affidavit has been filed by the Respondent No. 2, Shri Nagehswar
Chaubey in the month of May 2004. Hindalco has filed its rejoinder affidavit in the second week of July 2004.
The matter is pending.
(B) Labour cases filed against Hindalco
i. Thirty six contract workers at the Taloja plant canteen filed ULP No. 637 of 1998 in the Industrial Tribunal,
Thane claiming permanence of employment. The Industrial Court passed an order dated February 16, 2004
rejecting their complaint and the contact labourers moved High Court at Mumbai vide appeal No. 2999 of
2004. The High Court has granted a stay against the order of the Industrial Tribunal. The case is pending final
hearing at the High Court at Mumbai. Hindalco meanwhile, has filed Writ Petition No. 573/04 challenging the
notification dated October 10, 2003 issued by the Government of Maharashtra due to which engagement of
contract labour in the canteen of Taloja plant had to be abolished. The matters are pending in the Bombay
High Court at Mumbai along with the above matter.
ii. A workman at the Belgaum plant was dismissed for sabotage and filed a petition No. 39617 in the Karnataka
High Court claiming reinstatement with back-wages amounting to approximately Rs. 0.15 Crore. The case is
pending at the Karnataka High Court.
iii. Hindalco declared a lock-out on April 29, 1980 as a consequence of an illegal strike by issuing a notice of
lockout. Thereafter the Labour and Conciliation Officer issued a notice dated April 30, 1980 commencing
conciliation proceedings and as the conciliation ended in a failure, a failure report was sent to the Government
of Karnataka which passed an order of reference dated June 10, 1980 referring the dispute to the Industrial
Tribunal, Hubli for adjudication. The tribunal passed an award dated December 14, 1999 holding that Hindalco
was justified in declaring the lockout and that the workmen were not entitled to any wages. The Indal Potroom
Worker’s Union challenged the award of the Industrial Tribunal by filing W.P. No. 6339 of 1991. The learned
Single Judge passed an order dated February 7, 2005 reversing the findings of fact recorded by the tribunal
and declared that the lockout declared by Hindalco was illegal and unjustified and directed Hindalco to pay
50 per cent wages for the period of lockout. Hindalco has filed a writ appeal No. 2104 of 2005 before the
Karnataka High Court against this order dated February 7, 2005. Certain workmen at the Belgaum plant were
dismissed in connection with the lockout in 1980 and filed WP No. 2549/2005 and 32819/02 in the Karnataka
High Court claiming reinstatement with back-wages amounting to approximately Rs. 0.45 Crores. The cases
are pending at the Karnataka High Court.
iv. An industrial dispute arose between Hindalco and its workmen from the Alupuram plant over the issue of
justifiability of the lay off of workmen and the quantum of lay off compensation. The Government of Kerala
issued an order dated March 27, 1996 referring the dispute for adjudication before the Industrial Tribunal,
Alappuzha. The Government of Kerala issued another order dated March 30, 2004 invoking section 10B of
the Industrial Disputes Act directing Hindalco to provide alternative work for the maximum number of workmen
who had been laid off and make payment to those workmen who were laid off at the rate of full monthly
salary which they were entitled to for the month of January 1996 treating the 50% share as an ex gratia.
Hindalco has filed a writ petition No. 6384 of 1996 dated April 6, 1996 before the High Court of Kerala at
Ernakulam against these orders. The petition is pending disposal. The aggregate claim of the workmen
against Hindalco is approximately Rs. 0.3 Crores.
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v. An employee at Alupuram plant filed a complaint No. 16/1999 in the Industrial Tribunal. The Tribunal passed
an order in favour of Hindalco. Aggrieved by the award of Industrial Tribunal, the workman filed OP
No. 10704/2003 in the Kerala High Court claiming an aggregate amount of Rs. 0.15 Crores against Hindalco.
vi. An industrial dispute arose between Hindalco and its workmen from the Alupuram plant over the issue of
confirmation of twelve temporary and casual workers from the Alupuram plant. The Government of Kerala
issued an order dated December 6, 2003 referring the dispute for adjudication before the Labour Court,
Ernakulum. The Labour Court has registered Industrial Dispute No. 16/2003 and the matter is pending disposal.
The workers have claimed wages aggregating to Rs. 0.12 Crores.
vii. The Employees State Insurance Corporation issued a notice of demand dated September 20, 1997 to Hindalco
demanding an aggregate Rs. 0.156 Crores plus interest at the rate of 15 per cent from June 1, 1997 for the
same on account of Employee State Insurance for the period July 1994 to November 1996. Hindalco filed a
writ petition No. 3022 of 1997 before the Patna High Court at Ranchi for quashing the notice and for
restraining the Employee State Insurance Corporation from realizing any amount as per the notice. The High
Court passed order dated December 16, 1997, staying the demand of Rs. 0.156 Crores on the condition that
Hindalco deposit a sum of Rs. 0.05 Crores and further directed that Company was to furnish security other
than cash and bank guarantee to the satisfaction of the Court. The matter is pending disposal.
viii. V.N. Pandey was discharged from the services of Hindalco due to long absence. He filed a case against
Hindalco before District Judge, Mirzapur that was decided in favour of Hindalco. Aggrieved by this he filed a
petition against the order of District Judge and second appeal No. 2840/86 in the Allahabad High Court. The
matter is pending before the High Court.
ix. Purshottam, a former workman, was terminated from service. The Labour Court upheld the termination and the
workman filed W.P. No. 8503 of 1982 in the Allahabad High Court against such order of termination. Hindalco
served a notice to the workman to hand over the quarter allotted to him. On failure of the workman to vacate
the premises, Hindalco filed a civil suit praying for eviction of workman. The suit was decreed in favour of
Company and the first appeal filed by the workman against the order was also dismissed. Aggrieved by the
orders of the lower court the workman filed a second appeal No. 972/90 before the Allahabad High Court
claiming that he was a tenant and not a licensee. The matter is pending before the High Court.
x. The Government enhanced the E.S.I. coverage to the employees drawing wages Rs. 6500 per month vide
notification dated December 23, 1996. The Dakshanichal Majdoor Kalyan Samiti, challenged this notification
in W.P. No. 14987/97 in the Allahabad High Court claiming that Hindalco should be exempted from the said
notification and that the court should direct Hindalco not to curtail the existing medical facilities. The High
Court in its interim order dated May 5, 1997 directed Hindalco not to reduce in any manner, directly or
indirectly, the perquisites and facilities including medical facilities of employees except as provided by regulation.
The matter is pending before the High Court.
xi. Hindalco issued a charge sheet in the name of one Mohan Lal Soni for not vacating Company’s quarters as
ordered. An enquiry was held and he was dismissed from the service of Hindalco with effect from March 11,
1987. The Labour Court, Allahabad decided Adjudication Case No. 23/88 against the workman. Aggrieved by
the award of Labour Court, the workman filed W.P. No. 34221/99 in the Allahabad High Court inter alia on the
ground that the enquiry violated principles of natural justice and that the punishment was disproportionate
and has prayed for reinstatement with back wages. The matter is pending before the High Court.
xii. Hindalco Workers Union raised a dispute in adjudication case No.14/89 regarding regularization of 150
temporary workmen of the construction division, who were employed for the expansion of the Factory. The
Industrial Tribunal, Allahabad (I) rejecting the claim of the trade union, passed an award dated March 26,
1998 that trade union was not competent to espouse the cause and that Hindalco could not be forced to
create new posts. Aggrieved by the award, the trade union filed W.P. No. 41851/98 in the Allahabad High
Court. The case is pending at the High Court and no interim order has been passed.
xiii. Seventeen staff members were terminated due to anti management activities. Eight of the staff members
settled their cases, while the remaining 9 staff members contested their cases through the Hindalco Staff
Association on grounds of unfair dismissal and prayed for continuity of service. The Industrial Tribunal (I),
Allahabad passed an award dated June 25, 1999 in adjudication case No. 25 of 91 rejecting the claim of the
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staff members on the ground that they were not workmen under the Uttar Pradesh Industrial Disputes Act,
1947. Aggrieved by the said order, the staff members filed W.P. No. 21357 of 2000 in the Allahabad High
Court asking for the setting aside of the order dated March 26, 1998 and continuity in service. The matter is
pending before the High Court.
xiv. Sukhranjan Haldar was appointed as junior labour supervisor in the construction division on sanction from
time to time. After expiry of the sanction, he was discharged on January 18, 1989. He challenged the termination
and raised a dispute which was referred to the Labour Court. The Labour Court in its award dated September
7, 1998 held that it being a fixed term appointment, there was no retrenchment. The workman filed W.P. No.
7150/ 2000 in the Allahabad High Court, challenging the award of the Labour Court on the ground that the
principle of “last come first go” has not been followed and that his work was of permanent nature and has
prayed for regularization of work. The case involves the issue of applicability of 2 (oo) (bb) of Industrial
Disputes Act, 1947.
xv. One Fula Devi has filed W.P. No. 16331/2002 against the Life Insurance Corporation, Hindalco and others in
the Allahabad High Court on the ground that she is entitled to the insurance amount as the beneficiary of the
three life insurance policies taken by her husband, Parasnath Yadav, a workman in Hindalco, who died in
August 2001. The petitioner claimed that the premium was deducted from her husband’s salary by Hindalco,
but Hindalco failed to remit the same to Life Insurance Corporation of India. Hence the petitioner contends
that the default in payment of insurance premium is the fault of Hindalco. The matter is pending before the
High Court.
xvi. Hindalco Pragatisheel Mazdoor Sabha has filed W.P. No. 16760 (C) of 85 in the Allahabad High Court
challenging the award dated May 16, 1985 passed by the Industrial Tribunal, Allahabad I in Adjudication
Case No. 29/83 wherein the tribunal rejected their contention that contractor labourers working the in Hindalco
canteen should be allowed wages and other facilities similar to those available to other workman of the
establishment of Hindalco. Counter and rejoinder to the same have been filed. The matter has been part
heard and is being listed.
xvii. Fifty one contract workers have filed Civil Misc. W.P. No. 10063/1987 in the Allahabad High Court, through the
Hindalco Workers Union against Hindalco and others on the grounds of termination of service due to the fact
that the contract given out to M/s Doodh Nath Prasad came to an end on March 25, 1987. Counter and
rejoinder have been filed. The next date of hearing is yet to be decided.
xviii. Shanker Upadhyay, worked as substitute workman of Hindalco and was taken on probation for six months in
the post of U Man. His services were terminated on account of unsatisfactory work. He raised an industrial
dispute and a settlement was arrived at to take him back into employment on probation for a further period of
three months. His services were again terminated with effect from December 11, 1987 and he was reverted
back to the post of substitute workman (Badli). His services were again terminated from the post of a U Man
with effect from March 15, 1988. He raised an industrial dispute in Adj. 280/88 challenging this in the Labour
Court, Varanasi on the grounds that it amounted to termination of service. The Labour Court held that since he
was on the roll of Hindalco his services were not terminated. The workman challenged the award in the High
Court in W.P. 24044/92 before the Allahabad High Court. The Allahabad High Court held that there was no
provision in the Standing Order under which a Badli could be promoted to the post of U Man, and therefore
held that his appointment as U Man was a fresh appointment and hence his reversion to the post of Badli
amounted to termination. The High Court has remanded the case back to the Labour Court to decide the case
on merits. The case is pending before the Labour Court at Varanasi. Matter was transferred to Labour Court
Kanpur, Hearing concluded award reserved.
xix. There are twenty cases in the Labour Court, Allahabad under adjudication filed by workmen, challenging their
termination on various grounds.
xx. There is one case in the Labour Court, Allahabad under adjudication filed by contract labourers, challenging
their termination of services by the concerned contractor on various grounds. Hindalco is a party to these
proceedings.
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xxi. There are three cases filed before the Industrial Tribunal (I) at Allahabad, by workmen raising industrial
disputes in respect of their dismissal by Hindalco.
xxii. There are nineteen cases filed by former workmen of Hindalco on various grounds, all of which are pending
before the Labour Court, Varanasi.
xxiii. There are four cases filed before the Labour Court, Bharuch by former security guards, challenging termination
of their service by the contractor and claiming an aggregate amount of approximately Rs. 0.348 Crores. There
is one case filed before the Labour Court, Bharuch by a security supervisor in respect of resignation from
service and claiming an aggregate amount of Rs. 0.384 Crores.
xxiv. The President of CBW Union raised a dispute before Assistant Labour Commissioner (C), Ranchi regarding
payment of wages for the alleged lock out period from May 17, 2000 to June 10, 2000. After failure of
conciliation before Assistant Labour Commissioner the case was forwarded to Secretary, Ministry of Labour,
Govt. of India. The case bearing No. L–43011/3/2000/IR(M)is now pending before the CGIT, Dhanbad.
xxv. Seven cases have been filed by person who allegedly worked at Katni bauxite mine. The claimants contend
that they were taken on work for quality check of bauxite at Katni up to February 1996. These persons were
later relieved from work and have initiated conciliation proceedings before Conciliation Officer. After failure of
conciliation, the Central Government has referred the matter for adjudication before Industrial Tribunal cum
Labour Court, Jabalpur.
xxvi. The Government of Karnataka has by order of reference number No 265 dated December 2, 1998 transferred
a labour complaint filed by an association of 218 employees who have been retired under the Voluntary
Retirement Scheme demanding better benefits than those offered under the Scheme to the Additional Labour
Court, Hubli. By its reply dated September 18, 2000, Hindalco has disputed the legality of the reference.
Hindalco has filed its affidavit of evidence on April 29, 2003. Objections filed by the Company. Matters are
pending.
xxvii. In addition to the above cases, there are sixty three labour related cases which have been filed against
Hindalco for claims aggregating to Rs. 1.745 Crores, which are pending in various fora.
(C) Income Tax Proceedings:
Hindalco does not have any material contingent liability in respect of the following Income tax proceedings.
Before the Income Tax Appellate Tribunal
Appeals filed by Hindalco before the Income Tax Appellate Tribunal
Hindalco has filed the following major appeals before the Income Tax Appellate Tribunal (“ITAT”), for amounts
aggregating approximately Rs. 180.501 Crores, which are as follows.
i. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1988-89
aggregating tax impact of Rs. 10.002 Crores, inter alia on the issue of applicability of section 115 J of the IT Act, to
the profits of Hindalco for the relevant assessment year. The matter is pending before the ITAT.
ii. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1992-93
aggregating tax impact of Rs. 1.175 Crores, inter alia on the issue of deduction under section 80 HHC of the IT Act.
The matter is pending before the ITAT.
iii. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1993-94
aggregating tax impact of Rs. 7.364 Crores, inter alia on the issue of deduction under section 80 HHC of the IT Act
and deduction under section 80 I of the IT Act. The matter is pending before the ITAT.
iv. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1994-95
aggregating tax impact of Rs. 7.171 Crores, inter alia on the issue of deduction under section 80 HHC of the IT Act
and deduction under section 80 I of the IT Act. The matter is pending before the ITAT.
v. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1995-96
aggregating tax impact of Rs. 12.756 Crores, inter alia on the issue of deduction under section 80 HHC of the IT
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Act and deduction under section 80 I of the IT Act. The matter is pending before the ITAT.
vi. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1996-97
aggregating tax impact of Rs. 16.532 Crores, inter alia on the issue of deduction under section 80 HHC of the IT
Act and deduction under section 80 I of the IT Act. The matter is pending before the ITAT.
vii. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1997-98
aggregating Rs. 2.23 Crores, inter alia on the issue of disallowance of deduction under section 80 O in respect of
royalty received and the issue on disallowance of depreciation and expenses. The matter is pending before the
ITAT.
viii. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1998-99
aggregating tax impact of Rs. 2.508 Crores, inter alia on the issue of deduction under section 80 HHC of the IT Act
and issue of disallowance of deduction under section 80 O in respect of royalty received. The matter is pending
before the ITAT.
ix. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1999-2000
aggregating tax impact of Rs. 3.248 Crores, inter alia on the issue of deduction under section 80 HHC of the IT Act
and issue of disallowance of certain expenses. The matter is pending before the ITAT.
x. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 2000-2001
aggregating tax impact of Rs. 1.014 Crores, inter alia on the issue of deduction under section 80 HHC of the IT Act
and issue of disallowance of certain expenses. The matter is pending before the ITAT.
xi. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 2001-2002
aggregating tax impact of Rs. 45.3 Crores, inter alia on the issue of the deduction under section 80 HHC of the IT
Act and issue of disallowance of certain expenses. The matter is pending before the ITAT.
xii. Hindalco has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 2002-2003
aggregating tax impact of Rs. 36.753 Crores, inter alia on the issue of deduction under section 80 HHC of the IT
Act and disallowance of certain expenses. The matter is pending before the ITAT.
xiii. Hindalco has filed an appeal before the ITAT, against the order of the Commissioner of Income Tax (Appeals) for
the assessment year 2003-2004 aggregating tax impact of Rs. 23.377 Crores, inter alia upholding the order of the
assessing officer on the issues of disallowance of write off of Inter Corporate Deposits, deduction under section 80
HHC of the IT Act and disallowance of certain expenses. The matter is pending before the ITAT.
xiv. Hindalco has filed appeals before the ITAT, on the issue of withholding tax on the GDR issue expenses aggregating
tax impact of Rs. 4.843 Crores and 4.313 Crores for the assessment year 1994-95 and 1995-96 respectively. The
matter is pending before the ITAT. In addition, Hindalco has also filed appeals with the ITAT on the issue of
withholding tax on the remittances of fees and expenses to foreign parties.
xv. In addition, appeals have been filed against the orders of the tax/appellate authorities in respect of the erstwhile
Renusagar Power Company for the assessment years 1979-80 and 1980-81.
Appeals filed by the Department before the Income Tax Appellate Tribunal:
The Department has filed the following major appeals before the Income Tax Appellate Tribunal (“ITAT”), for amounts
aggregating Rs. 800.943 Crores.
i. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1988-
89 aggregating tax impact of Rs. 1.058 Crores, inter alia on issues of deletion of addition on account of Modvat
credit and deletion of income under section 41(1) of the IT Act. The matter is pending before the ITAT.
ii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1988-
89 aggregating tax impact of Rs. 1.198 Crores, inter alia on commission paid to stockists, deduction under section
80 M and on the issue of deduction of on borrowed fund under section 36(1) (iii) of the IT Act. The matter is
pending before the ITAT.
iii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1989-
90 aggregating tax impact of Rs. 1.748 Crores, inter alia on issues of deletion of addition on account of Modvat
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credit, deletion of income under section 41(1) of the IT Act and set off of loss. The matter is pending before the ITAT.
iv. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1989-
90 aggregating tax impact of Rs. 1.899 Crores, inter alia on commission paid to stockists, deduction under section
80 M and on the issue of deduction of interest on borrowed fund under section 36(1) (iii) of the IT Act. The matter
is pending before the ITAT.
v. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1990-
91 aggregating tax impact of Rs. 2.980 Crores, inter alia on issues of deletion of addition on account of in Modvat
credit and set off of losses. The matter is pending before the ITAT.
vi. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the reassessment year
1990-91 aggregating tax impact of Rs. 3.164 Crores, inter alia on commission paid to stockists, deduction under
section 80 M and on the issue of deduction of interest on borrowed fund under section 36(1) (iii) of the IT Act. The
matter is pending before the ITAT.
vii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1992-
93 aggregating tax impact of Rs. 13.808 Crores, inter alia on issues of deductions under section 80 I of the IT Act,
deduction under section 80 M of the IT Act and on the issue of deduction of interest on borrowed fund under
section 36(1) (iii) of the IT Act. The matter is pending before the ITAT.
viii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1993-
94 aggregating tax impact of Rs. 15.835 Crores, inter alia on issues of deletion of addition on account of Modvat
credit and deduction of interest on borrowed fund under section 36(1) (iii) of the IT Act. The matter is pending
before the ITAT.
ix. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1994-
95 aggregating tax impact of Rs. 13.307 Crores, inter alia on issues of commission paid to stockists and issue of
deduction of interest on borrowed fund under section 36(1) (iii) of the IT Act. The matter is pending before the ITAT.
x. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1995-
96 aggregating tax impact of Rs. 14.190 Crores, inter alia on issues of deletion of addition on account of Modvat
credit and deduction of interest on borrowed fund under section 36(1) (iii) of the IT Act. The matter is pending
before the ITAT.
xi. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1996-
97 aggregating tax impact of Rs. 12.183 Crores, inter alia on issues of deletion of addition on account of Modvat
credit commission paid to stockists, deductions under section 80 M of the IT Act and deduction of interest on
borrowed fund under section 36(1) (iii) of the IT Act. The matter is pending before the ITAT.
xii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1997-
98 aggregating tax impact of Rs. 16.936 Crores, inter alia on issues of deletion of addition on account of Modvat
credit commission paid to stockists, deductions under section 80 M of the IT Act and interest on borrowed fund
under section 36(1) (iii) of the IT Act. The matter is pending before the ITAT.
xiii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1998-
99 aggregating tax impact of Rs. 14.039 Crores, inter alia on issues of allowance of claim under section 80 IA
interest on borrowed funds and computing deduction under section 80 HHC of the IT Act. The matter is pending
before the ITAT.
xiv. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 1999-
2000, aggregating tax impact of Rs. 99.374 Crores, inter alia on issues of allowance of claim under section 80 IA
interest on borrowed funds and computing deduction under section 80 HHC of the IT Act. The matter is pending
before the ITAT.
xv. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 2000-
2001, aggregating tax impact of Rs. 154.364 Crores, inter alia on issues of allowance of claim under section 80 IA
interest on borrowed funds and computing deduction under section 80 HHC of the IT Act. The matter is pending
before the ITAT.
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xvi. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 2001-
2002, aggregating tax impact of Rs. 227.648 Crores, inter alia on issues of deletion of addition on account of
Modvat credit, allowance of claim under section 80 IA interest on borrowed funds, deduction of interest capitalization
and computing deduction under section 80 HHC of the IT Act. The matter is pending before the ITAT.
xvii. The Department has filed an appeal before the ITAT, against the order of the CIT(A) for the assessment year 2002-
2003, aggregating tax impact of Rs. 203.545 Crores, inter alia on issues of deletion of addition on account of
Modvat credit, allowance of claim under section 80 IA interest on borrowed funds, deduction of interest capitalization
and computing deduction under section 80 HHC of the IT Act. The matter is pending before the ITAT.
In addition, the Department has filed seven appeals in respect of the erstwhile Renusagar Power Company against
the orders of the Assessing Officer, for the assessment years 1978-79, 1979-80, 1980-81 and 1988-89.
Hindalco is also the appellant in five income tax appeals pending before the ITAT. These appeals have arisen out
of orders passed by the Adjudicating Officers confirming demands raised by the Department against Hindalco. The
aggregate financial implication of these matters is to the tune of Rs. 1.904 Crores. Hindalco is also defendants in
six income tax appeals pending before the ITAT. In all these cases the demands raised by the Income Tax Department
have been rejected by the Adjudicating Officers. The aggregate financial implication of these six matters is to the
tune of Rs. 3.667 Crores.
Income Tax Proceedings in respect of demerged undertaking of Indian Aluminium Company Limited:
Pursuant to a Scheme of Arrangement approved by the High Courts of Kolkata and Mumbai, all businesses of Indal with
the exception of business pertaining to the foils plant at Kollur, Andhra Pradesh were demerged into us with effect from
April 1, 2004.
Appeals filed before the High Court and Supreme Court:
i. For assessment years 1974-75 and 1979-80, the Supreme Court in a matter relating to section 80 J of the IT
Act and aggregating Rs. 1.737 Crores in favour of the Income Tax Department. The Department order is
pending which will follow after the Income Tax Appellate Tribunal relays the judgement.
ii. For assessment year 1987-88, Hindalco filed a writ petition in the Calcutta High Court questioning the
applicability of special audit under section 142(2A) of the IT Act. The matter is pending before the High Court
and the assessment is also pending.
iii. For assessment year 1990-91, Hindalco filed a reference application before the Calcutta High Court against
the order of the ITAT aggregating to Rs. 3.345 Crores on various grounds including deduction under
Section 80 HHC, deduction under section 80I, deduction under section 32AB and prior year expenditure. The
matter is pending before the High Court.
iv. For Assessment Year 1981-82, the department filed an application under section 256(2) with the Calcutta
High Court on the issue of allowability of transit house expenses for Rs. 0.048 Crores. The matter is pending
before the High Court.
Appeal filed with the ITAT:
Hindalco has filed an appeal with the ITAT for assessment year 1995-96 against an order passed by the Commissioner
of Income Tax under section 263 of the IT Act for an amount of Rs. 0.85 Crores on account of alleged excess
deduction allowed under section 80M of the IT Act. The matter is pending before the ITAT.
Appeals filed with the Commissioner of Income Tax (Appeals):
Six appeals have been filed with the Commissioner of Income-tax (Appeals), details of which are given below:
i. For assessment year 1996-97, the assessing officer disallowed Rs. 2.67 Crores towards excise duty under
section 147 of the IT Act. The matter is pending before the Commissioner of Income Tax (Appeals).
ii. For assessment year 1997-98 the assessing officer disallowed Rs. 3.204 Crores towards excise duty under
section 147 of the IT Act. The matter is pending before the Commissioner of Income Tax (Appeals).
iii. For assessment year 1998-99 the assessing officer disallowed Rs. 2.46 Crores towards excise duty under
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section 147 of the Income-tax Act. The matter is pending before the Commissioner of Income Tax (Appeals).
iv. Hindalco has filed an appeal against the regular assessment order of the assessing officer for assessment
year 2000-01 aggregating to Rs. 23.1 Crores on various grounds including disallowance for current repairs,
VRS expenses, bad debts written off, etc. The matter is pending before the Commissioner of Income Tax
(Appeals).
v. Hindalco has filed an appeal against the regular assessment order of the assessing officer for assessment
year 2001-02 aggregating to Rs. 28.4 Crores on various grounds including disallowance for current repairs,
deduction under section 80IA and 80IB of the IT Act, interest on borrowing for construction, etc. The matter is
pending before the Commissioner of Income Tax (Appeals).
vi. Hindalco has filed an appeal against the regular Assessment Order of the Assessing Officer for assessment
year 2002-03 aggregating to Rs. 85.8 Crores on various grounds including disallowance under Section 80IA
and 80IB, deduction under section 80HHC, deduction on account of commission, current repairs, etc. The
matter is pending before the Commissioner of Income Tax (Appeals).
(D) Wealth Tax
There are wealth tax appeals in respect of Hindalco for claims of less than Rs. 0.1 Crores.
(E) Central Excise
i. The Deputy Commissioner of Central Excise (Rebate), Mumbai – I, has issued deficiency memo-cum-SCN-
cum-call for personal hearing F. No. V(15)/Reb/Ch.-74/2004/3072 dated November 10, 2004 on 37 rebate
claims for the months of July and August 2004 on the grounds that Hindalco has not submitted final assessment
certificate issued by the Assistant Commissioner, Bharuch as well as duty payment certificate and duplicate
ARE-1 was not submitted in the tamper proof sealed covers. Personal hearing was held on December 22,
2004. Hindalco has submitted a letter to the Deputy Commissioner requesting him to settle the rebate claims
keeping in abeyance the cess amount, till appropriate clarifications issued by the Central Board of Excise and
Customs, New Delhi. The rebate claim on the cess amount will be allowed thereafter. The Deputy Commissioner,
Central Excise, Raigad has issued two Order-in-Original Nos. 419/05-06/D.C.(R)/RAIGAD and 420/05-06/
D.C.(R) / RAIGAD both dated June 16, 2005 settling thereby the rebate claims for the period July, 2004 to
November, 2004 amounting to Rs. 94.59 Crores without education cess amounting to Rs. 0.813 Crores,
stating that education cess paid during July 10, 2004 to September 6, 2004 cannot be allowed as rebate.
Hindalco has filed appeals before the Commissioner of Excise (Appeals), Mumbai and presentation for issuing
clarification is pending before the Central Board of Excise and Customs, New Delhi.
ii. The Commissioner, Central Excise and Customs, Vadodara – II, has confirmed the demand of Excise Duty of
Rs. 1.09 billion being the duty payable on the clearances of the gold bars for the period from May, 2000 to
February 2003. The Commissioner ordered the appropriation of the amount of Rs. 63.434 Crores already paid
by Hindalco and ordered Hindalco to pay the differential amount of Rs. 45.935 Crores and imposed a penalty
of Rs. 109 Crores as well as interest. Hindalco filed an appeal along with an application for a stay and a
request for early hearing with CESTAT, Mumbai on July 21, 2003. Personal hearing on the stay application
was held on July 31, 2003 and an unconditional stay was granted. Personal hearing was held on October 19,
2004 and October 20, 2004 at CESTAT, Mumbai and written arguments have been submitted on November
24, 2004. An order has since been delivered in June 2005, wherein one member of CESTAT has not
confirmed the demand whereas the other member has confirmed the demand of duty but set aside the
penalty. In view of the difference of opinion, the matter will be referred to a third member.
iii. The Additional Commissioner, Central Excise, has issued a SCN No. V Ch.74(4)80/R-IV/D-Brh/Commr/2003
dated June 27, 2003 demanding an aggregate amount of Rs. 0.308 Crores at the rate of 16 per cent on gold
manufactured and cleared without payment of duty in respect of which supplementary invoices were issued in
March, 2003. Subsequently, the Additional Commissioner, Central Excise issued an Order-In Original dated
December 22, 2003 confirming the SCN and further imposed a penalty of Rs. 0.308 Crores. Hindalco filed an
appeal dated March 11, 2004 before the Commissioner (Appeals). Personal hearing was held on March 22,
2004. The Commissioner (Appeals) granted an unconditional stay till the decision of the matter before the
CESTAT, Mumbai in the case (3) above. Personal hearing was held on June 17, 2004 where Hindalco
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requested the Commissioner (Appeals) to issue the necessary directions to be operative till the matter was
pending before the CESTAT, Mumbai. The matter was decided against Hindalco on February 25, 2005. Hindalco
filed an appeal along with an application for stay before the CESTAT, Mumbai on April, 29, 2005. The
department has issued a letter regarding the recovery of dues against confirmed demand on June 17, 2005.
The CESTAT, Mumbai has granted a stay on the recovery of dues on June 21, 2005. The case is pending
hearing.
iv. The Assistant Commissioner, Central Excise, Mirzapur, served a demand notice No. V (3) 16-demand /94/257
dated February 16, 1994 on Hindalco calling upon it to pay a sum aggregating Rs. 14.59 Crores in respect
of excise duty on the electricity purchased by Hindalco from Renusagar on the ground that the excise on
manufacture of electricity by Renusagar has been included in the prices of aluminium from time to time fixed
by the Central Government in the relevant period. The demand notice stated that out of the total sum of
Rs. 14.59 Crores of the demand dated September 30, 1984, Hindalco has made provision for Rs. 5.470
Crores in its accounts and the balance amount has been sequestered in the Aluminium Regulation Account
constituted under the Aluminium (Control) Order, 1970 which ought to have been deposited to the credit of
the Central Government as envisaged under the provisions of section 11D of the Central Excise Act, 1944.
Hindalco has filed Writ Petition No. 1175/1994 in the Delhi High Court on March 8, 1994. The Court, allowed
the petition on July 9, 1993 and vide order dated August 5, 1994 found that the Respondent in the writ
petition did not file a reply despite being given two opportunities to do so and therefore stayed the demand
notice dated February 16, 1994 till final orders were passed in the writ petition.
v. The Commissioner, Central Excise and Customs, Vadodara – II has issued a SCN No. V.Ch.74(4)43/R-IV/D-
BRH/Commr./2004 dated April 13, 2004 to Hindalco in respect of the amount of Rs. 1.634 Crores that is
sought to be recovered from Hindalco under Rule 12 of the Cenvat Credit Rules, 2002 read with section 11A
of the Central Excise Act, 1944. The Commissioner has also sought to impose penalty under Rule 13 of the
Rules and charge interest at the rate as fixed by the Board under section 11AB of the Central Excise Act,
1944. Hindalco had allegedly not reversed the credit amounting to Rs. 1.634 Crores which they had originally
availed, and which was in excess of the correctly admissible credit of duty. Hearing was held on February 21,
2005. The Commissioner Central Excise and Customs dropped the proceedings against Hindalco vide order
dated February 22, 2005. This SCN was confirmed by Additional Commissioner, vide order-in-original no.48/
Demand/ADC/D-BRH/03 dated August 26, 2003 which was reversed by the Commissioner (Appeal), vide
Order-in-Appeal No. Commr (A)/31/VDR-II/04 dated January 30, 2004. The Commissioner of Central Excise
and Customs, Vadodara-II has now filed a Memorandum of Appeal in CESTAT, Mumbai against this Order-in-
Appeal. Cross objections against the appeal have been filed by Hindalco on May 17, 2004 in CESTAT,
Mumbai. The matter is currently pending in CESTAT, Mumbai.
vi. The Commissioner, Central Excise, Allahabad, issued a demand-cum-SCN No. 13/Commr.Alld./2004 for the
assessment period 2001-2002 dated February 16, 2004 to Hindalco demanding an aggregate sum of Rs.
1.671 Crores in respect of the alleged non-inclusion of interest element while arriving at the cost of production
of rolled product for captive consumption as per valuation rules. The reply to the SCN has been submitted
and a hearing held on July 13, 2004. The matter is pending with the Commissioner, Central Excise, Allahabad.
vii. The Commissioner, Central Excise, Allahabad, issued a SCN bearing No. 21\Commr.\all\2004 dated April 6,
2004 to Hindalco demanding an aggregate sum of Rs. 1.059 Crores for the assessment period 2000-2001 in
respect of the alleged non-inclusion of interest element while arriving at the cost of production of rolled
product for captive consumption as per valuation rules. The matter is pending with the Commissioner, Central
Excise, Allahabad.
viii. The Commissioner, Central Excise, Bhubaneshwar-II issued a Demand-cum-SCN No. V(76)15/SCNMC/SBP-II/
35/2003/9433A dated June 17, 2005 to Hindalco demanding an aggregate amount of Rs. 11.096 Crores,
penalty under section 11AC of the Central Excise Act, 1944 and interest under section 11AB of the Central
Excise Act, 1994 in respect of the alleged under-valuation of ingots and cast coils transferred to other units
between July 1, 2000 to March 31, 2002, invoking the extended period of limitation. Pursuant to an application
made by Hindalco to extend time for submission of the reply to the SCN, the Superintendent (Adjudication)
has granted an extension of time allowing Hindalco to submit a reply on or before September 5, 2005 before
the Commissioner, Central Excise, Bhubaneshwar-II. The matter is pending.
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ix. The Director General of Anti-Evasion issued SCN dated April 11, 1997 to Hindalco demanding an aggregate
amount of Rs. 2.02 Crores in respect of the alleged clandestine manufacture and removal of excisable goods.
Hindalco filed a reply dated September 28, 1998 before the Commissioner of Central Excise (Adjudication),
Mumbai, who passed an order dated March 23, 2005, dropping a major portion of the demand and charges
of clandestine removal but confirmed the demand in respect of some differences between the physical stock
of scrap and stock as reflected in the excise records. The Commissioner passed an order for payment of duty,
penalty and redemption fine aggregating Rs. 0.875 Crores. Hindalco has filed an appeal dated June 23,
2005 along with an application for stay before the CESTAT. The matter is pending.
x. A SCN has been issued to Hindalco dated February 28, 2005 to Hindalco demanding an aggregate sum of
Rs. 1.28 Crores in respect of the notional interest alleged to have been earned for the period 2003-04 on the
credit balances of the buyers. The reply to this notice is yet to be filed.
xi. Disputes with respect to classification of closure sheets amounting to Rs. 3.985 Crores are pending before the
Commissioner, Central Excise, Kolkata-II. The cases have not proceeded after show cause proceedings in
July, 1996. Hindalco has attended a personal hearing for cases amounting Rs. 1.586 Crores before
Commissioner, Central Excise, Kolkata-II on March 15, 2005 and an order with respect to the same is
awaited.
xii. The Assistant Commissioner, Central Excise (Adj), has issued SCNs to Hindalco demanding a sum of
Rs. 1.14 Crores in respect of input credit against dross clearance. The matter is pending before the
Commissioner of Central Excise (Adj).
xiii. The Assistant Commissioner/Commissioner, Central Excise (Adj), has issued SCNs to Hindalco demanding a
sum of Rs. 2.71 Crores in respect of dross removed without payment of excise duty and education cess. Out
of Rs. 2.71 Crores, CESTAT had issued an order of Rs. 1.02 Crores in favour of Hindalco. Excise Authorities
have challenged this order in the Calcutta High Court. No hearings have taken place before the High Court.
With regard to the balance Rs. 1.69 Crores, the matter is pending before the Commissioner of Central Excise
(Adj).
xiv. The Commissioner, Central Excise, issued a SCN No. V-CH-76(15)198-CE/KOL-II/ADJN/2002/3142-45-A dated
November 10, 2003 to Hindalco demanding an aggregate amount of Rs. 103 Crores on the ground that
Hindalco had already availed of Cenvat credit on the inputs received on stock transfer basis from its other
unit during the period April 1, 2000 to September 30, 2002. The matter is pending before the Commissioner,
Central Excise. Similarly the Commissioner, Central Excise has issued a SCN No.V-Ch.76(15)198-CE/KOL-II /
Adjn/2002/4971 dated July 16, 2004 to Hindalco demanding an aggregate amount of Rs. 24.922 Crores on
the ground that Hindalco availed of Cenvat credit on the inputs received on stock transfer basis from its other
units for the period January 1, 2002 to March 31, 2003. The matter is pending before the Commissioner,
Central Excise.
xv. The Commissioner, Central Excise issued a SCN No. 294 dated August 5, 2005 to Hindalco demanding an
aggregate amount of Rs. 2.07 Crores on the ground that Hindalco considered lower cost of input materials for
valuation of products despatched to other units of Hindalco during the period July, 2002 to December, 2004.
Hindalco is in the process of replying to this SCN.
xvi. The Directorate of Central Excise Intelligence, Mumbai issued a SCN-cum-demand notice dated June 1, 2001
to Hindalco demanding duty amounting to an aggregate of Rs. 47.22 Crores on the ground of wrongly
availing the benefit of the exemption contained in Notification No. 6/2000-CE dated March 1, 2000, thereby
manufacturing and clearing precious metal, gold without payment of duty.
xvii. Apart from the cases described hereinabove there are approximately 104 other excise related cases filed
against Hindalco. The approximate amounts in these cases aggregate to Rs.107.60 Crores.
(F) Customs:
i. The Collector of Customs, Calcutta issued a SCN No S2-9/92-SIB dated April 23, 1992 to Hindalco invoking
a bank guarantee for recovery of refund aggregating Rs. 6.21 Crores on the ground that coal tar pitch is
being manufactured by the process “straight run method” attracting duty at 15 per cent, whereas Hindalco
contended that the coal tar pitch was manufactured by the “cut-back method” and attracted duty at Rs. 100
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per ton. Hindalco filed Writ Petition No. 3498 of 1993 in the Calcutta High Court. The Court, vide order dated
September 7, 1994 allowed the appeal, thereby quashing the SCN. The Collector of Customs, Calcutta filed
Appeal No. 620 of 1994 before the Division Bench of the Calcutta High Court. The matter was listed for
hearing on Septenmber 11, 2006 but could not be taken up. It is to be listed for hearing.
ii. The Deputy Commissioner, Customs, Kandla vide Order-in-Original No. KDL/DC-GP-I/9/2000 dated December
22, 2000 confirmed the differential duty demand for 6 Bills of Entry amounting to Rs. 4.045 Crores considering
the CIF value as FOB value and adding the cost of freight and insurance for assessment. Hindalco filed an
appeal with the Commissioner (Appeals) who, vide order dated April 28, 2003, set aside the Order-in-Original
dated December 22, 2000 remanded the case back to the Deputy Commissioner for reconsideration of the
issues following the principles of natural justice. Hindalco has received a fresh Demand cum SCN F No. S/5-
20/1867 Gr-I dated August 16, 2004 from the Deputy Commissioner, Customs, Kandla. Hindalco has submitted
its reply to the SCN and personal hearing has been held on November 24, 2004. The matter has been
decided in favour of Hindalco. The Department is yet to file an appeal against the order of the Deputy
Commissioner, Customs.
iii. The Assistant Commissioner, Customs, Calcutta has issued a SCN dated June 1, 2000 to Hindalco seeking
to include the CIF value of Rs. 4.090 Crores in the price of equipment imported from KHD Humboldt Wedag
AG, Germany for the production of green anode used in the process of electrolysis for production of aluminium
metal, to confiscate technical manuals valued at Rs. 4 Crores imported from VAW Aluminium Technologies
GmbH, Germany (“VAW”) and to impose a penalty under section 112 of the Customs Act, 1962. VAW sent the
manuals to Hindalco vide airway bill dated June 15, 2000. Hindalco filed a Bill of Exchange for clearance of
the manuals on June 21, 1999. Hindalco filed a writ petition before the Delhi High Court seeking release of
material. On April 6, 2000 the Court ordered the release of the manuals on Hindalco furnishing a bank
guarantee for Rs. 0.5 Crores and a Provisional Duty Assessment Bond (“P.D. Bond”) for Rs. 0.7 Crores.
Hindalco furnished the bank guarantee and P.D. Bond as ordered by the Court and the manuals have been
released. The bank guarantee has been extended upto March 31, 2006. Hindalco replied to the SCN on
January 31, 2001. The date of personal hearing is yet to be fixed.
iv. The Assistant Commissioner, Customs, Mumbai, has issued an order dated June 14, 1996 finalising the
assessment in respect of 400 metric tonnes of Synthetic Cryolite and requiring Hindalco to pay a duty of
Rs. 1.8 Crores by enforcing the P.D. Bond given by Hindalco at the time of the provisional assessment. A duty
of Rs. 0.455 Crores as provisionally assessed was paid to get the goods cleared in May 1994. Hindalco filed
an appeal against the order of the Assistant Commissioner before the Commissioner of Customs (Appeals)
who allowed the appeal on January 5, 1998 and remanded the matter to the Assistant Commissioner. The
Assistant Commissioner heard the matter on April 16, 1998 and reserved orders. The order has not so far
been released.
v. Apart from the cases described hereinabove there are 5 cases filed against Hindalco. The approximate
amounts in these cases aggregate to Rs. 1.503 Crores.
(G) Sales Tax:
i. The Commercial Taxes Department has issued SCNs No. NBZ/07/02/01-02, NBZ/07/02/02-03 and NBZ/07/02/
03-04 dated August 11, 2004 to Hindalco for an amount aggregating Rs. 1.422 Crores in respect of the denial
of set-off of taxes paid on inter-state purchases of various inputs used in the manufacturing of aluminium foils
which are subject to the interstate sales tax and setoff as provided GO 667 dated October 11, 2001 for the
assessment years 2001-02, 02-03 and 03-04 respectively. The department also issued subsequent notices
dated November 2, 2004 and November 10, 2004. Hindalco has filed Writ Petition No. 21775/2004 before the
High Court of Andhra Pradesh against the notices. The petition has been admitted by the Court. Vide an order
dated February 17, 2005, the High Court admitted the petition and directed the Department not to take any
action with respect to the assessment years 2001-02 and 02-03 pending disposal of the petition, with a
specific direction to Hindalco to file its objections to the SCN in relation to the assessment year 2003-04. The
writ petition is pending disposal. With respect to the assessment year 2004-05, Hindalco has written to the
department disputed that the matter is subjudice and will be addressed after the decision in the writ petition.
ii. The Flying Squad Unit, Ahmedabad has issued a demand notice in provisional assessment dated September
11, 2001 for an aggregate amount of Rs. 21.89 Crores for non-payment of sales tax on leased assets.
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Hindalco has filed a writ petition before the Gujarat High Court at Ahmedabad against this provisional
assessment. The Court admitted the writ petition and granted a stay against recovery proceeding in 2001. The
next hearing is awaited.
iii. The Flying Squad Unit, Ahmedabad has issued a demand notice in provisional assessment dated June 11,
2001 for an aggregate amount of Rs. 21.23 Crores for non-payment of sales tax on leased assets. Hindalco
has filed a writ petition before the Gujarat High Court at Ahmedabad against this provisional assessment. The
Court admitted the writ petition and granted a stay against recovery proceeding on November 18, 2001. The
next date of hearing is yet to be fixed by the High Court. Meanwhile, regular sales tax assessment for the
relevant year 1997-98 has been passed. In the interim, the Deputy Commissioner, Sales Tax, Bharuch has
passed an order for final assessment and regularized the revised demand of Rs. 26.05 Crores.
iv. An order of assessment under section 15B of the Gujarat Sales Tax Act was made for assessment years
1998-1999 demanding sales tax of an amount of Rs. 1.08 Crores together with interest, etc. Hindalco filed an
appeal dated May 5, 2003 before the Assistant Commissioner, Sales Tax (Appeal), Vadodara against the
demand, but the appeal was rejected. Hindalco has appealed to the Tribunal which has granted a stay on
September 17, 2003 till the hearing of the appeal. The hearing was fixed for April 11, 2005 but was adjourned.
v. The Assistant Commissioner, Commercial Taxes, Ranchi, issued an assessment order dated February 1, 2005
to Hindalco for an aggregate amount of Rs. 3.08 Crores for the assessment year 2000-01 in respect of non-
submission of Form F for alumina sent to Hindalco for conversion and in respect of TOT and Surcharge.
Hindalco filed an appeal on March 14, 2005 with the Joint Commissioner (Appeals), Ranchi. The hearing of
the appeal was completed on June 10, 2005 and the Commissioner (Appeals) passed an order dated July
26, 2005 remanding the matter to the Deputy Commissioner, Ranchi with directions.
vi. The Directorate of Commercial Taxes issued a SCN dated July 10, 2001 to Hindalco demanding an aggregate
amount of 1.71 Crores as sales tax along with interest for the assessment year 1998-99 under the West
Bengal Sales Tax Act, 1994. The amount demanded includes disallowance of credit notes, higher demand for
sales tax with respect to sale of import licenses and sale of assets, extra demand against stock transfer and
non-production of forms. Hindalco went on appeal against the said order of the Department to the Deputy
Commissioner. The matter is being heard.
vii. Apart from the cases described hereinabove there are 27 other sales tax related cases filed against Hindalco.
The approximate amounts in these cases aggregate to Rs. 3.056 Crores.
(H) Service Tax:
i. Liability to pay service tax was initially imposed on the persons availing the services of ‘Goods Transport
Operator’ and ‘Clearing and Forwarding Agents’. As Hindalco was availing the services, it got itself registered
and paid service tax till 1999. The Supreme Court of India, vide its judgement dated August 27, 1999 in the
Laghu Udyog Bharti case, directed that any tax which had been paid by the customer or client of a “Goods
Transport Operator’ or ‘Clearing and Forwarding Agents’ was to be refunded within 12 weeks of them making
a demand. Hindalco also sought the refund of Rs. 0.492 Crores in September and October, 1999 which was
rejected by the Assistant Commissioner on June 19, 2000 and Rs. 1.021 Crores in December, 1999 and
January 2000 which was rejected by the Assistant Commissioner on February 6, 2001. However, the provisions
were amended to nullify the effect of the judgment and the authorities rejected the claim on the basis of those
amendments. Hindalco filed an appeal before the Commissioner (Appeals) who passed an order dated
December 24, 2001 rejecting the appeal. Hindalco filed an appeal before the CEGAT, New Delhi against this
order, which was rejected by an order dated June 4, 2003. Hindalco has filed an SLP in the Supreme Court
against this order of the CEGAT. Two writ petitions bearing Nos 328 and 329 of 2004 were filed in the
Supreme Court challenging the amendments made vide sections 116 and 117 of the Finance Act, 2000 to the
provisions of the Service Tax Act, 1994. The writ petitions further challenged the validity of section 158 of the
Finance Act, 2003 by which the provisions of Chapter V of the Finance Act, 1994 as modified by section 116
of Finance Act, 2000 have been retrospectively amended and validated in respect of services rendered by the
goods transport operators and clearing and forwarding agents. Both the aforesaid writ petitions were dismissed
vide order dated March 17, 2005. The SLP is pending disposal.
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ii. The Assistant Commissioner has issued a SCN dated July 4, 2004 to Hindalco demanding an amount of
Rs. 1.87 Crores as service tax leviable in respect of the consulting engineering / technical know how received
from a firm which does not have an office in India.
iii. The Assistant Commissioner, Central Excise Division, Mirzapur has issued a SCN dated December 29, 2004
to Hindalco demanding an amount of Rs. 1.94 Crores as service tax leviable in respect of the consulting
engineering/technical knowhow received from a firm which does not have an office in India. The reply to the
same is yet to be filed.
iv. The Assistant Commissioner, Central Excise, Mirzapur, issued a SCN dated June 4, 2004 to Hindalco
demanding an aggregate sum of Rs. 1.87 Crores in respect of the alleged non-payment of service tax on
consulting engineering services/knowhow from non-resident firms. The sum demanded has been subsequently
revised. Hindalco has filed its reply and the matter is pending with the Assistant Commissioner, Central
Excise, Mirzapur.
(I) Other taxes, fees and cesses:
i. The State of Madhya Pradesh has imposed a transit fee at the rate of Rs. 7 per ton on coal (including 4 per
cent sales tax thereon) under the Madhya Pradesh (Forest Produce) Rules, 2000. The General Manager,
Northern Coalfields Ltd. issued demand notices No. NCL:SGR:Sales:SR:02: 260 and 261 both dated March 1,
2002 and notice No. JRD/AFM/Supply.bill/Transp.fee/2001-02/962 dated March 23/27, 2002, notice No. JRD/
AFM/Supply.bill/Transp.fee/2002-03/218 dated June 19/22, 2002, notice No. JRD/AFM/Supply.bill/Transp.fee/
2001-02/219 dated June 19, 2002, notice No. coal/credit/transit fee/RSTPP/2002-2003/148 dated June 10,
2002, notice No. coal/credit/transit fee/RSTPP/2002-2003/148 dated June 10, 2002 and notice No. coal/credit/
transit fee/RPD/2002-2003 dated July 10, 2002 demanding the said duty of a sum amounting to an aggregate
of Rs. 3.031 Crores to Hindalco. Hindalco has filed Writ Petition No. 4115/2002 before the High Court of
Madhya Pradesh at Jabalpur challenging the aforesaid demand notices as well as the constitutional validity
of order No. F-5/9/10-3/2001 dated May 28, 2001 issued by the State of Madhya Pradesh to the Chief
Conservator of Forests and notification dated May 28, 2001 fixing the transit fee and letter No. 327/sidhi dated
February 2, 2002, as illegal, arbitrary and without jurisdiction. The petition further challenged the constitutional
validity of the relevant provisions of the Madhya Pradesh Transit (Forest Produce) Rules, 2000 and sections
2(4)(b)(iv) and 41 of the Indian Forest Act, 1927. Hindalco has paid Rs. 14.64 Crores (upto September, 2006)
(recurring) under protest and subject to the judgement in the writ petition. The hearing was concluded on
February 28, 2006 and written arguments have been submitted. Orders have been reserved.
ii. The Janpad Panchayat, Kusmi, district Surguja has, vide resolution dated February 11, 1999 under section 77
of the Madhya Pradesh Panchayat Raj Adhiniyam, 1993, levied tax at the rate of Rs. 5 per tonne on the
transportation of bauxite from bauxite mines situated from Tehsil Kusmi, with effect from January 1, 1999. The
Panchayat issued order No. J.P/99 dated February 12, 2002 confirming the said resolution and imposed the
said levy on the Company. A demand was made to the Company to pay the said tax for an amount aggregating
Rs. 0.038 Crores. The Company had filed Writ Petition No. 32/2000 challenging the aforesaid levy before the
High Court of Madhya Pradesh at Jabalpur which has since been transferred to the High Court of Chattisgarh
at Bilaspur. The challenge was on the ground that the levy of the said tax was not within the legislative
competence of the State Government or the Janpad Panchayat. The Company is liable to pay tax of an
amount aggregating Rs. 1.009 Crores as calculated upto August, 2006. The petition was listed in the last
week of February, 2004 but could not be taken up for hearing. The next date of hearing is yet to be fixed.
iii. The Divisional Forest Officer, Renukoot has, in exercise of power under section 41 of the Indian Forest Act,
1927 and Rule 5 of the Uttar Pradesh Transit of Timber and other Forest Produce Rules, 1978, imposed
initially a transit fee at the rate of Rs. 5 per tonne on bauxite being brought by trucks from Madhya Pradesh
to Renukoot and on coal moved by Hindalco by trucks from Madhya Pradesh to Renusagar and also within
district Sonebhadra at the rate of Rs. 38 per tonne with effect from June, 2004. Hindalco has paid a transit fee
on coal amounting to Rs. 0.256 Crores from July 20, 1999 to January 17, 2000 and a transit fee on bauxite
amounting to Rs. 0.028 Crores from July 19, 1999 to January 24, 2000. A transit fee of Rs. 0.43 Crores has
been imposed on bauxite from January, 2000 to August 2006 and Rs. 28.18 Crores on coal upto September
2006. Hindalco has filed Writ Petition No. 40 of 2000 challenging the said imposition before the Allahabad
High Court on the ground that the D.F.O, Renukoot does not have the legislative competence to impose the
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said levy and has further challenged the constitutional validity of sections 2(4)(b)(iv) and 41 of the Indian
Forest Act, 1927. In response to stay application No. 2000 in WP No. 40 of 2000, the Court, vide order dated
January 18, 2000, issued a stay on the levy on the condition that if the writ petition fails, the amount will be
payable with interest at 18 per cent per annum.
iv. The Zilla Panchayat, Sonebhadra has, under the provisions of the Uttar Pradesh Kshetra Panchayat and Zilla
Panchayat Adhiniyam, 1961, levied a transport/toll tax on the transportation of coal by Hindalco from the
collieries to its factories at Renukoot and Renusagar at the rate of Rs. 30 per truck. Hindalco has filed Writ
Petition No. 587/2003 before the Allahabad High Court challenging the levy. The Petition also challenged the
constitutional validity of the said Zilla Panchayat Adhiniyam, 1961 on grounds that that Zilla Panchayat does
not have the legislative competence to frame the impugned bye laws. The realization of the levy has been
stayed by the High Court vide order dated April 10, 2003. Vide order dated May 22, 2003, the petition has
been clubbed with another writ petition No. 18035 and referred to a Full Bench of the High Court. The order
dated April 10, 2003 also directs Petitioner to make necessary changes in their petition and the Respondents
to file counter within one month. Arguments from our side concluded, Arguments from the respondents side
continuing, matter is now fixed for arguments of the respondents and our rejoinder on 28, 29, and 30
November, 2006.
v. Shaktinagar Special Area Development Authority imposed a cess at the rate of Rs. 5 per ton on coal purchased
by Hindalco from Northern Coalfields Ltd. Northern Coalfields Ltd. has demanded the said levy aggregating
Rs. 3.32 Crores (as on June 2005) from Hindalco. Hindalco has paid an amount Rs. 0.24 Crores. Hindalco
has filed a writ petition No. 791 of 1997 dated April 4, 1997 against the State of Uttar Pradesh and others
before the Allahabad High Court challenging the demand. Hindalco has further challenged the constitutionality
of the said levy on several grounds including legislative competence and arbitrariness. The imposition was
stayed by the Court on December 19, 1997 with directions not to press the demand for the impugned cess in
pursuance of bills raised and also not to raise any further demand for the cess pending further orders. The
Respondent Government has filed its counter. The petition was listed on July 28, 2005 and was adjourned.
The next date of listing is yet to be announced.
vi. As the monitoring agency for the collection of Research and Development Cess, IDBI demanded the payment
of Rs 1.28 Crores in connection with the import by Hindalco of TG Sets from ABB Germany. Hindalco filed an
application dated March 14, 2002 with Technology Development Board, the subsequent monitoring agency.
The agency refused the refund of the cess paid. Hindalco has challenged this order through a Writ Petition
filed before the Delhi High Court.
vii. The Commercial Taxes Department has issued demand notices in Form II dated November 22, 2004, December
23, 2004, January 22, 2005, March 1, 2005, March 22, 2005 and May 10, 2005 to Hindalco demanding an
aggregate sum of Rs. 815.51 Crores as the Special Entry Tax in respect of the furnace oil procured by
Hindalco by way of import and indigenously from the State of Karnataka imposed under the provisions of the
Karnataka Special Tax on Entry of Certain Goods Act, 2004. Hindalco filed a writ petition No. 45866/2004
dated November 19, 2004 before the High Court of Karnataka against this notice. The High Court passed an
order granting a stay on the proceedings of collection of the Special Entry Tax for the periods April and May
2005. However, Hindalco is yet to receive the orders certifying the same. The demand notices for April 2005
to July 2005 have been received vide notices dated May 31, 2005, June 23, 2005 and September 2, 2005
and are awaiting a stay in relation to the same. No provision was made for the month of August 2005 as the
entire furnace oil was purchased within the State. The date of hearing is yet to be announced.
viii. The Director General of Foreign Trade has issued a SCN to Hindalco in respect of non-submission of export
obligation against EPCG License. The reply is under preparation. A personal hearing was held on February
15, 2005.
ix. The State of Orissa imposed Rural Infrastructure and Socio Economic Development Tax under Orissa Rural
Infrastructure and Socio Economic Development Act, 2005 (ORISED Act) on minerals and coal bearing land.
Company has challenged inter alia Act/ Rules/ Notification by way of W.P. No. 8228/2006 before Orissa High
Court . The Division Bench of the High Court of Orissa struck down the impugned Act/Rules and Notification
vide its order dated 5.12.2005. Against the order of the High Court the State of Orissa filed an SLP No. 5264
of 2006 before the Hon’ble Supreme Court of India. The case is next posted for hearing on 5.12.2006.
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x. Northern Coalfields Limited (NCL), Jhingurdah project raised a Demand dated 23.3.2006 through supplementary
bill for the period from 30.9.2005 to 28.2.2006 for Rs. 4.43 Crores and for 0.191 Crores on the Basic value of
dispatch of coal for 5 days (Total 46.2 Million) in respect of Renusagar Power Division and for 2.84 million in
respect of Renukoot (including CST at the rate of 4%) for the period 20.9.2005 to 27.3.2006 under Madhya
Pradesh Gramin Avsanrachna Tatha Sadak Vikas Adhiniyam, 2005. As the liability is recurring the Company
has filed a W.P. No. 4915 of 2006 before the Hon’ble High Court of Jabalpur challenging the Act/Rules/
Notification and demand raised by NCL thereunder. The Hon’ble High Court has stayed the Demand vide
interim order dated 4.4.2006. Notices were issued to the respondents and the case is listed for further
hearing. Meanwhile as a similar levy imposed by the State of Orissa was struck down by the Orissa High
Court and the order is under challenge before the Supreme Court, Company moved a Transfer petition before
the Hon’ble Supreme Court and the Transfer petition has been allowed on Nov. 6, 2006.
xi. Nagar Palika, Singrauli, Distt. Sidhi (M.P.) in purported exercise of power under section 132 of the M.P.
Municipalities Act, 1960 imposed a Terminal Tax inter alia on export of coal at Rs. 5 per tonne. Initially
demands were raised on Northern Coalfield Limited (NCL). However, NCL decline to pay. The Nagar Palika,
Singrauli put up the barriers on the road for the purpose of collection of Terminal Tax and stopped all the
trucks carrying coal for renusagar Power Division of the Company. A Writ Petition No. 1588 of 2006 has been
filed at Hon’ble High Court of Madhya Pradesh at Jabalpur challenging the levy. The High Court vide its order
dated January 25, 2006 has issued notice to the Respondeants and has meanwhile ordered that trucks
carrying coal will not be detained at the checkposts subject to the condition that terminal tax shall be paid on
the coal obtained from NCL. Although there is no provision for payment of Tax in advance the Company has
paid an advance of Rs. 0.23 Crores as goodwill gesture up to September, 2006. The case is to be listed for
the hearing.
xii. Apart from the cases described hereinabove there are four other miscellaneous tax related cases filed against
Hindalco. The approximate amounts in these cases aggregate to Rs. 0.739 Crores.
(J) Civil Cases filed against Hindalco:
i. Bombay Environmental Action Group and Shyam Chainani have filed Writ Petition No. 959 of 1998 on March
16, 1998 before the High Court of Judicature at Bombay seeking to restrain Indal from carrying any mining
activity or any other activity of any nature whatsoever in the Iderganj area of Radhanagari Taluka, Kolhapur
District on the alleged ground that the mine is within the Radhanagari Sanctuary and the mining activity is
carried out by Indal without obtaining the necessary permissions for the same from the relevant authorities
and that grave and irreparable harm, loss and injury would be caused to the environment and topography of
the Radhanagari Reserve Sanctuary. The High Court has granted a stay order dated April 1, 1998 restraining
Indal from carrying on any mining activity in the Iderganj area of Radhanagari, Kolhapur, till further orders.
The stay order is still in force.
ii. Bombay Environmental Action Group and Shyam Chainani have filed Writ Petition No. 2244 of 98 before the
High Court of Judicature at Bombay seeking cancellation of the renewal of mining lease granted to Indal in
the Iderganj area allegedly within the Radhanagari Sanctuary in Kolhapur. Stay on the renewal of the lease
is in force. The total value of the mining rights which have been affected through these cases was Rs. 2.205
Crores.
iii. The Estate Officer, Air India Limited issued an Eviction Notice dated April 19, 1999 to Hindalco purporting to
act under section 4 of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 claiming that
Hindalco was in unauthorized occupation of an area of 10496.80 sq. ft. on the 15th floor of the Air India
Building, situated at Nariman Point, Mumbai, and seeking to evict Hindalco therefrom. Hindalco filed its reply
dated October 4, 1999 before the Estate Officer who passed an order dated October 3, 2001 holding that
Hindalco was in unauthorized occupation of the premises and ordered it to vacate the same. The same officer
passed an order on the same day staying the eviction for a period of four weeks in the interests of justice.
Hindalco filed an appeal dated October 11, 2005 before the Principal Judge, Bombay City Civil Court, against
this order dated October 3, 2001. The appeal is pending disposal.
iv. The Estate Officer, Air India Limited issued a SCN dated November 21, 2003 to Hindalco purporting to act
under section 7 of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 demanding an aggregate
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of amount of Rs. 32 Crores as damages in respect of the alleged unauthorized occupation of Hindalco of an
area of 10496.80 sq. ft. on the 15th floor of the Air India Building, situated at Nariman Point, Mumbai, and
interest thereon. Hindalco filed its reply dated December 29, 2003 before the Estate Officer. The Estate Officer
passed an order dated March 4, 2004 adjourning the hearing of the matter till further notice. The matter is
pending disposal.
v. The Centre for Public Interest Litigation has filed Interim Application No. 152 of 2003 dated May 13, 2003 in
Civil Writ Petition No. 202 of 1995 before Central Empowered Committee (“CEC”) constituted by the Supreme
Court in the case of T.N. Godavarman Thirumalpad v. Union of India inter alia alleging that Hindalco encroached
on forest land in Renukoot resulting in loss of flora and fauna of the area which is in violation of the Forest
Act, the Forest (Conservation) Act and the Wildlife Act. The Interim Application also alleged that Hindalco has
transferred some of the land allotted to it without requisite sanction, which is also violative of the aforesaid
Acts. The complaint has been filed on the basis of internal reports of the Forest Department. Hindalco filed a
counter in reply where it, inter alia took the preliminary objection that the Supreme Court, had earlier, vide
order dated August 26, 2002, rejected writ petition No. 238 of 2002, which was filed on identical issues by
N.K. Jain and another, and hence the interim application must be dismissed. The Complainant has filed a
rejoinder on December 3, 2003, which refuted the reply by Hindalco, inter alia on the grounds that the
dismissal of the said writ petition was on grounds of the same being misconceived, motivated and belated
and therefore did not affect the admissibility of the interim application. The first effective hearing was held on
January 5, 2004 where the CEC took note of the preliminary objection filed by Hindalco as well as the
rejoinder and directed the complainant to file an affidavit on two points - namely that the present matter is not
covered by the Writ Petition decided by the Supreme Court and that the CEC can entertain the matter despite
the dismissal of the earlier writ petition. The date of disposal of the preliminary objection will be fixed after the
filing of the said affidavit by the Complainant.
vi. Centre for Public Interest Litigation has filed Writ Petition No. 2145 of 99 before the Delhi High Court against
the Union of India and Ministry of Environment and Forest seeking issuance of directions by the High Court
to the Union of India and its agencies to ensure that the fly ash generated as industrial waste by thermal
power plants is utilized for the purpose of making cement or bricks and other building materials. The Petitioner
also sought suitable directions from the Court to give effect to the objectives of the draft Notification dated
May 22, 1998 under the Environment (Protection) Rules, which aims to prevent the dumping and disposal of
fly ash in landfills. The notification was brought into force on September 14, 1999, in pursuance of, inter alia,
the order of the Delhi High Court dated August 25, 1999 in the aforesaid writ petition directing the Central
Government to publish the final notification. Subsequently, the Court has issued directions vide several orders
to ensure the compliance of the aforesaid notification. Hindalco has filed an affidavit on August 22, 2003
certifying that it has reported compliance with the notification vide letter No. PandIR/HRD/5308/10827 dated
August 12, 2000 to the Uttar Pradesh Pollution Control Board, letter No. HR/Env/1714/29049 dated March 12,
2002 to the Central Pollution Control Board, New Delhi and letter No. PandIR/Env/6020/11383 to the Ministry
of Environment and Forest, Lucknow. The High Court had asked the Union of India to file an affidavit on the
implementation of the objectives of the notification by concerned thermal power stations as well as by the
State Pollution Control Boards. The Ministry of Environment and Forest in turn asked various thermal power
stations including Hindalco (Renusagar) to file report on the status of the implementation of the aforesaid
notification to it. Hindalco vide letter No. PandIR/Env/1323 dated February 26, 2004, furnished the requisite
details to the Ministry of Environments and Forests. The Union of India filed the requisite affidavit on July 14,
2004 before on the Delhi High Court. The matter was listed for hearing on December 12, 2005 when the
Court heard it in part on compliance report. Listed on September 25, 2006 when it was adjourned sine die in
view of the fact that transfer petition has been filed in the Supreme Court.
vii. Surendra Nath Dubey has filed Civil Miscellaneous Writ Petition No. 4926 of 2002 dated November 20, 2001
before the Allahabad High Court against Hindalco seeking to restrain Hindalco from constructing an ash dam
in district Sonebhadra on the ground that such construction would allegedly cause air and water pollution.
Notices have been issued by the Court but have not been served on Hindalco. Hindalco has completed the
construction of the ash dam. The next date for hearing is yet to be fixed. However, under the circumstances
writ petition now become infractous.
viii. Prakriti Seva Sansthan has filed Civil Miscellaneous Writ Petition No.14403 of 2002 dated April 8, 2002
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ADITYA BIRLA NUVO LIMITED
against, inter alia, the State of Uttar Pradesh and Hindalco alleging that enquiry by the Sub-divisional Magistrate,
Sonbhadra into an accident that took place at the ash dam in 1996 was strongly influenced by the management
of the Hindalco Group and therefore was not properly conducted. The Writ Petition also alleges that that the
ash dam being built by Hindalco is in breach of applicable environmental norms and therefore has prayed
that the Court direct the Respondents to construct a permanent ash dam with professional expertise and
advise and take all preventive and ecologically friendly measures to safeguard the environment of the area.
In addition, the petitioner also sought an ad interim order directing the Respondent to conduct a fresh enquiry
into the accident. The Allahabad High Court admitted the Writ Petition vide order dated April 12, 2002. The
Court further directed the District Magistrate, Sonbhadra to personally make a local spot inspection in relation
to the incident that took place in 1996 and submit his report. The District Magistrate submitted a report of his
findings to the Court on May 22, 2002. Notice has to be issued in this case, which has not been listed
thereafter.
ix. M/s Trimax Industries Ltd. filed Writ Petition No. 4290 of 2002 against the Union of India, the Company and
others before Orissa High Court challenging an order dated September 18, 2002 in Revision Application No.
22/(II)/2001-R-C-I passed by the Central Government under section 30 of the Mines and Minerals (Development
and Regulation) Act, 1957 and Rule 55 of the Minerals Concession Rules, 1960 in favour of Hindalco. The
impugned order had allowed the revision preferred by Hindalco against the order of the State Government
dated February 14, 2001 rejecting application of Hindalco and Trimax for bauxite mining lease in Orissa. A
similar application for revision by Trimax had been rejected by Central Government vide order dated September
18, 2002. The Court, vide interim order dated October 24, 2002 issued a stay on the revision passed by the
Central Government. The High Court vide its order dated May 8, 2003 vacated the stay order. The Court
directed the Union of India to file a counter to the Writ Petition. Meanwhile M/s Trimax had filed another writ
No 10756 of 2005 challenging the order of approval of grant of mining lease in favour of Hindalco. The matter
was heard on November 9, 2006 and order was reserved. the matter is now again listed for hearing on 22nd
November 2006. Similarly, M/s Gimpex Industries Ltd. has challenged an order dated September 9, 2004
issued by the State of Orissa recommending granting mining lease in favour of Hindalco by filing revision
petition No. 22 (8) 2004/RC-I dated November 16, 2004 before the Mines Tribunal, New Delhi. Gimpex
Industries has asked for a stay to be imposed on the mining activity. The reply to this application has been
filed on January 13, 2005. The matter was finally heard on June 28, 2005 and orders are reserved. The
Tribunal vide its order dated December 12, 2005 rejected the Revision Petition.
x. Ram Shankar Singh, Shital Prasad, Shiv Nandan and Abhay Lal have filed Civil Miscellaneous Writ Petition
No. 5241 of 2002 dated January 25, 2002 before the Allahabad High Court inter alia against the Government
of India, Northern Coalfields Limited and Hindalco seeking to restrain them from interfering with the possession
of the petitioners over certain plots of land in District Sonebhadra. The petitioners have alleged that
compensation has not been paid to them in respect of the acquisition of these plots of land by the Government
of India under the provisions of the Coal Bearing Areas (Acquisition and Development) Act, 1957. After
acquisition, the Government handed over the land to Northern Coalfields Ltd. Hindalco has taken permission
and possession from Northern Coalfields Ltd. for laying of a pipeline. The petitioners have challenged the
acquisition of the land as well as the subsequent grant of permission to Hindalco from Northern Coalfields
Ltd. On an interim application filed in March, 2005 the Court ordered that in case the possession of the land
is still with the petitioners, they should not be dispossessed. The matter is yet to be listed for hearing.
However, the work of construction of ash pipeline has been completed.
xi. Agnorpeth Shri Sarveshwari Samooh filed Civil Misc. Writ Petition No. 3800 of 2001 dated November 21,
2001 against the State of UP, Hindalco and others before Allahabad High Court alleging that peaceful
possession of the land occupied by the Ashram managed by the Petitioner society, is being disturbed by
officials of Hindalco, who dispute the Petitioner’s ownership and possession of the Ashram premises. The
petitioner also filed a stay application No. 3800 of 2001 asking the Court to direct the Respondents not to
interfere in the peaceful possession and functioning of the Petitioner society and further direct them to permit
the free flow of goods in the Ashram premises and further to direct the Respondents to allow the Petitioner to
construct a tubewell on its premises. Hindalco has filed its counter affidavit before the High Court. The next
date for hearing is yet to be fixed.
xii. Indian Bank has filed O.A. No. 66 of 1994 against the erstwhile Renusagar Power Company, its directors and
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Hindalco before Debt Recovery Tribunal, Calcutta claiming differential interest amounting to Rs. 0.65 Crores in
relation to a term loan of Rs. 3.45 Crores with an interest of 4.5 per cent per annum over the official rate of
the Reserve Bank of India with a minimum of 13.5 per cent per annum from the date of execution of
documents till the date of payment in full, availed of by the erstwhile Renusagar Power Company under a
term loan agreement dated June 23, 1981. The Indian Bank has alleged that Hindalco, as guarantor of the
said loan has failed to make the payment of interest in accordance with the terms of the disbursement.
Subsequently, the name of Hindalco was substituted as Respondent No. 1 vide order of the Debt Recovery
Tribunal dated July 5, 2002. The matter was fixed for judgement on February 2, 2004. However, the Presiding
Officer could not deliver the judgement and retired. The matter was adjourned for arguments on July 31, 2006
after which it has been further adjourned for arguments till December 18, 2006.
xiii. Md. Hussain and others, who are residents of the Nagar Panchayat, Renukoot have filed Writ Petition No.
39739 of 2000 dated August 20, 2000 against the State of Uttar Pradesh, Hindalco and others before the
Allahabad High Court challenging the Notification dated April 7, 2000 which declared the property held by
Hindalco in Renukoot, Uttar Pradesh as an Industrial Township by virtue of the power given to the Governor
of Uttar Pradesh under Article 243-Q of the Constitution. The petition was filed on the grounds the notification
is based on information including information that no service within the area has been rendered by the Nagar
Panchayat, Renukoot, the population of the area and the area and size of the Hindalco establishment, all of
which is incorrect and unsubstantiated. Further, the petition alleges that a hearing has not been provided to
the general public of Renukoot or the elected Nagar Panchayat Committee before the making of such
notification. The petition alleges that the objective satisfaction of the Governor in declaring the area as an
Industrial Township is not supported by any evidence or material and that the Governor has not applied his
mind in issuing such notification. Notices have been issued to the Respondents. Hindalco is yet to file its
counter.
xiv. Six cases have been filed wherein parties have made representation to have small plots of land held by
Hindalco, recorded as their ownership in the revenue records in Mirzapur District. The tehsildar and
subsequently the Assistant Record Officer passed orders in favour of the Plaintiffs. Hindalco filed revision
petitions before the Commissioner, Mirzapur and the Board of Revenue which are still pending.
xv. In Appeal No. 3501 of 1994, similar to those mentioned hereinabove, filed by Nokhai, the Assistant Record
Officer vide order dated April 22, 1994 ordered mutation of the revenue records in the name of Nokhi,
deleting the name of Hindalco, in respect of certain plots, recorded in the name of Hindalco. These lands had
been purchased by Hindalco through a sale deed registered under the Government Grants Act, 1895. Hindalco
has filed an appeal before the Record Officer, Sonebhadra against this order. The date of hearing is yet to be
fixed.
xvi. Three cases have been filed against Hindalco seeking an order of permanent injunction against the construction
of an ash pipeline by Hindalco. The cases have been filed on the premise that the construction is interfering
with their enjoyment of their property. Hindalco has erected an ash dam, pipeline on these properties. These
cases are still being heard at the Court of the Civil Judge.
xvii. Ashok Kumar and others have filed Civil Miscellaneous Writ Petition No. 18683 of 2005 before the Allahabad
High Court against Hindalco. Hindalco had filed Civil Suit No. 33 of 1987 before the Court of the Civil Judge
(Junior Division), Dudhi for permanent injunction and demolition of unauthorized construction made by the
petitioners on Hindalco’s land in District Sonebhadra. To comply with the condition imposed in the Environment
Management Plan (EMP) to upgrade the existing Effluent Treatment Plant (“ETP”)/Sewage Treatment Plant
(“STP”) to ensure “zero discharge”, a pipeline from STP to Alumina Plant was laid by Hindalco. A portion of
the pipeline also passed beneath the land on which the Petitioners’ unauthorized construction exists. The
Petitioners moved an application before the Court of the Civil Judge on September 14, 2004 seeking to
restrain Hindalco from passing the pipeline from underneath the construction of the petitioners and from
utilizing the pipeline for drainage. The trial court allowed the application on December 24, 2004 and restrained
Hindalco from using the pipeline. Aggrieved by this order of the trial court, Hindalco filed a miscellaneous
appeal before the District Judge, who allowed the appeal on February 8, 2005 and vacated the injunction
order passed by the trial court. Aggrieved by the aforesaid order, the Petitioners filed the instant writ petition.
The petition was taken up by the High Court on March 3, 2005. No interim order was made by the Court
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against Hindalco. The matter is to be listed in the next cause list.
xviii. A claim for anode slime insurance at Noranda has been filed and admitted by National Consumer Forum for
Rs. 2.84 Crores on August 3, 2004. A hearing was held on November 10, 2004. M/s. New India Assurance
Co. have submitted their replies. National Consumer Forum is yet to determine the next hearing date.
xix. Apart from the cases described hereinabove there are 14 civil cases filed against Hindalco. Majority of these
cases pertain to property related disputes where the relief sought is in the nature of injunction against
Hindalco restraining it from constructing on or encroaching into relevant suit properties. The approximate
amounts in these cases aggregate to 0.301 Crores.
(K) Miscellaneous Cases filed against Hindalco
i. Three cases have been filed under section 5 and 26 of the Indian Forest Act, 1927 (“Forest Act”) before the
Magistrate’s Court by the Divisional Forest Officer, Renukoot alleging encroachment upon forest land by
Hindalco through incorrect construction of boundary wall. In each of these cases, the Investigating Officer has
recommended that an application for invocation of section 63 of Forest Act be made.
ii. Eight cases have been filed before the Judicial Magistrate at Lohardaga for breach of sections 25, 26 and 33
of the Forest Act by Hindalco. It is alleged in these cases that Hindalco has engaged in activities not
permitted in the forest area such as mining, construction of road and transportation of bauxite. In three of
these cases, the High Court has admitted a petition for quashing the proceedings and has stayed the
proceeding in the lower court. In three other cases, the lower court is hearing the case. In two of the cases,
the sanction of the Deputy Forest Officer for continuing the proceedings is awaited.
iii. Two cases have been filed against Hindalco under section 52 of the Forest Act before the Divisional Forest
Officer for the confiscation of materials illegally collected from the forest. One of these cases is pending
hearing before the Divisional Forest Officer. In the other case, an adverse order was passed by the Officer on
March 3, 2005. Against this order, Writ Petition (Cr) No.146 of 2005 was filed at Jharkhand High Court, Ranchi
on April 19, 2005 and the order of the lower court was stayed vide order dated May 12, 2005.
iv. The Assistant Mining Officer, Lohardaga, issued a demand notice dated January 5, 2002 directing Hindalco to
pay an amount aggregating Rs, 1.955 Crores (together with Mines and Minerals Ltd.) in respect of the
alleged arrears of royalty on vanadium sludge payable by Hindalco and interest thereon till December 31,
2001. Hindalco disputed its liability and the matter was referred to the Certificate Officer (Mines), Ranchi, who
commenced certificate proceedings under a notice dated January 15, 2002. Hindalco filed Writ Petition No.
6839 of 2002 before the Allahabad High Court challenging the notice dated January 5, 2002 and January 15,
2002. The High Court passed orders dated February 14, 2002 and March 22, 2002 holding that in case
Hindalco deposited 50 per cent of the aggregate amount and furnished a bank guarantee for the remaining
amount, any further action including the certification proceedings pursuant to the demand notice would remain
stayed. Hindalco has complied with the aforesaid conditions.
v. The Assistant Mining Officer, Gumla vide Notice dated June 13, 2005 demanded royalty on Vanadium
amounting to Rs. 1.38 Crores for the period 1991-92 to 2000-01 with interest of Rs 2.67 Crores calculated up
to March 31, 2005. Hindalco has furnished a reply to this notice denying the liability. The Certificate Officer
has issued notice to Hindalco on July 25, 2005 for realization of the dues. Hindalco has denied its liability to
pay vide August 25, 2005. The reply from the Assistant Mining Officer has also been filed before the Certificate
Officer on September 6, 2005. Certificate Officer vide its order dated 20.12.2005 directed the Company to
deposit 50% of the certificate amount in cash and furnish a bank guarantee for the balance amount as interim
measure. Company complied with the directions and the matter is pending.
vi. The District mining authorities of District Gumla and Lohardaga in the State of Jharkhand raised the demand
for royaty on vanadium in respect of mining leases situated in dist Gumla for Rs. 5,51,87,693 and Lohardaga
for Rs. 3,10,24,253 totalling Rs. 8,62,11,936 for the period 2001-2005. The certificate proceedings commenced
and Hindalco’s interim application for the rectification of amount has been allowed. The revised amount now
stands at Rs. 2,43,67,756. The Court however in line with its earlier order has directed the Company to
deposit as an interim measure the 50% of the amount as cash and furnish a bank guarantee for the balance
amount. Company complied with the directions. The matter is pending.
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vii. District mining authorities Gumla, Jharkhand has raised a demand of Rs. 48,48,245 for the period January 1,
2006 to August 31, 2006 towards royalty with interest on Vanadium Sludge. Hindalco filed its objections. The
department however initiated the certificate proceedings and notice was to file objections received on November
7, 2006. Company to file its reply within one month. Similar demand amounting to Rs. 19,97,730 has been
made by authorities of District Lohardaga, reply submitted. But the authorities have initiated Certificate
proceeding.
viii. Hindalco has filed Revision Application dated January 21, 2002 under section 54 of the Mineral Concession
Rules, 1960 before the Revisional Tribunal, Mines, Delhi against the order of the Government of Maharashtra
dated February 16, 2002, granting mining lease rights to R.M. Mohite in Kolhapur copper mines of area
1312.41 hectares. Revision hearing was held on June 13, 2004 and was concluded on June 20, 2004. The
order of the tribunal is awaited.
ix. Hindalco has filed Title Suit No. 174 of 1999 in the Court of the Civil Judge, Sambalpur against the
encroachment of land held by Hindalco at Hirakud against B. Kanta and others. The case is posted for
hearing.
x. Apart from the cases described hereinabove there are eight other cases filed against Hindalco. The approximate
amounts in these cases are an aggregate of Rs. 1.388 Crores.
(L) Arbitration Proceedings:
i. Hindalco initiated arbitration proceedings for failure of Uttar Pradesh State Electricity Board (“UPSEB”) to supply
electrical energy in terms of Agreement dated October 29, 1959. For the period 1971 to 1973, the amount claimed
was Rs. 2.05 Crores and for 1973 to 1975, the amount claimed was Rs. 6.91 Crores. UPSEB moved the Lower
Court challenging the reference to Arbitration, which was rejected. Hence UPSEB has filed Revision Nos. 6 and 7
of 1980 dated January 1, 1980. Stay was granted on January 18, 1980. Hindalco has filed an application for
vacation of stay. The matter was last listed on May 20, 2005 when the court directed the cases to be listed before
the appropriate regular court.
ii. Hindalco has been involved in arbitration proceedings with IFFCO. The Presiding Arbitrator endorsed the awards of
IFFCO’s Arbitrator against Hindalco. An amount of Rs. 7.19 Crores along with interest at 10.25 per cent from
January 15, 2001 was awarded to IFFCO. Hindalco has filed an appeal in the Delhi High Court on October 10,
2004 against this arbitration award. A hearing was held on December 1, 2004 and notices were issued. The next
date for hearing is on September 10, 2005. Court directed both parties to file synopses and listed the matter for
hearing on November 22, 2005.
iii. Hindalco initiated arbitration proceedings for Rs. 1.53 Crores and Rs. 1.17 Crores on the grounds of failure of
UPSEB to supply electrical energy in terms of agreement dated November 30, 1976. UPSEB filed miscellaneous
cases before the Civil Judge, Lucknow, which were dismissed for default. The application for restoration and
condonation of delay were also dismissed by order dated February 5, 1993. UPSEB filed FAFO Nos. 105 of 1993
and 107 of 1993 was filed by UPSEB. Arbitration proceedings were stayed by High Court vide order dated May 20,
1993. The next date of hearing is yet to be fixed.
iv. Hindalco initiated three arbitration proceedings for failure of UPSEB to supply electrical energy in terms of Agreements
dated October 29, 1959 and September 30, 1976. The amounts claimed were Rs. 2.64 Crores for the period
September 1973 to November 30, 1977, Rs. 6.162 Crores for the period April 7, 1977 to September 18, 1977 and
Rs. 6.221 Crores for the period December 1, 1977 to May 7, 1978. UPSEB moved the Lower Court challenging the
references to Arbitration. The lower court partly allowed the applications holding that the arbitration clauses were
valid and the dispute were covered by the arbitration clauses but the references to arbitration were unilateral and
hence invalid. Against these orders Hindalco filed Revision Nos. 339, 340 and 341 of 1979 while UPSEB filed
Revision Nos. 10, 11 and 40 of 1980. Restraint orders have been granted against the arbitrator from proceeding in
these arbitrations. Revisions are being listed for final hearing. The matters were listed on May 20, 2005 and the
Court directed these to be listed before the appropriate Court.
v. Hindalco initiated arbitration proceedings for failure of UPSEB to supply electrical energy in terms of the agreements
dated October 29, 1959 and November 30, 1976. The amount claimed was Rs. 4.193 Crores for the period March
8, 1978 to September 30, 1978. UPSEB filed suit No. 58 of 1979 before Civil Judge (S.D.), Lucknow for permanent
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injunction against the arbitration proceedings and for declaration that the dispute did not come within the purview
of the arbitration clause. The said suit was allowed vide order dated September 28, 1998. Against this order of the
Civil Judge Civil Revision No. 122 of 1998 has been preferred by Hindalco. In this proceeding, the High Court vide
its order dated January 18, 1999 stayed the operation of the impugned order of the Civil Judge. The matter came
up for hearing on July 25, 2003 and was dismissed due to non-appearance of counsels. Restoration application
has been filed on July 31, 2003. The High Court ordered restoration of the case to its original number and
continuation of the existing stay order on March 4, 2004. The case was listed last in July 9, 2004 and adjourned.
A further date of hearing is yet to be fixed.
vi. Hindalco had initiated arbitration proceedings against UPSEB in respect of the refund of Rs. 0.364 Crores paid
under protest on account of wrongful demand based on minimum consumption guarantee. The UPSEB declined to
appoint an arbitrator and challenged the appointment of sole arbitrator before the District Court in the Unnao
District of Uttar Pradesh. The Court vide its order dated April 10, 1992 rejected the challenge and UPSEB filed a
Writ Petition No. 1232 of 1992 against the said Order. The writ petition was dismissed for default on December 4,
2000. The sole arbitrator passed an award on December 15, 2000 which was made Rule of Court in the year 2001.
UPSEB filed an application No. 6179 of 2000 for recall of the order dated December 4, 2000 and for restoration of
the Writ Petition No. 1232 of 1992. The application is pending disposal.
vii. UPSEB had revised its general rates from July 1, 1978 and had worked out an increase of 4.1647 paisa /unit over
and above the average rate of 11 paisa/unit by ignoring the effect of fuel cost valuation adjustment charges in
calculating the proportionate increase in terms of power agreement. Hindalco had paid a sum of Rs. 1.17 Crores
under protest and had initiated arbitration proceedings on April 17, 1981. The arbitrator made an award for
Rs. 0.359 Crores, which was made Rule of Court on August 27, 1990. Against the order of making the award the
Rule of Court, FAFO No. 47 of 1991 dated March 26, 1991 has been filed by the UPSEB in respect of an amount
of Rs. 0.173 Crores. The appeal was admitted on August 16, 1994. Proceedings are pending and no further date
has been fixed.
(M) Notice
Hindalco was allotted 64 acres 30 guntas extent of land in Kangrali Industrial Area by the Karnataka Industrial
Areas Development Board (“KIADB”) vide an allotment letter dated April 4, 1973. The Assistant Secretary, KIADB,
Belgaum passed an order dated January 18, 2000 terminating the allotment letter and resuming the land on
account of the alleged non-compliance with the conditions contained in the allotment letter. Hindalco, by a letter
dated January 18, 2000, requested the KIADB to withdraw its letter dated January 18, 2000 and consider its
proposals submitted in an earlier letter dated August 6, 2000. The KIADB, by its letters dated January 28, 2000 and
January 31, 2000 revoked the order dated January 18, 2000 and kept the same in abeyance. By its letter dated
February 1, 2000, the KIADB withdrew the order. Hindalco made an exchange proposal to the KIADB. The exchange
proposal was accepted by KIADB. However, the same would not be implemented due to various practical problems
such as stamp duty and surrender of our own land. Matter is pending with KIADB.
(N) Regulations:
i. Pursuant to its order dated February 18, 2005, SEBI ordered Hindalco Industries Limited and Pilani Investment
and Industries Corporation Limited (the “Acquirers”) to make a Public Announcement for an Open Offer of
Bihar Caustic & Chemicals Limited (“Target Company”) as required under Chapter III of SEBI (Substantial
Acquisition of Shares and Takeover) Regulations, 1997, taking the reference date as June 18, 2002 to the
shareholders of Bihar Caustic & Chemicals Limited as on that date. SEBI further ordered the Acquirers to pay
interest at the rate of 10% per annum to the shareholders of the Target Company in terms of Regulation 44
(i) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 for the loss of interest
caused to them from October 21, 2002 till the date of actual payment of consideration for the shares to be
tendered/accepted in the offer directed to be made by the Acquirers. The Company had acquired 17,700
Equity shares under the Open Offer. All the statutory compliances under the Open Offer are completed.
2. Grasim Industries Limited
i. A show cause notice for an amount of Rs.10.4 Crores was issued against cenvat credit on the ground that the
spinning and weaving units of Bhiwani Unit is not a composite mill. The matter is pending in CEGAT. Show
cause notices have been served aggregating Rs.15.16 Crores on the grounds of misclassification of machinery,
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cenvat on fuel oil and non-fuel items. These are pending at various levels. Show cause notices have been
served aggregating Rs.27.59 Crores towards disallowance of modvat credit on raw material supplies and
capital goods. The matter is pending in CEGAT. In addition, there are other cases aggregating Rs.15.45
Crores which are pending at various levels.
ii. Demand of Rs.10.86 Crores has been raised towards custom duty on import of technical knowhow and other
services against which Bank Guarantee of Rs.5.68 Crores has been furnished. Matter is pending in appeal
with the High Court at Mumbai. In addition, there are cases aggregating to Rs.0.04 Crores towards calculation
of duty on moisture allowance for coal and towards purchase of computer. These matters are pending at
various levels.
iii. Demand of Rs.10.74 Crores has been raised towards stamp duty and lease transfer charges on the transfer
of Gwalior property. A demand of Rs. 5.66 Crores has been made towards Stamp Duty on valuation of mining
lease. A petition has been filed challenging the basis of valuation. In addition, there are other cases aggregating
Rs.5.24 Crores which are pending at different levels.
iv. Madhya Pradesh State Electricity Board (“MPSEB”) has raised a demand of Rs.45.47 Crores on the basis of
an order of the Madhya Pradesh Electricity Regulatory Commission imposing a condition to use Board’s
minimum power to the extent of equivalent units generated by 3 DG sets against which a stay has been
obtained from Madhya Pradesh High Court. A demand of Rs. 2.25 Crores has been made towards surcharge
on non-payment of energy development cess. Matter is pending with Madhya Pradesh High Court. An appeal
against a demand of electricity tax of Rs. 7.23 Crores made by CEIG is pending with Energy Secretary for
disposal. There are other cases amounting to Rs. 7.54 Crores pending before different levels.
v. Demand aggregating Rs.9.62 Crores has been made towards Sales Tax on stock transfers and interest
thereon and pending “C” forms. The matters are pending before the Sales Tax Board. Additionally, demand of
Rs. 2.14 Crores has been made towards disallowance on various accounts. There are other cases relating to
pending “C” Forms, sales tax registration, purchase tax, entry tax, etc. aggregating Rs. 26.3 Crores, which are
pending at various levels.
vi. Demand of Rs. 13.33 Crores has been made by the Irrigation Department. Government of Gujarat, towards
water charges. In addition, demand for water cess amounting to Rs.1.26 Crores has been made. All these are
pending at various levels.
vii. Matters aggregating Rs. 3.48 Crores with regard to Mineral Area Development Cess & Royalty, Rs. 6.27
Crores with regard to Land compensation, Rs. 6.22 Crores with regard to Labour disputes, Rs. 3 Crores with
regard to Freight disputes, Rs.0.59 Crores with regard to Betterment fees, Rs.0.22 Crores with regard to
Service tax, Rs. 0.99 Crores with regard to Property & Road Tax, Rs. 3.57 Crores with regard to wood price
difference. Claims from parties aggregating Rs. 2.79 Crores and miscellaneous cases aggregating Rs.6.84
Crores are pending before various appropriate authorities.
viii. The State represented by the Labour Enforcement Officer, Tiruchirappalli, Tamil Nadu (“LEO”) filed two
complaints S.T.C. Nos. 505 of 2003 and 506 of 2003 before the Judicial Magistrate, Ariyalur against Kumar
Mangalam Birla (in his capacity as Chairman of Grasim Industries Limited (“Grasim”)), S.K. Maheshwari, K.C.
Birla and two different contractors. It has been alleged that the contractors were under the control and
supervision of Grasim including Kumar Mangalam Birla, Mr. S.K. Maheshwari and K.C. Birla. In his letter dated
February 14, 2003, the LEO had requested Grasim to rectify the irregularities mentioned in their inspection
report of January 7, 2003. They also ordered Grasim to pay wages in accordance with guidelines given by the
Cement Wage Board amounting to approximately Rs. 0.75 Crores and Rs. 0.287 Crores to the workers under
the two cases respectively. The Judicial Magistrate was requested to discharge the petitions against Kumar
Mangalam Birla and S.K. Maheshwari as they were not responsible for the day to day working of Grasim. The
Magistrate by his order dated February 27, 2004 rejected the request. Criminal miscellaneous petition Nos.
5405 & 5406 of 2004 were thus filed in the High Court at Chennai for discharge of the petition against Kumar
Mangalam Birla and S.K. Maheshwari. The High Court in its order dated April 28, 2004 stayed all further
proceedings and set aside the order dated February 27, 2004 of the Judicial Magistrate. The matters are
currently pending.
ix. Satyabhama Devi, a shareholder of Grasim Industries Limited (“Grasim”) has filed criminal case No. 1477(C)
2001 against Kumar Mangalam Birla as Chairman of Grasim and others in the Court of the Judicial Magistrate,
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First Class, Patna. She has alleged that she applied for 710 debentures of Grasim, paid Rs. 49,700 for them
and when she sold her shares in the secondary market after conversion of her debentures, Grasim stopped
the transfer. Grasim has contended that these debentures did not belong to Satyabhama Devi in the first
place. The Judicial Magistrate, by his order dated October 10, 2001, had directed for issue of summons
against Kumar Mangalam Birla and the other accused. Kumar Mangalam Birla filed criminal miscellaneous
No. 1305/2002 in the High Court at Patna requesting for quashing of the impugned order passed by the
Judicial Magistrate. The High Court by its order dated July 22, 2002 stayed further proceedings in case No.
1477(C) 2001. The matter is currently pending.
x. On January 31, 2006 Tata Industries Limited (“TIL”) sent a letter to Grasim under the Shareholders Agreement
dated December 15, 2000 (the “Shareholders Agreement”) alleging that the applicationmade by Aditya Birla
Telecom Limited for grant of USA License License for a metro circle constututed a material breach of the
Shareholders Agreement.
Further, on February 27, 2006, TIL sent another letter to Grasim alleging that the performance review investor
presentation for the second quarter ended on September 30, 2005 and the third quarter ended December 31,
2005 and investor/analysts meet presentation dated September 12, 2005 posted on ABNL’s website had
resulted in a material breach of the confidentiality provisions of the Shareholders Agreement. TIL characterized
this letter as a “Termination Notice” and notified Grasim that it would purchase the Aditya Birla Group’s entire
shareholding in IDEA (then existing) (the “Aditya Birla Shares”) within 90 days of the notice at the Default
Price (as defined in the Shareholders Agreement). On its part, Grasim refuted the allegations. Subsequently
though, notwithstanding the Termination Notice and, as required by the Shareholders Agreement, the Tata
Group offered to sell its entire shareholding in IDEA (then existing) (the “Tata Shares”) to the Aditya Birla
Group since it had received an offer to purchase the Tata Shares from a third party.
Meanwhile, on May 5, 2006, TIL, purportedly acting for itself and on behalf of Apex Investments (Mauritius)
Holding Private Limited (“Apex), issued a notice of arbitration to Grasim under the Shareholders Agreement.
Pursuant to this offer, the Tata Shares were purchased by the Aditya Birla Group, on June 20, 2006, from TIL
and Apex Investments (Mauritius) Holding Private Limited (“Apex”) the entities which held these shares. The
share purchase agreement dated June 1, 2006 entered into between the Tata Group and the Aditya Birla
Group provides that it was executed without prejudice to the rival contentions of the parties with reference to
the Termination Notice and the legal rights, which have accrued under the Shareholders Agreement.
Thereafter, TIL and Apex filed an arbitration application in the High Court at Mumbai for the appointment of an
arbitrator for adjudication of the alleged disputed under the Shareholders Agreement. The applicants withdrew
this application on September 8, 2006 with liberty to adopt appropriate proceedings as the Bombay High
Court was not the appropriate forum for hearing the arbitration application. There is a possibility that TIL and
Apex may file proceedings on this issue with the Supreme Court of India.
xi. Grasim Industries Limited and Samruddhi Swastik Trading & Investments Limited (the “Acquirers”) made an
open offer for acquisition of 20% of the equity share capital of Larsen & Toubro Limited (“L&T”) pursuant to
the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 (the “Regulations”). SEBI vide its letter dated November 8, 2002 (the “SEBI Letter”) decided to conduct
an investigation in terms of Chapter V of the Regulations on the alleged violations, with regard to the
acquisition of 25,000,000 equity shares, aggregating to 10.05% of the paidup and voting capital of L&T by the
Acquirers on November 18, 2001. SEBI advised the merchant banker responsible for the open offer to not to
proceed with the open offer formalities pursuant to the public announcement made on October 14, 2002 and
to issue a revised public announcement stating, the contents of the SEBI Letter. A revised public announcement
with the contents of the SEBI Letter was made on November 21, 2002.
Further, SEBI vide its letter dated November 29, 2002, advised the merchant banker that the Acquirers should
not acquire any further shares of L&T in the open market or through negotiation or otherwise with effect from
November 29, 2002 until further advice. The Acquirers were also asked to furnish the details of their
shareholding in L&T pursuant to the public announcement.
The Acquirers filed an appeal with the Securities Appellate Tribunal (“SAT”) on November 18, 2002. While
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SAT admitted the petition, it did not grant interim relief to stay the directions issued by SEBI. SEBI vide its
letter dated April 22, 2003 withdrew the restrictions imposed on the Acquirers regarding further acquisition of
the equity share capital of L&T and also allowed the merchant banker to proceed with the public offer with
instructions to make certain disclosures in the Letter of Offer. In view of SEBI having permitted the Acquirers
to proceed with the public offer, the appeal filed with SAT was withdrawn. The public offer opened on May 7,
2003 and closed on June 2, 2003.
3. UltraTech Cement Limited
(A) Criminal Cases
i. There are no criminal cases pending against the Company.
(B) Civil disputes
ii. M/s. Sharda Steel Corporation has filed a Special Civil Suit (No. 60/2002) before the Court of Civil Judge
(Senior Division), at Bhavnagar, against UltraTech alleging breach of contract for the purchase of aluminious
and ferruginous clays from a location near Mahuva, in Gujarat, claiming damages approximately Rs. 3.8
crores. The Civil Judge, Bhavnagar by an Order dated February 19, 2002, directed UltraTech to deposit a
security amount of Rs. 3.0 crores which was challenged by UltraTech in the High Court at Ahmedabad, and
pursuant to the Order of the High Court, an undertaking has been given by UltraTech not to alienate/dispose
off assets of UltraTech up to a value of Rs. 4.0 crores. UltraTech has now challenged the jurisdiction of the
Court and its application for transfer of the case to Mumbai is pending.
(C) Sales tax disputes
iii. The Commissioner of Sales Tax, Orissa, has challenged the Assessment Order for 1994-95 passed by the first
Appellate Authority. This is pertaining to UltraTech’s Cement Grinding Unit at Jharsuguda, Orissa. The amount
involved aggregates Rs. 8.93 crores. The matter is pending appeal with the Orissa Sales Tax Tribunal.
(D) Consumer disputes
iv. There are eight Consumer Cases pending against UltraTech. The issues involved in these cases are mainly
pertaining to quality of cement supplied. The total amount involved in these cases is around Rs. 0.75 crores.
(E) Arbitration proceedings
v. Sunfield Resources Private Limited, filed two Arbitration Petitions (No. 34 and 35 of 2004) against UltraTech
arising out of a dispute regarding a contract for supply of coal, claiming demurrage cumulatively amounting to
Rs. 1.2 crores. UltraTech challenged the award in the High Court at Mumbai (Appeal No. 881 of 2005) which
has since been admitted and the matter is now pending hearing.
4. Bihar Caustic and Chemicals Limited
i. Dilip Kumar Sharma filed criminal complaint against one of the contractors of the company and the managing
director of the company. Dilip Kumar Sharma had rented a machine to the contractor for carrying out work in
the company’s premises. The full amount of rent was not paid by the contractor and Dilip Kumar Sharma filed
the criminal complaint. The court took cognizance of the complaint and issued a bailable warrant against the
contractor and the managing director of the company. The company filed a criminal miscellaneous application
to quash the order before the Jharkhand High Court at Ranchi, and the High Court has issued a stay against
the proceedings of the trial court. The criminal miscellaneous application is pending for final disposal.
ii. The Jharkhand State Electricity Board (JSEB) raised an annual minimum guarantees bill of Rs.2.14 Crores,
which was challenged by the company before the High Court. The High Court directed the JSEB to issue a
revised bill, which was issued for an amount aggregating to Rs.15.89 Crores. The revised bill included fuel
surcharge and other charges. The matter is subjudice before the High Court. The amount in dispute aggregates
approximately Rs.61.50 Crores.
iii. A fuel surcharge bill of Rs.37.8 Crores was raised by the JSEB and challenged by the company on the
ground of wrong calculation. The disputed amount involved is approximately Rs.12.82 Crores. The delayed
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payment surcharge on the disputed amount of fuel surcharge arrears amounts Rs.5.89 Crores. The matter
already concluded in Supreme Court, judgement reserved and order is awaited.
iv. There was strike by Workers’ Union in 1986 for want of salary structure of different categories of employees
and the matter was referred to by the State Govt. to Industrial Tribunal for adjudication and pending at their
end. There are some more minor labour matters pending with various courts and the altogether disputed
claims amounts Rs.1.56 Crores
v. There are four income tax cases pending before CIT(A) / High Court aggregating to Rs.1.09 Crores.
5. Tanfac Industries Limited
(A) Income tax disputes
1. HF Acid, as a saleable product, was introduced in 1990 after carrying out modification and expansion of the
existing facility. Aluminium Fluoride, the main product, is produced by reacting HF Acid (an intermediate
product manufactured captively) with Aluminium Hydroxide. As Tanfac is eligible to claim deduction under
section 80-I for the new project, Tanfac is considering the market price of HF Acid for transfer cost for making
Aluminium Fluoride and accordingly claimed the said deduction in their return. Tanfac has also taken legal
opinions from leading advocates in this regard. Even though the law is very clear in the facts of similar
cases, the Income Tax Department is contesting Tanfac’s claim. The dispute is at the tribunal level at present
(CIT appellate has passed favorable orders supporting our claim).
2. As per the provision of the Income-Tax Act, Tanfac has claimed a deduction for profits relating to exports as
per the formula laid down in the Income-Tax Act (Export Turnover / Total Turnover x Taxable profits). The
Income-Tax Department is contesting that the total turnover should include excise duty, sales tax, etc. and not
the net sales as claimed by Tanfac. The matter is at the appellate stage before the Commissioner of Income
Tax Appeals. The amount involved in the above cases is Rs. 2.43 Crore.
(B) Central Excise disputes
There are two cases relating to central excise pending against Tanfac before the Appellate Tribunal amounting
to Rs. 0.44 Crore
(C) Custom disputes
There are two cases against Tanfac regarding customs amounting to Rs. 0.17 Crore.
(D) Sales tax disputes
i. There is one case pending against Tanfac relating to Tamil Nadu General Sales Tax amounting to Rs. 0.03
Crore.
6. Pilani Investment and Industries Corporation Limited
Pilani Investment and Industries Corporation Limited, a group company, was ordered by the SEBI to make an open
offer for the acquisition of shares of Bihar Caustic & Chemicals Limited. For further details, please refer to the
section titled “Outstanding Litigations and Defaults -- Hindalco Industries Limited”.
III. Subsidiaries
1. Birla Sun Life Insurance Company Limited
i. The State Commission has issued a notice dated 9th December, 2003 to the Company on the basis of the
complaint lodged by Mohammed Azam bearing case No. 69/2003 demanding an aggregate sum of Rs.1
Crore in respect of company not settling the claim in term policy No. 000062849 issued on 7th March, 2003
of which company’s actual liability would be to the tune of Rs.0.08 Crores. The balance amount will be borne
by reinsurer.
ii. The Commissioner, Service Tax, Mumbai, has issued a Show Cause Notice bearing No. F. No. ST/ HQ.PREV/
136/A/2005/317 dated 06.04.2006 to explain as to why the company should not be held liable to pay an
aggregate sum of Rs.7.09 Crores for the assessment period September 2004 to September 2005 in respect
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of the alleged cenvat credit utilized for payment of insurance agency commission and management consultancy
and excess cenvat credit utilized for payment of risk premium. The hearing for the matter is pending with the
Commissioner, Service Tax, Mumbai.
iii. There are 26 miscellaneous cases pending against the Company at various fora as on September 7, 2006.
The probable liability aggregates to Rs.1.85 Crore out of which BSLI’s liability will be Rs.0.57 Crores. The
balance amount of Rs.1.28 Crore would be paid by the reinsurer.
2. PSI Data Systems Limited
i. The Deputy Commissioner of Income Tax filed a complaint (ITA 497/02 and ITA 498/02) before the Income
Tax Appellate Tribunal, Bangalore Bench against PSI for not deducting tax at source under section 192 on
the perquisite in the form of Stock Options granted to its employees under Employees Stock Option Plan. The
commissioner opined that the benefit granted to the employee by way of allotment of share at a concessional
price is a perquisite. Whereas the Tribunal held that any benefit by way of allotment of shares under ESOP is
not perquisite. Against the said order of the tribunal, the department has filed an appeal under section 260A
of the Act to the High Court of Karnataka challenging the findings of the Tribunal. The case may be next heard
within the next 6 to 12 months (No date has been decided yet). The financial implication is Rs. 1.615 Crore
ii. Tushar N. Mehta filed a criminal case (No. 1943/1990) on (date) before (Court), against Vinay L. Deshpande
and Ajit Balakrishnan (former MDs of PSI) for allegedly misrepresenting the capabilities of PSI’s product. The
case has remained dormant for several years. PSI has sent the case papers to Mr. Sandeep Singhi, Advocate,
to inquire about the status of the case. The financial impact on PSI is likely to be Rs. 0.010 Crores.
iii. Caltiger, Kolkata filed a complaint (MP 85/2001) on (date) before the Magistrate’s Court, Kolkata against some
senior management staff alleging criminal conspiracy (Sec 120A) and cheating (Sec 420 of IPC). As advised
by Corporate Legal, PSI’s advocate has filed an application under sections 239 and 245(2) of the Criminal
Procedure Code for dismissing the complaint since no offence was committed and the charges were baseless.
The matter was taken up on March 23, 2005. The Court has not yet framed charges, as the Learned Judicial
Magistrate, Barrackpore has transferred the matter before the Learned C.J.M. Bidhannagar. The last date was
fixed on April 7, 2006, when the Court adjourned the matter till August 11, 2006 since the records had not yet
been recei ved from the Barrackpore Court. The fi nanci al i mpact on PSI i s l i kel y to be
Rs 0.056 Crores.
iv. PSI received a notice from SEBI dated October 8, 2001 in relation to the open offer by PSI under Regulation
6(2)(4) and Regulation 8(3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
for non-compliance with Regulations 6 and 8 (3). SEBI initiated proceedings against PSI on September 23,
2002. Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regularization Scheme, 2002, PSI
sought to regularize the non-compliance and also paid Rs. 50,000 as penalty. Pursuant to the same, SEBI
withdrew the adjudication proceedings by a letter dated December 11, 2003.
v. Apart from the above there are five other civil cases (including sales Tax, ESIC) filed against the Company for
claims aggregating to Rs. 0.318 Crores.
3. Birla Technologies Limited
i. There is one litigation pending against the Company, aggregating to Rs.0.33 Crores in the National Consumer
Disputes Redressal Forum.
4. Transworks Information Services Limited
i. The appeal against TDS order on taxability of transport cost as conveyance allowance for Assessment Year
2005-06 pending before Commissioner of Income Tax (Appeals). Tax demand of Rs.0.06 Crores.
5. Minacs
i. John Simmonds, a shareholder of the Corporation, and 2067456 Ontario Limited (“2067456”, and with John
Simmonds, “the Claimant”), a shareholder of the Corporation and a company controlled by John Simmonds,
have filed a claim July 19, 2006 under the Business Corporations Act (Ontario) naming the Corporation, the
estate of Elaine Minacs and the directors and certain past directors of the Corporation as defendants. Damages
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ADITYA BIRLA NUVO LIMITED
sought against the estate of Elaine Minacs are US$ 4,000,000. There is no claim for damages against the
Company or its directors. The Notice of Application indicates that the oppression claim relates to certain
related party transactions. The threat arose as part of a court action between the Claimant and a numbered
corporation controlled by the estate of Elaine Minacs over the entitlement of the Claimant to exercise certain
options to acquire shares of the Corporation owned by that numbered company. John Simmonds has agreed
to withdraw his claim against the Company and the Company is waiting for confirmation from the court that
this withdrawal has been filed.
ii. Mary Ann Thompson has filed a claim against the Company alleging wrongful dismissal. The amount involved
as calculated by the Company amounts to US$ 80,000. No order has been passed as yet and the matter is
currently pending.
iii. Steve Spracklin has filed a claim against the Company alleging wrongful dismissal. The amount involved as
calculated by the Company amounts US$ 80,000 and legal costs. No order has been passed as yet and the
matter is currently pending.
iv. Danny Borris has filed a claim against the Company alleging wrongful dismissal. The amount involved as
calculated by the Company amounts to US$ 720,000 to US$ 1,000,000. No order has been passed as yet
and the matter is currently pending.
v. There is currently an on-going dispute between the Company and the estate of Elaine Minacs in connection
with the benefits attaching to two key-man life insurance policies (the ‘Policies’); Zurich Life Policy # 2900787
in the amount of US$ 2,000,000; and London Life Policy # 8428229-7 in the amount of US$350,000. The
policies are owned by the Company and at the time that Ms Minacs’ employment agreement was entered into
in November 2004, the beneficiary of each policy was the Company. On various occasions in 2005, the
beneficiaries of the policies were changed to beneficiaries designated by Ms Minacs without the knowledge
of the Company or its independent directors. In 2006, the corporation changed the beneficiary of each policy
to the corporation, advised Ms Minacs’ representatives of the same and, at the time of doing so, indicated that
if proceeds were paid under a policy to the Company, the proceeds would be placed in escrow pending the
resolution of the dispute by settlement or litigation. The terms of the escrow have been negotiated by the
corporation with the estate of Ms Minacs and the parties have entered into an agreement with respect thereto
as of the date hereof. The estates’ counsel and the estate have threatened to bring an action naming the
Company and certain directors as defendants. Ms Minacs’ estate maintains that the policies were for the
benefit of Ms Minacs personally under the terms of her employment agreement and that Ms Minacs was
within her rights to designate the beneficiaries of the policies. The corporation maintains that Ms Minacs did
not, and Ms Minacs’ estate does not, have the right to designate the beneficiaries of the policies. The matter
is currently pending.
vi. Mentor Capital previously filed a claim against the Company in the amount of US$ 180,000 alleging delay in
the distribution of shares pursuant to a share purchase agreement. There has been no activity and the
Corporation has received no communication with respect to this file in the past five years.
vii. The Michigan Department of Treasury has filed assessments with respect to Single Business Tax for the year
ended December 31, 2002 and December 31, 2003, for an aggregate amount of US$ 87,739. The matters are
currently pending.
6. English Apparels Private Limited
i. There is one labour related case against the Company amounting to Rs. 0.0044 Crores.
ii. There is one income tax related case against the Company amounting to Rs. 0.0112 Crores.
7. Birla-NGK Insulators Limited
i. The Additional Commissioner, Central Excise Vadodara–II issued OIO No. 17/DEM/ADC/D.Halol/2005 Dtd. 19-
09-2005 to the Company demanding an aggregate sum of Rs.0.31 Crores for the year 2003-04 in respect of
the alleged claim of Company of cenvat credit of the duty paid for re-importation of goods under Notification
No. 94/96-Cus dated December 16, 1996. CESTAT, Mumbai waived the pre-deposit of duty and penalty and
stayed recovery thereof pending the appeal.
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ii. The Assisstant Commissioner, Customs, ICD Vadodara, issued OIA bearing No. 01/04 dated August 23, 2004
to the Company demanding an aggregate sum of Rs.0.1 Crores for the year 2003-04 in respect of the SAD
and interest on duty paid for re-importation of goods from Siemens China. The matter is pending with CESTAT,
Mumbai.
iii. There are three customs related cases filed against Company aggregating to Rs. 0.001 Crores before CESTAT,
Mumbai in respect of applicability of education cess while clearance of imports under DEPB. There are two
custom related show cause notices sent to the company by Assistant Commissioner ICD Vadodara for which
the company has replied. The amount involved in these cases aggregates to Rs. 0.006 Crores in respect of
education cess on imports cleared under DEPB. No order has been passed as yet and the matters are
currently pending.
iv. There are sixteen customs related cases filed by the Company aggregating to Rs. 0.002 Crores before
Commissioner Appeal in respect of non applicability of ecucation cess while clearance of imports under
DEPB for which no contingent liability exists. There is one custom related case filed by the company aggregating
to Rs. 0.015 before CESTAT, Mumbai in respect of penalty & fine on wrong filing of bill of entry for import of
Zinc Oxide Block.
v. There are nine excise related case for claim aggregating to Rs. 0.002 Crores filed by the company before
Commissioner Appeal in respect of claim for interest on delay in refund of rebate claim.
vi. The Assisstant Commissioner, Central Excise has issued six OIO to the Company confirming adjustment of
claim of rebate of duty of Birla NGK Insulators Limited against demand of Service Tax of Aditya Birla Nuvo
Limted an aggregate sum of Rs. 4532 Crores. The matter is pending with Commissioner-Appeals.
vii. The Additional Commissioner, Central Excise, Kolkata has issued show cause cum demand notice bearing
No. 10/CE/R-IV/RIS/Kol.IV/Adjn/04 dated May 21, 2004 which alleged that the Company did not include
charges of ‘Type Test’ in the assessable value in accordance with the provisions of the Central Excise Rules,
1944. The Company has thus contravened the provisions of section 4(i)(a) and 4(3)(d) of Central Excise Act,
1944 and Rules 4,6 of Central Excise (No. 2) Rules 2001 and 2002. The Company is thus charged of evading
Central Excise Duty of Rs. 0.0520 Crores. The Additional Commissioner has ordered the Company to show
why this duty should not be recovered from them under section 11(A)(1) of the Central Excise Act, 1944. A
penalty of Rs. 0.0520 Crores has also been imposed under section 11(A)(C) of the said Act and Rule 25 of
Central Excise (No. 2) Rules 2001 and 2002. The Company has written to the Additional Commissioner for
the show cause notice to be dropped. No order has been passed as yet and the matter is currently pending.
viii. There are approximately five excise related show cause notices sent to the Company to which the Company
has replied. The amounts involved in these cases aggregate to Rs. 0.062 Crores. No orders have been
passed as yet and all the matters are currently pending.
ix. The Deputy Commissioner of Income Tax has filed a case relating to disallowances of expenses aggregating
Rs 1.788 Crores pertaining to Financial Year 2002-03. The likely liability involved is Rs. 0.657 Crores. The
matter is pending with ITAT, Mumbai.
x. There is one labour related case, which has been filed by the company in respect of directing the Government
to declare strike from March 23, 2006 illegal and prosecute those who instigated it, etc. against State of
Gujarat & others. The matter is pending with High Court of Gujarat, Ahmedabad.
xi. There are 19 labour related cases filed by the company in respect of discharge of workmen from services for
indiscipline etc. The matter is pending with the High Court of Gujarat against rejection of Company’s approval
application by the Conciliation Officer, Godhra and the case has also been filed by the company before the
Supreme Court challenging the Gujarat High Court’s interim order to pay them relief.
xii. There are sixteen applications filed by the company with the Industrial Tribunal for the approval of discharge
of workmen from services for indiscipline etc.
xiii. There are two cases referred by the Government of Gujarat in respect of charter of demands from the
company and the union. Both matters are pending with Industrial Tribunal.
xiv. There are two other labour matters pending with the Industrial Tribunal related to whether wages are payable
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ADITYA BIRLA NUVO LIMITED
to workers or not during the period of strikes from 20.3.06 to 22.5.06 and from 3.8.06 onwards.
xv. There are seven labour cases pending in Labour Court regarding termination of workers’ services which have
been filed against the Company for claims aggregating to Rs.0.13 Crores.
xvi. The Additional Commissioner, Service Tax, Kolkata has issued show cause notice bearing C.No. V(5)61/ST-
Adjn/Addl.Commr/06/2358 dated March 23, 2006 which has alleged that the Company wrongly availed the
benefit of exemption notification No. 32/2004-ST dated December 12, 2004 and violated section 68(1) of the
Chapter V/VA of Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994. This resulted in short
payment of Service Tax and education Cess of Rs. 0.170 Crores during the period January 2005 to December
2005. The Additional Commissioner has ordered the Company to show cause as to why this duty should not
be recovered from them under section 68 (1) and 75 of the Finance Act, 1994. A penalty of has also been
proposed for the contravention of the said Act. The Company has written to the Additional Commissioner for
the show cause notice to be dropped. No order has been passed as yet and the matter is currently pending.
xvii. The Deputy Commissioner, Central Excise, Rishra Division has issued show cause notice bearing C.No. V-
32(77)1-St/RDN/KOL-IV/05/4365 dated February 17, 2005 which has alleged that the Company contravened
the provisions of section 66, 67, 68, 69, 73, 75, 75A, 76, 77 & 78 of Chapter V of the Finance Act, 1994 (32
of 1994) read with Rule 4 & 6 of Service Tax Rules, 1994. The Company did not pay Service Tax of
Rs. 0.1293 Crores for the assessment period April 2002 to March 2003 on engineering consultancy charges
paid to NGK Insulators Limited, Japan. The Deputy Commissioner has ordered the Company to show cause
as to why this duty should not be recovered from them under section 68, 71 and 73 of Chapter V of the
Finance Act, 1994. A penalty of has also been proposed under section 73, 75, 75A, 76 and 78 of the said Act.
The Company has written to the Deputy Commissioner for the show cause notice to be dropped. No order
has been passed as yet and the matter is currently pending.
xviii. There is one service tax related show cause notice sent to the Company to which the Company has replied.
The approximate amount involved in this case is Rs. 0.0259 Crores plus a penalty of Rs. 0.0002 Crores. No
order has been passed as yet and the matter is currently pending.
xix. There are two cases pending against the Company involving a total amount aggregating to Rs. 0.055 Crores.
No order has been passed as yet and the matters are currently pending.
xx. There is one case pending before the Industrial Tribunal regarding staff union’s charter of demand.
xxi. There is one case against the company pending with the industrial tribunal relating to whether the salary are
payable to 170 Nos. union staff members for 22 days strike period.
xxii. There is one case pending in High Court regarding termination of staff from the service for claim aggregating
to Rs.0.03 Crores.
xxiii. There is one civil case filed by the company against 12 discharged workmen to vacant the workers colony
accommodation.
xxiv. There is one civil case filed by the company for challenging the order of district collector for seize of 22 KL
LDO and imposed fine equivalent to 20% cost of the material.
xxv. There is one civil suit filed by the company against 11 discharged workmen for preventing them to do any
illegal activities near by areas of the company. Contempt of court order & injunction filed.
xxvi. There is one injunction application filed before Sr. Division Godhra by the company against trespassing of
workmen inside the factory premise.
Except as stated above, there are no outstanding litigations, defaults etc. in relation to our subsidiaries
pertaining to matters likely to affect operation and finances of the company, including disputed tax liabilities,
prosecution under any enactment in respect of Schedule XIII to the Companies Act, 1956.
IV. Directors
i. HRB Floriculture Limited, through its managing director, Krishna K. Parwal filed criminal case No. 113/2003
before the Judicial Magistrate, Jaipur against the Bank of Rajasthan and B.R. Gupta, a director of the Company
323
under section 120B, 406 and 420 of the Indian Penal Code. HRB Floriculture Limited has alleged that its
managing director had made an application seeking allotment of 90,000 shares in a rights issue of the Bank
of Rajasthan. It has been alleged that pursuant to such application, shares and tradable warrants were
allotted but were neither delivered nor listed with the stock exchange causing financial loss and mental
torture. Even though the police submitted that the matter is of civil nature, the Judicial Magistrate issued
process. The Bank has filed a criminal miscellaneous petition 703/2003 before the High Court, Rajasthan at
Jaipur to quash the proceedings in the lower court. The matters are currently pending.
ii. A notice has been issued by the Assistant Conservator of Forests, Bannerghatta National Park, Bangalore to
Kumar Mangalam Birla alleging that there has been an encroachment of four acres of the forest land in
Basavanapura by Grasim Jan Seva Trust. Grasim Jan Seva Trust is taking necessary action pursuant to the
notice.
iii. The Company has filed criminal miscellaneous petition nos. 8607/03 and 8608/03 on behalf of Kumar Mangalam
Birla and S.K. Mitra in the High Court at Allahabad under section 482 of the criminal procedure code against
Charanjeet Singh. Charanjeet Singh had filed case no. 2339/02 against Kumar Mangalam Birla, S.K. Mitra
and an ex-employee of the Lucknow Branch, Ashish Goel in the Court of the Metropolitan Magistrate, Kanpur
for cheating, mischief and causing damage under sections 417, 418, 419 and 420 of the Indian Penal Code
in relation to a hire purchase transaction of the Company. A second-hand Maruti was taken under hire
purchase from the Company but Charanjeet Singh alleged that registration papers were not given to him and
as a result he could not use the car as a taxi. He thus suffered losses and requested the Court of the
Metropolitan Magistrate, Kanpur to summon Kumar Mangalam Birla and S.K. Mitra and try and convict them.
The High Court at Allahabad granted a stay on the proceedings at the Court of the Metropolitan Magistrate,
Kanpur vide its order dated October 16, 2003. The stay is still in force and there are no further developments
in the case.
iv. The Enforcement Directorate, Department of Revenue, Government of India issued show cause notices No. T-
F/132/SDE-AKB/B/2002 (SCN III) 5331 and T-F/132/SDE-AKB/B/2002(SCN III) 5331 T-4/132/SDE-AKB/B/2002
(SCN IV) 5323 dated May 29, 2002 to the erstwhile Birla Global Finance Limited (BGFL) (now merged with
the Company) and its officials Adesh Kumar Gupta (then Joint President of BGFL, currently director of the
Company), Madhavan Menon, Atul Jain, Madhav Vengurlekar, Gajanand Agarwal, Orlando D'Souza and
Jaswant Puthran for alleged non-compliance of provision of section 7 (4) read with section 6 (4) and section
6 (5) and section 49 of Foreign Exchange Regulation Act, 1973 and have thereby rendered themselves liable
to be proceeded against under section 50 of Foreign Exchange Regulation Act, 1973 read with section 49(3)
and section 49(4) of Foreign Exchange Management Act, 1999, while issuing foreign exchange of US$
1,16,200 and US$ 1,07,800 to Jairam Exports and Vikas Exports respectively under an authorization granted
by the Reserve Bank of India. As per submissions made by company, the alleged contraventions, if any had
been committed by the junior employees of the company for their own benefit without any knowledge or
neglect of the Company or its senior officers including Adesh Kumar Gupta and therefore the proceedings
may be dropped against them.
v. B.N. Sharma, a fixed deposit holder has filed a criminal complaint under section 138 of the Negotiable
Instruments Act, 1881 against the Company, the Chairman and S.K. Mitra, the then Managing Director of the
erstwhile Birla Global Finance Limited ("BGFL"- now part of the Company) for an amount of Rs. 2,83,000 in
the Court of the Metropolitan Magistrate, Karkadooma, Delhi. The Court ordered for issuance of process
against the Company, the Chairman and S.K. Mitra. The Company has filed criminal revision petition under
section 397 read with section 399 of Criminal Procedure Code against B.N. Sharma in the Court of Additional
Sessions Judge, Karkardooma, Delhi for setting aside the impugned order for issue of process dated February
28, 2005 passed by the Court of Metropolitan Magistrate, Karkardooma, Delhi and for staying the proceedings
before the trial court. This case does not concern Kumar Mangalam Birla as he was not the Chairman of
BGFL when the case was filed. The matter is currently pending.
vi. The State represented by the Labour Enforcement Officer, Tiruchirappalli, Tamil Nadu ("LEO") filed two
complaints S.T.C. nos. 505 of 2003 and 506 of 2003 before the Judicial Magistrate, Ariyalur against Kumar
Mangalam Birla (in his capacity as Chairman of Grasim Industries Limited ("Grasim")), S.K. Maheshwari, K.C.
Birla and two different contractors. It has been alleged that the contractors were under the control and
supervision of Grasim including Kumar Mangalam Birla, S.K. Maheshwari and K.C Birla. In his letter dated
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ADITYA BIRLA NUVO LIMITED
February 14, 2003, the LEO had requested Grasim to rectify the irregularities mentioned in their inspection
report of January 7, 2003. They also ordered Grasim to pay wages in accordance with guidelines given by the
Cement Wage Board amounting to approximately Rs. 0.75 Crores and Rs. 0.287 Crores to the workers under
the two cases respectively. The Judicial Magistrate was requested to discharge the petitions against Kumar
Mangalam Birla and S.K. Maheshwari as they were not responsible for the day to day working of Grasim. The
Magistrate by his order dated February 27, 2004 rejected the request. Criminal miscellaneous petition nos.
5405 & 5406 of 2004 were thus filed in the High Court at Chennai for discharge of the petition against Kumar
Mangalam Birla and S.K Maheshwari. The High Court in its order dated April 28, 2004 stayed all further
proceedings and set aside the order dated February 27, 2004 of the Judicial Magistrate. The matters are
currently pending.
vii. Satyabhama Devi, a shareholder of Grasim Industries Limited ("Grasim") has filed criminal case no. 1477(C)
2001 against Kumar Mangalam Birla as Chairman of Grasim and others in the Court of the Judicial Magistrate,
First Class, Patna. She has alleged that she applied for 710 debentures of Grasim, paid Rs. 49,700 for them
and when she sold her shares in the secondary market after conversion of her debentures, Grasim stopped
the transfer. Grasim has contended that these debentures did not belong to Satyabhama Devi in the first
place. The Judicial Magistrate, by his order dated October 10, 2001, had directed for issue of summons
against Kumar Mangalam Birla and the other accused. Kumar Mangalam Birla filed criminal miscellaneous
no. 1305/2002 in the High Court at Patna requesting for quashing of the impugned order passed by the
Judicial Magistrate. The High Court by its order dated July 22, 2002 stayed further proceedings in case no.
1477(C) 2001. The matter is currently pending.
Except for the criminal and civil offences stated above, where the Directors of the Company have been
named as parties or respondents, there are no, outstanding litigation, disputes, overdues to banks / financial
institutions, defaults against banks / financial institutions, proceedings initiated for any economic/civil/ any
other offences, involving the Directors of our Company.
V. Promoters
1. Kumar Mangalam Birla
For litigations against Kumar Mangalam Birla please refer to the section on “Directors” under “Outstanding Litigations
& Defaults”.
2. Birla Group Holding Private Limited
There is one income tax related case for the assessment year 2001-02 pending before the Income Tax Appellate
Tribunal aggregating to Rs.0.16 Crores. An order has been passed by the Tribunal and the matter has been
remanded back to the assessing officer.
Except as stated above, there are no outstanding litigation, disputes, overdues to banks / financial institutions,
defaults against banks / financial institutions, proceedings initiated for any economic / civil / any other offences,
involving our Promoter.
VI. Joint Ventures
1. Idea Cellular Limited
Andhra Pradesh
Writ Petitions
i. Mr. B.V.L. Somayulu filed a writ petition (No. 14973/2006) in the High Court of Andhra Pradesh, at Hyderabad
on July 15, 2006 against the Government of Andhra Pradesh, the Commissioner, Municipal Corporation of
Vishakapatnam, Idea and the Dutch House Apartments Welfare Association. Pursuant to a permission given
by the Government of Andhra Pradesh and the Commissioner, Idea was allowed to set up GSM antennas at
the terrace and a generator room in the cellar of the welfare association. The Petitioner is a flat owner in the
said welfare association and has approached the Court seeking to declare the proceedings of the Government
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of Andhra Pradesh and the Commissioner as illegal, arbitrary and unconstitutional and to direct the
Commissioner to remove Idea’s GSM antennas erected on the terrace and the generator room in the cellar.
The case is presently pending for filing of the counter.
Civil Cases
i. A landlord by the name of Mr. Muttavarapu Anjaneyulu instituted a suit on July 8, 2005 against Idea (O.S 145/
2005) on the file of the Junior Civil Judge’s Court at Chilakaluripeta, alleging that Idea has laid its Optical
Fiber Cable (OFC) through his land. At present this OFC line has been handed over to Tata Teleservices
Limited (TTL) by virtue of a sale. The Plaintiff has also filed an interim application seeking a mandatory
injunction to direct the Defendants (the Collector of Guntur District is the 1 Defendant, the National Highway
Authority of India is the 2
nd
Defendant, Tata Communications Limited is the 3
rd
Defendant and Reliance
Infocom Limited. is the 4
th
Defendant) to remove the erected demarcated stones, iron rods, cement poles and
embedded cables along with the inner ridges within 3 check points, claiming that the same allegedly fall
within his land. The suit is scheduled for hearing the Commissioner’s Report, which was requested by the 4
th
Defendant. There is no financial implication for Idea.
ii. Phonographic Performance Limited has instituted a suit (No. 285/2005) on July 14, 2005 on the file of the
Second Additional Senior Civil Judge’s Court, at Hyderabad, against Idea, to restrict the use of its songs/tones
as dialer tones. In the present suit, Maa TV is the 1st Defendant, Air Tel is the 2
nd
Defendant and Idea is the
3
rd
Defendant. Idea has filed a counter and written statement. The suit is coming up for hearing of issues.
There is no financial implication for Idea, as the onus of obtaining Intellectual Property Rights for the songs/
tones to be used as dialer tones is on the 1st Defendant as per the agreement executed between Phonographic
Performance Limited, the 1st Defendant and Idea.
iii. Mrs. Ganji Rajeshwari has instituted a suit (O.S. 701/2000) on November 6, 2000 against Idea on the file of
the Additional Senior Civil Judge’s Court at Ranga Reddy District Court. In the same suit, the Plaintiff instituted
an Interim Application requesting the grant of an ad-interim injunction against Idea, restraining Idea and its
representatives from causing any obstruction to the right of way to the Plaintiff’s land which is situated
adjacent to the leasehold land of Idea at Majidpur village. The injunction was allowed. The right of way
claimed in the suit was for a common approach road to the land of the Plaintiff as well as that for Idea. There
is no financial implication for Idea.
iv. Indu Advertisers (authorized agency to collect advertisement tax within the Tirupathi Municipality from April
2003 to March 2006) has instituted a suit (No. 606/2005) on August 16, 2005 against Idea on the file of the
Principal Junior Civil Judge, Tirupathi for an amount of Rs. 0.0038 Crore due as advertisement tax for glow
signs put up by Idea at various retail outlets. Idea has filed a written statement. The suit has been posted for
issues. The financial implications for Idea amount to Rs. 0.0038 Crore.
v. M/s Suguna Motors (erstwhile dealers of Idea), through its Managing Director, has instituted a suit (No.317/
2002) on August 24, 2002 on the file of the Principal Senior Civil Judge at Warangal against Tata Cellular
Limited (Idea) and the Central Bank of India, Hanamkonda Branch for a sum of Rs.0.02 Crore. The suit is to
enforce the bank guarantee issued by the Central Bank of India, Hanmakonda Branch in favor of Tata Cellular
Limited. The bank guarantee was invoked in terms of the Dealership Agreement upon breach of the same by
the Plaintiff. The said suit is posted for issues. The financial implications for Idea are Rs.0.02 Crore.
vi. Four cell site related cases have been filed against Idea, three of these cases have been filed by apartment
associations and one has been filed by an individual. The issues involved in the cases pertain to removal of
the cell site and a temporary injunction to restrain the employees of Idea from entering the suit premises.
There is no financial implication for Idea as it is ready to pay the license fee to the rightful owner of the
common areas /terrace as per the directions of the Hon’ble Court.
Consumer Cases
i. Nine consumer cases are pending against Idea. The issues involved in these cases include claiming of
refunds, compensation for cost of damages, deficiency of services, rectification of bills, mental anguish and
restoration of cell services. The financial implication on Idea is Rs. 0.015 Crore.
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Arbitration proceedings
Idea has initiated an arbitration against a grantor by the name of Kota Satyanarayana (O.P. 211/2002) for the
recovery of a security deposit of Rs. 0.016 Crore deposited by Idea for installation of its cell tower on the rooftop/
terrace of the Respondent’s building. The agreement entered into between Idea and the Respondent was foreclosed
by Idea due to certain operational issues. The total claim involved in the petition is Rs. 0.031 Crore (a security
deposit of Rs. 0.016 Crore plus as interest amount of Rs Rs. 0.015 Crore). In the same suit the Respondent has
filed a counter claim for an amount of Rs. 0.139 Crore as license fee for the entire term of the agreement. The
arbitration award is pending.
Delhi
Consumer case
There are sixty-eight consumer cases pending against Idea before various consumer fora. These cases involve
allegations of deficiency in services provided by Idea. The aggregate financial implication of all the aforesaid
consumer cases is Rs. 0.77 Crore.
Other Civil cases
There are twenty-seven cell sites located at Ghaziabad, being part of Delhi and NCR Circle, where in the UP
stamps and Registration authority has demanded Rs. 0.417 Crore as deficit Stamp Duty, terming Leave and License
agreements as Lease agreements. Idea is contesting this. The matter is pending before the Appellate Commissioner.
There are four cell site related cases filed against Idea by local residents objecting to the installation of telecom
equipment and the matters are being compromised. There is no financial impact on Idea.
Gujarat
Supreme Court
Ahmedabad Municipal Corporation/AEC/AUDA have filed a Special Leave Petition (SLP (C) 2650/2002 AMC/AEC/
AUDA) challenging an order passed by the division bench of Gujarat High Court in favor of Idea stating that
Building Permission is not required for installation of BTS towers as the structures are temporary in nature. Status
Quo was granted by Supreme Court against demand of Rs. 0.35 Crores. The matter is pending before the Supreme
Court for final hearing.
Arbitration proceedings
A dealer was appointed at Surat at the time of commencing mobile operations there. The dealer has invoked
arbitration against Idea seeking recovery of monies. As per the books of accounts of Idea all payments have been
made except a sum of Rs. 0.0067 Crore which is still due and payable, as against the claim of Rs. 0.96 Crore
made by the dealer. The arguments are complete and the matter is pending for establishing the claim made by the
Claimant.
Civil cases
i. Jitendra Malkani, an individual has instituted a civil suit (Suit No. 2158/97) alleging wrongful levy of charges
for call diverting facility. The suit is appearing on the non-hearing board.
ii. Nirav Kishore has filed a civil suit (Suit No. 1524/99) alleging erroneous disconnection. The suit is appearing
on the non-hearing board.
iii. Bharat Virjibhai along with other co- plaintiffs has instituted a civil suit (Suit No. 521/2004) for recovery of due
rent. The main application is appearing on the hearing board. The plaintiff has also filed a connected stay
application which has been disposed of without granting stay.
iv. Eight civil cases relating to cell sites are pending against Idea. Seven out of eight of the cases have been
filed by individuals and one matter has been filed by building associations. Further, in six out of the seven
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cases filed by individuals only injunctive relief has been claimed against Idea and in the remaining one
matter the plaintiff has also sought payment of compensation. All these matters are appearing on the hearing
board, and in none of these matters Idea is suffering an adverse injunction order, except for one matter,
where Idea had preferred an appeal against the injunction order and the matter is pending.
Consumer cases
There are forty-six consumer cases pending against Idea before various consumer fora. These cases involve
allegations of deficiency in services provided by Idea. The aggregate financial implication of all the aforesaid
consumer cases is Rs. 0.395 Crore.
Maharashtra
Public Interest Litigation
Savio G. M. Dias filed a public interest litigation before the High Court at Mumbai, Panjim Bench, alleging that
mobile towers are hazardous to health and has requested the Court to take action under the Criminal Procedure
Code for removal of such towers and also requested for the formation of a scientific body to ascertain the radiations
and health hazards due to the mobile site.
Criminal cases
i. The Deccan Police had allegedly assaulted Mr. Mohammed Shaikh on a criminal complaint filed by Idea for
fraud. Badrunisa Shaikh, mother of the said accused filed a complaint (No. 626/1999) in this regard involving
Dr. George and Captain Kadam who were officers of Idea. An application for discharge has been filed. No
decision has yet been made. Mohammed Shaikh, had also lodged a separate complaint (No. 596/1999),
against the officers of Idea. An application for discharge has also been filed in this regard. No decision has
yet been made.
ii. The Walunj Police Station filed a F.I.R. (No. 436/2003) against Idea’s Customer Convenience Centre Manager
for alleged fraud and cheating. The charge sheet was filed in Court. Bail was granted to Idea’s Customer
Convenience Centre Manager. The matter had been listed for hearing.
iii. The State of Maharashtra filed a penal case (No. 1431/2005) under Section 33 of the Weights and
Measurement Act for a breach of the regulation during trading.
iv. The Pune Municipal Corporation filed a penal proceeding (No. 74/2005) for alleged evasion of octroi by Idea
amounting to Rs. 0.0018 Crore on the goods imported by Idea.
v. The Metrology Department, Daund lodged a complaint (No. 452/2004) against Mr. Ashok Ahuja and Mr. Yatin
Merchant under Rule 23 (1), Rule 6 (1) and Rule 23 (7) of The Weights and Measures Rules, 1979 read with
Section 33 and 51 of the Weights and Measures Act, 1985 for the alleged offence of printing two M.R.Ps on
one pre-paid pack and for not printing the packing year on the pre-paid voucher.
Cell Site related cases
i. Vinkar Society filed a suit (No. 310/2003) against Idea for declaration of rights and an injunction to prevent
Idea from constructing its cell tower. Idea acquired a rooftop terrace of the building from the plot holder of the
Society. The Society also granted a No Objection Certificate for lease. The Society subsequently revoked the
No Objection Certificate on the ground of fraud and the alleged health hazard that would occur due to the
installation and has filed the instant Suit. The written statement has been filed and the suit is pending.
However, the construction is completed and the site is operational as at date.
ii. Mandakini Chikhale filed a suit (No. 5/2005) against Idea as a site was acquired for the cell tower of Idea
without the permission of the residents of the building at Manchar. The site has consequently been abandoned.
An application for abandoning the suit has been filed.
iii. Shivaji Phad filed a suit (No. 166/2006) for an injunction in respect of the cell tower at Udgir (Latur District).
Mr. Phad is an owner of the adjacent land. There is a dispute between the owner and Mr. Phad as to the
boundaries of the property and Mr. Phad has alleged encroachment upon his land. The Court has prohibited
Idea from making any construction.
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ADITYA BIRLA NUVO LIMITED
iv. Pratibhnagar Co-op Housing Society filed a suit (No. 562/2006) against Idea for declaration of rights and an
injunction to prevent Idea from constructing its tower. Idea acquired a rooftop terrace of the building from the
plot holder of the Society. The Society also granted a No Objection Certificate for lease. The Society consequently
revoked the No Objection Certificate on the ground of fraud and the alleged health hazard that would occur
due to the installation. The written statement has been filed and the suit is pending. However, the construction
is completed and the site is operational as at date.
v. Vimal Kumar and Lalit Kumar Jain filed a Suit (No. 861/1999) for partition of the suit land (which is also a
green field site of Idea) in metes and bounds. Idea had acquired the green field site in Katraj Village. Our
tower is located within the suit land. Idea has been made a necessary party to the suit. The Plaintiff filed the
application for depositing the rent payable to the co-owners in Court. As per the Court orders Idea is depositing
rent in court until the final partition order.
vi. Sanvordekar Shailesh Durgananda filed a suit (No. 41/2001) against his father and others (Idea being Defendant
No. 24) for declaration and injunction. The green field tower installed by Idea at Sarvodem is one of the Suit
properties. The Plaintiff has sought that the agreement executed between Defendant No.1 and Idea be declared
illegal, null and void. Idea has filed the written statement.
vii. Mr. Ajit Shewale filed a suit (No. 9/2002) against Idea which erected the Green Field cell site on the suit
premises in 1998. One of the co-owners of the Green Fields land sold his share in the year 2002. The land
records did not show the land as divided into metes and bounds and therefore the current owner on the
alleged old revenue records filed a suit against the owner and Idea to remove the encroachment.
viii. Bhargav Masurkar filed a suit (No. 50/2002) against Idea which had acquired the suit premises and converted
into a green fields Site in Kankawali Village. As the land was not partitioned in metes and bounds the co-
owner claims the rights in respect of the land. The Plaintiff sought the removal of Idea’s tower. A written
statement was filed by Idea. The matter has been posted for framing of the issues.
ix. Abdul Sattar filed a suit (No. 72/2005) against Idea regarding certain disputes relating to a piece of land. Idea
entered into an agreement with Mr. Nasimbi Khan in respect of erection of the cell tower at Lalkhed (Dharva
District). A dispute arose in the family regarding ownership of the property allotted to Idea. Hence the suit was
filed by Mr Sattar (co-owner) against Idea. The Court has granted an injunction against construction of the cell
tower by Idea. Against this interim order the co-owner has filed a Civil Appeal in the District Court. The civil
appeal is pending for hearing.
x. Bhau Namdev Aware, the co -owner of the land on which Idea’s tower (green field Site, Gaymukh Nagar
Highway) is situated filed a suit (No. 417/2005) for partition at metes and bounds. Idea has been made a
necessary party to the Suit. The summons for the case has been served, and Idea appeared in the matter.The
matter has been posted for the filing of our statement and for appearance of the parties.
xi. Bhau Namdev, the co -owner of the land on which Idea’s tower (Green Field Site Gaymukh Nagar Highway)
is situated filed a transfer petition (No. 14/2006) for the partition of lands at metes and bounds. The owner has
also filed different suits for partition of other properties. The owner has filed a transfer petition for all the cases.
Idea has been made a necessary party.
Motor Accident Claim
Anjanabai Kondiram Yadav, filed a motor accident claim of Rs. 0.01 Crore (Rupees one lakh only) after he was
injured in an accident caused by a vehicle owned by Idea on the Nagar-Pune Road. The vehicle was insured with
New India Assurance Company Limited. The liability for payment is on the insurance company. Accordingly Idea
filed a counter in the case, which is pending. Idea is a necessary party to the claim. The financial impact for Idea
is Rs. 0.01 Crore.
Insolvency Case
H.P. Karnavat, a customer of Idea, filed an Insolvency Petition (No. 3/2004). In the Petition the debts of Idea amount
to Rs. 0.0029 Crore in respect of the mobile services provided to the applicant/customer.
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Consumer Cases
18 consumer cases have been filed against Idea concerning the claiming of refunds, compensation for cost of
damages, deficiency of services, rectification of bills, mental harassment, illegal disconnection, and restoration of
cell services aggregating Rs. 0.185 Crore.
Civil Recovery Cases
i. Prabhat Rajmal Nibija filed a Recovery Suit (No. 962/2003) against Idea. Idea had awarded a dealership for
the sale of SIM cards. The terms of the dealership agreement stated no refund of the security deposit would
be paid by Idea. The Dealer has discontinued his dealership services. The Dealer thereafter has claimed a
refund of the deposit paid which amounts to Rs. 0.05 Crore plus interest @ 18% p.a from the date of
discontinuation. A Suit for recovery of Rs. 0.098 Crore has been filed. Idea has filed its written statement in the
matter. The matter has been listed for issues. The financial impact for Idea is Rs. 0.098 Crore.
ii. R.P Jain filed a Recovery Suit for rent which was allegedly to be paid by us in accordance with the Leave
and License agreement executed for the erection of our cell tower. In the said matter we filed an application
under Sections 6 and 7 of the Arbitration Act for referring the matter to an arbitrator as per the arbitration
clause contained in the aforesaid agreement. The Lower Court rejected Idea’s prayer for referring the matter
to arbitration. Against the said order, Idea filed a revision petition before the Bombay High Court, Aurangabad
Bench. The revision petition was admitted and the matter at the lower court was stayed. In the said revision
petition the Court ordered deposition of the disputed amount in Court. The disputed amount of Rs. 0.0299
Crore was deposited in the High Court. The matter is not listed for hearing. No date has been given. The
financial impact on Idea is Rs. 0.0299 Crore.
Other Cases
Mrudula Gandhi filed a suit (No.95/2004) for specific performance and compensation worth Rs. 0.10 Crore (including
rent and compensation) on the basis of an agreement made for the installation of a cell site for an unexpired lease
period which has been revoked by Idea due to failing to gain building permissions from the local authority. Idea has
filed an application under sections 6 and 7 of the Arbitration Act for referring the matter to an arbitrator as per the
arbitration clause contained in the agreement. The lower court has rejected the application of Idea for the matter to
be referred to an arbitrator. Consequently Idea has filed a revision petition before the High Court at Mumbai for
referring the matter to arbitration. The Revision Petition has been admitted and the matter before the Lower Court
has been stayed.
Uttar Pradesh (West)
Civil disputes
i. Handa Mobile filed a suit (No. 291/2001) against Idea claiming refund of the security deposit made by it
following a dealership agreement entered into with Idea. Idea terminated the dealership agreement with the
Plaintiff as per the terms of the agreement. The written statement has been filed by Idea and the matter is
presently pending. Handa Mobile also filed a second suit (No. 349/2001) claiming compensation for termination
of the dealership agreement. The written statement has been filed by Idea and the matter is pending as well.
The financial implication for Idea is Rs. 0.025 Crore.
ii. Bhikha Ram Rathore filed a suit (No. 24/2006) for recovery of a license fee payable by Idea. Idea entered into
a license agreement with the Plaintiff for the purpose of setting up the necessary equipment on site required
for providing mobile services in the area. The Plaintiff claims that Idea has not paid the requisite license fee
for a period of six months commencing from June 29, 2004 to December 29, 2004 in respect of the said
premises. The written statement is yet to be filed by Idea and the matter is presently pending. The financial
implication for Idea is Rs. 0.006 Crore.
Consumer disputes
Twenty-six consumer cases have been filed against Idea and its subsidiary regarding deficiency in service. The
financial implication is Rs. 0.219 Crore.
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Cell Site disputes
Eight cell site related cases have been filed against Idea regarding deficiency in stamp duty paid by Idea including
two writ petitions filed by the State against Escotel seeking stay of operation or order passed by Additional
Commissioner in favor of Idea. The matters are pending.
Outstanding Litigation not pertaining to any specific Circle
Department of Telecommunications demands
i. Idea and two of its subsidiaries have received demand notices for payment of outstanding monies towards
spectrum fees due to the Wireless Planning Division of the Department of Telecommunication. Whilst the
notices to Idea and one of its subsidiaries is dated July 7, 2006, the notice to the other subsidiary is dated
July 10, 2006. A period of fifteen days had been stipulated to respond to the notices. The liabilities of Idea
and the subsidiaries are Rs. 14.8 Crore, Rs. 4.6 Crore and Rs. 36.1 Crore respectively. Idea is proposing to
take up the matter with the Cellular Operators Association of India (“COAI”) and also file its reply independently.
Idea has responded to the notices and accordingly the DoT has conveyed to Idea that it has no dues.
However, the amounts pertaining to the subsidiaries have been shown as due by the DoT. The amounts have
been paid by Idea under protest and without admitting liability as it was required in order to obtain the letter
of intent for the Mumbai Circle. Idea intends to go ahead with the industry stand on the matter.
ii. Idea has received two notices, both dated July 14, 2006 from the Department of Telecommunication (DoT) in
respect of its operations in Delhi and Andhra Pradesh, asking Idea to disconnect all cellular connections of
such subscribers (pertaining to these Circles) who have been allegedly given connections without conducting
proper verification. The DoT has also asked Idea to show cause why the above should not be viewed as a
breach of one of the conditions of the License Agreement and why appropriate action including the imposition
of penalty may not be taken. Idea has replied to the show cause notice stating its intention to comply with the
license conditions. However, Idea in its reply to the show cause notice has also cited the immediate logistical
difficulty in verifying all subscriber details. IMCL has also received a similar notice on the same date in
respect of its operation in the Haryana Circle and this notice too has been replied by IMCL stating the
reasons similar to the reasons stated in Idea’s reply. The DoT has issued instructions to all operators to
ensure verification of all subscribers by March 31, 2007.
Other Civil Cases
i. Marksman was the exclusive licensee of the Pakistan Cricket Board for distributing scores of the January-
February 2006 Indo-Pak series via text messages to mobile phone users. As all India mobile cellular
telecommunication service operators distributed these scores via text messages without Marksman’s permission/
approval and charged customers for each text message. Marksman has filed proceedings in the Madras High
Court seeking an injunction against and damages from the concerned operators. Idea does not provide
services in Tamil Nadu and at this time the suit is being defended inter alia by the Cellular Operators
Association of India and operators who provide services/have offices in Tamil Nadu. The interlocutory orders
passed by the Madras High Court on February 7, 2006 do not prevent the operators from distributing cricket
scores. Marksman has filed an appeal against this order Idea is initiating action to monitor the proceedings in
the High Court of Madras.
Regulatory Matters
i. The matter relates to interest on the over paid interest to Department of Telecommunication (“DoT”) during
migration to the revenue sharing regime in 1999. Telecom Dispute Settlement and Appellate Tribunal (“TDSAT”)
gave a judgment in Idea’s favor for refund of the interest amount over charged by the DoT. The judgment was
later confirmed by the Supreme Court with slight modifications. The DoT refunded the interest but did not pay
interest on the refunded amount from the date it was over paid. After the Execution Appeal was disposed of
by TDSAT, Idea has approached the Supreme Court re-highlighting its initial submissions as well as
inconsistencies in the TDSAT order. The case has been admitted and notices have been issued. The financial
impact on Idea as at December 31, 2003, if all prayers are granted is Rs. 60 Crore.
ii. Idea and IMCL filed an independent petition (No. 22/2005 and 3/2004) against the Department of
Telecommunication (“DoT”) before TDSAT for the wrongful levy of penalty. A wrongful penalty of 150% was
levied by the DoT on the delayed payment of license fee by Idea though there was an adequate refund to be
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made to Idea by the DoT in the light of the TDSAT order on the refund of interest case. The DoT has filed its
reply in the matter to which Idea has filed its rejoinder. The next hearing has been scheduled for November
16, 2006. The financial impact on Idea is approximately Rs. 11.5 Crore and on IMCL is approximately Rs 8
Crore.
iii. BSNL has filed an appeal before the Supreme Court against the Telecom Dispute Settlement and Appellate
Tribunal (“TDSAT”) order passed in favor of Idea. The matter relates to the unilateral recovery of Rs 5.75 Crore
by BSNL in 2005, on account of the alleged pending dues arising out of usage of leased lines by Idea during
the period of 1996/1997. Idea approached TDSAT who directed BSNL to refund the amount they illegally
adjusted in May 2005. BSNL later preferred the present appeal against the TDSAT order before the Supreme
Court. BSNL has also prayed for an interim stay on the TDSAT order. However pursuant to the arguments,
BSNL has assured a refund to Idea within one month, subject to final outcome of the case. The money has
been currently recovered but the case is pending before the Supreme Court. The financial impact on Idea is
Rs. 5.75 Crore.
Income-tax (including TDS matters) Disputes
Andhra Pradesh
i. In respect of Assessment Year 1998-199, an amount of Rs. 7,23,760/- was paid as TDS towards a Remittance
of ECU 68,314.36 made to GSM Facilities Limited (UK) towards research cost. An appeal was filed on
September 22, 2003 stating that the TDS was not payable under the Income Tax Act nor under the double
taxation agreement. The Appellate Order was received on May 28, 2004 in Idea’s favor and refund was
received on November 22, 2004 of Rs. 7,23,760 plus interest of Rs. 5,45,994. The DCIT, Circle - 2 (1),
Hyderabad has appealed to the Appellate Tribunal. The matter was partly heard and adjourned for further
hearing in January 2007. No fixed date has been allotted.
ii. In respect of Assessment Year 2000-01 TDS certificates had some defects and the same were rectified and
filed. The interest on the refund was calculated from the date of filing the second set of certificates and not
from the due date 1st April 2000. The Appellate Order was received on May 28, 2004 in favor of Idea and an
amount of Rs.2,44,238/- received towards interest on 05.07.2004. The DCIT, Circle - 2 (1), Hyderabad has
appealed to the Appellate Tribunal. There was a hearing of this case on November 13, 2006, which has been
adjourned to January 15, 2007.
iii. In respect of Assessment Year 2003-2004, the Income-tax department has raised demand of Rs. 0.261 Crore
on account of non-deduction of TDS on distributor margin under section 194H treating the same as in the
nature of Commission. The Commissioner of Income-tax (Appeals) allowed Idea’s appeal and the order of the
assessing officer has been struck down. The Assessing Officer has filed an appeal with the Income-tax
Appellate tribunal (ITAT) against the order of the Commissioner of Income-tax (Appeals), which is pending to
be heard.
iv. Assessments for the years 1998-99, 2001-02 and 2003-04 have been completed by making usual disallowances.
Such disallowances have resulted in a reduction of returned losses having no financial implications in the
nature of tax demand. Idea has filed an appeal before the Commissioner of Income-tax (Appeals), which is
pending to be heard. For assessment year 1998-99, returned loss was Rs. 281.104 Crore and the assessed
loss was Rs. 223.696 Crore. For assessment year 2001-2002, returned loss was Rs. 133.915 Crore and the
assessed loss was Rs. 75.040 Crore. For assessment year 2003-2004, returned loss was Rs.247.789 Crore
and the assessed loss was Rs. 174.699 Crore.
Delhi
In respect of Assessment Year 2003-2004 and 2004-2005, the Income-tax department has raised demand of Rs.
0.466 Crore on account of non-deduction of TDS on distributor margin under section 194H treating the same as in
the nature of Commission. Commissioner of Income-tax (Appeals) has confirmed the aforesaid demand. Idea has
filed an appeal with the Income-tax Appellate tribunal (ITAT) against the order of the Commissioner of Income-tax
(Appeals), which is pending to be heard.
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Maharashtra
In respect of Assessment Years 1998-1999, 1999-2000 and 2001-2002, the department has levied interest Rs.
0.191 Crore on account of short deduction of TDS on foreign payments and default in payment of TDS on salaries.
This matter has been heard before the Income-tax Appellate Tribunal (ITAT) and the order giving effect to ITAT order
is yet to be received.
Service Tax Related Disputes
Gujarat
i. In respect of the period March 2003 to November 2003, the service tax department issued a show cause
notice on issue relating to service tax not paid on service provided to foreign visitors in India. Additional
Commissioner of Central Excise, Ahmedabad-III had fixed a personal hearing date as at January 19, 2006.
Idea submitted its reply against the show cause notice as at January 19, 2006 at the time of personal hearing.
The Additional Commissioner raised demand of Rs. 0.233 Crore on August 3, 2006. Idea has filed an appeal
with Commissioner (Appeals), Ahmedabad-III as at October 30, 2006. The date for further hearing in the
matter has not been intimated.
ii. In respect of November 2003 to December 2004, the service tax department issued a show cause notice on
issue relating to service tax paid on roaming settlement on net basis. Additional Commissioner of Central
Excise, Ahmedabad-III had fixed a personal hearing date as at January 19, 2006. Idea submitted its reply
against the show cause notice as at January 19, 2006 at the time of personal hearing. The Additional
Commissioner raised demand of Rs. 0.11 Crore on August 10, 2006. Idea has filed an appeal with
Commissioner (Appeals), Ahmedabad-III as at October 30, 2006. The date for further hearing in the matter has
not been intimated.
iii. In respect of January 2005 to May 2005, the service tax department issued a show cause notice on issues
relating to service tax paid on roaming settlement on net basis. Idea submitted its reply against the show
cause notice as at May 02, 2006 at the time of personal hearing. The Additional Commissioner raised
demand of Rs. 0.051 Crore on September 11, 2006. Idea is in the course of filing an appeal to Commissioner
(Appeals), Ahmedabad-III.
iv. In respect of the period June 2005 to March 2006, the service tax department issued a show cause notice on
issue relating to service tax paid on roaming settlement on net basis.
Disputes Relating to Sales Tax
Andhra Pradesh
Idea was provisionally assessed by the CTO for the year 1997-1998 (from July to December 1997) under the
APGST Act. The assessing authority levied tax on a turnover of Rs 7,23,70,588/- on the ground that Idea received
the said amount towards the sale of airtime involved in the calls and the said transaction was nothing but sale of
incorporeal or tangible character that falls under Entry 197 of the first schedule to the APGST Act. The amount of
the demand is Rs.28,94,824. Aggrieved by the orders Idea preferred appeal before the Additional Deputy
Commissioner who dismissed the appeal and confirmed the orders of the assessing authority. Aggrieved by the
dismissal orders Idea filed an appeal before State Appellate Tribunal (“STAT”) and the STAT allowed the appeal
setting aside the order of the lower authorities on 16th April’1999.
The matter was considered closed until May 2004 when a copy of the Tax Revision Petition indicating that the State
Representative has made a revision before the High Court of Andhra Pradesh. The matter is yet to be listed for
hearing as of date.
Gujarat
For the Assessment Years 1998-1999, 1999-2000, 2000-2001 and 2001-2002, sales tax department has levied
sales tax on sale of SIM cards and raised demand of Rs. 0.854 Crore (including interest and penalty). Idea has filed
an appeal before the Assistant Commissioner of Sales Tax (Appeals) Mehsana, which is pending to be heard.
Against the above outstanding dues raised in the assessment orders of all these years, as directed by the Honorable
High Court 25% of the total dues amounting to Rs. 0.15 Crore has been paid.
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Maharashtra
For the Assessment Year 2000-2001, the sales tax department has raised demand of Rs. 4.390 Crore treating
regrouping of fixed assets from one block of assets to another as sales though there was no sales and also on
account of estimating of purchases from unregistered dealers. Idea has filed an appeal before the Maharashtra
sales tax tribunal, which is pending to be heard.
Uttar Pradesh (West)
In respect of Assessment Year 2003-2004, Idea has received refund of Rs. 0.307 Crore as against Rs. 0.361 Crore
paid under protest. The main issue is relating to the applicable rate to sale of SIM cards. Idea is in the course of
filing an appeal with the first appellate authority.
2. Birla Sun Life Distribution Company Limited
i. There is one case under civil suit filed against the company aggregating to Rs.0.06 Crores.
ii. There are two income tax cases pending against the Company in various forums for amounts aggregating to
Rs.0.31 Crores on various grounds of assessment for assessment year 2001-02 & 2003-04.
iii. There are two show cause notices received from the service tax department dated September 20, 2006
wherein they have raised a demand of Rs. 0.0326 Crores for the year 2003-04 and Rs. 0.055 Crores for the
year 2004-05, respectively on service tax payable on advertisement income.
3. Birla Sun Life Asset Management Company Limited
i. There are two income tax cases pending before the Appellate authorities for Assessment year 2002-03 and
Assessment Year 2003-04 for tax aggregating to Rs. 6.27 Crores.
ii. There are eight cases pending before various Consumer Redressal Forums filed against the company. The
value of the amount disputed / claimed aggregates to Rs.0.3737 Crores.
iii. SEBI has imposed a penalty of Rs. 0.0075 Crores on Birla Mutual Fund for non-compliance of disclosure
requirements under Regulation 7 (1) of SEBI (Substantial Acquisitions of Shares and Takeover) Regulations,
1997 pursuant to the acquisition of 1,61,200 shares (representing 5.01% of the paid up capital) of Subex
Systems Limited on October 18, 1999 by the schemes of Birla Mutual Fund.
iv. On December 31, 2003 the company had sold 364 days Treasury Bills maturing on January 9, 2004 for Rs.
50 Crores. However, security details were entered as 91 days Treasury Bills, instead of 364 days Treasury
Bills, maturing on the same day. As the market hours were closed for the day, the Treasury Bills were settled
on January 1, 2004. SEBI in a letter dated February 13, 2004 informed the company that the bouncing of
State Government Ledger deal happened due to lack of proper control and due diligence before entering into
the deal. It advised the company to take due care in future and improve compliance standards to avoid
recurrence of such instances failing which action may be initiated in accordance with the provisions of SEBI
(Mutual Funds) Regulations, 1996.
v. SEBI carried out investigations into the alleged manipulations in the scrip price of Colour Chips India Limited
(“CCIL”). Birla Mutual Fund and another Mutual Fund (the “Funds”) had bought one lakh shares each on the
first day of trading in the scrip of CCIL. The Funds placed their order at Rs. 50 when the prevailing orders
were upwards of Rs. 80. SEBI in its report dated April 15, 2004 found that the selling party was Kruthika
Portfolio Services Private Limited, a company related with the management of CCIL and B.K.Sharma, both of
whom had asked the other Mutual Fund and possibly also Birla Mutual Fund, to place the order of one lakh
shares with Jardine Fleming. SEBI found that the buy order placed by the Funds through Jardine Fleming was
responsible for benchmarking of prices and Birla Mutual Fund had knowingly or unknowingly helped in the
nefarious designs of the management of CCIl and B.K.Sharma. SEBI issued a warning to Birla Mutual Fund
asking Birla Mutual Fund to be cautious in the future as repetition of such an act would be viewed seriously
and would invite heavy penalty.
vi. SEBI reviewed the report submitted by the auditors of the company wherein the auditors had stated that there
was violation of the SEBI circular dated July 27, 2000 which requires an asset management company to
record the justification for each investment decision taken by the fund manager. Additionally, the auditors
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ADITYA BIRLA NUVO LIMITED
found instances where risk factors were not included in advertisements issued by the company. SEBI has
advised the company to take due care in future and improve the compliance standards of the company to
avoid recurrence of such instances.
Except as stated above, there are no contingent liabilities not provided for, outstanding litigation, disputes,
non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial
institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits and arrears on
cumulative preference shares issued by the company, defaults in creation of full security as per terms of
issue/other liabilities, proceedings initiated for any economic/civil/ any other offences, involving our joint ventures.
VII. Associates
1. Birla Securities Limited
i. The Income Tax Department has filed an appeal before the Income Tax Appellate Tribunal against the order
of the Commissioner of Income Tax (Appeals) for the assessment year 1998-99 which partly allowed an appal
by the Company on the issues of allocation of interest pertaining to dividend income and addition of provision
for diminution in the value of unquoted shares for the computation of book profit under section 115JA of the
Income Tax Act, 1961 having aggregate tax impact of Rs.0.05 Crores plus interest thereon. No order has been
passed as yet and the matter is currently pending.
ii. Birla Securities Limited (“Birla Securities”) made an application for the transfer of the company’s membership
with the OTC Exchange of India (the “OTC Exchange”) in favour of BGFL Corporate Finance Private Limited
(“BGFL Corporate”). While processing the request, the OTC Exchange ordered Birla Securities to make a
payment of Rs. 5,000 towards penalty charges for not obtaining prior approval from the OTC Exchange for
change in dominant shareholder. Birla Securities has by way of a letter dated August 22, 2006 submitted that
there is no change in the dominant shareholder; they have, however, made the above payment.
Except as stated above, there are no contingent liabilities not provided for, outstanding litigations, disputes,
non payment of statutory dues, overdues to banks / financial institutions, defaults against banks / financial
institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits and arrears on
cumulative preference shares issued by the company, defaults in creation of full security as per terms of
issue/other liabilities, proceedings initiated for any economic/civil/ any other offences, involving our Associates.
335
GOVERNMENT APPROVALS
We have received the necessary consents, licenses, permissions and approvals from the government and various
governmental agencies required for our present business and except as mentioned below, no further material approvals
are required for carrying on our present business.
Approvals for the Issue
1. In-principle approval from the National Stock Exchange of India Limited dated October 5, 2006; and
2. In-principle approval from the Bombay Stock Exchange Limited dated October 4, 2006.
General
1. PAN Number: AAACI1747H.
2. Certificate of Importer Exporter Code 0288010396 issued on May 24, 1988 by the Office of Regional Joint Director
General of Foreign Trade.
Factory /Unit approvals
Unit 1: Corporate Finance Division
1. Registration No. GS 11/011168 dated August 23, 2004 under the Bombay Shops and Establishment Act, 1948
certifying that Aditya Birla Nuvo Limited, Administrative Office Finance has been registered as a commercial
establishment is valid till December 31, 2006
Unit 2: Hi-Tech Carbon, Gummidipoondi
1. Factory License No.1199 dated June 9, 1998 from Deputy Chief Inspector of Factories, Chennai is valid till December
31, 2006.
2. Amended Certificate of Registration R.C. No. 2/1999 under sub-section (2) of section 7 of the Contract Labour
(Regulation and Abolition) Act,1970 dated January 30, 2006 from Deputy Chief Inspector of Factories is for
manufacturing of carbon black and power generation.
3. Certificate (No. 81/DCIB/CHC/05-06) for the use of a boiler registry number T/6636 dated October 2, 2005 from
Deputy Chief Inspector of Boilers certifying that the boiler is permitted to be worked at a maximum pressure 17.0 kg.
lb per square inch is valid till December 21, 2006.
4. Certificate (No. 100/ DCIB/CHC/05-06) for the use of a boiler registry number T/6156 dated March 23, 2006 from the
Deputy Chief Inspector of Boilers certifying that the boiler is permitted to be worked at a maximum pressure 17.0 kg.
lb per square inch is valid till March 22, 2007.
5. Certificate (No.20/DCIB/CHC/06-07 ) for the use of a boiler registry number T/6157 dated June 9, 2006 from Deputy
Chief Inspector of Boilers certifying that boiler is permitted to be worked at a maximum pressure 17.0 kg. lb per
square inch is valid till June 8, 2007.
6. Certificate (No.40/DCIB/CHC/06-07) for the use of a boiler registry number T/7206 dated August 10, 2006 from the
Deputy Chief Inspector of Boilers certifying that boiler is permitted to be worked at a maximum pressure 17.0 kg lb
per square inch is valid till August 9, 2007.
7. Certificate (No. 21/ DCIB/CHC/06-07) for the use of a boiler registry number T/6141 dated June 9, 2006 from the
Deputy Chief Inspector of Boilers certifying that boiler is permitted to be worked at a maximum pressure 51.0 kg lb
per square inch is valid till June 8, 2007.
8. Provisional Order (No. 13/ DCIB/CHC/06-07) from the Deputy Chief Inspector of Boilers dated June 15, 2006
granting permission to use the waste heat boiler Registry No.T/7720 is valid till December 14, 2006.
9. Provisional Order (No. 21/ DCIB/CHC/06-07) from Deputy Chief Inspector of Boilers dated August 10, 2006 granting
permission to use the waste heat boiler Registry V 656-02 is valid till February 9, 2007.
10. Solvent/Raffinate/Shop license No: 11/2003 from the District Magistrate, Tiruvallur dated December 30, 2003 for the
storage/use of 11,000 KL in the storage point at Gummidipoondi village for two years is valid till December 31,
2007.
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ADITYA BIRLA NUVO LIMITED
11. Fire Service License No. 11458/2005 dated November 9, 2005 from Divisional Officer, Fire and Rescue Services for
manufacture of carbon black and power generation is valid till November 8, 2006.
12. Certificate of Accreditation (Certificate No-T-0273) dated July 7, 2005 from the National Accreditation Board for
Testing and Calibration Labouratories certifying that Quality Assurance Laboratory, Hi-Tech Carbon has been
assessed and accredited in accordance with the standard ISO/IEC 17025:1999 for its facilities at Gummidipoondi in
the field of Chemical Testing is valid till July 6, 2008.
13. Certificate of Accreditation (Certificate No-T-0272) dated July 7, 2005 from the National Accreditation Board for
Testing and Calibration Laboratories certifying that Quality Assurance Laboratory, Hi-Tech Carbon has been assessed
and accredited in accordance with the standard ISO/IEC 17025:1999 for its facilities at Gummidipoondi in the field
of Mechanical Testing is valid until July 6, 2008.
14. Permit for Transport of Molasses from a Dealer dated March 14, 2006 from the District Revenue Officer permitting
Hi-Tech Carbon to transport Molasses obtained from any holder of a license in Form M.L.2 is valid till March 31,
2007.
15. License No: P/HQ/TN/15/1485 (P 15164) dated June 23, 1998 from the Chief Controller of Explosives to Hi-Tech
Carbon for the importation and storage of 19200 KL Petroleum ( Petroleum Class B in bulk 200 KL and Petroleum
Class C in bulk 19000 KL) is valid till December 31, 2007.
16. License No. 1/98-99 dated July 17, 1995 from the District Revenue Officer to Hi-Tech Carbon to possess molasses
not exceeding twenty metric tonnes at any one time and one hundred and twenty five tones in a year for the
purpose of manufacture of carbon black is valid till March 31, 2007.
Unit 3: Rajashree Gases
1. Consent order 12/consent/water order/13/2005 dated March 2, 2005 from the Uttar Pradesh. Pollution Control Board
is valid till December 31, 2006.
2. Consent order 12/consent/Air order/13/2005 dated March 2, 2005 from the Uttar Pradesh Pollution Control Board is
valid till December 31, 2006.
Unit 4: Insulator Rishra
1. Certificate of Enlistment No. 1972 dated September 5, 2006 from Rishra Municipality granting certificate of trading
business to Indian Rayon and Industries Limited, Insulator division is valid till March 31, 2007.
Unit 5: Indian Rayon, Veraval
1. Letter No. J-11012/25/95-IA.II (I) dated August 31, 1998 from Additional Director (S), Ministry of Environment and
Forests mentions that the emission of CS2 and H2S from the Caustic Soda Plant at Veraval in no case should
exceed limits prescribed by the Gujarat Pollution Control Board.
2. Letter dated June 21, 2005 from the Under Secretary to the Government of India, Ministry of Commerce and
Industry to Aditya Birla Nuvo Limited enclosing amendment letter No.2 dated June 21, 2006 relating to ‘Change of
Name’ of the Company from Indian Rayon and Industries Limited to Aditya Birla Nuvo Limited and extending period
of technical collaboration agreement for a period of five years from June 1, 2004 to May 31, 2009.
3. Consolidated Consents and Authorization No: GPCB/CCA/JNG-1/25944 dated August 29, 2003 read with amendment
letter No : GBCB/CCA/JNG-1/31513 dated November 5, 2003 from Gujarat Pollution Control Board for the use of
outlet for the use of discharge of treated effluent and to operate industrial plant in the air pollution control areas
notified, to keep the discharge within the prescribed limits and to provide comprehensive treatment system to
achieve the quality of Water effluent and Air pollution and solid/ hazardous waste within the specified limits. The
consent is valid up to November 17, 2007.
4. No Objection Certificate PC/NOC/CCA/JNG-1/8452 dated March 24, 2005 from Gujarat Pollution Control Board
under the Water (Prevention and Control Pollution) Act-1974, the Air Act-1981 and the Environment (Protection) Act-
1986 for expansion of an industrial plant at Veraval for manufacturing Caustic Soda, Chlorine, Compressed H2 is
valid for five years from the date of issue.
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5. No Objection Certificate PC/CCA/JNG-1/8454 dated March 24, 2005 from the Gujarat Pollution Control Board under
the Water (Prevention and Control Pollution) Act-1974, the Air Act-1981 and the Environment (Protection) Act-1986
for setting up of a power plant of 18 MW capacities with in the existing premises of the unit at Veraval is valid for
five years from the date of issue.
6. Certificate of Registration CL/III/CL/Regi/354/103499 under sub-section (2) of section 7 of the Contract Labour
(Regulation and Abolition) Act, 1970 is to employ contract labour for manufacture of Viscose Filament Rayon Yarn,
Sulphuric Acid and Carbon-di-sulphide.
7. Certificate of Recognition No. 015240 dated December 23, 2004 from the Joint Director General of Foreign Trade
certifying that the Company has been accorded the status of a Four Star Export house in accordance with the
provisions of the Exim Policy is valid till March 31, 2009.
8. Registration-Cum-Membership Certificate (RCMC No: 325/2005-2006) dated March 29, 2006 from the Deputy Director
General of Federation of Indian Export Organizations to Aditya Birla Nuvo Limited is valid till March 31, 2007.
9. Factory License No. 083726 dated April 16, 1994 from Chief Factory Inspector, Gujarat to not employ more than
5000 people on any one day and not consume more than 5000 H.P. on any one day is valid till 2007.
Unit 6: Insulator Marketing Division, Halol
1. Letter dated August 12, 2004 from the Assistant Commissioner, Central Excise and Customs, Vadodara has allotted
Service Tax code No: AAAC/1747 H ST001 to the Company, Insulator Division (Domestic Marketing).
Unit 7: Madura Garments
1. Certificate of Registration No. ALCB-4/CLA/P-31/2003-04 dated July 30, 2003 from the Assistant Labour Commissioner
to Madura Garments under Contract Labour (Regulation and Abolition) Act, 1970.
2. Consent letter No. 539/KSPCB/EO/BNG-C-1/DEO/INR-138509/APC/2005-06//7549 dated January 19, 2006 from
Karnataka State Pollution Control Board granting consent to operate plant under section 21 of the Air (Prevention
and Control) Act, 1981 Act is valid till December 31, 2006.
3. Consent letter No. 379/KSPCB/RO/BNG-CITY-1/DEO/INR-138509/2005-06//7548 dated January 19, 2006 from the
Karnataka State Pollution Control Board granting consent for existing discharge of sewages and/ or trade effluents
under sections 25 and 26 of the Water (Prevention and Control) Act, 1974 Act is valid till December 31, 2006.
Unit 8: Hi-Tech Carbon, Renukoot
1. Registration No. SBR-109 dated March 23, 1998, issued by the Deputy Director of factories, Uttar Pradesh to H.J.
Vaidya (Director) to use the premises situated in Hi-Tech Carbon, Murdhwa Industrial area as a factory.
2. Contract Labour license No. 16 dated September 13, 2005 under the Contract Labour (Regulation and Abolition)
Act, 1970 is valid till September 19, 2006.
3. Boiler Registration No. U.P./4559 dated September 12, 2005 from the Deputy Director of Boilers, Uttar Pradesh to
work the above registered boiler is valid till September 11, 2006. The registration is renewed till August 23, 2007.
4. Boiler Registration No. U.P./5112, 5113, 5114 dated September 13, 2005 from the Assistant Director of Boilers, Uttar
Pradesh to work the above registered boilers is valid till September 12, 2006.
5. Boiler Registration No. U.P./5917 dated April 25, 2006 from the Assistant Director of Boilers, Uttar Pradesh to Hi-
Tech Carbon to work the above registered boilers is valid till April 6, 2007.
6. Letter from the Assistant Director of Boilers, Uttar Pradesh dated July 27, 2006 allows Hi-Tech Carbon to use the
Boiler Registration No. U.P./6163 till April 24, 2007.
7. Letter from Assistant Director of Boilers, Uttar Pradesh dated July 27, 2006 allows Hi-Tech Carbon to use the Boiler
Registration No. U.P./5115 till July 26, 2007.
8. Letter from the Deputy Director of Boilers, Uttar Pradesh. dated May 18, 2006 allows Hi-Tech Carbon to use the
Boiler Registration No. U.P./5071 till May 5, 2007.
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ADITYA BIRLA NUVO LIMITED
9. Consent order 48/C-2/ consent/water order/06 dated February 24, 2006 from the Uttar Pradesh Pollution Control
Board is valid till December 31, 2007.
10. Consent order 33/C-2/ consent (Air) order/06 dated February 24, 2006 from the Uttar Pradesh Pollution Control
Board is valid till December 31, 2007.
Unit 9: Indo Gulf Fertilizers
1. Registration and License to work a factory (Registration No. SUL-27) from the Director of Factories granting a
license for use as a factory employing not more than 1000 persons on any one day during the year and using
motive power not exceeding 2000 H.P. is valid till December 31, 2006.
2. Certificate of Registration No. 43/84 dated September 21, 1984 from the Registration Officer under sub-section (2)
of Section 7 of the Contract Labour (Regulation and Abolition) Act, 1970.
3. Fertilizer Registration Certificate No. 77610/777 dated May 18, 2000 from District Agriculture Officer, Lucknow for
the wholesale and retail sale of fertilizers is valid till May 17, 2009.
4. Letter of authorization dated May 17, 2005 from the Director of Agriculture, Ranchi entitling Indo Gulf Fertilisers
Limited to carry on the wholesale business of urea is valid for a period of 3 years from April 1, 2004 unless
suspended or revoked by the competent authority.
5. Letter of Authorization dated October 26, 2004 from the Notified Authority (Fertiliser), Patna entitling Indo Gulf
Fertilisers Limited to carry on the wholesale business of Urea, DAP, MOP is valid for a period of 3 years from April
1, 2004 unless suspended or revoked by the competent authority.
6. Fertilizer Registration Certificate No. 212/021197 from the District Agriculture Officer and Fertiliser Registering Authority,
Sultanpur for the wholesale and retail sale of fertilizers is valid till June 10, 2009.
7. License No: G/CC/UP/06/625 (G 10817) dated November 8, 2005 from the Joint Chief Controller of Explosives;
Agra for the possession of cylinders filled with compressed gas is valid till September 30, 2008.
8. License No. P-HQ/UP/15/1829 (P168164) dated March 18, 1988 from the Chief Controller of Explosives for the
import of 34000 K.L of Petroleum (17000 KL of Petroleum Class ‘A’ in bulk and 17,000 KL of Petroleum Class ‘C’ in
bulk) is valid till December 31, 2008.
9. License for Naphtha No.37/STR dated June 5, 2000 from District Magistrate, Sultanpur for use of Naphtha as feed/
fuel in Ammonia Plant, power and steam generation plants is valid till March 31, 2007.
10. License Number: P/CC/UP/14/3163 (P 168337) dated February 19, 1988 from the Joint Chief Controller of Explosives;
Agra for the storage of 20 KL Petroleum Class B in Tanks is valid till December 31, 2008.
11. License No. P/HQ/UP/15/1044 (P 8446) dated June 20, 1996 from Chief Controller of Explosives for the importation
of 100 KL Petroleum of Class ‘A’ in bulk is valid till December 31, 2007.
12. License No. P/HQ/UP/15/707 (P 8100) dated February 3, 1998 from Chief Controller of Explosives for the importation
of 400 KL Petroleum (Petroleum Class ‘A’ in bulk 100 KL, Petroleum Class ‘B’ in bulk 200 KL, Petroleum Class ‘C’
in Bulk 100 KL) is valid till December 31, 2008.
13. No.224-MC-3276 dated December 23, 2002 from Northern Railway allowing the facility of making payment of
railway freight and other allied dues through credit-note-cum-cheque at Sindurwa station on goods traffic dealt with
is valid till September 30, 2006.
14. Franking License No. UP 35/ E 0026/2003 from the Chief Post Master is valid till December 31, 2007.
15. Industrial Radiographer’s Certificate No. 1590 dated March 31, 1990 certifies that the Company has satisfied the
radiation safety requirements for undertaking industrial radiography operations at an approved site under an
authorised user. The certificate is renewed up to December 31, 2007.
16. Boiler Registration No. U.P./4599, U.P./4600 dated November 28, 2005 from the Deputy Director of Boilers, Uttar
Pradesh to work the above registered boiler is valid till November 27, 2007.
339
17. Boiler Registration No. U.P./4597, U.P./4598 dated November 28, 2005 from the Deputy Director of Boilers, Uttar
Pradesh to work the above registered boiler is valid till November 27, 2007.
18. Boiler Registration No. U.P./4672 dated November 28, 2005 from the Deputy Director of Boilers, Uttar Pradesh to
work the above registered boiler is valid till November 27, 2006.
19. Boiler Registration No. U.P./4449 dated October 24, 2005 from the Deputy Director of Boilers, Uttar Pradesh to work
the above registered boiler is valid till October 23, 2006.
20. Boiler Registration No. U.P./4491 dated January 27, 2006 from the Deputy Director of Boilers, Uttar Pradesh to work
the above registered boiler is valid till January 26, 2007.
21. License No. 126/August/Sultanpur dated August 29, 2002 from the District Magistrate, Sultanpur to the Company
grants license for one 12 bore DBBL gun no.10273 made in Italy. The license is renewed till August 29, 2008.
22. License No. 128/August/Sultanpur dated August 29, 2002 from the District Magistrate, Sultanpur to the Company
grants license for one 12 bore DBBL gun No. 7553 made in Italy. The license is renewed till August 29, 2008.
23. Registration Certificate No. 21/307 dated July 7, 1988 from the Chief Inspector, Sultanpur certifies that Indo Gulf
Fertilisers has been registered under the Uttar Pradesh Shops and Establishment Act, 1962. The certificate is
renewed till March 31, 2008.
24. Registration Certificate No. 5/4074 dated July 7, 1987 from the Chief Inspector, Lucknow certifies that the Company
has been registered under the Uttar Pradesh Shops and Establishment Act, 1962. The certificate is renewed till
March 31, 2010.
25. Registration Certificate No.31681-1317-34 dated August 31, 1988 from the Inspector, under the Bihar Shops and
Establishment Act certifies that Indo Gulf Fertilisers has been registered under the Bihar Shops and Establishment
Act, 1953. The certificate is valid till December 31, 2006.
26. Registration Certificate No. 12234 dated September 5, 2006 from the Inspector, under the Bihar Shops and
Establishment Act certifies that Indo Gulf Fertilisers has been registered under the Bihar Shops and Establishment
Act, 1953 at Muzaffarpur. The certificate is valid till December 31, 2006.
27. Registration Certificate No. 827/97 from the Labour Department, Gorakhpur certifies that Indo Gulf Fertilisers has
been registered under the Uttar Pradesh Shops and Establishment Act, 1962. The certificate is valid till March 31,
2007.
28. Registration Certificate No. 3305 from the Chief Inspector, Bareilly certifies that Indo Gulf Fertilisers has been
registered under the Uttar Pradesh Shops and Establishment Act, 1962. The certificate is renewed till March 31,
2011.
29. Letter No. 9104/ENE.II/UP/12413 dated October 9, 2002 from the Assistant Provident Commissioner, Varanasi certifies
that the establishment is covered from Sub-Regional Office, Varanasi under Employee’s Provident Fund and
Miscellaneous Provisions Act, 1952 with effect from January 1, 1993 under the scheduled head ‘Fertilizer’ under
Code No. UP/12413.
30. Authorisation No.AERB/RSD/444/IR/ NR-085/UP-19/2004/339 dated January 7, 2004 from the Chairman Atomic
Energy Regulatory Board is the regulatory Consent for handling of radioactive substances and radiation generating
equipment. The regulatory consent is valid till December 31, 2006.
31. License No. CSR 518 (E) dated March 16, 2006 from the District Magistrate, Sultanpur for use of Naphtha as feed/
fuel in Ammonia plant, Power and Steam generation plants is issued for a period of one year.
32. Letter No.E/DL/7238/(Relaxed)/5845 dated July 12, 1984 from the Regional Provident Fund Commissioner, New
Delhi grants relaxation from the provisions of the Employees’ Provident Fund Scheme, 1932 under paragraph 79
thereof with effect from July 1, 1984 pending exemption under section.17(1) (a) of the Employees’ Provident Funds
& Misc. Provisions Act, 1952.
33. Letter No. 3359 P-3/92-23 dated July 31, 1992 grants permission to supply power to Argon Recovery Plant of
Indian Rayon & Industries Ltd., which is situated in Indo Gulf Fertilizer’s premises,
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ADITYA BIRLA NUVO LIMITED
34. Letter No. 2936 P-3/90-23-129 P/88 dated June 14, 1990 grants permission to supply power to the township of the
Company.
35. Certificate No. 0178909 dated January 27, 2006 from the Chief Inspector is the Weight and Measures Certificate.
The same is valid till January 26, 2007.
36. Certificate No. 0178580 dated May 24, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till 23 May, 2007.
37. Certificate No. 0178581 dated May 24, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till 23 May, 2007.
38. Certificate No. 0178582 dated May 25, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till May 24, 2007.
39. Certificate No. 0178583 dated May 25, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till May 24, 2007.
40. Certificate No. 0178584 dated May 25, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till May 24, 2007.
41. Certificate No. 0178585 dated May 26, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till May 25, 2007.
42. Certificate No. 0178597 dated June 19, 2006 from the Inspector is the Weight and Measures Certificate. The same
is valid till June 18, 2007.
43. Walkie Talkie License P-695/1-22 dated December 28, 2005 from the Assistant Wireless Adviser is renewed up to
December 2006.
44. Wireless License P-2175/1+8+2SB dated May 31, 2006 from the Assistant Wireless Adviser is renewed up to June
30, 2007.
Unit 10: Financial Services Division
1. Certificate No. BH /1524 from the Assistant Commissioner, Commercial Taxes dated January 28, 1999 certifies that
Birla Global Finance Limited has been registered as a dealer under the West Bengal Sales Tax Act, 1994.
2. PJT/03/1/2299/94-95 dated March 9, 1995 from Assistant Commercial Tax Officer; Hyderabad certifies that Birla
Global Finance Limited has been registered as a dealer under section 7 (1) / 7 (2) of the Central Sales Tax Act,
1956. The certificate is valid until cancelled.
3. PJT/03/1/2861/94-95 dated March 9, 1995 from Assistant Commercial Tax Officer; Hyderabad certifies that Birla
Global Finance Limited has been registered as a dealer under section 12 (1) / (2) of the Andhra Pradesh General
Sales Tax Act, 1957. The certificate is valid until cancelled.
4. Registration Certificate No. 23222172 dated June 1, 1998 from Registering Authority, Ernakulam certifies that Birla
Global Finance Limited has been registered as a dealer under section 7 (1) / (2) of the Central Sales Tax Act, 1956.
The certificate is valid until cancelled.
5. Certificate of Registration CST No. 1421/02674 dated September 28, 1995 from sales tax officer, Jaipur certifies that
Birla Global Finance Limited has been registered as a dealer under Section 7 (1) / (2) of the Central Sales Tax Act,
1956. The certificate is valid until cancelled.
6. Certificate of Registration No. 60597919 dated June 13, 1997 from Assessing Authority, Mohali certifies that Birla
Global Finance Limited has been registered as a dealer under section 7 (1) / (2) of the Central Sales Tax Act, 1956.
The certificate is valid until cancelled.
7. Certificate of Registration No. 60597919 dated June 13, 1997 from Assessing Authority, Mohali certifies that Birla
Global Finance Limited has been registered as a dealer under the Punjab General Sales Tax Act, 1948.
8. Certificate of Registration No. 24573400297 dated June 13, 1997 from Sales Tax Officer, Ahmedabad certifies that
341
Birla Global Finance Limited has been registered as a dealer under section 7 (1) / (2) of the Central Sales Tax Act,
1956. The certificate is valid until cancelled.
9. Certificate of Registration No. 24073400297 dated July 1, 2002 from Sales Tax Officer, Ahmedabad certifies that
Birla Global Finance Limited has been registered as a dealer under Gujarat Sales Tax Act, 1969.
10. Certificate of Registration No: RST 1421/02674 from the Commercial Tax Officer certifies that Birla Global Finance
Limited has been granted voluntary registration with effect from March 20, 1993 under the Rajasthan Sales Tax Act,
1994. The certificate is valid until cancelled.
11. Certificate of Registration No. BHC-II-2515 from the Sales tax Officer, Bhubaneswar under the Central Sales Tax
(Registration and Turnover) Rules, 1957 certifies that Birla Global Finance Limited has been registered as a dealer
under section 7 (1) / (2) of the Central Sales Tax Act, 1956.
12. Certificate of Registration No. BH-II-3271 certifies that Birla Global Finance Limited has been registered as a dealer
under section 8/9-A of the Orissa Sales Tax Act, 1947.
13. Certificate No. V/2778 dated October 3, 2000 from the Sales Tax Officer, Vasco-da-Gama Ward certifies that Birla
Global Finance Ltd has been registered as a dealer under section 11 of the Goa Sales Tax Act, 1964. The
certificate is valid until cancelled.
14. Department of Sales Tax, (Government of Maharashtra) has allotted VAT TIN: 27510095746V and CST TIN:
27510095746 C to Birla Global Finance Limited and the same is in effect from April 1, 2006.
15. Certificate of Registration No. 5564 (BH) C dated July 25, 1995 from the Assistant Commissioner, certifies that
M/s. Birla Global Finance Ltd. has been registered as a dealer under section 7 (1) / (2) of the Central Sales Tax Act,
1956. The certificate is valid until cancelled.
16. Certificate of Registration No. LK 5249092 dated June 8, 1998 from the Sales Tax Officer certifies that Birla Global
Finance Limited has been registered as a dealer under section 7 (2) of the Central Sales Tax Act, 1956. The
certificate is valid until cancelled.
17. Registration Certificate of Establishment No. AII-19931 dated March 30, 1996 from Inspector under the Bombay
Shops and Establishments Act, 1948 certifies that Birla Global Finance Limited has been registered as a commercial
establishment under the Bombay Shops and Establishment Act, 1948. The certificate is renewed for the year 2006.
18. Certificate of Registration No.CHA 16766 dated December 26, 1996 from the Assessing Authority, Chandigarh
certifies that Birla Global Finance Limited has been registered as a dealer under the Punjab General Sales Tax Act,
1948 as enforced in the Union Territory of Chandigarh. The certificate is valid until cancelled.
19. Certificate of Registration No. CHA.CST 16562 dated December 26, 1996 from the Notified Authority Chandigarh
certifies that Birla Global Finance Limited has been registered as a dealer under section 7(1)/ 7 (2) of the Central
Sales Tax Act, 1956. The certificate is valid until cancelled.
20. Certificate of Registration No. 23222172 dated June 1, 1998 from the Sales Tax Officer, Ernakulum certifies that.
Birla Global Finance Limited has been registered as a dealer under section 13 of the Kerala General Sales Tax Act,
1963. The certificate is valid until cancelled.
21. Certificate of Registration No. V/CST/2195 (Central) dated October 3, 2000 from the Sales Tax Officer Vasco-da-
Gama certifies that Birla Global Finance Limited has been registered as a dealer under section 7 (2) of the Central
Sales Tax Act, 1956. The certificate is valid until cancelled.
22. Letter from Commissioner, Commercial Taxes, Madhya Pradesh grants TIN 23650900932 to Birla Global Finance
Limited.
23. Registration No. 23650900932 from the Commercial Tax Officer, Indore certifies that Birla Global Finance Limited
has been registered as a dealer under section 7(1)/ 7 (2) of the Central Sales Tax Act, 1956. The certificate is valid
until cancelled.
24. Certificate of Registration No. LK 5249092 (Central) dated June 8, 1998 from the Sales Tax Officer, Lucknow
certifies that Birla Global Finance Limited has been registered as a dealer under section 7 (2) of the Central Sales
Tax Act, 1956. The certificate is valid until cancelled.
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ADITYA BIRLA NUVO LIMITED
25. Certificate of Registration No.121471 dated December 18, 1992 from the Commercial Tax Officer certifies that Birla
Global Finance Limited has been registered as a dealer under section 20 of the Tamil Nadu General Sales Tax Act
1959. The certificate is valid until cancelled.
26. Certificate of Registration No. 639565 from the Sales Tax Officer, Chennai certifies that Birla Global Finance Limited
has been registered as a dealer under section 7 (1)/ (2) of the Central Sales Tax Act, 1956.
27. Letter datedOctober 6, 2006 from the Deputy General Manager, Reserve Bank of India cancelling the certificate of
registration as a NBFC of Birla Global Finance Limited.
Unit 11: Jaya Shree Textiles
1. Certificate of Recognition No. 015240 dated December 23, 2004 from Joint Director General of Foreign Trade
according the status of a Four Star Export House to Indian Rayon and Industries Limited. for a period of five years
from April 1, 2004 to March 31, 2009.
2. Memorandum of agreement dated August 13, 2004 between West Bengal State Electricity Board and Aditya Birla
Nuvo Limited for supply of electrical energy for industrial purposes at Prabasnagar, Rishra for a period of five years
from the date of commencement of revised supply.
3. License No. 272/CL/83/SLO dated December 13, 1983 under Contract Labour (R&A) Act. 1970 to Ram Narayan
Singh (Principal Employer-Jaya Shree Textiles) is renewed till December 31, 2006.
4. Factory license No. 3000 dated August 9, 2006 from Chief Inspector of Factories to Aditya Birla Nuvo Limited --
Unit-Jayashree Textiles is valid till December 31, 2006.
Miscellaneous:
1. Certificate of Registration dated November 25, 2003 from the Securities and Exchange Board of India to the
Company as a Share Transfer Agent in Category II, subject to conditions in the rules and in accordance with the
regulations to carry out the activities as specified therein has been renewed from November 1, 2006 to October 31,
2009. The registration code for the Registrar to an Issue and Share Transfer Agent is INR000001815.
Taxation Related Approvals
Tamil Nadu
Hi-Tech Carbon, Gummidipoondi
1. Certificate of Registration (TNGST 1701051/97-98) dated May 6, 1997 from the Commercial Tax Officer certifying
that Hi-Tech Carbon-Unit III has been registered as a dealer under section 20 of the Tamil Nadu General Sales Tax
Act, 1959 is valid until cancelled.
2. Certificate of Registration (CST No. 694549/97-98) dated April 28, 1997 from the Commercial Tax Officer certifying
that Hi-Tech Carbon-Unit III has been registered as a dealer under section 7 (1), 7 (2) of the Central Sales Tax Act,
1956 is valid until cancelled.
Uttar Pradesh
Rajashree Gases
1. Registration No. AAACI1747HXM014 dated May 26, 2003 from Assistant Commissioner of Central Excise certifying
that Indian Rayon and Industries Limited (Unit Rajashree Gases) is registered for manufacture of excisable goods
is valid till the registrant carries on the activity for which it has been issued or surrenders it or till it is revoked or
suspended.
2. Certificate No 5201716 dated July 25, 1992 from the Sales Tax Officer, Lucknow certifying that Rajashree Gases
has been registered as a trader under section 7 (1) and 7(2) of The Central Sales Tax Act, 1956 is valid until
cancelled.
3. Sales Tax Registration No. (UPST) LK0362682 dated March 25, 1994 is effective from June 11, 1992.
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Renukoot
1. Registration No. AAACI 1747 H XM 006 dated December 4, 2001 issued by the Superintendent of Central Excise
certifying that Hi-Tech Carbon is registered for manufacture of excisable goods. The same is valid till the registrant
carries on the activity for which it has been issued or surrenders it or till it is revoked or suspended.
2. Certificate of registration RG 0027665 dated October 14, 1986 under Uttar Pradesh Sales Tax Act, 1948 has been
renewed till the time of carrying on of the business.
3. RG5006659U/S7 (2) dated December 16, 1986 from the Sales Tax Officer certifying that Hi-Tech Carbon has been
registered as trader is valid until cancelled.
Indo Gulf Fertilisers
1. Certificate of Registration No. 52051310 dated August 28, 2002 from the Assessing Authority, Ludhiana certifies that
Indo Gulf Corporation Limited has been registered as a dealer under the Punjab General Sales Tax Act, 1948. The
certificate is valid until cancelled.
2. Certificate of Registration No. 52051310 dated August 28, 2002 from the Assessing Authority, Ludhiana certifies that
Indo Gulf Corporation Limited has been registered as a dealer under section 7 (1) / (2) of the Central Sales Tax Act,
1956. The certificate is valid until cancelled.
3. Certificate of Registration No. PTW-911(R) from Assistant Commissioner (Commerce), Patna certifies that Indo Gulf
Corporation Limited has been registered as a dealer under section 13 of the Bihar Sales Tax Act. The certificate is
valid until cancelled.
4. Certificate of Registration No. PTW-911(Central) dated October 28, 1988 from the Assistant Commissioner
(Commerce), Patna certifies that Indo Gulf Corporation Limited has been registered as a dealer under section 7 (1)
/ (2) of the Central Sales Tax Act, 1956. The certificate is valid until cancelled.
5. Memo No. 179(CD-107) dated March 10, 2005 from the Assistant Commissioner Commercial Taxes, Corporate
division allots 11 digit Registration Certificate No. under different acts to Indo Gulf Fertilisers Limited. (State Act No-
19200320166, C.S.T Act no-19200320263, Vat No-1920032069).
6. Certificate of Registration No. BH-II 3710 dated February 23, 2000 from the Sales Tax Officer, Bhubaneswar certifies
that Indo Gulf Corporation Limited has been registered as a dealer under section 9-A of the Orissa Sales Tax Act,
1947. The certificate is valid until cancelled.
7. Certificate of Registration No. BHC II-2894 (Central) dated February 23, 2000 from the Sales Tax Officer, Bhubaneswar
certifies that Indo Gulf Corporation Limited has been registered as a dealer under section 7 (2) of the Central Sales
Tax Act, 1956. The certificate is valid until cancelled.
8. Certificate of Registration No. DG-1176 (R) dated February 7, 2001 from the Assistant Commissioner, Deoghar
certifies that Indo Gulf Corporation Limited has been registered as a dealer under section 14 of the Bihar Finance
Act, 1981. The certificate is valid until May 31, 2008.
9. Certificate of Registration No. DG 1849 (Central) dated February 7, 2001 from the Assistant Commissioner, Deoghar
certifies that Indo Gulf Corporation Limited has been registered as a dealer under section 7(1)/ (2) of the Central
Sales Tax Act, 1956. The certificate is valid until cancelled.
10. Permanent Account Number-AABC10553N for Indo Gulf Fertilisers Limited from Commissioner of Income Tax, Lucknow.
11. Letter dated May 5, 2003 from the Income Tax Officer, TDS-VI, Lucknow allots LKNI05013B as Tax Deduction
Account Number under section 203 A of the Income Tax Act, 1961 to Indo Gulf Fertilisers Limited.
12. Certificate of Registration S. Tax/ C & F-2-26/97 from the Assistant Commissioner, Central Excise, Lucknow certifies
that Indo Gulf Fertilizers and Chemicals Corporation Limited is certified to have been registered with the Central
Excise Department for collecting Service Tax on C & F Agent. The certificate is valid till the holder carries on the
activity for which the certificate has been issued.
13. Certificate of Registration S. Tax/TPT-33/57/98 from the Assistant Commissioner, Central Excise, Lucknow certifies
that Indo Gulf Fertilizers and Chemicals Corporation Limited is certified to have been registered with the Central
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ADITYA BIRLA NUVO LIMITED
Excise Department for collecting Service Tax on Goods Transport. The certificate is valid till the holder carries on the
activity for which the certificate has been issued.
14. Letter from the Income Tax Department dated May 5, 2006 to Indo Gulf Fertilisers Limited allots LKNA06647E as
the Tax Deduction Account Number under the Income Tax Act, 1961.
15. Certificate of Registration No. LK-0244305 dated February 2, 1990 from the Sales Tax Officer certifies that the
Company has been registered under section 8 (a) of the Uttar Pradesh Sales Tax Act, 1948.
16. Certificate from Assistant Commissioner (Trade Tax), Rudrapur grants TIN 05004455138.
17. Registration No. AABCI0553NXM001 dated February 27, 2003 from Assistant Commissioner of Central Excise
certifying that Indo Gulf Fertilisers Limited is registered for manufacturing of excisable goods is valid till the registrant
carries on the activity for which it has been issued or surrenders it or till it is revoked or suspended.
18. Certificate of Registration No. LK 5139286 dated July 27, 1984 from the Sales Tax Officer certifies that Indo Gulf
Fertilizers and Chemicals Corporation Limited has been registered as a dealer under section 7 (1)/ 7 (2) of the
Central Sales Tax Act, 1956. The certificate is valid until cancelled.
West Bengal
Rajashree Syntex
1. Central Excise Registration. No. AAACI 1747HXM 004 from Commissioner, Central Excise, under Custom and
Central Excise Rules, is valid till the registrant carries on the activity for which it has been issued or surrenders it
or till it is revoked or suspended.
2. Memo No. 447/CD-2011 dated march 14, 2005 from the Assistant Commissioner Commercial Taxes, Corporate
division allots 11 digits Registration Certificate No. under different acts. (State Act No. 19200281172, C.S.T Act No.
19200281269, Vat No-19200281075)
Jayshree Textiles
1. Registration Certificate No: AAACI1747HXM001 dated February 27 , 2006 from Assistant Commissioner of Central
Excise certifying that Aditya Birla Nuvo Limited- Unit Jay Shree Textiles is registered for manufacturing of excisable
goods is valid till the registrant carries on the activity for which it has been issued or surrenders it or till it is revoked
or suspended.
2. Memo No. 447/CD-2011 dated march 14, 2005 issued by the Assistant Commissioner, Commercial Taxes, Corporate
division allotting 11 digit Registration Certificate No. (State Act No-19200281172, C.S.T Act No. 19200281269, Vat
No. 19200281075).
3. Provisional Order dated September 20, 2006 from the Inspector of Boilers for use of water tube boilder with
registered no WBL 11314.
Gujarat
Indian Rayon, Veraval
1. Central Excise Registration Certificate (Registration No. AAACI1747HXM007) dated January 17, 2006 from the
Assistant Commissioner of Central Excises certifying that Aditya Birla Nuvo Limited is registered for Manufacturing
of Excisable goods at Veraval is valid till the Registrant carries on the activity for which it has been issued or
surrenders it or till it is revoked or suspended.
2. VAT Certificate No. 24121200267 dated September 28, 2005 from Sales Tax Officer, Veraval issuing VAT Registration
No. in replacement of Sales Tax No. 1212002676 dated July 1,2002 under Gujarat Sales Tax, Act 1969.
3. Certificate of Entitlement dated August 1, 2006 from the Deputy Commissioner of Commercial Taxes, Junagadh
certifies that the amount of incentive granted under the Exemption Certificate was Rs. 9198.09 lacs and the period
for incentive granted under the Exemption Certifcate is from July 1, 1997 to March 24, 2007.
4. Certificate of Registration dated September 28, 2005 from the Sales Tax Officer, Junagadh certifies that Aditya Birla
Nuvo Limited has been registered as a dealer under Section 7 (1) and 7 (2) of the Central Sales Tax Act, 1956.
Central Sales Tax. Number allotted to the Company is 24621200267.
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Karnataka
Madura Garments
1. Central Excise Registration Certificate (Registration No. AAACI1747HXM012) dated January 6, 2006 from the Assistant
Commissioner of Central Excises certifying that Aditya Birla Nuvo Limited (Madura Garments Division) is registered
for the manufacturing of excisable goods and is valid till the Registrant carries on the activity for which it has been
issued or surrenders it or till it is revoked or suspended.
2. Provisional VAT Registration (Tax identification no 29540051319) dated March 23, 2003 issued by the Deputy
Commissioner of Commercial Taxes to Madura Garments and Rayon Divisions registering it provisionally for VAT.
Pending Applications
1. Application for renewal to operate industry under the Water (Prevention and Control of Pollution) Act, 1974 and the
Air (Prevention and Control of Pollution) Act, 1981 for the Hi-Tech Carbon unit at Gummidipoondi.
2. License under the Factories Act, 1948 for the Unit Rajashree gases. Certificate No. 663/F/LI dated March 31, 1995
from Assistant Director, Factories, Uttar Pradesh certifies that the unit Rajashree gases has applied for license
under the Factories Act, 1948 and the same is pending/being considered.
3. Letter dated November 25, 2005 from Madura Garments Division of the Company to the VAT Officer, requesting to
issue the new VAT registration certificate in the name of Aditya Birla Nuvo Limited.
4. Application dated May 17, 2006 to the member secretary, West Bengal pollution control board for renewal of
consent to operate (Jaya Shree Textiles) under section 25 and 26 of Water (Prevention and Control of Pollution)
Act, 1974.
5. Application dated July 3, 2006 in Form B. No.1 to the Inspector of Boilers for inspection of and the grant of a
certificate for the boiler with registered No. WBL 11199.
6. Form No. 2, application for registration and grant or renewal of license No. 6199 for Rajashree Syntex.
7. Letter from the factory manager dated July 21, 2000 to the Registration Officer and the Deputy Labour Commissioner
for the amendment in the registration certificate under the Contract Labour and Regulation Act, 1970.
8. Application for renewal of certificate of registration N-84-CAL/91-93 to carry on the business of selling fertilizers in
manufacturing/wholesale.
9. Application for renewal of Registration Certificate No. R-138/KOL/2003-2006 (Mfg) dated September 15, 2003 issued
by the Registering Authority, West Bengal for sale of fertiliser.
10. Application forms 4 B for renewal of factory License No. SBR-109 for one year from January 1, 2007 to December
31, 2007 for Hi-Tech Carbon Unit at Renukoot.
346
ADITYA BIRLA NUVO LIMITED
STATUTORY AND OTHER INFORMATION
Authority for the Issue
Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on September 11, 2006
it has been decided to make the rights offer to the Equity Shareholders of the Company with a right to renounce.
Prohibition by SEBI
Neither we, nor our Directors or the Promoter Group Companies, or companies with which our Directors are associated
with as directors or promoters, have been prohibited from accessing or operating in the capital markets under any order
or direction passed by SEBI. Further, none of the directors or person(s) in control of the Promoters have been prohibited
from accessing the capital market under any order or directon passed by SEBI. Further none of the Promoters, their
relatives, the Company, group companies has been declared as wilful defaulters by RBI / Government authorities.
Eligibility for the Issue
Our Company is an existing company registered under the Companies Act whose Equity Shares are listed on the BSE
and NSE. It is eligible to offer this Issue in terms of Clause 2.4.1(iv) of the SEBI (DIP) Guidelines.
Disclaimer Clause
AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND
EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS
DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED / 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 THIS DRAFT LETTER OF OFFER.
THE LEAD MANAGER ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED AND DSP MERRILL LYNCH LIMITED
HAS CERTIFIED THAT THE DISCLOSURES MADE IN THIS DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE
AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE
FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR
MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE
ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF
ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE
DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS
BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGERS ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED
AND DSP MERRILL LYNCH LIMITED HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED
SEPTEMBER 22, 2006 WHICH READS AS FOLLOWS:
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL
DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER MATERIALS MORE PARTICULARLY
REFERRED TO IN THE ANNEXURE HERETO IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER
OF OFFER 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, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED
IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY;
WE CONFIRM THAT:
a) THE DRAFT LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS,
MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES,
INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY
IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH;
347
c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO
ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO INVESTMENT IN THE
PROPOSED ISSUE;
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT LETTER OF
OFFER ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID; AND
4. WE CERTIFY THAT WRITTEN CONSENT FROM SHAREHOLDERS HAS BEEN OBTAINED FOR INCLUSION OF
THEIR SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES
PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED/
SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING
THE DRAFT LETTER OF OFFER WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD
AS STATED IN THE DRAFT LETTER OF OFFER – NOT APPLICABLE.
5. IF UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL
THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE.
The filing of the Draft Letter of Offer does not, however, absolve the Company from any liabilities under section 63 or
section 68 of the Companies Act or from the requirement of obtaining such statutory or other clearance 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 Managers any irregularities or lapses in this Letter of Offer.
Caution
The Company and the Lead Managers accept no responsibility for statements made otherwise than in this Letter of Offer
or in any advertisement or other material issued by the Company or by any other persons at the instance of the
Company and anyone placing reliance on any other source of information would be doing so at his own risk.
The Lead Managers and the Company shall make all information available to the Equity Shareholders and no selective
or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including
at presentations, in research or sales reports etc. after filing of this Letter of Offer with SEBI.
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 Mumbai,
India only.
The distribution of the Letter of Offer and the Issue of Equity Shares on a rights basis to persons in certain jurisdictions
outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons in whose possession this
Letter of Offer may come are required to inform themselves about and observe such restrictions. Any disputes arising out
of this issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only.
No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that
purpose, except that this Letter of Offer has been filed with SEBI for observations and SEBI has given its observations.
Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and this Letter of
Offer may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such
jurisdiction. Neither the delivery of this Letter of Offer nor any sale hereunder, shall under any circumstances create any
implication that there has been no change in our affairs from the date hereof or that the information contained herein is
correct as of any time subsequent to this date.
The Draft Letter of Offer was filed with SEBI, World Trade Centre, Cuffe Parade, Mumbai 400 005, for its observations.
After SEBI gives its observations, the Letter of Offer was filed with the Designated Stock Exchange as per the provisions
of the Act.
United States Restrictions
NEITHER THE RIGHTS ENTITLEMENTS NOR THE EQUITY SHARES THAT MAY BE PURCHASED PURSUANT THERETO
HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
ANY U.S. STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED
348
ADITYA BIRLA NUVO LIMITED
WITHIN THE UNITED STATES OF AMERICA OR THE TERRITORIES OR POSSESSIONS THEREOF (THE “UNITED
STATES” OR THE “U.S.”) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, “US PERSONS” (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)), EXCEPT IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE RIGHTS REFERRED TO IN THIS LETTER OF OFFER
ARE BEING OFFERED IN INDIA, BUT NOT IN THE UNITED STATES. THE OFFERING TO WHICH THIS LETTER OF
OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY
SHARES OR RIGHTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY
ANY OF THE SAID SHARES OR RIGHTS. ACCORDINGLY, THIS LETTER OF OFFER SHOULD NOT BE FORWARDED TO
OR TRANSMITTED IN OR INTO THE UNITED STATES AT ANY TIME, EXCEPT IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NEITHER THE COMPANY NOR ANY PERSON ACTING
ON BEHALF OF THE COMPANY WILL ACCEPT SUBSCRIPTIONS FROM ANY PERSON, OR THE AGENT OF ANY
PERSON, WHO APPEARS TO BE, OR WHO THE COMPANY OR ANY PERSON ACTING ON BEHALF OF THE COMPANY
HAS REASON TO BELIEVE IS, A RESIDENT OF THE UNITED STATES AND TO WHOM AN OFFER, IF MADE, WOULD
RESULT IN REQUIRING REGISTRATION OF THIS LETTER OF OFFER WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION. THE COMPANY IS INFORMED THAT THERE IS NO OBJECTION TO A UNITED STATES
SHAREHOLDER SELLING ITS RIGHTS IN INDIA. RIGHTS MAY NOT BE TRANSFERRED OR SOLD TO ANY U.S.
PERSON.
European Economic Area Restrictions
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive at
any relevant time (each, a “Relevant Member State”) no offer of the Equity Shares is or will be made by the Company (or
any person on its behalf) to any person within a Relevant Member State at any time and it is a condition of the offer of
the Equity Shares that investors certify that:
1. they did not receive the Letter of Offer from the Company while they were within a Relevant Member State;
2. they acknowledge that the Company has not authorised the making of any offer of the Equity Shares in a Relevant
Member State; and
3. if notwithstanding the forgoing they are situated in a Relevant Member State, they:
(a) are a legal entity which is authorised or regulated to operate in the financial markets or, if not so authorised
or regulated, whose corporate purpose is solely to invest in securities;
(b) are a legal entity which has two or more of (1) an average of at least 250 employees during the last financial
year; (2) a total balance sheet of more than •43,000,000 and (3) an annual net turnover of more than
•50,000,000, as shown in its last annual or consolidated accounts; or
(c) are an investor in the existing equity shares and are applying to acquire new Equity Shares for a total
consideration of at least •50,000.
For the purposes of this provision, the expression an “offer” in relation to any Equity Shares in any Relevant Member
State means the communication in any form and by any means of sufficient information on the terms of the offer and the
Equity Shares so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be
varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the
expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each
Relevant Member State.
Designated Stock Exchange
The Designated Stock Exchange for the purposes of this Issue will be the BSE.
Disclaimer Clause of the BSE
The Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated October 4, 2006 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 scrutinized this Letter of Offer for its limited internal purpose of
deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner: (i)
warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer; or (ii) warrant that
349
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 acquires any securities of this Company may do so
pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever
by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/
acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.
Disclaimer Clause of the NSE
As required, a copy of this Letter of Offer has been submitted to National Stock Exchange of India Limited (“NSE”). NSE
has given vide its letter dated October 5, 2006 permission to the Issuer to use the Exchange’s name in this Letter of Offer
as one of the Stock Exchanges on which the 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 the
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 the Issuer’s
securities will be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial
or other soundness of the Issuer, its Promoters, its management or any scheme or project of the Issuer.
Every person who desires to apply for or otherwise acquire any securities of the 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.
Impersonation
As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1)
of section 68A of the Companies Act which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any
shares therein, or 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”
Dematerialised dealing
The Company has entered into agreements dated October 16, 2002 and November 4, 2000 with National Securities
Depository Limited (NSDL) and the Central Depository Services (India) Limited respectively, and its Equity Shares bear
the ISIN INE069A01017.
Listing
The existing Equity Shares are listed on the BSE and NSE. The Company has made applications to the BSE and NSE
for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this Letter
of Offer. The Company has received in-principle approvals from BSE and NSE by letters dated October 4, 2006 and
October 5, 2006, respectively. The Company will apply to the BSE and NSE for listing of the Equity Shares to be issued
pursuant to this Issue.
If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock Exchanges
mentioned above, within 42 days from the Issue Closing Date, the Company shall forthwith repay, without interest, all
monies received from applicants in pursuance of this Letter of Offer. If such money is not paid within eight days after the
Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default
shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed
under the section 73 of the Act.
Consents
Consents in writing of the Auditors, Lead Managers, Legal Advisors, Registrar to the Issue and Banker to the Issue to act
in their respective capacities have been obtained and filed with SEBI, along with a copy of the Letter of Offer and such
consents have not been withdrawn up to the time of delivery of this Letter of Offer for registration with the stock
exchanges.
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ADITYA BIRLA NUVO LIMITED
M/s. Khimji & Kunverji & Co., Chartered Accountants and M/s. S. R. Batliboi & Co., Chartered Accountants, the Auditors
of the Company have given their written consent for the inclusion of their Report in the form and content as appearing in
this Letter of Offer and such consents and reports have not been withdrawn up to the time of delivery of this Letter of
Offer for registration with the stock exchanges.
M/s. Khimji & Kunverji & Co., Chartered Accountants have given their written consent for inclusion of tax benefits in the
form and content as appearing in this Letter of Offer, accruing to the Company and its members.
To the best of our knowledge there are no other consents required for making this Issue. However, should the need arise,
necessary consents shall be obtained by us.
Expert Opinion, if any
Except in the sections titled “Financial Statements” and “Statement of Tax Benefits” on page 8 and 30 of this Letter of
Offer, no expert opinion has been obtained by the Company in relation to this Letter of Offer.
Expenses of the Issue
The expenses of the Issue payable by the Company including brokerage, fees and reimbursement to the Lead Managers,
Auditors, Legal Advisors, Registrar to the Issue, printing and distribution expenses, publicity, listing fees, stamp duty and
other expenses are estimated at Rs. 8.60 crore (around 1.12% of the total Issue size) and will be met out of the proceeds
of the Issue.
In Rs. Crore
S. No. Particulars Amount % of net % of total
proceeds of expenses of
the Issue the issue
1. Fees of the Lead Managers, 5.42 0.71% 63.02%
Registrar to the Issue, Legal Advisors,
Auditors and other advisors
2. Printing and stationery, distribution, postage, etc. 1.09 0.14% 12.67%
3. Advertisement and marketing expenses 0.10 0.26% 23.14%
4. Other expenses 1.99 0.01% 1.16%
Total 8.60 1.13% 100%
Fees Payable to the Lead Managers to the Issue
The fees payable to the Lead Managers to the Issue are set out in the engagement letters issued by the Company to the
Lead Managers and the Memorandum of Understanding entered into by the Company with the Lead Managers, copies
of which are available for inspection at the registered office of the Company.
Fees Payable to the Registrar to the Issue
The fee payable to the Registrar to the Issue is as set out in the relevant documents, copies of which are available for
inspection at the Registered Office of the Company.
Previous Issues by the Company
The Company has not undertaken any previous public or rights issue during the last five years.
Date of listing on the Stock Exchange
The Equity Shares of our Company were listed on December 8, 1987 on the BSE. Thereafter, the Equity Shares were
listed on the NSE on September 5, 1995.
We have voluntarily delisted from Ahmedabad Stock Exchange Limited, the Calcutta Stock Exchange Association Limited
and the Delhi Stock Exchange Association Limited in accordance with the provisions of the SEBI (Delisting of Securities)
Guidelines, 2003.
351
Issues for consideration other than cash
The Company has not issued Equity Shares for consideration other than cash or out of revaluation reserves, other than
issuances mentioned in the section “Capital Structure” on page 16 of the Letter of Offer.
Outstanding Debentures or Bonds and Preference Shares
The Company has no outstanding debentures or bonds and preference shares.
Option to Subscribe
Other than the present Issue, the Company has not given any person any option to subscribe to the Equity Shares of the
Company.
Stock Market Data for Equity Shares
As our Company’s shares are actively traded on the BSE and NSE, our Company’s stock market data have been given
separately for each of these Stock Exchanges.
The high and low closing prices recorded on the BSE and NSE for the preceding three years and the number of Equity
Shares traded on the days the high and low prices were recorded are stated below:
BSE
Year High Date of Volume Low Date of Volume Average
ending (Rs.) High on date (Rs.) Low on date price
March 31, of high of low for the
(no. of (no. of year
shares) shares) (Rs.)
2004 279.9 December 30, 2004 53899 74.5 April 1, 2005 22165 174.50
2005 469 March 11, 2005 14405 180 May 17, 2004 71751 290.65
2006 777 February 7, 2005 15447 388.5 May 2, 2005 17890 576.97
April 1, 2006 1123.92 November 30, 2006 28435 531.39 June 13, 2006 15041 789.76
to November
30, 2006
The average price has been computed based on the average of the daily high and low price of Equity Shares.
NSE
Year High Date of Volume Low Date of Volume Average
ending (Rs.) High on date (Rs.) Low on date price
March 31, of high of low for the
(no. of (no. of year
shares) shares) (Rs.)
2004 278.7 Decemeber 30, 2003 105256 75.25 April 1, 2003 26759 174.54
2005 462.8 February 28, 2005 127039 181 May 17, 2004 98905 290.83
2006 776.7 February 7, 2006 17759 387 May 2, 2005 38068 577.72
April 1, 2006 1122.62 November 30, 2006 79830 523.32 June 13 , 2006 48764 790.94
to November
30, 2006
The average price has been computed based on the average of the daily high and low price of Equity Shares.
352
ADITYA BIRLA NUVO LIMITED
The high and low prices and volume of Equity Shares traded on the respective dates during the last six months is as
follows:
BSE
Month, High Date of Volume Low Date of Volume Average
Year (Rs.) High on date (Rs.) Low on date price
of high of low for the
(no. of (no. of year
shares) shares) (Rs.)
May 06 1000 May 5, 2006 31094 695.35 May 31, 2006 30771 835.07
June 06 798 June 30, 2006 9768 510.05 June 9, 2006 46611 644.57
July 06 739.95 July 4, 2006 6707 625.1 July 24, 2006 8340 682.35
August 2006 859 August 22, 2006 40296 702 August 2, 2006 16445 744.87
September 2006 871 September 29, 2006 79940 795.5 September 01, 2006 3110 826.63
October 2006 983.95 October 31, 2006 31024 850 October 19, 2006 4165 896.81
November 1123.92 November 30, 2006 28435 958.79 November 03, 49418 1019.66
2006 2006
In the event the high and low price of the Equity Shares are the same on more than one day, the day on which there
has been higher volume of trading has been considered for the purposes of this section.
NSE
Month, High Date of Volume Low Date of Volume Average
Year (Rs.) High on date (Rs.) Low on date price
of high of low for the
(no. of (no. of year
shares) shares) (Rs.)
May 2006 980 May 5, 2006 22720 683 May 31, 2006 59112 839.64
June 2006 761.1 June 28, 2006 21160 500 June 9, 2006 72993 643.80
July 2006 775.4 July 4, 2006 10078 601.1. July 24, 2006 162568 683.36
August 2006 862 August 25, 2006 7201 706 August 2, 2006 31593 745.95
September 2006 871 September 29, 2006 41475 790 September 25, 2006 13191 828.16
October 2006 985 October 31, 2006 118024 819.6 October 16, 2006 13292 898.20
November 1122.62 November 30, 2006 79830 960.38 November 03, 35308 1020.89
2006 2006
* In the event the high and low price of the Equity Shares are the same on more than one day, the day on which there
has been higher volume of trading has been considered for the purposes of this section.
The market price was Rs. 812.50 on BSE on September 12, 2006, the trading day immediately following the day on
which Board meeting was held to finalize the offer price for the Issue.
The market price was Rs. 813.50 on NSE on September 12, 2006, the trading day immediately following the day on
which Board meeting was held to finalize the offer price for the Issue.
There have not been any transactions in Equity Shares by the Promoters, the promoter group and directors of the
Company during the last six months from the date of this Letter of Offer other than those mentioned in the section
“Capital Structure” on page 16 of the Letter of Offer.
353
Important
This Issue is pursuant to the resolution passed by the Board of Directors at its meetings held on September 11,
2006.
This Issue is applicable to those Equity Shareholders whose names appear as beneficial owners as per the list to
be furnished by the depositories in respect of the shares held in the electronic form and on the Register of
Members of the Company at the close of business hours on the Record Date i.e. December 8, 2006, after giving
effect to the valid share transfers lodged with the Company upto the Record Date i.e. December 8, 2006.
Your attention is drawn to the section entitled ‘Risk Factors’ appearing on page viii of this Letter of Offer.
Please ensure that you have received the Composite Application Form (“CAF”) with this Letter of Offer.
Please read the Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the
CAF. The instructions contained in the CAF are, each an integral part of this Letter of Offer and must be carefully
followed. An application is liable to be rejected for any non-compliance of the provisions contained in the Letter of
Offer or the CAF.
All enquiries in connection with the Letter of Offer or CAF should be addressed to the Registrar to the Issue,
quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAF.
All information shall be made available to the Investors by the Lead Managers and the Issuer, and no selective or
additional information would be available by them for any section of the Investors in any manner whatsoever
including at road shows, presentations, in research or sales reports, etc.
The Lead Managers and the Company shall update the Draft Letter of Offer and keep the public informed of any
material changes till the listing and trading commences.
Issue Schedule
Issue Opening Date : December 26, 2006
Last date for receiving requests for split forms : January 9, 2007
Issue Closing Date : January 25, 2007
Allotment Letters / Refund Orders
The Company will issue and dispatch letters of allotment/ share certificates/ demat credit 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 42 days
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 shall pay that money with interest as stipulated under Section 73 of the Companies Act.
Applicants residing at 15 centers where clearing houses are managed by the Reserve Bank of India (RBI), will get
refunds through ECS only (Electronic Clearing Service) except where Applicants are otherwise disclosed as applicable/
eligible to get refunds through direct credit and RTGS.
In case of those Applicants who have opted to receive their Rights Entitlement in dematerialized form using electronic
credit under the depository system, and advice regarding their credit of the Equity Shares shall be given separately.
Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post
intimating them about the mode of credit of refund within 42 working days of closure of the Issue.
In case of those Applicants who have opted to receive their Rights Entitlement in physical form and 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 approved by the companies Law Board under Section 113 of the Companies
Act or other applicable provisions, if any. Allottees are requested to preseve such letters of allotment, which would be
exchanged later for the share certificates. For more information please refer to the section titled ‘Letters of Allotment/
Share Certificates/Demat Credit’ on page no. 369 of this Letter of Offer.
The letter of allotment / refund order exceeding Rs.1,500 would be sent by registered post/speed post to the sole/first
Applicant’s registered address. Refund orders up to the value of Rs.1,500 would be sent under certificate of posting.
Such refund orders would be payable at par at all places where the applications were originally accepted. The same
would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first Applicant. Adequate funds would
be made available to the Registrar to the Issue for this purpose.
354
ADITYA BIRLA NUVO LIMITED
Promise v. Performance
1. The Company
Rights Issue:
We made rights issue of 85,87,500 – 13.5% 11th series secured fully convertiable debentures of Rs. 100/- each for cash
at par aggregating to Rs. 85.87 crores to equity shareholders. The object of the issue was to provide for a part of the
finance required for the companies capital expenditure programmes, inter alia, for setting up of plants to manufacture
80,000 tonne per annum (“TPA”) of white cement in Rajasthan, and to manufacture 20,000 TPA of Carbon Black, 8,000
TPA of Tiles and 12,000 TPA of sanitaryware all in U. P. installation of 12.5 MW captive plant for Cement unit in
Karnataka, making investment by way of Equity Shares in Indo Gulf Fertilizers & Chemicals Corporation Limited, and
modernization, renovation and addition of balancing equipment in its existing units etc.
The details of which are as hereunder:
Issue opened on : December 10, 1986
Issue closed on : January 10, 1987
There were no projections in the prospectus issued by the Company.
Rights Issue:
We made a rights issue of 17,50,000 14% 13th series secured redeemable non-convertible debentures of Rs. 100/- each
for cash at par aggregating Rs. 17.50 crores. The object of issue of the Debentures is to provide for a part of the finance
for the Company’s long term working capital requirements.
The details of which are as hereunder:
Issue opened on : June 5, 1989
Issue closed on : July 8, 1989
There were no projections in the letter of offer issued by the Company.
Rights Issue:
Aditya Birla Nuvo Limited (formerly Indian Rayon and Industries Limited) made a rights issue in 1993 to its shareholders
of 5,447,400 zero interest secured fully convertible debentures of Rs. 170 each and 1,620,000 zero interest secured fully
convertible debentures of Rs. 200 each, both for cash at par, aggregating Rs. 125.01 crores and 7,227,400 number
16.5% fifteenth series secured redeemable non-convertible debentures of Rs. 300 each with detachable warrants for
cash at par aggregating Rs. 216.82 crores.
Issue Open date Issue Close date Objects of the Issue Actual Performance achieved
September 14, 1993 October 11, 1993 a. To set up a 50000 TPA sea The sea water magnesia plant
water magnesia project at with an installed capacity of 50,000
an estimated cost of TPA, was commissioned and
Rs 240.40 crores. commercial production started
b. To expand the capacity towards the end of February 1998.
of the companies carbon Due to adverse market conditions,
black division from the plant was written off in the
20,000 TPA to 40,000 TPA year 2000. The expansion of the
at an estimated cost of capacity of the company’s carbon
Rs 72 crores, and normal black division was completed well
capital expenditure for within the promised time period.
modernization estimated There were no cost over runs.
at about Rs. 83 crores.
355
2. Group Companies
Hindalco Industries Limited
Details of the last public/ rights issue made
The company issued 231,521,031 equity shares of Re. 1 each pursuant to a letter of offer dated November 25, 2005 on
a rights basis.
Issue opened on : December 19, 2005
Issue closed on : January 18, 2006
The proceeds of the issue were applied for the objects of the issue as disclosed in the letter of offer for the said issue,
i.e. expansion of existing facilities at Muri, Belgaum, and Hirakud, undertaking greenfields projects for alumina and
aluminium facilities. The proceeds of the rights issue at 25% of the issue price amounting to Rs. 5,557 million have been
utilized for the purpose of defraying related issue expenses amounting to Rs. 366 million and subscription of shares of a
subsidiary company to the tune of Rs. 149 million while the balance amount is temporarily invested in short term liquid
securities.
Grasim Industries Limited
Grasim Industries Limited made a rights issue of 10,416,666 – 12.5% secured redeemable partly convertible debentures
(II series) of face value Rs. 120 aggregating to a value of Rs. 125 crores to its equity shareholders in 1989.
Issue Open date Issue Close date Objects of the Issue Actual Performance achieved
September 27, 1989 October 26, 1989 To partly finance a gas based The company’s sponge iron
sponge iron project with a facility at Salav District, Raigad
licensed capacity of six lakh (Maharashtra) – Vikram Ispat
TPA and if in line with Division, having an annual
Government’s licensing policy, capacity of 750,000 tonnes was
to expand capacity upto seven commissioned in March, 1993
and a half lakh TPA. The project within the scheduled time period.
was to be located at Salav District, The current capacity is 900,000
Raigad (Maharashtra) and TPA.
estimated to cost Rs. 400 crores.
Bihar Caustics & Chemicals Limited
Details of the last public/ rights issue made
The company issued 1,56,00,000 equity shares of Rs. 10 each pursuant to a letter of offer dated January 30, 2003 on a
rights basis in the ratio of 2:1. The object of the issue was to part finance the coal based captive power plant and meet
the expenses of the issue.
Issue opened on : February 18, 2003
Issue closed on : April 18, 2003
Tanfac Industries Limited
Tanfac Industries Limited has not made any public or rights issue in the last three years.
Ultra Tech Cement Limited
Ultra Tech Cement Limited has not made any public or rights issue in the last three years.
Investor Grievances and Redressal System
The Company has adequate arrangements for redressal of Investor complaints. Well-arranged correspondence system
developed for letters of routine nature. The share transfer and dematerialization for the Company is being handled by
inhouse registrar and share transfer agent. Letters are filed categorywise after having attended to. Redressal norm for
response time for all correspondence including shareholders complaints is 15 days.
356
ADITYA BIRLA NUVO LIMITED
Status of Complaints
(a) No. of shareholders complaints as of August 31, 2006: 13
(b) Total number of complaints received during last financial year (2005-2006): 53
(c) Total number of complaints received during current financial year (2006-2007): 13
(d) Status of the complaints: Out of the 13 complaints received our Company in fiscal 2007, we have resolved 9
complaints and in 4 complaints we have sought additional information from the complainants.
(e) Time normally taken by it for disposal of various types of Investor grievances: 3 - 4 days
Investor Grievances arising out of this Issue
The Company’s investor grievances arising out of the Issue will be handled by Mr. Devendra Bhandari, Compliance
Officer and Company Secretary, and M/s. Intime Spectrum Registry Limited, who are the Registrar to the Issue. The
Registrar will have a separate team of personnel handling only our post-Issue correspondence.
The agreement between us and the Registrar will provide for retention of records with the Registrar for a period of at
least one year from the last date of dispatch of Letter of Allotment/ share certificate / warrant/ refund order to enable the
Registrar to redress grievances of Investors.
All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no.,
name and address, contact telephone / cell numbers, email id of the first applicant, number and type of shares applied
for, Application Form serial number, amount paid on application and the name of the bank and the branch where the
application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details
of the Renouncee should be furnished.
The average time taken by the Registrar for attending to routine grievances will be 15 days from the date of receipt. In
case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the
Registrar to attend to them as expeditiously as possible. We undertake to resolve the Investor grievances in a time bound
manner.
Investors may contact the Compliance Officer / Company Secretary in case of any pre-Issue/ post -Issue related problems
such as non-receipt of letters of allotment/share certificates/demat credit/refund orders etc. His address is as follows:
Mr. Devendra Bhandari
Aditya Birla Nuvo Limited
Aditya Birla Centre, ‘A’ Wing, 4th Floor,
S.K. Ahire Marg, Mumbai – 400 030.
Tel: + 91 22 24995000/ 66525000
Fax: + 91 22 24995821/ 66525821
Email: [email protected]
Changes in Auditors during the last three years
We changed our Statutory Auditor in the financial year 2003-04. We have appointed M/s. S. R. Batliboi & Co in place of
Lodha & Co., Chartered Accountants.
Capitalisation of Reserves or Profits
The Company has not capitalized any of its reserves or profits for the last five years other than those mentioned in the
section “Capital Structure” on page 16 of the Letter of Offer.
Revaluation of Fixed Assets
There has been no revaluation of the Company’s fixed assets for the last five years.
357
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the issue amount, the Company shall forthwith
refund the entire subscription amount received within 42 days from the date of the Issue. If there is a delay beyond eight
days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest for the
delayed period as prescribed under Section 73 of the Companies Act.
358
ADITYA BIRLA NUVO LIMITED
TERMS OF THE ISSUE
The Equity Shares, now being issued, are subject to the terms and conditions contained in this Letter of Offer, the
enclosed Composite Application Form (“CAF”), the Memorandum and Articles of Association of the Company, approvals
from the RBI, the provisions of the Companies Act, guidelines issued by SEBI, guidelines, notifications and regulations for
issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies
from time to time, terms and conditions as stipulated in the allotment advice or letter of allotment or security certificate
and rules as may be applicable and introduced from time to time.
Authority for the Issue
This Issue is being made pursuant to the resolution passed by the Board of Directors of the Company under Section
81(1) of the Companies Act at its meeting held on September 11, 2006.
Basis for the Issue
The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear
as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the
electronic form and on the register of members of the Company in respect of Equity Shares held in the physical form at
the close of business hours on the Record Date, i.e., December 8, 2006 fixed in consultation with the Stock Exchanges.
The Equity Shares are being offered for subscription in the ratio of two Equity Shares for every 17 Equity Shares held by
the Equity Shareholders.
Ranking of Equity Shares
The Equity Shares allotted pursuant to this Issue shall be subject the Memorandum and Articles of Association of the
Company and the Companies Act, 1956 and shall rank pari-passu in all respects with the existing Equity Shares of the
Company, including dividend payment. For more details see “Main Provisions of Articles of Association” on page 375 of
this Letter of Offer.
Mode of Payment of Dividend
We shall pay dividend to our shareholders as per the provisions of the Companies Act.
Principal Terms and Conditions of the Issue
Face Value
Each Equity Share shall have the face value of Rs. 10.
Issue Price
Each Equity Share is being offered at a price of Rs. 793 (including a premium of Rs.783).
Rights Entitlement Ratio
As your name appears as beneficial owner in respect of Equity Shares held in the electronic form or appears in the
register of members as an Equity Shareholder of the Company as on December 8, 2006 i.e. Record Date. You are
entitled to the number of Equity Shares as set out in Part A of the enclosed CAF.
The Equity Share are being offered on a rights basis to the existing Equity Shareholders of the Company in the ratio of
two Equity Shares for every 17 Equity Shares held as on the Record Date.
Only upon receipt of the aforesaid details, Rights Entitlement of the claimants shall be determined.
Rights of the Equity Shareholder
Subject to applicable laws, the equity shareholders shall have the following rights:
Right to receive dividend, if declared;
Right to attend general meetings and exercise voting powers, unless prohibited by law;
359
Right to vote on a poll either in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right of free transferability of shares; and
Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and
our Memorandum and Articles of Association.
For a detailed description of the main provisions of our Articles of Association dealing with voting rights, dividend,
forfeiture and lien, transfer and transmission and/or consolidation/splitting, see section titled “Main Provisions of Articles of
Association of the Company” on page 375 of this Letter of Offer.
Market Lot
The market lot for the Equity Shares in dematerialised mode is one. In case of physical certificates, the Company would
issue one certificate for the Equity Shares allotted to one folio (“Consolidated Certificate”).
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the issued amount, the Company shall forthwith
refund the entire subscription amount received within 42 days from the date closure of the Issue. If there is a delay
beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay
interest for the delayed period as prescribed under Section 73 of the Companies Act.
The Issue will become undersubscribed after considering the number of shares applied as per entitlement plus additional
shares. The undersubscribed portion shall be applied for only after the Issue Closing Date. In the event of undersubscription,
the promoters or promoter group intend to apply for additional Equity Shares such that at least 90% of the Issue is
subscribed. As a result of this subscription and consequent allotment, the promoters or promoter group may acquire
shares over and above their entitlement in the Issue, which may result in an increase of the shareholding being above
the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of
additional Equity Shares by the promoter or promoter group, if any, will not result in change of control of the management
of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other
than meeting the requirements indicated in the section on “Objects of the Issue” on page 25 of this Letter of Offer), there
is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments
to the promoter or promoter group, in this Issue, the promoter shareholding in the Company exceeds their current
shareholding. The promoter or promoter group intends to subscribe to such unsubscribed portion as per the relevant
provisions of the law. Allotment to the promoter or promoter group of any unsubscribed portion, over and above their
entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time
relating to continuous listing requirements.
The above is subject to the terms mentioned under the section titled ‘Basis of Allotment’ on page 367 of this Letter of
Offer.
Fractional entitlements
For Equity Shares being offered on rights basis under this Rights issue, if the shareholding of any of the Equity Shareholders
is less than nine Equity Shares or is not in multiples of 17, the fractional entitlement of such holders shall be ignored.
Shareholders whose fractional entitlements are being ignored would be given preferential allotment of ONE additional
share each if they apply for additional shares.
Those Equity shareholders having holding less than nine Equity Shares and therefore entitled to zero Equity Shares
under the Right Issue shall be despatched a CAF with zero entitlement. Such equity shareholders are entitled to apply for
additional Equity Shares. However, they cannot renunciate the same to third parties. CAF with zero entitlement will be
non-negotiable /non-renunciable.
Joint-Holders
Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same
as joint-holders with benefits of survivorship subject to provisions contained in the Articles of Association of the Company.
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ADITYA BIRLA NUVO LIMITED
Terms of payment
Full amount of Rs. 793 shall be payable on Application.
Where an Applicant has applied for additional shares and is allotted lesser number of Equity Shares than applied for, the
excess application money paid shall be refunded. The monies would be refunded within forty two days from the closure
of the Issue, and if there is a delay beyond eight days from the stipulated period, the Company will pay interest on the
monies in terms of Section 73 of the Companies Act.
Nomination facility
In terms of Section 109A of the Companies Act, nomination facility is available in case of Equity Shares. The applicant
can nominate any person who is not an excluded U. S. Person as defined in Regulation S under the U.S. Securities Act
of 1933, as amended, by filling the relevant details in the CAF in the space provided for this purpose.
A sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders being individual(s) may
nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be,
shall become entitled to the Equity Shares. A Person, being a nominee, becoming entitled to the Equity Shares by reason
of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled
if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also
make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the
event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale
of the Equity Share by the person nominating. A transferee will be entitled to make a fresh nomination in the manner
prescribed. When the Equity Share is held by two or more persons, the nominee shall become entitled to receive the
amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on
request at the registered office of the Company or such other person at such addresses as may be notified by the
Company. The Applicant can make the nomination by filling in the relevant portion of the CAF.
Only one nomination would be applicable for one folio. Hence, in case the Shareholder(s) has already registered the
nomination with the Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue
under the same folio. However, new nominations, if any, by the Equity Shareholder(s) shall operate in supersession of the
previous nomination, if any.
In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the
Equity Shares to be allotted in this Issue. Nominations registered with respective depository participant of the Applicant
would prevail. If the applicant requires to change the nomination, they are requested to inform their respective DP.
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 receipt and 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 a rights basis by an Indian company in terms of FEMA and regulation 6 of notification No.
FEMA 20/2000-RB dated May 3, 2000. However, the general permission referred to in the sentence immediately above
is subject to the restrictions described below under “No Offer in the United States”. The Board of Directors may at its
absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of
Equity Shares, payment of dividend etc. to the non-resident Shareholders. The equity shares purchased on a rights basis
by non-residents shall be subject to the same conditions including restrictions in regard to the repatriability as are
applicable to the original equity shares against which equity shares are issued on a right basis.
By virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies (“OCBs”) have been
derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management
(Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, OCBs shall
not be eligible to subscribe to the Equity Shares. The RBI has however clarified in its circular, A.P. (DIR Series) Circular
No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are
permitted to undertake fresh investments as incorporated non-resident entities. Thus, OCBs desiring to participate in this
Issue must obtain prior approval from the RBI. Such approval shall be submitted along with the CAF.
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The Letter of Offer and CAF shall only be dispatched to non-resident Equity Shareholders with registered addresses in
India. The Letter of Offer and CAF should not be forwarded to or transmitted in or into the United States of America or the
territories or possessions thereof at any time or to, or for the account or benefit of, “U.S. Persons” (as defined in
Regulation S under the United States Securities Act of 1933, as amended), except in a transaction exempt from the
registration requirements of the Securities Act.
No Offer in the United States
The rights and the shares of the Company have not been and will not be registered under the United States Securities
Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or
otherwise transferred within the United States or to, or for the account or benefit of, “U.S. Persons” (as defined in
Regulation S under the Securities Act), except in a transaction exempt from the registration requirements of the Securities
Act. The rights referred to in this Letter of Offer are being offered in India but not in the United States of America. The
offering to which this Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any
shares or rights for sale in the United States of America, or the territories or possessions thereof, or as a solicitation
therein of an offer to buy any of the said shares or rights. Accordingly, this Letter of Offer should not be forwarded to or
transmitted in or into the United States of America at any time except in a transaction exempt from the registration
requirements of the Securities Act. Neither the Company nor any person acting on behalf of the Company will accept
subscriptions from any person, or the agent of any person, who appears to be, or who the Company or any person acting
on behalf of the Company has reason to believe is, a resident of the United States of America and to whom an offer, if
made, would result in requiring registration of this Letter of Offer with the United States Securities and Exchange Commission.
The Company is informed that there is no objection to a United States shareholder selling its rights in India. Rights may
not be transferred or sold to any U.S. Person (as defined in Regulation S under the Securities Act).
Procedure for Application
The CAF would be printed in blue ink for all shareholders. Additional separate advise for Non-resident shareholders will
be provided. In case the original CAF is not received by the applicant or is misplaced by the applicant, the applicant may
request the Registrars to the Issue, Intime Spectrum Registry Limited, for issue of a duplicate CAF, by furnishing the
registered folio number, DP ID Number, Client ID Number and their full name and address. Non-resident shareholders
can obtain a copy of the CAF from the Registrars to the Issue, Intime Spectrum Registry Limited by furnishing the
registered folio number, DP ID number, Client ID number and their full name and address. Equity Shares offered to you
either in full or in part in favour of any other person or persons. Such renouncees can only be Indian Nationals/Limited
Companies incorporated under and governed by the Act, statutory corporations/institutions, trusts (unless registered
under the Indian Trust Act), minors (through their legal guardians), societies (unless registered under the Societies
Registration Act, 1860 or any other applicable laws) provided that such trust/society is authorized under its constitution/
bye laws to hold equity shares in a company and cannot be a partnership firm, more than three persons including joint-
holders, HUF, foreign nationals (unless approved by RBI or other relevant authorities) or to any person situated or having
jurisdiction where the offering in terms of this Letter of Offer could be illegal or require compliance with securities laws.
Option to Subscribe
Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in
dematerialised (electronic) form at the option of the applicant. Our Company signed a bipartite agreement with National
Securities Depository Limited (NSDL) and Intime Spectrum Registry Limited on February 25, 1999 and with Central
Depository Services (India) Limited (CDSL) and Intime Spectrum Registry Limited on December 28, 1999, which enables
the Investors to hold and trade in securities in a dematerialised form, instead of holding the securities in the form of
physical certificates.
Utilisation of Issue Proceeds
The Board declares that:
(a) The funds received against this Issue will be transferred to a separate bank account other than the bank account
referred to sub-section (3) of Section 73 of the Companies Act.
(b) Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the balance
sheet of the Company indicating the purpose for which such moneys has been utilised.
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ADITYA BIRLA NUVO LIMITED
(c) Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate separate
head in the balance sheet of the Company indicating the form in which such unutilised moneys have been
invested.
The funds received against this Issue will be kept in a separate bank account and the Company will not have any
access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that
the minimum subscription of 90% of the Issue has been received by the Company.
Undertakings by the Company
(a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily.
(b) 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 will be taken within seven working days of finalization of basis of allotment.
(c) The funds required for dispatch of refund orders/ allotment letters/ certificates by registered post or any other mode
disclosed in the Letter of Offer shall be made available to the Registrar to the Issue.
(d) The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the specified
time.
(e) No further issue of securities affecting equity capital of the Company shall be made till the securities issued/offered
through the Issue are listed or till the application moneys are refunded on account of non-listing, under-subscription
etc.
(f) The Company accepts full responsibility for the accuracy of information given in this Letter of Offer and confirms that
to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in
this Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.
(g) All information shall be made available by the Lead Managers and the Issuer to the Investors at large and no
selective or additional information would be available for a section of the Investors in any manner whatsoever
including at road shows, presentations, in research or sales reports etc.
How to Apply?
Resident Equity Shareholders
Applications should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be
completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the
Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications
as per instructions given in the Letter of Offer.
Non-resident Equity Shareholders
Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be
subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys,
allotment of Equity Shares, issue of letters of allotment/ certificates/ payment of dividends etc.
The CAF consists of four parts:
Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares
Part B: Form for renunciation
Part C: Form for application for renouncees
Part D: Form for request for split application forms
Non-resident Equity Shareholders will be required to represent, inter alia, that they are not excluded U.S. Persons as
such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended.
363
Option available to the Equity Shareholders
The Equity Shareholders will be having the following five options:
(a) Apply for his entitlement in part
(b) Apply for his entitlement in part and renounce the other part
(c) Renounce his entire entitlement
(d) Apply for his entitlement in full
(e) Apply for his entitlement in full and apply for additional Equity Shares
Acceptance of the Issue
You may accept the Issue and apply for the Equity Shares offered, either in full or in part by filling of Part A of the
enclosed CAF and submit the same along with the application money payable to the Bankers to the Issue at any of the
branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing
Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by
the branches of collecting banks can send their CAF together with the cheque drawn on a local bank at Mumbai or
demand draft/pay order payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to
anyone other than the Registrar to the Issue are liable to be rejected.
Renunciation
As an Equity Shareholder, you have the right to renounce your entitlement for the Equity Shares in full or in part in favour
of one or more person(s). Your attention is drawn to the fact that the Company shall not allot and/or register any Equity
Shares in favour of:
More than three persons including joint holders
Partnership firm(s) or their nominee(s)
Minors
Hindu Undivided Family
Any Trust or Society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable
Trust laws and is authorized under its Constitutions to hold Equity Shares of a Company)
The right of renunciation is subject to the express condition that the Board/ Committee of Directors shall be entitled in its
absolute discretion to reject the request for allotment to renouncee(s) without assigning any reason thereof.
Procedure for renunciation
To renounce the whole offer in favour of one renouncee
If you wish to renounce the offer indicated in Part A, in whole, please complete Part B of the CAF. In case of joint holding,
all joint holders must sign Part B of the CAF. The person in whose favour renunciation has been made should complete
and sign Part C of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF.
Renouncee(s) shall not be entitled to further renounce the entitlement in favour of any other person.
To renounce in part/or renounce the whole to more than one person(s)
If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or
more renouncees, the CAF must be first split into requisite number of forms.
Please indicate your requirement of split forms in the space provided for this purpose in Part D of the CAF and return the
entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of
receiving requests for split forms. On receipt of the required number of split forms from the Registrar, the procedure as
mentioned in paragraph above shall have to be followed.
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ADITYA BIRLA NUVO LIMITED
In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the
specimen registered with the Company, the application is liable to be rejected.
Renouncee(s)
The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the Application Form
and submit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date along with the
application money.
Change and/ or introduction of additional holders
If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/are not already a joint
holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall 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.
However, this right of renunciation is subject to the express condition that the Board of Directors of the Company shall be
entitled in its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason
thereof.
Please note that:
Part A of the CAF must not be used by any person(s) other than those in whose favour this Offer has been made.
If used, this will render the application invalid.
Request for split form should be made for a minimum of 100 Equity Shares or in multiples thereof and one Split
Application Form for the balance Equity Shares, if any.
Request by the Equity Shareholder(s) for the Split Application Form should reach the Company on or before
January 9, 2007.
Only the person to whom the Letter of Offer and/or Abridged Letter of Offer has been addressed to and not the
renouncee(s) shall be entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split
again.
Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.
Additional Equity Shares
You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to,
provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favor of
any other person(s). Only depository representing various individual GDR holders, may apply for additional shares
representing intention of those GDR holders who wish to apply for additional shares over their entitlements and also
renounce the entitlement of those GDR holders who have indicated their intention to the depository to renounce their
entitlement. Company would take due care that the GDR holders who have represented to the depository that they would
renounce their entitlement would not be eligible to apply for any additional shares. If you desire to apply for additional
Equity Shares, please indicate your requirement in the place provided for additional shares in Part A of the CAF.
Applications for additional Equity Shares shall be considered and allotment shall be in the manner prescribed under the
section entitled ‘Basis of Allotment’ on page 367 of this Letter of Offer. The renouncees applying for all the Equity Shares
renounced in their favour may also apply for additional Equity Shares.
In case of application for additional Equity Shares by Non-Resident Equity Shareholders, the allotment of additional
securities will be subject to the permission of the RBI.
Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment
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would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.
The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following
options with regard to the Equity Shares offered, using the enclosed CAF:
Option Available Action Required
Accept whole or part of your entitlement without Fill in and sign Part A (All joint holders must sign)
renouncing the balance.
Accept your entitlement in full and apply for Fill in and sign Part A including Asset III relating to the
additional Equity Shares acceptance of entitlement and Asset IV relating to additional
Equity Shares (All joint holders must sign)
Renounce your entitlement in full to one person Fill in and sign Part B (all joint holders must sign) indicating
(Joint renouncees are considered as one). the number of Equity Shares renounced and hand it over to
the renouncee. The renouncees must fill in and sign Part C (All
joint renouncees must sign)
Accept a part of your entitlement and renounce Fill in and sign Part D (all joint holders must sign) requesting
the balance to one or more renouncee(s) for Split Application Forms. Send the CAF to the Registrar to
OR the Issue so as to reach them on or before the last date for
receiving requests for Split Forms. Splitting will be permitted
only once.
Renounce your entitlement to all the Equity Shares On receipt of the Split Form take action as indicated below. For
offered to you to more than one renouncee the Equity Shares you wish to accept, if any, fill in and sign
Part A.
For 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.
Introduce a joint holder or change the sequence This will be treated as a renunciation. Fill in and sign Part B
of joint holders and the renouncees must fill in and sign Part C.
For applicants residing at places other than designated Bank Collecting branches
Resident investors residing at places other than the cities where the Bank collection centres have been opened and non-
resident applicants applying on a non-repatriation basis should send their completed CAF by registered post/speed post
to the Registrar to the Issue, Intime Spectrum Registry Limited alongwith demand drafts net of bank and postal charges,
payable at Mumbai in favour of the Bankers to the Issue, crossed account payee only and marked “ABNL-Rights Issue”
so that the same are received on or before closure of the Issue i.e January 25, 2007.
Non-resident investors, who are not excluded U. S. Persons as defined in Regulation S under the U.S. Securities Act of
1933, as amended, (a "U.S. Person"), applying on a repatriation basis should send their completed CAF by registered
post/speed post to the Registrar to the Issue, Intime Spectrum Registry Limited alongwith demand drafts for the full
application amount, payable at Mumbai in favour of the Bankers to the Issue, crossed account payee only and marked
"ABNL-Rights Issue NR" so that the same are received on or before closure of the Issue i.e January 25, 2007.
The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue
are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner
except as mentioned below.
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate
CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID number and his/
her full name and address to the Registrar to the Issue. Please note that those who are making the application in the
duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received / found
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ADITYA BIRLA NUVO LIMITED
subsequently. If the applicant violates any of these requirements, he / she shall face the risk of rejection of both the
applications.
Application on Plain Paper
A resident Equity Shareholder or a non-resident Equity Shareholder, who is not an excluded U.S. Person as defined in
Regulation S under the U.S. Securities Act of 1933, as amended, (a "U.S. Person"), applying on a non-repatriation basis
who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to
subscribe to the Issue on plain paper, along with an Account Payee Cheque drawn on a local bank at Mumbai or
Demand Draft/Pay Order payable at Mumbai in favour of the Bankers to the Issue, crossed account payee only and
marked "ABNL-Rights Issue" and send the same by registered post directly to the Registrar to the Issue.
A non-resident Equity Shareholder, who is not an excluded U.S. Person as defined in Regulation S under the U.S.
Securities Act of 1933, as amended, (a "U.S. Person"), applying on a repatriation basis who has neither received the
original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain
paper, along with an Account Payee Cheque drawn on a local bank at Mumbai or Demand Draft/Pay Order payable at
Mumbai in favour of the Bankers to the Issue, crossed account payee only and marked "ABNL-Rights Issue NR" and
send the same by registered post directly to the Registrar to the Issue.
The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen
recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should
contain the following particulars:
Name of Issuer, being Aditya Birla Nuvo Limited;
Name and address of the Equity Shareholder including joint holders;
Registered Folio Number/ DP and Client ID No.;
Number of shares held as on Record Date;
Number of Rights Equity Shares entitled;
Number of Rights Equity Shares applied for;
Number of additional Equity Shares applied for, if any;
Total number of Equity Shares applied for;
Total amount paid at the rate of Rs. [] per Equity Share;
Particulars of cheque/draft;
Savings/Current Account Number and name and address of the bank where the Equity Shareholder will be depositing
the refund order;
PAN, photocopy of the PAN card/ PAN communication / Form 60 / Form 61 declaration where the application is for
Equity Shares of a total value of Rs. 50,000 or more for the applicant and for each applicant in case of joint names;
Include the representation in writing that "I/We understand that the Rights entitlements and the Equity Shares
have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), or any United States state securities laws and may not be offered, sold, resold or otherwise
transferred within the United States or to, or for the account or benefit of, "U.S. Persons" (as defined in Regulation
S under the Securities Act (a "U.S. Person")), except in a transaction exempt from the registration requirements of
the U.S. Securities Act, and I/we confirm that I/we am/are not a U.S. Person and am/are not applying for these
Equity Shares for the account or benefit of a U.S. Person. There are no restrictions under the laws of my/our local
jurisdiction that prevent or prohibit me/us from applying for the Equity Shares." In addition, residents of the
European Economic Area must confirm that "I/We satisfy the requirements relating to the EEA in the Letter of
Offer."; and
Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the
Company.
367
Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce
their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently.
If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well
as forfeiture of amounts remitted along with the applications.
For Applicants residing at places where the Bank collection centres have been opened, application forms duly
completed together with cash/ cheque/demand draft for the application money must be submitted before the close
of the subscription list to the Bankers to the Issue named herein or to any of its branches mentioned on the
reverse of the CAF. The CAF alongwith application money must not be sent to the Company or the Lead Managers
to the Issue or the Registrar to the Issue.
For Applicants residing at places other than the cities where the Bank collection centres have been opened,
application forms duly completed together with cash/ cheque/demand draft for the application money net of bank
charges for demand draft and postal charges must reach Registrar to the Issue before the close of the subscription
list.
The Applicants are requested to strictly adhere to these instructions. Failure to do so could result in the application
being liable to be rejected with the Company, the Lead Managers and the Registrar not having any liabilities to such
Applicants.
Last date of Application
The last date for submission of the duly filled in CAF is January 25, 2007. The Board or any committee thereof will have
the right to extend the said date for such period as it may determine from time to time but not exceeding 60 (sixty) days
from the Issue Opening Date.
If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue, as the
case may be, on or before the close of banking hours on the aforesaid last date or such date as may be extended by the
Board/ Committee of Directors, the offer contained in this Letter of Offer shall be deemed to have been declined and the
Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the
section titled “Basis of Allotment”.
INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCK
EXCHANGES ONLY IN DEMATERIALIZED FORM.
Basis of Allotment
Subject to the provisions contained in this Letter of Offer, the Articles of Association of the Company and the approval of
the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority:
(a) Full allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full or in part and
also to the Renouncee(s) who has / have applied for Equity Shares renounced in their favour, in full or in part.
(b) If the shareholding of any of the Equity Shareholders is less than nine or is not in multiples of 17, then the
fractional entitlement of such holders for Equity Shares shall be ignored. Shareholders whose fractional entitlements
are being ignored would be considered for allotment of one additional share each if they apply for additional
share(s). Allotment under this head shall be considered if there are any un-subscribed equity shares after allotment
under (a) above. If number of Equity Shares required for allotment under for this head are more than number of
shares available after allotment under (a) above, the allotment would be made on a fair and equitable basis in
consultation with the Designated Stock Exchange. (For further details please see the section titled “Terms and
Procedure of the Issue – Fractional Entitlements” on page 359 of this Letter of Offer)
(c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of the
Issue and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be
made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on
the Record Date, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The
allotment of such Equity Shares will be at the sole discretion of the Board/committee of Directors in consultation
with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.
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ADITYA BIRLA NUVO LIMITED
(d) Allotment to the Renouncees who having applied for the Equity Shares renounced in their favour have also applied
for additional Equity Shares, provided there is an under-subscribed portion after making full allotment in (a), (b) and
(c) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole
discretion of the Board/ committee of Directors but in consultation with the Designated Stock Exchange, as a part of
the Issue and not as a preferential allotment.
(e) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus
available after making full allotment under (a), (b), (c), and (d) above
After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same
shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b)(ii) of the Takeover Code which would be
available for allocation under (c), (d) and (e) above. After considering the above allotment, any additional Equity Shares
shall be disposed off by the Board or committee of Directors authorised in this behalf by the Board of Directors of the
Company, in such manner as they think most beneficial to the Company and the decision of the Board or committee of
Directors of the Company in this regard shall be final and binding. In the event of oversubscription, allotment will be
made within the overall size of the issue.
Allotment to promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with
Clause 40A of the Listing Agreement and the other applicable laws prevailing at that time.
The Company expects to complete the allotment of Equity Shares within a period of 42 days from the date of closure of
the Issue in accordance with the listing agreement with the BSE and NSE. The Company shall retain no oversubscription.
Underwriting
The present rights issue is not underwritten.
Allotment / Refund
The Company will issue and dispatch letters of allotment/ share certificates/ demat credit 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 42 days
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 shall pay that money with interest as stipulated under Section 73 of the Companies Act.
Applicants residing at 15 centers where clearing houses are managed by the Reserve Bank of India (RBI), will get
refunds through ECS only (Electronic Clearing Service) except where Applicants are otherwise disclosed as applicable/
eligible to get refunds through direct credit and RTGS.
In case of those Applicants who have opted to receive their Rights Entitlement in dematerialized form using electronic
credit under the depository system, and advise regarding their credit of the Equity Shares shall be given separately.
Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post
intimating them about the mode of credit of refund within 42 working days of closure of Issue.
In case of those Applicants who have opted to receive their Rights Entitlement in physical form and 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 approved by the companies Law Board under Section 113 of the Companies
Act or other applicable provisions, if any. Allottees are requested to preseve such letters of allotment, which would be
exchanged later for the share certificates. For more information please refer to the section titled ‘Letters of Allotment/
Share Certificates/Demat Credit’ on page no. 369 of this Letter of Offer.
The letter of allotment / refund order exceeding Rs.1,500 would be sent by registered post/speed post to the sole/first
Applicant’s registered address. Refund orders up to the value of Rs.1,500 would be sent under certificate of posting. Such
refund orders would be payable at par at all places where the applications were originally accepted. The same would be
marked ‘Account Payee only’ and would be drawn in favour of the sole/first Applicant. Adequate funds would be made
available to the Registrar to the Issue for this purpose.
Payment of Refund
Mode of making refunds
The payment of refund, if any, would be done through any of the following modes
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1. ECS – Payment of refund would be done through ECS for applicants having an account at any of the following
fifteen centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur,
Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. This mode of payment of refunds would be
subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf,
from the Depositories. The payment of refunds is mandatory for applicants having a bank account at any of the
abovementioned fifteen centres, except where the applicant, being eligible, opts to receive refund through NEFT,
direct credit or RTGS.
2. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through NEFT wherever the
applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic
Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from
the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR
numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number
while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that
particular bank branch and the payment of refund will be made to the applicants through this method.
3. Direct Credit – Applicants having bank accounts with the Refund Banker(s), in this case being, HDFC Bank Limited
shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the same
would be borne by the Company.
4. RTGS – Applicants having a bank account at any of the abovementioned fifteen centres and whose refund amount
exceeds Rs. 1 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their
preference to receive refund through RTGS are required to provide the IFSC code in the Bid-cum-application Form.
In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund
Bank(s) for the same would be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the
credit would be borne by the applicant.
5. For all other applicants, including those who have not updated their bank particulars with the MICR code, the
refund orders will be despatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/
Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or
demand drafts drawn on the HDFC Bank Limited and payable at par.
Letters of Allotment / Share Certificates / Demat Credit
Letter(s) of allotment/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the
first named applicant or respective beneficiary accounts will be credited within 6 (six) weeks, from the date of closure of
the subscription list. In case the Company issues letters of allotment, the relative share certificates will be dispatched
within three months from the date of allotment. Allottees are requested to preserve such letters of allotment (if any) to be
exchanged later for share certificates. Export of letters of allotment (if any)/ share certificates/ demat credit to non-resident
allottees will be subject to the approval of RBI.
Option to receive Equity Shares in Dematerialized Form
Applicants to the Equity Shares of the Company issued through this Issue shall be allotted the securities in dematerialised
(electronic) form at the option of the applicant. The Company signed a bipartitie agreement with National Securities
Depository Limited (NSDL) on October 16, 2000 and and with Central Depository Services (India) Limited (CDSL) on
November 4, 2000, which enables the Investors to hold and trade in securities in a dematerialised form, instead of
holding the securities in the form of physical certificates.
In this Issue, the Allottees who have opted for Equity Shares in dematerialised form will receive their Equity Shares in the
form of an electronic credit to their beneficiary account with a depository participant. Investor will have to give the relevant
particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this
information, will be given the securities in physical form. No separate applications for securities in physical and/or
dematerialized form should be made. If such applications are made, the application for physical securities will be treated
as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be done in demat option
for the shares sought in demat and balance, if any, may be allotted in physical shares.
The Equity Shares of the Company will be listed on the BSE and the NSE.
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ADITYA BIRLA NUVO LIMITED
Procedure for availing the facility for allotment of Equity Shares in this Issue in the electronic form is as under:
1. Open a beneficiary account with any depository participant (care should be taken that the beneficiary account
should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case
of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as
with the Company). In case of investors having various folios in the Company with different joint holders, the
investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already
opened such beneficiary account(s) need not adhere to this step.
2. For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on the Record
Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who
change their accounts and wish to receive their Equity Shares pursuant to this Issue by way of credit to such
account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may
be noted that the allotment of securities arising out of this Issue may be made in dematerialized form even if the
original Equity Shares of the Company are not dematerialized. Nonetheless, it should be ensured that the depository
account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the
Company.
3. Responsibility for correctness of information (including Applicant’s age and other details) filled in the CAF vis-à-vis
such information with the Applicant’s depository participant, would rest with the Applicant. Applicants should ensure
that the names of the Applicants and the order in which they appear in CAF should be the same as registered with
the Applicant’s depository participant.
4. Applicants must necessarily fill in the details (including the beneficiary account number or client ID number) appearing
in the CAF under the heading ‘Request for Shares in Electronic Form’.
5. Equity Share/Warrants allotted to an Applicant in the electronic account form will be credited directly to the Applicant’s
respective beneficiary account(s) with depository participant.
6. Applicants should ensure that the names of the Applicants and the order in which they appear in the CAF should
be the same as registered with the Applicant’s depository participant.
7. Non-transferable allotment advice/refund orders will be directly sent to the Applicant by the Registrar to this Issue.
8. If incomplete/incorrect details are given under the heading ‘Request for Shares in Electronic Form’ in the CAF, the
Applicant will get Equity Shares in physical form.
9. Renouncees can also exercise the option to receive Equity Shares in the demat form by indicating in the relevant
asset and providing the necessary details about their beneficiary account.
10. It may be noted that Equity Share arising out of this Issue can be received in demat form even if the existing Equity
Shares are held in physical form. Nonetheless, it should be ensured that the depository participant account is in the
name of the Applicant(s) in the same order as per specimen signatures appearing in the records of the depository
participant/Company.
11. It may be noted that shares in electronic form can be traded only on the Stock Exchanges having electronic
connectivity with NSDL or CDSL.
12. Dividend or other benefits with respect to the shares held in dematerialised form would be paid to those Equity
Shareholders whose names appear in the list of beneficial owners given by the depository participant to the
Company as on the date of the book closure.
13. If incomplete / incorrect beneficiary account details are given in the CAF the Applicant will get Equity Shares in
physical form.
14. The Equity Shares pursuant to this Issue allotted to investors opting for dematerialized form would be directly
credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any)
would be sent directly to the Applicant by the Registrar to the Issue but the Applicant’s depository participant will
provide to him the confirmation of the credit of such Equity Shares to the Applicant’s depository account.
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15. Renouncees will also have to provide the necessary details about their beneficiary account for allotment of securities
in this Issue. In case these details are incomplete or incorrect, the Renouncees will get Equity Shares in physical
form.
UNIQUE IDENTIFICATION NUMBER - MAPIN
Unique Identification Number (“UIN”)
With effect from July 1, 2005, SEBI had decided to suspend all fresh registrations for obtaining UIN and the requirement
to contain/quote UIN under the SEBI MAPIN Regulations/Circulars vide its circular MAPIN/Cir-13/2005. However, in a
recent press release dated December 30, 2005, SEBI has approved certain policy decisions and has now decided to
resume registrations for obtaining UINs in a phased manner. The press release states that the cut off limit for obtaining
UIN has been raised from the existing limit of trade order value of Rs.100,000 to Rs. 500,000 or more. The limit will be
reduced progressively. For trade order value of less than Rs. 500,000 an option will be available to investors to obtain
either the PAN or UIN. These changes are, however, not effective as of the date of this Letter of Offer and SEBI has
stated in the press release that the changes will be implemented only after necessary amendments are made to the SEBI
MAPIN Regulations.
General instructions for applicants
a) Please read the instructions printed on the enclosed CAF carefully.
b) Application should be made on the printed CAF, provided by the Company and should be completed in all respects.
The CAF found incomplete with regard to any of the particulars required to be given therein, and / or which are not
completed in conformity with the terms of this Letter of Offer are liable to be rejected and the money paid, if any, in
respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any.
The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s /
husband’s name must be filled in block letters.
c) The CAF together with cheque / demand draft should be sent to the Bankers to the Issue / Collecting Bank or to the
Registrar to the Issue, as the case may be, and not to the Company and the Lead Managers to the Issue.
Applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorised
by the Company for collecting applications, will have to make payment by Account Payee Cheque drawn on a local
bank at Mumbai or Demand Draft/Pay Order payable at Mumbai in favour of the Bankers to the Issue, crossed
account payee only and marked “ABNL-Rights Issue” and send their application forms to the Registrar to the Issue
by registered post. If any portion of the CAF is / are detached or separated, such application is liable to be rejected.
d) Applications for a total value of Rs.50,000 or more, i.e. where the total number of securities applied for multiplied by
the Issue Price, is Rs. 50,000 or more, the applicant or in the case of application in joint names, each of the
applicants, should mention his/ her PAN allotted under the IT Act and also submit a photocopy of the PAN card(s)
or a communication from the Income Tax authority indicating allotment of PAN (“PAN Communication”) along with
the application for the purpose of verification of the number. Applicants who do not have PAN are required to
provide a declaration in Form 60 / Form 61 prescribed under the I.T. Act along with the application. CAFs without
this photocopy/ PAN Communication/ declaration will be considered incomplete and are liable to be rejected.
e) Applicants are advised to provide information as to their savings/current account number, 9 digit MICR number and
the name of the Bank, branch with whom such account is held in the CAF to enable the Registrar to the Issue to
print the said details in the refund orders, if any, after the names of the payees.
f) The payment against the application should not be effected in cash if the amount to be paid is Rs. 20,000 or more.
In case payment is effected in contravention of this, the application may be deemed invalid and the application
money will be refunded and no interest will be paid thereon. Payment against the application if made in cash,
subject to conditions as mentioned above, should be made only to the Bankers to the Issue.
g) Signatures should be either in English, Hindi or Gujarati or in any other language specified in the Eighth Schedule
to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a
Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the
CAF as per the specimen signature recorded with the Company.
h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the
relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under
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ADITYA BIRLA NUVO LIMITED
this Offer and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws
of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial
number of the CAF. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent
after the Issue Closing Date, then the application is liable to be rejected.
i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the
specimen signature(s) recorded with the Company. Further, in case of joint applicants who are renouncees, the
number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first
applicant’s name and all communication will be addressed to the first applicant.
j) Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad for allotment of Equity
Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in
the matter of refund of application money, allotment of Equity Shares, subsequent issue and allotment of Equity
Shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Equity Shareholder has specific
approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the
CAF.
k) All communication in connection with application for the Equity Shares, including any change in address of the
Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue
quoting the name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that
any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the
Registrar and Transfer Agents of the Company Intime Specturm Registry Limited in the case of Equity Shares held
in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.
l) Split forms cannot be re-split.
m) Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to
obtain split forms.
n) Applicants must write their CAF number at the back of the cheque / demand draft.
o) Only one mode of payment per application should be used. The payment must be either in cash or by cheque /
demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or
a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the
application is to be submitted.
p) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated cheques
and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts /
money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in
cash. (For payment against application in cash please refer point (f) above)
q) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank / Registrar will
acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
Grounds For Technical Rejections
Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:
Amount paid does not tally with the amount payable for;
Bank account details (for refund) are not given;
Age of First Applicant not given;
PAN photocopy/ PAN Communication/ Form 60 / Form 61 declaration not given if Application is for Rs. 50,000 or
more;
In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents
are not submitted;
If the signature of the existing shareholder does not match with the one given on the Application Form and for
renouncees if the signature does not match with the records available with their depositories;
If the Applicant desires to have shares in electronic form, but the Application Form does not have the Applicant’s
depository account details;
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Application Forms are not submitted by the Applicants within the time prescribed as per the Application Form and
the Letter of Offer;
Applications not duly signed by the sole/joint Applicants;
Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest in the
Issue;
Applications accompanied by Stockinvest;
In case no corresponding record is available with the Depositories that matches three parameters, namely, names
of the Applicants (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the
beneficiary’s identity;
Applications by in eligible US Persons as defined in Regulation S under the United States Securities Act of 1933,
as amended, or;
Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local
laws) and where last available address in India has not been provided.
Mode of payment for Resident Equity Shareholders/ Applicants
Applicants who are resident in centers with the bank collection centres shall draw cheques / drafts accompanying
the CAF in favour of the Bankers to the Issue, crossed account payee only and marked “ABNL-Rights Issue”.
Applicants residing at places other than places where the bank collection centres have been opened by the
Company for collecting applications, are requested to send their applications together with Demand Draft/Pay Order
payable at Mumbai in favour of the Bankers to the Issue, crossed account payee only and marked “ABNL-Rights
Issue” directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing
Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in
transit, if any.
Mode of payment for Non-Resident Equity Shareholders/ Applicants
As regards the application by non-resident equity shareholders, the following further conditions shall apply:
Payment by non-residents must be made by demand draft payable at Mumbai / cheque payable drawn on a bank
account maintained at Mumbai or funds remitted from abroad in any of the following ways:
Application with repatriation benefits
By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted
along with Foreign Inward Remittance Certificate); or
By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Mumbai; or
By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Mumbai;
or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of the Bankers to
the Issue and marked ‘ABNL-Rights Issue NR’ payable at Mumbai and must be crossed ‘account payee only’ for the
full application amount
Application without repatriation benefits
As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above,
payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Mumbai or
Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the
allotment of Equity Shares will be on non-repatriation basis.
All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of the
Bankers to the Issue and marked ‘ABNL-Rights Issue’ payable at Mumbai and must be crossed ‘account payee only’ for
the full application amount. The CAF duly completed together with the amount payable on application must be deposited
with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue
Closing Date. A separate cheque or bank draft must accompany each CAF.
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ADITYA BIRLA NUVO LIMITED
Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may
be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the
NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete
and is liable to be rejected.
New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.
Note:
In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in
Equity Shares can be remitted outside India, subject to tax, as applicable according to IT Act.
In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares
cannot be remitted outside India.
The CAF duly completed together with the amount payable on application must be deposited with the Collecting
Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date.
A separate cheque or bank draft must accompany each CAF.
In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made
in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment,
remittance and subject to necessary approvals.
Payment by Stockinvest
In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest scheme has
been withdrawn with immediate effect. Hence, payment through Stockinvest would not be accepted in this Issue.
Disposal of application and application money
No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers to the
Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment
slip at the bottom of each CAF.
The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in
either case without assigning any reason thereto.
In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an
application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares
allotted, will be refunded to the applicant within six weeks from the close of the Issue.
For further instruction, please read the Composite Application Form (CAF) carefully.
Important
Please read the Letter of Offer carefully before taking any action. The instructions contained in the accompanying
CAF are an integral part of the conditions of the Letter of Offer and must be carefully followed; otherwise the
application is liable to be rejected.
All enquiries in connection with the Letter of Offer or accompanying CAF and requests for Split Application Forms
must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the
name of the first Equity Shareholder as mentioned on the CAF and superscribed ‘ABNL-Rights Issue’ on the
envelope) to the Registrar to the Issue at the following address:
Intime Spectrum Registry Limited
C13, Pannalal Silk Mills Compound,
LBS Marg, Bhandup (West), Mumbai-400078
Tel: + 91 22 25960320
Fax: + 91 22 25960329
Email: [email protected]
Contact Person: Mr. Vishwas Attawar
The Issue will be kept open for 30 days unless extended, in which case it will be kept open for a maximum of 60 days.
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MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
Capitalised terms used in this section have the meaning that has been given to such terms in the Articles of Association.
Pursuant to Schedule II of the Companies Act, 1956 and SEBI Guidelines, the main provisions of the Articles of Association
of the Company are set forth below:
CAPITAL
Article 5 (a) provides that : “The Authorised Share Capital of the Company is Rs.100,00,00,000 (Rupees One Hundred
Crores) divided into 8,50,00,000 (Eight Crores Fifty Lacs) Equity Shares of Rs.10 each and 15,00,000 (Fifteen Lacs)
Redeemable Preference Shares of Rs.100 each with the rights, privileges and conditions attached thereto as per the
relevant provisions contained in that behalf in these presents and with power to the Company to increase or reduce the
capital and to divide the shares in the capital for the time being into several classes (being those specified in the
Companies Act, 1956) and to attach thereto respectively such preferential, qualified or special rights, privileges or
conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify,
enlarge or abrogate any such rights, privileges or conditions in such manner as may be permitted by the said Act or
provided by these Articles of Association of the Company.”
BUY BACK OF SHARES
Article 5 (d) provides that: ”Notwithstanding the provisions contained in the Article-5(a), the Company shall have the
power, subject to and in accordance with all the provisions of the Act and other applicable provisions of law, and subject
to such approvals, permissions and sanctions, if any, as may be necessary, to purchase, acquire or hold its own shares
whether or not they are redeemable, on such terms and conditions and upto such limits as may be prescribed by law
from time to time, provided that nothing herein contained shall be deemed to affect the provisions of Sections 100 to 104
and Section 402 of the Act in so far as and to the extent they are applicable.”
ALLOTMENT OF SHARES
Article 8 provides that : “Subject to the provisions of the Companies Act, 1956 and these Articles, the shares in the capital
of the Company for the time being shall be under the control of the Directors who may allot or otherwise dispose of the
same or any of them to such persons in such proportion and on such terms and conditions and either at premium or at
par, or (subject to compliance with the provisions of the Companies Act) at a discount as they may from time to time think
fit and proper, and with the sanction of the Company in General Meeting to give to any person a call of any shares either
at par or at a premium and at such time and for such consideration as the Directors think fit. PROVIDED HOWEVER that
the Company in General Meeting shall be entitled to make any provision or provisions as regards the issue and
allotment of such shares before the issue thereof by the Directors.”
COMMISSION FOR PLACING SHARES
Article 10 provides that: “The Company may at any time pay a commission to any person for subscribing or agreeing to
subscribe (whether absolutely or conditionally) for any shares, debentures or debenture-stock of the Company, or procuring
or agreeing to procure subscription (whether absolute or conditional) for any shares, debentures or debenture-stock of
the Company, but so that if the commission in respect of shares shall be paid or payable out of capital, the statutory
conditions and requirements shall be observed and complied with and the amount or the rate of commission shall not
exceed five per cent of the price at which the shares are issued or two and half per cent of the price at which the
debentures or debenture-stock are issued. The commission may be paid or satisfied in cash or in shares, debentures or
debenture-stock of the Company.”
MEMBER’S RIGHT TO CERTIFICATE
Article 16 provides that: “Every member shall be entitled to one certificate for all the shares registered in his name. Every
certificate of shares shall specify the number and denoting number of the shares in respect of which it is issued and the
amount paid-up thereon. For any further certificate the Directors shall be entitled but shall not be bound to prescribe a
charge not exceeding rupee one.”
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ADITYA BIRLA NUVO LIMITED
AS TO ISSUE OF NEW CERTIFICATE IN PLACE OF ONE DEFACED, LOST OR DESTROYED
Article 17 provides that: “If any certificate be worn out or defaced, then, upon production thereof to the Directors, they may
order the same to be cancelled, and may issue a new certificate in lieu thereof, and if any certificate be lost or destroyed,
then upon proof thereof to the satisfaction of the Directors, and on such indemnity as the Directors deem adequate being
given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. A sum not
exceeding rupee one as the Directors may determine shall be paid to the Company for every certificate issued under this
clause. Provided that no fee shall be charged for issue of new certificates in replacement of those which are old, decrepit
or worn out or where the cages on the reverse for recording transfers have been fully utilised.”
CALLS
Article 19 provides that: “The Directors may from time to time make such calls as they think fit upon the members in
respect of all moneys unpaid on the shares held by them respectively, and not by the conditions of allotment thereof
made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and
at the times and places appointed by the Directors. A call may be made payable by instalments.”
PAYMENT OF CALLS IN ADVANCE
Article 24 provides that: “The Directors may, if they think fit, receive from any member willing to advance the same, and
either in money or money’s worth, all or any part of the capital due upon the shares held by him beyond the sums
actually called for; and upon the amount so paid or satisfied in advance, or so much thereof as from time to time exceeds
the amount of the calls then made upon the shares in respect of which such advance has been made, the Company may
pay interest at such rate as the member paying such sum in advance and the Directors agree upon.”
FORFEITURE AND LIEN
IF CALL OR INSTALMENT NOT PAID NOTICE MAY BE GIVEN
Article 25 provides that: “If any member fails to pay any call or instalment on or before the day appointed for the payment
of the same, the Directors may at any time thereafter, during such time as the call or instalment remains unpaid, serve a
notice on such member requiring him to pay the same, together with any interest that may have accrued and all
expenses that may have been incurred by the Company by reason of such non-payment.”
FORFEITED SHARES TO BECOME PROPERTY OF THE COMPANY
Article 28 provides that: “Any share so forfeited shall be deemed to be the property of the Company, and the Directors
may sell, re-allot and otherwise dispose of the same in such manner as they may think fit.”
COMPANY’S LIEN ON SHARES
Article 31 provides that: “The Company shall have a first and paramount lien upon all the shares (other than fully paid up
shares) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale
thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares and
no equitable interest in any share shall be created except upon the footing and condition that clause 14 hereof is to have
full effect. And such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares.
Unless otherwise agreed the registration of a transfer of shares shall operate as a waiver of the Company’s lien, if any,
on such shares.
Provided that the provisions relating to the waiver of the Company’s lien, if any, on partly paid shares on registration for
transfer of such shares shall also mutatis mutandis apply in respect of a dematerialised share, debenture and other
security, the beneficial owner of which is registered with the Depository and where such beneficial owner shall have
transferred his dematerialised shares, debentures and securities.”
TRANSFER AND TRANSMISSION
TRANSFER NOT TO BE REGISTERED EXCEPT ON PRODUCTION OF INSTRUMENT OF TRANSFER
Article 35 provides that: “The Company shall not register a transfer of shares in, or debentures of the Company, unless
a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the
transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the Company
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along with the certificates relating to the shares or debentures, or if no such certificate is in existence, along with the
letter of allotment of the shares or debentures :
Provided that where on an application in writing made to the Company by the transferee and bearing the stamp required
for an instrument of transfer, it is proved to the satisfaction of the Board of Directors that the instrument of transfer signed
by or on behalf of the transferor and by or on behalf of the transferee has been lost, the Company may register the
transfer on such terms as to indemnity as the Board may think fit:
Provided further that nothing in this Article shall prejudice any power of the Company to register as shareholder or
debenture holder any person to whom the right to any shares in, or debentures of, the Company has been transmitted by
operation of law.”
DIRECTOR MAY DECLARE TO REGISTER TRANSFER
Article 39 provides that: “Notwithstanding anything contained in Articles 35, 36 and 37, the Directors may at any time in
their absolute and uncontrolled discretion and without assigning any reason decline to register any proposed transfer of
shares whether the transferee is a member of the Company or not.”
NOMINATION FOR SHARES AND DEBENTURES
Article 46A provides that: “Notwithstanding anything contained in Articles 36, 45 and 46, every holder(s) of shares in or
holder(s) of debentures of the Company, holding either singly or jointly, may, at any time, nominate a person in the
prescribed manner to whom the shares and/or the interest of the member in the capital of the Company or debentures of
the Company shall vest in the event of his/her death. Such member may revoke or vary his/her nomination, at any time,
by notifying the same to the Company to that effect. Such nomination shall be governed by the provisions of Sections
109A and 109B of the Companies Act, 1956 or such other regulations governing the matter from time to time.”
INCREASE AND REDUCTION OF CAPITAL
POWER TO INCREASE CAPITAL
Article 47 provides that: “The Company in general meeting may, from time to time, increase its share capital by the
creation of new shares of such amount as may be deemed expedient.”
REDUCTION OF CAPITAL ETC
Article 52 provides that: “The Company may, from time to time, by special resolution, reduce its capital and any capital
redemption reserve fund in any manner and with and subject to any incident authorised and consent required by law.”
SUB-DIVISION AND CONSOLIDATION OF SHARES
Article 53 provides that: “The Company may in General Meeting by Ordinary Resolution alter the conditions of its
Memorandum as follows:
(a) Consolidate and divide all or any of the Share Capital into shares of larger amounts than its existing shares;
(b) Sub-divide its shares or any of them into shares of smaller amounts than originally fixed by the Memorandum, so
however, that in the sub-division the proportion between the amounts paid and the amounts, if any, unpaid on each
reduced share shall be same as it was in the case of the share from which the reduced share derived;
(c) Cancel shares which at the date of such Ordinary Resolution have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the amount of the shares so cancelled.”
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ADITYA BIRLA NUVO LIMITED
MODIFICATION OF RIGHTS
Power to modify rights
Article 55(a) provides that: “Whenever the capital by reason of the issue of preference shares or otherwise is divided into
different classes of shares, all or any of the rights and privileges attached to each class may be varied, modified,
commuted, affected, abrogated or dealt with subject to :-
(i) the consent of the holders not being less than three-fourths of the issued share of the class; or
(ii) the sanction by a resolution passed at separate meeting of the holders of those shares and supported by the votes
of the holders of not less than three-fourths of those shares.”
BORROWING POWERS
POWER TO BORROW
Article 56 provides that: “ The Directors may, from time to time, at their discretion, raise or borrow, or secure the payment
of, any sum or sums of money for the purposes of the Company; Provided that the moneys to be borrowed together with
the moneys already borrowed by the Company (apart from temporary loans obtained from the Company’s bankers in the
ordinary course of business) shall not at any time except with the consent of the Company in general meeting exceed the
aggregate of the paid-up capital of the Company and its free reserves, that is to say, reserves not set part for any specific
purpose.”
MEETINGS
Article 62 (a) (i) provides that: “The Company shall, in addition to any other meetings, hold a general meeting which shall
be styled its “annual general meeting” at the intervals and in accordance with the provisions.
(b) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday,
and shall be held either at the registered office of the Company or at some other place within the city, town or village in
which the registered office of the Company is situate; and the notices calling the meeting shall specify it as the annual
general meeting.”
EXTRA-ORDINARY MEETINGS
Article 63 provides that: “All other meetings of the Company shall be called Extraordinary Meetings.”
QUORUM
Article 68 provides that: “Five members personally present shall be quorum for a general meeting.”
CHAIRMAN OF GENERAL MEETING
Article 68 provides that: “The Chairman of the Directors shall be entitled to take the chair at every general meeting, or if
there be no such Chairman, or if at any meeting he shall not be present within fifteen minutes after the time appointed
for holding such meeting, the members present shall choose another Director as Chairman, and if no Director be present
or if all the Directors present decline to take the chair then the members present shall choose one of their number to be
Chairman.”
VOTES OF MEMBERS
Article 82 (a) provides that: “On a show of hands every member present shall have one vote and upon a poll every
member present in person or by proxy shall have one vote for every share held by him. Provided that the holders of
Preference Shares shall have no right to vote either in person or by proxy at any general meeting by virtue or in respect
of their holdings of preference shares, unless the preferential dividend due on such preference shares or any part of
such dividend has remained unpaid in respect of an aggregate period of not less than two years preceding the date of
commencement of the meeting or unless a resolution is proposed directly affecting the rights or privileges attached to
such preference shares.”
PROXIES PERMITTED
Article 88 provides that: “Votes may be given either personally or by proxy.”
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INSTRUMENT OF PROXY
Article 91 provides that: “The instrument appointing a proxy shall
(a) be in writing; and
(b) be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a body corporate, be
under its seal or be signed by an officer or an attorney duly authorised by it.”
DIRECTORS
NUMBER OF DIRECTORS
Article 95 provides that: “Unless otherwise determined by a general meeting, the number of Directors shall not be less
than three or more than fifteen.”
QUORUM FOR MEETINGS
Article 113(a) provides that: “The quorum for a meeting of the Board of Directors of the Company shall be ne-third of its
total strength (any fraction contained in that one-third being rounded off as one), or two Directors, whichever is higher.
Provided that where at any meeting the number of interested Directors exceeds or is equal to two-third of the total
strength, the number of the remaining Directors, that is to say, the number of the Directors who are not interested, shall
be the quorum during such time.”.
PASSING OF RESOLUTION BY CIRCULATION
Article 122 provides that: “No resolution shall be deemed to have been duly passed by the Board or by a committee
thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all
the Directors, or to all the members of the committee, then in India (not being less in number than the quorum fixed for
a meeting of the Board of committee, as the case may be), and to all other Directors or members, at their usual address
in India and has been approved by such of the Directors as are then in India or by a majority of such of them, as are
entitled to vote on the resolution.”
DIVIDENDS
DIVIDEND IN SPECIE
Article 142 provides that: “Any general meeting declaring a dividend may resolve that such dividend be paid wholly or in
part by the distribution of specific assets and in particular of paid-up shares, debentures or debenture stock of the
Company, or paid-up shares, debentures or debenture stock of any other company, or in any one or more of such ways.”
UNCLAIMED DIVIDEND
Article 152 provides that: “Any dividend which has been declared by the Company but has not been paid or claimed in
accordance with the provisions of Section 205A of the Act, within 42 days from the date of declaration to or by a member
entitled to the payment of such dividend, shall be dealt with by the company in accordance with the said Section 205A.”
WINDING UP
Distribution of assets in specie
(Article 163 provides that
“(a) If the Company shall be wound up, the liquidator, may with the sanction of a special resolution of the Company and
any other sanction required by the Act, divide amongst the members in specie or kind the whole or any part of the
assets of the Company, whether they shall consist of property of the same kind or not.
(b) For the purpose aforesaid, the liquidator may set such value as he deems fair upon any property to be divided as
aforesaid and may determine how such division shall be carried out as between the members or different classes
of members.
(c) The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for
the benefit of the contributories as the liquidator, with the like sanction shall think fit, but so that no member shall
be compelled to accept any shares or other securities whereon there is any liability.”
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ADITYA BIRLA NUVO LIMITED
INDEMNITY
Section 164 provides that: “Subject to the provisions of the Companies Act, every Director, Manager, Managing Director,
Auditor, Secretary and other officer or servants of the Company shall be indemnified by the Company against, and it shall
be the duty of the Directors out of the funds of the Company to pay all cost, losses and expenses which any such officer
or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such
officer or servant, or in any way in the discharge of his duties, and the amount for which such indemnity is provided shall
immediately attach as a lien on the property of the Company, and have priority as between the members over all other
claims.”
SECRECY
SECRECY CLAUSE
Article 166 provides that: “Subject to the provisions of the Companies Act, no member shall be entitled to require
discovery of any information respecting any detail of the Company’s trading or any matter in the nature of a trade secret,
mystery of trade or secret process which may relate to the conduct of the business of the Company and which in the
opinion of the Board of Directors it may be inexpedient in the interest of the Company to communicate to the public.”
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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by us or entered
into more than two years before the date of this Letter of Offer) which are or may be deemed material have been entered
or are to be entered into by us. These contracts and also the documents for inspection referred to hereunder, may be
inspected at the registered office of the Company situated at Indian Rayon Compound, Veraval-363 266, Gujarat from
11.00 a.m. to 2.00 p.m. from the date of this Letter of Offer until the date of closure of the Subscription List.
A. Material Contracts
1. Memorandum of Understanding between the Company, Enam Financial Consultants Private Limited and DSP
Merrill Lynch Limited dated September 21 2006.
2. Memorandum of Understanding between the Company and the Registrar dated October 7, 2006.
3. Monitoring Agency letter dated November 23, 2006 entered into between the Company and IDBI Bank.
B. Documents
1. Memorandum of Association and Articles of Association of the Company.
2. Certificate of Incorporation of the Company dated September 26, 1956.
3. Fresh certificate of incorporation consequent on change of name from The Indian Rayon Corporation Limited
to Indian Rayon and Industries Limited on January 23, 1987.
4. Fresh certificate of incorporation consequent on change of name from Indian Rayon and Industries Limited to
Aditya Birla Nuvo Limited on October 27, 2005.
5. Shareholders Resolution passed at the Annual General Meeting held on August 17, 2006 appointing M/s.
Khimji Kunverji & Co., and M/s. S. R. Batliboi & Co, as statutory auditors for the financial year 2006 - 2007.
6. Copy of the Board Resolution dated September 11, 2006 approving this Issue.
7. Consents of the Directors, Auditors, Lead Manager to the Issue, Legal Counsel to the Issue, Bankers to the
Issue, Bankers to the Company and Registrars to the Issue, to include their names in the Letter of Offer to act
in their respective capacities.
8. Appointment of Company Secretary as Compliance Officer.
9. Letter dated September 12, 2006 from the Auditors of the Company confirming Tax Benefits as mentioned in
this Letter of Offer.
10. The Report of the Auditors, M/s. Khimji Kunverji & Co., and M/s. S. R. Batliboi & Co., as set out herein dated
December 01, 2006 in relation to the restated financials of the Company for the last five financial years.
11. Annual Report of the Company for the last five Financial Years.
12. In-principle listing approval dated October 4, 2006 and October 5, 2006 from the BSE and the NSE respectively.
13. Letter No. CFD/DIL/RI/PB/MKS/80204/2006 dated November 20, 2006 and letter No. CFD/DIL/ISSUES/RI/
MKS/82277/2006 dated December 14, 2006 issued by SEBI for the Issue.
14. Due Diligence Certificate dated September 22, 2006 from Enam Financial Consultants Private Limited and
DSP Merrill Lynch Limited.
15. Bi-partite Agreement dated November 4, 2000 between the Company and CDSL to establish direct connectivity
with Depository.
16. Bi-partite Agreement dated October 16, 2002 between the Company and NSDL to establish direct connectivity
with Depository.
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ADITYA BIRLA NUVO LIMITED
17. Complaints received from investors in respect of the draft letter of offer filed with SEBI and Company’s & the
Lead Managers responses to them.
(a) Letter dated October 10, 2006 received from M.V. Kini & Company in respect of cases involving
Ramniranjan Kedia Tourism Services Private Limited;
(b) Letter dated October 13, 2006 addressed to SEBI from M.V. Kini & Company in respect of cases
involving Ramniranjan Kedia Tourism Services Private Limited;
(c) Letter dated October 19, 2006 from the Company to the Lead Managers in respect of cases involving
Ramniranjan Kedia Tourism Services Private Limited;
(d) Response of the Lead Managers to M.V. Kini & Company dated October 20, 2006;
(e) Letter dated October 30, 2006 from M.V. Kini & Company in respect of cases involving Ramniranjan
Kedia Tourism Services Private Limited;
(f) Response of the Lead Managers to M.V. Kini & Company dated November 15, 2006.
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DECLARATION
No statement made in this Letter of Offer contravenes any of the provisions of the Companies Act and the rules made
thereunder. All the legal requirements connected with the 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.
On behalf of the Board of Directors of Aditya Birla Nuvo Limited
Mr. Kumar Mangalam Birla – Chairman and Non-Executive Director
Mrs. Rajashree Birla – Non-Executive Director
Mr. H.J. Vaidya – Independent Director
Mr. B.L. Shah – Non-Executive Director
Mr. P. Murari – Independent Director
Mr. B.R. Gupta – Independent Director
Ms. Tarjani Vakil – Independent Director
Mr. Vikram Rao – Whole Time Director
Mr. S.C. Bhargava – Independent Director
Mr. G.P. Gupta – Independent Director
Mr. S.K. Mitra – Whole Time Director
Mr. Rakesh Jain – Whole Time Director
Mr. K.K. Maheshwari – Whole Time Director
Mr. Adesh Kumar Gupta – Whole Time Director
Dr. Bharat K. Singh – Managing Director
Place : Mumbai
Date : December 15, 2006
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ADITYA BIRLA NUVO LIMITED
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