2009923175750offer Document
2009923175750offer Document
GENERAL RISKS
For taking an investment decision, investors must rely on their own examination of the
Issue and the Information Memorandum including the risks involved. The Issue has not
been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI
guarantee the accuracy or adequacy of this Information Memorandum.
CREDIT RATING
LA+ (pronounced L A Plus) by ICRA Limited for Rs.350 Crores long term NCDs indicating
adequate-credit-quality. The rated instrument carries average credit risk.
The rating is not recommended to buy, sell or hold Securities and investors should take their own
decision. The rating may be subject to revision or withdrawal at any time by the assigning rating
agency and each rating should be evaluated independently of any other rating. The rating
obtained is subject to revision at any point of time in the future. The rating agencies have a right
to suspend, withdraw the rating at any time on the basis of new information etc.
LISTING
The Debentures are proposed to be listed on the National Stock Exchange of India Limited (NSE
or the Stock Exchange).
Brief Profile
Sr. No. Name of Director Category
Mr. B. N. Kalyani
Appointment Date: 30/03/1993 as Director and 23/08/1997 as CMD
Residence Address: Amit, 221-A, Kalyani Nagar, Yerawada, Pune 411006
Mr. Baba Kalyani (60), is the Chairman and Managing Director of Bharat Forge Limited. Born on 7
January, 1949, Mr. Kalyani is a Mechanical Engineer from the Birla Institute of Technology, Pilani,
Rajasthan. He also has an M.S. from the Massachusetts Institute of Technology, USA.
Mr Kalyani is also the Chairman of Kalyani Group. The groups business interests are in Specialty Steel,
Forgings, Auto Components, Infrastructure and Specialty chemicals. With a global workforce of over
10,000 employees, the group comprises companies that include Bharat Forge Limited, Kalyani Steels Ltd,
Kalyani Carpenter Special Steels Ltd, Automotive Axles Ltd, Kalyani Lemmerz Ltd, BF Utilities Ltd., Hikal
Ltd, BF-NTPC Energy Systems Ltd., CDP Bharat Forge GmbH, Germany, Bharat Forge Aluminiumtechnik
GmbH & Co. KG., Germany, Bharat Forge America, Inc, USA, Bharat Forge Kilsta AB, Sweden, Bharat
Forge Scottish Stampings Ltd, Bharat Forge Daun GmbH, Bharat Forge Hong Kong Ltd., and FAW Bharat
Forge (Changchun) Co. Ltd, China, The groups annual turnover is USD 2.4 billion and it has joint ventures
with leading global companies that include ArvinMeritor, USA, Carpenter Technology Corporation, USA,
Hayes Lemmerz, USA and FAW Corporation, China.
Mr. Kalyani is also director in The Ugar Sugar Works Ltd., Nandi Infrastructure Corridor Enterprises Ltd.,
Nandi Economic Corridor Enterprises Ltd., Kalyani Carpenter Metal Centres Ltd., Merritor HVS (India)
Ltd., Khed Developers Ltd., Xapiola Holdings Ltd., UTI Asset Management Co. Pvt. Ltd., True Value
Holdings Pvt. Ltd., Epicentre Technologies Pvt. Ltd., Kalyani Mauritius Pvt. Ltd., and Khed Economic
Infrastructure Pvt. Ltd.
Mr. Kalyani is associated with several leading Industry, Trade and Educational institutions in India and
abroad. He is a member of the National Council of the Confederation of Indian Industry, the apex
industry association in the country; Chairman, Board of Governors, Shri Guru Gobind Singhji Institute of
Engineering & Technology Nanded; Vice President, Maratha Chamber of Commerce, Industries and
Agriculture; Member, India Education Initiative; Member, Governing Board, National Institute of Bank
Management; Member, Executive Committee, Indo German Chamber of Commerce; Member, Indo-US
CEOs Forum; Member, Robert Bosch Advisory Committee Member, India Advisory Committee, World
Economic Forum, Switzerland; and Member, Commonwealth Business Council, UK.
Mr. Kalyani also serves on Boards of many prestigious companies and represents industry on several
Government Committees including as Member, National Manufacturing Competitiveness Council; Member,
Board of Trade; Member, National Knowledge Commission; Member, Development Council for
Automobiles & Allied Industries; and Member, Consultative Group of Higher & Technical Education
[including Vocational Education].
Mr. Kalyani is the Founder Chairman of Pratham Pune Education Foundation, an NGO that is engaged in
providing primary education to children belonging to under privileged section of the local community in
Pune.
Mr. Kalyanis significant contributions to industry and the community have been recognized through
various prestigious awards that he has received. He has been conferred Businessman of the Year-2006
by Business India Magazine, Entrepreneur of the Year - 2005 for Manufacturing by Ernst & Young and
CEO of the Year 2004 by the Business Standard group. He is also recipient of several other awards
including Leader of Quality [Gold Award] by Qimpro Foundation; The CEO of the Year 2006 by Indian
Institute of Materials Management; Baroda Sun Award by Bank of Baroda; V. Krishnamurthy Award for
Excellence 2006 from the Centre for Organisation Development, Hyderabad; FIE Foundations
Rashtrabhushan Award for outstanding contribution in Industrial Globalisation; Global Entrepreneur of
the Year 2006 by Jagatik Marathi Chamber of Commerce & Industries [JMCCI]; the National Press Award
and FIE Foundation Award.
Mr. Kalyani has been honored by the Government of India with the prestigious Padma Bhushan Award.
Mr. S. M. Thakore
Appointment Date: 27/06/1986
Residence Address: 509, Cumbala Crest, 42-A, G. Deshmukh Marg, Mumbai 400026
Mr. S.M. Thakore (62), a solicitor, is a Partner in at solicitors firm Talwar, Thakore & Associates.
Born on 23rd July 1947, Mr. Thakore is an Independent and Non-executive Director since 27 June 1986.
Mr. Thakore also serves on the Boards of Alkyl Amines Chemicals Limited, Carraro India Private Limited,
Carraro PNH Components (India) Private Limited, Morarjee Textiles Limited, Carborundum Universal
Limited, , Uni Deritend Limited , Uni Klinger Limited and DSP BlackRock Investment Managers (Mauritius)
Limited.
Mr. S.D. Kulkarni (74), is a Chartered Accountant. Born on 20th September, 1934, Mr. Kulkarni is an
Independent and Non- executive Director. He is a Chartered Accountant and was formerly Managing
Director and Chief Executive Officer of Larsen and Toubro Limited. Mr. Kulkarni is an Independent and
Non-executive Director since 24 July 1999. Mr. Kulkarni also serves on the Boards of Sesa Goa Limited,
SICOM Capital Management Private Limited, Syngenta India Limited, Syngenta Foundation India and
Voltas Limited.
Mr. P.G. Pawar (64), B.E. (BITS, Pilani), born on 15 October, 1944, is an Independent and Non-
executive Director of the Company with effect from 24 May, 2005.
Mr. Pawar also serves on the Board of P.P Holdings Ltd., Sakal Papers Ltd., , Finolex Cables Ltd.,
Kirloskar Oil Engine Ltd., Force Motors Ltd., , Ajay Metachem Sud Chemie Pvt. Ltd., Sakal Printers Pvt.
Ltd., United Risk Insurance Broking Company Pvt. Ltd., United Metachem Pvt. Ltd., Panhala Investment
Pvt. Ltd., International Conventions India Pvt. Ltd., Karha Developers & Miners Pvt. Ltd., Rajgadh Agro
Farms Pvt. Ltd., Pasle Agro Farms Pvt. Ltd., Bhimthadi Developers & Miners Pvt. Ltd., Karha
Infrastructure Pvt. Ltd. and World Association of Newspapers.
Prof. Dr. Uwe Loos (63), Graduate Engineer, Ph.D., born on 6 March, 1946 is an Independent and
Non-executive Director of the Company with effect from 1 August, 2005.
Dr Loos was a Member of the Management Board of Porsche AG (1993), for production and logistics and
was responsible for the introduction and implementation of a programme to establish worldwide
competitiveness in manufacturing. He joined FAG in 1998, a leading ball bearing manufacturer and was
appointed Chairman of the Board. During his tenure at FAG, he gained experience with its global
operations including India.
Dr. Loos also serves on the Boards of Gildemeiste AG, , Claas GmbH, Dorma GmbH, Trumpf GmbH, CDP
Bharat Forge GmbH, EDAC GmbH and Rodenstock GmbH, Bharat Forge Aluminiumtechnik GmbH & Co.
KG., Bharat Forge Daun GmbH, HP Pelzer GmbH and OPEL GmbH.
Mr. P.C. Bhalerao (59), B.E., M.B.A., D.T.M., born on 4 March, 1950 is a Non-Executive Director of
the Company with effect from July 31, 2005.
Mr. Bhalerao also serves on the Boards of Meritor HVS (India) Limited, Nandi Infrastructure Corridor
Enterprises Limited, Kumar Housing &Land Development Limited, Sanghvi Movers Limited, Nandi
Economic Corridor Enterprises Limited, CDP Bharat Forge GmbH, Bharat Forge Aluminiumtechnik GmbH &
Co. KG. and Bharat Forge Daun GmbH.
Mrs. Lalita Gupte (60), holds a Bachelors Degree in Economics and a Masters Degree in Business
Management. Born on 4 October, 1948, Mrs. Gupte is an Independent and Non-executive Director
of the Company with effect from 5 December, 2006.
She retired, in October 2006, as the Joint Managing Director of ICICI Bank Ltd. At ICICI Bank, she has vast
experience in International Business of the Bank and held leading positions in the areas of Retail and
Corporate Banking, Leasing, Planning & Resources and other areas. She was instrumental in transforming
ICICI Bank into a technology led leader in diversified financial services business.
She is also a director of ICICI Venture Funds Management Company Limited, Godrej Properties Ltd.,
Firstsource Solutions Ltd., HPCL- Mittal Energy Ltd., Kirloskar Brothers Ltd., Swadhaar Finserve Pvt. Ltd.,
and Nokia Corporation
Mr. Alan Spencer (75) is M.A. from Balliol College, Oxford. Born on 3 December, 1933, Mr. Alan
Spencer is an Independent and Non-executive Director of the Company with effect from 21
January, 2008. He has vast knowledge and experience of the Automotive Industry, being
associated with Ford Motors Company for 38 years. Mr. Spencer also serves on the Board of
NEFAZ, Russia and RABA, Hungary.
Mr. P. H. Ravikumar
Appointment Date: 20/05/2009
Residence Address: Flat # 501, Yashowan Towers, Y.H. Kataria Marg, Behind Mahim Head Post
Office, Mahim (West), Mumbai 400 016.
Mr. P.H. Ravikumar, born on 20th July 1951, is an Independent and Non-executive Director on the Board
with effect from 20 May 2009. Mr. Ravikumar has done Bachelors in Commerce and CAIIB, AIB from
London. He has also done a Senior Diploma in French. He has total work experience of 36 years in
Banking and financial services.
Mr. P.H. Ravikumar is also Director, amongst others, on the Board of Directors of Federal Bank Ltd.,
Federal Bank Financial Services Ltd., Eveready Industries India Ltd., Akruti City Ltd., SKS Microfinance
Pvt. Ltd., NABARD Consultancy Services Pvt. Ltd., Akruti City Venture Capital Mgt. Pvt. Ltd. and
Fundamental Value Partners (FVP) Kairos Credit Fund India Ltd.
Mr.Naresh Narad
Appointment Date: 24th July 2009
Residence Address: C II / 127, Moti Baugh, New Delhi 110 021
Mr. Naresh Narad has held various important positions in the Govt. of India and Govt. of Madhya
Pradesh.
Mr. Naresh Narad is currently Additional Director on the Board of FAT Pipe Networks Limited.
Mr. V. K. Jairath
Appointment Date: 24th July 2009
Residence Address: 194-B , Kalpataru Horizon , S.K Ahire Marg, Off. Dr.Annie Besant Road, Worli ,
Mumbai -400 018
Mr. Vinesh Kumar Jairath (50) , is IAS, B.A., LL.B., Masters in Economics from the University of
Manchester, U.K., and a Fellow of Rockefeller Foundation, USA. Born on 27th December 1958, Mr.
Jairath is a former Principal Secretary (Industries), Govt. of Maharashtra. Mr. Jairath is an Independent
and Non-executive Director on the Board with effect from 24 July 2009.
Mr. Jairath has over 25 years of experience in public administration, rural development, poverty
alleviation, infrastructure planning and development and infrastructure financing, finance, industry,
urban development, environmental management, while occupying various important positions in the
Government of India and the State Government of Maharashtra.
Mr. Jairath is currently also an Independent Director in Tata Motors Ltd., Avantha Power &
Infrastructure Limited and Maharashtra Airport Development Co. Ltd. (MADC).
Mr. G. K. Agarwal
Appointment Date: 01/04/1998 as Executive Director and Deputy Managing Director with effect
from 23/05/2006
Residence Address: B-10, Varsha Park, Baner, Pune 411045
Mr. G K Agarwal, born on 17th February 1951, B.E. (Mech), MBA, has been on the Board since 01 April
1998. He is elevated as the Dy. Managing Director with effect from 23 May 2006. Mr Agarwal serves on
the board of BF Utilities Limited, CDP Bharat Forge GmbH, Bharat Forge Aluminiumtechnik GmbH &Co.
KG, Bharat Forge Daun GmbH and Bharat Forge Hong Kong Limited.
Mr. Amit Kalyani (34), has received his Bachelors Degree in Mechanical Engineering from Bucknell
University, Pennsylvania, USA in 1998. Born on 26th July, 1975, Mr. Amit Kalyani is Executive
Director of the Company with effect from 11 May, 2004.
He initially worked with Kalyani Steels Ltd, followed by other companies within the group. He then
joined Bharat Forge in 1999 as Vice President and Chief Technology Officer, where he played a critical
role responsible for implementing Unified MIS System SAP R3.
He later took charge of investor relations & fund raising such as GDR, FCCB, Rights Issue & ECBs, to the
tune of $ 400 million over a period of 3 years. He was also instrumental in strategizing and execution of
the several acquisitions that the group had in Germany.
Mr. Amit Kalyani is currently an Executive Director on the board of Bharat Forge Limited, the flagship
company of the US $ 2.4 billion Kalyani Group. While he is involved in the companys strategic planning &
global business development initiatives, Mr. Amit Kalyani also takes care of the overall group strategy
and is responsible for the expansion of its steel business and driving the infrastructure business foray of
the group.
Mr. B. P. Kalyani
Appointment Date: 23/05/2006
Residence Address: B , The Tulip, 211/2, Plot 65, Kalyani Nagar, Pune 411 006.
Mr. B. P. Kalyani (47), B.E. (Production Engineering), VJTI, Mumbai, MBA in finance from New York
University, MS (Mech.) Columbia University, New York. Born on 31 July, 1962, is an Executive
Director of the Company with effect from 23 May, 2006. He has served with the Company for 24
years and was senior vice president (FMD). He also serves on the Board of Kalyani Utilities
Development Limited.
Mr. S. E. Tandale
Appointment Date: 23/05/2006
Residence Address: C-S02, Pride Panorama, Senapati Bapat Marg, Pune 411 016.
Mr. S. E. Tandale (40), B.E. (Mech.) born on 24 September, 1968, is an Executive Director of the
Company with effect from 23rd May, 2006. He has served with the Company for 15 years and was
Senior Vice President (International Trade Division). He also serves on the Boards of Bharat Forge
America Inc., Bharat Forge Kilsta AB, Bharat Forge Scottish Stampings Limited, FAW Bharat Forge
(Changchun) Company Limited and Tecnica UK Limited.
Mr. P. K. Maheshwari
Appointment Date: 23/05/2006
Residence Address: Flat No.102, Prime Building, Cosmos, Magarpatta City, Hadpsar, Pune
411028
Mr. P. K. Maheshwari (48), B.Com. CA, PGDM, born on 18 February, 1961, is an Executive Director
of the Company with effect from 23 May, 2006. He was Group Chief Finance Officer of the
Company.
He also serves on Boards of Nandi Highway Developers Ltd. , Nandi Infrastructure Corridor Enterprises
Ltd., Nandi Economic Corridor Enterprises Ltd., CDP Bharat Forge GmbH., Bharat Forge Aluminiumtechnik
GmbH & Co. KG., Bharat Forge America Inc., Bharat Forge Hong Kong Limited, Bharat Forge Kilsta AB,
Bharat Forge Scottish Stampings Limited, FAW Bharat Forge (Changchun) Company Limited and Bharat
Forge Daun GmbH.
Mr. Sunil K. Chaturvedi (46) is a commerce graduate and Chartered Accountant. Born on 5
February, 1963, Mr. Chaturvedi is an Executive Director of the Company with effect from 20 May,
2008. He joined Indian Administrative Service, Government of India, in August 1988 and worked
in various capacities till January 31, 2008. He has over 23 years of experience. He serves on
Board of BF-NTPC Energy Systems Limited.
Business Description
The Company
Our Company is the flagship company of the Kalyani group which has significant presence in the
auto component sector in India.
We are one of the leading commercial forging companies globally in terms of capacity and revenue
and our Company is one of the largest commercial forging companies in India. We are one of the
worlds leading manufacturers of automotive chassis and Power train (engine) components such as
crankshafts, front axle beams, connecting rods, steering knuckles and other components to several
of the worlds leading commercial vehicle and passenger vehicle manufacturers.
We also produce forged components for non automotive industries including wind energy, railways,
marine, stationery diesel engines and the oil and gas industry. These products include shafts for
windmills, valves, bonnets and Blow out Preventers (BOP) for the oil and gas industry, and
crankshafts for marine, Locomotive and stationery diesel engines.
Our Companys principal production facility is located in Pune. Installed capacities of major
products of our line of business are as under as on 31st March 2009:
Corporate Structure
Our Company has direct and indirect wholly-owned subsidiaries in Germany, Sweden, Scotland,
the United States and Hong Kong. Our Company has a joint venture company in China, in which
we own 52 per cent stake.
Since 2004, our Company has made several strategic acquisitions in key locations such as
Germany, Sweden, Scotland, USA, China etc. These acquisitions have given our Company
competitive strengths such as dual shore manufacturing capabilities, full service supply capabilities
and strong design and engineering capabilities. Our Companys capabilities and access to
customers and markets outside of India have been significantly expanded by these investments,
which include the formation of a joint venture company, FAW Bharat Forge (Changchun) Company
Limited,(FAWBF) in China with FAW Forging Limited of FAW Corporation in March 2006, the
acquisition of the Imatra Forging Group, now renamed as Bharat Forge Kilsta AB (BFK) in Sweden
and Bharat Forge Scottish Stampings Limited, (BFSSL) in Scotland, in September 2005, the
acquisition of Federal Forge Inc., now known as Bharat Forge America Inc.(BFA), based in Lansing,
Michigan, USA in June 2005, acquisition of Bharat Forge Aluminiumtechnik GmbH & Co. KG (BFAT)
based in Brand-Erbisdorf, Germany in December 2004 and acquisition of CDP Bharat Forge GmbH
(CDPBF) based in Ennepetal, Germany in January 2004.
The forging capacity & Products of our Companys Subsidiaries are as follows:
Our Company has on June 19, 2008 incorporated BF-NTPC Energy Systems Limited as a joint
venture company pursuant to a MoU dated February 8, 2008 with NTPC Limited.
In November 2008, we have also signed an agreement with Alstom SA, France to set up a Joint
Venture Company for manufacturing state of the art supercritical power plant equipments in India.
Competitive strengths
We believe that we have several competitive strengths that provide us with significant
opportunities to grow our business in the forging industry. Our principal competitive strengths are
as follows:
Looking Forward
The key elements of our strategy are as follows:
As of March 31, 2009, the non-automotive business contributed 21% to our consolidated
revenues. The forgings for the non-automotive sector are presently being supplied from both
our Indian and overseas Subsidiaries. The non-automotive sectors are seeing demand and
growth due to various factors including new investments in the infrastructure sector in
emerging economies such as India and China and replacement investments in the
infrastructure and transportation sector to replace legacy infrastructure and comply with new
stringent emission norms.
In August 2009, we have signed a Joint Venture & Shareholders Agreement with Areva to set up a
Joint Venture (JV) to build a manufacturing facility for heavy forgings in India.
2. Explore strategic opportunities to expand product portfolio and further diversify the
geographic, economic and customer risk of our existing business model
We will continue to de-risk our business model through organic and inorganic growth initiatives
across the following areas:
Geography: We are already present in major continents including North America, Europe
and Asia (India and China) and will continue to penetrate these markets further and
explore new geographies.
Product portfolio: Expanding the product portfolio across steel and aluminum forgings for
the automotive sector, covering engine and chassis components and increasing our
presence in non automotive sectors, thereby transforming our Company from an auto
component supplier to an engineering and capital goods company.
Customer base: Deepen relationships with existing customers and expand our customer
base across geographies and product portfolio.
Our Products
We manufacture wide range of products both in forged and machined conditions. The majority of
our products such as crankshafts, front axle assembly and components and connecting rods are for
the automotive industry.
We also produce forged components for non automotive industries including wind energy, railways,
marine and stationery diesel engines and the oil and gas industry. These products include shafts
for windmills, valves, bonnets and Blow out Preventers (BOP) for the oil and gas industry, and
crankshafts for marine, Locomotive and stationery diesel engines.
Our steel forgings products include products such as crankshafts, front axle assembly and
components, connecting rods and heavy engineering products sold in forged condition for
automotive and other industries such as oil and gas. We also manufacture open die forged
products such as roller shafts, blooming mill rolls, integral frame shafts and wind mill shafts.
We have broadly organized our product offerings into two segments, based on the method of
forging; viz. closed die forgings and open die forgings. Our technically competent engineers work
closely with our customers to extract the best design and produce cost effective and quality
forgings.
Closed die forgings accounts for a major portion of our production. In this process, the hot metal
is closed around a die consisting of two halves. This process is used to make smaller forgings
requiring closer tolerance limits like axles, gear blanks and crankshafts among others. The process
is sometimes referred to as impression die forging. Our closed die forging products can be
primarily classified as engine components, chassis components and others. These components
include the following:
(a) Crankshafts
A crankshaft is a power train part, which transmits the power generated in the cylinder through
the connecting rod to the main drive of the vehicle.
We have the capability to manufacture a wide variety of crankshafts for various automotive & non
automotive applications such as passenger & commercial vehicles, Stationary & Marine diesel
engines, Locomotives and power generating sets. We manufacture crankshafts in both forged and
machined form.
Our customers for crankshafts include global OEMs and Indian commercial vehicle manufacturers.
B. Chassis Components
C. Other products
Facilities
Our Company has facilities for every step of the production process from design to testing and
validation. This reduces our Companys dependence on third-party service providers and enables
us to offer our Companys customers a shorter time to market of our products. Our Companys
control over the entire production process enables our Company to ensure the quality of our
Companys products.
Capacity
As at March 31, 2009, our Company on standalone basis had an installed forging capacity of
240,000 MT per annum. The table below sets out our installed capacity and level of production of
major products for the years ended March 31, 2009, 2008 and 2007 respectively:
Machined
Products
Front Axle
Assembly and
Components Nos 753,200 753,200 753,200 309,583 509,417 572,053
Financial Analysis
The Financial Performance of the Company (stand alone) for last five years is as under;
Rs. Crore
2009 2008 2007 2006 2005
Equity Paid Up 44.54 44.54 44.54 44.46 39.56
Net worth 1,486.93 1,473.28 1,316.80 1,154.13 422.56
Gross Block 2,684.02 2,029.64 1,735.06 1,265.11 948.78
History
We are the flagship company of the Kalyani Group which has a significant presence primarily in the
auto component sector in India. We were established in 1961 as Bharat Forge Company Limited by
Mr. Neelakanth Kalyani. We commenced our production in 1966. The name of our Company was
subsequently changed to Bharat Forge Limited on April 30, 1986.
Acquired 100 per cent ownership in the Swedish forging group, Imatra Kilsta AB,
renamed BFK and its wholly owned subsidiary Scottish Stamping Limited, renamed
BFSSL.
Formed a joint venture company, FAW Bharat Forge with the FAW Group. Our Company
holds 52 per cent of the shares in FAW Bharat Forge while the FAW Group holds 48 per
cent of the shares. The FAW Group transferred its ongoing forging business to FAW
Bharat Forge. FAW Bharat Forge commenced operations on April 6, 2006.
Completed Rs 650 Crore capacity expansion programmes for forging & Machining facility
at its Pune plant. The said programme increased its forging capacity from 102,966 TPA to
240,000 TPA and crankshaft & Front axle components machining capacity.
2007 Embarked on Rs 500 crores capacity expansion programme for setting up a ring rolling
facility, state of the art non-auto forging facility with complimentary machining
,machining of medium crankshafts at Baramati & machining of windmill shafts at Satara.
The capacity expansion will augment the forging capacity of the Indian operations to
365,000 tons Per Annum (TPA).
2008 Incorporated a joint venture company, BF NTPC Energy Systems Limited, on June 19,
2008, with a 51% majority stake for the manufacture of castings, forgings, fittings and
high pressure pipings required for power and other industries, balance of plant (BOP)
equipment for the power sector etc
Signed an agreement with Alstom SA, France to set up a Joint Venture Company for
manufacturing state of the art supercritical power plant equipments in India in November
2008.
2009 Signed a Joint Venture & Shareholders Agreement with Areva to set up a Joint Venture to
build a manufacturing facility for heavy forgings in India.
Shareholding Pattern
Statement showing Shareholding Pattern as on June 30th, 2009
Total No. of % to Total No.
Category of Shareholder Shares of Shares
Promoter & Promoter Group 97,908,905 43.97
Mutual Funds / UTI 90,14,201 4.05
Financial Institutions / Banks 13,587,346 6.10
Insurance Companies 10,676,336 4.80
Foreign Institutional Investors 17,120,389 7.70
Bodies Corporate 24,699,858 11.09
Individuals 46,624,048 20.94
Others (Clearing Members & Trusts) 3,011,988 1.35
Shares held by Custodians and against which
Depository Receipts have been issued 9,200 0.00
Total 22,26,52,271 100
Issued to SIFCO,
USA for
consideration
March 25, other than cash
2,380 100 100 155,000 15,500,000 Non Cash
1964 pursuant to their
technical
assistance
contract2
Subdivision of equity shares from Rs. 100 each to Rs. 10 each resulting in 1,550,000 shares of Rs.
10 each3
Vth Series
Convertible
Debentures issued
May 20,
312,500 10 40 5,272,500 52,725,000 Cash on a rights basis to
1987
the existing
shareholders in
the ratio of 5:80
April 24, 10 Bonus Issue in the
1989 5,272,500 10 10,545,0 00 105,450, 00 - ratio of 1.14
IX Series Non
December
Convertible
14, 1993 1,337,03510 160 19,774,685 197,746,850 Cash
Debentures
Coupon conversion
April 15, Rights Issue in the
1994 6,923,00010 50 26,697,685 266,976,850 Cash ratio of 1:3
1. The details are not available as the records were burnt in fire which took place in our premises
on April 24, 1998
2. 4,760 Equity Shares of Rs. 100 each were issued as fully paid up for consideration other than
cash, to SIFCO, USA pursuant to a Technical Assistance Contract. These shares were issued in
calendar year 1963 and 1964.
3. The shares of face value of Rs. 100 each were subdivided into equity shares of face value of Rs.
10 each vide the approval given the general body at the extraordinary general meeting held on
July 02, 1971.
4. Issue of fully paid Bonus Shares by way of capitalization of Share Premium Account and
Reserves. The details are not available as the records were burnt in a fire which took place in our
premises on April 24, 1998.
5. Equity shares issued at a premium of Rs. 146/- per equity share, against warrants issued to
Promoter/Promoter Group Companies on preferential basis. These shares were allotted to Kalyani
Steels Limited (2,885,000 equity shares), Ajinkya Investment and Trading Company Limited
(205,000 equity shares), Koyna Investment and Trading Company (205,000 equity shares) and
Cockscomb Investment and Finance Private Limited (205,000 equity shares). Details of certificate
from the statutory auditors that the securities were issued in accordance with then existing SEBI
Guidelines was not available as the records were burnt in fire which took place in our premises on
April 24, 1998.
7. A private placement of 18, 00,000 shares was done to Promoter group companies. 900,000
shares were allotted to Surajmukhi Investment & Finance Limited and other 900,000 shares to
Chakrapani Investment & Trades Limited. A certificate from the statutory auditors that the
securities were issued in accordance with then existing SEBI Guidelines was obtained.
8. Pertains to shares forfeited on account of non-payment of calls; 5,426 equity shares were
forfeited on June 30, 1991, of which forfeiture of 2,424 equity shares has been annulled on
account of payment of overdue calls subsequently; 65,730 equity shares were forfeited on
November 30, 1993, of which forfeiture of 34,164 equity shares has been annulled on account of
payment of overdue calls subsequently.
9. Allotment of 340 equity shares to non-residents was annulled in reference to RBI advice against
allotting additional shares under 89 series debentures of VIth series with attached coupon
warrants.
V. INDUSTRY
Indias automotive components industry manufactures almost the entire range of parts required by
the automotive industry for various types of vehicles. The forging industry caters to five major
segments namely power train parts (pistons, piston rings, engine valves, crankshafts, connecting
rods etc.), electrical parts (starter motors and generators etc.), drive, transmission, Chassis and
steering parts (gears, clutches, front axle beams, steering knuckles etc.), suspension and braking
parts (brakes, leaf springs, shock absorbers etc.), equipment (headlights, dashboard instruments
etc.) and others (sheet metal parts, pressure die castings, tyres, tubes etc.).
The Indian Automotive industry witnessed strong growth with automobile production increasing
from 6.28 million vehicles in 2002-03 to over 11.18 million vehicles in 2008-09, at a CAGR of 10
per cent. This was driven by a vibrant economy, increased purchasing power of the Indian
consuming class among others. (Source: Society of Indian Automobile Manufacturers (SIAM)
website www.siamindia.com.)
The Indian auto component industry is estimated to have achieved a turnover of US$ 18 billion in
200708 registering a growth of 20 per cent as compared to previous year. The auto parts
industry has emerged as one of Indias fastest growing manufacturing sectors, growing at a
compound annual growth rate (CAGR) of 28 per cent in value terms between 2002-03 and 2007-
08. The industry has achieved this through expansion of product portfolio, entry in to newer
markets and efficiency improvement.
(Source: Global Competitiveness of Indian Auto Component Industry & Its Sustainability.
Automotive Component Manufacturers Association of India website http://www.acmainfo.com).
The auto component sector in 2007-08 is estimated to have exported 20 per cent of its output. In
the year 2007-08, the industry exported goods worth US$ 3.6 billion as against US$ 2.9 billion in
year 2006-07, registering a growth of 26%.
(Source: Global Competitiveness of Indian Auto Component Industry & Its Sustainability.
Automotive Component Manufacturers Association of India website http://www.acmainfo.com).
Domestic Markets
A major source of domestic demand for the auto component manufacturers is derived from
domestic passenger vehicles and commercial vehicles demand. As per SIAM, for the year ended
March 31, 2009, passenger cars and utility vehicles production grew at CAGR of 16.8 per cent
between 2002-03 and 2008-09. For the same period; commercial vehicles production registered a
CAGR of 12.7 per cent.
(Source: Society of Indian Automobile Manufacturers (SIAM website www.siamindia.com).
Export Markets
The offshore demand for auto components mainly comprises of global vehicle majors (OEMs) and
Tier 1 manufacturers. As per ACMA, Indian auto component exports have grown at approximately
30 per cent per annum in the past four years to cross US$ 3.6 billion in 2008 from US$ 1.3 billion
in 2004.
(Source: Global Competitiveness of Indian Auto Component Industry & Its Sustainability.
Automotive Component Manufacturers Association of India, website http://www.acmainfo.com/)
The automotive sector is one of the core industries of the Indian economy. The delicensing of the
sector in 1991 and the subsequent opening up of 100 per cent foreign direct investment (FDI)
through the automatic route marked the beginning of a new era for the Indian automotive
industry. Since then almost all the global major automobile players have set up their facilities in
India taking the level of production of vehicles from 2 million in 1991 to 11.18 million (Including 2
& 3 wheelers) in 200809.
The growth of the Indian middle class with increasing purchasing power along with the strong
growth of the economy over the past few years has attracted global major auto manufacturers to
the Indian market. Moreover, India provides trained manpower at competitive costs making India
a favoured global manufacturing hub. The attractiveness of the Indian markets on one hand
combined with the stagnation of the auto sector in markets such as Europe, US and Japan on the
other, have resulted in shifting of new capacities and flow of capital to the Indian auto industry
resulting in a boom for the domestic auto industry over the past 5 years
Passenger vehicle production increased from around 0.7 million vehicles in 2002-03 to more than
1.84 million vehicles in 2008-09, a CAGR of 16.8%. During the same period, Commercial vehicle
production increased at a CAGR of 12.7% from 0.20 million vehicles to 0.42 million vehicles.
1,777,583 1,838,697
1,545,223
1,309,300
1,209,876
989,560
723,330
Commercial Vehicles
549,006
519,982
417,126
391,083
353,703
275,040
203,697
In 2008-09, the Indian Auto industry witnessed turbulent times due to hardening interest rates,
lower availability of finance, escalating fuel prices, economic slowdown all of which have
contributed to the sluggish volumes in the sector. The situation drastically deteriorated in the latter
half of the year due to sudden global economic crisis due to the sub prime crisis. Within the auto
pack, volumes of the Commercial Vehicles (CV) segment have been impacted the most due to the
slowdown, with Medium & Heavy Commercial Vehicles (M&HCV) volumes declining drastically.
M&HCV production in H2 FY09 declined by 61.3% as compared to the same period last year.
After seven consecutive years of good growth, auto component majors are facing major headwinds
on both the domestic as well as the export front and Auto component manufacturers have begun
cutting production. Lack of finance and a large inventory stockpile had forced truck majors to
sharply cut production commercial & Passenger vehicles in the wake of slowing demand. Off late,
the incentives provided by the federal government have resulted in stifling of the decline and small
recovery in certain segments.
Forgings find application in various industries other than automobiles, like power plants, wind
turbines, earth-moving equipments, marine engines, aerospace, railways etc. These sectors are
globally witnessing phenomenal growth driven by:
New investments in emerging economies like India and China
Replacement investments in developed economies of North America and Europe for
overhaul of legacy infrastructure and complying with new emission norms
The growth potential offered by some segments of the non automotive sector both globally & in
India is explained below.
Wind Energy
The rise of wind energy as an alternative energy source is being driven by higher prices & supply
scarcity of commodities like oil, coal etc., and increasing social and political concern over carbon
emissions and climate change, and by the changing legislative landscapes that accompany this.
In the 11th five year plan (2008-12), the Government of India is targeting additional installed
power generation capacity of 10,500 MW through wind energy (Source:www.mnes.nic.in/pdf/11th-
plan-proposal.pdf). Forged components for the wind energy sector include main shafts, flanges,
gear box components and rings among others.
Railways
The railway industry is on a growth path fueled by growing global trade and rising fuel costs for
transportation by road and air. The rapid rise in international trade and domestic cargo has placed
a great strain on railway infrastructure in India. The Government of India has decided to build
dedicated freight corridors in the Western and Eastern high-density routes. The investment is
expected to be about Rs. 22,000 crore (US$ 5 bn).(Source: Committee on infrastructure
www.infrastructure.gov.in). Forged components for the railways include connecting rods,
crankshafts, track links, pistons, axles and camshafts among others.
Power
The government has plans for capacity creation of 78,000 MW during the 11th five year plan
(2008-12) and has announced setting up of nine major Ultra Mega Power Projects (UMPPs). These
are very large sized projects, approximately 4000 MW each, requiring investment of about Rs
16,000 Crores each. This sector overall will require projected investments to the tune of US$ 150
billion. (Source: Government websites: Ministry of power (www.powermin.nic.in and investment
commission of India (http://www.investmentcommision.in). At the same time existing
infrastructure in the developed markets is getting replaced to conform to the new emission norms.
Forged components for the power sector include rotor shafts, precision forged blades for turbines
and components for turbo generators.
Under the purview of current document, the Company intends to raise an amount of Rs.350 Crores
of Secured Redeemable Non Convertible Debentures in dematerialised form.
The Company has a valid rating of LA+ With a Stable Outlook (pronounced L Double A) by ICRA
Limited as per the details given below and the rating letter from the rating agency is enclosed at
the end of this document.
The detail terms sheet of the proposed debenture issue is given in section XXIII of this document.
LA+ with a Stable Outlook (pronounced L A Plus) by ICRA Limited for Rs.350 Crores long term
NCDs. Instruments with this rating are judged to offer an adequate credit quality rating.
The rating is not a recommendation to buy, sell or hold securities and investors should take their
own decision. The rating may be subject to revision or withdrawal at any time by the assigning
rating agency and each rating should be evaluated independently of any other rating. The rating
obtained is subject to revision at any point of time in the future. The rating agencies have a right
to suspend, withdraw the rating at any time on the basis of new information etc.
The Company proposes to mobilise through private placement of Secured Redeemable Non-
Convertible Debentures (NCDs).
Issue Size Rs.350 Crores (Rupees Three Hundred Fifty Crores only)
Depository NSDL/CDSL
Settlement Payment of interest will be made by way of cheque(s)/ interest
warrant(s)/ demand draft(s)/credit through RTGS system
The Company reserves the right to change the issue programme and also accept or reject any
application in part or in full without assigning any reason.
The Present issue of Debenture is being made to meet the normal capital expenditure, general
corporate purposes and long term funds requirement.
The Main Object Clause of the Memorandum of association of the Company enables it to undertake
the activities for which the funds are being raised through the present issue and also the activities
which the Company has been carrying on till date. The proceeds of this Issue after meeting all
expenses of the Issue will be used by the Company for meeting issue objects.
The following contracts (not being contracts entered into in the ordinary course of business carried
on by the Company or entered into more than two years before the date of this document which
are or may be deemed material have been entered or to be entered into by the Company.
These material contracts and material documents referred to hereunder, may be inspected at the
Registered Office of our Company between 10.00 am to 4.00 pm on working days.
Material Contracts
Copy of letter from the Company appointing Bank of Maharashtra as Trustee to the Issue.
2) Copy of the Certificate of Incorporation of the Company dated 19th June 1961.
4) Certified true copy of the Resolution(s) of the Company passed at the General Meeting held on
24th July 2009 for increase in borrowing limits.
5) Certified true copy of the Resolution of the Board of Directors dated 20th May 2009 for
issuance of debentures and empowering for other related matters.
6) Copies of Annual Reports of our Company for the last five financial years.
7) Certified true copy of the Resolution of the Members of the Company passed at the 48th
Annual General Meeting held on 24th July 2009 appointing M/s. Dalal & Shah, Chartered
Accountants, as statutory auditors of the Company.
The table below sets forth outstanding borrowing of the Company as on 31st March 2009:
(Amount in Crores)
Nature of
Name of the Bank Sanctioned Limit Outstanding Amount
Facility
Secured Loans
Bank of Baroda London Long Term Loan Rs.76.08 (USD 1.5) Rs. 25.36 (USD 0.50)
Bank of India, London Long Term Loan Rs.76.08 (USD 1.5) Rs.50.72 (USD 1.00)
Standard Chartered
Long Term Loan Rs.101.44 (USD 2.00) Rs.81.15 (USD 1.60)
Bank, Mauritius
Consortium Banks Working Capital
Rs.825.00 Rs.209.83
Loan
Calyon, Singapore Long Term Loan Rs.253.60 (USD 5.00) Rs.253.60 (USD 5.00)
Private placement of Non Convertible
Rs.250.00 Rs.250.00
NCD Debentures
Sub Total (a) Rs.870.66 (USD 8.10)
Unsecured Loans
0.5 % FCCB Tranche 1 FCCB Rs.304.32 (USD 6.00) Rs.220.63 (USD 4.35)
0.5 % FCCB Tranche 2 FCCB Rs.304.32 (USD 6.00) Rs.304.32 (USD 6.00)
0 % FCCB Tranche A FCCB Rs.202.88 (USD 4.00) Rs.202.88 (USD 4)
0 % FCCB Tranche B FCCB Rs.202.37 (USD 3.99) Rs.202.37 (USD 3.99)
The Company had issued Foreign Currency Convertible Bonds (FCCB) in four Tranches aggregating
USD 19.99 crore, detailed in the table below. The said bonds are optionally convertible into GDR/
However, the Company has option to redeem the balance of the above Bonds if such balance is
less than 10% in aggregate of principal amount of such tranche of bonds originally issued in
respect of each Tranche, during the redemption exercise period in the manner specified in the
offering circular at a premium so as to provide a predetermined yield to the Bondholders
The Company also has the option to call the Bondholders of Tranche A & Tranche B to mandatorily
convert the Bonds into Equity Shares if the Market price on the specified date provided the holder
a gain of at least a 30% over the Early Redemption amount.
The following table sets out the parameters associated with each Tranche of Bonds issued as
discussed above:
Amt. Coupo
Tra Face
USD n Int Companys option for
nch Value Holders option to convert Maturity
Cror Rate Early Redemption
e USD
e % p.a.
Initial Price
Exercise Gross
Exercise period Price % of
period Yield to Date
per Face
Bond
Share Value
holders
From To Rs. From To
1 6.00 1,000 0.50% 30-May-05 10- 336.105 19- 13- 5.25% 20- 126.77
Apr- Apr- Apr- Apr- 8%
10 07 10 10
2 6.00 1,000 0.50% 30-May-05 10- 384.12 19- 13- 5.75% 20- 129.93
Apr- Apr- Apr- Apr- 9%
10 08 10 10
A 4.00 100,000 - 08-Jun-06 18- 604.03 28- 18- 6.00% 28- 142.57
Apr- Apr- Apr- Apr- 6%
12 09 12 12
B 3.99 100,000 - 08-Jun-06 18- 690.32 28- 18- 6.50% 28- 156.48
Apr- Apr- Apr- Apr- 1%
13 09 13 13
Due to variables currently indeterminate, the premium on actual redemption is not computable and
hence will be recognised if and as and when the redemption option is exercised, as a charge to the
securities premium account in terms of Section 78(2)(d) of the Companies Act,1956.
Sanctio
Outstandin
Facility ned Properties Security Charge
g Amount
Limit
First Fixed legal Pari Passu
charge on all present and
Term Loan from
USD 1.5 USD 1.00 Fixed Assets of the future fixed assets of the Co &
Bank of India ,
Crore Crore Co Pari Passu Hypothecation with
London
existing lenders of P&M and all
other Fixed Assets of the Co.
First Fixed legal Pari Passu
charge on all present and
Term Loan from
USD 1.5 USD 0.50 Fixed Assets of the future fixed assets of the Co &
Bank Of Baroda,
Crore Crore Co Pari Passu Hypothecation with
London
existing lenders of P&M and all
other Fixed Assets of the Co
Term Loan from USD First Pari Passu charge over
USD 5.00 Fixed Assets of the
Calyon, 5.00 present and future movable
Crore Co
Singapore Crore fixed assets of the Co.
Term Loan
Exclusive First Charge over
Standard USD 2.0 USD 1.60
Aircraft Aircraft by way of Specific
Chartered Bank Crore Crore
Hypothecation
for Aircraft
Fund Based
Rs.825 Rs.209.83 Inventory and Book
consortium
Crores Crore Debts
Working Capital
There are no material event/development or change at the time of issuance of this document
which may affect the issue or the investors decision to invest/ continue to invest in the debt
securities.
XII. Debt Securities Issued for Consideration Other Than Cash, At Premium Or
At Discount, In Pursuance Of An Option.
The Issuer Company has not issued any debt securities for consideration other than cash, at
premium, or at discount. The details of the FCCBs issued are provided in the section IV titled Brief
History of Issuer Company since incorporation and changes in Capital Structure.
List of Top 10 Shareholders of Equity Shares and No. of Equity Shares held by them (as on 30th
June 2009):
Sr. % To
Name Address Total Shares
No Equity
C/o Kalyani Steels Ltd,
1 KSL Holdings Pvt Ltd Mundhwa,Pune Cantonment, Pune 2,31,42,870 10.39
411 036
Investment Department, 6th Floor,
Life Insurance West Wing,Central Office,
2 2,24,43,729 10.08
Corporation Of India Yogakshema, Jeevan Bima Marg,
Mumbai 400 021
Industry House, S.No 49, Opp
Sundaram Trading & Kalyani Carpenter Special Steels Ltd,
3 2,08,16,932 9.35
Investment Pvt Ltd Mundhwa, Pune Cantonment, Pune
411 036
C/o Kalyani Steels Ltd,
Gladiola Investments
4 Mundhwa,Pune Cantonment, Pune 1,13,96,420 5.12
Ltd
411 036
C/o Kalyani Steels Ltd,
Surajmukhi Investment
5 Mundhwa,Pune Cantonment, Pune 1,07,49,265 4.83
and Finance Limited
411 036
Industry House, S. No 49, Opp.
Ajinkya Investment and Kalyani Carpenter Special Steels Ltd.,
6
Trading Co Pvt. Ltd. Mundhwa, Pune Cantonment, Pune 98,18,925 4.41
411 036
C/o Kalyani Steels Ltd,
Chakrapani Investment
7 Mundhwa,Pune Cantonment, Pune 95,10,410 4.27
and Finance Limited
411 036
Kritadnya Management
C/o Bharat Forge Ltd, Mundhwa,
8 & Trading Services Pvt 84,31,225 3.79
Pune Cantonment, Pune 411 036
Ltd
Deutsche Bank, A.G , DB House,
Hazarimal Somani Marg, Next to
9 Janus Contrarian Fund 67,11,673 3.01
Sterling Centre, P.O Box No 1142,
Fort Mumbai , Mumbai, 400 001
The New India The New India Assurance Building ,
10 Assurance Company 87 M.G.Road , Fort, Mumbai 400 60,36,470 2.71
Limited 001
12,90,57,919
Total 57.96
0.5% Tranche 2 FCCB USD 6.00 crore (O/s USD 6.00 crore) due April 2010
Sr.No Name Address Total % To
Shares Equity
1 * Refer Note below
0% Tranche B FCCB USD 3.99 crore (O/s USD 3.99 crore) due April 2013
Sr.No Name Address Total Shares % To
Equity
1 * Refer Note below
*Note:
The holders of each of the series of FCCBs are represented by Depository viz. Citibank N.A 388,
Greenwich Street, New York, New York 10013, USA. The payment due towards interest where
applicable is made to the Paying Agent Citibank NA, 5, Carmaelite Street, London EC4Y0PA, United
Kingdom
Global Depository Recepits (GDR) USD 10.00 crore (O/s USD 0.25 crore)
Sr.No Name Address Total Shares % To
Equity
1 ** Refer Note below
**Note:
The holders of each of the GDRs are represented by Depository viz. Citibank N.A 388, Greenwich
Street, New York, New York 10013, USA.
The normal procedure followed for transfer of securities held in dematerialized form shall be
followed for transfer of these debentures held in electronic form. The seller should give delivery
instructions containing details of the buyers DP account to his depository participant. The Issuer
undertakes that there will be a common transfer form / procedure for transfer of debentures
The Company reserves the right to change the issue programme and also accept or reject any
application in part or in full without assigning any reason.
Market Lot
The market lot will be one Debenture (Market Lot). Since the debentures are being issued only in
dematerialised form, the odd lots will not arise either at the time of issuance or at the time of
transfer of debentures.
The Debentures since issued in electronic (dematerialized) form, will be governed as per the
provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and
Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to
time and other applicable laws and rules notified in respect thereof.
Terms of Payment
The full face value of the Debentures applied for is to be paid along with the Application Form.
Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s) for the full
face value of the Debentures applied for.
Tax Benefits
Under the existing provisions of the Income Tax Act, 1961 for the time being in force, the following
tax benefits and deductions will be available to the Debenture holder(s) of the Company subject to
the fulfillment of the requirements of the relevant provisions. The tax benefits are given as per the
prevailing tax laws and may vary from time to time in accordance with the amendments or
enactment thereto. As alternate views are also possible, the Debenture holder(s) are advised to
consult their own tax advisers on the tax implications of the acquisition, ownership and sale of
Debentures, and income arising thereon
In all other situations, tax would be deducted at source on each payment as per prevailing
provisions of the Income Tax Act. Details on deduction of tax at source are given under para Tax
Deduction at Source (TDS) mentioned elsewhere in this Information Memorandum. No Wealth Tax
is payable in respect of investments in Debentures of the Company.
Notes:
1. All the above benefits are as per the current tax law as amended by the Finance Act, 2008
2. The stated benefits will be available only to the sole/ first named holder in case the Debentures
are held by joint holders.
Payment on Redemption
Payment on redemption will be made by cheque(s)/ warrants(s) in the name of the Debenture
holder whose name appears on the List of Beneficial owners given by Depository to the Company
as on the Record Date. On the Company dispatching the redemption warrants to such Beneficiary
(ies) by registered post/ courier, the liability of the Company shall stand extinguished.
The Debentures shall be taken as discharged on payment of the redemption amount by the
Company on maturity to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository
Participant. Such payment will be a legal discharge of the liability of the Company towards the
Debenture holders. On such payment being made, the Company will inform NSDL/ CDSL/
Depository Participant and accordingly the account of the Debenture holders with NSDL/ CDSL/
Depository Participant will be adjusted.
The Companys liability to the Debenture holders towards all their rights including for payment or
otherwise shall cease and stand extinguished from the due date of redemption in all events.
Further the Company will not be liable to pay any interest or compensation from the date of
redemption. On the Company dispatching the amount as specified above in respect of the
Debentures, the liability of the Company shall stand extinguished.
Effect of Holidays
Should any of dates defined above or elsewhere in the Information Memorandum, excepting the
Deemed Date of Allotment, fall on a Saturday, Sunday or a Public Holiday, the next working day
shall be considered as the effective date(s).
Notices
All notices to the Debenture holder(s) required to be given by the Company or the Trustees shall
be published in one English and one regional language daily newspaper in Mumbai, New Delhi,
Kolkata and Chennai and/ or, will be sent by post/ courier to the sole/ first allottee or sole/ first
Beneficial Owner of the Debentures, as the case may be from time to time.
All notice(s) to be given by the Debenture holder(s) shall be sent by registered post or by hand
delivery to the Company or to such persons at such address as may be notified by the Company
from time to time through suitable communication.
Joint-Holders
Where two or more persons are holders of any Debenture(s), they shall be deemed to hold the
same as joint tenants with benefits of survivorship subject to other provisions contained in the
Articles.
Depository Arrangements
Company has In-house arrangements for the present Debenture issue. The Company has made
necessary depository arrangements with National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL) for issue and holding of Debentures in
dematerialized form. In this context the Company has signed two agreements as under:
Agreement dated 5th May, 2004 between Bharat Forge Ltd., and National Securities Depository
Limited (NSDL) for offering depository option to the investor.
Agreement dated 1st January, 2004 between Bharat Forge Ltd., and Central Depository Services
(India) Limited (CDSL) for offering depository option to the investor.
Investor can hold the debentures only in dematerialized form and deal with the same as per the
provisions of Depositories Act, 1996 as amended from time to time.
Number of debentures applied for is less than the minimum application size;
Applications exceeding the issue size;
Bank account details not given;
Details for issue of debentures in electronic/ dematerialized form not given;
PAN/GIR and IT Circle/Ward/District not given;
In case of applications under Power of Attorney by limited companies, corporate bodies, trusts,
etc. relevant documents not submitted;
In the event, if any Debenture(s) applied for is/ are not allotted in full, the excess application
monies of such Debentures will be refunded, as may be permitted.
How to Apply
This Information Memorandum is neither a prospectus nor a statement in lieu of prospectus and
does not constitute an offer to the public generally to subscribe for or otherwise acquire the
Debentures issued by the Company. The document is for the exclusive use of the Institution(s) to
whom it is delivered and it should not be circulated or distributed to third parties. The document
would be sent specifically addressed to the institution(s) by the Issuer Company.
The applicant or in the case of an application in joint names, each of the applicant, should mention
his/her Permanent Account Number (PAN) allotted under the Income-tax Act, 1961 or where the
same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the
provision of Section 139A(5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the
TDS certificates. Hence, the investor should mention his PAN/GIR No. if the investor does not
submit Form 15G/15AA/other evidence, as the case may be for non-deduction of tax at source. In
case neither the PAN nor the GIR Number has been allotted, the applicant shall mention Applied
for and in case the applicant is not assessed to income tax, the applicant shall mention Not
Applicable (stating reasons for non applicability) in the appropriate box provided for the purpose.
Application Forms without this information will be considered incomplete and are liable to be
rejected.
Applications may be made in single or joint names (not exceeding three). In the case of joint
applications, all payments will be made out in favour of the first applicant. All communications will
be addressed to the first named applicant whose name appears in the Application Form at the
address mentioned therein.
Unless the Issuer Company specifically agrees in writing with or without such terms or conditions it
deems fit, a separate single cheque/ demand draft must accompany each Application Form.
Applicants are requested to write their names and application serial number on the reverse of the
instruments by which the payments are made. All applicants are requested to tick the relevant
column Category of Investor in the Application Form.
Application Form must be accompanied by either demand draft(s) or cheque(s) drawn or made
payable in favour of Bharat Forge Ltd. and crossed Account Payee Only. Cash, outstation
cheques, money orders, postal orders and stock invest shall not be accepted. The Company
assumes no responsibility for any applications/ cheques/ demand drafts lost in mail. Detailed
instructions for` filling up the application form and list of collection centers are provided elsewhere
in this Information Memorandum.
No separate receipts shall be issued for the application money. However, Bankers to the Issue at
their Designated Branch (es) receiving the duly completed Application Forms will acknowledge the
receipt of the applications by stamping and returning the acknowledgment slip to the applicant.
Applications shall be deemed to have been received by the Issuer Company only when submitted
to Bankers to the Issue at their designated branches or on receipt by the Registrar as detailed
above and not otherwise. For further instructions, please read Application Form carefully.
Future Borrowings
The Company shall be entitled to borrow/ raise loans or avail of financial assistance in whatever
form as also issue Debentures/ Notes/ other securities in any manner with ranking as pari-passu
basis or otherwise and to change its capital structure, including issue of shares of any class or
redemption or reduction of any class of paid up capital, on such terms and conditions as the
Company may think appropriate, without the consent of, or intimation to, the Debenture holder(s)
in this connection.
Right to Re-Issue
In the event of the Debentures being so purchased and/ or redeemed before maturity in any
circumstances whatsoever, the Company shall have the right to re-issue the Debentures under
section 121 of the Companies Act, 1956 or any other relevant statute(s), as applicable.
Statutory Auditors
Bank of Maharashtra
Recovery and Legal Services Department,
Central Office, Lokmangal,
1501, Shivaji Nagar,
Pune 411005
XVII. The discount at which such offer is made and the effective price for
the investor as a result of such discount.
The debentures are being issued at the face value and not at discount to offer price.
XVIII. The Debt Equity Ratio prior to and after issue of the debt security
The debt equity ratio of the Company as on 31st March 2009 is 1.22 times and subsequent to the
issue to these debentures will be approximately 1.45 times.
The company is discharging all its liabilities in time and would continue doing so in future as well.
The company has been paying regular interest and repaying the bank.
XX.The permission / consent from the prior creditors for a second or pari passu
charge.
The Company shall procure consent from the existing charge holders for creation of security for
the Proposed Debentures on pari passu basis. The trustee shall in future provide consent to create
pari-passu charge subject to the Issuer Company complying with the requisite terms of the
debentures issued.
The Company has appointed Bank of Maharashtra to act as Trustees for the Debenture holders. A
copy of letter from Bank of Maharashtra conveying their consent to act as Trustees for the
Debenture holders is enclosed.
LA+ With Stable Outlook (pronounced L A Plus) by ICRA Limited for Rs. 350 Crores long term
NCDs. Instruments with this rating are judged to offer a adequate credit quality rating and carries
low credit risk.
The rating is not a recommendation to buy, sell or hold securities and investors should take their
own decision. The rating may be subject to revision or withdrawal at any time by the assigning
rating agency and each rating should be evaluated independently of any other rating. The rating
obtained is subject to revision at any point of time in the future. The rating agencies have a right
to suspend, withdraw the rating at any time on the basis of new information etc.
The Company shall get the debentures listed on the WDM segment of the National Stock Exchange
Limited.
Issue Size Rs.350 Crores (Rupees Three Hundred Fifty Crores only)
Depository NSDL/CDSL
Issue Programme
Issue Open Date September 10, 2009
Earliest Closing Date September 18, 2009
Deemed Date of Allotment Within 4 days from the issue closure date
# The issuer reserves the right to change the issue closing date and in such an event, the Date of
Allotment for the Debentures may also be revised by the issuer at its sole and absolute discretion.
In the event of any change in the above issue programme, the issuer will intimate the investors
about the revised issue programme.
DISCLAIMER CLAUSE
This Disclosure Document is neither a prospectus nor a statement lieu of prospectus and does not
constitute an offer to the public to subscribe for or otherwise acquire the Debenture issued by the
Issuer. Apart from this Disclosure Document, no offer document or prospectus has been prepared
in connection with this Issue and no prospectus in relation to the Issuer or the Debentures relating
to this Offer has been delivered for registration nor such a document is required to be registered
under the applicable laws. This Disclosure Document is issued by the issuer and has been prepared
by the issuer to provide general information on the company and does not purport to contain all
the information a potential investor may require. This information relating to the issuer contained
in the Disclosure Document is believed by the issuer to be accurate in all respects as of the date
hereof.
DECLARATION
It is hereby declared that this Disclosure Document contains full disclosure in accordance with
Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008
issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008.
The Issuer also confirms that this Disclosure Document does not omit disclosure of any material
fact, which may make the statements made therein, in the light of the circumstances under which
they are made, misleading. The Disclosure Document also does not contain any false or misleading
statement.
The Issuer accepts no responsibility for the statements made otherwise than in this Disclosure
Document or in any other material issued by or at the instance of the Issuer and that any one
placing reliance on any other source of information would be doing so at his own risk.
Beejal Desai
Sr. Vice President (Legal) &
Company Secretary
Date:
Place: Pune