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2009923175750offer Document

This document summarizes a private placement of secured redeemable non-convertible debentures (NCDs) by Bharat Forge Limited amounting to Rs. 350 crores. Some key details include: - The debentures have a credit rating of "LA+" by ICRA indicating adequate credit quality. - The proceeds will be used for general corporate purposes. - Axis Bank Limited is the sole arranger and Bank of Maharashtra is the debenture trustee. - The debentures have various terms regarding redemption amount, period of maturity, and yield on redemption.

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0% found this document useful (0 votes)
84 views44 pages

2009923175750offer Document

This document summarizes a private placement of secured redeemable non-convertible debentures (NCDs) by Bharat Forge Limited amounting to Rs. 350 crores. Some key details include: - The debentures have a credit rating of "LA+" by ICRA indicating adequate credit quality. - The proceeds will be used for general corporate purposes. - Axis Bank Limited is the sole arranger and Bank of Maharashtra is the debenture trustee. - The debentures have various terms regarding redemption amount, period of maturity, and yield on redemption.

Uploaded by

AmitomSudarshan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 44

Private & Confidential For Private Circulation Only

(This Disclosure Document is neither a Prospectus nor a Statement


in Lieu of Prospectus). This Disclosure Document prepared in
conformity 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)

Registered Office: Mundhwa, Pune Cantonment, Pune 411036


Tel: +91 20 2670 2777 Fax: +91 20 2682 2163, Website: www.bharatforge.com
Contact Person: Mr. Beejal Desai, Company Secretary
Email: [email protected]

SCHEDULE I DISCLOSURE AS PER SEBI GUIDELINES FOR THE ISSUE OF DEBENTURES


ON A PRIVATE PLACEMENT BASIS

PRIVATE PLACEMENT OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES


(NCDS) OF RS.10,00,000/- EACH FOR CASH AT PAR AGGREGATING TO RS.350 CRORES

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).

SOLE ARRANGER DEBENTURE TRUSTEES REGISTRAR TO THE ISSUE

In House Registrar & Transfer Agent


Bharat Forge Limited
AXIS BANK LIMITED Bank of Maharashtra Beejal Desai Sr. Vice President
111, Maker Tower F, Recovery & Legal Services (Legal) & Company Secretary
Cuffe Parade, Colaba, Department Tel: +91 20 2670 2777
Mumbai 400005 Central office, Lokmangal, [email protected]
1501, Shivaji Nagar, www.bharatforge.com
Pune - 411005

Issue Opens on September 10, 2009


Earliest Issue Closure Date September 18, 2009
Allotment/Deemed Date of Allotment Within 4 days from the issue closure date
The company 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 company at its sole and absolute
discretion. In the event of any change in the above issue programme, the company will intimate
the investors about the revised issue programme.
TABLE OF CONTENTS

I. NAME, ADDRESS & REGISTERED OFFICE OF THE COMPANY ............................................... 6


II. BOARD OF DIRECTORS ............................................................................................................................ 6
III. SUMMARY OF BUSINESS/ ACTIVITIES ....................................................................................... 12
BUSINESS DESCRIPTION ............................................................................................................................................. 12
CORPORATE STRUCTURE ............................................................................................................................................. 12
COMPETITIVE STRENGTHS ........................................................................................................................................... 13
LOOKING FORWARD ..................................................................................................................................................... 13
OUR PRODUCTS ............................................................................................................................................................ 14
FACILITIES ..................................................................................................................................................................... 16
CAPACITY ....................................................................................................................................................................... 16
FINANCIAL ANALYSIS ................................................................................................................................................... 17
IV. BRIEF HISTORY OF OUR COMPANY SINCE INCORPORATION AND CHANGES IN
CAPITAL STRUCTURE ............................................................................................................................................ 17
HISTORY ........................................................................................................................................................................ 17
MILESTONES AND ACHIEVEMENTS OF OUR COMPANY: ............................................................................................ 17
CAPITAL STRUCTURE OF THE COMPANY ..................................................................................................................... 19
SHAREHOLDING PATTERN ............................................................................................................................................ 19
CHANGES IN CAPITAL STRUCTURE ............................................................................................................................. 19
V. INDUSTRY........................................................................................................................................................... 23
INDIAN AUTOMOTIVE COMPONENTS INDUSTRY OVERVIEW .................................................................................... 23
KEY MARKETS FOR INDIAN AUTO COMPONENTS INDUSTRY .................................................................................... 24
INDIAN AUTOMOTIVE INDUSTRY................................................................................................................................. 24
OUTLOOK FOR THE INDIAN AUTO COMPONENTS INDUSTRY .................................................................................... 25
GLOBAL NON-AUTOMOTIVE INDUSTRY OVERVIEW ................................................................................................... 26
VI. SECURITIES TO BE ISSUED AND LISTED UNDER CURRENT DOCUMENT ............... 26
CREDIT RATING ............................................................................................................................................................ 27
VII. DETAILS OF THE ISSUE SIZE............................................................................................................. 28
VIII. DETAIL OF UTILISATION OF PROCEEDS OBJECTS OF THE ISSUE ........................ 28
IX. MATERIAL CONTRACTS INVOLVING FINANCIAL OBLIGATION................................... 28
MATERIAL CONTRACTS ................................................................................................................................................ 28
MATERIAL DOCUMENTS ............................................................................................................................................... 29
X. DETAILS OF PAST BORROWINGS ........................................................................................................ 29
DETAILS OF SECURITY FOR SECURED INDEBTNESS- NCD/TERM LOAN (RUPEE/FCL) ..................................... 31
XI. MATERIAL DEVELOPMENT ................................................................................................................... 31
XII. DEBT SECURITIES ISSUED FOR CONSIDERATION OTHER THAN CASH, AT
PREMIUM OR AT DISCOUNT, IN PURSUANCE OF AN OPTION.................................................... 31
XIII. DETAILS OF HIGHEST TEN HOLDERS OF EACH KIND OF SECURITIES............... 32
XIV. UNDERTAKING TO USE A COMMON FORM OF TRANSFER................................................ 33
XV. REDEMPTION AMOUNT, PERIOD OF MATURITY, YIELD ON REDEMPTION .......... 33
XVI. INFORMATION RELATING TO THE TERMS OF OFFER OR PURCHASE....................... 34
MARKET LOT ................................................................................................................................................................. 34
LETTER(S) OF ALLOTMENT/ DEBENTURE CERTIFICATE(S)/ REFUND ORDER(S) ................................................ 34
ISSUE OF LETTER(S) OF ALLOTMENT ......................................................................................................................... 34

Private & Confidential 2


Not for circulation
ISSUE OF DEBENTURE CERTIFICATE(S) .................................................................................................................... 34
DISPATCH OF REFUND ORDERS .................................................................................................................................. 34
TERMS OF PAYMENT ..................................................................................................................................................... 34
PAYMENT OF INTEREST ................................................................................................................................................ 35
TAX DEDUCTION AT SOURCE (TDS)......................................................................................................................... 35
TAX BENEFITS ............................................................................................................................................................... 35
REDEMPTION ................................................................................................................................................................. 36
PAYMENT ON REDEMPTION .......................................................................................................................................... 36
EFFECT OF HOLIDAYS................................................................................................................................................... 36
LIST OF BENEFICIAL OWNERS .................................................................................................................................... 36
DEBENTURE REDEMPTION RESERVE (DRR) ............................................................................................................. 36
NOTICES ........................................................................................................................................................................ 36
JOINT-HOLDERS ........................................................................................................................................................... 36
SHARING OF INFORMATION ......................................................................................................................................... 37
UNDERTAKING BY THE ISSUER.................................................................................................................................... 37
DEPOSITORY ARRANGEMENTS .................................................................................................................................... 37
PROCEDURE FOR APPLYING FOR DEMAT FACILITY .................................................................................................... 37
TRUSTEES FOR THE DEBENTURE HOLDERS ................................................................................................................ 38
RIGHT TO ACCEPT OR REJECT APPLICATIONS .......................................................................................................... 38
HOW TO APPLY ............................................................................................................................................................. 38
WHO CAN APPLY .......................................................................................................................................................... 39
APPLICATIONS UNDER POWER OF ATTORNEY ........................................................................................................... 40
APPLICATION BY MUTUAL FUNDS ............................................................................................................................... 40
FUTURE BORROWINGS ................................................................................................................................................. 40
PURCHASE/ SALE OF DEBENTURES ............................................................................................................................ 40
RIGHT TO RE-ISSUE .................................................................................................................................................... 40
DEBENTURE HOLDER NOT A SHAREHOLDER .............................................................................................................. 40
RIGHTS OF DEBENTURE HOLDERS .............................................................................................................................. 40
STATUTORY AUDITORS ................................................................................................................................................ 41
REGISTRAR TO THE ISSUE ........................................................................................................................................... 41
TRUSTEE FOR THE ISSUE ............................................................................................................................................. 41
XVII. THE DISCOUNT AT WHICH SUCH OFFER IS MADE AND THE EFFECTIVE PRICE
FOR THE INVESTOR AS A RESULT OF SUCH DISCOUNT. ................................................................ 41
XVIII. THE DEBT EQUITY RATIO PRIOR TO AND AFTER ISSUE OF THE DEBT
SECURITY ..................................................................................................................................................................... 41
XIX. SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES, PAYMENT OF DUE
INTEREST ON DUE DATES ON TERM LOANS AND DEBT SECURITIES. ................................... 42
XX. THE PERMISSION / CONSENT FROM THE PRIOR CREDITORS FOR A SECOND
OR PARI PASSU CHARGE.................................................................................................................................... 42
XXI. NAME OF DEBENTURE TRUSTEE ...................................................................................................... 42
XXII. RATING RATIONALE ADOPTED BY RATING AGENCIES. .............................................. 42
XXIII. NAMES OF ALL RECOGNIZED STOCK EXCHANGE WHERE SECURITIES ARE
PROPOSED TO BE LISTED CLEARLY INDICATING THE DESIGNATED STOCK
EXCHANGE AND ALSO WHETHER IN-PRINCIPAL APPROVAL FROM THE RECOGNIZED
STOCK EXCHANGE HAS BEEN OBTAINED................................................................................................. 42
XXIV. TERM SHEET ............................................................................................................................................ 42
DISCLAIMER CLAUSE ............................................................................................................................................ 44
DECLARATION .......................................................................................................................................................... 44

Private & Confidential 3


Not for circulation
GENERAL DISCLAIMER
This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is
prepared 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. This document does not constitute an offer to the public generally to subscribe for or
otherwise acquire the Debentures to be issued by Bharat Forge Ltd. (the Issuer/ the
Company). The document is for the exclusive use of the Institutions to whom it is delivered and
it should not be circulated or distributed to third party (ies). The Company certifies that the
disclosures made in this document are generally adequate and are in conformity with the
captioned SEBI Regulations. This requirement is to facilitate investors to take an informed decision
for making investment in the proposed Issue.

DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA


This Disclosure Document has not been filed with Securities & Exchange Board of India (SEBI). The
Securities have not been recommended or approved by SEBI nor does SEBI guarantee the
accuracy or adequacy of this document. It is to be distinctly understood that this document should
not, in any way, be deemed or construed that the same has been cleared or vetted 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 document. The issue of Debentures being made on private placement basis, filing
of this document is not required with SEBI, however SEBI reserves the right to take up at any
point of time, with the Company, any irregularities or lapses in this document.

DISCLAIMER OF THE ISSUER


The Issuer confirms that the information contained in this Disclosure Document is true and correct
in all material respects and is not misleading in any material respect. All information considered
adequate and relevant about the Issue and the Company has been made available in this
Disclosure Document for the use and perusal of the potential investors and no selective or
additional information would be available for a section of investors in any manner whatsoever. The
Company accepts no responsibility for statements made otherwise than in this Disclosure
Document or any other material issued by or at the instance of the Issuer Company and anyone
placing reliance on any other source of information would be doing so at his/her/their own risk.

DISCLAIMER OF THE STOCK EXCHANGE


As required, a copy of this Disclosure Document has been submitted to the Bombay Stock
Exchange Limited (hereinafter referred to as BSE) for hosting the same on its website. It is to be
distinctly understood that such submission of the document with BSE or hosting the same on its
website should not in any way be deemed or construed that the document has been cleared or
approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of this document; nor does it warrant that this Issuers
securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for
the financial or other soundness of this Issuer, its promoters, its management or any scheme or
project of the Company. Every person who desires to apply for or otherwise acquire any securities
of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not
have any claim against the Exchange whatsoever by reason of any loss which may be suffered by
such person consequent to or in connection with such subscription/ acquisition whether by reason
of anything stated or omitted to be stated herein or any other reason whatsoever.

DISCLAIMER OF THE ARRANGER


It is advised that the Company has exercised self due-diligence to ensure complete compliance of
prescribed disclosure norms etc in this Disclosure Document. The role of the Arranger in the
assignment is confined to marketing and placement of the Debentures on the basis of this
Disclosure Document as prepared by the Company. The Arrangers have neither scrutinized/ vetted
nor have they done any due-diligence for verification of the contents of this Disclosure Document.
The Arranger shall use this document for the purpose of soliciting subscription from qualified
institutional investors and other eligible investors in the Debentures to be issued by the Company

Private & Confidential 4


Not for circulation
on private placement basis It is to be distinctly understood that the aforesaid use of this document
by the Arranger should not in any way be deemed or construed that the document has been
prepared, cleared, approved or vetted by the Arranger; nor do they in any manner warrant, certify
or endorse the correctness or completeness of any of the contents of this document; nor do they
take responsibility for the financial or other soundness of this Issuer, its promoters, its
management or any scheme or project of the Company. The Arranger or any of its directors,
employees, affiliates or representatives do not accept any responsibility and/or liability for any loss
or damage arising of whatever nature and extent in connection with the use of any of the
information contained in this document.

Private & Confidential 5


Not for circulation
I. NAME, ADDRESS & REGISTERED OFFICE OF THE COMPANY

Summary Information Of Our Company

Issuer Bharat Forge Limited

Registered Office Mundhwa, Pune Cantonment, Pune - 411036


Contact Person
Mr. Beejal Desai, Sr. Vice President (Legal) & Company Secretary Tel:
+91 20 2670 2777 Fax: +91 20 2682 2163,
Email: [email protected]
Website: www.bharatforge.com

II. Board of Directors

Brief Profile
Sr. No. Name of Director Category

1 Mr. B.N. Kalyani Promoter, Executive and Managing Director

2 Mr. S.M. Thakore Non-executive, Independent

3 Mr. S.D. Kulkarni Non-executive, Independent

4 Mr. P.G. Pawar Non-executive, Independent

5 Dr. Uwe Loos Non-executive, Independent

6 Mr. P.C. Bhalerao Non-executive Director

7 Mrs. Lalita D. Gupte Non-executive, Independent

8 Mr. Alan Spencer Non-executive, Independent

9 Mr. P.H. Ravikumar Non-executive, Independent

10 Mr.Naresh Narad * Non-executive, Independent

11 Mr.V.K.Jairath * Non-executive, Independent

12 Mr. G.K. Agarwal Deputy Managing Director

13 Mr. Amit B. Kalyani Executive Director

14 Mr. B.P. Kalyani Executive Director

15 Mr. S.E. Tandale Executive Director

16 Mr. P.K. Maheshwari Executive Director

17 Mr. Sunil Kumar Chaturvedi Executive Director


th
*Joined the Board with effect from 24 July 2009.

Private & Confidential 6


Not for circulation
BRIEF PROFILE OF DIRECTORS, DATE OF APPOINTMENT, ADDRESS & OTHER
DIRECTORSHIP

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.

Private & Confidential 7


Not for circulation
Mr. Kalyani was conferred [D.Litt] Honoris Causa by Symbiosis International University, Pune in 2006 and
he is a Fellow of The Indian National Academy of Engineering.

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


Appointment Date: 24/07/1999
Residence Address: 12, Pushkar, Bhikoba Pathare Marg, B/H. Catering College, Dadar (West),
Mumbai 400028

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


Appointment Date: 24/05/2005
Residence Address: S. No.73 (P), , Near Shroff Suyash Building, Near Pancard Club Road, Baner,
Pune 411 045.

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


Appointment Date: 01/08/2005
Residence Address: Industrial Consultant, Hauptmansreute 122, D-70193 Stuttgart, Germany.

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.

Private & Confidential 8


Not for circulation
Mr. P. C. Bhalerao
Appointment Date: 31/07/2005
Residence Address: B-7, Varsha Park, Baner, Pune 411045

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 D. Gupte


Appointment Date: 05/12/2006
Residence Address: Mhaskar Building, 1st Floor, 153C, Sir Bhalchandra Road, Matunga, Mumbai
400019

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


Appointment Date: 21/01/2008
Residence Address: 13 Chesham Street, London SW1X 8ND, London.

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

Private & Confidential 9


Not for circulation
Mr. Naresh Narad (65) is B.A., LL.B. and a Veteran IAS Civil Servant. Born on 5th May 1944, Mr. Naresh
Narad is an Independent and Non-executive Director on the Board with effect from 24 July 2009.

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


Appointment Date: 11/05/2004
Residence Address: Amit, 221/A, Kalyani Nagar, Yerawada, Pune 411006

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.

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Mr. Amit Kalyani also serves on the Boards of Kalyani Infotech Solutions Limited, Nandi Economic Corridor
Enterprises Limited, Epicentre Technologies Private Limited, Kalyani Steels Limited, Nandi Infrastructure
Corridor Enterprises Limited, BF Utilities Limited, KPIT Cummins Infosystems 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, Bhalchandra Invt. Ltd., Forge Invt. Ltd., Mundhwa Invt. Ltd.,True Value
Holding Pvt. Ltd., Crocus Properties. Pvt. Ltd., Khed Economic Infrastructure Pvt. Ltd., Ajinkya Invt. &
Trading Co., Jalkamal Invt. & Fin. Ltd., Jalkumbhi Invt. & Fin. Ltd., Khed Developers Ltd., BF-NTPC
Energy Systems Ltd., Bharat Forge Daun GmbH and Xapiola Holdings Ltd.

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


Appointment Date: 20/05/2008
Residence Address: D-16, Sector-39, Noida 201 303 U.P.

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.

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III. SUMMARY OF BUSINESS/ ACTIVITIES

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:

Forging approximately 2, 52,685 MT per annum


Crankshaft Machining capacity 7, 59,600 Nos per annum
Front axle assembly and components 7, 53,200 Nos per annum

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:

Name of the Company Capacity MT per annum Products


FAW BF 135,000 Chassis Components for Passenger &
Commercial Vehicles
BFK & BFSSL 100,000 Engine & Chassis Components for
Commercial Vehicles
BFA 60,000 Chassis Components for Light Commercial
Vehicles
CDP BF & BF AT 100,000 Engine & Chassis Components for Passenger
& Commercial Vehicles

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.

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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.

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:

1. Strong focus on technology and full service supply capabilities


Over the years, we have developed extensive technology and product design capabilities.
Examples of such development include vertically integrated steel mills within the Kalyani group,
and wide domain knowledge for the design and engineering of highly critical and safety automotive
and non automotive components.
We are well placed in terms of providing a single window for meeting the requirements of global
OEMs from material sourcing and approval to machining, testing and validation.

2. Established relationships with premier global customers


We supply products to customers in four major geographic regions, namely India, the United
States, Europe and Asia Pacific (excluding India). We have a well diversified customer base of
more than 35 global OEM and Tier 1 companies in both the automotive as well as non-automotive
space.

3. Development partner with major OEMs


We have moved from supplying components as per customers drawings to co-developing the part
along with the customer. In the process we offer our metallurgical and design engineering
capabilities and experience in manufacturing, enabling the customer to optimize the component
design. This leads to a long-term mutually beneficial relationship with OEMs besides giving us a
major share of the business.

4. Wide product range and scalability of operations


We have diverse production facilities with press lines ranging from 1,600 MT to 16,000 MT, which
enable us to produce almost an entire range of closed and open die forgings.

5. Dual Shore manufacturing capabilities


Our global presence gives us the ability to cater to the needs of our customers from multiple
locations, at times designing products at one location while manufacturing them at another. Such
Dual-shore manufacturing with certain facilities in close proximity to customers assures our
customers uninterrupted and certainty of supply and also gives the benefit of cost-competitive
manufacturing operations.

Looking Forward
The key elements of our strategy are as follows:

1. Capture the growth potential offered by the non automotive sectors


Considering the growth potential, we are capitalizing on our manufacturing and design
engineering capabilities, metallurgical know-how and existing customer relationships, to
expand our business in the following non automotive sectors:
Conventional and non conventional energy
Aerospace
Oil and gas exploration
Rail and marine
Infrastructure metals and mining

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.

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As a part of our foray into the non-automotive sector, we have 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.
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.

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.

1. Closed Die Forging

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:

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A. Engine Components

(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) Connecting Rods


We are a major supplier of connecting rods for the diesel engine industry, Locomotives & Marine
Engines, automobile as well as power generation applications. We currently manufacture forged
connecting rods for global OEMs. Current range of connecting rods varies between 1-125 kg

B. Chassis Components

(a) Front axle assembly and components


Front axle assembly and components comprise the front axle beam and steering knuckles. A front
axle beam is a chassis component that supports the two front wheels of a vehicle. We are one of
the leading suppliers of front axle beams to the world market. We supply both forged and
machined front axle beams for a wide array of applications ranging from light commercial vehicles
to heavy trucks.
A steering knuckle is also a chassis component that usually includes a spindle and steering arm
and allows the front wheel to pivot. We supply fully machined steering knuckles to OEMs globally.

C. Other products

(a) Transmission parts


We manufacture transmission parts for passenger cars and sports utility vehicles, used in highly
sophisticated manual as well as automated transmissions. We supply a wide variety of parts such
as input shafts, gears, sleeve transmission counter shafts and output shafts ranging from 0.5 kg to
10 kg.

(b) Oil and Gas Products


We provide forgings for the oil and gas segment, with products ranging from valves, chokes,
casing heads, both in forged and machined condition. We have also developed forged valves for
high pressure applications in the oil industry. We currently manufacture oil and gas products
ranging from 15 500 kg. Our Companys facility is API-6A certified and our production strictly
adheres to the API requirements.

2. Open Die Forging


In open die forging, the work piece is not completely confined as it is being shaped by the dies.
This process is adopted when the volume requirements are low. Usually open die forging is used
for heavy forgings, which find application in industrial machinery. Open die production is restricted
to a few companies in the industry. The open die process is commonly associated with large parts
such as shafts, sleeves and disks, where part weights can be upwards of 1 Ton. Most open die
forgings are produced on flat dies. Round swaging dies and V dies also are used in pairs or with a
flat die. Operations performed on open die presses include drawing out or reducing the cross-
section of an ingot or billet to lengthen it, upsetting or reducing the length of an ingot or billet to a
larger diameter, upsetting, drawing out and piercing-processes sometimes combined with forging
over a mandrel for forging rough-contoured rings. In open die forging, metals are worked above
their recrystallisation temperatures. As the process requires repeated changes in work piece
positioning, the work piece cools during open die forging below its hot-working or recrystallisation
temperature. It then must be reheated before forging can continue. For example, a steel shaft 2ft
in diameter and 24ft long may require four to six heats before achieving the final forged
dimension.

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The open die forging process is adopted for heavy forgings, which find application in industrial
machinery, power plants, wind turbines and oil exploration among others.

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.

We have 12 plants spread across India, US, Europe and China.

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:

Installed Capacity Production (Incl job work)


FY FY
Unit 2009 2008 2007 2009 2008 2007

Steel Forgings MT 252,685 240,000 240,000 134,428 191,738 165,239

Machined
Products

Crankshafts Nos 759,600 719,635 650,000 440,511 559,983 522,065

Front Axle
Assembly and
Components Nos 753,200 753,200 753,200 309,583 509,417 572,053

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Notes:
Our Companys installed capacity is dependent on product mix, which in turn is dependent on
actual demand for various products from time to time.
Actual production includes captive consumption of 54,263 MT per annum for the year ended March
31st 2009, 74,687 MT per annum for the year ended March 31, 2008

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

Gross Sales 2,114.78 2,314.37 1,990.84 1,651.44 1,258.63


Net Sales 1,994.55 2,141.76 1,834.82 1,530.79 1,167.22
PBIDT 407.48 640.91 541.72 442.72 334.20
PAT 103.29 273.59 240.95 206.97 161.63
Cash Profit (PAT + Depreciation) 252.73 412.53 340.75 280.01 214.19
Dividend (annualised %) 50 175 175 150 125
Total Debt-Equity Ratio 1.22 0.87 1.06 0.85 0.94
Long Term Debt-Equity Ratio 1.07 0.63 0.76 0.63 0.62

IV. BRIEF HISTORY OF OUR COMPANY SINCE INCORPORATION AND CHANGES


IN CAPITAL STRUCTURE

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.

Milestones and achievements of our Company:


Year Event
1961 Incorporation of our Company
1962 Technical agreement with SIFCO, USA for hammer forging technology
1966 Start of hammer shop commercial production
1972 Execution of maiden export order to Greece
1984 Technical agreement with Tokyo Drop Forge, Japan for technology up-gradation and
quality improvement for hammer forgings
1985 Entry in the erstwhile USSR market by winning a large contract for under carriage
components
1986 Technical agreement with Jidosha Buhin Kogyo, Japan for machining of front axle beams
1990-91 Major breakthrough in the developed markets of Japan, USA and UK for the critical
suspension and engine components like front axle beams and machined crankshafts
1991 Implementation of a large US $ 50 million forging facility up-gradation programme by
commissioning of 16000 MTs and 6000 MTs Weingarten (Germany) presses
1993 ISO 9002 accreditation
1996 Technical agreement with Metalart Corporation, Japan for small forgings and
commissioning of 4000 MTs and 2500 MTs mechanical press lines for small forgings
1997-98 Establishment of new machining facilities for crankshafts, front axle beams and heavy
steering knuckles
1999 QS 9000 accreditation
2000 Implementation of a US $ 30 million forging facility expansion programme by

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Year Event
commissioning of second 16000 MTs Weingarten (Germany) press and 2500 MTs
mechanical press lines
2001 Windmill Division and Investment Division were vested in BF Utilities Limited vide a
Scheme of Arrangement under Section 391 and 394 of the Companies Act, 1956
2002 Acquired the order book of Dana Spicer Europe Limited (Kirkstall Forge Division) and got
access to new customers in Europe and strengthen our presence in Oil and Gas Sector.
2004 Acquired German operations of Carl Dan Peddinghaus GmbH & Co., Germany in an asset
purchase deal through our wholly owned subsidiary, CDP Bharat Forge GmbH. Acquired
100 per cent ownership interest of CDP-AT, now renamed as BF AT, which marked our
entry into the aluminium auto component business and enabled our Company to offer a
wider range of products to its customers.
2005-06 Acquired the operations of Federal Forge Inc., in an asset purchase deal through its
wholly owned subsidiary BFA. This acquisition gave our Company access to the light truck
market in the United States and established a manufacturing presence in the United
States.

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.

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Capital Structure of the Company
Share Capital as at 31st March 2009 is set forth below:
(Rs. In crores)
As on 31st March, 2009 Amount
1. SHARE CAPITAL
A. Authorised Equity Share Capital 60.00
Authorised Preference Share Capital 43.00
Authorised Unclassified Shares 2.00

B. Issued Equity Capital 44.57


Issued Preference Share Capital -
Issued Unclassified Shares -

C. Subscribed and Paid up Equity Capital 44.54


Subscribed and Paid up Preference Share Capital -
Subscribed and Paid up Unclassified Shares -

Total Borrowings as on:


(Rs. In crores)
Particulars 31st March 2009 31st March 2008
LOAN FUND
a. Secured Loan 870.66 461.58
b. Unsecured Loan 937.21 825.91
Total 1,807.87 1,287.49

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

Changes in Capital Structure


The table below sets forth changes in the issued share capital of the Company.
No. of
Face Issue Cumulative Cumulative
Date of Equity
Value Price Number of paid-up ConsiderationRemarks
allotment Shares
(Rs.) (Rs.) shares capital (Rs.)
Allotted
September Subscription to
156 100 100 156 15,600 Cash
26, 1961 MOA1
Private
Placement of
January 20,
6,000 100 100 6,156 615,600 Cash Shares to
1962
Directors,
Friends &

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No. of
Face Issue Cumulative Cumulative
Date of Equity
Value Price Number of paid-up ConsiderationRemarks
allotment Shares
(Rs.) (Rs.) shares capital (Rs.)
Allotted
Relatives
Private
Placement of
Shares to
May 8, 1962 3,050 100 100 9,206 920,600 Cash
Directors,
Friends &
Relatives
Private
Placement of
September Shares to
50 100 100 9,256 925,600 Cash
22, 1962 Directors,
Friends &
Relatives
Issued to SIFCO,
USA for
consideration
May 21, other than cash
2,380 100 100 11,636 1,163,600 Non Cash
1963 pursuant to their
technical
assistance
contract 2
Subscribed
April 23,
privately by
1963
directors, friends
& relatives
Subscribed
June 7,
privately by
1963 12,095 100 100 23,731 2,373,100 Cash
promoters and
managing agents
Subscribed
June 15, privately by
1963 friends &
relatives
Subscribed
privately by
directors,
October 4,
13,458 100 100 37,189 3,718,900 Cash promoters,
1963
managing
agents, friends &
relatives
Subscribed
privately by
directors,
November
6,600 100 100 43,789 4,378,900 Cash promoters,
16, 1963
managing
agents, friends &
relatives
Subscribed
privately by
directors,
November
23 076 100 100 66,865 6,686,500 Cash promoters,
30, 1963
managing
agents, friends &
relatives
1963 8,755 100 100 75,620 7,562,000 Cash Details regarding

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No. of
Face Issue Cumulative Cumulative
Date of Equity
Value Price Number of paid-up ConsiderationRemarks
allotment Shares
(Rs.) (Rs.) shares capital (Rs.)
Allotted
1964 share capital
subscription not
available1
January 20, Initial Public
100
1964 77,000 100 152,620 15,262,000 Cash Offering

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

September Bonus Issue in the


17, 1976 930,000 10 10 2,480,000 24,800,000 - ratio of 3:54

June 20, Bonus Issue in the


1981 2,480,00010 10 4,960,000 49,600,000 - ratio of 1.14

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

December Rights Issue in the


23, 1989 4,090,70010 50 14,635,700 146,357,000 Cash ratio of 1:4

November Rights Issue in the


6, 1992 3,801,95010 160 18,437,650 184,376,500 Cash ratio of 1:4

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

September Preferential issue


13, 1994 3,500,00010 156 30,197,685 301,976,850 Cash to Promoter
group5
VIth Series Non
December
Convertible
19, 1994 1,209,801 10 50 31,407,486 314,074,860 Cash
Debentures
Coupon

Private & Confidential 21


Not for circulation
Conversion
June 16, Senior executive
1995 1,568,60010 196.93 32,976,086 329,760,860 Cash stock Option
Scheme6
Xth Series non-
August 1,
convertible
1995
2,926,45010 50 35,902,536 359,025,360 Cash debentures
Coupon
Conversion
November Private placement
8, 1995 1,800,00010 117.18 37,702,536 377,025,360 Cash to Promoter
Group7
(34,568) 10 - 37,667,968 376,679,680 Forfeited8
Annulment of
equity shares
(340) 10 - 37,667,628 376,676,280
allotted to non-
residents9
October 1, Rights Issue in the
1,882,91410 560 39,550,542 395,505,420 Cash
2004 ratio of 1:20
GDRs allotted on
April 19,
3,636,50010 1,190.3843,187,042 431,870,420 Cash April 19, 2005 and
2005
May 5, 2005
Sub-division of equity shares from Rs.10 each to Rs. 2 each resulting in 215,935,210 shares of
Rs. 2 each pursuant to a resolution of the shareholders dated March 30, 2005
Conversion of
Warrants attached
December
4,574,205 2 268.20 220,509,415 441,018,830 Cash to Equity Shares
12, 2005
allotted in the
2004 Rights Issue
March 17, Conversion of 1st
1,753,2462 336.11 222,262,661444,525,322 Cash
2006 Tranche FCCBs
Conversion of 1st
April 12,
389,610 2 336.11 222,652,271445,304,542 Cash Tranche FCCBs
2006

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.

Private & Confidential 22


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6. In 1995, the Company provided an interest free loan of Rs.309 million to a company, Kritadnya
Management and Trading Services Private Limited (KMTS), which has given an undertaking to
hold the shares solely for the purpose of obligations of the BFL Executives Welfare and Share
Option Trust in terms of clause (b) of the proviso to Section 77(2) of the Companies Act, 1956. In
this regard, the Company has allotted 1,568,600 equity shares to KMTS in 1995.

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

Indian Automotive Components Industry overview

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).

Private & Confidential 23


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Key markets for Indian Auto components Industry

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/)

Indian Automotive Industry

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.

Domestic Passenger Vehicle Segment (2003-2009)

Private & Confidential 24


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Passenger Vehicles

1,777,583 1,838,697
1,545,223
1,309,300
1,209,876
989,560
723,330

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Domestic Commercial Vehicle Segment (2003-2009)

Commercial Vehicles

549,006
519,982

417,126
391,083
353,703
275,040
203,697

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

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.

Outlook for the Indian Auto components Industry

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.

Private & Confidential 25


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Global Non-automotive industry overview

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.

VI. SECURITIES TO BE ISSUED AND LISTED UNDER CURRENT DOCUMENT

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.

Private & Confidential 26


Not for circulation
Credit Rating

For Secured Redeemable Non Convertible Debentures

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.

Private & Confidential 27


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VII. DETAILS OF THE ISSUE SIZE

The Company proposes to mobilise through private placement of Secured Redeemable Non-
Convertible Debentures (NCDs).

Summary Term Sheet


Issuer Bharat Forge Ltd.

Instrument Secured Redeemable Non Convertible Debentures

Issue Size Rs.350 Crores (Rupees Three Hundred Fifty Crores only)

No. of Debentures 3500

Face Value Rs.10,00,000 each


Tenor The above NCDs will be redeemed at par as under:
At the end of 54th month 25%
At the end of 60th month 50%
At the end of 66th month 25%
Listing The debentures are proposed to be listed on the WDM segment of the
National Stock Exchange of India Limited (NSE)

Issuance The Debentures are proposed to be issued in Dematerialised form

Trading The Debentures will be traded in Dematerialised form 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.

VIII. DETAIL OF UTILISATION OF PROCEEDS OBJECTS OF THE ISSUE

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.

IX. MATERIAL CONTRACTS INVOLVING FINANCIAL OBLIGATION

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.

Private & Confidential 28


Not for circulation
Material Documents
1) Certified true copies of the Memorandum and Articles of Association of the Company, as
amended from time to time.

2) Copy of the Certificate of Incorporation of the Company dated 19th June 1961.

3) Copy of Certificate of Commencement of Business.

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.

X. DETAILS OF PAST BORROWINGS

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)

Sales Tax Deferral


Deferral Loan Rs.6.94
Loan
Others Rs.0.06
Sub Total (b) Rs.937.20

Total ( a) + (b) Rs.1,807.87

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/

Private & Confidential 29


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Equity Shares to be exercised at any time during the exercise period at a pre determined initial
price subject to adjustments upon occurrence of certain event.

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.

Private & Confidential 30


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Details of Security for Secured Indebtness- NCD/Term Loan (Rupee/FCL)

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

First Pari Passu mortgage on


immovable properties at
Non Convertible
Rs.250 Rs.250 Fixed Assets Of the Mundhwa, Satara, Jalgaon, and
Debentures to
Crore Crore Co Chakan and hypothecation of all
LIC
present and future movable
properties of the Co.

Fund Based
Rs.825 Rs.209.83 Inventory and Book
consortium
Crores Crore Debts
Working Capital

XI. Material Development

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.

Private & Confidential 31


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XIII. Details of Highest Ten Holders of Each Kind of Securities

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

As on 31st March 2009:


0.5% Tranche 1 FCCB USD 6.00 crore (O/s USD 4.35 crore) due April 2010
Sr.No Name Address Total % To
Shares Equity
1 * Refer Note below

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

Private & Confidential 32


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0% Tranche A FCCB USD 4.00 crore (O/s USD 4.00 crore) due April 2012
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.

11.95% p.a. Non Convertible Debentures of Rs.250 Crore


Sr.No Name Address Total Shares % To
Equity
1 Life Insurance Corporation Yogakshema, Jeevan Beema Marg,
of India Mumbai : 400 021 - -

XIV. Undertaking To Use A Common Form Of Transfer

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

XV.Redemption Amount, Period Of Maturity, Yield On Redemption

Issuer Bharat Forge Ltd.


Instrument Secured Redeemable Non Convertible Debentures
Issue Size Rs.350 Crores (Rupees Three Hundred Fifty Crores only)
No. of Debentures 3500
Face Value Rs.10,00,000 each
Tenor The above NCDs will be redeemed at par as under:
At the end of 54th month 25%
At the end of 60th month 50%
At the end of 66th month 25%
Coupon Rate 10.75% p.a. payable semi-annually
Listing The debentures are proposed to be listed on the WDM segment
of the National Stock Exchange of India Limited (NSE)
Issuance The Debentures are proposed to be issued in Dematerialised
form
Trading The Debentures will be traded in Dematerialised form only

Private & Confidential 33


Not for circulation
Depository NSDL/CDSL
Security First charge on the fixed assets with minimum asset cover of
1.25 times.
Security Creation Within a period of 120 days from the date of disbursement,
failing which an additional interest @ 2% p.a. on the
outstanding amount of debentures shall be payable from the
date of disbursement till such creation of security to the
satisfaction of the Corporation.
In case security is not created even after a period of further 90
days over and above the stipulated period of 120 days the
investors shall have the right to recall the outstanding principle
amount along with other monies/ accrued interest thereon.
Default Interest In case of default in payment of interest and/or principal
redemption on the due dates, additional interest @ 2% over
the documented rate will be payable by the company.
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.

XVI. Information Relating To The Terms of Offer or Purchase

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.

Letter(s) of Allotment/ Debenture Certificate(s)/ Refund Order(s)


Issue of Letter(s) of Allotment
The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/
Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial
credit within 4 days from the Deemed Date of Allotment. The initial credit in the account will be
akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the
account will be akin to a Debenture Certificate.

Issue of Debenture Certificate(s)


Subject to the completion of all legal formalities within 4 days from the Deemed Date of Allotment,
or such extended period as may be approved by the Appropriate Authorities, the initial credit akin
to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the
number of Debentures allotted.

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.

Dispatch of Refund Orders


The Company shall ensure dispatch of Refund Order(s) by Registered Post only.

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.

Face Value Per Minimum Application for Amount Payable on


Debenture Application per Debenture
Rs. 10,00,000/- 1 Debenture & in multiples of 1 Rs. 10,00,000/-
Debenture thereafter

Private & Confidential 34


Not for circulation
Payment of Interest
The interest will be payable to the Debenture holder(s) whose names appear in the List of
Beneficial Owners given by the Depository to the Company on the Record Date/ Book Closure
Date. Payment of interest will be made by way of cheque(s)/ interest warrant(s)/ demand
draft(s)/credit through RTGS system. In case of cheque/demand draft the same will be dispatched
to the sole/ first applicant, 7 days before the due date(s) by registered post at the sole risk of the
applicant.

Tax Deduction at Source (TDS)


Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-
enactment thereof will be deducted at source. For seeking TDS exemption/ lower rate of TDS,
relevant certificate(s)/ document(s) must be lodged at least 15 days before the payment of
interest becoming due with the Company at its Registered Office at Bharat Forge Limited,
Mundhwa, Pune Cantonment, Pune 411036 or to such other person(s) at such other address(es) as
the Company may specify from time to time through suitable communication.

Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application


money, should be submitted along with the Application Form. Where any deduction of Income Tax
is made at source, the Company shall send to the Debenture holder(s) a Certificate of Tax
Deduction at Source.

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

I. To Resident Debenture holders


No Income Tax will be deducted at source from interest payable on Debentures in the following
cases:
In case of payment of interest to a Debenture holder, who is an individual and resident in India,
where the interest payment in the aggregate during the financial year does not exceeds Rs.
5,000/-;
Tax will be deducted at a lower rate where the Assessing Officer, on an application of any
Debenture holder, issues a certificate for deduction of tax at such lower rate as per provisions of
the Section 197(1) of the Income Tax Act.

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.

II. To other Eligible Institutions


Mutual Funds registered under the SEBI Act or regulations made there under or such other mutual
fund sets up by public sector bank or public financial institution or authorized by Reserve Bank of
India and notified by the Central Government will, subject to the provisions of Chapter XII-E, be
exempted from income tax on all their income, including from investment in Bonds/ Debentures
under the provisions of Section 10(23D) of Income Tax Act.

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.

Private & Confidential 35


Not for circulation
Redemption
The face value of the Debentures will be redeemed at par. In case if the principal redemption date
falls on a day which is not a Business Day (Business Day being a day on which Commercial Banks
are open for Business in the city of Mumbai), then the payment due shall be made on the next
Business Day.

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).

List of Beneficial Owners


The Company shall request the Depository to provide a list of Beneficial Owners as at the end of
the Record Date. This shall be the list, which shall be considered for payment of interest or
repayment of principal amount, as the case may be.

Debenture Redemption Reserve (DRR)


As per extant circular no. 6/3/2001-CL.V dated 18.04.2002 issued by the Government of India
with respect to creation of Debenture Redemption Reserve, for manufacturing and infrastructure
companies, the adequacy of DRR is defined at 25% of the value of debentures issued through
private placement route. In terms of extant provisions of Companies Act, 1956, the Company is
required to create Debenture Redemption Reserve out of profits, if any, earned by the Company.
The Company shall create a Debenture Redemption Reserve (DRR) and credit to the DRR such
amounts as applicable under provisions of Section 117C of the Companies Act 1956 (as amended
from time to time) or any other relevant statute(s), as applicable.

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.

Private & Confidential 36


Not for circulation
Sharing of Information
The Company may, at its option, use on its own, as well as exchange, share or part with any
financial or other information about the Debenture holders available with the Company, with its
subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies,
statutory bodies, as may be required and neither the Company or its subsidiaries and affiliates nor
their agents shall be liable for use of the aforesaid information.

Undertaking by the Issuer


The Issuer Company undertakes that:
1. the complaints received in respect of the Issue shall be attended to by the issuer company
expeditiously and satisfactorily;
2. it shall take all steps for completion of formalities for listing and commencement of trading at
all the concerned stock exchange(s) where securities are to be listed and taken within 120
working days from the date of closure of issue.
3. the funds required for dispatch of refund orders by registered post shall be made available to
the Registrar to the Issue by the Issuer Company;
4. no further issue of securities shall be made till the securities offered through this Information
Memorandum are listed or till the application moneys are refunded on account of non-listing,
under-subscription, etc;
5. necessary co-operation to the credit rating agency shall be extended in providing true and
adequate information till the debt obligations in respect of the instrument are outstanding.

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.

Procedure for applying for Demat Facility


The applicant must have at least one beneficiary account with any of the Depository
Participants (DPs) of NSDL or CDSL prior to making the application.
The applicant must necessarily fill in the details (including the beneficiary account number
and Depository Participants ID) appearing in the Application Form under the heading
Details for Issue of Debentures in Electronic/ Dematerialised Form.
Debentures allotted to an applicant will be credited directly to the applicants respective
Beneficiary Account(s) with the DP.
For subscribing the debentures, names in the application form should be identical to those
appearing in the account details in the depository. In case of joint holders, the names
should necessarily be in the same sequence as they appear in the account details in the
depository.
Non-transferable allotment advice/refund orders will be directly sent to the applicant by the
Registrars to the Issue.
If incomplete/incorrect details are given under the heading Details for Issue of Debentures
in Electronic/ Dematerialised Form in the application form, it will be deemed to be an
incomplete application and the same may be held liable for rejection at the sole discretion
of the Company.
For allotment of Debentures, the address, nomination details and other details of the
applicant as registered with his/her DP shall be used for all correspondence with the
applicant. The Applicant is therefore responsible for the correctness of his/her demographic
details given in the application form vis--vis those with his/her DP. In case the information
is incorrect or insufficient, the Issuer would not be liable for losses, if any.

Private & Confidential 37


Not for circulation
It may be noted that Debentures being issued in electronic form, the same can be traded
only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. The
National Stock Exchange of India Limited, where the Debentures of the Company are
proposed to be listed has connectivity with NSDL and CDSL.
Interest or other benefits would be paid to those Debenture holders whose names appear
on the list of beneficial owners given by the Depositories to the Company as on Record
Date/ Book Closure Date. In case of those Debentures for which the beneficial owner is not
identified by the Depository as on the Record Date/ Book Closure Date, the Company would
keep in abeyance the payment of interest or other benefits, till such time that the beneficial
owner is identified by the Depository and conveyed to the Company, whereupon the
interest or benefits will be paid to the beneficiaries, as identified, within a period of 30
days.

Trustees for the Debenture holders


The Company has appointed Bank of Maharashtra to act as Trustees for the Debenture holders
(hereinafter referred to as Trustees). A copy of letter from Bank of Maharashtra conveying their
consent to act as Trustees for the Debenture holders is enclosed elsewhere in this Information
Memorandum.
The Company and the Trustees will enter into a Trustee Agreement, inter alia, specifying the
powers, authorities and obligations of the Company and the Trustees in respect of the Debentures.
The Debenture holder(s) shall, by signing the Application Form and without any further act or
deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or
authorized officials to do inter-alia all acts, deeds and things necessary in respect of or relating to
the security to be created for securing the Debentures being offered in terms of this Information
Memorandum.
All the rights and remedies of the Debenture holder(s) shall vest in and shall be exercised by the
said Trustees without having it referred to the Debenture holder(s).
No Debenture holder shall be entitled to proceed directly against the Company unless the Trustees,
having become so bound to proceed, fail to do so.
Any payment made by the Company to the Trustees on behalf of the Debenture holders shall
discharge the Company pro tanto to the Debenture holder(s).
The Trustees will protect the interest of the Debenture holder(s) in the event of Default by the
Company in regard to timely payment of interest and repayment of principal and they will take
necessary action at the cost of the Company.

Right to Accept or Reject Applications


The Board of Directors/ Committee of Directors reserves its full, unqualified and absolute right to
accept or reject any application, in part or in full, without assigning any reason thereof. The
rejected applicants will be intimated along with the refund order, if applicable, to be sent. Interest
on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s)
till one day prior to the date of refund. The Application Forms that are not complete in all respects
are liable to be rejected and would not be paid any interest on the application money. Application
would be liable to be rejected on one or more technical grounds, including but not restricted to:

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.

Private & Confidential 38


Not for circulation
Only eligible investors as given hereunder may apply for debentures by completing the Application
Form in the prescribed format in BLOCK LETTERS in English as per the instructions contained
therein. Applications should be for a minimum of 1 Debentures and in multiples of 1 Debenture
thereafter. Applications not completed in the said manner are liable to be rejected. Application
Form duly completed in all respects must be submitted with any of the designated branches of the
Bankers to the Issue. The name of the applicants bank, type of account and account number must
be filled in the Application Form. This is required for the applicants own safety and these details
will be printed on the refund orders and interest/ redemption warrants.

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.

Who Can Apply


The following categories of investors may apply for the debentures, subject to fulfilling their
respective investment norms/ rules by submitting all the relevant documents along with the
application form.
Scheduled Commercial Banks;
Regional Rural Banks;
Financial Institutions;
Insurance Companies;
Mutual Funds;
Companies, Bodies Corporate authorised to invest in debentures.
Provident, Pension, Superannuation and Gratuity Fund.
Other eligible investors.

Private & Confidential 39


Not for circulation
Applications under Power of Attorney
A certified true copy of the power of attorney or the relevant authority as the case may be along
with the names and specimen signature(s) of all the authorized signatories and the tax exemption
certificate/ document, if any, must be lodged along with the submission of the completed
Application Form. Further modifications/ additions in the power of attorney or authority should be
notified to the Company or to its Registrars or to such other person(s) at such other address(es)
as may be specified by the Company from time to time through a suitable communication.

Application by Mutual Funds


In case of applications by Mutual Funds, a separate application must be made in respect of each
scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as
multiple applications, provided that the application made by the Asset Management Company/
Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has
been made.

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.

Purchase/ Sale of Debentures


The Company will have the power exercisable at its absolute discretion from time to time to
purchase some or all the Debentures at any time prior to the specified date(s) of redemption, at
discount, at par or at premium from the open market in accordance with the applicable laws. Such
Debentures, at the option of the Company, may be cancelled, held or resold at such price and on
such terms and conditions as the Company may deem fit and as permitted by law.

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.

Debenture holder not a Shareholder


The Debenture holders will not be entitled to any of the rights and privileges available to the
Shareholders.

Rights of Debenture holders


The Debentures shall not, except as provided in the Companies Act, 1956 confer upon the holders
thereof any rights or privileges available to the members of the Company including the right to
receive Notices or Annual Reports of, or to attend and/or vote, at the General Meeting of the
Company. However, if any resolution affecting the rights attached to the Debentures is to be
placed before the shareholders, the said resolution will first be placed before the concerned
registered Debenture holders for their consideration. In terms of Section 219(2) of the Act, holders
of Debentures shall be entitled to a copy of the Balance Sheet on a specific request made to the
Company.
The rights, privileges and conditions attached to the Debentures may be varied, modified and/or
abrogated with the consent in writing of the holders of at least three-fourths of the outstanding
amount of the Debentures or with the sanction of Special Resolution passed at a meeting of the
concerned Debenture holders, provided that nothing in such consent or resolution shall be
operative against the Company, where such consent or resolution modifies or varies the terms and
conditions governing the Debentures, if the same are not acceptable to the Company.
The registered Debenture holder or in case of joint-holders, the one whose name stands first in the
Register of Debenture holders shall be entitled to vote in respect of such Debentures, either in
person or by proxy, at any meeting of the concerned Debenture holders and every such holder
shall be entitled to one vote on a show of hands and on a poll, his/her voting rights shall be in
proportion to the outstanding nominal value of Debentures held by him/her on every resolution
placed before such meeting of the Debenture holders.

Private & Confidential 40


Not for circulation
The Debentures are subject to the provisions of the Companies Act, 1956, the Memorandum and
Articles of Association, the terms of this prospectus and Application Form. Over and above such
terms and conditions, the Debentures shall also be subject to other terms and conditions as may
be incorporated in the Trustee Agreement/ Letters of Allotment/ Debenture Certificates, guidelines,
notifications and regulations relating to the issue of capital and listing of securities issued from
time to time by the Government of India and/or other authorities and other documents that may
be executed in respect of the Debentures.
Save as otherwise provided in this Information Memorandum, the provisions contained in
Annexure C and/ or Annexure D to the Companies (Central Governments) General Rules and
Forms, 1956 as prevailing and to the extent applicable, will apply to any meeting of the Debenture
holders, in relation to matters not otherwise provided for in terms of the Issue of the Debentures.
A register of Debenture holders will be maintained in accordance with Section 152 of the Act and
all interest and principal sums becoming due and payable in respect of the Debentures will be paid
to the registered holder thereof for the time being or in the case of joint-holders, to the person
whose name stands first in the Register of Debenture holders.
The Debenture holders will be entitled to their Debentures free from equities and/or cross claims
by the Company against the original or any intermediate holders thereof.

Statutory Auditors

Dalal & Shah


Chartered Accountants
252, Veer Savarkar Marg,
Shivaji Park, Dadar,
Mumbai- 400 028

Registrar to the Issue

In House Registrar & Transfer Agent

Bharat Forge Limited


Beejal Desai Sr. Vice President (Legal) & Company Secretary
Tel: +91 20 2670 2777
[email protected]
www.bharatforge.com

Trustee for the Issue

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.

Private & Confidential 41


Not for circulation
XIX. Servicing behavior on existing debt securities, payment of due interest on
due dates on term loans and debt securities.

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.

XXI. Name Of Debenture Trustee

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.

XXII. Rating rationale adopted by rating agencies.

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.

XXIII. Names of all recognized stock exchange where securities are


proposed to be listed clearly indicating the designated stock exchange and
also whether in-principal approval from the recognized stock exchange has
been obtained.

The Company shall get the debentures listed on the WDM segment of the National Stock Exchange
Limited.

XXIV. TERM SHEET


Issuer Bharat Forge Ltd.
Instrument Secured Redeemable Non Convertible Debentures

Normal Capital Expenditure, General Corporate Purposes and


Object of the Issue
Long Term Funds requirement

Issue Size Rs.350 Crores (Rupees Three Hundred Fifty Crores only)

No. of Debentures 3500

Face Value Rs.10,00,000/- each (Rupees Ten Lakhs each)


Minimum Subscription 1 debentures of Rs.10,00,000/- each and in multiple of 1
thereafter
Tenor 5 years 6 months from the date of allotment

Private & Confidential 42


Not for circulation
Redemption
The NCDs will be redeemed at par in three installments form the
date of allotment as under:
At the end of 54th month 25%
At the end of 60th month 50%
At the end of 66th month 25%

Rating LA+ by ICRA


Coupon Rate 10.75% p.a.
*Interest Payment Semi Annually
First charge on fixed assets of the Company to the extent that a
Security Fixed Asset Cover of 1.25 times is maintained till date of
maturity.
Security will be created within 120 days from the date of
allotment. A penal interest of 2% will be charged from date of
allotment till the date of security creation, if the Company fails to
Security Creation create the security within the stipulated time. Further if the
company fails to create the security after the extended time of 90
days, the investors reserves the right to re-call the investment
along with all outstanding.
In case of default in payment of interest and/or principal
Default Interest redemption on the due dates, additional interest @ 2% over the
documented rate will be payable by the company.
Payment of interest will be made by way of cheque(s)/ interest
Settlement
warrant(s)/ demand draft(s)/credit through RTGS system
Interest on Application Interest at the coupon rate (subject to deduction of income tax
Money under the provisions of the Income Tax Act, 1961, or any other
statutory modification or re-enactment thereof, as applicable)
will be paid to all the applicants on the application money for the
Debentures. Such interest shall be paid from the date of
realisation of cheque(s)/ demand draft(s) upto one day prior to
the Deemed Date of Allotment. The interest on application money
will be computed on an Actual/ 365 day basis. Such interest
would be paid on all the valid applications, including the refunds.
Where the entire subscription amount has been refunded, the
interest on application money will be paid along with the Refund
Orders. Where an applicant is allotted lesser number of
Debentures than applied for, the excess amount paid on
application will be refunded to the applicant along with the
interest on application money.

Proposed to be listed on the WDM segment of the National Stock


Listing
Exchange of India Limited (NSE)

Issuance The Debentures are proposed to be issued in Dematerialised form

Trading The Debentures will be traded in Dematerialised form only

Depository NSDL/CDSL

Interest for each of the interest periods shall be calculated, on


'actual/ 365 (366 in case of a leap year) days' basis, on the face
Interest Calculation
value of principal outstanding on the Debentures at the coupon
rate rounded off to the nearest Rupee.
The Record date for the debentures shall be 15 days prior to each
Record Date
interest payment and/or principal repayment date.
Trustee Bank of Maharashtra

Private & Confidential 43


Not for circulation
* Subject to TDS at applicable rate.

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.

For Bharat Forge Limited

Beejal Desai
Sr. Vice President (Legal) &
Company Secretary

Date:

Place: Pune

Private & Confidential 44


Not for circulation

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