BURNPUR CEMENT LIMITED

DRAFT PROSPECTUS

Dated []

(To be updated on filing with ROC)

RISK IN RELATION TO THE ISSUE

This being the first issue of Equity Shares of the Company, there has been no formal market for the Equity Share of the Company. The face

value of the Equity Share is Rs 10/- and the Issue Price is 1.0 time of the face value at the lower end of the price band and 1.2 times

at the higher end of the price band. The Issue Price (has been determined and justified by the Lead Manager and the Issuer Company as

stated under the paragraph "Basis for Issue Price" on page no 39 of this Draft Prospectus) should not be taken to be indicative of the

market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in

the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing.

The Company has not opted for IPO grading.

GENERAL RISKS

Investments in Equity and Equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless

they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment

decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue

including the risks involved. The Equity shares offered in the Issue have not been recommended or approved by the Securities and Exchange

Board of India ("SEBI"), nor does SEBI guarantee the accuracy or adequacy of this Draft Prospectus. Specific attention of the investors is

invited to the section "Risk Factors" beginning on page vii of this Draft Prospectus.

ISSUER'S ABSOLUTE RESPONSIBILITY

The Company having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Prospectus contains all information

with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Prospectus

is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are

honestly held and that there are no other facts, the omission of which makes this Draft Prospectus as a whole or any of such information or

the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Equity Shares offered through this Draft Prospectus are proposed to be listed on the Bombay Stock Exchange Limited ("BSE") and the

National Stock Exchange of India Limited ("NSE"). The Company has received in-principle approvals from BSE and NSE vide their letters

dated [] and [], respectively for the listing of Equity Shares being issued in terms of this Draft Prospectus. For the purpose of this Issue,

BSE shall be the Designated Stock Exchange.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

BURNPUR CEMENT LIMITED

(Originally incorporated as Ashoka Concrete & Allied Industries Private Limited on June 19, 1986 with the Registrar of Companies, West Bengal Kolkata. The name of the Company was changed to

Burnpur Cement Private Limited on September 18, 2001. Subsequently the Company was converted into a Public Limited Company under section Sec. 44 of the Companies Act, 1956 on November

12, 2001 and the name of the Company was changed to Burnpur Cement Limited and a fresh Certificate of Incorporation obtained from the Registrar of Companies, West Bengal Kolkata.

For details of changes in Registered Office of the Company please refer to page no 9 of this Draft Prospectus.)

Registered Office: Cement house, Saradapally, Ashoknagar P.O. Asansol- 713304, Dist.: Burdwan (West Bengal), India

Tel.: (0341)2250663, 2250859/61/62; Fax: (0341) 2250860; E-mail: [email protected]; Website: www.burnpurcement.com;

Plant: Vill-Palasdiha Panchgachia Road P.O. - Kanyapur, Dist. Burdwan West Bengal Pincode-713341

Tel: (0341) 2250454, 2252965; Contact Person/Compliance Officer: Mr. Manoj Agarwal, Company Secretary

ISSUE PROGRAM

ISSUE OPENS ON : [] ISSUE CLOSES ON : []

PRESENT ISSUE

ISSUE OF 3,18,25,100 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. [

] PER EQUITY SHARE AGGREGATING

TO RS. 3182.51 LACS (AT THE LOWER END OF THE PRICE BAND OF RS.10/-PER EQUITY SHARE) AND RS. 3819.01 LACS (AT THE

HIGHER END OF THE PRICE BAND OF RS. 12/-PER EQUITY SHARE) (HEREINAFTER REFERRED TO AS "THE ISSUE")

OFFER THROUGH THIS DRAFT PROSPECTUS

2,19,00,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. [] PER EQUITY SHARE. THE ISSUE COMPRISES A

RESERVATION FOR ELIGIBLE EMPLOYEES OF UPTO 10,95,000 EQUITY SHARES OF RS.10/- EACH (HEREINAFTER REFERRED TO AS

THE "EMPLOYEE RESERVATION PORTION") AND THE NET ISSUE TO THE PUBLIC OF 2,08,05,000 EQUITY SHARES OF RS.10/- EACH

(HEREINAFTER REFERRED TO AS THE "NET ISSUE")

PRESENT ISSUE WOULD CONSTITUTE 74.02% OF THE FULLY DILUTED POST-ISSUE PAID UP CAPITAL OF THE COMPANY. THE NET

ISSUE TO THE PUBLIC WOULD CONSTITUTE 48.39% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF THE COMPANY.

Price Band: Rs. 10/- to Rs. 12/- per Equity Share of Rs. 10/- each

The Company will determine the Issue Price before filing the Prospectus with RoC

SREI CAPITAL MARKETS LIMITED

'Vishwakarma', 86 C, Topsia Road (South)

Kolkata - 700 046, West Bengal, India

Tel : +91 33 3987 3810/3845

Fax: +91 33 3987 3861/3863

E-mail: [email protected]

Website: www.srei.com

NICHE TECHNOLOGIES PRIVATE LIMITED

D-511, Bagree Market, 71, B R B Basu Road

Kolkata - 700 001, West Bengal, India

Tel : +91 33 2234 3576/2235 7271/7270

Fax: +91 33 2215 6823

E-mail: [email protected]

Website: www.nichetechpl.com

TABLE OF CONTENTS

TITLE

PAGE NO.

SECTION I

DEFINITIONS AND ABBREVIATIONS

Conventional / General Terms i

Issue Related Terms i

Technical and Industry Terms iii

Abbreviations iii

SECTION II

RISK FACTORS

Certain Conventions; Use of Market Data

Forward Looking Statements

Risk Factors

vii

SECTION III

INTRODUCTION

Summary 1

The Issue 6

Summary of Financial Data 7

General Information 9

Capital Structure 14

Objects of the Issue 25

Basic Terms of Issue 37

Basis for Issue Price 39

Statement of Tax Benefits

SECTION IV ABOUT THE COMPANY

Industry Overview 51

Business Overview

Brief History Of The Company And Other Corporate Matters

Management And Organization

Promoters And Their Background 106

Related Party Transactions 110

Currency Of Presentation 110

Dividend Policy 110

SECTION V

FINANCIAL INFORMATION

Auditors Report & Restated Statement of Accounts 112

Financial And Other Information Of Companies, firms

Promoted/Controlled by the Promoters

142

Management Discussion And Analysis Of The Financial

Condition And Results Of The Operations

150

SECTION VI LEGAL AND OTHER INFORMATION

Outstanding Litigations and Defaults 161

Material Developments

163

Government Approvals and Licenses 164

SECTION VII OTHER REGULATORY AND STATUTORY DISCLOSURES 166

SECTION VIII

ISSUE RELATED INFORMATION

Terms of the Issue 174

Issue Procedure 178

SECTION IX MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

OF THE COMPANY

197

SECTION X OTHER INFORMATION

Material Contracts and Documents for Inspection

233

Declaration 235

SECTION I: DEFINITIONS AND ABBREVIATIONS

Conventional/General Terms

Terms Description

“Burnpur Cement

Limited ” or

“Burnpur” or “the

Issuer Company” or

“the Issuer” or “the

Company” or “we” or

“us” or “our

Company” or “BCL”

Unless the context otherwise requires, refers to, Burnpur Cement Limited,

a public limited company incorporated under the Companies Act and

having its registered office at Cement house, Saradapally, Ashoknagar,

P.O. Asansol- 713304, West Bengal, India.

Articles/Articles of

Association/AOA

The Articles of Association of Burnpur Cement Limited as amended from

time to time.

Auditors The statutory auditors of the Company, viz. M/s N K Agarwal & Co.,

Chartered Accountants.

Board/Board of

Directors

The Board of Directors of the Company or a committee constituted thereof.

Companies Act/ the

Act

The Companies Act, 1956, as amended from time to time.

Director(s) Director(s) of the Burnpur Cement Limited, from time to time, unless

otherwise specified.

Equity Shares Equity shares of the Company of face value of Rs.10/- each unless

otherwise specified in the context thereof.

Group

Companies/Firms

BCL Developers.

Memorandum/MOA/

Memorandum of

Association

The Memorandum of Association of Burnpur Cement Limited.

Promoter(s) Shall mean jointly Mr. Ashok Gutgutia, Mrs. Shashi Gutgutia, Insight

Consultants Private Limited, Bharat Cement Private Limited and Goyal Auto

Distributors Private Limited

Promoters’ Group As defined in Explanation II of Clause 6.8.3.2 of SEBI (Disclosure and

Investor Protection) Guidelines, 2000 and amendments thereof Promoters’

Group includes:

Asha Devi Bhartia

A.K. Gutgutia & Sons

R.A. Gutgutia & Co.

Income Tax Act The Income Tax Act, 1961, as amended from time to time

Fiscal/FY/ Financial

Year

Twelve months ending March 31st of a particular year unless otherwise

specified.

You, Your, Yours Unless the context otherwise requires, refers to, investors

Issue Related Terms

Term Description

Allotment Issue or transfer of Equity Shares pursuant to the Offer, to the

successful applicants in the issue.

Allottee The successful applicant to whom the Equity Shares are being/have been

issued.

Applicant Any prospective investor who makes an application for Equity Shares in

terms of this Draft Prospectus

Application Form The Form in terms of which the investors shall apply for the Equity

Shares of the Company

Banker(s) to the

Issue

[●]

BSE Bombay Stock Exchange Limited

Committee Committee of the Board of Directors of the Company authorized to take

decisions on matters related to/incidental to this issue

Depositories Act The Depositories Act, 1996, as amended from time to time.

Depository A depository registered with SEBI under the SEBI (Depositories and

Participants) Regulations, 1996, as amended from time to time.

Depository Participant

/DP

A Depository Participant as defined under the Depositories Act, 1996..

Designated Stock

Exchange

Bombay Stock Exchange Limited

Eligible Employees Means a permanent employee of the Company or the Director(s) of the

Company other than promoter Director who Indian Nationals, based in

India and is an Employee of the Company as on the date of filing the

Prospectus with the RoC is physically present in India on the date of

submission of the Application Form.

Employee

Reservation Portion

The portion of the Issue comprising upto 10,95,000 Equity Shares

Equity Shareholders Person(s) holding equity share(s) of the Company unless otherwise

specified in the context thereof

Fresh Issue/ Issue/

Public Issue/ Offer

Public Issue of 2,19,00,000 Equity Shares of Rs. 10/- each for cash at at

a premium of Rs. [•] per equity share, in terms of this Draft Prospectus

Indian GAAP Generally Accepted Accounting Principles in India.

Issue Opening Date

The date on which the issue Opens for subscription (i.e., (•), 2007)

Issue Closing Date

The date on which the issue Closes for subscription (i.e., (•), 2007)

Issue Period The period between the Issue Opening Date and Issue Closing Date and

includes both the dates.

Issue Price The price at which Equity Shares will be issued by the Company in

terms of this Draft Prospectus i.e. Rs. (•) per share. The Issue Price will

be decided by the Company in consultation with the Lead Manger prior

to filing of the Prospectus with the RoC.

IPO Initial Public Offering

Issuer Burnpur Cement Limited

Lead Manager/LM Lead Manager to the Issue, in this case being SREI Capital Markets

Limited.

Mutual Funds Means Mutual Funds registered with SEBI under the SEBI (Mutual Funds)

Regulations, 1996, as amended from time to time.

Net Issue/Offer to

Public/Net Issue

The Issue of 2,08,05,000 Equity Shares of Rs.10/- each.

Non-Institutional

Investors

All investors that are not Qualified Institutional Buyers or Retail

Individual Investors and who have applied for Equity Shares for an

amount more than Rs. 1,00,000/-.

NSE National Stock Exchange of India Limited.

OCB / Overseas

Corporate Body

Means and includes an entity defined in Clause (xi) of Regulation 2 of

the Foreign Exchange Management (Deposit) Regulations, 2000 and

which was in existence on the date of commencement of the withdrawal

of general permission to Overseas Body Corporate Regulations, 2003

and immediate prior to such commencement was eligible to undertake

transactions pursuant to the general permission granted under the

Foreign Exchange Management (Deposit) Regulations, 2000.

Offer Document/

Prospectus

The Prospectus filed with RoC in accordance with the provisions of

section 60 of the Companies Act containing inter alia the Issue Price and

the number of Equity Shares to be issued and certain other information.

Public Issue Account In accordance with Section 73 of the Companies Act, 1956, an account

opened with the Banker(s) to the Issue to receive monies for the Public

Issue.

Qualified Institutional

Public financial institutions as defined in Section 4A of the Companies

iii

Buyers or QIBs Act, FIIs, Scheduled Commercial Banks, Mutual funds registered with

SEBI, Venture Capital Funds registered with SEBI, Foreign Venture

Capital Investors registered with SEBI, State Industrial Development

Corporations, Insurance Companies registered with the Insurance

Regulatory and Development Authority(IRDA), Provident Funds with

minimum corpus of Rs. 2500 lacs, Pension Funds with a minimum corpus

of Rs. 2500 lacs, and Multilateral and Bilateral development financial

institutions.

Registrar of

Companies/ RoC

Registrar of Companies, West Bengal, Kolkata situated at “Nizam

Palace”, 2nd

MSO Building, 2nd floor, 234/4, A J C Bose Road, Kolkata-

700020

Registrar / Registrar

to the Issue

Being the Registrar appointed for the Issue, in this case being Niche

Technologies Private Limited having its registered office at D-511,

Bagree Market, 71, B R B Basu Road Kolkata – 700 001, West Bengal

India

Retail Individual

Investors.

“Retail Individual Investor” means an individual investor (including HUF

and NRIs) who applies for securities of or for a value of not more than

Rs.1,00,000/-.)

SCML/SREI SREI Capital Markets Limited a public limited company incorporated

under the provisions of the Companies Act and with its registered office

at ‘Vishwakarma’, 86C, Topsia Road (South), Kolkata – 700046

Stock Exchanges BSE and NSE

SEBI The Securities and Exchange Board of India constituted under the SEBI

Act, 1992.

Underwriters

[•]

Underwriting

Agreement

The agreement dated [•] between the Underwriters and the Company to

be entered into before the filing of Prospectus with the RoC.

Glossary of Technical and Industry Terms

Term Description

Kcal Kilo calories

KVA Kilo Volt Ampere

KWh Kilowatt hours

MnTPA Million tons per annum

MPa Mega Pascal

Mnt Million Tons

Mw Mega Watt

OPC Ordinary Portland Cement

Petcoke Petroleum Coke

PPC Pozzolona Portland Cement

PSC Portalnd Slag Cement

TPD Tons per day

TPH Tons per hour

Abbreviation of General Terms

Term Description

AGM Annual General Meeting.

AS Accounting Standards as issued by the Institute of Chartered Accountants

of India.

AY Assessment Year

BIFR Board for Industrial & Financial Reconstruction

CAGR Compounded Annual Growth Rate.

CDSL Central Depository Services (India) Limited.

DIP Guidelines SEBI (Disclosure & Investor Protection) Guidelines, 2000, as amended

ECS Electronic Clearing System

EGM Extraordinary general meeting

EPS Earnings per Share

ESOP Employee Stock Option Plan

Face Value Value of paid up equity capital per Equity Share

FCNR Account Foreign Currency Non Resident Account

FEMA Foreign Exchange Management Act, 1999, as amended from time to time,

and the Regulations framed there under for the time being in force.

FI Financial Institution

FII/Foreign

Institutional Investor

Foreign Institutional Investor (as defined under SEBI (Foreign Institutional

Investors) Regulations, 1995), registered with SEBI under applicable laws

in India.

FIPB Foreign Investment Promotion Board

FY/ Fiscal Financial year ending on March 31

FDI Foreign Direct Investment

GAAP Generally accepted accounting principles

GoI The Government of India

HNI High Net-worth Individual

HUF Hindu Undivided Family

IPO Initial Public Offering

INR/ Rs Indian Rupees

ISO 9001:2000 International Standard Organisation 9001:2000 Certification Standard

I.T. Act The Income Tax Act, 1961, as amended.

MoU Memorandum of Understanding

NAV Net Asset Value

NRE Account Non-Resident External Account.

NRI Non-Resident Indian, as defined under Foreign Exchange Management

(Transfer or Issue of Security by a Person Resident Outside India)

Regulations, 2000, as amended.

NRO Account Non Resident Ordinary Account

NSDL National Securities Depository Limited

P/E Price earning ratio

PAN Permanent Account Number

PAT Profit after Tax

PBDT Profit Before Depreciation and Tax

PBIDT Profit Before Interest, Depreciation and Tax

PBT Profit Before Tax

R&D Research and Development.

RBI The Reserve Bank of India.

RONW Return on Net Worth

RTGS Real Time Gross Settlement

Rs. Indian National Rupee

SCRA Securities Contracts (Regulation) Act, 1956 as amended

SCRR Securities Contracts (Regulation) Rules, 1957, as amended.

SEBI Securities and Exchange Board of India.

SEBI Act Securities and Exchange Board of India Act, 1992 as amended

SEBI Takeover

Regulations

Securities and Exchange Board of India (Substantial Acquisition of Shares

and Takeover) Regulations, 1997, as amended.

SEBI Guidelines Means the extant Guidelines for Disclosure and Investor Protection issued

by Securities and Exchange Board of India, constituted in the Securities

and Exchange Board of India Act, 1992 (as amended, called Securities

and Exchange Board of India (Disclosure and Investor Protection)

Guidelines, 2000)

SSI Small scale Industries

Sq. mt. Square Metre

Sq. ft. Square Feet

TAN Tax Deduction Account Number

SECTION II: RISK FACTORS

Certain Conventions, Use of Market Data

Unless stated otherwise, the financial data in this Draft Prospectus is derived from the restated

financial statements as of and for the years ended March 31, 2002, 2003, 2004, 2005 and 2006

and for the nine months ended December 31, 2006 prepared in accordance with Indian GAAP, the

Companies Act, 1956 and restated in accordance with SEBI Guidelines, as stated in the report of

the Statutory Auditors, M/s N K Agarwal & Co., Chartered Accountants, included on page no. 112

of this Draft Prospectus. The fiscal year commences on April 1st of a year and ends on March

31st of the following year. In this Draft Prospectus, unless the context otherwise requires, all

references to one gender also refers to another gender and the word "Lakh" or "Lac" means "one

hundred thousand" and the word "million" means "ten lac" and the word "Crore" means "ten

million". In this Draft Prospectus, any discrepancies in any table between the total and the sums

of the amounts listed are due to rounding off.

All references to “India” contained in this Draft Prospectus are to the Republic of India. All

references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of

India.

Market and Industry Data used throughout this Draft Prospectus has been obtained from

publications available in the public domain and internal Company reports. These publications

generally state that the information contained therein has been obtained from sources believed to

be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be

assured. Although the Company believes that the industry data used in this Draft Prospectus is

reliable, it has not been independently verified. Similarly, internal Company reports, while

believed by the Company to be reliable, have not been verified by any independent source.

Forward-Looking Statements And Market Data

This Draft Prospectus contains certain “forward-looking statements”. These forward looking

statements can generally be identified by words or phrases such as “aim”, “anticipate”, “believe”,

“expect”, “estimate”, intend”, “objective”, “may”, “plan”, “project”, “shall”, “will” “will continue”,

“will pursue” or other words or phrases of similar import. Similarly, statements that describe

Company’s objectives, strategy, plans or goals are also forward-looking statements.

All forward-looking statements are subject to risks, uncertainties and assumptions about the

Company that could cause actual results to differ materially from those contemplated by the

relevant forward-looking statement. Important factors that could cause actual results to differ

materially from the expectations include, among others:

• General economic and business conditions;

• Company’s ability to successfully implement its strategy and its growth and expansion

plans and technological changes;

• Factors affecting the Cement industry;

• The ability to modify and enhance the product offerings based on customer needs and

evolving technologies;

• The ability to retain the existing clients and acquire new clients;

• Changes in the pricing policies or those of the competitors;

• Inadequate availability of Raw Materials;

• Increasing competition in the Cement industry;

• Increases in labour costs, raw materials prices, prices of plant & machineries and

insurance premia;

• Manufacturers’ defects or mechanical problems with Company’s plant & machineries or

incidents caused by human error;

• Cyclical or seasonal fluctuations in the operating results;

• Amount that the Company is able to realise from the clients;

• Changes in laws and regulations that apply to the cement industry;

• Changes in fiscal, economic or political conditions in India;

• Social or civil unrest or hostilities with neighboring countries or acts of international

terrorism;

• Changes in the interest rates and tax laws in India.

• The Company’s ability to meet its capital expenditure requirements.

For further discussion of factors that could cause Company’s actual results to differ, please see

the section entitled “Risk Factors” included in this Draft Prospectus. In the light of inherent risks

and uncertainties, the forward-looking statements, events and circumstances discussed in this

Draft Prospectus might not occur and are not guarantees of future performance.

Neither the Company, it’s Directors and Officers, any member of the Issue Management Team

nor any of their respective affiliates has any obligation to update or otherwise revise any

statements reflecting circumstances arising after the date hereof or to reflect the occurrence of

underlying events, even if the underlying assumptions do not come to fruition. In accordance

with SEBI requirements, for purposes of the Issue, the Company and the Lead Manager to the

Issue will ensure that investors in India are informed of material developments relating to the

business until such time as the grant of listing and trading permission by the Stock Exchanges.

vii

RISK FACTORS

An investment in the Equity Shares involves a high degree of risk. The investors should carefully

consider all information in this Draft Prospectus, including the risks and uncertainties described

below, before making an investment in the Equity Shares. If any of the following risks or any of

the other risks and uncertainties discussed in this Draft Prospectus actually occur, the Company’s

business, financial condition and future results of operations could suffer, the trading price of its

Equity Shares could decline, and the investors may lose all or part of their investment.

Unless specified or quantified in the relevant risk factors below, the Company is not in a position

to quantify the financial or other implications of any of the risks mentioned hereunder.

Materiality

The Risk factors have been determined on the basis of their materiality. The following factors

have been considered for determining the materiality.

1. Some events may not be material individually but may be found material collectively.

2. Some events may have material impact qualitatively instead of quantitatively.

3. Some events may not be material at present but may be having material impacts in

future.

Internal Risk Factors:

1. The company’s business is dependent upon its ability to source sufficient limestone

for its operations.

Management Perception

The company would be able to meet most of its requirement of limestone, the key raw

material for cement production, from mines which are located near its proposed plant. The

proposed cement plant located in Hazaribag district is near rich sources of

limestone. The

Company has entered into an lease agreement dated 26

September, 2006 with M/s Pandya

Minerals ffor mining limestone. These leased mines have an area of 8.53 acres at village

Kadhu P.S. Ramgarh. Jharkhand. Limestone shall be mined on the basis of the JV agreement

with Pandya Mines and the MOU with Government of Jharkhand (GOJ), As per the MOU with

the GOJ, the State Government shall assist the Company to source limestone as per the

requirements of the Company. The Company has already made an application to the GOJ for

grant to mining lease for mining limestone on the 27

of September, 2006 and is awaiting

grant of the said mining rights from the GOJ.

Although the Company believes that its mining rights are sufficient to meet current and

future production levels, in case the mining rights granted by GOJ or Joint Venture agreement

with Pandya Mines are revoked or are not renewed upon its expiry, or significant restrictions

on the usage of the rights are imposed or applicable environmental standards are

substantially increased, the Company’s abilities to operate its plant could be effected which

could materially and adversely affect the financial condition and results of operations.

2. The Company is dependent upon the continued supply of coal, gypsum and other

raw materials and fuel, the supply and costs of which can be subject to significant

variation.

Management Perception

The Company would be relying on a number of domestic suppliers to provide certain raw

materials, including gypsum and additives for the proposed plant. The Company would also

dependent on various domestic suppliers for the supply of coal. If the Company is unable

to obtain adequate supplies of raw materials or fuel in a timely manner or on acceptable

commercial terms, or if there are significant increases in the cost of these supplies, the

business and results of operations may be materially and adversely affected. As per the MOU

with the Government of Jharkhand (GOJ), the GOJ will assist the Company in sourcing raw

materials. The Company, however, based on its experience in the region is confident that

such an occasion would not arise, on account of its multiple supplier profile.

viii

3. The Company depends on its own distribution network for the sale of its products.

Management Perception

The Company’s products are currently marketed through a distribution network comprising of

around 525 distributor/dealers/C&F Agents and 21 market organizers who in turn sell the

products to end users such as contractors, retailers, and the like. The Company also markets

its products directly to institutions and Corporate bodies. Since the dealers/distributors/C&F

agents have day-to-day contact with customers, the Company is exposed to the risk of its

dealers/distributors/C&F agents failing to adhere to the standards set for them in respect of

sales and after-sales service, which in turn could affect customer’s perception of the

Company’s brand and products. If the competitors of the Company provide better commercial

terms to the dealers, they may be persuaded to promote the products of the Competitors

instead of the products of the Company.

4. Disruptions in supply and transportation could affect the business of the Company.

Management Perception

The production of cement is dependent on a steady supply of various raw materials. These

inputs would be transported to the Company’s existing plant at Asansol & the proposed unit

at Hazaribagh, Jharkhand by road and cement is transported to the customers by both road

and rail. Transport of the inputs and finished products is subject to various bottlenecks and

other hazards beyond the control of the Company. An increase in the price of transportation

or interruptions in transportation of the inputs or finished products could have an adverse

effect on the business, financial condition and results of operations. Transportation strikes by

members of various Indian truckers’ unions have had in the past, and could have in the

future, an adverse effect on the receipt of supplies and delivery of the products by the

Company. In addition, cement is a perishable product as its quality deteriorates upon contact

with moisture over a period of time. Therefore, prolonged storage or exposure to moisture

during transport may result in such cement stocks being written off. Although the Company

has not encountered any significant disruption to the supply and transportation of inputs and

finished products till date, no assurance can be given that any such disruption will not occur

in the future. The Company typically uses third party transportation providers for the supply

of raw materials and for delivery of its products to the customers. In addition, transportation

costs have been steadily increasing. Continuing increases in transportation costs or

unavailability of transportation services for the products may have an adverse effect on on

the Company’s business and results of operations.

5. Rise in Input Costs may affect profitability

The input costs of the products of the Company may increase due to various reasons. In case

the Company is not able to pass on such increase to the consumers because of competition or

otherwise, it may affect the profitability of the Company.

Management Perception

The Company constantly endeavours to procure raw materials and packing materials at the

lowest prices using its long-term association with the suppliers and constantly developing

new sources. The Company also follows prudent pricing policy to keep the costs under check.

The risk on account of price fluctuation in raw material is reduced to a significant extent by

passing incremental raw material cost to the prices of finished products thereby insulating the

Company from fluctuation in raw material prices. Profitability will depend upon the extent up

to which the company is able to pass on the burden of rise in the price of raw material to the

consumers.

6. The operations of the Company are subject to manufacturing risks and may be

disrupted by a failure in the manufacturing facilities.

Management Perception

The manufacturing operations of the Company could be disrupted for reasons beyond the

control of the Company. These disruptions may include extreme weather conditions, fire,

natural catastrophes or raw material supply disruptions. The manufacturing facilities are also

subject to operating risks, such as the breakdown or failure of equipment, power supply or

processes, performance below expected levels of output or efficiency, obsolescence, labour

disputes, natural disasters, industrial accidents and the need to comply with the directives of

relevant government authorities. Any significant manufacturing disruption could adversely

affect the ability of the Company to make and sell products, which could have a material

adverse effect on the business, financial condition and results of operations of the Company.

The Company is in the process of setting up a Clinkerisation and cement grinding plant at

Patratu in Hazaribag by incurring significant capital expenditure. The Company’s expansion

plans involve risks and difficulties, many of which are beyond its control and accordingly

there can be no assurance that the Company will be able to complete its plans on schedule or

without incurring additional expenditures. The Company’s success will inter alia depend on,

its ability to assess potential markets, control input costs and maintain sufficient operational

and financial controls. There can be no assurance that the Company’s expansion plans will

result in it achieving the production levels that it expects to. The Company’s future results of

operations may be adversely affected if it is unable to implement its growth strategies

successfully.

7. The business and future results of operations of the Company may be adversely

affected if the Company is unable to set up the proposed plant at Patratu,

Jharkhand.

Management Perception

The Company is in the process of setting up a Clinkerisation and Cement grinding plant of

800 TPD expendable to 1600 TPD at Patratu Jharkhand to start its production capacity by

incurring significant capital expenditure. The Company proposes to manufacture Clinker,

Ordinary Portland Cement (OPC), Portland Pozzolona Cement (PPC) and Portland Slag

Cement (PSC). The Company expects to incur significant capital expenditure for the proposed

plant. There exist other risks associated with such major projects, such as time overrun, cost

overruns, delays in implementation and changes in market conditions etc. The business and

future results of operations of the Company may be adversely affected if the Company is

unable to set up the proposed cement plant within the stipulated time.

8. The results of operations could be adversely affected by strikes, work stoppages or

increased wage demands by the employees or the inability of the Company to

attract and retain skilled personnel.

Management Perception

As of March 31, 2007, the Company had 86 permanent employees. While the Company

considers the current labour relations to be good, there can be no assurance that the

Company will not experience future disruptions to its operations due to disputes or other

problems with its work force, which could adversely affect its business and future results of

operations.

The Company’s ability to meet future business challenges depends on its ability to attract and

recruit talented and skilled personnel. It faces strong competition to recruit and retain skilled

and professionally qualified staff. The loss of key personnel or inability to manage the

attrition levels in different employee categories may materially and adversely impact

business, the Company’s ability to grow and its control over various business functions.

9. The Eastern India cement market is highly competitive.

Management Perception

The Company’s primary markets are the Eastern States of India namely West Bengal, Bihar

and Jharkhand

. Some of the competitors of the Company are larger than the Company and

have financial resources and thus may be able to deliver products on more attractive terms

or may be able to invest larger amounts of capital into their business, including greater

expenditure for better and more efficient production capabilities. These competitors may limit

the opportunity of the Company to expand its’ market share and may compete with it on

pricing of products. The business, financial condition and prospects of the Company could be

adversely affected if it is unable to compete with its competitors and sell cement at

competitive prices.

With increased thrust and emphasis given by the Government and private sector to

construction activities and infrastructure development, the demand for cement is going to be

ever-increasing. The Compay therefore foresees no let up in demand for Company’s products.

10. Non availability of power could disrupt the operations for the proposed project.

Management Perception

The power requirement for running the proposed clinkerisation and cement grinding plant

would be obtained from the existing 33 KV HT lines of Damodar Valley Corporation by tapping

the same, application for the same would be made by the Company to the concerned

authorities in due course. The Company has already obtained the required power connection

for the construction period. The Company would also be taking necessary precautionary back

up measures such as D.G. set.

11. The Company has not started recruiting the manpower for the proposed plant.

Management perception

The Company does not foresee any difficulty in recruiting the required manpower in time for the proposed

plant expansion project. The Company has currently on its payrolls experienced manpower

whose services shall also be used for the proposed project. Trained manpower in the

managerial, supervisory and skilled categories are expected to be easily available. Personnel

in the semi skilled and unskilled categories are proposed to be employed from nearby

villages/towns.

12. The proposed project of the Company would be partially funded from this Public

Issue. Any delay/failure of the same, may adversely impact the implementation of

the project and cost overrun.

Management Perception

The Company requires significant capital to finance its proposed project which would be

partly funded through the IPO. In case there is a delay in Public Issue/failure of the same, the

Company would have to make alternate funding arrangements through an equitable mix of

secured/unsecured loans, private placement of equity and contribution from the promoters.

13. There may arise production problems on account of possible flaws in design

estimates.

Management Perception

The Company has appointed Development Consultants Private Limited as engineering

consultants who would be providing design, drawing, technology and would be monitoring the

project and ensure successful commissioning of the Plant. Development Consultants Private

Limited have a past experience in handling projects of such magnitude.

14. The Company’s sustained growth depends on its ability to attract and retain skilled

Personnel. Failure of the Company to attract and retain skilled personnel could

adversely affect the Company’s growth prospects

Management Perception

The Company has devised a sound human resource policy to develop and retain its key

management personnel and talent and the Company has been able to retain significant part

of its manpower talent.

15. There may be Time and Cost overrun in the Proposed Project

The Company, as regards this Project, has made certain assumptions on the time frame by

which the Project will be completed. While adequate contingency provisions have been made

while assessing the capital cost of the project, the costs are subject to fluctuations in future

due to hike in input cost, higher levies etc. Also, the disbursement of the loans is contingent

on the satisfaction of certain conditions such as clearance from SEBI etc. In case there is a

delay in complying with any of the conditions, it may result in time and cost over run, which

in turn may adversely impact the future profitability.

Management Perception

The proposed project would be under the overall supervision of Development Consultants

Private Limited (DCPL). The contractor for construction would be appointed by the Company

in consultation with DCPL. The Company has identified M/s ThyssenKrupp Industries India

Pvt. Limited, one of the reputed suppliers of cement equipments, for supplying main Plant &

Machinery to set up a clinkerisation and Cement grinding unit at a capacity of 800TPD

expendable to 1600 TPD at Patratu in Jharkhand. The Company has already received the land

allotment and land development is in progress. The Company does not foresee any delay in

the overall completion of the work and hopes to conduct its trial run and commercial

production as per schedule.

16. Competence of the Promoters in handling Project of this size is yet to to be tested.

Further, the promoters have no past experience in handling a cement clinkerisation

unit.

The cost of the project is Rs.12090 lakhs, including public issue expenses. Although the

promoters have past experience of running a grinding unit, their competence in running a

cement clinkerisation unit remains to be demonstrated. An equity investor is therefore faced

with an uncertainty of performance by the management.

Management Perception

The promoters of the Company have considerable experience of having run this business

successfully and profitably in the cement sector for nearly 15 years. The Company has also

on board senior and experienced Professionals who have the experience of setting up &

running similar facilities in the past. Moreover, the promoters view the present optimistic

scenario and economic growth in the country and the corporate sector as an opportunity to

enlarge the scale of the operations of the Company. Please refer page no. 106 for profile of

the promoters and page no. 104 for experience of key managerial personnel.

17. The Company is yet to place orders for the plant and machinery relating to the

project.

Management Perception

The Company has floated enquiries for all the equipments, plant and machineries, and the

quotations from various parties have already been received. Development Consultants Private

Limited (DCPL) would be assisting the Company in selecting the right vendors for supply of

plant and machineries.

18. The operations of the Company are subject to Environmental, health and safety

hazards.

Management Perception

The operations of the Company are subject to various risks associated with the production of

cement. These hazards can cause injury and/or loss of life, severe damage to, and

destruction of, property and equipment, and environmental damage, and may result in the

suspension of operations and the imposition of civil and criminal liabilities on the Company.

The Company proposes to set up the project while conforming to all pollution control and

safety norms as stipulated by State Pollution Control Board.

19. The Company’s operations and consequently its revenues could be adversely

affected by under utilization or mis utilization of its existing as well as proposed

capacity

xii

Management Perception

Effective utilization of capacities is a key factor in the Company’s ability to generate revenue.

The Company proposes to set up a new Integrated Cement Plant at Patratu, Hazaribag to

increase its manufacturing capacities. The Company constantly strives to scale up its

operations based on capacity utilization of its facilities on a long-term basis.

20. Further equity offerings may lead to dilution of equity and impact its market price

The Company may require further infusion of funds to satisfy its capital needs and future

growth plans, which it may not be able to procure. Any future equity offerings by the

Company may lead to dilution of equity and may affect the market price of its Equity Shares.

Management Perception

In the near future, there are no plans to issue further equity shares. In case the Company

decides to raise additional funds through the issuance of equity, the same would be done for

further value creation for the shareholders of the Company and after taking adequate consent

from them.

21. The Company’s dependence on its promoters is tremendous, and any inability on

the part of the promoters to contribute to the growth and business of the Company

may affect its performance.

Management Perception

The Company is dependent on the experience and efforts of its promoters, as is applicable to

any other company/industry. However, the Company has been in this business for over 15

years. The promoters’ family has been associated with the Company and its business since

inception. The promoters have been involved with critical functions like development of the

product, marketing, and other operations of the Company. The Company also has a qualified

team of marketing executives, finance professionals and professionals in other functional

domains who are involved in the day-to-day operations of the Company. This reduces the

company’s dependence on the promoters to manage the operations of the company.

22. Legal proceedings:

The Company, directors and promoter are involved in certain legal proceedings. The

Company may need to make provisions in its financial statements, which could increase its

expenses and its current liabilities. The Company can give no assurance that these legal

proceedings will be decided favourably. Any adverse decision may have a significant effect on

the Company’s business and results of operations.

a. Legal proceedings instituted against the directors/officers of the Company and the

monetary amount involved in these cases is given in the following table:

Type of litigation Total number of

pending cases

Remarks and amount involved

Criminal Case 1 Special Court, Burdwan. Under Section

151 of the Electricity Act, 2003 read with

Section 190(1)(a) of the Code of Criminal

Procedure for a commission of Offence

punishable under Section 135 of the

Electricity Act, 2003 pertaing to theft of

energy

b. The Company is involved in the following legal proceedings for tax demands :

A classification of the legal proceedings instituted by the Company and the monetary

amount involved in these cases is given in the following table:

xiii

Type of Litigation Amount

Involved

(in Rupees)

Financial Implication Status

Sales Tax 4507639.10 Provisions in financial

statements required, if

legal proceedings not

decided in Company’s

favour.

Pending before

the West Bengal

Appellate &

Revisional Board

For more information regarding litigations, please refer to the section titled “Outstanding

Litigations and Defaults” beginning on page no. 161 of this Draft Prospectus.

23. Contingent Liability as on 31

December, 2006

As per the Audited Financial Statements, the Company has certain contingent liabilities,

which, if determined against it in future, may impact its financial position, adversely. Details

of the contingent liabilities as on December 31, 2006 are given in the following table:

Rs. in Lakhs

Brief Particulars As at

December 31, 2006

Sales tax Demand 45.08

WBSEB 99.00

Outstanding Bank Guarantee * 18.46

Total 162.54

* The outstanding bank guarantees of Rs. 18.46 lacs as mentioned above are covered to the

extent of Rs. 11.95 lacs by fixed deposits in the name of the Company and its promoters.

24. Payment or benefit to Promoter Director

The Registered/Corporate Office of the Company situated at Cement House, Saradapally,

Ashoknagar P.O. Asansol- 713304, Dist.: Burdwan, West Bengal and a part of the factory

premises situated at Vill-Palasdiha, Panchgachia Road P.O. – Kanyapur, Dist. Burdwan West

Bengal Pincode-713341 is owned by Mr. Ashok Gutgutia, Promoter and Vice Chairman &

Managing Director of the Company and has been taken on rent by the Company.

25. Any inability to manage the Company’s growth could disrupt its business and

reduce profitability.

The Company has experienced significant growth in revenues in the past years and expects

this growth to place significant demands on both its management and resources. This will

require the Company to continuously evolve and improve its operational, financial and

internal controls across the organisation. In particular, continued expansion increases the

challenges involved in:

 Recruiting, training and retaining sufficient skilled technical, sales and management

personnel;

 Maintaining high levels of customer satisfaction; and

 Developing and improving the Company’s internal administrative infrastructure,

particularly the financial, operational and other internal systems.

Management Perception

The Company has demonstrated its ability to grow the business and its flexibility in scaling its

operations to various levels as is evident from turnover trends in the last few years. Internal

and administrative processes and systems have also undergone tremendous change keeping

with the requirements and growth patterns. The company feels that in the future and keeping

in perspective its past track records, it will be able to grow operations at a continued pace

and adapt its organisation based on its evolving business strategies

xiv

26. The Company may not have adequate insurance to cover any and all losses incurred

in its business operations.

Management Perception

The Company maintains insurance coverage in such amounts and against such risks, which it

believes, are in accordance with industry practice.

However, such insurance may not be adequate to cover all conceivable losses or liabilities

that may arise from operations, and the Company may, in the future, not be able to maintain

insurance of the types or at levels which it deems necessary or adequate or at rates which it

considers reasonable.

27. The Company significant indebtedness and the conditions and restrictions imposed

by our financing agreements could adversely affect our ability to conduct our

business and operations.

28. Due to high transportation costs, the Company may not market its products outside

Esatern India.

External Risk Factors:

1. The Indian Cement Industry is cyclical and affected by a number of factors, which

are beyond the control of the Company.

Management Perception

The Indian cement industry is cyclical in nature. In recent years, cement prices and

profitability of cement manufacturers have fluctuated significantly in India, depending upon

overall supply and demand. A number of factors influence supply and demand for cement,

including production, overcapacity, general economic conditions, in particular, activity levels

in certain key sectors such as housing and construction, competitors’ actions and local, State

and Central Government policies, which in turn may affect the prices and margins the

Company and other Indian cement manufacturers can realize.

2. Slowdown of the Indian economy and in particular Eastern India could affect the

operations of the Company.

Management Perception

Due to the significant impact of transportation costs on overall costs, cement manufacturing

and sale in India is largely regional in nature. The production facility of the Company is

located at Asansol in the State of West Bengal in Eastern India, and it sells its cement to

customers in Eastern India. Economic conditions and the level of growth in Eastern India

therefore have a direct impact on its business and results of operations, including the level of

demand and the prices for its products and the availability and prices of transport and raw

materials.

3. The cement business is seasonal in nature.

Management Perception

The sale of cement is adversely affected by difficult working conditions during monsoon which

restrict construction activities. Accordingly, revenues recorded in the first half of the financial

year between April and September are traditionally lower, compared to revenues recorded

during the second half of the financial year. During periods of curtailed construction activity

due to adverse weather conditions, the Company may continue to incur operating expenses,

but its revenues from sale of its products may be delayed or reduced.

4. The Cement Industry is dependent upon the Government Policy on Infrastructure

development.

The business of the company is dependent to a large extent on the implementation of the

central and state budget allocations to the infrastructure sector. The liberalization policy of

the Government and incentives offered by it has spurred the growth of opportunities in the

field of Infrastructure and particularly road sector giving rise to increased demand for

cement. Adverse changes if any, in the Government policy could thus affect the company's

business prospects.

5. The Indian Cement Industry is fragmented which may result in decline in cement

prices.

Management Perception

Currently, the cement industry in India is highly fragmented as compared to those in other

cement producing countries. Though the share of cement production of the top eight cement

companies in India has risen to 60% in the year ended March 31, 2006 there are still over 45

different cement companies in India which have less than 2 million tonnes cement capacity.

The Company is subject to competition from numerous regional competitors. Such producers

have mayin the past tried try to gain a the market share by discounting lowering their prices,

which may putting pressure on the Company and other leading cement companies to lower

prices as well, so as to maintain their respective market shares.

6. Taxes and other levies imposed by the Government of India or State Governments

relating to the Company’s business may have a material adverse effect on the

demand of its products

Management Perception

Taxes and other levies imposed by the Central or State Governments that affect the industry

include Customs duties, Excise duty and Central and State sales tax / value added tax. These

taxes and levies affect the cost of production of cement. An increase in any of these taxes or

levies, or the imposition of new taxes or levies in future, may have a material adverse impact

on the business, profitability and financial condition of the Company.

7. The cement industry is subject to various environmental and other regulations. Any

significant change in the regulations may result in additional cost and reduction in

profitability.

Management Perception

The Company’s cement operations are subject to various Central and State environmental

laws and regulations relating to the control of pollution in the locations where it operates. In

particular, the discharge or emissions of chemicals, dust or other pollutants into the air, soil

or water that exceed permitted levels are strictly monitored by the Central and State

Governments. There can be no assurance that compliance with such environmental laws and

regulations will not result in a curtailment of production or a material increase in the costs of

production or otherwise have a material adverse effect on the financial condition of the

Company and future results of operations. Environmental laws and regulations in India have

been increasing in stringency and it is possible that they will become significantly more

stringent in the future. Stricter laws and regulations, or stricter interpretation of the existing

laws and regulations, may impose new liabilities on the Company or result in the need for

additional investment in pollution control equipment, either of which could affect its business,

financial condition or future prospects.

8. Any further issuance of equity shares by the Company may adversely affect the

trading price of the Equity Shares.

Management Perception

Any future issuance of equity shares by the Company or any future issuance of convertible

securities by the Company, may significantly affect the trading price of its equity shares.

Such issuances of equity shares and convertible securities may dilute the position of investors

in the Equity Shares and could adversely affect the market price of the Equity Shares.

9. Factors beyond the management's control

xvi

Political, Economical and Social unrest, terrorist attacks, civil disturbances and regional

conflicts in the country could adversely affect the business of the Company. Natural

calamities and adverse weather conditions could have a negative impact on business of the

Company.

10. Natural calamities and acts of violence involving Indian and other countries.

Floods, earthquakes, terrorist attacks and other acts of violence or war/destruction involving

India and other countries could adversely affect the Country’s business and economy, and

consequently reflect on the Company’s business.

Management Perception

The consequences of any of the above are unpredictable and the Company may not be able

to foresee events that could have a material adverse effect on its business, financial condition

or results of operations.

11. After this Issue, the price of the Equity Shares may be highly volatile, or an active

trading market for the Equity Shares may not develop

The prices of the Company’s Equity Shares on the Indian stock exchanges may fluctuate after

this Issue.

Management Perception

Fluctuations in equity share prices on the Indian stock exchanges may result from several

factors, including:

a. Volatility in the Indian and global securities market

b. Results of operations and performance of the Company

c. Performance of the competitors, the Indian Cement industry and the perception in

the market about investments in the Cement sector

d. Adverse media reports on Burnpur or the Industry segments in which the company

operates

e. Changes in the estimates of the Company’s performance or recommendations by

financial analysts

f. Significant developments in India’s economic liberalisation and deregulation policies

g. Significant developments in India’s fiscal and environmental regulations

There has been no public market for the Company’s Equity Shares and the prices of the

Equity Shares may fluctuate after this Issue. There can be no assurance that an active

trading market for the Equity Shares will develop or sustain after this Issue, or that the prices

at which the Equity Shares are initially traded will correspond to the prices at which the

Equity Shares will trade in the market subsequent to this Issue.

12. Stability in policies and political situation

The Company’s performance is linked to the stability of policies and the political situation in

India

Management Perception

The role of the Indian Central and State Governments in the Indian economy on producers,

consumers and regulators has remained significant over the years. Since 1991, the

Government of India has pursued policies of economic liberalization, including significantly

relaxing restrictions on the private sector. Any political instability could delay the reform of

the Indian economy and could have a material adverse effect on the market for Company’s

shares. Protests against privatisation could slowdown the pace of liberalization and

deregulation. The rate of economic liberalization could change, and specific laws and policies

affecting companies in the cement sector, foreign investment, currency exchange rates and

other matters affecting investment in Company’s securities could change as well. A significant

change in India’s economic liberalization and deregulation policies could disrupt business and

economic conditions in India and thereby affect Company’s business.

xvii

Notes to Risk Factors

1. Issue of 3,18,25,100 equity shares of Rs.10 each for cash at a premium of Rs.[•] per

equity share aggregating to Rs. 3182.51 lacs (at the lower band of the issue price of Rs.

10/-per equity share) and Rs. 3819.01 lacs (at the higher band of the issue price of Rs.

12/-per equity share). The issue through this Draft Prospectus comprises of 2,19,00,000

equity shares of Rs.10 each for cash consisting of a reservation for eligible employees of

upto 10,95,000 equity share of Rs.10/- each (hereinafter referred to as the “employee

reservation portion”) and a net issue to the public of 2,08,05,000 equity shares of

Rs.10/- each.

2. The net worth of the Company was Rs. 1081.61 lacs as at March 31, 2006 and Rs.

1423.59 lacs as at December 31, 2006 as per the restated financial statements under

Indian GAAP.

3. The Book Value per Equity Share of Rs.10/- each was at Rs. 12.59 as at March 31, 2006

and Rs. 16.57 as at December 31, 2006, as per the restated financial statements under

Indian GAAP.

4. The average cost of acquisition of Equity Shares of the Promoters are as follows:

Sr.

No.

Name of Promoter Avg. Cost of

Acquisition of Equity

Share (Rs.)

1 Mr. Ashok Gutgutia 2.23

2 Mrs. Shashi Gutgutia 10.00

3 Insight Consultants Private Limited 10.74

4 Bharat Cement Private Limited 10.00

5 Goyal Auto Distributors Private Limited 10.00

5. For details of the Company’s related party transactions, please refer to the section titled

“Related Party Transactions” on page 110.

6. Trading in Equity Shares for all investors shall be in dematerialised form only.

7. Investors are advised to refer to the paragraph on "Basis for Issue Price" on page no. 39

of this Draft Prospectus before making an investment in this Issue.

8. Investors may please note that in the event of over-subscription, allotment shall be made

on a proportionate basis. For more information please refer to the section titled “Basis of

Allotment” beginning from page no. 191 of the Draft prospectus.

9. Any clarification or information relating to the Offer shall be made available by the Lead

Manager, and the Company to the investors at large and no selective or additional

information would be available for a section of investors in any manner whatsoever.

Investors may contact the Lead Manager or the Compliance Officer for any

complaints/clarifications / information pertaining to the Offer.

10. Investors are advised to refer to the section titled “Basis for the Offer Price” on page 39

of this Draft Prospectus before making any investment in this issue.

11. The Promoters/ Directors/ Key Managerial Personnel are interested to the extent of the

normal remuneration, reimbursement of the expenses incurred, or benefits such as sitting

fees and those relating to their respective shareholdings in the Company.

12. There are no relationships with Statutory Auditors to the Company other than auditing

and certification of financial statements.

13. In addition to the LM, the Company is obliged to update the Draft Prospectus and keep

the public informed about any material changes till listing and trading commences in

respect of the shares issued through this Draft Prospectus.

xviii

14. None of the Promoters, Promoter Group has undertaken transactions in the shares of the

Company from the last six months in the last six months preceding the date on which the

Draft Prospectus is filed with SEBI.

15. The investors are advised to refer the Paragraph on promoter’s background and past

financial performance of the Company before making an investment in the proposed

issue.

16. The company, its directors, company's associates or group companies have not been

prohibited from accessing the capital market under any order or direction passed by

SEBI.

17. The promoters, their relatives, issuer, group companies, associate companies are not

detained as willful defaulters by RBI/Government authorities and there are no violations

of securities laws committed in the past or pending against them.

SECTION III: INTRODUCTION

Summary

You should read the following summary together with the Risk Factors beginning from page no.

vii of this Draft Prospectus and the more detailed information about Burnpur Cement Limited and

its financial data included in this Draft Prospectus.

Industry Overview

The cement industry is a core sector and one of the kingpins for the growth of the country.

Cement is one of the most basic construction materials, and hence, an essential item for the

infrastructure development of the country.

The evolution of the cement industry in India can be broadly classified into three periods: The

period up to partial decontrol (up to 1982), the period up to total decontrol (1982-89) and the

period after total decontrol (after 1989 to date). The following table summarizes the events in the

cement industry.

Events during the period of government control

Period Events

1942 FOR (free on rail) destination price of cement fixed on a cost plus basis.

1946-1952 Cost of production of ACC used as a basis for fixing cement prices. Freight

equalisation system introduced simultaneously.

1958 Introduction of three-tier retention price scheme, whereby retention prices

are decided based on the age of the plant and technology employed.

Jan-66 Price and distribution controls lifted.

Jan-68 Price and distribution controls re-imposed.

Apr 1969 - May 1979

Period of single price regime; total distribution control.

Cement industry grew at around 4.0 per cent during this period as against

the high growth rates in the past.

Sep-77 Government guarantees 12 per cent post-tax return on the net worth of

new cement companies.

Events during the period of partial decontrol

Period Events

Feb-82 Companies allowed to sell 33 per cent of their production in the open market,

while price and distribution controls enforced for the remaining production

1985-86 Proportion of cement for free market sale increased to 50 per cent.

Events post decontrol

Period Events

Mar-89 Price and distribution controls removed completely.

Jul-91 Industrial licensing abolished for new capacities.

The cement industry in India has grown steadily since 1914, when the first cement unit of 1000

tonnes was set up at Porbandar. The growth in the industry has followed the pattern of economic

growth, i.e., moderate to low growth during the fifties, the sixties and the seventies and high

growth during the eighties & the nineties. Since decontrol of cement, the industry showed

characteristics symptoms of free market conditions, where producers build capacities ahead of

demand in the expectation of capturing the future demand.

Indian Cement Industry Structure

The cement industry in India is estimated at 125 million tonnes (2004-05) by volume. The

domestic cement industry is highly fragmented, with over 50 cement players and more than 120

manufacturing plants. This apart, the industry is highly regionalized, as cement units are

concentrated in clusters, close to the limestone deposits. Competition is also regionalized since

the low-value of the commodity makes transportation over long distances uneconomical.

Like in most commodity industries, the business cycle in the cement industry follows a set

pattern. When the demand-supply gap narrows, price realizations improve and companies

increase their capex outlays for building capacities and increasing their market shares. As

capacities start bunching up, overcapacity starts creeping-in and player profitability deteriorates.

This constraints further capacity additions, which results in lower capex outlays

and, over a period of time, helps in improving the business scenario. Most of the large companies

with high level of financial flexibility are the first to take off in good times as they are

continuously looking at improving their market share.

Players

The main players in the cement industry are the raw material suppliers, manufacturers,

distributors and end-users. Given below is a brief summary of the characteristics of each party.

Raw Material Suppliers

Most of the main raw material suppliers are either in the public sector domain or controlled by the

central or state Governments. As the cement companies, generally enter into prospecting/mining

lease with the respective state Governments, the Government generally controls the prices. Most

of the cement companies are assigned quarterly linkages for coal (fuel) from specific coalfields.

The cement industry accounts for only 3% of the total coal requirements.

Power is purchased from the respective State Electricity Boards. Arising from the lack of

availability of quality power, cement companies have been increasingly using captive power to

augment their requirements.

(Source : Financial Appraisal Note – SBI Capital Markets Limited)

For further details, see the section on ‘Industry Overview’ beginning from page no 51

of the Draft Prospectus.

Business Overview

Burnpur Cement Limited (BCL) is one of the established cement manufacturers of Eastern India

having its market presence in West Bengal, Jharkhand and Bihar. BCL started operations in

October 1991 with a small cement plant with 30 TDP capacity in Asansol. Expansion of facilities

over the years has resulted in a capacity of 1000 TDP of cement making. For its consistent and

continuous endeavours, the company has received ISO-9001:2000 certification in January, 2004

The Company has also been certified by the Bureau of Indian Standards for its quality and has

been certified IS 455 : 1989

BCL is a professionally managed company. The Company has achieved a turnover of Rs. 25.85

crores in FY 2005-06.

The Company started operations in the cement industry in October 1991 with a small cement

plant of 30 TPD in Asansol to produce Portland Slag Cement conforming to IS 455:1989. The

production phase was ushered in with the commissioning of the Plant in October, 1991. A slow

and steady commissioning of other units led to a gradual stepping up of production over the

years. Expansion of facilities over the years has resulted in a capacity of 1000 TPD of cement

making. The Company has earned brand recognition for consistent product quality, customer

satisfaction, marketing network etc. For its consistent and continuous endeavors the company

has received ISO-9001:2000 in 2004.

The capacity of the grinding unit has not been optimally utilized due to non-availability of clinker.

Considering the constraints in availability of raw material (clinker) and also for planned expansion

in the cement sector the company has decided to set up an 800 TPD expandable to 1600 TPD

Clinkerisation and Cement grinding unit at Patratu Hazaribagh, Jharkhand which is approximately

3.0 km away from Patratu Thermal Power Station and about 10-15 kms from vast limestone

deposits.

For further details, see the section on ‘Business Overview’ beginning from page no 66

of the Draft Prospectus.

Competitive Strengths

The Company believes that the following are the principal competitive strengths which

differentiate the Company from other Cement manufacturing Companies.

• The Company has experienced promoters

The promoters of the Company have past experience and are well versed in the cement

industry. They are in this business since 1991.

• The Company has presence & brand image in Eastern India cement market:

The cement industry in India is region-focused due to the high transportation costs and

proximity to limestone mines. With an ongoing developmental phase in the areas of

infrastructure driven by demand for cement from construction, increased spending on

infrastructure by the state and central governments and development of special economic

zones and real estate demand, there would be a more demand in Eastern India for cement

from the construction sector. The Company believes that it is well positioned to take

advantage of this demand being the one of the key manufacturers in Eastern India and also

due to the Company’s proposed new project at Patratu which will address the expected

demand growth.

Further, the Company believes that its brand name and reputation provide the Company

with a competitive advantage in ensuring that cement dealers carry the products.

• The Company will have access to quality raw material and fuel for its proposed

unit :

Two critical materials for the cement production are Limestone as raw material and coal as

fuel. Limestone deposits of good quality having CaO (calcium Oxide) of around 46.74% are

spread over a large area within 10-15 kms from the proposed project site of the Company.

Coal having Calorific value of 4500 Kcal /Kg. and ash content as low as 30.06% is available

in plenty in Jharkhand The nearest place of coal from the proposed plant is Bhurkunda

which is approx. 12 km from the proposed project site. Access to quality limestone and

coal used in production of cement at near by locations, would help the Company to produce

cement at competitive prices.The Company has access to reserves of limestone which the

Company believes are sufficient to sustain the operations both existing and future. Further,

the manufacturing plants being in close proximity to the limestone reserves, results in

lower transportation costs. The Company has entered into a Joint Venture agreement with

Pandya Mines for supply of limestone. The Company has also made an application to the

Government of Jharkhand for grant to mining lease for mining limestone on the 27

September, 2006 and is awaiting grant of the said mining rights from the Government of

Jharkhand.

• The Company follows an Established raw materials policy:

The Company procures its raw materials directly from reputed manufactures and suppliers

which helps the company to establish an efficient supply chain at competitive prices and

ensures delivery on-time. The management of the Company places significant emphasis on

the sourcing and logistics for raw material. The Company is able to source key raw

materials close to the factory resulting in reduction of transportation costs.

• The Company’s marketing and distribution network is in place:

The Company has a wide distribution network in Eastern India. The Company has around

525 dealers/distributors/C&F agents all across the states of West Bengal, Bihar and

Jharkhand. The Company believes that this network and the cordial relationships that it

enjoys with the dealers/distributors/C&F agents enables the Company to market and

distribute its cement widely and efficiently in every district of the region.

• Experience and technical know-how:

The Company has over 15 years of experience in the Indian cement industry, which it

believes provides the Company with the experience and skills to maximize production

efficiency, expand production capacity and reduce costs. Over the years, the Company has

developed long-term customer relationships and a reputation for quality. Further, the

Company has a stable and experienced management team with significant experience in

the industry.

• Government Incentives

The Company’s proposed project at Patratu would be eligible to avail the various incentives

from the Government of Jharkhand as follows:

• Capital Investment Subsidy of Rs. 7.00 crores to be paid within 3 months from the

commencement of commercial production.

• Refund of Commercial Tax (VAT): 75% of the VAT paid to be refunded in the subsequent

year for a period of 8 years.

• Interest subsidy: 50% of interest paid or 2% of the turnover (whichever is minimum) for

a period of 5 years subject to maximum of Rs. 1.00 crore per annum.

• Pollution Control equipment subsidy.

• Exemption for registration fees.

Business Strategy

The Company operates in a competitive market and aims to be a premier cement manufacturing

company. The Company believes that there is a tremendous growth opportunity in the cement

sector particularly in eastern India and the domain expertise that the Company has obtained in the

past will enable the company to compete effectively in this sector and deliver value proposition to

the customers and stakeholders. The Company aims to achieve this by implementing the following

strategies:

• Consolidation of Company’s position through capacity expansion

To achieve the Company’s objective of increasing its presence in the Eastern Indian markets and

associated demand for the products, the Company has increased its cement capacity at its

existing plant over the years from 30 TPD to 1000 TPD. The cement production facility to be set

up at Patratu would be scaled up taking the total production capacity to 1800 TPD.

• Focusing on sales on a region wise basis

The cement industry in India is region-focused due to the high transportation costs. The

Company’s strategy is to focus on maximizing net sales realization by focusing on sales of its

product on a regional basis. The Company’s strategy is to focus on saturating the markets which

are close to its plant where it enjoys a relative freight advantage. However the growth in the

Indian cement markets of Central India has presented a growth opportunity for the Company.

• Increase in distribution and sales network

The Company’s products are currently marketed through a widespread distribution network

comprising of around 525 dealers/distributors/C & F agents who in turn sell the product to end

users such as contractors, retailers, etc. It will continue to focus on building a dedicated and

motivated dealer network spread across the states of Eastern India by seeking to add additional

dealers to the network and strengthen its relationship with the existing dealers.

The Company also sells its products directly to Government and high end users and would be

focusing strongly in this sector.

• Increased promotion of Company’s brand

To promote the Company’s products and the brand with dealers who are the customers of the

Company, the Company organizes meetings with its dealers/customers. The Company also

intends to undertake advertising and promotional campaigns in select markets to increase the

brand awareness and enhance the understanding of the Company’s products. Direct promotional

efforts to reach out to contractors and builders would also be done.

• The Company adopts a multipronged strategy for continuous growth of its

business through the following measures :

• Enhance the quality, design and get up, in accordance with the International

Standards.

• Horizontal integration by way of adding new products to the existing

products.

• Long term customer relationship and customer satisfaction.

• Need based production.

The Issue:

Equity Shares offered:

Fresh Issue 3,18,25,100 Equity Shares of Rs. 10/ each

Of which

Participation by Promoters/Promoter

Group/Directors/Friends &

Associates/Others before the Issue

99,25,100 Equity Shares of Rs. 10/- each

Offered through this Prospectus 2,19,00,000 Equity Shares of Rs. 10/-

each

Out of which

Employee Reservation Portion 10,95,000 Equity Shares of Rs. 10/ each

Net Issue 2,08,05,000 Equity Shares of Rs. 10/ each

Of which:

a. As per SEBI Guidelines, a minimum of 50% of

the net issue is reserved for Retail Portion

At least 1,04,02,500 Equity Shares (Allocation

on proportionate basis)

b. As per SEBI Guidelines, a maximum of 50% to

Other than Retail Individual Portion

Not more than 1,04,02,500 Equity Shares

(Allocation on proportionate basis)

Equity Shares outstanding prior to the Issue 1,11,68,800 Equity Shares of Rs. 10/- each

Equity Shares outstanding after the Issue 4,29,93,900 Equity Shares of Rs. 10/- each

Objects of the Issue Please refer to the section titled “Objects of the

Issue” at page no. 25 of this Draft Prospectus.

Fresh Issue of Equity shares has been authorized by the Board of Directors of the Company at

their meeting held on 18

November, 2006 and has been authorised by a Special Resolution

pursuant to the provisions of Section 81(1A) of the Companies Act, 1956 at the Extra Ordinary

General Meeting of the Company held on 12

December, 2006

• Eligible Employees of the Company during the period commencing from the date of filing

of the Prospectus with ROC up to the Issue closing date shall be entitled to apply in the

Reserved for Employees category.

• Under subscription, if any, in any of the above two categories of Net Issue would be met

with spill over inter se from the other category.

SUMMARY OF FINANCIAL DATA

The following tables which set forth the summary of financial and operating information should be

read in conjunction with the Financial Statements and notes thereto included in the “Financial

Statements” and “Management Discussion and Analysis of Financial Condition and Result of

Operations” beginning from page 112 and 150 respectively in the Draft Prospectus.

Summary Statement of Profits & Losses, as Restated

(Rs. in lacs)

For the Year/Period Ended

Particulars

31-Dec-06 31-Mar-06

31-Mar-05

31-Mar-04

31-Mar-03 31-Mar-02

Audited

Income

Sales from:

- Manufactured Goods 1,211.80

2,107.95

1,328.05

940.17

696.21 543.63

- Traded Goods 63.11

476.96

84.99

- - -

Gross Sales 1,274.90

2,584.91

1,413.04

940.17

696.21 543.63

Less : Excise Duty 151.76

301.92

200.22

143.08

108.93 73.87

Net Sales 1,123.14

2,282.99

1,212.82

797.08

587.28 469.76

Other Income 27.00

31.76

0.01

83.83

56.35 32.02

Increase/(Decrease) in

Stock

(0.34) 0.23

(5.50) 2.28

2.89 (2.83)

Total 1,149.80

2,314.97

1,207.33

883.20

646.52 498.96

Expenditure

Manufacturing Expenses 241.61

469.21

259.71

242.76

140.57 103.47

Raw Materials Consumed 515.30

951.00

536.85

394.76

284.01 228.14

Trading Purchase 57.00

423.96

74.67

- - -

Staff Costs (incl. Directors'

Remuneration)

26.00

30.57

25.76

19.06

15.35 9.47

Administrative, Selling &

Distribution Exp.

136.10

212.66

169.22

96.90

90.13 84.52

Interest & Financial Charges

(Net)

69.40

63.58

34.58

59.41

49.92 23.40

Depreciation 60.86

58.18

43.75

39.48

49.22 26.16

Total 1,106.27

2,209.17

1,144.55

852.38

629.19 475.15

Profit Before Tax (PBT) 43.54

105.80

62.78

30.82

17.33 23.80

Current Tax 10.85

8.90

4.92

2.37

0.29 -

Deferred Tax/(Credit) (0.56) 7.91

13.95

13.30

40.08 -

Fringe Benefit Tax 0.63

0.20

- - - -

Profit After Tax (PAT), as

restated

32.61

88.79

43.91

15.15

(23.05) 23.80

Profit & Loss Account b/f 202.14

139.92

106.52

105.14

127.24 103.44

Adjustments - Prior Period

Items

0.36

(3.26) 0.95 -

Appropriations - -

- -

Transferred to General

Reserve

- -

5.00

- -

Dividend - 23.31

4.88

- -

Dividend Tax - 3.27

0.62

0.64

- -

Net Profit carried to

Balance Sheet

235.11

202.14

139.92

106.52

105.14 127.24

Summary Statement of Assets and Liabilities as restated (Rs. in lakhs)

As At

Particulars

Dec

Mar

Audited

Fixed Assets

Gross Block 1,991.08

1,957.77

1,842.83

729.12 773.01

619.26

Less: Accumulated Depreciation 427.60

339.16

244.21

200.46 160.98

111.76

Net Block 1,563.48

1,618.61

1,598.62

528.65 612.03

507.49

Less: Revaluation Reserve 790.55

818.13

854.90

- - -

Net Block after Adjustment of

Revaluation Reserve

772.93

800.48

743.73

528.65 612.03

507.49

Capital work in Progress 56.53

22.46

- 147.13 - -

Total (a) 829.46

822.94

743.73

675.79 612.03

507.49

Investments (b) 1.00

1.00

1.00 1.00

1.65

Current Assets, Loans &

Advances

Inventories 599.35

379.54

519.90

451.97 324.93

205.66

Sundry Debtors 386.80

532.62

96.33

65.54 54.56

89.02

Cash & bank balances 445.84

187.74

69.98

48.06 57.96

40.65

Loans & advances 499.41

363.11

104.42

56.49 61.65

82.78

Total (c) 1,931.40

1,463.01

790.64

622.06 499.10

418.11

Total Assets (d) = (a + b +

2,761.86

2,286.95

1,535.36

1,298.85 1,112.14

927.26

Liabilities & Provisions

Secured Loans 1,053.71

919.22

506.48

402.92 390.25

307.07

Unsecured Loans 21.00

- - 244.09 238.87

222.55

Deferred Tax Liability 74.69

75.24

67.33

53.38 40.08

Current Liabilities & Provisions 188.87

210.88

335.35

379.16 230.00

162.63

Total (e) 1,338.27

1,205.34

909.17

1,079.55 899.21 692.24

Net worth (f) = (d - e) 1,423.59

1,081.61

626.20

219.29 212.92

235.02

Represented By

Equity Share Capital 859.39

859.39

466.19

97.69 97.69

97.69

Share Application Money 309.00

- - - - -

Reserves & Surplus

Reserves & Surplus 1,045.75

1,040.35

1,014.90

121.60 115.23

137.33

Less: Revaluation reserve 790.55

818.13

854.90

- - -

255.20

222.22

160.01

121.60 115.23

137.33

Less: Miscellaneous

Expenditure

- - - - - -

Net Worth 1,423.59

1,081.61

626.20

219.29 212.92

235.02

General Information

Burnpur Cement Limited

Incorporation:

Originally incorporated as Ashoka Concrete & Allied Industries Private Limited on June 19, 1986

with the Registrar of Companies, West Bengal Kolkata The name of the Company was changed to

Burnpur Cement Private Limited on September 18, 2001. Subsequently the company was

converted into a Public Limited Company under section Sec. 44 of the Companies Act, 1956 on

November 12, 2001 and the name of the Company was changed to Burnpur Cement Limited and

a fresh Certificate of Incorporation obtained from the Registrar of Companies, West Bengal

Kolkata

Registered Office:

‘Cement House’ Saradapally, Ashok Nagar P.O.

Asansol –713304 District- Burdwan, -713304 West Bengal

Tel: (0341) 2250663, 225 0859/61/62;

Fax: (0341) 225 0860

Email:

[email protected]

Website:www.burnpurcement.com

The Registered Office of the Company was initially situated at Radha Nagar Road, Burnpur. It was

shifted from Radha Nagar Road, Burnpur to 28, New Road, Alipur, Kolkata – 700 027 with effect

from 1

August, 1991. The registered office was further shifted to Radhanagar Road, P.O.:

Burnpur (Asansol), Dist. : Burdwan with effect from 15

June, 1995. The Registered office was

further shifted to Cement House, Saradapally, Ashok Nagar, P.O. Asansol, District: Burdwan,

West Bengal – 713304 with effect from 1

December, 1995.

Plant:

Vill-Palasdiha Panchgachia Road

P.O. – Kanyapur, Dist. Burdwan

West Bengal Pincode-713341

Tel: (0341) 2250454, 2252965

Branch Offices :

i. 4, Fairlie Place,

“HMP House”

Suite No.. 106, 1st Floor,

Kolkata – 700 001

Tel : (033) 2231 6620

ii. Saket Dham,

Shanti Niketan Colony,

North of Bihar College of Pharmacy,

West Bailey Road,

Patna, Bihar

Tel : (0621) 2428243

iii. 2C, Krishna Tower,

2nd Floor, Garikhana

Upper Bazar

Ranchi – 834 001, Jharkhand

Tel : (0651) 2205334

Fax: (0651) 2205346

Proposed Plant :

Plot No. A-8P,9,10,11,B-38,39,40,C-7P,8,9,10,11 & XP,

Block-D and Block-E

Patratu Industrial Estate

Jharkhand State

Company Registration No.: 21-40831

Company Identification No. (CIN): U27104WB1986PLC040831

Address of Registrar of Companies:

Registrar of Companies, West Bengal, Kolkata

“Nizam Palace”,

2nd

MSO Building, 2nd floor

234/4, A J C Bose Road

Kolkata-700020

West Bengal

Board of Directors

Name of the Director Designation Status

Mr. Arvind Pande Chairman Non-Executive & Independent Director

Mr Ashok Gutgutia Vice Chairman &

Managing Director

Executive Director

Mrs Shashi Gutgutia Director Non Executive & Non Independent

Director

Mr Kailash Pd. Agarwal Director Non Executive & Non Independent

Director

Mr. Keshab Chandra Das Director Non Executive & Non Independent

Director

Mr Subroto Mukherjee Director Non-Executive & Independent Director

Mr. Prabha Shanker Mishra Director Non-Executive & Independent Director

Mr. Girdhar Lal Harlalka Director Non-Executive & Independent Director

Mr. Abdul Kalam Director Non-Executive & Independent Director

Brief Profile of the Chairman and the Vice Chairman & Managing Director

Mr. Arvind Pande, Chairman (Non-Executive & Independent Director)

Mr. Arvind Pande, IAS, aged 64, Chairman of the Company, is a Bachelor of Science from

Allahabad University and a Bachelor of Arts and Master in Arts (Economics) from Cambridge

University, U.K. He joined the Indian Administrative Service (IAS) in 1965 and has held several

important positions in his tenure in the Indian Administrative Service both in India and abroad.

He was an advisor to Executive Director for India, Bangladesh and Sri Lanka at the World Bank,

Washington D.C. USA and in World Bank assisted projects in the Department of Economic Affairs,

Ministry of Finance. He was also the Joint Secretary to the Prime Minister of India from 1981 to

1986. Mr. Pande moved on to the Corporate Public Sector in 1986 after he joined the Steel

Authority of India Ltd. as a full time functional director dealing with several areas like Corporate

Planning, Personnel and Human resources and moved on to become the Chairman and Chief

Executive Officer of SAIL from January 1997 to September 2002. He was instrumental in

implementing a major restructuring schedule at SAIL. He is also on the board of several

companies like HDFC Bank Limited, Visa Steel Limited, Era Construction (India) Limited, Sandhar

Technologies Limited etc. Mr. Arvind Pande has been appointed as an Additional Director of the

Company w.e.f 05.10.2006. He is also a member of the audit committee of the Company.

Mr Ashok Gutgutia, Vice Chairman & Managing Director

Mr. Ashok Gutgutia, aged 46 years is a Graduate of Commerce from University of Ranchi and is

an MBA from Indian Institute of Business Management, Patna. He was appointed as a Director of

the company with effect from 19

June 1986 and Managing Director with effect from April 1,

2002 upto March 31

, 2007. He was further re appointed as Managing Director of the Company

for a period of five years with effect from 1

April, 2007. He was Chairman of the Company till

February, 2007 and was redesignated as Vice Chairman with effect from 16

February,

2007. He along with his father, Late Ramawatar Gutgutia, had founded Ashoka Concrete & Allied

Industries Private Limited on June 19, 1986 which later on became Burnpur Cement Limited. Mr.

Gutgutia has 15 years of experience in the Cement Industry. His long-term strategy-planning

along with knowledge of the cement industry contributes to the Company’s continued growth and

expansion. He is also a member of the IPO committee of the Board.

For details of Board of Directors please refer to the section titled “Management & Organisation”

beginning from page 94 of this Draft Prospectus

Company Secretary and Compliance Officer

Mr. Manoj Agarwal

Cement house, Saradapally, Ashoknagar

P.O. Asansol- 713304, Dist.: Burdwan (W.B.), India.

Tel.: (0341) 2250663, 2250859/61/62,

Fax: (0341) 2250860

E-mail:

[email protected]

Website: www.burnpurcement.com

Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-

Issue or post- Issue related problems such as, credit of allotted shares in the respective

beneficiary accounts, refund orders etc.

Legal Advisor to the Issue

Mukherjee Agarwalla & Co.

Advocates

7C, Kiran Shankar Roy Road

Ground Floor, Room No. - GQ

Kolkata – 700 001

Tel.: +91-33-22133001/22133002

Fax: +91-33-22133002

Email: -

Bankers to the Company

State Bank of India

B.B. Ganguly Street

4,Gangadhar Babu Lane,

Kolkata- 700 012

Tel:033-2236-1614/2234-5304

Fax:033-2236-1614

Email : -

State Bank of India

Bijoy Pal Sarani,

Asansol-713 304

Tel: 0341-2250385

Fax: 0341-2252212

E-mail:

Sbi00011@sbi.co.in

UTI Bank Ltd.

Dalhousie Square Branch

4, Clive Row, Kolkata – 700 001

Tel: 033-2242-0072/2242-0075

Fax: 033-2242-0076

E-Mail:

[email protected]

UTI Bank Ltd.

3/20 K.K. Banerjee Road

Berhampore - 742101

Tel: 03482-260698/872

Fax: 03482-260365

E-mail:[email protected]

UTI Bank Ltd.

Apcar Garden,

Asansol- 713304

Tel: 0341-2254618/19

Fax: 0341-2254623

E-mail: [email protected]

HDFC Bank

P.C. Chatterjee market

Rambandhu Tala

G.T. Road

Asansol - 713303

Tel: 0341-2215176

Fax: 0341-2215176

E-Mail:[email protected]

Lead Manager

SREI Capital Markets Limited

‘Vishwakarma’, 86C Topsia Road (South)

Kolkata- 700 046

Tel: +91 33 3987 3810//3845

Fax: +91 33 3987 3861/3863

E-Mail: ca[email protected]

Website:

www.srei.com

SEBI Registration No. INM 000003762

Contact Person: Mr. Manoj Agarwal

Registrar to the Issue

Niche Technologies Pvt. Ltd.

D-511, Bagree Market

71, B R B Basu Road

Kolkata – 700 001

Tel : +91 33 2235 7270/71/3070

Fax: +91 33 2215 6823

E-mail: [email protected]

Website:

www.nichetechpl.com

SEBI Registration No. : INR000003290*

Contact Person: Mr Shoab Abbas

* The Registrar has informed that in the matter of Ankit Prachi Trading & Investment Ltd., notice

of enquiry has been issued by SEBI and necessary submissions have been made. The matter is

presently pending before SEBI.

Bankers to the Issue

[●]

Brokers to the Issue

All members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue.

Statutory Auditors to the Company

M/S N K Agarwal & Co.

303, N.S. Road

P.O. - Asansol (W. Bengal)

Pin – 713301

Tel- 0341-2202371 / 3090901

Fax: -0341-2202371

E-mail: [email protected]

Statement Of Inter Se Allocation Of Responsibilities Amongst Lead Manager

Since SREI Capital Markets Ltd. is the sole Lead Manager for this Issue, the entire Issue related

activities are handled by SREI.

Credit Rating of the Issue

This being an Issue of Equity Shares, credit rating is not required.

IPO Grading

The Company has not opted for IPO grading in relation to this issue of equity shares.

Trustee

This being an Issue of Equity Shares, appointment of Trustee is not required.

Monitoring Agency to the Issue

There is no requirement for a monitoring agency in terms of Clause 8.17 of the SEBI DIP

Guidelines. However, the Board of Directors and the Audit Committee of the Board would monitor

the deployment of the issue proceeds.

Appraising Entities

The Project has not been appraised by any Bank or Financial Institution.

Underwriters to the Issue

The Company intends to get the issue underwritten as follows:

(This portion has been intentionally left blank and will be filled in before filing of the Prospectus

with the ROC)

Name and Address of the

Underwriter

Date of Agreement Amount Underwritten

(Rs. in lakhs)

In the opinion of the Board of Directors of the Company (based on a Certificate given to it by the

Underwriters), the resources of all the above mentioned Underwriters are sufficient to enable

them to discharge their respective underwriting obligations in full. All the above-mentioned

Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as

brokers with the Stock Exchanges. The above Underwriting Agreement has been accepted by the

Board of Burnpur Cement Limited at their meeting held on [•], and Burnpur has issued letters of

acceptance to the Underwriters.

In the event of any default, the respective Underwriter, in addition to other obligations defined in

the Underwriting Agreement, will also be required to procure or subscribe in the event that the

Issue remains unsubscribed or undersubscribed, or to the extent of the devolved amount.

Capital Structure Of The Company

The Company Share Capital as at the date of filing this Draft Prospectus with SEBI (before and

after the Issue) is set forth below:

(In Rupees, except share data)

Particular Nominal Value

Aggregate

Value at Issue

Price

Authorised Capital

4,60,00,000 Equity shares of Rs 10/-each 46,00,00,000 46,00,00,000

Issued, Subscribed and Paid Up Capital before the Issue

1,11,68,800 Equity Shares of Rs 10/- each fully paid up 11,16,88,000 11,68,37,800

Present Issue

3,18,25,100 Equity Shares of Rs 10/- each 31,82,51,000 [●]

Out of which

D Promoter’s Contribution

99,25,100 Equity Shares of Rs. 10/-

each to be issued to

promoters/promoter group/Directors/Friends

& Associates/Others before the issue.

9,92,51,000 [●]

E Offer Through this Draft Prospectus

2,19,00,000 Equity Shares of Rs.10/- each 21,90,00,000 [●]

Out of Above

Employee Reservation Portion

10,95,000 Equity Shares of Rs.10/- each 1,09,50,000 [●]

F Net Issue to the Public

2,08,05,000 Equity Shares of Rs 10/- each 20,80,50,000 [●]

Paid Up Share Capital After Issue

4,29,93,900 Equity Shares of Rs 10/- each 42,99,39,000 [●]

SHARE PREMIUM ACCOUNT

Before the Issue 51,49,800

After the Issue [●]

NOTES TO CAPITAL STRUCTURE

The Authorised Equity Share Capital of the Company has been built-up as per the

details given below:

Increased from Increased to

Date

Face

Value

(Rupees)

Number of

Amount

(Rs. in

lacs)

Number of

Amount

(Rs. in

lacs)

June, 1986 On

Incorporation

100 - - 5,000 5

November, 1990 100 5,000 5 24,000 24

May, 1992 100 24,000 24 35,000 35

January, 1993 100 35,000 35 70,000 70

April, 1993 100 70,000 70 100,000 100

September, 2004 100 1,00,000 100 200,000 200

March, 2005

Change in Face value of

Equity Shares from Rs. 100/-

to Rs.10/-

20,00,000 200

March,2005 10 20,00,000 200 50,00,000 500

March,2006 10 50,00,000 500 1,00,00,000 1,000

December 2006 10 1,00,00,000

1,000 2,00,00,000 2,000

March ,2007 10 2,00,00,000

`2,000 4,60,00,000 4,600

The current authorised capital is sufficient to meet the requirements of the fresh issue.

A Share Capital History of the Company

Capital Build up: The existing equity share capital of Company has been subscribed and allotted

as under:

Date of

Allotment

Number

of Equity

Face

Value

(Rs.)

Issue

Price

(Rs.)

Consideration

Nature of

Allotment

No. o

Equity

Cumulative

Paid–up

Capital

(Rs.)

Cumulative

Premium

(Rs.)

19.06.86 20

100 100 Cash Subscription on

signing of

Memorandum of

Association

2000 -

31.03.95 43,780

100

Cash Further

Allotment

43,800

43,80,000 -

31.03.95* 3,000

100 100 Other than cash

Further

Allotment

46,800

46,80,000 -

16.02.99 4,890

100 100 Cash Further

Allotment

51,690

51,69,000 -

19.03.02 46,000

100 100 Cash Further

Allotment

97,690

97,69,000 -

15.03.05

10 - Reduction in

Face value

Reduction in

face value

from Rs. 100/-

to Rs. 10/-

9,76,900

97,69,000 -

31.03.05 36,85,000

10 10 Cash Further

Allotment

46,61,900

4,66,19,000 -

31.03.06 39,32,000

10 10 Cash Further

Allotment

85,93,900

8,59,39,000 -

20.02.07 25,74,900

10 12 Cash Further

Allotment

1,11,68,800

11,16,88,000 51,49,800

Note:

* Burnpur Cement Limited “Buyer”) had entered into two Deeds of Sale on the 30

of March,

1992 with Mr. Ashok Gutgutia and Mr. Pawan Gutgutia respectively (collectively called the

“Seller”) for purchase of land situated at Mouza Palashidiha. P.S.Asansol within the Registry

Office Asansol, District Burdwan and the area and plot No. and Khatian Nos. as described in the

above mentioned Deeds of Sale.

The Company paid a consideration of Rs. 3,00,000/- (Rupees Three Lakhs only) by way of

allotment of 300 Equity Shares of Rs.100/- each as follows:

Mr. Ashok Gutgutia - 1,500 Equity Shares of Rs.100/- each

Mr. Pawan Gutgutia - 1,500 Equity Shares of Rs.100/- each

The Board of Directors of the Company at their Meeting held on 31

March, 1995 approved the

purchase of the said land and the allotment of shares

B Share Capital History of the Promoters:

Name of

the

Promoter

Date of

Allotment

Transfer

and made

fully

paid-up

Considerat

ion

No. of

Face

value

(Rs.)

Issue /

Transfer

Price

(Rs.)

% age

of Pre

Issue

Paid-up

Capital

% age

of Post

Issue

Paid-up

Capital

19.06.86 Cash 10

100

31.03.95 Cash 1,720

100

31.03.95 Considerati

on Other

than cash

1,500

100

19.03.02 Cash 10,000

100

20.08.04 Transfer 8,260

100

20.08.04 Transfer 1,000

100

20.08.04 Transfer 1,200

100

20.08.04 Transfer 7,500

100

15.03.05 Reduction

in face

value from

Rs.100/- to

Rs.10/-

3,11,900

- 2.79 0.73

31.03.05 Cash 11,12,000

10 9.96 2.59

22.03.06 Transfer 62,050

10 0.56 0.14

31.03.06 Cash 53,000

10 0.47 0.12

Mr Ashok

Gutgutia

Sub Total

(A)

15,38,950

13.78 3.58

31.03.95 Cash 600

100

19.03.02 Cash 15,000

100

15.03.05 Reduction

in face

value from

Rs.100/- to

Rs.10/-

1,56,000

- 1.40 0.36

31.03.05 Cash 5,33,000

10 4.77 1.24

22.03.06 Transfer 6,000

10 0.05 0.01

Mrs Shashi

Gutgutia

Sub Total

(B)

6,95,000

6.22 1.62

31.03.05 Cash 4,00,000

10 3.58 0.93

31.03.06 Cash 37,30,000

10 33.40 8.68

Insight

Consultant

Private

20.02.07 Cash 24,00,000

12 21.49 5.58

Limited

Sub Total

(C)

65,30,000

58.47 15.19

19.03.02 Cash 21,000

100

15.03.05 Reduction

in face

value from

Rs100/- to

Rs.10/-

2,10,000

- 1.88 0.49

Bharat

Cement

Private

Limited

Sub Total

(D)

2,10,000

1.88 0.49

31.03.95 Cash 5,500

100

15.03.05 Reduction

in face

value from

Rs100/- to

Rs.10/-

55,000

10 0.49 0.13

Goyal Auto

Distributor

s Private

Limited

Sub Total

(E)

55,000

0.49 0.13

Total

Promoters

Holding

(A+B+C+D

+E)

90,28,950

80.84 21.00

* - indicates percentage on pre-issue capital, which does not constitute the firm allotment to

promoters/promoters group/

Directors/Friends & Associates/Others prior to opening of the Issue.

Promoters Contribution and Lock-in

i. 3 years lock – in

In terms of chapter IV of the SEBI DIP Guidelines, an aggregate of 20% of the post-issue paid up

Equity Share capital of the Company held by the promoters of the Company shall be locked in for

a period of three years. The details of the promoter’s Equity shares locked in for a period of three

years are as under:

Name of

the

Promoter

Date of

Allotment/

Transfer

and made

fully paid-

Consideration

No. of

Face

value

(Rs.)

Issue /

Transfer

Price

(Rs.)

% age

of Post

Issue

Paid-up

Capital

Lock in

period

(years)

15.03.05 Reduction in

face value

from Rs.100/-

to Rs.10/-

1,28,118

- 0.30

31.03.05 Cash 11,12,000

10 2.59

22.03.06 Transfer 62,050

10 0.14

31.03.06 Cash 53,000

10 0.12

Mr. Ashok

Gutgutia

Sub Total

(A)

13,55,168

3.15

15.03.05 Reduction in

face value

from Rs.100/-

to Rs.10/-

64,702

- 0.15

31.03.05 Cash 5,33,000

10 1.24

22.03.06 Transfer 6,000

10 0.01

Mrs Shashi

Gutgutia

Sub Total

(B)

6,03,702

1.40

31.03.05 Cash 4,00,000

10 0.93

3 Insight

Consultant

31.03.06 Cash 37,30,000

10 8.68

20.02.07 Cash 24,00,000

12 5.58

3 Private

Limited

Sub Total

(C)

65,30,000

15.19

15.03.05 Reduction in

face value

from Rs100/-

to Rs.10/-

87,099

- 0.20

3 Bharat

Cement

Private

Limited

Sub Total

(D)

87,099

0.20

15.03.05 Reduction in

face value

from Rs100/-

to Rs.10/-

22,811

10 0.05

3 Goyal Auto

Distributor

s Private

Limited

Sub Total

(E)

22,811

0.05

Total

Promoters

Holding

(A+B+C+

D+E)

85,98,780

20.00

ii. 1 year lock-in

The details of the promoter’s Equity shares locked in for a period of one year are as

under :

Name of

the

Promoter

Date of

Allotment /

Transfer

and made

fully paid-

Consideration No. of

Face

value

(Rs.)

Issue /

Transfer

Price

(Rs.)

% age

of Post

Issue

Paid-up

Capital

Lock in

period

(years)

15.03.05 Reduction in

face value from

Rs.100/- to

Rs.10/-

1,83,782

- 0.43

1 Mr. Ashok

Gutgutia

Sub Total

(A)

1,83,782

0.43

15.03.05 Reduction in

face value from

Rs.100/- to

Rs.10/-

91,298

- 0.21

1 Mrs.

Shashi

Gutgutia

Sub Total

(B)

91,298

0.21

15.03.05 Reduction in

face value from

Rs100/- to

Rs.10/-

1,22,901

- 0.29

1 Bharat

Cement

Private

Limited

Sub Total

(C)

1,22,901

0.29

Goyal Auto

Distributor

s Private

Limited

15.03.05 Reduction in

face value from

Rs100/- to

Rs.10/-

32,189

10 0.07

Sub Total

(D)

32,189

0.07

Total

Promoters

Holding

(A+B+C+

4,30,170

1.00

C Shareholding pattern of persons in Promoter Group:

Name of the

Promoter

Date of

Allotment/

Transfer

and made

fully paid

Consideration

No. of Shares

Face

value

(Rs.)

Issue/

Transfer

Price

(Rs.)

% age

of Pre

Issue

Paid-up

Capital

% age o

Post Issue

Paid-up

Capital

31.03.05 Cash 60,000

0.54 0.14

Asha Devi Bhartia

Sub Total (A)

60,000

0.54 0.14

20.08.04 Transfer 1,960

100

0.02 0.0046

20.08.04 Transfer 11,500

100

0.10 0.03

15.03.05 Reduction in

face value from

Rs.100/-

Rs.10/-

1,34,600

1.21 0.31

31.03.05 Cash 6,25,000

5.60 1.45

31.03.06 Cash 7,000

0.06 0.02

A.K. Gutgutia &

Sons

Sub Total (B)

7,66,600

6.86 1.78

31.03.95 Cash 990

100

0.01 0.002

20.08.04 Transfer 1370

100

0.01 0.003

15.03.05 Reduction in

face value from

Rs.100/-

Rs.10/-

23,600

0.21 0.05

31.03.06 Cash 1,42,000

1.27 0.33

R.A. Gutgutia &

Co.

Sub Total (C)

1,65,600

1.48 0.39

Total (A+B+C) 9,92,200

8.88 2.31

* - indicates percentage on pre-issue capital, which does not constitute the firm allotment to

promoters/promoters group/

Directors/Friends & Associates/Others prior to opening of the Issue.

There would be a Participation by Promoters/Promoter Group/Directors/Friends &

Associates/Others to the tune of 99,25,100 shares before the issue.

The Promoters/Promoter group would be subscribing to 58,35,000 Equity Shares of Rs.10/- each

at a premium of Rs.[•] per share aggregating to Rs.583.50 lacs (at the lower band of the issue

price of Rs. 10/-per equity share) and Rs. 700.20 lacs (at the higher band of the issue price of

Rs. 12/-per equity share) before the Issue.

Friends & Associates/Others would be subscribing to 40,90,100 Equity Shares of Rs.10/- each at

a premium of Rs.[•] per share aggregating to Rs.409.01 lacs (at the lower band of the issue price

of Rs. 10/-per equity share) and Rs. 490.81 lacs (at the higher band of the issue price of Rs. 12/-

per equity share).

1. Out of the total Promoters’ holding, 85,98,780 equity shares being 20% of the Post-Issue

Equity Share Capital will be under lock in for 3 years. In terms of Clause 4.12.1 of the

SEBI DIP Guidelines, the balance equity shareholding of the promoters i.e. 4,30,170

Equity Shares (in excess of the aforesaid 20%) shall be locked in for a period of one year.

The Promoters’ Contribution has been brought in to the extent of not less than the

specified minimum lot and from persons defined as Promoters under the SEBI DIP

Guidelines.

2. In terms of Clause 4.13.1 of the SEBI DIP Guidelines, the lock-in shares mentioned above

has been arrived on the basis of ‘Issued Last, Locked First’. The promoters have given a

written undertaking that these shares shall not be transferred except inter se transfer as

per the SEBI guidelines.

3. In terms of Clause 4.14.1 of the SEBI Guidelines, in addition to the lock-in of 20% of

post-issue shareholding of the Promoter for three years, as specified above, the entire

pre-issue share capital of the Company shall be locked in for a period of one year.

4. Locked-in Equity Shares held by the Promoter can be pledged with banks or financial

institutions as collateral security for loans granted by such banks or financial institutions.

In terms of Clause 4.16(b) of the SEBI Guidelines, Equity Shares held by the Promoters

may be transferred to and amongst the Promoter/Promoter Group or to a new promoter

or persons in control of the Company subject to continuation of the lock-in in the hands

of the transferees for the remaining period and compliance with the Securities and

Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,

1997, as applicable.

5. Further, in terms of Clause 4.16(a) of the SEBI Guidelines, Equity Shares held by

shareholders other than the Promoter may be transferred to any other person holding

shares which are locked-in as per Clause 4.14 of the SEBI Guidelines, subject to

continuation of the lock-in in the hands of the transferees for the remaining period and

compliance with the Securities and Exchange Board of India (Substantial Acquisition of

Shares and Takeovers) Regulations, 1997, as applicable.

6. The lock-in period shall commence from the date of allotment of Equity Shares in this

issue and the last date of the lock-in shall be reckoned as three years from the date of

commercial production or date of allotment of shares in the public issue, whichever is

later.

7. In case the final allotment of equity shares exceeds the number of equity shares offered

through this issue on account of rounding off to the nearest integer as decided at the

time of allotment, the number of shares to be locked in for three years shall be calculated

on the increased allotted share capital.

8. Pre-issue and post issue share holding pattern of the Promoters and the

promoter group is as under:

Pre Issue Post Issue

Name of Shareholder

No. of

Holding

No. of Shares %

Holdin

PROMOTERS

Mr Ashok Gutgutia 15,38,950

13.78 [●]

[●]

Mrs Shashi Gutgutia 6,95,000

6.22 [●]

[●]

Insight Consultants Private Limited 65,30,000

58.47 [●]

[●]

Bharat Cement Private Limited 2,10,000

1.88 [●]

[●]

Goyal Auto Distributors Private Limited 55,000

0.49 [●]

[●]

Sub Total (a) 90,28,950

80.84 [●]

[●]

PROMOTERS’ GROUP

Asha Devi Bhartia 60,000

0.54 [●]

[●]

A.K. Gutgutia & Sons 7,66,600

6.86 [●]

[●]

R.A. Gutgutia & Co. 1,65,600

1.48 [●]

[●]

Sub Total (b) 9,92,200

8.88 [●]

[●]

Shareholding of Promoters and

Promoters’ Group (a+b)

100,21,150

89.72 1,58,56,150 36.88

9. Shareholding pattern- Pre-issue and Proposed Post Issue Share Holding

Pattern of the Company is as under:

Pre-Issue Post-Issue#

Sr.No.

Category

No. of

Holding

No. of

Holding

1 Promoters

(i) Indian 90,28,950

80.84

[●]

(ii) Foreign -

[●]

2 Promoter Group :

(i) Relatives 60,000

0.54

[●]

(ii) Others 9,32,200

8.35

[●]

Total Shares of Promoter and

Promoter Group (A)

100,21,150

89.72

158,56,150

36.88

3 Non Promoters:

[●]

(i) Foreign Institutional Investors -

[●]

(ii) Financial Institutions -

[●]

(iii) Venture Capital

(iv) NRI & OCB -

[●]

(v) Employees 17,750

0.16

11,12,750##

2.59

(vi) Public -

[●]

(vii) Friends & Associates 1,63,300

1.46

[●]

(viii) Other Bodies Corporate 9,66,600

8.65

[●]

(ix) Net Issue ### -

208,05,000

48.39

Total Shares of Non Promoters

(B)

11,47,650

10.28

271,37,750

63.12

Total (A)+(B) 111,68,800

100.00

429,93,900

100.00

# Post-Issue shareholding pattern will be determined after the Issue.

##Assuming that the number of shares held by the employees prior to the Issue remains

the same and Employee Reservation Portion is fully subscribed by the Eligible Employees

of the Company

### This figure represents the net issue through this Issue.

10. Equity Shares held by top 10 ten shareholders

a. Top ten shareholders as on the date of filing the Draft Prospectus with SEBI is

as follows:

Sl. No. Name of Shareholder No. of Shares % to total

paid up

capital

1 Insight Consultants (P) Ltd. 65,30,000 58.47

2 Ashok Gutgutia 15,38,950 13.78

3 A.K. Gutgutia & Sons 7,66,600 6.86

4 Shashi Gutgutia 6,95,000 6.22

5 Oracle Marketing Pvt. Ltd. 4,00,000 3.58

6 Online Tradecon Pvt. Ltd. 4,00,000 3.58

7 Bharat Cement (P) Ltd. 2,10,000 1.88

8 Nissan Commodities Pvt. Ltd.

1,66,600 1.49

9 R.A. Gutgutia & CO. 1,65,600 1.48

10 Sitaram Bhartia 75,000 0.67

Total Shares 1,09,47,750 98.02

b. Top ten shareholders ten (10) days prior to the date of filing the Draft

Prospectus with SEBI is as follows:

Sl. No. Name of Shareholder No. of Shares % to total

paid up

capital

1 Insight Consultants (P) Ltd. 65,30,000 58.47

2 Ashok Gutgutia 15,38,950 13.78

3 A.K. Gutgutia & Sons 7,66,600 6.86

4 Shashi Gutgutia 6,95,000 6.22

5 Oracle Marketing Pvt. Ltd. 4,00,000 3.58

6 Online Tradecon Pvt. Ltd. 4,00,000 3.58

7 Bharat Cement (P) Ltd. 2,10,000 1.88

8 Nissan Commodities Pvt. Ltd. 1,66,600 1.49

9 R.A. Gutgutia & CO. 1,65,600 1.48

10 Sitaram Bhartia 75,000 0.67%

Total Shares 1,09,47,750 98.02

c. Top ten shareholders two years prior to the date of filing the Draft Prospectus

with SEBI is as follows:

Sl. No.

Name of Shareholder No. of Shares % to total paid

up capital

1 Ashok Gutgutia 14,23,900 30.54

2 A.K. Gutgutia & Sons 7,59,600 16.29

3 Shashi Gutgutia 6,89,000 14.78

4 Oracle Marketing Pvt. Ltd. 4,00,000 8.58

5 Online Tradecon Pvt. Ltd. 4,00,000 8.58

6 Insight Consultants Pvt. Ltd. 4,00,000 8.58

7 Bharat Cement Lt. 2,10,000 4.50

8 Sitaram Bhartia. 75,000 1.61

9 Asha Devi Bhartia 60,000 1.29

10 Goyal Auto Distributors Pvt. Ltd. 55,000 1.18

Total Shares 44,72,500 95.94

13. The Promoter and the Promoter Group have not purchased or sold any Equity Shares

from the market during the period of six months preceding the date on which the Draft

Prospectus is filed with SEBI.

14. Neither the Company, its promoters, its Directors, nor the LM have entered into any

buy-back and/or standby arrangements for purchase of Equity Shares of the Company

offered through this Draft Prospectus.

15. An over-subscription to the extent of 10% of the issue size public can be retained for

the purpose of rounding off to the nearest multiple of minimum allotment lot, while

finalizing the allotment.

16. The Company has not raised any bridge loan from any Bank against the proceeds of

this issue.

17. There are no partly paid up Equity Shares as on the date of Draft Prospectus.

18. The Equity Shares offered through this issue will be made fully paid up, and hence

there shall be no partly paid shares in this issue.

19. A total of 10,95,000 Equity Shares have been reserved for allocation to the eligible

employees.

20. Under-subscription, if any, in the Reservation for Eligible Employees shall be added

back to the Net issue. In case of under-subscription in the Net Issue spill over to the

extent of under subscription shall be permitted from the Employee Reservation Portion.

21. As per SEBI Guidelines, a minimum of 50% of the net issue is reserved for allotment to

individual investors applying for Equity Shares of or for a value of not more than Rs.

1,00,000/-. The remaining 50% of the net issue is reserved for individuals applying for

Equity Shares of a value more than Rs. 1,00,000/- and corporate bodies/institutions

etc.

22. Subject to participation by Promoters/Promoter Group/Directors/Friends &

Associates/Others before the issue, the company shall not make further issue of capital

in any manner whether by way of issue of bonus shares, preferential allotment, rights

issue, or pubic issue or otherwise during the period commencing from the submission of

Draft Prospectus with SEBI, till the Equity Shares to be issued pursuant to the Issue

have been listed

23. Subject to participation by Promoters/Promoter Group/Directors/Friends &

Associates/Others before the issue, the company presently does not have any intention

or proposal to alter its capital structure for a period of six months from the date of

opening of the issue, by way of split/consolidation of the denomination of Equity Shares

or further Issue of Equity Shares (including issue of securities convertible into

exchangeable, directly or indirectly for Equity Shares) whether preferential or

otherwise, except, that if the company goes for acquisitions and joint ventures it might

consider raising additional capital to fund such activity or use share as currency for

acquisition and/or participation in such joint venture.

24. On the date of filing the Draft Prospectus with SEBI, there are no outstanding warrants,

options or rights to convert debentures, loans or other instruments into Equity Shares,

which would entitle the existing Promoters or shareholders, or any other person any

option to receive Equity Shares after the Offer.

25. The company has not issued any Bonus shares or shares out of revaluation reserves or

reserves without accrual of cash resources.

26. The Company has not issued any Equity shares for consideration other than cash

except issue of 3000 Equity Shares of Rs. 100/- each as consideration for purchase of

land.

27. An investor cannot apply for more than the number of Equity Shares offered under this

Issue, subject to the maximum limit of investment prescribed under relevant laws

applicable to each category of investor.

28. At any given point of time, there shall be only one denomination for the Equity Shares

of the Company and the Company shall comply with such disclosure and accounting

norms specified by SEBI from time to time.

29. Investors may note that in case of over-subscription, allotment will be on proportionate

basis as detailed in para on “Basis of Allotment” beginning on page no. [•] of this Draft

Prospectus.

30. Allotment shall be on a proportionate basis rounded off to the nearest integer subject to

the minimum allotment being equal to the minimum application size. In case of over

subscription the proportionate allotment will be subject to the reservation for Retail

Individual Investors as below: -

a) A minimum of 50% of the net issue will initially be made available for allotment to retail

individual investors.

b) The balance net issue shall be made available for allotment to applicants other than

retail individual investors.

31. Under–subscription, if any, in the Retail and Non Institutional l categories would be

allowed to be met with spill over inter se from the other category, at the sole discretion

of the Company in consultation with the LM. Applicant cannot make an application for

more than the number of Equity Shares offered to the public, subject to the maximum

limit of investment prescribed under relevant laws applicable to each category of

investor.

32. The company has 17 Equity Shareholders as on 31 March, 2007

Objects of the Issue

The objects of the Issue are as stated herein below:

1. To set-up a Integrated Clinkerisation and Cement grinding plant of 800 TPD capacity

expandable to 1600 TPD in the Hazaribagh district of Jharkhand at Patratu Industrial

Estate, for manufacturing Clinker, Ordinary Portland Cement (OPC), Portland Pozzolona

Cement (PPC) and Portland Slag Cement (PSC).

2. To meet the expenses of the Issue.

3. To list the equity shares of the Company on the Bombay Stock Exchange Limited (BSE),

and the National Stock Exchange of India Limited (NSE), which will enhance the

Company’s brand name and provide liquidity to its existing and future shareholders.

The main object clause and objects incidental or ancillary to the main object clause of the

Memorandum of Association of the Company permits the Company to undertake the existing

activities and the activities for which the funds are being raised through the present issue.

Cost of the Project

The company is setting up an integrated Cement plant in the Hazaribagh district of Jharkhand at

Patratu Industrial Estate, for manufacturing Clinker, Ordinary Portland Cement (OPC), Portland

Pozzolana Cement (PPC) and Portland Slag Cement (PSC) at an estimated cost of Rs. 12090

lakhs.

The Company has appointed Development Consultants Private Limited (DCPL), 24B Park Street,

Kolkata – 700 016 as engineering consultants for the proposed project. The terms of DCPL’s

appoitment includes finalising the basic engineering of the plant, selection of vendors for main

plant & equipment and all auxiliaries not ordered along with the main machinery, procurement

assistance and follow up, detailed engineering and to extend miscellaneous services for

inspection, project monitoring, site supervision and successful commissioning of plant.

Development Consultants Private Limited have carried out a Techno Economic feasibility study of

the proposed project.

The Company has also appointed SBI Capital Markets Limited for carrying out the financial

feasibility and economic viability of the proposed project and SBI Capital Markets Limited have

given a Financial Appraisal Note of the proposed project.

Break up of Project Cost

(Rs. in lacs)

Sr. No. Particulars Total Cost

1 Land & Site Development 257.00

3 Building and Civil works 1756.00

3 Plant & Machinery 8023.00

4 Misc. Fixed Assets 197.00

5 Contingency * 748.00

6 Interest During Construction 386.00

7 Technical Know how fee 50.00

8 Preliminary Expenses 228.00

9 Preoperative Expenses 65.00

10 Working Capital margin 380.00

Total Project Cost 12090.00

* estimated at 6.19% of total project cost.

Source :( As per the Financial Appraisal Note of SBI Capital Market).

SBI Capital Markets Limited had considered 1756.00 as cost for Building and Civil Works, Rs.

8023.00 lacs as cost of Plant & Machinery, Rs.50 lacs as cost of Technical Know how fee and

Rs.228.00 lacs as cost of Preliminary Expenses. However, in view of the increase/decrease in

costs as per the quotations received vis a via the earlier estimates, the Company has reworked

the above mentioned costs and the difference between the total project cost as per the Financial

Appraisal Note of SBI Capital Markets Limited and the actual requirements of the Company would

be set off from the “Contingencies”.

The revised break up of project cost of the Company has been computed as follows:

(Rs. in lacs)

Sr. No. Particulars Total Cost

1 Land & Site Development 257.00

3 Building and Civil works 1718.16

3 Plant & Machinery 8379.53

4 Misc. Fixed Assets 197.00

5 Contingency 329.31

6 Interest During Construction 386.00

7 Technical Know how fee 100.00

8 Preliminary Expenses 278.00

9 Preoperative Expenses 65.00

10 Working Capital margin 380.00

Total Project Cost 12090.00

MEANS OF FINANCING

The Project is proposed to be funded from Promoter’s contribution, Public Issue, Term loans from

Banks/Financial Institutions. The proposed means of the finance for the Project will be as under:

Particulars Amount

(Rs. in lacs)

Shareholder’s Fund/Equity

Promoter’s Contribution

[•]

Public Issue

[•]

Internal Accruals

[•]

Sub Total (Equity) 4030.00

Debt/Term Loan 8060.00

Total Project Cost 12090.00

The Company confirms that firm arrangements of finance through verifiable means towards 75%

of the stated means of finance excluding the amount to be raised through the proposed public

issue has been made.

Equity

The total equity requirement for the Project is projected at Rs.4030 lacs. This is proposed to be

funded as follows:

Promoters Contribution

The promoters/promoter group/Friends & Associates/Others

have already brought in about Rs

308.99 lacs as on 20

February, 2007 through subscription to 25,74,900 equity shares of Face

Value of Rs.10 each at a premium of Rs.2. For details of the contribution by promoter group and

others please refer to section titled Capital Structure on page no. 14 of this Draft Prospectus.

Public Issue

The Company proposes to use net proceeds of the issue for funding its proposed Project.

Term Loan

The details of the term loan sanctioned are as follows:

The entire debt component of the proposed project has been already tied up and various banks

have already given the sanction letter(s). The tentative break up of the debt allocation by various

banks are as follows:

Term loan sanctioned by Banks: (Rs. In Lacs)

Name of Bank Amount

Sanctioned

Tentative

Allocation

Date of

Sanction

State Bank of India 1500 1500 15.12.2006

State Bank of Hyderabad 1500 900 05.01.2007

Canara Bank 2015 1210 09.12.2006

Punjab National Bank 1500 950 04.01.2007

Indian Overseas Bank 1000 700 15.11.2006

Union Bank of India 1500 900 06.01.2007

Bank of India 1000 700 16.11.2006

Oriental Bank of Commerce 1000 700 24.11.2006

Indian Bank 1000 500 24.01.2007

Grand Total 12015 8060

State Bank of India is the leader of the Consortium. For major terms and conditions of Term

Loan, please refer to Page No 133 of this Draft Prospectus

Break-up of Project Cost

In order to take the advantage of the increasing demand for cement in the Eastern region and

capitalize on the brand image of the Company and to enable the Company to sell cement at

competitive rates, the Company is in the process of setting up a 800 TPD expandeble to 1600

TPD Clinkerisation and Cement grinding unit at Patratu Industrial Area, District Hazaribagh,

Jharkhand, which is approximately 3.0 km away from Patratu Thermal Power Station and about

10-15 kms from vast limestone deposits. The project will be implemented in-house with technical

consultancy from Development Consultants Private Limited a Kolkata based technical consultancy

firm with experience in cement industry.

The Company proposes to set-up a new Clinkerisation and Cement grinding plant in the

Hazaribagh district of Jharkhand at Patratu Industrial Estate, for manufacturing Ordinary Portland

Cement (OPC), Portland Pozzolona Cement (PPC) and Portland Slag Cement (PSC). The break up

of the respective capacities are as follows:

S No. Name of the Unit Capacity (TPA)

1 Clinkerisation Unit 800 TPD

2 Crushing 220 TPH

3 Raw Material Grinding 75 TPH

4 Raw Mill Blending 2500 T

5 Pyroprocessing 800 TPD

6 Clinker Storage 7000 T

7 Clinker Grinding 45 TPH

8 Cement Storage Cilos 4x2500 T

9 Packing Plant 2x90 TPH

10 Gypsum Coal Crusher 1x20 TPH

Land & Site Development

Location :

The proposed Clinkerisation and Cement grinding plant is located within the State Industrial

Estate of Jharkhand State, which is approx. 3.00 km away from Patratu and about 10-15 kms

from the limestone deposit. Electricity is available from the existing DVC HT line passing by the

side of the project. Power can also be available from nearby Patratu. Water from both surface

and as well as underground is available at the site. Major source of water shall be the existing

reservoir which is around 1.5 km away from the proposed site.

The company has been allotted 60 acres of land on lease for a period of 30 years from the

Government of Jharkhand for establishing the cement plant. The land is sufficient to establish the

project. The limestone mines are scattered at a distance of about 10-15 kms from the proposed

project site.

Locational Advantages :

 The site is located very close to the limestone mines, which are scattered at a distance of

about 10-15 kms from the proposed project site.

 The proposed site is located at a distance of about 400 meters only from State High way

connecting Ranchi-Patratu.

 The nearest railhead is at Patratu, which is about 7 km from the proposed site and Airport

is at Ranchi, which is 45 km from the site.

 The power requirement for running the cement plant can be obtained from the existing

33 KV HT lines of DVC by tapping the same. Power is also available at the limestone

deposit from existing 6 KV Power line.

 The total water requirement for the proposed project is estimated at 373 m3/day. The

required number of bore wells shall be provided at the plant and mines, based on

hydrological investigations, to meet the water requirement of the proposed project.

However alternate arrangements can be made to get water from existing reservoir which

is 1-1.5 km away from the proposed site.

 Transportation facilities to access various markets are readily available.

 Both skilled and unskilled labour is easily available in the area.

The land has been leased for a period of 30 years and the Company has paid a premium of Rs.

211 lacs. Land tax and land maintenance rent of Rs. 1.80 Lacs and 1.31 Lacs per annum

respectively is to be paid to the government at the end of every financial year. Land maintenance

to be paid after 2 years from the allotment of land or from the date of commercial production

whichever is earlier. The details of the cost of land and site development are given below:

(Rs. In lacs)

Description

Total Cost

Land Premium 211

Internal road for factory 40

Soil Investigation 4

Land Tax 2

Total 257

Building & Civil Works

The estimates of costs of Building and civil works is as per the quotation ref No. DCPL-K6C10/PC-

7/7402 dated 28

March, 2007 of Development Consultants Private Limited. As per the Techno

Economic feasibility Report of Development Consultants Private Limited, each building and

structure shall be designed functionally so as to provide enough space for operation, maintenance

and provide the plant workers good and safe environment. Steps shall generally be 250 mm wide

and 200 mm rise for industrial buildings and 150 mm rise for Administrative Buildings, canteen

and other non-plant buildings. Hand rails 1.0 m high with toe guards shall be provided for all

stairs and walkways.

The cost under this head includes civil and structural cost for common facilities also. The

Company is yet to award the contract for Building & Civil works. However Development

Consultants Private Limited would design the foundation, buildings and structural and oversee the

construction of the building and civil works. . The detailed break up of Building and civil works as

per the quotation ref No. DCPL-K6C10/PC-7/7402 dated 28

March, 2007is as given below.

(Rs. In lacs)

Description Total

Cost

Factory Bldg for the main plant & equipment 854.58

Factory Buildings for Auxiliary Services like steam supply, water supply,

Laboratory, workshop etc

54.12

Administrative building 42.80

Godowns, Warehouse & Open-yard facilities 84.10

Misc. non-factory buildings like canteen, time office, excise house etc. 2.36

Silos, tanks, walls, chests, basins, cisterns, hoppers, Bins and other structures

which are Necessary for installation of Plant & Equipment

650.00

Garages 7.20

Civil Engineering works not included above 23.00

Total 1718.16

SBI Capital Markets Limited had estimated Rs.1756 lacs as the cost of Building and Civil Works.

However as per the quotations received the cost of Building and Civil Works works out to be

Rs.1718.16 lacs.

Plant and Machinery

Cost of plant and machinery includes impact of taxes and duties. The details of the equipment the

Company intends to purchase and their estimated costs, including the estimated costs of

associated spares, attachments and other accessories, are as follows :

The cost is based on the estimates provided by technical consultants for the project. The break-

up of the plant and machinery cost is as given below.

(Rs. In lacs)

Description Total Cost

Main Plant & equipment 7212.53

Other Plant and Machinery 415.00

Electrical and Instrumentation & Control 752.00

Total 8379.53

The detailed break up of major Plant & Machinery been given below.

Main Plant and Machinery

Prices for design, engineering, manufacturing and supply of main plant and machinery as

described below as per the quotation received from Thyssenkrupp Industries India ref

No.CN/MK/AB/Q 60074 dated 17.01.2007 is as under:

Estimated Cost :

Rs. in lakhs

PARTICULARS COST

Raw material drying and grinding (Ball Mill)

Raw meal transport, Blending Silo and Kiln feed

Pyroprocessing

Coal drying and grinding

Coal dosing

Water cooling system and Compressor Room

Electrical and Instrumentation as per scope of supply

6020.00

Basic Total 6020.00

Excise Duty including Cess @ 16.32% 982.46

Sub Total 7002.46

CST @ 3% 210.07

TOTAL COST 7212.53

The equipments specified in the quotation of ThyssenKrupp Industries India have the following

specifications :

1. Raw Material Grinding

Composition of raw material

Limestone 93%

Laterite 05%

Bauxite 02%

Grindability of raw material 11.8 KWH/T at shaft @ 12% R on 90 micron

As per ACC test report

Raw Mill Section (Ball Mill)

a) Type Ball Mill

b) Size of Mill 4.2 x 13 m long

c) Drying chamber size 3.6 x 3 m long

d) Capacity of mill 145 TPH

e) Feed size of raw material 90% Passing 25 mm, Max. 30 mm

f) Maximum moisture content

in feed

Avg. 5% , 6% max.

g) Product size 12% residue on 90 micron

h) Maximum moisture content

in product

< 1%

One no. of Separator of separation of product

a) Type Dynamic air separator

b) Size NSV 250/4

c) Rotor size (Dia) 2500 mm

2. Raw Material Transport

a) Capacity 180 TPH

b) Conveying equipment Bucket elevator

3. Blending silo

One no. of blending silo

a) Type of silo Tangential

b) Capacity of silo 6000 Ton

c) Silo size 14 m dia. X 40 m filling height

4. Kiln Feed

a) Type of system Bucket Elevator

b) Capacity 130 TPH

5. Preheater

Six stage preheater DOPOL with Precalcinator

a) Type of preheater DOPOL 90

b) Number of stages Six

c) Size A13, B13, B12, B12, B10,C13

6. Kiln

a) Size of Kiln 3.4 m x 51 m long

b) Capacity of Kiln 1600 TPD

c) Sintering zone cooling fans 10 no. cooling fans with capacity of m3.min @ 3.5 mbar

7. Cooler

a) Type of grate cooler Single grate reciprocating cooler SR 2418/II with static pre-

gate

b) Grate area 42.8 sq.m

8. Clinker Transport

a) Type Deep bucket conveyor

b) Capacity 100 TPH

11. Coal Grinding

One no. of air swept ball mill

a) Size of mill 3 x 6.25 m long

b) Capacity of mill 16 TPH

c) Coal Hardgrove Index 45

d) Feed size of coal 0 – 30 mm

e) Maximum moisture content 08% max.

f) Material fineness 15% R on 90 microns

g) Maximum moisture content

in product

h) Separator Dynamic separator LMK 155

12. Coal dosing

a) Type of system Screw pump

b) Capacity 3 x 7.5 TPH (One standby)

Other Plant and Machinery

Prices for other plant and machinery as described below as per the quotation received from

Development Consultants Private Limited ref No. DCPL-K6C10/PC-7/7403 dated 28

March, 2007

is as under:

Estimated Cost :

(Rs. in lacs)

SL No. Particulars Total Cost

1 Crushing Section (A) 100.00

Plant and Machinery other than main plant

2 Miscellaneous belt conveyors and bag filters 50.00

3 Clinker extraction & feeding to hoppers 35.00

4 Ducts, Chutes, Duct Supports & Miscellaneous maintenance steel

platform

200.00

5 Iron /Sweetener/slag handling system 5.00

6 Cranes and Hoist 25.00

Sub Total (B) 315.00

Total Cost (A+B) 415.00

Electrical and Instrumentation & Control

Prices for Electrical and Instrumentation & Control as described below as per the quotation

received from Development Consultants Private Limited ref No. DCPL-K6C10/PC-7/7404 dated

March, 2007 is as under:

Estimated Cost :

(Rs. in lacs)

SL No. Particulars Total Cost

A Electrical System

33 K V system

150.00

6.6 K V system 100.00

415 V System 150.00

D.C. System 20.00

Other Electrical Works like Cabling, Illumination, Inter-

Communication, Trays, Earthling etc

150.00

Miscellaneous Electrical Work 50.00

Total Electrical System (A) 620.00

B Instrumentation & Control System

Field Instruments 20.63

PLC Control & MIS 72.18

Cables, Tray & Junction Boxes 39.19

Total for Instrumentation & Control (B) 132.00

Grand Total (A+B) 752.00

SBI Capital Markets Limited had estimated Rs.8023 lacs as the cost of Plant and Machinery.

However as per the quotations received the cost of plant and machinery works out to be

Rs.8379.53 lacs. The difference in the estimates of SBI Capital Markets Limited and actual

quotations would be set off from contingencies.

Miscellaneous Fixed Assets

These include equipment for various utilities such as furniture, fire fighting equipment, Tools &

Tackles and expenditure on computerization and vehicles and communication systems etc.

Prices for Miscellaneous Fixed Assets as described below as per the quotation received from

Development Consultants Private Limited ref No. DCPL-K6C10/PC-7/7405 dated 28

March, 2007

is as under:

Estimated Cost :

(Rs. In lacs)

Description Total Cost

Office Furniture, computer, photocopy, machines, fax machines etc

2.81

Water supply and distribution system 36.59

Compressed air supply system 11.26

Insulation materials for dedusting 11.26

Fire Fighting system & Equipment 8.44

A/C & Ventilation Equipment 2.81

Laboratory Equipment 11.26

Workshop Equipment 11.26

Road Weigh Bridge 14.07

Lubricants 2.81

Refractories 84.43

Total 197.00

Summarized list of plant & Machinery for which orders are yet to be placed :

Sr.

Description

Tentative Supplier Amount

(Rs. in

lacs)

Quotation no. Date of

quotation relied upon

Main Plant and

Machinery

Thyssenkrupp

Industries India

7212.53 Ref No.CN/MK/AB/Q 60074

dated 17.01.2007

Other Plant and

Machinery

As per Estimates by

Development

Consultants Private

Limited

415.00 Ref No. DCPL-K6C10/PC-

7/7403 dated 28

March,

2007

Electrical and

Instrumentation &

Control

As per Estimates by

Development

Consultants Private

Limited

752.00 Ref No. DCPL-K6C10/PC-

7/7404 dated 28

March,

2007

Total 8379.53

Summary of Orders (excluding escalation, contingencies, transportation etc):

Sr.

No.

Particulars Value

(Rs. In

lacs

%age

A Total Cost of Plant & Machinery :

Domestic 8379.53 100.00%

Imported - -

B Value of Orders Placed :

Domestic - -

Imported - -

C Value of Orders yet to be placed :

Domestic 8379.53 100.00%

Imported - -

The Company has relied on quotations received from various suppliers for orders yet to be

placed. Further, The Company has not bought or does not propose to buy any second hand Plant

& Machineries out of the Issue proceeds.

Contingency

Provision for contingency has been estimated at Rs 329.31 lacs. In the event of any cost

overruns due to any adverse change in asset prices for which agreements have not yet been

entered, time variation, unexpected price rise due to factors beyond the control of the Company,

the Company has made a contingency provision in tune of Rs.329.31 lacs, to take care of any

such eventuality which may occur

Interest During Construction

Interest During Construction (IDC) has been estimated at Rs. 386 lacs.

Technical Know How

The technical know how fee payable to various consultants at different stages of the project

implementation has been estimated at Rs. 100 lacs.

SBI Capital Markets Limited had estimated Rs.50 lacs as the total estimated cost of Technical

Know how fee. However as per the appointment letter given to Development Consultants Private

Limited, the total estimated cost of Technical know how fee works out to be Rs. 100 lacs. The

difference iwould be set off from contingencies.

Preliminary Expenses

The preliminary expenses have been estimated at of Rs. 278 lacs, the break up of which has been

provided below. The Company shall be issuing 2,19,00,000 shares of Rs.10/- each through Initial

Public Offering (IPO) for which expense amounting to Rs. 200 lacs has been estimated.

(Rs. In lacs)

Description Total Cost

Capital issue expenses(legal, advertising, printing etc) 200

Consultancy & Syndication 26

Other start-up expenses 32

Bank Processing Fee 20

Total 278

SBI Capital Markets Limited had estimated Rs.228 lacs as the total estimated cost of Preliminary

expenses. However as per the quotations received the total estimated cost of Preliminary

expenses works out to be Rs.278 lacs. The difference in the estimates of SBI Capital Markets

Limited and actual quotations would be set off from contingencies.

Preoperative Expenses

The preoperative expenses for the project are estimated at Rs. 65 lacs which include rent and

taxes, travelling, insurance expenses, etc. The detailed break-up of the preoperative expenses is

as follows.

(Rs. in lacs)

Description Total Cost

Establishment expenses including salaries & wages 14

Rents, rates and taxes 1

Travelling Expenses 1

Miscellaneous expenses like postage, stationary, legal charges etc 1

Insurance during Construction @.50% of P&M 33

Mortgage expenses, stamp duty etc on loan 15

Construction facilities like temporary structures etc 1

Total 65

Margin Money for Working Capital

The working capital margin requirement of the project is estimated at Rs. 380 lacs based on the

calculations for the first full year of operations (FY 2008-09) for the project. The break-up is

given below:

(Rs. in lacs)

Particulars Days

Mar-08

Amount

Current Assets

Stock of Raw Materials

Limestone 7

Sweetener 30

Iron Ore 30

Slag 30

Fly Ash 15

Gypsum 30

Coal 30

Consumables 30

Packing Materials 30

Total Stock of Raw Materials 126

Stock of Work-in-Process 10 79

Stock of Finished Goods 10 93

Receivables (Debtors) 60 1259

Total Current Assets (A) 1556

Current Liabilities

Payables (Creditors) 10

Other Liabilities 30

Total Current Liabilities (B) 37

Working Capital Gap (A-B) 1519

Margin Money (25%) 380

Bank Borrowing (75%) 1139

Expenses of the Issue:

The expenses of this issue include, among others, issue management fees, underwriting fees,

selling commissions, printing and distribution expenses, legal fees, fees to auditors, advertisement

expenses and listing fees. The total expenses for this issue are estimated at Rs. 200 lacs.

Sl.

No.

Activity Estimated

Amount

(Rs. in

lakhs)

% of Total

Expenses

% of

Total

Issue size

1. Fees of LM

[•] [•]

[•]

2. Underwriting commission

[•]

[•] [•]

3. Brokerage & Selling commission

[•]

[•] [•]

4. Advertisement & Marketing expenses

[•]

[•] [•]

5. Printing and Stationery, Distribution, postage

etc

[•]

[•] [•]

6. Fees of Registrar to the issue

[•]

[•] [•]

7. Other Expenses (including legal fees, filing fees,

listing fees, depository charges etc)

[•]

[•] [•]

Total

200

[•] [•]

* will be incorporated after finalization of Issue Price

Appraisal

The fund requirement and deployment are based on internal management estimates and have

not been appraised by any bank or financial institution

The Company has appointed Development Consultants Private Limited as engineering consultants

for the proposed project and to finalize the basic engineering, selection of vendors for main plant

& equipment and all auxiliaries not ordered along with the main machinery, procurement

assistance and follow up, detailed engineering and to extend miscellaneous services for

inspection, project monitoring, site supervision and successful commissioning of plant and

Development Consultants Private Limited have carried out a Techno Economic feasibility of the

proposed project..

The Company has also appointed SBI Capital Markets Limited for carrying out the financial

feasibility and economic viability of the proposed project and SBI Capital Markets Limited have

given a Financial Appraisal Note of the proposed project.

Undertaking By The Issuer Company

Pursuant to Clause 2.8 of the SEBI (Disclosure and Investor Protection) Guidelines, 2000, the

Company has made firm arrangements for the stated Means of Finance as follows:

(Rs. In lakhs)

Particulars Amount

(Rs. in lacs)

Shareholder’s Fund

Promoter’s Contribution

[•]

Public Issue

[•]

Internal Accruals

[•]

Sub Total (Equity) 4030.00

Debt 8060.00

Total Project Cost 12090.00

The Company confirms that firm arrangements of finance through verifiable means towards 75%

of the stated means of finance excluding the amount to be raised through the proposed public

issue has been made.

Schedule of Implementation:

Particulars Duration Expected Month of

commencement

Expected Month

of completion

Land Already allotted

Land development & Civil

Works

11 months Already commenced

(July 2006)

February,2008

Plant & Machinery and other fixed assets

Placement of orders and

delivery:

 Core Equipments

 Electrical

 Auxiliary Equipments

10 months

8 months

7 months

April, 2007

July, 2007

August 2007

February 2008

March, 2008

March,2008

Erection & installation 5 months October 2007 March, 2008

Trial Production 1 months March, 2008 March, 2008

Start of Commercial

Production

1 month April, 2008 April, 2008

The objects of the issue involve considerable co-ordination and efficiency. The implementation

schedule has been drawn up to maintain a strict time schedule. The year wise break up of the

proposed expenditure is as follows :

Sr.

No.

Particulars Total Amount to be utilised upto

Up to

31.03.07

March

2008

March

2009

Total

1 Land & Site

Development

211.12 45.88 - 257.00

2 Building and Civil

works

227.97 1490.19 - 1718.16

3 Plant & Machinery - 7500.00 879.53 8379.53

4 Misc. Fixed Assets - 150.00 47.00 197.00

5 Technical Know how

fee

- 50.00 50.00 100.00

6 Preliminary Expenses 83.11 150.00 44.89 278.00

7 Preoperative

Expenses

- 65.00 - 65.00

8 Working Capital

margin

- - 380.00 380.00

9 Interest During

Construction

- - 386.00 386.00

10 Contingency - - 329.31 329.31

Total 522.20 9451.07 2116.73 12090.00

COST INCURRED ON THE PROJECT TILL DATE

The Company has incurred a sum of Rs.522.20 lakhs till 28.02.2007 towards the objects of the

issue, details of which and the sources of finance for the same has been certified by the auditors

M/s N.K. Agarwal & Co., Chartered Accountants, vide their certificate dated March 29, 2007:

(Rs. in lacs)

Sr.

No.

Particulars Amount

1. Land & Site Development 211.12

2. Building & Civil Work 227.97

3. Pre-Operative Expenses 83.11

TOTAL 522.20

The Source of above deployment of funds is as under:

(Rs. in lacs)

Sr. No. Particulars Amount

1. Promoter’s Contribution 309.00

2. Internal Accrual 140.52

3. Sundry Creditors 72.68

TOTAL 522.20

Monitoring of Utilisation of Funds

There is no requirement for a monitoring agency in terms of Clause 8.17 of the SEBI DIP

Guidelines. The Audit Committee appointed by the Board of Directors will monitor the utilization

of the issue proceeds.

Interim Use of Funds

The management, in accordance with the policies set up by the Board, will have the flexibility in

deploying the net proceeds received by the Company from the Issue. Pending utilization for the

proceeds, the Company intends to temporarily invest the funds in high quality interest/dividend

bearing liquid instruments including money market mutual funds, deposit with banks for

necessary duration. The Company may also use the same to fund its working capital requirement

on a temporary basis

BASIC TERMS OF ISSUE

The Equity Shares being offered are subject to the provisions of the Companies Act, the

Memorandum and Articles of the Company, the terms of this Draft Prospectus, Application Form,

and other terms and conditions as may be incorporated in the Allotment Advice, and other

documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also

be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of

capital, listing and trading of securities issued from time to time by SEBI, Government of India,

Reserve Bank of India, Registrar of Companies, Stock Exchanges, and/or other authorities, as in

force on the date of the Issue and to the extent applicable.

Ranking Of Equity Shares

The Equity Shares being offered shall be subject to the provisions of Memorandum and Articles of

the Company and shall rank pari passu in all respects with the other existing Equity Shares of the

Company. Allottees of the Equity Shares under this Issue will be entitled to dividends and other

corporate benefits, if any, declared by the Company after the date of allotment.

Face Value

The Face Value of the Equity Share is Rs. 10/- and the Issue Price is (.) times the face value of

the Equity Share. The price band is Rs. 10/- to Rs. 12/- per equity share of Rs. 10/- each i.e., the

issue price is 1.0 time of the face value at the lower end of the price band, and 1.2 times the face

value at the higher end of the price band.

Rights of the Equity Shareholders

Subject to applicable laws, the Equity Shareholders shall have the following rights:

i. Right to receive dividend, if declared;

ii. Right to attend general meetings and exercise voting rights, unless prohibited by law;

iii. Right to vote on a poll either in person or by proxy;

iv. Right to receive offers for rights shares and be allotted bonus shares, if announced;

v. Right to receive surplus on liquidation;

vi. Right of free transferability; and

vii. Such other rights, as may be available to a shareholder of a listed public limited company

under the Companies Act, 1956.

For a detailed description of the main provisions of the Company’s Articles of Association relating

to voting rights, dividend, forfeiture and lien, transfer and transmission and/or

consolidation/splitting, please refer to ‘Main provisions of Articles of Association of the Company’

on Page no. 197 of this Draft Prospectus.

Market Lot

In terms of Section 68B of the Companies Act, the Equity Shares of the Company shall be allotted

only in dematerialised form. As trading in the Equity Shares is compulsorily in dematerialised

form, the market lot is one Equity Share.

Allotment of Equity Shares will be done in multiples of one Equity Share, subject to a minimum

allotment of [•] Equity Shares.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% of the Net Issue, including

devolvement of Underwriters (if any) within 60 days from the date of closure of the issue, the

Company shall forthwith refund the entire subscription amount received. If there is a delay

beyond 8 days, after the company becomes liable to pay the amount, the Company shall pay

interest as per Section 73 of the Companies Act 1956.

Authority for the Present Issue

The Board of Directors of the Company had approved the present Issue of Equity Shares vide a

resolution passed at their meeting held on 18

November, 2006. Present Issue of Equity Shares

has been authorized by shareholders vide a Special Resolution passed at the Extra-Ordinary

General Meeting of the Members held on 12

December, 2006.

Terms of Payment

The entire Issue price is payable on application only. In case of allotment of lesser number of

Equity Shares than the number applied, the Company shall refund the excess amount paid on

application to the applicants.

Basis for Issue Price

The Offer Price will be determined by the Company in consultation with the LM and specified in

the Prospectus that will be filed with the Registrar of Companies. The face value of the Equity

Shares is Rs. 10 and the Offer Price is 1.0 times the face value at the lower end of the Price band

and 1.2 times the face value at the higher end of the Price Band.

Investors should read the following summary along with the section titled “Risk Factors”

beginning on page vii of the Draft Prospectus and the details about the Company and its financial

statements included in this Draft Prospectus. The trading price of the Equity Shares of the

Company could decline due to these risks and the investor may lose all or part of his investment.

Qualitative factors

1. The Company is one of the established players in Cement sector of Eastern India having its

market presence in West Bengal, Jharkhand and Bihar.

2. The Company has a technically qualified management team led by promoters having rich

experience in Cement industry.

3. The company has already a grinding unit for manufacture of cement for a capacity of 1,000

TPD located in Asansol district of West Bengal.

4. The company is setting up 800 TPD expandeble to 1600 TPD Clinkerisation and Cement

grinding unit in Hazaribagh district of Jharkhand state. The location of the site of the project

has following advantages:

• The site is located about 10-15 kms from limestone mines, which is basic raw material for

the production of Cement.

• Abundance of both skilled and unskilled labourers.

• Various Tax incentives and Subsidies available from the Government of Jharkhand.

5. The proposed project of the Company has been vetted by Mecon Ltd.

6. The company has successfully implemented expansion projects in the past.

7. The Company was awarded ISO-9001:2000 certification in January 2004 for manufacturing of

its products.

8. Being a cement deficit region, there exists a significant gap between demand and supply in

the Eastern region, the proposed expansion would enable the Company to increase its

capacity, which will cater to this existing gap between Demand and Supply resulting in

increase in the sales.

9. The proposed project of the Company would have a participation to the tune of Rs. 8060 lacs

from a consortium of bankers

10. The Company has achieved Financial Closure for the propsed project.

11. The Company has appointed Development Consultants Private Limited as engineering

consultants for the proposed project. and Development Consultants Private Limited have

carried out a Techno Economic feasibility studyof the proposed project..

12. The Company has also appointed SBI Capital Markets Limited for carrying out the financial

feasibility and economic viability of the proposed project and SBI Capital Markets Limited

have given a Financial Appraisal Note of the proposed project.

Quantitative Factors

Information presented in this section is derived from the Audited Restated Financial Statements

prepared in accordance with Indian GAAP.

1. Adjusted earning per share (EPS)

Year EPS (Rs.) Weight

2003-04 1.55 1

2004-05 4.45 2

2005-2006 1.90 3

Weighted Average 2.69

EPS for 9 months ended 31

December,

2006 is Rs. 0.51 (annualised)

2. Price Earning ratio (P/E ratio) in relation to the Issue Price of Rs [•] per share

Issue Price Rs. [•]

per share

(a) P/E based on 31st March, 2006 EPS of Rs. 1.90 [•]

P/E Multiple at the lower end of the price band of Rs. 10/- is 5.26

P/E Multiple at the higher end of the price band of Rs. 12/- is 6.32

(b) P/E based on Weighted Average EPS of Rs. 2.69 [•]

P/E Multiple at the lower end of the price band of Rs. 10/- is 3.72

P/E Multiple at the higher end of the price band of Rs. 12/- is 4.46

Highest 24.6

Lowest 2.9

Industry Composite – Category: North India 11.1

Industry Composite – Category: South India 9.8

Source: Capital Market Volume XXII/03 dated April 09 – 22, 2007; Category: Cement – North

India & Cement – South India

3. Return on Net Worth

Year RONW

(%)

Weight

2003-04 6.91

2004 - 2005 7.01

2005 - 2006 8.21

Weighted Average 7.59

RONW for 9 months ended 31

December,

2006 is Rs. 0.51 (annualized)

3.05

4. Minimum Return on Total Net worth after Issue needed to maintain pre-issue EPS of

Rs. 1.90 is [•]

5. Net Asset Value (NAV) per share (Rs.):

As at

31st March, 2006 12.59

After Issue [•]

Issue Price 10-12

Notes:

a. Earning per share represents earning per share calculated on the basis of restated profit

divided by the weighted average number of equity shares (Basic/Diluted) as at the end of

the year.

b. Return on Net Worth as a percentage represent restated profit after tax divided by Net

Worth at the end of each financial year.

c. Net Asset value has been computed on the basis of Net Equity Method (Net Worth at the

end of each financial year divided by the weighted average number of Equity Shares at

the end of each financial year.

Comparison with Industry Peers

Comparison of the accounting ratios of the issuer company as mentioned above with the peer

group i.e. companies of comparable size in the same industry for the year ended ending 31

March 2006 is as follows.

Name of the

Company

Capital

(In Cr)

Sales

(In Cr)

PAT

(In

cr)

EPS

(Rs.)

Book

value

(Rs.)

P/E

Ratio

RONW

(%)

Dalmia Cement 8.55 571.4 38.9 8.9 107.4 9.0 8.8

K C P 12.89 165.6 17.5 12.8 84.7 6.9 16.8

Sagar Cements 12.70 153.8 2.8 2.2 38.1 6.2 11.8

Vinay Cements 10.00 39.1 5.1 5.1 33.5 4.4 18.9

Anjani Portland 18.39 36.8 - - 10.3 3.8 0.1

Deccan Cement 7.00 123.2 8.9 12.4 96.9 3.5 13.9

Kakatiya Cements 7.77 126.9 12.8 16.2 96.1 2.9 18.6

Shiva Cements 16.65 18.2 (4.0) - 1.70 - 2.70

Burnpur Cement

Limited

8.59 25.85 0.89 1.90 12.59 - 8.21

Source: Capital Market Volume XXII/03 dated April 09 – 22, 2007; Category: Cement – North

India & Cement – South India

The Face value of shares is Rs 10/- per share. The equity shares are being issued at a price of Rs.

[•] per share. The issue price is 1.0 times at the lower end of the price band and 1.2 times at the

higher end of the price band.

The Lead Manager believes that the Issue Price of Rs. [•] is justified in view of the above

qualitative and quantitative parameters. The investors may want to peruse the risk factors on

page no. vii of the Draft Prospectus and the financials of the Company including important

profitability and return ratios, as set out in the Auditors’ report beginning from page no [●] of the

Draft Prospectus to have a more informed view of the investment proposition.

STATEMENT OF TAX BENEFITS

Burnpur Cement Limited

Cement house

Saradapally, Ashoknagar

P.O. Asansol – 713304

Dist: Burdwan (W.B.), India

Dear Sirs,

We hereby certify that the enclosed annexure states the possible tax benefits available to M/s

Burnpur Cement Limited (the “Company”) and to the Shareholders of the Company under the

provisions of the Income Tax Act, 1961 (provisions of Finance Act, 2006), and other direct and

indirect tax laws presently in force in India. Several of these benefits are dependent on the

Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws.

Hence, the ability of the Company or its Shareholders to derive tax benefits is dependent upon

fulfilling such conditions, which based on business imperatives the Company faces in the future,

the Company may or may not choose to fulfill.

The contents of this annexure are based on information, explanations and representations

obtained from the Company and on the basis of our understanding of the business activities and

operations of the Company.

The benefits discussed in the enclosed statement are not exhaustive. This statement is only

intended to provide general information to the investors and is neither designed nor intended to

be a substitute for professional tax advice. A shareholder is advised to consider in his/her/its own

case, the tax implications of an investment in the equity shares particularly in view of the fact

that certain recently enacted legislation may not have a direct legal precedent or may have a

different interpretation on the benefits, which an investor can avail. We do not express any

opinion or provide any assurance as to whether:

• The Company or its shareholders will continue to obtain these benefits in future; or

• The conditions prescribed for availing the benefits have been / would be met with.

The contents of this annexure are based on information, explanations, and representations

obtained from the Company and on the basis of our understanding of the business activities and

operations of the Company.

This report is intended solely for your information and for the inclusion in the offer Document in

connection with the proposed IPO of the Company and is not to be used, referred to or

distributed for any other purpose without our prior written consent.

For N K AGARWAL & CO.

Chartered Accountants

N K Agarwal

Proprietor

Membership No.: 14267

Date: February 19, 2007

Place: Asansol

TAX BENEFITS

The tax benefits listed below are the possible benefits available under the current tax laws in

India. Several of these benefits are dependent on the Company or its Shareholders fulfilling the

conditions prescribed under the relevant tax laws. Hence the ability of the Company or its

Shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based

on business imperatives it faces in the future, it may not choose to fulfill.

The following tax benefits shall be available to the Company and the prospective

shareholders under Direct Tax.

I. BENEFITS AVAILABLE UNDER THE INCOME TAX ACT, 1961 (“THE ACT”)

A. BENEFITS AVAILABLE TO THE COMPANY

The Company will be entitled to deduction under the sections mentioned hereunder from its total

income chargeable to Income Tax.

1. Dividends exempt under Section 10(34)

Under Section 10(34) of the Act, the Company will be eligible for exemption of income by

way of dividend from domestic company referred to in Section 115-O of the Act.

2. Income from units of Mutual Funds exempt under Section 10(35)

The Company will be eligible for exemption of income received from units of mutual funds

specified under Section 10(23D) of the Act, income received in respect of units from the

Administrator of specified undertaking and income received in respect of units from the

specified company in accordance with and subject to the provisions of Section 10(35) of

the Act.

3. Premium Paid on Health Insurance under Section 36(1)(ib)

In terms of section 36(1)(ib) of the Act, with effect from April 1, 2007, the amount of any

premium paid by cheque by the assessee as an employer to effect or to keep in force an

insurance on the health of his employees under a scheme framed in this behalf by:

a) the General Insurance Corporation of India formed under section 9 of the General

Insurance Business (Nationalisation) Act,1972 and approved by the Central

Government; or

b) any other insurer and approved by the Insurance Regulatory and Development

Authority established under sub-section (1) of section 3 of the Insurance

Regulatory and Development Authority Act, 1999

is deductible expenditure and will accordingly apply in relation to the assessment year

2007-08 and subsequent years.

4. Exemption of Long-Term Capital Gain under Section 10(38)

According to section 10(38) of the Act, long-term capital gains on sale of equity shares or

units of an equity-oriented fund where the transaction of sale is chargeable to Securities

Transaction Tax (STT) shall be exempt from tax. However, the aforesaid income shall be

taken into account in computing the Book profit and income tax payable under section

115JB.

5. Depreciation under Section 32

In accordance with and subject to the provisions of section 32 of the Income tax Act, the

company will be allowed to claim depreciation on specified tangible and intangible assets

as per the rates specified. Besides normal depreciation, the company, in terms of section

32(1)(iia), shall be entitled to claim depreciation @ 20% of actual cost on new plant and

machinery acquired after 31st March, 2005.

6. Preliminary Expenses under Section 35D

In accordance with and subject to the provisions of section 35D of the Income tax Act,

the company will be entitled to amortise, over a period of five years, all expenditure in

connection with the proposed public issue subject to the overall limit specified in the said

section.

7. Exemption of Long Term Capital Gain under Section 54EC

According to the provisions of section 54EC of the Act and subject to the conditions

specified therein, capital gains not exempt under section 10(38) and arising on transfer of

a long term capital asset shall not be chargeable to tax to the extent such capital gains

are invested in certain notified bonds, subject to a ceiling of Rs. 50 lakhs, within six

months from the date of transfer. However, if the said bonds are transferred or converted

into money within a period of three years from the date of their acquisition, the amount

of capital gains exempted earlier would become chargeable to tax as long term capital

gains in the year in which the bonds are transferred or converted into money.

8. Lower Tax Rate under Section 111A on Short-Term Capital Gains

As per the provisions of section 111A of the Act, short-term capital gains on sale of equity

shares or units of an equity oriented fund where the transaction of sale is chargeable to

Securities Transaction tax (“STT”) shall be subject to tax at a rate of 10 per cent (plus

applicable surcharge and education cess).

9. Lower Tax Rate under Section 112 on Long-Term Capital Gains

As per the provisions of Section 112 of the Act, long-term gains that are not exempt

under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus

applicable surcharge and education cess). However, as per the proviso to Section 112(1),

if the tax on long term capital gains resulting on transfer of listed securities or units,

calculated at the rate of 20 percent with indexation benefit exceeds the tax on long term

gains computed at the rate of 10 percent without indexation benefit, then such gains are

chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and

education cess).

10. Benefits under Section 115JAA

Under Section 115JAA(1A) of the Act, tax credit shall be allowed of any tax paid (MAT)

under Section 115JB of the Act. Credit eligible for carry forward is the difference between

MAT paid and the tax computed as per the normal provisions of the Act. Such MAT credit

shall not be available for set-off beyond 7 years succeeding the year in which the MAT

becomes allowable.

Under the existing provisions of sections 234A, 234B and 234C, the assessee is held

liable to pay simple interest at the rate of one percent for every month or part of a month

for default in furnishing return of income, for default in payment of advance tax and for

deferment of advance tax respectively. For the purposes of computing interest, credit for

advance tax paid and tax deducted or collected at source is allowed. MAT credit under

section 115JAA, relief of tax under section 90 and deduction from income-tax payable

under section 91 are not taken into account while charging interest under the aforesaid

sections. Under section 140A also interest is paid on shortfall of advance tax and for

delay in furnishing return of income. However with effect from April 1,2007 i.e., in

relation to the Assessment Year 2007-08 and subsequent years, reduction of MAT credit

under section 115JAA, relief of tax under section 90 and 90A and deduction from income-

tax payable under section 91 is allowed while calculating the interest U/s. 234A, 234B

and 234C of the income tax act’1961.

11. Minimum Alternate Tax (MAT) under Section 115JB

Under Section 115JB of the Act, in case of a company, if the tax payable on the total

income as computed under the Income-tax Act in respect of any previous year relevant to

the assessment year commencing on or after the April 1, 2001 is less than seven and

one-half per cent of its book profit, such book profit shall be deemed to be the total

income of the assessee and the tax payable for the relevant previous year shall be seven

and one-half per cent of such book profit. However with effect from April 1,2007 i.e., in

relation to the Assessment Year 2007-08 and subsequent years if the tax payable on the

total income as computed under the Income-tax Act in respect of any previous year

relevant to the assessment year commencing on or after the April 1, 2007 is less than ten

per cent of its book profit, such book profit shall be deemed to be the total income of the

assessee and the tax payable for the relevant previous year shall be ten per cent of such

book profit.

B. BENEFITS AVAILABLE TO RESIDENT SHAREHOLDERS

1. Exemption under Section 10(34)

Under Section 10(34) of the Act, income earned by way of dividend from domestic

company referred to in Section 115-O of the Act is exempt from income tax in the hands

of the shareholders.

2. Exemption of Long-Term Capital Gain under Section 10(38)

Under Section 10(38) of the Act, long term capital gain arising to the shareholder from

transfer of a long term capital asset being an equity share in the company or unit of an

equity oriented mutual fund (i.e. capital asset held for the period of twelve months or

more) entered into in a recognized stock exchange in India and being such a transaction,

which is chargeable to Securities Transaction Tax, shall be exempt from tax. However,

the aforesaid income shall be taken into account in computing the Book profit and income

tax payable under section 115JB.

3. Capital Gains under Section 48

Under section 48 of the Act, if the company’s shares are sold after being held for not less

than twelve months, the gains [in cases not covered under section 10(38) of the Act], if

any, will be treated as long term capital gains and the gains shall be calculated by

deducting from the gross consideration, the indexed cost of acquisition.

4. Exemption of Long Term Capital Gain under Section 54EC

Under section 54EC of the Act and subject to the conditions and to the extent specified

therein, long-term capital gains (other than those exempt under section 10(38) of the

Act) arising on the transfer of shares of the Company would be exempt from tax, subject

to a ceiling of Rs. 50 lakhs, if such capital gain is invested within 6 months after the date

of such transfer in the bonds (long term specified assets) issued by:

a) National Highway Authority of India constituted under section 3 of The National

Highway Authority of India Act, 1988;

b) Rural Electrification Corporation Limited, the company formed and registered

under the Companies Act, 1956.

If only part of the capital gain is so reinvested, the exemption available shall be in the

same proportion as the cost of long term specified assets bears to the whole of the

capital gain. However, in case the long term specified asset is transferred or converted

into money within three years from the date of its acquisition, the amount so exempted

shall be chargeable to tax during the year such transfer or conversion. The cost of the

long term specified assets, which has been considered under this Section for calculating

capital gain, shall not be allowed as a deduction from the income-tax under Section 80C

of the Act for any assessment year beginning on or after April 1, 2006.

5. Exemption of Long term capital gain under Section 54F

According to the provisions of section 54F of the Act and subject to the conditions

specified therein, in the case of an individual or a Hindu Undivided Family (‘HUF’), gains

arising on transfer of a long term capital asset (not being a residential house) are not

chargeable to tax if the entire net consideration received on such transfer is invested

within the prescribed period in a residential house. If only a part of such net consideration

is invested within the prescribed period in a residential house, the exemption shall be

allowed proportionately. For this purpose, net consideration means full value of the

consideration received or accruing as a result of the transfer of the capital asset as

reduced by any expenditure incurred wholly and exclusively in connection with such

transfer.

6. Rebate under Section 88E

Section 88E provides that where the total income of a person includes income chargeable

under the head “Profits and gains of business or profession” arising from taxable

securities transactions, he shall get rebate of Securities Transaction Tax paid by him in

the course of his business. Such rebate is to be allowed from the amount of income tax in

respect of such transactions calculated by applying average rate of income tax.

7. Lower Tax Rate under Section 111A on Short-Term Capital Gains

As per the provisions of section 111A of the Act, short-term capital gains on sale of equity

shares where the transaction of sale is chargeable to Securities Transaction Tax shall be

subject to tax at a rate of 10 per cent (plus applicable surcharge and education cess).

8. Lower Tax Rate under Section 112 on Long-Term Capital Gains

As per the provisions of Section 112 of the Act, long term gains that are not exempt

under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus

applicable surcharge and education cess). However, as per the proviso to Section 112(1),

if the tax on long term capital gains resulting on transfer of listed securities or units or

zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceeds

the tax on long term gains computed at the rate of 10 percent without indexation benefit,

then such gains are chargeable to tax at a concessional rate of 10 percent (plus

applicable surcharge and education cess).

C. BENEFITS AVAILABLE TO NON RESIDENTS/ NON-RESIDENT INDIAN

SHAREHOLDERS (OTHER THAN MUTUAL FUNDS, FIIS AND FOREIGN VENTURE

CAPITAL INVESTORS)

1. Exemption under Section 10(34)

Under Section 10(34) of the Act, income earned by way of dividend from domestic

company referred to in Section 115-O of the Act is exempt from income tax in the hands

of the shareholders.

2. Exemption under Section 10(38)

Under Section 10(38) of the Act, long term capital gains arising out of sale of equity

shares or a unit of equity oriented fund will be exempt from tax provided that the

transaction of sale of such equity shares or unit is chargeable to Securities Transaction

Tax. However, the aforesaid income shall be taken into account in computing the Book

profit and income tax payable under section 115JB.

3. Exemption of Long Term Capital Gain under Section 54EC

Under section 54EC of the Act and subject to the conditions and to the extent specified

therein, long-term capital gains (other than those exempt under section 10(38) of the

Act) arising on the transfer of shares of the Company would be exempt from tax, subject

to a ceiling of Rs. 50 lakhs, if such capital gain is invested within 6 months after the date

of such transfer in the bonds (long term specified assets) issued by:

a. National Highway Authority of India constituted under section 3 of The National

Highway Authority of India Act, 1988;

b. Rural Electrification Corporation Limited, the company formed and registered

under the Companies Act, 1956.

If only part of the capital gain is so reinvested, the exemption available shall be in the

same proportion as the cost of long term specified assets bears to the whole of the

capital gain. However, in case the long term specified asset is transferred or converted

into money within three years from the date of its acquisition, the amount so exempted

shall be chargeable to tax during the year such transfer or conversion.

4. Exemption of Long Term Capital Gain under Section 54F

Under section 54F of the Act and subject to the conditions specified therein, long-term

capital gains (other than those exempt from tax under Section 10(38) of the Act) arising

to an individual or a Hindu Undivided Family (‘HUF’) on transfer of shares of the Company

will be exempt from capital gains tax subject to certain conditions, if the net

consideration from transfer of such shares are used for purchase of residential house

property within a period of 1 year before or 2 years after the date on which the transfer

took place or for construction of residential house property within a period of 3 years

after the date of such transfer.

5. Lower Tax Rate under Section 111A on Short-Term Capital Gains

Under section 111A of the Act and other relevant provisions of the Act, short-term capital

gains (i.e., if shares are held for a period not exceeding 12 months) arising on transfer of

equity share in the Company would be taxable at a rate of 10 percent (plus applicable

surcharge and education cess) where such transaction of sale is entered on a recognized

stock exchange in India and is liable to securities transaction tax. Short-term capital

gains arising from transfer of shares in a Company, other than those covered by section

111A of the Act, would be subject to tax as calculated under the normal provisions of the

Act.

6. Lower Tax Rate under Section 112 on Long-Term Capital Gains

Under section 112 of the Act and other relevant provisions of the Act, long term capital

gains, (other than those exempt under section 10(38) of the Act) arising on transfer of

shares in the Company, would be subject to tax at a rate of 20 percent (plus applicable

surcharge and education cess) after indexation. The amount of such tax should however

be limited to 10% (plus applicable surcharge and education cess) without indexation, at

the option of the shareholder, if the transfer is made after listing of shares.

Where shares of the Company have been subscribed in convertible foreign exchange,

Non- Resident Indians (i.e. an individual being a citizen of India or person of Indian origin

who is not a resident) have the option of being governed by the provisions of Chapter

XII-A of the Act, which inter alia entitles them to the following benefits:

1. Under section 115E, where the total income of a non-resident Indian includes any income

from investment or income from capital gains of an asset other than a specified asset,

such income shall be taxed at a concessional rate of 20 per cent (plus applicable

surcharge and education cess). Also, where shares in the company are subscribed for in

convertible foreign exchange by a Non-Resident India, long-term capital gains arising to

the non-resident Indian shall be taxed at a concessional rate of 10 percent (plus

applicable surcharge and education cess). The benefit of indexation of cost and the

protection against risk of foreign exchange fluctuation would not be available.

2. Under provisions of section 115F of the Act, long term capital gains (in cases not covered

under section 10(38) of the Act) arising to a non-resident Indian from the transfer of

shares of the Company subscribed to in convertible Foreign Exchange (in cases not

covered under section 115E of the Act) shall be exempt from Income tax, if the net

consideration is reinvested in specified assets or in any savings certificates referred to in

section 10(4B), within six months of the date of transfer. If only part of the net

consideration is so reinvested, the exemption shall be proportionately reduced. The

amount so exempted shall be chargeable to tax subsequently, if the specified assets are

transferred or converted into money within three years from the date of their acquisition.

3. Under provisions of section 115G of the Act, it shall not be necessary for a Non- Resident

Indian to furnish his return of income under section 139(1) if his income chargeable

under the Act consists of only investment income or long term capital gains or both;

arising out of assets acquired, purchased or subscribed in convertible foreign exchange

and tax deductible at source has been deducted there from as per the provisions of

Chapter XVII-B of the Act.

4. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder

in respect of the taxable securities transactions entered into in the course of his business

would be eligible for rebate from the amount of income-tax on the income chargeable

under the head “Profit and gains of business or profession” arising from taxable securities

transactions. Such rebate is to be allowed from the amount of income tax in respect of

such transactions calculated by applying average rate of income tax on such income. As

such, no deduction will be allowed in computing the income chargeable to tax as capital

gains, such amount paid on account of securities transaction tax.

5. As per Section 90(2) of the Act, provisions of the Double Taxation Avoidance Agreement

between India and the country of residence of the Non-Resident/ Non- Resident India

would prevail over the provisions of the Act to the extent they are more beneficial to the

Non- Resident/ Non-Resident India.

D. BENEFITS AVAILABLE TO FOREIGN INSTITUTIONAL INVESTORS (‘FIIs’)

1. Under Section 10(34) of the Act, income earned by way of dividend from

domestic company referred to in Section 115-O of the Act is exempt from income

tax in the hands of the shareholders.

2. Under Section 10(38) of the Act, long term capital gains arising out of sale of

equity shares or a unit of equity oriented fund will be exempt from tax provided

that the transaction of sale of such equity shares or unit is chargeable to

Securities Transaction Tax. However, the aforesaid income shall be taken into

account in computing the Book profit and income tax payable under section

115JB.

3. Under section 54EC of the Act and subject to the conditions and to the extent

specified therein, long-term capital gains (other than those exempt under section

10(38) of the Act) arising on the transfer of shares of the Company would be

exempt from tax, subject to a ceiling of Rs. 50 lakhs, if such capital gain is

invested within 6 months after the date of such transfer in the bonds (long term

specified assets) issued by:

a. National Highway Authority of India constituted under section 3 of The National

Highway Authority of India Act, 1988;

b. Rural Electrification Corporation Limited, the company formed and registered

under the Companies Act, 1956.

If only part of the capital gain is so reinvested, the exemption available shall be in the

same proportion as the cost of long term specified assets bears to the whole of the

capital gain. However, in case the long term specified asset is transferred or converted

into money within three years from the date of its acquisition, the amount so exempted

shall be chargeable to tax during the year such transfer or conversion.

4. The income by way of short term capital gains or long term capital gains [in cases

not covered under section 10(38) of the Act] realized by FIIs on sale of shares of

the company would be taxed at the following rates as per section 115 AD of the

Act

• Short term capital gains, other than those referred to under section 111A of the

Act shall be taxed @ 30% (plus applicable surcharge & education cess).

• Short term capital gains, referred to under section 111A of the Act shall be taxed

@ 10% (plus applicable surcharge and education cess)

• Long Term capital gains @ 10% (plus applicable surcharge and education cess)

(without cost indexation)

It may be noted here that the benefits of indexation and foreign currency fluctuation

protection as provided by section 48 of the Act are not applicable.

5. Section 88E provides that where the total income of a person includes income

chargeable under the head “Profits and gains of business or profession” arising

from taxable securities transactions, he shall get rebate of STT paid by him in the

course of his business. Such rebate is to be allowed from the amount of income

tax in respect of such transactions calculated by applying average rate of income

tax.

6. As per section 90(2) of the Act, provisions of the Double Taxation Avoidance

Agreement between India and the country of residence of the FII would prevail

over the provisions of the Act to the extent they are more beneficial to the FII.

E. BENEFITS AVAILABLE TO MUTUAL FUNDS

As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under

the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual

Funds set up by public sector banks or public financial institutions or authorized by the Reserve

Bank of India would be exempt from income tax. However, the Mutual Funds shall be liable to

pay tax on distributed income to unit holders under Section 115R of the Act.

F. VENTURE CAPITAL COMPANIES / FUNDS

In terms of section 10(23FB) of the Act, all Venture capital companies/funds registered with

Securities and Exchange of India, subject to the conditions specified, are eligible for exemption

from income tax on all their income, including profit on sale of shares of the Company.

II. BENEFITS AVAILABLE UNDER THE WEALTH TAX ACT, 1957

Shares of the Company held by the shareholder will not be treated as an asset within the

meaning of section 2(ea) of Wealth Tax Act, 1957, hence no Wealth Tax will be payable on the

market value of shares of the Company held by the shareholder of the Company.

III. BENEFITS AVAILABLE UNDER THE GIFT TAX ACT, 1958

Exemption from Gift Tax Gift tax is not leviable in respect of any gifts made on or after October

1, 1998. Therefore, any gift of shares will not attract gift tax.

Notes

1. The above Statement of Possible Direct Tax Benefits sets out the provisions of

law in a summary manner only and is not a complete analysis or listing of all

potential tax consequences of the purchase, ownership and disposal of equity

shares;

2. The above Statement of Possible Direct Tax Benefits sets out the possible tax

benefits available to the Company and its shareholders under the current tax laws

as amended by the Finance Act, 2006 presently in force in India. Several of these

benefits are dependent on the Company or its shareholders fulfilling the

conditions prescribed under the relevant tax laws;

3. This statement is only intended to provide general information to the investors

and is neither designed nor intended to be a substitute for professional tax

advice. In view of the individual nature of the tax consequences, the changing tax

laws, each investor is advised to consult his or her own tax consultant with

respect to the specific tax implications arising out of their participation in the

issue;

4. In respect of non-residents, the tax rates and the consequent taxation mentioned

above shall be further subject to any benefits available under the Double Taxation

Avoidance Agreement, if any, between India and the country in which the non-

resident has fiscal domicile; and

5. The stated benefits will be available only to the sole/first named holder in case

the shares are held by joint shareholders.

6. In view of the individual nature of tax consequences, each investor is advised to

consult his/her own tax advisor with respect to specific tax consequences of

his/her participation in the issue.

For N K AGARWAL & CO.

Chartered Accountants

N K Agarwal

Proprietor

Membership No.: 14267

Date: February 19, 2007

Place: Asansol

SECTION IV: ABOUT THE ISSUER COMPANY

The information presented in this section has been extracted from Financial Apraisal Note of SBI

Capital Markets Limited, publicly available documents from various sources, including officially

prepared materials from the Government and its various ministries and has not been prepared or

independently verified by the Issuer or the Lead Manager.

1. Industry Overview

Cement Industry

Introduction

The cement industry is a core sector and one of the kingpins for the growth of the country.

Cement is one of the most basic construction materials, and hence, an essential item for the

infrastructure development of the country.

The evolution of the cement industry in India can be broadly classified into three periods: The

period up to partial decontrol (up to 1982), the period up to total decontrol (1982-89) and the

period after total decontrol (after 1989 to date). The following table summarizes the events in the

cement industry.

Events during the period of government control

Period Events

1942 FOR (free on rail) destination price of cement fixed on a cost plus basis.

1946-1952 Cost of production of ACC used as a basis for fixing cement prices.

Freight equalisation system introduced simultaneously.

1958 Introduction of three-tier retention price scheme, whereby retention

prices are decided based on the age of the plant and technology

employed.

Jan-66 Price and distribution controls lifted.

Jan-68 Price and distribution controls re-imposed.

Apr 1969 - May 1979

Period of single price regime; total distribution control.

Cement industry grew at around 4.0 per cent during this period as

against the high growth rates in the past.

Sep-77 Government guarantees 12 per cent post-tax return on the net worth

of new cement companies.

Events during the period of partial decontrol

Period Events

Feb-82 Companies allowed to sell 33 per cent of their production in the open market,

while price and distribution controls enforced for the remaining production

1985-86 Proportion of cement for free market sale increased to 50 per cent.

Events post decontrol

Period Events

Mar-89 Price and distribution controls removed completely.

Jul-91 Industrial licensing abolished for new capacities.

The cement industry in India has grown steadily since 1914, when the first cement unit of 1000

tonnes was set up at Porbandar. The growth in the industry has followed the pattern of economic

growth, i.e., moderate to low growth during the fifties, the sixties and the seventies and high

growth during the eighties & the nineties. Since decontrol of cement, the industry showed