Duncans Industries Ltd rehabilitation scheme sanctioned by BIFR

Case No.
70/2006
Duncans Industries Ltd. (DIL)
BOAR D F OR INDUS TRIAL AND F INANCIAL RECONS TRUCTION CASE NO. 70/2006 - M/S. DUNCANS INDUSTRIES LTD. (DIL) BENCH- I ORDER 1. M/ s . D u n c a n s In d u s t r ie s Lt d . (D IL) (h e r e in a ft e r r e fe r r e d
t o a s t h e C o m p a n y) file d a r e fe r e n c e b a s e d o n it s Au d it e d B a la n c e S h e e t (AB S ) a s o n 3 1 . 3 . 2 0 0 6 w h ic h wa s c o n s id e r e d in a h e a r in g h e ld o n 2 1 . 2 . 2 0 0 7 wh e r e in t h e B e n c h d eclared t h e com p a n y s ick u/s 3(1)(o) of t h e Sick In d u s t r ia l Com p a n ies (S p ecia l Pr ovis ion s ) Act, 1 9 8 5 (h er ein a ft er r efer r ed t o a s t h e S ICA) a n d a p p oin t ed S t a t e Ba n k of In d ia (S BI) a s t h e Op er a t in g Agen cy (OA) u / s 1 7 (3 ) of S ICA to for m u la t e a rehabilitation scheme for the company. 2. Th e OA vid e it s com m u n ica t ion d a t ed 1 .4 .2 0 1 1 s u b m it t ed a
r eh a b ilit a t ion s ch em e a n d fu r t h er in for m a t ion / cla r ifica t ion vid e let t er d a t ed 2 3 .5 .2 0 1 1 b a s ed on wh ich t h e Boa r d h a s for m u la t ed a Dr a ft Reh a b ilit a t ion S ch em e (DRS ) for t h e r eviva l of t h e com p a n y. Th e DRS m a in ly en vis a ges cor p or a t e r es t r u ct u r in g of DIL b y wa y of d e-m er ger of a ll it s a s s et s a n d lia b ilit ies r ela t in g t o Fer t ilizer Un d er t a k in g a n d t r a n s fer a n d ves t in g of t h e s a id Un d er t a k in g, t h r ou gh a S ch em e of Ar r a n gem en t in t o a n ew u n d er t a k in g, n a m ely M/ s . Ka n p u r Fer t ilizer s a n d Cem en t s Lt d . (KFCL) lea vin g t h e t ea op er a t ion s in DIL. 3. Th e DRS on t h e s u b ject com p a n y wa s cir cu la t ed on 1 .6 .2 0 1 1 .
Th e h ea r in g for ob ject ion s / s u gges t ion s on t h e DRS wa s fixed for 1 1 .8 .2 0 1 1 , 1 6 .8 .2 0 1 1 , 3 0 .8 .2 0 1 1 , 1 4 .9 .2 0 1 1 a n d 2 9 .9 .2 0 1 1 . Th e
Bench approved certain amendments in the DRS in the hearing held on 11.8.2011, 16.8.2011, 30.8.2011 and 29.9.2011. 4. Accor d in gly, t h e Ben ch s a n ct ion ed S ch em e en clos ed a n d t o b e
implemented by all concerned. (Y.K. GAIHA) (NIRMAL SINGH) MEMBER CHAIRMAN Encl: Sanctioned Scheme, containing 131 pages Dated: 16/1/2012 -1
Case No.70/2006
BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

CASE No 70/2006, M/s DUNCANS INDUSTRIES LTD (DIL) BENCH-I SANCTIONED SCHEME 1 1.1 BACKGROUND M/s Duncans Industries Ltd (DIL), a public limited Company, incorporated on 30.7.1993 under the Companies Act, 1956 with its registered office at Duncan House, 31, Netaji Subhas Road, Kolkata; has been promoted by Sh G P Goenka of Duncan Goenka Group. The company is engaged in Urea ( Fertilizer) and Tea business. The Fertilizer complex for manufacture of Urea with installed capacity of 7,22,000 MT per annum is located at Panki Ind Area, Kanpur (UP) The Tea units/estates are located in Distt. Jalpaiguri, Darjeeling (WB) and Uttar Dinajpur (WB) for producing/processing of Tea with capacity of approx 150 lakh Kg per annum. The fertilizer complex was set up by multinational company M/s ICI Ltd in 1969. In 1993. the fertilizer unit was made a separate entity by the name of M/s Chand Chhap Fertiliser and Chemicals Ltd. In 1993 itself, the company was taken over by Duncan Industries Ltd. However, due to various reasons, the Fertilizer plant has not been in operation and has been lying closed since 2002 except for a brief period of operation for about 1.5 months from 30 Aug 2005 to 17 Oct 2005. The Tea Gardens and Tea processing factories were acquired by DIL on merger of erstwhile M/s Duncans Agro Industries Ltd. It is one of the oldest and largest tea companies in the country. It goes back to the year 1859 when Mr Thomas Duncan set up the Tea business in the Company. All the Tea Gardens and processing factories of the company are situated in West Bengal. Due to non operation of the Fertiliser Plant, the company has been continuously incurring huge losses and as a result, operations of Tea business has also been affected due to inadequate focus on upkeep of tea estates.
The Tea Divn of the company had also been incurring losses but has been able to earn profits in YE 31.3.2010 after 4 years of continuous losses.
1.2
1.3
1.4
1.5
1.6 1.7
Due to downward revision of Fertiliser Retention Price Support (RPS) in 2002 with retrospective effect from July 1997, an amount of Rs 446.95 Cr receivable as fertilizer subsidy from GoI had to be written off during YE -2
Case No.70/2006
31.3.2006, which resulted in losses and erosion of entire net worth of the company. 1.8 The Company has now entered into an Investment Agreement dated 18.6.2010 with M/s Jaypee Fertilizers & Industries Ltd (JFIL) (a Jaypee Group company) as a strategic investor (SI) for revival of the Fertiliser Division.
1.8.2 The rehabilitation measures, inter alia, envisage de-merger of all the assets and liabilities of Fertiliser Unit and transfer and vesting of the same into a new company M.s Kanpur Fertiliser & Cement Ltd (KFCL). The Tea business shall be left in residual DIL. Infusion of fresh funds into the new company by a Joint Venture Company (JV Co.) M/s Jaypee Uttar Bharat Vikas Ltd ( JUBVPL) of JFIL (SI) and M/s ISG Traders Ltd (a part of promoter group of DIL) is envisaged. 1.8.3 The OA has submitted DRS which proposes cost of scheme aggregating to Rs 1059.40 Cr as under:
Particulars One Time Settlement (OTS) of the dues of the secured creditors Payment of Late payment Charges (Arcil and CBI) OTS to other secured creditors Repayment of WCTL and Loans Capital Expenditure for conversion of the feedstock of the Fertiliser Plant and Tea Division Settlement of the dues of the unsecured lenders including fixed deposits Other unsecured creditors/liabilities Payment of Workmen dues: Working capital
Payment of Statutory dues
1 2 3 4 5 6 7 8 9
1 0
Amount(Rs\Cr) 257.21 5.65 5.78 35.69 241.53
110.19 73.67 112.46 206.45 10.77 1059.40
Total
1.8.4 The proposed means of finance (Rs 1059.40 Cr) are as under: Amount (Rs\Cr) Particulars
1 2 3
Promoters equity in Tea Business Equity by JV Co in Fertiliser business Interest free unsecured loans / equity from Promoters in Tea business Debts by JV Co from WOS / Associates :Rs 335 Cr and in Fertiliser business 11.65 400.00 30.56 369.62
4 5
Internal accruals: Total
247.57 1059.40
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1.8.5 As against the principal outstanding amount of Rs 616.70 Cr of the secured creditors, the company has entered into OTS for Rs 271.55 Cr (including Rs 14.34 Cr already paid). The company to settle the dues of Fixed Deposit holders at 85% which comes to Rs 66.07 Cr. The company has entered into an MOU with the workmen of fertilizer undertaking and has incorporated their dues in the DRS. Duncan Voluntary Retired & Pensioners Employees Association (DVREPA) have also agreed for settlement of their dues and the company has incorporated dues of DVREPA amounting to Rs 4.09 Cr in DRS. ARCIL, the largest lender with 47.15% share in o/s dues of secured creditors, has conveyed its confirmation vide letter dated 06.01.2011 accepting the settlement amount proposed to be paid to the secured lenders as envisaged in the DRS. Other major secured creditors except WBIDC & PICUP ( which constitute 2.53% of the total dues of secured creditors) have also agreed for the OTS offer of the company. Thus, 97.47% of the secured creditors have accepted the OTS offer. 2 REFERENCE TO BIFR 2.1 The company, based on ABS 31.3.2006, filed a reference under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1985 (hereinafter referred to as the Act ). In the hearing held on 21.2.2007, the Bench declared the company as sick company u/s 3(1)(o) of the Act. The Bench noted that the provisions of Section 18 of SICA would have to be explored in public interest in relation to the company. Accordingly, in terms of the powers available u/s 17(3) of SICA, the Bench appointed State Bank of India (SBI) as the Operating Agency (OA) with directions to prepare a revival scheme for it, if feasible. The Bench inter-alia issued the following directions: i) Individual holders of fixed deposits were free to negotiate with the company to secure repayment of their dues or to approach the Company Law Board (CLB) u/s 58A of the Companies Act or to file suits for recovery of their dues.
2.2
The company preferred an appeal against directions of Board in respect of fixation of cut off date as 31.3.07 and in respect of Fixed Deposit of individual holders in BIFR Order dated 21.2.2007. Hon ble AAIFR, vide order dated 14.12.2007, set aside the aforesaid direction/guidelines. In the hearing held on 26.5.2009, the Bench directed the company to commence the process of startup activities and also commence its operations within a month as GOI had already accorded permission to DIL to re-commence operations based on Naphtha.
2.3
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2.4
The company preferred an appeal against the above orders of the Board and Hon ble AAIFR vide order dated 3.7.2009 stayed the operation of Board s aforesaid directions. In response to MA Nos. 64 and 65 filed by some unsecured creditors to consider their claims while formulating the rehabilitation scheme, the Bench in the hearing held on 25.2.2010, directed that the applicants may approach appropriate civil court for filing recovery suit against the company to determine the dues. However, the decree, if any, shall not be executed without prior approval of BIFR and the decreed amount shall be appropriately considered in the DRS by the company. Hon ble AAIFR vide order dated 15.9.2010 directed that DRS shall be modified to incorporate payment of principal dues of Duncan Voluntary Retired & Pensioners Employees Association (DVREPA), which shall be paid by the company within a period of 120 days in lump sum from the date of sanction of the scheme. In the hearing held on 20.10.2010, SBI (OA) informed the Bench that most of the stakeholders had accepted the provisions of DRS in the Joint Meeting held on 1.10.2010 and ARCIL, the largest secured lender, has accepted the demerger of the Fertilizer Division of the company through a Joint Venture (JV) company with Jaypee Group . While CBI, SBT, SICOM and IOC conveyed acceptance of OTS proposal offered by the company, PICUP did not accept the OTS offered by the company. In the hearing held on 20.10.2010, the Bench issued the following directions :I. SBI (OA) shall submit the revised DRS to the Board within 15 days. II. The next hearing of the case will be held on 3.2.2011.
2.5
2.6
2.7
2.8
2.9
In the hearing held on 3.2.2011, the Bench interalia issued the following directions: 1) A limited hearing comprising of SBI(OA) and all secured creditors of the company will be held on 23.2.2011 to examine the DRS proposal of the company.
.2.10 In the limited hearing held on 23.2.2011 to examine the DRS proposal of the company, the secured creditors expressed consent on the provisions of the DRS. The secured creditors requested the Bench for early circulation of the DRS so that their accounts may be settled under OTS as per the scheme.
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2.11
State Bank of India (Operating Agency) has submitted revised DRS vide letter dated 1.4.2011 and further information has been submitted by Co s letter dated 23.5.2011. The DRS has been considered in JM convened by OA on 1.10.2010. SHARE CAPITAL AND SHAREHOLDERS
Category No of Shares held % of Share holding 58.68 2.81 7.52 29.47 0.42 1.10 41.32 100.0 Amoun t (Rs / Cr)
I A B. 1
II
III
Equity Shares of Rs 10/- each Promoter s Holding Non- Promoters Holding Institutional Investors Foreign Banks Bodies Corporate Individuals NRI s / Foreign Nationals Others(Clearing Members) Sub-total Total Equity Capital 8.25% Redeemable Cum. Pref. Shares of Rs 100/- each. Albert Trading Company P Ltd. IDBI Total Redeemable Cum. Pref. Share 0.001% Cum. Redeem. Pref. Shares Banks and FI s of Rs 100/each Total Preference Share Capital Total Share Capital
3,12,32,927 14,94,208 950 40,00,303 1,56,81,481 2,26,235 5,86,922 2,19,90,099 5,32,23,026
53.22
2,00,000 7,50,000 9,50,000 1,65,98,331
21.05 78.95 100.00 100.00
9.50 165.98
1,75,48,331
175.48 228.70
The authorized capital of the company is Rs 235 Cr divided into 550 lakh shares of Rs 10 each, 180 lakh cumulative preference shares of Rs 100 each. The issued, subscribed and paid up capital of Rs 53.22 Cr is divided into 532.23 lakh shares of Rs 10 each and Rs 175.48 lakh divided into 175.48 lakh cumulative preference shares of Rs 100 each. The shares of the company are quoted at BSE and NSE and there is regular trading. 3.2 Market price/Intrinsic value of Equity Shares: The shares are listed on BSE and NSE and share price as on 13.5.2011 was Rs 15.65 on BSE ( Volume 25444) and Rs 15.55 on NSE (Volume 31864) with 52 week high/low of Rs 24.35/ Rs 12.75 on BSE and Rs 24.30/ Rs 12.10 on NSE. -6
Case No.70/2006
The fair value for induction of equity as per valuation report dated 21.2.2011 of M/s Chaturvedi & Partners, Chartered Accountants, is Rs 10 being the average of NAV of (-) Rs 15, Profit earning capacity value (PECV) (-) Rs 56 and Market price of Rs 18. 4 PROMOTERS M/s ISG Traders Ltd and its associate companies are the promoters of DIL. 5 BOARD OF DIRECTORS
Sl. Name ( S/Sh) No.
1. G.P. Goenka
Age Qualification
70 B.Sc,
Experience
Industrialist heading the Duncan Goenka Group and exPresident FICCI. ExChairman Tea Board of India Finance and Corporate Affairs Tea and Tea Marketing related activities. Ex- Chairman General Insurance Corporation.
Designation
Chairman
2. 3. 4.
T.S. Broca . IAS (Retired) R.K.Bhargava . IAS (Retired) M.H. Chinoy
78 75 73
M.A M.A. Diploma in International & Export Management B.Sc, PGDM
Independent Director Independent Director Independent Director Independent Director Special Director BIFR. Whole time Director
5. 6. 7.
D. Sengupta S.K.Kinra A.K.Goel
68 65 60
B.Com, FCA
8.
S.P.Gupta
57
B.Tech.(Chemical Engg.)
Finance, Accounts, Taxation, Administration and Corporate Affairs. Process Engineering, Business Management, Productivity enhancement etc.
Executive Director
TECHNICAL & PROFESSIONAL STAFF DIL has adequate technical and professional personnel for operation of its fertiliser and Tea undertaking who looks after the production, marketing, finance and administrative functions. It will, however, have to fill up the vacancies caused due to leaving / retirement of the certain employees in fertilizer division during the period of the non operation of plant.
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Case No.70/2006
REASONS FOR SICKNESS The following main reasons are attributed to sickness of the company:
7.1
Reduction in Retention Price Support (RPS) retrospectively by GoI in 2002 w.e.f. July, 1997 and withholding / deductions / adjustments of RPS receivables in respect of the subsequent period of operation; i) Urea is an essential commodity whose selling price is controlled by the Government. In order to promote the consumption of urea to increase agricultural yields, the GOI introduced Retention Pricing Scheme (RPS). The difference between the RPS and the farm-gate price is reimbursed to the manufacturers by way of subsidy through the Fertilizer Industry Co-ordination Committee (FICC) under the Ministry of Chemicals & Fertilizer. However, GoI/FICC did not revise RPS for the period 1997- 2000 and 2000-03 till June 2002. In the interim period, the industry claimed subsidy on the basis of adhoc notifications from the GoI. ii) The revised retention price for the Company was notified by the Government vide its order dated 5th November, 2001 having a reduction of Rs 1927/- per MT and Rs 1926/- per MT for the period 1.4.2000 - 31.3.2001 and 1.4.2001 - 31.3.2003 respectively. GoI vide notification dated 4th June, 2002, also notified the revised pricing policy parameters for the 7th and 8th pricing periods covering the period from 1st July, 1997 to 31st March, 2003. The impact of the adhoc notifications and the 7th and 8th Pricing Policies resulted in recovery of Rs 446.95 Cr from DIL, which was recovered/ deducted / adjusted by the Government. iii) The decision of Government in reducing the subsidy with retrospective effect resulted in erosion of the Company s working capital which led to severe cash flow mismatch resulting in closure of the fertilizer unit in March 2002.
iv) The Company s SLP filed in Supreme Court against decision of High
Court (vide which the High Court had dismissed the writ petition filed by the company against retrospective downward revision of the fertilizer subsidy by the GOI) was also dismissed vide its judgment dated 10th February, 2006. Consequently, Rs 446.95 Cr receivable by the Company as subsidy had to be written off during YE 31st March, 2006. Such a heavy loss eroded the entire net worth of the company making it a sick industrial company .
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Case No.70/2006
7.2 i.
Inadequate working capital: In accordance with the CDR Package approved by the CDR Empowered Committee vide its letter dated 15th October 2004, the Banks were to provide Rs 62 Cr of additional Working Capital facility for recommencement of the operation at the fertilizer plant against an additional exclusive security of 2.89 Cr equity shares of M/s Andhra Cements Ltd (ACL) held by M/s Boydell Media Pvt Ltd, a company of Duncan Goenka Group, to be pledged in favour of Banks. The banks sanctioned additional working capital facility of Rs 56.45 Cr while the balance Rs 5.55 Cr (State Bank of Patiala was not agreeable to finance) was brought in by the promoters along with their contribution of Rs 25 Cr. Necessary pledge in favour of banks was created on 2.89 Cr shares of Andhra Cements Limited (ACL) exclusively securing the above limit of Rs 56.45 Cr. Upon implementation of the package, the lay-off was lifted w.e.f. 8th July, 2005, understanding with IOC (Naphtha provider) and KESCO (electricity provider) were arrived at to ensure the smooth availability of raw materials and power. The production at the plant recommenced on 30th August, 2005. After the unit re-started the operations in August, 2005, subsidy was again delayed from GoI and entire working capital of the company got locked-up in the subsidy receivable and plant operations had to be again suspended w.e.f. 18.10.2005. The company approached the Department of Fertilizer / FICC for release of subsidy which was pending for disbursement and also got assurance that in future the subsidy will be released in time. With the expectation that the Department of Fertilizer / FICC shall take some positive action on the request of the Company, it embarked upon the program to carry out certain essential repairs and maintenance of the plant which was necessary to ensure the continuity of stable production at desired efficiency levels. However, the subsidy amounting to Rs 25 Cr could only be released in the month of February 2006. By that time, the price of Naphtha, which is a major raw material, constituting more than 60% of the cost of production of urea, increased from Rs 23,500 per MT (in the month of July-Sept,05) to Rs 31,300 per MT (in the month of April,06). Though the increase in price of Naphtha was to be compensated to the company as part of subsidy but it had major implication in the working capital requirement of the company. The increase in price of naphtha coupled with delay in disbursement of subsidy led to acute shortage of fund and increased the working capital requirement for the operation. The Company requested banks to provide further support to overcome the liquidity problem caused due to locking of funds in the subsidy. The matter was discussed with the banks and it was suggested to explore the alternate possibility to tie-up the working capital requirement by way of credit from Indian Oil Corporation (IOC), the sole supplier of Naphtha to the Company, as a long-term solution. IOC in principle was agreeable to supply the -9
ii.
iii.
Case No.70/2006
naphtha through the process of an Escrow Mechanism against the subsidy receivables but in the meantime, the price of Naphtha had further gone up to Rs 32,200/- per MT and at this price the requirement of Naphtha per month on full capacity utilization was estimated approximately Rs 95 Cr
and trend for release of subsidy by the Government on 45 days basis, requirement of credit from IOC was expected to be of approximately Rs 250 Cr and Naphtha supply could not materialize through escrow mechanism and as a result plant could not restart operation due to non-availability of feedstock. 7.3 Recession in Tea Industry: The tea industry, which is one of the oldest agro-based industries in the country, passed through a recession for 7 years till 2008 primarily due to fall in tea prices, lower exports, stagnant demand in the domestic market, escalation in the input cost, abnormal increase in labour cost and the presence of large quantities of tea produced by the unorganized sector where cost of production is low. The recession in the tea industry adversely affected the Company s tea operations. The above major factors contributed in the company incurring substantial losses and becoming sick.
8.0 PAST PERFORMANCE 8.1 Financial Position

YE 31 March
st
2006 Audited 62.72 142.12 156.00 640.88 360.87 1362.59 891.79 193.54 0 698.25 8.11 706.36 390.22 316.14 331.44 -239.39 954.4 1362.59 62.72 142.12 954.40 -749.56
2007 Audited 199.51 142.12 29.20 734.15 368.69 1473.67 893.91 214.16 282.60 397.15 5.91 403.06 143.44 259.62 330.80 -275.29 1158.54 1473.67 199.51 142.12 1158.54 -816.91
2008 Audited 228.71 142.12 727.57 392.63 1491.03 894.33 234.23 282.60 377.5 5.66 383.16 136.6 246.56 105.71 -254.79 1393.55 1491.03 228.71 142.12 1393.55 -1022.72
2009 Audited 228.71 142.12 719.33 414.96 1505.12 896.33 253.41 282.60 360.32 5.99 366.31 129.63 236.68 92.17 -265.37 1441.64 1505.12 228.71 142.12 1441.64 -1070.81
(Rs\Cr) 2010 Audited 228.71 142.12 718.83 401.49 1491.15 901.44 272.90 282.60 345.94 6.96 352.9 122.7 230.2 92.17 -262.95 1431.73 1491.15 228.71 142.12 1431.73 -1060.90
30.9.10 Prov 228.71 142.12 720.20 400.18 1491.21 903.99 283.28 282.60 338.11 6.52 344.63 119.24 225.39 92.17 -251.07 1424.72 1491.21 228.71 142.12 1424.72 -1053.89
Share Capital Reserves and Surplus CRPS Pending Allotment Secured Loans Unsecured Loans Total Liabilities Gross Block Less: Accum. Depreciation Less: Impairment Net Block Capital Work in Progress Sub Total Less: Revaluation Reserve Fixed Assets (Net) Investments Net Current Assets Accumulated Losses Total Assets Net Worth: Share Capital Reserves and Surplus Less: Accumulated Losses Net Worth
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Case No.70/2006
Comments: The accumulated losses have marginally declined in YE 2009 -2010. 8.2 Working Results:
YE 31st March 2006 Audited 63.35 2007 Audited 0.08 -100% -104.58 10.76 -115.34 110.01 -58.50 10.76 -69.26 104.29 -5% -74.33 10.90 3.18 -66.61 173.36 -24.05 -7.66 3.01 -34.72 104.37 -40% -181.95 -56.94 -103.98 -54.19 2008 Audited 3.03 3688% -0.23 10.76 -10.99 108.05 4% -10.20 -24.84 2.91 -37.95 131.29 26% -48.94 -4.90 20.21 -8.83 -104.23 (446.95) -798.90 -3.01 -0.21 -161.39 -0.23 29.10
(223.96)
(Rs\Cr)
2009 Audited 0.70 -77% -0.84 10.76 -11.60 143.03 32% -3.49 -24.59 2.84 -30.92 143.73 9% -42.52 -5.04 2010 Audited 0.01 -99% -1.76 10.76 -12.52 159.06 11% 20.63 12.33 2.90 30.06 159.07 11% 17.54 -7.52 13.73 -6.72 21.52 1.54 19.98 82.81 -0.87 5.38 -6.25 82.80 30.9.10
(6 months)
Working Results
(i) Fertilizer Division:
Gross Turnover / Other Receipts % Growth EBIDT Depreciation EBIT of Fert. Div.
Prov 0.01
(ii) Tea Division:

Gross Turnover / Other Receipts % Growth EBIDT Exchange (Deficit)/ Gain on realignment Depreciation EBIT of Tea Divn
(iii) Company
Total Gross Turnover / Other Receipts % Growth EBIT Interest Interest for earlier years on Income Tax Prior Period Adjustment
Taxation ( including provision for Deferred Tax)
-0.19 0.34
-0.11
Extra Ordinary Item PAT
-228.72
-48.09
9.91
7.01
Comments: i) Extraordinary items in YR 2006 represents subsidy receivable written off

consequent to the decision of Hon ble Supreme Court.
ii) Extraordinary items in YR 2008 represents provision for diminution in the value
of investments
iii) Tea Industry being seasonal figures for the 6 month ended on 30.9.2010 are not
representative for the whole year.
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LOANS , CREDIT FACILITIES AND LIABILITIES:

(A) Fertilizer Undertaking I. Secured Loans, Debentures etc. of Banks and FI's Total Banks and FI's Debts other than Addl WC II. Additional Working Capital Total Addl Working Capital Total Secured Loans of Banks & FI's Interest Accrued & due Total Secured Loans and Interest III.Employees Dues IV. Statutory Dues: V. Other Unsecured Trade Creditors / Liabilities KESCO IOC Security Deposits Suppliers / Creditors Advance from Customer Interest Accrued Others Provision for Current Expenses Sub Total
Total Secured Loans and Unsecured Creditors Liabilities - Fertilizer Undertaking (A) (B) Tea Undertaking and other Liabilities of the Fertilser Undertaking ;
O/s 30.9.10
% of settlement proposed
(Rs / Lakh) Amount Waiver Payable
57015.00 3221.00 60236.00 4430.02 64666.02 7943.61 179.67
39.46% 100% 42.70% 0% 100% 100%
22500.00 3221.00 25721.00 25721.00 7943.61 179.67
34515.00 0.00 34515.00 4430.02 38945.02 0.00 0.00
8113.12 5668.59 493.79 3041.19 95.49 370.23 584.19 500.00 18866.60 91655.90
25% 25% 25% 25% 25% 0% 25% 100%
2028.28 1417.15 123.45 760.30 23.87 0.00 146.05 500.00 4999.09 38843.37
6084.84 4251.44 370.34 2280.89 71.62 370.23 438.14 0.00 13867.51 52812.53
I. Working Capital / Loan (To Continue): (a) Working Capital (b) WCTL and Loan Total (a+b) ( To continue) II. Other Secured Loans: III. Unsecured Loans 15% Optionally Convertible Debentures (OCD) Loan Under Housing Scheme from Housing Board Loans from Bodies Corporate Fixed Deposits FCCB Interest Accrued on FD's Interest Accrued on other unsecured loans Foreign Exchange Fluctuations Unsecured loans from Promoters ( Cont. in CDR) to be converted into Equity) Interest Accrued on FCCB Interest Accrued to ICD's Sub-total
2431.50 3568.50 6000.00 1180.00 25.00 7.37 3010.24 7773.35 14575.00 795.13 216.88 6619.30 3055.50 3819.38 121.27 40018.42
100% 100% 100% 49% 25% 100% 25% 85% 25% 0% 0% 0%
2431.50 3568.50 6000.00 578.20 6.25 7.37 752.56 6607.35 3643.75 0.00 0.00 0.00 3055.50 0.00 0.00 14072.78
0.00 0.00 0.00 601.80 18.75 0.00 2257.68 1166.00 10931.25 795.13 216.88 6619.30 0.00 3819.38 121.27 25945.64
0% 0%
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IV, Employees Dues: V. Statutory Dues: VI. Other Unsecured Creditors / Liabilities (a)Non Current Period: Suppliers / Creditors ( Non Current) L&T Finance Bills Discounting( Private Parties) Provision for Interest Sub-total (a) (b)Current Period: Total Other Unse. Creditors / Liabilities (a+b) Total Secured and Unsecured Loans / Other unsecured creditors / liabilities (B) Tea excl bank borrowings Rs 6000 lakh to continue and current creditors Total Liabilities of Fertilizer and Tea (A+B)
5998.83 1627.36
100% 100%
5998.83 1627.36
0.00
1915.79 42.07 323.66 406.91 2688.43 8397.45 11085.88 65910.49 51513.04 157566.39
25% 25% 25% 0% 100%
478.95 10.52 80.92 0.00 570.38 8397.45 8967.83 37245.00 22847.55 76088.37
1436.84 31.55 242.75 406.91 2118.05 0 2118.05 28665.49 28665.49 81478.02
10 10.1
MARKET REPORT / MARKETING ARRANGEMENT

The Company s Chand Chhap brand of Urea was one of the strongest Urea brands in the fertilizer market in Northern India. The plant is ideally located in agriculture belt and in decontrol scenario, with the brand equity of Chand Chhap , the entire production of Urea can be sold within a radius of 100 miles. The dealer network of the Company is in the entire northern India which needs to be revamped on resuming the plant operation . Tea is generally sold through brokers in auction centers at Siliguri and Kolkata. Loose tea is also sold all over India through a network of agents.
10.2
10.3
INDUSTRIAL SCENARIO India s fertilizer production has been stagnating for the last two decades and consumption is growing at a steady pace. No capacity has been added over more than a decade due to lack of incentives by the GOI. Under the current five year plan, GOI is laying strong emphasis on the development of the agri-sector and increasing food production. With the impetus, the demand for the fertilizer in general and Urea in particular is expected to grow at rates higher than those witnessed in the past. The country is becoming increasingly import dependent for farm nutrients. India imports about 20% of the world tradable surplus of urea, diammonium phosphate and muriate of potash. The country needs to increase the fertilizer output from 20 million tonnes to 40 million in order to reduce imports. Greenfield route for increasing the production capacity is very capital intensive with high gestation while revival of the existing plants would involve lower capital with short gestation period. -13
Case No.70/2006
11.0
MANUFACTURING FACILITIES & INFRASTRUCURE The company is having 2 products of manufacture viz Fertilizer and Tea.
11.1
FERTILISER PLANT Land & Building: The unit is located at Block - A , Panki Pandu Scheme No. 40, Kanpur and is about 10 Km away from the heart of the city and 8 Km away from the Kanpur Railway Station. Panki, Kanpur, UP. Three long term leases were granted by the Kanpur Nagar Mahapalika on 15th May, 1967, 1st February, 1968 and1st February, 1968 for an aggregating extent of 270.9667 acres of land in Plot Nos. 2, 2B and 5 and situate in Block A, Panki Pandu Scheme No. 40 Kanpur for a period of 999 years effective from the dates thereof. Fertilizer Factory occupies an area of 243.4387 acres equivalent to 9,85,159.50 sq. mts in the said Plot Nos. 2, 2B and 5 and was transferred to Duncans Industries Ltd ( earlier known as Chand Chhap Fertilizers And Chemicals Ltd) Building Structures are built in accordance with the requirement of the Plant and other accessories supporting system. Necessary structures are either load bearing structures or framed structure with different type of roofing as per requirement of Plant with Roads, open yards boundary walls, etc. (I) (i) Utilities Power and Steam The power supply and distribution system of the plant is connected from 132 KV supply line of Kanpur Electricity Supply Company (KESCO) and sanctioned load is 81 MVA. The captive power plant has a power generating capacity of 12 MWH using a back pressure turbo generator set with back pressure steam . There are two boilers and both are coal fired each of 70 T/hr steam rising capacity. (ii) Water The water is drawn from the Lower Ganges Canal to meet the needs of the DIL factory to the 2 reservoirs of 40 million gallons and 30 million gallons respectively. . Effluent Treatment Industrial effluent emanating from non-nitrogenous effluents does not contain free ammonia and contains other relevant pollutants -14
(iii)
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within the allowable limits. The nitrogenous effluents contain ammonia and / or urea in concentrations is treated in the respective plant built in treatment facilities and recycled and used as make up water to cooling tower. (II) Manpower The plant has a skilled workforce that has been with the Company almost ever since the operations began. Raw Materials IOC has been the sole supplier of naphtha to DIL. Supplies are made mostly from Mathura. Koyali. Bogaingaon and Barauni refineries. Major quantity of naphtha is supplied from Mathura refinery and unloaded at unloading bay. Plant & Machinery The Plant & Machinery relating to the Fertilizer Undertaking consists of Ammonia manufacturing plants, Urea production plant viz. 3 (three) identical streams of Urea Plants, captive power plants, Naphtha Vapourisers, reformers, ammonia converter, pollution control equipment, pipe lines, fittings, railway siding, tube wells, storage tanks, together with other moveable assets including air conditioners, stand by systems, data processing machines, air conditioning plants, furniture & fixtures, vehicles, locomotive engines etc. The various processes and associated facilities for producing ammonia and urea are as follows: (i) Ammonia Plant The ammonia plant is designed to produce 1244T/day (1332T/day up rated) ammonia, is based on ICI Steam Naphtha Reforming Process. The plant is divided into three completely independent streams, each producing ammonia @415/T/day (444T/day up rated). Urea Manufacture The urea plant is a Mitsue Toatsu Total Recycle C process from TEC Japan, designed to produce 2046 T/day (2250T/day up rated) of prilled urea. It is divided into three completely independent parallel streams, each producing 682T/day (750T/day up rated). Urea Bagging
There are four packing lines 3 in operations and 4th stand by.Each line has two spouts and bags are applied to spouts
(III)
(IV)
(ii)
(iii)
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Case No.70/2006
manually. Each bag fills and drops on moving conveyor underneath at the interval of 6 seconds and travels to sewing conveyor for stitching by the sewing machines provided on pillars. (iv) Off-site Facilities The following facilities have been provided in the complex: (a) Naphtha Storage and Handling System Process and fuel naphtha consumed by the Fertilizer Plant is the product of the IOC refineries, delivered by rail and pipeline. From the IOC terminal at Panki naphtha is delivered through underground pipeline to the Storage tanks within the battery limits. PSR Plant The PSR unit is designed to de-sulphurise 500T/day (Up rated to 745 MT/day) of straight run naphtha, laden with total sulphur 1500ppm to give product having not more than 5 ppm sulphur. Inert Gas Plants These plants ensure the supply of about 1500 m/hr oxygen and moisture free good quality Nitrogen to the other process plants, which is used for purging of the vessels etc. It also supply 575 m of cracked gas for the start up of ammonia plants. Ammonia Storage & Handling System Ammonia storage and Handling System consists of two numbers of insulated ammonia storage tanks operating at 12 WG each having a nominal capacity of 1500 MT and associated refrigeration system. The refrigeration plant consisting of three compressors and condensers etc. is designed to receive 18T/hr liquid ammonia at 30C.
(b)
(c)
(d)
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11.2
TEA UNIT: The Tea gardens and processing factories of the company are situated in the State of West Bengal and have approximately 17 million kg per annum of tea manufacturing facility. The details of Tea estates of the company are as under:
1 2 3 4
5
Location Bagracote Birpara

Dumchipara
Hectares 479.62 886.39 660.28 498.96 775.47 629.9 415.95 727.61 284.52 605.06 183.97 445.2 6592.93 769.57 194.29 963.86 7556.79
6 7 8
9
10
11
12
Garganda Gungaram Hantapara Kilcott Lankapara Marybong Nagaisuree Runglee Tulsipara Sub Total Projects Terai Land Madanhat Land Sub Total Total
All the 12 factories of the DIL are having complete processing facility for manufacturing about 17 million kg Tea per annum The electric power is available from WBSEB and it also has standby captive arrangement through DG sets. All incoming green tea leaves are collected from the garden and are weighed and then sent to Withering house for proper withering to reach about 65-70% withered leaves followed by Crushing and Rolling by CTC machines, Drying and Grading and then inspected and tested by QA Deptt followed by Packing and Despatch. It is ensured that Quality products are supplied to the market. The Company has about 19500 personnel on its roll and during peak season it also deploys temporary labour for its operations. Due to severe liquidity crisis faced by the Company, replacement of some of the old equipments could not be carried out in the past, which has now been undertaken to reduce the cost of processing.
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12.
THE REHABILITATION SCHEME The Rehabilitation Scheme envisages following strategy for revival of the company:
i. De-merger of Fertilizer Unit into a new company KFCL ( Kanpur Fertiliser & Cement Ltd) at book value of assets of Rs 101.14 Cr and liabilities of Rs 388.43 Cr (at settlement amount) with share exchange ratio of 1 equity share of KFCL for 40 equity shares of DIL and Infusion of fresh funds of Rs 742.77 Cr out of which Rs 400 Cr in the form of equity and Rs 342.77 Cr in the form of interest free secured loans into the new company. ii. OTS of dues of secured creditors at Rs 225 Cr against principal o/s of Rs 570.15 Cr (39.46% payment of principal dues), Addl working capital o/s wc dues of Rs 46.55 Cr to be settled at 100 % out of which Rs 14.34 Cr already paid while Rs 60 Cr to continue as working capital for tea division. iii. Settlement of other liabilities Other Secured Lenders (OCD NCD and secured deposits Rs 11.80 Cr at Rs 5.78 Cr (49% payment) Unsecured Lenders: ICD, FCCB & OCD of Rs 176.10 Cr at Rs 44.03 Cr (25% payment) / Fixed Deposits of Rs 77.73 Cr at Rs 66.07 Cr ( 85% payment). iv. Settlement of unsecured creditors of Fertiliser Undertaking and Residual DIL @25% of principal dues: v. Payment of statutory dues vi. Settlement of dues of the workmen of the Fertilizer Division
vii. 60% de-rating of share capital of DIL viii. Capital expenditure of Rs 229.30 Cr on Fertiliser Plant: ix. Infusion of fresh funds of Rs 11.65 Cr in the form of equity and Rs 26.85 Cr interest free unsecured loans / equity in DIL. x. Conversion of existing unsecured loans of Rs 30.56 Cr brought in by the promoters into equity at par, post derating: xi. Relief and concessions from various concerned parties: 12.1 De-merger of Fertilizer Unit into a new company:
Corporate restructuring of DIL is proposed by way of de-merger of all assets of the fertilizer undertaking at its book value of Rs 101.14 Cr and liabilities of Rs 388.43 Cr (at settlement amount) and transfer by way of a Strategic Joint Venture between the existing Promoters of DIL and M/s Jaiprakash Associates Ltd and vesting of the said undertaking into a new company namely Kanpur Fertilizers & Cement Ltd. ( KFCL or the Transferee Company ), leaving the tea operation in DIL. KFCL will be a wholly owned subsidiary of M/s. Jaypee Uttar Bharat Vikas Pvt Ltd ( JUBVPL) which in turn is a 50:50 Joint Venture formed between
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the existing promoters ( through their Group Company- M/s. ISG Traders Ltd ) and M/s Jaiprakash Associates Ltd.( through their WOS - M/s Jaypee Fertilizers & Industries Ltd.). The holding structure of KFCL is set out below:
i)
Kanpur Fertilizers & Cement Ltd (KFCL) (wholly owned subsidiary of

JUBVPL)
It is a wholly owned subsidiary of JUBVPL which has been formed with the initial share capital of Rs 10 lakh which will be increased by Rs 400.63 Cr on allotment of equity shares of Rs 400 Cr to JUBVPL and Rs 0.53 Cr to the existing share holders of DIL in terms of the scheme. ii) Jaypee Uttar Bharat Vikas Pvt. Ltd. (JUBVPL) ( Joint Venture Company) It is a 50:50 JV Company of Jaypee Fertilizers & Industries Ltd. ( Jaypee Group) and ISG Traders Ltd. ( existing Promoter Group) has been formed with the initial equity share capital Rs 15 lakh which is held by Jaypee Fertilizers & Industries Ltd. and ISG Traders Ltd. in the ratio of 50:50 which will be enhanced to Rs 20 Cr in the equal ratio. iii) ISG Traders Ltd (ISGTL) (Existing Promoter Group) The existing share capital of the company is Rs 22.86 Cr out of which 92.98% shares are held by the Promoters and associate companies. Balance equity is with the non promoters entities / public. iv) Jaypee Fertilizers & Industries Ltd. (JFIL) (Jaypee Group) It is a wholly owned subsidiary (WOS) of M/s Jaiprakash Associates Ltd (JAL)( Strategic Investor) has been formed with the initial share capital of Rs 25 lakh by JAL. The equity capital of this company shall be increased to Rs 250 Cr or more by M/s JAL / its associates.
12.1.1 Rationale / Justification for De-merger:

Due to non operation of the fertilizer unit, the Company has been continuously incurring huge losses and as a result , performance of the Tea units of the company has also suffered very badly. Due to the substantial requirement of working capital for the operation of fertilizer plant the funds of the company remained utilized in the said unit and retrospective downward revision of RPS by GOI, the requirement of funds of Tea unit could not be met. Further, businesses of Fertilizer and Tea are entirely unrelated and they do no have synergies of operations and have different dynamics, require different strategies for growth and different focus for alliance / consolidation. In view of the same and to cure the problems, which are being faced by the Company, it has been proposed that Fertilizer undertaking of the Company be separated from the Tea undertaking, so that adequate attention is paid by the separate Board of Directors to the
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respective businesses and the adverse conditions prevailing, in any, of these businesses do not affect the business of other undertaking. The de-merger shall also enable the respective business undertakings to raise the funds, which are needed for their revival based on their own strengths. The Company s liabilities would substantially reduce upon settlement / payment of dues of creditors , out of the funds to be inducted by JUBVPL the JV Co. , and conversion of feed stock of fertilizer plant from Naphtha to Gas cum Naphtha along with additional capital expenditure on energy saving measures and revamping the plant will improve the operational efficiency of the fertilizer plant which, in turn, is expected to turn both the companies profitable / viable on long term basis. The Scheme of Arrangement between DIL and KFCL for proposed De-merger Scheme is as per Annexure A . The board of M/s Duncans Industries Ltd in its meeting held on 17.06. 2010 has approved the participation of M/s Jaypee Fertilizers & Industries Ltd.(a Jaypee Group Co) as a strategic investor for the revival and rehabilitation of the company's fertilizer unit at Panki, Kanpur through JUBVPL the JV Co. of M/s Jaypee Fertilizers & Industries Ltd and M/s ISG Traders Ltd, a group company of the existing promoters of DIL, upon sanction of the Rehabilitation Scheme and de-merger of the fertilizer undertaking into a separate entity i.e. KFCL.
12.1.2 Share Exchange / Swap Ratio :

The Fertilizer undertaking is getting liabilities of Rs 1182.19 Cr against assets of Rs 101.13 Cr as per book value being transferred to KFCL as on 01.10.2010. The net assets value is Rs (-) 1081.06 Cr as per book value as on 30.9.2010. As per estimated fair value of assets, the net assets value is arrived at Rs (-) 732.20 Cr after accounting for liabilities of Rs 1182.19 Cr and contingent liabilities of Rs 22.97 Cr( Total Liabilities: Rs 1205.16 Cr) whereas, the assets are valued at Rs 336.40 Cr ( Fixed assets Rs 286.75 Cr and current assets: Rs 49.65 Cr). Exchange ratio of 1 equity share of KFCL for 40 equity shares of DIL is proposed as per Report dated 27.10.2010 of M/s Chaturvedi & Partners, Chartered Accountants, New Delhi, on exchange ratio for the proposed de-merger of fertilizer undertaking of the company with Kanpur Fertilizer & Cement Ltd. As per valuation report, to arrive at the exchange ratio, a nominal value of Rs 0.01 paisa per share has been assigned to the shares of DIL which subsequent to the restructuring and reduction of capital as proposed works out to Rs 0.25/- per share of Rs 10/- of DIL ( Post restructuring and reduction and consolidation of share capital) and the same has been considered for the purpose of determining share exchange ratio.
12.1.3 Approval of Secured Lenders for de-merger:

As per the minutes of CDR Lenders Meeting held on 30.8.2010, ARCIL, the largest lender with an exposure of Rs 319.16 Cr (47.16%) is agreeable In principle to the de-merger of the Fertilizer Divn and
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Jaypee Group forming a joint venture company. CBI, SBI, SBT
and SBP vide their letters dated 15.02.2011 , 25.02.2011 , 26.02.2011 and 07.03.2011 respectively have also conveyed their in principal approval to the restructuring / de-merger of the Fertilizer Division and OTS proposal contained in the DRS. CDR has also conveyed the approval of OTS and de-merger of the Fertiliser Division vide its letter dated 24.02.2011. Thus the secured lenders having 97.47% of the principal dues have already accepted the OTS proposal and de-merger of the Fertiliser Division of the Company. 12.1.4 Infusion of Funds in KFCL for revival of Fertilizer Undertaking: Infusion of fresh funds of Rs 742.77 Cr out of which Rs 400 Cr in the form of equity and Rs 342.77 Cr in the form of interest free secured loans into the new company i. e. Kanpur Fertilizers & Cement Ltd. (KFCL- Transferee Company ) by M/s. Jaypee Uttar Bharat Vikas P Ltd. (JUBVPL) a Joint Venture Company (JV Co.) incorporated by M/s Jaypee Fertilizers & Industries Ltd (JFIL) a wholly owned subsidiary (WOS) of the Strategic Investor, viz., M/s. Jaiprakash Associates Ltd. and ISG Traders Ltd, a group company of the existing promoters of DIL, is proposed.
(i)
As the existing secured lenders have expressed their inability to infuse further funds, a strategic investor has been proposed to be inducted to infuse fresh funds required for revival of the fertilizer undertaking.
JAL or Strategic Investor ) has evaluated the potential of the fertilizer business of DIL and considering long term viability of the fertilizer business, has agreed to invest for revival of fertilizer undertaking . JAL, and its wholly owned subsidiary (WOS) i.e. M/s Jaypee Fertilizers & Industries Ltd. has agreed to infuse fresh funds in the KFCL through the JV Co. M/s. Jaypee Uttar Bharat Vikas Pvt. Ltd. and / or directly by the WOS, for revival and rehabilitation of the Fertilizer Undertaking of DIL on De-merger of the Fertilizer Undertaking of DIL, i.e., all assets, liabilities, contracts, rights, and titles from DIL and its transfer and vesting into KFCL on as is where is basis. In addition, KFCL shall also bear certain other identified liabilities of Rs 115.88 Cr which shall be paid by DIL out of the funds to be provided by KFCL.
(ii) M/s. Jaiprakash Associates Ltd ( herein after referred to as
(iii)
A Joint Venture Company M/s. Jaypee Uttar Bharat Vikas Pvt Ltd (here in after referred as JV Co. JUBVPL) has been incorporated, the existing and future equity share capital of which shall be held in the ratio of 50:50 by WOS of Strategic Investor and ISG Traders Ltd ( a part of existing promoter group of DIL) for participating in the revival and
rehabilitation
of
fertilizer business -21
of DIL on mutually
Case No.70/2006
agreed terms. The Strategic Investor and existing promoters of DIL shall jointly assist for technical, financial and management expertise required for completing the revival and rehabilitation of the Fertilizer Undertaking of DIL and ensure OTS of the dues of secured creditors, settlement of dues of the secured creditors other than the FI s and Banks, unsecured debts / creditors including settlement of the dues of the workers, employees, etc. and other unsecured liabilities. (iv) JUBVPL the JV Co based on de-merger of fertilizer undertaking is agreeable to induct funds in KFCL required for payment of OTS of secured lenders, settlement of dues of the secured lenders other than the FI s and Banks, unsecured debts / creditors including settlement of the dues of the workers, employees, other unsecured liabilities and for meeting the requirement of (i) converting the plant from Naphtha to a dual feed stock i.e. Gas cum Naphtha based plant, energy saving measures and revamping of plant etc. involving capital expenditure of approx. Rs 229.30 Cr which is essential as per the policy of the GOI as well for long term viability of the plant, (ii) start-up of the fertilizer plant, and (iii) working capital required for operation of fertilizer plant.
12.1.5
a)
M/s Jaiprakash Associates Ltd (JAL):

Brief Profile:
Jaiprakash Associates Ltd, the flagship Company of the Jaypee Group, an infrastructure conglomerate involved inter-alia in manufacture & marketing of Cement; development of Expressways & Real Estate; Tourism & Hospitality, and has over 4 decades of experience in execution of river valley and hydroelectric power projects undertaking EPC and turnkey contracts, as the lead construction company or as leader of consortia and through joint ventures. JAL has been involved in the implementation of hydro-electric projects across the country involving an aggregate generation of over 10,000 MW. The 900MW Baglihar Hydroelectric Project in Jammu & Kashmir, has been the largest EPC project executed in the country in Hydropower sector so far.
b) Shareholding pattern:
Sl. No. A. B. Category of shareholder Total No of shares Total shareholding as % of total no of shares
C.
Shareholding of Promoter and Promoter Group Public Shareholding Institutions Non-institutions Total Public Shareholding T0TAL (A)+(B)
97,70,92,441
45.99
76,28,77,132 38,46,65,060 114,75,42,192 2,124,634,633
35.91 18.10 54.01 100.00
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c) Financial Results:
(Rs\Cr)
YE 31st March Working Results Gross Turnover EBITD Interest Depreciation Exceptional Items Prior Period Adjustment Taxation Extraordinary Items Profit After Tax Financial Position Share Capital Share Capital Suspense Reserve & Surplus Equity Warrants Less : Misc. Expenditure to the extent not w/off Net Worth Secured Loans Unsecured Loans Deferred Tax Liabilities Total Liabilities Fixed Assets (Net) including CWIP Investments Deferred Tax Assets Net Current Assets Total Assets 2006 Audited 3,324.51 1,517.13 239.74 151.46 361.37 124.57 639.99 215.06 2,467.14 0.51 2,681.69 2,721.38 1,498.40 490.18 7,391.65 3,343.73 1,557.04 6.98 2,483.90 7,391.65 2007 Audited 3,578.35 1,040.21 257.25 163.05 205.01 414.90 219.24 2,653.71 0.14 2,872.81 3,685.95 1,829.81 499.43 8,888.00 5,150.09 1,778.74 9.32 1,949.85 8,888.00 2008 Audited 4,273.89 1,385.79 339.14 203.30 233.68 609.67 234.30 3,965.20 398.50 0.10 4,597.90 4,640.30 3,665.28 571.15 13,474.63 7,930.52 3,224.83 11.49 2,307.79 13,474.63 2009 Audited 6,147.93 2,068.63 504.32 308.97 4.36 353.97 897.01 236.76 43.60 6,258.85 158.80 3.86 6,694.15 7,338.28 5,767.89 720.04 20,520.36 11,899.85 4,465.20 30.41 4,124.90 20,520.36 2010 Audited 10,355.43 4,895.60 1,055.79 456.06 1,214.72 (0.70) 673.31 (211.94) 1,708.36 424.93 8,075.79 8,500.72 11,358.01 6,550.70 956.08 27,365.51 14,510.32 5,576.26 32.83 7,246.10 27,365.51
12.1.6
M/s Jaypee Fertilizers & Industries Ltd. (JFIL) (Wholly Owned Subsidiary of M/s Jaiprakash Associates Ltd): a) Brief Profile M/s Jaypee Fertilizers & Industries Ltd has been incorporated on 3.6.2010, under Companies Act, 1956, in the State of UP as a wholly owned subsidiary (WOS) of the JAL (Strategic Investor). Its authorized share capital is Rs 2,500 lakh and paid-up equity share capital is Rs 25 lakh. It has one of its objectives to undertake the business of manufacturing, selling and trading of fertilizers and related activities.
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b) Shareholding pattern:
S.No. 1. 2. 3. 4. 5. 6. 7. Name of shareholder Jaiprakash Associates Ltd. Shri J.P. Gaur Shri Manoj Gaur Shri Sunil Kumar Sharma Shri Suren Jain Shri S.D. Nailwal Shri Harish K. Vaid Total No of shares 249400 *100 *100 *100 *100 *100 *100 2,50,000
Total shareholding as a % of total number of shares
99.76 0.04 0.04 0.04 0.04 0.04 0.04 100.00
* Beneficial interest in these shares being held by Jaiprakash Associates Ltd.

12.1.7
M/s ISG Traders Ltd ( ISGTL): a group company of DIL:
a) Brief Profile,: The Company was originally incorporated as Standard General Assurance Co. Ltd in 1943 and the name was changed to S.G. Investment & Industries Ltd in 1977. The name was again changed to ISG Traders Ltd on 31.12.2002. The Company is mainly engaged in trading of paper. The Company has diversified its activities to carry on business of technical, engineering, consultancy, designing, drawing, engineering of plant and machinery used in various diverse industries. b) Shareholding pattern The authorised share capital of ISGTL is Rs 5277 lakh The issued, subscribed and paid-up share capital at present is Rs 2285.66 lakh comprising of 2,28,68,987 equity shares of Rs 10/- each. c) Equity Shareholding pattern (As on 31.03.2010):
A B. Category Promoters Holding Non- Promoters, Holding Total No of Shares held 2,12,63,860 16,05,127 2,28,68,987 % of Share holding 92.98 7.02 100.0
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d) Past Working Results and Financial Position: (Rs / Lakh) Y.E. 31.06. 06 31.03. 07 31.03. 08 31.03. 09 (15 months) (9 Months) Working Results Audited Audited Audited Audited Gross Income 1198 652 2790 1112 EBIDT 962 -1288 1097 670 Interest 637 243 567 605 Depreciation 32 18 23 22 Taxation 2 44 1 PAT Financial Position Share Capital Reserves and Surplus Secured Loans Unsecured Loans Total Liabilities Fixed Assets (Net) Investments Net Current Assets Accumulated Losses Total Assets Net Worth 291 1695 22103 3549 1569 28916 944 18237 6544 3191 28916 20606 -1549 1695 22103 3798 1267 28863 959 16237 6926 4741 28863 19057 462 1695 22094 3826 1325 28940 936 14761 8964 4279 28940 19510 42 2286 24740 4967 535 32528 914 23194 8420 0 32528 27026
31.03.10 Audited 1703 971 839 21 111 2286 24850 7992 537 35665 893 25690 9082 0 35665 27136
12.1.8 M/s Jaypee Uttar Bharat Vikas Pvt Ltd (JUBVPL) (JV Co.): a) Brief Profile M/s Jaypee Uttar Bharat Vikas Pvt Ltd has been incorporated on 31.5.2010, under the Companies Act, 1956 in the State of UP. Its authorized share capital is Rs 100 lakh and paid-up equity share capital is Rs 15 lakh. It has one of its objectives to undertake and promote the business of manufacturing, selling and trading of fertilizers and related activities, directly or through promoting / investing companies.
b) Board of Directors
Name ( S/Sh) Suren Jain ( Nominee of JFIL) S.D. Nailwal ( Nominee of JFIL) Age Qualification 40 Degree in Production Engg. 63 Fellow of ICSI Experience Designation 19 years in corporate Chairman planning, finance and management 41 years in project Director financing , corporate planning and secretarial work. M.A. (Eco) and Ex- ED (F&A) SAIL Director ICWA M.Com. LLB., Redt. ED Delhi Stock Director FCS,Dipl. In Exchange Business Adm.
S.D. M. Nagpal ( Nominee of ISGTL) R. K. Pandey (Nominee of ISGTL)
69 71
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JFIL and ISGTL shall have representation on the Board of Directors of JUBVPL the JV Co. in proportion of their respective shareholding i.e. 50:50. Existing board of directors of the JV Co is as under: c) Shareholding pattern:
S. No.
Name of shareholder ( S/Sh)
Total no of shares
1.
2. 3. 4. 5. 6. 7.
Manoj Gaur Sameer Gaur Sunil Kumar Sharma Suren Jain Harish K. Vaid M/s Jaypee Fertilizers & Industries Ltd. ( JFIL) M/s ISG Traders Ltd. (ISGTL) Total
*2000 *2000 *2000 *2000 *2000 65000 75000 1,50,000
Total shareholding as a % of total number of shares 1.33 1.33 1.33 1.33 1.33 43.34 50.00 100.00
* Beneficial interest in these shares being held by Jaypee Fertilizers & Industries Ltd. 12.1.9 a) M/s Kanpur Fertilizers & Cement Ltd (KFCL): Brief Profile Kanpur Fertilizers & Cement Ltd has been incorporated on 31st May, 2010, under the provisions of the Companies Act, 1956, in the State of Uttar Pradesh. Its authorized share capital is Rs 10 Cr and paid-up equity share capital is Rs 10 lakh. It has one of its objectives to undertake the business in manufacturing, selling and trading of fertilizers and related activities.
b) Board of Directors
S.No. 1. Name ( S/Sh) Manoj Gaur, Chairman Ajay Sharma, S.D. M. Nagpal ( Nominee of ISGTL) R. K. Pandey ( Nominee of ISGTL) Age 46 Qualification
B.E. Civil (BITS Pilani)
Experience
2. 3. 4.
55 69 71
25 years in Cement Production and Marketing, Corporate and Finance. LLB. Master in Business 25 years in HR & IR and Management (BHU) Cement Production Planning and Marketing M.A. (Eco) and ICWA Ex- ED (F&A) SAIL M.Com. LLB.,FCS,Dipl. In Business Adm. Retd. ED Delhi Stock Exchange
JFIL and ISGTL shall have representation on the Board of Directors of the KFCL in proportion of their respective shareholding i.e. 50:50 in JUBVPL the JV Co.
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c) Shareholding pattern:
S.No Name of shareholder (S/Sh) . Manoj Gaur 1. Sameer Gaur 2. 3. 4. 5. 6. 7. 8.
Suren Jain S.D. Nailwal Harish K Vaid R.S. Kuchhal M.M. Sibbal M/s Jaypee Uttar Bharat Vikas P Ltd (JUBVPL) Total Bharat Vikas Pvt. Ltd.
Total no of shares
*8000 *7000 *7000 *7000 *7000 *7000 *7000 50000 1,00,000
% Shareholding
8.00 7.00 7.00 7.00 7.00 7.00 7.00 50.00 100
* Beneficial interest in these shares being held by Jaypee Uttar 12.2 a) OTS of dues of secured creditors at Rs 257.21 Cr against principal o/s of Rs 616.71 Cr An amount of Rs 257.21 Cr shall be paid for payment of OTS amount of Rs 225 Cr and balance of additional working capital of Rs 32.21 Cr of Banks and Financial Institutions shall be paid by KFCL to the banks and financial institutions within 90 days from the date of sanction of the Scheme in full and final settlement of their dues. Principal outstanding of DIL to its secured lenders was Rs 676.70 Cr as on 31.3.2007 (including the outstanding against devolvement of bank guarantees ), out of which cash credit dues of Rs 60 Cr serviceable from tea operations would be retained in the residual DIL, and the balance amount of the principal dues aggregating to Rs 616.71 Cr, out of which Rs 14.34 Cr towards additional working capital has already been paid uptill 31.03.2010 by DIL, and the balance debt of Rs 602.36 Cr is proposed to be settled for Rs 257.21 Cr and the settled amount shall be transferred to KFCL.
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b)
Lender-wise principal dues outstanding as on 31.3.2010 are as follows:

(Rs\Cr)
Cash Credit to continue in Tea DIL Addl. WC disbursed in 2005 for Fertiliser Unit Balance of principal dues of Cash Credit, WCTL, TL s, Debentures Total Principal Dues % of dues Addl. WC already paid by DIL OTS Amount to be paid by KFCL
Lenders
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
State Bank of India ARCIL (ICICI) Central Bank of India ARCIL(PNB) ARCIL (IDBI & IDBI Bank) ARCIL (UCO Bank) ARCIL (Bank of Baroda) State Bank of Travancore Harsh Credit(HDFC) State Bank of Patiala SICOM PICUP* State Bank of India (SBICI) Antariksh (ICICI) WBIDC* Partly Convertible Debentures(SBI Trustee) TOTAL
42.95
7.68 14.20
102.42 96.97 69.29 62.86 67.22 33.00 28.93 24.56 20.00 18.01 16.69 13.49 3.32 7.50 3.66 2.23
153.05 96.97 83.49 78.86 67.22 40.09 36.02 30.42 20.00 18.01 16.69 13.49 9.00 7.50 3.66 2.23
22.62% 14.33% 12.34% 11.65% 9.93% 5.92% 5.32% 4.50% 2.96% 2.66% 2.47% 1.99% 1.33% 1.11% 0.54% 0.33%
7.68
40.42 38.27 41.54 28.64 26.53 20.11 18.51
11.37
4.63
0.80
7.09 7.09 5.86
5.86
9.69 7.89 7.11 6.59 5.32 1.31 2.96 1.44 0.88
5.68
60.00
46.55
570.15
676.70
100.00 %
14.34
257.21
* The aggregate dues of WBIDC and PICUP constitute 2.53% of the total dues of the secured creditors. They should also accept the OTS offer on the same lines as accepted by majority secured creditors constituting of 97.47% of secured debts c) Out of the working capital facilities of Rs 60 Cr to be retained in DIL, WCTL of Rs 24.31 Cr ( SBI share of Rs 21.47 Cr and SBICI share of Rs 2.84 Cr) and loan of Rs 11.37 Cr being share of ARCIL will be settled by DIL. Upon receipt of above OTS amount and balance of additional working capital, all the dues of the lenders shall stand settled without any further act, deed or thing to be performed and all procedural matters as to filing of necessary forms and returns for -28
d)
Case No.70/2006
release of securities shall be done by all the secured lenders simultaneously. e) All securities including collaterals provided by the promoters of DIL / their associates in connection with the said facilities shall stand discharged / released by the lenders and all the title deeds and other documents kept as / evidencing security with respect to the assets (movable and immovable) of the Fertilizer Undertaking shall be released and delivered by the secured lenders in favour of and to KFCL and all the assets of the Fertilizer Undertaking shall be free from all and any existing encumbrances. Upon payment of OTS amount, the security on the assets of the Tea Division including personal guarantees of the promoters for WCTL / cash credit facility of Rs 60 Cr pertaining to Tea Division along with interest and other penal charges thereon, to be retained by the secured lenders. All other securities and personal guarantees provided as collaterals by the promoters / associates of DIL shall stand released by the lenders. All the secured creditors shall waive interest, coupons, penal /compound interest, balance of the principal amount, other charges / claims, rights etc. payable in respect of the above mentioned loans and cumulative preference shares held by secured lenders issued to them against part of the unpaid interest shall stand cancelled on sanction of the Scheme. In CDR MC cum joint CDR Lenders Meeting held on 30th August, 2010, SBI and SBP have in principle agreed to the settlement proposal as contained in the DRS subject to the final approval of their appropriate authority and CBI has given its in principle consent to the settlement proposal. ARCIL vide its letter dated 27.08.2010 also stated that they are in principle agreeable to the de-merger of the Fertilizer Division through a JV with the Jaypee Group and DRS may be submitted to BIFR for circulation but they would communicate their decision on the settlement proposal as contained in the DRS after their necessary internal approval. Strategic Investor (Jaypee Group) has also conveyed their acceptance to proposal of the CDR lenders to bring in 50% of the settlement amount to be kept in a ESCROW Account with SBI (OA) on sanction of the Scheme. Further in the Joint Stakeholders Meeting (chaired by SBI ) held on 1.10.2010. ARCIL reiterated its in principle consent to the demerger of the Fertilizer Division and advised DRS may be
f)
g)
h)
i)
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Case No.70/2006
submitted to the Board for circulation but they would communicate their decision on the settlement proposal as contained in the DRS after their necessary internal approval as stated in CDR MC cum joint CDR Lenders Meeting held on 30th August, 2010.
j)
The other lenders viz SBT, SICOM, Harsh Credit Pvt. Ltd. and Antrakish Vyapar Pvt. Ltd. have also conveyed their in principle acceptance to the OTS proposal. However, PICUP ( having 1.99% share in principal dues) has informed that the OTS proposal is not as per policy of the Corporation where as WBIDC (having 0.54% share in principal dues) vide its letter dated 10.11.2010 informed that OTS as envisaged with the secured lenders is not acceptable to them. ARCIL vide its letter dated 06.01.2011 have agreed to the de-merger of the Fertilizer Division through a JV Co with Jaypee Group and settlement amounts proposed to be paid to the secured lenders as envisaged in the DRS. Thus secured lenders having 97.47% of the principal dues have already accepted the OTS proposal and de-merger of the Fertiliser Division of the Company.
k)
l)
12.3 a)
Settlement of other liabilities:

Other Secured Lenders, Unsecured Lenders / Debts/Fixed deposits
The Company is having principal amount of Rs 11.80 Cr of secured optionally convertible debentures (OCD), nonconvertible debentures (NCD s) and deposits (against the security of investments held by DIL) from various companies / individuals and it is proposed to settle with them for Rs 5.78 Cr at par with OTS with Banks / FI s. OTS amount of Rs 5.78 Cr payable as above for settlement of other secured debts excluding the secured debts of FIs and Banks, will be paid by DIL out of the funds to be provided by KFCL within 90 days of sanction of Scheme by BIFR. Upon above payment all the securities including collaterals provided by the DIL / promoters / associates, etc. in connection with the said dues shall stand discharged and released by the debenture and deposit holders in favour of DIL. DIL shall have exclusive right on these investments. The Company had issued FCCB in 1996 aggregating to Swiss Francs 50 million to foreign investors with a maturity period of seven years. The FCCB holders have exercised their put option in 2001 and proceedings for recovery are pending before Hon ble High Court at Calcutta. The said dues shall also be settled at, 25% of the principal outstanding as on cut off date on converting -30
b)
c)
Case No.70/2006
to INR at exchange rate prevailing on the date of exercising the put option by FCCB holders, i.e. Rs 36.44 Cr and shall be paid by DIL out of the funds to be provided by KFCL in three equal annual interest free installments after a moratorium of one year from the date of sanction of scheme by BIFR. d) The principal amount of Fixed Deposits of Rs 77.73 Cr as on 30.9.2010 shall be settled at 85% and Rs 66.07 Cr will be paid by DIL in full and final settlement out of the funds to be provided by KFCL. The repayment shall commence within 90 days and shall be completed within 180 days from the date of sanction of the Scheme. The outstanding dues of inter corporate deposits (ICDs) from various bodies corporate and 15% optionally convertible debentures, shall be settled at 25% of the principal outstanding of Rs 30.10 Cr and Rs 25 lakh respectively as on the cut off date for Rs 7.53 Cr and Rs 6.25 lakh respectively, and shall be paid by DIL out of the funds to be provided by KFCL in 3 equal annual interest free installments after a moratorium of one year from the date ofsanction of Scheme. Other Liabilities: Settlement of unsecured creditors of Fertiliser Undertaking and Residual DIL @25% of principal dues: Unsecured loans, unsecured trade creditors and other liabilities relating to Fertilizer Undertaking and residual DIL shall be settled to the extent of 25% of the principal amount thereof in installments. IOC: The outstanding dues of IOC, will be settled at 25% of the principal outstanding of Rs 56.69 Cr as on the cut off date for Rs 14.17 Cr, and shall be transferred to and paid by KFCL in 3 equal annual interest free installments after a moratorium of one year from the date of sanction of Scheme. KESCO: The outstanding dues of KESCO for supply of power to the fertilizer plant amounting to Rs 81.13 Cr will be settled at 25% as on the cut off date for Rs 20.28 Cr, and shall be transferred to and paid by KFCL in 3 equal annual interest free installments after a moratorium of one year from the date of sanction of Scheme
e)
12.4
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Case No.70/2006
12.5
STATUTORY DUES: The outstanding amount of statutory dues comprising State and Central Sales Tax / Trade Tax / VAT, Fringe Benefit Tax, Kanpur Nagar Mahapalika and Kanpur Cantonment Board Taxes, Provident Fund, and ESI, employees dues including contribution to various funds ( gratuity and pension funds) and other unsecured creditors / liabilities relating to Fertiliser Undertaking shall be transferred after the grant of waivers as envisaged in the Scheme, to KFCL. The statutory dues comprising PF, Cess on Tea Green Leaf, employees dues including contribution to various funds ( gratuity and superannuation funds), dues of the other unsecured creditors / liabilities etc. relating to the Tea business shall be paid by DIL after grant of waivers as envisaged in the Scheme.
12.6 Settlement of dues of the workmen of the Fertilizer Division : Settlement of dues of the workmen of the Fertilizer Division is proposed in terms of Registered MOU entered with the recognized workmen union i.e. IEL Employees Union dated 06.06.2010 and about 99% workmen have also affirmed the terms and conditions of the MOU. Settlement with the Workmen of Fertilizer Division: The production at fertilizer plant was suspended / discontinued from 18th December, 2005. Except workmen of essential services, guest house, other workmen were allowed special leave from 1.06.2006. A Memorandum of Settlement dated 6th June, 2010 ( MOS ), has been executed between the workers through their representing union i.e. IEL Employees Union ( IELEU ), and DIL and KFCL, which inter-alia contains provisions for settlement of all the dues, claims, including statutory dues of the permanent and casual workmen of Fertilizer Undertaking, provisions for payment of special gratuity, ex-gratia payments, and provisions for withdrawal of all legal proceedings by all workers / union. It has been agreed by IELEU that other than the payments to be made to the workers under the MOS, no other payments, whether statutory or otherwise, are required to be made to such workers who were in the employment of DIL with respect to the Fertilizer Undertaking. The MOS also provides new terms of employment on which the permanent workmen of Fertilizer Undertaking shall work after reopening of the plant. -32
Case No.70/2006
12.7
60% de-rating of share capital of DIL: As the losses have eroded the complete net-worth of the Company and the paid-up value of equity shares of the company does not reflect their true value, therefore existing paid-up equity share capital amounting to Rs 53.22 Cr shall stand de-rated by 60%. The 8.25% Redeemable Cumulative Preference Shares amounting to Rs 9.50 Cr shall also stand reduced by 60%. As part of the restructuring under CDR, unpaid interest amounting to Rs 165.98 Cr of banks / financial institutions was converted into 0.001% Cumulative Redeemable Preference Share (CRPS). Since the principal dues of the banks and FI s shall be settled on OTS basis, their rights in existing CRPS shall be extinguished and written off fully. The amount outstanding in capital redemption reserve of Rs 15 Cr and debenture redemption reserve of Rs 11.87 Cr shall stand transferred / adjusted to / from accumulated losses.
12.8 Capital expenditure of Rs 229.30 Cr on Fertiliser Plant: Conversion of fertilizer plant from Naphtha-based feedstock to Gas cum Naphtha based dual feedstock together with energy saving measures and revamping of the plant involving expenditure of Rs 229.30 Cr.
12.8.1 Conversion of feedstock of fertilizer plant from Naphthabased to Gas cum Naphtha based dual feedstock, energy saving measures and revamping of plant: (i) Urea industry in India comprises of 30 plants, out of which 15 plants are gas based, 8 plants are naphtha based and 7 plants are based on other feedstock. In terms of capacity, 60% is gas based and 40% is based on naphtha and other feedstock i.e. almost half of the country s fertiliser capacity is still not gas based. While the need to convert to gas is well established as per the policy of GOI, however availability of gas continues to be an area of concern. In view of the GOI policy, all non-gas based i.e. FO / naphtha based plants have to be converted to gas based plants. The site of DIL fertiliser plant at Panki is very strategically located and the HBJ pipeline is passing only 18 km away. Supply of gas to this site can be made available on creating the necessary facility by the GAIL. -33
(ii)
Case No.70/2006
(iii) On conversion of feed stock from naphtha to gas cum naphtha, the handicap of DIL in using expensive naphtha will get wiped out and for all practical purposes it will become a gas based plant enjoying competitive advantage over the remaining such operational plants. On conversion to gas along with energy saving measures, revamping of plant, etc. at an approximate cost of Rs 229.30 Cr to be incurred in a phased manner, the plant will be benefited by substantial saving in energy consumption from 7.847 MMKCal / Mte of Urea in case of naphtha to 6.887 MMKCal / Mte on Gas based. The operational efficiency including energy efficiency from the conversion will not be mopped up for a period of 5 years from the date of commissioning of the converted plant, as per new policy of the Government.
12.9 Infusion of fresh funds of Rs 11.65 Cr in the form of equity and Rs 26.85 Cr interest free unsecured loans / equity :
Infusion of fresh funds of Rs 11.65 Cr in the form of equity post de-rating of existing equity capital and Rs 26.85 Cr by way of interest free unsecured loans/equity in 3 installment in 2011-12, 2012-13 and 2014-15 by the Promoters / Associates is proposed into DIL. 12.10 Conversion of existing unsecured loans of Rs 30.56 Cr brought in by the promoters into equity at par, post de-rating: Conversion of existing unsecured loans of Rs 30.56 Cr brought in by the promoters into equity at par after de-rating of existing share capital is proposed. 12.11 Relief and concessions from various concerned parties: The Scheme also envisages grant of relief and concession by the agencies / authorities including Central Govt, State Govt of UP, Trade Tax Department of UP, Kanpur Electric Supply Company (KESCO), Indian Oil Corporation (IOC), Govt of West Bengal, CBDT, PF Authorities, ESI, and employees etc as stated below.
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13.0 COST OF SCHEME AND MEANS OF FINANCE :

13.1 Cost of Scheme:
The cost of the scheme of KFCL (Fertilizer) and DIL has been estimated as Rs. 1059.40 Cr, the break up of which is as under:Cost of the Scheme 1 2 3 4 5 Payment of OTS Dues of TL and balance of additional working capital to Banks / FI s Payment of Late payment charges (Arcil and CBI) OTS Payment to Other Secured Dues (debentures, ICDs) out of funds from KFCL Repayment of WCTL and loan Payment of other unsecured debts i.e. FCCB / FRCN Rs.36.44 Cr, Fixed Deposits Rs 66.07 Cr,, Inter Corporate Deposits Rs.7.53 Cr and OCD s Rs.0.07 Cr aggregating to Rs. 110.10 Cr out of funds from KFCL and Housing Board Rs. 0.08 Cr) Statutory Dues Payment of Workmen / Employees Dues Other Unsecured Creditors / Liabilities Funds for settlement of dues of other secured debts (i.e. secured debentures and deposits Rs. 5.78 Cr and unsecured debts i.e. Fixed Deposits, Inter Corporate Deposits and OCD s aggregating to Rs.110.10 Cr) Working Capital for Fertilizer already brought in Increase in Current Assets Capital expenditure
Total
(Rs/ Cr) KFCL DIL 257.21 5.65 5.78 35.69 110.19
Total 257.21 5.65 5.78 35.69 110.19
6 7 8 9
1.74 77.61 49.99 115.88
9.03 10.77 34.85 .112.46 23.68 .73.67 -115.88 -
10 11 12
30.56 165.89 229.30 897.62 10.00 12.23 161.78
30.56 175.89 241.53 1059.40
13.2 Justification for cost of scheme:

(i). Payment to the Banks and Financial Institutions of Rs 257.21 Cr has been provided in the cost of the Scheme. Repayment of WCTL (SBI and SBICI) of Rs 24.32 Cr and loan (ARCIL) of Rs 11.37 Cr have been provided in the cost of scheme out of the total repayment WCTL / Loan of Rs 35.69 Cr envisaged by de-merged DIL (ii). Payment of dues of other secured lenders (secured by pledge of investments) of Rs 5.78 Cr has been provided. Payment of dues of unsecured lenders / debts aggregating to Rs 110.19 Cr viz., FCCB s - Rs 36.44 Cr , fixed deposits - Rs
(iii).
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Case No.70/2006
66.07 Cr and unsecured debentures and ICDs from bodies corporate -
Rs 7.59 Cr and Housing Board dues of Rs 7.37 lakh have been provided. (iv). For Payment of statutory dues comprising State and Central sales tax / trade tax / VAT, fringe benefit tax, provident fund, and ESI, employees dues including contribution to various funds (provident fund, gratuity and pension funds), dues of Kanpur Electric Supply Company (KESCO), Indian Oil Corporation (IOC), and other unsecured creditors / liabilities etc. an amount aggregating to Rs 129.34 Cr has been provided in the cost of the scheme, out of Rs 131.22 Cr, payable by KFCL. For payment of statutory dues comprising PF, Cess on green leaf, employees dues including contribution to various funds (gratuity and superannuation funds), dues of the other unsecured creditors / liabilities etc relating to Tea business, an amount aggregating to Rs 67.56 Cr payable by DIL from 2011-12 to 2015-16 has been provided. Increase in net current assets of Rs 165.89 Cr ( including cash and bank balances at the close of 31.3.2012) is envisaged for operation of Fertilizer Undertaking by KFCL during first 3 years of operation which will be reduced by Rs 50.86 Cr after conversion from Naphtha to Gas in 2014-15. Besides increase in net current assets for restart of the fertilizer plant, Rs 30.56 Cr were already provided for meeting the working capital requirement of the plant under CDR Restructuring, by the Promoters of DIL, has been included in the cost of the scheme. Net Working capital of residual DIL (Tea Undertaking) will increase by Rs 10 Cr and has been included in the cost of the Scheme. For the fertilizer unit, a Capital expenditure of Rs 229.30 Cr is envisaged for (a) Conversion of Fertilizer Plant from Naphtha based feedstock to Gas cum Naphtha based dual feedstock, and (b) Implementation of identified area of potential energy savings and revamping of plant. The funds for capital expenditure of Rs 229.30 Cr shall be arranged in KFCL by way of equity / preference / interest free unsecured loans from the JUBVPL the JV Co. in a phased manner. The conversion is essential as per the policy of the GOI as well for long term viability of the plant. For the Tea business, a Capital expenditure of Rs 12.23 Cr has been proposed during 2011-2012 for replacement of old CTC banks, mono rail in leaf housel, dryers, heaters, transformers etc. and drilling of tube wells / installation of booster pumps and other irrigation equipment for covering additional area of about 400 hect. -36
(v).
(vi).
(vii).
(viii).
Case No.70/2006
under irrigation in the tea gardens / factories of the improve the quality of tea and productivity . viii)
DIL to
Details of provision for Rs. 115.88 Cr in the Cost of Scheme: Loans (other than banks) of Rs 11.80 Cr secured against the investments of DIL and unsecured debts i.e. Optionally convertible debentures, fixed deposits, inter corporate deposits from body corporate and FCCB s aggregating to Rs 253.83 Cr were raised by DIL from time to time for meeting working capital requirement of the fertiliser unit. These debts are appearing in the Books of Accounts of DIL Head Office at Kolkata. Details of settlement amount Rs 115.88 Cr. provided in the Cost of the Scheme are as under: Rs. / Cr
O/s Principal Amount Secured Loans other than Banks 15 % Optionally Convertible Debentures 15% Redeemable NCD ICD's Bodies Corporate Sub-total Unsecured Loans 15% Optionally Convertible Debentures (OCD) Loans from Bodies Corporate Fixed Deposits FCCB Sub-total Total Settlement Amount in the Cost of the Scheme 2.54 0.64 2.60 5.78 0.06 7.53 66.07
5.20 1.30 5.30 11.80 0.25 30.10 77.73
145.75
253.83
36.44
110.10
265.63
115.88
All Liabilities relatable to the Fertiliser Undertaking (including the secured debts other than Banks / FI s and unsecured debts) are to be discharged by Kanpur Fertilizers & Cement Ltd (KFCL). Duncans Depositors Welfare Forum (DDWF) (representing the Fixed Deposit holders) had raised their concern in Joint Stakeholders Meeting about the proposed transfer of unsecured fixed deposits to the Fertiliser Undertaking. Large number of depositors are from West Bengal. Various depositors have filed recovery proceeding under the jurisdiction of Calcutta Courts, which are pending. DDWF has asked DIL to facilitate the settlement of their dues from Kolkata only so that unsecured lenders
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Case No.70/2006
do not face any difficulty post de-merger of the Fertiliser Undertaking and jurisdiction of Calcutta Courts should be maintained . Addressing the concern of the Deposit Forum, secured and unsecured debts (other than banks / FI s and unsecured trade creditors), relatable to Fertiliser business will continue in DIL to facilitate the settlement from Kolkata and funds aggregating to Rs 115.88 Cr for their settlement will be provided by KFCL. In the Cost of the Scheme of the DIL, repayment of secured debts other than banks Rs 5.78 Cr and unsecured debts Rs 110.10 Cr (excluding Rs 8 lakh for the dues of Housing Board) are included in respective items and aggregate inflow of Rs. 115.88 Cr for settlement of these liabilities from KFCL is stated by way of credit in the Scheme instead of adding to the cost of the scheme and means of finances of DIL. 13.3 Means of Finance: (Rs / Cr)
Means of Finance 1 Equity by JUBVPL the JV Co. / Promoters / KFCL
400.00
DIL
11.65 30.56 26.85 92.72 161.78
Total
411.65 30.56 369.62 247.57 1059.40
Associates 2 Unsecured Loans & Advances by Promoters * / 342.77 3 Debts by JUBVPL the JV Co./ JFIL Promoters and Associates 154.85 4 Internal Accruals Total 897.62 * Already brought in and will be converted into equity in DIL.
The total cost of the scheme is estimated at Rs. 1059.40 Cr, out of Rs 161.78 Cr is for DIL and Rs 897.62 Cr for KFCL the SPV of JUBVPL . For DIL, the funds required are proposed to be financed by way of infusion of equity ( Rs 11.65 Cr) , interest free unsecured loans ( Rs. 57.41 Cr) from promoter(s) of DIL and Rs 92.72 Cr from internal accruals. For KFCL, JUBVPL (the 50:50 JV Co) will induct Rs 400 Cr in KFCL as equity and raise interest free loan of ( Rs 342.77 Cr) from the JFIL WOS of JAL/Associates and Rs 154.86 Cr from internal accruals to finance the cost of Scheme
The cost of the Scheme of KFCL, estimated as Rs 897.63 Cr, is proposed to be financed by way of infusion of equity of Rs 400 Cr by JUBVPL (JV Co.) into the KFCL within 90 days from the date of sanction of the Scheme and Rs 342.77 Cr by way of secured debts to be infused by JUBVPL (JV Co.) over a period of 24 months commencing from 1st April, 2011, befitting the requirement to finance the working capital and capital expenditure, and balance from internal accruals as per the scheme. -38
Case No.70/2006
13.4
Mobilization of Funds: JUBVPL, the JV Co shall raise funds for investing in KFCL by way of issue of Equity Shares / debts. Equity shares in JUBVPL shall be issued to JFIL and ISGTL in existing proportion to the shareholding of these companies so that each of the company continue to hold 50% of the equity shareholding of JUBVPL ( JV Co.). JFIL (WOS of Strategic Investor) shall subject to compliance of applicable law and as per the sanctioned scheme provide / arrange loans to JUBVPL (JV Co.) so as to ensure that the JUBVPL(JV C o.) to induct the funds in KFCL as per the Scheme.
13.5 Cost of the Scheme and Monetary value of envisaged reliefs & sacrifices are as under:
(Rs. / Cr)
I. COST OF THE SCHEME (a) Cost of the Rehabilitation Scheme 1059.40 814.78 1874.18 411.65 400.18 811.83 43.32
(b) Monetary Value of Sacrifices Total I II. Promoters /JUBVPL the JV Co. / JFIL Contribution (a) Equity by Promoters / JUBVPL the JV Co./ Associates (b) Debts ( Interest free) by Promoters / JUBVPL the JV Co./ JFIL / Associates Total II (II) as % of (I)
13.6
Post Restructuring Shareholding Pattern of DIL: The existing equity share capital of the company is proposed to be reduced by 60% and then every five (5) equity shares of Rs 4/- each shall be consolidated into two (2) equity share of Rs 10/- each fully paid-up in terms of section 18(2)(1) of the SICA. The existing shareholding pattern, the shareholding pattern after de-rating of the existing equity and also the shareholding pattern after infusion of fresh / conversion of existing unsecured advances from the Promoters Group into equity (post de-rating)/ would be as follows: (Rs / Cr)
Existing
A. Promoter s Holding
Post deFresh rating Infusion / Conversion
Propose d Equity Pattern
Indian Promoters
B. Non- Promoters Holding
31.23
58.68
12.49
42.20
54.69
86.15
Institutional Investors
Non-Institutional Investors
1.50 20.49 53.22
2.82 38.50 100.0
0.60 8.20 21.29 42.20
0.60 8.20 63.49
0.94 12.91 100.00
Total
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Case No.70/2006
13.7
Post Restructuring Shareholding Pattern of KFCL Existing Issue of Shares

to the Shareholders of DIL
(Rs\Cr)
Proposed Fresh Infusion Equity Pattern
JUBVPL (JV Co.) DIL Shareholders in terms of the Scheme of Arrangement
0.10 0.00 0.10
0.00 0.53 0.53
400.00 0.00 400.00
400.10 0.53 400.63
Total
13.8
The sources for investment of Rs 400 Cr by JUBPVL ( the JV Company ) into the equity shares of its wholly owned subsidiary company namely M/s Kanpur Fertilizers & Cement Ltd (KFCL), are proposed as under:
(a)
Corporate restructuring of DIL is proposed by way of de-merger of all the assets and liabilities of fertilizer undertaking and vesting of the said undertaking into a newly incorporated company namely Kanpur Fertilizers & Cement Ltd (KFCL). KFCL is a wholly owned subsidiary of 50:50 Strategic Joint Venture company namely M/s Jaypee Uttar Bharat Vikas Pvt. Ltd. ( JUBVPL) the JV Co of the existing promoters of DIL ( through their group company - M/s ISG Traders Ltd ) and M/s Jaiprakash Associates Ltd (through their wholly owned subsidiary Jaypee Fertilizers & Industries Ltd). Induction of Rs 400 Cr in the form of equity shall be made in KFCL as per the scheme by the 50:50 Strategic Joint Venture company i.e. M/s Jaypee Uttar Bharat Vikas Pvt. Ltd. ( JUBVPL). The equity share capital of JUBVPL shall be contributed in the ratio of 50: 50 by the JV partners M/s ISG Traders Ltd (a group company of the existing promoters of DIL ) and M/s Jaypee Fertilizers & Industries Ltd (a wholly owned subsidiary of M/s Jaiprakash Associates Ltd). The share capital of JUBVPL will be increased initially to Rs, 20 Cr and then to such further additional capital as may be decided by the Board of Directors of the said JV Co . The said increased share capital shall be subscribed in the equal ratio by the JV partners M/s ISG Traders Ltd and M/s Jaypee Fertilizers & Industries Ltd . In addition to Rs 20 cr to be made available to the JV Co from initial equity as mentioned hereinabove, balance Rs 380 Cr shall be brought in by the JV partners directly or from their associate / group companies in JUBVPL in the form of equity or loans so as to induct Rs 400 Cr in KFCL by way of equity share capital. -40
(b)
(c)
(d)
(e)
Case No.70/2006
(f)
(g) (h)
Net worth of M/s Jaiprakash Associates Ltd (holding company of JV partner, Jaypee Fertilizers & Industries Ltd) is more than Rs 8000 Cr ( Net worth as per audited balance sheet as on 31.3.2010 being Rs 8500.72 Cr) Net worth of M/s ISG Traders Ltd is above Rs 270 Cr ( Net Worth as per audited balance sheet as on 31.3.2010 being Rs 271.36 Cr). In view of the fact that both the JV partners are having satisfactory financial back ground and commitment for rehabilitation and revival of the Fertiliser Undertaking, infusion of proposed funds in JUBVPL shall be ensured by the JV partners for induction in the equity of KFCL in terms of the scheme. An undertaking of the JV partners in this respect has also been submitted.
14.0
CUT OFF DATE : The Cut-off date for the purpose of the Scheme has been considered 30th September, 2010. 15.0 RELIEF AND CONCESSIONS: The Scheme envisages grant of following reliefs and concessions from various parties i.e. Secured lenders i.e Banks / FI s and other lenders, unsecured lenders, Central Government / Department of Fertilizer, Central Board of Direct Taxes, Statutory Authorities, U.P Government , U.P. State Electricity Board / U.P. Electricity Regulatory Commission/ KESCO, Government of West Bengal and other concerned parties. 15.1 OTS with Secured Creditors (against Term Loan, working capital): 15.1.1 Term Loans/Working capital from Banks/Others: OTS for Rs 225 Cr : State Bank of India including SBICL, Central Bank of India, State Bank of Travancore, State Bank of Patiala, ARCIL ( assigned debts of Punjab National Bank, UCO Bank, Bank of Baroda, IDBI, IDBI Bank, ICICI), WBIDC, PICUP, SICOM, Antariksh Vyapaar Pvt Ltd. (assigned debt of ICICI), Harsh Credit Pvt. Ltd. (assigned debt of HDFC) and PCD holders: (i) To accept OTS amount of Rs 225 Cr in full and final settlement of all dues outstanding in cash credit (excluding Rs 60 Cr which is to be retained out of the total existing working capital in DIL), WCTL, BG devolved, FITL, term loans, debentures. and after waiver of all simple / compound / penal interest, LD, balance of the principal dues, coupons / rights, other dues / charges etc. as on the date of sanction of the scheme. The said amount of Rs 225 Cr shall be transferred to and paid by KFCL, within 90 days from the date of sanction of the Scheme. Upon payment of OTS amount, the security on the assets of the Tea Division including personal guarantees of the promoters for WCTL / cash credit facility of Rs 60 Cr pertaining to Tea Division along with interest and other penal charges thereon, to be retained by the secured lenders. All other securities and personal guarantees provided as collaterals by the promoters / associates of DIL shall stand released by the lenders. -41
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Details of OTS amount of Rs 225 Cr payable to secured creditors excluding additional working capital covered under Para 15.1.2 are given below :
(Rs\Cr)
Secured Creditors State Bank of India Central Bank of India State Bank of Travancore State Bank of Patiala SBICI ARCIL(PNB) ARCIL (UCO Bank) ARCIL (Bank of Baroda) ARCIL(IDBI & IDBI Bank) ARCIL (ICICI) Antariksh (ICICI) Harsh Credit Pvt. Ltd.(HDFC) WBIDC* PICUP* SICOM Partly Convertible Debentures TOTAL
Outstanding principal 102.42 69.29 24.56 18.01 3.32 62.86 33.00 28.93 67.22 96.97 7.50 20.00 3.66 13.49 16.69 2.23 570.15
OTS Amount 40.42 27.34 9.69 7.11 1.31 24.81 13.02 11.42 26.53 38.27 2.96 7.89 1.44 5.32 6.59 0.88 225.00
(ii)
0.001% Cumulative Redeemable Preference Shares (CRPS) of Rs 100/each aggregating to Rs 165.98 Cr issued to the banks and financial institutions along with unpaid accrued amounting to Rs 0.65 Cr dividend till cut off date thereon shall stand fully written off in terms of the OTS settlement with the banks and Financial Institutions. In the event of default of payment of the amount of OTS as mentioned in sub-para (i) herein above on the due dates stipulated therefore, the OTS shall be considered as failed and the dues of the Company shall be reinstated to the original amount mentioned in para 15.1.1 subject to the approval of BIFR. All reliefs and concessions granted by the secured lenders shall stand withdrawn.
(iii)
15.1.2 (i)
Additional Working Capital from Central Bank of India and ARCIL ( PNB, UCO Bank and BOB): OTS for Rs 32.21 Cr
To accept payment of Rs 32.21 Cr (excluding Rs 14.34 Cr already paid) in full and final settlement of balance amount of Additional Working Capital Facility which was released by the banks for the recommencement of the fertiliser operation in the year 2005 and to waive all simple / compound / penal interest, LD, other charges etc. as on the date of sanction of the scheme. The said amount of Rs 32.21 Cr shall be paid by KFCL, within 90 days from the date of sanction of the Scheme. Banks / ARCIL to release all securities provided for securing this facility including shares of Andhra Cement Ltd (ACL) and NRC Ltd. (NRC) upon receipt of this payment of Rs 32.21 Cr. Banks / Assignees shall waive all,
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simple / compound / penal interest, LD, other charges etc. till the date of payment. Details of Rs 32.21 Cr are as follows: (Rs / Cr.)
Secured Creditors Central Bank of India ARCIL(Punjab National Bank) ARCIL (UCO Bank) ARCIL (Bank of Baroda) TOTAL 14.20 3.83 7.09 7.09 32.21
(ii) In addition to the amount of Rs 32.21 Cr payable to ARCIL and CBI as per
sub- para (i) above, DIL shall make further payment of Rs 3 Cr to ARCIL and Rs 2.65 Cr to CBI towards full and final payment of the late payment charges on account of delay in the repayment of additional working capital by 31.10.2011. The said amount shall be funded by the promoters of DIL by infusing additional funds in the form of equity share capital of DIL at par post reduction and consolidation of the existing paid up share capital of DIL in terms of the scheme.
15.1.3 Working Capital for Tea operation from SBI, SBICI and ARCIL(PNB):
Existing working capital facilities of Rs 60 Cr to be retained for DIL comprise SBI (Rs 42.95 Cr), SBICI ( Rs 5.68 Cr) and ARCIL(PNB) (Rs 11.37 Cr):
(a) SBI and SBICI:

i) To allocate Rs 48.63 Cr into need based working capital of Rs 24.315 Cr (SBI share Rs 21.475 Cr and SBICI s share Rs 2.84 Cr) in cash credit account and Rs 24.315 Cr (SBI share Rs 21.475 Cr and SBICI s share Rs 2.84 Cr) as WCTL for the requirement of operations of tea undertaking in DIL. The requirement for working capital shall be assessed according to the existing norms relating to tea industry and as per Bank s norms from time to time. Interest on WCTL with effect from 1st April, 2010 shall be charged at the SBAR prevailing from time to time (presently 12.50% p.a.). The WCTL will be repaid in installments commencing on 30th March, 2014, 30th September, 2014 and 31st March, 2015. Interest on CC with effect from 1st April, 2010 will be charged at the SBAR prevailing from time to time (presently 12.50%) plus 2% for a period of one year and reset thereafter. (ii) To continue existing non-fund based limit of Rs 15 Cr (Bank Guarantee and inland Letter of Credit from SBI) in DIL. Margin of 5% will be provided for the first year from 01.04.2010 which will be reset thereafter. 50% of the normal charges will be payable for the first year, which will be reset thereafter.
(b) ARCIL ( PNB ): (i) The share of ARCIL amounting to Rs 11.37 Cr shall continue as loan in DIL and will be paid in 3 equal annual installments of Rs 5.61 Cr each
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(inclusive of Rs 1.82 Cr as interest ) on 15.03.2013, 15.03.2014 and 15.03.2015. (ii) ARCIL s exposure as aforesaid shall be secured by first charges over the moveable fixed assets, current assets and immoveable properties of Tea Division and the personal guarantee of Mr. G.P.Goenka. (iii) In the event the company fails to repay the amount mentioned in sub clause (i) above on the due dates stipulated therefore, the dues of the company shall be reverted to the dues as mentioned in Para 15.1.3(b) (i) less the amount paid by the company, if any, subject to approval of BIFR,
15.1.4
From State Bank of India including SBICI, Central Bank of India, State Bank of Travancore, State Bank of Patiala, ARCIL (assignee of debts of Punjab National Bank, UCO Bank, Bank of Baroda, IDBI, IDBI Bank, ICICI), WBIDC, PICUP, SICOM, Antariksh Vyapaar Pvt Ltd. (assigned debt of ICICI), Harsh Credit Pvt. Ltd. (assignee of debt of HDFC) and PCD holders: (i) (a) To release all the charges, titles, securities, personal / corporate guarantees, securities, collateral security etc. relating to Fertiliser Division, simultaneously on realization of the OTS amount as per para 12.2 hereto. All the title deeds and other documents kept as / evidencing security with respect to the assets (movable and immovable) of the Fertilizer Undertaking shall be released and delivered by the secured lenders in favour of KFCL, including filing of any statutory forms, acts or deed with the concerned authorities. All the charges on the assets of the Fertiliser Division pertaining to the working capital facility of Rs 60 Cr for the Tea Division shall stand released. Personal / corporate guarantees shall be released in favour of the respective guarantors / pledgers. (b) To release all the titles deeds and other documents kept as / evidencing security with respect to the assets ( movable & immovable) of Tea Division and personal guarantee pertaining to cash credit and WCTL upon due repayment of the amounts as mentioned in clause 15.1.3 (a) and (b) above by the company. All Legal cases filed by the Company/ISGTL and pending against Central Bank of India shall be withdrawn by the company.
ii)
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15.2 Secured Creditors (Debentures Holders and ICD s Holders other than Bank s and FI s )(secured by way of pledge of investments):
The amount payable for settlement of the said liability shall be provided by KFCL and paid by DIL on the following terms: (i) An amount of Rs 5.78 Cr shall be paid in one time settlement in full and final settlement of the dues, within a period of 90 days from the date of sanction of the Scheme. To waive all interest / compound / penal interest / liquidated damages, balance principal amount, other claims, etc. thereon till date of payment of above amount. To release security of investments pledged with them upon receipt of settlement amount as above in favour of DIL.
(ii)
(iii)
15.3 Ministry of Chemical & Fertilizers - Department of Fertilizer, GOI:

In respect of DIL / KFCL ( Transferee company): (i) To allow resumption of production with Naphtha as feedstock and allow 3 years time from resumption of production for conversion of feedstock from Naphtha to Gas. To allow and compute subsidy on the Urea manufactured on the basis of Naphtha as feedstock till such time plant is converted into LNG / Gas as feedstock. M/o Chemicals & Fertilzers Deptt of Fertilizer vide letter dated 3.8.2011 has stated as follows : As per the policy of Stage-III of New Pricing Scheme for Urea manufacturing units notified by the Govt. on 8.3.2007, the units are allowed resumption on existing feedstock with stipulation to convert to gas within specified time limits. This was conveyed vide DOF letter No. 12014/1/2008-FPP dt. 6.3.2009. The validity of NPS-III policy dt. 8.3.2007 has since been extended beyond 31.3.2010 till further orders on provisional basis. The Bench accepted the views of the Deptt. of Fertilisers. To continue the energy norm of 7.847 gcal / mt as last notified for the plant and the energy savings should not be mopped-up for a period of at least 5 years after conversion to gas. M/o Chemicals & Fertilzers Deptt of Fertilizer vide letter dated 3.8.2011 has stated as follows : As per the provisions of NPS-III policy, conversion etc, continuation of existing norms for 5 years period is permissible. The Bench accepted the views of the Deptt. of Fertilisers. To notify concession price on the basis of the current prices of inputs (i.e. feedstock, coal, power, bags etc.) at the time of the resumption of
(ii)
(iii)
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production. Escalation / de-escalation should be calculated on fortnightly basis and should be reimbursed along with the subsidy for that period. M/o Chemicals & Fertilzers Deptt of Fertilizer vide letter dated 3.8.2011 has stated as follows : One time updation of concession price based on near latest notified prices of inputs may be considered. As per the extant policy, quarterly / annual escalation is computed. The Bench accepted the views of the Deptt. of Fertilisers. (iv) To consider to allow Billing for subsidy on fortnightly basis and subsidy should be released within 7 days M/o Chemicals & Fertilzers Deptt of Fertilizer vide letter dated 3.8.2011 has stated as follows : In the normal course, claim bills for receipt of urea of the month are submitted by urea units in the subsequent month and paid in the following month. The Bench accepted the views of the Deptt. of Fertilisers and also directed to consider the relief for priority payment of the subsidy/concession price as was considered in case of M/s Southern Petrochemicals Ltd. as per DOF letter dated 26.11.2009 and Madras Fertilizers Ltd. as per DOF letter dated 4.7.2011, as submitted by DIL vide its letter dated 6.9.2011. (v) To extend full support for conversion of fertilizer plant into Gas / LNG based and grant allocation of Gas / LNG on priority basis as per the requirement of the plant without insisting for guarantee or collaterals. M/o Chemicals & Fertilzers Deptt of Fertilizer vide letter dated 3.8.2011 has stated as follows : Deptt. of Fertilizers recommends to M/o Petroleum & Natural Gas for allocation of gas to fertilizer units. The allocation of gas is decided by the Empowered Group of Ministers(EGoM) under the M/o Petroleum & Natural Gas. Deptt. of Fertilizers has requested M/o Petroleum & Natural Gas for allocation of gas to the company(DIL), Kanpur vide letter No. 12014 / 1 / 2007 FPP (PC) dt. 6.5.2011. DIL may now take up with M/o Petroleum & Natural Gas / GAIL for gas pipeline connectivity of 18 kms only and allocation of gas , agreement etc. The Bench accepted the views of the Deptt. of Fertilisers. (vi) To resume the sponsorship for allocation of suitable grade of coal quantity of 236800 MT per annum for generation of steam essentially required for manufacturing ammonia and urea. M/o Chemicals & Fertilzers Deptt of Fertilizer vide letter dated 3.8.2011 has stated as follows : Since the unit is not operational, presently no quantity of coal is drawn by them. However, in case of likely commencement , M/o Coal will be requested for allocation of required quantity. The Bench accepted the views of the Deptt. of Fertilisers. (vii) To consider to accept payment of all the undisputed statutory dues after waiving interest, penalty and damages etc. over a period of 3 years after a moratorium of one year from cut-off-date and extend any other relief, benefits and concessions as applicable for sick industrial companies as per the Government policy / guidelines for the rehabilitation of the sick companies.
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15.4 (i)
Ministry of Coal, GOI: To Consider: To resume the allocation and supply of suitable grade of coal quantity of 236800 MT per annum through rail from Coal India Ltd., BCCL and ECL on sponsorship by Fertilizer Industry Co-ordination Committee (FICC) from time to time for generation of steam essentially required for manufacturing ammonia and urea.
Central Board of Direct Taxes (CBDT) : To consider except (ii) In respect of DIL / KFCL ( Transferee Company ): (i). To consider to grant exemption from the applicability of Section 41(1) of the Income Tax Act, 1961 in respect of remission / cessation arising out of the Scheme. (ii). To permit KFCL to carry forward and set off the accumulated losses (including lapsed losses) and unabsorbed depreciation as per the Income Tax Act, 1961 relatable to the Fertilizer Undertaking till such losses are set off fully against income in the assessment years subsequent to the assessment year during which de-merger as above shall take place subject to the overall provision of the Act. The effect of this provision shall be given in the manner as is provided under Section 72A of the Income Tax Act, 1961. (iii). To consider to allow payment of TDS arrear as on the cut-off date after a moratorium of one year in 8 equal quarterly installments and to waive interest and penalty leviable under the various provisions of the Income Tax Act and rules made there under including for the past defaults against the DIL / KFCL (Transferee Company) / Directors / Executives / Officers. (iv). To consider to allow to revise the returns of Income Tax incorporating information / details within a period of 2 years from the date of sanction of the Scheme irrespective of the lapse of statutory time for filling such revised returns and direction to the assessing authority to frame assessment/ re-assessment pursuant to such returns notwithstanding that the assessment have been completed or the time limit for completion of assessment / reassessment may have been expired and grant waiver of interest under any provisions of the Act. (v). To consider to exempt from applicability of the provisions of Section 115 JB of Income Tax Act, 1961 for a period of 5 years from the date of sanction of Scheme. (vi). To consider to exempt from the applicability of the provisions of Section 43B, 45, 72(3), 74(2), 79, 80, 139 (3), 201(1), 201(1A), 221, 271, 276B and 281 of the Income Tax Act, 1961 from the past period and for further period of 5 years from the date of sanction of Scheme.
15.5
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(vii). To consider to permit to receive all income without deduction of any tax under the provisions of Chapter XVII-B of the Act for a period of 5 years from the date of sanction of Scheme.
(viii). To consider to grant approval under Part B of the Fourth Schedule of the
Income Tax Act for transfer of amount in excess of the liability of the Non Management Staff Pension Scheme of Duncans Industries Ltd. (Fertiliser Division) to Senior Management Staff Pension Scheme of Duncans Industries Ltd (Fertiliser Division) .
15.6
(i)
Employees Provident Fund Organization (EPFO) :

In respect of DIL / KFCL ( Transferee company): To waive penal interest and to consider other damages as per rules and policy levied or leviable due to late payment / non-payment of provident fund (PF) / employees family pension fund (EFPF) / Deposit Linked Insurance / Employees Pension Scheme, 1995(EPS-95), Administrative Charges / Inspection Charges till the cut-off date. To consider to allow payment of Provident Fund, Family Pension Fund (EFPF) including Employees Pension Scheme, 1995 (EPS-95) / Employees Deposit Linked Insurance / Administrative Charges / Inspection Charges dues with simple interest at the statutory rate of interest paid by Employees PF Organization from time to time as on cut off date after moratorium of one year in 36 equal monthly installments without carrying any penal interest and damages.
(ii)
15.7
(i)
ESI Corporation (ESIC) :

In case of DIL / KFCL ( Transferee company): To waive damages levied or leviable on the DIL / KFCL due to late payment / non-payment of ESI dues in respect of casual employees, filling of returns / any other defaults etc in Fertilizer Undertaking till the cut-off date. ESI dues payable for the past period till cut off date is about Rs 3.53 lakh which will be paid within 120 days from the scheduled date of recommencement of production without levy of any penal interest and damages. Ministry of Corporate Affairs (MCA) / Registrar Of Companies, West Bengal / Registrar Of Companies, U.P.: To consider In respect of DIL / KFCL ( Transferee company):
(ii)
15.8
(i)
DIL / its Promoters / JUBVPL (JV Co.) / JFIL / ISGTL / associates shall be exempted from the provisions of Section 81, 192A, 293(1), 372A for preferential issue of equity shares, for providing unsecured loans / guarantees. DIL / its Promoters / ISGTL / JFIL / JUBVPL (JV Co ) / associates shall also be exempted from ceiling on promoters holding
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prescribed under the provisions of the Companies Act, 1956 for subscribing the shares in terms of this Scheme. (ii) DIL / KFCL shall be exempted from the applicability of the provisions of Section , 16, 31,,80(5), 94, 95, 100 to 105, 138,198, 269, and Schedule XIII of the Companies Act, 1956. To consider to exempt DIL and its Directors in respect of penal provisions under section 58A, 58AA, and 58AAA of the Companies
(iii)
Act,1956 and other applicable provisions / rules in respect of

acceptance of deposits and for the defaults prior to the date of sanction of the Scheme by BIFR. (iv) On sanction of the scheme, existing paid up equity share capital (subscribed) and redeemable cumulative preference shares of DIL shall stand reduced by 60% and 0.001% Cumulative Redeemable Preference Shares (CRPS) aggregating to Rs 165.98 Cr issued to the banks and financial institutions by DIL alongwith accrued dividend thereon shall stand fully written off in terms of the OTS settlement with the Banks and Financial Institutions without following the provisions of Section 100-105 of the Companies Act, 1956. DIL may be allowed to allot 4,22,05,000 nos. of equity shares of the face value of Rs 10/- each aggregating to Rs 42.205 Cr post reduction and consolidation of share capital at par to the Promoters / Associate Companies without following the requirement of the provisions of section 81(1A),,108A and 108B of Companies Act, 1956. The authorized share capital of KFCL shall be enhanced to Rs 450 Cr. (Rupees Four Hundred Fifty Cr only) and Memorandum and Articles of Association of KFCL shall be amended accordingly and to consider exempting from payment of fees and exempting from applicability of Section 16 and 31 of the Companies Act, 1956. KFCL may be allowed to allot one (1) number of equity share of Rs 10/each fully paid up to the equity shareholders of DIL for every 40 (forty equity shares) of Re. 10/- each (post de-rating and consolidation) held by them pursuant to the Scheme of Arrangement without following the requirement of the provisions of section 68B, 81, 108A, and 108B of the Companies Act, 1956. JUBVPL (JV Co.) shall infuse Rs 400 Cr in KFCL within 90 days from the date of sanction of scheme and KFCL shall allot 40 Cr nos equity shares of Rs 10 each at par to JUBVPL (JV Co.) within 7 working days from the date of infusion of the aforesaid funds without following the requirement of the provisions of section 68B, 81, 108A, and 108B of the Companies Act, 1956.
(v)
(vi)
(vii)
(viii)
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15.9 (i)
Securities & Exchange Board of India (SEBI): DIL shall be exempted from following the requirement of Securities Contracts (Regulation) Rules, 1957 read with Securities Contracts (Regulation) (Amendment), Rules, 2010, Regulations of Public / Preferential issue SEBI Guidelines for Preferential Issue under SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009.and relevant provisions of Listing Agreement for allotment of 4,22,05,000 nos. equity shares of face value of Rs 10/- each aggregating to Rs 42.205 Cr ( Rs 30.55 Cr already brought in) post reduction and consolidation of share capital at par to the Promoters / Associate Companies.
(ii)
DIL shall be exempted from minimum public holding requirement under clause 40A of the Listing Agreement read with Securities Contracts (Regulation) Amendment Rules, 2010 for a period of three years from the date of listing of shares pursuant to this Scheme.
Notwithstanding anything contained in the scheme, the fresh equity being inducted by the existing promoters/associates/strategic investor in terms of this scheme will have a lock in period of 3 years from the date of issue of the equity shares. The Bench directed that SEBI to consider the above reliefs as per their guidelines.
(iii)
15.10 (i)
National Stock Exchange (NSE): DIL: Restructured equity shares of DIL and equity shares to be allotted pursuant to the Sanctioned Scheme shall be listed by NSE immediately within one month from the date of allotment of such shares in terms of the Scheme without following the requirement of Listing Agreement .
(ii) DIL shall be exempt from minimum public holding requirement under Clause 40 A of the listing requirement for a period of 3 years from date of listing of shares pursuant to the scheme. During the above period, the promoters/associates of DIL to off-load excess equity held by them in DIL. No objection, by NSE, if SEBI agrees. 15.11
(i)
Govt. of U.P. ( Ministry of Industry ): To consider:

To exempt DIL / KFCL from the levy of stamp duty on de-merger of assets of the Fertilizer Undertaking and identified liabilities as per the Scheme of Arrangement sanctioned under the provisions of the SICA.
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(ii)
All licenses / permissions / pollution and other consents / approvals in respect of Fertilizer Undertaking including lapsed shall stand revived / restored immediately for a period of three years in the name of KFCL from the date of sanction of the Scheme, to enable KFCL to recommence commercial production in lawful manner. To exempt DIL, its Directors / Officers from any penalties / additional charges / proceedings/ penal provisions in respect of any past defaults, omissions / acts. KFCL shall not be liable in respect of defaults and omissions prior to the date of the de-merger of the Fertiliser Undertaking in terms of the scheme.
(iii)
(iv) To accept payment of any other undisputed dues / levies of the State /
quasi Govt. Departments (including Kanpur Nagar Mahapalika /
Corporation) / Kanpur Cantonment Board after waiver of all penalties / interest / claims etc. over a period of three years after a moratorium period of one year from the date of sanction of the Scheme. (v) To provide any other relief, benefits and concessions available to the sick companies as per the policy of the State Government for rehabilitation of the sick companies.
15.12 Trade Tax Department, Govt of UP - with respect to Trade Tax, Sales Tax, Central Sales Tax, VAT, Entry Tax, Turnover Tax, Purchase Tax: In respect of DIL / KFCL: To Consider: (i) To condone delay in submission of sales tax / turnover tax / entry tax / VAT returns and forms related thereto and grant time of 24 months for submitting the same from the date of sanction of the Scheme. To set aside all ex-parte assessment orders from the financial year 2000-2001 and onwards or appeals / penalties and make reassessment after providing opportunity of being heard to DIL/ KFCL in the matter. To continue the registration certificates under State and Central Sales Tax Act / Vat Act in the name of KFCL. To waive interest, penalties levied / to be levied on account of delayed payment of dues in respect of the past period upto the -51
(ii)
(iii) (iv)
Case No.70/2006
cut-off-date and to accept payment after waiver of interest, penalties over a period of 3 years in equal half yearly installments after giving one year moratorium from the cut-off-date. (v) All proceedings initiated, notices issued and orders passed for the assessments from the financial year 2000-2001 and onwards on account of defaults / omissions from the date of sanction of the Scheme and exempt DIL / KFCL from any penalties / proceedings arising from past defaults / omissions .
15.13
Kanpur Electric Supply Company (KESCO) / UPPCL / UP Electricity Regulatory Commission and Govt of UP: In respect of DIL/ KFCL: To Consider: Waiver of minimum consumption Guarantee (MCG), Minimum / Fixed demand charges, Electricity duty, Low Power Factor surcharge and parallel operation charges during the period when the plant was not in operation w.e.f. 18th October, 2005. To restore / reconnection of total power load of the plant as was existing earlier at the time when plant stopped operation without charging line charges, service connection charges and security / guarantee.
(i)
(ii)
(iii) To waive all interest, penalty and late payment surcharge upto the cut- off- date or reconnection, which ever is later. Security deposit for electricity connection for the Fertilizer Undertaking which was appropriated by KESCO be reversed from the date it was appropriated and be transferred to the account of KFCL as security deposit amount for electricity. (iv) To withdraw a claim of Rs 24.63 Cr towards 15% surcharge for supply of power from independent feeder installed at the cost of the company for the period from August 2000 to September 2001 which was once withdrawn as non leviable but again demanded by KESCO against which a writ petition filed by DIL before the Hon ble Allahabad High Court is pending. After restoring the security deposit, withdrawal of independent feeder surcharge and waiver of 75% of the remaining amount, Rs 20.28 Cr being 25% amount of the balance dues shall be paid in three equal -52
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annual after a moratorium of one year from the date of sanction of the Scheme, in full and final settlement of all the dues / claims. 15.14 From Agriculture Income Tax Deptt / Industries Deptt/ IR Deptt: State Govt. of West Bengal In respect of DIL: To Consider: (i) To extend the existing scheme of exemption from payment of Education Cess
and Rural Employment Cess on tea green leaf produced in the tea gardens for a further period of 5 years from cut-off-date. (ii) To accept the payment of arrears of Rs 1.51 Cr towards Education Cess and Rural Employment Cess relating to the period up 31st March, 2004 after waiver of interest, penalty etc. in 12 quarterly installments after a
moratorium of one year from the date of sanction of the Scheme. (iii) To accept repayment of any other undisputed dues / levies of the State /
quasi Govt. Departments (including Municipal Board / Corporation / Panchayat Tax in Tea Estates) after waiver of all penalties / interest / claims etc. in terms of orders of the competent authority. (iv) To provide any other relief, benefits and concessions available to the sick companies as per the policy of the State Government for rehabilitation of the sick companies. (v) To exempt the DIL/ Directors / Officers from any penalties / proceedings arising from any past defaults / omissions .
Notwithstanding anything contained hereinabove, the reliefs and concessions to be granted should not be beyond the provisions of State Policy Guidelines. 15.15 From Unsecured Lenders- FCCB Holders / Optionally Convertible Debenture (OCD) Holders and ICD Lenders / Fixed Deposit Holders: The amount payable for settlement of the said liability shall be provided by KFCL and paid by DIL on the following terms: (a) Unsecured Foreign Currency Convertible Bonds (List as per Annexure XII) (i) The principal amount of FCCB in Swiss Francs shall be frozen after converting in INR at the exchange rate prevailing as on 21st November, 2001 (being the date on which FCCB holders exercised Put Option). and an amount of Rs 36.44 Cr, to the extent 25% of the principal amount as determined above, shall be paid in three equal annual interest free installments after a moratorium of one year from the date of sanction of Scheme in full and final settlement of all dues and claims. The Bench heard the arguments of both the parties and issued the following directions regarding this : The Bench granted consent as agreed by the company in hearing, to M/s Credit Suisse AG to proceed with the suit No 310 of 2004 pending before the
(vi)
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Hon ble Calcutta High Court so that the exact amount (principal) in respect of the FRCN s is crystallized and as and when such amount is crystallized the same will be paid as per provisions of the scheme for such category of creditors. (ii) All interest / compound / penal interest/ liquidated damages, balance of the principal amount, conversion clause, other claims / demands shall stand waived. Holders
(b) Unsecured Loans i.e. Optionally Convertible Debenture (OCD)

and ICD Lenders:
(i)
An amount of Rs 7.59 Cr to the extent of 25% of the principal amount outstanding as on cut off date shall be paid in 3 equal annual interest free installments after a moratorium of one year from the date of sanction of the Scheme, in full and final settlement of all the claims of OCD holders and ICD lenders. .
All interest / compound / penal interest / liquidated damages, balance of the principal amount etc. shall stand waived.
(ii)
(iii) Winding up petitions / recovery suits, other proceedings etc. instituted by the ICD Lenders against DIL shall stand withdrawn from the date of sanction of the Scheme and they shall have no further claim other than those payable in terms of the sanctioned scheme.
(c) Unsecured Fixed Deposit Holders:

(i) An amount of Rs 66.07 Cr to the extent of 85% of the principal amount of fixed deposits outstanding as on cut off date shall be paid in one time full and final settlement of all the dues of fixed deposit holders. Repayment shall commence within 90 days and shall be completed within 180 days (without carrying any interest) from the date of sanction of the Scheme. All interest including compound / penal interest, claims, and balance of principal amount etc. on the fixed deposits shall stand waived immediately.
(ii)
15.16 From Unsecured Creditors / unsecured Liabilities: In respect of DIL / KFCL: (a) Indian Oil Corporation (IOC): (i) To waive all interest / claim / charges and 75% on principal outstanding dues for supply of Naphtha and other petroleum products to Fertilizer Plant and to cancel Memorandum of Settlement (MOS) dated 24th October, 2005 and other documents / agreements executed there to. (ii) After waiver of the above, Rs 14.17 Cr being 25% of its principal amount for supply of Naphtha shall be paid by KFCL in three equal annual interest free installments after a moratorium of one year -54
Case No.70/2006
from the date of sanction of the Scheme by BIFR, in full and final settlement of all the dues / claims with out carrying any interest. (b) (i) Other Unsecured Creditors / unsecured Liabilities:
The dues of other unsecured trade creditors / unsecured liabilities viz security deposits, retention money, trade suppliers/creditors, advances from customers, and unsecured liabilities others amounting to Rs 42.15 Cr in respect of the Fertilizer Undertaking shall be paid to the extent of 25% of their principal amount outstanding as on the cut - off - date , in full and final settlement of their dues in three equal interest free annual installments by KFCL after a moratorium of one year from the date of sanction of the Scheme.
(ii) The dues of other non current unsecured trade creditors/liabilities

amounting to Rs 22.82 Cr in respect of the Tea Undertaking/Residual DIL shall be paid to the extent of 25% of their principal amount as outstanding as on the cut - off - date, in full and final settlement of their dues in three equal interest free annual installments by DIL after a moratorium of one year from the date of sanction of the Scheme. (iii) All interest including compound / penal, other claims, balance principal amount thereon till the date of payment in terms of the Scheme shall stand waived immediately on sanction of Scheme. Unsecured creditors / liabilities, which are under dispute / litigation / appeal shall on crystallization after exercise of all legal remedies available to the DIL and KFCL shall be paid only to the extent of 25% of the principal amount over a period three years after a moratorium of one year from the date of order on interest free basis. Simple / compound / penal interest, damages, penalties, other charges etc. charged or chargeable on the same and balance 75% amount shall be waived From Workmen and Fertilizer Division: (i) all Employees including ExEmployees
(v)
15.17
DIL and KFCL have executed a Memorandum of Understanding (MOU) with the recognized workmen union i.e. IEL Employees Union / workmen of the Fertilizer Division on 06.06.2010 which inter alia provides terms and conditions for restart and running of fertilizer plant and the manner in which their dues are payable. Based on the said MOU, estimated dues have been provided in the Scheme and included under total employees dues (including VRS dues, PF and ESI dues, contribution to gratuity and pension funds) net of advances of Rs 79.44 Cr. The said MOU dated 06.06.2010 has been agreed to and executed individually by more than 99% of workmen on roll of the Fertilizer Undertaking. The workmen / IEL Employees Union and the Company to abide by the terms and conditions of the MOU.
-55
Case No.70/2006
Duncans Voluntarily Retired Employees and Pensioners Association in Appeal No 232 of 2010 has submitted its affidavit before the Hon ble AAIFR on 15.09.2010 agreeing with the terms and conditions for their payment without interest and other claims within a period of 120 days in lump sum from the date of sanction of the scheme, as per AAIFR order dated 15.09.2010 (ii) A Memorandum of Understanding (MOU) has also been executed with the majority of supervisors i.e. 26 supervisors out of total 33 supervisors individually and their dues have been incorporated in the Scheme based on the said MOU and included under total employees dues net of Rs 79.44 Cr. (iii) Surplus funds available in Non Management Staff Pension Scheme shall be transferred to Senior Management Staff Pension Scheme and to make up the short fall, Rs 1.38 Cr shall be contributed by the KFCL to the said fund of senior management pension in three equal annual installments from COD. Pension to the retired / left beneficiaries, after waiver of interest or any other claim on delayed payment of pension benefit, shall be commenced within three months from the date of approval of transfer of surplus funds from Non Management Staff Pension Scheme. (iv) VRS / Pension Payable to Ex- Employees of Fertilizer Division Opted Voluntary Retirement:
(a) Employees of commercial department of New Delhi office / other offices of the fertilizer undertaking s who were separated in the past under VRS / Pension Schemes shall be paid their VRS / Annuity dues amounting to Rs 4.09 Cr without interest and other claims within a period of 120 days in lump sum from the date of sanction of the scheme, in terms of AAIFR order dated 15.09.2010. (b) All exemployees who have opted voluntary retirement (including 32 ex employees of commercial department of Fertiliser Division) have agreed to withdraw all legal cases, disputes, demands / claims from the court, tribunal, labour court, judicial and quasi judicial authorities, or any other forum. Payments to these ex-employees shall be made after withdrawal of their cases .
-56
Case No.70/2006
16.0
(i) (ii)
SACRIFICES FROM EXISTING SHAREHOLDERS

To agree and accept the proposal of issue of further shares to the promoters as envisaged in this Rehabilitation Scheme. Existing paid up equity share capital (subscribed) Rs 53.22 Cr of DIL shall stand reduced by 60% i.e Rs 31.93 Cr and post reduction every five (5) equity shares of Rs 4/- each shall stand consolidated into two (2) equity share of Rs . 10/- each fully paid-up. Special Resolution to be passed by the shareholders. Post reduction of share capital and consolidation of shareholding of the share holders of DIL, who would be entitled for less than one (1) equity share, will be transferred to a person authorised by the Board of Directors of DIL who will hold these shares in trust and sell the same to distribute the sale proceeds to those shareholders in proportion of their share holding.
(iii)
Existing 9,50,000 Redeemable Cumulative Preference Shares aggregating to Rs 9.50 Cr shall stand reduced by 60% i.e Rs 5.70 Cr and post reduction every five Redeemable Cumulative Preference share of Rs 40/- each shall stand consolidated into two Redeemable Cumulative Preference Share of Rs . 100/- each fully paid-up. These Preference Shares shall be redeemed in five equal annual installment commencing from March, 2017. 0.001% Cumulative Redeemable Preference Shares (CRPS) of Rs 100/- each aggregating to Rs 165.98 Cr issued to the banks and financial institutions along with unpaid accrued amounting to Rs 0.65 Cr dividend till cut off date thereon shall stand fully written off in terms of the OTS settlement with the banks and Financial Institutions ( Also incorporated under reliefs from FIs/Banks) KFCL ( Transferee Company) shall issue one (1) number of equity share of Rs 10/each fully paid up to the equity shareholders of DIL for every 40 ( forty equity shares) of Re. 10/- each (post de-rating and consolidation) held by them
(iv)
(v)
pursuant to the Scheme of Arrangement. The said shares shall be distributed amongst the shareholders of DIL in proportion of their shareholding in DIL as on a record date. The shares to be allotted to the individual shareholders of DIL who would be entitled for less than hundred (100) equity shares will be transferred to a person authorised by the Board of Directors of Transferee Company who will hold these shares in trust and sell the same to distribute the sale proceeds to those shareholders in proportion of their share holding. vi) The approval for de-rating of shares shall be subject to passing of Special Resolution by the shareholders.
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Case No.70/2006
17.0 FINANCIAL VIABILITY:

17.1 Duncans Industries Ltd (DIL) (Rs\Cr)
As on March 31, Installed capacity (MTPA) Fertilizer ( Urea) Tea ( Approx) Production (MTPA) Fertilizer ( Urea) Tea % Growth(Tea) Net Sales % Growth Other Income Increase in Stocks Production Cost and other Expenses PBDIT ( Tea). Expenses Relating to Fertiliser Division Interest Depreciation (Tea) Depreciation (Fertiliser) Profit before tax (Tea) Less: Tax Late payment charges Foreign Exchange Fluctuation (Loss)/ Gain Provisions for Doubt full deposits / advances Profit after tax Share Capital Reserves & Surplus Accumulated Losses Net Worth -24.59 0.00 -48.09 228.71 142.12 -1441.64 1070.81 12.33 -1.17 9.90 228.71 142.12 -1431.73 -1060.90 0.00 -23.05 -46.05 228.71 142.12 -1074.59 -703.76 147.41 -3.68 1.52 5.04 2.84 10.76 -23.84 0.34 138.60 35 5.13 0 14953 0 14386 -4% 156.30 13% 2.76 8.41 146.08 21.39 1.46 7.53 2.90 10.76 -1.26 0.00 0 14236 -1% 180.72 16% 2.75 1.23 151.31 33.40 36.42 11.57 3.03 5.38 -23.00 0.00 NA 15315 8% 193.33 7% 2.00 0 160.61 34.72 0.00 11.57 3.03 0.00 20.12 0.00 5.65 0.00 0.00 14.47 67.29 115.25 -14.85 167.70 0.00 0.00 27.80 67.29 115.25 12.96 195.50 0.00 0.00 26.18 67.29 115.25 39.14 221.69 0.00 0.00 27.19 67.29 115.25 66.32 248.87 NA 16795 10% 212.00 10% 2.00 0 169.78 44.22 0.00 13.39 3.03 0.00 27.80 0.00 NA 16795 0% 215.31 2% 2.00 0 174.72 42.59 0.00 13.39 3.03 0.00 26.18 0.00 NA 16795 0% 215.31 0% 2.00 0 174.72 42.59 0.00 12.37 3.03 0.00 27.19 0.00 2009 Audited 2010 Audited 2011 Proj. 2012 Proj. 1 NA 15000 2013 Proj. 2 NA 15000 2014 Proj. 3 NA 15000 2015 Proj. 4 NA 15000
7,22,000 15,000
7,22,000 15000
7,22,000 15000
17.1.1
Comments (DIL): Net worth becomes positive in YE 2012 while the accumulated losses are wiped out in YE 2013.
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Case No.70/2006
17.2
Kanpur Fertilisers & Cement Ltd (KFCL):

2009
Audited
Installed capacity (MTPA)
(Rs\Cr)
2012
Proj.
2010
Audited
2011
Proj.
2013
Proj.
2014
Proj.
2015
Proj.
1 722 722 722 722
2 722
3 722
4 722
Fertilizer ( Urea) in thousand MT Production (MTPA) Fertilizer ( Urea) in thousand MT Capacity Utilisation Net Sales Concession Price (Subsidy) % Growth Other Income Production Cost and other Expenses PBDIT Interest Depreciation Profit before tax (Tea) Less: Tax Profit after tax Equity Share Capital Reserves & Surplus Accumulated Losses Net Worth
NA Nil Nil NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
NA Nil Nil NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
NA Nil Nil NA NA NA NA NA NA NA NA NA NA NA 0.10 0 -403.18 -403.08 703.925 97% 361.11 1116.70 1.68 1412.98 66.51 0 12.00 54.51 0.00 54.51 400.63 0 -349.20 51.43 722 100% 370.39 1145.38 3% 1.68 1415.91 101.54 0 15.70 85.84 0.00 85.84 400.63 0 -263.37 137.26 722 100% 370.39 1189.54 0% 1.68 1372.27 189.34 0 18.34 170.99 0.00 170.99 400.63 0 -92.38 308.25 722 100% 370.39 510.78 0% 1.68 726.03 156.82 0 20.98 135.83 0.00 135.83 400.63 0 43.46 444.09
17.2.1
Comments (KFCL): Net worth becomes positive in year ending 31.3.2012 while the accumulated losses are wiped out in YE 2015.
-59
Case No.70/2006
18
Debt Service Coverage Ratio (DSCR)
18.1 Duncans Industries Ltd (Post De-Merger of Fertiliser Division) (Rs / Lakh)
For the year ending 31st March Inflow Net Operating Profit before Depreciation Late payment charges (Arcil and CBI) TOTAL Servicing Capital Expenditure Repayment of WCTL and Loan Payment of Other Secured Loans Payment of Unsecured Debts Late payment charges (Arcil and CBI)
Increase in Current Assets / Working Capital
2012 1750 565 2315 1223 0 578 6607 565 500 1337 10810 8851 1959 1.18
2013 3083 3083
2014 2921 2921
2015 3022 3022
Total 10776 565 11341 1223 3569 578 11018 565 1000 4958 22911 15438 7473 1.52
379 1471 500 1320 3670 1968 1702 1.81
1190 1470
2000 1470
Payment to Unsecured Creditors / Liabilities Less: Servicing out of Promoters Contribution / funds from KFCL TOTAL DSCR
1308 3968 1468 2500 1.17
993 4463 3153 1310 2.31
Comments: Average DSCR of 1.52 with minimum of 1.17 in 3rd year of de-merged operations ( YE 2014) is satisfactory ( benchmark being 1.33:1) 18.2 KFCL ( De-merged Fertiliser Division)
(Rs / Lakh)
For the year ending 31st March Inflow Net Operating Profit Depreciation
Funds from JUBVPL (JV Co.)/ JFIL / Associates
2012 I 5451 1200 63777 70428 9923 25721 7186 7385 50215 1.40
2013 II 8584 1570 10500 20654 13007 0 1468 1970 16445 1.26
2014 III 17099 1834 18933 0 0 1468 1970 3438 5.51
2015 IV 13583 2098 15682 0 0 1468 1609 3077 5.10
Total 44717 6703 74277 125697 22929 25721 11588 12934 73172 1.72
TOTAL Servicing Capital Expenditure Payment of Secured Debts OTS Funds to DIL for Settlement of Debts Payment to Unsecured Creditors / Liabilities TOTAL DSCR
18.2.1
Comments: Average DSCR of 1.72 with minimum of 1.26 in 2nd year of operations ( YE 2013) is satisfactory ( benchmark being 1.33:1). -60
Case No.70/2006
19 19.1
CONCLUSION The rehabilitation strategy envisages reliefs and concessions by the Central & State Governments and also induction of fresh funds by the promoters / associates / strategic investor and its WOS / JUBVPL to finance the cost of the scheme. The financial projections of DIL and KFCL as per the rehabilitation scheme are enclosed. The Projected Profitability Statement reveals that DIL will start earning profits from the first year of rehabilitation itself. As per the projected Balance Sheet, the net worth of DIL would become positive in YE 2012 and accumulated losses will be wiped off in YE 2013. In respect of KFCL, The Projected Profitability Statement, reveals that KFCL will start earning profits from the YE 2012 itself. As per the projected Balance Sheet, the net worth of KFCL would become positive in YE 2012 and accumulated losses will be wiped off in YE 2015. The Projected Cash Flow Statement reveals that DIL shall have surplus cash flows, which can be used for its modernization / expansion programs taken up subsequently. Therefore, the Scheme can be considered to be commercially and techno-economically viable. GENERAL TERMS AND CONDITIONS a. State Bank of India (SBI) is appointed as the Monitoring Agency (MA). b. The company shall take steps to strengthen the management structure and effectiveness. c. The Company shall constitute a Monitoring Committee consisting of CEO of the company and Special Director of BIFR, if any and MA to oversee and monitor implementation of the Rehabilitation Scheme.Sale or disposal of any asset, movable or immovable, should be done only through ASC constituted as per guidelines of BIFR. d. The company shall take steps to strengthen the internal control systems and internal audit system. e. The company shall appoint a reputed Chartered Accountant s firm as Concurrent Auditors with direct reporting relationship to MA with copy to the CEO of the company on terms satisfactory to it. The BOD shall review the Concurrent Auditor s Report and take needful corrective steps immediately thereof. -61
19.2
19.3
19.4
20.
Case No.70/2006
f. The company shall satisfy MA that the physical progress and all aspects of cost of the scheme/means of finance of the scheme is complied with as per the original schedule. To this end, the company shall furnish to MA such information and data as may be required by it at intervals stipulated by it. Any financial shortfall arising out of the delayed implementation of the schedule or for any other reason shall be met by the company/promoters without any recourse to FI/Banks or seeking any further reliefs/concessions from them than what has already been provided for in the Scheme within a period not exceeding three months. g. The company shall not undertake any new project or expansion or make any investment or obtain any asset on lease/hire without the prior approval of BIFR during the currency of the Scheme. h. The company shall not declare any dividend on equity shares without prior approval of BIFR during the rehabilitation period. i. The company shall continue to submit its audited balance sheet (ABS) from cut off date onwards at the end of each financial year within one month of the finalization thereof to the Monitoring Agency (MA)/secured and main creditors and BIFR. It shall ensure finalization of ABS in terms of provisions of Companies Act, 1956 without fail and the BOD must ensure to avoid any delay.
j. In addition to meticulous compliance with the schedules of payments covered under the scheme, the company shall ensure timely payment of all dues accruing after the cut off date and/or date of sanction of the scheme to Banks, Financial Institutions, Central and State Governments and Statutory Authorities in normal course, failing which the concerned parties would be free to withdraw the reliefs and concessions granted by them, subject to prior approval of BIFR. k. The company shall submit progress reports (PR) regarding the implementation of the scheme to MA on quarterly basis within one month following the close of the quarter during the first two years of the scheme and on half-yearly basis thereafter till full implementation if the progress has been good in terms of projections. The MA shall monitor the implementation of the scheme in all its aspects and shall submit a review of the implementation of the scheme to BIFR within a month of receipt of such PR with copies to BOD of the company and to all concerned. -62
Case No.70/2006
If the company defaults to submit the PR, the MA must report to the Board also. l. The loans inducted/to be inducted by the promoters shall be subordinated and interest free and shall not be withdrawn during the rehabilitation period without the prior approval of BIFR/MA.
m. Any shortfall in the means of finance will be brought in by the promoters / JFIL / JUBVPL (JV Co.). n. All current dues arising after cut-off date to be paid by the company in the normal course and no special protection of SICA would be available for this purpose. o. Dues upto cut-off date not disclosed/covered in the rehabilitation scheme to be met by the company/promoters by bringing additional interest free funds from outside sources. p. The company/promoters are directed u/s 22A of SICA not to dispose of, sell or alienate any fixed or current assets of the company without the consent of the secured creditor and the BIFR. The current assets, however, can be drawn down to the extent required for day-to-day operations and proper accounts of which would be maintained. q. The provisions of the Scheme shall have effect notwithstanding anything inconsistent therewith contained in any other Act except the provisions of the Foreign Exchange Management Act, 1999 and the Urban Land (Ceiling and Regulation) Act, 1976) for the time being in force or in the Memorandum and Articles of Association of the company or in any other instrument having effect by virtue of any Act other than Sick Industrial Companies (Special Provisions) of Act, 1985 as amended or re-enacted from time to time or any Act passed in replacement thereof. r. Reference to BIFR shall include any successor Tribunal or Forum or Authority, which is conferred with or which exercises the powers exercised by the BIFR. s. The assets and liabilities of the fertilizer undertaking shall stand transferred and vested through de-merger as a going concern to the KFCL, in terms of the attached Scheme of Arrangement in accordance with the provisions of Section 18 (6A) / Section 18(7) of SICA and / or this transfer shall be construed to be a Demerger under and for the purpose of section 391-394 of the Companies Act, 1956 for all legal, taxation, accounting and all other purposes. -63
Case No.70/2006
t. Notwithstanding anything contained in the scheme, the fresh equity being inducted by the existing promoters / associates / strategic investor in terms of this scheme will have a lock in period of 3 years from the date of issue of the equity shares. u. This Scheme shall come into force with immediate effect and shall be implemented by all concerned as per the time frame stipulated / or envisaged in the Scheme and in the Annexures hereto.
(YK GAIHA) MEMBER Dated : 16.01.2012 Encl: 1. Cost of Scheme & Means of Finance 2. Assumptions underlying projections 3. Projected Profit & Loss Estimates (DIL) Projected Profit & Loss Estimates (KFCL) 4. Projected Balance Sheets (DIL) Projected Balance Sheets ( KFCL) 5. Projected Cash Flow (DIL) Projected Cash Flow ( KFCL) 6 DSCR 7. Details of Proposed Capital Expenditure 8. Liabilities of Fertilizer Undertaking 9 Details of Liabilities as on 30.9.2010 10 Contingent Liabilities as on 31.3.2010: 11 List of Legal Cases Pending Before Various Courts 12 List of unsecured Creditors
(NIRMAL SINGH) CHAIRMAN
ANNEXURE I II III IV V VI VII VIII IX X XI XII

XIII
13 Details of Lead Managers and Co-managers Subscribing Unsecured Foreign Currency Convertible Bonds (FCCBs)
14 Scheme of Arrangement
-64

Duncans Industries Ltd rehabilitation scheme sanctioned by BIFR

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Duncans Industries Ltd rehabilitation scheme sanctioned by BIFR

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Case No.

Duncans Industries Ltd. (DIL)

Th e h ea r in g for ob ject ion s / s u gges t ion s on t h e DRS wa s fixed for 1 1 .8 .2 0 1 1 , 1 6 .8 .2 0 1 1 , 3 0 .8 .2 0 1 1 , 1 4 .9 .2 0 1 1 a n d 2 9 .9 .2 0 1 1 . Th e

Duncans Industries Ltd. (DIL)

BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

Duncans Industries Ltd. (DIL)

Amount(Rs\Cr) 257.21 5.65 5.78 35.69 241.53

110.19 73.67 112.46 206.45 10.77 1059.40

Internal accruals: Total

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

3,12,32,927 14,94,208 950 40,00,303 1,56,81,481 2,26,235 5,86,922 2,19,90,099 5,32,23,026

2,00,000 7,50,000 9,50,000 1,65,98,331

21.05 78.95 100.00 100.00

Duncans Industries Ltd. (DIL)

T.S. Broca . IAS (Retired) R.K.Bhargava . IAS (Retired) M.H. Chinoy

M.A M.A. Diploma in International & Export Management B.Sc, PGDM

D. Sengupta S.K.Kinra A.K.Goel

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

8.0 PAST PERFORMANCE 8.1 Financial Position

Duncans Industries Ltd. (DIL)

(ii) Tea Division:

Extra Ordinary Item PAT

Comments: i) Extraordinary items in YR 2006 represents subsidy receivable written off

Duncans Industries Ltd. (DIL)

LOANS , CREDIT FACILITIES AND LIABILITIES:

(Rs / Lakh) Amount Waiver Payable

57015.00 3221.00 60236.00 4430.02 64666.02 7943.61 179.67

39.46% 100% 42.70% 0% 100% 100%

22500.00 3221.00 25721.00 25721.00 7943.61 179.67

34515.00 0.00 34515.00 4430.02 38945.02 0.00 0.00

25% 25% 25% 25% 25% 0% 25% 100%

100% 100% 100% 49% 25% 100% 25% 85% 25% 0% 0% 0%

Duncans Industries Ltd. (DIL)

25% 25% 25% 0% 100%

1436.84 31.55 242.75 406.91 2118.05 0 2118.05 28665.49 28665.49 81478.02

MARKET REPORT / MARKETING ARRANGEMENT

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

Location Bagracote Birpara

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

Kanpur Fertilizers & Cement Ltd (KFCL) (wholly owned subsidiary of

12.1.1 Rationale / Justification for De-merger:

Duncans Industries Ltd. (DIL)

12.1.2 Share Exchange / Swap Ratio :

12.1.3 Approval of Secured Lenders for de-merger:

Duncans Industries Ltd. (DIL)

Jaypee Group forming a joint venture company. CBI, SBI, SBT

(ii) M/s. Jaiprakash Associates Ltd ( herein after referred to as

fertilizer business -21

Duncans Industries Ltd. (DIL)

M/s Jaiprakash Associates Ltd (JAL):

76,28,77,132 38,46,65,060 114,75,42,192 2,124,634,633

35.91 18.10 54.01 100.00

Duncans Industries Ltd. (DIL)

Duncans Industries Ltd. (DIL)

99.76 0.04 0.04 0.04 0.04 0.04 0.04 100.00

2000 2000 2000 2000 *2000 65000 75000 1,50,000