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Nov 2009

INFORMATION MEMORANDUM

Bedmutha Industries Ltd (BIL) Detailed Project Report for Term Debt Financing

Bedmutha Industries Limited

IMPORTANT NOTICE
This Information Memorandum (IM) contains proprietary and confidential information regarding Bedmutha Industries Ltd. (BIL). The IM has been prepared by SYNERGY FINANCIAL SERVICES based on the information provided by BIL and the published information available. The financial projections in the Information Memorandum have been prepared for the limited purpose of circulation among the potential investors. The financial projections represent, to the best of knowledge and judgment, BILs expected financial position, results of operations and cash flow situation for the projection period as relating to its proposed expansion project. These projections should not be construed as future earnings guidance for the Company as they may be affected adversely by various risk factors inherent to the Companys business, changes in economic conditions, legislation and other force-majeure circumstances.

SYNERGY FINANCIAL SERVICES has not independently verified all of the information contained in this IM and the work performed by SYNERGY FINANCIAL SERVICES is not in the nature of audit or due-diligence. Neither SYNERGY FINANCIAL SERVICES/ BIL, nor any

of the directors, employees or advisors make any express or implied representation or warranty and no responsibility or liability is accepted by any of them with respect to the estimates or forecasts set forth in this IM or the underlying assumptions on which they are based or any credit decision taken on the basis of this IM. Estimates, statistics, opinions and forecasts contained in this document are based on BILs own information and knowledge. They are provided in good faith, but by their nature, are based on a number of assumptions and are subjective. This IM is furnished on strictly confidential basis and is for the sole use of the person / Company to whom it is addressed. Neither this IM, nor the information contained herein, may be reproduced or passed to any person or used for any other purpose other than stated above. Financial Advisor:

Synergy Financial Services


Planet Home Building, 2nd Floor, 85 M G Road, Camp, Pune 411001 Mr. Shridhar S Shinde Cell: 09922707373 E-mail: shridharsshinde@yahoo.com .

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CONTENTS Executive Summary Introduction 2.1 Company Profile 2.2 Our Existing Business Operations 2.2.1 Manufacturing facilities 2.2.2 Steel Wire Division 2.2.3 Consultancy Division 2.2.4 Power Division 2.3 Share Capital and Shareholding 2.3.1 Authorized Share Capital 2.3.2 Shareholding details 2.4 Organogram of BIL 2.5 Board of Directors Financials of Existing Operations 3.1 Division-wise and Product-wise Revenue Break-up 3.2 summary of past financial performance 3.3 Financial Position 3.4 Key Performance 3.5 Banking Facilities Key Management Personnel Industry Background 5.1 Steel & Steel Wires 5.2 Application of Steel Wire and Wire products 5.3 Global Scenario 5.4 Indian Scenario 5.5 Industry Demand 5.5.1 Power Sector 5.5.2 Infrastructure Sector 5.5.3 Automobile Sector & Engineering 5.5.4 Agriculture and Horticulture 5.5.5 General Application 5.5.6 Peer Group 5.6 Future Outlook Expansion Plan 6.1 Project Scope 6.2 Galvanizing Wires 6.3 LRPC Wires 6.4 Spring Wires 6.5 Aluminum Conductor Project Economics 7.1 Project Location 7.2 Project Cost 7.3 Means of Finance Implementation Schedule & Implementation Strategy 8.1 Project Schedule 8.2 Project Implementation Strategy Raw Material and Utilities 9.1 Raw material 9.2 Utilities 5.3 Manpower and Staff Strength

Page Nos 07 13 13 15 15 16 19 19 20 20 20 21 22 24 24 25 26 26 27 29 31 31 32 33 33 34 34 35 35 36 36 36 37 38 38 38 39 42 42 46 46 47 51 53 53 53 56 56 57 58

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Bedmutha Industries Limited

Marketing and Distribution 10. Marketing and Distribution 1 10. Clients 2 11 Project Financials 11. Financials for new Project 1 11. Assumptions 2 11. Key ratios for project on standalone basis 3 11. DSCR for Project on stand alone basis 4 11. Security Margin/ Assets Coverage Ratio 5 11. Key Ratios for Project on consolidated basis 6 11. DSCR for Project on consolidated basis 7 11. Repayment Schedule 8 11. Sensitivity Analysis 9 12 SWOT Analysis of Proposed Project ANNEXURE Synopsis of Group Concerns Philanthropy

10

59 59 60 61 61 61 61 62 62 62 63 63 64 65 66 72

Tabl e No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

TABLES Corporate Snapshot Capacities Achieved by BIL Milestones Achieved by BIL Manufacturing capacity of BIL Business Segment of Bedmutha Industries Ltd Wire portfolio of BIL Industry Snapshot Details of Capital of BIL as on 30th Sept 2009 Top ten shareholders as on 30th Sept 2009 Board of Directors of BIL as on 30th Sept 2009 Banking Details of BIL as on 31st March 2009 Key Management Personnels of BIL Peer Group Snapshot Total Mfg Capacity of Galvanised wire (Post-expansion) Cost of Proposed Project and Means of Finance Details of Area Planning Project Estimate for Land Development and Construction Details of Plant and Machinery Estimate of cost of Misc. Fixed Assets

Page Nos 12 13 14 15 16 17 19 20 20 22 27 29 36 38 47 48 48 49 49

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20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

Estimate of Electrical Installation Cost Estimate of Prelim Expenses Estimate of Pre-operative Expenses Provision of Contingency Term Funding Details Details of IPO Project Schedule Status of Govt Approvals/ Consents/ Applications Details of source of key raw material Manpower Composition of BIL Details of Manpower requirement Assumptions Key ratios for project on stand alone basis DSCR for Project on stand alone basis Security Margin/ Assets Coverage Ratio Key Ratios for Project on consolidated basis DSCR for Project on consolidated basis Repayment Schedule Sensitivity Analysis SWOT Analysis of Proposed Project Corporate snapshot of KIEPL Board of Directors of KIEPL as on 30th Sept 2009 Capital Structure of KIEPL as on 30th Sept 2009 Shareholding pattern of KIEPL as on 30th Sept 2009 Corporate Snapshot of Ashoka Pre-Con Pvt. Ltd Board of Directors of Ashoka Pre-Con Pvt Ltd Capital Structure of Ashoka Pre-Con Pvt. Ltd as on 30th Sept 2009 Board of Directors of Ashoka Pre-Con Pvt Ltd as on 30th Sept 2009 Details of Elme Plast Company Details of Partners as on 30th Sept 2009 Financials of Elme Plast Co Corporate Details of Usha Chemicals Financials of Usha Chemicals Corporate details of Kreepa Steel Industries Financials of Kreepa Industries Corporate Snapshot of BSRVPL Corporate Snapshot of KRBTA Pvt Ltd Financials of KRBTA Pvt Ltd Corporate Snapshot of Vinita Computers Corporate Snapshot of Ganesh Manufacturing Company Corporate Snapshot of Kamal Transport Corporate Snapshot of Jagruti Architects Corporate Snapshot of Precrete Technologies

50 50 50 51 52 52 53 54 56 58 58 61 61 62 62 62 63 63 64 65 66 66 67 67 67 68 68 68 68 69 69 69 69 70 71 71 71 72 72 72 72 73 73

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Bedmutha Industries Limited

Exhibi t No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14

EXHIBIT
Overview of activities of BIL Client-mix in Revenue terms of BIL Orgonogram of BIL Application of Steel Wire Classification of the steel wire grade Grades of Plain Carbon Steel Grades of Plain Carbon Steel LRPC wire Mfg process of LRPC Galvanized Steel and MS Wire All Aluminum Conductors (AAC) All Alloy Aluminum Conductors (AAAC) Aluminum Conductors Steel Reinforced (ACSR) Location Map

Page Nos
16 18 21 32 32 33 35 40 40 41 43 43 43 46

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Bedmutha Industries Limited

1 Executive Summary
1. Company Background Bedmutha Industries Limited (BIL) is a one of the leading and broad based producers of steel wire and wire products in western India. Bedmutha Industries Ltd, the flagship company of Bedmutha group, was incorporated in 1990 and is promoted by Vedmutha family of Nashik. The primary business of Bedmutha Industries Ltd. is manufacturing of galvanized wire, both low and high carbon, for power transmission sector especially for State Electricity Boards (SEBs), automobile sector and agriculture sector. The plant has a total capacity of 60000 MTPA. The company periodically upgrades its facilities and augments its capacity keeping in view the market demand and customer needs. The company is already one of the top 10 producers of steel wire in the country. The company has embarked upon major expansion plan with a view to become one of the top five producers of steel wire. It is planning to install Hi-speed Galvanizing plant with uniform coating and with capability of very heavy coating having an annual capacity of 49000 MTPA. Further they plan to set-up LRPC wire manufacturing plant, with an annual capacity of 36000 MTPA and spring manufacturing plant with a capacity of 18000 MTPA, by importing latest machines. They also plan to set up a manufacturing unit for manufacture of Aluminum rod and conductor with an annual capacity of 42000 MT. In the financial year 2012-13 the company proposes to set up another LRPC line with a capacity of 36000 MTPA and spring wire of 18000 MTPA from their internal accruals. Post-expansion BIL will be one of the top five producers of steel wire both in terms of capacity and product portfolio. The Board of directors consists of six members composing three Promoter Directors and three Independent Directors. The team consists of three professional, one from computer field and other two from finance background. The key promoters are:

2.

Business profile

3.

Management

K R Bedmutha: Chairman - An Electrical Engg, with an experience of over 30 years in corporate business. He laid the foundation of the group and was instrumental in steering the Company to its present form. Mr Vijay K Vedmutha: Managing Director - An Industrial and production Engineer, with more than 20 years of experience in industry. He oversees marketing and finance operations of the Group. Mr Ajay K Vedmutha: A Mechanical Engg, has more than 18 years pf experience in industry. He oversees

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production, planning and control operations of the Company. 4. Financials of the companys existing operations (Rs in lacs)
06-07 Capital Resource and surplus TNW Secured loans Unsecured loan Fixed assets(Net) Sales (net) PBT Current ratio DE ratio 334.95 411.51 746.46 2390.09 470.07 479.28 7251.54 59.01 1.49 0.51 07-08 899.58 478.93 1331.12 3646.58 806.09 1681.42 11454.26 480.33 1.32 0.57 08-09 899.58 1064.97 1926.66 3815.53 918.87 2310.30 14678.93 1074.45 1.36 0.47

5.

Existing banking arrangements

(Rs in lacs)
Bank Working Capital FB NFB 1200 900 900 3000 620 415 340 1375 Term Loan Total

PNB BOI Andhra Bank Total

625 634 180 1439

2445 1949 1420 5814

6.

Industry Overview

The Global wire business is expected to grow to a capacity of 54 million tons by 2010 and in Dollar terms it is expected to grow to US $ 25 billion. North America, Europe and South East Asia each account for approximately 25% each of the Global demand for the Steel Wires. Steel wire market in Asia-Pacific is estimated at $9.4 billion as stated by Global Industry Analysts Inc. In tune with the developed countries, demand of Steel Wires from India is also growing at 5% due to the growth in infrastructure and the automobile sector. Although there is a steady increase in the export of steel wires from India, it only forms 1% of the total global exports of wire business.

Steel Market India is the 5th largest producer of steel globally. Producing about 55 million tonnes (MT) of steel a year, today India accounts for a little over 7 per cent of the world's total production. India is the only country across the world to post a positive overall growth in crude steel production at 1.01 per cent for the January-March period of 2009. The recovery in steel production has been aided by the improved sales performance of steel companies. The steel sector grew by 5.3 per cent in May 2009.

Production

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Steel production reached 28.49 million tonne (MT) in April-September 2009. Further, India, which recorded production of 22.14 MT of steel during April-August 2009, is likely to emerge as the world's third largest steel producer in the current year, according to Goutam Kumar Basak, Executive Secretary, Joint Plant Committee (JPC). The National Steel Policy has a target for taking steel production up to 110 MT by 201920. Nonetheless, with the current rate of ongoing greenfield and brownfield projects, the Ministry of Steel has projected India's steel capacity is expected to touch 124.06 MT by 201112.

Consumption India accounts for around 5 per cent of the global steel consumption. Almost 70 per cent of the total steel used is for kitchenware. However, its use in railway coaches, wagons, airports, hotels and retail stores is growing immensely. India's steel consumption rose by 5.7 per cent to 26.49 MT in the first six months of the current fiscal over the same period a year ago on account of improved demand from sectors like automobile and consumer durables. A Credit Suisse Group study states that India's steel consumption will continue to grow by 16 per cent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.

Source IBEF (Indian Brand Equity Foundation) 7. Companys Plans

In line with its philosophy of quality upgradation, value addition and increasing the range of products to cater to the market demands, the Company plans to set up a mega unit with state of art machinery. They have already been awarded the status of Mega Project by Industries, Energy and Labour Department, Government of Maharastra vide its letter dated 06th July 2009 along with several incentives. The proposed state-of-the-art plant will be located on Ghoti-Sinnar Highway, near Sinnar, Nashik Dist., Maharashtra State. They are planning to increase the galvanized wire capacity by setting up state-of-the-art plant. It plans to install Hi-speed Galvanizing plant of 49000 MTPA capacity with uniform coating and with capability of very heavy coating. set-up LRPC wire and spring manufacturing plant of 36000 MTPA and 18000 MTPA capacity respectively by importing latest machines. set-up Aluminum rod and conductor manufacturing plant

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(with furnace) of 42000 MTPA capacity.

Set up an additional LRPC line with a capacity of 36000 MTPA in 2012-13 and spring wire of 18000 MT PA from internal accrual. The project has been awarded the status of Mega Project by Industries, Energy and Labour Department, Government of Maharastra. The Company is in the process of procuring on outright purchase basis, 100 acres of land on Ghoti-Sinnar Highway near Sinnar, Nashik, Maharastra. After procuring land all the remaining statutory obligations would be got fulfilled.
Cost of Project Land Factory Building Plant & Machinery Miscellaneous Fixed Assets Furniture & Fixtures Electrical Installations Preliminary Expenses Pre-operative Expenses Contingencies IDC Margin for Working Capital INR in Lacs 1500.30 5292.31 14045.65 1011.43 25.08 1579.19 2050.00 450.00 638.54 1070.00 3200.97 30863.4 9 Means of Finance Equity: Internal Accrual IPO Subtotal Debt: Term Loan/ DPG Subtotal Total INR in Lacs

8.a .

Project Status

8.b . COP

TOTAL

MOF

363.49 10500.00 10863.49 20000.00 20000.00 30863.49

Source equity funding

of

8.c

Financial

Out of the equity contribution of Rs. 10863.49 Lacs, the company plans to bring Initial Public Offering of Rs. 10500.00 Lacs & balance from internal accruals. BIL has appointed SEBI registered merchant banker M/s. Ashika Capital Pvt Ltd vide Appointment letter no.ACL:MUM:2009-2010:0091 dated 27.10.09 as lead managers for the management of the issue. The issue is to be underwritten. The company intends to hit the market by March end. The entire process is finalized and DRHP is proposed to be filled within one week of the appraisal of the project. (Rs in lacs)

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Highlightsexisting operations

06-07 Capital Resource and surplus TNW Secured loans Unsecured loan Fixed assets(Net) Sales (net) PBT Current ratio DE ratio Average DSCR 334.95 411.51 746.46 2390.09 470.07 479.28 7251.54 59.01 1.49 0.51

07-08 899.58 478.93 1331.12 3646.58 806.09 1681.42 11454.26 480.33 1.32 0.57 5.34

08-09 899.58 1064.97 1926.66 3815.53 918.87 2310.30 14678.93 1074.45 1.36 0.47

8.d

Financial highlights of the proposed project

(Rs in lacs)
2011-12 Capital Resource and surplus TNW Secured loans Unsecured loan Fixed assets(Net) Sales (net) PBT Current ratio DE ratio Average DSCR 10500.00 419.3 5 10,919.3 5 23,924.0 7 0.00 24,345.4 6 63,496.13 1,698.1 4 1.28 1.83 2012-13 10500.00 3,617.58 14,117.5 8 20,961.23 0.00 25,865.1 7 74,651.4 0 5,341.26 1.48 1.24 1.91 2013-14 10500.00 8,230.2 3 18,730.2 3 17,573.69 0.00 24,442.7 7 99,268.0 7 8,070.6 5 1.55 0.76

9. 10.

Credit requirement Security


For the existing facilities TL WC For the proposed TL

The requirement of the Company by way of term loan is Rs. 20000 lacs. The consortium has already shown interest to take up the term loan in the ratio of working capital sharing.
Primary Charge on existing plant & machinery of the Company. Charge on plant & machinery of the Company to be procured from Bank finance. Collateral Charge on existing land and building along with other personal assets of the directors Extension of the above charge. Personal guarantees Mr Vijay Vedmutha Mr Ajay Vedmutha Mr K R Vedmutha -do-

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Corporate Details
Corporate Snapshot Year of Incorporation Constitution CIN Registered Office Corporate Office Manufacturing Units

Table 1: Corporate Snapshot

Quality Certification Industry Membership

Awards and recognition Board of Directors

Auditors Bankers

1990 Public Limited company (Unlisted) U31200MH1990PLC057863 A-32, Sinnar Co-op Indl Estate, Sinnar, Nashik 422103 B-302,Sai Classic, Gavanpada, Mulund East ,Mumbai 400081 Unit 1: Plot No. A-31-35/57, STICE, Musalgaon, Sinnar, Nashik 103. Unit 2: Plot No. A-70/71/72, STICE, Musalgaon, Sinnar, Nashik 103 Unit 3: Plot No. B-140, STICE, Musalgaon, Sinnar, Nashik 103 Unit 4: Plot No. B-113, STICE, Musalgaon, Sinnar, Nashik 103 ISO 9001:2000 The Steel Wire Manufacturers Association of India (SWMAI) EEPC Small Scale Wire Association Indo Italian Chamber of Commerce and Industry Jain International Trade Organization Nashik Industries and Manufacturers Association Bhartiya Udyog Ratan Award for energy conservation Indian Achievers Award for industrial development Sinnar Udhyog Gavrav Award for Industrial development Eminent Women Engineer Award for Ind. Contribution Mr.K.R.Bedmutha, Chairman Mr. Vijay K Vedmutha, Managing Director Mr. Ajay K Vedmutha, Joint Managing Director Mr. Shital Nahar , Independent director Mr. A Balsubramanian, Independent director Mr N M Kadu, Independent director M/s. Patil Hiran Jajoo and Co. Nasik Punjab National Bank, Nashik Bank of India, Nashik and Mulund, Mumbai Andhra Bank, Pune

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2 Introduction 2.1 Company Profile:


Bedmutha Industries Limited (BIL) is a one of the leading and broad based producers of steel wire and wire products in western India. Bedmutha Industries Ltd, the flagship company of Bedmutha group, was incorporated in 1990 for manufacturing galvanized wire, both low and high carbon, for power transmission sector especially for State Electricity Boards (SEBs), automobile sector and agriculture sector. BIL is a part of Bedmutha Group, spearheaded by Mr. K.R. Bedmutha and has diversified business interest in Steel wire sector, Technical Consultancy, Chemical, Agriculture, Power and infrastructure sector. The day-to-day operation of the group is managed by Mr. Vijay Vedmutha and Mr. Ajay Vedmutha, the sons of Mr. K.R. Bedmutha, the founder of Bedmutha Group. Since its inception the company has grown from 300MT/ month capacity with total wire drawing capacity to 5000 MT/ month with 4 lines. Table 2: Capacities Achieved by BIL
Year Wire Drawing Direct sale of wires 1992-93 1993-94 1997-98 2003-04 2005-06 2007-08 2008-09 16800 16800 18000 42100 60000 5300 1200 15000 22100 Capacity Of total wire drawing, used for Galvanising including stranding wire 3600 6100 11500 16800 16800 25300 25300 Wire nails 1800 1800 PC Wire 10800 Total 3600 6100 16800 16800 18000 42100 60000

MT per annum

Upto 2000, the companys key clients were State Electricity Boards (SEBs). Almost 60% of the production was supplied to Electricity Boards but with delay in payment from SEBs, the company also developed new clients in the private sectors. Today the company has diversified client portfolio with each product segment amounting not more than 25%. The company has invested heavily in plant automation and in eliminating bottlenecks in the manufacturing process. The company has excelled both in terms of financial and physical performance over the years. BIL has 14 offices and branches across India and widespread dealership all over India. With the consolidation of the steel wire business within the group, the company now ranks among the top ten producers in steel wire segment of India.

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The company achieved following milestone since its incorporation: Table 3 ; Milestones Achieved by BIL
Year 1990 1992 1994 1994 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2008 Milestone achieved Year of Incorporation Commenced commercial production with 3600 MTPA De-bottling of existing plant, thereby increasing the Capacity from 3600 MPTA to 6100 MTPA Approved Vendor of Maharashtra Electricity Board Approved Vendor of Gujrat Electricity Board and Karnataka Electricity Board Expansion by adding Galvanized Plant no-2 of 5400 MTPA and total Capacity of 11,500 MPTA Backward intregration by acquiring the Wire Drawing Capacity from M/s. Kamal Wire with a Capacity of 16,800 MTPA in Sinnar, Nashik. Approved Vendor of Rajasthan Electricity Board M/s. Test Engineers and Associates was taken over by Bedmutha Industries Limited Acquired Deemed Export Order from REC (Rajasthan Electric Board) under World Bank Tender 3rd Galvanizing plant was installed adding 5300 MTPA Company acquired ISO 9002 Wire Drawing Capacity has enhanced from 16,800 MPTA to 18,000 MTPA Approved Vendor of Power Grid Corporation 4th Galvanizing plant was installed taking total galvanizing capacity from 16,800 MTPA to 25,300 MTPA Expansion of Wire & Wire Products Capacity from 18,000 MTPA to 42,100 MTPA and Wire Nails Capacity of 1800 MTPA by way of merger, amalgamation of M/s. Ajay Wire Private Ltd., Kamdhenu Wire Private Ltd. and Shreeram Wire Private Ltd with Bedmutha Industries Limited. u/s.391394 of companies Act. Set up Wind Mill in Karnataka with power generation Capacity of 0.225 MW In order to Concentrate more on manufacturing Business the Consultancy Division demerged Wire Drawing Capacity has enhanced from 42,100 to 60,000 MTPA and P.C.Wire Line with a capacity of 10,800 MTPA during March,2009 Name changed to Bedmutha Industries Ltd Acquired 51% stake in Kamlasha infrastructure and Engineering Pvt. Ltd. in order to expand business activities. Joint Venture Agreements with Ashoka Buildcon Ltd. To manufacture Cement prestress concrete poles

2008 2008 2008 2008 2009

Over the years the operations of the company have been taken over by Mr. Vijay Vedmutha and Mr. Ajay Vedmutha, the sons of Mr. K.R. Bedmutha, the founder of Bedmutha Group. The promoters have been in this business line for about three decades and are well-known and well established business group now. In order to achieve the economies of scale and to reap its benefits, the Company has recently completed major restructuring exercise wherein all its group companies in the wire and wire products segment were consolidated into one single entity. Accordingly all the group companies viz. M/s. Ajay Wire P. Ltd., M/s. Kamdhenu Wire Pvt Ltd and M/s. Shriram Wire Pvt. Ltd. have been merged with BIL as per High Court order dated 28th Sept 2009. The valuation was done by M/s. Dalal and Shah, Chartered Accountants.

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2.2 Our Existing Business Operations:


2.2.1 Manufacturing Facilities
The company has its manufacturing facilities located in the industrial estate (STICE) at Sinnar, Nasik. The merged company has in all four units in the same area. The units have locational advantage in terms of connectivity: Being located in a backward area, the company is eligible for all the benefits applicable to the industries located in backward area. Strategic location advantage in terms of road and rail connectivity. Close proximity to important cities such as Mumbai, Pune, Nasik and Surat. Mumbai Sea Port is at a distance of 200 KM from Sinnar, leading to raw material transport. Table 4: Manufacturing capacity of BIL
Units Unit I Unit II Unit III Unit IV Location Plot No. A-31-35/57, STICE, Musalgaon, Sinnar, Nasik 422 103. Plot No. A-70/71/72, STICE, Musalgaon Sinnar, Dist: Nasik Plot No.B-113, STICE, Musalgaon, Sinnar, Dist Nasik 422 103. Plot No. B-140, STICE, Musalgaon, Sinnar, Dist Nasik 422 103. Product Wire Drawing Galvanized Wire Wire Drawing Spring Wire PC wire Wire Nail Chain link Stranding Capacity Chin link Barbed Wire Installed Capacity

25300 MTPA 22100 MTPA 10800 MTPA 1800 MTPA 2400 MTPA (capacity included in capacity of unit II.)

Post-expansion BIL will be one of the top five producers of steel wire both in terms of capacity and product portfolio. Over a period of time the Company has diversified its activities into related technical field such as consultancy and power. In order to reflect diversified interest of the company, the name of the company was changed from Bedmutha Wire Company Ltd (BWCL) to Bedmutha Industries Ltd (BIL) in Oct 2009.

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Details of the Wire, Consultancy and power division are as under Exhibit 1: Overview of activities of BIL

Table 5: Business Segment of Bedmutha Industries Ltd


1 2 3 Business Division Steel wire and wire products Consultancy Division Power Division Productions MS wire, GI Wires, PC wire, spring wire, wire nails NA Power Assets Capacity/ Assets 60000 MTPA NA Windmill 225 kva LoI for small Hydro Power project Location Sinnar, Nasik Mumbai Gadag, Karnataka

2.2.2 Steel Wire Division


Post-merger, BIL has wide product range in wire and wire product segment. Starting from manufacture of galvanized wire way back in 1992, the Company has gradually added to its products portfolio to cover a wide range of steel wires used by various industries such as infrastructure, power, automobile, engineering, horticulture and defence: Table 6: Wire portfolio of BIL
Type of wire Galvanized steel and M.S. wire Cable Armour wire, Round Wire and Flat Wire A.C.S.R. wire, Wire Single and Stranded Stay wire Earth wire Chain link fencing Barbed wire Application Telephone, Agriculture, Wire Netting, Barbed Wire, Welding Rods, Fasteners, etc Power Cables Power Conductors Power Lines H.T. Transmission Lines Defence, border fencing, farm and industrial fencing Defence, border fencing, farm and industrial fencing

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- Capacity
The commercial production commenced in 1992 with 300 MT/ month capacity having single galvanizing line. In 1994 the company did its first expansion by de-bottling of the existing galvanizing plant thereby enhancing the total galvanizing capacity to 508 MT/month. In 1997 the capacity of galvanizing plant was further expanded by 450 MT/month by adding plant No.2. In 1998, the Company went in for backward integration by acquiring the Wire drawing capacity from M/s. Kamal Wire with a capacity of 1400 MT/month in Sinnar, Nashik. The third and fourth galvanizing lines were added in 2003 and 2008 increasing the galvanizing capacity by 1150 MT/month. In 2005 the wire drawing capacity was expanded by 100 MT/month. In 2008 the group companies, M/s. Ajay Wire Private Ltd., Kamdhenu Wire Private Ltd. and Shreeram Wire Private Ltd were amalgamated with Bedmutha Industries Limited. u/s.391-394 of companies Act and the company expanded their wire & wire products capacity by 2008 MT/ month including Wire Nails Capacity of 150 MTPA. During March 2009, the wire drawing capacity was enhanced by 1492 MT/month including P.C.Wire Line by 900 MT/month.

- Facilities
With a view to consolidate their existing wire and wire products manufacturing activities all the group companies viz. M/s. Ajay Wire P. Ltd., M/s. Kamdhenu Wire Pvt Ltd and M/s. Shriram Wire Pvt. Ltd. have been merged with BIL as per High Court order dated 28th Sept 2009.

- Major Customers

Some of the key customers of company are: Polycab MK Spring Ltd RPG Cables Ltd Suprajit Industries Finolex Cables Ltd Tata Johnson Ravin Cable Ltd Mand M Vendors Universal Cable Bajaj Auto Vendors Tata Fecaso Bharat Wire Rope Bajaj Electricals Sterlite Industries Ltd SEBs of Gujarat, Maharashtra and Kerala. Bharat Glass Tubes Ltd.

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The client-mix in the terms of revenue is as follows: Exhibit 2: Client-mix in Revenue terms of BIL

- Potential:
Table 7: Industry Snapshot Industry Highlights Industry Structure Total number of Wire Drawing The Steel wire Industry is growing at Units registered with Steel a rate of 5-7% p.a. However the Ministry was 100 with annual growth in this sector is expected to installed capacity of 1,475,750 increase in leaps and bounds in the tonnes. years to come. Out of these registered units, 26 Out of the per capita consumption with annual installed capacity of of steel in the country, per capita 502,585 tonnes were found to be consumption of steel wire is only in working condition. 5%. The total production of Steel However with the expected pace of Wires across various grades was development this figure is likely to to the extent of 400,000 tonnes go up to 7-8%. in the organized sector. Current Statistics Total Installed Capacity 2.118 Million Tons Capacity Utilization 80% Total Production 1.694 Million Tons Export 0.12 Million Tons (7%) Import 0.05 Million Tons Total Demand in the country 1.624 Million Tons Source Steel Wire Manufacturers Association of India (SWMAI Industry Source

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Industry Demand:
The demand for the steel wire is derived demand. The key end-users of steel wire are: 1. Power Sector i. Power Transmission and Distribution ii. Power Cable iii. Conductors iv. Power Line Construction Sector i. Bridges ii. Roads iii. others Telecom Sector i. Telephone lines Automobile Sector Agriculture and Horticulture Sector. Engineering Sector General Application

2.

3. 4. 5. 6. 7.

2.2.3 Consultancy Division


The company also has a technical consultancy division. The activities of the technical consultancy division are categorized as Inspection activities and Consultancy activities. The main services provided are of Stability and Safety Certification, NDT Services, 3rd Party Procurement Inspection and Failure risk assessment. They also render the services as Chartered Engineers, Surveyors, Loss Assessors and Government approved Valuers. They are Competent Persons (Agency) under the Factories Act and Petroleum and Explosives Safety (PESO) and provides safety programme against fire and explosion. Some of the major assignments carried out by Consultancy Division are. The technical consultancy division is empanelled with companies such as HPCL, BPCL, IOC, Gujarat Refinery, Gandhar Oil Mills, Thermax, Godrej Soaps etc. In March 2009 the Consultancy Division has been demerged in a separate entity named as K.R.Bedmutha Techno Associates Pvt Ltd.

2.2.4 Power Division


Wind Mill Project,

The company recently embarked into the production of power by setting up a single windmill at Gadag, Karnataka, which is wind proven site in Karnataka. It is one of the best sites in India for best return on Investment. Installing windmill in Karnataka has the following benefits:

o o o

Karnataka purchase price is at Rs.3.40 per unit Karnataka allows the sale of power to 3rd Party in certain cases. Electricity Duty/Tax is exempted

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Bedmutha Industries Limited

Wheeling and Banking facility allowed

All the activities in Power sector is carried out through Power division of the Company. The installed capacity of the wind turbine generator of SWL (Southern Wind Farms Ltd.) make installed by the Company is 75 Kw. The windmill is being maintained by Tejasri Developer (P) Ltd. The Company has plans to install two more windmills in the near future. The commercial and other benefits accruing to the Company are:

o
o

o o

Generation of approx 6.00 Lakhs +/-5% units Power purchase by KPTCL @ Rs.3.40 per unit Carbon Credit revenue accrues @ 30 paise per unit generated 100% tax exemption for 10 years under Section 80 IA of IT Act.

The Company has power purchase agreement with Karnataka government and is considering downstream integration into distribution business as company is already producing steel wire which is the basic requirement for power transmission and distribution.

2.3 Share Capital and Shareholding:


2.3.1 Authorized Share Capital
The details of the authorized and paid-up capital of BIL as on 30th Sept 2009 are as under: Table 8: Details of Capital of BIL as on 30th Sept 2009 Particulars Rs. In Lacs Authorized Share Capital 1,50,00,000 Equity Shares of Rs. 10 1500.00 each Issued, Subscribed and Paid up Share Capital 89,95,838 Equity Shares of Rs. 10 899.58 each

2.3.2 Shareholding details


BIL is a closely-held company. The entire equity is held by the Bedmutha Family. Top-10 shareholders of BIL as on 30th Sept 2009 are as under. Table 9: Top ten shareholders as on 30th Sept 2009
Sr. No 1 2 3 4 5 6 7 8 9 10 Top-10 Shareholders Mr. Ajay K. Vedmutha M/s Bedmutha Sons Realty Ventures P. Ltd. K R Bedmutha (HUF) Kachardadas R. Bedmutha Miss Divya Ajay Vedmutha Miss Lavina Ajay Vedmutha Mrs. Kamalabai K. Bedmutha Mrs. Usha V. Vedmutha Mrs. Vinita A. Vedmutha Miss. Sneha V. Vedmutha % of holding 9.60% 9.32% 2.66% 8.63% 8.71% 8.48% 4.32% 9.95% 8.48% 8.71%

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2.4 Organogram of BIL

Exhibit 3: Orgonogram of BIL

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2.5 Board of Directors


The Board has six members composing three Promoter Directors and three Independent Directors. The overall management of the company vests with the Board of Directors. The day-to-day management of the Company is looked after by the Managing Director and the Joint Managing Director under the overall guidance of the board. They are assisted by a team of qualified and experienced executives and professionals. Table 10: Board of Directors of BIL as on 30th Sept 2009
1 2 3 4 5 6 Mr. Mr. Mr. Mr. Mr. Mr. Name of Director K.R. Bedmutha Vijay. K. Vedmutha Ajay. K. Vedmutha Shital Nahar A Balasubramanian N M Kadu Age 74 yrs 45 yrs 42 yrs 38 yrs 61 yrs 60 yrs Position Chairman MD Jt. MD Director Director Director Classification Promoters Group Promoters Group Promoters Group Independent Independent Independent Qualification B.E. (Electrical) B.E., MBA-Fin B.E. (Mech) BE Computer B Sc, FCA M Sc., CAIIB

Brief profile of Directors:

i)

Mr. K.R.Bedmutha, 74 is Electrical Engineer by qualification. He is a founder of Bedmutha Group. Under his able leadership the Bedmutha Group has grown from single product to multi-product group.

Mr. K.R. Bedmutha has worked with leading companies such as Birla Group, Heavy Engineering Corporation, and Indian Tools etc before venturing in the industry. He is a member of Institute of Engineers (India), Indian Institute of Industrial Engineers, Institute of Works Managers (London), Board of National Safety Council and Industrial Safety and Health Association. Mr. Bedmutha promoted Bedmutha Wire Company Ltd in 1990 along with his sons. He has promoted other group companies M/s.Elme Plast, M/s. Kamal Wires K.R. Bedmutha Techno Associates etc. K R Bedmutha is Executive Chairman of the company and represents the promoter group.

ii)

Mr. Vijay. K .Vedmutha, 45, elder son of Mr. K.R. Bedmutha is Industrial and Production Engineer by qualification. He has done MBA with specialization in Finance. He is a member of Institute of Engineers India, Associate Member of Institute of Valuer's (India), Institute of Surveyors and Loss of Assessors, Associate Member of the Society of Non-destructive Tester Institute and Indian Institute of Plant Engineer.

Vijay Vedmutha is Managing Director of the company and represents the promoter group. He joined the company in 1985 and oversees Marketing and Finance operations of the company.

iii)

Mr. Ajay K. Vedmutha, 42, younger son of Mr. K.R. Bedmutha is a Mechanical Engineer by qualification. He is member of Institute of Engineers of India, Deccan Sugar Technologies and Association, Life Member of the National Safety Council and Institute of Energy Engineers.

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Ajay K Vedmutha is Joint Managing Director of the company and represents the promoter group. He joined the company in 1987 and since then has been on the board of directors. He is responsible for Production, Planning and Control operations of the company.

iv)

Mr. Shital Nahar 38, is a B.E. Computer and Diploma in Electrical Engg by qualification. He is a past President of Computer and Media Dealers Association (CMDA) and is currently a member in advisory capacity. He is engaged in the business of computer Hardware and networking.

He joined the companys board in 2007-08 as an Independent Director. His area of expertise is Information Technology, Computer Networking and latest technology applications.

v)

Mr. A. Balasubramanian, 61 is a Charted Accountant by qualification and is a former Chief General Manager of Punjab National Bank with vast and varied experience in banking and industry.

He joined the companys board on 14.11.2009 as an Independent Director. His area of expertise is Banking, Finance and Risk Management.

vi)

Mr. N M Kadu, 60 has Master degree in Science with additional qualification of, CAIIB (Certified Associate of Indian Institute of Bankers). He is a former Assistant General Manager of Punjab National Bank with vast experience.

He joined the companys board on 14.11.2009 as an Independent Director. His area of expertise is Banking, Finance and Risk Management.

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3.0

Financials of Existing Operations

3.1 Division-wise and Product-wise Revenue Break-up


(INR in Lacs)
Sr No A For the year ending 31st March Particulars Wire and Wire Products GI Wire/ GI Patented Wire MS/ HC Wire Deemed Export Sales GI Wire Sale (Exempted) MS Wire Nails / Wire Nail GI Chain Link Subtotal B Ancillary Sales Conversion Charges Zinc, Lead and Ash Sales Scrap Subtotal C D Subtotal (A + B) Trading Sales: Trading Activities Factory Building Plant and Machinery Wire Rod Sales Highseas Wire Rod Sales Subtotal E Energy Wind mill Energy Sales F G Consultancy KRBTA Division Other Sales Professional Charges Electronic Component Sales Misc Sales Mechl Repairs and Main Sales 14.36 58.7 7 18.7 5 3.4 70.0 3 24.7 6 256.46 312.32 488.28 0.5 7 10.2 7 1,287.32 1,192.02 708.68 449.13 3,539.48 95.30 2,381.67 1,157.65 31.7 6 23.7 1 368.22 1,581.34 166.58 56.98 36.18 259.74 5,658.27 180.18 13.1 1 37.5 0 230.79 7,502.95 59.1 5 18.7 1 76.0 7 153.92 12,489.66 5,398.53 7,272.16 4,074.29 360.69 2.20 961.26 0.10 5,382.18 232.05 1,224.48 433.45 463.70 2.0 3 12,335.74 9,940.01 1,913.66 16.3 4 FY07 Pre-Merger FY08 Post-Merger FY09 Audited

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2 Machine Division Subtotal H Grand Total Excise Duty, S.tax and Levies Carriage Inward I Total Sales 27.53 41.89 7,243.94 1,086.24 6.73 8,336.9 1 80. 94 11,436.26 2,030.80 17.7 9 13,484.84 94. 79 14,664.33 2,981.81 14.6 0 17,660.74

3.2 A summary of past financial performance is presented here under:


(INR in Lacs)
For the year ending 31st March Particulars Sales less: Excise Duty and Taxes Net Sales Other Income Increase/ (Decrease) in Stocks Total Income Expenditure EBIDTA Depreciation Interest Profit Before Extraordinary Item/Prior Period Items Forex Losses Prior Period Expenses Profit Before Tax Corporate Tax Deferred Tax FBT Profit/ (Loss) After Tax Profit/(Loss) brought forward Amount available for Appropriation FY07 PreMerger 8,336.94 1,085.28 7,251.56 13.06 (134.50) 7,130.12 6,749.86 380.25 84.55 259.96 35.75 (23.51) 0.23 59.03 24.65 4.29 3.30 26.78 160.11 186.89 FY08 PostMerger 13,484.90 2,030.64 11,454.26 91.91 (18.20 ) 11,527.9 7 10,370.9 8 1,156. 99 218. 83 467. 63 480. 53 0.00 0. 20 480. 33 51.5 4 64.4 2 6.0 0 358. 37 148. 60 506.9 FY09 Audited 17,660.7 4 2,981.8 1 14,678. 93 52. 50 446. 28 15,177. 71 13,351. 65 1,826. 06 267. 03 473. 74 1,085. 29 0.00 10. 84 1,074. 45 271.5 6 98. 29 4.2 6 700. 34 376.5 4 1,076.8

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Sales BIL registered net sales of Rs.14679 lacs, Rs. 11454 Lacs and Rs. 7252 Lacs respectively in FY 2008 and FY 2007. The net sales of FY 2009 and FY 2008 of BIL shows a growth of almost 28% and 58% over net sales of FY 2007 and FY 2008 respectively. The net sales growth is principally on account of merger and better marketing. Profitability: The Company has registered a PBIDT margin of over 12% in as compared to over 10% in FY 2008 and over 5% in FY 2007. The PAT Margin has moved up to over 4.7% and 3.1% in FY2009 and FY2008 respectively. It has been on the back of better realizations and on account of synergies derived from merger.

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3.3. Financial Position


(INR in Lacs)
For the year ending 31st March Particulars Capital Reserves and Surplus Shareholders Fund Secured Loans Unsecured Loans Loan Fund Deferred Tax Liability Total Liabilities (TL) Gross Block Accumulated Depreciation Net Block Capital work-in-progress Investments Goodwill on account of Merger Current assets, loans and advances Less: Current Liabilities and Provisions Net Current Assets Misc Exp to the extent not written off Total Assets FY07 PreMerger Audited 334.95 411.51 746.46 2,390.09 470.07 2,860.16 64.54 3,671.16 1,192.47 713.19 479.28 40.72 10.77 86.51 3,268.69 220.54 3,048.15 5.73 3,671.16 FY08 PostMerger Audited 899.58 478.93 1,378.51 3,646.58 806.09 4,452.67 121.85 5,953.03 3,061.40 1,379.98 1,681.42 33.72 16.58 101.11 5,295.71 1,186.21 4,109.50 10.70 5,953.01 FY09 Audited 899.58 1064.97 1954.55 3815.53 918.87 4734.40 220.14 6919.09 3957.31 1647.01 2310.30 0.00 19.26 89.99 5865.48 1429.65 4435.83 63.82 6919.09

3.4 Key Performance


For the year ending 31st March Particulars EBIDTA Margin (%) EBIT Margin (%) PAT Margin (%) Raw Material (%) Current Ratio TOL: TNW D:E Ratio FY07 Pre-Merger Audited 5.33% 4.15% 0.38% 76.85% 1.49 x 3.50 x 0.51x FY08 Post-Merger Audited 10.04% 8.14% 3.11% 77.0% 1.32 x 3.63 x 0.57 x FY09 Audited 12.03% 10.27% 4.61% 78.0% 1.36 x 2.72 X 0.47 X

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3.5 Banking Facilities


BIL is enjoying the credit facilities under consortium of Punjab National Bank, Bank of India and Andhra Bank. PNB is the lead bank of the consortium. The status of facilities enjoyed by the company is: Table 11: Banking Details of BIL as on 31st March 2009 (INR in Lacs)
TL Sancti on 625.00 C.C. Sancti on o/s 1200.0 0 978.35 Non-Fund Based Sancti on o/s 620.00 176.2 0 313.4 1 Total o/s 1563.9 6

Bank and Branch Punjab National Bank Raviwar Karanja Branch, Nasik city, Nasik 422 001 Bank of India Nasik Main Branch, Mundada Market, 203 A, M.G. Road, Nasik 422 002. Mulund East Branch Shree Vallabh Apartment, Hanuman Chowk, Mulund (East), Mumbai 400 081 Andhra Bank 610, Sachapir Street, Camp, Pune 411 001 Total Exposure

o/s 409.4 1 199.0 1

540.00

900.00

628.38

415.00

1140.8 0

360.00

194.1 2 124.4 2 926. 96

445.00

434.53

345.00

222.2 2 287.4 0 999. 23

850.87

180.00 1705.0 0

900.00 3445.0 0

851.07 2892. 33

420.00 1800.0 0

1262.8 9 4818. 52

Corporate Term Loan of PNB, BOI and Andhra Bank is secured by 1 st Pari Passu charge on Land, Building and Plant and Machinery of the company. Working Capital facility of PNB, BOI and Andhra Bank is secured by way of 1st Pari Passu charge on Stock and Book Debts and 2nd Pari Passu charge on Land and Building and Plant and Machinery of the company. Term Loan outstanding as on 30th Sept 2009 is Rs. 999.31 Lacs. Fund Based Working Capital facility utilized as on Sept 2009 is Rs. 3172.61 Lacs. Non-Fund Based Working Capital facility utilized as on Sept 2009 is Rs. 1962.18 Lacs

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The Company has been sanctioned the following loan facilities: (Rs in lacs)
Bank Sanction letter Facilities Punjab National Bank Letter No NIL dated 15.06.09 issued by its Nasik City, Nasik Branch T/L 1 T/L II T/L NEW Cash Credit (Enhanced from Rs.1200) Bank of India Letter No NIL dtd 09.09.2009 issued by its Nasik City, Nasik Branch T/L 1 T/L II T/L (Windmill) T/L NEW Cash Cr (Enhanced from Rs.1200) Andhra Bank Letter No 906/52 dtd 21.05.2009 issued by its Pune Branch T/L 1 T/L NEW Cash Cr (Enhanced from Rs.900) 180 (115.70) 325 1300 BG (enhanced from Rs.40.00) FLC (Enhanced from Rs.375.) 80 180 (121.18) 360 (345.79) 360 (54.43) 225 1800 BG (reduction from Rs.90.00) FLC (Enhanced from Rs.330.) 110 Fund based Limit (Bal O/s) 240 (174.88) 225 (187.32) 220 1800 Non fund based Facilities BG FLC (Enhanced from Rs.500. Limit 110 780

780

540

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4. Key Management Personnel


The broad guidelines are formulated by the board of directors and day-to-day management of the company is looked after by the MD assisted by the team of professional qualified and experienced executives. The details of the key management personnel are Table 12: Key Management Personnels of BIL
Name Mr. Vijay K Vedmutha Mr. Ajay K Vedmutha Mrs. Vinita A. Vedmutha Mr. S. M. Shinde Mr. C B Gupta Mr J C Misaal Mr. Sibasis Bhadra Dr. Kumar Bhagchandani Mr Soumitro Mukherjee Mr. Vikas Nair Mr. Nilesh Designation Managing Director Joint Managing Director Chief Executive Officer Dy. General Manager Asstt. General Manager General Manager General Manager Vice President Finance Head Sr. Manager Company Secretary Department Commercial, Marketing and Finance Production, Planning and Control General Administration and HR Production Commercial Commercial Marketing General Administration and HR Finance Acctts and Finance Legal and Secretarial Age 45 yrs 42 yrs 40 yrs 32 yrs 59 yrs 40 yrs 45 yrs 58 yrs 49 yrs 28 yrs 25 yrs Qualification BE, MBA (Fin) BE BE BE (Mechanical) B.Com, LLB DME, DMM, DBM BE Mech PhD in HRD CA M.Com, DCA ACS, M Com

1. Officer

Mrs. Vinita A. Vedmutha, Chief Executive

Mrs. Vinita is a Computer Engineer by qualification. She is over all incharge of finance division and also controls manufacturing activities at BIL. She has been declared as Eminent Woman of the Year 2008. 2. Mr. S. M. Shinde, General Manager Planning and Control (PPC) Production

Mr. Shinde is an Engineering graduate by qualification. Mr. Shinde is in charge of manufacturing (technical and commercial) activities. He is with the Company since inception and has widely traveled across the country as well as abroad and is aware of the latest manufacturing techniques involved in manufacturing high speed galvanizing wire as well as LRPC wire. 3. Mr. C B Gupta, AGM Commercial.

Mr. C B Gupta, is a Commerce as well as Law graduate. He has 35 years experience in Wire Industry. He deals with Government supplies and is well conversed with legal formalities involved in procuring tenders of global status. Mr. Gupta is also managing order processing system, production planning and distribution of the Company through godowns located at Silvassa, Daman and Bangalore.

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3. Mr. JC Misaal, General Manager - Material


Mr. Misaal, aged 40 years, is a DME, DMM, DBM by qualification. He is having more than 15 years of experience in material procurement and management. Mr. Bhadra is the head of Material procurement and management Division of the Company. 4. Mr. Sibasis Bhadra, General Manager Marketing. Mr. Bhadra is an Engineering Graduate by qualification. He has also completed Diploma in Business Management and is a trained Internal Auditor for Quality Management System. He is having more than 25 years of industrial experience in Wire Industry. Mr. Bhadra has worked with Bandel Thermal Power Station and Usha Martin Ltd.. Mr. Bhadra is the head of marketing Division of the Company. 5. Dr. Kumar Bhagchandani, Vice President. Mr. Kumar is doctorate in HRD from Asian Institute of Management, Manila, Philippines, affiliated to Harvard Business School. Dr. Kumar has received Lead Auditor Certification from worldwide Quality Management Networks, London in 1998 and National Status Award for intellectual development 2007 from Intellectual Peoples and Economic Growth Association, New Delhi. Dr. Kumar Bhagchandani is having more than 30 years of industrial experience. Dr. Kumar is responsible for supervision of new project development and overseas corporate affairs of the company. 6. Mr. Soumitro Mukherjee, CA Accounts Mr. Mukharjee (aged 49 years). is a Chartered Accountant by qualification. He has 18 years experience of working with a leading companies like Voltas Ltd., Float Glass India Ltd., Eternit Evertest ltd. etc., besides 5 years of independent practice in taxation. He is in incharge of finance division. 7. Mr. Vikas Nair, Sr. Manager Accounts Mr. Nair (aged 28 years). is a Commerce graduate. He has four years experience of working with a leading CA in Nashik. He is part of finance division. He also looks after Company Law matters and is a member of Internal Audit Committee. 8. Mr. Nilesh Amrutkar Mr Amrutkar (aged 25 years) is Company Secretary as well law graduate by qualification. He has recently joined the Company and is incharge of Company Law and Secretarial matters of the Company.

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5. Industry Background 5.1 Steel & Steel Wires:

Among all the metals steel is most widely used metal in manufacturing wires having vast application because of its abundant availability strength and multiple applications. Steel is one of the most widely consumed metals. Because of the critical role played by steel in infrastructural and overall economic development, the steel industry is often considered to be an indicator of economic progress. The steel industry's business cycles reflect the general economic activity of a nation. Steel wire being a part of steel industry is highly dependent on the buoyancy of its end-use industries. Conditions in construction and automotive industries largely determine demand for wire products worldwide. Growing investment in infrastructure and higher disposable incomes in several developing economies are key factors driving growth in steel and its derivative products. Steel wire has many uses. As a result, the product range of steel wire manufacturers is being continuously widened. An indicative list of the various types of steel wire and wire products produced in India is given below: Hard Bright Wire Alloy Steel Wire Lock Washer Wire Umbrella Rib Wire Card and Gill Pin Wire Stainless Steel Wire Rivet Wire Needle Wire Pre-stressed concrete Wire and Strands Weldmesh Wire Roping Wire Screw and Nail Wire Stay Wire Galvanized Wire ACSR Core Wire Sectional Wire Spring Steel Wire Piano Wire Signal Wire Binding Wire Netting Wire Stitching Wire Staple and Pin Wire Animal Shoe Nail Wire Ring Traveler Wire Hair Pin Wire Ball Bearing Wire Cycle Spoke Wire Tyre Bead Wire Wire Nail Electrode Wire Cable Armouring Wire Bolt Wire Barbed Wire Telegraph Telephone Wire Panel Pin Wire Reed Wire Cold Heading Quality Wire Heald Wire and

Source: Steel Wire Manufacturers Association of India (SWMAI) I

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Application of Steel Wire and Wire products:


Steel wire has many applications. Steel wire in all its variants and alloy finds application in Power, Automobile, Engineering, Construction and other sectors. Steel wire and its allied products find application in the some of the industry: 1. Automobile Industry 2. Construction Industry 3. Power Industry 4. Engineering Industry 5. General Application 6. Railways etc 7. Others. Exhibit 4: Application of Steel Wire

Source: Keynote Research

The steel wire grades are classified into Plain Carbon steel wire, Stainless steel wire and Alloy Steel wire grades. Exhibit 5: Classification of the steel wire grade
Classification of Steel wire

Alloy Steel Wires

Stainless Steel

Plain Carbon Steel Grade

Source: Steel Wire Manufacturers Association of India (SWMAI)


The Plain Carbon steel grade is further classified into Black/ Uncoated wires which form around 75 to 80% and Galvanized Wire, Copper Coated, Bronze Coated or other material coated which forms around 20 to 25%. Exhibit 6: Grades of Plain Carbon Steel

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Source: Steel Wire Manufacturers Association of India (SWMAI)

Global Scenario
In 2005 the Global wire business was to the tune of 43 million tons and in terms of Dollars it was around US $ 20 billion. This market is expected to grow to a capacity of 54 million tons by 2010 and in Dollar terms it is expected to grow to US $ 25 billion. North America, Europe and South East Asia each account for approximately 25% each of the Global demand for the Steel Wires. Steel wire market in Asia-Pacific is estimated at $9.4 billion as stated by Global Industry Analysts Inc. In tune with the developed countries, demand of Steel Wires from India is also growing at 5% due to the growth in infrastructure and the automobile sector. Although there is a steady increase in the export of steel wires from India, it only forms 1% of the total global exports of wire business. It is for the wire industry to meet the challenges both in the domestic and the global world by taking full advantage of their capacities, updating the technology, going for more value added products, reduction in cost and striving for continuous improvement, look for export opportunities with innovation and creativity. Some of the leading companies in the steel wire sector are:

NV Bekaert SA, Belgium Global Steel Wire S.A. Santander, Spain Arbed. Luxemburg (Now part of Arcelor Mittal Group) Tata Wires, India (Division of Tata Steel Ltd) Shanghai Baosteel Group Corporation, China

Indian Scenario
Steel Wire Industry was established in India in 1920s and has progressed remarkably. It has been successful in achieving a wide product range comprising of various types of high carbon, alloy steel and special steel wires, in addition to mild steel wires. Versatility has been achieved by the industry for meeting the requirements of numerous consuming sectors. This sophistication has been possible due to continuous and well-planned R and D efforts on part of the manufacturers. The result has been that the industry is in a position to manufacture and supply steel wires, both in the domestic and the international markets, in accordance with ASTM (American Society for Testing and Materials), DIN (German Institute for Standardization), JIS (Japanese Industrial Standards), etc. in addition to ISS. Radical Economic Reforms introduced since 1991 aimed at deregulating the productive sectors of the economy for more efficient and faster growth and opening up of the Indian economy to global competition through liberal trade and investment policies have ushered in far-reaching changes in industrial, financial and trading sectors which have added important dimension to the growth of the steel wire

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industry. As a result, the product range of steel wire manufacturers is being continuously widened. Some of the major players in steel wire production in India are: Tata Steel Limited (Wire Division) Usha Martin Ltd. Ramsarup Industries Ltd Rajratan Global Wires Ltd Bedmutha Industries Ltd. Indian Steel and Wire Products Ltd Miki Steel Works (P) Ltd. Vidushi Wires P Ltd The Indian Steel Works (P) Ltd. HD Wire

Industry Demand
The demand for the steel wire is derived demand. Conditions in the infrastructure, construction and automobile industries largely determine demand for wire products. Growing investment in infrastructure and other sectors in India are key factors driving growth in steel wires products. The key end-users of steel wire are: 1. Power Sector a. Power Transmission and Distribution b. Power Cable c. Conductors d. Power Line 2. Construction Sector e. Bridges f. Roads g. others 3. Telecom Sector h. Telephone lines 4. Automobile Sector 5. Agriculture and Horticulture Sector. 6. Engineering Sector 7. General Application

Power Sector:
India requires additional capacity creation of at least 1 Lakh MW (close to 80% of the capacity) by 2012 in order to bridge Demand-Supply mismatch. Increase in generation capacity also requires increase in transmission and distribution capacity. With the government emphasis on transmission and distribution (APDR Program) the proposal is for the larger investments in Tand D. As a result, India would be required to invest Rs. 900 Billion across the value chain in the power sector. This will create demand for cables for about Rs. 270 Billion in the next 6 years. Power sector is also the largest consumers of the budget spent with around 30% share in the total spend. Products which are used in power distribution and transmission are G.I. wire, Earth wires, Cable Armoring wire, Conductor wire, and Stay wires, etc.

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After power sector, the next biggest consumer of steel wire is infrastructure sector. With the government focus on the infrastructure, construction of The Golden Quadrilateral Project, and the 7300 km NSEW corridor, the boom in residential and commercial construction, the developments of new airports at all the major cities have all increased the consumption of steel wire products. Steel wire products such as LRPC wires are widely being consumed in the construction of bridges, roads and other heavy constructions.

Telecom Sector:
Today India is the fourth largest telecom market in Asia after China, Japan and South Korea and Indian telecom network is the eighth largest in the world. Telecom sector has undergone the major process of transformation and currently one of the fastest growing sectors. In terms of teledensity India ranks lowest (1.29 telephone lines per 100 people) among the major developing economy providing enormous opportunities. Telecom sector account 10% of the total budget spend. Galvanized steel and MS wire is extensively used in the telecom companies in laying telephones cables etc.

Automobile Sector & Engineering:

The Indian auto component industry has been navigating through a period of rapid changes with great lan. Driven by global competition and the recent shift in focus of global automobile manufacturers, business rules are changing and liberalization has had sweeping ramifications for the industry. The global auto components industry is estimated at US$1.2 trillion. The Indian auto component sector has been growing at 20% per annum since 2000 and is projected to maintain the high-growth phase of 1520% till 2015. High carbon forms of wires are extensively used in the auto components industry such as spring manufacturers and in shock absorbers, clutch wire, wires used in fasteners, etc. The second form of high carbon wires are used in wire ropes which have various applications. Medium carbon forms of wires are used in nail manufacturing, fasteners, trolleys, etc. Some of the applications of these wires ropes are in surface mining wire ropes, underground mining wire ropes, lift elevator wire ropes, general engineering wire ropes, oil drilling wire ropes, etc. Exhibit 7: Grades of Plain Carbon Steel

Agriculture and Horticulture: 37 | P a g e

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Indian Agriculture sector accounts for 27% of the GDP, contributes 21% of total export and raw materials to several industries. Steel wire and wire products such as galvanized wire, barbed wire, chain link fencing, etc are widely used in grape growing, etc. A supporting net is prepared by the farmers using galvanized wire to support delicate climbers like grapes, strawberry, tomatoes etc. Barbed wires are also extensively used in the horticulture, etc for fencing and Chainlink Fencing is used in horticulture for storing of fruits and vegetables.

General Application:
High carbon content wires as well as galvanized wires are extensively used for general industrial purpose such as knitting needles, knitting rings, spring for mattresses, etc which are supplied according to the customers specifications across various industries. Barbed wires are also extensively used in the defense, etc for fencing. Chainlink Fencing is used in the fencing the boundaries of the railway lines.

Peer Group
In India, some of the companies in the steel wire segments are: Tata Steel Limited (Wire Division) Usha Martin Ltd. Ramsarup Industries Ltd Rajratan Global Wires Ltd Bedmutha Industries Ltd. Indian Steel and Wire Products Ltd Miki Steel Works (P) Ltd. The top players based on capacity are: Table 13: Peer Group Snapshot
Company Tata Steel Ltd. @ Usha Martin Ltd. $ Ramsarup Industries Ltd. # Bedmutha Wire Co. Ltd. GI and Others wires Capacity (MT) 199,700 97,200 197,000 109,044 LRPC wire Capacity (MT) 72,000 36,000 36,000 36,000 18, 000 42,000 Spring wire Capacity (MT) Aluminium Conductor Capacity (MT)

Post-expansion BIL will be one of the top-five producers of steel wires in the country. Other leading manufacturers are Tata Steel, Usha Martin and Ramsarup Industries. Source: @: As per Annual Report 2008 $: As per Annual Report 2008 #: As per Research Report

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Future Outlook
From the above, it is apparent that the demand for the steel wire is more dependent on the key infrastructure sector rather than the steel sector. Though steel wire producers consume steel yet the final product is not steel per se. With the double digit growth in power, construction and telecom sector the steel wire sector is undergoing a major process of transformation. While the demand for steel will continue to grow in traditional sectors such as infrastructure, construction, housing automotive, steel tubes and pipes, consumer durables, packaging, and ground transportation, specialised steel will be increasingly used in hi-tech engineering industries such as power generation, petrochemicals, fertilizers, etc. The new airports and railway metro projects will require a large amount of stainless steel. According to an estimate, with the growing need for oil and gas transportation infrastructure, a US$ 118 billion opportunity is waiting to be tapped by steel manufacturers in the next five years. Indian steelmakers are set to make the most of booming global demand for steel pipes and tubes with the government withdrawing the 10 per cent duty on the exports of these products. According to a study by ICICI Direct, Indian steel companies are likely to get 19 per cent of the total global demand in the years to come.

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6. Expansion Plan
6.1 Project Scope
Having established as one of the leading players in the industry and with the completion of corporate restructuring exercise the company has earmarked a major expansion plan. The company is planning to set-up state-of-the-art plant for manufacturing: Expanding existing Galvanizing wire production by installing Hi-Speed galvanizing plant Adding new product LRPC and spring wire by setting-up state-of-the-art production facilities Adding new product Aluminum conductor wire by setting-up state-of-the-art production facilities. The proposed expansion has been classified as Mega Project by Industries, Energy and Labour Department, Government of Maharashtra vide its letter dated 06th July 2009 . The copy of the letter is annexed.

6.2 Galvanizing Wires


In order to meet current requirement of galvanized wire from the power sector which is witnessing tremendous growth, the company plans to set-up new plant by installing Hi-Speed galvanizing machines with uniform coating and with the capability of handling very heavy coating. This High Speed Galvanizing plant, which is proposed to be set up, will have a capacity of around 49,000 MTPA. Post-expansion, the company will be one of largest manufacturers of galvanized wires in the country having combined manufacturing capacity of 74,100 MTPA. Table14: Total Mfg Capacity of Galvanised wire (Post-expansion) Capacity MTPA Existing Capacity 25,100 MT Proposed Capacity 49,000 MT Total Capacity 74,100 MT Some of the key benefits accruing to the company with the installation of latest HiSpeed Galvanizing machines are: 1. Close control on zinc coating: Galvanized wires produced from the existing machines have excess zinc coating of around 20-30% which is beyond requirement as close monitoring is not possible with the existing machines. However, with the new machines tolerance level of upto 5% can be maintained as these machines have in-built zinc control facilities. This will lead to huge saving in terms of the zinc consumption. Hence with zinc, one of the expensive raw materials under control, would see a lot of saving and would make companys products more competitive.

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2. Cost saving Zinc is one of the expensive commodities and with the control on the zinc coating the cost of the final products will come down, making the companys products more competitive. 3. Minimal Man-power requirement The machines are fully computerized including computerized setting of the operations and with minimum human intervention. 4. Flexibility of Product-mix With the latest plant the company will be able to produce galvanized wire with low, medium, high and very high coating from the same set-up with ease. 5. Packing and coil size: With this plant the company will be able to produce jumbo coil of 800 kg to 1000 kg, which is, must for export market.

6.3

LRPC Wires

In order to increase its product portfolio, BIL is planning to set-up LPRC wire manufacturing plant with installed capacity of 36,000 MTPA by importing latest machines from Europe. They propose to increase the capacity by 36000 MTPA from financial year 2013-14, for which the machineries would be procured from internal accruals. Some of the features of the proposed plant will be as follows: The Company proposes to set up a plant having the latest technology with superior output rate for the manufacture of LRPC wire and strands. 1. Highly versatile plant composed of a spool pay-off, din 1600, capable of 6600kg of wire, and a coil payoff to allow using coils arriving from the wire drawing line. 2. Double set of dies, first set of 4 meters capstan, a four planes straightening unit to have a perfectly straight wire. 3. Second set of 4 meters capstans unit with pinch roller set to bunch the wire during cutting cycle, made with hydraulic shear 4. 600kw induction furnace having highly efficient cooling quench with perfect drying of the strand. 5. Double take-up unit to make the final packing. The benefits derived out of this machine are as follows: Wire Drawing is expected to have better quality due to improved wire cooling. Single length joint free strands having a length of a couple of kms can be derived from this plant Synchronized induction furnace will help in the manufacture of best property wire as per international standards A total trouble free machine as the entire plant is thoroughly integrated. PLC operated machine with optimum manpower requirement There are in all about 50 plants of this kind set up all over the world Only Company with similar product line in India is M/s. Usha Martin Has an output capacity of 36,000 mtpa.

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A. Details of LRPC Wires


LRPC wire uses the stress relaxation property of steel. By treating the steel through a thermo-mechanical process known as stabilizing, the propensity of the steel to "relax" under a stressed condition is controlled to a great extent and LRPC wires are thus made. Properties of LRPC Wires High strength. Consistency of physical properties. Consistent coil characteristics with uniform winding. Close tolerances on unit mass to length ratio. Higher breaking loads. Higher proof stress loads. Higher fatigue and corrosion resistance. Better performance at elevated temperature. Lower relaxation losses. Joint-less long length strength. Exhibit 8: LRPC wire

Exhibit 9: Mfg process of LRPC

Source: Tata Wires

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B. Application A steel member that is pre-stressed, i.e. LRPC wire, and embedded in concrete, loses the initially applied stress exponentially with the passage of time. Hence they can be used in a lot of applications including pre-stressed concrete girders for road, river and railway bridges and flyovers, pre-stressed concrete domes, slabs, silos, hangars, aquaducts, viaducts and railway sleepers. Low Relaxation PC Stranded wires are used in Pre-stressed concrete girders for road, river and railway bridges and flyovers, Pre-stressed atomic reactor domes, slabs, silos, hangars, aquaducts, high rise buildings, viaducts and railway sleepers. Exhibit 10: Galvanized Steel and MS Wire

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C. Markets LRPC has wide application in the infrastructure sector. It is widely used as a new steel material taking in place of traditional construction material in the construction sector. PC wire strand is used in the upper plates of bridges, for the maintenance of bridges and flyover. It is also used in the floor and roof reinforcement of sports stadiums. Beside the general use, the products are essential in large cargo recovery and offshore platform jobs in which cranes and other recovery equipment cannot be used. In India today, LRPC wire segment today is one of the fastest growing segments in the entire steel wire segment because of its wide application in the entire infrastructure segment. The leading companies producing these wires in India currently are Tata Steel, Usha Martin Ltd and Ramsarup Industries Ltd.

6.4 Spring Wires


BIL is planning to set-up Spring Wire applicable for manufacturing shock absorbers in automobile industry. The installed capacity for the proposed Spring Wire is 18, 000 MTPA. They propose to increase the capacity by 18000 MTPA from financial year 2013-14, for which the machineries would be procured from internal accruals. The company has strong relationship with leading automobile companies such as M and M, Tata Motors and their vendors.

6.5 Aluminum rod and Conductor


With a view to exploit the business potential of Aluminum conductors, BIL is planning to manufacture Aluminum rod from which they would manufacture Aluminum conductors by setting up a manufacturing plant with installed capacity of 42,000 MTPA. The machines would be procured domestically as well as by importing latest machines. The plant would have the latest technology.

A.

Details of Aluminum Conductor Wires

Aluminum Conductors are used in Transmission and Distribution system to carry the generated electrical energy from generating station to end user. They are mainly of the following types:

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All Aluminum Conductors (AAC)

Bedmutha Industries Limited

Exhibit 11: All Aluminum Conductors

This conductor is also known as aluminum stranded conductor. This conductor is manufactured from electrolytically refined (E.C.GRADE) aluminum, having purity of minimum 99.5% of aluminum. This conductor is used mainly in urban areas and the spacing is short and the supports are close. All aluminum conductors are made up of one or more strands of aluminum wire depending on the end usage. These conductors are also used extensively in costal because it has a very high degree of corrosion resistance.

(ii)

All Alloy Aluminum Conductors (AAAC) Exhibit 12: All Alloy Aluminum Conductors

This conductor is made from aluminum-magnesium-silicon alloy of high electrical conductivity containing enough magnesium silicide to give it better mechanical properties after treatment. These conductors are generally made out of aluminum alloy 6201. AAAC CONDUCTOR has a better corrosion resistance and better strength to weight ratio and improved electrical conductivity than ACSR CONDUCTOR on equal diameter basis.

(iii)

Aluminum Conductors Steel Reinforced (ACSR)

Exhibit 13: Aluminum Conductors Steel Reinforced

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This conductor consists of a solid or stranded steel core surrounded by strands of aluminum (E.C. GRADE). ACSR CONDUCTOR is available in a wide range of steel varying from as low as 6% to as high as 40 %. The higher strength ACSR CONDUCTORS are used for river crossings, overhead ground wires, installations involving extra long spans etc.. against any given resistance of conductor, ACSR conductor may be manufactured for having a wide range of tensile strength as per requirement. The principal advantage of these conductors are high tensile strength and light weight with longer spans as well as with lesser supports. Due to the greater diameter of ACSR CONDUCTORS a much higher corona limit can be obtained causing big advantages on high as well as extra high voltage overhead lines. The Electrical energy is normally generated at the power stations far away from the urban areas where the consumers are located. There is a large network of conductors between the generating stations and the consumer. The network is called the Transmission and Distribution system. The Transmission system is to deliver bulk power from power stations to the load centres and large industrial consumers beyond the economical service range of the regular primary distribution lines where as distribution system is to deliver power from power sector or substations to the various consumers. This transmission and distribution system can employ either overhead system or underground system. Transmission of power, overhead system mainly due to low cost and some other advantages ACSR generally used or transmission line and AAC and AAAC conductors for distribution of power carry out mostly the high voltage transmission. The favorable attributes of aluminum for electrical applications are: relatively high electrical and thermal conductivities, low density, nonmagnetic properties, ease of drawing down to the smaller wire sizes and high resistance to weathering. Because of technological advances and favorable price as compared to copper, there has been continuous significant growth in the volume, sizes and varieties of aluminum conductors.

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B.

Application ALL ALUMINIUM CONDUCTORS (AAC) Used as bare overhead conductor for distribution lines. Because of its poor strength to weight ratio, AAC has limited use in Transmission lines. AAC is extensively used in urban areas where spans are usually short but high conductivity is required. ALL ALUMINIUM ALLOY CONDUCTORS (AAAC) Used as bare overhead conductor for power distribution lines. Designed utilizing a high-strength aluminum alloy to achieve a high strength -to-weight ratio; affords better sag characteristics. Aluminum alloy gives AAAC higher resistance to corrosion than ACSR. ALUMINIUM CONDUCTOR STEEL RE-INFORCED

ACSR has the established reputation for economy and dependability in power transmission lines. Also used for primary and secondary distribution lines. Wide range of steel content from 7% to 40% can be achieved by different stranding, to meet desired strength. C. Markets India is a developing country with a fast growing population. The economic growth of the country and the demand for any essential items grows as a function of population. Electrical power demand also grows as a function of population. In today's modern world the dependence on electricity is so much that it has become a part of our life. The ever increasing use of electric power for domestic commercial and industrial purposes necessitates to provide bulk electric power economically. Our present generation capacity is about 1,05,000 MW but projected demand by 2012 is 205000 MW that means an extra 1,00,000 MW has to be produced to meet the demand. The electrical energy is normally generated at the power stations far away from the urban areas where consumers are located. In order to evacuate this generated power at the door steps at end user, there is a large net work of Transmission and Distribution system including the Aluminium Conductors. ACSR conductors are generally used for transmission line and AAC and AAAC conductor for Distribution purpose. Due to massive rural electrification programme and the commitment of the Central and State Government to electrify each and every house in a remote village and also the reforms and efforts and to ensure electricity to all section of the society on demand, brighten the demand and scope of the conductors.

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7. PROJECT ECONOMICS
Project Location
The project will be located on Ghoti-Sinnar Highway, Near Sinnar Nashik, Maharashtra State. Nashik (or Nasik) is located in the northwest of Maharashtra state, 200 km from Mumbai and Pune. It has a population of over 1 million. Sinnar is situated at a distance of about 180 kilometers from Mumbai & 202 Km from Pune. The 3 national highways (NH -50, NH-3 and NH-211) passing through Nashik district. Exhibit 14: Location Map

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Nashik is industrally well developed The HAL plant is an aircraft manufacturing plant located 10 miles (16 km) from Nashik employing about 7000 people, so making Nashik a hub with good prospects for aircraft manufacturing. World-renown manufacturers who have set up plants in the Nashik MIDC area are: Bosch India (leader in auto ancillaries), Crompton Greaves Limited, ABB Ltd, Mahindra & Mahindra Ltd, Kirloskar Oil, Ceat Tyres, Schnider, Jyothi Structure, Shanmukha Laboratories, VIP Ltd, Graphite India Ltd,'Surya Murphy', Glaxo Pharma, Coca Cola, and Victor Gasket Ltd. As well, IT sectors have entered. The Indian Security Press The India Security Press (the National Treasury Press) was the biggest employer in Nashik for many decades until the late eighties when a service-based economy started to thrive. The existence of the India Security Press is very beneficial to Nashik citizens. It has provide employment to thousands of residents for the past few decades, and has stimulated the surrounding economy and protecterd the green canopy of the city. There is an adjoining Gymkhana and a large playground, which is a favorite games/exercise spot for both children and adults. Hindustan Aeronautics Limited has a presence at Ojhar Township in the Nashik District of Maharashtra State, where it is designs, manufactures and overhauls a variety of aviation products from basic trainers to highly sophisticated supersonic fighters, helicopters, transport aircraft, engines, accessories and systems.but growth is slow due to the lack of infrastructure and technical support. Nashik is now popular for the wine industry, with around 60% of Indian wine production at Nashik. Nasik Wine Park is a grape wine park administered by the Maharashtra Industrial Development Corporation (MIDC).

Project Cost:
The total cost of the fixed assets for the project is estimated at Rs. 30863.49 Lacs including pre-operative expenses, contingency provisions and margin money for the Working Capital. The project is proposed to be financed on DER of 1.84:1x. The equity portion of Rs. 10863.49 lacs will be brought in by way of Initial Public Offering and Internal Accruals. Table15: Cost of Proposed Project and Means of Finance
Cost of Project Land Factory Building Plant and Machinery Miscellaneous Fixed Assets Furniture and Fixtures Electrical Installations Preliminary Expenses (incldg. Public Issue Exp) Pre-operative Expenses Contingencies IDC Margin for Working Capital Total Cost of Project Means of Finance Internal Accrual INR in Lacs 1,500.30 5,292.31 14,045.65 1,011.43 25.08 1,579.19 2,050.00 450.00 638.54 1,070.00 3,200.97 30,863.4 9 363.49

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Initial Public Offering (IPO) Term Loan/ DPG/ Buyers Credit Total Means of Finance

10500.00 20000.00 30863.49

Details of Items of Project Cost


i. Land Cost: The company has identified a plot situated at Ghoti-Sinnar Highway, Near Sinnar Nashik, Maharashtra State, District admeasuring about 100 acres. The land would be acquired on outright purchase basis and would be sufficient for the present as well as near future expansion of the company. The total provision for acquisition of land including stamp duty, registration and Premium to MIDC is Rs. 1500.30 Lacs. ii. Factory Building including Civil work and Development BIL is constructing factory buildings, office block, sheds and godowns / tanks. The total cost of factory building, godown etc. admeasuring 45445 Sq Mts is estimated at Rs. 5292.31 Lacs which is as per the estimates prepared by Government approved Chartered Engineers/ Architect firm viz. The average construction cost works out to be Rs.11100/- per Sq mtr. and is considered reasonable. The area planning is given: Table 16: Details of Area Planning Area Planning Unit Plot Area 100 Acres 45445 Sq Constructed Area Mts Balance Area 88.78 Acres Construction Area/ Plot Area 11.22% Table 27: Project Estimate for Land Development and Construction
INR in lacs Particulars (Rs in Lacs) Fencing (RM) Leveling and Filling Internal Roads (Sq Mtrs) Total Land Development Cost Construction Cost Main Building (Construction Cost) Office Block (Admin Building) Pickling Shed Die Polish Shed Maintenance Production Store Scrap, Wire Rod storage 14000 750 Area (Sq Mts) 2800 Rate/Sq Mts 1800 Total Cost 50. 40 500. 00 105. 00 655. 40 Total Cost 3,330.0 0 111. 00 137. 94 4. 44 4. 44 4. 44 5. 55 350.

Area (Sq Mts) 30000 1000 1140 40 40 40 50 10000

Rate/Sq Mts 11100 11100 12100 11100 11100 11100 11100 3500

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Guest House Residential quarters Testing Lab Water gal + W/d Gen Lime PHOS BORAX Zinc + Lead 3 x storage LPG tanks 5 ton x 4 (10 x2) Nitrogen 10 ton ACID 10 t* 2 ACID Hcl 15 tons Toilets to staff, workers, officer, guest, rest room Total Construction Cost Total Factory Building Cost

1000 1875 60

15000 20000 5000

50 50 50 50

3000 3000 3000 5000

45,445.00

00 150. 00 375. 00 3. 00 30. 00 1. 50 1. 50 1. 50 2. 50 80. 00 15. 00 15. 00 10. 00 4. 10 4,636. 91 5,292. 31

iii.

Plant and Machinery The selection of the machines is based on the past experience of the company and on the technical specifications as well. All the items of plant and machinery are being procured from reputed suppliers. Details of the plant and machinery to be acquired by the company, its cost, name of the suppliers, etc are furnished at Annexure BIL proposes to import LRPC, Spring and High Speed Galvanizing line from Europe. The company has already finalized the suppliers and the cost of imported machineries is as quoted by the suppliers is Rs. 6243.61Lacs. The cost of indigenous machineries is estimated at Rs. 7133.20 Lacs. The cost is based on quotations obtained from reputed suppliers. All the indigenous machines are readily available. Table 18: Details of Plant and Machinery
Cost of Plant and Machinery Imported Machines Domestic Machines Cost of installation & Commissioning Total Cost Total Cost INR in lacs 6243.61 7133.20 668.84 14045.65

iv.

Miscellaneous Fixed Assets The company will require miscellaneous fixed assets apart from above plant and machinery. The miscellaneous fixed assets comprises generator, cooling

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tower, forklifts, mobile crane, Mono crane, ETP Pumps, Water pumps, Gas Pipes, Acid Pipes and others misc. items. The estimated cost of these assets is Rs. 1036.52 Lacs. Table 19: Estimate of cost of Misc. Fixed Assets
Cost Unit s Nos . Unit Basic Price INR Total Cost Total BP INR Excise Duty INR 8.24% DG set AMFC Panel Cooling Tower water circulation Forklift Mobile Crane EOT Crane Compressor E-45 Electronic weigh bridge Computer SAP/ERP Borig MC for water SCADA Gas pipes Acid pipes Etp Pumps (sets) Water Pumps (sets) Capacitors Furniture SUB TOTAL 1 1 12 4 2 5 1 1 1 1 1 1 1 1 1 1 1 26.85 8.00 1.38 8.63 11.88 17.65 7.67 10.60 9.26 119.60 5.00 200.00 15.00 5.00 245.90 8.00 7.00 20.00 26.85 8.00 16.56 34.52 23.76 88.25 7.67 10.60 9.26 119.60 5.00 200.00 15.00 5.00 250.00 8.00 7.00 20.00 2.21 0.66 1.36 0.00 1.96 0.00 0.63 0.87 0.76 9.86 0.41 16.48 1.24 0.41 20.60 0.66 0.58 1.65 2.00 % 0.58 0.17 0.36 0.69 0.51 1.77 0.17 0.23 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 VAT VAT INR 12.50 % 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.25 16.18 0.68 27.06 2.03 0.68 33.83 1.08 0.95 2.71 Freigh t INR 3% 0.89 0.26 0.55 1.06 0.79 2.70 0.25 0.35 0.34 4.37 0.18 7.31 0.55 0.18 9.13 0.29 0.26 0.73 30.53 9.10 18.83 36.27 27.02 92.72 8.72 12.05 11.61 150.01 6.27 250.85 18.81 6.27 313.56 10.03 8.78 25.08 1,036.52 Total Cost (INR in lacs )

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v.

Electrical Installation Table 30: Estimate of Electrical Installation Cost


Cost Transformer Power sub. Station Power distribution Cables SUB TOTAL unit 1 1 1 1 INR in Lacs 71.89 695.68 521.76 289.87 1,579.19

vi.

Preliminary Expenses An amount of Rs. 2050.00 Lacs has been provided towards fund raising expenses, fees to merchant bankers and charges etc including IPO expenses. vii. Table 24: Estimate of Prelim Expenses
INR in Lacs 1050.0 0 1000.0 0 2050. 00

Cost Fund Raising expenses: IPO related expenses Project Report /Preparation Fees and Bank charges Total Fund raising expenses

vii.

Pre-Operative Expenses Pre-operative Expenses have been estimated at Rs. 450.00 Lacs. These include the personnel cost incurred during project implementation, upfront payment, banking charges, legal fees, security creation charges and other related expenses. Table 22: Estimate of Pre-operative Expenses
Cost Traveling Expenses/hotel charges Salary and Consultant's Fees Startup Expenses SUB TOTAL INR in Lacs 100.00 250.00 100.00 450.00

viii.

Contingencies A contingency provision of Rs. 638.54 Lacs has been made. BIL has received firm quotations for imported machines. However, a provision @ 3.00 % on Construction work, Plant and Machinery, Misc. fixed assets, Electrical installation and Furniture has been provided to off-set any adverse sensitivity towards price escalation during the implementation period. Contingency provisions and its allocation to the project cost have been appended in financial part of this report.

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Table 23: Provision of Contingency


Particulars Land Land Development Civil Work Imported Machinery Indigenous Machinery Misc. Fixed Assets Furniture and Fittings Electrical Installation SUB TOTAL Firm Cost 1500.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1500.30 Non-Firm Cost 0.00 655.40 4636.91 6243.61 7133.20 1011.43 25.08 1579.19 21284.83 % of Escalation 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Contingency Provision INR in lacs 0.00 19.66 139.11 187.31 214.00 30.34 0.75 47.38 638.54

ix.

Interest During Construction Period IDC of Rs. 1070.00 Lac has been estimated for 15 months duration of the Project implementation. Margin for Working Capital The requirement of working capital in the first year of operation on completion of the new project is estimated at Rs 3200.97 Lacs. The working capital requirement has been estimated based on 30 days requirement of raw materials (Wire Rod, Zinc, Lead and Wastage), 8 days of work in process/ semi finished goods, 10 days of finished goods, 3 months of debtors and 45 days of creditors & 30 days of provisioning. Bank finance for working capital would be available to the extent of Rs 3924.08 Lacs. The balance (Rs 3200.97 Lakh) has been provided in the project cost as margin money for working capital during the first year of operations. The incremental margin money requirement for the subsequent years would be met out of internal accruals. The company is yet to approach bank(s) for tying-up its incremental working capital requirement. The detailed calculation of margin money requirement is furnished at Annexure.

x.

7.3 Means of Finance


The total capital outlay of Rs. 30863.49 Lacs is funded in the ratio of D:E 1.84:1. i. Equity: The total equity contribution is Rs. 10863.49 Lacs out of which the company plans to bring Initial Public Offering of Rs. 10500 Lacs and balance from internal accrual. BIL has appointed SEBI registered merchant banker M/s. Ashika Capital Pvt Ltd vide Appointment letter no.ACL:MUM:2009-2010:0091 dated 27.10.09 as lead managers for the management of the issue. The issue is to be underwritten. The company intends to hit the market by March end. The entire process is finalized and DRHP is proposed to be filled within one week of the appraisal of the project. Debt: The Company intends to borrow Rs. 20000.00 Lacs from the banks under Consortium / Multiple banking facilities. ECA Financing would form a part of Term Loan facility for imported Plant and Machinery (12%)

ii.

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Table 24: Term Funding Details


Details of the Term Loan Rupee Term Loan (RTL) Tenor Moratorium Coupon Rs. 20000 Lacs 7 years 9 months 1 year 9 months 12% p.a.

Security offered

1st charge in favour of banks, of all the immovable and movable properties and stock pertaining to the project, both present and future till the date of last repayment of the term loan on pari passu basis. Personal guarantee of the Promoter Directors.

The details of the offering are as under: Table 25: Details of IPO
Details of the Initial Public Offering Issue Size Post-Issue Dilution Face Value Lead Manager to the IPO Registrar Legal Advisors Underwriter Rs. 10500.00 Lacs 45% Rs. 10.00 Ashika Capital Pvt Ltd Mondkar Computers Pvt Ltd CLCI - Partner - Advocate A Y Srinivasan . Will be appointed on receipt of SEBI card

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8. Implementation Schedule & Implementation Strategy


The erection and commissioning of the proposed plant and machinery are expected to be completed by February 2011. The company has already appointed Project Consultant Mr. H. V. Joshi, an authority in the industry, for the proposed expansion.

8.1 Project Schedule


Table 26: Project Schedule
Schedule of Activity Land -- Land Acquisition -- Registration and Stamp duty Construction Details: -- Site Development -- Civil Construction Plant and Machinery Order Placement -- Imported -- Indigenous Delivery and Installation -- Imported -- Indigenous Misc Fixed Assets Furniture and Fixtures and Electrical Installation Sanction of Utilities Trial Production Final Production Start time Completion Time Time frame

Immediate Immediate

31.01.10 31.01.10

2 months 2 months

01.04.10 01.04.10

01.05.10 01.11.10

2 months 8 months

15.02.10 15.02.10

31.10.10 31.10.10

8 months 8 months

01.11.10 01.11.10

31.11.10 31.11.10

1 month 1 month

01.12.10 01.12.10 01.02.11 01.04.11

01.03.11 31.12.10 31.03.11

3 months 1 month 2 months

The total implementation period is of 21 months beginning from December 2009 to April 2011. The additional LRPC & spring wire plant will be ready for production by end of March 2013.

8.2 Project Implementation Strategy:


Appointment of Consultants: BIL has already appointed Mr. H V Joshi as Project Consultant for the implementation of proposed project vide Appointment Letter Megaproject/2, dated 05.08.2009. The scope of services of Project Consultant is mentioned in the appointment letters.

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Background of Project Consultant: Mr. H.V. Joshi Mr. Joshi has 34 years of very sound experience of manufacturing various steel wire and wire products such as LRPC, Spring steel, wire ropes , Cable Armour, ACSR, Gabian Wire, Fish Net, Fishing Ropes, Chq Wire (Cold Heading Quality Wires) Textile Wire etc. SS wire, Welded, Barbed Wire, Wire Ropes Etc Wire Products. Mr. Joshi has completed three turn key projects in steel wire and wire products in Kenya, Saudi Arabia and Dubai. He was associated with Bekaert Belgium for 8 years in transfer of technology to Kenyan project. In past, retainer consultant to Usha Martin and JCT Div. Thapar Group. Appointment of Contractors: BIL will appoint Contractors in consultation with Consultants through tenders to carry out specific activity. All the contractors will be appointed taking into consideration factors such as their expertise, past experience and reliability.
S. No. a)

Status of Government consents/ Approvals/Utilities Table 27: Status of Govt Approvals/ Consents/ Applications
Approval Maharashtra Pollution Control Board clearance for water and air. Environment and Forest clearance Civil aviation clearance for chimney height Industrial Entrepreneur memorandum (IEM) Water availability Power Connection Agency State Pollution Control Board Current Status Application will be made in due course.

b)

c) d) e) f)

Government of Maharashtra and Ministry of Environment and Forest, GOI Airports Authority of India Secretariat (SIA), Ministry of Commerce and Industry, New Delhi State Government and MIDC MSEDCL

NA

NA Application will be made to MCI in due course. Application will be made to MIDC in due course. Application will be made to MSEDCL in due course.

Economic Consideration The new project, on completion, would help the company to reduce its overall cost of production and improve its bottomline. The new project would further improve the market share of the company and it would be able to meet the growing demand for power and infrastructure sector. Social Consideration The expansion project would offer direct employment to a total number of around 150 employees/ workers, besides generating indirect employment. For its new project, BIL would pay excise duty of about Rs. 5232.08 Lakh per annum from FY 2012 onwards. It would also pay higher income tax due to higher profits from the new project.

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Environment Consideration The company has the approval from Maharashtra Pollution Control Board for its existing unit. Pollution control approval for the expansion project is yet to be obtained. No effluents will be generated during the manufacturing process; however the unit will apply for NOC from Maharashtra State Pollution Control Board. The manufacturing operations of steel wire do not generate any soil and liquid effluent as such; however, the company requires no objection certificate for gaseous discharge emanating from evaporation of solvents during the process.

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9. Raw Material and Utilities


9.1 Raw material
Existing Unit: The sourcing of raw materials at economic cost with assured and timely supply and without incurring heavy cost on transportation is the key to the success of business. BIL has a reputation of not just employing modern technology but also sourcing quality raw materials at the cheapest cost. BIL carries out detailed global survey with the following objectives: Full availability of material of all grades, size and quality. Saving of minimum Rs.1000 per ton due to bulk purchase contract. Timely supply of finish product to customer due to availability of rawmaterial during shortage of material resulting in customer satisfaction and retention.

With these objectives new suppliers were developed in Ukraine, China, Malaysia, Canada and Indonesia. The result of the exercise is that today 80% of the material is being imported from these countries. Simultaneously relationship with the domestic suppliers is maintained. The key raw materials used in the manufacturing of steel wire and allied products are: Steel Rods: Steel Rods are the primary raw material in the manufacturing of steel wire and allied products. Steel Rods also forms around 80% of the total raw material cost; hence efficient sourcing of the raw material is very import. The company is sourcing its requirement of steel from RINL (Rashtriya Ispat Nigam Limited) Vizag, Tata Steel Jamshedpur, SAIL (Steel Authority of India Limited) Bhilai and also imports from China, Malaysia and Ukraine. The company has MoUs in place for long term supply of materials with the suppliers. Zinc: Zinc is another important raw material in the manufacturing process. The company sources its requirement from Hindustan Zinc Limited, Rajasthan. The company already has long term contract in place with Hindustan Zinc Limited Lead: Lead is process consumable. The company is sourcing its requirement from Hindustan Zinc Limited with whom, the company has long term contract in place. Table 28: Details of source of key raw material
Key Raw material Existing Unit Steel Zinc Lead Furnace Oil Proposed unit Steel, Zinc, lead and furnace oil Aluminum Source of supply TISCO, SAIL, RINL and Mukund Steel and also imports from countries like China, Malaysia and Ukraine Hindustan Zinc Limited and Imported Hindustan Zinc Limited and Imported BPCL and HPCL As above Bharat Aluminum Company Ltd National Aluminum Company Ltd and Indian Aluminum Company Ltd. and imports

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Proposed unit:
Raw Material and Consumables for proposed plant The key raw materials used in the manufacturing of steel wire, LRPC wire and Spring are Steel Rods, Zinc and Lead. The company is sourcing these products from reputed suppliers for its existing requirement from RINL Vizag, Tata Steel Jamshedpur, SAIL Bhilai, HZL and also imports from China, Ukraine and Malaysia. The company plans to tap existing sources for the proposed raw material requirement. The key raw materials used in the manufacturing of aluminum conductor wire are aluminum rods. The company would source these products from reputed suppliers for its requirement from Hindalco Industries Ltd., Bharat Aluminum Company Ltd National Aluminum Company Ltd and Indian Aluminum Company Ltd. and also by way of imports.

9.2 Utilities

Fuel Oil: For the requirement of fuel oil, the company has contracts in place with BPCL (Bharat Petroleum Corporation Ltd) and HPCL (Hindustan Petroleum Corporation Limited). Alternative sources of fuel such as Biomass are being planned out for use. The company has already conducted trial use of Bio-mass and know-how has reached perfection. Existing Unit:

Power: The Company sources its entire power requirement from Maharashtra State Electric Board. 2 MW Power generation form Hydro resource is planned. Windmill installed at Karnataka is generating is 225KW. Two more Wind Mill are planned to be installed. Existing Power load is 2 MW. Electricity for the proposed plant

The company will apply for a power connection from MSEB/MIDC for the total anticipated load of the proposed plant. To cater the anticipated load of 3 MW, the company plans to establish 10 MVA sub-station. The company also plans to have 100% power back facility by way of captive DG Set of 3 MW for the proposed plant. It will procure a D. G set (Powerica make). Existing Unit:

Water: The plant has access to local water supplies which is adequate to meet its existing and future requirements. Existing water requirement is 80,000 Liters per day Water Requirement for the proposed plant

To meet the water requirements for production process and for sanitation purposes, the company intends to make application to MIDC. Water storage facility will be built underground and water storage capacity will be 3.00 Lac Litres as per regulation.

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9.3 Manpower and Staff Strength


Existing plants: There is adequate manpower available in Sinnar and around Nashik area. The Company has a total of 241 employees on its roll as on 30th Sept 2009. The composition of manpower is as follows: Table 29: Manpower Composition of BIL
Particulars Managers Staff Workmen Contractual Labour Factory 123 75 Admin. Office/ Sales Staff 20 23 Total 20 23 123 75

BIL has a strong team of professionals having background and rich experience in the industry. Proposed plant: There is adequate manpower available in Sinnar and around Nasik area. The requirement of manpower is as follows: Table 5: Details of Manpower requirement
Particulars Management Managers Staff Workmen Contractual Labour Total Factory 1 2 20 31 70 122 Admin. Office/ Sales Staff 1 3 9 10 5 28 Total 2 5 29 40 75 150

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10. Marketing and Distribution


10.1 Marketing and distribution Existing: Bedmutha group has a pan India presence with operations in the western regions of India. The distribution strategy of the company has been based around the products its manufactures for different sectors. For e.g. the galvanized wire there are a number of industries where these wires are used. There are a number of cable manufacturing companies in western and southern India and the company supplies products to these cable manufacturers directly as well as through an outsourced marketing agent.

Power Transmission: The orders for galvanized wires like earth wire, stay wire and ACSR wire etc are fulfilled through public tenders. The company is in direct contact with the turnkey contractors who undertake these projects on BOT basis. Since Bedmutha wire is approved as per IS standards and also the company is registered with Power Grid Corporation of India and most of SEBs, the company is first choice of the contractors. Agriculture Industry: Steel wire and wire products such as galvanized wire, barbed wire, chain link fencing, etc are specifically supplied to the grape growing areas of Nashik, Aurangabad, Ahmednagar, Sangli, Satara etc. A supporting net is prepared by the farmers using galvanized wire to support delicate climbers like grapes, strawberry, tomatoes etc. This product is distributed through dealers network. Industrial Segment: High carbon wires as well as galvanized wires are used for general industrial purpose such as knitting needles, knitting rings, spring for mattresses, etc which are supplied according to the customers specifications across various industries. For spring steel wires the Company targets auto ancillary companies in the west and south and also in Gurgaon in the north. Examples of auto ancillary companies which are being served are Volkswagen, Mahindra and Mahindra, Tata Telco, Ford, Bajaj Auto. These customers are serviced directly.

The marketing initiatives undertaken by the Company include: Brand Image build-up through group seminars with the agricultural belt to explain to farmers, the use of products and economics of using Bedmutha wires. Participation in various wire and cable exhibitions. Going forward the Company plans to participate in international exhibitions. The company has its warehouses located at many locations such as Satna, Bangalore, Silvassa and Daman. The warehouses are mainly to serve local customers effectively and are used more as stock points for technical and commercial purpose.

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Proposed plant The company has strong existing infrastructure to support the proposed expansion. The company has its own warehousing facilities and strong dealer network along with direct sales relationship with corporate.

10.2 Clients
Some of the key customers of company are: Polycab MK Spring Ltd RPG Cables Ltd Suprajit Industries Finolex Cables Ltd Tata Johnson Ravin Cable Ltd Mand M Vendors Universal Cable Bajaj Auto Vendors Tata Fecaso Bharat Wire Rope Bajaj Electricals Sterlite Industries Ltd SEBs of Gujarat, Maharashtra and Kerala. Bharat Glass Tubes Ltd.

The client-mix in the terms of revenue is as follows: Exhibit 15: Client-mix in Revenue terms of BIL

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11. Project Financial Indicators


11.1 Financial Ratios for the new project (on completion) and the company as a whole as at March 31, 2012, would be as under:
New Project Debt equity ratio (DER) Fixed asset coverage ratio (FACR) 1.84:1 1.21 Company as a whole FY 2012 1.34:1 1.28

11.2 Assumptions
Assumptions underlying profitability projections for the expansion project are:

Capacity Utilization: (Stand alone basis) INR in lacs Table 6: Assumptions


FY12 49,04 4 36,00 0 42,00 0 18,00 0 145,04 4 69% FY13 49,04 4 36,00 0 42,00 0 18,00 0 145,04 4 78% FY14 49,04 4 72,00 0 42,00 0 36,00 0 199,04 4 87% FY15 49,04 4 72,00 0 42,00 0 36,000 199,04 4 90% FY16 49,04 4 72,00 0 42,00 0 36,000 199,04 4 90% FY17 49,04 4 72,00 0 42,00 0 36,00 0 199,04 4 90% FY18 49,04 4 72,00 0 42,00 0 36,00 0 199,04 4 90%

Installed Capacity (MT) Galvanized Wire LRPC Wire Aluminium Rod Spring Total Capacity (MTPA) Capacity Utilization Working of Production Ghoti-Sinnar Plant (New Plant) Galvanized Wire LRPC Wire Aluminium rod and conductor Spring Total Production (MTPA)

36,783 23,400 31,500 9,000 100,683

41,687 25,200 35,700 9,900 112,487

44,139 61,200 37,800 30,600 173,739

46,591 61,200 39,900.0 0 30,600 178,291

46,591 61,200 39,900 30,600 178,291

46,591 61,200 39,900 30,600 178,291

46,59 1 61,20 0 39,90 0 30,60 0 178,29 1

11.3

Key Ratios for Project on stand alone basis INR in lacs


FY17 12.31% 10.94% 6.34% 81.09% 92.08% FY18 11.81% 10.45% 6.31% 81.09% 92.58%

Table 7: Key ratios for project on stand alone basis


FY12 9.76% 7.12% 0.72% 85.67% 94.93% FY13 13.28% 10.83% 4.72% 81.92% 91.08% FY14 12.53% 10.69% 5.37% 82.08% 91.91% FY15 13.06% 11.30% 6.07% 81.23% 91.33% FY16 12.78% 11.02% 6.13% 81.09% 91.62%

EBIDTA Margin (%) EBIT Margin (%) PAT Margin (%) Raw Material (%) Expenses (%)

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Interest Service Cov. Ratio Current Ratio TOL: TNW D:E Ratio

1.97 x 1.28 x 2.89 x 1.83 x

3.42 x 1.48 x 2.06 x 1.24 x

4.87 x 1.55 x 1.52 x 0.76 x

6.61 x 1.57 x 1.09 x 0.45 x

8.83 x 1.60 x 0.79 x 0.26 x

13.35 x 1.64 x 0.58 x 0.12 x

43.63 x 1.69 x 0.40 x 0.00 x

11.4 DSCR for Project on stand alone basis Table 33: DSCR for Project on stand alone basis
PAT Interest on Term Loans Dep and Misc. Exp W/o Sub-total Interest on Term Loans Term Loans Repayments Sub-total DSCR Average DSCR FY12 457.8 1 2,200.0 0 1,677.0 5 4,334. 86 2,200.0 0 2,200. 00 01.97x 01.91x FY13 3,525.7 7 2,212.5 0 1,832.4 0 7,570. 67 2,212.5 0 2,500.0 0 4,712. 50 01.61x FY14 5,327.4 4 1,850.0 0 1,832.4 0 9,009. 83 1,850.0 0 3,333.3 3 5,183. 33 01.74x FY15 6,305.9 9 1,450.0 0 1,832.4 0 9,588. 38 1,450.0 0 3,333.3 3 4,783. 33 02.00x

INR in lacs
FY16 6,388.1 4 1,050.0 0 1,832.4 0 9,270. 54 1,050.0 0 3,333.3 3 4,383. 33 02.11x FY17 6,603.3 0 650.0 0 1,422.4 0 8,675. 70 650.0 0 3,333.3 3 3,983. 33 02.18x FY18 6,570.3 5 187.5 0 1,422.4 0 8,180. 24 187.5 0 4,166.6 7 4,354. 17 01.88x

It can be observed that the debt servicing ability of the Company from the cash flow from operation remains comfortable under all circumstances through out the tenor of loan. 11.5 Security Margin/ Assets Coverage Ratio Table 34: lacs
Particulars WDV of Fixed Assets Aggregate TL/ DPG Security Margin available % of Margin FY12 24, 345.46 20,000.0 0 FY13 25, 865.17 17,500.0 0 FY14 24, 442.77 14,166.6 6 FY15 23, 020.38 10,833.3 3 FY16 21, 597.98 7,500.0 0 FY17 20, 175.58 4,166.6 7 FY18 18 ,753.18 -

Security Margin/ Assets Coverage Ratio

INR in

121.73%

147.80%

172.54%

212.50%

287.97%

484.21%

It can be observed that the security margin available is adequate through out the tenor of loan. 11. 6 Key Ratios for Project on consolidated basis (Company) Table 35: Key Ratios for Project on consolidated basis lacs
EBIDTA Margin (%) PAT Margin (%) TOL:TNW Debt/Equity (TLF:TNW) FY08 10.10 % 3.13% 4.09 3.23 FY09 12.44 % 4.77% 3.14 2.41 FY10 13.01 % 4.89% 3.78 2.92 FY11 12.12 % 4.88% 1.74 1.54 FY12 10.34 % 1.89% 2.67 1.99 FY13 12.83 % 4.75% 1.96 1.40 FY14 12.25 % 5.24% 1.50 0.95 FY15 12.61 % 5.79% 1.12 0.67 FY16 12.28 % 5.96% 0.86 0.48

INR in
FY17 11.84 % 6.08% 0.66 0.33 FY18 11.34 % 5.99% 0.50 0.21

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Interest Coverage Current Ratio RoE (%) No.of Shares in Lacs EPS (INR) DSCR

2.53 4.46 26.00 % 89.96 3.98 2.5 8

3.85 4.10 35.65 % 89.96 7.79 2.5 7

4.06 4.14 33.77 % 120.0 0 7.67 3.1 9

4.04 5.32 8.15% 120.0 0 9.63 2.7 4

2.62 2.56 10.71 % 120.0 0 13.87 2.1 8

3.80 2.70 24.01 % 120.0 0 39.22 1.7 7

4.90 2.53 25.91 % 120.0 0 54.01 1.9 3

5.96 2.64 24.01 % 120.0 0 61.92 2.2 3

6.84 2.72 20.86 % 120.0 0 63.87 2.4 1

7.99 2.80 18.45 % 120.0 0 65.18 2.5 0

10.12 2.89 16.17 % 120.0 0 64.22 2.1 5

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11.7. DSCR for Project on consolidated basis (Company) Table 36: DSCR for Project on consolidated basis INR in lacs
PAT Interest on Term Loans Depreciation and W/o Sub-total Interest on Term Loans Term Loans Repayments Sub-total DSCR Average DSCR FY10 920.9 3 171.3 3 379.5 7 1,471. 83 171.3 3 289.5 5 460.8 7 3.1 9 2.3 9 FY11 1,155.7 8 196.0 3 412.6 0 1,764. 41 196.0 3 447.8 0 643.8 3 2.7 4 FY12 1,664. 67 2,339. 33 2,089. 65 6,093. 65 2,339. 33 457. 97 2,797. 30 2. 18 FY13 4,706.9 1 2,296.9 0 2,245.0 0 9,248. 81 2,296.9 0 2,920.2 5 5,217. 15 1.7 7 FY14 6,480.6 5 1,890.9 0 2,241.8 1 10,613. 36 1,890.9 0 3,609.0 6 5,499. 96 1.9 3 FY15 7,430.8 3 1,462.6 4 2,216.3 1 11,109. 78 1,462.6 4 3,509.8 3 4,972. 47 2.2 3 FY16 7,664.7 4 1,050.8 0 1,877.6 4 10,593. 19 1,050.8 0 3,346.1 7 4,396. 97 2.4 1 FY17 7,821.6 6 650.0 0 1,467.6 4 9,939. 31 650.0 0 3,333.3 3 3,983. 33 2.5 0 FY18 7,706.9 8 187.5 0 1,467.6 4 9,362.1 2 187.5 0 4,166.6 7 4,354.1 7 2.1 5

11.8 Repayment Schedule:


The term loan is proposed to be repaid as follows: Moratorium period Repayment period Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Period 1st quarter quarter 1st quarter quarter 1st quarter quarter 1st quarter quarter 1st quarter quarter 1st quarter quarter Total to 4th to 4th to 4th to 4th to 4th to 4th : 1 year 9 months (qtr June 10 to qtr March 2012) : Quarterly instalments are as following: Repayment Amount per qtr (in lacs) 625.00 833.33 833.33 833.33 833.33 1041.67 Total Repayment amt. 2500.00 3333.33 3333.33 3333.33 3333.33 4166.67 20000.00

Table 37:

Repayment Schedule
INR in Lacs FY14 17,500. 00 3,333. FY15 14,166.6 6 3,333.3 FY16 10,833. 33 3,333. FY17 7,500.0 0 3,333.3 FY18 4,166.6 7 4,166.6

TERM LOAN REPAYMENT AND INTEREST Year ended March 31, FY11 FY12 FY13 Rate of Interest 12.00% 14,150. 20,000.0 Opening Balance 09 0 Addition during the 14,15 5,8 year 0.09 49.90 Repayment 2,500.0

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Closing Balance Interest on Term Loan 14,150. 09 86 9.85 20,000.0 0 2,2 00.00

0 17,500.0 0 2, 212.50

33 14 ,166.66 1, 850.00

3 10, 833.33 1, 450.00

33 7 ,500.00 1 ,050.00

3 4,166.6 7 650.00 -

187.50

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11.9 Sensitivity Analysis:


Table 38: Sensitivity Analysis
On standalone basis Situation Base Case Decrease in Sales Price 5% Increase in Raw Material Cost 5% Decrease in Sale Price by 5% & increase in raw material cost by 5% Average DSCR 1.91 1.20 1.33 0.53 On Company as a whole Average DSCR 2.14 1.18 1.51 0.61

The company executes long term contract with their supplier, wherein the rates are fixed on month to month basis. In view of this arrangement, they pass on the rate difference to their customers and hence the situation wherein the sale prices would decline by 5% and cost of raw material would increase by 5% would not ideally arise.

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12. SWOT Analysis of Proposed Project


Table 39: SWOT Analysis of Proposed Project Strength Weakness 1. Experienced promoter with more than 1. Presence of strong players in the segment three decade of experience in this viz. Tata SSL, Usha Martin and Ramsarup business. Industries in the segment. 2. Low Gestation period of one year. 3. The company has appointed experienced consultant for the implementation of the project. 4. The key strength of the project is its low cost operation; BIL is importing latest state-of-the-art machines. MitigantThe Company is already operating in this competitive environment along with above listed companies and has carved out its own space in the market. Further, the demand is huge to absorb the capacities of all these players and demand is growing with huge investments in power and other infrastructure. Hence, the competition from these players will not have any adverse impact. 2. Since the basic raw material is steel, the project is exposed to commodity risk. MitigantThe Company has entered in long term contracts with price variation clause, which is applicable on month to month basis. The Foreign Exchange risk has also been hedged. Further the Company has vast experience of 3 decades in weathering the cyclical variations. Opportunities 1. The key end-user of LRPC wire is infrastructure sector viz. Power, Construction and Engineering Sector. 2. Located on close proximity to Mumbai, the financial capital of the country and important cities such as Surat, Pune and Nasik which are some of the fastest growing cities in the country. Threats 1. Economic slowdown especially slowdown in infrastructure market (deceleration in infrastructure spending) would affect the market for the products of the Company. Mitigant: The economic slowdown would affect all industries and they are used to meet such challenges.

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Annexure:

A Synopsis of Group Concerns:


Group Details:
Some of the affiliated & group companies of KR Bedmutha Group are: 1. M/s. Kamalasha Infrastructure & Engineering Pvt Ltd. 2. M/s. Ashoka Pre-con Pvt Ltd 3. M/s. Elme Plast Co. 4. M/s. Usha Chemicals 5. M/s. Kreepa Steel Industries 6. M/s. Bedmutha Sons Realty Ventures Private Limited 7. M/s. K. R. Bedmutha Techno Associates Private Limited

1. M/s Kamalasha Infrastructure & Engineering Pvt Ltd.


Kamalasha Infrastructure & Engineering Private Limited (KIEPL) is a special purpose company promoted by Bedmutha Industries Ltd for implementation of turkey contract of electrification in Dharangaon Division, Jalgaon Circle, Nasik Zone. KIEPL has been awarded a sub-contract by JV of Ashoka Buildcon Ltd and Tesla Transformers Ltd. The JV of Ashoka Buildcon Limited, Nasik & Tesla Transformers Limited, Bhopal has won the bid on competitive basis for six divisions of MSEDCL under Mahavitaran Infrastructure Plan. The Bedmutha Group is having understanding with this front end JV for executing the contract for Dharangaon Division (Tender No59) on Back-to-Back Basis. The estimated cost of the works for Dharangaon Division is Rs. 12,295.00 Lacs. (Letter of Award dated 6th May 2009). Table 40: Corporate snapshot of KIEPL
Corporate information Name Date of Incorporation CIN Number Constitution Registered Office Kamalasha Infrastructure & Engineering Private Limited 03rd Feb 2007 U45200MH2007PTC167532 Private Limited Company D 11, MIDC, Satpur, Nashik 07

Board of Directors As per the Memorandum & Articles of Association of KIEPL, the number of directors on the board of the Company shall not be less than two and not more than twelve. As on date, the Board of Directors of KIEPL comprises of three directors. The details of the composition of the Board as on 30th September 2009 are given below: Table 41: Board of Directors of KIEPL as on 30th Sept 2009
Name Mr. K R Bedmutha Mr. Ajay K Vedmutha Mr. Hemant Makhawana Director Director Director Director

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Capital Structure Details of the authorized and paid-up capital of the Company as on 30th Sept 2009 are as under: Table 42: Capital Structure of KIEPL as on 30th Sept 2009
Particulars Authorized Share Capital Issued, Subscribed and Paid up Share Capital Share Application Money Rs. In Lacs 100.00 99.00 1.06

Shareholding As per shareholders agreement, the shareholding pattern of the Company as on 30th Sept 2009 is as below. Table 43: Shareholding pattern of KIEPL as on 30th Sept 2009
Shareholders Bedmutha Industries Ltd Margo Engineers Pvt. Ltd. Bedmutha Sons Realty Ventures Pvt. Ltd. K R Bedmutha Total Shareholding % holding 55% 25% 15% 5% 100%

Present Banking Arrangement KIEPL enjoys fund-based (Rs. 1298.00 Lacs) & non-fund based (Rs.1500.00 Lacs) facilities from Axis Bank, Zaver Road, Mulund (w) Branch vide sanction letter no. Axis/ MC-II/VSS/0226/2009-10 dated 27th July 2009. Financials: The project is under implementation phase. 2. Ashoka Pre-Con Pvt Ltd. Ashoka Pre-con Pvt Ltd (APPL) was formed as joint-venture in the year 2008 between Ashoka Group and Bedmutha Group to manufacture cement poles. Ashoka Group is specialized in the field of construction of Roads, Bridges, Industrial, Residential and commercial complexes with more than 25 years of standing proven experience. Their Group is having an annual turnover of over Rs.1785 crores. The JV has its registered office at Ashoka House, Ashoka Marg, Vadala, Nasik. The plant is located at Gat No.153 (156/1), Sinnar, Nashik. The main activity of the company will be manufacturing of concrete poles used for the Electricity Distribution lines, constructions of Bridges and other electrical infrastructure projects. Table 44: Corporate Snapshot of Ashoka Pre-Con Pvt. Ltd
Corporate information Name Date of Incorporation CIN Number Constitution Registered Office Plant Ashoka Pre-Con Private Limited 24th Oct 2008 U26940MH2008PTC187764 Private Limited Company Ashoka House, Ashoka Marg, Vadala, Nasik Gat No.153 (156/1), Sinnar, Nashik.

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Board of Directors As on date, the Board of Directors of APPL comprises of six directors. The details of the composition of the Board are given below: Table 45: Board of Directors of Ashoka Pre-Con Pvt Ltd
Mr. Mr. Mr. Mr. Mr. Mr. Name Sanjay Prabhakar Londhe Ajay K Bedmutha K R Bedmutha Satish D. Parakh Ashish Ashok Katariya Ramesh Pokerna Director Director Director Director Director Director Technical Director

Capital Structure Details of the authorized and paid-up capital of the Company are as under: Table 46: Capital Structure of Ashoka Pre-Con Pvt. Ltd as on 30th Sept 2009
Particulars Authorized Share Capital Issued, Subscribed and Paid up Share Capital Share Application Money Rs. In Lacs 100.00 1.00 278.00

The authorized and issued share capital of APPL will be increased in due course of time as and when required for adequate infusion of equity into the Project. The Share application money has been brought in by the partners of the firm. After the signing of shareholders agreement, the shareholding pattern of the Company is as under. Table 47: Shareholding of Ashoka Pre-Con Pvt Ltd as on 30th Sept 2009
Shareholders Ashoka Buildcon Ltd Bedmutha Industries Ltd Total shareholding % holding 51% 49% 100%

Present Banking Arrangement Ashoka Pre-Con, currently, does not have any sanctioned credit limits from any bank or financial institution. Financials: The project is under implementation phase. 3. M/s Elme last Co. The firm is a profit making partnership firm engaged in manufacture of plastic and polythene bags. The firm is having its manufacturing facilities at Satpur, Nasik. Table 8: Details of Elme Plast Company
Firmss information Name Date of establishment Constitution Registered Office M/s Elme Plast Co. 30.01.1990 Partnership Firm D 11, MIDC, Satpur, Nashik.

Partners The firm has 2 partners. The detail of the partners is as given below:

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Table 49: Details of Partners as on 30th Sept 2009


Name Mr. Usha V Bedmutha Mr. K R Bedmutha Partner Partner Partner Profit Sharing 50% 50%

Present Banking Arrangement The company is banking with Bank of India, Mulund, Mumbai. It is having Current Account. Financials: Table 50: Financials of Elme Plast Co (INR in Lacs)
Particulars Share Capital Add: Reserves & Surplus TNW Sales PBT Audite d 200607 75.63 5.33 80.96 124.07 0.20 Audite d 200708 75.69 5.33 81.02 44.72 0.06 Audite d 200809 75.68 5.33 81.01 4.56 0.23

The Company has not been taking further orders in the Company as they are concentrating on wire business. 4. M/s Usha Chemicals The firm is an existing profit making proprietary firm formed in 1997 has been promoted by Mrs Usha Vijay Bedmutha. The firm is in specialty chemical segment and manufactures chemicals such as Ferrous Sulphate, Zinc Sulphate and Copper Sulphate. Its manufacturing facilities are located at Sinnar, Nasik. Table 51: Corporate Details of Usha Chemicals
Firmss information Name Date of establishment Constitution Registered Office M/s Usha Chemicals 5th August 1997 Proprietorship concern Plot A 62, 63 STICE, Musalgaon, Sinnar

Present Banking Arrangement The company is banking with State Bank of India, Sinnar, Nashik and has sanctioned cash credit limit of Rs.15 lacs.

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Financials: Table 52: Financials of Usha Chemicals (INR in Lacs)


Particulars Partners Capital Add: Reserves & Surplus TNW Sales PBT Audite d 200607 7.32 17.62 24.94 256.59 0.35 Audite d 200708 6.51 16.11 22.62 87.46 0.63 Audite d 200809 2.01 6.87 8.88 41.45 3.29

The Company has not been taking further orders in the Company as they are concentrating on wire business. 5. M/s Kreepa Steel Industries Kreepa Steel Industries, a part of Bedmutha Group, is an ISO 9001 firm engaged in manufacturing, supply & servicing of energy saving blast, energy meter, inverter, distribution/ control panel, contract work for PCB assembly and electrical/ electronic products. Kreepa Steel Industries is constituted as a registered partnership firm between Mr. K.R. Bedmutha, Mr. A.K. Bedmutha, Mr. V.K. Bedmutha and Mr. V.V Kenge in the equal ratio. The partnership firm was formed in June 2002 and has its registered office at Plot No. D-8, Road No.-10, MIDC, Satpur, Nasik. Kreepa Steel has recently bagged Rs. 16.50 Crore orders from Ashoka Buildcon Ltd for supply of 10,000 Distribution boxes spread over a period of next two years. Table 53: Corporate details of Kreepa Steel Industries
Name of Partnership Firm Constitution Date of Formation Partners Kreepa Steel Industries Partnership firm (Registered) June 1st 2002 Partners % Share Mr. K.R. Bedmutha 25% Mr. A.K. Bedmutha 25% Mr. V.K. Bedmutha 25% Mr. V.V. Kenge 25% Plot No. D-8, Road No.-10, MIDC, Satpur, Nasik.

Office & Factory

Present Banking Arrangement The company is banking with Union Bank of India, Satpur, Nasik and has been sanctioned Cash credit limits of Rs.50 Lacs. Financial Performance for last three years of Kreepa Steel Industries

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Table 54: Financials of Kreepa Industries (INR in Lacs)


Particulars Sales Other Income Inc/Dec in Stock Total Income Raw Material & Other Mfg Exp Admin & Other Exp Total Expenditure EBITDA Interest & Financial Charges Depreciation PBT Mar-07 321.04 11.92 7.01 339.97 310.45 17.40 327.85 12.12 1.87 8.78 1.46 Mar-08 331.75 8.74 8.09 348.58 315.62 19.39 335.01 13.57 7.51 5.88 0.18 Mar-09 58.91 6.29 -13.96 51.24 30.18 7.22 37.40 13.84 8.01 4.53 1.30

M/s Bedmutha Sons Realty Ventures Private Limited Bedmutha Sons Realty Ventures Private Limited, has been incorporated in 2007 for the purpose of dealing in real estate business of the Group. Table 55: Corporate Snapshot of BSRVPL
Company Activity Date of Incorporation Constitution Registered Office Bedmutha Sons Realty Ventures Private Limited Real Estate 3rd Feb 2007 Private Limited D 11, MIDC, Satpur, Nasik 07

M/s K.R. Bedmutha Techno Associates Private Limited K.R. Bedmutha Techno Associates P Ltd is into technical consulting and engineering services. The Company has been formed in 2008. It has subsidiary KRBTA Unison Private Limited. Table 56: Corporate Snapshot of KRBTA Pvt Ltd
Company Activity Date of Incorporation Constitution Registered Office K. R. Bedmutha Techno Associates Private Limited Technical Consulting and Engineering Services 14th April 2008 Private Limited D 11, MIDC, Satpur, Nasik

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Table 97: Financials of KRBTA Pvt Ltd (INR in Lacs)


Particulars Audited 200809 5.00 1.00 31.00 32.00 296.47 34.37

Authorized Capital Paid up Capital Add: Reserves & Surplus TNW Sales PBT

8. M/s Vinita Computers A proprietary concern promoted by Mrs. Vinita A. Vedmutha for Computer Training in a franchise model. The status as on today - it has been foreclosed to concentrate in other areas. Activity: provide computer training. Table 58: Corporate Snapshot of Vinita Computers
Firmss information Name Date of establishment Constitution Registered Office M/s Vinita Computers July 2007 Proprietorship concern of Mrs Vinita A Vedmutha D 11, MIDC, Satpur, Nashik 422 007

9. M/s Ganesh Manufacturing Company It was a Trading firm to trade into Iron & Steel products. The firm has been foreclosed as on date. Activity: trading of Iron & Steel products. Table 59: Corporate Snapshot of Ganesh Manufacturing Company
Firmss information Name Date of establishment Constitution Office M/s Ganesh Manufacturing Company In the year 1989 Proprietorship concern of Mr Ajay K. Vedmutha D 11, MIDC, Satpur, Nashik 422 007

9. M/s Kamal Transport


It was a Transport division started with an aim to provide logistic support to existing industry. The firm has been foreclosed as on date. Activity: provide logistic support to existing industry. Table 60: Corporate Snapshot of Kamal Transport

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Firmss information Name Date of establishment Constitution Office

M/s Kamal Transport In the year 1997 Proprietorship concern of Mr Ajay K. Vedmutha D 11, MIDC, Satpur, Nashik 422 007

10 M/s Jagruti Architects It is a consultancy activity in the field of architectural services & preparation of plans. Activity: consultancy in field of architectural services & plan preparation. Table 61: Corporate Snapshot of Jagruti Architects
Firmss information Name Date of establishment Constitution Registered Office and Plant M/s Jagruti Architects 1998 - 1999 Proprietorship concern of Mrs Vinita A. Vedmutha 10, Poornima hsg soc, Mulund East, Mumbai

11. M/s Precrete Technologies It is Joint Venture between Bedmutha Group & Ashoka Built-con with 49% stake in Bedmutha Industries Ltd. to float a manufacturing unit. Table 62: Corporate Snapshot of Precrete Technologies
Firmss information Name Date of Incorporation CIN Number Constitution Directors Registered Office Precrete Technologies 24th Oct 2008 U73200MH2008PTC187503 Private Limited Company Mr. Ajay Vedmutha Mr. Sanjay Londhe Ashoka House, Ashoka Marg, Vadala, Nasik

Philanthropy
The Group and the Bedmutha family have been actively involved in social and charitable causes for improvement of the quality of life of the people in the region, especially Sinnar and Nashik. The company is in process of developing BEDMUTHA GREEN FOUNDATION on 2 acres of land in STICE which will plant more than 2500 plants of SUBABUL for enhancement of oxygen level in the zone and provide coal environment.

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