ARIES AGRO LIMITED - Moneycontrol.com

378 Pages·2007·3.55 MB·English

Cyan Magenta Yellow Black
Red Herring Prospectus
Please read Section 60B of the Companies Act, 1956
Dated 27th November, 2007
100% Book Built Issue
ARIES AGRO LIMITED
(The Company was originally incorporated as "Aries Agro-Vet Industries Private Limited" on 27th November, 1969 under the Companies Act, 1956
with the Registrar of Companies, Maharashtra and was converted into Public Limited Company under section 21 of the Companies Act, 1956 and
the name was changed to "Aries Agro-Vet Industries Limited" on 30th December, 1994. The name of the Company was further changed to "Aries
Agro Limited" and a fresh Certificate of Incorporation was obtained on 27th October 2006 from the Registrar of Companies, Maharashtra, Mumbai.
For details of changes in the Registered Office of the Company, please refer to page no. 11 of this Red Herring Prospectus)
Registered & Corporate Office: Aries House, Plot No.24, Deonar, Govandi (East), Mumbai 400 043
Tel No: [phone]/53 Fax No: [phone]/25502753
Contact Person/Compliance Officer: Mr. S. Ramamurthy, Chief Financial Officer
E-mail: [email protected], Website: www.ariesagro.com
INITIAL PUBLIC ISSUE OF 45,00,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS. [(cid:122)(cid:122)(cid:122)(cid:122)(cid:122)] PER EQUITY SHARE
(INCLUDING SHARE PREMIUM OF RS. [(cid:122)(cid:122)(cid:122)(cid:122)(cid:122)] PER EQUITY SHARE) AGGREGATING RS. [(cid:122)(cid:122)(cid:122)(cid:122)(cid:122)] LAKHS, (HEREINAFTER REFERRED
TO AS “THE ISSUE”). THE ISSUE WOULD CONSTITUTE 34.61% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF
THE COMPANY.
PRICE BAND: RS. 120/- TO RS.130/- PER EQUITY SHARE OF FACE VALUE OF RS 10/-
THE ISSUE PRICE IS 12.0 TIMES OF THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND 13.0 TIMES OF THE
FACE VALUE AT THE HIGHER END OF THE PRICE BAND.
In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional working days after such revision, subject to the Bidding/
Issue period not exceeding ten working days. Any revision in the price band, and the revised Bidding/Issue period, if applicable, will be widely disseminated by
notification to Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (NSE) by issuing a press release and also by indicating
the change on the website of the Book Running Lead Manager (BRLM) and at the terminals of the Syndicate Member(s).
The Issue is being made through the 100% Book Building Process wherein up to 50% of the issue shall be allocated on proportionate basis to Qualified
Institutional Buyers out of which 5% will be available for allocation on a proportionate basis to Mutual Funds. The remaining QIB portion shall be available for
allotment on a proportionate basis to QIB bidders including Mutual Funds, subject to valid bids being received at or above the Issue Price. Further, not less than
15% of the issue would be allocated to Non-Institutional Bidders on proportionate basis and not less than 35% of the issue would be allocated to Retail Individual
Bidders on a proportionate basis, subject to valid bids being received from them at or above the Issue Price.
RISKS IN RELATION TO THE FIRST ISSUE
This being the first issue of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs.
10 and the Issue Price is 12.0 times of the face value at the lower end of the price band and 13.0 times of the face value at the higher end of the price band.
The Price Band (as determined by the Company in consultation with the Book Running Lead Manager (BRLM) on the basis of assessment of market demand for
the Equity Shares by way of Book Building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No
assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will
be traded after listing.
We have not opted for the grading of the Issue.
GENERAL RISKS
Investment in Equity and Equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take
the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an
investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity Shares offered in the
Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of
this Red Herring Prospectus. Specific attention of investors is invited to the section titled ‘Risk Factors’ beginning on page no. viii of this Red Herring Prospectus.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Company having made all reasonable inquiries, accepts responsibility for, and confirms that this Red Herring Prospectus contains all information with regard
to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Red Herring Prospectus is true and correct
in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no
other facts, the omission of which makes this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions
misleading in any material respect.
LISTING
The Equity Shares offered through this Red Herring Prospectus are proposed to be listed on the Bombay Stock Exchange Limited (“BSE”) and the National Stock
Exchange of India Limited (“NSE”). The in-principle approvals from BSE and NSE for the listing of Equity Shares have been received vide their letter nos. DCS/
IPO/SC/IPO-IP/0289/2007-08 dated May 22, 2007 and NSE/LIST/53368-A dated August 13, 2007 respectively. For the purposes of this Issue, BSE is the
Designated Stock Exchange.
BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE
SREI CAPITAL MARKETS LTD. AARTHI CONSULTANTS PRIVATE LIMITED
'Vishwakarma', 86 C Topsia Road (South) 1-2-285, Domalguda,
Kolkata - 700 046, West Bengal, India Hyderabad - 500 029, Andhra Pradesh, India
Tel : [phone] Tel : [phone]
Fax: [phone]/3863 Fax: [phone]
E-Mail: [email protected] E-mail: [email protected]
Investors Grievance E-mail: [email protected] Website: www.aarthiconsultants.com
Website: www.srei.com SEBI Regn. No.: INR 000000379
SEBI Regn. No.: INM 000003762
ISSUE PROGRAMME
BID/ISSUE OPENS ON : Friday, December 14, 2007 BID/ISSUE CLOSES ON : Wednesday, December 19, 2007
TABLE OF CONTENTS
SECTION TITLE PAGE NO.
SECTION I DEFINITIONS AND ABBREVIATIONS
COMPANY RELATED TERMS i
ISSUE RELATED TERMS i
TECHNICAL AND INDUSTRY TERMS iv
CONVENTIONAL AND GENERAL TERMS / ABBREVIATIONS v
SECTION II RISK FACTORS
CERTAIN CONVENTIONS; USE OF MARKET DATA vii
FORWARD LOOKING STATEMENTS vii
RISK FACTORS viii
SECTION III INTRODUCTION
SUMMARY OF OUR INDUSTRY, BUSINESS, STRENGTHS & STRATEGY 1
THE ISSUE 5
SUMMARY OF FINANCIAL AND OPERATING INFORMATION 6
GENERAL INFORMATION 11
CAPITAL STRUCTURE 19
OBJECTS OF THE ISSUE 30
BASIC TERMS OF ISSUE 67
BASIS FOR ISSUE PRICE 69
STATEMENT OF TAX BENEFITS 73
SECTION IV ABOUT THE COMPANY
INDUSTRY OVERVIEW 81
BUSINESS OVERVIEW 93
HISTORY OF THE COMPANY AND OTHER CORPORATE MATTERS 140
MANAGEMENT AND ORGANIZATION 147
PROMOTERS 161
RELATED PARTY TRANSACTIONS 162
CURRENCY OF PRESENTATION 163
DIVIDEND POLICY 163
SECTION V FINANCIAL INFORMATION
AUDITORS REPORT AND FINANCIAL STATEMENTS (AS RESTATED) 164
FINANCIAL AND OTHER INFORMATION OF COMPANIES/FIRMS/
TRUSTS PROMOTED/CONTROLLED BY THE PROMOTERS 244
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 252
SECTION VI LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND DEFAULTS 261
MATERIAL DEVELOPMENTS 270
GOVERNMENT APPROVALS/LICENSING ARRANGEMENTS 271
SECTION VII OTHER REGULATORY AND STATUTORY DISCLOSURES 283
SECTION VIII ISSUE RELATED INFORMATION
TERMS OF THE ISSUE 291
ISSUE STRUCTURE 294
ISSUE PROCEDURE 295
SECTION IX MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY 321
SECTION X OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 351
DECLARATION 353
SECTION I GENERAL

DEFINITIONS AND ABBREVIATIONS
COMPANY RELATED TERMS

Terms Description
“Aries Agro Limited” or “Aries” or Unless the context otherwise require, refers to, Aries Agro Limited, a
“Aries Agro” or “the Company” or Public limited company incorporated under the Companies Act, 1956
“Issuer” or “We” or “us” or “our” and having its registered office at Aries House, Plot No.24, Deonar,
Govandi (East), Mumbai 400 043
Promoter(s) Shall mean jointly
Dr. T.B. Mirchandani
Dr. Jimmy Mirchandani
Dr. Rahul Mirchandani
Promoter’s Group As defined in Explanation II of Clause 6.8.3.2 of SEBI (Disclosure and
Investor Protection) Guidelines, 2000 and amendments thereof
Promoters’ Group includes:
Mr. Akshay Mirchandani
Mr. Amol Mirchandani
Mrs. Sarasa Mirchandani
Mrs. Nitya Mirchandani
Mr. Ashok Mirchandani
Mrs. Meenaxi Subramanian
Mrs. Jayanti Gopalakrishnan
Group Companies/ Firms Aries Marketing Limited
Aries East West Nutrients Pvt Ltd
Mirabelle International
Blossoms International Ltd
Sreeni Agro Chemicals Pvt Ltd
Golden Harvest Middle East (FZC)
Articles / Articles of Association/AoA Articles of Association of Aries Agro Ltd.
Auditors The statutory auditors of the Company, M/s Kirti D Shah & Associates,
Chartered Accountants
Board/Board of Directors Board of Directors of Aries Agro Limited or a committee thereof
Director(s) Director(s) of Aries, unless otherwise specified
Subsidiary Companies Aries Agro Care Private Limited
Aries Agro Equipments Private Limited
You Unless the context otherwise requires, refers to, investors.

ISSUE RELATED TERMS

Term Description
Allotment/Allotted Unless the context otherwise requires, the issue/ allotment of
Equity Shares of the Company pursuant to this Issue to the
successful Bidders.
Allottee The successful Bidder to whom the Equity Shares are being/have
been Issued / allotted.
Banker(s) to the Issue ICICI Bank Limited, HDFC Bank Limited and Axis Bank Limited
Bid An offer made by a prospective investor to subscribe to or purchase
the Equity Shares of the Company at a price within the Price Band,
during the Bidding Period and includes all revisions and
modifications thereto.
Bid Amount The highest value of the optional Bids indicated in the Bid cum
Application Form and payable by the Bidder on submission of the
Bid in the Issue
Bid / Issue Closing Date The date after which the Syndicate Members to the Issue will not
accept any Bids for the issue; any such date shall be notified
through a notice in a widely circulated English national newspaper,
a Hindi national newspaper and a Marathi news paper

i
Bid / Issue Opening Date The date on which the Syndicate Members to the Issue shall start
accepting Bids for the Issue; any such date shall be notified
through a notice in a widely circulated English national newspaper,
a Hindi national newspaper and a Marathi news paper
Bid-cum-Application Form The form in terms of which the Bidder shall make an offer to
subscribe to or purchase the Equity Shares of the Company and
which will be considered as the application for issue of the Equity
Shares pursuant to the terms of this Red Herring Prospectus
Bidder(s) Any prospective investor who makes a Bid for Equity Shares in
terms of this Red Herring Prospectus and the Bid-cum-Application
form through the Book Building Process
Bidding / Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue
Closing Date inclusive of both days and during which period
prospective investors can submit their Bids.
Book Building Process / Method Book building route as provided in Chapter XI of the SEBI
Guidelines, in terms of which this Issue is made
BRLM/Book Running Lead Manager Book Running Lead Manager, in this case being SREI Capital
Markets Limited
CAN / Confirmation of Means the note, advice or intimation of allocation of Equity Shares
Allocation Note sent to the Bidders who have been allocated Equity Shares after
discovery of the Issue Price in accordance with the Book Building
Process
Cap Price The higher end of the Price Band, Rs. 130/- per equity share in the
issue above which the Issue Price will not be finalized and above
which no bids will be accepted
Companies Act/ The Act The Companies Act, 1956, as amended from time to time.
Cut-off / Cut-off Price Any price within the Price Band finalised by the Company in
consultation with the BRLMs. A Bid submitted at Cut-off Price is a
valid Bid at all Price levels within the Price Band
Depositories Act The Depositories Act, 1996, as amended from time to time
Depository/Depositories A depository registered with SEBI under the SEBI (Depositories
and Participant) Regulations, 1996, as amended from time to time
Designated Date The date on which Escrow Collection Banks transfer the funds from
the Escrow Account to the Public Issue Account after the
Prospectus is filed with the ROC, following which the Board of
Directors shall transfer/allot the Equity Shares to successful
Bidders
Depository Participant / DP A depository participant as defined under the Depositories Act
Designated Stock Exchange Bombay Stock Exchange Limited
Draft Red Herring Prospectus/ DRHP The Draft Red Herring Prospectus issued in accordance with
Section 60B of the Companies Act, 1956 and SEBI Guidelines,
which does not have complete particulars of the price at which the
Equity Shares are offered and the size of the Issue.
Eligible NRI NRI from such jurisdiction outside India where it is lawful to make
an offer or invitation under the issue.
Equity Shares Equity Shares of the Company of face value of Rs. 10 each unless
otherwise specified in the context thereof
Escrow Account Account opened with the Escrow Collection Bank and in whose
favour the Bidder will Issue cheques/drafts in respect of the Bid
amount/margin money, when submitting a Bid
Escrow Agreement Agreement entered into amongst the Company, the Registrar, the
Escrow Collection Bank(s) and BRLMs for collection of the Bid
Amounts and for remitting refunds, if any of the amounts collected
to the Bidders
Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI
as Bankers to the Issue and with whom the Escrow Account will be
opened in this Issue.
FII(s)/Foreign Institutional Investors Foreign institutional investor (as defined under SEBI (Foreign
Institutional Investors) Regulations, 1995) registered with SEBI
under applicable laws in India
First Bidder The bidder whose name appears first in the bid cum application

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form or revision form
Floor Price The lower end of the Price Band, Rs. 120/- per equity share in the
Issue below which the Issue Price will not be finalised and below
which no bids will be accepted
Fresh Issue/ Issue/ Public Issue/ Offer Public Issue of 45,00,000 Equity Shares of Rs. 10 each for cash at
the Issue Price of Rs. [•] aggregating to Rs. [•] lakhs by the
Company in terms of this Red Herring Prospectus
FVCI Foreign Venture Capital Investor registered under the SEBI
(Foreign Venture Capital Investor) Regulations, 2000
Income Tax Act The Income Tax Act, 1961, as amended from time to time
Issue Price The final price at which Equity Shares will be Allotted in terms of
the Prospectus, as determined
Issue Account Account opened with the Banker(s) to the Issue to receive monies
from the Escrow Accounts for the Issue on the Designated Date
Issuer Aries Agro Limited
Margin Amount The amount paid by the bidder at the time of submission of
his/her bid, being 10% to 100% of the bid amount
Memorandum of The Memorandum of Association of Aries Agro Limited
Association/Memorandum/MOA
Mutual Funds Mutual funds registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996.
Mutual Fund Portion 5% of the QIB Portion or 1,12,500 Equity Shares (assuming the
QIB Portion is for 50% of the Issue size) available for allocation to
Mutual Funds only on proportionate basis, out of the QIB Portion.
Non-Institutional Bidders All Bidders that are not Qualified Institutional Buyers or Retail
Individual Bidders and who have Bid for Equity Shares for an
amount more than Rs. 100,000
Non-Institutional Portion The portion of the Issue Size being 6,75,000 Equity Shares of
Rs.10 each available for allocation to Non Institutional Bidders on
proportionate basis
OCB / Overseas Corporate Body Means and includes an entity defined in Clause (xi) of Regulation 2
of the Foreign Exchange Management (Transfer or Issue of
Securities by a person Resident outside India) Regulations, 2000
and which was in existence on the date of commencement of the
withdrawal of general permission to Overseas Body Corporate
Regulations, 2003 and immediate prior to such commencement
was eligible to undertake transactions pursuant to the general
permission granted under the Foreign Exchange Management
(Transfer or Issue of Securities by a person Resident outside
India) Regulations, 2000.
Pay-in-Date Bid/Issue closing date or the last date specified in the CAN sent to
Bidders as applicable
Price Band The price band with a minimum price (Floor Price) of Rs. 120/-
and the maximum price (Cap Price) of Rs. 130/- per Equity Share,
including any revisions thereof.
Pay-in-Period i. With respect to Bidders whose Margin Amount is 100% of
the Bid Amount, the period commencing on the Bid Opening
Date and extending until the Bid Closing Date, and
ii. With respect to Bidders whose Margin Amount is less than
100% of the Bid Amount, the period commencing on the Bid
Opening Date and extending until the closure of the Pay-in
Date
Pricing Date The date on which the Company in consultation with the BRLMs
finalises the Issue Price
Prospectus The Prospectus filed with the RoC containing, inter-alia, the Issue
Price that is determined at the end of the Book Building process,
the size of the Issue and certain other information
Public Issue Account Account opened with the Bankers to the Issue to receive monies
from the Escrow Account for the Issue on the Designated Date.
Qualified Institutional Buyers/QIB Public Financial Institutions as specified in Section 4A of the
Companies Act, Scheduled Commercial Banks, Mutual Funds
registered with SEBI, Foreign Institutional Investors registered

iii
with SEBI, Multilateral & Bilateral Development Financial
Institutions, Venture Capital Funds registered with SEBI, Foreign
Venture Capital Investors registered with SEBI, State Industrial
Development Corporations, Insurance Companies registered with
the Insurance Regulatory And Development Authority (IRDA),
Provident Funds with minimum corpus of Rs. 2500 Lakhs and
Pension Funds with minimum corpus of Rs. 2500 Lakhs
QIB Portion The portion of the issue size being 22,50,000 Equity Shares of
Rs.10 each available for allocation to QIB Bidder(s)
QIB Margin amount An Amount representing at least 10% of the Bid Amount
Refund Banker HDFC Bank Limited
Refunds through electronic transfer of Refunds through electronic transfer of funds means Refunds
funds through ECS, Direct Credit or RTGS as applicable.
Registrar/Registrar to the Issue Registrar to the issue, in this case Aarthi Consultants Private
Limited having its registered office at 1-2-285, Domalguda,
Hyderabad – 500 029.
Retail Individual Bidders Individual Bidders (including HUFs) who have bid for Equity
Shares for an amount less than or equal to Rs. 1,00,000.
Retail Portion The portion of the Issue size being 15,75,000 Equity Shares of Rs.
10 each available for allocation to Retail Individual Bidder(s)
Revision Form The form used by the Bidders to modify the quantity of Equity
Shares or the Bid Price in any of their Bid cum Application Forms
or any previous Revision Form(s)
RHP/Red Herring Prospectus Means this offer document issued in accordance with Section 60B
of the Companies Act, which does not have complete particulars
on the price at which the Equity Shares are offered and the size of
the Issue. The Red Herring Prospectus which will be filed with the
RoC at least 3 days before the Bid Opening Date and will become
a Prospectus after filing with the RoC after pricing and allocation.
ROC/Registrar of Companies Registrar of Companies, Maharashtra, Mumbai
SCML/SREI SREI Capital Markets Limited a public limited company
incorporated under the provisions of the Companies Act, 1956 and
with its registered office at “Vishwakarma”, 86 C, Topsia Road,
(South), Kolkata-700 046
Stock Exchanges The BSE and the NSE
Syndicate The BRLMs and Syndicate Member(s).
Syndicate Agreement The agreement to be entered into among the Syndicate Members
and the Company in relation to the collection of bids in this Issue
Syndicate Member Aum Capital Market Private Limited
TRS or Transaction Registration Slip The slip or document issued by the Syndicate Members to the
Bidder as proof of registration of the Bid.
Underwriters [•]
Underwriting Agreement The agreement between the Underwriters and the Company to be
entered into on or after the Pricing Date
VCFs Venture Capital Funds as defined and registered with SEBI under
the SEBI (Venture Capital Fund) Regulations, 1996, as amended
from time to time.

TECHNICAL AND INDUSTRY TERMS

Term Description
(NH ) Mo O .4H O Ammonium Molybdate
4 6 7 24 2
AIBP Accelerated Irrigation Benefit Programme
B Boron
Ca Calcium
Cl Chorine
Co Cobalt
Cu Copper
CuSO .5H O Copper Sulphate Pentahydrate
4 2
DAP Di Ammonium Phosphate
DCP Di-Calcium Phosphate

iv
DTPA Di-ethylene-tri-amine-penta-acetic acid
EDDHA Ethylene-diamine(o-dihydroxyphenyl) acetic acid
EDTA Ethylene-diaminetetraacetic acid
FAI Fertilizer Association of India
FCO Fertilizer Control Order, 1985
Fe Iron
Fe – EDTA Chelated Iron
FeSO .7H O Ferrous Sulphate
4 2
FSI Floor Space Index
HEDTA Hydroxy-ethyl-ethylene-diamine-tri-acetic acid
IMMA Indian Micro Fertilizers Manufacturers Association
K Potassium
KCl Potassium Chloride
Mg Magnesium
Mn Manganese
MnSO .4H O Manganese Sulphate
4 2
Mo Molybdenum
MOP Muriate of Potash
MT/Mt Metric Tonnes
N Nitrogen
Na B O .10 H O Borax or Sodium Borate
2 4 7 2
NTA Nitrilotriacetic acid
OGL Open General License
P Phosphorous
pH pondus hydrogenii (latin term for Measure of acidity)
ppm Parts per million
S Sulphur
TDR Transferable Development Rights
Zn Zinc
Zn – EDTA Chelated Zinc
ZnSO .7H O Zinc Sulphate Monohydrate
4 2

CONVENTIONAL AND GENERAL TERMS / ABBREVIATION

Term Description
Act or Companies Act Companies Act, 1956 and amendments thereto
AED Monetary Unit used in UAE
AGM Annual General Meeting of the shareholders
AS Accounting Standards issued by the Institute of Chartered Accountants of India
AY Assessment Year
BSE Bombay Stock Exchange Ltd.
CAGR Compounded Annual Growth rate
CDSL Central Depository Services (India) Limited
cm Centimeter
DIP Guidelines SEBI (Disclosure & Investor Protection) Guidelines, 2000, as amended
DP ID Depository Participant’s Identity
ECS Electronic Clearing Service
EGM Extraordinary General Meeting of the shareholders
EPS Earnings Per Share
FCNR Account Foreign Currency Non Resident Account
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and
the Regulations framed there under.
FIPB Foreign Investment Promotion Board
FY / Fiscal/Financial Year Period of twelve months ended March 31 of that particular year, unless
otherwise stated
FZC Free Zone Company (in UAE)
GIR Number General Index Registry Number
Golden Harvest Golden Harvest Middle East (FZC), A Company incorporated in UAE
GOI Government of India

v
Term Description
GDP Gross Domestic Product
HUF Hindu Undivided Family
Ha Hectare
ICAI Institute of Chartered Accountants of India
IPO Initial Public Offering
IMMA Indian Micro-Fertilisers Manufacturers Association
I.T. Act The Income Tax Act, 1961, as amended from time to time
LLC Limited Liability Company
MOF Ministry of Finance, Government Of India
MOU Memorandum of Understanding
Mt Metric tonne
NA Not Applicable
NAV Net Asset Value
NEFT National Electronic Funds Transfer
NR Non Resident
NRE Account Non-Resident External Account
NRI Non-Resident Indian, as defined under Foreign Exchange Management (Transfer
or Issue of Security by a Person Resident Outside India) Regulations, 2000, as
amended.
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
OGL Open General Licence
PAN Permanent Account Number
PAT Profits After Taxation
PBT Profits Before Taxation
P/E Ratio Price/Earnings Ratio
RBI The Reserve Bank of India
RONW Return on Net Worth
Rs. / Rupees / INR Indian Rupees
RTGS Real Time Gross Settlement
SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time
SCRA Securities Contract (Regulation) Act, 1956, as amended from time to time
SEBI Securities and Exchange Board of India constituted under the SEBI Act.
SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to
time
SEBI DIP Guidelines SEBI (Guidelines for Disclosure and Investor Protection) 2000 issued by SEBI
effective from January 27, 2000, as amended, including instructions and
clarifications issued by SEBI from time to time
SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeover) Regulations, 1997, as amended.
TAN Tax Account Number
tpa/TPA Tonnes Per Annum
UAE United Arab Emirates
WOS Wholly Owned Subsidiary

vi
SECTION II RISK FACTORS

i. CERTAIN CONVENTIONS; USE OF FINANCIAL & MARKET DATA

Unless stated otherwise, the financial data in this Red Herring Prospectus is derived from the restated
financial statements as of and for the years ended March 31, 2003, 2004, 2005, 2006, 2007 and for the
four months ended 31st July, 2007, prepared in accordance with Indian GAAP, the Companies Act, 1956
and restated in accordance with SEBI Guidelines, as stated in the report of our Statutory Auditors, M/s.
Kirti D Shah & Associates, Chartered Accountants, included on page 164 of this Red Herring Prospectus.
The fiscal year commences on April 1 and ends on March 31. In this Red Herring Prospectus, unless the
context otherwise requires, all references to one gender also refers to another gender and the word
"Lakh" or "Lac" means "one hundred thousand" and the word "million" means "ten lac" and the word
"Crore" means "ten million". In this Red Herring Prospectus, any discrepancies in any table between the
total and the sums of the amounts listed are due to rounding off.

All references to “India” contained in this Red Herring Prospectus are to the Republic of India. All
references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. All
references to “AED”, are to the monetary unit used in United Arab Emirates.

Market and Industry Data used throughout this Red Herring Prospectus has been obtained from
publications available in the public domain and internal Company reports. These publications generally
state that the information contained therein has been obtained from sources believed to be reliable but
their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we
believe the industry data used in this Red Herring Prospectus is reliable, it has not been independently
verified. Similarly, internal Company reports, while believed by the Company to be reliable, have not been
verified by any independent source.

FORWARD-LOOKING STATEMENTS

This Red Herring Prospectus contains certain “forward-looking statements”. These forward looking
statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”,
“expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or
other words or phrases of similar import. Similarly, statements that describe our objectives, plans or goals
are also forward-looking statements.

All forward looking statements are subject to risks, uncertainties and assumptions about us that could
cause actual results to differ materially from those contemplated by the relevant forward-looking
statement. Important factors that could cause actual results to differ materially from the expectations
include, but are not limited to:
• Dependence of Indian Agriculture on monsoon and weather conditions
• Changes in law and regulations that apply to Agri-business in India
• Increasing competition and the conditions of the customers of the Company and the
micronutrients/agro-chemical industry
• Changes in Government policies towards our industry
• The Company’s ability to successfully implement its strategy, growth and expansion plans;
• General economic and business conditions in the markets in which we operate and in the local,
regional and national economies.
• Changes in the value of the Rupee vis-à-vis other currencies
• Changes in political and socio-economic conditions in India.
• The Company’s ability to meet its capital expenditure requirements;

For further discussion of factors that could cause the actual results to differ, please refer to the section
titled “Risk Factors”, “ Business Overview” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” beginning on page viii, 93 and 252 of this Red Herring Prospectus
respectively. By their nature, certain market risk disclosures are only estimates and could be materially
different from what actually occurs in the future. As a result, actual future gains or losses could materially
differ from those that have been estimated. Neither the Company, the Directors, any member of the
Syndicate nor any of their respective affiliates have any obligation to update or otherwise revise any
statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying
events, even if the underlying assumptions do not come to fruition. In accordance with SEBI
requirements, the Company and the BRLM will ensure that investors in India are informed of material
developments until such time of the grant of listing and trading permission by the Stock Exchanges.

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ii. RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all of the
information in this Red Herring Prospectus, including the risks and uncertainties described below, before making
an investment in the Equity Shares of the Company. If any of the following risks actually occur, the Company’s
business, results of operations and financial condition could suffer, the trading price of its Equity Shares could
decline, and you may lose all or part of your investment.

Unless specified or quantified in the relevant risk factors below, the Company is not in a position to quantify the
financial or other implication of any of the risks mentioned herein under:

Materiality

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

1. Some events may not be material individually but may be found material collectively.
2. Some events may have material impact qualitatively instead of quantitatively.
3. Some events may not be material at present but may be having material impacts in future.

Internal Risk Factors:

1. There are qualifications for non provisioning of certain expenses in the Auditors Report to
Accounts
To meet the provisioning requirements in respect of Gratuity, the Company has opted for Life Insurance
Corporation of India’s Group Gratuity Scheme for its employees. The total contribution payable including
arrears as per Life Insurance Corporation of India as on 31/03/2007 is Rs. 126.24 lakhs. The Company
has provided Rs. 37.00 lakhs in audited accounts for FY 2005-06, FY 2006-07 and for the four month
period ended 31st July, 2007 and has also provided additional Rs. 40 lakhs (pertaining to period FY 2001-
02 to FY 2004-05) in these restated Accounts. The balance liability of Rs. 49.24 lakhs pertaining to period
prior to 1.4.2001 remains unprovided for. The Company has not taken the credit for deferred Tax asset of
Rs. 16.58 lakhs on such unprovided liability. Due to this the Reserves and Surplus are higher by Rs. 32.66
lakhs, Current Liabilities and Provisions are lower by Rs. 49.24 lakhs and Deferred Tax Liability is higher
by Rs. 16.58 lakhs.

Management Perception
We intend to pay unprovided liability in 5 equal installments as permitted by Life Insurance Corporation of
India and will provide the liability in the year of payment.

2. Majority of the Trade Marks of our Company are not registered and in case we do not receive
the new registrations or renewal of the existing registrations, it may affect our business
goodwill on account of possible misuse by any third party.

We have Certificates of Registration in our name for 18 Trade Marks, out of which 3 have been applied for
renewal. The Trade Marks are renewed from time to time from the Registrar of Trademarks, Mumbai for
our various products in routine course. We have also applied to the Trade Marks Registry for registration
of 24 Trade Marks (including Logo). The Registration of Trade Mark is normally valid for 10 years from the
date of the application and may be subsequently renewed. Non-receipt of the new registrations and non-
renewal of Trademarks applied for by us may affect our business goodwill on account of possible misuse
by any third party.

For details of trade marks expired and applications for renewal and the new registration applications,
please refer to the section titled ‘Intellectual Property’ on page 103 of the Red Herring Prospectus.

Management Perception
We do not foresee any difficulty in getting the registration/renewals of these trade marks. Although there
is likelihood of Company losing busiess or goodwill on account of use or misuse of our trademarks by any
third party or concern, we have been using the trademarks and logo consistently and therefore believe
that we have a proprietory right and ownership over the logo and trademarks.

3. Some of secretarial and accounting records were damaged / lost / washed out from the
Company’s premises in the unprecedented floods in Mumbai during the month of July, 2005.
We have vide our letter dated 25th August, 2005 intimated the Senior Inspector, Deonar Police

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