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PUBLIC ANNOUNCEMENT TO THE SHAREHOLDERS OF
KANOI PAPER & INDUSTRIES LIMITED
(Regd. Office: 2A, GANESH CHANDRA AVENUE, 2ND FLOOR, ROOM NO. 4 & 4A, KOLKATA-700 013)
This Public Announcement (“PA”) is being issued by Ashika Capital Limited, Manager to the Offer, on behalf of Mr. Murari Lal Jalan and M/s. Arrow Syntex Pvt. Limited (hereinafter collectively referred to as “Acquirers”) pursuant to Regulation 10 & 12 and in compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto (hereinafter referred to as “Regulations”).
1. THE OFFER:
a) The Offer is being made by Mr. Murari Lal Jalan, a non-resident Indian residing at Post Box 17516, Al Maktoum Road, Dubai, UAE and having his Indian address at 9/3, Basant Bihar, Kanke Road, Ranchi (Jharkhand) and M/s. Arrow Syntex Pvt. Ltd. having its registered office at 2A, Ganesh Chandra Avenue, 2nd Floor, Kolkata-700 013 to the Equity Shareholders of Kanoi Paper & Industries Limited (hereinafter referred to as “Target Company” or “KPIL”).
b) The Acquirers have entered into a Share Purchase Agreement dated 24/12/2003 (“Agreement”) to acquire 21,98,823 fully paid-up equity shares of Rs.10/- each representing 35.90% of the paid-up equity and voting share capital of KPIL from promoters of KPIL, their relatives & associate companies (hereinafter collectively referred to as "Sellers") at a price of Rs.2.50 per share (“Negotiated Price”) payable in cash (“The Acquisition”).
c) For the purpose of this offer, there are no persons acting in concert as per the provisions of Regulations 2(1)(e) of the Regulations.
d) The Acquirers are now making this Open Offer (“Offer”) to the shareholders of KPIL (other than the parties to the Agreement) to acquire from them upto 12,25,080 fully paid-up Equity Shares of Rs.10/- each, representing 20% of its paid up equity share and voting capital at a price of Rs.4.20 per share (“Offer Price”) payable in cash subject to terms and conditions mentioned hereinafter. KPIL does not have any partly paid up equity shares.
e) The shares of KPIL are listed on The Stock Exchange, Mumbai (“BSE”) and the Calcutta Stock Exchange Association Limited (“CSE”). The equity shares are frequently traded on BSE and infrequently traded on CSE within the meaning of explanation (i) to Regulation 20(5) of the Regulations. The offer price of Rs.4.20 per share is justified in terms of Regulation 20(4) & 20(5) of the Regulations in view of the following:
i) M/s. Arrow Syntex Pvt. Ltd. has acquired on 11.11.2003, 5,21,950 equity shares of KPIL representing 8.52% of the total equity share capital at a price of Rs.2.50/- per share and on 12.11.2003, 2,82,550 equity shares representing 4.61% of the total equity share capital at a price of Rs.2.50/- per share on spot delivery basis.
ii) Except as stated above, the Acquirers have not acquired any shares of the Target Company during the twelve months preceding this Public Announcement and during the 26 weeks prior to the date of PA including by way of allotment in a public, rights or preferential issue.
iii) The share price data of KPIL on BSE where it is frequently traded is as under:
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The average of the weekly high and low of the closing prices of the shares of the Target Company during the 26 weeks preceding the date of this Public Announcement
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Rs.3.31
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The average of the daily high and low prices of the shares of the Target Company during the 2 weeks preceding the date of this Public Announcement
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Rs.4.19
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Source: www.bseindia.com
iv) The financial parameters based on the audited annual accounts for the year ended 31.03.2003 of KPIL such as Book Value, Earning per share and Return on Networth are all negative. Since, the Earning per share of KPIL is negative, the P/E multiple is not applicable. The average industry P/E for the sector in which KPIL operates is 8.0 (Source: Capital Market journal Vol. XVIII/20, Dec 08-21, 2003, sector-Paper)
The Offer Price of Rs.4.20 per equity share of KPIL is therefore justified in terms of Regulation 20(11) of the Regulations.
f) As on the date of this Public Announcement, M/s. Arrow Syntex Pvt. Ltd. holds 8,04,500 equity shares of KPIL, representing 13.13% of its paid up and voting share capital.
g) The Offer is not subject to any minimum level of acceptances from shareholders and is not a conditional Offer.
h) This is not a competitive bid.
i) The Acquirer will comply with the Regulations and complete the offer formalities irrespective of the compliance or fulfilment or outcome of the Share Purchase Agreement with the Sellers.
2. INFORMATION ABOUT THE ACQUIRERS:
a) Mr. Murari Lal Jalan, son of Late Ganesh Prasad Jalan, a non-resident Indian aged about 39 years, is residing at Post Box 17516, Al Maktoum Road, Dubai, UAE and is having his Indian address at 9/3, Basant Bihar, Kanke Road, Ranchi (Jharkhand). He has more than 20 years of experience in paper, photographic films, photo colour labs and photographic equipment business. He is presently the Director in KPIL. His networth as on 31/03/2003 as certified by Mr. Sanjay Kansal (Membership No. 60528), partner of Kansal Sanjay & Associates, Chartered Accountants, having office at P-17, New C.I.T. Road, 1st floor, Room No.7, Kolkata-700 073 Ph:22348351 vide certificate dated 24/12/2003 is Rs.253.18 Lacs.
b) Arrow Syntex Pvt. Ltd. (ASPL) having its registered office at 2A, Ganesh Chandra Avenue, 2nd floor, Kolkata-700 013 was incorporated under the Companies Act, 1956 on 12/07/1994. ASPL is a Non-Banking Financial Company registered with RBI vide registration no. B.05.05324 dated 28.01.2003. ASPL is presently engaged in the business of investment in shares & securities. Mr. Murari Lal Jalan and Mr. Narayan Jalan are the promoters of the Company. Total Revenue and profit after tax of ASPL for the year ended 31.03.2003 were Rs.83.32 Lacs and Rs.0.19 Lacs respectively. As on 31st March 2003 the equity share capital of the company was Rs.123.21 Lacs comprising of 12,32,120 equity shares of Rs. 10/- each and Reserve and Surplus (excluding revaluation reserve) were Rs. 182.01 Lacs. For the year ended 31st March 2003 Return on Networth is 0.06%, book value per share is Rs.24.75 and earning per share is Rs.0.02. The price earning multiple data is not applicable, as ASPL is an unlisted Company.
3. INFORMATION ABOUT THE TARGET COMPANY:
a) KPIL having its registered office at 2A, Ganesh Chandra Avenue, 2nd Floor, Room No. 4 & 4A, Kolkata-700 013 was originally incorporated under the Companies Act, 1956 on 20/09/1984 under the name of BDT Business Limited. The name of the Company was subsequently changed to Kanoi Paper & Industries Limited and a fresh certificate of incorporation was obtained on 07/08/1989.
b) As on the date of this Public Announcement, the paid-up and voting equity share capital of KPIL is Rs.6,12,54,000/- comprising of 61,25,400 Equity Shares of Rs.10/- each fully paid-up. There are no partly paid-up shares.
c) KPIL is engaged in the business of manufacturing of writing and printing paper.
d) The Equity Shares of KPIL are listed at The Stock Exchange, Mumbai and the Calcutta Stock Exchange Association Limited.
e) As per the audited Accounts for the year ended 31.03.2003, the total income and net loss of KPIL was Rs.1391.69 lacs and Rs.653.05 lacs respectively. The networth, book value and earning per share of KPIL as on 31.03.2003 are all negative.
4. REASONS FOR THE OFFER AND FUTURE PLANS ABOUT TARGET COMPANY:
a) This offer has been made pursuant to Regulation 10 and 12 and other provisions of Chapter III and in compliance with the Regulations.
b) The acquisition is for substantial acquisition of shares and voting rights accompanied with change in control / management.
c) The Acquirers propose to expand the business activity in the paper and paper related products. The Acquirers family are engaged in paper trade for the last 60 years and are willing to expand their wings into manufacturing of paper and paper related products. The acquisition of KPIL would facilitate such motive as KPIL is already engaged in these activities. By virtue of this acquisition the Acquirers will get majority shareholding entitling them to exercise management control over the Target Company.
d) The Acquirers do not have any plans to dispose off or otherwise encumber any assets of KPIL in the next two years except in the ordinary course of business of KPIL.
e) The Acquirers shall not sell, dispose of or otherwise encumber any substantial assets of KPIL except with the prior approval of the shareholders.
5. STATUTORY APPROVALS/ OTHER APPROVALS REQUIRED FOR THE OFFER:
a) Approval is required from FIPB / SIA and / or RBI for purchase of shares of the Target Company. Mr. M. L. Jalan, one of the Acquirer shall make an application to FIPB / SIA and / or RBI for acquiring shares in KPIL and for taking management control. Depending on the approval, Mr. M. L. Jalan would acquire the shares in the Target Company. The Acquirers have not entered into any formal agreement between them in respect of acquisition of shares of the Target Company acquired as per agreement or through any public offers. However, as per the understanding, in case of non-receipt of appropriate approval from FIPB / SIA / RBI or any other agency for acquisition for equity shares by Mr. M. L. Jalan being a non-resident, all the valid equity shares acquired as per any agreement (s) or tendered under any open offer (s) which are not allowed to be acquired by Mr. M. L. Jalan, would be acquired by M/s. Arrow Syntex Pvt. Ltd.
b) Approval from RBI will be required for acquisition of shares from NRI shareholders, if any.
c) As on the date of this Public Announcement, no statutory approvals other than as stated above are required to be obtained for the purpose of this Offer.
d) No approval from any Bank or Financial Institutions is required for the purpose of this Offer.
6. DELISTING OPTION TO THE ACQUIRERS IN TERMS OF REGULATION 21(3):
If, pursuant to this Offer and any acquisition of shares by the Acquirers from the open market or through negotiations or otherwise made in compliance with the SEBI (SAST) Regulations 1997, the public shareholding is reduced to 10% or less of the paid up and voting share capital of KPIL, then in accordance with Regulation 21(3) of the Regulations, the Acquirers will make an Offer to acquire the outstanding shares remaining with the public shareholders in accordance with the SEBI (Delisting of Securities) Guidelines, 2003.
7. FINANCIAL ARRANGEMENTS:
a) The Acquirers have adequate financial resources and have made firm financial arrangement for the implementation of the Offer in full out of their own sources / networth and no borrowings from Banks/ FIs or Foreign sources is envisaged. Mr. Sanjay Kansal (Membership No. 60528), partner of Kansal Sanjay & Associates, Chartered Accountants, having office at P-17, New C.I.T. Road, 1st floor, Room No.7, Kolkata-700 073 Ph:22348351 vide certificate dated 24/12/2003 that sufficient resources are available with the Acquirers for fulfilling the obligations under this “Offer” in full.
b) The total fund requirement for the Offer is Rs.51,45,336/- (Fifty One Lacs Forty Five Thousand Three Hundred and Thirty Six only). In accordance with Regulation 28 of the Regulations, the Acquirers have opened an Escrow account in Tamilnad Mercantile Bank Limited, 58D, N. S. Road, Kolkata-700 001 in the form of a fixed deposit of Rs.13,50,000/- being more than 25% of the total consideration payable to shareholders under the Offer.
c) The Manager to the Offer, Ashika Capital Limited has been duly authorised by the Acquirers to operate & realize the value of Escrow Account in terms of the Regulations.
d) The Manager to the Offer confirms that the firm arrangement for the funds and money for payment through verifiable means are in place to fulfil the offer obligations.
8. OTHER TERMS OF THE OFFER:
a) The Letter of Offer ("LO") together with Form of Acceptance cum Acknowledgement shall be mailed to those equity shareholders of KPIL (other than the shareholders who are parties to the agreement) whose names appear on the Register of Members of KPIL and to those beneficial owners of the Equity shares of KPIL, whose names appear as beneficiaries on the records of the respective Depository Participant ("DP"), at the close of business hours on 29/12/2003 (“Specified Date”). The LO along with Form of Acceptance (“FoA”) and Form of Withdrawal (“FoW”) would also be available at SEBI Website: www.sebi.gov.in from the date on which Offer opens. Eligible persons to the offer may download these forms for their use.
b) Beneficial owners (holders of shares in dematerialised form) who wish to tender their shares will be required to send their Form of Acceptance cum Acknowledgement along with a photocopy of the delivery instructions in "Off-market" mode, duly acknowledged by the Depository Participant in favour of the special Depository Account, to the Registrar to the Offer, in accordance with the instructions to be specified in the LO.
c) Shareholders holding equity shares in physical form who wish to accept the Offer and tender their shares, will be required to send their (i) duly signed Form of Acceptance, (ii) original share certificate(s), (iii) duly signed and executed transfer deed(s) and other documents to the Registrar to the Offer, in accordance with the instructions specified in the LO.
d) All owners (registered or unregistered) of the shares of KPIL (except parties to the agreement) are eligible to participate in the Offer. Unregistered shareholders / Owner of shares who have sent shares for transfer can send their application in writing to the Registrar to the Offer, on a plain paper stating the Name, Address, No. of shares held, No. of shares offered, Distinctive Nos., Folio No., together with Original share certificate(s), valid share transfer deeds and the Original contract notes issued by the broker through whom they have acquired their shares. No indemnity is required from unregistered shareholders.
e) In case of non-receipt of Letter of Offer, the eligible persons may send their consent, to the Registrar to the Offer, on a plain paper stating the Name & address of the first holder, Name(s) & address(s) of joint holders(s) if any, Regd. Folio No., Share Certificate No., Distinctive Nos., No of Shares offered along with documents as mentioned above so as to reach the Registrar to the Offer on or before the closure of the Offer i.e. 16/03/2004 or in case of beneficial owners, they may send the application in writing to the Registrar to the Offer on a plain paper stating the Name, Address, No. of shares held, No. of Shares offered, DP Name, DP ID No., Beneficiary account number and a photocopy of the delivery instruction in “Off Market” mode, duly acknowledged by the DP, in favour of special depository account, so as to reach the Registrar to the Offer, on or before the closure of the Offer i.e. 16/03/2004.
f) The Acquirers have appointed Maheshwari Datamatics Pvt. Ltd. as the Registrar to the Open Offer ("Registrar"). The Registrar has opened a special depository account with Shree Bahubali International Limited in National Securities Depository Limited ("NSDL") styled " Maheshwari Datamatics Pvt. Ltd.-KPIL-Open Offer Escrow A/c”. The DP ID is IN300773 and Beneficiary Client ID is 10104140. Shareholders having their beneficiary account in Central Depository Services India Limited (“CDSL”) have to use inter depository delivery instruction for the purpose of crediting their equity shares in favour of Special Depository Escrow Account with NSDL.
g) Shareholders who have sent their shares for dematerialisation need to ensure that the process of getting shares dematerialised is completed well in time so that the credit in the Escrow Account should be received on or before the closure of the Offer, else the application would be rejected.
h) In case the shares tendered in the Offer by the shareholders of KPIL are more than the shares to be acquired under the Offer, the acquisition of the shares from each shareholder will be as per the provision of Regulation 21(6) of the Regulations on a proportionate basis. The marketable lot for both physical and demat shares is 1(One).
i) The Registrar will hold in trust the share certificates, shares lying to the credit of the special depository account, Form of Acceptance cum Acknowledgement, if any, and the transfer form(s) on behalf of the shareholders of KPIL who have accepted the Offer, till the cheques / drafts for the consideration and / or the unaccepted shares / share certificates are despatched / returned.
j) The consideration for the shares accepted by the Acquirers will be paid by crossed account payee cheques/ demand drafts. Such payments and documents in case of unaccepted shares will be returned by registered post/ speed post at the shareholders / unregistered owners' sole risk. Shares held in dematerialised form to the extent not accepted will be credited back to the account of beneficial owner specified in the acceptance form. Communication of acceptance / rejection and the payment of consideration for the accepted shares will be made by the Acquirers in cash through cheque/ demand draft to the shareholders of accepted shares within 30 days from the date of the closure of the Offer.
k) In terms of Regulation 22(5A), shareholders shall have the option to withdraw acceptance tendered upto three working days prior to the date of closure of the Offer by submitting the documents as specified below, so as to reach the Registrar to the Offer. The withdrawal can be exercised by submitting Form of Withdrawal enclosed with Letter of Offer. In case of non-receipt of form of withdrawal, the withdrawal can be exercised by making plain paper application alongwith the following details:
Ø In case of physical shares: Name, address, distinctive numbers, folio nos., number of shares tendered / withdrawn.
Ø In case of dematerialised shares: Name, address, number of shares tendered / withdrawn, DP name, DP ID, Beneficiary account no. and a photocopy of delivery instruction in “off market” mode or counterfoil of the delivery instruction in “off market” mode, duly acknowledged by the DP in favour of the Depository Escrow Account.
l) The shares withdrawn by the shareholders, if any would be returned by registered post, in case of physical shares.
m) The Acquirers undertake to pay interest pursuant to Regulation 22(12) to the shareholders for the delay, if any, in payment of consideration.
n) A schedule of some of the major activities in respect of the Offer is given below:
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Activity
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Date
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Day
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Specified date (for the purpose of determining the names of shareholders to whom the Letter of Offer will be sent)
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29/12/2003
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Monday
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Last Date for a Competitive Bid
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19/01/2004
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Monday
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Date by which the Letter of Offer will be despatched to shareholders
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10/02/2004
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Tuesday
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Date of Opening of the Offer
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16/02/2004
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Monday
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Last date for revising the Offer Price / No. of Shares
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05/03/2004
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Friday
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Last Date for withdrawal of acceptance by shareholders who have accepted the Offer
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11/03/2004
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Thursday
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Date of Closing of the Offer
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16/03/2004
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Tuesday
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Date by which communicating rejection/ acceptance and despatch of cheques/ demand drafts towards payment of consideration to be completed.
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14/04/2004
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Wednesday
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9. GENERAL:
a) Shareholders who have accepted the Offer by tendering the requisite documents, in terms of the Public Announcement / Letter of Offer, can withdraw the same upto 11/03/2004 i.e. three working days prior to the date of Closure of the Offer.
b) If there is any upward revision in the Offer Price upto seven working days prior to the closure of the Offer i.e. 05/03/2004 or withdrawal of the Offer, the same would be informed by way of PA in the same newspapers where this PA appears and the revised Price would be payable to all the shareholders who have tendered their shares any time during the Offer.
c) The Acquirers, the Sellers and the Target Company have not been prohibited by SEBI from dealing in securities, in terms of the direction issued u/s 11B of the SEBI Act or under any other regulations made under the SEBI Act.
d) If there is a competitive bid:
¨ The Open Offers under all the subsisting bids shall close on the same day.
¨ As the Offer price can not be revised during 7 working days prior to the closing date of the Offers / bids, it would therefore be in the interest of shareholders to wait till the commencement of that period to know the final Offer price of each bid and tender their acceptance accordingly.
e) There is no non-compete agreement.
f) Pursuant to Regulation 13 of the Regulations, the Acquirers have appointed Ashika Capital Limited, Kolkata, as the Manager to the Offer.
g) Maheshwari Datamatics Pvt. Ltd. of 6, Mangoe Lane, Kolkata – 700 001, Tel: (033) 2243-5809, Fax: (033) 2248-4787, E-mail:
mdpl@cal.vsnl.net.in
is the Registrar to the Offer. The contact person is Mr. S. Rajagopal.
h) The Acquirers and its directors, jointly and severally accept full responsibility for the information contained in this Public Announcement and also for their obligations as laid down in the Regulations.
i) This PA will be available on SEBI's website at www.sebi.gov.in. Eligible persons to the Offer may also download a copy of the LO along with Form of Acceptance and Form of Withdrawal which will also be available on the SEBI's website from the Offer opening date i.e.16/02/2004 and apply in the same.
j) For further details, please refer to the LO & Acceptance Form.
Issued by Manager to the Offer on behalf of the Acquirers:
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Your trust is our strength
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Ashika Capital Limited
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(Contact Person: Ms. Astha Singhania)
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7, B. B. Ganguly Street,
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4th Floor, Kolkata-700 012
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Tel: (033) 2221-5031/ 5032/ 5112/ 5113
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Fax: (033) 2215-9418
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Email: ashika@cal2.vsnl.net.in
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Place: Kolkata
Date: 29/12/2003