LETTER OF OFFER

 

THIS DOCUMENT IS IMPORTANT AND REQUIRES IMMEDIATE ATTENTION

This Letter of Offer is sent to you as shareholder(s) of Shin Ho Petrochemical (India) Limited. If you require any clarification about the action to be taken, you may please consult your stockbroker or investment consultant or the Manager to the Offer or the Registrar to the Offer. In case you have recently sold your equity shares in Shin Ho Petrochemical (India) Limited, please hand over this Letter of Offer and the accompanying Form of Acceptance cum Acknowledgement, Form of Withdrawal cum Acknowledgement and Transfer Deed(s) to the Member of Stock Exchange through whom the said sale was effected.

OPEN OFFER BY

SUPREME PETROCHEM LTD

612, Raheja Chambers, Nariman Point, Mumbai 400021

Tel No.: (022) 66935927, 22883518, Fax: (022) 40055681, 22883521

                                   

to

Acquire 23,59,200 equity shares of Rs. 10/- each representing 20% of the total equity share and voting capital of Target Company at a price of Rs. 5.85/- (Rupees Five and Eighty Five paise only) per fully paid equity shares of Rs.10/- each, payable in cash.

of

SHIN HO PETROCHEMICAL (INDIA) LIMITED

Registered Office: Ammullavoyil Village, Andarkuppam Post, Manali New Town, Chennai - 600103

Tel No.: (044) 25943457, 25942216 Fax: (044) 25941442       

 

Pursuant to the provisions of Regulation 10 and 12 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereof.

 

ATTENTION:

1.         The offer is not a conditional offer.

2.         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 three working days prior to the date of closure of the offer i.e. May 31, 2006 (Wednesday).

3.         If there is any upward revision in the Offer Price by the Acquirer upto seven working days prior to the date of closure i.e. upto May 24, 2006 (Wednesday), the same would be informed by way of a Public Announcement in the same newspapers where the original Public Announcement had appeared. Such revision in the Offer Price would be payable for all the equity shares tendered anytime during the Offer Period.

4.         There is no competitive bid.

5.         The Offer is subject to the compliance of the terms and conditions and reporting requirements under the Foreign Exchange Management Act, 1999 (FEMA) for the acquisition of equity shares by the Acquirers from the Non-residents under the Offer. No statutory approvals other than this are required to be obtained for the purpose of the offer.

6.         A copy of Public Announcement, Letter of Offer, Form of Acceptance cum Acknowledgement and Form of Withdrawal are also available on SEBI's website: https://www.sebi.gov.in/

 

MANAGER TO THE OFFER

REGISTRAR TO THE OFFER

STRATCAP SECURITIES (INDIA) PRIVATE LIMITED

44, Strategic House,

Mint Road,

Mumbai – 400001

Tel: 022-66349946-49

Fax: 022-22642393

E-mail:info@strategicindia.net

Contact Person: Mr. Anil Bhattar

 

KARVY COMPUTERSHARE

PRIVATE LIMITED

Karvy House, 46 Avenue 4,

Street No 1, Banjara Hills,

Hyderabad – 500034

Tel: 040 – 23312454

Fax: 040 – 23311968

E-mail: murali@karvy.com

Contact Person:Mr.Murali Krishna

OFFER OPENS ON: MAY 15, 2006 (Monday)

OFFER CLOSES ON: JUNE 3, 2006 (Saturday)

 

 

FOR PROCEDURE FOR ACCEPTANCE OF THIS OPEN OFFER PLEASE REFER SECTION “10” PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF THE OFFER

FORM OF ACCEPTANCE-CUM-ACKNOWLEDGEMENT AND FORM OF WITHDRAWAL ARE ENCLOSED WITH THIS LETTER OF OFFER.
       

 

 

SCHEDULE OF THE MAJOR ACTIVITIES OF THE OFFER

 

Sr. No.

Activity

Schedule

1.

Date of Public Announcement (PA)

March 24, 2006 (Friday)

2.

Specified Date

April 17, 2006 (Monday)

3.

Last Date for Competitive Bid(s)

April 14, 2006 (Friday)

4.

Date by which Letter of Offer will be dispatched to the Shareholders

May 6, 2006 (Saturday)

5.

Offer Opening Date

May 15, 2006 (Monday)

6.

Last Date for the Revision of the Offer Price / Number of Equity Shares.

May 24, 2006 (Wednesday)

7.

Last date to withdraw acceptance tendered by shareholders

May 31, 2006 (Wednesday)

8.

Offer Closing Date

June 3, 2006 (Saturday)

9.

Date by which the acceptance / rejection would be intimated and the corresponding payment for the acquired equity shares and / or the unaccepted equity shares / share certificates will be dispatched.

June 17, 2006 (Saturday)

 

RISK FACTORS

 

(a)           In the event that either (a) the regulatory approvals are not received in a timely manner, (b) there is any litigation to stay the offer, or (c) SEBI instructs the Acquirer not to proceed with the offer, then the offer proceeds may be delayed beyond the schedule of activities indicated in this Letter of Offer. Consequently, the payment of consideration to the public shareholders of SHPIL, whose shares have been accepted in the offer as well as the return of shares not accepted by the acquirer may be delayed.

 

(b)           The Acquirer intends to make an offer for 20% of the total equity share and voting capital amounting to 23,59,200 equity shares of SHPIL under the SEBI (SAST) Regulations, 1997. Further, the shares tendered in the offer will be held by Registrar to the Offer in trust, till the completion of the offer formalities. Accordingly, the Acquirer makes no assurance with respect to any decision by the shareholders on whether or not to participate in the offer.

 

(c)            The share purchase agreement provides that, in case of non-compliance of any provisions of the SEBI (SAST) Regulations, 1997 (the "Regulations"), the agreement shall not be acted upon either by the Seller or the Acquirer.

 

(d)           In the event of over-subscription to the offer, the acceptance will be on a proportionate basis.

 

(e)           The Acquirer makes no assurance of market price of shares of the Target Company during or after the offer.

 

(f)             The details of pending litigations against the acquirer are as under:

 

              i.      The Sales Tax Authorities have made claims for an amount aggregating to Rs.177.59 lacs against SPL. Cases pertaining to these claims are pending at various levels of Appellate Authorities.

 

            ii.      The Central Excise authorities have made claims aggregating to Rs. 107.37 lacs against SPL which are pending at various levels of Appellate Authorities.

 

          iii.      An Appeal has been filed by SPL in the CESTAT against an order of the Commission of Customs (Appeals) claiming an amount of Rs. 300 lacs for goods sold on high seas by SPL.

 

           iv.      A customer has filed a civil suit in the High Court, Mumbai claiming an amount of Rs.949.44 lacs from SPL. The Company is in the process of filing its reply in the court.

 

The risk factors set forth above, pertain to the offer and not in relation to the present or future business or operations of SHPIL or any other related matters, and are neither exhaustive not intended to constitute a complete analysis of the risk involved in participation or otherwise by a shareholder in the offer. Shareholders of SHPIL are advised to consult their stockbrokers or investment consultants, if any for further risk with respect to their participation in the offer.

TABLE OF CONTENTS

 

Sr. No.

Particulars
Page No

1.

Definitions

 

2.

Disclaimer Clause

 

3.

Details of the Offer

 

4.

Background of the Acquirer

 

5.

Disclosure in terms of Regulation 16(ix)

 

6.

Future Plans / Strategies of the Acquirer with regard to the target company

 

7.

Background of the Target Company – Shin-Ho Petrochemical

 

8.

Offer Price and Financial Arrangements

 

9.

Terms and Conditions of the Offer

 

10.

Procedure for Acceptance and Settlement of Offer

 

11.

Documents for Inspection

 

12.

Declaration by the Acquirer

 

13.

Enclosures

 

1         DEFINITIONS

 

1.

Acquirer or The Acquirer or SPL

Supreme Petrochem Ltd

2.

BSE

Bombay Stock Exchange Limited

3.

Form of Acceptance

Form of Acceptance cum Acknowledgement

4.

Form of Withdrawal

Form of Withdrawal cum Acknowledgement

5.

LOO or Letter of Offer

Offer Document

6.

Manager to Offer / Merchant Banker

Stratcap Securities (India) Private Limited

7.

Negotiated Price

Rs 3.85/- (Rupees Three and Eighty Five Paise Only) per fully paid-up equity share of face value of Rs.10/- each

8.

Offer or The Offer

23,59,200 equity shares of Rs 10/- each representing 20% of the total voting capital of Target Company

9.

Offer Price

Rs 5.85/- (Rupees Five and Eighty-Five Paise Only) per fully paid equity share, payable in Cash

10.

Persons eligible to participate in the Offer

Registered shareholders of Shin Ho Petrochemical (India) Limited and unregistered shareholders who own the equity shares of Shin Ho Petrochemical (India) Limited any time prior to the Offer closure other than the Parties to SPA i.e. Acquirer & the Sellers

11.

Public Announcement or "PA"

Announcement of the Open Offer by The Acquirer, which appeared in the newspapers on March 24, 2006

12.

RBI

Reserve Bank of India

13.

Registrar or Registrar to the Offer

Karvy Computershare Private Limited

14.

SEBI

Securities and Exchange Board of India

15.

SEBI (SAST) Regulations, 1997 / Takeover Code

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto

16.

SEBI Act

Securities and Exchange Board of India Act, 1992

17.

Seller

S H Chemical Co Limited, Rep. of Korea

18.

SHPIL/Target Company

Shin Ho Petrochemical (India) Limited

19.

S H Chemical Co Limited

A company which is in the Promoter Group of Shin Ho Petrochemical (India) Limited and is the Seller in SPA entered into between the Acquirer and Seller

20.

SPA

Share Purchase Agreement

21.

TPA

Tons per annum

 

2         DISCLAIMER CLAUSE

 

IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF DRAFT LETTER OF OFFER WITH SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THE DISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS. THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF SHIN HO PETROCHEMICAL (INDIA) LIMITED TO TAKE AN INFORMED DECISION WITH REGARD TO THE OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR FINANCIAL SOUNDNESS OF THE ACQUIRER, PERSONS ACTING IN CONCERT OR THE COMPANY WHOSE SHARES ARE PROPOSED TO BE ACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE ACQUIRER ARE PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT ACQUIRER DULY DISCHARGE THEIR RESPONSIBILITY ADEQUATELY. IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE MERCHANT BANKER, STRATCAP SECURITIES (INDIA) PRIVATE LIMITED HAS SUBMITTED A DUE DILIGENCE CERTIFICATE DATED APRIL 3, 2006 TO SEBI IN ACCORDANCE WITH THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997 AND SUBSEQUENT AMENDEMENTS THEREOF. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRER FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER.

 

3         DETAILS OF THE OFFER

 

3.1         Background of the Offer

 

3.1.1                The offer is being made under Regulation 10 read with Regulation 12 and as a result of this offer, the Acquirer will have substantial acquisition of shares or voting rights accompanied with complete change in control and management of "Shin Ho Petrochemical (India) Limited".

 

3.1.2                The Acquirers entered into an SPA dated March 20, 2006 to acquire 64,87,800 (Sixty Four Lacs, Eighty Seven Thousand, Eight Hundred Only) fully paid up equity shares of Rs.10/- each representing 55% of the total paid up equity share capital of "Shin Ho Petrochemical (India) Limited" from the promoters of SHPIL, namely, S H Chemical Co. Limited, Rep. of Korea (the Seller), at a price of Rs 3.85/- (Rupees Three and Eighty-Five Paise Only) per fully paid up equity share payable in cash (Negotiated Price). The total consideration for the shares acquired under the SPA is Rs 2,50,00,000/- (Rupees Two Hundred and Fifty Lacs Only) to be discharged to the sellers by the acquirer as per the terms agreed upon and contained in the SPA. The Seller is part of the Promoter Group of the Target Company.

 

3.1.3                The important features of the SPA are laid down as under:

 

                                                               i.      The total consideration payable as per SPA is Rs 250 lacs to acquire 64,87,800 equity shares of the Target Company at a price of Rs 3.85/- per equity share. The Acquirer will also advance Rs 90 lacs to the Target Company for settlement of amounts due from the Target Company to the Seller.

                                                              ii.      Within 20 days of the effective date (date of execution of the SPA), the Seller shall deliver to the Escrow Agent, delivery instruction slips, where the shares are in dematerialized form, duly signed by it. Simultaneously with the delivery of the delivery instruction slips, the Acquirer shall deliver to the Escrow Agent pay orders towards amounts payable under the SPA. These sums shall be dealt with by the Escrow Agent in terms of the Escrow Agreement.

                                                            iii.      The Seller shall file with Reserve Bank of India (“RBI”), not later than 5 days of date of SPA, all necessary or appropriate notifications or applications required to obtain the consent of RBI and to consummate the transaction.

                                                            iv.      The Seller shall cause the present directors of the Company to execute and deliver to the Acquirer, at or prior to Closing a letter of resignation (effective as of the Closing Date) from his or her position as director of the Company with waiver by such directors of any right or claim, actual or contingent arising out of, relating to or based upon such resignation, against the Company.

                                                              v.      The acquirer, after induction on the Board, shall have the name of company changed within a period as reasonably practicable but not later than 180 days, the Acquirer shall not use any word and also form any company with a name resembling or similar to the word “Shin Ho” at any time in future.

                                                            vi.      The Seller represents and warrants that within 120 days from the Closing date the Seller shall provide all technical information in the usual and proper manner as the Seller would do in a normal case to increase the installed capacity from 6000 TPA to 12,000 TPA and also make arrangements to dismantle, pack and ship the old screen, reactor with agitator to the company.

                                                           vii.      This transaction involving transfer of 55% of total issued and subscribed equity share capital with change in management and control of Target Company is subject to compliance with the provisions of SEBI (SAST) Regulations, 1997. The parties hereto unconditionally and irrevocably agree that the execution, delivery and performance of SPA is subject to compliance with the provisions of SEBI (SAST) Regulations, 1997 and in case of non-compliance of any provisions of this regulation, the SPA for such sale of shares shall not be acted upon by Seller and Acquirer.

3.1.4                Neither the Acquirer, Seller nor the Target Company have been prohibited by SEBI from dealing in securities, in terms of direction under Section 11B of the SEBI Act or under any of the Regulations made under the SEBI Act.

 

3.1.5                Acquirer has not acquired any equity shares of the Target Company after the date of Public Announcement till the date of Letter of Offer.

 

3.1.6                There may be a change in the composition of the Board of Directors of the Target Company in course of normal business subject to depositing of 100% of consideration payable in Escrow Account after a period of 21 days from the date of PA as per Regulation 22(7) of SEBI (SAST) Regulation, 1997.  However, as on date the company has deposited 25% of the consideration payable in the Escrow account and will need to deposit balance 75% of the consideration payable in Escrow Account before inducting its representatives on the Board of the Target Company.

 

3.2         Details of the proposed offer

 

3.2.1        The Acquirer has made a Public Announcement, which was published on March 24, 2005 (Friday) in the following newspapers in compliance with the Regulation 15(1) and pursuant to Regulation 10 and 12 of SEBI (SAST) Regulations, 1997.

 

Publication

Editions

Business Standard

English National Daily

Prathkal

Hindi National Daily

Dinamalar

Regional Daily

Navshakti

Regional Daily

The Public Announcement is also available on SEBI website at www.sebi.gov.in.

 

3.2.2                The Acquirer is making an offer under the SEBI (SAST) Regulations, 1997 to acquire 23,59,200 equity shares of Rs.10/- each fully paid up representing 20% of the voting capital of "SHPIL" at a price of Rs 5.85/- (Rupees Five and Eighty-Five Paise Only) per fully paid up equity share ("Offer Price") payable in cash subject to the terms and conditions mentioned hereinafter. The Offer is not subject to any minimum level of acceptances from shareholders.

 

3.2.3                There are no partly paid up shares in "Shin Ho Petrochemical (India) Limited".

 

3.2.4                The Offer is not subject to any minimum level of acceptances from the shareholders. The Acquirer will accept those equity shares of SHPIL that are tendered in valid form in terms of this offer upto maximum of 23,59,200 equity shares.

 

3.2.5                Apart from the 64,87,800 equity shares constituting 55% of the total issued, subscribed, paid-up and voting share capital from sellers under SPA, the Acquirer has not acquired any equity share in the Target Company since the date of Public Announcement i.e. March 24, 2006 (Friday), up to the date of Letter of Offer.

 

3.3         Object of the acquisition/offer

 

3.3.1                The Acquirer Company and its promoters are interested in taking over the management and control of SHPIL. Thus substantial acquisition of shares and voting rights accompanied with change in control and management is the reason and rationale for the acquisition.

 

3.3.2                The Offer to the Public shareholders of SHPIL is for the purpose of acquiring 20% of the total voting capital/rights of SHPIL. The Acquirer intends to expand the current business by adding an additional product to its existing line of product through acquisitions of shares coupled with management control of the Target Company and utilize its own marketing capabilities and tap necessary synergies by combination of the businesses.

4         BACKGROUND OF THE ACQUIRER

 

4.1         The Open Offer is being made by Supreme Petrochem Ltd having its registered office at 612, Raheja Chambers, Nariman Point, Mumbai–400021. Tel: (022) – 66935927, 22883518, Fax: (022) – 40055681, 22883521, Email: ravi_kuddyady@spl.co.in.

 

4.2         Supreme Petrochem Ltd is the sole Acquirer in the present offer. It is a listed company having its shares listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.

 

4.3         The salient features of the SPA are mentioned in Para 3.1.3.

 

4.4         Supreme Petrochem Ltd was incorporated on December 14, 1989 and obtained Certificate of Commencement of Business on February 13, 1990. It commenced manufacturing polystyrene in October, 1995 at its facilities located at Village Amdoshi, Wakan Roha Road, Taluka Roha, Dist. Raigad, Maharashtra–402 106. The company is currently engaged in the business of production of Polystyrene and Speciality Polystyrene for which it has installed capacity of 2,72,000 TPA & 17,000 TPA respectively. SPL’s product range covers the entire range of Polystyrene, a versatile thermoplastic resin available in a wide range of formulations from general purpose and impact grades to highly specialized grades. SPL is also exporting Polystyrene to over 75 countries world wide.

 

4.5         SPL is promoted by The Supreme Industries Limited and R Raheja Investments Private Limited holding 29.67% each and have an aggregate holding of 59.34%.

 

4.6         SPL and its promoters are in compliance with listing requirements and Chapter II of SEBI (SAST) Regulations, 1997. There had been delay by SPL with the reporting requirements under Chapter II of the SEBI (SAST) Regulations, 1997 from 1997 to 2001. However, it had availed of the SEBI (Regularization) Scheme, 2002 and accordingly made a payment of Rs. 50,000 as penalty to SEBI for the delay in compliance of Chapter II of Regulations. From 2002 onwards, SPL has been regular with the reporting requirements under Chapter II of the SEBI (SAST) Regulations, 1997.

 

4.7         The composition of the Board of Directors of SPL as on the date of this letter of offer is as under: -

 

Name

Appointment

Date

No of yrs of Experience

Qualification

Residential Address

Mr. M. P. Taparia

14.12.1989

45 yrs in Project Management, Production, Finance, Marketing & Planning

Bachelor of Arts

Girikunj, 71, Marine Drive, N.S.Road,

Mumbai - 400020

Mr Rajan B. Raheja

14.12.1989

33 yrs in Project Management, Production, Finance, Marketing & Planning

Bachelor of Commerce

Rahejas, G.B. Jukar Road Juhu,

Mumbai – 400049

Mr Aziz Parpia

14.12.1989

52 yrs as practicing solicitor

LLB

9, Blooming Heights

4, Pali Hill, Bandra (W)

Mumbai - 400050

Mr Bajranglal Taparia

22.11.1993

47 yrs in Finance & Investment

Bachelor of Arts

Girikunj, 71, Marine Drive, N.S.Road,

Mumbai - 400020

Mr Satish Raheja

22.11.1993

17 yrs in Finance & Planning

BSc, Business Management

Case Postale 3153 1211 Geneva Switzerland

Mr Shivratan Taparia

22.11.1993

36 yrs in Project Management, Production, Finance, Marketing & Planning

B.E (Mechanical)

Girikunj, 71, Marine Drive, N.S.Road,

Mumbai - 400020

Mr Hasmukh Shah

 

18.10.1994

47 yrs and is Ex – chairman of IPCL

Bachelor of Arts

15, Dhanushya Society,

Sama Road,

Baroda - 390008

Name

Appointment

Date

No of yrs of Experience

Qualification

Residential Address

Mr M. S. Ramachandran

26.07.2005

36 yrs and is the Ex – chairman Indian Oil Corporation

B.E. (Mechanical)

K-99, Hauz Khas Enclave,

New Delhi -110016

Mr R Kannan

(Nominee Director)

19.07.2005

34 yrs in Banking, & Financial Management.

M.Tech (Chemical) & Chartered Financial Analyst

#21, Parthasarathypuram, North Usman Road,

T Nagar,

Chennai – 600017

Mr Manoj Chhabra

(Alternate Director)

14.05.2001

29 yrs in Finance & Accounts

Chartered Accountant

502 Brindaban III Poonam Nagar Andheri (East), Mumbai - 400093

 

There are no directors of the Acquirer Company who are on the Board of Directors of the Target Company.

 

4.8         The audited financials of SPL is as under:

 

(Rs. In Lacs)

Profit & Loss Statement

Year ended 30.06.03

(Audited)

Year ended 30.06.04 (Audited)

Year ended

30.06.05

(Audited)

Period ended

31.12.05

(Certified)

Sales (net of Excise Duty)

77,438

1,10,882

134,703

64,482

Other Income

326

225

340

114

Total Income

77,764

1,11,107

135,043

64,596

Total Expenditure

70,838

1,04,515

125,195

61,509

Profit before Interest, Depreciation & Tax

6,926

6,592

9,848

3,087

Depreciation

1,595

1,519

1,609

836

Interest

2,589

1,708

1,682

793

Profit before Tax

2,742

3,365

6,557

1,458

Provision for Tax

1,477

1,472

2,896*

89

Profit after Tax

1,265

1,893

3,661

1,369

* Includes Impairment Loss of Rs 436.29 lacs

 

                (Rs. In Lacs)

Balance Sheet Statement

Year ended 30.06.03

(Audited)

Year ended 30.06.04 (Audited)

Year ended 30.06.05

(Audited)

Period ended 31.12.05

(Certified)

Sources of Funds

 

 

 

 

Paid up Equity Share Capital

9,062

9,749

9,751

9,751

Preference Share Capital

124

0

0

0

Reserves & Surplus  (excl. Revaluation Reserve)

1,614

2,329

4,655

6,023

(-) Profit & Loss Account (Dr Bal)

740

0

0

0

(-) Misc. Expenditure not w/off

369

268

182

161

Networth

9,691

11,810

14,224

15,613

Secured Loans

16,287

17,380

16,033

16,039

Unsecured Loan

3,269

515

602

633

Deferred Tax Liability

698

1,906

3,873

3,873

Total

29,945

31,611

34,732

36,158

Uses of Funds

 

 

 

 

Net Fixed Assets

29,495

28,140

26,971

26,797

Investments

352

320

159

9,711

Net Current Assets

98

3,151

7,602

(350)

Total

29,945

31,611

34,732

36,158

 

 

Other Financial Data

Year ended 30.06.03 (Audited)

Year ended 30.06.04

(Audited)

Year ended 30.06.05

(Audited)

Period ended 31.12.05

(Certified)

Dividend (%)

0

8

12

0

Earning Per Share (Rs)

 

 

 

 

      Basic

1.40

2.02 **

3.75

1.40*

      Diluted

1.20

1.69

3.51

1.13*

Return on Networth (%)

13.05

16.03

25.74

8.77*

Book Value Per Share (Rs.)

10.69

12.11

14.59

16.01

Dividend (%) = (Dividend Paid/Face Value of Equity shares issued)*100

Earning Per Share = Profit After Tax/No. of Equity Shares issued

Return on Net worth (%) = (Profit After Tax/Networth)*100

Book Value Per Share = Networth/ No. Of Equity shares issued

Networth = Share Capital + Reserves- Debit Balance in Profit & Loss A/C- Miscellaneous Expenditure not written off

*Not annualized                    ** weighted average

 

4.9         There was no earlier acquisition made by SPL in the Target Company. Hence, details regarding earlier acquisitions including compliance with SEBI (SAST) Regulations, 1997 are not applicable.

 

4.10      The Acquirer has not promoted any other company and hence the information about the other companies promoted by the Acquirer is not applicable. 

 

4.11      According to the financial statements for the year ended June 30, 2005 the total contingent liabilities of Supreme Petrochem Ltd comprise of:

 

a.             The Company has estimated value of contracts remaining to be executed on capital accounts and not provided for to the sum of Rs. 279.22 lacs.

b.             Letters of Credit opened by Bankers and outstanding as of June 30, 2005 for a sum of Rs. 10,527.90 lacs.

c.             Bills discounted but not matured for Rs. 10,625.95 lacs

d.             Counter-guarantees given to Banks against Bank Guarantees for Rs. 95.54 lacs.

e.             Excise/Service Tax matters under dispute for Rs. 177.59 lacs and other claims for a sum of Rs. 71.31 lacs.

 

4.12      Reasons for rise in Income/PAT

 

The income and profit of the company has increased in the past three years due to overall cost efficiency coupled with increase in production and sales volumes particularly on the export front.

 

4.13      The significant accounting policies of SPL are as follows:

 

Basis of Accounting

The accounts are prepared on the basis of historical cost convention and on accrual basis.

 

Fixed Assets

Fixed assets are valued at cost less depreciation. Costs comprise of the purchase price and any attributable cost of bringing the asset to working condition for its intended use.

 

Depreciation

Depreciation on Fixed Assets is provided on Straight Line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

 

Investments

Investments are stated in cost. Temporary diminution in the value of long term investments, meant to be held for a long period of time is not recognized.

 

 

Inventories

Inventories are valued at lower of cost and net realizable value except stores and spares, which are valued at cost. The method of determination of cost of various categories of inventories are as follows:

 

a.   Stores and spares                                                 : At cost (weighted average)

 

b.   Raw Materials (incl. packing materials)                    : At cost (weighted average)

 

c.   Stock in process                                                   : At cost (weighted average)

 

d.   Finished goods                                                      : At cost (weighted average)

 

Foreign Currency Transactions

Foreign Currency assets and liabilities covered by forward contracts are stated at the forward contract while those not covered by forward contracts are restated at rates ruling at the year end. Exchange differences relating to fixed assets are adjusted in the cost of the asset. Any other exchange differences are dealt with in the profit and loss account.

 

Cenvat Credit

CENVAT credit on Raw Materials and Capital Goods has been accounted for by reducing the purchase cost of Raw Materials and Capital Goods respectively.

 

Recognition of Income And Expenditure

Items of Income and Expenditure are generally accounted on accrual basis.

 

Export Benefits

Benefits in account of entitlement to import duty-free raw materials under the Advance License scheme is accounted for in the year of export calculated on the basis of rate of exchange and import duty prevailing at the date of the Balance Sheet. This is included under the head “Other Operating Income”.

 

Retirement Benefits

Contributions to Provident and Superannuation Funds are accounted on actual liability basis. Provisions for Gratuity and leave encashment benefit on retirement are made on actuarial valuation basis.

 

Miscellaneous Expenditure

Non-competition fees is amortized over a period of eight years and Loan restructuring fees is amortized over a period of seven years.

 

Segment Reporting

The Company’s main business is manufacturing and marketing of Polystyrene. There are no separate segments within the Company as defined by AS 17 (Segment reporting) issued by The Institute of Chartered Accountants of India.

 

Deferred Tax

Deferred Tax asset or liability is recognized for timing differences between the profit as per the financial statements and the profit offered for income tax, based on tax rates that have been enacted or substantively enacted at the Balance Sheet date. Deferred Tax assets are recognized only if there is reasonable certainty that sufficient future taxable income will be available, against which they can be realized.

 

Contingent Liabilities

Contingent liabilities are provided for in the accounts except liabilities of a contingent nature, which are disclosed at their estimated value in the notes on accounts.

 

4.14      SPL has complied and adhered to Corporate Governance conditions as stipulated in Clause 49 of the listing agreements.

 

4.15      The details of pending litigations are as under:

 

Cases initiated by SPL

 

a.             SPL has filed various cases against its customers for cheque bouncing under the provisions of the Negotiable Instruments Act in the Metropolitan Magistrates Court for aggregate amount of Rs. 62.30 lacs.

b.             SPL has also filed winding-up petitions for recovery of amounts due to it from its debtors, aggregate amount Rs. 145.00 lacs.

c.             Case u/s 406 read with section 34 of IPC filed against a debtor in the Metropolitan Magistrates Court for an amount of Rs. 51.20 lacs.

d.             Petition to the High Court under Article 226 and 227 of the constitution against the Mathadi Kamgar Board for unlawful order passed by the Mathadi Board for an amount of Rs. 72.00 lacs.

e.             SPL has filed a complaint with the Economic Offence Wing, Mumbai Police u./s. 420 and 120B of the IPC against one of its customers for an amount of Rs. 206.46 lacs.

 

Cases against SPL

 

a.             The Sales Tax Authorities have made claims for an amount aggregating to Rs.177.59 lacs against SPL. Cases pertaining to these claims are pending at various levels of Appellate Authorities.

b.             The Central Excise authorities have made claims aggregating to Rs. 107.37 lacs against SPL which are pending at various levels of Appellate Authorities

c.             An Appeal has been filed by SPL in the CESTAT against an order of the Commission of Customs (Appeals) claiming an amount of Rs. 300 lacs for goods sold on high seas by SPL.

d.             A customer has filed a civil suit in the High Court, Mumbai claiming an amount of Rs.949.44 lacs from SPL. The Company is in the process of filing its reply in the court.

 

4.16      The details of the Compliance Officer are as follows:

 

Mr. Rakesh Nayyar

Executive Director (Finance & Corporate Affairs) and Company Secretary

Supreme Petrochem Ltd

17/18 Shah Industrial Estate,

Veera Desai Road, Andheri (West),

Mumbai – 400 053.

Tel. No: (022) – 67091900, 66935927

Fax No: (022) – 40055681.

 

4.17      There has been no merger / demerger or spin off during the last 3 years in SPL. SPL has not changed its name since incorporation.

 

4.18      The Shareholding pattern of the Company as on date of Public Announcement are as follows:

 

S. No.

Category

No. of Shares held

% to total shares

A

Promoters Holding

 

 

 

Promoters

5,78,77300

59.35

 

Persons Acting in Concert

26,37,201

2.70

 

Sub-total

6,05,14,501

62.06

B

Non-Promoters Holding

 

 

 

Institutional Investors

1,95,906

0.20

 

NRIs

33,94,127

3.48

 

Public and Others

3,34,08,266

34.26

 

Sub-total

3,69,98,299

37.94

 

Total

9,75,12,800

100.00

4.19      No action has been taken by SEBI under Section 11B or any other Regulations made under the SEBI Act, 1992 against the Acquirer.

 

 

5         DISCLOSURE IN TERMS OF REGULATION 16 (IX)

 

The Acquirer shall ensure compliance with Regulations 21(2).

 

 

6         FUTURE PLANS / STRATEGIES OF THE ACQUIRER WITH REGARD TO THE TARGET COMPANY

 

6.1         The Acquirer is mainly in the production of Polystyrene and Speciality Polystyrene and has identified the Target Company, which is in the business of manufacture, distribution, marketing of Expandable Polystyrene Resin. The Acquirer intends to expand the current business by adding an additional product i.e. Expandable Polystyrene Resin to its existing line of product in order to diversify business risk. With the acquisitions of shares coupled with management control of the Target Company, it shall be able to utilize its own marketing capabilities to better position the product in the market and tap necessary synergies by combination of the businesses. SPL’s priority for Target Company is to turn around by ensuring continuous operations of the plant at near nameplate capacity and in future to increase the installed capacity to obtain economies of scale. SPL shall infuse working capital whenever necessary for ensuring continuous operations.

 

6.2         The Acquirer shall not sell, dispose off or otherwise encumber any assets of the target company in the next two years from the date of closure of the offer subject to the prior approval of the shareholders and in the ordinary course of business.

 

            

7         BACKGROUND OF SHIN HO PETROCHEMICAL (INDIA) LIMITED

 

7.1     The Target Company i.e. Shin Ho Petrochemical (India) Limited (“SHPIL”) was originally incorporated as Shin – A Chemical (India) Private Limited on July 31, 1989 and later on converted into Public Limited Company on February 24, 1992. Subsequently, it changed its name to Shin Ho Petrochemical (India) Limited vide fresh Certificate of Incorporation consequent upon change of name, dated June 17, 1996. It has its Registered Office & Works at Ammullavoyil Village, Andarkuppam Post, Manali New Town, Chennai – 600103. Tel. No.: (044) 25943457, 25942216 Fax: (044) 25941442.

 

7.2     The Company is promoted by S H Chemical Co. Limited, Rep. of Korea (formerly known as Shin Ho Petrochemical Co Limited, Korea), Nava Bharat Ferro Alloys Limited, Beardsell Limited and Tamil Nadu Industrial Corporation Limited (TIDCO). These promoters have promoted SHPIL as individual promoters and there is no arrangement or agreement amongst the present promoters except with TIDCO. S H Chemical Co. Limited, Rep. of Korea has given an undertaking to TIDCO accepting the terms in respect of appointing TIDCO’s representative as nominee director and first right of refusal in case either party desires to sell its holding in SHPIL. Beardsell has already disposed off its holding during financial year 2005-2006. S H Chemical has now executed SPA with the Acquirer to sell 64,87,800 equity shares representing 55% of the total paid-up equity share capital of SHPIL. The remaining promoters, not being a part of SPA, are eligible to tender their equity shares in present offer. After closure of the offer, these promoters will no longer be promoters of SHPIL and the remaining shares, if any, will form part of public shareholding. SHPIL is presently engaged in the business of manufacture, distribution, marketing of Expandable Polystyrene Resin under a technical and financial collaboration with S H Chemical Co Limited, Rep. of Korea.

 

7.3     The Present authorized capital of SHPIL is Rs. 1,200 lacs, comprising of 1,20,00,000 equity shares of Rs. 10/- (Rupees Ten Only) each. It has an issued, subscribed and paid-up equity share capital of Rs. 1,179.60 lacs, consisting of 1,17,96,000 fully paid-up equity shares of Rs.10/- each. There are no partly paid up shares in the company.

 

7.4    The present capital structure of SHPIL is as under:

 

Paid-up Equity Share of SHPIL

No. of Equity Shares / Voting Rights

% of shares / Voting Rights

Fully paid-up equity shares

1,17,96,000

100%

Partly paid-up equity shares

Nil

Nil

Total paid-up equity shares

1,17,96,000

100%

Total voting right

1,17,96,000

100%

 

7.5    The current capital structure of SHPIL has been built-up since inception as under:

 

Date of allotment

No of shares issued

% of shares issued

Cumulative paid-up capital   (Rs.)

Mode of allotment

Identity of allottees (promoters / ex-promoters / others)

Status of Compliance

31.07.1989

20

00.00

200

Cash

Subscriber

No compliance is pending

01.04.1991

5

00.00

250

Cash

Promoters

30.04.1992

13,15,500

11.15

1,31,55,250

Cash

Promoters

08.08.1992

3,74,500

3.17

1,69,00,250

Cash

Promoters

24.10.1992

50,000

0.42

1,74,00,250

Cash

Promoters

24.12.1992

37,500

0.32

1,77,75,250

Cash

Promoters

13.01.1993

5,00,000

4.24

2,27,75,250

Cash

Promoters

23.03.1993

35,000

031

2,31,25,250

Cash

Directors/Friends

09.07.1993

5,67,475

4.81

2,88,00,000

Cash

Directors/Friends

15.07.1993

28,80,000

24.42

5,76,00,000

Cash

Public Issue

30.03.1994

3,80,000

3.22

6,14,00,000

Cash

Preferential Allot.

11.10.1994

4,20,000

3.56

6,56,00,000

Cash

Preferential Allot.

25.05.1996

52,36,000

44.39

11,79,60,000

Cash

Preferential Allot.

 

1,17,96,000

100.00

 

 

 

 

7.6    The shares of “SHPIL” are listed on the Bombay Stock Exchange Limited (BSE) and the Madras Stock Exchange Ltd. (MSE). The equity shares are frequently traded on the BSE in terms of explanation (i) to Regulation 20(5). However, there is no trading at Madras Stock Exchange Ltd.

 

7.7    There are no outstanding convertible instruments like warrants, FCDs or PCDs etc. in SHPIL.

 

7.8     There has been delay in compliance with the regulation 6(2), 6(4) for 1997 and 8(3) for the periods 1998, 1999 and 2001 as per SEBI Letter dated November 16, 2004 of Chapter II of the SEBI (SAST) Regulations, 1997. The Company has represented before SEBI in the matter. Thereafter, it has been regular in compliance with the SEBI (SAST) Regulations, 1997. In view of such non-compliance/delayed compliance, SEBI may initiate appropriate actions against the Target Company.

 

7.9     SHPIL has complied with the requirements of the Listing Agreement and no punitive action has been initiated by BSE and MSE, where its equity shares are listed.

 

7.10  The composition of the Board of Directors of SHPIL as on the date of this letter of offer is as under: -

 

Name and Residential Address

Designation

Date of Appointment

Qualification and Experience                in no. of years

Mr. Young Soo Kim

Kesav Dugar, Apt B 302, 1, East Avenue, Kesavaperumalpuram,

Chennai 600 028

Managing Director

29.10.2002

Graduate in Business Management having 22 years experience

Mr Choong Sik Lee

10th Floor, Seongwoo Bldg, 51-1, Dohwa-Dong, Mapo-gu, Seoul, Korea 121 715

 

Director

29.09.2005

Graduate in Business Administration, Certified Public Accountant, Certified Tax Accountant having an experience of 16 yrs.

Mr Gyu Eok Hwang

22-95 Sibum Apartments

Youido Dong,

Youngdeungpo Gu,

Seoul, Korea

 

Director

30.05.1995

BS in Chemical Engineering with an experience of about 28 years.

Mr Dal Seon Oh

No. 189, St Mary’s Road,

Ayhreya Apartments,

Flat No. 2A, 2nd Floor,

Alwarpet, Chennai 600 018

 

Director

24.10.2001

B.A. with an experience of about 20 years.

Mr Gowri R Shanker

4/241, MGR Salai,

Palavakkam,

Chennai 600 041

Director

30.04.2003

MS in Electronic Commerce, MBA – Specialization in Finance, MS in Industrial Engineering, BS in Chemical Engineering with an experience of 17 years

 

Mr B Ramakrishnan

3/1, Muthu Mohamed Street, Puzhuthivakkam,

Chennai 600 091

 

Nominee Director

29.10.2004

B. Tech, MBA having an experience of about 15 years.

 

As on date, none of the directors on the board of directors of the Target Company represent the Acquirer.

 

7.11  There has been no merger/de-merger, spin off during the past three years in SHPIL.

 

7.12  The audited financial information of SHPIL is as under:

 

           (Rs. In Lacs)

Profit & Loss Statement

Year ended 30.06.03

(Audited)

Year ended 30.06.04

(Audited)

Year ended 30.06.05

(Audited)

Period ended 31.12.05

(Certified)

Sales (less Excise Duty)

3,375

1,983

1,499

995

Other Income

135

27

111

10

Total Income

3,510

2,011

1,610

1,005

Total Expenditure

3,387

2,123

1,652

1,167

Profit before Interest, Depreciation & Tax

123

(113)

(42)

(162)

Depreciation

81

80

80

40

Interest

99

61

31

13

Profit before Tax

(57)

(253)

(153)

(216)

Provision for Tax

0.00

0.00

1

(2)

Profit after Tax

(57)

(253)

(154)

(218)

 

           (Rs. In Lacs)

Balance Sheet Statement

Year ended 30.06.03

(Audited)

Year ended 30.06.04

(Audited)

Year ended 30.06.05

(Audited)

Period ended 31.12.05

(Certified)

Sources of Funds

 

 

 

 

Paid up Share Capital

1,180

1,180

1,180

1,180

Reserves & Surplus

0

0

0

0

(-) Miscellaneous expenditure not written off

2

0

0

0

(-) Debit Balance in Profit & Loss Account

129

383

537

755

Networth

1,049

797

643

425

Secured Loans

55

144

52

73

Unsecured Loan

328

200

200

75

Total

1,432

1,141

895

573

Uses of Funds

 

 

 

 

Net Fixed Assets*

952

875

796

756

Investments

0

0

0

0

Net Current Assets

480

266

99

(183)

Total

1,432

1,141

895

573

* Excluding Revaluation Reserve

 

 

Other Financial Data

Year ended 30.06.03 (Audited)

Year ended 30.06.04

(Audited)

Year ended 30.06.05

(Audited)

Period ended 31.12.05

(Certified)

Net Worth (In Lacs)

1,049

797

643

425

Dividend (%)

-

-

-

-

Earning Per Share (Rs)

(0.48)

(2.15)

(1.31)

(1.85)

Return on Net worth (%)

(5.43)

(31.74)

(23.95)

(51.29)

Book Value Per Share (Rs.)

8.89

6.76

5.45

3.60

 

Dividend (%) = (Dividend Paid/Face Value of Equity shares issued)*100

Earning Per Share = Profit After Tax/No. of Equity Shares issued

Return on Net worth (%) = (Profit After Tax/Networth)*100

Book Value Per Share = Networth/ No. Of Equity shares issued

Networth = Share Capital + Reserves- Debit Balance in Profit & Loss A/C- Miscellaneous Expenditure not written off

 

7.13  There has been continuous decline in sales and consequently in the profit for the past 3 years on account of:

 

§            Rise in the input cost due to volatile price fluctuations of the Petroleum products in the global level. The Styrene Monomer, raw material used for the manufacturing of EPS was priced at a higher rate in the international market.

 

§            In-adequacy of working capital finance, as the present bank finance availed by SHPIL is not sufficient to support the required level for import of raw-material at a higher price prevailing in the international market.

 

§            Due to above, SHPIL has been underutilizing its production capacity. During the FY05, the capacity utilization was merely 20% appx.

 

7.14  Pre-Offer and Post-Offer shareholding pattern of the Target Company is as per the following table:

 

Sr. No.

Shareholder Category

Shareholding & voting rights prior to the acquisition and offer

Shares / voting rights acquired which triggered off the Regulations

Shares / voting rights to be acquired in the open offer (assuming full acceptance)

Shareholding & voting rights after the acquisition and offer

 

 

(A)

(B)

(C)

(A+B+C)

 

 

No.

%

No.

%

No.

%

No.

%

1.
PROMOTER GROUP

 

 

 

 

 

 

 

 

 

(a) Sellers (Party to SPA)

 

 

 

 

 

 

 

 

 

1. S H Chemical Co Ltd, Korea

65,89,000

55.86

64,87,800

(55.00)

Nil

Nil

*

*

 

(b) Other than (a) above

 

 

 

 

 

 

 

 

 

1. TIDCO

5,00,000

4.24

Nil

Nil

*

*

*

*

 

2. Navabharat Ferro Alloys Ltd

3,11,260

2.64

Nil

Nil

 

Total of (1a) + (1b)

74,00,260

62.74

(64,87,800)

(55.00)

*

*

*

*

2.
ACQUIRER

 

 

 

 

 

 

 

 

 

Supreme Petrochem Ltd

Nil

Nil

64,87,800

55.00

23,59,200

20.00

88,47,000

75.00

 
Total (2)

Nil

Nil

64,87,800

55.00

23,59,200

20.00

88,47,000

75.00

3.

Parties to agreement other than (1) (a) & (b) & (2)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

 
Total (3)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

4.

Non-Promoters holding

 (other than 1 to 3)

 

 

 

 

 

 

 

 

 

1.   FIs/MFs/FIIs/Banks

2,64,700

2.24

Nil

Nil

(23,59,200)

(20.00)

 

29,49,000 *

 

25.00

 

 

2.   NRI’s

6,535

0.06

Nil

Nil

 

3.   Indian Public & others

41,24,505

34.96

Nil

Nil

 
Total (4)

43,95,740

37.26

Nil

Nil

(23,59,200)

(20.00)

29,49,000 *

25.00

 
TOTAL

1,17,96,000

100.00

Nil

Nil

Nil

Nil

1,17,96,000

100.00

 

Note:

·         The data within bracket indicates sale of equity shares.

 

·         * The promoters other than seller, mentioned under 1(b) can also participate in the offer, hence their share holding is shown under public category and also, even if they hold any shares after the offer, their holding will be part of public holding and shown under public holding. The seller holding, post offer, will also be a part of public holding and shown under the public holding.

 

·         The public shareholders post offer would be in compliance with the continuous listing requirements of the Target Company.

 

·         The Manager to the Offer confirms that it does not hold any shares in the Target Company as on date of public announcement. They declare and undertake that they shall not deal in the shares of the Target Company during the period commencing from the date of their appointment as Manager to the Offer till the expiry of 15 days from the date of closure of the Offer.

 

7.15   Changes in Promoter’s Shareholding

Year

Reason

Change (No. of Shares)

Cumulative Holding (No. of Shares)

Remarks

05-05-1993

Post Public Issue

 

17,80,000

 

FY 1993-94

Further Allotment - Issue of shares to promoters

1,65,000

19,45,000

Preferential allotment to Beardsell

FY 1996-97

Further Allotment - Issue of shares to promoters

52,36,000

71,81,000

Preferential Allotment to Shin Ho, Korea

FY 1997-98

Purchase / Acquisition of shares from Directors and Relatives

5,73,000

77,54,000

SEBI has levied a penalty on Shin Ho Petrochemical Co Ltd., Korea of Rs. 5 lacs for violation of Regulation 11(2) of SEBI (SAST) Regulation 1997 which was paid.

FY 2005-06

Sale/Transfer of Shares

(3,53,740)

74,00,260

Sale of shares by Beardsell & Nava Bharat

 

7.16   The approximate number of shareholders in SHPIL in public category is 6,500 as on the date of public announcement, which includes 8 NRI shareholders.

 

7.17   The company has complied and adhered to the requirement of Corporate Governance as per the provisions of Clause 49 of the listing agreement.

 

7.18   The name and contact details of the compliance officer are as under: -

 

Name of the Compliance Officer: Mr. V Thayalan, Company Secretary.

Contact Address                         : Shin Ho Petrochemical (India) Limited

                           Ammullavoyil Village, Andarkuppam Post,

                           Manali New Town, Chennai 600103.

        Contact Number: 044-25943457

 

7.19   The details of pending litigations are as under:

 

Cases against the company

 

1.             LG Polymers (India) Ltd a supplier to the company filed a case against the company for a sum of Rs. 26.37 lacs and interest from 1998 to December 2003 for Rs. 24.53 lacs aggregating to Rs. 50.90 lacs, which is pending before Principal District Court at Vishakahpatnam.

 

2.             The Company has reached to settlement with Union Roadways Ltd; a transporter before High Court, Madras and agreed to pay Rs. 5 lacs out of Rs. 11 lacs as on 28.03.2006.

 

Cases filed by the Company

 

1.             The company has lodged an Insurance claim for Rs. 84.09 lacs and the same is pending before National Consumer Disputes Redressal Commission, New Delhi.

 

2.             The Company has filed cheque bouncing cases against its customers for a sum of Rs. 133.82 lacs which are pending before various courts in Tamil Nadu / Maharashra.

 

3.             The Company has filed civil cases for recovery of outstanding from the two customers for a sum of Rs. 100.68 lacs.

 

4.             The Company has filed winding up case under the Companies Act at High Court Bench, Indore, Madhya Pradesh against Dynatech Packaging Pvt Ltd, Indore for Rs.78.34 lacs towards the recovery of outstanding.

 

5.             The Company has served demand notice / winding up notice for recovery of Rs. 87.22 lacs against two customers. The company has given notice to IFKO TOKYO Insurance Company for a claim of Rs. 15 lakhs on account of loss of Styrene Monomer material insured. The cases are yet to be filed.

 

8         OFFER PRICE AND FINANCIAL ARRANGEMENTS

 

8.1         Justification of Offer Price

 

8.1.1                The shares of SHPIL are listed on the Bombay Stock Exchange Limited and the Madras Stock Exchange but traded only on the Bombay Stock Exchange Limited.

 

8.1.2                Details of the total number of shares listed and the annualized trading turnover are as follows:

 

Name of Stock Exchange

Total no. of shares traded during the 6 calendar months prior to the month in which PA is made

Total No. of listed shares

Annualized Trading Turnover (in terms of % to total listed shares)

Bombay Stock Exchange

13,08,770

1,17,96,000

22.19

Madras Stock Exchange

NA since no trading

(Source: www.bseindia.com)

 

8.1.3                Offer Price Determination

 

a.       The shares of SHPIL are deemed to be frequently traded at BSE in terms of Regulation 20(5) of the SEBI (SAST) Regulations, 1997. The Offer Price in terms of Regulation 20(4) of the SEBI (SAST) Regulations, 1997 has been determined taking into account the following parameters.

 

1.            Negotiated price

Rs 3.85

2.            Highest price paid by the Acquirer for acquisition including a public or right or a preferential issue during the period of 26 weeks prior to PA

NIL

3.            Share price data of SHPIL on BSE, where it is frequently traded, is as under:

 

a)       The average of the weekly high and low of the closing prices of   the shares of SHPIL during the 26 weeks preceding the date of announcement

Rs 5.74

b)       The average of the daily high and low of the closing prices of the shares of SHPIL during the 2 weeks preceding the date of announcement.

Rs 5.01

 

b.       The shares of “SHPIL” have also been listed on the Madras Stock Exchange Limited and where it has not been traded during the preceding six calendar months prior to the month of this Public Announcement. Therefore, so far MSE is concerned, the shares of SHPIL are thus deemed to be infrequently traded in terms of Regulation 20(5) of the SEBI (SAST) Regulations, 1997. The Offer Price in terms of Regulation 20(5) of the SEBI (SAST) Regulations, 1997 has been determined taking into account the following parameters.

 

 

i.

Negotiated price under an agreement as referred to in sub-regulation (1) of Regulation 14 of SEBI (SAST) Regulations, 1997

 

Rs 3.85/-

ii.

Price paid by the Acquirer for acquisition including by way of allotment in a public or rights or preferential issue during the twenty-six week period prior to the date of this public announcement

 

There has been no acquisition by the acquirer during the said period of 26 weeks

iii.

OTHER PARAMETERS:

Year ended 30.06.2005

(Audited)

Period ended 31.12.2005

(Certified)

Return on Net-Worth (%)

(23.95)

(51.29)

Book Value Per Share (Rs.)

5.45

3.60

Earning Per Share (Rs.)

(1.31)

(1.85)

 

iv.

The P/E multiple in this case is not applicable in view of the Earnings Per Share being negative for the year ended 30.06.2005 and also period ended on 31.12.2005.

 

Not Applicable

 

8.1.4                Details of average of weekly high and low share prices for the past 26 weeks and average of daily high and low share prices for the past two weeks preceding the week of public announcement are as under:

 

26 Weeks - Weekly High & Low

 

No

Week ending

High (Rs)

Low (Rs)

Average (Rs)

Volume

1

23-03-2006

5.50

4.90

5.20

123835

2

16-03-2006

5.05

4.80

4.93

35692

3

09-03-2006

5.50

5.05

5.28

8249

4

02-03-2006

5.10

4.85

4.98

5300

5

23-02-2006

5.39

5.04

5.22

4800

6

16-02-2006

5.65

5.14

5.20

20381

7

09-02-2006

5.83

5.56

5.70

9500

8

02-02-2006

7.13

6.10

6.62

18600

9

26-01-2006

7.11

6.24

6.68

34300

10

19-01-2006

6.10

5.67

5.89

33605

11

12-01-2006

6.37

5.52

5.95

15500

12

05-01-2006

5.79

5.52

5.66

5450

13

29-12-2005

6.11

5.57

5.84

16900

14

22-12-2005

6.49

5.70

6.10

25580

15

15-12-2005

5.72

5.00

5.36

7100

16

08-12-2005

5.20

4.95

5.08

11201

17

01-12-2005

5.50

5.25

5.38

6400

18

24-11-2005

5.75

5.50

5.63

6000

19

17-11-2005

5.95

5.77

5.86

8634

20

10-11-2005

5.70

5.50

5.60

11851

21

03-11-2005

5.93

5.66

5.80

1400

22

27-10-2005

6.00

5.95

5.98

27600

23

20-10-2005

7.48

6.29

6.89

192382

24

13-10-2005

7.71

6.49

7.10

254269

25

06-10-2005

6.95

4.76

5.86

170674

26

29-09-2005

6.00

4.51

5.26

249940

Average Price (Rs.)

5.74

1308770

 

2 Weeks – Daily High & Low

 

No

Date

High (Rs)

Low (Rs)

Average (Rs)

Volume

1

23-03-2006

5.50

5.10

5.30

33501

2

22-03-2006

5.50

5.00

5.25

77100

3

21-03-2006

5.25

5.25

5.25

6300

4

20-03-2006

5.00

4.85

4.99

2400

5

17-03-2006

5.14

4.75

4.95

4534

6

16-03-2006

5.00

4.85

4.93

12066

7

14-03-2006

4.85

4.80

4.83

22201

8

13-03-2006

5.05

4.58

4.82

925

9

10-03-2006

4.82

4.82

4.82

500

Average Price (Rs.)

5.01

 

                   (Source: http://www.bseindia.com/)

 

Since the shares of SHPIL are frequently traded on the BSE and infrequently traded on MSE, the Offer Price of Rs. 5.85/- per share is the highest as per above-mentioned criteria, in the opinion of the Manager to the Offer and Acquirer, the Offer Price of Rs. 5.85/- is being justified in terms of Regulation 20(4) of the Takeover Regulations.

8.1.5                There is no non-compete agreement.

 

8.1.6                The Offer Price of Rs. 5.85/- per fully paid up equity share of SHPIL is justified in terms of Regulation 20(11) of the SEBI (SAST) Regulation, 1997.

 

8.1.7                The Acquirer has not acquired any equity shares of SHPIL after the date of public announcement till the date of filing this letter of offer. If the acquirer acquires equity shares after the date of Public Announcement up to 7 working days prior to the closure of the offer at a price higher than the offer price, then the highest price paid for such acquisition shall be payable for all the valid acceptances received under the offer.

 

8.2         Financial Arrangements

 

8.2.1                Acquirer has adequate financial resources and made firm financial arrangements to fulfill the obligations under the open offer. No borrowings from Bank/Financial Institution are being made for the purpose. The funds to be utilised will be domestic and not a foreign fund.

8.2.2                The maximum purchase consideration payable by Acquirer assuming full acceptance of offer is Rs 1,38,01,320 i.e. 23,59,200 fully paid equity shares at a price of Rs 5.85/- per equity share (the "Offer Price") payable in cash subject to the terms and conditions mentioned hereinafter.

8.2.3                The Acquirer have created an Escrow Account of Rs.34,51,000 (being more than 25% of the consideration payable) in the form of cash deposit with HDFC Bank Limited, Fort Branch, Mumbai. The Acquirer has created Lien over the value of the Escrow Account and The Manager to the Offer has been duly authorized by the Acquirer to realize the value of escrow account in terms of the Regulation.

8.2.4                M/s Parikh & Shah, Chartered Accountants (Membership No. 7878) having their office at Bhupati Chambers, Mathew Road, Opera House, Mumbai - 400004 (Telephone No. 022-23630269, Fax No. 022-23618472) have certified vide their certificate dated 21st March, 2006 that sufficient resources are available with the Acquirer to fulfill its obligations under the Offer. Based on this, the Manager to the Offer has satisfied itself about the firm arrangement through verifiable means are in place and the Acquirer has adequate financial resources to meet the obligation under the offer.

8.2.5                The Manager to the Offer is satisfied that the firm arrangements for funds and money for payment through verifiable means are in place to fulfill offer obligations.

 

9         TERMS AND CONDITIONS OF THE OFFER

 

9.1         Persons eligible to participate in the Offer

 

9.1.1                The offer is made to all the shareholders of SHPIL, registered or unregistered, who own the equity shares of SHPIL any time prior to the date of Closure of the Offer, other than the parties to the SPA.

 

9.1.2                None of the existing shares of SHPIL are under any Lock-in requirement.

 

9.2         Statutory Approvals

 

9.2.1                The Offer is subject to the compliance of the terms and conditions and reporting requirements under the Foreign Exchange Management Act, 1999 (FEMA) for the acquisition of equity shares by the Acquirers from the Non residents under the Offer.

 

9.2.2                While tendering the shares under the offer, the NRIs/OCBs/FIIs will be required to submit the No Objection Certificate/ Tax Clearance Certificate, indicating the amount of tax to be deducted by the Acquirer before remitting the consideration, from the Income Tax Authorities under the Income Tax Act, 1961. In case the aforesaid No Objection Certificate/ Tax Clearance Certificate is not submitted, the Acquirer will arrange to deduct tax at the maximum marginal rate as may be applicable to the category of the shareholder, on the entire consideration amount payable to such shareholder. The Acquirer will send the proof of having deducted and paid the tax along with the payment consideration.

 

9.2.3                As on the date of Public Announcement, no approval from any bank or financial institutions is required for the purpose of this Offer, to the best of the knowledge of the Acquirer.

 

9.2.4                As on the date of Public Announcement, to the best of the Acquirer’s knowledge, no other statutory approvals are required to be obtained for the purpose of this Offer.

 

9.2.5                The Offer would be subject to all other statutory approvals that may become applicable at a later date before the completion of Offer.

 

9.2.6                Subject to the receipt of statutory approval, the Acquirer shall complete all procedure relating to the Offer including payment of consideration within a period of 15 days from the Offer Closing Date to those shareholders whose share certificates and/or other documents are found valid and in order and are approved for acquisition by the Acquirer. In case of delay in receipt of any statutory approval, Regulation 22(12) of SEBI (SAST) Regulations, 1997, will be adhered to, i.e. SEBI has power to grant extension of time to Acquirer for payment of consideration to shareholders subject to Acquirer agreeing to pay interest as directed by SEBI. Further in case the delay occurs on account of willful default by the Acquirer in obtaining the approvals, Regulation 22 (13) of SEBI (SAST) Regulations, 1997, will also become applicable.

 

9.3         Others

 

9.3.1                This Letter of Offer is being made to the public shareholders of SHPIL and the Letter of Offer with the Form of Acceptance cum Acknowledgement & Form of Withdrawal would be mailed to all the shareholders of SHPIL (other than parties to SPA), whose names appear on the Register of Members of SHPIL and the beneficial owners of the shares, whose names appear on the records of the respective share depositories, at the close of the business on April 17, 2006 (Monday), being the Specified Date. Persons who own equity shares of SHPIL any time prior to the date of Offer Closure, but are not registered holders, are also eligible for accepting the offer.

 

9.3.2                Accidental omission to dispatch this Letter of Offer to any person to whom this Offer is made or the non-receipt or delayed receipt of this Letter of Offer by any such person will not invalidate this Offer in any way.

 

9.3.3                Unaccepted Share Certificates, Share Transfer Forms and other documents, if any, will be returned by registered post at the shareholder(s) / unregistered owner(s) sole risk. Unaccepted shares held in dematerialized form will be credited back to the beneficial owners depositary account with the respective depository participant as per the details furnished by the beneficial owner in the Acceptance Form.

 

9.3.4                Consideration for equity shares accepted would be paid by crossed account payee cheques/ demand drafts/pay orders and sent by registered post to the address of the first shareholder(s) / unregistered owner(s) at their sole risk.

 

10     PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF THE OFFER

 

10.1      Shareholders who wish to tender their equity shares will be required to send their Form of Acceptance cum Acknowledgement, Original Share Certificate(s) and duly signed Share Transfer Form(s) (shares held in physical form) or photocopy of their delivery instruction in “Off-Market” Mode duly acknowledged by Depository Participant in favor of “Special Depository Account” (shares held in dematerialized form) to the Registrar to the Offer by hand delivery or registered post or through courier, as the case may be in accordance with the instructions specified in the Letter of Offer and in the Form of Acceptance cum Acknowledgement.

 

10.2      Shareholders of SHPIL to whom this Offer is being made, are free to offer his / her / their equity shares of SHPIL for sale to the Acquirer, in whole or part, while tendering his / her / their equity shares in this Offer.

 

10.3      Beneficial owners and shareholders holding shares in physical or dematerialized form, who wish to avail of this Offer will have to forward the following documents to the office of the Registrar to the Offer by hand delivery or by registered post, as the case may be, on or before business hours upto the date of Closure of the Offer, i.e. June 3, 2006 (Saturday).

 

·         Form of Acceptance, duly completed in all respects and signed by all the joint shareholders in the same order and as per the specimen signature(s) registered with SHPIL.

 

In Dematerialised Form

 

·         Photocopy of the delivery instruction in “Off-market” mode or counterfoil of the delivery instruction in “Off market” mode, duly acknowledged by DP in favour of the special depository account (please see below) before the close of business hours on June 3, 2006 (Saturday)

 

The Registrar to the offer has opened a special depository account. The details of the special depository account are as under:

 

DP Name                      : HDFC Bank Limited

DP ID                            : IN301151

Client ID                       : 21777410

Account Name              : SHPIL – Escrow Demat A/c

Depository                    : National Securities Depository Limited (NSDL)

 

For each delivery instruction, the beneficial owner should submit a separate FOA. In the case of demat shares, the shareholders are advised to ensure that their shares are credited in favor of the special depository account, before the closure of the Offer, i.e. no later than close of business on June 3, 2006 (Saturday). Beneficial owners having their beneficiary accounts with CDSL have to use inter depository delivery instruction slip for the purposes of crediting their shares in favour of the special depository account. The Forms of Acceptance of such demat shares not credited in favour of the special depository account, before the closure of the Offer will be rejected.

 

In Physical Form

 

·         Relevant Original Share Certificate(s).

 

·         Valid Share Transfer Deed(s), duly signed (in case the equity shares are held in joint names, by all the shareholders and in the same order as appearing in the Register of Members of SHPIL or on the Share Certificate issued by SHPIL) as per the specimen signature(s) lodged with SHPIL and witnessed by an independent witness (if possible, by a Notary Public, Bank Manager or a Member of a recognised stock exchange with membership number). Please do not fill in any other details in the Share Transfer Deed. In the event that a shareholder needs additional Share Transfer Deed(s), the same can be obtained from the Registrar to the Offer as mentioned hereafter.

 

·         Where the Transfer Deed(s) are executed by Constituted Attorney, attach a copy of the Power of Attorney duly certified as a True Copy by a Notary Public / Gazetted Officer.

 

10.4      In case the equity shares are held by a Company / Body Corporate, then a certified True Copy of a valid Board Resolution giving authority and certified true copy of the Memorandum and Articles of Association of such Company / Body Corporate should also be enclosed.

 

10.5      Non- Resident shareholders should also enclose a copy of permission received from RBI for the shares held by them in SHPIL. The tenders from non-resident shareholders, where the aforesaid permission is not submitted are liable to be rejected.

 

10.6      Non-Resident shareholders should also enclose a copy of “No-objection” certificate/tax clearance certificate from the income tax-authorities under Income Tax Act, 1961, indicating the amount of tax to be deducted by the Acquirer before remitting the consideration. In case the aforesaid “No-objection” certificate is not submitted, the Acquirer shall arrange to deduct tax at the maximum marginal rate as may be applicable to the shareholder, on the entire consideration amount payable. The Acquirer also reserves the right to reject such tenders from non-resident shareholders, where the aforesaid “No-objection” certificate is not submitted.

 

10.7      In case the equity shares stand in the name of a sole shareholder, who is deceased, the Notarized copy of the legal representation obtained from a Competent Court.

 

10.8      The offer documents are being dispatched to only those shareholders, who are eligible to participate in the offer. As the Acquirer and the parties to the agreement dated March 20, 2006 are not eligible, the offer documents are not sent to them.

 

10.9      No document should be sent to the Acquirer or to SHPIL or to the Manager to the Offer.

 

10.10  In case of non-receipt of Letter of Offer, the eligible shareholders may send his / her / their applications to the Registrar to the Offer on the address mentioned herein above, on a plain paper stating the name, address, number of equity shares held, folio number(s), certificate number(s), distinctive number(s), and number of shares tendered along with the relevant documents as mentioned hereinabove, so as to reach them on or before business hours upto the date of closure of the offer i.e. June 3, 2006 (Saturday).

 

10.11  Persons who own equity shares of SHPIL any time prior to the date of Offer Closure, but are not registered holders, can tender their equity shares for purchase by the Acquirer, by communicating his / her / their desire to tender, in writing to the Registrar to the Offer and obtain from them a copy of the Letter of Offer, the Application Form and Transfer Deed(s) and lodge the same along with the relevant Share Certificate(s) and other documents, as mentioned herein below together with the Original Contract Note issued by a registered Stock Broker of a recognized Stock Exchange, only at the address of Registrar to the Offer.

 

An unregistered shareholder can send his / her / their application to the Registrar to the Offer on the address mentioned above, on a plain paper stating the name, address, number of shares held, folio number(s), certificate number(s), distinctive number(s) and number of equity shares tendered along with the relevant documents as mentioned hereinabove, so as to reach them on or before 4.00 pm on June 3, 2006. The forms are also available on SEBI website www.sebi.gov.in.

 

10.12  No indemnity is required from the unregistered shareholders.

 

10.13  In case the Share Certificate(s) and the instrument(s) of transfer are lodged for transfer with SHPIL, then the Form of Acceptance should be accompanied by (i) the Share Transfer Deed(s) and (ii) the acknowledgement of lodgment or receipt issued by SHPIL by individual. Whereas the Transfer Deed(s) are executed by Constituted Attorney, also attach a copy of the Power of Attorney duly certified as a True Copy by a Notary Public / Gazetted Officer along with the acknowledgement of lodgment or receipt issued by SHPIL. In case the equity shares are lodged by a Company / Body Corporate, then a certified True Copy of a valid Board Resolution giving authority and certified true copy of the Memorandum and Articles of Association of such Company / Body Corporate should also be enclosed along with the Form of Acceptance and the acknowledgement of lodgment or receipt issued by SHPIL.

 

10.14  The following collection centre would be accepting the documents as specified above:

 

S. No.

Collection Centre

Address of Collection Centre

Contact Person

Phone No.

Fax No.

Mode of Delivery

1.         

Mumbai (Andheri)

7, Andheri Industrial Estate

Off. Veera Desai Rd, Andheri West,

Mumbai 400 053

Vishakha Shringarapure

 

022-26730799

022-26730152

Hand Delivery

 

 

2.         

Mumbai (Fort)

 

 

 

 

16-22 Bake House

Maharashtra Chmb. of Comm. Lane,

Opp. MSC Bank, Fort

Mumbai – 400 023

Nutan Shirke 

 

022-56382666

022-56331135

 

 

 

Hand Delivery

 

3.         

Chennai

No. 33/1, Venkatraman Street, T. Nagar,

Chennai - 600017

Gunashekhar

044-28151793 / 1794 / 4781

044-28153181

Hand Delivery

4.         

Hyderabad

Karvy House, 46, Avenue 4, Street No 1,

Banjara Hills,

Hyderabad 500 034

A. Anitha

040-23312454

040-23311968

Hand Delivery /  Regd. Post / Courier

5.         

New Delhi

105-108, Arunachal Bldg, 19, Barakhamba Road, Connaught Place,

New Delhi 110 001

Michael George

011-23324401

011-23310616

 

Hand Delivery

 

 Holidays: Sundays and Bank Holidays

 

10.15  The Registrar to the Offer will hold in trust the shares / share certificates, Form of Acceptance cum Acknowledgement, if any, and the transfer form(s) on behalf of the shareholders of SHPIL who have accepted the Offer, until the cheques / drafts for the consideration and / or the unaccepted shares / share certificates are dispatched / returned.

 

10.16  In terms of Regulation 22(5A) of the SEBI (SAST) Regulations, shareholders desirous of withdrawing their acceptances tendered in the Offer can do so up to three working days prior to the date of Closure of the Offer i.e. May 31, 2006 (Wednesday). The withdrawal option can be exercised by submitting the Form of Withdrawal as enclosed in the Letter of Offer. The shareholders are advised to ensure that the Form of Withdrawal should reach the Registrar to the Offer at the collection centre mentioned in the Letter of Offer or above as per the mode of delivery indicated therein on or before business hours upto the last date of withdrawal i.e. May 31, 2006 (Wednesday).

 

10.17  The withdrawal option can be exercised by submitting the Form of Withdrawal enclosing with it Copy of the Form of Acceptance-cum-Acknowledgement / Plain paper application submitted and the Acknowledgement slip. In case of non receipt of Form of Withdrawal, the withdrawal option can be exercised by making an application on plain paper along with the following details; name, address, distinctive numbers, folio number, share certificate number, number of shares tendered, date of tendering the shares.

 

10.18  In case of non receipt of Form of Withdrawal, the withdrawal option for dematerialized shares can be exercised by making an application on plain paper along with the following details; name, address, distinctive number of shares tendered/withdrawn, DP Name, DP ID Beneficiary Account no. and a photocopy of delivery instructions in “off market” mode or counterfoil of the delivery instruction in “off market” mode, duly acknowledged by the DO in favour of the Depository Escrow Account.

 

10.19  The withdrawal of Shares will be available only for the Share certificates / Shares that have been received by the Registrar to the Offer. Physical shares withdrawn by shareholders would be returned to the shareholders by Registered post.

 

10.20  The acquirer shall acquire the shares received from the shareholders under the offer on a proportional basis in terms of Regulation 21(6) & the intimation of returned shares to the Shareholders will be sent at the address as per the records of SHPIL.

 

10.21  Acquirer will acquire all the fully paid-up equity shares tendered in the Offer with valid applications upto 23,59,200 equity shares.

 

10.22  Method of Settlement

 

10.22.1         The marketable lot of SHPIL is 100 {Hundred} equity shares for physical shares.

 

10.22.2         The Form of Acceptance, relevant Original Share Certificate(s), valid Share Transfer Deed(s) and other documents, tendered by the shareholders of SHPIL under this Offer, shall be accepted from such shareholders in terms of the Letter of Offer, but will become a fully valid and binding contract between such shareholder(s) and the Acquirer only upon the fulfillment of all the conditions mentioned herein the Letter of Offer and Form of Acceptance.

 

10.22.3         On fulfillment of all the conditions herein mentioned, the Letter of Offer and Form of Acceptance, the Acquirer will pay the Offer Price by a crossed and “Account Payee Only” cheque(s) or demand draft(s) or pay order(s) drawn in favour of the sole shareholder or first named shareholder in case of joint holding. The payment consideration will be sent by Registered Post to the sole / first named shareholder of SHPIL whose equity shares are accepted by the Acquirer at his address registered with SHPIL. It is desirable that shareholders holding Shares in physical mode provide bank details of the first/ sole shareholder in the Form of Acceptance cum Acknowledgement, so that the same can be incorporated in the cheque / demand draft.

 

10.22.4         Unaccepted share certificates, transfer forms and other documents, if any, will be returned by registered post at the shareholders’ / unregistered owners’ sole risk to the sole / first shareholder.

 

10.22.5         The Acquirer shall endeavor to complete all procedures relating to the Offer within fifteen days from the date of Closure of the Offer i.e. June 17, 2006 (Saturday), including payment of consideration to the shareholders of SHPIL whose equity shares are accepted for purchase by the Acquirer.

 

10.22.6         In case of non-receipt of any of statutory approvals, if any required, as per regulation 22(12), SEBI may grant extension of time for the purpose of making payments to the shareholders who have successfully tendered their equity shares pursuant to this Offer and in such an event, the Acquirer will pay interest for the delayed payment beyond fifteen days of the closure of the Offer, at such rate as may be prescribed by SEBI.

 

10.23  General

 

10.23.1         The Form of Acceptance and instructions contained therein are integral part of this Letter of Offer.

 

10.23.2         Neither the Acquirer nor the Manager nor the Registrar nor the Target Company will be responsible for any loss in transit or delay in receipt of the completed Form of Acceptance, Share certificate(s), Share transfer deed(s), copy of delivery instructions or other documents.

 

10.23.3         The Offer Price is denominated and payable in Indian Rupees only.

 

10.23.4         All the communication in connection with the Form of Acceptance should be addressed to the Registrar to the Offer as mentioned above, with full name of the sole / first applicant, folio number, number of equity shares tendered, date of lodgement of the Form of Acceptance and other relevant particulars.

 

10.23.5         If there is any upward revision in the Offer Price (Regulation 26) by the Acquirer till the last day of revision, viz., at any time upto seven working days prior to the date of closure of the Open Offer or withdrawal of the Offer i.e. May 24, 2006 (Wednesday), the same would be informed by way of Public Announcement in the same newspapers where original Public Announcement had appeared. Such revised Offer would be payable for all the shares tendered anytime during the Offer.

 

10.23.6         “If there is competitive bid:

 

10.23.6.1         The Public Offers under all the subsisting bids shall close on the same date.

 

10.23.6.2         As the Offer Price cannot 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”.

 

10.23.7         The Acquirer does not hold any share in the Target Company except 64,87,800 fully paid equity shares to be acquired through SPA.

 

10.23.8         In terms of Regulation 22 (5A), shareholders shall have the option to withdraw acceptance tendered earlier, by submitting the Form of Withdrawal enclosed with the LOO, so as to reach Registrar to the Offer on or before business hours upto three working days prior to the date of Closure of the Offer, i.e. May 31, 2006 (Wednesday) as mentioned above.

 

10.23.9         Alternatively, a copy of Public Announcement, Letter of Offer, Form of Acceptance cum Acknowledgement and Form of Withdrawal cum Acknowledgement can be obtained from SEBI’s official website: www.sebi.gov.in.

 

10.23.10     The Manager to the Offer i.e. Stratcap Securities (India) Private Limited does not hold any shares in SHPIL on the date of PA.

 

10.23.11     Applications which are complete in all respect and which reach the Registrar to the Offer on or before the date of closure of offer i.e. June 3, 2006 (Saturday) would be approved and the shares so offered would be accepted by the Acquirers free from all lien, charges, encumbrances along with all the rights attached to the shares like the right to all dividends, bonus and right shares and all other rights as are attached to such acquired shares.

 

10.23.12     There are no shares of “SHPIL” with lock-in period.

 

11     DOCUMENTS FOR INSPECTION

 

The following documents are available for inspection at the Office of the Manager to the Offer i.e. Stratcap Securities (India) Private Limited, 44, Strategic House, Mint Road, Mumbai – 400001, from 10:00 a.m. to 4:00 p.m. on all working days except Sundays, until the closure of the Offer.

 

(a)           Appointment letter issued by the Acquirer to Stratcap Securities (India) Private Limited appointing as Manager to Offer.

 

(b)           Certificate of Incorporation, Memorandum and Articles of Association of Supreme Petrochem Limited.

 

(c)           Certificate of Incorporation, Memorandum and Articles of Association of Shin Ho Petrochemical (India) Limited.

 

(d)           Net worth certificate issued by Chartered Accountant certifying the net worth of the Acquirer and the adequacy of financial resources with the Acquirer to fulfill the open offer obligations.

 

(e)           Audited Annual Reports of “SHPIL” for the financial year 2005, 2004, 2003 and Certified statement of accounts up to the period ended December 31, 2005.

 

(f)             Audited Annual Reports of “SPL” for the financial year 2005, 2004, 2003 and Certified financial figures for the period ending on December 31, 2005.

 

(g)           A letter from HDFC Bank Limited confirming the amount kept in Escrow Account and that the lien is in favour of Stratcap Securities (India) Private Limited.

 

(h)           Copy of the Share Purchase Agreement (SPA) dated March 20, 2006.

 

(i)             Published copies of the Public Announcement dated March 23, 2006.

 

(j)             A copy of the letter from SEBI in terms of proviso to Regulation 18(2) of the Regulations.

 

12     DECLARATION BY THE ACQUIRER

 

12.1      The Acquirer accepts full responsibility for the information contained in this Letter of Offer.

 

12.2      The Acquirer is responsible for ensuring compliance with the Regulations.

 

For and on behalf of Acquirer

Supreme Petrochem Ltd

 

 

Rakesh Nayyar

Executive Director (Finance & Corporate Affairs)

and Company Secretary

 

Place : Mumbai

Date   : May 3, 2006

 

13     ENCLOSURES

 

1.             Form of Acceptance cum Acknowledgement

2.             Form of Withdrawal cum Acknowledgement

3.             Blank Share Transfer Deed(s)