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PROSPECTUS

MSP STEEL & POWER LIMITED(Incorporated in India on November 18, 1968 as Adhunik Rollers Private Limited under the Companies Act, 1956 with RegistrationNo. 21-27399 with Registrar of Companies, West Bengal. The name of the Company was changed to MSP Steel & Power Private Limited onMarch 7, 2003. The Company subsequently became a public company under the name of MSP Steel & Power Limited with effect from9th September, 2003)

Registered Office: 1, Crooked Lane, Kolkata-700 069, India. Tel.: (033) 2248-3795/4138, Fax: (033) 2248-1720

Corporate Office: 16/S, Block A, 2nd. Floor, New Alipore, Kolkata – 700 053Tel: (033) 2457 0038/ 3940, Fax: (033) 2458 2239

E-mail: [email protected], website: www.mspsteel.com

PRESENT ISSUE1,60,00,000 equity shares of Rs. 10/each for cash at par aggregating Rs. 1600 lacs of which 16,00,000

Equity Shares being 10% of the Issue Size to be compulsorily allotted to QIBs. The Project has aparticipation of Rs.7675 Lacs as term loan from Consortium of Banks.

RISK IN RELATION TO THE FIRST ISSUE

This being the first issue of the company, there has been no formal market for the securities of the company. The face valueof the shares is Rs.10/ and the issue price is 1 time of the face value. The issue price (as determined by the Company inconsultation with the Lead Manager and as mentioned in the paragraph on basis for issue price) should not be taken to beindicative of the market price of the equity shares after the shares are listed. No assurance can be given regarding an active orsustained trading in the shares of the company or regarding the price at which the equity shares will be traded after listing.

GENERAL RISKS

Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in thisoffer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefullybefore taking an investment decision in this offering. For taking an investment decision, investors must rely on their ownexamination of the issuer and the offer including the risks involved. The securities have not been recommended or approvedby Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document.Attention of the investors is specifically invited to the Statement of Risk Factors mentioned on page nos. (iii) to (ix) ofthe Prospectus.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains allinformation with regard to the issuer and the issue, which is material in the context of the issue, that the information containedin the Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions andintentions expressed herein are honestly held and that there are no other facts, the omission of which make this document asa whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Equity Shares of the Company are proposed to be listed on The Stock Exchange, Mumbai (“BSE”) (The Designated StockExchange) and The National Stock Exchange of India Limited (NSE). The in-principle approvals have been received from BSEand NSE for listing of the Equity Shares vide their letters dated 14-09-2004 and 05-10-2004,31-01-2005 and 25-05-2005respectively.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

MICROSEC INDIA LTD KARVY COMPUTERSHARE PVT LTDAzimganj House, 2nd Floor 46, Road No. 4, Street No. 1 Banjara Hills7, Camac Street,Kolkata 700 017 Hyderabad – 500 034Ph: 91-33-2282 9330 Tel: (040) 23312454, 23320251-53Fax: 91-33-2282 9335 Fax: (040)-23311968E-Mail: [email protected] E-mail: [email protected]

ISSUE PROGRAMME

ISSUE OPENS ON MONDAY, JUNE 20, 2005

ISSUE CLOSES ON FRIDAY, JUNE 24, 2005

MAGENTA BLACK

MAGENTA BLACK

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TABLE OF CONTENTS

Title Page No.

I. DEFINITIONS & ABBREVIATIONS ...................................................................................................... i

II. FORWARD-LOOKING STATEMENTS; MARKET DATA ..................................................................... ii

III. RISK FACTORS & MANAGEMENT PERCEPTION THEREOF........................................................... iii to ix

IV. HIGHLIGHTS ......................................................................................................................................... x

Part I

I. GENERAL INFORMATION ................................................................................................................... 1

II. CAPITAL STRUCTURE OF THE COMPANY ....................................................................................... 9

III. TERMS OF THE PRESENT ISSUE ...................................................................................................... 20

IV. PARTICULARS OF THE ISSUE ........................................................................................................... 31

V. DESCRIPTION OF INDUSTRY AND BUSINESS ................................................................................ 76

VI. COMPANY, MANAGEMENT AND PROJECT ...................................................................................... 81

VII. MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIALCONDITION AND RESULTS OF THE OPERATIONS AS REFLECTEDIN THE FINANCIAL STATEMENTS. ..................................................................................................... 91

VIII. FINANCIAL OF GROUP COMPANIES ................................................................................................. 94

IX. BASIS FOR ISSUE PRICE.................................................................................................................... 101

X. OUTSTANDING LITIGATIONS OR DEFAULTS .................................................................................. 103

XI. RISK FACTORS AND MANAGEMENT PERCEPTION ON THE SAME, IF ANY ................................ 105

Part II

I. GENERAL INFORMATION ................................................................................................................... 111

II. FINANCIAL INFORMATION.................................................................................................................. 115

III. STATUTORY AND OTHER INFORMATION ........................................................................................ 131

Part III

Declaration ...................................................................................................................................................... 142

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MSP STEEL & POWER LIMITED

I. DEFINITIONS & ABBREVIATIONS

Act The Companies Act, 1956

Articles Articles of Association of the Company

Auditors Jaiswal Kuldeep & Co.

Board Board of Directors of MSP Steel & Power Ltd

BSE The Stock Exchange, Mumbai

CSE The Calcutta Stock Exchange Association Limited

CDSL Central Depository Services (India) Ltd

DP Depository Participant

DRI Direct Reduced Iron

DSE The Delhi Stock Exchange Association Limited

EPS Earning per share

ESP Electro Static Precipitator

FIIs Foreign Institutional Investors

IPO Initial Public Offer

Issue Public Issue of Equity Shares by MSP Steel & Power Ltd

IVBL ING Vysya Bank Limited

LDO Light Diesel Oil

MSP/ The Company/ The Issuer MSP Steel & Power Limited

LM/ Lead Manager/ MIL Microsec India Limited

MW Mega Watts

Memorandum The Memorandum of Association of MSP Steel & Power Ltd

MOA Memorandum and Articles of Association of MSP Steel & Power Ltd

NAV Net Asset Value

NRIs Non-Resident Indians

NSDL National Securities Depository Ltd

NSE The National Stock Exchange of India Ltd

OCBs Overseas Corporate Bodies

PTLR Prime Term Lending Rate

PAN Permanent Account Number

QIB Qualified Institutional Buyers

RBI Reserve Bank of India

Registrar Karvy Computershare Pvt Ltd

ROC Registrar of Companies, West Bengal at Kolkata

Rft Running Feet

TPA Tonnes per Annum

TPH Tonnes per Hour

WHRB Waste Heat Recovery Boiler

SEBI Securities and Exchange Board of India

Currency of Presentation

In this Prospectus, all references to “Rs” are to Indian Rupee. All financial data contained in this Prospectus has been roundedoff to the nearest lacs, except stated otherwise. In this Prospectus, any discrepancy in any table between the totals and sumsof the amount listed are due to rounding off.

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II. FORWARD-LOOKING STATEMENTS; MARKET DATA

Statements included in this Prospectus which contain words or phrases such as “will”, “aim”, “will likely result”, “believe”,“expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, seekto”, “future”,” objective”, “goal”, “project”,“should”, “will pursue” and similar expressions or variations of

such expressions, that are “forward-looking statements”.

Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertaintiesassociated with the Company’s expectations with respect to, but not limited to, the Company’s ability to successfully implementits strategy, its growth and expansion, technological changes, its exposure to market risks, general economic and politicalconditions in India which have an impact on its business activities or investments, the monetary and interest policies of India,inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, theperformance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes andchanges in competition in the industry.

For further discussion of factors that could cause the Company’s actual results to differ, see the section entitled “Risk Factors”beginning on page no. (iii) of this Prospectus. By their nature, certain market risk disclosures are only estimates and could bematerially different from what actually occurs in the future.

As a result, actual future gains or losses could materially differ from those that have been estimated. In accordance with SEBIrequirements, the Company will ensure that investors are informed of material developments until such time as the grant oflisting and trading permission by the Stock Exchanges.

Market data used throughout this Prospectus was obtained primarily from internal company reports. The information containedin this Prospectus has been obtained from sources believed to be reliable, but that their accuracy and completeness andunderlying assumptions are not guaranteed and their reliability cannot be assured. Although, the Company believes that themarket data used in this Prospectus is reliable, it has not been independently verified. Similarly, internal Company reports anddata, while believed to be reliable, have not been verified by any independent source.

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III. RISK ENVISAGED BY MANAGEMENT & MANAGEMENT PROPOSALS TO ADDRESS THE RISKS

Investors should consider carefully the following risk factors, together with the other information contained in thisProspectus before they decide to buy the company’s equity shares. If any of the following risks actually occur, thecompany’s business, financial condition and results of operations could suffer, the trading price of the company’sequity shares could decline and you may lose all or part of your investment.

RISK FACTORS ENVISAGED BY THE MANAGEMENT SPECIFIC TO THE PROJECT AND INTERNAL TO THECOMPANY AND THE PROPOSAL OF THE MANAGEMENT TO ADDRESS THE RISK

1. Size of the Project

The net worth of the company is Rs.4559.56 lacs as on 31st March 2005. The company has embarked upon settingup of an integrated steel plant referred to as the Integrated Steel project which is projected to cost Rs 9,874 lacs.The company has also commenced work on supplementary projects referred to as the ancillary project which isestimated to cost Rs.2436.90 lacs. The total project cost is estimated at Rs. 12310.90 Lacs which is approximately3 times the size of its net worth. Although the promoters have an established track record in the steel industry, theircompetence in handling a project of this magnitude remains to be demonstrated. An equity investor is thereforefaced with an uncertainty of performance by the management.

Proposal to address the risk

The promoters of the MSP group have over two decades of experience in the steel industry. They are alreadymanaging steel manufacturing capacities to the tune of 2,25,000 TPA of sponge iron, 100,000 TPA of MS Ingots and60,000 TPA of Rounds and Flats at various locations. The promoters are therefore confident of managing a projectof this magnitude. The financial closure for the entire project i.e both for Integrated Steel and ancillary projects beingRs.6175 lacs and Rs.1500 lacs respectively is complete and the entire promoters share of equity has been broughtinto the company. The implementation of the Integrated Steel project is on schedule and one sponge iron kiln ofcapacity 300 TPD is operational from 4th November 2004. Moreover,the optimistic scenario in the Steel sectorpresently is viewed upon by the promoters as an opportunity to enlarge the scale of the operations of the group.

2. Risk arising from any delay or failure in fund mobilization from public

Any delay in the mobilization of the requisite funds through IPO may severely disrupt the implementation of theproject and the Company may not be in a position to incur heavy expenses.


The Banks have already appraised the project and have sanctioned loans worth Rs.6,175 lacs in the funding of theIntegrated Steel project and Rs. 1500 lacs for the ancillary project. The promoters have already brought in equity of Rs.4197.64 lacs to fund the entire operation of the Company. A consortium of Banks have disbursed a sum of Rs.6130.76lacs upto the 30th day of April 2005. The funding through the proposed public offer is only 16% of the cost of the integratedsteel plant. In case such raising of funds is delayed or abandoned, the equity brought in by the promoters for futureexpansion plans shall be utilised to meet the shortfall.

3. Risk arising out of uncertainty in raw material supply

Steel industry being a raw material intensive industry, the Company is constantly exposed to possible unpredictabilityin the supply of raw materials, particularly iron-ore and coal. Disruption in the supply of any of the above raw materialmay lead to hampering of the production process flow.


The Company, in order to ensure steady supply of vital raw materials, in requisite quantity, has prudently chosen alocation in Chattisgarh, which is near the iron-ore mines,coal mines and is well connected with roads. The Companyis sourcing coal from Korba/Raigarh under South Eastern Coalfields Limited and Mahanadi Coal Fields Limited andhas already obtained linkages for its entire coal requirements from Coal India Limited. Hence the company is insulatedagainst the current scarcity of coal and the fluctuations in domestic and international coal prices. The company hasentered into a long-term agreement with Sarkar Iron Crusher for supply of crushed iron ore and has arrangementswith Rungta Mines, Essel Mines, Patnaik Minerals and ABS Merchants Pvt Ltd for supply of the same. The companyhas also received allotment for ironore from the mines of National Mineral Development Corporation Limited (NMDC)

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for the year 2005-06. In future the company expects to source both raw materials i.e. coal and ironore from captivemines for which applications have been made and are under active consideration.

4. Risk arising out of non-compliance with pollution control norms

Sponge Iron manufacturing is a highly polluting process. This is due to the generation of fugitive dust and emissionof waste gases at a very high temperature, which pollute the air. Apart from this, various processes like stockpiling,crushing, screening and conveying are noisy and results in localized noise pollution. Any carelessness on part of thecompany regarding this issue may expose it to the risk of being penalized by relevant authorities for non-compliancewith pollution control norms.


The promoters have been in the iron and steel industry for two decades now. Having sound technical knowledge inthis field, they are aware of the above risk factor. The Company has already obtained the permission of the ChattisgarhEnvironment Conservation Board to operate Kiln I of the Sponge Iron Plant. Moreover suitable machinery andsystems have been installed to recover waste heat by recycling the gases emitted by the sponge iron kilns. This willnot only prevent thermal pollution but also control the loss of energy. Apart from this, pollution control equipmentsare installed at almost every process to make the entire operation safe and environment friendly.

The Company has received consent to establish Kiln II, Captive Power Plant, Steel Melting Shop and Re-Rolling millfrom the Pollution Control Board. The company has filed an application for consent to operate Kiln II which is underconsideration.

5. Critical Risk Factors/Weaknesses/Threats as per the appraisal report of the appraising Bank

ING Vysya Bank

Business risk and Future Outlook

With signs of recession on its way out and marked improvement in the performance of infrastructure and manufacturingsegment have considerably revived the fortunes of steel sector. Consumption of the finished steel increased byabout 6% in the last year and the industry is likely to sustain the improved performance in the current year. Demandfor steel in China helped the momentum in steel prices at global level, while automobile and construction industryhas seen strong demand. The capital goods industry is also showing signs of recovery. Sustained rise in steel pricesin the global market coupled with strong domestic growth and increased export will enable improved marketperformance of the Industry in the near future.

Management Risk

The promoters are already in this line of business for over 20 years and have good experience. The existing groupcompanies of the promoters are running profitably. The promoters have appointed Industrial Technical Consultantsfor setting up the DRI Plant. The consultants have extensive experience in setting up Sponge Iron plants.

Management risk is perceived low.

Structure Risk

There is no structure risk involved in the proposed facility. Term loan is being shared with other banks.

INTERNAL RISK FACTORS:

1. Any future equity offerings by the Company or issue of options under employee stock option planmay lead to dilution of equity in the hands of the investors.


The SEBI Guidelines prevent a Company from frequent issue of equity shares. Also the Company as on date has noplans of providing employee stock options.

2. Ashirwad Steels & Industries Limited – a group company is listed on the stock Exchange of Mumbai,Kolkata and Delhi. The Company had not paid the listing fees of Delhi Stock Exchange for eightyears.

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Proposals to address the risk

The management of the company Ashirwad Steels & Industries Limited has got the company voluntarily delistedfrom the Delhi Stock Exchange after clearing all dues and has also voluntartily got itself delisted from CSE. Thecompany shares are traded on The Stock Exchange, Mumbai and is presently quoted at Rs.34.00 as on 1st June2005.

3. Ashirwad Steel & Industries Limited, a listed group Company, had made a public issue in February1995, and has failed to achieve projections made in its Prospectus; reference may be made to page 99of the prospectus.

4. Cases Against Group Companies/ Firms:

a) MSP STEEL PRIVATE LIMITED

The Director Genral of Central Excise Intelligence (DGCEI) conducted a search and seizure on the 29th July 2003at the Factory/Office premises of MSP Steel Private Limited located at Vill: Haldiaguna, P.O. Gobardhan, Dist:Keonjhar, Orissa, and at the Mining Square, behind Keonjhar Law College, Keonjhar.

During the operation certain documents and records were seized. On the basis of seized documents, the DGCEIdetermined an amount of Rs. 4,71,362/- as payable being the amount of duty evaded, on clearances of M.S. Roundswithout payment on duty. The Company has made a voluntary payment of Rs.5,00,000/- on 29.07.03.

A Show Cause Notice was issued by DGCEI on the Company stating that the following Rules were contravened bythe Company:-

(i) Rule 4 (1) - Finished goods cleared without payment of duty.

(ii) Rule 6 - Failure to correctly assess and pay excise duty.

(iii) Rule 8 - Failure to pay the duty by due date.

(iv) Rule 10 - Failure to maintain proper records indicating the particulars regarding goods produced,inventory of goods, quantity removed, assessable value amount of duty payable in thestatutory records.

(v) Rule 11 Failure to clear goods under the cover of proper invoice.

The implication of the above notice is as follows on the Company:

� Demand on Account of duty of Rs.4,71,362/-. appropriated from Rs.5,00,000/ voluntarily paid by thecompany on 29th July 2003.

� Penalty imposable, equal to the amount of the duty demanded u/s – 11AC of Central Excise Act, 1994.

� Penalty imposable under Rule 25 of Central Excise Rules, 2002.

� Interest at the applicable rate on the duty short paid U/s. 11AB.

� Penalty imposable under Rule 26 of Central Excise Rules, 2002 on Mr. Suresh Kumar Agarwal, Director andon Mr. Basant Sahoo, Commercial Executive of MSP Steel Pvt. Ltd.

The Company has requested the Hon’ble Joint Commissioner, Central Excise & Customs, of the Bhubaneswar – IICommissionerate to provide the Company with an opportunity to apply before the Hon’ble Settlement Commission,Kolkata Zone, Kolkata for waiver of interest and penalty vide their letter dated 27th September 2004.

An application has been made by the Company before the Hon’ble Settlement Commission, Kolkata Zone on 2ndMarch,2005.

b) MSP SPONGE IRON LIMITED

The Director Genral of Central Excise Intelligence (DGCEI) conducted a search and seizure on the 29th July 2003at the Factory/Office premises of MSP Sponge Iron Limited located at Vill: Haldiaguna, P.O. Gobardhan, Dist:Keonjhar, Orissa- 758013, and at 16/S, Block ‘A’ New Alipore, Kolkata – 700 053.

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During the operation certain documents and records were seized. On the basis of seized documents, the DGCEIdetermined an amount of Rs. 8,22,838/- as payable being the amount of duty evaded, on removal of Sponge ironcontravening the following Rules of central Excise rules-1944 as amended. The Company has made a voluntarypayment of Rs.10,00,000/- on 29.07.03.

A Show Cause Notice was issued by DGCEI on the Company stating that the following Rules were contravened bythe Company:-

(i) Rule 4 (1) - Clearance of manufactured goods from factory without payment of duty involved.



(iv) Rule 10 - Failure to maintain proper records indicating the particulars regarding goods produced,inventory of goods, quantity removed, assessable value amount of duty payable in thestatutory records.



� Demand of duty amounting to Rs.8,22,832/- appropriated from Rs.10,00,000/ voluntarily paid by thecompany on 29th July 2003.




� Penalty imposable under Rule 26 of Central Excise Rules, 2002 on Mr. P.K.Dey and Sanjay SahooAccountant of MSP Sponge Iron Ltd.

The Company has requested the Hon’ble Joint Commissioner, Central Excise & Customs, of the Bhubaneswar – IICommissionerate to provide the Company with an opportunity to apply before the Hon’ble Settlement Commission,Kolkata Zone, Kolkata for waiver of interest and penalty vide letter dated 27th September 2004.

An application has been made by the Company before the Hon’ble Settlement Commission, Bhubaneswar Zone onthe 2nd March,2005


The Management is of the view that since the Companies have voluntarily paid the duty amount the penalty andinterest will be waived. Further the amount involved will in no way adversely affect the working of the Companies.The Companies have also taken steps, so that such irregularities shall not recur in the future.

5. Search and Seizure operations conducted by the Income Tax Authorities

The Income Tax Authority, Kolkata had conducted a search and seizure operation on the 20th June 2003 on theoffice and factory premises of the MSP Group of Companies including the residence of the directors. The IncomeTax department has seized, inter alia cash worth Rs.73.15 Lacs the disclosure of which has been made in the booksof accounts and tax thereon has been duly paid. Revised return under section 153A has been filed and assessmentproceedings have not yet been started. The Income Tax Department is preparing their report to be filed with theconcerned authorities for further processing in the above search and seizure matter.

6. The Company has low EPS and past record is not good.


The Company was incorporated in 18.11.1968 as Adhunik Rollers Pvt. Ltd. The company was earlier engaged inproduction of Katha an ingredient used in the preparation of readymade betals. The raw materials for the manufactureof katha is wood and owing to scarcity of the same and restrictions on transportation the production of katha hasbeen discontinued.

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The name of the Company was changed to MSP Steel & Power Private Limited on March 7, 2003 to reflect its newbusiness initiative. The Company then subsequently became a public company under the name of MSP Steel &Power Limited with effect from 9th September 2003.

The Company after discontinuing the Katha manufacturing operations has decided to set up a green field industrialsteel complex at Jamgaon, Raigarh, Chattisgarh. The annual impact of the expansion on the turnover and profitabilitywould be reflected in the coming financial years. The raw materials are suitably located near the proposed site andthus the company shall have an edge in comparison to other units.

The Company has low EPS owing to its lack of business activities at this stage. Once the project comes on stream,the Company will witness a steady increase in profitability resulting in higher EPS.

The Company has already started production of Kiln-I and has been able to attain a profitability of Rs.244.86 lacs ona turnover of Rs.3472.81 lacs from five months of production in the year 2004-2005.

7. The Company was only doing trading business in the financial year 2003-04


The Company has already started production in financial year 2004-2005 and KILN-1 of the Sponge Iron Plant hasbeen commissioned. The company has been able to attain a turnover of Rs.3508.70 lacs of which trading constitutesonly Rs.35.90 lacs as per financial results of the Company as on the 31st March 2005.

8. The group companies are participating in the proposed expansion.


The Group Companies shown in the prospectus are as follows:

Name of the Company Shareholding in MSP Steel & Power Ltd.

1. Ashirwad Steels & Industries Limited Nil

2. Howrah Gases Limited Nil

3. MSP Sponge Iron Limited Nil

4. MSP Steels Private Limited Nil

5. Rama Alloys Private Limited 5.10%

Apart from Rama Alloys Private Limited none of the group manufacturing companies are participating in theequity of the Company.

The major investments in the equity of the company have been made by the group investment companies whoprimarily invest in securities of companies.

The present investments have been made by the individual promoters, their relatives and associates and corporatepromoters alongwith the group Bodies Corporates as mentioned hereinbelow:

Name of the Company No. of Shares held Shareholdingin MSP Steel in %*& Power Ltd.

Adhunik Gases Limited (Promoter) 4004000 6.89%

MSP Infotech Pvt Ltd (Promoter) 7114000 12.24%

MSP Properties India Pvt Ltd (Promoter) 6030500 11.38%

Larigo Investment Pvt Ltd (Promoter) 383500 6.60%

Raj Securities Limited 3872000 6.66%

Jagran Vyapaar Limited 2102000 3.62%

K C Texofine Private Limited 3932000 6.77%

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Name of the Company No. of Shares held Shareholdingin MSP Steel in %*& Power Ltd.

MSP Metallics Limited 2380000 4.10%

Shikhar Commotrade Pvt. Ltd. 750000 1.29%

AAESS Tradelinks Pvt Ltd 1900000 3.27%

Total 32468000 62.82%

*The % of shareholding is based on post issue shareholding of 58100000 shares

The majority of investments in the equity of the company have been made by the promoting companies and groupinvestment companies who primarily invest in securities of companies.

9. The banks could take the risk of lending funds to the project as in the event of any eventuality, it ispossible for banks to place their personnel on the board of the Company, but the same is notpossible for individual investors.


The regulations and the Companies Act do provide a scope for representation of the minority shareholders on theBoard of the Company. The above-mentioned risk is a standard risk for all companies and for all green field projectsseeking public participation.

10. The issue is not underwritten


Underwriting of a fixed price issue is not compulsory. Owing to the group strengths and the viability of the proposedproject and pricing of the offering the Board of Company has decided against underwriting of the proposed issue.However, it is pertinent to note that the issue has a compulsory participation of 10% of the Net offer to the public byQIBs, which will add further to the credibility of the issue and provide comfort to the small investors.

11. The small investors interest are not protected by Group Company for which the Group Companywas shifted to “Z” Group.

The group company Ashirwad Steels & Industries Limited was shifted to Z Group by the Stock Exchange Mumbai onwhich it is listed owing to non-compliance and non-submission of records as per the listing agreement. The saidcompany has already met all the requirements of BSE and only after satisfying themselves with the details andsuitable compliances BSE has accorded the in principle approval to the Company.

The trading price of the Company on the Stock Exchange, Mumbai as on June 1, 2005 was Rs.34.00.

EXTERNAL RISKS BEYOND THE CONTROL OF THE COMPANY:

1. Competitive Business Environment

The company operates in a globally competitive business environment. Growing competition may force the companyto reduce the prices of its products, which may impact margins and market share.


The management is seized of the threat and would use its experience in effectively mitigating the risk. Moreover,demand for sponge iron is expected to grow specially in view of diminishing availability of steel melting scrap andrising prices of coking coal for making steel through blast furnace route. In view of the recent spurt of exports andrising demand in the domestic market of rounds and flats, the outlook is positive.

The integrated steel project would help in reduction of costs, making the cost of products competitive.

2. Changes in regulatory environment

Changes in regulatory environment relating to manufacturing and marketing Sponge Iron, Billet Casting, captivePower Plant and TMT Bars in and outside the country will significantly impact the business of the company.

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The company keeps itself abreast of the various developments in the regulatory environment and gears itself tocomply with the dynamics. The Company shall be able to adapt to any change in the regulatory environment.

3. Acts of Violence

Terrorist attacks and other acts of violence or war involving India and other countries where the company sells itsproducts could affect the company’s business.


The consequences of any potential armed conflict are unpredictable and the Company may not be able to foreseeevents that could have a materially adverse effect on its business, financial condition or results of operations.However, the company would take up appropriate risk management strategies.

NOTES:

i. Net worth of the company as on March 31, 2005 is Rs 4559.56 Lacs.

ii. Present Issue of 1,60,00,000 equity shares of Rs. 10/- each for cash at par aggregating Rs. 1,600 lacs. NetOffer to Public is 1,60,00,000 equity shares of Rs. 10/- each for cash at par aggregating Rs. 1600 lacs. TheProject has Rs. 160 lacs as equity participation from the QIBs and Rs. 7675.00 Lacs as Term Loan fromConsortium of Banks.

iii. Book Value of the equity shares of the company as on March 31, 2005 is Rs.10.90 per Equity Share.

iv. Investors are advised to refer to the paragraph on “Basis for Issue Price” on page 101 before making aninvestment in the issue.

v. Investors may note that in case of over subscription, the allotment shall be on proportionate basis and fordetails; reference may be made to Para “Basis of Allotment” given on page 24 of the prospectus.

vi. The investors are advised to refer the Paragraph on promoter’s background and past financial performanceof the company before making an investment in the proposed issue.

vii. There are no relationships with statutory auditors to the company other than auditing and certification offinancial statements.

viii. Investors may note that allotment and trading in shares of the company shall be done only in dematerialisedform.

ix. The contingent liability not provided for by the company as on 31.03.2005 is a Bank Guarantee provided bythe banker’s of the company in favor of Forest Department amounting to Rs.3.00 Lacs (Rupees three lacsonly) against which a fixed deposit receipt of Rs.3.00 Lacs has been lodged and contracts remaining to beexecuted on capital accounts worth Rs. 3550.52 Lacs.

Details of Related Party Transactions

Rs. in lacs

Name Type of Transaction 2002-03 2003-04 2004-05

To Directors

Mr. Puran Mal Agarwal Remuneration 0.96 1.20 3.00Interest on Loan 0.02 0.03 –

Mr. Suresh Kumar Agarwal Remuneration – – 3.00Interest On Loan 0.08 0.09 –

Mr. Manish Agarwal Factory Rent 0.48 0.48 0.48

Mr. Saket Agarwal Factory Rent 0.48 0.48 0.48

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To Companies in which Directors are interested

Larigo Investment Pvt Limited Depo Rent 0.18 0.18 0.18

Howrah Gases Ltd Purchase (Oxygen cylinders) – 0.10Purchase [Ingots] 110.72 –Purchase [iron ore} – – 166.55

Rama Alloys Pvt Ltd Purchase [Oxygen Cylinders] 19.42 20.47 –

MSP Sponge Iron Ltd Purchase (Iron Ore) – 5.15 –

MSP Rolling Mills Pvt Ltd Purchase (Steel Fabrication Materials) – 3.95 12.51

MSP Steels Pvt Ltd Purchase (MS Round) – 57.73 –

To Relatives Of Directors

Smt Kisturi Devi Agarwal Factory Rent 0.48 0.48 0.48Interest On Loan 0.06 – –

Smt Kiran Agarwal Office Rent 0.15 0.30 0.30

Smt Nisha Agarwal Office Rent 0.15 0.30 0.30

S.K Agarwal [HUF] Interest On Loan 0.001 – –

IV. HIGHLIGHTS:

� Existing profit making company.

� The company proposes to set up an integrated steel complex at Jamgaon, Raigarh, Chattisgarh. OneSponge Iron Kiln with capacity to produce 300 TPD is operational from 4th November 2004.

� The raw material sources are suitably located near the proposed site providing an edge in comparison toother units.

� The linkages for the supply of the main raw materials viz. coal and iron ore from Mahanadi Coal Fields andNatioanl Mineral Development Corporation Limited respectively are in place.

� The promoters amongst themselves have adequate experience in the industry. Two of the promoters areassociated with the industry for past two decades and have been instrumental in the success of the MSPGroup.

� The financial closure for the debt portion of the project has been completed and a consortium of Banks hassanctioned Rs.7675 Lacs as loan to the Company. Disbursement to the tune of Rs.6130.76 Lacs has beenreceived by the Company upto 30th April 2005.

� The promoters, promoter group and their associates have already invested a sum of Rs. 4197.60 lacstowards the project of which Rs.1888.50 lacs is brought in for the integrated steel project and the remainingRs.2309.14 lacs has been brought in for the ancillary projects of the Company, infrastructure developmentand other corporate purposes.The Implementation of the project is on schedule.

� The company has received approval to construct Private Railway Siding at the plant site at Jamgaon fromthe Railway Traffic Controller for which construction work has already begun.

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PART-I

GENERAL INFORMATION


(Incorporated as Adhunik Rollers Private Limited on 18th November 1968, under the Companies Act, 1956. The name ofthe company was changed to MSP Steel & Power Private Limited on 07.03.2003. The Company subsequently became a

public company under the name of MSP Steel & Power Limited with effect from 9th September 2003)

Registered Office: 1, Crooked Lane, Kolkata-700 069, India.Tel.: (033) 2248-3795/4138, Fax: (033) 2248-1720

Corporate Office: 16/S, Block A, 2nd. Floor, New Alipore, Kolkata – 700 053Tel: (033) 2457 0038/ 3940, Fax: (033) 2458 2239

E-mail: [email protected], website: www.mspsteel.com

PRESENT ISSUE 1,60,00,000 equity shares of Rs. 10/each for cash at par aggregating Rs. 1600 lacs of which16,00,000 Equity Shares being 10% of the Issue Size to be compulsorily allotted to QIBs.The Project has a participationof Rs.7675 Lacs as term loan from Consortium of Banks.

AUTHORITY FOR THE PRESENT ISSUE

Pursuant to section 81(1A) of the Companies Act 1956, the present issue has been authorized by a resolution passed by theBoard of Directors of the company at their meeting held on 05.07.2003 and a special resolution passed at the General Meetingof the shareholders of the company held on 28.07.2003. Subsequently an enhanced resolution was passed by the Board ofDirectors of the company at their meeting held on 02.02.2005 and a special resolution passed at the General Meeting of theshareholders of the company held on 28.02.2005.

GOVERNMENT/STATUTORY APPROVALS

The company has received all the necessary consents, licences, permissions and approvals from the Government and variousGovernment agencies required for its present business and the company can undertake the activities proposed by it in view ofthe present approvals and no further approvals from any Government authorities are required except as referred in page iv inRisk Factor no.4 in this Prospectus. It must, however, be distinctly understood that in granting the above consents/ licences/permissions/ approvals, the Government does not take any responsibility for the financial soundness of the Company or forthe correctness of any of the statements or any commitments made or opinions expressed.

The Company has received the following Government approvals/ licenses/ permissions:

1. Registration for power generation from the Ministry of Industry, Department of Industrial Policy and Promotion, Secretariat ofIndustrial Assistance vide letter dated 26.11.2002 bearing IEM Number: 2812/SIA/IMO/2002 in the name of Adhunik RollersPrivate Ltd. On subsequent application the above has been amended to be in the name of MSP Steel & Power Private Limited,vide letter dated 22.5.2003. An application to further amend the above in the name of MSP Steel and Power Limited is pending.

2. Registration for power generation with the proposed capacity of 225 MW from the Ministry of Industry, Department ofIndustrial Policy and Promotion, Secretariat of Industrial Assistance vide letter dated 02.03.2005 bearing IEM Number:927/SIA/IMO/2005 in the name of MSP Steel & Power Limited.

3. Registration for manufacture of sponge iron and ingots and billets from the Ministry of Commerce & Industry, Departmentof Industrial Policy and Promotion, Secretariat of Industrial Assistance vide letter dated 25.02.2005 bearing IEM Number:844/SIA/IMO/2005 in the name of MSP Steel and Power Limited.

4. Registration for manufacture of sponge iron, pig iron, ingots and billets,re-rolled products from the Ministry of Commerce& Industry, Department of Industrial Policy and Promotion, Secretariat of Industrial Assistance vide letter dated23.10.2003 bearing IEM Number: 3063/SIA/IMO/2003 in the name of MSP Steel and Power Limited.

5. Registration for manufacture of Coal Washery from the Ministry of Commerce & Industry, Department of Industrial Policyand Promotion, Secretariat of Industrial Assistance vide letter dated 20.05.2004 bearing IEM Number 1762/SIA/IMO/2004in the name of MSP Steel and Power Limited.

6. Permission to establish sponge iron plant in Raigarh, Chhattisgarh from Chhattisgarh Environment Conservation Boardvide letter no 1769/B-301/TS/CECB/2003 dated 20.05.2003.

7. Consent received from Chhattisgarh Environment Conservation Board under section 21 of the Air (Prevention & Control ofPollution) Act, 1981 for production of 100000 tonnes per annum of Sponge Iron for Kiln I vide consent dated 30/10/2004and letter no. 4385/TS/CECB/2004.

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8. Entered into a Memorandum of Understanding with the Chhattisgarh State Industrial Development Corporation Ltd(CSIDC) executed on 03.02.2003, for proposed investment of Rs 17,359 Lacs.

9. Central Excise Registration Certificate from Assistant Commissioner of Central Excise, Central Excise and CustomDivision, Bilaspur, dated 14.08.2003, bearin Registration No: TEMPE1249FXM001 for manufacturing excisable goods atJamgaon, Raigarh, Chattisgarh, 496 001.

10. Certificate of Registration with the West Bengal Sales Tax, vide their letter dated 25.08.2003, issued by commercial taxofficer, Jorabagan Charge, bearing No 19451616126, in favour of MSP Steel and Power Private Limited, in lieu of RC No:JB/549B, dated 16.04.1993.

11. Certificate of Registration with the Central Sales Tax, Raigarh, vide their letter-dated 10.03.2003, issued by commercialtax officer, Raigarh Circle, bearing No RGH/RGH/2816, in favour of MSP Steel and Power Private Limited.

12. Certificate of Registration with the Central Sales Tax, West Bengal, vide their letter dated 16.04.1993, amended on25.08.2003 issued by commercial tax officer, Jorabagan Charge, bearing No 19451616223, in favour of MSP Steel andPower Private Limited, in lieu of RC No: 377B(JB) Central, dated 16.04.1993.

13. Certificate of Registration with the Madhya Pradesh Sales Tax, vide their letter no: RGH/RGH/31 dated 29.05.2003,issued by commercial tax officer, Raigarh Circle, bearing no: 11/04/RGH-4882/6 in favour of MSP Steel and PowerPrivate Limited, valid with effect from 28.05.2003.

14. Sanction of Power Supply to the extent of 2000 KVA at 33 KV at village Jamgaon, District Raigarh from Cahttisgarh StateElectricity board vide letter no. CE/BR/Comm/HT/R/9040 dated 03/01/2004 in phased manner. 1000 KVA is available withimmediate effect and 2000 KVA w.e.f. October 2004.

15. Permission to draw water from underground source/ river from State Investment Promotion Board, Chattisgarh WaterResources Division, vide letter no 454/SIPB/41/02 dated 06/05/2003.

16. No Objection Certificate from the Panchayat.

17. Certificate of Registration under the Service Tax Rules 1994 with the Central Excise department for payment of Servicetax on service of goods transport agency bearing no: 38/GTA/ST/RGH/2005 dated 28.01.2005, issued by SuperintendentCentral Excise, Range Raigarh in favour of MSP Steel and Power Limited, valid till the holder carries on the activity.

18. Approval for linkage of non coking coal from Korba/Raigarh Coal Fields from Joint Industrial Advisor Ministry of steel videtheir letter dated 23rd January 2004 bearing no. 15(9)/2003-IDW. It has also received approval of rail linkage fortransportation of 30,000 MT of iron ore of different sizes from Basua Iron Ore mines per month, to the Raigarh railwaysiding in Chattisgarh. The Company has received clearance from the Chief Freight Traffic Manager -South East CentralRailway Bilaspur for construction of Private Railway Siding at Jamgaon, which will help reduction in both cost oftransportation and time taken in transportation and will enhance the bottom-line of the company in the long term perspective.

19. Approval for linkage of non-coking coal from MCL from the Ministry of Coal & Mines to the Sponge Iron Plant of MSP Steel& Power Ltd vide letter dated 24th September 2004 bearing no. 23021/17/2003-CPD.

20. NOC from Chattisgarh Pollution Control Board for establishing steel melting shop, captive power plant, sponge iron Kiln IIand rolling mill.

21. Allotment of ironore from the mines of National Mineral development Corporation.

The Company has applied for the following Government approvals/ licenses/ permissions:

1. Permission to operate Kiln II from Chhattisgarh Environment Conservation Board.

PROHIBITION BY SEBI

The company, its directors/promoters and persons in control, its subsidiaries, its associates, its directors, its promoters, othercompanies/entities promoted by the promoters of MSP Steel & Power Ltd., and companies/entities with which the company’sdirectors are associated as directors have not been prohibited from assessing/operating in the capital markets or restrainedfrom buying /selling/dealing in securities under any order or discretion passed by SEBI.

ELIGIBILITY FOR THE ISSUE

Since MSP Steel & Power Limited does not meet the track record criteria as specified in Clause 2.2.1 of the SEBI Guidelines,Hence the company is coming out with an issue under Clause 2.2.2, which is stated as hereunder:

1. The project has at least 15% participation by Financial Institutions/ Scheduled Commercial Banks, of which at least 10%comes from the appraiser(s). In addition to this, at least 10% of the issue size shall be allotted to QIBs, failing which the fullsubscription monies shall be refunded.

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The entire project has 55.68% participation by Financial Institutions/ Scheduled Commercial Banks.

a.Rs. In Lacs

Sl No. Name of Banks Amount % of Total Project Cost

1 ING Vysya Bank (Appraiser) 2,100.00 15.24%

2 UCO Bank 1,600.00 11.61%

3 Indian Overseas Bank 1,500.00 10.88%

4 Andhra Bank 975.00 7.07%

5 State Bank of India 1500.00 10.88%

TOTAL 7,675.00 55.68%

b. The company has reserved Rs.160 lacs being 10% of Rs.1600 lacs (Issue Size) for equity participation from QIBs.

2. The minimum post issue face value capital of the company shall be Rs. 1000 lacs.

The post issue capital of the company will be Rs. 5810.00 lacs

Pursuant to Clause 2.2.2A of the SEBI (Disclosure and Investor Protection) Guidelines, 2000

“The company shall not make an allotment pursuant to a public issue or offer for sale of equity shares or any securityconvertible into equity shares unless in addition to satisfying the conditions mentioned in Clause 2.2.1 or 2.2.2 as the casemay be, the prospective allottees are not less than one thousand (1000) in number.”

Pursuant to Clause 2.8 of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 the Company has made firmarrangements for the stated Means of Finance as follows:

Rs in Lacs

Phase I Phase II

Particulars Integrated Ancillary Other Utilities TOTALSteel Projects and General

Project CorporatePurposes

A. Total Means of finance required 9974.03 2436.9 1372.24 13783.17

B. Amount to be raised through public issue 1600.00 – – 1600.00

C. Amount Excluding the public Issue (A-B) 8374.03 2436.9 1372.24 12183.17

Total @ 75% of (C) 6280.52 1827.67 1029.18 9137.37

Particulars Integrated Ancillary Other Utilities TOTALSteel Projects and General


A. Loan sanctioned from ING Vysya Bank, 6175.00 1500.00 – 7675.00UCO Bank, Indian Overseas Bank,Andhra Bank and State Bank of India.

B. Already Brought in By the Promoter Group 1888.50 936.90 1372.24 4197.64

C. Finance arranged through verifiable means 8063.50 2436.90 1372.24 11872.64

As per clause 2.2.2B of SEBI (DIP) Regulations:

(ii) “Project” means the object for which the monies proposed to be raised to cover the objects of the issue.

(v) As per Section 2.2.2B(v) of SEBI (Disclosure and Investors’ Protection) Guidelines, inserted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003, ‘Qualified Institutional Buyer’ shall mean:

a. Public financial institution as defined in section 4A of the Companies Act, 1956;

b. Scheduled Commercial banks;

c. Mutual funds;

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d. Foreign Institutional Investor registered with SEBI;

e. Multilateral and Bilateral development financial institutions;

f. Venture Capital funds registered with SEBI;

g. Foreign Venture Capital investors registered with SEBI;

h. State Industrial Development Corporations;

i. Insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA);

j. Provident Funds with minimum corpus of Rs. 25 crores;

k. Pension Funds with minimum corpus of Rs. 25 crores;

Based on the above data the Lead Manager has certified vide its certificate dated 25th April, 2005 that the Company is fulfilling thecriteria of eligibility norms for public issue by unlisted company as specified in the Guideline 2.2.2 of SEBI (DIP) Guidelines, 2000.

DISCLAIMERS

SEBI DISCLAIMER CLAUSE

AS REQUIRED, A COPY OF THIS PROSPECTUS WOULD BE SUBMITTED TO THE SECURITIES AND EXCHANGE BOARDOF INDIA.

IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE PROSPECTUS TO SEBI SHOULD NOT IN ANYWAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOTTAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FORWHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OROPINIONS EXPRESSED IN THE PROSPECTUS. THE LEAD MANAGER, MICROSEC INDIA LIMITED HAS CERTIFIEDTHAT THE DISCLOSURES MADE IN THE PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITYWITH SEBI (DISCLOSURES AND INVESTOR PROTECTION) GUIDELINES 2000, IN FORCE FOR THE TIME BEING. THISREQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT INTHE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLEFOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE PROSPECTUS,THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGESITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGERMICROSEC INDIA LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 19TH JANUARY, 2004IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS 1992 WHICH READS AS FOLLOWS :

1. “WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKECOMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALSIN CONNECTION WITH THE FINALISATION OF THE PROSPECTUS PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS ANDOTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THEOBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THEDOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY.

WE CONFIRM THAT:

a) THE PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS ANDPAPER RELEVANT TO THE ISSUE;

b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE GUIDELINES,INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY INTHIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

c) THE DISCLOSURES MADE IN THE PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THEINVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE.

3. WE CONFIRM THAT BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE PROSPECTUS AREREGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID.

4. WE CONFIRM THAT OUR LIABILITY AS REFERRED IN CLAUSE 5.1.1 OF THE SEBI DIP GUIDELINES SHALLCONTINUE EVEN AFTER THE COMPLETION OF ISSUE PROCESS.

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5. WE CERTIFY THAT THE WRITTEN CONSENT HAS BEEN OBTAINED FROM SHAREHOLDERS FOR INCLUSION OFTHEIR SECURITIES AS PART OF PROMOTERS CONTRIBUTION SUBJECT TO LOCK IN AND THE SECURITIESFORMING PART OF PROMOTERS CONTRIBUTION SUBJECT TO LOCK IN, WILL NOT BE DISPOSED/SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFTPROSPECTUS WITH THE BOARD TILL THE DATE OF COMMENCEMENTOF LOCK IN PERIOD AS STATED IN THEDRAFT PROSPECTUS

THE FILING OF PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDERSECTION 63 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OROTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI, FURTHERRESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER (S) ANY IRREGULARITIESOR LAPSES IN THE PROSPECTUS.”

DISCLAIMER STATEMENT FOR THE STOCK EXCHANGE ASSOCIATIONS:

DISCLAIMER CLAUSE OF THE STOCK EXCHANGE, MUMBAI (BSE) - THE DESIGNATED STOCK EXCHANGE

As required, a copy of this Prospectus has been submitted to The Stock Exchange, Mumbai (BSE). “The Stock Exchange,Mumbai (“BSE”) has given vide its letter no. -– DCS/SG/SM/2004 Dated 14th September 2004 permission to this company touse the Exchange’s name in this Offer document as one of the Stock Exchanges on which this company’s securities areproposed to be listed. The Exchange has scrutinized this offer document for its limited internal purpose of deciding on thematter of granting the aforesaid permission to this company. The Exchange does not in any manner-

i. Warrant, certify or endorse the correctness or completeness of any of the contents of this offer document, or

ii. Warrant that this Company’s securities will be listed or continue to be listed on the Stock Exchange, or

iii. Take any responsibility for the financial or other soundness of this Company, it’s promoters, it’s management or anyScheme or Project of this Company.

And it should not, for any reason be deemed or construed that this offer document has been cleared or approved by theExchange. Every person who desires to apply for or otherwise acquires any securities of this company may do so pursuant toindependent inquiry, investigation and analysis and shall not have any claim against the Exchange, whatsoever, by reason ofany loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether byreason of anything stated or omitted to be stated herein or for any other reason whatsoever.

DISCLAIMER CLAUSE OF THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)

As required, a copy of this Prospectus has been submitted to National Stock Exchange of India Limited (hereinafter referred toas NSE). NSE has given vide its letter NSE/LIST/6573-K dated 5th October 2004, permission to the company to use theExchange’s name in this Prospectus as one of the stock exchanges on which the company’s securities are proposed to belisted subject to the Company fulfilling the various criteria for listing including the one related to paid up capital (i.e. the paid upcapital shall not be less than 10 crores and market capitalization shall not be less than Rs. 25 crores at the time of listing). TheExchange has scrutinized this Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaidpermission to the Company. It is to be distinctly understood that the aforesaid permission given by NSE should not in any waybe deemed or construed that the Prospectus has been cleared or approved by NSE; nor does it in any manner warrant, certifyor endorse the correctness or completeness of any of the contents of this Prospectus; nor does it warrant that the company’ssecurities will be listed or continue to be listed on the Exchange; nor does it take any responsibility for the financial or othersoundness of the company, its promoter, its management or any scheme or project of the company.

Every person who desires to apply for or otherwise acquires any securities of the Company may do so pursuant to independentenquiry, investigation and analysis and shall not have any claim against the exchange, whatsoever, by reason of any losswhich may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason ofanything stated or omitted to be stated herein or any other reason whatsoever.

DISCLAIMER STATEMENT FROM THE ISSUER

The company accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisement or anyother material issued by or at the instance of the company and that anyone placing reliance on any other source of informationwould be doing so at his own risk.

JURISDICTION

This offer is made in India to persons resident in India including Indian nationals resident in India who are majors, HinduUndivided Families, Companies, Corporate Bodies and Societies registered under the applicable laws in India and authorisedto invest in shares, Indian mutual funds registered with the SEBI, Indian financial institutions, commercial banks and regionalrural banks, co-operative banks (subject to RBI permission), trusts (registered under Societies Registration Act, 1860, or any

6

other trust law and are authorised under their constriction to hold and invest in shares) and to NRI’s, OCB’s, and FIIs asdefined under the Indian laws. This prospectus does not, however, constitute and offer to sell or an invitation to subscribe toshares issued hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in suchjurisdiction. Any person into whose possession this prospectus comes is required to inform himself about and to observe anysuch restrictions. Any disputes arising out of such issue will be subject to the jurisdiction of courts in Kolkata.

FILING

A copy of the Prospectus to be filed under Section 60 of the Companies Act would be delivered for registration to ROC. A copyof the Prospectus would be filed with SEBI (Eastern Region) situated atL&T Chambers,3rd floor 16,Camac Street, Kolkata-700017. A copy of the documents referred to on Page 141 of the Prospectus has been kept open for public inspection at theRegistered Office of the Company.

LISTING

Initial listing applications have been made by the company to The Stock Exchange, Mumbai (Designated Stock Exchange)and The National Stock Exchange of India Limited (NSE) for permission to list the equity shares and for an official quotation ofthe equity shares of the Company.

In case the permission to deal in and for official quotation of the equity shares is not granted by above mentioned StockExchanges, the company shall forthwith repay without interest, all monies received from applicants in pursuance of thisProspectus and if such money is not paid within eight days from which the company is liable to repay it, the company shallrepay as prescribed under section 73(2) of the Companies act 1956.

The company with the assistance of the lead manager shall ensure that all steps for the completion of the necessary formalitiesfor listing and commencement of trading at the stock exchange mentioned above are taken within seven working days offinalisation of the basis of allotment for the Issue.

UNDERTAKING FROM PROMOTERS AND DIRECTORS

The Company accepts full responsibility for the accuracy of the information given in the prospectus and confirmsthat to the best of their knowledge and belief, there are no other facts, their omission of which make any statement inthe Prospectus misleading and they further confirm that they have made all reasonable enquiries to ascertain suchfacts. The issuer further declares that the stock exchanges to which an application for official quotations are proposedto be made does not take any responsibility for the financial soundness of this offer or for the price at which the equityshares are offered or for the correctness of the statement made or opinions expressed in this prospectus. Thepromoters/directors declare and confirm that no information/material likely to have a bearing on the decision ofinvestors in respect of the shares offered in terms of this prospectus has been suppressed, withheld and/or incorporatedin the manner that would amount misstatement/misrepresentation, and in the event of its transpiring at any point oftime till allotment/refund, as the case may be, that any information/material has been suppressed/with held and/oramounts to a misstatement/misrepresentation, the promoter/directors undertake to refund the entire application moniesto all the subscribers within 7 days thereafter without prejudice to the provisions of section 63 of the Companies Act.

CORPORATE GOVERNANCE

The SEBI guidelines in respect of Corporate Governance shall be applicable to the company immediately after listing of itsshares on the stock exchange. The company undertakes that it shall take the necessary steps to comply with all the requirementsof the guidelines on corporate governance as would be applicable to it upon listing of its shares. To ensure highest standardof corporate governance the company has already appointed four additional independent director namely Mr. Akshay KumarSingh, Mr. Niranjan Dash, Mr. Navneet Jagatramka and Mr. Arvind Kumar Saraf on the Board of the company w.e.f 12thDecember 2003.

In this regard, the company has already set up an audit committee and other committees as per the requirements of therevised guidelines. The details of the various Committees being formed by the company has been provided under Chapter VI:Company, Management and Project on page 89.

IMPERSONATION

Attention of applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act,which is reproduced below:

“any person who-

(a) Makes in a fictitious name an application to a company for acquiring, or subscribing of any Equity Shares therein, or

(b) Otherwise induces a company to allot, or register any transfer of Equity Shares therein to him, or any otherperson in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.”

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MINIMUM SUBSCRIPTION

If the Company does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue orif the subscription level falls below 90% after the closure of the issue on account of cheques having been returned unpaid orwithdrawal of applications, the Company shall forthwith refund the entire subscription amount received. If there is delaybeyond 8 days after the Company becomes liable to pay the amount, the Company shall pay interest as per Section 73 of theCompanies Act, 1956.

SHARE CERTIFICATES/ALLOTMENT LETTERS/REFUND ORDERS

Letter(s) of Allotment / Share Certificate (s) together with refund orders of value over Rs 1,500/-, if any, to allottees andLetter(s) of regret together with refund orders of value over Rs 1,500/- to non-allottees will be despatched by registered postand refunds of value Rs. 1,500/- and less will be despatched under certificate of posting at the applicant’s sole risk within 10weeks from the date of closure of the subscription list.

Adequate funds for the above purpose will be made available to the Registrar to the issue to ensure despatch of refund orders,allotment letters and share certificates by Registered Post / Certificate of Posting. The company agrees that -

(a) as far as possible allotment of securities offered to the public shall be made within 30 days of the closure of the publicissue.

(b) it shall pay interest @ 15% per annum if the allotment has not been made and the refund orders are not despatched to theinvestors within 30 days from the date of closure of the issue.

Despatch of share certificates/refund orders and demat credit would be completed and allotment and listing documents wouldbe submitted to the Stock Exchange within two working days of the finalisation of the basis of allotment. The listing and tradingof the securities offered through this Prospectus shall commence at the aforesaid stock exchange where they are proposed tobe listed within 7 working days of the date of finalisation of the basis of allotment.

ISSUE PROGRAMME

The subscription list will open at the commencement of banking hours and will close at the close of banking hours on the datesas mentioned below or earlier date at the discretion of the board of directors of the company (herein after referred to as ‘theboard’) but not before the close of the banking hours on the date mentioned under the caption “earliest closing”.

ISSUE OPENS ON : MONDAY, JUNE 20, 2005

ISSUE CLOSES ON : FRIDAY, JUNE 24, 2005

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ISSUE MANAGEMENT TEAM

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUEMICROSEC INDIA LTD KARVY COMPUTERSHARE PVT LTDAzimgunj House, 2nd Floor 46, Road No. 4, Street No. 17, Camac Street, Kolkata-700 017 Banjara Hills, Hyderabad – 500 034Ph: (033) 22829330 Tel: (040) 23312454, 23320251-53Fax: 91- 33-22829335 Fax: (040)-23311968E-Mail: [email protected] E-mail: [email protected] Registration No. INM 000010791 SEBI Regn. No. INR 000000221

AUDITORS LEGAL ADVISOR TO THE ISSUEJaiswal Kuldeep & Co. Khaitan & CoMall Enclave, Block B, Flat No 204, Emerald House 1B,13,Khudiram Bose Sarani, Kolkata 700 080 Old Post Office Street, Kolkata – 700 001Telephone: 033- 2221-6764 Tel.: (033) 22487000,22482221Fax: 91-33-2234-8192 Fax: (033) 22487656Email: [email protected] Email: [email protected]

BANKERS TO THE COMPANY BANKERS TO THE ISSUEState Bank of India HDFC Bank LimitedCommercial Branch, SEBI Regd. No.: INB100000063R.M. 1, 3rd Floor, Controlling Branch24, Park Street, 6, Royd Street, Abhilasha II, 1st Floor, Kolkata- 700 016Kolkata – 700016 Tel.: (033) 2474 2383/2384Telephone: 033-22168325 4/1, Fax: (033) 2486 0712

Email: [email protected]

ING VYSYA Bank ICICI BANK LIMITEDMiddleton Street, SEBI Regn. No.: INB100000004Kolkata – 700 071 Capital Market DivisionTelephone: 033-2280-0979 30, Mumbai Samachar Marg,

Fort, Mumbai - 400001UCO BANK Ltd Tel.: (022) 22655284/85/8615/1A, Gariahat Road, Fax: (022) 22611138Kolkata – 700 019 Email: [email protected]: 033-2240-7314

Indian Overseas Bank COMPLIANCE OFFICER & COMPANY SECRETARY13/3, Strand Road, Mr. Ashok SarawagiKolkata – 700001 MSP Steel & Power LimitedTelephone: 033- 2248-6875 16/S, Block A, 2nd. Floor,

New Alipore, Kolkata – 700 053The Federal Bank Limited Tel: (033) 2457 0038/ 3940,4/1, Lala Lajpat Rai Sarani, Kolkata –700 020 Fax: (033) 2458 2239Telephone: 033-2283-2452 E-mail: [email protected]

Andhra Bank58, Chowringhee Road, Kolkata- 700071Telephone: 033-22825660/3459/8435

Citibank N.A.40,Chowringhee Road, Kolkata –700 071Telephone: 033-2288-0038

Investors can contact the Compliance Officer in case of any pre-issue / post-issue related problems such as non-receipt ofletters of allotment / share certificates / refund orders, etc.

TRUSTEES

This being an issue of Equity Shares, appointment of trustees is not required.

CREDIT RATING

This being an issue of Equity Shares, credit rating is not required.

UNDERWRITERS TO THE ISSUE

Underwriting being optional, the company does not propose to underwrite the issue.

9


II. CAPITAL STRUCTURE OF THE COMPANY

a. PARTICULARS Nominal AggregateValue(Rs) Value(Rs)

A. AUTHORISED CAPITAL

6,00,00,000 Equity shares of Rs 10/-each 600,000,000 600,000,000

B. ISSUED, SUBSCRIBED AND PAID UP

4,21,00,000 Equity Shares of Rs 10/- each * 421,000,000 431,729,000

C. NET OFFER TO PUBLIC

1,60,00,000 Equity Shares of Rs 10/- each fully paid up 160,000,000 160,000,000

(I) Out of which 10% to be compulsorily subscribed by QIBs

16,00,000 Equity Shares of Rs 10/- each at par 16,000,000 16,000,000

(II) Remaining to all other categories of Public

1,44,00,000 Equity Shares of Rs 10/- each at par 144,000,000 144,000,000

D. PAID UP SHARE CAPITAL AFTER OFFER

5,81,00,000 Equity Shares of Rs 10/- each fully paid up 581, 000,000 581,000,000

E. SHARE PREMIUM ACCOUNT

Existing 10,729,000

After the Issue 10,729,000

Note:

1. 1,30,800 equity shares have been allotted at a premium of Rs. 15/- on 1st March,2002.

2. 6,40,000 equity shares have been allotted at a premium of Rs. 15/- on 1st March,2003.

3. 31,14,000 equity shares have been allotted at a premium of Rs. 15/- on 30 August 2003

4. 2,68,06,000 equity shares have been allotted at par on 31st March 2005.

5. 2,85,400 equity shares have been allotted at par on 8th April 2005.

Notes forming part to capital structure

1. Details of the increase in authorised capital

Sl Particulars of Increase Date of MeetingNo.

1. Rs. 10 Lacs Incorporation

2. From Rs. 10 Lacs to Rs. 25 Lacs 24.11.1992





7. From Rs. 450 Lacs to Rs. 1600 Lacs 28. 07.2003





10

2. Capital History of the Company

The existing share capital of the company has been subscribed and allotted as under:

Date of Number Face Issue Consideration Value (Rs) Date on RemarksAllotment of equity Value Price (cash, bonus, which fully

shares (Rs) (Rs) consideration paid upother than

Cash)

Incorporation 4,000 10 10 Cash 40,000 18.11.1968 Allotment toinitial share

holders

31.03.1969 8,500 10 10 Cash 85,000 31.03.1969 Allotment

31.03.1970 13,000 10 10 Cash 130,000 31.03.1970 Allotment

31.03.1971 10,000 10 10 Cash 100,000 31.03.1971 Allotment

31.03.1978 22,500 10 10 Cash 225,000 31.03.1978 Allotment

31.03.1978 29,000 10 10 Consideration 290,000 31.03.1978 Allotmentother than Cash

30.03.1993 10,000 10 10 Cash 100,000 30.03.1993 Allotment

30.03.1994 105,000 10 10 Cash 1,050,000 30.03.1994 Allotment

29.03.1996 197,500 10 10 Cash 1,975,000 29.03.1996 Allotment

31 .03.1997 80,000 10 10 Cash 800,000 31.03.1997 Allotment

31.03.1999 390,000 10 10 Cash 3,900,000 31.03.1999 Allotment

01.03.2002 130,800 10 25 Cash 3,270,000 01.03.2002 Allotment

01.03.2003 597,200 10 25 Cash 14,930,000 01.03.2003 Allotment

01.03.2003 42,800 10 25 Consideration 1,070,000 01.03.2003 Allotmentother than Cash

30.08.2003 3,114,000 10 25 Cash 77,850,000 30.08.2003 Allotment

30.09.2003 4,754,300 @ 1:1 Bonus Nil 30.09.2003 BonusAllotment

31.12.2003 4,500,000 10 10 Cash 45,000,000 31.12.2003 Allotment

31.01.2004 1,000,000 10 10 Cash 10,000,000 31.01.2004 Allotment

31.03.2005 26,806,000 10 10 Cash 268,060,000 31.03.2005 Allotment

08.04.2005 285,400 10 10 Cash 2,854,000 08.04.2005 Allotment

Total 42,100,000 431,729,000

Note:

@ One fully paid Bonus share has been issued to the existing shareholders for every one equity share held on 30.09.2003.

# The face value on allotment was Rs.100/. The Equity share of Rs.100/each was split into 10 shares of Rs. 10/ each by wayof Resolution passed at the Extra Ordinary meeting of the Share Holders of the Company held on 28th July 2003.

11


3. Promoter Contribution and Lock In

Sl Date of Date when Consideration No. of Face Issue % of Post Lock inNo Allotment/ made fully Shares Value Price Issue Period

Purchase paid up Capital

1 18.11.1968 18.11.1968 Cash 1,000 10 10 0.00% 1 Year

2 31.03.1970 31.03.1970 Transfer 4,000 10 10 0.01% 1 Year

3 02.05.1984 02.05.1984 Cash 1,000 10 10 0.00% 1 Year

4 09.07.1984 09.07.1984 Transfer 10,000 10 10 0.02% 1 Year

5 20.09.2002 20.09.2002 Transfer 5,000 10 10 0.01% 1 Year

6 05.08.2003 05.08.2003 Transfer 975,750 10 10 1.68% 1 Year

7 30.08.2003 30.08.2003 Cash 1,504,000 10 25 2.59% 1 Year

8 30.09.2003 30.09.2003 Bonus 2,500,750 10 1:1 4.30% 1 Year

9 31.12.2003 31.12.2003 Cash 3,000,000 10 10 5.16% 1 Year

10 31.01.2004 31.01.2004 Cash 500,000 10 10 0.86% 1 Year

11 31.03.2005 31.03.2005 Cash 13,226,000 10 10 22.76% *3 Years

Total 21,727,500 37.40%

* Out of the total 13,226,000 shares allotted on 31.03.2005 to the promoters and promoting companies, 11620000 equityshares will be locked in for 3 years and the balance 1,606,000 shares will be locked in for 1 year.

� The lock in period shall commence from the date of allotment of shares in the public issue or commencement ofcommercial operations, which ever is later

� The securities forming part of promoters’ contribution that are issued last have been locked in first.

� The securities which are subject to lock in carry the inscription “non-transferable”.

Note: In case the final allotment of shares exceeds 1,60,00,000 shares on account of rounding off to the nearest integer asdecided at the time of allotment, the number of shares to be locked in for 3 years shall be calculated on the increased allottedshare capital.

4. Promoters’ Contribution and lock-in period in respect of promoters whose name figures in the prospectus aspromoters in the paragraph on “ Promoters and their background”:

A. Details of aggregate shareholding of the promoters:

Sl Date of Consideration No. of Face Issue % of Post Lock inNo Allotment/ Purchase Shares Value Price Issue Capital Period

1 Puranmal Agrawal

18-Nov-68 Cash 1000 10 10 0.00 1 year

9-Jul-84 Transfer 5000 10 10 0.01 1 year

30-Aug-03 Cheque 40000 10 25 0.07 1 year

30-Sep-03 Bonus 46000 10 10 0.08 1 year

31-Mar-05 Cheque 50000 10 10 0.09 3 years

Sub Total 142000 0.24

2 Suresh Agrawal


30-Aug-03 Cheque 16000 10 25 0.03 1 year

30-Sep-03 Bonus 22000 10 – 0.04 1 year

31-Mar-05 Cheque 50000 10 10 0.09 3 years

Sub Total 94000 0.17

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3 Manish Agrawal


30-Sep-03 Bonus 2000 10 – 0.00 1 year

31-Mar-05 Cheque 300000 10 10 0.52 3 years

Sub Total 304000 0.52

4 Saket Agrawal


30-Sep-03 Bonus 2000 10 – 0.00 1 year

31-Mar-05 Cheque 200000 10 10 0.34 3 years

Sub Total 204000 0.35

5 MSP Infotech Pvt. Ltd.

30-Aug-03 Cheque 642000 10 25 1.10 1 year

30-Sep-03 Bonus 642000 10 – 1.10 1 year

31-Dec-03 Cheque 1000000 10 10 1.72 1 year

31-Jan-04 Cheque 500000 10 10 0.86 1 year

31-Mar-05 Cheque 4330000 10 10 7.45 3 years

Sub Total 7114000 12.24

6 Larigo Investments Pvt. Ltd

5-Aug-03 Transfer 467500 10 10 0.80 1 year

30-Sep-03 Bonus 467500 10 – 0.80 1 year

31-Dec-03 Cheque 1000000 10 10 1.72 1 year

31-Mar-05 Cheque 1900000 10 10 3.27 3 years

Sub Total 3835000 6.60

7 Adhunik Gases Ltd.

20-Sep-02 Transfer 5000 10 10 0.01 1 year

30-Aug-03 Cheque 424000 10 25 0.73 1 year

30-Sep-03 Bonus 429000 10 – 0.74 1 year

31-Dec-03 Cheque 1000000 10 10 1.72 1 year

31-Mar-05 Cheque 2146000 10 10 3.69 3 years

Sub Total 4004000 6.89

8 MSP Properties India Pvt. Ltd.


30-Aug-03 Cheque 382000 10 25 0.66 1 year

30-Sep-03 Bonus 890250 10 – 1.53 1 year

31-Mar-05 Cheque 1606000 10 10 2.76 1 year

31-Mar-05 Cheque 2644000 10 10 4.56 3 years

Sub Total 6030500 10.38

Total (A) 21727500 37.40

None of the equity shares which have been considered for lock in for 3 years are ineligible as per Clause 4.6 of the SEBI (DIP)Guidelines 2000 as amended.

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B. Aggregate Shareholding of The Promoters Group


1 Suresh Kumar Agarwal (HUF)

31-Mar-87 Transfer 10060 10 10 0.02 1 year

30-Sep-03 Bonus 10060 10 – 0.02 1 year


2 Ramanand Puranmal (HUF)



30-Sep-03 Bonus 7880 10 – 0.01 1 year


3 Estate of Late Ramanand Agarwal

30-Oct-68 Cash 1000 10 10 0.00 1 year


31-Mar-71 Cheque 1000 10 10 0.00 1 year


30-Sep-03 Bonus 9810 10 – 0.02 1 year


4 Puranmal Agarwal (HUF)


30-Sep-03 Bonus 12000 10 – 0.02 1 year


5 Nisha Agarwal


30-Sep-03 Bonus 5750 10 – 0.01 1 year

31-Mar-05 Cheque 300000 10 10 0.52 1 year

Sub Total 311500 0.54

6 Pranay Agarwal

30-May-85 Transfer 500 10 10 0.00 1 year

30-Sep-03 Bonus 500 10 – 0.00 1 year

31-Mar-05 Cheque 300000 10 10 0.52 1 year

Sub Total 301000 0.52

7 Priyanka Agarwal

10-Feb-97 Transfer 1000 10 10 0.00 1 year

30-Sep-03 Bonus 1000 10 – 0.00 1 year

31-Mar-05 Cheque 50000 10 10 0.09 1 year


8 Kisturi Devi Agarwal

31-Mar-71 Cheque 1500 10 10 0.00 1 year

30-Mar-78 Cheque 4000 10 10 0.01 1 year



30-Sep-03 Bonus 11000 10 – 0.02 1 year


14


9 Kiran Agarwal

2-May-84 Transfer 4000 10 10 0.01 1 year

10-Sep-99 Cheque 1000 10 10 0.00 1 year

30-Sep-03 Bonus 5000 10 10 0.01 1 year

31-Mar-05 Cheque 450000 10 10 0.77 1 year

Sub Total 460000 0.79

10 K C Texofine Pvt. Ltd.

30-Aug-03 Cheque 316000 10 10 0.54 1 year

30-Sep-03 Bonus 316000 10 – 0.54 1 year

31-Dec-03 Cheque 500000 10 10 0.86 1 year

31-Mar-05 Cheque 2800000 10 10 4.82 1 year

Sub Total 3932000 6.77

11 MSP Metallics Ltd.

31-Mar-99 Cheque 50000 10 10 0.09 1 year

30-Aug-03 Cheque 640000 10 10 1.10 1 year

30-Sep-03 Bonus 690000 10 – 1.19 1 year

31-Dec-03 Cheque 1000000 10 10 1.72 1 year

Sub Total 2380000 4.10

12 Raj Securities Ltd.

29-Mar-96 Cheque 40000 10 10 0.07 1 year

31-Mar-99 Cheque 30000 10 10 0.05 1 year

1-Mar-03 Cheque 28000 10 10 0.05 1 year

30-Aug-03 Cheque 348000 10 10 0.60 1 year

30-Sep-03 Bonus 446000 10 – 0.77 1 year

31-Jan-04 Cheque 500000 10 10 0.86 1 year

31-Mar-05 Cheque 2480000 10 10 4.27 1 year

Sub Total 3872000 6.66

13 Rama Alloys Pvt. Ltd.


30-Sep-03 Bonus 47500 10 – 0.08 1 year

31-Mar-05 Cheque 2870000 10 10 4.94 1 year

Sub Total 2965000 5.10

14 Jagran Vyapar Pvt. Ltd.



30-Aug-03 Cheque 306000 10 10 0.53 1 year

30-Sep-03 Bonus 651000 10 – 1.12 1 year

31-Mar-05 Cheque 800000 10 10 1.38 1 year

Sub Total 2102000 3.62

15 AAESS Trade Links Pvt. Ltd.

31-Mar-05 Cheque 1900000 10 10 3.27 1 year

Sub Total 1900000 3.27

16 Dexo Trading Pvt. Ltd.

31-Mar-05 Cheque 850000 10 10 1.46 1 year

Sub Total 850000 1.46

15



17 Sikhar Commotrade Pvt. Ltd.

31-Mar-05 Cheque 750000 10 10 1.29 1 year

Sub Total 750000 1.29

Total (B) 19977000 34.39%

C. Persons Acting in Concert

Sl No. Name of shareholder Consideration No. Of Face % of post Lock inShares Value issue period

capital

1 Sandeep Agrawal Cash 27700 10 0.04% 1 year

2 Ruchika Chowdhury Cash 23700 10 0.04% 1 year

3 Arun Kumar Somani Cash 15000 10 0.03% 1 year

4 Kishan Daruka Cash 10000 10 0.02% 1 year

5 Rajgang Traders Pvt Ltd Cash 10000 10 0.02% 1 year

6 Sunita Daruka Cash 10000 10 0.02% 1 year

7 Reeetika Jhunjhunwala Cash 9700 10 0.02% 1 year

8 Anil Somani Cash 2000 10 0.00% 1 year

9 Vijay Laxmi Agrawal Cash 2000 10 0.00% 1 year

10 Accurate Investment Co. Ltd Cash 40000 10 0.07% 1 year

11 Jupiter Associates Limited Cash 20000 10 0.03% 1 year

12 Sree Seating Systems (P) Ltd Cash 90000 10 0.15% 1 year

13 Arion Commercial (P) Ltd Cash 100000 10 0.17% 1 year

14 Shringhar Mercantile Pvt Ltd Cash 35400 10 0.06% 1 year

Total (C ) 395500 0.67%

PARTICULARS No. of Shares % of ShareholdingPost Issue

Sub Total (A) 21727500 37.40%

Sub Total (B) 19977000 34.39%

Sub Total (C) 395500 0.67%

Grand Total 42100000 72.46%

� The lock in period shall commence from the date of allotment of shares in the public issue.

� The entire pre-issue shareholding shall be locked in for a period of atleast one year.

� In case the number of shares allotted in the public issue is more than 1,60,00,000, shares due to rounding off to thenearest integer, the number of shares to be locked in for three years shall be increased to make 20% of the post issuedcapital.

� The equity shares of the company, which have been transferred in the name of the promoters and promoters group, havebeen purchased after payment of adequate consideration in cash/cheque.

16

5. The following Directors of Promoters where promoter is a Company hold shares in the company as follows.

Details of the holding of Directors of the Promoting Companies

1. MSP Infotech Private Limited

Director No. of Shares

Mr. Saket Agrawal 204000

Mr. Manish Agrawal 304000

Mr. Pramod Goel Nil

2. MSP Properties India Private Limited


Mr. Puranmal Agrawal 142000

Mr. Suresh Kumar Agrawal 94000

Mrs. Kiran Agrawal 460000

Mrs. Nisha Agrawal 311500

3. Larigo Investments Private Limited


Mr. Suresh Kumar Agrawal 94000

Mrs.Kiran Agrawal 460000

Mr. Kailash Chand Choudhary Nil

4. Adhunik Gases Limited


Mr. Puranmal Agrawal 142000

Mr. Dalbir Chibbar Nil

Mr. Sawal Ram Beniramka Nil

6. There were no sales or purchases of the equity shares of the Company by the Directors of the Promoter where promoteris a Company during the period of six months preceding the date on which the prospectus was filed with the Board.

7. The promoters’ contribution has been brought-in is not less than the specified minimum lot of Rs. 25,000/- per applicationfrom each individual and Rs. 1,00,000/- from companies.

8. The details of the ten largest shareholders as on date of filing with ROC.

Sl No Name of Shareholder No of shares % holding*

1 MSP Infotech Pvt. Ltd. 7114000 16.90%

2 MSP Properties (I) Pvt. Ltd. 6030500 14.32%

3 Adhunik Gases Limited 4004000 9.51%

4 K C Texofine Pvt. Ltd. 3932000 9.34%

5 Raj Securities Limited 3872000 9.20%

6 Larigo Investment Pvt Ltd 3835000 9.11%

7 Rama Alloys Private Limited 2965000 7.04%

8 MSP Metallics Ltd. 2380000 5.65%

9 Jagraan Vyapaar Ltd. 2102000 4.99%

10 AAESS Trade Links Pvt. Ltd. 1900000 4.51%

* Based on the issued share capital of 42100000 shares.

17


9. The details of the ten largest shareholders as on 10 days prior to the date of filing with ROC

Sl No Name of Shareholder No of shares % Holding*

1 MSP Infotech Pvt. Ltd. 7114000 16.90%

2 MSP Properties (I) Pvt. Ltd. 6030500 14.32%

3 Adhunik Gases Limited 4004000 9.51%

4 K C Texofine Pvt. Ltd. 3932000 9.34%

5 Raj Securities Limited 3872000 9.20%

6 Larigo Investment Pvt Ltd 3835000 9.11%

7 Rama Alloys Private Limited 2965000 7.04%

8 MSP Metallics Ltd. 2380000 5.65%

9 Jagraan Vyapaar Ltd. 2102000 4.99%

10 AAESS Trade Links Pvt. Ltd. 1900000 4.51%

* Based on the issued share capital of 42100000 shares.

10. The details of the ten largest shareholders two years prior to the date of filing with ROC

Sl No Name of Shareholder No of shares % Holding

1 Dexo Trading Pvt Ltd 157,250 9.59%

2 Digvijay Tracon Pvt Ltd 120,000 7.32%

3 Kanhaiya Consultancy 120,000 7.32%

4 Raj Securitiesltd 98,000 5.97%

5 Mohit Vyapaar Pvt Ltd 80,000 4.88%

6 Bhomia Estate Pvt Ltd 72,000 4.39%

7 Jagran Vyapaar Pvt Ltd 60,000 3.66%

8 Namod Consultancy Pvt Ltd 60,000 3.66%

9 PNC Capital Trust Ltd 60,000 3.66%

10 MSP Metallics Pvt Ltd 50,000 3.05%

11 Kanhaiya Consultants Pvt Ltd 50,000 3.05%

* Based on the then issued share capital of 16,40,300 shares.

11. The Pre-issue and Post-issue share holding pattern of Promoters Group is as under:

Particulars Pre-Issue Post-Issue

No. Of shares % No. Of shares %@ Rs. 10/- each Holding @ Rs. 10/- each Holding

A Promoters 21727500 51.61% 21727500 37.40%

B Immediate Relatives of the Promoters 1226000 2.91% 1226000 2.11%

C Companies in which 10% or more of theshare capital is held by the promoter/an immediate relative of the promoter/a firm or HUF in which the promoter orany one or more of his immediaterelatives is a member 8497000 20.18% 8497000 14.62%

D Companies in which the Companymentioned in [c] holds 10% or more ofthe share capital 10254000 24.36% 10254000 17.65%

Total 41704500 99.06% 41704500 71.78%

18

12. The Pre-issue and Post-issue of shareholding pattern of MSP Steel and Power Limited is as under:

Category Pre-Issue Post-Issue

No. Of shares % No. Of shares % Holding@ Rs. 10/- each Holding @ Rs. 10/- each

Promoter Group 41704500 99.06% 41704500 71.78%

Persons Acting in Concert 395500 0.94% 395500 0.68%

QIBs 1600000 2.75%

Public 14400000 24.78%

Total 42100000 100% 58100000 100.00%

Note:

i. The Company has not raised any bridge loan against the proceeds of this issue.

ii. Neither the Company, its promoters, its Directors, nor the LM have entered into any buy-back and/or standbyarrangements for purchase of Equity Shares of the Company from any person.

iii. The promoters’ contribution has been brought-in in not less than the specified minimum lot of Rs. 25,000/- perapplication from each individual and Rs. 1,00,000/- from companies.

iv. In the process of allocation of rounding off to the nearest integer result in the actual allocation being higher than theEquity Shares offered, an over subscription to the extent of 10% of the net offer to the public can be retained whilefinalising the allotment.

v. The company shall not make any further issue of capital in any manner whether by way of issue of bonus shares,preferential allotment, rights issue, or pubic issue or otherwise during the period commencing from the submission ofoffer document to the Board on behalf of the Company for this public issue, till the securities offered to in the saiddocument have been listed or the application moneys refunded on account of non-listing or under-subscription, etc

vi. The company presently does not have any intention or proposal to alter its capital structure for a period of six monthsfrom the date of opening of the issue, by way of split/consolidation of the denomination of Equity Shares or further Issueof Equity Shares (including issue of securities convertible into exchangeable, directly or indirectly for Equity Shares)whether preferential or otherwise, except that the company may issue options to its employee pursuant to any employeestock option plan, or if the company goes for acquisitions and joint ventures the might consider raising additional capitalto fund such activity or use share as currency for acquisition and/or participation in such joint venture.

vii. The company has issued 47,54,300 fully paid equity shares as bonus shares on 30.09.2003 out of the share premium ofthe Company. The Company has not issued any Equity Shares out of revaluation reserves.

viii. At any given point of time, there shall be only one denomination for the Equity Shares of the Company and the Companyshall comply with such disclosure and accounting norms specified by SEBI from time to time.

ix. The Company has 39 (Thirty Nine) members as on the date of filing of the Prospectus with the SEBI.

x. There are no transactions in the securities of the Company during preceding 6 months which were financed directly orindirectly by the promoters, their relations, their group Companies or associates or by the above entities directly orindirectly to other persons.

xi. The shareholders of the Company do not hold any warrant, option or convertible loan or any debentures, which wouldentitle them to acquire further shares of the Company.

xii. Written consent for lock-in has been obtained from the persons whose shares form part of promoters’ contribution andform part of lock in.

xiii. The equity shares to be held by the Promoters, their relatives & associates under the lock-in period shall not be sold /hypothecated / transferred during the lock-in period. However, inter se transfers between the promoters’ names as suchwould be permitted, provided that the requirement of lock-in period guidelines continues to apply, to the extent initiallyprescribed.

xiv. An applicant in the net public category cannot make an application for a number of securities, which exceeds the netoffer to the Public.

xv. In case of reserved categories, a single applicant in the reserved category can make an application for a number ofsecurities, which exceeds the reservation.

19


xvi. The unsubscribed portion in any reserved category may be added to any other reserved category. *

xvii. The unsubscribed portion, if any, after such inter se adjustments amongst the reserved categories shall be added backto the net offer to the public.

* The unsubscribed portion mentioned in clause (i) above does not include minimum reserved for the QIB category asper the requirements of Clause 2.2.2 of DIP Guidelines.

xviii. If there is undersubscription in the net offer to the public portion, spillover to the extent of undersubscription shall bepermitted from the reserved category to the net public offer portion.

xix. If any person to whom firm allotment is proposed to be made withdraws partially or fully from the offer made to him afterfiling of the prospectus with the Registrar of companies, the extent of shares proposed to be allotted to such a personshall be taken up by the promoters* and the subscription amount shall be brought in at least one day prior to the issueopening date.

The shares so acquired by the promoters shall also be subject to lock in for a period of three years.

xx. No buyback or standby or similar arrangement shall be allowed with the person for whom securities are reserved forallotment on a firm basis.

xxi. The equity shares to be held by the person other than the promoters under the lock-in period shall not be sold /hypothecated / transferred during the lock-in period. However, inter se transfers between persons holding shares assuch would be permitted, provided that the requirement of lock-in period guidelines continues to apply, to the extentinitially prescribed.

xxii. Any transaction in securities by the “promoter”, “promoter group”and the immediate relatives of the promoters during theperiod between the date of filing of the the offer document with the Registrar of companies or stock exchange as thecase may be and date of closure of the issue shall be reported to the stock exchanges concerned within 24 hrs. of thetransaction.

20

III. TERMS OF THE PRESENT ISSUE


The present issue of equity shares is being made pursuant to a special resolution passed by the shareholders under section81(1A) of the Act at the Annual General meeting held on 28th day of July 2003 which was subsequently changed by aresolution passed by the Board of Directors of the Company at their meeting held on 2nd February 2005 and a specialresolution passed at the General Meeting of the shareholders of the company held on 28th February 2005.

PRINCIPAL TERMS AND CONDITIONS OF THE ISSUE

The Equity shares now being offered are subject to the terms of this Prospectus, the Application Form and Memorandum andArticles of Association of the Company, the guidelines for listing of Securities issued by Government of India and guidelinesissued by the Securities and Exchange Board of India (SEBI) from time to time, the Depositories Act, 1996 and the provisionsof the Companies Act, 1956.

In addition, the equity shares shall also be subject to such other terms and conditions as may be incorporated in the Letter of Allotment,as per guidelines, notifications and other regulations for the issue of the capital and listing of securities laid down from time to time bythe Government of India and / or other authorities and other documents that may be executed in respect of equity shares.

MINIMUM NUMBER OF SHARE APPLICATIONS AND TERMS OF PAYMENT

Applications should be made for minimum of 500 equity shares and in multiples of 500 equity shares thereafter. The details ofamount payable on application and on allotment are as under:

Category Towards Equity Share Capital (Rs.)

Public & QIB

On Application 10.00

Total 10.00

No interest would be payable on application money pending allotment upto 30 days from the date of closure of the issue.

Where an applicant is allotted lesser number of shares than he has applied for, the excess amount paid on application will berefunded to applicant in the manner stated on page no. 24 of this Prospectus.

An applicant in the public category can make application for that number of shares, which is offered, to the public for subscription.If an application is rejected in full the whole of the Application money will be refunded to the applicant.

INTEREST IN CASE OF DELAY IN DISPATCH OF ALLOTMENT LETTERS/ REFUND ORDERS

The Company agrees that as far as possible allotment of securities offered to the public shall be made within 30 days of theclosure of public issue. The company further agrees that it shall pay interest @15% per annum if the allotment letters / refundorders have not been dispatched to the applicants within 30 days from the date of the closure of the issue.

ARRANGEMENT FOR DISPOSAL OF ODD LOTS

The Company’s shares will be traded in dematerialised form only and the marketable lot is 1 share. Therefore there is nopossibility of odd lots.

RANKING OF EQUITY SHARES

The Equity Shares to be issued shall, subject to the provisions of the Memorandum and Articles of the Company rank paripassu with the existing Equity Shares of the Company including rights in respect of dividends.

RIGHTS OF THE EQUITY SHAREHOLDER

Subject to applicable laws, the equity shareholders shall have the following rights:

i. Right to receive dividend, if declared;

ii. Right to attend general meetings and exercise voting powers, unless prohibited by law;

iii. Right to vote on a poll either in person or by proxy;

iv. Right to receive offers for right shares and be allotted bonus shares, if announced;

v. The right of free transferability;

vi. Right to receive surplus on liquidation; and

vii. Such other right as may be available to the shareholder of a listed Public Company under the Companies Act andMemorandum and Articles of Association of the Company.

21


MARKETABLE LOT

The Company shall allot Equity Shares in dematerialised form only. The trading in the Equity Shares of the Company shall onlybe in dematerialised form for all investors, where the market lot is one (1) equity share.

PROCEDURE FOR APPLICATION AND MODE OF PAYMENT

Availability of Prospectus and Application Forms

Application forms together with Memorandum containing salient features of the Prospectus may be obtained from the RegisteredOffice of the Company, Lead Managers to the Issue, Registrar to the Issue and Bankers to the issue named herein or fromtheir branches as stated on the reverse of the application form. Any individual desiring to have a full copy of the Prospectusmay write to the Lead Manager or to the Registered Office of the Company.

Application may be made by:

i. Indian Nationals resident of India who are Adult Individuals in single name or joint names (not more than three)

ii. Hindu Undivided Families through the Karta of the Hindu Undivided Family

iii. Companies, Bodies Corporate and Societies registered under the applicable laws in India and authorised to invest in theShares

iv. Indian Mutual Funds registered with SEBI

v. Indian Financial Institutions & Banks

vi. Trusts who are registered under the Societies Regulation Act, 1860 or any other trust law and are authorised under itsconstitution to hold and invest in shares

vii. Commercial Banks and Regional Rural Banks. Co-operative Banks may also apply subject to permission from ReserveBank of India

viii. Permanent and Regular employees of the Company

ix. Non-Resident Indians (NRIs), and Foreign Institutional Investors (FIIs) registered with SEBI, subject to the applicable RBIGuidelines and Approvals, if any.

x. Minor, through their natural / legal guardians.

Applications not to be made by

i. Foreign Nationals (except NRIs / FIIs)

ii. Overseas Corporate Bodies (OCBs)

iii. Partnership firms or their nominees

A. GENERAL INSTRUCTIONS

i. Applications must be made in the prescribed application form and completed in Full in BLOCK LETTERS in English as perthe instructions contained herein and in the application form and are liable to be rejected if not so made.

ii. The application for securities should be for a minimum of 500 Equity shares and in multiples of 500 shares thereof. Anapplicant can make an application only for a maximum of securities that are offered to the public.

iii. Thumb impressions and signatures other than in English/ Hindi or any other language specified in the 8th Schedule to theConstitution of India, must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under his/ herofficial seal.

iv. Bank Account Details of Applicant: The name of the applicant’s Bank, type of account and account number must befilled in the Application Form. This is required for the applicants’ own safety and these details will be printed on the refundorders, if any. Applications without these details would be treated as incomplete and are liable to be rejected.

v. Applications under Power of Attorney: In case of applications under Power of Attorney or by Companies, BodiesCorporate, Societies registered under the applicable laws, trustees of trusts, Provident Funds, Superannuation Funds,Gratuity Funds a certified copy of the Power of Attorney or the relevant authority, as the case may be, must be lodgedseparately at the office of the Registrar to the Issue simultaneously with the submission of the application form, indicating theserial number of the application form and the name of the Bank and the branch office where the application is submitted.

The Company in its absolute discretion, reserves the right to relax the above condition of simultaneous lodging of thePower of Attorney along with the Application form, subject to such terms and conditions as the Company deems fit.

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vi. PAN/ GIR Number: Where an application is for a total value of Rs. 50,000 or more, the applicant or in case of applicationin joint names, each of the applicants should mention his/ her/ their Permanent Account number (PAN) allotted underIncome Tax Act, 1961 or where the same has not been allotted, the GIR Number and the IT Circle/ Ward/ District shouldbe mentioned. In case where neither the PAN nor the GIR Number has been allotted, or the applicant is not assessed toIncome Tax, the appropriate box provided for the purpose in the application form must be ticked. Applications without thiswill be considered incomplete and are liable to be rejected.

vii. Joint Applications in the case of individuals: Applications can be in single or joint names (not more than three). In thecase of joint applications, all payments will be made out in favour of the first applicant. All communications will beaddressed to the first named applicant whose name appears in the Application form at the address mentioned therein.

viii. Section 269 SS Of Income Tax, 1961 In respect of all the above categories eligible to apply to this issue, having regardto the provisions of Sec 269 SS of the Income Tax Act, 1961, the subscriptions against these applications should not beeffected in cash and must be effected by an Account Payee Cheques/Draft, if the amount payable is Rs. 20,000 or more.In case the payment is effected in contravention of this provision, the applications are liable to be rejected.

ix. Applications may be made by Hindu Undivided Families (HUF) through the Karta of the (HUF) and will be treated at parwith individual applications.

x. Multiple Applications: An applicant should submit only one application form (and not more than one) for the total numberof equity shares applied for. Two or more applications in single or joint names will be deemed to be multiple applicationsif the sole and/ or first applicant is one and the same. In case of application by Mutual Funds, a separate application canbe made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not betreated as multiple applications provided that the application made by the Asset Management Company/ Trustees/Custodian clearly indicate their intention as to the scheme for which the application has been made. The Companyreserves the right to accept or reject, in its absolute discretion, any or all-multiple applications.

xi. Multiple Applications By Mutual Funds A separate application can be made in respect of each scheme of an IndianMutual Fund registered with SEBI and such application will not be treated as multiple application provided that theapplications made by the AMCs / Trustees / the custodians clearly indicate the intention as to each scheme for whichapplication has been made.

xii. Applications by NRIs/ FIIs: There is no reservation and separate application form for NRIs/ FIIs. NRIs/ FIIs willing toinvest in this issue should follow the relevant RBI Guidelines in this regard.

xiii. In case payment of application money is by a mode other than cash, a separate single cheque/ draft must accompanyeach application form.

Note:

i. Applicants are requested to write their names and application serial number on the reverse of the instruments by which thepayments are being made to avoid misuse of instruments submitted along with the applications for equity shares.

ii. For further instructions, please read the Application Form carefully.

B. PAYMENT INSTRUCTIONS

i. Payment may be made by way of cash or cheque/ demand draft/ (money/ postal orders will not be accepted) drawn on anyBank, including a co-operative Bank which is situated at and is a member or sub-member of the Banker’s clearing-houselocated at the place where the application form is submitted, i.e. at designated collection centres.

ii. Outstation cheques/demand drafts drawn on Banks not participating in the clearing process will not be accepted.

iii. All cheques/ demand drafts accompanying the Application Form must be made payable to the bankers to the issue andmarked “A/c MSP STEEL & POWER LIMITED – Public Issue” and crossed “A/C payee only”. For e.g. “HDFC Bank A/c –MSP – Public Issue” or “ICICI Bank A/c – MSP – Public Issue”

iv. The applications shall be made only by way of cash/ cheque/ demand draft. However, if the amount payable on applicationis Rs. 20,000 or more, such payment must be effected only by way of an account payee cheque or Bank draft in terms ofsection 269SS of the Income-Tax Act, 1961. Otherwise the applications may be rejected and application money shall berefunded without any interest.

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PAYMENT INSTRUCTIONS (FOR NRIS/FIIS ON A REPATRIABLE BASIS)

Application made by NRIs

1. Application should be made only

i. in the names of individuals, societies and other corporate bodies owned predominantly (at least to the extent of 60%)by Non- Resident individuals of Indian nationality/ origin and NOT in the names of minors, firms, Partnerships,Foreign Institutional Investors, foreign nationals or their nominees. Applications by societies must be accompaniedby a certificate in the prescribed form OAC/ OAC-1 from an Overseas Auditor/ Chartered Accountant/ Certified PublicAccountant.

ii. with remittances from abroad for the amount payable on application per share through approved banking channels orout of funds held in Non-Resident External (NRE) / Foreign Currency Non Resident (FCNR) accounts maintainedwith banks authorised to deal in foreign exchange in India, along with the certificate from the bank issuing the draftconfirming that the draft has been issued by debit to NRE / FCNR account.

2. Applications for the NRI category can be obtained from the Corporate Office of the Company.

3. The allotment of equity shares to NRIs shall be subject to RBI approval or any other requisite authority as may benecessary under the existing Exchange Control Regulation. The sale proceeds of such investment in equity shares byNRIs will be allowed to be repatriated along with the income thereon, subject to instructions from RBI then in force andsubject to Indian Tax Laws, provided that the investments are made by inward remittance from abroad through approvedbanking channels or out of funds held in NRE / FCNR accounts maintained with a bank in India.

4. Refunds/dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank charges /commission. In case of applicants who remit their application money from funds held in NRE / FCNR accounts, suchpayments shall be credited to their respective NRE / FCNR accounts (details of which shall be furnished in the spaceprovided for this purpose in the Application Form), under intimation to them. In case of applicants who remit their moneythrough Indian Rupee Drafts from abroad, such payments in Indian Rupees will be converted into US Dollars or any otherfreely convertible currency as maybe permitted by RBI at the exchange rate prevailing at the time of remittance and will bedispatched by registered post, or if the applicants so desire, will be credited to their NRE / FCNR accounts, details ofwhich are to be furnished in the space provided for this purpose in the Application Form. The Company will not beresponsible for loss, if any, incurred by the applicant on account of conversion of Foreign Currency into Indian Rupeesand vice versa.

5. Applications in this category cannot be made out of NRO accounts and such applications would be rejected. Applicationsout of NRO accounts can, however, be made in the category of Resident Indian public.

6. All cheques / bank drafts accompanying the Application Form must be made payable to the Bankers to the Issue withwhom the Application Forms are lodged and be marked “MSP STEEL & POWER LIMITED - NRI” and crossed“Account Payee only.”

FOR FURTHER INSTRUCTIONS REGARDING APPLICATIONS FOR THE EQUITY SHARES, INVESTORS ARE REQUESTEDTO READ THE APPLICATION FORM CAREFULLY.

SUBMISSION OF COMPLETED APPLICATION FORMS

All applications duly completed and accompanied by cash/ cheques/ demand drafts shall be submitted at the branches of theBankers to the issue (listed in the Application Form) before the closure of the Issue. Applications should NOT be sent to theOffice of the Company or of the Lead Managers to the Issue.

Application Forms along with Bank drafts payable at Hyderabad can also be sent by registered post with acknowledgementdue to the Registrars to the Issue, Karvy Computershare Pvt. Limited so that the same can be received before the closure ofthe subscription list. The envelopes should be superscribed with the word “MSP Steel & Power Limited “ and marked to“the Head - IPO”.

No separate receipts will be issued for the application money. However, the Bankers to the issue or their approved collectingbranches receiving the duly completed application form will acknowledge receipt of the application by stamping and returningto the applicant the acknowledgement slip at the bottom of each application form.

Applications shall be deemed to have been received by the Company only when submitted to the Bankers to the issueat their designated branches or on receipt by the Registrars as detailed above and not otherwise.

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BASIS OF ALLOTMENT

In the event of public issue of equity shares being over-subscribed, the Executive Director/ Managing Director of the StockExchange, Mumbai (The Designated Stock Exchange) along with the post issue Lead Manager, Board of Directors and theRegistrars to the Issue shall be responsible to ensure that the basis of allotment is finalised in a fair and proper manner withthe following guidelines:

a) Applications will be categorised according to the number of shares applied for.

b) The total number of Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, i.e., thetotal number of the shares applied for in that category (number of applicants in the category multiplied by number ofShares applied for) multiplied by the inverse of the over subscription ratio.

c) Number of Shares to be allotted to the successful allottees will be arrived at on a proportionate basis, (i.e., total number ofshares applied for by each applicant in that category multiplied by the inverse of the over subscription ratio.)

d) In all the applications where the proportionate allotment works out to less than 500 shares per applicant, the allotmentshall be made as follows:

i. Each successful applicant shall be allotted a minimum of 500 shares.

ii. The successful applicants out of the total applicants for that category shall be determined by draw of lots in such amanner that the total number of shares allotted in that category is equal to the number of shares worked out as per (ii)above.

iii. If the proportionate allotment to an applicant works out to a number that is more than 500, then the number would berounded off to the nearest integer (for e.g. if number of shares is between 556.01 and 556.49 then it would berounded off to 556 and in case it is between 556.50 and 556.99 it would be rounded off 557 shares). All applicants insuch categories would be allotted shares arrived at after such rounding off.

e) If the shares allocated on a proportionate basis to any category are more than the shares allotted to the applicants in thatcategory, the balance available shares for allotment shall be first adjusted against any other category, where the allocatedshares are not sufficient for proportionate allotment to the successful applicants in that category. The balance shares, ifany, remaining after such adjustment will be added to the category comprising of applicants applying for minimum numberof shares.

f) If the process of rounding off the number of shares to allottees to the nearest integer, results in actual allotment beinghigher than the shares offered, the Company may allot additional equity share up to a maximum of 10 % of the size of thenet offer to the public. The requisite resolution has been passed by the Company in this regard.

g) The above allotment is further subject to the following guidelines in the case of over subscription:

i. A minimum of 10% of the issue is to be compulsorily allotted to the QIBs.

ii. A minimum 50% of the net offer of securities to the public shall initially be made available for allotment to retailindividual investors, as the case may be.

iii. The balance net offer of securities to the public shall be made available for allotment to:

a. Individual applicants other than retail individual investors, and;

b. Other investors including Corporate bodies/ institutions irrespective of the number of securities applied for.

iv. The unsubscribed portion of the net offer to any one of the categories specified in (ii) or (iii) shall / may be madeavailable for allotment to applicants in the other category, if so required.

The term ‘Retail Individual Investor’ means an individual investor who applies for securities of or for value of not more than Rs.50,000/-.

The drawl of lots (where required) to finalise the basis of allotment, shall be done in the presence of a public representative onthe Governing Board of the Designated Stock Exchange.

Investors may note that in case of over-subscription, allotment shall be on proportionate basis and will be finalised by theExecutive Director/Managing Director of the Stock Exchange, Mumbai (Designated Stock Exchange) along with the post issueLead Manager and the Registrars to the issue as per the guidelines issued by the SEBI. RMB (Compendium) series circularNo.2(1999-2000) on 16-02-2000.

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ACCESS TO THE FUNDS:

Subscription received against this issue would be kept in a separate bank account and the Company will not have access tothese funds so collected until it has received approval for allotment from the Stock Exchange, Mumbai (Designated StockExchange) and listing permission is received from all the exchanges where listing is proposed in terms of this prospectus.

PAYMENT BY STOCKINVEST

In terms of RBI Circular DBOD No. FSBC BC 42/24.47.000/2003-04 dated November5, 2003 the stockinvest scheme hasbeen withdrawn with immediate effect. Hence, payment through stock invest would not be invested in the issue.

SAFETY NET OR BUY BACK ARRANGEMENT

A safety net option has been provided in this prospectus as follows:

It shall be available to all original resident individual allottees in the public issue.

Such safety net facility shall be limited upto a maximum of 1000 shares per allottee at the issue price of Rs.10/- perequity share and the offer shall be valid for a period of 6 months from the last date of despatch of securities in thepublic issue, which shall be disclosed in the Basis of allotment advertisement of the Company.

This option is being provided by the Lead Managers to the Issue Microsec India Limited and they undertake that theyhave the capacity to provide this option to the original resident individual allottees. The networth of Microsec IndiaLimited as per their audited balance sheet dated 30th September 2004 is Rs. 1066.31 lacs.

Microsec India Limited is a SEBI Registered Category I Merchant Banker bearing Registration No. INM 000010791 andSEBI Registered Underwriter bearing Registration No. INU000001181.

DEPOSITORY OPTION TO INVESTORS

AS PER SEBI GUIDELINES TRADING IN SECURITIES OF COMPANIES MAKING A PUBLIC OFFER SHALL BE INDEMATERIALISED FORM ONLY ALTHOUGH INVESTORS HAVE AN OPTION TO HOLD THE SHARES IN PHYSICALFORM OR DEMAT FORM.

The Company shall issue the securities only in dematerialised form as per Section 68 B of Companies Act, 1956. Details ofDepositories Account is mandatory and applications without Depository account would be treated as incomplete and rejected.Investors will not have the option of getting the allotment of physical shares. However, they may get the shares re-materialisedsubsequent to allotment.

1. Tripartite agreements have been signed between MSP Steel & Power Limited , Karvy Computershare Pvt Ltd and NationalSecurities Depository Limited (“NSDL”) and Central Depository Services Limited (CDSL).

The ISIN No. allotted to the Company is INE 752 G 01015

2. Such an option if exercised should be indicated in the relevant blocks in the share application form itself.

3. Investors who wish to apply equity shares in electronic form need to have at least one Beneficiary Account with aDepository Participant prior to the allotment.

4. The applicants name in the Depository Instruction Section in the Application Form should be the same as appearing in hisor its Beneficiary Account. In case of joint applicants, in addition to the name, the sequence of the names in theApplication Form and the Beneficiary Account should be the same.

5. Allotment Advice/Refund Orders will be directly sent to the investors by the Registrars to the issue.

6. If incomplete / incorrect investor account details are given in the application form; it may result in rejection of application form.

7. Responsibility for correctness of applicant’s demographic details given in the share application form vis-à-vis, those withhis/her Depository Participant, would rest with the investor.

8. Shares in electronic form can be traded on Stock Exchanges having electronic connectivity with the NSDL & CDSL.

ACCEPTANCE OF APPLICATIONS

The Company reserves the right to accept or reject, any application, in whole or in part, without assigning any reason thereof.If the application is rejected in full, the whole of the application money received will be refunded by Registered Post to theapplicant. If the application is accepted in part, the excess application money after adjusting for the amount payable onallotment will be refunded to the applicant. Such refund, if any, will carry interest @ 15% p.a. after 30 days from the closure ofthe Issue for the period of delay beyond 30 days.

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DESPATCH OF REFUND ORDERS

The company shall ensure dispatch of refund orders of value over Rs.1500/- and share/debentures by Registered Post onlyand adequate funds for the purpose shall be made available to the Registrar by the issuer company.

SCOPE OF ACTIVITIES OF THE REGISTRAR TO THE ISSUE

The Registrar to the Issue shall also be the Share Transfer Agent and would also be responsible for all the post issue activitiespertaining to this issue.

UNDERTAKING BY THE ISSUER COMPANY:

The company hereby undertakes:

i. That the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously andsatisfactorily;

ii. That the company shall take all steps for completion of the necessary formalities for listing and commencement of tradingat all stock exchanges where the securities are to be listed within 7 working days of finalisation of basis of allotment;

iii. That the funds required for dispatch of refund orders/allotment letters/ certificates by registered post shall be madeavailable to the Registrar to the Issue by the issuer company;

iv. That the promoters’ contribution in full, wherever required, shall be brought in advance before the Issue opens for publicsubscription.

v. The Demat credit/ refund orders to the Non-Resident Indians shall be despatched within specified time.

vi. That no further issue of Equity Shares shall be made till the securities offered through this offer document are listed or tillthe application moneys are refunded on account of non-listing, under subscription, etc.

UTILISATION OF ISSUE PROCEEDS

The Board of Directors of the Company certifies that:

i. All monies received out of the Fresh Issue shall be transferred to separate bank account other than the bank accountreferred to in sub-section (3) of section 73;

ii. Details of all monies utilised out of the Fresh Issue referred above shall be disclosed under an appropriate separate headin the balance-sheet of the company indicating the purpose for which such monies had been utilised;

iii. Details of all unutilised monies out of Fresh Issue if any, shall be disclosed under an appropriate separate head in thebalance sheet of the company indicating the form in which such unutilised monies have been invested;

DECLARATION:

The Board of Directors of the Company declares that:

i. The utilisation of monies received under promoters’ contribution shall be disclosed under an appropriate head in thebalance sheet of the company indicating the purpose for which monies have been utilized.

ii. The details of all unutilised monies out of the funds received under promoters’ contribution shall be disclosed under aseparate head in the balance sheet of the company indicating the form in which such unutilised monies have been invested.

BENEFITS AVAILABLE UNDER THE INCOME TAX ACT AND OTHER LAWS TO THE COMPANY AND ITSSHAREHOLDERS, (INDIAN RESIDENTS, NRI’s, FII’s, etc.):

The Company has been advised by Jaiswal Kuldeep & Co., Chartered Accountants, vide their certificate dated 2nd April2005 that under the current tax laws, the following tax benefits inter-alia will be available to the Company and shareholders ofthe company. A shareholder is advised to consider on his own case the tax implications of an investment in the shares.

STATEMENT OF TAX BENEFITS

Under the Income Tax, 1961

A. To the Company

i. In accordance with and subject to the provisions of section 80-IA of the Income Tax Act ,1961 the company would beentitled to a deduction of 100% of profits derived from production and/or distribution or transmission of power for any tenconsecutive years out of the fifteen years beginning from the year in which the undertaking generated power orcommences transmission or distribution of power before 31.03.2006.

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ii. In accordance with the provisions of section 35 of the Income Tax Act,1961 the company would be entitled to a deductionon the expenditure laid out or expended on scientific research related to the business.

iii. As per the provisions of section 32 the company is eligible to claim depreciation on tangible and specified intangibleassets as explained in the said section and the relevant IT rules there under.

iv. The company is eligible under section 35D of the Act to a deduction equal to one tenth of such expenditure for each of theten successive previous years beginning with the previous year in which the business commences or as the case may be,the previous year in which the extension of the industrial undertaking is completed or the new industrial unit commencesproduction or operation subject to the limits provided or the conditions specified under the said section.

(B) TO THE SHAREHOLDERS OF THE COMPANY - UNDER THE INCOME TAX ACT, 1961

Resident Shareholders

1 In terms of section 10(34) of the Act, any income by way of dividends referred to in Section 115-O (i.e. dividends declared,distributed or paid on or after 1 April 2003) received on the shares of the company is exempted from the tax.

2 In terms of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of long term capitalasset being an equity shares in a company would not be liable to tax in the hands of the shareholder if the followingconditions are satisfied:

a.) The transaction of sale of such equity share is entered into on or after 10th September 2004.

b.) The transaction is chargeable to such securities transaction tax as explained below.

3. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No. 2) Act, 2004, transactions forpurchase and sale of the securities in the recognised stock exchange by the shareholder, shall be chargeable tosecurities transaction tax. As per the said provisions, any delivery based purchase and sale of equity share in a companythrough the recognised stock exchange is liable to securities transaction tax @ 0.075% of the value payable by bothbuyer and seller. The non-delivery based sale transactions are liable to tax @ 0.015 % of the value payable by the seller.

4. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the taxable securitiestransactions entered into in the course of his business would be eligible for rebate from the amount of income-tax on theincome chargeable under the head “Profit and gains of business or profession” arising from taxable securitiestransactions. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains, suchamount paid on account of securities transaction tax.

5. In terms of section 10(23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions orMutual Funds registered under the Securities and Exchange Board of India or authorized by the Reserve Bank of India,subject to the conditions specified therein are eligible for exemption from income tax on all their income, including incomefrom investment in the shares of the company.

6. Under section 48 of the Act, if the company’s shares are sold after being held for not less than twelve months, the gains[in cases not covered under section 10(38) of the Act], if any, will be treated as long term capital gains and the gains shallbe calculated by deducting from the gross consideration, the indexed cost of acquisition.

7. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains [incases not covered under section 10(38) of the Act] arising on the transfer of shares of the Company will be exempt fromcapital gains tax if the capital gain are invested within a period of 6 months after the date of such transfer for a period ofat least 3 years in bonds issued by

a) National Bank for Agriculture and Rural Development established under section 3 of The National Bank forAgriculture and Rural Development Act, 1981;

b) National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988;

c) Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956;

d) National Housing Bank established under section 3(1) of the National Housing Bank Act, 1987; and

e) Small Industries Development Bank of India established under section 3(1) of the Small Industries DevelopmentBank of India Act, 1989;

8. Under section 54ED of the Act and subject to the conditions and to the extent specified therein, long term capital gains [incases not covered under section 10(38) of the Act] on the transfer of shares of the Company, as and when it is listed, willbe exempt from capital gains tax if the capital gains are invested in shares of an Indian Company forming part of an

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eligible public issue, within a period of 6 months after the date of such transfer and held for a period of at least one year.Eligible public issue means issue of equity shares which satisfies the following conditions, namely –

a) the issue is made by a public company formed and registered in India;

b) the shares forming part of the issue are offered for subscription to the public;

9. Under section 54F of the Act, long term capital gains [in cases not covered under section 10(38) of the Act arising to anindividual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain taxsubject to other conditions, if the net consideration from such shares are used for purchase of residential house propertywithin a period of one year before and two years after the date on which the transfer took place or for construction ofresidential house property within a period of three years after the date of transfer.

10. Under section 112 of the Act and other relevant provisions of the Act, Long term capital gains, (i.e., if shares are held for aperiod exceeding 12 months) [in cases not covered under section 10(38) of the Act], arising on transfer of shares in theCompany, shall be taxed at a rate of 20% (plus applicable surcharge) after indexation as provided in the second provisoto section 48. The amount of such tax should however be limited to 10%(plus applicable surcharge) without indexation, atthe option of the shareholder, if the transfer is made after listing of shares.

11. Under section 111A of the Act and other relevant provisions of the Act, short-term capital gains (i.e., if shares are held fora period not exceeding 12 months), arising on transfer of shares in the Company on a recognised stock exchange, shallbe taxed at a rate of 10% (plus applicable surcharge).

Non-Resident Indians/ Non Residents Shareholders Other than FIIs and Foreign venture capital investors

12. In terms of section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared,distributed or paid on or after 1 April 2003) received by a non-resident Indian shareholder (i.e. an individual being a citizenof India or person of Indian origin who is not a ‘resident’) on the shares of the company is exempted from the tax.

13. In terms of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of long term capitalasset being an equity shares in a company would not be liable to tax in the hands of the shareholder if the followingconditions are satisfied:

a. The transaction of sale of such equity share is entered into on or after 10th September, 2004.

b. The transaction is chargeable to such securities transaction tax.


15. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No. 2) Act, 2004, transactions forpurchase and sale of the securities in the recognised stock exchange by the shareholder, shall be chargeable tosecurities transaction tax. As per the said provisions, any delivery based purchase and sale of equity share in a companythrough the recognised stock exchange is liable to securities transaction tax @ 0.075% of the value payable by bothbuyer and seller. The non-delivery based sale transactions are liable to tax @ 0.015 % of the value payable by the seller.

16. Under Section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains [incases not covered under section 10(38) of the Act] arising on the transfer of shares of the Company will be exempt fromcapital gains tax if the capital gain are invested within a period of 6 months after the date of such transfer for a period ofat least 3 years in bonds issued by

a. National Bank for Agriculture and Rural Development established under section 3 of The National Bank forAgriculture and Rural Development Act, 1981;

b. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988;

c. Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956;

d. National Housing Bank established under section 3(1) of the National Housing Bank Act, 1987; and

e. Small Industries Development Bank of India established under section 3(1) of the Small Industries DevelopmentBank of India Act, 1989;

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17. Under Section 54ED of the Act and subject to the conditions and to the extent specified therein, long term capital gains [incases not covered under section 10(38) of the Act] on the transfer of shares of the company, as and when it is listed, willbe exempt from capital gains tax if the capital gain are invested in shares of an Indian company forming part of an eligiblepublic issue, within a period of 6 months after the date of such transfer and held for a period of at least one year. Eligiblepublic issue means issue of equity shares which satisfies the following conditions, namely –

a. the issue is made by a public company formed and registered in India;

b. the shares forming part of the issue are offered for subscription to the public;

18. Under Section 54F of the Act, long term capital gains [in cases not covered under section 10(38) of the Act arising to anindividual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain taxsubject to other conditions, if the net consideration from such shares are used for purchase of residential house propertywithin a period of one year before and two year after the date on which the transfer took place or for construction ofresidential house property within a period of three years after the date of transfer.

19. Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains (i.e. if shares are held for aperiod exceeding 12 months) [in cases not covered under section 10(38) of the Act, arising on transfer of shares in theCompany, shall be taxed at a rate of 20% (plus applicable surcharge) after indexation as provided in the second provisoto section 48. The amount of such tax should however, be limited to 10% (plus applicable surcharge) without indexation,at the option of the shareholder, if the transfer is made after listing of shares.

20. Under section 115-I of the Act, the non-resident Indian shareholder has an option to be governed by the provisions ofChapter XII-A of the Income Tax Act, 1961 viz. “Special Provisions Relating To Certain Incomes of Non-Residents” whichare as follows: -

a. Under section 115E of the Act, where shares in the company are acquired or subscribed for in convertible ForeignExchange by a Non Resident Indian, capital gains arising to the non-resident on transfer of shares held for a periodexceeding 12 months on a recognised stock exchange, shall (in cases not covered under section 10(38) of the Act)be concessionally taxed at the flat rate of 10% (plus applicable surcharge) (without indexation benefit but withprotection against foreign exchange fluctuation).

b. Under provisions of section 115F of the Act, long term capital gains (in cases not covered under section 10(38) of theAct) arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible ForeignExchange (in cases not covered under section 115E of the Act) shall be exempt from Income tax, if the netconsideration is reinvested in specified assets within six months of the date of transfer. If only part of the netconsideration is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall bechargeable to tax subsequently, if the specified assets are transferred or converted into money within three yearsfrom the date of their acquisition.

c. Under provisions of section 115G of the Act, it shall not be necessary for a Non-Resident Indian to furnish his returnof income if his income chargeable under the Act, consists of only investment income or long term capital gains orboth arising out of assets acquired, purchased or subscribed in convertible foreign exchange and tax deductible atsource has been deducted there from.

21. Under the first proviso to section 48 of the Act, in case of a non resident shareholder, in computing the capital gains arisingfrom transfer of shares of the company acquired in convertible foreign exchange (as per exchange control regulations) (incases not covered by section 115E of the Act), protection is provided from fluctuations in the value of rupee in terms offoreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case.The capital gains/ loss in such a case is computed by converting the cost of acquisition, sales consideration andexpenditure incurred wholly and exclusively in connection with such transfer into the same foreign currency which wasutilized in the purchase of the shares.

Foreign Institutional Investors (FIIs)

22. In terms of section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared,distributed or paid on or after 1 April 2003) received on the shares of the company is exempted from the tax.

23. In terms of section 10(38) of the Act, any long term capital gains arising to an investor from transfer of long term capitalasset being an equity shares in a company would not be liable to tax in the hands of the investor if the following conditionsare satisfied:

a. The transaction of sale of such equity share is entered into on or after 10th September, 2004.

b. The transaction is chargeable to such securities transaction tax.

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24. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No. 2) Act, 2004, transactions forpurchase and sale of the securities in the recognised stock exchange by the investor, shall be chargeable to securitiestransaction tax. As per the said provisions, any delivery based purchase and sale of equity share in a company throughthe recognised stock exchange is liable to securities transaction tax @ 0.075% of the value payable by both buyer andseller. The non-delivery based sale transactions are liable to tax @ 0.015 % of the value payable by the seller.


26. The income by way of short term capital gains or long term capital gains [in cases not covered under section section10(38) of the Act] realized by FIIs on sale of shares in the company would be taxed @ 10% as per section 115AD of theAct. However in case of such long term capital gains, the tax is levied on the capital gains computed without consideringthe cost indexation and protection against foreign exchange fluctuation)

27. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gain [incases not covered under section 10(38) of the Act] arising on the transfer of share of the company will be exempt fromcapital gain tax if the capital gain are invested within a period of 6 month after the date of such transfer for a period of last3 year in bond issued by: -

a. National Bank for agriculture and Rural Development established under section 3 of The National Bank forAgriculture and Rural Development Act, 1981;

b. National Highway Authority of India constituted under section 3 of the National Highway Authority of India Act, 1988

c. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956;

d. National Housing Bank established under section 3(1) of the National Housing Bank Act, 1987; and

e. Small Industries Development Bank of India established under section 3(1) of the Small Industries DevelopmentBank of India Act, 1989.

28. Under section 54ED of the Act and subject to the conditions and to the extent specified therein, long term capital gains [incases not covered under section 10(38) of the Act] on the transfer of shares of the company, as and when it is listed, willbe exempt from capital gains tax if the capital gain are invested in shares of an Indian company forming part of a eligiblepublic issue, within a period of 6 months after the date of such transfer and held for a period of at least one year. Eligiblepublic issue means issue of equity shares which satisfies the following conditions, namely –

a. the issue is made by a public company formed and registered in India;

b. the shares forming part of the issue are offered for subscription to the public;

Venture Capital Companies/Funds

In terms of section 10(23FB) of the Act, all Venture capital companies/funds registered with Securities and Exchange of India,subject to the conditions specified, are eligible for exemption from income tax on all their income, including dividend from andincome from sale of shares of the company.

(C) Benefits to Members of the Company under the Wealth Tax Act, 1957

Shares of company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth TaxAct 1957, hence shares are not liable to Wealth Tax Act, 1957.

(D) Benefits to Members of the Company under the Gift Tax Act, 1958.

Gift made after 1st October 1998 is not liable for any gift tax and hence gift of shares of the company would not be liable for any gift tax.

Notes:

1. All the above benefits are as per the current tax law as amended by the Finance (No. 2) Act, 2004.

2. The stated benefits will be available only to the sole/first named holder in case joint holders hold the shares.

3. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to anybenefits available under the Double Taxation Avoidance Agreements, if any, between India and the country in which thenon-resident has fiscal domicile.

4. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor withrespect to specific tax consequences of his/her participation in the scheme.

5. The contents of this annexure is based on information, explanations and representations obtained from the Company andon the basis of our understanding of the business activities and operations of the Company.

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IV. PARTICULARS OF THE ISSUE

A. OBJECTS OF THE ISSUE

The objects of the present issue of equity shares are:

1. For setting up of an Integrated Steel Plant comprising of the following:

1. 2 Nos. 96,000 Tonnes per annum sponge iron plant modules.

2. 16 Mega Watt Captive Power Plant.

3. 95,109 tonnes per annum Steel Melt Shop comprising of 3 nos., 12 tonnes Induction Furnaces and 1 No. 2 StrandBillet Caster.

4. 80,000 Tonnes per annum Re-Rolling Mill.

2. For setting up the following Ancillary Projects to aid the Integrated steel Project:

1. Coal Washery Plant with capacity of 576000 TPA.

2. Expansion of Power Plant from existing 16MW to 24MW by addition of further 8MW

3. Private Railway Siding of 2.4 Kms at the project premise.

3. Other Utilities and General Corporate Purposes

Apart from the above projects the management has future plans to build staff quarters and housing colonies for thestaff of the company. The sharp increase in the prices of raw materials has prompted the management to arrange forfurther long-term working capital requirements. The management has also earmarked funds to be utilized for othercorporate purposes, which include inter alia acquisition for coal mining blocks, and iron ore blocks to facilitate backward integration and other such corporate purposes.

4. To list its equity shares on The Stock Exchange, Mumbai and The National Stock Exchange of India Limited.

5. To meet the expenses of the present issue.

The main objects clause and objects incidental or ancillary to the main objects clause of the Memorandum ofAssociation of the company enables the company to undertake the existing activities and the activities for which thefunds are being raised through the present issue.

B. FUNDING REQUIREMENTS

The cost of the project & the means of finance for setting up of the Integrated Steel project have been appraised byING Vysya Bank. The cost estimates as per the project report prepared by MPA Financial Services Pvt. Ltd andappraised by ING Vysya Bank for the Integrated Steel project as mentioned above is Rs.9, 874.03 lacs.

The Ancillary project report has also been prepared by MPA Financial Services Pvt. Ltd and State Bank of India hasappraised the project. The total cost of the Ancillary project is estimated to be Rs. 2,436.90 lacs.

The Other Utilities and General Corporate Purposes are estimated to cost Rs. 1,372.24 lacs.

Apart from the above cost, an estimated sum of Rs. 100 lacs would be required to fund the issue and listing expenses.

C. Location of the Project

Plant Site City Office

MSP Steel & Power Limited MSP Steel & Power LimitedVillage & P.O. Jamgaon Hari Bhavan, Near Pahar Mandir,District Raigarh District Raigarh, ChattisgarhChattisgarh - 496001 Phone + 91 7762 226532Phone – +91 7762 26449/50/51/52/53 Fax + 91 7762 226533

D. Break Up Of Project Cost

I. Integrated Steel Project

The integrated steel project comprises of the following modules which shall be completed in Phase I of the projectimplementation schedule.

I. 2 Nos. 96,000 Tonnes per annum sponge iron plant modules.

II. 16 Mega Watt Captive Power Plant.

III. 95,109 tonnes per annum Steel Melt Shop comprising of 3 nos., 12 tonnes Induction Furnaces and 1 No. 2 StrandBillet Caster.

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IV. 80,000 Tonnes per annum Re-Rolling Mill.

The cost of the project & the means of finance for setting up of the Integrated Steel project have been appraisedby a consortium of Banks comprising of ING Vysya Bank, IOB,UCO Bank and Andhra Bank. The cost estimates ofRs. 9,874.03 lacs are as per the project report prepared by MPA Financial Services Pvt. Ltd and appraised bythe lead appraising bank, ING Vysya Bank.

Rs in Lacs

Activity

Sl Cost of project Sponge M.S. Power Re-rolling TotalIron Billet Plant Plant Amount

Plant Plant

1. Land and Site Development – – – – 122.66

2. Factory Building & Civil Structurals 277.44 254.70 221.71 99.51 853.36

3. Plant & Machinery 1,623.30 745.89 2,703.60 407.55 5,480.34

4. Miscellaneous Fixed Assets 1,207.27 114.44 438.65 96.17 1,856.53

5. Technical Know-how Fees 25.00 10.00 40.00 5.00 80.00

6. Preliminary & Preoperative Expenses 257.50 123.19 286.00 58.50 725.19

7. Contingencies 77.70 27.88 35.16 15.08 155.82

8. Margin Money for Working Capital 275.38 54.30 0.00 270.45 600.13

Sub-total 3,743.60 1,330.39 3,725.11 952.26 9,874.03

II. Ancillary Project

The ancillary project comprises of the following modules which shall also be completed in Phase I of the projectimplementation schedule.

I. Coal Washery Plant with capacity of 576000 TPA.

II. Expansion of Power Plant from existing 16MW to 24MW by addition of further 8MW

III. Private Railway Siding of 2.4 Kms at the project premise.

The coal washery will assure the company availability of best quality of coal for its sponge iron unit that shall increasethe efficiency of the sponge iron kilns. The additional power plant is being set up at a cost of nearly Rs. 156 lacs perMW as against Rs.300 lacs per MW in the Integrated Steel project. The expanded capacity would reduce thedependency on the outside power. Moreover the additional power will be cheaper by at least 30% in comparison to thenormal power tariff. The railway siding will help in reduction the cost of transportation.

The ancillary project has also been prepared by MPA Financial Services Pvt. Ltd and State Bank of India hasappraised the project.

Rs in Lacs

Activity

Sl Cost of project Coal Power Railway TotalWashery Plant Sidings Amount

1. Land and Site Development – – 2.63 2.63

2. Factory Building & Civil Structurals 154.00 85.00 304.41 543.41

3. Plant & Machinery 326.93 810.03 19.37 1156.33

4. Miscellaneous Fixed Assets 142.56 265.41 71.79 479.76

5. Preliminary & Preoperative Expenses 34.08 58.00 29.11 121.19

6. Contingencies 15.59 29.01 19.78 64.38

7. Margin Money for Working Capital 69.19 0.00 0.00 69.19

Sub-total 742.36 1247.45 447.08 2436.90

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The company has proposed for additions of the following plants and projects in the ancillary project to make the unit moreprofitable:

(a) Additional 8 MW Captive Power Plant

The entire 16 MW captive power plant earlier, was based on waste heat recovery of the sponge iron plant.Subsequently, it was observed that the price difference between the cost of 8MW and 12 MW turbines is nominal andtherefore, the company has decided to set up a 24 MW Captive Power Plant comprising of 2 units of 12MW each.

The Power plant shall now consist of the following main units:

(a) Two Waste Heat Recovery Boilers

(b) One Atmospheric Fluidised Bed Combustion Boiler

(c) Two Steam Turbo Generators

The additional boilers will be run on washery rejects/coal char generated as waste/by product. The power will beconsumed by the units other than the billet unit of the company there by reducing the dependency on the outsidepower. Morever the additional power will be cheaper by at least 30% in comparison with the normal power tariff.

(b) Coal Washery Unit

The company is setting up a coal washery unit with installed feed capacity of 5,76,000 MTPA. Considering therecovery for clean coal at 60%, there will be production of 3,45,000 MTPA clean coal for consumption by sponge ironkilns. This will assure the company avaibility of best quality of coal at lower cost for its sponge iron unit. The betterquality coal will also increase the efficency of the kilns. It is to be noted that 35% of the fed coal i.e.268800 MTPA aswashery rejects produced by the coal washery unit shall be consumed by the additional 8MW captive power plant. Thecompany has selected a two stage washing by Heavy Media Cycline Process having the following design features:

(a) Heavy media Pump fed low head coal Cyclone washery of 100 TPH Raw coal throughput capacity of non-coking coal.

(b) Complete close circuit with zero discharge of effluent

(c) Efficient dust suppression system and an elaborate fire fighting arrangement.

(d) PLC operated fully automatic with central control room

(e) Instruments like nucleonic density gauge, electronic level controllers etc, for automatic control of the process.

(f) It requires minimum manpower.

(c) Railway Siding

Company is setting up a 2.4 Kms long railway siding for handling the requirements of iron ore, coal and finished goodssuch as billets and re –rolled products. This will reduce the cost of transportation by at least 150-200 per MT and shallenable the company timely supply of raw materials.

III. Other Utilities and General Corporate Purposes

Apart from the above projects the management has plans to build staff quarters and housing colonies for the staff ofthe company, arrange for further long-term working capital requirements of the company and the management hasearmarked funds to be utilized for other corporate purposes, which include inter alia acquisition for coal mining blocks,and iron ore blocks to provide complete back ward integration. The projects shall be implemented in Phase II of theproject implementation schedule.

Rs. in Lacs

Particulars Total Amount

Long Term Working Capital Requirements 525.00

Housing Colony for staff 275.00

Other Corporate Purposes 572.24

TOTAL 1372.24

The promoters have already brought in equity towards the said future plans but funds shall be invested in the futureplans only on completion of the Integrated Steel project and the Ancillary project of the company pending which the fundsmay be utilized to meet any requirements of the Integrated Steel project to enable timely implementation of the same.

The cost estimates for other utilities and general corporate purposes are as per estimates prepared by themanagement and the deployment of funds is entirely at the discretion of the Company and is not subject to monitoringby any independent agency.

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IV. TOTAL COST OF PROJECT

Phase I Phase II

Particulars Integrated Ancillary Other Utilities TOTALSteel Project and General


Land & Site Development 122.66 122.66

Sponge Iron Plant 3743.60 – – 3743.60

M.S.Billet Plant 1330.39 – – 1330.39

Power Plant 16MW 3725.11 – – 3725.11

Re Rolling Plant 952.27 – – 952.27

Coal Washery – 742.36 – 742.36

Power Plant additional 8MW – 1247.45 – 1247.45

Railway Siding – 447.09 – 447.09

Public Issue Expenses 100.00 – – 100.00

Long Term Working Capital Requirment – – 525.00 525.00

Housing Colony for staff – – 275.00 275.00

Other Corporate Purposes – – 572.24 572.24

TOTAL 9974.03 2436.90 1372.24 13783.17

E. MEANS OF FINANCE

Rs in Lacs

Particulars Integrated Ancillary Other Utilities TOTALSteel Project Project and General

CorporatePurposes

Equity Capital 1888.50 936.90 1372.24 4197.64

Term Loan 6175.00 1500.00 – 7675.00

Public Issue 1600.00 – – 1600.00

Internal Accruals 310.53 – – 310.53

TOTAL 9974.03 2436.90 1372.24 13783.17

F. UNDERTAKING BY THE ISSUER COMPANY

The Company hereby confirms that firm arrangements of finance through verifiable means towards 100% of the statedMeans of Finance, excluding the amount to be raised through the proposed public issue have been made.

G. APPRAISAL

The Company’s bankers viz. ING Vysya, UCO, IOB and Andhra bank have appraised the Integrated steel projectbased on detailed technical and financial information prepared in the “Project report” as prepared by MPA FinancialServices P Ltd and sanctioned term loans towards debt component.

The ancillary project has been appraised by State Bank of India on 20.11.2004 based on detailed technical andfinancial information prepared in the “Project report” as prepared by MPA Financial Services P Ltd and sanctionedterm loans towards debt component.

The utilities and other general corporate purposes comprising of long term working capital requirements and othercorporate purposes is based on own estimates of the management.

ING Vysya Bank was the lead appraising bank and has sanctioned Rs.2100 lacs as term loan in the project for theIntegrated Steel Plant vide its sanction letter dated 15th September 2003 and appraisal report dated 15th July 2003.

The scope of the appraisal was to consider term loan of Rs.2100.00 lacs repayable in 20 quarterly installments aftera moratorium of 2 years to part finance the integrated steel and power plant to be set up at Raigarh (Chhattisgarh)under consortium banking arrangement and to consider working capital limit of Rs.450 lacs and non-fund limit ofRs.50 lacs under consortium banking arrangement.

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DISCLAIMER CLAUSE OF THE BANK

1. The appraisal of the Integrated Steel project has been carried out by ING Vysya Bank Ltd (IVBL) for the purpose ofsanction of term loan. IVBL has not carried out any independent techno-economic viability study. The appraisal isbased upon information that the bank considers reliable i.e. the technical and financial report of MPA FinancialServices P Ltd.

2. It is to be distinctly understood that IVBL is not responsible for the company achieving their projected level ofproduction/sales, which have a bearing on the financial viability of the project. Actual results may differ materially fromthose projected. Disbursal of Term Loan is subject to fulfilment of terms and conditions.

3. IVBL is not responsible for any delay in implementation of the project and the consequent impact of achievement ofsales/profits estimated.

4. Neither IVBL nor any person connected accepts any liability arising from the use of the appraisal note.

The risk analysis of the project is reproduced below:

RISK APPRAISAL


With signs of recession on its way out and marked improvement in the performance of infrastructure and manufacturingsegment have considerably revived the fortunes of steel sector. Consumption of the finished steel increased by about 6%in the last year and the industry is likely to sustain the improved performance in the current year. Demand for steel in Chinahelped the momentum in steel prices at global level, while automobile and construction industry has seen strong demand.The capital goods industry is also showing signs of recovery. Sustained rise in steel prices in the global market coupledwith strong domestic growth and increased export will enable improved market performance of the Industry in the nearfuture.

Management Risk

The promoters are already in this line of business for over 20 years and have good experience. The existing groupcompanies of the promoters are running profitably. The promoters have appointed Industrial Technical Consultants forsetting up DR Plant. The consultants have have good experience in setting up Sponge Iron plants.


Structure Risk


The points mentioned under threats and weaknesses have been included in the risk factors.

This Offer Document contains the cost of the Integrated Steel project as per the project report prepared by MPA FinancialServices P Ltd.

H. Details of Loans sanctioned for the total project are as follows:

Rs in Lacs

Name of Banks Date of sanction Amount

I Integrated Steel Project

1 ING Vysya Bank 15.09.2003 2,100.00

2 UCO Bank 29.09.2003 1,600.00

3 Indian Overseas Bank 29.12.2003 1,500.00

4 Andhra Bank 18.02.2004 975.00

Sub Total (A) 6,175.00

II Ancillary Project

1 State Bank of India 20.11.04 1500.00

Sub Total (B) 1500.00

Total (A+B) 7675.00

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The utilisation of the issue proceeds will be as follows:

Rs in Lacs

Issue Proceeds to be utilized Amount

Towards the cost of the completion of Integrated Steel project 1500. 00

Towards issue and listing expenses 100.00

TOTAL 1600.00

I. DEPLOYMENT OF FUNDS IN THE PROJECT

The company has already incurred Rs. 8790.80 Lacs on the Integrated Steel project and Rs.1469.54 lacs on theancillary project till 30th April 2005 and as certified by the auditors Jaiswal Kuldeep & Co vide their certificate dated1st June 2005.

The following are the details of the expenditure incurred till the 30th April 2005:

Rs. In Lacs

Integrated Ancillary TotalSteel Project Project

Particulars

Land & Site Development 95.25 5.52 100.77

Factory Building 841.25 484.86 1326.11

Plant & Machinery 4758.48 678.20 5436.68

Miscellaneous Fixed Assets 1563.28 215.56 1778.84

Technical Know How 25.50 10.00 35.5

Preliminary and Pre-operative Expenses 534.13 75.40 609.53

Investment in Working Capital 972.91 – 972.91

Total 8790.80 1469.54 10260.34

Note: - The following heads includes advances also:

1. Land & Site Development

2. Building

3. Plant & Machinery

4. Misc. Fixed Assets

The Company has not raised any Bridge Loans or made any other financial arrangements against the proceeds of thisissue.

J. YEAR WISE BREAK UP OF EXPENDITURE INCURRED AND PROPOSED TO BE INCURRED FOR THEINTEGRATED STEEL PROJECT

Rs. In Lacs

Sl Particulars Cost of Incurred Upto To be incurredNo. project 30.04.2005 in 2005-06

1. Land and Site Development 122.66 95.25 27.41

2. Factory Building & Civil Structurals 853.36 841.25 12.11

3. Plant & Machinery 5480.34 4758.48 721.86

4. Miscellaneous Fixed Assets 1856.33 1563.28 293.05

5. Technical Know-how Fees 80.00 25.50 54.5

6. Preliminary & Preoperative Expenses 725.19 534.13 191.06

7. Contingencies 155.82 – 155.82

8 Margin for Working Capital 600.13 972.91 (372.78)

Sub-total 9874.03 8790.80 1083.23

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K. YEAR WISE BREAK UP OF EXPENDITURE INCURRED AND PROPOSED TO BE INCURRED FOR THEANCILLARY PROJECT

Sl Particulars Cost of Incurred Upto To be incurredNo. project 30.04.2005 in 2005-06

1. Land and Site Development 2.63 5.52 (2.89)

2. Factory Building & Civil Structurals 543.41 484.86 58.55

3. Plant & Machinery 1156.33 678.20 478.13

4. Miscellaneous Fixed Assets 479.76 215.56 264.20

5. Technical Know-how Fees 15.00 10.00 5.00

6. Preliminary & Preoperative Expenses 106.19 75.40 30.79

7. Contingencies 64.38 – 64.38

8 Margin for Working Capital 69.19 – 69.19

Sub-total 2436.89 1469.54 967.35

L. Interim Use of Proceeds

Pending any use as described above, the proceeds of the issue shall be invested in high quality, interest / dividendbearing short term / long term liquid instruments including deposits with banks for the necessary duration. We mayalso use the same to fund our working capital requirement on a temporary basis.

DETAILS OF THE PROJECT

1. Overview

MSP Group is one of the leading steel manufacturers in the secondary sector in eastern India. The group already hasmanufacturing facilities to the tune of 2,25,000 TPA of sponge iron, 100,000 TPA of MS Ingots and 60,000 TPA ofRounds and Flats in the states of West Bengal, Orissa, Chattisgarh, Andhra Pradesh and Jharkhand.

The Company is in the process of setting up a Greenfield integrated steel plant at Jamgaon, Raigarh, Chattishgarh.

The project is envisaged to set up:

1. 2 Nos. 96,000 TPA sponge iron plant modules;

2. 16 MW captive power plant;

3. 95109 TPA steel melt shop comprising three 12 Ton induction furnaces and one 2 strand billet caster and

4. 80000 TPA re-rolling mill

The site for the proposed project is at Jamgaon, Raigarh, Chattishgarh. The process route selected for themanufacture of steel via the Sponge iron plant-induction Furnace – bContinuous casting – TMT Bars and wire rodswith major power supplied through captive source would ensure cost effective production of steel. The project costshave been estimated at Rs 9874.02 Lacs.

2. Project Background

India is endowed with the major raw materials for iron and steel industry such as iron ore, coal and slag material. Thecountry has the basic infrastructure, availability of cheap and skilled labour, strong and wide manufacturing base andgood research and development. India has a large pool of Engineering and Metallurgical talent and good portfacilities.

The steel industry has undergone major changes such as, delicensing and removal of price controls. The privatesector has a larger role to play without ceiling on plant capacity.

The Government of India has embarked upon an economic liberalisation programme, which has given an impetus tothe Indian Steel Industry in the overseas market as well.

The secondary steel industry has been facing endemic problems for a long time. The major problems can besummarised as follows:

i. Uncertain, interrupted and inadequate supply of power.

ii. High tariff rate of power

iii. Uncertain and inadequate supply with high and fluctuating price of melting scrap – the main feed stock.

38

The secondary steel plants are also in the process of re-organisation undergoing modernisation, expansion andstructural adjustments to meet the needs of the changing environment. In today’s national steel scenario, the ministeel plants based on the Electric Arc Furnace and Medium Frequency Induction Furnace operation contributes about25-30% of the domestic steel output.

3. Project Brief

MSP Group is a well-known steel manufacturer in the secondary sector in the eastern India. The group has multipliedits business operations in terms of sales and production by setting up different projects in the steel sector andindustrial oxygen gases in the state of West Bengal, Orissa, Andhra Pradesh, Chattisgarh and Jharkhand. The groupturnover was in excess of Rs.25000 lacs for the year ended March 2005.

With the experience of successfully running secondary steel units and industrial oxygen gas units MSP Group ofIndustries now proposes to put up an integrated steel complex at Jamgaon, Raigarh, Chattisgarh. The process routeselected for the manufacture of steel via the Sponge Iron Plant – Induction Furnace – Continuous casting – TMT Barsand Wire rods with major power supplied through captive source would ensure manufacture of steel at the cheapestcost.

The iron-ore would be sourced from private parties from Barbil mines area, which is approximately 260 kms fromJamgaon. Non-coking coal will be sourced from Government linkages from mines located at approximately 50-60 kmsfrom the proposed project site.

4. Manufacturing Process

39


5. A Diagrammatic representation of the integrated process flow is as follows:

40

Direct Reduction Technologies

Direct reduction processes are of significance and can form an alternative to a conventional Blast furnace. Solid spongeiron (direct reduced iron or DRI) is produced by removing oxygen from the ore .The technique of Direct reduction variesaccording to the type of reducing agents employed and the metallurgical vessel in which they are reduced. The reducingagents used normally are:

� Gas reduction

� Solid reducing agents

Gas reduction is more commonly used. Depending on the reduction vessel employed , there are:

� Shaft furnaces

� Rotary kiln furnace

� Fluidised bed and

� Retort process.

Reducing gasses are carbon monoxide, hydrogen and their mixture, which are generally found in natural gasses. Thedirectly used solid reducing agents are coals of any size, so that there is no need for expensive coke. The continuous shaftfurnace, which uses reducing gasses, is more common. Midrex, HYL III process is of this type. HYL I process is ofdiscontinuous retort type. SL/RN and Krupp-Codir are of rotary kiln type . These processes use solid reducing agents andoperate in continuous flow. Ores for direct reduction have to meet stringent specifications with high percentage of Fe andlow content of tramp elements. Pellets are used mainly for this purpose. The output of all DRI processes is Sponge IronSponge iron is also hot briquetted to HBI .DRI combined with an EAF is considered as an efficient steel making technique.

Casting:

The liquid steel is cast into semi-finished products such as billets, blooms, slabs etc. This process called continuouscasting is different from old technology (still in use in older plants) where liquid steel is first solidified in large blocks calledingots and then rolled into semis, involving higher energy and waste in re-heating.

Rolling:

The semis such as billets, blooms, slabs are heated at 1200°C to make metal malleable and then rolled into finishedproducts. There are different rolling mills for different products. Rolling mill for long products such as bars, angles,structural etc. can be part of steel making plant or an independent small-scale industry. Flat product rolling mills are capitalintensive, as they have to meet strict quality parameters. Rolling rolls slabs in flat product HR plate/ strip/ coil by processof heating the slab followed. HR sheet’s thickness can be further reduced by cold rolling i.e. rolling in CR mill at roomtemperature. CR can be zinc coated in a galvanizing plant to make galvanized plates or corrugated sheets. (GP/ GC). Wirerods can be drawn to make wires.

6. Advantages of the Project

The proposed project will be in an advantageous position because of the following: -

Raw Materials – Locational Advantage

a. Iron Ore

The plant is located at Jamgaon, Raigarh, Chattisgarh. Iron ore is available in plenty and would be brought from mineslocated in an around Barbil. The coal is available from mines located at about 50-60 km from the proposed site.

b. Non-coking Coal

Non-coking coal is one of the main raw materials for sponge iron. The coal of the required specification is available inthe mines located in Raigarh and Korba -districts under South Eastern Coal fields Limited (Govt. of India) a subsidiaryof Coal India Ltd. The coalmines are located within a radius of 50 to 60 kms. The main collieries are Chirimiri, Hasdeo,BKP Area, Bhatgaon and Kusmunda. The Company has received the necessary approvals for the supply of coal.

The cost of coal for the unit will be cheaper in comparison to the other plants in West Bengal. Further for themanufacture of steel own DRI to the extent of 80% of the charge mix would be used.

c. Total waste energy utilisation

In a coal based sponge iron plant, about 40% coal energy is utilised. As such, a waste heat recovery boiler with everykiln shall be installed for generation of power. From energy perspective, the total balance in the power generated fromwaste gases with the requirement of energy for steel manufacture. The captive power produced from waste heatwould meet the major requirement for the total steel capacity envisaged.

41


In order to ensure that there are no jerk loads in the Power Distribution System, Induction Furnaces will be installedinstead of Electric Arc Furnace. Use of the Induction Furnace allows the power to be tapped directly from the captivepower plant at 11 KV. An electric arc furnace due to its fluctuating nature of load on the supply system (causing voltagedips and harmonic variations in the grid) can only be run with the support of a high voltage supply and a high shortcircuit level.

d. Electricity

The power cost from the captive plant will be cheap i.e. almost about 40-45% of the normal electricity cost, which isusually Rs 2.80 per Unit. Use of captive power will improve the economic viability of the project because waste heatgenerated in the sponge iron plant will be utilised. The application for 33 KVA electricity line has been forwarded bythe local SE to Bilaspur HO for approval and the same is stated t be completed by December 2003.

Advantages of using Sponge Iron

Use of sponge iron is increasing continuously due to the following reasons: -

� Reduced availability of quality steel scrap.

� Sponge iron does not have impurities such as, copper, tin, arsenic, chromium, nickel, lead etc.

� Reduced refining time.

� Simultaneous melting and refining with continuous charging.

� Faster metallurgical reactions.

� Less refractory consumption due to less hot spots in the furnace.

� Consistent chemical composition.

� The ship breaking industry has been hamstrung by the recession in the shipping industry. Thereby, affecting theavailability of quality steel scrap.

DETAILED BREAK UP OF COSTS

a) Land and Site Development (Rs. 122.66 lacs)

The integrated steel plant project will be located at Village: Jamgaon, Dist: Raigarh, Chattisgarh, India. The total landrequired for the project is 52 acres. The land required for the project has been acquired and all necessary formalitieshave for registration, mutation and conversion of land for industrial usage has been completed and all formalities andrules complied with. The company has further acquired 23 acres of land in the adjoining areas on ownership for itsfuture expansions.

Rs in Lacs

Sl. Particulars Amount

(A) LAND

(i) Free hold Land admeasuring 52 acres at Village: Jamgaon, Dist- Raigarh, Chhattishgarh. 12.25

(ii) Stamp duty, Registration Charges, Legal Fees etc. 0.61

Total (A) 12.86

(B) SITE DEVELOPMENT EXPENSES

(i) Cost of levelling and development of land. It will be raised toa height of 4 feet. The cost of filling and levelling will be @ 90000/- per acre 46.80

(ii) Internal Road-2000 rm, 18 feet wide internal road @ Rs. 750 per rm.Type of ConstructionOver burnt bricks, stone chips and sand morram 15.00

(iii) Cost of Compound Wall – 6000 rft and 8 feet height @ Rs. 750 per rft.Type of Construction8’ height, 5 inches thick-cemented brick wall RCC column, tie beam. 45.00

(iv) Cost of 2 nos. Iron Gates @ Rs. 150,000 each. 3.00

Total (B) 109.80

Grand Total: (A + B) 122.66

42

b) Factory Building & Civil Structural (Rs. 853.36 lacs)

The company has appointed SP Construction & Contractor for the proposed factory building and civil structural. Theproposed expenditure of Rs. 853.35 lacs can be divided into expenditure to be incurred for Sponge Iron Plant, M.S.Billet Plant, Power Plant and Re-rolling Mill to the tune of Rs. 277.44 lacs, 254.70 lacs, 221.71 lacs and 99.51 lacsrespectively. The Construction and fabrication work for Sponge Iron Plants have already been completed.Weighbridge of 50 Tonnes capacity and two DG sets of 750 KVA each and one 380 KVA capacities have been installedat site so as to ensure smooth running of erection and fabrication work. The construction work and fabrication toenable installation of Ist power plant is scheduled to be completed in the month of October 2004.

Details of buildings:

(i) Sponge Iron Division

The details of estimates are as under: -

Sl. Description Type of Measurement Area(m2) Rate/ m2 AmountNo Construction (L*B*H)

(Meters)

1. Crushing AC sheet roofing 8 m*5 m*16m 320 3000 9.60House RCC foundation, (4 floors) - 2. Nos. Shed MS joist column with(For Coal) angle bradngs.

2. Ground Hopper - DO- m*5m*4m*4m 200 3000 6.00Shed(For Coal) (depth) & 3m*25m*

4m (inclination) - 2Nos.

3. Ground - DO- m*5m*4m*4m 200 3000 6.00Hopper (depth) & 3m*25m*Shed 4m(inclination) - 2(For Iron Ore) Nos.

4. Iron Ore Fines - DO- 8m*4m*15m -2 64 3000 1.92Stock Bin Nosand Hopper

5. Iron Ore - DO- 6 m*5m*12m - 2 nos. 180 3000 5.40Screen House (3 floors)

6. Coal Transfer - DO- 4 m*4 m*8 m 64 3000 1.92House (2 floors) - 2 Nos.

7. Feed Bunker - DO- 6m*50 m* 12.22 m 600 3000 18.00Shed (In different portion)

- 2 nos.

8. After Burning - DO- 8m*8m*40 m 1152 3000 34.56Chamber (9 floor) – 2 nos.

9. Kiln Feed - DO- 8m*6m*25m 480 3000 14.40Building (5 floor) – 2 nos.

10. Kiln Cooler - DO- 10m*10m*20m 800 3000 24.00Transfer (4 floor)- 2 nos.Building

11. Cooler - DO- m*12m*5m*5m 324 3000 9.72Discharge (depth) &6m*15mHouse *5m (inclination) – 2

nos.

12. Product - DO- 8m*8m*20m – 2 nos. 128 3000 3.84House Transfer

13. Product House - DO- 12m*12m*15-24m 1440 4000 57.60With Stock Bins (5floor) – 2 nos.

43


Sl. Description Type of Measurement Area(m2) Rate/ m2 AmountNo Construction (L*B*H)

(Meters)

14. Underground RCC underground 12m*30m*5m 1500000 L.S. 7.06Reservoir construction with (With suitable Litres

250 mm thick w being partitions)5 meter deep. Finishwith water proofingcompound and Cleanmanhole covers.

15. Overhead RCC construction 30000 L.S. 3.00Reservoir with 250mm thick Litres

concrete wall.

16. Pedestals for RCC foundation 750 Cu m of RCC 750Cu m 4000 30.00Kiln & Cooler with 6m Depth to carry a load of

1200 MT

17. Cooler Tray RCC construction 40m*10m*2m depth L.S. 3.00and Drainage

18. Electric control RCC roof slab, 250 mm 12 m *6 m *2 m 144 3000 4.32room and thick brick wall with (2 Nos.)D.G. Set room. cement plasters, steel

windows, wooden doorand water proof floors

19. Laboratory RCC structure, 250 mm 15m*10m*3m 150 3000 4.50thick brick wall, RCCroof slab, plasters finish.

20. Administrative RCC structure, 20m*10m*3mBuilding RCC roof-ing with (2 floors) 400 3200 12.80

250 mm thick wall,wooden doors,win-dows, MS grill,terrazzo floor finishwith sanitary pipesand fittings.

21. Stuff Quarters -DO- 30m*10m*3m 600 2800 16.80(2 floors)

22. Toilets RCC structure, 250 L. S. 2.00mm thick brick wall,RCC roof complete withpiping and sanitaryfittings.

23. Security Room RCC foundation, L. S. 1.00RCC roof slab, 250 mmthick. Brick wall withcement plaster, steelwindows & woodendoors.

Total 277.44

44

(ii) Billet Division


Rs in Lacs

Sl. Description Type of Measurement Area(m2) Rate/ m2 AmountNo. Construction (L*B*H)

(Meters)

1. Main Factory RCC foundation, AC 150x21x16 3150 3500 110.25Shed sheet roofing, MS joist

column with anglebarding

2. Lean-to-shed -DO- 55 x 13 x 8 715 1500 10.73

3. Furnace Room 250 mm thick reinforced L. S. 11.25concrete about 1500 mmbelow ground level withRCC beams (250 x 400mm) are to be casted atground and lintel level.Furnace room wall cruciblefoundation and roof slabwill be 250 mm thick.

4. Store Room RCC frame structure 10 x 30 300 3500 10.50(2Floors) building RCC roof with

250 mm brickwork alongwith rolling shutter, steelwindows and cement finish.

5. Scrap Bay 110x20 2200 2000 44.00

6. Billet Bay 70 x 22 1540 2000 30.80

7. R.Table Bay 22 x 11 242 1800 4.36

8. Underground RCC underground –– 1000000 2.00 20.00Reservoir construction with 250 litre

mm thick wall being4 meter deep. Finish withwater proofing compoundand a manhole covers.Underground Reservoir- 18,00,000 It.ColdSump-1, 00,000 It.HotSump-1.10, 000 It.

9. Overhead RCC construction with 20 x 16 x 1.50 320 5.40Reservoir 250 mm thick concrete (90,000 litre)

wall at 1 C meter abovepump room

10. Sub-station RCC pocket foundations L. S. 5.00(Indoor) 1500 mm below the

existing ground level.Foundation of main andauxiliary transformers willbe upto a height of 1.50 mfrom ground level.

45



(Meters)

11. Meter Room, RCC structure, 250 mm 5x3 15.00 3000 0.45LT Room, thick brick wall, RCC 5x3 15.00 3000 0.45Maintenance roof slab. tie beam, 6x3 18.00 3000 0.54Room water proof floors.a) Meter Roomb) L T Roomc) Main. Room

12. Pump Room RCC structures, 5 x 6.5 32.50 3000 0.98and 250 mm thick brick

wall, RCC roof slab,plaster finish.

Total 254.70

(iii) Power Division

The details of estimates are as under: -Rs in Lacs


(Meters)

1. Complete civil 221.71works includingstructural work,Plate works.

Total 221.71

(iv) Re-rolling Mill Division


Rs. In lacs


(Meters)

1. Main factory AC sheet roofing 146m’ x 20m’ 2920 2100 61.32shed(Mill Shed) RCC foundation,including Shed steel Column

2. Workshop / -Do- 45m’ x 8m’ 360 2100 7.56Pane/ Furnace /Pump Room

3. Electric sub- RCC foundation, 12m x 6m 72 2100 1.51station Room 10" thick wall with

concrete roofing

4. Labour Quarter -Do- 30mx 15m 450 2350 10.58

5. Under Ground Concrete wall,Water Reservoir Cement finish L. S. 5.00

6. OverheadWater Tank L. S. 3.00

7. Furnace Concrete wall,Oil Tank Steel Tank L. S. 3.00

8. Overhead Steel Tank L. S. 1.00Oil Service Tank

46


(Meters)

9. Deep TubeWell 1.50

10. Furnace Shed 24m x 10m 240 2100 5.04

Total 99.51

c) Plant & Machinery (Rs. 5,480.34 lacs)

Details of Plant & Machinery.

(i) Sponge Iron Division:

Rs. In lacs

Details of Machinery Name of the Suppliers Current Status Total

Rotary Kiln With Cooler Walchand Nagar Industries Limited Installed/ Delivered 1327.04

Hydraulic System Frontline Hydraulics, Secunderabad Installed/ Delivered 11.41

Fans & LDO / HSD Heatly & Gresham (India) Limited, Kolkata Installed/ Delivered 7.55

Bimetallic Slip Rings Lohman Casting Pvt. Limited Installed/ Delivered 10.13

Butterfly Dampers Merger Systems, Howrah Installed/ Delivered 1.56

Double Pendulum Valve And Flap Electro Zavod (India) Pvt. Ltd., Kolkata Installed/ Delivered 29.33

Gear Box & Couplings Elecon Engineering Co Ltd. Kolkata Installed/ Delivered 167.02

Rotary Air Lock Feeder Evergreen Engg. Works. Jamshedpur Installed/Delivered 2.93

Kiln Tubes And Pipes Nitin Castings Ltd., Mumbai Installed/Delivered 66.35

Total 1623.32

All machineries for Kiln I has been installed and for Kiln II has been delivered.

(ii) Billet Division:


Melting Furnace Inductotherm (I) Pvt Ltd Installed 290.66

Cooling Tower Southern Cooling Towers Pvt. Limited Delivered 11.40

Furnace Transformer Truvolt Engg. Co. Pvt. Ltd., Kolkata Delivered 37.62

Water Distribution System Southern Cooling Towers Pvt. Limited Delivered 10.13

Air Compressor Atlas Copco Limited Delivered 3.99

Concast Concast (India) Limited, Kolkata Ordered 167.27

Charging Skips, Tendis,Spoons Laddel etc. Fabrication on site Ordered 2.93

EOT Crane Roy & Birdi Engineers, Kolkata Delivered 120.17

Circular lifting magnet Eletro Zavod (I) Pvt. Ltd., Kolkata Delivered 20.29

Span Crane for Billet Handling Roy & Birdi Engineers, Kolkata Ordered 24.13

Laboratory Equipments Sigma Instruments Kolkata Ordered 12.06

Pollution Control Equipments Environ Care Filtration & Systems, Kolkata Ordered 45.24

Total 745.89

47


(iii) Power Division:


WHRB’s- 39.2 TPH Cethar Vessels Limited Installed 1224.50

Straight Condensing Steam Triveni Engg Ltd / Installed 1158.14Turbine Generating Set Alstom Ltd

Piping Local Purchase Installed 180.96

Transportation,Erection &Commissioning Local Purchase Installed 140.00

Total 2703.60

(iv) Re-rolling Mill Division:


410 mm Roughing Mill of 3 stands R. K. Engineers, Howrah Delivered 45.53

310 mm Roughing Mill of 4 stands R. K. Engineers, Howrah Delivered 26.82

280 mm Alt. 2 Hi 1st Finishing R. K. Engineers, Howrah Delivered 10.50Mill of 2 stands

260 mm 2 Hi Continuous R. K. Engineers, Howrah Delivered 37.012nd Finishing Mill of 4 stands

Auxiliary Equipments R. K. Engineers, Howrah Delivered 31.93

Oil Fired Re - Heating Furnace R. K. Engineers, Howrah Delivered 52.00

Auxiliary and Electrical Motor R. K. Engineers, Howrah Delivered 189.28

Workshop / Roll Turning Shop R. K. Engineers, Howrah Delivered 14.48

Total 407.55

d) Miscellaneous Fixed Assets (Rs. 1,856.53 lacs)

(i) Sponge Iron Division:


Crusher & Vibrating Screen Moktali Engg. Co., Baroda Installed 89.28

Vibrating Feeder & Magnetic Electro Magnetic Industries, Baroda Installed 34.03Separator

Air Receiver Tank Atlas Copco (India) Ltd. Mumbai Installed 1.28

Screw Compressor Atlas Copco (India) Ltd. Mumbai Installed 23.45

Volumetric Feeders Bevcon Wayors Pvt. Ltd, Hyderabad Installed 10.74

Belt Conveyor for Raw Material Suman Industries, Kolkata Installed 112.20& Finished Goods

Wet Scrapper Bevcon Wayors Pvt. Ltd, Hyderabad Installed 10.38

Electric Motors for Kiln and Kirloskar make Pawan Installed 23.34Other Equipments Kumar & Co., Kolkata

Roots Blower Kay International Ltd., Delhi Installed 13.03

Variable Speed Drive J. K. Automation, Kolkata Installed 53.32

Bucket Elevator Bevcon Wayors Pvt. Ltd. Hyderabad Installed 8.44

Machine Control Circuit Venus Controls & Switchgear Pvt Ltd Installed 24.27

Power Control Circuit Venus Controls & Switchgear Pvt Ltd Installed 11.03

Electrical Slip Ring Electro Zavod (P) Ltd. Installed 10.92

Transformer Truevolt Engg. Co. Pvt. Ltd., Kolkata Installed 15.39

48


Switch Gear Installed 13.23

First set of Consumable stores Passary Minerals Ltd., Rourkela/Matthews & Co. Kolkata/ GmmcoLtd., Nagpur Installed 358.00

Pollution Equipment Welltech, Maheshtalla Kolkata Installed 40.14

Civil, Fabrication Items,Installation - Installed 77.06

Laboratory Equipments Sigma Instruments Installed 8.11

D. G. Set Jaksons Ltd., Noida Installed 67.84

Tools & Tackles Installed 5.60

Furniture, Fixture &Office Equipments Installed 5.00

Service connection & Security CSEB [Chattisgarh State Installed 20.00deposit payable to ACB Electricity Board]

Water Pump, Motor Cooling Tower Western Consolidated Installed 4.14Pvt. Ltd., Kolkata

Deep Tubewell Boring Installed 3.00

Weight Bridge Digital Weighing Systems Installed 8.21Pvt. Ltd., Bilaspur

Water Spray Nozzles A. J. Corp., Mumbai Installed 1.16

PLC + Scada J. K. Automation Installed 77.69

Grease Pump Lincoln Helios (India) Ltd., Banglore Installed 12.06

Transportation / Installation –– 64.93

Total 1207.27

(ii) Billet Division:


Auxiliary Transformer Multicables Pvt. Ltd, Kolkata Installed 4.83

L T Panel, switch gear, cabling, Automatic control Corp. & Delivered 39.56electrification including indoor Power Electric Cables Co.substation

H. T. Sub-station & Cables Electronics Switchgears Pvt. Ltd./ Delivered 59.40for Power line Power Electric Cables Co.

Furniture & Office equipments Local Purchase 2.50

Fire Fighting Equipments 1.99

Tools, Gas Cutting, Welding sets Delivered 6.16

Total 114.44



DM plant, Cooling tower, Cethar Vessels Limited Installed 193.02Fire fighting fire and etc.

HT & Lt switchgear, substation. Cethar Vessels Limited. Installed 241.28

Transportation cost Cethar Vessels Limited Installed 4.34

Total 438.65

49


(iv) Re-rolling Mill Division:


Quality Control Local Purchase Ordered 3.00Laboratory Equipments

Complete Transformer Multicables Pvt. Ltd. Ordered 10.00

Vacuum Circuit Breaker Shri NM Electric Co. Pvt. Ltd., Kolkata Ordered 13.63

Furnace Oil Tank Ordered 3.00

D.G. Set Jaksons Limited Ordered 4.28

Liquid Starter Ordered 2.00

Water Pump Local Purchase Ordered 8.00

Weighbridge Local Purchase Ordered 4.34

Electrical, LT, HT, Busher Local Purchase Ordered 47.91

Total 96.17

e) Technical Know-how Fees (Rs. 80.00 lacs)

The Technical Know-how Fees of Rs. 80.00 lacs includes Rs. 25.00 lacs for Sponge Iron plant to Industrial TechnicalConsultants, Rs. 10.00 lacs to Engineering and Mechanical Consultants for Billet Plant, Rs. 40.00 lacs to AKB PowerConsultants Pvt. Ltd for Power Plant and Rs.5.00 lacs to R.K. Engineerings for Re-Rolling Mill.

f) Preliminary & Preoperative Expenses (Rs. 725.19 lacs)

The preliminary and pre-operative expenses of Rs. 725.19 lacs includes Rs. 257.50 lacs for Sponge Iron Plant,Rs. 123.19 lacs for M. S. Plant, Rs. 286.00 lacs for Power Plant and Rs. 58.50 lacs for Re-rolling Mill.


Rs in Lacs

Sl Particulars AmountNo

1. Establishment Expenses including Salary to staff at works site 3.00

2. Travelling Expenses 2.00

3. Miscellaneous Expenses 5.00

4. Interest during construction period and upfront fees 245.00

5. Insurance during construction period 2.50

Total 257. 50


Rs in Lacs


1. Travelling Expenses & Misc. Expenses 6.00

2. Establishment Expenses 5.00

3. Interest during construction period 107.19


Total 123.19

50


Rs in Lacs


1 Travelling Expenses & Misc. Expenses 6.00

2 Establishment Expenses 10.00

3 Interest during construction period 260.00

4 Insurance during construction period 10.00

Total 286.00


Rs in Lacs


1. Travelling Expenses 3.00

2. Establishment Expenses 3.00

3. Miscellaneous Expenses 2.00

3. Interest during construction period & Upfront fees 47.50


Total 58.50

Contingencies (Rs. 155.81 lacs)

A contingency provision of 2.5% amounting to Rs. 155.81 lacs has been considered on the cost of factory Building andCivil Structurals, Plant and Machinery and Miscellaneous Fixed Assets.


Rs in Lacs

Item Cost Contingency (%) Amount

Land and Site Development 43.91 0.00% 0.00

Buildings 277.44 2.50% 6.94

Plant & Machinery 1623.30 2.50% 40.58

Miscellaneous Fixed Assets 1207.27 2.50% 30.18

Preliminary & Pre-operative Expenses 257.50 0.00% 0.00

Margin Money for Working Capital 0.00 0.00% 0.00

Total 3409.42 77.70


Rs in Lacs



Buildings 254.70 2.50% 6.37

Plant & Machinery 745.89 2.50% 18.65




Total 1238.21 27.88

51



Rs in Lacs



Buildings 221.71 2.50% 5.54

Plant & Machinery 745.89 2.50% 18.65




Total 1,692.25 35.16


Rs in Lacs



Buildings 99.51 2.50% 2.49

Plant & Machinery 407.55 2.50% 10.19




Total 862.40 15.08

Investment Avenues

The management proposes to deploy issue proceeds in liquid investments pending its utilisation in the proposed project.

Collaboration, Any Performance Guarantee or Assistance by the Collaborators-

All equipments that have been ordered have a performance guarantee of 12 months.

The company has not entered into any technical collaboration with any company or person and is not assisted inmarketing by the collaborators.

In preparation of the Project Report assistance has been taken from Industrial Technical Consultant who are a group oftechnical experts in the field of sponge iron project implementation.

ISSUE AND LISTING EXPENSES (RS. 100 LACS)

The company has estimated that an amount of Rs. 100.00 Lacs would be incurred towards Issue and Listing expenses.These expenses would comprise fees payable to the Stock Exchange for listing, Lead Manager, Registrar, Bankers to theIssue, Legal Advisor, Auditors, Advertising and marketing expenses, stationery and distribution expenses, bank chargesand other incidental and miscellaneous expenses.

These expenses will be met out of the issue proceeds.

DETAILS OF INSTALLED CAPACITY AND CAPACITY UTILISATION:


The plant will run for triple shift per day and 320 days a year after setting aside 45 day for periodical kiln clearing andmaintenance work. The proposed plant will have the Sponge Iron production capacity of 300 M. T. per day from eachof the 2 kilns.

Proposed Capacity

2 x 300 x 320 days = 1,92,000 MT/ Year

Product Mix Production Qty.

Lumps 100% 1,92,000

52

Capacity Utilisation

The Capacity Utilisation has been proposed at 65% in the first year, 75% in the 2nd year and 85% in 3rd yearonwards. Production in different years would be as under: -

Year Utilisation Production(%) (M.T.)

2005-06 65 1,24,800

2006-07 75 1,44,000

2007-08 onwards 85 1,63,200


The plant will run for triple shift per day and 320 days a year. The details of installed capacity have been worked out asunder: -

i) No. Of Induction Furnace : 3

ii) Average Batch Capacity / Furnace (M. T.) : 12

iii) Average no. Of heats per day of 24 hours : 10

iv) No. Of working days per year : 320

v) Yield i.e. charge to liquid metal : 86%

vi) Installed Capacity of Liquid Metal per year (M. T.) : 320*10*12*3*86% i.e. 99,072.00

vii) Installed Capacity of Billets per year (M. T.) : 132096*96% i.e. 95,109.00


The Capacity Utilisation during different years of projections are as under: -

Year Utilisation Production(%) (M.T.)

2005-06 65 61,821

2006-07 75 71,332

2007-08 onwards 85 80,843

(iii) Captive Power Plant

Considering the average steam consumption norm for power generation as 4:1 TPH steam / MW at 65 bar & 485degree centigrade. Though each boiler will be of 36 TPH capacities, average steam generation will be 33 TPH fromeach boiler. Power generating potential from 2 nos. WHRB 66/4.1 = 16.09 MW

Total Power generating potential (WHRB) 16.09 MW

Turbo generator to be installed (2x8 MW) / (1X16 MW) = 16.00 MW

Considering station load (10%) 1.60 MW

Total power available 14.40 MW

Net power available (Considering 85% utilisation) 12.24 MW


The plant will run for double shift of 8 hours each day and 320 days a year.

The products to be manufactured are T.M.T. Bars. Sizes of TMT Bars 8 mm dia, 10 mm dia, 12 mm dia and 16 mm dia.

Production capacity for 8 mm dia bars is taken for basic calculations since this is the smallest size of bars produced oncooling bed as long products.

53


Technical parameters for production of 8 mm dia TMT bar are as under: -

Product Size Sectional Wt. Kg / Meter Finishing Speed (Meters / Sec.)

8.00 0.395 13.93

Basic raw materials (Billet wt/ Pc.) 110.00 kgs (average)

Sectional wt. Of 8 mm dia 0.395

Length of 8 mm dia 278.48 Mtrs

Speed of 8 mm dia rolling 13.93 Mtrs / sec.

Time taken to roll one piece 19.99 secs

Idle time between piece 4.01 secs

Total time taken to roll one piece 24.00 secs.

No. of pieces that can be rolled / hour 149.99 pcs.

Yield 95%

Production per hour 15.67 Tonnes

Installed Capacity per year – 80,251.12, i.e. Say 80,000 M.T./ Year

In the same way all other sizes shall have a production rate more than 16.8 tonnes per hour.

The product mix is proposed as under: -

Product Mix Production Qty. (M. T.)

TMT bars 100% 80,000

Total: 80,000


The year wise Capacity Utilisation and Production have been arrived as under: -

Year Capacity Utilisation (%) Production (M.T.)

2005-06 65 52,0002006-07 75 60,0002007-08 85 68,0002008-09 onwards 90 72,000

DETAILS OF RAW MATERIAL COST & CONSUMABLE STORES


Raw material:

Raw Materials for the proposed product are Iron are, Coal, Dolomite and LDO. The raw material requirement and itsper tonne of product is as under: -

Items Requirement / Tonnes of Finished Goods Rate/ M.T. Total (Rs)

i) Iron Ore 1.60 M.T. 1500* 2,400.00

ii) Coal 1.30 M.T. 1300* 1,690.00

iii) Dolomite 50 kg. 625* 31.00

TOTAL 4,121.00

*Including freight

Hence, Raw Material requirement at 100% production will be as under: -

1,92,000 M. T. * Rs. 4,121 /- per M.T. = 7912.80 Lakh

Consumables stores:

Light Diesel oil is required to the tune of 3 litres per tonne of Finished Goods.

The total cost at 100% production will be as under: -

3 Litre * Rs.23 per litre * 1,92,000 MT = 132.48 Lacs

54

(ii) M.S. Billet Division

Raw Material:

Raw Materials requirement and its cost at 100% production level has been estimated at:

Rs. in Lac

Items Rate Input Product Amount Excise(Rs./M.T.) Quantity Mix (%) duty

(M.T.) included16%

Sponge Iron 0.00 91,673.16 64.58% 0.00 0.00

Pig Iron 10,200.00 22,777.89 34.77% 2,323.34 320.46

Ferro Manganese 22,000.00 495.36 0.43% 108.98 15.03

Ferro Silicon 34,500.00 195.84 0.17% 67.56 9.32

Aluminium Shots 82,000.00 57.60 0.05% 47.23 6.51

Total: 115,199.85 100.00% 2,547.11 351.32

Rate / MT (of Excisable Items) 304.33

Raw Material rate includes excise duty, sales tax and transportation charges etc. Recovery of billet has beenconsidered at 82.56% of the raw material weight.

Requirements and its cost during different years have been taken as under: -

Year Quantity Amount (Rs/Lacs)

2005-06 74,879.91 1,655.63

2006-07 86,399.89 1,910.34

2007 –08 / 0nwards 97,919.88 2,165.05

Excise Amount included in purchase of Raw Material 304.97 per MT

CENVAT amount to be claimed has been calculated as under: -

Year Quantity Consumed Amount Rs/Lacs

2005-06 74,879.91 228.36

2006-07 86,399.89 263.50

2007-08/ 0nwards 97,919.88 298.63

SCHEDULE OF CONSUMABLE STORES

Miscellaneous Stores:

The cost per ton on this account will amount to Rs. 250 per M.T.

(Rs.)

Garnex Board Set 55.00Radex 10.13Copper Mould Tube 26.00Monolithic Lining Of Tundish 11.50AI Wire 13.50Tundish Nozzle 2.95Dummy, Bar Bolt 2.78Oxygen 2.97Thermocouple 5.25Acetylene 7.25Furnace Oil, Mobil Oil, Diesel Oil Etc. 50.00Other Misc. Stores 62.67

Total 250.00

55


Other Consumable Stores:

For 600 M.T. production, the stores requirement is as under:

Particulars Rs.

1 No. Dining Farma Used 1,5008 Nos. Patching Farma Used 8,0008 Nos. Asbestos Mill Board (1m * 1m * 1m) 4006 M.T. Ramming Mass 12,00075 Kg. Boric Acid 9,00020 Kg. Sodium Silicate 100

Total: 31,000

Hence, cost of consumable stores will be Rs. 300/- per M.T.

The consumption during different years will be as under: -

Rs. in Lacs

Year Quantity Amount

2005-06 74,879.91 224.64

2006-07 86,399.89 259.20

2007-08/0nwards 97,919.88 293.76

(iii) Captive Power Plant

The power will be generated from waste heat generated from Direct Reduction Kiln.

Technical parameter of Waste Heat Gas.

Steam Output, Maximum Continuous Rating (MCR), TPH 36

Steam Output, Nominal Continuous Rating (MCR), TPH 33

Steam Pressure At Super-Heater Outlet, KSCA 67

Steam Temperature At Super Heater Outlet 485

Feed Water Temp. Economiser 140

No. Of Boilers 2

Waste Gas Inlet Conditions

A. Gas Flow, Nm3 / Hr 90,000

B. Gas Temperature, Degree Centigrade 950 – 1,000

C. Dust Content, Mg/Nm3 35

Exit Temperature Of Waste Gases, Degree Centigrade 160

(iv) Re-Rolling Mill

Raw Material

The raw material for the proposed products is M. S. Billets, M. S. Rounds and Tor will be drawn from M. S. Billets. Theprocess altogether has a loss of 5%. Out of which there will be 2% clear burning loss and 3% will be end cutting andseconds. The ends cuttings and seconds are saleable at scrap value. The raw material will be sourced from M. S.Billet division of the company; hence no cost has been considered.

The raw materials requirement and its cost at 100% production level has estimated as under:

Rs. in lacs

Description Finished Goods Wastage Total Raw MaterialQuality (M.T.) @ 5% Qty. (M.T.) Rate/M.T Value

M.S. Billet / Ingot 80,000.00 4,210.53 84,210.53 0.16 13473.68

Total 80,000.00 4,210.53 84,210.53 0.16 13473.68

56

The break up of the Billets cost is as under: -

(Rate Per M. T.)

i) Basic Cost 16000.00 (including excise duty)

ii) Freight 0.00

CONSUMABLES STORES

Misc. Consumable Stores

Consumable stores include cost of Rolls, Bearing, Lubricating oil, Grease etc. As per the industry average, the averagerolls cost per Ton of finished goods is Rs. 100/- considering other consumables at Rs. 25/- per Ton has been taken asRs. 125/-.

DETAILS OF POWER AND FUEL EXPENSES


Power Cost

The machine wise power requirements have been estimated as under: -

Machine’s Name PowerRequirement [KW] Total

Each machine

Vibro feeder 6.00 12.00Iron Ore Screen 12.00 24.00Coal Crusher 90.00 180.00Coal Screen 11.25 22.50Volumetric Feedersi) Coal 2.00 4.00ii) Iron Ore 2.00 4.00iii) Lime Stone 2.00 4.00ARO Air Fan 33.00 66.00Emergency Cap 12.00 24.00Ceiling Air Fan 3.00 6.00Kiln in let cooling air fan 22.00 44.00Injection Coal Volumetric Feeder 2.00 4.00Kiln main drive (DC) 120.00 240.00Kiln Aex Drive 15.00 30.00Central Burner Blower 22.00 44.00Central Burner Oil Pump 6.00 12.00Shell Air Fan 100.00 200.00Cooler Main Drive 90.00 180.00Cooler Aex Drive 9.00 18.00D. P. Valve 9.00 18.00Bore Well Pump 22.00 44.00Cooler Cooling Water Pump 44.00 88.00Dusting Blower 60.00 120.00Cooler Inlet Cooling Fan 15.00 30.00Rotary Air luck Feeder 5.00 10.00Kiln outlet cooling, fan 22.00 44.00Sponge Iron Screen 15.00 30.00Magnetic Separator 6.00 12.00Dedusting Flower – II 60.00 120.00Air Compressor 75.00 150.00Conveyor System 75.00 150.00General Lighting 30.00 60.00Total 997.25 1,994.50Approximately 1000 2000 KVA

57


A power connection of 2,000 KVA is sufficient to run the plant smoothly.

Total power consumption at 100% capacity level will be: -

* 0.90(Power Factor) * O.85 (Load factor) * 20Hrs, * 320 Days = 9,792,000 Units

The power cost has been computed as under: Rs. in Lacs

Particulars 05-06 06-07 07-08 08-09 onwards

Capacity Utilisation (%) 65% 75% 85% 85%

Units Consumption (No) 6,364,800 7,344,000 8,323,200 8,323,200

Demand Charges @ Rs. 122 per I0/A per month. 29.28 29.38 29.38 29.38

Energy Charges & Fuel Surcharge @ Rs. 2.80 per unit 178.21 205.63 233.05 233.05

Total: 207.49 234.91 262.33 262.33

Fuel Cost

The D.G. Set will run on an average 4 hours per day. Accordingly the power cost has been considered for 20 hours per dayonly.

Total fuel consumption at 100% capacity level will be: -

(a) 400 Litres * 4 hours * 320 days *Rs. 23/-- = 117.76 Lacs.

(b) The Power and Fuel cost in the different years will be as under:

Particulars 05-06 06-07 07-08 08-09 Onwards

Power 207.49 234.91 262.33 262.33

Fuel 76.54 88.32 100.10 100.10

Total: 284.04 323.23 362.43 362.43

Water

Water is required for cooling purpose and drinking / sanitation purpose. Make up water require-ment of about 2,88,000litres/ day would be met from underground sources through deep tube wells. Provision for deep tube well cost has beenmade in the project cost and cost of power has been taken made in the power and fuel cost.

Approval has been obtained from State Investment Promotion Board for drawing water from nearby river to meet waterrequirements. Apart form the same; tests were conducted on site through 10 bores to assess the availability of water,which turned out to be quite satisfactory. 2 Bore wells have been installed at site and the water availability has turned outto be 10 m3/hr per bore.

(ii) M. S. Billet division

Power

Power requirement has been arrived at as under: -

Particulars Power Requirements (KW)

Furnace 15,000

Auxiliary Load for EOT Crane, Air Compressor, Lighting Fans etc. 1,500

Total 16,500

Thus, power connection of 16,500 KVA is sufficient to meet the power demand. However maximum demand will be15,500 KVA taking power factor at 99%.

Total unit consumption per year will be: -

15500 * 24 Hrs * 0.80 Load Factor * 320 Days = 9,52,32,000 Units

Total power available from Captive Power Plant = 12.24 MW

i.e. = 12,240 KWH

i.e. = 2,93,760 KW per day

58

i.e. = 9,40,03,200 Units p.a.

Power to be purchased from grid = 12,28,800 Units

1,228,800/ (24*0.80*320*0.99*0.95) = 213 KW

Say 225 KW

Power Bill

Rs in Lacs

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

i. Capacity Utilisation 65% 75% 85% 85% 85% 85%

ii. Units Consumption 7,98,720 9,21,600 10,44,480 10,44,480 10,44,480 10,44,480

iii. Demand Charges @ Rs. 122/-per KVA per month 3.29 3.29 3.29 3.29 3.29 3.29

iv. Normal Power Tariff p.u. Rs. 2.80 2.80 2.80 2.80 2.80 2.80

v. Energy Charges & Fuel Surcharge 22.36 25.80 29.25 29.25 29.25 29.25

Total 25.66 29.10 32.54 32.54 32.54 32.54

(iii) Re-Rolling Mill

Connected Electrical Motors & Load Estimate is as follows: -

Sl. Particulars Connected Load (KW)No.

1. Main Mil Motors 3136.00

2. Re-Heating Furnace and Auxiliaries 160.34

3. Roller Table & Conveyor 89.58

4. Pinching Rollers & End Croping System 63.42

5. Cooling Bed 349.52

6. Lubricating Oil System 41.04

7. Coiler & Pinch Roll 109.84

8. Cooling Water System 74.60

9. T. M. T. 220.50

10. Mechanical Work Shop 100.00

11. Compressor 44.76

12. Raw material Yard & Others 60.00

13. Factory Lighting, Yard Lighting, Tube well Pump, Stores etc. 50.00

Total 4,499.60Total (say) 4,500.00

Total connected Load 4500 KW

When we are rolling wire rods, we shall not operate theTMT pumps, cooling beds and connected equipments andwhile Re-rolling Bars wire rod mill and connected equipmentsshall be switched off. Hence, max. load at a time shall bereduced by 570 KW (which is connected load of bar equipments.) 570 KW

Hence, effective load of operation at a time 3,930.00 KW

Load in KVA (P.F. = 0.90) = 4,366.67 KVA

Integrated max. demand at estimated load factor of 45% 1,965.00 KVASay 1,965.00 KVA

59


Power Cost

A power connection of 4500 KW is sufficient to meet the demand. Maximum demand will be 4,370 KVA. However it willreduce to 1965 KVA taking 45% load factor.

Total power consumption at 100% capacity level will be: -

1965 KVA * 16 Hrs. * 0.45 * 320 Days = 4,527,360 Units

The Power Cost has been computed as under: -

Power Bill

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

i) Capacity Utilisation 65% 75% 85% 90% 90% 90%

ii) Units Consumption 29,42,784 33,95,520 38,48,256 40,74,624 40,74,624 40,74,624

iii) Demand Charges @ Rs. 122/-per KVA per month 28.77 28.77 28.77 28.77 28.77 28.77

iv) Normal Power Tariff p.u Rs. 2.80 2.80 2.80 2.80 2.80 2.80

v) Energy Charges & Fuel Surcharge 82.40 95.07 107.75 114.09 114.09 114.09

Total 111.17 123.84 136.52 142.86 142.86 142.86

Fuel Cost

The furnace Oil requirement is 36 litres/ M.T. of finished goods.

Total fuel consumption at 100% capacity level will be: -

36 litres * 86000 * Rs. 22/-- = 633.60 Lacs.

The Power and Fuel cost in the different years will be as under: -

Particulars 05-06 06-07 07-08 08-09 Onwards

Power Cost 111.17 123.84 136.52 142.86

Fuel Cost 411.84 475.20 538.56 570.24

Total: 523.01 599.04 675.08 713.10

Water

There is own tube well and water reservoir in the factory premises. The cost of power for running the water pump isincluded in the power cost. The company will also procure water from DPL. Total make up water requirement for coolingpurpose is 40 cum per day with flow rate of 150 cum / hr.

ANCILLIARY PROJECT

a) Plant & Machinery (Rs. 1156.33 lacs)

I. Coal Washery Division In Rs. Lacs


Pumps (slurry) Metso Minerals (New Delhi) Pvt Ltd. Delivered 24.13

Valves Steam & Mining Industries Delivered 9.65

Pipes Gajanan Pipes Delivered 14.48

Magnetic Separator Eriez Mbe India Ltd. Delivered 15.08

Thickener Hindustan Dorr-Oliver Ltd. Delivered 15.68

Centrifuge Don Valley Engg. Pvt. Ltd. Delivered 48.26

High Frequency Screen Linatex Africa Pvt. Ltd. Delivered 12.67

Belt Press Filter Not yet ordered 108.58

Desliming Screens International Combustion (I) Ltd. Delivered 36.19

Belt Conveyor Northland Rubber Mills. Delivered 42.22

Total 326.93

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II. Railway Siding

All machineries for laying of the Railway Siding would be purchased from the authorised vendors of the railways asper specification provided by the Railway authorities. The company will not receive any quotations and shall place theorder as instructed by the authorities.

III. Power Division (Rs. in Lacs)


FBC Boilers (1*36 tph) Cethar Vessels Limited Part Delivered 370.36along with accessories

Steam Turbine (2*12 MW) Triveni Engineering Delivered 108.58with accessories & Industries Ltd

Electrostatic Pracipitator Thermax Ltd In progress 220.77

Piping Triveni Engineering & Industries Ltd In progress 60.32

Transportation, erection &Commissioning 50.00

Total 810.03

b) Miscellaneous Fixed Assets (Rs. 479.76 lacs)

I. Coal Washery Division (Rs. in Lacs)


Unbalance Motor Feeder International Combustion (I) Ltd. Delivered 2.41

Sieve Bend Mining & Material Handling Equipment Pvt. Ltd. Delivered 5.07

Classifying Cyclone Carborandum Universal Ltd. Delivered 3.62

Air Compressor Atlas Copco Ltd. Delivered 7.96

Air Drier Summits Hygronics Pvt. Ltd. Not yet delivered

HM Cyclone Carborandum Universal Ltd. Delivered 5.43

Sector Gate/ R&P Gate Not to be ordred 1.51

Water Pumps Impex Machinery Corporation Delivered 1.09

Electrical Instrumentation 90.48

Erection & Commissioning 25.00

Design & Engineering 15.00

Total 142.56

II. Power Division (Rs. in Lacs)


Balance of Plant of 8 MW CPP 1. Paharpur Cooling Tower Ltd Part Delivered 265.41including Cooling Tower, Water 2. Forbes Marshall P LtdTreatment System, Fuel handling 3. Watertech Engineers P LtdSystem, Ash handling system, 4. Shinkawa Electric Co LtdPower cycle piping, Control & 5. OthersPumps etcInstrumentation, Fire Protectionsystem, EOT Crane, Transfer

61


Implementation schedule for various plants are as follows:I. Integrated Steel Plant Project

II. Ancillary Project

Products1. Nature of Product:

Sponge Iron or Direct Reduced Iron (DRI):

Solid metallic iron product obtained upon Direct Reduction of high grade iron ore in solid state itself without beingconverted into liquid form like that in Blast Furnace.

Sponge Iron (SI):

DRI is also known as Sponge Iron because of its spongy microstructure.

Billets

A semi-finished product which are similar to blooms but of smaller cross sectional size (usually less than or 5’’x5’’/7’’x7’’. These are used as input material for production of Finished Steel long products viz bars & rods, light sectionsetc.

2. Market Details

The sponge iron industry continues to show good profits by posting net profits of Rs 1,449 million in the first 9 monthsof 2004-05 as against Rs 767 million in the corresponding period of 2003-04, a jump of almost 90 per cent. Theincrease in PAT can be attributed mainly to the increase in operating profits.

The topline in sponge iron showed an impressive growth of 86 per cent during 9 Month 2004-05 compared with thecorresponding period of 2003-04, due to growth in volumes and increase in prices.

62

Spurt in steel demand are driving volumes: Sponge iron production increased by 22.6 per cent to 7.2 million tonnesduring April-December 2004 from 5.8 million tonnes in the corresponding period of 2003.

Finished steel production, which is the lone driver of sponge iron demand, increased by 5-6 per cent during 2004-05.Sponge iron is used in steel manufacturing in EAF/IFs along with scrap. With the change in the government’s scrapimport policy, following explosions at Bhushan Steels, scrap imports have fallen. In addition, international scrap priceshave been high. This rise in scrap prices and its scarcity have led to higher sponge iron content in the charge mix ofEAF. These factors contributed to healthy demand for sponge iron.

source: crisinfac

There is an improvement in capacity utilization and thus, an increase in sponge iron production in India over the next twoyears. About 2m-ton capacity is likely to be added by FY06. However, demand for sponge iron is slated to exceed 8.5 MT,and incremental demand would more than absorb the incremental supply. The CAGR from the FY1997 to FY2006 isestimated to be 6.1%.

Demand and high scrap prices resulted in high prices:In the first 9 months of 2004-05, average prices were almost 47per cent higher than the levels in the corresponding period of 2003-04, due to high input costs and strong demand.Sponge iron prices are linked to international scrap prices, as scrap is a close substitute to sponge iron.

Sponge iron prices in 2005-06

Sponge iron prices are seen stable in 2005-06, at around Rs 11,500-12,000 per tonne (which are now at the same level ofRs 13,000 per tonne). A slight correction in prices will be seen due to mounting capacities. However, production growth islikely to be restricted due to coal shortage, restricting the fall in prices. The shortage of coal is likely to restrict production,while high scrap prices and buoyant growth in steel production will result in high demand for sponge iron, therebymaintaining the demand supply balance.

Prices of sponge iron are dependant on the following factors:

� Sponge iron demand-supply

� Prices and availability of raw materials

� Prices of imported scrap.

63


Sponge iron demand-supply

Entry barriers in the sponge iron industry are very low due to low capital requirement and low gestation period. As a result,when sponge iron prices are high and market fundamentals are good many small capacities start coming up. The industryhas witnessed significant growth in capacities in 2004-05. According to industry sources, the coal-based sponge ironcapacity will grow by around 2.5 million tonnes in 2005-06. On the other hand, the demand for sponge iron is set to growat 20-22 per cent, resulting in an incremental demand of around 1.3 million tonnes. Thus, industry fundamentals of thesponge iron industry are expected to weaken.

Sponge iron demand in 2005-06

Since 2000-01, sponge iron demand (for coal-based units) has increased at a CAGR of 21 per cent. The demand forsponge iron is driven by steel production through the induction furnace (IF)/electric arch furnace (EAF) route. Steelmakers use sponge iron with scrap as a charge mix in IF/EAF. Ideally, in EAF/IF, sponge iron and scrap are used in theratio of 60:40 in the charge mix. However, this ratio keeps changing as per the availability and prices of scrap.

We are expecting the sponge iron demand to increase by around 20 per cent in 2005-06. Our outlook is primarily based onthe following factors:

Growth in steel production: According to IISI, currently, out of 32-33 million tonnes of finished steel production in India,around 38 per cent is manufactured through the EAF/IF route. We assume steel production growing at around 7 per cent,resulting in similar growth in production through the EAF route. Thus, the rise in steel production in the country will boostthe demand for sponge iron.

Other Markets

Prolific steel producers like Russia and other CIS countries are now also turning into large consumers of steel. In theformer USSR countries, while the production was flat for CY03, consumption grew at 4.5%. For CY04, demand is expectedto pick up at roughly the same rate while production is expected to grow at 1%.

STEEL BILLETS

Manufacturing Process

Steel billets are manufactured either by ingot casting and rolling through blooming & billet mills or by forging or bycontinuous-casting of billets directly from liquid steel. Billets manufactured by forging are mostly alloy or special steels.Pencil ingots of smaller sizes, manufactured in mini steel plants are also used as substitute of billets.

Due to better yield, less energy consumption and capital investment, continuous-casting is being practiced even forannual production levels of 25,000-30,000 t billets.

Users

The billet being a semi-finished product is used for further processing for production of suitable products. It is used as afeedstock to rolling mills for production of long products like wire rods, bars/rods and light structural. Billet is also usedextensively in forge shops and machine shops for production of engineering goods and also as feedstock for seamlesstubes.

Industry Scenario & Market Potential of Steel Billets

Demand & Supply Forecasts

While projecting all-India demand for steel billets, the requirement of the same for integrated steel plants (primaryproducers) has not been considered, since their captive requirement goes for finished steel production.

In view of the above, demand for steel billets excluding the captive requirement of integrated steel plants is mainlydependent on production levels of bars and rods and structural by secondary producers. The anticipated production ofmild steel bars and rods and structural from secondary producers during 2006-07 is of the order of 11.8 million tonne. Billetrequirement for producing the above products will be around 12.5 million tonne. The production of pencil ingots/billetsfrom secondary sector during 2006-07 is likely to be about 10.0 million tonne, which include mild steel, medium/highcarbon steel, alloy steels etc. It is estimated that the share of mild steel will be of the order of 7.5 million tonne. Thequantity of mild steel billets available for sale from integrated steel plants (BSP, TISCO, DSP & RINL) is likely to be around3.0 million tonne (0.8 million tonne BSP, 0.76 million tonne TISCO, 0.85 million tonne DSP and 0.6 million tonne Vizag).

Thus total availability of mild steel billets would be around 10.5 Mt (7.5 Mt from secondary sector +3 Mt from integratedsteel plants) as against the requirement of the order of 12.5. So there will be shortfall of around 2 Mt billets during 2006-07.

With the liberalized export policies and considering the trade prevailing in Asian countries, an export provision of around1 Mt of billets has been considered during 2006-07.

64

Based on the above, resultant gaps/surpluses of billets emerge as follows:

Resultant Gaps (-)/Surpluses (+) for Mild Steel Billets

Year Demand Availability Resultant Gaps (-) and Surplus (+)

Domestic With Export Without Export With Export

2006-07 12500 13500 10500 (-) 2000 (-) 3000

The end consumption of constructional steel in this country has lately increased by a very great magnitude. The majorconsumers being thermal power unit and the expansion programme of the steel plants both in primary as well a insecondary sector, in addition to this other normal growth oriented construction programme like housing complex, PWDconstruction, Industrial Complex, Sports Complex, Bridges, etc. are there.

This large-scale consumption rate has created a big gap in the total supply & availability of rolled steel.

This demand supply gap has been felt more acutely in some zonal regions in this country. The Eastern & North-East zonesare particularly affected. The annual production capacities of rolling mills in West Bengal & Assam are about 815,000tonnes and 207,000 tonnes respectively.

Whereas the production capacity of mini steel plant producing billets/ ingots amount to 500,000 tonnes and 40,000 tonnesannually. Naturally the shortfall in this two states amounting to 482,000 tonnes has to be met by either billets received fromthe main producers or billets/ingots from the secondary producers.

The production rate of main producer is not likely to increase radically and the arc furnace based industries are virtuallyclosed due to higher production cost, hence the void is likely to continue or increase unless the cost of consumables beingused In the arc furnace becomes low or the consumption pattern of constructional steel changes. Since neither of theseare going to change radically this void of billets/ingots is likely to continue for a long time to come.

It is apprehended that the growth of construction oriented industries and other programmes to be undertaken by thevarious Government Agencies will reach to an appreciable level within a few years 10 come and therefore capacitiesaddition to billet / lngot production would be a necessity.

Infrastructure and housing construction boost demand for long products

Long products are expected to grow at a healthy 9 per cent in 2003-04, and a CAGR of 6.9 per cent from 2004-05 to 2007-08. In long products, bars and rods are expected to outperform the other segments.

A strong demand growth from housing and infrastructure augurs well for the industry. In the Union Budget 2003-04, thegovernment announced a major thrust for the infrastructure sector. It announced 48 new road projects with an outlay of Rs4,000 billion. Eight port and shipping projects are also going on. These will require a large amount of long steel,particularly bars and rods.

Low interest rates and tax sops have boosted the urban housing sector, which is fairly steel- intensive. This growth isexpected to continue, pushing the demand for long steel.

In recent times, the demand growth rate for structurals has fallen, due to lack of large projects in power or manufacturing.Growth will remain low in spite of new investments in the power sector, because the housing sector has begun shiftingfrom structurals to bars and rods, which are more easily available, and are more cost-effective.

source: crisinfac

Approach to Marketing

The company has a well-developed and established distribution system throughout the country. The major portion of theoutput from the sponge iron and the billet divisions shall be used in house as input for the production of re-rolled products.The remaining shall be sold in different parts of the country through brokers located in the states of Orissa, Chattisgarh,Delhi, Punjab, Haryana, Tamil Nadu, Bihar, Jharkhand and Maharashtra.

The re-rolled products will be sold in the States of Chhattisgarh, Orissa, Bihar, Jharkhand, Uttar Pradesh and Tamil Nadu.These products will be sold through distributors and dealers at various locations. The appointment of the same will bedone at suitable time before the start of the commercial production of re-rolled products. The services of the existingDistributors and Dealers of the products of the Group Companies shall also be used. Owing to the presence of the groupcompanies all over the country, the company will not find it difficult to sell the re-rolled products to the prospective clients.

65


PLANT ORGANISATION AND MANPOWER REQUIREMENT

Efficient management of the unit requires judicious manpower planning; selection of qualified and experience personnel andappropriate organisational structure, clearly defining the functions and responsibility of the managerial and supervisory staff.

The manpower requirement in accordance with the targeted production of plant operation has been estimated on the followingconsideration: -

i. The estimated production and productivity level which is achievable in various sections of the plant with the proposedplant and machineries.

ii. The total number of personnel required to perform various duties associated with the different processing stepsleading to production of Sponge iron, Captive power plant, Steel melting shop and Re-rolling mill.

A preliminary estimate of the manpower requirement allowing for leave, absenteeism, sickness and holidays for smooth andefficient operations of various sectors of the plant has been prepared purely on technical and managerial grounds primarily toindicate the order of manpower requirement. It would be emphasized that the manpower requirement will have to be reviewedat the time of commissioning of the plant. Further, the implementation of industrial laws and regulations and locational factorsof labour employment will also have to be considered.

The total manpower of each unit has been summarized as under: -

Units Total nos

Sponge iron 225

Captive power plant 76

Steel melting shop 178

Re-rolling mill 67

Grand total 546

The details of category wise employment are as below: -

(i) D R Plant

Category Total Nos. Percentage of Total

Managerial 3 1.33%

Supervisory 30 13.33%

Labour – Skilled 100 44.44%

- Unskilled 86 38.22%

Others 6 2.68%

Total 225 100.00

(ii) Captive Power Plant


Managerial 3 3.95%


Labour - Skilled 45 59.21%


Others 2 17.11%

Total 76 100.00

(iii) Billet Casting Plant


Managerial 1 0.56%




Others 20 11.24%

Total 178 100.00

66

(iv) Re-Rolling Mill


Managerial 5 7.46%




Others 6 8.94%

Total 67 100.00

PLANT CAPACITY AND MANUFACTURING PROCESS

A. Plant Capacity

Based on the existing demand of the products consumption pattern, the plant capacity has been arrived. Sponge Iron Plant,Captive Power Plant and Billet Casting Plant will work for 320 days a year on triple shift per day and Rolling Mill will work for320 days a year on double shift per day. Capacity of the plant has been worked on the basis of uninterrupted production,standard yield and existing efficiency norms.

Attainment of plant capacity depends on various activities. It needs co-ordination among different sections and maximumcapacity can be achieved after few years. Capacity utilisation also depends on power availability. Considering all the parameters,capacity utilisation of 65%, 75% and 85% have been considered for the first three years of operation and thereafter at 85% forall the sections except the re-rolling mills whose capacity utilisation has been taken at 90% during fourth year of operation.

The proposed steel making plant through sponge iron route has been planned based on 2 nos. of 300 TPD kiln, 16 MW powerplant for captive use, 3 nos. of 12 Tonnes. Induction furnaces with billet caster and TMT Bar mill. All the plants will operate for320 days per year and on triple shift basis except re-rolling mill running on double shift basis. The key parameters of thevarious plants are as below:

(i) Sponge Iron Unit

No. Of Kilns 2 (Two)

Productivity 300 Tonnes / Kiln / Day

Production/Day 600 Tonnes

Working days in a year 320

No. Of shifts 3 shifts

Installed Capacity per year 192000

(ii) Captive Power Plant

Steam Output, maximum continuous rating (MCR), Tph 36

Steam Output, Nominal continuous rating (NCR). Tph 33

Steam pressure at super heater outlet, ksca 67

Steam Temperature at super heater outlet, °C. 485

Feed water temperature economiser, °C. 140

No. Of Boilers 2 (Two)

Waste gas inlet conditions

- Gas flow, Nm3 /hr 90000

- Gas temperature, °C 950 -1000

- Dust content, mg / Nm3 35

- Exit temperature of waste gases °C. 160

67


(iii) Steel Melt Shop

Induction furnaces 3 Nos.

Melting capacity of each furnace 12 Tonnes

No. Of heat per day 10

No. Of working days in a year 320

No. Of shifts 3 shifts

Yield from charge to liquid steel 86%

Installed capacity per year 95,109 MT

Billet dimensions 100 mm x 100mm & 6mtr Long

(iv) Re-Rolling Mills

No. of working days in a year 320

No. of shifts 2 shifts

Yield 95%

Installed capacity per year 80,000 MT

B. Manufacturing Process

(i) Sponge Iron

Direct Reduced Iron process based on use of rotary kiln is well established in the country. The materials handling systemaccepts incoming raw materials (Lump ore, coal and limestone or dolomite) from road transportation and conveys the materialto stockpiles. Typically, the materials are recovered from the stockpiles by front-end loaders, which then deposit the materialonto conveyors. The ore is screened to remove fines and a portion of the coal crushed to a size suitable for pneumaticinjection. Once processing is complete, the materials are delivered to day bins. The raw materials are extracted from the daybins via volumetric feeders and are fed in controlled quantities to the feed end of the kiln. The kiln rotates slowly, causing theore and the coal to progress towards the discharge end of the kiln, while being heated and reduced. The kiln is refractory linedand equipped with refractory dams at the feed end and discharge end in order to maximise residence time.

The coal provides the heat for the endothermic reductions that produce DRI. Air, for combustion of the coal, is added readilyto the kiln via air tubes, which are mounted at various positions along the length of the kiln. By using a technique of injectionof crushed coal at the discharge end of the kiln, the process may be operated successfully without the necessity for anyhydrocarbon fuel, such as natural gas or oil, material bed temperatures of up to 1,075 degree C. can be easily sustained. Thereactions in the kiln are carefully controlled by varying the quantity of coal injected from the discharge end of the kiln and byregulating the amount of air introduced along with the length of the kiln through the air tubes. On discharge from the kiln theDRI has a metalisation of more than 90%. Depending on the coal, the sulphur content of the DRI can be controlled to as lowas 0.010-012 per cent, while other impurities are chiefly dependent on the quality of the ore.

Once the product passes out of the kiln, it is cooled in rotary cooler, it is then transferred to a product handling building forseparation of the residual char, ash and spent limestone waste products, and for classification of the DRI into size fractions.The separation trains use a combination of magnetic separation and air elutriation to achieve an ore all target iron yield ofmore than 95%. The waste gas produced by the kiln process is extracted from the feed end of the kiln. The gas is at hightemperature and also contains some remaining volatiles. These are burnt to remove the carbon monoxide and hydrocarbons,which further increases the gas temperature. Typically the gas is cooled in after burning chamber with water spray.

(ii) Billet Casting

Raw material mixes mainly sponge iron upto 80% and M. S. Steel Scrap/Pig Iron is charged into the furnace. Extra carbon inthe form of free carbon or excess carbon present in the scrap is also added depending upon the quantum of sponge iron in thecharge. As soon as the charge is completely melted, necessary Ferro Alloys and de-oxiders are added. The temperature ofliquid metal is allowed to rise in the Furnace till the correct pouring temperature is achieved which is checked with the help ofImmersion Pyrometer. The hot metal is poured with the hydraulic system in the pre-heated ladle after adding certain fluxes sothat the temperature is maintained at -about 1600 degree centigrade. Ladle is then carried by EOT crane to the concastmachine and kept above the tundish of the concast machine. The bottom of the ladle is opened by hydraulic system and hotmetal starts pouring out into the concast machine. Through tundish, it passes through copper moulds. Copper moulds give theparticular desired shape. To initiate casting, a dummy bar is inserted into the bottom end of the mould, while the other end ofthe dummy bar is held by withdrawal/ straightening rolls when the molten steel at the correct temperature reaches the stipulatedlevel inside the mould, the withdrawal rolls and mould reciprocating unit are operated.

68

The cooling water circulation through the mould (primary cooling) and in the secondary circuit started a few minutes before theactual casting operation. The dummy bar is withdrawn followed by the hot solidify billet. The cooling water circulating aroundthe mould carries away enough heat from the liquid steel to produce a solid outer skin of sufficient strength to safely envelopethe liquid portion at the interior that to will be solidify by the secondary cooling, which consist of spraying of water jets on thebody of the billet. Before beginning to withdraw the dummy bar it must be insured that the outer casing of the billet is strongenough otherwise’ a rupture in the skin may occur resulting in a break out which releases the molten metal and forces a shutdown of the operations. Thus the important parameters are temperature of liquid steel, rate of primary and secondary cooling,mould reciprocating characteristics, which all influence the casting rate and the quality of the casting. The solidified billetfurther passes through straightening machine, cut to required length and sent to the cooling bed through the roll conveyersystem. The total system requires soft water for cooling of copper moulds. Sized billets are lifted by crane to finishing yard forinspection and storage/despatch.

(iii) Power Plant

The WHRB shall be sized and designed to extract maximum sensible heat energy contained in the waste gases emanatingfrom the Direct Reduction kiln. The major technical parameters of WHRB are given below:

Technical Parameters Of WHRB

Type : single drum, vertical, multi pass, semi-outdoor, natural circulation.

Steam output, maximum continuous - Rating (MCR), tph 36

Steam output, nominal continuous - Rating (NCR), t/hr 33

Steam pressure at super-heater Outlet, ksca 67

Steam temperature at super heater Outlet, °C 485

Feed water temp Economizer. °C 140

No. of Boilers 02

Waste gas inlet conditions Gas flow, Nm3/hr 90000

Gas Temperature, °C 950-1000

Dust content, mg/Nm3 35

Exit temperature of waste gases, °C 160

The boiler pressure part internals will be designed among other considerations to withstand mechanical wear from the abrasivedust particles carried by the waste gases. The boiler consists of economiser, evaporator, super heater, integral piping, wastegas ducting with expansion joints. Supporting structures, platforms and walkways. Soot blowers etc. The proposed WHRBshall be unfired, single drum, top supported, three passes, natural circulation type.

The high temperature dust laden waste gases from DR plant kiln will enter the first pass of the boiler. The water wall is the firstheat transfer section arranged in the direction of gas flow. The entire section is made of water-cooled enclosure formed bytube fusion welded panel or fin welded panel tube.

The water section is partitioned and a screen is provided at the inlet of second pass to safeguard the super-heater from anyfouling. Front-end rear wall is continuous and connected to top/bottom header. The sidewalls are provided with headers,which in turn are connected to steam drum by supply/riser tubes.

Super heater-1 and 2 are the second heat transfer section in the direction of gas flow. It consists of plain tube assembly, inlet& outlet headers and connected links. Super heater section will be arranged in two stages with a spray type de-super heaterin between to control the steam temperature.

Depending upon the design, the super heater will be followed by evaporator section. Evaporator is located in the second passafter super heater - 1 in the direction of gas flow. It consists of inclined coils assembly made of plain tubes, inlet & outletheaders and connected link. Evaporator-2 & 3 (optional) are located in the third pass in the direction of gas flow, having thecoils similar to the evaporator coils.

As per design three or four blocks of economiser will be provided in the third pass to cool the gases up to around 160°C.

Adequate number of shoot blowers will be provided for on-line cleaning of heating surfaces. Soot blowing may be of steamtype or acoustic depending upon the design.

The drum and super heater outlet will be provided with spring-loaded safety valves of adequate relieving capacity. The Boilerwill be provided with a suitable control system to ensure maximum steam generation for different waste gas inlet conditions.

An attemperator will be provided to ensure constant super heater outlet temperatures over a wide operating range. The controlsystem will be designed to ensure steady steam flow and temperature conditions. A three-element drum level control systemconsisting of drum level transmitter, feed water flow transmitter, steam flow transmitter and flow controller etc. will be provided.

69


Instruments will be provided for measuring pressure and temperature of steam, feed water, waste gases at different sections.Direct level gauges and levels switches for steam drum will also be provided. Flow measuring device at the inlet of WHRB formeasurement of waste gases will also be provided. The steam is utilised for generation of power through turbine.

(iv) Re - Rolling Mills

The process involves converting the shape stock viz. Ingots/billets to desired finished section in hot condition by way ofpassing the material between a pair of grooved rolls and providing suitable draft at various stages. The whole operation isconducted at a particular temperature range and within a limited time span. The stages of rolling operation are comprised ofheating of feed stock to roll able temperature, rolling the feed stock in different mill stands, cropping the hot bar during processof rolling between stands as applicable and subsequently finishing in the form of hot rolled deformed bar in straight length. Thehot bar coming out of last pass is then conveyed through TMT line and collecting in a cool bed after shearing. The bars atalmost ambient temperature are sheared to commercial length stored and kept ready for dispatch.

In TMT process hot bars are subjected to quenching by means of an intense cooling installation (cooling installation speciallydesigned water spray system). This step hardens the surface layer to martensite while the core structure remains austenite.When the bar is free of water chamber heat flows from core to surface and surface gets tempered to structure called martensite.In the cooling bed due to atmosphere cooling, the hardened. Zone is tempered by temperature homogenisation in the crosssection and the austenite core is transferred to ductile-ferrite-pearlite core.

TECHNICAL ARRANGEMENT

A. TECHNOLOGY STATUS IN INDIA

The direct reduction process in India was formerly launched in 1980 with the SL/RN process at Kothagudam in AP. The SIILplant capacity has been expanded with another module of the same capacity. The OSIL plant at Keonjhar is based on ACCARprocess produces 1,00,000 TPA Sponge iron in rotary kiln. The plant was commissioned in 1982. IPITATA has set up a rotarykiln of 90,000 TPA plant based on TDR process. The KRUP/CUOIR (Coal based rotary kiln) technology has been adopted bySunflag Industries for their plant located at Bhandara in Maharastra. Essar Steels have put up gas based sponge iron plantsat Hazira in Gujrat using MIDREX Technology. JINDAL Technology has been adopted by Jindal Strips Plants located atRaigarh, M.P. in six modules of 1 lakh tonne capacity each. OSIL have developed their own process know how which hasbeen successfully utilised in- Lloyds Metals for their plant of 1.5 lakh tonne capacity located near Chugus, Maharashtra. Smallcapacity rotary kilns where coal is used as reducing agent have been also installed in the country and operating successfully.These mini plants are operating successfully and have the advantages of lower specific investment cost, lesser gestationperiod etc.

B. TECHNICAL KNOWHOW

Industrial Technical Consultants who have adequate experience in setting up a 300 TPD sponge iron plants have beenappointed as a technical consultant for the proposed DR plant. Cethar Vessels Private Limited, Kolkata, who are well experiencedin setting up the power plant will execute the implementation of the power plant. Steel melt shop along with the continuouscasting machine shall be installed with the technical help of machine supplier Megatherm Electronics Private Limited, Kolkata,who have also supplied and installed the similar plants in the group companies and are running smoothly. The re-rolling millshall be installed by R. K. Engineers, Kolkata.

The scope of works will include the followings: -

a. The technical know how for the purpose of installing plant and machineries necessary for the manufacture of spongeiron and its allied products.

b. Necessary plants, factory designs and layouts charts and drawing documentation and other forms of technical knowhow for the said purpose.

c. Advice in the matter of purchase of necessary plant and machinery suitable for the factory.

d. Render the services of their technicians to assist the company in carrying out the improvement of the factory and forinstalling plant and machineries.

e. Provide technicians from their own staff to attend at the Company’s factory whenever necessary. Technical training toselected persons with their associated members while commissioning the plant to enable them to operate themachinery and plant.

f. Advice the Company promptly and to the best of their ability in connection with any technical or manufacturingproblems or difficulties which may be referred to it by the company during the continuance of the agreement.

g. Provide necessary technical assistance towards specification, quality, grade, quantity and name of the raw materialsand other consumables required for the plant.

70

PROGRESS OF THE PROJECT AT JAMGAON, RAIGARH

The Company has taken all the major steps for the implementation of the project as has been briefed below:

A. Letter of Intent

The Company has obtained IEM in the name of MSP Steel & Power Pvt. Ltd. issued by the Ministry of Commerce and Industry,Government of India.

B. Land Procurement

MSP Steel and Power Limited has already purchased 52 acres of land as envisaged in the project report directly from privateowners. Construction and erections are in progress on the acquired land.

Sl Date of Purchase Purchased From Plot Area in Total StatusNo No. Acres Expenses

in Rs.

1 11 October 2002 1. Satyanarayan 40 1.00 10,94,224 Registered/2. Surendra Mutated

2 3. LalKumar 41 38.70 and4. Vinod Converted to

3 5. Rajendra 43 1.96 Industrial Plot6. Saroj

4 7. Kirtan 45 0.368. Bihari

5 28 March 2003 1. Bastom 29/1 1.49 29,150 Registered2. Suban

6 3. Santosh 31/1 0.46 8,2804. Urmila

7 5. Mangal mati 37/1 0.18 3,2406. Belmati

8 29 March 2003 1. Pujari 88/2 4.52 74,222 Registered9 2. Sanyasi 92/1 1.76 26,400

10 5 June 2003 1. Gadadhar 37/1 0.00 51,750 Registered

11 39 0.00

12 40/2 2.07

Total 52.50 12,87,266

Besides, the Company has bought a further 23 acres of land directly from private land owners for development of railwaysiding, labour colony, coal benefication plant and solid waste dump yard. Land measuring around 82 Hectares will be requiredin phases.

The Land acquired by the company is free from all encumbrances.

The Company has received permission for conversion of agricultural land to industrial and for 42 acres of land. It has alreadyapplied for conversion for the remaining land. The Company has received all other necessary and statutory approvals fromrespective government departments pertaining to the above land.

C. Statutory Clearances

With the further ancillary project of the company and the total project size exceeding Rs.1000 lacs an Environment ImpactAssessment has to be conducted by the Central Government ageny/approved agency. The company has appointed Minimecto prepare the application and to procure clearance from the EAll. Other statutory permissions required from various Governmentdepartments are being applied for as and when required.

D. No Objection Certificate (NOC)

NOC from jurisdictional Gram Panchayat and from State pollution Control Board, Central Government has been obtained toestablish the integrated steel plant and the ancillary project.

E. Raw Materials

The basic raw materials for sponge iron manufacturing are COAL and IORN ORE. For captive sourcing of Iron Ore thecompany is in the process of filing applications for lease of Iron ore mines that are known to be prospective.

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The Railway Transport Clearance for procurement of iron ore from NMDC has been obtained. The company has receivedallotment of iron ore from the mines of NMDC for the supply of iron ore on a long term basis. The company also has arrangementswith private iron ore suppliers in Orissa like Rungta Mines, Essel Mining, Patnaik Minerals for the supply of calibrated iron oreand iron ore stocking is also under progress.

The Company has received the approval for linkage of non coking coal from Korba/Raigarh Coal Fields from Joint IndustrialAdvisor Ministry of Steel vide their letter dated 23rd January 2004 bearing no. 15(9)/2003-IDW for 1,44,000 Metric tonnes perannum. It has also received approval of rail linkage for transportation of 30,000 MT of iron ore of different sizes from BasuaIron Ore mines per month, to the Raigarh railway siding in Chattisgarh. Lifting of Coal has already commenced on and from themonth of June 2004. The coal linkage for 2nd Kiln on MCL, Sambalpur for 1,44,000 TPA has also been accorded by Ministryof Steel and Ministry of Coal.

F. Water

Necessary permission has been obtained from local government and also from the PWD Department for drawl of water fromunderground sources. The Government of Chhattisgarh has also given its consent to the Company to draw water from KURNalla nearby in case of insufficiency of ground water. Apart from the same, tests were conducted on site through 10 boresdrilled to assess the availability of water, which turned out to be quite satisfactory.

G. Power

The Chattisgarh State Electricity Board (CGSEB) has given in-principle approval for supply of power of 2000 KVA load. Theapplication for 33 KV electricity line has been approved by the CGSEB Security Deposit together with supervision and erectioncharges as asked by the Board has been deposited. The electricity line has been drawn upto the premises of the company andelectricity is available at the plant site.

For Captive Power Plant, a joint meeting has been held with the CGSEB and the approval for the same has been obtained.Accordingly, the company has submitted a formal application to The Energy Department, Government of Chattisgarh, fornecessary clearance/ approval to this effect.

H. Finance

Financial closure of the project is done. A consortium of 5 banks has sanctioned a term loan of Rs 7675 lacs and out of whichRs 6130.76 lacs has already been disbursed by banks upto 30th April 2005. Promoter’s contribution by way of equity loan tothe tune of Rs.4197.64 lacs has already been brought in. The management has already made capital investment worth Rs.10260.34 lacs in the project.

I. Appointment of Consultants

Industrial Technical Consultant of Raipur has been appointed as Project Consultants for the Sponge Iron Project and A K BPower Consultants Pvt.Ltd have been appointed for the Power Plant Project, Engineering & Metallurgical Consultants havebeen appointed for the Billet plant and R.K. Engineerings have been appointed for Re-Rolling Mill and Mr. Abhik Mukherjee forCoal Washery Plant.

Orders for Kiln and other plants and machineries have been made as per their design and drawings.

J. Plant & Machinery

The entire equipments for Plant & Machinery and Miscellaneous Fixed assets for Kiln 1 have been successfully commissionedtogether with Raw Material Handling plant and Product Handling system for both kilns. Most of the parts of Kiln - II have beenreceived at site for final assembly and erection and work on the same is underway. Parts of both WHRB’s and TG Sets havealready been received at site and erection of the same is underway. All main plant and machinery for entire Integrated Steelproject has already been placed and deliveries are been received as per schedule. All equipment for coal washery has alreadybeen received at site and erection is under progress.

K. Civil Construction & Mechanical Fabrication

Sponge Division - The construction work for the Kiln & Cooler for Kiln-II together with all other ancillaries has also beencompleted.

Power Division - Civil works for both WHRB’s has also been completed and so has the foundations for Turbine GeneratorHouse and both TG1 and TG2. Civil works for ancilliaries like Cooling Tower, DM plant, etc are under progress.

SMS and Rolling Mill – Civil foundations for shed of both SMS and rolling mill has already been completed and main foundationsfor plant and machinery is also completed.

Coal Washery: Civil works for washery building and other ancilliary have already been completed.

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L. Auxiliary Facilities

A Weighbridge of 50 tonnes capacity, a Black-Hoe Excavator, 2 Nos. Payloaders, a Hydra Crane, 3 DG sets of 380 KVA, and2 750 KVA capacities and other miscellaneous equipment required for civil and mechanical works has been installed at site soas to ensure smooth running of erection and fabrication work. A temporary power connection has been obtained by CGSEB soas to facilitate work at site.

M. Commissioning

The Kiln I with a capacity to produce 300 TPD of sponge Iron Plant has commenced production from the 4th of November2004. The remaining plants are expected to commence production as follows:

� Kiln – II – July ’2005

� Power Plant I – July ’2005

� Power Plant II – Nov’2005

� Re-Rolling Mill – Sept ’2005

� Billet Plant – July’2005

� Coal Washery – July’2005

� Railway Siding – Feb’2006

DETAILS OF ORDERS PLACED

Plant and Machinery and Miscellaneous Fixed Assets

Name of Machinery Vendor Date Amount

Coupling Abg Enterprises 28-Feb-04 1.08

Adarsh Udyog Pvt Ltd 15-Mar-04 0.28

Fire Bricks Arvind Industries 18-May-04 2.49

Screw Compressor Atlas Copco 12-Jan-04 4.10

Electrical Slip Ring Bemci 13-Oct-03 3.00

Wet Scrapper Conveyor Bevcon Wayers Pvt. Ltd. 13-Jan-05 22.07

Wet Scrapper Conveyor Bevcon Wayors Pvt.Ltd. 12-Jan-05 7.12

Pay Loader Caterpilar India Pvt Ltd 2-May-04 20.65

Pump Skid System Chemtrols Samil (India) Pvt. Ltd. 20-May-04 3.50

Electrical Instruments Chowdhury Electricals 14-Mar-04 12.26

Concast India Ltd. 5-Aug-04 74.00

AC DC Motors Crompton Greevs 2-Mar-04 2.35

Hydraulic System for Rolling Mill Denison Hydraulics India Ltd. 28-Feb-05 2.50

Denison Hydraulics India Ltd. 15-Jan-05 4.30

Diem Castings 30-Nov-04 0.00

Kiln Tubes & Pipes Dwarkesh Engineering Works Pvt Ltd 26-Nov-03 30.48

Gear Boxes & Couplings Elecon Engg.Co. Ltd. 15-Jul-03 52.10

Gear Boxes & Couplings Elecon Engg.Co. Ltd. 27-Apr-04 64.00

Electro Magnetic Electro Mag Devices 27-Feb-04 5.30

Magnetic Drum Electro Magnetic Industries 23-Dec-03 8.00

Electrical Instruments Electro Mech Engineers 4-Mar-04 0.71

Rotary Coal Feeder Evergreen Engeniring 25-Feb-04 1.64

Gear Boxes & Pinion Stands Flender Limited 12-Jul-04 87.97

Steam PRDS System Forbes Marshall Acra Pvt. Ltd. 17-Jan-05 10.50

Frontline Hydraulics 4.46

Pipes Gajanand Tubes 29-Apr-04 14.50

73



Support roller, Tyre,Building House Gears (India) 15-Feb-04 6.33

AC DC Motors Gupta Electrical 17-Mar-04 1.39

Steel Structurals Gupta Steel Fabricators 30.48

Thermax Cooling System H&K Rolling Mill Engineers Pvt.Ltd. 8-Jan-05 76.50

Crusher & Vibrating Hari Machines 8-Oct-03 36.18

Shaft Forgings Hindustan Forgings Ltd. 18-Feb-04 30.09

DM Plant Hydrochem Products (I) Pvt. Ltd. 30-Sep-04 7.50

Water Pumps Impex Machinery Corporation 8-Mar-05 2.02

Pumps Impex Machinery Corporation 27-Jan-04 0.62

Pumps Impex Machinery Corporation 29-Jan-04 1.85

Castables Interdominion Sales Agencies 1.40

MCC-2 & MCC-4 Ishaani Electronics Pvt. Ltd. 2-Feb-05 5.52

VVVF Drive Modules Ishanni Electronic Pvt Ltd 3-Mar-04 10.84

J K Automation 26-Jul-03 25.75

J K Electro Power 0.98

DG Sets Jacksons 1-Apr-03 13.51

DG Sets Jacksons 22-Apr-04 52.60

Electical Items Jain Electricals 2-Mar-05 2.06

Spare Bearings K.K.Enterprise 25-Jan-05 4.00

Roots Blower Kay International :Ltd 17-May-03 6.88

Cables Kei Industries 2.64

Steel Structurals Khedia Industries 78.92

10 MVA Transformers Kirloskar Electric Co. Ltd. 3-Nov-04 31.00

DC Motors & Digital Drives Kirloskar Electric Company Limited 19-Jul-04 42.75

AC Motors Kirloskar Electric Company Limited 19-Jul-04 35.44

Electric Motors for Kiln Kirlosker Electric Company 14-Oct-03 20.34

Support Rollers Kisco Castings 18-Feb-04 33.20

Bearings KK Enterprises 4-Mar-04 1.64

Insulation Lloyd Insulations 31-Mar-04 7.50

ASTM-A-335 Gr. P11 Pipes M.J. Patel (India) Ltd. 4-Mar-05 19.67

Machining & Gear Cutting Marshall Engg. Works 16-Apr-04 2.80

DCS System Mashiha Automation 29-Dec-04 32.96

Miscellaneous Mechanical Engineering 3.49

Induction Furnace Megatherm Electronics Pvt.Ltd. 18-Oct-04 15.00

Saturated Magnetic Analyser Metorex Security Products OY 9-Mar-05 10.37

Saturated Magnetic Analyser Metorex Security Products OY 9-Mar-05 4.00

Entry Roller Guides Morgardshamar India Ltd. 5-Jan-05 4.81

Kiln Tier Casting Mukand Limited 18-Feb-04 67.95

Plumber Block Mukta Engineering Concern 12-Jan-04 0.75

Transformer Multicables Pvt Ltd 22-Jul-03 21.60

Weigh Feeders Multiweigh Systems 10-Dec-03 11.25

Electrical Instruments Naveen Enterprises 22-Dec-03 14.76

74


Gear Box & couplings New Allenberry Works 2-Jan-04 6.75

Optimax in line Gear Box New Allenbery Works 11-Jan-05 0.84

Optimax in line Gear Box New Allenbery Works 11-Jan-05 10.37

Alloy Steel Centrifigully Cast Nitin Castings Limited 5-Feb-05 22.07

Alloy Steel Centrifigully Cast Nitin Castings Limited 5-Feb-05 0.84

Conveyor Belt Northland Rubber Mills 16-Dec-03 21.40

Cooling Tower Paharpur Cooling Tower 28-Jun-04 57.00

Motors Pawan Kumar & Co 7-May-04 0.64

Peacefort Chemical Engg 25.00

Shell Air Fan Pelican Kinematics 2-Jan-04 1.60

I D Fan Pelican Kinematics 19-Feb-04 6.50

Matching Flanges,Bolts, Nuts Pelican Valves & Engeenering works 7-Mar-05 2.11

Butterfly Valves Pelican Valves & Engeenering works 7-Mar-05 7.82

Centralised Lubrication Systems Prakash Lubriquipment Pvt. Ltd. 30-Dec-04 6.67

Centralised Lubrication Systems Prakash Lubriquipment Pvt. Ltd. 30-Dec-04 7.12

Slip Ring Segments Raipur Roto Cast 30-Jan-04 7.14

ASTM - A - 335 Gr. P11 Pipes Rajendra Industrial Corporation 4-Mar-05 2.10

Machining & Gear Cutting Reform Machine Tools Ltd. 16-Apr-04 5.60

Machining & Gear Cutting RP Alloys & Forgings Pvt. Ltd. 12-Feb-04 13.75

Machining & Gear Cutting RP Alloys & Steel Forgings Pvt. Ltd. 12-Feb-04 9.00

Slip Seal Rings Sai Engg. & Machineries 18-Feb-04 33.20

Steel Plates Sail Bhillai Steel Plant 90.00

Weigh Bridge Sanwar Weighing 30-Apr-03 4.34

Castings for thrust roller Shinathji Ispat Ltd. 18-Feb-04 2.10

LOI/PO for Turbosupervisory system Shinkawa Electric Co. Ltd. 16-Nov-04 1,497.15

Bearings SKF Bearings 29-Mar-04 70.00

FRP Cooling Tower Southern Cooling Tower Pvt.Ltd. 8-Dec-04 8.00

Cooling Tower Southern Cooling Towers Ltd 18-Feb-04 3.94

Draft Cooling Tower Southern Cooling Towers Pvt. Ltd. 15-Nov-04 3.78

Draft Cooling Tower Southern Cooling Towers Pvt. Ltd. 15-Nov-04 6.67

Castings for Girth Gear Starwire India Ltd. 12-Feb-04 20.75

SS for Castables Steel World 21.81

Boiler feed Pumps Sulzar Pumps 6-Mar-04 6.00

Conveyor Equipments Suman Industries 28-Oct-03 18.32

Induction Melting Furnace with 2 Crucibles Superhit Electromag Pvt.Ltd. 30-Oct-04 97.00

Refactories TATA Refactories Limited 9-Feb-05 144.52

Pollution Equipment The ACC Limited (Esp) 24-Apr-04 60.00

Pollution Equipment The ACC Limited (Esp) 24-Jul-04 60.00

Refractories The ACC Limited (Refractories) 30-Jan-04 112.50

Refractories The ACC Limited (Refractories) 26-Feb-04 112.50

Electrical Instruments The Geeta Electricals 27-Feb-04 1.00

75



WHRSG Thermal Systems (Hyderabad) Pvt. Ltd. 4-Mar-04 421.00

Electrostatic Precipitator Thermax Ltd. 9-Sep-04 51.00

Weigh Feeders Transweigh India Limited 4-Mar-05 20.00

Weigh Feeders Transweigh India Limited 4-Mar-05 51.00

TG Set Triveni Engineering & Industries Ltd. 29-Jan-04 525.00

TG Set Triveni Engineering & Industries Ltd. 6-May-04 538.00

Cables TTD Industries 11-Aug-03 20.55

Pneumatic Cylinders Veljan Hydrair Pvt. LTD. 15-Jan-05 1.85

Pneumatic Cylinders Veljan Hydrair Pvt. LTD. 15-Jan-05 124.52

Rotary kiln with cooler Walchand Nagar Industries Ltd. 20-Jan-03 569.00

Pump Watertech Enginers Pvt. Ltd. 16-Oct-04 1.06

Panel Wavecon Electronics 2-Jan-05 1.85

Total 6,131.43

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V. DESCRIPTION OF INDUSTRY AND BUSINESS

1. Introduction

One of the most useful and versatile material, steel is considered to be the backbone of human civilization. As the steelindustry has tremendous forward and backward linkages in terms of material flow and income and employmentgeneration, the growth of an economy is closely related to the quantity of steel used by it.

Steel has been one of the oldest industrial sectors in India. It has also been the first to get liberalized and partially controlslifted from it in 1991. There have been massive capacity additions by all steel majors and several new groups made foraysinto primary and secondary steel market in the first phase of liberalization in early 90s. The major costs of the industry arethe costs of iron ore, limestone, coal and power. While the country is rich in iron ore and limestone, its quality of coal ispoor and power costs are high. The industry enjoys inherent advantages in terms of availability of raw material and cheaplabour.

Finished steel is produced in the form of flat and non-flat products and is normally available from integrated steel plants orsecondary producers covering mini steel plants and re-rollers. Bars and rounds along with structural heavy rounds belongto the category of long products of steel and generally produced from billet/ingot in rod mill/structural mill. These productsplay very significant role in the development of both the industrial and constructional sector of the country.

2. Global Scenario

� In 2004 World Crude Steel output at 1.05 billion metric tonnes was 8.7% more than the previous year. (Source: WorldSteel Dynamics)

� China remained the world’s largest Crude Steel producer in 2003 also (220.12 million metric tonnes) followed byJapan (110.51 million metric tonnes) and USA (91.36 million metric tonnes). India occupied the 8th position (31.78million metric tonnes). (Source: IISI)

� Asia accounts for about 40% of global demand, which is expected to reach 50% in the next few years as demandgrowth is projected to be more in this region.

The following significant developments have been witnessed recently in the global steel scenario:

� Spate of mergers and acquisitions all over the world in the steel industry involving cross border acquisitions andmergers.

� China has emerged as the most vibrant market for steel production and consumption.

� Crisis of excess capacity and prevalence of market distorting practices in the global steel market has inducedprotectionist measures from a number of steel trading countries.

� IISI has projected an increase by 6.2% or 53 million metric tonnes in 2004 in the global consumption of finished steelproducts. IISI has split the growth into two separate areas, China and the Rest of the World (ROW). Steelconsumption in China has been estimated to increase by 13.1% or 31 mmt in 2004.

3. Indian Scenario

The steel industry witnessed a remarkable turnaround, buoyed by a spurt in the international prices. The domestic industrycapitalized on this buoyancy, with a sharp surge in exports, particularly to China. In the domestic market, userindustries like automobiles, housing and infrastructure sector and the consumer durable sectors continue toreport strong growth. In 2003-04, production of finished carbon steel and Pig Iron was 36.957 million tonnes and 3.764Million Tonnes respectively. In 2003-04, the main and secondary producers produced 43% and 57% of finished steels.(Source: Crisinfac Reports)

As per the estimates of Tenth Five-Year Plan (2003 to 2007), the construction sector (housing and commercial,infrastructure, and industrial) is set to grow at around 12%. It is estimated that the domestic demand for steel will remainbuoyant at around 8-10% during 2004-05 and 2005-06, promising good fortunes for the players. Indian steel producersperformed well during the fiscal 2003 and 2004, despite the global industry being faced with one of the most challengingoperating and business environments in the last decade. With improved pricing and worldwide demand growth of steelproducts, most of the Indian steel manufacturers reaped the benefits of increased exports, reporting substantialimprovement in profitability and overall financial position.

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4. Global and domestic steel demand: remains firm

A 5.3% CAGR in global steel consumption is expected until 2005 (2003-05). Growth in China, which accounts for nearly30% of global steel consumption, is expected to slow down – from over 20% in 2003 to 13% in 2004. Steel consumption inIndia grew 5% whereas exports surged 16% in FY2004. Steel production grew 7.4% in FY2004. Between April andSeptember 2004, domestic consumption grew 6%.

International steel prices remain firm and are ruling at nine-year high in November 2004. In H1 FY2005, prices of TMTBars, internationally, have shot up approx. 20%, YoY from Rs.20500/Mt to Rs. 24500/Mt. Prices of Billets; on the contraryhave shot up 18% approx. YoY from $300/MT to $350. The high growth in international prices in Q2 FY2005 was due to thelow base effect. We believe that prices are likely to remain stable in the short term.

Overview on Infrastructure developments in India

5. Infrastructure

Good infrastructure is a must for any country to help its economy grow. This is more important for the developing countries likeIndia. However, the state of infrastructure in India continues to be abysmal, and is a major obstacle in its economiccompetitiveness. The pace of infrastructure development is sluggish and tardy and the level of private and public investmentin infrastructure is unacceptably low.

Infrastructure development has begun to pick up over the past two years, driven by government initiatives as well as privateparticipation. Innovative schemes of financing and low rates of interest have made it easier and cheaper to fund large projects.The assessment of projects in key infrastructure sectors like roads, ports, railways and power plants, indicates prospectiveinvestments of Rs. 6,19,600 cr over the next five years.

The construction sector, which accounts for nearly 50% of the total investment in any sub-segment of infrastructure, would bethe biggest beneficiary of the surge in infrastructure investment over the next 3-4 years. It is estimated that the constructionpotential from the total investment in infrastructure over the FY2004-FY2008 will be at Rs.4,09,400 cr, a 30% increase over theperiod FY2000-FY2004. (Source: Crisinfac Reports)

The growth in construction sector will in turn lead to an upsurge in the demand of construction steel in a major way and willbenefit all the steel producing companies substantially.

6. Roads

Financed by a cess of Re. 1 per litre of diesel and petrol - which was raised to Rs 1.50 in the Union Budget 2003-04 - road-building projects have been major successes. The Golden Quadrilateral project spans 5,846 kilometres, and envisages

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strengthening and four-laning of highways connecting Delhi, Mumbai, Chennai and Kolkata. According to data released by theGovernment of India, over 1,400 kilometres (or 24%) have been already four-laned; all contracts have been awarded for theremainder, and the projects are being implemented.

India’s road coverage is excellent on paper. On a broad level, India’s road network can be divided into national highways, statehighways and rural roads. Table 1 gives the current status of these roads:

7. Table 1: Indian Road Network

Length (In kms.) Percent

National Highways 58,112 1.8

State Highways 137,119 4.1

Major District Roads 470,000 14.2

Rural Roads 26,50,000 79.9

Total length 33,15,231 100.0

Source: NHAI

The geographic coverage of India’s highway network, almost 0.66 km of highway per sq. km of total road area compares wellwith the United States of America (0.65 km.) and is four times superior to China (0.16 km). However the quality of roads ispoor. China’s highway network comprises 15,000 kms. Of 4-6 lane expressways that were constructed very swiftly over thelast 10 years. In contrast, only about 3000 kms of India’s highways is 4 lanes; the rest is 2-lane or less. Further, expresswaysdo not link major economic centers. About a quarter of the highways is surfaced with bitumen or concrete and only a fifth issurfaced with water-bound macadam. The rest are unpaved. The condition of the roads is not laudable either. The World Bankin 2002 classified 25% of the national highways, as being of “poor quality”, and more than 50% of state highways was labelledas “poor” or “very poor”. Of the 6,61,000 Indian villages, 40% was not connected by all-weather roads to market centers andmajor road networks. The resultant toll on the economy is huge. The Rakesh Mohan Committee Report on Infrastructure(1996) estimate losses of the range of US $6-6.5 billion annually due to poorly developed roads. 25% highways are congested.The average speed of trucks and buses in India is almost half of the average international speed.

Having recognised the same the Government of India has taken full-fledged measures in development of Indian Roads.

8. Golden Quadrilateral and North-South East-West Corridor

The National Highway Development Project (NHDP) has two major projects to develop highways: Golden Quadrilateral (GQ),and the North-South East-West (NSEW) Corridor. The 5,846km-long GQ will connect the country’s four main metros (Mumbai,Delhi, Chennai and Calcutta), and is expected to be completed by 2006. The 7,300km-long NSEW corridor will connectSrinagar to Kanyakumari, and Silchar to Porbandhar, and is to be completed by 2009. These two projects will constitute a13,146km network of four and six- laned highways that will provide road connectivity to major ports.

Power

India has a total installed power-generation capacity of 105,000 MW. The growth in generation capacity has lagged behinddemand for power, so the country has a significant deficit. The government’s programme “Power for all by 2012” aims toclose this gap. The recently passed Electricity Act is a landmark reform for the sector, as it allows private-sector participationin transmission and distribution (T&D), and delicenses the generation of power. Another major reform is the tripartite agreement(TPA) between SEBs, the central government, and the RBI, for one-time settlement of SEBs’ dues to central utilities.

With these reforms, the power sector is poised for fresh investments of an estimated Rs1,71,700 cr over the next 6-7years. Of this, about Rs.92,600 cr would flow to the order books of construction companies, which in turn will benefitthe construction steel companies.

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9. Long products: an overview

Long steel products, comprising bars, rods, structural and rails, are primarily used in sectors such as construction, housing,infrastructure and railways. Longs constitute 45% of steel production in India.

Over the last five years (FY2000-04), a 4% CAGR has been seen in demand for long products. Consumption in FY2004 hasgrown relatively faster – at about 5%. Prices of long products have remained firm – in line with the overall rise in steel prices.

International prices of wire rods during H1 FY2005 have risen 47%, whereas those of billets have climbed 50%.

10. Bars and Rod Production in the country

Various studies conducted by reputed agencies with regard to long products in the Eastern region show that there is substantialgap between demand and supply and this would increase as constructional activities gather pace in the next few years.

Considering past and present trend of consumption of steel and country’s future industrial and economic planning the demandof finished steel as projected by working Group of Iron & Steel for 8th five year plan and the task force constituted by Governmentof India is 42.0 million tonnes for 2006-07 and 57.0 million tonnes for 2011-12. Out of this the demand for bars and rods for2011-12 is 15.23 million tonnes and 21.13 million tonnes respectively. Subsequent to above projection working group on Iron& Steel for 9th Five Year Plan has projected the demand for 2005-06 at 48.8 million tonnes.

While estimating the demand for bars/rounds during this period it has been assumed that percentage contribution of demandof this product out of total steel demand as projected by Working Group for 8th Five Year Plan shall be similar for the 9th FiveYear Plan also.

Thus the demand for bars and rods is projected for the 2005-06 is 17.7 million tonnes. It has been estimated against thedemand there will be a shortfall of 9.9 million tonnes. If however an average 5% growth of production per year is consideredfrom 2001-02 by way of expansion/better utilization of existing units the shortfall of bars/ rounds would be 8.2 million tonnes in2005-06.

With the increase in constructional activities in various sectors like irrigation, dam, power plants, housing etc. the demand forrolled deformed bar in the form of TMT bar and cold twisted deformed bars are increasingly rapidly. There are about 60 re-rolling mills excluding Scrap Re-Rollers in the State of West Bengal of which 40 mills are running at present with their aggregateannual production of 4.8 lakhs tonnes.

A comparative study of demand – past and future of Long Products and steel structural in India is given below.

Year Steel Structural(Million tonnes) Bars, Rods, Steel Wires(Million tonnes)

1999-2000 2.92 8.55

2000-2001 3.10 8.95

2001-2002 3.30 9.40

2002-2003 3.52 9.87

2003-2004 3.75 10.36

2004-2005 4.00 10.88

2005-2006 4.25 11.42

2006-2007 4.50 12.00

2011-2012 6.00 15.00

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11. Sponge iron: an overview

In the steel-making process by the electric arc furnace (EAF) method, sponge iron is an intermediate product. Demand, supplyand prices of sponge iron are closely linked with the dynamics of the steel industry.

Consumption: 10% CAGR (FY1999 to 2004)

India is the largest producer of sponge iron in the world, followed by Venezuela. Over the last five years, production has had aCAGR of 9%. During the same period, consumption grew at a CAGR of over 10%. However, the growth in demand in FY04grew by 17% to over eight million tonnes.

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VI. COMPANY, MANAGEMENT AND PROJECT

Brief History of the Group

MSP Group is one of the leading steel manufacturers in the secondary sector in Eastern India. The Group has multiplied itsbusiness operations in terms of sales and production by setting up different projects in the steel sector and industrial gases inWest Bengal, Orissa, Chattishgarh and Jharkhand. The group turnover was in excess of Rs. 25000 lacs during the year endedMarch 2005.

A snapshot of the Group’s current manufacturing capacities is as follows:

Howrah Gases Limited: 60,000 TPA Sponge Iron unit at Ranigunj, W.B., 36000 TPA Induction furnace and 120 M3 per hr ofindustrial oxygen at Burdwan, W.B.

Ashirwad Steels Ltd: 45,000 TPA and 60,000 TPA Sponge Iron Units at Jamshedpur and Hyderabad respectively and 32800TPA of LPG Bottling Plants at Uluberia and Raigarh.

MSP Sponge Iron Limited: A Sponge Iron-manufacturing unit with a capacity of 60,000 TPA at Keonjhar, Orissa.

MSP Steels Private Limited: 50,000 TPA Induction furnace and 36,000 TPA Re-rolling mills at Keonjhar, Orissa.

MSP Rolling Mills (P) Ltd: 24,000 TPA Re-Rolling Mill at Howrah, WB.

Rama Alloys Private Limited: 90m3 Per hr of Industrial Oxygen.

In view of the experience of running a secondary steel plant and industrial gases unit successfully, the MSP Group nowproposes to put up an integrated steel complex at Jamgaon, Raigarh, Chhattishgarh. The process route selected for themanufacture of steel via the Sponge Iron Plant-Induction Furnace –Continuous casting – TMT Bars and Wire rods with majorpower supplied through a captive source would ensure efficient production.

The iron ore would be sourced from Barbil mines, which is approximately 260 kms from Jamgaon. It is planning to sourcecomplete non-coking coal from the mines located at approximately 50-60 kms from the proposed project site.

Brief History of the Company

The company was incorporated as Adhunik Rollers Pvt. Ltd., having its registered office at 1, Crooked Lane, Kolkata-700 001West Bengal on 18.11.1968. The name of the Company was changed to MSP Steel & Power Private Limited on March 7, 2003.The company subsequently became a public company under the name of MSP Steel & Power Limited with effect from 9thSeptember 2003.

Present Activities

The company is currently involved in manufacturing of sponge iron and trading of steel products.

MAJOR EVENTS IN THE HISTORY OF THE COMPANY

Capacity/facility creation, location of plant, etc

The company has proposed to set up an Integrated Steel plant with a capacity to manufacture 192000 M.T. p.a. of Sponge Ironthrough two kilns of 300 tonnes capacity each, 2 Nos. 96,000 Tonnes per annum along with 36 Tonnes per hour waste heatrecovery boiler, 16 Mega Watt Captive Power Plant, 95,109 tonnes per annum Steel Melt Shop comprising of 3 nos., 12 tonnesInduction Furnaces and 1 No. 2 Strand Billet Caster and 80,000 Tonnes per annum Re-Rolling Mill.

The project shall be located at the address below:

Location of the Project

Plant Site City OfficeMSP Steel & Power Limited MSP Steel & Power LimitedVillage & P.O. Jamgaon Hari Bhavan,District Raigarh Near Pahar Mandir,Chattissgarh - 496001 RaigarhChattisgarh –Phone – +91 7762 26449/50/51/52/53 Phone + 91 7762 226532

Fax + 91 7762 226533

The Company has started producing sponge iron from Kiln I which commenced production from 4th November 2004.

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Apart from the above Integrated Steel project the Company is also setting up the following Ancillary Projects to aid the IntegratedSteel Project.




Products

The company was earlier engaged in production of Katha an ingredient used in the preparation of readymade betals. The rawmaterials for the manufacture of katha is wood and owing to scarcity of the same the production of katha has been discontinued.

The Company at present produces sponge iron and minorly trades in MS rods and oxygen cylinders and other steel products.

Competitive conditions, Marketing etc

The company has a competitive edge over competitors due to the following reasons:

� Capacities to meet demand

� Quality of the final product

� Market reputation of the promoters

Defaults/ Re-Schedulement with Banks and Institutions

The company has neither defaulted nor has there been any reschedulement with Financial Institutions/ Banks, conversion ofloans into equity. There has been no event in the company such as strikes, lock outs etc.

Location of the company

The Registered Office of the company is located at 1, Crooked Lane, Kolkata 700 069 and corporate office is located at 16/S,Block A, 2nd Floor,New Alipore, Kolkata- 700 053.

Main objects of the company

(a) To carry on in India and/or elsewhere either directly or by means of subsidiary compa-nies all or any of the business ofPig Iron and Steel manufacturers, refiners, founders, rollers, re-rollers, mechanical, electrical and general engineersand contractors, tool makers, brass founders, metal workers, manufactures of Iron and Steel castings, ma-chinists,smiths, wood workers, builders, painters, metallurgists, gas and electrical manu-facturers and engineers, plate-makers, sheet makers, wire-drawers, galvanisers, enamellers, electroplaters, manufacturers of tin-containers,aluminium products, G.I buckets, and to sell import export, manufacture, repair, convert, let on hire and deal inmachinery, rawmaterials, by-products, scrap, implements, tools, utensils and materi-als and conveniences of allkinds and generally to carry on the said business.

(b) To carry on or any of the business of manufacturers, exporters, Importers, buyers, sell-ers, dealers, indentors,distributors, platers, hires, traders, processors, rollers, re-roll-ers, drawers, makers, extruders, fabricators, founders,forgers, smelters, of and in all kinds of ferrous and non-ferrous metals, iron, steel, alloy steels, Sponge Iron, Specialand stainless steel, bright steel bar and shafting (ferrous and non-ferrous), structural and sheet metal fabrication,foundry work of all kinds, ferrous and non-ferrous castings of all kinds, ingots, billets, rods, twisted bars, flats,squares, wire and wire ropes and all kinds of wire products, slabs plates, rounds, sheets, coils, strips, sleepers, pipes,tubes, pipe and tube fittings, rails, channels, angels, beams trusses, structurals, bolts and nuts, rivets, utensils of allmetals, hopes, circles, buckles, tolls, implements, plants, machin-eries, industrial components, and all light and heavysorted sections and all other types of rolls, engineering goods and other products of Iron, steel, brass, copper,stainless steel, aluminium’s, gunmetal, lead, cast iron, scrap, and any other ferrous and non-fer-rous metals, alloys ofany specification or description and to act as exporter or merchant exporter, or importer in all goods described hereinand in all other metallic substances.

(c) The company do carry on the business by setting up a Thermal Power Plant.

i) To generate, accumulate, transmit, distribute and supply electricity for the purpose of captive consumption forbeing used in other manufacturing process(s), heat, light and for all other purposes for which electrical energycan be employed, and supply of surplus electrical energy to external entities as well, and to manufacture and/orprocure all apparatus and things required for or capable of being used in connec-tion with the generation,accumulation, transmission, distribution, supply and em-ployment of electricity, including in the term ‘electricity’all power that can be derived there from, or may be incidentally hereafter discovered in dealing with electricity.

ii) To acquire Concessions, or licenses granted by and to enter into contracts with government of India orGovernment of any State in India, or any Municipal or Local Authority, Company or Person, for the Constructionand maintenance of any electri-cal installations, for the production, transmission or use of any electric power foraforementioned purposes.

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iii) To construct, lay-down, establish, fix, and carry out all necessary buildings, works, machineries, mains, cables,wires, lines, accumulators, lamps and other appliances to generate, accumulate, transmit, distribute, supply andemploy electricity.

iv) To process, make marketable use, sell and dispose off ash or any other materials produced as a result of thegeneration of electricity and to prepare, manufacture, sell and deal in any products capable of being producedfrom such ash or such other material.

(d) To carry on in India or elsewhere the business of prospecting, exploring, operating and working on mines, quarriesand to win, set, crush, smelt, manufacture, process exca-vate, dig, break, acquire, develop, exercise, turn to account,survey, produce, prepare, remove, undertake, barter, convert, finish, load, unload, handle, transport, buy, sell, import,export, supply, and to act as agent, broker, adatia, stockist, distributor, consult-ants, constructor, manager, operator orotherwise to deal in all sorts, present and future ore, minerals, deposits, goods, substances, and materials, includingsands, stones, soils, chalk, clay, china clay, bentonite, boryles, calcite, and coal, lignite, rock phosphate, brimstone,brine, bauxite, limestone, precious, and other stones, gold, silver diamonds, iron, aluminium, titanium, vanadiumbrass and other allied materials, by-products, mix-tures, blends, residues & substances and to do all incidental actsand things necessary for the attainment of objects under these presents.

(e) To search, survey, discover and find out and to acquire by concession, grant, purchase, barter, lease, licence,degrees, and tenders the allotment or otherwise of land or water area from Government, semi-government, Localauthorities, private bodies, Corpora-tions and other persons such rights, powers, and privileges whatsoever forobtaining mines, open cast mines, quarries, deposits, for accomplishment of above objects.

(f) To set up, operate & carry on the business of coal beneficiation, processing’s, calibrating, sizing, segregating, upgradation, screening, washing, in all sorts of present & future ores, including iron-ore, minerals, deposits, their by-products, mixtures, blends, resi-dues, and substances, and to do all acts / things incidental to and necessary for theat-tainment of objects.

(g) To act as merchants or agents for the sale or purchase of all or any of the products or by products of any and everysuch business or for the materials used in the production or manufacture thereof in connection with all or any of theabove objects in (a), (b), (c), (d), (e) or (f) above.

Subsidiary Company

The Company does not have any subsidiary company as on the date of this Prospectus.

DETAILS OF DIRECTORS AS ON THE DATE OF FILING THE PROSPECTUS

Name, age and Date of Qualification Occupation Particulars of other No. ofResidential Address appointment Directorship shares

held in thecompany

Mr. Puranmal Agrawal Since B Com Business 1. MSP Steels Pvt. Ltd., 142,000(50 Yrs) inception (Hons) 2. Howrah Gases LtdS/o of Late Ramanand 18.11.1968 3. Adhunik Gases LtdAgrawal 4. Raj Securities Ltd386 A, Block-G, New Alipore, 5. Larigo Investment Pvt LtdKolkata - 700053 6. Ashirwad Steels &(Chairman) Industries. Ltd.

7. Rama Alloys Pvt. Ltd.8. MSP Metallics Ltd9. MSP Properties India

Pvt Ltd

Mr. Suresh Kumar Agrawal 27.02.1974 B.E. Business 1. Ashirwad Steels & 94,000(48 yrs) Mechanical Industries Ltd.,S/O of Late Ramanand 2. Howrah Gases Ltd.,Agrawal 3. Larigo Investment Pvt Ltd386A, Block-G, 4. MSP Steels Pvt. Ltd.,New Alipore, 5. MSP Metallics LtdKolkata – 700 053 6. MSP Properties India(Managing Director) Pvt Ltd

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Name, age and Date of Qualification Occupation Particulars of other No. ofResidential Address appointment Directorship shares

held in thecompany

Mr Manish Agrawal 05.07.2003 B Com Business 1. K C Texofine Pvt Ltd 304,000(24 yrs) (Hons) 2. MSP Infotech Pvt LtdS/O of Mr. Puranmal Agrawal MBA 3. MSP Sponge. Ltd.386A, Block-G, New Alipore,Kolkata - 700053(Director)

Mr Saket Agrawal 05.07.2003 B Com Business 1. K C Texofine Pvt Ltd 204,000(24 years) (Hons) 2. MSP Infotech Pvt LtdS/O of Mr. Suresh Kumar MBA 3. MSP Sponge. Ltd.Agrawal386A, Block-G, New Alipore,Kolkata - 700053(Director)

Mr. Akshaya Kumar Singh 12.12.2003 M.Sc. Business(63 years) (Geology)S/O of Late Gopinath Singh PH.D &N-3/278, IRC Village DR. NAT.Bhubaneswar- 751015 Sc.(Director)

Mr. Niranjan Dash 12.12.2003 B.Sc Consultancy(64 years) [Mech Eng]S/O HIG-69, Kannan Vihar FIE(PH-I) Patia,Bhubaneswar- 751031(Director)

Mr. Navneet Jagatramka 12.12.2003 B.Com, LLB Consultancy(35 years)S/O Late Prem PrakashJagatramkaNayaganj,Raigarh (CG)496001(Director)

Mr. Arvind Kumar Saraf 12.12.2003 B.Com, Chartered(36 years) FCA AccountantS/O Bijay Kumar Saraf85, Metcalfe Street,Room No. 206Kolkata - 700013(Director)

PROMOTERS AND DIRECTORS AND THEIR BACKGROUND

Background of the Promoters

Mr. Puran Mal Agrawal

Mr. Puran Mal Agrawal is engaged in the business of Steel and Industrial Oxygen Gas manufacturing for the past 25 years. Heis a graduate in Commerce and has been continuously providing commercial direction to the efforts of the group. He has beeninstrumental in formulating the strategies and streamlining finances of the group efficiently, thereby providing an appropriatesynergy to the group. Under his able leadership, a humble endeavour has grown into a vibrant industrial group.

Mr. Suresh Kumar Agrawal

Mr. Suresh Kumar Agrawal, son of Late Ramanand Agrawal aged 48 years is a qualified Mechanical Engineer from JabalpurUniversity. He is engaged in the steel business for the past 20 years. Furthermore he has had hands-on experience on thefactory floor since the age of 16. As a result of numerous years of exposure in the industry he has been able to render his

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technical acumen in ensuring high quality in products and optimal utilisation of machines. He looks after production and qualitycontrol as promoter-director in other companies of the group.

Mr. Manish Agrawal

Mr. Manish Agrawal, son of Mr. Puran Mal Agrawal aged 24 years is a commerce graduate and holds a Masters Degree inBusiness Administration with specialisation in Marketing from International Management Institute, Delhi. He shoulders theresponsibility of marketing the products in the existing markets and also developing of new markets.

Mr. Saket Agrawal

Mr. Saket Agrawal, son of Mr. Suresh Kumar Agrawal aged 24 years is a commerce graduate and gold medallist Managementgraduate from International Management Institute, Delhi. Mr. Agrawal is a dynamic young entrepreneur who is focussedentirely in the implementation of the project that is expected to spearhead the expansion plans of the Group.

Adhunik Gases Limited

The company was incorporated on 30.04.1985 having its registered office at 1, Crooked Lane, Kolkata- 700069. The companyis currently engaged in trading in iron and steel products.

The present directors of the company are:

1. Mr. Puranmal Agrawal

2. Mr. Sawal Ram Beniramka

3. Mr. Dalbir Chhibbar

Larigo Investments Pvt Ltd.

The company was incorporated on 19.02.1998 having its registered office at 1, Crooked Lane, Kolkata- 700069. The companyis currently engaged in investment in securities and trading in iron and steel products.

The Company is a NBFC having Registration Number B05.05162 issued on 30.01.2003.


1. Mr.Suresh Kumar Agrawal

2. Mrs. Kiran Agrawal

3. Mr.Kailash Chand Choudhary

MSP Infotech Pvt Ltd.

The company was incorporated on 22.03.2000 having its registered office at 16/S,Block”A” New Alipore, Kolkata - 700053. Thecompany is currently engaged in investment in securities.


1. Mr. Saket Agrawal

2. Mr. Manish Agrawal

3. Mr. Pramod Goel

MSP Properties (India) Pvt Ltd.

The company was incorporated on 11.09.1997 having its registered office at 1, Crooked Lane, Kolkata- 700069. The companyis currently engaged in investment in securities and providing of loans.


1. Mr. Puranmal Agrawal

2. Mr.Suresh Kumar Agrawal

3. Mrs. Kiran Agrawal

4. Mrs. Nisha Agrawal

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Details of Promoters

Mr. Puranmal Agrawal

Permanent Account Number ACXPA6338C

Driving Licence Number WB-01-207678

Passport Number R-799471

Voter ID Number WB/23/150/045453

Bank Branch and address Citibank N.A40,Chowringhee Road,Kolkata -700071

Bank Account Number 5296718337

Mr. Suresh Kumar Agrawal

Permanent Account Number ACXPA6339D



Voter ID Number WB/23/150/045452



Mr. Manish Agrawal

Permanent Account Number ACJPA0456B



Voter ID Number LFB0990486



Mr. Saket Agrawal

Permanent Account Number ACJPA0455C



Voter ID Number LFB0990477



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Details of Promoter Companies

Adhunik Gases Ltd Larigo Investments MSP Properties MSP Infotech Pvt LtdPvt Ltd IndiaPvt Ltd

Directors 1. Mr. Puranmal Agrawal 1. Mr.Suresh Kumar 1. Mr. Puranmal Agrawal 1. Mr. Saket Agrawal2. Mr. Sawal Ram Agrawal 2. Mr.Suresh Kumar 2. Mr. Manish Agrawal

Beniramka 2. Mrs. Kiran Agrawal Agrawal 3. Mr. Pramod Goel3. Mr. Dalbir Chhibbar 3. Mr.Kailash Chand 3. Mrs. Kiran Agrawal

Choudhary 4. Mrs. Nisha Agrawal

Date of 30-4-1985 19-2-1998 11-9-1997 22-03-2000Incorporation

Registration 038866 043824 085430 091431No

NBFC Reg No N.A B05.05162 N.A N.A.Dated 30-01-2003

Nature of Trading in Investment in shares Investment in securities Investment inBusiness Iron & Steel and rental Income and Interest Income shares

PAN No. AACCA1027E AAACL4319C AACCM0780G AACCM2824P

Banker Allahabad Bank Allahabad Bank Federal bank Citibank

Bank A/C No. 1135 214 1332 0272230331

We confirm that the PAN, Bank Account details and Passport Numbers of the Promoters has been submitted to the StockExchanges on which shares are proposed to be listed, at the time of filing the Prospectus with them.

There have been no changes in the management of the above promoting companies in the last three years.

Background of the Directors other than the Promoter Directors

Mr. Akshyay Kumar Singh

Mr. Akshyay Kumar Singh was appointed as a Director of the company on 12.12. 2003. He is 62 years of age, and M.Sc. inGeology and a PhD & Dr. Nat. Sc from Hungarian Academy of Sciences & EOTVOSL University, Budapest. He has thirty yearsof experience as a geologist and is the former Joint Director – Geology Level-1 in directorate Of Mining & Geology, Orissa. Heis recognised by the Indian Bureau of Mines as a qualified person to prepare mining plans.

Mr Niranjan Dash

Mr. Niranjan Dash has been appointed as a director on 12.12.2003. He is 64 years old, a B.Sc (Mechanical) Engineering,Chartered Engineer and Fellow of the Institute of Engineers. He is a specialist in the erection, commissioning and maintenanceof various parts of Steel Plants. With vast training and experience from industrially developed countries such as Germany,Czechoslovakia, Austria, Russia, Ukraine, England and France, he has served as a consultant for SAIL. He has been associatedextensively with Rourkela Steel Plant. He has been involved in the selection of process technology and equipment for RourkelaSteel Plant modernisation. He has also served as the Executive Director for Projects and Modernisation and also for MaterialsManagement division at different tenures.

He has been the General Manager- Projects in Bhilai Steel Plant as well. He has been instrumental in various critical technicalupgradation and modernisation work in Bhilai.

Mr Dash has also received management education from IIM, Kolkata. He has also had several honorary assignments, suchas, Hony. Secretary Rourkela Productivity Council, Hony. Secretary, Indo-German, rourkela, Hony. Chairman, Institution ofEngineers, Rourkela Chapter, Hony. President, Rourkela Management Association.

Mr. Arvind Kumar Saraf

Mr Saraf has been appointed as director on 12.12.2003. He is a Chartered Accountant by profession. He has been an all IndiaRank holder and is currently practicing as a Chartered Accountant for the last ten years.

Mr. Navneet Jagatramka

Mr Jagatramka has been appointed as director on 12.12.2003. He is 35 years of age and qualified in law. An industrial projectconsultant since 1997 based out of Raigarh, he is a member of DIPC, a government body in Raigarh. He has been theSecretary of State Bank Grahak Bank Sangh, the President of the Managing Committee, ITI, Raigarh and the Secretary of theIndian Red Cross Society. He is also the partner of Mahanadi Minerals a pioneering unit of lime manufacturing.

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OUTSTANDING LITIGATIONS & DEFAULTS

Pending Litigations

There are no pending litigations, disputes or suits against the company or its promoters/directors and there is no default inmeeting any of the statutory/bank/institutional dues. No proceedings have been initiated for economic offences against it andit is not a sick Company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1956.

Key Managerial Personnel

The profile of the key managerial personnel are given below:

Name Age Qualification Designation Responsibility Total Date Previous(yrs) Exp of Employment

(yrs) Joining

Mr. Sunil B. 38 Diploma in General Material 20 May, Sunflag Iron &Bhoyar Mech. Engg. Manager Management 2003 Steel Co. Ltd.,

(Works) & Project Planning; & ManikgarhProject in Charge Cement

Mr. Subhash 32 B. Com Senior Accounts & 10 Apr, TonganagaonAgrawal (Hons), Manager Taxation 2003 Tea Co. Pvt. Ltd.

FCA &ICWAI

Mr.Ashok 29 B. Com Commercial Secretarial, 7 March, Ashirwad Steel &Sarawagi (Hons), Manager and Finance and 2005 Industries. Ltd.

ACA & Company CommercialICWAIACS Secretary function

Mr.B.K.Singh 39 BE Mechanical Senior Head Power 14 Dec Thermax LtdDGM Power Plant 2004

Mr A. P .Sadhoo 36 BE Mechanical DGM Head 16 Dec Sunflag Iron &Mechanical (Mechanicals) 2004 Steel Co. Ltd.

Mr. B.N. Kar 44 MBA DGM Sponge 25 Nov Tata SpongeProduction Iron Division 2004 Iron Ltd

Mr Ramesh Nayak 50 MA, LLB Senior Personnel & 22 Jan Orissa SpongeManager Human Resourses 2005 Iron Ltd

Mr. V. Kanaka Raju 45 B.E. Manager Power & 20 Jun Sunflag Iron &(Electrical & Electrical Electricals 2003 Steel Co. Ltd.Electronics)M.B.A.

Mr. Prashant 39 B.A. & M. A. Senior Liaison officer 12 Mar S. G. F. A. Ltd.Pandey Executive 2003

Mr Manoj Singh 36 BE Mechanical Manager Head (Mechanicals) 10 Sept WalchandMechanical Coal Washery 2004 Industries Limited

Notes:

1. All the above-mentioned personnel are permanent employees of the Company.

2. There is no understanding with the major shareholders, customers, suppliers or any others pursuant to which any ofthe abovementioned personnel have been recruited.

3. There is no change in the key managerial personnel in the last three years prior to the date of filing the Prospectus.

4. Once the other operations of the Company will commence, the Company shall appoint more professional as per themanpower requirements.

5. Mr. Akbar Ali, Mr. Abhishek Tiwari and Mr. Kailash Agarwal have joined other organisations in the past one-year.

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CORPORATE GOVERNANCE

The company has complied with SEBI guidelines in respect of Corporate Governance specially with respect to broad basing ofBoard, constituting the Committees such as shareholders/investor grievance committee, etc. To ensure highest standard ofcorporate governance the company has already appointed four additional independent directors namely, Mr. Akshyay KumarSingh, Mr. Niranjan Dash, Mr. Arvind Kumar Saraf and, Mr. Navneet Jagatramka on the Board of the company with effect from12.12.2003.

Committees as per the Corporate Governance Norms

I) Audit Committee

a) Members

Name of Member Designation Type of Director

Mr Arvind Kumar Saraf Chairman Independent- Non-Executive

Mr Navneet Jagatramka Vice- Chairman Independent- Non-Executive

Mr Saket Agrawal Member Non-Executive

b) Tenure

The tenure of the Committee shall be one year. The Committee may be renewed or reconstituted by the Board.

c) Quorum

The quorum shall be two members being independent directors or one third of the members of the Auditcommittee whichever is higher.

d) Powers

i. to investigate into any activity within its terms of reference

ii. to seek information from any employees

iii. to obtain outside legal or other professional advice

iv. to secure attendance of outsiders with relevant experience, if it considers necessary

e) Terms of Reference

i. The audit committee shall review the following aspects of business of the Company

ii. Review the unaudited quarterly results, half-yearly and annual accounts of the Company

iii. Oversee the Company’s financial reporting process and the disclosure of its financial information to ensurethat the financial statement is correct, sufficient and credible.

iv. Recommending the appointment and removal of external auditor, fixation of audit fee and also approval forpayment for any other services.

v. Reviewing with the Management the annual financial statements before submission to the Board.

vi. Reviewing with Management, external and internal auditors, the adequacy of internal control systems.

vii. Reviewing the adequacy of internal audit function, including the structure of the internal audit department,staffing and seniority of the official heading the department, reporting structure coverage and frequency ofinternal audit.

viii. Discussion with internal auditors any significant findings and follow-up there on.

ix. Reviewing the findings of any internal investigations by the internal auditors into matters where there issuspected fraud or irregularity or a failure of internal control systems of a material nature and reporting thematter to the Board.

x. Discussion with external auditors before the audit commences, on the nature and scope of audit as well ashave post-audit discussion to ascertain any areas of concern.

xi. Reviewing the Company’s financial and risk management policies.

xii. To look into and review the reasons for substantial defaults, if any, in payments to the depositors, debentureholders, shareholders (in case of non payment of declared dividends) and creditors.

xiii. The Chairman of the Audit Committee shall be present at the Annual General Meeting of the Company to provideany clarification on queries from shareholders.

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II) Shareholders/ Investor Grievance Committee

a) Members

Name of Member Designation Type of Director

Mr Arvind Kumar Saraf Chairman Independent- Non-Executive

Mr Manish Agrawal Vice- Chairman Non-Executive

Mr Saket Agrawal Member Non-Executive

b) Tenure

The tenure of the Committee shall be one year and the Committee may be renewed or reconstituted by the Board.

c) Quorum

The quorum shall be either two members or one third of the members of the Committee.

d) Powers

i. to investigate into any activity within its terms of reference

ii. to seek information from any employees

iii. to obtain outside legal or other professional advice

iv. to secure attendance of Registrar or other outsiders with relevant experience, if it considers necessary

e) Terms of Reference

i. to review and ensure compliance of statutory provisions of the Companies Act, the guidelines of SEBI and theStock Exchanges and other statutory requirements relating to transfer and transmission of shares/debentures of the Company.

ii. to review and ensure that the Registrar/Company’s Transfer House implement all the statutory provisions asabove

iii. approve transfers/transmission of shares/debentures and demat/remat of the shares/debentures

iv. approve issue of duplicate share certificates, consolidation/sub-division of share certificates on completion ofthe procedures as may be stipulated.

v. ensure all shareholders queries, grievances and complaints like transfer of shares, non-receipt of balancesheet, non-receipt of declared dividends etc. are attended and redressed in an expeditious manner.

vi. any other matter referred by the Board relating to equity shareholders of the Company.

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VII. MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF THEOPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS.

SUMMARY OF PAST RESULTS FOR THE LAST THREE YEARS

Rs. in Lacs

Particulars 31-Mar-03 31-Mar-04 31-Mar-05

Income

Sales

Of products manufactured by the Company 7.05 22.22 3,472.81

Of Products traded in by the Company / Services 363.31 484.46 35.90

Sub Total 370.36 506.68 3,508.70

Net Other Income 7.93 14.70 9.70

Increase (Decrease) in Inventories 18.21 (37.17) 260.08

TOTAL INCOME 396.50 484.21 3,778.48

Expenditure

Trading Purchases 361.51 404.00 32.58

Raw Materials Consumed 1.27 0.00 2,580.39

Staff Costs 1.83 3.84 64.17

Other Manufacturing Expenses 12.56 14.68 231.28

Administration and other Expenses 9.04 7.38 128.00

Selling & Distribution Expenses 5.44 9.25 23.56

TOTAL EXPENDITURE 391.63 439.15 3,059.98

Net Profit before Interest, Depreciation, Tax and Extraordinary Items. 4.87 45.06 718.50

Interest 0.39 0.37 114.36

Depreciation 1.18 2.00 199.56

Net Profit before Tax and Extraordinary Items 3.30 42.70 404.58

Provision for Taxation 1.30 15.32 31.72

Provision for Deferred Tax 0.54 0.11 127.99

Net Profit before Extraordinary Items 1.46 27.27 244.86

Extraordinary items 0.03 0.00 0

Net Profit after Extraordinary Items 1.42 27.26 244.86

Balance Brought down from Earlier Year 4.12 5.55 32.81

Balance Carried to Balance Sheet 5.55 32.81 277.67

Note: The Figures given above has been reclassified, rearranged and recasted wherever considered necessary to reflect theoperation of the company on the basis of a uniform practice.

There are no significant change in the items of income and expenditure and there were no unusual or infrequent events ortransaction; significant economic changes that materially affected or are likely to effect income from continuing operations.

ANALYSIS

The company envisaged setting up of Integrated Steel Plant in the year 2002–03 comprising of

1. 2 Nos. 96,000 Tonnes per annum sponge iron plant modules.

2. 16 Mega Watt Captive Power Plant.

3. 95,109 tonnes per annum Steel Melt Shop comprising of 3 nos., 12 tonnes Induction Furnaces and 1 No. 2 StrandBillet Caster.

4. 80,000 Tonnes per annum Re-Rolling Mill.

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Later to aid the Integrated Steel Project it was envisaged to set up the the following ancillary projects:




The company was able to commence production of One Sponge Iron Kiln with capacity to produce 300 TPD from the 4th ofNovember 2004 and has achieved a turnover of Rs.3472.81 lacs from the above activity. The plant has achieved 85% capacityutilisation in the first year of operation.

Gross Sales increased to Rs. 3508.60 lacs as against Rs.506.68 lacs for the previous year. The Profit before tax stood at Rs.404.13 lacs as compared to Rs. 42.70 for the previous year. Profit after tax has improved to Rs.244.86 lacs from Rs. 27.27 lacsfor the previous year. The company has already commenced production of sponge iron from Kiln-I from November 2004 andthe entire integrated steel plant is expected to be operational from the month of September 2005.

The outlook of the steel industry is positive and after implementation of the ancillary project the company would be a low costproducer of steel.

a) Unusual or infrequent events or transactions

The company was previously engaged in the manufacturing of Kutch and Katha which are ingredients used in thepreparation of readymade betals. The raw materials for the manufacture of katha is wood and owing to scarcity of thesame and restrictions on transportation, the production of katha was discontinued.

Apart from this there has been no events to the best of our knowledge which may be called unusual “or” “infrequent”.

b) Significant Economic changes that materially affect or are likely to affect income from continuing operations.

With an overall upsurge in the Indian economy, the demand of iron and steel is at an all time high. This increase hasresulted into demand of iron and steel products and the company is suitably placed to benefit out of this situation as thedemand for the products is from the construction and infrastructure industry. The increase initiative of the government inthe infrastructure development has also lead to high requirement of steel products.

c) Known trends or Uncertainities

Uncertainity exists over the avaibility and price of raw materials namely iron ore, Coal etc. and prices of finished productsviz. sponge iron, pig iron, steel billets and TMT bars etc. The risk on account of the above price fluctuation is reduced to agreat extent considering the fact that a rise in the price of the basic raw material will be passed on in the form of increasedprice of the finished product. The company has made long term arrangements for supply of coal and iron ore and as suchthe rist of uncertainity is mitigated to a large extent. Other than as described elsewhere in the Prospectus, to ourknowledge,there are no known trends or uncertainities that have or had or are expected to have a material adverse impacton revenue or income of the company from continuing operations.

d) Future relationship between costs and income

Other than as described elsewhere in this prospectus, to our knowledge, there are no known factors which will affect thefuture relationships between the costs and income or which will have a material impact on the operations and finances ofthe company.

e) Total turnover of each major industry segment in which the company operates

Sales in value terms of the major segments of the industry made and traded by the company for the nine months endedMarch 31,2005.

SL No. Major Segments Rs. In Lacs. % age

1 Sponge Iron 3472.81 98.98

2 TOR Steel 35.90 1.02

3508.70 100.00

f) New Products or business segments

The Company will operate in the following business segment- Sponge Iron, MS Billet, TMT Bars and Rods. TheCompany is also in the process of setting up a 24 MW captive power plant at the site for captive power consumption.

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g) Extent to which business is seasonal

The business of the company is not seasonal.

h) Any significant dependence on a single of few suppliers or customers

Currently there are many suppliers of sponge iron in India and dependence on few suppliers is not likely to occur. Thecompany sells its product to various foundries, furnaces and rolling mills in eastern India and dependence on single or fewcustomers is non-existent.

i) Competitive conditions

The company has a competitive edge over competition due to the following reasons:

� Capacities for sponge iron production

� Quality of final product

� Market reputation of the promoters

The fragmented structure of the sector possesses a good opportunity for a medium / large media house to distinguish itselffrom the lot and create a position of strength by having a diversified product mix and a varied product penetration alongwith the necessary infrastructure for quality production.

The Directors confirm that there have been no events or circumstances since the date of the last financial statements,which materially and adversely affect or likely to affect the profitability of the company or the value of its assets or its abilityto pay its liabilities within the next twelve months.

Future Prospects

Driven by the thrust of Government spending and reforms, the infrastructure and construction sectors are headed for anupswing. Infrastructure development has begun to pick up over the past two years, driven by government initiatives as well asprivate participation. Innovative schemes of financing and low rates of interest have made it easier and cheaper to fund largeprojects. The assessment of projects in key infrastructure sectors like roads, ports, railways and power plants, indicatesprospective investments of Rs. 6,19,600 crores over the next five years.

The growth in construction sector will in turn lead to an upsurge in the demand of construction steel in a major way and willbenefit all the steel producing companies substantially.

The construction component would form 66% of the investments in infrastructure projects over the next four years.

The construction sector is set for strong growth over the next few years

The government has been promoting investments in infrastructure through its own entities as well as private participation overthe past two years.

Roads: One of the major initiatives has been construction of new roads and upgrading of existing ones. The key projects inroads are the Golden Quadrilateral, the North-South- East-West (NSEW) corridor, and Ministry of Road Transport & Highways(MORT&H), which would together involve an investment of Rs859bn.

Ports: Ports have already attracted significant investments by foreign and domestic companies, driven by the Sagarmalaproject and privatization of existing ports.

Hydel power generation: The state-owned National Hydel Power Corporation (NHPC) as well as the private sector arebuilding capacity.

Airports and railways: Policies for modernization are in early stages of formulation. The sectors could see private sectorinvestment from Indian as well as foreign majors.

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VIII. FINANCIAL OF GROUP COMPANIES

The details of group companies are as follows:

Ashirwad Steels Howrah MSP Sponge MSP Steels Rama Alloys& Industries Ltd Gases Ltd Iron Ltd Pvt Ltd Pvt. Ltd.

Date of 19th Feb,1986 24th May,1985 16th July 1999 22nd Aug, 1997 15th April, 1993Incorporation

Directors P M Agrawal P M Agrawal Saket Agrawal P M Agrawal P M AgrawalS K Agrawal S K Agrawal Manish Agrawal S K Agrawal Kiran AgrawalDalbir Chhibar Ashok Kumar Pradip Kumar Dey Ashok Kumar Nisha AgrawalYudhbir Chhibar Kailash Chowdhury S B KulkarniAshok Kumar

Factory Site 1. Uluberia 1. Dewandighi, Vill: Belisuan Vill: Belisuan Dewandighi,2. Raigarh, Burdwan, WB PO: Goverdhan PO: Goverdhan Burdwan, WB

Chhatisgarh 2 Raniganj Dist: Keonjhar, Dist: Keonjhar,3. Adityapur Industrial Area, Orissa Orissa

Industrial Estate, 3. Burdwan, WBJamshedpur

4. Veliminedu,Nalgonda,Andhra Pradesh

Product 1&2. Hydrocarbon 1. Oxygen Gas Sponge Iron 1. MS Ingot Oxygen GasGas bottling plant 2. MS Ingot Casting3. Sponge Iron 3. Sponge Iron 2. MS Rounds &4. Sponge Iron Flats

Installed 1&2. 32.8 Tonnes 1. 120 Cu Mtr 60,000 MTPA 1. 50,000 MTPA 90 Cu Mtr per hrCapacity 3. 45,000 MTPA per hr 2. 36,000 MTPA

4. 60,000 MTPA 2. 50,000 MTPA3. 60,000 MTPA

Commercial 1. 1991 1. 1987 Dec 2000 Mar 2002 1996Production 2. 1993 2. 1996(year) 3. 2000 3. Oct, 2002

4. 2004

A Snapshot of Financials of Group Companies (Audited) as on 31st March 2004Rs in Lacs

Ashirwad Steels Howrah MSP Sponge MSP Steels Rama Alloys& Industries Ltd Gases Ltd Iron Ltd Pvt Ltd Pvt. Ltd.

Sales 3715.78 5742.40 3144.79 2348.51 157.67

PBT 345.35 183.58 228.90 117.01 4.45

PAT 247.74 124.83 154.85 70.60 4.08

Networth 951.29 1011.98 971.85 572.02 187.83

Net Fixed Assets 1472.92 1398.36 947.99 689.61 124.62

Term Loans & 22.17 763.75 from 319.39 from 300.30 SIDBI 10.39 fromEquipment WBFC,1CICI, SIDBI, ABN AMRO,Finance Loans Magma Leasing ABN- AMRO, ICICIBank.

Ltd., ICICIBank,Kotak Mahindra, Centurion Bank.Ashok LeylandFinance.

Working Capital NIL 163.7 SBI, 63.25 40.20 NILLimit Allahabad Bank Federal Bank UCO Bank,

India ExchangePlace.

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The following are the group companies:

1. Ashirwad Steels & Industries Limited

Background of the Company

The Company was originally incorporated on 19.02.86 in the name and style of Ashirwad Mercantile Limited. Subsequently,the name was changed to Ashirwad Steels & Industries Limited with effect from 29.01.93, having its registered office at 1,Crooked Lane, Kolkata –700069, West Bengal.

In the year 1990-91, the Company set up a Hydrocarbon Gas Bottling Plant at Uluberia, Howrah, West Bengal, to fill the abovegas in ISI marked cylinders for industrial and commercial consumers as a substitute of Dissolved Acetylene Gas. The Companyhas been operating the above bottling plant quite successfully since then. In the year 1993 the Company expanded its operationin this field and set up a similar Hydrocarbon Gas Bottling Plant near the city of Raigarh, Madhya Pradesh. Both the aforesaidplants are running successfully and earning profits. The commercial operation of Uluberia Plant started in 1991 and of RaigarhPlant in the year 1993. The installed capacity of both plants together is to bottle 32800 Tonnes of L. P. Gas and R. L. H. Gas.

The company has also set up a Sponge Iron Manufacturing unit with a capacity of 45000 TPA at Adityapur Industrial Estate,Jamshedpur. The unit started commercial production from April 2000.

The financial highlights for 3 years are given below.

Rs in Lacs

Year Ended March 31 2002 2003 2004(Audited) (Audited) Audited)

Total Income 2002.00 2365.09 3930.07

Profit after tax (PAT) 97.86 113.67 247.74

Share Capital 406.64 406.64 406.64

Reserves (excluding revaluation reserve) 186.6 300.27 548.01

Earnings per share (EPS) (in Rs.) 2.41 2.80 6.09

Miscellaneous Expenditure 6.83 5.09 3.36

Networth 586.41 701.82 951.29

Net Asset Value (NAV) per share (in Rs.) 14.42 17.26 23.29

Source: Audited Financial Statements

Notes: Face value of each equity share is Rs. 10

There are no pending litigations, disputes or suits against this company and there are no defaults in meeting any of theStatutory/bank/institutional dues. No proceedings have been initiated for economic offences against it and it is not a sickCompany within the meaning of Sick Industrial Companies (Special Provisions) Act, 1956.

Contingent liabilities not provided:

Guarantees given by Banks, counter guaranteed by the company for Rs.23.70 Lacs.

Stock Market Data

The stock market data for the Company during the last 6 months at the stock exchange Mumbai, is as follows:

Month Highest(Rs.) Lowest(Rs.)

Dec-04 28.45 13.97

Jan-05 28.60 21.75

Feb-05 34.55 22.65

Mar-05 34.50 24.55

Apr-05 47.00 27.50

May-05 40.00 31.00

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Particulars Price in Rs

Highest Price – (18.04.2005) 47.00

Lowest Price – (03.12.2004) 13.97

Price on 1st June 2005 34.00

2. Howrah Gases Limited


Howrah Gases Limited is an existing profit making company having its registered office at 1, Crooked Lane, Kolkata –700069,West Bengal. The company was incorporated on 24.05.85. The company is engaged in manufacturing of industrial oxygengas at Dewandighi, P.O. Mirzapur, Burdwan, West Bengal. The installed capacity of the Burdwan unit is 120 Cubic meters perhour. The unit started commercial production in the year 1995. The company has also set up a Mini Steel Plant having twofurnaces for manufacture of M.S. Ingots with installed capacity of 50000 TPA at Dewandighi, P.O. Mirzapur, Burdwan, WestBengal. Due to shortage of scraps, the company has also set up a sponge iron-manufacturing unit of 200 TDP at MangalpurIndustrial estate, Ranigunge, Burdwan, West Bengal. The unit is a backward integration for the company.

The Financial highlights for 3 years are given below.

Rs in Lacs

Year Ended March 31 2002 2003 2004(Audited) (Audited) (Audited)

Total Income 3,267.10 4,113.05 5787.03


Share Capital 177.81 177.81 177.81


Miscellaneous expenditure 1.04 0.9 0.44





A demand for Rs.3,26,736/- on account of Interest and penalty has been raised by Joint Commissioner, Central Excise, BolpurCommissionerate, against Howrah Gases Limited, a Group Company.

The Company has preferred an appeal to the Commissioner (Appeals).

The Group Company has also an outstanding Corporate Guarantee amounting to Rs.815 Lacs given in favour of Small IndustriesDevelopment Bank of India (SIDBI) (on behalf of MSP Sponge Iron Ltd. For Rs.390 Lacs and on behalf of MSP Steels Pvt. Ltd.for Rs.425 Lacs).

There is also an outstanding Bank Guarantee for Rs.9.08 Lacs in respect of which Fixed Deposit of Rs.9.10 Lacs have beenlodged.

There are no pending litigations, disputes or suits against this company and there are no defaults in meeting any of theStatutory/bank/institutional dues. No proceedings have been initiated for economic offences against it and it is not a sickcompany within the meaning of Sick Industrial Companies (Special Provisions) Act, 1956.

Stock Market Data

The stocks of the company have not been traded during the last 6 months on the Calcutta Stock Exchange Association Limited.

Howrah Gases Ltd has obtained listing of 300,000 equity shares of Rs 10 each on the Calcutta Stock Exchange Association Ltd.These equity shares were issued at a premium of Rs 50 per share on preferential allotment basis under SEBI Guidelines ’94.

The Company has further obtained trading permission vide letter dated 26.09.2003 bearing no CSEA/LD/T.N/1234/2003 fromthe Calcutta Stock Exchange Association Ltd for 5,50,000 equity shares of Rs 10 each issued at a premium of Rs 50 per shareallotted on private placement basis, under SEBI Private Placement Guidelines.

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Howrah Gases Ltd has obtained trading notice vide letter dated 13.05.2003, bearing no UPSE/LC/2003-04/1463 from the U.P.Stock Exchange Association Ltd for the following:

i. 1,85,625 equity shares of Rs 10 each issued at a premium of Rs 15 per share issued on rights basis bearingdistinctive numbers 556876 to 742500 in the year 1995-96.

ii. 1,85,625 equity shares of Rs 10 each issued at a premium of Rs 15 per share issued on rights basis bearingdistinctive numbers 742501 to 928125 in the year 1998-99.

iii. 3,00,000 equity shares of Rs 10 each issued at a premium of Rs 50 per share allotted on preferential basis on27.12.2000.

Howrah Gases Ltd has obtained trading notice vide letter dated 11.11.2003, bearing no UPSE/LC/ /2003-04/4349 from theU.P. Stock Exchange Association Ltd for 5,50,000 equity shares of Rs 10 each issued at a premium of Rs 50 per share allottedon private placement basis, under SEBI Private Placement Guidelines.

3. MSP Sponge Iron Limited


The Company was incorporated on 16.07.99 having its registered office at Vill: Balisuan, P.O.: Govardhan, Dist: Keonjhar,Orissa and corporate office at 1, Crooked Lane, Kolkata – 700069, West Bengal. The company has set up a sponge ironmanufacturing unit with a capacity of 60000 TPA at Vill: Balisuan, P.O.: Govardhan, Dist: Keonjhar, Orissa adjacent to theexisting M.S. Ingot / Re-rolling mills of SP Steel Pvt. Ltd. sponge iron is used in the electric furnace (mini steel plants) formaking steel castings and ingots.

The financial highlights for 3 years are given below

Rs in Lacs


Total Income 1330.68 1892.77 3207.18


Share Capital 395.33 435.33 435.33







There are no pending litigations, disputes or suits against this Company and there are no defaults in meeting any of theStatutory/bank/institutional dues. No proceedings have been initiated for economic offences against it and it is not a sickCompany within the meaning of Sick Industrial Companies (Special Provisions) Act, 1956.

The Company has issued Bank Guarantee in favour of Mahanadi Coalfields Ltd. for Rs.16.13 Lacs which is acontingentliability for the Company.

4. MSP Steels Private Limited


The company was incorporated on 22.08.97 for manufacture of MS Ingots and re-rolled products having its registered office at1, Crooked Lane, Kolkata –700069, West Bengal. The company has set up the above project at Vill: Balisuan, P.O.: Govardhan,Dist: Keonjhar, Orissa. Installed capacity of MS Ingot unit is 50000 TPA and Re-rolling mills of 36000 TPA.

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The financial highlights for 3 years are given below.

Rs. in Lacs


Total Income 179.13 1993.98 2659.5


Share Capital 475.89 475.89 475.89








5. Rama Alloys Private Limited


The company was incorporated on 15th April 1993 with the main aim of setting up an industry for manufacturing mild steel andindustrial gases It has its registered office at 1, Crooked Lane, Kolkata –69. The company was looking for a suitable site whereit can get continues power supply. As a result it set up oxygen manufacturing unit at Dewandighi, P.O. Mirzapur, Burdwan, WestBengal in the year 1995. The commercial production started in the year 1996. The installed capacity of the plant is 90 Cubicmeters per hour. The plant is running at about 80% capacity utilisation.

The Financial Highlights for 3 years are given below.

Rs in lacs


Total Income 153.04 172.65 157.56


Share Capital 87.13 87.13 87.13








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Common Pursuits

All the companies in the MSP Group are involved in the steel manufacturing process. Therefore the finished product of oneGroup Company often happens to be the raw material of another. For instance, MSP Sponge Iron Ltd manufactures spongeiron in its unit in Orissa and provides it as raw material to MSP Steels Pvt Ltd, which produces MS Ingots and MS flats androunds. Similar is the case with Howrah Gases Ltd, which produces MS Ingots from sponge iron sourced from MSP SpongeIron Ltd. MSP Rolling Mills Pvt Ltd, which also produces MS Flats and Rounds, sources its ingots, partially from Howrah GasesLtd.

Sales or purchases between companies in the promoter group exceeding in the aggregate 10% of the total sales orpurchases for the year ended 31st March 2004.

Sl Vendor Purchaser Particulars of Quantity Average ValueNo. Company Company Materials Rate Rs. (Inclusive

of Excise)Rs. In Lacs

1 MSP Sponge Iron Ltd. MSP Steels Pvt Ltd. Sponge Iron 14,707.530 M.T. 6,548/- 963.16

2 MSP Sponge Iron Ltd. Howrah Gases Ltd. Sponge Iron 11,824.180M.T. 6,427/- 760.00

3 MSP Sponge Iron Ltd. Howrah Gases Ltd. Calibrated Iron Ore 26,200.400M.T. 1,400/- 366.82

4 Howrah Gases Ltd. MSP Rolling MS Ingots 14,084.725M.T. 11,810/- 1663.44Mills Pvt. Ltd.

Promoters have not resigned as directors from any companies during the last three years except for Mr. Manish Agrawal andMr.Saket Agrawal who have resigned from the Directorship of MSP Rolling Mills Pvt. Ltd and MSP Metallics Ltd. with effectfrom 03.09.2002 and 07.05.2002 respectively. Mr. Manish Agrawal and Mr.Saket Agrawal have been reinducted on the Boardof MSP Metallics Limited with effect from 10th Jan 2005.

Details regard to other listed companies under the same management

Name of the company Ashirwad Steels & Industries Limited

Year of Issue 1995

Type of Issue (Public/ Rights/Composite) Public Issue

Amount of issue Rs.240 Lacs

Date of closure of issue 16th February 1995

Ashirwad Steel & Industries Limited, a listed group Company, had made an issue in February 1995, and has failed to achieveprojections made in its Prospectus as under:

Rs.in Lacs

Particulars Project- Perfor- Project- Perfor- Project- Perform- Project- Perform-ions mance ions mance ions ance ions ance

31st March Ended 1995 1995 1996 1996 1997 1997 1998 1998

Installed Capacity

(MT) (Tube Mill) 15680 15680 15680 15680 15680 15680 15680 15680

(MT) (LPG) 21600 21600 21600 21600 21600 21600 21600 21600

Capacity Utilisation (%)

Tube Mill 40% 0.06% 50% 9.58% 60% 14.11% 60% 10.83%

LPG 0 0 14 0 35 0 52.5 0.80

Turnover 420.47 145.64 2,009.96 433.03 2,896.10 516.97 3,431.00 512.35

PBDIT 41.43 23.74 269.94 53.14 370.98 42.10 430.66 56.03

Interest 4.83 2.00 34.16 1.42 44.51 0.49 41.28 0.91

Depreciation 6.19 6.92 69.28 20.07 112.50 27.54 150.80 31.33

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Particulars Project- Perfor- Project- Perfor- Project- Perform- Project- Perform-ions mance ions mance ions ance ions ance

Profit before Tax 30.41 14.82 162.72 31.65 213.19 14.07 234.80 23.79

Profit After Tax 30.41 14.82 162.72 31.65 213.19 12.27 234.80 21.29

Dividend 15% 18% 20% 5% 20% 0% 25% 0%

Equity Capital 166.64 166.64 406.64 406.64 406.64 406.64 406.64 406.64

Reserves & Surplus 42.36 31.89 123.27 61.67 255.13 73.94 388.27 95.21

Networth 209.00 198.53 530.39 468.31 662.55 480.58 795.39 501.85

Book Value per Share (Rs.) 12.54 11.91 13.03 11.52 16.29 11.82 19.56 12.34

E.P.S. (Rs) 5.48 0.89 4.00 0.78 5.24 0.30 5.77 0.52

The Company has not been able to achieve the projected figures as stated in the prospectus.

The commissioning of the LPG Bottling Plant was delayed owing to steep hike in the cost of imported LPG making the operationseconomically unviable.

The capacity utilisation of Steel Tube Mill was low owing to teething problems in the production coupled with sluggish marketconditions.

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IX. BASIS FOR ISSUE PRICE

Qualitative factors

a) MSP group is one of the leading steel manufacturers in the secondary sector in Eastern India having presence in thestates of West Bengal, Orissa, Chattisgarh, Andhra Pradesh and Jharkhand.

b) The group currently has manufacturing capacities to the tune of 225,000 TPA of sponge iron, 100,000 TPA of MSIngots and 60,000 TPA of Rounds and Flats at various locations.

c) The company is setting up a green field industrial steel complex at Jamgaon, Raigarh, Chattisgarh. One Sponge IronKiln with a capacity to produce 300 TPD is already operational from November 2004. It attained a capacity utilizationof 85% within three months of operation. The annual impact of the expansion on the turnover and profitability wouldbe reflected in the coming financial year. The raw materials sources are suitably located near the proposed site andthus the company shall have an edge over its competitors.

d) The promoters amongst themselves have adequate experience in the industry. Two of the promoters are associatedwith the industry for past two decades and have been instrumental in the success of the MSP Group.

e) The Company has received clearance from the Chief Freight Traffic Manager -South East Central Railway Bilaspur forconstruction of Private Railway Siding at Jamgaon, which will help reduction in both cost of transportation and timetaken in transportation and will enhance the bottom-line of the company in the long term perspective.

f) The Company has received the approval for linkage of non coking coal from Korba/Raigarh Coal Fields from JointIndustrial Advisor Ministry of steel vide their letter dated 23rd January 2004 bearing no. 15(9)/2003-IDW. It has alsoreceived approval of rail linkage for transportation of 30,000 MT of iron ore of different sizes from Basua Iron Oremines per month, to the Raigarh railway siding in Chattisgarh.

g) The company has received allotment for ironore from the mines of National Mineral Development Corporation Limited(NMDC) for the year 2005-06.

Quantitative Factors

Adjusted Earning Per Share (EPS)

Year EPS Weight

2002-03 0.13 1

2003-04 0.29 2

2004-05 1.62 3

Weighted Average 0.93

Price Earning Ratio

Based on 2004-05 EPS of Rs. 1.62 6.17

Based on weighted average EPS of Rs 0.93 10.75

Industry P/E

Highest 9.30

Lowest 3.60

Average 4.80

Return on Net Worth

Year RONW (%) Weight

2002-03 0.51% 1

2003-04 1.34% 2

2004-05 5.36% 3

Weighted Average 3.21%

Minimum Return on Total Net Worth after Issueneeded to maintain EPS at Rs 0.93 8.73%

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Net Asset Value (NAV)

(a) As at 31.03.2005 10.90

(b) After issue 10.65

(c) Issue price 10.00

Notes:

a. The Earnings per Share and the average return of net worth has been computed on the basis of the adjusted profitsand losses of the respective years drawn after considering the impact of accounting policy changes and materialadjustments/prior period items pertaining to the earlier years.

b. The denominator considered for the purpose of calculating Earnings per Share is the average number of EquityShares outstanding during the year including share application money pending allotment.

c. Net Asset Value Per Share represents Shareholder’s Equity as per restated financial statements less miscellaneousexpenditure as divided by number of shares outstanding at the end of the period including share application moneypending allotment.

d. The Company is setting up a green field industrial steel complex at Jamgaon, Raigarh, Chattisgarh. The past financialfigures do not reflect the profitability and the future performance of the Company. However, the Company has decidedto issue the equity shares at par of Rs. 10/ per equity share.

Comparison of the accounting ratios of the issuer company as mentioned above with the industry average and the accountingratios of the peer group (i.e. companies of comparable size in the same industry for the period ended ending 31st March 2005is as follows.

Peer Equity Book Sales EPS P/E MarketCapital Value (Rs Cr) (Rs) Price on(Rs Cr) (Rs) 18.05.2005

Jindal Steel & Power Ltd 15.40 428.00 2253.60 167.40 5.5 923

Monnet Ispat 31.49 97.3 777.77 39.30 3.6 143

Tata Sponge Iron 15.40 85.70 240.50 39.50 4.4 175

MSP Steel & Power 58.10 10.90 35.08 1.62 6.17* –

* Based on the Issue price

(Source Capital Market Vol XX/06,May 23-Jun 5,2005)

The face value of the shares is Rs.10/- and the Issue price is 1 time of the face value.

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X. OUTSTANDING LITIGATIONS OR DEFAULTS

1. There are no pending litigations in which the promoters of the company are involved.

2. There are no overdues, defaults to the financial institutions / Banks, Reschedulement of Loans to Banks / FII’s by thecompany. There are no pending offences of non-payment of statutory dues and dues towards instrument holders likedebenture holders, fixed deposit holders and arrears of cumulative preference shares by the promoters of thecompany and by the companies/firms promoted by the promoters.

3. There are no cases of litigations pending against the company or against any other company whose outcome couldhave a materially adverse effect on the position of the company.

4. There are no pending litigation’s against the promoters / directors in their personal capacities and also involvingviolation of statutory regulations or criminal offences.

5. There are no pending proceedings initiated for economic offences against the directors, promoters, companies andfirms promoted by the promoters.

6. There are no outstanding litigation’s, disputes pertaining to the matters likely to affect the operations and financials ofthe company including disputed tax liability, prosecution under any enactment in respect of Schedule XIII of thecompanies Act, 1956.

7. There are no litigation’s outstanding against the promoters / directors in their personal capacity. The Company, itspromoters and other companies with which promoters are associated have neither suspended by SEBI nor anydisciplinary action has been taken by SEBI. There are no prosecution launched by Income Tax Authorities and no liabilitycompounded by the Promoters / Company / Companies / Ventures with which the Promoters are associated is subsisting.

8. There are no cases of pending litigation/defaults in respect of the firms / Companies with which the Promoters areassociated in the past but are no longer associated.

Cases Against Group Companies/ Firms:

MSP STEEL PRIVATE LIMITED

The DGCEI conducted a search and seizure on the 29th July 2003 at the Factory/Office premises of MSP Steel Private Limitedlocated at Vill: Haldiaguna, P.O. Gobardhan, Dist: Keonjhar, Orissa, and at the Mining Square, behind Keonjhar Law College,Keonjhar.

During the operation certain documents and records were seized. On the basis of seized documents, the DGCEI determined anamount of Rs. 4,71,362/- as payable being the amount of duty evaded, on clearances of M.S. Rounds without payment on duty.

A Show Cause Notice was issued on the Company stating that the following Rules were contravened by the Company:-




(iv) Rule 10 - Failure to maintain proper records indicating the particulars regarding goods produced, inventoryof goods, quantity removed, assessable value amount of duty payable in the statutory records.



� Demand on Account of duty of Rs.4,71,362/-.




� Penalty imposable under Rule 26 of Central Excise Rules, 2002 on Mr. Suresh Kumar Agarwal, Director and on Mr.Basant Sahoo, Commercial Executive of MSP Steel Pvt. Ltd.

The Company has requested the Hon’ble Joint Commissioner, Central Excise & Customs, of the Bhubaneswar – IICommissionerate to provide the Company with an opportunity to apply before the Hon’ble Settlement Commission, KolkataZone, Kolkata for waiver of interest and penalty vide their letter dated 27th September 2004.

An application has been made by the Company before the Hon’ble Settlement Commission, Kolkata Zone on 2nd March, 2005.

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MSP SPONGE IRON LIMITED

The DGCEI conducted a search and seizure on the 29th July 2003 at the Factory/Office premises of MSP Sponge Iron Limitedlocated at Vill: Haldiaguna, P.O. Gobardhan, Dist: Keonjhar, Orissa- 758013, and at 16/S, Block ‘A’ New Alipore, Kolkata – 700 053.

During the operation certain documents and records were seized. On the basis of seized documents, the DGCEI determinedan amount of Rs. 8,22,838/- as payable being the amount of duty evaded, on removal of Sponge iron contravening thefollowing Rules of central Excise rules-1944 as amended..

(i) Rule 4 (1) Clearance of manufactured goods from factory without payment of duty involved. (ii) Rule 6 Failure to correctly assess and pay excise duty. (iii) Rule 8 Failure to pay the duty by due date. (iv) Rule 10 Failure to maintain proper records indicating the particulars regarding goods produced, inventory of

goods, quantity removed, assessable value amount of duty payable in the statutory records. (v) Rule 11 Failure to clear goods under the cover of proper invoice.


� Demand of duty amounting to Rs.8,22,832/- appropriated from Rs.10,00,000/ voluntarily paid by the company on 29thJuly 2003.




� Penalty imposable under Rule 26 of Central Excise Rules, 2002 on Mr. P.K.Dey and Sanjay Sahoo Accountant of MSPSponge Iron Ltd.

The Company has requested the Hon’ble Joint Commissioner, Central Excise & Customs, of the Bhubaneswar – IICommissionerate to provide the Company with an opportunity to apply before the Hon’ble Settlement Commission, KolkataZone, Kolkata for waiver of interest and penalty vide letter dated 27th September 2004.

An application has been made by the Company before the Hon’ble Settlement Commission, Bhubaneswar Zone on the 2ndMarch, 2005

Search and seized operations conducted by the Income Tax Authorities.

The Income Tax Authority, Kolkata had conducted a search and seizure operation on the 20th June 2003 on the office andfactory premises of the MSP Group of Companies including the residence of the directors. The Income Tax department hasseized, inter alia cash worth Rs.73.15 Lacs. Revised return under section 153A has been filed and assessment proceedingshas not yet been started.The Income Tax Department is preparing their report to be filed with the concerned authorities forfurther processing in the above search and seizure matter.

The following are the details of Promoters / Directors who were signatories to Memorandum of Association of other Companies.

Name of Director Name of the Company

Mr. Puranmal Agrawal Rama Alloys Private LimitedAshirwad Steels and Industries LtdHowrah Gases LtdMSP Steels Pvt LtdMSP Metallics LtdAdhunik Gases LimitedMSP Properties India Pvt Ltd

Mr. Suresh Kumar Agrawal Ashirwad Steel Industries LtdHowrah Gases LtdMSP Steels Pvt LtdMSP Metallics LtdAdhunik Gases LimitedMSP Properties India Pvt Ltd

Mr. Manish Agrawal MSP Rolling Mills Pvt LtdMSP Steels Pvt LtdMSP Infotech Pvt LtdMSP Sponge Iron Ltd

Mr. Saket Agrawal MSP Rolling Mills Pvt LtdMSP Sponge Iron LtdMSP Infotech Pvt Ltd

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XI. RISK ENVISAGED BY MANAGEMENT & MANAGEMENT PROPOSALS TO ADDRESS THE RISKS

Investors should consider carefully the following risk factors, together with the other information contained in this Prospectusbefore they decide to buy the company’s equity shares. If any of the following risks actually occur, the company’s business,financial condition and results of operations could suffer, the trading price of the company’s equity shares could decline andyou may lose all or part of your investment.

RISK FACTORS ENVISAGED BY THE MANAGEMENT SPECIFIC TO THE PROJECT AND INTERNAL TO THE COMPANYAND THE PROPOSAL OF THE MANAGEMENT TO ADDRESS THE RISK

1. Size of the Project

The net-worth of the company is Rs.4559.56 lacs as on 31st March 2005. The company has embarked upon setting up of anintegrated steel plant referred to as the Integrated Steel project which is projected to cost Rs 9,874 lacs. The company has alsocommenced work on supplementary projects referred to as the ancillary project which is estimated to cost Rs.2436.90 lacs.The total project cost is estimated at Rs. 12310.90 Lacs which is approximately 3 times the size of its net worth. Although thepromoters have an established track record in the steel industry, their competence in handling a project of this magnituderemains to be demonstrated. An equity investor is therefore faced with an uncertainty of performance by the management.


The promoters of the MSP group have over two decades of experience in the steel industry. They are already managing steelmanufacturing capacities to the tune of 2,25,000 TPA of sponge iron, 100,000 TPA of MS Ingots and 60,000 TPA of Roundsand Flats at various locations. The promoters are therefore confident of managing a project of this magnitude. The financialclosure for the entire project i.e both for Integrated Steel and ancillary projects being Rs.6175 lacs and Rs.1500 lacs respectivelyis complete and the entire promoters share of equity has been brought into the company. The implementation of the IntegratedSteel project is on schedule and one sponge iron kiln of capacity 300 TPD is operational from 4th November 2004. Moreover,theoptimistic scenario in the Steel sector presently is viewed upon by the promoters as an opportunity to enlarge the scale of theoperations of the group.

2. Risk arising from any delay or failure in fund mobilization from public

Any delay in the mobilization of the requisite funds through IPO may severely disrupt the implementation of the project and theCompany may not be in a position to incur heavy expenses.


The Banks have already appraised the project and have sanctioned loans worth Rs.6,175 lacs in the funding of the IntegratedSteel project and Rs. 1500 lacs for the ancillary project. The promoters have already brought in equity of Rs. 4197.64 lacs tofund the entire operation of the Company. A consortium of Banks has disbursed a sum of Rs.6130.76 lacs upto the 30th day ofApril 2005. The funding through the proposed public offer is only 16% of the cost of the integrated steel plant. In case suchraising of funds is delayed or abandoned, the equity brought in by the promoters for future expansion plans shall be utilised tomeet the shortfall.

3. Risk arising out of uncertainty in raw material supply

Steel industry being a raw material intensive industry, the Company is constantly exposed to possible unpredictability in thesupply of raw materials, particularly iron-ore and coal. Disruption in the supply of any of the above raw material may lead tohampering of the production process flow.



The Company, in order to ensure steady supply of vital raw materials, in requisite quantity, has prudently chosen a location inChattisgarh, which is near the iron-ore mines,coal mines and is well connected with roads. The Company is sourcing coal fromKorba/Raigarh under South Eastern Coalfields Limited and Mahanadi Coal Fields Limited and has already obtained linkagesfor its entire coal requirements from Coal Indai Limited. Hence the company is insulated against the current scarcity of coal andthe fluctuations in domestic and international coal prices. The company has entered into a long-term agreement with SarkarIron Crusher for supply of crushed iron ore and has arrangements with Rungta Mines, Essel Mines, Patnaik Minerals and ABSMerchants Pvt Ltd for supply of the same. The company has also received allotment for ironore from the mines of NationalMineral Development Corporation Limited (NMDC) for the year 2005-06. In future the company expects to source both rawmaterials i.e. coal and ironore from captive mines for which applications have been made and are under active consideration.

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4. Risk arising out of non-compliance with pollution control norms

Sponge Iron manufacturing is a highly polluting process. This is due to the generation of fugitive dust and emission of wastegases at a very high temperature, which pollute the air. Apart from this, various processes like stockpiling, crushing, screeningand conveying are noisy and results in localized noise pollution. Any carelessness on part of the company regarding this issuemay expose it to the risk of being penalized by relevant authorities for non-compliance with pollution control norms.


The promoters have been in the iron and steel industry for two decades now. Having sound technical knowledge in this field,they are aware of the above risk factor. The Company has already obtained the permission of the Chattisgarh EnvironmentConservation Board to operate Kiln I of the Sponge Iron Plant. Moreover suitable machinery and systems have been installedto recover waste heat by recycling the gases emitted by the sponge iron kilns. This will not only prevent thermal pollution butalso control the loss of energy. Apart from this, pollution control equipments are installed at almost every process to make theentire operation safe and environment friendly.

The Company has received Consent to establish Kiln II, Captive Power Plant, Steel Melting shop and Re-Rolling mill from thePollution Control Board. The company has filed an application for consent to operate Kiln II which is under consideration.

5. Critical Risk Factors/Weaknesses/Threats as per the appraisal report of the appraising Bank

ING Vysya Bank


With signs of recession on its way out and marked improvement in the performance of infrastructure and manufacturingsegment have considerably revived the fortunes of steel sector. Consumption of the finished steel increased by about 6% inthe last year and the industry is likely to sustain the improved performance in the current year. Demand for steel in Chinahelped the momentum in steel prices at global level, while automobile and construction industry has seen strong demand. Thecapital goods industry is also showing signs of recovery. Sustained rise in steel prices in the global market coupled with strongdomestic growth and increased export will enable improved market performance of the Industry in the near future.

Management Risk

The promoters are already in this line of business for over 20 years and have good experience. The existing group companiesof the promoters are running profitably. The promoters have appointed Industrial Technical Consultants for setting up DRIPlant. The consultants have have good experience in setting up Sponge Iron plants.


Structure Risk


INTERNAL RISK FACTORS:

1. Any future equity offerings by the Company or issue of options under employee stock option plan may lead todilution of equity in the hands of the investors.


The SEBI Guidelines prevent a Company from frequent issue of equity shares. Also the Company as on date has no plans ofproviding employee stock options.

2. Ashirwad Steels & Industries Limited – a group company is listed on the stock Exchange of Mumbai, Kolkata,and Delhi.The Company had not paid the listing fees of Delhi Stock Exchange for eight years.


The management of the company Ashirwad Steels & Industries Limited has got the company voluntarily delisted from the DelhiStock Exchange after clearing all dues and has also voluntartily got itself delisted from CSE. The company shares are tradedon The Stock Exchange, Mumbai and is presently quoted at Rs.34.00 as on 1st June 2005.

3. Ashirwad Steel & Industries Limited, a listed group Company, had made a public issue in February 1995, andhas failed to achieve projections made in its Prospectus; reference may be made to page 99 of the darftprospectus.

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4. Cases Against Group Companies/ Firms:

a) MSP STEEL PRIVATE LIMITED

The Director Genral of Central Excise Intelligence (DGCEI) conducted a search and seizure on the 29th July 2003 at theFactory/Office premises of MSP Steel Private Limited located at Vill: Haldiaguna, P.O. Gobardhan, Dist: Keonjhar, Orissa, andat the Mining Square, behind Keonjhar Law College, Keonjhar.

During the operation certain documents and records were seized. On the basis of seized documents, the DGCEI determinedan amount of Rs. 4,71,362/- as payable being the amount of duty evaded, on clearances of M.S. Rounds without payment onduty. The Company has made a voluntary payment of Rs.5,00,000/- on 29.07.03.

A Show Cause Notice was issued by DGCEI on the Company stating that the following Rules were contravened by theCompany:-







� Demand on Account of duty of Rs.4,71,362/-. appropriated from Rs.5,00,000/ voluntarily paid by the company on 29thJuly 2003.




� Penalty imposable under Rule 26 of Central Excise Rules, 2002 on Mr. Suresh Kumar Agarwal, Director and on Mr.Basant Sahoo, Commercial Executive of MSP Steel Pvt. Ltd.

The Company has requested the Hon’ble Joint Commissioner, Central Excise & Customs, of the Bhubaneswar – IICommissionerate to provide the Company with an opportunity to apply before the Hon’ble Settlement Commission, KolkataZone, Kolkata for waiver of interest and penalty vide their letter dated 27th September 2004.

An application has been made by the Company before the Hon’ble Settlement Commission, Kolkata Zone on 2nd March,2005.

b) MSP SPONGE IRON LIMITED

The Director Genral of Central Excise Intelligence (DGCEI) conducted a search and seizure on the 29th July 2003 at theFactory/Office premises of MSP Sponge Iron Limited located at Vill: Haldiaguna, P.O. Gobardhan, Dist: Keonjhar, Orissa-758013, and at 16/S, Block ‘A’ New Alipore, Kolkata – 700 053.

During the operation certain documents and records were seized. On the basis of seized documents, the DGCEI determinedan amount of Rs. 8,22,838/- as payable being the amount of duty evaded, on removal of Sponge iron contravening thefollowing Rules of central Excise rules-1944 as amended. The Company has made a voluntary payment of Rs.10,00,000/- on29.07.03.

A Show Cause Notice was issued by DGCEI on the Company stating that the following Rules were contravened by theCompany:-

(i) Rule 4 (1) - Clearance of manufactured goods from factory without payment of duty involved.





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� Demand of duty amounting to Rs.8,22,832/- appropriated from Rs.10,00,000/ voluntarily paid by the company on 29thJuly 2003.




� Penalty imposable under Rule 26 of Central Excise Rules, 2002 on Mr. P.K.Dey and Sanjay Sahoo Accountant of MSPSponge Iron Ltd.

The Company has requested the Hon’ble Joint Commissioner, Central Excise & Customs, of the Bhubaneswar – IICommissionerate to provide the Company with an opportunity to apply before the Hon’ble Settlement Commission, KolkataZone, Kolkata for waiver of interest and penalty vide letter dated 27th September 2004.

An application has been made by the Company before the Hon’ble Settlement Commission, Bhubaneswar Zone on the 2ndMarch,2005


The Management is of the view that since the Companies have voluntarily paid the duty amount the penalty and interest will bewaived. Further the amount involved will in no way adversely affect the working of the Companies. The Companies have alsotaken steps, so that such irregularities shall not recur in the future.

5. Search and Seizure operations conducted by the Income Tax Authorities

The Income Tax Authority, Kolkata had conducted a search and seizure operation on the 20th June 2003 on the office andfactory premises of the MSP Group of Companies including the residence of the directors. The Income Tax department hasseized, inter alia cash worth Rs.73.15 Lacs the disclosure of which has been made in the books of accounts and tax thereonhas been duly paid. Revised return under section 153A has been filed and assessment proceedings has not yet been started.The Income Tax Department is preparing their report to be filed with the concerned authorities for further processing in theabove search and seizure matter.

6. The Company has low EPS and past record is not good.


The Company was incorporated in 18.11.1968 as Adhunik Rollers Pvt. Ltd. The company was earlier engaged in production ofKatha an ingredient used in the preparation of readymade betals. The raw materials for the manufacture of katha is wood andowing to scarcity of the same and restrictions on transportation the production of katha has been discontinued.

The name of the Company was changed to MSP Steel & Power Private Limited on March 7, 2003 to reflect its new businessinitiative. The Company then subsequently became a public company under the name of MSP Steel & Power Limited witheffect from 9th September 2003.

The Company after discontinuing the Katha manufacturing operations has decided to set up a green field industrial steelcomplex at Jamgaon, Raigarh, Chattisgarh. The annual impact of the expansion on the turnover and profitability would bereflected in the coming financial years. The raw materials are suitably located near the proposed site and thus the companyshall have an edge in comparison to other units.

The Company has low EPS owing to its lack of business activities at this stage. Once the project comes on stream, theCompany will witness a steady increase in profitability resulting in higher EPS.

The Company has already started production of Kiln-I and has been able to attain a profitability of Rs.244.86 lacs on a turnoverof Rs.3472.81 lacs from five months of production in the year 2004-2005.

7. The Company was only doing trading business in the Financial year 2003-2004


The Company has already started production in the year 2004-2005 and KILN-1 of the Sponge Iron Plant has been commissioned.The company has been able to attain a turnover of Rs.3508.70 lacs of which trading constitutes only Rs.35.90 lacs as perfinancial results of the Company as on the 31st March 2005.

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8. The group companies are participating in the proposed expansion.


The Group Companies shown in the prospectus are as follows:

Name of the Company Shareholding in MSP Steel & Power Ltd.

6. Ashirwad Steels & Industries Limited Nil

7. Howrah Gases Limited Nil

8. MSP Sponge Iron Limited Nil

9. MSP Steels Private Limited Nil

10. Rama Alloys Private Limited 5.10%

Apart from Rama Alloys Private Limited none of the group manufacturing companies are participating in the equity of theCompany .

The major investments in the equity of the company have been made by the group investment companies who primarily investin securities of companies.

The present investments have been made by the individual promoters, their relatives and associates and corporate promotersalongwith the group Bodies Corporates as mentioned hereinbelow:

Name of the Company No. of Shares held in Shareholding inMSP Steel & Power Ltd. %*

Adhunik Gases Limited (Promoter) 4004000 6.89%

MSP Infotech Pvt Ltd (Promoter) 7114000 12.24%

MSP Properties India Pvt Ltd (Promoter) 6030500 11.38%

Larigo Investment Pvt Ltd (Promoter) 383500 6.60%

Raj Securities Limited 3872000 6.66%

Jagran Vyapaar Limited 2102000 3.62%

K C Texofine Private Limited 3932000 6.77%

MSP Metallics Limited 2380000 4.10%

Shikhar Commotrade Pvt. Ltd. 750000 1.29%

AAESS Tradelinks Pvt Ltd 1900000 3.27%

Total 32468000 62.82%

*The % of shareholding is based on post issue shareholding of 58100000 shares

The majority of investments in the equity of the company have been made by the promoting companies and group investmentcompanies who primarily invest in securities of companies.

9. The banks could take the risk of lending funds to the project as in the event of any eventuality, it is possiblefor banks to place their personnel on the board of the Company, but the same was not possible for individualinvestors.


The regulations and the Companies Act do provide a scope for representation of the minority shareholders on the Board of theCompany. The above mentioned risk is a standard risk for all companies and for all green field projects seeking public participation.

10. The issue is not underwritten


Underwriting of a fixed price issue is not compulsory. Owing to the group strengths and the viability of the proposed project andpricing of the offering the Board of Company has decided against underwriting of the proposed issue. However, it is pertinentto note that the issue has a compulsory participation of 10% of the Net offer to the public by QIBs, which will add further to thecredibility of the issue and provide comfort to the small investors.

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11. The small investors interest are not protected by Group Company for which the Group Company was shifted to“Z” Group.

The group company Ashirwad Steels & Industries Limited was shifted to Z Group by the Stock Exchange Mumbai on which itis listed owing to non-compliance and non-submission of records as per the listing agreement. The said company has alreadymet all the requirements of BSE and only after satisfying themselves with the details and suitable compliances BSE hasaccorded the in principle approval to the Company.

The trading price of the Company on the Stock Exchange as on June 1st 2005 was Rs.34.00.

EXTERNAL RISKS BEYOND THE CONTROL OF THE COMPANY:

1. Competitive Business Environment

The company operates in a globally competitive business environment. Growing competition may force the company to reducethe prices of its products, which may impact margins and market share.


The management is seized of the threat and would use its experience in effectively mitigating the risk. Moreover, demand forsponge iron is expected to grow specially in view of diminishing availability of steel melting scrap and rising prices of cokingcoal for making steel through blast furnace route. In view of the recent spurt of exports and rising demand in the domesticmarket of rounds and flats, the outlook is positive.

The integrated steel project would help in reduction of costs, making the cost of products competitive.

2. Changes in regulatory environment

Changes in regulatory environment relating to manufacturing and marketing Sponge Iron, Billet Casting, captive Power Plantand TMT Bars in and outside the country will significantly impact the business of the company.


The company keeps itself abreast of the various developments in the regulatory environment and gears itself to comply withthe dynamics. The Company shall be able to adapt to any change in the regulatory environment.

3. Acts of violence

Terrorist attacks and other acts of violence or war involving India and other countries where the company sells its productscould affect the company’s business.


The consequences of any potential armed conflict are unpredictable and the Company may not be able to foresee events thatcould have a materially adverse effect on its business, financial condition or results of operations. However, the companywould take up appropriate risk management strategies.

MECHANISM FOR INVESTOR REDRESSAL

The company has appointed Karvy Computershare Pvt Ltd, the Registrar to the Issue, to handle the investor grievances in coordination with Compliance officer of the Company. All grievances relating to the present Issue may be addressed to theRegistrar with a copy to the Compliance Officer, giving full details such as name, address of the applicant, number of EquityShares applied for, amount paid on application and bank and branch. The Company would monitor the work of the Registrar toensure that the investor grievances are settled.

Ashirwad Steels & Industries Limited

The Company has appointed Niche Tecnologies Pvt Limited as its registrars who handle the investor grievances received. Thecompany has received 7 investor grievances in the past year of which only one grievance is pending. The company follows upwith the registrar so as to redress the grievance at the earliest in any case the company makes sure that the reply to theinvestor is made within 10 days of receipt of grievance.

Howrah Gases Limited

The Company has appointed Niche Tecnologies Pvt Limited as its registrars who handle the investor grievances received. Thecompany does not have any investor grievance as on date. The company follows up with the registrar so as to redress thegrievance at the earliest in any case the company makes sure that the reply to the investor is made within 10 days of receipt ofgrievance.

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PART II

I. GENERAL INFORMATION

CONSENTS

Consent in writing of the Directors, Lead Manager, Auditors, Registrar to the issue, Bankers to the issue, Bankers to theCompany, Company Secretary and Compliance Officer, and the Legal Advisor to act in their respective capacities have beenobtained and filed along with a copy of the Prospectus with ROC as required under Section 60 of the Companies Act 1956 andnone of them have withdrawn their consent upto the time of delivery of a copy of this Prospectus for registration.

Jaiswal Kuldeep & Co., Chartered Accountants, the Statutory Auditors of MSP Steel & Power Limited have also given theirwritten consent to their report being included being included in the form and content in which it appears in this Prospectus andalso of the tax benefits accruing to the company and its members and same consent has not been withdrawn upto the time ofthe delivery of this Prospectus for registration to the Registrar of companies, West Bengal at Kolkata.

EXPERT OPINION

No opinion of any expert has been obtained by the Company, except Auditor’s Certificate regarding the Tax benefits availableto the Company and members of the Company as referred in page 26 in this Prospectus.


Pursuant to section 81(1A) of the Companies Act 1956, the present issue has been authorized by a resolution passed by theBoard of Directors of the company at their meeting held on 05.07.2003 and a special resolution passed at the General Meetingof the shareholders of the company held on 28.07.2003. Subsequently an enhanced resolution was passed by the Board ofDirectors of the company at their meeting held on 02.02.2005 and a special resolution passed at the General Meeting of theshareholders of the company held on 28.02.2005.

CHANGE IN THE BOARD OF DIRECTORS DURING THE LAST THREE YEARS

The current directors of the company are:

Name Date of Appointment

Mr. Puranmal Agrawal Since Inception

Mr. Suresh Kumar Agrawal 27.02.1974

Mr. Manish Agrawal 05.07.2003

Mr. Saket Agrawal 05.07.2003

Dr. Akshyaya Kumar Singh 12.12.2003

Mr. Arvind Kumar Saraf 12.12.2003

Mr. Niranjan Dash 12.12.2003

Mr. Navneet Jagatramka 12.12.2003

None of the directors of the company have resigned.

CHANGE IN THE AUDITORS DURING THE LAST THREE YEARS

There are only two changes in the Auditors during the last three years:

Dwarka Ashok Associates, Chartered Accountants, was appointed as the Statutory Auditor in the Annual General Meeting ofthe Company held on 30th September 2002, in place of . G. P. Agrawal & Co., Chartered Accountants, who have resigned.

Jaiswal Kuldeep & Co. Chartered Accountants has been appointed as the Statutory Auditor w.e.f. 9th December 2003, in theExtra-ordinary General Meeting of the Company held on 9th December 2003, in place of Dwarka Ashok Associates, CharteredAccountants, who have resigned for personal reason.

DISPOSAL OF APPLICATIONS AND APPLICATION MONEY

No receipt will be issued for application money. However, the Bankers to the issue receiving the applications will acknowledgethe receipt of the application by stamping and returning the detachable acknowledgement slip appended to each applicationform.

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The sum received in respect of the issue will be kept in separate bank account and the Company will not appropriate the fundsunless approval of the Stock Exchange Association Limited is obtained for allotment and listing, and where listing has beenproposed on more than one exchange, no utilisation shall be allowed till listing approval is available from each of the exchangesconcerned.

The Board reserves the right to accept or reject any application in whole or part and in either case without assigning anyreason thereof.

BASIS OF ALLOTMENT

In the event of public issue of equity shares being over-subscribed, the Executive Director/ Managing Director of the StockExchange, Mumbai (The Designated Stock Exchange) along with the post issue Lead Manager, Board of Directors and theRegistrars to the Issue shall be responsible to ensure that the basis of allotment is finalised in a fair and proper manner withthe following guidelines:

a) Applications will be categorised according to the number of shares applied for.

b) The total number of Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, i.e., thetotal number of the shares applied for in that category (number of applicants in the category multiplied by number ofShares applied for) multiplied by the inverse of the over subscription ratio.

c) Number of Shares to be allotted to the successful allottees will be arrived at on a proportionate basis, (i.e., total number ofshares applied for by each applicant in that category multiplied by the inverse of the over subscription ratio.)

d) In all the applications where the proportionate allotment works out to less than 500 shares per applicant, the allotmentshall be made as follows:

i. Each successful applicant shall be allotted a minimum of 500 shares.

ii. The successful applicants out of the total applicants for that category shall be determined by draw of lots in such amanner that the total number of shares allotted in that category is equal to the number of shares worked out as per (ii)above.

iii. If the proportionate allotment to an applicant works out to a number that is more than 500, then the number would berounded off to the nearest integer (for e.g. if number of shares is between 556.01 and 556.49 then it would be roundedoff to 556 and in case it is between 556.50 and 556.99 it would be rounded off 557 shares).All applicants in suchcategories would be allotted shares arrived at after such rounding off.

e) If the shares allocated on a proportionate basis to any category are more than the shares allotted to the applicants in thatcategory, the balance available shares for allotment shall be first adjusted against any other category, where the allocatedshares are not sufficient for proportionate allotment to the successful applicants in that category. The balance shares, ifany, remaining after such adjustment will be added to the category comprising of applicants applying for minimum numberof shares.

f) If the process of rounding off the number of shares to allottees to the nearest integer, results in actual allotment beinghigher than the shares offered, the Company may allot additional equity share up to a maximum of 10 % of the size of thenet offer to the public. The requisite resolution has been passed by the Company in this regard.

g) The above allotment is further subject to the following guidelines in the case of over subscription:

i. A minimum of 10% of the issue is to be compulsorily allotted to the QIBs.

ii. A minimum 50% of the net offer of securities to the public shall initially be made available for allotment to retailindividual investors, as the case may be.

iii. The balance net offer of securities to the public shall be made available for allotment to:

ii. Individual applicants other than retail individual investors, and;

iii. Other investors including Corporate bodies/ institutions irrespective of the number of securities applied for.

iv. The unsubscribed portion of the net offer to any one of the categories specified in (ii) or (iii) shall / may be madeavailable for allotment to applicants in the other category, if so required.

The term ‘Retail Individual Investor’ means an individual investor who applies for securities of or for value of not more thanRs. 50,000/-.

The drawl of lots (where required) to finalise the basis of allotment, shall be done in the presence of a public representative onthe Governing Board of the Designated Stock Exchange.

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Investors may note that in case of over-subscription, allotment shall be on proportionate basis and will be finalised by theExecutive Director/Managing Director of the Stock Exchange, Mumbai (Designated Stock Exchange) along with the post issueLead Manager and the Registrars to the issue as per the guidelines issued by the SEBI. RMB (Compendium) series circularNo.2(1999-2000) on 16-02-2000.

Denomination of share

The Equity Shares will be issued in market lots of 1 Equity Share of face value of Rs. 10/- each.

Shares/allotment letters/refund orders

Letter(s) of Allotment/Share (s) together with refund orders of value over Rs.1,500/-, if any, to allottees and Letter(s) of Regrettogether with refund orders of value over Rs.1,500/- to non-allottees will be despatched by registered post and refunds ofvalue Rs.1,500/- and less will be despatched under certificate of posting at the applicant’s sole risk within 30 days of theclosing of subscription list.

Adequate funds for the above purpose will be made available to the Registrar to the issue to ensure despatch of refund orders,allotment letters and share s by Regd. Post/ certificate of posting.

Interest in case of delay on allotment and despatch.

a) As far as possible, allotment of securities offered to the public shall be made within 30 days of the closure of this offer.

b) The Issuer shall pay interest @ 15% per annum for the period of delay beyond 30 days if the allotment has not been madeand /or refund orders have not been despatched to the investors within 30 days from the date of closure of the offer.

Interest on excess application money

Payment of interest at the rate of 15% per annum on the excess application money will be made to the applicants for thedelayed period, if any, beyond 30 days from the date of closure of the subscription list, in terms of the provisions of theCompanies Act, 1956 and the guidelines issued by the Ministry of Finance vide Letter No.F/8/6/SE/79 dated 21.7.83 and asamended by Letter No.F/14/2/SE/85 dated 27.9.1985 addressed to Stock Exchanges and as further modified by SEBI’s circulardated May 15, 1996.

Application of Section 269SS of the Income Tax Act, 1961.

In respect of the provisions of Section 269SS of the Income Tax Act, 1961, the subscription against the equity shares should beeffected only by an account payee cheque or an account payee draft/, if the amount payable is Rs.20,000/- or more. In case thepayment is made in contravention of this provision, the application money will be refunded and no interest will be paid.

Investors Grievances Redressal Mechanism

The Registrar to the Issue will handle investors’ grievances pertaining to this issue. A fortnightly status report of the complaintsreceived and redressed by them would be forwarded to the Company. The Company would also be co-ordinating with theRegistrar to the issue in attending to the grievances of the investors.

The Company assures that the following schedules shall be adhered to by the Board of Directors in respect of the complaints,if any, to be received.

Sl. No Nature Of The Complaint Time Taken

1 Non-receipt of the refund warrants or shares Within 7 days of receipt of complaint, subject to production ofsatisfactory evidence.

2. Change of Address notification Within 7 days of receipt of information

3. Any other complaint in relation to Public Issue Within 7 days of receipt of complaint with all relevant details.

The Company has appointed Mr. Ashok Sarawagi as Compliance Officer who would directly deal with SEBI office with respectto implementation of various laws, rules, regulations and other directives issued by SEBI and matters related to investorcomplaints. The investors may contact the compliance officer in case of any pre issue/post issue related problems. TheCompliance officer will be available at the following address:

MSP STEEL & POWER LIMITEDMr. Ashok Sarawagi16/S, Block A, 2nd. Floor,New Alipore, Kolkata – 700 053Tel: (033) 2457 0038/ 3940,Fax: (033) 2458 2239Email: [email protected]

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ISSUE MANAGEMENT TEAM

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

MICROSEC INDIA LTD KARVY COMPUTERSHARE PVT LTDAzimgunj House, 2nd Floor 46, Road No. 4, Street No. 17, Camac Street, Banjara HillsKolkata-700 017 Hyderabad – 500 034Ph: (033) 22829330 Tel: (040) 23312454, 23320251-53Fax: 91- 33-22829335 Fax: (040)-23311968E-Mail: [email protected] E-mail: [email protected] Registration No. INM 000010791 SEBI Regn. No. INR 000000221

AUDITORS LEGAL ADVISOR TO THE ISSUE

Jaiswal Kuldeep & Co. Khaitan & CoMall Enclave, Block B, Flat No 204, Emerald House 1B,13,Khudiram Bose Sarani, Old Post Office Street,Kolkata 700 080 Kolkata – 700 001Telephone: 033- 2221-6764 Tel.: (033) 22487000,22482221Fax: 91-33-2234-8192 Fax: (033) 22487656Email: [email protected] Email: [email protected]

BANKERS TO THE COMPANY BANKERS TO THE ISSUE

State Bank of India HDFC Bank LimitedCommercial Branch, SEBI Regd. No.: INB100000063R.M. 1, 3rd Floor, Controlling Branch24, Park Street, 6, Royd Street, Abhilasha II, 1st Floor, Kolkata- 700 016Kolkata – 700016 Tel.: (033) 2474 2383/2384Telephone: 033-22168325 4/1, Fax: (033) 2486 0712

Email: [email protected]

ING VYSYA Bank ICICI BANK LIMITEDMiddleton Street, SEBI Regn. No.: INB100000004Kolkata – 700 071 Capital Market DivisionTelephone: 033-2280-0979 30, Mumbai Samachar Marg,

Fort, Mumbai - 400001UCO BANK Ltd Tel.: (022) 22655284/85/8615/1A, Gariahat Road, Fax: (022) 22611138Kolkata – 700 019 Email: [email protected]: 033-2240-7314

Indian Overseas Bank COMPLIANCE OFFICER & COMPANY SECRETARY13/3, Strand Road, Mr. Ashok SarawagiKolkata – 700001 MSP Steel & Power LimitedTelephone: 033- 2248-6875 16/S, Block A, 2nd. Floor,

New Alipore, Kolkata – 700 053The Federal Bank Limited Tel: (033) 2457 0038/ 3940,4/1, Lala Lajpat Rai Sarani, Fax: (033) 2458 2239Kolkata –700 020 E-mail: [email protected]: 033-2283-2452

Andhra Bank58, Chowringhee Road,Kolkata- 700071Telephone: 033-22825660/3459/8435

Citibank N.A.40,Chowringhee Road,Kolkata –700 071Telephone: 033-2288-0038

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II. FINANCIAL INFORMATION

AUDITORS REPORT1st June 2005

The Board of Directors,MSP Steel and Power Limited1, Crooked Lane,

Kolkata 700 069

Dear Sirs,

Re.: Public Issue of 16,00,000 Equity Shares of Rs.10/- each for cash at par aggregating to Rs. 16,00,00,000/-

We have examined the books and accounts of MSP Steel and Power Limited for the five financial years ended March 31,2001,2002,2003,2004 and March 31,2005 being the last date to which the accounts of the Company have been made up andaudited by us for presentation to the members.

In accordance with the requirements of: Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 The Securitiesand Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 19, 2000 inpursuance of Section 11 of SEBI Act, 1992, “the SEBI Guidelines” and as amended from time to time.

We report that the profits/losses of the Company for the above years are as set out below. These profits/losses (expressed inLacs of Rupees) have been arrived at after charging all expenses of management, including depreciation and after makingsuch adjustments as in our opinion are appropriate and are subject to the notes given below.

Adjustments may be necessary to make the accounts for the period from April 1, 2004 to March 31, 2005, to comply with therequirements of the law relating to accounts to be laid before the Company in the general meeting, but at the date of signing ofthis report, we are not aware of any material adjustments which would affect the results of the accounts.

1. Statement of Profits and Losses (Annexure I)

2. Statement of Assets and Liabilities (Annexure II)

3. Major Notes to Accounts (Annexure III)

4. Summary of Accounting Ratios (Annexure IV)

5. Capitalisation Statement (Annexure V)

6. Tax Shelter Statement (Annexure VI)

We further report that the “other financial information” has been correctly computed from the figures as statements of AdjustedAssets and Liabilities and Adjusted Profits and Losses of the Company.

We further confirm that the Company does not have any subsidiaries within the meaning of section 4 of the Companies Act,1956.

This report is intended solely for your information for inclusion in the proposed Public Issue of Equity Shares of the Companyand is not to be used, or distributed for any other purpose without our prior written consent.

For, JAISWAL KULDEEP & CO.Chartered Accountants

(Kuldeep Jaiswal)Proprietor

Place: Kolkata

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ANNEXURE I

STATEMENT OF PROFITS AND LOSSES, AS RESTATED

Rs. in Lacs

Particulars 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05

Income

Sales

Of Products Manufactured by the Company 8.70 7.07 7.05 22.22 3,472.81

Of Products Traded in by the 141.33 127.45 363.31 484.46 35.90

Company / Services

Sub Total 150.02 134.52 370.36 506.68 3,508.70

Net Other Income 2.02 1.77 7.93 14.7 9.70

Increase (Decrease) in Inventories (14.82) 5.55 18.21 (37.17) 260.08

TOTAL INCOME 137.22 141.83 396.5 484.21 3,778.48

Expenditure

Trading Purchases 105.92 116.28 361.51 404 32.58

Raw Materials Consumed 7.69 6.44 1.27 – 2,580.39

Staff Costs 1.41 1.43 1.83 3.84 64.17

Other Manufacturing Expenses 7.84 6.77 12.56 14.68 231.28

Administration Expenses & Other Expenses 6.13 4.92 9.04 7.38 128.00

Selling & Distribution Expenses 5.04 2.67 5.44 9.25 23.56

TOTAL EXPENDITURE 134.03 138.51 391.65 439.15 3,059.98

Net Profit before Interest, Depreciation,Tax and Extraordinary Items. 3.19 3.32 4.87 45.06 718.50

Interest 1.06 0.64 0.39 0.37 114.36

Depreciation 1.62 1.48 1.18 2.00 199.56

Net Profit before Tax and Extraordinary Items 0.51 1.20 3.30 42.69 404.58

Provision for Taxation 0.23 0.52 1.30 15.32 31.72

Provision for Deferred Tax – – 0.54 0.11 127.99

Net Profit before Extraordinary Items 0.27 0.68 1.46 27.27 244.86

Extraordinary items – – 0.03 – –

Net Profit after Extraordinary Items 0.27 0.68 1.42 27.26 244.86

Balance Brought down from Earlier Year 3.17 3.45 4.12 5.55 32.81

Balance Carried to Balance Sheet 3.45 4.12 5.55 32.81 277.67

Note:

The Figures given above has been reclassified, rearranged and recasted wherever considered necessary to reflect the operationof the company on the basis of a uniform practice.

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Details of other income

Rs. in Lacs


Recurring

Interest 1.55 1.18 6.31 11.15 8.96

Non Recurring

Miscellaneous Income 0.01 0.43 1.64 0.01 0.02

Sundry Balance written off – 0.00 – – –

Excess Provision written back – – 0.04 – –

Weigh bridge gain /(loss) 0.46 0.16 (0.06) (0.43) –

Dividend Income – – – 0.03 0.06

Profit/Loss on sale of investment – – – 0.67 –

Prior Period Income – – – 1.72 –

Discount Received – – – 1.53 0.65

Total 2.02 1.77 7.93 14.70 9.69

ANNEXURE II

SUMMARY OF ASSETS AND LIABILITIES, AS RESTATED

The assets and liabilities of the Company at the end of each financial years i.e. March 31, 2004, 2003, 2002 and 2001 auditedand presented to the members and, as at year ended 31st March 2005 prepared and approved by the Board of Directors andexamined and found correct by us and, after making such adjustments and subject to the notes appearing hereinafter are setout below:

Rs. in Lacs

Particulars As at As at As at As at As at31.03.01 31.03.02 31.03.03 31.03.04 31.03.05

Fixed Assets:

Gross Block 19.26 19.26 19.26 25.67 2,873.74

Less: Depreciation 11.33 12.81 13.99 15.99 215.55

Net Block 7.93 6.45 5.27 9.68 2,658.19

Less: Revaluation Reserve – – – – –

Net Block after adjustment forRevaluation Reserve 7.93 6.45 5.27 9.68 2,658.19

Capital work-in progress 0.15 0.15 34.42 1,315.55 4,386.66

Total Fixed Assets (A) 8.08 6.60 39.69 1,325.23 7,044.84

Investments (B) 33.91 68.41 71.06 71.75 71.75

Current Assets, loans and Advances:

Inventories 30.40 29.51 46.45 24.12 1,199.56

Sundry Debtors 17.38 14.46 39.23 64.37 332.79

Cash & Bank Balances 14.10 10.82 45.88 346.78 1,629.23

Loans and Advances 26.17 16.24 152.60 570.35 1,978.19

Total (C) 88.05 71.03 284.16 1,005.62 5,139.78

Total Assets (A+B+C) = D 130.04 146.04 394.91 2,402.60 12,256.37

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Rs. in Lacs

Particulars As at As at As at As at As at31.03.01 31.03.02 31.03.03 31.03.04 31.03.05

Less: Liabilities and Provisions:

Secured Loans – – – 4.24 6,864.39

Unsecured Loans 4.69 3.98 4.33 50.00 2.89

Current Liabilities and Provisions 22.26 18.29 106.04 309.91 700.89

Deferred Tax Liability – – 0.54 0.65 128.64

Total Liabilities (D) 26.95 22.27 110.91 364.80 7,696.81

Net worth (D-E) 103.09 123.77 284.00 2,037.80 4,559.56

Represented by

1. Share Capital (A) 86.95 100.03 164.03 1,500.86 4,181.46

2. Share Application Money (A1) 12.70 – – 400.00 –

3. Reserves 3.45 23.74 121.17 140.10 384.96

Less Revaluation Reserve – – – – –

Reserves (Net of Revaluation Reserves) (B) 3.45 23.74 121.17 140.10 384.96

Miscellaneous Expenditure tothe extent not written off (C) – – 1.20 3.16 6.86

Net worth (A+A1+B-C) 103.10 123.77 284.00 2,037.80 4,559.56

ANNEXURE III

ACCOUNTING POLICIES :

1. Significant Accounting Policies:

a) Convention

The financial statement have been prepared in accordance with the applicable accounting Standards in India and presentationrequirements of the Companies Act 1956 of India.

b) Basis of Accounting:

The Company prepares its accounts under historical cost convention and on accrual basis, except other wise stated, inaccordance with the normally accepted accounting principles. Revenue from sales of goods is recognised on passage of titleto the customers, which generally coincides with delivery. Refunds of excise and other levies/taxes, and Insurance Claim areaccounted for on acceptance / actual receipt basis.

c) Fixed Assets and Capital work-in-progress:

Fixed Assets are stated at cost less accumulated depreciation. The cost of an asset comprises the original cost of acquisition(netof cenvat) and includes taxes, duties etc, freight and other expenses relating to the acquisition/ construction, erection, installation,& commisioning. Expenditure for addition, improvement and renewal are capitalised and expenditure for maintenance andrepairs are charged to the Profit & Loss Account. Finance Charges relating to acquition of fixed assets are also capitalised tothe extent they relate to the period till such assets are ready to be put to use.

Capital work-in progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are notyet ready for their intended use at the balance sheet.

d) Depreciation :

Depreciation on fixed assets has been provided for on the basis of written down value method at the rates and in the mannerprescribed under Schedule XIV (as amended) of the Companies Act,1956.Depreciation on fixed assets added during the yearis provided on Pro-rata basis with reference to the date of commissioning/ addition.

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e) Investments:

Investments are valued at cost and provision is made when there is a fall other than temporary in valuation of investments.

f) Valuation of Inventories

Inventories are valued at lower of cost or net realizable value. Cost is determined on weighted average basis and includesexpenditure incurred in the normal course of business in bringing such inventories to its location including appropriate overheads,wherever applicable. Obsolete, slow moving and defective inventories are identified at the time of physical verification andwherever, necessary provision is made for such inventories.

g) Excise Duty

Cenvat credit on input is adjusted with the cost of material. Cenvat credit on purchases of Capital goods is reduced from thecost of such assets and no depreciation is charged thereon.

h) Borrowing Cost

Borrowing Cost attributable to acquition of fixed assets are also capitalised to the extent they relate to the period till suchassets are ready to be put to use. All other borrowing costs are charged to revenue.

i) Retirement Benefits

Company’s Contributions to Provident Fund are charged to Profit & Loss Account. No provision has been made for the liabilityon account of Gratuity payable to the Employees.

j) Foreign Currency Transaction

Foreign currency transactions have been accounted on the basis of actual transaction value.

k) Miscellaneous Expenditure :

Preliminary expenditure are being amortised over a period of 5 years.Share Issue Expenses will be amortised over a periodof 5 years after the closure of the Public Issue.

l) Sales:

Gross Sales are inclusive of Excise Duty and Sales Tax, wherever applicable.

m) Income Tax:

Tax on income for the current period is determined on the basis of taxable income and tax rates in accordance with theprovisions of Income Tax Act, 1961.

Provision for Deferred tax is recognized on the timing difference between the accounting income and the taxable income forthe year based on applicable tax rates and laws on the Balance sheet date.

N) Contingencies

Loss contingencies are recorded wthen it is ascertained that the liability has been incurred and the amount could reasonablebe estimated.

2. In view of inadequacy of information received from suppliers information required to be disclosed regarding small scaleand ancilliary industries could not be furnished in these accounts.

3. Detail of Capacity & Production :

ITEMS UNITS LICENCED CAPACITY INSTALLED CAPACITY PRODUCTION

Katha & Cutch MT. N.A N.A –

Sponge MT. N.A 96000 34304.00

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4. Quantitative Information pursuant to para 3 & 4 of part II of schedule VI to the Companies Act, 1956 :

Rs. in Lacs

PARTICULARS OPENING PURCHASES/ CONSUMPTION/ CLOSINGBALANCE PRODUCTION SALES BALANCE

QTY AMT QTY AMT QTY AMT QTY AMT (IN MT) (IN MT) (IN MT) (IN MT)

1. RAW MATERIAL :

Coal 280.91 4.02 103834.14 1150.26 79078.78 827.61 25036.27 326.61( 280.91) ( 4.02) – – (280.91) (4.02)

Iron Ore 529.79 10.72 78227.36 2355.21 56992.15 1764.99 21765.00 600.94(529.79) (10.72) (529.79) (10.72)

Dolomite 14.68 0.09 1408.06 7.62 934.28 5.06 488.46 2.65(14.68) (0.09) (14.68) (0.09)

2. TRADING GOODS

Oxygen Gas Cylinders(Nos) 257.00 0.30 – – – – 257.00 0.30 ( 87.00) ( .10) ( 23594) ( 20.56) (23,424) (25.49) (257) (0.30)

Tor Steel 4.485 0.93 149.01 32.58. 153.50 35.89 – – (135.34) (21.99) (2283.95) (383.43) (2414.80) (453.15) (4.485) (0.92)

3. FINISHED GOOD

Katha 7.19 7.47 – – – – 7.19 7.47(14.39) (15.03) – – (7.20) (10.04) (7.19) (7.47)

Cutch 3.06 0.58 – – – – 3.06 0.58(46.76) (9.32) – – (43.70) (12.18) (3.06) (0.58)

Sponge Iron 34304 3223.51 31526.65 3472.80 2777.35 261.00

Note:- Purchase value of Raw Material includes Cost of Transportation. Consumption includes shortages.Figures in Bracketpertains to previous Year

5. Contigent Liability :

Bank Guarantee has been given by the banker of the Company amounting to Rs. 3,00,000/- (Previous Year-Rs.3,00,000/-)against which fixed deposit receipt of Rs. 3,00,000/-( Previos Year- Rs.3,00,000/-) has been lodged with the same forestdepartment.

Estimated amount of contract remaining to be Executed on Capital account and not provided for.( Net of Advances)- approx.Rs.3550.52 Lacs (Previous Year – 1495.19)

6. Deferred Taxes

Deferred tax provision has been made in the Accounts in accordance with the requirements of Accounting Standards on “Taxeson Income” (AS 22). The major components of the deferred tax assets/(liabilities) based on the tax effect of timing differencesare as under:

31st March 2005 31st March 2004

Tax effect on timing differences:

Deferred Tax Assets/(Liability)(Excess)/Shortfall of tax depreciation over book depreciation (12864300) ( 65038)

(12864300) (65038)

7. Foreign Currency Transaction:

C.I.F. Value of imports – Rs.103.97 Lacs (Previous Year: NIL)

8. Segment Information

The Company’s business activity primarily falls within a single reportable segment i.e Iron & steel products which are subjectto similar risk and returns. Moreover, there is no geographical segment . Hence, there is no separate segment report which isin conformity with the Accoutning Standard-17 of the The Institute of Chartered Accountants of India.

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9. No Provision has been made against a loan of Rs.30,812/- (Previous Year Rs.30812/- including interest of Rs. 5812/-)considered as doubtful of realisation.

10. Interest amounting to Rs.6,77,762/- on the above loan of Rs.-25,000/- (on which interest of Rs.5812/- accrued upto 1978-79) has not been provided as it is considered doubtful and suit of recovery of loan along with interest has been filed.

11. Previous year’s figures has been re-grouped and reclassified/re-arranged where ever necessary to confirm to currentyear’s classification.

12. Calculation of Earnings per Share

As on 31st March

Particular Unit 2001 2002 2003 2004 2005

Numerator used for calculating Rs. InLakhs 0.27 0.68 1.42 27.26 244.86Basic and Diluted Earning perShare (Adjusted Profit)

Weighted average No. of shares No. of Shares 869,500 880,251 1,052,903 9,506,644 15,082,041used as denominator forcalculating Basic and Diluted EPS

Nominal Value of Share Rs. 10 10 10 10 10

Basic and Diluted Earning per Share Rs. 0.03 0.08 0.13 0.29 1.62

13. Details of Related Party TransactionsRs. in lacs


To Directors

Mr. Puran Mal Agarwal Remuneration 0.96 1.20 3.00Interest on Loan 0.02 0.03 –

Mr. Suresh Kumar Agarwal Remuneration – – 3.00Interest On Loan 0.08 0.09 –

Mr. Manish Agarwal Factory Rent 0.48 0.48 0.48

Mr. Saket Agarwal Factory Rent 0.48 0.48 0.48

To Companies in which Directors are interested

Larigo Investment Pvt Limited Depo Rent 0.18 0.18 0.18

Howrah Gases Ltd Purchase (Oxygen cylinders) – 0.10Purchase [Ingots] 110.72 –Purchase [iron ore} – – 166.55

Rama Alloys Pvt Ltd Purchase[Oxygen Cylinders] 19.42 20.47 –

MSP Sponge Iron Ltd Purchase (Iron Ore) – 5.15 –

MSP Rolling Mills Pvt Ltd Purchase (Steel Fabrication Materials) – 3.95 12.51

MSP Steels Pvt Ltd Purchase (MS Round) – 57.73 –

To Relatives Of Directors

Smt Kisturi Devi Agarwal Factory Rent 0.48 0.48 0.48Interest On Loan 0.06 – –

Smt Kiran Agarwal Office Rent 0.15 0.30 0.30

Smt Nisha Agarwal Office Rent 0.15 0.30 0.30

S.K Agarwal [HUF] Interest On Loan 0.001 – –

14. Previous year’s figures has been re-grouped and reclassified/re-arranged where ever necessary to confirm to currentyear’s classification.

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ANNEXURE IV

SUMMARY OF ACCOUNTING RATIOS

Accounting Ratios 31.03.01 31.03.02 31.03.03 31.03.04 31.03.05

Earnings per share (Rs)+ 0.03 0.08 0.13 0.29 1.62

Return on net worth % 0.26 0.55 0.51 1.34 5.37

Net asset value per share (Rs) 11.86 12.37 17.31 13.58 10.90

No. of equity shares of 869,500 1,000,300 1,640,300 15,008,600 41,814,600Rs. 10 each outstanding

+Calculated as per AS-20

ANNEXURE V

CAPITALISATION STATEMENTRs. in lacs

Particulars Pre Issue Post IssueAs At31.03.2005

Short Term Debt (Including Current Liabilities) 1,258.75 1,258.75

Long Term Debt 6,314.81 7,781.34

Total Debt 7,573.56 9,040.09

Shareholders Fund

Share Capital 4,210.00 5,810.00

Reserves And Surplus 384.26 384.26

Miscellaneous Expenditure to the extent not written off 6.86 6.86

Total Shareholders Fund 4,588.10 6,188.10

Long Term Debt /Equity 1.38 1.26

Notes:

1. The above has been computed on the basis of restated statement of accounts.

2. Short-term Debts are debts maturing within the next one year from the date of the above statement.

3. The Pre-Issue share capital includes 285400 equity shares alloted on 08.04.2005

ANNEXURE VI

TAX SHELTER STATEMENTRs. in Lacs


Book Profit 0.50 1.20 3.30 42.70 404.58

Tax Rate (including surcharge) 39.55% 35.70% 36.75% 35.88% 36.59%

Tax at Notional Rate 0.20 0.43 1.21 15.32 148.03

Adjustment export profits/dividends – – – – –

Difference between book depreciation and 0.08 0.26 0.24 (0.02) (322.19) tax depreciation

Other Adjustments – – – 0.04 –

Net Adjustments 0.08 0.26 0.24 0.02 (322.19)

Tax Expense/(Saving) thereon 0.03 0.09 0.09 0.01 (117.89)

Profit/(loss) as per Income Tax as Returned 0.58 1.46 3.54 42.72 82.39

Taxable Income/(Loss) 0.58 1.46 3.54 42.72 82.39

Taxable Income as per MAT – – – – 404.58

Tax as per Income Tax as Returned 0.23 0.52 1.30 15.33 31.72

The numbers for the year ended March 31, 2005 are provisional and final amount will be ascertained at the time of filing ofreturn of income.

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DETAILS OF SECURED LOANS

Particulars 31.03.01 31.03.02 31.03.03 31.03.04 31.03.05

Secured Loans

(A) Term Loans from Banks

ING Vysya Bank – – – – 1928.17

UCO Bank – – – – 1126.17

Andhra Bank – – – – 914.79

Indian Overseas Bank – – – – 1444.10

State Bank of India – – – – 795.23

Total (A) – – – – 6208.46

(B) From Banks For Working Capital

ING Vysya Bank – – – – 415.03

UCO Bank – – – – 134.55

State Bank of India – – – – 0.01

Total (B) – – – – 549.59

(C) Hire/Purchase Loans from Banks – – – 4.24 106.34

Total (C ) – – – 4.24 106.34

Total (A+B+C) – – – 4.24 6864.39

Entire term loan are secured by way of parri passu first charge on the entire fixed assets including land & building, plant &machinery and parri passu second charge on entire current assets of the company with pari passu charge on fixed assets ofRama Alloys Pvt Ltd as a collateral security.

DETAILS OF INVESTMENTS AS ON 31/03/2005Rs. in Lacs

Quoted Investments No. of Shares Cost

Howrah Gases Ltd. 93,700 15.91

Ashirwad Steel & Ind. Ltd. 2,500 0.25

Nageshwar Investment Ltd. 11,000 0.61

Rudoday Security Ltd. 10,000 0.46

Indian Ovearseas Bank 6,960 0.70

Offshore Finvest Ltd. 15,700 1.57

Un-Quoted Investments No. of Shares Cost

Adhunik Industries Pvt. Ltd. 20,000 2.00

MSP Properties (I) Pvt. Ltd. 7,500 0.75

MSP Sponge Iron Ltd. 188,000 24.50

MSP Steels (P) Ltd. 250,000 25.00

STATEMENT OF UNSECURED LOANS AS ON 31/03/2005Rs. in Lacs

Name Amount

KPJ Concast Ltd. 2.89

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PRINCIPAL TERMS OF LOAN AND ASSETS CHARGED AS SECURITY:

i. The salient features of the agreement for Term Loan for Rs. 2,100.00 lacs with ING VYSYA BANK dated 15.09.2003are as under:

Purpose:

To meet the cost of land and site development, building, plant and machinery and other fixed assets of the company – Rs.9874.02Lacs, for setting up a project for manufacture of:

1,92,000 MT p.a of Sponge Iron.

95,109 MT p.a of Billet casting.

80,000 MT p.a of TMT bars and wire rods.

16 MW Captive power plant at village Jamgaon, District Raigarh, Chattishgarh.

Security and Collateral:

� Primary Security - First charge on pari-passu basis with other banks on entire fixed assets of the company including land& building, plant & machinery and other assets of the company related to the proposed project at Raigarh, Distt.Chattisgarh to be set up at cost of Rs. 9874.02 lacs.

� Collateral Security - First charge over the fixed assets of the group company, Rama Alloys Pvt Ltd., (NW Rs. 205.86 lacs)W.D.V Rs. 116.28 lacs as on 31.3.2003 on pari- pasu basis with other banks.

� Corporate Guarantee of MSP Sponge Iron. Ltd, MSP Steels Pvt. Ltd., MSP Rolling Mills Pvt. Ltd, ‘Howrah Gases Ltd,Rama Alloys Pvt. Ltd.

� Personal Guarantee of Mr. S.K. Agrawal, Mr. P.M. Agrawal, Mr. M. Agrawal & Mr. S. Agrawal.

Repayment:

The repayment will be in 20 quarterly instalments with moratorium of two years as under:

� First six instalments of Rs. 73.50 Lacs each.

� Next eight instalments of Rs. 105.00 Lacs each.

� Next four instalments of Rs. 128.625 Lacs each.

� Last two instalments of Rs. 152.25 lacs each.

Interest:

Interest on the loan will be charged @ PLR+ 2% (Minimum 13.5% p.a.). Interest is payable on monthly basis from the monthof Commercial Production.

The interest rate currently applicable is 10.75% per annum.

Margin:

34% (Rs.3,474.02 Lacs)

Disbursement of term loan (phase wise) will be made on pro-rata basis in proportion to the funds raised by thepromoters.

1. The company to give post-dated cheques towards term loan instalments.

2. All the securities charged to the bank to be comprehensively insured.

3. Term loan will be released only after the balance term loan of Rs. 4300 lacs is tied up with other bank/s.

4. Working capital limit will be considered once the project is nearing completion.

5. The borrower shall submit to all lenders, monthly progress reports indicating the physical and financial progress of theproject, duly supported by a Chartered Accountant’s Certificate.

6. The borrower shall complete all the essential/requisite formalities for completion of the project (Obtention of necessarystatutory / non-statutory licenses / permits / approvals / clearances etc. from competent authorities) under advice to thebank.

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7. The borrower shall provide an undertaking that any modification/ further expansion / diversification plan shall beundertaken only after receiving written consent from the bank.

8. The borrower shall also undertake not to change the constitution of the concern without specific approval of the Bank. TheBank reserves the right to withdraw the facilities in the event of any change in ownership / shareholding pattern /management of the company / firm.

9. Cost over run, if any, to be met by the promoters from their own sources.

10. The limits will be released only, after the company complies with all the sanction terms and conditions.

11. The bank reserves the right to accelerate the repayment schedule if the cash generation of the unit so warrants,irrespective of the schedule of repayment fixed.

12. The borrower shall not shift or remove the security described in the schedule of agreement without the prior approval of thebank in writing.

13. The borrower shall not pay any fee, commission, royalty etc. nor give preferential treatment to any concern with which thepromoters / directors / partners are associated with in respect of purchase of machineries, equipments, raw materials etc.,obtaining of technical know-how, sale of finished goods and any other transaction without prior approval of the bank.

ii. The salient features of the agreement for Term Loan for Rs 1,600.00 lacs, Working capital cash credit loan of Rs330.00 lacs and a bank guarantee of Rs 38.00 lacs with UCO Bank dated 29.09.03 are as under:

Nature of facility: Term Loan of Rs 1,600.00 Lacs –

- Sponge Iron RS 600 Lacs

- Power Plant Rs 640 Lacs

- Billet Division Rs 220 Lacs

- Rerolling Mill Rs 140 Lacs

Purpose: Acquisition of fixed / movable assets for setting up integrated steel plant.

Margin: 37% on total project cost, excluding working capital margin.

Security:

� Primary - Equitable Mortgage of factory land and building and all fixed assets and hypothecation of all plant and machineryand other movable assets both present and future on Pari passu basis with, other term lenders.

� Collateral - Extension of charge over all current assets of the company.

Repayment:

� Repayable in 20 quarterly instalments at the rate of Rs 80 lacs per quarter commencing from third quarter of 2005-06.Interest is to be serviced as and when due.

� Interest during construction period to be serviced as and when due.

� The First instalment will fall due for Payment latest on 31.12.2005 or six months after commencement of the commercialoperation of the sponge iron and the power plant unit whichever is earlier and Subsequent instalments to be paid withinthe last day of the relevant quarter.

� In case of any of the unit is commissioned and ready for commercial production repayment for the unit will be preponed.

Interest

PTLR+2.5% presently 14.5% p.a. (ROI 14.33% at monthly rests), corresponding to B+ credit rating.

The interest rate currently applicable is 11.00% per annum (ROI 10.88% at monthly rests).

Mode Of Disbursement:

Disbursement is to be made progressively and according to progress of implementation of the project and proportionately withterm lenders. Quotation of the assets/machineries to be purchased to be obtained and payment should be made directly to thesuppliers.

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Working Capital

Nature of facility: Cash Credit (Hypothecation) – Rs 330 Lacs

� Sponge Iron Rs 150 Lacs

� Billet Division Rs 80 Lacs

� Rerolling Mill Rs 100 Lacs

Margin: 25% on stock, WIP and finished goods, 25% on book debts upto 90 days old. Inter-company book debts for thepurpose of computation of drawing power should not be more than 45 days old. Inter-company book debts not to exceed 25%of total book debts submitted by the company for the computation of drawing power. No drawings against books debts for interunit transfers.

Security, Collateral:

� Primary - Hypothecation of stock, book debts and other current assets both present and future.

� Collateral - Extension of charge on the fixed assets of the company on pari-passu basis.

Rate of Interest: 2% above PLR presently 13.5% p.a (ROI 13.35% at monthly rests) corresponding to “A” credit rating.

Nature of facility: Bank Guarantee of Rs 38.00 Lacs

Purpose: In favour of Chattisgarh State Electricity Board, for supply of electricity.

Margin: 25% in the form of Cash/ FDR

Nature: Performance / Financial

Period of Guarantee: 1 Year, to be renewed at Bank’s discretion.

Security: Counter guarantee of the company & extension charge on the current assets of the company

Extension of charge on fixed assets of the company on pari-passu basis

All the above facilities will be additionally secured by personal guarantee of Director and corporate guarantee of:

Rs. in Lacs

Name of Director Net Worth 31.03.02

Suresh Kumar Agrawal 35.18

Puran Mal Agrawal 40.50

Saket Agrawal 36.58

Manish Agrawal 33.36

iii. The salient features of the agreement for Term Loan for Rs 1,500.00 lacs with Indian Overseas Bank dated29.12.03 are as under:

Nature of facility: Term Loan of Rs 1,500.00 Lacs


Margin: 35.18% on total project cost.

Security, Collateral and Guarantee:

Primary – Pari passu first charge on block assets of the company, existing/ future on pari passu basis with, other term lenders.

Collateral – second charge on the current assets of the company on pari passu basis.

First pari passu charge over the fixed assets of the company Rama Alloys Pvt Ltd

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Guarantee

All the above facilities will be additionally secured by personal guarantee of Promoter Director :

Rs. in Lacs

Name of Director Net Worth 31.03.02



Saket Agrawal 36.58


The term loan should have the corporate guarantees of the following group companies.Rs. in Lacs

Name of Companies Net Worth 31.03.02

MSP Sponge Iron Limited 940.18

MSP Steels Private Limited 732.70

MSP Rolling Mills Private Limited 202.08

Howrah Gases Limited 835.04

Rama Alloys Private Limited 205.86

Repayment:

Repayable in 20 equal quarterly instalments of Rs.75.00 Lacs each commencing from 01.10.2005 (Moratorium of six monthsfrom deemed commercial operation date of March 2005). Interest should be serviced as and when it is due for payment.

Interest

The current rate of interest is 10.25% per annum.

Mode Of Disbursement:

Disbursement of term loan will be made for individual divisions on promoters bringing their equity up front. For this purpose theproportion of loan division wise is as under:

a. Sponge Iron Division : Rs. 600 Lacs

b. Captive Power Plant : Rs. 200 Lacs

c. M S Billets division : Rs. 600 Lacs

d. Re- rolling Mill : Rs. 100 Lacs

iv. The salient features of the agreement for Term Loan for Rs 975.00 lacs with Andhra Bank dated 18.02.04 are asunder:

Nature of facility: Term Loan of Rs 975.00 Lacs


Margin: 35.20% on total project cost.

Security, Collateral and Guarantee:

Primary – Pari passu first charge on block assets of the company, existing/ future on pari passu basis with, other term lenders.

Collateral – second charge on the current assets of the company on pari passu basis.

First pari passu charge over the fixed assets of the company Rama Alloys Pvt Ltd

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Guarantee

All the above facilities will be additionally secured by personal guarantee of Promoter Directors:

Rs. in Lacs




Saket Agrawal 36.58


The term loan should have the corporate guarantees of the following group companies.

Rs. in Lacs


MSP Sponge Iron Limited 940.18

MSP Steels Private Limited 732.70

MSP Rolling Mills Private Limited 202.08

Howrah Gases Limited 835.04

Rama Alloys Private Limited 205.86

Repayment:

Repayable in 20 quarterly instalments commencing from 01.10.2005 (Moratorium of six months from deemed commercialoperation date of March 2005). Interest should be serviced as and when it is due for payment.

1-6 instalments Rs. 34.125

7- 14 instalments Rs. 48.75



Interest

The current rate of interest is 12.50% per annum.

v. The salient features of the agreement for Term Loan for Rs. 1500 lacs with SBI dated 20/11/04 are as under:

Purpose:

To meet the cost of land and site development, building, plant and machinery and other fixed assets of the company -24.37lakhs, for setting up of a project of:

� 5,76,000 MTPA Coal Washery Unit.

� 8 MW Captive Power Plant

� 2.4 Kms. Long Railway siding at village Jamgaon, District Raigarh,Chattishgarh.

Security and Collateral

� Primary Security - First charge on parri passu basis with other banks on factory land and building, all immovable fixedassets, plant and machinery and other movable assets of the company.

� Collateral Security - Second charge on parri passu basis with other term lenders on the current fixed assets of thecompany.

� Personal Guarantee of Mr. Puranmal Agarwal,Mr.Suresh Kr. Agarwal,Mr. Manish Agarwal, Mr. Saket Agarwal.

Repayment:

The repayment will be made in 20 quarterly installments of Rs. 75.00 lacs each commencing from 30.06.2006 with a moratoriumperiod of 1 year and 9 months and subsequent installments to be paid within the last day of the relevant quarter.

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Interest:

At State Bank Lending rate which is presently at 10.25% per annum with monthly rests.

Special Conditions:

i. On adverse deviation in Current ratio, TOL/TNW, Interest Coverage Ratio by more than 20% from the stipulated levelspenal interest @1% will be levied for the period of non- adherence subject to a minimum period of one year.

ii. On default in payment of interest / installment to the bank or to other financial institution / Banks, penal interest @ 1% willbe levied for the period of such a default.

iii. The borrower shall provide the bank with quarterly reports on the end use of the term finance till completion of the project.

iv. Water supply and treatment being a crucial component shall be completed in time before the schedule commissioning ofthe project.

v. The borrower is to prepare PERT-CPM and Bar Chart for Construction/Erection /Commissioning stages.

vi. First charge created by the Borrower on the current assets in favour of the existing term lenders will have to be releasedby the lending banks and necessary charges created in favour of SBI for the term loan facilities by the borrower within aperiod of 3 months failing which a penal interest rate of 1% will shall be levied above the applicable interest till thecompletion of the same.

vii. The bank will review period of moratorium after one year and if considered necessary the same will be reduced by thebank.

vi. The salient features of the agreement for Working Capital Loan for Rs. 900 lacs with ING Vysya dated 20/11/04 areas under:



� Primary Security - First charge on parri passu basis with other banks on raw materials,stock in process,finishedgoods,consumable stores,receivables.

� Collateral Security - Second charge on parri passu basis with other term lenders on entire fixed assets of the company.

� Personal Guarantee of Mr. Puranmal Agarwal,Mr.Suresh Kr. Agarwal,Mr. Manish Agarwal, Mr. Saket Agarwal.

� Corporate Gurantee- Rama Alloys P Ltd.

Interest: IVRR minus 1.25%

Margin:

Raw Materials : 25%

Finished Goods: 25%

Stock in Process: 25%

Stores & Spares : 25%

Book Debts : 25%

Special Conditions:

� Book Debts outstanding upto 90 days will be eligible for the purpose of drawing under the limit.

� .Sublimit of Cash Credit

Facility : LC Bill Discounting

Pricing : To be decided at the time of availment

Tenor : Maximmum usage period of 90 days.

� Stock statement to be submitted on or before the 10 th of the succeeding month

vii. The salient features of the agreement for Working Capital Loan for Rs. 1000 lacs with SBI dated 20/11/04 are asunder:


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� Primary Security - First charge on parri passu basis with other banks on raw materials, stock in process,finishedgoods,consumable stores,receivables.

� Collateral Security - Second charge on parri passu basis with other term lenders on entire fixed assets of the company.

� Personal Guarantee of Mr. Puranmal Agarwal, Mr.Suresh Kr. Agarwal, Mr. Manish Agarwal, Mr. Saket Agarwal.

Basis of Valuation:

i. Raw Materials and Stores: At cost, current market rates, Govt. controlled rates or invoice rates whichever is the lowest.

ii. Stock in Process: Raw material at cost plus factory overheads.

iii. Finished Goods : At cost, current market rates, Govt. controlled rates, company’s selling price or invoice price whicheveris the lowest.

iv. Book Debts : Invoice Value.

Interest:

At State Bank Lending rate which is presently at 10.25% per annum with monthly rests.

Margin:

Raw Materials : 25%

Finished Goods: 25%

Stock in Process: 25%

Stores & Spares : 25%

Book Debts : 25%

Special Conditions:

� Book Debts outstanding upto 90 days will be eligible for the purpose of drawing under the limit.

� Stock of Raw materials should be stored in the factory compound properly segregated lootwise with the Banks nameprominently displayed.Stock of finished goods should be arranged in a methodical manner to facilitate instant verification.

� Stock statement to be submitted on or before the 10 th of the succeeding month along with a list of current insurancepolicies dealing therein the name of the insurance company,amount of cover and date of expiry of such cover.

� All inflammable stocks and stores hypothecated to the Bank should be kept fully insured and should the bank think itnecessary to provide riot and strike cover.

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III. STATUTORY AND OTHER INFORMATION

MINIMUM SUBSCRIPTION

The minimum subscription to be raised by this issue is 1,44,00,000 equity shares aggregating to Rs. 14,40,00,000 being 90%of 1,60,00,000 equity shares aggregating to Rs. 1600.00 Lacs offered through this prospectus.

Further 16,00,000 equity shares should be compulsorily subscribed by QIB’s being 10% of the issue size.

If the company does not receive the minimum subscription of 90% of the net offer to the public on the date of closure of theissue or if the subscription level falls below 90% after the closure of the issue on account of cheques having been returnedunpaid or withdrawal of applications or if a minimum of 16,00,000 equity shares is not subscribed by QIB’s, the company shallforthwith refund the entire subscription amount received. For delay beyond 8 days, after the company becomes liable to paythe amount, the company shall pay interest as per Section 73 of the companies Act 1956.

RIGHTS OF THE EQUITY SHAREHOLDERS

The Equity Shares now being issued are subject to the terms of this Offer Document, the Application Form, Memorandum andArticles of Association of the Company, the Guidelines issued by the Government of India and Securities and Exchange Boardof India from time to time and the Companies Act, 1956. These new equity shares shall rank pari-passu with the existing issuedequity shares of the Company in all respects.

Shareholders are entitled to receive dividend as and when declared, Bonus and Rights shares as and when made. Further therights of the above and other holders of the instruments are subject to the provisions of Section 206A of the Companies Act,1956 and other laws applicable from time to time.

EXPENSES OF THE ISSUE

The expenses of the issue payable by MSP Steel & Power Limited inclusive of brokerage, fees payable to the Lead Managersto the issue, Registrar to the Issue, Legal Advisors & Tax Consultants, stamp duty, printing, publication, advertising and distributionexpenses, bank charges, listing fees and other miscellaneous expenses will not exceed Rs.100 Lacs, and will be met out of theproceeds of the present issue.

FEES PAYABLE TO THE LEAD MANAGER

The total fees payable to the Lead Manager to the Issue will be as per the Memorandum of Understanding signed with theLead Manager viz. Microsec India Limited, copies of which are available for inspection at the Registered office of the company.

FEES PAYABLE TO REGISTRAR TO THE ISSUE

The fees payable to the registrar to the issue as set out in their offer letter, copies of, which are kept open for inspection at theregistered office of the company.

The registrar will be reimbursed for all relevant out-of-pocket expenses including such as cost of stationery, postage, andstamp duty, communication expenses. Adequate funds will be provided to the Registrar to the issue to enable them to sendrefund orders or allotment advice by registered post.

BROKERAGE

Brokerage will be paid @ 1.5% on the nominal value of the equity shares on the basis of allotments made against applicationsbearing the stamp of a member of any recognised stock exchange in India in the brokers column. Brokerage at the same ratewill also be payable to the bankers to the issue in respect of allotment made against applications bearing their respectivestamps in the brokers column.

In case of tampering or over stamping of broker/agents codes on the application form, the Issuer’s decision to pay brokeragein this respect will be final and no further correspondence will be entertained in this matter.

COMMISSION AND BROKERAGE ON PREVIOUS ISSUES

Except as stated elsewhere in the Prospectus, no sum has been paid or is payable as commission or brokerage for subscribingto or procuring or agreeing to procure subscription for any of the Equity Shares of the Company since its inception.

PREVIOUS ISSUE FOR CASH

This being the first public issue of the company this clause does not apply.

PREVIOUS PUBLIC OR RIGHT ISSUES (During the last five years)

The Company has not made any public issue of equity shares whatsoever prior to this issue. The details of issue of capitalhave been outlined in the paragraph on the build up of the share capital under the capital structure.

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ISSUE OF SHARES OTHERWISE THAN FOR CASH

The company has issued 4754300 Bonus Shares out of the Share Premium Account of the Company in the ratio of one fullypaid equity share of Rs.10/- each in lieu of One equity share held on 30.09.2003. There has been no public issue of equity /debentures whatsoever prior to this issue. Other than the Bonus Shares no shares or debentures have been issued or agreedto be issued as fully or partly paid otherwise than for cash since incorporation.

PREFERENCE SHARES AND DEBENTURES

The company has not issued any preference shares or debentures since its incorporation.

ISSUE AT A PREMIUM OR DISCOUNT

1,30,800 equity shares of the company have been issued at a premium of Rs. 15 per equity share on 1st March, 2002; then6,40,000 equity shares of the company have been issued at a premium of Rs. 15 per equity share on 1st March, 2003 andfurther 31,14,400 equity shares of the company have been issued at a premium of Rs. 15 per equity share on 30th August,2003. No shares have been issued at a discount.

OPTION TO SUBSCRIBE

Except as otherwise stated in this prospectus, the company has not entered into nor does it at present propose to enter intoany contract or arrangement whereby any option or preferential right of any kind has been or is proposed to be given to anyperson to subscribe to any shares or debentures of the company.

As the trading of the Company’s shares will be undertaken in dematerialized form only, the Company shall Issue the shares toall applicants who provide their demat account details in dematerialized form only. However, an investor will have an option tohold the shares in physical form or demat form. The Registrar to the Issue will Issue to the said allottee a single certificate forall the shares allotted to the said applicant in Case an investor requests for rematerialization of his/ her shares.

INVESTORS MAY KINDLY NOTE THAT TRADING IN THE SHARES OF THE COMPANY ON THE STOCK EXCHANGESSHALL BE IN DEMATERIALISED FORM ONLY FOR ALL THE INVESTORS.

CLASSES OF SHARES

The Company has one class of shares viz. equity shares of face value of Rs. 10/ each as on date.

PURCHASE OF PROPERTY

Save in respect of the property purchased or acquired or proposed to be purchased or acquired under the contract referred toherein below under the heading material contracts and documents for inspection, there is no property which the company haspurchased or acquired or proposes to purchase or acquire which is to be paid, wholly or partly out of the proceeds of thepresent issue or the purchase of acquisition of which has not been completed on the date of issue of this prospectus other thanthe following:

a) The contract for the purchase or acquisition whereof was entered into in the ordinary course of the company’s business,the contract not being made in contemplation of the issue in consequence of the contract.

b) In respect of which the amount is not material. Except as stated in this prospectus the company has not purchased anyproperty in which any of its promoters or directors has or have any direct or indirect interest or in respect of any paymentthereof.

REVALUATION OF ASSETS

There has been no revaluation of the assets since incorporation of the company.

INTEREST OF DIRECTORS AND PROMOTERS

Except as otherwise stated elsewhere in this prospectus, all the directors may be deemed to be interested to the extent ofremuneration and fees payable to them for attending the meeting of the Board or committee thereof and reimbursement oftravelling and other incidental expenses, if any, for such attendance’s as per the articles.

All the Directors / Promoters of the company shall be deemed to be interested to the extent of shares held by them and/or theirfriends and relatives and which may be allotted to them out of the present issue, and are deemed to be interested to the extentof remuneration and perquisites being drawn by them from the company.

The Whole-time Director is interested to the extent of remuneration paid to him for services rendered to the company. Further,the Managing Director is interested to the extent of equity shares that may be subscribed and allotted/ transferred to him out ofthe present offer in terms of the Prospectus and also to the extent of any dividend payable to him and other distributions inrespect of the said Equity Shares.

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The Directors may also be regarded as interested in the shares, if any, held by or that may be subscribed by and allotted/transferred to the companies, firms and trust, in which they are interested as directors, Members, partners and/or trustees. Alldirectors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into byLHIL with any company in which they hold directorships or any partnership firm in which they are partners as declared in theirrespective declarations.

Except as stated otherwise in this prospectus, the company has not entered into any contract, agreements or arrangementduring the preceding two years from the date of the prospectus in which the directors are interested directly or indirectly and nopayments have been made to them in respect of these contracts, agreements or arrangements which are proposed to be madeto them.

APPOINTMENT OF WHOLE-TIME DIRECTOR.

Directors and Remuneration

Mr. Puran Mal Agrawal has been proposed to be Re-appointed as Whole Time Director Cum Chairman and his terms ofappointment varied and Mr. Suresh Kumar Agrawal has been proposed to be appointed as Managing Director respectively inthe Board Meeting of the Company held on the 10th day of July 2004 subject to the approval of the Company in the GeneralMeeting. The remuneration proposed to be paid to the above Directors is as under:

Name of Director Date of placement With effect from Tenure forof resolution inGeneral Meeting

Mr. Puran Mal Agrawal 10th August, 2004 10th July 2004 3 YearsMr. Suresh Kumar Agrawal 10th August, 2004 10th July 2004 3 Years

1. Sri Puran Mal Agrawal, Chairman Cum Whole Time Director

i. Salary of Rs.25,000 (Rupees Twenty Five Thousand only) per month including dearness allowance, in the scale ofRs. 25000/- to Rs.50000/- per month.

ii. Perquisites: The Whole Time Director shall also be entitled to the perquisites listed below, subject to the condition that theperquisites listed under part –”A” shall be limited to the Annual salary .

PART – “A”

(i) MEDICAL REIMBURSEMENT :

Reimbursement of expenses incurred for self and family subject to a ceiling of one month’s salary in a year or three monthssalary over a period of three years.

(ii) LEAVE TRAVEL ALLOWANCE/CONCESSION :

Upto Rs. 1,00,000/ - per annum.

(iii) CLUB FEES :

Fees of Clubs, subject to a maximum of two clubs may be provided but no Life membership fee or Admission fee is to be paidby the Company.

(iv) PERSONAL ACCIDENT INSURANCE :

Of an amount, the Annual Premium of which shall not exceed Rs. 15,000/-.

(v) PERFORMANCE LINKED BONUS :

Upto maximum of 24 months salary per annum.

PART – “B”

(i) Company’s contribution towards Provident Fund as per Rules of the Company, but not exceeding 12% of the Salary.

(ii) Company’s contributions towards Pension/ Superannuation Fund such amount as together with the Company’scontribution to the Provident Fund does not exceed 25% of the salary whenever applicable.

(iii) Gratuity: Not exceeding one-half month’s salary for each completed year of service, subject to a maximum limit asprescribed under Schedule XIII to the Companies Act, 1956.

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PART – “C”

(i) Provision of Company’s Car with driver for use on Company’s business. The Company for use of car will bill him for privatepurposes, if any.

(ii) Free Telephone facility at Residence. The company to him, if any, will bill personal long distance calls.

The use of the Company’s car and telephone for office purpose shall not be treated as perquisites.

2. Sri Suresh Kumar Agrawal, Managing Director

i. Salary of Rs.25,000 (Rupees Twenty Five Thousand only) per month including dearness allowance, in the scale ofRs. 25000/- to Rs.50000/- per month.

ii. Perquisites: The Whole Time Director shall also be entitled to the perquisites listed below, subject to the condition thatthe perquisites listed under part –”A” shall be limited to the Annual Salary.

PART – “A”

(i) MEDICAL REIMBURSEMENT :

Reimbursement of expenses incurred for self and family subject to a ceiling of one month’s salary in a year or three monthssalary over a period of three years.

(ii) LEAVE TRAVEL ALLOWANCE/CONCESSION :

Upto Rs. 1,00,000/ - per annum.

(iii) CLUB FEES :

Fees of Clubs, subject to a maximum of two clubs may be provided but no Life membership fee or Admission fee is to be paidby the Company.

(iv) PERSONAL ACCIDENT INSURANCE :

Of an amount, the Annual Premium of which shall not exceed Rs. 15,000/-.

(v) PERFORMANCE LINKED BONUS :

Upto maximum of 24 months salary per annum.

PART – “B”

(i) Company’s contribution towards Provident Fund as per Rules of the Company, but not exceeding 12% of the Salary.

(ii) Company’s contributions towards Pension/ Superannuation Fund such amount as together with the Company’s contributionto the Provident Fund does not exceed 25% of the salary whenever applicable.

(iii) Gratuity: Not exceeding one-half month’s salary for each completed year of service, subject to a maximum limit as prescribedunder Schedule XIII to the Companies Act, 1956.

PART – “C”

(i) Provision of Company’s Car with driver for use on Company’s business. The Company for use of car will bill him for privatepurposes, if any.

(ii) Free Telephone facility at Residence. The company to him, if any, will bill personal long distance calls.

The use of the Company’s car and telephone for office purpose shall not be treated as perquisites.

Minimum Remuneration

During the currency of the tenure of the Whole Time Director, if the Company has no profits or its profits are inadequate in anyfinancial year, the Company shall pay remuneration by way of Salary and perquisites not exceeding the limits specified inSection II of Part II of the Schedule XIII of the Companies Act,1956, as may be amended from time to time.

THE MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY

The Authorised share capital of the company is Rs 60,00,00,000/- (Rupees sixty crores only) divided into 6,00,00,000 (Sixcrores ) equity shares of Rs. 10/- (rupees ten) each with the rights, privileges or conditions attaching thereof as are provided bythe regulations of the company for the time being into several classes and to attach thereof respectively such preferential rightsprivileges or conditions as may be determined by or in accordance with the regulations of the company and to vary, modify orabrogate any such rights, privileges or conditions in such manner as may for time being be provided by the regulations of thecompany or as may be permitted by the companies act.

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Increase of capital by the company and how carried into effect

4. The Company in General Meeting may, from time to time, increase the capital by the creation of new shares, such increaseto be of such aggregate amount and to be divided into such shares of such respective amounts as the resolution shallprescribe. Subject to the provisions of the Act, any shares of the original or increased capital shall be issued upon suchterms and conditions and with such rights and privileges annexed thereto, as the General meeting resolving upon thecreation thereof shall, direct, and if no direction be given, as the Directors shall determine, and in particular, such sharesmay be issued with a preferential or qualified right to dividends or otherwise and in the distribution of assets of theCompany, and with a right of voting at general meetings of the company in conformity with Section 87 of the Act.Whenever the capital of the company has been increased under the provisions of this Article, the Directors shall complywith the provisions of Section 97 of the Act.

Lien

38. The company shall have a first and paramount lien upon all the shares (other than fully paid up shares registered in thename of each member (whether solely or jointly with others) and upon the proceeds of sale thereof, for all moneys(whether presently payable or not) called or payable at a fixed time in respect of such shares and no equitable interest inany shares shall be created except upon the footing, and upon the condition that Article 22 thereof is to have full effect.Any such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed,the registration of a transfer of shares shall operate as a waiver of the Company’s lien, if any, on such shares.

Forfeiture of share

41. If any member fails to pay any call or instalment on or before the day appointed for the payment of the same the Board mayat any time thereafter during some time as the call or instalment remains unpaid, serve notice on such member requiringhim to pay the same, together with any interest that may have accrued and all expenses that may have been incurred bythe company by reason of such non payment.

42. The notice shall name a day (not being less than thirty days from the date of the notice) and a place or places on and atwhich such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state thatin the event of non-payment at or before the time, and at the place appointed the shares in respect of which such call wasmade or instalment is payable will be liable to be forfeited.

Dematerialisation of securities

64A. The provisions of this article shall apply notwithstanding anything to the contrary contained in any other articles.

1. For the purpose of this article:

‘Beneficial Owner’ means a person or persons whose name is recorded as such With a depository, ‘SEBI’ means theSecurities & Exchange Board of India; established under Section 3 of the Securities & Exchange Board of India Act,1992 and

‘Depository’ means a company formed and registered under the companies act, 1956, and which has been granted acertificate of registration to act as depository under Securities & Exchange Board of India Act, 1992; and wherein thesecurities of the company are dealt with in accordance with the provisions of the Depositories Act, 1996.

2. The Company shall be entitled to dematerialise securities and to offer securities in a dematerialised form pursuant tothe Depositories Act, 1996.

3. Every holder of or subscriber to securities of the company shall have the option to receive certificates for suchsecurities or to hold the securities with a depository. Such a person who is the beneficial owner of the securities canat’ any time opt out of a depository, if permitted bylaw, in respect of any securities in the manner provided by theDepositories Act, 1996 and the Company shall, in the manner and within the time prescribed, issue to the beneficialowner the required certificates for the Securities.

If a person opts to hold his Securities with the depository, the Company shall intimate such depository the details ofallotment of the Securities, and on receipt of the information, the depository shall enter in its record the name of theallottee as the beneficial owner of the Securities.

4. All securities held by a depository shall be dematerialized and be in fungible form. Nothing contained in Sections 153,153A, 153B, 187B, 187C and 372A of the Act shall apply to a depository in respect of the securities held by on behalfof the beneficial owners.

5. (a) Notwithstanding anything to the contrary contained in the Act or these Articles, a depository shall be deemed tobe the registered owner for the purposes of effecting transfer of ownership of securities of the company on behalfof the beneficial owner.

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(b) Save as otherwise provided in (a) above, the depository as the registered owner of the securities shall not haveany voting rights or any other rights in respect of the securities held by it.

(c) Every person holding securities of the Company and whose name is entered as the beneficial owner of securitiesin the record of the depository shall be entitled to all the rights and benefits and be subject to all the liabilities inrespect of the securities which are held by a depository and shall be deemed to be a Member of the Company.

6. Notwithstanding anything contained in the Act or these Articles to the contrary, where securities of the company are heldin a depository, the records of the beneficiary ownership may be served by such depository on the company by means ofelectronic mode or by delivery of floppies or discs.

7. Nothing contained in Section 108 of the Act or these Articles, shall apply to a transfer of securities affected by a transferorand transferee both of who are entered as beneficial owners in the records of a depository.

8. Notwithstanding anything contained in the Act or these Articles, where a depository deals with securities, the companyshall intimate the details thereof to the depository immediately on allotment of such securities.

9. Nothing contained in the Act or these Articles regarding the necessity of having distinctive numbers for securities issued bythe company shall apply to securities held with a depository.

10. The Register and Index of beneficial owners maintained by a depository under the Depositories Act, 1996 shall be deemedto be the Register and Index of Members and Security holders for the purposes of these Articles.

Transfer and transmission of shares

51. The Company shall keep a book to be called the “Register of Transfers”, and therein shall be fairly and directly enteredparticulars of every transfer or transmission of any share.

52. The instrument of transfer shall be in writing and all the provisions of Section 108 of the Act shall be duly complied with inrespect of all transfer of shares and the registration thereof.

53. Every such instrument of transfer shall be executed both by transferor and the transferee and the transferor shall bedeemed to remain the holder of such share until the name of the transferee shall have been entered in the Register ofMembers in respect thereof. The Board shall not issue or register a transfer of any share in favour of a minor (except incases when they are fully paid up).

61. Every instrument of transfer shall be presented to the Company dilly stamped for registration accompanied by suchevidence as tile Board of Directors may require to prove the title of the transferor, his right to transfer the shares andgenerally under and subject to such conditions and regulations as the Board of Directors shall from time to time prescribe,and every registered instrument of transfer shall remain in tile custody of the Company until destroyed by order of theBoard of Directors.

62. For the purpose of tile registration of a transfer, the certificate or certificates of the share or shares to be transferred mustbe delivered to the Company along with (same as provided in Section 108 of the Act) a properly stamped and executedinstrument of transfer.

Transfer fee

63. There shall be paid to the company, in respect of the transfer or transmission of any number of shares to the same party,such fee, if any, as the directors may require.

Directors may refuse to register transfer

55. Subject to the provisions of Section 111 & 111A of the Act, the Board of Directors may at its own absolute and uncontrolleddiscretion and without assigning any reason, decline to register or acknowledge any transfer of shares (notwithstandingthe proposed transferee be already a Member), but in such case it shall within one month from the date on which theinstrument of transfer was lodged with the Company, send to the transferee and the transferor notice of the refusal toregister such transfer provided that registration of a transfer shall not be refused on the ground of the transferor beingeither alone or jointly with any other person or persons, indebted to the Company on any account whatsoever, exceptwhere the Company has lien on shares.

Registration of persons entitled to shares otherwise than by transfer

59. Subject to the provisions of articles 56 and 57, any person becoming entitled to shares in consequence of the death,lunacy, bankruptcy or insolvency of any member, or the marriage of a female member, or by any lawful means other thanby a transfer in accordance with these presents, may with the consent of the Board of Directors (which it shall not be underany obligation to give) upon producing such evidence that he sustains the character in respects of which he proposes toact under this article of his title, as the holder of the shares or elect to have some person nominated by him and approvedby the Board of Directors, registered as such holder, provided nevertheless, that if such person shall elect to have hisnominee registered he shall testify the election by executing to his nominee an instrument of transfer in accordance with

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the provisions herein contained and until he does so, he shall not be freed from any liability in respect of the shares. ThisArticle is referred to in these Articles as the Transmission Article.

Persons entitled may receive dividend without being registered as member

60. A person entitled to a share by transmission shall, subject to the right of the directors to retain such dividends or money ashereinafter provided, is entitled to receive and may give discharge for any dividends or other moneys payable in respectof the share.

Company not liable for disregard of a notice in prohibiting registration of a transfer

64. The Company shall incur no liability or responsibility whatsoever in consequence of its registering or giving effort to anytransfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in theRegister of Members) to the Prejudice of persons having or claiming any equitable right, title or interest to or in the saidshares, notwithstanding that the company may have had notice of such equitable right, title or interest or notice prohibitingregistration of such transfer, and may have entered such notice, or deferred thereto, in any book of the Company, and thecompany shall not be bound or required to regard or attend or give effect to any notice which may be given to it of anyequitable right title or interest, or be under any liability whatsoever fur refusing or neglecting so to do, though it may havebeen entered or referred to in some book of the Company; but the company shall nevertheless be at liberty to regard andattend to any such notice and give effect thereto, if the board of directors shall so think fit.

Power to borrow

66. The Board may, from time to tithe, at its discretion subject to the provisions of Section 292 of the Act, raise or borrow, eitherfrom the Directors or from elsewhere and secure the payment of any sum or sums of money for the purpose of theCompany; provided that the Board shall not without the sanction of the Company in General Meeting borrow any sum ofmoney which together with money borrowed by the Company (apart from temporary loans obtained from the Company’sbankers in the ordinary course of business) exceed the aggregate for the time being of the paid up capital of the Companyand its free reserves, that is to say, reserves not set aside for any specific purpose.

Payment or payment of moneys borrowed

67. The Board may raise or secure the repayment of such sum or sums in such; manner and upon such terms and conditionsin all respects as it thinks fit and in particular, by the issue of bonds, perpetual or redeemable, debentures or debenture-stock, or any mortgage, or other security on the undertaking of the whole or any part of the property of the Company (bothpresent and future including its uncalled capital for the time being.

Register of mortgages etc to be kept

71. The Board of Directors shall cause a proper register to be kept in accordance with the provisions of Section 143 of the Actof all mortgages and charges specifically affecting the property of the Company; and shall cause the requirements ofSections 118, 125, 127 and 144 (both inclusive) of the Act in that behalf to be duly complied with, so far as they are requireto be complied with by the Board of Directors.

Annual general meeting

75. The company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetingsin that year. All General Meetings other than Annual General Meeting shall be Extraordinary General Meetings. The firstAnnual General Meeting shall be held within eighteen months from the date of incorporation of the company and the nextAnnual General Meeting shall be held within six months after the expiry of the financial year in which the first AnnualGeneral Meeting was held and thereafter an Annual General Meeting of the company shall be held within six months afterthe expiry of each financial year, provided that not more than fifteen months shall elapse between the date of one AnnualGeneral Meeting and that of the next. Nothing contained in the foregoing provisions shall be taken as affecting the rightconferred upon the Registrar under the provisions of Section 166(1) of the Act to extend the time within which any AnnualGeneral Meeting may be held. Every Annual General Meeting shall be called for on a time during business hours, on a daythat is not a public holiday, and shall be held in the office of the company or at some other place within the city in which theoffice of the Company is situated as the Board may determine and the Notices tailing the Meeting shall specify it as theAnnual General Meeting. The Company may in anyone Annual General Meeting fix the time for its subsequent AnnualGeneral Meeting. Every member of the company shall be entitled to attend either in person or by proxy and the Auditorsof the Company shall be entitled to attend and to be heard at any General Meeting which he attends on any part of thebusiness, concerns him as Auditor. At every Annual General Meeting of the Company there shall be laid on the table thedirectors’ Report (if not already attached in the Audited statement of Accounts) the proxy Register with proxies and theRegister of Directors’ Share holdings of which latter Register shall remain open and accessible during the continuance ofthe meeting. The Board shall cause to be prepared the Annual List of Members, summary of the Share Capital, BalanceSheet and Profit and Loss Account and forward the same to the registrar in accordance with Sections 159, 161 and 220 ofthe Act.

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Extraordinary general meeting

76. The Board may, whenever it thinks fit, call an Extraordinary General Meeting [EGM] and it shall do so upon a requisition inwriting by any member or members holding in the aggregate not less than one-tenth of such of the paid-up capital as at thedate carries the right of voting in regard to the matter in respect of which the requisition has been made.

77. Any valid requisition so made by members must state the object or objects of the meeting proposed to be called and mustbe signed by the requisitionists and be deposited at the office provided that such requisition may consist of severaldocuments in file form each signed by one or more requisitionists.

78. Upon the receipt of any such requisition, the Board shall forthwith call an Extraordinary General Meeting, and if they do notproceed within twenty-one days from the date of the requisition being deposited at the office to cause a meeting to becalled on a day not later than forty-five days from the date of deposit of the requisition, the requisitionists, or such of theirnumber as represents either a majority in value of the paid-up share capital of the Company as is referred to in Section169(4) of the Act, which ever is less, may themselves call the meeting, but in either case, any meeting so called shall beheld within three months from the date of tile delivery of the requisition as aforesaid.

Number of directors

111. 1. Until otherwise determined by a general meeting of the Company and subject to tile provisions of Section 252 of theAct, the number of Directors (excluding Debenture and Alternate Directors, (if any) shall not be less than three normore than twelve.

The first directors of the company were the following

i. Mr. Sitaram Agrawal

ii. Mr. Ramanand Agrawal

iii. Mr. Vijay Kumar Agrawal

iv. Mr. Puranmal Agrawal

Retirement and rotation of directors

129. At every annual general meeting of the company, one-third if such of the directors for the time being as are liable to retireby rotation or if their number is not three or a multiple of three, the number nearest to one-third shall retire from office.

130. Subject to Section 256(2) of the Act, the Directors to retire by rotation under Article 129 at every Annual General Meetingshall be those who have been longest in the office since their last appointment, but as between persons who becamedirectors on the same day, those who are to retire, shall, in default of, and subject to any agreement among themselves,be determined by lot.

131. A retiring Director shall be eligible for re-election.

Appointment of alternate director

114. The Board may appoint an Alternate Director to act for-a Director (hereinafter called “the Original Director”) during hisabsence for a period of not less than three months from the State in which the meetings of the Board are ordinarily held.An Alternate Director appointed under this Article shall not hold office for a period longer than that permissible to theOriginal director in whose place he has been appointed and shall vacate the office of the Original Director when hereturns to that State. If the terms of office of the original director are determined before he so returns to that state, anyprovisions in the Act or in these Articles for the automatic reappointment of any retiring Director in default of anotherappointment shall apply to the Original Director and not to the Alternate Director.

Additional directors

115. Subject to the provisions of Sections 260 and 264 of the Act, the Board shall have power at any time and from time totime to appoint any other qualified person to be an Additional Director, but so that the total number of Directors shall notat any time exceed the maximum fixed under the Article 111. Any such Additional Director shall hold office only up to thedate of the next annual general meeting.

Director’s power to fill casual vacancies

118. Subject to the provisions of Section 262, 264 and 284(6) of the Act, the Board shall have power at any time and from timeto time to appoint any other qualified person to be a Director to fill a casual vacancy. Any person so appointed shall holdoffice only up to the date to which the Director in whose place he is appointed would have held office if it had not beenvacated by him.

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Directors may act notwithstanding any vacancy

121. The continuing directors may act not withstanding any vacancy in their body but if, and so long as their number isreduced below the minimum number fixed by the Article 111 hereof, the continuing directors not being less than two, mayact for the purpose of increasing the number of directors to that number or for summoning a general meeting but for noother purpose.

Secretary

156. The directors may from time to time appoint, and at their discretion, remove the Secretary provided that where the Boardcomprises only three directors, neither of them shall be the Secretary. The Secretary appointed by the directors pursuantto this Article shall be a whole-time Secretary. The Directors may also at any time appoint some person, who need not beSecretary, to keep the registers required to be kept by the company.

The seal its custody and use

157. (a) The Board shall provide a common seal for the purposes of the company, and shall have power from time to time todestroy the same and substitute a new seal in lieu thereof and the seal shall never be used except by the authorityof the Board or a Committee of the Board previously given.

(b) The Company shall also be at liberty to have an official seal in accordance with Section 50 of the Act, for use in anyterritory, district or place outside India.

158. Every Deed or other instrument, to which the seal of the company is required to be affixed, shall unless the same isexecuted by a duly constituted attorney, be signed by two Directors or one Director and Secretary or some other personappointed by the Board for the purpose, provided that in respect of the Share Certificate, the Seal shall be affixed inaccordance with the Article 19(a).

Capitalisation

172. Any General Meeting may resolve that any moneys, investments, or other assets forming part of undivided profits of thecompany standing to the credit of the Reserves, or any Capital Redemption Reserve Fund, in the hands of the companyand available for dividend or representing premiums received on the issue of shares and standing to the credit of theShare Premium Account be capitalised and distributed amongst such of the members as would be entitled to receive thesame if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto ascapital and that all or any part of such capitalised fund be applied on behalf of such members in paying up in full anyunissued shares, debentures, or debenture-stock of the company which shall be distributed accordingly or in or towardspayment of the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by suchmembers in full satisfaction of their interest in the said capitalised sum. Provided that any sum standing to the credit of aShare Premium Account or a Capital redemption reserve fund may, for the purposes of this Article, only be applied in thepaying up of unissued shares to be issued to members of the company as fully paid bonus shares.

173. A General Meeting may resolve that any surplus money arising from the realisation of any capital asset of the companyor any investments representing the same, or any other undistributed profits of the company not subject to charge forincome tax, be distributed among the members on the footing that they receive the same as capital.

174. For the purpose of giving effect to any resolution within the two last preceding. Articles hereof the Board may settle anydifficulty which may arise in regard the distribution as it thinks expedient and in particular may issue fractional certificates,and may fix the value of distribution of any specific assets, and may determine that cash payment shall be made to anymembers upon the footing of the value so fixed in order to adjust the rights of all parties and may vest such cash orspecific assets in trustees upon such trusts for the persons entitled to the Board. Where requisite, a proper contract shallbe filed in accordance with Section 75 of the Act, and the Board may appoint any person to sign such contract on behalfof the person entitled to the dividend or capital fund, and such appointment shall be effective.

The company in general meeting may declare a dividend

160. The Company in General Meeting may declare dividends to be paid to members according to their respective rights, butno dividend shall exceed the amount recommended by the Board, but the Company in General Meeting may declare asmaller dividend.

Dividends only to be paid out of profits

161. No dividend shall be declared or paid otherwise than out of the profits of the financial year arrived at after providing fordepreciation in accordance, with the provisions of Section 205 of the Act or out of the profits of the Company for anyprevious financial year or years arrived at after providing for depreciation in accordance with these provisions andremaining undistributed or out of both, provided that;

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(a) If the Company has not provided for depreciation for any previous financial year or years, it shall, before declaringor paying a dividend for any financial year, provide for such depreciation out of the profits of the financial year oryears.

(b) If the Company has incurred any loss in any previous financial year or years, the amount of the loss or any amountwhich is equal to the amount provided for depreciation for that year or those years whichever is less, shall be set offagainst the profits of the company for the year for which the dividend is proposed to be declared or paid or againstthe profits of the Company for any previous financial year or years arrived at in both cases after providing fordepreciation in accordance with the provisions of sub-section (2) of Section 205 of the Act, or against both.

Interim dividend

162. The Board may, from time to time, pay to the Members such interim dividend as in their judgment, the position of theCompany justifies.

Capital paid up in advance not to earn dividend

163. Where the capital is paid in advance of calls, such capital may carry interest, but shall not in respect thereof confer a rightto dividend or participate in profits.

Dividends in proportion to amount paid up

164. All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares duringany portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providingthat it shall rank for dividend as from a particular date, such share shall rank for dividend accordingly.

Retention of dividends until completion of transfer under article 60

165. The Board may retain the dividends payable upon shares in respect of which any person is under Article 60, entitled tobecome a member on which any person under that articles is entitled to transfer until such person shall become amember in respect of such shares or shall duly transfer the same.

Debts may be deducted

167 No member shall be entitled to receive payment of any interest or dividend in respect of his share or shares while anymoney may be due or owing from him to the company in respect of such share or shares or otherwise howsoever, eitheralong or jointly with any other person or persons; and the Board may deduct form the interest or dividend payable to anymember all sums of money so due from his to the company.

Transfer of shares must be registered

168 A transfer of shares shall not pass the rights to any dividend declared thereon before the registration of the transfer.

Unclaimed dividend

170. No unclaimed dividend shall be forfeited by the Board unless the claim thereto becomes barred by law and the companyshall comply with the provisions of Sections 205A and 205C of the Act in respect of all unclaimed or unpaid dividends.

Interest may be paid out of capital

26. Where any shares are issued for the purpose of raising money to defray the expenses of the construction of any work orbuilding, or the provision of any plant, which cannot be made profitable for a lengthy period, the company may payinterest on so much of the share capital as is for the time being paid up, for the period, at the rate and subject to theconditions and restrictions provided by Section 208 of the Act and may charge the same to capital as part of-the cost ofconstruction of the work or building, or the provision of plant.

Directors to keep true accounts

175.

(1) The company shall keep at the office or at such other place in India as the board thinks fit, proper Books of Account inaccordance with Section 209 of the Act, with respect to

a) All the sums of moneys received and expended by the Company and the matters in respect of which the receipts andexpenditure take place.

b) All sales and purchases of goods by the Company.

c) The Assets and Liabilities of the Company.

(2) Where the Board decides to keep all or any of the Books of Account at any place other than the office of the Company theCompany shall within seven days of the decision file with the Registrar a notice in writing giving, the full address of thatother place.

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(3) The Company shall preserve in good order the Books of Account relating to the period of not less than eight yearspreceding the current year together with the vouchers relevant to any entry in such Books of Account.

(4) Where the Company has a branch office, whether in or outside India, the Company shall be deemed to have complied withthe Article if proper Books of Account relating to tile transactions effected at the branch office are kept at the branch officeand proper summarized returns made up to date at intervals of not more than three months are sent by the branch officeto the Company at its offices at other place in India, at which the Company’s Books of Account are kept as aforesaid.

(5) The Books of Account shall give a true and fair view of the state of affairs of the Company or branch office, as the case maybe, and explain its transaction. The Books of Account and other books and papers shall be open to inspection by anyDirectors during business hours.

MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS

The following contract and agreement referred to in Para “A” below (not being contracts entered into in the ordinary course ofbusiness carried on or intended to be carried on by the company or contracts entered into more than two years before the dateof this Prospectus) which are / or may be deemed to be material have been entered into by or on behalf of the Company.Copies of these contracts together with copies of documents referred to in Para “B” below all of which have been attached tothe copy of this Prospectus and which have been delivered to the Registrar of Companies, West Bengal at Kolkata for registrationand may be inspected at the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on any working day from thedate of this Prospectus until the date of closing of subscription list.

A) MATERIAL CONTRACTS

1. Memorandum of Understanding between the Company and the Lead Manager, Microsec India Limited, dated15th November 2003.

2. Memorandum of Understanding between the Company and the Registrar to the Issue, Karvy Computershare Pvt Ltddated 24th December 2003.

3. Agreement dated 22nd December 2004 between the Company, Karvy Computershare Pvt Ltd and National SecuritiesDepository Limited for dematerialisation of shares.

4. Agreement dated 7th December 2004 between the Company, Karvy Computershare Pvt Ltd and Central DepositoryServices Limited for dematerialisation of shares.

B) DOCUMENTS FOR INSPECTION

1. Memorandum and Articles of Association of the Company.

2. Certificate of Incorporation dated 18th November 1968.

3. Fresh Certificate of incorporation dated 9th September 2003 consequent on conversion into public limited Company andchange of name.

4. Consent letters from Lead Manager to the Issue, Registrar to the issue, Bankers to the issue, Bankers to the Company,Directors, Auditors, Legal Advisor, Compliance Officer, Company Secretary as referred to in this Prospectus to act in theirrespective capacities.

5. Copy of the Resolution passed under Sections 81 (1A) on 28.02.2005 authorizing the Issue of Equity shares.

6. Copy of the Auditors Reports

i. Report mentioned on Prospectus dated 01.06.2005

ii. Report on Tax Benefits dated 02.04.2005 advising the Company about the tax benefits available to the Company andits members.

iii. Consent for inclusion of their name thereof in the prospectus.

7. Copies of Annual Reports mentioned in the report of the Auditors dated 01.06.2005

8. Power of Attorney from the Company, in favour of Mr. Puranmal Agrawal, Mr. Suresh Agrawal, Mr. Saket Agrawal,Mr. Manish Agrawal and Mr. Ashok Sarawagi.

9. Due Deligence certificate dated 19.01.2004 issued by Lead Manager to the issue Microsec India Limited.

10. Copies of initial listing applications made to the Stock Exchanges- BSE and NSE.

11. Copy of the in principle approval received from the Stock Exchange Mumbai dated 14.09.2004 and The National StockExchange of India Limited dated 05.10.2004 which was further extended vide letters dated 31.01.2005 and 25.05.2005respectively.

12. Copy of SEBI observation dated 27.05.2005 issued in respect of this Prospectus.

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PART - III

DECLARATION

All the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government or the guidelines issuedby the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act,1992, as the case may be, have been complied with and no statement made in this Prospectus is contrary to the provisions ofthe Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or rules made there under or guidelinesissued, as the case may be. We further certify that all the statements in this Prospectus are true and fair.

We, the directors of MSP Steel & Power Limited, hereby declare and confirm that no information / material likely to have abearing on the decision of the investors in respect of the equity shares issued in terms of the Prospectus has been suppressed/ withheld and / or incorporated in the manner that would amount to misstatement / misrepresentation. The Company acceptsno responsibility for statements made otherwise than in the Prospectus or in the advertisements or any other material issuedby or at the instance of the Company and that anyone placing reliance on any other source of information would be doing soat his/her own risk.

Signed by the Directors:

1. Mr. Puranmal Agrawal (Chairman )

2. Mr. Suresh Kumar Agrawal (Managing Director)

3. Mr. Manish Agrawal

4. Mr. Saket Agrawal

5. Dr. Akshyaya Kumar Singh

6. Mr. Niranjan Dash

7. Mr.Navneet Jagatramka

8. Mr.Arvind Kumar Saraf

Signed by the Compliance Officer and Company Secretary

Mr. Ashok Sarawagi

Place: Kolkata

Date: 3rd June 2005

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