security clause final-heg im - bombay stock exchange 3 of 34 general disclaimer this disclosure...

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HEG Limited (Incorporated on 27th October, 1972 as a Public Limited Company under The Companies Act, 1956)

Registered Office: Mandideep, Distt. Raisen, Madhya Pradesh - 462046 (India) Tel.: (07480) 2233524 to 2233527, Fax: 91-07480-2233522

Corporate Office: Bhilwara Towers, A-12, Sector 1, Noida-201301 (India) Tel.: (0120) 4390300, 2541810, Fax: 91-0120-2531648

Website: www.hegltd.com, E-Mail: [email protected]

SCHEDULE-I DISCLOSURES AS PER SEBI GUIDELINES

FOR ISSUE OF DEBENTURES ON A PRIVATE PLACEMENT BASIS

CREDIT RATING Fitch Ratings India Private Limited has assigned “AA-(ind)/Stable” (pronounced “Double A minus ind with stable outlook”) rating to Non-Convertible Debentures aggregating Rs 100 crores. This rating indicates high degree of safety with regard to timely payment of interest and principal on the instrument. The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating Agency has a right to suspend, withdraw the rating at any time on the basis of new information etc. RATING AGENCY

Fitch Ratings India Private Limited, Apeejay House, 6th Floor, 3 Dinshaw Vachha Road, Churchgate, Mumbai- 400 020. Tel.: +91-22 40001700 Fax: (91-22) 40001701 LISTING

The Debentures shall be listed on the Wholesale Debt Market (WDM) of Bombay Stock Exchange Limited (BSE).

Private & Confidential – For Private Circulation Only (This Disclosure Document is neither a Prospectus

nor a Statement in Lieu of Prospectus)

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Registrar to Issue Debenture Trustees MCS Limited F-65, First Floor, Okhla Industrial Area, Phase-I, New Delhi – 110 020. Tel No. (011) 41406149, 41406152 Fax No. 91-11- 26384907 E-mail: [email protected]

IDBI Trusteeship Services Ltd., Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai-400001. Tel No. (022) 40807000 Fax No. 91-22-66311776/22625247 E-mail: [email protected]

Sole Arranger

Yes Bank Ltd. Nehru Centre, 9th Floor, Discovery of India, Dr. A.B.Road, Worli, Mumbai -400018

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GENERAL DISCLAIMER This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008. This document does not constitute an offer to the public generally to subscribe for or otherwise acquire the Debentures to be issued by HEG Limited (the “Issuer”/ the “Company”). The document is for the exclusive use of the Institutions to whom it is delivered and it should not be circulated or distributed to third party(ies). The Company certifies that the disclosures made in this document are generally adequate and are in conformity with the captioned SEBI Regulations. This requirement is to facilitate investors to take an informed decision for making investment in the proposed Issue. DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA This Disclosure Document has not been filed with Securities & Exchange Board of India (SEBI). The Securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. It is to be distinctly understood that this document should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this document. The issue of Debentures being made on private placement basis, filing of this document is not required with SEBI, however SEBI reserves the right to take up at any point of time, with the Company, any irregularities or lapses in this document. DISCLAIMER OF THE SOLE ARRANGER It is advised that the Company has exercised self due-diligence to ensure complete compliance of prescribed disclosure norms etc in this Disclosure Document. The role of the Lead Arrangers in the assignment is confined to marketing and placement of the Debentures on the basis of this Disclosure Document as prepared by the Company. The Lead Arrangers have neither scrutinized/ vetted nor have they done any due-diligence for verification of the contents of this Disclosure Document. The Lead Arrangers shall use this document for the purpose of soliciting subscription from qualified institutional investors in the Debentures to be issued by the Company on private placement basis It is to be distinctly understood that the aforesaid use of this document by the Lead Arrangers should not in any way be deemed or construed that the document has been prepared, cleared, approved or vetted by the Lead Arrangers; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Company. The Lead Arrangers or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this document. DISCLAIMER OF THE ISSUER The Issuer confirms that the information contained in this Disclosure Document is true and correct in all material respects and is not misleading in any material respect. All information considered adequate and relevant about the Issue and the Company has been made available in this Disclosure Document for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. The Company accepts no responsibility for statements made otherwise than in this Disclosure Document or any other material issued by or at the instance of the Issuer Company and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. DISCLAIMER OF THE STOCK EXCHANGE As required, a copy of this Disclosure Document has been submitted to the Bombay Stock Exchange Limited (hereinafter referred to as “BSE”) for hosting the same on its website. It is to be distinctly understood that such submission of the document with BSE or hosting the same on its website should

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not in any way be deemed or construed that the document has been cleared or approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Company. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

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i. Name and address of the registered office of the issuer. HEG Limited Mandideep (Near Bhopal), Distt. Raisen, Madhya Pradesh - 462046 (India) Tel.: (07480) 233524 to 233527 Fax: 91-(07480)2233522 Corporate Office HEG Limited Bhilwara Towers, A-12, Sector 1, Noida-201301 (India) Tel.: (0120) 2541810, Fax: 91-0120-2531648 Website: www.hegltd.com E-Mail: [email protected]

ii. Names and addresses of the Directors of the issuer:

Name & Designation

Age (Years)

Qualification

Date of Appointment

Residential Address Particulars of other

Directorships

RSWM Ltd., Chairman

Maral Overseas Ltd., Chairman

Bhilwara Spinners Ltd., Chairman

Malana Power Company Ltd. , CMD

Bhilwara Processors Ltd., Director

Indo Canadian Consultancy Services Ltd., Director

BSL Ltd., Director

India Glycols Ltd, Director

Cheslind Textiles Ltd., Chairman

Shri Ravi Jhunjhunwala Chairman & Managing Director

54 B-COM (HONS) & MBA

01.09.1983 63, Friends Colony (East) New Delhi – 110 065.

AD Hydro Power Ltd., Chairman

RSWM Ltd., Chairrman – Emeritus

Maral Overseas Ltd., Chairman – Emeritus

Bhilwara Spinners Ltd. , Chairman – Emeritus

Malana Power Company Ltd., Director

A D Hydro Power Ltd., Director

Indo Canadian Consultancy Services Ltd., Director

Shri L N Jhunjhunwala Chairman-Emeritus

81 BA-(MATHS HONS)

27.10.1972 63, Friends Colony (East), New Delhi – 110 065.

LNJ Financial Services Ltd., Director

RSWM Ltd. , Vice Chariman

Maral Overseas Ltd., Managing Dirctor

Shri Shekhar Agarwal Vice Chairman

57 B-TECH(MECH), IIT KANPUR, M.SC (CHICAG

15.07.1996 7, Sadhna Enclave New Delhi – 110 017.

Bhilwara Technical Textiles Ltd., Chairman

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Essay Marketing Company Ltd., Director

APPTEX Manpower Development Services Ltd., Director

BSL Ltd., Director

Bhilwara Infotech Ltd. , Director

Confederation of Indian Textiles Industry, Committee Member

O

LNJ Bhilwara Textile Anusandhan Vikas Kendra, Governing Council Member

Shri P Murari Independent Director

75 M.A.(ECO)

30.03.1996 2, Gilchrirst Avenue, Off. Harrington Road, Chetpet, Chennai – 600 031.

Aditya Birla Nuvo Ltd., Director Aban Offshore Ltd., Director Great Eastern Energy Corporation Ltd., Director Adayar Gate Hotel Ltd., Director Bajaj Auto Ltd., Director South Asian Petrochem Ltd., Director Xpro India Ltd., Director Strategic Weighting Systems Ltd. , Director Nuziveedu Seeds Ltd., Director Glaxo Smithkline Consumer Healthcare Ltd., Director Credit Capital Assets Management Co. Ltd.-Director Idea Cellular Ltd- Director Bajaj Holdings & Investment Ltd.,Director Malar Hospitals Ltd., Director

Sandhar Technologies Ltd., Chairman & Director

Maral Overseas Ltd., Director

Indo-Continental Hotels & Resorts Ltd. , Director

Ansal Properties & Industries Ltd., Director

Hero – Honda Finlease Ltd., Director

OCL India Ltd. Director

Titagarh Wagons Ltd., Director

Sandhar Infosystems ltd. , Chairman & Director

Landmark Property Development Co. Ltd., Chairman & Director

Parsvnath Hotels Ltd., Director

Parsvnath SEZ Ltd., Director

Adayar Gate Hotel ltd. , Director

RSWM Limited , Director

Shri D.N. Davar Independent Director

75 M.A (ECO) , CAIIB

10.11.1994 B 5 / 82, Safdarjung Enclave New Delhi – 110 029.

RSWM Ltd. , Director Shri Kamal Gupta

63 FCA, FICWA,

10.11.1994 N-23, Sector -11 Noida – 201 301. Maral Overseas Ltd., Director

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PNB Gilts Ltd., Director

Malana Power Company Ltd. , Director

Independent Director

PH.D

AD Hydro Power Ltd., Director

Shri V.K. Mehta Director

78 GRADUATE

08.09.1979 91,9th Floor, Maker Tower I, GD Somani Marg cuffe parade Mumbai 400005

Shri N. Mehta (Alternate to Shri V.K. Mehta) Alternate Director

48 GRADUATE

18.05.2002 Lilavati Hospital & Research Centre Reclamation, A-791, Bandra (W) Mumbai - 400 050

Shri R.C. Surana Executive Director & CEO.

56 MBA & DIPLOMA IN FOREIGN TRADE FROM IIFT

29.01.2003 S-466, Greater Kailash,Part-II, New Delhi-110048

Larsen & Toubro Ltd., Nominee Director

Shri N. Mohan Raj Nominee Director

56 M.A.(ECO)

28.01.04 Executive Director (Investment Operations) LIC of India Central Office, Yogakshema, Jeevan Bima Marg, Mumbai – 400 021.

Shri Kashi N. Memani Independent Director

70 B.COM , FCA

30-04-2004 W-2, 1st Floor, Greater Kailash Part-II New Delhi – 110 048.

DLF Ltd., Director Emami Ltd., Director HT Media Ltd., Director ICICI Venture Funds Management Co. Ltd., Director Great Eastern Energy Corporation Ltd., Director National Engineering Industries Ltd., Director Aegon Religare Life Insurance Co. Ltd., Director Chambal Fertilizers & Chemicals Ltd, Director Match Point Investment Mgt. Ltd. , Dircetor Ekal Vidyalaya Foundation of India, Chairman JK Lakshmi Cement Ltd-Director

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Shri Riju Jhunjhunwala Executive Director

30 GRADUATION IN BUSINESS MANAGEMENT

30.04.2009 63, Friends Colony (East) New Delhi – 110 065.

BSL Ltd – Director Bhilwara Infotech Ltd- Director Bhilwara Technical Textiles Ltd-Director Cheslind Textiles Ltd- Director LNJ Bhilwara Textile Anusandhan Vikas Kendra- Governing Council Member

Shri Om Parkash Bahl Independent Director

70 M.SC. PH.D

30.04.2009 D-210 Sector 55 NOIDA-201301

HEG Graphite Products And Serviced Ltd

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iii. A brief summary of the business/ activities of the issuer and its line of business

Set up in seventies, in technical and financial collaboration with Societe Des Electrodes Et Refractaries Savoie (SERS), a subsidiary of Pechiney of France, HEG is one of the largest integrated graphite plant in world. HEG (graphite division) has facilities for production of Graphite Electrodes and Graphite Specialties. Its Graphite plant is located at Mandideep near Bhopal (MP). HEG diversified into textiles in 1985 when a cotton yarn unit was set up in Jammu. In 1988, a sick unit was taken over from IFCI and it was renamed as Rishabhdev Unit (Rajasthan). This unit was engaged in manufacturing of viscose / blended yarn. HEG diversified further in 1991, by setting up a Sponge Iron Plant at Borai near Durg (M.P.) which was further forwarded integrated to produce Steel Billets in 2005. A Waste Heat Recovery Power Plant (WHRS) was set up in February 1997 at Borai in the Sponge Iron plant to generate power out of the gases and solids produced in the manufacturing process of sponge iron, which otherwise would go waste. The capacity of the plant is 12.5 MW. To concentrate on its core activity of manufacturing Graphite Electrodes, HEG divested its textile and steel businesses in the year 2003 and 2007 respectively. HEG diversified into power generation facilities to cater to its in-house demand for electricity, which is one of the major inputs in manufacturing Graphite Electrodes. HEG had installed a hydel power project at Tawa in District Hoshangabad (M.P.) The plant is set up at Tawa Dam on a tributary of Narmada River. The project was completed in March 1997 and is rated capacity is 13.5 MW. A coal based captive power plant of 30 MW was set up in the year 2005 and another one of 33 MW has been commissioned in May 2009. Thus the overall captive power capacity in HEG has gone upto approx 77 MW. HEG presently has a capacity to manufacture 60,000 TPA graphite electrodes. This capacity is being enhanced to 66,000 TPA at a capital cost of approx.Rs.42 Crores. CORPORATE PHILOSOPHY/ MISSION STATEMENT To become a globally acknowledged top league player in Graphite Electrodes & allied businesses with commitment to growth, innovation, quality & customer focus CORPORATE STRATERGY To leverage the core competence in the field of Graphite Business by pursuing the path of growth to maximize the stakeholder value. A customer focus on becoming the choice supplier for the leading steel manufacturers by meeting their stated and unstated needs. To remain competitive by continuous cost reduction, energy conservations and adopting environment friendly technologies MAIN OBJECTS OF THE COMPANY The main objects of the Company as contained in the Memorandum of Association are: A. Main object to be pursued on incorporation are: To produce, extract, manufacture, purchase, refine, prepare, process, import, export, buy, sell and deal in graphite, graphite electrodes, graphite anodes, graphite specialties, coal tar, coal tar pitch, synthetic and natural coal, cokes, carbon, all kinds of minerals, chemicals, electrochemical, gas and substances in all their various forms and derivations and their products, by products and

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ancillary products and to carry on the business of distillers, refinery operators, compounders, synthetics, analysts, physicists, reactor operators, gas producers, and consumers, manufactures of plastics, prospectors, drillers, miners, chemical manufactures, chemists, druggists, analytical chemists, dry-salter, oil and color men. 2. To prospect, form, examine, explore, win, get, quarry, smelt, calcine, refine, crush and grind,

dress, amalgamate, manipulate and prepare for market, purchase, sell or deal in ores, metals and minerals of kinds, and to carry on any other prospecting, mining or metallurgical operations and to buy, sell manufacture and deal in minerals, plant, machinery, implements, products in which any of the minerals is used and such other things capable of being use in connection with prospecting, mining and/or metallurgical operations.

B. Objects incidental or ancillary to the attainment of main objects:

1. To undertake, execute, advise on, assess, design, draft, inspect, estimate, survey, supervise,

superintend works and contracts for work, and contracts involving the design, supply, use, construction, installation, operation or maintenance of any structure, factory, workshop, plant, reactors, machinery, tools, utensils, apparatus, appliances, substances, materials and other articles and to carry out any ancillary or other works relating thereto.

2. To purchase and/or otherwise acquire and undertake the whole or any part of the business,

property, rights, and liabilities of any person, firm, or body corporate, carrying on or proposing to carry on any business which this Company is authorized to carry on, or possessed of property or rights suitable for any of the purposes of Company, or which can be carried on in conjunction therewith or which is capable of being conducted so as directly or indirectly to benefit the Company and to purchase, acquire, sell and deal in property, share, stocks, debenture stock of any such person, firm or body corporate and to conducts, make or to carry into effect any arrangements in regard to the winding up of the business of any such person, firm or body corporate.

3. To buy, sell, manufacture, repair, alter, improve, exchange, let out on hire, import, export and

deal in all factories, works, plants, machinery, tools, utensils, appliances, apparatus, products, materials, substances, articles and things capable of being used in any business which this Company is competent to carry on or required by any customers or persons having dealing with the Company or commonly dealt in by persons engaged in any such business or which may seem capable of being profitably dealt with in connection therewith and to manufacture, experiment with, render marketable and deal in all products of residual and by-products incidental to or obtained in any of the business carried on by the Company.

4. To purchase, take on lease or tenancy or in exchange, hire, take options over or otherwise

acquire for any estate or interest whatsoever and to hold, develop, work, cultivate, deal with and turn to account, concessions, grants, decrees, licenses, privileges, claims, options, leases, property, real or personal, or rights or powers of any kind which may appear to be necessary or convenient for any business of the Company.

5. To acquire from any person, firm or body corporate or un-incorporate, whether in India or

elsewhere, technical information, known-how process, engineering, manufacturing and operating data, plans, layouts and blue prints useful for the design, erection and operation of plant required for any of the business of the Company and to acquire any grant or license and other rights and benefits in the foregoing matters and things.

6. To sell, exchange, mortgage, let on lease, royalty or tribute, grant licenses, casements, options

and other rights over and in any other manner deal with or dispose of the whole or any part of the undertaking, property, assets, rights and effects of the Company for such consideration

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as may be thought fit and in particular for stocks, shares, whether fully or partly paid up, or securities of any other company.

7. To pay for any rights or property acquired by the Company and to remunerate any person,

firm, body corporate rendering services to the Company either by cash payment or by allotment to him or them of shares or securities of the Company credited as paid up in full or in part or otherwise.

8. To borrow or raise or secure the payment of money from any Bank or Banks or any other

person or persons for the purpose of the Company’s business in such manner and on such terms and conditions and with such rights, powers and privileges as the Company thinks fit.

9. To procure the registration or recognition of the Company in or under the laws of any place

outside India. 10. To guarantee the performance of any contract or obligations of and the payment of dividends

and interest on any stock, shares or securities of any company, corporation, firm, or person in any case in which such guarantee may be considered likely directly or indirectly to further the objects of the Company or the interests of its shareholders.

11. To guarantee the payment of money unsecured or secured by or payable under or in respect

of promissory notes, bonds, debentures, debenture stocks, contracts, mortgages, charges, obligations, instruments, and securities of any company or any authority, supreme, municipal, local or otherwise or of any persons whomsoever, whether incorporated or not incorporated and generally to guarantee or become sureties for the performance of any contracts or obligations.

12. To, subscribe for, underwrite, acquire, hold, sell and otherwise deal in shares, stock,

debentures, debenture stock, bonds, mortgages, obligations and securities of any kind issued or guaranteed by any company (body corporate or undertaking) of whatever nature and whosesoever constituted or carrying on business, and shares, stocks, debentures, debenture-stock, bonds, mortgages, obligations and other securities issues or guaranteed by any government, sovereign ruler, commissioners, trust, municipal, local or other authority or body of whatever nature, whether in India or elsewhere.

13. To receive money on deposit loan and borrow or raise money in such manner as the

Company shall think fit, and in particular by issue of debentures, or debenture-stock (perpetual or otherwise) and to secure the repayment of any money borrowed, raised or owing by mortgage, charge or lien upon all or any of the property or assets of the Company (both present and future), including its uncalled capital, and also by a similar mortgage, charge or lien to secure and guarantee the performance by the Company or any other person or company of any obligation undertaken by the Company or any other person or company as the case may be.

14. To draw, make, endorse, accept, discount negotiate, execute and issue bills of exchange,

promissory notes, bills of lading, warrants, debentures and other negotiable or transferable instruments or securities.

15. To apply for, purchase or otherwise acquire and protect, prolong and renew, whether in India

or elsewhere any patents, patents rights, brevets, invention, trade marks, design, licenses, protections, concessions and the like conferring any exclusive or non-exclusive or limited right to use any secret or other information as to any invention, process or privilege which may seem capable of being used for any of the purposes of the company or the acquisition of which may seem calculated directly or indirectly to benefit the Company and use, exercise,

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develop, manufacture under or grant licenses or privileges in respect of, or otherwise turn to account, the property, rights and information so acquired and to carry on any business in any way connected therewith.

16. To expend money in experimenting on and testing and in improving or seeking to improve

any patents, rights, inventions, discoveries, processes or information of the Company or which the Company may acquire or proposes to acquire.

17. Subject to any applicable law for the time being in force, to act as managers of any business or

other undertaking and generally, subject as aforesaid, to undertake or take part in the management, supervision or control of the business or operations of any person, firm, body corporate, association or other undertaking and for such purpose or purposes to appoint and remunerate any officers of the Company, accountants or other experts or agents.

18. To form, incorporate or promote any company or companies whether in India or in any

foreign country having same or similar objects as that of the company and to do all the things required to be done in that connection.

19. Subject to the provisions of the Act to amalgamate or enter into partnership or into any

arrangement for sharing profits, union of interests, co-operation, joint adventure or reciprocal concession or for limiting competition with any person or persons or company or companies carrying on or engaged in, or about to carry on or engage in, or being authorized to carry on or engage in any business or transaction which the Company is authorized to carry on or engage in or which can be carried on in conjunction therewith or which is capable of being conducted so as directly or indirectly to benefit this Company.

20. To enter into any arrangements and to take all necessary or proper steps with Governments or

with other authorities, supreme, national, local, municipal or otherwise of any placed in which the Company may have interests and to carry on any negotiations or operations for the purpose of directly or indirectly carrying out the objects of the company or effecting any modification in the constitution of the Company or furthering the interests of its members and to oppose any such steps taken by any other company, firm or person which may be considered likely directly or indirectly to prejudice the interests of the Company or its members and promote or assist the promotion, whether directly or indirectly, of any legislation which may appear to be in the interest of the Company and to oppose and resist whether directly or indirectly, any legislation which may seem disadvantageous to the Company and to obtain from any such Government authority or any company any charters, contracts, decrees, rights, grants, loans, privileges or concessions which the company may think it desirable to obtain and carry out, exercise, and comply with any such arrangements, charters, contracts, decrees, rights, privileges or concessions.

21. To adopt such means of making known the products of the Company as may seem expedient

and in particular by advertising in the press by circulars, by purchase and exhibition of works of art or interests, by publication of books and periodicals, and by granting prizes, rewards and donations.

22. To undertake and execute any trust, the undertaking of which may seem to the Company

desirable, and either gratuitously, or otherwise and vest any real or personal property, rights or interests acquired by or belonging to the Company in any person or company on behalf or for the benefit of the Company and with or without any declared trust in favor of the Company.

23. To establish and support or aid in the establishment, maintenance or extension of any

association, institution or fund in any way connected with any trade, commerce or industry

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including any association, institution or fund for the protection of the interests of masters, owners and employers against loss by bad debts, strikes, combinations, fire, accidents or otherwise or for the benefit of any clerks, workmen or others at any time employed by the Company or any of its predecessors in business or their families or dependants and whether or not in common with other persons or classes of persons and in particular of friendly, co-operative and other societies, reading rooms, libraries, educational and charitable institutions, dining and recreation rooms, churches, chapels, schools and hospitals and to grant gratuities, pensions and allowances and to contribute to any funds raised by public or local subscriptions for any purpose whatsoever.

24. To aid, peculiarly or otherwise, any association, body or movement having an object for the

solution, settlement, or surmounting of industrial or labour problems or troubles or the promotion of industry or trade.

25. To subscribe or guarantee money for any national, charitable, benevolent, public, general or

useful object or for any exhibitions. 26. To establish and maintain or procure the establishment and maintenance of any contributory

or non-contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pension, allowances or emoluments to any persons who are or were at any time in the employment or service of the Company or of any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary company, or who are or were at any time Directors or officers of the Company or of any such other company as aforesaid, and the wives, widows, families and dependants of any such persons, and also establish and subsidies and subscribe to any institutions, associations, clubs or funds calculated to be for the benefit of or to advance the interests and well-being of the Company or of any such other Company as aforesaid, and make payments to or towards the insurance of any such person as aforesaid, and do any of the matters aforesaid either alone or in conjunction with any other company as aforesaid.

27. To distribute among the members in specie any property of the Company, or any proceeds of

sale or disposal of any property of the Company in case of winding up but so that no distribution amounting to a reduction of capital be made except with the sanction (if any) for the time being required by law.

28. To do all or any of the above things in any part of the world as principals, agents, contractors,

trustees, or otherwise by or through trustees, attorneys, agents or otherwise and either alone or in conjunction with others and to establish offices, agencies or branches of carrying on any of the aforesaid objects in India or elsewhere in the world and to undertake the management of the Company or companies having objects altogether or in part similar to those of the Company.

29. To amalgamate with any Company or Companies having objects altogether or in part similar

to those of this Company or any other Company, subject to the provisions of the Companies Act, 1956.

30. To open branches in India and elsewhere and to get the Company registered in any foreign

country and adopt such means of making known to the public the business or the products of the Company as may seem expedient and in particular by advertising in the press, by circulars and publication of books and periodicals.

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BUSINESS OF THE COMPANY AND ITS PRODUCTS HEG Ltd, (HEG), incorporated in 1972-73, is a diversified company having interests in Graphite Electrodes, and Electric Power. HEG, a premier ISO 9001:2000 company of the LNJ Bhilwara Group is one of the leading graphite electrodes manufacturer. HEG is one of the market leaders for graphite electrodes in India and exports more than 80% of its production (Graphite Electrodes) to international markets. Started as an importer of semi finished Electrodes, the company turned to production of graphite electrodes with technical and financial assistance from La Societe Des Electrodes Et Refractories Savoie (SERS) a part of the PECHINEY Group, France. The technology collaboration continued till 1992 after which HEG parted ways with Pechiney. The Graphite Electrode plant of the company is situated at Mandideep near Bhopal in the State of Madhya Pradesh, India. The present capacity of graphite Electrode unit is 60,000 MTPA. The power requirement of the Mandideep unit is fulfilled to a large extent by the power generating plants of the company at Tawa (Hydel Power plant of 13.5 MW) and a 63 MW thermal plant at same location as that of Graphite Electrode Plant i.e. Mandideep (Bhopal). HEG is undergoing capacity expansion plan of 6,000 MTPA (from 60,000 MTPA to 66,000 MTPA) at their Graphite Electrode plant with an estimated capital cost of Rs. 42 Crs. HEG belongs to the well-established LNJ Bhilwara Group, which is a multi product group with major interests in fields including graphite electrodes, textiles & power generation Production units of the Group companies are spread across the country and many of the Group companies have been awarded the prestigious ISO 9000 certification. Another distinction is that about 53% of the Group’s turnover comes from exports. With a turnover of Rs. 3,614 crores, LNJ Bhilwara Group in FY 2008-09 employed approximately 25,000 people and has some well-known brands, which includes Mayur Suitings, BSL Suitings, Geoffrey Hammonds and La Italia Fashions under its belt. The group has manufacturing plants, which are spread across the country. Set up in seventies, in technical and financial collaboration with Societe Des Electrodes Et Refractaries Savoie (SERS), a subsidiary of Pechiney of France, HEG is one of the largest integrated graphite plant in world. HEG (graphite division) has facilities for production of Graphite Electrodes and Graphite Specialties. Its Graphite plant is located at Mandideep near Bhopal (MP). HEG diversified into textiles in 1985 when a cotton yarn unit was set up in Jammu. In 1988, a sick unit was taken over from IFCI and it was renamed at Rishabhdev Unit (Rajasthan). This unit is engaged in manufacturing of viscose/ blended yarn. HEG diversified further in 1991, by setting up a Sponge Iron Plant at Borai near Durg (MP). The Sponge Iron plant was further forward integrated by setting up a Steel Billets manufacturing facility in 2005. A waste Heat Recovery Power Plant (WHRS) was set up in February 1997 in the Sponge Iron plant to generate power out of the waste gases and solids produced in the manufacturing process of sponge iron. The capacity of the plant is 13.5 MW. Both the textile and steel (including WHRS and sponge iron) were later hived off as a part of company’s long term strategy to concentrate on its core business i.e. manufacturing graphite electrode. HEG presently has a capacity to manufacture 60,000 TPA graphite electrodes. This capacity is being enhanced to 66,000 TPA at a capital cost of approx.Rs.42 Crores. HEG diversified into power generation facilities to cater to its in-house demand for electricity, which is one of the major inputs in manufacturing Graphite Electrodes. HEG had installed a hydel power project at Tawa in District Hoshangabad (M.P.) The plant is set up at Tawa Dam on a tributary of Narmada River. The project was completed in March 1997 and is rated capacity is 13.5 MW. A coal based

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captive power plant of 30 MW was set up in the year 2005 and another one of 33 MW has been commissioned in May 2009 at the Mandideep near Bhopal (MP).. Thus the overall captive power capacity in HEG has gone upto approx 77 MW. Over the above period, HEG has following achievements to its credit: a) Awarded “Rajeev Gandhi National Quality Commendation Award 2001” to its Graphite

plant at Mandideep by Bureau of Indian Standards, Government of India. b) HEG Ltd, has bagged the prestigious National Export Award instituted by the Ministry of

Commerce, Government of India, for outstanding export performance for the year 1997-98. c) HEG has won the country’s top export award instituted by the Chemical & Allied Products

Export Promotion Council (CAPEXIL) for outstanding exports for the past 18 consecutive years. Also won “Highest Export Award” from the CAPEXIL in the 2008 for non mineral category for second consecutive year.

d) HEG bagged the Fist Prize in the First ever “SHE” (Safety, Health & Environment)

competition organized by CII at the State Level. Divisions of HEG HEG at present has diversified operations, covering manufacture of Graphite Electrodes and Electrical Power for captive consumption. Graphite Division – Its beginning and growth: Started as an importer of semi finished Electrodes, the company turned to production of graphite electrodes with technical and financial assistance from La Societe Des Electrodes Et Refractories Savoie, France. HEG expanded the capacity of their Mandideep unit to produce 30,000 MTPA (from 24,000 MTPA) of Graphite Electrodes at a cost of Rs. 47 crores during the year 2001-02. HEG further expanded its capacity from 30,000 MTPA to 60,000 MTPA in last 5 years at a capital cost of Rs. 450 crores including setting up a thermal power plant of 30 MW. Power for the Mandideep unit was supplemented by the power generating plants of HEG at Tawa and thermal power plant at Mandideep. Since power is one of the major inputs in manufacture of graphite electrodes, this places the company at a competitive advantage in the market place. During 1999-00, the company has engaged the services of Price Waterhouse Coopers for BPR, Supply Chain and Cost Reduction measures at the Graphite Plant. With the help of Indian Statistical Institute HEG has implemented Six Sigma Tools & techniques in the plant. Hydel Unit, Tawa Tawa unit, commissioned during 1996-97 uses water stored in the reservoir of Tawa Dam for generation of electricity. The total capacity of the unit is 13.5 MW. The electricity so generated, is transferred to the M.P. State Electricity Board grid at Itarsi and is drawn at Mandideep to meet the requirements of the graphite unit. Wheeling charges are paid to the Electricity Board for transmission of power. Thermal Power Plant HEG has also set up a co-generation thermal power plant. The power generated from this unit meets the power needs of the Graphite unit at Mandideep. The 30 MW unit was commissioned during 2005 and uses the coal for generation of electricity and another one of 33 MW has been commissioned in May 2009. The total capacity of the unit is 63 MW. The surplus electricity if any is sold to the State Electricity Board and outside parties. SUBSIDIARIES OF THE COMPANY: The Company has one subsidiary in the name of HEG Graphite Products & Services Limited.

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Date of Incorporation 18th Sep 2009

iv. A brief history of the issuer since its incorporation giving details of its activities including any reorganization, reconstruction or amalgamation, changes in its capital structure, (authorized, issued and subscribed) and borrowings, if any. Share Capital history of the Company Borrowings:

Sr. No.

Name of the Allottee

Date of Allotment

Consideration

(Cash, bonus, Kind, etc.)

No. of Equity Shares

Face Value

Issue Price

Cumulative Equity

Share Capital (Rs.)

1. Allotment to promoters

1972 Cash 7 10/- 10/- 70.00

2. Allotment to promoters

1974 Cash 50 10/- 10/- 570.00

3. Promoters 1976 Cash 1189943 10/- 10/- 11900000.00

4. Allotted to Collaborators

1976 Cash 580300 10/- 10/- 17703000.00

5. Public Issue 1976 Cash 1250000 10/- 10/- 30203000.00


1976 Cash 609700 10/- 10/- 36300000.00

7. Allotted to promoters 1977 Cash 185000 10/- 10/- 38150000.00


1977 Cash 185000 10/- 10/- 40000000.00

9. Conversion of Loan (FIs)

1982 Cash 1105120 10/- 10/- 51051200.00

10. Bonus 1982 Bonus 2041588 10/- Bonus

71467080.00

11. Forfeited Shares Cash 1150 10/- 10/- 71455580.00

12. Issued on Merger 31.03.1990 Cash 10700 10/- 10/- 71562580.00

13. Right-cum-Public Issue

07.12.1991 Cash 2203125 10/- 40/- 93593830.00

14. Right-cum-Pref. Issue 08.12.1992 Cash 8162850 10/- 40/- 175222330.00

15. Pref. Issue 24.07.1994 Cash 2633000 10/- 65.33 201552330.00

16. Bonus 29.12.1994 Bonus 20155233 10/- Bonu

s 403104660.00

17. Conversion of FCCB’s

2007-08 Cash 4007517 10/- 10/- 443179830.00

18. Shares Bought Back & Extinguished

2008-09 & 2009-2010

Cash 3295703 10/- 10/- 410222800.00

Capital Structure

(Rs. in Crores) As on March 31, 2009 Nominal

Value Amount

1. Share Capital

A. Authorised Share Capital

5,50,00,000 Equity Shares of Rs. 10/- each 55.00 55.00

15,00,000 Preference Shares of Rs. 100/- each 15.00 15.00

B. Issued, Subscribed & Paid- up Share Capital

4,43,17,983 Equity Shares of Rs. 10/- each 44.32 44.32

2. Paid-Up Share Capital after the Present Issue

4,43,17,983 Equity Shares of Rs.10 each 44.32 44.32

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15,03,059 Less: Shares bought back and extinguished 2,41,919 Less: Shares bought back but not extinguished

1.50 0.25

1.50 0.25

4,25,73,005 Equity Shares of Rs.10/- each fully paid up (including forfeited equity shares) (The present issue is done through private placement of Secured Redeemable Non- Convertible Debentures which would not have any impact on the paid up equity capital of the Company)

42.57 42.57

3. Details of Debentures already issued

a. Issue of 50 Secured Redeemable Non-Convertible Debentures of Rs. 1,00,00,000/- each

50.00 50.00

Of which, Reservations are Nil Nil 4. Present Issue of Debentures through this Schedule

a. Issue of 1000 Secured Redeemable Non-Convertible Debentures of Rs. 1,0,00,000/- each

100.00 100.00

Of which, Reservations are Nil Nil

c. Net Offer in terms of this Schedule Issue of 1000 Secured Redeemable Non-Convertible Debentures of Rs.1,0,00,000/- each

100.00 100.00

Outstanding debentures or bonds and other instruments issued by the issuer company outstanding as on September 30, 2009: (a) Secured Loans (Rs. in crores)

Term Loans From Financial Institutions/ Banks 192.35

Working Capital from Bank 346.70

NCD 50.00

(b) Unsecured Loans (Rs. in crores)

Foreign Currency Convertible Bonds 38.73

Short Term Loans Borrowing from Bank 147.52

Other Short Term Borrowing – Commercial Paper 40.00

v. Details of debt securities issued and sought to be listed including face value, nature of debt

securities mode of issue i.e. public issue or private placement. The company has placed NCD for INR 50 crores with LIC of India for a period of 3 years @ 9.55%

p.a.( Payable Annually) Current Issue: Under the purview of current document, the Company intends to raise an amount

of Rs. 100 Crores of Secured Redeemable Non Convertible Debentures through private placement to institutional investors.

The Company has a valid rating of AA-(ind)/Stable” (pronounced “Double A minus ind with

stable outlook”) as per the details given below and the rating letter from the rating agency is enclosed at the end of this document.

The Company proposes to mobilize through private placement of secured Redeemable Non-

Convertible Debentures (NCDs) of the face value of Rs.1,0,00,000/- each at par aggregating Rs. 100 Crores.

Nature of Debt Securities Secured, Redeemable, Non Convertible Debentures

Mode of Issue Private Placement

Issue Amount Rs. 100 Crores

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Security To be secured by first pari passu charge on Fixed Assets of the company with a minimum asset coverage ratio of 1.25 times. The Debentures together with interest payable in respect thereof shall be secured by a first pari passu charge on Fixed Assets of the Company in favour of the Trustees for the Debentureholders (the ‘Debenture Trustee), The Company will create the security for the Debentures within 3 months from the deemed date of allotment. In the event of the Company not creating the security within 3 months from the deemed date of allotment, it shall pay interest at the rate of 2% p.a. over and above the coupon applicable on these debentures. Such additional interest shall be payable from the expiry of 3 months from the deemed date of allotment till creation of such security.

Tenor Option I: 2 years (INR 50 crores) Option II: 3 years (INR 50 crores)

Coupon Rate Option I: 8.50% p.a. Option II: 8.90% p.a.

Interest Payable Annually

Redemption Date At par at the end of 2 Years for Option I and at the end of 3 years for Option II

Issue opening date December 8, 2009

Issue closing date December 14, 2009

Deemed date of allotment December 17, 2009

vi. Issue size Issue size is Rs 100 crore vii. Details of utilization of the issue proceeds The Utilization of funds proposed to be raised through this private placement will be to meet

company’s long term working capital requirement and refinance of existing high cost term debt of the company and General Corporate Purposes. The Main Object Clause of the Memorandum of association of the Company enables it to undertake the activities for which the funds are being raised through the present issue and also the activities which the Company has been carrying on till date. The proceeds of this Issue after meeting all expenses of the Issue will be used by the Company for meeting issue objects.

viii. A statement containing particulars of the dates of, and parties to all material contracts,

agreements involving financial obligations of the issuer Copies of the contracts and documents, referred to below, may be inspected at the Registered

Office of the Company between 10.00 a.m. and 12.00 noon on any working day (Monday to Friday) until the date of closing of the issue.

Sr. No. Nature of Contract

1 Certified copy of the Memorandum & Articles of Association of the Company, as amended from time to time.

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2. Certified true copy of the resolution passed by the Board of Directors at the meeting held on 5th September ,2009 approving issue of NCD amounting to Rs 150 Cr. on private placement basis.

3. Certified true copy of the resolution passed by the Members of the Company at the Annual General Meeting held on 27th September ‘2008 under section 293(1)(d) of the Companies Act, 1956

4. Copies of Annual Reports of the Company for the last five financial years.

5. Credit rating letter from FITCH Ratings

6. Letter from IDBI Trusteeship Services Limited giving its consent to act as Debenture Trustees

7. Certified true copy of the Resolution of the Members of the Company passed at the Annual General Meeting appointing M/s Doogar & Associates and M/s S. S. Kothari Mehta & Company as statutory auditors of the Company.

8. Copy of tripartite agreement between the Company, MCS Limited and National Securities Depository Limited.

9. Copy of tripartite agreement between the Company, MCS Limited and Central Depository Services (India) Limited.

ix. Details of other borrowings including any other issue of debt securities in past as on

September 30, 2009; (A) Secured term loans

(Rs. Cr.)

Existing Name of bank/ institution Sanctioned Outstanding

Punjab National Bank 100 56.25

IDBI Bank 100 55.8

Canara Bank 50 37.5

Kotak Mahindra Bank 30 30.0

DEG, Germany 20 8.00

LBBW, Germany 20 4.80

Total 320 192.35

Term Loans from Financial Institutions and Banks are secured by way of joint equitable mortgage of all the immoveable properties (Present & future) or graphite and thermal, & Power units and Hydel unit of the company situated at Mandideep, and Tawanagar respectively ranking on pari-passu basis and hypothecation of all moveable asserts of the company (except book debts) subject to prior charge of the Company’s Bankers on specified movable assets in respect of Working Capital borrowings.

(B): WORKING CAPITAL FACILITIES (INR CR)

Existing

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Funded Non Funded Name of bank/ institution

Sanctioned

Outstanding

Sanctioned

Outstanding

Total

Sanctioned

State Bank of India 430.0 308.0 160.0 590.0

IDBI Bank 50.0 - 20.0 - 70.0

Punjab National Bank 40.0 19.7 - - 40.0

Standard Chartered Bank 20.0 9.9 20.0 - 40.0

HSBC 30.0 9.1 - - 30.0

Central Bank of India 20.0 - - - 20.0

HDFC Bank 10.0 - - - 10.0

State Bank of India^ 40.0 40.0 40.0

Deutsche Bank^ 40.0 40.0 - - 40.0

Kotak Mahindra Bank^ 35.0 35.0 - - 35.0

HDFC Bank^ 20.0 20.0 - - 20.0

Barclays Bank^ 20.0 14.0 - - 14.0

- - - - -

Total 709.0 455.7 200.0 153.0 949.0

^ Unsecured short term borrowings, out of consortium * Existing banking arrangement of customer: Consortium Working capital borrowings from Banks are secured by hypothecation of all stocks present & future, stores, spare parts, packing materials, raw materials, finished goods, goods in transit/ process, book debts outstanding monies receivable, claims, bills etc and second charge by way of joint equitable mortgage of immovable properties of the company in respect of graphite & thermal power units at Mandideep, and hydel unit at Tawanagar. ( C): FCCB: HEG had issued 1% FCCB of USD 28.75 MM in July 2005 with a conversion price of 192.06, due in 2010. USD 17.70 MM worth of debt has already been converted into equity early during FY08 . FCCB of face value of USD 3 million have been bought back in Financial Year 2008-2009 and balance USD8.05 Mn (equivalent to INR 3873 Mn) is outstanding as on date. (D) : Commercial Papers: HEG had commercial paper of INR 400 MM outstanding on 30-Sep-2009 (E): Non Convertible Debentures: HEG has placed NCD for INR 500 MM with LIC of India for a period of 3 years.

FINANCIAL INDICATORS

a) Profit and loss and Balance Sheet (Rs. Crores)

FINANCIAL PARAMETERS 31/03/07 31/03/08 31/03/09

Auditors Report Unqualified Unqualified Unqualified

Profit and Loss:

Net Sales 817.90 946.00 1,029.00

EBITDA 193.75 302.87 376.10

Depreciation 47.60 45.10 45.60

Financial Expenses 46.05 50.57 66.74

PBT (after exceptionals) 100.10 207.20 161.40

PAT 73.90 146.40 107.00

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Net Cash Accruals 113.00 117.30 122.90

Balance Sheet:

WC/ST Debt 371.90 496.23 556.60

Long Term debt 423.80 94.10 171.60

Total Outstanding Liabilities (TOL) 1,002.90 835.8 1022.00

Tangible Net Worth(TNW) 441.7 618.8 668.50

Current Assets, Loans & Advances 711.68 817.0 907.30

Current Liabilities & Provision 596.00 692.6 767.37

Net Fixed Assets(inc cwip) 673.00 605.23 698.25

Interim performance

(Rs. Crores)

Interim Performance

Interim Performance

Financial Parameters

(H1 FY10) (H1 FY09)

Net Sales 505.30 532.70

EBITDA 180.9 141.2

Depreciation 25.40 22.20

Interest Expenses 34.00 25.90

PBT 121.50 93.20

PAT 86.10 61.00

EBITDA Margins (%) 35.8% 26.5%

x. Any material event/ development or change at the time of issue or subsequent to the issue

which may affect the issue or the investor’s decision to invest / continue to invest in the debt securities.

Other than details given in the Disclosure Document there is no material event/development or change at the time of issuance of this document which may affect the issue or the investor’s decision to invest/ continue to invest in the debt securities.

xi. Particulars of the debt securities issued (i) for consideration other than cash, whether in

whole or part, (ii) at a premium or discount, or (iii) in pursuance of an option.

The Issuer Company has not issued any debt securities for consideration other than cash, at premium, or at discount. The details of the FCCB’s issued are provided in the section IV titled Brief History of Issuer Company since incorporation and changes in Capital Structure.

xii. A list of highest ten holders of each class or kind of securities of the issuer as on the date of

application along with particulars as to number of shares or debt securities held by them and the address of each such holder.

The Top ten largest equity shareholders of the Company as on March 31, 2009:

Sr.No. Name and address of the Shareholders No of shares % to Capital

1 Norbury Investments Ltd. 5362991 12.53

2 Microlight Investments Ltd. 4665579 10.90

3 Bharat Investments Growth Ltd. 2609598 6.10

4 Life Insurance Corporation of India 3433294 8.02

5 Mekima Corporation 1789537 4.18

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6 Raghav Commercial Ltd. 1272371 2.97

7 RSWM Ltd. 978000 2.28

8 Deutsche Securities Mauritius Ltd. 1168693 2.73

9 LNJ Financial Services Ltd 935173 2.18

10 GPC Mauritius II LLC 2893888 6.76

xiii. An undertaking that the issuer shall use a common form of transfer The company has been issuing debentures in Demat form only and there are no physical

holdings. However the Company would use a common transfer form for physical holdings if at a later stage there is some holding in physical form due to the depository giving the re-materialization option to any investor.

xiv. Redemption amount, period of maturity, yield on redemption

Redemption Amount Rs 100.00 Crores (at par)

Tenor Option I: 2 years (Rs. 50 crores)

Option II: 3 years (Rs. 50 crores)

Redemption At par at the end of 2rd Year for Option I

At par at the end of 3rd Year for option II

Coupon/Interest Rate Option I: 8.50% p.a

Option II: 8.90% p.a

xv. Information relating to the terms of offer or purchase

Amount Rs. 100 crores

Face Value Rs 10,00,000 /- per debenture

Interest Option I: 8.50% p.a

Option II: 8.90% p.a

Tenor Option I: 2 years (Rs. 50 crores)

Option II: 3 years (Rs. 50 crores)

Interest payable Annually

Security To be secured by first pari passu charge on Fixed Assets of the company with a minimum asset coverage ratio of 1.25 times.

The Debentures together with interest payable in respect thereof shall be secured by a first pari passu charge on Fixed Assets of the Company in favour of the Trustees for the Debentureholders (the ‘Debenture Trustee), The Company will create the security for the Debentures within 3 months from the deemed date of allotment. In the event of the Company not creating the security within 3 months from the deemed date of allotment, it shall pay interest at the rate of 2% p.a. over and above the coupon applicable on these debentures. Such additional interest shall be payable from the expiry of 3 months from the deemed date of allotment till creation of such security.

Redemption At par at the end of 2rd Year for Option I

At par at the end of 3rd Year for option II

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Issue opening date

December 8, 2009

Issue closing date December 14, 2009

Deemed date of allotment

December 17, 2009

Listing The Debentures of the Company would be listed on the Wholesale Debt Market (WDM)

segment of the Bombay Stock Exchange Limited (BSE). The company shall comply with the requirements of the listing agreement to the extent applicable to it on a continuous basis.

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Who can Invest The following categories of investors, when specifically approached, are eligible to apply for this private placement of Debentures

1. Companies and Bodies Corporate including Public Sector Undertakings; 2. Commercial Banks; 3. Regional Rural Banks; 4. Financial Institutions; 5. Insurance Companies; 6. Mutual Funds; 7. Any other investor authorised to invest in these Debentures.

All investors are required to comply with the relevant regulations/guidelines applicable to them for investing in this issue of Debentures.

Procedure for applications by Mutual Funds and Multiple Applications The applications forms duly filled shall clearly indicate the name of the concerned scheme for which application is being made and must be accompanied by certified true copies of:

• SEBI registration certificate

• Resolution authorizing investment and containing operating instructions

• Specimen Signature of authorized signatories

Documents to be provided by investors Investors need to submit the following documentation, along with the application form, as applicable:

• Memorandum and Articles of Association/ Documents Governing Constitution;

• Resolution authorizing investment;

• Certified True Copy of the Power of Attorney;

• Form 15 AA for investors seeking exemption from Tax deduction at source from interest on the application money;

• Specimen signatures of the authorised signatories duly certified by an appropriate authority;

• SEBI Registration Certificate (for Mutual Funds);

• PAN to be submitted.

How to Apply This being a Private Placement Offer, Investors who are established/ resident in India and who have been addressed through this communication directly only are eligible to apply.

All Application Forms, duly completed, together with cheque/ demand draft for the amount payable on application must be delivered before the closing of the issue, at any of the designated collection centres or to the Lead Arrangers to the Issue.

Applications should be for a minimum of 5 Debenture and in multiples of 1 Debenture thereafter. All cheques/ demand drafts should be in favour of “HEG Limited" and crossed “Account Payee Only”. The entire amount of Rs. 10,00,000/- (Rs. Ten Lacs only) per Debenture is payable on application. Alternatively, investors can remit their application money through RTGS to HEG Limited RTGS Account as detail given below:

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Account Name : HEG LIMITED Name of Bank & Address : STATE BANK OF INDIA

COMMERCIAL BRANCH BHOPAL

IFSC Code No. : SBIN0001920 Account No. : 10170392779 Applications for the Debentures must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in English and as per the instructions contained therein. Applications complete in all respects (along with all necessary documents as detailed in this Disclosure Document) must be submitted before the last date indicated in the issue time table or such extended time as decided by the Company, at any of the designated collection centres, accompanied by the subscription amount by way of cheque(s)/ demand draft(s) drawn on any bank including a co-operative bank which is situated at and is a member of the Bankers’ clearing house located at a place where the application form is submitted. Outstation cheque(s)/ Bank draft(s) drawn on Bank(s) not participating in the clearing process at the designated clearing centres will not be accepted. Money orders/ postal orders will also not be accepted. The Company assumes no responsibility for any applications/ cheques/ demand drafts lost in mail. No separate receipt will be issued for the application money. However, the Company’s designated collection branches or Arranger(s) receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the Acknowledgment Slip at the bottom of the each Application Form. As a matter of precaution against possible fraudulent encashment of interest warrants/ cheques due to loss/ misplacement, the applicant should furnish the full particulars of his or her bank account (i.e. Account Number, name of the bank and branch) at the appropriate place in the Application Form. Interest warrants will then be made out in favour of the bank for credit to his/ her account so specified and despatched to the investors, who may deposit the same in the said bank. Mode of Payment The full face value of the Debentures applied for is to be paid alongwith the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s)/ RTGS for the full face value of the Debentures applied for.

Face Value per Debenture Minimum Application for Amount Payable on

Application per Debenture

Rs. 10,00,000/- 5 Debenture and in multiples of 1 Debenture thereafter

Rs. 10,00,000/-

Effect of Holidays Should any of the dates defined above or elsewhere in this Schedule other than the deemed date of allotment, fall on a Saturday, Sunday or a public holiday, the next day (working day/business day) shall be considered as the effective date(s). Interest on Application Money Interest at the coupon rate (subject to deduction of income tax under the provisions of the

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Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Debentures. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s)/ RTGS upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on an Actual/ 366 day basis. Such interest would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid alongwith the Refund Orders. Where an applicant is allotted lesser number of Debentures than applied for, the excess amount paid on application will be refunded to the applicant alongwith the interest on refunded money. The interest cheque(s)/ demand draft(s) for interest on application money (alongwith Refund Orders, in case of refund of application money, if any) shall be dispatched by the company within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) alongwith the Refund Order(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant. Payment of Interest Interest for each of the interest periods shall be computed on an actual-by-365 days a year basis on the principal outstanding on the Debentures at the Coupon rate. If the interest period from start date to end date includes February 29, then interest shall be paid on the basis of (End Date-Start Date)/366. Computation of Interest Interest for each of the interest periods shall be calculated, on 'actual/ 365 (366 in case of a leap year) days' basis, on the face value of principal outstanding on the Debentures at the coupon rate rounded off to the nearest Rupee. Tax Deduction at Source Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. For seeking TDS exemption/lower rate of TDS, relevant certificate/ document must be lodged by the Instrument Holders at the registered office of the Company at least 30 days before the interest payment becoming due and if required, be submitted a fresh annually and/or as and when called upon for the same by the Company. Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application money, should be submitted along with the application form. Failure to comply with the above shall entitle the Company to deduct tax at source as may be advised to it. Date of Allotment The Date of Allotment for the issue is 17th December 2009. Letter(s) of Allotment/Debenture Certificate(s)/Refund Order(s) Issue of Letter(s) of Allotment The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 15 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Debenture Certificate. Issue of Debenture Certificate(s) Subject to the completion of all statutory formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the appropriate authority(ies), the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Debentures allotted. The Debentures since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996,

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Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof. Depository Arrangements The Company has appointed “MCS Limited” (hereinafter referred to as the ‘Registrars’/ ‘RTA) Shri Venktesh Bhawan, W-40, Okhla Industrial Area, Phase-II, New Delhi – 110 020. Tel No. (011) 26384909, 26384910 Fax No. 91-11- 26384907 E-mail: [email protected] as Registrars & Transfer Agent for the present Debenture Issue. The Company shall make necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of Debentures in dematerialised form. In this context the company has signed two tripartite agreements as under: a. Tripartite Agreement between HEG Limited, MCS Limited and National Securities

Depository Limited (NSDL) for offering depository option to the investors. b. Tripartite Agreement between HEG Limited, MCS Limited and Central Depository Services

(India) Limited (CDSL) for offering depository option to the investors. Investors can hold the Debentures only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time. Procedure for applying for Demat Facility

• The applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application.

• The applicant must necessarily fill in the details (including the beneficiary account number and Depository Participant’s ID) appearing in the Application Form under the heading ‘Details for Issue of Debentures in Electronic/ Dematerialised Form’.

• Debentures allotted to an applicant will be credited directly to the applicant’s respective Beneficiary Account(s) with the DP.

• For subscribing the Debentures, names in the application form should be identical to those appearing in the account details in the depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the depository.

• The Registrars to the Issue will directly send non-transferable allotment advice/refund orders to the applicant.

• If incomplete/ incorrect details are given under the heading ‘Details for Issue of Debentures in Electronic/ Dematerialised Form’ in the application form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the company.

• For allotment of Debentures, the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any.

• It may be noted that Debentures being issued in electronic form, the same can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. National Stock Exchange of India Limited where the Debentures of the company are proposed to be listed has connectivity with NSDL and CDSL.

• Interest or other benefits would be paid to those Debentureholders whose names appear on the list of beneficial owners given by the Depositories to the company as on Record Date/ Book Closure Date. In case of those Debentures for which the beneficial owner is not identified by the Depository as on the Record Date/ Book Closure Date, the company would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to the company, whereupon

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the interest or benefits will be paid to the beneficiaries, as identified, within a period of 30 days.

Market Lot The market lot will be one Debenture (“Market Lot”). Since the Debentures are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of Debentures. Trading of Debentures The trading of Debentures would be permitted in demat mode only in standard denomination of Rs. 10,00,000/- in the anonymous, order driven system of the stock exchanges in a separate trading segment. The marketable lot would be Rs. 10,00,000/-. All class of investors would be permitted to trade subject to the standard denomination/ marketable lot. The trades executed on spot basis shall be required to be reported to the stock exchange(s). Mode of Transfer of Debentures Debentures shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Debentures held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. Transfer of Debentures to and from NRIs/ OCBs, in case they seek to hold the Debentures and are eligible to do so, will be governed by the then prevailing guidelines of RBI. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Company. Right to Accept or Reject Applications The Company reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The application forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Number of Debentures applied for is less than the minimum application size; b. Applications exceeding the issue size; c. Bank account details not given; d. Details for issue of Debentures in electronic/ dematerialised form not given; PAN/GIR and

IT Circle/Ward/District not given; e. In case of applications under Power of Attorney by limited companies, corporate bodies,

trusts, etc. relevant documents not submitted; In the event, if any Debenture(s) applied for is/ are not allotted in full, the excess application monies of such Debentures will be refunded, as may be permitted. PAN/ GIR Number All applicants should mention their Permanent Account Number or the GIR Number allotted under Income Tax Act, 1961 and the Income Tax Circle/ Ward/ District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided.

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Record Date / Book Closure Date Falling on Sunday / Holiday The ‘Record Date/ Book Closure Date’ for the Debentures shall be 30 days prior to each interest payment and/ or principal repayment date (in case of exercise of call option). In case record date / book closure date falls on Sunday / Holiday, the day prior to the said Sunday / Holiday shall be the record date / book closure date. Payment on Redemption The payment of the redemption amount of the Debentures will be made by the Company to the beneficiaries as per the beneficiary list provided by the depository as on the record date. The Debentures held in the Dematerialised Form shall be taken as discharged on payment of the redemption amount by the Company on maturity to the registered Debentureholders whose name appears in the Register of Debentureholders on the record date. Such payment will be a legal discharge of the liability of the Company towards the Debentureholders. On such payment being made, the Company will inform NSDL/CDSL and accordingly the account of the Debentureholders with NSDL /CDSL will be adjusted. The Company's liability to the Debentureholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due dates of redemption in all events. Further the Company will not be liable to pay any interest or compensation from the dates of such redemption. On the Company dispatching the amount as specified above in respect of the Debentures, the liability of the Company shall stand extinguished. Purchase and Sale of Debentures The Company may, at any time and from time to time, purchase Debentures at the price available in the debt Market in accordance with the applicable laws. Such Debentures may, at the option of the Company, be cancelled, held or reissued at such a price and on such terms and conditions as the Company may deem fit and as permitted by law. Re-issue of Debentures Where the Company has redeemed any such Debentures, subject to the provisions of Section 121 of the Companies Act and other applicable provisions, the Company shall have and shall be deemed always to have had the right to keep such Debentures alive for the purpose of reissue and in exercising such right, the Company shall have and shall be deemed always to have had the power to re-issue such Debentures either by re-issuing the same Debentures or by issuing other Debentures in their place. List of Beneficial Owners The Company shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be. Succession In the event of the demise of the sole/first holder of the Debenture(s) or the last survivor, in case of joint holders for the time being, the Company will recognize the executor or administrator of the deceased Debentureholder, or the holder of succession certificate or other legal representative as having title to the Debenture(s). The Company shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Company may, in its absolute discretion, where it

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thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debenture(s) standing in the name of the deceased Debentureholder on production of sufficient documentary proof or indemnity. Where a non-resident Indian becomes entitled to the Debenture by way of succession, the following steps have to be complied with: a. Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the

Debenture was acquired by the NRI as part of the legacy left by the deceased holder. b. Proof that the NRI is an Indian National or is of Indian origin. Such holding by the NRI will be on a non-repatriation basis. Signatures Signatures should be made in English and in any of the Indian Languages. Thumb impressions must be attested by an authorized official of a Bank or by a Magistrate/ Notary Public under his/her official seal. Nomination Facility As per Section 109 A of the Companies Act, 1956, only individuals applying as sole applicant/ Joint Applicant can nominate, in the prescribed manner, a person to whom his Debentures shall vest in the event of his death. Non-individuals including holders of Power of Attorney can not nominate. Debentureholder not a Shareholder The Debentureholders will not be entitled to any of the rights and privileges available to the shareholders. If, however, any resolution affecting the rights attached to the Debentures is placed before the members of the Company, such resolution will first be placed before the Debentureholders for their consideration. Modification of Rights The rights, privileges, terms and conditions attached to the Debentures may be varied, modified or abrogated with the consent, in writing, of those holders of the Debentures who hold at least three fourth of the outstanding amount of the Debentures or with the sanction accorded pursuant to a resolution passed at a meeting of the Debentureholders, provided that nothing in such consent or resolution shall be operative against the Company where such consent or resolution modifies or varies the terms and conditions of the Debentures, if the same are not acceptable to the Company. Future Borrowings The Company shall be entitled from time to time to make further issue of Debentures to the public, members of the Company and /or any other person(s) and to raise further loans, advances or such other facilities from Banks, Financial Institutions and / or any other person(s) on the security or otherwise of its assets. Debenture Redemption Reserve The Government of India, Ministry of Company Affairs has vide General Circular No. 6/3/2001-CL.V dated April 18, 2002 issued by the Government of India with respect to creation of Debenture Redemption Reserve, for manufacturing and infrastructure companies, the adequacy of DRR is defined at 25% of the value of debentures issued through private placement route. In terms of extant provisions of Companies Act, 1956, the Company is required to create Debenture Redemption Reserve out of profits, if any, earned by the company. The company shall create a Debenture Redemption Reserve (‘DRR’) and credit to the DRR such amounts as applicable under provisions of Section 117C of the Companies Act 1956 (as amended from time to time) or any other relevant statute(s), as applicable.

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Notices All notices required to be given by the Company or by the Trustees to the Debentureholders shall be deemed to have been given if sent by ordinary post/ courier to the original sole/ first allottees of the Debentures and/ or if published in one All India English daily newspaper and one regional language newspaper. All notices required to be given by the Debentureholder(s), including notices referred to under “Payment of Interest” and “Payment on Redemption” shall be sent by registered post or by hand delivery to the Company at its corporate office Bhilwara Towers, A-12, Sector-1, Bhilwara Towers, Noida – Uttar Pradesh (201301) or to such persons at such address as may be notified by the Company from time to time. Governing Law The Debentures are governed by and shall be construed in accordance with the Indian laws. Any dispute arising thereof will be subject to the jurisdiction at the city of NOIDA (U.P.). Consents Consents in writing of the Registrar of issue and Trustees for the Debentureholders to act in their respective capacities, have been obtained. Underwriting of the issue The Issue of Debentures has been underwritten by YES BANK Limited. Tax Benefits A Debentureholder is advised to consider in his own case the tax implications in respect of subscription to the Debentures after consulting his tax advisor. COMPLIANCE OFFICER Mr. Ashish Sabharwal Bhilwara Towers, A-12, Sector 1, Noida-201301 (India) Tel.: (0120) 2541810, Fax: 91-0120-2531648 E-Mail: [email protected], Website: www.hegltd.com The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ Debenture certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. STATUTORY AUDITORS M/s Doogar & Associates Chartered Accountants 13, Community Center, East of Kailash, New Delhi-110065 Tel No. (011)26472557,26419079 Fax No.(011) 26219491.

M/s S. S. Kothari Mehta & Company Chartered Accountants 146-149 Tribhuvan Complex Ishwar Nagar, Mathura Road, New Delhi-110065. Tel No. (011) 66628892. Fax No.(011)23731631

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CREDIT RATING AGENCY Fitch Ratings India Private Limited Apeejay House, 6th Floor, 3, Dinshaw Vachha Road, Churchgate, Mumbai – 400 020. Tel No. (022) 40001700 Fax No. (022) 40001701 BANKERS TO THE ISSUE State Bank of India Commercial Branch, Bhopal Madhya Pradesh REGISTRAR TO THE ISSUE MCS Limited F-65, First Floor, Okhla Industrial Area, Phase-I, New Delhi – 110 020. Tel No. (011) 41406149, 41406152, Fax No. 91-11- 26384907 E-mail: [email protected] TRUSTEE TO THE ISSUE IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17,R.Kamani Marg, Ballard Estate, Mumbai-400001.. Tel No. (022) 40807000, Fax No. 91-22-66311776/22625247 E-mail: [email protected]

xvi. The discount at which such offer is made and the effective price for the investor as a result of such discount.

The debentures are being issued at the face value and not at discount to offer price.

xvii. The debt equity ratio prior to and after issue of the debt security as on September 30, 2009:

Prior to Issue After the Issue*

Debt Equity Ratio 0.42 0.42

*As the proceeds for the proposed NCD are likely to be used for repayment of old term loans, the debt-equity ration is not likely to change.

xviii. Servicing behavior on existing debt securities, payment of due interest on due dates on term loans and debt securities.

The payment of interest & repayment of principal is being done in a timely manner on the respective due dates.

xix. Permission and consent from the creditors

The Debentures together with interest payable in respect thereof shall be secured by a first pari passu charge on Fixed Assets of the Company in favour of the Trustees for the

Debentureholders (the ‘Debenture Trustee’ or the ‘Trustee’),

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The Company will create the security for the Debentures within 3 months from the deemed date of allotment. In the event of the Company not creating the security within 3 months from the deemed date of allotment, it shall pay interest at the rate of 2% p.a. over and above the coupon applicable on these debentures. Such additional interest shall be payable from the expiry of 3 months from the deemed date of allotment till creation of such security. On creation of the security, the Debentures will have a security cover of not less than 1.25 times of the total amount outstanding on the Debentures

The Company shall procure consent from the existing charge holders for creation of security for the Debentures on pari-passu basis. The Trustee shall in future provide consent to create pari-passu charge subject to the Issuer Company complying with the requisite terms of the debentures issued.

xx. The names of the debenture trustee(s) shall be mentioned with a statement to the effect

that debenture trustee(s) has given his consent to the issuer for his appointment under regulation 4 (4) and also in all the subsequent periodical communications sent to the holders of debt securities.

The debenture trustee of the proposed debenture is:

IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17,R.Kamani Marg, Ballard Estate, Mumbai-400001.. Tel No. (022) 40807000, Fax No. 91-22-66311776/22625247 E-mail: [email protected]

Consent letter from Debenture Trustee is attached

xxi. The rating rationale (s) adopted by the rating agencies shall be disclosed

FITCH has assigned “AA-(ind)/ (Stable)” (pronounced “Double A minus ind with stable outlook”) rating to these Debentures. Credit Rating Rationale from Fitch is attached.

xxii. Names of all the recognised stock exchanges where securities are proposed to be listed

clearly indicating the designated stock exchange and also whether in principle approval from the recognised stock exchange has been obtained.

The securities are proposed to be listed with Designated Stock Exchange:

BOMBAY STOCK EXCHANGE LIMITED Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001. Tel No.: 022-22721233/4, Fax No..: 022-22721919. Website: www.bseindia.com

The Company has applied for obtaining in principle approval from the stock exchanges

Rating AA-(ind) by FITCH

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xxiii. Summary Term Sheet

Issuer HEG Limted

Instrument Secured, Redeemable, Non Convertible Debentures

Face Value Rs 10,00,000 /- per debenture

Issue Size Rs. 100 crores

Tenor 2 years 3 years

Coupon Rate 8.50% p.a. 8.90% p.a.

Interest Payment Annually

Interest Payment Dates Annually from the Deemed Date of Allotment

Redemption Bullet, At par

Redemption Date At the end of 2 years from the Deemed Date of Allotment

At the end of 3 years from the Deemed Date of Allotment

Interest on Application Money At coupon rate from the date of credit in Company’s account till the day prior to the date of allotment

Put/Call Option N.A.

Rating AA-(ind) by Fitch

Security To be secured by first pari passu charge on Fixed Assets of the company with a minimum asset coverage ratio of 1.25 times. The security to be created within 90 days from date of allotment.

Trustees IDBI Trusteeship Services Ltd

Registrar & Transfer Agent MCS Limited

Form Of Issuance Demateralised

Listing On the Wholesale Debt Market (WDM) segment of the Bombay Stock Exchange Limited (BSE)

Issue Opening Date December 8, 2009

Issue Closing Date December 14, 2009

Deemed Date of Allotment December 17, 2009

for HEG Limited

(Manvinder Singh Ajmani) Chief Financial Officer

Place: NOIDA Date: