KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

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Price trend Sponge iron prices primarily depend on: · Scrap prices, as scrap can be substituted to an extent to manufacture steel · Demand for steel · Prices of iron ore and coal, as they are the key inputs in the manufacture of sponge iron. Higher scrap prices may lead to increased usage of sponge iron in the input mix of the secondary route of steel making. The buoyancy in the steel industry has resulted in scrap prices touching an all time high of 300-325 USD/ MT. The Indian market (a) Demand The demand for sponge iron in India has been growing at 8.25% CAGR over the last eight years (1996-2004). The demand has been primarily driven by the following factors: · Increase in steel production via the secondary route accounting for 42-43% of the total steel output. This is expected to grow further due to shortage of coking coal, a key raw material for steel making via the primary route based on blast furnace. · Proportion of sponge iron in secondary production is also likely to go up, with low domestic availability and high international prices of scrap, a marginal substitute for sponge iron. · Availability of scrap will be constrained in the context of regulations relating to imports of low quality scrap to India. Indian Sponge Iron Demand (Mn Tonnes) (b) Supply India has emerged as the top most sponge iron producing country on the supply front in the last few years. Indian Sponge Iron Production (Mn Tonnes) (c) Outlook 1. Sponge Iron is an attractive investment option since entry barriers are very low with short gestation periods, low initial capital, indigenous technology and equipments, an assured market, early payback, a modular system and an excellent growth potential. On the other hand, demand for sponge iron is expected to create an incremental demand of 1.3 Mn tonnes compared to 2.5 Mn tonnes of capacity additions. Thus, industry fundamentals of the sponge iron industry are expected to weaken over a few years, after which it would consolidate and stabilize at a higher level. 2. As per industry analysts, the upturn in the global sponge iron industry is expected to continue and is pegged to grow at a CAGR of 6-7%. This growth is at a back of an increase in steel production and continuous substitution in demand for scrap. 3. Significant additions in capacities are expected with a buoyant demand scenario. However, all capacities generated will not be able to function at an optimum operating rate due to scarcity of iron ore and coal. As per industry estimates, the Indian coal requirement for 2004-05 was approximately 405 Mn tonnes against the availability of 370 Mn tonnes. As a result, the players are forced to use E and F grade of coal, resulting in lower yield. Therefore, players with captive raw material sources would emerge successful in long run. Since sponge iron substitutes scrap, scrap prices work as a cap for sponge iron prices. Unavailability of scrap globally and import restrictions would maintain the prices of scrap at higher levels, resulting in increased sponge iron prices. 36
III. Flat Products Flat products include slabs, plates, hot rolled sheets, hot rolled coil and strips. Flat products have applications in various domains such as: Architecture, Building and Construction Oil & gas industries Ship Building Industry Automotive Power Generation, transmission Manufacture of LPG cylinders Chemical, processing Railway wagons Equipment Manufacturers and white goods The very nature of flat products and the industry segments in which it is applied makes it very volatile and prone to price and demand fluctuations. Industry segments like Automobiles and White Goods are very dependent and directly proportional to prevailing economic conditions i.e. if the economy is in recession, these industry segments also go through declining sales and profits. In the same way, they are in great demand when the economy is on a bull run. India and China are prime examples of this phenomenon. IV. Long Products Introduction Long products are made by using billets and blooms. These include rods, bars, pipes, ropes, wires, angles, channels, and beams used by the housing/construction sector. Long products are made from mild steel that contains less than 0.25% carbon. Then refined metal in molten form is solidified into billets. These billets are then re-rolled into long products like bars, and rods. Demand for steel billets is directly linked with demand for bars and wire rods. Most long products find use in infrastructure development – in the construction of roads, dams or housing. There is a growing demand for long products given the thrust on developing infrastructure. Golden Quadrilateral, a project undertaken by GoI has pushed demand for long products. Also, transportation is an important cost in the final delivery of long products. Demand for long products is largely dependent on the development of infrastructure in a region. Economic growth of the regions is dependent on the industrialization and urbanization trends in the region. Demand for bars and rods rose from 9.483 Mn in FY02 to 11.41 Mn in FY05. As per CRIS INFAC, the domestic demand is estimated to increase at 6% CAGR in FY06-10. Demand Drivers As per CRIS INFAC, the demand for long products is expected to be driven by buoyant construction activity. CRIS INFAC expects construction investment to increase by 11% over the tenth 5-year plan. Several projects with huge investment have been planned in more sectors. The key growth drivers for the construction industry will be housing, roads and bridges etc. Long Products: Demand (‘000 Bars and Growth Structurals Growth Railway Growth Growth tonnes) roads (per cent) (per cent) materials (per cent) Total (per cent) 1990-91 5494 - 1719 - 569 - 7782 - 1991-92 5699 3.7 1708 -1 652 14.6 8059 3.6 1992-93 5559 -2.5 1926 13 597 -8.4 8062 0.3 1993-94 5780 4.0 1925 0 590 -1.2 8295 2.6 1994-95 6589 14.0 2062 7 587 -0.5 9238 11.4 1995-96 7152 8.5 2422 17 594 1.2 10168 10.1 1996-97 7619 6.5 2551 5 634 6.7 10804 6.3 1997-98 7588 -0.4 2720 7 615 -2.9 10924 1.1 1998-99 7756 2.2 2710 0 555 -9.9 11020 0.9 1999-00 8407 8.4 2609 -4 562 1.3 11578 5.1 2000-01 9268 10.2 2460 -6 614 9.3 12342 6.6 2001-02 9483 2.3 2319 -6 703 14.4 12505 1.3 2002-03 10263 8.2 2369 2 884 25.7 13516 8.1 2003-04E E: Estimate 10626 3.5 3041 28 929 5.1 14596 8.0 Source: CRIS INFAC 37
Page 1 and 2: KAMDHENU ISPAT LIMITED DRAFT PROSPE
Page 3 and 4: DEFINITIONS AND ABBREVIATIONS Gener
Page 5 and 6: Abbreviations Abbreviation Full For
Page 7 and 8: RISK FACTORS An investment in equit
Page 9 and 10: mentioned under Class 1 to 42 cover
Page 11 and 12: (b) Any disruption/ discontinuance
Page 13 and 14: affect our operating results. We ar
Page 15 and 16: The central and state tax scheme in
Page 17 and 18: SUMMARY The following summary is qu
Page 19 and 20: THE ISSUE Equity Shares offered by
Page 21 and 22: of the Stabilisation Period allot,
Page 23 and 24: For the year ended August March Mar
Page 25 and 26: LEGAL ADVISOR TO THE ISSUE Luthra &
Page 27 and 28: 2. Capital Buildup: The existing sh
Page 29 and 30: B. Promoter Group 1. Saurabh Agarwa
Page 31 and 32: Sl. Name of Date of Consid- No. of
Page 33 and 34: Sl. Name of Date of Consid- No. of
Page 35 and 36: 7. The Pre-issue and Post-issue sha
Page 37 and 38: (b) Our top ten shareholders and sh
Page 39 and 40: OBJECTS OF THE ISSUE The proceeds f
Page 41 and 42: BASIS FOR ISSUE PRICE QUALITATIVE F
Page 43 and 44: STATEMENT OF TAX BENEFITS The Compa
Page 45 and 46: loss, such long -term capital loss
Page 47 and 48: Benefit available to Mutual Funds I
Page 49 and 50: Restrictions in external trade, bot
Page 51: to compete with the likes of China,
Page 55 and 56: · In China and other Asian countri
Page 57 and 58: BUSINESS OVERVIEW Kamdhenu Ispat Li
Page 59 and 60: PROCESS PROCESS FLOW CHART FOR PROD
Page 61 and 62: POWER The Company sources Power fro
Page 63 and 64: The sponge iron is one of the raw m
Page 65 and 66: We help them to get right people to
Page 67 and 68: 23. A.S. CEMENT INDUSTRIES, Patiala
Page 69 and 70: PROPERTY A. Properties owned by the
Page 71 and 72: S No. 6. 7. 8. Date & Tenure Name &
Page 73 and 74: OUR INDEBTEDNESS Sr. No 1 Lender &
Page 75 and 76: Main Objects The main objects of th
Page 77 and 78: OUR MANAGEMENT As per the Articles
Page 79 and 80: C. MR. SUNIL KUMAR AGARWAL Designat
Page 81 and 82: Company Secretary Secretarial & Leg
Page 83 and 84: PROMOTERS OUR PROMOTERS MR. SATISH
Page 85 and 86: 2. and accessories, automobile part
Page 87 and 88: The Board of Directors Kamdhenu Isp
Page 89 and 90: Annexure - II Statement of Assets a
Page 91 and 92: 7 The company is manufacturing CTD/
Page 93 and 94: Annexure - VII Performance Ratios:
Page 95 and 96: Principal Terms of Sanctioned Loans
Page 97 and 98: Financial Statements of Group Compa
Page 99 and 100: The Board of Directors of the Compa
Page 101 and 102: List of Shareholders as on 30.9.200
Page 103 and 104:
MANAGEMENT’S DISCUSSION AND ANALY
Page 105 and 106:
DEPRECIATION Depreciation on fixed
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of excise duty was 8% thereafter up
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Administrative and Other Expenses W
Page 111 and 112:
Cost Of Goods Traded In The company
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Information required as per clause
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SL. NO. 5 6 7 8 9 10 11 12 ASSESSME
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3.2 CENTRAL EXCISE Commissioner of
Page 119 and 120:
4.2 M/s. Kamdhenu Ispat Limited vs.
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II Outstanding litigations involvin
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Sales Tax ASSESSMENT YEAR PARTICULA
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11. The Company has obtained consen
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BEHALF AND TOWARDS THIS PURPOSE, TH
Page 129 and 130:
Public Issue expenses are estimated
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ISSUE INFORMATION Terms of the Issu
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Applications by Hindu Undivided Fam
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Payment Instructions 1. Payments sh
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5. Investors can contact the Compli
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for public subscription and the bal
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POWER TO MODIFY RIGHT 11. (i) If at
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without any deduction or allowance
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there be no such Chairman or if at
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69. The Director shall not be requi
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fit and any such appointment may (i
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present and entitled to vote there
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MATERIAL CONTRACTS AND DOCUMENTS FO
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DECLARATION All the relevant provis
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KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

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