DCI-APPLICATION FORM-RESIDENT.pmd - Finapolis

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IN THE NATURE OF <strong>FORM</strong>2A - MEMORANDUM CONTAINING SALIENT FEATURES OF THE PROSPECTUS RISK FACTORS Prospective investors should carefully consider the risks and uncertainties described below, in addition to the other information contained in the Prospectus before making any investment decision relating to the Bonds. If any of the following risks or other risks that are not currently known or are now deemed immaterial, actually occur, our business, financial condition and result of operation could suffer, the trading price of the Bonds could decline and you may lose your all or part of your interest and / or redemption amounts. Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify or quantify the financial or other implications of any of the risks mentioned herein. The ordering of the risk factors is intended to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk factor over another. The Prospectus contains forward looking statements that involve risk and uncertainties. Our Company’s actual results could differ materially from those anticipated in these forward looking statements as a result of several factors, including the considerations described below and elsewhere in the Prospectus. Investors are advised to read the following risk factors carefully before making an investment in the Bonds offered in this Issue. You must rely on your own examination of our Company and this Issue, including the risks and uncertainties involved. Unless otherwise indicated, all financial and statistical data relating to the dredging industry in the following discussion are derived from the MoS, the GoI, the GoI’s Twelfth Five-Year Plan, and our internal operating data,. These data have been reclassified in certain respects for purposes of presentation. RISK RELATING TO OUR BUSINESS AND INDUSTRY 1. We are defendants in some legal proceedings and claims arising from tax and contract disputes that, if determined against us, could have a material adverse impact on our results of operations and financial condition. 2. Our performance is linked to the performance of the Indian economy and the dredging industry in India. 3. We are substantially dependent on maintenance dredging which comprised more than 75% of our dredging volumes in the period from fiscal 2009-10 to fiscal 2011-12. 4. About 55% of our income from operations is from the dredging work at Kolkata Port. 5. The age, capacity and other limitations of our fleet of dredgers and our limited auxiliary equipment may impact our ability to compete against international dredging companies in the Indian dredging market if we are unable to upgrade and expand our fleet. 6. Our business is subject to other operating risks such as environmental hazards, shortage of skilled manpower, foreign competition and risks inherent as well as ancillary to our operations 7. Although we insure against the risk of damage to our equipment, employees and third parties, we cannot be sure that actual liabilities will not exceed our insurance coverage. 8. We have limited experience in international dredging and are subject to risks related to our international operations. 9. Environmental matters could force us to incur significant capital and operational costs. 10. We operate in a competitive environment which may result in increased competitive pressure on our business. 11. Our failure to anticipate, or adapt our business to, customer requirements and the introduction of new dredging techniques in the dredging industry may adversely affect our business and our leadership position. 12. Our ability to reduce our repairs and maintenance costs is an essential part of our business strategy and we cannot assure you that our cost reduction measures will be successful. 13. Increases in the cost of fuels and lubricants may have a material adverse impact on our results of operations. 14. The GoI is a significant shareholder in our Company and has the ability to exercise significant control over us and its interests may conflict with your interests as a bondholder. 15. We are dependent on a limited number of suppliers for the supply of critical spare parts used in our operations and 93% of our spare parts consumed are imported which may result in additional expenses and affect the smoothfunctioning of our operations. 16. Our employees are represented by trade unions and any labor unrest could adversely affect our operations and profitability. 17. Our contingent liability could adversely affect our financial condition. RISKS RELATING TO THE INDIAN ECONOMY 18. Financial instability in other countries may cause increased volatility in Indian financial markets. 19. Our operations may be adversely affected by weather conditions and natural disasters and our business our future financial performance and the price of the Bonds may be adversely impacted. 20. We are subject to risks arising from exchange rate fluctuations. 21. Terrorist attacks and other acts of violence or war involving India, the United States, and other countries could adversely affect the financial markets, result in loss of customer confidence, and adversely affect our business, results of operations and financial condition. 22. Investors may have difficulty enforcing foreign judgments in India against the Company or our management. 38 DREDGING CORPORATION OF INDIA LIMITED
IN THE NATURE OF <strong>FORM</strong>2A - MEMORANDUM CONTAINING SALIENT FEATURES OF THE PROSPECTUS 23. Our growth depends on the sustained growth of the Indian economy. An economic slowdown in India and abroad could have a direct impact on our operations and profitability. 24. Political instability or changes in the government could delay further liberalization of the Indian economy and adversely affect economic conditions in India generally, which could impact our business. 25. Any downgrading of India’s sovereign rating by an international rating agency (ies) may affect our business and our liquidity to a great extent. 26. There may be less company information available in Indian securities markets than in securities market in other more developed countries. 27. The proposed new taxation system could adversely affect our business and the price of the Bonds. Risks Relating to the Bonds or this Issue 28. Changes in interest rates may affect the price of our Bonds. 29. There has been no prior public market for the Bonds and the same may not develop in future, therefore the price of the Bonds may be volatile. 30. The Bonds are classified as ‘tax free bonds’ eligible for tax benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961 up to an amount of interest on such bonds. 31. Any downgrading in credit rating of our Bonds may affect the value of Bonds and thus our ability to raise further debts. 32. There is no guarantee that the Bonds issued pursuant to this Issue will be listed on BSE in a timely manner, or at all. 33. There may be a delay in making refunds to applicants. 34. Payments made on the Bonds will be subordinate to certain tax and other liabilities as laid down by law. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts which are or may be deemed material have been entered or are to be entered into by the Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at Core-2,1st Floor, ‘Scope Minar’, Plot No.2A & 2B, Laxmi Nagar Dist. Centre, Delhi-110091, India from 10.00 AM to 5 P.M on any business days from the date of the Prospectus until the date of closure of the Issue. DECLARATION We, the Directors of the Dredging Corporation of India Limited, certify that all applicable legal requirements in connection with the Issue, including all the relevant provisions of the Companies Act, 1956, the SEBI Debt Regulations and the guidelines issued by the Government of India, or the guidelines issued by the Securities and Exchange Board of India, established under Section 3 of the Securities and Exchange Board of India Act, 1992 and any other competent authority in this behalf, have been duly complied with and no statement made in the Prospectus is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or the rules made or guidelines/regulations issued thereunder, as the case may be. We further certify that the Prospectus does not omit disclosure of any material fact which may make the statements made therein, in light of circumstances under which they were made, misleading and that all statements in the Prospectus are true and correct. On behalf of the Board of Directors of DREDGING CORPORATION OF INDIA LIMITED: _________________________ CAPT. D.K. MOHANTY (Managing Director and Chief Executive Officer) ____________________________ MR. P.V. RAMANA MURTHY Director (Finance) (Whole time Director) _______________________ MR. P.JAYAPAL Director(Operations and technical) (Whole time Director) _______________________ MR. M.C. JAUHARI Director (Part - time Official) _____________________ MR. BALACHANDRAN SRINIVASAN Independent Director (Part - time Non - Official Director) _______________________ DR. S. NARASIMHA RAO Independent Director (Part - time Non - Official Director) _______________________ MR. VINAI KUMAR AGARWAL Independent Director (Part - time Non - Official Director) Place: New Delhi Date: March 5, 2013 FOR FURTHER DETAILS PLEASE REFER TO THE PROSPECTUS DREDGING CORPORATION OF INDIA LIMITED 39
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DCI-APPLICATION FORM-RESIDENT.pmd - Finapolis

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