ANNEXURE III SUMMARY STATEMENT OF CASH FLOWS, AS RESTATED
OBJECTS OF THE ISSUE
The proceeds of the Issue are proposed to be utilized by us for financing the following objects: Expansion and Modernization of existing Hand Tool manufacturing facility at Jalandhar. General Corporate Purpose
Expenses for the Issue
Additionally, the Object of the Issue is to achieve the benefits of listing on the Stock Exchanges and create a public market for the Equity Shares of our Company.
The main object clause and objects incidental or ancillary to the main object clause of the Memorandum of Association of the Company enables us to undertake the existing activities and the activities for which the funds are being raised through the present issue.
Requirement of Funds
The total estimated funds requirement is given below:
Sr. No. Particulars Amount (in ` Lakhs)
1 Expansion and Modernization of existing manufacturing facility 3,217.42
2 General Corporate purpose* [●]
3 Expenses of the Issue* [●]
Total [●]
*will be incorporated at the time of filing of prospectus
The fund requirement and deployment is based on our Management estimates and vendor quotations and has not been appraised by any bank or financial institution or any other independent agencies. The fund requirement above is based on our current business plan.
We operate in a highly competitive, dynamic market condition, and may have to revise our business plan from time to time. Consequently, our fund requirements and utilization of proceeds may also change accordingly. Any such change in our plans may require rescheduling of our expenditure programs, at the discretion of our Management, subject to the necessary approvals, and such rescheduling, if any, shall be within the Objects of the Issue.
Means of Finance
Sr. No. Particulars Amount (in ` Lakhs)
1 Proceeds of IPO 4,000.00
2 Internal Accrual# [●]
Total [●]
# will be incorporated at the time of filing of Prospectus
In the event of any shortfall in raising the requisite funds from the proceeds of the Issue for the objects or cost overrun, such shortfall will be met by way of such means available to our company including internal accruals. In case of any surplus after utilization of the proceeds of the issue for the stated objects, we may use such surplus towards general corporate purposes. In case of variations in the actual utilization of funds earmarked for the purposes mentioned above, increase fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this issue.
Details of use of Issue Proceeds:
1. Expansion and Modernization of existing manufacturing facility at Jalandhar
We are in the business of manufacturing, selling & export of precision engineered hand tools products. The demand for precision engineered hand tools both in India and abroad has encouraged us to expand and modernize
the existing manufacturing facility. Our present manufacturing facilities are located at VPO Mand, Kapurthala Road, Jalandhar and in Phase - III, Industrial area, Sansarpur Terace, District Kangra Himachal Pradesh. The premises of our present manufacturing unit at Jalandhar have a land area of 30,680 square meters out of which the existing manufacturing facilities have been set up on an area of 11,612 square meters. The other manufacturing facility in district Kangra is located on an area of 2,750 square meters .We plan to set up the proposed project at the premises at Jalandhar on an area of approximate 8,360 square meters adjacent to the present manufacturing facility.
At present we are manufacturing drop forged hand tools and allied products. Under the proposed expansion cum modernization program we propose to manufacture press forged hand tools. We propose to install seven forging machinery lines with high speed forging press. The propose facility will increase our forging capacity to 7,800 MTPA from existing 3,600 MTPA. The estimated cost of the proposed project is ` 3,217.42 Lacs as per details as under:
(` in Lacs)
Particulars Amount
Civil work & Building 597.36
Plant & Machinery 2,526.94
Electricals & Miscellenous Fixed Assets 93.12
Total Cost 3,217.42
Building & Civil Work
The cost of Civil Work & construction of building for expansion is estimated at ` 597.36 Lacs inclusive of taxes as per quotation dated August 04, 2012 from M/s Kuwar Builders and Developers (engineers and contractors), Panchkula. The unit will have a constructed area of 90,000 square foot and the average construction cost has been estimated at ` 640/- per square foot. The same has been certified by the Architect, Vivek Consultants, Chandigarh vide their letter dated September 04, 2012.
Plant and Machinery
The cost of plant & Machinery is estimated at ` 2,526.94 Lacs including imported machinery and is based on the quotations received from various vendors.
A. We propose to install seven 600T forging lines which will be imported from Taiwan. Each forging line will comprise of Induction Furnace 200 KW, Transformer for induction Heater, Rolling mill CR-125, High speed forging press, steel brush machine, Die Bolsters, and stainless pressure tanks etc. A detailed breakup of the cost of imported forging lines is given below:
Supplier: Jing Duann Machinery Industrial Co. Ltd, No.77, 35Rd, Taichung Ind, Park Taichung, Taiwan 407. Quotation dated 20/03/2012
Particulars Foreign Currency ` In Lacs
FOB Price of one Forging Line USD 470,666 263.57
Freight (approx 5.1%) 13.44
Insurance @ 1% 2.64
Custom Duty @ 25% of FOB Price 65.89
Clearing charges @1 % 2.64
Installation Charges – Estimated 3.00
Total 351.18
Total Cost of 7 Forging Lines 2,458.26
Converted at 1 US$ = ` 56
B. The following equipments are proposed to be purchased from domestic suppliers
Name of Machine Name of Supplier Date of Quotation Amount (in ` Lacs)* Induction Heating system
(for forging Application) Electrotherm (India) Limited, Ahmedabad, Gujarat
Name of Machine Name of Supplier Date of Quotation Amount (in ` Lacs)* Single Girder E.O.T
Cranes cap- 1 Tonn with double hoists (4 Nos)
Asia Cranes Private Limited, Ludhiana
31/07/2012 36.60
Total 68.68
* inclusive of Taxes, Freight & installation charges Electricals & Miscellaneous Fixed Assets
Name of Machine Name of Supplier Date of Quotation Amount
(in ` Lacs) Kirloskar Silent Diesal Generators
500KVA (2 Nos)- Model DV 10
Jaimata Engineers, Hoshiarpur Road, Jallandhar City
04/09/2012 56.92 Kirloskar Make 2000 KVA Oil Filled
Transformer Jaimata Engineer, Hoshiarpur Road, Jallandhar City 04/09/2012 16.70 Electric Cables, Electric Panels &
Accessories
Management estimates - 12.00
Computers & Office Equipments Management estimates - 7.50
Total 93.12
No second hand plant & machinery and miscellaneous fixed asset is proposed to be purchased from the proceeds of the Issue. The orders for the plant & machinery and miscellaneous will be placed by us in due course.
Implementation Schedule for expansion and Modernization of existing manufacturing facility
Activities Commencement Completion
Acquisition of Land - Existing
Civil construction & Building April 2013 June 2013
Placement of order for Imported Machinery April 2013 May 2013 Placement of order for Indigenous Machinery October 2013 October 2013 Imported Machinery - Delivery at site January 2014 January 2014 Indigenous Machinery - Delivery at site January 2014 January 2014
Erection & Installation February 2014 March 2014
Trial Runs March 2014 -
Commencement of Commercial Operations April 2014 -
2. General Corporate Purposes
The Proceeds of the Issue will be first utilized towards proposed expansion and modernization of existing manufacturing facility at Jalandhar. We intend to deploy the balance Issue proceeds aggregating to ` [●] lakhs, towards the general corporate purposes, including but not restricted to strengthening our marketing capabilities, entering into brand building exercises or contingencies in ordinary course of business which may not be foreseen or any other purposes as approved by our Board of Directors. Our management, in accordance with the policies of our Board, will have flexibility in utilizing the proceeds earmarked for general corporate purposes. However, not more than 15% of the proceeds of issue would be deployed for the General Corporate purposes.
3. Expenses for the Issue
The Issue related expenses consist, underwriting fees, selling commission, fees payable to the BRLM, Legal counsel, Escrow Collection Banks and Registrar to the Issue stationery printing and distribution expenses, legal fees, IPO Grading expenses, statutory advertisement expenses, NSDL / CDSL connectivity charges, charges for book building platform for bidding, fees payable to SEBI and listing fees etc. The total expenses of the Issue are estimated to be approximately ` [●] Lakhs.
Particulars Amount
` Lakhs * Issue Expenses * As a % of Total
As a % of Total Issue Size *
BRLM / Syndicate member fee [●] [●] [●]
Underwriting & Selling Commission [●] [●] [●]
Advertising & Marketing expenses [●] [●] [●]
Registrar fee [●] [●] [●]
Printing, Stationary, Dispatch [●] [●] [●]
Other expenses (including listing fee, SEBI filing fee, IPO Grading expenses, Legal Counsel fee, Depository charges, Auditor’s fee, etc.)
[●] [●] [●]
Total [●] [●] [●]
* Will be incorporated at the time of filing of the Prospectus. Estimated Schedule of Deployment of Funds
As estimated by our management, the entire proceeds received from the issue would be utilized a under:
(` in lakhs)
Particulars Funds already deployed
(till July 31, 2012)
2012-13 2013-14 Total Expansion and Modernization of existing
manufacturing facility
- - 3,217.42 3,217.42
General Corporate purpose - - [●] [●]
Expenses of the Issue* 17.95 [●] [●] [●]
Total [●] [●]
Deployment of Funds towards the Objects of the Issue
We have incurred ` 17.95 Lakhs upto July 31, 2012 towards the Objects of the Issue which has been certified by Mr. Amit Sethi (Membership No. 502521), Partner, Kumar Ashwani & Associates, Chartered Accountants, vide their certificate dated September 01, 2012. The same has been incurred towards payment of Issue related expenses and have been financed through internal accruals.
Interim Use of Proceeds
Pending utilization of the proceeds out of the Issue for the purposes described above, we intend to temporarily invest the funds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks and other investment grade interest bearing securities as may be approved by the Board. Such investments would be in accordance with the investment policies approved by the Board from time to time. Bridge Financing Facilities
We have not raised any bridge loan against the Proceeds of the Issue. Monitoring of Utilization of Funds
There is no requirement for appointment of an independent monitoring agency in terms of Regulation 16(1) of the SEBI ICDR Regulations. Pursuant to Clause 49 of the listing agreement, the Audit Committee of our Board will monitor the utilization of the Net Proceeds.
We shall, on a quarterly basis disclose to the Audit Committee the uses and application of the proceeds of the Issue and further disclose the same a part of the quarterly declaration of financial results. We will disclose the utilization of the proceeds of the Issue under a separate head in our balance sheet till such time the proceeds of the Issue have been utilised, clearly specifying the purpose for which such proceeds have been utilized. We will also, in our balance sheet till such time the proceeds of the Issue have been utilised, provide details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of
such unutilized proceeds of the Issue. The said annual disclosure shall also be certified by the Statutory Auditors of our Company.
No part of the proceeds from the Issue will be paid by us as consideration to our Promoters, our Directors, Key Management Personnel or Promoter Group entities, except in the normal course of our business as disclosed under section titled “Interest of Promoters”, “Interest of Directors” and “Interest of Key Managerial Personnel” on page 93, 84 and 87 of the Draft Red Herring Prospectus.
Neither our Promoter nor any Directors and / or entities comprising the Promoter Group have any interest either in the proposed procurement of any equipment indicated under the Section “Objects of the Issue” or any of the entities from whom quotations have been obtained for the proposed procurement.