Case Study On Sterlite Industries Ltd India Finance Essay

Sterlite Industries are Indias largest non-ferrous metals and excavation company and are one of the fastest turning private sector companies. Listed on the BSE and NSE in India and is the First Indian Metals & A ; Mining Company to name on the New York Stock Exchange. Primary concern countries are Aluminium, Copper, Zinc & A ; Lead and Commercial Energy. Sterlite Industries started in 1986 as Sterlite Cables Limited, acquires the Shamsher Sterling Corporation, changes the name to Sterlite Industries ( India ) Limited.1988 Sterlite Industries makes an initial public offering of its portions on the Indian stock exchange and 2007 Sterlite Industries primary naming on NYSE in June 2007.

Sterlite Industries ( India ) Ltd. ( “ Sterlite ” ) believes that high criterions of corporate administration are critical to guarantee concern success. The Company has ever believed in carry oning its personal businesss in a just and crystalline mode and in keeping the highest ethical criterions in its traffics with all its components. Sterlite ‘s mission is to invariably reexamine its systems and processs to accomplish the highest degree of corporate administration in the overall involvement of all the stakeholders.

In instance of alteration in the Price Band, the Bidding Period will be extended for three extra working yearss after the alteration of the Price Band topic to the Bidding Period non transcending 10 on the job yearss. Any alteration in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by presentment to the Bombay Stock Exchange Limited ( the “ BSE ” ) and the National Stock Exchange of India Limited ( the “ NSE ” ) , by publishing a imperativeness release, and besides by bespeaking the alteration on the web sites of the Global Co-ordinators and Book Running Lead Managers ( “ GCBRLMs ” ) , Book Running Lead Managers ( the “ BRLMs ” ) and at the terminuss of the members of the Syndicate.

In footings of Rule 19 ( 2 ) ( B ) of the Securities Contracts ( Regulation ) Rules, 1957, as amended, this being an Issue for less than 25 % of the station Issue paid-up equity capital, the Issue is being made through the 100 % Book Building Process wherein at least 60 % of the Issue will be allocated on a proportionate footing to Qualified Institutional Buyers ( “ QIBs ” and such part the “ QIB Portion ” ) , provided that our Company may apportion up to 30 % of the QIB Portion, to Anchor Investors, on a discretional footing ( the “ Anchor Investor Portion ” ) . Further 5 % of the QIB Portion less the Anchor Investor Portion shall be available for allotment on a proportionate footing to Mutual Funds merely. The balance shall be available for allotment on a proportionate footing to QIBs and Mutual Funds, capable to valid Bids being received from them at or above the Issue Price. If at least 60 % of the Issue can non be allocated to QIBs, so the full application money will be refunded forthwith. Further, non less than 10 % of the Issue will be available for allotment on a proportionate footing to Non-Institutional Bidders and non less than 30 % of the Issue will be available for allotment on a proportionate footing to Retail Individual Bidders, capable to valid Bids being received at or above the Issue Price.

Hazard in relation to the Issue

This being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs. 10 per Equity Share and the Floor Price is [ 4 ] times the face value and Cap Price is 55,635 Cr. No confidence can be given sing an active or sustained trading in the Equity Shares or sing the monetary value at which the Equity Shares will be traded after listing.

The IPO Grading is assigned on a five-point graduated table from 1 to 5, with IPO Grade 5/5 bespeaking strong basicss and IPO Grade 1/5 bespeaking hapless basicss. For taking an investing determination, investors must trust on their ain scrutiny of the Issuer and the Issue, including the hazards involved. The Equity Shares offered in the Issue have non been recommended or approved by the Securities and Exchange Board of India ( the “ SEBI ” ) , nor does SEBI vouch the truth or adequateness of this Draft Red Herring Prospectus.

The Issue

( 1 ) Company is sing a Pre-IPO Placement. If the Pre-IPO Placement is completed, the Issue size would be reduced by the extent of such Pre-IPO Placement, capable to a minimal Issue size of 10 % of the station Issue paid-up equity capital.

( 2 ) Company may apportion up to 30 % of the QIB Portion, to Anchor Investors on a discretional footing in conformity with the ICDR Regulations.

( 3 ) Allocation shall be made on a proportionate footing. Under-subscription, if any, in any class, except the QIB Portion, would be allowed to be met with spill-over from any other class or combination of classs at the discretion of the Company, in audience with the GCBRLMs, the BRLMs and the Designated Stock Exchange.

Registered Office: Bharat

Board of Directors

Composition of the Board:

As on 31 March 2008, Sterlite ‘s Board comprised of nine Directors. There are four booster Directors on the Board, including the non-executive Chairman and the Executive Vice-Chairman. The other two booster Directors are nonexecutive. In add-on, the Board has a Managing Director, a Whole-time Director and three Non-executive independent Directors

Global Co-ordinators & A ; Book Running Lead Managers

Book Running Lead Managers

Capital Structure

As on 31st March 2010 | As on 31st March 2009

Beginnings of Fundss

1. Stockholders ‘ Fundss

Share Capital 168.08 141.70

Militias & A ; Surplus 22,100.00 13,898.14

22,268.08 14,039.84

2. Lend Fundss

Secured Loans 100.00 303.80

Unbarred Loans 5,222.20 3,526.24

3. Deferred Tax Liability ( Net ) 5,322.20 3,830.04 363.81 333.65

Entire 27,954.09 18,203.53

Notes

Share Capital

Authorised:

92,50,00,000 Equity Shares of Rs. 2 each 185.00 185.00

Issued, Subscribed and Paid up Capital

84,04,00,422 ( Previous Year 70,84,94,411 ) Equity Shares of Rs. 2 each to the full paid up 168.08 141.70

Less: Unpaid Allotment Money/Calls in Arrears ( other than Directors ) ( Current Year Rs. 11,790 )

( Previous twelvemonth Rs. 11,790 )

Entire 168.08 141.70

Amalgamate Financials

Amalgamate Financials

Rs. 24,410 Crore Consolidated turnover for 2009-10 – up by 15.4 %

Rs. 8,031 Crore PBIDT for 2009-10 up by 17.1 %

Rs. 5,409 Crore Net Net income for 2009-10

Rs. 37,012 Crore Shareholders ‘ fund base

Rs. 21,313 Crore Cash and Liquid investing

Rs. 46.79 Amalgamate EPS for 2009-10 on hypertrophied equity base

Dividend of Rs. 3.75 per equity portion of Rs. 2/- each for 2009-10

Copper

Cathode production – 334,174 metric tons

Highest of all time Domestic Gross saless – 206,150 metric tons

Announced enlargement programme of duplicating of Copper imposts smelting capacity to 800 ktpa with associated 160 MW confined power works

Zinc-Lead

Achieved 1 mtpa capacity in Zinc-Lead

Record Annual Zinc and Lead mined metal production at 768,620 metric tons

Record Annual Zinc and Lead refined metal production at 650,038 metric tons

Silver production at 176,381 kgs

Aluminum

Highest of all time production of hot metal from BALCO works II smelter – 254,745 metric tons.

268,425 metric tons Aluminium production

267,802 metric tons Aluminium gross revenues

Highest of all time production of Rods -148,239 metric tons

Construction work on the 325 ktpa Aluminium smelter and 1,200 MW Captive Power works at BALCO come oning good.

Commercial Energy

The building work of the 2,400 MW Coal based Power Plant at Jharsuguda is come oning good.

Revived 1,980 MW Merchant Power Plant at Talwandi in Punjab province Coal linkages secured for all power workss.

Share Capital History of Sterlite Company

Date of allocation

No. of equity portions

Face

Issue Price ( Rs. )

Consideration

Nature of allocation

Accumulative equity portion capital ( Rs. )

Value ( Rs. )

( Cash, other than hard currency etc. )

February 2, 1995

2

100

100

Cash

Initial subscription to the Memorandum of Association

200

April 13, 1998

49,348

100

100

Cash

Discriminatory allocation

49,35,000

Pursuant to a stockholders declaration dated October 27, 2007, each equity portion of a face value of Rs. 100 was split into 10 Equity Shares of Rs. 10 each.

November 5, 2007

58,60,00,000

10

10

Cash

Conversion of 586,000,000, 0 % OFCDs

5,86,49,35,000

November 5, 2007

60,00,00,000

10

10*

Cash

Conversion of 600,000,000, 0 % OFCDs

7,514,935,000*

October 5, 2009

8,21,215

10

213

Cash

Allotment to bing stockholders

11,873,147,150**

Entire

1,18,73,14,715

A

Shareholding Pattern

Stockholders

Pre-Issue

Post-Issue**

No. of Equity Shares

Percentage of shareholding

No. of Equity Shares

Percentage of shareholding

Promoter

Sterlite Industries

1,18,73,14,655

100

1,18,73,14,655

[ a-? ]

Sub Total ( A )

1,18,73,14,655

100

1,18,73,14,655

[ a-? ]

Others

Mr. Navin Agarwal* #

10

Negligible

10

Negligible

Mr. Dwarka Prasad Agarwal #

10

Negligible

10

Negligible

Mr. Kuldip Kumar Kaura #

10

Negligible

10

Negligible

Mr. Taru

10

Negligible

10

Negligible

Jain #

Mr. Din Dayal Jalan* #

10

Negligible

10

Negligible

Mr. Kishore Kumar #

10

Negligible

10

Negligible

Sub Total ( B )

60

Negligible

60

Negligible

Public ( C )

Nothing

Nothing

[ a-? ]

[ a-? ]

Entire Share Capital ( A + B+ C )

1,18,73,14,715

100

[ a-? ]

100

OBJECTS OF THE ISSUE

The objects of the Issue are to: ( 1 ) portion finances the building and development of the Jharsuguda Power Project and the Talwandi Power Project ( “ Identified Undertakings ” ) and ( 2 ) fund outgo for general corporate intents. The chief objects clause and objects incidental to the chief objects set out in our Memorandum of Association enable us to set about our bing activities and the activities for which financess are being raised by us through this Issue.

BASIS FOR ISSUE PRICE

The Issue Price will be determined by our Company in audience with the GCBRLMs, the BRLMs on the footing of the appraisal of market demand for the offered Equity Shares by the Book Building Process. The face value of the Equity Shares of the Company is Rs. 10 each and the Issue Price is [ 4 ] times of the face value at the lower terminal of the Price Band and [ 4 ] times the face value at the higher terminal of the Price Band.

Net incomes per Share ( “ EPS ” ) ( Standalone )

Particulars

Gaining Per Share ( Face Value Rs. 10 per Equity Share )

Basic ( Rs. )

Diluted ( Rs. )

Weight

Year ended March 31, 2007

54.71

0.05

1

Year ended March 31, 2008

0

0

2

Year ended March 31, 2009

-0.07

-0.07

3

Leaden Average

9.08

-0.03

Six months ended September 30, 2009

0.12

0.12

Our Promoters and Group Entities

The Promoter of our Company is Sterlite Industries ( India ) Limited. Sterlite Industries acquired 99.99 % equity involvement in our Company on October 3, 2006 from Twinstar Infrastructure Limited, an attached company and Mr. Anil Agarwal, the laminitis of Vedanta Resources plc. Pursuant to portion purchase understandings, each dated October 3, 2006, for a entire consideration of Rs. 4,934,900.

Promoter

Sterlite Industries ( India ) Limited ( “ Sterlite Industries ” ) Sterlite Industries was incorporated under the Companies Act on September 8, 1975 as aˆzRainbow Investment LimitedaˆY . Subsequently, the name changed to aˆzSterlite Cables LimitedaˆY and so its present name aˆzSterlite Industries ( India ) LimitedaˆY in 1986.

Sterlite Industries is engaged in the concern of fabrication of Cu cathodes, rods, sulfuric acid, phosphorous acid etc. The registered office of Sterlite Industries is situated at SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O. , Tuticorin 628 002, Tamil Nadu, India.

Sterlite Industries was engaged in the concern of power and control overseas telegrams, overhead power transmittal music directors and enamelled Cu wires. In 1990, Sterlite Industries diversified its activities by set abouting the industry of jelly-filled telecommunication overseas telegrams and a works was besides commissioned to industry of aluminium sheets and foils. Sterlite Communication Limited was merged with Sterlite Industries in 1996 in conformity with a strategy of merger. Pursuant to a subsequent strategy of restructuring, the telecommunication concern of Sterlite Industries was transferred to Sterlite Optical Technologies Limited as a traveling concern with consequence from July 1, 2000.

There has been no alteration in control or direction of Sterlite Industries in the last three old ages. The equity portions of Sterlite Industries are soon listed on the Stock Exchanges and its American Depositary Shares ( “ ADSs ” ) are listed on the New York Stock Exchange ( “ NYSE ” ) .

Shareholding Pattern

The shareholding form of Sterlite Industries as of September 30, 2009 is as follows.

Class of Shareholder

No. of stockholders

Entire No. of equity portions of face value Rs. 2 each

Entire No. of portions held in dematerialized signifier

Percentage

( A ) Shareholding of Promoter and Promoter Group

( 1 ) Indian

Persons / Hindu Undivided Family

4

2,07,040

2,07,040

0.02

Bodies Corporate

3

2,56,64,125

2,56,36,230

3.05

Sub Total

7

2,58,71,165

2,58,43,270

3.08

( 2 ) Foreign

Bodies Corporate

5

41,13,06,383

3,46,70,418

48.94

Sub Total

5

41,13,06,383

3,46,70,418

48.94

Entire shareholding of Promoter and Promoter Group ( A )

12

43,71,77,548

6,05,13,688

52.02

( B ) Public Shareholding

( 1 ) Institutions

Common Funds / UTI

219

3,08,42,245

3,08,28,945

3.67

Fiscal Institutions / Banks

38

11,17,342

11,03,792

0.13

Cardinal Government / State Government ( s )

1

700

The Rationale behind traveling for the fund raising/ raising the capital construction through the signifier of Issued, Subscribed and Paid up Capital for the twelvemonth 2009 and 2010

1 ) Of the above equity portions:

( a ) 2,10,000 Equity Shares were allotted as to the full paid up pursuant to a contract without payment being received in hard currency before bargain back, extinguishment, subdivision and issue of bonus portions.

( B ) 32,19,73,026 Equity Shares of Rs. 2 each were allotted as to the full paid up Bonus Shares by manner of capitalization of General Reserve and Security Premium.

( degree Celsius ) 27,33,675 Equity Shares were allotted pursuant to strategy of Amalgamation without payment being received in hard currency before bargain back, extinguishment, subdivision and issue of bonus portions.

( vitamin D ) 40,99,400 Equity Shares were allotted as to the full paid upon transition of 50,000 Foreign Currency Convertible Bonds before subdivision and issue of bonus portions.

( vitamin E ) 12,49,92,080 ( Previous Year 7,56,78,479 ) American Depository Shares ( ADS ) portion stand foring 12,49,92,080 ( Previous Year 7,56,78,479 ) underlying equity portions.

2 ) Of the above equity portions, 45,31,23,492 ( Previous twelvemonth 40,69,61,874 ) equity portions ( including ADS ) are held by Company ‘s keeping Company and 2,56,13,400 ( old twelvemonth 2,63,17,719 ) by a fellow subordinate of the Company.

The above fund elevation activity has been proven really efficient and the company ‘s fiscal public presentation has been good overall.