Motor Industries Company Limited
Registered office: Hosur Road, Adugodi, Bangalore 560 030


THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION


This Offer is made to shareholder(s)/ beneficial owner/s of Motor Industries Company Limited
as on the Specified Date i.e. 06.12.2000

For any clarification/help on the subject, shareholders are
advised to contact the Manager to the Offer or the Company.


CASH OFFER AT Rs. 3,800 (Rupees Three thousand eight hundred only)
 

PER EQUITY SHARE

[Pursuant to the Securities and Exchange Board of India
(Buy Back of Securities) Regulations, 1998]

to buy back up to
200,000 fully paid-up equity shares

representing up to 5.55% of the total paid-up equity share capital of Motor Industries Co. Ltd


THE PROCEDURE FOR ACCEPTANCE OF THIS OFFER IS SET OUT AT
PARAGRAPH 16 OF THIS LETTER OF OFFER.

TENDER/OFFER FORM FOR OFFERING EQUITY SHARES
FOR BUY-BACK IS ENCLOSED


 
MANAGER TO THE OFFER Registrar to the offer
 
DSP Merrill Lynch Ltd

Mafatlal Centre, 10th Floor, 

Nariman Point,

Mumbai- 400 021.

Tel No- (022) 232 8000 

Fax No- (022) 204 8518

 Alpha Systems Private Limited

30,Ramana Residency, 4th Cross,

Sampige Road,Malleswaram, 

Bangalore-560 003 

Tel No: (080) 3460815/18

Fax No: (080) 3460819


  OFFER OPENS ON : Wednesday, December 13, 2000

OFFER CLOSES ON : Friday, December 29, 2000
 
 
 
 
 
 
TABLE OF CONTENTS 
Page No.
1. Definitions
2. Time table
3. Disclaimer clause
4. Details of the buyback offer
5. Authority for the buyback
6. Brief information about the Company
7. Necessity for buyback
8. Basis of the Offer Price
9. Capital structure and shareholding pattern
10. Sources of funds
11. Details of escrow account and amount to be deposited therein
12. Stock market data
13. Management discussion on likely impact of the buyback on the Company
14. Statutory approvals
15. Collection centres
16. Process and methodology to be adopted for buyback
17. Taxation
18. Extract from the explanatory statement to the notice sent to the shareholders 
convening the Extraordinary General Meeting of the Company held on 03.11.2000
19. Declaration by Board of Directors of the Company
20. Auditors Report
21. Material documents for inspection
22. Compliance officer and remedies for investor protection
23. Investor service centre
24. Manager to the Offer
25. Directors responsibility

 
 
 
 
 
 
 
  1. DEFINITIONS
1. Act The Companies Act, 1956 as amended by the Companies (Amendment) Act, 1999
2.  CDS Central Depository Services (India) Limited
3.  Company/MICO Motor Industries Co. Ltd.
4.  Equity shares Fully paid-up equity shares of face value Rs.100/- each of the Company
5.  FIPB Foreign Investment Promotion Board
6.  Manager to the offer DSP Merrill Lynch Limited, Mafatlal Centre, 10th Floor, Nariman Point, Mumbai-400 021
7.  NSDL National Securities Depository Limited
8.  Offer Price Price at which equity share will be bought back from the shareholders i.e. Rs. 3,800 Per share
9.  Offer Size Number of shares proposed to be bought back multiplied by the Offer price i.e. Rs. 76 crores
10.  RBI Reserve Bank Of India
11.  Registrar to the offer Alpha Systems Private Limited, 30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bangalore- 560 003
12.  Regulations The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998
13.  SEBI The Securities and Exchange Board of India
14.  Specified date The date for the purpose of determining the names of the shareholders to whom the letter of offer will be sent

 

2. TIME TABLE
 
Activity  Date
Board Meeting recommending Buyback 14.09.2000
Date of General Meeting authorizing Buyback 03.11.2000
Public Announcement of Buyback 06.11.2000
Specified Date 06.12.2000
Offer Opens on 13.12.2000
Offer Closes on 29.12.2000
Finalise basis of allocation 08.01.2001
Despatch of consideration warrant / share certificates 13.01.2001
Extinguishment of shares 15.01.2001

3. DISCLAIMER CLAUSE

A copy of this Letter of Offer has been submitted to Securities and Exchange Board of India (SEBI).

It is to be distinctly understood that submission of the Offer Document to SEBI should not, in any way be deemed/construed that the same has been cleared or approved by SEBI. SEBI does not take any responsibility either for the financial soundness of the Company to meet the buy back commitments or for the correctness of the statements made or opinions expressed in the offer document. Manager to the Offer DSP Merrill Lynch Limited certify that the disclosure made in the offer document are generally adequate and are in conformity with the provisions of the Companies Act, 1956 and the SEBI (Buy Back of securities) Regulations, 1998. This requirement is to facilitate investors to take an informed decision for tendering their shares in the buy back.
 
 

It should also be clearly understood that while the Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the offer document, the Manager to the Offer is expected to exercise due diligence to ensure that the Company discharges its duty adequately in this behalf and towards this purpose, the Manager to the Offer, DSP Merrill Lynch Limited has furnished to SEBI a Due Diligence Certificate dated November 6, 2000 in accordance with SEBI (Buy Back of Securities) Regulations, 1998, which reads as follows:

  1. We have examined various documents and other materials more particularly referred to in the enclosed letter of offer pertaining to the said buyback;
  2. On the basis of such examination and the discussions with the Company, its directors and other officers, other agencies, independent verification of the statements concerning the subjects of the offer, and other papers furnished by the Company,
We confirm that: (a) the draft letter of offer forwarded to SEBI is in conformity with the documents, materials and papers relevant to the buyback offer;

(b) all the legal requirements connected with the said offer as also the guidelines, instructions, etc. issued by SEBI, the Government and any other competent authority in this behalf have been duly complied with; and

(c) the disclosures made in the draft letter of offer are true, fair and adequate to enable the investors to make a well informed decision in respect of the captioned buyback offer.

(3) We confirm that, besides ourselves, all the intermediaries named in the letter of offer are registered with SEBI and that till date such registration is valid.
 
 

The filing of offer document with SEBI, does not however, absolve the Company from any liabilities under the provisions of the Companies Act, 1956 or from the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed buy-back.

Promoters/Directors declare and confirm that no information/material likely to have a bearing on the decision of investors has been suppressed/withheld and/or incorporated in the manner that would amount to mis-statement/misrepresentation and in the event of it transpiring at any point of time that any information/material has been suppressed/ withheld and/or amounts to a mis-statement/misrepresentation, the promoters/directors and the Company shall be liable for penalty in terms of the provisions of the Companies Act, 1956 and the SEBI (Buy Back of Securities) Regulations, 1998.

4. DETAILS OF THE BUY BACK OFFER
 
No. of Shares/Description Nominal Value Rs. Buyback Price
Authorised, Issued, Subscribed and Paid Up 3,805,146 equity shares of Rs.100/- 

each fully paid up 

Less 200,000 equity shares of Rs.100/- each Bought back in May 2000 

380,514,600
 
 
 
 

20,000,000

360,514,600

  
b) Present Buyback 

Up to 200,000 equity shares 

 20,000,000 @ Rs3,800 per equity share
Subscribed Equity Capital and Free Reserves:

Equity capital as on 30.06.2000

Equity capital after this buyback of Equity Shares:

Free Reserves as on 30.06.2000:

Free Reserves after this buyback of Equity Shares 
360,514,600

340,514,600

4,829,846,715

4,089,846,715 

  

 

Motor Industries Company Limited ("MICO" or "the Company") hereby announces its Offer to buyback up to a maximum of 200,000 fully paid up equity shares ("Shares") of the Company of face value Rs.100/- each through the Tender Offer in accordance with Section 77A of The Companies Act, 1956 ("Act") and The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, ("Regulations"), from the Shareholders of the Company at a price of Rs. 3,800/-(Rupees three thousand eight hundred only)("Offer Price"), payable in cash, representing up to 5.55% of the existing paid up equity share capital ("Capital") of the Company aggregating to Rs76Crores (Rupees seventy six crores only) ("Offer size") representing up to 14.64% of the paid up capital and free reserves of the Company as on 30.06.2000.

The Buy back Offer is made to all shareholders of the Company both registered and unregistered, other than Robert Bosch GmbH.

The procedure for the buyback is described in Paragraph 16.

The shares will be acquired free from all liens, charges and encumbrances.

5. AUTHORITY FOR THE BUY BACK

Pursuant to Section 77A and the applicable provisions of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999 and the Regulations, 1998, the present Offer for buy back of equity shares of the Company from the shareholders has been duly authorised by:

1. resolution passed by the Board of Directors of the Company at their Meeting held on 14.09.2000;

2. special resolution passed by shareholders of the Company at the Extraordinary General Meeting of the Company held on 03.11.2000 and

3. resolution passed by the Board of Directors of the Company at their meeting held on 03.11.2000 (post EGM)

6. BRIEF INFORMATION ABOUT THE COMPANY 1. MICO was incorporated on 12. 11.1951. MICO is engaged in the manufacture of diesel fuel injection equipment, spark plugs, machine tools, auto electrical items, hydraulic and pneumatic equipment, portable electric power tools, packaging machines etc, and also deals in auto accessories. Robert Bosch GmbH holds 53.8% in the equity capital of the Company and consequently MICO is a subsidiary of Robert Bosch GmbH.

2. Brief financial information of the Company based on Audited Accounts of the Company for the last three financial years and for the six months ended 30.06.2000 is given below:

(Rs. crores unless stated otherwise)
Year ending: 31.12.1997 31.12.1998 31.12.1999 30.06.2000
Total Income 1396 1330 1553 806
Net Profit 80 70 106 99
Paid up Equity 38 38 38 36
Reserves & Surplus 312 373 467 485
Total Debt 92 85 40 149
EPS (Rs./per share) 211 184 278 276@
EPS before exceptional items 212 170 274 107@
Debt Equity Ratio (x) 0.26 0.21 0.08 0.29
Post-Buyback Debt/Equity Ratio* - - - 0.13
Return on Networth (%) 23 17 21 19

*Note: As if the buyback had occurred on 30.06.2000 and assuming that the entire offer is subscribed to. Post buyback, the debt/equity ratio will be well within the limits laid down under the Regulations.

@ Not annualised
 
 
 
 
 
 

3. Board of Directors
 
Name Designation Qualifications Date of appointment Other Directorship(s) held 
Mr. H.Zimmerer Chairman Engineer- Machine Building 18.06.1996  Robert Bosch GmbH. (Supervisory Board member and Advisor to the Board of Management)
Zexel Corporation
Mr. Y.H. Malegam Director F.C.A. (India) F.C.A. (England and Wales) 22.11.1986 The Antifriction Bearings Corporation Ltd. 

Atco Healthcare Limited 

(Alternate Director)
Bayer (India) Ltd.
Bayer Industries Ltd.
Cabot India Ltd.
Tata Coffee Ltd.
Escorts Ltd.
Hindustan Construction Co. Ltd.

Mipco Seamless Rings (Gujarat) Ltd.
National Securities Clearing Corporation Ltd.
National Stock Exchange of India Ltd.
Nicholas Piramal India Ltd.
Siemens Ltd.
Tata Tea Ltd.

The Western India Plywoods Ltd.

Dr. J.J. Irani Director K.B.E.,FEng 15.12.1998 Tata Refractories Ltd. 

(Chairman)
The Tata Iron & Steel Co. Ltd. 

(Managing Director)
Tata Sons Ltd.
Tata Industries Ltd.

Tata Engineering & 

Locomotive Co. Ltd.

Tata International Ltd.
Reserve Bank of India (Central Board)
Bharat Heavy Electricals Ltd.

Tata Incorporated, New York

BOC India Ltd.

Timken India Ltd

Tata Ryerson Ltd.

TRF Ltd. (Chairman)
NICCO Corporation Ltd.

Tata Korf Engineering 

Services Ltd.

Jamshedpur Power Co. Ltd.

Mr. F.Fehrenbach Director Diploma in Industrial Engineering 16.09.1999 Robert Bosch GmbH.(Deputy Member of The Board of Management)
Bosch Sanayi ve Turkey (Chairman)
Dr. G. Krueger (Alternate Director to Mr. H Zimmerer) Dr.Jur. (Germany) 19.06.1996 Dagger Forst Tools Ltd. 

(Alternate Director)
Tata Klockner Industrial Plants Limited (Alternate Director)
Roots Multi Clean Ltd. 

(Alternate Director)

Mr. J.L. Pasricha Joint Managing Director M.A. (Hons) A.C.A. (India) F.C.A. (England and Wales) 01.07.1988/

01.07.1993/ 01.07.1998

 Kalyani Brakes Ltd.

Robert Bosch India Ltd.
Motor Industries Trading Ltd.
Motor Industries Software Services Ltd.

Mr. A. Nobis Joint Managing Director Bachelor of Economics 17.12.1999 Kalyani Brakes Ltd.

Robert Bosch India Ltd. (Chairman)

Motor Industries Software Services Ltd.

Motor Industries Trading Ltd.

Widia (India) Ltd.

Mr. M. Lakshminarayan Joint Managing Director M.Tech. 01.10.2000 EMA India Limited

 

Changes in the Board of Directors during the last three years:
 
Director Date of Change Reasons
Mr. J. K. Setna 15.12.1998 Resignation*
Dr. J.J. Irani 15.12.1998 Appointment
Dr. Hermann Eisele 24.06.1999 Resignation*
Mr. F. Feherenbach 16.09.1999 Appointment
Mr. A. Nobis 17.12.1999 Appointment
Dr. H. Bertling 30.06.2000 Retirement
Mr. D. Schalomon 30.09.2000 Retirement
Mr. M. Lakshminarayan 01.10.2000 Appointment

* upon attaining the age of retirement
 
 

7. NECESSITY FOR BUY BACK

To enable the Company to return some of the cash available, which is not immediately required for the operations of the Company, to its shareholders.
 
 

8. BASIS OF THE OFFER PRICE

1. At the Extraordinary General Meeting of the Company held on 03.11.2000, the shareholders approved the buy back at a price not exceeding Rs. 4,000 /- per equity share, to be finalised by the Board/Board committee.

2. The Board at its meeting held on 03.11.2000, post EGM, approved the buy back price of Rs. 3,800 per equity share.

3. The offer price has been arrived at based on share price quotations, return on equity, earnings per share, net worth and other relevant factors.
 
 

9. CAPITAL STRUCTURE AND SHAREHOLDING PATTERN
  1. The capital of the Company consists of 3,605,146 equity shares of Rs.100/- each fully paid up.
  2. The shareholding pattern of the Company as on 16.10.2000 is as under:

Particulars of Shareholders

 Current Shareholding Post-Buyback Shareholding*
No. of equity shares % to the equity share capital No. of equity shares % to the equity share capital
Robert Bosch GmbH 1,940,626 53.8% 1,940,626 57%
Public Financial Institutions, Insurance companies and Nationalised Banks 1,015,099 28.2%
 
 
 
 
 
 

1,464,520
 
 
 
 
 
 

43%

Foreign Institutional Investors 165,347 4.6%
Others 484,074 13.4%
Total 3,605,146 100% 3,405,146 100%
* Note: Assumes 100% acceptance of the offer ( i.e. 200,000 equity shares)
 
 

3. There are no partly paid up shares or outstanding convertible instruments.
  1. There are no locked-in or non-transferable shares.
5. Neither Robert Bosch GmbH, Directors of the Company nor relatives of Directors of the Company have purchased or sold any shares of the Company during the 12 months preceding the date of Public Announcement i.e. 03.11.2000 except 70 shares tendered by the relatives of the Directors and bought back by the Company vide its Buy Back Offer in May 2000 at a price of Rs. 4200/- per share.

6. Robert Bosch GmbH do not intend to tender shares in the buyback program. The Directors of the Company hold, in the aggregate, 129 shares and the relatives of the Directors hold in the aggregate 80 shares.

The Directors and the relatives of Directors have the option to participate in the buy back offer.
  1. There is no pending scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act, 1956.

10. SOURCES OF FUNDS

1. The Company proposes to buyback a maximum of 200, 000 equity shares at a price of Rs.3,800 per share. Therefore the amount required for this buyback is Rs. 76 crores.
  1. The buy back of equity shares of the Company will be financed out of the free reserves of the Company and/or marketable securities; by liquidation of financial assets and hence no cost of finance is envisaged.

11. DETAILS OF ESCROW ACCOUNT AND AMOUNT TO BE DEPOSITED THEREIN

The Company has opened an escrow in terms of Regulation 10 of the Regulations in the form of:

a) bank guarantee for Rs. 19 crores (Rupees Nineteen Crores only) representing 25% of the offer size, issued by Deutsche Bank in favour of Manager to the offer viz. DSP Merrill Lynch Limited, valid until January 28, 2001 i.e. 30 days after the closure of the offer and;

b) deposited a sum of Rs.76lakhs (Rupees Seventy six lakhs only) being 1% of the offer size with Deutsche Bank with directions to the Bank to act on instruction of Manager to the offer viz. DSP Merrill Lynch Limited.

12. STOCK MARKET DATA 1. The Company’s shares are listed on the Bangalore Stock Exchange and The Stock Exchange, Mumbai and are also permitted for trading on The National Stock Exchange of India Limited.
  1. High, low and average market prices for last four years and monthly high, low and average market prices for six months preceding the announcement of the Offer for buy back and their corresponding volumes are as follows:

The Bangalore Stock Exchange (BgSE)
 
Period
High (Rs.)
Date of High & number of shares traded on date
Low 

(Rs.)
Date of Low & number of shares traded on date
Average Price
Total volume traded in period
1996
7500
27.09.1996
70
5500
20.12.1996
5
6500
3860
1997
7050
04.06.1997
5
5010
17.12.1997
1
6030
197
1998
4500
20.01.1998
1
3550
01.12.1998
1
4025
2
1999
3950
24.02.1999
1
3525
06.05.1999
1
3738
3
Up to November 2000
…
…
…
…
….
…
…
Nil

[Source: BgSE]
 
 

The Stock Exchange, Mumbai (BSE)
 
Period
High (Rs.)
Date of High & number of shares traded on date
Low

(Rs.)
Date of Low & number of shares traded on date
Average Price
Total volume traded in period
1996
8033
17.06.96
285
5750
20.12.96
40
6892
90,609
1997
7123
30.05.97
589
4950
30.12.97
25
6036
60,375
1998
5900
23.04.98
3916
3300
05.10.98
30
4600
47,330
1999
6595
10.08.99
508
3350
13.04.99
46
4973
144,373
Up to March 2000
5390
03.01.00
100
3060
09.03.00
265
4297
60,852
April 2000
3793.75
13.04.00
335
3401
25.04.00
220
3627
3,202
May 2000
3882.65
15.05.00
115
3695
12.05.00
25
3764
13,340
June 2000
3850
05.06.00
1160
3650
30.06.00
135
3760
8981
July 2000
3698.95
04.07.00
45
3203
28.07.00
79
3487
2697
Aug 2000
3495
21.08.00
1
3170
24.08.00
92
3300
1361
Sep 2000
3651.50
13.09.00
306
3145
08.09.00
106
3426
2788
Oct 2000
3445
11.10.00
107
3245
20.10.00
267
3345
1460
Nov 2000
3425
02.11.00
26
3404
01.11.00
84
3415
145

[Source: BSE]
 
 
 
 
 
 
 
 
 
 
 
 

The National Stock Exchange of India (NSE)
 
Period
High

(Rs.)
Date of High & number of shares traded on date
Low (Rs.)
Date of Low & number of shares traded on date
Average Price
Total volume traded in period
1996
8048
17.06.96
305
5596
19.12.96
330
6822
55,365
1997
7179
30.05.97
595
4900
30.12.97
45
6039
29,070
1998
5984
22.04.98
550
3285
05.10.98
35
4634
25,515
1999
6090
27.09.99
340
3350
17.03.99
30
4720
74,000
Up to March 2000
5400
06.01.00
155
3110
15.03.00
164
4229
34,510
April 2000
3797.80
17.04.00
415
3391.25
06.04.00
40
3638
8445
May 2000
3799.95
19.05.00
50
3665
03.05.00
465
3749
4150
June 2000
3880
05.06.00
125
3650.15
28.06.00
105
3762
1363
July 2000
3693.55
04.07.00
204
3239
31.07.00
64
3492
3563
Aug 2000
3449
16.08.00

17.08.00
11

40
3185.50
29.08.00
113
3323
1332
Sep 2000
3663.85
13.09.00
746
3190
05.09.00
101
3412
3741
Oct 2000
3445
09.10.00
74
3213
16.10.00
166
3279
1307
Nov 2000
3456
02.11.00
72
3448
01.11.00
84
3452
181

[Source: NSE]

Notice of the Board Meeting convened to consider the proposal to buy-back some part of the Equity shares of the Company was given to the Stock Exchanges on 08.09.2000. The price of the Company’s equity share on 08.09.2000 at the Stock Exchange, Mumbai was Rs. 3,145/-. The Board at its meeting held on 14.09.2000 approved the proposal for buy-back of up to 200,000 equity shares at a price not exceeding Rs.4000/- per share. This maximum price is substantially higher than the price prevailing on 08.09.2000. The market price on 15.09.2000 i.e. immediately after the date of the Board resolution passed on 14.09.2000 approving the buy-back was Rs. 3479/-.

The Board at its meeting held on 03.11.2000 fixed the price of share for buy-back at Rs. 3,800 per share.

13. MANAGEMENT DISCUSSION ON LIKELY IMPACT OF THE BUY BACK ON THE COMPANY

Consequent upon proposed buy-back of equity shares of the Company, the Company does not anticipate any significant change in the earnings from its business.

The Board of directors of the Company are informed that Robert Bosch GmbH does not intend to tender in the proposed buy back offer of the Company.

Consequent to the proposed buy back offer, and based on the response to the buy back offer, the percentage holding of Robert Bosch GmbH would increase beyond 53.8 %. Although such an increase in the percentage holding of Robert Bosch GmbH is consequential in nature, as a matter of abundant caution the Company has made an application to Foreign Investment Promotion Board (FIPB) for its consent/approval for the said consequential increase in the percentage holding of Robert Bosch GmbH in the equity capital of the Company beyond 53.8%.

Consequent to the proposed buy back offer and based on the number of shares offered by/bought back from the shareholders, the percentage holdings of the Non Residents, Foreign Institutional Investors, Indian Financial Institutions, Banks and Other Shareholders would undergo a change. Buy back of equity shares will not affect the present Management structure of the Company.

14. STATUTORY APPROVALS

1.The Secretariat for Industrial Assistance, Dept. of Industrial Policy & Promotion, Ministry of Industry, Government of India vide letter No. II:259(99)/271(99) dated 11.06.1999 as amended by Ministry of Commerce and Industry, letter No. II: 259(99)/271(99) – amend dated 20.10.2000 has granted approval for the increase in the percentage holding of Robert Bosch GmbH from 54% to 57%.

2.Buy-back of shares from Non Resident shareholders will be subject to approval, if any, of the Reserve Bank of India, as applicable.
 
 

15. COLLECTION CENTRES
 
Place  Address, Telephone/ fax number, working hours (other than on holidays)
Bangalore Deutsche Bank AG, Raheja Towers, Ground Floor, West Wing, 26-27, M.G. Road, Bangalore- 560 001 Tel : 080 559 4488

Fax : 080 559 2011

Monday to Friday 10 a.m. to 5 p.m.

Saturday: 10 a.m. to 2 p.m.

Calcutta Deutsche Bank AG, Brooke House, 9, Shakespeare Sarani, Calcutta- 700 001 Tel : 033 2825050

Fax : 033 2821716

Monday to Friday 10 a.m. to 5 p.m.

Saturday: 10 a.m. to 2 p.m.

Chennai Deutsche Bank AG, Kothari Building, Ground Floor, 114, M.G. Road, Chennai- 600 034 Tel : 044 8215408

Fax : 044 8215410

Monday to Friday 10 a.m. to 5 p.m.

Saturday: 10 a.m. to 2 p.m.

Mumbai Deutsche Bank AG, DB House, Next to Sterling Cinema, Hazarimal Somani Marg, Post Box 1142, Fort, Mumbai- 400 001 Tel : 022 2074720

Fax : 022 2075047

Monday to Friday 10 a.m. to 5 p.m.

Saturday: 10 a.m. to 2 p.m.

New Delhi Deutsche Bank AG, Tolstoy House, 15017, Tolstoy Marg, New Delhi- 110 001 Tel : 011 3721150

Fax : 011 3316237

Monday to Friday 10 a.m. to 5 p.m.

Saturday: 10 a.m. to 2 p.m.

Ahmedabad UTI Bank Ltd., Sakar-I, Ground Floor, Opp. Gandhigram Railway Station, Off Ashram Road, Ahmedabad- 380 009 Tel : 079 6587292

Fax : 079 6581854

Monday to Friday 9.30 a.m. to 5.30 p.m 

Saturday: 9.30 a.m. to 1.30 p.m.

Hyderabad UTI Bank Ltd., 6-3-879/8, First Floor, G. Pulla ReddyBldg. Greenlands, Begumpet Road, Hyderabad- 500 016 Tel : 040 3395182

Fax : 040 3395184

Monday to Friday 9.30 a.m. to 5.30 p.m.

Saturday: 9.30 a.m. to 1.30 p.m.

Pune UTI Bank Ltd., Sterling Plaza, Plot No. 1262/B, Jangali Maharaja Road, Near Deccan Gymkhana, Pune- 411004 Tel : 020 5520481

Fax : 020 5520531

Monday to Saturday 9.30 a.m. to 5.30 p.m. 

Surat  UTI Bank Ltd, Digvijay Towers, Opposite: St. Xaviers School, Ghoddod Road, Surat - 395001 Tel : 0261 663103

Fax : 0261 664854

Monday to Friday 9.30 a.m. to 5.30 p.m.

Saturday 9.30 a.m. to 1.30 p.m.

Vadodara (Baroda) UTI Bank Ltd., Arundeep Complex, Ground Floor, Race Course Circle, Vadodara- 390 015 Tel : 0265 351181

Fax : 0265 351185

Monday to Friday 9.30 a.m. to 5.30 p.m.

Saturday: 9.30 a.m. to 1.30 p.m.

[Note: Shareholders at other centres are requested to send the tender/ offer form by Registered Post Acknowledgement Due to the Registrar to the Offer: Alpha Systems Private Limited, as per detailed instructions incorporated in the tender/ offer form superscribing the envelope as "MICO Buy Back II"]
 
 

16. PROCESS AND METHODOLOGY TO BE ADOPTED FOR BUYBACK

  1. The Letter of Offer and Tender/offer form will be mailed to the shareholders of the Company whose names appear on the Register of Members of the Company or who are beneficial owner/s of shares as per the records of National Securities Depository Limited/Central Depository Services (India) Limited, as the case may be, as on 06.12.2000 being the Specified date.
  2. Shareholders may submit the Tender/offer form at the specified Collection Centres along with the share certificate/s and other relevant documents as specified in the Letter of Offer. It is mandatory for shareholders to indicate bank account number to which the Offer proceeds will be payable.
3. The offer will be made to all shareholders other than Robert Bosch GmbH.
  1. The shareholders should submit separate Tender/Offer form for each of the folios and/ or for each of their Depository Accounts. Where the Tender/Offer forms are signed under Power of Attorney or by Authorised Signatory (ies) on behalf of a Company or a Body Corporate, the Power of Attorney/ Signing Authority must be previously registered with Company along with the specimen signatures. The registration serial number of such documents should be mentioned below the signature of the applicant. Where the relevant document is not so registered, a copy of the same duly certified by a Notary Public / Gazetted Officer should be enclosed with the Tender/Offer Form.
  1. The Company will not accept any equity shares offered for buy back which are under lock in or where there exists restraint order of the Court for transfer/ disposal of equity shares or where loss of share certificates has been notified to the Company or where any other restraint subsists.
6. Members may offer for buyback their full holding or any part of their holding of shares of the Company, as they desire.

In the event the aggregate number of shares offered by the shareholders are more than the total number of shares to be bought back by the Company, the acceptances per shareholder shall be made in accordance with the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 i.e. acceptances per shareholder shall be equal to the acceptances tendered by the shareholder divided by the total acceptances received and multiplied by the total number of shares to be bought back.

However, in cases where shares tendered are less than the minimum marketable lot (5 shares), the entire holding will be accepted. After completing the acceptance on the above basis, the balance shares shall be accepted on a proportionate basis in terms of the formula given above, taking care that this does not result in non-marketable lots.

For example; A shareholder who offers 5 or less than 5 shares under the buyback offer would have full acceptance of the offer. If for, example, a shareholder tendered 96 shares, he/she would have the following acceptances;

a) If subscription to the offer is 175,000 shares: All 96 shares will be accepted

b) if subscription to the offer is 210,000 valid shares: All non-marketable lots (5 shares or less than 5 shares), say 25,000 shares are tendered in lots of 5 shares or less, will be accepted after which the remaining shares tendered will be accepted on a proportionate basis taking care that this does not result in the creation of odd-lots i.e. 5 + 96 - 5 x (200,000-25,000) / (210,000 – 25,000) = 91 shares.
  1. In case one or more of the joint holders is deceased, theTender/Offer form must be signed by all the surviving holder(s) and submitted along with the certified or attested true copy of the death certificate. If the sole shareholder is deceased the Tender/Offer form must be signed by the Legal Representative of the deceased and submitted along with the certified or attested true copy of Probate/ Letter of administration/ Succession Certificate while tendering the equity shares for buy back.
  2. Where a joint shareholder is deceased, the shares of such deceased shareholder tendered will be consolidated with the shares if any held and tendered by the surviving shareholder/s for the purpose of reckoning the aggregate number of shares to be bought back from the surviving shareholder/s.
  3. Unregistered transferees will have to submit the duly executed transfer deed(s) for transfer of equity shares in his/her name along with the share certificates, Tender/Offer form and other documents as applicable.
  4. Non resident shareholders are advised to enclose the copy of the RBI permission enabling them to acquire the shares of the Company.
11. Procedure to be followed by the beneficial owners holding shares in demat form:

The Company has opened Depository Accounts styled " MICO Buy-back (II) of Equity shares Depository Account" with Deutsche Bank AG, Mumbai.

The details of the Depository Accounts are as under:-
  For Beneficial owners holding account in NSDL For Beneficial owners holding account in CDS
DP Name Deutsche Bank AG, Mumbai Deutsche Bank AG, Mumbai
DP ID    
Client ID    
ISIN     

  The Beneficial Owners are required to execute the trade by tendering the Delivery Instruction for debiting his Beneficiary Account with the concerned Depository Participant (DP). A photocopy of the Delivery Instruction or counterfoil of the Delivery Instruction duly acknowledged by the DP shall be attached to the Tender/ Offer Form and submitted to the Registrar to the Offer or bank branches at any of the collection centres. The Beneficial Owner may note that the delivery instruction to be given to the DP should be for "off- market trade" mode.

For each delivery instruction to the DP the beneficial owner should submit a separate Tender/ Offer form. Beneficial owners are requested to ensure the credit of their shares to the " MICO Buy-back of Equity shares Depository Account" on or before the date of closure of the Offer.

Shares held in Demat form to the extent not accepted for buy-back will be returned to the beneficial owner to the credit of beneficial owner’s Depository Account with the respective Depository Participant as per details furnished by the beneficial owner in the Tender / Offer Form. Beneficial owners may advise their respective depository participant to receive any shares returned as aforesaid.
  1. Consideration warrant for accepted shares and share certificates where applicable will be dispatched by the Company at the address of the members registered with the Company / address of the beneficial owners as furnished by NSDL/CDS to the company, as the case may be, by Registered Post to the first named shareholder/ beneficial owner at the sole risk of the shareholders/ beneficial owners.
17. TAXATION:

Deduction of tax at source on the buyback consideration payable to a Non-resident share holder

( i. e. a person other than a company and a foreign company and a Foreign Institutional Investor) :

The company will deduct the tax at source (including surcharge) in accordance with section 195 of the Indian Income-tax Act on the gross purchase price at 33% in case of ‘a person other than a company’ and 48% in case of ‘a foreign company’ unless the shareholder obtains a certificate from his assessing officer that the tax be deducted at a lower rate or at nil rate or on a lesser amount.However, Non-resident shareholders desirous of claiming benefits under Double Taxation Avoidance Agreement should furnish full justification for the same with a certified copy of the tax residence certificate and other appropriate documentary evidences to the company to consider the same on case to case basis.

In respect of Foreign Institutional Investors, deduction of tax at source will be in accordance with section 196D of the Indian Income-tax Act. Foreign Institutional Investors desirous of claiming the exemption applicable to capital gains as provided in section 196D(2), should furnish a declaration to that effect duly certified by a Chartered Accountant.’
 
 

The extract of Income Tax Act 1961 as amended by Finance Act 1999, relating to treatment in case of buyback of shares is given below:

To the Shareholders of the Company

"Section 2(22)

"dividend" includes-

(a)……to ……(e)

but "dividend" does not include ———

(iv) any payment made by a company on purchase of its own shares from a shareholder in accordance with the provisions of section 77A of the Companies Act, 1956 (1 of 1956).""Capital gains on purchase by company of its own shares or other specified securities

Section 46A

Where a shareholder or a holder of other specified securities receives any consideration from any company for purchase of its own shares or other specified securities held by such shareholder or holder of other specified securities, then, subject to the provisions of section 48, the difference between the cost of acquisition and the value of consideration received by the shareholder or the holder of other specified securities, as the case may be, shall be deemed to be the capital gains arising to such shareholder or the holder of other specified securities, as the case may be, in the year in which such shares or other specified securities were purchased by the Company.

Explanation – For the purposes of this section, "specified securities" shall have the meaning assigned to it in Explanation to section 77A of the Companies Act, 1956 (1 of 1956)."

Investors are advised to consult their tax consultants for treatment that may be given by the respective assessing officer in their case. Company or lead manager does not accept any responsibility for the accuracy or otherwise of such advise.
 
 

To the Company

Payment made by a Company on purchase of its own shares in accordance with Section 77A of the Companies Act, 1956, being not a dividend, there is no liability for additional income-tax under Section 115 O of the Income Tax Act, 1961.
 
 

18. EXTRACT FROM THE EXPLANATORY STATEMENT TO THE NOTICE DATED 30.09.2000 SENT TO THE SHAREHOLDERS CONVENING THE EXTRAORDINARY GENERAL MEETING HELD ON 03.11.2000

1. In terms of Section 77A of the Companies Act, 1956, the Company can buy back its own shares provided a) buy back is or less than 25% of the total paid-up capital and free reserves of the Company and

b) buy back of equity shares in any financial year does not exceed 25% of its total paid-up equity capital in that financial year.

2. The Company has accumulated free reserves and satisfactory liquidity as represented by bank balances and marketable securities. The return on these marketable securities does not compare favourably with the return on equity for the Company. The future generation of cash along with borrowings, if any, will support the resources required for investments in fixed assets in coming years. Therefore, the buy back of equity shares as proposed provides an opportunity to the Company to return the excess cash to its shareholders.
  1. The Company’s shares are listed in the Bangalore Stock Exchange and The Stock Exchange, Mumbai and are permitted for trading in The National Stock Exchange of India Limited. Over the past few years, the traded volumes of the Company’s shares, as shown in the table given below have been quite low on these exchanges.
Year Bangalore Stock Exchange The Stock Exchange, Mumbai The National Stock Exchange Total /% to total number of shares
1996
3,860
90,609
55,365
149,834/ 3.94
1997
197
60,375
29,070
89,642/ 2.35
1998
2
47,330
25,515
72,847/ 1.91
1999
3
144,373
74,000
218,376/5.74
Up to 30.09.2000
-
93,221
57,104
150,325/4.17

(Source: BgSE/BSE/NSE)

4. The cumulative volume of shares traded in the years 1996, 1997, 1998, 1999 and 2000 year-to-date on these stock exchanges are only 18.89 % of the Company’s outstanding shares. This may have hindered some of the shareholders in disinvesting their holdings and realising the value of their investments.

5. The Government of India has approved buy-back of shares by Companies pursuant to Section 77A of the Companies Act, 1956. This offers the Company an opportunity to return part of the accumulated reserves/cash to the shareholders enabling them to disinvest some of their holdings in the Company’s shares.

6. At the time of buy-back of equity shares in May 2000, the Company bought back as planned 200,000 equity shares of the 292,105 shares validly tendered for buy-back. Consequently, the Company returned to the shareholders some of the shares tendered by them as the aggregate number of shares tendered exceeded the number of shares to be bought back by the Company. This might have disappointed some of the shareholders of the Company. The proposed buy-back offers another opportunity to the shareholders to tender for buy-back some of the shares held by them.
  1. Even after the buy-back, the Company will continue to have satisfactory debt equity ratio. The buy-back is not likely to have any adverse impact on the future fund requirements of the Company for its operations.
  2. It is proposed that the Board of Directors or a Committee of the Board of Directors of the Company duly constituted for the purpose be authorised to decide at the appropriate time one of the methods of buy-back referred in Section 77A(5) of the Companies Act, 1956 and Regulation 4(1) of the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998.
  1. The buy-back of equity shares of the Company will be financed out of free reserves and/or marketable securities of the Company.
  2. The particulars of equity shares of the Company held by Robert Bosch GmbH, the Directors of the Company and relatives of Directors of the Company as on the date of the Board Meeting held on 14.09.2000 is given below:
Robert Bosch GmbH : 1,940,626 Shares constituting 53.8 % of total paid-up capital
Directors : 178 Shares constituting 0.005% of total paid-up capital 
Relatives of Directors : 80 Shares constituting 0.002% of total paid-up capital
 
  1. Particulars of shares of the Company purchased or sold by the persons referred above, during the period of 6 months preceding the date of the Board Meeting held on 14.09.2000 and subsequent to the said Board Meeting till the date of notice convening the Extraordinary General Meeting is given below:
     


     
     
     
     
     
     
    Category Number of equity shares purchased/sold Maximum/minimum price at which purchase/sale was made Date of purchase/sale
    Directors Relatives of Directors Nil 70 Does not arise Tendered for buy-back in May 2000 at Rs.4,200 per share  Not applicable 04.05.00

     

  2. The Board of Directors of the Company confirm that there are no defaults subsisting in repayment of deposits, redemption of debentures or preference shares or repayment of term loans to any financial institutions or banks.
  3. The Board of Directors confirm that they have made a full enquiry into the affairs and prospects of the Company and have formed an opinion;
that immediately following the date on which the General Meeting is convened there will be no grounds on which the Company could be found unable to pay its debts;

that as regards Company’s prospects for the year immediately following that date, that, having regard to Board’s intentions with respect to the management of the Company’s business during that year and to the amount and character of the financial resources which will in the Board’s view be available to the Company during that year, the Company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date and

confirm further that in forming an opinion as aforesaid, the Directors have taken into account the liabilities as if the Company were being wound up under the provisions of the Companies Act, 1956 (including prospective and contingent liabilities).

Text of the Report dated September 30,2000 of the Auditors, M/s. A. F. Ferguson & Co., Chartered Accountants, to the Board of Directors of the Company

In connection with the proposed buy back of equity shares approved by the Board of Directors at their meeting held on 14th September 2000 and based on the information and explanations given to us, we report as follows:

1. We have inquired into the state of affairs of the company in relation to its audited accounts for the six months ended 30th June 2000 taken on record at the meeting of the Committee of the Board of Directors held on 30th September 2000 and projections for the calendar years 2000 and 2001.
  1. The amount of permissible capital payment towards buy back of equity shares (including premium) in question, as ascertained below, has been properly determined in accordance with section 77A (2)(c) of the Companies Act, 1956:
(Rs. in million)
 
Share capital as at 30th June 2000
(3,605,146 equity shares of Rs.100 each)
360.51
Free reserves as at 30th June 2000
4829.85
 
5190.36
Maximum amount permitted for buyback i.e. 25% of total paid up capital and free reserves
1297.59

  3. The Board of Directors in their meeting held on 14th September 2000, have formed their opinion, as specified in clause (x) of Schedule I of Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998, on reasonable grounds and that the company will not, having regard to its state of affairs, be rendered insolvent within a period of one year from the date of the extraordinary general meeting of the members of the company proposed to be held on 3rd November 2000.
 
 19. TEXT OF DECLARATION DATED 03.11.2000 BY THE BOARD OF DIRECTORS OF THE COMPANY 1. "We, the Directors of Motor Industries Co. Ltd., having registered office at Hosur Road, Adugodi, Bangalore- 560 030, declare that there are no defaults subsisting in repayment of deposits, redemption of debentures or preference shares or repayment of term loans to any Financial Institution/s or Bank/s.

2. We, the Directors of the Company further declare that the Board of Directors have made a full enquiry into the affairs and prospects of the Company and have formed the opinion that;

as regards the prospects of the Company for the year immediately following the date of the letter of offer (i.e. 03.11.2000) that,having regard to the intentions of the Board with respect to the management of the Company’s business during that year and to the amount and character of the financial resources which will in the view of the Board be available to the Company during that year, the Company will be able to meet its liabilities and will not be rendered insolvent within a period of one year from that date;

In forming the opinion for the above purposes, the Board of Directors have taken into account the liabilities as if the Company were being wound up under the provisions of the Companies Act, 1956 (including prospective and contingent liabilities)."

20. AUDITORS REPORT

Text of the Report dt. 3rd November 2000 of the Auditors, M/s A.F. Ferguson & Co., Chartered Accountants, to the Board of Directors of the Company

In connection with the proposed buyback of equity shares approved by the Board of Directors at their Meeting held on 14th September 2000 and by the members at the Extraordinary General Meeting held on 3rd November 2000 and based on the information and explanations given to us, which to the best of knowledge and belief were necessary for this purpose, we report as follows:

1. We have inquired into the state of affairs of the company in relation to its audited accounts for the six months ended 30th June 2000 taken on record at the meeting of the committee of the Board of Directors (constituted for the said purpose) held on 30th September 2000 and the projections for the calendar years 2000