Information for Stake Holders

ISSUE OF 10% REDEEMABLE CUMULATIVE PREFERENCE SHARES –
CONTEMPT PETITIONS FILED BEFORE HON’BLE HIGH COURT, NEW DELHI.
With regard to above, the requisite information is being provided as under :

• FAMILY SETTLEMENT AND ORDER DATED 21-11-2006 OF HON’BLE CLB

1. Mr. B.B. Singal is the founder promoter of Bhushan Group which comprises of three manufacturing companies i) Bhushan Steel Ltd., (BSL) Bhushan Power and Steel Ltd. (BPSL) Aarti Strips Ltd., Nepal (ASL). These companies were controlled by Mr. B.B. Singal and his two sons, Mr. Neeraj Singal and Mr. Sanjay Singal, either directly or through investment companies, which investment companies were owned and controlled by Mr. B.B. Singal and Mr. Neerai Singal and Mr. Sanjay Singal.
   
   
2. Disputes and differences arose between the brothers, Mr. Neeraj Singal and Mr. Sanjay Singal. In order to resolve their disputes and differences and maintain family peace, harmony and goodwill, the father, Mr. B.B. Singal, along with the sons, Mr. Neeraj Singal and Mr. Sanjay Singal and their respective family members reached an oral family arrangement / agreement on 30.11.2002 for the reorganization of their shareholding and allocation of management, responsibilities of Bhushan Group of Companies. By the said family arrangement / agreement, it was, in substance, agreed that w.e.f. 1.12.2002:-
   
   
   • BPSL and ASL would be managed and controlled by Mr. Sanjay Singal.
   • BSL would be managed and controlled by Mr. Neeraj Singal.
   • Mr. B.B. Singal as the founder promoter of the Bhushan Group would be associated with both the companies as Chairman and shall hold one third shares of promoter holding in both the companies.
   • Shares of BSL and BPSL would be respectively transferred to the respective parties.
   • Accounts were to be settled between BSL and BPSL.
   
   
   
3. However, Mr. Sanjay Singal committed breach of the said family arrangement / agreement and also committed acts of oppression and mismanagement in BSL and BPSL.
   
   
4. Aggrieved by the actions of Mr. Sanjay Singal, the father Mr. B.B. Singal and Mr. Neeraj Singal along with others were constrained to file Company Petition No.77/2006 titled as Shri B.B. Singal & Ors. Vs. BSL & Others before Company Law Board (Principal Bench), New Delhi under Section 397/398, 399 of the Companies Act, 1956. During the course of proceedings, the Hon'ble CLB passed various Interim orders from time to time including following Interim Order on 21-11-2006 in the said Company Petition :
   

• ISSUE OF 15,00,000 10% REDEEMABLE CUMULATIVE PREFERENCE SHARES:

The Board of Directors of the Company at their meeting held on 31-01-2009 interalia accorded their approval for Issue of 15,00,000 10% Redeemable Cumulative Preference Shares of Rs. 100 each to be issued @ Rs 3000 per share ( including premium @ Rs 2900 per share ) aggregating to Rs 450 Crores. The said preference shares are redeemable at any time within 10 years from the date of allotment and are non convertible.

• REPLY OF LETTERS

Agarwal Law Associates and V.P. Chhabra & Associates vide letters dated 05-02-2009 pointed out that proposed issue of preference shares by BSL will be in violation of CLB Order dated 21-11-2006 and amount to Contempt of Court Order.

UKCA Law Chambers, our Advocates, vide their letters dated 12-02-2009 replied that correct meaning of CLB order dated 21-11-2006 is that voting structure of BSL and BPSL will not be changed and BSL is within their right to issue 10% Redeemable Cumulative Preference Shares having no voting rights and there is no disobedience of CLB order.

• CONTEMPT PETITION FILED BY PARAGON SECURITIES PVT. LTD AGAINST BHUSHAN STEEL LTD.

The Contempt Petition filed by Paragon Securities Pvt. Ltd. of Chandigarh against BSL before Hon’ble High Court, New Delhi was attended by the senior advocates on behalf of the company on 17-02-2009. The Hon’ble High Court, New Delhi recorded the statement of our advocate that allotment of Preference shares would not carry voting rights and they would not change the voting structure of BSL and status quo would be maintained. On 04-03-2009, the Hon’ble High Court, New Delhi fixed the next date of hearing for 24-08-2009.

• CONTEMPT PETITION FILED BY BSL AGAINST BPSL

The Contempt Petition has also been filed by BSL against BPSL before Hon’ble High Court, New Delhi for punishment for contempt for Order of CLB dated 21-11-06 and restrain the BPSL from issuing any shares against share application money received after 21-11-06. The said Petition was also attended by the senior advocates on behalf of the company on 04-03-2009 and the Hon’ble High Court, New Delhi fixed the next date of hearing for 24-08-2009.