Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
DRAFT RED HERRING PROSPECTUSAugust 6, 2015
Please refer section 32 of the Companies Act, 2013This Draft Red Herring Prospectus will be updated upon fi ling with the RoC
Book Built Offer
ALKEM LABORATORIES LIMITEDAlkem Laboratories Limited (“Company”) was incorporated as a private limited company ‘Alkem Laboratories Private Limited’ on August 8, 1973 at Patna under the Companies Act, 1956 and
subsequently became a deemed public limited company under section 43A(2) of Companies Act, 1956 on October 26, 1988. Pursuant to our Company passing a resolution under section 21 of Companies Act, 1956 and upon issuance of a fresh certifi cate of incorporation consequent on change of name dated August 21, 2001, the name of our Company was changed to ‘Alkem Laboratories Limited’ with
effect from October 26, 1988. Pursuant to an order passed by the Company Law Board, Kolkata, the registered offi ce of our Company was shifted from state of Bihar to Maharashtra in the year 2007. For further details, please refer to the chapter “History and Certain Corporate Matters” on page 158.
Registered Offi ce and Corporate Offi ce: Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, Maharashtra, India. Tel No:+91 22 3982 9999; Fax No:+91 22 2492 7190Contact Person: Mr. Manish Narang, Senior Vice President, Legal, Company Secretary and Compliance Offi cer; Tel No:+91 22 3982 9999; Fax No:+91 22 2492 7190
E-mail: [email protected]; Website: www.alkemlabs.com; Corporate Identity Number: U00305MH1973PLC174201.
PROMOTERS OF OUR COMPANY: MR. SAMPRADA SINGH, MR. BASUDEO N. SINGH AND INDIVIDUALS IDENTIFIED AS PROMOTERS AND LISTED IN THE CHAPTER “OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES” ON PAGE 194.
INITIAL PUBLIC OFFERING OF UPTO 12,853,442 EQUITY SHARES OF FACE VALUE `2 EACH (“EQUITY SHARES”) OF OUR COMPANY FOR CASH AT A PRICE OF `[●] PER EQUITY SHARE THROUGH AN OFFER FOR SALE, BY THE SELLING SHAREHOLDERS (DEFINED SUBSEQUENTLY) AGGREGATING UP TO `[●] MILLION (“OFFER”). THE OFFER INCLUDES A RESERVATION OF UP TO [●] EQUITY SHARES, AGGREGATING UP TO `[●] MILLION, FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED SUBSEQUENTLY) ON A COMPETITIVE BASIS (“EMPLOYEE RESERVATION PORTION”). THE OFFER LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE “NET OFFER”. THE OFFER AND THE NET OFFER WILL CONSTITUTE UP TO 10.75% AND [●] %, RESPECTIVELY, OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY.
THE FACE VALUE OF THE EQUITY SHARES IS ` 2 EACH. THE OFFER PRICE IS ` [●] PER EQUITY SHARE AND IS [●] TIMES OF THE FACE VALUE THE PRICE BAND, DISCOUNT, IF ANY, TO RETAIL INDIVIDUAL INVESTORS AND ELIGIBLE EMPLOYEES AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS (“GCBRLMs”) AND WILL BE ADVERTISED IN ONE ENGLISH, HINDI AND MARATHI NEWSPAPERS (MARATHI BEING THE REGIONAL LANGUAGE OF MAHARASHTRA WHERE OUR REGISTERED OFFICE IS LOCATED), EACH WITH WIDE CIRCULATION, AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE.In case of revision in the Price Band, the Bid/ Offer Period shall be extended for at least three Working Days after such revision of the Price Band, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band, and the revised Bid/ Offer Period, if applicable, shall be widely disseminated by notifi cation to BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release and also by indicating the change on the websites of the GCBRLMs and at the terminals of the Syndicate member(s).Pursuant to Rule 19(2)(b)(iii) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”), the Offer is being made for at least 10% of the post-Offer paid-up Equity Share capital of our Company. The Offer is being made through the Book Building Process in compliance with regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (“SEBI ICDR Regulations”), wherein 50% of the Net Offer shall be allocated on a proportionate basis to qualifi ed institutional buyers (“QIBs”). Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, allocate up to 60% of the QIB Portion to Anchor Investors (“Anchor Investor Portion”) at the Anchor Investor Offer Price, on a discretionary basis, out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remaining Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above Offer Price. Further, not less than 15% of the Net Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Investors in accordance with SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. Further, [●] Equity Shares shall be reserved for allocation on a proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Offer Price. All QIBs (other than Anchor Investors) and Non-Institutional Investors must compulsorily and Retail Individual Investors and Eligible Employees may optionally participate in this Offer through the ASBA process by providing the details of their respective bank accounts in which the corresponding Bid Amounts will be blocked by the SCSBs. For further details please refer to the chapter “Offer Procedure” on page 476.
RISKS IN RELATION TO THE FIRST ISSUEThis being the fi rst public offering of Equity Shares of our Company, there has been no formal market for the Equity Shares. The face value of the Equity Shares is `2 and the Floor Price is [•] times of the face value and the Cap Price is [•] times of the face value. The Offer Price (as determined and justifi ed by our Company and the Selling Shareholders in consultation with the GCBRLMs as stated in “Basis for Offer Price” on page 99) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and / or sustained trading in the Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKSInvestment in equity and equity related securities involves a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer including the risks involved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specifi c attention of the investors is invited to the chapter “Risk Factors”on page 18.
COMPANY’S AND THE SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITYOur Company, having made all reasonable inquiries, accepts responsibility for and confi rms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of this Offer; that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held; and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.Each Selling Shareholder accepts responsibility only for statements in this Draft Red Herring Prospectus in relation to itself and the Equity Shares being sold by them through the Offer for Sale. The Selling Shareholders do not assume any responsibility for any other statement in this Draft Red Herring Prospectus, including without limitation, any and all of the statements made by or relating to the Company or its business.
LISTINGThe Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on BSE and NSE. The in-principle approvals from each of BSE and NSE for listing the Equity Shares have been received pursuant to letter no. [●] dated [●] and letter no. [●] dated [●], respectively. For the purpose of this Offer, [●] shall be the Designated Stock Exchange. A copy of the Red Herring Prospectus and the Prospectus shall be delivered for registration to RoC in accordance with section 26(4) of the Companies Act, 2013. For details of the material contracts and documents available for inspection from the date of the Red Herring Prospectus up to the Bid/ Offer Closing Date, please refer to the chapter “Material Contracts and Documents for Inspection” on page 549.
GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER
Nomura Financial Advisory and Securities (India) Private LimitedCeejay House, Level 11, Plot F, Shivsagar Estate, Worli, Mumbai – 400 018,Maharashtra, India.Tel.: +91 22 4037 4037Fax: +91 22 4037 4111Email: [email protected]: www.nomuraholdings.com/company/group/asia/india/index.htmlInvestor grievance email: [email protected] Person: Mr. Shreyance ShahSEBI Regn. No.: INM000011419
Axis Capital Limited1st Floor, Axis House, C-2 Wadia International Centre, P.B. Marg, Worli, Mumbai – 400 025, Maharashtra, India.Tel.: +91 22 4325 2183Fax: +91 22 4325 3000Email: [email protected]:www.axiscapital.co.inInvestor grievance email: [email protected] Person:Ms. Lakha NairSEBI Regn. No.:INM000012029
J.P. Morgan India Private LimitedJ.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz (East), Mumbai – 400 098, Maharashtra, India.Tel.: +91 22 6157 3000Fax: +91 22 6157 3911Email: [email protected]:www.jpmipl.comInvestor grievance email: [email protected] Person: Ms. Prateeksha Runwal SEBI Regn. No.:INM000002970
Edelweiss Financial Services Limited14th Floor, Edelweiss House, Off. C.S.T. Road, Kalina,Mumbai – 400 098,Maharashtra, India.Tel: +91 22 4086 3535Fax +91 22 4086 3610Email: al.ipo@edelweissfi n.comWebsite:www.edelweissfi n.comInvestor grievance email: customerservice.mb@edelweissfi n.comContact Person : Mr. Anshul Bansal/ Mr. Siddharth ShahSEBI Regn. No.: INM0000010650
Link Intime India Private LimitedC-13, Pannalal Silk Mills Compound, L.B.S. Marg,Bhandup (West),Mumbai – 400 078, Maharashtra, India.Tel: +91 22 6171 5400Fax: +91 22 2596 0329E-mail: [email protected]: www.linkintime.co.in Investor Grievance E-mail: [email protected] Person: Mr. Sachin AcharSEBI Regn. No.: INR000004058
BID/ OFFERPROGRAMME#
FOR ALL BIDDERS: OFFER OPENS ON: [●]FOR QIBs: OFFER CLOSES ON**: [●]FOR ALL BIDDERS, OTHER THAN QIBs: OFFER CLOSES ON: [●]
#Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, may offer a discount of up to [●]% (equivalent of `[●]) on the Offer Price to Retail Individual Investors and Eligible Employees. Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, consider participation by Anchor Investors. The Anchor Investor shall bid in the Anchor Investor Bid/ Offer Period i.e. one Working Day prior to the Bid/ Offer Opening Date.** Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, consider closing the Bidding by QIB Bidders one Working Day prior to the Bid/ Offer Closing Date in accordance with the SEBI ICDR Regulations.
Alkem Laboratories Limited
1
TABLE OF CONTENTS
SECTION I: GENERAL ...................................................................................................................................... 2
DEFINITIONS AND ABBREVIATIONS .................................................................................................... 2 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ............................................. 14 FORWARD LOOKING STATEMENTS ................................................................................................... 17
SECTION II: RISK FACTORS ........................................................................................................................ 18
SECTION III: INTRODUCTION .................................................................................................................... 43
SUMMARY OF INDUSTRY ....................................................................................................................... 43 SUMMARY OF OUR BUSINESS ............................................................................................................... 45 SUMMARY FINANCIAL INFORMATION ............................................................................................. 51 THE OFFER .................................................................................................................................................. 58 GENERAL INFORMATION ...................................................................................................................... 60 CAPITAL STRUCTURE ............................................................................................................................. 71
SECTION IV: PARTICULARS OF THE OFFER ......................................................................................... 98
OBJECTS OF THE OFFER ........................................................................................................................ 98 BASIS FOR OFFER PRICE ........................................................................................................................ 99 STATEMENT OF TAX BENEFITS ......................................................................................................... 102
SECTION V: ABOUT THE COMPANY ....................................................................................................... 115
INDUSTRY OVERVIEW .......................................................................................................................... 115 OUR BUSINESS ......................................................................................................................................... 129 KEY INDUSTRY REGULATIONS AND POLICIES ............................................................................. 149 HISTORY AND CERTAIN OTHER CORPORATE MATTERS .......................................................... 158 OUR SUBSIDIARIES ................................................................................................................................. 163 OUR MANAGEMENT ............................................................................................................................... 174 OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES ......................................... 194 DIVIDEND POLICY .................................................................................................................................. 212
SECTION VI: FINANCIAL INFORMATION ............................................................................................. 213
FINANCIAL STATEMENTS .................................................................................................................... 213 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ...................................................................................................................................... 358 FINANCIAL INDEBTEDNESS ................................................................................................................ 382
SECTION VII: LEGAL AND OTHER INFORMATION ........................................................................... 398
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ............................................. 398 LICENSES AND APPROVALS ................................................................................................................ 435 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 451
SECTION VII: OFFER INFORMATION ..................................................................................................... 467
OFFER STRUCTURE................................................................................................................................ 467 TERMS OF THE OFFER .......................................................................................................................... 473 OFFER PROCEDURE ............................................................................................................................... 476
SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION .................................. 526
SECTION IX: OTHER INFORMATION...................................................................................................... 549
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 549
SECTION X: DECLARATION BY THE SELLING SHAREHOLDERS.................................................. 551
SECTION XI: DECLARATION ..................................................................................................................... 552
Alkem Laboratories Limited
2
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
This Draft Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise
indicates or implies, the following terms have the meanings given below. References to statutes, rules, regulations,
guidelines and policies will be deemed to include all amendments and modifications notified thereto from time to
time.
The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms
under the SEBI ICDR Regulations, the Companies Act, the SCRA, the Depositories Act and the rules and
regulations made thereunder.
Notwithstanding the foregoing, including any terms and abbreviations used in the chapters “Statement of Tax
Benefits”, “Financial Statements”, “Outstanding Litigations and Material Developments”, “Our Business” and
“Main Provisions of the Articles of Association” on pages 102, 213, 398, 129 and 526, respectively, shall have the
meanings given to such terms in these respective chapters.
General Terms
Term Description
Alkem/ our Company or
the Company
Alkem Laboratories Limited, a company incorporated under the Companies Act, 1956,
and having its registered office at Alkem House, Senapati Bapat Marg, Lower Parel,
Mumbai – 400 013, Maharashtra, India.
“We”/ “us”/ “Our” Unless the context otherwise indicates or implies, refers to our Company together with
our Subsidiaries, on a consolidated basis.
Company Related Terms
Term Description
Articles/ Articles of
Association/ AoA
The articles of association of our Company, as amended.
Auditor / Statutory
Auditor
The statutory auditors of our Company, namely, B S R & Co. LLP, Chartered
Accountants. Board/ Board of
Directors
The board of directors of our Company or a duly constituted committee thereof.
Ascend Our Subsidiary, Ascend Laboratories LLC
Cachet Our Subsidiary, Cachet Pharmaceuticals Private Limited
Corporate Office The corporate office of our Company located at Alkem House, Senapati Bapat Marg,
Lower Parel, Mumbai – 400 013, Maharashtra, India.
CSR Committee The corporate social responsibility committee of the Board of Directors.
Director(s) The director(s) of our Company.
Enzene Our Subsidiary Enzene Biosciences Limited
Equity Shares The equity shares of our Company of `2 each, fully paid up, unless otherwise specified in the context thereof.
Group Our Company along with our Subsidiaries
Group Companies The companies, firms and ventures promoted by our Promoters and disclosed in the
chapter “Our Promoters, Promoter Group and Group Companies - Our Group
Companies” on page 194.
Independent
Director(s) Independent directors on the Board of Directors. For details of the Independent
Directors, please refer to the chapter “Our Management” on page 174.
Indchemie Our Subsidiary Indchemie Health Specialities Private Limited
Memorandum/
Memorandum of
Association/ MoA
The memorandum of association of our Company, as amended.
OAIL Olympic Agro Industries Limited
Pharmacor Our Subsidiary, Pharmacor Pty Ltd, Australia
Promoters The promoters of our Company namely, (i) Samprada Singh, (ii) Samprada Singh
(HUF), (iii) Balmiki Prasad Singh, (iv) Manju Singh, (v) Sarandhar Singh, (vi)
Srinivas Singh, (vii) Satish Kumar Singh, (viii) Premlata Singh, (ix) Sarvesh Singh,
Alkem Laboratories Limited
3
Term Description
(x) Annapurna Singh, (xi) Sandeep Singh, (xii) Inderjit Arora; (xiii) Basudeo N.
Singh, (xiv) Rekha Singh, (xv) Dhananjay Kumar Singh, (xvi) Madhurima Singh,
(xvii) Divya Singh, (xviii) Aniruddha Singh, (xix) Mritunjay Kumar Singh, (xx)
Seema Singh, (xxi) Meghna Singh, (xxii) Shrey Shreeanant Singh and (xxiii)
Archana Singh.
Promoter Group Includes such persons and entities constituting promoter group in terms of Regulation
2 (1)(zb) of the SEBI ICDR Regulations and mentioned in the chapter “Promoter,
Promoter Group and Group Companies” on page 194.
Registered Office The registered office of our Company located at Alkem House, Senapati Bapat Marg,
Lower Parel, Mumbai – 400 013, Maharashtra, India.
Registrar of
Companies / RoC
The Registrar of Companies, Mumbai located at 100, Everest, Marine Drive Mumbai
– 400 002, Maharashtra, India.
Shareholders The shareholders of our Company.
Shareholders’
Agreement
Shareholders’ Agreement dated July 13, 2015 entered into between the Promoters
and the Company. For further details, please refer please refer to, “History and
Certain Corporate Matters – Summary of Key Agreements – Shareholders
Agreement” on page 161.
Shareholder’s Group 1 The shareholder’s group 1 consists of certain of our Promoters, namely (i) Samprada
Singh, (ii) Samprada Singh (HUF), (iii) Balmiki Prasad Singh, (iv) Manju Singh, (v)
Sarandhar Singh, (vi) Srinivas Singh, (vii) Satish Kumar Singh, (viii) Premlata Singh,
(ix) Sarvesh Singh, (x) Annapurna Singh, (xi) Sandeep Singh and (xii) Inderjit Arora.
Shareholder’s Group 2 The shareholder’s group 2 consists of certain of our Promoters, namely (i) Basudeo
N. Singh, (ii) Rekha Singh, (iii) Dhananjay Kumar Singh, (iv) Madhurima Singh, (v)
Divya Singh, (vi) Aniruddha Singh, (vii) Mritunjay Kumar Singh, (viii) Seema Singh,
(ix) Meghna Singh, (x) Shrey Shreeanant Singh and (xi) Archana Singh.
Selling Shareholders The selling shareholders to the Offer namely, (i) Nawal Kishore Singh, (ii) Jayanti
Sinha, (iii) Rajesh Kumar, (iv) Rekha Singh, (v) Anju Singh, (vi) Anita Singh, (vii)
Rajeev Ranjan, (viii) Prerana Kumar, (ix) Prabhat N Singh, (x) Deepak Kumar Singh,
(xi) Kishore Kumar Singh, (xii) Lalan Kumar Singh, (xiii) Tushar Kumar, (xiv)
Krishna Singh, (xv) Alok Kumar, (xvi) Ashok Kumar, (xvii) Madan Kumar Singh,
and (xviii) Raj Kumar Singh.
Subsidiaries The subsidiaries of our Company namely, (i) Cachet Pharmaceuticals Private
Limited, (ii) Indchemie Health Specialities Private Limited, (iii) Enzene Biosciences
Limited, (iv) Alkem Real Estate LLP, (v) Alkem Laboratories (Nigeria) Limited, (vi)
Alkem Laboratories (Pty) Limited, (vii) Alkem Laboratories Corporation, (viii)
Alkem Pharma GmbH, (ix) S&B Holdings BV, (x) Pharmacor Pty Ltd., (xi)
ThePharmaNetwork LLC, (xii) Ascend Laboratories Sdn Bhd, (xiii) Ascend
Laboratories SpA, (xiv) Pharmacor Limited, (xv) ThePharmaNetwork LLP, (xvi)
Alkem Laboratories Korea, Inc., (xvii) S&B Pharma Inc. (xviii) Ascend Laboratories
LLC and (ix) Ascend Laboratories (UK) Limited.
Offer Related Terms
Term Description
Allot/ Allotment/
Allotted
Transfer of Equity Shares to successful Bidders pursuant to this Offer.
Allotment Advice Note or advice or intimation of Allotment sent to the Bidders who have been or are
to be Allotted Equity Shares after the Basis of Allotment has been approved by the
Designated Stock Exchange.
Allottee A successful Bidder to whom the Allotment is made.
Anchor Investor A QIB, applying under the Anchor Investor Portion and in accordance with the
requirements specified in the SEBI ICDR Regulations.
Anchor Investor
Allocation Price
The final price at which allocation is being done to Anchor Investors on the Anchor
Investor Bid Period. The Anchor Investor Allocation Price will be decided by our
Company and the Selling Shareholders in consultation with the GCBRLMs.
Anchor Investor Bid/
Offer Period
The final day, one Working Day prior to the Bid/ Offer Opening Date, on which Bids
by Anchor Investors shall be submitted and Allocation to Anchor Investors shall be
completed.
Anchor Investor Offer The final price at which Equity Shares will be Allotted to the Anchor Investors in
Alkem Laboratories Limited
4
Term Description
Price terms of the Red Herring Prospectus and Prospectus, which price will be equal to or
higher than the Offer Price but not higher than the Cap Price.
Anchor Investor Portion Up to 60% of the QIB Portion which may be allocated by our Company and the Selling
Shareholders, in consultation with the GCBRLMs, to Anchor Investors on a
discretionary basis.
One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds,
subject to valid Bids being received from domestic Mutual Funds at or above the
Anchor Investor Allocation Price.
Application Supported
by Blocked Amount/
ASBA
An application, whether physical or electronic, used by ASBA Bidder to make a Bid
authorising a SCSB, to block the Bid Amount in their ASBA Account.
Bids by QIBs (except Anchor Investors) and Non-Institutional Investors should be
compulsorily made through ASBA. Anchor Investors are not permitted to participate
through the ASBA process.
ASBA Account Account maintained with a SCSB and specified in the Bid cum Application Form
submitted by the ASBA Bidders for blocking the extent of the appropriate Bid
Amount specified by an ASBA Bidder in the Bid cum Application Form.
ASBA Bidder(s) Any Bidder, other than an Anchor Investor, who Bids in the Offer through the ASBA
process.
Axis Axis Capital Limited
Bankers to the Offer The Escrow Collection Bank(s), Refund Bank(s) and Public Issue Bank(s).
Basis of Allotment The basis on which Equity Shares will be Allotted to successful Bidders under the
Offer and which is described in the chapter “Offer Procedure” on page 476.
Bid(s) An indication to make an offer during the Bid/ Offer Period by a Bidder (other than
Anchor Investors) or during the Anchor Investor Bid/ Offer Period by the Anchor
Investors, to purchase the Equity Shares from Selling Shareholders at a price within
the Price Band, including all revisions and modifications thereto.
Bid Amount The highest value of optional Bids indicated in the Bid cum Application Form and
payable by the Bidder/ blocked in the ASBA Account on submission of a Bid cum
Application Form in the Offer, which shall be net of Employee Discount and Retail
Discount for Eligible Employees and Retail Individual Investors, as applicable.
However for Eligible Employees applying in the Employee Reservation Portion and
the Retail Individual Investors applying at the Cut-Off Price, the Bid amount shall be
Cap Price multiplied by the number of Equity Shares Bid for by such Eligible
Employee/ Retail Individual Investors and mentioned in the Bid cum Application
Form net of Employee/ Retail Discount as the case may be.
Bid cum Application
Form
The form used by a Bidder, including ASBA Bidders, which is serially numbered
comprising an eight digit application number, to make a Bid and which will be
considered as the application for Allotment in terms of the Red Herring Prospectus
and the Prospectus.
Bid/ Offer Closing Date Except in relation to any Bids received from Anchor Investors, the date after which
the Syndicate, the Designated Branches and the Non-Syndicate Registered Brokers
will not accept any Bids, which shall be notified in two national daily newspapers,
one each in English and Hindi, and in one Marathi daily newspaper, each with wide
circulation and in case of any revision, the extended Bid/ Offer Closing Date also to
be notified on the website and terminals of the Syndicate, the Non-Syndicate
Registered Brokers and SCSBs, as required under the SEBI ICDR Regulations.
Our Company and the Selling Shareholders may, in consultation with the GCBRLMs,
consider closing the Bid/ Offer Period for QIBs one Working Day prior to the Bid/
Offer Closing Date in accordance with the SEBI ICDR Regulations which shall be
notified in two national daily newspapers, one each in English and Hindi, and in one
Marathi daily newspaper, each with wide circulation.
Bid/ Offer Opening
Date
Except in relation to Anchor Investor, the date on which the Syndicate, the SCSBs
and the Non-Syndicate Registered Brokers shall start accepting Bids which shall be
notified in two national daily newspapers, one each in English and Hindi, and in one
Marathi daily newspaper, each with wide circulation.
Alkem Laboratories Limited
5
Term Description
Bid/ Offer Period The period between the Bid/ Offer Opening Date and the Bid/ Offer Closing Date,
inclusive of both days, during which prospective Bidders (except Anchor Investors)
can submit their Bids, including any revisions thereof. The Bid/ Offer Period shall
comprise of Working Days only. Our Company and the Selling Shareholders, in
consultation with the GCBRLMs may consider closing the Bidding by QIB Bidders
one Working Day prior to the Bid/ Offer Closing Date, which shall be notified in an
advertisement in same newspapers in which the Bid/ Offer Opening advertisement
was published and in such a case the Bid/ Offer Period for the QIBs shall be
determined accordingly.
Bid Lot [●] Equity Shares
Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring
Prospectus and the Bid cum Application Form, including an Anchor Investor unless
stated or implied otherwise.
Book Building Process/
Method
The book building process as provided under Part A of Schedule XI of the SEBI
ICDR Regulations, in terms of which this Offer is being made.
Broker Centre Broker centres notified by the Stock Exchanges where Bidders can submit the Bid
cum Application Forms to a Non-Syndicate Registered Broker.
The details of such Broker Centres, along with the names and contact details of the
Non-Syndicate Registered Broker are available on the websites of the respective
Stock Exchanges. CAN/ Confirmation of
Allocation Note
The note or advice or intimation of allocation of Equity Shares sent to the successful
Anchor Investors who have been allocated Equity Shares after discovery of the
Anchor Investor Offer Price, including any revisions thereof.
Cap Price The higher end of the Price Band above which the Offer Price will not be finalized
and above which no Bids will be accepted.
Client ID Client identification number maintained with one of the Depositories in relation to demat account.
Cut-off Price The Offer Price, as finalised by our Company and the Selling Shareholders in
consultation with the GCBRLMs. Only Retail Individual Investors and Eligible
Employees bidding in the Employee Reservation Portion are entitled to Bid at the
Cut-off Price, for a Bid Amount not exceeding `200,000 (which shall be net of Employee Discount/ Retail Discount, as applicable). No other category of Bidders
are entitled to Bid at the Cut-off Price.
Demographic Details The address, Bidders bank account details, MICR code, name, status and occupation
of a Bidder
Depository A depository registered with SEBI under the Depositories Act.
Designated Branch Such branches of the SCSBs, which shall collect Bid cum Application Forms used
by ASBA Bidders, a list of which is available on http://www.sebi.gov.in/ /cms/sebi_data/attachdocs/1365051213899.html or at such other websites as may be
prescribed by SEBI from time to time.
Designated Date The date on which funds are transferred from the Escrow Account to the Public Issue
Account or the Refund Account, as appropriate, and instructions for transfer of the
amount blocked by the SCSB from the bank account of the ASBA Bidder to the
Public Issue Account are provided, after the Prospectus is filed with the RoC,
following which the Selling Shareholders shall transfer the Equity Shares in the Offer
for Sale.
Designated Stock
Exchange/ DSE
[●]
Draft Red Herring
Prospectus or DRHP
This draft red herring prospectus dated August 6, 2015 issued in accordance with the
SEBI ICDR Regulations, filed with SEBI and which does not contain complete
particulars of the price at which the Equity Shares would be Alloted and the size of
the Offer.
Edelweiss Edelweiss Financial Services Limited
Eligible Employees All or any of the following:
(a) a permanent and full time employee of our Company and Subsidiaries (excluding
such employees who are not eligible to invest in the Offer under applicable laws,
Alkem Laboratories Limited
6
Term Description
rules, regulations and guidelines including Promoters and employees who are part
of the Promoter Group) as of the date of filing of the Red Herring Prospectus with
the RoC and who continues to be an employee of our Company, until the
submission of the Bid cum Application Form, in accordance with applicable law;
and
(b) a Director of our Company (excluding Promoters who are Directors11 of our
Company) who is eligible to apply under the Employee Reservation Portion under
applicable law.
An employee of our Company, who is recruited against a regular vacancy but is on
probation as on the date of submission of the Bid cum Application Form will also be
deemed a ‘permanent and a full time employee’.
The maximum Bid Amount under the Employee Reservation Portion by an Eligible
Employee shall not exceed `200,000 on a net basis.
Eligible Employees may be given a discount, at the discretion of our Company and
the Selling Shareholders, in consultation with the GCBRLMs in accordance with
Regulation 29 of the SEBI ICDR Regulations.
Eligible FPIs FPIs from such jurisdictions outside India where it is not unlawful to make an offer/
invitation under the Offer and in relation to whom the Red Herring Prospectus
constitutes an invitation to purchase the Equity Shares offered thereby
Eligible NRIs NRI(s) from jurisdictions outside India where it is not unlawful to make an offer or
invitation under the Offer and in relation to whom the Bid cum Application Form and
the Red Herring Prospectus will constitute an invitation to subscribe to or purchase
the Equity Shares
Employee Discount Our Company and the Selling Shareholders, in consultation with the GCBRLMs,
may offer a discount of up to [●]% (equivalent of `[●]) to the Offer Price to Eligible Employees and which shall be announced at least five Working Days prior to the Bid/
Offer Opening Date.
Employee Reservation
Portion Reservation of up to [●] Equity Shares aggregating up to `[●] million, available for allocation to Eligible Employees on a proportionate basis.
Escrow Account Account opened with the Escrow Collection Banks for the Offer and in whose favour
the Bidder (except ASBA Bidders) will issue cheques or drafts in respect of the Bid
Amount when submitting a Bid.
Escrow Agreement Agreement to be entered into by our Company, the Selling Shareholders, the
Registrar to the Offer, the GCBRLMs, the Syndicate member(s), the Escrow
Collection Bank(s) and the Refund Bank(s) for collection of the Bid Amounts and
where applicable, refunds of the amounts collected from the Bidders (excluding the
ASBA Bidders), on the terms and conditions thereof.
Escrow Collection
Banks
The banks which are clearing members and registered with SEBI under the Securities
and Exchange Board of India (Bankers to an Issue) Regulations, 1994, with whom
the Escrow Account(s) will be opened.
First / Sole Bidder Bidder whose name shall be mentioned in the Bid cum Application Form or the
Revision Form and in case of joint Bids, whose name shall also appear as the first
holder of the beneficiary account held in joint names.
Floor Price Lower end of the Price Band, subject to any revision thereto, at or above which the
Offer Price and the Anchor Investor Offer Price will be finalised and below which
no Bids will be accepted.
GCBRLMs/ Global Co-
ordinators and Book
Running Lead
Managers
The global co-ordinators and book running lead managers to the Offer, in this case
being Nomura Financial Advisory and Securities (India) Private Limited, Axis
Capital Limited, J.P. Morgan India Private Limited and Edelweiss Financial Services
Limited.
General Information
Document/ GID
The General Information Document for investing in public issues prepared and issued
in accordance with the circular (CIR/ CFD/ DIL/ 12/ 2013) dated October 23, 2013,
notified by SEBI, suitably modified and included in “Offer Procedure – General
Information Document for Investing in Public Issues” on page 488.
Alkem Laboratories Limited
7
Term Description
Insurance Companies Any company registered with Insurance Regulatory and Development Authority as
an insurance company.
JPM/ J.P. Morgan J.P. Morgan India Private Limited.
Listing Agreement The listing agreement to be entered into by our Company with the Stock Exchanges.
Mutual Funds A mutual fund registered with SEBI under the Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996.
Mutual Fund Portion 5% of the Net QIB Portion or [●] Equity Shares available for allocation to Mutual
Funds, out of the Net QIB Portion.
Net Offer The Offer minus the Employee Reservation Portion.
Net QIB Portion The portion of the QIB Portion, less the number of the Equity Shares Allotted to the
Anchor Investors.
Non-Institutional
Investors
All Bidders, including Category III FPIs, that are not QIBs or Retail Individual
Investors and who have Bid for Equity Shares for a cumulative amount more than
`200,000 (but not including NRIs other than eligible NRIs). Non-Institutional
Portion
Portion of the Offer being not less than 15% of the Net Offer consisting of [●] Equity
Shares which shall be available for allocation on a proportionate basis to Non-
Institutional Investors, subject to valid Bids being received at or above the Offer
Price.
Nomura Nomura Financial Advisory and Securities (India) Private Limited.
Non-Resident A person resident outside India, as defined under FEMA and includes an NRI, FII,
FPIs and FVCI.
Non-Syndicate Broker
Centre
A broker centre of the Stock Exchanges with broker terminals, where in a Non-
Syndicate Registered Broker may accept Bid cum Application Forms, a list of which
is available on the website of the Stock Exchanges, and at such other websites as may
be prescribed by SEBI from time to time.
Non-Syndicate
Registered Broker
A broker registered with SEBI under the Securities and Exchange Board of India
(Stock Brokers and Sub Brokers) Regulations, 1992, having office in any of the Non-
Syndicate Broker Centres, and eligible to procure Bids in terms of the circular No.
CIR/ CFD/ 14/ 2012 dated October 4, 2012 issued by SEBI.
Offer/ Offer for Sale Initial public offering of up to 12,853,442 Equity Shares of face value of `2 each for cash at a price of ̀ [●] each by way of an Offer for Sale, aggregating up to `[●] million.
The Offer comprises of Net Offer to the public aggregating up to `[●] million and Employee Reservation Portion.
Offer Agreement The agreement dated August 6, 2015 entered into among our Company, the Selling
Shareholders and the GCBRLMs, pursuant to which certain arrangements are agreed
to in relation to the Offer.
Offer Price Final price at which Equity Shares will be Allotted in terms of the Red Herring
Prospectus. The Offer Price will be decided by our Company and the Selling
Shareholders in consultation with the GCBRLMs on the Pricing Date.
A discount of up to [●]% (equivalent of `[●]) per Equity Share on the Offer Price may be offered to Retail Individual Investors and Eligible Employees. The Rupee amount
of the such discount, if any, will be decided by our Company and the Selling
Shareholders, in consultation with the GCBRLMs, and advertised in [●] editions of
[●], [●] editions of [●]and [●] editions of [●] (which are widely circulated English,
Hindi and Marathi newspapers, Marathi being the regional language of Maharashtra
where our Registered Office is located), at least five Working Days prior to the Bid/
Offer Opening Date, and shall be made available to the Stock Exchanges for the
purpose of uploading on their website.
Offer Proceeds The proceeds of the Offer. For further details, please refer to the chapter “Objects of
the Offer” on page 98.
Price Band Price band of a minimum price of `[●] per Equity Share (Floor Price) and the maximum price of `[●] per Equity Share (Cap Price) including any revisions thereof.
Price Band and the minimum Bid Lot size for the Offer will be decided by our
Company and the Selling Shareholders in consultation with the GCBRLMs and will
be advertised, at least five Working Days prior to the Bid/ Offer Opening Date, in
Alkem Laboratories Limited
8
Term Description
[●] edition of the English national newspaper [●], [●] edition of the Hindi national
newspaper [●] and [●] edition of the Marathi newspaper [●], each with wide
circulation.
Pricing Date The date on which our Company and the Selling Shareholders in consultation with
the GCBRLMs finalise the Offer Price.
Prospectus The prospectus to be filed with the RoC in accordance with section 26 of the
Companies Act, 2013 and the SEBI ICDR Regulations, containing, inter alia, the
Offer Price that is determined at the end of the Book Building process, the size of the
Offer and certain other information.
Public Issue Account The bank accounts opened with the Public Issue Banks by the Selling Shareholders
under section 40(3) of the Companies Act, 2013 to receive money from the Escrow
Accounts on the Designated Date and where the funds shall be transferred by the
SCSBs from the ASBA Accounts.
Public Issue Banks The banks which are clearing members and registered with SEBI under the Securities
and Exchange Board of India (Bankers to an Issue) Regulations, 1994 with whom the
Public Issue Account(s) will be opened.
Qualified Institutional
Buyers or QIBs
Qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI ICDR
Regulations.
QIB Portion The portion of the Offer of [●] Equity Shares required to be allocated to QIBs.
Red Herring
Prospectus/ RHP
Red herring prospectus to be issued in accordance with section 32 of the Companies
Act, 2013 and the provisions of the SEBI ICDR Regulations, which will not have
complete particulars of the price at which the Equity Shares will be offered and the
size of the Offer.
Red Herring Prospectus will be registered with the RoC at least three days before the
Bid/ Offer Opening Date and will become the Prospectus upon filing with the RoC
after the Pricing Date.
Refund Account The account(s) opened with Refund Bank(s), from which refunds (excluding to the
ASBA Bidders), if any, of the whole or part of the Bid Amount shall be made.
Refund Banks The banks which are clearing members and registered with SEBI under the Securities
and Exchange Board of India (Bankers to an Issue) Regulations, 1994 with whom the
Refund Account will be opened.
Refunds through
electronic transfer of
funds
Refunds through electronic transfer of funds means refunds through NECS, Direct
Credit, NEFT or RTGS, as applicable.
Registrar/ Registrar to
the Offer
Registrar to this Offer, in this case being Link Intime India Private Limited.
Restated Consolidated
Financial Information
Consolidated financial statement of assets and liabilities as at March 31, 2015, 2014,
2013, 2012 and 2011 and statement of profit and loss and statement of cash flows for
each of the years ended March 31, 2015, 2014, 2013, 2012 and 2011 for our
Company, its Subsidiaries read alongwith all the notes thereto, restated in accordance
with the SEBI ICDR Regulations, which have been prepared and presented under the
historical cost convention using the accrual system of accounting in accordance with
the Indian GAAP and requirements of Companies Act, 1956 (up to March 31, 2014)
and notified sections, schedules and rules of the Companies Act (w.e.f. April 1, 2014)
including accounting standards as prescribed by the Companies (Accounting
Standard) Rules, 2006 as per Section 211(3c) of the Companies Act, 1956 (which are
deemed to be applicable as Section 133 of Companies Act read with Rule 7 of
Companies (Accounts) Rules, 2014, to the extent applicable) and included in the
section “Financial Statements” on page 213
Restated Standalone
Financial Information
Standalone financial statement of assets and liabilities as at March 31, 2015, 2014,
2013, 2012 and 2011 and statement of profit and loss and statement of cash flows for
each of the years ended March 31, 2015, 2014, 2013, 2012 and 2011 for our Company
read alongwith all the notes thereto, restated in accordance with the SEBI ICDR
Regulations, which have been prepared and presented under the historical cost
convention using the accrual system of accounting in accordance with the Indian
GAAP and requirements of Companies Act, 1956 (up to March 31, 2014) and
notified sections, schedules and rules of the Companies Act (w.e.f. April 1, 2014)
including accounting standards as prescribed by the Companies (Accounting
Alkem Laboratories Limited
9
Term Description
Standard) Rules, 2006 as per Section 211(3c) of the Companies Act, 1956 (which are
deemed to be applicable as Section 133 of Companies Act read with Rule 7 of
Companies (Accounts) Rules, 2014, to the extent applicable) and included in the
section “Financial Statements” on page 213
Retail Discount Our Company and the Selling Shareholders, in consultation with the GCBRLMs,
may decide to offer a discount of `[●] per Equity Share to the Offer Price to Retail Individual Investors and which shall be announced at least five Working Days prior
to the Bid/ Offer Opening Date.
Retail Individual
Bidders / Retail
Individual Investors /
RIIs
Individual Bidders, submitting Bids, who have Bid for Equity Shares for an amount
not more than `200,000 in any of the bidding options in the Net Offer (including HUFs applying through their Karta and Eligible NRIs and does not include NRIs other
than Eligible NRIs).
Retail Portion/ Retail
Category
The portion of the Offer being not less than 35% of the Net Offer available for
allocation to Retail Individual Investor(s) in accordance with the SEBI ICDR
Regulations, subject to valid Bids being received at or above the Offer Price.
Revision Form Form used by Bidders, including ASBA Bidders, to modify the quantity of the Equity
Shares or the Bid Amount in any of their Bid cum Application Forms or any previous
Revision Form(s).
QIB Bidders and Non-Institutional Investors are not allowed to lower their Bids (in
terms of quantity of Equity Shares or the Bid Amount) at any stage.
Self-Certified Syndicate
Bank or SCSBs
The banks which are registered with SEBI under the Securities and Exchange Board
of India (Bankers to an Issue) Regulations, 1994 and offer services in relation to
ASBA, including blocking of an ASBA Account in accordance with the SEBI ICDR
Regulations and a list of which is available on http:/ / www.sebi.gov.in/ sebiweb/
home/ list/ 5/ 33/ 0/ 0/ Recognised Intermediaries or at such other website as may be
prescribed by SEBI from time to time.
Share Escrow
Agreement
Agreement to be entered into between the Selling Shareholders, our Company and the
Escrow Agent in connection with the transfer of Equity Shares under the Offer for
Sale by the Selling Shareholders and credit of such Equity Shares to the demat account
of the Allottees.
Specified Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms
from ASBA Bidders, a list of which is available on the website of SEBI
(http://www.sebi.gov.in) and updated from time to time
Sub Syndicate
member(s)
A SEBI Registered member of BSE and/ or NSE appointed by the GCBRLMs and /
or Syndicate member(s) to act as a Sub Syndicate member(s) in the Offer.
Syndicate Includes the GCBRLMs and Syndicate member(s).
Syndicate Agreement The agreement to be entered into between the GCBRLMs, the Selling Shareholders,
the Syndicate member(s) and our Company in relation to the collection of Bids
(excluding Bids by ASBA Bidders) in this Offer.
Syndicate ASBA
Centres
Bidding Centres where an ASBA Bidder can submit his Bid cum Application Form
to the Syndicate member(s) and prescribed by SEBI from time to time.
Syndicate member(s) An intermediary registered with the SEBI to act as a syndicate member(s) and who
is permitted to carry on the activity as an underwriter in this case being [●].
Transaction Registration
Slip/ TRS
The slip or document issued by member of the Syndicate or the SCSB (only on
demand), as the case may be, to the Bidder as proof of registration of the Bid.
U.S. QIB Qualified institutional buyers, as defined in Rule 144A under Securities Act.
Underwriters The GCBRLMs and the Syndicate member(s).
Underwriting
Agreement
The agreement among the Underwriters, the Selling Shareholders and our Company
to be entered into on or after the Pricing Date.
Working Day Any day, other than Saturdays and Sundays, on which commercial banks in Mumbai
are open for business, provided however, for the purpose of the time period between
the Bid/ Offer Closing Date and listing of the Equity Shares on the Stock Exchanges,
“Working Days” shall mean all days excluding Sundays and bank holidays in
Mumbai in accordance with the SEBI Circular no. CIR/ CFD/ DIL/ 3/ 2010 dated
April 22, 2010.
Alkem Laboratories Limited
10
Technical/ Industry Related Terms / Abbreviations
Term Description
Asst. Assistant
ANDA Abbreviated New Drug Application
APIs Active pharmaceutical ingredients
C&F Clearing and Forwarding
CDSCO Central Drugs Standard Control Organization of India
CEO Chief Executive Officer
CFO Chief Financial Officer
cGMP Current Good Manufacturing Practices
DESI Drug Efficacy Study Implementation
DPCO 2013 Department of Pharmaceuticals released the revised Drugs (Price Control) Order,
2013
DCGI Drug Controller General of India
DMF Drug Master Files
EMA European Medicine Agency
EPCG Export Promotion Capital Goods
Fax Facsimile
FDA Food and drugs administration
FDC Drugs Fixed dose combination drugs
FSSAI Food Safety and Standards Authority of India
FTFs First-to-files
GCP Good clinical practices
GLP Good laboratory practices
GMP Good manufacturing processes
ICDS Income Computation and Disclosure Standards
IMS Health IMS Health Information and Consulting Services India Private Limited
NDA New drug application
NHAM National Health Assurance Mission
NLEM National List of Essential Medicines
NPPA National Pharmaceutical Pricing Authority
Sr. Senior
Tel. Telephone
TGA Therapeutic Goods Administration, Australia
WHO World Health Organisation
UCPMP Uniform Code of Pharmaceutical Marketing Practices
UK-MHRA The Medicines and Healthcare Products Regulatory Agency in the United Kingdom
USFDA United States Food and Drug Administration
V.P. Vice President
Conventional and General Terms/ Abbreviations
Term Description
AGM Annual general meeting
AIF(s) Alternative investment funds, as defined in, and registered with SEBI under the
Securities and Exchange Board of India (Alternative Investment Funds) Regulations,
2012.
AS Accounting standards issued by the Institute of Chartered Accountants of India
AY Assessment year
BPLR Bank prime lending rate
BG Bank guarantee
BR Base rate
BSE BSE Limited
Bn/ bn Billion
CAGR Compounded annual growth rate
CC Cash credit
CCI Competition Commission of India
CDSL Central Depository Services (India) Limited
Alkem Laboratories Limited
11
Term Description
CIN Corporate identity number
CIT Commissioner of Income Tax
CLB Company Law Board
CSR Corporate social responsibility
CST Central Sales Tax
CST Act The Central Sales Tax Act, 1956
CST Rules The Central Sales Tax (Registration and Turnover) Rules, 1957
Category I Foreign
Portfolio Investors
FPIs that are registered as “Category I foreign portfolio investors” under the SEBI
FPI Regulations.
Category II Foreign
Portfolio Investors
FPIs that are registered as “Category II foreign portfolio investors” under the SEBI
FPI Regulations.
Category III Foreign
Portfolio Investors
FPIs that are registered as “Category III foreign portfolio investors” under the SEBI
FPI Regulations.
Consolidated FDI
Policy
Consolidated FDI Policy (Circular 1 of 2015) dated May 12, 2015 issued by the
Department of Industrial Policy and Promotion, Ministry of Commerce and Industry,
Government of India, and any modifications thereto or substitutions thereof, issued
from time to time.
Companies Act, 1956 The Companies Act, 1956 (without reference to the provisions thereof that have
ceased to have effect upon notification of the sections of the Companies Act, 2013)
along with the relevant rules made thereunder.
Companies Act/
Companies Act, 2013
The Companies Act, 2013, to the extent in force pursuant to the notification of
sections of the Companies Act, 2013, along with the relevant rules made thereunder.
Competition Act The Competition Act, 2002
DCA and Rules Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945
DIN Director identification number
DIPP Department of Industrial Policy and Promotion, Ministry of Commerce and Industry,
Government of India
DP ID Depository participant identification
Depositories NSDL and CDSL
Depositories Act The Depositories Act, 1996
EPS Earnings per share
EOU Export oriented unit
Europe MAA Europe Marketing Authorisation Application
FCNR Account Foreign currency non-resident account
FDI Foreign direct investment
FEMA
The Foreign Exchange Management Act, 1999 read with rules and regulations
thereunder and amendments thereto
FEMA Regulations The Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations 2000 and amendments thereto.
FII(s) Foreign Institutional Investors as defined under the SEBI FPI Regulations. FPI(s) Foreign Portfolio Investors as defined under the SEBI FPI Regulations.
fiscal year/ Fiscal/ FY Period of 12 months ended March 31 of that particular year, unless otherwise stated.
FIPB Foreign Investment Promotion Board
FLC Foreign letter of credit
FVCI Foreign Venture Capital Investor, as defined in and registered with SEBI under the
SEBI FVCI Regulations
GAAR General anti-avoidance rule
GDP Gross domestic product
GoI/ Government Government of India
GST Goods and Services Tax
HNI High net worth individual
HUF Hindu undivided family
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IPO Initial public offering
ILC Inland letter of credit
IRDA Insurance Regulatory and Development Authority
I.T. Act The Income Tax Act, 1961
Alkem Laboratories Limited
12
Term Description
Indian GAAP Generally Accepted Accounting Principles in India
Ind AS Indian Accounting Standard
Insider Trading
Regulations
The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 2015
KMP/ Key Management
Personnel/ Key
Managerial Personnel
Key management personnel defined under section 2(1)(s) of the SEBI ICDR
Regulations and includes the officers vested with executive powers and the officers
at the level immediately below the Board and defined more particularly in “Our
Management – Key Management Personnel” on page 190.
LER Loan equivalent risk
Libor London interbank offer rate
LOC Letters of credit
LOU Letter of undertaking
LLP Act The Limited Liability Partnership Act, 2008
MAT Minimum alternate tax
MCA Ministry of Corporate Affairs, Government of India
MICR Magnetic ink character recognition
Mn / mn Million
MOU Memorandum of understanding
Mutual Fund(s) Mutual Fund(s) means mutual funds registered under the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996.
NA/ N.A. Not Applicable
NAV/ Net Asset Value Net Asset Value being paid up equity share capital plus free reserves (excluding
reserves created out of revaluation) less deferred expenditure not written off
(including miscellaneous expenses not written off) and debit balance of Profit and
Loss account, divided by number of issued Equity Shares.
NCR National capital region
NECS National electronic clearing services
NEFT National electronic fund transfer
Net Worth Net worth means the aggregate of the paid up share capital, share premium account,
and reserves and surplus (excluding revaluation reserve).
NOC No objection certificate.
Notified Sections The sections of the Companies Act, 2013 that have been notified by the MCA and are
currently in effect.
NR Non-resident
NRE Account Non-resident external account
NRI An individual resident outside India who is a citizen of India or is an ‘Overseas
Citizen of India’ cardholder within the meaning of Section 7 (A) of the Citizenship
Act, 1955.
NRO Account Non-resident ordinary account
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
OCB/ Overseas
Corporate Body
A company, firm, partnership, society or other corporate body owned directly or
indirectly to the extent of at least 60% by NRIs including overseas trusts, in which
not less than 60% of beneficial interest is irrevocably held by NRIs directly or
indirectly and which was in existence on October 3, 2003 and immediately before
such date had taken benefits under the general permission granted to OCBs under
FEMA. OCBs are not allowed to invest in this Offer, except with the specific
permission of the RBI.
p.a. Per annum
P/ E Ratio Price/ earnings ratio
PAN Permanent account number allotted under the Income Tax Act, 1961.
PAT Profit after tax
PBT Profit before tax
PCFC Packing Credit in Foreign Currency
PIO Persons of Indian origin
PLR Prime lending rate
RBI The Reserve Bank of India
RBI Act The Reserve Bank of India Act, 1934
Alkem Laboratories Limited
13
Term Description
RONW Return on Net Worth
`/ Rs./ Rupees/ INR Indian Rupees
RTGS Real time gross settlement
SAP Systems, Applications and Products in Data Processing
SCRA The Securities Contracts (Regulation) Act, 1956
SCRR The Securities Contracts (Regulation) Rules, 1957
SCSB Self-certified syndicate bank
SEBI The Securities and Exchange Board of India constituted under the SEBI Act.
SEBI Act The Securities and Exchange Board of India Act, 1992
SEBI AIF Regulations The Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012
SEBI FII Regulations The Securities and Exchange Board of India (Foreign Institutional Investors)
Regulations, 1995
SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors)
Regulations, 2014 SEBI FVCI Regulations The Securities and Exchange Board of India (Foreign Venture Capital Investors)
Regulations, 2000
SEBI ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009
SEBI Takeover
Regulations
The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011
SEBI VCF Regulations The erstwhile Securities and Exchange Board of India (Venture Capital Funds)
Regulations, 1996
Securities Act U.S. Securities Act of 1933, as amended
SIA Secretariat of Industrial Assistance, Department of Industrial Policy & Promotion,
Ministry of Commerce and Industry, Government of India
SPV Special Purpose Vehicle
Sr. Senior
STT Securities transaction tax
State Government The government of a state of the Union of India
Stock Exchange(s) BSE and/ or NSE, as the context may refer to
UK The United Kingdom
US / U.S./ United States The United States of America
US GAAP Generally Accepted Accounting Principles in the United States of America
USD/ US$/ U.S.$ United States Dollars
VAT Value added tax VCFs Venture Capital Funds as defined and registered with SEBI under the SEBI VCF
Regulations
Alkem Laboratories Limited
14
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
Certain Conventions
All references to “India” in this Draft Red Herring Prospectus are to the Republic of India and all references to
the “U.S.”, “USA” or “United States” are to the United States of America. Further, all references to following
countries are:
Sr. No. Reference Country
1. Australia The Commonwealth of Australia
2. Chile The Republic of Chile
3. Germany The Federal Republic of Germany
4. Kenya The Republic of Kenya
5. Malaysia The Federation of Malaysia
6. Netherlands The Kingdom of Netherlands
7. Nigeria The Federal Republic of Nigeria
8. Philippines The Republic of the Philippines
9. South Africa The Republic of South Africa
10. South Korea The Republic of Korea
11. U.K., UK or United Kingdom The United Kingdom of Great Britain and Northern Ireland
Financial Data
Unless stated otherwise, the financial information in this Draft Red Herring Prospectus is derived from our
Restated Consolidated Financial Information and Restated Standalone Financial Information. The above stated
financial information is restated in accordance with the SEBI ICDR Regulations, which have been prepared and
presented under the historical cost convention using the accrual system of accounting in accordance with the
Indian GAAP and requirements of Companies Act, 1956 (up to March 31, 2014) and notified sections, schedules
and rules of the Companies Act (w.e.f. April 1, 2014) including accounting standards as prescribed by the
Companies (Accounting Standard) Rules, 2006 as per Section 211(3c) of the Companies Act, 1956 (which are
deemed to be applicable as Section 133 of Companies Act read with Rule 7 of Companies (Accounts) Rules, 2014,
to the extent applicable).
In this Draft Red Herring Prospectus, all figures in decimals have been rounded off to the first decimal and all
percentage figures have been rounded off to one decimal places and accordingly there may be consequential
changes in this Draft Red Herring Prospectus.
Our Company’s fiscal year commences on April 1 and ends on March 31 of the next year; accordingly, all
references to a particular fiscal year, unless stated otherwise, are to the 12 month period ended on March 31 of
that year.
There could be significant differences between Indian GAAP, US GAAP and IFRS. The reconciliation of the
financial information to IFRS or US GAAP financial information has not been provided. Our Company has not
attempted to explain those differences or quantify their impact on the financial data included in this Draft Red
Herring Prospectus and we urge investors to consult your own advisors regarding such differences and their
impact on our Company’s financial data. For details in connection with risks involving differences between
Indian GAAP and IFRS, please refer to “Risk Factors – Significant differences could exist between Indian GAAP
and other accounting principles, such as U.S. GAAP and IFRS, which may affect investors’ assessments of our
Company’s IND IFRS financial condition” on page 39. Accordingly, the degree to which the financial
information included in this Draft Red Herring Prospectus will provide meaningful information is entirely
dependent on the reader’s level of familiarity with Indian accounting policies and practices, Indian GAAP, the
Companies Act and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting
policies, Indian GAAP, the Companies Act, the SEBI ICDR Regulations and practices on the financial
disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.
Unless the context otherwise indicates, any percentage amounts, as set forth in “Risk Factors”, “Our Business”,
“Management’s Discussion and Analysis of Financial Conditional and Results of Operations” on pages 18, 129
and 358 respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated on the basis of
the Restated Consolidated Financial Information and Restated Standalone Financial Information of our
Company.
https://upload.wikimedia.org/wikipedia/commons/5/50/RepChile.ogg
Alkem Laboratories Limited
15
Currency and Units of Presentation
All references to:
“Rupees” or “`” or “INR” or “Rs.” are to Indian Rupee, the official currency of the Republic of India;
“USD” or “US$” are to United States Dollar, the official currency of the United States of America;
“Euro” or “EUR” are to Euro, the official currency of the European Union and consequently, the official currency of the Kingdom of Netherlands; and
All references to the following currencies refer to the official currencies of countries mentioned below:
Sr. No. Currency Country 1. Australian dollar or AUD or $ Australia
2. Chilean peso or CLP or $ Chile
3. Euro or EUR or € Germany
4. Kenyan shilling or KES or Sh Kenya
5. Malaysian ringgit or MYR or RM Malaysia
6. Euro or EUR or € Netherlands
7. Nigerian naira or NGN or ₦ Nigeria
8. Philippine peso or PHP or ₱ Philippines
9. South African rand or ZAR or R South Africa
10. South Korean won or KRW or ₩ South Korea
11. British pound or GBP or £ U.K., UK or United Kingdom
Except otherwise specified, our Company has presented certain numerical information in this Draft Red Herring
Prospectus in “million” units. One million represents 1,000,000 and one billion represents 1,000,000,000.
Exchange Rates
This Draft Red Herring Prospectus contains conversion of certain other currency amounts into Indian Rupees
that have been presented solely to comply with the SEBI ICDR Regulations. These conversions should not be
construed as a representation that these currency amounts could have been, or can be converted into Indian
Rupees, at any particular rate or at all.
The following table sets forth, for the periods indicated, information with respect to the exchange rate between
the Rupee and other currencies:
(in `) Currency As on March 31,
2011 2012 2013 2014 2015
1 USD(1) 44.6 50.9 54.3 59.9 62.5
1 AUD(2) 46.1 52.9 56.6 55.3 47.5
1 Chilean peso(3) 0.1 0.1 0.1 0.1 0.1
1 €(4) 63.4 67.9 69.5 82.7 67.2
100 Kenyan shilling(5) 53.6 61.3 63.5 69.3 67.6
1 RM(6) 14.9 16.9 17.4 18.3 16.8
1 NGN(7) 0.3 0.3 0.3 0.4 0.3
1 Philippine peso(8) 1.0 1.2 1.3 1.3 1.4
1 Rand(9) 6.6 6.6 5.9 5.7 5.1
1 KRW(10) 0.0 0.0 0.0 0.1 0.1
1 £(11) 71.8 81.5 82.2 99.8 92.5 Source:
(1) Foreign Exchange Dealer Association of India - Fedai.org.in (2) Foreign Exchange Dealer Association of India - Fedai.org.in (3) Oanda.com (4) Foreign Exchange Dealer Association of India - Fedai.org.in
https://en.wikipedia.org/wiki/Chilean_pesohttps://en.wikipedia.org/wiki/Kenyan_shillinghttps://en.wikipedia.org/wiki/Malaysian_ringgithttps://en.wikipedia.org/wiki/Nigerian_nairahttps://en.wikipedia.org/wiki/Philippine_pesohttps://en.wikipedia.org/wiki/South_African_randhttps://en.wikipedia.org/wiki/South_Korean_wonhttps://en.wikipedia.org/wiki/Pound_sterlinghttps://en.wikipedia.org/wiki/Chilean_pesohttps://en.wikipedia.org/wiki/Kenyan_shillinghttps://en.wikipedia.org/wiki/Philippine_peso
Alkem Laboratories Limited
16
(5) Foreign Exchange Dealer Association of India - Fedai.org.in (6) Oanda.com (7) Oanda.com (8) Oanda.com (9) Foreign Exchange Dealer Association of India - Fedai.org.in (10) Oanda.com (11) Foreign Exchange Dealer Association of India - Fedai.org.in
In case March 31 of any of the respective years is a public holiday, the previous calendar day not being a public
holiday has been considered.
Industry and Market Data
Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has been obtained
or derived from publicly available information as well as various industry publications and sources.
Industry publications generally state that the information contained in such publications has been obtained from
publicly available documents from various sources believed to be reliable but their accuracy and completeness
are not guaranteed and their reliability cannot be assured. Accordingly, no investment decision should be based
on such information. Although we believe the industry and market data used in this Draft Red Herring Prospectus
is reliable, it has not been independently verified by us, the Selling Shareholders or the GCBRLMs or any of
their affiliates or advisors. The data used in these sources may have been re-classified by us for the purposes of
presentation. Data from these sources may also not be comparable.
The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful
depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.
There are no standard data gathering methodologies in the industry in which business of our Company is
conducted, and methodologies and assumptions may vary widely among different industry sources.
Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various
factors. Accordingly, investment decisions should not be based solely on such information.
This Draft Red Herring Prospectus includes industry related information from a report published by CRISIL
Research, a division of CRISIL Limited. CRISIL Research (“CRISIL”) has consented to the use of such
information in the Draft Red Herring Prospectus subject to the following disclosure:
CRISIL Research, a division of CRISIL Limited (“CRISIL”) has taken due care and caution in preparing this
report (“Report”) based on the Information obtained by CRISIL from sources which it considers reliable
(“Data”). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and
is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report
is not a recommendation to invest / disinvest in any company covered in the Report. CRISIL especially states that
it has no liability whatsoever to the subscribers / users / transmitters/ distributors of this Report. CRISIL Research
operates independently of, and does not have access to information obtained by CRISIL’s Ratings Division /
CRISIL Risk and Infrastructure Solutions Ltd (“CRIS”), which may, in their regular operations, obtain
information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of
CRISIL’s Ratings Division / CRIS. No part of this Report may be published/reproduced in any form without
CRISIL’s prior written approval.
Alkem Laboratories Limited
17
FORWARD LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward-looking
statements can generally be identified by words or phrases such as “will”, “aim”, “will likely result”, “believe”,
“expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”,
“objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions.
All statements contained in this Draft Red Herring Prospectus that are not statements of historical fact constitute
“forward-looking statements”. All statements regarding our expected financial condition and results of operations,
business, plans, objectives, strategies, goals and prospects are forward-looking statements.
Forward-looking statements reflect our current views with respect to future events and are not a guarantee of
future performance. These statements are based on our management’s beliefs and assumptions, which in turn are
based on currently available information. Although our Company believes the assumptions upon which these
forward-looking statements are based to be reasonable, any of these assumptions could prove to be inaccurate,
and the forward-looking statements based on these assumptions could be incorrect.
Further, the actual results may differ materially from those suggested by the forward-looking statements due to
risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes
pertaining to the pharmaceutical industry in India in which our Company operates and our ability to respond to
them.
Important factors that could cause actual results to differ materially from our expectations include, but are not
limited to, the following:
1. Price fluctuation due to Drug Prices Control Order and NLEM; 2. Our ability to successfully implement our strategy, growth and expansion plans; 3. Our ability to identify market trends and customer preferences early on and to leverage this information
successfully;
4. The outcome of legal or regulatory proceedings that our Company is or might become involved in; 5. Contingent liabilities, environmental problems and uninsured losses; 6. Government approvals; 7. Changes in government policies and regulatory actions that apply to or affect our business; 8. Developments affecting the Indian economy; and 9. Uncertainty in global financial markets.
We cannot assure investors that the expectation reflected in these forward-looking statements will prove to be
correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking
statements and not to regard such statements as a guarantee of future performance.
By their nature, certain risk disclosures are only estimates and could be materially different from what actually
occurs in the future. As a result, actual future gains or losses could materially differ from those that have been
estimated. Our Company, the Directors, the GCBRLMs and their respective affiliates or associates do not have
any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising
after the date hereof or to reflect the occurrence of underlying events, even if the, underlying assumptions do not
come to fruition. In accordance with the SEBI ICDR Regulations, our Company and the GCBRLMs will ensure
that investors in India are informed of material developments until such time as the grant of listing and trading
permissions by the Stock Exchanges for the Equity Shares allotted pursuant to the Offer. Each of the Selling
Shareholders will ensure that investors are informed of material developments in relation to statements and
undertakings made by such Selling Shareholder in the Red Herring Prospectus until the time of the grant of listing
and trading permission by the Stock Exchanges.
All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause our
actual results to differ materially from those contemplated by the relevant forward looking statement. For further
discussion of factors that could cause our actual results to differ from our expectations, please refer to the chapters
“Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results
of Operation” on pages 18, 129 and 358, respectively.
Alkem Laboratories Limited
18
SECTION II: RISK FACTORS
An investment in the Equity Shares involves a high degree of risk. You should carefully consider all
information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before
making an investment in the Equity Shares. If any or some combination of the following risks actually occur,
our business, prospects, results of operations and financial condition could suffer, the trading price of the
Equity Shares could decline and you may lose all or part of your investment. In addition, the risks set out in this
section may not be exhaustive and additional risks and uncertainties not presently known to us, or which we
currently deem to be immaterial, may arise or may become material in the future. Unless specified in the relevant
risk factor below, we are not in a position to quantify the financial implication of any of the risks mentioned below.
Any potential investor in the Equity Shares should pay particular attention to the fact that we are subject to
extensive regulatory environment that may differ significantly from one jurisdiction to other. In making an
investment decision, prospective investors must rely on their own examination of us on a consolidated basis and
the terms of the Offer including the merits and the risks involved. To obtain a complete understanding of our
business, you should read the sections “Our Business” and “Management’s Discussion and Analysis of Financial
Condition and Result of Operations” on pages 129 and 358, respectively. If our business, result of operations or
financial condition suffers, the price of the Equity Shares and the value of your investments in the Equity Shares
could decline.
This Draft Red Herring Prospectus also contains forward looking statements, which refers to future events that
produce known and unknown risks, uncertainties and other factors, many of which are beyond our control, which
may cause the actual results to be materially different from those expressed or implied by the forward looking
statements. Please refer to the chapter “Forward Looking Statements” on page 17.
In this section, unless the context otherwise requires, a reference to our “Company” refers to Alkem Laboratories
on a stand-alone basis and “we”, “us” and “our” refers to Alkem Laboratories Limited, and our Subsidiaries on
a consolidated basis. Unless otherwise stated or the context otherwise requires, the financial information used in
this section is derived from our Restated Consolidated Financial Information and Restated Standalone Financial
Information, as applicable.
Risks relating to our Business
1. There are outstanding litigations involving our Company, our Promoters, our Directors and our Subsidiaries.
Our Company, our Promoters, our Directors and our Subsidiaries are involved in certain legal proceedings
which are pending at different levels of adjudication before various courts, tribunals and appellate authorities.
We cannot provide assurance that these legal proceedings will be decided in our favour. Decisions in such
proceedings adverse to such person/ entity’s interests may have a significant adverse effect on our business,
results of operations, cash flows and financial condition.
A summary of the pending civil and criminal proceedings involving our Company, our Promoters, our
Directors and our Subsidiaries is provided below:
Litigations against our Company
Category Company
No. of
Proceedings
Amount, to the extent quantifiable (` million)
Criminal Complaints 20 2.4
Civil Proceedings 16 2.2
Tax Proceedings (Direct and Indirect) 73 1,324.7
Labour Matters 23 3.3
Litigations by our Company
Category Company
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Proceedings 45 56.2
Civil Proceedings 11 28.9
Labour Matters 6 Nil
Alkem Laboratories Limited
19
Litigations against Indchemie
Category Subsidiaries
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 5 Nil
Civil Proceedings Nil Nil
Tax Proceedings (Direct and Indirect) 3 2.7
Labour Matters Nil Nil
Litigations by Indchemie
Category Subsidiaries
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 25 2.4
Civil Proceedings 1 Nil
Labour Matters Nil Nil
Litigations against Cachet
Category Subsidiaries
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 3 Nil
Civil Proceedings Nil Nil
Tax Proceedings (Direct and Indirect) 17 110.1
Labour Matters 1 0.4
Litigations by Cachet
Category Subsidiaries
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 9 8.5
Civil Proceedings Nil Nil
Labour Matters Nil Nil
Litigations against our Promoters
Category Promoters
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 18 2.1
Civil Proceedings 2 Nil
Tax Proceedings (Direct and Indirect) Nil Nil
Labour Matters Nil Nil
Litigations against our Directors
Category Directors
No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 18 2.1
Civil Proceedings 2 Nil
Tax Proceedings (Direct and Indirect) Nil Nil
Labour Matters Nil Nil
For further details of legal proceedings involving the Company, our Promoters, our Directors and our
Subsidiaries, please refer to the chapter “Outstanding Litigation and Material Developments” on page 398.
In addition to the aforementioned legal proceedings there are notice