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DRAFT RED HERRING PROSPECTUS
Dated March 30, 2015 Please read Section 32 of the Companies Act, 2013
(The Draft Red Herring Prospectus will be updated upon filing with the RoC)
Book Built Issue
Our Company was incorporated as Dilip Buildcon Private Limited on June 12, 2006 as a private limited company under the Companies Act, 1956, with the Registrar of Companies, Madhya Pradesh
at Gwalior (the RoC). Our Company was converted into a public limited company and consequently, the name of our Company was changed to Dilip Buildcon Limited and a fresh certificate of
incorporation was issued by the RoC on August 26, 2010. For further details of change in the name and registered and corporate office of our Company please see the section entitled History and
Certain Corporate Matters on page 173.
Registered and Corporate Office: Plot No. 5, Inside Govind Narayan Singh Gate, Chuna Bhatti, Kolar Road, Bhopal 462 016, Madhya Pradesh
Contact Person: Abhishek Shrivastava, Company Secretary and Compliance Officer; Tel: +91 755 4029999; Fax: +91 755 4029998
E-mail: [email protected]; Website: www.dilipbuildcon.co.in
Corporate Identity Number: U45201MP2006PLC018689
OUR PROMOTERS: DILIP SURYAVANSHI, SEEMA SURYAVANSHI, DEVENDRA JAIN AND SURYAVANSHI FAMILY TRUST
PUBLIC ISSUE OF UP TO [] EQUITY SHARES OF FACE VALUE OF 10 EACH (EQUITY SHARES) OF DILIP BUILDCON LIMITED (OUR COMPANY OR THE ISSUER) FOR
CASH AT A PRICE OF [] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF [] PER EQUITY SHARE) AGGREGATING UP TO [] MILLION (ISSUE) COMPRISING A
FRESH ISSUE OF UP TO [] EQUITY SHARES AGGREGATING UP TO 6,500 MILLION (FRESH ISSUE) AND AN OFFER FOR SALE OF UP TO 2,276,265 EQUITY SHARES BY DILIP SURYAVANSHI, 1,225,681 EQUITY SHARES BY DEVENDRA JAIN (DILIP SURYAVANSHI AND DEVENDRA JAIN COLLECTIVELY REFERRED TO AS THE PROMOTER SELLING
SHAREHOLDERS) AND 11,420,969 EQUITY SHARES BY BANYANTREE GROWTH CAPITAL, LLC (THE INVESTOR SELLING SHAREHOLDER) (THE PROMOTER SELLING
SHAREHOLDERS AND THE INVESTOR SELLING SHAREHOLDER COLLECTIVELY, THE SELLING SHAREHOLDERS) AGGREGATING UP TO [] MILLION (THE OFFER FOR SALE AND TOGETHER WITH THE FRESH ISSUE, THE ISSUE). THE ISSUE WILL CONSTITUTE [] % OF OUR POST-ISSUE PAID-UP EQUITY SHARE CAPITAL.
THE FACE VALUE OF EQUITY SHARES IS 10 EACH. OUR COMPANY ALONGWITH THE SELLING SHAREHOLDERS MAY, IN CONSULTATION WITH THE BOOK RUNNING LEAD
MANAGERS, OFFER A DISCOUNT OF UP TO [] % (EQUIVALENT TO []) ON THE ISSUE PRICE TO RETAIL INDIVIDUAL BIDDERS (RETAIL DISCOUNT). THE PRICE BAND, THE RETAIL DISCOUNT AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE BOOK
RUNNING LEAD MANAGERS (BRLMS) AND WILL BE ADVERTISED IN [] EDITION OF [] (A WIDELY CIRCULATED ENGLISH NATIONAL DAILY NEWSPAPER) AND []
EDITIONS OF [] (A WIDELY CIRCULATED HINDI NATIONAL DAILY NEWSPAPER WITH WIDE CIRCULATION IN MADHYA PRADESH) AT LEAST FIVE WORKING DAYS PRIOR
TO THE BID/ISSUE OPENING DATE.
In case of any revision to the Price Band, the Bid/Issue Period will be extended by three additional Working Days after such revision of the Price Band, subject to the total Bid/Issue Period not exceeding 10
Working Days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to the 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 website of the BRLMs and at the terminals of the other members of the Syndicate.
In terms of Rule 19(2)(b)(ii) of the Securities Contracts (Regulation) Rules, 1957, as amended (SCRR), this is an Issue for at least such percentage of the post-Issue Equity Share capital of the Company that
will be equivalent to 4,000 million calculated at the Issue Price. The Issue is being made through the Book Building Process wherein 50% of the Issue shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (QIBs) (the QIB Portion), provided that our Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 60% of the QIB Portion to Anchor
Investors on a discretionary basis. 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB
Portion shall be available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Issue Price.
Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation to Retail Individual
Bidders in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the SEBI Regulations), subject to valid Bids being received at or
above the Issue Price. All potential Bidders, other than Anchor Investors, may participate in the Issue through an Application Supported by Blocked Amount (ASBA) process by providing details of their
respective bank account which will be blocked by the Self Certified Syndicate Banks (SCSBs). QIBs (except Anchor Investors) and Non-Institutional Bidders are mandatorily required to utilise the ASBA
process to participate in the Issue. Anchor Investors are not permitted to participate in the Anchor Investor Portion through ASBA Process. For details, please see the section entitled Issue Procedure on page
419.
RISK IN RELATION TO THE FIRST ISSUE
This being the first public issue of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is 10 and the Floor Price is [] times the face value and the Cap Price is [] times the face value. The Issue Price (determined and justified by our Company in consultation with the Selling Shareholders and the BRLMs as stated under the section entitled
Basis for Issue Price on page 106) 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 or sustained
trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the Issue unless they can afford to take the risk of losing their entire investment. Investors
are advised to read the risk factors carefully before taking an investment decision in the Issue. For taking an investment decision, investors must rely on their own examination of our Company and the Issue,
including the risks involved. The Equity Shares in the Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy
of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the section entitled Risk Factors on page 17.
ISSUERS AND SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Issue, which is
material in the context of the Issue, 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. Further, each of the Promoter Selling Shareholders severally accept responsibility that this Draft Red Herring Prospectus contains all information
about him as a Selling Shareholder in the context of the Offer for Sale and further assumes responsibility for statements in relation to him included in this Draft Red Herring Prospectus. The Investor Selling
Shareholder accepts responsibility only for statements specifically made by the Investor Selling Shareholder in this Draft Red Herring Prospectus with respect to itself and the Equity Shares offered by it in the
Offer for Sale and that such statements are true, complete and correct in all material respects and are not misleading in any material respect.
LISTING
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the BSE and the NSE. Our Company has received an in-principle approval from the BSE and the NSE for the listing
of the Equity Shares pursuant to letters dated [] and [], respectively. For the purposes of the Issue, the Designated Stock Exchange shall be []. A copy of the Red Herring Prospectus and the Prospectus shall
be delivered for registration to the 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/Issue Closing Date, see the section Material Contracts and Documents for Inspection on page 483.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
Axis Capital Limited
Axis House, 1st Floor, C-2
Wadia International Center
P. B. Marg, Worli
Mumbai 400 025
Maharashtra
Tel: +91 22 4325 1199
Fax: +91 22 4325 3000
E-mail: [email protected]
Investor grievance e-mail: [email protected]
Website: www.axiscapital.co.in
Contact Person: Akash Aggarwal
SEBI Registration No.: INM000012029
Deutsche Equities India Private Limited
14th Floor, The Capital
Bandra Kurla Complex
Mumbai 400 051
Maharashtra
Tel: +91 22 7180 4444
Fax: +91 22 7180 4199
E-mail: [email protected]
Investor grievance e-mail: [email protected]
Website: www.db.com/India
Contact Person: Vivek Pabari
SEBI Registration No.: INM000010833
PNB Investment Services Limited
11th Floor, Dalamal House
Nariman Point
Mumbai 400 021
Maharashtra
Tel: +91 22 4347 4031
Fax: +91 22 2284 0854
E-mail: [email protected]
Investor grievance e-mail:
Website: www.pnbisl.com
Contact Person: Vinay N. Rane
SEBI Registration No.: INM000011617
Link Intime India Private Limited
C-13, Pannalal Silk Mills Compound,
L.B.S. Marg
Bhandup (West)
Mumbai 400 078
Maharashtra
Tel: +91 22 6171 5400
Fax: +91 22 2596 0329
E-mail: [email protected]
Website: www.linkintime.co.in
Contact Person: Sachin Achar
SEBI Registration No.: INR000004058
BID/ISSUE PROGRAMME
BID/ISSUE OPENS ON [](1)
BID/ISSUE CLOSES ON [](2) (1) Our Company and the Selling Shareholders may, in consultation with the BRLMs, consider participation by Anchor Investors in accordance with the SEBI Regulations. The Anchor Investor Bid/Issue Period
shall be one Working Day prior to the Bid/Issue Opening Date.
(2) Our Company and the Selling Shareholders may, in consultation with the BRLMs, consider closing the Bid/Issue Period for QIBs one Working Day prior to the Bid/Issue Closing Date in accordance with the SEBI Regulations.
mailto:[email protected]:[email protected]:[email protected]://www.pnbisl.com/
(i)
TABLE OF CONTENTS
SECTION I: GENERAL ...................................................................................................................................... 1
DEFINITIONS AND ABBREVIATIONS ........................................................................................................ 1 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ................................................... 14 FORWARD-LOOKING STATEMENTS ....................................................................................................... 16
SECTION II: RISK FACTORS ........................................................................................................................ 17
SECTION III: INTRODUCTION .................................................................................................................... 58
SUMMARY OF INDUSTRY .......................................................................................................................... 58 SUMMARY OF OUR BUSINESS .................................................................................................................. 62 SUMMARY OF FINANCIAL INFORMATION ............................................................................................ 64 THE ISSUE ...................................................................................................................................................... 72 GENERAL INFORMATION .......................................................................................................................... 74 CAPITAL STRUCTURE ................................................................................................................................ 85 OBJECTS OF THE ISSUE .............................................................................................................................. 98 BASIS FOR ISSUE PRICE ........................................................................................................................... 106 STATEMENT OF TAX BENEFITS ............................................................................................................. 109
SECTION IV: ABOUT OUR COMPANY ..................................................................................................... 123
INDUSTRY OVERVIEW ............................................................................................................................. 123 OUR BUSINESS ........................................................................................................................................... 140 REGULATIONS AND POLICIES ................................................................................................................ 169 HISTORY AND CERTAIN CORPORATE MATTERS ............................................................................... 173 OUR SUBSIDIARIES ................................................................................................................................... 178 OUR MANAGEMENT ................................................................................................................................. 188 OUR PROMOTERS AND PROMOTER GROUP ........................................................................................ 207 OUR GROUP COMPANIES ......................................................................................................................... 212 RELATED PARTY TRANSACTIONS ........................................................................................................ 219 DIVIDEND POLICY ..................................................................................................................................... 220
SECTION V: FINANCIAL INFORMATION ............................................................................................... 221
RESTATED CONSOLIDATED FINANCIAL STATEMENTS ................................................................... 221 RESTATED UNCONSOLIDATED FINANCIAL STATEMENTS ............................................................. 272 FINANCIAL INDEBTEDNESS ................................................................................................................... 332 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS .............................................................................................................................................. 360
SECTION VI: LEGAL AND OTHER INFORMATION ............................................................................. 377
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS .................................................... 377 GOVERNMENT APPROVALS ................................................................................................................... 391 OTHER REGULATORY AND STATUTORY DISCLOSURES ................................................................. 393
SECTION VII: ISSUE INFORMATION ....................................................................................................... 411
TERMS OF THE ISSUE ................................................................................................................................ 411 ISSUE STRUCTURE .................................................................................................................................... 414 ISSUE PROCEDURE .................................................................................................................................... 419 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ............................................... 471
SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION............................................ 472
PART A OF THE ARTICLES OF ASSOCIATION ..................................................................................... 472 PART B OF THE ARTICLES OF ASSOCIATION ..................................................................................... 479
SECTION IX: OTHER INFORMATION ..................................................................................................... 483
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ....................................................... 483 DECLARATION ........................................................................................................................................... 485
1
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
This Draft Red Herring Prospectus uses certain definitions and abbreviations which, unless the context
otherwise indicates or implies, shall have the meaning as provided below. References to any legislation, act or
regulation shall be to such legislation, act or regulation, as amended from time to time.
The words and expressions used in this Draft Red Herring Prospectus but not defined herein, shall have, to the
extent applicable, the meaning ascribed to such terms under the Companies Act, the SEBI Regulations, the
SCRA, the Depositories Act or the rules and regulations made thereunder.
General Terms
Term Description
our Company, the
Company or the Issuer
Dilip Buildcon Limited, a company incorporated under the Companies Act,
1956 and having its Registered and Corporate Office at Plot No. 5, Inside
Govind Narayan Singh Gate, Chuna Bhatti, Kolar Road, Bhopal 462 016,
Madhya Pradesh
we/us/our Unless the context otherwise indicates or implies, our Company, its
Subsidiaries and its Joint Ventures, on a consolidated basis
Company Related Terms
Term Description
Articles of Association The articles of association of our Company, as amended
Auditors/Statutory Auditors The statutory auditors of our Company, Mukund M. Chitale & Co., Chartered
Accountants and Naresh Rajani & Co., Chartered Accountants
Board/Board of Directors The board of directors of our Company or a duly constituted committee
thereof
BTGC Agreement The subscription and shareholders agreement dated February 14, 2012
entered into between our Company, our Promoters and BanyanTree Growth
Capital, LLC
Compulsorily Convertible
Preference Shares
0.01% compulsorily convertible preference shares of our Company of face
value 100,000 each
Director(s) The director(s) of our Company
Equity Shares The equity shares of our Company of face value of 10 each
Group Companies Companies, firms, ventures etc. promoted by our Promoter, irrespective of
whether such entities are covered under Section 370(1)(B) of the Companies
Act, 1956 or not. For details, please see the section entitled Our Group
Companies on page 212
Investor Selling Shareholder BanyanTree Growth Capital, LLC, a company incorporated under the laws of
Mauritius with its principal office at 14, Nexteracom 1, Cybercity, Ebene,
Mauritius
Joint Ventures The joint ventures formed by our Company, namely, (i) Valecha Dilip JV
(formed in partnership with Valecha Engineering Limited); and (ii) Dilip
Buildcon Private Limited and ITS Infrastructure Private Limited (JV) (formed
in partnership with ITS Infrastructure Private Limited).
2
Term Description
Key Management Personnel Key management personnel of our Company in terms of the Companies Act,
2013 and the SEBI Regulations as disclosed in the section entitled Our
Management on page 188
Memorandum of Association The memorandum of association of our Company
Promoters The promoters of our Company namely, Dilip Suryavanshi, Seema
Suryavanshi, Devendra Jain and Suryavanshi Family Trust. For details, please
see the section entitled Our Promoters and Promoter Group on page 207
Promoter Group Persons and entities constituting the promoter group of our Company in terms
of Regulation 2(1)(zb) of the SEBI Regulations and a list of which is provided
in the section entitled Our Promoters and Promoter Group on page 207
Promoter Selling Shareholders Dilip Suryavanshi and Devendra Jain
Registered and Corporate
Office
Registered and corporate office of our Company situated at Plot No. 5, Inside
Govind Narayan Singh Gate, Chuna Bhatti, Kolar Road, Bhopal 462 016,
Madhya Pradesh
Shareholders Shareholders of our Company
Subsidiaries Subsidiaries of our Company set out in the section entitled Our Subsidiaries
on page 178
Issue Related Terms
Term Description
Allot/Allotment/Allotted Unless the context otherwise requires, allotment of the Equity Shares pursuant
to the Fresh Issue and transfer of the Equity Shares offered by the Selling
Shareholders pursuant to the Offer for Sale to the Allottees
Allottee A successful Bidder to whom the Equity Shares are Allotted
Allotment Advice Note or advice or intimation of Allotment sent to the Bidders who have been
or are to be Allotted the Equity Shares after the Basis of Allotment has been
approved by the Designated Stock Exchange
Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion
with a minimum Bid of 100 million in accordance with the requirements specified in the SEBI Regulations
Anchor Investor Bid/Issue
Period
The day, one Working Day prior to the Bid/Issue Opening Date, on which
Bids by Anchor Investors shall be submitted and allocation to the Anchor
Investors shall be completed
Anchor Investor Issue Price Final price at which the Equity Shares will be Allotted to Anchor Investors in
terms of the Red Herring Prospectus and the Prospectus, which price will be
equal to or higher than the Issue Price but not higher than the Cap Price.
The Anchor Investor Issue Price will be decided by our Company and the
Selling Shareholders in consultation with the BRLMs.
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 BRLMs to Anchor Investors
on a discretionary basis.
One-third of the Anchor Investor Portion shall be reserved for Mutual Funds,
3
Term Description
subject to valid Bids being received from Mutual Funds at or above the price
at which allocation is being done to Anchor Investors.
Application Supported by
Blocked Amount or ASBA
An application, whether physical or electronic, used by Bidders, other than
Anchor Investors, to make a Bid authorising an SCSB to block the Bid
Amount in the ASBA Account.
ASBA is mandatory for QIBs (except Anchor Investors) and Non Institutional
Bidders participating in the Issue. Anchor Investors are not permitted to
participate in the Issue through the ASBA process.
ASBA Account An account maintained with an SCSB and specified in the Bid cum
Application Form submitted by ASBA Bidders for blocking the Bid Amount
mentioned in the Bid cum Application Form
ASBA Bid A Bid made by an ASBA Bidder
ASBA Bidder Prospective investors (other than Anchor Investors) in the Issue who intend to
submit Bid through the ASBA process
Banker(s) to the Issue/Escrow
Collection Bank(s)
Banks which are clearing members and registered with SEBI as bankers to an
issue and with whom the Escrow Account will be opened, in this case being
[]
Basis of Allotment The basis on which the Equity Shares will be Allotted to successful Bidders
under the Issue and which is described in the section entitled Issue
Procedure on page 419
Bid An indication to make an offer during the Bid/Issue Period by a Bidder
pursuant to submission of the Bid cum Application Form, or during the
Anchor Investor Bid/Issue Period by the Anchor Investors, to subscribe to or
purchase the Equity Shares of our Company at a price within the Price Band,
including all revisions and modifications thereto as permitted under the SEBI
Regulations
Bid Amount The highest value of optional Bids indicated in the Bid cum Application Form
Bid cum Application Form The form used by a Bidder, including an ASBA Bidder, 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/Issue Closing Date Except in relation to any Bids received from the Anchor Investors, the date
after which the Syndicate, the Designated Branches and the Registered
Brokers will not accept any Bids, which shall be published in [] edition of []
(a widely circulated English national daily newspaper) and [] editions of []
(a widely circulated Hindi national daily newspaper with wide circulation in
Madhya Pradesh)
Our Company and the Selling Shareholders may, in consultation with the
BRLMs, consider closing the Bid/Issue Period for QIBs one Working Day
prior to the Bid/Issue Closing Date in accordance with the SEBI Regulations
Bid/Issue Opening Date Except in relation to any Bids received from the Anchor Investors, the date on
which the Syndicate, the Designated Branches and the Registered Brokers
shall start accepting Bids, which shall be published in [] edition of [] (a
widely circulated English national daily newspaper) and [] editions of [] (a
widely circulated Hindi national daily newspaper with wide circulation in
Madhya Pradesh)
4
Term Description
Bid/Issue Period Except in relation to Anchor Investors, the period between the Bid/Issue
Opening Date and the Bid/Issue Closing Date, inclusive of both days, during
which prospective Bidders can submit their Bids, including any revisions
thereof
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 and unless otherwise
stated or implied, includes an ASBA Bidder and Anchor Investor
Book Building Process Book building process, as provided in Schedule XI of the SEBI Regulations, in
terms of which the Issue is being made
Broker Centres Broker centres notified by the Stock Exchanges where Bidders can submit the
Bid cum Application Forms to a Registered Broker
The details of such Broker Centres, along with the names and contact details
of the Registered Broker are available on the respective website of the Stock
Exchanges.
BRLMs/Book Running Lead
Managers
The book running lead managers to the Issue namely, Axis Capital Limited,
Deutsche Equities India Private Limited and PNB Investment Services
Limited
CAN/Confirmation of
Allocation Note
Notice or intimation of allocation of the Equity Shares sent to Anchor
Investors, who have been allocated the Equity Shares, after the Anchor
Investor Bid/Issue Period
Cap Price The higher end of the Price Band, above which the Issue Price will not be
finalised and above which no Bids will be accepted
Cut-off Price Issue Price, finalised by our Company in consultation with the BRLMs. Only
Retail Individual Bidders are entitled to Bid at the Cut-off Price. QIBs and
Non-Institutional Bidders are not entitled to Bid at the Cut-off Price
Designated Branches Such branches of the SCSBs which shall collect the Bid cum Application
Forms used by the ASBA Bidders, a list of which is available on the website
of SEBI at 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
Designated Date The date on which the Escrow Collection Banks transfer funds from the
Escrow Accounts, and the SCSBs issue instructions for transfer of funds from
the ASBA Accounts, to the Public Issue Account or Refund Account, as
appropriate in terms of the Red Herring Prospectus
Designated Stock Exchange []
Deutsche Deutsche Equities India Private Limited
Draft Red Herring Prospectus
or DRHP
This draft red herring prospectus dated March 30, 2015, issued in accordance
with the SEBI Regulations, which does not contain complete particulars of the
price at which the Equity Shares will be Allotted and the size of the Issue
Eligible NRI(s) NRI(s) from jurisdictions outside India where it is not unlawful to make an
offer or invitation under the Issue and in relation to whom the Bid cum
Application Form and the Red Herring Prospectus will constitute an invitation
to purchase the Equity Shares
5
Term Description
Escrow Account An account opened with the Escrow Collection Bank(s) and in whose favour
the Bidders (excluding the ASBA Bidders) will issue cheques or drafts in
respect of the Bid Amount when submitting a Bid
Escrow Agent Escrow agent appointed pursuant to the Share Escrow Agreement, namely, []
Escrow Agreement Agreement to be entered into by our Company, the Selling Shareholders, the
Registrar to the Issue, the BRLMs, the Syndicate Members, 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
First Bidder Bidder whose name shall be mentioned in the Bid cum Application Form in
case of joint Bids, whose name shall also appear as the first holder of the
beneficiary account held in joint names
Floor Price The lower end of the Price Band, subject to any revision thereto, at or above
which the Issue Price will be finalised and below which no Bids will be
accepted
Fresh Issue The fresh issue of up to [] Equity Shares aggregating up to 6,500 million by our Company
Issue The public issue of up to [] Equity Shares of face value of 10 each for cash
at a price of [] each, aggregating up to [] million comprising the Fresh Issue and the Offer for Sale
Issue Agreement The agreement dated March 27, 2015 between our Company, the Selling
Shareholders and the BRLMs, pursuant to which certain arrangements are
agreed to in relation to the Issue
Issue Price The final price at which Equity Shares will be Allotted in terms of the Red
Herring Prospectus
The Issue Price will be decided by our Company in consultation with the
BRLMs on the Pricing Date.
Issue Proceeds The proceeds of the Issue that is available to our Company and the Selling
Shareholders
Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion), or [] Equity
Shares which shall be available for allocation to Mutual Funds only
Mutual Funds Mutual funds registered with SEBI under the Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996
Net Proceeds Proceeds of the Fresh Issue less our Companys share of the Issue expenses.
For further information about use of the Issue Proceeds and the Issue
expenses, please see the section entitled Objects of the Issue on page 98
Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid
for Equity Shares for an amount more than 200,000 (but not including NRIs other than Eligible NRIs)
Non-Institutional Portion The portion of the Issue being not less than 15% of the Issue comprising of []
Equity Shares which shall be available for allocation on a proportionate basis
to Non-Institutional Bidders, subject to valid Bids being received at or above
the Issue Price
6
Term Description
Non-Resident A person resident outside India, as defined under FEMA and includes a Non
Resident Indian, FIIs and FPIs
Offer for Sale The offer for sale of up to 2,276,265 Equity Shares by Dilip Suryavanshi,
1,225,681 Equity Shares by Devendra Jain and 11,420,969 Equity Shares by
the Investor Selling Shareholder at the Issue Price aggregating up to [] million in terms of the Red Herring Prospectus
PNBISL PNB Investment Services Limited
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 revisions thereof
The Price Band and the minimum Bid Lot size for the Issue will be decided by
our Company and the Selling Shareholders in consultation with the BRLMs
and will be advertised, at least five Working Days prior to the Bid/Issue
Opening Date, in (i) [] edition of English national newspaper [], (ii) []
editions of Hindi national newspaper [], and (iii) [] edition of Hindi regional
language newspaper [], each with wide circulation. Such advertisement will
also disclose the relevant financial ratios calculated at the Floor Price and the
Cap Price and will also be available on the websites of the Stock Exchanges.
Pricing Date The date on which our Company and the Selling Shareholders, in consultation
with the BRLMs, will finalise the Issue Price
Prospectus The Prospectus to be filed with the RoC after the Pricing Date in accordance
with Section 26 of the Companies Act, 2013, and the provisions of the SEBI
Regulations containing, inter alia, the Issue Price that is determined at the end
of the Book Building Process, the size of the Issue and certain other
information
Public Issue Account An account opened with the Bankers to the Issue by our Company under
Section 40 of the Companies Act, 2013 to receive monies from the Escrow
Account(s) the Designated Date and to which the funds shall be transferred by
the SCSBs from the ASBA Accounts
QIB Category/QIB Portion The portion of the Issue (including the Anchor Investor Portion) being 50% of
the Issue comprising of [] Equity Shares which shall be Allotted to QIBs
(including Anchor Investors)
Qualified Institutional Buyers
or QIBs
Qualified institutional buyers as defined under Regulation 2(1)(zd) of the
SEBI Regulations
Red Herring Prospectus or RHP The Red Herring Prospectus to be issued in accordance with Section 32 of the
Companies Act, 2013 and the provisions of the SEBI Regulations, which will
not have complete particulars of the price at which the Equity Shares will be
offered and the size of the Issue.
The Red Herring Prospectus will be registered with the RoC at least three days
before the Bid/Issue Opening Date and will become the Prospectus upon filing
with the RoC after the Pricing Date.
Refund Account(s) The account opened with the Refund Bank(s), from which refunds, if any, of
the whole or part of the Bid Amount (excluding refund to ASBA Bidders)
shall be made
Refund Bank(s) []
Refunds through electronic Refunds through NECS, direct credit, RTGS or NEFT, as applicable
7
Term Description
transfer of funds
Registered Brokers Stock brokers registered with the stock exchanges having nationwide
terminals, other than the Members of the Syndicate
Registrar to the Issue or
Registrar
Link Intime India Private Limited
Restated Consolidated
Financial Statements
Restated consolidated financial statements of assets and liabilities as of and for
the six month period ending September 30, 2014 and as of and for March 31,
2014, 2013, 2012, 2011 and 2010 and statement of profit and loss and cash
flows for the six month period ending September 30, 2014 and for each of the
years ended March 31, 2014, 2013, 2012, 2011 and 2010 for our Company
Restated Financial Statements Collectively, the Restated Consolidated Financial Statements and the Restated
Unconsolidated Financial Statements
Restated Unconsolidated
Financial Statements
Restated unconsolidated financial statements of assets and liabilities as of and
for the six month period ending September 30, 2014 and as of and for March
31, 2014, 2013, 2012, 2011 and 2010 and statement of profit and loss and cash
flows for the six month period ending September 30, 2014 and for each of the
years ended March 31, 2014, 2013, 2012, 2011 and 2010 for our Company
Retail Discount Discount of []% (equivalent of []) to the Issue Price given to Retail Individual Bidders
Retail Individual Bidder(s) Individual Bidders who have Bid for the Equity Shares for an amount not
more than 200,000 in any of the bidding options in the Issue (including HUFs applying through their Karta and Eligible NRIs and does not include
NRIs other than Eligible NRIs)
Retail Portion The portion of the Issue being less than 35% of the Issue consisting of []
Equity Shares which shall be available for allocation to Retail Individual
Bidder(s) in accordance with the SEBI Regulations
Revision Form Form used by the 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 Bidders 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(s) or SCSB(s)
The banks registered with SEBI, offering services in relation to ASBA, a list
of which is available on the website of SEBI at
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised- Intermediaries
Selling Shareholders The Promoter Selling Shareholders and the Investor Selling Shareholder
Share Escrow Agreement The agreement to be entered into among 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 at the website of the SEBI
(www.sebi.gov.in) and updated from time to time
Stock Exchanges BSE Limited and the National Stock Exchange of India Limited
8
Term Description
Syndicate Agreement Agreement to be entered into among the BRLMs, the Syndicate Member, our
Company and the Selling Shareholders in relation to the collection of Bids in
the Issue (other than Bids directly submitted to the SCSBs under the ASBA
process and Bids submitted to Registered Brokers at the Broker Centres)
Syndicate Members Intermediaries registered with SEBI who are permitted to carry out activities
as an underwriter, namely, []
Syndicate or Members of the
Syndicate
The BRLMs and the Syndicate Members
TRS or Transaction
Registration Slip
The slip or document issued by the Syndicate, or the SCSB (only on demand),
as the case may be, to the Bidder as proof of registration of the Bid
Underwriters The BRLMs and the Syndicate Members
Underwriting Agreement The agreement among the Underwriters, our Company and the Selling
Shareholders to be entered into on or after the Pricing Date
Working Day All days, other than a Sunday or a public holiday on which commercial banks
are open for business, provided however, with reference to (a) announcement
of Price Band; and (b) Bid/Offer Period, Working Days shall mean all days
excluding Saturdays, Sundays and public holidays, which are working days for
commercial banks in India
Technical/Industry Related Terms /Abbreviations
Term Description
BLT Build, Lease and Transfer
BOO Build, Own and Operate
BOOT Build, Operate, Own and Transfer
BOT Build, Operate and Transfer
BOT (Annuity) Annuity based BOT projects
BOT (Toll) Toll based BOT projects
BROT Build, Rehabilitate, Operate and Transfer
CAD Current Account Deficit
COD Date of commencement of the commercial operation of project.
Construction Workers Act The Building and Other Construction Workers (Regulation of Employment
and Conditions of Service) Act, 1996
DBFO Design, Build, Finance and Operate
DBFOT Design, Build, Finance, Operate and Transfer
DFCs Dedicated Freight Corridors
EPC Engineering, Procurement and Construction
9
Term Description
FEED Front End Engineering and Design Contracts
GST Goods and Services Tax
IDC Interest During Construction
Minimum Wages Act The Minimum Wages Act, 1948
MPRDC Madhya Pradesh Road Development Corporation Limited
NH National Highway
NH Act National Highways Act, 1956
NH Fee Rules National Highways Fee (Determination of Rates and Collection) Rules, 2008
NHAI National Highways Authority of India
NHAI Act National Highways Authority of India Act, 1988
NHDP National Highways Development Programme
O&M Operation and Maintenance
OMT Operate Maintain and Transfer
RLT Rehabilitate, Lease or Rent, and Transfer
ROT Rehabilitate, Operate, and Transfer
SPV Special Purpose Vehicle
VGF Viability Gap Funding
Wages Act The Payment of Wages Act, 1936
Conventional and General Terms or Abbreviations
Term Description
AGM Annual General Meeting
AIF Alternative Investment Fund as defined in and registered with SEBI under the
Securities and Exchange Board of India (Alternative Investments Funds)
Regulations, 2012
AS/Accounting Standards Accounting Standards issued by the Institute of Chartered Accountants of India
Bn/bn Billion
BSE BSE Limited
CAGR Compounded Annual Growth Rate
Category I Foreign Portfolio
Investors
FPIs who are registered as Category I foreign portfolio investors under the
SEBI FPI Regulations
Category II Foreign Portfolio FPIs who are registered as Category II foreign portfolio investors under the
10
Term Description
Investors SEBI FPI Regulations
Category III Foreign Portfolio
Investors
FPIs who are registered as Category III foreign portfolio investors under the
SEBI FPI Regulations
CDSL Central Depository Services (India) Limited
CENVAT Central Value Added Tax
CESTAT Customs, Excise and Service Tax Appellate Tribunal
CIN Corporate Identity Number
CIT Commissioner of Income Tax
Companies Act Companies Act, 1956 and/or the Companies Act, 2013, as applicable
Companies Act, 1956 Companies Act, 1956, as amended (without reference to the provisions thereof
that have ceased to have effect upon the notification of the Notified Sections)
Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the notification of
the Notified Sections
C.P.C Civil Procedure Code, 1908
Cr.P.C Criminal Procedure Code, 1973
Depositories NSDL and CDSL
Depositories Act The Depositories Act, 1996
DIN Director Identification Number
DP ID Depository Participants Identification
DP/Depository Participant A depository participant as defined under the Depositories Act
EGM Extraordinary General Meeting
EPS Earnings Per Share
Equity Listing Agreement Listing Agreement to be entered into with the Stock Exchanges on which the
Equity Shares of our Company are to be listed
ESI Act Employee State Insurance under the Employees State Insurance Act, 1948
FCNR Foreign Currency Non-Resident
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, read with rules and regulations
thereunder
FEMA Regulations FEMA (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) A foreign portfolio investor as defined under the SEBI FPI Regulations
11
Term Description
Financial Year/Fiscal/FY Unless stated otherwise, the period of 12 months ending March 31 of that
particular year
FIPB Foreign Investment Promotion Board
FIR First Information Report
FVCI Foreign venture capital investors as defined and registered under the SEBI
FVCI Regulations
GDP Gross Domestic Product
GIR General Index Register
GoI or Government Government of India
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
Income Tax Act The Income Tax Act, 1961
India Republic of India
Indian GAAP Generally Accepted Accounting Principles in India
IPC Indian Penal Code, 1860
IPO Initial Public Offering
IST Indian Standard Time
IT Information Technology
LIBOR London Interbank Offered Rate
MICR Magnetic Ink Character Recognition
Mn Million
N.A./NA Not Applicable
NAV Net Asset Value
NECS National Electronic Clearing Services
NEFT National Electronic Fund Transfer
Notified Sections The sections of the Companies Act, 2013 that have been notified by the
Ministry of Corporate Affairs, Government of India
NR Non-Resident
NRE Account Non Resident External Account
NRI A person resident outside India, who is a citizen of India or a person of Indian
origin, and shall have the meaning ascribed to such term in the Foreign
Exchange Management (Deposit) Regulations, 2000
12
Term Description
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB/Overseas Corporate Body A company, 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 the Issue
p.a. Per annum
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
PAT Profit After Tax
RBI The Reserve Bank of India
RoC Registrar of Companies, Madhya Pradesh situated at 3rd Floor, 'A' Block,
Sanjay Complex, Jayendra Ganj, Gwalior, Madhya Pradesh
RoNW Return on Net Worth
/Rs./Rupees/INR Indian Rupees
RTGS Real Time Gross Settlement
SCRA Securities Contracts (Regulation) Act, 1956
SCRR Securities Contracts (Regulation) Rules, 1957
SEBI The Securities and Exchange Board of India constituted under the SEBI Act,
1992
SEBI Act Securities and Exchange Board of India Act, 1992
SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investments Funds)
Regulations, 2012
SEBI FII Regulations Securities and Exchange Board of India (Foreign Institutional Investors)
Regulations, 1995
SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors)
Regulations, 2014
SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors)
Regulations, 2000
SEBI Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009
SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations,
1996
13
Term Description
Securities Act United States Securities Act of 1933
SICA Sick Industrial Companies (Special Provisions) Act, 1985
Sq. ft. Square feet
STT Securities Transaction Tax
State Government The government of a state in India
Stock Exchanges The BSE and the NSE
Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011
U.K. United Kingdom
U.S./U.S.A/United States United States of America
US GAAP Generally Accepted Accounting Principles in the United States of America
USD/US$ United States Dollars
VAS Value Added Services
VAT Value Added Tax
VCFs Venture Capital Funds as defined in and registered with SEBI under the SEBI
VCF Regulations
Notwithstanding the foregoing, terms in of the sections Statement of Tax Benefits, Restated Financial
Statements and Main Provisions of Articles of Association on pages 109, 221 and 472, respectively, shall
have the meaning given to such terms in such sections. Page numbers refer to page number of this Draft Red
Herring Prospectus, unless otherwise specified.
14
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
Certain Conventions
All references in this Draft Red Herring Prospectus to India are to the Republic of India and all references to
the U.S., U.S.A or United States are to the United States of America.
Unless stated otherwise, all references to page numbers in this Draft Red Herring Prospectus are to the page
numbers of this Draft Red Herring Prospectus.
Financial Data
Unless stated otherwise, the financial information in this Draft Red Herring Prospectus is derived from our
audited financial statements prepared in accordance with Indian GAAP and the Companies Act and restated in
accordance with the SEBI Regulations.
In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the
amounts listed are due to rounding off. All figures in decimals have been rounded off to the second decimal and
all percentage figures have been rounded off to one decimal place.
Our Companys financial year commences on April 1 and ends on March 31 of the next year; accordingly, all
references to a particular financial year, unless stated otherwise, are to the 12 month period ended on March 31
of that year.
There are significant differences between Indian GAAP, U.S. GAAP and IFRS. Our Company does not provide
reconciliation of its financial information to IFRS or U.S. GAAP. 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 it is urged that you consult your own advisors regarding such differences and their impact on our financial
data. For further details, please see the section entitled Risk Factors Significant differences exist between
Indian GAAP and other accounting principles with which investors may be more familiar on page 55.
Accordingly, the degree to which the financial information included in this Draft Red Herring Prospectus will
provide meaningful information is entirely dependent on the readers level of familiarity with Indian accounting
policies and practices, the Companies Act and the SEBI Regulations. Any reliance by persons not familiar with
Indian accounting policies 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 the sections Risk Factors, Our
Business, Managements Discussion and Analysis of Financial Conditional and Results of Operations on
pages 17, 140 and 360, respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated
on the basis of our audited consolidated financial statements and our Companys audited unconsolidated
financial statements prepared in accordance with Indian GAAP and the Companies Act and restated in
accordance with the SEBI Regulations.
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; and
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 conversions of certain other currency amounts into Indian Rupees
that have been presented solely to comply with the SEBI 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.
15
The following table sets forth, for the periods indicated, information with respect to the exchange rate between
the Rupee and the US$ (in Rupees per US$):
Currency As on March
31, 2010
()
As on March
31, 2011
()
As on March
31, 2012
()
As on March
31, 2013
()
As on March
31, 2014
()
As on September
30, 2014
() 1 US$ 45.14 44.65 51.16
(1) 54.39
(2) 60.10
(3) 61.61
Source: RBI Reference Rate, except otherwise specified (1) Exchange rate as on March 30, 2012, as RBI Reference Rate is not available for March 31, 2012 being a Saturday. (2) Exchange rate as on March 28, 2013, as RBI Reference Rate is not available for March 31, 2013, March 30, 2013 and March 29,
2013 being a Sunday, Saturday and a public holiday, respectively. (3) Exchange rate as on March 28, 2014, as RBI Reference Rate is not available for March 31, 2014, March 30, 2014 and March 29,
2014 being a public holiday, a Sunday and a Saturday, respectively.
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 industry publications, Roads and Highway, Annual
Review October 2014 issued by CRISIL Research, a division of CRISIL Limited and other 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 decisions 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 or the BRLMs 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 readers 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.
In accordance with the SEBI Regulations, the section entitled Basis for the Issue Price on page 106 includes
information relating to our peer group companies. Such information has been derived from publicly available
sources, and neither we, nor the BRLMs have independently verified such information.
16
FORWARD-LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain forward-looking statements. These forward-looking
statements generally can be identified by words or phrases such as aim, anticipate, believe, expect,
estimate, intend, objective, plan, project, will, will continue, will pursue or other words or
phrases of similar import. Similarly, statements that describe our Companys strategies, objectives, plans,
prospects or goals are also forward-looking statements. All forward-looking statements are subject to risks,
uncertainties and assumptions about us that could cause actual results to differ materially from those
contemplated by the relevant forward-looking statement.
Actual results may differ materially from those suggested by the forward-looking statements due to risks or
uncertainties associated with the expectations with respect to, but not limited to, regulatory changes pertaining
to the industries in India in which our Company operates and our ability to respond to them, our ability to
successfully implement our strategy, our growth and expansion, technological changes, our exposure to market
risks, general economic and political conditions in India which have an impact on its business activities or
investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest
rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in
India and globally, changes in domestic laws, regulations and taxes and changes in competition in the industries
in which we operate. Important factors that could cause actual results to differ materially from our Companys
expectations include, but are not limited to, the following:
General economic and business conditions and level of investment and activity in the infrastructure development and construction sector;
Inability to identify or acquire new projects or win bids for new projects;
Changes in Government policies and budgetary allocations for investments in road infrastructure;
Delays, modifications or cancellations of projects included in our order book and our future projects;
Lower than expected returns on our investment in BOT projects; and
Ability to obtain financing in order to meet our capital expenditure requirements and pursue our growth strategy.
For further discussion of factors that could cause the actual results to differ from the expectations, please see the
sections entitled Risk Factors, Our Business and Managements Discussion and Analysis of Financial
Condition and Results of Operations on pages 17, 140 and 360, respectively. By their nature, certain market
risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a
result, actual gains or losses could materially differ from those that have been estimated.
We cannot assure Bidders that the expectations reflected in these forward-looking statements will prove to be
correct. Given these uncertainties, Bidders are cautioned not to place undue reliance on such forward-looking
statements and not to regard such statements as a guarantee of future performance.
Forward-looking statements reflect the current views of our Company as of the date of this Draft Red Herring
Prospectus and are not a guarantee of future performance. These statements are based on the managements
beliefs and assumptions, which in turn are based on currently available information. Although we believe the
assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions
could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect.
Neither our Company, our Directors, the Selling Shareholders, the BRLMs nor any of their respective affiliates
have any obligation 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 SEBI requirements, our Company and BRLMs will ensure that Bidders in India are
informed of material developments until the time of the grant of listing and trading permission by the Stock
Exchanges. Each of the Selling Shareholders will severally ensure that Bidders are informed of material
developments in relation to statements and undertakings made by him/it in the Red Herring Prospectus and the
Prospectus until the time of the grant of listing and trading permission by the Stock Exchanges.
17
SECTION II: RISK FACTORS
An investment in the Equity Shares involves a high degree of risk. Investors should carefully consider all the
information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before
making an investment in the Equity Shares. The risks and uncertainties described in this section are not the only
risks that we currently face. Additional risks and uncertainties not currently known to us or that are currently
believed to be immaterial may also have an adverse impact on our business, results of operations and financial
condition. If any of the following risks, or other risks that are not currently known or are currently deemed
immaterial, actually occur, our business, results of operations and financial condition could be materially and
adversely affected and the price of the Equity Shares could decline, causing the investors to lose part or all of
the value of their investment in the Equity Shares. The financial and other related implications of the risk
factors, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are
certain risk factors where the financial impact is not quantifiable and, therefore, cannot be disclosed in such
risk factors.
To obtain a complete understanding, prospective investors should read this section in conjunction with the
sections Our Business and Managements Discussion and Analysis of Financial Condition and Results of
Operations on pages 140 and 360, respectively, as well as the other financial and statistical information
contained in this Draft Red Herring Prospectus. The financial information in this section is derived from our
Restated Financial Statements as of and for the six months ended September 30, 2014 and for the Financial
Years 2014, 2013, 2012, 2011 and 2010.
Internal Risk Factors
Risks Relating to our Business
1. There are certain criminal proceedings pending against our Company, our Promoters and certain
Directors and employees.
There are certain criminal proceedings pending against our Company, our Promoters and certain
Directors which are pending at different levels of adjudication before various courts. The amounts
claimed in these proceedings have been disclosed to the extent ascertainable and quantifiable, and
include amounts jointly and severally from our Company and other parties. There are two criminal
cases pending against our Company, Promoters and Directors. Also, there are various criminal cases
pending against our employees in relation to road accidents, under various sections of the IPC and any
adverse outcome in these cases could have a material adverse impact on the position of our Company
These proceedings may have a significant impact on our corporate image, reputation, client
relationships and chances of undertaking new projects, divert the attention of our management and
Promoters and waste our corporate resources. If we are unable to neutralize the impact of these
proceedings effectively or efficiently, we may suffer damage to our reputation and relationships with
our clients, lenders, suppliers and communities and experience significant project delays or cost
overruns. Our business, prospects, financial condition and results of operation could be materially and
adversely affected as a result. For details in relation to certain material litigation, please see the section
entitled Outstanding Litigation and Material Developments on page 377.
2. There are outstanding legal proceedings against our Company, certain of its Directors, its
Promoters, Subsidiaries and its Joint Ventures, which may adversely affect our business, financial
condition and results of operations.
There are outstanding legal proceedings against us that are incidental to our business and operations,
including certain criminal proceedings against our Company, certain of its Directors, its Promoters and
its Subsidiaries and Joint Ventures. These proceedings are pending at different levels of adjudication
before various courts, tribunals, enquiry officers and appellate tribunals. Such proceedings could divert
management time and attention, and consume financial resources in their defense. Further, an adverse
judgment in some of these proceedings could have an adverse impact on our business, financial
condition and results of operations. Additionally, some properties on which we are developing projects
are subject to litigation.
A summary of the outstanding legal proceedings against our Company, its Directors, its Promoters, and
its Subsidiaries and Joint Ventures as disclosed in this Draft Red Herring Prospectus along with the
amount involved, to the extent quantifiable, have been set out below (excluding certain cases against
18
our Company for traffic accidents caused by our drivers that occurred during the ordinary course of our
business):
Litigation against our Company
S. No. Nature of Case Number of Outstanding
Cases
Amount involved(1)
(in million) 1. Criminal 2
(2) -
2. Civil 172 527.49
3. Income Tax 1 0.07(3)(4)
4. Labour 5 15.23 (1) Approximate amounts involved, may vary due to any penalty or interest (2) Excluding 113 criminal cases filed against the employees of our Company. (3) 10,000 per assessment year from 2007-2008 to 2013-2014. (4) This amount does not include amounts deposited with the Income Tax Settlement Commission.
Litigation against the Directors
S. No. Nature of Case Number of Outstanding
Cases
Amount involved(1)
(in million) Dilip Suryavanshi
(2)
1. Criminal 1 -
2. Civil 7 3.06
3. Income Tax 2 0.07(3)(4)
Seema Suryavanshi(2)
1. Criminal 1 -
2. Civil nil -
3. Income Tax 1 -(4)
Devendra Jain(2)
1. Criminal 1 -
2. Civil 3 0.54
3. Income Tax 1 23.52
Naval Jawaharlal Totla
1. Criminal nil -
2. Civil nil -
3. Income Tax 1 6.09(5)
Amogh Kumar Gupta
1. Criminal 1 -
2. Civil nil -
3. Income Tax nil - (1) Approximate amounts involved, may vary due to any penalty or interest (2) Also the Promoters of our Company. (3) 10,000 per assessment year from 2007-2008 to 2013-2014. (4) This amount does not include amounts deposited with the Income Tax Settlement Commission. (5) Additions in income made in the assessment order
Litigation against the Subsidiaries and Joint Ventures
S. No. Nature of Case Number of Outstanding
Cases
Amount involved(1)
(in million) 1. Civil 4 0.06
2. Arbitration 5 303.28 (1) Approximate amounts involved, may vary due to any penalty or interest
We cannot assure you that any of these proceedings will be decided in favour of us, our Promoters, our
Directors, our Subsidiaries, our Joint Ventures or our Group Companies or that no further liability will
arise out of these proceedings. Further, the amounts claimed in these proceedings have been disclosed
to the extent ascertainable, excluding contingent liabilities and include amounts claimed. Should any
new developments arise, such as a change in Indian law or rulings by appellate courts or tribunals,
additional provisions may need to be made by us, our Promoters, our Directors, our Subsidiaries, our
Joint Ventures and our Group Companies in our respective financial statements, which may adversely
19
affect our business, financial condition and reputation. For further details of outstanding litigation
against us, our Directors, our Promoters, our Subsidiaries, our Joint Ventures and our Group
Companies, please see the section entitled Outstanding Litigation and Material Developments on
page 377.
3. Our Company and certain of our Promoters and Directors have been subject to search and seizure
operations conducted by the Indian income tax authorities. Any adverse determination by the tax
authorities in this matter could increase our tax liability and subject us to monetary penalties.
Search and seizure proceedings were initiated by the Income Tax Department on June 20, 2012 against
our Company and certain of our Subsidiaries, Promoters, Directors, Promoter Group entities and Group
Companies (the Income Tax Search and Seizure Proceedings). Pursuant to the Income Tax Search
and Seizure Proceedings, the Deputy Commissioner of Income Tax, Central, Bhopal issued notices
under Section 153A of the Income Tax Act, 1961 for assessment years 2007-08 to 2012-13 on
December 27, 2012, and a notice under Section 143(2) of the Income Tax Act, 1961, for assessment
year 2013-14 on September 10, 2014 against our Company and certain of our Subsidiaries, Promoters,
Directors, Promoter Group entities and Group Companies. Our Company has filed a response to the
assessing officer on December 17, 2013, stating that return of income filed under Section 139(1) of the
Income Tax Act, 1961, for the assessment years 2007-08, 2009-10, 2010-11, 2011-12, and 2012-13,
shall be considered as return of income filed under section 153A of the Income Tax Act, 1961. Our
Company and two of our Promoters, Dilip Suryavanshi and Seema Suryavanshi have filed settlement
applications under Section 245C (1) of the Income Tax Act, 1961 along with fresh computation of
incomes before the Income Tax Settlement Commission, Additional Bench, Mumbai (the Settlement
Commission) on March 12, 2015. Our Company, Dilip Suryavanshi and Seema Suryavanshi have
deposited amounts aggregating 71.00 million, 107.20 million, and 8.80 million, respectively, towards the proposed settlement. For details, please see section entitled Outstanding Litigation and
Material Developments on page 377. There can be no assurance that the Settlement Commission will
accept the settlement terms proposed by our Company and our Promoter, and that there will be no
additional tax liability imposed on our Company or our Promoters. Further, there can be no assurance
that any settlement order passed by the Settlement Commission will not be challenged by the Income
Tax department. Any adverse determination in such proceedings may have a material adverse effect on
our financial condition, cash flows, and results of operations.
4. Projects included in our order book and our future projects may be delayed, modified or cancelled
for reasons beyond our control which may materially and adversely affect our business, prospects,
reputation, profitability, financial condition and results of operation.
As of September 30, 2014, our order book was 56,658.75 million. Our order book sets forth our expected revenues from uncompleted portions of the construction contracts received. However, project
delays, modifications in the scope or cancellations may occur from time to time due to either a clients
or our default, incidents of force majeure or legal impediments. For example, in some of our projects,
we or our clients are obliged to take certain actions, such as acquiring land, securing right of way,
clearing forests, securing required licenses, authorisations or permits, making advance payments or
opening of letters of credit or moving existing utilities, which may be delayed due to our clients non-
performance, our own breaches or force majeure factors. In an EPC project, we may incur significant
additional costs due to project delays and our counterparties may seek liquidated damages due to our
failure to complete the required milestones or even terminate the construction contract totally or refuse
to grant us any extension. The schedule of completion may need to be reset and we may not be able to
recognize revenue if the required percentage of completion is not achieved in the specified timeframe.
In a BOT project, such delays may result in our payment of damages to the other parties, the clients
invocation of our performance security and consequential delays in our receipt of annuities and/or
collection of tolls in our BOT projects.
We may not have the full protection in our construction contracts or concession agreements against
such delays or associated liabilities and/or additional costs. Further, we may have escalation clauses in
some of our contracts, which, may be interpreted restrictively by our counterparties, who may dispute
our claims for additional costs. As a result, our future earnings may be different from the amount in the
order book. Our contracts may be amended, delayed or cancelled before work commences or during the
course of construction. Due to unexpected changes in a projects scope and schedule, we cannot predict
with certainty when or if expected revenues as reflected in the order book will be achieved. In addition,
even where a project proceeds as scheduled, it is possible that contracting parties may default and fail
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to pay amounts owed or receivables due. If any or all of these risks materialize, our business, prospects,
reputation, profitability, financial condition and results of operation may be materially and adversely
affected.
5. If we are not successful in managing our growth, our business may be disrupted and our
profitability may be reduced.
We have experienced high growth in recent years and expect our businesses to continue to grow
significantly. We achieved a 78.44% continuous year-on-year revenue growth for the four-year period
ended March 31, 2014. We expect this growth to place significant demands on us and require us to
continuously evolve and improve our operational, financial and internal controls across our Group. Our
future growth is subject to risks arising from a rapid increase in order volume, and inability to retain
and recruit skilled staff. Although we plan to continue to expand our scale of operations through
organic growth or investments in other entities, we may not grow at a rate comparable to our growth
rate in the past, either in terms of income or profit.
Our future growth may place significant demands on our management and operations and require us to
continuously evolve and improve our financial, operational and other internal controls within our
Group. In particular, continued expansion may pose challenges in:
maintaining high levels of project control and management, and client satisfaction;
recruiting, training and retaining sufficient skilled management, technical and bidding personnel;
developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, internal control and other internal systems;
making accurate assessments of the resources we will require;
adhering to the standards of health, safety and environment and quality and process execution to meet clients expectations;
operating in jurisdictions and business segments where we have limited experience;
preserving a uniform culture, values and work environment;
strengthening internal control and ensuring compliance with legal and contractual obligations;
managing relationships with clients, suppliers, contractors, investors, lenders and service providers; and
supporting infrastructure such as IT and HR management systems.
To manage our growth, we are also in the process of implementing an ERP system to improve
efficiency and exercise better control over our project sites. Failure to implement the system on time or
at all may have an adverse impact on our ability to manage our growth. If we are not successful in
managing our growth, our business may be disrupted and profitability may be reduced. Our business,
prospects, financial condition and results of operations may be adversely affected.
6. Lower than expected returns on our investment in BOT projects may adversely affect our financial
results; we may not be able to divest BOT projects at the prices we anticipate or at all and new roads
may compete with our BOT road projects.
While our strategy is to undertake BOT projects opportunistically, we had a portfolio of 12 BOT
projects as of September 30, 2014, with 10 completed projects and two under-construction. Our BOT
projects fall into three typesannuity plus toll-based, annuity-based and toll-based. For further details,
please see the section entitled Business Infrastructure Development Business on page 141 of this
Draft Red Herring Prospectus. Return on investment in our BOT projects is based on a number of
factors, including financing costs, amount of capital invested, duration and other terms and conditions
of the concessions and the toll revenues and annuities collected.
In our annuity BOT projects or BOT projects with an annuity component, our annuity revenue depends on the fixed amounts paid to us by our government clients. The amount of annuity is
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not necessarily linked to our actual costs of construction and may only be changed by the
government clients pursuant to the relevant concession agreements.
In our toll-based projects or projects with a toll component, our toll revenue depends on the tolling rates set by the NHAI in accordance with the Indian Tolls Act, 1881 and the actual
traffic volume using our roads. Our decision to undertake BOT road projects is largely based
on our estimate of our expected toll revenue, which is turn partly based on our estimate of the
traffic volume using our roads. Traffic volume may be affected by a number of factors beyond
our control, including general economic conditions, alternate routes, alternate means of
transportation, location of toll plazas, weather conditions, demographic changes, fuel prices,
reduction in commercial or industrial activities in the regions served by the roads and natural
disasters. Thus the actual traffic volume may be lower than our estimate. Decreases in traffic
volume, aggravated by delays in project completion or financial closure, could result in a
significant loss of our toll revenue. In addition, our concession agreements typically limit and
regulate increases in tolling rates, where adjustments could be made only upon the occurrence
of certain events specified in our concession agreements. Usually, the NHAI sets the
applicable tolling rates and we may not be able to increase tolling rates to cover increases in
our operational costs.
In some of our concession agreements, adjustments of annuities are linked to the movements of
inflation indices in a relevant year. However, there are no provisions in our concession agreements
protecting us against increases in interest rates or cost of raw materials. Our lenders may have the right
to periodically adjust our interest rates and our applicable interest rates may increase based on their
review of our credit profile and perceived risks in our operations. Our operational costs may also
increase substantially during the construction or operation of our BOT projects due to shortage of raw
materials or substantial increases in prices of raw materials beyond the permitted scope of adjustment
in the relevant concession agreements. Many factors causing such adverse changes are beyond our
control and we are usually not able to demand matching increases in our tolling rates or annuities. Even
if we invoke the inflation adjustment clauses in some of our concession agreements, the increase may
not be adequate to offset the negative impact of increases in interest rates or cost of raw materials.
Under the relevant concession agreements, our Subsidiaries have rights to construct and operate the
road projects exclusively for fixed periods of time and we receive annuities and/or tolls, as the case
may be, for the use of our roads. However, we may be faced with competition from new roads
developed by State Governments, which are not within our control. For example, MPRDC has the right
to construct competing roads after a prescribed period of time, pursuant to the terms of the concession
agreements. State Governments may not always charge for the use of these roads. There can be no
assurance that our road projects will compete effectively against such roads that connect the same
locations. Any material decrease in the actual traffic volume as compared to our forecasted traffic
volume could have a material adverse effect on our cash flows from our tolling projects, which in turn
can adversely affect our business, prospects, financial condition and results of operation.
In addition, various other governmental authorities could implement policies that may affect our return
on investments in unpredictable ways. As our BOT projects often require significant capital investment
with potential returns spread over a long period of time, inadequate toll revenues and annuities
collected from our projects may result in a low return or even loss on our investment, which may
adversely affect our liquidity, business, financial condition and results of operation.
As part of our growth strategy, we may evaluate, from time to time, the opportunities to divest the BOT
assets that have lower profit margins and use the proceeds to acquire assets with higher profit margins.
We optimize our portfolio of projects by retaining or acquiring the BOT projects that yield higher
returns and make more efficient use of our capital. However, we cannot assure you that we will be able
to divest such BOT projects at the prices we anticipate or at all. Particularly, other BOT asset owners
may similarly seek to improve their balance sheets and sell their BOT projects. There may be a lack of
market demand as the majority of BOT assets typically require purchasers to have substantial capital.
Offers for our BOT assets may be substantially below the book values of these assets. In this
circumstance, we may not be able to divest such assets or implement our above strategy at all. As a
result, our business, prospects, financial condition and results of operations may be adversely affected.
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7. Our projects are exposed to various implementation and other risks and uncertainties.
Some of our projects are under construction or development. The construction or development of these
new projects involves various implementation risks including construction delays, delay or disruption
in supply of raw materials, delays in acquisition of land, unanticipated cost increases, force majeure
events, cost overruns or disputes with our joint venture partners. We may be further subject to
regulatory risks, financing risks and the risks that these projects may ultimately prove to be
unprofitable. In particular:
delays in completion and commercial operation could increase the financing costs associated with the construction and cause our forecast budget to be exceeded;
some of the drawings for the sites on which these projects are expected to be developed may not be accurate;
we may encounter unforeseen engineering problems, disputes with workers, force majeure events and unanticipated costs due to defective plans and specifications;
we may not be able to obtain adequate capital or other financing at affordable costs or obtain any financing at all to complete construction of and to commence operations of these projects;
we may not be able to provide the required guarantees under project agreements or enter into financing arrangements due to lack of working capital;
we may not receive timely regulatory approvals and/or permits for development and operation of our projects, such as environmental clearances, mining, forestry or other approvals from the
federal or state environmental protection agencies, mining, forestry, railway or other
regulatory authorities and may experience delays in government land acquisition and
procuring right of way and other unanticipated delays;
we may not be able to recover the amounts already invested in these