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HINDUJA LEYLAND FINANCE LIMITED Our Company was incorporated on November 12, 2008, as a public limited company under the Companies Act, 1956, with a certificate of incorporation granted by the Registrar of Companies, at Chennai, Tamil
Nadu (the “RoC”). Our Company received its certificate of commencement of business from the RoC on March 4, 2009. Pursuant to a certificate issued by the Reserve Bank of India (“RBI”) on March 22, 2010,
our Company was permitted to commence operations as a non-banking financial company (“NBFC”) under section 45 IA of the Reserve Bank of India Act, 1934. Our Company was originally classified as a
systemically important non-deposit accepting non-banking financial company (“SI-NBFC-ND”) in the calendar year 2010. Our Company was subsequently granted the status of an NBFC-Asset Finance Company
(“NBFC-AFC”) by the RBI pursuant to a certificate of registration received on May 12, 2014. For further details, see “History and Certain Corporate Matters” on page 185.***
Corporate Identity Number: U65993TN2008PLC069837 Registered Office: 1, Sardar Patel Road, Guindy, Chennai 600 032, Tamil Nadu, India Tel: +91 44 3925 2525 Fax: +91 44 3925 2553
Corporate Office: 27-A, Developed Industrial Estate, Guindy, Chennai 600 032, Tamil Nadu, India Tel: +91 44 3925 2533 Fax: +91 44 3925 2553
Contact Person: Mr. S. Ramasamy, Company Secretary and Compliance Officer Tel: +91 44 3925 2527 Fax: +91 44 3925 2553
E-mail: [email protected] Website: www.hindujaleylandfinance.com
PROMOTERS: ASHOK LEYLAND LIMITED AND HINDUJA POWER LIMITED INITIAL PUBLIC OFFERING OF UP TO [●] EQUITY SHARES OF FACE VALUE OF ` 10 EACH (THE “EQUITY SHARES”) OF HINDUJA LEYLAND FINANCE LIMITED (“HLFL” OR OUR “COMPANY” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (INCLUDING SHARE PREMIUM OF ` [●] PER EQUITY SHARE) (THE “OFFER PRICE”) AGGREGATING UP TO ` [●] MILLION (THE “OFFER”). THE OFFER COMPRISES A FRESH ISSUE OF UP TO [●] EQUITY SHARES AGGREGATING UP TO ` 5,000 MILLION BY OUR COMPANY (THE “FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 26,608,810 EQUITY SHARES AGGREGATING UP TO ` [●] MILLION BY EVERFIN HOLDINGS (THE “INVESTOR SELLING SHAREHOLDER” AND SUCH OFFERED SHARES “INVESTOR OFFERED SHARES”) (THE “OFFER FOR SALE”). THE OFFER SHALL CONSTITUTE [●]% OF THE POST-OFFER PAID-
UP EQUITY SHARE CAPITAL OF OUR COMPANY. OUR COMPANY AND THE INVESTOR SELLING SHAREHOLDER, IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS
(“BRLMs”), IS CONSIDERING A PRIVATE PLACEMENT OF UP TO 26,000,000 EQUITY SHARES FOR CASH CONSIDERATION AGGREGATING UP TO ` 2,000 MILLION, PRIOR TO FILING OF THE RED HERRING PROSPECTUS WITH THE ROC (“PRE-IPO PLACEMENT”). IF THE PRE-IPO PLACEMENT IS COMPLETED, THE NUMBER OF EQUITY SHARES ISSUED PURSUANT TO
THE PRE-IPO PLACEMENT WILL BE REDUCED FROM THE FRESH ISSUE, SUBJECT TO A MINIMUM OFFER SIZE OF AT LEAST SUCH PERCENTAGE OF EQUITY SHARES AS IS
EQUIVALENT TO A VALUE OF ` [●] MILLION (CALCULATED AT THE OFFER PRICE) BEING OFFERED TO THE PUBLIC.
THE PRICE BAND, ANY RETAIL DISCOUNT AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE INVESTOR SELLING SHAREHOLDER IN CONSULTATION
WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE ADVERTISED IN [●] EDITION OF [●] (A WIDELY CIRCULATED ENGLISH NATIONAL NEWSPAPER) ), [●] EDITION OF [●] (A
WIDELY CIRCULATED HINDI NATIONAL NEWSPAPER) AND [●] EDITION OF [●] (A WIDELY CIRCULATED TAMIL NEWSPAPER, TAMIL BEING THE REGIONAL LANGUAGE IN THE
PLACE WHERE OUR REGISTERED OFFICE IS LOCATED) AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO BSE
LIMITED (“BSE”) AND NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”, AND TOGETHER WITH BSE, THE “STOCK EXCHANGES”) FOR UPLOADING ON THEIR RESPECTIVE
WEBSITES.# # Discount of ` [●] per Equity Share to the Offer Price may be offered to Retail Individual Bidders (“Retail Discount”)
THE FACE VALUE OF THE EQUITY SHARE IS ` 10 EACH In case of revision in the Price Band, the Bid/Offer Period will be extended for at least three additional Working Days after revision of the Price Band subject to the Bid/Offer Period not exceeding a total of 10 Working Days.
Any revision in the Price Band and the revised Bid/Offer Period, if applicable, will be widely disseminated by notification to the Stock Exchanges, by issuing a press release, and also by indicating the change on the websites
of the BRLMs, and at the terminals of the members of the Syndicate and by intimation to Self Certified Syndicate Banks (“SCSBs”), the Registered Brokers, Registrar and Share Transfer Agent to the Offer and Collecting
Depository Participants.
The Offer is being made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulations) Rules, 1957, as amended (“SCRR”) and in compliance with Regulation 26(1) of the Securities
and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the “SEBI ICDR Regulations”), wherein 50% of the Offer shall be allocated on a proportionate basis to Qualified
Institutional Buyers (“QIBs”) (the “QIB Portion”), provided that our Company and the Investor Selling Shareholder may, in consultation with the BRLMs, allocate up to 60% of the QIB Portion to Anchor Investors on a
discretionary basis (the “Anchor Investor Portion”), of which one-third is to be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Offer
Price in accordance with the SEBI ICDR Regulations. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proporstionate basis only to Mutual Funds, and the remainder
of the 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 the Offer Price. Further, not
less than 15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors (“NIIs”) and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders
(“RIIs”) in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All Investors (except Anchor Investors) shall participate in this Offer only through an Application
Supported by Blocked Amount (“ASBA”) process. For details, see “Offer Procedure” on page 423.
RISKS IN RELATION TO THE FIRST OFFER This being the first public issue of the securities of our Company, there has been no formal market for the securities of our Company. The face value of our Equity Shares is ` 10 and the Floor Price and Cap Price are [●] times and [●] times of the face value of our Equity Shares, respectively. The Offer Price (as determined and justified by our Company and the Investor Selling Shareholder, in consultation with the BRLMs and as stated in “Basis
for Offer Price” on page 121 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
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 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 the 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 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. Specific attention
of the investors is invited to “Risk Factors” on page 17.
ISSUER’S AND INVESTOR SELLING SHAREHOLDER’S 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 Offer, which is material in the
context of the 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. Further, the Investor Selling Shareholder accepts responsibility only for the statements specifically confirmed and undertaken by the Investor Selling Shareholder with respect to itself and the Investor
Offered Shares and confirms that such statements are true and correct in all material respects and are not misleading in any material respect.
LISTING The Equity Shares issued through the Red Herring Prospectus are proposed to be listed on the Stock Exchanges. We have received in-principle approvals from BSE and NSE for the listing of the Equity Shares pursuant to
letters dated [●] and [●], respectively. For the purposes of this Offer, [●] is the Designated Stock Exchange. 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.
BOOK RUNNING LEAD MANAGERS
REGISTRAR AND SHARE
TRANSFER AGENT TO THE
OFFER
Axis Capital Limited
1st Floor, Axis House
C 2 Wadia International Centre
Pandurang Budhkar Marg Worli
Mumbai 400 025
Maharashtra, India
Tel: +91 22 4325 2183
Fax: +91 22 4325 3000
Email: [email protected]
Investor Grievance Email:
Website: www.axiscapital.co.in
Contact Person: Ms. Simran Gadh
SEBI Registration No.:
INM000012029
ICICI Securities Limited
ICICI Centre
H.T. Parekh Marg, Churchgate
Mumbai 400 020
Maharashtra, India
Tel: +91 22 2288 2460
Fax: +91 22 2282 6580
E-mail: [email protected] Website: www.icicisecurities.com
Investor Grievance Email:
Contact Person: Mr. Rupesh Khant
SEBI Registration No.:
INM000011179
SBI Capital Markets Limited
202, Maker Tower E, Cuffe Parade
Mumbai 400 005
Maharashtra, India
Tel: +91 22 2217 8300
Fax: +91 22 2217 8332
E-mail: [email protected]
Investor Grievance E-mail:
Website: www.sbicaps.com
Contact Person: Mr. Gitesh
Vargantwar
SEBI Registration No.:
INM000003531
YES Securities (India) Limited
YES Bank Tower, IFC 2, 19th floor
Senapati Bapat Marg Elphinstone (W)
Mumbai 400 013, Maharashtra, India
Tel: +91 22 3347 9688
Fax: +91 22 2421 4511 E-mail: [email protected]
Investor Grievance E-mail:
[email protected] Website: www.yesinvest.in
Contact Person: Mr. Aditya Vora
SEBI Registration No.:
MB/INM000012227
Karvy Computershare Private Limited
Karvy Selenium Tower B
Plot 31 and 32, Gachibowli
Financial District, Nanakramguda
Hyderabad 500 032
Tel: +91 40 6716 2222
Fax: +91 40 2343 1551
E-mail: [email protected]
Investor Grievance E-mail:
Website: www.karisma.karvy.com
Contact Person: Mr. Murali Krishna
SEBI Registration No.: INR000000221
BID/OFFER PERIOD*
BID/OFFER OPENS ON [●] BID/OFFER CLOSES ON (FOR QIBs)** [●]
BID/OFFER CLOSES ON (FOR ALL OTHER BIDDERS) [●]
* Our Company and the Investor Selling Shareholder, in consultation with the BRLMs, may consider participation by Anchor Investors, in accordance with the SEBI ICDR Regulations. The Anchor Investor
Bidding Date shall be one Working Day prior to the Bid/Offer Opening Date.
** Our Company and the Investor Selling Shareholder, in consultation with the BRLMs, may decide to close the Bid/Offer Period for QIBs one Working Day prior to the Bid/Offer Closing Date, in accordance
with the SEBI ICDR Regulations.
***“The company is having a valid Certificate of Registration dated March 22, 2010, issued by the Reserve Bank of India under Section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does
not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed
by the company and for repayment of deposits/discharge of liabilities by the company.”
DRAFT RED HERRING PROSPECTUS
Dated March 29, 2016
See Section 32 of the Companies Act, 2013
(This Draft Red Herring Prospectus will be updated upon filing with the RoC)
Book Built Offer
http://www.icicisecurities.com/mailto:[email protected]://www.karvycomputershare.com/default.aspx
1
TABLE OF CONTENTS
SECTION I - GENERAL ..................................................................................................................................... 2
DEFINITIONS AND ABBREVIATIONS ..................................................................................................... 2 CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION ............................................................................................................ 12 FORWARD-LOOKING STATEMENTS ................................................................................................... 15
SECTION II - RISK FACTORS ....................................................................................................................... 17
SECTION III – INTRODUCTION ................................................................................................................... 48
SUMMARY OF INDUSTRY ........................................................................................................................ 48 SUMMARY OF BUSINESS ......................................................................................................................... 61 SUMMARY FINANCIAL INFORMATION .............................................................................................. 67 SELECTED STATISTICAL INFORMATION .......................................................................................... 78 THE OFFER .................................................................................................................................................. 91 GENERAL INFORMATION ....................................................................................................................... 93 CAPITAL STRUCTURE ............................................................................................................................ 102 OBJECTS OF THE OFFER ....................................................................................................................... 118 BASIS FOR OFFER PRICE ...................................................................................................................... 121 STATEMENT OF TAX BENEFITS .......................................................................................................... 124
SECTION IV: ABOUT THE COMPANY ..................................................................................................... 127
INDUSTRY OVERVIEW ........................................................................................................................... 127 OUR BUSINESS .......................................................................................................................................... 155 KEY REGULATIONS AND POLICIES IN INDIA................................................................................. 171 HISTORY AND CERTAIN CORPORATE MATTERS ......................................................................... 185 OUR MANAGEMENT ............................................................................................................................... 193 OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANY ............................................ 213 RELATED PARTY TRANSACTIONS ..................................................................................................... 222 DIVIDEND POLICY ................................................................................................................................... 223
SECTION V – FINANCIAL INFORMATION ............................................................................................. 224
FINANCIAL STATEMENTS..................................................................................................................... 224 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ...................................................................................................................................... 360 FINANCIAL INDEBTEDNESS ................................................................................................................. 388
SECTION VI – LEGAL AND OTHER INFORMATION ........................................................................... 390
OUTSTANDING LITIGATION AND OTHER MATERIAL DEVELOPMENTS .............................. 390 GOVERNMENT AND OTHER APPROVALS ........................................................................................ 398 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 400
SECTION VII – OFFER RELATED INFORMATION ............................................................................... 415
TERMS OF THE OFFER ........................................................................................................................... 415 OFFER STRUCTURE ................................................................................................................................ 419 OFFER PROCEDURE................................................................................................................................ 423
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ...................................... 468
SECTION VIII –PROVISIONS OF THE ARTICLES OF ASSOCIATION.............................................. 469
SECTION IX – OTHER INFORMATION .................................................................................................... 584
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 584 DECLARATION ......................................................................................................................................... 586
2
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or implies, the following terms shall have the meanings provided below in
this Draft Red Herring Prospectus, and references to any statute or regulations or policies will include any
amendments or re-enactments thereto, from time to time. In case of any inconsistency between the definitions
given below and the definitions contained in the General Information Document (as defined below), the definitions
given below shall prevail.
Unless the context otherwise indicates, all references to “HLFL”, “the Company”, “our Company” and “the
Issuer”, are to Hinduja Leyland Finance Limited, a company incorporated in India under the Companies Act
1956 with its Registered Office at 1, Sardar Patel Road, Guindy, Chennai 600 032, Tamil Nadu, India.
Furthermore, unless the context otherwise indicates, all references to the terms “we”, “us” and “our” are to
Hinduja Leyland Finance Limited, its Subsidiary and its Associate Company (as defined below) on a consolidated
basis.
Company and Investor Selling Shareholder Related Terms
Term Description
ALL Ashok Leyland Limited
AoA/Articles of Association or
Articles
The articles of association of our Company, as amended
Auditors The statutory auditor of our Company, being M/s B S R & Co. LLP, Chartered Accountants
Board or Board of Directors The board of directors of our Company, or a duly constituted committee thereof
Business Locations Business Locations represent the total locations from which the Company or personnel of
HLF Services Limited conduct our operations as at the end of the relevant year/ period.
CCCPPS 0.0001% compulsorily convertible cumulative participating preference shares with a face
value of ` 37.58154 each Corporate Office The corporate office of our Company, at 27-A, Developed Industrial Estate, Guindy,
Chennai 600 032, Tamil Nadu, India
CEO The chief executive officer of our Company
CFO The chief financial officer of our Company
COO The chief operating officer of our Company
Director(s) The director(s) on our Board
Equity Shares The equity shares of our Company of a face value of ` 10 each Equity Shareholders The holders of the Equity Shares
Everfin Holdings or Everfin or
Investor Selling Shareholder
Everfin Holdings
Everfin SHA Shareholders’ agreement dated July 17, 2013 executed between our Company, Ashok
Leyland Limited, Ashley Holdings Limited, Ashley Investments Limited, IndusInd
International Holdings Limited, Aasia Management & Consultancy Private Limited,
Hinduja Ventures Limited, Hinduja Realty Ventures Limited, Hinduja Finance Private
Limited, HLF Services Limited, Everfin Holdings, Mr. Vinod K. Dasari, Mr. R. Seshasayee
and Mr. S. Nagarajan and Mr. K. Sridharan
Everfin SSA Share Subscription Agreement dated July 17, 2013 executed between our Company, Ashok
Leyland Limited, Ashley Holdings Limited, Ashley Investments Limited, IndusInd
International Holdings Limited, Aasia Management & Consultancy Private Limited,
Hinduja Ventures Limited, Hinduja Realty Ventures Limited, Hinduja Finance Private
Limited, HLF Services Limited, Everfin Holdings, Mr. Vinod K. Dasari, Mr. R. Seshasayee
and Mr. S. Nagarajan and Mr. K. Sridharan and Everfin Holdings
Group Company The Group Company of our Company, as identified and described in “Our Promoters,
Promoter Group and Group Company” on page 213
HHFL or Subsidiary or Hinduja
Housing Finance
Hinduja Housing Finance Limited. For details of our Subsidiary, see “History and Certain
Corporate Matters” on page 185
HLF Services Limited or HSL
or Associate Company
HLF Services Limited. For details of our Associate Company, see “History and Certain
Corporate Matters” on page 185
Hinduja ESOP 2013 The employee stock option plan, namely, Hinduja Employee Stock Option Plan, 2013,
established by our Company as described in “Capital Structure” on page 102
HPL Hinduja Power Limited
Investor Offered Shares Up to 26,608,810 Equity Shares being offered by the Investor Selling Shareholder in the
Offer for Sale
3
Term Description
Key Management Personnel Key management personnel of our Company in terms of the Companies Act, 2013 and the
SEBI ICDR Regulations and disclosed in “Our Management” on page 193
MoA/Memorandum
of Association
The memorandum of association of our Company, as amended
Promoters Ashok Leyland Limited and Hinduja Power Limited
Preference Shareholder The holder of the CCCPPS
Promoter Group Persons and entities constituting the promoter group of our Company, pursuant to Regulation
2(1)(zb) of the SEBI ICDR Regulations
Registered Office The registered office of our Company situated at 1, Sardar Patel Road, Guindy, Chennai 600
032, Tamil Nadu, India
RoC The Registrar of Companies, Chennai, Tamil Nadu
Restated Consolidated Financial
Information
Audited restated consolidated summary statements (together with annexures and notes
thereto) of assets and liabilities as of September 30, 2015 and the audited restated
consolidated summary statements of profit and loss and cash flows for the six month period
ended September 30, 2015 for our Company, its Subsidiary and its Associate Company
Restated Standalone Financial
Information
Audited restated standalone summary statements (together with annexures and notes thereto)
of assets and liabilities as of September 30, 2015, March 31, 2015, March 31, 2014, March
31, 2013, March 31, 2012 and March 31, 2011 and the audited restated standalone summary
statements of profit and loss and cash flows for the six month period ended September 30,
2015 and for each of the Fiscals 2015, 2014, 2013, 2012 and 2011 for our Company
Restated Financial Information Restated Consolidated Financial Information and Restated Standalone Financial Information,
collectively
Offer Related Terms
Term Description
Acknowledgement Slip The slip or document issued by the Designated Intermediary to a Bidder as proof of registration
of the Bid
Allotted/Allotment/Allot Issue and allotment of Equity Shares pursuant to the Fresh Issue and transfer of Investor Offered
Shares offered by the Investor Selling Shareholder pursuant to the Offer for Sale, to the successful
Bidders
Allottee A successful Bidder to whom the Equity Shares are Allotted
Allotment Advice The note or advice or intimation of Allotment, sent to each successful Bidder who has been or is
to be Allotted the Equity Shares after approval of the Basis of Allotment by the Designated Stock
Exchange
Anchor Escrow Account Account opened with the Anchor Escrow Bank for the Offer, wherein the Anchor Investors will
transfer the funds in respect of the Bid Amount when submitting a Bid
Anchor Investor(s) A QIB, that applies under the Anchor Investor Portion in accordance with the requirements
specified in the SEBI ICDR Regulations
Anchor Investor
Allocation Price
The price at which, Equity Shares will be allocated to Anchor Investors in terms of the Red
Herring Prospectus and the Prospectus, which will be decided by our Company and the Investor
Selling Shareholder, in consultation with the BRLMs
Anchor Investor Bidding
Date
The date 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
Price
The final price at which Equity Shares will be Allotted to Anchor Investors in terms of the Red
Herring Prospectus and the Prospectus, which will be a price equal to or higher than the Offer
Price but not higher than the Cap Price. The Anchor Investor Offer Price will be decided by our
Company and the Investor Selling Shareholder, in consultation with the BRLMs
Anchor Investor Portion Up to 60% of the QIB Portion, which may be allocated by our Company and the Investor Selling
Shareholder, in consultation with the BRLMs, to Anchor Investors in terms of the Red Herring
Prospectus, on a discretionary basis. One-third of the Anchor Investor Portion is reserved for
domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or
above the Anchor Investor Offer Price
Application Supported by
Blocked Amount/ ASBA
The application (whether physical or electronic) by a Bidder (other than Anchor Investors) to
make a Bid authorizing the relevant SCSB to block the Bid Amount in the relevant ASBA
Account
ASBA Account Account maintained with an SCSB which will be blocked by such SCSB to the extent of the
appropriate Bid Amount in relation to a Bid by a Bidder (other than Anchor Investors) and as
defined in the Bid cum Application Form
Axis Cap Axis Capital Limited
Banker to the
Offer/Anchor Escrow
Bank
The bank which is a clearing member and registered with SEBI as an escrow collection bank,
with whom the Anchor Escrow Account in relation to the Offer for Bids by Anchor Investors
4
Term Description
will be opened and from which a refund of the whole or part of the Bid Amount, if any, shall be
made, in this case being [●]
Basis of Allotment The basis on which the Equity Shares will be Allotted to successful Bidders under the Offer,
described in “Offer Procedure – Basis of Allotment” on page 457
Bid An indication to make an offer during the Bid/Offer Period by a Bidder, or on the Anchor Investor
Bidding Date by an Anchor Investor, pursuant to submission of a Bid cum Application Form, to
subscribe for or purchase the Equity Shares at a price within the Price Band, including all revisions
and modifications thereto, to the extent permissible under the SEBI ICDR Regulations. The term
“Bidding” shall be construed accordingly
Bid Amount In relation to each Bid, the highest value of the optional Bids as indicated in the Bid cum
Application Form and payable by the Bidder upon submission of the Bid in the Offer, less Retail
Discount
Bid cum Application
Form
The form of which the Bidder shall make a Bid and which shall be considered as the application
for the Allotment pursuant to the terms of the Red Herring Prospectus and the Prospectus
Bid Lot [●]
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
Bid/Offer Closing Date Except in relation to any Bids received from Anchor Investors, the date after which the Designated
Intermediaries shall not accept any Bids for the Offer, which shall be published in [●] edition of
[●] (a widely circulated English national newspaper), [●] edition of [●] (a widely circulated Hindi
national newspaper) and [●] edition of [●] (a widely circulated Tamil newspaper, Tamil being the
regional language in the place where our Registered Office is located). Our Company and the
Investor Selling Shareholder, in consultation with the BRLMs, may decide to close the Bid/Offer
Period for QIBs one Working Day prior to the Bid/Offer Closing Date, subject to the SEBI ICDR
Regulations
Bid/Offer Opening Date Except in relation to any Bids received from Anchor Investors, the date on which the Designated
Intermediaries shall start accepting Bids for the Offer, which shall be published by our Company
in the [●] edition of [●] (a widely circulated English national newspaper), [●] edition of [●] (a
widely circulated Hindi national newspaper) and the [●] edition of [●] (a widely circulated Tamil
newspaper, Tamil being the regional language in the place where our Registered Office is
located)
Bidding Centers Centers at which the Designated Intermediaries shall accept the Bid cum Application Forms, being
the Designated Branch for SCSBs, Specified Locations for Syndicate, Broker Centres for
Registered Brokers, Designated RTA Locations for RTAs and Designated CDP Locations for
CDPs
Bid/Offer Period Except in relation to Anchor Investors, the period between the Bid/Offer Opening Date and the
Bid/Offer Closing Date, inclusive of both days during which prospective Bidders (excluding
Anchor Investors) can submit their Bids, including any revisions thereof
Book Building Process The book building process as described in Schedule XI of the SEBI ICDR Regulations, in terms
of which the Offer is being made
Book Running Lead
Managers/BRLMs
The book running lead managers to the Offer, in this case being Axis Cap, I-Sec, SBICAPS and
YES Securities
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 Brokers are available on the respective websites of the
Stock Exchanges (www.bseindia.com and www.nseindia.com)
Cap Price The higher end of the Price Band above which the Offer Price and Anchor Investor Offer Price
will not be finalized and above which no Bids will be accepted, including any revisions thereof
Client ID Client identification number of the Bidder’s beneficiary account
Collecting Depository
Participant/CDP
A depository participant registered under the Depositories Act, 1996 and who is eligible to procure
Bids at the Designated CDP Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015
dated November 10, 2015 issued by SEBI
Cut-off Price The Offer Price, finalized by our Company and the Investor Selling Shareholder, in consultation
with the BRLMs, which shall be any price within the Price Band. Only RIIs are entitled to Bid at
the Cut-off Price (subject to the Bid Amount being upto ` 200,000, net of Retail Discount, if any). QIBs (including Anchor Investors) and NIIs are not entitled to Bid at the Cut-off Price
Demographic Details The details of the Bidders including the Bidders’ address, names of the Bidders’ father/husband,
investor status, occupations and bank account details
Designated Branches Such branches of the SCSBs which may collect the Bid cum Application Form used by Bidders
(other than Anchor Investors), a list of which is available at the website of SEBI
(http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries) and updated
from time to time
5
Term Description
Designated CDP
Locations
Such centers of the Collecting Depository Participants where Bidders can submit the Bid cum
Application Forms. The details of such Designated CDP Locations, along with the names and
contact details of the Depository Participants are available on the respective websites of the Stock
Exchanges (www.nseindia.com and www.bseindia.com) and updated from time to time
Designated Date The date on which the Anchor Escrow Banks transfer the funds from the Anchor Escrow
Account to the Public Offer Account or the Refund Account, as appropriate, and the Registrar
and Share Transfer Agent to the Offer issues instruction to SCSBs for transfer of funds from the
ASBA Accounts to the Public Offer Account in terms of the Red Herring Prospectus and the
Prospectus
Designated Intermediaries Members of the Syndicate, sub-syndicate/agents, SCSBs, Registered Brokers, Brokers, CDPs
and RTAs, who are authorized to collect Bid cum Application Forms from the Bidders, in
relation to the Offer
Designated RTA
Locations
Such centers of the RTAs where Bidders can submit the Bid cum Application Forms. The details
of such Designated RTA Locations, along with the names and contact details of the RTAs are
available on the respective websites of the Stock Exchanges (www.nseindia.com and
www.bseindia.com) and updated from time to time
Designated Stock
Exchange
[●]
Draft Red Herring
Prospectus/DRHP
This draft red herring prospectus dated March 29, 2016 filed with SEBI and issued in accordance
with the SEBI ICDR Regulations, which does not contain complete particulars of the price at
which our Equity Shares will be Allotted and the size of the Offer
Eligible NRI A non-resident Indian, resident in a jurisdiction 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 constitutes an invitation to subscribe for the Equity Shares
Escrow Agreement Agreement dated [●], 2016 entered into by and among our Company, the Investor Selling
Shareholder, the Registrar to the Offer, the BRLMs and the Anchor Escrow Bank for collection of
the Bid Amounts and where applicable remitting refunds, if any, to the Bidders, on the terms and
conditions thereof
First Bidder The Bidder whose name appears first in the Bid cum Application Form or the Revision Form
Floor Price The lower end of the Price Band, and any revisions thereof, at or above which the Offer Price and
the Anchor Investor Offer Price will be finalized and below which no Bids will be accepted and
which shall not be less than the face value of the Equity Shares
Fresh Issue Fresh issue of up to [●] Equity Shares aggregating up to ` 5,000 million by our Company as part of the Offer, in terms of this Draft Red Herring Prospectus
Our Company and the Investor Selling Shareholder, in consultation with the BRLMs, is
considering a Pre-IPO Placement of up to 26,000,000 Equity Shares for cash consideration
aggregating up to ` 2,000 million, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the number of Equity Shares issued pursuant to the Pre-IPO
Placement will be reduced from the Fresh Issue, subject to a minimum Offer size of at least such
percentage of Equity Shares as is equivalent to a value of ` [●] million (calculated at the Offer Price) being offered to the public
General Information
Document
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
and updated pursuant to the circular (CIR/CFD/POLICYCELL/11/2015) dated November 10,
2015 notified by SEBI and included in “Offer Procedure” on page 432
I-Sec ICICI Securities Limited
Maximum RII Allottees The maximum number of RIIs that can be allotted the minimum Bid Lot, computed by dividing
the total number of Equity Shares available for Allotment to RIIs by the minimum Bid Lot
Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion) available for allocation to Mutual
Funds only, on a proportionate basis
Net Proceeds Proceeds of the Offer that will be available to our Company, which shall be the gross proceeds of
the Fresh Issue less our Company’s share of the Offer expenses. For further details, see “Objects
of the Offer” on page 118
Net QIB Portion The portion of the QIB Portion less the number of Equity Shares Allotted to the Anchor
Investors
Non-Institutional Portion The portion of the Offer, being not less than 15% of the Offer or [●] Equity Shares, available for
allocation on a proportionate basis to NIIs, subject to valid Bids being received at or above the
Offer Price
NIIs All Bidders, including Category III FPIs that are not QIBs (including Anchor Investors) or RIIs
who have Bid for Equity Shares for an amount of more than ` 200,000 (but not including NRIs other than Eligible NRIs)
6
Term Description
Offer Public offer of up to [●] Equity Shares for cash at a price of ` [●] per Equity Share, aggregating up to ` [●] million, comprising a Fresh Issue of up to [●] Equity Shares, aggregating up to ` 5,000 million, of our Company and an Offer for Sale of up to 26,608,810 Equity Shares,
aggregating up to ` [●] million by the Investor Selling Shareholder Offer Agreement The agreement dated March 29, 2016 entered into by and among our Company, the Investor
Selling Shareholder and the BRLMs, pursuant to which certain arrangements are agreed in relation
to the Offer
Offer for Sale Offer for sale of up to 266,608,810 Equity Shares being offered by the Investor Selling
Shareholder pursuant to the Red Herring Prospectus
Offer Price The final price (less Retail Discount, if any) at which Equity Shares will be Allotted to the
successful Bidders (except Anchor Investors), as determined in accordance with the Book Building
Process and determined by our Company and the Investor Selling Shareholder, in consultation
with the BRLMs in terms of the Red Herring Prospectus on the Pricing Date. A discount of ` [●] to the Offer Price may be offered to RIIs. The amount of the Retail Discount will be decided by
our Company and the Investor Selling Shareholder, in consultation with the BRLMs, and
advertised in [●] edition of [●] (a widely circulated English national newspaper), [●] edition of [●]
(a widely circulated Hindi national newspaper) and [●] edition of [●] (a widely circulated Tamil
newspaper, Tamil being the regional language in the place 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 respective websites
Pre-IPO Placement Private placement of up to 26,000,000 Equity Shares for cash consideration aggregating up to ` 2,000 million, which may be undertaken by our Company and the Investor Selling Shareholder, in
consultation with the BRLMs, in favour of such investors as permissible under applicable law, to
be completed prior to filing the Red Herring Prospectus with the RoC and the details of which, if
completed, will be included in the Red Herring Prospectus. If the Pre-IPO Placement is completed,
the number of Equity Shares issued pursuant to the Pre-IPO Placement will be reduced from the
Fresh Issue, subject to a minimum Offer size of at least such percentage of Equity Shares as is
equivalent to a value of ` [●] million (calculated at the Offer Price) being offered to the public Price Band Price band of the Floor Price of ` [●] and a Cap Price of ` [●], including revisions thereof. The
Price Band, any Retail Discount and the minimum Bid lot for the Offer will be decided by our
Company and the Investor Selling Shareholder, in consultation with the BRLMs, and advertised
in the [●] edition of [●], a widely circulated English national newspaper, [●] edition of [●] (a
widely circulated Hindi national newspaper) and the [●] edition of [●] (a widely circulated Tamil
newspaper, Tamil being the regional language in the place where our Registered Office is
located) at least five Working Days prior to the Bid/Offer Opening Date, with the relevant financial
ratios calculated at the Floor Price and at the Cap Price and which shall be made available to the
Stock Exchanges for the purpose of uploading on their respective websites
Pricing Date The date on which our Company and the Investor Selling Shareholder, in consultation with the
BRLMs, shall finalize the Offer Price
Prospectus The Prospectus to be filed with the RoC for this Offer on or after the Pricing Date in accordance
with the provisions of Section 26 of the Companies Act, 2013 and the SEBI ICDR Regulations,
containing the Offer Price, the size of the Offer and certain other information, including any
addenda or corrigenda thereto
Public Offer Account The account to be opened with the Banker to the Offer under Section 40(3) of the Companies Act,
2013, to receive monies from the Anchor Investor Escrow Account and the ASBA Accounts on
the Designated Date
QIB Portion The portion of the Offer, being 50% of the Offer or [●] Equity Shares available for allocation to
QIBs on a proportionate basis, including the Anchor Investor Portion (in which allocation shall be
on a discretionary basis, as determined by our Company and the Investor Selling Shareholder, in
consultation with the BRLMs), subject to valid Bids being received at or above the Offer Price,
provided that our Company and the Investor Selling Shareholder may, in consultation with the
BRLMs allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis
QIBs A qualified institutional buyer as defined under Regulation 2(1)(zd) of the SEBI ICDR 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 SEBI ICDR Regulations, which will not have complete particulars of the price at which
the Equity Shares shall be Allotted and which shall be filed with the RoC at least three days
before the Bid/Offer Opening Date and will become the Prospectus after filing with the RoC
after the Pricing Date, including any addenda or corrigenda thereto
Refund Account(s) Account opened with the Anchor Escrow Bank from which refunds, if any, of the whole or part of
the Bid Amount shall be made to the Anchor Investors
Registered Brokers Stock brokers registered with the stock exchanges having nationwide terminals, other than the
members of the Syndicate and eligible to procure Bids in terms of Circular no. CIR/CFD/14/2012
dated October 4, 2012, issued by SEBI
7
Term Description
Registrar Agreement The agreement dated March 29, 2016, entered into by and among our Company, the Investor
Selling Shareholder and the Registrar to the Offer in relation to the responsibilities and obligations
of the Registrar to the Offer pertaining to the Offer
Registrar and Share
Transfer Agents or RTAs
Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the
Designated RTA Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated
November 10, 2015 issued by SEBI
Registrar to the Offer Karvy Computershare Private Limited
Retail Portion The portion of the Offer, being not less than 35% of the Offer or [●] Equity Shares, available for
allocation to RIIs, which shall not be less than the minimum Bid Lot, subject to availability in the
Retail Portion and the remaining Equity Shares being Allotted on a proportionate basis
Retail Discount A discount of up to ̀ [●] (equivalent to [●]% of the Offer Price) that may be offered to RIIs (subject
to the Bid Amount being upto ` 200,000 net of Retail Discount, if any), by our Company and the Investor Selling Shareholder, in consultation with the BRLMs, at the time of making a Bid
RIIs Retail individual bidders (including HUFs and Eligible NRIs) whose Bid Amount for Equity
Shares in the Offer is not more than ` 200,000 Revision Form The form used by Bidders to modify the number of Equity Shares or the Bid Amount in any of
their Bid cum Application Forms or any previous Revision Form, as applicable
SBICAPS SBI Capital Markets Limited
Self Certified Syndicate
Banks or SCSBs
The banks registered with SEBI which offer the ASBA facility, a list of which is available on the
website of SEBI (http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries)
and updated from time to time and at such other websites as may be prescribed by
SEBI from time to time
Share Escrow Agreement Agreement to be entered into between the Investor Selling Shareholder, our Company, the
Escrow Agent and the BRLMs in connection with the transfer of the Investor Offered Shares
by the Investor Selling Shareholder and credit of such Equity Shares to the demat accounts of
the Allottees
Specified Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms, a list of which is
included in the Bid cum Application Form
Stock Exchanges BSE Limited and National Stock Exchange of India Limited
Syndicate Agreement The agreement to be entered into by and among the members of the Syndicate, our Company, the
Investor Selling Shareholder and the Registrar and Share Transfer Agent to the Offer in relation
to the collection of Bids in the Offer (other than Bids directly submitted to the SCSBs, to Registered
Brokers at the Broker Centres, to RTAs at Designated RTA Locations and to the CDPs at
Designated CDP Locations)
Syndicate Members Intermediaries registered with SEBI and permitted to carry out activities as an underwriter, in this
case being [●]
Syndicate or members of
the Syndicate
Collectively, the BRLMs and the Syndicate Members
Underwriters The members of the Syndicate
Underwriting Agreement The agreement among our Company, the Investor Selling Shareholder and the Underwriters, to be
entered into on or after the Pricing Date
Working Day(s) All days, other than 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, as notified by SEBI.
For the purpose of the time period between the Bid Closing Date and listing of the Equity Shares
on the Stock Exchanges, “Working Days” shall mean all days excluding second and fourth
Saturdays, Sundays and bank holidays in India, in accordance with SEBI circular no.
CIR/CFD/DIL/3/2010 dated April 22, 2010 and notification F. No.4/1/7/2015-IR dated August
20, 2015 issued by the Department of Financial Services, Ministry of Finance, Government of
India.
YES Securities YES Securities (India) Limited
Conventional and General Terms and Abbreviations
Term Description
AIF(s) Alternative Investment Funds, as defined in, and registered with SEBI under, the SEBI AIF
Regulations
AGM Annual General Meeting
Authorised Dealers Authorised Dealers registered with RBI under the Foreign Exchange Management (Foreign
Currency Accounts) Regulations, 2000
8
Term Description
Banking Regulation Act Banking Regulation Act, 1949
Bn or Billion Billion
BSE BSE Limited
CAGR Compounded Annual Growth Rate. CAGR is calculated by taking the nth root of the total
percentage growth rate, where n is the number of years in the period being considered
CAR Capital Adequacy Ratio.
Category III FPIs FPIs registered as category III FPIs under the SEBI FPI Regulations, which shall include all other
FPIs not eligible under category I and II foreign portfolio investors, such as endowments, charitable
societies, charitable trusts, foundations, corporate bodies, trusts, individuals and family offices
CCI Competition Commission of India
CDSL Central Depository Services (India) Limited
Companies Act Companies Act, 1956 and/or the Companies Act, 2013, as applicable
Companies Act 1956 Companies Act, 1956 (without reference to the provisions thereof that have ceased to have effect
upon notification of the Notified Sections)
Companies Act, 2013 Companies Act, 2013, to the extent in force pursuant to the notification of the Notified Sections,
read with the rules, regulations, clarifications and modifications thereunder
Consolidated FDI Policy The current consolidated FDI Policy, effective from May 12, 2015, issued by the DIPP, and any
modifications thereto or substitutions thereof, issued from time to time
Depository A depository registered with SEBI under the Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996
Depositories Act The Depositories Act, 1996
DIPP Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, GoI
DP ID Depository Participant’s identity number
DTC Direct Tax Code, 2013
EBITDA Earnings Before Interest, Tax, Depreciation and Amortization
EGM Extraordinary general meeting
EPF Act The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
EPS Earnings per share
ESI Act Employees’ State Insurance Act, 1948
FCNR Account Foreign Currency Non Resident (Bank) account established in accordance with the FEMA
FDI Foreign direct investment
FEMA The Foreign Exchange Management Act, 1999 read with rules and regulations thereunder
FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000
FII(s) Foreign Institutional Investors as defined under the erstwhile Securities and Exchange Board of
India (Foreign Institutional Investors) Regulations, 2000, registered with SEBI under applicable
law in India and deemed as FPIs under the SEBI FPI Regulations
Fiscal The period of 12 months commencing on April 1 of the immediately preceding calendar year
and ending on March 31 of that particular calendar year
FPIs A foreign portfolio investor as defined under the SEBI FPI Regulations
FVCI Foreign Venture Capital Investors as defined under the SEBI FVCI Regulations, and registered
with SEBI
GAAR General Anti Avoidance Rules
GDP Gross Domestic Product
GoI The Government of India
GST Goods and Services Tax
HUF(s) Hindu Undivided Family(ies)
ICAI The Institute of Chartered Accountants of India
ICRA ICRA Limited
ICSI The Institute of Company Secretaries of India
ICMAI The Institute of Cost Accountants of India
ICMA The Institute of Cost and Management Accountants
IFSC Indian Financial System Code
IFRS International Financial Reporting Standards
Income Tax Act The Income Tax Act, 1961
IND AS The Indian Accounting Standards referred to in the Companies (Indian Accounting Standard)
Rules, 2015, as amended
Indian Accounting
Standard Rules 2015
The Companies (Indian Accounting Standards) Rules, 2015
India Republic of India
Indian GAAP Generally Accepted Accounting Principles in India
9
Term Description
INR or Rupee or ` or Rs. Indian Rupee, the official currency of the Republic of India
IPO Initial public offering
IRDA Insurance Regulatory and Development Authority
MAT Minimum Alternative Tax
MCA The Ministry of Corporate Affairs, GoI
Mutual Funds Mutual funds registered with SEBI under the Securities and Exchange Board of India (Mutual
Funds) Regulations, 1996
NAV Net asset value
Notified Sections The sections of the Companies Act, 2013 that have been notified by the MCA and are currently in
effect
NR/ Non-resident A person resident outside India, as defined under the FEMA and includes a Non-resident Indian
NRE Account Non-Resident External Account established and operated in accordance with the FEMA
NRI Non-Resident Indian
NRO Account Non-Resident Ordinary Account established and operated in accordance with the FEMA
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
Off-Book AUM Total assigned contract balances
P/E ratio Price/Earnings Ratio
PAN Permanent account number
PAT Profit after tax
Prudential Norms The Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms
(Reserve Bank) Directions, 2007 (up to March 31, 2014) and Non-Banking Financial (Non-
Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015
(from April 1, 2014), as amended by Reserve Bank of India from time to time (together referred
to as Prudential Norms).
RBI The Reserve Bank of India
ROA Return on Assets
ROE Return on Equity
RoNW Return on net worth
RTA Road Transport Authority
RTGS Real–time gross settlement
Rule 144A Rule 144A under the U.S. Securities Act
SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002
SCRA The Securities Contracts (Regulation) Act, 1956
SCRR The Securities Contracts (Regulation) Rules, 1957
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 Securities and Exchange Board of India (Alternative Investments Funds) Regulations, 2012
SEBI ESOP Regulations Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014
SEBI ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009
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 Listing Regulations Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015
SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996
STT Securities transaction tax
Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011
US$ or USD or US
Dollar
United States Dollar, the official currency of the United States of America
USA or U.S. or US United States of America
U.S. GAAP Generally Accepted Accounting Principles in the United States of America
U.S. Securities Act The United States Securities Act, 1933
VAT Value Added Tax
VCFs Venture capital funds as defined in and registered with SEBI under the SEBI VCF Regulations or
the SEBI AIF Regulations, as the case may be
10
Industry Related Terms
Term Description
ABS Anti-Lock Braking Systems
AUM Assets Under Management
BS II, III, IV Bharat Stage emission norms
CARE CARE Ratings
CARO The Companies (Auditor’s Report) Order, 2015
CE Construction Equipment
CIBIL The Credit Information Bureau (India) Limited
CPCC Central Process And Control Cell
CRAR Capital to Risk Weighted Assets Ratio
CV Commercial Vehicle
EMI Equated Monthly Installments
EPC Engineering, Procurement, Construction
ERP Enterprise Resource Planning
ERS Electronic Clearance System
EWS Economically Weaker Sections
FOIR Fixed Obligation to Income Ratios
FSI Floor Space Index
FTB First-Time Buyer
GPRS General Packet Radio Service
GVW Gross Vehicle Weight
HAM Hybrid Annuity Model
HFC Housing Finance Company
ICRA ICRA Limited
IMF International Monetary Fund
IT Information Technology
KYC Know Your Customer
LAP Loans Against Property
LCV Light Commercial Vehicle
LIG Lower Income Group
LTV Loan To Value
MCE Mining and Construction Equipment
ME Mining Equipment
MHCV Medium and Heavy Commercial Vehicle
MSME Micro, Small and Medium Enterprises
NBFC Non-Banking Financial Company
NHB National Housing Board
NPA Non-Performing Assets
OEM Other Equipment Manufacturer
PDC Post-Dated Cheque
PNC Pick-and-Carry Cranes
PSB Public Sector Bank
PTC Pass Through Certificate
PV Passenger Vehicle
RTO Regional Transport Office
SCB Scheduled Commercial Banks
SCV Small Commercial Vehicle
SIAM Society of Indian Automobile Manufacturers
SME Small and Medium-Sized Enterprises
SRTO Small Road Transport Operator
SRTU State Road Transport Undertakings
STO Small Truck Owner
T Tonne
YoY Year Over Year
11
The words and expressions used but not defined in this Draft Red Herring Prospectus will have the same meaning
as assigned to such terms under the Companies Act, the SEBI Act, the SCRA, the Depositories Act and the rules
and regulations made thereunder.
Notwithstanding the foregoing, terms in “Provisions of the Articles of Association”, “Statement of Tax Benefits”,
“Industry Overview”, “Key Regulations and Policies in India”, “Financial Statements”, “Outstanding
Litigation and Other Material Developments” and “Part B” of “Offer Procedure”, on pages 469, 124, 127, 171,
224, 390, and 433 will have the meanings ascribed to such terms in these respective sections.
12
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION
Certain Conventions
All references in this Draft Red Herring Prospectus to “India” are to the Republic of India. All references in this
Draft Red Herring Prospectus to the “U.S.”, “USA” 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 indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our Restated
Consolidated Financial Information for the six month period ended September 30, 2015 and the Restated
Standalone Financial Information for the six month period ended September 30, 2015 and for the fiscals 2015,
2014, 2013, 2012 and 2011, prepared in accordance with Section 26 of the Companies Act, 2013, and sub-clause
(i), (ii) and (iii) of clause (b) of sub-section (1) of Chapter III of the Companies Act, 2013, read with rule 4 of the
Companies (Prospectus and Allotment of Securities) Rules, 2014, the Generally Accepted Accounting Principles
in India (“Indian GAAP”) and the Companies Act, and restated in accordance with the SEBI ICDR Regulations.
Our Company’s fiscal year commences on April 1 of the immediately preceding calendar year and ends on March
31 of that particular calendar year, so all references to a particular fiscal year are to the 12 month period
commencing on April 1 of the immediately preceding calendar year and ending on March 31 of that particular
calendar year.
There are significant differences between the Indian GAAP, IFRS and the U.S. GAAP. 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 practices. Any
reliance by persons not familiar with Indian accounting practices, the Indian GAAP, the Companies Act and the
SEBI ICDR Regulations on the financial disclosures presented in this Draft Red Herring Prospectus should
accordingly be limited. We have not attempted to quantify the impact of the IFRS or the U.S. GAAP on the
financial data included in this Draft Red Herring Prospectus, nor do we provide a reconciliation of our financial
information to those under the U.S. GAAP or the IFRS and we urge you to consult your own advisors regarding
such differences and their impact on our financial data. For details, see “Risk Factors – Certain companies in
India, including our Company, are required to prepare financial statements under Ind AS. The transition to
Ind AS in India is very recent and still unclear and our Company may be negatively affected by these changes.”
on page 44.
Certain figures contained in this Draft Red Herring Prospectus, including financial information, have been subject
to rounding adjustments. All decimals have been rounded off to two decimal points. In certain instances, (i) the
sum or percentage change of such numbers may not conform exactly to the total figure given; and (ii) the sum of
the numbers in a column or row in certain tables may not conform exactly to the total figure given for that column
or row. However, where any figures that may have been sourced from third-party industry sources are rounded
off to other than two decimal points in their respective sources, such figures appear in this Draft Red Herring
Prospectus as rounded-off to such number of decimal points as provided in such respective sources.
Unless the context otherwise indicates, any percentage amounts, as set forth in “Risk Factors”, “Our Business”
and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” on pages 17,
155 and 360 respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated on the basis
of the Restated Financial Information of our Company prepared in accordance with Section 26 of the Companies
Act, 2013, and sub-clause (i), (ii) and (iii) of clause (b) of sub-section (1) of Chapter III of the Companies Act,
2013 read with rule 4 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, the Indian GAAP
and the Companies Act, and restated in accordance with the SEBI ICDR Regulations.
One of our Promoters, Ashok Leyland Limited (“ALL”), being listed on NSE and BSE, declares, and will be
required to declare its quarterly unaudited consolidated results in accordance with Regulation 33 of the SEBI
Listing Regulations, which may include limited unaudited financial information about us. As these results would
13
be unaudited, under SEBI ICDR Regulations such results cannot be included and do not form part of this Draft
Red Herring Prospectus.
EBIDTA presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and
liquidity that is not required by, or presented in accordance with, Indian GAAP, IFRS or US GAAP. Furthermore,
EBIDTA is not a measurement of our financial performance or liquidity under Indian GAAP, IFRS or US GAAP
and should not be considered as an alternative to net profit/loss, revenue from operations or any other performance
measures derived in accordance with Indian GAAP, IFRS or US GAAP or as an alternative to cash flow from
operations or as a measure of our liquidity. In addition, EBITDA is not a standardised term, hence a direct
comparison of EBITDA between companies may not be possible. Other companies may calculate EBITDA
differently from us, limiting its usefulness as a comparative measure.
Industry and Market Data
Unless stated otherwise, industry and market data used throughout this Draft Red Herring Prospectus has been
obtained from various industry publications and sources, including ‘Overview of Retail NBFC and HFC Credit’
dated March 2, 2016, ‘Indian Automobile Industry Report, Special Report’ dated November 19, 2015 and ‘Indian
Construction Equipment Report, 2015’ dated November 19, 2015 issued by ICRA Limited (“ICRA”). 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 made based on
such information. Although we believe that the industry and market data used in this Draft Red Herring Prospectus
is reliable, it has not been independently verified by us, the Investor Selling Shareholder or the BRLMs or any of
their affiliates or advisors. The data used in these sources may have been reclassified by us for the purposes of
presentation. Data from these sources may also not be comparable. The extent to which the industry and market
data presented in this Draft Red Herring Prospectus is meaningful depends upon 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 we conduct our business and methodologies and assumptions may vary
widely among different market and industry sources. Such data involves risks, uncertainties and numerous
assumptions and is subject to change based on various factors, including those discussed in “Risk Factors” on
page 17. Accordingly, investment decisions should not be based solely on such information.
In accordance with the SEBI ICDR Regulations, “Basis for Offer Price” on page 121 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.
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 the business of our Company is conducted, and
methodologies and assumptions may vary widely among different industry sources.
The statements and undertakings which are specifically “confirmed” or “undertaken” by the Investor Selling
Shareholder in respect of the Investor Offered Shares in this Draft Red Herring Prospectus shall be deemed to be
the only statements and undertakings made by the Investor Selling Shareholder in this Draft Red Herring
Prospectus. All other statements and/or undertakings in this Draft Red Herring Prospectus shall be statements and
undertakings made by our Company even if the same relates to the Investor Selling Shareholder.
Certain information in the chapters titled “Summary of Industry”, “Summary of Business”, “Industry Overview”
and “Our Business” on pages 48, 61, 127 and 155 of this Draft Red Herring Prospectus have been obtained from
ICRA which has issued the following disclaimer:
“All information contained in the enclosed content has been obtained by ICRA Limited from sources believed by
it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is
true, such information is provided ‘as is’ without any warranty of any kind, and ICRA Limited in particular, makes
no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such
information. All information contained herein must be construed solely as statements of opinion, and ICRA
Limited shall not be liable for any losses incurred by users from any use of this publication or its contents.”
14
Currency and Units of Presentation
All references to “Rupees” or “`” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. All references to “US$”, “U.S. Dollar”, “USD” or “U.S. Dollars” are to United States Dollars, the official
currency of the United States of America.
All figures have been expressed in millions. One million represents ‘10 lakhs’ or 1,000,000. However, where any
figures that may have been sourced from third-party industry sources are expressed in denominations other than
millions in their respective sources, such figures appear in this Draft Red Herring Prospectus expressed in such
denominations as provided in such respective sources.
Exchange Rates
This Draft Red Herring Prospectus contains conversions of U.S. Dollars into Indian Rupees that have been
presented solely to comply with the requirements of the SEBI ICDR Regulations. These conversions should not
be construed as a representation that such currency amounts could have been, or can be converted into Indian
Rupees, at any particular rate, or at all.
The exchange rates of U.S. Dollars as of September 30, 2015, March 31, 2015, March 28, 2014, March 28, 2013,
March 30, 2012 and March 31, 2011 are provided below:
(In `) Currency As of March 31,
2011
As of March
31, 2012
As of March 31,
2013
As of March 31,
2014
As of March 31,
2015
As of September
30, 2015
1 USD 44.65 51.16(1) 54.39(2) 60.10(3) 62.59 65.74
Source: RBI reference rate sourced from www.rbi.org.in
(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.
http://www.rbi.org.in/
15
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”, “contemplate”, “expect”,
“estimate”, “future”, “goal”, “intend”, “likely to” “objective”, “plan”, “project”, “will continue”, “seek to”, “will
pursue” or other words or phrases of similar import. Similarly, statements which describe our strategies,
objectives, plans or goals are also forward-looking statements.
These forward-looking statements are based on our current plans, estimates and expectations and actual results
may differ materially from those suggested by such 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. Certain important factors that would cause actual
results to differ materially include, but are not limited to:
our inability to access ALL’s dealership and distribution network.
dependence upon the performance, operations, and prospects of the overall Indian automotive market and, in particular, demand for MHCVs.
our inability to compete effectively in an increasingly competitive industry.
our inability to control or reduce the level of NPAs in our portfolio or inability to provide for such higher levels of NPAs.
our inability to maintain relationships with automotive dealers and motor vehicle OEMs.
failure to effectively manage our growth or sustain our growth strategy.
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 our management’s 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. One of our
Promoters, ALL, being listed on NSE and BSE, declares, and will be required to declare its quarterly unaudited
consolidated results in accordance with Regulation 33 of the SEBI Listing Regulations, which may include limited
unaudited financial information about us. As these results would be unaudited, under SEBI ICDR Regulations
such results cannot be included and do not form part of this Draft Red Herring Prospectus.
For a further discussion of factors that could cause our actual results to differ, see “Risk Factors”, “Our Business”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 17,
155 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 future gains or losses could
materially differ from those that have been estimated. Forward-looking statements reflect our current views as of
the date of this Draft Red Herring Prospectus and are not a guarantee of future performance. Although we believe
that the assumptions on which such statements are based are reasonable, any such assumptions as well as the
statement based on them could prove to be inaccurate.
Neither our Company, nor the Investor Selling Shareholder, nor the Syndicate, nor any of their respective affiliates
will 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. Our Company and the BRLMs will ensure that investors are informed of material developments as
required under applicable law or relevant within the context of the Offer, until the receipt of final listing and
trading approvals for the Equity Shares pursuant to the Offer.
In accordance with SEBI requirements, our Company and the BRLMs will ensure that investors are informed of
material developments until the time of the grant of listing and trading permission by the Stock Exchanges. The
Investor Selling Shareholder shall authorize and reasonably assist the Company in ensuring that investors are
informed of material developments in relation to statements and undertakings made by the Investor Selling
Shareholder in the Red Herring Prospectus and the Prospectus until the time of the grant of listing and trading
permission by the Stock Exchanges. The statements and undertakings which are specifically “confirmed” or
“undertaken” by the Investor Selling Shareholder in this Draft Red Herring Prospectus with respect to the Investor
Offered Shares shall be deemed to be the only statements and undertakings made by the Investor Selling
Shareholder. All other statements and/or undertakings in this Draft Red Herring Prospectus shall be statements
and undertakings made by our Company even if the same relates to the Investor Selling Shareholder.Further, in
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accordance with Regulation 51A of the SEBI ICDR Regulations, our Company may be required to annually update
the disclosures made in this Draft Red Herring Prospectus and make such relevant disclosures publicly available
in the manner specified by SEBI.
17
SECTION II - RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all the information
disclosed in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before
making an investment in the Equity Shares. The risks described below are not the only risks relevant to us or
the Equity Shares or the industry in which we currently operate. Additional risks and uncertainties, not presently
known to us or that we currently deem immaterial may also impair our business prospects, results of operations
and financial condition. In order to obtain a complete understanding about us, prospective investors should
read this section in conjunction with the sections “Our Business”, “Selected Statistical Information”, and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 155,
78 and 360, respectively, as well as the other financial and statistical information included in this Draft Red
Herring Prospectus. If any of the risks described below, or other risks that are not currently known or are
currently deemed immaterial actually occur, our business prospects, results of operations and financial
condition could be adversely affected, the trading price of the Equity Shares could decline, and investors may
lose all or part of the value of their investment. 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.
You should consult your tax, financial and legal advisors about the particular consequences to you of an
investment in this Offer.
This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result
of certain factors, including the considerations described below and elsewhere in this Draft Red Herring
Prospectus. Please see “Forward-Looking Statements” on page 15.
Until Fiscal 2015, our Company did not have any subsidiaries and no consolidated financial statements were
prepared. In September 2015, we commenced our housing finance business through our wholly owned subsidiary,
Hinduja Housing Finance Limited. Unless otherwise indicated, the financial information included herein are
based on our Restated Standalone Financial Information for Fiscal 2011, Fiscal 2012, Fiscal 2013, Fiscal 2014
and Fiscal 2015 and Restated Consolidated Financial Information as of and for the six months ended September
30, 2015, included in this Draft Red Herring Prospectus. For further details, see “Financial Information”
beginning on page 224.
Unless the context otherwise requires, in this section, references to “we”, “us”, “our”, or “Company” refers to
Hinduja Leyland Finance Limited on a standalone basis other than with respect to the six months ended September
30, 2015, when it refers to Hinduja Leyland Finance Limited on a consolidated basis.
INTERNAL RISK FACTORS
1. Our inability to access ALL’s dealership and distribution network could have an adverse effect on our business, prospects, results of operations, and financial condition.
Our business depends on the continuity of our relationship with one of our Promoters, ALL. We derive a
significant amount of business as a result of ALL’s large distribution network. Our relationship with ALL
assists us in sourcing customers, expanding our operational network and increasing market penetration. AUM
of loans for vehicles manufactured by ALL as a percentage of our total AUM were 44.52%, 42.36%, and
45.99% as of March 31, 2013, 2014 and 2015, respectively, and 47.80% as of September 30, 2015. ALL’s
retail customers compose a significant portion of our customer base, and our revenue is also dependent on
ALL’s production and sales volume. In the MHCV segment, we finance MHCVs that are manufactured only
by ALL.
As a result, our business depends on the success of ALL’s distribution and marketing network and brand
equity, and in particular, on ALL’s MHCV business. Our inability to obtain business from ALL’s customers
may materially affect our business prospects, results of operations and financial condition.
In addition, our customers may delay or default on their payments due to us on account of technical failures
of their vehicles or construction equipment because they associate these failures with ALL and, in turn, with
us. Any inability of ALL to maintain and expand its own distribution network, increase its sales, and
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effectively respond to competition, or any decline in sale of ALL’s vehicles may adversely affect our business,
results of operations and financial condition. ALL is the second largest carrier in the MHCV segment in India
and in Fiscal 2014 and 2015 it had a market share of 25.8% and 28.5%, respectively, of the MHCV segment
(passenger carrier and goods carriers) (Source: IAI Report, 2015). There is no assurance that ALL’s market
share will not reduce in the future, and any such negative impact could in turn have a material adverse effect
on our business, prospects, results of operations and financial condition.
2. Our results of operations and financial condition are dependent upon the performance, operations, and prospects of the overall Indian automotive market and, in particular, demand for MHCVs. Any adverse
development in the Indian automotive sector or in government policies affecting this industry, including
the new and used vehicle financing industry, could adversely affect our business and results of operations.
As our business operations primarily relate to financing of new and used commercial and personal vehicles,
our assets and NPAs have, and will likely continue in the future to have, a high concentration of vehicle
financing loans. Our business is dependent on various factors that impact the automotive industry, such as
the demand for vehicles and transportation services in India, the costs of raw materials for manufacture of
vehicles, levy of additional duties and taxes, changes in Indian regulations, customer preferences and
government policies affecting used and new commercial vehicles.
MHCV loans represented 51.20% of our AUM as of September 30, 2015. Our AUM for MHCV finance grew
at a CAGR of 45.68%, from ₹ 6,900.65 million in Fiscal 2011 to ₹ 31,082.89 million in Fiscal 2015. We have
a greater risk of loan defaults and losses in the event the MHCV segment in particular experiences weak
demand within the commercial vehicles industry, as adverse economic conditions may have a negative effect
on the ability of our borrowers to make timely payments of their loans. In the recent past, demand for MHCVs
has been cyclical. For example, following the impact of global financial crisis in Fiscal 2009, the Indian CV
industry experienced growth of 30% in each of Fiscal 2010 and Fiscal 2011. However, after experiencing
steady growth, the buoyancy in domestic CV industry deteriorated from March 2012 onwards. In fiscal 2012,
the growth slowed to 18.2% and entered into the negative territory in Fiscal 2013 (down 2.0% year-over-
year) and weakened further in Fiscal 2014 (down 20.2% year-over-year) due to a weakening economy and
surplus capacity in the trucking system. (Source: IAI Report, 2015)