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Draft Red Herring Prospectus Dated: May 07, 2018
Read with Section 26 and 32 of the Companies Act, 2013 100% Book Built Issue
USHANTI COLOUR CHEM LIMITEDOur Company was incorporated under the provisions of Companies Act, 1956 as ‘Ushanti Colour Chem Private Limited’ in Gujarat vide Certificate of Incorporation issued by Registrar of Companies, Gujarat, Dadra and Nagar Haveli, on May 12, 1993. Consequently, it was converted into a public limited company pursuant to special resolution passed at Extra-ordinary General Meeting of our Company held on February 19, 2018 and the name of our Company was changed to ‘Ushanti Colour Chem Limited’ and a fresh certificate of incorporation consequent upon Conversion of Private Limited to Public Limited dated March 07, 2018 was issued by Registrar of Companies, Ahmedabad. The Corporate Identification Number of our Company is U24231GJ1993PLC019444. For further details of Incorporation and Change of Registered Office of our company, please refer to chapter titled “General Information” and “Our History and Certain Other Corporate Matters” beginning on page 65 and page 151 of this Draft Red Herring Prospectus.
Registered Office: 88/8 GIDC, Phase I, Vatva, Ahmedabad- 382445, Gujarat, IndiaTel. No.: 079-25833315; Fax No.: Not Avaliable
Contact Person: Archita Jitendrakumar Shah, Company Secretary and Compliance OfficerEmail: [email protected]; Website: www.ushanti.com
PROMOTERS OF OUR COMPANY: MAUNAL SHANTILAL GANDHI AND MINkU SHANTILAL GANDHI
THE ISSUE
INITIAL PUBLIC OFFER CONSISITING OF FRESH ISSUE OF UPTO 19,26,000* EQUITY SHARES OF FACE VALUE OF Rs. 10/- EACH FULLY PAID CASH AT A PRICE OF Rs. []/- PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [] PER EQUITY SHARE) (THE “ISSUE PRICE”) AGGREGATING UP TO RS []/-** LAkHS (“THE ISSUE”) OF WHICH [] EQUITY SHARES OF FACE VALUE RS. 10/- EACH FOR CASH AT A PRICE OF RS. []/- PER EQUITY SHARE, AGGREGATING RS. [] LAkHS WILL BE RESERVED FOR SUBSCRIPTION BY THE MARkET MAkER TO THE ISSUE (THE “MARkET MAkER RESERVATION PORTION”). THE ISSUE LESS MARkET MAkER RESERVATION PORTION I.E. ISSUE OF UPTO [] EQUITY SHARES OF FACE VALUE OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. [] PER EQUITY SHARE, AGGREGATING RS. [] IS HEREINAFTER REFERED TO AS THE “NET ISSUE”. THE ISSUE AND THE NET ISSUE WILL CONSTITUTE []% AND []%, RESPECTIVELY OF THE FULLY DILUTED POST ISSUE PAID UP EQUITY SHARE CAPITAL OF OUR COMPANY. THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER (“BRLM”) AND WILL BE ADVERTISED IN [] EDITIONS OF THE ENGLISH NATIONAL NEWSPAPER [], [] EDITIONS OF THE HINDI NATIONAL NEWSPAPER [] AND [] EDITIONS OF THE GUJARATI NEWSPAPER [], GUJARATI BEING THE LOCAL LANGUAGE OF GUJARAT, WHERE OUR REGISTERED OFFICE IS SITUATED, EACH WITH WIDE CIRCULATION, AT LEAST 5 (FIVE) WORKING DAYS PRIOR TO THE BID/ ISSUE OPENING DATE WITH THE RELEVANT FINANCIAL RATIOS CALCULATED AT THE FLOOR PRICE AND THE CAP PRICE AND SHALL BE MADE AVAILABLE TO THE EMERGE PLATFORM OF NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE EMERGE”, REFERRED TO AS THE “STOCK EXCHANGE”) FOR THE PURPOSE OF UPLOADING ON THEIR WEBSITE.In case of any revisions in the Price Band, the Bid/Issue Period will be extended by at least three additional Working Days after such revision of the Price Band, subject to the Bid/ Issue Period not exceeding 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 website of the BRLMs and the terminals of the Syndicate Members (defined herein below).
In terms of SEBI Circular No. CIR/CFD/POLICYCELL/11/2015, all potential investors shall participate in the Offer only through an Application Supported by Blocked Amount (“ASBA”) process providing details about the bank account which will be blocked by the Self Certified Syndicate Banks (“SCSBs”) for the same. For details in this regard, specific attention is invited to the chapter titled “Issue Procedure” beginning on page 232 of this Draft Red Herring Prospectus. A copy of the Red Herring Prospectus/ Prospectus will be delivered for registration to the Registrar of Companies as required under Section 32 and Section 26 of the Companies Act, 2013.
In terms of Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”) the Issue is being made for at least 25% of the post-issue paid-up Equity Share capital of our Company. The Issue is being made in accordance with Chapter XB of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time (“SEBI (ICDR) Regulations”),wherein []% of the Net Issue shall be available for allocation on a proportionate basis to QIBs. 5% of the QIB 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, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Net Issue will be available for allocation to Retail Individual Investors, in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Issue Price. All investors shall participate in this Issue mandatorily through the Applications Supported by Blocked Amount (“ASBA”) process by providing details of their respective bank accounts which will be blocked by SCSBs. For details, please refer to the section titled “Issue Information” on page 222 of DRHP.
RISKS IN RELATION TO THE FIRST ISSUE
This being the first public Issue of the Issuer, there has been no formal market for our Equity Shares. The face value of the Equity Shares is Rs.10/- each and the Issue price of Rs. [] per Equity Share is [] times of the face value. The Issue Price (as determined and justified by our Company in consultation with the BRLM as stated in the chapter titled ‘Basis for issue Price’ beginning on page 103 of this Draft Red Herring Prospectus) should not be taken to be indicative of the market price of the Equity Shares after such 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 this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and this Issue, including the risks involved. The Equity Shares offered 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 titled ‘Risk Factors’ beginning on page 20 of Draft Red Herring Prospectus.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Issuer and this Issue, which is material in the context of this 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 or inclusion 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.
LISTING
The Equity Shares of our Company issued through this Draft Red Herring Prospectus are proposed to be listed on the EMERGE Platform of National Stock Exchange of India Limited (‘NSE EMERGE’). In terms of the Chapter XB of the SEBI (ICDR) Regulations, 2009, as amended from time to time, our Company has received an In-principle approval letter dated [] from NSE EMERGE for using its name in this Issue document for listing of our shares on the EMERGE Platform of National Stock Exchange of India Limited. For the purpose of this Issue, National Stock Exchange of India Limited shall be the Designated Stock Exchange.
BOOK RUNNING LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
PANTOMATH CAPITAL ADVISORS PRIVATE LIMITED 406-408, Keshva Premises, Behind Family Court,Bandra Kurla Complex, Bandra (East), Mumbai – 400051, Maharashtra, India Tel: +91-22 6194 6700Fax: +91-22 2659 8690Website: www.pantomathgroup.comEmail: [email protected] Grievance Id: [email protected] Person: Unmesh Zagade / Hardik BhutaSEBI Registration No: INM000012110
BIGSHARE SERVICES PRIVATE LIMITED1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis, Makwana Road, Marol, Andheri East, Mumbai 400059, Maharashtra, IndiaTel: +91 22 6263 8200Fax: +91 22 6263 8299Email: [email protected] Website: www.bigshareonline.com Investor Grievance Id:[email protected] Contact Person: Jibu JohnSEBI Registration Number: INR000001385
BID/ISSUE PROGRAMME
BID/ISSUE OPENS ON: [], [] BID/ISSUE CLOSES ON: [], []
*Number of shares may need to be adjusted for lot size upon determination of issue price**Subject to finalisation of basis of Allotment
Page 1 of 325
SECTION I – GENERAL .................................................................................................................... 3
DEFINITION AND ABBREVIATION ................................................................................................. 3
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA....................................... 17
FORWARD LOOKING STATEMENT ............................................................................................... 19
SECTION II – RISK FACTORS....................................................................................................... 20
SECTION III - INTRODUCTION.................................................................................................... 42
SUMMARY OF INDUSTRY ............................................................................................................... 42
SUMMARY OF OUR BUSINESS ...................................................................................................... 52
SUMMARY OF FINANCIAL STATEMENTS .................................................................................. 59
THE ISSUE ........................................................................................................................................... 63
GENERAL INFORMATION ............................................................................................................... 65
CAPITAL STRUCTURE ..................................................................................................................... 76
OBJECTS OF THE ISSUE ................................................................................................................... 95
BASIS FOR ISSUE PRICE ................................................................................................................ 103
STATEMENT OF POSSIBLE TAX BENEFITS .............................................................................. 106
SECTION IV – ABOUT THE COMPANY .................................................................................... 109
OUR INDUSTRY ............................................................................................................................... 109
OUR BUSINESS ................................................................................................................................ 125
KEY INDUSTRY REGULATIONS AND POLICIES ...................................................................... 139
OUR HISTORY AND CERTAIN OTHER CORPORATE MATTERS ........................................... 151
OUR MANAGEMENT ...................................................................................................................... 156
OUR PROMOTER AND PROMOTER GROUP .............................................................................. 171
OUR GROUP COMPANIES ............................................................................................................. 175
RELATED PARTY TRANSACTIONS ............................................................................................. 176
DIVIDEND POLICY .......................................................................................................................... 177
SECTION V – FINANCIAL STATEMENTS ................................................................................ 178
FINANCIAL STATEMENTS AS RESTATED ................................................................................. 178
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ........................................................................................................... 179
FINANCIAL INDEBTEDNESS ........................................................................................................ 195
SECTION VI – LEGAL AND OTHER INFORMATION ........................................................... 199
OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS ...................................... 199
GOVERNMENT AND OTHER STATUTORY APPROVALS ........................................................ 204
OTHER REGULATORY AND STATUTORY DISCLOSURES ..................................................... 211
SECTION VII – ISSUE INFORMATION ..................................................................................... 222
TERMS OF THE ISSUE .................................................................................................................... 222
ISSUE STRUCUTRE ......................................................................................................................... 228
ISSUE PROCEDURE ......................................................................................................................... 232
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES .................................. 275
SECTION VIII – MAIN PROVISIONS OF ARTICLES OF ASSOCIATION .......................... 278
SECTION IX – OTHER INFORMATION .................................................................................... 319
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ........................................... 319
DECLARATION ................................................................................................................................ 321
Page 2 of 325
The Equity Shares have not been and will not be registered under the U.S Securities Act of 1933,
as amended (“U.S. Securities Act”) or any state securities laws in the United States of America
and may not be offered or sold within the United States or to, or for the account or benefit of,
“U.S. Persons (as defined in Regulation S), except pursuant to exemption from, or in a transaction
not subject to, the registration requirements of the U.S. Securities laws. Accordingly the Equity
Shares are being offered and sold only outside the United States in offshore transaction in reliance
on Regulation S under the U.S Securities Act and the applicable laws of the jurisdiction where
those offers and sale occur.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any
other jurisdiction outside India and may not be offered or sold, and application may not be made
by persons in any such jurisdiction, except in compliance with the applicable laws of such
jurisdiction.
Page 3 of 325
SECTION I – GENERAL
DEFINITION AND ABBREVIATION
In this Draft Red Herring Prospectus, unless the context otherwise requires, the terms and abbreviations
stated hereunder shall have the meanings as assigned therewith.
COMPANY RELATED TERMS
Term Description
“Ushanti Colour Chem
Limited ” or “Ushanti Colour
Chem”, or “the Company” ,or
“our Company” or “we”, “us”,
“our”, or “Issuer” or the
“Issuer Company”
Unless the context otherwise requires, refers to Ushanti Colour
Chem Limited, a public limited Company incorporated under the
Companies Act, 1956.
“AoA” or “Articles” or
“Articles of Association”
Articles of Association of Ushanti Colour Chem Limited, as
amended from time to time
Audit Committee The committee of the Board of Directors constituted as the
Company’s Audit Committee in accordance with Section 177 of the
Companies Act, 2013
Board of Directors/ the Board
/ our Board/ Director(s)
The Board of Directors of Ushanti Colour Chem Limited, including
all duly constituted Committee(s) thereof
Bankers to the Company Such banks which are disclosed as Bankers to the Company in the
chapter titled “General Information” on page 65 of this Draft Red
Herring Prospectus
Company Secretary and
Compliance Officer
The Company Secretary & Compliance Officer of our Company
being Archita Shah
Director(s) Director(s) of Ushanti Colour Chem Limited, unless otherwise
specified
Equity Shares Equity Shares of our Company of face value of Rs. 10/- each fully
paid up
Equity Shareholders/
shareholders Persons/ Entities holding Equity Shares of our Company
Group Companies Such Companies as are included in the chapter titled ‘Our Group
Companies’ beginning on page 175 of this Draft Red Herring
Prospectus
ISIN International Securities Identification Number. In this case being [●].
Key Managerial Personnel
(KMP)
Key managerial personnel of our Company in terms of Regulation 2
(1) (s) of the SEBI Regulations and as disclosed in the chapter titled
“Our Management” beginning on page 156 of this Draft Red Herring
Prospectus.
“MoA” / “Memorandum /
Memorandum of Association”
The Memorandum of Association of our Company, as amended from
time to time
Nomination and
Remuneration Committee
The committee constituted as the Company’s Nomination &
Remuneration Committee in accordance with Section 177 of the
Companies Act, 2013
NRI/ Non-Resident Indian A person resident outside India, as defined under FEMA and who is
a citizen of India or a Person of Indian Origin as defined under
FEMA (Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000.
Page 4 of 325
Term Description
Person or Persons Any Individual, Sole Proprietorship, Unincorporated Association,
Unincorporated Organization, Body Corporate, Corporation,
Company, Partnership Firm, Limited Liability Partnership Firm,
Joint Venture, or Trust or any other Entity or Organization validly
constituted and/or incorporated in the jurisdiction in which it exists
and operates, as the context requires
“Promoter”, “Promoters” or
“our Promoters”
Promoters of our Company being Maunal Gandhi and Minku
Gandhi.
Promoter Group Includes such persons and entities are constituting our promoter
group in terms of Regulation 2(1) (zb) of the SEBI (ICDR)
Regulations and as enlisted in the chapter titled “Our Promoter and
Promoter Group” beginning on page 171 of this Draft Red Herring
Prospectus
Peer Reviewed Auditor Independent Auditor having a valid Peer Reviewed Certificate in our
case being M/s. N K Aswani & Co., Chartered Accountants
Registered Office The Registered office of our Company situated at 88/8, Phase I
GIDC Vatva, Ahmedabad - 382445, Gujarat, India.
RoC / Registrar of Companies Registrar of Companies, ROC Bhavan, Opp Rupal Park Society,
Behind Ankur Bus Stop, Naranpura, Ahmedabad-380013, Gujarat,
India.
Shareholders Shareholders of our Company
Stakeholders Relationship
Committee
The committee constituted as the Company’s Stakeholders
Relationship Committee in accordance with Section 178(5) of the
Companies Act, 2013
“Statutory Auditor” /
“Auditor”
The Statutory Auditor of our Company, being M/s. ANA &
Associates, Chartered Accountants
“you”, “your” or “yours” Prospective investors in this Issue
ISSUE 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.
Allotment/ Allot/
Allotted
Issue and allotment of Equity Shares of our Company pursuant to the
Issue of the Equity Shares to successful Bidders
Allottee(s) Successful Bidders(s) to whom Equity Shares have been
allotted/transferred
Allotment Advice
Note or advice or intimation of Allotment sent to the successful 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.
ASBA / Application
Supported by Blocked
Amount
An application, whether physical or electronic, used by Bidders, to make
a Bid authorising an SCSB to block the Bid Amount in the ASBA
Account
ASBA Account
An account maintained with an SCSB and specified in the Bid cum
Application Form submitted by Bidders for blocking the Bid Amount
mentioned in the Bid cum Application Form
ASBA form
An application form, whether physical or electronic, used by Bidders
which will be considered as the application for Allotment in terms of this
Draft Red Herring Prospectus.
Page 5 of 325
Term Description
ASBA Application
Location(s) / Specified
Cities
Locations at which ASBA Applications can be uploaded by the SCSBs,
namely Mumbai, New Delhi, Chennai, Kolkata, and Ahmedabad.
Banker(s) to the Issue The banks which are clearing members and registered with SEBI as
Banker to an Issue with whom the Public Issue Account will be opened
and in this case being ICICI Bank.
Basis of Allotment
The basis on which Equity Shares will be Allotted to the successful
Bidders under the Issue and which is described under chapter titled “Issue
Procedure” beginning on page 232 of this Draft Red Herring Prospectus.
Bid An indication to make an issue during the Bid/Issue Period by a Bidder
pursuant to submission of the Bid cum Application Form, to subscribe to
or purchase the Equity Shares at a price within the Price Band, including
all revisions and modifications thereto as permitted under the SEBI ICDR
Regulations.
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
Bidding The process of making a Bid.
Bid Amount The highest value of optional Bids indicated in the Bid cum Application
Form and in the case of Retail Individual Bidders Bidding at Cut Off
Price, the Cap Price multiplied by the number of Equity Shares Bid for by
such Retail Individual Bidder and mentioned in the Bid cum Application
Form and payable by the Retail Individual Bidder or blocked in the ASBA
Account upon submission of the Bid in the Issue
Bid cum Application
form
The form used by a Bidder, to make a Bid and which will be considered
as the application for Allotment in terms of the Red Herring Prospectus
Bid Cum Application
Collecting Intermediaries
a SCSB with whom the bank account to be blocked, is maintained
a syndicate member (or sub-syndicate member) If any
a stock broker registered with a recognized stock exchange (and whose
name is mentioned on the website of the stock exchange as eligible for
this activity)(‘broker’) if any
a depository participant (‘DP’) (whose name is mentioned on the website
of the stock exchange as eligible for this activity)
a registrar to an issue and share transfer agent (‘RTA’) (whose name is
mentioned on the website of the stock exchange as eligible for this
activity)
Bid Lot 19,26,000 Equity shares and in multiples of [●] Equity Shares thereafter
Bid/ Issue Closing Date The date after which the Syndicate, the Designated Branches and the
Registered Brokers will not accept any Bids, which shall be notified in
[●] edition of the English national newspaper [●], [●] edition of the Hindi
national newspaper [●], and [●] edition of the Gujarati newspaper [●],
each with wide circulation and in case of any revision, the extended
Bid/Issue Closing Date shall also be notified on the website and terminals
of the Syndicate and SCSBs, as required under the SEBI ICDR
Regulations
Bid/ Issue Opening Date The date on which the Syndicate, the Designated Branches and the
Registered Brokers shall start accepting Bids, which shall be notified in
[●] edition of the English national newspaper [●], [●] edition of the Hindi
national newspaper [●], and [●] edition of the Gujarati newspaper [●],
each with wide circulation, and in case of any revision, the extended
Bid/Issue Opening Date also to be notified on the website and terminals
Page 6 of 325
Term Description
of the Syndicate and SCSBs, as required under the SEBI ICDR
Regulations.
Bid/ Issue Period The period between the Bid/ Issue Opening Date and the Bid/Issue
Closing Date, inclusive of both days, during which Bidders can submit
their Bids, including any revisions thereof.
Bidding/Collecting
Centre
Centres at which the Designated Intermediaries shall accept the ASBA
Forms, i.e, Designated SCSB Branch for SCSBs, Specified Locations for
Syndicate, Broker Centres for Registered Brokers, Designated RTA
Locations for RTAs and Designated CDP Locations for CDPs
Book Building Process Book building process, as provided in Schedule XI of the SEBI ICDR
Regulations, in terms of which the Issue is being made
Book Running Lead
Managers or BRLM
The Book Running Lead Manager to the Issue namely Pantomath Capital
Advisors Private Limited, SEBI registered Category – I Merchant Banker
Broker Centres
Broker centres notified by the Stock Exchanges, where the 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 website of National Stock
Exchange of India Limited.
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
CAN or Confirmation of
Allocation Note
The note or advice or intimation sent to each successful Bidder indicating
the Equity Shares which will be Allotted/ transferred, after approval of
Basis of Allotment by the Designated Stock Exchange.
Client ID Client Identification Number maintained with one of the Depositories in
relation to demat account.
Cut-off Price Issue Price, which shall be any price within the Price Band finalised by
our Company in consultation with the BRLM. 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.
Collecting Depository
Participant or CDP
A depository participant as defined under the Depositories Act, 1996,
registered with SEBI and who is eligible to procure Applications at the
Designated CDP Locations in terms of circular no.
CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by
SEBI
Controlling
Branch/Designated
Branch
Such branch of the SCSBs which coordinate Applications under this Issue
by the ASBA Applicants with the Registrar to the Issue and the Stock
Exchanges and a list of which is available at http://www.sebi.gov.in or at
such other website as may be prescribed by SEBI from time to time
Demographic Details The demographic details of the Bidders/Applicants such as their address,
PAN, occupation and bank account details
Depositories
Depositories registered with SEBI under the Securities and Exchange
Board of India (Depositories and Participants) Regulations, 1996, as
amended from time to time, being NSDL and CDSL
Depository Participant A Depository Participant as defined under the Depositories Act, 1996
Designated Date
The date on which the Collection Banks transfer funds from the public
issue accounts, and the SCSBs issue instructions for transfer of funds
from the ASBA Accounts, to the Public Issue Account or the Refund
Account, as appropriate, in terms of the Draft Red Herring Prospectus
following which the Board of Directors may Allot Equity Shares to
http://www.sebi.gov.in/
Page 7 of 325
Term Description
successful Bidders in the Fresh Issue may give delivery instructions for
the transfer of the respective Offered Shares.
Designated
Intermediary(ies)
Syndicate, Sub-Syndicate Members/agents, SCSBs, Registered Brokers,
CDPs and RTAs, who are authorized to collect ASBA Forms from the
Bidders, in relation to the Issue
Designated RTA
Locations
Such centres of the RTAs where Bidder 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 Exchange (www.nseindia.com) and
updated from time to time
Designated Stock
Exchange Emerge Platform of National Stock Exchange of India Limited.
Designated CDP
Locations
Such centres of the CDPs where Bidders can submit the Bid Cum
Application Forms. The details of such Designated CDP Locations, along
with names and contact details of the Collecting Depository Participants
eligible to accept Bid cum Application Forms are available on the website
of the Stock Exchange (www.nseindia.com) and updated from time to
time
Draft Red Herring
Prospectus or DRHP
The Draft Red Herring Prospectus dated [●] issued in accordance with
section 32 of the Companies Act, 2013 and filed with the Emerge
Platform of National Stock Exchange of India Limited under SEBI
(ICDR) Regulations, which does not contain
First/sole Bidder
Bidder whose name shall be mentioned in the Bid cum Application Form
or the Revision Form and in case of joint Bids, whose name shall also
appear as the first holder of the beneficiary account held in joint names
Floor Price
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
FII/ Foreign Institutional
Investors
Foreign Institutional Investor (as defined under SEBI (Foreign
Institutional Investors) Regulations, 1995, as amended) registered with
SEBI under applicable laws in India.
General Information
Document/GID
The General Information Document for investing in public issues
prepared and issued in accordance with the circular
(CIR/CFD/DIL/12/2013) dated October 23, 2013, notified by SEBI and
included in “Issue Procedure” on page 232 of this Draft Red Herring
Prospectus
Listing Agreement The Equity Listing Agreement to be signed between our Company and
the National Stock Exchange of India Limited.
Market Making
Agreement
Market Making Agreement dated [●] between our Company, Book
Running Lead Manager and Market Maker
Market Maker
Market Maker appointed by our Company from time to time, in this case
being Pantomath Stock Brokers Private Limited who has agreed to
receive or deliver the specified securities in the market making process
for a period of three years from the date of listing of our Equity Shares or
for any other period as may be notified by SEBI from time to time
Market Maker
Reservation Portion
The Reserved Portion of Upto [●] Equity Shares of face value of Rs. 10
each fully paid for cash at a price of Rs [●] per Equity Share aggregating
Rs. [●] for the Market Maker in this Issue.
Mutual Fund(s) A mutual fund registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996, as amended from time to time
http://www.nseindia.com/http://www.nseindia.com/
Page 8 of 325
Term Description
Mutual Fund Portion
5% of the QIB Portion (excluding the Anchor Investor Portion) i.e. [●]
Equity Shares available for allocation to Mutual Funds, out of the QIB
Portion
NIF
National Investment Fund set up by resolution F. No. 2/3/2005-DD-II
dated November 23, 2005 of Government of India published in the
Gazette of India.
NSE Emerge of NSE/
SME Exchange
The SME Platform of National Stock Exchange of India Limited,
approved by SEBI as an SME Exchange for listing of equity shares
offered under Chapter XB of the SEBI (ICDR) Regulations.
NSE National Stock Exchange of India Limited
Eligible NRI NRIs from such jurisdiction outside India where it is not unlawful to make
an offer or invitation under the Issue and in relation to whom this Draft
Red Herring Prospectus constitutes an invitation to subscribe for the
Equity Shares offered herein on the basis of the terms thereof.
Net Issue
The Issue (excluding the Market Maker Reservation Portion) of Upto [●]
Equity Shares of face value of Rs. 10 each fully paid for cash at a price of
Rs [●] per Equity Share aggregating Rs. [●] by our Company
Net Proceeds
Proceeds of the Fresh Issue less our Company’s share of the Issue
expenses. For further information about use of the Issue Proceeds and the
Issue expenses, see “Objects of the Issue” on page 96
NIF National Investment Fund set up by resolution F. No. 2/3/2005-DD-II
dated November 23, 2005 of Government of India published in the
Gazette of India
Non Institutional Bidders
All Bidders, including Category III FPIs that are not QIBs or Retail
Individual Investors, who have apply for Equity Shares for an amount of
more than Rs. 2,00,000/- but not including NRIs other than Eligible NRIs
Non-Resident
A person resident outside India, as defined under FEMA (Transfer or
Issue of Security by a Person Resident Outside India) Regulations, 2017,
as amended from time to time, and includes FIIs and FPIs
Issue/Issue Size/ Initial
Public Issue/ Initial
Public Offer/ Initial
Public Offering/ IPO
The Initial Public Issue of Upto 19,26,000 Equity Shares of face value of
Rs.10 each for cash at a price of Rs. [●] each, aggregating up to Rs.[●]
comprising the Fresh Issue.
Issue Agreement
The agreement dated April 18, 2018 between our Company and the
BRLM, 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
Draft Red Herring Prospectus. The Issue Price will be decided by our
Company in consultation with the BRLM on the Pricing Date in
accordance with the Book-Building Process and the Draft Red Herring
Prospectus
Issue Proceeds
The proceeds of the Issue that is available to our Company. For further
information about use of Issue Proceeds, see “Objects of the Issue” on
page 96 of this Draft Red Herring Prospectus
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 as defined under the Foreign Exchange
Management (Deposit) Regulations, 2000, as amended from time to time.
OCBs are not allowed to invest in this Issue
Page 9 of 325
Term Description
Other Investors
Investors other than Retail Individual Investors. These include individual
bidders/applicants other than retail individual investors and other
investors including corporate bodies or institutions irrespective of the
number of specified securities applied for
Person/ Persons
Any individual, sole proprietorship, unincorporated association,
unincorporated organization, body corporate, corporation, company,
partnership, limited liability company, joint venture, or trust or any other
entity or organization validly constituted and/or incorporated in the
jurisdiction in which it exists and operates, as the context requires
Price Band
Price band of a minimum price of Rs. [●] per Equity Share (Floor Price)
and the maximum price of Rs.[●] 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 in consultation with the BRLM and will be
advertised at least five Working Days prior to the Bid/ Issue Opening
Date, in [●] edition of the English national newspaper [●], [●] edition of
the Hindi national newspaper [●] and [●] edition of the Gujarati
newspaper [●], each with wide circulation
Pricing date The date on which our Company in consultation with the BRLM, will
finalise the Issue Price
Prospectus
The Prospectus to be filed with the RoC on or after the Pricing Date in
accordance with Section 26 of the Companies Act, 2013, and the SEBI
ICDR Regulations containing, inter alia, the Issue Price, the size of the
Issue and certain other information
Public Issue Account
Account opened with the Banker to the Issue i.e. ICICI Bank under
Section 40 of the Companies Act, 2013 to receive monies from the SCSBs
from the bank accounts of the bidders on the Designated Date.
Public Issue Account
Agreement/ Banker to the
Issue Agreement
Agreement entered on [●] amongst our Company, Book Running Lead
Manager, the Registrar to the Issue and Public Issue Bank/Banker to the
Issue for collection of the Bid Amount on the terms and conditions
thereof.
Qualified Institutional
Buyers or QIBs or QIB
Bidders
Qualified Institutional Buyers as defined under Regulation 2(1)(zd) of the
SEBI (ICDR) Regulations, 2009.
QIB Portion The portion of the Issue being [●]% of the Net Issue, consisting of [●]
Equity Shares, available for Allocation to QIBs (including Anchor
Investors), subject to valid Bids being received at or above the Issue Price
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 ICDR
Regulations, which will not have complete particulars of the price at
which the Equity Shares will be offered and the size of the Issue,
including any addenda or corrigenda thereto.
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 on or 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 Bidders) shall
be made.
Refund Bank(s) / Refund
Banker(s)
Bank which is / are clearing member(s) and registered with the SEBI as
Bankers to the Issue at which the Refund Account will be opened, in this
case being ICICI Bank.
Page 10 of 325
Term Description
Refund through
electronic transfer of
funds
Refunds through NECS, direct credit, RTGS or NEFT, as applicable
Registered Broker
Individuals or companies registered with SEBI as “Trading Members”
(except Syndicate/Sub-Syndicate Members) who hold valid membership
of NSE having right to trade in stocks listed on Stock Exchanges, through
which investors can buy or sell securities listed on stock exchanges, a list
of which is available on
http://www.nseindia.com/membership/dynaContent/find_a_broker.htm
Registrar /Registrar to the
Issue
Registrar to the Issue, in this case being Bigshare Services Private Limited
having registered office at 1st Floor, Bharat Tin Works Building, Opp.
Vasant Oasis, Makwana Road, Marol, Andheri East, Mumbai - 400059
Registrar and Share
Transfer Agents or RTAs
Registrar and share transfer agents registered with SEBI and eligible to
procure Applications at the Designated RTA Locations in terms of
circular no. CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015
issued by SEBI
Resident Indian
A person resident in India, as defined under FEMA (Transfer or Issue of
Security by a Person Resident Outside India) Regulations, 2017, as
amended from time to time
Retail Individual
Bidder(s)/Retail
Individual
Investor(s)/RII(s)/RIB(s)
Individual Bidders, or minors applying through their natural guardians,
including HUFs (applying through their Karta), who apply for an amount
less than or equal to Rs 2,00,000/-
Revision Form
Form used by the 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)
Reservation Portion The portion of the Issue reserved for category of eligible Bidders as
provided under the SEBI (ICDR) Regulations, 2009
Registrar Agreement
The agreement dated April 18, 2018, entered by our Company and the
Registrar to the Issue in relation to the responsibilities and obligations of
the Registrar to the Issue pertaining to the Issue
Reserved Category /
Categories Categories of persons eligible for making Bids under reservation portion.
SCSB/ Self Certified
Syndicate Banker
Bank which is registered with SEBI under SEBI (Bankers to an Issue)
Regulations, 1994, as amended from time to time, and which Issue the
service of making Bids/Application/s Supported by Blocked Amount
including blocking of bank account and a list of which is available on
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised
Intermediaries or at such other website as may be prescribed by SEBI
from time to time
SEBI Listing Regulations
Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and includes the agreement
to be entered into between our Company and the Stock Exchange in
relation to listing of Equity Shares on such Stock Exchange.
SEBI (Foreign Portfolio
Investor) Regulations
Securities and Exchange Board of India (Foreign Portfolio Investors)
Regulations, 2014, as amended from time to time
Specified Locations
Bidding centres where the Syndicate shall accept Bid cum Application
Forms from Bidders, a list of which is available on the website of SEBI
(www.sebi.gov.in) and updated from time to time
http://www.nseindia.com/membership/dynaContent/find_a_broker.htmhttp://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised%20Intermediarieshttp://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised%20Intermediarieshttp://www.sebi.gov.in/
Page 11 of 325
Term Description
Sub-Syndicate members A SEBI Registered member of NSE appointed by the BRLM and/or
Syndicate Member to act as a Sub-Syndicate Member in the Issue
Syndicate Agreement
Agreement dated [●] entered into amongst the BRLM, the Syndicate
Members, our Company in relation to the procurement of Bid cum
Application Forms by Syndicate
Syndicate or Members of
the Syndicate
Intermediaries registered with SEBI who are permitted to carry out
activities as an underwriter, namely, [●]
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
Underwriter Pantomath Capital Advisors Private Limited
Underwriting Agreement The agreement dated [•] entered into between the Underwriter and our
Company
Working Day
“Working Day” means all days, other than second and fourth Saturday of
the month, Sunday or a public holiday, on which commercial banks in
Mumbai are open for business; provided however, with reference to the
time period between (a) announcement of Price Band; and (b) Bid/ Issue
Period, “Working Day” shall mean all days, excluding all Saturdays,
Sundays or a public holiday, on which commercial banks in Mumbai are
open for business; and with reference to the time period between the Bid/
Issue Closing Date and the listing of the Equity Shares on the Stock
Exchanges, “Working Day” shall mean all trading days of Stock
Exchanges, excluding Sundays and bank holidays
TECHNICAL AND INDUSTRY TERMS
Term Description
CSO Central Statistics Office
EPFO Employees’ Provident Fund Organisation
ESI Employee State Insurance
FDI Foreign Direct Investment
FCNR Foreign Currency Non-Resident
FY Financial Year
GDP Gross Domestic Product
GST Goods and Services Tax
GVA Gross Value Added
IMF International Monetary Fund
INR Indian Rupees Official Currency of India
MSMEs Micro, Small & Medium Enterprises
MYEA Mid-Year Economic Analysis
NITI Aayog National Institution for Transforming India
NMP National Manufacturing Policy
US/ U.S./ USA United States of America
WPI Wholesale Price Index
PMGKY Pradhan Mantri Garib Kalyan Yojana
RBI Reserve Bank of India
SEZ Special Economic Zone
TADF Technology Acquisition and Development Fund
TASL Tata Advanced Systems Ltd
Page 12 of 325
Term Description
UDAY Ujwal DISCOM Assurance Yojana Scheme
US$ United States Dollar, the official currency of United States of America
CONVENTIONAL AND GENERAL TERMS/ABBREVIATIONS
Term Description
A/C Account
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 Standard Accounting Standards as issued by the Institute of Chartered
Accountants of India
A.Y./AY Assessment Year
AoA Articles of Association
ASBA Application Supported by Blocked Amount
BIFR Board for Industrial and Financial Reconstruction
NSE National Stock Exchange of India 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 Investors
FPIs who are registered as – Category II foreign portfolio investors
under the SEBI FPI Regulations
Category III Foreign
Portfolio Investors
FPIs who are registered as – Category III foreign portfolio investors
under the SEBI FPI Regulations
CC Cash Credit
CDSL Central Depository Services (India) Limited
CFO Chief Financial Officer
CIN Corporate Identification Number
CS Company Secretary
CST Central Sales Tax
Cm Centimetre
CMD Chairman and Managing Director
CENVAT Central Value Added Tax
Companies Act, 1956 Companies Act, 1956 (without reference to the provisions thereof that
have ceased to have effect upon notification of the Notified Sections)
and the Companies Act, 2013.
Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the
notification of the notified sections
Depositories NSDL (National Securities Depository Limited) and CDSL (Central
Depository Services Limited); Depositories registered with the SEBI
under the Securities and Exchange Board of India (Depositories and
Participants) Regulations, 1996, as amended from time to time
Depositories Act The Depositories Act, 1996, as amended from time to time.
DGFT Directorate General of Foreign Trade
DIN Director Identification Number
DIPP Department of Industrial Policy & Promotion
DP Depository Participant
Page 13 of 325
Term Description
DP ID Depository Participant’s Identity
EBIDTA Earnings before interest, depreciation, tax, amortization and
extraordinary items
ECS Electronic Clearing System
EGM Extraordinary General Meeting
EPFA The Employees‘ Provident Funds and Miscellaneous Provisions Act,
1952
ESIC Employee State Insurance Corporation
ESOP Employee Stock Option Plan
ESPS Employee Stock Purchase Scheme
EPS Earnings Per Share
EPF Employees Provident Fund
FCNR Account Foreign Currency Non Resident Account
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act 1999, as amended from time to
time and the regulations framed there under
FII(s) Foreign Institutional Investor, as defined under the FII Regulations and
registered with the SEBI under applicable laws in India
FPI(s) Foreign Portfolio Investor means a person who satisfies the eligibility
criteria prescribed under Regulation 4 and has been registered under
Chapter II of Securities And Exchange Board Of India (Foreign
Portfolio Investors) Regulations, 2014, which shall be deemed to be an
intermediary in terms of the provisions of the SEBI Act,1992
FII Regulations Securities and Exchange Board of India (Foreign Institutional
Investors) Regulations, 1995, as amended from time to time.
FIs Financial Institutions
FIPB The Foreign Investment Promotion Board, Ministry of Finance, GoI
FVCI Foreign Venture Capital Investor registered under the Securities and
Exchange Board of India (Foreign Venture Capital Investor)
Regulations, 2000
FV Face Value
F.Y./FY Financial Year
GAAP Generally Accepted Accounting Principles
GDP Gross Domestic Product
GIR Number General Index Registry number
GoI/ Government Government of India
HNI High Networth Individual
HUF Hindu Undivided Family
ICDR Regulations/ SEBI
Regulations/ SEBI (ICDR)
Regulations/Regulations
SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2009 as amended from time to time
Indian GAAP Generally Accepted Accounting Principles in India
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IPO Initial Public Offering
IRDA Insurance Regulatory and Development Authority
I. T. Act The Income Tax Act, 1961, as amended.
Page 14 of 325
Term Description
IT Authorities Income Tax Authorities
IT Rules The Income Tax Rules, 1962, as amended from time to time
INR Indian National Rupee
Key Managerial Personnel
/ KMP
The officers declared as a Key Managerial Personnel and as mentioned
in the chapter titled “Our Management” beginning on page 156 of this
Draft Red Herring Prospectus
KVA Kilovolt-ampere
BRLM Book Running Lead Manager
Ltd. Limited
Mn Million
MoA Memorandum of Association
MoF Ministry of Finance, GoI
MoU Memorandum of Understanding
MD Managing Director
MICR Magnetic Ink Character Recognition
N/A or N.A. Not Applicable
NAV Net Asset Value
NBFC Non Banking Finance Company
Net Worth The aggregate of the paid up share capital, share premium account, and
reserves and surplus (excluding revaluation reserve) as reduced by the
aggregate of miscellaneous expenditure (to the extent not adjusted or
written off) and the debit balance of the profit and loss account
NOC No Objection Certificate
NR Non Resident
NRE Account Non Resident (External) Account
NRI Non Resident Indian, is a person resident outside India, who is a citizen
of India or a person of Indian origin and shall have the same meaning
as ascribed to such term in the Foreign Exchange Management
(Deposit) Regulations, 2000, as amended from time to time
NRO Account Non Resident (Ordinary) Account
NSDL National Securities Depository Limited
NI Act Negotiable Instruments Act, 1881
OCB Overseas Corporate Bodies
p.a. per annum
PAN Permanent Account Number
PAT Profit After Tax
Pvt. Private
PBT Profit Before Tax
P/E Ratio Price Earnings Ratio
QIB Qualified Institutional Buyer
RBI Reserve Bank of India
RBI Act The Reserve Bank of India Act, 1934, as amended from time to time
RoC Registrar of Companies
RoNW Return on Net Worth
Rs. / INR Indian Rupees
Page 15 of 325
Term Description
SCRA Securities Contracts (Regulation) Act, 1956 as amended from time to
time
SCRR Securities Contracts (Regulation) Rules, 1957
SCSB Self-Certified Syndicate Bank
SEBI Securities and Exchange Board of India
SEBI Act Securities and Exchange Board of India Act, 1992, as amended from
time to time
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 VCF Regulations Securities and Exchange Board of India (Venture Capital Fund)
Regulations, 1996 as repealed pursuant to the SEBI AIF Regulations
SEBI Insider Trading
Regulations
The SEBI (Prohibition of Insider Trading) Regulations, 2015, as
amended from time to time, including instructions and clarifications
issued by SEBI from time to time
SEBI Takeover
Regulations /Takeover
Regulations / Takeover
Code
Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011
Listing Regulations / SEBI
Listing Regulations/ SEBI
(LODR) Regulations
Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015
Sub-Account Sub-accounts registered with SEBI under the SEBI (Foreign
Institutional Investor) Regulations, 1995, other than sub-accounts
which are foreign corporate or foreign individuals.
SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended
from time to time
SME Small Medium Enterprise
Sec Section
SSI Undertaking Small Scale Industrial Undertaking
Stock Exchange (s) Emerge Platform of National Stock Exchange of India Limited
STT Securities Transaction Tax
TAN Tax Deduction Account Number
TRS Transaction Registration Slip
TIN Taxpayers Identification Number
TNW Total Net Worth
u/s Under Section
UIN Unique Identification Number
US/ U.S. / USA/ United
States United States of America
USD / US$ / $ United States Dollar, the official currency of the United States of
America
Page 16 of 325
Term Description
U.S. GAAP Generally accepted accounting principles in the United States of
America
UOI Union of India
UV Ultraviolet
VAT Value Added Tax
VCF / Venture Capital
Fund
Foreign Venture Capital Funds (as defined under the Securities and
Exchange Board of India (Venture Capital Funds) Regulations, 1996)
registered with SEBI under applicable laws in India.
WDV Written Down Value
WTD Whole-time Director
w.e.f. With effect from
YoY Year over year
Notwithstanding the following: -
i) In the section titled “Main Provisions of the Articles of Association” beginning on page 278 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that
section;
ii) In the section titled “Financial Statements” beginning on page 178 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section;
iii) In the section titled “Risk Factor” beginning on page 20 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section;
iv) In the chapter titled “Statement of Possible Tax Benefits” beginning on page 106 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that chapter; and
v) In the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 179 of this Draft Red Herring Prospectus, defined terms shall
have the meaning given to such terms in that chapter.
Page 17 of 325
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
All references to “India” are to the Republic of India and all references to the “Government” are to the
Government of India.
FINANCIAL DATA
Unless stated otherwise, the financial data included in this Draft Red Herring Prospectus are extracted
from the restated financial statements of our Company, prepared in accordance with the applicable
provisions of the Companies Act, Indian GAAP and restated in accordance with SEBI (ICDR)
Regulations, as stated in the report of our Peer Reviewed Auditors, set out in the section titled ‘Financial
Statements as Restated’ beginning on page 178 this Draft Red Herring Prospectus. Our restated financial
statements are derived from our audited financial statements prepared in accordance with Indian GAAP
and the Companies Act, and have been restated in accordance with the SEBI (ICDR) Regulations.
Our fiscal year commences on April 1st of each year and ends on March 31st of the next year. All
references to a particular fiscal year are to the 12 month period ended March 31st of that year. 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 decimals have been rounded off to two decimal points.
There are significant differences between Indian GAAP, IFRS and US GAAP. The Company has not
attempted to quantify their impact on the financial data included herein and urges you to consult your
own advisors regarding such differences and their impact on the Company’s financial data. Accordingly
to what extent, the financial statements 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 / Indian GAAP. Any reliance by persons not familiar with Indian Accounting Practices on the
financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.
Any percentage amounts, as set forth in “Risk Factors”, “Our Business”, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and elsewhere in this Draft Red Herring
Prospectus unless otherwise indicated, have been calculated on the basis of the Company’s restated
financial statements prepared in accordance with the applicable provisions of the Companies Act, Indian
GAAP and restated in accordance with SEBI (ICDR) Regulations, as stated in the report of our Peer
Reviewed Auditor, set out in the section titled ‘Financial Statements as Restated’ beginning on page
178 of this Draft Red Herring Prospectus.
CURRENCY OF PRESENTATION
In this Draft Red Herring Prospectus, references to “Rupees” or “Rs.” or “INR” are to Indian Rupees,
the official currency of the Republic of India. All references to “$”, “US$”, “USD”, “U.S. $”or “U.S.
Dollars” are to United States Dollars, the official currency of the United States of America.
All references to ‘million’ / ‘Million’ / ‘Mn’ refer to one million, which is equivalent to ‘ten lacs’ or
‘ten lakhs’, the word ‘Lacs / Lakhs / Lac’ means ‘one hundred thousand’ and ‘Crore’ means ‘ten million’
and ‘billion / bn./ Billions’ means ‘one hundred crores’.
INDUSTRY & MARKET DATA
Unless stated otherwise, Industry and Market data and various forecasts used throughout this Draft Red
Herring Prospectus have been obtained from publically available Information, Industry Sources and
Government Publications.
Industry Sources as well as Government Publications generally state that the information contained in
those publications has been obtained from sources believed to be reliable but their accuracy and
completeness and underlying assumptions are not guaranteed and their reliability cannot be assured.
Although we believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not
been independently verified by the Book Running Lead Manager or our Company or any of their
affiliates or advisors. Such data involves risks, uncertainties and numerous assumptions and is subject
to change based on various factors, including those discussed in the section “Risk Factors” on page 20
Page 18 of 325
of this Draft Red Herring Prospectus. Accordingly, investment decisions should not be based solely on
such information.
Further, the extent to which the industry and market data presented 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 we
conduct our business, and methodologies and assumptions may vary widely among different industry
sources.
Page 19 of 325
FORWARD LOOKING STATEMENT
This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward
looking statements can generally be identified by words or phrases such as “aim”, “anticipate”,
“believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will
continue”, “will pursue” or other words or phrases of similar meaning. Similarly, statements that
describe our strategies, objectives, plans 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 and property valuations to differ materially from those contemplated by the relevant forward
looking statement.
Important factors that could cause actual results to differ materially from our expectations include, but
are not limited to the following:-
• General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;
• Changes in laws and regulations relating to the sectors / areas in which we operate;
• Increased competition in the sectors / areas in which we operate;
• Factors affecting the Industry in which we operate;
• Our ability to meet our capital expenditure requirements;
• Fluctuations in operating costs;
• Our ability to attract and retain qualified personnel;
• Changes in political and social conditions in India, the monetary and interest rate policies of India and other countries;
• Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
• The performance of the financial markets in India and globally;
• Any adverse outcome in the legal proceedings in which we are involved;
• Our failure to keep pace with rapid changes in technology;
• The occurrence of natural disasters or calamities;
• Other factors beyond our control;
• Our ability to manage risks that arise from these factors;
• Conflict of Interest with affiliated companies, the promoter group and other related parties; and
• Changes in government policies and regulatory actions that apply to or affect our business.
For a further discussion of factors that could cause our actual results to differ, refer to section titled
“Risk Factors” and chapter titled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” beginning on pages 20 and 179respectively of this Draft Red Herring
Prospectus. 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.
Future looking statements speak only as of the date of this Draft Red Herring Prospectus. Neither we,
our Directors, Book Running Lead Manager, Underwriter 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, the BRLM and our Company will ensure
that investors in India are informed of material developments until the grant of listing and trading
permission by the Stock Exchange.
Page 20 of 325
SECTION II – RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all the
information in this Draft Red Herring Prospectus, including the risks and uncertainties described
below, before making an investment in our Equity Shares. In making an investment decision, prospective
investors must rely on their own examination of our Company and the terms of this issue including the
merits and risks involved. Any potential investor in, and subscriber of, the Equity Shares should also
pay particular attention to the fact that we are governed in India by a legal and regulatory environment
in which some material respects may be different from that which prevails in other countries. The risks
and uncertainties described in this section are not the only risks and uncertainties we currently face.
Additional risks and uncertainties not known to us or that we currently deem immaterial may also have
an adverse effect on our business. If any of the following risks, or other risks that are not currently
known or are now deemed immaterial, actually occur, our business, results of operations and financial
condition could suffer, the price of our Equity Shares could decline, and you may lose all or any part
of your investment. Additionally, our business operations could also be affected by additional factors
that are not presently known to us or that we currently consider as immaterial to our operations.
Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify
or quantify the financial or other implications of any of the risks mentioned herein. Unless otherwise
stated, the financial information of our Company used in this section is derived from our restated
financial statements prepared in accordance with Indian GAAP and the Companies Act, 2013 and its
applicable Companies Act Rules (as amended from time to time) and restated in accordance with the
SEBI ICDR Regulations. To obtain a better understanding, you should read this section in conjunction
with the chapters titled “Our Business” beginning on page 125, “Our Industry” beginning on page 109
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
beginning on page 179 respectively, of this Draft Red Herring Prospectus as well as other financial
information contained herein.
The following factors have been considered for determining the materiality of Risk Factors:
• Some events may not be material individually but may be found material collectively;
• Some events may have material impact qualitatively instead of quantitatively; and
• Some events may not be material at present but may have material impact in future.
The financial and other related implications of risks concerned, wherever quantifiable, have been
disclosed in the risk factors mentioned below. However, there are risk factors where the impact may
not be quantifiable and hence the same has not been disclosed in such risk factors. Unless otherwise
stated, the financial information of the Company used in this section is derived from our financial
statements under Indian GAAP, as restated in this Draft Red Herring Prospectus. Unless otherwise
stated, we are not in a position to specify or quantify the financial or other risks mentioned herein. For
capitalized terms used but not defined in this chapter, refer to the chapter titled “Definitions and
Abbreviation” beginning on page 3 of this Draft Red Herring Prospectus. The numbering of the risk
factors has been done to facilitate ease of reading and reference and does not in any manner indicate
the importance of one risk factor over another.
The risk factors are classified as under for the sake of better clarity and increased understanding:
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INTERNAL RISK FACTORS:
BUSINESS SPECIFIC RISKS:
1. We specialise in only 1 product type, i.e., Blue colour Dyes.
Our Company was into manufacturing various colours of dyestuffs till year 2013. After getting
permission for manufacturing of CPC Blue Crude dyestuff and witnessing the growing demand of our
CPC Blue product, our Company decided to focus into business of manufacturing on one specific
product type and specialise in it, consequently we started manufacturing Turquoise Blue reactive dyes
only with their sub-variants. Although this has led to the growth of our business both in terms of
operational and financial performance in recent years, however, our business model is restricted to a
particular product type and limits the growth to an extent owing to our inability to meet the demand of
customers having requirements of various colour dyes and pigments. Presence substantially in only 1
colour product makes our business comparatively small and prone to competition risks. However, we
market other colour products like Black, Orange and Red also but those are based on specific orders
received and we are not into full-time manufacturing of the same. Customers may not prefer us as their
business partner if they have requirements of multiple colours as we are not in a position to supply them
multi-colour options from under one roof. This may adversely affect our overall business.
2. Our products use raw materials, prices of which have been very volatile in past.
Manufacturing of Dyes requires numerous dye intermediates, such as, Vinyl Sulphur, Phosphorus
Trichloride, Soda Ash. These intermediates form substantial portion of our total production cost. Our
cost of material consumed was approx. 53.93% and 47.72% of our Total Expense for the period ended
31st December, 2017 and financial year ended 31st March, 2017. Although our Company produces one
of the intermediates, we procure majority of our raw materials requirements from third party suppliers.
These chemicals are produced only by domestic producers. We procure our major requirements from
them and till now we have been able to procure it at the normal prevailing rates in market. However,
there have been situations in past where prices of these intermediates have increased by multiple times
causing us to pay abnormal cost for such intermediates adversely affecting our overall profitability
thereby causing working capital crunch. As there are only few producers for these intermediates, we
face a risk of substantial increase in prices by these producers. Occurrence of any such event in future
may affect our business substantially both in terms of operations and financials.
3. Presently our major focus of revenue is on the sale of Blue Dyestuffs and any decrease in the demand for them will adversely affect our business.
Our Company has been focusing only on production of Blue dyestuffs. Our percentage revenue in F.Y.
2016-17 for Blue Dyestuffs was around 90% in F.Y. 2016-17. We being a specialised player in Blue
Reactive Dyes, our focus has remained intact in this segment. Any decrease in demand or our inability
to supply our product on timely basis it may adversely affect our operational and financial performance.
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4. Intense competition from China may affect our business adversely.
Dye manufacturing business is carried majorly in India and China across the globe. Our company faces
tough competition from players situated in China as they have a competitive advantage of
manufacturing dyestuffs at lower cost. Since only 2 countries manufacture dyes, there is an intense
competition between both the countries which are trying to increase their market share. There have been
environmental restrictions on companies in China which has led to shut down of many dye
manufacturers favouring other manufacturers, however, there is no assurance that such restrictions
would kill the competition to our advantage and we will not face any threat from companies in China.
5. Our future growth is majorly dependent on the new manufacturing facility which we are setting up. Any delay in commissioning the new facility may hamper the business operations of our company.
We have been into the business of dyestuffs since 1993, with the experience we possess our company
has built a large customer base. At present, our manufacturing facility is operating at more than 90% of
its installed capacity providing us limited scope to grow within the facility. To capitalize on this fact,
we are setting up a new manufacturing facility spread over an area of 75,060 sq. meters with an annual
production capacity of approx. 16,140 tons including dye intermediates and dyestuffs while the
permitted capacity is approx. 32,800 tons p.a. Hence, our Company is largely dependent on the
upcoming facility for further growth of our business. Our Company has received approval from Gujarat
Pollution Control Board (GPCB) for their consent to establish this facility with the list of intermediates
we intend to manufacture. Our Company has also received the No Objection Certificate from GPCB.
However, any non-compliance with their rules and regulations, unavailability of the required funds for
machineries, or any other internal or external factors within or beyond our control may adversely affect
our expansion plan and may hinder the growth of our business. We may not be able to assure about the
timely commencement of the proposed facility which may also possess a blockage to the growth plans
of the company and cause stress on capital structure of the company.
6. We have not placed orders for 100% of the Plant & Machineries which will be required to be installed in the new manufacturing facility.
Our Company has planned to set-up a new manufacturing facility in which company intends to increase
its production capacity of manufacturing dyes. Further, the company also plans to manufacture certain
intermediates which are required for manufacturing of dyestuffs. For this purpose, the Company has
already acquired land at Saykha Industrial Estate – Dahej and our company has finalised the list of the
machineries which are to be purchased. However, the plant and machineries which are to be installed
are yet to be ordered and none of the machinery has been purchased. Further, we have not entered into
any definitive agreement with any of the suppliers for the purchase of the machineries.
7. We are in business related to chemicals which faces excessive government regulations.
Dye chemical business involves use of numerous toxic acids and its related chemical components.
Usage of such intermediates is hazardous to the environment as a whole. This leads to excessive
government focus and regulations to be followed in such business model. With increased compliances
and regulations, Company faces challenges on many aspects such as control on use of materials,
discharge of effluent treatment which may affect the business directly. Any such non-compliances may
lead to imposition of penalties, fines or imprisonment. Further, operations of the Company may be
suspended; manufacturing licenses may be suspended, withdrawn or terminated.
8. Our Company generates major portion of its revenue from export operations. Any problems in such geographies may affect our business adversely.
Our company manufactures dyestuffs and exports it to many countries like, Turkey, Egypt, Bangladesh,
Pakistan etc. Our company has generated around 58.9% and 59.5% of its total revenue from export
operations for the period ended 31st December, 2017 and for the year ended F.Y. 2016-17. The
company’s performance is largely dependent on the political and economic conditions in these regions.
Any adverse situation in these regions may affect our business substantially. We believe the customer
base which we have created over the years is strong enough to weather any such conditions, however,
we may not guarantee that any problems in these region will not affect our business.
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Consequently, any adverse changes in these economies such as slowdown in the economy, appreciation
of the Indian Rupee vis-à-vis the currencies of these economies, acts of terrorism or hostility targeting
these countries, etc. would directly impact our revenues and results from operations. In the event of
change in policies or laws in these regions with respect to our industry, quality standards, our financial
condition and business operations may be adversely affected. In case of any contingencies in future due
to which we are unable to operate effectively in these markets, our results from operations, revenues
and profitability may be adversely affected.
9. Our manufacturing unit and proposed manufacturing facility is situated on plots that are taken on long-term lease from G.I.D.C., and we will have to comply with the terms and conditions/covenants
laid down in lease agreements with G.I.D.C., noncompliance of the same may affect our business
operations.
Our Company has its manufacturing unit situated at 88/6-8, GIDC Phase I, Vatva, Ahmedabad –
382445, Gujarat, India within G.I.D.C. limits. The said plot is taken on long-term lease from G.I.D.C.
Further, the proposed manufacturing facility at Saykha Industrial Estate of Dahej, Gujarat has also been
taken on long term lease from G.I.D.C. We have been complying with all on-going requirements of
G.I.D.C. and as on date of this Draft Red Herring Prospectus there are no litigations or disputes on our
occupancy of such land with G.I.D.C. However, any defaults in complying with the said terms and
conditions/covenants on our part may be subjected to penal provisions and it may also lead to the
cancellation of such lease, which will adversely affect our business, financial conditions and results of
operations.
10. Delay in schedule of the setting up of facility may subject our Company to risks related to time and cost overrun which may have a material adverse effect on our business, results of operations and
financial condition. Our Company is currently proposing to set-up a new manufacturing facility at Saykha GIDC, Dahej.
For further details regarding to our proposed manufacturing facility, please refer the chapter titled
"Objects of the Issue" on page 96 of this Draft Red Herring Prospectus. We may face risks relating to
the delay in schedule of setting up of facility, complete the project within our estimated budget, failure
of our contractors and suppliers to adhere to our specifications and timelines, and changes in the general
economic and financial conditions in India. Further as and when we complete our set-up work, our
material requirements and costs as well as our staffing requirements and employee expenses may
increase and we may face other challenges in extending our financial and other controls to our unit
managing our consequent growth. In the event that the risks and uncertainties discussed above or any
other unanticipated risks, uncertainties, contingencies or other events or circumstances limit or delay
our efforts to use the Net Proceeds to achieve the planned growth in our business, the use of the Net
Proceeds for purposes identified by our management may not result in actual growth of our business,
increased profitability or an increase in the value of your investment in our Equity Shares.
11. We depend on a limited number of customers for a significant portion of our revenues. The loss of a major customer or significant reduction in production and sales of, or demand for our products from,
our major customers may adversely affect our business, financial condition, results of operations
and prospects.
We derive our entire operational revenues from sale of dyestuffs in the domestic as well as overseas
market. We depend on a limited number of customers for a significant portion of our revenues. Revenue
from our top 10 and top 5 customers constituted 42.87% and 29.20% of our revenue for Financial Year
2016-17. We face competition from both domestic and international manufacturers in the international
market. However, we believe that we have good and long term relationship with our customers, any
loss of customer base or reduction in volume of orders, out of our existing customers, will impact our
overall sales, resulting in a decline in our revenues. While we are constantly striving to increase our
customer base and reduce dependence on any one particular customer, there is no assurance that we
will be able to broaden our customer base in any future periods or that our business or results of
operations will not be adversely affected by a reduction in demand or cessation of our relationship with
any of our major customers.
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12. Our dependence on few suppliers puts us at risk of interruptions in the availability of raw materials, which could adversely affect our business, financial condition and results of operations. Further, we
have not entered into any long-term agreements with our suppliers for raw materials and accordingly
may face disruptions in supply from our current suppliers.
We procure raw materials / intermediates required for the manufacturing of dyestuffs from various
companies in the domestic market. We chose to deal with suppliers on the basis of quality assurance,
cost effectiveness and relationships. Though we prefer to deal with a fixed set of suppliers with whom
we have cordial relationships, there are no fixed suppliers for our raw material purchases and we have
not entered into any fixed supply agreement or MoU or any other arrangement with any of our suppliers.
Our top 10 and top 5 suppliers contributed 70.3% and 50.22% of our Total Purchases for the F.Y. 2016-
17.
These suppliers have accorded their trust and service based on our long operating history in the industry,
our credit worthiness, and our goodwill. However, in the absence of written agreements, our suppliers
are not bound to supply goods to us and can withdraw their commitments from us at any time. There
can be no assurance that there will not be a significant disruption in the supply of raw materials from
current sources, or, in the event of a disruption, that we would be able to locate alternative suppliers of
the raw materials of