KALPATARU LIMITED

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DRAFT RED HERRING PROSPECTUSDated September 23, 2010Please read section 60B of the Companies Act, 1956(The Draft Red Herring Prospectus will be updated upon filing with the RoC)100% Book Building IssueKALPATARU LIMITEDOur Company was incorporated as Kalpataru Homes Private Limited on December 22, 1988 under the Companies Act, 1956 (the “Companies Act”) in Mumbai. Our Company was converted into a public limitedcompany on May 16, 1995 and our Company’s name was changed to Kalpataru Homes Limited. The name of our Company was subsequently changed to Kalpataru Limited on February 1, 2008. For further details inrelation to the changes to each of the name and registered office of our Company, please see “History and Certain Corporate Matters” on page 192.Registered and Corporate Office: 91, Kalpataru Synergy, opposite Grand Hyatt, Santacruz (East), Mumbai – 400 055, Maharashtra, India. Tel: 91 22 3064 5000; Fax: 91 22 3064 3131Contact Person: Manoj Thakar, Company Secretary and Compliance Officer; Tel: 91 22 3064 5000; Fax: 91 22 3064 3131Website: www.kalpataru.com; Email: manoj.thakar@kalpataru.comPROMOTERS OF THE COMPANY: MOFATRAJ P. MUNOT AND PARAG M. MUNOTPUBLIC ISSUE OF [ ] EQUITY SHARES WITH A FACE VALUE OF RS. 10 EACH (“EQUITY SHARES”) OF KALPATARU LIMITED (THE “COMPANY” OR THE “ISSUER”) FOR CASH AT APRICE OF RS. [y] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [ ]* PER EQUITY SHARE) AGGREGATING TO RS. 10,080 MILLION (THE “ISSUE” OR THE “IPO”). THEISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF [ ] EQUITY SHARES FOR CASH AT A PRICE OF RS. [y] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [ ] PEREQUITY SHARE) AGGREGATING TO RS. [ ] (THE “NET ISSUE”) AND A RESERVATION OF [ ] EQUITY SHARES FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES FOR CASH AT APRICE OF RS. [y] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [ ]* PER EQUITY SHARE) AGGREGATING TO RS. 35.10 million (THE “EMPLOYEE RESERVATIONPORTION”). THE ISSUE WILL CONSTITUTE [ ]% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF THE COMPANY.The Company is considering a placement of up to 3,100,000 Equity Shares and/or aggregating up to Rs. 2,000 million with various investors (“Pre-IPO Placement”). The Pre-IPO Placement will be undertaken at thesole discretion of our Company at a price to be decided by our Company. The Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement prior to filing the Red HerringProspectus with the Registrar of Companies (the “RoC”). If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement, subject to a minimumNet Issue size of 10% of the post-Issue paid-up equity share capital being offered to the public.THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 EACH.THE PRICE BAND, AND THE MINIMUM BID LOT SIZE WILL BE DECIDED BY THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BEADVERTISED AT LEAST TWO WORKING DAYS PRIOR TO THE BID/ISSUE OPENING DATE.*OUR COMPANY IN CONSULTATION WITH THE BRLMS MAY DECIDE TO OFFER A DISCOUNT OF UP TO [ ]% OF THE ISSUE PRICE TO THE ELIGIBLE EMPLOYEES AND RETAILINDIVIDUAL BIDDERS (“EMPLOYEE AND RETAIL DISCOUNT”). THE EXCESS AMOUNT PAID AT THE TIME OF BIDDING SHALL BE REFUNDED TO THE ELIGIBLE EMPLOYEES ANDRETAIL INDIVIDUAL BIDDERS.In case of revision in the Price Band, the Bidding/Issue Period will be extended for three additional Working Days after revision of the Price Band, subject to the Bidding/Issue Period not exceeding 10 Working Days.Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the National Stock Exchange of India Limited (“NSE”) and the Bombay StockExchange Limited (“BSE”), by issuing a press release, and also by indicating the change on the website of each of the Book Running Lead Managers (“BRLMs”) and at the terminals of each of the SyndicateMembers.Our Company is undertaking this Issue under Rule 19(2)(b)(ii) of the Securities Contracts (Regulations) Rules, 1957 ("SCRR") and shall comply with the requirements thereunder. This being an issue for less than25% of the post-Issue paid-up equity share capital, the Issue is being made through the 100% Book Building Process wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to QualifiedInstitutional Buyers ("QIB"). 5% of the QIB Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall beavailable 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 shall beavailable for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to validBids being received at or above the Issue Price. All Bidders other than Anchor Investors may participate in this Issue through an Application Supported by Blocked Amount ("ASBA") process providing details aboutthe bank account which will be blocked by the Self Certified Syndicate Banks ("SCSBs") for the same. For details, please see "Issue Procedure" on page 526.RISK IN RELATION TO FIRST ISSUEThis being the first issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is Rs. 10 each. The Floor Price is [ ] timesof the face value and the Cap Price is [ ] times of the face value. The Issue Price (as has been determined in consultation with our Company and the BRLMs as stated under the paragraph on “Basis for Issue Price”)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 nor regardingthe price at which the Equity Shares will be traded after listing.IPO GRADINGThis Issue has been graded by [ ] as [ ] (pronounced [ ]) indicating [ ]. The IPO grading is on a five point scale from one to five, with IPO Grade 5/5 indicating strong fundamentals and IPO Grade 1/5 indicatingpoor fundamentals. For further details, please see “General Information” on page 64.GENERAL RISKSInvestments 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 advisedto 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 our Company and the Issue including the risksinvolved. 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 HerringProspectus. Specific attention of the investors is invited to the section titled “Risk Factors” beginning on page xiii.ISSUER’S ABSOLUTE RESPONSIBILITYThe Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Issue, which is materialin the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentionsexpressed herein are honestly held and that there are no other facts, the omission of which will make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions orintentions misleading in any material respect.LISTING ARRANGEMENTThe Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the NSE and the BSE. The Company has received “in-principle” approvals from the NSE and the BSE for the listing of theEquity Shares pursuant to letters dated [ ] and [ ], respectively. For the purpose of the Issue, the Designated Stock Exchange shall be [ ].BOOK RUNNING LEAD MANAGERSMorgan Stanley IndiaCompanyPrivateLimited5F, 55-56, Free PressHouse,Free Press Journal Marg,215, Nariman Point,Mumbai – 400 021.India.Tel: 91 22 6621 0555Fax: 91 22 6621 0556E-mail:kl ipo@morganstanley.comInvestor Grievance Email:investors om/IndiaofferdocumentsContact Person: RonakSandilSEBI Registration No.:INM000011203# [ ]CitigroupGlobalMarkets India PrivateLimited12th floor, Bakhtawar,Nariman Point,Mumbai – 400 021.India.Tel: 91 22 6631 9890Fax: 91 22 6646 6056E-mail:kalpataru.ipo@citi.comInvestor Grievance tmContact Person: RajivJumaniSEBI Registration No.:INM000010718BID/ISSUE OPENS ON: [ ]**Collins Stewart IngaPrivate LimitedA-404 Neelam CentreHind Cycle RoadWorliMumbai – 400 030IndiaTel: 91 22 2498 2919Fax: 91 22 2498 2956E-mail:kalpataru.ipo@csinga.comInvestor nga.comContact Person: DeepaMuthaSEBI Registration No.:INM000010924ICICISecuritiesLimitedICICI Centre,H.T. Parekh Marg,Churchgate,Mumbai – 400 020IndiaTel: 91 22 6637 7292Fax: 91 22 2282 orGrievanceEmail: ecurities.comContact Person: RajivPoddarSEBI Registration No.:INM000011179REGISTRAR TO THEISSUEIDFC Capital Limited#Naman Chambers, C-32G-Block, Bandra KurlaComplexBandra (East)Mumbai 400 051,IndiaTel : 91 22 6622 2600Fax : 91 22 6622 2501Email :kalpataru.ipo@idfc.comInvestor grievance omContact Person: ShirishChikalgeSEBI Registration No.:INM000011336Nomura FinancialAdvisory andSecurities (India) PrivateLimitedCeejay House, Level 11,Dr. Annie Besant Road,Worli,Mumbai 400 018,IndiaTel: 91 22 4037 4037Fax: 91 22 4037 4111Email: kalpataru.ipoin@nomura.comInvestor Grievance omura.com/asia/services/capital raising/equity.shtmlContact Person: ManishAgarwalSEBI Registration No:INM000011419Link Intime India PrivateLimitedC-13, Pannalal Silk MillsCompoundL.B.S Marg, Bhandup (West)Mumbai – 400 078MaharashtraIndiaTel: 91 22 2596 0320Fax: 91 22 2596 w.linkintime.co.inContact Person: Sanjog SudSEBIRegistrationNo.:INR000004058ISSUE PROGRAMMEFOR QIBS BID/ISSUE CLOSES ON: [ ]FOR RETAIL AND NON-INSTITUTIONAL BIDDERS (INCLUDING ELIGIBLE EMPLOYEES)BID/ISSUE CLOSES ON [ ]Our Company may consider participation by Anchor Investors. The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/Issue Opening Date.

TABLE OF CONTENTSDEFINITIONS AND ABBREVIATIONS. IPRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA . XFORWARD-LOOKING STATEMENTS .XIRISK FACTORS . XIIISUMMARY OF INDUSTRY AND BUSINESS. 40SUMMARY FINANCIAL INFORMATION. 54THE ISSUE . 63GENERAL INFORMATION. 64CAPITAL STRUCTURE. 75OBJECTS OF THE ISSUE. 87BASIS FOR ISSUE PRICE . 95STATEMENT OF TAX BENEFITS. 98INDUSTRY . 107OUR BUSINESS . 132REGULATIONS AND POLICIES . 182HISTORY AND CERTAIN CORPORATE MATTERS. 193MANAGEMENT . 198SUBSIDIARIES AND OTHER CONSOLIDATED ENTITIES 211PROMOTER AND PROMOTER GROUP . 241GROUP COMPANIES . 247RELATED PARTY TRANSACTIONS. 280DIVIDEND POLICY . 281FINANCIAL STATEMENTS . 282MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTSOF OPERATIONS .398FINANCIAL INDEBTEDNESS. 418OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS . 427GOVERNMENT APPROVALS . 490OTHER REGULATORY AND STATUTORY DISCLOSURES. 515TERMS OF THE ISSUE . 524ISSUE STRUCTURE . 527ISSUE PROCEDURE . 531RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES. 561MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION. 565MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION. 576DECLARATION . 579

DEFINITIONS AND ABBREVIATIONSGeneral our Company”, “theCompany” or “the Issuer”“we”, “us” or “our”SubsidiariesJoint VenturesDescriptionThe associates of our Company as disclosed in “Subsidiaries and otherConsolidated Entities” on page 211.The partnership firms and limited liability partnerships whose accounts areconsolidated with the accounts of our Company and as disclosed in“Subsidiaries and Other Consolidated Entities” on page 211.Unless the context otherwise requires, refers to Kalpataru Limited, a companyincorporated under the Companies Act and having its registered office at 91,Kalpataru Synergy, opposite Grand Hyatt, Santacruz (East), Mumbai 400055,Maharashtra, India.Unless the context otherwise requires, means our Company, its Subsidiaries,Associates, Joint Ventures and Consolidated Partnership Firms.The subsidiaries of our Company as disclosed in “Subsidiaries and OtherConsolidated Entities” on page 211.The joint ventures of our Company as disclosed in “Subsidiaries and OtherConsolidated Entities” on page 211.Company Related TermsTermArticles of AssociationAudit CommitteeAuditorsBoard of Directors/BoardChairmanDirector(s)Equity SharesEquity ShareholdersExecutive DirectorIndependent DirectorGroup CompaniesManaging DirectorMemorandum ofAssociationNon-executive DirectorPreference SharesPreference ShareholdersPromotersPromoter GroupRegistered OfficeShareholders/InvestorsGrievance CommitteeDescriptionThe articles of association of our Company.The committee of the Board constituted as our Company’s audit committee inaccordance with Section 292A of the Companies Act and Clause 49 of theListing Agreement to be entered into with the Stock Exchanges.The statutory auditors of our Company, M/s. MGB & Co., CharteredAccountants.The board of directors of our Company or a duly constituted committee thereof.The executive chairman of our Company, Mofatraj P. Munot.The director(s) of our Company.Equity shares of our Company having a face value of Rs. 10 each.The holder of Equity Shares of our Company.An executive Director.A non-executive, independent Director.Companies, firms, ventures promoted by our Promoters, irrespective of whethersuch entities are covered under Section 370(1B) of the Companies Act, and setout in “Group Companies” on page 246.The Managing Director of our Company, Parag M. Munot.The memorandum of association of our Company.A non-executive, non-independent Director.Redeemable non-convertible preference shares of our Company having a facevalue of Rs. 10 each and tenure of 15 years, unless otherwise specified.The preference shareholders of our Company, unless otherwise specified.The Promoters of our Company, Mofatraj P. Munot and Parag M. Munot.The Promoter Group refers to such persons and entities which constitute thepromoter group of our Company pursuant to Regulation 2 (1)(zb) of the SEBIRegulations, a list of which is provided in “Promoters and Promoter Group” onpage 240.91, Kalpataru Synergy, opposite Grand Hyatt, Santacruz (East), Mumbai –400055, Maharashtra, India.A committee of the Board comprising Omprakash Gahotra, Sajjanraj Mehta andImtiaz Kanga constituted in accordance with the provisions of the ListingAgreement.i

Issue Related TermsTermAllotment/Allot/AllottedAllotteeAnchor InvestorAnchor Investor BiddingDateAnchorInvestorConfirmationofAllocation NoteAnchor Investor IssuePriceAnchor Investor PortionApplication Supported byBlocked Amount/ASBAASBA AccountASBA BidderASBA Bid cumApplication Form orASBA BCAFASBA Revision FormBasis of AllotmentBidBid AmountBid/Issue Closing DateBid/Issue Opening DateDescriptionUnless the context otherwise requires, the allotment of Equity Shares to thesuccessful Bidders pursuant to this Issue.A successful Bidder to whom Equity Shares are Allotted.A Qualified Institutional Buyer applying under the Anchor Investor categorywith a minimum Bid of Rs. 100 million.The day, one Working Day prior to the Bid/Issue Opening Date, on which Bidsby Anchor Investors shall be submitted, prior to or after which the Syndicatewill not accept any Bids and allocation to Anchor Investors shall be completed.Note or advice or inti

The name of our Company was subsequently changed to Kalpataru Limited on February 1, 2008. For further details in relation to the changes to each of the name and registered office of our Company, please

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