BHARAT WIRE ROPES LIMITED
Our Company was incorporated as Bharat Ropes Private Limited on July 24, 1986, at Mumbai, Maharashtra as a private limited company under the Companies Act, 1956. Our Company was converted into a public limited company pursuant to approval of the shareholders in an extraordinary general meeting held on May 2, 1992 and consequently, the name of our Company was changed to Bharat Ropes Limited and a fresh certificate of incorporation consequent upon conversion to public limited company was granted on June 10, 1992. Thereafter, the name of our Company was changed from Bharat Ropes Limited to Bharat Wire Ropes Limited and a fresh certificate of incorporation consequent upon change of name was granted by the Registrar of Companies, Mumbai, on July 5, 1996. For details of changes in the name and the registered office of our Company, please refer to the chapter titled “History and Certain Corporate Matters” beginning on page 158 of this Prospectus.
Registered Office: Plot No. 1&4, Atgaon Industrial Complex, Mumbai-Nasik Highway, Atgaon (East), Taluka Shahpur, Thane – 421601, Maharashtra, India. Tel: +91-2527-240123 Fax: +91-2527-240196
Corporate Office: 701, A Wing, Trade World, Kamla City, Senapati Bapat Marg, Lower Parel (West), Mumbai- 400013, Maharashtra, India. Tel: +91-22-66824600 Fax: +91-22-24955477
Contact Person: Mr. Shailesh Rakhasiya, Company Secretary and Compliance Officer, Tel: +91-22-66824600 Fax: +91-22-24955477 E-mail: compliance@bharatwireropes.com Website: Corporate Identification Number: U27200MH1986PLC040468.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
Intensive Fiscal Services Private Limited
914, 9th Floor, Raheja Chambers, Free Press Journal Marg, Nariman Point, Mumbai - 400 021, Maharashtra, India Tel No.: +91 - 22 - 22870443/44/45
Fax No.: +91 - 22 – 22870446 E-mail: bwrl.ipo@intensivefiscal.com
Investor Grievance E-mail: ipo@intensivefiscal.com Website: www.intensivefiscal.com
Contact Person: Mr. Harish Khajanchi/ Mr. Mudit Kankariya SEBI Registration No.: INM000011112
BOB Capital Markets Limited
3rd Floor, South Wing, UTI Tower, Gn Block, Bandra Kurla Complex, Bandra East, Mumbai 400 051, Maharastra, India Tel No.: +91 22 6138 9300
Karvy Selenium, Tower B, Plot number 31 & 32, Gachibowli, Financial District, Nanakramguda, Hyderabad 500 032, Andhra Pradesh, India Toll Free no. : 1800 3454 001
BID/ISSUE OPENED ON: FRIDAY, MARCH 18, 2016 BID/ISSUE CLOSED ON: TUESDAY, MARCH 22, 2016
PROMOTERS OF OUR COMPANY: MR. MURARILAL MITTAL, MRS. USHA MITTAL, MR. MANAN MITTAL AND GAJI MERCANTILE PRIVATE LIMITED PUBLIC ISSUE OF 1,55,55,555 EQUITY SHARES OF FACE VALUE OF Rs.10 EACH (“EQUITY SHARES”) OF BHARAT WIRE ROPES LIMITED (OUR “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF Rs. 45 PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs. 35 PER EQUITY SHARE) AGGREGATING UP TO Rs. 7,000* LACS (THE “ISSUE”). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF 1,47,77,778 EQUITY SHARES (THE “NET ISSUE”) AND RESERVATION OF 7,77,777 EQUITY SHARES AGGREGATING UP TO Rs. 350 LACS FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEE (AS DEFINED HEREIN) (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE CONSTITUTES 34.60% OF THE POST-ISSUE PAID-UP EQUITY SHARE CAPITAL AND THE NET ISSUE TO THE PUBLIC CONSTITUES 32.87% OF POST-ISSUE PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY.THE FACE VALUE OF THE EQUITY SHARES IS Rs.10/- EACH. THE ISSUE PRICE IS RS. 45 PER EQUITY SHARE AND IS 4.5 TIMES THE FACE VALUE OF THE EQUITY SHARES.
*Subject to finalisation of Basis of Allotment
This Issue is being made pursuant to Rule 19(2)(b) of the Securities Contracts Regulation Rules, 1957, as amended (“SCRR”), this is an Issue for at least 25% of the post-Issue of our Company. The Issue is being made through the Book Building Process in compliance with the provisions of Regulation 26(2) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, (the “SEBI (ICDR) Regulations”), wherein at least 75% of the Net Issue shall be allotted on a proportionate basis to Qualified Institutional Buyers (“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. If at least 75% of the Net Issue cannot be Allotted to QIBs, then the entire application money shall be refunded forthwith. Further, not more than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Net Issue shall be available for allocation to Retail Individual Bidders in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the “SEBI (ICDR) Regulations”), subject to valid Bids being received at or above the Issue Price. All Bidders are mandatorily required to utilise the ASBA process to participate in this Issue. For details, please refer to the chapter titled ‘Issue Procedure’ beginning on page 318 of this Prospectus.
RISKS IN RELATION TO THE FIRST ISSUE
This being the first public issue of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is Rs.10 each. The Issue Price is 4.5 times the face value. The Issue Price (determined and justified by our Company, in consultation with the BRLMs in accordance with SEBI (ICDR) Regulations and as stated under the chapter titled “Basis for Issue Price” beginning on page 100 of this Prospectus) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their entire investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of our Company and the Issue, including the risks involved. The Equity Shares 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 Prospectus. Specific attention of the investors is invited to the section
“Risk Factors” beginning on page 17 of this Prospectus.
ISSUER’S ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to our Company and the Issue, which is material in the context of the Issue, that the information contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
SECTION I – GENERAL 1
DEFINITIONS AND ABBREVIATIONS 1
CERTAIN CONVENTIONS, USE OF FINANCIAL DATA AND MARKET DATA AND CURRENCY OF
FINANCIAL PRESENTATION 14
FORWARD LOOKING STATEMENTS 16
SECTION II: RISK FACTORS 17
SECTION – III : INTRODUCTION 40
SUMMARY OF INDUSTRY 40
SUMMARY OF OUR BUSINESS 45
SUMMARY OF FINANCIAL INFORMATION 52
THE ISSUE 56
GENERAL INFORMATION 57
CAPITAL STRUCTURE 68
OBJECTS OF THE ISSUE 82
BASIS FOR ISSUE PRICE 100
STATEMENT OF POSSIBLE TAX BENEFITS 103
SECTION IV: ABOUT OUR COMPANY 110
INDUSTRY OVERVIEW 110
OUR BUSINESS 121
KEY REGULATIONS AND POLICIES 148
HISTORY AND CERTAIN CORPORATE MATTERS 158
OUR MANAGEMENT 164
OUR PROMOTERS AND PROMOTER GROUP 183
OUR GROUP COMPANIES/ENTITIES 191
RELATED PARTY TRANSACTIONS 198
DIVIDEND POLICY 199
SECTION V: FINANCIAL INFORMATION 200
FINANCIAL STATEMENTS 200
STATEMENT OF CAPITALIZATION
251
FINANCIAL INDEBTEDNESS 252
MANAGEMENT‟S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 257
SECTION VI - LEGAL AND OTHER INFORMATION 272
OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS 272
GOVERNMENT AND OTHER KEY APPROVALS 285
SECTION VII - OTHER REGULATORY AND STATUTORY DISCLOSURES 292
SECTION VIII: ISSUE RELATED INFORMATION 307
TERMS OF THE ISSUE 307
ISSUE STRUCTURE 311
ISSUE PROCEDURE 318
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES 373
SECTION IX – MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 374
SECTION X – OTHER INFORMATION 432
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 432
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Unless the context otherwise indicates, requires or implies, the following terms shall have the following meanings in this Prospectus. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto.
Unless the context otherwise requires, refers to Bharat Wires Ropes Limited, a company incorporated under the Companies Act, 1956 vide a Certificate of Incorporation issued by the Registrar of Companies, Maharashtra, Mumbai and having its registered office at Plot No. 1&4, Atgaon Industrial Complex, Mumbai – Nasik Highway, Atgaon – East, Taluka- Shahpur, District – Thane – 421 601, Maharashtra, India.
―you‖, ―your‖ or ―yours‖ Prospective bidders in this Issue
Company Related Terms
Terms Description
AoA / Articles / Articles of Association
Articles of Association of our Company, as amended from time to time.
Atgaon Facility/Existing Manufacturing Facility
The existing manufacturing facility of our Company situated at Plot No. 1&4, Atgaon Industrial Complex, Mumbai – Nasik Highway, Atgaon – East, Taluka- Shahpur, District – Thane – 421 601, Maharashtra, India.
Audit Committee The committee of the Board of Directors reconstituted as our Company‘s Audit Committee on December 28, 2015 in accordance with Section 177 of the Companies Act, 2013.
Auditors/ Statutory Auditors The Auditors of our Company namely, M/s. Sureka Associates. Board of Directors / the Board
/ our Board
The Board of Directors of our Company, including all duly constituted Committees thereof.
CIN Corporate Identification Number.
Companies Act / Act The Companies Act, 1956, amendments thereto and/or the Companies Act, 2013, with amendments thereto to the extent applicable.
Corporate Office Corporate Office of our Company located at 701, A Wing, Trade World Building, Kamla City, Senapati Bapat Marg, Lower Parel (W), Mumbai – 400 013.
Corporate Promoter The Corporate Promoter of our Company, namely Gaji Mercantile Private Limited. For details, please refer to the chapter titled ―Our Promoters and Promoter Group‖ beginning on page 183 of this Prospectus.
Depositories Act The Depositories Act, 1996, as amended from time to time.
DIN Directors Identification Number.
Director(s) / our Directors Director(s) of our Company, unless otherwise specified.
Equity Shares Equity Shares of our Company of face value of Rs.10 each unless otherwise specified in the context thereof.
GIR Number General Index Registry Number.
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Indian GAAP Generally Accepted Accounting Principles in India.
IPO Committee The IPO committee constituted by our Board on June 15, 2015.
ISIN International Securities Identification Number. In this case being - INE316L01019. Key Managerial Personnel
(KMP)
Key managerial personnel of our Company in terms of Regulation 2(1)(s) of the SEBI (ICDR) Regulations and disclosed in the chapter titled ―Our Management‖ beginning on page 164 of this Prospectus.
Lender/Lenders Lenders of our Company comprising Term Loan Consortium Bankers and Working Capital Consortium Bankers.
LIE Report Report dated April 30, 2015, issued by Techn-O-Aid Consultants Private Limited [Lenders Engineers, Technical Consultants (TEV) Architects, Chartered Engineers and Valuers]
LLP Act Limited Liability Partnership Act, 2008.
MOA / Memorandum / Memorandum of Association
Memorandum of Association of our Company, as amended.
Non Residents A person resident outside India, as defined under FEMA Regulations.
NRIs / Non-Resident Indians A person resident outside India (as defined under FEMA) and who is a citizen of India or a Person of Indian Origin under Foreign Exchange Management (Deposit) Regulations, 2000, as amended.
Peer Review Auditor Independent Auditor having a valid Peer Review certificate in our case being M/s. NGS & Company LLP.
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.
Previous Management Old/Previous Management of our Company existing prior to the date of the SPA. Promoters Promoters of our Company, namely, Mr. Murarilal Mittal, Mrs. Usha Mittal, Mr. Manan
Mittal and Gaji Mercantile Private Limited. For details, please refer to the chapter titled ―Our Promoters and Promoter Group‖ beginning on page 183 of this Prospectus. Promoter Group The persons and entities constituting the promoter group pursuant to Regulation
2(1)(zb) of the SEBI (ICDR) Regulations and disclosed in chapter titled ―Our Group
Companies / Entities‖ beginning on page 191 of this Prospectus.
Proposed Project The new manufacturing facility proposed to set-up by our Company at Plot No – 4 admeasuring 2,54,376 square meters located at M.I.D.C. Chalisgaon Industrial Area, Village – Khadki, BK Chalisgaon, District Jalgaon – 424101, Maharashtra.
Pyrolysis Plant The pyrolysis plant located at Plot No. 4, Chalisgaon, Industrial Area MIDC, Village – Khadki BK. Chalisgaon, District Jalgaon – 424101, Maharashtra.
Registered Office Plot No. 1&4, Atgaon Industrial Complex, Mumbai – Nasik Highway, Atgaon – East, Taluka- Shahpur, District – Thane – 421 601, Maharashtra, India.
Registrar of Companies/RoC Registrar of Companies, Maharashtra (Mumbai) situated at 100, Everest, Marine Drive, Mumbai – 400002, Maharashtra.
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related notes, schedules and annexures thereto included in this Prospectus, which have been prepared in accordance with the Companies Act, 2013 and Indian GAAP and restated in accordance with the SEBI (ICDR) Regulations.
SEBI Securities and Exchange Board of India constituted under the SEBI Act, 1992. 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 (Alternate Investments Funds) Regulations,
2012, as amended from time to time.
SEBI FII Regulations Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended from time to time.
SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, as amended from time to time.
SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000, as amended from time to time.
SEBI (ICDR) Regulations/ SEBI Regulations
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 issued by SEBI on August 26, 2009, as amended, including instructions and clarifications issued by SEBI from time to time.
SEBI (LODR) Regulations, 2015
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 issued by SEBI on September 2, 2015, consolidates and streamlines the provisions of existing listing agreements for different segments of the capital markets.
SEBI Takeover Regulations or Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended from time to time.
SEBI VCF Regulations Securities Exchange Board of India (Venture Capital Funds) Regulations, 1996 as amended from time to time.
Shah Group Mr. Sundarji M. Shah, Mr. Devchand M. Shah, Mr. Dinesh S. Shah, Mr. Sundarji M. Shah (HUF), Mr. Devchand M. Shah (HUF), Mr. Dinesh S. Shah (HUF), Mrs. Jaya S. Shah, Mrs. Pratibha D. Shah, Mrs. Shailee D. Shah
Shareholders Shareholders of our Company unless otherwise specified.
Stakeholders‘ Relationship
Committee
The Stakeholders‘ Relationship Committee reconstituted by our Board of Directors on
December 28, 2015.
SPA Share Purchase-cum-Holders‘ Agreement dated June 30, 2010 entered into between our Company, our Corporate Promoter-Gaji Mercantile Private Limited and certain other shareholders. For details refer to the chapter titled ―History and Certain Corporate Matters‖ beginning on page 158 of this Prospectus.
Term Loan Consortium Bankers
Bank of Baroda, Central Bank of India, Corporation Bank, Export Import Bank of India. State Bank of Bikaner and Jaipur, Union Bank and Vijaya Bank.
Working Capital Consortium Bankers
Bank of Baroda and State Bank of Bikaner and Jaipur.
ISSUE RELATED TERMS
Terms Description
Allotment/Allot/Allotted Issue of the Equity Shares pursuant to the Issue to the successful applicants.
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Block Amount (ASBA) Bid authorizing an SCSB to block the Payment Amount in the specified bank account maintained with such SCSB. ASBA is mandatory for all Bidders participating in the Issue.
ASBA Account Account maintained by an ASBA Bidders with an SCSB which will be blocked by such SCSB to the extent of the Bid Amount of the ASBA Applicant.
ASBA Bid A Bid made by an ASBA Bidder
ASBA Bidder Prospective Bidders in this Issue who have Bid/ applied through ASBA.
Bankers to the Company Banks who have extended credit facilities to our Company i.e. Bank of Baroda, Union Bank of India, Central Bank of India, Vijaya Bank, Corporation Bank, State Bank of Bikaner and Jaipur, Export-Import Bank of India.
Bankers 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 Axis Bank Limited.
Basis of Allotment The basis on which the Equity Shares will be Allotted to successful Bidders under the Issue and which is described in the chapter titled ―Issue Procedure‖ beginning on page 318 of this Prospectus.
Bid An indication to make an offer during the Bid/Issue Period by a Bidder pursuant to submission of Bid cum Application Form to subscribe for or purchase the Equity Shares of our Company at a price within the Price Band, including all revisions and modifications thereto.
Bid/Issue Closing Date March 22, 2016 Bid/Issue Opening Date March 18, 2016
Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders submitted their Bids, inclusive of any revisions thereof.
Bidder(s) An ASBA Bidder who made a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form.
Bidding Centers Centers at which the SCSBs, Syndicate members, Registered Brokers and RTAs/CDP‘s have accepted the Bid cum Application Forms, being the 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. Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form and
payable by the Bidder/blocked in the ASBA Account upon submission of the Bid. Bid cum Application Form The form in terms of which an ASBA Bidder made an offer to subscribe for the Equity
Shares and which has been considered as the application for Allotment for the purposes of the Prospectus.
Bid Lot 300 Equity Shares and in multiples of 300 Equity Shares thereafter
BOBCAPS BOB Capital Markets Limited
Book Building Process / Method
The book building process as provided under Schedule XI of the SEBI(ICDR) Regulations, in terms of which the Issue is being made.
BRLMs/Book Running Lead Managers
The Book Running Lead Managers to the Issue, in this case being Intensive Fiscal Services Private Limited and BOB Capital Markets Limited.
5 and updated from time to time. Broker to the Issue/ Registered
Brokers
All recognized members of the Stock Exchanges having nationwide terminals would be eligible to act as the Broker to the Issue/ Registered Brokers and other than the members of the Syndicate.
BSE BSE Limited.
CAN / Confirmation of Allocation Note
The note or advice or intimation sent to each successful Bidder indicating the Equity Shares which will be Allotted, after approval of Basis of Allotment by the Designated Stock Exchange.
Cap Price The higher end of the Price Band, in this case being Rs. 45, above which the Issue Price was not finalised and above which no Bids were accepted.
Client ID Client identification number of the Bidder‘s beneficiary account. Collecting Depository
Participants/CDPs
A depository participant registered under Section 12 (1A) of the SEBI Act and who is eligible to procure Bids at the Designated CDP Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by SEBI.
Compliance Officer Our Company Secretary who has been appointed as Compliance Officer of our website of SEBI at http://www.sebi.gov.in or at such other website as may be prescribed by SEBI from time to time.
Cut-off Price Any price within the Price Band, in this case being Rs.45, finalized by our Company in consultation with BRLMs. A Bid submitted at Cut- off Price is a valid price at all levels within the Price Band. Only Retail Individual Bidders and the Eligible Employees are entitled to Bid at the Cut-off Price, for a Bid Amount not exceeding Rs. 2,00,000/-. No other category of Bidders is entitled to Bid at the Cut-off Price.
Demographic Details The demographic details of the Bidders such as their Address, PAN, Occupation and Bank Account details.
Depository / Depositories A depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
Depository Participant / DP A Depository Participant as defined under the Depositories Act, 1996.
Designated Branches Such branches of the SCSBs which shall collect the ASBA Bid-cum-Application Form used by ASBA Bidders, a list of which is available on the website of SEBI at http://www.sebi.gov.in or at such other websites as may be prescribed by SEBI from time to time.
Designated CDP Locations Such centers of the Collecting Depository Participants where Bidders can submit the Bid cum Application Forms. The details of such Designated CDP Locations, along with the names and contact details of the Depository Participants are available on the respective websites of the Stock Exchanges (www.nseindia.com and www.bseindia.com) and updated from time to time.
Designated Date The date on which the amounts blocked by the SCSBs are transferred from the bank accounts of the ASBA Bidder to the Public Issue Account, after the Prospectus is filed with the RoC, following which the Board of Directors shall Allot Equity Shares to the Allottees.
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details of the RTAs are available on the respective websites of the Stock Exchanges (www.nseindia.com and www.bseindia.com) and updated from time to time.
DP ID Depository Participant‘s Identification.
Draft Red Herring Prospectus or DRHP
The Draft Red Herring Prospectus dated July 21, 2015 issued in accordance with the SEBI (ICDR) Regulations, which does not contain complete particulars of the price at which the Equity Shares will be Allotted.
Eligible Employee A permanent and full-time employee of our Company or a Director of our Company (excluding such other persons not eligible under applicable laws, rules, regulations and guidelines), as on the date of filing of the Red Herring Prospectus with the RoC, who are Indian nationals and are based, working and present in India as on the date of submission of the Bid cum Application Form and who continue to be in the employment of our Company or Directors of our Company, as the case may be, until submission of the Bid cum Application Form.
Eligible NRI(s) A Non Resident Indian from jurisdiction outside India where it is not unlawful to make an offer or invitation under the Issue and in relation to whom this Prospectus will constitute an invitation to subscribe for the Equity Shares.
Eligible QFI(s) QFIs from such jurisdictions outside India where it is not unlawful to make an offer or invitation under the Issue and in relation to whom the Bid cum Application Form and the Red Herring Prospectus constitutes an invitation to subscribe to the Equity Shares offered thereby and who have opened demat accounts with SEBI registered qualified depository participants.
Employee Reservation Portion The portion of the Issue, being 7,77,777 Equity Shares, available for allocation to Eligible Employees on a proportionate basis.
Equity Shares or Ordinary Shares
The ordinary shares of our Company having a face value of Rs. 10/-, unless otherwise specified in the context thereof.
Escrow Agreement Agreement dated February 24, 2016, entered into amongst our Company, BRLMs, the Registrar to the Issue, and the Bankers to the Issue for collection of the Bid Amounts on the terms and condition thereof.
First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form
Floor Price The lower end of the Price Band, i.e., Rs. 40 per Equity Share at or above which the Issue Price was finalized and below which no Bids were accepted.
General Information Document/GID
General Information Document prepared and issued in accordance with the Circular (CIR/CFD/DIL/12/13) dated October 23, 2013 notified by SEBI.
Intensive Intensive Fiscal Services Private Limited.
IPO Initial Public Offering.
Issue / Issue Size / Public Issue Public Issue of 1,55,55,555 Equity Shares of Rs.10 each for cash at a Price of Rs.45 per Equity & Share premium of Rs. 35 per Equity Share aggregating to Rs.7000 lacs. The Issue comprises of the Net Issue to the public aggregating upto Rs.6650 lacs and Employee Reservation Portion aggregating upto Rs. 350 lacs.
Issue Closing Date Tuesday, March 22, 2016. Issue Opening Date Friday, March 18, 2016.
Issue Agreement The agreement dated July 21, 2015 between our Company and the BRLMs, pursuant to which certain arrangements are agreed to in relation to the Issue.
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or the context otherwise implies, the term Issue Price refers to the Issue Price applicable to investors.
Mutual Fund A Mutual Fund registered with SEBI under the SEBI (Mutual Funds) Regulations,1996, as amended.
Mutual Funds Portion 5% of the QIB Portion available for allocation to Mutual Funds only. Net Issue Issue less Employee Reservation Portion.
Net Proceeds The Issue proceeds less the Issue expenses.
Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders or Eligible Employees bidding in the Employee Reservation Portion and who have Bid for Equity Shares for an amount more than Rs. 2,00,000 (but not including NRIs other than Eligible NRIs). Non-Institutional Portion The portion of the Net Issue being not more than 15% of the Net Issue consisting of
22,16,666 Equity Shares available for allocation to Non-Institutional Bidders on a proportionate basis subject to valid Bids being received at or above the Issue Price. Non-Resident A person resident outside India, as defined under FEMA and includes Eligible NRIs,
FPIs, Eligible QFIs, FIIs registered with SEBI and FVCIs registered with SEBI.
NSE National Stock Exchange Limited.
OCB / Overseas Corporate Body
A Company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs, including overseas trust in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under Foreign Exchange Management (Deposit) Regulations, 2000. OCB are not allowed to invest in this Issue.
Price Band Price Band with a minimum price of Rs. 40/- (Floor Price) and the maximum price of Rs. 45/- (Cap Price).
Pricing Date The date on which our Company, in consultation with the BRLMs, finalized the Issue Price, i.e. March 23, 2016.
Prospectus This Prospectus filed with the Registrar of Companies 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 that was determined at the end of the Book Building Process, the size of the Issue and certain other information, including any addenda or corrigenda thereto.
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understanding with SEBI. Provided that such non-resident investor shall not be resident in Country which is listed in the public statements issued by Financial Action Task Force from time to time on: (i) jurisdictions having a strategic anti-money laundering/combating the financing of terrorism deficiencies to which counter measures apply; (ii) jurisdictions that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.
Qualified Institutional Buyers / QIBs
As defined under Regulation 2(1)(zd) of the SEBI (ICDR) Regulations, and includes Public Financial Institutions as specified in Section 4A of the Companies Act 1956/ 2(72) of the Companies Act, 2013, Scheduled Commercial Banks, Mutual Funds, Foreign Institutional Investors registered with SEBI, Multilateral and Bilateral Development Financial Institutions, Venture Capital Funds and AIFs registered with SEBI, FPI other than Category III FPI registered with SEBI; State Industrial Development Corporations, Insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA), Provident Funds with a minimum corpus of Rs.25 Crores and Pension Funds with a minimum corpus of Rs. 25 Crores, National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India, Insurance funds set up and managed by army, navy or air force of the Union of India, Insurance funds set up and managed by the Department of Posts, India.
Red Herring Prospectus or RHP
The Red Herring Prospectus, dated March 7, 2016, read with corrigendum dated March 17, 2016 issued in accordance with Section 32 of the Companies Act, 2013 which does not have complete particulars of the price at which the Equity Shares will be offered and the size of the Issue. The Red Herring Prospectus was filed with the RoC at least 3 (three) days before the Bid/Issue Opening Date and would become a Prospectus upon filing with the RoC after the Pricing Date.
Refunds Refunds through the ASBA process.
Registrar and Share Transfer
Agents or RTA‘s Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the Designated RTA Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by SEBI.
Registrar/ Registrar to the Issue
Registrar to the Issue being Karvy Computershare Private Limited situated at Karvy Selenium, Tower B, Plot number 31 & 32, Gachibowli, Financial District, Nanakramguda, Hyderabad 500032, India.
Retail Individual Bidders Individual Bidders, other than Eligible Employees bidding in the Employee Reservation Portion, submitting Bids, who have Bid for the Equity Shares for an amount not more than Rs. 200,000/ in any of the bidding options in the Net Issue (including HUFs applying through their Karta and Eligible NRIs and does not include NRIs other than Eligible NRIs.
Retail Portion The portion of the Net Issue being not more than 10% of the Net Issue consisting of 14,77,777 Equity Shares available for allocation to Retail Individual Bidder(s) on a proportionate basis subject to valid Bids being received at or above the Issue Price. Revision Form The form used by the ASBA Bidders to modify the quantity of Equity Shares or the Bid
Amount in any of their Bid cum Application Forms or any previous Revision Form(s). QIB Bidders and Non-Institutional Bidders are not allowed to withdraw or lower their Bid (in terms of number of Equity Shares or the Bid Amount) at any stage.
Self-Certified Syndicate Bank(s) / SCSB(s)
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Stock Exchanges BSE Limited and National Stock Exchange of India Limited.
Specified Cities/Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms from ASBA Bidders, a list of which is available at the website of the SEBI (www.sebi.gov.in) and updated from time to time.
Syndicate The BRLMs and the Syndicate Member(s).
Syndicate Agreement The agreement, dated February 24, 2016, entered into amongst the BRLMs, the Syndicate Members, the Registrar and our Company in relation to the collection of Bids in this Issue ( other than bids directly submitted to the designated branches of the SCSBs, to Registered Brokers at Broker Centres, to RTAs at Designated RTA Locations and to the CDP s at Designated CDP Locations ).
Syndicate Member(s) Intermediaries registered with SEBI who are permitted to carry out activities as an underwriter, namely, Intensive Fiscal Services Private Limited and BOB Capital Markets Limited.
TRS / Transaction Registration Slip
The slip or document issued by a member of the Syndicate or an SCSB (only on demand), Registered Brokers, RTA‘s and CDP‘s, as the case may be, to the Bidder, as proof of registration of the Bid.
Underwriter(s) Intensive Fiscal Services Private Limited and BOB Capital Markets Limited
Underwriting Agreement The Agreement dated March 28, 2015 entered between the Underwriters and our Company.
U.S. Securities Act U.S. Securities Act of 1933, as amended.
Working Days All trading days of stock exchanges excluding Sundays and bank holidays in India in accordance with the circular no. CIR/CFD/POLICY/CELL/11/2015 dated November 10, 2015 and circular no. SEBI/HO/CFD/DIL/CIR/P/2016/26 dated January 21, 2016 issued by SEBI.
COMPANY AND INDUSTRY RELATED TERMS
Terms Description
BIS Bureau of Indian Standards
BPCL Bharat Petroleum Corporation Limited
BPO Business Process Outsourcing
BSI British Standards Institution
CAGR Compounded Annual Growth Rate
CARE Credit Analysis & Research Limited
CARE Report Report on Indian Steel and Wire Rope Industry dated June 30, 2015 by Credit Analysis and Research Limited
CMIE Centre for Monitoring Indian Economy Private Limited
CORE Central Organisation for Railway Electrification
CRM Customer Relationship Management
DGMS Directorate General of Mines Safety
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business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment.
E&P Exploration & Production
GIR General Index Register No.
IEC Import Export Code
IOCL Indian Oil Corporation Limited
IRS Indian Register of Shipping
IST Indian Standard Time
IWRC Indian Workers Resource Center
MAT Minimum Alternate Tax
MICR Magnetic Ink Character Recognition
M.I.D.C. Maharashtra Industrial Development Corporation
MPCB Maharashtra Pollution Control Board
MSEB Maharashtra State Electricity Board
MSEDCL Maharashtra State Electricity Distribution Company Limited
OEM Original Equipment Manufacturers
PESO Petroleum and Explosives Safety Organisation
PGCIL Power Grid Corporation of India Limited
RDSO Research Designs & Standards Organization
YoY Year on Year
ABBREVIATIONS
Abbreviation Full Form
AS Accounting Standards as issued by the Institute of Chartered Accountants of India
A/c Account
AGM Annual General Meeting
ASBA Applications Supported by Blocked Amount
AIF Alternative Investment Funds registered under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended.
AY Assessment Year
B. A Bachelor of Arts
B. Com Bachelor of Commerce
B. E Bachelor of Engineering
B. Sc Bachelor of Science
B. Tech Bachelor of Technology
BG/LC Bank Guarantee / Letter of Credit
BSE BSE Limited
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CIT Commissioner of Income Tax
CS. & CO Company Secretary & Compliance Officer
CY Current Year
DIN Director Identification Number
DIPP Department of Industrial Policy and Promotion, Ministry of Commerce, Government of India
DRHP Draft Red Herring Prospectus
ECS Electronic Clearing System
EPS Earnings Per Share
EGM /EOGM Extraordinary General Meeting
ESOP Employee Stock Option Plan
€ Euro
EXIM/ EXIM Policy Export – Import Policy
FCNR Account Foreign Currency Non Resident Account
FIPB Foreign Investment Promotion Board
FDI Foreign Direct Investment
FY / Fiscal/Financial Year Period of twelve months ended March 31 of that particular year, unless otherwise stated FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the
regulations framed there under
FIs Financial Institutions
FIIs Foreign Institutional Investors (as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under applicable laws in India.
FPIs ―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. FVCI Foreign Venture Capital Investors registered with SEBI under the SEBI (Foreign
Venture Capital Investor) Regulations, 2000.
GAJI Gaji Mercantile Private Limited
GoI/Government Government of India
GDP Gross Domestic Product
GELLP Gyanshankar E-Trading LLP
GITCPL Gyanshankar Investment & Trading Company Private Limited
GSLLP Gyanshankar Services LLP
HNI High Net worth Individual
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
ICD Inter-Corporate Deposit
ICDR Issue of Capital and Disclosure Requirement Regulations, 2009
ICSI The Institute of Company Secretary of India
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IPO Initial Public Offering
ISO ISO is an international-standard-setting body composed of representatives from various national standards organizations.
IREDA Indian Renewable Energy Development Agency Limited
IT Information Technology
ITI Industrial Training Institute
INR / Rs./ Rupees Indian Rupees, the legal currency of the Republic of India I.T. Act Income Tax Act, 1961, as amended from time to time.
Kg Kilogram
KMP Key Managerial Personnel
KVA Kilovolt-ampere
Kw Kilowatt
LLP Limited Liability Partnership
LNG Liquefied Natural Gas
mm Millimetre
mn Million
Mt Metric tonnes
MoF Ministry of Finance, Government of India
MOU Memorandum of Understanding
M. A Master of Arts
M. B. A Master of Business Administration
M. Com Master of Commerce
M. E Master of Engineering
M. Tech Masters of Technology
Merchant Banker Merchant Banker as defined under the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.
MTPA Metric Tonnes per annum
NA Not Applicable
NAV Net Asset Value
NOC No Objection Certificate
NPV Net Present Value
NRIs Non Resident Indians
NRE Account Non Resident External Account
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
OCB Overseas Corporate Bodies
P.A. Per Annum
PAC Persons Acting in Concert
PE Private Equity
P/E Ratio Price/Earnings Ratio
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RAPDRP Restructured Accelerated Power Development & Reforms Programme.
ROE Return on Equity
RONW Return on Net Worth
RTGS Real Time Gross Settlement
SCPL Stellar Credit and E-Trading Private Limited
SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time. SCRA Securities Contract (Regulation) Act, 1956, as amended from time to time. SICA Sick Industrial Companies (Special Provisions) Act, 1985
STT Securities Transaction Tax
Sec. Section
TAN Tax-Deduction Account Number
TIN Tax-payer Identification Number
US/United States United States of America
USD/ US$/ $ United States Dollar, the official currency of the Unites States of America U.S. GAAP Generally Accepted Accounting Principles in the United States of America
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.
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All references in this Prospectus to ―India‖ are to the Republic of India. All references in this Prospectus to the ―U.S.‖, ―USA‖ or ―United States‖ are to the United States of America.
Unless stated otherwise, all references to page numbers in this Prospectus are to the page number of this Prospectus.
Financial Data
Unless stated otherwise, the financial data in this Prospectus is derived from our Restated Financial Statements prepared for the financial year ended 2011, 2012, 2013, 2014, 2015 and the 8 (eight) month period ended November 30, 2015 in accordance with Indian GAAP, Accounting Standards, the Companies Act, as stated in the reports of our Peer Reviewed Auditors and SEBI (ICDR) Regulations, 2009 included under the chapter titled “Financial Statements”beginning on page 200 of this Prospectus. Our financial year commences on April 1 of every year and ends on March 31 of every next year.
Certain figures contained in this Prospectus, including financial information, have been subject to rounding adjustments. All decimals have been rounded off to two decimal points. In certain instances, (i) the sum or percentage change of such numbers may not conform exactly to the total figure given; and (ii) the sum of the numbers in a column or row in certain tables may not conform exactly to the total figure given for that column or row. However, where any figures that may have been sourced from third-party industry sources are rounded off to other than two decimal points in their respective sources, such figures appear in this Prospectus as rounded-off to such number of decimal points as provided in such respective sources.
Any percentage amounts, as set forth in "Risk Factors", "Our Business", "Management's Discussion and Analysis of Financial Conditions and Results of Operation" beginning on pages 17 and 121 and 257, respectively of this Prospectus, unless otherwise indicated, have been calculated based on our restated respectively financial statement prepared in accordance with the SEBI (ICDR) Regulations.
There are significant differences between Indian GAAP, U.S. GAAP and the IFRS. Accordingly, the degree to which the Indian GAAP, Financial Statements included in this Prospectus will provide meaningful information is entirely dependent on the reader‘s level of familiarity with Indian accounting practice and Indian GAAP. Any reliance by persons not familiar with Indian accounting policies and practices, Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations on the financial disclosures presented in the Prospectus should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data.
Industry & Market Data
Unless stated otherwise, industry and market data and forecast used throughout the Prospectus was obtained from internal Company reports, data, websites, Industry publications report as well as Government Publications and the CARE Report. Industry publication data and website data generally state that the information contained therein has been obtained from sources believed to be reliable, but that their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured.
15 Currency of Financial Presentation and Exchange Rates
All references to "Rupees" or "INR" or ―Rs.‖ are to Indian Rupees, the official currency of the Republic of India. Except where specified, including in the chapter titled ―Industry Overview‖ throughout this Prospectus all figures have been expressed in lacs, million, crores and billions.
This Prospectus contains conversions of certain US Dollar, Euro and other currency amounts into Indian Rupees that have been presented solely to comply with the requirements of the SEBI (ICDR) Regulations. These conversions should not be construed as a representation that those US Dollar, Euro or other currency amounts could have been, or can be converted into Indian Rupees, at any particular rate.
Definitions
16
identified by words or phrases such as ―aim‖, ―anticipate‖, ―believe‖, ―expect‖, ―estimate‖, ―intend‖, ―objective‖, ―plan‖, ―project‖, ―will‖, ―will continue‖, ―will pursue‖ or other words or phrases of similar import. Similarly, statements that describe our Company‘s 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 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:
1. General economic and business conditions in the markets in which we operate and in the local, regional and national economies;
2. Our ability to successfully implement our growth strategy and expansion plans, and to successfully launch and implement various projects and business plans for which funds are being raised through this Issue;
3. Our ability to attract and retain qualified personnel;
4. Changes in political and social conditions in India or in countries that we may enter, 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;
5. The performance of the financial markets in India and globally;
6. Any adverse outcome in the legal proceedings in which we are involved;
7. Occurrences of natural disasters or calamities affecting the areas in which we have operations;
8. Market fluctuations and industry dynamics beyond our control;
9. Our ability to compete effectively, particularly in new markets and businesses;
10. Changes in foreign exchange rates or other rates or prices;
11. Our ability to anticipate global outsourcing trends and suitably expand our current service offerings;
12. Our ability to protect our intellectual property rights and not infringing intellectual property rights of other parties;
13. Realization of Contingent Liabilities;
14. Changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry;
15. Termination of customer contracts without cause and with little or no notice or penalty;
16. Failure of our infrastructure and equipment;
17. Failure to obtain and retain approvals and licenses or changes in applicable regulations.
We cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements and not to regard such statements as a guarantee of future performance.
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An investment in the Equity Shares involves a high degree of risk. Investors should carefully consider all the information in this Prospectus, including the risks and uncertainties described below, before making an investment in the Equity Shares. The risks and uncertainties described in this section are not the only risks that we currently face. Additional risks and uncertainties not currently known to us or that are currently believed to be immaterial may also have an adverse impact on our business, results of operations and financial condition. If any of the following risks, or other risks that are not currently known or are currently deemed immaterial, actually occur, our business, results of operations and financial condition could be materially and adversely affected and the price of our Equity Shares could decline, causing the investors to lose part or all of the value of their investment in the Equity Shares. The financial and other related implications of the risk factors, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are certain risk factors where the financial impact is not quantifiable and, therefore, cannot be disclosed in such risk factors.
This Prospectus also contains forward-looking statements that involve risks and uncertainties. Our Company‟s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the considerations described below and elsewhere in this Prospectus. Please refer to the chapter titled “Forward Looking Statements” beginning on page 16. To obtain a complete understanding, Prospective Investors should read this section in conjunction with the chapters titled “Our Business” and “Management‟s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 121 and 257, respectively, as well as the other financial and statistical information contained in this Prospectus. Unless otherwise stated, financial information in this section is derived from our restated financial information included in section “Financial Information” beginning on page 200. In making an investment decision, prospective investors must rely on their own examination of our Company and the terms of the Issue including the merits and the risks involved.
Materiality
The risk factors have been determined on basis of their materiality. The following factors have been considered for determining the materiality.
1. Some risks may not be material individually but may be material when considered collectively.
2. Some risks may have an impact, which is qualitative though not quantitative.
3. Some risks may not be material at present but may have a material impact in the future.
A. INTERNAL RISK FACTORS
1. Underutilization of capacity of our Existing Manufacturing Facilities or Proposed Project may adversely affect our business, results of operations and financial condition.
Our Company currently has facilities for manufacturing of 12,000 MTPA of wire rope which are currently utilised to the extent of 53%. We propose to set up a fully integrated manufacturing facility with installed capacity of 66,000 MTPA. The proposed capacity would be more than five times of our existing capacity. We will incur significant capital expenditure on setting up the same. We cannot assure that we shall be able to utilize our existing or proposed manufacturing facilities to their full capacity or up to an optimum capacity, and non-utilisation of the same may lead to loss of profits or can result in losses, and may adversely affect our business, results of operations and financial condition. Even use of the proposed production capacity is subject to several variables like availability of raw material, power, water, proper working of machinery, orders on hand, supply/demand, manpower, etc.
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funds through other sources to meet our obligations of meeting equity contribution for our Proposed Project. In case of shortfall in the proceeds of this Issue which are to be utilized for meeting the objects of the Issue, the shortfall will be met by such means as are available to our Company at such future time and at the discretion of the management, including by way of cash available with us or by any other means permissible under law. We cannot assure that we will be able to arrange for adequate cash or will be able to procure further loans to meet the funding requirements. Any failure to meet the additional funding requirements will have a material adverse effect on the implementation of the Proposed Project.
We may also be required to adhere to certain restrictive covenants as regards raising of finance for the project from means other than those sanctioned under our present financing documents. Any failure or delay on our part to raise funds from the Issue or any shortfall in the issue proceeds and subsequent inability of our Company to source alternate means of finance may delay the implementation of our project and could adversely affect our growth plans.
3. Any failure on the part of our Promoters to fund their portion of Project Cost may adversely affect our growth
plans and the implementation of Proposed Project may be jeopardized.
Other means of financing of our objects to the extent of Rs.5497.99 lacs forming part of the Promoter Portion towards Proposed Project as required from time to time prior to disbursement of the term Loan, more particularly set out in the chapter titled ―Objects of the Issue‖ beginning on page 82 of this Prospectus are out of internal accrual or non-convertible preference shares or ICD (collectively ―Promoter Portion‖). In case of shortfall of Promoter Portion, there can be no assurance that we will be able to raise the funds through other sources to meet the obligations of Promoter Portion. Any failure on the part of our Promoters to bring in their share of Promoter Portion will adversely affect the financing arrangements with Term Loan Consortium Lenders, which may result into withholding of disbursement by them and implementation of Proposed Project may be jeopardized.
4. The Proposed Project is appraised by an appraising agency and contents of the appraisal report are withheld.
The Proposed Project of our Company has been appraised by an appraising agency. Our Term Loan Consortium Bankers have relied upon the report of the appraising agency while sanctioning term loans facilities to us. Details of appraising agency and contents of the report, schedule of implementation are withheld with us as the appraising agency has denied its consent for inclusion of its name and contents of the report in any offer document. Consequently, we are unable to provide any particulars/contents of the report including but not limited to the implementation of the Proposed Project and costs as has been ascertained by the appraising agency. Further, we may not be able to otherwise share the contents of the said report to any third parties including the current and prospective shareholders of our Company. The Term Loan Consortium Bankers have caused the LIE Report prepared and based on which have made disbursements to the Company. The Company has obtained this LIE Report which inter alia covers all the material aspects included in the appraising agency‘s report. This report has also been included as one of the material documents that is available for inspection.
5. Delay in schedule of implementation may subject our Company to risks related to time and cost overrun may have
a material adverse effect on our business, results of operations and financial condition.
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delay in completing the Proposed Project due to any reason whatsoever may result in commencing operations in an increased competitive environment along with significant cost and time overruns. Due to these time and/or cost overruns, the overall benefits of such plans to our revenue and profitability may decline and it may significantly increase our interest costs. Such a scenario may adversely impact the cash flows and will have an adverse effect on our business, results of operations and financial condition.
6. Our Company was acquired by one of our Promoters, Gaji Mercantile Private Limited vide the SPA and hence,
our Promoters have limited knowledge and records of documents relating to corporate actions undertaken by our Company including RoC filings.
Until the year 2010, our Company was owned, managed and controlled by the Shah Group. Subsequently, in the year 2010, one of our corporate Promoter - Gaji Mercantile Private Limited purchased 1,06,75,490 equity shares of our Company vide SPA. At the time of handing over of the management, the previous management had informed our current Promoters that certain documents pertaining to corporate, accounting, financial, legal documents and other statutory records since incorporation were not available, misplaced, destroyed or otherwise not traceable. Hence, we do not have complete set of such records. Further, our Company does not have any supporting documents and/or RoC filings, such as Forms 2, Form 23 and Forms 5, made in the period prior to the acquisition of the aforesaid Equity Shares by our Corporate Promoter, in order to ascertain increase in the authorised capital of our Company and allotments made during the period from July 25, 1986 till March 31, 2010. Moreover, at the time of incorporation, our Company had 15,000 Equity Shares and 10,000 unclassified shares. However, our Company does not have in its records, documentation reflecting the classification of the unclassified shares as Equity Shares or any other kind of shares. Further, we do not have any supporting documents to ascertain whether our Company has at any point of time entered into any arrangement or scheme of amalgamation or has undertaken revaluation of its assets, has issued any shares out of its revaluation reserve, or has issued any shares for consideration other than cash or has issued shares by way of capitalisation of its reserves, during the period from July 25, 1986 till March 31, 2010. The relevant documents are also not available/destroyed at the office of the RoC, as certified by M/s. Sachin Chhadawa and Associates, Company Secretaries, dated July 4, 2014. Therefore, our Company is unable to provide any disclosures or make any confirmations on all of the aforementioned matters. The disclosures pertaining to the aforementioned matters currently made in this Prospectus are inter alia on the basis of information readily available from public domains and with our Company. Further, we may be liable for payment of penalty fees and additional expenses arising from our inability to furnish correct particulars, in respect of the RoC filings, and for misrepresentation of facts which may occur due to non-availability of documents. Moreover, the Corporate Promoter of the Company – Gaji Mercantile Private Limited and the Company are indemnified by the Shah Group against any liability arising in respect of the period prior to the date of the SPA. Additionally, as an investor protection measure and to ensure that the Company and its shareholders are insulated from any consequences of any loss, damage, destruction, deficiency or non-availability of information, documents, details, in respect of the Company‘s affairs pertaining to corporate, accounting, financial, legal and other statutory records pertaining to the period prior to the date of the SPA, the promoters of the Company, vide Deed of Indemnity dated August 28, 2015, have inter-alia indemnified the Company against the same as also liabilities/claims arising due to non-availability of documents, in case of failure on the part of the Shah Group to honour any claim under the indemnity provisions aforesaid. For further information, please see the chapter titled ―History and Certain Corporate Matters‖ beginning on page 158 of this Prospectus.
7. Our Company’s management was changed in 2010 and hence our Promoters have limited knowledge and records
of litigations, disputes etc. of our Company.
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SPA and that additionally, as an investor protection measure and to ensure that the Company and its shareholders are insulated from any consequences of any loss, damage, destruction, deficiency or non-availability of information, documents, details, in respect of the Company‘s affairs pertaining to corporate, accounting, financial, legal and other statutory records pertaining to the period prior to the date of the SPA, the promoters of the Company, vide Deed of Indemnity dated August 28, 2015, have inter-alia indemnified the Company against the same as also liabilities/claims arising from any additional unknown legal proceedings to which our Company may be a party, in case of failure on the part of the Shah Group to honour any claim under the indemnity provisions aforesaid.
8. Our Proposed Project will be operated on lands which have been taken on long lease basis from M.I.D.C.
The land on which our Proposed Project is located, is taken on lease basis by us from M.I.D.C. For the purpose of facilitating bank finance, the MIDC, at the request of our Company, has granted a pre-determined lease in favour of our Company under a Pre-Determined Lease Agreement dated March 31, 2015. As per the terms of the said Pre-Determined Lease Agreement, our Company is required to complete the construction of at least 20% built-up area for the project before November 8, 2017. The balance construction is to be completed by our Company within a period of 10 (ten) years from November 8, 2017. In the event, our Company fails to complete the project including construction of the factory building within the stipulated time period, comply with the stipulations contained in the agreement or commits default in payment of the stipulated charges, then the M.I.D.C. shall have the right to resume possession of the aforesaid land and everything thereon.
A loss of our Company‘s leasehold interests, including through actual or alleged non-compliance with the terms of the lease arrangement and M.I.D.C.‘s requirements, the termination of lease by the M.I.D.C., or our inability to secure renewal thereof on commercially reasonable terms when it expires, would interfere with our ability to implement the Proposed Project thus affecting our financial performance. The cost of relocating a site is significant. There is no assurance that our Company will be able to procure alternate sites at favourable pricing terms. Any such relocation and/or increase in the costs incurred due to such relocation could cause disruption of our business and may adversely affect our financials as well as our ability to retain our customers. In addition, we may not always have the ability to access, analyse and verify all information regarding titles and other issues prior to entering into lease arrangements in respect of the site of the Proposed Project and to the extent there is any defect in the titles of any of such leased site, our ability to continue operating at such leased sites may be adversely affected.
9. Our Promoters do not have the experience of operating in the wire ropes sector.
Our Promoters do not have prior experience in the sector in which our Company operates. Our Promoters have not acquired any technical expertise which is required in our field. Our Company relies on the technical expertise of its employees. There can be no assurance that we will be successful in our business plans due the lack of such direct experience of our Promoters.
10. While we have identified the Objects of the Issue, we have not inter se allocated the amounts among the sub-heads such as equipment/plant and machinery/building/civil works/building construction activity, etc. at Proposed Project, and the same would be at the discretion of the management of the Company.
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There are outstanding legal proceedings involving our Company, our Promoters and our Directors. These proceedings are pending at different levels before various courts, tribunals, affiliate tribunals, enquiry officers, etc. Further, our Promoter Director, Mr. Murarilal Mittal is involved in certain legal proceedings initiated against Welspun Corp Limited, in which he previously held positions of directorship/authorized representative. In one of the proceedings, penalties, to the tune of Rs.86,098.21 lacs have been imposed on Welspun Corp Limited, in which he was a director. The order imposing such penalty has been stayed by the Hon‘ble Bombay High Court. Currently, no part of the said penalties are imposed on Mr.Murarilal Mittal. However, there is no assurance that he will not be made liable to bear any part of the said penalties or any other additional penalties/costs imposed, in future. For further details relating to legal proceedings initiated against Welspun Corp Limited, please refer to page 278, of the chapter titled ―Outstanding Litigations and Material Developments‖ beginning on page 272 of this Prospectus.
Brief details of such outstanding litigations as of the date of this Prospectus are set-forth below and the amounts involved in these litigations have been disclosed to the extent they are ascertainable/quantifiable:
a. Litigations / Proceedings filed against our Company
Sr. No.
Nature of Matter No. of Matters Amount (to the extent
quantifiable) (Rs. in lacs)*#
1. Litigation involving Tax Liabilities 5 15.74
2. Litigation involving Civil Laws 1 177.35
b. Litigations / Proceedings initiated by our Company
Sr. No.
Nature of Matter No. of Matters Amount (to the extent
quantifiable) (Rs. in lacs)*#
1. Litigation involving Tax Liabilities 5 197.65
2. Litigation involving Criminal Matters 2 11.33
c. Litigations / Proceedings filed against our Directors
Sr. No .
Nature of Matter No. of Matters Amount (to the extent
quantifiable) (Rs. in lacs)* 1. Litigation involving Actions by
statutory/regulatory authorities
2 25.00
2. Litigation involving Criminal Matters 1 unascertainable
d. Litigations / Proceedings initiated by our Directors
Sr. No.
Nature of Matter No. of matters Amount (to the extent
quantifiable) (Rs. in lacs)*
