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Z dp26848 PDF
Z dp26848 PDF
BOOK RUNNING LEAD MANAGER JOINT BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE
UTI BANK
Solutions for a lifetime
UTI Bank Limited Allianz Securities Limited Karvy Computershare Private Limited
Central Office: Maker Towers ‘F’, 33, Vaswani Mansion, Karvy House, 46, Avenue 4,
11th Floor, Cuffe Parade, Colaba, 6th Floor, Dinsha Vachha Road, Street No.1, Banjara Hills,
Mumbai – 400 005 Churchgate, Mumbai – 400 020 Hyderabad 500 034
Tel.: (022) 2218 9106 - 09 Tel.: (022) 2287 0580 Tel.: (040) 2331 2454
Fax.: (022) 2216 2467 Fax.: (022) 2287 0581 Fax.: (040) 2331 1968
E-mail: utibmbd@utibank.co.in E-mail: srs@aslfinancial.com E-mail: srs.ipo@karvy.com
Website: www.utibank.com Website: www.aslfinancial.com Website: www.karvy.com
ISSUE PROGRAMME
Bid / Issue Opens On [], 2005 Bid / Issue Closes On [], 2005
LISTING
The Equity Shares issued through the Draft Red Herring Prospectus are proposed to be listed on The Bombay Stock Exchange Limited (Designated
Stock Exchange) and The National Stock Exchange of India Limited. The Company has received in-principle approvals for listing its Equity Shares
from the aforesaid stock exchanges through their letters dated ________ and _________ respectively.
C MY K
TABLE OF CONTENTS
i
DEFINITIONS, TECHNICAL GLOSSARY AND ABBREVIATIONS
Terms Description
“SRS Entertainment Limited” Refers to SRS Entertainment Limited, a public limited company incorporated
or “SRSEL” or “the under the Companies Act, 1956
Company” or "our Company"
“we” or “us” and “our” Unless the context otherwise require, refers to SRS Entertainment Limited
ii
Amounts and for remitting refunds, if any, of the amounts collected, to the
Bidders.
Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as Banker to
the Issue at which the Escrow Account will be opened.
Face Value Par value of equity capital per Equity Share (presently Rs.10 per Equity Share)
Floor Price The lower end of the Price Band, below which the Issue Price will not be
finalised and below which no Bids will be accepted
IPO Committee A Committee constituted by the Board of Directors comprising of Mr. R. K.
Aggrawal, and Mr. Sunil Jindal for the purpose of carrying out various activities
in relation to the Issue
Issue Price The price at which Allotment of Equity Shares will be made in this Issue as
determined by the Company and in consultation with the BRLM and Joint
BRLM, on the Pricing Date.
Issue/ Initial Public Offer / "IPO" Public Issue of 2,28,57,200 Equity Shares of face value of Rs.10/- each at the
Issue Price by the Company under the Draft Red Herring Prospectus
Net Issue Issue size less 42,87,200 equity shares reserved for Promoters of the Company,
less 22,85,720 Equity Shares reserved for the Shareholders of the Group
Companies of the Company and less 22,85,720 equity shares reserved for
Employees of the Company
NRIs/ Non-Residents Non-Resident is a person resident outside India, as defined under FEMA and who
is a citizen of India or a Person of Indian Origin under FEMA (Transfer or Offer
of Security by a Person Resident Outside India) Regulations, 2000
Pay-in-date The last date specified in the CAN sent to the Bidders
Pay-in-Period This term means
i. with respect to Bidders whose Margin Amount is 100% of the Bid Amount,
the period commencing on the Bid Opening Date and extending until the Bid
Closing Date, and
ii. with respect to Bidders whose Margin Amount is less than 100% of the Bid
Amount, the period commencing on the Bid Opening Date and extending
until the closure of the Pay-in-Date
Price Band The Price band of a minimum price (Floor Price) of Rs. [•] and the maximum
price (Cap Price) of Rs. [•] and includes revision thereof
Pricing Date The date on which the Company in consultation with the BRLM and Joint BRLM
finalises the Issue Price
Public Issue Account In accordance with Section 73 of the Companies Act, 1956, an account opened
with the Banker(s) to the Issue to receive monies from the Escrow Account for
the Issue on the Designated Date
QIB Portion The portion of the Issue being mandatory, 69,99,280 Equity Shares of Rs.10 each
at the Issue Price, available for allocation to QIBs
Qualified Institutional Buyers/ Public Financial Institutions as specified in Section 4A of the Companies Act,
QIBs Scheduled Commercial Banks, Mutual Funds registered with SEBI, Venture
Capital Funds 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.2500 lacs and
Pension Funds with a minimum corpus of Rs.2500 lacs
Red Herring Prospectus Means the Red Herring Prospectus issued in accordance with Section 60B of the
Companies Act, which does not have complete particulars on the price at which
the Equity Shares are issued and size of the Issue. The Red Herring Prospectus
would be filed with the RoC at least three days before the opening of the Bid/
Issue and will become a Prospectus after filing with the RoC after the pricing and
allocation.
Registrar/ Registrars to the Issue Karvy Computershare Private Limited
Reserved Categories Means reservation for allocation to:
i. Promoter Group of the Company
ii. Permanent Employees and Directors of the Company *
iii. Shareholders of Group Companies i.e., Akriti Financial Services (P)
Limited and Ferro Plast Limited *
* as on cut-off date [•]
Retail Individual Bidders Individual Bidders (including HUFs) who have not Bid for an amount in excess
iii
of Rs.1,00,000 in any of the bidding options in the Issue.
Retail Portion The portion of the Issue being a minimum of 48,99,496 Equity Shares of Rs.10
each available for allocation to Retail Individual Bidder(s)
Revised Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid
Price in any of their Bid cum Application Forms or any previous Revision
Form(s).
SEBI (DIP) Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on
January 27, 2000, as amended, including instructions and clarifications issued by
SEBI from time to time
SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time
Stock Exchanges The Bombay Stock Exchange Limited and The National Stock Exchange of India
Limited
Syndicate The Syndicate Members collectively
Syndicate Agreement The agreement to be entered into among the Company and the members of the
Syndicate in relation to the collection of Bids in this Issue
Syndicate Members Intermediaries registered with SEBI and eligible to act as underwriters. Syndicate
Members are appointed by the BRLM and Joint BRLM
TRS or Transaction TRS or The slip or document issued by the Syndicate Members to the Bidder as proof of
Transaction Registration Slip registration of the Bid
Underwriters The BRLM, Joint BRLM and the Syndicate Members
Underwriting Agreement The Agreement dated [•] among the Syndicate and the Company to be entered
into on or after the Pricing Date.
iv
Promoter Group Family members of Promoters
1. Mr. Lalit Bansal
2. Mr. N. C. Bansal
3. Mr. Bishan Bansal
4. Mr. Suresh Bansal
5. Ms. Sanjna Bansal
Corporate bodies:
1. Bansla Finlease Limited
2. BTL Commercial Limited
3. BTL Impex (India) Limited
4. BTL Industries Limited
5. BTL Investments Limited
6. BTL Sales Limited
7. Madhavtech India (P) Limited
8. Neelabh Engineers (P) Limited
9. North Delhi Credit & Investments Limited
10. Parvati Finlease Limited
Registered Office of the C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094
Company
Retail Stores/ Bazaar(s) SRS Value Bazaar, i.e., retail stores proposed to be set up by the Company
Reverse Osmosis A water purification process
SRS Cinemas Brand name of theatre screens poposed to be set up
SRS Multiplex / SRSM Existing Multiplex located at City Centre, Sector 12, Faridabad, (NCR), Haryana
121007
SRS Value Bazaar Retail stores proposed to be set up by the Company
Tier II Cities Urban areas having a population of more than 10 lakh but less than 30 lakh, other
than the “Big Six” Metros [Mumbai, Delhi, Kolkata, Chennai, Bangalore,
Hyderabad]
Abbreviations
Abbreviations Full Form
A/c Account
Act/Companies Act The Companies Act, 1956, as amended from time to time
AGM Annual General Meeting
AS Accounting Standards as issued by the Institute of Chartered Accountants of India
BRLM Book Running Lead Manager, in this case being UTI Bank Limited
BSE The Bombay Stock Exchange Limited
CAGR Compounded Annual Growth Rate
Capital or Share Capital Capital of the Company
CDSL Central Depository Services (India) Limited
Joint BRLM Joint Book Running Lead Manager, in this case being Allianz Securities Limited
DP Depository Participant
DPC Damp Proof Coarse
EGM/ EOGM Extraordinary General Meeting
EPS Earnings Per Share
FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the
regulations framed thereunder
FIPB Foreign Investment Promotion Board
FY / Fiscal / Financial Year Financial year ending March 31
GOI Government of India
HSEB Haryana State Electricity Board
HUDA Haryana Urban Development Authority
HUF Hindu Undivided Family
Indian GAAP Generally Accepted Accounting Principles in India
IT Act The Income Tax Act, 1961 as amended
KVA kilovolt Ampere
MoU Memorandum of Understanding
v
Mts. Meters
N.A. Not Applicable
NAV Net Asset Value
NCR National Capital Region
N.I Act Negotiable Instruments Act, 1881 as amended
NPV Net Present Value
NRE Account Non Resident External Account
NRIs Non Resident Indians
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
OCB(s) Overseas Corporate Bodies
p.a. per annum
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
PAT Profit after Tax
RBI Reserve Bank of India
RoC Registrar of Companies
RoE Return on Equity
RoNW Return on Net Worth
Rs. Indian Rupees
SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992
sq. ft. Square feet
TAN Tax Deduction and Collection Account Number
USD / US$ United States Dollar
VCDs Video Compact Disks
CURRENCY OF PRESENTATION
In the Draft Red Herring Prospectus, all references to “Rs.” refer to Rupees, the lawful currency of India and
“USD” or “US$” refer to the United States Dollar, the lawful currency of the United States of America.
References to the singular also refer to the plural and one gender also refers to any other gender, wherever
applicable.
The words “ Lakh” or “ Lac” mean “ one hundred thousand” and the word “ million” means “ ten lacs” and the
word “ crore” means “ ten million” or “ one hundred Lacs”. In the Draft Red Herring Prospectus unless the
context otherwise requires, the terms ‘we’, ‘us’ and ‘our’ refer to SRS Entertainment Limited.
In the Draft Red Herring Prospectus, any discrepancies in any table between total and the sums of the amount
listed are due to rounding off.
vi
FORWARD-LOOKING STATEMENTS
We have included statements in the Draft Red Herring Prospectus which contain words or phrases such as
“will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”,
“plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar
expressions or variations of such expressions, that are “forward-looking statements”.
Actual results may differ materially from those suggested by the forward-looking statements due to risks or
uncertainties associated with our expectations with respect to, but not limited to, our ability to successfully
implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general
economic and political conditions in India which have an impact on our business activities or investments, the
monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign
exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and
globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the
industry.
For further discussion of factors that could cause our actual results to differ, please refer to the section titled
“Risk Factors” beginning on page no. viii of the 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. Neither the
Company nor the Book Running Lead Manager, 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 Company and the Book Running Lead Manager will ensure that investors in India are
informed of material developments until such time as the grant of listing and trading permission by the Stock
Exchanges.
vii
RISK FACTORS
Any investment in Equity Shares involves a high degree of risk and so you should carefully consider the risks
described below before you make an investment decision. Risks have been quantified, wherever possible. If any
of the following risks actually occur, our business, financial condition and results of operations could suffer, the
trading price of our Equity Shares could decline and you may lose all or part of your investment.
Management Perception:
Our Company was incorporated on August 29, 2000, but began commercial operations on November 12,
2004. Due to this, our Company has not declared dividend in the past. However, this is not an indicative of
future Company policy for dividend declaration. Any future declaration of dividends is subject to
availability of profits and other financial and economic considerations.
2. The Company has not registered some of the brand names it proposes to establish through the
Project. As a result, the Company may have lesser recourse to initiate legal proceedings to protect the
in-house brands. This may lead to a dilution in the brand value of the in-house brands.
The Company presently has two trademarks registered in the name of the SRS Commercial Co. Limited viz.
SRS World and SRS Cinemas. The Company applied for registration of trademarks for SRS Value Bazaar
and SRS Club. Pending the registration of these trademarks the Company may have a lesser recourse to
initiate legal proceedings to protect the in-house brands. This may lead to a dilution in the brand value of
the in house product brands.
Management Perception
Our success with our in-house brands depends, partly on our ability to protect and defend our current and
future intellectual property rights relating to such brands. We are in the business of building retail and
entertainment brands, failure to obtain the registration may have an adverse impact on our business. If, we
fail to adequately protect our intellectual property and market products/services under brands similar to our
brands.
3. The business plans of the Company may need substantial capital and additional financing in the form
of debt and/or equity to meet the requirements.
Management Perception
Our proposed business plan is substantially funded through this IPO and partly by Promoters equity and
debt. However, the actual amount and timing of future capital requirements may differ from estimates
including but not limited to unforeseen delays or cost over runs, unanticipated expenses, market
developments or new opportunities in the industry. We may also not be able to generate internal cash in our
Company as estimated and may have to resort to alternate sources of funds. Sources of additional financing
may include commercial borrowings, vendor financing, or further issue of equity or debt instruments. If we
decide to raise additional funds through the debt route, the interest obligations would increase and we may
be subject to additional covenants, which could limit our ability to access cash flows from the operations. If
we decide to raise additional funds through equity route, your shareholding in the Company could get
diluted.
4. Any adverse impact on the title/ownership rights/development rights of the landlords (including the
Promoters/ Promoter Group) from whose real estate premises the Company would carry out its
operations may impede the Company’s effective operations of its
Multiplexes/Cineplexes/Bazaars/restaurants in the future.
Management Perception
With a view to deepen our penetration into several cities across the country, our Company plans to obtain a
few properties on which a part of the Project will be operated, by entering into transactions in the nature of
long-term lease or sub-lease or leave and licence or conducting basis and /or other contractual arrangements
basis with third parties and/or our Promoters or the Promoter Group Companies. Any adverse impact on the
title /ownership rights/development rights of our landlords (including our Promoters or the Promoter Group
Companies) from whose real estate premises we propose operate our Multiplexes/
Cineplexes/Bazaars/restaurants may impede our Company’s effective operations.
viii
5. The Company has not yet executed the required definitive agreements or arrangements for fully
utilizing the Issue proceeds. Also, it has not yet finalised consultants and contractors for several of the
proposed new Multiplex/Cineplex/retail stores/restaurants.
Management Perception
We have executed preliminary contractual agreements for the three properties that we propose to acquire
each at Agra, Ludhiana and Muzaffarnagar, the lease sites at Jodhpur and Amritsar for the Cineplex and
Food Court, at Gurgaon for the Food Court. However, final contractual agreements have not been entered
into. We have not entered into any agreements for the three locations where SRS Value Bazaar and Food
Court/ restaurants are proposed to be set up on lease basis for which we are raising funds through this Issue.
We have not yet finalised consultants and contractors for our proposed Project, nor have we placed orders
for the equipment and furniture that we may require. Should we not execute our expansion plan as
envisaged because of this there could be time and cost overruns affecting the performance of our Company.
Further, our expansion plan includes the lease model to be implemented in seven cities. In such cases, any
delay on the part of the lessor to give possession of the property in a timely manner would delay the
implementation of the Project and besides delays it may also cause may cause substantial cost overruns.
6. The Company has not entered into definitive agreement or placed orders for construction, machinery
and equipment required to operate the proposed Project.
Management Perception
The deployment of funds as stated in the “Introduction - Objects of the Issue” is entirely at our discretion
and is not subject to monitoring by any independent agency. All the figures included under the
“Introduction - Objects of the Issue” are based on our own estimates. The estimated capital expenditure
including contingency provisions towards the Project is estimated to be Rs. 10623.70 Lacs and out of the
total working capital reqirement of Rs.906.30 Lacs, Rs. 681.30 Lacs that will be financed out of the
proceeds of this Issue.
For more information regarding the status of the Project see “Introduction - Objects of the Issue” and
“Business Overview - Location of the Project” on page no. 24 and 50 respectively of the Draft Red Herring
Prospectus.
7. Non-receipt of Government and other regulatory approvals may affect the proposed expansion plan
Management Perception:
We have not yet applied for and/or received all the government and other regulatory approvals required
with regard to the new Multiplexes/Cineplexes/retail stores/restaurants proposed to be set by us. In case of
non receipt or delayed receipt of the same, we may not be able to implement our proposed expansion plan
as scheduled, which may lead to cost overrun and have impact on our growth and financial condition.
However, we are of the view that the abovesaid approvals/ permissions can only be applied/ obtained at the
stage once the project commences. For details on the applicable government and/or regulatory approvals
refer to “Legal Information - Government Approvals / Licensing Arrangements” on page no.114 of the
Draft Red Herring Prospectus.
8. Success of the business is substantially dependent on the management team, inability to retain them
could adversely affect the businesses of the Company
Management Perception
We have a strong team of professionals to oversee the operations and growth of our businesses, including
our Managing Director, CEO and several Key Management personnel. Our success is substantially
dependent on the expertise and continuity of quality services of our management team. The loss of the
services of such personnel may have an adverse effect on our business, financial condition and results of
operations.
9. As per the Project Appraisal Report by UTI Bank Limited dated September 05, 2005, the
Company/Project is subject to the following weaknesses:
i. New promoters:
The promoters of the company are new in the above business and therefore they have very little hands on
experience of running a entertainment & retail industry business. Though they have proved their project
execution skills by successfully setting up SRS Multiplex, their management skills in running the business
through various business cycles is to be established.
ix
ii. Operating Efficiency:
Currently the company is operating a single project SRS Multiplex at Faridabad. With regard to the current
small scale of operations, the scale of operations is going to increase manifolds in future with the
completion of various activities in the project. The company’s capability in efficiently operating such a new
business on large scale is to be established.
10. The Company has issued Equity Shares in the past 12 months to some of its promoter/promoter
group/investors at a price of Rs.10/- and Rs.20/- per share.
Management Perception
We have allotted 10,00,000 Equity Shares at Rs.10/- each and 1,35,38,500 Equity Shares at Rs.20/- each of
our Company to some of our Promoters/promoter group/ investors in the last 12 months from the date of the
Draft Red Herring Prospectus. (For further details please refer to ‘Notes to Capital Structure’ under the
section titled “Intorduction - Capital Structure” on page no.10 of the Draft Red Herring Prospectus).
11. In the future, the Company may not be entitled to Entertainment Tax benefits in the states of Uttar
Pradesh, Haryana, Rajasthan and Punjab, where setting up of Multiplexes/ Cineplexes is planned
under the Project
Management Perception:
Multiplexes/Cineplexes/retail stores/restaurants proposed to be set up by the Company, as stated in the
section "Introduction - Objects of the Issue", will become operative after two or three years. Government
Policies may change by that time. It might be possible that the above exemptions may not be available to
the Company when the Cineplexes become operative. However, presently there is no indication of any such
change happening in the Government policy.
Currently, the respective State Government policies provide the following for multiplex business:
State Entertainment tax rate Government Policy
Haryana 50% No tax exemption available
Punjab - Tax exemption for 5 years for multiplexes
having capacity of minimum 1000 seats, set up
in an area of 4000 square yards and minimum
investment of Rs.2000 lacs.
Rajasthan - Tax exempt for 3 years as follows:
• 75% for the 1st year
• 50% for the 2nd year
• 25% in the 3rd year
Uttar Pradesh 60% Tax Exemption for 5 year for multiplexes
(project) worth Rs.150 lacs or more.
We are aware of the existing policies and the proposed Multiplexes/Cineplexes will be built keeping in
mind the relevant rules and regulations to avail the aforesaid benefits in respective states.
12. Sustainability of income from leased property will depend on the performance of its clients operating
out of the shopping mall at the Multiplexes
Management Perception:
The location of SRS Multiplex has the advantage of being accessible to the population of Faridabad as well
as being within reach of the population of New Delhi. The complex, being situated near the main Delhi-
Agra highway in the city center of Faridabad has the potential to attract tourists who visit the Taj Mahal and
Mathura. Also, the brands having their presence at SRS Multiplex are renowned names. Therefore, we do
not envisage a problem of performance by such brands.
In the future also, we intend to set up the Project at the best available sites in the cities our Company plans
to penetrate and tie up with well established and renouned brands for the shopping malls.
13. Misuse of the Company’s brand name SRS Cinemas and the brand 7 Dayz provided by M/s Seven
Dayz Restaurants (P) Limited.
x
The Company proposes to lend its brands SRS Cinemas and the brand 7 Dayz, which is provided by M/s
Seven Dayz Restaurants (P) Limited, to the various parties with whom it proposes to enter into agreements
for implementation of the franchise model, Such parties may misuse the brands or commit any act of
commission or omission that may erode the value of these brands.
Management Perception:
As per the MoU entered into by our Company and M/s Richi Look Marketing (P) Limited, a company
appointed for implementing the franchise model, our Company will have recourse in terms of legal
proceedings etc. to safeguard our interests and the value of our intellectual property rights.
Besides, we will take necessary steps to avoid occurance of such embarassing situations. Our Company
proposes to recruit a quality control executive at each of the sites. Such personnel will be responsible to
ensure that the processes defined by the Company are strictly followed and there in no negligence
committed in the quality control systems or misuse of the said brands.
14. The multiplex business is cyclical in nature during the different periods of the year.
Management Perception:
Our business is cyclical during the different periods of the year. Our revenues are higher during the April-
June and October-December quarters. Any substantial decrease in our sales in these quarters can have a
material adverse impact on our financial performance. Our revenues increase in the third quarter of the
financial year (October-December quarter) due to the occurrence of festivals like Durga Puja, Diwali,
Christmas, etc, as well as during the summer vacation season (April-June quarter). Also, major big banner
Hindi movies are released during the above mentioned quarters. As a result of this, the quarter to quarter
comparison of financial results may not be accurate or meaningful indicator of our future performance.
15. Success of the Cineplex business depends upon the commercial success of various films.
Management Perception:
Success of the Cineplex business depends upon the commercial success of various films. In cases where a
film is not a box office success, it may not attract crowds subsequently we will not enjoy high capacity
utilization. Further, lack of quality content in a film will be reflected in the box office performance and will
in turn impact our profitability. The profitability of the Cineplex business will also depend on the purchase
price of the film. There is no guarantee that the box office performance will be commensurate with the price
paid.
16. Fluctuations in exchange rates may adversely affect the cost of our Project.
Management Perception:
We intend to use part of proceeds from the Issue to meet capital expenditure required for the expansion plan
described in section “Introduction - Objects of the Issue” beginning on page no.24 of the Draft Red Herring
Prospectus. Some of the equipment we intend to deploy is expected to be imported and be paid for in
foreign currency. Changes in foreign exchange rates affecting the value of the Rupee adversely may affect
the cost of the Project.
17. The Company has not received final sanction for debt of Rs.2000.00 Lacs required for the Project
Management Perception:
We have received in-principle approval for the debt portion of the means of finance from UTI Bank Limited
amounting to Rs. 2000 lacs. Any delay in getting the final sanction from the bank may cause delay in
implementation of our Project.
xi
Home Stores (India) Limited (HSL) moved an arbitration application in the Hon’ble Hight Court of Delhi,
under Section 11(6)(b) of the Arbitration and Conciliation Act, 1956, against the Company alleging that the
Company had failed to adhered to the time schedule as per the lease deed entered with the Company for
providing on leasehold propoerty at SRS Multiplex. As per the said lease deed, HSL paid a sum of
Rs.5,44,480 at the time of signing the lease deed on account of security deposit. HSL has demanded a sum
of Rs. 20 lac for the losses suffered by it on account of the non completion of the project and its
consequential handing over by the Company. HSL has also prayed to the Hon’ble High Court for the
appointment of Arbitrator and the disputes and difference arisen between the parties to be referred to the
said Arbitrator. A show cause notice dated August 04, 2005 was received by the Company on August 22,
2005 and the matter has been listed for further directions on October 04, 2005
Management Perception:
We received the 'full occupation certificate' from HUDA upon completion of construction of the Multiplex
building on August 11, 2004. However, HSL never came forward for taking the possession of the premises
despite our several requests. Vide our letter dated January 21, 2005, we terminated the lease deed and
demanded a sum of Rs.5,35,283 from HSL on account of rent and 'common area maintainence' charges
(including service tax) with effect from October 22, 2004 till January 15, 2005. Immediately on receiving
the notice from HSL,we, through our advocates gave reply on June 14, 2005 whereby the our claim was
reiterated. Claim of HSL was denied. Appointment of Mr. Anand Srivastava as arbitrator was disputed and
called upon HSL to concur in the appointment of Mr. Sanjeev Singh Advocate as the arbitrator.
For more information regarding litigations involving our Directors or our Promoters/ Promoter Group
please refer to the section titled "Outstanding Litigation and Material Development" on page no.111 of the
Draft Red Herring Prospectus.
Management Perception:
The above transactions are in the ordinary course of business. Refer to "Financial Information" on page no.
91 of the Draft Red Herring Prospectus for details on Related Party Transactions.
1. The retail/entertainment industry is prone to unforeseen shifts in tastes and preferences of audiences,
which could have an impact on the operations of the Company.
Management Perception
Our success will depend on our ability to understand the business environment and change our business
strategy accordingly.
2. Competition from existing shopping malls, single cinema theaters and multiplexes and future
entrants in the retail/shopping malls and Cineplex business in which the Company operates and
proposes to operate. The concentration of shopping malls and multiplexes in a particular area will
impact the footfalls and in turn adversely impact the profitability.
Management Perception
Our success will depend in developing the business strategy to cope with the competition by adopting new
strategies in accordance with the changing circumstances.
3. Changes in cinema/theatre technology may render our current technologies obsolete or require us to
make substantial capital investments.
Management Perception
The Company would adopt strategy to shift the equipments to other areas where existing technology may be
useful and adopt new technology in the areas wherever required to meet and respond to the competition.
xii
4. Public places such as Multiplex/Cineplex/retail stores/restaurants could be likely targets for
unforeseen acts of violence (including terrorist acts and rioting), which may impact the retail and
entertainment business
Management Perception
Any violence in public places such as retail stores and malls could cause damage to life and property, and
also impact consumer sentiment and their willingness to visit public places.
5. One of the major segments in which the Company operates, the retail industry, is restricted in its
ability to raise financial resources for its growth
Management Perception
The retail sector has not been granted industry status by the Government of India. The capital requirements
for a retailer are in the real estate (which banks have historically restricted lending to) and for meeting
working capital requirements. Banks and financial institutions are further reluctant to lend to the sector
because of lack of collaterals since most of the assets are on lease.
While some of the leading retailers are still able to get bank funding, the smaller ones are constrained for
growth funding. Similarly, equity options are also restricted with Foreign Direct Investment not being
permitted in the retail trading sector.
6. Retail sector generally depends upon various external merchandisers/vendors on whom absolute
control is not possible
Management Perception
Generally, the retail sector depends upon various vendors to provide them the merchandise. Operations
could be adversely affected if supplies of merchandise are not obtained in a timely manner from the vendors
or if the supply of such merchandise is discontinued or if vendors are not able to meet with the growth
requirements.
7. Regional conflicts in South Asia could adversely affect the Indian economy, disrupt the Company’s
operations and cause its business to suffer.
Management Perception
South Asia has, from time to time, experienced instances of civil unrest and hostilities among neighbouring
countries, such as between India and Pakistan. In recent years there have been military confrontations along
the India-Pakistan border. Military activity or terrorist attacks in the future could influence the Indian
economy. This could have a material adverse effect on the market for securities of Indian companies,
including the Equity Shares and also on the market for the Company’s offering.
8. Multiplicity of local taxes and levies including VAT, service tax and entertainment tax may impact
the growth of organised retail and entertainment industries.
Management Perception
Each state in India has different local taxes and levies including sales tax, VAT, Entertainment Tax, octroi,
etc, which has enhanced the complexity for organised retailers as well as added to their costs. Incidence of
various levies as well as the requirement to mention the Maximum Retail Price (MRP) on various products
has led to organised retailers functioning in a sub optimal level, impacting their competitiveness vs.
unorganised players who also gain by way of tax evasion. Unfavourable changes in these local taxes and
levies might marginally impact the performance adversely since these are indirect levies and are recovered
from the ultimate consumer(s).
9. The fortunes of the retail and enertainment sector, especially of companies retailing lifestyle
products, are linked to the overall performance of the economy
Management Perception
The retail sector is dependent on consumer spend for its performance. Overall economic conditions can
impact the consumer spend, and more so in areas such as lifestyle products. Any impact on the Indian
economy due to internal or external reasons could impact consumer spend. Since retailers have fixed costs
xiii
in the short term, any downtrend in the economy can impact the retail sector adversely and impact fashion
and lifestyle retailers even more.
10. Availability of large quantities of retail space can be affected by change in interest rates or banking
policies
Management Perception
Prevailing interest rates in the economy as well as the yields available on the lease of property have been
instrumental in making real estate available for retail by permitting investors to borrow and invest in real
estate and lease it to retail companies. Any change in interest rates, or yields on property or change in
banking policies pertaining to lending against real estate or securitisation of lease rentals could impact
availability of real estate for retail.
11. Attrition rates at the entry level are very high for the industry
Management Perception
Our industry competes with other emerging service sectors such as ITES in its ability to hire and retain
quality people in addition to competition amongst the players in the sector. Hence, availability of trained
manpower poses a key risk for the retail sector.
As organised retail grows rapidly, there will be further pressure on existing players as new entrants would
look for trained manpower at various levels. Opening up of Foreign Direct Investment (FDI) in retail could
see the entry of international retail majors and put further pressure on the manpower.
12. Stability of policies and political situation in India can determine the fortunes of the industry
Management Perception
The Indian Central and State Governments play an important role for the sector by regulating policies and
regulations governing businesses, including malls/mutilpex/retail. We cannot assure that the current policies
will continue in future. The rate of economic liberalisation could change and specific laws and policies
affecting our industries and other policies affecting investment in our securities could change as well. A
significant change in India’s economic liberalisation and deregulation policies could disrupt business and
economic conditions in India and thereby affect our business.
13. Any change in the current policies pertaining to foreign direct investment in the retail sector could
impact our business.
Unstable internal and international political environment could impact the economic performance in both
short term and long term.
14. There has been no public market for the Equity Shares of our Company and the prices of the Equity
Shares may fluctuate.
Management Perception
There can be no assurance that an active trading market for the Equity Shares will develop or be sustained
after this Issue or that the prices at which the Equity Shares are sold in this Issue will correspond to the
prices at which the Equity Shares will trade in the market subsequent to this Issue.
15. After this Issue, price of the Company's Equity Shares may be highly volatile, or an active trading
market for the Equity Shares may not develop. The prices of the Equity Shares on the Stock
Exchanges may fluctuate as a result of several factors, including:
• Volatility in the Indian and global securities market;
• Results of operations and performance of the Company, in terms of market share;
• Performance of the competitors, the Indian film exhibition industry, organised and unorganised
retail sector and the perception in the market about investments in these sectors;
• Performance of the Indian economy;
• Changes in Government policies;
• Changes in the estimates of our performance or recommendations by financial analysts;
• Significant developments in India’s economic liberalisation and deregulation policies; and
• Significant developments in India’s fiscal and environmental regulations.
xiv
16. Force Majeure: In future there might be a natural calamity like earthquake, Tsunami, volcano, etc. or some
unforseen event that is beyond the control of the Company that might prevent it from performing its
business obligations and could disrupt its properties.
1. Public Issue of 2,28,57,200 Equity Shares of Rs.10 each of SRS Entertainment Limited (the “Company”) at
a price of Rs. [•] per Equity Share for cash aggregating Rs. [•] Lacs.
2. Investors are advised to refer to the section titled "Introduction - Basis of Issue Price" on page no.31 before
investing in this Issue.
3. Networth as on June 30, 2005 is Rs.2636.49 Lacs.
4. The Book value per share as on June 30, 2005 is Rs. 15.47
5. The investors may contact the Book Running Lead Manager for any clarifications or information pertaining
to the Issue.
6. Average cost of acquisition per share by Mr. Sunil Jindal and Mr. Raju Bansal is Rs.10 per equity share
7. The Promoters do not have any interest in the business of the Company, except to the extent of investments
made by them and their Promoter Group / investment companies in SRSEL. For details on the same, please
refer to page no.88 of the Draft Red Herring Prospectus.
8. The Investors are advised to refer to the section titled ‘Introduction - Basis of Issue Price’ on page no. 31 of
the Draft Red Herring Prospectus before making an investment in the Issue.
9. Trading in Equity Shares of the Company for all the investors shall be in dematerialized form only.
10. Investors may note that in case of over-subscription in the Issue, allotment to Non-Institutional Bidders and
Retail Bidders shall be on a proportionate basis. For more information, see the section titled ‘Basis of
Allotment’ on page no. 143 of the Draft Red Herring Prospectus.
xv
INTRODUCTION
You should read the following Summary with the Risk Factors from page no.viii and more detailed information
about us and our Financial Statements included elsewhere in the Draft Red Herring Prospectus.
Summary
Industry
SRSEL lays great emphasis on growth of the retail sector to determine its future growth pattern. Multiplexes
today reflect the emergence of organised Indian retail industry. They have also emerged as the fastest growing
niche in the Indian media sector. Their rise reflects:
Metamorphosis of Indian retail (rise of organised retail, malls etc)
Increasing disposable incomes
Rising aspirations of the urban consumer and a change in consumer behaviour
which has altered the spending pattern of the urban consumer.
Going by this trend, the business model of SRSEL is a blend of the retail and entertainment sectors. It includes
construction and management of Multiplex, which includes Cineplex, shopping malls, coffee lounge, Food
Court, health club etc.
Entertainment:
Though distribution and exhibition are the last links in the chain bringing filmed entertainment to the masses,
they are of paramount importance, as the success of the film depends on successful distribution and exhibition.
In India the current infrastructure for Film exhibition is inadequate to meet existing and potential demand. For a
nation with 50,000 lac admissions every year (roughly a weekly entry of about 1000 lac), there are only around
12,900 theatres spread over the country. Further to this, the theatrical sales constitute dominant source of
revenues for the film industry and represent box office ticket sales to the viewers at the cinema halls. Ticket
sales constitute to be around 90% of the total revenues in the film industry. (Source FICCI Report)
The trends suggest that with the advent of multiplexes and modern theatres the exhibition business has indeed
become lucrative. To take guidance from international trends, theatre occupancy in England, Germany, US and
Australia tripled with the multiplex boom and similar growth could be expected in India with adequate
exhibition infrastructure - multiplexes, megaplexes and miniplexes. In fact, only 32% of the screens in the US
are single theatre screens, the rest falling under either multiplexes, megaplexes or miniplexes category whereas
the in India 95% of the screens are in single screen theaters.
International trends
So far various international markets are highly under screened. Looking at the present structure, The US has
about 9000 persons per screen, Europe around 27000 people per screen, Latin America around 69000 and Asia
around 105000 people per screen. This shows that Indian Multiplex market is extremely under screened. This
survey also states that factors like location, type of theatre, dining and shopping are most important features in
selecting a theatre and entertainment joint.
Retail:
The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new
formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls
begun their journey from metros and are now turning towards second-rung cities introducing the Indian
consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market,
India is being seen as a potential goldmine. It has been ranked 2nd in a Global Retail Development Index of 30
developing countries drawn up by A. T. Kearney.
Real Estate:
India is ranked 5th in the list of 30 emerging retail markets and organized retail segment is expected to grow
from a mere 2% to 20% by the end of the decade.
1
The Company’s Business
The business model of SRS Entertainment Limited is a “hybrid” model, which involves a mix of entertainment
cum retailing and real estate. The Company’s maiden project, SRS Multiplex, is a unique complex, combining a
3 screen Cineplex with most facilities of a modern shopping mall. SRS Multiplex commenced operations from
November 12, 2004 and has been proved profitable within the first 6 months of its operation. The average ticket
prices at SRS PVR Cinemas range from Rs.75/- to Rs.150/-. All the showrooms and shop blocks in the mall
have been completely sold / leased out.
Some of the leading brands in sunglasses, apparels both formal and casual wear, gold/silver jewellery, women
wears both ethnic and western, music, are available at SRS Multiplex
SRSM offers a wide variety of restaurants that offer visitors a range of delicacies to chose from. Some of the
available cuisines are Mexican, Indian, continental and also fast food including burgers, pizzas, pastries, hot and
cold drinks, ice cream parlours etc.
The Company's first retail store, SRS Value Bazaar is proposed to be set up at the Multiplex and will begin
commercial operations in October 2005. SRS Value Bazaar would be a hyper-market in the retail business of
various products at the sites in the format and type of retail chain with different content of products depending
on needs and aspirations of customers. The discount store concept in the form of SRS Value Bazaar would
provide value for money to the population at large apart from the target segment and ensure additional footfalls
for the entire Multiplex.
The Issue
Equity Shares offered for Issue by the 2,28,57,200 Equity Shares
Company
of which:
2
Statement of Profit and Loss Account - As Restated
(Rupees in Lacs)
Particulars Quarter ended For the year ended March 31,
June 30, 2005 2005* 2004 2003
Income
A) Sales :
a) Operational Revenue Company 369.20 453.17 0.00 0.00
b) Products traded by the Company 34.88 35.62 0.00 0.00
Sub-Total (a) + (b) 404.08 488.79 0.00 0.00
(c ) Other Operational Income 185.70 275.10 0.00 0.00
(d) Other Income 11.80 1.47 0.00 1.13
(e) Interest 0.00 0.00 0.00 0.00
Total (A) 601.58 765.36 0.00 1.13
Expenditure
Work Cost/Operational Exp. 93.68 245.63 0.00 0.00
Staff Costs 27.17 33.95 0.00 0.15
PVR Share 6.57 6.20 0.00 0.00
Administration Expenses 116.20 87.26 0.00 0.00
Selling & Other Expenses/ Sales 14.56 15.14 0.00 0.00
Promotion
Interest 51.27 72.59 0.00 0.89
Fringe Benefit Tax 0.50 0.00 0.00 0.00
Depreciation 29.70 45.00 0.00 0.00
Preliniminery Expenses W/off 0.46 1.83 0.00 0.03
Total (B) 340.11 507.60 0.00 1.07
3
Cash and Bank Balances 149.32 131.78 77.96 11.48
Loans and Advances 288.34 71.06 0.23 0.12
Other Current Assets 0.00 0.00 0.00 0.00
Sub-Total 838.55 403.22 78.19 226.22
D. Liabilities and Provisions :
Secured Loans 1530.00 1368.85 999.62 610.96
Unsecured Loans 1111.21 1153.93 94.34 32.76
Current Liabilities and Provisions 189.15 196.75 71.68 23.35
Sub-Total 2830.36 2719.53 1165.84 667.30
E. Networth 2636.49 2296.32 1249.84 541.51
F. Represented by
1. Share Capital 1848.04 1739.60 1250.00 541.70
2. Reserves 804.26 572.98 0.04 0.04
Less Revaluation Reserve 0.00 0.00 0.00 0.00
Reserves (Net of 804.26 572.98 0.04 0.04
Revaluation Reserves)
Less Preliminary Expenses yet not 15.81 16.27 0.20 0.23
w/off
Networth 2636.49 2296.32 1249.84 541.51
4
GENERAL INFORMATION
SRS ENTERTAINMENT LIMITED
The Company was incorporated as ‘SRS Commercial Co. Limited’ on August 29, 2000 under the Companies
Act 1956. It changed its name to 'SRS Entertainment Limited' on January 25, 2005 under a fresh Certificate of
Incorporation. Registered Office of the Company is located at C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094.
Registration number of the Company is 55-107484. The Registrar of Companies, NCT Delhi and Haryana
having its office at New Delhi is the concerned Registrar of Companies in case of our Company. The Company
has changed its registered office from 804, Manjusha, 57, Nehru Place, New Delhi to E-985, Near Mala Devi
School, 100 ft. Road, Babarpur, Shahdara, Delhi vide resolution dated 1.12.2000 and to the present location C-
4/1, 100 Ft. Road, Shahdara, Delhi 110094 vide resolution dated 23.4.2003. The head office of the Company is
located at E-18, Nehru Ground, NIT Faridabad - 121001
Brief Description of the Chairman, Managing Director and Executive Directors is given below:
5
Tel No.: (011) 23354234, 23314777
Fax: (011) 23323809
E-mail: ubirodel@ndf.vsnl.net.in
Book Running Lead Manager to the Issue Joint Book Running Lead Manager to the Issue
UTI Bank Limited Allianz Securities Limited
Central Office, Maker Towers ‘F’ 11th Floor, 33, Vaswani Mansion,
Cuffe Parade, Colaba, 6th Floor, Dinsha Vachha Road, Churchgate,
Mumbai – 400 005 Mumbai – 400 020
Tel.: (022) 2218 9106 - 9 Tel. : (022) 2287 0580
Fax: (022) 2216 2467 Fax. : (022) 2287 0581
Web site: www.utibank.com Website: www.aslfinancial.com
E-mail: utibmbd@utibank.co.in E-mail: srs@aslfinancial.com
Contact person: Ms. Shilpa Jaisingh Contact Person: Mr. Sanjay Dewan
Registrars to the Issue Legal Advisor to the Issue
Karvy Computershare Private Limited Vaish Associates
Karvy House, 46, Avenue 4, Street No.1, Banjara 10 Hailey Road,
Hills, Apts. 5, 6 and 7,
Hyderabad 500 034 New Delhi – 110001
Tel.: (040) 2331 2454 Tel: (011) 52492510
Fax.: (040) 2331 1968 Fax: (011) 23320484/ 52492600
E-mail: srs.ipo@karvy.com E-mail: vaishlaw@vsnl.com
Contact Person: Mr. Ganapathy Subramaniam
Auditors to the Company Bankers to the Issue
T.K. Gupta & Associates [•]
4228/1, Ansari Road,
Darya Ganj,
New Delhi - 110002
Tel: (011) 23269898, 23264006
Fax: (011) 23255308
E-mail: tkguptaca@rediffmail.com
Company Secretary Compliance Officer
Ms. Navneet Chhabra Mr. Arun Kumar Gupta
SRS Multiplex, SRS Multiplex,
City Centre, Sector-12, City Centre, Sector-12,
Faridabad, (NCR), Haryana 121007. Faridabad, (NCR), Haryana 121007.
Telephone: (0129) 5008350, 5003266 Mobile: +91 9810672518
Fax: (0129) 2433255 Telephone: (0129) 5008350, 5003266
E-mail:navneet@srs-world.com Fax: (0129) 2433255
E-mail: srsco@srs-world.com
Note: Investors are advised to contact the Registrar to the Issue/ Compliance Officer in case of any pre-
issue/post-issue related problems such as non-receipt of Red Herring Prospectus/ Letter of Allotment/ Share
Certificate(s)/ Warrant Certificate(s)/ Refund Orders/ Demat Credit.
6
BRLM shall ensure compliance with stipulated
requirements and completion of prescribed
formalities with the Stock Exchanges, Registrar of
Companies and SEBI.
5 Appointment of various agencies connected with the UTI Bank UTI Bank
Issue including Printers, Advertising Agency,
Bankers to the Issue etc.
4 Appointment of Registrar to the Issue UTI Bank, Allianz Allianz
6 Company positioning and pre-marketing exercise, UTI Bank, Allianz UTI Bank
finalise media and public relation strategy, drafting
and approval of all publicity material other than
statutory advertisement as mentioned in (3) above
including corporate advertisement, brochure, etc.
7 Qualified Institutional Bidder (QIBs) Category: UTI Bank, Allianz UTI Bank
Finalising the list and division of investors for one-
to-one meetings, Co-ordinating institutional investor
meetings, finalising pricing decision and institutional
allocation in consultation with the Company
8 Non Institutional and Retail Marketing of the Issue, UTI Bank, Allianz Allianz
which will cover inter alia:
_ Formulating marketing strategy
_ Preparation of publicity budget
_ Finalise Media and Public Relation strategy
_ Finalising centers for holding conferences for
brokers, press, etc.
_ Follow-up on distribution of publicity and issue
material including bid cum application form,
prospectus and deciding on the quantum of the
issue material
9 Appointment of Syndicate Members UTI Bank, Allianz Allianz
10 Running the Book, interaction and co-ordination UTI Bank, Allianz Allianz
with Stock Exchanges for book-building software,
bidding terminals and mock trading
11 Finalisation of Prospectus and RoC Filing etc. UTI Bank, Allianz UTI Bank
12 The post bidding activities including, management of UTI Bank, Allianz Allianz
escrow accounts, co-ordinate non-institutional
allocation, intimation of allocation, dispatch of
refund orders to Bidders etc.
13 The post issue activities for the Issue will involve UTI Bank, Allianz Allianz
essential follow up steps, which include the
finalisation of listing of Equity Shares and dispatch
of allotment advice and refund orders, with the
various agencies connected with the work such as the
Registrars to the Issue, Bankers to the Issue and the
bank handling refund business.
Even if many of these activities will be handled by other intermediaries/agencies, the designated BRLM/Joint
BRLM shall be responsible for ensuring that these intermediaries/agencies fulfill their functions and enable it
to discharge this responsibility through suitable agreements with the Company.
Credit Rating
This being an Issue of Equity Shares credit rating for this Issue is not required.
Trustees
As this is an Issue of Equity Shares, the appointment of Trustees is not required.
Monitoring Agency
This Issue being for less than aggregate Rs.50,000 Lacs, appointment of a Monitoring Agency is not
applicable.
7
Project Appraisal
The Project, for which funds are being raised through the Issue, has been appraised by UTI Bank Limited for
financing the debt requirement. UTI Bank Limited has given its consent for its name being included as
appraising agency and for their appraisal report being used in this document.
SEBI, through its guidelines, has permitted an Issue of securities to the public through the 100% Book Building
Process, wherein at least 50% of the Issue shall be allocated on a discretionary basis to Qualified Institutional
Buyers (QIBs). Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis
to Non Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a
proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue
Price. The Company will comply with these guidelines for this Issue. In this regard, the Company has
appointed the BRLM/Joint BRLM to procure subscriptions to the Issue. The process of book building, under
SEBI Guidelines, is relatively new and the investors are advised to make their own judgment about investment
through this process prior to making a Bid in the Issue. Pursuant to recent amendments to SEBI Guidelines,
QIBs are not allowed to withdraw their Bid after the Bid/ Issue Closing Date. See page no.125 for the section
titled “Issue Information - Terms of the Issue” in the Draft Red Herring Prospectus.
Illustration of Book Building and Price Discovery Process (Investors should note that the following is solely
for the purpose of illustration and is not specific to the Issue)
Bidders can bid at any price within the price band. For instance, assuming a price band of Rs.20 to Rs.24 per
share, issue size of 3,000 equity shares and receipt of five bids from bidders details of which are shown in the
table below. A graphical representation of the consolidated demand and price would be made available at the
bidding centres during the bidding period. The illustrative book as shown below shows the demand for the
shares of our Company at various prices and is collated from bids from various investors.
The price discovery is a function of demand at various prices. The highest price at which the issuer is able to
issue the desired quantum of shares is the price at which the book cuts off i.e., Rs.22 in the above example. The
issuer, in consultation with the BRLM will finalise the issue price at or below such cut off price i.e. at or below
Rs.22. All bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in
respective category.
Underwriting Agreement
After the determination of the Issue Price and prior to filing of the Prospectus with RoC, the Company, on its
behalf, will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be
issued through the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the
8
BRLM/Joint BRLM shall be responsible for bringing in the amount devolved in the event that the members of
the Syndicate do not fulfill their underwriting obligations.
The Underwriters have indicated their intention to underwrite the following number of Equity Shares:
(This portion has been intentionally left blank and will be filled in before filing of the Prospectus with (RoC)
In the opinion of our Board of Directors (based on a certificate given by the Underwriters), the resources of the
above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting
obligations in full. The above-mentioned Underwriters are registered with SEBI under Section 12(1) of the
SEBI Act or registered as brokers with the Stock Exchange(s).
Our Board of Directors, at their meeting held on [•], have accepted and entered into the underwriting Agreement
mentioned above on behalf of the Company. Allocation among Underwriters may not necessarily be in
proportion to their underwriting commitments. Notwithstanding the above table, the BRLM, Joint BRLM and
the Syndicate Members shall be responsible for ensuring payment with respect to Equity Shares allocated to
investors procured by them. In the event of any default in payment, the respective Underwriter, in addition to
other obligations defined in the underwriting agreement, will also be required to procure/subscribe to the extent
of the defaulted amount.
Allocation to QIBs is discretionary as per the terms of the Draft Red Herring Prospectus and may not be
proportionate in any way and the patterns of allocation to the QIBs could be different for the two Underwriters.
9
CAPITAL STRUCTURE
(D) Net Issue to the public in terms of the Draft Red Herring Prospectus
1,42,84,274 Equity Shares of Rs.10/- each 1428.42 [•]
* 42,87,200 Equity Shares of Rs.10 each at the 'Cut-Off' price will be allotted to the Promoter Group of the
Company on firm allotment basis, towards 'Promoters Contribution in the Project'. The Promoters have vide
their letter dated August 25, 2005 undertaken to bring Rs. [•], being the amount due at the higher end of the
price band of Rs. [•] to Rs. [•], amounting to Rs. [•] Lacs, one day prior to the Issue Opening date and the
same will be deposited in an escrow account to be opened with the Banker to the Issue, which will be a
Scheduled Commercial bank as required by SEBI (DIP) Guidelines, 2000.
These equity shares will be subscribed to by the corporate bodies forming part of the Promoter Group as
under:
Sr. Name of Investor Registered Office Address No. of shares of
No. Rs. 10/- each
1. Bansla Finlease Limited C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 12,85,714
2. BTL Commercial Limited C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 2,85,714
3. BTL Impex (India) Limited E-985, 100 Ft. Road, Near Babarpur Bus 1,42,857
Terminal. Shahdra, Delhi – 110032
4. BTL Industries Limited E-985, 100 Ft. Road, Near Babarpur Bus 2,85,714
Terminal. Shahdra, Delhi – 110032
5. BTL Investments Limited C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 11,44,345
6. BTL Sales Limited E-985, 100 Ft. Road, Near Babarpur Bus 2,85,714
Terminal. Shahdra, Delhi 110032
7. Madhavtec India (P) D-15/2, New Govindpura, Street No.9, Delhi 1,42,857
Limited – 55
8. Neelabh Engineering (P) D-15/2, New Govindpura, Street No.9, Delhi 1,42,857
Limited – 55
9. North Delhi Credit E-985, 100 Ft. Road, Near Babarpur Bus 2,85,714
Investments Limited Terminal. Shahdra, Delhi – 110032
10
10.Parvati Finlease Limited C-8, LGF – II, East of Kailash, New Delhi 2,87,202
TOTAL 42,87,200
The abovementioned equity shares will be locked-in for 1 year from the date of allotment in the Issue.
Notes
Date of No. of shares Face Cumulative Offer Nature of Nature of Issue and
Allotment and allotted Value no. of shares Price payment reason for
Date when (Rs.) (Rs.) allotment
Made fully
Paid-up
29.08.2000 700 10.00 700 10.00 Cash Subscription to
Memorandum of
Association
31.12.2001 99, 300 10.00 1,00,000 10.00 Cheque Preferential
Allotment
31.03.2002 8,30,000 10.00 9,30,000 10.00 Cheque Preferential
Allotment
10.08.2002 17,47,000 10.00 26,77,000 10.00 Cheque Preferential
Allotment
30.09.2002 5,00,000 10.00 31,77,000 10.00 Cheque Preferential
Allotment
16.12.2002 8,62,000 10.00 40,39,000 10.00 Cheque Preferential
Allotment
29.03.2003 13,78,000 10.00 54,17,000 10.00 Cheque Preferential
Allotment
12.06.2003 8,70,000 10.00 62,87,000 10.00 Cheque Preferential
Allotment
31.08.2003 24,74,000 10.00 87,61,000 10.00 Cheque Preferential
Allotment
05.11.2003 15,75,800 10.00 1,03,36,800 10.00 Cheque Preferential
Allotment
20.02.2004 21,63,200 10.00 1,25,00,000 10.00 Cheque Preferential
Allotment
07.01.2005 10,00,000 10.00 1,35,00,000 10.00 Cheque Preferential
Allotment
28.02.2005 15,00,000 10.00 1,50,00,000 20.00 Cheque Preferential
Allotment
28.03.2005 20,38,500 10.00 1,70,38,500 20.00 Cheque Preferential
Allotment
12.08.2005 * 1,00,00,000 10.00 2,70,38,500 20.00 Cheque Preferential
Allotment
2,70,38,500
* 1,00,00,000 equity shares of Rs.10/- each at Rs.20/- each have been allotted to the following:
(Rupees in Lacs)
Entities No. of equity shares Amount
Promoter Group:
Bansla Finlease Limited 15,36,750 3,07,35,000
BTL Commercial Limited 4,00,700 80,14,000
BTL Investments Limited 25,50,050 5,10,01,000
BTL Sales Limited 2,55,000 51,00,000
Madhavtech India (P) Limited 75,000 15,00,000
Parvati Finlease Limited 9,25,000 1,85,00,000
Sub total (a) 57,42,500 11,48,50,000
Others:
Private Corporate bodies:
11
Akriti Financial Services (P) Limited 20,000 4,00,000
Avisha Credit Capital Limited 24,05,000 4,81,00,000
Ferro Plast Limited 8,65,000 1,73,00,000
Master Finlease Limiteds 7,00,000 1,40,00,000
Vijay Finlease Limited 2,55,000 51,00,000
Individuals:
Mr. Raj Kumar Singla 5,000 1,00,000
Ms. Mona Arora 500 10,000
Mr. Sourabh Gupta 5,000 1,00,000
Mr. S. S. Gupta 2,000 40,000
Sub total (b) 42,57,500 8,51,50,000
Total (a + b) 1,00,00,000 20,00,00,000
Funds raised from this preferential allotment have been used to partially meet the fund requirement towards the
Project. For the schedule of "Objects of the Issue - Funds Deployed" please refer to page no. 29 of the Draft Red
Herring Prospectus.
3. There has been no issue of shares for consideration other than cash / cheque.
4. The Company has not issued any Equity Shares out of the revaluation reserves.
5. As on date of filing of draft Red Herring Prospectus with SEBI, the issued capital of the Company is
fully paid up.
a) 3 years lock-in (Promoters' contribution and lock-in in respect of promoters whose name figure in the
Draft Red Herring Prospectus as Promoters)
Name of the Promoter Date on which Nature of Number of Face Value Issue/trans % of post Lock-in
equity shares payment Equity (Rs.) fer Price issue paid period $
were of Shares (Rs.) up capital
allotted/transfe consider
rred and made ation
fully paid-up
Sunil Jindal 29.08.2000 Cheque 100 10 10 0.0002
31.12.2001 Cheque 500 10 10 0.0010
15.04.2004 Cheque 1,20,000 10 10 0.2405
1,20,600 0.2417 3 years
12
05.11.2003 Cheque 1,32,500 10 10 0.2656
20.02.2004 Cheque 5,000 10 10 0.0100
1,97,500 0.3958 3 years
13
05.11.2003 Cheque 1,90,000 10 10 0.3808
15.04.2004 Cheque 1,50,000 10 10 0.3006
20.02.2004 Cheque 7,65,000 10 10 1.5332
15.04.2004 Cheque 2,50,000 10 10 0.5010
15.04.2004 Cheque 2,00,000 10 10 0.4008
17,45,000 3.4973 3 years
b) 1 year lock-in
Name of the Promoter Date on which Nature of Number of Face Issue/tran % of post Lock-in
equity shares payment Equity Value sfer Price issue paid period $
were of Shares (Rs.) (Rs.) up capital (years)
allotted/transf considera
erred and tion
made fully
paid-up
Sunil Jindal 24.01. 2005 cheque 100 10 20 0.00
24.01. 2005 cheque 100 10 20 0.00
24.01. 2005 cheque 500 10 20 0.00
24.01. 2005 cheque 6,300 10 20 0.01
15.04. 2004 cheque 9,000 10 10 0.02
16,000 0.03 1 year
Bansla Finlease Limited 28.03. 2005 cheque 550,000 10 20 1.10
12.08. 2005 cheque 1536,750 10 20 3.08
2086,750 4.18 1 year
BTL Commercial Limited 07.01. 2005 cheque 20,000 10 10 0.04
28.03. 2005 cheque 309,000 10 20 0.62
12.08. 2005 cheque 400,700 10 20 0.80
14
729,700 1.46 1 year
BTL Impex (India) Limited 28.03. 2005 cheque 222,500 10 20 0.45
222,500 0.45 1 year
BTL Investments Limited 28.03. 2005 cheque 555,000 10 20 1.11
12.08. 2005 cheque 2550,050 10 20 5.11
3105,050 6.22 1 year
BTL Sales Limited 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 6,500 10 20 0.01
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 1,500 10 20 0.00
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 50,000 10 20 0.10
24.01. 2005 cheque 50,000 10 20 0.10
24.01. 2005 cheque 1,000 10 20 0.00
24.01. 2005 cheque 200 10 20 0.00
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 3,000 10 20 0.01
24.01. 2005 cheque ,500 10 20 0.00
24.01. 2005 cheque 250,000 10 20 0.50
28.03. 2005 cheque 185,000 10 20 0.37
12.08. 2005 cheque 255,000 10 20 0.51
847,700 1.70 1 year
Madhavtech India (P) 07.01. 2005 cheque 130,000 10 10 0.26
Limited
12.08. 2005 cheque 75,000 10 20 0.15
205,000 0.41 1 year
North Delhi Credit & 28.03. 2005 cheque 97,000 10 20 0.19
Investments Limited
97,000 0.19 1 year
Parvati Finlease Limited 12.08.2005 cheque 925,000 10 20 1.85
925,000 1.85 1 year
Akriti Financial Services (P) 12.08. 2005 cheque 20,000 10 20 0.04
Limited
20,000 0.04 1 year
Ferro Plast Limited 12.08. 2005 cheque 865,000 10 20 1.73
865,000 1.73 1 year
Avisha Credit Capital 12.01. 2005 cheque 50,000 10 20 0.10
Limited
12.01. 2005 cheque 200,000 10 20 0.40
28.02. 2005 cheque 1250,000 10 20 2.51
12.08. 2005 cheque 2405,000 10 20 4.82
3905,000 7.83 1 year
Amit Goel 15.01. 2005 cheque 50,000 10 20 0.10
50,000 0.10 1 year
Anshul Maheshwari 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10000 10 20 0.02
30,000 0.06 1 year
Anjana Maheshwari 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 1,000 10 20 0.00
6,000 0.01 1 year
Bindu Sethi 24.01. 2005 cheque 20,000 10 20 0.04
15
05.04. 2005 cheque 5,000 10 48 0.01
25,000 0.05 1 year
Boats India (P) Limited 24.01. 2005 cheque 30,000 10 20 0.06
30,000 0.06 1 year
Chander Bhan Sharma 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 1,000 10 20 0.00
6,000 0.01
Dayawati 24.01. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Deepak Mangla 24.01. 2005 cheque 200 10 20 0.00
24.01. 2005 cheque 200 10 20 0.00
24.01. 2005 cheque 1,000 10 20 0.00
24.01. 2005 cheque 1,000 10 20 0.00
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 8,000 10 20 0.02
20,400 0.04 1 year
Hema Aggarwal 24.01. 2005 cheque 4,000 10 20 0.01
24.01. 2005 cheque 500 10 20 0.00
4,500 0.01 1 year
Himanshu Jain 24.01. 2005 cheque 60,000 10 20 0.12
60,000 0.12 1 year
Harish Kumar Maheshwari 24.01. 2005 cheque 10,000 10 20 0.02
10,000 0.02 1 year
Kamlesh Jindal 15.01. 2005 cheque 10,000 10 44 0.02
10,000 0.02 1 year
Kamlesh Maheshwary 24.01. 2005 cheque 20,000 10 20 0.04
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 4,000 10 20 0.01
24.01. 2005 cheque 1,000 10 20 0.00
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 5,000 10 20 0.01
70,000 0.14 1 year
Kailash M. Mehta 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 1,000 10 20 0.00
6,000 0.01 1 year
Kanika Anand 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
30,000 0.06 1 year
Lakshmi Gupta 15.01. 2005 cheque 30,000 10 42 0.06
30,000 0.06 1 year
Manu Consultants Limited 28.03. 2005 cheque 16,000 10 20 0.03
16,000 0.03 1 year
Moksh Pal Singh 15.01. 2005 cheque 84000 10 41 0.17
84,000 0.17 1 year
Manohar Lal 15.01. 2005 cheque 84,000 10 40 0.17
15.01. 2005 cheque 70,000 10 40 0.14
15.01. 2005 cheque 10,000 10 40 0.02
15.01. 2005 cheque 10,000 10 40 0.02
24.01. 2005 cheque 10,000 10 40 0.02
24.01. 2005 cheque 10,000 10 40 0.02
16
24.01. 2005 cheque 2,000 10 40 0.00
05.04. 2005 cheque 4,000 10 40 0.01
200,000 0.40 1 year
Manju Rani Jain 24.01. 2005 cheque 10,000 10 20 0.02
10,000 0.02 1 year
Mukesh Kumar Aggarwal 24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 500 10 20 0.00
4,500 0.01 1 year
Master Finlease Limited 24.01. 2005 cheque 30,000 10 20 0.06
24.01. 2005 cheque 270,000 10 20 0.54
24.01. 2005 cheque 500,000 10 20 1.00
24.01. 2005 cheque 200,000 10 20 0.40
24.01. 2005 cheque 150,000 10 20 0.30
24.01. 2005 cheque 100,000 10 20 0.20
28.02. 2005 cheque 250,000 10 20 0.50
28.03. 2005 cheque 700,000 10 20 1.40
2200,000 4.41 1 year
Mona Arora 12.08. 2005 cheque 500 10 20 0.00
500 0.00 1 year
Manish Jain 24.01. 2005 cheque 1,000 10 20 0.00
1,000 0.00 1 year
Naresh Kumar 15.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 20,000 10 20 0.04
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 500 10 20 0.00
24.01. 2005 cheque 1,000 10 20 0.00
24.01. 2005 cheque 1,500 10 20 0.00
45,000 0.09 1 year
Narender Kumar Singhal 15.01. 2005 cheque 10,000 10 43 0.02
24.01. 2005 cheque 10,000 10 43 0.02
24.01. 2005 cheque 10,000 10 43 0.02
30,000 0.06 1 year
Nitesh Maheshwary 24.01. 2005 cheque 10,000 10 20 0.02
10,000 0.02 1 year
Narender Kumar Jain 24.01. 2005 cheque 15,000 10 20 0.03
24.01. 2005 cheque 4,000 10 20 0.01
24.01. 2005 cheque 1,000 10 20 0.00
20,000 0.04 1 year
Prem Sagar Singla 31.12. 2001 cheque 50,000 10 10 0.10
50,000 0.10 1 year
Poonam Munjal 24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 500 10 20 0.00
2,500 0.01 1 year
Parveen Kumar Gupta 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 500 10 20 0.00
24.01. 2005 cheque 200 10 20 0.00
5,700 0.01 1 year
Parvesh Mahajan 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 500 10 20 0.00
24. 01. 2005 cheque 200 10 20 0.00
5,700 0.01 1 year
17
Paramjeet Singh Bakshi 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 5,000 10 20 0.01
25,000 0.05 1 year
Rajat Fincap (P) Limited 30.09. 2002 cheque 50,000 10 10 0.10
29.03. 2003 cheque 50,000 10 10 0.10
20.02. 2004 cheque 145,000 10 10 0.29
245,000 0.49 1 year
Raju Gupta 15.01. 2005 cheque 20,000 10 42 0.04
20,000 0.04 1 year
Rakesh Maheshwary 24.01. 2005 cheque 10,000 10 20 0.02
10,000 0.02 1 year
Rajinder Maheshwary 24.01. 2005 cheque 10,000 10 20 0.02
10,000 0.02 1 year
Rai Chand Jain 24.01. 2005 cheque 2,000 10 20 0.00
2,000 0.00 1 year
Rajiv Arora 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 500 10 20 0.00
12,500 0.03 1 year
Ramesh Maheshwari 24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 1,000 10 20 0.00
3,000 0.01 1 year
Rakesh kumar Mahajan 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 500 10 20 0.00
24.01. 2005 cheque 200 10 20 0.00
5,700 0.01 1 year
Raj Kumar Singla 12.08. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Rita Goyal 28.03. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Surbhi Gupta 15.01. 2005 cheque 10,000 10 42 0.02
15.01. 2005 cheque 10,000 10 42 0.02
15.01. 2005 cheque 10,000 10 42 0.02
30,000 0.06 1 year
Sahil Gupta 15.01. 2005 cheque 10,000 10 42 0.02
15.01. 2005 cheque 10,000 10 42 0.02
20,000 0.04 1 year
Sukesh Gupta 15.01. 2005 cheque 20,000 10 43 0.04
15.01. 2005 cheque 10,000 10 43 0.02
30,000 0.06 1 year
Sheenam Maheshwary 24.01. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Smita Arora 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 3,000 10 20 0.01
24.01. 2005 cheque 1,000 10 20 0.00
16,000 0.03 1 year
Shipra Sharma & Satish 24.01. 2005 cheque 10,000 10 20 0.02
Sharma
24.01. 2005 cheque 1,000 10 20 0.00
11,000 0.02 1 year
Satish Sharma (HUF) 24.01. 2005 cheque 10,000 10 20 0.02
18
24.01. 2005 cheque 4,000 10 20 0.01
14,000 0.03 1 year
Sandeep Kumar Maheshwary 24.01. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Sneh Lata 24.01. 2005 cheque 2,000 10 20 0.00
cheque 2000 0.00 1 year
Sucon (India) (P) Limited 28.03. 2005 cheque 76,500 10 20 0.15
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 2,000 10 20 0.00
24.01. 2005 cheque 1,000 10 20 0.00
24.01. 2005 cheque 500 10 20 0.00
100,000 0.20 1 year
Sunita Maheshwari 24.01. 2005 cheque 2,000 10 20 0.00
2,000 0.00 1 year
Suresh Maheshwari 24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
24.01. 2005 cheque 10,000 10 20 0.02
30,000 0.06 1 year
Shashi Mehta & Kailash M. 24.01. 2005 cheque 5,000 10 20 0.01
Mehta
24.01. 2005 cheque 1,000 10 20 0.00
6,000 0.01 1 year
Sanjeev Kumar Khanna 24.01. 2005 cheque 10,000 10 20 0.02
10,000 0.02 1 year
Suman Gupta 24.01. 2005 cheque 5,000 10 20 0.01
24.01. 2005 cheque 500 10 20 0.00
24.01. 2005 cheque 200 10 20 0.00
5,700 0.01 1 year
Sanjay Mittal 28.03.2005 cheque 2,500 10 20 0.01
2,500 0.01 1 year
S. C. Aggarwal 28.03.2005 cheque 3,000 10 20 0.01
3,000 0.01 1 year
Subhash Goel 28.03.2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Shyam Sunder Garg 28.03.2005 cheque 3,000 10 20 0.01
3,000 0.01 1 year
Sourabh Gupta 12.08. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
S. S. Gupta 12.08. 2005 cheque 2,000 10 20 0.00
2,000 0.00 1 year
Vijay Finlease Limited 12.08. 2005 cheque 2,55,000 10 20 0.51
2,55000 0.51 1 year
Vikas K. Modi 24.01. 2005 cheque 5,000 10 20 0.01
5,000 0.01 1 year
Varsha Gupta 15.01. 2005 cheque 20,000 10 43 0.04
20,000 1 year
$
Lock-in period shall start from the date of allotment of Equity Shares in terms of the Draft Red Herring
Prospectus
7. The Promoter’s contribution is not being brought-in less than the specified minimum lot of Rs. 25,000/-
per application from each individual and Rs.1,00,000/- from companies.
19
8. The Company, its Promoters, Directors and Book Running Lead Manager have not entered into any
buy-back, stand-by and similar arrangements for purchase of securities being offered through the Draft
Red Herring Prospectus.
10. The Equity Shares to be held by the Promoter Group under lock-in period shall not be sold /
hypothecated / transferred during the lock-in period. However, the Equity Shares held by Promoter
Group, which are locked in, may be transferred to and among Promoter Group or to a new promoter or
persons in control of the Company, subject to the continuation of lock-in with the transferees for the
remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 as applicable. The Promoter Group may pledge their Equity Shares with banks or
financial institutions as additional security for loans whenever availed by them from banks or financial
institutions.
11. In case of over-subscription, allotment will be on proportionate basis as detailed in para "Statutory and
other Information - Basis of Allotment" on page no.143 of the Draft Red Herring Prospectus. An over-
subscription to the extent of 10% of the Net Issue to public can be retained for the purpose of rounding
off to the nearer multiple of [•] (which is minimum allotment lot), while finalising the allotment.
Consequently, the actual allotment may go up by a maximum of 10% of the Net Issue to public, as a
result of which, the post Issue paid up capital would also increase by the excess amount of allotment so
made. In such an event, the shares held by the Promoter and subject to lock-in shall be suitably
increased; so as to ensure that 20% of the post Issue paid-up capital is locked in.
12. The securities through this Public Issue shall be made fully paid up or will be forfeited within 12
months from the date of allotment of the securities offered through the Draft Red Herring Prospectus.
13. Unsubscribed portion in any Reserved Category would be added to any other Reserved Category. The
unsubscribed portion, if any, after such interse adjustments among the Reserved Categories shall be
added back to the Net Issue to the public and first be distributed equally between the Retail Portion and
the Non-Institutional Portion in accordance with the description in section titled "Statutory and other
Information - Basis of Allotment” as described in page no. 143.
14. Undersubscription:
Unsubscribed portion in any Reserved Category may be added to any other Reserved Category
The unsubscribed portion, if any, after such interse adjustments among the Reserved Categories
shall be added back to the Net Issue to the public
In case of undersubscription in the Net Issue to the public portion, spillover to the extent of
undersubscription shall be permitted from the Reserved category to the Net Issue portion.
a) Top ten shareholders as on date of filing of the Red Herring Prospectus with the RoC
20
b) Top ten shareholders ten days prior to the date of filing of the Red Herring Prospectus with the RoC
Name of shareholder No. of shares
BTL Investments Limited 42,70, 550
Bansla Finlease Limited 41,54,250
Avisha Credit Capital Limited 39,05,000
BTL Sales Limited 25,92,700
Master Finlease Limited 22,00,000
BTL Commercial Limited 18,82,700
BTL Industries Limited 16,37,000
Parvati Finlease Limited 9,25,000
Madhavtech India (P) Limited 8,83,000
Ferro Plast Limited 8,65,000
c) Top ten shareholders two years prior to the date of filing of the Red Herring Prospectus with the RoC
Name of shareholder No. of shares
Bansla Finlease Limited 20,17,500
BTL Industries Limited 14,68,000
BTL Impex (India) Limited 10,66,000
BTL Investments Limited 10,02,500
Madhavtech India (P) Limited 5,98,000
BTL Commercial Limited 4,67,000
Neelabh Engineers (P) Limited 4,59,000
BTL Sales Limited 1,90,000
Rajat Fincap (P) Limited 1,84,000
North Delhi Credit & Investments Limited 1,50,000
16. Aggregate shareholding of the Promoter Group and of the Directors of the Promoters, where the
promoter is a company is as follows:
21
Promoter's Group".
Total 1,82,40,300 67.46 2,25,27,500 45.15
Promoter Group:
Corporate bodies:
BTL Investments Limited 42,70,550 15.79
Bansla Finlease Limited 41,54,250 15.36
BTL Commercial Limited 18,82,700 6.96
BTL Impex (I) Limited 5,72,500 2.12
BTL Industries Limited 16,37,000 6.05
BTL Sales Limited 25,92,700 9.59
North Delhi Credit & Investments Limited 2,47,000 0.91
Madhavtech India (P) Limited 8,83,000 3.27
Neelabh Engineers (P) Limited 4,59,000 1.70
Parvati Finlease Limited 9,25,000 3.42
II 1,76,23,700 65.18
Individuals:
Mr. Lalit Bansal 1,97,500 0.73
Mr. N. C. Bansal 1,72,500 0.64
Mr. Bhishan Bansal 25,000 0.09
Mr. Suresh Bansal 35,000 0.13
Ms. Sanajna Bansal 5,000 0.02
III 4,35,000 1.61
Sub-total (a) (I+II+III) 1,82,40,300 67.46
Others
Corporate Bodies 76,06,000 28.13
Individuals 11,78,200 4.36
HUF 14,000 0.05
Sub-total (b) 87,98,200 32.54
Total 2,70,38,500 100.00
18. Pre and post Issue shareholding pattern of the Company is as follows:
Pre Issue Post-Issue
Category No. of shares % No. of shares %
Promoters 1,81,600 0.67 1,81,600 0.36
Promoter Group 1,80,58,700 66.79 2,23,45,900 44.79
Others 87,98,200 32.54 1,33,69,640 26.80
Public 0 0.00 1,39,98,560 28.06
TOTAL 2,70,38,500 100.00 4,98,95,700 100.00
19. There have been no transactions by the Promoters, their relatives and associates, and the Directors of
the Company, directly or indirectly, in the Equity Shares of the Company during the last 6 months.
20. The Company has not granted any options or shares of the Company under any scheme of Employee
Stock Options or Employee Stock Purchase to its employees.
22
21. The Company does not have any proposal, intention, negotiation or consideration to alter the capital
structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a
preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities
within a period of six months from the date of opening of the present Issue or from the date the
application moneys are refunded on account of failure of the Issue.
22. However, if business needs of the Company so require, the Company may alter the capital structure by
way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or
issue of bonus or rights or public issue of shares or any other securities during the period of six months
from the date of listing of the Equity Shares issued under the Red Herring Prospectus or from the date
the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all
the approvals which may be required for such alteration.
23. At any given time, there shall be only one denomination of the Equity Shares. The Company shall
comply with such disclosure and accounting norms as may be specified by the SEBI from time to time.
25. The promoters, directors and Book Running Lead Managers to the Issue have not paid any amount,
whether direct or indirect and in cash or kind, in the nature of discount, commission, allowance or
otherwise to any person.
23
OBJECTS OF THE ISSUE
The object of the issue is to raise funds for the proposed expansion plans of the Company. The object is also to
create a public trading market for its shares by listing them on the Stock Exchanges, which will enhance our
visibility and brand name and enable us to use our equity shares for strategic growth opportunites. The net
proceeds from the Issue after deducting underwriting Commission and management fees, brokerage; fees to
various advisors and all other Issue related expenses from the Issue of shares are intended to be deployed in
setting up the Project in the following manner:
A. Owned Model:
(i) Funding the capital expenditure required for the expansion;
(ii) To meet working capital requirement;
B. Lease Model:
Leased Premises including SRS Value Bazaars/ Food Courts/ Restaurants/Multiplexes/cinemas or any
combination thereof:
(i) To meet capital expenditure
(ii) To meet working capital requirement;
C. Franchise Model
(i) To meet expenditure towards human resource training, software development etc.
The other object of the Issue is to get the shares listed on the Stock Exchanges and to provide liquidity to our
existing investors.
The main object clause and objects incidental or ancillary to the main objects clause of the Memorandum of
Association of the Company enables the Company to undertake the existing activities and the activities for
which funds are being raised by the Company, through the Issue.
The Cost of Project and Funds Requirement as appraised by UTI Bank Limited is as follows:
Disclaimer Clause: This Project Appraisal Report (Report) contains proprietary and confidential information regarding
SRS Entertainment Limited (SRS). The Report has been prepared by UTI Bank Limited (UTIB) based on the information
provided by SRS and the published information available.
The financial projections in the Report have been prepared for the limited purpose of circulation among the
Banks/FIs/Institutions who have shown their interest in financing the project. The financial projections represent, to the best
of knowledge and judgment, SRS’s expected financial position, results of operations and cash flow situation for the
projection period. These projections are subject to changes in economic conditions, legislation and other force-majeure
circumstances.
UTIB has not independently verified all of the information contained in this Report and the work performed by UTIB is not
in the nature of audit or due-diligence. Neither UTIB, nor any of the directors, employees or advisors make any expressed or
implied representation or warranty and no responsibility or liability is accepted by any of them with respect to the estimates
or forecasts set forth in this Report or the underlying assumptions on which they are based or any credit or investment
decision taken on the basis of this Report.
This Report is furnished on strictly confidential basis and is for the sole use of the person / company to whom it is addressed.
Neither this Report, nor the information contained herein, may be reproduced or passed to any person or used for any other
purpose other than stated above.
(Rupees in Lacs)
A Project Cost
I Capital Expenditure
Sr. No. Model Cost per location No. of locations Amount
1. Ownership 2558.00 3 7674.00
2. Lease 638.00 4 2552.00
3. Franchise - 5 100.00
24
10326.00
II Working capital requirement 906.30
III Contingencies 297.70
Sub total (a) 11530.00
A. Project Cost
I. Capital Expenditure
1. Ownership Model
The Company proposes to buy land and construct a structure on it for Multiplexes, which would also include
Cineplexes, shopping mall, lobby etc. The land is being located at a prime location which is convenient to the
customers and has a sufficient parking place. The structure would be built along with the interior designing,
furniture and fixtures and equipment which would be having aesthetic looks and design.
SRSEL proposes to own 3 (three) of such Multiplexes. Accordingly, total cost of construction of the three
owned Multiplexes is estimated to be:
(Rupees in Lacs)
Sr. No. Cost Head Cost per facility Cost of 3 facilities
1. Property 1920.00 5760.00
2. Theatres - SRS Cinemas 306.00 918.00
3. SRS Value Bazaar 208.00 624.00
4. 7 Dayz restaurants 124.00 372.00
Total 2,558.00 7674.00
2. Lease Model
The total cost estimated by SRSEL to implement the leased model at the proposed locations is as under:
(Rupees in Lacs)
Sr. No. Cost Head Cost per facility Cost of 4 facilities
1. Theatres - SRS Cinemas 306 1224
2. SRS Value Bazaar 208 832
3. 7 Dayz Restaurants 124 496
Total 638 2552
3. Franchise Model
The total cost for implementing the franchise model is estimated as Rs.100 Lacs. This would be utilised towards
software development costs and providing manpower training.
(Rupees in Lacs)
Table Page Amount No. of Total
Sr. Referenc No. per locations
no. Cost Head e location
Installation of software, radio O 60 19.60 5 98.00
connectivity and training &
1 development
2 Miscellaneous Expenses .40 5 2.00
Total Cost 20.00 5 100.00
The owned Multiplexes would contribute a major head for the Project cost and the same for each proposed site,
would be as follows:
25
Owned Multiplexes
(Rupees in Lacs)
Table Page Amount No. of Total
Reference Nos. per locations
Cost Head location
1 Land 320.00 3 960.00
Building including common A 52 972.90 3 2918.70
2 Interiors
3 Plant & Machinery B 52 336.00 3 1008.00
4 Air Conditioning C 53 125.00 3 375.00
5 Lifts & Escalators G 55 93.10 3 279.30
6 Architect Fees K/1 57 25.00 3 75.00
Misc. Expenses 3% of Item No. 48.00 3 144.00
7 (2, 3,4 & 5)
Total Cost 1,920.00 3 5760.00
26
Expenses
Total Cost 208.00 3 4 7 1456.00
Owned 208.00 3 - 3 624.00
Lease 208.00 - 4 4 832.00
(Rupees in Lacs)
Table Page No. of locations Total
Cost Head Reference No. Amount Owned Lease Location Amount
Interior, Furniture J/1 56 41.25 3 4 7 288.75
and Including
1 electrical Fixture
2 Air conditioning F 54 6.80 3 4 7 47.60
Computer, N 59 20.00 3 4 7 140.00
monitors &
3 Palazama
4 Kitchen Equipment J/2 56 41.20 3 4 7 288.40
Seating Chairs & J/3 56 3.00 3 4 7 21.00
5 Tables
Civil Work J/4 56 9.75 3 4 7 68.25
including Fire
Fighting &
6 counters
7 Architect Fees K/4 57 2.00 3 4 7 14.00
Total Cost 124.00 3 4 7 868.00
Owned 124.00 3 - 3 372.00
Lease 124.00 - 4 4 496.00
III. Contingencies
The company estimates contingency of Rs. 297.70 Lacs which approx. is 3% of the total capital cost of the
Project taking in view of escalation of the cost of project.
27
B. Issue Expenses
Issue expenses to be met out of the funds raised from the Issue is estimated at Rs.470 Lacs. For details on Issue
expenses please refer to “ General Information – Issue Expenses” on page no. 122 of the Draft Red Herring
Prospectus.
Appraisal
The Project has been appraised by UTI Bank Limited for meeting the debt requirement for the Project.
Means of Finance
(Rupees in Lacs)
Sr. No. Means Project Cost
a. Equity:
i. Preferential Allotment (1) 2499.99
ii. IPO Proceeds [•]
b. Debt (2) 2000.00
c. Internal Accruals (3) Balance
Total [(a) + (b) + (c)] 12000.00
(1)
Preferential allotment refers to the preferential allotment of 1,00,00,000 Equity Shares of Rs. 10/- each at
Rs.20/- each made by the Company on August 12, 2005. For details on the allotment please refer to the section
"Capital Structure - Share Capital History of the Company " on page no. 11 and "Legal Information - Material
Developments" on page no. 111 of the Draft Red Herring Prospectus.
The amount of Rs.2000 Lacs so raised have been deployed in the Project. For details on deployment of the same
please refer to the section titled “Introduction - Objects of the Issue - Funds Deployed” on page no. 29 of the
Draft Red Herring Prospectus.
(2)
SRSEL has received the in-principal approval for the debt component of Rs.2000 Lacs from UTI Bank
Limited.
(3)
If funds raised from this IPO are in short of our requirement to meet the proposed expansion programme, such
amount will be met through the internal accruals of the Company.
In the event that funds raised from the IPO are in excess of our stated requirement, the same will be used as
follows:
a) Further expansion plans of the Company over and above the Project,
b) Branding of our SRS Multiplex, SRS Value Bazaars and SRS Cinemas to gain mind-share of customers and
create customer loyalty, and
c) Advertising and promotional campaigns to earn local market-share and improve profitability
28
Jaipur - - - - - - - Mar’ 07 Mar’ 07
Funds Deployed
The Company has deployed Rs.1997.03 Lacs towards Project cost, the break-up of which, as certified by T. K.
Gupta and Associates, Chartered Accounts dated August 20, 2005 is provided below:
(Rupees in Lacs)
Sr. No. Particulars Amount
1 Advance to Era Infrastructure Limited 840.00
2 Advance to Ayushi Steel Co. (P) Limited 400.00
3 Advance to J V Steel Traders 75.00
4 Advance to Kanika Strips (P) Limited 253.00
5 Advance to Mani Mahesh Metals (P) Limited 40.00
6 Advance to SRS Buildcon (P) Limited 250.00
7 Advance to Tarang Buildcon P Limited 100.00
8 Omaxe Construction Limited 1.51
9 Tulip Info Sevices (P) Limited 2.51
10 P R infrastructure Limited 1.51
11 Issue related expenses
33.50
(Advance to Issue management team, RoC etc.)
Total 1997.03
29
including deposits with banks for the necessary duration. Such investments would be in accordance with the
investment policies approved by the Board of Directors from time to time.
30
BASIS OF ISSUE PRICE
Qualitative Factors
The Company is strategically positioned to leverage its strength in the domestic market, due to its competitive
strengths that include the following:
5. Focus:
The Company has focused, developed and maintained a 'family outing' approach while setting up SRS
Multiplex. There is something of entertainment for everyone. E.g., 3 screen Cineplex for the entire
family to watch movies together, Dazzel Resto Bar for the young-at-heart, mehndi corner for ladies,
Little Freedom for kids etc. This approach not only gels with the Company’s concept of entertainment
but also is a mechanism to add multiple revenue streams and de-risk the business model.
6. Selection of brands:
Carrying the Company's focus forward, the selection of brands operating out of SRSM has been done
in a way so as to appeal the middle and upper middle class population. There is a kids zone for
children, for men there is a one big mega store named Planet Fashion that houses brands like Louis
Philippe, Van Heusen, Allen Solly and Oswals, women focused brands like Sangini Jewelers, Shringar
Place, Nari Collection and Silver and Chant and many brands that enjoy popularity among all genders
and age groups like Rayban, Archies, Titan and Music World. For the ones with a sensitive taste bud,
there is choice of McDonalds, Yellow Chilly, Pizza Hut, Dazzle Bar, 7 Dayz, Cowboyz and Khana
Karkhana.
7. Marketing strength:
The Company believes that SRS Multiplex has been accepted in Faridabad. It enjoys strong brand
recall due to marketing through newspaper ads, radio spots, direct mailers and the use of promotions
like paid previews, contests, and blood donation campaigns. Premieres of films are also used as an
important marketing tool.
Quantitative Factors
SRSEL was incorporated August 29, 2000, but the commercial operations of its first Multiplex, SRS Multiplex
commenced on November 12, 2004. Therefore, computing ratios related to profitability, e.g. EPS and RoNW,
are not relevant from F.Y 2000 to F.Y 2004.
1. Financial Performance
(Rupees in Lacs)
Particulars Quarter ending For the year ended March 31,
June 30, 2005 2005 * 2004 2003
Sales 601.58 765.36 0.00 1.13
31
Profit after Tax 231.27 219.09 0.00 0.04
Equity Capital 1848.04 1739.60 1250.00 541.70
Reserves and Surplus 804.26 572.98 0.04 0.04
* The period for which the revenue earned is for 140 days from 12th November 2004 to 31st March 2005
There are no comparable companies that operate in entertainment cum retail sector and the real estate sector
similar to that of SRSEL and currently listed in India. Therefore, comparison of industry P/E is not possible.
5. Minimum Return on Total Net Worth post-Issue to maintain pre-Issue EPS is [•]
BVPS
As at Quarter ended June 30, 2005 15.47
As at March 31, 2005 13.50
After the Issue [•]
There are no companies which are strictly comparable with SRSEL. However, following companies have
been considered for the purpose of comparison of ratios:
Parameter Adlabs Films Shoppers' Stop
(Figures as of March 31, 2004)
EPS (Rs./unit) 7.88 2.19
Book Value (Rs./unit) 48.76 14.31
Return on Networth (%) 12.39 14.30
P/E Multiple** 57.70 352.80
**Based on September 06, 2005 closing prices as available on Capitaline Plus
9. Issue Price is [•] times the Issue Price at the lower end of the price band and [•] times at the higher end
of the price band.
The final price would be determined on the basis of the demand from the investors.
32
TAX BENEFITS
To
The Board of Director
SRS Entertainment Limited
E-18, Nehru Ground
NIT Faridabad
Dear Sir,
As required, we are giving here under a statement of possible Tax benefits available to M/s SRS Entertainment
Limited (formerly known as SRS Commercial Limited) and its shareholders.
We hereby report that the enclosed annexure states the possible tax benefits available to M/s SRS Entertainment
Limited (formerly Known as SRS Commercial Limited) (the "Company”) and its shareholders under the current
direct tax laws. Several of these benefits are dependent on the Company or its shareholders fulfilling the
conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to
derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the
Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed herein are
not exhaustive.
This statement is only intended to provide general information to the investors and is neither designed nor
intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences
and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the
specific tax implications arising out of their participation in the issue.
The contents of this annexure are based on information, explanations and representations obtained from the
Company and on the basis of our understanding of the business activities and operations of the Company and
the interpretation of current tax laws.
T. K. GUPTA
(PARTNER)
33
Benefits available to the Company Under the Income Tax Act, 1961.
1. Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in
section 115-O of the Act is exempt from income tax in the hands of share holders.
2. As per the provisions of section 10(38), long term capital gain arising to the share holders from the
sale/transfer of long term capital assets being an Equity Shares in any company or unit of an equity oriented
mutual fund ( i.e. a capital assets held for the period of 12 months or more) entered into a recognized stock
exchange in India and being such transaction, which chargeable to security transaction tax is exempt from
tax
3. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No.2) Act, 2004,
transactions for purchase and sale of the securities in the recognized stock exchange by the shareholder,
shall be chargeable to securities transaction tax. As per the said provisions, any delivery based purchase and
sale of equity share in a company through the recognized stock exchange is liable to securities transaction
tax @ 0.075% of the value payable by both buyer and seller (0.1% with effect from 1 June, 2005 as per the
Finance Act, 2005). The non-delivery based sale transactions are liable to tax @ 0.015% of the value
payable by the seller (0.02% with effect from 1 June, 2005 as per the Finance Act, 2005).
4. In terms of section 88E of the Act, the securities transaction tax paid by the share holder in respect of
taxable securities transaction entered into in the course of business would be eligible for rebate from the
amount of income-tax on the income chargeable under the head ’Profit and gains under Business or
profession’ arising from taxable securities transactions as such no deduction in respect amount paid on
account of securities transaction tax will be allowed in computing the income chargeable to tax as capital
gain.
5. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the
Company would be entitled to exemption from tax on gains arising from transfer of the long term capital
asset (not covered by section 10 (38) if such capital gain is invested in any of the long-term specified assets
within a period of 6 months after the date of such transfer for a period of at least 3 years, in the manner
prescribed in the said section. Where the long-term specified asset is transferred or converted into money at
any time within a period of three years from the date of its acquisition, the amount of capital gains
exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-
term specified asset is transferred or converted into money.
6. Under section 54ED of the Act and subject to the conditions and to the extent specified therein, long-term
capital gains (in cases not covered under section 10(38) of the Act) on the transfer of investment in shares
will be exempt from capital gains tax if the capital gains are invested in shares of an Indian Company
forming part of an eligible public issue, within a period of 6 months after the date of such transfer and held
for a period of at least one year. Eligible public issue means issue of equity shares which satisfies the
following conditions, namely -
a) the issue is made by a public company formed and registered in India;
b) the shares forming part of the issue are offered for subscription to the public;
There is a legal uncertainty over whether the benefit under this Section can be extended to shares forming
part of the offer for sale by the selling shareholders.
7. As per the provisions of section 111 A, Short Term capital gains arising from the transfer of Equity Shares
in any company through a recognized stock exchange or from the sale of units of equity-oriented mutual
fund shall be subject to tax @ 10% (plus applicable service tax & education cess) provided such transaction
is subject to Securities Transaction Tax.
8. Under Section 112(1)(b) of the Act and other relevant provision of the Act, long-term capital gains [not
covered under section 10(38) arising on transfer of share in the company, if share are held for a period
exceeding 12 months, shall be taxed at a rate 20% (plus applicable surcharge and education cess) after
indexation as provided in the proviso to the section 48 or at 10% (plus applicable surcharge and education
cess) (without indexation), at the option of share holder.
Benefits available to the Members of the company Under the Income Tax Act, 1961.
34
1. Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in
section 115-O of the Act is exempt from income tax in the hands of share holders.
2. As per the provisions of section 10(38), long term capital gain arising to the share holders from the
sale/transfer of long term capital assets being an Equity Shares in any company or unit of an equity oriented
mutual fund ( i.e. a capital assets held for the period of 12 months or more) entered into a recognized stock
exchange in India and being such transaction, which chargeable to security transaction tax is exempt from
tax
3. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No.2) Act, 2004,
transactions for purchase and sale of the securities in the recognized stock exchange by the shareholder,
shall be chargeable to securities transaction tax. As per the said provisions, any delivery based purchase and
sale of equity share in a company through the recognized stock exchange is liable to securities transaction
tax @ 0.075% of the value payable by both buyer and seller (0.1% with effect from 1 June, 2005 as per the
Finance Act, 2005). The non-delivery based sale transactions are liable to tax @ 0.015% of the value
payable by the seller (0.02% with effect from 1 June, 2005 as per the Finance Act, 2005).
4. In terms of section 88E of the Act, the securities transaction tax paid by the share holder in respect of
taxable securities transaction entered into in the course of business would be eligible for rebate from the
amount of income-tax on the income chargeable under the head ’Profit and gains under Business or
profession’ arising from taxable securities transactions as such no deduction in respect amount paid on
account of securities transaction tax will be allowed in computing the income chargeable to tax as capital
gain.
5. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the
Company would be entitled to exemption from tax on gains arising from transfer of the long term capital
asset (not covered by section 10 (38) if such capital gain is invested in any of the long-term specified assets
within a period of 6 months after the date of such transfer for a period of at least 3 years, in the manner
prescribed in the said section. Where the long-term specified asset is transferred or converted into money at
any time within a period of three years from the date of its acquisition, the amount of capital gains
exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-
term specified asset is transferred or converted into money.
6. Under section 54ED of the Act and subject to the conditions and to the extent specified therein, long-term
capital gains (in cases not covered under section 10(38) of the Act) on the transfer of investment in shares
will be exempt from capital gains tax if the capital gains are invested in shares of an Indian Company
forming part of an eligible public issue, within a period of 6 months after the date of such transfer and held
for a period of at least one year. Eligible public issue means issue of equity shares which satisfies the
following conditions, namely -
a) the issue is made by a public company formed and registered in India;
b) the shares forming part of the issue are offered for subscription to the public;
There is a legal uncertainty over whether the benefit under this Section can be extended to shares forming
part of the offer for sale by the selling shareholders.
7. Under Section 54F of the Act, where in case of individual or HUF capital gain arising from transfer of long
term capital assets [other than a residential house and those exempt u/s10(38) ] then such capital gain,
subject to the conditions to the extent specified there in, will be exempt if the net sales consideration from
such transfer is utilized for purchase of residential house property with in a period of one year before or two
year after the date on which transfer took place or for construction of residential house property with in
period of three years after the date of transfer.
8. As per the provisions of section 111 A, Short Term capital gains arising from the transfer of Equity Shares
in any company through a recognized stock exchange or from the sale of units of equity-oriented mutual
fund shall be subject to tax @ 10% (plus applicable service tax & education cess) provided such transaction
is subject to Securities Transaction Tax.
9. Under Section 112(1)(b) of the Act and other relevant provision of the Act, long-term capital gains [not
covered under section 10(38) arising on transfer of share in the company, if share are held for a period
exceeding 12 months, shall be taxed at a rate 20% (plus applicable surcharge and education cess) after
35
indexation as provided in the proviso to the section 48 or at 10% (plus applicable surcharge and education
cess) (without indexation), at the option of share holder.
10. In accordance with the provisions of Section 10(32) of the Act, any income of minor children clubbed with
the total income of the parent under Section 64(1A) of the Act will be exempt from tax to the extent of Rs.
1,500 per minor child per year.
1. In case of a shareholder being a Mutual fund, as per the provisions of Section 10(23D) of the Act, any
income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or
Regulations made there under, Mutual Funds set up by public sector banks or public financial institutions
and Mutual Funds registered with SEBI / regulation thereunder or authorised by the Reserve Bank of India,
subject to the conditions as the Central Government may by notification in the Official Gazette specify in
this behalf, would be exempt from Income Tax on all their income, including income from investment in
the shares of the company.
1. In case of a shareholder being a Venture Capital Company / Fund, as per the provisions of Section
10(23FB) of the Act, any income of Venture Capital Companies / Funds registered with the Securities and
Exchange Board of India, would exempt from Income Tax, on all their income, including dividend from
and income from sale of shares of the company, subject to the conditions specified.
1. As per the prevailing provisions of the above Act, no Wealth Tax shall be levied on value of shares of the
Company.
1. Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares
will not attract gift tax.
Note:
1. All the above benefits are as per the current tax laws as amended by the Finance Act, 2005.
2. All the above benefits are as per the current tax law and will be available only to the sole / first named
holder in case the shares are held by joint holders.
3. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further
subject to any benefits available under the double taxation avoidance agreements, if any, between India and
the country in which the non-resident has fiscal domicile.
4. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax
advisor with respect to specific tax consequences of his / her participation in the scheme. However, a
shareholder is advised to consider in his / her / its own case. The tax implications of an investment in the
Equity Shares, particularly in view of the fact that certain recently enacted legislations may not have direct
legal precedent or may have a different interpretation on the benefits which an investor can avail.
36
ABOUT SRS ENTERTAINMENT LIMITED
INDUSTRY OVERVIEW
Introduction
The Company lays great emphasis on growth of the retail sector to determine its future growth pattern.
Multiplexes today reflect the emergence of organised Indian retail industry. They have also emerged as the
fastest growing niche in the Indian media sector. Their rise reflects:
Metamorphosis of Indian retail (rise of organised retail, malls etc)
Increasing disposable incomes
Rising aspirations of the urban consumer and a change in consumer behaviour
which has altered the spending pattern of the urban consumer.
Going by this trend, the business model of SRSEL is a perfect blend of the retail and entertainment sectors. It
includes development and management of Multiplex, which includes Cineplex, shopping malls, coffee lounge,
food court, health club etc.
The estimated consumption spend in India has doubled from US$250bn to US$500bn in the last 5 years, based
on the changing demographics. In particular, the sharp rise in the number of ‘upper end’ and ‘rich’ households
(as per the recent NCAER survey) is indicative of the potential consumption spend. People are richer, younger
and more aspirational than ever before, supporting the growth in the retail and entertainment sectors.
Retail
Overview
Retailing in India has traditionally been the domain of the unorganised sector. The retail landscape is dominated
by the local setups like kirana shops, family run general stores and small local merchandise retailers. In fact
India has 120 lac retail outlets, the world’s largest retail network. The retail sector generates 15% of the total
employment in the country and is the largest contributor to India’s GDP.
Current trends
The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new
formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls
begun their journey from metros and are now turning towards second-rung cities introducing the Indian
consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market,
India is being seen as a potential goldmine.
4. Scalable and profitable retail models are well established for most of the categories
37
Last few years have seen development of the scalable and profitable retail models across categories. Large
Indian corporate groups like Tata, , Raheja, , , Piramal Group, Pantaloon have taken big leap in setting up
the retail chain business. Various other renowned groups have expressed serious interest in investing in
retailing. In addition, foreign investors and private equity players are also firming up plans to identify
investment opportunities in the Indian retail sector. Investments into the sector are estimated at Rs. 2,000-
2,500 crore in the next 2-3 years, and over Rs. 20,000 crore by the end of 2010, as reported by KSA
Technopak. Successful development of value based concepts such as Big Bazaar, Giant and Vishal Mega
Mart as well as development of retail space in smaller cities and towns will drive organised retail into the
next level of cities. Small towns with a population of 5-10 lacs are witnessing a defined increase in
disposable income coupled with high aspirational levels leading to enhanced spending on consumer goods
along with lesser aversion to credit. Thus, the ‘retail boom’, 85% of which has so far been concentrated in
the metros is beginning to percolate down to smaller cities and towns. The contribution of these tier-II cities
to total organised retailing sales is expected to grow to 20-25%.
38
A.T. Kearney has estimated India's total retail market at US $202.6 billion which is expected to grow at a
compounded 30% over the next five years.
• In 2003-04, organised retailing, which has an annual growth rate of 8.5%, swept past the Rs.200 billion
mark (US $4.5 billion), a figure that appears quite small if one were to compare the extent of the total
market.
• Organised retail, at present comprises merely 2% of the total market in India. This means that the
untapped segment amounts to a whopping Rs.9,800 billion (approx. US $225 billion).
• The share of modern retail is likely to grow from its current 2% to 15-20% over the next decade,
analysts feel.
According to a study conducted by KSA Technopak, a retail consultancy firm, major part of the investment over
the next two years is likely to go into development of 93 malls in 14 major cities. Of the 93 malls, about 39 will
be launched in 2005 and the remaining 54 in 2006. By 2010, about 300 malls are estimated to come up. Also,
development of malls is likely to spread across 60 cities by the end of the decade.
The National Capital region (NCR) comprising of New Delhi, Gurgaon, Noida and Faridabad will see the
maximum development with 14 retail malls with a cumulative space of 3.35 million square feet expected to be
operational in 2005. This is on account of the high spending power traditionally demonstrated in this region.
They are generally characterised by the following traits compared to the metros:
lower population
less developed physical and civil infrastructure
less cosmopolitan in nature i.e. higher levels of heterogeneity in the demography
lower penetration of organised business
lower costs of living
Popular examples of Tier-II cities are Ahmedabad, Baroda, Indore, Nagpur, Agra, Lucknow, Chandigarh, etc.
More recently, Tier-II cities have attracted the attention of the booming I.T. and I.T.E.S. industry that are
rapidly opening offices and facilities in these cities on account of their unique advantages like availability of
skilled manpower at lower costs, large land area available at attractive rates and lower costs of operation.
Thus, the economic benefits of the technology boom in India is spreading beyond the traditional hubs and is
moving into newer cities. This has resulted in the youth population in these areas having higher income and
consequently higher discretionary spending power. Coupled with the increasing exposure to globalisation and
the aspirational needs to mimic the trends of their metropolitan brethren, it has led to the development of
potentially lucrative pockets which have been so far under-developed.
The Tier-II cities are also characterised by the existence of industries unique to each location. For example, the
sugar mills of Agra, the diamond merchants of Surat, the cloth traders of Ahmedabad, and so on. These
industries have yielded several success stories over the decades and have led to the development of several high
income families in each city. So far, these consumers have had very little opportunity to experience the modern
amenities offered by the upscale retail and entertainment avenues in the metros.
39
Entertainment
Overview
Multiplexes, a new concept in movie exhibition in India has substantial revenue and entertainment potential. A
multiplex embodies the luxuries, amenities of the modern day theatre; multiple screen choices, state-of-art
technology, ergonomic seating, eye-catching architecture and top of the line cafes and food courts. Currently
there are about 50 - 55 multiplexes operational in India with prominent ones being in Mumbai, Pune, Delhi, and
Bangalore.
Current trends
One of the advantages of a multiplex is that a patron, has multiple movie options at any given point in time. This
allows a movie patron to watch another movie, if the tickets for the movie of his choice are not immediately
available. It also allows the movie patron to revisit the theater complex at a greater frequency as compared to a
single screen theater, Multiplexes generally offer international quality audio and video equipment apart from
quality seating and ambience, thus providing a patron with a high quality viewer ship experience.
40
Films are a key destination for entertainment. Exhibition is the last mile in the film value chain where the patron
interacts with the film. The poor condition of most single screens has turned away family audiences.
Multiplexes offer the quality ambience and service levels. Although multiplex tickets are usually priced at a
premium to the ticket prices of single screens, they continue to attract patrons (both individuals and families) on
account of the better quality of service and ambience that they provide.
e) Growing corporatisation:
Over the last 5 years, the Film Industry is gradually getting corporatised. Several production houses have also
raised capital from the equity markets. This is resulting in a growth in the number of films produced by top
quality producers / directors. A lot of niche / innovative films are also being produced by such production
houses. All this is directly beneficial to Multiplexes.
Though distribution and exhibition are the last links in the chain bringing filmed entertainment to the masses,
they are of paramount importance, as the success of the film
depends on successful distribution and exhibition. In India the
current infrastructure for Film exhibition is inadequate to
meet existing and potential demand. For a nation with 5,000
million admissions every year (roughly a weekly entry of
about 100 million), there are only around 12,900 theatres
spread over the country. Further to this, the theatrical sales
constitute dominant source of revenues for the film industry
and represent box office ticket sales to the viewers at the
cinema halls. (Source FICCI Report)
41
International trends
So far various international markets are highly under screened. Looking at the present structure, The US has
about 9000 persons per screen, Europe around 27000 people per screen, Latin America around 69000 and Asia
around 105000 people per screen. This shows that Indian Multiplex market is extremely under screened. This
survey also states that factors like location, type of theatre, dining and shopping are most important features in
selecting a theatre and entertainment joint.
Favourable Demographics
Some key finding of the study conducted to study the demographics of the Indian entertainment consumer.
• Maximum film-watchers fall in age of 15 years to 55 years.
• 49% of the teenagers are frequent movies goers
• Due to the population boom of 1980’s and 1990’s more and more people are expected to come in the
category of 13+ and 18+. Thus market for frequent movie goers is expected to increase.
• Indian entertainment market is heavily under screened as compared to the US and European markets.
Actually, one of the main reasons for the depressed industry scenario in developed countries is large
number of screens per million of population.
• India is primarily at the single screen theatre stage with few multiple screen cinema halls existing in metro
cities. Increase in number of screens in India due to advent of multiple screen cinemas and multiplexes will
be beneficial for the industry as pointed out earlier with overseas examples illustrating that cinema
attendance goes up with multiplexes.
• An average Indian spends about 30% of his annual income on family entertainment (activities housed in
family entertainment centers for e.g. multiplexes and megaplexes) (source: study by KSA Technopak)
Government Policies
Entertainment tax is a state subject in India and hence is levied on cinemas, theatres and other forms of
entertainment. Quite a few state governments such as Maharashtra, Gujarat, West Bengal, Madhya Pradesh and
Uttar Pradesh have announced an entertainment tax holiday to new mulitplexes being set up in their respective
states. The Governments of Maharashtra and Gujarat have been amongst the first to come out with such policies,
which envisage exemption from entertainment tax – 100% for first 3 years and 75 per cent for the balance two
years for multiplex operators. At the Central level, the Union government has given section 80 I B benefits of
50 per cent income tax deduction to multiplexes being set up in non-metro cities.
Entertainment Tax Holiday (ETH) is definitely the single most significant factor in the commercial feasibility of
multiplexes. However the success of multiplexes in Delhi (where this holiday is not available) point out to the
fact that a good operational exhibition facility with premium pricing can still attract audience. The ETH would
improve the project payback period and also enable multiplex owners to invest in other entertainment facilities,
which would generate revenues to compensate when the rebate expires after 5 years
42
• 50% for the 2nd year
• 25% in the 3rd year
Gujarat 50% Tax Exemption for 3 Years and 75% rebate
for following two years to multiplexes with
more than 4 screens and capacity > 1200
seats.
Real Estate
Driven by the positive growth in industry, real estate in India is booming. The development of real estate
focusses on two primary areas: retail and residential.
The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail
markets and predicted an impressive 20% growth rate for the organised retail segment by 2010. The organised
segment is expected to grow from a mere 2% to 20% by the end of the decade, it said.
Investment in the retail real estate segment yields 13-16% return which is quite high when compared with the
returns from the residential and office segments. There are, of course, exceptions such as the National Capital
Region, where the prices of residential property have appreciated by 20 to 30% over the last one year.
According to a survey by real estate consulting firm CB Richard Ellis (CBRE), office space in Mumbai is more
expensive than Manhattan. The CBRE survey, called Global Market Rents, has ranked Mumbai as the world's
15th most expensive place, Manhattan, the 20th, while Delhi stands at the 32nd position.
The cost of occupation in Mumbai is $56.83 per square feet per annum, while in Manhattan, it is $52.04 per sq ft
and in Delhi, it is $40.62. Technically, occupation cost represents rent plus local taxes and service charges.
Over 300 malls with a combined retail space of 2.5 crore square feet are sprouting across the country at an
investment of Rs 12,500 crore, eight times of Rs 1,500 crore invested till last year.
According to an ICICI study, malls are estimated to become a Rs.38,447 crore ($8.3 billion) sector by 2010.
As the competition in the market is intense, builders are going out of their way to be different. Specialised
malls have become the order of the day. Gurgaon, on the suburbs of New Delhi will soon have an auto mall
and jewellery mart, while Bangalore is about to get an exclusive furniture mall.
Similarly in the home segment, which is driven by the availability of easy home finance, most builders are
trying to woo investors with interesting features, each more tempting than the other.
Closed-circuit television and earthquake proofing are expected as standard features in most upmarket
blocks. Evershine Builders, for instance, is providing a range of facilities from modular kitchens to piped
gas and Internet connections.
43
BUSINESS OVERVIEW
The Company's business model is a “hybrid” model, which involves a mix of entertainment cum retailing and
real estate. The Company’s maiden project, SRS Multiplex, is a unique complex, combining a 3 screen Cineplex
with most facilities of a modern shopping mall.
SRS Multiplex commenced operations on November 12, 2004 and has been profitable since commencement. It
is located on NH-2, Delhi-Agra Road at Faridabad, just 25 kms away from Connaught Place in New Delhi. The
complex is spread over 23,000 sq. ft. with a total built up area of 1,22,000 approx sq. ft., of which total
commercial leasable area expands to 33,358.35 sq. ft. and 3.5 acres of parking space to accommodate over 2,500
vehicles at a time. The location is significant as it has the advantage of being accessible to the population of
Faridabad as well as being within reach of the affluent population of New Delhi. The complex being situated on
the main Delhi-Agra highway has the potential to attract tourists who visit the Taj Mahal and Mathura.
SRS Multiplex was conceived to provide entertainment experience combining high-tech architecture,
technology and world class amenities to provide a truly global experience to visitors. The Company has
incorporated several new design concepts and ideas to ensure that SRS Multiplex offers an experience that is not
provided anywhere else in India. The Company contracted the services of Gautam & Gautam Associates for
conceptualising the architecture of the complex while the task of construction was undertaken by Era
Construction India Limited
Some of the major architectural and design features that highlight SRSM and renders it the remarkableness are:
The average capacity utilization of the Cineplex is approximately 40% and ticket prices range from Rs.75/- to
Rs.150/- per ticket. The total shopping area leased out stands at 32,936.41 sq. ft.. Of which 13,665.47 sq. ft. area
has been sold and leased back by the Company.
Mini Theatre
Mini Theater has capacity of 72 luxury seats. This provides the facility for corporate members to arrange
conferences, presentations, annual general meetings, product launches, training program, tele conferences
etc.
44
Yellow Chilly
A premier restaurant conceptualised by one of the leading chef of India Mr. Sanjeev Kapoor, who is also
the host of a popular teleserial Khanna Khazana aired on Zee TV, has set up a chain of Yellow Chilly
restaurants. The restaurant has made a mark as super specialty curtsy for food lovers.
Music World
A grand collection of all types of audio and video cassettes, CDs and DVDs of all various classical, film,
non film, folks etc. are available. The chain of music world was setup by famous R.P.G. Group owner of
HMV Brand has drizzling environment and unique collection.
World of Titan
India’s Brand Icon in the field of watches, with its brands has presence in SRSM.
Airtel
A full service outlet providing the sale of all types of Nokia mobile phones and service to the prepaid and
postpaid customers of Airtel.
Rayban
A leading brand in the spectacles market has its presence at the ground level.
Dukes
A varied collection of t-shirts, trousers, shirts, shorts, jeans (denim and non denim), sweaters, pull overs,
track suits, jackets etc. for all age groups and weather.
S F Jeans
A brand owned by the Madura Garments having the collections of shirts, t-shirts, jeans, shorts and other
denim collections.
Sangini
An exclusive outlet of diamond jewellery that caters to the sophisticated audience.
Nokia
This leading mobile manufacturer has its presence in SRSM with its wide range of mobile phones and
accessories.
Mc-Donald
The leading international chain of fast food restaurants. It has seating capacity for more than 60 people.
Cream Bell
This is an exclusive ice cream outlet.
There are various other brands/ outlets having their presence at SRSM and attract varied audiences. Some of
them are:
Sanjh Savera
U.S. Garments
Orchid Blues
AMPm Kitchen Corner
Walk and Style
Silver and Chants
Pizza Hut
45
Pizza Hut is a brand well known among the gourmet. They have a chain of Pizza Hut restaurants around the
country. One of such restaurants is presence at SRSM too. It uses the common seating capacity which is
approximately 130 seats.
Nescafe
The coffee shop with decent seating arrangements
Juice Zone
A juice junction for refreshing moods and providing of all type of seasonal and Non seasonal variey
Planet Fashion
A mega store having the unique brand of Madura Garments viz. Van Heusen, Allen Solly, Luise Philppe,
Peter England etc.
Archies
A gift and card store for all ages, occasion and remberences.
Cowboyz
A fresh bakery shop with wide variety of pastries, patties, cakes, biscuit and burger etc.
There are a few other outlets at this floor like the Damini Creation and Spicy Western Wear that provide
exclusive wear.
This floor also provides entertainment for the ladies shopping at SRSM. A corner has been reserved for a
mehndi-wala. This is a unique ladies corner for decorating the hands with beautiful design, fragrance and colour
heena.
• Visitors Lounge
A spacious furnished and luxurious lounge has been provided for the waiting customers, near the screens. It has
a seating capacity for upto 40 people.
• Coffee Lounge
Two coffee lounges having the capacity of 40 people each for birthday parties, Kitty parties and similar
occasion near the theatre.
• Travelator
India’s first and only auto walk system at the SRS Multiplex by OTIS. A luxury, which is often facilitated at
International Airports, has its presence in India. This is the first Travelator which has been installed in India.
46
Roof Top Facilities
• Crystal Restaurant
An open air roof top restaurant near the periphery of swimming pool provide the hill top experience. It also
includes pool facing bar with Indian and imported drinks has its magnificent presence. The management of this
restaurant is with Dazzle Restro Bar. Its seating capacity is upto 70 seats
• Swimming Pool
An imported Australian pool at the roof above the screen is first of its kind in Asia. It was the dream facility of
SRSEL for being the very first and only in India for the club members of SRS Multiplex.
The following facilities are also proposed to be included in the SRS Club:
Health Club
Slimming Center
Steam Bath
Sauna Bath
Jacuzzi
Yoga
Business Model
The current business model comprises of revenue and costs from entertainment and real estate sectors. Details of
the same is as under:
47
Business Model
Income Costs
Cineplex Operations
Movie tickets and Snack Entertainment
bar sales Tax
Distribution
Shopping Mall Costs
Sale and Lease of
Commercial Space Direct Costs
F&B
SRS Club
Monthly and Annual
Personnel
Membership Fee
Parking Charges
48
Business Model
Income Costs
SRS Cinemas
Movie tickets and Snack Entertainment
bar sales Tax
Distribution
SRS Value Bazaars Costs
Sale of products Direct Costs
F&B
Shopping Mall
Sale and Lease of Personnel
Commercial Space
SRS Club
Monthly and Annual Rentals
Membership Fee
Advertising Utilities
Displays
Renting out of
Advertising space and
Housekeeping
& Security
Promotional
activities Arranged by
sponsors within/ outside Promotion &
the premises Marketing
Party Lawn
Catering and Space Other Costs
charges
Kids Park
Income from Rides and
Swings
Parking Charges
Going ahead, with the proposed commencement of commercial operations of SRS Value Bazaar, the Company
will set foot into the retail segment as well. The proposed business model will be as under:
49
Location of the Project
The Company’s business model is based on the latent demand for upscale entertainment and retail options in
non-metro urban cities, also known as Tier-II cities. These areas are increasing grabbing the attention of Fast
Moving Consumer Goods (FMCG) companies and F&B retailers. It is estimated that the growth of organised
retail in Tier-II cities will outstrip the relative growth in the metros by three times.
1. Ownership model
SRSEL proposes to expand the mall operations under the SRS Multiplex business model by buying land and
building smaller replicas of the existing SRS Multiplex in three different cities. The cities have been identified
as:
City State
Agra Uttar Pradesh
Ludhiana Punjab
Muzaffarnagar Uttar Pradesh
These Multiplexes will provide SRS Cinemas, SRS Value Bazaars, 7 Dayz Restaurant – Food Court, other
restaurants and a shopping area that will house various leading brands.
2. Lease Model
SRSEL plans to expand its operations through leasing of properties. Four of such sites, i.e., two at Gurgaon and
one each at Amritsar and Jodhpur would provide SRS Cineplex and 7 Dayz Restaurant – Food Court. At
Jodhpur, the Company also plans to also introduce the SRS Value Bazaar. SRS Value Bazaar would also be set
up, on lease arrangement basis, at three other locations, i.e., Ambala, Jalandhar and Meerut. At these locations
the Company proposes to implement the SRS Cineplex and 7 Dayz Restaurant – Food Court on a franchise
arrangement basis described below.
The following table provides city wise overview of facilities proposed to be provided under the lease model:
City State SRS Cineplex Food SRS Value
Court/restauran Bazaar
t
Gurgaon, Omaxe Haryana
☺ ☺ -
Plaza,
Gurgaon, Omaxe Haryana
☺ ☺ -
Wedding Mall
Amritsar Punjab ☺ ☺ -
Jodhpur Rajasthan ☺ ☺ ☺
Ambala Haryana - - ☺
Jalandhar Punjab - - ☺
Meerut Uttar Pradesh - - ☺
M/s Omaxe Construction Limited is in process of development and construction of two shopping malls cum
multiplex named Omaxe Plaza and Wedding Mall at Gurgaon. The Company has entered into agreements with
Omaxe Construction Limited to take on lease, premises for running theatres at the said malls cum multiplex. For
details on the agreements please refer to the section titled "History and Corporate Structure - Other Agreements"
on page no. 72 of the Draft Red Herring Prospectus.
The Company has already entered into MoUs for two properties details of which are as follows:
City State Lessor Date of MoU
Amritsar Punjab P R Infrastructure Limited 17.07.2005
Jodhpur Rajasthan Tulip Info Services (P) Limited 08.07.2005
50
Details of the aforesaid MoUs is as follows:
• MoU with P R Infrastructure Limited
MoU has been signed between SRSEL and M/s P R Infrastructure Limited for their upcoming shopping mall at
Batala, Verka Chowk, Amritsar for 4 theatre screens in a super area of 23000 sq. ft. for period of 9 years divided
into 3 slots of 3 years each. A ticket window would be provided at the ground floor at an approximate area of
150 sq.ft.
3. Franchise Model
SRSEL has entered into a MoU with M/s Richi Look Marketing (P) Limited to provide marketing assistance to
implement the franchisee model. The Company would authorise Richi Look to use/franchise the brand for SRS
Cinemas and 7 Dayz. SRSEL would provide recruitment advice and training to the personnel and put the I.T.
and allied infrastructure in place. For this, SRSEL proposes to develop a software that would facilitate the
centrally controlled system for logistics, purchases, revenue generated etc. at each of the sites.
SRSEL, with the assistance of Richi Look, would implement the franchisee model in the following sites:
City State
Ambala Haryana
Jallandhar Punjab
Jaipur Rajasthan
Meerut Uttar Pradesh
Panipat Haryana
(Rupees in Lacs)
Sr. Particulars Name of Area Rate Per Unit Amount
No. Vendor/Supplier (Sq. Ft.) (Rs.)
1 Civil Work ERA Infrastructure India 80000 550.00 440.00
Limited
2. Finishing & ERA Infrastructure India 80000 425.00 340.00
Furnishing Limited
(Civil work)
3. Fire Fighting ERA Infrastructure India 80000 65.00 52.00
Limited
4. Furniture & ERA Infrastructure India 80000 84.00 67.20
Fixtures (Wood Limited
work)
5. Architect Fees Gautam & Gautam 80000 31.25 25.00
Associates
6. Furniture & ERA Infrastructure India 80000 92.00 73.70
Fixture Limited
(Including
Lighting
Fixture)
1247.25 997.90
51
Equipment
The Company is currently negotiating with various suppliers for supply of various fixtures, furniture,
equipments, hardware and software required to operate the Project. The details of the equipment with the
respective suppliers and consultants the Company is in dialogue is as given hereunder:
Table - A
Table - B
Owned Multiplexes - Detail of Plant & Machinery
(Rupees in Lacs)
No. of
Sr. Unit Price Per
Description Vendor Location
No. Location/Property
/ Property Total Cost
1 Sub Head 1 - Wiring for Light Points, MEC Electrical 24.50 3 73.50
Power Points, UPS Lighting Etc. Engineers &
Contractors
2 Sub Head 2 - Telephone Conducting MEC Electrical 3.50 3 10.50
& wiring Engineers &
Contractors
3 Sub Head 3 - CCTV System/TV MEC Electrical 4.85 3 14.55
System Engineers &
Contractors
4 Sub Head 4 - Data Networking MEC Electrical 2.10 3 6.30
Engineers &
Contractors
5 Sub Head 5 - Music System:/ MEC Electrical 7.85 3 23.55
Speakers for Audies Engineers &
Contractors
6 Sub Head 6 - Intelligent fire alarm MEC Electrical 24.25 3 72.75
system Engineers &
Contractors
7 Sub Head 7 - Lighting Distribution MEC Electrical 4.75 3 14.25
Board Engineers &
Contractors
52
8 Sub Head 8 - MV Panel Boards, MEC Electrical 84.50 3 253.50
Starters, Control Console Etc. Engineers &
Contractors
9 Sub Head 9 - Earthling & Lightening MEC Electrical 12.75 3 38.25
Protection Engineers &
Contractors
10 Sub Head 10 - Cables, Cable Trays & MEC Electrical 49.50 3 148.50
Steel Structure for walk ways Engineers &
Contractors
11 Sub Head 11 - Sub-Station System MEC Electrical 30.15 3 90.45
Engineers &
Contractors
12 Sub Head 12 – D. G. Set & Allied MEC Electrical 61.50 3 184.50
works (1 X 500 KVA + 2 X 250 Engineers &
KVA) Contractors
13 Sub Head 13 - External / Facade MEC Electrical 6.10 3 18.30
Lighting Engineers &
Contractors
14 Sub Head 14 - Lighting Fixtures MEC Electrical 19.70 3 59.10
Engineers &
Contractors
336.00 3 1,008.00
Table C
Owned Multiplexes - Air conditioning
(Rupees in Lacs)
Description Vendor Unit Qty. Rate No. of Total
locations
Sub Head 1 - Machinery Suvidha Engineers Lot 1 72.00 3 216.00
Project
Sub Head 2- Piping Suvidha Engineers Lot 1 24.00 3 72.00
Project
Sub- Head 3 Air Distribution Suvidha Engineers Lot 1 10.00 3 30.00
Project
Sub -Head 4- Insulation Suvidha Engineers Lot 1 10.00 3 30.00
Project
Sub -Head 5-Electrical Suvidha Engineers Lot 1 9.00 3 27.00
Works Project
TOTAL 125.00 375.00
Table D
SRS Cinemas - Air conditioning
(Rupees in Lacs)
Description Vendor Unit Qty. Rate No. of Amount
locations
Sub head 1 – machinery, Suvidha Engineers Lot
1 19.50 7 136.50
ahu,fcu’s Project
Sub head 2- piping Suvidha Engineers Lot
1 3.50 7 24.50
Project
Sub- head 3 air distribution Suvidha Engineers Lot
1 4.80 7 33.60
Project
Sub –head 4- insulation Suvidha Engineers Lot
1 1.25 7 8.75
Project
Sub –head 5-electrical works Suvidha Engineers Lot
1 1.55 7 10.85
Project
TOTAL
30.60 7 214.20
53
Table E
SRS Value Bazar - Air conditioning
(Rupees in Lacs)
Description Vendor Unit Qty. Rate No .of Amount
locations
Sub head 1 – machinery, ahu,fcu’s Suvidha Lot 1 16.90 7 118.30
Engineers
Projects
Sub head 2- piping Suvidha Lot 1 3.00 7 21.00
Engineers
Projects
Sub- head 3 air distribution Suvidha Lot 1 4.60 7 32.20
Engineers
Projects
Sub -head 4- insulation Suvidha Lot 1 1.15 7 8.05
Engineers
Projects
Sub -head 5-electrical works Suvidha Lot 1 1.55 7 10.85
Engineers
Projects
TOTAL 27.20 7 190.40
Table F
7 Dayz Food Court - Air conditioning
(Rupees in Lacs)
Description Vendor Unit Qty. Rate No. of Total
locations
Sub head 1 – machinery, ahu,fcu’s Suvidha Lot 1 4.50 7 31.50
Engineers
Project
Sub head 2- piping Suvidha Lot 1 0.40 7 2.80
Engineers
Project
Sub- head 3 air distribution Suvidha Lot 1 1.50 7 10.50
Engineers
Project
Sub -head 4- insulation Suvidha Lot 1 0.15 7 1.05
Engineers
Project
Sub -head 5-electrical works Suvidha Lot 1 0.25 7 1.75
Engineers
Project
TOTAL 6.80 7 47.60
54
Table G
Owned Multiplexes – Lifts & Escalators
(Rupees in lacs)
No. of
Sr. Unit Total
Description Vendor Qty Location
No. Price Price
/ Property Total Cost
OTIS Elevator
1 Passanger Glass Elevaors Company (India)
Ltd. 2 23.00 46.00 3 138.00
2 4.2 M Esclators OTIS Elevator
Company (India)
Ltd. 2 14.85 29.70 3 89.10
3 Charges towards Erection & OTIS Elevator
Service Tax Company (India)
Ltd. 2 3.50 7.00 3 21.00
4 OTIS Elevator
Customs Duty (35% of 14.85 Lacs) Company (India)
Ltd. 2 5.20 10.40 3 31.20
Total 93.10 3 279.30
Table H
55
Table I
SRS Value Bazar - Interior, Furniture,Equipment and Civil Work
(Rupees in lacs)
No.of
Sr. Vendor / Rate locations Total
No. Particulars Contractor Area Unit (Rs.) Amount Amount
1 Interior &
Furnishing ERA
(Including Infrastructure 16000 Sq. Ft. 293.00 46.88 7 328.16
Electrical (India) Ltd.
fixtures)
2 Miscellaneous Turnkey 0.12 7 0.84
Expenses
47.00 329.00
TOTAL
3 Equipments ERA
Infrastructure Turnkey 25.00 17.50
7
(India) Ltd.
Civil Work &
4 Fire Fighting, ERA
Wooden Infrastructure
Partitions, (India) Ltd. 16000 Sq. Ft. 405.00 64.80 7 45.36
Individual
Counter & Racks
Table - J
7 Dayz Restaurants - Interior, Furniture, Kitchen Equipments, Chairs and Civil Work
(Rupees in lacs)
Sr. Vendor \ No.of
Particulars Area Unit Rate (Rs.) Amount Total Amount
No. Contractor Locations
Interior &
Furnishing ERA Infrastructure
(Including (India) Ltd.
Electrical
1 fixtures) 4000Sq. Ft. 1031.25 41.25 7 288.75
Equipments ERA Infrastructure
2 (India) Ltd. Trunkey 41.20 7 288.40
Seating Chairs ERA Infrastructure Sets
3 & Tables (India) Ltd. 50 (4+1) 6000 3.00 7 21.00
Civil Work
including Fire
Fighting & ERA Infrastructure
4 counters (India) Ltd. 4000Sq. Ft. 243.75 9.75 7 68.25
56
Table K
Architect Fees
(Rupees in lacs)
Sr.No. Description Name Rate No. of Total
per location locations
1 Owned Multiplexes 25.00 3 75.00
2 SRS Cinemas 5.00 7 35.00
3 SRS Value Bazar Gautam & Gautam 3.00 7 21.00
Associates
4 7 Dayz Restaurants 2.00 7 14.00
Total 145.00
Table L
SRS Cinemas - Detail Computers, Plazamas, Display Monitors, & Soft wares Etc.
(Rupees in lacs)
No. of
Sr. Unit Total
Description Vendor Qty Location Total Cost
No. Price Price
/Property
1 Server Micro-Chip
Computers 3 1.40 4.20 7 29.40
2 Display Server Micro-Chip
1 0.55 0.55 7 3.85
Computers
3 Nodes - a) For Ticket
Counter (4 Nos)
Micro-Chip
b) For Back Office 12 0.38 4.56 7 31.92
Computers
(8 Nos)
4 Micro-Chip
Touch Screen for Cash Counter 6 00.90 5.40 7 37.80
Computers
5 Bar Code Reader Micro-Chip
Computers 4 00.10 00.40 7 2.80
6 Swap Card Reader Micro-Chip
Computers 10 0.11 1.1 7 7.7
8 Thermal Printer Micro-Chip
Computers 10 00.18 1.80 7 12.60
9 Lazor Printer Micro-Chip
Computers 3 00.20 00.60 7 4.20
10 Ticket Printer Micro-Chip
Computers 4 .550 2.20 7 15.40
11 All in One Printer Micro-Chip
Computers 1 00.95 00.95 7 0.665
12 Photo State Machine Micro-Chip
Computers 1 1.25 1.25 7 8.75
13 Net Working (A- 24 Port
Switch, B- 24 Port Switch, C-
Network Cable, D-UTP Micro-Chip
4.112 7 28.784
Connector Computers
E-Wall Mountal Jack-RJ-45, F-
Router
14 UPS 8 KVA Online UPS Micro-Chip
Computers 2 1.65 3.30 7 23.10
15 UPS 1 KVA Offline UPS Micro-Chip
Computers 3 0.8 0.24 7 1.68
16 Soft ware Micro-Chip
Computers 0.00
57
A- Window 2003 Premier Micro-Chip
Server Computers 3 00.60 1.80 7 12.60
17 B-Operating system Micro-Chip
Computers 2 00.065 1.43 7 10.01
18 C-Office 2003 Professional Micro-Chip
Computers 16 00.16 2.56 7 17.92
19 D-Nortran antivirus Micro-Chip
Computers 00.40 7 02.80
20 PC Any Where Micro-Chip
Computers 3 0.11 0.33 7 2.31
21 Cinema Operational Software Micro-Chip
Vista Computers 01 4.00 4.00 7 28.00
22 Less: Discount (0.27) 7 (1.86)
Total 40 7 280.00
Table M
SRS Value Bazaar - Detail Computers, Plazamas, Display Monitors, & Soft wares Etc.
(Rupees in lacs)
No. of
Unit Total
S.No. Description Vendor Qty Location
Price Price
/Property Total Cost
1 IBM Server
Micro-Chip Computers
3 4.5 13.50 7 94.50
2 Nodes - a) For Office
System
(4 Nos)
Micro-Chip Computers 9 0.38 3.42 7 23.94
b) For A/c (2
Nos)
c) For Data Entry
3 Touch Screen for Cash
Micro-Chip Computers 5 00.90 4.50 7 31.50
Counter
4 Bar Code Reader Micro-Chip Computers 5 00.10 00.50 7 3.50
5 Thermal Printer Micro-Chip Computers 5 00.18 00.90 7 6.30
6 Lazor Printer Micro-Chip Computers 4 00.20 00.80 7 5.60
7 Dot Matrix Printer Micro-Chip Computers 1 00.285 0.285 7 1.995
8 All in One Printer Micro-Chip Computers 1 00.95 00.95 7 0.665
9 Photo State Machine Micro-Chip Computers 1 1.25 1.25 7 8.75
10 Print Server Micro-Chip Computers 2 00.08 00.16 7 1.12
11 Net Working (A- 24 Port
Switch, B- 24 Port Switch,
C- Network Cable, D-UTP Micro-Chip Computers 00.526 7 3.68
Connector
E-Wall Mountal Jack-RJ-45
12 UPS 8 KVA Online UPS Micro-Chip Computers 2 1.65 3.30 7 23.10
13 Soft ware Micro-Chip Computers 0.00
A- Window 2003 Premier
Micro-Chip Computers
Server 3 00.60 1.80 7 12.60
B-Operating system Micro-Chip Computers 14 00.065 00.91 7 6.37
C-Office 2003 Professional Micro-Chip Computers 9 00.16 1.44 7 10.08
D-Nortran antivirus Micro-Chip Computers 17 00.30 7 02.10
14 Bazaar Software Micro-Chip Computers 01 4.50 4.50 7 31.50
15 Designing Machine 2 .60 1.20 7 8.40
16 HP Scanner 1 0.32 0.32 7 2.24
17 HP Inkjet Printer 1 0.38 0.38 7 2.66
58
18 Less: Discount (0.09) 7 (.60)
Total 40 7 280.00
Table N
7 Dayz Food Courts - Detail Computers, Plazamas, Display Monitors, & Soft wares Etc.
(Rupees in lacs)
Total
No. of
Sr. Total Cost
Description Vendor Qty Unit Price Location
No. Price
/Property
1 Server – a) For Primary Domain
Micro-Chip
b) For Backup Domain
Computers
2 1.40 2.80 7 19.60
2 Nodes -
a) For Cash Counter(6Nos) Micro-Chip
b) For Back Office (7 Nos) Computers 13 0.38 4.54 7 31.78
(Discount Rs. 40,000/-)
3 Thermal Printer
Micro-Chip
Computers 6 00.18 1.08 7 7.56
59
Table O
Table P
(Rupees in lacs)
60
B Package price (Imported
projection) 7 -
12 Reel Arm Set (local) 3 18000 54000 7 3.78
13 Film guide rollers set of 4 (local) Cine Cita (P)
Ltd. 3 4000 12000 7 0.84
14 Loop accumulator and additional
rollers (approx) for interlock Cine Cita (P)
(local) Ltd. 1 25000 25000 7 1.75
15 Rewinder (local) Cine Cita (P)
Ltd. 2 800 1600 7 0.11
16 Splicer (local) Cine Cita (P)
Ltd. 2 4000 8000 7 0.56
Sub Total B 1,00,600 7 7.04
C
17 Schneider Integrated Anamorphic
lens size 60 mm to 80 mm Cine Cita (P)
Ltd. 3 116500 349500 7 24.47
18 Schneider Widescreen lens size Cine Cita (P)
60 mm to 80 mm Ltd. 3 45700 137100 7 9.59
19 Osram 4000 W/HS OFR Xenon Cine Cita (P)
bulb Ltd. 1 53460 53460 7 3.75
20 Osram 3000 W/HS OFR Xenon Cine Cita (P)
bulb Ltd. 2 42140 84280 7 5.89
Sub Total C 6,24,340 7 43.70
D
21 Slide projector (imported) Cine Cita (P)
Ltd. 3 33200 99600 7 6.97
22 Projection port (local) Cine Cita (P)
Ltd. 3 10000 30000 7 2.10
23 Slide projector port (local) Cine Cita (P)
Ltd. 3 10000 30000 7 2.10
24 Viewer port (local) Cine Cita (P)
Ltd. 3 10000 30000 7 2.10
Sub Total D 1,89,600 7 13.27
E
F Audio System 7 -
28 Cine Cita (P)
CP650D Ltd. 3 593000 1779000 7 124.53
29 JBL 4632T Cine Cita (P)
Ltd. 3 116100 348300 7 24.38
30 Cine Cita (P)
JBL 3632 Ltd. 6 80400 482400 7 33.76
31 Cine Cita (P)
JBL 4642A Ltd. 6 66000 396000 7 27.73
32 JBL 8330A Cine Cita (P)
Ltd. 40 14300 572000 7 40.04
33 Brackets for surround speakers Cine Cita (P)
Ltd. 40 600 24000 7 1.68
61
34 CL1 Cine Cita (P)
Ltd. 3 37700 113100 7 7.91
35 CL2 Cine Cita (P)
Ltd. 9 53500 481500 7 33.71
36 XLS 402 Cine Cita (P)
Ltd. 4 20200 80800 7 5.65
37 XLS 602 Cine Cita (P)
Ltd. 8 26900 215200 7 15.06
38 Crown SST 4632T Cine Cita (P)
Ltd. 3 18000 54000 7 3.78
39 Crown SST 3632 Cine Cita (P)
Ltd. 6 10000 60000 7 4.20
40 Booth Monitor Cine Cita (P)
Ltd. 3 21000 63000 7 4.41
41 Rack 40 ru Cine Cita (P)
Ltd. 2 27500 55000 7 3.85
42 Rack 32 ru Cine Cita (P)
Ltd. 2 24000 48000 7 3.36
43 Cables & connectors (from
projector to processor &
processor to amplifiers) Cine Cita (P)
Ltd. 3 7500 22500 7 1.58
Sub Total F 47,94,800 7 335.64
Kitchen Equipments - Candy
G
44 Pop Corm Warmers ( Gold
Medal) Kitchen Rama 2 180535 361070 7 25.27
45 Hot Dispenser Cabinet Unit
Kitchen Rama 2 95000 190000 7 13.30
46 Pop Crn Machine
Kitchen Rama 2 438000 876000 7 61.33
47 Butter Dispenser
Kitchen Rama 2 20580 41160 7 2.88
48 Nacho Warmers
Kitchen Rama 2 24750 49500 7 3.47
49 Hot Dog Grills
Kitchen Rama 2 74875 149750 7 10.48
50 Bun Warmers
Kitchen Rama 2 51840 103680 7 7.27
51 Straw Dispenser
Kitchen Rama 4 4800 19200 7 1.34
52 Napkin Dispenser
Kitchen Rama 4 10170 40680 7 2.85
53 Cup Dispenser
Kitchen Rama 8 28000 224000 7 15.68
54 Smoke less Fryer
Kitchen Rama 1 200000 200000 7 14.00
55 Dump Stataion
Kitchen Rama 1 25000 25000 7 1.75
56 Ice Shaver
Kitchen Rama 1 35000 35000 7 2.45
57 Two Door Refregerator
Kitchen Rama 1 202000 202000 7 14.14
58 Ice Cube Machine
Kitchen Rama 1 163000 163000 7 11.41
59 Cold Display Cabinet
Kitchen Rama 2 125000 250000 7 17.50
62
60 Miscellaneous Equipments
189120 7 13.24
Sub Total G 3119160 218.35
Total - (A+B+C+D+E+F+G) 14760000 1033.20
Orders for the above equipment have not been placed as all equipment is readily available in the market,
delivery is quick and installation time is not substantial. The said amount is to the tune of 60.31% of the total
Project cost required for the expansion.
The video security has been installed for the following purposes:
(i) To help 'Identify' perpetrators.
(ii) To help 'Prevent' accidents or wrongdoing.
(iii) To help 'Protect' people and property.
(iv) To help 'Observe' processes.
Raw Materials
The Company does not have any manufacturing activities and therefore, there is no raw material requirement.
Manpower
The Company sources its manpower requirements from consultancy firms like MSR Marketing (P) Limited,
Satmaya Trading Co. (P) Limited etc. As on September 06, 2005, the Company has more than 80 regular
employees on its rolls.
Power
At SRS Multiplex the Company has made necessary arrangements to meet its power requirements. It has
obtained approval for 1750 KVA of electricity line from HSEB. As a measure of precaution, SRSEL has
installed two DG Sets of capacity of 500 KVA each and one DG set of 160 KVA at SRS Multiplex. The DG sets
are sufficient to generate power in the event of power failure.
Water
Water is not required as such for the operation of Multiplex/cinemas/ retail stores/restaurants. The requirement
of water is restricted to human consumption, cooking and cleaning purposes. For this purpose, a water treatment
plant, based on Reverse Osmosis process has been installed at SRS Multiplex.
Sewage
The Company has obtained approval from HUDA for managing sewage at SRS Multiplex. An Effluent
Treatment Plant of Migrani make has been installed.
Marketing
1. Marketing Arrangements for SRS Multiplex
SRS Multiplex has established itself as one of the premier Multiplex providing some of the best facilities. The
Company has been advertising in the newspapers, Radio FM, direct marketing and promotion events like paid
63
previews, contests, DJ, social events like dance competition, fancy dress, singing competition etc. Different
brands having their shopping set up in the Multiplex also manage their individual schemes/ campaign for
promotional purpose which indirectly add to the promotion of SRS Multiplex. Hoardings have been installed at
prominent places at Faridabad to promote the SRS brand.
The Company has appointed M/s Happenings as the marketing and advertising and promotion agency. M/s
Happenings has been entrusted the responsibility of space selling and ad selling for SRS Multiplex.
Although the agreement is in nature of being executed in the normal course of business, it aids the
promotion of SRS Multiplex. The agreement was entered into on April 16, 2005.
The brand objective of the Company is to expand its customer base, ensure customer loyalty by creating a
world class shopping and movie watching experience and thus increase depth of the Company's consumer
relationship.
In the coming years, marketing communications will be carried out along the following lines:
Business strategy
The Company plans to target potential cities in North India as such cities are catching up with Metros in
terms of culture, disposable income and lifestyle. The cities have been chosen based on the population,
education centers providing penetration among the youth and being the advantage of among the first in such
cities.
SRS Value Bazaar would be a hyper-market in the retail business of various products at the sites in the
format and type of retail chain with different content of products depending on needs and aspirations of
customers. The discount store concept in the form of SRS Value Bazaar would provide value for money to
the population at large apart from the target segment and ensure additional footfalls for the entire Multiplex.
SRS Value Bazaar is a unique concept. It would be located in own multiplexes and in leased multiplexes of
the Company. The Company would procure raw material and other ingredients centrally so as to make the
system cost effective. The first store, to be opened at Faridabad, would be a trend setter in the opening of
other stores. The store will operate as a discount store and provide various categories including apparels and
accessories for all ages and gender, cosmetics, home textiles, household appliances, linen etc.
SRS Cinemas would be a chain of Cineplexes being owned/ leased/ managed by the Company. The present
project envisages Cineplex set up in 7 cities across the country, having 21 screens with a capacity of about
20,000 seats.
With the increasing numbers in terms of locations, the Company is growing horizontally by opening of new
Multiplexes/ Cineplex/ Bazaar and Food Courts which would provide economies of scale as the outsourcing
/ purchasing for all the locations would be done centrally.
64
The children games and club facilities would provide entertainment to all age groups providing a complete
family entertainment centre.
A membership drive for the exclusive SRS Club would provide discounts, privileges at all the SRS
locations.
To enhance the corporate value by its very name SRS – ‘Sab Raho Saath’, providing a feeling of
togetherness, happiness and fun.
The existing total operative capacity at SRS PVR Cinemas is 776 seats. The following table shows the capacity
utilization for the months April to July 2005:
Sr. No. Month Capacity utilization
1 April 22.51%
2 May 38.54%
3 June 44.75%
4 July 46.47%
Competitive Strengths
SRS Multiplex is well placed in the highly competitive retail and entertainment sector, in Faridabad. Few of its
competitive strengths are:
Professional and young management team possessing a good business acumen
Strong communication skills
Focus
Innovative and focused marketing strategies
Understanding of entertainment, retail and real estate businesses
Purchase of property
The Company plans to purchase property at 3 places viz. Agra, Ludhiana and Muzaffarnagar. The Company has
given advance worth Rs.250 lacs for the purchase of properties. These properties are planned to be located at
premium places in these cities. For details of the advance payment, refer to section “Introduction - Objects of
the Issue - Funds Deployed” on page no. 29 of the Draft Red Herring Prospectus.
65
KEY INDUSTRY REGULATIONS AND POLICIES
The Government of India and the respective State Governments have formulated various legislations over the
years, which apply to companies engaged in the business of entertainment, real estate, retail and eateries in
India.
The Company (SRS Entertainment Limited) currently has one Multiplex comprising of shopping center, theatre
screens, eateries, etc. located at Faridabad (NCR–Delhi) and has plans to come up with other similar Mutilpexes
in different States and is therefore subject to various State enactments also.
Under the provisions of various Central Government and State Government statutes / legislation, each of the
multiplex is required to obtain and renew certain licenses/ registrations and / or permissions with respect to
respective business/ operations/ matters.
Pursuant to the applicable laws in force in various States in India in which the Company's Multiplex/ Cineplex/
restaurant would be situated, each of the operation requires mandatory registrations/ licenses/ consents/
permissions under the statutes listed out below (the list of requisite statutes/ legislation set out below is by way
of illustration and is not exhaustive for the present purpose): -
66
The Act authorizes the Central Government to constitute Board of Film Certification (the “Board”) in
accordance with the Cinematograph (Certification) Rules, 1983 for the purpose of sanctioning films for public
exhibition in India. The Board may certify films for either restricted or unrestricted exhibition, or in the
alternative, may prohibit the exhibition of the film.
The certificate issued by the Board is valid for a period of 10 (ten) years. In terms of the Act, an establishment
that exhibits films would have to obtain a license for such exhibition to confirm that the establishment has
complied with the provisions of the Act and that the safety standards of the establishment are adequate. Non-
compliance with the provisions of the Act would attract penalties in the form of imprisonment and/or fines.
The Punjab Cinema Regulation Act, 1952/ The Punjab Cinema Regulation Rules, 1952
Punjab Cinema Regulation Act, 1952 (the “PCR Act”) extends to the whole of the State of Punjab and
Haryana.
This is State enactment to make provisions for regulating exhibitions by means of cinematographs in the State of
Punjab and Haryana. Under the provisions of this Act, no person shall give an exhibition by means of
cinematograph, elsewhere than in a place licensed under this Act or otherwise than in compliance with any
condition and restriction imposed by such license.
The Punjab Entertainment Duty Act, 1955/ The Punjab Entertainment Duty Rules, 1956
The Punjab Entertainment Duty Act, 1955 (the “PED Act”) extends to the whole of the State of Punjab and
Haryana. The applicability of the PED Act has been extended to Haryana in terms of Haryana Adaptation of
Laws (State and Concurrent Subjects) Order, 1968.
The PED Act, inter alia, provides for the levy of an entertainment duty in respect of admission to public
entertainments. The PED Act provides that a person admitted to an entertainment shall be liable to pay an
entertainment duty at a rate not exceeding one hundred and twenty five percent of the amount of payment for
admission, which the Government may specify, by a notification in this behalf, and the said duty shall be
collected by the proprietor and rendered to the Government in the manner prescribed. Proprietor in relation to
any entertainment includes the owner, partner or a person responsible for the management thereof.
The Punjab Entertainments Tax (Cinematograph Shows) Act, 1954/ The Punjab Entertainments Tax
(Cinematograph Shows) Rules, 1954
The Punjab Entertainments Tax (Cinematograph Shows) Act, 1954 (the “PET Act”) extends to the whole of the
State of Punjab and Haryana. The applicability of the PET Act has been extended to Haryana in terms of
Haryana Adaptation of Laws (State and Concurrent Subjects) Order, 1968.
The PET Act, inter alia, provides for levy, charge and payment to the State government, on all public
cinematograph exhibitions to which persons are admitted on payment, and entertainment at such rates as the
State government may, from time to time, by notification fix, but not exceeding ten percent of the entertainment
duty payable at the rate notified under Section 3 of the Punjab Entertainment Duty Act, 1955.
The Haryana Value Added Tax Act, 2003/ Central Sales Tax Act, 1956
The Haryana Value Added Tax Act, 2003 (the “HVAT Act”) was introduced in the State of Haryana with effect
from April 1, 2003. Every dealer who is liable to pay tax has to apply for registration under the HVAT Act /
Central Sales Tax Act within the prescribed time limit.
67
Section 3 of the HVAT Act provides that every dealer who would have continued to be liable to pay tax under
the Haryana General Sales Tax Act of 1973 (the “HGST Act”) had HVAT Act not come into force, and every
other dealer whose gross turnover during the year immediately preceding the appointed day exceeded the
taxable quantum as defined or specified in the HGST Act, shall [subject to the provisions of sub-section (4)] be
liable to pay tax on and from the appointed day on the sale of goods effected by him in the State.
Fiscal Regulations
Income earned by way of profits by a company incorporated in India is subject to levy of income tax on it in
accordance with the tax rate prescribed in the Income-tax Act read with Rules framed thereunder.
The Company, like other companies, is eligible to avail certain benefits/ exemptions/ deductions available under
the Income-tax Act. For details of the tax benefits see ‘Tax Benefits’ on page no. 33 of the Draft Red Herring
Prospectus.
68
HISTORY AND CORPORATE STRUCTURE
History
Address of the Registered/ C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094
Corporate Office
Constitution Public Limited Company
Activity
Existing Construction and management of multiplexes, amusement
parks, cinema halls, hotels, clubs and commercial and
residential buildings.
Proposed Same as above
Date of incorporation January 25, 2005
Complexes located at:
Existing Setor-12, NH-2, Delhi-Agra Road, Faridabad (NCR)
Haryana 121007
Proposed Please refer to para "Business Overview - Location of the
Project" on page no.50 of the Draft Red Herring Prospectus
SRSEL was incorporated as 'SRS Commercial Co. Limited' under the Companies Act, 1956 on August 29, 2000
which was engaged in the business of trading in commodities. Witnessing the rapid development in the National
Capital Region in terms of civic infrastructure, quality of population, standards of living and general economic
growth, the Company decided to venture into a different line of business to capitalize on the retail and
entertainment business potential in the country. Thereafter, it changed its name to SRS Entertainment Limited
on January 25, 2005 with the main object to engage in activities of construction and management of
Multiplexes, Amusement Parks, Cinema Halls, Hotels, Clubs and Commercial and Residential Buildings etc. in
and outside India.
The Company started with a small beginning by getting, in auction, land from HUDA in January 2002. This was
a significant event which later on developed into a magnificient mall. After extensive surveys and closely
studying similar projects in other parts of the country and the world, the Company gradually gathered the
resources for building the SRS Multiplex at Faridabad. It was entrusted the support of banks, collaborators etc.
SRS Multiplex started commercial operations November 12, 2004. SRS Multiplex is an integrated project
consisting of a 3 screen multiplex, a modern shopping mall, a family restaurant and food court and a health club
with a rooftop swimming pool. The big names like Mcdonalds, Pizza Hut, Nescafe, Rayban, Airtel, Music
World etc. to name a few add glory to the Multiplex. M/s ERA Construction was the main contractor for
building up the project alongwith other different contractors for different contracts. SRS Multiplex received
compliments from various celebrities and dignitaries for its attractiveness and colourfullness. The Multiplex’s
enjoys recognition and is well accepted by the passers-by. Now, the Company receives many offers for similar
replica for other cities. For its SRS Multiplex, the Company tied up with PVR Limited for content and
management of the 3 screens built on the nature’s theme of Sun, Moon and Galaxy. The latest movies having
strong mass appeal are displayed on the screens. The food joints have been selected on their various tastes from
spicy to sweets.
69
or any body interested for the same, to organise events, road shows, etc., for the purpose of marketing and
business promotion, within and outside the multiplex, restaurant, banquet, cinema halls and any other
building.
4. To buy, exchange or otherwise acquire an interest in any immovable property for the purpose of
construction of multiplex, cinema halls, open/digital theatres, restaurants, bar, discotheques, club,
gymnasium, swimming pool, amusement parks, beauty parlor and saloon, recreational and sports museum,
banquet halls, departmental store, auditorium and any other type of building.
5. To get the rights for broadcasting, telecasting and marketing the musical programmes, serials, quiz
programmes, thrillers, family dramas, news, sports etc., whether in all or in episodes and to broadcast and
telecast the same.
70
Insertion of new clauses in Objects Incidental or ancillary to the
attainment of the Main Objects – 13A, 35, 36 and 37
Major Events
Event Date
Got Allotment Letter from HUDA 28.01.2002
Bhoomi poojan and start of construction 26.06.2002
Sanction of Term Loan of Rs.1000 Lac by PNB, Janpath, New Delhi 05.12.2002
Got DPC Certificate from HUDA 10.12.2002
Soft launch of SRS Multiplex 22.10.2004
Final launch of SRS Multiplex on the eve of Deepawali 12.11.2004
Sanction of Term Loan of Rs.1850lac from Union Bank of India (UBI), Connaught 20.05.2005
Place, New Delhi under Union Rental Scheme @ 9.75% p. a.
Sanction Letter No.CP:ADV:2005:642 from UBI for reduction in rate of interest by 1% 13.06.2005
thereby making it 8.75%
MoU with Tulip Info Services (P) Limited for leased space measuring 50,000 Sq. Ft. 08.07.2005
construction and management of Cineplex, Restaurant and SRS Value Bazaar at
Jodhpur, Rajasthan.
MoU with P. R. Infrastructure for leased space measuring 23,000 Sq. Ft. construction 17.07.2005
and management of Cineplex and Restaurant at Amritsar
Grant of ISO 9001:2000 Certification 19.08.2005
Franchise agreement with Richi Look Marketing (P) Limited – Cineplex 22.08.2005
Agreement with Omaxe Construction Limited for leased space measuring 18,000 sq.ft. 22.08.2005
each for construction and management of Theatre at Omaxe Plaza and Wedding Mall at
Gurgaon
Subsidiaries
The Company has not promoted any other company and hence does not have subsidiaries.
Shareholders Agreements
71
The Company has not entered into agreement with any of it shareholders. The Company is also not a party to
any agreement between any of its shareholders.
Other Agreements
4. PVR Limited
On July 28, 2004, the Company entered into an agreement with PVR for the operation and management of the
SRS PVR Cinemas. Under the terms of the agreement, PVR provides management consultancy to SRSEL for
Cineplex at SRSM for the consideration of 5% of the gross turnover of the Cineplex at SRSM. The gross
turnover, as defined in the agreement, means the turnover of the Multiplex Cinema including without limitation
all revenue eared by the Company from concession, cafeteria sales, advertising inside the auditorium and in the
foyer area for show window, product display etc. marketing and promotions, campaigns less entertainment tax
applicable and paid by the Company on Cineplex admissions at SRSM. The agreement is valid for a period of
nine years from the commencement date which is November 12, 2004, the date when SRSEL inaugurated
SRSM at Faridabad, Haryana.
72
MANAGEMENT
I. Board of Directors
73
S/o Late Mr. M. M. Retired
Mehta 30 Yrs.
63 years
7 Mr. Devendra Singh 646, Sector – B. Sc. and 28.03.2005 SRS Retreat
Independent Director 16A, L.L.B Services (P)
S/o Mr.. Balbir Singh Faridabad Professional Limited
46 years 25 years Fortune Portfolio
(P) Limited
Brief profile of directors other than the Chairman, Managing Director and Executive Directors
74
2. Terms of Appointment and Compensation of Mr. Raju Bansal, Executive Director:
i. Salary: Rs. 80,000/- Per Month
ii. House Rent Allowance: Rs.24,000/- per month
iii. Conveyance Allowance: Rs.10,000/- per month
iv. Medical Allowance: Rs.10,000/- per month
v. Perquisites:
(a) Telephone: Actual telephone charges
(b) Newspaper and mazagines: Actual expenses towards newspaper and magazines
(c) Statutory Benefits: All statutory benefits applicable to the Company from time to time shall be
payable as per applicable provisions
(d) Gratuity: Gratuity payable shall not exceed half month's salary for each completed year of service.
vi. Sitting Fees: Rs.5000 for Board Meeting and Rs.2000 for Committee Meeting
vii. Others: Reimbursement of actual entertainment expenses, actual traveling and hotel expenses for the
Company’s business and/or allowances as per the Company’s Rules.
viii. Termination: Tenure ends on December 21, 2009 (a period of 5 years from date of appointment) as per
the terms of the resolution dated December 21, 2004.
* Rs.5000 each is for Board Meetings. Additionally, Rs.2000 will be paid as Sitting fees to the Directors for
Committee Meetings.
Corporate governance is administered through the Board of Directors and the committees of the Board.
However, primary responsibility for upholding high standards of corporate governance and providing necessary
disclosures within the framework of legal provisions and institutional conventions with commitment to enhance
shareholders’ value vests with the Board of Directors.
Pursuant to listing of the Equity Shares, the Company would be required to enter into listing agreements with
The National Stock Exchange of India Limited and The Bombay Stock Exchange Limited.
The Company is in compliance with the applicable provisions of listing agreement pertaining to corporate
governance, including appointment of independent Directors and constitution of the following committees of the
Board of Directors:
Audit Committee
The Audit Committee consists of Dr. R. K. Aggarwal, Mr. Sunil Jindal and Mr. K. M. Mehta. Any two members
would constitute a quorum for a meeting of the Audit Committee which will be chaired by Mr. R. K. Aggarwal.
The Audit Committee acts as an interface between the management and the statutory and internal auditors
overseeing the internal audit functions. The Audit Committee was first constituted by the Board of Directors in
its meeting held on June 12, 2003 pusuant to compliance of the Companies Act, 1956. The Audit Committee
was reconstituted on January 04, 2005 and March 28, 2005.
The committee is entrusted with the functions, scope and powers as envisaged in Section 292 (a) of the
Companys Amendment Act, 2000 and/or any modification / amendment thereof from time to time.
Remuneration Committee
The Remuneration Committee consists of Dr. R. K. Aggarwal, Mr. K. M. Mehta and Mr. R. S. Gupta. All the
members of the committee are non-executive independent directors. Any two members would constitute quorum
75
for a meeting of the Remuneration Committee. The Remuneration Committee is broadly responsible to review
and approve the compensation package for senior management personnel including the Managing Director and
Chief Executive Officer.
The committee is scheduled to meet once a year and will be chaired by Mr. R. K. Aggarwal. The Company
Secretary of the Company, Ms. Navneet Chhabra would act as the secretary of the committee.
There is no requirement of holding qualification shares to become a Director of the Company in the Articles of
Association of the Company.
The borrowing power of the Board of Directors of the Company has been increased upto Rs.10000 Lacs vide
resolution dated 12.8.2005 passed in the EOGM of the company. The Company has presently utilised Rs. 1850
Lacs under union rent scheme of Union Bank of India, Connaught Palace, New Delhi. The Company has
approached UTI Bank Limited for its debt requirement for the proposed project and UTI Bank Limited has vide
its letter no. UTIBK/RMD-DEL/AM/172 dated September 8, 2005.
76
Anil Goyal 21.01.2002 28.03.2005 Appointed as Additional Director and
confirmed at AGM dated 27.06.2002
Resigned from Directorship by giving
resignation letter dated 28.03.2005
Raj Kumar 01.02.2005 N.A. Appointed as Additional Director and
Aggarwal confirmed at AGM dated 25.07.2005 and
elected as Chairman w.e.f. 01.04.2005
Kailash M Mehta 28.03.2005 N.A. Appointed as Additional Director and
confirmed at AGM dated 25.07.2005
Devendra Singh 28.03.2005 N.A. Appointed as Additional Director and
confirmed at AGM dated 25.07.2005
Rajesh Mangla 21.01.2002 14.06.2005 Appointed as Additional Director and
confirmed at AGM dated 27.06.2002 and
Appointed as Whole-time Director w.e.f.
01.4.2005 and Resigned as Director
and whole time Director w.e.f.
14.06.2005
77
II. Management Organisation structure
Chairman
Raj Kumar Aggarwal
Managing
Director
Sunil Jindal
C.E.O.
Ashok Bansal
Management Incharge
Representative Purchase &
HOD Admin & H.R. Store
Suresh Arora Ajay Jain
78
III. Key Management Personnel
None of the Directors and Key Management Personnel, except Ms. Navneet Chhabra and Mrs. Seema Narang
have family relation between them. As on September 06, 2005 all the employees named above are on the roll of
the Company as permanent employees.
79
Mr. Rahul Das
Mr. Das is a B.A (Hons) Graduate in Economics. His experience spans over 20 years. He held independent
charge as profit center head in Karam Chand Thapar (Africa) Limited Prior to that he was the Vice-President
International Sourcing with Ashco, Inc. He has also been a partner in J.B. Nayak & Son’s and assistant manager
with the Assam Company India Ltd, Assam.
Employees
The total manpower on the rolls of the Company is more than 80 as on the date of the Draft Red Herring
Prospectus. For entire manpower requirement, the Company banks mainly on manpower consultancy firms.
Disclosures Regarding Employees Stock Option Scheme / Employees Stock Purchase Scheme
Till date, the Company has not introduced any Employees Stock Option Scheme / Employees Stock Purchase
Scheme, as required by the Guidelines or Regulations of SEBI relating to Employee Stock Option Scheme and
Employee Stock Purchase Scheme.
80
PROMOTERS
Copy of the Permanent Account Number, Bank Account Number and passport of the above have been submitted
to the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited.
Promoter Group
A. Relatives of Promoters
The other individuals who form part of the Promoter Group of SRS Entertainment Limited are Mr. Lalit Bansal,
Mr. N. C. Bansal, Mr. Bishan Bansal, Mr. Suresh Bansal and Mrs. Sanjna Bansal. These individuals are not
holding any directorships in the Company and are not involved in the day-to-day management of the Company.
B. Corporate Bodies
It is promoted by Mr. Sushil Singla, Mr. Rajesh Singla and Mr. Vinod Jindal. The Board of Directors of the
company comprises of Mr. Sushil Singla, Mr. Sanjay Singla, Mr. Praveen Singla, Mr. Rajesh Singla, Mr. Vinod
Jindal and Mr. Bishan Bansal.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
81
Total 80,81,800 100.00
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 242.71 167.54 77.60
Expenses 234.77 160.27 72.74
Profit/ (Loss) Before Tax (PBT) 7.95 7.26 4.86
Profit/ (Loss) after Tax (PAT) 4.38* 5.82 4.43
Equity Share Capital 808.18 700.00 662.35
Share Application Money 1.62 31.00 9.30
Reserve And Surplus 339.56 10.65 8.75
EPS 0.05 0.08 0.07
NAV 14.20 10.15 10.13
*The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company
enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher
provision for tax has been made in F.Y2005.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 90.74 31.80 32.77
Expenses 89.38 30.91 31.92
Profit/ (Loss) Before Tax (PBT) 1.37 0.89 0.85
Profit/ (Loss) after Tax (PAT) 1.03 0.88 0.04
Equity Share Capital 150.00 117.24 60.00
Share Application Money 41.46 0.00 6.84
Reserve & Surplus 185.09 53.98 0.79
EPS 0.07 0.08 0.01
NAV 22.11 14.26 9.36
82
number of the company with ROC is 55-85457. The company has the authorised service station and sub
dealership of TVS motors and direct selling agents of various finance companies to finance of vehicles.
The company is promoted by Mrs. Ritu Jindal and Mr. Rishi Prakash Chikkara. Its Board of Directors are Mrs.
Ritu Jindal, Mr. Rishi Prakash and Mrs. Sangeeta Kapoor.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Name of Shareholder No. of Shares % of Shareholding
Promoters
Mrs. Ritu Jindal 68,300 4.91
Mr. Rishi Prakash Chikkara 32,400 2.33
Relatives, Friends & Associates 12,89,600 92.76
Total 13,90,300 100.00
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 136.00 23.24 5.02
Expenditure 130.60 22.50 4.91
PBT 1.46 0.75 0.10
PAT (0.35)* 0.69 0.06
Share Capital 139.03 116.12 50.00
Share Application Money 3.30 5.80 0.00
Reserves & Surplus 84.35 16.89 0.08
EPS 0.00 0.06 0.01
NAV 15.69 10.96 9.99
* The company has made provission for deffered tax liability to the tune of Rs.1,70,200 for the prior years in the
current year.
The company is promoted by Mr. Girraj Prasad Jindal and Mr. Karamvir Singh and its Board of Directors
comprises of Mr. Girraj Prasad Jindal, Mr. Karamvir Singh and Mr. Khem Chand.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 418.82 53.17 53.42
Expenses 412.71 47.28 51.39
83
Profit/ (Loss) Before Tax (PBT) 6.11 5.89 2.03
Profit/ (Loss) after Tax (PAT) 3.86* 5.42 1.86
Equity Share Capital 156.22 111.79 95.57
Share Application Money 0.00 0.02 9.20
Reserve & Surplus 196.69 63.95 11.54
EPS 0.25 0.48 0.19
NAV 22.59 15.72 11.21
*The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company
enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher
provision for tax has been made in F.Y2005.
It is promoterd by Mr. Naresh Goel, Mr. Nanak Chand Tayal and Mr. Dinesh Kumar Goel. Its Board of
Directors comprises of:
1. Mr. Naresh Goel
2. Ms. Manju Rani Jain
3. Mr. Sunil Jindal
4. Mr. Nanak Chand Tayal
5. Mr. Dinesh Kumar Goel
6. Mr. Vipin Nalwa
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 389.75 379.78 150.19
Expenses 383.95 374.73 143.19
Profit/ (Loss) Before Tax (PBT) 5.80 5.05 7.01
Profit/ (Loss) after Tax (PAT) 3.41* 4.49 6.45
Equity Share Capital 757.99 700.00 700.00
Share Apllication Money 31.22 0.00 29.95
Reserve And Surplus 188.93 11.56 11.98
EPS 0.04 0.06 0.09
NAV 12.49 10.17 10.17
*The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company
enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher
provision for tax has been made in F.Y2005.
84
Company (India) Limited. Subsequently, on November 18, 2003 its name was changed from Gomti Manutrade
Limited to BTL Sales Limited and the company received a fresh Cetificate of Incorporation. The registration
number of the company with ROC is 55-41949. The company deals in manufacturing and trading of milk, edible
oil, Vanspati Ghee, and other consumable items.
Promoters of the company are Mr. Dheeraj Gupta and Mrs. Sanjana Bansal. Its Board of Directors are Mr.
Dheeraj Gupta, Mr. Nitin Kumar and Mrs. Sanjan Bansal.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-2003
Income 180.56 1.66 0.53
Expenses 179.55 1.64 0.46
Profit/ (Loss) Before Tax (PBT) 1.01 0.02 0.07
Profit/ (Loss) after Tax (PAT) 0.60 0.01 0.04
Equity Share Capital 117.77 74.25 10.00
Share Application Money 0.00 43.65 12.98
Reserve & Surplus 203.96 64.32 0.05
EPS 0.05 0.00 0.04
NAV 27.24 18.57 9.28
Promoters of the company are Mr. Vinod Gupta, Mr. Rakesh Gupta, Mr. Ashish Gupta and Mr. Rahul Gupta.
It’s Board of Directors comprrise of Mr. Vinod Gupta and Mr. Ashish Gupta.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 2.65 0.71 0.35
Expenses 0.24 0.29 0.38
85
Profit/ (Loss) Before Tax (PBT) 2.41 0.42 (0.03)
Profit/ (Loss) after Tax (PAT) 2.28 0.31 (0.03)*
Equity Share Capital 45.29 37.55 31.17
Share Application Money 0.00 0.00 0.42
Reserve & Surplus 78.61 53.33 34.20
EPS 0.50 0.08 0.00
NAV 27.29 24.10 20.82
*In F.Y 2003, the company has suffered a loss of approximately Rs.0.15 lacs on sale of quoted investment.
The company is promotered by Mr. Vinod Gupta, Mrs. Monica Gupta and Vinod Kumar HUF. The Board of
Directors of the company comprises of Mr. Vinod Gupta and Mrs. Monica Gupta.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 0.00 0.00 0.00
Expenses 0.00 0.00 0.00
Profit/ (Loss) Before Tax (PBT) 0.00 0.00 0.00
Profit/ (Loss) after Tax (PAT) 0.00 0.00 0.00
Equity Share Capital 18.02 18.02 17.72
Share Application Money 1.85 1.70 1.70
Reserve & Surplus 26.85 26.85 26.40
EPS 0.00 0.00 0.00
NAV 24.41 24.46 24.66
It is promoted by Mr. Raju Gupta and Mr. Dinesh Khatri. Borad of Directors of the company are Mr. Raju
Gupta and Mr. Dinesh Khatri
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing this Red Herring Prospectus with RoC is as
under:
86
Total 15,36,245 100.00
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-2005 2003-2004 2002-2003
Income 31.42 40.82 30.87
Expenses 30.11 39.59 29.73
Profit/ (Loss) Before Tax (PBT) 1.31 1.23 1.14
Profit/ (Loss) after Tax (PAT) 0.85* 1.04 0.97
Share Capital 153.62 128.04 108.41
Share Application Money 0.00 0.00 24.50
Reserves & Surplus 138.65 61.72 1.80
EPS 0.06 0.08 0.09
NAV 19.03 14.82 10.17
*The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company
enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher
provision for tax has been made in F.Y2005.
Promotes of the company are Mr. Ashwani Taneja and Mrs. Meena Aggarwal. Its Board of Directors Mr.
Ashwani Taneja, Mrs. Meena Aggarwal and Mr. Ritesh Aggarwal.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing this Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-2005 2003-2004 2002-2003
Income 3.68 2.43 1.93
Expenses 3.35 2.22 1.73
Profit/ (Loss) Before Tax (PBT) 0.33 0.21 0.21
Profit/ (Loss) after Tax (PAT) 0.21 0.14 0.13
Share Capital 40.92 40.92 40.92
Share Application Money 51.05 28.80 13.80
Reserves & Surplus 0.63 0.42 0.28
EPS 0.05 0.03 0.03
NAV 10.15 10.10 10.05
There is no change in the management in any of the above Promoter Group companies during the last three
financial years.
The Permanent Account Numbers, Bank Account Numbers, the Company Registration Numbers and the
addresses of the Registrars of Companies where the Promoter Group companies are registered have been
submitted to the National Stock Exchange of India Limited and The Bombay Stock Exchange Limited.
87
Common Pursuits
There are no common pursuits in the business of our Company and our Promoter Group companies.
Interest of Promoters
The Promoters do not have any interest in the business of SRSEL, except to the extent of investments made by
them and their Promoter Group / investment companies in SRSEL and earning returns thereon. For details of the
salary and remuneration of the Managing Director, please refer to the section titled “Terms of Appointment and
Remuneration of Directors” on page no. 74 of the Draft Red Herring Prospectus.
The Company has entered into various agreements/transactions with its Promoter Group companies. For further
details, please refer to “Risk Factors” on page no. viii of the Draft Red Herring Prospectus and “Related Party
Transactions” in the para below.
88
GROUP COMPANIES
The company was incorporated on May 23, 1996 as Akriti Financial Services Private Limited The registration
number of the company with ROC is 55-79126. The company is engaged in the activity of financing of articles
or commodities of all and every kind of description by way of hire purchase, installment purchase or deferred
payment or similar transaction.
It is promoted by Mr. Raj Kumar Aggarwal, and Mr. Sunil Jindal. The Board of Directors of the company
comprises of Mr. Raj Kumar Aggarwal, Mrs. Shakuntla Devi, Mr. Sunil Jindal and Mr. Ritesh Kumar
Aggarwal.
Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 9.36 2.35 1.13
Expenses 7.87 2.04 1.45
Profit/ (Loss) Before Tax (PBT) 1.49 0.31 (0.32)*
Profit/ (Loss) after Tax (PAT) 1.37 0.28 (0.32)
Equity Share Capital 122.67 99.42 84.42
Share Application Money 38.30 67.28 58.38
Reserve And Surplus 88.50 65.25 50.25
EPS 0.11 0.03 ---
NAV 249.30 232.13 192.58
* The company sustained loss in the F.Y. 2003 because it did not receive dividend income on its investments in
unquoted securities.
The company was incorporated on December 04, 1973 as Ferro Plast Private Limited and received a fresh
Certificate of Incorporation on April 8, 1996 subsequent upon change of name to Ferro Plast Limited on
conversion to public limited company. The registration number of the company with ROC is 55-6980. The
company is engaged in the business as factors, financers, guarantors, finance brokers and agent to do business of
financing by way of Hire purchase, leasing, installment purchase or similar transaction.
It is promoted by Mr. Rajeev Vashisht, Mrs. Annapurna Gupta and Mr. Raju Bansal. The Board of Directors of
the company comprises of Mr. Rajeev Vashisht, Mrs. Annapurna Gupta, Mr. Raju Bansla and Mr. Sunil
Aggarwal.
The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as
under:
89
Mrs. Annapurna Gupta 25,000 20.79
Mr. Sunil Aggarwal 310 0.26
Mr. Raju Bansal 2,255 1.87
Sub-total 28,000 23.28
Non Promoters 92,275 73.72
Total 1,20,275 100.00
Financial Performance:
Financial highlights for the last three years is as follows:
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03
Income 8.39 3.43 3.12
Expenses 7.78 3.33 2.95
Profit/ (Loss) Before Tax (PBT) 0.61 0.10 0.17
Profit/ (Loss) after Tax (PAT) 0.42 0.09 0.16
Equity Share Capital 120.28 116.53 93.03
Share Application Money 46.54 12.38 35.60
Reserve And Surplus 27.25 23.50 (0.57)*
EPS 0.35 0.08 0.17
NAV 194.07 152.26 127.76
* The negative reserves and surplus is due to accumulated loss of prior years
Currency of presentation
For currency of presentation used in the Draft Red Herring Prospectus kindly refer to the section titled
‘Currency of Presentation’ on page no. vi of the Draft Red Herring Prospectus.
Dividend Policy
The declaration and payment of dividends will be recommended by our Board of Directors and our
shareholders, in their discretion, and will depend on a number of factors, including but not limited to our
earnings, capital requirements and overall financial condition. The Company has not declared or paid dividend
since its inception since the Company began commercial operations in November 2004.
90
FINANCIAL INFORMATION
To
The Board of Directors
SRS Entertainment Limited,
(Formerly Known as SRS Commercial Co. Limited)
Delhi
Dear Sir(s),
We have examined and found correct the Audited Accounts of SRS Entertainment Limited for the past five
financial years/period ended 31/03/2001, 2002, 2003, 2004, 2005 and for the quarter ended on 30th June 2005
being the last date upto which the accounts of the Company have been made up and audited by us. Subject to
paragraph 3(f) of Auditors Report and Notes on Accounts in Schedule IV of the said audited financial
statements, at the date of signing this report, we are not aware of any material adjustment which would affect the
result shown by these accounts in accordance with the requirement of Part II of Schedule II to the Companies
Act, 1956.
In accordance with the requirements of Paragraph B (1) of Part II of Schedule II to the Companies Act 1956 (the
Act), the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (SEBI
Guidelines) and our terms of reference with the Company dated 22nd January, 2005 requesting us to make this
report for the purpose of the Offering Memorandum as aforesaid, we report that:
The restated profits of the Company for the financial years/period ended 31stMarch 2001, 2002, 2003, 2004,
2005 and quarter ended on 30.06.2005 are as set out in Annexure I to this report. These profits have been arrived
at after charging all expenses including depreciation and after making such adjustment and regroupings as in our
opinion are appropriate and more fully described in the Significant Accounting Policies and Notes appearing in
Annexure III & IV respectively to this report.
The restated assets and liabilities of the Company as at 31st March, 2001, 2002, 2003, 2004, 2005 and quarter
ended on 30.06.2005 are as set out in Annexure II to this report after making such adjustments and regroupings
as in our opinion are appropriate and more fully described in the Significant Accounting Policies and Notes
appearing in AnnexureIII & IV respectively to this report.
The restated cash flow statement of the Company as at 31stMarch, 2001, 2002, 2003, 2004, 2005 quarter ended
on 30.06.2005 and are as shown in Annexure V to this report.
The company has not paid any dividend during the years/period ended 31st March , 2001, 2002, 2003, 2004,
2005 and quarter ended on 30.06.2005.
We have examined the following financial information relating to the Company and as approved by the Board
of Directors for the purpose of inclusion in the Offer document:
In our opinion the above financial information of the Company read with Significant Accounting Policies and
notes on account attached in Annexure III & IV to this report, after making adjustments and re-grouping as
considered appropriate has been prepared in accordance with Part II of Schedule II of the Act and the SEBI
Guidelines.
91
This report is intended solely for your information and for inclusion in the Offer document in connection with
the specific Public Offer of equity shares of the Company and is not to be used, referred to or distributed for any
other purpose without our written consent.
Thanking you,
92
ANNEXURE – I
(Rupees in Lacs)
Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01
Ended
on
30.06.20
05
Income
A) Sales :
a) Operational Revenue 369.20 453.17 0.00 0.00 0.00 0.00
Company
b) Products traded by the 34.88 35.62 0.00 0.00 46.30 0.00
Company
Sub-Total (a) + (b) 404.08 488.79 0.00 0.00 46.30 0.00
(c ) Other Operational Income 185.70 275.10 0.00 0.00 0.00 0.00
(d) Other Income 11.80 1.47 0.00 1.13 0.00 0.29
(e) Interest 0.00 0.00 0.00 0.00 1.97 0.39
Total (A) 601.58 765.36 0.00 1.13 48.27 0.68
Expenditure
Work Cost/Operational Exp. 93.68 245.63 0.00 0.00 43.80 0.00
Staff Costs 27.17 33.95 0.00 0.15 0.00 0.00
PVR Share 6.57 6.20 0.00 0.00 0.00 0.00
Administration Expenses 116.20 87.26 0.00 0.00 0.63 0.33
Selling & Other Expenses/ 14.56 15.14 0.00 0.00 0.00 0.00
Sales Promotion
Interest 51.27 72.59 0.00 0.89 3.81 0.30
Fringe Benefit Tax 0.50 0.00 0.00 0.00 0.00 0.00
Depreciation 29.70 45.00 0.00 0.00 0.00 0.00
Preliniminery Expenses W/off 0.46 1.83 0.00 0.03 0.03 0.03
Total (B) 340.11 507.60 0.00 1.07 48.27 0.66
Net Profit before tax 261.47 257.76 0.00 0.06 0.00 0.02
Taxation 22.00 20.21 0.00 0.02 0.00 0.01
Deferred Tax 8.20 18.46 0.00 0.00 0.00 0.00
Profit After Tax 231.27 219.09 0.00 0.04 0.00 0.01
Profit B/f for Last Years 219.14 0.05 0.05 0.01 0.01 0.00
Profit Transferred to Reserve 450.41 219.14 0.05 0.05 0.01 0.01
& Surplus
93
ANNEXURE – II
(Rupees in Lacs)
Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01
Ended
on
30.06.200
5
A. Fixed Assets :
Gross Block 4099.89 4088.99 0.00 0.00 0.00 0.00
Less Depreciation 74.70 45.00 0.00 0.00 0.00 0.00
Net Block 4025.19 4043.99 0.00 0.00 0.00 0.00
Add :- Capital Work in 603.11 568.64 2337.30 982.36 126.89 0.00
Progress
Less : Revaluation 0.00 0.00 0.00 0.00 0.00 0.00
Reserve
Net Block after 4628.30 4612.63 2337.30 982.36 126.89 0.00
adjustment
for Revaluation Reserve
Sub-Total 4628.30 4612.63 2337.30 982.36 126.89 0.00
94
ANNEXURE - III
3. Depreciation: Depreciation of other assets is provided on "Straight line Method”, at the rates prescribed by
Schedule XIV to the Companies Act, 1956.
4. Sundry Debtors/Loans and Advances: are stated net of provision for identified doubtful debts/advances.
5. Valuation of work in progress: The work in progress has been determined by the Management at the
estimated realizable cost.
8. Contract Receipts - Joint venture: Proportionate Consolidation method of accounting and reporting is
followed in respect of Joint venture entered into by the Company. The Income from such joint venture is
recognised on the basis of Bills submitted, certified and sanctioned by the appropriate authorities. The
actual expenses for such Project in Joint Venture are accounted on the basis of the Profit sharing ratio.
9. Earning Per Share: Earning per Share is calculated by dividing the net profit or loss for the period
attributable to equity shareholders by the weighted average number of equity shares outstanding during the
period.
10. Taxation: Provision for Income tax comprises of current tax and deferred tax charge or release. Deferred tax
is recognised, subject to consideration of prudence, on timing differences, being difference between taxable
and accounting income/expenditure that originate in one period and are capable of reversal in one or more
subsequent period(s). Deferred tax assets are not recognised unless there is "virtual certainty" that sufficient
future taxable income will be available against which such deferred tax assets will be realised
11. Contingencies: Liabilities which are material and whose future outcome cannot be ascertained with
reasonable certainty are treated as contingent and disclosed by way of notes to the accounts.
95
ANNEXURE IV
Notes on Accounts:
2. Other additional quantitative information pursuant to para 3, 4-C, and 4-D of part - II of Schedule VI of the
Companies Act, 1956 is not ascertainable and amenable and hence not included in the Report.
4. Directors remuneration:
During the quarter ended on 30th June 2005 directors received the remuneration of Rs. 3.00 Lacs and NIL
during the previous year 2004-05.
5. Auditors remuneration
(Rupees in Lacs)
Qtr. Ended
Particulars on 2004-05 2003-04 2002-03 2001-02 2000-01
30.06.2005
Audit fees NIL 1.03 0.16 0.16 0.05 0.01
The auditors remuneration has been approved by the shareholders.
6. Income tax assessment has been completed upto the assessment year F.Y. 2003-04
7. The Deferred Tax liability comprises of tax effect of timing differences on account of:
Deferred tax liability has arisen during the quarter ended on 30th June 2005 Rs.8.19 Lacs and in the previous
F.Y. 2004-05 amounting to Rs.18.46 Lacs on account of timing difference in the depreciation (as per
Balance Sheet). There are no other deferred tax liabilities of deferred tax assets.
8. As the company’s business activity comprises of different segments of revenue that arises from the activity
of multiplex viz. theater revenue, lease rent, Advertisement Space Selling/Space Selling and Parking
revenue and club member ship fees. During the quarter ended on 30th June 2005 the company has accepted
the application of 478 persons.
9. The balance on all personal accounts is subject to confirmation by the parties and reconciliation, if any.
10. Previous year figures have been shown regrouped / rearranged, where considered necessary.
11. There are no amounts outstanding in respect of unpaid dividend / fixed deposits for more than seven years
to be transferred to Investors Education and Protection Fund.
96
ANNEXURE – V
Inflow
Interest Income 7.14 0.00 0.00 0.00 1.97 0.38
Sale of Investment 0.00 0.00 0.00 37.43 0.00 0.00
Net cash flow from (38.23) (2338.21) (1355.14) (818.04) (156.35) (5.95)
Investing Activities (B)
C Cash Flow from Financing
Activities
Inflow
Increase in Share capital 108.44 489.60 708.30 441.64 95.00 5.07
Share Premium 0.00 353.85 0.00 0.00 0.00 0.00
97
Increase in Borrowing- Net 161.15 369.22 388.66 601.07 0.00 9.89
Misc. Income (Exchange 0.00 0.00 0.00 0.00 0.00 0.00
Rates)
Increase (Decrease) (42.73) 1059.60 61.58 (2.59) 32.65 2.70
Unsecured Loans
Net Cash in Financing 226.86 2272.27 1158.54 1040.12 127.65 17.66
Activities (c )
Net Increase/(Decrease) in 17.54 53.83 66.46 (3.47) 6.26 8.70
cash and cash equivalents
Cash and cash equivalent 131.78 77.95 11.49 14.96 8.70 0.00
(opening balances)
Cash and cash equivalents 149.32 131.78 77.95 11.49 14.96 8.70
(closing balances)
ANNEXURE – VI
98
ANNEXURE – VII
CAPITALISATION STATEMENT
(Rupees in Lacs)
Particulars Qtr. Ended on 31/3/2005 31/03/2004
30.06.2005
Short Term Debts
Unsecured Loans 1111.21 1153.93 94.34
Total Short Term Debt (A) 1111.21 1153.93 94.34
Long Term Debt
Secured Loans 1530.00 1368.85 999.62
Total Long Term Debt (B) 1530.00 1368.85 999.62
Shareholders funds
Share Capital 1703.85 1703.85 1250.00
Share Application Money 144.19 35.75 0.00
Share Premium 353.85 353.85 0.00
Reserve & Surplus 450.41 219.14 0.05
Less:- Misc. Exp. Not yet w/off (15.81) (16.27) (0.20)
Total shareholders fund (C) 2636.49 2296.32 1249.85
Long term Debt/Equity Ratio (A/C) 0.58:1 0.59:1 0.80:1
Post issue capitalization cannot be determined till the completion of book building process.
99
ANNEXURE – VIII
(Rupees in Lacs)
Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01
Ended on
30.06.200
5
Tax Rate (including 33.66% 36.59% 36.59% 35.70% 35.70% 39.55%
Surcharge & Cess)
Profit as per Profit & Loss 261.47 257.77 0.00 0.06 0.00 0.01
Account
Tax at Notional Rate 88.01 94.32 0.00 0.02 0.00 0.00
Adjustments
Difference between Tax 97.25 235.48 0.00 0.00 0.00 0.00
depreciation and Book
Depreciation
Net Adjustments 97.25 235.48 0.00 0.00 0.00 0.00
Tax Saving thereon (As per 32.73 86.17 0.00 0.00 0.00 0.00
Balance Sheet)
Tax as per MAT (As per 22.00 20.21 0.00 0.01 0.00 0.01
Balance Sheet)
Tax Provided in the books 22.00 20.21 0.00 0.02 0.01 0.01
ANNEXURE – IX
100
DETAILS OF INVESTMENT
A. Unquoted Shares
(Rupees in Lacs)
Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01
Ended
on
30.06.20
05
(a) North Delhi Credit & 0.00 0.00 0.00 0.00 0.00 6.00
Investment Limited
(b) BTL Home Finvest Limited 0.00 0.00 0.00 0.00 3.00 0.00
(c) BTL Investments Limited 0.00 0.00 0.00 0.00 9.60 0.00
(d) J.D. Sons Steel (P) Limited 0.00 0.00 0.00 0.00 18.50 0.00
(e) Rajat Fincap (P) Limited 0.00 0.00 0.00 0.00 6.33 0.00
Total 0.00 0.00 0.00 0.00 37.43 6.00
B. Quoted Shares
The Company did not make any investment in quoted shares during the period/years ending on March 31 2005,
2004, 2003, 2002 and 2001 and quarter ended on 30.06.2005.
ANNEXURE – X
ANNEXURE – XI
DETAILS OF LOANS & ADVANCES
(Rupees in Lacs)
Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01
Ended
on
30.06.20
05
a) Loan to Parties 0.00 0.00 0.00 0.00 0.00 0.20
(Unsecured considered Good)
b) Advances recoverable in
cash or in kind or of for value
to be received.
Advance to Suppliers, 200.74 1.61 0.00 0.00 0.00 0.00
Contractors & Others
Staff Imp rest & Advances 5.81 5.77 0.00 0.00 0.00 0.00
Pre- Paid Expenses 24.20 13.76 0.00 0.00 0.00 0.00
Security Deposits 45.23 40.77 0.00 0.00 0.00 0.00
Service Tax Recoverable 1.01 0.30 0.00 0.00 0.00 0.00
Advance Tax & TDS 11.34 8.85 0.23 0.12 0.08 0.08
101
Sub-Total 288.33 71.06 0.23 0.12 0.08 0.08
Total 288.33 71.06 0.23 0.12 0.08 0.28
ANNEXURE – XII
(ii) Others
From Individual 3.35 5.33 0.00 0.00 0.56 0.00
From H.U.F 0.00 0.00 2.65 2.59 4.78 2.70
From Bodies Corporate 656.17 626.91 41.27 0.00 30.00 0.00
Trade Deposits 25.70 23.67 0.00 0.00 0.00 0.00
Sub Total (ii) 685.22 655.91 43.92 2.59 35.34 0.00
Total 1111.21 1153.93 94.34 32.76 35.34 2.70
ANNEXURE – XIII
Detail of secured loan outstanding as on 31.03.2005, 31.3.2004, 2003, 2002, and 2001
102
(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03 2001-02 2000-01
Secured Loan from Bank 1279.30 999.62 610.96 9.89 9.89
ANNEXURE – XIV
The related party disclosures entered into by the Company are reported to be NIL in the audited financial
statements for the year ended on 31st March 2005 and quarter ended on 30th June 2005.
103
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussions of financial condition and results of operations together with audited
financial statement for the year ending on March 31, 2001, 2002, 2003, 2004 and 2005 under Indian GAAP
including scheduled, Annexure and notes thereto and the reports thereon, which appear in the Draft Red
Herring Prospectus. These financial statements are prepared in accordance with Indian GAAP, the Companies
Act and SEBI Guidelines and restated as described in the Auditor’s Report of T. K. Gupta & Associates dated
August 29,2005 in the section with the title “Financial Information” at page no. 91 of the Draft Red Herring
Prospectus. Unless otherwise stated, the financial information used in this section is derived from our audited
unconsolidated financial statements under Indian GAAP, as restated.
Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the 12-month
period ended March 31 of that year.
The Company’s maiden project, SRS Multiplex began commercial operations from November 12, 2004. The
Multiplex is a unique complex, combining a 3 screen Cineplex, all the facilities of a modern shopping mall, a
club house, restaurants/Food Court and a coffee loungecoffee lounge.
The second is in the real estate sector. The Multiplex consists of 23,000 sq. ft. area of shopping complex. This is
either let out on either lease rental basis or sold. Many brands such as Rayban, Airtel, Pizza Hut, Mc-Donalds
etc. have their presence in the Multiplex.
Going ahead, the Company plans to foray into the retail segment by launching a chain of its retail stores under
the name and style "SRS Value Bazaar". The Bazaar will offer lifestyle products in several price ranges to cater
to the aspirational needs of the consumers in each of their locations. The products stocked in these Bazaars will
reflect the unique tastes and purchasing power capacities of each city individually.
The first SRS Value Bazaar is being set up in the SRS Multiplex at Faridabad. This is expected to become
operative from October 01, 2005. Products such as garments, accessories, household items, groceries, cosmetics
etc will be made available at this bazaar at discounted rates upto 40%. The Company plans to make the SRS
Value Bazaar a common feature of its proposed Project and expects it to become a major revenue driver for the
Company.
These factors and a number of future developments may affect our results of operations, financial condition and
cash flow in future periods. We believe that the following future developments may affect our future results of
operations, financial condition and cash flow:
Retail
Multiplexes are fast emerging as the one of the key anchor tenants for most organised retail outlets in India.
Improving regulatory environment.
104
Multiplexing – highly fragmented industry with scattered ownership – opportunities exists for nationwide
film exhibition chain through chain of multiplexes.
For more information on these and other factors/developments which have or may affect us financially, please
refer to the other parts of this “Managements' Discussion and Analysis of Financial Condition and Results of
Operations” section and the section titled “Risk Factors” on page no. viii.
The following table gives the details of our operations for FY 2005 and for the three month period ended
June 30, 2005
(Rupees in Lacs)
Particulars For 3 months ended For the financial year
June 30, 2005 ended March 31, 2005
Revenue
Operational Income 404.08 488.79
Other Operational Income 185.70 275.10
Other Income 11.80 1.47
Total 601.58 765.36
Expenditure
Work Cost/Operational Exp. 93.68 245.63
Staff Costs 27.17 33.95
PVR Share 6.57 6.20
Administration Expenses 116.20 87.26
Selling & Other Expenses/ Sales Promotion 14.56 15.14
Interest 51.27 72.59
Fringe Benefit Tax 0.50 0.00
Depreciation 29.70 45.00
Preliniminery Expenses W/off 0.46 1.83
Total 340.11 507.60
F.Y 2005
SRS Multiplex commenced commercial operations on November 12, 2004 at Faridabad (NCS - Delhi). Hence,
the revenues and expenditure for the F.Y2005 may not be considered representative of the entire year.
Revenue
Particulars For 3 months Ratio to total For the financial Ratio to total
ended June income (%) year ended income (%)
30, 2005 March 31, 2005
Revenue
Operating Revenue 404.08 67.17 500.32 64.40
Other Operating 185.70 30.87 275.10 35.41
Revenue
Other Income 11.80 1.96 1.47 0.19
Total 601.58 100.00 776.89 100.00
Operational Revenue
Operation revenue means the revenue from theaters viz. sale of cinema tickets and sale of candy bar at snack
counter inside the theater and space selling.
105
Particulars For 3 months Ratio to For the financial Ratio to total
ended June 30, total income year ended March income (%)
2005 (%) 31, 2005
Box Office Collection 125.57 20.87 130.52 16.80
Sale of Snacks at Candy 34.88 5.80 31.81 4.09
Bar
Space Selling 4.63 0.77 337.99 43.51
SRS Club Revenue 239.00 39.73 0.00 0.00
Total 404.08 67.17 500.32 64.40
Other Income
The other income includes the miscellaneous income such as display charges on day-to-day basis and
miscellaneous liability written off on account of short and excess and miscellaneous charges recovered from the
tenants such as sound license fees
Operating Expenses
Operating expenses means distributors share, Entertainment tax payable to the State Government, Show tax
payable to the municipal corporation and purchase cost of the snacks sold at candy bar inside the theater and
cost of space selling.
Particulars For 3 months Ratio to total For the financial Ratio to total
ended June 30, income (%) year ended March income (%)
2005 31, 2005
Cost of Purchase of 12.56 2.09 11.53 1.48
snack sold at Candy
Bar
Distributors Share 37.60 6.25 40.15 5.17
Entertainment Tax 41.86 6.96 43.50 5.60
PVR Share 6.57 1.09 6.20 0.80
Show Tax 0.27 0.04 0.42 0.05
Cost of Space Selling 1.39 0.23 161.56 20.80
Total 100.25 16.66 263.36 33.90
Operating Margin
The operating margin means the gross total of operating and other operating revenue/income and
deduction/subtraction of operating expenses.
106
Particulars For 3 months Ratio to total For the financial Ratio to total
ended June 30, income (%) year ended income (%)
2005 March 31, 2005
Operating Revenue 404.08 67.17 500.32 64.40
Less Operating 100.25 16.66 263.36 33.90
Expenses
Operating Profit 303.83 50.51 236.96 30.50
(a) Personal Expenses includes the expenses on salary to the staff including the P.F. and E.S.I expenses,
and staff welfare expenses.
(b) Office and administrative expenses includes the Electricity and water expenses, Security and house
keeping, Auditors remuneration, Printing and stationery, Postage and courier, Repair and Maintenance,
Insurance, Rates and taxes, ROC Expenses and Miscellaneous Expenses.
(c) Marketing Expenses includes Sales Promotion Expenses and Tour and traveling Expenses.
Depreciation
Fixed assets are stated at their original cost of acquisition less accumulated depreciation. Cost includes all cost
to bring the assets to present condition. Expenditure incurred up to the date of launching of SRS Multiplex, to
the extent attributable to the construction of fixed assets are also capitalised.
Depreciation is provided, pro rata to the period of use, by straight line method at the rates prescribed in the
Schedule XIV of the companies Act, 1956.
Cash Flows
The table below summarises our cash flows for the quarter ending June 30, 2005, F.Y 2005 and F.Y 2004
107
Net Worth
Borrowings
In the Financial Year 2004, we made the addition to the fixed assets including capital work in progress
amounting to Rs. 1354.94 Lacs on the construction of SRS Multiplex.
In the Financial Year 2005, we made the addition to the fixed assets including capital work in progress
amounting to Rs. 2275.33 Lacs on the construction of SRS Multiplex.
In the quarter ending June 30, 2005, we made the addition to the fixed assets including capital work in progress
amounting to Rs. 46.76 Lacs towards further investment on expansion of SRS Multiplex.
Our capital expenditure plan as per our objects for the current issue is below:
The total cost of our proposed Project is Rs. 12000 Lacs. We have already given as advance of Rs. 1997.03 Lacs
on capex. The balance amount of will be funded through IPO proceeds and debt of Rs. 2000 Lacs. Shortfall, if
any, will be met through the internal accruals of the Company.
For details on deployment of the funds to be raised from the Issue kindly refer to the section “Introduction -
Objects of the Issue – Funds Deployed” on page no. 29 of the Draft Red Herring Prospectus.
In case of any short fall/cost overrun, we intend meeting the fund requirements through our internal accruals.
Our internal accruals for the F.Y2004-05 as per last audited accounts are Rs.219.09 Lacs.
Current Assets
The current assets include the inventory, Sundry Debtors and cash and bank balance.
An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:
2. Significant economic changes that materially affected or are likely to affect income from continuing
operations:
Any major changes in policies of the Government would have significant impact on the profitability of the
Company.
Except the above, there are no significant economics changes that may materially affect or likely to affect
income from continuing operations.
3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales,
revenue or income from continuing operations:
Apart from the risks as disclosed under heading “Risk Factors” beginning from page no. viii of the Draft
Red Herring Prospectus, there are no other known trends or uncertainties that have had or are expected to
have a material adverse impact on revenue or income from continuing operations.
108
4. Future changes in relationship between costs and revenues, in case of events such as future increase in
labour or material costs or prices that will cause a material change are known:
Nil
5. The extent to which material increases in net sales or revenue are due to increased sales volume,
introduction of new products or services or increased sales prices
The growth in revenues is in line with rising trend in the business of our Company.
6. Total turnover of each major industry segment in which the company operated
Our Company operated in two industry segments viz. Entertainment and Real Estate. Turnover for the
quarter ended June 2005 from each of the segments is Rs.404.08 Lacs from entertainment and Rs. 185.70
lacs from real estate.
I. Competitive Conditions
The entertainment and retail businesses are subject to stiff competition. We believe that we are well
positioned to promote SRS Multiplex as a preferred Multiplex destination to the customers in the region in
which we are presently operating.
On account of our competitive strengths, we feel that we are in a position to serve our customers to their
satisfaction. Few of our strengths are:
Professional and young management team
Strong communication skills
Innovative and focused marketing strategies
Understanding of entertainment, retail and real estate businesses
II. With the changing consumer aspirations and drive for better life style, the tier-II cities have witnessed a
similar change towards such aspirations as seen in Metros. The educated and youth population with higher
disposable incomes would drive customer aspirations for better entertainment alternatives, life style products
and visiting of eatery places.
We are in the process of consistently evaluating opportunities and may form an alternative formats within
our proposed offering as per our perspective of the new opportunities available in the market place.
Our growth and strategies are based on increasing in the cities of operation selectively in two or more
formats of retail/ entertainment/ eatery joints.
Furthering SRS brand has a complete entertainment experience through unique and innovative promotions
enhancing the merchandise categories growing through economies of scale, developing new private labels,
offer better variety in each category, enhancing our operational experience through better systems and
process.
109
Promotions
The promotions are targeted at enhancing the funds in shopping and providing the customers with unique
experience. In the past, we have organised many promotional events which include:
Dance competition
Singing competition
Lori Festival
Competition
Presently operating from a single multiplex at Faridabad, we have been able to overcome any competition as
there is negligible presence of other Malls.
The twin city of Gurgaon happens to be the best overtaking in other cities in the country in terms of total
Malls/ Multiplex area. Faridabad being the other city touching the capital of the country has been witnessing
a series of new structures coming up. There are about 9 more multiplexes coming up over a length of about
12 kms. These would, in future, cause competition in terms of cineplexes. However, it will take atleast 2
years for our new projects to be set up as most of the present new projects are at the lower ground level and it
will take more than 2 years to start operations.
Benefiting from the first strength, in the future we would be facing competition from other retailers of
similar products and services. These include stand alone stores in the unorganised sector as well as other
chain of stores/ cinemas in the vicinity.
110
LEGAL INFORMATION
Outstanding Litigations
Apart from a Arbitration applicationed stated herein below, there are no present or threatened litigation by or
against the Company and there is no show cause notice or legal notice, which has been served on the Company.
The status of litigation as per representation by the management of the Company is given below:
Arbitration Application by The Home Stores (India) Limited V/s SRS Entertainment Limited
Home Stores (India) Limited (HSL) had pursuant to lease deed dated August 11, 2004 executed with the
Company agreed to take on lease 6806 sq.feet Super Area or 5445 Sq. feet Carpet Area on the Lower Ground
Floor in the SRS Multiplex at rent of Rs. 2,72,240 per month. As per the said lease deed, HSL was to take
possession of the premises on August 16, 2004 and to deposit Rs.8,16,720 towards security deposit equivalent to
three months rent. HSL paid Rs.5,44,480 on execution of the lease deed.
Subsequently HSL moved a Arbitration Application in the Hon’ble Hight Court of Delhi, under Section 11(6)(b)
of the Arbitration and Conciliation Act, 1956, against the Company alleging that the Company had failed to
adhered to the time schedule as per the lease deed and had breached the terms and conditions of thelease deed.
HSL demanded a sum of Rs.20 lac for the losses suffered by it on account of the non completion of the project
and its consequential handing over by the Company. HSL has also prayed to the Hon’ble High Court for the
appointment of Arbitrator and the disputes and difference arisen between the parties to be referred to the said
Arbitrator. A show cause notice dated August 04, 2005 was received by the Company on August 22, 2005 and
the matter has been listed for further directions on October 04, 2005.
2. Raj Kumar Aggarwal Vs. M/s K. K Sharma & Company and Kiran Kumar Sharma
This is a Criminal Complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The
Complainant had given a loan to the accused against the satisfaction of which the accused had given a cheque of
Rs. 2,06,000. The cheque bounced on being presented by the Complainant for collection to the bank. Aggrieved
by the bouncing of the cheque the Complainant has filed a Criminal Complaint before Additional Chief Judicial
Magistrate, Faridabad. The matter is pending adjudication.
(b) The litigation outstanding by or against the promoter Group Companies is given in below:
i. Individuals:
1. Satish Kumar Vs. Lalit Kumar
This is a civil appeal filed by Mr. Satish Kumar against the judgment and decree dated 8.19.2003 by Shri R.K
Jain Civil Judge Junior Division Faridabad in Civil Suit No 724 of 1998 vide which the suit of the
111
plaintiff/respondent has been decreed with cost and with the prayer for the acceptance of the appeal and setting
aside the judgment and decree of the learned lower court and dismissing the suit of the respondent with cost.
The matter is pending adjudication.
i. Individuals:
1. Lalit Kumar Vs. Satish Kumar
This is an execution petition filed by Mr. Lalit Kumar for the purpose of the recovery of a sum or Rs 1,93,056/-
against the Judgment Debtor Mr. Satish Kumar. A Decree of ejectment and recovery has already been passed in
favour of Mr. Lalit Kumar.
The execution petition has been stayed as the Judgment Debtor has filed an appeal.
3. Ved Prakash, Parbhu Dayal, Chetan Pal Singh, Vinod Kumar, Lalit Kumar, Manoj Kumar, Bishan Sarup
and Amit Kumar Vs. State of Haryana
This is an application under Section 144 of the Code of Civil Procedure for the restoration of possession before
the Sub Divisional Officer (Civil) Ballabgarh.
The petitioners had moved an application for the restoration of possession but the same was ordered to be
stayed sine die vide order dated 5.12.2003on account of pendensy of ROR No 167-168 of 2001-2. Aggrieved
form the order dated 5.12.2003 the petitioner preferred a revision before Shri Gulab Singh Sorad, IAS,
Commissioner Gurgaon Division, Gurgaon bearing executive revision No 59 of 2002-3. The said revision
petitions of the petitioners were accepted vide order dated 13.10.2004 and it was ordered that possession be
delivered to the owners to the disputed land. The petitioners are the owners of this land having purchased the
same from Col. Sir Harinder Singh Ex Ruler of Faridkot in 1989. There fore it has been prayed that the
possession be kindly be restored back to
The Petitioners in respect of khasra no. 158/2 measuring 1 Kanal 15 Marala situated within the Revenue Estate
of Ballabgarh. The petition is pending.
Since, the following Promoter Group Companies are engaged in the activity of automobile financing etc., these
cases are filed by them for recovery of business dues.
112
Nature of
Sr. No. Defendant/Accused Amount Involved (Rs.) Stage of Case
of Case
1. Rati Ram 249,471 138 of N. I. Act Pre Summoning Evidence
2. Harun 1,98,162 138 of N. I. Act Notice to Accused
3. Param Singh 1,50,000 138 of N. I. Act Notice to Accused
4. Fazru 1,41,607 138 of N. I. Act Notice to Accused
5. Ramanand 98,460 138 of N. I. Act Notice to Accused
6. Zakir Hussain 82,860 138 of N. I. Act Notice to Accused
7. Narpat Singh 55,741 138 of N. I. Act Notice to Accused
8. Mahinder 43,130 138 of N. I. Act Pre Summoning Evidence
9. Sabbir Ahmed 30,000 138 of N. I. Act Notice to Accused
10. Mubin 27,600 138 of N. I. Act Notice to Accused
11. Sirajudeen 21,972 138 of N. I. Act Notice to Accused
12. Akthar 20,151 138 of N. I. Act Notice to Accused
13. Imran 20,000 138 of N. I. Act Notice to Accused
14. Shamsher Singh 10,420 138 of N. I. Act Notice to Accused
113
12. Ghanshyam 65,535 138 of N. I. Act Notice to Accused
13. Dinesh Kuamr 65,000 138 of N. I. Act Complainat's Evidence
14. Jan Mohmed 64,000 138 of N. I. Act Notice to Accused
15. Sahabuddin 63,195 138 of N. I. Act Notice to Accused
16. Mahender Singh 60,000 138 of N. I. Act Notice to Accused
17. Harun 60,000 138 of N. I. Act Notice to Accused
18. Bal Mukand 52,121 138 of N. I. Act Notice to Accused
19. Jormal 44,103 138 of N. I. Act Notice to Accused
20. Jaibir Singh 41,806 138 of N. I. Act Notice to Accused
21. Bacchu Singh 40,266 Suit for Recovery Notice to Accused
22. Maqsood Ahmed 30,015 138 of N. I. Act Bailable Warrants of
Accused
23. Rati Khan 27,819 Suit for Recovery Notice to Accused
24. Ajad Singh 25,500 138 of N. I. Act Notice to Accused
25. Satbir 21,000 138 of N. I. Act Non Bailable Warrants of
Accused
26. Kartar Singh 10,160 138 of N. I. Act Bailable Warrants of
Accused
27. Rati Ram 9,030 138 of N. I. Act Bailable Warrants of
Accused
We the Board of Directors of SRS Entertainment Limited certify that there are no material developments since
the last balance sheet date save and except:
The Company has issued 1,00,00,000 equity shares of Rs.10 each for Rs.20 each on preferential basis to its
Promoters, Promoter Group Companies and others for a total amount of Rs.2000 Lacs. Details of the transaction
have been provided at page no. 11 of the Draft Red Herring Prospectus.
It should be noted that after the aforesaid allotment, Earning Per Share (EPS) of the Company stands dilitued to
Rs.5.06 per share from Rs.5.43 (annualised) per share as on June 30, 2005
114
GOVERNMENT APPROVALS/LICENSING ARRANGEMENTS
Technical Approvals
The Company has taken obtained Structural Safety Certificate, confirming that "Plot No. 1132, Sector-19
Faridabad" is designed confirming to Indian Standard Certifications and National Building Code Provisions
including that of earthquake design requirements, from Technical Projects Consultants, New Delhi.
4. Certificate of Importer Exporter Code No. 050264625 dated February 22, 2001
115
Cinema
10 HUDA Executive - 13.07.2004 - Water connection
Water Connection Engineer
HUDA,
Faridabad
11 Certificate of Assessing Haryana Value 17.09.2004 - VAT Registration
Registration, Haryana Authority Added Tax Act,
VAT 2003
12 Allotment of Regional Employees’ 11.10.2004 - Provident Fund
Provident Fund Code Provident Fund Provident Funds
Number Commissioner, & Miscellaneous
Haryana Provisions
Act,1952
13 Allotment of Regional Employee State 06.07.2005 - Employee State
Employee State Director, Insurance Act, Insurance Corporation
Insurance Employees State 1948
Corporations Code Insurance
Number Corporation
14 Approval for Administrator -- 22.06.2004 -- Approval for
construction and HUDA, construction.
maintenance of Faridabad
parking and common
area
15 Permission for Administrator, -- 18.03.2005 -- Permission to maintain
development of green Huda green area without
area permanent structures
for beautification of
area.
16 Permission for SE (OP) Circle, -- 12.01.2005 -- Permission granted for
release of enhanced DHBVNL, stopgap arrangement
contractual demand Faridabad. to the existing system.
of 750 KVA.
17. Inspection Of 1000 Chief Electrical -- 04.06.2004 -- During inspection,
KVA Transformer Inspector installations were
found to be complying
with the relevant
provisions of the Act.
18 Extension of load to SE (OP) Circle, -- 03.12.2004 -- Extension of load
1600KW DHBVNL, sanctioned by the
Faridabad authority.
19 Full Occupation Estate Officer, HUDA (Erection 11.08.2004 -- Construction of
Certificate HUDA, Faridabad of buildings) Building completely in
Regulations, compliance of
1979 approved building
plans and rules/
regulations of HUDA
20 Certificate of Non- Estate Officer, -- 14.05.2004 -- Certifying that the
Encumbrance HUDA, Faridabad property is free of any
Property encumbrance.
21 Possession Certificate Junior Engineer, -- 15.03.2002 -- Possession of the plot
HUDA, Faridabad permitted
22 DPC Certificate Sub-Divisional -- 10.12.2002 -- Construction of plot
Engineer
23 Allotment Letter Estate Officer, -- 28.01.2002 -- Letter for allotment as
HUDA, Faridabad per Form CC made on
free hold acquired by
way of bid
24 Fire NoC Assistant -- 10.08.2005 09.08.2006 In respect of Multiplex
Divisional Fire at Faridabad
116
Officer, Faridabad
The following licenses required for the Project are pending receipt:
i. Registration of the brand name SRS Value Bazaar has been applied for by the Company which is
pending with the relevant governemt authority.
ii. The Company is yet to apply for the abovementioned Government approvals/ Licences required for
implementing the Project. The above list is indicative of the approvals required by the Company to
inplement the Project and not exhaustive.
No consent of the Government of India is required by the Company for this Issue.
The Company has complied with all the applicable guidelines / directions issued by RBI from time to time.
As certified by the Legal Advisor to the Issue, except as stated above, the Company has received all the
necessary consents, licenses, permissions and approvals form the Government/RBI and various government
agencies, which are required for its present business.
117
OTHER REGULATORY AND STATUTORY DISCLOSURES
The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of the
Draft Red Herring Prospectus, the CAF, the Memorandum and Articles of Association of the Company, the
approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines
issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued
by Government of India and/or other statutory authorities and bodies from time to time, Listing Agreements
entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment
advise or letter of allotment or Security Certificate and rules as may be applicable and introduced from
time to time, the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above such terms and
conditions, the Equity Shares shall also be subject to applicable laws, guidelines, notifications and regulations
relating to issue of capital and listing of securities issued from time to time by SEBI, the Government of India,
RBI and or other authorities.
Prohibition by SEBI
The Company, its Directors, Promoters, entities forming the Promoter Group, other companies/entities
promoted by the Promoters, and companies/entities with which the Directors of the Company are associated as
directors, have not been prohibited from accessing the capital markets under any order or direction passed by
SEBI. None of the Directors or the persons in control of the Promoter companies have been prohibited from
accessing the capital markets or restrained from buying/selling/dealing in securities under any order or direction
passed by SEBI.
a) The Company has net tangible assets of at least Rs.300 Lacs in each of the preceding three full years (of 12
months each) of which not more than 50% are held in monetary assets.
b) The Company has a track record of distributable profits as per Section 205 of Companies Act, for at least
three out of immediately preceding five years.
For calculating distributable profits in terms of Section 205 of the Companies Act extra-ordinary items shall not
be considered;
c) The Company has a net worth of at least Rs.100 Lacs in each of the preceding three full years of 12 months
each;
d) In case the Company has changed its name within the last one year, atleast 50% of the revenues for the
preceding one full year is earned by the Company from the activity suggested by the new name; and
e) The aggregate of the proposed Issue and all previous issues made in the same financial year in terms of size
(i.e. offer through offer Document + firm allotment + promoters contribution through offer document) does not
exceed five (5) times its pre-issue networth as per the audited balance sheet of the last financial year.
In terms of a certificate issued by M/S T. K. Gupta and Associates, the statutory auditors dated August 25, 2005
the Company satisfies the above eligibility criteria as follows:
(Rupees in Lacs)
Particulars 2005 2004 2003 2002 2001
Net Tangible Assets (1) 4614.34 2337.30 1196.98 91.25 0.00
Monetary Assets (2) 401.52 78.19 11.60 72.12 11.38
Monetary Assets as % of Net 8.70 3.35 0.97 79.04 N.A.
Tangible Assets
118
Net Profits as restated 219.09 0.00 0.04 0.00 0.01
Net Worth as restated (3) 2296.32 1249.84 541.51 99.80 4.48
Distributable Profits (4) 219.09 0.00 0.04 0.00 0.01
(1)
Net tangible assets means the sum of all net assets of the Company excluding intangible assets as defined in
Accounting Standard 26 issued by ICAI.
(2)
Monetary Assets comprise cash and bank balances, public deposit account with the Government and interest
accrued thereon.
(3)
Net worth have been computed as the aggregate of equity share capital and reserves, excluding miscellaneous
expenditures, if any.
(4)
Distributable profits have been computed in terms of section 205 of the Companies Act.
Name of the Company was changed from 'SRS Commercial Company Limited' to 'SRS Entertainment Limited'
on January 25, 2005. This was done to better reflect the nature of activities of the Company, which began
commercial operations of SRS Multiplex, the first Multiplex of the Company, in November 2004.
The Company meets all the conditions mentioned above. However, the Equity Shares are being offered through
the book building route in accordance with clauses 2.2.2 and 2.2.2A of the SEBI Guidelines, wherein:
Atleast 50% of the Net Issue to public (i.e., 83,85,000 equity shares) will be allotted to the Qualified
Institutional Buyers (QIBs), failing which the full subscription monies shall be refunded
The post-issue face value capital of the Company shall be Rs. 4989.57 Lacs.
Disclaimer Clause
AS REQUIRED, A COPY OF THIS DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED
TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY
UNDERSTOOD THAT THE SUBMISSION OF DRAFT RED HERRING PROSPECTUS TO SEBI
SHOULD NOT, IN ANY WAY BE DEEMED/ CONSTRUED THAT THE SAME HAS BEEN
CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPOSIBILITY EITHER
FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE
ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS
MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS.
THE BOOK RUNNING LEAD MANAGERS UTI BANK LIMITED HAVE CERTIFIED THAT THE
DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY
ADEQUATE
AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR
PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO
FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN
THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE
ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND
DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE BOOK
RUNNING LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE
THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF
AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGERS UTI BANK
LIMITED, HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER
12, 2005 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH
READS AS FOLLOWS:
WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS ETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED TO IN
THE ANNEXURE HERETO IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED
HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE;
ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS
DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF
THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED
119
PROFITIBALITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS
MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY;
WE CONFIRM THAT:
THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH
THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE
GUIDELINES, INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER
COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH;
THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR
AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS
TO INVESTMENT IN THE PROPOSED ISSUE;
BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING
PROSPECTUS ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS
VALID; AND
IF UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE
UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS
THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE
THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE
COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY
OR OTHER CLEARANCE AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED
ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH
THE BOOK RUNNING LEAD MANAGER(S) (MERCHANT BANKERS) ANY IRREGULARITIES
OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS.
Caution
The Company accepts no responsibility for statements made otherwise than in the Draft Red Herring Prospectus
or in any advertisement or other material issued by the Company or by any other persons at the instance of the
Company and anyone placing reliance on any other source of information would be doing so at his own risk.
The Book Running Lead Manager and the Company shall make all information available to the Equity
Shareholders and no selective or additional information would be available for a section of the Equity
Shareholders in any manner whatsoever including at presentations, in research or sales reports, etc. after filing
of the Draft Red Herring Prospectus with SEBI. The Book Running Lead Manager and the Company shall
update the Draft Red Herring Prospectus and keep the public informed of any material changes till the listing
and trading commences.
The Draft Red Herring Prospectus has been filed with SEBI, Mittal Court, 'A' Wing, Nariman Point, Mumbai
400 021, for its observations. The final Red Herring Prospectus will be filed with the Designated Stock
Exchange as per the provisions of the Act.
Warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring
Prospectus; or
Warrant that this Company's securities will be listed or will continue to be listed on the Exchange; or
120
Take any responsibility for the financial or other soundness of this Company, its promoters, its management or
any scheme or project of this Company; and its should not for any reason be deemed or construed that the Draft
Red Herring Prospectus has been cleared or approved by the Exchange.
Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant
to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever
by reason of any loss which may be suffered by such person consequent to or in connection with such
subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other
reason whatsoever.
Filing
A copy of the Draft Red Herring Prospectus, along with the documents required to be filed under Section 60B of
the Companies Act, would be delivered for registration to the RoC and a copy of the Prospectus to be filed
under Section 60 of the Companies Act would be delivered for registration with RoC. A copy of the Draft Red
Herring Prospectus has been filed with SEBI at Ground Floor, Mittal Court, “A” Wing, Nariman Point, Mumbai
400 021.
Listing
Applications have been made to The Bombay Stock Exchange Limited and National Stock Exchange of India
Limited for permission to deal in and for an official quotation of our Equity Shares. We have nominated The
Bombay Stock Exchange Limited as the Designated Stock Exchange for the Issue.
If the permissions to deal in and for an official quotation of our Equity Shares are not granted by any of the
Stock Exchanges mentioned above, our Company shall forthwith repay, without interest, all moneys received
from the applicants in pursuance of the Draft Red Herring Prospectus. If such money is not repaid within eight
days after our Company becomes liable to repay it (i.e. from the date of refusal or within 70 days from the
Bid/Issue Closing Date, whichever is earlier), then our Company and every director of our Company who is an
officer in default shall, on and from expiry of eight days, will be jointly and severally liable to repay the money,
with interest at the rate of 15% per annum on application money, as prescribed under Section 73 of the
Companies Act.
Our Company shall ensure that all steps for the completion of necessary formalities for listing and
commencement of trading at both the Stock Exchanges mentioned above are taken within seven working days
of finalisation and adoption of the basis of allotment for the Issue.
Impersonation
As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection
(1) of Section 68A of the Companies Act, 1956 which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing
for, any Equity Shares therein, or otherwise induces a Company to allot, or register any transfer of
Equity Shares therein to him, or any other person in a fictitious name, shall be punishable with
imprisonment for a term which may extend to five years”
Consents
The written consents of Directors, Company Secretary, Book Running Lead Manager to the Issue, Legal
Advisor to the Issue, Registrar to the Issue, Statutory Auditors of the Company, Bankers to the Company and
Bankers to the Issue to act in their respective capacities, have been obtained and filed along with a copy of the
Draft Red Herring Prospectus with the Registrar of Companies, NCT Delhi & Haryana at New Delhi as required
121
under Section 60 of the Companies Act and such consents have not been withdrawn up to the time of delivery of
the Red Herring Prospectus for registration.
Expert Opinion
The Company has not obtained any expert opinions related to the present Issue, except the opinion of the
Statutory Auditors, M/s T. K. Gupta & Associates, Chartered Accountants on the tax benefits available to the
investors.
Issue Expenses
Public Issue expenses are estimated as follows:
(Rupees in Lacs)
Sr. No. Particulars Amount
1 Fees of Book Running Lead Manager, Registrar, Legal Advisor, [•]
Auditors, Tax Auditors, etc.
2 Printing and Stationery, Distribution, Postage, etc. [•]
3 Brokerage and Selling Commission [•]
4 Advertisement and Marketing Expenses [•]
5 Other Expenses (incl. Filing Fees, Listing Fees, Depository Charges, [•]
etc.)
6 Contingencies [•]
Total [•]
Previous Public or Rights Capital issues by the Company (during the last five years)
This is the first Public /Rights issue by the Company.
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Except as stated in 'Capital Structure' on page no. 10 of the Draft Red Herring Prospectus, we have not issued
any equity shares for consideration otherwise than for cash.
Particulars in regard to other listed companies under the same management within the meaning of
section 370 (1)(B) of the Companies Act, 1956 which made any capital Issue during the last three years
There is no company under the same management within the meaning of erstwhile section 370 (1)(B) of the
Companies Act, 1956:
a) Issuer Company:
Since this is an initial public offer by the Issuer Company, this is not applicable
There are no complaints and/or grievances from the investors which are pending. All the complaints and/or
grievances have been satisfactorily replied.
We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine
investor grievances will be seven business days from the date of receipt of the complaint. In case of non routine
complaints and complaints where external agencies are involved, we will seek to redress these complaints as
expeditiously as possible.
We have appointed Mr. Arun Kumar Gupta (CFO) as the Compliance Officer and he may be contacted in case
of any pre issue or post-issue related problems. His contact details are as under:
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Appointed In place of
1 M/s. T. K. Gupta & M/s Rakesh Raj & Resignation 28.12.2004 EOGM
Associates Associates
2 M/s Rakesh Raj & M/s A. C. Aggarwal & Resignation 07.07.2003 EOGM
Associates Co.
Other than the above, there was no change in Auditors during preceeding three years.
124
OFFERING INFORMATION
ISSUE INFORMATION
For a detailed description of the main provisions of the Company’s Articles of Association relating to voting
rights, dividend, forfeiture and lien, transfer and transmission and / or consolidation / splitting, see “Description
of Equity Shares and Terms of Articles of Association of the Company” on Page no. 147 in the Draft Red
Herring Prospectus.
Market Lot
In terms of Section 68B of the Companies Act, the Equity Shares of the Company shall be allotted only in
dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares of the Company
shall only be in dematerialised form for all investors.
Since trading of the Equity Shares will be dematerialised mode, the tradable lot is one equity share.
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to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity
share(s).
Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any
person to become entitled to equity share(s) in the event of his or her death during the minority. A nomination
shall stand rescinded upon a sale/ transfer/ alienation of equity share(s) by the person nominating.
In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the
provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be
required by the Board, elect either:
• to register himself or herself as the holder of the equity shares; or
• to make such transfer of the equity shares, as the deceased holder could have made.
Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself
or herself or to transfer the equity shares, and if the notice is not complied with within a period of ninety days,
the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the
equity shares, until the requirements of the notice have been complied with.
Since the allotment of Equity Shares in the Issue will be made only in dematerialised mode, there is no need to
make a separate nomination with us. Nominations registered with respective depository participant of the
applicant would prevail. If the investors require changing the nomination, they are requested to inform their
respective depository participant.
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the Issue amount, including devolvement
of the members of the Syndicate, if any, within 60 days from the Bid/Issue Closing Date, the Company shall
forthwith refund the entire subscription amount received. If there is a delay beyond 8 days, the Company and
every director of the Company who is an officer in default, becomes liable to repay the amount with interest as
per Section 73 of the Companies Act.
If the number of allottees in the proposed Issue is less than 1,000 allottees, The Company shall forthwith refund
the entire subscription amount received.
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ISSUE STRUCTURE
Public Issue of 2,28,57,200 Equity Shares of Rs. 10/- each at the Issue Price of Rs. [•] for cash aggregating Rs.
[•] Lacs is being made through a 100% book building process. Details of the issue structure are tabulated below:
127
Reserved Reserved Reserved QIBs Non- Retail
portion for portion for portion for Institution Individual
Promoters Shareholders Employees al Bidders Bidders
of the of Group of the
Company Companies of Company
the Company
Number of Equity Up to Up to 22,85,720 Up to Up to Minimum Minimum
Shares * 42,87,200 Equity Shares 22,85,720 69,99,280 of of
Equity Equity Equity 20,99,784 48,99,496
Shares Shares Shares or Equity Equity
Net Issue to Shares or Shares or
public less Net Issue to Net Issue to
allocation public less public less
to Non- allocation allocation
Institutional to QIBs and to QIBs and
Bidders and Retail Non-
Retail Individual Institutional
Individual Bidders Bidders
Bidders
Percentage of Issue Up to ** Up to 10% ** Up to Up to 50% Minimum Minimum
size available for 18.76% of of Issue size 10% of of Net Issue 15% of Net 35% of the
Allocation Issue size Issue size to public or Issue to Net Issue to
Net Issue public or public or
size less Net Issue Net Issue
allocation size less size less
to Non- allocation allocation
Institutional to QIBs and to QIBs and
Bidders and Retail Non-
Retail Individual Institutional
Individual Bidders Bidders
Bidders
Basis of Allotment if N.A.$ Proportionate Proportionat Discretiona Proportiona Proportiona
respective category is e ry te te
oversubscribed
Minimum Bid N.A.$ [•] Equity [•] Equity Such Such [•] Equity
Shares and Shares and number of number of Shares and
thereafter in thereafter in Equity Equity thereafter in
multiples of [•] multiples of Shares that Shares that multiples of
Equity Shares [•] Equity the Bid the Bid [•] Equity
Shares Amount Amount Shares
exceeds Rs. exceeds Rs.
1,00,000 1,00,000
and in and in
multiples of multiples of
[•] Equity [•] Equity
Shares Shares
Maximum Bid N.A.$ Such number of Such Such Such Such
Equity Shares number of number of number of number of
that the number Equity Equity Equity Equity
of Equity Shares that Shares not Shares not Shares so as
Shares Bid for the number exceeding exceeding to ensure
should not of Equity the Net the Net that the Bid
exceed Shares Bid Issue size Issue size Amount
22,85,720 for should subject to subject to does not
Equity Shares not exceed applicable applicable exceed Rs.
22,85,720 limits limits 1,00,000
Equity
Shares
Mode of Allotment Compulsor Compulsory in Compulsory Compulsor Compulsor Compulsor
y in Dematerialised in y in y in y in
128
Reserved Reserved Reserved QIBs Non- Retail
portion for portion for portion for Institution Individual
Promoters Shareholders Employees al Bidders Bidders
of the of Group of the
Company Companies of Company
the Company
Demateriali form Dematerialis Demateriali Demateriali Demateriali
sed form ed form sed form sed form sed form
Trading Lot One One One One One One
Who can Apply N.A.$ Shareholders of Employees Public Resident Individuals
the Group of the financial Indian (including
Companies of Company as institutions, individuals, HUFs)
the Company, on [•] as specified HUF (in the applying for
i.e, Akriti in section name of up to Rs.
Financial 4A of the Karta), 1,00,000
Services (P) Companies companies,
Limited and Act, corporate
Ferro Plast scheduled bodies,
Limited, as on commercial societies
[•] banks, and trusts
mutual
funds,
venture
capital
funds, and
State
Industrial
Developmen
t
Corporations
, Insurance
companies
registered
with
Insurance
Regulatory
and
Developmen
t Authority
Provident
Funds with
minimum
corpus of
Rs. 2500
lacs and
Pension
Funds with
minimum
corpus of
Rs. 2500
lacs who are
authorised
under their
constitution
to hold and
invest in
Equity
Shares
129
Reserved Reserved Reserved QIBs Non- Retail
portion for portion for portion for Institution Individual
Promoters Shareholders Employees al Bidders Bidders
of the of Group of the
Company Companies of Company
the Company
applicable to Amount Amount Amount Amount
reserved portion applicable to applicable applicable applicable
for reserved to QIB to Non- to Retail
Shareholders of portion for Bidders at Institutional Bidders at
Group Employees the time of Bidders at the time of
Companies of of the submission the time of submission
the Company at Company at of Bid-cum- submission of Bid cum
the time of the time of Application of Bid-cum- Application
submission of submission Form to the application Form to the
Bid-cum- of Bid-cum- members of Form to the members of
Application Application the members of the
Form to the Form to the Syndicate the Syndicate
members of the members of Syndicate
Syndicate the
Syndicate
Margin Amount N.A $ Full Bid Full Bid NIL Full Bid Full Bid
Amount on Amount on Amount on Amount on
Bidding Bidding Bidding Bidding
* Subject to valid bids being received at or above the Issue Price, under-subscription, if any, in any category,
would be allowed to be met with spill-over from any other categories at the discretion of the Company, the
BRLM and the Joint BRLM.
** Unsubscribed portion in any Reserved Category would be added to any other Reserved Category. The
unsubscribed portion, if any, after such interse adjustments among the Reserved Categories shall be added back
to the Net Issue to the public and first be distributed equally between the Retail Portion and the Non-
Institutional Portion in accordance with the description in section titled "Statutory and other Information - Basis
of Allotment” as described in page no. 143. In the event that the demand in either of the Retail Portion or the
Non-Institutional Portion has been met, the Equity Shares shall be allocated to a category in which the demand
has not been met. The remaining undersubscribed Equity Shares, if any, after allocation to the Retail Portion and
the Non-Institutional Portion as aforesaid, shall be allocated to the QIB Portion in accordance with the
description in section titled “Statutory and other Information - Basis of Allotment” as described in page no. 143.
$
Oversubscription in the Promoters reservation category is not possible as the investors and number of shares
proposed to be applied for by each entity has been finalised. Amount payable by each of them, at the cap price,
will brought-in one day before the Bid/Issue open date. For details please refer to “Capital Structure” on page no
10 of the Draft Red Herring Prospectus.
130
ISSUE PROCEDURE
Bidders are required to submit their Bids through the members of the Syndicate. We, in consultation with the
BRLM and Joint BRLM reserve the right to reject any Bid procured by any or all members of the Syndicate
without assigning any reason thereof from QIBs.
In case of Non-Institutional Bidders and Retail Individual Bidders, the Company would have a right to reject the
Bids only on technical grounds.
Investors should note that Equity Shares would be allotted to all successful allottees only in the
dematerialised form.
Illustration of Book Building and Price Discovery Process (Investors may note that this illustration is
solely for the purpose of easy understanding and is not specific to the Issue)
Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 31 to Rs. 38 per
share, issue size of 7000 equity shares and receipt of five bids from bidders out of which one bidder has bid for
500 shares at Rs.38 per share while another has bid for 1,500 shares at Rs.37 per share. A graphical
representation of the consolidated demand and price would be made available at the bidding centers during the
bidding period. The illustrative book as shown below shows the demand for the shares of the Company at
various prices and is collated from bids from various investors.
Bid-cum-Application Form
Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate
for the purpose of making a Bid in terms of the Draft Red Herring Prospectus. The Bidder shall have the option
to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as
multiple bids. Upon the allocation of Equity Shares, dispatch of CAN, and filing of the Prospectus with the
RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and
submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have
authorised the Company to make the necessary changes in the Draft Red Herring Prospectus and the Bid-cum-
Application Form as would be required for filing the Prospectus with he ROC and as would be required by ROC
after such filing, without prior or subsequent notice of such changes to the Bidder.
The prescribed colour of the Bid-cum-Application Form for various categories, is as follows:
Category Colour of Bid Cum Application Form
Indian Public applying on a non-repatriation basis White
Reserved Categories, i.e., Shareholders of Group Companies Pink
of the Company and Employees of the Company
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First bidder: ABC Hindu Undivided Family applying through ABC, where ABC is the name of the Karta”.
Bids by HUFs would be considered at par with those from individuals;
3. Companies, corporate bodies and societies registered under the applicable laws in India and authorised to
invest in the Equity Shares;
4. Indian Mutual Funds registered with SEBI;
5. Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI
regulations, as applicable);
6. Venture Capital Funds registered with SEBI;
7. State Industrial Development Corporations;
8. Trust/ society registered under the Societies Registration Act, 1860, as amended, or under any other law
relating to Trusts/ society and who are authorised under their constitution to hold and invest in Equity
Shares;
9. Scientific and/ or Industrial Research Organisations authorised to invest in Equity Shares.
10. Insurance companies registered with the Insurance Regulatory and Development Authority;
11. Provident funds with minimum corpus of Rs. 2500 lacs and who are authorised under their constitution to
hold and invest in Equity Shares;
12. Pension funds with minimum corpus of Rs. 2500 lacs and who are authorised under their constitution to
hold and invest in Equity Shares
Note: The BRLM, Joint BRLM, Syndicate Members and any associate of the members of the BRLM, Joint
BRLM and Syndicate Members (except asset management companies on behalf of mutual funds, Indian
financial institutions and public sector banks) cannot participate in that portion of the Issue where allocation is
discretionary unless otherwise permitted by SEBI.
Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum
number of Equity Shares that can be held by them under the relevant regulations or statutory guidelines.
As per the current regulations, the following restrictions are applicable for investments by mutual funds:
No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related
instruments of any company provided that the limit of 10% shall not be applicable for investments in index
funds or sector or industry specific funds. No mutual fund under its scheme should own more than 10% of any
company’s paid-up capital carrying voting rights.
As per the current regulations, the following restrictions are applicable for SEBI registered Venture Capital
Funds:
The SEBI (Venture Capital Funds) Regulations, 1996 prescribe investment restrictions on venture capital funds
registered with SEBI. Accordingly, the holding by any individual venture capital fund registered with SEBI
should not exceed 25% of our Company’s paid-up capital. The aggregate holdings of venture capital funds
registered with SEBI could, however, go up to 100% of our Company’s paid-up equity capital. However, as of
this date, no such resolution has been recommended for adoption.
The above information is given for the benefit of the Bidders. We, the BRLM and the Joint BRLM are not liable
for any amendments or modification or changes in applicable laws or regulations, which may happen after the
date of the Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and
ensure that the number of Equity Shares bid for do not exceed the applicable limits under laws or regulations.
The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as amended (the
“Securities Act ”) or any state securities laws in the United States 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 of the Securities
Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act. Accordingly, the Equity Shares will be offered and sold only (i) in the United States to
“Qualified Institutional Buyers”, as defined in Rule 144A of the Securities Act, and (ii) outside the United States
in compliance with Regulation S and the applicable laws of the jurisdiction where those offers and sales occur.
132
The Bid must be for a minimum of [•] Equity Shares and in multiples of [•] Equity Shares thereafter, subject to
maximum Bid amount of Rs.1,00,000. In case of revision of Bids, the Retails bidders have to ensure that the Bid
amount does not exceed Rs.1,00,000. In case the maximum Bid amount is more than Rs.1,00,000, then the same
would be considered for allocation under the Non-Institutional Bidders category. The cut-off option is an option
available only to the Retail
Individual Bidders indicating their agreement to bid and purchase the equity shares at the final offer price as
determined at the end of the Book Building process.
However, the maximum Bid by a QIB should not exceed the investment limits prescribed for them by the
regulatory or statutory authorities governing them. Under SEBI existing guidelines a QIB Bidder cannot
withdraw its Bid after the Bid/Issue Closing Date.
In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure that the Bid
Amount is greater than Rs.1,00,000/-. In case the Bid Amount reduces to Rs.1,00,000/- or less due to a revision
in Bids, the same would be considered for allocation under Retail portion.
133
the Bid through the Revision Form, the procedure for which is detailed under the paragraph “Build up of
the Book and Revision of Bids” on page no. 136 of the Draft Red Herring Prospectus.
5. The BRLM, JOINT BRLM and Syndicate Members will enter each bid option into the electronic bidding
system as a separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand
option and give the same to the Bidder. Bidders should make sure that they ask for a copy of the
computerised TRS for every Bid Option from the Syndicate Member. Therefore, a Bidder can receive up to
three TRSs for each Bid-cum-Application Form.
6. Along with the Bid-cum-Application Form, all Bidders will make payment in the manner described under
the paragraph “Terms of Payment and Payment into Escrow Account” on page no. 135 of the Red Herring
Prospectus.
Option to Subscribe
Equity Shares being issued through this Prospectus can be applied for in the dematerialised form only.
Escrow Mechanism
Escrow Account for the Issue
The Company shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the
Bidders shall make out the cheque or demand in respect of his or her Bid and/or revision of the bid. Cheques or
demand drafts received for the full Bid amount from Bidders in a certain category would be deposited in the
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Escrow Account for the Issue. The Escrow Collection Banks will act in terms of the Red Herring Prospectus and
an Escrow Agreement. The monies in the Escrow Account for the Issue shall be maintained by the Escrow
Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall not exercise any lien
whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the
Designated Date, the Escrow Collection Banks shall transfer the monies from the Escrow Account to the Public
Issue Account with the Bankers to the Issue as per the terms of the Escrow Agreement with the Company.
Payments of refunds to the Bidders shall also be made from the Escrow collection Banks are per the terms of the
Escrow Agreement and the Red Herring Prospectus.
The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an
arrangement between the Escrow Collection Bank(s), The Company, the Registrar to the Issue, BRLM and Joint
BRLM, and Syndicate Members to facilitate collections from the Bidders.
Bid cum Application Forms accompanied by cash and Stockinvest shall not be accepted.
The maximum bid price has to be paid at the time of submission of the Bid cum Application Form based on the
highest bidding option of the Bidder. The members of the Syndicate shall deposit the cheque or demand draft
with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders till such time as
the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds from the
Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account or Refund Account
with the Bankers to the Issue, as applicable.
In case of QIBs, the members of the Syndicate may, at their discretion, waive such payment at the time of the
submission of the Bid cum Application Form. Where such payment at the time of submission of the Bid cum
Application Form is waived at the discretion of the members of the Syndicate, the Issue Price shall be payable
for the allocated Equity Shares no later than the date specified in the CAN, which shall be subject to a minimum
period of two days from date of communication of the allocation list to the members of the Syndicate by the
BRLM and Joint BRLM. If the payment is not made favoring the Escrow Account within the time stipulated
above, the application of the Bidder is liable to be rejected. However, if the members of the Syndicate do not
waive such payment, the full amount of payment has to be made at the time of submission of the Bid cum
Application Form.
Where the Bidder has been allocated lesser number of Equity Shares than he or she had bid for, the excess
amount paid on bidding, if any, after adjustment for allocation, will be refunded to such Bidder within 15 days
from the Bid/Issue Closing Date.
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also held in the same joint names and are in the same sequence in which they appear in the Bid cum
Application Form).
• Investor Category – Individual, Corporate or Mutual Fund, etc.
• Numbers of Equity Shares bid for
• Bid price
• Bid-cum-Application Form number
• Whether payment is made upon submission of Bid-cum-Application Form
• Depository Participant Identification No. and Client Identification No. of the Demat Account of the
Bidder
(e) A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding
options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The
registration of the Bid by the member of the Syndicate does not guarantee that the Equity Shares shall be
allocated either by the members of the Syndicate or us.
(f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind.
(g) The members of the Syndicate have the right to review the Bid. Consequently, the members of the
Syndicate also have the right to accept the Bid or reject it without assigning any reason. In case of Non-
Institutional Bidders and Retail Individual Bidders, Bids shall not be rejected except on the technical
grounds listed in the Draft Red Herring Prospectus.
(h) It is to be distinctly understood that the permission given by NSE and BSE to use their network and
software of the online IPO system should not in any way be deemed or construed to mean that the
compliance with various statutory and other requirements by us, and BRLM/JOINT BRLM are cleared or
approved by NSE and BSE; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the compliance with the statutory and other requirements nor does it take any
responsibility for the financial or other soundness of the Company, promoters, management or any scheme
or project of the Company.
(i) It is also to be distinctly understood that the approval given by NSE and BSE should not in any way be
deemed or construed that the Red Herring Prospectus has been cleared or approved by the NSE and BSE;
nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents
of the Draft Red Herring Prospectus; nor does it warrant that the equity shares will be listed or will continue
to be listed on the NSE and BSE.
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(h) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the
incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if
any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in
accordance with the terms of the Red Herring Prospectus. In case of QIBs, the members of the Syndicate
may at their sole discretion waive the payment requirement at the time of one or more revisions by the QIB
Bidders.
(i) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from
the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised
TRS, which will act as proof of his or her having revised the previous Bid.
(j) In case of discrepancy of data between NSE or BSE and the members of the Syndicate, the decision of the
BRLM and Joint BRLM based on the physical book shall be final and binding to all concerned.
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the Equity Shares so allotted, if they so desire, as per the provisions of the Companies Act and the
Depositories Act.
(b) Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be
allocated to them pursuant to this Issue.
(c) After the funds are transferred from the Escrow Account to the Public Issue Account on the Designated
Date, we would allot the equity shares to the allottees. We would ensure the allotment of Equity Shares
within 15 days of Bid / Issue Closing Date and give instructions to credit to the allottees’ depository
accounts within two working days from the date of allotment. In case we fail to make allotment within 15
days of the Bid/Issue Closing Date, interest would be paid to the investors at the rate of 15% per annum.
General Instructions
Do’s:
(a) Check if you are eligible to apply;
(b) Ensure that the Bid is only within the Price Band.
(c) Read all the instructions carefully and complete the Resident Bid-cum-Application Form (white in colour)
or Non- Resident Bid-cum-Application Form (blue in colour), as the case may be;
(d) Ensure that the details about Depository Participant and Beneficiary Account are correct as Equity Shares
will be transferred in the dematerialised form only;
(e) Investors must ensure that the name given in the bid cum application form is exactly the same as the Name
in which the Depository Account is held. In case, the Bid cum Application Form is submitted in joint
names, investors should ensure that the Depository Account is also held in the same joint names and are in
the same sequence in which they appear in the Bid cum Application Form;
(f) Ensure that the Bids are submitted at the bidding centres only on forms bearing the stamp of a member of
the Syndicate;
(g) Ensure that you have been given a TRS for all your Bid options; and
(h) Submit Revised Bids to the same member of the Syndicate through whom the Original Bid was placed and
obtain a revised TRS.
Dont’s:
(a) Do not Bid for lower than the minimum Bid size;
(b) Do not Bid/ revise Bid to a price that is less than the Floor of the Price Band or higher than the Cap of the
Price Band;
(c) Do not Bid on another Bid-cum-Application Form after you have submitted a Bid to the members of the
Syndicate;
(d) Do not pay the Bid amount in cash or through Stockinvest;
(e) Do not send Bid cum Application Forms by post; instead hand them over to a member of the Syndicate
only;
(f) Do not bid at Cut-off price for Non-institutional and QIB Bidders;
(g) A Bid from any investor should not exceed the investment limit or maximum number of Equity Shares that
can be held by a Bidder under the applicable laws or regulations.
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(f) Thumb impressions and signatures other than in the languages specified in the Eight Schedule in the
Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate
under his or her official seal.
Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository
Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum
Application Form, the Registrar to the Issue will obtain from the Depository demographic details of the
Bidders such as address, bank account details for printing on refund orders and occupation (herein after
referred to as Demographic Details). Hence, Bidders should carefully fill in their Depository Account
details in the Bid-cum-Application Form. These Demographic Details would be used for all
correspondence with the Bidders including mailing of the refund orders/ CANs/Allocation Advice and
printing of Bank particulars on the refund order and the Demographic Details given by Bidders in the
Bid -cum application Form would not be used for these purposes by the Registrar.
Hence, Bidders are advised to update their Demographic Details as provided to their Depository
Participants.
By signing the Bid-cum-Application Form, Bidder would have deemed to authorize the depositories to provide,
upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Refund
orders/Allocation Advice/CANs would be mailed at the address of the Bidder as per the Demographic Details
received from the Depositories. Bidders may note that delivery of refund orders/allocation advice/CANs may
get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such
an event, the address and other details given by the Bidder in the Bid cum Application Form would be used only
to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk.
In case no corresponding record is available with the Depositories that matches three parameters, namely, names
of the Bidders (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and
the beneficiary’s identity, then such Bids are liable to be rejected.
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In case of Bids made by mutual fund registered with SEBI, Venture Capital Fund registered with SEBI and
Foreign Venture Capital investor registered with SEBI, a certified copy of their SEBI registration certificate
must be submitted with the Bid cum Application Form. Failing this, the Company reserves the right to accept or
reject any Bid in whole or in part, in either case without assigning any reason.
The Company in its absolute discretion, reserve the right to relax the above condition of simultaneous lodging of
the Power of Attorney along with the Bid cum Application form, subject to such terms that we may deem fit.
Payment Instructions
The Company shall open an Escrow Account(s) with the Escrow Collection Bank(s) for the collection of the Bid
Amounts payable upon submission of the Bid-cum-Application Form and for amounts payable pursuant to
allocation in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid
and/or on allocation as per the following terms:
Payments should be made by cheque or demand draft drawn on any Bank (including a Co-Operative
Bank), which is situated at, and is a member of or sub-member of the banker’s clearing house located at
the centre where the Bid-cum-Application Form is submitted. Outstation cheques/bank drafts drawn on
banks not participating in the clearing process will not be accepted and applications accompanied by such
cheques or bank drafts are liable to be rejected.
Payment by Stockinvest
In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5,
2003, the Stockinvest Scheme has been withdrawn with immediate effect. Hence, payment through stockinvest
would not be accepted in this Issue.
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No separate receipts shall be issued for the money payable on the submission of Bid cum Application Form or
Revision Form. However, the collection centre of the BRLM, Joint BRLM or Syndicate Member will
acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the
Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid cum
Application Form for the records of the Bidder.
Other Instructions
Joint Bids in the case of Individuals
Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be
made out in favour of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form
(“First Bidder”). All communications will be addressed to the First Bidder and will be dispatched to his or her
addres.
Multiple Bids
A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required.
Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same.
We reserve the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories.
It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004
by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to
furnish, where applicable, the revised Form 60 or 61 as the case may be.
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5. PAN or GIR Number not given if Bid is for Rs. 50,000 or more;
6. Bids for lower number of Equity Shares than specified for that category of investors;
7. Bids at a price less than lower end of the Price Band;
8. Bids at a price more than the higher end of the Price Band;
9. Bids at cut-off price by Non-Institutional and QIB Bidders;
10. Bids for number of Equity Shares which are not in multiples of 100;
11. Category not ticked;
12. Multiple bids;
13. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents
are not submitted;
14. Bid-cum-Application Form does not have the stamp of the BRLM, Joint BRLM or Syndicate Members;
15. Bid-cum-Application Form does not have Bidder’s depository account details;
16. Bid-cum-Application Forms are not delivered by the Bidders within the time prescribed as per the Bid-cum-
Application Form, Bid/Issue Opening Date advertisement and the Red Herring Prospectus and as per the
instructions in the Red Herring Prospectus and the Bid cum-Application Form
17. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations. See the
details regarding the same at page no. 127 of the Draft Red Herring Prospectus;
18. Bids accompanied by Stockinvest;
19. Signature of sole and / or joint bidders missing;
20. In case no corresponding record is available with the Depositories that matches three parameters namely,
names of the Bidders (including the sequence of names of joint holders), the depositary participant’s
identity (DP ID).
Bids from any investor without relevant details of his or her depository account are liable to be rejected.
(d) A Bidder applying for Equity Shares must have at least one beneficiary account with either of the
Depository Participants of either NSDL or CDSL prior to making the Bid.
(e) The Bidder must necessarily fill in the details (including the Beneficiary Account Number and Depository
Participant’s Identification number) appearing in the Bid-cum-Application Form or Revision Form.
(f) Equity shares allotted to a successful Bidder will be credited in electronic form directly to the beneficiary
account (with the Depository Participant) of the Bidder.
(g) Names in the Bid-cum-Application Form or Revision Form should be identical to those appearing in the
account details in the Depository. In case of joint holders, the names should necessarily be in the same
sequence as they appear in the account details in the Depository.
(h) Non-transferable allotment advice or refund orders will be directly sent to the Bidder by the Registrar to
this Issue.
(i) If incomplete or incorrect details are given under the heading ‘Request for Equity Shares in electronic form’
in the Bidcum-Application Form or Revision Form, it is liable to be rejected.
(j) The Bidder is responsible for the correctness of his or her demographic details given in the Bid-cum-
Application Form vis-à-vis those with his or her Depository Participant.
(k) It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges having
electronic connectivity with NSDL and CDSL. All the Stock Exchanges where the Equity Shares are
proposed to be listed have electronic connectivity with CDSL and NSDL.
(l) The trading of the Equity Shares of the Company would be in dematerialised form only for all investors.
As this Issue comprises of Fresh Issue, investors are advised to instruct their Depository Participants to accept
the Equity Shares that may be allocated to them pursuant to this Issue.
Communications
All future communications in connection with Bids made in this Issue should be addressed to the Registrar to
the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form number, number of
Equity Shares applied for, date, bank and branch where the Bid was submitted and cheque, draft number and
issuing bank thereof.
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Procedure and Time Schedule for Allotment of Equity Shares and Disposal of Applications and
Application Money
The Company reserves at its absolute and uncontrolled discretion and without assigning any reason therefore,
the right to accept or reject any Bid in whole or in part. In case a Bid is rejected in full, the whole of the Bid
Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. In case a Bid is rejected in
part, the excess Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. We
will ensure the allotment of the Equity Shares within 15 days from the Bid/Issue Closing Date. We shall pay
interest at the rate of 15% per annum (for any delay beyond the periods as mentioned above), if allotment is not
made, refund orders are not dispatched and/ or dematerialised credits are not made to investors within two
working days from the date of allotment.
In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI Guidelines, we,
further undertake that:
• Allotment of Equity Shares shall be made only in dematerialised form within 15 days of the Bid/Issue
Closing Date;
• We would ensure despatch of refund orders within 15 days of the Bid/Issue Closing Date; and
• We shall pay interest at 15% per annum (for any delay beyond the 15 days time period as mentioned
above), if allotment/ transfer is not made, refund orders are not dispatched and/or demat credits are not
made to investors within the 15 days time prescribed above.
• We will provide adequate funds required to the Registrar to the Issue for dispatch of refund orders or
allotment advice. Refunds will be made by cheque, pay orders or demand drafts drawn on a bank appointed
by the Company as a refund banker and payable at par at places where Bids are received. Bank charges, if
any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.
Impersonation
Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the
Companies Act, 1956, which is reproduced below:
“Any person who:
(a) Makes in a fictitious name, an application to a Company for acquiring or subscribing for, any shares
therein, or
(b) Otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other
person in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years.”
Basis of Allotment
A. For Employee Reservation Portion
Only Eligible Employees are eligible to apply under the Employee Reservation Portion.
Bids received from the Eligible Employees at or above the Issue Price shall be grouped together to
determine the total demand under this category. The allocation to all the successful Eligible Employees will
be made at the Issue Price.
If the aggregate demand in this category is less than or equal to 22,85,720 Equity Shares at or above the
Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand.
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If the aggregate demand in this category is greater than 22,85,720 Equity Shares at or above the Issue Price,
the allocation shall be made on a proportionate basis up to a minimum of [•] Equity Shares. For the method
of proportionate Basis of Allotment, refer below.
The unsubscribed portion, if any, out of the Equity Shares in the Employee Reservation Portion will be
added to the categories of Non Institutional Bidders and Retail Bidders, in a proportion to be determined by
the Company in consultation with the BRLM and Joint BRLM.
D. For QIBs
Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to determine the
total demand under this category. The allotment to all the QIBs will be made at the Issue Price.
The Issue size less allotment to Non-Institutional Portion and Retail Portion shall be available for allotment
to QIBs who have bid in the Issue at a price that is equal to or greater than the Issue Price.
The allotment would be decided by our Company in consultation with the BRLM and Joint BRLM and
would be at their sole discretion, based on various factors, such as quality of the Bidder, size, price and date
of the Bid.
The aggregate allotment to QIB Bidders shall not be less than [•] Equity Shares.
Undersubscription, if any in the Non Institutional and Retail Bidders categories would be allowed to be met
with spill over from any other category at the sole discretion of our Company, the BRLM and Joint BRLM.
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d) In all Bids where the proportionate allotment is less than [•] Equity Shares per Bidder, the allotment shall
be made as follows:
Each successful Bidder shall be allotted a minimum of [•] Equity Shares; and
The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a
manner such that the total number of Equity Shares allotted in that category is equal to the number of
Equity Shares calculated in accordance with (b) above.
e) If the proportionate allotment to a Bidder is a number that is more than [•] but is not a multiple of 1 (which
is the marketable lot), the number in excess of the multiple of 1 would be rounded off to the higher multiple
of 1 if that number is 0.5 or higher.
If that number is lower than 0.5, it would be rounded off to the lower multiple of 1. All Bidders in such
categories would be allotted Equity Shares arrived at after such rounding off.
f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares
allotted to the Bidders in that category, the remaining Equity Shares available for allotment shall be first
adjusted against any other category, where the allotted shares are not sufficient for proportionate allotment
to the successful Bidders in that category. The balance Equity Shares, if any, remaining after such
adjustment will be added to the category comprising Bidders applying for minimum number of Equity
Shares.
Interest in case of delay in Despatch of Allotment Letters/Refund Orders in case of Public Issues
The Company agrees that allotment of securities offered to the public shall be made not later than 15 days of the
closure of the public issue. The Company further agrees that it shall pay interest @ 15% per annum if the
allotment letters/refund orders have not been dispatched to the applicants within 15 days from the date of
closure of the Issue.
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• that the promoters’ contribution in full, wherever required, shall be brought n advance before the Issue
opens for public subscription and the balance, if any, shall be brought in pro rata basis before the calls
aremade on public.
• that no further issue of Equity Shares shall be made till the Equity Shares issued through the Red Herring
Prospectus are listed or until the bid monies are refunded on account of non-listing, under-subscription etc.
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DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF ASSOCIATION
The Articles of Association of the Company, inter alia, includes following clauses:
Shares
Share-Capital
3. The Authorised Share Capital of the Company shall be such Amount and be divided into such shares as may,
from time to time, be provided in clause V of the Memorandum of Association, with power to increase or reduce
the capital in accordance with company's regulations and the provisions of the Companies Act, 1956 for the time
being inforce in that behalf with power to sub-divide consolidate and increase and with power, from time to
time, to issue any shares of the original capital with and subject to any preferential, qualified or special rights,
privileges or conditions as may be thought fit, and upon the sub-division of shares to apportion the right to
participate in profits, in any manner as between the shares resulting from subdivision.
Allotment of Shares
5. Subject to the provisions of these Articles, the shares shall be under the control of the Directors who may allot
or otherwise dispose off the same on such terms and conditions, and at such time as the Directors think fit and
with power to issue any shares as fully paid up in consideration of services rendered to the Company in its
formation or otherwise, provided that where the Directors decides to increase the issued capital of the Company
by the issue of further shares, the
provisions of Section 81 of the Act will be complied with, provided further that the option or right to call of
shares shall not be given to any person except with the sanction of the Company in general meeting.
Brokerage
8. The Company may pay a reasonable sum of brokerage, subject to the ceiling prescribed under the Act.
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(a) Such further shares shall be offered to the persons who, at the date of the offer, are holders of the equity
shares of the company, in proportion, as near as circumstances admit, to the capital paid up on those shares at
the date.
(b) Such offer shall be made by a notice specifying the number of shares offered and limiting a time not less
than thirty days from the date of the offer and the offer if not accepted, will be deemed to have been declined.
(c) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the
shares offered to them in favour of any other person and the notice referred to in sub clause (b) thereof shall
contain a statement of this right.
PROVIDED THAT the Directors may decline, without assigning any reason to allot any shares to any person in
whose favour any member may renounce the shares offered to him.
(d) After expiry of the time specified in the aforesaid notice or on receipt of earlier intimation from the person to
whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose off
them in such manner and to such person (s) as they may think, in their sole discretion, fit.
II. Notwithstanding anything contained in sub-clause (I) thereof, the further shares may be offered to any
persons (whether or not those persons include the persons referred to in clause (a) of sub-clause (I) hereof) in
any manner whatsoever.
a. If a special resolution to that effect is passed by the company in General Meeting, or
b. Where no such special resolution is passed, if the votes cast (whether on a show of hands or on a poll as the
case may be) in favour of the proposal contained in the resolution moved in the general meeting (including the
casting vote, if any, of the Chairman) by the members who, being
entitled to do so, vote in person, or where proxies are allowed, by proxy, exceed the votes. If any, cast against
the proposal by members, so entitled and voting and the Central Government is satisfied, on an application made
by the Board of Directors in this behalf that the proposal is most beneficial to the company.
IV. Nothing in this Article shall apply to the increase of the subscribed capital of the company caused by the
exercise of an option attached to the debenture issued or loans raised by the company:
a. to convert such debentures or loans into shares in the company, or
b. to subscribe for shares in the company (whether such option is conferred in these Articles or otherwise).
PROVIDED THAT the terms of issue of such debentures or the terms or such loans includes a term providing
for such option and such terms:
i. Either has been approved by the Central Government before the issue of the debentures or the raising of the
loans or is in conformity with Rules, if any, made by that Government in this behalf, and
ii. In the case of debentures or loans of other than debentures issued to or loans obtained from Government or
any institution specified by the Central Government in this behalf, has also been approved by a special
resolution passed by the company in General Meeting before the issue of the debentures or raising of the loans.
Joint-Holders of Shares
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13. Where two or more persons are registered as the holders of any share they shall be deemed to hold the same
as joint-tenants with benefit of survivorship subject to the following provisions and to the other provisions of
these Articles relating to joint holders:-
Maximum number
a) The Company shall not be bound to register more than three persons as the joint-holders of any share.
Delivery of certificates
d) Only the person whose name stands first in the Register as one of the joint-holders of any share shall be
entitled to delivery of the certificate relating to such shares.
Calls
Calls
14. The Directors may, from time to time, subject to the terms on which any shares, may have been issued, make
such calls as they think fit, upon the members in respect of all moneys unpaid on the shares held by them
respectively, and not by the conditions of allotment there to made payable at fixed times and each member shall
pay the amount of every call so made on him to the persons and at the times and places appointed by the
Directors. A call may be made payable by installments.
Notice of call
16. Not less than 30 (Thirty) days notice of any calls shall be given specifying the time and place of payment
and to whom such call shall be paid.
Amount payable
17. If by the terms of issue of any share or otherwise, the whole or part of the amount of issue price thereof is
made payable at any fixed time or by installments at fixed times, every such amount of issue price of instalment
thereof shall be payable as if it was a call duly made by the Directors and of which due notice had been given
and all the provisions herein contained in respect of calls shall apply to such amount or issue price or
installments accordingly.
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be sufficient to prove that the name of the defendant is, or was when the claim arose, on the register of the
Company as a holder, or one of the holders of the number of shares in respect of which such claim is made, that
the resolution making the call is duly recorded in the minute book and that the amount claimed is not entered as
paid in the books of the Company, and it shall not be necessary to prove the appointment of the Directors who
made any call nor that a quorum of Directors was present at the meeting at which any call was made nor that
such meeting was duly convened or constituted, nor any other matter but the proof of the matters aforesaid shall
be conclusive evidence of the debt.
b. The members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same
would, but for such payment, become presently payable.
c. The provisions of these Articles shall mutatis mutandis apply to the calls on debentures of the Company.
Form of notice
22. The notice shall name a day (not being less than 30 (thirty) days from the date of the notice) and a place or
places on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. The
notice shall also state that in the event of nonpayment on or before the time and at the place or places appointed,
the shares in respect of which such call was made or instalment is payable will be liable to be forfeited.
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Arrears to be paid notwithstanding forfeiture
27. Any member whose shares have been forfeited shall not withstanding such forfeiture, be liable to pay and
shall forthwith pay to the Company all calls, installments, interest and the expenses owing upon or in respect of
such shares at the time of all installments, interest and the forfeited together with interest thereupon, from the
time of the forfeiture until payment at 12 (Twelve) percent per annum or such other rate as the Director may
determine and the Directors may enforce the payment thereof without any deduction of allowances for the value
of shares at the time of forfeiture but shall not be under any obligation to do so.
Effect of forfeiture
28. The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands
against the Company in respect of the share, and all their rights incidental to the share except only such of those
rights as by these Articles are expressly saved.
Evidence of forfeiture
29. A duly verified declaration in writing that the declarant is a Director of the company and that certain shares
in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the
facts therein stated as against all persons claiming to be entitled to the shares and the receipt of the Company for
the consideration, if any given for the shares on the sale or disposition thereof, shall constitute a written title to
such shares.
Validity of Shares
32. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers by these presents
given, the Director may appoint some person to execute an instrument of transfer of the shares sold and cause
the purchaser's name to be entered in the register in respect of the shares sold and aft er his name has been
entered in the Register in respect of such shares his title to such shares shall not be affected by any irregularity
or invalidity in the proceedings in reference to such forfeiture, sale or disposition, nor impeached by any person
and the remedy of any person aggrieved by the sale shall be in damages only and against the Company
exclusively.
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Execution of transfer etc.
34. Subject to the provisions of the Act, no transfer of shares shall be registered unless a proper instrument of
transfer duly stamped and executed by or on behalf of the transferor or transferee has been delivered to the
Company together with the certificate or certificates of the shares, or if no such certificate is in existence along
with the letter of allotment of shares. The instrument of transfer of any shares shall be signed both by or on
behalf of the transferor and by or on behalf of transferee and the transferor shall be deemed to remain the holder
of such share until the name of the transferee is entered in the Registered in respect thereof.
34A. The instrument of transfer of any shares in the Company shall be executed by or on behalf of the transferor
and the transferee and a common form of transfer shall be used.
Register of transfer
37. The Company shall keep a "Register of Transfers" and therein shall be fairly and distinctly entered particular
of every transfer of any share.
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42. On giving seven days' notice by advertisement in a newspaper circulating in the District in which the Office
of the company is situated, the Register of Members may be closed during such time as the Directors think fit
not exceeding in the whole forty five days in each year but not exceeding thirty days at a time.
45. Subject to any other provisions of these articles if the Directors in their sole discretion are satisfied in regard
thereof, a person becoming entitled to a share in consequences of the death or insolvency of a member may
receive and give a discharge for any dividends or other money payable in respect of the share.
Nomination
46A. Notwithstanding anything contained in the Articles of Association or in any other law for the time being in
force, where a nomination has been made in the manner prescribed in Section 109A of the Act, purporting to
confer on any person the right to vest the shares in, or debentures of the Company, the nominee shall, on the
death of the shareholder or holder of debentures of the Company or, as the case may be, on the death of the joint
holders, become entitled to all the rights in the shares or debentures of the company or, as the case may be, all
the joint holders, in relation to such shares in or debentures of the Company to the exclusion of all other persons,
unless the nomination is varied or cancelled in the prescribed manner and the provisions contained in Sections
109A and 109B of the Act, shall be applicable to such cases.
Share Warrants
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47A. (1) For the purpose of these Articles, the expressions "beneficial owner", "depository", registered owner"
and "security" shall have the meaning as defined in the Depositories Act, 1996 or any other reenactments or
modifications thereof.
(2) Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialised/
rematerialize its securities and to offer securities in dematerialised form pursuant to the Depositories Act, 1996.
(3) All the securities held by a Depository shall be dematerialised and be in a fungible form.
(4) Notwithstanding anything to the contrary contained in these Articles, a Depository shall be deemed to be
registered owner for the purpose of effecting transfer of ownership of security on behalf of the beneficial owner.
The Depository shall not have any voting rights in respect of the securities held by it.
(5) Nothing contained in these Articles relating to transfer of securities in physical form shall apply to transfer
of securities held in a Depository
(6) The register and index of beneficial owners maintained by a Depository shall be deemed to register and
index of members and register and index of debenture holders of the Company.
(7) Notwithstanding anything contained in these Articles where the securities are dealt in a Depository, the
Company shall intimate the details of allotment of securities to the Depository immediately on allotment of such
securities.
Stocks
Stocks
48. The company may exercise the power of conversion of its shares into stock and in that case regulations 37 to
39 to Table "A" in Schedule 1 to the Act, shall apply.
Alteration of Capital
Surrender
50. Subject to the provisions of Section 100 to 104 of the Act, the Board may accept from any member the
surrender of all or any of his shares on such terms and conditions as shall be agreed.
Modification of Rights
Borrowing Powers
Power to borrow
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52. The Board may from time to time and at its description, subject to the provisions of Sections 58A, 292 and
293 of the Act, and Regulations made thereunder and directions issued by the RBI raise or borrow either from
the Directors or from elsewhere and secure the payment of any sum or sums of money for the purpose of the
Company.
Instrument of transfer
55. Save as provided in Section 108 of the Act, no transfer of debenture shall be registered unless a proper
instrument of transfer duly stamped and executed by the transferor and transferee has been delivered to the
Company together with the certificate or certificates of debentures.
56. If the Board refuses to register the transfer of any debentures the Company shall within two months from
due date on which the instrument of transfer was lodged with the Company, send to the transferee and to
transfer of notice of the refusal.
Reserves
Reserves
57. Subject to the provisions of the Act, the Board shall in accordance with Section 205 (2A) of the Act, before
recommending any dividend, set aside out of the profits of the Company such sums as it thinks proper as
reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the
Company may be properly applied and pending such application may at the description, either be employed in
the business of the Company or be invested in such investments (other than shares of the Company as the Board
may, from time to time, think). The Board may also carry forward any profit which it may think prudent not to
divide without setting them aside as a reserve.
Capitalisation
58. Any General Meeting may resolve that the whole or any part of the undivided profits of the Company
(which expression shall include any premiums received on the issue of shares and any profits or other sums
which have been set aside as a reserve or reserves or have been carried forward without being divide) be
capitalised and distributed amongst such of the members as would be entitled to receive the same if distributed
by way of dividend and on the same proportions on the footing that they become entitled thereto as capita and
that all or any part of each capitalised amount be applied on behalf of such members in paying up in full any
unissued shares of the Company which shall be distributed accordingly in or towards payment of the uncalled
liability on any issued shares, and that such distribution or payment shall be accepted by such member in full
satisfaction of their interest in the said capitalised amount. Provided that any sum standing to the credit of a
share premium account or a capital redemption reserve account may for the purpose of this Article only be
applied in the paying up of unissued shares to be issued to members of the Company as fully-paid bonus shares.
Fractional Certificates
59. For the purpose of giving effect to any resolution under two last preceding Articles, the Directors may settle
any difficulty which may arise in regard to the distribution as they think expedient and the particular may issue
fractional certificate.
General Meetings
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60. The Directors may, whenever they think fit, call an extra ordinary General Meeting provided however if at
any time they are not in India, Directors capable of acting who are sufficient in number to form a quorum any
Director present in India may call an extra ordinary General Meeting as in the same manner as nearly as possible
as that in which such a meeting may be called by the Board.
Notice of meeting
61A Twenty-one days, notice At least of every General Meeting, Annual or Extraordinary and by whomsoever
called, specifying the day, place and hour of meeting and the general nature of the business to be transacted
thereat shall be given in the manner hereinafter provided to such persons as are under these Articles or the Act
entitled to receive notice from the Company provided that in the case of an annual meeting with consent in
writing of all the members entitled to vote thereat and in case of any other meeting with consent of the members
holding not less than 95% (Ninety five percent) of such part of the paid-up capital of the Company as give right
to vote at the meeting. A meeting may be convened by shorter notice.
Quorum
62. The quorum for a General Meeting shall be atleast five members present in person.
Chairman
63. At every General Meeting, the Chair shall be taken by the Chairman of the Board of Directors. If at any
meeting, the Chairman of the Board of Directors is not present within fifteen minutes after the time appointed
for holding the meeting or, though present but unwilling to Act as Chairman, the members present shall choose
one of the Directors present to be Chairman or if no Director shall be present or though present shall be
unwilling to take the chair than the members present shall choose one of their members being a member entitled
to vote to be the Chairman.
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Poll to be taken if demanded
68. If poll is demanded the same shall be taken at such time (not later than forty-eight hours from the time when
the demand was made) and place and either by open voting or by ballot as the Chairman shall direct and either
at once or after an interval or adjournment or otherwise and the result of the poll shall be deemed to be the
resolution of the meeting at which the poll was demanded. The demand for poll may be withdraw at any time by
the persons who made the demand of a poll shall not prevent the continuance of a meeting for the transaction of
any business other than the question on which a poll has been demanded.
Vote of Members
Vote of members
69. (1) On a show of hands every member present in person and being a holder of Equity Shares shall have one
vote and every person present either as a proxy on behalf of a holder of equity Shares or as a duly authorised
representative of a body corporate being a holder of Equity Shares, if he is not entitled to vote in his own rights,
shall have one vote.
(2) On a poll the voting rights of a holder of Equity Shares shall be as specified in Section 87 of the Act.
(3) The voting rights of the holders of the Preference Shares including the Redeemable Cumulative Preference
Shares shall be in accordance with the provision of Section 87 of the Act.
(4) No Company or body corporate shall vote by proxy so long as a resolution of its Board of Director sunder
Section 187 of the Act is in force and the representative named in such resolution is present at the General
Meeting at which the vote by proxy is tendered.
Joint holder
71. Where there are joint holders of any shares any one of such persons may vote at any meeting either
personally or by proxy in respect of such shares as if he were solely entitled thereto and if more than one of such
joint-holders be present at any meeting either personally or by proxy than that one of the said persons so present
whose name stands prior in order on the register in respect of such share shall alone be entitled to vote in respect
thereof. Several executor or administrators of deceased member in whose name any share stands shall for the
purpose of this Article be deemed joint holders thereof.
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eight hours before the time for holding the meeting at which the person named in the instrument proposes to
vote in default the instrument of proxy shall not be treated as valid.
Restriction on voting
76. No objection shall be taken to the validity of any vote except at the meeting or poll at which such vote shall
be tendered and every vote not disallowed at such meeting or poll and whether given personally or by proxy or
otherwise shall be deemed valid for all purposes.
Validity of vote
77. No member shall be entitled to exercise any voting rights either personally or by proxy at any meeting of the
company in respect of any shares registered in his name on which any calls or other sums presently payable by
him have not been paid or in regard to which the Company has exercised any right or lien.
Dividends
Declaration of dividends
115. The Company in General Meeting may declare a dividend to be paid to the members according to their
rights and interest in the profits and may subject to the provisions of Section 205 of the Act, fix the time for
payment.
Interim dividends
119. The Directors may, from time to time, pay to the members such interim dividends as in their judgement the
position of the Company justifies.
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Debts may be deducted
120. Subject to Section 205 A of the Act, the Director may retain any dividends on which the Company has a
lien and may apply the same in or towards satisfaction of debts, liabilities or engagements in respect of which
the lien exists.
122. A transferor of shares shall not pass the rights of any dividends declared thereon before the registration of
the transfer.
Dividend to jointholders
124. Any one of the several persons who are registered as joint-holders of any share may give effectual receipts
of all dividends and payment on account of dividends in respect of such shares.
Payment by post
125. A. Unless otherwise directed, any dividend may be paid by cheque or warrant sent through the post to the
registered address of the member or person entitled thereto, or in the case of jointholders to the registered
address of that one whose name stands first on the Register in respect of the joint holding or to such person and
such address and the member or person entitled or such joint-holders as the case may be, may direct and every
cheque or warrant shall be made payable at par to the person or to the order of such the person to whom it is
sent or to the order of such other person as the member or person entitled or such joint-holders, as the case may
be, may direct.
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OTHER INFORMATION
1. MoU dated September 06, 2005 with UTI Bank Limited, Book Running Lead Manager to the Issue and
Allianz Securities Limited, Joint Book Running Lead Manager to the Issue
2. Engagement Letter dated July 23, 2005 received from the Company appointing UTI Bank Limited to act as
Book Running Lead Manager to the Issue and Allianz Securities Limited to act as Joint Book Running Lead
Manager to the Issue.
3. MoU dated September 12, 2005 signed with Karvy Computershare Private Limited, Registrar to the Issue
4. Tripartite Agreement dated [•] between the Company, NSDL and Karvy Computershare Private Limited,
Registrar to the Company
5. Tripartite Agreement dated [•] between the Company, CDSL and Karvy Computershare Private Limited,
Registrar to the Company
6. Copy of MoU with M/s Richi Look Marketing (P) Limited dated August 22, 2005
7. Copy of MoU with M/s Seven Dayz Restaurants (P) Limited dated August 22, 2005
8. Copies of agreements entered into with Omaxe Construction Limited
For Mall dated August 22, 2005
For Wedding Mall dated August 22, 2005
9. Copies of MoUs for leased properties entered into with:
• Tulip Info Services (P) Limited dated July 08, 2005
• P R Infrastructure Limited dated July 17, 2005
10. Agreement with Gautam & Gautam Associates, Architect and Interior Designers dated August 17, 2005
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17. SEBI observation letter dated [•]
Any of the contracts or documents mentioned in the Draft Red Herring Prospectus may be amended or modified
at any time if so required in the interest of the Company or if required by the other parties, without reference to
the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant
statutes.
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DECLARATION
No statement made in the Draft Red Herring Prospectus shall contravene any of the provisions of the Companies
Act, 1956 and the rules made thereunder. All the legal requirements connected with the said Issue as also the
guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have
been duly complied with and no statement made in the Draft Red Herring Prospectus is contrary to the
provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules made
there under or guidelines issued, as the case may be.
We further certify that all the disclosures made in the Draft Red Herring Prospectus are true and correct.
Place: Delhi
Date: September 12, 2005
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