IL&FS Investsmart Limited
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C M K FINAL PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated : July 13, 2005 100% Book Building Offer IL&FS Investsmart Limited (The Company was incorporated as Investsmart India Limited on September 1, 1997 under the Companies Act, 1956 and obtained Certificate of Commencement of Business on October 7, 1997. The Company was changed to IL&FS Investsmart Limited on March 25, 2003) Registered Office: The IL&FS Financial Centre, Plot C-22, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051 (Previously: Mahindra Towers, 4th Floor, ‘B’ Wing, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 till June 14, 2000) Tel: +91-22-2653 3333; Fax: +91-22-2653 3075 Contact Person: Mr. Shekhar Deshpande E-mail: [email protected] Website: www.investsmartindia.com PUBLIC OFFER OF 11,400,000 EQUITY SHARES COMPRISING FRESH ISSUE OF 8,800,000 EQUITY SHARES OF THE FACE VALUE OF RS. 10 EACH AT A PRICE OF RS. 125 INCLUDING A PREMIUM OF RS. 115, FOR CASH AGGREGATING RS. 11,000 LAKHS AND OFFER FOR SALE OF 2,600,000 EQUITY SHARES OF THE FACE VALUE OF RS. 10 EACH AT A PRICE OF RS. 125 FOR CASH AGGREGATING RS. 3,250 LAKHS (COLLECTIVELY REFERRED TO AS THE “OFFER”), INCLUDING EMPLOYEE RESERVATION OF 11,40,000 EQUITY SHARES OF THE FACE VALUE OF RS. 10 EACH AT THE PRICE OF RS. 125 FOR CASH AGGREGATING RS. 1,425 LAKHS AND THE NET OFFER TO THE PUBLIC OF 10,260,000 EQUITY SHARES OF THE FACE VALUE OF RS. 10 EACH AT THE PRICE OF RS. 125 FOR CASH AGGREGATING RS. 12,825 LAKHS (HEREINAFTER REFERRED TO AS “NET OFFER”) THE NET OFFER TO THE PUBLIC WOULD CONSTITUTE 23.42 % OF THE POST OFFER PAID-UP CAPITAL OF THE COMPANY OFFER PRICE OF Rs. 125 PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH OFFER PRICE IS 12.5 TIMES OF THE FACE VALUE The Net Offer is being made through a 100% Book Building Process wherein 60% of the Net Offer to the Public shall be allocated on a discretionary basis to Qualified Institutional Buyers, not less than 10% of the Net Offer to the Public shall be allocated to Non-Institutional Investors and not less than 30% of the Net Offer to the Public shall be allocated to Retail Investors on a proportionate basis, subject to valid bids being received within the price band. If 60% of the Net offer to the Public cannot be allotted to Qualified Institutional Buyers then the entire application money shall be refunded forthwith. RISK IN RELATION TO FIRST OFFER This being the first Issue of IL&FS Investsmart Limited (the “Company/IIL”), there has been no formal market for the Equity Shares of the Company. The Face Value of the shares is Rs.10 each and the issue price is 12.5 times of the face value. The floor price is 11 times and cap price is 12.5 times of the face value. The Issue Price/Floor price/Price band (which has been determined and justified by the Book Running Lead Managers and the Issuer Company as stated under Basis of Offer Price on page no. 25) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares of the Company nor regarding the price at which the Equity Shares will be traded after listing. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the Issuer and the Offer including the risks involved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the statements in Risk Factors beginning on page no. xi. COMPANY’S ABSOLUTE RESPONSIBILITY IL&FS Investsmart Limited having made all reasonable inquiries, accepts responsibility for and confirms that this Offer document contains all information with regard to IL&FS Investsmart Limited and the Issue, which is material in the context of the Issue, that the information contained in the Offer document is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions, misleading in any material respect. LISTING The Equity Shares offered through this document are proposed to be listed on National Stock Exchange of India Limited and The Stock Exchange, Mumbai. IL&FS Investsmart Limited has received in-principle approval from these Stock Exchanges for the listing of their Equity Shares pursuant to letters dated June 10, 2005 and May 24, 2005 respectively. National Stock Exchange of India Limited will be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGER REGISTRAR TO THE OFFER SBI CAPITAL MARKETS LIMITED KARVY COMPUTERSHARE PRIVATE LIMITED 202, Maker Tower ‘E’, “Karvy House”, 46, Avenue 4, Cuffe Parade Street No. 1, Banjara Hills, Hyderabad – 500 034 Mumbai – 400 005 Tel. : +91-40-2331 2454 Tel: +91 – 22 – 2218 9166 Fax. : +91-40-2331 1968 Fax: +91 – 22 – 2218 8332 E-mail : [email protected] Email : [email protected] Website : www.karvy.com Website : www.sbicaps.com Contact Person : Mr. Murali Krishna OFFER PROGRAMME BID / OFFER OPENS ON : Monday, July 04, 2005 BID / OFFER CLOSES ON : Friday, July 08, 2005 C M K TABLE OF CONTENTS PAGE DEFINITIONS AND ABBREVIATIONS .............................................................................................................................................. i CERTAIN CONVENTIONS ................................................................................................................................................................. ix FORWARD-LOOKING STATEMENTS; MARKET DATA .................................................................................................................. x RISK FACTORS ................................................................................................................................................................................. xi INTRODUCTION ................................................................................................................................................................................ xxviii SUMMARY ................................................................................................................................................................................. xxviii BUSINESS SUMMARY ..................................................................................................................................................... xxviii THE OFFER ..................................................................................................................................................................... xxix FINANCIAL SUMMARY .................................................................................................................................................... xxx GENERAL INFORMATION ........................................................................................................................................................ 1 CAPITAL STRUCTURE ............................................................................................................................................................. 11 OBJECTS OF THE OFFER ...................................................................................................................................................... 19 BASIC TERMS OF THE ISSUE ........................................................................................................................................ 23 BASIS FOR OFFER PRICE ............................................................................................................................................. 25 TAX BENEFITS ................................................................................................................................................................. 27 THE COMPANY’S PROFILE ............................................................................................................................................................. 33 INDUSTRY ................................................................................................................................................................................. 33 KEY INDUSTRY REGULATION ................................................................................................................................................. 40 BUSINESS ................................................................................................................................................................................. 42 HISTORY AND CORPORATE STRUCTURE ............................................................................................................................ 59 HISTORY .......................................................................................................................................................................... 59 MAIN OBJECTS OF IIL ...................................................................................................................................................