DQ Entertainment (International) Limited (Our Company Was Incorporated on April 13, 2007 As “Animation and Multimedia Private Limited” in Hyderabad, Andhra Pradesh
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RED HERRING PROSPECTUS Dated February 20, 2010 Please read section 60B of the Companies Act, 1956 100% Book Building Issue DQ Entertainment (International) Limited (Our Company was incorporated on April 13, 2007 as “Animation and Multimedia Private Limited” in Hyderabad, Andhra Pradesh. The name of our Company was changed to “DQ Entertainment (International) Private Limited” by a special resolution passed at the EGM held on January 10, 2008. The status of our Company was changed to a public limited company by a special resolution of the members passed at an EGM held on July 25, 2009. The fresh certificate of incorporation consequent on change of status from private to public was granted to our Company on September 10, 2009 by the RoC. For changes in our name and our registered office see “Our History and Certain Corporate Matters” on page no. 92 of this Red Herring Prospectus) Registered Office: 644, Aurora Colony, Road Number 3, Banjara Hills, Hyderabad 500 034 Tel.: + 91 40 2355 3726/27, Fax: + 91 40 2355 2594 Company Secretary and Compliance Officer: Ms Anita Sunil Shankar Email: [email protected] ; Website: http://www.dqentertainment.com OUR COMPANY IS PROMOTED BY MR. TAPAAS CHAKRAVARTI AND DQ ENTERTAINMENT (MAURITIUS) LIMITED PUBLIC ISSUE OF 16,048,011 EQUITY SHARES OF RS. 10 EACH OF DQ ENTERTAINMENT (INTERNATIONAL) LIMITED (“OUR COMPANY” OR “THE ISSUER”) FOR CASH AT A PRICE OF RS. [y] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [•] PER EQUITY SHARE) AGGREGATING RS. [•] (THE “ISSUE”). THE ISSUE INCLUDES A RESERVATION OF UP TO 321,011 EQUITY SHARES OF RS. 10 EACH FOR ELIGIBLE EMPLOYEES (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE LESS THE EMPLOYEE RESERVATION PORTION IS REFERRED TO AS THE “NET ISSUE”. THE ISSUE WOULD CONSTITUTE 20.24% OF THE POST ISSUE PAID-UP CAPITAL OF OUR COMPANY AND THE NET ISSUE WILL CONSTITUTE 19.84% OF THE POST ISSUE PAID UP CAPITAL OF OUR COMPANY. PRICE BAND: RS. [y] TO RS. [y] PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH THE FLOOR PRICE IS [●] TIMES OF THE FACE VALUE AND THE CAP PRICE IS [●] TIMES OF THE FACE VALUE THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER AND ADVERTISED AT LEAST TWO (2) WORKING DAYS PRIOR TO THE BID/ ISSUE OPENING DATE* # A discount of upto Rs. [●] to the Issue Price determined pursuant to completion of the Book Building Process has been offered to Eligible Employees (the “Employee Discount”) In case of revision in the Price Band, the Bidding/Issue Period will be extended for three additional working days after revision of the Price Band, subject to the Bidding/Issue Period not exceeding ten working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to National Stock Exchange of India Limited (“NSE”) and the Bombay Stock Exchange Limited (“BSE”), by issuing a press release, and also by indicating the change on the website of the Book Running Lead Manager (“BRLM”) and at the terminals of the other members of the Syndicate. In terms of Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957 (“SCRR”), the Issue being less than 25% of the post-Issue capital, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated on a proportionate basis to QIB Bidders. 5% of the QIB Portion (exclusding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. The Company may consider allocation up to 30% of the QIB Portion to Anchor Investors as per the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the “SEBI (ICDR) Regulations”). If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, up to 10% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and up to 30% of the Net 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. Further, up to 321,011 Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Issue Price. RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of our Company, there has been no formal market for our Equity Shares. The face value of the Equity Shares is Rs. 10 each. The Floor Price is [•] times of the face value. The Issue Price (has been determined and justified by the BRLM and the Issuer as stated under the section titled “Basis for Issue Price” on page no. 47 of this Red Herring Prospectus) should not be taken to be indicative of the market price of the Equity Shares after they are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing. IPO GRADING This Issue has been graded by Fitch Ratings, a credit rating agency registered with SEBI. The Issue has been assigned a grade of 3 (ind) out of a maximum of 5 (ind) indicating average fundamentals through its letter dated February 8, 2010. For details regarding the grading of the Issue and the disclaimer of Fitch Ratings, see the section “General Information” and refer to the “Material Contracts and Documents for Inspection” on page nos. 16 and 294 respectively of this Red Herring Prospectus. No other grading has been obtained for the Issue. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by SEBI, nor does SEBI guarantee the accuracy or adequacy of the contents of this Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” on page no. i of this Red Herring Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares offered through this Red Herring Prospectus are proposed to be listed BSE. We have received an ‘in-principle’ approval from the BSE, for the listing of the Equity Shares pursuant to its letter dated November 5, 2009. For the purposes of the Issue, BSE shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE SBI Capital Markets Limited Karvy Computershare Private Limited 202, Maker Tower ‘E’, Plot No. 17-24, Vittal Rao Nagar Madhapur Cuff Parade, Mumbai 400 005 Hyderabad – 500 081, India Tel: +91 22 2217 8300 Telephone: +91 40 2342 0815 Fax: +91 22 2218 8332 Facsimile: +91 40 2342 0814 Email: [email protected] Email: [email protected] Investor Grievance Email: [email protected] Contact Person: Mr. Murali Krishna Website: www.sbicaps.com Website: www.karvycomputershare.com Contact Person: Mr. Abhishek Gupta/ Mr.Sandeep Onkar SEBI registration number: INR000000221 SEBI Registration No.: INM000003531 BID/ISSUE PROGRAMME BID/ISSUE OPENS ON March 8, 2010 BID/ISSUE CLOSES ON March 10, 2010 TABLE OF CONTENTS SECTION I- GENERAL ..............................................................................................................................I DEFINITIONS AND ABBREVIATIONS.................................................................................................. I PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA............................................. IX FORWARD-LOOKING STATEMENTS................................................................................................. XI SECTION II- RISK FACTORS.............................................................................................................. XII SECTION III – INTRODUCTION............................................................................................................. 1 SUMMARY OF INDUSTRY..................................................................................................................... 1 SUMMARY OF BUSINESS...................................................................................................................... 3 SUMMARY FINANCIAL INFORMATION............................................................................................