DRAFT RED HERRING PROSPECTUS Dated [l] Please read Section 60B of the Companies Act, 1956 (Draft Red Herring Prospectus will be updated upon RoC filing) 100% Book Building Issue Shringar Cinemas Limited Registered Office: B/103, Kailash, Juhu Church Road, Juhu, Mumbai – 400 049, India Tel: +91 22 2625 5900; Fax: +91 22 2625 5272; Website: www.shringar.co.in Email: [email protected] Corporate Office: Fame Adlabs, 2nd Floor, Andheri Link Road, Oshiwara, Andheri (W), Mumbai 400 053 (India) Tel: +91-22-5640 3640 (Our Company was incorporated on October 26, 1999 as “Shringar Cinemas Private Limited” and converted into a public company “Shringar Cinemas Limited” on December 19, 2004 under the Companies Act 1956.) PUBLIC ISSUE OF EQUITY SHARES COMPRISING OF 81,50,000 EQUITY SHARES OF FACE VALUE RS.10/- EACH AT A PRICE OF RS. [l] FOR CASH AT A PREMIUM AGGREGATING RS. [l] LACS (HERE IN AFTER REFERRED TO AS THE “ISSUE”), INCLUDING EMPLOYEE RESERVATION OF 250,000 EQUITY SHARES OF FACE VALUE RS.10/- EACH AT A PRICE OF RS. [l] FOR CASH AGGREGATING RS. [l] LACS AND NET ISSUE TO THE PUBLIC OF 79,00,000 EQUITY SHARES OF FACE VALUE RS.10/- EACH AT A PRICE OF RS. [l] FOR CASH AGGREGATING RS. [l] LACS (HERE IN AFTER REFERRED TO AS THE “NET ISSUE TO THE PUBLIC”) AND THE ISSUE WOULD CONSTITUTE 25.82% OF THE POST ISSUE PAID-UP CAPITAL OF SHRINGAR CINEMAS LIMITED. PRICE BAND: Rs. [l] TO Rs. [l] PER EQUITY SHARE OF FACE VALUE Rs.10 ISSUE PRICE [l] IS TIMES OF THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [l] TIMES OF THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND The Issue is being made through the 100% book building process where 50% atleast of the Net Issue to the Public shall be issued on a discretionary basis to qualified institutional buyers. Further, not less than 25% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non- Institutional bidders and not less than 25% of the Net Issue to the Public shall be available for allocation on a proportionate basis to retail bidders, subject to valid bids being received at or above the Issue Price. RISK IN RELATION TO FIRST ISSUE This being the first issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the shares is Rs 10/- and the issue price is ‘[l] times’ of the face value. The Issue Price (as determined by the Company, in consultation with the Book Running Lead Managers (“BRLMs”), on the basis of assessment of market demand for the Equity Shares by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their 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 Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the summarized and detailed statements in Risk Factors beginning on page VIII. COMPANY’S ABSOLUTE RESPONSIBILITY Shringar Cinemas Limited, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to Shringar Cinemas Limited and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft 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 issued through this Draft Red Herring Prospectus are proposed to be listed on The Stock Exchange, Mumbai (“BSE”) (also the Designated Stock Exchange) and the National Stock Exchange of India Limited (“NSE”). We have received in-principle approvals from these Stock Exchanges for the listing of our Equity Shares pursuant to letters dated ——— and ————, respectively. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE ENAM FINANCIAL CONSULTANTS JM MORGAN STANLEY PRIVATE LIMITED INTIME SPECTRUM PRIVATE LIMITED 141, Maker Chambers III, REGISTRY LIMITED 801/ 802, Dalamal Towers Nariman Point, Mumbai-400 021. (India) C-13, Pannalal Silk Mills Compound, Nariman Point Mumbai, India 400 021 Tel.: +91-22-5504 0404 LBS Marg, Bhandup (West) Tel. : +91- 22- 5638 1800 Fax:+91- 22-5630 1694 Mumbai, India 400 078 Fax. : +91- 22- 2284 6824 E-Mail: [email protected] Email: [email protected] Tel: +91-22-5555 5454 Fax: +91-22-5555 5353 Email: [email protected] ISSUE PROGRAM BID/ISSUE OPENS ON BID/ISSUE CLOSES ON TABLE OF CONTENTS DEFINITIONS AND ABBREVIATIONS ………………………………………………………………………I SECTION I: RISK FACTORS …………………………………………………………………………………VI CERTAIN CONVENTIONS; USE OF MARKET DATA ………………………………………………….... VI FORWARD-LOOKING STATEMENTS ………………………………………………………………………VII RISK FACTORS ……………………………………………………………………………………………… VIII SECTION II: INTRODUCTION ………………………………………………………………………………….1 SUMMARY………………………………………………………………………………………………………....1 SUMMARY FINANCIAL DATA…………………………………………………………………………………..4 STATEMENT OF UNAUDITED PROFORMA INFORMATION……………………………………………... 9 THE ISSUE………………………………………………………………………………………………………. 10 GENERAL INFORMATION…………………………………………………………………………………….. 11 CAPITAL STRUCTURE………………………………………………………………………………………….20 OBJECTS OF THE ISSUE …………………………………………………………………………………… 27 SECTION III: ABOUT US ………………………………………………………………………………………..31 INDUSTRY …………………………………………………………………………………………………………31 BUSINESS …………………………………………………………………………………………………………44 REGULATIONS AND POLICIES ………………………………………………………………………………..59 OUR HISTORY ……………………………………………………………………………………………………62 MANAGEMENT…..………………………………………………………………………………………………. 67 OUR PROMOTERS ……………………………………………………………………………………………... 73 GROUP COMPANIES …………………………………………………………………………………………... 76 OUR SUBSIDIARIES ……………………………………………………………………………………………. 82 RELATED PARTY TRANSACTIONS ………………………………………………………………………….. 85 SECTION IV: MANAGEMENT’S DISCUSSION AND ANALYSIS.…………………………………………..91 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (AS PER UNCONSOLIDATED INDIAN GAAP)………………………………………………91 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (AS PER CONSOLIDATED INDIAN GAAP)…………………………………………………108 MATERIAL DEVELOPMENTS…………………………………………………………………………………..120 SECTION V: FINANCIAL STATEMENTS……………………………………………………………………..121 SECTION VI: LEGAL AND REGULATORY INFORMATION……………………………………………….165 OUTSTANDING LITIGATION……………………………………………………………………………………165 GOVERNMENT APPROVALS…………………………………………………………………………………..168 DIVIDEND POLICY……………………………………………………………………………………………….173 STATEMENT OF TAX BENEFITS………………………………………………………………………………174 SECTION VII: ISSUING INFORMATION………………………………………………………………………180 TERMS OF THE ISSUE………………………………………………………………………………………….180 ISSUE STRUCTURE……………………………………………………………………………………………..182 ISSUE PROCEDURE…………………………………………………………………………………………….184 BASIS FOR ISSUE PRICE ………………………………………………………………………………………199 SECTION VIII: OTHER INFORMATION……………………………………………………………………….201 STATUTORY AND OTHER INFORMATION…………………………………………………………………..201 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF SHRINGAR CINEMAS LIMITED………….206 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONS………………………………………224 DECLARATION……………………………………………………………………………………………………226 DEFINITIONS AND ABBREVIATIONS Definitions Term Description “Shringar Cinemas Limited” , Unless the context otherwise requires, refers to, Shringar Cinemas Limited, a “our Company” , “we”, “us”, public limited company incorporated under the Companies Act and its and “our” consolidated subsidiaries Shringar Films Private Limited (SFPL) or Swanston Multiplex Cinemas Private Limited (SMCPL). Issue Related Terms and Abbreviations Term Description Allotment Issue or transfer of Equity Shares as the context requires, pursuant to this Issue AS Accounting Standards as issued by the Institute of Chartered Accountants of India Articles/ Articles of Articles of Association of our Company, Shringar Cinemas Limited Association Auditors The statutory auditors of our Company, M/s. BSR & Co, Chartered Accountants. Banker(s) to the Issue The banks in which the Public Issue Account will be opened and which will act as such, in terms of this Draft Red Herring Prospectus. Bid An indication to make an offer during the Bidding Period by a prospective investor to acquire the Equity Shares of the Company at a price at or above the Floor Price, including all revisions and modifications thereto Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid for the Issue Bid / Issue Closing Date The date after