Patel Engineering Limited
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PROSPECTUS Please read Section 60B of the Companies Act, 1956. Dated May 15, 2006 100% Book Built Issue PATEL ENGINEERING LIMITED (Our Company was incorporated as “Patel Engineering Company Limited” on April 2, 1949 at Mumbai under the Companies Act, 1913 with the Registration No. 7039 of 1949- 50. The name of our Company was changed to “Patel Engineering Limited” with effect from December 9, 1999. For details of changes to our Registered Office, please refer to the chapter titled “History and Other Corporate Matters” on page 78 of this Prospectus. Registered Office: Patel Estate Road, Jogeshwari (West), Mumbai – 400 102. Tel: +91 22 2678 2916 • Fax: +91 22 2678 2455. Contact Person: Ms. Shobha Shetty • E-mail: [email protected] • Website: www.pateleng.com PUBLIC ISSUE OF 9,659,090 EQUITY SHARES OF RE. 1 EACH AT A PRICE OF RS. 440 PER EQUITY SHARE (INCLUDING SHARE PREMIUM OF RS. 439 PER EQUITY SHARE) FOR CASH AGGREGATING RS. 4,250 MILLION (HEREINAFTER REFERRED TO AS THE “ISSUE”). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF UP TO 9,176,135 EQUITY SHARES OF RE. 1 EACH AGGREGATING TO RS. 4,037.50 MILLION (“NET ISSUE”) AND A RESERVATION FOR EXISTING RETAIL SHAREHOLDERS OF THE COMPANY OF UP TO 482,955 EQUITY SHARES OF RE. 1 EACH (“EXISTING RETAIL SHAREHOLDERS’ RESERVATION PORTION”) AGGREGATING TO RS. 212.50 MILLION. THE ISSUE WILL CONSTITUTE 16.2% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. THE ISSUE PRICE IS RS. 440 PER EQUITY SHARE THE FACE VALUE OF THE EQUITY SHARES IS Re. 1 THE ISSUE PRICE IS 440 TIMES OF THE FACE VALUE In case of revision in the Price Band, the Bidding Period shall be extended for three additional working days after such revision, subject to the Bidding Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited, by issuing a press release and by indicating the change on the websites of the Book Running Lead Managers (“BRLMs”) and the terminals of the member of the Syndicate. This Issue is being made through a 100% Book Building Process wherein not more than 50% of the Net Issue shall be allocated to Qualified Institutional Buyers (“QIBs”) on a proportionate basis, out of which 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion, if any, shall be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above Issue Price. Further, not less than 15% of the Net Issue would be available for allocation to Non-Institutional Bidders and not less than 35% of the Net Issue would be available for allocation to Retail Individual Bidders on a proportionate basis, subject to valid bids being received from them at or above the Issue Price. Upto 482,955 Equity Shares shall be available for allocation on a proportionate basis to the Existing Retail Shareholders subject to valid Bids at or above the Issue Price and the maximum Bid in the Existing Retail Shareholders’ Reservation Portion is limited to such number of Equity Shares that the Bid Amount does not exceed Rs. 100,000. 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 this Issue including the risks involved. The Equity Shares issued in this 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 Prospectus. Specific attention of the investors is invited to the statements in the chapter titled “Risk Factors” beginning on page xii of this Prospectus. COMPANY’S ABSOLUTE RESPONSIBILITY The Company having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to the Company and this Issue, which is material in the context of this Issue, that the information contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares of our Company are listed on Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”). The Equity Shares offered through this Prospectus are proposed to be listed on BSE and NSE. We have received in-principle approvals from BSE and NSE for the listing of our Equity Shares pursuant to letters dated April 7, 2006 and April 10, 2006, respectively. BSE shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE ENAM ICICI Securities Limited Enam Financial Consultants Private Limited Intime Spectrum Registry Limited ICICI Centre, 801, Dalamal Tower, C-13, Pannalal Silk Mills Compound, H.T. Parekh Marg, Nariman Point, LBS Marg, Bhandup (West) Churchgate, Mumbai – 400 020 Mumbai - 400 021. Mumbai, India 400 078 Tel: +91 22 2288 2460 Tel: +91 22 5638 1800 Tel: +91-22-2596 0320 Fax: +91 22 2282 6580 Fax: +91 22 2284 6824 Fax: +91-22-2596 0329 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.icicisecurities.com Website: www.enam.com Website: www.intimespectrum.com ISSUE PROGRAM BID/ISSUE OPENED ON : WEDNESDAY, MAY 3, 2006 BID/ISSUE CLOSED ON : TUESDAY, MAY 9, 2006 TABLE OF CONTENTS Page No. Section I – General Definitions and Abbreviations ................................................................................................................................... iii Presentation of Financial and Use of Market Data ................................................................................................. x Forward Looking Statements ...................................................................................................................................... xi Section II – Risk Factors Risk Factors ................................................................................................................................................................. xii Section III – Introduction Summary .......................................................................................................................................................................... 1 Summary Financial Data............................................................................................................................................... 8 The Issue ....................................................................................................................................................................... 12 General Information..................................................................................................................................................... 13 Capital Structure .......................................................................................................................................................... 21 Objects of The Issue ................................................................................................................................................... 31 Basis of Issue Price ..................................................................................................................................................... 36 Statement of Tax Benefits.......................................................................................................................................... 39 Section IV – About us Industry .......................................................................................................................................................................... 42 Our Business ................................................................................................................................................................. 49 Regulations and Policies ............................................................................................................................................ 76 History and Other Corporate Matters ....................................................................................................................... 78 Our Management .......................................................................................................................................................... 84 Our Promoters ............................................................................................................................................................... 97 Our Subsidiaries ........................................................................................................................................................ 101 Promoter Group Companies .................................................................................................................................... 107 Related Party Transactions.....................................................................................................................................