Midvalley Entertainment Limited
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RED HERRING PROSPECTUS Dated December 20, 2010 Please read Section 60 B of Companies Act, 1956 100% Book Building Issue MIDVALLEY ENTERTAINMENT LIMITED (Our Company was originally incorporated in India as “CTV Entertainment Private Limited” on July 12, 1989 under the Companies Act, 1956. For details of the changes in the name of our Company and our Registered Office, see “History and Certain Corporate Matters” on page 109 of this Red Herring Prospectus.) Registered Office: 9th Floor, Gee Gee Emerald, 312, Valluvar Kottam High Road, Nangumbakkam, Chennai – 600034, Tamil Nadu, India. Tel: 91-44-30632454; Fax: 91-44-30632453 Contact Person: Mr. S.N. Madhavan, Company Secretary and Compliance Officer.Tel: 91-44-30632454; Fax: 91-44-30632453 Email: [email protected]; Website: www.mvel.in Our Promoters: Datuk K. Ketheeswaran, M/s. Unigold Pacific Limited, M/s. Global Motion Pictures & Ventures Limited and M/s. Kiara Enigma Sdn Bhd. THE ISSUE PUBLIC ISSUE OF [●] EQUITY SHARES OF RS.10/- EACH (THE “EQUITY SHARES”) FOR CASH AT A PRICE OF RS. [●] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [●] PER EQUITY SHARE) AGGREGATING TO RS. 6000 LACS (“HEREIN AFTER REFFERED TO AS “THE ISSUE”) BY MIDVALLEY ENTERTAINMENT LIMITED (HEREINAFTER REFERRED TO AS “MVEL” OR THE “COMPANY” OR THE “ISSUER”). THE ISSUE SHALL CONSTITUTE [●] % OF THE POST ISSUE SHARE CAPITAL OF OUR COMPANY. PRICE BAND: RS. [●] TO RS. [●] PER EQUITY SHARE OF FACE VALUE RS. 10 EACH. THE ISSUE PRICE IS [●] TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [●] TIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND In case of revision in the Price Band, the Bidding/Issue Period will be extended by three additional days after revision of the Price Band subject to the Bidding /Issue Period not exceeding 10 working days. Any revision in the Price Band and the Bidding/Issue Period, if applicable, will be widely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange (“NSE”), by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Manager and at the terminals of the Syndicate. The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI (ICDR) Regulations, 2009 and through the 100% Book Building Process wherein upto 50% of the Issue will be available for allocation to Qualified Institutional Buyers (“QIB”) on a proportionate basis, subject to valid bids being received at or above the Issue Price. Provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors on a discretionary basis out of which one-third shall be reserved for domestic Mutual Funds. Further at least 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and at least 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 issue price. Any bidder may participate in this Offer through the ASBA process by providing the details of their respective bank accounts in which the corresponding Bid amounts will be blocked by Self Certified Syndicate Banks (“SCSBs”). For details in this regard, specific attention is invited to “Issue Procedure” on page 221 of this Red Herring Prospectus. In case of delay, if any in refund, our Company shall pay interest on the application money at the rate of 15% per annum for the period of delay. RISK IN RELATION TO THE FIRST ISSUE This being the first issue of the company, there has been no formal market for the securities of the company. The face value of the shares is Rs. 10/- per Equity Share and the issue price is [●] times of the face value. The Issue Price (as determined and justified by the Issuer, in consultation with the BRLM, on the basis of assessment of market demand for the Equity Shares by way of Book Building Process) 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 shares of the company nor regarding the price at which the equity shares will be traded after listing. GENERAL RISKS Investment 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 securities have not been recommended or approved by Securities and Exchange Board of India nor does Securities and Exchange Board of India guarantee the accuracy or adequacy of this document. Specific attention of the Investors is invited to the statement of Risk Factors pertaining to Company, its business and this Issue on Page 12 of the Red Herring Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Offer Document contains all information with regard to the Issuer and the issue, which is material in the context of the issue, that the information contained in this 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. IPO GRADING This issue has been graded by M/s. Brickworks Ratings India Pvt. Ltd. and has been assigned the “BWR IPO Grade 1” indicating “Poor Fundamentals” through their letter dated November 02, 2010. For further details in this regard please refer “General Information” and “Material Contracts and Documents for Inspection” on page 39 and 289 respectively of the Red Herring Prospectus. LISTING The Equity Shares offered through this Prospectus are proposed to be listed on the Bombay Stock Exchange Limited (“BSE”). Our company has received an in-principle approval for listing of the equity shares from BSE vide its letter No 1229 dated October 20, 2010. For the purpose of this Issue, the designated Stock Exchange will be the Bombay Stock Exchange Limited (“BSE”). BOOK RUNNING LEAD MANAGER REGISTRAR TO THIS ISSUE Aryaman Financial Services limited Cameo Corporate Services Limited 60, Khatau Building, Ground Floor, Subramanian Building No. 1, Alkesh Dinesh Modi Marg, Fort, Mumbai – 400 001. Club House Road, Chennai – 600 002. Tel No.: 91 - 22 - 2261 8264 / 8635 Tel. No.: 91 - 44 - 2846 0390, Fax No.: 91 - 44 - 2846 0129 Fax No.: 91 - 22 - 2263 0434. Web: www.cameoindia.com, Web: www.afsl.co.in, Email: [email protected] Email: [email protected] Contact Person: Mr. Deepak Biyani/ Mr. Viral Shah Contact Person: Mr. R.D. Ramasamy SEBI Registration No. INM000011344 SEBI Registration No. INR000003753 BID/ISSUE OPENS ON BID/ISSUE CLOSES ON Monday, January 10, 2011 Wednesday, January 12, 2011 * Our Company may consider participation by Anchor Investors. The Anchor Investor Bid/Issue Period shall be one Working Day prior to the Bid/ Issue Opening Date. TABLE OF CONTENTS SECTION CONTENTS PAGE NO. I GENERAL DEFINITIONS AND ABBREVIATIONS 1 CERTAIN CONVENTIONS & USE OF MARKET DATA 10 FORWARD LOOKING STATEMENTS 11 II RISK FACTORS 12 III INTRODUCTION SUMMARY OF OUR INDUSTRY 29 SUMMARY OF OUR BUSINESS 32 SUMMARY OF OUR FINANCIAL INFORMATION 34 BRIEF DETAILS OF THE ISSUE 38 GENERAL INFORMATION 39 CAPITAL STRUCTURE 48 OBJECTS OF THE ISSUE 60 BASIC TERMS OF THE ISSUE 66 BASIS OF ISSUE PRICE 68 STATEMENT OF TAX BENEFITS 71 IV ABOUT THE ISSUER COMPANY INDUSTRY OVERVIEW 81 OUR BUSINESS 87 KEY INDUSTRY REGULATIONS AND POLICIES 103 HISTORY AND CERTAIN CORPORATE MATTERS 109 OUR MANAGEMENT 114 OUR PROMOTERS AND PROMOTERS GROUP 130 DIVIDEND POLICY 152 V FINANCIAL STATEMENTS AUDITOR’S REPORT 153 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 181 RESULTS OF OPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS VI LEGAL AND OTHER REGULATORY INFORMATION OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS 195 GOVERNMENT & OTHER KEY APPROVALS 198 OTHER REGULATORY AND STATUTORY DISCLOSURES 203 VII ISSUE RELATED INFORMATION TERMS OF THE ISSUE 215 ISSUE STRUCTURE 218 ISSUE PROCEDURE 221 VIII MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF OUR COMPANY 260 IX OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 289 DECLARATION 291 SECTION I: DEFINITIONS AND ABBREVIATIONS Definitions Term Description “The Issuer” or Company or “Our Company” or Unless the context otherwise requires refers to Midvalley Entertainment Limited, a “Midvalley Entertainment Company incorporated under the Companies Act, 1956 Limited” or “MVEL” or “We” or “Our” or “Us 1. Datuk K. Ketheeswaran 2. Unigold Pacific Limited Promoters 3. Kiara Enigma Sdn. Bhd. 4. Global Motion Pictures & Ventures Pte. Ltd 1. MultiVest Resources Berhad 2. Benta Plantations (Perak) Sdn. Bhd 3. Allegro Equity (M) Sdn. Bhd Group Companies 4. Global International Ventures Group Limited 5. Puas Emas Utilities Sdn. Bhd 6. Allgrow Equity Sdn. Bhd. 7. Venture Grandeur Sdn. Bhd. Company Related Terms Term Description Articles/ Articles of The Articles of Association of Midvalley Entertainment Limited Association The Statutory Auditors of our Company namely, M/s. Venkatesh