SHREE RENUKA SUGARS LIMITED (Incorporated on October 25, 1995 at Belgaum Under the Companies Act, 1956 with Incorporation No
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Red Herring Prospectus Please read Section 60B of the Companies Act, 1956 Dated September 26, 2005 100% Book Building Issue SHREE RENUKA SUGARS LIMITED (Incorporated on October 25, 1995 at Belgaum under the Companies Act, 1956 with Incorporation No. 08-19046.) Registered Office: BC 105 Havelock Road, Camp, Belgaum - 590 001. Tel: +91 831 240 4000 Fax: +91 831 240 4961; Contact Person: Mr. R.H. Sadekar. E-mail: [email protected]; Website: www.renukasugars.com Corporate Office: D.G.P House, VIP Compound, 88 – C, Off Veer Savarkar Marg, Prabhadevi, Mumbai - 400 025. Tel: +91 22 2437 7744 Fax: +91 22 2437 7747. PUBLIC ISSUE OF [●] EQUITY SHARES OF FACE VALUE RS. 10/- EACH AT A PRICE OF RS. [●] FOR CASH AT A PREMIUM AGGREGATING RS. 1,000 MILLION (HEREINAFTER REFERRED TO AS THE “ISSUE”). THERE WILL ALSO BE A GREEN SHOE OPTION OF [●] EQUITY SHARES FOR CASH AT A PRICE OF RS. [●] PER EQUITY SHARE AGGREGATING RS. 100 MILLION. THE ISSUE AND THE GREEN SHOE OPTION AGGREGATE RS. 1,100 MILLION. THE FACE VALUE OF THE EQUITY SHARES IS RS. 10/-. THE ISSUE WILL CONSTITUTE [●]% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY ASSUMING THAT THE GREEN SHOE OPTION IS NOT EXERCISED AND [●]% ASSUMING THAT THE GREEN SHOE OPTION IS EXERCISED IN FULL. PRICE BAND: Rs. 250 TO Rs. 300 PER EQUITY SHARE OF FACE VALUE RS. 10 EACH ISSUE PRICE IS 25 TIMES OF THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND 30 TIMES OF THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND This Issue is being made through a 100% Book Building Process wherein a minimum of 60% of the Issue shall be allocated on a discretionary basis to Qualified Institutional Buyers. Further, not less than 10% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% 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 the Issue Price. RISK IN RELATION TO FIRST ISSUE This being the first issue of the 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 [●] times of the face value. The Issue Price (as determined by the Company, in consultation with the Book Running Lead Manager (“BRLM”) and the Co-Book Running Lead Manager (“Co-BRLM”), 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 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 Red Herring Prospectus. Specific attention of the investors is invited to the statements in Risk Factors beginning on page no. xi of this Red Herring Prospectus. COMPANY’S ABSOLUTE RESPONSIBILITY Shree Renuka Sugars Limited having made all reasonable inquiries, accept responsibility for and confirms that this Red Herring Prospectus contains all information with regard to Shree Renuka Sugars Limited and this Issue, which is material in the context of this 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 makes 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 issued through this Red Herring Prospectus are proposed to be listed on The National Stock Exchange of India Limited and Bombay Stock Exchange Limited. We have received in-principle approvals from these Stock Exchanges for the listing of our Equity Shares pursuant to letters dated August 31, 2005 and August 22, 2005 respectively. The Bombay Stock Exchange Limited is the Designated Stock Exchange. BOOK RUNNING LEAD MANAGERS CO-BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE JM Morgan Stanley Private Limited Edelweiss Capital Limited Karvy Computershare Private Limited 141, Maker Chambers III, 14th Floor, Express Towers Unit: – Renuka Sugars Public Issue Nariman Point, Nariman Point Karvy House, 21, Avenue 4, Mumbai - 400 021 Mumbai – 400 021 Street No. 1, Banjara Hills, Tel: +91 22 5630 3030 Tel: + 91 22 2286 4400 Hyderabad - 500 034 Fax:+91 22 2204 7185 Fax:+ 91 22 2288 2119 Tel: + 91 40 23312454 / 23320751-53 E-mail: Email: [email protected] Fax: +91 40 23311968/ 23323049 [email protected] Website: www.edelcap.com E-mail: [email protected] Website: www.jmmorganstanley.com Website: www.karvy.com ISSUE PROGRAMME BID/ISSUE OPENS ON : OCTOBER 7, 2005 BID/ISSUE CLOSES ON : OCTOBER 14, 2005 TABLE OF CONTENTS Section I – General Definitions and Abbreviations ....................................................................................................................... i Section II – Risk Factors Certain Conventions – Use of Market Data .................................................................................................... ix Forward-Looking Statements ......................................................................................................................... x Risk Factors .................................................................................................................................................... xi Section III – Introduction Summary ........................................................................................................................................................ 1 The Issue ........................................................................................................................................................ 10 Green Shoe Option ........................................................................................................................................ 11 General Information ........................................................................................................................................ 14 Capital Structure ............................................................................................................................................. 19 Objects of the Issue ........................................................................................................................................ 29 Issue Structure ............................................................................................................................................... 40 Basis of Issue Price ......................................................................................................................................... 42 Statement of Tax Benefits ............................................................................................................................. 44 Section IV – About Us Industry ........................................................................................................................................................... 48 Our Business .................................................................................................................................................. 59 Regulations and Policies ................................................................................................................................. 74 History and Other Corporate Matters ............................................................................................................. 80 Our Management ........................................................................................................................................... 88 Our Promoters and their Background ............................................................................................................. 99 Related Party Transactions ............................................................................................................................. 103 Dividend Policy ............................................................................................................................................... 105 Section V – Financial Statements Report of our Statutory Auditor, Ashok Kumar, Prabhashankar & Co ............................................................ 106 Management’s Discussion and Analysis of Financial Conditions and Results of Operation ....................... 146 Unconsolidated financial statements of the Company for the nine months ended June 30, 2005 as audited by Independent Auditor, Grant Thornton ................................................. 169 Unconsolidated Financial Statements of the Company for the year ended September