Essel Shyam Communication Limited
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Draft Red Herring Prospectus (DRHP) Please read Section 60B of the Companies Act, 1956 (The DRHP will be updated upon filing with the ROC) 100% Book Built Offer ESSEL SHYAM COMMUNICATION LIMITED (Originally Incorporated as “Essel Spacelinks Limited” under the Companies Act, 1956 on 30th April, 1996 with Registrar of Companies, NCT of Delhi & Haryana, New Delhi. The name of the Company was changed to “Essel Shyam Communication Limited” w.e.f. 9th April 1997 and a fresh certificate of incorporation has been obtained. The registered office of the Company was changed from B-10, Lawrence Road, Industrial Area, New Delhi – 110035 to present address w.e.f.10th February 1998.) Registered Office : C-138 Mariana Industrial Area Phase-I, New Delhi-110028, India. Tel: +91 11 45401780/81/83; Fax: +91 11 45401782. Corporate Office : C-34, Sector 62, Electronic City, Naiad – 201307 (U.P.), India. Tel: +91 120 2400780; Fax: +91 120 2400474; E-mail: [email protected]; Website: www.esselshyam.net; Contact person: Mr. Upendra Prasad, Company Secretary, PUBLIC ISSUE OF 55,00,000 EQUITY SHARES OF RS.10 EACH FOR CASH AT A PRICE OF RS. [●] PER EQUITY SHARE (INCLUDING SHARE PREMIUM OF RS. [●] PER SHARE) AGGREGATING TO RS. [●] LACS (THE ‘ISSUE’). 5,50,000 EQUITY SHARES OF RS.10 EACH WILL BE RESERVED IN THE ISSUE FOR SUBSCRIPTION BY PERMANENT EMPLOYEES AND DIRECTORS OF THE COMPANY (THE “EMPLOYEE RESERVATION PORTION”, AND THE ISSUE OF EQUITY SHARES OTHER THAN THE EMPLOYEE RESERVATION PORTION, THE “NET ISSUE”). THE ISSUE WILL CONSTITUTE 27.78% OF THE FULLY DILUTED POST-ISSUE PAID-UP CAPITAL OF ESSEL SHYAM COMMUNICATION LIMITED (“COMPANY” OR “ISSUER”). PRICE BAND: Rs. [●] TO Rs. [●] PER EQUITY SHARE OF FACE VALUE Rs. 10 EACH. THE FACE VALUE OF THE SHARES IS Rs. 10 AND THE FLOOR PRICE IS [●] TIMES OF THE FACE VALUE AND THE CAP PRICE IS [●] TIMES OF THE FACE VALUE. In case of revision in the Price Band, the Bidding Period will 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, will be widely disseminated by notification to the 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 the terminals of the members of the Syndicate. This Issue is being made through the 100% Book Building Process wherein upto 50% of the Net Issue shall be allocated on a proportionate basis to QIBs as specified in the Disclosure and Investor Protection Guidelines, 2000 of the Securities and Exchange Board of India (“SEBI”). 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% 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. RISK IN RELATION TO FIRST ISSUE This being the first public 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 Equity 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 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 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 this Draft Red Herring Prospectus. Specific attention of the investors is invited to the statements in the chapter titled “Risk Factors” beginning on page [x]. ABSOLUTE RESPONSIBILITY The Company having made all reasonable inquiries, accepts responsibility for and confirms that this Draft 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 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 BSE and the NSE. We have received in-principle approvals from these Stock Exchanges for the listing of our Equity Shares pursuant to letters dated [●] and [●], respectively. For purposes of the Issue, BSE shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGER BOOK RUNNING LEAD MANAGER (BRLM) REGISTRAR TO THE OFFER BIGSHARE SERVICES PVT. LTD. KEYNOTE CORPORATE SERVICES LIMITED. E-2, Ansa Industrial Estate, 307, Regent Chambers, Saki-Vihar Road, Sakinaka, Nariman Point, Mumbai - 400 021. Mumbai - 400 072. Tel. : +91 22 22025230; Fax : +91 22 22835467 Tel.: +91 22 2847 0652; Fax: +91 22 2852 5207 E-mail: [email protected] E-mail: [email protected] Website: www.keynoteindia.net Website: www.bigshareonline.com SEBI Regn. No.: INR 000001385 SEBI Regn. No.: INM 000003606 ISSUE PROGRAMME BID/ISSUE OPENS ON: [●] BID ISSUE CLOSES ON: [●] TABLE OF CONTENTS Page No. DEFINITIONS AND ABBREVIATIONS ii PRESENTATION OF FINANCIAL AND MARKET DATA viii FORWARD-LOOKING STATEMENTS ix RISK FACTORS x SUMMARY 1 SUMMARY OF FINANCIAL DATA 3 THE ISSUE 5 GENERAL INFORMATION 6 CAPITAL STRUCTURE 12 OBJECTS OF THE ISSUE 19 BASIS FOR ISSUE PRICE 26 STATEMENT OF TAX BENEFITS 28 INDUSTRY 34 OUR BUSINESS 41 REGULATIONS AND POLICIES 51 HISTORY AND CERTAIN CORPORATE MATTERS 52 OUR MANAGEMENT 56 OUR PROMOTER AND GROUP COMPANIES 62 DIVIDEND POLICY 85 FINANCIAL STATEMENTS 86 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 118 GOVERNMENT AND OTHER APPROVALS 131 OTHER REGULATORY AND STATUTORY DISCLOSURES 134 ISSUE STRUCTURE 142 TERMS OF THE ISSUE 145 ISSUE PROCEDURE 148 MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 173 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 183 DECLARATION 185 i DEFINITIONS AND ABBREVIATIONS Company Related Terms Term Description “Essel Shyam Essel Shyam Communication Limited, a public limited company incorporated under Communication Limited”, the Companies Act, 1956, with its registered office at C-138 Nariana Industrial Area “the Company”, “ESCL”, Phase-I, New Delhi-110028, India. “we”, “our” and “us” Our Subsidiary Essel Shyam Technologies Limited, a wholly owned subsidiary of the Company. “Promoters” Rama Associates Limited, a public limited company incorporated under the Companies Act, 1956, with its registered office at B-10 Lawrence Road, Industrial Area, New Delhi-110035, India and Shyam Basic Infrastructure Projects Pvt. Ltd., a private limited company incorporated under the Companies Act, 1956, with its registered office at B2-D Shiv Marg, Bani Park, Jaipur-302016 (Rajasthan), India. ESOP 2006 Employee stock option plan for the employees of the Company as approved by the shareholders by way of a resolution dated June 5, 2006. Issue Related Terms Term Description Allotment Unless the context otherwise requires, the issue and the allotment of Equity Shares, pursuant to the Issue. Allottee The successful Bidder to whom the Equity Shares are/have been allotted. Article/Articles of Articles of Association of our Company, as amended from time to time. Association Auditors M/s Mehra Goel & Co. Banker(s) to the Issue [•] Bid An indication to make an offer during the Bidding/Issue Period by a Bidder to subscribe to our Equity Shares at a price within the Price Band, 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 pursuant to the Bid in the Issue. Bid/Issue Closing Date The date after which the members of the Syndicate will not accept any Bids for the Issue, which date shall be notified in a widely circulated English national newspaper, a Hindi national newspaper of wide circulation and a regional language newspaper of wide circulation. Bid cum Application Form The form in terms of which the Bidder shall make an offer to subscribe to/purchase the Equity Shares offered for subscription pursuant to this Issue, and which will be considered as the application for Allotment in terms of the Draft Red Herring Prospectus. Bidder Any prospective investor who makes a Bid pursuant to the terms of the Draft Red Herring Prospectus and the Bid cum Application Form. Bidding/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date, inclusive of both days, during which the Bidders can submit their Bids.