M.S. KHURANA ENGINEERING LIMITED (Our Company Was Incorporated As “M.S
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C M Y K Draft Red Herring Prospectus Dated [ ], 2007 Please read Section 60B of the Companies Act, 1956 (The Draft Red Herring Prospectus will be updated and become Red Herring Prospectus upon RoC filing) 100% Book Building Issue M.S. KHURANA ENGINEERING LIMITED (Our Company was incorporated as “M.S. Khurana Constructions Private Limited” under the provisions of the Companies Act, 1956 pursuant to a Certificate of Incorporation dated September 9, 1998. The name was changed to “M.S. Khurana Engineering Private Limited” on September 24, 1998. On August 12, 2002 the name changed to “M.S. Khurana Engineering Limited” on becoming a public limited company. Our Company has been allocated CIN U45201GJ1998PLC034638.) Registered Office: 3rd floor, Jay Tower, Ankur Complex, Naranpura, Ahmedabad 380 013; (There has been no change in the Registered Office of our Company since incorporation.) Tel: + 91 79 2748 4349 / +91 79 2745 6975; Fax: +91 79 2748 5071; E-mail: [email protected]; Website: www.mskhurana.com Contact Person: Mr. Jitesh Patel, Assistant Company Secretary and Compliance Officer PUBLIC ISSUE OF 45,00,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. [ ] PER EQUITY SHARE (INCLUDING SHARE PREMIUM OF RS. [] PER SHARE) AGGREGATING RS. [] LACS BY M.S. KHURANA ENGINEERING LIMITED (‘THE COMPANY’ OR ’THE ISSUER’). THE ISSUE COMPRISES OF “NET ISSUE TO THE PUBLIC” OF 45,00,000 EQUITY SHARES AGGREGATING RS. [] LACS. THE NET ISSUE TO THE PUBLIC WOULD CONSTITUTE 29.45% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF THE COMPANY. Price Band: Rs. [] To Rs. [] Per Equity Share of Face Value of Rs. 10 Each The Issue Price is [] times of the Face Value at the Lower End of the Price Band and [] times of the Face Value at the Higher End of the Price Band In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional working days after such revision, subject to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding/Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE), whose online IPO system will be available for bidding, by issuing a press release and by indicating the change on the websites of the Book Running Lead Manager (“BRLM”) and the terminals of the members of the Syndicate. This Issue is being made through a 100% Book Building Process wherein upto 50% of the Issue will be allocated to Qualified Institutional Buyers (QIBs) on a proportionate basis, subject to valid bids being received at or above the Issue Price. Out of the portion available for allocation to the QIBs, 5% will be available for allocation to Mutual Funds only. Mutual Fund Bidders shall also be eligible for proportionate allocation under the balance available for the QIBs. Further, atleast 15% of the Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and atleast 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 the Issue Price. RISK IN RELATION TO FIRST ISSUE This being the first issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is Rs.10/- and the Issue Price is [] times of the face value at the lower end of the Price Band and [] times of the face value at the higher end of the Price Band. The Issue Price (as determined and justified by the Book Running Lead Manager and our Company on basis of assessment of market demand for the Equity Shares by way of Book Building as stated in chapter titled “Basis of Issue Price” beginning on page []) 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 our 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 our 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 Draft Red Herring Prospectus. Specific attention of the investors is invited to the statements in the chapter titled “Risk Factors” beginning on page []. ISSUER’S ABSOLUTE RESPONSIBILITY M.S. Khurana Engineering Limited, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and this Issue, which is material in the context of this 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 Bombay Stock Exchange Limited (“BSE”) and The National Stock Exchange of India Limited (NSE). BSE shall be the Designated Stock Exchange for purpose of this Issue. We have received in-principle approval for the listing of our Equity Shares pursuant to letters dated [] and [] from BSE and NSE. IPO GRADING Our Company has not opted for IPO Grading since on the date of filing this DRHP it is not mandatory. However in the event it becomes mandatory our Company will get the issue graded BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE UTI Securities we makeInvesting easier UTI Securities Limited Bigshare Services Private Limited [Subsidiary of Securities Trading Corporation of India Limited] SEBI Regn. No.: INR0000001385 SEBI Reg. No.: INM 000007458 E-2/3, Ansa Industrial Estate AMBI Reg. No.: AMBI / 083 Saki Vihar Road, Saki Naka 1st Floor, Dheeraj Arma, Anant Kanekar Marg, Station Road Andheri (East), Mumbai – 400 072. Bandra (East), Mumbai – 400 051 Tel: +91 22 28473747/ 3474/ 0652/ 0653; Fax: +91 22 28475207 Tel: +91 22 6751 5828 / +91 22 6751 5815; Fax: +91 22 6702 3194 Website: www.bigshareonline.com Website: www.utisel.com; Email: [email protected] E-mail: [email protected] Contact Person: Mr. Sumeet Lath/Ms. Sujaya Shetty Contact Person: Mr. N.V.K Mohan ISSUE PROGRAMME BID / ISSUE OPENS ON : [] BID / ISSUE CLOSES ON : [] C M Y K TABLE OF CONTENTS CONTENTS Page No. SECTION I – DEFINITIONS AND ABBREVIATIONS DEFINITIONS 1 ISSUE RELATED TERMS 1 CONVENTIONAL / GENERAL TERMS 4 COMPANY / INDUSTRY RELATED TERMS 5 ABBREVIATIONS 6 SECTION II – GENERAL PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA 8 FORWARD LOOKING STATEMENTS 9 SECTION III – RISK FACTORS 10 SECTION IV – INTRODUCTION SUMMARY 20 THE ISSUE 23 SUMMARY OF FINANCIAL INFORMATION 24 GENERAL INFORMATION 26 CAPITAL STRUCTURE 32 SECTION V – OBJECTS OF THE ISSUE OBJECTS OF THE ISSUE 44 BASIC TERMS OF THE ISSUE 54 BASIS OF ISSUE PRICE 56 STATEMENT OF TAX BENEFITS 59 SECTION VI - ABOUT US INDUSTRY OVERVIEW 68 OUR BUSINESS 81 KEY INDUSTRY REGULATIONS AND POLICIES 108 HISTORY AND OTHER CORPORATE MATTERS 110 OUR MANAGEMENT 116 OUR PROMOTERS AND THEIR BACKGROUND 130 CURRENCY OF PRESENTATION 134 DIVIDEND POLICY 134 SECTION VII - FINANCIAL INFORMATION AUDITOR’S REPORT 135 OTHER GROUP COMPANIES / VENTURES OF PROMOTERS 174 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 188 OF OPERATIONS SECTION VIII - LEGAL AND OTHER REGULATORY INFORMATION OUTSTANDING LITIGATIONS, MATERIAL DEVELOPMENTS AND OTHER DISCLOSURES 198 GOVERNMENT/ STATUTORY AND BUSINESS APPROVALS 204 OTHER REGULATORY AND STATUTORY DISCLOSURES 210 SECTION IX - ISSUE RELATED INFORMATION TERMS OF THE ISSUE 219 ISSUE PROCEDURE 225 SECTION X – DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF ASSOCIATION MAIN PROVISIONS OF ARTICLES OF ASSOCIATION 254 SECTION XI - OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 285 DECLARATION 287 M. S. Khurana Engineering Limited SECTION I – DEFINITIONS AND ABBREVIATIONS DEFINITIONS Term Description “M.S. Khurana”, Unless the context otherwise requires, refers to M.S. Khurana Engineering “our Company”, Limited, a public limited company incorporated under the Companies Act. “the Company” and “Issuer” “we”, “us” and Unless the context otherwise requires, refers to M.S. Khurana. “our” Promoter(s) Unless the context otherwise requires, refers to Mr. Sudhir Khurana, Mr. Ashish Khurana, Mr. Vikram Khurana, Mr. Vishal Khurana, Mrs. Mira Khurana, Mrs. Nicole Khurana and Mrs. Geeta Khurana Subsidiary/ Unless the context otherwise requires, refers to our subsidiary, M.S. Khurana Concessionaire Infrastructure and Toll Road Private Limited Group/Associate Unless the context otherwise requires, refers to companies / other ventures Companies/ promoted by our Promoters (s) i.e. Madhav Healthcare Private Limited; Minar Firms/ Ventures Trading and Services Limited; M.S. Khurana Builders Private Limited; Aashiana Recreation Projects Private Limited; West India Hospitality Private Limited; Westinn Limited; Panorama Builders Private Limited; Scope Consultancy Private Limited; M/s.