Thinksoft Global Services Limited
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PROSPECTUS Dated October 6 , 2009 100% Book Building Issue THINKSOFT GLOBAL SERVICES LIMITED (The Company was incorporated as Relliant Global Services (India) Private Limited on June 8, 1998 at Bangalore, Karnataka under the Companies Act, 1956 with company registration no. 08/23821. On December 17, 1999, the Company’s name was changed to Thinksoft Global Services Private Limited. It became a Public Company pursuant to a special resolution of the shareholders of the Company at an Extra-Ordinary General Meeting held on July 22, 2008 and the word “Private” was deleted from its name. The certificate of incorporation reflecting the new name was issued on August 19, 2008 by the Registrar of Companies, Tamilnadu, Chennai, Andaman & Nicobar Islands. The Registered Office of the Company was shifted from S-912, Manipal Centre, Dickenson Road, Bangalore – 560 042 to the present address vide Fresh Certificate of Incorporation consequent on change of registered office address issued by the Registrar of Companies, Tamil Nadu, Chennai, Andaman and Nicobar Islands dated February 26, 2008). Registered Office:Type II, Unit-5, Dr. Vikram Sarabhai Instronics Estate, Thiruvanmiyur, Chennai – 600 041, India. Tel: 91 44 4392 3200, Fax: 91 44 4392 3258 Website: www.thinksoftglobal.com E-mail:[email protected]. Contact Person: Ms. Akila S, Company Secretary & Compliance Officer. PUBLIC ISSUE OF 36,46,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. 125 PER EQUITY SHARE AGGREGATING RS. 4557.50 LAKHS (THE “ISSUE”) BY THINKSOFT GLOBAL SERVICES LIMITED (THE “COMPANY” OR “THE ISSUER”). THE ISSUE CONSISTS OF A FRESH ISSUE OF 13,50,000 EQUITY SHARES BY THE COMPANY AND AN OFFER FOR SALE OF 22,96,000 EQUITY SHARES BY EURO INDO INVESTMENTS (EII) & MR VINOD GANJOOR (HEREINAFTER REFERRED TO AS THE “SELLING SHAREHOLDERS”). THE ISSUE WOULD CONSTITUTE 36.27% OF THE POST-ISSUE PAID-UP EQUITY CAPITAL OF THE COMPANY. ISSUE PRICE OF Rs. 125 /- PER EQUITY SHARE OF FACE VALUE OF RS. 10/- EACH THE ISSUE PRICE IS 12.5 TIMES THE FACE VALUE In case of revision in the Price Band, the Bidding Period will be extended for three additional days after revision of the Price Band subject to the Bidding Period/Issue period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue 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) whose online IPO system will be available for bidding, by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Managers and at the terminals of the Syndicate. This Issue is being made through a 100% Book Building Process wherein upto 50% of the Issue will be available for allocation on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (of which 5% will be available for allocation for Mutual Funds), subject to valid bids being received at or above the Issue Price. Mutual Fund bidders shall also be eligible for proportionate allocation under the balance available for the QIBs. Further, not less than 15% of the Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. RISKS IN RELATION TO THE FIRST ISSUE This being the first Issue, there has been no formal market for the shares of the Company. The Face Value of the Shares is Rs. 10/- each and the Issue Price is 12.5 times of the Face Value. The Issue Price (as determined by the Company and the Selling Shareholders, in consultation with the Book Running Lead Managers (“BRLMs”) 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 and/or sustained trading in the Equity Shares 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 Issuer and the Issue including the risks involved. The Equity Shares offered in the 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 section titled “Risk Factors” on page [xiii ] of this Prospectus. ISSUER’S AND SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY The Company and the Selling Shareholders, having made all reasonable inquiries, accept responsibility for and confirm that this Prospectus 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 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. IPO GRADING This Issue has been graded by ICRA Limited as “ICRA IPO Grade 2”, indicating below average fundamentals through its letter dated August 17, 2009. For details, please refer to the section titled “General Information” starting from page 12 and the section titled “Material Contracts and Documents for Inspection” starting from page 388 of this Prospectus. LISTING The Equity Shares offered through this Prospectus are proposed to be listed on the BSE and NSE. The Company has received in-principle approvals from Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE) for the listing of the Equity Shares pursuant to their letters dated June 12, 2009 and June 11, 2009 respectively. For the purpose of this Issue, the Designated Stock Exchange is NSE. BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE Karvy Investor Services Limited Karvy Computershare Private Limited “Karvy House”, 46, Avenue 4, Street No. 1, Banjara Hills, Cyber Villa, Plot No.17-24, Vittalrao Nagar, Hyderabad (Andhra Pradesh) - 500 034 Madhapur, Hyderabad – 500 081, India Tel.: 91 40 2331 2454, 2342 8774 Tel: 91 40 2342 0815 Fax : 91 40 2337 4714 Fax: 91 40 2343 1551 Email:[email protected] E-mail: [email protected] Website: www.karvy.com Website: www.kcpl.karvy.com Contact Person: Mr. M. P. Naidu Contact Person: Mr. M Muralikrishna BID/ISSUE PROGRAMME DATE OF OPENING OF THE ISSUE : Tuesday September 22, 2009 DATE OF CLOSING OF THE ISSUE : Thursday October 01, 2009 TABLE OF CONTENTS PAGE NO. SECTION I- GENERAL A. DEFINITIONS AND ABBREVIATIONS i B. PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA xi C. FORWARD LOOKING STATEMENTS xi SECTION II-RISK FACTORS RISK FACTORS xiii SECTION III-INTRODUCTION A. SUMMARY 1 B. THE ISSUE 3 C. SUMMARY FINANCIAL INFORMATION 5 D. GENERAL INFORMATION 12 E. CAPITAL STRUCTURE 25 F. OBJECTS OF THE ISSUE 39 G. BASIS FOR ISSUE PRICE 52 H. STATEMENT OF TAX BENEFITS 55 SECTION IV - ABOUT THE COMPANY A. INDUSTRY OVERVIEW 66 B. BUSINESS OVERVIEW 76 C. REGULATIONS AND POLICIES 108 D. HISTORY AND CERTAIN CORPORATE MATTERS 119 E. MANAGEMENT 131 F. PROMOTERS AND PROMOTER GROUP COMPANIES 149 G. CURRENCY OF PRESENTATION 154 H. RELATED PARTY TRANSACTIONS 154 I. DIVIDEND POLICY 155 SECTION V - FINANCIAL INFORMATION A. FINANCIAL STATEMENTS 156 B. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 251 OPERATIONS C. FINANCIAL INDEBTEDNESS 263 SECTION VI - LEGAL AND OTHER INFORMATION A. OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 266 B. STATUTORY LICENSES AND APPROVALS 278 SECTION VII - REGULATORY AND STATUTORY DISCLOSURES REGULATORY AND STATUTORY DISCLOSURES 291 SECTION VIII – ISSUE INFORMATION A. TERMS OF THE ISSUE 305 B. ISSUE STRUCTURE 309 C. ISSUE PROCEDURE 314 SECTION IX- MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY 363 SECTION X-OTHER INFORMATION A. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 388 B. DECLARATION 391 APPENDIX – ICRA LIMITED LETTER DATED AUGUST 17, 2009 ASSIGNING GRADE FOR IPO 392 SECTION I - GENERAL A. DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates the following terms have the following meanings in this Prospectus. Term Description “The Company” or Thinksoft Global Services Limited, a company “Company” or constituted under the Companies Act, 1956, having its “Thinksoft” or “we” or Registered Office at Type II, Unit.5, Dr. Vikram “our” or “us” or “the Sarabhai Instronics Estate, Thiruvanmiyur, Chennai-600 Issuer” 041, India Conventional/General Terms/Abbreviations Term Description A/c Account Act or Companies Act Companies Act, 1956 and amendments thereto AGM Annual General Meeting AS Accounting Standards issued by the Institute of Chartered Accountants of India ASBA Application Supported by Blocked Amount AY Assessment Year BSE Bombay Stock Exchange Limited CAGR Compound Annual Growth Rate CBDT Central Board of Direct Taxes CDSL Central Depository Services (India) Limited Depositories Act The Depositories Act, 1996, and subsequent amendments thereto Depository/Depositories NSDL and CDSL, both being depositories, which are registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996 as amended from time to time.