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Draft Letter of Offer for Private Circulation to the Equity Shareholders of the Bank Only

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Draft Letter of Offer for Private Circulation to the Equity Shareholders of the Bank Only Draft Letter of Offer For private circulation to the equity shareholders of the Bank only THE DHANALAKSHMI BANK LIMITED (Incorporated on November 14, 1927 under the Indian Companies Act, 1913 with Registrar of Companies, Kerala) Registered Office : Dhanalakshmi Buildings, Naickanal, Thrissur - 680001 Tel : 0487-2335131, 2335177. Fax : 0487- 2335580; Email : [email protected] ,Website : www.dhanbank.com Contact person: Mr. Ravindran K. Warrier , Company Secretary and Compliance Officer FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE BANK ONLY Issue of [●] Equity Shares of Rs. 10 each for cash at a premium of Rs. [●]/- per Equity Share aggregating to Rs. 200 crores on rights basis to the existing Equity Shareholders of The Dhanalakshmi Bank Limited. (the “Bank”/“DBL”/the “Issuer”) in the ratio of [●] Equity Share[s] for every [●] Equity Share[s] (i.e. [●]:[●]) held as on the record date i.e. [●], 2007. The Issue Price is [●] times the face value of the Equity Shares of our Bank. GENERAL RISKS Investment 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 securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or the adequacy of this document. Investors are advised to refer to the section titled “Risk Factors” beginning on page viii of this Draft Letter of Offer before making an investment in this Issue. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Draft Letter of Offer 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 Draft Letter of Offer is true and correct in all material respects 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. LISTING The existing Equity Shares of the Bank are listed on Bombay Stock Exchange Limited (“BSE”), National Stock Exchange of India Limited (“NSE”) and the Cochin Stock Exchange Limited (“CSE”). The Bank has received “in-principle” approvals from BSE, NSE and CSE for listing the Equity Shares arising from this Issue vide their letters dated [•], [•] and [•] respectively. For the purposes of this Issue, the Designated Stock Exchange is [ •]. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE Enam Securities Private Limited Karvy Computershare Private Limited SEBI Reg. No.: INM000006856 SEBI Reg. No.: INR000000221 801/802, Dalamal Towers Plot No. 17 - 24 , Vitthal Rao Nagar, Madhapur Nariman Point, Mumbai 400 021 Hyderabad 500 081 Tel: +91 22 6638 1800 Tel: +91-40-2342 0818 Fax: +91 22 2284 6824 Fax: +91-40-2342 0814 Email: [email protected] Email: dlb.rights @karvy.com Website: www.enam.com Website: www.karvy.com Contact Person: Mr. Amit Jain Contact Person: Mr. M. Murli Krishna ISSUE PROGRAMME Issue Opens On : Last Date For Receiving Requests For Split Forms : Issue Closes On : [●], 2007 [●], 2007 [●], 2007 i The Dhanalakshmi Bank Limited TABLE OF CONTENTS PARTICULARS PAGE DEFINITIONS, ABBREVIATIONS AND INTERPRETATION iii PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA vi FORWARD-LOOKING STATEMENTS vii RISK FACTORS viii INTRODUCTION 1 SELECTED FINANCIAL INFORMATION 2 GENERAL INFORMATION 4 CAPITAL STRUCTURE 5 OBJECTS OF THE ISSUE 13 BASIS FOR ISSUE PRICE 14 STATEMENT OF TAX BENEFITS 16 INDUSTRY OVERVIEW 21 OUR BUSINESS 28 KEY REGULATIONS AND POLICIES 51 OUR HISTORY AND CERTAIN CORPORATE MATTERS 63 DIVIDENDS 67 OUR MANAGEMENT 68 OUR PROMOTER AND PROMOTER GROUP 79 FINANCIAL STATEMENTS – AUDITORS REPORT 96 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 126 STOCK MARKET DATA FOR SHARES OF THE BANK 141 LICENSES AND APPROVALS 145 LEGAL AND OTHER INFORMATION 147 STATUTORY AND OTHER INFORMATION 162 TERMS OF THE ISSUE 170 MAIN PROVISIONS OF OUR ARTICLES OF ASSOCIATION 189 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 201 DECLARATION 202 DEFINITIONS, ABBREVIATIONS AND INTERPRETATION A. CONVENTIONAL/ GENERAL TERMS Act : The Companies Act, 1956 as amended Articles or AOA : Articles of Association of the Bank Board : The Board of Directors of the Bank or The Committee Authorized to act on its behalf Equity Shares : The Issued, Subscribed and Paid Up Equity Share Capital of the Bank and the additional equity share of the Bank offered pursuant to the Rights Issue Equity Shareholders : Means a holder/beneficial owner of equity shares of the Dhanalakshmi Bank Limited as on the record date i.e. [●]. Depository : A depository registered with SEBI under the SEBI (Depository and Participant) Regulations, 1996, as amended from time to time. Guidelines / SEBI Guidelines : SEBI (Disclosure and Investor Protection) Guidelines, 2000 and subsequent amendments thereto ISIN : International Securities Identification Number allotted by the depository Memorandum Or MOA : Memorandum of Association of the Bank Rights Issue : Present issue of equity shares of Rs. 10/- each UIN : Unique identification number B. OFFER RELATED TERMS CAF : Composite Application Form Bankers To The Issue : [●] Lead Manager/ENAM : Enam Securities Private Limited 801/802, Dalamal Towers Nariman Point, Mumbai 400 021 LOF / Letter Of Offer : Letter of Offer of the Bank for the rights issue of [●] equity shares of Rs. 10/- each at a premium of Rs. [●] Record Date : [●] Registrars / Registrars To The : Karvy Computershare Private Limited Issue/ Registrar And Share Plot No. 17 - 24 , Vitthal Rao Nagar, Madhapur Transfer Agent / R&T Agents Hyderabad 500 081 C. BANK/INDUSTRY RELATED TERMS Auditors : The statutory auditors of the Bank being M/s PB Vijayaraghavan & Co. and M/s R. Subramanian and Company Bank Acquisition Act : Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, as amended from time to time Board of Directors/Board : The Board of Directors of our Bank or a committee constituted thereof Chairman : The Chairman of the Bank Repatriation : “Investment on repatriation basis” means an investment the sale proceeds of which are, net of taxes, eligible to be repatriated out of India, and the expression ‘Investment on non-repatriation basis’, shall be construed accordingly. The BR Act : The Banking Regulation Act, 1949 and subsequent amendments thereto D. ABBREVIATIONS “We”, “us”, “our”, “the Issuer”, : Unless the context otherwise indicates or implies, refers to The “the Bank”, “our Bank” or “The Dhanalakshmi Bank Limited Dhanalakshmi Bank Limited” AY : Assessment Year AGM : Annual General Meeting AS : Accounting Standard As Issued By The Institute Of Chartered Accountants Of India BG : Bank Guarantee BSE/Designated Stock Exchange : The Bombay Stock Exchange Ltd. CAF : Composite Application Form iii The Dhanalakshmi Bank Limited CSE : Cochin Stock Exchange CDSL : Central Depository Services (India) Limited DEMAT : Dematerialized (Electronic/Depository as the context may be) DP : Depository Participant EGM : Extra-Ordinary General Meeting EPS : Earnings Per Share FCNR : Foreign Currency Non Resident FDI : Foreign Direct Investment FEMA : Foreign Exchange Management Act 1999 and the subsequent amendments thereto FERA : Foreign Exchange Regulation Act, 1973 FII : Foreign Institutional Investor [as defined under FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] registered with SEBI FIPB : Foreign Investment Promotion Board FY : Financial Year GOI / Government : Government Of India HUF : Hindu Undivided Family IT : Income-Tax Act 1961 ITAT : Income Tax Appellate Tribunal LoF : Letter Of Offer MIS : Management Information System MSE : Madras Stock Exchange NABARD : National Bank for Agriculture and Rural Development NR : Non Resident NRE ACCOUNT : Non Resident External Account NRI : Non Resident Indian NRO ACCOUNT : Non Resident Ordinary Account NSDL : National Securities Depository Limited OCB : Overseas Corporate Bodies PAN/GIR No. : Income Tax Permanent Account Number/General Index Reference Number RBI : Reserve Bank Of India SEBI : Securities And Exchange Board of India SEBI (SAST) Regulations, 1997 : SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto SIDBI : Small Industries Development Bank of India E. TECHNICAL AND INDUSTRY TERMS AND ABBREVIATIONS AFS : Available for sale ALCO : Asset Liability Management Committee ARCIL : Asset Reconstruction Company of India Limited ATMs : Automated Teller Machines Bps : Basis points CAIIB : Certified Associate of Indian Institute of Bankers CAR : Capital Adequacy Ratio CAGR : Compounded Annual Growth Rate CAMEL : Capital, Asset Quality, Management, Earnings, Liquidity, Systems CBS : Core Banking Solutions CBLO : Collateralised Borrowing and Lending Obligation CCIL : Credit Corporation of India Limited CCBD : Cash Credit Book Debts CDR : Corporate Debt Restructuring CIBIL : Credit Information Bureau of India Limited CISA
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