MAYAJAAL ENTERTAINMENT LIMITED (Originally Incorporated Under the Companies Act, 1956 As West Bank Garden Farm Clubs Private Limited on 9Th July, 1997
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C M Y K DRAFT RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated 14th January, 2009 (The Draft Red Herring Prospectus will be updated upon ROC filing) 100% Book Built Issue MAYAJAAL ENTERTAINMENT LIMITED (Originally incorporated under the Companies Act, 1956 as West Bank Garden Farm Clubs Private Limited on 9th July, 1997. The name of our Company was changed to Hotel Whales Private Limited w.e.f. 28th December, 1999. The name of our Company was further changed to Mayajaal Entertainment Private Limited w.e.f. 11th January, 2001. Our Company was subsequently converted to a public limited company and the name was changed to Mayajaal Entertainment Limited, pursuant to a resolution passed at a shareholders meeting held on 22nd April, 2002.) Our corporate and registered office is presently located at No. 34/1,35, Kanathur Reddy Kuppam Village, Chengalput Taluk, Kancheepuram District–603112, Tamil Nadu. Tel: +91-44-27472860; Fax: +91-44-27472870; Website:www.mayajaal.com; E-mail:[email protected] (For details of changes in our registered office, see the section titled “Our History and Corporate Structure” on Page 120 of this Draft Red Herring Prospectus.) Contact Person & Compliance Officer: Mr. Subramanian Ganesan, Compliance Officer/Company Secretary; E-mail:[email protected] INITIAL PUBLIC OFFERING OF 1,21,00,000 EQUITY SHARES OF Rs. 10 EACH (“EQUITY SHARES”) FOR CASH AT A PRICE OF RS [] PER EQUITY SHARE AGGREGATING RS. [] LAKHS, COMPRISING OF A FRESH ISSUE OF 99,00,000 EQUITY SHARES BY MAYAJAAL ENTERTAINMENT LIMITED AND AN OFFER FOR SALE OF 22,00,000 EQUITY SHARES BY THE SELLING SHAREHOLDER. THE FRESH ISSUE AND THE OFFER FOR SALE ARE JOINTLY REFERRED TO AS THE “ISSUE”.1,00,000 EQUITY SHARES OF RS. 10 EACH WILL BE RESERVED IN THE ISSUE FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (REFFERED TO AS THE “EMPLOYEE RESERVATION PORTION”) AND 7,00,000 EQUITY SHARES OF RS. 10 EACH WILL BE RESERVED FOR THE ELIGIBLE SHAREHOLDERS OF OUR PROMOTER AND PROMOTER GROUP COMPANY (REFERRED TO AS THE “SHAREHOLDERS OF THE PROMOTER AND ITS GROUP COMPANY PORTION”). THE OFFER OF EQUITY SHARES OTHER THAN THE EMPLOYEE RESERVATION PORTION AND SHAREHOLDERS OF THE PROMOTER AND ITS GROUP COMPANY PORTION SHALL BE CALLED THE “NET ISSUE.” THE NET ISSUE IS OF 1,13,00,000 EQUITY SHARES OF RS. 10 EACH CONSTITUTING 25.36% OF OUR POST ISSUE CAPITAL. PRICE BAND: RS. [] TO RS. [] PER EQUITY SHARE OF FACE VALUE RS. 10 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/Issue Period will be extended for three additional working days after revision of the Price Band subject to the Bidding/Issue Period not exceeding ten working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release, and also by indicating the change on the website of the Book Running Lead Manager and at the terminals of the Syndicate Members. This Issue is being made through a 100% Book Building Process wherein not more than 50% of the Net Issue shall be allotted on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (including 5% of the QIBS Portion that would be specifically reserved for mutual funds on a proportionate basis), subject to valid Bids being received at or above the Issue Price. Further, at least 15% of the Net Issue shall be available for allocation on a proportionate basis to Non- Institutional Bidders and at least 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 THE FIRST ISSUE TO THE PUBLIC This being the first issue of the 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 Floor Price is [] times of the face value and the Cap Price is [] times of the face value. The Issue Price (as determined by the Company and the Selling Shareholder in consultation with the Book Running Lead Manager, 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 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 our Company 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 Draft Red Herring Prospectus. Specific attention of the investors is invited to the section titled “Risk Factors” beginning on page 13 of this Draft Red Herring Prospectus. COMPANY’S AND SELLING SHAREHOLDER’S ABSOLUTE RESPONSIBILITY Our Company and the Selling Shareholder, having made all reasonable inquiries, accept responsibility for and confirm that this Draft Red Herring Prospectus contains all information with regard to our 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 offered through this Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received in-principle approval from the BSE and the NSE for the listing of our Equity Shares pursuant to letters dated [] and [] respectively. BSE shall be the Designated Stock Exchange for the purpose of this Issue. IPO GRADING Our Company has appointed CARE Limited for IPO Grading. CARE Limited has assigned [] Grade to the Initial Public Offering of our Company. The rationale furnished by the grading agency for its grading will be updated at the time of filing of the Red Herring Prospectus with RoC. BOOK RUNNING LEAD MANAGER REGISTRARS TO THE ISSUE COMFORT SECURITIES PRIVATE LIMITED CAMEO CORPORATE SERVICES LIMITED A-301, Hetal Arch, Opp. Natraj Market, "Subramaniam" Building, S.V. Road, Malad (West), No. 1, Club House Road, Mumbai - 400 064. Chennai - 600 002 Tel : 022 - 28449765; Fax: 022 - 28892527 Tel No. 044 - 2846 0390; Fax: 044 - 2846 0129 Email:[email protected] Contact Person: Mr. R. D. Ramaswami Website: www.comfortsecurities.co.in Website: www.cameoindia.com Contact Person: Mr. Sarthak Vijlani E- Mail: [email protected] SEBI Regn. No: INM 000011328 SEBI Regn. No.: INR 000003753 ISSUE PROGRAMME BID/ISSUE OPENS ON : [] BID/ISSUE CLOSES ON : [] C M Y K TABLE OF CONTENTS SECTION TITLE PAGE NO I GENERAL DEFINITION AND ABBREVIATIONS 1 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA 9 HISTORY & BACKGROUND OF OUR PROMOTER 10 FORWARD LOOKING STATEMENTS 12 II RISK FACTORS 13 III INTRODUCTION SUMMARY 26 SUMMARY OF FINANCIAL DATA 31 ISSUE DETAILS IN BRIEF 33 GENERAL INFORMATION 34 CAPITAL STRUCTURE 42 OBJECTS OF THE ISSUE 54 BASIC TERMS OF THE ISSUE 67 BASIS FOR ISSUE PRICE 69 STATEMENT OF TAX BENEFITS 71 IV ABOUT OUR COMPANY INDUSTRY OVERVIEW 81 OUR BUSINESS 96 KEY INDUSTRY REGULATIONS AND POLICIES 116 OUR HISTORY AND CORPORATE STRUCTURE 120 OUR MANAGEMENT 124 OUR PROMOTER 139 OUR PROMOTER GROUP / GROUP COMPANIES / ENITITIES 143 RELATED PARTY TRANSACTIONS 151 DIVIDEND POLICY 152 V FINANCIAL INFORMATION FINANCIAL INFORMATION 153 MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 180 OPERATIONS VI LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 189 GOVERNMENT & OTHER APPROVALS 201 OTHER REGULATORY AND STATUTORY DISCLOSURES 215 VII ISSUE RELATED INFORMATION TERMS OF THE ISSUE 226 ISSUE STRUCTURE 229 ISSUE PROCEDURE 232 ASBA PROCESS 265 VIII MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 270 IX OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 282 DECLARATION 284 SECTION I: GENERAL DEFINITIONS AND ABBREVIATIONS DEFINITIONS Term Description "MEL", "Mayajaal Entertainment Limited", Mayajaal Entertainment Limited a public limited company "Mayajaal" or "our Company" incorporated under the Companies Act, 1956. "We" or "us" and "our" Unless the context otherwise require, refers to Mayajaal Entertainment Limited. Conventional / General Terms Terms Description AOA/Articles/ Articles of Articles of Association of Mayajaal Entertainment Limited Association Auditors The statutory auditors of Mayajaal Entertainment Limited being R. Subramanian & Co. , Chartered Accountants, Chennai Bankers to our Company Andhra Bank Kotak Mahindra Bank Repco Bank Limited. Board of Directors / Board The Board of Directors of Mayajaal Entertainment Limited BSE Bombay Stock Exchange Limited (the designated stock exchange) CARE Credit Analysis & Research Limited Companies Act The Companies Act, 1956 Depositories Act The Depositories Act, 1996 Director(s) Director(s) of Mayajaal Entertainment Limited, unless otherwise specified Equity Shares Equity Shares of our company of face value of Rs.