Gujarat State Petronet Limited
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RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated January 9, 2006 100% Book Built Issue GUJARAT STATE PETRONET LIMITED (Incorporated under the Companies Act, 1956 on December 23, 1998 as Gujarat State Petronet Limited) Registered Office: GSPC Bhavan, Sector 11, Gandhinagar, Gujarat-382 011, India (For changes in registered office, see section titled “History and Certain Corporate Matters” on page 67 of this Red Herring Prospectus). Tel: +91 79 5570 1604; Fax +91 79 2323 6477. Contact Person: Mr. Sandeep Dave; Tel: +91 79 5570 1005/1312/1320 E-mail: [email protected]; Website: www.gujpetronet.com PUBLIC ISSUE OF 138,000,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS. [●] PER EQUITY SHARE AGGREGATING RS. [●] MILLION (HEREINAFTER REFERRED TO AS THE “ISSUE”) BY GUJARAT STATE PETRONET LIMITED (“GSPL”, “THE COMPANY” OR “THE ISSUER”). THE ISSUE WILL CONSTITUTE 25.45 % OF THE FULLY DILUTED POST-ISSUE CAPITAL OF OUR COMPANY. PRICE BAND: RS. 23 TO RS. 27 PER EQUITY SHARE OF FACE VALUE RS. 10 EACH. ISSUE PRICE IS 2.3 TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND 2.7 TIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND. 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 Bombay Stock Exchange Limited (“BSE”) and 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 Managers and at the terminals of the Syndicate. The Issue is being made through the 100% Book Building Process wherein up to 50% of the Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”). 5% of the QIB Portion shall be available for allocation to Mutual Funds only and the remaining QIB Portion shall be available for allocation to the QIB Bidders including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 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 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 per Equity Share and the Issue Price is [●] times of the face value. The Issue Price (as determined by the Company in consultation with the Book Running Lead Managers, 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 allotted pursuant to the Issue 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 the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of this Red Herring Prospectus. Specific attention of the investors is invited to the section “Risk Factors” beginning on page xii of this Red Herring Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Company having made all reasonable inquiries, accepts responsibility for and confirms that this 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 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 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 Red Herring Prospectus are proposed to be listed on BSE and NSE. We have received in-principle approval from BSE and NSE for the listing of our Equity Shares pursuant to letters dated November 17, 2005 and November 16, 2005, respectively. For purposes of the Issue, NSE shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE KOTAK MAHINDRA CAPITAL HSBC SECURITIES AND ICICI SECURITIES LIMITED KARVY COMPUTERSHARE COMPANY LIMITED CAPITAL MARKETS (INDIA) ICICI Centre PRIVATE LIMITED Bakhtawar, 3rd Floor, PRIVATE LIMITED H.T. Parekh Marg, Karvy House, 46, Avenue 4, Street No.1 229, Nariman Point, 52/60, Mahatma Gandhi Road, Churchgate, Banjara Hills, Hyderabad 500 034, India Mumbai 400 021, India. Fort, Mumbai 400 001, India Mumbai - 400 020, India Tel.: +91 40 2331 2454 Tel.: +91 22 5634 1100 Tel: +91 22 2267 4921 Tel: +91 22 2288 2460 Fax: +91 40 2343 1551 Fax. : +91 22 2284 0492 Fax: +91 22 2263 1984 Fax: +91 22 2283 7045 E-mail: [email protected] E-mail: [email protected] Email: [email protected] E-mail: [email protected] Website: www.karvy.com Website: www.kotak.com Website: www.hsbc.co.in Website: www.iseconline.com BID/ ISSUE PROGRAMME BID/ ISSUE OPENS ON: JANUARY 24, 2006 BID/ ISSUE CLOSES ON: JANUARY 28, 2006 TABLE OF CONTENTS Page DEFINITIONS AND ABBREVIATIONS ..................................................................................................... i PRESENTATION OF FINANCIAL AND MARKET DATA .......................................................................... x FORWARD-LOOKING STATEMENTS ..................................................................................................... xi RISK FACTORS ........................................................................................................................................ xii SUMMARY .............................................................................................................................................. 1 THE ISSUE ............................................................................................................................................... 3 SUMMARY FINANCIAL AND OPERATING INFORMATION................................................................... 4 GENERAL INFORMATION ....................................................................................................................... 7 CAPITAL STRUCTURE ............................................................................................................................. 17 OBJECTS OF THE ISSUE ......................................................................................................................... 25 TERMS OF THE ISSUE ............................................................................................................................ 33 BASIS FOR ISSUE PRICE ........................................................................................................................ 36 STATEMENT OF TAX BENEFITS ............................................................................................................. 38 INDUSTRY ............................................................................................................................................... 44 OUR BUSINESS ....................................................................................................................................... 49 REGULATIONS AND POLICIES ............................................................................................................... 63 HISTORY AND CERTAIN CORPORATE MATTERS ................................................................................. 67 OUR MANAGEMENT .............................................................................................................................. 71 OUR PROMOTER AND GROUP COMPANIES ......................................................................................... 81 DIVIDEND POLICY ................................................................................................................................... 90 FINANCIAL STATEMENTS ...................................................................................................................... 91 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND U.S. GAAP .................. 113 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 119 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS .......................................................... 144 GOVERNMENT AND OTHER APPROVALS ............................................................................................. 150 OTHER REGULATORY AND