Katha Media DRHP Cover.Pmd

DRAFT RED HERRING PROSPECTUS Dated: November 11, 2011 Please read Sections 60B of the Companies Act, 1956 TM The Draft Red Herring Prospectus will be updated upon filing with the RoC 100% Book Building Issue KATHA MEDIATIX INDIA LIMITED Our Company was incorporated originally as a Limited Company in the name and style of “Katha Mediatix India Limited” vide certificate of incorporation dated November 16, 2000 with CIN U74300MH2000PLC129635 issued by the Registrar of Companies, Maharashtra, Mumbai. Further the name of our Company was changed to “Kathaa Mediatix India Limited” and a fresh certificate of incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai, on May 22, 2008. Further the name of our Company was again changed to “Katha Mediatix India Limited” and a fresh certificate of incorporation reflecting the new name was issued on August 20, 2010 by the Registrar of Companies, Maharashtra, Mumbai. Registered Office: 31, Chandragupta Estate, 1st Floor, New Link Road, Andheri (W), Mumbai – 400 053. Maharashtra, India [For more information on our change in name and registered office, refer to section titled “History and Certain Corporate Matters” beginning on page no 107 of this Draft Red Herring Prospectus] Corporate Office: 4th Floor, Kailash Plaza, Opposite Yash Raj Studios, Fun Republic Lane, Andheri (W), Mumbai 400 053, Maharashtra, India Tel: +91- 22 - 2674 4844 Fax: +91 22 2674 4846 Website: www.kathagroup.com E-mail: [email protected] Contact Person: Mr. Ankit Sethi, Company Secretary and Compliance Officer THE PROMOTERS OF OUR COMPANY ARE MR. KRISHNENDU SEN, MRS. KAJAL SEN, MR. ROMEER SEN AND MR. ROMAN SEN PUBLIC ISSUE OF 40,00,000 EQUITY SHARES OF ` 10/- EACH (“EQUITY SHARES”) OF KATHA MEDIATIX INDIA LIMITED (“KMIL” OR “THE COMPANY’ OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ` [] PER EQUITY SHARE), AGGREGATING ` [] (THE “ISSUE”). THE ISSUE SHALL CONSTITUTE 26.27% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF OUR COMPANY. PRICE BAND: ` [] TO ` [] PER EQUITY SHARE THE FACE VALUE OF THE EQUITY SHARES IS ` 10/- EACH. THE FLOOR PRICE IS [] TIMES THE FACE VALUE AND THE CAP PRICE IS [] TIMES OF THE FACE VALUE THE PRICE BAND AND THE MINIMUM BID LOT SIZE FOR THE ISSUE WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER AND WILL BE ADVERTISED BY OUR COMPANY AT LEAST TWO (2) WORKING DAYS PRIOR TO THE BID/ ISSUE OPENING DATE. In case of revision in the Price Band, the Bidding / Issue Period will be extended for three additional days after revision of the Price Band subject to the Bidding Period/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 (the “BSE”) and the National Stock Exchange of India Limited (the “NSE”) whose online IPO system will be available for bidding, 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 under sub regulation (1) of Regulation 26 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the “SEBI Regulations”) and through a 100% Book Building wherein upto 50% of the Issue shall 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. RISK IN RELATION TO THE FIRST ISSUE This being the first public 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 ` 10/- each. The Floor Price is [] times of the face value and the Cap Price is [] times of the face value. The Issue Price/ Floor Price/ Price Band (as determined and justified by our Company in consultation with the Book Running Lead Manager, as stated under the section titled “Basis for Issue Price” beginning on page no 77 of this Draft Red Herring Prospectus) should not be taken to be indicative of the market price of the Equity Shares after they 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 Investment in equity and equity related securities involve a high 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 section titled “Risk Factors” beginning on page no 11 of this Draft Red Herring Prospectus 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 Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Investors are advised to refer to “Risk Factors” beginning on page no 11 of this Draft Red Herring Prospectus 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 Red Herring Prospectus contains all information with regard to the Issuer and the 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 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 make 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. IPO GRADING This Issue has been graded by [] and has been assigned the “IPO Grade []/5” indicating [], through its letter dated []. The IPO grading is assigned on a five point scale from 1 to 5 wherein an “IPO Grade 5/5” indicates strong fundamentals and an “IPO Grade 1/5” indicates poor fundamentals. For more information please refer the section titled “General Information” beginning on page no 48 of this Draft Red Herring Prospectus and refer to “Material Contracts and Documents for Inspection” beginning on page no 247 of this Draft Red Herring Prospectus. LISTING The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the (“BSE”) and the (“NSE”). Our Company has received an ‘in-principle’ approval from the BSE and the NSE, for the listing of the Equity Shares pursuant to their letters dated [] and [], respectively. For the purposes of this Issue, the Designated Stock Exchange shall be []. BOOK RUNNING LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE STELLANT CAPITAL ADVISORY SERVICES (P) LIMITED BIGSHARE SERVICES PRIVATE LIMITED SEBI Registration No.: INM 000011773 SEBI Registration No.: INR000001385 Merchant Chamber, Basement, Opp: Patkar Hall, New Marine Lines, E-2, Ansa Industrial Estate, Sakivihar Road, Saki Naka, Churchgate, Mumbai – 400 020 Andheri (East), Mumbai - 400 072 Tel: +91–22– 2206 1606; Fax: +91–22– 2206 5061; Tel: +91 22 4043 0200 Fax: +91 22 2847 5207 Website: www.stellantcapital.com; Email: [email protected] E-mail: [email protected] Website: www.bigshareonline.com Investor Grievance Id: [email protected] Contact Person: Mr.Ashok Shetty Contact Person: Mr.Lokendra Parihar/Mr.Jinesh Lodaya BID/ISSUE PROGRAMME BID/ ISSUE OPENS ON [ ] BID/ ISSUE CLOSES ON [ ] TABLE OF CONTENTS TITLE PAGE SECTION I – DEFINITIONS AND ABBREVIATIONS CONVENTIONAL AND GENERAL TERMS/ ABBREVIATIONS 1 ISSUE RELATED TERMS 3 ISSUER RELATED TERMS 6 INDUSTRY RELATED TERMS 7 SECTION II – GENERAL PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND CURRENCY OF PRESENTATION 8 FORWARD LOOKING STATEMENTS 10 SECTION III – RISK FACTORS 11 SECTION IV – INTRODUCTION SUMMARY OF INDUSTRY 25 SUMMARY OF BUSINESS 35 SUMMARY OF FINANCIAL INFORMATION 44 THE ISSUE 47 GENERAL INFORMATION 48 CAPITAL STRUCTURE 56 OBJECTS OF THE ISSUE 68 BASIC TERMS OF THE ISSUE 75 BASIS FOR ISSUE PRICE 78 STATEMENT OF TAX BENEFITS 80 SECTION V – ABOUT OUR COMPANY INDUSTRY OVERVIEW 86 BUSINESS OVERVIEW 95 KEY REGULATIONS AND POLICIES 104 HISTORY AND CERTAIN CORPORATE MATTERS 107 OUR MANAGEMENT 111 OUR PROMOTERS AND THEIR BACKGROUND 124 OUR PROMOTER GROUP AND GROUP COMPANIES 128 RELATED PARTY TRANSACTIONS 135 CURRENCY AND UNITS OF PRESENTATION 136 DIVIDEND POLICY 137 SECTION VI- FINANCIAL INFORMATION FINANCIAL STATEMENTS 138 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 157 OPERATIONS FINANCIAL INDEBTEDNESS 167 SECTION VII- LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS 168 GOVERNMENT/ STATUTORY AND BUSINESS APPROVALS 175 OTHER REGULATORY AND STATUTORY DECLARATIONS 178 SECTION VIII- ISSUE RELATED INFORMATION TERMS OF THE ISSUE 190 ISSUE STRUCTURE 193 ISSUE PROCEDURE 197 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES 233 SECTION IX - MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF OUR COMPANY 234 SECTION X – OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 247 DECLARATION 249 SECTION I - DEFINITIONS AND ABBREVIATIONS In this Draft Red Herring Prospectus, the terms "we", "us", "our", "our Company" "" or "KMIL", unless the context otherwise implies, refer to Katha Mediatix India Limited.

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