LETTER of OFFER Dated: October 11, 2017 for the Eligible Equity Shareholders and Eligible Employees of Our Bank Only
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LETTER OF OFFER Dated: October 11, 2017 For the Eligible Equity Shareholders and Eligible Employees of our Bank only THE KARUR VYSYA BANK LIMITED Our Bank was incorporated as The Karur Vysya Bank Limited (the “Bank” or the “Issuer”) on June 22, 1916 under the Companies Act, 1913. Our Bank received the license to carry on banking business in India under the Banking Regulation Act, 1949, from the Reserve Bank of India on December 20, 1958. Registered Office: Post Box No. 21, Erode Road, Karur - 639002, Tamil Nadu, India Tel No: +91 4324 269437 / 269441 / 269443; Fax No.: +91 4324 225700 Contact Person: Mr. Srinivasa Rao Maddirala, Company Secretary and Compliance Officer E-mail: [email protected], Website: www.kvb.co.in Corporate Identification Number: L65110TN1916PLC001295 FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS AND ELIGIBLE EMPLOYEES OF OUR BANK ONLY LETTER OF OFFER ISSUE OF UP TO 11,87,81,048 EQUITY SHARES OF FACE VALUE OF ` 2 EACH (“EQUITY SHARES”) OF OUR BANK FOR CASH AT A PRICE OF ` 76 PER EQUITY SHARE (“ISSUE PRICE”) (INCLUDING A PREMIUM OF ` 74 PER EQUITY SHARE) AGGREGATING UP TO ` 902.74 CRORES BY OUR BANK. THE ISSUE COMPRISES AN ISSUE OF UP TO 10,16,21,048 EQUITY SHARES TO THE ELIGIBLE EQUITY SHAREHOLDERS OF OUR BANK ON RIGHTS BASIS IN THE RATIO OF 1 (ONE) FULLY PAID-UP EQUITY SHARE FOR EVERY 6 (SIX) FULLY PAID-UP EQUITY SHARES HELD ON OCTOBER 13, 2017 (THE “RECORD DATE”) AGGREGATING UP TO ` 772.32 CRORES AND A RESERVATION OF UP TO 1,71,60,000 EQUITY SHARES FOR THE ELIGIBLE EMPLOYEES OF OUR BANK AGGREGATING UP TO ` 130.42 CRORES (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE TO THE ELIGIBLE EQUITY SHAREHOLDERS AND ELIGIBLE EMPLOYEES, COLLECTIVELY REFERRED TO AS THE ISSUE. THE ISSUE LESS THE EMPLOYEE RESERVATION PORTION IS REFERRED TO AS THE NET ISSUE. THE ISSUE PRICE IS 38 TIMES THE FACE VALUE OF THE EQUITY SHARES. THE ENTIRE ISSUE PRICE FOR THE EQUITY SHARE IS PAYABLE ON APPLICATION. GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in the 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 relation to the 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 being issued in the issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does the SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to the section titled “Risk Factors” from page 10 before making an investment in this Issue. ISSUER’S ABSOLUTE RESPONSIBILITY Our Bank, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to our Bank and the Issue, which is material in the context of the Issue, that the information contained in this Letter of Offer 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 Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of our Bank are listed and traded on the National Stock Exchange of India Limited (“NSE”) and have been permitted to trade on BSE Limited (“BSE”) under the ‘Permitted Securities’ category. Our Bank has received an ‘in-principle’ approval from the NSE vide their letter dated September 29, 2017, for listing the Equity Shares to be allotted pursuant to the Issue. For the purposes of the Issue, the Designated Stock Exchange is the NSE. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE IIFL Holdings Limited Karvy Computershare Private Limited 10th Floor, IIFL Centre, Kamala City Karvy Selenium Tower B, Plot Number 31-32 Senapati Bapat Marg, Lower Parel (West) Gachibowli, Financial District Mumbai - 400 013, Maharashtra, India Nanakramguda, Serilingampally Tel: +91 22 4646 4600 Hyderabad 500 032, Andhra Pradesh, India Fax: +91 22 2493 1073 Tel: +91 40 6716 2222 Email: [email protected] Fax: +91 40 3343 1551 Investor Grievance Email: [email protected] Email: [email protected] Website: www.iiflcap.com Investor Grievance Email: [email protected] Contact Person: Sachin Kapoor/Pinak Bhattacharyya Website: www.karishma.karvy.com SEBI Registration Number: INM000010940 Contact Person: M. Muralikrishna SEBI Registration No.: INR000000221 ISSUE SCHEDULE LAST DATE FOR REQUEST FOR ISSUE OPENS ON ISSUE CLOSES ON SPLIT APPLICATION FORMS OCTOBER 25, 2017 NOVEMBER 2, 2017 NOVEMBER 10, 2017 TABLE OF CONTENTS SECTION I – GENERAL ............................................................................................................................... 1 DEFINITIONS AND ABBREVIATIONS .............................................................................................. 1 NOTICE TO OVERSEAS SHAREHOLDERS ....................................................................................... 6 CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND CURRENCY OF PRESENTATION .................................................................................................................................... 7 FORWARD LOOKING STATEMENTS ................................................................................................ 9 SECTION II – RISK FACTORS ................................................................................................................. 10 SECTION III- INTRODUCTION ............................................................................................................... 39 THE ISSUE ............................................................................................................................................ 39 SUMMARY FINANCIAL STATEMENTS .......................................................................................... 41 GENERAL INFORMATION ................................................................................................................ 49 CAPITAL STRUCTURE ....................................................................................................................... 53 OBJECTS OF THE ISSUE .................................................................................................................... 59 SECTION IV - STATEMENT OF TAX BENEFITS ................................................................................. 61 SECTION V – ABOUT OUR BANK .......................................................................................................... 64 OUR MANAGEMENT .......................................................................................................................... 64 SECTION VI – FINANCIAL INFORMATION ........................................................................................ 69 FINANCIAL STATEMENTS ............................................................................................................... 69 ACCOUNTING RATIOS AND CAPITALISATION STATEMENT ................................................ 117 STOCK MARKET DATA FOR EQUITY SHARES .......................................................................... 119 MATERIAL DEVELOPMENTS ......................................................................................................... 122 WORKING RESULTS ........................................................................................................................ 123 SECTION VII – LEGAL AND OTHER INFORMATION .................................................................... 124 OUTSTANDING LITIGATIONS AND OTHER DEFAULTS .......................................................... 124 GOVERNMENT AND OTHER STATUTORY APPROVALS ......................................................... 128 OTHER REGULATORY AND STATUTORY DISCLOSURES ....................................................... 129 SECTION VIII – OFFERING INFORMATION ..................................................................................... 143 TERMS OF THE ISSUE ...................................................................................................................... 143 SECTION IX - STATUTORY AND OTHER INFORMATION ............................................................ 180 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................ 180 DECLARATION ................................................................................................................................. 182 SECTION I – GENERAL DEFINITIONS AND ABBREVIATIONS In this Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded below shall have the same meaning as stated in this section. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments, replacements and modifications notified thereto as on the date of this Letter of Offer. The following list of defined terms is intended for the convenience of the reader only and is not exhaustive. Bank Related Terms Term Description Articles / Articles of Articles of Association of our Bank, as amended Association / AoA Audit Committee The audit committee of the Board of Directors of our Bank Auditors / Statutory The current statutory auditors of our Bank,