DRAFT RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated: [*] (The Draft Red Herring Prospectus will be updated upon filing with the ROC ) 100% Book Building Issue TM PRATIBHA INDUSTRIES LIMITED (Registration No. 11- 90760) (Incorporated on July 19, 1995 under the Companies Act, 1956 as a public limited company) Registered Office: 101, Usha Kamal, 574, Chembur Naka, Chembur, Mumbai 400071 Corporate Office: Shrikant Chambers, Phase–II, 5th Floor, Sion - Trombay Road, Next to R.K. Studio, Chembur, Mumbai 400071 Tel: 91 22 5641 4499; Fax 91 22 2520 1135; E-mail: [email protected]; Website: www.pratibhagroup.com Compliance Officer: Mr. T. R. Radhakrishnan (General Manager – Finance) PUBLIC ISSUE OF 42,85,000 EQUITY SHARES OF FACE VALUE OF Rs.10/- EACH AT A PRICE OF Rs. [•] FOR CASH (INCLUDING PREMIUM OF Rs.[•] PER SHARE) AT A PREMIUM AGGREGATING RS. [•] LAKHS (HEREINAFTER REFERRED TO AS THE "ISSUE", INCLUDING EMPLOYEE RESERVATION OF 4,28,500 EQUITY SHARES OF FACE VALUE RS.10/- EACH AT A PRICE OF RS. [•] FOR CASH AGGREGATING RS. [•] LAKHS AND NET ISSUE TO THE PUBLIC OF 38,56,500 EQUITY SHARES OF FACE VALUE RS.10/- EACH AT A PRICE OF RS. [•] FOR CASH AGGREGATING RS. [•] LAKHS (HEREINAFTER REFERRED TO AS THE "NET ISSUE TO THE PUBLIC" AND THE ISSUE WOULD CONSTITUTE 30.00% OF THE POST ISSUE PAID-UP CAPITAL OF THE COMPANY PRICE BAND: Rs. [•] TO Rs. [•] PER EQUITY SHARE OF FACE VALUE Rs.[•] EACH THE FACE VALUE OF THE EQUITY SHARE IS RS. 10/- EACH. THE OFFER PRICE IS [•] TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [•] TIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND The Issue is being made through a 100% Book Building Process wherein not more than 50% of the Net offer to the public shall be allocated on proportionate basis to Qualified Institutional Buyers (including 5% for Mutual Funds). Further, not less than 15% of the Net offer to the public shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 35% of the Net offer to the public shall be available for allocation on a proportionate basis to Retail Bidders, subject to valid bids being received at or above the Issue Price. RISK IN RELATION TO THE ISSUE This being the first issue of Equity Shares of the Company, there has been no formal market for its Equity Shares. The face value of the shares is Rs 10/- 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 Manager ("BRLM"), 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 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 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 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 the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the summarized and detailed statements in Risk Factors beginning on page [•],of this Draft Red Herring Prospectus. COMPANY’S ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft 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 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 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 The National Stock Exchange of India Limited (NSE) and the Bombay Stock Exchange Limited (BSE). We have received in-principle approval from the NSE and BSE for the listing of our Equity Shares pursuant to letters dated [•], 2005 and [•], 2005, respectively. The Bombay Stock Exchange Limited shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE VIVRO FINANCIAL SERVICES PRIVATE LIMITED INTIME SPECTRUM REGISTRY LIMITED 1st Floor, Manu Mansion C-13, Pannalal Silk Mills Compound, 16/18, Shahid Bhagatsingh Road L.B.S. Marg, Bhandup (W), Mumbai – 400 078 Opp. Old Custom House, Fort, Mumbai - 400 023 Tel No. 022-5555 5454, Fax: 022 – 5555 5353 Tel.: 022-2265 7364, Fax: 022-2265 8406 Website: www.intimespectrum.com Website: www.vivro.net, E-mail: [email protected] E- Mail: [email protected] ISSUE SCHEDULE BID/ ISSUE OPENS ON [•] BID/ ISSUE CLOSES ON [•] Table of Content Particulars Page No. A. DEFINITIONS AND ABBREVIATIONS I. CONVENTIONAL/ GENERAL TERMS 1 II. OFFERING RELATED TERMS 2 III. COMPANY/INDUSTRY RELATED TERMS 4 IV. ABBREVIATIONS 5 B. RISK FACTORS I. FORWARD LOOKING STATEMENT AND MARKET DATA 7 II. RISK FACTORS 7 C. INTRODUCTION I. SUMMARY 15 II. THE ISSUE / OFFER 17 III. FINANCIAL SUMMARY 18 IV. GENERAL INFORMATION 21 V. CAPITAL STRUCTURE 27 VI. OBJECTS OF THE ISSUE 36 VII.BASIC TERMS OF THE ISSUE 40 VIII.BASIS FOR ISSUE PRICE 41 IX.TAX BENEFITS 44 D. ABOUT THE ISSUER I. INDUSTRY OVERVIEW 48 II. BUSINESS OVERVIEW 59 III. KEY INDUSTRY REGULATIONS AND POLICIES 75 IV. HISTORY AND CORPORATE STRUCTURE 76 V. MANAGEMENT 80 VI. PROMOTERS 92 E. E.FINANCIAL INFORMATION I.FINANCIAL INFORMATION OF THE COMPANY 95 II.FINANCIAL INFORMATION OF GROUP COMPANIES AND JOINT 133 VENTURES III.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL 141 CONDITION AND RESULTS OF OPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS F. LEGAL AND OTHER INFORMATION I. OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS 149 II. GOVERNMENT APPROVALS /LICENSING ARRANGEMENTS 151 G. OTHER REGULATORY AND STATUTORY DISCLOSURES 153 H. OFFERING INFORMATION I TERMS OF THE ISSUE 162 II ISSUE PROCEDURE 166 I. DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF 190 ASSOCIATION J. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 224 K. DECLARATION 226 A. DEFINITIONS AND ABBREVIATIONS I. CONVENTIONAL/ GENERAL TERMS Term Description AGM Annual General Meeting of Pratibha Industries Limited Articles / Articles of Articles of Association of Pratibha Industries Limited Association / AOA Companies Act / Act The Companies Act, 1956 as amended from time to time Depository A Company formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration under sub-section (1A) of Section 12 of the Securities and Exchange Board of India Act, 1992 Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant A depository participant registered as such under sub-section (1A) of Section 12 of the Securities and Exchange Board of India Act, 1992 FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed there under FDI Foreign Direct Investment FII Foreign Institutional Investor [as defined under FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] registered with SEBI. Financial year / Fiscal year Period of twelve months ended March 31 of that particular year / FY Indian GAAP Generally accepted accounting principles in India I.T. Act The Income-Tax Act, 1961, as amended from time to time Memorandum / MOA Memorandum of Association of Pratibha Industries Limited NRI / Non-Resident Indian A person resident outside India who is a citizen of India or is person of Indian origin (as defined in Foreign Exchange Management (Deposit) Regulations, 2000 ROC Registrar of Companies, Maharashtra situated at 100, Everest, Marine Lines, Mumbai 400002 RBI Reserve Bank of India SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time. SEBI The Securities and Exchange Board of India, constituted under the SEBI Act, 1992 SEBI Act Securities and Exchange Board of India Act, 1992 as amended from time to time SEBI/(DIP) Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended, including instructions and clarifications issued by SEBI from time to time 1 II.OFFERING RELATED TERMS Allotment Issue of Equity Shares of the Company pursuant to the Public Issue to the successful Bidders. Allottee The successful Bidder to whom the Equity Shares are being issued. Bankers to the Issue The Bankers with whom the escrow account for the Issue shall be opened Bid An offer made during the Bidding Period by a prospective investor to subscribe to Equity Shares of the Company at a price within the Price Band, including all revisions and modifications thereto Bid Price / Bid Amount The amount equal to highest value of the optional Bids indicated