BAJAJ FINSERV LIMITED Registered and Corporate Office: Bajaj Auto Limited Complex, Mumbai-Pune Road, Pune 411 035. Tel: +91 20 66107458; +91 20 27472851 Fax: +91 20 27407380 E-mail: [email protected]; Website: www.bajajfinserv.in Contact Person: Ms. Sonal R Tiwari, Company Secretary & Compliance Officer Bajaj Finserv Limited was originally incorporated on April 30, 2007 under the Companies Act, 1956. The Hon’ble High Court of Judicature at Bombay by its order dated December 18, 2007 has approved the Scheme of Arrangement amongst Bajaj Auto Limited (since renamed as “Bajaj Holdings & Investment Limited”), Bajaj Holdings & Investment Limited (since renamed as “Bajaj Auto Limited”) and Bajaj Finserv Limited and their respective shareholders and creditors. INFORMATION MEMORANDUM FOR LISTING OF 144,683,510 EQUITY SHARES OF RS.5/- EACH NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest in the equity shares of Bajaj Finserv Limited 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 the shares of Bajaj Finserv Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved. ABSOLUTE RESPONSIBILITY OF BAJAJ FINSERV LIMITED Bajaj Finserv Limited, having made all reasonable enquiries, accepts responsibility for and confirms that this Information Memorandum contains all information with regard to Bajaj Finserv Limited, which is material in the context of the issue of shares pursuant to the scheme, that the information contained in the Information Memorandum 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 Information Memorandum 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 of the Company are proposed to be listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company has submitted this Information Memorandum with BSE and NSE and the same has been made available on the Company’s website viz. www.bajajfinserv.in The Information Memorandum would also be made available in the website of BSE (www.bseindia.com) and NSE (www.nseindia.com). ADDRESS FOR CORRESPONDENCE Bajaj Finserv Limited. Bajaj Auto Limited Complex, Mumbai – Pune Road, Pune – 411 035. E-mail : [email protected] Tel No.: 020- 66107458, 27472851. Fax No.: 020-27407380. 1 TABLE OF CONTENTS Sr. Particulars Page No. No. 1 Definitions, Abbreviations & Industry related terms 4 2 Certain Conventions; Use of Market Data 7 3 Forward Looking Statements 8 4 Risk Factors 9 5 Introduction 29 6 General Information 40 7 Capital Structure 42 8 Scheme of Arrangement of Demerger 53 9 Statement of Tax Benefits 63 10 About Bajaj Finserv Limited 72 11 Management 75 12 Promoters 87 13 Financial Information 93 14 Group Companies – Financial and Other Information 118 2 15 Management Discussion & Analysis 132 16 Subsidiaries 134 17 Outstanding Litigations and Material Developments 140 18 Government Approvals 148 19 Regulatory and Statutory Disclosures 149 20 Main Provisions of Articles of Association of BFS 153 21 Other Information 182 22 Declaration 183 3 DEFINITIONS, ABBREVIATIONS & INDUSTRY RELATED TERMS In this Information Memorandum, all references to “India” contained in this Information Memorandum are to the Republic of India. All references to “Rupees” or “Rs.” or INR are to Indian Rupees, the official currency of the Republic of India ; references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words “Lakh” or “Lac” mean “100 thousand” and the word “million” means “10 Lakh” and the word “crore” means “10 million” or “100 Lakh” and the word “billion” means “1,000 million” or “100 crores”. Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. Definitions Term Description “BFS” or “the Bajaj Finserv Limited, a public limited company Company” or “our incorporated under the provisions of the Companies Company” or “Issuer Act, 1956, having its registered office at Bajaj Auto Company” or “we” or Limited Complex, Mumbai-Pune Road, Pune 411 035 “us” or “our” Company/Issue/Industry related Terms Term Description The Companies Act, 1956 and amendments Act / Companies Act thereto AGM Annual General Meeting Articles/Articles of Articles of Association of the Company Association AS Accounting Standards, as issued by the Institute of Chartered Accountants of India Auditor Refers to M/s. Dalal & Shah, Chartered Accountants, East & West Insurance Building, 2nd Floor, 49/55, Bombay Samachar Marg, Fort, Mumbai: 400 023, unless otherwise specified. Board / Board of Directors Board of Directors of the Company Bajaj Allianz General Insurance Company BAGICL Limited BALICL Bajaj Allianz Life Insurance Company Limited BAFDL Bajaj Allianz Financial Distributors Limited BAFL Bajaj Auto Finance Limited Bn Billion BSE The Bombay Stock Exchange Limited CAGR Compounded Annual Growth Rate Capital or Share Capital Share Capital of the Company CDSL Central Depository Services (India) Limited Chairman Mr Rahul Bajaj, a resident of India Demerged Company Bajaj Holdings and Investment Limited (Formerly Bajaj Auto Limited) 4 Term Description Designated Stock Exchange The designated stock exchange for the Issue shall be National Stock Exchange of India Limited Depositories Act The Depositories Act, 1996 and amendments thereto DP Depository Participant DSE Designated Stock Exchange EGM Extraordinary General Meeting Equity Share(s) or Share(s) Means the Equity Share of the Company having a face value of Rs. 5/- unless otherwise specified in the context thereof Equity Shareholder Means a holder of Equity Shares Managing Director Mr Sanjiv Bajaj, a resident of India FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 FERA Foreign Exchange Regulation Act, 1973 FI Financial Institutions FII(s) Foreign Institutional Investors registered with SEBI under applicable laws Period of twelve months ended March 31 of that Financial Year/Fiscal/FY particular year, unless otherwise stated GOI Government of India HUF Hindu Undivided Family Industrial Policy The industrial policy and guidelines issued thereunder by the Ministry of Industry, Government of India, from time to time Investor(s) Shall mean the holder(s) of Equity Shares of the Company as on the Record Date. Indian GAAP Generally accepted accounting principles in India IT Act The Income Tax Act, 1961 and amendments thereto Memorandum/Memorandum Memorandum of Association of the Company of Association Mn Million NBFC Non Banking Finance Company NR Non Resident NRI(s) Non Resident Indian(s) NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB Overseas Corporate Body Promoter(s) Bajaj Holdings and Investment Limited (formerly Bajaj Auto Limited) RBI The Reserve Bank of India Record Date March 25, 2008 5 Term Description Registered office of the Bajaj Auto Limited Complex, Mumbai-Pune Company Road, Pune 411 035 ROC Registrar of Companies, State of Maharashtra, located at 3rd Floor, PMT Commercial Building, Deccan Gymkhana, Pune 411 004 Scheme or Scheme of Scheme of Arrangement under Sections 391 to Arrangement or Demerger 394 of the Companies Act, 1956 amongst Bajaj Scheme Auto Limited (since renamed as Bajaj Holdings and Investment Limited), Bajaj Holdings & Investment Limited (since renamed as Bajaj Auto Limited) and Bajaj Finserv Limited and their respective shareholders and creditors, sanctioned by the High Court of Judicature at Bombay on December 18, 2007 and effective from February 20, 2008. SEBI Securities and Exchange Board of India SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto SEBI DIP Guidelines Guidelines for Disclosure and Investor Protection issued by Securities and Exchange Board of India, constituted under the Securities and Exchange Board of India Act, 1992 (as amended), called Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, as amended, including instructions and clarifications issued by SEBI from time to time. SIA Secretariat of Industrial Assistance SICA Sick Industrial Companies (Special Provisions) Act, 1985 Stock Exchange(s) BSE and NSE. Takeover Code The SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 and amendments thereto Wealth-Tax Act The Wealth Tax Act, 1957 and amendments thereto 6 CERTAIN CONVENTIONS; USE OF MARKET DATA Unless stated otherwise, the financial data in this Information Memorandum is derived from our restated financial statements. The fiscal year commences on April 1 and ends on March 31 of each year. As the company was incorporated on April 30, 2007, the current fiscal year starts from April 30, 2007 and ends on March 31, 2008. However, the vesting of Strategic Business Undertaking under the Scheme of Demerger approved by the High Court, Bombay takes effect from the close of business hours of March 31, 2007. In this Information Memorandum, any discrepancies in