RED HERRING PROSPECTUS Date: 8th June 2011 Please read Section 60B of the Companies Act, 1956 100% Book Built Issue RUSHIL DECOR LIMITED (Our Company was incorporated on May 24, 1993 as “Rushil Decor Private Limited” under the provisions of the Companies Act, 1956 with Registrar of Companies, Gujarat, Dadra & Nagar Haveli and subsequently, the name of our Company changed to “Rushil Decor Limited” on December 4, 2007 vide a fresh certificate of incorporation on becoming a public limited company. Our company has been allocated Corporate Identification number U25209GJ1993PLC019532 For details of changes in our registered office, see the section “History and Other Corporate Matters” beginning on page no 142 of this Red Herring Prospectus) REGISTERED OFFICE: S.No. 125, Near Kalyanpura Patia, Gandhinagar Mansa Road, Village Ilta, Tal: Kalol, District: Gandhinagar – 382845 Gujarat, India, Tel. No. + 91 – 2764 – 287 487, 287 777; Fax No. + 91 – 2764 – 287 700; Website: www.virlaminate.com; Email: [email protected]; Corporate Office: 1, Krinkal Apartment, Opp. Mahalaxmi Temple, Near Mahalaxmi Char Rasta, Paldi, Ahmedabad – 380 007, Gujarat, India Tel No: +91-79-2665 1346/ 2662 2 323; Fax No: +91-79-2664 0969; Email id: [email protected]; Company Secretary & Compliance Officer: Mr. Hasmukh Kanubhai Modi PROMOTERS OF THE COMPANY: MR. GHANSHYAMBHAI AMBALAL THAKKAR, MR. KRUPESH GHANSHYAMBHAI THAKKAR, GHANSHYAMBHAI A. THAKKAR (HUF), KRUPESH THAKKAR (HUF), MRS. KRUPA KRUPESH THAKKAR AND RUSHIL INTERNATIONAL Public Issue of56,43,750 Equity Shares of `. 10/- each of Rushil Decor Limited (Hereinafter referred to as the “Company” or “Issuer” or “RDL”) at a price of `.[•] per Equity Share for cash aggregating ` [•] lakh (hereinafter referred to as the “Issue”) including Promoter’s Contribution of 2,43,750 Equity Shares of ` . 10/- each at a price of `. [•] per Equity Share for cash aggregating `.[•] lakh(hereinafter referred to as the “Promoter’s Contribution”) and Net Issue to the public of 54,00,000 Equity Shares at a price of `.[•] per Equity Share aggregating `. [•] lakh (hereinafter referred to “Net Issue”).The Net Issue will constitute 37.50% of the post Issue paid-up capital of our Company. Price Band: ` [•] to ` [•] Per Equity Share of Face Value ` 10 Each. The Floor Price is [•] Times of the Face Value and the Cap Price is [•] Times of the Face Value In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional working days after such revision, subject to the Bidding/ Issue Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding/Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE), whose online IPO system will be available for bidding and Self Certified Syndicate Banks(SCSBs), by issuing a press release and by indicating the change on the websites of the Book Running Lead Manager (BRLM and CBRLM) and the terminals of the member(s) of the Syndicate. The Price Band had been revised subsequent to the filing of the Red Herring Prospectus with the Registrar of Companies, Ahmedabad, (the “RoC”) in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. This Issue is being made through a 100% Book Building Process wherein upto 50% of the Net Issue (subject to mandatorily minimum 10%) will be allocated to Qualified Institutional Buyers (QIBs) on a proportionate basis, subject to valid bids being received at or above the Issue Price. Out of the portion available for allocation to the QIBs, 5% will be available for allocation to Mutual Funds only. Mutual Fund Bidders shall also be eligible for proportionate allocation under the balance available for the QIBs. Further, atleast 15% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and atleast 35% of the Net 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. The Issue is being made in terms of clause 26 (2) (a) (ii) & (b) (i) of SEBI (ICDR) Regulations, 2009, wherein the “Project” has at least 15% participation by Financial Institutions/Scheduled Commercial Banks, of which at least 10% comes from the Appraiser(s). In addition to this, at least 10% of the Issue size shall be allotted to QIBs, failing which, the full subscription money shall be refunded. In case of delay, if any in refund, our Company shall pay interest on the application money at the rate of 15% per annum for the period of delay. RISKS IN RELATION TO THE FIRST ISSUE This being the first issue of Equity Shares of our Company, there has been no formal market for our Equity Shares. The Face Value of the Equity Shares is `.10/- and the Issue Price is [•] times of the Face Value. The Issue Price (has been determined and justified by the BRLM and the Issuer as stated under the chapter on “Basis for Issue Price” beginning on page 77 of the Red Herring Prospectus) should not be taken to be indicative of the market price of our Equity Shares after our Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares of our Company nor regarding the price at which the Equity Shares will be traded after listing. GENERAL RISK 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 our 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 document. Specific attention of the investors is invited to the section titled ‘Risk Factors’ beginning on page 12 of this Red Herring Prospectus. ISSUER'S ABSOLUTE RESPONSIBILITY Issuer, having made all reasonable inquiries, accepts responsibility for and confirm that this Red Herring Prospectus contains all information with regard to our 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. IPO GRADING This Issue has been graded by ICRA and has been assigned the “IPO Grading 2 ”, indicating “Below Average Fundamentals”. For Details kindly refer ‘General Information’ beginning on page 35 and ‘Material Contracts and Documents for Inspection’ beginning on page 377 of this Red Herring Prospectus. LISTING The Equity Shares are proposed to be listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). Our Company has received inprinciple approvals from BSE and NSE vide their letters dated June 09, 2010 and August 23, 2010 respectively. BSE shall be the Designated Stock Exchange for the purpose of this Issue. BOOK RUNNING LEAD MANAGER CO-BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE BIGSHARE SERVICES PRIVATE LIMITED CORPORATE STRATEGIC ALLIANZ LIMITED INDBANK MERCHANT BANKING SERVICES LTD E/2, Ansa Industrial Estate, Sakivihar Road, 402, Samedh Complex, Near Associated Petrol 11, Varma Chambers, Homji Street, Sakinaka, Andheri (E), Mumbai - 400 072 Pump, C.G. Road, Ahmedabad – 380 006, Fort Mumbai – 400 001 Tel: +91-22-404 30 200 , Fax: +91-22-28475207 Gujarat- India. Tel No: +91-22 22634601 SEBI REG. NO.: INR000001385 Tel No: + 91-079- 2642 4138 / 2656 2165 Fax No: +91-22 22658270 Website: www.bigshareonline.com TeleFaxNo : + 91-079- 4002 4670 SEBI REG NO. MB/INM000001394 E-Mail: [email protected] SEBI REGN NO: INM 000011260 Email: [email protected] Contact Person : Ashok Shetty Email Id: [email protected] Website: www.indbankonline.com Website: www.csapl.com Contact Person: Mr. M Srinivas/Mr. Kishore Iyer Contact Person: Rekha Singhal / Chetan Sharma ISSUE PROGRAM BID/ISSUE OPENS ON : 20th June 2011 BID/ISSUE CLOSES ON : 23rd June 2011 Rushil Decor Limited TABLE OF CONTENTS CONTENTS PAGE NO SECTION I – GENERAL • Definitions And Abbreviations 2 • Company Related Terms 2 • Issue Related Terms 3 • Technical and Industry Terms 7 • Conventional and General Terms / abbreviations 8 • Presentation of Financial Industry and Market Data 10 • Forward Looking Statements 11 SECTION II - RISK FACTORS 12 SECTION III - INTRODUCTION • Summary of Industry 25 • Summary of Business 27 • Brief Details of the Issue 30 • Summary of Financial Information 31 • General Information 35 • Capital Structure 45 • Objects of the Issue 61 • Basic Terms of the Issue 76 • Basis for Issue Price 77 • Statement of Tax Benefits 79 SECTION IV - ABOUT US • Industry Overview 86 • Business Overview 92 • Key Industry Regulations & Policies 137 • History and Other Corporate Matters 142 • Our Management 148 • Our Promoters and their Background 166 • Currency of Presentation 170 • Dividend Policy 171 SECTION V - FINANCIAL STATEMENTS • Auditors’ Report and Financial Information of Our 172 Company • Financial Information of Group Companies 212 • Management’s Discussion and Analysis of Financial 217 Condition and Results of Operations as Reflected in the Financial Statements SECTION VI – LEGAL AND OTHER REGULATORY INFORMATION • Outstanding Litigations, Material Developments and 224 Other Disclosures • Government and Other Statutory Approvals 239 • Other Regulatory and Statutory Disclosures 246 SECTION VII – ISSUE RELATED INFORMATION 1.