Chapter 6 - CONTENTS OF OFFER DOCUMENT - SEBI (Disclosure and Investor Protection Guidelines) 2000

CHAPTER VI CONTENTS OF OFFER DOCUMENT 6.0 The Offer document shall contain the following: 1 (SECTION I - CONTENTS OF THE PROSPECTUS 6.1 In addition to the disclosures specified in Schedule II of the Companies Act, 1956, the prospectus shall contain the following: 6.2 The prospectus shall contain all material information which shall be true and adequate so as to enable the investors to make informed decision on the investments in the issue. 6.3 The prospectus shall also contain the information and statements specified in this chapter and shall as far as possible follow the order in which the requirements are listed in this chapter and summarised in Schedule VIIA. 2 (Provided that nothing contained in sub-clauses (a) and (j) of clause 6.8.3.2 and clause 6.9.5.8 and nothing contained in clause 6.10.3.1 in respect of entities not covered under section 370 (1)(B) of the Companies Act, 1956 shall apply to a listed company satisfying all the requirements specified in clause 2.1.2A.1.) 3 ( 4 (Provided further that) in case of public issue by listed company, information in terms of clauses 6.8.3.2 (a) and (j) and clause 6.9.5.8 and information in terms of clause 6.10.3.1 in respect of entities not covered under section 370 (1)(B) of the Companies Act 1956 may not be disclosed in the prospectus, if the following conditions are fulfilled: (a) The issuer company has been filing periodic statements in regard to financial results and shareholding pattern with the Designated Stock Exchange and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange/ on a common e- filing platform. (b) The issuer company has in place an investor grievance handling mechanism which includes meeting of Shareholders / Investors Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances. (c) The Lead Merchant Banker has certified compliance of (a) and (b) above. Provided further that where the issuer company is complying with the 5 (second) proviso, it shall (a) furnish to the Board the following undertaking along with the draft prospectus, which shall also be incorporated in the prospectus: We confirm that other than the disclosures made in the instant prospectus, nothing material has changed in respect of disclosures made by us at the time of our previous issue made on . . (b) make a copy of the offer document of the immediately preceding public or rights issue, available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection.) 6.4 Cover Pages 6.4.1 The cover page paper shall be of adequate thickness (preferably minimum 100 gcm. quality). 6.4.2 Front Cover Pages 6.4.2.1 The front outside and inside cover pages of the prospectus shall be white and no patterns or pictures shall be printed on these pages. 6.4.2.2 The front outside cover page of the prospectus shall contain the following details only: (a) Issue Details (i) The word Prospectus . (ii) The name of the issuer company, its logo, its previous name if any, the address of its registered office, along with its telephone number, fax number, contact person, website address and e-mail address. (iii) The nature, number, price and amount of the instruments offered and the issue size, as may be applicable. (iv) The following clause on Risks in relation to the first issue (wherever applicable) shall be incorporated in a box format in case of a initial public issue: This being the first issue of the company, there has been no formal market for the securities of the company. The face value of the shares is (-----) and the issue price/ floor price/ price band is X-times of the face value. The issue price/ floor price/ price band (has been determined and justified by the Lead Merchant Banker and the issuer company as stated under Justification of Premium paragraph - in case of premium issue) should not be taken to be indicative of the market price of the equity shares after the shares are listed. No assurance can be given regarding an active or sustained trading in the shares of the company nor regarding the price at which the equity shares will be traded after listing. (v) The following clause on general risk shall be incorporated: Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer 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 offering. For taking an investment decision, investors must rely on their own examination of the issuer and the offer 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 document. Specific attention of investors shall be invited to the statement of Risk factors by indicating their page number(s) in the General Risks . (vi) The following clause on Issuer s Absolute Responsibility clause shall be incorporated as under: The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the offer document 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 make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. (vii) The names, logos and addresses of all the Lead Merchant Bankers with their titles who file the prospectus with the Board, along with their telephone numbers, fax numbers, website addresses and e-mail addresses. (viii) The name, logo and address of the Registrar to the Issue, along with its telephone number, fax number, website address and e-mail address. (ix) Issue Schedule: a. Date of opening of the issue. b. Date of closing of the issue. c. Date of earliest closing of the issue. (x) Credit Rating, if applicable. (x-a) 6 (Disclosure under the heading IPO Grading , stating all the grades obtained for the IPO and giving reference to the page number(s) on which details of IPO Grading, as provided for in clause 6.8.2.9A, are given.) (xi) Name/s of the stock exchanges where listing of the securities is proposed (and the details of in-principle approval for listing obtained from these stock exchanges). 6.4.3 Back Cover Pages 6.4.3.1 The back inside cover page and back outside cover page shall be in white. 6.5 Table of Contents 6.5.1 Table of Contents shall appear immediately after the front inside cover page. 6.6 Definitions and Abbreviations 6.6.1 Conventional/ General Terms. 6.6.2 Offering-related Terms. 6.6.3 Company/ Industry-related Terms. 6.6.4 Abbreviations. 6.7 Risk Factors 6.7.1 The Risk factors, other than those specified in clauses 6.4.2.2 (a) (iv), (v) and (vi), shall be printed in clear readable font (preferably of minimum point 10 size). 6.7.2 The Risk factors shall be classified as those which are specific to the project and internal to the issuer company and those which are external and beyond the control of the issuer company. 6.7.3 The Risk factors shall be determined on the basis of their materiality. 6.7.4 Materiality shall be decided taking the following factors into account: 6.7.4.1 Some events may not be material individually but may be found material collectively. 6.7.4.2 Some events may have material impact qualitatively instead of quantitatively. 6.7.4.3 Some events may not be material at present but may be having material impacts in future. 6.7.5 The Risk factors shall appear in the prospectus in the following manner: 6.7.5.1 Risks envisaged by Management. 6.7.5.2 Proposals, if any, to address the risks. 6.7.6 Any notes required to be given prominence shall appear immediately after the Risk factors. 6.8 Introduction 6.8.1 Summary 6.8.1.1 Summary of the industry and business of the issuer company. 6.8.1.2 Offering details in brief. 6.8.1.3 Summary consolidated financial, operating and other data. 6.8.2 General Information 6.8.2.1 The name, address of registered office and the registration number of the issuer company, along with the address of the Registrar of Companies where the issuer company is registered. 6.8.2.2 The Board of Directors of the issuer company. 6.8.2.3 Brief details of the Chairman, Managing Director, Whole Time Directors, etc. of the issuer company. 6.8.2.4 The names, addresses, telephone numbers, fax numbers and e-mail addresses of the Company Secretary, Legal Advisor and Bankers to the Company. 6.8.2.5 The name, address, telephone number, fax number and e-mail address of the Compliance Officer. 6.8.2.6 The names, addresses, telephone numbers, fax numbers, contact person, website addresses and e-mail addresses of the Merchant Bankers, Co-Managers, Registrars to the Issue, Bankers to the Issue, Brokers to the Issue, Syndicate members, 7 (Self Certified Syndicate Banks) etc. 6.8.2.7 The names, addresses, telephone numbers, fax numbers and e-mail addresses of the auditors of the issuer company. 6.8.2.8 Statement of inter-se allocation of responsibilities among Lead Managers: If more than one Merchant Banker is associated with the issue, the inter-se allocation of responsibility of each Merchant Banker, as demarcated and submitted to the Board in terms of clause 5.3.2, shall be disclosed in the prospectus. 8 (Provided that in case of a fast track issue the inter-se allocation of responsibilities shall be disclosed, notwithstanding that it was not filed with the Board.) 6.8.2.9 Credit Rating (in case of debenture issues): (a) The credit rating obtained from a credit rating agency for the proposed issue of debt security, including convertible instruments. (b) If the rating has been obtained from more than one credit rating agencies, disclosures shall be made of all ratings including unaccepted rating. (c) All the credit ratings obtained during the previous three years before filing of the prospectus for any of its listed debt-securities at the time of accessing the market through a rated debt-security shall be disclosed. 9 (6.8.2.9A IPO Grading: (a) 10 (Names of all the credit rating agencies) from which grading has been obtained for the proposed IPO of equity shares or any other security which may be converted into or exchanged with equity shares at a later date 11 (). (b) 12 (Disclosure of all the grades obtained from the credit rating agencies.) (c) The rationale / description of the grading/s so obtained, as furnished by the credit rating agency/ies.) 6.8.2.10 The names, addresses, telephone numbers, fax numbers, website addresses and e-mail addresses of the trustees under debenture trust deed (in case of debenture issue). 6.8.2.11 Name of the monitoring agency, if applicable, to be disclosed. 6.8.2.12 Where the project is being appraised, the name, address, telephone number and e-mail address of the appraising entity. 6.8.2.13 Book building process in brief. 6.8.2.14 Details of Underwriting, if any: (a) The names, addresses, telephone numbers, fax numbers and e-mail addresses of the underwriters and the amount underwritten by them. (b) Declaration by the Board of Directors of the issuer company that the underwriters have sufficient resources to discharge their respective obligations. 6.8.3 Capital Structure 6.8.3.1 The capital structure shall be presented in the following manner: (a) Authorised, issued, subscribed and paid up capital (Number of instruments, description and aggregate nominal value). (b) Size of the present issue, giving separately promoters contribution, firm allotment/ reservation for specified categories and net offer to public (Number of instruments, description, aggregate nominal value and issue amount shall be given in that order; Name(s) of group companies to be given, in case reservation has been made for shareholders of the group companies; Applicable percentages may be given in case of book built issue). (c) Paid-up Capital: (i) After the issue. (ii) After conversion of securities (if applicable). (d) Share Premium Account (before and after the issue). 6.8.3.2 After the details of capital structure, the following notes shall be incorporated: (a) Share capital issued, giving details such as date of issue, number of shares, face value, issue price, nature of allotment (rights, bonus, etc.), cumulative capital, etc. Further, details of any share split, issue of shares otherwise then for cash (with reasons thereof), any reduction in capital shall also be disclosed. 13 (Provided that in case of a public or rights issue by a listed company, where shares had been issued under one or more employee stock option schemes, particulars of shares issued under the employee stock option schemes may be aggregated quarter-wise, indicating the aggregate number of shares issued and the price range within which shares have been issued in each quarter.) 14 (Provided further that in cases falling within the foregoing proviso, a document giving date-wise details of shares issued under employee stock option scheme(s), including price at which they were issued, shall be made available as a material document for inspection.) (b) Note relating to promoters contribution and lock-in period, stating date of allotment, date when made fully paid up, nature of allotment (rights, bonus, etc.), number of securities, face value of securities, issue price of securities, percentage of promoters contribution to total issued capital and the date up to which the securities are locked-in. An illustrative format of promoters contribution and lock-in is specified in Schedule VIII. 15 ((ba) The manner in which clause 4.6 has been complied with.) 16 ((bb) If the issuer is exempt from the requirements of promoters contribution, the relevant provisions should be indicated.) (c) Percentage of contribution by the promoters whose name is mentioned in the prospectus as promoters as per clause 6.9.6.1 and the date up to which the securities are locked-in. An illustrative format of promoters contribution whose name figures in prospectus is specified in Schedule IX. (d) Statement that promoters contribution has been brought in to the extent of not less than the specified minimum lot and from persons defined as promoters under the Guidelines. (e) Statement that the promoters undertake to accept full conversion, if the promoters contribution is in terms of the same optionally convertible security as is being offered to the public. (f) Details of all buy-back and `stand by and similar arrangements for purchase of securities by promoters, directors and lead merchant bankers shall be disclosed. (g) Statement that an over-subscription to the extent of 10% of the net offer to public can be retained for the purpose of rounding off to the nearer multiple of minimum allotment lot. (h) A disclosure to the effect that the securities offered through this public/ rights issue shall be made fully paid up or may be forfeited within 12 months from the date of allotment of securities in the manner specified in clause 8.6.2 of these Guidelines. (i) A note stating that: (i) Unsubscribed portion in any reserved category may be added to any other reserved category. (ii) The unsubscribed portion, if any, after such inter se adjustments amongst the reserved categories shall be added back to the net offer to the public. (iii) In case of under-subscription in the net offer to the public portion spillover to the extent of under subscription shall be permitted from the reserved category to the net public offer portion. (j) Following details regarding major shareholders: (i) Names of the ten largest shareholders as on the date of filing of the prospectus with the Registrar of Companies. (ii) Number of shares held by shareholders at (i) above including number of shares which they would be entitled to upon exercise of warrant, option, rights to convert a debenture, loan or other instrument. (iii) Particulars as in (i) and (ii) above as on a date two years prior to the date of filing the prospectus with the Registrar of Companies. (iv) Particulars as in (i) and (ii) above as on a date ten days prior to the date of filing of the prospectus with the Registrar of Companies. (v) If the issuer company has made an initial public offering within the immediately preceding two years, the above information shall be given separately indicating the names of persons who acquired shares by subscriptions to the public issue and those who acquired the shares by allotment on a firm basis or by private placement. (k) The details of: (i) the aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company. (ii) the aggregate number of securities purchased or sold by the promoters group and the directors of the promoter during a period of six months preceding the date on which the draft prospectus is filed with Board and to be updated by incorporating the information in this regard till the time of filing the prospectus with the Registrar of Companies. (iii) the maximum and minimum price at which purchases and sales referred to in (ii) above were made along with the relevant dates. (l) In the event of it not being possible to obtain information regarding sales and purchase of securities by any relative of the promoters, a statement to that effect shall be made in the prospectus on the basis of the transfers recorded in the books of the issuer company. (m) Details of options granted or shares issued under any scheme of employees stock option or employees stock purchase of issuer company. Explanation I: For the purpose of sub-clauses (k) and (l) above, the term Promoter shall include: (a) the person or persons who are in over-all control of the company; (b) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which the securities are offered to the public; (c) the persons or persons named in the prospectus as promoters(s). Provided that a director/ officer of the issuer company or person, if they are acting as such merely in their professional capacity shall not be included in the Explanation. Explanation II : Promoter Group shall include: (a) the promoter; (b) an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse); and (c) in case promoter is a company: (i) a subsidiary or holding company of that company; (ii) any company in which the promoter holds 10% or more of the equity capital or which holds 10% or more of the equity capital of the promoter; (iii) any company in which a group of individuals or companies or combinations thereof who holds 20% or more of the equity capital in that company also holds 20% or more of the equity capital of the issuer company; and (d) in case the promoter is an individual: (i) any company in which 10% or more of the share capital is held by the promoter or an immediate relative of the promoter or a firm or HUF in which the promoter or any one or more of his immediate relative is a member; (ii) any company in which a company specified in (i) above, holds 10% or more, of the share capital; (iii) any HUF or firm in which the aggregate share of the promoter and his immediate relatives is equal to or more than 10% of the total; and (e) all persons whose shareholding is aggregated for the purpose of disclosing in the prospectus under the heading shareholding of the promoter group . Explanation III: The Financial Institution, Scheduled Banks, Foreign Institutional Investors (FIIs) and Mutual Funds shall not be deemed to be a promoter or promoter group merely by virtue of the fact that 10% or more of the equity of the issuer company is held by such institution. Provided that the Financial Institutions, Scheduled Banks and Foreign Institutional Investors (FIIs) shall be treated as promoters or promoter group for the subsidiaries or companies promoted by them or for the mutual fund sponsored by them. 6.8.4 Objects of the Offering 6.8.4.1 The object of raising funds through the issue, that is whether for fixed asset creation and/ or for working capital or any other purpose, shall be disclosed clearly in the prospectus. 17 (Further, a disclosure to the effect that activities proposed to be undertaken by the issuer out of the funds raised in the present issue fall within the main objects listed in the Memorandum of Association or other charter or instrument governing the issuer shall be made in the prospectus.) 6.8.4.2 Funds Requirement (a) The requirement for funds proposed to be raised through the issue shall be disclosed clearly. (b) Where the company proposes to undertake more than one activity, i.e., diversification, modernisation, expansion, etc., the total project cost shall be given activity- wise or project wise as the case may be.. (c) Where the company is implementing the project in a phased manner, the cost of each phase, including the phase, if any, which has already been implemented, shall be separately given. 6.8.4.3 Funding Plan (Means of Finance) (a) An undertaking shall be given in the prospectus by the issuer company confirming firm arrangements of finance through verifiable means towards 75% of the stated means of finance, excluding the amount to be raised through proposed Public/ Rights issue, have been made. (b) The balance portion of the means of finance for which no firm arrangement has been made shall be mentioned without specification) 6.8.4.4 Appraisal (a) The scope and purpose of the appraisal, if any, along with the date of appraisal shall be disclosed in the prospectus. (b) The prospectus shall contain the cost of the project and means of finance as per the appraisal report. (c) The revision, if any, in the project cost and the means of finance after the date of issue of the appraisal report shall be explained and disclosed. (d) The weaknesses and threats, if any, given in the appraisal report, shall be disclosed in the prospectus by way of risk factors. 6.8.4.5 Schedule of Implementation (a) Schedule of implementation of the project and progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production, etc. 6.8.4.6 Funds Deployed (a) Actual expenditure incurred on the project (in cases of companies raising capital for a project) upto a date not earlier than two months from the date of filing the prospectus with the Registrar of Companies, as certified by a Chartered Accountant. 18 ((b) A cash flow statement showing funds which have been brought in as promoters contribution and have been deployed prior to the public issue.) 6.8.4.7 Sources of Financing of Funds Already Deployed (a) Means and source of financing, including details of bridge loan or other financial arrangement, which may be repaid from the proceeds of the issue. 6.8.4.8 Details of Balance Fund Deployment (a) Year wise break up of the expenditure proposed to be incurred on the said project. 6.8.4.9 Interim Use of Funds (a) Investment avenues in which the management proposes to deploy issue proceeds, pending its utilisation in the proposed project. 6.8.4.10 Basic Terms of Issue 6.8.4.11 Basis for Issue Price (a) The basis for issue price/ floor price/ price band shall be disclosed and justified on the basis of the following information, which shall be also disclosed separately: (i) Earnings Per Share, i.e., EPS pre-issue for the last three years (as adjusted for changes in capital). (ii) P/E pre-issue. (iii) Average Return on Net Worth in the last three years. (iv) Minimum Return on Increased Net Worth required to maintain preissue EPS. (v) Net Asset Value per share based on last balance sheet. (vi) Net Asset Value per share after issue and comparison thereof with the issue price. (vii) An illustrative format of disclosure in respect of basis for issue price is given in Schedule XV. (viii) Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group (i.e., companies of comparable size in the same industry (indicate the source from which industry average and accounting ratios of the peer group has been taken). (ix) The face value of shares (including the statement about the issue price/ floor price/ price band being X times of the face value). Provided that the projected earnings shall not be used as a justification for the issue price in the prospectus. Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised. (b) The Lead Merchant Banker shall not proceed with the issue in case the accounting ratios mentioned above do not justify the issue price. (c) In case of book built issues, the red herring prospectus shall state that the final price would be determined on the basis of the demand from the investors. 6.8.4.12 Tax Benefits (a) Any special tax benefits for the issuer company and its shareholders. 6.9 About the Issuer Company 6.9.1 Industry Overview 6.9.2 Business Overview 6.9.2.1 Details of the business of the issuer company (a) Location of the project (b) Plant, machinery, technology, process, etc.: (i) Details in a tabular form to be given shall include the machines required to be bought by the issuer company, cost of the machines, name of the suppliers, the date of placement of order and the date/ expected date of supply. (ii) In case of machines yet to be delivered, the date of quotations relied upon for the cost estimates given, shall also be mentioned. (iii) Percentage and value terms the plant and machinery for which orders are yet to be placed shall be stated and also be given by way of a risk factor. (iv) Details of second hand machinery bought/ proposed to be bought, if any, including the age of the machines, balance estimated life, etc. shall also be given. (c) Collaborations, any performance guarantee or assistance in marketing by the collaborators: (i) Following information regarding persons/ entities with whom technical and financial agreements have been entered into to be given: a. place of registration and year of incorporation. b. paid up share capital. c. turnover of the last financial year of operation. d. general information regarding such persons relevant to the issuer. (d) Infrastructure facilities for raw materials and utilities like water, electricity, etc. (e) Products/ services of the issuer company: (i) Nature of the product/s consumer/ industrial and end users. (ii) Market, including details of the competition, past production figures for the industry, existing installed capacity, past trends and future prospects regarding exports (if applicable), demand and supply forecasts (if given, should be essentially with assumptions unless sourced from a market research agency of repute), etc. to be given. Source of data used shall be mentioned. (iii) Approach to marketing and proposed marketing set up. (iv) Export possibilities and export obligations, if any (in case of a issuer company providing any service particulars, as applicable, be furnished). 6.9.2.2 Business strategy (a) A brief statement about business strategy. (i) A brief statement about future prospects, including the following: (i) Capacity Capacity Utilisation: a. A table shall be incorporated giving the existing installed capacities for each product, capacity utilisation for these products in the previous three years, proposed capacities for existing as well as proposed products and the assumptions for future capacity utilisation for the next three years (from the date of commencement of commercial production) in respect of existing as well as proposed products. b. If the projected capacity utilisation is higher than the actual average capacity utilisation by more than 25% during the previous three years, how the issuer company proposes to achieve the projected levels of capacity utilisation in view of its failure to achieve levels of similar capacity utilisation in the past, shall be stated. (ii) Projections: No forecast of projections relating to financial performance of the issuer company shall be given in the prospectus. 6.9.2.3 Property 6.9.2.4 Purchase of property (a) As respects any property referred to in sub-clause (b): (i) the names, address, descriptions and occupations of the vendors; (ii) the amount paid or payable in cash, shares or debentures to the vendor and, where there is more than one separate vendor, or the company is a sub purchaser, the amount so paid or payable to each vendor, specifying separately the amount, if any, paid or payable for goodwill; (iii) the nature of the title or interest in such property acquired or to be acquired by the issuer company; (iv) short particulars of every transaction relating to the property completed within the two preceding years, in which any vendor of the property to the company or any person who is, or was at the time of the transaction, a promoter, or a director or proposed director of the company had any interest, direct or indirect, specifying the date of the transaction and the name of such promoter, director or proposed director and stating the amount payable by or to such vendor, promoter, director or proposed director in respect of the transaction. (b) The property to which sub-clause (a) applies is a property purchased or acquired by the issuer company or proposed to be purchased or acquired, which is to be paid for wholly or partly out of the proceeds of the issue offered for subscription by the prospectus or the purchase or acquisition of which has not been completed at the date of issue of the prospectus, other than property: (i) the contract for the purchase or acquisition whereof was entered into in the ordinary course of the issuer company s business, the contract not being made in contemplation of the issue nor the issue in consequence of the contract; or (ii) as respects which the amount of the purchase money is not material. (c) for the purpose of this clause, where a vendor is a firm, the members of the firm shall not be treated as separate vendors. (d) if the issuer company proposes to acquire a business which has been carried on for less than three years, the length of time during which the business has been carried. 6.9.3 Key Industry-Regulation (if applicable) 6.9.4 History and Corporate Structure of the issuer company 6.9.4.1 History and Major Events. 6.9.4.4 Shareholders agreements (a) Key terms of subsisting shareholders agreements, if any (to be provided even if the issuer company is not a party to such an agreement, but is aware of such an agreement). (b) All such agreements shall be included in the list of material contracts required under clause 6.15.1. 6.9.4.5 Other agreements (a) The dates, parties to, and general nature of every other material contract, not being a contract entered into in the ordinary course of the business carried on or intended to be carried on by the issuer company or a contract entered into more than two years before the date of the prospectus. (b) All such agreements shall be included in the list of material contracts required under clause 6.15.1. 6.9.4.6 Strategic partners. 6.9.4.7 Financial partners. 6.9.5 Management 6.9.5.1 Board of Directors (a) Names, address and occupation of Manager, Managing Director, and other Directors (including Nominee Directors, Whole-time Directors), giving their directorships in other companies. (b) Details of borrowing powers. 6.9.5.2 Compensation of Managing Directors/ Whole time Directors (a) The dates, parties to, and general nature of every contract appointing or fixing the remuneration of a Director, Whole-time Director, Managing Director or Manager whenever entered into, that is to say, whether within or more than, two years before the date of the prospectus. (b) All such contracts shall be included in the list of material contracts required under clause 6.15.1. 6.9.5.3 Compliance with Corporate Governance requirements. 6.9.5.4 Shareholding of Directors, including details of qualification shares held by them, whereever applicable. 6.9.5.5 Interest of directors (a) Full particulars of the nature and extent of the interest, if any, of every Director: (i) in the promotion of the issuer company; or (ii) in any property acquired by the issuer company within two years of the date of the prospectus or proposed to be acquired by it. (b) Where the interest of such a director consists in being a member of a firm or company, the nature and extent of the interest of the firm or company, with a statement of all sums paid or agreed to be paid to him or to the firm or company in cash or shares or otherwise by any person either to induce him to become, or to qualify him as, a director, or otherwise for services rendered by him or by the firm or company, in connection with the promotion or formation of the issuer company shall be disclosed. 6.9.5.6 Change, if any, in the directors during the last three years, and reasons, thereof. 6.9.5.7 Management Organisation Structure. 19 (6.9.5.7A Corporate Governance A disclosure to the effect that the issuer has complied with the requirements of Corporate Governance contained in the Equity Listing Agreement, particularly those relating to composition of Board of Directors, constitution of committees such as Audit Committee, Shareholder / Investor Grievance Committee, etc.) 6.9.5.8 Key Management Personnel (a) A paragraph on the key managerial personnel shall be incorporated giving full details of the personnel recruited as on the date of filing of the prospectus with the Board indicating name, date of joining, qualification, details of previous employment etc. (b) The Lead Merchant Banker shall verify and ensure that the persons whose names appear in this paragraph are in the employment of the issuer company as permanent employees. (c) The shareholding of the Key Managerial Personnel. (d) Bonus or Profit Sharing Plan for the Key Managerial Personnel. (e) Changes in the Key Managerial Personnel: Any change otherwise than by way of retirement in the normal course in the key senior managerial personnel particularly in charge of production, planning, finance and marketing within one year prior to the date of filing the prospectus with the Board shall be disclosed. 6.9.5.9 Employees 6.9.5.10 Disclosures regarding employees stock option scheme/ employees stock purchase scheme of the issuer company, if any, as required by the Guidelines or Regulations of the Board relating to Employee Stock Option Scheme and Employee Stock Purchase Scheme. 6.9.5.11 Payment or Benefit to Officers of the issuer company (non-salary related). (a) Any amount or benefit paid or given within the two preceding years or intended to be paid or given to any officer and consideration for payment of giving of the benefit. 6.9.6 Promoters/ Principal Shareholders 6.9.6.1 Where the promoters are individuals: (a) A complete profile of the promoters, including their age, educational qualifications, experience in the business or employment and in the line of business proposed in the prospectus, their business and financial activities, photograph, voter ID number, driving license number shall be disclosed. (b) A declaration, confirming that the Permanent Account Number, Bank Account Number and Passport Number of the promoters have been submitted to the Stock Exchanges on which securities are proposed to be listed, at the time of filing the draft prospectus with them. 20 (Provided that nothing contained in sub-clause (b) shall apply to a fast track issue.) 6.9.6.2 Where the promoters are companies: (a) History of the companies and the promoters of the companies shall be furnished. (b) Details in change of management of the companies, if any, including details of the persons who are holding the controlling interest together with the applicability and compliance of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. (c) A declaration, confirming that the Permanent Account Numbers, Bank Account Numbers, the Company Registration Numbers and the addresses of the Registrars of Companies where the companies are registered have been submitted to the Stock Exchanges on which securities are proposed to be listed, at the time of filing the draft prospectus with them. 21 (Provided that nothing contained in sub-clause (c) shall apply to a fast track issue.) 6.9.6.3 Common pursuits 6.9.6.4 Full particulars of the nature and extent of the interest, if any, of every promoter: (a) in the promotion of the issuer company; or (b) in any property acquired by the issuer company within two years of the date of the prospectus or proposed to be acquired by it. (c) Where the interest of such a director or promoter consists in being a member of a firm or company, the nature and extent of the interest of the firm or company, with a statement of all sums paid or agreed to be paid to him or to the firm or company in cash or shares or otherwise by any person either to induce him to become, or to qualify him as, a director, or otherwise for services rendered by him or by the firm or company, in connection with the promotion or formation of the issuer company. 6.9.6.5 Payment or benefit to promoters of the issuer company: Any amount or benefit paid or given within the two preceding years or intended to be paid or given to any promoter and consideration for payment of giving of the benefit. 6.9.6.6 Related party transactions as per the Financial Statements 6.9.7 Currency of presentation 6.9.7.1 One standard financial unit shall be used in the prospectus 6.9.8 Dividend policy 6.10 Financial Statements 6.10.1 Selected Consolidated Financial and Operating data 6.10.2 Financial Information of the issuer company 6.10.2.1 A report by the auditors of the issuer company with respect to: (a) profits and losses and assets and liabilities, in accordance with clauses 6.10.2.2 or 6.10.2.3, as the case may require; and (b) the rates of dividends, if any, paid by the issuer company in respect of each class of shares in the issuer company for each of the five financial years immediately preceding the issue of the prospectus, giving particulars of each class of shares on which such dividends have been paid and particulars of the cases in which no dividends have been paid in respect of any class of shares for any of those years; and, if no accounts have been made up in respect of any part of the period of five years ending on a date three months before the issue of the prospectus, containing a statement of that fact (and accompanied by a statement of the accounts of the issuer company in respect of that part of the said period up to a date not earlier than six months of the date of issue of the prospectus indicating the profit or loss for that period and the assets and liabilities position as at the end of that period together with a certificate from the auditors that such accounts have been examined and found correct by them. The said statement may indicate the nature of provision or adjustments made or are yet to be made). 6.10.2.2 If the issuer company has no subsidiaries, the report shall: (a) so far as regards profits and losses, deal with the profits or losses of the issuer company (distinguishing items of a non- recurring nature) for each of the five financial years immediately preceding the issue of the prospectus; and (b) so far as regards assets and liabilities, deal with the assets and liabilities of the issuer company at the last date to which the accounts of the issuer company were made up. 6.10.2.3 If the issuer company has subsidiaries, the report shall: (a) so far as regards profits and losses, deal separately with the issuer company s profits or losses as provided by 6.10.2.2 and in addition, deal either: (i) as a whole with the combined profits or losses of its subsidiaries, so far as they concern the members of the issuer company; or (ii) individually with the profits or losses of each subsidiary, so far as they concern the members of the issuer company; or, instead of dealing separately with the issuer company s profits or losses, deal as a whole with the profits or losses of the issuer company, and, so far as they concern the members of the issuer company, with the combined profits or losses of its subsidiaries; and (b) so far as regards assets and liabilities, deal separately with the issuer company s assets and liabilities as provided by 6.10.2.2 and in addition, deal either: (i) as a whole with the combined assets and liabilities of its subsidiaries, with or without the issuer company s assets and liabilities; or (ii) individually with the assets and liabilities of each subsidiaries; and shall indicate as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than the members of the issuer company. 6.10.2.4 If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are, or is, to be applied directly or indirectly: (a) in the purchase of any business; or (b) in the purchase of an interest in any business and by reason of that purchase, or anything to be done in consequence thereof, or in connection therewith; the issuer company will become entitled to an interest as respects either the capital or profits and losses or both, in such business exceeding fifty percent, thereof; a report made by accountants (who shall be named in the prospectus) upon: (i) the profits or losses of the business of each of the five financial years immediately preceding the issue of the prospectus; and (ii) the assets and liabilities of the business at the last date to which the accounts of the business were made up, being a date not more than one hundred and twenty days before the date of the issue of the prospectus. 6.10.2.5 (a) If: (i) the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly in any manner resulting in the acquisition by the issuer company of shares in any other body corporate; and (ii) by reason of that acquisition or anything to be done in consequence thereof or in connection therewith, that body corporate will become a subsidiary of the issuer company; a report made by accountants (who shall be named in the prospectus) upon: (i) the profits or losses of the other body corporate for each of the five financial years immediately preceding the issue of the prospectus; and (ii) the assets and liabilities of the other body corporate at the last date to which its accounts were made up. (b) The said report shall: (i) indicate how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to acquired, have concerned members of the issuer company and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with for holders of other shares, if the issuer company had at all material times held the shares to be acquired; and (ii) where the other body corporate has subsidiaries, deal with the profits or losses and the assets and liabilities of the body corporate and its subsidiaries in the manner provided by sub-clause (a) (ii) above in relation to the issuer company and its subsidiaries. 6.10.2.6 Principal terms of loan and assets charged as security. 6.10.2.7 Other provisions relating to accounts of the issuer company: (a) All significant accounting policies and standards followed in the preparation of the financial statements shall be disclosed. (b) Statements of Assets and Liabilities and Profit and Loss or any other financial information shall be incorporated after making the following adjustments, wherever quantification is possible: (i) Adjustments/ rectification for all incorrect accounting practices or failures to make provisions or other adjustments which resulted in audit qualifications. (ii) Material amounts relating to adjustments for previous years shall be identified and adjusted in arriving at the profits of the years to which they relate irrespective of the year in which the event triggering the profit or loss occurred. (iii) Where there has been a change in accounting policy, the profits or losses of the earlier years (required to be shown in the prospectus) and of the year in which the change in the accounting policy has taken place shall be recomputed to reflect what the profits or losses of those years would have been if a uniform accounting policy was followed in each of these years. (iv) If an incorrect accounting policy is followed, the re-computation of the financial statements shall be in accordance with correct accounting policies. (v) Statement of profit or loss shall disclose both the profit or loss arrived at before considering extraordinary items and after considering the profit or loss from extraordinary items. An illustrative format of the disclosure of profits and losses on this basis is specified at Schedule X. (vi) The statement of assets and liabilities shall be prepared after deducting the balance outstanding on revaluation reserve account from both fixed assets and reserves and the networth arrived at after such deductions. A suggested format of assets and liabilities is specified at Schedule XI. (c) The turnover disclosed in the Profit and Loss Statement shall be bifurcated into: (i) turnover of products manufactured by the issuer company; (ii) turnover of products traded in by the issuer company; and (iii) turnover in respect of products not normally dealt in by the issuer company but included in (ii) above, shall be mentioned separately. (d) The prospectus shall disclose details of `Other Income in all cases where such income (net of related expenses) exceeds 20% of the net profit before tax, including: (i) the sources and other particulars of such income; and (ii) an indication as to whether such income is recurring or non-recurring, or has arisen out of business activities/ other than the normal business activities. (e) Changes (with quantification, wherever possible) in the activities of the issuer company which may have had a material effect on the statement of profit/ loss for the five years, Including discontinuance of lines of business, loss of agencies or markets and similar factors. (f) Accounting and other ratios: (i) The following accounting ratios shall be given for each of the accounting periods for which financial information is given. a. Earnings per Share: This ratio shall be calculated after excluding extra ordinary items. b. Return on net worth: This ratio shall be calculated excluding revaluation reserves. c. Net Asset Value per share. This ratio shall be calculated excluding revaluation reserves. (ii) Accounting and other Ratios shall be based on the Financial Statements prepared on the basis of Indian Accounting Standards. (g) Capitalisation Statement: (i) A Capitalisation Statement showing total debt, net worth, and the debt/ equity ratios before and after the issue is made shall be incorporated. (ii) In case of any change in the share capital since the date as of which the financial information has been disclosed in the prospectus, a note explaining the nature of the change shall be given. (iii) An illustrative format of the Capitalisation Statement is specified at Schedule XIII. (h) Unsecured loans: (i) Break-up of total outstanding unsecured loans taken by the issuer company, promoters/ group companies/ associate companies and others shall be given in the prospectus. (ii) In respect of each such unsecured loan of the former category, the terms and conditions, including interest rates and the repayment schedule. (iii) If the loan can be recalled by the lenders at any time, the fact has to be given as a risk factor. (i) For a proper understanding of the future tax incidence, the following factors shall be identified and explained through proper disclosures: (i) Profits after tax are often affected by the tax shelters which are available. (ii) Some of these are of a relatively permanent nature (for example, arising out of export profits) while others may be limited in point of time (for example, tax holidays for new undertakings). (iii) Tax provisions are also affected by timing differences which can be reversed in the future (for example, the difference between book depreciation and tax depreciation). (iv) An illustrative format of statement in respect of tax shelter is specified in Schedule XII. 6.10.2.8 The issuer company, if it so desires, may include in the prospectus, the financial statements prepared on the basis of more than one accounting practices, subject to disclosure of the material differences arising because of differences in the accounting policies of different accounting practices. 6.10.3 Financial Information of Group Companies 6.10.3.1 The following information for the last three years, based on the audited statements, in respect of all the companies, firms, ventures, etc. promoted by the promoters, irrespective of whether these are covered under section 370 (1)(B) of the Companies Act, 1956 shall be given, wherever applicable: (a) Date of Incorporation. (b) Nature of activities. (c) Equity Capital. (d) Reserves (excluding revaluation reserve). (e) Sales. (f) Profit after tax (PAT). (g) Earnings per share (EPS). (h) Net Asset Value (NAV). (i) The highest and lowest market price of shares during the preceding six months with suitable disclosures for changes in capital structure during the period and the market value on the date of filing the prospectus with the Registrar of Companies. (j) If any of the companies has made public or rights issue in the preceding three years, the issue price of the security, the current market price and particulars of changes in the capital structure, if any, since the date of issue and a statement regarding the cost and progress of implementation of the project in comparison with the cost and implementation schedule given in the prospectus. (k) Information regarding adverse factors related to the company and in particular regarding: (i) whether the company has become a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 or is under winding up. (ii) whether the company has made a loss in the immediately preceding year and if so, the profit or loss figures for the immediately preceding three years. 22 (Provided that nothing contained in this clause shall apply to an issue made by any government company, statutory authority or corporation or any special purpose vehicle set up by any of them.) 6.10.3.2 In case, the issuer company has more than five listed group companies, the financial information may be restricted to the five largest listed companies to be determined on the basis of market capitalisation one month before the date of filing draft prospectus with the Board 23 (or in case of a fast track issue, one month before the reference date); Provided that financial information regarding every such company which has become a sick industrial company or is under winding up or has a negative net worth shall be provided. 24 Explanation: For the purposes of this clause, the term reference date shall have the same meaning as assigned to it in Explanation (a) to clause 2.1.2A.1.) 6.10.3.3 If the promoters have disassociated themselves from any of the companies/ firms during preceding three years, the reasons therefor and the circumstances leading to the disassociation shall be furnished together with the terms of such disassociation. 6.10.3.4 (a) In case there are common pursuits among these companies, the reasons and justification for the same shall be spelt out and the conflict of interest situations shall be stated. (b) The related business transactions within the group shall also be mentioned. (c) The significance of these transactions on the financial performance of the company/ companies shall be stated. 6.10.3.5 Sales or purchase between companies in the promoter group when such sales or purchases exceed in value in the aggregate 10% of the total sales or purchases of the issuer and also disclose material items of income or expenditure arising out of transactions in the promoter group. 6.10.4 Changes in Accounting Policies in the last three years 6.10.5 Management s Discussion and Analysis of Financial Condition and Results of Operations as Reflected in the Financial Statements: 6.10.5.1 Overview of the business of the issuer company. 6.10.5.2 Significant developments subsequent to the last financial year: A statement by the directors whether in their opinion there have arisen any circumstances since the date of the last financial statements as disclosed in the prospectus and which materially and adversely affect or is likely to affect the trading or profitability of the issuer company, or the value of its assets, or its ability to pay its liabilities within the next twelve months. 6.10.5.3 Factors that may affect Results of the Operations. 6.10.5.4 Discussion on Results of Operations: A summary of past financial results after adjustments as given in the auditors report for the past three years containing significant items of income and expenditure shall be given. 6.10.5.5 Comparison of recent Financial Year with the Previous Financial Years (last three years) on the major heads of the Profit Loss Statement: (a) An analysis of reasons for the changes in significant items of income and expenditure shall also be given, inter alia, containing the following: (i) unusual or infrequent events or transactions. (ii) significant economic changes that materially affected or are likely to affect income from continuing operations. (iii) known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations. (iv) future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known. (v) the extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices. (vi) total turnover of each major industry segment in which the issuer company operated. (vii) status of any publicly announced new products or business segment. (viii) the extent to which business is seasonal. (ix) any significant dependence on a single or few suppliers or customers. (x) competitive conditions. 6.10.5.6 Management s Discussion and Analysis of financial condition and results of operations as reflected in the financial statements (MDA) shall be based on the Financial Statements prepared on the basis of Indian Accounting Practices. In addition, the issuer company may present MDA based on other Accounting Practices. 6.11 Legal and Other Information 6.11.1 Outstanding Litigations and Material developments 6.11.1.1 Outstanding litigations involving the issuer company: (a) Litigations against the issuer company or against any other company whose outcome could have a materially adverse effect of the position of the issuer company. (b) Further, all the litigations against the directors involving violation of statutory regulations or alleging criminal offence shall be furnished in the prospectus. (c) Pending proceedings initiated for economic offences against the issuer company or its directors shall be disclosed separately indicating their present status. (d) The details of the past cases in which penalties were imposed by the concerned authorities on the issuer company or its directors. (e) Outstanding litigations, defaults, etc., pertaining to matters likely to affect operations and finances of the issuer company, including disputed tax liabilities, prosecution under any enactment in respect of Schedule XIII to the Companies Act, 1956 (1 of 1956) etc. shall be disclosed. (f) The Lead Merchant Banker shall ensure to appropriately incorporate in the prospectus and as risk factor(s), information regarding pending litigations, defaults, non payment of statutory dues, proceedings initiated for economic offences/ civil offences (including the past cases, if found guilty), any disciplinary action taken by the Board/ stock exchanges against the issuer company or its Directors. (g) The name(s) of small scale undertaking(s) or any other creditors to whom the issuer company owes a sum exceeding 1 lakh which is outstanding more than 30 days; and 6.11.1.2 The information about outstanding litigations as per clause 6.11.1.1 (e) shall be furnished in respect of subsidiaries of the issuer company (if applicable). 6.11.1.3 Outstanding litigations involving the promoter and group companies: (a) All pending litigations in which the promoters are involved, defaults to the financial institutions/ banks, non-payment of statutory dues and dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares by the promoters and the companies/ firms promoted by the promoters, shall be listed in the prospectus together with the amounts involved and the present status of such litigations/ defaults. The likely adverse effect of these litigations/ defaults, etc. on the financial performance of the issuer company shall also be mentioned. (b) Further, the cases of pending litigations, defaults, etc. in respect of companies/ firms/ ventures with which the promoters were associated in the past but are no longer associated shall also be disclosed in case their name(s) continues to be associated with particular litigation(s). (c) Further, all the litigations against the promoter involving violation of statutory regulations or alleging criminal offence shall be furnished in the prospectus. (d) Pending proceedings initiated for economic offences against the promoters, companies and firms promoted by the promoters shall be disclosed separately indicating their present status. (e) The details of the past cases in which penalties were imposed by the concerned authorities. (f) The lead merchant banker shall ensure to appropriately incorporate in the prospectus and as risk factor(s), information regarding pending litigations, defaults, non payment of statutory dues, proceedings initiated for economic offences/ civil offences (including the past cases, if found guilty), any disciplinary action taken by the Board/ stock exchanges against the promoters and their other business ventures (irrespective of the fact whether they are companies under the same management with the issuer company as per section 370 (1B) of the Companies Act, 1956). 25 (Provided that nothing contained in this clause shall apply to an issue made by any government company, statutory authority or corporation or any special purpose vehicle set up by any of them.) 6.11.1.4 If any the above mentioned litigations, etc., arise after the filing of the prospectus, the facts shall be incorporated appropriately in the prospectus (and as risk factors). 6.11.1.5 In case there are no such cases, a distinct negative statement is required to be made in this regard in the prospectus. 6.11.1.6 Material developments since the last balance sheet date. 6.11.2 Government Approvals/ Licensing Arrangements 6.11.2.1 Investment approvals (FIPB/ RBI, etc.). 6.11.2.2 All government and other approvals. 6.11.2.3 Technical approvals. 6.11.2.4 Letter of intent/ industrial license and declaration of the Central Government/ RBI about non-responsibility for financial soundness or correctness of statements. 6.12 Other Regulatory and Statutory Disclosures 6.12.1 Authority for the issue and details of resolution passed for the issue. 6.12.2 Prohibition by SEBI. 6.12.3 Eligibility of the issuer company to enter the capital market. 26 (6.12.3A Compliance with provisos to clause 6.3 or 6.39, as the case may be, if applicable.) 27 (6.12.3B Details of compliance with eligibility requirements to make a fast track issue, if applicable.) 6.12.4 Disclaimer clause: (a) A prospectus shall contain the following disclaimer clause in bold capital letters: It is to be distinctly understood that submission of offer document to SEBI should not in any way be deemed or construed that the same has been cleared or approved by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the issue is proposed to be made or for the correctness of the statements made or opinions expressed in the offer document. Lead Merchant Banker, ______________ has certified that the disclosures made in the offer document are generally adequate and are in conformity with SEBI (Disclosures and Investor Protection) Guidelines in force for the time being. This requirement is to facilitate investors to take an informed decision for making investment in the proposed issue. It should also be clearly understood that while the Issuer Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the offer document, the Lead Merchant Banker is expected to exercise Due Diligence to ensure that the Company discharges its responsibility adequately in this behalf and towards this purpose, the Lead Merchant Banker _______________________ has furnished to SEBI a Due Diligence Certificate dated ________________ 28 (which reads as follows (due diligence certificate submitted to the Board to be reproduced here):) The filing of offer document does not, however, absolve the company from any liabilities under section 63 or 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed issue. SEBI, further reserves the right to take up, at any point of time, with the lead merchant banker(s) any irregularities or lapses in offer document. (b) Disclaimer Statement from the Issuer and the Lead Manager: A statement to the effect that the issuer company and the Lead Manager accepts no responsibility for statements made otherwise than in the prospectus or in the advertisement or any other material issued by or at the instance of the issuer and that anyone placing reliance on any other source of information would be doing so at his own risk should be incorporated. 6.12.5 Caution. 6.12.6 Disclaimer in respect of jurisdiction. 6.12.7 Disclaimer clause of the stock Exchanges. 6.12.8 Disclaimer clause of the Reserve Bank of India (if applicable). 6.12.9 Filing of prospectus with the Board and the Registrar of Companies: 6.12.9.1 Under this head, the office of the Board where the prospectus has been filed shall be mentioned. 6.12.9.2 Address of the Registrar of Companies, where copy of the prospectus, having attached thereto the material contracts and documents referred to elsewhere in the prospectus, has been filed, shall also be mentioned. 6.12.10 Listing: 6.12.10.1 Names of the designated stock exchange and other exchanges where application has been made for listing of the present issue shall be mentioned. 6.12.11 Consent of the Directors, auditors, solicitors/ advocates, Managers to the Issue, Registrar to the Issue, Bankers to the Company, Bankers to the Issue and experts. 6.12.12 Expert opinion obtained, if any. 6.12.13 Expenses of the issue. 6.12.14 Details of fees payable to (in terms of amount, as a percentage of total issue expenses and as a percentage of total issue size): 6.12.14.1 Lead Managers. 6.12.14.2 Co-lead Managers, if any 6.12.14.3 Co-managers, if any 6.12.14.4 Other Merchant Bankers 6.12.14.5 Registrars to the issue. 6.12.14.6 Advisors. 6.12.14.7 Bankers to issues 6.12.14.8 Trustees for the debenture-holders. 6.12.14.9 Others 6.12.15 Underwriting commission, brokerage and selling commission. 6.12.16 Previous public or rights issues, if any (during the last five years): 6.12.16.1 Closing Date. 6.12.16.2 Date of allotment. 6.12.16.3 Date of refunds. 6.12.16.4 Date of listing on the stock exchange. 6.12.16.5 If the issue (s) at premium or discount and the amount thereof. 6.12.16.6 The amount paid or payable by way of premium, if any, on each share which had been issued within the two years preceding the date of the prospectus or is to be issued, stating the dates or proposed dates of issue and, where some shares have been or are to be issued at a premium and other shares of the same class at a lower premium, or at par or at a discount, the reasons for the differentiation and how any premiums received have been or are to be disposed of. 6.12.17 Previous issues of shares otherwise than for cash. 6.12.18 Commission or brokerage on previous issues. 6.12.19 Following particulars in regard to the issuer company and other listed companies under the same management within the meaning section 370 (1)(B) of the Companies Act, 1956 which made any capital issue during the last three years shall be given: 6.12.19.1 Name of the company. 6.12.19.2 Year of Issue. 6.12.19.3 Type of Issue (public/ rights/ composite). 6.12.19.4 Amount of issue. 6.12.19.5 Date of closure of issue. 6.12.19.6 Date of completion of delivery of share/ debenture certificates. 6.12.19.7 Date of completion of the project, where object of the issue was financing the project. 6.12.19.8 Rate of dividend paid. 6.12.20 Promise vis- -vis performance: 6.12.20.1 Issuer company: (a) A separate para entitled Promise Vs Performance - Last three issues shall be given indicating whether all the objects mentioned in the respective offer documents relating to the earlier issues by the issuer company were met and whether all projections made in the said offer documents were achieved. (b) If not, non-achievement of objects/projections shall be brought out distinctly shortfall and delays shall be quantified. 6.12.20.2 Listed Ventures of Promoters: (a) A separate paragraph on issues of group/associate companies entitled Promise Vs Performance - Last one Issue of group/associate companies shall be given indicating whether all the objects mentioned in the respective offer documents relating to group/ associate companies were met and whether all projections made in the said offer documents were achieved. (b) If not, non-achievement of objects/ projections shall be brought out distinctly. Shortfall and delays shall be quantified. 6.12.21 Outstanding debentures or bonds and redeemable preference shares and other instruments issued by the issuer company outstanding as on the date of prospectus and terms of issue. 6.12.22 Stock market data for equity shares of the issuer company, if listed: 6.12.22.1 Particulars of: (a) high, low and average market prices of the share of the issuer company during the preceding three years; (b) monthly high and low prices for the six months preceding the date of filing the draft prospectus with Board which shall be updated till the time of filing the prospectus with the Registrar of Companies/ Stock Exchange concerned; (c) number of shares traded on the days when the high and low prices were recorded in the relevant stock exchange during said period of (i) and (ii) above; (d) the stock market data referred to above shall be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure (e.g. when the shares have become ex-rights or ex-bonus); (e) the market price immediately after the date on which the resolution of the Board of Directors approving the issue was approved; (f) the volume of securities traded in each month during the six months preceding the date on which the prospectus is filed with ROC; and (g) to volume of business transacted along with high, low and average prices of shares of the issuer company shall also be stated for respective periods. 6.12.23 Mechanism evolved for redressal of investor grievances 6.12.23.1 The prospectus shall disclose the arrangements or any mechanism evolved by the issuer company for redressal of investor grievances. 6.12.23.2 The issuer company shall disclose the time normally taken by it for disposal of various types of investor grievances. 6.12.23.3 Similar disclosure shall be made in regard to the listed companies under the same management within the meaning of Section 370 (1B) of the Companies Act, 1956 for the period of three years prior to the date of filing of the prospectus with the Registrar of Companies/ Stock Exchange. 6.12.24 Change, if any, in the auditors during the last three years, and reasons, thereof. 6.12.25 Capitalisation of reserves or profits (during last five years). 6.12.1 Revaluation of assets, if any (during the last five years) 6.13 Offering Information 6.13.1 Terms of the Issue 6.13.1.1 Ranking of equity shares. 6.13.1.2 Mode of payment of dividend. 6.13.1.3 Face value and issue price/ floor price/ price band. 6.13.1.4 Rights of the instrument holders. 6.13.1.5 Market lot. 6.13.1.6 Nomination facility to investor. 6.13.1.7 Minimum subscription: (a) For Non-underwritten Public Issues: Following statement shall appear: If the company does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest as per Section 73 of the Companies Act, 1956. (b) For Underwritten Public Issues: Following statement shall appear: If the company does not receive the minimum subscription of 90% of the net offer to public including devolvement of Underwriters within 60 days from the date of closure of the issue, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest prescribed under Section 73 of the Companies Act, 1956. (c) For Composite Issues: (i) The Lead Merchant Banker shall ensure that the requirement of minimum subscription is satisfied both jointly and severally, i.e., independently for both rights and public issues. (ii) If the issuer company does not receive the minimum subscription in either of the issues the issuer company shall refund the entire subscription received. (d) Offer for sale: The requirement of minimum subscription shall not be applicable to offer for sale. (e) Public issues by infrastructure companies: The requirement of minimum subscription shall not be applicable to an eligible infrastructure company, provided disclosures regarding the alternate source of funding is made in the prospectus. 6.13.1.8 Arrangements for Disposal of Odd Lots: (a) Any arrangements made by the issuer company for providing liquidity for and consolidation of the shares held in odd lots, particularly when such odd lots arise on account of issues by way of rights, bonus, conversion of debentures/ warrants etc., shall be intimated to the shareholders/ investors. (b) The issuer company is free to make arrangements for providing liquidity in respect of odd lot shares through any investment or finance company, broking firms or through any other agency and the particulars of such arrangement, if any, may be disclosed in the prospectus related to the concerned issue of capital. (c) The Lead Merchant Banker shall ascertain whether the issuer company coming for fresh issue of capital proposes to set up trusts in order to provide service to the investors in the matter of disposal of odd lot shares of the issuer company held by them and if so, disclosures relating to setting up and operation of the trust shall be contained in the prospectus. (d) Whenever any issue results in issue of shares in odd lots, the issuer company, shall as far as possible issue certificates in the denomination of 1-2-5-10-20-50 shares. 6.13.1.9 Restrictions, if any, on transfer and transmission of shares/ debentures and on their consolidation/ splitting. 6.13.2 Issue Procedure 6.13.2.1 Fixed price issue or book building procedure as may be applicable, including details regarding bid form / application form, who can bid/apply, maximum and minimum bid/application size, bidding process, bidding, bids at different price levels, etc. 6.13.2.2 Option to subscribe in the issue: (a) The details of option to subscribe for securities to be dealt with in a depository. (b) The Lead Merchant Banker shall incorporate a statement in the prospectus and in the application form to the effect that the investor shall have an option either to receive the security certificates or to hold the securities in dematerialised form with a depository. 6.13.2.3 How to apply - availability of forms, prospectus and mode of payment: (a) Applications by mutual funds: (i) The Lead Merchant Bankers shall clearly incorporate necessary disclosures under the heads Procedure for applications by mutual funds and Multiple Applications to indicate that a separate application can be made in respect of each scheme of an Indian mutual fund registered with the Board and that such applications shall not be treated as multiple applications. (ii) The applications made by the AMCs or custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which application is being made. (b) Applications by NRIs: (i) The Lead Merchant Banker shall ensure the following disclosures: a. the name and address of at least one place in India from where individual NRI applicants can obtain the application forms. b. NRI applicants may please note that only such applications as are accompanied by payment in free foreign exchange shall be considered for allotment under the reserved category. The NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians and shall not use the forms meant for reserved category. 29 ((c) Application by ASBA investors: (i) The Lead Merchant Banker shall ensure disclosures regarding details of Application Supported by Blocked Amount process including specific instructions for submitting Application Supported by Blocked Amount.) 6.13.2.4 Escrow mechanism: (a) Escrow A/c. of the issuer company. (c) Escrow A/c. of the syndicate member. 6.13.2.5 Terms of payment and payment into the Escrow Collection Account. 6.13.2.6 Electronic registration of bids. 6.13.2.7 Build up of the book and revision of bids. 6.13.2.8 Price discovery and allocation. 6.13.2.9 Signing of underwriting agreement. 6.13.2.10 Filing of prospectus with the Registrar of Companies. 6.13.2.11 Announcement of Pre-Issue Advertisement. 6.13.2.12 Issuance of Confirmation of Allocation note ( CAN ) and Allotment in the Issue. 6.13.2.13 Designated date. 6.13.2.14 General instructions: (a) Do s and don ts. (b) Instructions for completing the Bid form. 30 ((c) Bidders bank account details.) (d) Bids by NRIs or FIIs on a repatriation basis. 6.13.2.15 Payment instructions: (a) Payment into escrow account of the issuer company. (b) Payment into escrow account of the syndicate member. 31 ((c) Payment instructions for Application Supported by Blocked Amount) 6.13.2.16 Submission of bid form. 6.13.2.17 Other instructions: (a) Joint bids in the case of individuals. (b) Multiple bids. (c) 32 (Instruction to applicants to disclose Permanent Account Number in the application form, irrespective of the amount for which application / bid is made, along with the instruction that applications without Permanent Account Number would be rejected.) 33 ((d) Rejection of Bids.) (e) Equity shares in demat form with NSDL or CDSL. (f) The investor s attention shall also be invited to contact the compliance officer in case of any pre-issue/ post-issue related problems such as non-receipt of letters of allotment/ share certificates/ refund orders, etc. 6.13.2.18 Disposal of application and Application moneys. 6.13.2.19 Provisions of sub-section (1) of section 68A of the Companies Act, 1956 relating to punishment for fictitious applications, shall be mentioned. 6.13.2.20 Interest on refund of excess bid amount. 6.13.2.21 Basis of allotment or allocation. 6.13.2.22 Procedure and time of schedule for allotment and issue of certificates. 6.13.2.23 Method of proportionate allotment. 34 (6.13.2.24 Letters of Allotment or refund orders or instructions to Self Certified Syndicate Banks in Application Supported by Blocked Amount process.) 6.13.2.25 35 (Mode of making refunds: The Company shall disclose the mode in which it shall make refunds to applicants in case of oversubscription, in the prospectus and in the abridged prospectus. Provided that where the company proposes to make use of more than one mode of making refunds to applicants, the respective cases where each such mode will be adopted shall be disclosed. Explanation: The permissible modes of making refunds are as follows: (a) In case of applicants residing in any of the centres specified by the Board by crediting of refunds to the bank accounts of applicants through electronic transfer of funds by using ECS (Electronic Clearing Service), Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer), as is for the time being permitted by the Reserve Bank of India; (b) In case of other applicants by despatch of refund orders by registered post, where the value is 1500/- or more, or under certificate of posting in other cases, (subject however to postal rules); and (c) In case of any category of applicants specified by the Board crediting of refunds to the applicants in any other electronic manner permissible under the banking laws for the time being in force which is permitted by the Board from time to time.) 6.13.2.26 Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders 36 /instruction to Self Certified Syndicate Banks by the Registrar) in Case of Public Issues: The caption Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders in Case of Public Issues shall appear and shall contain the following statement: (a) Where it is a fixed price issue: The company agrees that as far as possible allotment of securities offered to the public shall be made within 30 days of the closure of public issue. The company further agrees that it shall pay interest @15% per annum if the allotment letters/ refund orders have not been despatched to the applicants 37 (or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner) within 30 days from the date of the closure of the issue. However applications received after the closure of issue in fulfillment of underwriting obligations to meet the minimum subscription requirement, shall not be entitled for the said interest. (b) Where it is a book-built issues: The company agrees that allotment of securities offered to the public shall be made not later than 15 days of the closure of public issue. The company further agrees that it shall pay interest @15% per annum if the allotment letters/ refund orders have not been despatched to the applicants 38 (or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner) within 15 days from the date of the closure of the issue. 6.13.2.27 Undertaking by the issuer company: (a) The following undertaking by the issuer company shall be incorporated in the prospectus: (i) that the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily. (ii) that all steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within seven working days of finalisation of basis of allotment. (iii) that the issuer company shall apply in advance for the listing of equities on the conversion of debentures/ bonds. 39 ((iv) that funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the issue by the issuer.) 40 ((iv)(a) that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 30 days or 15 days of closure of the issue, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.) (v) that the promoters contribution in full, wherever required, shall be brought in advance before the Issue opens for public subscription and the balance, if any, shall be brought in pro rata basis before the calls are made on public. (vi) that the certificates of the securities/ refund orders to the non-resident Indians shall be despatched within specified time. (vii) that no further issue of securities shall be made till the securities offered through this prospectus are listed or till the application moneys are refunded on account of non-listing, under subscription, etc. 41 (viii) that adequate arrangements shall be made to collect all Applications Supported by Blocked Amount (ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment.) (b) In case of a debenture issue, the issuer company shall also give undertakings to the following effect in the prospectus: (i) that the issuer company shall forward the details of utilisation of the funds raised through the debentures duly certified by the statutory auditors of the issuer company, to the debenture trustees at the end of each half-year. (ii) that the issuer company shall disclose the complete name and address of the debenture trustee in the annual report. (iii) that the issuer company shall provide a compliance certificate to the debenture holders (on yearly basis) in respect of compliance with the terms and conditions of issue of debentures as contained in the prospectus, duly certified by the debenture trustee. (iv) that the issuer company shall furnish a confirmation certificate that the security created by the company in favour of the debenture holders is properly maintained and is adequate enough to meet the payment obligations towards the debenture holders in the event of default. (v) that necessary cooperation with the credit rating agency (ies) shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding. 6.13.2.28 Utilisation of Issue Proceeds: (a) A statement by the Board of Directors of the issuer company to the effect that: (i) all monies received out of issue of shares or debentures to public shall be transferred to separate bank account other than the bank account referred to in sub-section (3) of section 73 of the Companies Act, 1956; (ii) details of all monies utilised out of the issue referred to in sub-item(i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the purpose for which such monies had been utilised; and (iii) details of all unutilised monies out of the issue of shares or debentures, if any, referred to in sub-item (i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the form in which such unutilised monies have been invested. (b) The prospectus shall contain a statement of the Board of Directors of the issuer company to the effect that: (i) the utilisation of monies received under promoters contribution and from firm allotments and reservations shall be disclosed under an appropriate head in the balance sheet of the issuer company, indicating the purpose for which such monies have been utilised. (ii) the details of all unutilised monies out of the funds received under promoters contribution and from firm allotments and reservations shall be disclosed under a separate head in the balance sheet of the issuer company, indicating the form in which such unutilised monies have been invested. 42 (Provided that nothing contained in this clause shall apply to public issues or rights issues made by banks or public financial institutions or to offers for sale.) 6.13.2.29 Restrictions on foreign ownership of Indian securities, if any: (a) Investment by NRIs. (b) Investment by FIIs. 6.14 Description of Equity Shares and Terms of the Articles of Association 6.14.1 Rights of members regarding voting, dividend, lien on shares and the process for modification of such rights and forfeiture of shares. 6.14.2 Main provisions of the Articles of Association. 6.15 Other Information 6.15.1 List of material contracts and inspection of documents for inspection: 6.15.1.1 Material contracts. 6.15.1.2 Documents. 6.15.1.3 Time and place at which the contracts, together with documents, will be available for inspection from the date of prospectus until the date of closing of the subscription list. 6.15.2 Declaration 43 ((a) The draft prospectus (in case of issues other than fast track issues), red herring prospectus and prospectus shall be approved by the Board of Directors of the issuer and shall be signed by all Directors, the Chief Executive Officer, i.e., the Managing Director or Manager within the meaning of the Companies Act, 1956 and the Chief Financial Officer, i.e., the whole-time Finance Director or any other person heading the finance function and discharging that function. (b) The signatories shall further certify that all disclosures made in the prospectus are true and correct.) 44 (SECTION II - CONTENTS OF ABRIDGED PROSPECTUS 6.16 General Instructions: The information to be provided under each of the heads specified below shall be as per the requirement of 45 (Section I) of Chapter VI except when specified otherwise. 6.16.1 The Abridged Prospectus shall be printed in a font size which shall not be visually smaller than TIMES NEW ROMAN Size 10. 6.16.2 The order in which items appear in the Abridged Prospectus shall correspond, wherever applicable, to the order in which items appear in the Prospectus. 6.16.3 The application form shall be so positioned that on the tearing-off of the application form, no part of the information given in the Abridged Prospectus is mutilated. 6.17 General Information 6.17.1 The name of the issuer company and address of the registered office of the issuer company, along with telephone number, fax number, email address and website address, and where there has been a change in the address of the registered office or name of the Issuer, details thereof. 6.17.2 Name/s of stock exchanges where listing of the securities is proposed. 6.17.3 Dates of opening, earliest closing and closing of the issue. 6.17.3A 46 (Disclosure under the heading IPO Grading , stating all the grades obtained for the IPO, along with the rationale/ description furnished by the credit rating agency(ies) for each of the grades obtained.) 6.17.4 Disclaimer Clause of SEBI 6.17.5 Consolidated Disclaimer Clause of Stock Exchanges: Disclaimer clauses of stock exchanges shall be combined into a single disclaimer clause with appropriate reference to individual stock exchanges. 6.17.6 Disclaimer Statement of the issuer company and merchant banker 6.17.7 Name and address of the Lead Managers, along with telephone number, fax number, website address, name of contact person and email address. 6.17.8 Name and address of the brokers along with phone numbers. 6.17.9 47 (Name and address of the collecting bankers and/or Designated Branches of Self Certified Syndicate Banks) 6.17.10 Name and address of the registrars to the issue along with phone number, fax number, website address, name of contact person and email address. 6.17.11 Name and address of the trustee under debenture trust deed (in case of a debenture issue) along with phone number, fax number, website address, name of contact person and email address. 6.17.12 Name and address of the statutory auditors. 6.17.13 Rating for the proposed debenture/ preference shares issue, if any, obtained from the credit rating agencies. 6.17.14 Name and address of the underwriters and the amount underwritten by them, if applicable. 6.17.15 (a) Name, address, telephone number, fax number and email address of the Compliance Officer. (b) Investor s attention shall be invited to contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-receipt of letters of allotment/ share certificates/ credit of securities in depositories beneficiary account/ refund orders, etc. 6.17.16 Provisions of sub section (1) of Section 68A of the Companies Act, 1956 relating to punishment for impersonation. 6.17.17 Declaration about the issue of allotment letters/ refunds within a period of 30 days and interest in case of delay in dispatching refund/ allotment letters @ 15% per annum or at the rate as may be specified. 6.17.18 Risk Factors and proposals to address the same. 6.18 Capital Structure of the issuer company 6.18.1 Following details to be furnished: a. Authorised, issued, subscribed and paid up capital (Number of instruments, description, aggregate nominal value). b. Size of present issue. Disclose separately promoters contribution, firm allotment/ reservation for specified categories and net offer to public. c. Number of instruments, description, aggregate nominal value and issue amount shall be given in this order. Name(s) of group companies to be given, in case, reservation has been made for shareholders of the group companies. d. Paid-up Capital i. after the issue ii. after conversion of securities (if applicable). e. Share Premium Account (before and after the issue). 6.18.2 Complete Notes to the Capital Structure. 6.18.3 A disclosure to the effect that the securities offered through this public/ rights issue shall be made fully paid up or forfeited within 12 months from the date of allotment of securities in a manner as specified in clause 8.5.2. 6.19 Terms of the Present Issue 6.19.1 i. Authority for the issue, terms of payment and procedure and time schedule for allotment and issue of certificates/ refund orders. ii. The clause Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders 48 (/instruction to Self Certified Syndicate Banks by the Registrar) in Case of Public Issues shall appear. 6.19.2 Instructions for applicants a. How to Apply, Availability of Prospectus, Abridged Prospectus and Application Forms, Mode of Payment and Book building procedure, if relevant. b. Residents: In the application form meant for Indian Public, the declaration relating to Nationality and Residentship shall be shown prominently as under: Nationality and Residentship (Tick whichever is applicable) i. I am / We are Indian National(s) resident in India and I am/we are not applying for the said equity shares as nominee(s) of any person resident outside India or Foreign National(s). ii. I am / We are Indian National(s) resident in India and I am / We are applying for the said equity shares as Power of Attorney holder(s) of Non- Resident Indian(s) mentioned below on nonrepatriation basis. iii. I am / We are Indian National(s) resident outside India and I am/we are applying for the said equity shares on my / our own behalf on nonrepatriation basis. c. Non-Resident Indians (NRIs): The application form meant for NRIs shall not contain provision for payment through NR (O) accounts. On the face of the form, the following legend shall be printed in a box: Attention NRI Applicants: Payment must be made through their Non Resident External (NRE) / Foreign Currency Non Resident (FCNR) accounts or through cheques / drafts sent from abroad and drawn on convertible rupee accounts in India. Forms accompanied by cheques drawn on NR (O) accounts are liable to be rejected . d. Attention of NRIs shall be invited to the following: i. the name and address of at least one place in India from where individual NRI applicants can obtain the application forms. ii. Such applications as are accompanied by payment in free foreign exchange shall be considered for allotment under the reserved category. iii. Such NRIs who wish to make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians and shall not use the form meant for reserved category. As regards applications in case of reservations to NRIs, a disclosure is to be made incorporating the fact that payment for such allotments shall come through external source only and that payments through NRO account will not be permitted. e. The application form should contain necessary instructions/ provisions for the following: i. Instructions to applicants to mention the number of application form on the reverse of the instruments to avoid misuse of instruments submitted along with the applications for shares/ debentures in public issues. ii. Provision in the application form 49 (other than Applications Supported by Blocked Amount) for inserting particulars relating to bank account number and the name of the bank with whom such account is held, to enable printing of the said details in the refund orders or for refunds through Electronic Clearing System. 50 (Provided that in case of an issue of securities which is wholly required to be made in the dematerialized form, it would not be necessary to require bank account details in the application form. Provided further that in a case covered by the preceding proviso, the application form shall contain a statement that the bank account details of the applicant would be taken from the data provided by him to the depository.) 51 ((iia)Provision in the application form for Applications Supported by Blocked Amount, for inserting particulars relating to bank account number which is authorised to be blocked and other particulars as specified by SEBI in this regard.) iii. 52 (Instruction to applicants to disclose Permanent Account Number in the application form, irrespective of the amount for which application / bid is made, along with the instruction that applications without Permanent Account Number would be rejected.) iv. Details of options, if any, to receive securities subscribed for, either in demateralised or physical form and a statement that trading in securities on the stock exchanges in physical form will be available only subject to limits prescribed by the Board for time to time. 53 (v. Brief mention of the various intended modes of making refunds (as disclosed in the prospectus).) f. Application by Mutual Funds 6.19.3 Any special tax benefits for company and its shareholders (Only section numbers of the Income Tax Act and their substance should be mentioned, without reproducing the text of the sections). 6.20 Particulars of the Issue 6.20.1 Objects of the issue 6.20.2 Project cost 6.20.3 Means of financing 6.20.4 Name of Appraising Agency, if any 6.20.5 Name of Monitoring Agency, if any 6.21 Company, Management and Project 6.21.1 History and main objects and present business of the company. 6.21.2 Promoters and their background. 6.21.3 Names, address and occupation of manager, managing director, and other Directors (including nominee-directors and whole-time directors) giving their directorships in other companies. 6.21.4 Location of the project 6.21.5 Plant and machinery, technology, process, etc 6.21.6 Collaboration, any performance guarantee or assistance in marketing by the collaborators 6.21.7 Infrastructure facilities for raw materials and utilities like water, electricity, etc. 6.21.8 Schedule of implementation of the project and progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production etc. 6.21.9 Products/Services 6.21.9.1 Nature of the products/services and end users 6.21.9.2 Existing, licensed and installed capacity of the product, demand of the product-existing, and estimated in the coming years as estimates by a Government authority or by any other reliable institution, giving source of the information. In case the company is providing services, relevant information in regard to nature/ extent of services, etc., have to be furnished. 6.21.9.3 Approach to marketing and proposed marketing set up 6.21.9.4 Export possibilities and export obligations, if any. 6.21.9.5 Stock Market Data: Disclose particulars of:- a. high, low and average market prices of the share of the company during the preceding three years b. monthly high and low prices for the six months preceding the date of filing of the prospectus c. number of shares traded on the days when high and low prices were recorded in the relevant stock exchange during period of (i) and (ii) above, and total volume traded on those dates d. the stock market data referred to above shall be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure (e.g., when the shares have become ex-rights or ex-bonus) e. the market price immediately after the date on which the resolution of the Board of Directors approving the issue was approved f. the volume of securities traded in each month during the six months preceding the date on which the offer document is filed with ROC g. Along with high, low and average prices of shares of the company, details relating to volume of business transacted should also be stated for respective periods. 6.22 Following particulars in regard to the listed companies under the same management which made any capital issue in the last three years a. Name of the company b. Year of issue c. Type of issue (public/ rights/ composite) d. Amount of issue e. Date of closure of issue f. Date of despatch of share/ debenture certificate completed g. Date of completion of the project, where object of the issue was financing of a project h. Rate of dividend paid, if any. 6.23 Basis for Issue Price a. Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital); b. P/E pre-issue c. Average return on net worth in the last three years d. Minimum return on increased net worth required to maintain preissue EPS; e. Net Asset Value per share based on last balance sheet; f. Net Asset Value per share after issue and comparison thereof with the issue price. g. Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group (i.e., companies of comparable size in the same industry. (Indicate the source from which industry average and accounting ratios of the peer group has been taken) Provided that the projected earnings shall not be used as a justification for the issue price in the offer document. Provided further that the accounting ratios disclosed in the offer documents in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised. h. The face value of shares (including the statement about the issue price being X times of the face value) 6.24 Outstanding Litigations and Defaults (in a summarised tabular form) 6.24.1 Whether all payment/refunds, debentures, deposits of banks or companies, interest on deposits, debenture interest, institutional dues have been paid up to date. If not, details of the arrears, if any, to be stated. 6.25 Material Development: Any material development after the date of the latest balance sheet and its impact on performance and prospects of the company. 6.26 Expert opinion obtained, if any. 6.27 Change, if any, in directors and auditors during the last three years and reasons thereof. 6.28 Time and Place of Inspection of material contracts (List of material contracts not required) 6.29 Financial Performance of the Company for the Last Five Years (Figures to be taken from the audited annual accounts in a tabular form) 6.29.1 a. Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the year of revaluation and its monetary effect on assets) and borrowings b. Profit and Loss data: Sales, Gross profit, Net profit, dividend paid, if any c. Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company d. Following information as extracted from the report of the auditors reproduced in the main offer document in terms of clause 6.18 of the Guidelines: i) net profit before accounting for extra ordinary items ii) extra ordinary items iii) net profit after accounting for extra ordinary items 6.29.2 Management Discussions and Analysis on Accounts 6.30 Listed Ventures of Promoters 6.31 Previous Public or Rights Issues, if any ,of last 5 years 6.32 Disclosure on Investor Grievances Redressal System 6.33 Statement regarding minimum subscription clause: Following statements shall appear depending upon the type of issue: 6.33.20 For Non-underwritten Public Issues If the company does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest as per Section 73 of the Companies Act 1956. 6.33.21 For Underwritten Public Issues If the company does not receive the minimum subscription of 90% of the net offer to public including devolvement of Underwriters within 60 days from the date of closure of the issue, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest prescribed under Section 73 of the Companies Act 1956. 6.33.22 For Composite Issues i. The Lead Merchant Banker shall ensure that the requirement of minimum subscription is satisfied both jointly and severally, i.e., independently for both rights and public issues. ii. If the company does not receive the minimum subscription in either of the issues the company shall refund the entire subscription received. 6.34 Signatories to the Offer Document.) 54 (SECTION III CONTENTS OF THE LETTER OF OFFER 6.39 A listed issuer company making a rights issue shall make disclosures, as specified in clause 6.42, in the letter of offer, if it satisfies the following conditions: (a) the issuer company has been filing periodic reports, statements and information in compliance with the listing agreement for the last three years immediately preceding the date of filing of the letter of offer with the designated stock exchange, in case of a fast track issue and in any other case, the date of filing of the draft letter of offer with the Board; (b) the reports, statements and information referred to in sub-clause (a) above are available on the website of any recognised stock exchange with nationwide trading terminals or on a common efiling platform specified by the Board; (c) the issuer company has investor grievance-handling mechanism which includes meeting of the Shareholders or Investors Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer company as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances. 6.40 If the listed issuer company does not satisfy the conditions specified in clause 6.39, it shall make disclosures in the letter of offer as specified in Section I and as specified in sub-clauses (d), (e) and (f) of clause 6.42.16.2 of this Section. 6.41 Irrespective of whether the conditions specified in clause 6.39 are satisfied or not, the following listed issuer companies shall make disclosures, as specified in Section I, in the letter of offer: (a) A listed issuer company whose management has undergone change pursuant to acquisition of control in accordance with the provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; (b) An issuer company whose securities have been listed consequent to relaxation granted by the Board under sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 for listing of its securities pursuant to a scheme sanctioned by a High Court under sections 391 to 394 of the Companies Act, 1956. 6.42 A listed issuer company referred to in clause 6.39 shall make the following disclosures in the letter of offer, as far as possible, in the order in which the disclosures are specified in this clause. 6.42.1 Cover Pages 6.42.1.1 The cover page paper shall be of adequate thickness (preferably minimum hundred gcm. quality). 6.42.1.2 Front Cover Pages (a) The front outside and inside cover pages of the letter of offer shall be white and no patterns or pictures shall be printed on these pages. (b) The front outside cover page of the letter of offer shall contain only the following details: a. The words Letter of Offer . b. The name of the issuer company, its logo, address of its registered office, its telephone number, fax number, contact person, website address and e-mail address. c. The nature, number, price and amount of the instruments offered and issue size, as may be applicable. d. The following clause on general risk : Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer 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 offering. For taking an investment decision, investors must rely on their own examination of the issuer company and the offer including the risks involved. The securities being offered in the issue have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of investors shall be invited to the statement of Risk factors given on page number(s) .. under the section General Risks . e. The following clause on Issuer s Absolute Responsibility shall be incorporated in a box format: The issuer company, having made all reasonable inquiries, accepts responsibility for and confirms that this letter of offer contains all information with regard to the issuer company and the issue, which is material in the context of the issue, that the information contained in the 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 make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. f. The names, logos and addresses of all the lead merchant bankers with their titles who have signed the due diligence certificate and filed the letter of offer with the Board, along with their telephone numbers, fax numbers, website addresses and e-mail addresses. g. The name, logo and address of the registrar to the issue, along with its telephone number, fax number, website address and e-mail address. h. Issue schedule: a. Date of opening of the issue. b. Date of closing of the issue. c. Last date for request for split. i. The names of the recognised stock exchanges where the securities of the issuer company are listed and the details of in-principle approval for listing of the securities proposed to be offered in the rights issue. 6.42.1.3 Back Cover Pages (c) The back inside cover page and back outside cover page shall be in white. 6.42.2 Table of Contents 6.42.2.1 The table of contents shall appear immediately after the front inside cover page. 6.42.3 Definitions and Abbreviations 6.42.3.1 Conventional or general terms. 6.42.3.2 Issue related terms. 6.42.3.3 Issuer company and industry related terms. 6.42.3.4 Abbreviations. 6.42.4 Risk Factors 6.42.4.1 The risk factors shall be printed in clear readable font (preferably of minimum point ten size). 6.42.4.2 The risk factors shall be in relation to the following: (a) The issue and objects of the issue. (d) The issuer company and its ongoing business activities. (e) The material litigations which impact the business of the issuer company. 6.42.4.3 The risk factors shall be determined on the basis of their materiality. In determining the materiality of risk factors, the following shall be considered: (a) Some events may not be material individually but may be found material collectively. (b) Some risks may have an impact which is qualitative though not quantitative. (c) Some risks may not be material at the time of making the disclosures in the letter of offer but may have a material impact in the future. 6.42.4.4 The risk factors shall appear in the letter of offer in the following manner: (a) The risks envisaged by the management. (b) The proposals, if any, to address the risks and the manner in which the same are proposed to be addressed. 6.42.4.5 The proposals to address risks shall not contain any speculative statement on the positive outcome to any litigation, etc. 6.42.4.6 The proposals to address risks shall not be given for any matter that is sub-judice before any Court or Tribunal. 6.42.4.7 The risk factors shall be disclosed in the descending order of materiality. Wherever risks about material impact are stated, the financial and other implications of the same shall be disclosed. If it cannot be quantified, a distinct statement about the fact that the implications cannot be quantified shall be made. 6.42.5 Prominent notes 6.42.5.1 This section shall contain notes which are required to be given prominence and shall also include the following: (a) The net worth before the issue (as per latest audited financial statement disclosed in the letter of offer) and issue size. (b) The details of transactions by the issuer company with group or subsidiary companies during the last one year immediately preceding the date of filing the letter of offer with the designated stock exchange, in case of a fast track issue and in any other case, the date of filing draft letter of offer with the Board, the nature of transactions and the cumulative value of transactions. (c) The details of all financing arrangements whereby the promoter group, the directors of the company which is a promoter of the issuer, the directors of the issuer and their relatives have financed the purchase by any other person of securities of the issuer company other than in the normal course of the business of the financing entity during the period of six months immediately preceding the date of filing the letter of offer with the designated stock exchange, in case of a fast track issue and in any other case, the date of filing draft letter of offer with the Board. 6.42.6 Introduction 6.42.6.1 Summary (a) Issue details in brief. (b) Summary consolidated financial, operating and other data. 6.42.6.2 General Information (a) The name and address of the registered office and the registration number of the issuer company, along with the address of the Registrar of Companies where the issuer company is registered. (b) The names, addresses, telephone numbers, fax numbers and e-mail addresses of the Company Secretary and compliance officer of the issuer company. (c) The names, addresses, telephone numbers, fax numbers, contact person, website addresses and e-mail addresses of the bankers to the issue, Self Certified Syndicate Bankers and legal advisors to the issue. (d) The statement of inter-se allocation of responsibilities among lead merchant bankers, where more than one merchant banker is associated with the issue. (e) The following details of credit rating, in case of a rights issue of convertible debt instruments: (i) The details of all the credit ratings including unaccepted rating obtained for the issue of convertible debt instruments. (ii) All credit ratings obtained during the three previous years before filing the letter of offer for any of its listed convertible debt instruments at the time of accessing the market through a convertible debt instrument. (f) The names, addresses, telephone numbers, fax numbers, website addresses and e-mail addresses of the trustees under debenture trust deed, in case of a rights issue of convertible debt instruments. (g) The name of the monitoring agency, if applicable. (h) The name, address, telephone number and e-mail address of the appraising entity, in case the project has been appraised. (i) The details of underwriting, if any: (i) The names, address, telephone numbers, fax numbers and e-mail address of the underwriters and the amount underwritten by them. (ii) A declaration by the board of directors of the issuer company that the underwriters have sufficient resources to discharge their respective obligations. (iii) In case of partial underwriting of the issue, the extent of underwriting. (iv) The details of final underwriting arrangement, indicating actual number of securities underwritten, in the letter of offer before it is filed with the designated stock exchange. (j) The principal terms of loan and assets charged as security. 6.42.6.3 Capital Structure (a) The authorised, issued and subscribed capital after suitable incorporation of the outstanding convertible securities (number of securities, description and aggregate nominal value). (b) Paid-up capital. (c) The following details of outstanding instruments: (i) Details of options, if any. (ii) Details of convertible securities, if any. (d) The details of securities held by promoter and promoter group including the details of lock-in, pledge of and encumbrance on such securities. (e) The details of shares acquired by promoters and promoter group in the last one year immediately prior to the date of filing of the draft letter of offer with the Board. (f) The intention and extent of participation by promoters and promoter group in the issue with respect to: (i) their rights entitlement. (ii) the unsubscribed portion over and above their rights entitlement. (g) The shareholding pattern as per the latest filing with the recognised stock exchange(s). (h) The details of the shareholders holding more than one per cent. of the share capital of the issuer company. 6.42.7 Particulars of the Issue 6.42.7.1 Objects of the Issue (a) The objects of the issue shall be disclosed. (b) If one of the objects is investment in a joint venture or subsidiary or an acquisition, the following additional disclosures shall be made: (i) The details of the form of investment, i.e., equity, debt or any other instrument. (ii) If the form of investment has not been decided, a statement to that effect. (iii) If the investment is in debt instruments, complete details regarding the rate of interest, nature of security, terms of repayment, subordination, etc. (iv) If the investment is in equity, whether any dividends are assured. (v) The nature of benefit expected to accrue to the issuer company as a result of the investment. (c) If one of the objects of the issue is the grant of a loan to any entity, details of the loan agreements including the rate of interest, whether secured or unsecured, duration, nature of security, terms of repayment, subordination, etc. and the nature of benefit expected to accrue to the issuer company as a result of the investment. If such loan is to be granted to a subsidiary, group or associate company, details of the same. (d) If one of the objects of the issue is utilisation of the issue proceeds for long term working capital, the following additional disclosures shall be made: (i) Basis of estimation of working capital requirement, along with relevant assumptions. (ii) Reasons for raising additional working capital, substantiating the same with relevant facts and figures. (iii) Details of the projected working capital requirement including detailed assessment of working capital after implementation of the project or achievement of objects of the issue, as the case may be, capacity utilisation assumptions, break-up of expected current assets into raw materials, finished goods, work in progress, sundry debtors etc., along with the assumption about the holding norms for each type of current asset, total current liabilities, net current assets and envisaged sources of finance for net current assets, i.e., bank finance, institutional finance, own funds, etc. (iv) The total envisaged working capital requirement in a tabular form, the margin money thereof and the portion to be financed by any bank(s) or otherwise. (v) A complete perspective on the present working capital position vis- vis the projected working capital position based on which the money is proposed to be raised in the public issue. (vi) Details of the existing working capital available with the issuer company, along with a break-up of total current assets into raw materials, finished goods, work in progress, sundry debtors, etc., total current liabilities, net current assets and sources of finance for net current assets, i.e., bank finance, institutional finance, own funds, etc. (vii) If no working capital is shown as part of the project for which issue is being made, the reasons therefor. 6.42.7.2 Requirement of Funds (a) The requirement for funds proposed to be raised through the issue. (b) Where the issuer company proposes to undertake more than one activity or project, such as diversification, modernisation, expansion, etc., the total project cost shall be given activity-wise or project wise, as the case may be. (c) Where the issuer company is implementing the project in a phased manner, the cost of each phase including the phase, if any, which has already been implemented, shall be separately given. (d) The details of all material existing or anticipated transactions in relation to the utilisation of the issue proceeds or project cost with promoters, directors, key management personnel, associates and group companies. The relevant documents shall be included in the list of material documents for inspection. (e) If object of the issue is to fund a project, the following details shall be given: (i) Location of the project. (ii) Plant and machinery, technology, process, etc. (iii) Collaboration, performance guarantee if any, or assistance in marketing by the collaborators. (iv) Infrastructure facilities for raw materials and utilities like water, electricity, etc. (f) If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are, or is, to be applied directly or indirectly: (i) in the purchase of any business; or (ii) in the purchase of an interest in any business and by reason of that purchase, or anything to be done in consequence thereof, or in connection therewith; the issuer company will become entitled to an interest as respects either the capital or profits and losses or both, in such business exceeding fifty percent, thereof; a report made by accountants (who shall be named in the letter of offer) upon: a. the profits or losses of the business of each of the five financial years immediately preceding the issue of the letter of offer; and b. the assets and liabilities of the business at the last date to which the accounts of the business were made up, being a date not more than six months before the date of the issue of the letter of offer. (g) If: (i) the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly in any manner resulting in the acquisition by the issuer company of shares in any other body corporate; and (iii) by reason of that acquisition or anything to be done in consequence thereof or in connection therewith, that body corporate will become a subsidiary of the issuer company; a report made by accountants (who shall be named in the letter of offer) upon: a. the profits or losses of the other body corporate for each of the five financial years immediately preceding the issue of the Letter of Offer; and b. the assets and liabilities of the other body corporate at the last date to which its accounts were made up. (h) Strategic partners, if applicable, to the project / objects of the issue. (i) Financial partners, if applicable to the project / objects of the issue. 6.42.7.3 Funding Plan (Means of Finance) (a) An undertaking shall be given in the letter of offer by the issuer company confirming that firm arrangements of finance through verifiable means towards seventy five per cent. of the stated means of finance, excluding the amount to be raised through proposed issue and existing identifiable internal accruals, have been made. (b) The balance portion of the means of finance for which no firm arrangement has been made shall be mentioned without specification. (c) The details of funds tied up and the avenues for deployment of excess proceeds, if any. 6.42.7.4 Appraisal (a) The scope and purpose of the appraisal, if any, along with the date of appraisal. (b) The cost of the project and means of finance as per the appraisal report. (c) Explanation regarding revision, if any, in the project cost and the means of finance after the date of issue of the appraisal report. (d) The weaknesses and threats, if any, given in the appraisal report, by way of risk factors. 6.42.7.5 Schedule of Implementation (a) The schedule of implementation of the project in a tabular form and the progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production and reasons for delay, if any. 6.42.7.6 Deployment of Funds (a) The details of the sources of funds and the deployment of these funds on the project (where the issuer company is raising capital for a project), up to a date not earlier than two months from the date of filing the letter of offer with the designated stock exchange, as certified by a Chartered Accountant, along with the name of the chartered accountant and the date of the certificate. (b) Where share application money brought in advance by the promoters is deployed in the project and the same is being adjusted towards their rights entitlement in the rights issue, the extent of deployment and utilisation of the funds brought in by the promoters shall be disclosed. 6.42.7.7 Sources of Financing of Funds Already Deployed (a) Means and source of financing, including details of bridge loan or other financial arrangement, which may be repaid from the proceeds of the issue. 6.42.7.8 Details of Balance Fund Deployment (a) Year wise break up of the expenditure proposed to be incurred on the said project. 6.42.7.9 Interim Use of Funds (a) Investment avenues in which the management proposes to deploy issue proceeds, pending its utilisation in the proposed project. 6.42.7.10 Any special tax benefits for the issuer company and its shareholders. 6.42.7.11 Key Industry Regulations for the proposed objects of the issue (if different from existing business of the issuer company). 6.42.7.12 Interest of promoters and directors, as applicable to the project or objects of the issue. 6.42.8 History and Corporate Structure about the Issuer company 6.42.8.1 In case the issuer company has not come out with any issue in the past ten years or more, a brief statement about the history and corporate structure of the issuer company, the main objects of the issuer company and major events in the past. 6.42.9 Management (Board of Directors) 6.42.9.1 Name, age, qualifications, Director Identification Number, experience, address, occupation and date of expiration of the current term of office of manager, managing director, and other directors (including nominee directors, whole-time directors), giving their directorships in other companies. 6.42.9.2 The nature of any family relationship between any of the directors. 6.42.9.3 Any arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which of the directors was selected as a director or member of senior management. 6.42.9.4 Details of service contracts entered into by the directors with the issuer company providing for benefits upon termination of employment and a distinct negative statement in the absence of any such contract. 6.42.10 Financial Information of the Issuer company 6.42.10.1 Stand-alone and consolidated financial statements of the issuer company: (a) A report by the auditors of the company with respect to profit or loss and assets and liabilities (indicating changes in accounting policies, if any) in respect of the last completed accounting year for which audit has been completed. (b) A report by the auditors of the company on a limited review of the profit or loss and assets and liabilities (indicating changes in accounting policies, if any), as at a date not earlier than six months prior to the date of the opening of the issue, where audited accounts as at such date are not available. (c) For the purpose of sub-clauses (a) and (b) above, it shall be sufficient if: (i) In the statement of the assets and liabilities, the main heads of assets and liabilities as provided in Part I of Schedule VI of the Companies Act, 1956 have been provided. If an issuer company is governed by a statute other than the Companies Act, 1956, the main heads of assets and liabilities as specified in such statute shall be provided in the statement of assets and liabilities. (ii) In the statement of profit or loss, the information required to be disclosed under the heads of income and expenditure as per clause 41 of the equity listing agreement in respect of quarterly financial information to be filed with the recognised stock exchanges, has been provided. 6.42.10.2 In addition, in accordance with Ministry of Finance Circular no.F.2/5/SE/76 dated February 05, 1977 and amended further on March 08, 1977, the following information for the period between the last date of the balance sheet and profit and loss account sent to the shareholders and up to the end of the last but one month preceding the date of the letter of offer shall be furnished. (a) Working results of the issuer company under following heads: (i) a. Sales / turnover b. Other income (ii) Estimated gross profit / loss (excluding depreciation and taxes). (iii) a. Provision for depreciation b. Provision for taxes. (iv) Estimated net profit / loss. (b) Material changes and commitments, if any affecting financial position of the issuer company. (c) Week-end prices for the last four weeks; current market price; and highest and lowest prices of equity shares during the period with the relative dates. 6.42.10.3 Stock market quotation of shares/ convertible instruments of the company (high/ low price in each of the last three years and monthly high/low price during the last six months). 6.42.10.4 Accounting and other ratios: (a) The following accounting ratios shall be given for each of the accounting periods for which financial information is given: (i) Earnings per share: This ratio shall be calculated after excluding extra ordinary items. (ii) Return on Networth: This ratio shall be calculated excluding revaluation reserves. (iii) Net Asset Value per share: This ratio shall be calculated excluding revaluation reserves. (b) Accounting and other ratios shall be based on the financial statements prepared on the basis of Indian Accounting Standards. 6.42.10.5 Capitalisation Statement: (a) A Capitalisation Statement showing total debt, net worth, and the debt/ equity ratios before and after the issue is made shall be incorporated. (b) In case of any change in the share capital since the date as of which the financial information has been disclosed in the Letter of Offer, a note explaining the nature of the change shall be given. (c) An illustrative format of the Capitalisation Statement is specified hereunder: Particulars Pre-issue as at 30-6-2009 As Adjusted for issue (Rupees in lakhs) Short-Term Debt 1870 1870 Long Term Debt 4370 4370 Shareholders Funds Share Capital 4000 4450 Reserves 14570 37520 Total Shareholders Funds 18570 41940 Long Term Debt/Equity 0.24:1 0.10:1 Note: Since 31-3-2009 (which is the last date as of which financial information has been given in para of this document), share capital was increased from 3000 lacs to 4000 lacs by the issue of bonus shares in the ratio of 1 share for every 3 shares. 6.42.10.6 One standard financial unit shall be used in the Letter of Offer 6.42.11 A statement to the effect that the price has been arrived at in consultation between the issuer company and the Merchant banker. 6.42.12 Outstanding Litigations and Defaults 6.42.12.1 The following details shall be disclosed by the issuer company: (a) Pending matters which, if they result in an adverse outcome, would materially and adversely affect the operations or the financial position of the issuer company. (b) Matters which are pending or which have arisen in the immediately preceding ten years involving: (i) Issues of moral turpitude or criminal liability on the part of the issuer company (ii) Material violations of statutory regulations by the issuer company (iii) Economic offences where proceedings have been initiated against the issuer company. (c) For the purpose of determining materiality, the following tests or parameters shall be applied: (i) For the outstanding litigations which may not have any impact on the future revenues, the disclosure is required: a. Where the aggregate amount involved in such individual litigation exceeds one per cent. of the net worth of the issuer company as per last completed financial year; or b. Where the decision in one case is likely to affect the decision in similar cases, even though the amount involved in single case individually may not exceed one per cent. of the net worth of the issuer company as per the last completed financial year. (ii) For the outstanding litigations which may have any impact on the future revenues, the disclosure is required: a. Where the aggregate amount involved in such individual litigation is likely to exceed one per cent. of the total revenue of the issuer company as per last completed financial year; or b. Where the decision in one case is likely to affect the decision in similar cases, even though the amount involved in single case individually may not exceed one per cent of the total revenue of the issuer company, if similar cases put together collectively exceed one per cent. of total revenue of the issuer company as per last completed financial year. (d) These disclosures shall be made in respect of the issuer company and the subsidiary companies of the issuer company whose financial statements are included in the offer document, either separately or in consolidated form. 6.42.13 Government Approvals or Licensing Arrangements 6.42.13.1 In case of a new line of activity/project, all pending government and regulatory approvals; In case of an existing line of activity/project, al pending regulatory and government approvals and pending renewals of licences. 6.42.14 Material Development 6.42.14.1 Any material development after the date of the latest balance sheet and its impact on performance and prospects of the issuer company. 6.42.15 Other Regulatory and Statutory Disclosures 6.42.15.1 Authority for the issue and details of resolution passed for the issue. 6.42.15.2 A statement by the issuer company that the issuer company, promoters, promoter group, directors or person(s) in control of the promoter have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by the Board. 6.42.15.3 A confirmation whether any of the directors of the issuer company are associated with the securities market in any manner, if yes, whether the Board has initiated any action against the said entities and the related details. 6.42.15.4 It may be disclosed whether the issuer company, promoters, group companies, the relatives (as per Companies Act,1956) of promoters, group companies are identified as wilful defaulters by Reserve Bank of India or other authorities. 6.42.15.5 A statement to the effect that the issuer company is in compliance with provisions specified in clause 6.42. 6.42.15.6 Details of compliance with eligibility requirements to make a fast track issue, if applicable. 6.42.15.7 Disclaimer clauses: (a) The letter of offer shall contain the following disclaimer clause in bold capital letters: It is to be distinctly understood that submission of Letter of Offer to SEBI should not in any way be deemed or construed that the same has been cleared or approved by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the issue is proposed to be made or for the correctness of the statements made or opinions expressed in the Letter of Offer. Lead Merchant Banker, ______________ has certified that the disclosures made in the Letter of Offer are generally adequate and are in conformity with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 in force for the time being. This requirement is to facilitate investors to take an informed decision for making investment in the proposed issue. It should also be clearly understood that while the issuer company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the letter of offer, the lead merchant banker is expected to exercise due diligence to ensure that the issuer company discharges its responsibility adequately in this behalf and towards this purpose, the lead merchant banker _______________________ has furnished to the Securities and Exchange Board of India (SEBI) a due diligence certificate dated ________________ (which reads as follows: (due diligence certificate submitted to the Board to be reproduced here) The filing of the letter of offer does not, however, absolve the issuer company from any liabilities under section 63 or section 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed issue. SEBI further reserves the right to take up, at any point of time, with the lead merchant banker any irregularities or lapses in letter of offer. (b) Disclaimer Statement from the issuer company and lead merchant banker: A statement to the effect that the issuer company and the lead merchant banker accept no responsibility for statements made otherwise than in the Letter of Offer or in the advertisement or any other material issued by or at the instance of the issuer company and that anyone placing reliance on any other source of information would be doing so at his own risk. Investors who invest in the issue will be deemed to have been represented by the issuer company and lead manager and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire equity shares of our company, and are relying on independent advice / evaluation as to their ability and quantum of investment in this issue. (c) Disclaimer in respect of jurisdiction: A brief paragraph mentioning the jurisdiction under which provisions of law and the rules and regulations are applicable to the letter of offer. (d) Disclaimer clause of the stock exchanges, if any. (e) Disclaimer clause of the Reserve Bank of India (if applicable). 6.42.15.8 The fact of filing the letter of offer with the Board and the stock exchange(s) and the office of the Board where the letter of offer has been filed. 6.42.15.9 Details of fees payable to (in terms of amount, as a percentage of total issue expenses and as a percentage of total issue size): (a) Lead merchant bankers. (b) Co-lead merchant bankers, if any (c) Co-managers, if any (d) Other merchant bankers (e) Registrars to the issue (f) Advisors (g) Bankers to the issue (h) Trustees for the debt instrument holders. (i) Others (j) Underwriting commission, brokerage and selling commission. 6.42.15.10 Arrangements or any mechanism evolved by the issuer company for redressal of investor grievances and the time normally taken by it for disposal of various types of investor grievances. 6.42.16 Offering Information 6.42.16.1 Terms of payments and procedure and time schedule for allotment and issue of certificates, credit of securities to the investors demat account. 6.42.16.2 How to apply, availability of application forms and letter of offer and mode of payment, including the following: (a) Applications by mutual funds: (ii) The necessary disclosures under the heads Procedure for applications by mutual funds and Multiple Applications shall be incorporated to indicate that a separate application can be made in respect of each scheme of an Indian mutual fund registered with the Board and that such applications shall not be treated as multiple applications. (iii) A disclosure that the applications made by asset management companies or custodians of a mutual fund shall clearly indicate the name of the concerned scheme for which application is being made. (b) Applications by non-resident Indians: The following disclosures shall be made: (i) The name and address of at least one place in India from where individual non-resident Indian applicants can obtain the application forms. (ii) A statement that: non-resident Indian applicants may please note that only such applications as are accompanied by payment in free foreign exchange shall be considered for allotment under the reserved category. The non-resident Indians who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians and shall not use the forms meant for reserved category. (c) Application by ASBA investors: Disclosures regarding details of Application Supported by Blocked Amount process including specific instructions for submitting Application Supported by Blocked Amount. (d) A statement that the shareholders who have not received the application form may, along with the requisite application money, apply in writing on a plain paper. (e) The format to enable the shareholders to make the application on plain paper specifying therein necessary particulars such as name, address, ratio of rights issue, issue price, number of equity shares held, ledger folio numbers, depository participant ID, client ID, number of equity shares entitled and applied for, additional shares if any, amount to be paid along with application, and particulars of cheque, etc. to be drawn in favour of the issuer company s account; (f) A statement that the shareholders making the application otherwise than on the application form shall not renounce their rights and shall not utilise the application form for any purpose including renunciation even if it is received subsequently. (g) Provisions of sub-section (1) of section 68A of the Companies Act, 1956 relating to punishment for fictitious applications, including the disclosures that any person who: (i) makes in a fictitious name an application to a company for acquiring, or subscribing for, any shares therein, or (ii) otherwise induces a company to allot, or register any transfer of, shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years. (h) Declaration about the credit of securities to the demat account / refunds within a period of fifteen days and interest in case of delay in refund at the prescribed rate. (i) Mode of making refunds: (i) The mode in which the issuer company shall make refunds to applicants in case of oversubscription. (ii) If the issuer company proposes to use more than one mode of making refunds to applicants, the respective cases where each such mode will be adopted shall be disclosed. (iii) The permissible modes of making refunds are as follows: (d) In case of applicants residing in any of the centres specified by the Board: by crediting of refunds to the bank accounts of applicants through electronic transfer of funds by using ECS (Electronic Clearing Service), Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer), as is for the time being permitted by the Reserve Bank of India; (e) In case of other applicants: by despatch of refund orders by registered post, where the value is 1500/- or more, or under certificate of posting in other cases, (subject however to postal rules); and (f) In case of any category of applicants specified by the Board: crediting of refunds to the applicants in any other electronic manner permissible under the banking laws for the time being in force which is permitted by the Board from time to time. 6.42.17 Undertakings by the issuer company in connection with the issue 6.42.17.1 The issuer company shall undertake that: (a) the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily. (b) that steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within seven working days of finalisation of basis of allotment. (c) funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the issue by the issuer company. (d) that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of closure of the issue giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. (e) that adequate arrangements shall be made to collect all ASBA applications and to consider them similar to non-ASBA applications while finalizing the basis of allotment. (f) In case of convertible debt instruments, the issuer company shall additionally undertake that: (i) the issuer company shall forward the details of utilisation of the funds raised through the convertible debt instruments duly certified by the statutory auditors of the issuer company, to the debenture trustees at the end of each half-year. (ii) the issuer company shall disclose the complete name and address of the debenture trustee in the annual report. (iii) the issuer company shall provide a compliance certificate to the convertible debt instrument holders (on yearly basis) in respect of compliance with the terms and conditions of issue of debentures as contained in the Letter of Offer, duly certified by the debenture trustee. (iv) the issuer company shall furnish a confirmation certificate that the security created by the company in favour of the convertible debt instrument holders is properly maintained and is adequate to meet the payment obligations towards the convertible debt instrument holders in the event of default. (v) necessary cooperation with the credit rating agency (ies) shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding. 6.42.18 Utilisation of Issue Proceeds 6.42.18.1 The letter of offer for an issue other than a rights issue made by any bank or public financial institution shall contain a statement of the board of directors of the issuer company to the effect that: (a) all monies received out of issue of shares to public shall be transferred to separate bank account. (b) details of all monies utilised out of the issue referred to in sub-clause (a) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the purpose for which such monies had been utilised; and (c) details of all unutilised monies out of the issue of shares referred to in sub-clause (a) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the form in which such unutilised monies have been invested. 6.42.19 Restrictions on foreign ownership of Indian securities, if any 6.42.19.1 Investment by NRIs. 6.42.19.2 Investment by FIIs. 6.42.20 Statement regarding minimum subscription clause 6.42.20.1 The following statements shall appear in the letter of offer: (a) If the issuer company does not receive the minimum subscription of ninety per cent. of the issue (including devolvement of underwriters where applicable), the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the issue. (b) If there is delay in the refund of subscription by more than 8 days after the company becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), the issuer company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956. 6.42.21 Statutory and other information 6.42.21.1 Option to subscribe in the issue: (a) The details of option, if any, to receive the securities subscribed for either in demateralised form or physical form. (b) The lead merchant banker shall incorporate a statement in the offer document and in the application form to the effect that the investor shall have an option either to receive the security certificates or to hold the securities in dematerialised form with a depository. 6.42.21.2 Material contracts and time and place of inspection which shall include copies of the Annual Reports of the issuer company for the last five years. 6.42.21.3 Any other material disclosures, as deemed necessary. 6.42.22 Declaration 6.42.22.1 The draft letter of offer (in case of issues other than fast track issues) and letter of offer shall be approved by the Board of Directors of the issuer company and shall be signed by all directors, the Chief Executive Officer, i.e., the Managing Director or Manager within the meaning of the Companies Act, 1956 and the Chief Financial Officer, i.e., the whole-time finance director or any other person heading the finance function and discharging that function. 6.42.22.2 The following statement shall be disclosed: No statement made in this letter of offer contravenes any of the provisions of the Companies Act, 1956 and the rules made thereunder. All the legal requirements connected with the issue as also the guidelines, instructions, etc., issued by SEBI, Government and any other competent authority in this behalf, have been duly complied with. 6.42.22.3 The signatories shall further certify that all disclosures made in the letter of offer are true and correct. 6.43 A listed issuer company making disclosures in the letter of offer as per this Part shall make a copy of the offer document of the immediately preceding public issue or rights issue available to the public in the manner specified in sub-clause (ii) of clause 5.6.2 and shall also make such document available as a material document for inspection. 55 ( SECTION IV - CONTENTS OF THE ABRIDGED LETTER OF OFFER 6.44 The abridged letter of offer shall contain disclosures as specified in Section II of this Chapter. Provided that where the conditions laid down in clauses 6.39 (a) and 6.39 (b) are satisfied, clauses 6.18.2, 6.19.3, 6.21, 6.22, 6.23, 6.26, 6.27, 6.30, 6.31 and 6.32, specified under Section II of this Chapter shall not apply to the abridged letter of offer. 6.45 The order in which items shall appear in the abridged letter of offer shall correspond, wherever applicable, to the order in which items appear in the letter of offer. 6.46 The abridged letter of offer shall also include the following disclosures: (a) Provisions pertaining to applications referred to in clause 5.11; (b) Rights entitlement ratio; (c) Fractional entitlements; (d) Renunciation; (e) Application for Additional equity shares; (f) Intention of promoters to subscribe to their rights entitlement; (g) Statement that a copy of the offer document of the immediately preceding public or rights issue is made available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection. ***** 1 Substituted for Section I of Chapter VI, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. The text of Section I, prior to this substitution, is given at the end of these Guidelines, after Schedule XXX. 2 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 3 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006. 4 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 5 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 for the words aforesaid . 6 Substituted, vide SEBI Circular No. SEBI/CFD/DIL/DIP/25/2007/30/4 dated April 30, 2007, for the following clause, which was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/19/4 dated April 19, 2006: Statement indicating whether IPO grading has been opted for. If yes, disclosure of all grades so obtained, including unaccepted grades, as provided under clause 5.6B.2 and reference of the page number where details of IPO grading, as provided under clause 6.8.2.9A, are given. 7 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 8 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 9 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/24/4 dated April 24, 2006. 10 Substituted, vide SEBI Circular No. SEBI/CFD/DIL/DIP/25/2007/30/4 dated April 30, 2007, for the words Name of the credit rating agency . 11 Omitted the words and the grading so obtained, including unaccepted grades , vide SEBI Circular No. SEBI/CFD/DIL/DIP/25/2007/30/4 dated April 30, 2007 12 Substituted, vide SEBI Circular No. SEBI/CFD/DIL/DIP/25/2007/30/4 dated April 30, 2007, for the following clause, which was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/19/4 dated April 19, 2006: If grading has been obtained from more than one credit rating agency, disclosure shall be made of all the grades so obtained, including unaccepted grades. 13 Inserted proviso, vide SEBI Circular no. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 14 Inserted proviso, vide SEBI Circular no. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 15 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 16 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 17 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 18 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 19 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 20 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 21 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 22 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 23 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 24 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 25 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 26 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006. 27 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 28 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 for the following: in accordance with SEBI (Merchant Bankers) Regulations 1992 which reads as follows: (i) We have examined various documents including those relating to litigation like commercial disputes, patent disputes, disputes with collaborators etc. and other materials in connection with the finalisation of the offer document pertaining to the said issue; (ii) On the basis of such examination and the discussions with the Company, its Directors and other officers, other agencies, independent verification of the statements concerning the objects of the issue, projected profitability, price justification and the contents of the documents mentioned in the Annexure and other papers furnished by the company. We confirm that: (a) the offer document forwarded to SEBI is in conformity with the documents, materials and paper relevant to the issue; (b) all the legal requirements connected with the said issue, as also the guidelines, instructions, etc. issued by SEBI, the Government and any other competent authority in this behalf have been duly complied with; and (c) the disclosures made in the offer document are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue. (d) beside ourselves, all the intermediaries named in the prospectus are registered with SEBI and till date such registration is valid. (e) We have satisfied ourselves about the worth of the underwriters to fulfill their underwriting commitments. 29 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 30 Reinserted sub-clause (c), vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/24/4 dated April 24, 2006. The sub-clause was earlier omitted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006 and provided as under: Bidders bank details. 31 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 32 Substituted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/28/1 dated November 28, 2007 for Pan or GIR number 33 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008 for the following: Issuer company s right to reject bids. 34 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008 for the following: Letters of allotment or refund orders 35 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006 for the following: Despatch of refund orders: The following clause shall be incorporated in the prospectus: The company shall ensure despatch of refund orders of value over 1500/- and share/ debenture certificates by Registered Post only and adequate funds for the purpose shall be made available to the Registrars by the issuer company . 36 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 37 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006. 38 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006. 39 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006 for the following: that the funds required for despatch of refund orders/ allotment letters/ certificates by registered post shall be made available to the Registrar to the Issue by the issuer company. 40 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006. 41 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 42 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/28/1 dated November 28, 2007. 43 Substituted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007, for the following: The draft prospectus and final prospectus shall be approved by the Board of Directors of the issuer company and shall be signed by all the Directors (including the Managing Director), Chief Executive Officer and Chief Financial Officer of the issuer company. They shall also certify that all the disclosures made in the prospectus are true and correct.) 44 Substituted for Section II of Chapter VI, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. The text of Section II, prior to this substitution, is given at the end of these Guidelines, after Schedule XXIX. 45 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006 for the letters and figure Part I . 46 Substituted, vide SEBI Circular No. SEBI/CFD/DIL/DIP/25/2007/30/4 dated April 30, 2007, for the following clause, which was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/21/2006/19/4 dated April 19, 2006: Statement indicating whether IPO grading has been opted for. If yes, disclosure of all grades so obtained, including unaccepted grades, as provided under clause 5.6B.2 and the rationale / description of the grading/s so obtained, as furnished by the credit rating agency/ies, may be given. 47 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008 for the following: Name and address of the collecting bankers 48 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 49 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 50 Inserted two provisos vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006. 51 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008. 52 Substituted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007, for the following: Disclosure of PAN/GIR number in respect of applications for monetary value of the investment of 50,000 and above. 53 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/18/2006/20/1 dated January 20, 2006. 54 Substituted vide circular No. SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 for the following:- SECTION III - CONTENTS OF THE LETTER OF OFFER 6.39 (The letter of offer shall fulfil the requirements and shall contain the disclosures as specified under Section I of this Chapter.) Provided that nothing contained in clauses 6.8.2.2, 6.8.2.3, sub-clauses (a), (b), (c), (d) and (e) of clause 6.8.3.2, clauses 6.8.4.12, 6.9.2.1, 6.9.2.2, 6.9.2.3, 6.9.2.4, 6.9.4, 6.9.6, 6.10.3, 6.12.16, 6.12.17, 6.12.18, 6.12.20 and 6.12.21 shall apply to a rights issue falling under 2.1.2A.1.) (Provided further that) information in terms of clauses 6.8.2.2, 6.8.2.3, sub-clauses (a), (b), (c), (d) and (e) of clause 6.8.3.2, clauses 6.8.4.12, 6.9.2.1, 6.9.2.2, 6.9.2.3, 6.9.2.4, 6.9.4 6.9.6 ,6.10.3, 6.12.16, 6.12.17, 6.12.18, 6.12.20 and 6.12.21 may not be disclosed in the letter of offer, if the following conditions are fulfilled: (a) The issuer company has been filing periodic statements in regard to financial results and shareholding pattern with the Designated Stock Exchange and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange/ on a common e- filing platform. (b) The issuer company has in place an investor grievance handling mechanism which includes meeting of Shareholders / Investors Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances. (c) The Lead Merchant Banker has certified compliance of (a) and (b) above. Provided further that where the issuer company is complying with the 221(second) proviso, it shall (a) furnish to the Board the following undertaking along with the draft letter of offer, which shall also be incorporated in the letter of offer: We confirm that other than the disclosures made in the instant letter of offer, nothing material has changed in respect of disclosures made by us at the time of our previous issue made on . . make a copy of the offer document of the immediately preceding public or rights issue, available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection. Explanation: For the purpose of rights issue (a) wherever the word RoC appears, the same shall be deemed to refer to Designated Stock Exchange. (b) wherever the word prospectus appears, the same shall be deemed to refer to letter of offer .) 6.40 Cover Pages 6.40.1 The front and back cover pages of the letter of offer shall comply with the requirements specified under 221(clause 6.4 of Section I) of this Chapter. 6.41 General information 6.41.1 Name and address of registered office of the company. 6.41.2 Issue listed at: [Name (s) of the Stock Exchanges] 6.41.3 Opening, closing dates of the issue. 6.41.4 Name and address of Lead Merchant Bankers. 6.41.5 Name and address of Trustees under Debenture Trust Deeds (in case of debenture/ issue). 6.41.6 Rating for the Debenture/ Preference Shares, if any, obtained from any Credit Rating Agency. 6.41.7 Provisions of sub-section (1) of Section 68A of the Companies Act, 1956 relating to punishment for fictitious applications. 6.41.8 Declaration about the issue of allotment letters/refunds within a period of 221(15 days) and interest in case of delay in refund at the prescribed rate under Section 73(2)/ (2A). 6.41.9 Declaration by the Board of Directors stating that all moneys received out of issue of shares or debentures through an offer document shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) of section 73; 6.41.10 Minimum Subscription Clause: The minimum subscription clause shall be incorporated as under: 6.41.10.1 For Non-underwritten Rights Issue i. If the Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within 221(fifteen days) from the date of closure of the issue. ii. If there is delay in the refund of subscription by more than 8 days after the company becomes liable to pay the subscription amount (i.e. 221(fifteen days) after closure of the issue), the company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956. 6.41.10.2 For Underwritten Rights Issue i. If the Company does not receive minimum subscription of 90% of the issue including devolvement of underwriters, the entire subscription shall be refunded to the applicants within 221(fifteen days) from the date of closure of the issue. ii. If there is delay in the refund of subscription by more than 8 days after the company becomes liable to pay the subscription amount (i.e., fifteen days after closure of the issue), the company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956. 6.42 Capital structure of the company a. Issued, subscribed and paid-up capital b. Size of present issue c. Paid up capital: i. after the present issue. ii. after the conversion of debentures (if applicable) d. i. Details of promoters holding (pre-issue and post issue) and the lock-in. ii. Pre and Post Issue shareholding pattern. iii. Promoters intention to subscribe to their entire rights entitlement. 6.43 Terms of the present issue 6.43.1 Authority for the issue, terms of payments and procedure and time schedule for allotment and issue of certificates. 6.43.2 How to apply - availability of forms, letter of offer and mode of payment. 6.43.3 Special tax benefits to company and shareholders under the Income tax Act, if any. 6.44 Particulars of the issue 6.44.1 Object of the issue. 6.44.2 Project Cost. 6.44.3 Means of financing (including contribution of promoters). 6.45 Company, management and project 6.45.1 History, main objects and present business of the company. 6.45.2 Background of promoters, Managing Director/ Whole time Director and names of nominees of institutions, if any, on the Board of Directors including key management personnel. 6.45.3 Location of the Project. 6.45.4 Plant and Machinery, technology, process etc. 6.45.5 Collaboration, performance guarantee if any, or assistance in marketing by the collaborators. 6.45.6 Infrastructure facilities for raw materials and utilities like water, electricity, etc. 6.45.7 Schedule of implementation of the project and progress made so far, giving details of land acquisition, execution of civil works, installation of plant and machinery, trial production, date of commercial production, if any. 6.45.8 The products: i. Nature of product(s)- consumer/ industrial and end users. ii. Existing, licensed and installed capacity of the product, demand of the product - existing, and estimated in the coming years as estimated by a Government authority or by any other reliable institution, giving source of the information. iii. Approach to marketing and proposed marketing set up (in case of company providing services, relevant information in regard to nature/ extent of services etc. to be furnished). 6.45.9 Future prospects - The expected year when the company would be able to earn net profit, declare dividend. 6.45.10 Change, if any, in directors and auditors during the last three years and reasons thereof. 6.46 Financial performance of the company for the last five years: (Figures to be taken from the audited annual accounts in tabular form) 6.46.1 Balance Sheet Data: Equity Capital, Reserves (State Revaluation Reserve, the year of revaluation and its monetary effect on assets) and borrowings. 6.46.2 Profit and Loss data: Sales, Gross profit, Net profit, Dividend paid if any. 6.46.3 Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company. 6.46.4 Stock market quotation of shares/ debentures of the company, if any, (high/ low price in each of the last three years and monthly high /low price during the last six months) 6.46.5 Details of any pending litigations, defaults against the company, these group companies and the business relationship of these companies with the issuing company. 6.46.6 Promise versus performance for the earlier Public/ Rights issues of the Company, or group companies. 6.46.7 Financial performance of the subsidiary company/ group company. 6.46.8 The accounting ratios as mentioned in clause 6.8.4.11. Provided that, the lead merchant banker shall not proceed with the issue in case the accounting ratios mentioned above, do not justify the issue price. 6.47 Risk Factors and Management perception of risk factors. 6.48 The information for the period between the last date of the balance sheet and profit and loss account sent to the shareholders and up to the end of the last but one month preceding the date of the letter of offer shall be furnished. 6.48.1 Working results of the company under following heads: (a) (i) Sales/ turnover (ii) Other income (b) Estimated gross profit/ loss (excluding depreciation and taxes) (c) (i) Provision for depreciation (ii) Provision for taxes (d) Estimated net profit/ loss 6.48.2 Material changes and commitments, if any, affecting financial position of the company. 6.48.3 Week-end prices for the last four weeks; current market price; and highest and lowest prices of equity shares during the period with the relative dates. 6.49 Following particulars in regard to the listed companies under the same management within the meaning of section 370(1B) which made any capital issue in the last three years. a. Name of the company. b. Year of issue. c. Type of issue (rights) d. Amount of issue. e. Date of closure of issue. f. Date of despatch of share/ debenture certificate completed. g. Date of completion of the project, where object of the issue was financing of a project. h. Rate of Dividend paid. 6.50 Management discussion and analysis of the financial conditions and results of the operations as reflected in the financial statement. 6.50.1 Any material development after the date of the latest balance sheet and its impact on performance and prospects of the company. 6.51 Outstanding litigation 6.52 Expert opinion obtained if any. 6.53 Statutory and other information 6.53.1 Option to Subscribe (a) The details of option to subscribed for securities to be dealt in a depository. (b) The lead merchant banker shall incorporate a statement in the offer document and in the application form to the effect that the investor shall have an option either to receive the security certificates or to hold the securities in dematerialised form with a depository. 6.53.2 Material contracts and time and place of inspection. 6.54 Undertaking by Directors No statement made in this Form shall contravene any of the provisions of the Companies Act, 1956 and the rules made thereunder. All the legal requirements connected with the said issue as also the guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with. Signature of Directors Place: Date: 55 Substituted vide circular No. SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 for the following:- SECTION IV - CONTENTS OF THE ABRIDGED LETTER OF OFFER 6.55 The abridged letter of offer shall contain disclosures as specified in Section II of this Chapter. Provided that where the conditions laid down in 1st proviso to clause 6.39 are satisfied, clauses 6.18.2, 6.19.3, 6.21, 6.22, 6.30 and 6.31 specified under Section II of this Chapter shall not apply to the abridged letter of offer. 6.56 The order in which items shall appear in the abridged letter of offer shall correspond, wherever applicable, to the order in which items appear in the letter of offer. 6.57 The abridged letter of offer shall also include the following disclosures: (a) Provisions pertaining to applications referred to in clause 5.11; (b) Rights entitlement ratio; (c) Fractional entitlements; (d) Renunciation; (e) Application for Additional equity shares; (f) Intention of promoters to subscribe to their rights entitlement; (g) Statement that a copy of the offer document of the immediately preceding public or rights issue is made available to the public as specified under clause 5.6.2(ii) and also as a document for public inspection.