SCHEDULE - 20 - CLARIFICATORY EXAMPLES - SEBI (Disclosure and Investor Protection Guidelines) 2000

SCHEDULE XX [ 1 (Clause 11.3.5 (vii))] CLARIFICATORY EXAMPLES i. In case of an issuer making an initial public offer: Suppose the post issue capital is 100 crores. As per the extant guidelines the promoters contribution shall not be less than 20% of the post issue capital subject to the condition that at least 25% of the post issue capital shall be offered to the public. In case, the promoters bring in only the minimum specified contribution, then 20 crores shall be allocated to the promoters. In such a scenario, Book Building facility may be for 80 crores, which is the issue size offered to the public through the prospectus. Allocation in such a scenario shall be as follows; Allocation for individual investors applying for upto 10 tradeable lots through the syndicate members shall be atleast 15% of the post-issue capital (Rs. 100 crores) i.e., atleast 15 crores. Allocation to Institutional investors as well as other investors applying through the syndicate members shall be 65 crores (Rs. 80 crores - 15 crores). Allocation to individual investors applying not through the syndicate members but during the time when the issue is open would be 10% of the issue size offered to the public through the prospectus (Rs. 80 crores) i.e., 8 crores. Due to allocation to individual investors applying not through the syndicate members the post issue capital would increase to 108 crores and therefore the promoters need to bring in extra capital of 2.4 crores to ensure that their post issue holding (Rs.20 crores + 2.4 crores = 22.4 crores) does not fall below the minimum specified percentage (20% of 110.4 crores i.e. 108 crores + 2.4 crores). Allocation to individual investors would therefore total at least 23 crores (Rs.15 crores + 8 crores). Similarly, the computation can be worked out for varying levels of promoters contribution. The point that needs to be understood is that in case of a company going in for an initial public offer and availing the facility of Book Building, the allocation to individual investors applying through the syndicate members shall be with reference to the post issue capital, while the allocation to individual investors applying not through the syndicate members shall be with reference to the issue size offered to the public through the prospectus. ii. The allocation process shall be as follows for a listed company: Suppose a listed company with a capital of 50 crores makes a further issue of capital to the public of 50 crores. As per the guidelines, the promoters have to participate to the extent of 20% of the proposed issue or ensure that his post-issue holding does not fall below 20% of the expanded capital. In case the promoters participate to the extent of 20% of the proposed issue, then the promoters contribution shall be 10 crores. The amount available for Book Building, in such a case, shall be 40 crores, which is the issue size offered to the public through the prospectus. Allocation for individual investors applying for upto 10 tradeable lots through the syndicate members shall be atleast 15% of the proposed issue size(Rs. 50 crores) i.e. atleast 7.5 crores. Allocation to Institutional investors as well as other investors applying through the syndicate members shall be 32.5 crores (Rs. 40 crores - 7.5 crores). 2 (Deleted). Allocation to individual investors applying not through the syndicate members but during the time when the issue is open would be 10% of the issue size offered to the public through the prospectus (Rs. 40 crores) i.e., 4 crores. Due to allocation to individual investors applying not through the syndicate members the capital issued through the present issue would increase to 54 crores and therefore the promoters need to bring in extra capital of 1.2 crores to ensure that their post issue holding (Rs.10 crores + 1.2 crores = 11.2 crores) does not fall below the minimum specified percentage (20% of 55.2 crores i.e., 54 crores + 1.2 crores). Allocation to individual investors would therefore total at least 11.5 crores (Rs. 7.5 crores + 4 crores). In case of a listed company going in for a further issue of capital and availing the facility of Book Building, the allocation to individual investors applying through the syndicate members shall be with reference to the proposed issue, while the allocation to individual investors applying not through the syndicate members shall be with reference to the issue size offered to the public through the prospectus. iii. The allocation process shall be as follows for an unlisted company going in for an offer for sale: Suppose an unlisted company with a capital of 100 crores makes an offer for sale. As per the guidelines, the promoters shall ensure that their shareholding after disinvestment shall not be less than 20% of the total issued capital of the company subject to the condition that at least 25% of the total issued capital of the company shall be offered to the public. In case the promoters shareholding after disinvestment remains at 20% of the total issued capital, then the promoters contribution shall be 20 crores. The amount available for Book Building, in such a case, shall be 80 crores, which is the issue size offered to the public through the prospectus. Allocation for individual investors applying for upto 10 marketable lots through the syndicate members shall be atleast 15% of the post issue capital(Rs. 100 crores) i.e. atleast 15 crores. Allocation to individual investors applying not through the syndicate members but during the time when the issue is open would be 10% of the issue size offered to the public through the prospectus (Rs. 80 crores) i.e. 8 crores. Allocation to Institutional investors as well as other investors applying through the syndicate members shall be 57 crores (Rs. 80 crores - 15 crores - 8 crores). 3 (Deleted). Allocation to individual investors would therefore total at least 23 crores (Rs. 8 crores + 15 crores). In case of an unlisted company going in for an offer for sale and availing the facility of Book Building, the allocations to the individual investors applying through the syndicate members shall be with reference to the post-issue capital, while the allocations to the individual investors not applying through the syndicate members shall be with reference to the issue size offered to the public through the prospectus. *********** 1 Inserted reference clause to the schedule, vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. 2 Omitted the following words, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005: Allocation would be determined by the Book Runner(s) in consultation with the Issuer as well as the syndicate members on the basis of prior commitment, quality of investor, earliness of bid, price aggression etc. 3 Omitted the following words, vide SEBI Circular No. SEBI/CFD/DIL/DIP/16/2005/19/9 dated September 19, 2005: Allocation would be determined by the Book Runner(s) in consultation with the Issuer as well as the syndicate members on the basis of quality of investor, earliness of bid, price aggression etc.