DRAFT RED HERRING PROSPECTUS Dated July 12, 2010 Please read section 60B of the Companies Act, 1956 (The Draft Red Herring Prospectus will be updated upon filing with the RoC) 100% Book Building Issue ENTERTAINMENT WORLD DEVELOPERS LIMITED The Company was incorporated on July 22, 1999 as ‘R.M.M. Construction Private Limited’ as a private limited company under the Companies Act, 1956, as amended (the “Companies Act”). The name of the Company was changed to ‘Entertainment World Developers Private Limited’ on February 28, 2003. The name of the Company was further changed to Entertainment World Developers Limited on conversion into a public limited company on February 5, 2010. For further details of changes in the name and registered office of the Company, see “History and Certain Corporate Matters” on page 106 of this Draft Red Herring Prospectus. Registered Office: G-16, R. R. Hosiery Building, Shree Laxmi Woolen Mills, Opp. Shakti Mills Compound, Off. Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011 Corporate Office: 6 th Floor, Treasure Island, 11, M.G. Road, Tukoganj, Indore 452 001 Contact Person: Bimal K. Nanda, Company Secretary and Compliance Officer Tel: (91 22) 4045 0555; Fax: (91 22) 4045 0512; Email: [email protected]; Website: www.ewdpl.com Promoters of the Company: Manish Kalani, Kalani Brothers (Indore) Private Limited and Padma Homes Private Limited PUBLIC ISSUE OF 38,928,943 EQUITY SHARES OF Rs. 10 EACH (“EQUITY SHARES”) OF ENTERTAINMENT WORLD DEVELOPERS LIMITED (THE “COMPANY” OR THE “ISSUER” OR “EWDL”) FOR CASH AT A PRICE OF Rs. [l] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs. [l] PER EQUITY SHARE) AGGREGATING TO Rs. [l] MILLION (THE “ISSUE”). THE ISSUE WILL CONSTITUTE 30% OF THE POST-ISSUE PAID-UP CAPITAL OF THE COMPANY. THE FACE VALUE OF EQUITY SHARES IS Rs. 10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS (“BRLMs”) AND WILL BE ADVERTISED AT LEAST TWO WORKING DAYS PRIOR TO THE BID/ISSUE OPENING DATE. In case of any revision to the Price Band, the Bid/Issue Period will be extended by three additional working days after such revision of the Price Band, subject to the Bid/ Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release, and also by indicating the change on the website of the BRLMs and at the terminals of the other members of the Syndicate. In terms of Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957 (“SCRR”), this is an issue for more than 25% of the post-Issue capital. The Issue is being made through the 100% Book Building Process wherein at least 50% of the Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIB”) Bidders. 5% of the QIB Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. If at least 50% of the Issue cannot be Allotted to QIBs, then the entire application money shall be refunded forthwith. Potential investors other than Anchor Investors may participate in this Issue through an Application Supported by Blocked Amount (“ASBA”) process providing details about the bank account which will be blocked by the Self Certified Syndicate Banks (“SCSBs”) for the same. For details, see “Issue Procedure” on page 332 of this Draft Red Herring Prospectus. RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs.10 and the Issue Price is [l] times of the face value. The Issue Price (has been determined and justified by the Company, and the BRLMs as stated under the section on “Basis for Issue Price” on page 45 of this Draft Red Herring Prospectus) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing. IPO GRADING This Issue has been graded by [l] as [l], indicating [l]. For details, see “General Information” on page 18 of this Draft Red Herring Prospectus. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. In taking an investment decision, investors must rely on their own examination of the Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the contents. Specific attention of the investors is invited to “Risk Factors” on page xi of this Draft Red Herring Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received an ‘in-principle’ approval from each of the BSE and the NSE for the listing of the Equity Shares pursuant to the letters dated [l] and [l], respectively. For the purposes of the Issue, the Designated Stock Exchange shall be [l]. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE ICICI Securities Limited* ICICI Centre, H. T. Parekh Marg Churchgate, Mumbai 400 020 Tel: (91 22) 2288 2460 Fax: (91 22) 2282 6580 E-mail: [email protected]Investor Grievance Email: [email protected]Website: www.icicisecurities.com Contact Person: Mangesh Ghogle / Vishal Kanjani SEBI Registration No.: INM000011179 * ICICI Securities Limited has made an application on April 7, 2010 with SEBI for renewal of its certificate of registration Kotak Mahindra Capital Company Limited 1st Floor, Bakhtawar 229 Nariman Point, Mumbai 400 021 Tel: (91 22) 6634 1100 Fax: (91 22) 2283 7517 Email: [email protected]Investor Grievance Email: [email protected]Website: www.kotak.com Contact Person: Chandrakant Bhole SEBI Registration No.: INM000008704 Edelweiss Capital Limited 14th floor, Express Towers Nariman Point, Mumbai 400 021 Tel: (91 22) 4086 3535 Fax: (91 22) 4086 3610 Email: [email protected]Investor Grievance Email: [email protected]Website: www.edelcap.com Contact Person: Neetu Ranka SEBI Registration No.: INM0000010650 Link Intime India Private Limited C-13, Pannalal Silk Mills Compound L.B.S Marg, Bhandup (West) Mumbai 400 078 Tel: (91 22) 2596 0320 Fax: (91 22) 2596 0329 Email: [email protected]Website: www.linkintime.co.in Contact Person: Chetan Shinde SEBI Registration No.: INR000004058 BID/ ISSUE PROGRAMME * BID/ISSUE OPENS ON: [l] * BID/ISSUE CLOSES ON: [l] ** * The Company may consider participation by Anchor Investors. The Anchor Investor Bid/ Issue Period shall be one working day prior to the Bid/ Issue Opening Date. ** The Company may consider closing the Bid/Issue Period for QIBs one day prior to the Bid/Issue Closing Date.
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DRAFT RED HERRING PROSPECTUSDated July 12, 2010
Please read section 60B of the Companies Act, 1956(The Draft Red Herring Prospectus will be updated upon filing with the RoC)
100% Book Building Issue
ENTERTAINMENT WORLD DEVELOPERS LIMITEDThe Company was incorporated on July 22, 1999 as ‘R.M.M. Construction Private Limited’ as a private limited company under the Companies Act, 1956, as amended (the “Companies Act”). The name of the Company was changed to ‘Entertainment World Developers Private Limited’ on February 28, 2003. The name of the Company was further changed to Entertainment World Developers Limited on conversion into a public limited company on February 5, 2010. For further details of changes in the
name and registered office of the Company, see “History and Certain Corporate Matters” on page 106 of this Draft Red Herring Prospectus. Registered Office: G-16, R. R. Hosiery Building, Shree Laxmi Woolen Mills, Opp. Shakti Mills Compound, Off. Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011
Corporate Office: 6th Floor, Treasure Island, 11, M.G. Road, Tukoganj, Indore 452 001Contact Person: Bimal K. Nanda, Company Secretary and Compliance Officer
Promoters of the Company: Manish Kalani, Kalani Brothers (Indore) Private Limited and Padma Homes Private Limited
PUBLIC ISSUE OF 38,928,943 EQUITY SHARES OF Rs. 10 EACH (“EQUITY SHARES”) OF ENTERTAINMENT WORLD DEVELOPERS LIMITED (THE “COMPANY” OR THE “ISSUER” OR “EWDL”) FOR CASH AT A PRICE OF Rs. [l] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs. [l] PER EQUITY SHARE) AGGREGATING TO Rs. [l] MILLION (THE “ISSUE”). THE ISSUE WILL CONSTITUTE 30% OF THE POST-ISSUE PAID-UP CAPITAL OF THE COMPANY.
THE FACE VALUE OF EQUITY SHARES IS Rs. 10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS (“BRLMs”) AND WILL BE ADVERTISED AT LEAST TWO WORKING DAYS
PRIOR TO THE BID/ISSUE OPENING DATE.
In case of any revision to the Price Band, the Bid/Issue Period will be extended by three additional working days after such revision of the Price Band, subject to the Bid/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release, and also by indicating the change on the website of the BRLMs and at the terminals of the other members of the Syndicate.
In terms of Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957 (“SCRR”), this is an issue for more than 25% of the post-Issue capital. The Issue is being made through the 100% Book Building Process wherein at least 50% of the Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIB”) Bidders. 5% of the QIB Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. If at least 50% of the Issue cannot be Allotted to QIBs, then the entire application money shall be refunded forthwith. Potential investors other than Anchor Investors may participate in this Issue through an Application Supported by Blocked Amount (“ASBA”) process providing details about the bank account which will be blocked by the Self Certified Syndicate Banks (“SCSBs”) for the same. For details, see “Issue Procedure” on page 332 of this Draft Red Herring Prospectus.
RISK IN RELATION TO THE FIRST ISSUEThis being the first public issue of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs.10 and the Issue Price is [l] times of the face value. The Issue Price (has been determined and justified by the Company, and the BRLMs as stated under the section on “Basis for Issue Price” on page 45 of this Draft Red Herring Prospectus) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
IPO GRADINGThis Issue has been graded by [l] as [l], indicating [l]. For details, see “General Information” on page 18 of this Draft Red Herring Prospectus.
GENERAL RISKSInvestments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. In taking an investment decision, investors must rely on their own examination of the Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the contents. Specific attention of the investors is invited to “Risk Factors” on page xi of this Draft Red Herring Prospectus.
ISSUER’S ABSOLUTE RESPONSIBILITYThe Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTINGThe Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received an ‘in-principle’ approval from each of the BSE and the NSE for the listing of the Equity Shares pursuant to the letters dated [l] and [l], respectively. For the purposes of the Issue, the Designated Stock Exchange shall be [l].
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
ICICI Securities Limited* ICICI Centre, H. T. Parekh Marg Churchgate, Mumbai 400 020Tel: (91 22) 2288 2460 Fax: (91 22) 2282 6580E-mail: [email protected] Grievance Email: [email protected]: www.icicisecurities.comContact Person: Mangesh Ghogle / Vishal KanjaniSEBI Registration No.: INM000011179* ICICI Securities Limited has made an application on April 7, 2010 with SEBI for renewal of its certificate of registration
BID/ISSUE OPENS ON: [l] * BID/ISSUE CLOSES ON: [l] *** The Company may consider participation by Anchor Investors. The Anchor Investor Bid/ Issue Period shall be one working day prior to the Bid/ Issue Opening Date.** The Company may consider closing the Bid/Issue Period for QIBs one day prior to the Bid/Issue Closing Date.
TABLE OF CONTENTS
SECTION I: GENERAL ........................................................................................................................................... I DEFINITIONS AND ABBREVIATIONS .................................................................................................................... I PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA .................................................................... IX FORWARD-LOOKING STATEMENTS .................................................................................................................... X SECTION II: RISK FACTORS ................................................................................................................................. XI SECTION III: INTRODUCTION ............................................................................................................................... 1 SUMMARY OF INDUSTRY ..................................................................................................................................... 1 SUMMARY OF BUSINESS ..................................................................................................................................... 4 SUMMARY FINANCIAL INFORMATION ......................................................................................................... ....... 10 THE ISSUE .............................................................................................................................................................. 17 GENERAL INFORMATION ...................................................................................................................................... 18 CAPITAL STRUCTURE ........................................................................................................................................... 26 OBJECTS OF THE ISSUE ....................................................................................................................................... 38 BASIS FOR ISSUE PRICE ...................................................................................................................................... 45 STATEMENT OF TAX BENEFITS ........................................................................................................................... 48 SECTION IV: ABOUT THE COMPANY .................................................................................................................. 58 INDUSTRY OVERVIEW ........................................................................................................................................... 58 BUSINESS ............................................................................................................................................................... 76 REGULATIONS AND POLICIES ............................................................................................................................. 100 HISTORY AND CERTAIN CORPORATE MATTERS .............................................................................................. 106 MANAGEMENT........................................................................................................................................................ 113 SUBSIDIARIES AND JOINT VENTURE .................................................................................................................. 129 PROMOTERS AND PROMOTER GROUP ............................................................................................................. 149 GROUP COMPANIES .............................................................................................................................................. 155 RELATED PARTY TRANSACTIONS ...................................................................................................................... 160 DIVIDEND POLICY .................................................................................................................................................. 161 SECTION V: FINANCIAL INFORMATION .............................................................................................................. 162 FINANCIAL STATEMENTS ..................................................................................................................................... 162 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION ............... 266 FINANCIAL INDEBTEDNESS ................................................................................................................................. 286 SECTION VI: LEGAL AND OTHER INFORMATION ............................................................................................. 288 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ........................................................................ 288 GOVERNMENT APPROVALS ................................................................................................................................. 295 OTHER REGULATORY AND STATUTORY DISCLOSURES ................................................................................ 314 SECTION VII: ISSUE INFORMATION .................................................................................................................... 325 TERMS OF THE ISSUE .......................................................................................................................................... 325 ISSUE STRUCTURE ............................................................................................................................................... 328 ISSUE PROCEDURE .............................................................................................................................................. 332 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ............................................................. 361 SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION................................................................ 365 SECTION IX: OTHER INFORMATION ................................................................................................................... 380 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ....................................................................... 380 DECLARATION ....................................................................................................................................................... 382
i
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
General Terms
Term Description
“EWDL”, “the Company” or the
“Issuer”
Unless the context otherwise indicates or implies, refers to Entertainment World
Developers Limited, a company incorporated under the Companies Act and
having its registered office at G-16, R. R. Hosiery Building, Shree Laxmi
Woolen Mills, Opp. Shakti Mills Compound, Off. Dr. E. Moses Road,
Mahalaxmi, Mumbai 400 011
“We”, “us” or “our” Unless the context otherwise requires, means the Company, its Subsidiaries and
joint venture
Joint Venture The joint venture of the Company as disclosed in “Subsidiaries and Joint
Venture” on page 129 of this Draft Red Herring Prospectus
Subsidiaries The subsidiaries of the Company as disclosed in “Subsidiaries and Joint
Venture” on page 129 of this Draft Red Herring Prospectus
Company Related Terms
Term Description
AEWDPL Annapoorna Entertainment World Developers Private Limited
Articles/Articles of Association Articles of Association of the Company
ATBPL Amaravati Treasure Bazaar Private Limited
Auditor The statutory auditor of the Company, Deloitte Haskins & Sells, Chartered
Accountants
BCCL The Baroda Commercial Corporation Limited
Board/Board of Directors The board of directors of the Company or a duly constituted committee thereof
CEO Chief Executive Officer
CEWPL Chandigarh Entertainment World Private Limited
Completed Projects Projects where construction has been completed and where the revenues of the
project have started
Corporate Office 6th
Floor, Treasure Island, 11, M. G. Road, Tukoganj, Indore 452 001
CRPL Cassandra Realty Private Limited
CTIPL Chandigarh Treasure Island Private Limited
Directors The director(s) of the Company, unless otherwise specified
DPPL Dazzling Properties Private Limited
EFSHPL EWDPL Five Star Hospitality Private Limited
ERHPL EWDPL Residential Holdings Private Limited
EWDAPL Entertainment World Developers Amritsar Private Limited
EWDBPL Entertainment World Developers Bijalpur Private Limited
Forthcoming Projects Projects in which the necessary legal documents relating to acquisition of land or
development rights have been executed, key land related approvals are being
obtained and management has prepared an initial design plan of the project or an
architect has been appointed and a detailed architect plan is in the process of
being prepared
Group Companies Companies, firms and ventures promoted by the Promoters, irrespective of
whether such entities are covered under section 370(1)(B) of the Companies Act
or not and disclosed in “Group Companies” on page 155 of this Draft Red
Herring Prospectus
IAF - III IDBI Trusteeship Services Limited (the merged entity after its merger with the
Western India Trustee and Executor Company Limited) in its capacity as trustee
of India Advantage Fund - III represented by its investment manager ICICI
Venture Funds Management Company Limited
ii
Term Description
IAF - IV IDBI Trusteeship Services Limited (the merged entity after its merger with the
Western India Trustee and Executor Company Limited) in its capacity as trustee
of India Advantage Fund - IV represented by its investment manager ICICI
Venture Funds Management Company Limited
ITMCPL Indore Treasure Market City Private Limited
ITPL Intesys Technologies Private Limited
ITTPL Indore Treasure Town Private Limited
JEWDPL Jodhpur Entertainment World Developers Private Limited
JTIPL Jabalpur Treasure Island Private Limited
KBIPL Kalani Brothers (Indore) Private Limited
Memorandum/ Memorandum of
Association
Memorandum of Association of the Company, unless the context otherwise
specifies
MMDCPL Marvell Mall Development Company Private Limited
NMMCPL Naman Mall Management Company Private Limited
NTBPL Nanded Treasure Bazaar Private Limited
Ongoing Projects Projects in respect of which the necessary legal documents relating to the
acquisition of land or development rights have been executed by us and/ or key
land related approvals have been obtained and any one of the following activities
are being undertaken (not necessarily in the sequence set out herein): (a) on-site
construction of the project has commenced; (b) initial detailed design for civil
and landscaping is being undertaken and work has commenced on detailed
design; (c) project launch activity which includes the construction of a show
residence, sales office and other supporting infrastructure at the project site has
commenced; or (d) an architect has been appointed and a detailed concept design
has being prepared
PEWDPL Pune Entertainment World Developers Private Limited
PHPL Padma Homes Private Limited
PML The Phoenix Mills Limited
Promoters Manish Kalani, Kalani Brothers (Indore) Private Limited and Padma Homes
Private Limited
Promoter Group Unless the context otherwise requires, refers to such persons and entities
constituting the promoter group of the Company in terms of Regulation 2(zb) of
the SEBI Regulations and disclosed in “Promoters and Promoter Group” on page
149 of this Draft Red Herring Prospectus
Registered Office G-16, R. R. Hosiery Building, Shree Laxmi Woolen Mills, Opp. Shakti Mills
Compound, Off. Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011
RTIPL Raipur Treasure Island Private Limited
TFBPL Treasure Food & Beverages Private Limited
THPL Treasure Hospitality Private Limited
TMEP Treasure MEP Services Private Limited
TSPL Treasure Showcase Private Limited
TWCPL Treasure World Constructions Private Limited
TWDPL Treasure World Developers Private Limited
UTBPL Ujjain Treasure Bazaar Private Limited
UTMCPL Udaipur Treasure Market City Private Limited
WREPL Wanderland Real Estates Private Limited
Issue Related Terms
Term Description
Allotment/Allot/Allotted Unless the context otherwise requires, means the allotment of Equity Shares
pursuant to the Issue to the successful Bidders
Allottee A successful Bidder to whom the Equity Shares are Allotted
iii
Term Description
Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion with
a minimum Bid of Rs. 100 million
Anchor Investor Allocation
Notice
Notice or intimation of allocation of Equity Shares sent to Anchor Investors who
have been allocated Equity Shares after discovery of the Issue Price if the Issue
Price is higher than the Anchor Investor Issue Price
Anchor Investor Bid/Issue
Period
The day, one working day prior to the Bid/Issue Opening Date, on which Bids by
Anchor Investors shall be submitted and allocation to Anchor Investors shall be
completed
Anchor Investor Issue Price The final price at which Equity Shares will be issued and Allotted to Anchor
Investors in terms of the Red Herring Prospectus and the Prospectus, which price
will be equal to or higher than the Issue Price but not higher than the Cap Price.
The Anchor Investor Issue Price will be decided by the Company in consultation
with the BRLMs
Anchor Investor Portion Up to 30% of the QIB Portion which may be allocated by the Company to
Anchor Investors on a discretionary basis. One-third of the Anchor Investor
Portion shall be reserved for domestic mutual funds, subject to valid Bids being
received from domestic mutual funds at or above the price at which allocation is
being done to Anchor Investors
Application Supported by
Blocked Amount/ ASBA
An application, whether physical or electronic, used by all Bidders other than
Anchor Investors to make a Bid authorising an SCSB to block the Bid Amount in
their ASBA Account maintained with the SCSB
ASBA Account An account maintained by the ASBA Bidders with the SCSB and specified in the
ASBA Bid cum Application Form for blocking an amount mentioned in the
ASBA Bid cum Application Form
ASBA Bid cum Application
Form
The form, whether physical or electronic, used by a Bidder (other than Anchor
Investor) to make a Bid through ASBA process, which contains an authorisation
to block the Bid Amount in an ASBA Account and will be considered as the
application for Allotment for the purposes of the Red Herring Prospectus and the
Prospectus
ASBA Bidder Prospective investors other than Anchor Investors in this Issue who intend to
Bid/apply through ASBA
ASBA Revision Form The form used by the ASBA Bidders to modify the quantity of Equity Shares or
the Bid Amount in any of their ASBA Bid cum Application Form or any
previous ASBA revision form(s)
Banker(s) to the Issue/Escrow
Collection Bank(s)
The banks which are clearing members and registered with SEBI as Bankers to
the Issue and with whom the Escrow Account will be opened, in this case being
[●]
Basis of Allotment The basis on which Equity Shares will be Allotted to successful Bidders under
the Issue and which is described under “Issue Procedure – Basis of Allotment” on
page 354 of this Draft Red Herring Prospectus
Bid An indication to make an offer during the Bid/Issue Period by a Bidder pursuant
to submission of the Bid cum Application Form, or during the Anchor Investor
Bid/ Issue Period by the Anchor Investors, to subscribe to the Equity Shares of
the Company at a price within the Price Band, including all revisions and
modifications thereto
Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form
Bid cum Application Form The form used by a Bidder (which, unless expressly provided, includes the
ASBA Bid cum Application Form by an ASBA Bidder, as applicable) to make a
Bid and which will be considered as the application for Allotment for the
purposes of the Red Herring Prospectus and the Prospectus
Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red
Herring Prospectus and the Bid cum Application Form
Bid/Issue Closing Date Except in relation to any Bids received from Anchor Investors, the date after
which the Syndicate and the Designated Branches of the SCSBs will not accept
iv
Term Description
any Bids for the Issue, which shall be notified in [●] edition of English national
daily newspaper, [●] edition of Hindi national daily newspaper and [●] edition of
regional language newspaper, each with wide circulation
Bid/Issue Opening Date Except in relation to any Bids received from Anchor Investors, the date on which
the Syndicate and the Designated Branches of the SCSBs shall start accepting
Bids for the Issue, which shall be notified in [●] edition of English national daily
newspaper, [●] edition of Hindi national daily newspaper and [●] edition of
regional language newspaper, each with wide circulation
Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date,
inclusive of both days, during which prospective Bidders can submit their Bids,
including any revisions thereof
Book Building Process Book building process, as provided in Schedule XI of the SEBI Regulations, in
terms of which this Issue is being made
BRLMs Book Running Lead Managers to the Issue, in this case being ICICI Securities
Limited, Kotak Mahindra Capital Company Limited and Edelweiss Capital
Limited
CAN/Confirmation of
Allotment Note
Note or advice or intimation of Allotment sent to the Bidders who have been
Allotted Equity Shares after Basis of Allotment has been approved by the
Designated Stock Exchange
Cap Price The higher end of the Price Band, above which the Issue Price will not be
finalised and above which no Bids will be accepted
Cut-off Price Issue Price, finalised by the Company in consultation with the BRLMs. Only
Retail Individual Bidders are entitled to Bid at the Cut-off Price, for a Bid
Amount not exceeding Rs. 100,000. QIBs and Non-Institutional Bidders are not
entitled to Bid at the Cut-off Price
Designated Branches Such branches of the SCSBs which shall collect the ASBA Bid cum Application
Forms used by the ASBA Bidders and a list of which is available on
http://www.sebi.gov.in
Designated Date The date on which funds are transferred from the Escrow Account or the amount
blocked by the SCSB is transferred from the ASBA Account, as the case may be,
to the Public Issue Account or the Refund Account, as appropriate, after the
Prospectus is filed with the RoC, following which the Board of Directors shall
Allot Equity Shares to successful Bidders
Designated Stock Exchange [●]
Draft Red Herring Prospectus
or DRHP
This Draft Red Herring Prospectus issued in accordance with Section 60B of the
Companies Act and the SEBI Regulations, which does not contain complete
particulars of the price at which the Equity Shares will be issued and the size (in
terms of value) of the Issue
Edelweiss Edelweiss Capital Limited
Eligible NRI(s) NRI(s) from jurisdictions outside India where it is not unlawful to make an issue
or invitation under the Issue and in relation to whom the Red Herring Prospectus
constitutes an invitation to subscribe to the Equity Shares
Engagement Letter Engagement letter dated June 18, 2010 between the Company and the BRLMs
Equity Shares Equity shares of the Company of Rs. 10 each fully paid-up unless otherwise
specified in the context thereof
Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour the
Bidders (excluding the ASBA Bidders) will issue cheques or drafts in respect of
the Bid Amount when submitting a Bid
Escrow Agreement Agreement dated [●] to be entered into by the Company, the Registrar to the
Issue, the BRLMs, the Syndicate Members, the Escrow Collection Bank(s) and
the Refund Bank(s) for collection of the Bid Amounts and where applicable,
refunds of the amounts collected to the Bidders (excluding the ASBA Bidders)
on the terms and conditions thereof
First Bidder The Bidder whose name appears first in the Bid cum Application Form or
v
Term Description
Revision Form or the ASBA Bid cum Application Form or the ASBA Revision
Form
Floor Price The lower end of the Price Band, at or above which the Issue Price will be
finalised and below which no Bids will be accepted
I-Sec ICICI Securities Limited
Issue The public issue of 38,928,943 Equity Shares for cash at a price of Rs. [●] each
aggregating to Rs. [●] million
Issue Agreement The agreement entered into on July 2, 2010 between the Company and the
BRLMs, pursuant to which certain arrangements are agreed to in relation to the
Issue
Issue Price The final price at which Equity Shares will be issued and Allotted in terms of the
Red Herring Prospectus. The Issue Price will be decided by the Company in
consultation with the BRLMs on the Pricing Date
Issue Proceeds The proceeds of the Issue that are available to the Company
Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations,
1996, as amended
Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion), or 681,257
Equity Shares available for allocation to Mutual Funds only
Net Proceeds The Issue Proceeds less the Issue expenses. For further information about use of
the Issue Proceeds and the Issue expenses, see “Objects of the Issue” on page 38
of this Draft Red Herring Prospectus
Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid for
Equity Shares for an amount of more than Rs. 100,000 (but not including NRIs
other than eligible NRIs)
Non-Institutional Portion The portion of the Issue being not less than 5,839,341 Equity Shares available for
allocation to Non-Institutional Bidders
Non-Resident A person resident outside India, as defined under FEMA and includes a Non
Resident Indian
Price Band Price Band of a minimum price of Rs. [●] (Floor Price) and the maximum price
of Rs. [●] (Cap Price) and includes revisions thereof. The Price Band and the
minimum Bid Lot size for the Issue will be decided by the Company in
consultation with the BRLMs and advertised, at least two working days prior to
the Bid/ Issue Opening Date, in [●] edition of English national daily [●], [●]
edition of Hindi national daily [●], and [●] edition of [●] regional language
newspaper.
Pricing Date The date on which the Company in consultation with the BRLMs finalises the
Issue Price
Prospectus The Prospectus to be filed with the RoC in accordance with Section 60 of the
Companies Act, containing, inter alia, the Issue Price that is determined at the
end of the Book Building Process, the size of the Issue and certain other
information
Public Issue Account Account opened with the Bankers to the Issue to receive monies from the Escrow
Account and from the SCSBs on the Designated Date
QIB Portion The portion of the Issue being at least 19,464,472 Equity Shares to be Allotted to
QIBs
Qualified Institutional Buyers
or QIBs Public financial institutions as specified in Section 4A of the Companies Act,
scheduled commercial banks, mutual fund registered with SEBI, FIIs and sub-
account registered with SEBI, other than a sub-account which is a foreign
corporate or foreign individual, venture capital fund registered with SEBI, state
industrial development corporation, insurance company registered with IRDA,
provident fund with minimum corpus of Rs. 25 crores, pension fund with
minimum corpus of Rs. 25 crores, National Investment Fund
Red Herring Prospectus or RHP The Red Herring Prospectus issued in accordance with Section 60B of the
Companies Act, which does not have complete particulars of the price at which
vi
Term Description
the Equity Shares are offered and the size of the Issue. The Red Herring
Prospectus will be filed with the RoC at least three days before the Bid/Issue
Opening Date and will become a Prospectus upon filing with the RoC after the
Pricing Date
Refund Account(s) The account opened with the Escrow Collection Bank(s), from which refunds, if
any, of the whole or part of the Bid Amount (excluding the ASBA Bidder) shall
be made
Refund Bank(s) [●]
Refunds through electronic
transfer of funds
Refunds through ECS, Direct Credit, RTGS or NEFT, as applicable
Registrar to the Issue/ Registrar Registrar to the Issue, in this case being Link Intime India Private Limited
Retail Individual Bidder(s) Individual Bidders who have Bid for Equity Shares for an amount not more than
Rs. 100,000 in any of the bidding options in the Issue (including HUFs applying
through their Karta and eligible NRIs and does not include NRIs other than
Eligible NRIs)
Retail Portion The portion of the Issue being not less than 13,625,130 Equity Shares available
for allocation to Retail Individual Bidder(s)
Revision Form The form used by the Bidders (which, unless expressly provided, includes the
ASBA Revision Form) to modify the quantity of Equity Shares or the Bid
Amount in any of their Bid cum Application Forms or any previous Revision
Form(s)
Self Certified Syndicate
Bank(s) or SCSB(s)
A banker to the Issue registered with SEBI, which offers the facility of ASBA
and a list of which is available on http://www.sebi.gov.in
Syndicate The BRLMs and the Syndicate Members
Syndicate Agreement The agreement dated [●] to be entered into between the Syndicate and the
Company in relation to the collection of Bids in this Issue (excluding Bids from
the Bidders applying through ASBA process)
Syndicate Members [●]
TRS/Transaction Registration
Slip
The slip or document issued by the Syndicate, or the SCSB (only on demand), as
the case may be, to the Bidder as proof of registration of the Bid
Underwriters The BRLMs and the Syndicate Members
Underwriting Agreement The agreement among the Underwriters, the Company to be entered into on or
after the Pricing Date
Working Days All days excluding Sundays and bank holidays in Mumbai
Conventional Terms
Term Description
Companies Act The Companies Act, 1956 and amendments thereto.
AGM Annual General Meeting
AS Accounting Standards issued by the Institute of Chartered Accountants of India
AY Assessment Year
BSE Bombay Stock Exchange Limited
CAGR Compounded Annual Growth Return
CDSL Central Depository Services (India) Limited
CIN Corporate Identity Number
Consolidated FDI Policy Consolidated FDI Policy issued by the Government of India, Ministry of Commerce
and Industry effective from April 1, 2010
Depositories NSDL and CDSL
Depositories Act The Depositories Act, 1996, as amended from time to time
DIN Director Identification Number
DP/ Depository Participant A depository participant as defined under the Depositories Act
DP ID Depository Participant‟s Identification
vii
Term Description
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
ECS Electronic Clearing Service
EGM Extraordinary General Meeting
EPS Earnings Per Share i.e., is calculated by dividing the net profit or loss for the period
attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period.
FCNR Foreign Currency Non-Resident
FDI Foreign Direct Investment
FEMA
Foreign Exchange Management Act, 1999 read with rules and regulations thereunder
and amendments thereto
FEMA Regulations FEMA (Transfer or Issue of Security by a Person Resident Outside India)
Regulations 2000 and amendments thereto
FII(s) Foreign Institutional Investors as defined under SEBI (Foreign Institutional Investor)
Regulations, 1995, as amended, and registered with SEBI under applicable laws in
India
Financial Year/ Fiscal/ FY Unless stated otherwise, the period of 12 months ending March 31 of that particular
year
FIPB Foreign Investment Promotion Board
FVCI Foreign Venture Capital Investors
GDP Gross Domestic Product
GIR General Index Register
GoI/Government Government of India
HNI High Net Worth Individual
HUF Hindu Undivided Family
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
Income Tax Act The Income Tax Act, 1961, as amended
Indian GAAP Generally Accepted Accounting Principles in India
LOI Letter of Intent
MCGM Municipal Corporation of Greater Mumbai
MHADA Maharashtra Housing Area Development Authority
Mn / mn Million
NA/ n.a. Not Applicable
National Investment Fund National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated
November 23, 2005 of the Government of India published in the Gazette of India
NAV Net Asset Value
NEFT National Electronic Fund Transfer
NOC No Objection Certificate
NR Non-resident
NRE Account Non Resident External Account
NRI Non Resident Indian, being a person resident outside India, as defined under FEMA
and the FEMA Regulations
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB A company, partnership, society or other corporate body owned directly or
indirectly to the extent of at least 60% by NRIs including overseas trusts, in which
not less than 60% of beneficial interest is irrevocably held by NRIs directly or
indirectly as defined under the FEMA Regulations. OCBs are not allowed to invest
in this Issue.
p.a. Per annum
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
viii
Term Description
PAT Profit After tax
PBT Profit Before tax
PIO Person of Indian Origin
PLR Prime Lending Rate
RBI The Reserve Bank of India
RoC The Registrar of Companies, Maharashtra located at 100, Everest, Marine Drive,
Mumbai 400 002
RONW Return on Net Worth
Rs./Rupees Indian Rupees
RTGS Real Time Gross Settlement
SCRA Securities Contracts (Regulation) Act, 1956, as amended
SCRR Securities Contracts (Regulation) Rules, 1957, as amended
SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992,
as amended
SEBI Act Securities and Exchange Board of India Act 1992, as amended
SEBI Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as
amended
SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and
Refund of Loan from Other Companies 55.35 2,410.43 - - -
Loans to Other Companies (14.08) (2,348.87) (9.60) - -
Loans to Subsidiary Companies (680.46) 285.04 - - -
Refund of Loan from Subsidiary Companies 545.43 - - - -
Net Cash (used in) / Flow from Investing
Activities
(114.66) 417.60 (641.29) (721.65) (292.48)
Cash Flows From Financing Activities
Proceeds from issue of share capital - - 12.27 25.66 125.99
Proceeds from Securities Premium - - 93.93 251.60 -
Share application money - 250.00 880.00 62.72 -
Repayment of Share application money (97.50) (1,032.50) - - -
Proceeds from Long Term Borrowings - - - 346.91 490.07
Proceeds from issue of debentures - - 200.00 550.00 -
Debenture Issue Expenses - - - (6.43) -
Proceeds from Secured Loans - 101.74 215.57 - -
Repayment of Secured Loans (44.15) (287.97) (277.77) - -
Proceeds from Unsecured Loans 2,002.35 768.81 339.72 - -
Repayment of Unsecured Loans (1,785.29) (344.38) (339.72) (4.77) 4.77
Deposits from Licensees (0.95) 0.79 15.83 41.82 61.32
Interest Paid (110.50) (114.30) (95.01) (80.43) -
Net Cash (used in)/flow from Financing Activities (36.04) (657.81) 1,044.82 1,187.08 682.15
Net increase in cash and cash equivalents (29.40) 12.23 (18.62) 56.96 22.29
Cash and cash equivalents as at beginning of
years
75.43 63.20 81.82 24.86 2.57
Cash and cash equivalents as at end of years 46.03 75.43 63.20 81.82 24.86
Cash Equivalents Comprise of
Cash on Hand 0.23 0.34 0.45 0.18 1.05
Balance with Scheduled Banks
In Current Accounts 10.89 33.72 37.39 2.54 1.62
In Fixed Deposit Accounts* 34.91 41.37 25.36 79.10 22.19
Total 46.03 75.43 63.20 81.82 24.86
* Fixed Deposit Accounts are deposited with banks as security for the guarantees provided by the banks.
17
THE ISSUE
Number of Equity Shares
Issue of Equity Shares 38,928,943
Of which:
A) QIB Portion At least 19,464,472(2)
of which
Anchor Investor Portion(1)
Up to 5,839,342
Balance available for allocation to QIBs other than the
Anchor Investor Portion (assuming the Anchor Investor
Portion is fully subscribed)
13,625,130
of which
Available for allocation to Mutual Funds only
(5% of the QIB Portion (excluding the Anchor
Investor Portion))
681,257
Balance for all QIBs including Mutual Funds 12,943,873
B) Non-Institutional Portion(2)
Not less than 5,839,341
C) Retail Portion(2)
Not less than 13,625,130
Pre and post-Issue Equity Shares
Equity Shares outstanding prior to the Issue 62,957,184(3)
Equity Shares outstanding after the Issue 129,763,143
Use of Net Proceeds See “Objects of the Issue” on page 38 of this Draft Red
Herring Prospectus.
Allocation to all categories, except the Anchor Investor Portion, if any, shall be made on a proportionate basis. (1) The Company may allocate up to 30% of the QIB Portion to Anchor Investors on a discretionary basis. One-third of the Anchor Investor
Portion shall be reserved for domestic mutual funds, subject to valid Bids being received from domestic mutual funds at or above the price at which allocation is being done to Anchor Investors. For further details, see “Issue Procedure” on page 332 of this Draft Red Herring
Prospectus.
(2) If at least 50% of the Issue cannot be Allotted to QIBs, then the entire application money shall be refunded forthwith. Under - subscription, if
any, in the categories, except the QIB Portion would be allowed to be met with spill over from any other category at the sole discretion of the
Company, in consultation with the BRLMs and the Designated Stock Exchange.
(3) Pursuant to a securities subscription and shareholders’ agreement dated November 1, 2006 between the Company, IAF - III, Promoters and
Ashok Ruia Enterprises Private Limited (merged with PML) (“Agreement”), the Company has issued and allotted 7,500,000 optionally convertible debentures of Rs. 100 each (“OCDs”) to IAF - III which will convert into 27,877,016 Equity Shares at a conversion price to be
determined in accordance with the terms of the Agreement, prior to the filing of the Red Herring Prospectus with the RoC. Of, 27,877,016,
Equity Shares that will be allotted to IAF - III, 11,463,276 Equity Shares aggregating to 8.83% of the post-Issue paid-up capital of the Company will be held in an escrow account with an escrow agent in accordance with the terms of the Agreement(“Escrow Equity Shares”).
The Escrow Equity Shares shall be released from the escrow account proportionately to the Promoters and IAF - III depending on the value
realised on sale of balance Equity Shares by IAF - III and the return on investment computed as per a prescribed multiple of cost or IRR structure, whichever is higher, as specified under the Agreement, after the mandatory lock-in period of one year from the date of allotment of
Equity Shares in the Issue. The Promoters and IAF - III will enter into an escrow Agreement with an escrow agent prior to the conversion of
OCDs into Equity Shares and filing of the Red Herring Prospectus with the RoC. The details of the conversion price and the escrow
agreement will be updated in the Red Herring Prospectus prior to filing with the RoC. For further details in relation to the Agreement, see
“History and Certain Corporate Matters – Shareholder Agreements/ Other Key Agreements” on page 110 of this Draft Red Herring
Prospectus.
18
GENERAL INFORMATION
Registered Office and registration number of the Company
G-16, R. R. Hosiery Building,
Shree Laxmi Woolen Mills,
Opp. Shakti Mills Compound,
Off. Dr. E. Moses Road,
Mahalaxmi
Mumbai 400 011
Maharashtra
Tel: (91 22) 4045 0555
Fax: (91 22) 4045 0512
Website: www.ewdpl.com
CIN: U45202MH1999PLC164003
Address of Registrar of Companies
The Company is registered with the Registrar of Companies, Mumbai, Maharashtra, situated at the following
address:
Registrar of Companies
Everest, 5th
Floor
100 Marine Drive
Mumbai 400 002
Maharashtra
Board of Directors
The Board of Directors consists of:
Name of the Director Designation DIN Address
Manish Kalani
Managing Director 00169041 11, Tukoganj
M. G. Road
Indore 452 001
B. Rajesh Nair
Executive Director 00061165 302, Shalimar Township
A. B. Road
Opposite Scheme No. 78
Indore 452 010
Sudarshan Bajoria
Non-Independent,
Non- Executive
Director appointed as
nominee of ICICI
Venture Funds
Management
Company Limited
01853708 Flat no. A- 402
4th
Floor
Golden Square
Sundar Nagar
Kalina, Santa Cruz (East)
Mumbai 400 098
Atul Ruia Non-Independent,
Non-Executive
Director appointed by
PML
00087396 Ruia House, 19 Bhau Sahib,
Hire Marg, Malabar Hill,
Mumbai 400 006
Balaji Sreekantiah Gubbi
Non-Independent,
Non- Executive
Director appointed by
02585676 304, Phoenix Tower, B Wing,
Senapati Bapat Marg, Lower
Parel, Mumbai 400 013
19
Name of the Director Designation DIN Address
PML
Paras Nath Pathak Non –Executive,
Independent Director
03085406 14/118, Indra Nagar, Lucknow
226 016
Mukesh Kacker Non- Executive,
Independent Director
01569098 5, Munirka Marg, Ground
Floor, Vasant Vihar, New
Delhi 110 057
Girish Raj Non –Executive,
Independent Director
00080058 Athina Township, 3rd
Stage,
Billishivale, Doddagubbi Post,
Banglore 562 149
Homi Aibara Non –Executive,
Independent Director
00273262 Jhaveri Mansion, 3rd
Floor, 30
Little Gibbs Road, Malabar
Hills, Mumbai 400 006
Suhail Nathani Non –Executive,
Independent Director
01089938 No. 801, Prabhu Kutir, 15
Altamount Road, Mumbai 400
026
For further details of the Directors, see “Management” on page 113 of this Draft Red Herring Prospectus.
The list of banks that have been notified by SEBI to act as a SCSB for the ASBA process are provided on
www.sebi.gov.in. For details on Designated Branches of SCSBs collecting ASBA Bid Cum Application Forms,
please refer to the above mentioned link.
Monitoring Agency
There will be no monitoring agency as the Issue Size is proposed to be less than Rs. 5,000 million. The Board will
monitor the utilization of the Net Proceeds. The Company will disclose the utilization of the Net Proceeds under a
separate head in its Balance Sheet for the relevant financial years subsequent to the Issue. The Company will
indicate investments, if any, of unutilized Net Proceeds in the Balance Sheet of the Company for the relevant
financial years subsequent to the Issue.
Inter Se Allocation of Responsibilities between the BRLMs
The following table sets forth the inter se allocation of responsibilities for various activities among the BRLMs for
the Issue:
22
Activities Responsibility Co-
ordinator
1. Capital structuring with relative components and formalities I-Sec, Kotak, Edelweiss I-Sec
2. Drafting and approval of all statutory advertisements I-Sec, Kotak, Edelweiss I-Sec
3. Due diligence of the Company including its
operations/management/ business/plans/legal, etc. Drafting and
design of the Draft Red Herring Prospectus and of statutory
advertisements including a memorandum containing salient
features of the Prospectus.
The BRLMs shall ensure compliance with stipulated requirements
and completion of prescribed formalities with the Stock
Exchanges, the RoC and SEBI including finalisation of the
Prospectus and RoC filing.
I-Sec, Kotak, Edelweiss I-Sec
4. Drafting and approval of all publicity material other than statutory
advertisements as mentioned above, including corporate
advertising, brochures, etc.
I-Sec, Kotak, Edelweiss Edelweiss
5. Appointment of Bankers to the Issue and Registrar to the Issue I-Sec, Kotak, Edelweiss I-Sec
6. Appointment of other intermediaries including, printers,
advertising agency
I-Sec, Kotak, Edelweiss Edelweiss
7. Marketing & road show presentation I-Sec, Kotak, Edelweiss Kotak
8. Non-institutional and Retail marketing of the Issue, which will
cover, inter alia:
Finalising media, marketing and public relations
strategy;
Finalising centre for holding conferences for brokers,
etc.;
Follow-up on distribution of publicity and Issue material
including forms, the Prospectus and deciding on the
quantum of Issue material; and
Finalising collection centres.
I-Sec, Kotak, Edelweiss Kotak
9. Domestic institutional marketing of the Issue, which will cover,
inter alia:
Finalising the list and division of investors for one to one
meetings, institutional allocation
I-Sec, Kotak, Edelweiss Edelweiss
10. International institutional marketing of the Issue, which will
cover, inter alia:
Finalising the list and division of investors for one-to-
one meetings, institutional allocation.
I-Sec, Kotak, Edelweiss Edelweiss
11. Pricing, Managing the book and allocation to QIB Bidders I-Sec, Kotak, Edelweiss Edelweiss
12. Co-ordination with the Stock Exchanges I-Sec, Kotak, Edelweiss Edelweiss
13. Post-Bidding activities including management of escrow
accounts, co coordinating, underwriting, co-ordination of non-
institutional allocation, announcement of allocation and dispatch
of refunds to Bidders, etc.
The post-Issue activities will involve essential follow up steps,
including the finalisation of trading, dealing of instruments, and
demat of delivery of shares with the various agencies connected
with the work such as the Registrars to the Issue, the Bankers to
the Issue, the bank handling refund business and SCSBs. The
I-Sec, Kotak, Edelweiss Kotak
23
BRLMs shall be responsible for ensuring that these agencies
fulfill their functions and discharge this responsibility through
suitable agreements with the Company. Note: ICICI Securities Limited has made an application on April 7, 2010 with SEBI for renewal of its certificate of registration
Credit Rating
As the Issue is of Equity Shares, there is no credit rating for this Issue.
Trustees
As the Issue is of Equity Shares, the appointment of trustees is not required.
Book Building Process
Book Building Process, with reference to the Issue, refers to the process of collection of Bids on the basis of the Red
Herring Prospectus within the Price Band, which will be decided by the Company in consultation with the BRLMs
and advertised at least two working days prior to the Bid/Issue Opening Date. The Issue Price is finalised after the
Bid/ Issue Closing Date. The principal parties involved in the Book Building Process are:
1. the Company;
2. the BRLMs;
3. the Syndicate Members who are intermediaries registered with SEBI or registered as brokers with BSE/
NSE and eligible to act as Underwriters. The Syndicate Members are appointed by the BRLMs;
4. the SCSBs;
5. the Registrar to the Issue; and
6. the Escrow Collection Banks.
This Issue is being made in accordance with Rule 19(2)(b)(i) of the SCRR and under the SEBI Regulations, where
the Issue will be made through the 100% Book Building Process wherein at least 50% of the Issue will be allocated
on a proportionate basis to QIBs. Out of the QIB Portion (excluding the Anchor Investor Portion), 5% shall be
available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for
allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them at or
above the Issue Price. If at least 50% of the Issue cannot be allotted to QIBs, then the entire application money will
be refunded forthwith. Further, not less than 15% of the Issue will be available for allocation on a proportionate
basis to Non-Institutional Bidders and not less than 35% of the Issue will be available for allocation on a
proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.
In accordance with the SEBI Regulations, QIB Bidders are not allowed to withdraw their Bid(s) after the
Bid/Issue Closing Date. For further details, see “Terms of the Issue” on page 325 of this Draft Red Herring
Prospectus.
The Company shall comply with the SEBI Regulations and any other ancillary directions issued by SEBI for this
Issue. In this regard, the Company has appointed the BRLMs to manage the Issue and procure subscriptions to the
Issue.
The Book Building Process under the SEBI Regulations is subject to change from time to time and the
investors are advised to make their own judgment about investment through this process prior to making a
Bid or application in the Issue.
Illustration of Book Building Process and Price discovery process (Investors should note that this example is
solely for illustrative purposes and is not specific to the Issue; it excludes bidding by Anchor Investors or ASBA
process)
Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 20 to Rs. 24 per equity
share, issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table
24
below. A graphical representation of the consolidated demand and price would be made available at the bidding
centres during the bidding period. The illustrative book below shows the demand for the equity shares of the issuer
company at various prices which is collated from bids received from various investors.
The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue
the desired number of shares is the price at which the book cuts off, i.e., Rs. 22 in the above example. The issuer, in
consultation with the BRLMs, will finalise the issue price at or below such cut-off price, i.e., at or below Rs. 22. All
bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in the respective
categories.
Steps to be taken by the Bidders for Bidding
1. Check eligibility for making a Bid (see “Issue Procedure - Who Can Bid?” on page 333 of this Draft Red
Herring Prospectus);
2. Ensure that you have a demat account and the demat account details are correctly mentioned in the Bid cum
Application Form;
3. Ensure that you have mentioned your PAN, Client ID and DP ID in the Bid cum Application Form. In
accordance with the SEBI Regulations, PAN would be the sole identification number for participants
transacting in the securities market, irrespective of the amount of transaction (see “Issue Procedure –
Permanent Account Number or PAN” on page 349 of this Draft Red Herring Prospectus);
4. Ensure that the Bid cum Application Form is duly completed as per instructions given in this Draft Red
Herring Prospectus and in the Bid cum Application Form;
5. Bids by QIBs (including Anchor Investors) will only have to be submitted to the BRLMs and/or their
affiliates, other than Bids by QIBs (excluding the Anchor Investors) who Bid through ASBA process, who
shall submit the Bids to the Designated Branches of the SCSBs;
6. ASBA Bidders will have to submit Bids (physical form) to the Designated Branches. ASBA Bidders should
ensure that the ASBA Account has adequate credit balance at the time of submission to the SCSB to ensure
that the ASBA Bid cum Application Form is not rejected.
Underwriting Agreement
After the determination of the Issue Price but prior to the filing of the Prospectus with the RoC, the Company will
enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through
the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLMs shall be responsible
for bringing in the amount devolved in the event that the Syndicate Members do not fulfil their underwriting
obligations. The underwriting shall be to the extent of the Bids uploaded by the Underwriters including through its
respective Syndicate Member/ sub-syndicate. The Underwriting Agreement is dated [ ].
The Underwriters have indicated their intention to underwrite the following number of Equity Shares:
This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC.
25
Name and Address of the Underwriters Indicated Number
of Equity Shares to
be Underwritten
Amount
Underwritten
(Rs. in Million)
ICICI Securities Limited ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai 400 020
[●] [●]
Kotak Mahindra Capital Company Limited
1st Floor, Bakhtawar, 229 Nariman Point, Mumbai 400 021
[●] [●]
Edelweiss Capital Limited
14th
floor, Express Towers, Nariman Point, Mumbai 400 021
[●] [●]
The above mentioned is indicative underwriting and this will be finalised after determination of the Issue Price and
actual allocation.
In the opinion of the Board of Directors (based on a certificate given by the Underwriters), the resources of the
above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in
full. The above mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered
as brokers with the Stock Exchange(s). The Board of Directors, at its meeting held on [●], has accepted and entered
into the Underwriting Agreement mentioned above on behalf of the Company.
Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments.
Notwithstanding the table above, the BRLMs and the Syndicate Members shall be responsible for ensuring payment
with respect to Equity Shares allocated to investors procured by them. In the event of any default in payment, the
respective Underwriter, in addition to other obligations defined in the Underwriting Agreement, will also be required
to procure subscriptions for/subscribe to Equity Shares to the extent of the defaulted amount.
Notwithstanding the foregoing, the Issue is also subject to obtaining (i) final listing and trading approvals of the
Stock Exchanges, which the company shall apply for after Allotment, and (ii) the final approval of the RoC after the
Prospectus is filed with the RoC.
26
CAPITAL STRUCTURE
The Equity Share capital of the Company as of the date of this Draft Red Herring Prospectus is set forth below:
(In Rs. except share data)
Aggregate
Nominal Value
Aggregate Value
at Issue Price
A) AUTHORISED SHARE CAPITAL
150,000,000 Equity Shares of Rs. 10 each 1,500,000,000
B) ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL
BEFORE THE ISSUE(1)
62,957,184 Equity Shares of Rs. 10 each 629,571,840
C) PRESENT ISSUE IN TERMS OF THIS DRAFT RED
HERRING PROSPECTUS
38,928,943 Equity Shares of Rs. 10 each 389,289,430 [●]
D) ISSUED, SUBSCRIBED AND PAID-UP EQUITY CAPITAL
AFTER THE ISSUE
129,763,143 Equity Shares of Rs. 10 each 1,297,631,430 [●]
E) SHARE PREMIUM ACCOUNT Before the Issue(1) 152,639,261 -
After the Issue [●] [●]
The present Issue in terms of this Draft Red Herring Prospectus has been authorised by the Board of Directors and
the shareholders of the Company, pursuant to their resolutions dated June 11, 2010 and June 15, 2010 respectively. (1) Pursuant to a securities subscription and shareholders’ agreement dated November 1, 2006 between the Company, IAF - III, Promoters and
Ashok Ruia Enterprises Private Limited (merged with PML) (“Agreement”), the Company has issued and allotted 7,500,000 optionally
convertible debentures of Rs. 100 each (“OCDs”) to IAF - III which will convert into 27,877,016 Equity Shares at a conversion price to be
determined in accordance with the terms of the Agreement, prior to the filing of the Red Herring Prospectus with the RoC. Of, 27,877,016, Equity Shares that will be allotted to IAF - III, 11,463,276 Equity Shares aggregating to 8.83% of the post-Issue paid-up capital of the
Company will be held in an escrow account with an escrow agent in accordance with the terms of the Agreement(“Escrow Equity Shares”). The Escrow Equity Shares shall be released from the escrow account proportionately to the Promoters and IAF - III depending on the value
realised on sale of balance Equity Shares by IAF - III and the return on investment computed as per a prescribed multiple of cost or IRR
structure, whichever is higher, as specified under the Agreement, after the mandatory lock-in period of one year from the date of allotment of Equity Shares in the Issue. The Promoters and IAF - III will enter into an escrow Agreement with an escrow agent prior to the conversion of
OCDs into Equity Shares and filing of the Red Herring Prospectus with the RoC. The details of the conversion price and the escrow
agreement will be updated in the Red Herring Prospectus prior to filing with the RoC. For further details in relation to the Agreement, see “History and Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements” on page 110 of this Draft Red Herring
Prospectus.
Changes in Authorised Share Capital
1. The initial authorised share capital of Rs. 2,500,000 divided into 250,000 Equity Shares of Rs. 10 each was
increased to Rs. 100,000,000 divided into 2,092,745 Class A equity shares of Rs. 10 each with voting rights
and 7,907,255 Class B equity shares of Rs. 10 each without voting rights, pursuant to resolution of
shareholders passed at the AGM held on July 7, 2003.
2. The authorised share capital of Rs. 100,000,000 divided into 2,092,745 Class A equity shares of Rs. 10
each with voting rights and 7,907,255 Class B equity shares of Rs. 10 each without voting rights was
consolidated into 1,000,000 equity shares of Rs. 100 each with voting rights, pursuant to resolution of
shareholders passed at an EGM held on January 19, 2004.
3. The authorised share capital of Rs. 100,000,000 divided into 1,000,000 equity shares of Rs.100 each was
increased to Rs. 113,000,000 divided into 1,130,000 equity shares of Rs. 100 each pursuant to resolution of
shareholders passed at the AGM held on September 30, 2004.
27
4. The authorised share capital of Rs. 113,000,000 divided into 1,130,000 equity shares of Rs.100 each was
increased to Rs. 150,000,000 divided into 1,500,000 equity shares of Rs. 100 each pursuant to resolution of
shareholders passed at an EGM held on March 10, 2006.
5. The authorised share capital of Rs. 150,000,000 divided into 1,500,000 equity shares of Rs.100 each was
sub-divided into 15,000,000 Equity Shares of Rs. 10 each pursuant to resolution of shareholders passed at
an EGM held on March 10, 2006.
6. The authorised share capital of Rs. 150,000,000 divided into 15,000,000 Equity Shares of Rs. 10 each was
increased to Rs. 170,000,000 divided into 17,000,000 Equity Shares of Rs. 10 each pursuant to resolution
of shareholders passed at an EGM held on June 27, 2007.
7. The authorised share capital of Rs. 170,000,000 divided into 17,000,000 Equity Shares of Rs. 10 each was
increased to Rs. 1,000,000,000 divided into 100,000,000 Equity Shares of Rs. 10 each pursuant to
resolution of shareholders passed at an EGM held on January 22, 2010.
8. The authorised share capital of Rs. 1,000,000,000 divided into 100,000,000 Equity Shares of Rs. 10 each
was increased to Rs. 1,500,000,000 divided into 150,000,000 Equity Shares of Rs. 10 each pursuant to
resolution of shareholders passed at an EGM held on May 12, 2010.
Notes to Capital Structure
1. Share Capital History of the Company
(a) The history of the equity share capital and share premium account of the Company is set forth below:
Date of
allotment of
Equity Shares
No. of
Equity
Shares
allotted
Face
Value
(Rs.)
Issue
Price
(Rs.)
Consideration
Cumulative no.
of Equity
Shares
Cumulative paid-up
Equity Share
Capital (Rs.)
Cumulative
Share Premium
(Rs.)
July 22, 1999 20 10 10 Cash 20 200 -
December 7,
2002
249,980 10 10 Cash 250,000 2,500,000 -
July 7, 2003 775,445(1) 10 10 Cash 1,025,445 10,254,450 -
July 7, 2003 1,067,300(2) 10 - Other than
Cash(2)
2,092,745 20,927,450 -
July 7, 2003 7,907,255(3) 10 10 Cash 10,000,000 100,000,000 -
(1) The Company issued 775,445 Class A equity shares of Rs. 10 each at par to PHPL and KBIPL.
(2) The Company issued 1,067,300 Class A equity shares of Rs. 10 each to Madhya Pradesh Housing Board as consideration for supervisory
services to be provided by MPHB.
(3) The Company issued 7,907,255 Class B equity shares of Rs. 10 each without voting rights to PHPL and KBIPL.
28
(4) The authorised share capital of Rs. 100,000,000 divided into 2,092,745 Class A equity shares of Rs. 10 each with voting rights and
7,907,255 Class B equity shares of Rs. 10 each without voting rights was consolidated into 1,000,000 equity shares of Rs. 100 each with
voting rights, pursuant to resolution of shareholders passed at an EGM held on January 19, 2004.
(5) The authorised share capital of Rs. 150,000,000 divided into 1,500,000 equity shares of Rs. 100 each was sub-divided into 15,000,000
equity shares of Rs. 10 each pursuant to resolution of shareholders passed at an EGM held on March 10, 2006.
(6) Forfeiture of 1,067,300 equity shares of Rs. 10 each allotted to Madhya Pradesh Housing Board.
(7) Rs. 6,425,408 has been provided towards debenture issue expenses on March 31, 2007. (8) Pursuant to a securities subscription and shareholders’ agreement dated November 1, 2006 between the Company, IAF - III, Promoters
and Ashok Ruia Enterprises Private Limited (merged with PML) (“Agreement”), the Company has issued and allotted 7,500,000 optionally convertible debentures of Rs. 100 each (“OCDs”) to IAF - III which will convert into 27,877,016 Equity Shares at a conversion
price to be determined in accordance with the terms of the Agreement, prior to the filing of the Red Herring Prospectus with the RoC. Of,
27,877,016, Equity Shares that will be allotted to IAF - III, 11,463,276 Equity Shares aggregating to 8.83% of the post-Issue paid-up capital of the Company will be held in an escrow account with an escrow agent in accordance with the terms of the Agreement(“Escrow
Equity Shares”). The Escrow Equity Shares shall be released from the escrow account proportionately to the Promoters and IAF - III
depending on the value realised on sale of balance Equity Shares by IAF - III and the return on investment computed as per a prescribed
multiple of cost or IRR structure, whichever is higher, as specified under the Agreement, after the mandatory lock-in period of one year
from the date of allotment of Equity Shares in the Issue. The Promoters and IAF - III will enter into an escrow Agreement with an escrow
agent prior to the conversion of OCDs into Equity Shares and filing of the Red Herring Prospectus with the RoC. The details of the conversion price and the escrow agreement will be updated in the Red Herring Prospectus prior to filing with the RoC. For further details
in relation to the Agreement, see “History and Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements” on page
110 of this Draft Red Herring Prospectus.
(b) Equity Shares Allotted for consideration other than cash:
Date of allotment
of the Equity
Shares
No. of Equity
Shares
Face Value
(Rs.)
Issue Price
(Rs.)
Consideration
July 7, 2003 1,067,300*
10 - Issued by the Company
as consideration for the
supervisory services to
be provided by Madhya
Pradesh Housing Board
June 11, 2010 47,217,888 10 - Bonus issue in the ratio
3:1 * These Equity Shares were forfeited on April 5, 2007.
2. History of the Equity Share Capital held by the Promoters
(a) Details of the build up of Promoters shareholding in the Company is set forth below:
(1) The authorised share capital of Rs. 100,000,000 divided into 2,092,745 Class A equity shares of Rs. 10 each with voting rights and
7,907,255 Class B equity shares of Rs. 10 each without voting rights was consolidated into 1,000,000 equity shares of Rs. 100 each with voting rights, pursuant to resolution of shareholders passed at an EGM held on January 19, 2004.
(2) The authorised share capital of Rs. 150,000,000 divided into 1,500,000 equity shares of Rs.100 each was sub-divided into 15,000,000
Equity Shares of Rs. 10 each pursuant to resolution of shareholders passed at an EGM held on March 10, 2006.
(3) PHPL and KBIPL have agreed to transfer 1,488,689 Equity Shares and 3,129,657 Equity Shares, respectively, to PML prior to the filing
of the Red Herring Prospectus with the RoC, in terms of a letter dated June 18, 2010, such that post conversion of the OCDs (prior to
filing of the Red Herring Prospectus with the RoC) held by IAF - III into the Equity Shares of the Company and prior to the Issue, KHPL
(a wholly owned subsidiary of PML) and PML together hold an aggregate of 33% of the pre-Issue equity share capital of the Company.
The details of this transfer will be updated prior to filing the Red Herring Prospectus with the RoC. Additionally, a deed of adherence and
modification to the securities subscription and shareholders agreement was executed on July 9, 2010 pursuant to which PML and KHPL
has agreed to transfer the Promoter Sale Shares (as defined below) back to the Promoters on default of certain obligations as provided under the said securities subscription and shareholders agreement. For further details, see “History and Certain Corporate Matters -
Shareholder Agreements/ Other Key Agreements”on page 110 of this Draft Red Herring Prospectus.
(4) Transferred from Manish Kalani, T.S. Summi, Padma Kalani, Manisha Kalani, S.K. Talati, Q.Y. Matkawala and Pawan Jain.
(5) Transferred from Money Penny Fincom Private Limited, Prmila Investment and Finance Limited and Maxtouch Securities Private
(7) Transferred from Sanovi Trading Private Limited, Anshuman Properties Private Limited, Vibgyor Laminates Private Limited and Padma
Kalani.
(b) Details of Promoters contribution locked in for three years
The minimum Promoter‟s contribution has been brought to the extent of not less than the specified
minimum lot and from persons defined as Promoters under the SEBI Regulations. Pursuant to the SEBI
Regulations, 20% of the fully diluted post-Issue capital of the Company held by the Promoters shall be
locked in for a period of three years from the date of Allotment of Equity Shares in the Issue. The Equity
Shares constituting minimum Promoters‟ contribution in the Issue which shall be locked-in for three years
are eligible therefor in terms of the SEBI Regulations. The details of such lock-in are set forth in the table
below:
Date of Acquisition
and when made
fully paid-up
Nature of
Allotment/Transfer
Nature of
consideration
No. of Equity Shares Face
Value
Issue/Acquisition
Price (Rs.)
Percentage of
Post-Issue
Paid-up
Capital
PHPL
February 28, 2003 Transfer from Kalani
Industries Private
Limited
Cash 73,780 10 10 0.06
July 7, 2003 Allotment of Class A
equity shares to augment the financial resources
Cash 228,911 10 10 0.18
July 7, 2003 Allotment of Class B
equity shares to augment
the financial resources
Cash 2,334,222 10 10 1.80
December 11, 2004 Allotment of equity
shares to augment the
financial resources
Cash 19,669 100(1) 1000 0.15
July 7, 2006 Transfer from Oswal Tradelink Private
Cash 16,600 100 80 0.13
31
Date of Acquisition
and when made
fully paid-up
Nature of
Allotment/Transfer
Nature of
consideration
No. of Equity Shares Face
Value
Issue/Acquisition
Price (Rs.)
Percentage of
Post-Issue
Paid-up
Capital
Limited
September 12, 2006
Transfer from Manisha Kalani
Cash 100 10(2) 10 0.00
June 11, 2010 Bonus Issue in the ratio
3:1
- 7,510,411 10 - 5.79
Total 10,510,111(3) 8.10
KBIPL
February 28, 2003 Transfer from Kalani Industries Private
Limited
Cash 176,200 10 10 0.14
May 14, 2003 Transfer from various
persons
Cash 20 10 10 0.00
July 7, 2003 Allotment of Class A
equity shares to augment
the financial resources
Cash 546,534 10 10 0.42
July 7, 2003 Allotment of Class B equity shares
Cash 4,748,284 10 10 3.66
December 11, 2004 Allotment of equity
shares to augment the financial resources
Cash 47,291 100(1) 1,000 0.36
December 23, 2005 Transfer from various
companies
Cash 1,940 100 100 0.02
July 7, 2006 Transfer from Ratnagiri Vinimay
Cash 38,750 100 80 0.30
July 7, 2006 Transfer from various
persons and companies
Cash 40 100 1,000 0.00
June 11, 2010 Bonus Issue - 9,091,267 10(2) - 7.01
Total 15,442,518(4) 11.90
Grand Total 25,952,629 20.00 (1) The authorised share capital of Rs. 100,000,000 divided into 2,092,745 Class A equity shares of Rs. 10 each with voting rights and
7,907,255 Class B equity shares of Rs. 10 each without voting rights was consolidated into 1,000,000 equity shares of Rs. 100 each with voting rights, pursuant to resolution of shareholders passed at an EGM held on January 19, 2004.
(2) The authorised share capital of Rs. 150,000,000 divided into 1,500,000 equity shares of Rs.100 each was sub-divided into 15,000,000
Equity Shares of Rs. 10 each pursuant to resolution of shareholders passed at an EGM held on March 10, 2006.
(3) The number of Equity Shares being offered by PHPL towards Promoter’s contribution have been computed on a fully diluted basis, taking
into account Equity Shares that will be issued to IAF - III on conversion of OCDs prior to filing the Red Herring Prospectus with RoC as well as the proposed transfer of 1,488,689 Equity Shares to PML prior to filing the Red Herring Prospectus with RoC. For further details,
see “History and Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements”on page 110 of this Draft Red Herring
Prospectus. (4) The number of Equity Shares being offered by KBIPL towards Promoter’s contribution have been computed on a fully diluted basis, taking
into account Equity Shares that will be issued to IAF - III on conversion of OCDs prior to filing the Red Herring Prospectus with RoC as well as the proposed transfer of 3,129,657 Equity Shares to PML prior to filing the Red Herring Prospectus with RoC. For further details,
see “History and Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements”on page 110 of this Draft Red Herring
Prospectus.
(c) Details of share capital locked in for one year
In addition to 20% of the post-Issue shareholding of the Company held by Promoters and locked in for
three years as specified above, the entire pre-Issue equity share capital will be locked-in for a period of one
year from the date of Allotment of the Equity Shares in this Issue.
In terms of SEBI Regulations, Equity Shares held by the shareholders who are venture capital funds /
venture capital investor, for a period of at least one year as on the date of this Draft Red Herring Prospectus
will not be subject to lock in as aforesaid. The details of such Equity Shares held by the venture capital
funds / venture capital investor are set forth in the table below:
32
Name of
shareholder
Date of acquisition Nature of
acquisition
No. of Equity Shares
IAF - III* November 1, 2006 Allotment 49,000
* IDBI Trusteeship Services Limited (the merged entity after its merger with the Western India Trustee and Executor Company
Limited) in its capacity as trustee of India Advantage Fund - III represented by its investment manager ICICI Venture Funds Management Company Limited which is registered with SEBI as a venture capital fund.
However, the Equity Shares held by IAF - III pursuant to the bonus issue on June 11, 2010, being 147,000
Equity Shares will be subject to lock-in for a period of one year from the date of allotment of the Equity
Shares in this Issue.
(d) Lock-in of Equity Shares to be issued, if any, to the Anchor Investor
Any Equity Shares that may be Allotted to Anchor Investors under the Anchor Investor Portion, if any,
shall be locked-in for a period of 30 days from the date of Allotment of Equity Shares in the Issue.
(e) Other Requirements in respect of lock-in
The Equity Shares held by Promoters may be transferred to and amongst the Promoter Group or to a new
promoter or persons in control of the Company, subject to continuation of the lock-in in the hands of the
transferees for the remaining period and compliance with the SEBI Takeover Regulations, as applicable.
The Equity Shares held by persons other than Promoters prior to the Issue may be transferred to any other
person holding Equity Shares which are locked-in along with the Equity Shares proposed to be transferred,
subject to continuation of the lock-in in the hands of the transferees for the remaining period and
compliance with the SEBI Takeover Regulations, as applicable.
The Equity Shares held by Promoters which are locked-in for a period of three years from the date of
Allotment in the Issue can be pledged with any scheduled commercial bank or public financial institution
as collateral security for loans granted by such banks or institution, provided that the pledge of Equity
Shares can be created when the loan has been granted by such bank or financial institution for financing
one or more of the objects of the Issue and pledge of Equity Shares is one of the terms of sanction of the
loan.
The Equity Shares held by the Promoter which are locked-in for a period of one year from the date of
Allotment in the Issue can be pledged with any scheduled commercial bank or public financial institution
as collateral security for loans granted by such bank or financial institution, provided that the pledge of the
Equity Shares is one of the terms of sanction of the loan.
3. Shareholding pattern of the Company
The table below presents the shareholding pattern before the proposed Issue and as adjusted for the Issue:
* The shareholding of the Promoter Group includes 4,763,748 Equity Shares held by Kalani Holdings Private Limited (a wholly owned
subsidiary of PML) which is a promoter group company in accordance with Regulation 2(zb)(iii)(C) of the SEBI Regulations. None of the Promoters of the Company hold any shares or have any interest in Kalani Holdings Private Limited (a wholly owned subsidiary of PML).
(1) Pursuant to a securities subscription and shareholders’ agreement dated November 1, 2006 between the Company, IAF - III, Promoters
and Ashok Ruia Enterprises Private Limited (merged with PML) (“Agreement”), the Company has issued and allotted 7,500,000 optionally
convertible debentures of Rs. 100 each (“OCDs”) to IAF - III which will convert into 27,877,016 Equity Shares at a conversion price to be
determined in accordance with the terms of the Agreement, prior to the filing of the Red Herring Prospectus with the RoC. Of, 27,877,016, Equity Shares that will be allotted to IAF - III, 11,463,276 Equity Shares aggregating to 8.83% of the post-Issue paid-up capital of the
Company will be held in an escrow account with an escrow agent in accordance with the terms of the Agreement(“Escrow Equity Shares”).
The Escrow Equity Shares shall be released from the escrow account proportionately to the Promoters and IAF - III depending on the value realised on sale of balance Equity Shares by IAF - III and the return on investment computed as per a prescribed multiple of cost or IRR
structure, whichever is higher, as specified under the Agreement, after the mandatory lock-in period of one year from the date of allotment of Equity Shares in the Issue. The Promoters and IAF - III will enter into an escrow Agreement with an escrow agent prior to the
conversion of OCDs into Equity Shares and filing of the Red Herring Prospectus with the RoC. The details of the conversion price and the
escrow agreement will be updated in the Red Herring Prospectus prior to filing with the RoC. For further details in relation to the Agreement, see “History and Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements” on page 110 of this Draft Red
Herring Prospectus.
(2) PHPL and KBIPL have agreed to transfer 1,488,689 Equity Shares and 3,129,657 Equity Shares, respectively, to PML prior to the filing
of the Red Herring Prospectus with the RoC, in terms of a letter dated June 18, 2010, such that post conversion of the OCDs (prior to filing
of the Red Herring Prospectus with the RoC) held by IAF - III into the Equity Shares of the Company and prior to the Issue, KHPL (a wholly owned subsidiary of PML) and PML together hold an aggregate of 33% of the pre-Issue equity share capital of the Company. The
details of this transfer will be updated prior to filing the Red Herring Prospectus with the RoC. Additionally, a deed of adherence and
modification to the securities subscription and shareholders agreement was executed on July 9, 2010 pursuant to which PML and KHPL has agreed to transfer the Promoter Sale Shares (as defined below) back to the Promoters on default of certain obligations as provided
under the said securities subscription and shareholders agreement. For further details, see “History and Certain Corporate Matters -
Shareholder Agreements/ Other Key Agreements”on page 110 of this Draft Red Herring Prospectus.
(3) This includes 38,928,943 Equity Shares which are proposed to be issued and allotted in the Issue, which constitutes 30% of the post- Issue
paid up capital of the Company. The number of shareholders in the public category after the Issue cannot be ascertained as of the date of
the Draft Red Herring Prospectus.
4. The list of top shareholders of the Company and the number of Equity Shares held by them is as under:
(a) As on the date of this Draft Red Herring Prospectus:
S.
No.
Name of the Shareholder No. of Equity Shares held Percentage
1. Manish Kalani 400 0.00
2. B. Rajesh Nair 40 0.00
3. KBIPL 25,405,004 40.35
4. PHPL 11,998,800 19.06
5. PML 20,593,192 32.71
6. KHPL (a wholly owned subsidiary of
PML)
4,763,748 7.57
7. IAF - III 196,000 0.31
Total 62,957,184 100.00
35
(b) As of 10 days prior to the date of this Draft Red Herring Prospectus:
S.
No.
Name of the Shareholder No. of Equity Shares held Percentage
1. Manish Kalani 400 0.00
2. B. Rajesh Nair 40 0.00
3. KBIPL 25,405,004 40.35
4. PHPL 11,998,800 19.06
5. PML 20,593,192 32.71
6. KHPL (a wholly owned subsidiary of
PML)
4,763,748 7.57
7. IAF - III 196,000 0.31
Total 62,957,184 100.00
(c) As of two years prior to the date of this Draft Red Herring Prospectus:
S.
No.
Name of the Shareholder No. of Equity Shares held Percentage
1. Manish Kalani 100 0.00
2. KBIPL 6,351,261 40.35
3. PHPL 2,999,700 19.06
4. PML 5,148,298 32.71
5. KHPL (a wholly owned subsidiary of
PML)
1,190,937 7.57
6. IAF - III 49,000 0.31
Total 15,739,296 100.00
5. The Company, the Directors or the BRLMs have not entered into any buy-back arrangements for the
purchase of Equity Shares from any person.
6. Except as stated in section “Management - Shareholding of Directors” on page 119 of this Draft Red
Herring Prospectus, none of the Directors or key management personnel hold any Equity Shares in the
Company. None of the directors of the Promoters hold any Equity Shares in the Company, except for B.
Rajesh Nair who holds 40 Equity Shares in the Company.
7. Pursuant to a securities subscription and shareholders‟ agreement dated November 1, 2006 between the
Company, IAF - III, Promoters and Ashok Ruia Enterprises Private Limited (merged with PML)
(“Agreement”), the Company has issued and allotted 7,500,000 optionally convertible debentures of Rs.
100 each (“OCDs”) to IAF - III which will convert into 27,877,016 Equity Shares at a conversion price to
be determined in accordance with the terms of the Agreement, prior to the filing of the Red Herring
Prospectus with the RoC. Of, 27,877,016, Equity Shares that will be allotted to IAF - III, 11,463,276 Equity
Shares aggregating to 8.83% of the post-Issue paid-up capital of the Company will be held in an escrow
account with an escrow agent in accordance with the terms of the Agreement (“Escrow Equity Shares”).
The Escrow Equity Shares shall be released from the escrow account proportionately to the Promoters and
IAF - III depending on the value realised on sale of balance Equity Shares by IAF - III and the return on
investment computed as per a prescribed multiple of cost or IRR structure, whichever is higher, as specified
under the Agreement, after the mandatory lock-in period of one year from the date of allotment of Equity
Shares in the Issue. The Promoters and IAF - III will enter into an escrow Agreement with an escrow agent
prior to the conversion of OCDs into Equity Shares and filing of the Red Herring Prospectus with the RoC.
The details of the conversion price and the escrow agreement will be updated in the Red Herring
Prospectus prior to filing with the RoC. For further details in relation to the Agreement, see “History and
Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements” on page 110 of this Draft
Red Herring Prospectus. Except as mentioned above, there are no outstanding convertible securities or any
other rights which would entitle any person any option to acquire the Equity Shares after the Issue.
36
8. PHPL and KBIPL have agreed to transfer 1,488,689 Equity Shares and 3,129,657 Equity Shares,
respectively, to PML prior to the filing of the Red Herring Prospectus with the RoC, in terms of a letter
dated June 18, 2010, such that post conversion of the OCDs (prior to filing of the Red Herring Prospectus
with the RoC) held by IAF - III into the Equity Shares of the Company and prior to the Issue, KHPL (a
wholly owned subsidiary of PML) and PML together hold an aggregate of 33% of the pre-Issue equity
share capital of the Company. The details of this transfer will be updated prior to filing the Red Herring
Prospectus with the RoC. Additionally, a deed of adherence and modification to the securities subscription
and shareholders agreement was executed on July 9, 2010 pursuant to which PML and KHPL has agreed to
transfer the Promoter Sale Shares (as defined below) back to the Promoters on default of certain obligations
as provided under the said securities subscription and shareholders agreement. For further details, see
“History and Certain Corporate Matters - Shareholder Agreements/ Other Key Agreements”on page 110 of
this Draft Red Herring Prospectus.
9. Subject to the conversion of 7,500,000 OCDs held by IAF - III into 27,877,016 Equity Shares prior to filing
of the Red Herring Prospectus with the RoC, there will be no further issue of Equity Shares, whether by
way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period
commencing from submission of this Draft Red Herring Prospectus with SEBI until the Equity Shares have
been listed.
10. An oversubscription to the extent of 10% of the Issue can be retained for the purposes of rounding off to
the nearer multiple of minimum allotment lot.
11. The Promoters, Promoter Group, the directors of the Promoters, the Directors and their immediate relatives
have not purchased or sold any Equity Shares within six months preceding the date of filing this Draft Red
Herring Prospectus with SEBI, except for B. Rajesh Nair who purchased 10 Equity Shares from KBIPL on
January 21, 2010 at Rs. 10 per Equity Share.
12. None of the Promoters, Promoter Group and Group Companies will participate in the Issue.
13. Neither the BRLMs nor their Associates hold any Equity Shares in the Company.
14. There shall be only one denomination of Equity Shares, unless otherwise permitted by law. We shall
comply with such disclosure and accounting norms as may be specified by SEBI from time to time.
15. The Equity Shares will be fully paid up at the time of Allotment failing which no Allotment shall be made.
16. As of the date of filing of this Draft Red Herring Prospectus, the total number of holders of Equity Shares is
seven.
17. No person connected with the Issue shall offer any incentive, direct or indirect, in any manner, whether in
cash, kind, services or otherwise, to any Bidder.
18. The Company has not issued any Equity Shares under any employee stock option scheme or employee
stock purchase scheme.
19. At least 50% of the Issue shall be allocated to QIBs on a proportionate basis. 5% of the QIB Portion
(excluding Anchor Investor Portion) shall be available for allocation to Mutual Funds only and the
remaining QIB Portion shall be available for allocation to the QIB Bidders including Mutual Funds subject
to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Issue will be
available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the
Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received from
them at or above the Issue Price. Under-subscription, if any, in the Non-Institutional and Retail Individual
categories would be allowed to be met with spill over from any other category at the discretion of the
Company in consulation with the BRLMs and the Designated Stock Exchange.
37
20. Under-subscription, if any, in any category, except the QIB Portion, would be allowed to be met with spill-
over from any other category or combination of categories at the discretion of the Company in consultation
with the BRLMs and the Designated Stock Exchange. For further details, see “Issue Structure” on page 328
of this Draft Red Herring Prospectus.
21. Other than the bonus issue on June 11, 2010, the Company has not issued any Equity Shares during a
period of one year preceding the date of this Draft Red Herring Prospectus at a price lower than the Issue
Price.
22. The Company presently does not intend or propose to alter the capital structure for a period of six months
from the Bid/Issue Opening Date, by way of split or consolidation of the denomination of Equity Shares or
further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or
indirectly for Equity Shares) whether on a preferential basis or issue of bonus or rights or further public
issue of specified securities or qualified institutions placement or otherwise. Also, if the Company enters
into acquisitions, joint ventures or other arrangements, the Company may, subject to necessary approvals,
consider raising additional capital to fund such activity or use Equity Shares as currency for acquisitions or
participation in such joint ventures.
23. There has been no financing arrangement whereby the Promoter Group, the directors of the Promoter, the
Directors and their respective relatives have financed the purchase by any other person of Equity Shares or
securities of the Company other than in normal course of the business of the financing entity during the
period of six months immediately preceding the date of filing of the Draft Red Herring Prospectus.
38
OBJECTS OF THE ISSUE
The proceeds of the Issue, after deducting the Issue related expenses (the “Net Proceeds”), are estimated to be
approximately Rs. [●] million.
The Net Proceeds are proposed to be utilised by the Company for the following objects:
(a) Construction of certain Ongoing Projects;
(b) Purchase of a portion of unsecured fully convertible debentures issued by TWDPL from IAF - III, IAF - IV
and PML; and
(c) General corporate purposes.
The main objects clause of the Memorandum of Association enables the Company to undertake the existing
activities and the activities for which the funds are being raised through this Issue.
The details of the proceeds of the Issue are summarised in the table below:
(In Rs. Million)
Amount
Gross Proceeds from the Issue [●]
Issue related Expenses [●]
Net Proceeds* [●] * To be finalised upon determination of the Issue Price
Any expenditure incurred towards the objects mentioned in this section will be recouped from the Net Proceeds of
the Issue.
Utilisation of Net Proceeds
The intended utilisation of the Net Proceeds is summarised in the table below:
(In Rs. million)
Particulars Amount
Construction of certain Ongoing Projects 875.01
Purchase of a portion of unsecured fully convertible debentures issued by
TWDPL from IAF - III, IAF - IV and PML
1,250.00
General corporate purposes(1)
[●]
Total Net Proceeds [●] (1) The amount to be deployed towards general corporate purposes will be decided after finalisation of Issue Price
Deployment of Net Proceeds of the Issue
The Net Proceeds of the Issue are currently expected to be deployed in accordance with the schedule set forth below:
(In Rs. million)
Project/ Activity Fiscal 2011 Fiscal 2012 Fiscal 2013 Total
Construction of certain Ongoing Projects 875.01 - - 875.01
Purchase of a portion of unsecured fully
convertible debentures of TWDPL from
IAF - III and IAF - IV and PML
1,250.00 - - 1,250.00
General corporate purposes(1)
[●] [●] [●] [●]
Total [●] [●] [●] [●] (1) The amount to be deployed towards general corporate purposes will be decided after finalisation of the Issue Price
39
Our management, in accordance with the policies set up by our Board, will have flexibility in deploying the Net
Proceeds, as well as the discretion to revise its business plan from time to time and consequently the funding
requirement and deployment of funds may also change. This may include rescheduling the proposed utilisation of
Net Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the utilisation of Net
Proceeds. In the event of significant variations in the proposed utilisation, approval of our shareholders shall be duly
sought. In case of variations in the actual utilisation of funds earmarked for the purposes set forth above, increased
fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other
purposes for which funds are being raised in this Issue, including the funds available for general corporate purposes.
If such surplus funds are unavailable, the required financing will be met through internal accruals and debt. We
believe that such alternative arrangements would be available to fund any such shortfall. In the event any surplus
funds remain from the Net Proceeds of the Issue after meeting all the aforesaid objectives, such surplus proceeds
will be used for general corporate purposes including for meeting future growth opportunities.
Details of the Objects of the Issue
1. Construction of Certain Ongoing projects
The Company proposes to deploy a portion of the Net Proceeds of the Issue towards construction and
development costs of the following Ongoing Projects:
(a) Treasure Market City, Indore (Phase I) being developed by Indore Treasure Market City Private
Limited;
(b) Treasure Island, Raipur being developed by Raipur Treasure Island Private Limited; and
(c) Treasure Island, Jabalpur being developed by Jabalpur Treasure Island Private Limited.
For further details on the projects mentioned above, see “Business” on page 76 of this Draft Red Herring
Prospectus.
The details of the projects, including the utilisation of the Net Proceeds of the Issue, are as follows:
S.
No.
Project
Name
Estimated
Gross
Leaseable/
Saleable
Area* (in
Sq. ft.)
Project
commencement
date
Estimated
completion
date
Total
estimated
project
cost
(including
land cost)
(In Rs.
million)##
Amount
deployed
as at
May 31,
2010#
(In Rs.
million)
Amount
proposed to
be utilised
from the Net
Proceeds of
the Issue
(In Rs.
million)
Proposed to be
funded by
internal
accruals (In Rs.
million)
Sanctioned
Debt available
to be drawn
down by the
Company (as at
May 31, 2010)
(In Rs. million)
1. Treasure
Market
City, Indore
(Phase I)
970,075 February 2008 June 2011 3,415.00 1,793.55 189.34 446.82 867.29
2. Treasure
Island,
Raipur
828,343 September 2007 March 2011 2,227.00 1,379.66 507.63 16.37 243.93
3. Treasure
Island,
Jabalpur
464,889 August 2007 March 2011 1,365.00 849.25 178.04 5.06 290.00
Total Costs 7,007.00 4022.46 875.01 468.25 1401.22 * As per certificate dated May 31, 2010 issued by P.G. Patki Architects and Sanjay Puri Architects. # As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants. ## These are based on management estimates as per the certificate dated June 30, 2010. However, estimated civil construction costs excluding
mechanical, electrical and plumbing costs for each of the projects have also been certified by P.G. Patki Architects and Sanjay Puri Architects pursuant to their certificates dated May 31, 2010.
40
1. Treasure Market City, Indore (Phase I)
Break up of costs
The details of the break-up of the cost for Treasure Market City, Indore (Phase I) are set forth below:
(In Rs. million)
S.
No.
Particulars Total estimated
project cost
Amount deployed as
at May 31, 2010#
1. Land costs 134.52 134.52
2. Civil construction costs including mechanical,
electrical and plumbing costs
2,916.75 1,429.52
3. Pre-operative costs including finance costs,
selling, marketing, brokerage, administration and
other miscellaneous costs
363.73 229.51
Total 3,415.00 1,793.55 # As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants.
Means of Finance
The details of our means of finance for Treasure Market City, Indore (Phase I) is set forth below:
(In Rs. million)
Particulars Amount
Total cost 3,415.00
(Less) Amounts deployed as of May 31, 2010# 1,793.55
(Less) Proposed funding through internal accruals 446.82 (Less) Expected funding from Net Proceeds of the Issue 189.34 Balance funds required 985.29 75% firm tie-up required in-terms of Regulation 4(g) of the SEBI Regulations 738.97 Sanctioned debt available to be drawn down by the Company (as at May 31, 2010) 867.29
##
# As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants. ## UCO Bank and LIC Housing Finance Limited have granted a loan of Rs. 1,250 million pursuant to a joint deed of agreement for
term loan dated February 25, 2010. Further, State Bank of Indore has granted a loan of Rs. 400 million pursuant to a sanction letter
dated March 31, 2010.
Indore Treasure Market City Private Limited has sufficient cash and bank balance to finance the balance
funds required for construction and development of Treasure Market City Indore, (Phase I).
2. Treasure Island, Raipur
Break up of costs
The details of the break-up of the cost for Treasure Island, Raipur are set forth below:
(In Rs. million)
S.
No.
Particulars Total estimated
project cost
Amount deployed as at May
31, 2010#
1. Land costs 170.70 170.70 2. Civil construction costs including
mechanical, electrical and plumbing costs 1,669.19 914.03
3. Pre-operative cost including selling,
marketing, brokerage, administration and
other miscellaneous costs
387.11 294.93
Total 2,227.00 1,379.66 # As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants.
41
Means of Finance
The details of our means of finance for Treasure Island, Raipur is set forth below:
(In Rs. million)
Particulars Amount
Total cost 2,227.00
(Less) Amounts deployed as of May 31, 2010# 1,379.66
(Less) Proposed funding through internal accruals 16.37 (Less) Expected funding from Net Proceeds of the Issue 507.63 Balance funds required 323.34 75% firm tie-up required in-terms of Regulation 4(g) of the SEBI Regulations 242.51 Sanctioned debt available to be drawn down by the Company (as at May 31, 2010) 243.93
##
# As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants. ## Housing and Urban Development Corporation Limited has granted a loan of Rs. 900 million pursuant to a loan agreement dated
March 31, 2007.
Raipur Treasure Island Private Limited has sufficient cash and bank balance to finance the balance funds
required for construction and development of Treasure Island, Raipur.
3. Treasure Island, Jabalpur
Break up of costs
The details of the break-up of the cost for Treasure Island, Jabalpur are set forth below:
(In Rs. million)
S.
No.
Particulars Total estimated
project cost
Amount deployed as at May
31, 2010#
1. Land costs 125.47 125.47
2. Civil construction costs including
mechanical, electrical and plumbing costs 1,008.23 563.76
3. Pre-operative cost including selling,
marketing, brokerage, administration and
other miscellaneous costs
231.30 160.02
Total 1,365.00 849.25 # As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants.
Means of Finance
The details of our means of finance for Treasure Island, Jabalpur is set forth below:
(In Rs. million)
Particulars Amount
Total cost 1,365.00
(Less) Amounts deployed as of May 31, 2010# 849.25
(Less) Proposed funding through internal accruals 5.06 (Less) Expected funding from Net Proceeds of the Issue 178.04 Balance funds required 332.65 75% firm tie-up required in-terms of Regulation 4(g) of the SEBI Regulations 249.49 Sanctioned debt available to be drawn down by the Company (as at May 31, 2010) 290.00
##
# As per certificate dated June 9, 2010 by R.L. Porwal & Co., Chartered Accountants. ## Housing and Urban Development Corporation Limited has granted a loan of Rs. 660 million pursuant to a loan agreement dated
December 14, 2007.
Jabalpur Treasure Island Private Limited has sufficient cash and bank balance to finance the balance funds
required for construction and development of Treasure Island, Jabalpur.
The Company shall be deploying the Net Proceeds in the project specific SPVs implementing the above
mentioned projects in the form of debt or equity.
42
2. Purchase of a portion of unsecured fully convertible debentures issued by TWDPL from IAF - III,
IAF - IV and PML
The Company proposes to utilise a portion of the Net Proceeds of the Issue aggregating to Rs. 750 million
to purchase a portion of unsecured fully convertible debentures (“Convertible Debentures”) of TWDPL, a
subsidiary of the Company, from IAF - III and IAF - IV which are venture capital funds registered with
SEBI and managed by ICICI Venture Funds Management Company Limited or any other holders of the
Convertible Debentures, if the Convertible Debentures are transferred by IAF - III and IAF - IV in
accordance with the a share and debenture subscription agreement dated November 15, 2007
(“Agreement”). IAF - III and IAF - IV subscribed to 149,999,150 Convertible Debentures of face value Rs.
10 each and 10 equity shares of face value Rs. 10 each, at a price of Rs. 850 per equity share aggregating to
Rs. 1,500 million through the Agreement. The Convertible Debentures are convertible into the Equity
Shares of TWDPL inter alia (i) after the the maturity date, which is the date falling on the expiry of four
years and 90 days from the date of issue of the Convertible Debentures or (ii) prior to the initial public
offering of TWDPL in the event that TWDPL proposes to undertake an initial public offering. The
Convertible Debentures will yield a maturity interest at the rate of 5% per annum compounded semi
annually to be paid by TWDPL in cash and the balance amount of 15% per annum may be paid by
TWDPL, totalling to an IRR of 20% per annum, which shall accrue and be converted into Equity Shares of
TWDPL in accordance with the Investor Agreement. Until conversion, TWDPL has an option of paying an
additional coupon over and above the 5% interest to be paid in cash as mentioned above and such
additional amount shall not exceed 8% compounded semi annually. For further details of the share and
debenture subscription agreement, see “Subsidiaries and Joint Venture - Treasure World Developers
Private Limited - Corporate Information” on page 129 of this Draft Red Herring Prospectus.
The Company also proposes to utilise a portion of the Net Proceeds of the Issue aggregating to Rs. 500
million to purchase a portion of Convertible Debentures of TWDPL from PML. PML subscribed to
100,000,000 Convertible Debentures of face value Rs. 10 each aggregating to Rs. 1,000 million through a
share and debenture subscription agreement dated October 10, 2008. The Convertible Debentures are
convertible into the Equity Shares of TWDPL inter alia (i) after the maturity date, which is the date falling
on the expiry of four years and 90 days from the date of issue of the Convertible Debentures or (ii) prior to
the initial public offering of TWDPL in the event that TWDPL proposes to undertake an initial public
offering. For further details of the share and debenture subscription agreement, see “Subsidiaries and Joint
Venture - Treasure World Developers Private Limited - Corporate Information” on page 129 of this Draft
Red Herring Prospectus.
IAF - III, IAF - IV and PML have not converted any Convertible Debentures held by them into equity
shares of TWDPL as on date of this Draft Red Herring Prospectus. The details of the proposed purchase of
a portion of Convertible Debentures of TWDPL by the Company from the Net Proceeds of the Issue are set
forth in the table below:
Investor Date of
Agreement
Amount Invested in
Convertible
Debentures as at
March 31, 2010(In Rs.
million)
Amount Proposed to be utilised
by the Company to purchase a
portion of Convertible
Debentures from the Net
Proceeds of the Issue (In Rs.
million)
IAF - III and IAF - IV
managed by ICICI
Venture Funds
Management Company
Limited
November
15, 2007
1,500 750
PML October 10,
2008
1,000 500
Total 2,500 1,250
43
3. General Corporate Purposes
The Net Proceeds of the Issue will be first utilised towards the aforesaid items and the balance is proposed
to be utilised for general corporate purposes including but not restricted to strategic initiatives,
partnerships, joint ventures and acquisitions, meeting exigencies, which the Company in the ordinary
course of business may face, or any other purposes as approved by the Board.
Issue Expenses
The estimated Issue related expenses are as follows:
(In Rs. million)
Particulars Amounts* As % of total
expenses
As a
percentage of
Issue Size
Lead merchant bankers (including, underwriting
commission, brokerage and selling commission)
[●] [●] [●]
Registrars to the Issue [●] [●] [●]
Advisors [●] [●] [●]
Bankers to the Issue [●] [●] [●]
Others:
- Printing and stationery [●] [●] [●]
- Listing fees [●] [●] [●]
- Advertising and marketing expenses [●] [●] [●]
- IPO Grading fees [●] [●] [●]
- Others [●] [●] [●]
Total Estimated Issue Expenses [●] [●] [●] *Will be incorporated after finalisation of Issue Price
Bridge Financing Facilities
The Company has not raised any bridge loans from any bank or financial institution as on the date of this
Draft Red Herring Prospectus.
Interim use of Net Proceeds of the Issue
The Company, in accordance with the policies formulated by its Board from time to time, will have
flexibility in deploying the Net Proceeds received from the Issue. The particular composition, timing and
schedule of deployment of the Net Proceeds of the Issue will be determined by the Company based on the
development of the projects. Pending utilisation of the Net Proceeds of the Issue for the purposes described
above, the Company intends to temporarily invest the funds in interest bearing liquid instruments including
deposits with banks and investments in money market mutual funds and other financial products and
investment grade interest bearing securities as may be approved by the Board.
Monitoring of Utilisation of Funds
There is no requirement for a monitoring agency as the Issue size is less than Rs. 5,000 million. The Board
shall monitor the utilisation of the proceeds of the Issue. The Company will disclose the utilisation of the
proceeds of the Issue under a separate head along with details, if any in relation to all such proceeds of the
Issue that have not been utilised thereby also indicating investments, if any, of such unutilised proceeds of
the Issue in the balance sheet of the Company for the relevant financial years commencing from Fiscal
2011.
Pursuant to clause 49 of the Listing Agreement, the Company shall, on a quarterly basis, disclose to its
Audit Committee the uses and applications of the proceeds of the Issue. On an annual basis, the Company
44
shall prepare a statement of funds utilised for purposes other than those stated in this Draft Red Herring
Prospectus and place it before the Audit Committee. Such disclosure shall be made only until such time
that all the proceeds of the Issue have been utilised in full. The statement shall be certified by the statutory
auditors of the Company. Furthermore, in accordance with clause 43A of the Listing Agreement, the
Company shall furnish to the Stock Exchanges on a quarterly basis, a statement including material
deviations if any, in the utilisation of the process of the Issue from the objects of the Issue as stated above.
This information will also be published in newspapers simultaneously with the interim or annual financial
results, after placing the same before the Audit Committee.
No part of the Issue proceeds will be paid by the Company as consideration to Promoters, the Directors, the
Company‟s key management personnel or the Group Companies, except in the ordinary course of business.
45
BASIS FOR ISSUE PRICE
The Issue Price of Rs. [●] has been determined by the Company in consultation with the BRLMs, on the basis of
assessment of market demand from the investors for the offered Equity Shares by way of Book Building process.
The face value of the equity shares is Rs 10 and the Issue price is [●] times the face value at the lower end of the
Price Band and [●] times the face value at the higher end of the Price Band. Investors should also refer to “Risk
Factors” and “Financial Statements” on pages xi and 162 of this Draft Red Herring Prospectus. The financial data
presented in this section are based on the Company‟s financial statements, as restated.
QUALITATIVE FACTORS
Ownership and operation of shopping centers resulting in predictable and stable revenues
Consumption driven revenue model combined with stable rentals
Strategic relationships with large retailers
Early mover advantage and track record in fast growing and emerging cities
Quality project execution and professional management capabilities
Experienced and dedicated management
For more details on qualitative factors, refer to “Business” on page 76 of this Draft Red Herring Prospectus.
QUANTITATIVE FACTORS
Information presented in this section is derived from our Unconsolidated and Consolidated Restated Financial
Statements prepared in accordance with Indian GAAP. For more details, refer to “Financial Statements” on page
162 of this Draft Red Herring Prospectus.
Some of the quantitative factors which may form the basis for computing the Issue Price are as follows:
1. EARNING PER SHARE (EPS):
As per our Restated Unconsolidated Summary Statements:
Year ended Basic EPS (in Rs.) Diluted EPS (in Rs.) Weight
March 31, 2010 0.23 0.16 3
March 31, 2009 0.29 0.20 2
March 31, 2008 0.48 0.36 1
Weighted Average 0.29 0.21
As per our Restated Consolidated Summary Statements:
Year ended Basic EPS (in Rs.) Diluted EPS (in Rs.) Weight
March 31, 2010 2.00 1.38 3
March 31, 2009 (2.05) (2.05) 2
March 31, 2008 (0.32) (0.32) 1
Weighted Average 0.26 (0.05)
Note:
a) The Earning per Share has been computed on the basis of the restated profits and losses of the
respective years.
b) EPS calculations have been done in accordance with Accounting Standard 20-“Earning per share”
issued by the Institute of Chartered Accountants of India.
c) The allocation of bonus shares issued pursuant to the board meeting on May 12, 2010 and the
same have been taken into account while computing the EPS.
46
2. PRICE EARNING RATIO (P/E RATIO)
Price/Earning (P/E) ratio in relation to Issue Price of Rs. [●] per share of face value of Rs. 10 each:
a) As per our Restated Unconsolidated Summary Statements for year ended March 31, 2010:
i. For Basic EPS: Rs. [●]
ii. For Diluted EPS: Rs. [●]
b) As per our Restated Consolidated Summary Statements for year ended March 31, 2010:
i. For Basic EPS: Rs. [●]
ii. For Diluted EPS: Rs. [●]
c) Industry P/E* –
a. Highest: 163.0
b. Lowest: 4.7
c. Industry Composite: 31.6
* Source: “Capital Market” magazine Vol. no. XXV/06 dated May 17 - May 30, 2010 (Industry – Construction Sector)
3. RETURN ON NET WORTH:
Return on Net Worth as Per Restated Unconsolidated Financial Statements
Year Ended RONW (%) Weight
March 31, 2010 1.67% 3
March 31, 2009 1.88% 2
March 31, 2008 1.73% 1
Weighted Average 1.75%
Return on Net Worth as Per Restated Consolidated Financial Statements
Year Ended RONW (%) Weight
March 31, 2010 3.55% 3
March 31, 2009 (4.48%) 2
March 31, 2008 (0.91%) 1
Weighted Average 0.13%
4. Minimum return on Increased Net Worth after the Issue required to maintain pre-issue EPS for the
year ended March 31, 2009:
a. Based on Restated Unconsolidated Financial Statements:
i. At the Floor Price - [●]
ii. At the Cap Price - [●]
b. Based on Restated Consolidated Financial Statements:
i. At the Floor Price - [●]
ii. At the Cap Price - [●]
47
5. NET ASSET VALUE PER EQUITY SHARE:
a. As of March 31, 2010 (Consolidated): Rs. 38.97
b. As of March 31, 2010 (Unconsolidated): Rs. 14.05
c. Issue Price [●]*
d. As of March 31, 2010 (Consolidated) after the Issue: Rs. [●]
e. As of March 31, 2010 (Unconsolidated) after the Issue: Rs. [●]
*Issue Price per Equity Share will be determined on conclusion of book building process.
Net Asset Value per Equity Share represents Net Worth, as restated, divided by the number of Equity
Shares outstanding at the end of the period.
6. COMPARISON WITH INDUSTRY PEERS:
S.No Name of the company
Face
Value (Rs.
per Share)
Basic
EPS (Rs.)
P/E Ratio RoNW
(%)
NAV (Rs.)
1 PML 2 4.1 51.2 3.6 105.8
2 Brigade Enterprises 10 4.1 34.5 8.6 91.3
3 Omaxe 10 4.5 - 6.3 74.7
4 Sobha Developers 10 13.9 20.9 10.3 174.2
5 Entertainment World
Developers Limited ##
10 0.23 [●] 1.67 14.05
Source: “Capital Market” magazine Vol. no. XXV/06 dated May 17 - May 30, 2010 (Industry –
Construction Sector- Based on the standalone audited financial statements.)
## Based on the Restated Unconsolidated Financial Statements for the year ended March 31, 2010
Since the Issue is being made through the 100% Book Building Process, the Issue Price will be determined on the
basis of investor demand.
The face value of our Equity Shares is Rs.10 each and the Issue Price is [●] times of the face value of our Equity
Shares.
The Issue Price of Rs. [●] has been determined by us, in consultation with the BRLMs on the basis of the demand
from investors for the Equity Shares through the Book-Building Process and is justified based on the above
quantitative and qualitative factors. For further details, see “Risk Factors” on page xi of this Draft Red Herring
Prospectus and the financials of the Company including important profitability and return ratios, as set out in
“Financial Statements” on page 162 of this Draft Red Herring Prospectus to have a more informed view. The trading
price of the Equity shares of the company could decline due to the factors mentioned in “Risk Factors” and you may
lose all or part of your investments.
48
STATEMENT OF TAX BENEFITS
9 June 2010
Entertainment World Developers Ltd.
G-16, R.R. Hosirey Building,
Shri Laxmi Woolen Mills Estate,
Dr.E.Moses Road,
Mahalaxmi
Mumbai – 400 011
Dear Sir,
Re: Statement of Possible Direct Tax Benefits
We hereby submit that the enclosed annexure states the possible tax benefits available to Entertainment World
Developers Ltd. (“Company”) and its shareholders under the current tax laws in India. Several of these benefits are
dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws.
Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such
conditions, which based on business imperatives the Company faces in the future, the Company may or may not
choose to fulfill.
The benefits discussed in the attached annexure are not exhaustive. This statement is only intended to provide
general information to the investors and is neither designed nor intended to be a substitute for professional tax
advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised
to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation
in the issue particularly in view of the fact that certain recently enacted legislation may not have a direct legal
precedent or may have a different interpretation on the benefits, which an investor can avail.
We do not express any opinion or provide any assurance whether:
the Company or its shareholders will continue to obtain these benefits in future; or
the conditions prescribed for availing the benefits have been or would be met with.
The contents of this annexure are based on information, explanations and representations obtained from the
Company and on the basis of our understanding of the business activities and operations of the Company.
49
ANNEXURE
STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO ENTERTAINMENT WORLD
DEVELOPERS LTD. (“COMPANY”) AND TO ITS SHAREHOLDERS
A. Under the Income Tax Act, 1961 (“the Act”)
I. Special tax benefits available to the company
There are no special tax benefits available under the Act to the Company.
II. General tax benefits available to the company
1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O received on
the shares of any Indian company is exempt from tax. However, as per section 94(7) of the Act, losses
arising from sale / transfer of shares, where such shares are purchased within three months prior to the
record date and sold within three months from the record date, will be disallowed to the extent such loss
does not exceed the amount of dividend claimed exempt.
2. As per section 10(35) of the Act, the following income will be exempt in the hands of the Company:
a. Income received in respect of the units of a Mutual Fund specified under clause (23D) of section
10; or
b. Income received in respect of units from the Administrator of the specified undertaking; or
c. Income received in respect of units from the specified company:
However, this exemption does not apply to any income arising from transfer of units of the Administrator
of the specified undertaking or of the specified Company or of a mutual fund, as the case may be.
For this purpose (i) “Administrator” means the Administrator as referred to in section 2(a) of the Unit Trust
of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) “Specified Company” means a Company
as referred to in section 2(h) of the said Act.
Further, as per section 94(7) of the Act, losses arising from the sale / redemption of units purchased within
three months prior to the record date (for entitlement to receive income) and sold within nine months from
the record date, will be disallowed to the extent such loss does not exceed the amount of income claimed
exempt.
As per section 94(8) of the Act, if an investor purchases units within three months prior to the record date
for entitlement of bonus, is allotted bonus units without any payment on the basis of holding original units
on the record date and such person sells / redeems the original units within nine months of the record date,
then the loss arising from sale/ redemption of the original units will be ignored for the purpose of
computing income chargeable to tax and the amount of loss ignored shall be regarded as the cost of
acquisition of the bonus units.
3. As per section 2(42A) of the Act, shares held in a company or any other security listed in a recognized
stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section
10(23D) or a zero coupon bonds will be considered as short term capital asset if the period of holding of
such security is 12 months or less. If the period of holding is more than 12 months, it will be considered as
long term capital assets. In respect of other assets the determinative period of holding is 36 months as
against 12 months mentioned above. Further, gain / loss arising from short term capital asset and long term
capital asset is regarded as short term capital gain and long term capital gain respectively.
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4. As per section 10(38) of the Act, long term capital gains arising to the company from the transfer of long
term capital asset being an equity share in a company or a unit of an equity oriented fund where such
transaction has been entered into on a recognised stock exchange of India and is chargeable to securities
transaction tax will be exempt in the hands of the Company.
For this purpose, “Equity Oriented Fund” means a fund –
(i) where the investible funds are invested by way of equity shares in domestic companies to the
extent of more than sixty five percent of the total proceeds of such funds; and
(ii) which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the
Act.
As per section 115JB, while calculating “book profits” the Company will not be able to reduce the long
term capital gains to which the provisions of section 10(38) of the Act apply and will be required to pay
Minimum Alternate Tax @ 18% (plus applicable surcharge and education cess) of the book profits
including long term capital gains to which provisions of section 10(38) applies.
5. Section 14A of the Act restricts claim for deduction of expenses incurred in relation to incomes which do
not form part of the total income under the Act. Thus, any expenditure incurred to earn tax exempt income
is not tax deductible.
6. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term
capital gain (in case not covered under section 10(38) of the Act) arising on the transfer of a Long Term
Capital Asset would be exempt from tax if such capital gain is invested within 6 months from the date of
such transfer in a “long term capital asset”. The investment in the long term specified assets is eligible for
such deduction to the extent of Rs.50,00,000 during any financial year. However, if the assessee transfers
or converts the long term specified asset into money within a period of three years from the date of its
acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term
capital gains in the year in which the long term specified asset is transferred or converted into money.
A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st
day of April 2007:
(i) by the National Highways Authority of India constituted under section 3 of the National Highways
Authority of India Act, 1988; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956.
7. As per section 111A of the Act, short term capital gains arising to the Company from the sale of equity
share or a unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax,
will be taxable at the rate of 15% (plus applicable surcharge and education cess). As per section 70 read
with section 74 of the Act, short-term capital loss, if any arising during the year can be set-off against short-
term capital gain as well as against the long-term capital gains and shall be allowed to be carried forward
upto eight assessment years immediately succeeding the assessment year for which the loss was first
computed.
8. As per section 112 of the Act, taxable long-term capital gains, on which securities transaction tax is not
paid, on sale of listed securities or units or zero coupon bonds will be charged to tax at the concessional rate
of 20% (plus applicable surcharge and education cess) after considering indexation benefits in accordance
with and subject to the provisions of section 48 of the Act or at 10% (plus applicable surcharge and
education cess) without indexation benefits, at the option of the Company. Under section 48 of the Act, the
long term capital gain arising out of the sale of capital asset will be computed after indexing the cost of
acquisition / improvement. As per section 70 read with section 74 of the Act, long-term capital loss, if any
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arising during the year can be set-off only against long-term capital gain and shall be allowed to be carried
forward upto eight assessment years immediately succeeding the assessment year for which the loss was
first computed for set off against future long term capital gain.
9. As per the provisions of section 32(2) of the Act, where full effect cannot be given to the depreciation
allowance in any year, the same can be carried forward and claimed in the subsequent years as depreciation
of subsequent years. Further, as per the provisions of section 72 of the Act, unabsorbed business losses
which are not set off in any previous year can be carried forward upto eight assessment years immediately
succeeding the assessment year for which the loss was first computed and set off against the business
profits of the subsequent assessment years. However, the carry forward and set off of business losses is
subject to (i) the provisions of section 79 of the Act dealing with carry forward and set off of losses in case
of companies (not being companies in which public are substantially interested) in which change in
shareholding is more than 49% and (ii) section 80 of the Act dealing with submission of returns for losses.
10. As per section 115JAA(1A) of the Act, credit is allowed in respect of any Minimum Alternate Tax paid
under section 115JB of the Act for any assessment year commencing on or after 1st day of April 2006. Tax
credit to be allowed shall be the difference between Minimum Alternate Tax paid and the tax computed as
per the normal provisions of the Act for that assessment year. The Minimum Alternate Tax credit shall not
be allowed to be carried forward beyond tenth assessment year immediately succeeding the assessment
year in which tax credit become allowable.
III. General tax benefits available to Resident Shareholders
1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O received on
the shares of any Indian company is exempt from tax. However, as per section 94(7) of the Act, losses
arising from sale / transfer of shares, where such shares are purchased within three months prior to the
record date and sold within three months from the record date, will be disallowed to the extent such loss
does not exceed the amount of dividend claimed exempt.
2. As per section 2(42A) of the Act, shares held in a company or any other security listed in a recognized
stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section
10(23D) or a zero coupon bonds will be considered as short term capital asset if the period of holding of
such security is 12 months or less. If the period of holding is more than 12 months, it will be considered as
long term capital assets. In respect of other assets the determinative period of holding is 36 months as
against 12 months mentioned above. Further, gain / loss arising from short term capital asset and long term
capital asset is regarded as short term capital gain and long term capital gain respectively.
3. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term capital
asset being an equity share of the Company, where such transaction has been entered into on a recognised
stock exchange of India and is chargeable to securities transaction tax, will be exempt in the hands of the
shareholder.
4. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of the
Company, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of
15% (plus applicable surcharge and education cess). As per section 70 read with section 74 of the Act,
short-term capital loss, if any arising during the year can be set-off against short-term capital gain as well as
against the long-term capital gains and shall be allowed to be carried forward upto eight assessment years
immediately succeeding the assessment year for which the loss was first computed.
5. Section 14A of the Act restricts claim for deduction of expenses incurred in relation to incomes which do
not form part of the total income under the Act. Thus, any expenditure incurred to earn tax exempt income
is not tax deductible.
6. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term
capital gain (in case not covered under section 10(38) of the Act) arising on the transfer of shares of a
Company would be exempt from tax if such capital gain is invested within 6 months from the date of such
52
transfer in a “long term capital asset”. The investment in the long term specified assets is eligible for such
deduction to the extent of Rs.50,00,000 during any financial year. However, if the assessee transfers or
converts the long term specified asset into money within a period of three years from the date of its
acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term
capital gains in the year in which the long term specified asset is transferred or converted into money.
A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st
day of April 2007:
(i) by the National Highways Authority of India constituted under section 3 of the National Highways
Authority of India Act, 1988; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956.
7. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on
the transfer of the shares of the Company held by an Individual or Hindu Undivided Family (HUF) will be
exempt from capital gains tax if the net consideration is utilized to purchase or construct a residential
house. The residential house is required to be purchased within a period of one year before or two years
after the date of transfer or to be constructed within three years after the date of transfer. Such benefit will
not be available:
(a) if the Individual or HUF -
owns more than one residential house, other than the new residential house, on the date of
transfer of the shares; or
purchases another residential house within a period of one year after the date of transfer
of the shares; or
constructs another residential house within a period of three years after the date of
transfer of the shares; and
(b) the income from such residential house, other than the one residential house owned on the date of
transfer of the original asset, is chargeable under the head “Income from house property”.
If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the
capital gain the same proportion as the cost of the new residential house bears to the net consideration, will
be exempt.
If the new residential house is transferred within a period of three years from the date of purchase or
construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be
income chargeable under the head “Capital Gains” of the year in which the residential house is transferred.
8. As per section 112 of the Act, taxable long-term capital gains, on which securities transaction tax is not
paid, on sale of listed securities will be charged to tax at the rate of 20% (plus applicable surcharge and
education cess) after considering indexation benefits or at 10% (plus applicable surcharge and education
cess) without indexation benefits, whichever is less. Under section 48 of the Act, the long term capital gain
arising out of the sale of capital asset will be computed after indexing the cost of acquisition /
improvement. As per section 70 read with section 74 of the Act, long-term capital loss, if any arising during
the year can be set-off only against long-term capital gain and shall be allowed to be carried forward upto
eight assessment years immediately succeeding the assessment year for which the loss was first computed
for set off against future long term capital gain.
53
9. As per section 36(1)(xv) of the Act, the securities transaction tax paid by the shareholder in respect of
taxable securities transactions entered in the course of the business will be eligible for deduction from the
income chargeable under the head “Profits and Gains of Business or Profession” if income arising from
taxable securities transaction is included in such income.
IV. General tax benefits available to Non-Resident Shareholders (Other than FIIs)
1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O received on
the shares of any Indian company is exempt from tax. However, as per section 94(7) of the Act, losses
arising from sale / transfer of shares, where such shares are purchased within three months prior to the
record date and sold within three months from the record date, will be disallowed to the extent such loss
does not exceed the amount of dividend claimed exempt.
2. As per section 10(38) of the Act, long term capital gains arising from the transfer of long term capital asset
being an equity share of the Company, where such transaction has been entered into on a recognised stock
exchange of India and is chargeable to securities transaction tax, will be exempt in the hands of the
shareholder.
3. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of the
Company, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of
15% (plus applicable surcharge and education cess). As per section 70 read with section 74 of the Act,
short-term capital loss, if any arising during the year can be set-off against short-term capital gain as well as
against the long-term capital gains and shall be allowed to be carried forward upto eight assessment years
immediately succeeding the assessment year for which the loss was first computed.
4. Section 14A of the Act restricts claim for deduction of expenses incurred in relation to incomes which do
not form part of the total income under the Act. Thus, any expenditure incurred to earn tax exempt income
is not tax deductible.
5. As per first proviso to section 48 of the Act, in case of a non resident shareholder, the capital gain/loss
arising from transfer of shares of the Company, acquired in convertible foreign exchange, is to be
computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and
exclusively in connection with such transfer, into the same foreign currency which was initially utilized in
the purchase of shares. Cost Indexation benefit will not be available in such a case. As per section 112 of
the Act, taxable long-term capital gains, on which securities transaction tax is not paid, on sale of shares of
the company will be charged to tax at the rate of 20% (plus applicable surcharge and education cess). The
benefit of proviso to section 112(1) providing for tax rate of 10% on long-term capital gains without
indexation may be available to listed securities. As per section 70 read with section 74 of the Act, long-
term capital loss, if any arising during the year can be set-off only against long-term capital gain and shall
be allowed to be carried forward upto eight assessment years immediately succeeding the assessment year
for which the loss was first computed for set off against future long term capital gain.
6. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term
capital gain (in case not covered under section 10(38) of the Act) arising on the transfer of shares of a
Company would be exempt from tax if such capital gain is invested within 6 months from the date of such
transfer in a “long term capital asset”. The investment in the long term specified assets is eligible for such
deduction to the extent of Rs.50,00,000 during any financial year. However, if the assessee transfers or
converts the long term specified asset into money within a period of three years from the date of its
acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term
capital gains in the year in which the long term specified asset is transferred or converted into money.
A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st
day of April 2007:
(i) by the National Highways Authority of India constituted under section 3 of the National Highways
Authority of India Act, 1988; or
54
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956.
7. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on
the transfer of the shares of the Company held by an Individual or Hindu Undivided Family (HUF) will be
exempt from capital gains tax if the net consideration is utilized to purchase or construct a residential
house. The residential house is required to be purchased within a period of one year before or two years
after the date of transfer or to be constructed within three years after the date of transfer. Such benefit will
not be available:
(a) if the Individual or HUF -
owns more than one residential house, other than the new residential house, on the date of
transfer of the shares; or
purchases another residential house within a period of one year after the date of transfer
of the shares; or
constructs another residential house within a period of three years after the date of
transfer of the shares; and
(b) the income from such residential house, other than the one residential house owned on the date of
transfer of the original asset, is chargeable under the head “Income from house property”.
If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the
capital gain the same proportion as the cost of the new residential house bears to the net consideration, will
be exempt.
If the new residential house is transferred within a period of three years from the date of purchase or
construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be
income chargeable under the head “Capital Gains” of the year in which the residential house is transferred.
8. As per section 36(1)(xv) of the Act, the securities transaction tax paid by the shareholder in respect of
taxable securities transactions entered in the course of the business will be eligible for deduction from the
income chargeable under the head “Profits and Gains of Business or Profession” if income arising from
taxable securities transaction is included in such income.
9. In respect of non-residents, the tax rates and consequent taxation mentioned above will be further subject to
any benefits available under the Tax Treaty, if any, between India and the country in which the non-
resident is considered resident in terms of such Tax Treaty. As per the provisions of section 90(2) of the
Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are
more beneficial to the non-resident.
V. Special tax benefits available to Non-Resident Indians
1. As per section 115C(e) of the Act, the term “non-resident Indians” means an individual, being a citizen of
India or a person of Indian origin who is not a “resident”. A person shall be deemed to be of Indian origin if
he, or either of his parents or any of his grand-parents, was born in undivided India.
2. As per section 115E of the Act, in the case of a shareholder being a non-resident Indian, and subscribing to
the shares of the Company in convertible foreign exchange, in accordance with and subject to the
prescribed conditions, long term capital gains arising on transfer of the shares of the Company (in cases not
covered under section 10(38) of the Act) will be subject to tax at the rate of 10% (plus applicable surcharge
and education cess), without any indexation benefit.
55
3. As per section 115F of the Act and subject to the conditions specified therein, in the case of a shareholder
being a non-resident Indian, gains arising on transfer of a long term capital asset being shares of the
Company will not be chargeable to tax if the entire net consideration received on such transfer is invested
within the prescribed period of six months in any specified asset or savings certificates referred to in
section 10(4B) of the Act. If part of such net consideration is invested within the prescribed period of six
months in any specified asset or savings certificates referred to in section 10(4B) of the Act then this
exemption would be allowable on a proportionate basis. Further, if the specified asset or savings certificates
in which the investment has been made is transferred within a period of three years from the date of
investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long term
capital gains in the year in which such specified asset or savings certificates are transferred.
4. As per section 115G of the Act, Non-Resident Indians are not obliged to file a return of income under
section 139(1) of the Act, if their only source of income is income from specified investments or long term
capital gains earned on transfer of such investments or both, provided tax has been deducted at source from
such income as per the provisions of Chapter XVII-B of the Act.
5. As per section 115H of the Act, where Non-Resident Indian becomes assessable as a resident in India, he
may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year
under section 139 of the Act to the effect that the provisions of Chapter XII-A shall continue to apply to
him in relation to investment income derived from the investment in equity shares of the Company as
mentioned in section 115C(f)(i) of the Act for that year and subsequent assessment years until assets are
converted into money.
6. As per section 115I of the Act, a Non-Resident Indian may elect not to be governed by the provisions of
Chapter XII-A for any assessment year by furnishing a declaration along with his return of income for that
assessment year under section 139 of the Act, that the provisions of Chapter XII-A shall not apply to him
for that assessment year and accordingly his total income for that assessment year will be computed in
accordance with the other provisions of the Act.
7. In respect of non-resident Indian, the tax rates and consequent taxation mentioned above will be further
subject to any benefits available under the Tax Treaty, if any, between India and the country in which the
non-resident is considered resident in terms of such Tax Treaty. As per the provisions of section 90(2) of
the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are
more beneficial to the non-resident.
VI. Benefits available to Foreign Institutional Investors („FIIs‟)
Special tax benefits
1. As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under the
provision of section 10(38) of the Act, at the following rates:
Nature of income Rate of tax (%)
Long term capital gains 10
Short term capital gains (other than referred to in section 111A) 30
Short term capital gains referred in section 111A 15
The above tax rates have to be increased by the applicable surcharge and education cess.
2. As per section 196D(2) of the Act, no deduction of tax at source will be made in respect of income by way
of capital gain arising from the transfer of securities referred to in section 115AD.
3. In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is levied
on the capital gains computed without considering the cost indexation and without considering foreign
exchange fluctuation.
56
General tax benefits
4. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.
dividends declared, distributed or paid on or after 1 April 2003 by the Company) received on the shares of
the Company is exempt from tax.
5. As per section 10(38) of the Act, long term capital gains arising from the transfer of long term capital asset
being an equity share of the Company, where such transaction is chargeable to securities transaction tax,
will be exempt to tax in the hands of the FIIs.
6. As per section 70 read with section 74 of the Act, short term capital loss, if any, arising during the year can
be set off against short term capital gain and long term capital gain. It also provides that long-term capital
loss, if any arising during the year can be set-off only against long-term capital gain. Both the short term
capital loss and long term capital loss shall be allowed to be carried forward upto eight assessment years
immediately succeeding the assessment year for which the loss was first computed. However the brought
forward long term capital loss can be set off only against future long term capital gains.
7. The tax rates and consequent taxation mentioned above will be further subject to any benefits available
under the Tax Treaty, if any, between India and the country in which the FII is considered as resident in
terms of such Tax Treaty. As per the provisions of section 90(2) of the Act, the provisions of the Act would
prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the FII.
8. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term
capital gain (in case not covered under section 10(38) of the Act) arising on the transfer of shares of a
Company would be exempt from tax if such capital gain is invested within 6 months from the date of such
transfer in a “long term capital asset”. The investment in the long term specified assets is eligible for such
deduction to the extent of Rs.50,00,000 during any financial year. However, if the assessee transfers or
converts the long term specified asset into money within a period of three years from the date of its
acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term
capital gains in the year in which the long term specified asset is transferred or converted into money.
A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st
day of April 2007:
(i) by the National Highways Authority of India constituted under section 3 of the National Highways
Authority of India Act, 1988; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956.
VII. Special tax benefits available to Mutual Funds
As per section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and
Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector
banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India will be
exempt from income tax, subject to such conditions as the Central Government may, by notification in the
Official Gazette, specify in this behalf.
B. General benefits available under the Wealth Tax Act, 1957
Asset as defined under section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies and
hence, shares are not liable to wealth tax.
The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary manner
only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership
and disposal of shares.
57
NOTES:
(i) All the above benefits are as per the current tax laws.
(ii) In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax
advisor with respect to specific tax consequences of his/her investments in the shares of the company.
58
SECTION IV: ABOUT THE COMPANY
INDUSTRY OVERVIEW
The information in this section is derived from various government publications and industry sources. Neither us
nor any other person connected with the Issue has verified this information. Industry sources and publications
generally state that the information contained therein has been obtained from sources generally believed to be
reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability
cannot be assured and, accordingly, investment decisions should not be based on such information.
We have also relied on reports prepared by Jones Lang Lasalle Meghraj (“JLLM”), entitled Residential
Opportunities in Central India, dated January 10, 2010 and Retail: Off the Beaten Track dated January 10, 2010
(together, the “JLLM Reports”). We commissioned the JLLM Reports for the purposes of confirming our
understanding of the industry in connection with the Issue. Neither we nor any other person connected with the Issue
has verified the information in the JLLM Reports.JLLM has advised that: (i) some information in JLLM database is
derived from estimates or subjective judgments; (ii) the information in the databases of other similar agencies may
differ from the information in JLLM database; (iii) while JLLM has taken reasonable care in the compilation of the
statistical and graphical information and believes it to be accurate and correct, data compilation is subject to
limited audit and validation procedures and may accordingly contain errors; (iv) JLLM, its agents, officers and
employees do not accept liability for any loss suffered in consequence of reliance on such information or in any
other manner; (v) the provision of such information does not obviate any need to make appropriate further
enquiries; and (vi) the provision of such information is not an endorsement of any commercial policies or any
conclusions by JLLM. Prospective investors are advised not to unduly rely on the JLLM Reports when making their
investment decision. The JLLM Reports contain estimates of market conditions based on samples. This information
should not be viewed as a basis for investment and references to the research should not be considered JLLM’s
opinion as to the value of any security or the advisability of investing in us.
Growth in the Indian Economy
India is the world‟s largest democracy by population size and one of the fastest growing economies in the world.
India‟s estimated population was approximately 1.16 billion people as of July 2009. India had an estimated Gross
Domestic Product (“GDP”) on a purchasing power parity basis of approximately US$ 3.3 trillion in 2008, making it
the fifth largest economy in the world after the European Union, United States of America, China and Japan.
(Source: CIA World Factbook) In the past few years, India has experienced rapid economic growth, with GDP
growing at an average growth rate of 8.8% between the fiscal year 2003 to the fiscal year 2007. This high growth
rate was slowed in the fiscal year 2009 with the growth rate of India‟s GDP decelerating to 6.7%, compared to 9.0%
in fiscal 2008, as a result of the global economic downturn. (Source: RBI, Macroeconomic and Monetary
Developments: Third Quarter Review 2009-10)
However, despite the global economic decline in the fiscal year 2008, India is showing positive signs of recovery
following the global economic downturn. Based on the Economic Outlook for fiscal 2010 by the Economic
Advisory Council to the Prime Minister, the Indian Economy may grow by about 7.2% in the fiscal year 2010 and
return to a 9% growth rate in the next two years. The world GDP growth rate for 2010 is estimated at 4.0%
according to the World Economic Outlook, January 2010 published by IMF.
The graph below is a comparison between India‟s expected GDP growth rate during calendar years 2009 and 2010,
as compared to advanced economies, developing economies, China and the world. As shown by the graph, all of the
countries are expected to experience positive growth in the calendar year 2010. This is due to the fact that economic
conditions have improved more than expected, owing mainly to Government intervention. Further, India‟s growth is
expected to outperform advanced and developing economies. Recent data suggests that the rate of decline in
economic activity is moderating, although this is occurring to varying degrees across different regions. Overall,
liquidity has improved and capital market activity has picked up substantially across the world.
59
3.0%
-0.8%
3.9%
-3.2%
2.1%
6.1%
2.1%
6.0%
7.3%
5.6%
7.7%
9.6%
8.7%
10.0%
0.5%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2008 2009 2010
World Advanced Economies Developing Economies India China
Source: International Monetary Fund, World Economic Outlook Update, January 2010 (Calendar Year Growth Rates)
India‟s recovery from the global economic slowdown (and its own slowdown in credit availability) has been by the
country‟s large domestic savings and corporate retained earnings, which have been used to finance investment.
Similarly, although urban consumption has slowed as a result of a recent decline in the labor market and job losses,
low export dependence, large rural consumption and employment have helped India to sustain consumption. Finally,
fiscal policy, primarily in the form of reduced interest rates and Government intervention, has helped to maintain
private demand, liquidity and short-term rates, thereby reducing the risk of loan losses.
The Real Estate Sector in India
The real estate sector in India comprises the development of residential housing, commercial buildings, hotels,
restaurants, cinemas, retail outlets and the purchase and sale of land and development rights. The real estate and
construction sector play an important role in the overall development of India‟s core infrastructure. It also plays a
significant role in the country's economy. The real estate sector is second only to agriculture in terms of employment
generation and contributes heavily towards the GDP. Almost five per cent of the country's GDP is contributed to by
the housing sector. In the next five years, this contribution to the GDP is expected to rise to 6 per cent. (Source:
India Brand Equity Forum, www.ibef.org)
The real estate sector has evolved in the past 10 years, accompanied by various regulatory reforms. The following
factors have a significant effect on the various segments of the industry:
Economic growth: The International Monetary Fund has projected a positive growth rate for the Indian
economy during calendar years 2009 and 2010. India‟s growth rate is expected to be faster than that of both
the advanced and the developing economies as a whole. Increased ecomonic growth is expected to have
positive effect on the real estate sector. (Source: International Monetary Fund, World Economic Outlook
Update, January 2010)
Demographic profile: The percentage of the Indian population that is made up of the earning population (in
the 20-59 age bracket) is expected to increase. An increase in the earning population usually leads to
increased spending and consumption in the economy which may in turn lead to stronger demand for the
real estate industry.
Growth of mortgage finance and credit take-off: Growth in the real estate sector is directly affected by the
growth of mortgage finance and lending to the real estate sector in the country, both in terms of reach and
affordability. As a large proportion of the investment in real estate sector is funded by bank and financial
institutions, increased credit take-off acts as a stimulus to the sector.
60
Government policies: A number of Reserve Bank of India (“RBI”) initiatives have helped to increase the
real estate sector‟s access to capital. The Government of India in March 2005 amended existing legislation
to allow 100% Foreign Direct Investment (“FDI”) in the real estate sector, subject to certain restrictions. It
is expected that the increased FDI will provide the necessary funding to help meet demand in the
commercial and residential real estate sectors. The following table shows that FDI inflow in the housing
and real estate sector was second only to the services sector during the three most recent fiscal years:
Sector 2007-08
(Rs. in crore)
2008-09
(Rs. in crore)
2009-10
(Rs. in crore)
Services
(Financial and Non-Financial)
26,589 28,411 20,958
Computer Software and Hardware 5,623 7,329 4,350
Telecommunications 5,103 11,727 12,338
Housing and Real Estate 8,749 12,621 13,586
Construction Activities
(including roads & highways)
6,989 8,792 13,544
Power 3,875 4,382 6,908
Automobiles 2,697 5,212 5,609
Metallurgical Industries 4,686 4,157 1,935
Petroleum and Natural Gas 5,729 1,931 1,328
Chemicals
(other than fertilizers)
920 3427 1,707
(Source: Department of Industrial Policy and Promotion, Fact Sheet On Foreign Direct Investment (FDI),
March 2010)
While the real estate sector in India has historically been unorganized, the sector has, in recent years,
exhibited a trend towards greater organization and transparency, accompanied by various regulatory
reforms. These reforms include:
the support of the Government of India in repealing of the Urban Land (Ceiling and Regulation)
Act (“ULCRA”), most state governments have repealed ULCRA except for West Bengal, Bihar
and Jharkhand;
modifications in the Rent Control Act to provide greater protection to homeowners wishing to rent
out their properties;
the rationalisation of property taxes in a numbers of states; and
the proposed computerisation of land records.
This trend has contributed towards the development of reliable indicators of value and organized
investment in the real estate sector by domestic and international financial institutions and has resulted in
the greater availability of financing for real estate developers and homeowners. The increased investment in
the real estate sector is being driven by: rising demand; heightened consumer expectations that are
influenced by higher disposable incomes; increased globalization and the introduction of new real estate
products and services.
61
Key Segments of Indian Real Estate
Retail Real Estate Infrastructure
Changing Consumption Patterns of Indian Consumers
Historically, the Indian retail sector has been dominated by small independent local retailers, such as traditional
neighborhood grocery stores. However, during the 1990s, organized retail outlets gained increased acceptance due to
an increase in the number of working women, changes in perception of branded products, entry of international
retailers and a growing number of retail malls. India‟s retail boom primarily originated in the Mature cities and has
subsequently expanded to High Growth and Emerging cities (as defined below), with leading retailers and
developers continuing to plan shopping malls and hypermarkets in these locations.
The growth of organized retail segment is expected to be driven by demographic factors, increasing disposable
incomes, the increased purchasing power of the growing middle class and consumerist aspirations, in addition to
macro economic policy decisions, such as allowing FDI in single brand retailing and cash-and-carry formats.
Although real estate development in the retail sector is relatively new in India, both domestic and foreign investors
have invested substantial capital in this sector in recent years.
The size of the Indian retail market was approximately US$ 410 billion in calendar year 2008, out of which modern
retail was approximately US$ 18 billion. Projected retail demand figures show that Indian retail market is expected
to be approximately US$ 535 billion by 2013. Out of this, modern retail would constitute US$ 73 billion, which
would result in a Compounded Annual Growth Return (“CAGR”) of over 30%. Investment up to US$ 30 billion is
anticipated over next five years in the modern retail sector. Over 20,000 new retail outlets are expected to open in
next two years. (Source: Technopak Report: India Growth Story: Pyramid To Diamond – Rise Of Consuming Class,
The Department of Tourism, Government of India has initiated a number of steps to ensure full utilization of the
potential which tourism holds for India‟s economy. Current regulations by the Government of India allow 100% FDI
in the Hospitality Sector through the automatic route. This has increased the amount of capital available for
investment into the sector.
Specific incentives given to the hospitality industry at the central and the state level include:
Incentives at Central Level:
Elimination of customs duty for import of raw materials, equipment and liquor among others;
Capital subsidy program for budget hotels fringe benefit tax exempted on crèche, employee sports and
guest house facilities; and
Five year income tax holiday granted to two to four star hotels established in specified districts which have
been declared UNESCO-declared 'World Heritage Sites'
Incentives at State Level:
Exemptions on luxury tax and sales tax for five to seven years for new projects;
Small capital subsidy for the development of budget hotels;
Below market rate allotment of land controlled by States for development projects;
Five year income tax holiday for two to four star hotels and convention centers (minimum 3,000 people) in
National Capital Region (“NCR”); and
In order to increase the built-up area of Delhi, zonal auction rate has been reduced by the Government of
India.
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External Growth Drivers
1. Rising GDP
Overall India‟s economy has experienced a positive rate of growth with a growth rate of 9.6% and 9% in
the fiscal year 2007 and the fiscal year 2008 respectively. Despite slowdown, the GDP growth for the fiscal
year 2009 is projected at 7.1%. An increase in GDP may act as a stimulant to growth in the hospitality
sector.
GDP
7831,050
1,487
2,135
-
500
1,000
1,500
2,000
2,500
2003 2008 2013 2018
US
$ B
n
(Source: Technopak Report: Indian Hospitality Industry Outlook, February 2009)
2. FDI Inflow
Of the total FDI inflow between the fiscal years 2000 and 2008, the hospitality sector contributed 1.56% of
the total inflow, amounting to US$ 1.07 billion. The hospitality sector requires more than US$ 10 billion
investment in the next two to three years for which the government is relying on FDI. (Source: Technopak
Report: Indian Hospitality Industry Outlook, February 2009)
3. Changing Consumer Dynamics and Ease of Access to Finance
Nominal per capita income growth averaged at approximately 7.3%, which was higher than the average
inflation rate of 5.1% during fiscal years 2004 to 2008. India has also experienced significant growth in the
credit card market. The credit card base in 2008 was estimated to be 25 million and this is expected to grow
at 20 to 25% per annum. Driving this growth is the increased use of credit cards for the purpose of
purchasing due to attractive and consumer friendly schemes being offered by various banks. 35% of those
who use credit cards use it for travel, hotel and dining.
4. Increasing Domestic and International Tourist Arrivals
There has been an increase in the number of tourists, both domestic as well as international.
From 310 million domestic visits in 2003, the number rose to 529 million in 2007, a CAGR of 14%. The
Ministry of Tourism‟s vision is to achieve 760 million domestic visits by the year 2011, with an annual
average growth rate of 12%.
Foreign tourist arrivals (“FTAs”) increased by 5.7% during 2008 and reached 5.37 million compared to
5.08 million during 2007. Foreign exchange earnings increased by 8%, to US$ 11.5 billion in 2008 from
US$ 10.70 billion in 2007. The Ministry of Tourism aims to achieve a figure of US$ 11 billion by 2011.
(Source: Technopak Report: Indian Hospitality Industry Outlook, February 2009)
66
(Source: Technopak Report: Indian Hospitality Industry Outlook, February 2009)
Internal Growth Drivers
1. Demand Supply Imbalance
Statistics on the demand and supply for hotel rooms indicate that India currently has around 114,200 hotel
rooms spread across various hotel categories and is facing a shortfall of approximately 156,000 rooms. The effect of this demand and supply gap is felt through increased room tariffs.
Current Supply Gap in the number of rooms
(Source: Technopak Report: Indian Hospitality Industry Outlook, February 2009)
2. New Entrants in the Sector
The Government of India until December 2007 has approved the construction of 85,000 hotel rooms
resulting in the emergence of different entrants in the industry ranging from real estate companies, private
equity firms, and IT companies. (Source: Technopak Report: Indian Hospitality Industry Outlook,
February 2009)
Residential Development
The residential segment consists of the development of apartments, houses and plotted developments in urban and
rural areas. Pan-India residential demand is estimated to be more than 7.5 million units by 2013 across all categories,
including luxury, mid-market and low income housing. Historically, cities have been a driving force in the economic
and social development of a nation. At present approximately 307 million Indians live in nearly 3,700 towns and
cities spread across the country. This represents 30.5% of its population, in contrast to only 15% (60 million) who
lived in urban areas in 1947 when the country achieved independence. Over the past 50 years, the population of
India has grown two and half times, while urban India has grown by nearly five times.
Today there are nearly two dozen cities in India with a population exceeding one million in addition to the county‟s
top eight metros, collectively making up nearly one third of the country‟s entire urban population. Most of the cities
are either state capitals or centres of large economic activity for their respective states. These non-metro cities, over
the last decade, have created their foot prints on India‟s real estate maps. These cities represent a large market which
67
is underserved by real estate developers from the organized residential sector. (Source: Jones Lang Lasalle Meghraj
Report: Residential Opportunities in Central India, January 2010)
The chart set forth below shows the “Residential Affordability Index” of some of India‟s fast growing and emerging
cities:
(Source: Jones Lang Lasalle Meghraj Report: Residential Opportunities in Central India, January 2010)
The demand-supply scenario in India‟s residential real estate sector is dependant on a number of factors, some of
which are described below:
Rapid urbanization: Historically, India has witnessed increasing urbanization, with the urban population increasing
from 18% of total population in 1961 to approximately 28% of total population by 2001. (Source: India Census)
This trend has given rise to increased need for quality housing within urban areas.
Rising disposable income and a trend towards ownership: The high economic growth rate that India has
experienced in recent years has led to an increase in disposable income and greater consumption. This, in turn, has
led to enhanced aspirations and a desire to own homes.
Growing middle class and favorable demographics: Increased demand for housing from the middle income segment
is expected to be a key feature in the growth of the Indian real estate industry. India‟s growing population in the
earning age bracket, along with an increase in disposable income in this bracket, is recognized as a key driver of
growth in housing demand.
Nuclear families: Indian families are gradually moving away from the concept of joint families to nuclear-single
household families, which has resulted in increased demand for housing in the country.
Fiscal incentives: Income tax incentives on housing loans are another contributing factor in supporting the growth of
residential housing property. Fiscal incentives are provided to the borrowers of housing loans in the form of
exemptions and rebates on interest and principal repayments. These have a significant effect on housing budgets and
support spending on housing facilities.
Housing finance: The level of penetration of housing finance as a financial product is directly related to the
affordability of the product to end consumers. Increased access and the growth of the secondary market will result in
reduced cost and also support the residential real estate sector.
68
Classification of Indian Cities based on Growth
Classification Characteristics Cities
Mature Strongest socio-economic fundamentals
Highest number of domestic and international brands
present
Highest number of operational and planned shopping
malls
Delhi, NCR and Mumbai
Transitional High economic growth rates, large middle class and
above average income
Developers are increasingly active with new
shopping mall projects
Most national brands are already present;
international brands have arrived or are planning to
make an entry
Ahmedabad, Bangalore, Chennai,
Hyderabad, Kolkata, Pune
High Growth On the radar of retailers who are attracted by high
incomes and strong brand awareness
Substantial level of shopping malls planned or under
development
Widely considered “the next retail destination”
Indore, Jaipur, Kochi, Ludhiana,
Mohali, Surat, Vadodara
Emerging Are part of the expansion plans of hypermarkets and
department stores
Consumers have growing incomes and rising
aspirations
Scarcity of brands and growing corporate activity are
leading to increased demand for organized retail
Coimbatore, Goa, Nagpur, Raipur,
Trivandrum, Udaipur
Nascent Organized retail is currently very limited though
department stores and hypermarkets may exist
On the “watch list” of pioneering retailers and
developers who are seeking to benefit from a “first
mover advantage”
Although development of organized retail sector is
slow, this can change quickly as local economies
react to new corporate arrivals
Bhilai, Bhopal, Guwahati, Jabalpur,
Nanded, Ujjain, Vijayawada
(Source: Jones Lang Lasalle Meghraj Report: Retail: Off the Beaten Track, January 2010)
Emerging Destinations and Tier III Cities
Indore
Indore, the commercial capital of Madhya Pradesh, is the centre of business and trading activities in Central India.
While the city is also known for its textile industry, Indore is undergoing fast-paced infrastructure development to
match the future demand from other industrial sectors. State and local governments are undertaking several
initiatives to promote Indore as a premier destination for investment. As a historic city, Indore has a distinct core
(old city) with newer developments spread spatially around in a concentric manner. Residential, retail and
institutional areas dominate the city’s core.
Indore
Population ('000s, 2008) Income / Capita (US$, 2008)
2,071 938
Prime Locations Secondary Locations
Capital Values (US$/sq ft) Capital Values (US$/sq ft)
54-86 36-54
69
Locales Locales
M G Road, Parts of A B Road,
Bypass, MR 10, New Palasia
Parts of A B Road, Vijay Nagar, Sanket Nagar, Shringar Colony, Kanchan
Baug, Ratlam Kothi, Gulmohur & Green Park Colony
(Source: Jones Lang Lasalle Meghraj Report: Residential Opportunities in Central India, January 2010)
Retail Market Dynamics:
In the old city of Indore, wholesale markets are prevalent and traditional high streets dominate the retail landscape.
Presently, a significant amount of retail activity is occurring in the central and eastern parts of the city close to the
high-end residential locations of Palasia, Race Course, Saket, Gulmohar and the upcoming locations of Vijay Nagar,
MR 10 and Indore Bypass.
A number of affluent entrepreneurs who reside in Indore are driving the demand for local brands along with national
and international retailers. Older, unorganised high street markets are slowly giving way to organised retail with the
arrival of new malls and shopping centres in the city. Approximately 1.7 million sq ft of retail space currently exists
in Indore with another 2.5 million sq ft expected in the next few years as 3 to 4 mall projects have been announced.
(Source: Jones Lang Lasalle Meghraj Report: Retail: Off the Beaten Track, January 2010)
Residential Market Dynamics:
Residential real estate development in Indore is active predominantly along the transport corridors of National
Highway No. 3 (Mumbai - Agra) and National Highway No. 59 (Indore - Ahmedabad). Established residential areas
in the city are the Old City (Juni Indore), M.G. Road, A.B. Road, Vijay Nagar, Sanket Nagar, New Palasia, Shringar
Colony, Kanchan Baug, Ratlam Kothi, Gulmohur & Green Park Colony. The emerging residential areas within the
city are Ring Road - Mahalakshmi Nagar, Bypass and MR 10. Many national level developers are developing
residential townships that include social infrastructure such as schools, small hospitals, club houses, recreation
spaces, retail space areas and multiplexes. Most of the proposed township projects are situated along the Bypass,
A.B. Road and MR - 10. (Source: Jones Lang Lasalle Meghraj Report: Residential Opportunities in Central India,
January 2010)
Mohali
Mohali is a city adjacent to Chandigarh, in the state of Punjab. The city has a high average literacy rate of 83%. The
economy of Mohali is characterized by the presence of a number of state-local companies including Punjab Tractor
Limited, ICI Paints and the Godrej Group. Recently, technology leaders such as Infosys, Dell, Quark, Philips and
SCL have established their development centres in Mohali. Denver based Quark has created Quark City, a US$ 500
million, 46-acre business park in Mohali, complete with a residential complex and facilities for shopping,
entertainment, medical, and education. It is expected to generate 25,000 direct and 100,000 indirect jobs.
Retail Market Dynamics:
Mohali may be regarded as a planned extension of the city of Chandigarh. Residents of this town are required to
travel to Chandigarh to shop due to a shortage of quality local retail destinations. The main markets of Mohali have
been developed as sector markets as the cities of Chandigarh and Mohali are collectively divided into 74 sectors.
Many of Mohali‟s sector markets are located on a straight road from Sector 58 to 65. Most of the ground floor space
in this retail corridor has been occupied by local merchants including restaurants, grocery shops, departmental
stores, jewellers, white good showrooms and banks. The Punjab Urban planning and Development Authority
(“PUDA”) is developing Sector 70 as a local market to entice Mohali residents to shop locally.
Underlying factors including a large segment of the population with higher socio-economic profiles seeking
residential options in the region, proximity to Chandigarh and initiatives taken by the Government of Punjab to
promote industrial and IT / ITES development are likely to have a positive effect on Mohali‟s retail development.
Shalimar Mall and Mall Matrix, with a combined area of 300,000 sq. ft. were the first malls proposed in Mohali. Six
additional malls, are in various stages of construction. These projects, along with others that have been planned,
could add an additional 5.5 million sq. ft. of new retail space.
70
Udaipur
Udaipur with its several lakes and picturesque setting is a major tourist destination for both domestic and
international tourists. The city is also a center for performing arts, crafts and its famed miniature paintings. The
city‟s primary commercial occupations are tourism and mining. Secondary and tertiary activities are increasing in
the northeast of the city. Amberi, Sukher, Sobhagpura, Raghunathpura and Bhuwana located in the north / northeast
of Udaipur have small scale industries and mining pits. The Dabok, Gudli and Gadwa areas are in the developed
Mewar industrial area. Other small-scale industries have also come up along the corridor towards Chittorgarh. Major
development activities have increased near the rivers, lakes and highways of Udaipur. Udaipur is developing
outward along National Highway No. 8 to Ahmedabad and National Highway No. 76 to Chittorgarh.
Udaipur
Population ('000s, 2008) Income / Capita (US$, 2008)
550 1,583
Prime Locations Secondary Locations
Capital Values (US$/sq ft) Capital Values (US$/sq ft)
54-64 36-54
Locales Locales
Madhuban, Ashoknagar, Sukhadia Circle, Fatehpura,
Panchvati, Bhupalpura, Parts of HiranMagri
Navratan Complex, Savina, Pratapnagar, Parts of
HiranMagri, Shobhagpura, Badgaon, Bhuvana
(Source: Jones Lang Lasalle Meghraj Report: Residential Opportunities in Central India, January 2010)
Retail Market Dynamics:
The lake city of Udaipur is a popular tourist destination in India. Historically, retail markets in Udaipur have been an
integral part of the city. As Udaipur grew beyond the banks of its lakes, major transportation arteries developed into
retail corridors. Retail high streets continue to be a fixture along Bapu Bazaar, Chetak Circle, Suraj Pole, Ashwini
Bazaar, Nehru Bazaar, Bada Bazaar, Shastri Circle, Delhi Gate, Sindhi Bazaar, Town Hall and Chand Pole. These
are complimented by specialized high streets at Ghantaghar Market (jewellery), Malda Estate (apparel) and Hathi
Pole (antiques).
Organized retail is widespread throughout Udaipur with Durga Nursery Road, Shakti Nagar and Sudkhadia Circle
possessing the largest concentration of new entrants. The 372,000 sq. ft. Celebration Mall, a joint venture between
Singapore based CapitaLand and Delhi based Advance India Projects, is under construction at Bhuwana along
National Highway No. 8 and is expected to become operational shortly after Rkay Mall Shopping Complex, a
100,000 sq. ft. project being developed at Panchawati becomes operational. A wide selection of international and
domestic brands are present in Udaipur across various categories of retail including Nokia, Adidas, John Players,
Levi Strauss and Pizza Hut. Domestic supermarkets such as Big Bazaar and Reliance Fresh have also established
themselves in prominent locations in Udaipur. Movie theatres, both new (Fun Cinemas) and reconstructed (Paras
Cinema) are also well present in the city.
Residential Market Dynamics:
The major typology of residential development in Udaipur has been low-rise bungalow type developments. High
land prices and less space availability have led to the development of apartments in some new developments. Also
as a result of the difficult topography of the city, limited area is available for horizontal expansion and hence the
trend of apartment houses and flats is developing in the city. The upscale residential areas of Udaipur are Madhuban,
parts of HiranMangri, Sukhadia Circle, Fatehpura, Bhupalpura, Polo Ground, and Navratan Complex, Sectors 3, 4, 5
and 11 among others.
71
Raipur
The general real estate trend in Raipur has shown upward trend in large scale construction and development
activities in the last three to four years. This may be attributed to the creation of Chhattisgarh as a separate state and
Raipur as its capital in the year 2001, which led to the city becoming an administrative center, in addition to trade
and business. This has led to increased migration of population in the state.
Naya Raipur is located between two national highways NH6 and NH43. The city is spread over an area of 8,000
hectares. It will be the fourth planned city in India after Gandhinagar, Chandigarh and Bhubaneshwar. The main
activity of the Naya Raipur city will be to administer the affairs of the state of Chhattisgarh. However, other
economic activities like software technology parks, gems and jewellery, business offices, health education and
research services and other regional recreational activities have also been proposed for the city.
Raipur
Population ('000s, 2008) Income / Capita (US$, 2008)
1,166 1,583
Prime Locations Secondary Locations
Capital Values (US$/sq ft) Capital Values (US$/sq ft)
39-51 32-43
Locales Locales
Sadar Bazaar , Malviya Road, Areas of Tatyapara, Civil
Lines, Fafdi, Shankar Nagar, Anupam Nagar, Shanti
Nagar VIP colony, Khamadi, Mova, Avanti Vihar
(Source: Jones Lang Lasalle Meghraj Report: Residential Opportunities in Central India, January 2010)
Retail Market Dynamics:
Raipur, a major trading and business hub for the entire Chhattisgarh region, has a large number of specialized
markets for various commodities. A majority of these traditional markets are located in the centre of the city with
new retail areas emerging along the Grand Eastern Road (National Highway No. 6). The stretch on National
Highway No. 6 between Tati Bandh to Teli Bandha has emerged as the most active retail destination in the recent
years. Sharda Chowk and Jaistambh Chowk are well established markets in the city centre.
A few small, unorganised shopping centres have been completed over the past few years, with Raipur getting its first
shopping mall, City Mall 36, last year. Three additional shopping malls are in advanced stages of development, two
of which, Celebration Mall and Treasure Island, are located on Grand Eastern Road / National Highway No. 6 with
the third located in Pandri, Raipur‟s traditional cloth market. Other major retail projects include the Lal Ganga
Shopping Complex and Millennium Plaza. The Lal Ganga Mall is an unorganised shopping center, which includes
some prominent national brands.
Residential Market Dynamics:
The decision to create a new capital, Naya Raipur City, which would include an addition of about 600,000 residents
by 2020 is a major reason for the increase in real estate development activity. The city has a dense core dominated
by commercial, retail and institutional activities. Residential development in Raipur is concentrated around this
retail and commercial hub along the Grand Eastern Road (National Highway No. 6). The central business district
area of Raipur City comprises of Sadar Bazaar and Malviya Road. The neighbouring areas of Tatyapara, Civil Lines,
Fafdi, Shankar Nagar, Anupam Nagar and Shanti Nagar among others are primarily residential in nature. Emerging
micro-markets like VIP colony, Khamadi, Mova and Avanti Vihar which are developing outwards from the core and
closer to the airport as well as in Naya Raipur city.
72
Bhilai
Bhilai is located in the durg district of Chhattisgarh State, approximately 40 kilometers from the State capital Raipur
along National Highway No. 6. Bhilai is the second largest city in the state of Chattisgarh and is known as the steel
capital of India. Home to India‟s largest steel plant, SAIL, Bhilai is one of the most industrialized areas of the state.
The influx of professionals working at SAIL has added a cosmopolitan atmosphere to the local culture and created
demand for organized retail. Bhilai is ranked as the top city in Chhattisgarh for its market potential and affluency.
Bhilai
Population ('000s, 2008) Income / Capita (US$, 2008)
1,253 1,146
Prime Locations Secondary Locations
Capital Values (US$/sq ft) Capital Values (US$/sq ft)
25-32 21-26
Locales Locales
Nehru Nagar, Ashok Nagar, Smriti Nagar MR (Main Road) 9 parallel to National Highway No. 6
(Source: Jones Lang Lasalle Meghraj Report: Residential Opportunities in Central India, January 2010)
Retail Market Dynamics:
National Highway No. 6 is the central retail corridor in Bhilai with major developments located around the main
junctions of the highway. Among the city‟s sectoral markets, the city centre and Sector-6 markets are the most
popular. The format of retail developments in Bhilai are mostly high street in nature with some mixed-use retail and
office complexes found in projects such as Chauhan Estate and Dhillon Complex. A number of brands including
Raymond, Reebok, Titan, Koutons, Gini & Jony and Peter England may be found in markets along National
Highway No. 6 such as Supela Chowk and Akash Ganga.
Retail projects in the upcoming areas of Bhilai typically do not have an independent existence but can be located on
the ground and first floors of residential apartments. These are mostly full service department stores. Although there
are no multiplexes in Bhilai, some traditional cinema halls including Venkatesh, Maurya and Chandra have
undertaken upgrades to cater to the city‟s present needs. Presently, Bhilai does not have any shopping mall although
a 690,000 sq ft project is being developed by Entertainment World Developers, which is expected to launch in 2011.
Residential Market Dynamics:
Organised real estate in Bhilai was underdeveloped until recently. The facilities, both residential and social
amenities, provided in the steel plant townships probably weakened the urge to develop organised real estate outside
the township area. However, recently Bhilai has experienced rapid growth in residential real estate.
Most of the urban growth is occurring in and around corporation area. Moreover, since the stretch of National
Highway No. 6 around SAIL corporation area operates as a toll road, Main Road 9 of corporation area, which runs
parallel to National Highway No. 6, has become a major thoroughfare. This has increased the physical growth of
corporation area towards the north. Apart from the township, other urban areas include Bhilai Municipal
Corporation, notified urban areas such as Bhilai - 3 and Kumhari.
The evolution of townships started along the national highway and developed further south. The main residential
areas are located in Nehru nagar, Ashok nagar, Smriti nagar among others. With the increased importance of Main
Road 9, which runs parallel to National Highway No. 6, the residential development is moving towards Durg. There
have been some successful organised real estate projects developed during the last two to three years. The success of
some of the real estate projects has encouraged other developers to start new ventures. (Source: Jones Lang Lasalle
Meghraj Report: Residential Opportunities in Central India, January 2010)
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Nanded
Nanded is the capital of Nanded district region of Maharashtra with an area of 51.76 sq. km. The economy of the
city is based on agriculture which is also the largest employer of people living in the city. Nanded is also a religious
hub to India‟s Sikh community and has one of most prominent Gurudwaras in the country.
Retail Market Dynamics:
As a trading and business center for nearby towns and the rural hinterland, the city of Nanded has well established
retail markets. Station Road, Vazirabad, Shivaji Nagar and Doctors Lane are the prominent retail and commercial
hubs of the city. A 380,000 sq. ft. mall being constructed by Entertainment World Developers will be Nanded‟s first
mall. Barara Tower and Alibhai Complex are the only two prominent mixed-use retail and commercial projects
being developed with a total area of approximately 30,000 sq. ft. (Source: Jones Lang Lasalle Meghraj Report:
Retail: Off the Beaten Track, January 2010)
Trivandrum
Trivandrum, the capital of Kerala, is the second largest city in the state, with a large population of urban
professionals. As per the census of India 2001, Trivandrum has a high literacy rate of 93%, as compared to Kerala
(91%) and India (79.9%). Technopark, a 340 acre IT park located in Trivandrum, is one of the largest IT parks in
India with 150 IT firms and over 20,000 employees. Large scale employment opportunities are a major reason why
Trivandrum experienced a 42% increase in population from 1991 to 2001 and why it is ranked second in the state of
Kerala for its market potential and affluence.
Retail Market Dynamics:
Trivandrum‟s central business district is also the center of the city‟s traditional retail district with Palayam, Chala
and East Fort being the three most prominent markets. M.G. Road and the area between Pattom and
Kesavadasapuram are the growth corridors of retail in the city. Kedaram, Karimpanal Arcade and Attukal Shopping
Complex are some of the noteworthy shopping destinations within the city. While retailers have land banks in the
suburban areas (in close proximity to Technpark), major developments are yet to take place. (Source: Jones Lang
Lasalle Meghraj Report: Retail: Off the Beaten Track, January 2010)
Vadodara
Vadodara lies along Gujarat‟s golden corridor which extends from Ahmedabad to Vapi. The city is one of India‟s
foremost industrial centres with a large group of chemicals and pharmaceuticals manufacturers.
Retail Market Dynamics:
The center of Vadodara consists of residential, commercial and institutional districts. Wholesale markets and high
street retail areas dominate the retail typology in this core area of the old city and adjacent areas. The old city
comprises Vadodara‟s traditional markets, which can be found along the prominent shopping corridors of Mahatma
Gandhi Road (Nyay Mandir Gate to Mandavi Gate), Raopura Road, Rajmahal Road, Mangal Bazaar and Dandiya
Bazaar.
Vadodara‟s emerging commercial and retail districts are principally located on the western side of the city‟s railway
line. R.C. Dutt Road, Race Course Road and Old Padra Road have emerged as prime retail and commercial
destinations within the city. A majority of the national and international brands operating in Vadodara are primarily
located along these roads. The predominant typology of retail developments found here are commercial complexes
with retail space on the lower and upper ground floors with office space above. Approximately 4.6 million sq. ft. of
retail space is operational in Vadodara with another 1 million sq. ft. of new retail space expected to enter the market
in the next few years. (Source: Jones Lang Lasalle Meghraj Report: Retail: Off the Beaten Track, January 2010)
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Ujjain
As a city of cultural and religious importance, Ujjain receives a large number of tourists throughout the year. In
addition, Ujjain is host to a number of famous religious fares which draw up to half a million pilgrims. Economic
activity in Ujjain is based on the agricultural industry for which the city serves as a regional wholesale market.
Retail Market Dynamics:
Small, traditional shops dominate the retail landscape in Ujjain. The main market area of the city, adjacent to Free
Ganj Tower, is resident to domestic apparel brands including Peter England, John Players, Charlie Outlaw and
Raymond. Gopal Mandir and Satigate are two other prominent shopping districts within the city. Presently, the city
does not have an organized retail shopping center, however Treasure Island (Ujjain), a 400,000 sq. ft. shopping mall
on Dhanwantri Chikisa Kendra Road, is in an advanced stage of development. (Source: Jones Lang Lasalle Meghraj
Report: Retail: Off the Beaten Track, January 2010)
Jabalpur
Jabalpur, with 1.2 million residents, is one of the wealthier cities in the state of Madhya Pradesh. It is the
headquarter to several important central and state government departments which employ thousands of government
workers. Jabalpur serves as a distribution center for a wide variety of products and natural resources. It is ranked
third in the state for its market potential and affluence.
Retail Market Dynamics:
Residents of Jabalpur, who have relatively higher disposable incomes among the Nascent cities, shop at the
traditional markets of Soni Bazaar, Madhital and Sadar Market. The development of Treasure Island (Jabalpur), a
680,000 sq. ft. retail project, is expected to add a new dynamic to the local retail landscape. (Source: Jones Lang
Lasalle Meghraj Report: Retail: Off the Beaten Track, January 2010)
Challenges Facing the Indian Real Estate Sector
Lack of national reach of existing real estate development companies
There are currently very few real estate development companies in India who can claim to have operations
throughout the country. Most real estate developers in India are regionally based and active in areas where the
conditions are most familiar to them. This is due to factors such as:
the differing tastes of customers in different regions;
difficulties with respect to large scale land acquisition in unfamiliar locations;
inadequate infrastructure to market projects in new locations;
the large number of approvals which must be obtained from different authorities at various stages of
construction under local laws; and
the long gestation periods of projects.
Local know how is a critical factor
The nature of demand and the regulatory framework of the local authorities significantly vary in different regions.
Demand is dependent on many factors
Real estate developers face challenges in generating adequate demand for many projects. The factors that influence a
customer‟s choice in a property are not restricted to quality alone, but also depend on a number of external factors,
including proximity to urban areas, and facilities and infrastructure such as schools, roads and water supply, each of
which is often beyond the developer‟s control. Demand for housing units is also influenced by policy decisions
relating to housing incentives.
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Increasing raw material prices
Construction activities are often funded by the client, who makes cash advances at different stages of construction.
In other words, the final amount of revenue from a project is pre-determined and the realisation of this revenue is
scattered across the period of construction. A significant challenge that real estate developers face is dealing with the
increasing costs for raw materials. The real estate sector is dependent on a number of components including cement,
steel, bricks, wood, sand, gravel and paints. As the revenues from sale of units are predetermined, adverse changes
in the price of any raw material directly affect developers‟ results.
Interest rates
One of the main drivers of the growth in demand for housing is the availability of finance at low rates of interest.
Interest rates have increased between 2004 and 2008, however, interest rates have shown signs of reducing recently
and most leading financial institutions have recently reduced the rates which they charge on housing loans.
However, any adverse changes in interest rates, which are beyond the developer‟s control, may affect the real estate
demand.
Tax incentives
The existing tax incentives available for housing loans are one of the major factors influencing demand. These tax
incentives, however, are based on the recommendations of various committees and panels and are likely to be
withdrawn. The Kelkar Panel has recommended phasing out the income tax deduction available on interest on
housing loans for owner-occupied houses.
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BUSINESS
Overview
We own, develop, manage and operate urban city shopping centers, develop and sell large scale residential
townships, and own, develop and lease hospitality properties in fast growing and emerging cities in India (i.e.,
emerging non-metropolitan cities) under the brand name “TREASURE”. We have completed the development of
1.51 million square feet of Developable Area comprising three retail shopping centers and hospitality properties in
two cities, Indore in Madhya Pradesh and Nanded in Maharashtra, and we are in the process of developing 23.33
million square feet of Developable Area spread over 11 Ongoing Projects and three Forthcoming Projects in eight
emerging cities across seven states in India. Our Completed Projects include Treasure Island-Indore, which is one of
the largest shopping centers in Central India, as well as one of the first shopping centers in an emerging city
(Source: The Franchising World, November 2008), Treasure Central-Indore and Treasure Bazaar-Nanded. We have
launched three residential townships, including two Treasure Towns and Treasure Vihars in Indore and a Treasure
Town and Treasure Vihar in Udaipur. For the financial year 2010 we derived Rs.494.68 million of income from the
sale of residential properties and aggregate advance bookings for our three launched residential townships was Rs.
1,837.00 million as of March 31, 2010. As of March 31, 2010, the aggregate Developable Area of these three
launched residential townships was 11.03 million square feet.
We presently operate and have ownership interests in Treasure Island-Indore, Treasure Central-Indore and Treasure
Bazaar-Nanded. We completed Treasure Island-Indore in December 2005, which comprised 0.45 million square feet
of retail, hospitality, entertainment and food and beverage space and 0.18 million square feet dedicated to parking
space. It has won a number of awards, including the “Most Admired Shopping Center – Tier II Cities” by Images
Shopping Centre Awards (“ISCA”) in 2008, 2009 and 2010, “Best Retailer Award” by the India Franchise
Association in 2009 and “Best Designed Shopping Mall of India” by the CNBC – CRISIL Real Estate Awards in
2007. We completed Treasure Central–Indore in May 2009, which comprised 0.23 million square feet of retail
space, 0.05 million square feet of commercial space, 0.04 million square feet of entertainment space and 0.01
million square feet of food and beverage space and included certain anchor tenants such as Pantaloon. We
completed Treasure Bazaar-Nanded in January 2010, which comprised 0.25 million square feet of retail, hospitality,
entertainment, food and beverage space and commercial space and 0.11 million square feet of parking space.
To develop and operate our shopping centers, we analyze the consumption patterns of a particular city. The income
earning potential of a shopping center is not entirely dependent on traditional real estate development principles,
such as the floor space index (“FSI”) or construction costs. Rather, we believe that income earning potential is
dependent on having the right tenant mix and high operational standards, which in turn will lead to higher
consumption rates. With higher consumption rates, we are able to command higher lease rates from our tenants. As a
result, a driving factor in our business is to increase consumption in the shopping centers that we develop and
operate. We also focus on developing projects in fast growing and emerging cities, where we typically enjoy an
early-mover advantage with respect to retail projects, and where we believe there is significant growth potential.
Our shopping centers are divided into three formats, “Treasure Market City”, “Treasure Island” and “Treasure
Bazaar”. These formats are differentiated on the basis of size and type of retailers. Treasure Market City projects
include more than 1.00 million square feet of Developable Area and comprise a mix of premium and value retail
outlets, including department stores and other anchor tenants; a hypermarket and smaller shops; entertainment
facilities, such as a multiplex cinema, bowling alley, go-carting, rides and/or video arcade; food and beverage
outlets; and hospitality and commercial space. Treasure Island developments include primarily premium retail
outlets and other anchor stores, entertainment, food and beverage and hospitality space and have a Developable Area
of 400,000 square feet to 1.00 million square feet. Treasure Bazaar projects have a Developable Area of up to
400,000 square feet and comprise value retail outlets, entertainment, food and beverage and hospitality space.
We are also developing large scale residential townships with a total Developable Area of 15.22 million square feet
designed to cater to diverse budgets and different segments of society. We have divided our residential township
projects into two formats, “Treasure Town” and “Treasure Vihar”. Treasure Towns are premium residential
townships developed over land parcels of 20 to 200 acres with modern amenities including a gymnasium, club
house, swimming pool, spa, tennis courts, gardens, ponds and landscaped areas. These projects will include modern
infrastructure, including power back-up for common areas along with full-time security. Treasure Vihars are
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affordable residential townships developed over land parcels of up to 50 acres with amenities such as power back-up
and full-time security. We believe that these projects will benefit from the TREASURE brand.
We are currently developing a Treasure Market City in Indore, Treasure Island projects in Raipur, Jabalpur, Bhilai
and Mohali and Treasure Bazaar projects in Ujjain, Amaravati and Baroda. Our retail and hospitality projects that
are part of our Ongoing Projects aggregate 5.11 million square feet of Leaseable Area, and our residential township
projects that are part of our Ongoing Projects aggregate 11.03 million square feet of Developable Area.
As of March 31, 2010, our “Forthcoming Projects” (i.e., projects in which the necessary legal documents relating to
acquisition of land or development rights have been executed, key land related approvals are being obtained and
management has prepared an initial design plan of the project or an architect has been appointed and a detailed
architect plan is in the process of being prepared), include a Treasure Island project in Thiruvananthapuram and
Treasure Town and Treasure Vihar projects in Indore (at Kanadia) and in Raipur (at Samta Colony), which are
expected to have 5.06 million square feet of Developable Area. Our retail and hospitality projects that are part of our
Forthcoming Projects aggregate 0.87 million square feet of Developable Area and our residential township projects
that are part of our Forthcoming Projects aggregate 4.19 million square feet of Developable Area.
“Developable Area” refers to the total construction area which we develop in each property, and includes carpet
area, wall area, common area, service and storage area, as well as other areas, including car parking. Such area,
other than car parking space, is often referred to in India as “super built-up” area. “Leaseable Area” is calculated by
the loading percentage (the percentage of a tenant‟s rent applied towards a shopping center‟s common areas) of
10.00% to 60.00% of the carpet area of the property, depending upon the use, and refers to the part of the
Developable Area that can be leased out to third parties.
The table below summarizes our Completed Projects, Ongoing Projects and Forthcoming Projects by type of project
and their total Developable and Leaseable Areas as of March 31, 2010:
Treasure
Market
City
Treasure
Island
Treasure
Bazaar
Treasure Town
and Vihar
Total
Completed Projects
No of Projects - 1 2 - 3
Total Developable Area
(million square feet) -
0.65
0.86 - 1.51
Total Leasable/Saleable Area
(million square feet) -
0.45
0.58 - 1.03
Ongoing Projects
No of Projects 1 4 3 3 11
Total Developable Area
(million square feet)
3.00
3.21
1.03 11.03 18.27
Total Leasable/Saleable Area
(million square feet)
2.02
2.32
0.77 11.03 16.14
Forthcoming Projects
No of Projects - 1 - 2 3
Total Developable Area
(million square feet) -
0.87
- 4.19 5.06
Total Leasable/Saleable Area
(million square feet) -
0.75
- 4.19 4.94
Grand Total
No of Projects 1 6 5 5 17
Total Developable Area
(million square feet)
3.00
4.73
1.89 15.22 24.84
Total Leasable/Saleable Area
(million square feet)
2.02
3.52
1.35 15.22 22.11
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We utilize project-specific SPVs and project-specific equity financing from investors for each of our projects. Some
of our key investors include PML, IAF - III and IAF - IV, funds managed by ICICI Venture Funds Management
Company Limited, MPC Synergy Limited, Edelweiss Trustee Services Limited, Kshitij Venture Fund and
Landmark Hi Tech Development Private Limited. As of March 31, 2010, our holdings across all our project-specific
SPVs range from 51.00% to 100.00% (except the project-specific SPVs of Treasure Central-Indore, Treasure Island-
Bhilai and Treasure Town and Treasure Vihar-Raipur), which enables us to consolidate and recognize income from
these project-specific SPVs in our balance sheet, as well as retain management control.
For the financial year 2010, our total income was Rs.1,062.34 million, our total net profit before tax and
depreciation was Rs.224.49 million and our net profit after tax before minority interest and share from associates
was Rs.148.15 million.
Strengths
We believe that the following are our principal strengths:
Ownership and operation of shopping centers resulting in predictable and stable revenues
In contrast to traditional real estate development companies which generally develop and sell properties, we own
most and operate all of our shopping center properties, including Treasure Island-Indore, Treasure Central-Indore
and Treasure Bazaar-Nanded. We currently own and operate a total Leaseable Area of 1.03 million square feet at
these three shopping centers through project-specific SPVs. This assures us of stable revenues for the terms of the
various leases which are generally for terms of 36 to 60 months. We have received rental income from the lease of
properties of Rs.230.35 million for the financial year 2010 (includes our share of rental income generated from our
joint venture project, Treasure Central-Indore). Upon completion of our retail and hospitality projects that are part of
our Ongoing Projects and Forthcoming Projects and along with our Completed Projects, we will operate and have
ownership interests in one Treasure Market City project, six Treasure Island projects and five Treasure Bazaar
projects, which will continue to provide us with steady revenues.
Consumption driven revenue model combined with stable rentals
We believe that the business of developing and operating successful shopping centers is attributable to the
consumption pattern of target customers, which comprises spending patterns and behavior within a catchment area
and is less related to real estate development. We also believe that the income earning potential of a shopping center
is not directly linked to the prevailing real estate prices in the vicinity, but is more linked to a shopping center‟s
tenant mix and quality of management. We intend to maximize the potential of a particular catchment area by
having the right tenant mix, which we believe leads to higher consumption rates.
For our shopping center developments, we have adopted a lease model, whereby we operate and maintain ownership
interests in the shopping centers we develop. We have leased and plan to lease out space across various properties
under lease structures where we receive basic minimum rentals and a percentage of revenue generated by the tenant.
While this assures us of minimum rentals across our retail properties, it also enables us to receive a share of the
revenues generated by our tenants‟ in-store sales, which aligns our interests with those of our tenants. Given our
business model and structuring of lease agreements, our lease rentals increase as consumption increases in a
particular location. This differentiates us from other typical real estate development companies and links our
business model to the consumption pattern of target micro-markets.
We have received rental income from the lease of properties of Rs.230.35 million for the financial year 2010
(includes our share of rental income generated from our joint venture project, Treasure Central-Indore), and
Rs.158.94 million and Rs.149.05 million for the financial years 2009 and 2008, respectively. We expect that we will
own most and operate all of our retail and hospitality projects that are part of our Ongoing Projects and Forthcoming
Projects including one Treasure Market City project, five Treasure Island projects and three Treasure Bazaar
projects, which will continue to provide us with stable rentals. With the completion of these projects, we are
expected to become one of the largest shopping center owners and operators in India in terms of number of
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operational shopping centers. (Source: “Retail off the Beaten Track,” January 10, 2010, Jones Lang LaSalle
Meghraj)
Strategic relationships with large retailers
We believe that our shopping centers are the preferred choice among retailers in the cities in which we operate and
provide a platform for large retailers to expand their businesses in such cities with a common partner. To
successfully lease out a shopping center, we believe that the retailer‟s confidence in the developer is a very
important factor, especially in fast growing and emerging cities where there are few organized national developers.
We believe that retailers have confidence in us due to our track record in achieving financial closure for our projects,
our commitment to quality and our operational expertise. In addition, as an early mover in the shopping center
industry in India, as evidenced by Treasure Island-Indore being among one of the first 10 shopping centers in
existence in India, as well as the first shopping center in an emerging city in India, our association with retailers
began in the early days of organized retail in India. (Source: The Franchising World, November 2008) We are a
member of the International Council of Shop Centers and we have grown with the retail industry and have been
actively involved in forums, events and conferences on organized retail in India and outside India, which we believe
has fostered confidence in us among retailers. We have strong relationships with large retail brands, including the
Pantaloon Group, which occupies 0.10 million square feet at Treasure Island-Indore, 0.21 million square feet at
Treasure Central-Indore and 0.03 million square feet at Treasure Bazaar-Nanded, and has committed to occupy 0.36
million square feet in our Ongoing Projects. Other large retail brands, such as Big Bazaar, E-Zone, Gitanjali,
Spencer and Max have also committed to anchor spaces in our projects under development. We believe that such
relationships help us in securing tenants for our new developments.
Early mover advantage and track record in fast growing and emerging cities
All of our retail properties and projects are strategically located in city centers and high growth corridors of the cities
in which they are developed. As one of the first developers of a shopping center in an emerging city, we have been
recognized by the market as an early mover in the shopping center industry in fast growing and emerging cities of
India. (Source: The Franchising World, November 2008) We believe that many of our projects enjoy the status of
being either the first shopping center of the city in which it is located or the largest shopping center in the city
center. We believe that this has helped us to become one of the preferred shopping center partners for major retailers
in India.
In addition, we have a successful track record in the execution of projects, including opening the projects on the
projected timelines. We presently have three operational shopping centers, with four additional projects expected to
open by the end of the financial year 2011. With the completion of our Ongoing Projects, we are expected to
become one of the largest shopping center owners focused on fast growing and emerging cities in the country by the
end of financial year 2012. (Source: “Retail off the Beaten Track,” January 10, 2010, Jones Lang LaSalle Meghraj)
Quality project execution and professional management capabilities
Our position as a successful real estate developer is largely due to our execution capabilities, which we have
demonstrated with the successful and timely completion and the quality of operation and management of Treasure
Island-Indore, Treasure Central-Indore and Treasure Bazaar-Nanded, as well as the launches of the Treasure Town
and Treasure Vihar projects in Indore (at AB Road and Rangawasa) and Udaipur (at Kharol Colony). We believe
that we are one of the few developers in India that has the range of skills required to develop and operate a shopping
center, including construction, interiors, fit-outs, mechanical, engineering and plumbing (“MEP”) services, design
and project management. We have accomplished this by primarily developing organically and acquiring separate
businesses that fulfill these functions.
Through Treasure World Developers Private Limited (“TWDPL”), our construction company, civil contracts across
most of our projects are undertaken through a documented tendering system by the project-specific SPV. In
addition, we subscribed to 51.00% interest in Intesys Technologies Private Limited (“Intesys”), a Delhi based
interior and fit-out specialist company, to ensure that the fit-outs of our projects are carried out in a timely manner,
as well as at a competitive cost, as each project-specific SPV follows a transparent tendering system for awarding
fit-out contracts. Intesys is a fit-out specialist in India that has the ability to undertake the entire chain of work
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required for fitting out a shopping center, including all elevational features, inside flooring, railings, false ceilings
and glazing. We also have our own MEP design company, Treasure MEP Services Private Limited (“TMEP”),
which is responsible for designing the MEP drawings and choosing the vendors and contractors for the MEP
services for all of our projects. Finally, we act as the project manager for all of our projects, which allows us to
closely monitor quality and costs.
Experienced and dedicated management
We have an experienced, qualified and dedicated management team, many of whom individually have over 15 years
of experience in their respective fields. We were one of the first real estate developers to build a modern shopping
center in central India, Treasure Island-Indore, which we completed on schedule and within budget. We believe our
operational properties illustrate our management‟s capability to deliver high quality projects in a highly competitive
business, secure financing and execute complex projects on time. For example, Treasure Island-Indore was
completed six months ahead of its scheduled completion date while meeting all specifications and requirements,
which we believe signifies the strength of our management in executing complex projects in new markets. All of
these properties have required attracting a number of anchor tenants and obtaining significant financing from a
number of institutional lenders. In addition, our brand name and reputation for project execution, have assisted us in
recruiting and retaining qualified management and employees. We also provide our staff with competitive
compensation packages and a corporate environment that encourages responsibility, autonomy and innovation. We
believe that the experience of our management team and its in-depth understanding of the real estate market in India
will enable us to take advantage of both current and future market opportunities.
Strategies
Our business strategy consists of the following principal elements:
Focus on “TREASURE” branded development projects in city-centric locations across India
We are committed to developing a large portfolio of retail projects and residential township projects under the
“TREASURE” brand wherein a consumer can relate to similar experiences across all our properties in India. We
have developed three formats for shopping centers and two formats for residential townships. The three formats are
differentiated on the basis of size of the shopping centers, the type of retailers and other facilities, including hotels,
multiplex cinemas and other entertainment venues and commercial space available at the development. We are also
developing residential townships, which are divided into two formats, “Treasure Town” and “Treasure Vihar”. As
of March 31, 2010, our retail and hospitality projects that are part of our Ongoing Projects include a Treasure
Market City in Indore, Treasure Island projects in Raipur, Jabalpur, Bhilai and Mohali and Treasure Bazaar projects
in Ujjain, Amaravati and Baroda. We are also developing Treasure Town and Treasure Vihar projects in Indore and
Udaipur. Our Forthcoming Projects include a retail and hospitality project in Thiruvananthapuram and residential
township projects in Indore (at Kanadia) and Raipur (at Samta Colony). Since most of our retail and hospitality
projects are developed in city center locations in fast growing and emerging cities, we envision our retail
developments as being the city center itself and becoming landmark destinations of the city. We aim to make
“TREASURE” a brand synonymous with quality and best management practices at viable rents across fast growing
and emerging cities in India.
Continue to develop projects in fast growing and emerging cities where we believe we are one of the dominant
organized retail, hospitality and residential developer
We will continue to focus on our strategy of developing shopping centers and residential townships in fast growing
and emerging cities in India where we typically enjoy an early-mover advantage, where we enjoy being the
dominant organized retail developer and where we believe there is significant growth potential. We believe that a
number of underlying factors will continue to provide India‟s retail sector with good growth prospects including,
favorable demographics, with two thirds of India‟s population below the age of thirty-five, continuing urbanization,
especially in emerging cities in which our projects are concentrated, India‟s economy continuing to grow steadily
and a growing middle class. We aim to be the largest shopping center owner and operator in fast growing and
emerging cities in India. We believe that our “TREASURE” brand is gaining in reputation and is recognized by
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retailers as the first choice in these cities. (Source: “Retail off the Beaten Track,” January 10, 2010, Jones Lang
LaSalle Meghraj)
Focus on performance and project execution
We believe that we have developed a reputation for good quality construction projects and completing projects
ahead of schedule. For example, Treasure Island-Indore was completed in 21 months, six months ahead of schedule,
as a result of our efficient management practices and close collaboration with third party contractors on the project.
As of March 31, 2010, we have 11 Ongoing Projects aggregating 18.27 million square feet of Developable Area. We
intend to continue to focus on performance and project execution in order to maximize client satisfaction. We will
continue to leverage the capabilities of our subsidiary service companies, including TWDPL, a construction
company, Intesys, a fit-out company, TMEP, a MEP design company, as well as our in-house project management
services, to ensure that all of our projects are completed on time and within the budgeted cost.
Focus on shopping center management
We have developed our shopping center management expertise by successfully managing our three operational retail
properties, which we believe are managed in accordance with international standards. With respect to all of our
shopping center projects, we expect we will enter into management contracts with each of the project-specific SPVs.
We will continue to manage our retail developments with the knowledge that there is a distinct difference between
property management and shopping center management. While most shopping center developers operate under the
premise that shopping center management comprises housekeeping, security and maintenance, we believe that these
elements contribute a small fraction of the total activities required to successfully manage a shopping center.
Accordingly, we will continue to focus on creating the optimal tenant mix and adhering to high operational
standards at each of our developments, which we believe will lead to higher consumption rates. With higher
consumption rates (which translates to higher turnover for our tenants), we expect to command competitive lease
rates from our tenants and higher revenues from our revenue sharing contracts.
Develop the “Treasure Showcase” concept
In order to tap into the customer base of the large number of Indian brand manufacturers operating in unorganized
multi-brand outlets across India, we have recently launched the concept “Treasure Showcase” at Treasure Island-
Indore. Treasure Showcase is a “shop-in-shop” seamless concept which will provide Indian non-mall brands a
platform to showcase and sell their products in our shopping centers in categories such as apparel, footwear,
electronics, food, accessories, cosmetics, jewellery, home furnishings and appliances based on a revenue sharing
arrangement. Our aim is not only to expand the number of retailers in the organized sector, but also to convert non-
shopping center customers who shop at multi-brand outlets into shopping center customers. Under the terms of our
Treasure Showcase revenue sharing arrangements, we provide our retail partners space of approximately 15,000
square feet to 50,000 square feet and operating services such as billing and shopping administration. We typically
purchase the products from our Treasure Showcase partners and pay for the products once a customer has purchased
the partner‟s product. Products which we have purchased but were not sold are returned to the partner at no cost to
us. In return for providing our Treasure Showcase partners with retail floor space, we receive approximately 35.00%
to 40.00% of the revenues from sales of our retail partner‟s products, as negotiated on a case-by-case basis. We
expect that this model will enable us to cover our operational costs, increase footfall and provide customers with
differentiated choices in our shopping centers. We intend to launch 19 additional Treasure Showcases by the end of
the financial year 2013, 12 of which will be located in our own shopping centers and seven of which will be located
in the shopping centers of other developers, mainly projects developed by PML.
Continue to utilize effective development and ownership structures to optimize resources
We will continue to utilize project-specific SPVs and project-specific equity financing from investors, which will
assist us in reducing our working capital investment and diversifying our risk. Although we intend to own and lease
our projects under development, this model provides us with the flexibility to strategically exit any particular
property or project by selling our interest in such property or project where we believe an absolute sale or perpetual
leases will provide us with more favorable returns.
82
Description of Our Business
We operate two shopping centers in Indore and a shopping center in Nanded and we are developing urban city
shopping centers in fast growing and emerging cities in India under the brand name “TREASURE”, which we
intend to own and operate upon completion. We are also developing residential townships in fast growing and
emerging cities, which we intend to manage upon completion. Our shopping centers are divided into three formats,
“Treasure Market City,” “Treasure Island” and “Treasure Bazaar” and our residential townships are divided into two
formats, “Treasure Town” and “Treasure Vihar”.
Completed Projects
We have completed the development of three shopping centers, including Treasure Island-Indore, Treasure Central-
Indore and Treasure Bazaar-Nanded. The following table provides key information with respect to our Completed
Projects:
Project Developable
Area (in
million
square feet)
Leaseable
Area (in
million
square
feet)
Leaseable
Area
Leased as
of March
31, 2010
(in million
square
feet)
Project
Cost (Rs.
in
millions)
Our Equity
Interest in the
Project-
Specific SPV as
per
Shareholders‟
Agreement
Our
Equity
Interest
in the
project-
specific
SPV as of
March
31, 2010*
Completion
Date
Treasure
Island-
Indore
0.65 0.45 0.44 1,110.00 100.00% 100.00% December
2005
Treasure
Central-
Indore
(Treasure
Bazaar)
0.48 0.33 0.33 905.00 50.00% 50.00% May 2009
Treasure
Bazaar-
Nanded
0.38 0.25 0.21 711.00 75.00% 75.20% January
2010
*Based on funds contributed to the project-specific SPV as of March 31, 2010.
Treasure Island-Indore
We currently own and operate Treasure Island-Indore, which opened in December 2005. Treasure Island-Indore is
situated in Indore, Madhya Pradesh along M. G. Road and is currently one of the largest shopping centers in central
India. (Source: The Franchising World, November 2008) This project comprised 0.65 million square feet of
Developable Area and 0.45 million square feet of Leaseable Area. Treasure Island-Indore includes 0.28 million
square feet of retail space, 0.05 million square feet of entertainment space (including a multiplex and other
entertainment facilities), 0.03 million square feet of food and beverage space, 0.08 million square feet of hospitality
space and 0.01 million square feet of commercial space. The shopping center is currently anchored by retailers such
as Big Bazaar, Pantaloon, Max, Nike and E-Zone, a five-screen multiplex cinema by PVR, a food court and a
number of restaurants, including Rajdhani, McDonalds, Pizza Hut and Barista. Treasure Island-Indore also includes
a four-star hotel under a leave and licence agreement for a period of 29 years.
The shopping center also provides parking space of 0.18 million square feet. Treasure Island-Indore won the “Most
Admired Shopping Centre – Tier II Cities” in 2008 and “Most Admired Shopping Centre – Mini Metros” awards in
2008, 2009 and 2010 by ISCA, “Best Retailer Award” by the India Franchise Association in 2009 and “Best
Designed Shopping Mall of India” by the CNBC – CRISIL Real Estate Awards in 2007. The total cost of the project
was Rs.1,110.00 million, which was financed by Rs.255.00 million of equity and Rs.855.00 million of debt.
83
For the financial years 2010 and 2009, revenues from our operations at Treasure Island-Indore were Rs.266.68
million and Rs.248.35 million, respectively.
Treasure Central-Indore
We currently operate Treasure-Central Indore, which opened in May 2009 and is situated at RNT Marg, central
Indore, Madhya Pradesh. This project comprised 0.48 million square feet of Developable Area and 0.33 million
square feet of Leaseable Area. As per the project-specific SPV shareholders‟ agreement, we hold a 50.00% equity
interest in Naman Mall Management Company Limited, the project-specific SPV that implemented the project, with
the balance held by Kshitij Venture Capital Fund. Treasure Central-Indore includes 0.23 million square feet of retail
space (including retail anchor tenants such as Pantaloon), 0.04 million square feet of entertainment space (including
a multiplex cinema) and 0.01 million square feet of food and beverage space. Treasure Central-Indore also includes
0.05 million square feet of saleable commercial space.
As at March 31, 2010, the total cost of the project was Rs.905.00 million, which was financed by Rs.311.00 million
of equity capital and reserves (except profit and loss), Rs.543.00 million of debt and Rs.51.00 million of internal
accruals and security deposits.
For the 11 month period ended March 31, 2010, our share of the revenue from Treasure Central-Indore was
Rs.75.05 million.
Treasure Bazaar-Nanded
We currently own and operate Treasure Bazaar-Nanded, which was completed in January 2010 and is situated at
Latur Road, central Nanded, Maharashtra. This project comprised 0.38 million square feet of Developable Area and
0.25 million square feet of Leaseable Area. As per the project-specific SPV shareholders‟ agreement, we hold a
75.00% equity interest in Nanded Treasure Bazaar Private Limited, the project-specific SPV that implemented the
project. Treasure Bazaar-Nanded includes 0.13 million square feet of retail space (including retail anchor tenants
such as Gitanjali and Big Bazaar), 0.04 million square feet of entertainment space (including a multiplex cinema by
PVR and other entertainment facilities), and 0.01 million square feet of food and beverage space. Treasure Bazaar-
Nanded also includes 0.02 million square feet of commercial space and a 0.05 million square foot hotel.
As at March 31, 2010, the total cost of the project was Rs.711.00 million, which was financed by Rs.60.00 million
of equity capital and reserves (except profit and loss) and Rs.651.00 million of debt.
For the three month period ended March 31, 2010, revenues from our operations at Treasure Bazaar-Nanded were
Rs.13.85 million.
Ongoing Retail and Hospitality Projects
We are in the process of developing a Treasure Market City project in Indore, Treasure Island projects in Raipur,
Jabalpur, Bhilai and Mohali, and Treasure Bazaar projects in Ujjain, Amaravati and Baroda, in which our Company
will hold an interest through its subsidiaries and project-specific SPVs. The following table provides key
information with respect to our retail and hospitality projects that are part of our Ongoing Projects:
84
Project Developable
Area (in
million
square feet)
Leaseable
Area (in
million
square
feet)
Leaseable
Area
Leased as
of March
31, 2010
(in
million
square
feet)
Approximate
Project Cost
(Rs. in
millions)
Our Equity
Interest in the
Project-
Specific SPV
as per
Shareholders‟
Agreement
Our
Equity
Interest
in the
Project-
Specific
SPV as
of
March
31,
2010*
Estimated
Completion
Date
Treasure Market City Project
Treasure
Market
City-
Indore
3.00 2.02 0.16 5,015.00 56.10% 57.09% June 2012
Treasure Island Projects
Treasure
Island-
Raipur
1.04 0.83 0.51 2,227.00 67.00% 68.35% March 2011
Treasure
Island-
Jabalpur
0.68 0.46 0.23 1,365.00 51.80% 52.73% March 2011
Treasure
Island-
Bhilai
0.69 0.52 0.24 1,416.00 17.00% 17.51% March 2011
Treasure
Island-
Mohali
0.80 0.51 0.05 1,787.00 51.00% 52.53% January
2012
Treasure Bazaar Projects
Treasure
Bazaar-
Ujjain
0.37 0.29 0.19 683.00 100.00% 100.00% September
2010
Treasure
Bazaar-
Amaravati
0.28 0.22 - 505.00 100.00% 100.00% March 2012
Treasure
Bazaar-
Baroda
0.38 0.26 - 631.00 51.00% 51.00% September
2012
*Based on funds contributed to the project-specific SPV as of March 31, 2010.
Treasure Market City-Indore
We are currently developing Treasure Market City-Indore, which is expected to comprise 3.00 million square feet
(including 1.03 million square feet of parking) of Developable Area and 2.02 million square feet of Leaseable Area
in the center of Indore. As per the project-specific SPV shareholders‟ agreement, we will hold a 56.10% equity
interest in Indore Treasure Market City Private Limited, the project-specific SPV that is implementing the project,
with the balance being held between K2C Residential Limited and, Weser River Limited which is owned by MPC
Synergy Limited.
As of March 31, 2010, we have commitments in the form of letters of intent with security deposits for the lease of
0.16 million square feet, which represents 7.90% of the total Leaseable Area (including retail anchor tenants such as
Max and Gitanjali). We plan to enter into an agreement with a hotel operator for the operation of the hotel located in
the project.
85
The land for this project has been acquired by Indore Treasure Market City Private Limited, and permits
commensurate with the stage of development and construction have been obtained, including environmental
clearance, town and country planning approval and construction permission from Indore Municipal Corporation. Out
of the total Developable Area of 3.00 million square feet, civil construction of 1.07 million square feet was
completed as of March 31, 2010.
We expect that the total development costs (including land and construction costs) for this project will be
Rs.5,015.00 million, of which we expect Rs.1,994.00 million will be contributed to the project-specific SPV in the
form of equity. As of March 31, 2010, Rs.1,514.53 million in equity capital and reserve (except profit and loss) has
been contributed to the project-specific SPV. Rs.2,818.00 million will be secured through debt financing and
Rs.203.00 million will be financed through internal accruals and security deposits. As of March 31, 2010, we have
received sanctions for secured debt financing of Rs.1,650.00 million. The total capital incurred on this project
(defined as total assets including current assets less current liabilities less cash and bank balances) as on March 31,
2010 was Rs.1,748.07 million. We expect to open the first phase of Treasure Market City-Indore, which is expected
to comprise 0.97 million square feet of Gross Leaseable Area by June 2011, and complete the project by June 2012.
Treasure Island-Raipur
We are currently developing Treasure Island, Raipur, which is expected to comprise 1.04 million square feet of
Developable Area and 0.83 million square feet of Leaseable Area in the center of Raipur. As per the project-specific
SPV shareholders‟ agreement, we will hold a 67.00% equity interest in Raipur Treasure Island Private Limited, the
project-specific SPV that is implementing the project, with the balance being held by Diemel River Limited owned
by MPC Synergy Limited.
As of March 31, 2010, we have commitments in the form of letters of intent with security deposits for the lease of
0.51 million square feet, which represents 61.40% of the total Leaseable Area (including retail anchor tenants such
as Max). We plan to enter into an agreement with a hotel operator for the operation of the hotel located in the
project.
The land for this project has been acquired by Raipur Treasure Island Private Limited and permits commensurate
with the stage of development and construction have been obtained, including environmental clearance, town and
country planning approval and construction permission from the Raipur Town and Country Planning Department.
Out of the total Developable Area of 1.04 million square feet, civil construction of 0.94 million square feet was
completed as of March 31, 2010.
We expect that the total development costs (including land and construction costs) for this project will be
Rs.2,227.00 million, of which we expect Rs.847.00 million will be contributed to the project-specific SPV in the
form of equity. As of March 31, 2010, Rs.645.20 million in equity capital and reserve (except profit and loss) and
Rs.33.13 million in unsecured debt financing have been contributed to the project-specific SPV. Rs.1,291.00 million
will be secured through debt financing and Rs.89.00 million will be financed through internal accruals and security
deposits. As of March 31, 2010, we have received sanctions for secured debt financing of Rs.900.00 million. The
total capital incurred (defined as total assets including current assets less current liabilities less cash and bank
balances) on this project as on March 31, 2010 was Rs.1,323.57 million. We expect to open Treasure Island-Raipur
by March 2011.
Treasure Island-Jabalpur
We are currently developing Treasure Island-Jabalpur, which is expected to comprise 0.68 million square feet of
Developable Area and 0.46 million square feet of Leaseable Area in the center of Jabalpur. As per the project-
specific SPV shareholders‟ agreement, we will hold a 51.80% equity interest in Jabalpur Treasure Island Private
Limited, the project-specific SPV that is implementing the project, with the balance being held by Emmer River
Limited and Baljinder Singh Khanna.
As of March 31, 2010, we have commitments in the form of letters of intent with security deposits for the lease of
0.23 million square feet, which represents 50.00% of the total Leaseable Area (including retail anchor tenants such
86
as Max). We plan to enter into an agreement with a hotel operator for the operation of the hotel located in the
project.
The land for this project has been acquired by Jabalpur Treasure Island Private Limited and permits commensurate
with the stage of development and construction have been obtained, including environmental clearance, town and
country planning approval and construction permission from Jabalpur Municipal Corporation. Out of the total
Developable Area of 0.68 million square feet, civil construction of 0.50 million square feet was completed as of
March 31, 2010.
We expect that the total development costs (including land and construction costs) for this project will be
Rs.1,365.00 million, of which we expect Rs.510.00 million will be contributed to the project-specific SPV in the
form of equity. As of March 31, 2010, Rs.445.86 million in equity capital and reserve (except profit and loss) and
Rs.6.00 million in unsecured debt financing have been contributed to the project-specific SPV. Rs.810.00 million
will be secured through debt financing and Rs.45.00 million will be financed through internal accruals and security
deposits. As of March 31, 2010, we have received sanctions for secured debt financing of Rs.660.00 million. The
total capital incurred (defined as total assets including current assets less current liabilities less cash and bank
balances) on this project as on March 31, 2010 was Rs.819.26 million. We expect to open Treasure Island-Jabalpur
by March 2011.
Treasure Island-Bhilai
We are currently developing Treasure Island-Bhilai, which is expected to comprise 0.69 million square feet of
Developable Area and 0.52 million square feet of Leaseable Area in the center of Bhilai. As per the project-specific
SPV shareholders‟ agreement, we will hold a 17.00% equity interest in Surya Treasure Island Private Limited, the
project-specific SPV that is implementing the project, with the balance being held by Fliede River Limited,
Edelweiss Trustee Services Private Limited and Shiraj Traders Private Limited.
As of March 31, 2010, we have commitments in the form of letters of intent with security deposits for the lease of
0.24 million square feet, which represents 46.15% of the total Leaseable Area (including retail anchor tenants such
as Big Bazaar, Pantaloon, Max and Gitanjali). We plan to enter into an agreement with a hotel operator for the
operation of the hotel located in the project.
The land for this project has been acquired by Surya Treasure Island Private Limited and most of the permits
commensurate with the stage of development and construction have been obtained, including environmental
clearance and town and country planning approval. We have applied for a renewal of our construction permit for the
land, which expired on April 23, 2009. Out of the total Developable Area of 0.69 million square feet, civil
construction of 0.52 million square feet was completed as of March 31, 2010.
We expect that the total development costs (including land and construction costs) for this project will be
Rs.1,416.00 million, of which we expect Rs.508.00 million will be contributed to the project-specific SPV in the
form of equity. As of March 31, 2010, Rs.475.20 million in equity capital and reserve (except profit and loss) has
been contributed to the project-specific SPV. Rs.850.00 million will be secured through debt financing and Rs.58.00
million will be financed through internal accruals and security deposits. As of March 31, 2010, we have received
sanctions for secured debt financing of Rs.570.00 million. The total capital incurred (defined as total assets
including current assets less current liabilities less cash and bank balances) on this project as on March 31, 2010 was
Rs.615.96 million. We expect to open Treasure Island-Bhilai by March 2011.
Treasure Island-Mohali
We are currently developing Treasure Island-Mohali, which is expected to comprise 0.80 million square feet of
Developable Area and 0.51 million square feet of Leaseable Area in the center of Mohali. As per the project-specific
SPV shareholders‟ agreement, we will hold a 51.00% equity interest in Chandigarh Treasure Island Private Limited,
the project-specific SPV that is implementing the project, with the balance being held by Ochtum River Limited.
87
As of March 31, 2010, we have commitments in the form of letters of intent with security deposits for the lease of
0.05 million square feet, which represents 9.80% of the total Leaseable Area.
The land for this project has been acquired by Chandigarh Treasure Island Private Limited and all permits
commensurate with the stage of development and construction have been obtained, including environmental
clearance, town and country planning approval and construction permission from Chandigarh, Punjab. Out of the
total Developable Area of 0.80 million square feet, civil construction of 0.06 million square feet was completed as of
March 31, 2010.
We expect that the total development costs (including land and construction costs) for this project will be
Rs.1,787.00 million, of which we expect Rs.637.00 million will be contributed to the project-specific SPV in the
form of equity. As of March 31, 2010, Rs.535.47 million in equity capital and reserve (except profit and loss) and
Rs.3.20 million in unsecured debt financing have been contributed to the project-specific SPV. Rs.1,071.00 million
will be secured through debt financing and Rs.79.00 million will be financed through internal accruals and security
deposits. As of March 31, 2010 we have received sanctions for secured debt financing of Rs.1,000.00 million. The
total capital incurred (defined as total assets including current assets less current liabilities less cash and bank
balances) on this project as on March 31, 2010 was Rs.614.45 million. We expect to open Treasure Island-Mohali
by January 2012.
Treasure Bazaar-Ujjain
We are currently developing Treasure Bazaar-Ujjain, which is expected to comprise 0.37 million square feet of
Developable Area and 0.29 million square feet of Leaseable Area in the center of Ujjain. As per the project-specific
SPV shareholders‟ agreement, we will hold a 100.00% equity interest in Ujjain Treasure Bazaar Private Limited, the
project-specific SPV that is implementing the project.
As of March 31, 2010, we have commitments in the form of letters of intent with security deposits for the lease of
0.19 million square feet, which represents 65.52% of the total Leaseable Area (including retail anchor tenants such
as Big Bazaar, Max and Gitanjali).
The land for this project has been acquired by Ujjain Treasure Bazaar Private Limited and permits commensurate
with the stage of development and construction have been obtained, including environmental clearance, town and
country planning approval and construction permission from Ujjain Municipal Corporation. Out of the total
Developable Area of 0.37 million square feet, civil construction of 0.35 million square feet was completed as of
March 31, 2010.
We expect that the total development costs (including land and construction costs) for this project will be Rs.683.00
million, of which we expect Rs.258.00 million will be contributed to the project-specific SPV in the form of equity.
As of March 31, 2010, Rs.3.25 million in equity capital and reserve (except profit and loss) and Rs.218.25 million in
unsecured debt financing have been contributed to the project-specific SPV. Rs.399.00 million will be secured
through debt financing and Rs.26.00 million will be financed through internal accruals and security deposits. As of
March 31, 2010 we have received sanctions for secured debt financing of Rs.250.00 million. The total capital
incurred (defined as total assets including current assets less current liabilities less cash and bank balances) on this
project as on March 31, 2010 was Rs.452.39 million We expect to open Treasure Bazaar-Ujjain by September 2010.
Treasure Bazaar- Amaravati
We are currently developing Treasure Bazaar- Amaravati, which is expected to comprise 0.28 million square feet of
Developable Area and 0.22 million square feet of Leaseable Area in the center of Amaravati. As per the project-
specific SPV shareholders‟ agreement, we will hold a 100.00% equity interest in Amaravati Treasure Bazaar Private
Limited, the project-specific SPV that is implementing the project.
The land for this project has been acquired by Amaravati Treasure Bazaar Private Limited and EWDPL Five Star
Hospitality Private Limited and most permits commensurate with the stage of development and construction have
88
been obtained, including town and country planning approval and construction permission from Amaravati
Municipal Corporation. We plan to commence construction of the project in July 2010.
We expect that the total development costs (including land and construction costs) for this project will be Rs.505.00
million, of which we expect Rs.181.00 million will be contributed to the project-specific SPV in the form of equity.
As of March 31, 2010, Rs.0.10 million in equity and Rs.100.89 million in unsecured debt financing have been
contributed to the project-specific SPV. Rs.299.00 million will be secured through debt financing and Rs.25.00
million will be financed through internal accruals and security deposits. As of March 31, 2010, we have not sought
sanctions for secured debt financing. The total capital incurred (defined as total assets including current assets less
current liabilities less cash and bank balances) on this project as on March 31, 2010 was Rs.100.49 million. We
expect to open Treasure Bazaar- Amaravati by March 2012.
Treasure Bazaar-Baroda
We are currently developing Treasure Bazaar- Baroda, which is expected to comprise 0.38 million square feet of
Developable Area and 0.26 million square feet of Leaseable Area in the center of Baroda. As per the project-specific
SPV shareholders‟ agreement, we will hold a 51.00% equity interest in Marvell Mall Development Company Private
Limited, the project-specific SPV that is implementing the project with the balance being held by Kshitij Venture
Capital Fund, Edelweiss Trustee Services Private Limited and others.
The land for this project has been acquired by Marvell Mall Development Company Private Limited and its
subsidiary, The Baroda Commercial Corporation Limited and we have submitted applications for permits
commensurate with the stage of development and construction, including environmental clearance, town and
country planning approval and construction permission from Baroda Municipal Corporation. We plan to commence
construction of the project in October 2010.
We expect that the total development costs (including land and construction costs) for this project will be Rs.631.00
million, of which we expect Rs.225.00 million will be contributed to the project-specific SPV in the form of equity.
As of March 31, 2010, Rs.145.05 million in equity and Rs.0.50 million in unsecured debt financing have been
contributed to the project-specific SPV. Rs.368.00 million will be secured through debt financing and Rs.38.00
million will be financed through internal accruals and security deposits. As of March 31, 2010 we had not sought
sanctions for secured debt financing. The total capital incurred (defined as total assets including current assets less
current liabilities less cash and bank balances) on this project as of March 31, 2010 was Rs.137.34 million. We
expect to open Treasure Bazaar-Baroda by September 2012.
Ongoing Residential Township Projects
We are in the process of developing two Treasure Towns and two Treasure Vihars in Indore (at AB Road and
Rangawasa) and a Treasure Town and Treasure Vihar in Udaipur (at Kharol Colony), in which our Company will
hold an interest through its subsidiaries and project-specific SPVs. The following table provides key information
with respect to our residential township projects that are part of our Ongoing Projects:
Project Developable
Area (in
million
square feet)
Area
Sold as of
March
31, 2010
(in
million
square
feet)
Approximate
Development
Cost (Rs. in
millions)
Our Equity
Interest in the
Project-Specific
SPV/AoP as per
Shareholders‟
Agreement
Our Equity
Interest in
the Project-
Specific
SPV/AoP as
of March 31,
2010*
Estimated
Completion
Date
Treasure Town
and Treasure
Vihar - Indore
(AB Road)
4.88 0.90 6,891.00 60.00% 60.00% June 2013
Treasure Town 1.27 0.19 1,638.00 51.00% 51.00% December
89
Project Developable
Area (in
million
square feet)
Area
Sold as of
March
31, 2010
(in
million
square
feet)
Approximate
Development
Cost (Rs. in
millions)
Our Equity
Interest in the
Project-Specific
SPV/AoP as per
Shareholders‟
Agreement
Our Equity
Interest in
the Project-
Specific
SPV/AoP as
of March 31,
2010*
Estimated
Completion
Date
and Treasure
Vihar -
Udaipur
2012
Treasure Town
and Treasure
Vihar - Indore
(Rangawasa)
4.88 0.39 4,986.00 51.00% 51.00% December
2013
*Based on funds contributed to the project-specific SPV/AoP as of March 31, 2010.
Treasure Town and Treasure Vihar-Indore (AB Road)
We are currently developing a Treasure Town and a Treasure Vihar in Indore at AB Road, which is expected to
comprise a total of 4.88 million square feet of Developable Area across both of the projects. As per the project-
specific SPV shareholders‟ agreement, we will hold a 60.00% equity interest in Indore Treasure Town Private
Limited, the project-specific SPV that is implementing the projects, with the balance being held by K2C Residential
Limited.
As of March 31, 2010, we have received advance bookings for the sale of 0.90 million square feet, which represents
18.44% of the total Developable Area of the two projects.
The land for the projects have been acquired by Indore Treasure Town Private Limited and its SPVs, Pune
Entertainment World Developers Private Limited and Entertainment World Developers Bijalpur Private Limited,
and most permits commensurate with the stage of development and construction have been obtained, including town
and country planning approval and construction permission from Indore Municipal Corporation. We have applied
for environmental clearance from Indore Municipal Corporation and expect to receive clearance by August 2010.
We expect that the total development costs (including land and construction costs) for these projects will be
Rs.6,891.00 million, of which we expect Rs.1,030.00 million will be contributed to the project-specific SPV in the
form of equity. As of March 31, 2010, Rs.1,026.85 million in equity capital and reserve (except profit and loss) has
been contributed to the project-specific SPV. Rs.700.00 million will be secured through debt financing and
Rs.5,161.00 million will be financed through internal accruals and deposits. As of March 31, 2010, we have received
sanctions for secured debt financing of Rs.700.00 million. The total capital incurred (defined as total assets
including current assets less current liabilities less cash and bank balances) on these projects as on March 31, 2010
was Rs.1,311.39 million. We expect to complete the project by June 2013.
Treasure Town and Treasure Vihar, Udaipur
We are currently developing a Treasure Town and a Treasure Vihar in Udaipur at Kharol Colony, which is expected
to comprise a total of 1.27 million square feet of Developable Area across both the projects. As per the project-
specific SPV shareholders‟ agreement, we will hold a 51.00% equity interest in Landmark Treasure Town, an AoP
that is implementing the projects, with the balance being held by Landmark Hi Tech Development Private Limited.
As of March 31, 2010, we have received advance bookings for the sale of 0.19 million square feet, which represents
14.96% of the total Developable Area of the two projects.
The land for the projects have been acquired by Dazzling Properties Private Limited, a member of the AoP, and all
permits commensurate with the stage of development and construction have been obtained, including environmental
clearance, town and country planning approval and construction permission from Udaipur Municipal Corporation.
90
Out of the total Developable Area of 1.27 million square feet, civil construction of 0.21 million square feet was
complete as of March 31, 2010.
We expect that the total development costs (including land and construction costs) for these projects will be
Rs.1,638.00 million, of which we expect Rs.467.00 million to be contributed to the project-specific SPV in the form
of equity. As of March 31, 2010 Rs.424.49 million has been contributed in equity capital and reserves (except profit
and loss). Rs.250.00 million will be secured through debt financing and Rs.921.00 million will be financed through
internal accruals and deposits. As of March 31, 2010, we have received sanctions for secured debt financing of
Rs.96.30 million. The total capital incurred (defined as total assets including current assets less current liabilities less
cash and bank balances) on these projects as on March 31, 2010 was Rs.466.18 million. We expect to complete the
project by December 2012.
Treasure Town and Treasure Vihar, Indore (Rangawasa)
We are currently developing a Treasure Town and a Treasure Vihar in Indore at Rangawasa, which is expected to
comprise a total of 4.88 million square feet of Developable Area across both of the projects. As per the project-
specific SPV shareholders‟ agreement, we will hold a 51.00% equity interest in Wanderland Real Estates Private
Limited, the project-specific SPV that is implementing the projects, with the balance being held by various real
estate investors.
As of March 31, 2010, we have received advance bookings for the sale of 0.39 million square feet, which represents
approximately 7.99% of the total Developable Area of the two projects.
The land for the projects have been acquired by Wanderland Real Estates Private Limited and it is currently
submitting applications for permits commensurate with the stage of development and construction, including
environmental clearance, town and country planning approval and construction permission from Indore Municipal
Corporation.
We expect that the total development costs (including land and construction costs) for these projects will be
Rs.4,986.00 million, of which Rs.500.00 million will be contributed to the project-specific SPV in the form of
equity. As of March 31, 2010, Rs.5.25 million in equity capital and reserves (except profit and loss) and Rs.449.31
million in unsecured debt financing have been contributed to the project-specific SPV. Rs.250.00 million will be
secured through debt financing and Rs.4,236.00 million will be financed through internal accruals and deposits. As
of March 31, 2010, we have not sought sanctions for secured debt financing. The total capital incurred (defined as
total assets including current assets less current liabilities less cash and bank balances) on these projects as of March
31, 2010 was Rs.489.58 million. We expect to complete the project by December 2013.
Forthcoming Projects
Our Forthcoming Projects include a retail and hospitality project, Treasure Island- Thiruvananthapuram, and two
residential township projects, Treasure Town and Treasure Vihar projects in Indore (at Kanadia) and Raipur (at
Samta Colony), in which our Company will hold an interest through its subsidiaries and project-specific SPVs. The
following table provides key information with respect to these Forthcoming Projects:
Project Developable
Area (in
million
square feet)
Estimated
Leaseable/Saleable
Area (in million
square feet)*
Approximate
Project Cost
(Rs. in
millions)
Our Equity
Interest in the
Project-
Specific SPV as
per
Shareholders‟
Agreement
Our
Equity
Interest in
the
Project-
Specific
SPV as of
March 31,
2010#
Estimated
Completion
Date
Treasure Island -
Thiruvananthapuram
0.87 0.75 1,452.00 100.00% 100.00% September
2012
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Project Developable
Area (in
million
square feet)
Estimated
Leaseable/Saleable
Area (in million
square feet)*
Approximate
Project Cost
(Rs. in
millions)
Our Equity
Interest in the
Project-
Specific SPV as
per
Shareholders‟
Agreement
Our
Equity
Interest in
the
Project-
Specific
SPV as of
March 31,
2010#
Estimated
Completion
Date
Treasure Town and
Treasure Vihar -
Indore (Kanadia)
2.26 2.26 2,016.00 100.00% 99.99% June 2013
Treasure Town and
Treasure Vihar –
Raipur (Samta
Colony)
1.93 1.93 1,950.00 33.33% 33.33% October
2013
*The estimated Leaseable/Saleable Area included in this table has been estimated by us on a best case basis and may change. See “Risk Factors - The estimated total Developable Area and Leaseable or Saleable Areas with respect to our Ongoing Projects and Forthcoming Projects are
based on existing real estate regulations and current development plans, and may differ from the actual total Leaseable or Saleable Area once
these projects are complete” on page xxvii of this Draft Red Herring Prospectus. # Based on funds contributed to the project-specific SPV as of March 31, 2010.
Treasure Island-Thiruvananthapuram
We plan to develop a Treasure Island in Thiruvananthapuram, which is expected to comprise 0.87 million square
feet of Developable Area and 0.75 million square feet of Leaseable Area in the center of Thiruvananthapuram. As
per the project-specific SPV shareholders‟ agreement, we will hold a 100.00% equity interest in Annapoorna
Entertainment World Developers Private Limited, the project-specific SPV that is implementing the project.
The land for this project has been acquired by Annapoorna Entertainment World Developers Private Limited and we
plan to submit applications for permits commensurate with the stage of development and construction, including
environmental clearance, town and country planning approval and construction permission in October 2010.
We expect that the total development costs (including land and construction costs) for this project will be Rs.1,452
million, of which we expect Rs.536.00 million will be contributed to the project-specific SPV in the form of equity.
As of March 31, 2010, Rs.0.20 million in equity and Rs.402.89 million in unsecured debt financing have been
contributed to the project-specific SPV. Rs.777.00 million will be secured through debt financing and Rs.139.00
million will be financed through internal accruals and security deposits. As of March 31, 2010, we have not sought
secured debt financing. The total capital incurred (defined as total assets including current assets less current
liabilities less cash and bank balances) on this project as on March 31, 2010 was Rs.401.89 million. We expect to
complete the project by September 2012.
Treasure Town and Treasure Vihar, Indore (Kanadia)
We plan to develop a Treasure Town and a Treasure Vihar in Indore at Kanadia, which is expected to comprise a
total of 2.26 million square feet of Developable Area across both of the projects. As per the project-specific SPV
shareholders‟ agreement, we will hold a 100.00% equity interest in Treasure World Developers Private Limited, the
project-specific SPV that is implementing the projects.
The land for the projects have been acquired by Treasure World Developers Private Limited and its subsidiaries,
Entertainment World Developers Amritsar Private Limited, Chandigarh Entertainment World Private Limited and
Jodhpur Entertainment World Developers Private Limited, and we plan to submit applications for permits
commensurate with the stage of development and construction, including environmental clearance, town and
country planning approval and construction permission from Indore Municipal Corporation in October 2010.
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We expect that the total development costs (including land and construction costs) for these projects will be
Rs.2,016.00 million, of which we expect Rs.462.00 million will be contributed to the project-specific SPV in the
form of equity capital and reserves (except profit and loss). Rs.250.00 million will be secured through debt financing
and Rs.1,304.0 million will be financed through internal accruals and deposits. As of March 31, 2010, we have not
sought debt financing. The total cost incurred on these projects as on March 31, 2010 was Rs.461.54 million. The
following table shows the total cost incurred on this project (defined as total assets including current assets less
current liabilities less cash and bank balances) as on March 31, 2010 by Treasure World Developers Private Limited
and its subsidiaries, Entertainment World Developers Amritsar Private Limited, Chandigarh Entertainment World
Private Limited and Jodhpur Entertainment World Developers Private Limited towards this project:
Project Specific SPVs Cost incurred as of March 31, 2010 (Rs. In
Millions)
Treasure World Developers Private Limited 178.23
Entertainment World Developers Amritsar Private Limited 70.31
Chandigarh Entertainment World Private Limited 104.52
Jodhpur Entertainment World Developers Private Limited 108.48
We expect to complete the project by June 2013.
Treasure Town and Treasure Vihar, Raipur (Samta Colony)
We plan to develop a Treasure Town and a Treasure Vihar in Raipur at Samta Colony, which is expected to
comprise a total of 1.93 million square feet of Developable Area across both of the projects. As per the project-
specific SPV shareholders‟ agreements, we will hold a 33.33% equity interest in Ramayana Realtors Private Limited
and 33.33% equity interest in Picasso Developers Private Limited, respectively, the project-specific SPVs that are
implementing the projects, with the balance being held by PML, Sharyans Resources Limited, Pantaloon Fashion
Limited and Kishore M. Gandhi and others.
The land for the projects have been acquired by Ramayana Realtors Private Limited and Picasso Developers Private
Limited and we plan to submit applications for permits commensurate with the stage of development and
construction, including environmental clearance, town and country planning approval and construction permission
from the Raipur Town and Country Planning Department in August 2010.
We expect that the total development costs (including land and construction costs) for these projects will be
Rs.1,950.00 million, of which we expect Rs.417.00 million will be contributed to the project-specific SPVs in the
form of equity. As of March 31, 2010, Rs.161.89 million in equity capital and reserves (except profit and loss) and
Rs.33.76 million in unsecured debt financing have been contributed to the project-specific SPVs. Rs.250.00 million
will be secured through debt financing and Rs.1,283.00 million will be financed through internal accruals and
deposits. As of March 31, 2010, we have not sought secured debt financing. The total capital incurred (defined as
total assets including current assets less current liabilities less cash and bank balances) on these projects as of March
31, 2010 was Rs.353.28 million. We expect to complete the project by October 2013.
Retail Properties Lease Structure
We typically enter into three types of lease arrangements with our tenants for our retail properties, fixed-price leases,
fixed-or-percentage of sales leases and percentage of sales leases.
Fixed-price lease. In a typical fixed price lease, a tenant pays rent at a specified price, monthly, for a fixed duration.
The rent a tenant pays is determined using a combination of assessing the prevailing market lease rates of the
shopping center‟s location along with an assessment of the tenant‟s ability to pay the proposed rental rates. All of
our fixed price leases are subject to an industry standard escalation rental increase clause at pre-determined intervals
during the term of the lease.
Fixed-or-percentage of sales lease. A fixed-or-percentage of sales lease, is an arrangement whereby a tenant pays a
base rental fee or additional rental fee based upon a percentage of its sales (whichever is higher); this percentage is
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calculated from the sales made by a tenant on its leased space, at the end of each month of the lease period. The base
rent is typically arrived at by taking into account the ongoing market lease rate for the space which a tenant intends
to occupy and its brand (which is determined by assessing its gross margins, operational expenditure and capital
expenditure levels). For example, if a tenant‟s percentage of sales paid as rental fees is high, the tenant will typically
receive a larger discount on its base rent. If a tenant pays a low percentage of its sales as rental fees, its base rent will
typically be higher.
Percentage of sales lease. The rental fee paid to us under percentage of sales leases are based entirely on the
tenant‟s sales, which is calculated from the sales made by the tenant on its leased space, at the end of each month of
the lease period. This percentage is typically arrived at by analyzing the tenant‟s business category (which is
determined by the sales volume and margin structure of a tenant), the tenant‟s brand (which is determined by
assessing its gross margins, operational expenditure and capital expenditure levels) and the tenant‟s trading density
(which is determined by the ability of the tenant to absorb our rental rates).
As of March 31, 2010, approximately 68.00% of our tenants were on fixed-price leases. The trend in the Indian
retail industry over the past year has been to move towards fixed-or-percentage of sales leases and percentage of
sales leases, which we expect to continue. Over the long term, we expect that the level of retail property tenant sales
will become the most important determinant of revenues of a retail property because a tenant‟s retail sales will
determine the amount of rent, percentage of rent and recoverable expenses (together, the “total occupancy costs”)
that shopping center tenants will be able to afford to pay. In addition, levels of retail property tenant sales can be
considerably more volatile in the short run than total occupancy costs, and may be affected significantly, by the
success or lack of success of a small number of tenants or a single tenant. We believe that the ability of tenants to
pay occupancy costs and earn profits over long periods of time increases as sales per square foot increase, whether
through inflation or real growth in consumer spending. Therefore, under our fixed-or-percentage of sales leases and
percentage of sales leases our tenants‟ sales directly affects the amount of rent we receive under such leases, which
in turn affects our results of operations and financial condition.
We monitor our retail tenants sales who are on fixed-or-percentage of sales leases and percentage of sales leases
through our WIN CORE sales tracking system, which connects to our tenants‟ point of sale terminals. This system
tracks the sales of our tenants which provides us and our tenants with real-time sales data and assists us in
calculating a tenant‟s rent, footfalls, average amount spent and shopper‟s preferences.
Hospitality Properties Lease Structure
We typically enter into fixed-plus-percentage of sales leases for a period of approximately 29 years with our
hospitality tenants for the hotels we develop. The hotel operator pays a base rental fee for the hotel and additional
rental fee based upon a percentage of its sales (usually limited to a specific segment of the hotel‟s business, such as
food and beverage); this percentage is calculated from the sales made by the hotel, at the end of each month of the
lease period. Furthermore, in certain circumstances, if the hotel achieves a certain revenue threshold from its hotel
room bookings, we are entitled to receive 35.00% of the incremental revenue achieved over and above the threshold
level. The base rent is typically arrived at by taking into account the ongoing market lease rate for the hotel. The
percentage of sales we negotiate as a rental fee on fixed-plus-percentage of lease arrangements varies between hotel
operators and depends on various factors including the hotel operator‟s business model and brand.
The Real Estate Development Process
Land identification and acquisition of ownership interests or development rights
To identify land acquisition and development opportunities, we focus on the consumption patterns in the city in
which we are considering developing a project, and whether the consumption patterns of the residents of that city
justify the acquisition and development cost. We also consider whether we will be an early-mover in that city and
whether the proposed project site is located within the city center. In addition, we focus on identifying development
opportunities in fast growing and emerging cities where we believe there is significant growth potential.
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We have a dedicated team that analyzes and monitors these parameters, as well as industry economics, property
market trends and government policies. We also use the feedback we receive from customers, along with our
relationships with property consultants, constructors, sub-contractors and suppliers, to assess future market demand
and industry outlook. We also undertake extensive market research to identify potential cities where projects can be
launched. This exercise helps us to identify market competition in these locations and assists us in determining the
most appropriate retail mix. After we have identified a potential development site, we evaluate and estimate the
costs which will be incurred for the development of the project. This process is jointly undertaken by our
engineering department and our team which identified the land.
Prior to undertaking each project, we conduct due diligence and assessment exercises in relation to immovable
properties and financial viability of the project. Once we have identified a plot that may be suitable for development,
our local lawyers undertake due diligence investigations in respect of land we desire to develop, including a review
of land records, planning records and ownership records, and publish a notice in newspapers soliciting objections
from persons claiming ownership of the land. Assuming that our investigations show no significant problems with
the identified land, we enter into negotiations pursuant to which we enter into a preliminary agreement with the
landowners to acquire the land. Formal conveyance of land by the seller (at which time stamp duty becomes
payable), for acquisitions of land, is completed shortly before construction is due to start and after all requisite
governmental consents and approvals have been obtained.
Obtaining consents, authorizations and approvals
Once we have identified and entered into an agreement to acquire title to the land, we seek requisite governmental
and regulatory consents, sanctions, authorizations and approvals, including site plan, development plan and
environmental approvals. We have considerable experience in working with governmental and regulatory authorities
to obtain such approvals. This experience has given us a good understanding of the regulatory regime in which we
operate, thereby enabling us to obtain requisite approvals on a timely basis and to obtain approval for the project of
the maximum permitted square footage given for the size of each plot.
Project development and execution
We generally finance the commencement of our projects with equity contributions from our shareholders, security
deposits from customers, internally generated funds from sales revenues, unsecured loans and bank borrowings
secured by the particular project for which funds are being borrowed. Our planning and development team models
the procurement process in conjunction with our finance and accounting teams in order to precisely budget for the
project and assist our sales and marketing team with pricing the project. During this stage, contractors will be
selected, usually through an open tender process. Materials procurement contracts are entered into between our
contractor and the suppliers and large scale equipment such as bulldozers are provided by third party building
contractors. We generally engage our subsidiaries, TWDPL, Intesys and TMEP and other contractors with whom we
have worked on previous developments. In some cases we may enter into turnkey contracts with contractors. These
contracts involve not only construction but also the outsourcing of procurement of the raw materials and labor to
such contractors. In such cases, we still undertake necessary project management and ensure that the execution by
such contractors meets our required standard operating procedures to ensure the uniformity and quality of our
developments.
We typically staff each of our projects with an on-site project manager, civil engineers, surveyors, quality control
officers, sales and marketing personnel, finance and accounting personnel, IT personnel, legal personnel, human
resources personnel and inventory control officers. Our personnel retain all on-site project management and
oversight roles, while construction services are provided.
Marketing, including sales or leasing, and post-completion
With respect to our retail developments, our sales and marketing department is responsible for leasing out the entire
development. Our in-house team approaches this task from the retailer‟s perspective. A viability study is prepared
for key prospective anchor tenants, which includes a summary of the consumption patterns of the city‟s residents
and the projected sales volume of the prospective tenant. This viability study helps us to support our proposed lease
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rates. The following table identifies our anchor tenants and the amount of square feet leased (including letters of
intent) by each such anchor tenant in our shopping centers as of March 31, 2010.
Name Number of
Anchor Stores
Gross Leaseable Area
Leased by Anchor
(square feet)
Gross Leaseable Area
Leased by Anchor
(square feet) 1
Total Gross Leaseable
Area Occupied by
Anchor (square feet)
Completed Projects Ongoing Projects
Big Bazaar 4 83,687 103,496 187,183
(Pantaloon)
Central 1 213,064 - 213,064
(Pantaloon)
Stellar 1 11,570 - 11,570
E-zone 1 11,451 - 11,451
(Pantaloon)
Pantaloon 2 33,642 31,387 65,029
Spencers 1 - 39,495 39,495
Next 1 8,141 - 8,141
Max 2 32,166 71,840 104,006
Gitanjali 6 9,047 112,878 121,925
Fashion Yatra 1 10,289 - 10,289
Multiplex
PVR 5 53,400 130,289 183,689
FUN 1 - 46,420 46,420
Adlabs 1 - 63,600 63,600
Treasure
Showcase
7 269,089 - 269,089
Total 34 735,546 599,405 1,334,951
1 Includes Letter’s of Intent signed, as of March 31, 2010
Units in our retail developments (not including hotel space, which we pre-lease prior to completion), are leased
around the time of completion of the development. In connection with perpetual leases, we may require that
customers pay advances on the purchase price at the time of entering into the long-term lease agreement.
With respect to residential township projects, our sales and marketing department is responsible for procuring
customers for the units in our developments. Most of our units are sold through word of mouth, but if required, we
market our units through marketing initiatives such as advertisements in newspapers, the internet and billboards,
launch events and corporate presentations. We also engage the services of real estate brokers and selling agents in
connection with the sale of our residential developments. We seek to foster good relations with our customers. In
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each of our residential developments, we provide our customers with a pre-occupancy inspection accompanied by
our site engineers.
With the exception of hotel developments, we manage all of our properties.
Insurance
We maintain insurance coverage with Indian insurers, such as the New India Assurance Company and
Cholamandalam General Insurance. The insurance that we procure varies with respect to each project and generally
includes coverage for fire and allied perils, contractors‟ all-risk protection and third party liability. We also maintain
insurance coverage for theft from the New India Assurance Company for the products at our Treasure Showcase
outlets. Our operations are subject to hazards inherent in the real estate industry which may cause various losses or
liability and such losses or liability may not be adequately covered by our insurance policies. See “Risk Factors -
Our insurance coverage may not adequately protect us against certain risks to or claims by our employees, and we
may be subject to losses that might not be covered in whole or in part by existing insurance coverage” on page xxix
of this Draft Red Herring Prospectus.
Competition
The real estate development industry in India, while fragmented and regionalized, is highly competitive. We face
competition from various Indian commercial and retail real estate development companies and shopping centers. In
our retail real estate business we currently face competition from local developers in the cities in which we operate.
In our residential real estate business we currently face competition from Omaxe Limited, Sahara Prime City
Limited, the DLF Group and Parsvnath Developers Limited.
Given our strategy of expanding our business activities in other fast growing and emerging cities, we expect that we
will face competition in the future from various Indian commercial and retail real estate investment and
development companies with significant operations in India. Given the fragmented nature of the real estate
development industry, we often do not have adequate information about the projects our competitors are developing
and accordingly, we run the risk of underestimating supply in the market. Although we intend to focus on fast and
emerging cities where we believe we have an early-mover advantage, we face the risk that some of our competitors,
who are also engaged in real estate development, may be better known in these markets, enjoy better relationships
with land owners and international or domestic joint venture partners, gain early access to information regarding
attractive parcels of land and be better placed to acquire such land. We and certain of our tenants compete with other
retail distribution channels, including department stores and shopping centers, in attracting customers. Moreover, we
compete with an increasing number of commercial real estate developers. In our hotel business, we will compete
with other hotels and service apartments operating in the neighborhood where the hotels are located. Increasing
competition could result in price and supply volatility, which could cause our business to suffer. We may also face
competition in the future from certain foreign real estate development companies operating in India or which may in
the future enter the Indian market.
Employees
As of March 31, 2010, we had 557 employees. Out of these employees, we had 27 employees in engineering, 50 in
accounting and finance, 11 in architecture and design, 65 in shopping center operations and maintenance, 26 in
procurement, 120 in projects, 37 in sales and marketing and others in legal, human resources, administration and
information systems. We believe that a skilled and motivated employee base is essential to maintain our competitive
advantage. None of our employees are represented by any labor or workers‟ unions. We believe that we have good
relations with our employees. Since 1999, when we began our real estate development operations, we have not
experienced any work stoppages or strikes.
Environment, Health and Safety
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We believe that we are generally in compliance with applicable environmental laws and regulations. We are not
currently a party to any environmental proceedings which, if adversely determined, would reasonably be expected to
have an adverse effect on our financial condition or results of operations.
We are committed to complying with applicable health, safety and environmental legislations and other
requirements in our operations. To ensure the effective implementation of our practices, we seek to identify at every
project all potential hazards at the beginning of our work on a project, evaluate the associated risks and institute and
monitor appropriate controls and risk mitigation methods.
We believe that all accidents and occupational health hazards can be prevented through systematic analysis and
control of risks. We encourage our employees to work constantly and proactively towards eliminating or minimizing
the impact of hazards to people and the environment. We encourage the adoption of occupational health and safety
procedures as an integral part of our operations.
Intellectual Property
EWDPL has been registered by us as a trademark under Class 35, 36, 37, 41 and 42 of the Trademark Act, 1999.
The trademarks “TREASURE”, “TREASURE MARKET CITY”, “TREASURE ISLAND”, “TREASURE TOWN”
and “TREASURE BAZAR” and their associated logos are owned by us, and we are the registered owner of the
trademarks. We have applied for registration of other various marks that we use in our business, including “Treasure
Vihar.”
Properties
Our registered office is located at G-16, R. R. Hosiery Building, Shree Laxmi Woolen Mills, Opp. Shakti Mills
Compound, Off. Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011 and our corporate office is located at 6th
Floor,
Treasure Island, 11, M.G. Road, Tukoganj, Indore 452 001, which are owned by us.
Land Reserves
The table below provides certain details of our Land Reserves and estimated Developable Area and
Our net cash used in operating activities was Rs.919.50 million for the financial year 2010. The cash used in
operating activities for the financial year 2010 was primarily utilized towards increasing our receivables and our
inventories. Net cash used in operating activities consisted of profit before tax of Rs.178.26 million, as adjusted for a
number of non-cash items, primarily depreciation of Rs.46.23 million, interest expense of Rs.199.19 million and
profit on sale of subsidiaries of Rs.20.29 million and changes in working capital, such as an increase in receivables
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of Rs.354.21 million, increases in loans and advances of Rs.139.36 million, increases in inventories of Rs.610.94
million and a decrease in payables of Rs.164.86 million.
Our net cash generated from operating activities was Rs.604.24 million for the financial year 2009. The cash
generated from operating activities for the financial year 2009 was primarily on account of realization of revenue
from rental income from our shopping centers. Net cash generated from operating activities consisted of loss before
tax of Rs.82.54 million, as adjusted for a number of non-cash items, primarily depreciation of Rs.38.40 million,
interest expense of Rs.207.41 million and interest income of Rs.23.93 million and changes in working capital, such
as a decrease in receivables of Rs.4.93 million, decreases in loans and advances of Rs.359.96 million, increases in
inventories of Rs.732.23 million and an increase in payables of Rs.868.01 million.
Our net cash used in operating activities was Rs.1,494.51 million for the financial year 2008. The cash used in
operating activities for the financial year 2008 was primarily utilized towards increasing our loans and advances and
our inventories. Net cash used in operating activities consisted of loss before tax of Rs.17.61 million, as adjusted for
a number of non-cash items, primarily depreciation of Rs.28.92 million and interest expenses of Rs.86.69 million
and changes in working capital, such as an increase in receivables of Rs.26.64 million, increases in loans and
advances of Rs.679.70 million, increases in inventories of Rs.1,159.96 million and an increase in payables of
Rs.315.11 million.
Cash Flows from Investing Activities
Our net cash flows used in investing activities was Rs.1,810.12 million for the financial year 2010, primarily as a
result of the purchase of fixed assets of Rs.1,858.70 million and investment in associate companies of Rs.3.33
million, partially offset by net sales proceeds received on sale of fixed assets of Rs.23.85 million.
Net cash used in investing activities was Rs.3,036.42 million for the financial year 2009, primarily as a result of the
purchase of fixed assets of Rs.3,071.10 million and purchase of current investments of Rs.1,435.90 million and
purchase of long term investments of Rs.72.91 million, partially offset by sale of current investments of Rs.1,470.97
million and share application money pending allotment of Rs.69.58 million.
Net cash used in investing activities was Rs.1,877.74 million for the financial year 2008, primarily as a result of the
purchase of fixed assets of Rs.1,814.56 million and purchase of current investments of Rs.1,712.94 million, partially
offset by the sale of current investments of Rs.1,740.41 million, and share application money pending allotment of
Rs.94.58 million.
Cash Flows from Financing Activities
Net cash generated from financing activities was Rs.2,278.38 million for the financial year 2010, primarily as a
result of incurrence of secured loans of Rs.1,918.33 million and unsecured loans of Rs.29.97 million and proceeds
from the issue of shares to minority shareholders by subsidiaries of Rs.511.55 million, partially offset by share
application money paid of Rs.97.50 million and interest payments of Rs.210.73 million.
Net cash generated from financing activities was Rs.3,397.74 million for the financial year 2009, primarily as a
result of incurrence of secured loans of Rs.1,310.30 million, proceeds from, the issue of debentures of Rs.1,000.00
million and proceeds from the issue of shares to minority shareholders by subsidiaries of Rs.1,569.06 million,
partially offset by share application money paid of Rs.782.50 million and interest payments of Rs.187.52 million.
Net cash generated from financing activities was Rs.3,535.87 million for the financial year 2008, primarily as a
result of proceeds from the issuance of debentures of Rs.1,699.99 million, proceeds from share application money of
Rs.880.00 million, the incurrence of secured loans of Rs.770.69 million, partially offset by interest payments of
Rs.86.38 million.
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Capital Expenditures
For the financial years 2010, 2009 and 2008, we incurred Rs.1,258.81 million, Rs.470.21 million and Rs.559.79
million, respectively, on capital expenditures (excluding capital work in progress). The capital expenditures for each
of the financial years 2010, 2009 and 2008 were primarily as a result of the completion of our ongoing retail and
residential projects. Our growth plans will require us to incur substantial additional expenditure in the future
financial years, particularly as a result of various ongoing retail and residential projects commencing operations.
Indebtedness
As of March 31, 2010, we had Rs.9,125.52 million of aggregate principal amount of indebtedness outstanding. The
following table summarizes our outstanding consolidated outstanding indebtedness as of March 31, 2010:
(Rs. in Million)
Particulars As of March 31, 2010
Long term loans .......................................................... 7,401.46
Short term loans.......................................................... 1,724.06
Total ............................................................................. 9,125.52
See “Financial Indebtedness” on page 286 of this Draft Red Herring Prospectus for a more detailed summary of our
outstanding indebtedness.
Contingent Liabilities
The following table provides our contingent liabilities as of March 31, 2010:
Particulars (Rs. in
million)
Bank guarantees outstanding………………………………………………………………………….. 103.16
Guarantees on behalf of other companies……………………………………………………………... 9,757.68
Demands of income tax authorities disputed in appeal………………………………………………..
Amount deposited by the Company against above demand…………………………………………...
63.64
14.88
Demands of Sales tax authorities disputed in appeal………………………………………………….. 2.90
Obligation under “Export Promotion of Capital Goods Scheme” of the Central Government …........ 525.07
Service tax on rent from commercial properties…………………………………………. 54.04
Claim from Madhya Pradesh Housing Board on account of dispute …………………….. 115.00
Contractual Obligations and Commercial Commitments
Our contractual obligations and commercial commitments consist principally of the following, as of March 31,
2010, classified by maturity:
(Rs. in Million)
Particulars Payment due by period
Total Less than
one year
One to three
years
Three to
five years
More than
five years
Long term debt 14,081.50 2,144.79 6,285.07 3,416.57 2,235.08
Short term debt 1,724.07 1,724.06 - - -
Contractual commitments 728.11 478.52 249.59 - -
Related Party Transactions
We have engaged in the past, and may engage in the future, in transactions with related parties, including with our
affiliates and certain key management members on an arm‟s lengths basis. Such transactions could be for provision
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of services, purchase and sale of goods, lease of assets or property, sale or purchase of equity shares or entail
incurrence of indebtedness. For details of our related party transactions, see “Related Party Transactions” on page
160 of this Draft Red Herring Prospectus.
Off Balance Sheet Commitments and Arrangements
We do not have any off-balance sheet arrangements, derivative instruments, swap transactions or relationships with
affiliates or other unconsolidated entities or financial partnerships that would have been established for the purpose
of facilitating off-balance sheet arrangements.
Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk and
commodities risk. We are exposed to commodity risk, interest rate risk and credit risk in the normal course of our
business.
Interest Rate Risk
We currently have floating rate indebtedness for our working capital requirements and also maintain deposits of
cash and cash equivalents with banks and other financial institutions and thus are exposed to market risk as a result
of changes in interest rates. As of March 31, 2010, Rs.5,065.61 million of our indebtedness consisted of floating rate
indebtedness. Upward fluctuations in interest rates increase the cost of both existing and new debts and affect our
results of operations. It is likely that in the current financial year and in future periods our borrowings will rise
substantially given our planned expenditures. We do not currently use any derivative instruments to modify the
nature of our exposure to floating rate indebtedness or our deposits so as to manage interest rate risk.
Commodity Risk
We are exposed to market risk with respect to the prices of raw materials and components used in our developments.
These commodities primarily are steel and cement. The costs of these raw materials and components are subject to
fluctuation based on commodity prices. In the normal course of business, we purchase these raw materials and
components either on a purchase order basis or pursuant to supply agreements. We currently do not have any
hedging instruments in respect of any of the commodities we purchase.
Credit Risk
We are exposed to credit risk on sales receivables owed to us by our customers. If our customers do not pay us in a
timely manner, or at all, we may have to make provisions for or write-off such amounts.
Seasonality
Our revenues and results may be affected by seasonal factors. Seasonal factors particularly affect our fixed-or-
percentage of sales leases and percentage of sales leases. The retail real estate industry has shopping center tenant
sales highest in the third quarter due to the Dusshera, Diwali and the calendar year-end season, and with lesser sales
during the summer months of June, July and August and the back-to-school period. The hotel industry is also
seasonal in nature and the periods during which our hotel tenants experience higher revenue during school vacations
and towards the calendar year-end season.
Adoption of IFRS effective April 2011
The Institute of Chartered Accountants of India, the accounting body that regulates the accounting firms in
India, has announced a road map for the adoption of, and convergence with the IFRS pursuant to which all public
companies in India will be required to prepare their annual and interim financial statements under IFRS,
beginning with the financial year commencing April 1, 2011 to April 1, 2014. Companies with a networth of less
than Rs.5,000.00 million are required to implement IFRS conversion from the financial year 2014. Because there is
285
significant lack of clarity on the adoption of and convergence with IFRS and there is no significant body of
established practice upon which to draw in forming judgments regarding its implementation and application, we
have not determined with a degree of certainty the impact that such adoption will have on our financial reporting.
There can be no assurance that our financial condition, results of operations, cash flows or changes in shareholders‟
equity will not appear materially worse under IFRS than under Indian GAAP.
Known Trends or Uncertainties
Other than as described in this section and the section titled “Risk Factors” on page xi of this Draft Red Herring
Prospectus, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a
material adverse impact on our income from continuing operations.
Significant Developments after March 31, 2010
Except as stated elsewhere in this Draft Red Herring Prospectus, to our knowledge no circumstances have arisen
since March 31, 2010, which is the date of the most recent financial statements included in this Draft Red Herring
Prospectus, which materially and adversely affect or are likely to affect our profitability, our financial condition or
our ability to pay our material liabilities within the next 12 months.
286
FINANCIAL INDEBTEDNESS
Details of Secured Loans
The details of the Company‟s secured loans are as follows:
(a) Fund Based
S.
No.
Name of
the
Lenders
Nature of
Borrowing
Amount
Sanctioned
(in Rs.
Million)
Amount
outstanding as
of May 31,
2010 (in Rs.
Million)
Interest (in %
per annum)
Tenure Repayment Security
1. UCO
Bank
Sanction
Letter dated
December 9, 2005 (Term
loan- I)
825.00 624.60 PLR+ 1.00% (1)
108 months
after completion
of one month from the date of
disbursement.
Repayable in equal
monthly instalments
commencing after completion of one
month from the date
of disbursement till December 2014
Refer to
Note 1
Loan
agreement dated
September
28, 2006 (Term loan –
II )
175.00 112.50 PLR+ 1.00% (1)
100 months
commencing after completion
of one month
from the date of disbursement
Repayable in equal
monthly instalments commencing after
completion of one
month from the date of disbursement till
December 2014 (1) The Company will be liable to pay penal interest at 2% per annum over and above the applicable rate of interest in the event of any failure to repay the installment, on all amounts outstanding for the period of default.
Note 1:
1. Primary: Assignment of future lease rent receivables from the tenant/ licenses of the property, Treasure
Island including the future lease rent receivables from 6th
to 8th
floor, Treasure Island, 11, Tukoganj, M.G.
Road, Indore.
2. Collateral: Exclusive first charge by way of equitable mortgage by deposit of title deeds of land
admeasuring 1,00,000 sq ft and building constructed/ to be constructed thereon, including 6th
to 8th
floor
Treasure Island, 11, Tukogan, M.G. Road, Indore.
3. Personal guarantee of Manish Kalani.
4. Corporate guarantee of Padma Homes Private Limited and Kalani Brothers (Indore) Private Limited.
Corporate Actions
Certain corporate actions, for which the Company requires the prior written approval of the lenders, inter alia
include:
1. Change in the tenant (or lessee of 6th
to 8th
floor, Treasure Island, 11, Tukoganj, M.G. Road, Indore) during
the period of the loan.
2. Change in capital structure.
3. Implement any scheme of expansion/ modernisation/ diversification renovation or acquire any fixed assets
during any accounting year.
4. Formulate any scheme of amalgamation or re-construction.
5. Invest by way of share capital in, or lend or advance funds to, or place deposits with any other concern.
6. Enter into borrowing arrangement either secured or unsecured with any other bank, financial institutions,
company or persons.
7. Undertake guarantee obligations on behalf of any other company, firm or person
8. Declare dividends for any year except out of profits relating to that year after making all due necessary
provisions and provided further that no default had occurred in any repayment obligations.
9. Repay monies brought in by principal shareholders/ directors/ depositors
10. Make drastic changes in their management set up
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11. Effect change in the remuneration payable to the directors either in the form or sitting fees or otherwise.
12. Create further charge, lien or encumbrance over the assets and properties of the Company charged to the
bank in favour of any other bank, financial institutions, company, firm or persons.
13. Sale, assign, mortgage or otherwise dispose off any of the fixed assets charged to the bank.
14. Undertake any trading activity other than the sale of products arising out of its own operations.
(b) Non – Fund Based
S.
No.
Name of the
Lenders
Nature of
Borrowing
Amount
Sanctioned (in
Rs. Million)
Amount
outstanding as
of May 31,
2010
(in Rs. Million)
Interest (in %
p.a.)
Security
1. State Bank
of Indore
Letter of guarantee
and hypothecation
agreement dated
October 7, 2005
4.55 4.55 - Refer Note 1
2. UCO Bank Sanction letter
dated May 17, 2008
100.00 0.69 - Refer Note 2
Note 1:
1. The company has assigned by way of first charge and hypothecated whole of the Company‟s stocks of
construction material and equipment and other raw materials and stores whether raw or in process of
manufacture and all materials and all articles manufactured there from which now or hereafter from time to
time during this security shall be brought into store or be in or about the Company‟s godowns or premises
at 11, Tukoganj, Main Road, Indore or wherever else the same may be including any such goods in course
of transit or delivery.
2. Personal Guarantee of Manish Kalani.
3. Corporate Guarantee of Flexituff International Limited.
Note 2:
1. Primary: Assignment of future lease rent receivables from the tenants of the property, Treasure Island, 11,
Tukoganj, M.G. Road, Indore. Counter Guarantee/indemnity of the Company.
2. Collateral: Exclusive first charge by way of equitable mortgage by deposit of title deeds of land
admeasuring 100,000 sq. ft. and building constructed/ to be constructed thereon.
3. Personal Guarantee of Manish Kalani.
4. Corporate Guarantee of Padma Homes Private Limited and Kalani Brothers (Indore) Private Limited.
288
SECTION VI: LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
Except as stated below there are no outstanding litigation, suits, criminal or civil prosecutions, proceedings or tax
liabilities against the Company, Promoters and Group Companies and there are no defaults, non-payment of
statutory dues, over-dues to banks/financial institutions, defaults against banks/financial institutions, defaults in
dues payable to holders of any debenture, bonds and fixed deposits and arrears of preference shares issued by the
Company, defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for
economic/civil/any other offences (including past cases where penalties may or may not have been awarded and
irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act)
other than unclaimed liabilities of the Company and no disciplinary action has been taken by SEBI or any stock
exchanges against the Company, its Promoters, Group Companies or Directors.
a. Cases involving the Company
Litigation against the Company
1. Ajay Khare has filed a case before the Assistant Labour Commissioner, Indore against the Company
seeking reinstatement to services of the Company and claiming back wages alleging that his services were
terminated as he belonged to a backward caste. Ajay Khare was employed as the House Keeping
Supervisor in the Company from July 1, 2006 whose services were terminated by the Company. Ajay
Khare has sought an amount of Rs. 99,346 as backwages and compensation. The Company has stated that
Ajay Khare had abruptly stopped attending duty and abandoned his work for almost a year from May 28,
2007 and hence Ajay Khare‟s name was struck down from the roll of the Company. The matter is
currently pending for conciliation.
2. Piyush Jain and Dipak Kaushal (“Applicants”) have filed a case before the Additional District Judge,
Indore against the Company, Commissioner – Indore Municipal Corporation, Building Officer - Indore
Municipal Corporation and the Chairman – High Rise Committee, Indore. The Applicants have alleged
certain irregularities and violation of the provisions of the M.P. Municipal Corporation Act, 1956 and the
Madhya Pradesh Bhoomi Vikas Niyam, 1984 with respect to the construction of “Treasure Island” in
Indore and have sought removal of the illegal construction. The Company has replied stating that the
construction of the mall is in accordance with the applicable law and that it has received all requisite
permissions and approvals. The matter is currently pending.
3. Madhukar has filed a case before the Joint Civil Judge, Senior Division, Nanded against the Company,
Milind Narwade, Rahul Narwade, Nilesh Thakkar, Mohammed Mohasin and Mirza Samdani Baig. The
case is in relation to family dispute over the partition of the property bearing survey No.71/4/4
admeasuring 1H 27R situated at Vasarni Taluq in Nanded District, out of which 87R was bought by
NTBPL from Nilesh Thakkar and others who had in turn bought the property from Milind Narwade and
Rahul Narwade in the year 2003. Madhukar has alleged that the property is a joint family property which
has not been partitioned and has alleged fraud in the transfer of the said property. Madhukar has claimed
that he is entitled to half share of the said property. The Company has filed its reply stating that the
property was not bought by the Company but by its subsidiary NTBPL. It is also stated that the suit
property was not an ancestral property, as it was bought by Gangaram (F/o Milind and Rahul) and that
Madhukar has no right to claim partition. The matter is currently pending.
Litigation by the Company
1. The Company, KBIPL and PHPL (“Plaintiffs”) have filed a declaratory suit before the District Court,
Indore against Tata Finance Limited (“TFL”) and Saurabh Kalani in relation to the plot admeasuring
100,000 sq. ft. situated at 11, Tukoganj, Main Road, Indore where the Company has constructed a mall by
the name “Treasure Island” (“Plot”). TFL had advanced a loan to Gilt Pack Limited for which Saurabh
Kalani provided a personal guarantee of Rs. 5,000,000. TFL, later on obtained an arbitration award
against Saurabh Kalani for execution. Upon assignment of the debt to Kotak Mahindra Bank Limited by
TFL, the execution proceedings were carried on by Kotak Mahindra Bank Limited wherein the manager
of Kotak Mahindra Bank Limited filed an affidavit stating that Saurabh Kalani has right, title and interest
in the Plot. The Plaintiffs have sought a declaration that Company is the lessee and KBIPL and PHPL are
289
the lessors of the said Plot and that Saurabh Kalani has no interest in the Plot. The matter is currently
pending.
2. The Company has filed an appeal before the Appellate Tribunal for Electricity, New Delhi against the
services, lubrication services, township, valid for a period of 10 years from October 10, 2008.
Trademark No. 1538463 granted to the Company in Class “41” under the name of “Entertainment
World Developers Private Limited” with respect to education, providing of training,
entertainment, sporting and cultural activities, shopping malls, production of shows, arranging and
conducting of symposiums, providing of recreation facilities and information, valid for a period of
10 years from October 11, 2008.
Trademark No. 1491358 granted to Five Star Developers Private Limited and Entertainment
World Developer Private Limited in Class “37” under the name of “TREASURE CITY” with
respect to township, building and construction services, valid for a period of 10 years from March
28, 2008.
Trademark No. 1489285 granted to the Company in Class “37” under the name of “THE
MIRAGE” with respect to building construction, valid for a period of 10 years from March 28,
2008.
Trademark No. 1489378 granted to the Company in Class “41” under the name of “THE
MIRAGE” with respect to multiplex theatre included, valid for a period of 10 years from March
28, 2008.
Trademark No. 1050238 granted to Entertainment World Developers Limited in Class “16” under
the name of “THE MIRAGE” with respect to publication, stationery & printed matter, valid for a
period of 10 years from July 6, 2006.
Trademark No. 1044912 granted to the Company in Class “16” under the name of “TREASURE
ISLAND” with respect to publication stationery and printed matter valid for a period of 10 years
from July 1, 2007.
Trademark No. 1538468 granted to the Company in Class “41” under the name of “EWDPL” with
respect to education, providing of training, entertainment, sporting and cultural activities,
shopping malls, production of shows, arranging and conducting of symposiums, providing of
recreation facilities and information, valid for a period of 10 years from March 9, 2007. Trademark No. 01636485 granted to the Company in Class “36” under the name of “TREASURE
HOMES” with respect to real estate affairs.
Trademark No. 01636486 granted to the Company in Class “37” under the name of “TREASURE
HOMES” with respect to township, building constructions of residential and commercial
complexes.
Trademark No. 01636487 granted to the Company in Class “41” under the name of “TREASURE
HOMES” with respect to shopping mall multiplex theatre and other entertainment services.
Trademark No. 01636488 granted to the Company in Class “42” under the name of “TREASURE
HOMES” with respect to providing of food drinks, temporary accommodation.
Trademark No. 01681882 granted to the Company in Class “36” under the name of “TREASURE
TOWN” with respect real estate affairs, property brokerage and related consultancy.
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Trademark No. 01681883 granted to the Company in Class “37” under the name of “TREASURE
TOWN” with respect township, building construction of residential and commercial complexes,
repair and maintenance of building.
Trademark No. 01636493 granted to the Company in Class “36” under the name of “TREASURE
MARKET CITY” with respect real estate affairs.
Trademark No. 01636494 granted to the Company in Class “37” under the name of “TREASURE
MARKET CITY” with respect township, building constructions of residential and commercial
complexes.
Trademark No. 01636496 granted to the Company in Class “42” under the name of “TREASURE
MARKET CITY” with respect providing of food drinks, temporary accommodation.
Trademark No. 01636489 granted to the Company in Class “36” under the name of “TREASURE
BAZAR” with respect real estate affairs.
Trademark No. 01636491 granted to the Company in Class “37” under the name of “TREASURE
BAZAR” with respect township, building constructions of residential and commercial complexes.
Trademark No. 01636492 granted to the Company in Class “42” under the name of “TREASURE
BAZAR” with respect providing of food and drinks temporary accommodation.
Trademark No. 01636481 granted to the Company in Class “36” under the name of
“TREASURE” with respect real estate affairs.
Trademark No. 01636482 granted to the Company in Class “37” under the name of
“TREASURE” with respect township, building constructions of residential and commercial
complexes.
Trademark No. 01636483 granted to the Company in Class “41” under the name of
“TREASURE” with respect shopping mall, multiplex theatre and other entrainment services.
Trademark No. 01636484 granted to the Company in Class “42” under the name of
“TREASURE” with respect providing of food drinks, temporary accommodation.
Trademark No. 01636497 granted to the Company in Class “36” under the name of “TI” with
respect real estate affairs.
Trademark No. 01636498 granted to the Company in Class “37” under the name of “TI” with
respect township, building constructions of residential and commercial complexes.
Trademark No. 01636499 granted to the Company in Class “41” under the name of “TI” with
respect shopping mall. multiplex theatre and other entertainment services.
Trademark No. 01636500 granted to the Company in Class “42” under the name of “TI” with
respect providing of food and drinks, temporary accommodation.
Trademark No. 1674796 granted to EWDPL Food & Beverages Private Limited in Class “42”
under the name of “PUNJABI TADKA” with respect restaurants, hotels, cafeterias, fast food, self
service restaurants, snack and sandwich bar services, coffee bar & other food & drinks related
services included in class 42.
Trademark No. 1674793 granted to EWDPL Food & Beverages Private Limited in Class “42”
under the name of “COCONUT CHUTNEY‟S” with respect restaurants, hotels, cafeterias, fast
311
food, self service restaurants, snack and sandwich bar services, coffee bar & other food & drinks
related services included in class 42.
Trademark No. 1674795 granted to EWDPL Food & Beverages Private Limited in Class “42”
under the name of “PUNJABI TADKA” with respect restaurants, hotels, cafeterias, fast food, self
service restaurants, snack and sandwich bar services, coffee bar & other food & drinks related
services included in class 42.
Trademark No. 1674794 granted to EWDPL Food & Beverages Private Limited in Class “42”
under the name of “COCONUT CHUTNEY‟S” with respect restaurants, hotels, cafeterias, fast
food, self service restaurants, snack and sandwich bar services, coffee bar & other food & drinks
related services included in class 42.
Trademark No. 1538465 granted to the Company in Class “35” under the name of “EWDPL”
with respect importers and exporters, marketing and distributions, advertising, subscriptions
agency for magazine newspaper, journal, business management, business administration, office
functions, sales promotion, help in the working and management of commercial undertakings.
Trademark No. 1538466 granted to the Company in Class “36” under the name of “EWDPL”
with respect insurance, financial affairs, monetary affairs, real estate affairs.
Trademark No. 1538467 granted to the Company in Class “37” under the name of “EWDPL”
with respect building construction & supervision, maintenance & repairing services, construction
information, rental of construction equipment, mining extraction, plumbing, painting, interior and
June 27, 2007 Deloitte Haskins and Sells Appointed
Capitalisation of Reserves or Profits
Except as disclosed in this Draft Red Herring Prospectus, we have not capitalised the reserves or profits at any time
during the last five years.
Revaluation of Assets
The Company has not revalued its assets in the last five years.
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SECTION VII: ISSUE INFORMATION
TERMS OF THE ISSUE
The Equity Shares being issued are subject to the provisions of the Companies Act, the Memorandum and Articles
of Association, the terms of this Draft Red Herring Prospectus, the Red Herring Prospectus and the Prospectus, Bid
cum Application Form, ASBA Bid cum Application Form, the Revision Form, the CAN and other terms and
conditions as may be incorporated in the Allotment advices and other documents/ certificates that may be executed
in respect of the Issue. The Equity Shares shall also be subject to laws, guidelines, notifications and regulations
relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the
Government, Stock Exchanges, RoC, RBI and/or other authorities, as in force on the date of the Issue and to the
extent applicable.
Ranking of Equity Shares
The Equity Shares being issued shall be subject to the provisions of the Memorandum and Articles of Association
and shall rank pari passu with the existing Equity Shares of the Company including rights in respect of dividend.
The Allotees in receipt of Allotment of Equity Shares under this Issue will be entitled to dividends and other
corporate benefits, if any, declared by the Company after the date of Allotment. For further details, see “Main
Provisions of the Articles of Association” on page 365 of this Draft Red Herring Prospectus.
Mode of Payment of Dividend
The Company shall pay dividends to its shareholders in accordance with the provisions of the Companies Act.
Face Value and Issue Price
The face value of the Equity Shares is Rs. 10 each and the Issue Price is Rs. [ ] per Equity Share. The Anchor
Investor Issue Price is Rs. [●] per Equity Share.
At any given point of time there shall be only one denomination for the Equity Shares.
Compliance with SEBI Regulations
The Company shall comply with all disclosure and accounting norms as specified by SEBI from time to time.
Rights of the Equity Shareholder
Subject to applicable laws, the equity shareholders shall have the following rights:
Right to receive dividend, if declared;
Right to attend general meetings and exercise voting powers, unless prohibited by law;
Right to vote on a poll either in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right of free transferability; and
Such other rights, as may be available to a shareholder of a listed public company under the Companies
Act, the terms of the listing agreement executed with the Stock Exchanges, and the Company‟s
Memorandum and Articles of Association.
326
For a detailed description of the main provisions of the Articles relating to voting rights, dividend, forfeiture and lien
and/or consolidation/splitting, see “Main Provisions of the Articles of Association” on page 365 of this Draft Red
Herring Prospectus.
Market Lot and Trading Lot
In terms of Section 68B of the Companies Act, the Equity Shares shall be Allotted only in dematerialised form. As
per the SEBI Regulations, the trading of the Equity Shares shall only be in dematerialised form. Since trading of the
Equity Shares is in dematerialised form, the tradable lot is one Equity Share. Allotment in this Issue will be only in
electronic form in multiples of one (1) Equity Share subject to a minimum Allotment of [ ] Equity Shares.
The Price Band and the minimum Bid Lot size for the Issue will be decided by the Company in consultation with the
BRLMs and advertised in [●] edition of English national daily [●], [●] edition of Hindi national daily [●], and [●]
edition of regional language newspaper [●] at least two days prior to the Bid/ Issue Opening Date.
Jurisdiction
Exclusive jurisdiction for the purpose of this Issue is with the competent courts/authorities in Mumbai.
Nomination Facility to Investor
In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidders, may
nominate any one person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all
the Bidders, as the case may be, the Equity Shares Allotted, if any, shall vest. A person, being a nominee, entitled to
the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the
Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the
registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to
appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death
during the minority. A nomination shall stand rescinded upon a sale of equity share(s) by the person nominating. A
buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on
the prescribed form available on request at the Registered Office/ Corporate Office of the Company or to the
Registrar and Transfer Agents of the Company.
In accordance with Section 109B of the Companies Act, any Person who becomes a nominee by virtue of Section
109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect
either:
To register himself or herself as the holder of the Equity Shares; or
To make such transfer of the Equity Shares, as the deceased holder could have made.
Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or
herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days, the
Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity
Shares, until the requirements of the notice have been complied with.
Since the Allotment of Equity Shares in the Issue will be made only in dematerialised form, there is no need to make
a separate nomination with the Company. Nominations registered with respective depository participant of the
applicant would prevail. If the investors require changing their nomination, they are requested to inform their
respective depository participant.
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the Issue, including devolvement of
327
underwriters within 60 days from the Bid/Issue Closing Date, the Company shall forthwith refund the entire
subscription amount received. If there is a delay beyond eight days after the Company becomes liable to pay the
amount, the Company shall pay interest as prescribed under Section 73 of the Companies Act.
If at least 50% of the Issue cannot be allotted to QIBs, then the entire application money will be refunded forthwith.
Further, the Company shall ensure that the number of prospective Allotees to whom Equity Shares will be Allotted
shall not be less than 1,000.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such
jurisdiction.
Arrangement for disposal of Odd Lots
There are no arrangements for disposal of odd lots.
Restriction on transfer of shares
Except for lock-in of the pre-Issue Equity Shares, Promoters‟ minimum contribution and Anchor Investor lock-in in
the Issue as detailed in “Capital Structure” on page 26 of this Draft Red Herring Prospectus, and except as provided
in the Articles of Association, there are no restrictions on transfers of Equity Shares. There are no restrictions on
transfers of debentures except as provided in the Articles of Association. There are no restrictions on transmission of
shares/ debentures and on their consolidation/ splitting except as provided in the Articles of Association. See “Main
Provisions of the Articles of Association” on page 365 of this Draft Red Herring Prospectus.
328
ISSUE STRUCTURE
Issue of 38,928,943 Equity Shares for cash at a price of Rs. [●] per Equity Share (including share premium of Rs.
[●] per Equity Share) aggregating to Rs. [●] million. The Issue will constitute 30% of the post-Issue paid-up
capital of the Company.
The Issue is being made through the 100% Book Building Process.
QIBs(1)
Non-Institutional
Bidders
Retail Individual
Bidders
Number of Equity
Shares(2)
At least 19,464,472 Equity Shares Not less than
5,839,341 Equity
Shares available for
allocation or Issue less
allocation to QIB
Bidders and Retail
Individual Bidders.
Not less than
13,625,130
Equity Shares
available for allocation
or Issue less allocation
to QIB Bidders and
Non-Institutional
Bidders.
Percentage of Issue
Size available for
Allotment/allocation
At least 50% of the Issue Size being
allocated. However, up to 5% of the
QIB Portion (excluding the Anchor
Investor Portion if any) shall be
available for allocation proportionately
to Mutual Funds only.
Not less than 15% of
Issue or the Issue less
allocation to QIB
Bidders and Retail
Individual Bidders.
Not less than 35% of
the Issue or the Issue
less allocation to QIB
Bidders and Non-
Institutional Bidders.
Basis of
Allotment/allocation if
respective category is
oversubscribed
Proportionate as follows:
(a) 681,257 Equity Shares shall be
allocated on a proportionate basis to
Mutual Funds only; and
(b) 12,943,873 Equity Shares shall be
allocated on a proportionate basis to
all QIBs including Mutual Funds
receiving allocation as per (a) above.
Proportionate Proportionate
Minimum Bid Such number of Equity Shares that
the Bid Amount exceeds Rs. 100,000
and in multiples of [●] Equity Shares
thereafter.
Such number of
Equity Shares that the
Bid Amount exceeds
Rs. 100,000 and in
multiples of [●]
Equity Shares
thereafter.
[●] Equity Shares and
in multiples of [●]
Equity Shares
thereafter
Maximum Bid Such number of Equity Shares not
exceeding the Issue, subject to
applicable limits.
Such number of
Equity Shares not
exceeding the Issue
subject to applicable
limits.
Such number of
Equity Shares
whereby the Bid
Amount does not
exceed Rs. 100,000.
Mode of Allotment Compulsorily in dematerialised form.
Compulsorily in
dematerialised form.
Compulsorily in
dematerialised form.
Bid Lot [●] Equity Shares and in multiples of
[●] Equity Shares thereafter.
[●] Equity Shares and
in multiples of [●]
Equity Shares
thereafter.
[●] Equity Shares and
in multiples of [●]
Equity Shares
thereafter.
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QIBs(1)
Non-Institutional
Bidders
Retail Individual
Bidders
Allotment Lot [●] Equity Shares and in multiples of
one Equity Share thereafter
[●] Equity Shares and
in multiples of one
Equity Share
thereafter
[●] Equity Shares and
in multiples of one
Equity Share
thereafter
Trading Lot One Equity Share One Equity Share
One Equity Share
Who can Apply (3)
Public financial institutions as
specified in Section 4A of the
Companies Act, scheduled commercial
banks, mutual funds registered with
SEBI, FIIs and sub-accounts registered
with SEBI, other than a sub-account
which is a foreign corporate or foreign
individual, venture capital funds
registered with SEBI, state industrial
development corporations, insurance
companies registered with Insurance
Regulatory and Development
Authority, provident funds (subject to
applicable law) with minimum corpus
of Rs. 250 million, pension funds with
minimum corpus of Rs. 250 million in
accordance with applicable law, and
National Investment Fund and
insurance funds set up and managed
by army, navy or air force of the
Union of India.
Resident Indian
individuals, Eligible
NRIs, HUF (in the
name of Karta),
companies, corporate
bodies, scientific
institutions societies
and trusts,
sub-accounts of FIIs
registered with SEBI,
which are foreign
corporates or foreign
individuals.
Resident Indian
individuals, Eligible
NRIs and HUF (in the
name of Karta)
Terms of Payment Amount shall be payable at the time of
submission of Bid cum Application
Form to the Syndicate Members
(except for Anchor Investors).(4)
Amount shall be
payable at the time of
submission of Bid
cum Application
Form.(4)
Amount shall be
payable at the time of
submission of Bid
cum Application
Form.(4)
Margin Amount Full Bid Amount on bidding
Full Bid Amount on
bidding
Full Bid Amount on
bidding
(1) The Company may allocate up to 30% of the QIB Portion to Anchor Investors on a discretionary basis. One-third of the Anchor Investor
Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to Anchor Investors. For further details, see “Issue Procedure” on page 332 of this Draft Red
Herring Prospectus.
(2) Subject to valid Bids being received at or above the Issue Price. This Issue is being made in accordance with Rule 19(2)(b)(i) of the SCRR,
as amended under the SEBI Regulations, where the Issue will be made through the 100% Book Building Process wherein at least 50% of
the Issue will be allocated on a proportionate basis to QIBs. Out of the QIB Portion (excluding the Anchor Investor Portion), 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate
basis to QIBs and Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least 50% of the Issue
cannot be allotted to QIBs, then the entire application money will be refunded forthwith. However, if the aggregate demand from Mutual Funds is less than 681,257 Equity Shares, the balance Equity Shares available for Allotment in the Mutual Fund Portion will be added to
the QIB Portion and allocated proportionately to the QIB Bidders in proportion to their Bids. Further, not less than 15% of the Issue will
be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.
Under-subscription, if any, in any category except in the QIB category would be met with spill-over from other categories at sole discretion of the Company, in consultation with the BRLMs and the Designated Stock Exchange.
(3) In case the Bid cum Application Form is submitted in joint names, the Bidders should ensure that the demat account is also held in the same
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joint names and are in the same sequence in which they appear in the Bid cum Application Form.
(4) In case of ASBA Bidders, the SCSB shall be authorised to block such funds in the bank account of the ASBA Bidder that are specified in the
ASBA Bid cum Application Form.
Withdrawal of the Issue
The Company, in consultation with the BRLMs, reserves the right not to proceed with the Issue anytime after the
Bid/Issue Opening Date but before the Allotment of Equity Shares. In such an event the Company would issue a
public notice in the newspapers, in which the pre-Issue advertisements were published, within two days of the Bid/
Issue Closing Date, providing reasons for not proceeding with the Issue. The BRLMs, through the Registrar to the
Issue, shall notify the SCSBs to unblock the bank accounts of the ASBA Bidders within one day from the day of
receipt of such notification. The Company shall also inform the same to Stock Exchanges on which the Equity
Shares are proposed to be listed.
Any further issue of Equity Shares by the Company shall be in compliance with applicable laws.
Bid/ Issue Programme
BID/ISSUE OPENS ON [●]*
BID/ISSUE CLOSES ON [●]**
* The Company may consider participation by Anchor Investors. The Anchor Investor Bid/ Issue Period shall be one working day prior to the Bid/
Issue Opening Date. ** The Company may consider closing the Bid/Issue Period for QIB Bidders one day prior to the Bid/Issue Closing Date.
Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time,
“IST”) during the Bid/ Issue Period as mentioned above at the bidding centres mentioned on the Bid cum
Application Form. On the Bid/ Issue Closing Date, the Bids shall be accepted only between 10.00 a.m. and 3.00
p.m. (IST) and shall be uploaded until (i) 4.00 p.m. (IST) in case of Bids by QIB Bidders and Non-Institutional
Bidders, and (ii) until 5.00 p.m. (IST) or such extended time as permitted by the Stock Exchanges, in case of Bids by
Retail Individual Bidders. It is clarified that the Bids not uploaded in the book would be rejected. Bids by the ASBA
Bidders shall be uploaded by the SCSB in the electronic system to be provided by the Stock Exchanges.
In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical Bid cum
Application Form, for a particular Bidder, the details as per the physical Bid cum Application Form of the Bidder
may be taken as the final data for the purpose of Allotment.
Due to limitation of time available for uploading the Bids on the Bid/ Issue Closing Date, the Bidders are advised to
submit their Bids one day prior to the Bid/ Issue Closing Date and, in any case, no later than 3.00 p.m. (IST) on the
Bid/ Issue Closing Date. All times mentioned in the Red Herring Prospectus are Indian Standard Time. Bidders are
cautioned that in the event a large number of Bids are received on the Bid/ Issue Closing Date, as is typically
experienced in public offerings, some Bids may not get uploaded due to lack of sufficient time. Such Bids that
cannot be uploaded will not be considered for allocation under the Issue. Bids will be accepted only on Business
Days, i.e., Monday to Friday (excluding any public holiday).
On the Bid/ Issue Closing Date, extension of time will be granted by the Stock Exchanges only for uploading the
Bids received by Retail Individual Bidders after taking into account the total number of Bids received up to the
closure of time period for acceptance of Bid cum Application Forms as stated herein and reported by the BRLMs to
the Stock Exchanges within half an hour of such closure.
The Company, in consultation with the BRLMs, reserves the right to revise the Price Band during the Bid/ Issue
Period, provided that the Cap Price shall be less than or equal to 120% of the Floor Price and the Floor Price shall
not be less than the face value of the Equity Shares. The revision in Price Band shall not exceed 20% on the either
side i.e. the floor price can move up or down to the extent of 20% of the floor price and the Cap Price will be revised
accordingly.
331
In case of revision of the Price Band, the Bid/Issue Period will be extended for three additional Working Days
after revision of Price Band subject to the Bid/Issue Period not exceeding 10 Working Days. Any revision in
the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to
the Stock Exchanges, by issuing a press release and also by indicating the changes on the web site of the
BRLMs and at the terminals of the Syndicate.
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ISSUE PROCEDURE
This section applies to all Bidders. Please note that all Bidders other than Anchor Investors can participate in the
Issue through the ASBA process. ASBA Bidders should note that the ASBA process involves application procedures
that are different from the procedure applicable to Bidders other than the ASBA Bidders. Bidders applying through
the ASBA process should carefully read the provisions applicable to such applications before making their
application through the ASBA process. Please note that all the Bidders are required to make payment of the full Bid
Amount along with the Bid cum Application Form.
Book Building Procedure
This Issue is being made through the 100% Book Building Process wherein at least 50% of the Issue will be
allocated to QIBs on a proportionate basis. Out of the QIB Portion (excluding the Anchor Investor Portion), 5%
shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for
allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them at or
above the Issue Price. If at least 50% of the Issue cannot be allotted to QIBs, then the entire application money will
be refunded forthwith. Further, not less than 15% of the Issue will be available for allocation on a proportionate
basis to Non-Institutional Bidders and not less than 35% of the Issue will be available for allocation on a
proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.
Allocation to Anchor Investors shall be on a discretionary basis and not on a proportionate basis.
All Bidders other than the ASBA Bidders are required to submit their Bids through the Syndicate. ASBA Bidders
are required to submit their Bids to the SCSBs.
Investors should note that the Equity Shares will be Allotted to all successful Bidders only in dematerialised form.
The Bid cum Application Forms which do not have the details of the Bidders‟ depository account shall be treated as
incomplete and rejected. Bidders will not have the option of being Allotted Equity Shares in physical form. The
Equity Shares on Allotment shall be traded only in the dematerialised segment of the Stock Exchanges.
Bid cum Application Form
The prescribed colour of the Bid cum Application Form for the various categories is as follows:
Category Colour of Bid cum
Application Form
Resident Indians and Eligible NRIs applying on a non-repatriation basis (ASBA as
well as non ASBA Bidders)
[●]
Eligible NRIs and FIIs applying on a repatriation basis (ASBA as well as non ASBA
Bidders)
[●]
Anchor Investors* [●]
*Bid cum Application forms for Anchor Investors have been made available at the offices of the BRLMs.
Bidders (other than ASBA Bidders) are required to submit their Bids through the Syndicate. Such Bidders shall only
use the specified Bid cum Application Form bearing the stamp of a member of the Syndicate for the purpose of
making a Bid in terms of the Red Herring Prospectus. The Bidder shall have the option to make a maximum of three
Bids in the Bid cum Application Form and such options shall not be considered as multiple Bids.
ASBA Bidders shall submit an ASBA Bid cum Application Form either in physical or electronic form to the SCSB
authorising blocking of funds that are available in the bank account specified in the ASBA Bid cum Application
Form only. Only QIBs can participate in the Anchor Investor Portion and such Anchor Investors cannot submit their
Bids through the ASBA process.
Upon the filing of the Prospectus with the RoC, the Bid cum Application Form shall be considered as the
Application Form. Upon completion and submission of the Bid cum Application Form to a Syndicate or the SCSB,
the Bidder or the ASBA Bidder is deemed to have authorised the Company to make the necessary changes in the
333
Red Herring Prospectus as would be required for filing the Prospectus with the RoC and as would be required by
RoC after such filing, without prior or subsequent notice of such changes to the Bidder or the ASBA Bidder.
Who can Bid?
Indian nationals resident in India who are not minors in single or joint names (not more than three);
Hindu Undivided Families or HUFs, in the individual name of the Karta. The Bidder should specify that
the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: “Name of
Sole or First bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the
Karta”. Bids by HUFs would be considered at par with those from individuals;
Companies, corporate bodies and societies registered under the applicable laws in India and authorised to
invest in equity shares;
Mutual Funds registered with SEBI;
Eligible NRIs on a repatriation basis or on a non repatriation basis subject to applicable laws. NRIs other
than eligible NRIs are not eligible to participate in this issue;