GANESHA ECOSPHERE LIMITED - BSE

Preliminary Placement Document

Not for Circulation

Serial Number: [●]

Strictly Confidential

GANESHA ECOSPHERE LIMITED

Our Company was originally incorporated as Ganesh Polytex Limited on October 30, 1987 with the Registrar of Companies, Uttar Pradesh at Kanpur

under the provisions of Companies Act, 1956. Our Company received the certificate for commencement of its business on April 12, 1988. The name of

our Company was changed to Ganesha Ecosphere Limited pursuant to a fresh certificate of incorporation consequent upon change of name dated October

7, 2011. The CIN of our Company is L51109UP1987PLC009090.

Registered Office: Raipur (Rania), Kalpi Road, Kanpur Dehat – 209 304, Uttar Pradesh, India

Corporate Office: 113/216-B, Swaroop Nagar, Kanpur – 208002, Uttar Pradesh, India

Website: www.ganeshaecosphere.com; Tel: +91-9198708383; Fax: +91-512-2555293

Ganesha Ecosphere Limited (“GEL”, “Issuer” or the “Company”) is issuing up to[●] equity shares of face value of ₹10 each (the “Equity Shares”) at

a price of ₹[●] per Equity Share (the “Issue Price”), including a premium of ₹[●] per Equity Share aggregating up to ₹[●] million (the “Issue”).

ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL

AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “SEBI ICDR REGULATIONS”) AND

SECTIONS 42 AND 62 OF THE COMPANIES ACT, 2013, AS AMENDED AND THE RULES MADE THEREUNDER.

THE ISSUE AND DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING MADE TO ELIGIBLE QUALIFIED

INSTITUTIONAL BUYERS (“QIBs”) AS DEFINED UNDER THE SEBI ICDR REGULATIONS IN RELIANCE UPON CHAPTER VIII OF

THE SEBI ICDR REGULATIONS AND SECTION 42 OF THE COMPANIES ACT, 2013, AS AMENDED AND THE RULES MADE

THEREUNDER. THIS PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES

NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON

OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA, OTHER THAN QIBs.

YOU ARE NOT AUTHORIZED TO AND MAY NOT (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER

PERSON; OR (2) REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3)

RELEASE ANY PUBLIC ADVERTISEMENTS OR UTILISE ANY MEDIA, MARKETING OR DISTRIBUTION CHANNELS OR AGENTS

TO INFORM THE PUBLIC AT LARGE ABOUT THE ISSUE. ANY DISTRIBUTION OR REPRODUCTION OF THIS PRELIMINARY

PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY

RESULT IN A VIOLATION OF THE SEBI ICDR REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER

JURISDICTIONS.

INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN

THIS ISSUE UNLESS THEY ARE PREPARED TO TAKE THE RISK OF LOSING ALL OR PART OF THEIR INVESTMENT.

PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY READ “RISK FACTORS” BEFORE MAKING AN INVESTMENT

DECISION RELATING TO THIS ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT

THE PARTICULAR CONSEQUENCES OF AN INVESTMENT IN THE EQUITY SHARES BEING ISSUED PURSUANT TO THIS

PRELIMINARY PLACEMENT DOCUMENT.

All of our Company’s outstanding Equity Shares are listed on the National Stock Exchange of India Limited (the “NSE”) and the BSE Limited (the

“BSE”, together with NSE, the “Stock Exchanges”). The closing price of the outstanding Equity Shares on the BSE and the NSE on May 2, 2018, was

₹391.75 and ₹399.70 per Equity Share, respectively. In-principle approvals under Regulation 28(1) of the SEBI Listing Regulations (as defined

hereinafter) for listing of the Equity Shares have been received from the NSE and the BSE on May 2, 2018. Applications shall be made for obtaining the

listing and trading approvals for the Equity Shares to be issued pursuant to the Issue on the Stock Exchanges. The Stock Exchanges assume no

responsibility for the correctness of any statements made, opinions expressed, or reports contained herein. Admission of the Equity Shares to trading on

the Stock Exchanges should not be taken as an indication of the merits of the business of our Company or the Equity Shares.

A copy of this Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter)) has been delivered

to the Stock Exchanges. A copy of the Placement Document (which will also include disclosures prescribed under Form PAS-4) will also be delivered

to the Stock Exchanges. Our Company shall also make the requisite filings with the Registrar of Companies, Uttar Pradesh at Kanpur (the “RoC”) and

the Securities and Exchange Board of India (“SEBI”) within the stipulated period as required under the Companies Act, 2013 and the Companies

(Prospectus and Allotment of Securities) Rules, 2014. This Preliminary Placement Document has not been reviewed by SEBI, the Reserve Bank of India (the “RBI”), the Stock Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by the QIBs. This Preliminary

Placement Document has not been and will not be registered as a prospectus with the RoC, will not be circulated or distributed to the public in India or

any other jurisdiction, and will not constitute a public offer in India or any other jurisdiction. This Preliminary Placement Document has been prepared

by our Company solely for providing information in connection with the Issue.

Invitations, offers and sales of the Equity Shares shall only be made pursuant to this Preliminary Placement Document together with the respective Bid

Cum Application Form (defined hereinafter) and the Placement Document and the Confirmation of Allocation Note (defined hereinafter). See section “Issue Procedure” on page 152. The distribution of this Preliminary Placement Document or the disclosure of its contents without the prior consent of

our Company to any person, other than QIBs and persons retained by QIBs to advise them with respect to their purchase of the Equity Shares is

unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to observe the foregoing

restrictions and make no copies of this Preliminary Placement Document or any documents referred to in this Preliminary Placement Document.

The information on the website of our Company or any website directly or indirectly linked to the website of our Company does not form part of this

Preliminary Placement Document and prospective investors should not rely on such information contained in, or available through, any such website.

The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act”), or the

securities laws of any state of the United States, and unless so registered may not be offered, sold or delivered within the United States, except pursuant

to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable state securities laws of the

United States. Accordingly, the Equity Shares are being offered, sold and delivered only outside the United States in offshore transactions in reliance on

Regulation S under the Securities Act (‘‘Regulation S’’) and in compliance with the applicable laws of each jurisdiction where such offers and sales are

made. For further details, see sections “Selling Restrictions” and “Transfer Restrictions” on pages 165 and 171, respectively.

BOOK RUNNING LEAD MANAGER

ITI Capital Limited (Formerly Inga Capital Limited)

This Preliminary Placement Document is dated May 2, 2018.

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http://www.ganeshaecosphere.com/

INDEX

NOTICE TO INVESTORS ..................................................................................................................................... 3 REPRESENTATIONS BY INVESTORS .............................................................................................................. 5 OFF-SHORE DERIVATIVE INSTRUMENTS (P-NOTES) ............................................................................. 10 DISCLAIMER CLAUSE OF THE STOCK EXCHANGES .............................................................................. 11 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ............................................................. 12 INDUSTRY AND MARKET DATA .................................................................................................................... 13 FORWARD-LOOKING STATEMENTS ............................................................................................................ 14 ENFORCEMENT OF CIVIL LIABILITIES ...................................................................................................... 15 EXCHANGE RATES............................................................................................................................................. 16 DEFINITIONS AND ABBREVIATIONS............................................................................................................ 17

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES

ACT, 2013 AND THE RULES MADE THEREUNDER .................................................................................... 23 SUMMARY OF BUSINESS .................................................................................................................................. 25 SUMMARY OF THE ISSUE ................................................................................................................................ 30 SUMMARY FINANCIAL INFORMATION ...................................................................................................... 32 RISK FACTORS .................................................................................................................................................... 37 MARKET PRICE INFORMATION .................................................................................................................... 69 USE OF PROCEEDS ............................................................................................................................................. 71 CAPITALISATION STATEMENT ..................................................................................................................... 72 CAPITAL STRUCTURE ...................................................................................................................................... 73 DIVIDENDS ........................................................................................................................................................... 75 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS ....................................................................................................................................................... 76 SUMMARY OF KEY DIFFERENCES BETWEEN INDIAN GAAP AND IND-AS ...................................... 95 INDUSTRY OVERVIEW ................................................................................................................................... 101 OUR BUSINESS ................................................................................................................................................... 116 REGULATIONS AND POLICIES ..................................................................................................................... 128 BOARD OF DIRECTORS AND SENIOR MANAGEMENT ......................................................................... 137 PRINCIPAL SHAREHOLDERS ........................................................................................................................ 148 ISSUE PROCEDURE .......................................................................................................................................... 152 PLACEMENT AND LOCK-UP ......................................................................................................................... 163 SELLING RESTRICTIONS ............................................................................................................................... 165 TRANSFER RESTRICTIONS ........................................................................................................................... 171 THE SECURITIES MARKET OF INDIA ........................................................................................................ 173 DESCRIPTION OF EQUITY SHARES ............................................................................................................ 177 STATEMENT OF TAX BENEFITS .................................................................................................................. 181 LEGAL PROCEEDINGS .................................................................................................................................... 196 STATUTORY AUDITORS ................................................................................................................................. 201 GENERAL INFORMATION.............................................................................................................................. 202 FINANCIAL INFORMATION ........................................................................................................................... 203 DECLARATION .................................................................................................................................................. 204

3

NOTICE TO INVESTORS

Our Company has furnished and accepts full responsibility for all the information contained in this Preliminary

Placement Document and confirms that to its best knowledge and belief, after having made all reasonable enquiries,

this Preliminary Placement Document contains all information with respect to our Company and the Equity Shares

which is material in the context of this Issue. The statements contained in this Preliminary Placement Document

relating to our Company and the Equity Shares are, in all material respects, true and accurate and not misleading,

and the opinions and intentions expressed in this Preliminary Placement Document with regard to our Company and

the Equity Shares are honestly held, have been reached after considering all relevant circumstances and are based

on reasonable assumptions and information presently available to our Company. There are no other facts in relation

to our Company and the Equity Shares, the omission of which would, in the context of the Issue, make any statement

in this Preliminary Placement Document misleading in any material respect. Further, all reasonable enquiries have

been made by our Company to ascertain such facts and to verify the accuracy of all such information and statements.

The Book Running Lead Manager has not separately verified the information contained in this Preliminary

Placement Document (financial, legal or otherwise). The Book Running Lead Manager or any of its affiliates,

including their respective shareholders, employees, counsel, officers, directors, representatives or agents do not

make any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted

by the Book Running Lead Manager or any of its affiliates, including its respective shareholders, employees,

counsel, officers, directors, representatives or agents as to the accuracy or completeness of the information contained

in this Preliminary Placement Document or any other information supplied in connection with the Equity Shares or

their issue or distribution. Each person receiving this Preliminary Placement Document acknowledges that such

person has not relied on either the Book Running Lead Manager or on any of its affiliates, including its respective

shareholders, employees, counsel, officers, directors, representatives or agents in connection with such person’s

investigation of the accuracy of such information or such person’s investment decision, and each such person must

rely on its own examination of our Company and the merits and risks involved in investing in the Equity Shares

issued pursuant to this Issue.

No person is authorised to give any information or to make any representation not contained in this Preliminary

Placement Document and any information or representation not so contained must not be relied upon as having been

authorised by or on behalf of our Company or by or on behalf of the Book Running Lead Manager. The delivery of

this Preliminary Placement Document at any time does not imply that the information contained in it is correct as of

any time subsequent to its date.

The Equity Shares to be issued pursuant to the Issue have not been approved, disapproved or recommended

by any regulatory authority in any jurisdiction including the United States Securities and Exchange

Commission, any other federal or state authorities in the United States, the securities authorities of any non-

United States jurisdiction or any other United States or non-United States regulatory authority. No authority

has passed on or endorsed the merits of this Issue or the accuracy or adequacy of this Preliminary Placement

Document. Any representation to the contrary may be a criminal offence in other jurisdictions.

The Equity Shares have not been recommended by any foreign, federal or state securities commission or regulatory

authority. The distribution of this Preliminary Placement Document and the issue of the Equity Shares may be

restricted in certain jurisdictions or countries by law. As such, this Preliminary Placement Document does not

constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in

which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or

solicitation. In particular, no action has been taken by our Company and the Book Running Lead Manager which

would permit an offering of the Equity Shares or distribution of this Preliminary Placement Document in any

jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not be

offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any offering material in

connection with the Equity Shares may be distributed or published in or from any country or jurisdiction, except

under circumstances that will result in compliance with any applicable rules and regulations of any such country or

jurisdiction.

The Equity Shares have not been and will not be registered under the Securities Act, or the securities laws of any

state of the United States, and unless so registered may not be offered or sold within the United States except pursuant

to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any

applicable state securities laws. Accordingly, the Equity Shares are being offered, sold and delivered only outside

the United States in offshore transactions in reliance on Regulation S and in compliance with the applicable laws of

each jurisdiction where those offers and sales are made. For a description of the selling restrictions in certain other

4

jurisdictions, see “Selling Restrictions” on page 165. The Equity Shares are transferable only in accordance with the

restrictions described in “Transfer Restrictions” on page 171.

The distribution of this Preliminary Placement Document or the disclosure of its contents without the prior consent

of our Company to any person, other than QIBs specified by the Book Running Lead Manager or its representatives,

and those retained by such QIBs to advise them with respect to their purchase of the Equity Shares, is unauthorised

and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to

observe the foregoing restrictions and to make no copies of this Preliminary Placement Document or any offering

material in connection with the Equity Shares.

Any reproduction or distribution of this Preliminary Placement Document in the United States, in whole or

in part, and any disclosure of its contents to any other person is prohibited. In making an investment decision,

prospective investors must rely on their own examination of our Company and the terms of the Issue,

including the merits and risks involved. Investors should not construe the contents of this Preliminary

Placement Document as legal, tax, accounting or investment advice. Investors should consult their own

counsel and advisors as to business, investment, legal, tax, accounting and related matters concerning the

Issue. In addition, neither our Company nor the Book Running Lead Manager are making any representation

to any offeree or subscriber of the Equity Shares regarding the legality of an investment in the Equity Shares

by such offeree or subscriber under applicable legal, investment or similar laws or regulations.

Each subscriber of the Equity Shares in the Issue is deemed to have acknowledged, represented and agreed

that it is eligible to invest in India and in our Company under Indian law, including Chapter VIII of the SEBI

ICDR Regulations and pursuant to Section 42 of the Companies Act, 2013, and the rules made thereunder,

and that it is not prohibited by SEBI or any other statutory authority in India or any other jurisdiction, from

buying, selling or dealing in the securities including the Equity Shares, or otherwise accessing the capital

markets in India including the Equity Shares. Each Allottee of the Equity Shares in the Issue also

acknowledges that it has been afforded an opportunity to request from our Company and review information

relating to our Company and the Equity Shares. This Preliminary Placement Document contains summaries

of certain terms of certain documents, which are qualified in their entirety by the terms and conditions of

such documents.

The information on our Company’s website (www.ganeshaecosphere.com), any website directly and indirectly

linked to the website of our Company or the websites of the Book Running Lead Manager or its affiliates, does not

constitute nor form part of this Preliminary Placement Document. Prospective investors should not rely on the

information contained in, or available through such websites.

NOTICE TO INVESTORS IN CERTAIN JURISDICTIONS

In addition to the above, for information to investors in certain other jurisdictions, see the sections “Selling

Restrictions” and “Transfer Restrictions” on pages 165 and 171, respectively.


5

REPRESENTATIONS BY INVESTORS

References herein to “you” or “your” are to the prospective investors in this Issue.

By Bidding for and/ or subscribing to any Equity Shares in the Issue, you are deemed to have represented, warranted,

acknowledged and agreed to our Company and the Book Running Lead Manager, as follows:

• You (i) are a QIB as defined under Regulation 2(1)(zd) of the SEBI ICDR Regulations and not excluded as

an eligible investor in the Issue pursuant to Regulation 86(1)(b) of the SEBI ICDR Regulations, (ii) have a

valid and existing registration under applicable laws and regulations of India, (iii) undertake to acquire, hold,

manage or dispose of any Equity Shares that are Allotted to you in accordance with Chapter VIII of the SEBI

ICDR Regulations, and (iv) undertake to comply with the SEBI ICDR Regulations, the Companies Act and

all other applicable laws, including in respect of reporting requirements, if any;

• If you are not a resident of India, but a QIB, you are a FPI (other than a category III FPI) having a valid and

existing certificate of registration with or on behalf of SEBI under the applicable laws in India or a multilateral

or bilateral development financial institution or an FVCI, and have a valid and existing registration with SEBI

under the applicable laws in India and are eligible to invest in India under applicable law, including the FEMA

Transfer Regulations, and any notifications, circulars or clarifications issued thereunder, and have not been

prohibited by SEBI or any other regulatory authority, from buying, selling or dealing in securities;

• You are eligible to invest in our Company under applicable laws and have not been prohibited by the SEBI

or any regulatory authority from buying, selling or dealing in securities or otherwise accessing the capital

markets in India;

• You are subscribing to the Equity Shares to be issued pursuant to the Issue in accordance with applicable

laws and by participating in this Issue, you are not in violation of any applicable law, including but not limited

to the Takeover Regulations, Insider Trading Regulations, the Securities and Exchange Board of India

(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, as

amended, and the Companies Act 2013;

• You will make all necessary filings with appropriate regulatory authorities, including RBI, as required

pursuant to applicable laws;

• If you are Allotted Equity Shares, you shall not, for a period of one year from the date of Allotment, sell the

Equity Shares so acquired except on the floor of the Stock Exchanges (additional requirements apply if you

are in jurisdictions other than India, see section “Transfer Restrictions” on page 171);

• You have made, or been deemed to have made, as applicable, the representations, warranties,

acknowledgements and undertakings set forth under sections titled “Selling Restrictions” and “Transfer

Restrictions” beginning on pages 165 and 171, respectively;

• You are aware that the Equity Shares have not been and will not be registered through a prospectus under the

Companies Act, the SEBI ICDR Regulations or under any other law in force in India. This Preliminary

Placement Document has not been reviewed or affirmed by the RBI, SEBI, the Stock Exchanges, the RoC or

any other regulatory or listing authority and is intended only for use by QIBs. This Preliminary Placement

Document has been filed (and the Placement Document will be filed) with the Stock Exchanges for record

purposes only and this Preliminary Placement Document has been displayed (and the Placement Document

will be displayed) on the websites of our Company and the Stock Exchanges;

• You are entitled to subscribe for and acquire the Equity Shares under the laws of all relevant jurisdictions

that apply to you and that you have fully observed such laws and you having the necessary capacity, have

obtained all necessary consents, governmental or otherwise, and authorizations and complied with all

necessary formalities, to enable you to commit to participate in the Issue and to perform your obligations in

relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all

necessary consents and authorizations to agree to the terms set out or referred to in this Preliminary Placement

Document), and will honour such obligations;

• Neither our Company nor the Book Running Lead Manager or any of its affiliates, including their respective

shareholders, directors, officers, employees, counsel, representatives or agents are making any

6

recommendations to you or advising you regarding the suitability of any transactions it may enter into in

connection with the Issue and your participation in the Issue is on the basis that you are not, and will not, up

to the Allotment of the Equity Shares, be a client of the Book Running Lead Manager. Neither the Book

Running Lead Manager nor any of its affiliates, including their respective shareholders, directors, officers,

employees, counsel, representatives, agents have any duties or responsibilities to you for providing the

protection afforded to their clients or customers or for providing advice in relation to the Issue and are not in

any way acting in any fiduciary capacity;

• You confirm that, either: (i) you have not participated in or attended any investor meetings or presentations

by our Company or its agents (the “Company Presentations”) with regard to our Company or the Issue; or

(ii) if you have participated in or attended any Company Presentations: (a) you understand and acknowledge

that the Book Running Lead Manager may not have knowledge of the statements that our Company or its

agents may have made at such Company Presentations and are therefore unable to determine whether the

information provided to you at such Company Presentations may have included any material misstatements

or omissions, and, accordingly you acknowledge that the Book Running Lead Manager has advised you not

to rely in any way on any information that was provided to you at such Company Presentations, and (b)

confirm that you have not been provided any material information relating to our Company and the Issue that

was not publicly available;

• All statements other than statements of historical fact included in this Preliminary Placement Document,

including, without limitation, those regarding our Company’s financial position, business strategy, plans and

objectives of management for future operations (including development plans and objectives relating to our

Company’s business), are forward-looking statements. Such forward-looking statements involve known and

unknown risks, uncertainties and other important factors that could cause actual results to be materially

different from future results, performance or achievements expressed or implied by such forward-looking

statements. Such forward-looking statements are based on numerous assumptions regarding our present and

future business strategies and environment in which we will operate in the future. You should not place undue

reliance on forward-looking statements, which speak only as at the date of this Preliminary Placement

Document. Our Company assumes no responsibility to update any of the forward-looking statements

contained in this Preliminary Placement Document;

• You are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered

to the general public, and the Allotment of the same shall be on a discretionary basis;

• You are aware that if you are Allotted more than 5% of the Equity Shares in the Issue, our Company shall be

required to disclose your name and the number of the Equity Shares Allotted to you to the Stock Exchanges

and the Stock Exchanges will make the same available on their websites and you consent to such disclosures;

• You have been provided a serially numbered copy of this Preliminary Placement Document and have read it

in its entirety, including in particular, the section “Risk Factors” beginning on page 37;

• In making your investment decision, you have relied solely on the information contained in this Preliminary

Placement Document and have not relied on any other disclosure or representation by our Company or any

other party. In addition, (i) you have relied on your own examination of our Company and the terms of the

Issue, including the merits and risks involved, (ii) you have made and will continue to make your own

assessment of our Company, the Equity Shares and the terms of the Issue, only on such information as has

been or will be made publicly available by our Company in accordance with law, (iii) you have relied upon

your own investigations and resources in deciding to invest in the Issue, (iv) you have consulted your own

independent advisors (including tax advisors) or otherwise have satisfied yourself concerning, without

limitation, the effects of local laws and taxation matters, and (v) you have received all information that you

believe is necessary or appropriate in order to make an investment decision in respect of our Company and

the Equity Shares;

• Neither the Book Running Lead Manager nor any of its affiliates, including their respective shareholders,

directors, officers, employees, counsel, representatives, agents or affiliates, have provided you with any tax

advice or otherwise made any representations regarding the tax consequences of purchase, ownership and

disposal of the Equity Shares (including but not limited to the Issue and the use of proceeds from the Equity

Shares). You will obtain your own independent tax advice from a reputable service provider and will not rely

on the Book Running Lead Manager nor on any of its affiliates, including their respective shareholders,

directors, officers, employees, counsel, representatives or agents when evaluating the tax consequences in

7

relation to the purchase, ownership and disposal of the Equity Shares (including but not limited to the Issue

and the use of proceeds from the Equity Shares). You waive, and agree not to assert any claim against our

Company or the Book Running Lead Manager or any of its affiliates, including their respective shareholders,

directors, officers, employees, counsel, representatives or agents with respect to the tax aspects of the Equity

Shares or as a result of any tax audits by tax authorities, wherever situated;

• You are a sophisticated investor and have such knowledge and experience in financial, business and

investment matters as to be capable of evaluating the merits and risks of an investment in the Equity Shares.

You are experienced in investing in private placement transactions of securities of companies in a similar

nature of business, similar stage of development and in similar jurisdictions. You and any accounts for which

you are subscribing to the Equity Shares (i) are each able to bear the economic risk of your investment in the

Equity Shares, (ii) will not look to our Company and/or the Book Running Lead Manager or any of its

affiliates, including their respective shareholders, directors, officers, employees, counsel, representatives or

agents for all or part of any such loss or losses that may be suffered in connection with the Issue, including

losses arising out of non-performance by our Company of any of its respective obligations or any breach of

any representations and warranties by our Company, whether to you or otherwise, (iii) are able to sustain a

complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the

investment in the Equity Shares, and (v) have no reason to anticipate any change in your or their

circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of

all or any part of the Equity Shares. You acknowledge that an investment in the Equity Shares involves a

high degree of risk and that the Equity Shares are, therefore, a speculative investment. You are seeking to

subscribe to the Equity Shares in the Issue for your own investment and not with a view to resell or distribute;

• You agree that in terms of Section 42(7) of the Companies Act, 2013 and other laws, as applicable, we shall

file the list of QIBs (to whom this Preliminary Placement Document has been circulated) along with other

particulars with the RoC and SEBI within 30 days of circulation of this Preliminary Placement Document

and other filings required under the Companies Act, 2013;

• If you are acquiring the Equity Shares to be issued pursuant to the Issue, for one or more managed accounts,

you represent and warrant that you are authorised in writing, by each such managed account to acquire such

Equity Shares for each managed account and to make (and you hereby make) the representations, warranties,

acknowledgements and agreements herein for and on behalf of each such account, reading the reference to

‘you’ to include such accounts;

• You are not a “Promoter” (as defined under the SEBI ICDR Regulations) of our Company or any of its

affiliates and are not a person related to the Promoters, either directly or indirectly, and your Bid does not

directly or indirectly represent the “Promoter”, or “Promoter Group”, (as defined under the SEBI ICDR

Regulations) of our Company or persons relating to the Promoter;

• You have no rights under a shareholders’ agreement or voting agreement with the Promoters or persons

related to the Promoters, no veto rights or right to appoint any nominee director on the Board of Directors,

other than the rights acquired, if any, in the capacity of a lender not holding any Equity Shares, which shall

not be deemed to be a person related to the Promoter;

• You will have no right to withdraw your Bid after the Bid/Issue Closing Date;

• You are eligible to apply and hold the Equity Shares Allotted to you together with any Equity Shares held by

you prior to the Issue. Further, you confirm that your aggregate holding after the Allotment of the Equity

Shares shall not exceed the level permissible as per any applicable regulation;

• The Bid made by you would not result in triggering a tender offer under the Securities and Exchange Board

of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the “Takeover

Regulations”);

• Aggregate allotment to you in the Issue, together with other QIBs in the Issue that belong to the same group

or are under common control as you, shall not exceed 50% of the Issue. For the purposes of this

representation:

(a) The expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies under

the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

(b) ‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)I of the Takeover

8

Regulations;

• You are aware that our Company shall make necessary filings with the RoC pursuant to the Allotment (which

shall include certain details of the Allottees) and if the Allotment of Equity Shares in the Issue results in you

being one of the top ten shareholders of our Company, we shall also be required to disclose your name and

shareholding details to the RoC within 15 days of Allotment, and you consent to such disclosure being made

by us;

• You shall not undertake any trade in the Equity Shares credited to your beneficiary account opened with the

Depository Participant until such time that the final listing and trading approvals for such Equity Shares are

issued by the Stock Exchanges, as applicable;

• You are aware that (i) applications for in-principle approval, in terms of Regulation 28 of the SEBI Listing

Regulations, for listing and admission of the Equity Shares on the Stock Exchanges, were made and approval

has been received from each of the Stock Exchanges, and (ii) the application for the final listing and trading

approvals will be made only after Allotment. There can be no assurance that the final approvals for listing

and trading in the Equity Shares will be obtained in time or at all. Our Company shall not be responsible for

any delay or non-receipt of such final approvals or any loss arising from such delay or non-receipt;

• You are aware and understand that the Book Running Lead Manager has entered into a placement agreement

with our Company, whereby the Book Running Lead Manager has, subject to the satisfaction of certain

conditions set out therein, severally and not jointly, agreed to manage the Issue and use reasonable efforts to

procure subscriptions for the Equity Shares on the terms and conditions set forth therein;

• You understand that the contents of this Preliminary Placement Document are exclusively the responsibility

of our Company, and neither the Book Running Lead Manager nor any person acting on their behalf nor their

counsels has or shall have any liability for any information, representation or statement contained in this

Preliminary Placement Document or any information previously published by or on behalf of our Company

and will not be liable for your decision to participate in the Issue based on any information, representation or

statement contained in this Preliminary Placement Document or otherwise. By accepting a participation in

the Issue, you agree to the same and confirm that the only information you are entitled to rely on, and on

which you have relied in committing yourself to acquire the Equity Shares is contained in this Preliminary

Placement Document, such information being all that you deem necessary to make an investment decision in

respect of the Equity Shares, you have neither received nor relied on any other information, representation,

warranty or statement made by or on behalf of the Book Running Lead Manager or our Company or any of

their respective affiliates or any other person, and neither the Book Running Lead Manager nor our Company

nor any other person including their respective shareholders, directors, officers, employees, counsels,

advisors, representatives or agents will be liable for your decision to participate in the Issue based on any

other information, representation, warranty or statement that you may have obtained or received;

• The only information you are entitled to rely on, and on which you have relied in committing yourself to

acquire the Equity Shares is contained in this Preliminary Placement Document, such information being all

that you deem necessary to make an investment decision in respect of the Equity Shares and that you have

neither received nor relied on any other information given or representations, warranties or statements made

by or on behalf of the Book Running Lead Manager (including any view, statement, opinion or representation

expressed in any research published or distributed by the Book Running Lead Manager or its affiliates or any

view, statement, opinion or representation expressed by any staff, including research staff, of the Book

Running Lead Manager or its respective affiliates) or our Company or any of their affiliates, including their

respective shareholders, directors, officers, employees, counsels, advisors, representatives or agents and

neither the Book Running Lead Manager nor our Company or any of their affiliates, including their respective

shareholders, directors, officers, employees, counsels, advisors, representatives or agents will be liable for

your decision to accept an invitation to participate in the Issue based on any other information, representation,

warranty, statement or opinion;

• You understand that neither the Book Running Lead Manager nor its affiliates have any obligation to

purchase or acquire all or any part of the Equity Shares purchased by you in the Issueor to support any loss

directly or indirectly sustained or incurred by you for any reason whatsoever in connection with the Issue,

including non-performance by our Company of any of its obligations or any breach of any representation and

warranty by our Company, whether to you or otherwise;

9

• You understand that the Equity Shares have not been and will not be registered under the Securities Act or

registered, listed or otherwise qualified in any other jurisdiction outside India and accordingly, may not be

offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject

to, the registration requirements of the Securities Act and applicable US state securities laws. Accordingly,

the Equity Shares are being offered and sold outside the United States in offshore transactions in reliance on

Regulation S and the applicable laws of the jurisdictions where those offers, and sales occur;

• You are, at the time the Equity Shares are purchased, located outside the United States (within the meaning

of Regulation S), and you are not an affiliate of our Company or a person acting on behalf of our Company

or such an affiliate;

• You are purchasing the Equity Shares in an offshore transaction meeting the requirements of Rule 903 or 904

of Regulation S and you shall not offer, sell, pledge or otherwise transfer such Equity Shares except in an

offshore transaction complying with Regulation S or pursuant to any other available exemption from

registration under the Securities Act and in accordance with all applicable securities laws of the states of the

United States and any other jurisdiction, including India;

• You agree that any dispute arising in connection with the Issue will be governed by and construed in

accordance with the laws of India, and the courts in Mumbai, India shall have exclusive jurisdiction to settle

any disputes which may arise out of or in connection with this Preliminary Placement Document and the

Placement Document;

• Each of the representations, warranties, acknowledgements and agreements set out above shall continue to

be true and accurate at all times up to and including the Allotment, listing and trading of the Equity Shares

in the Issue;

• You agree to indemnify and hold our Company, the Book Running Lead Manager and their respective

affiliates and advisors harmless from any and all costs, claims, liabilities and expenses (including legal fees

and expenses) arising out of or in connection with any breach of the foregoing representations, warranties,

acknowledgements and undertakings made by you in this Preliminary Placement Document. You agree that

the indemnity set forth in this paragraph shall survive the resale of the Equity Shares by, or on behalf of, the

managed accounts;

• Our Company, the Book Running Lead Manager, their respective affiliates and others will rely on the truth

and accuracy of the foregoing representations, warranties, acknowledgements and undertakings, which are

given to the Book Running Lead Manager on their own behalf and on behalf of our Company and are

irrevocable. It is agreed that if any of such representations, warranties, acknowledgements and undertakings

are no longer accurate, you will promptly notify our Company and the Book Running Lead Manager;

• You are aware that additional requirements would be applicable if you are in jurisdictions other than India,

as set forth under sections “Selling Restrictions” and “Transfer Restrictions” of Preliminary Placement

Document and you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and

that you have all necessary capacity and have obtained all necessary consents and authorities to enable you

to commit to this participation in this Issue and to perform your obligations in relation thereto (including,

without limitation, in the case of any person on whose behalf you are acting, all necessary consents and

authorities to agree to the terms set out or referred to in this Preliminary Placement Document) and will

honour such obligations;

• You are not acquiring or subscribing for the Equity Shares as a result of any “directed selling efforts” (as

defined in Regulation S) and you understand and agree that offers and sales are being made only outside the

United States in offshore transactions in reliance on Regulation S; and

• You understand that the Equity Shares have not been and will not be registered under the Securities Act or

any state securities laws of the United States, and unless so registered may not be offered, sold or delivered

within the United States except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the Securities Act and any applicable U.S. state securities laws, and that the

Equity Shares are only being offered, sold and delivered outside the United States in offshore transactions in

reliance on Regulation S and in compliance with the applicable laws of each jurisdiction where those offers

and sales are made.

10

OFF-SHORE DERIVATIVE INSTRUMENTS (P-NOTES)

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of

Regulation 22 of the SEBI (FPI) Regulations, a FPI (other than a Category III foreign portfolio investors and

unregulated broad based funds which are classified as category II FPI by virtue of their investment manager being

appropriately regulated), including the affiliates of the Book Running Lead Manager, may issue, subscribe or

otherwise deal in offshore derivative instruments as defined under the SEBI (FPI) Regulations as any instrument,

by whatever name called, which is issued overseas by a FPI against securities held by it that are listed or proposed

to be listed on any recognized stock exchange in India, as its underlying (all such offshore derivative instruments

are referred to herein as “P-Notes”) for which they may receive compensation from the purchasers of such P-Notes,

listed or proposed to be listed on any recognized stock exchange in India only in favour of those entities which are

regulated by any appropriate foreign regulatory authorities in the countries of their incorporation or establishment

subject to compliance with “know your client” requirements. An FPI shall also ensure that further issue or transfer

of any instrument referred to above issued by or on behalf of it, is made only to persons who are regulated by

appropriate foreign regulatory authorities. P-Notes have not been and are not being offered or sold pursuant to this

Preliminary Placement Document. This Preliminary Placement Document does not contain any information

concerning P-Notes, or issuer(s) of any P-Notes, including, without limitation, any information regarding any risk

factors relating thereto.

Any P-Notes that may be issued are not securities of our Company and do not constitute any obligations of, claim

on, or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the

establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-

Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our

Company. Our Company and the Book Running Lead Manager do not make any recommendation as to any

investment in P-Notes and does not accept any responsibility whatsoever in connection with any P-Notes. Any P-

Notes that may be offered are issued by, and are the sole obligations of, third parties that are unrelated to our

Company. Our Company and the Book Running Lead Manager do not make any recommendation as to any

investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-

Notes that may be issued are not securities of the Book Running Lead Manager and do not constitute any obligations

of, or claims on, the Book Running Lead Manager. Affiliates of the Book Running Lead Manager which are Eligible

FPIs (other than unregulated broad-based funds which are classified as FPI by virtue of their investment manager

being appropriately regulated) may purchase, to the extent permissible under law, Equity Shares in this Issue, and

may issue P-Notes in respect thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate

disclosure as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the

issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-

Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial,

legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-

Notes are issued in compliance with applicable laws and regulations.

11

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, a copy of this Preliminary Placement Document has been submitted to each of the Stock Exchanges.

The Stock Exchanges do not in any manner:

(i) warrant, certify or endorse the correctness or completeness of the contents of this Preliminary Placement

Document;

(ii) warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or

(iii) take any responsibility for the financial or other soundness of our Company, our Promoters, our

management or any scheme or project of our Company;

and it should not for any reason be deemed or construed to mean that this Preliminary Placement Document has

been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any

Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim

against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person consequent

to or in connection with, such subscription/acquisition, whether by reason of anything stated or omitted to be stated

herein, or for any other reason whatsoever.

12

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Preliminary Placement Document, unless otherwise specified or the context otherwise indicates or implies,

references to ‘you’, ‘your’, ‘offeree’, ‘purchaser’, ‘subscriber’, ‘recipient’, ‘investors’, ‘prospective investors’ and

‘potential investor’ are to the prospective investors in the Issue, references to ‘GEL’ or ‘the Company’, ‘our

Company’, or the ‘Issuer’ ‘we’, ‘us’, ‘our’ are to Ganesha Ecosphere Limited.

Currency and Units of Presentation

In this Preliminary Placement Document, all references to (a) “Indian Rupees”, “Rs.” And “₹” are to the legal

currency of the Republic of India; and (b) “USD” or “US$” or “U.S. dollar” are to United States Dollars, the official

currency of the United States of America. All references herein to “India” are to the Republic of India and its

territories and possessions and all references to the “Government” or “GoI” or the “Central Government” or the

“State Government” are to the Government of India, central or state, as applicable. All references herein to the “US”

or “U.S.” or the “United States” are to the United States of America and its territories and possessions.

References to the singular also refers to the plural and one gender also refers to any other gender, wherever

applicable, and the words “Lakh” or “Lac” mean “100 thousand”, the word “million” means “10 lakh”, the word

“crore” means “10 million” or “100 lakhs” and the word “billion” means “1,000 million” or “100 crores”.

Financial Data

The financial year of our Company commences on April 1 of each calendar year and ends on March 31 of the

following calendar year, and, unless otherwise specified or if the context requires otherwise, all references to a

particular ‘Fiscal Year’ or ‘Fiscal’ or ‘Financial Year’ or ‘FY’ are to the 12-month period ended on March 31 of that

year. Our audited financial statements as of and for the financial years ended March 31, 2017, March 31, 2016 and

March 31, 2015 have been prepared by our Company in accordance with Indian GAAP. Our Company adopted Ind-

AS from April 1, 2017 with transition date of April 1, 2016. Accordingly, our unaudited financial results for the

quarter and three months ended June 30, 2017, quarter and half year ended September 30, 2017 and quarter and nine

months ended December 31, 2017 have been prepared in accordance with Ind-AS, as prescribed under Section 133

of the Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standard) Rules, 2015 and

Companies (Indian Accounting Standards) Amendment Rules, 2016.

Our Company publishes its financial statements in Indian Rupees. The Erstwhile Auditor of our Company audited

the Financial Statements for the financial years 2017, 2016 and 2015 and has performed a limited review on the

financial results of our Company for the quarter ended June 30, 2017 and thereafter ceased to be the statutory auditors

of our Company on September 25, 2017. The existing Auditor was appointed on September 25, 2017 and has

performed a limited review on the financial results of our Company for the quarter and half year ended September

30, 2017 and quarter and nine months period ended December 31, 2017. The financial statements of our Company

as of and for the Financial Years ended March 31, 2015, March 31, 2016 and March 31, 2017 are audited by the

Erstwhile Auditors of our Company in accordance with the applicable generally accepted auditing standards in India

prescribed by the ICAI. The Unaudited Interim Financial Results have been reviewed by our Auditors in accordance

with the Standard on Review Engagement (SRE) 2410, ‘Review of Interim Financial Information Performed by the

Independent Auditor of the Entity’ issued by the ICAI.

Our Company does not attempt to quantify the impact of U.S. GAAP or IFRS on the financial data included in this

Preliminary Placement Document, nor does our Company provide a reconciliation of its financial statements to

International Financial Reporting Standards (“IFRS”) or U.S. GAAP. Each of IFRS and U.S. GAAP differ in certain

significant respects from Ind-AS and Indian GAAP. Accordingly, the degree to which the financial statements

prepared in accordance with Ind-AS and Indian GAAP included in this Preliminary Placement Document will

provide meaningful information is entirely dependent on the reader’s familiarity with the respective accounting

practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures

presented in this Preliminary Placement Document should accordingly be limited.We have conducted a preliminary

review of the impact of Ind-AS on our accounting policies, details of which are disclosed in the section “Summary

of Key Differences between Indian GAAP and Ind-AS” on page 95 and see section “Risk Factors” on page 37.

All numerical and financial information as set out and presented in this Preliminary Placement Document for the

sake of consistency and convenience have been rounded off to two decimal places. Accordingly, figures shown as

totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

13

INDUSTRY AND MARKET DATA

Information regarding market position, growth rates and other industry data and certain industry forecasts pertaining

to the businesses of our Company contained in this Preliminary Placement Document consists of estimates based on

data reports compiled by government bodies, recognized industry sources, professional organisations and analysts,

data from other external sources and knowledge of the markets in which we compete. Unless stated otherwise, the

statistical information included in this Preliminary Placement Document relating to the industry in which we operate

has been reproduced from various trade, industry and government publications and websites. We confirm that such

information and data has been accurately reproduced, and that as far as we are aware and are able to ascertain from

information published by third parties, no facts have been omitted that would render the reproduced information

inaccurate or misleading.

This data is subject to change and cannot be verified with certainty due to limits on the availability and reliability of

the raw data and other limitations and uncertainties inherent in any statistical survey. In many cases, there is no

readily available external information (whether from industry associations, government bodies or other

organisations) to validate market-related analysis and estimates, so we have relied on internally developed estimates.

Industry publications generally state that the information they generally contain has been obtained from sources

believed to be reliable but that the accuracy and completeness of the information is not guaranteed.

Neither we nor the Book Running Lead Manager have independently verified this data and do not make any

representation regarding the accuracy or completeness of such data. Our Company takes responsibility for accurately

reproducing such information but accepts no further responsibility in respect of such information and data.

Similarly, while we believe our internal estimates to be reasonable, such estimates have not been verified by any

independent source and we cannot assure potential investors as to their accuracy. Internal estimates and surveys,

industry forecasts and market research, while believed to be reliable, have not been independently verified and

neither we nor the Book Running Lead Manager make any representation as to the accuracy and completeness of

information based on trade, industry and government publications and websites, data reports compiled by

government bodies, professional organisations and analysts, or from other external sources.

Certain information in the section “Industry Overview” has been derived from various Indian government

publications/ industry reports and reports prepared by CRISIL and has not been prepared or independently verified

by us, the Book Running Lead Manager or any of our or its respective affiliates or advisors. Unless stated otherwise,

industry and market data used in this Preliminary Placement Document has been obtained or derived from publicly

available information and from the report titled “Assessment of India’s textile and PET recycling industries” dated

March 12, 2018 (“CRISIL Report”) issued by CRISIL which includes the following disclaimer:

“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this Report

based on the information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL

does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any

errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommendation

to invest / disinvest in any company covered in the Report. CRISIL especially states that it has no financial liability

whatsoever to the subscribers/ users/ transmitters/ distributors of this Report. CRISIL Research operates

independently of, and does not have access to information obtained by CRISIL’s Ratings Division / CRISIL Risk and

Infrastructure Solutions Limited (CRIS), which may, in their regular operations, obtain information of a confidential

nature. The views expressed in this Report are that of CRISIL Research and not of CRISIL’s Ratings Division / CRIS.

No part of this Report may be published / reproduced in any form without CRISIL’s prior written approval”.

14

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Preliminary Placement Document that are not statements of law or historical

facts constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by

terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’,

‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or phrases of

similar import. Similarly, statements that describe the strategies, objectives, plans or goals of our Company are also

forward-looking statements. However, these are not the exclusive means of identifying forward-looking statements.

All statements regarding our Company’s expected financial conditions, results of operations, business plans and

prospects are forward-looking statements. These forward-looking statements include statements as to our business

strategy, revenue and profitability (including, without limitation, any financial or operating projections or forecasts),

new business and other matters discussed in this Preliminary Placement Document that are not historical facts. The

forward-looking statements contained in this Preliminary Placement Document (whether made by us or any third

party), are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may

cause the actual results, performance or achievements of our Company to be materially different from any future

results, performance or achievements expressed or implied by such forward-looking statements or other projections.

All forward-looking statements are subject to risks, uncertainties and assumptions about us that could cause actual

results to differ materially from those contemplated by the relevant forward-looking statement. Important factors

that could cause the actual results, performances and achievements of our Company to be materially different from

any of the forward-looking statements include, among others:

• Inability to manage our growth effectively;

• Inability to compete effectively;

• Increased regulation or changes in existing regulations governing our industry;

• General economic and business conditions in India;

• Our ability to expand into new regions and markets;

• Change in trends of PET recycling into recycled polyester staple fibre.

By their nature, certain of the market risk disclosures are only estimates and could be materially different from what

actually occurs in the future. As a result, actual future gains, losses or impact on revenue or income could materially

differ from those that have been estimated, expressed or implied by such forward-looking statements or other

projections. All forward-looking statements are subject to risks, uncertainties and assumptions about us that could

cause actual results to differ materially from those contemplated by the relevant forward-looking statement.

Additional factors that could cause actual results, performance or achievements of our Company to differ materially

include, but are not limited to, those discussed under the sections titled “Risk Factors”, “Industry Overview”, “Our

Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

beginning on pages 37, 101, 116 and 76, respectively.

The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of the

management, as well as the assumptions made by, and information currently available to, the management of our

Company. Although we believe that the expectations reflected in such forward-looking statements are reasonable at

this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties,

investors are cautioned not to place undue reliance on such forward-looking statements. In any event, these

statements speak only as of the date of this Preliminary Placement Document or the respective dates indicated in

this Preliminary Placement Document and our Company undertakes no obligation to update or revise any of them,

whether as a result of new information, future events, changes in assumptions or changes in factors affecting these

forward-looking statements or otherwise. If any of these risks and uncertainties materialise, or if any of our

underlying assumptions prove to be incorrect, the actual results of operations or financial condition of our Company

could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent

forward-looking statements attributable to our Company are expressly qualified in their entirety by reference to these

cautionary statements.

15

ENFORCEMENT OF CIVIL LIABILITIES

Our Company is a public limited company incorporated under the laws of India. All of our Directors, key managerial

personnel and senior management personnel of our Company named herein are residents of India. All the assets of

our Company are located in India. As a result, it may be difficult or may not be possible for investors outside India

to effect service of process upon our Company or such persons in India, or to enforce judgments obtained against

such parties outside India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.

Recognition and enforcement of foreign judgments and execution of a foreign judgment is provided for under

Sections 13 and 44A respectively, of the Code of Civil Procedure, 1908 (the “Civil Procedure Code”) on a statutory

basis.

Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter

directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent

jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face

of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize

the law of India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was

obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud, or (vi) where the

judgment sustains a claim founded on a breach of any law in force in India.

Under Section 14 of the Civil Procedure Code, a court in India shall, upon the production of any document purporting

to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent

jurisdiction, unless the contrary appears on record; but such presumption may be displaced by proving want of

jurisdiction.

A foreign judgment which is conclusive under Section 13 of the Civil Procedure Code can be enforced in India (i)

by instituting execution proceedings; or (ii) by instituting a suit on such judgment.

Foreign judgments may be enforced by proceedings in execution in certain cases. Section 44A of the Civil Procedure

Code provides that where a foreign judgment has been rendered by a superior court within the meaning of that

section in any country or territory outside India which the Government has by notification declared to be in a

reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered

by the relevant court in India. However, Section 44A of the Civil Procedure Code is applicable only to monetary

decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in

respect of a fine or other penalty and does not include arbitration awards. Furthermore, the execution of the foreign

decree under Section 44A of the Civil Procedure Code is also subject to the exceptions under Section 13 of the Civil

Procedure Code, as mentioned above.

The United Kingdom, Republic of Singapore and Hong Kong (among others) have been declared by the Government

of India to be a reciprocating territory for the purposes of Section 44A of the Civil Procedure Code, but the United

States has not been so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory may be

enforced only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be filed in India

within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability

in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is

brought in India.

Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages

awarded as excessive or inconsistent with public policy. Further, any judgment or award denominated in a foreign

currency would be converted into Rupees on the date of such judgment or award and not on the date of payment. A

party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside

India any amount recovered pursuant to the execution of such a judgement.

16

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency

equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the

conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.

The following table sets forth information with respect to the exchange rates between the Rupee and the U.S. dollar

(in ₹ per US$1.00), for the periods indicated. The exchange rates are based on the reference rates released by RBI,

which are available on the website of RBI. No representation is made that any Rupee amounts could have been, or

could be, converted into U.S. dollars at any particular rate, the rates stated below, or at all.

On May 2, 2018 the exchange rate (RBI reference rate) was ₹66.66 to US$ 1.00. (₹ per US$)

Period end Average(1) High(2) Low(3)

Financial Year Ended:

March 31, 2018 65.04 64.45 65.76 63.35

March 31, 2017 64.84 67.09 68.72 64.84

March 31, 2016 66.33 65.46 68.78 62.16

Quarter ended:

March 31, 2018 65.04 64.31 65.23 63.35

December 31, 2017 63.93 64.74 65.55 63.93

September 30, 2017 65.36 64.29 65.76 63.63

June 30, 2017 64.74 64.46 65.04 64.00

Month ended:

April 30, 2018 66.78 65.64 66.83 64.93

March 31, 2018 65.04 65.02 65.23 64.80

February 28, 2018 65.10 64.37 65.10 63.61

January 31, 2018 63.69 63.64 63.98 63.35

December 31, 2017 63.93 64.24 64.54 63.93

November 30, 2017 64.43 64.86 65.52 64.41 (1) Average of the official rate for each working day of the relevant period. (2) Maximum of the official rate for each working day of the relevant period. (3) Minimum of the official rate for each working day of the relevant period. (4) In case of holidays, the exchange rate on the last traded day of the month has been considered as the rate for the period

end.

(Source: www.rbi.org.in)

http://www.rbi.org.in/

17

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise implies or requires, this Preliminary Placement Document uses the definitions and

abbreviations set forth below, which you should consider when reading the information contained herein. References

to any statutes, legislation, guidelines, act, charter documents and policies, rules or regulation shall be deemed to

include all amendments, modifications and replacements thereto, as of the date of this Preliminary Placement

Document. Notwithstanding the foregoing, terms used in the sections “Statement of Tax Benefits” and “Financial

Information” beginning on pages 181 and 203, respectively, shall have the meanings given to such terms in such

sections.

The following list of certain capitalized terms used in this Preliminary Placement Document is intended for the

convenience of the reader/prospective investor only and is not exhaustive.

Company Related Terms

Term Description

“Issuer”, “we”, “us”, “our”,

“Company”, “our Company”, “the

Company”, “GEL”

Unless the context otherwise indicates or implies, refers to Ganesha Ecosphere Limited,

a public limited Company incorporated under the Companies Act, 1956 and having its

registered office at Raipur (Rania), Kalpi Road, Kanpur Dehat – 209 304, Uttar Pradesh,

India

AGM Annual General Meeting

Articles/ Articles of Association The articles of association of our Company as amended from time to time

Auditors The statutory auditors of our Company, namely, Narendra Singhania & Co., Chartered

Accountants, appointed on September 25, 2017

Board of Directors/ Board The Board of Directors of our Company, or a duly constituted committee thereof

Compliance Officer The Company Secretary and Compliance Officer of our Company

Corporate Office The corporate office of our Company is located at 113/216-B, Swaroop Nagar, Kanpur

– 208 002, Uttar Pradesh, India

Director(s) Director(s) on our Board, unless otherwise specified

EGM Extraordinary general meeting

Equity Share(s) Equity Shares of our Company, having a face value of ₹10 each

Financial Year/ Fiscal/ FY A period of 12 months ending March 31, unless otherwise stated

Independent Director A non-executive, independent Director as per the Companies Act, 2013 and the SEBI

Listing Regulations.

Key Managerial Personnel Key Managerial Personnel of our Company as of the date of this Preliminary Placement

Document, in accordance with the Companies Act, 2013, namely:

(a) Shyam Sunder Sharmma, Chairman and Managing Director

(b) Sharad Sharma, Joint Managing Director

(c) Gopal Agarwal, Chief Financial Officer

(d) Bharat Kumar Sajnani, Company Secretary and Compliance Officer.

Memorandum/ Memorandum of

Association

The memorandum of association of our Company, as amended from time to time

Preference Shares Preference shares of our Company having a face value of ₹100 each

Promoters Shyam Sunder Sharmma, Vishnu Dutt Khandelwal, Sharad Sharma, Rajesh Sharma and

Seema Sharma

Promoter Group Unless the context requires otherwise, the entities forming part of our promoter group

in accordance with Regulation 2(1)(zb) of the SEBI ICDR Regulations

Registered Office The registered office of our Company is located at Raipur (Rania), Kalpi Road, Kanpur

Dehat – 209 304, Uttar Pradesh, India

RoC/ Registrar of Companies Registrar of Companies, Uttar Pradesh at Kanpur

Shareholders The shareholders of Equity Shares of our Company, unless otherwise specified

Statutory Auditors Current statutory auditors of our Company, being Narendra Singhania & Co., Chartered

Accountants.

Issue Related Terms

Term Description

Allocated/ Allocation The allocation of Equity Shares following the determination of the Issue Price to QIBs

on the basis of the Bid Cum Application Form submitted by them, by our Company in

consultation with the Book Running Lead Manager and in compliance with Chapter VIII

of the SEBI ICDR Regulations

Allot / Allotment / Allotted Unless the context otherwise requires, the issue and allotment of Equity Shares to be

issued pursuant to the Issue

18

Term Description

Allottee(s) QIBs to whom Equity Shares are issued and Allotted pursuant to the Issue

Audited Financial Statements The balance sheet of our Company as at March 31, 2017, March 31, 2016 and March

31, 2015. The related statement of profit and loss and cash flow statements including

notes thereto for the financial year ended March 31, 2017, March 31, 2016 and March

31, 2015 and a summary of significant accounting policies and other explanatory

information for the years ended March 31, 2017, March 31, 2016 and March 31, 2015

prepared in accordance with Indian GAAP.

Bid(s) Indication of interest of a Bidders, including all revisions and modifications thereto, as

provided in the Bid Cum Application Form, to subscribe for the Equity Shares pursuant

to the Issue. The term "Bidding" shall be construed accordingly.

Bid Cum Application Form The form (including any revisions thereof) pursuant to which a QIB shall submit a Bid

for the Equity Shares in the Issue

Bid/ Issue Closing Date [●], 2018, which is the last date up to which the Bid Cum Application Forms shall be

accepted

Bid/ Issue Opening Date May 2, 2018

Bid/ Issue Period 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

Bidder Any prospective investor, being a QIB, who makes a Bid pursuant to the terms of this

Preliminary Placement Document and the Bid Cum Application Form

Book Running Lead Manager or

BRLMs

Book Running Lead Manager to the Issue, ITI Capital Limited (formerly Inga Capital

Limited)

CAN or Confirmation of

Allocation Note

Note or advice or intimation to QIBs confirming Allocation of Equity Shares to such

QIBs after determination of the Issue Price and requesting payment for the entire

applicable Issue Price for all Equity Shares Allocated to such QIBs

Closing Date The date on which Allotment of Equity Shares pursuant to the Issue shall be made, i.e.

on or about May 9, 2018

CRISIL Report Research report prepared by CRISIL Limited titled ‘Assessment of India’s textile and

PET recycling industries’ dated March 12, 2018

Cut-off Price The Issue Price of the Equity Shares to be issued pursuant to the Issue which shall be

finalised by our Company in consultation with the Book Running Lead Manager

Designated Date The date of credit of Equity Shares to the QIB’s dematerialised account, as applicable

to the respective QIB

Eligible FPIs FPIs that are eligible to participate in this Issue and does not include Category III FPIs

who are not allowed to participate in the Issue

Erstwhile Auditor Mehrotra Rakesh Kumar & Co., Chartered Accountants, the erstwhile auditors of our

Company who held office till September 25, 2017

Escrow Agreement Agreement dated May 2, 2018, entered into amongst our Company, the Escrow Banks

and the Book Running Lead Manager for collection of the Bid Amounts and for

remitting refunds, if any, of the amounts collected, to the Bidders

Escrow Bank(s) Yes Bank Limited

Escrow Bank Account(s) The account titled “Ganesha Ecosphere Ltd–QIP Escrow Account” with regard to any

money received towards the subscription of the Equity Shares, opened with the Escrow

Bank(s), subject to the terms of the Escrow Agreement(s)

Floor Price The floor price of ₹396.13 which has been calculated in accordance with Chapter VIII

of the SEBI ICDR Regulations. In terms of the SEBI ICDR Regulations, the Issue Price

cannot be lower than the Floor Price. Our Company may offer a discount of not more

than 5% on the Floor Price in terms of Regulation 85 of the SEBI ICDR Regulations.

Issue The offer, issue and Allotment of [●] Equity Shares to QIBs pursuant to Chapter VIII of

the SEBI ICDR Regulations and the provisions of the Companies Act, 2013

Issue Price ₹[●] per Equity Share

Issue Size The issue of up to [●] Equity Shares aggregating up to ₹[●] million.

Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board of India

(Mutual Funds) Regulations, 1996, as amended

Mutual Fund Portion 10% of the Equity Shares proposed to be Allotted in the Issue, which is available for

Allocation to Mutual Funds

Pay-in Date The last date specified in the CAN for payment of application monies by the successful

Bidders

Placement Agreement Placement agreement dated May 2, 2018 entered into by our Company and the Book

Running Lead Manager

Placement Document The placement document to be issued by our Company in accordance with Chapter VIII

of the SEBI ICDR Regulations and Section 42 of the Companies Act, 2013

Preliminary Placement Document This preliminary placement document dated May 2, 2018 issued in accordance with

Chapter VIII of the SEBI ICDR Regulations and Section 42 of the Companies Act, 2013

QIBs or Qualified Institutional Qualified institutional buyers as defined under the SEBI ICDR Regulations in reliance

19

Term Description

Buyers upon chapter VIII of the SEBI ICDR Regulations and Section 42 of the Companies Act,

2013, as amended and the rules made thereunder, and which are not excluded pursuant

to regulation 86(1)(b) of the SEBI ICDR Regulations from participating in the Issue

QIP Qualified institutions placement, being a private placement to QIBs under Chapter VIII

of the SEBI ICDR Regulations and applicable provisions of the Companies Act.

Regulation S Regulation S under the Securities Act

Relevant Date May 2, 2018, which is the date of the meeting of the Board, or any committee duly

authorised by the Board, deciding to open the Issue

Securities Act The United States Securities Act of 1933, as amended and the related rules and

regulations promulgated thereunder

Unaudited Interim Financial

Results

Our Company’s standalone condensed financial statements as of and for the nine

months’ period ended December 31, 2017 and December 31, 2016 and explanatory notes

prepared in accordance with the Indian Accounting Standards.

Industry Related Terms

Term Description

BIS Bureau of Indian Standards

BOPP Biaxially-oriented polypropylene

CPI Consumer price index

FT-NIR Fourier transform near-infrared

GDP Gross domestic product

HDPE High density polyethylene

KTPA Kilo tonnes per annum

MEG Mono ethylene glycol

MEIS Merchandise Exports from India Scheme

MMF Manmade fibres

MSW Municipal solid waste

MTPA Metric Tonne Per Annum

NNI Net national income

PET Polyethylene terephthalate

PFY Polyester filament yarn

POY Partially-oriented yarn

PP Polypropylene

PSF Polyester staple fibre

PWM Plastic waste management

RGWP Rayon grade wood pulp

RMG Readymade garments

R-PET Recycled polyethylene terephthalate

RVM Reverse vending machine

SITP Scheme for Integrated Textile Park

SPI Society of Plastics industry

TPA Tonne Per Annum

TUFS Technology Upgradation Fund Scheme

VFY Viscose filament yarn

VSF Viscose staple fibre

Conventional and general terms

Term Description

₹/ INR/ Rupees/ Rs. Indian Rupees, the legal currency of the Republic of India.

AGM Annual general meeting

AIF(s) Alternative investment funds, as defined and registered with SEBI under the Securities

and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as

amended

AO Assessing Officer

AS Accounting Standards issued by ICAI, as required under the Companies Act

AY Assessment Year

BCM Billion Cubic Metres

BSE BSE Limited

CAGR Compound annual growth rate

Calendar Year(s) One Year(s) period beginning on January 1 ending on December 31

20

Term Description

Category III Foreign Portfolio

Investor

An FPI registered as a category III foreign portfolio investor under the SEBI FPI

Regulations

CARO Companies (Auditor’s Report) Order, 2016

CDSL Central Depository Services (India) Limited

CIN Corporate Identity Number

Civil Procedure Code The Code of Civil Procedure, 1908

CLB Company Law Board

Companies Act Companies Act, 1956 and/or the Companies Act, 2013, as applicable

Companies Act, 1956 Companies Act, 1956, as amended (without reference to the provisions thereof that have

ceased to have effect upon the notification of the Notified Sections) and the rules made

thereunder

Companies Act, 2013 Companies Act, 2013, to the extent in force pursuant to the notification of the Notified

Sections, and the rules made thereunder

Competition Act The Competition Act, 2002, as amended

Consolidated FDI Policy Circular IPP F. No. 5(1)/2017-FC-1 dated August 28, 2017issued by the Department of

Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of

India, effective from August 28, 2017 as amended from time to time

Cr. P. C. The Code of Criminal Procedure, 1973

Crore 100 lakhs

CSR Corporate Social Responsibility

Debt to equity ratio Debt to equity ratio is calculated as total borrowings/net worth

Depositories NSDL and CDSL

Depositories Act The Depositories Act, 1996

Depository Participant or DP A depository participant as defined under the Depositories Act

DIN Director’s Identification Number

DIPP Department of Industrial Policy & Promotion

DP ID Depository participant identity

EBITDA Earnings before interest, tax, depreciation and amortization

ECB External Commercial Borrowing

ECS Electronic clearing service

EGM Extraordinary general meeting

Eligible FPIs FPIs that are eligible to participate in this Issue and do not include qualified foreign

investors and Category III Foreign Portfolio Investors who are not allowed to participate

in the Issue

EOM Emphasis of Matters as per Standard on Auditing (SA) 706 titled ‘Emphasis of Matters

paragraphs and other matter paragraphs in the Independent Auditors Report’

EPS Earnings per share, i.e., profit after tax for a Financial Year divided by the weighted

average number of equity shares during the Financial Year

EU European Union

FATCA Foreign Account Tax Compliance Act

FDI Foreign direct investment

FEMA The Foreign Exchange Management Act, 1999, together with rules and regulations

thereunder, as amended

FEMA Transfer Regulations Foreign Exchange Management (Transfer or Issue of Security by a Person Resident

Outside India) Regulations, 2017, as amended

FFI Foreign financial institution

FICCI Federation of Indian Chambers of Commerce and Industry

FIPB Foreign Investment Promotion Board

FIR First Information Report

Form PAS-4 Form PAS-4 prescribed under the Companies (Prospectus and Allotment of Securities)

Rules, 2014, as amended

FPI Foreign portfolio investors as defined under the SEBI FPI Regulations and includes

person who has been registered under the SEBI FPI Regulations. Any foreign

institutional investor or qualified foreign investor who holds a valid certificate of

registration is deemed to be a foreign portfolio investor till the expiry of the block of

three years for which fees has been paid as per the Securities and Exchange Board of

India (Foreign Institutional Investors) Regulations, 1995, as amended

FVCI Foreign Venture Capital Investors (as defined under the SEBI (Foreign Venture Capital

Investors) Regulations, 2000, as amended) registered with the SEBI

GAAP Generally Accepted Accounting Principles

GAAR General anti-avoidance rules

GDP Gross Domestic Product

General Meeting AGM or EGM

GIR General Index Registrar

21

Term Description

GoI or Government Government of India

GST Goods and services tax

HUF Hindu undivided family

I.T. Act/ Income Tax Act The Income Tax Act, 1961

ICAI Institute of Chartered Accountants of India

ICDS Income Computation and Disclosure Standards

IFRS International Financial Reporting Standards of the International Accounting Standards

Board

Ind-AS Indian accounting standards converged with IFRS, as notified by the Ministry of

Corporate Affairs vide Companies (Indian Accounting Standards) Rules, 2015 vide

notification dated February 16, 2015, as amended

Indian GAAP Generally accepted accounting principles in India, including the accounting standards

specified under the Companies (Accounts) Rules, 2014, as amended.

Insurance Act The Insurance Act, 1938

Interest Coverage Ratio Cash profit after tax plus interest paid divided by interest paid

IMF International Monetary Fund

IPC The Indian Penal Code,1860

IRS Internal Revenue Service of the United States of America

JV Joint Venture

Lakh 100 thousand

MCA Ministry of Corporate Affairs, Government of India

MCLR Marginal Cost of funds-based Lending rate

MoF Ministry of Finance, Government of India

MoU Memorandum of Understanding

MSME Micro, Small and Medium Enterprises

Net Worth Net worth means the aggregate value of the paid-up share capital and all reserves created

out of the profits and securities premium account and debit or credit balance of profit

and loss account, after deducting the aggregate value of the accumulated losses, deferred

expenditure and miscellaneous expenditure not written off, as per the audited balance

sheet, but does not include reserves created out of revaluation of assets, write-back of

depreciation and amalgamation.

Non-Resident or NR A person resident outside India, as defined under the FEMA and includes a Non-

Resident Indian

Notified Sections Sections of the Companies Act, 2013 that have been notified by the Government of India

NRI or “Non-Resident Indian” A person resident outside India, who is a citizen of India or a person of Indian origin and

shall have the same meaning as ascribed to such term in the Foreign Exchange

Management (Deposit) Regulations, 2016, as amended or is an ‘Overseas Citizen of

India’ cardholder within the meaning of section 7(A) of the Citizenship Act, 1955.

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

Official Gazette The official gazette of India or a State

p.a. Per annum

PAN Permanent Account Number allotted under the I.T. Act

PAT Profit after tax

PBT Profit before tax

RBI Reserve Bank of India

RBI Act The Reserve Bank of India Act, 1934, as amended.

RONW Return on Net Worth

RTGS Real Time Gross Settlement

SCR (SECC) Rules Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)

Regulations, 2012, as amended.

SCRA The Securities Contracts (Regulation) Act, 1956, as amended

SCRR The Securities Contracts (Regulation) Rules, 1957, as amended

SEBI The Securities and Exchange Board of India established under the SEBI Act

SEBI Act The Securities and Exchange Board of India Act, 1992, as amended

SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations,

2014, as amended

SEBI Insider Trading Regulations,

1992

The Securities and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 1992, as amended

SEBI Insider Trading Regulations,

2015

The Securities and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 2015, as amended.

SEBI Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015, as amended.

22

Term Description

SEBI ICDR Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as

amended

SEBI Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011, as amended

Securities Act The United States Securities Act of 1933, as amended

SENSEX Index of 30 stocks traded on the BSE representing a sample of large and liquid listed

companies.

SEZ Special Economic Zone

SGST State Goods and Services Tax

Stock Exchanges The BSE and the NSE, taken together

STT Securities Transaction Tax

Supreme Court The Supreme Court of India

UK United Kingdom

U.S.A/ U.S./ United States United States of America

USD/ U.S.$/ U.S. Dollar United States Dollars, the legal currency of the United States.

U.S. GAAP Generally accepted accounting principles in the United States of America

VCF A Venture Capital Fund as defined and registered with SEBI under the Securities and

Exchange Board of India (Alternative Investment Funds) Regulations, 2012 or the

erstwhile Securities and Exchange Board of India (Venture Capital Funds) Regulations,

1996, as the case may be

w.e.f With effect from

Unless the content otherwise requires, the words and expressions used but not defined in this Preliminary Placement

Document will have the same meaning as assigned to such terms under the Companies Act, SEBI ICDR Regulations,

the SEBI Act, the SCRA, the Depositories Act and the rules and regulations made thereunder.

Notwithstanding the foregoing, terms specifically defined in this Preliminary Placement Document, shall have the

meanings given to such terms in the sections where specifically defined.

23

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES

ACT, 2013 AND THE RULES MADE THEREUNDER

The table below sets out the disclosure requirements as provided in Form PAS-4 and the relevant pages in this

Preliminary Placement Document where these disclosures, to the extent applicable, have been provided.

S. No. Disclosure Requirements

Relevant Page of

this Preliminary

Placement

Document

1. GENERAL INFORMATION

a. Name, address, website and other contact details of the Company indicating both

Registered Office and Corporate Office

Cover Page, 202

b. Date of incorporation of the Company Cover Page, 202

c. Business carried on by the Company and its subsidiaries with the details of branches or

units, if any

116

d. Brief particulars of the management of the Company 137

e. Names, addresses, DIN and occupations of the directors 137

f. Management’s perception of risk factors 37

g. Details of default, if any, including therein the amount involved, duration of default

and present status, in repayment of –

i) statutory dues 200

ii) debentures and interest thereon 200

iii) deposits and interest thereon 200

iv) loan from any bank or financial institution and interest thereon 200

h. Names, designation, address and phone number, email ID of the nodal/ compliance

officer of the Company, if any, for the private placement offer process

Cover page, 202

2. PARTICULARS OF THE OFFER

a. Date of passing of board resolution 202

b. Date of passing of resolution in the general meeting, authorizing the offer of securities 202

c. Kinds of securities offered (i.e. whether share or debenture) and class of security 30

d. Price at which the security is being offered including the premium, if any, along with

justification of the price

Cover page, 30

e. Name and address of the valuer who performed valuation of the security offered Not applicable

f. Amount which the Company intends to raise by way of securities Cover Page

g. Terms of raising of securities: Not applicable

• Duration, if applicable Not applicable

• Rate of dividend or Rate of Interest Not applicable

• Mode of payment Not applicable

• Repayment Not applicable

h. Proposed time schedule for which the offer letter is valid 152

i. Purposes and objects of the offer 71

j. Contribution being made by the promoters or directors either as part of the offer or

separately in furtherance of such objects

71

k. Principle terms of assets charged as security, if applicable Not applicable

3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,

LITIGATION ETC.

a. Any financial or other material interest of the directors, promoters or key managerial

personnel in the offer and the effect of such interest in so far as it is different from the

interests of other persons

141, 146

b. Details of any litigation or legal action pending or taken by any Ministry or Department

of the Government or a statutory authority against any promoter of the offeree company

during the last three years immediately preceding the year of the circulation of the offer

letter and any direction issued by such Ministry or Department or statutory authority

upon conclusion of such litigation or legal action shall be disclosed

199

c. Remuneration of directors (during the current year and last three Financial Years) 144

d. Related party transactions entered during the last three Financial Years immediately

preceding the year of circulation of offer letter including with regard to loans made or,

guarantees given or securities provided

203

e. Summary of reservations or qualifications or adverse remarks of auditors in the last five

Financial Years immediately preceding the year of circulation of offer letter and of their

impact on the financial statements and financial position of the Company and the

corrective steps taken and proposed to be taken by the Company for each of the said

reservations or qualifications or adverse remark

90

24

S. No. Disclosure Requirements

Relevant Page of

this Preliminary

Placement

Document

f. Details of any inquiry, inspections or investigations initiated or conducted under the

Companies Act, 2013 or any previous company law in the last three years immediately

preceding the year of circulation of offer letter in the case of the Company and all of its

subsidiaries. Also, if there were any prosecutions filed (whether pending or not) fines

imposed, compounding of offences in the last three years immediately preceding the

year of the offer letter and if so, section-wise details thereof for the Company and all

of its subsidiaries

200

g. Details of acts of material frauds committed against the Company in the last three years,

if any, and if so, the action taken by the Company

199

4. FINANCIAL POSITION OF THE COMPANY

a. the capital structure of the Company in the following manner in a tabular form-

(i)

(a)

the authorised, issued, subscribed and paid up capital (number of securities, description

and aggregate nominal value)

73

(b) size of the present offer 73

(c) paid up capital 73

(A) after the offer 73

(B) after conversion of convertible instruments (if applicable) Not applicable

(d) share premium account (before and after the offer) 73

(ii) the details of the existing share capital of the issuer company in a tabular form,

indicating therein with regard to each allotment, the date of allotment, the number of

shares allotted, the face value of the shares allotted, the price and the form of

consideration

73

Provided that the issuer company shall also disclose the number and price at which each

of the allotments were made in the last one year preceding the date of the offer letter

separately indicating the allotments made for considerations other than cash and the

details of the consideration in each case

74

b. Profits of the Company, before and after making provision for tax, for the three

Financial Years immediately preceding the date of circulation of offer letter

32, 203

c. Dividends declared by the Company in respect of the said three financial years; interest

coverage ratio for last three years (Cash profit after tax plus interest paid/ interest paid)

75

d. A summary of the financial position of the Company as in the three audited balance

sheets immediately preceding the date of circulation of offer letter

32

e. Audited cash flow statement for the three years immediately preceding the date of

circulation of offer letter

34

f. Any change in accounting policies during the last three years and their effect on the

profits and the reserves of the Company

35

5. A DECLARATION BY THE DIRECTORS THAT -

a. the Company has complied with the provisions of the Act and the rules made thereunder 204, 205

b. the compliance with the Act and the rules does not imply that payment of dividend or

interest or repayment of debentures, if applicable, is guaranteed by the Central

Government

204, 205

c. the monies received under the offer shall be used only for the purposes and objects

indicated in the Offer letter

204, 205

25

SUMMARY OF BUSINESS

Overview

According to the All India Recycled Fibre & Yarn Manufacturers Association, we are the largest PET recycler in

India in terms of production capacity of manufacturers of Recycled Polyester Staple Fibre (“RPSF”) in India

(Source: CRISIL Report) engaged in the manufacturing of RPSF, dyed texturised yarn and spun yarn with our

advanced manufacturing facilities. Our products find applications in the manufacturing of textiles (t-shirts, body

warmers, dress material etc.), functional textiles (non-woven air filter fabric, geo textiles, carpets, car upholstery

etc.), filtration and fillings (for pillows, duvets, toys etc.). Our business is supported by our modern manufacturing

facilities and a robust PET waste collection network across the country and overseas.

Our Company commenced commercial production in Financial Year 1989-90 with dyeing of polyester filament yarn

at our manufacturing unit in Kanpur with an installed capacity of 360 MT per annum (MTPA) and 1,800 spindles to

produce dyed and fancy/ double yarn respectively. In Fiscal 1995, our Company diversified into manufacturing of

recycled polyester staple fibre (RPSF) from PET (polyethylene terephthalate) waste bottle with an initial capacity

of 6,000 MTPA in Kanpur. Over the years, we grew our production capacity from 6,000 TPA to 87,600 TPA of

RPSF. Additionally, our Company also has 7,200 TPA (25,920 spindles) capacity of recycled spun yarn and 3,000

TPA of dyed texturised/ twisted filament yarn.

In addition to the aforesaid installed manufacturing capacities, our Company has entered into an arrangement with

a yarn spinning unit in Haryana for converting the RPSF manufactured by our Company into Spun Yarn on job work

basis. This arrangement enables our Company in securing Spun Yarn of nearly 150 tons per month without putting

in any capex.

As of periods ending March 31, 2017, March 31, 2016 and March 31, 2015, RPSF has been the biggest contributor

to our revenue and have comprised 75.67%, 73.37% and 67.81% of our revenue from gross sale of products.

We presently operate through our three manufacturing units at Kanpur (Uttar Pradesh), Rudrapur (Uttarakhand), and

Bilaspur (Uttar Pradesh) having a cumulative production capacity of 97,800 tonnes per annum (TPA). Our Company

has recently increased its RPSF capacity by an additional 21,000 MTPA at its Bilaspur manufacturing facility which

has commenced commercial production since February 1, 2018. We believe that this additional expansion will

enable us to recycle more than one lakh tonnes of PET bottles, strengthening our market leadership position in the

organised recycling segment.

As of December 31, 2017, we have a network of over 200 dealers and suppliers for sourcing of raw materials for

our products from India and overseas jurisdictions like Bangladesh, Thailand, South Korea and the United Kingdom.

We have received ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007 quality certifications from BSCIC

with respect to (i) quality management system; (ii) environmental management system; and (iii) occupational health

and safety management system. We have received the Hohenstein Institute’s (Germany) authorisation to use the

Oeko-Tex mark, validating the highest ecological standards and have also received the compliance certificate for

global recycled standard (GRS) from the CU Inspection and Certifications India Private Limited. As of February 28,

2018, our employee base comprises of 2,887 personnel (including contractors and trainees) across our operations.

In addition to our regular employees, we also engage technical consultants from time to time to seek advice on

process control and ways of improving the quality of our products.

In fiscal 2015, 2016, 2017 and the nine months ended December 31, 2017, gross revenues from sale of products

were ₹6,275.10 million, ₹6,546.06 million, ₹6,842.98 million and ₹5,447.44 million, respectively. In fiscal 2015,

2016, 2017 and the nine months ended December 31, 2017, profit after tax were ₹230.67 million, ₹248.59 million,

₹299.44 million and ₹254.19 million, respectively. As of December 31, 2017, we had firm supply orders for 7,766

tonnes of RPSF from over 150 customers.

Competitive Strengths

With a legacy of more than two decades in the PET recycling industry, we believe that following are our principal

competitive strengths:

1. Robust track record and large-scale operations in the PET recycling industry

26

Our Company having an existing installed capacity of 1,08,600 MTPA for RPSF (out of which 21,000 MTPA started

in February 2018) is the largest PET recycler in India in terms of production capacity of manufacturers of Recycled

Polyester Staple Fibre (“RPSF”) in India (Source: CRISIL Report). Supported by its large scale of operations which

results in economies of scale, our Company has demonstrated healthy and stable profitability over the years. Besides,

our Company has also demonstrated its ability to prevent a sharp decline in contribution margins in times of pressure

on RPSF realisations by reducing our raw material procurement cost. During Financial Year 2017, our Company

processed 4.52 billion PET bottles, which we believe is a domestic record in the PET recycling industry.

We have been able to maintain our leadership position in RPSF segment on account of sizable capacity and

diversified product portfolios. Besides our Company being the largest RPSF player in terms of production capacity,

with the commissioning of our 7,200 MTPA spun yarn facility at Bilaspur (Uttar Pradesh) in Financial Year 2014,

we started manufacturing spun yarn in-house which was done on job work basis earlier. Post commissioning of spun

yarn facility, we have moved up the value chain by converting PET bottles to PET flakes and making fibre and yarn

from PET flakes.

Our early entry in a low penetrated market has helped us to grow with stability and capture the PET recycling value

chain. We increased our RPSF manufacturing capacity by 121.21% from 39,600 MTPA in Financial Year 2009 to

87,600 MTPA in Financial Year 2015 and the cumulative capacity utilization of our manufacturing plants is 89% in

2017. We believe that, our modern technology machinery yields us better realization as quality is comparable with

virgin polyester. We have also expanded our RPSF capacity at Bilaspur by 21,000 MTPA in February 2018, which

will further add to our strength. Our higher capacity will lead to reduction in fixed manufacturing costs and better

inventory management.

With the track record of over two decades in the industry, our Company has established a strong procurement

network as well as a reasonably diversified client base. While the supplier network has helped our Company get

seamless supplies for its enhanced capacity over the years, steady demand from the established client base has

facilitated satisfactory capacity utilisation levels and scale of operations.

2. Strong PET waste supply network

The key entry barrier in PET recycling business is the sourcing of PET waste, which is required to maintain an

optimal scale of the business. As on December 31, 2017, we had more than 200 vendors and suppliers in various

strategic locations within India and overseas. Our collection network enables the supply of PET waste from various

sources, ranging from post-consumer scrap to industrial scrap. These vendors collect the used PET bottle and supply

it our manufacturing facilities after sorting and in flakes/bale form. Our collection network helps us to mobilise

nearly 250 tonnes of PET waste per day, translating into adequate raw material availability to feed our production

lines.

3. Relationship with established players in industry

Our customer base includes a diverse set of industries including OEMs to automobile industry, geo-textiles, medical

and packaging, textiles and non-woven applications. Our Company has more than 400 customers in its portfolio

having annual sale of ₹1,000,000 or more. Our customers base is widespread and with evolving industry and market

trends, we believe that our products have found wide acceptance in the markets across India. We also believe that

our customers have benefited from the high-quality products made available to them at reasonable prices. We further

believe that our Company is well poised to benefit from this strong relationship with the industry players enabling

our Company to provide better services to its customers. Our Company constantly improves its product quality for

meeting customer quality requirements and hence ensures enhancement of value to customers.

Our Company has sales offices at New Delhi, Mumbai, Ludhiana, Panipat, Jaipur, Kolkata and Kanpur which

manages relationships with the customers and helps in finding new customers. We are exporting nearly 5.89% of

our revenue from operations to Belgium, Spain, Italy, Morocco, Bangladesh, Turkey, Portugal, China, Greece and

Nepal. Our top five (5) customers contributed around 14% of our revenues from operations for the period ended

March 31, 2017, thus indicating a fairly diversified customer profile and non-reliance on a few customers for our

revenues. Further, our Company sell our products to various customers in the textile industry and also to wholesalers

and traders.

4. Stable financial position indicating consistent improvement in total operating income, comfortable

profitability margins, solvency indicators and liquidity profile

27

We continue to report healthy and consistent operating profit margins, which results in comfortable accruals in

relation to our debt obligations, as reflected in the DSCR (debt service coverage ratio) of 1.4 times in Financial Year

2017. Our liquidity profile continues to be stable as reflected in the average utilisation of fund-based limits at 50-

60% during the Financial Year 2017. We have been assigned (i) a credit rating of CARE A- (Single A Minus) in

relation to its long-term bank facilities (aggregating to ₹ 259.60 crores) indicating “Stable” outlook; and (ii) a credit

rating of CARE A2+ (A Two Plus) in relation to its short-term bank facilities (aggregating to ₹ 11.80 crores) vide

letter bearing No. CARE/DRO/RR/2017-18/1492 dated June 29, 2017 taking into account, inter-alia, (a) the

improvement in our PBILDT margins by 130 bps to 11.41% during FY 16 (PY: 10.11%) due to fall in raw material

prices and stabilization of expanded recycling capacity of RPSF at Bilaspur (21000 TPA); (b) capital structure and

liquidity profile marked by efficient management of the working capital cycle by using its cash accruals to fund the

working capital requirements with average utilization at around 50% in twelve (12) months ended December 2016;

(c) the experience of the promoters and the management team in RPSF business; (d) integrated operations;

(e)efficient raw material procurement and (f) product distribution network. ICRA has also conveyed its rating at A-

(ICRA A minus) with a stable outlook and assigned A2+ (ICRA A two plus) to the line of credit of our Company

vide its communication D/RAT/2017-18/G-52/5 dated March 30, 2018.

Further, we have delivered consistent growth over the preceding five Financial Years both in terms of financial and

operational metrics. Our net sales, have grown at a CAGR of 11.50% from ₹4,350.49 million for the Financial Year

2013 to ₹6,725.22 million for the Financial Year 2017 and our profit after tax for the year, has grown at a CAGR of

5.56% from ₹241.20 million for the Financial Year 2013 to ₹299.44 million for the Financial Year 2017. Our strong

balance sheet and positive operating cash flows enable us to fund our strategic initiatives, pursue opportunities for

growth and better manage unanticipated cash flow variations. We strive to maintain a robust financial position with

emphasis on having a strong balance sheet and increased profitability.

The table below sets forth some of the financial indicators for Financial Years 2015, 2016, 2017 and the nine months

period ended December 31, 2017: (in ₹ million)

Particulars Financial Year

2015

Financial Year

2016

Financial Year

2017

Nine months period

ended December 31, 2017

Net Sales 6219.5 6464.9 6725.2 5447.4(1)

EBITDA

(excluding other income) 646.8 752.9 815.3 630.6

EBITDA margin 10.4% 11.6% 12.1% 11.6%

PAT 230.7 248.6 299.4 254.2

PAT margin 3.7% 3.8% 4.5% 4.7%

RONW (%) 13.0% 12.4% 13.0% 10.1%(2)

Dividend per share ₹1.20 per Equity

Share

₹1.20 per Equity

Share

₹1.20 per Equity

Share -

(1) excise duty amounting to ₹36.38 million till 30th June, 2017 has not been deducted from Sales as the same has been shown under Expenses as per Ind-AS.

(2) amount not annualized

For further details on a comparative analysis of our financial position and income from operations, please refer to

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 76.

5. Technical Strength to develop cost effective formulations backed by our strong research and development

team

With more than hundred (100) product variants in our Company’s portfolio, we have the expertise to develop

products that meet the requirements of our downstream partners thereby making product development a significant

and critical capability of our Company. With more than 20 (twenty) member R&D team working on new product

development/quality improvement, the focus of our Company continues to be on maintaining high levels of quality

in products through research and technology development across processes, products and applications. We believe

that our strong research and development team and usage of advanced technology will help us increase our margins

on the products we sell.

6. Experienced senior leadership and technically skilled and motivated employees

We believe that our qualified and experienced senior management team, technically skilled employee base and

established Promoter background have contributed to the growth of our operations and the development of in-house

processes and competencies.

28

Our Chairman and Managing Director, Shyam Sunder Sharmma has around 53 years of experience in the industry

in which we operate. Our senior management team consists of technically qualified and highly experienced

professionals in the industry we operate in. They bring with them, extensive experience in sales and marketing, order

management, design and engineering, testing, purchase, operations, human resources, finance and after sales

services. We believe that our management framework allows us to maintain the flexibility to address the markets

and the geographies we operate in. We believe in high standards of ethical integrity and we ensure that all our

business functions are carried out in a transparent manner. For further information on our key managerial personnel,

please refer to “Board of Directors and Senior Management” on page 137.

Our human resources policies are aimed towards recruiting and retaining talented employees and facilitating their

integration into our Company and encouraging development of their skills. We believe the strength and quality of

our technically skilled team and the nature of our organizational structure has been instrumental in implementing

our business and growth strategies. We believe that our talented and motivated employees have been key to our

success so far and will further enable us to capitalize on future growth opportunities.

Our Strategies

We intend to grow our business by implementing the following strategies:

1. Increase margins and profitability on the sale of our products

Our Company derives about thirty percent (30%) of its revenue from low volume high margin products. Developing

such products, however require significant capital expenditure and we have invested substantially in capacity

expansion for manufacturing products that are margin accretive. We are one of the few RPSF manufacturers in the

industry to manufacture 0.90 to 70 denier RPSF in more than 200 colors/ shades customised around customer needs

and preferences and plan to continue to make constant efforts towards development of new value-added products

which shall be further supported by our ongoing expansion in order to reduce our dependency on high volume low

margin products. Moving towards the strategy of increasing the margins on our products, our Company has launched

its own RPSF brand “Rivivere” which is likely to have a positive impact in creation of its own brand and getting

acceptability of its products with a larger user base along with giving us a higher margin in comparison to the

traditional RPSF. In order to increase our margins and profitability, we also intend to establish long term connection

with overseas suppliers for constant supply of cheaper raw material.

2. Capitalise on market and regulatory driven opportunities

With increased Government focus on domestic manufacturing with the Government’s ‘Make in India’ programme,

the demand for PET resins are further expected to increase as domestic manufacturing is being encouraged in India,

which shall have a beneficial effect on the business operations of our Company. Further, the increased use of PET

resin would lead to generation of more scrap which would further provide an impetus and augment the need for

recycling. PET resins has witnessed robust growth over last five years -increasing usage in various end user

industries such as packaging & bottling, automobile, medical packaging, electrical and electronics, The increased

demand has been driven by replacement of traditional packaging materials like glass, aluminium, paper, metal and

growth in FMCG sector.

The Government of India introduced the plastic waste management rule recently with an extended responsibility for

recycling plastic scraps on all the manufacturers, producers and bulk generators of plastic. This development is

expected to have a positive impact on the industry in the near future. For instance, our Company had tied up for

collecting industrial waste with a large beverage bottling company and presently also working with them in

collection of post-consumer waste. The Plastic Waste Management Rules, 2016 issued by the Ministry of

Environment, Forest and Climate Change puts extended responsibility for collection of plastic scraps on

manufacturers, producers and bulk generators. This shall ensure increased collection of plastic waste, greater

investments in waste collection processes, higher income for waste collectors/ rag pickers, elimination of

intermediaries and transformation of plastic scrap business into organized market. Sensing the opportunity put forth

by new regulations for handling the plastic scrap, we are working towards strengthening and widening our direct

and indirect collection network across the country. With evolving industry and market trends coupled with changing

regulations, our Company stays on-course and adapt to make its business competitive.

Further, in October 2017, China banned import of all kind of PET bottle scrap and washed PET flakes into the

country. China has historically been the pioneer in PET recycling industry across the world and has been one of the

biggest importers of PET waste. Due to this new development, the PET waste suppliers will look out for alternate

29

procurer of PET waste and We are optimally placed to capitalise on these opportunities. Also, with increasing

environment awareness the preference for traditional wet dyeing of fibres and yarns is being replaced by dope dyed

RPSF and We are working continuously towards developing cost effective and environment friendly variants of

dope dyed shades to capitalize on the opportunity.

3. Targeting new customer accounts and expanding existing customer business

We intend to increase our sales and customer penetration by targeting new customer accounts and expanding our

existing customer accounts in our principal markets by offering our entire range of products. Towards this objective,

we seek to continue to leverage our relationships with our existing customer, who, presently, may be sourcing the

products we manufacture from other vendors. We believe that the recently increased capacity of additional 21,000

MTPA at our Bilaspur manufacturing facility shall also provide us more flexibility in terms of product profile and

further reduce lead time required for timely servicing our customer demands. While we believe our existing

customers provide us with the necessary drivers to generate growth, we intend to continue to focus on new

customers. We also intend to leverage our competencies to increase exports of our products overseas. We constantly

improve our product quality for meeting stringent customer requirements thereby ensuring enhancement value to

our customers. We also believe that we will be able to capitalize on our reputation for quality, consistent performance

and customer satisfaction in our existing markets and product verticals to target new customers.

4. Continue to enhance our brand

We believe that our brand is synonymous with credibility, reliability and efficiency in the industry in which we

operate. We wish to continue to enhance our brand value by continuously delivering quality product and services to

our existing and prospective customers so that we become the preferred RPSF and spun yarn supplier for all our

existing and prospective customers thereby increasing our market share. In order to capitalize on preference for

environmental positives products, our Company is also focussing on large production houses and brands which are

looking for sustainable and quality raw materials for the fabrics and garments being sold by them. Moving towards

this strategy our Company has launched its own brand “Rivivere” for its products which is likely to have a positive

impact in creation of its own brand and getting acceptability of its products with a larger user base.

5. Enhancing Research Based Product Portfolio

We believe that our emphasis on R&D shall be critical to our success and a differentiating factor from our

competitors. We undertake dedicated R&D in our existing products primarily with a focus to improve yields and

process efficiencies. With more than hundred (100) product variants in our Company’s portfolio, we have the

expertise to develop products that meet the requirements of our downstream partners thereby making product

development a significant and critical capability of our Company. Further, with more than twenty (20) member R&D

team working on new product development/quality improvement, the focus of our Company has always been and

shall be so on a going forward basis to maintain high levels of quality in products through modern research and

technology development across processes, products and applications.

6. To increase Spun yarn production on Job work basis

With a view to improve the profitability, our Company is focusing on getting its RPSF converted into Spun Yarn on

job basis from other yarn spinning units. The strategy has been thought of is to keep the asset light model. To this

end, our Company has already executed an agreement with a spinning unit in Haryana, which is producing nearly

150 tons per month of spun yarn for us on job work. On a going forward basis, our Company shall be focussing on

identification of more such units for utilizing their idle capacity to improve the profitability of its business operations.

30

SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and

is qualified in its entirety by, the more detailed information appearing elsewhere in this Preliminary Placement

Document, including the sections “Risk Factors”, “Use of Proceeds”, “Placement and Lock-up”, “Issue Procedure”

and “Description of the Equity Shares” beginning on pages 37, 71, 163, 152 and 177, respectively.

Issuer Ganesha Ecosphere Limited

Face Value ₹10 per equity share

Issue Size Issue of up to [●] Equity Shares, aggregating to ₹[●] million.

A minimum of 10% of the Issue Size i.e. up to [●] Equity Shares shall be

available for Allocation to Mutual Funds only, and up to [●] Equity Shares

shall be available for Allocation to all QIBs, including Mutual Funds.

In case of under-subscription or no subscription in the portion available to

Allocation only to Mutual Funds, such portion or part thereof may be Allotted

to other eligible QIBs.

Dividend See “Description of Equity Shares”, “Dividends” and “Statement of Tax

Benefits” beginning on pages 177, 75 and 181 respectively.

Indian Taxation See “Statement of Tax Benefits” beginning on page 181.

Floor Price ₹396.13 per Equity Share. In terms of the SEBI ICDR Regulations, the Issue

Price cannot be lower than the Floor Price. Our Company may offer a discount

of not more than 5% on the Floor Price in terms of Regulation 85 of the SEBI

ICDR Regulations.

Issue Price ₹[●] per Equity Share

Eligible Investors QIBs as defined in regulation 2(1)(zd) of the SEBI ICDR Regulations and not

excluded pursuant to Regulation 86 of the SEBI ICDR Regulations, to whom

this Preliminary Placement Document and the Bid Cum Application Form is

circulated and who are eligible to bid and participate in the Issue. The Equity

Shares are being offered and sold only outside the United States in offshore

transactions in reliance on Regulation S. The list of QIBs to whom this

Preliminary Placement Document and Application Form is delivered shall be

determined by the Book Running Lead Manager in consultation with our

Company, at its discretion. For further details, see “Issue Procedure –

Qualified Institutional Buyers” on page 156 and “Transfer Restrictions”

beginning on pages 171.

Date of Board Resolution

August 12, 2017

Date of Shareholders’

Resolution passed in the Annual

General Meeting of the

Company

September 25, 2017

Equity Shares paid-up and

outstanding immediately prior

to the Issue

19,176,877 Equity Shares

Equity Shares paid-up and

outstanding immediately after

the Issue

[●] Equity Shares

Listing Our Company has obtained in-principle approvals, dated May 2, 2018 from

the BSE and the NSE, in terms of Regulation 28(1) of the SEBI Listing

31

Regulations, for listing of the Equity Shares issued pursuant to the Issue. Our

Company will make applications to each of the Stock Exchanges to obtain

final listing and trading approvals for the Equity Shares after Allotment and

after the credit of Equity Shares to the relevant beneficiary accounts with the

Depository Participants, respectively.

Lock-up See “Placement and Lock-up” on page 163.

Promoter Lock-up

See “Placement and Lock-up” on page 163.

Transferability Restrictions The Equity Shares being Allotted pursuant to this Issue shall not be sold for a

period of one year from the date of Allotment, except on the floor of the Stock

Exchanges. The Equity Shares are also subject to certain other restrictions on

transferability. For further restrictions, see the section “Transfer Restrictions”

beginning on page 171.

Use of Proceeds The gross proceeds from the Issue will be approximately ₹[●] million. See the

section “Use of Proceeds” on page 71.

Risk Factors See the section “Risk Factors” beginning on page 37 for a discussion of risks

you should consider before deciding whether to subscribe for the Equity

Shares.

Pay-In Date Last date specified in the CAN sent to the QIBs for payment of application

money.

Closing The Allotment of the Equity Shares offered pursuant to the Issue is expected

to be made on or about May 9, 2018 (the “Closing Date”).

Ranking

The Equity Shares being issued pursuant to the Issue shall be subject to the

provisions of the Memorandum of Association and Articles of Association

and shall rank pari passu in all respects with the existing Equity Shares,

including rights in respect of dividends.

The shareholders of our Company who hold Equity Shares as on the relevant

record date will be entitled to participate in dividends and other corporate

benefits, if any, declared by our Company after the Closing Date, in

compliance with the Companies Act, the SEBI Listing Regulations and other

applicable laws and regulations. Shareholders of our Company may attend and

vote in shareholders’ meetings in accordance with the provisions of the

Companies Act. See the section “Description of the Equity Shares” beginning

on page 177.

Minimum Application Size

The minimum value of offer or invitation to subscribe to each QIB is ₹20,000,

to be calculated at the face value of the Equity Shares.

Security Codes for the Equity

Shares

ISIN INE845D01014

BSE scrip code 514167

NSE symbol GANECOS

32

SUMMARY FINANCIAL INFORMATION

The following selected financial information is derived from and should be read in conjunction with, the Audited

Financial Statements prepared in accordance with Indian GAAP and the Unaudited Interim Financial Statements,

each included elsewhere in this Preliminary Placement Document. Please refer to “Management’s Discussion and

Analysis of Financial Condition and Results of Operations” on page 76 of this Preliminary Placement Document,

for further discussion and analysis of the Audited Financial Statements and the Unaudited Interim Financial

Statements.

The financial information included in this Preliminary Placement Document does not reflect our Company’s results

of operations, financial position and cash flows for the future and its past operating results are no guarantee of its

future operating performance.

SELECTED FINANCIAL INFORMATION FROM THE AUDITED FINANCIAL STATEMENTS FOR

THE YEAR ENDING MARCH 31, 2017, MARCH 31, 2016 AND MARCH 31, 2015

Summary statement of Balance Sheet as at March 31, 2017, March 31, 2016 and March 31, 2015*

(in ₹ Lakhs) STATEMENT OF ASSETS AND LIABILITIES 2017 2016 2015

A. EQUITY AND LIABILITIES

1 Shareholders' funds

(a) Share Capital 1,917.69 1,917.69 4,727.60

(b) Reserves and Surplus 21,090.93 18,100.35 12,993.14

(c) Money received against Share Warrants 0.00 0.00 71.25

Sub-total - Shareholders' Funds 23,008.62 20,018.04 17,791.99

2 Share Application Money pending Allotment 0 0 0

3 Non-Current Liabilities

(a) Long-Term Borrowings 3,676.56 7,174.80 8,691.28

(b) Deferred Tax Liabilities (net) 1,425.50 1,216.40 9,62.73

(c) Other Long-Term Liabilities 31.80 79.73 83.23

(d) Long-Term Provisions 407.28 320.80 264.67

Sub-total - Non-Current Liabilities 5,541.14 8,791.73 10,001.91

4 Current Liabilities

(a) Short-Term Borrowings 6,252.93 4,647.62 7,963.20

(b) Trade Payables 3,386.15 2,172.98 3,301.56

(c) Other Current Liabilities 6,233.55 5,176.18 4,588.64

(d) Short-Term Provisions 223.46 426.59 551.92

Sub-total - Current Liabilities 16,096.09 12,423.37 16,405.32

TOTAL - EQUITY AND LIABILITIES 44,645.85 41,233.14 44,199.22

B. ASSETS

1 Non-Current Assets

(a) Fixed Assets:

(i) Tangible Assets 23,860.20 25,564.95 25,772.89

(ii) Intangible Assets 18.97 19.29 19.29

(iii) Capital Work-in-Progress 965.32 53.99 978.55

(iv) Intangible Assets Under Development 22.81 11.40 0.00

(b) Non-Current Investments 0.00 0.00 0.00

(c) Deferred Tax Assets (net) 0.00 0.00 0.00

(d) Long-Term Loans and Advances 998.87 250.84 272.69

(e) Other Non-Current Assets 36.40 31.46 35.03

Sub-total - Non-Current Assets 25,902.57 25,931.93 27,078.45

2 Current Assets

(a) Current Investments 0.00 0.00 0.00

(b) Inventories 9,225.41 6,926.88 8,234.28

(c) Trade Receivables 5,605.50 4,973.54 4,073.54

(d) Cash and Bank Balances 1,118.10 377.64 1,595.25

(e) Short-Term Loans and Advances 2,649.36 2,787.89 2,797.69

(f) Other Current Assets 144.91 235.26 420.01

Sub-total - Current Assets 18,743.28 15,301.21 17,120.77

TOTAL - ASSETS 44,645.85 41,233.14 44,199.22

* as per the audited financial statements of our Company, prepared in accordance with the accounting standards

33

notified under section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules,

2014 and Companies (Accounting Standards) Rules, 2006.

Summary statement of Profit and Loss for the Financial Year ended March 31, 2017, March 31, 2016 and

March 31, 2015*

(in ₹ lakhs)

Particulars For the year ended March 31,

2017 2016 2015

1 Revenue from Operations

(a) From Sale of Products 68,429.84 65,460.61 62,751.05

(b) Other Operating Revenues 165.55 79.39 130.12

Total Revenue from Operations 68,595.39 65,540.00 62,881.17

2 Other Income 225.51 146.56 170.58

3 Total Revenue (1+2) 68,820.90 65,686.56 63,051.75

4 Expenses

(a) Cost of materials consumed 41,124.47 39,059.57 39,928.50

(b) Purchases of stock-in-trade 1,917.31 1,024.97 1,636.47

(c) Changes in inventories of finished goods, work-

in-progress and stock-in-trade (599.22) 843.50 10.70

(d) Employee benefits expense 4,402.59 3,932.13 3,366.61

(e) Finance Cost 1,487.12 1,986.22 1,967.25

(f) Depreciation and Amortisation expense 2,043.12 2,104.90 1,887.22

(g) Power & Fuel 7,241.98 6,916.70 5,704.43

(h) Excise Duty 1,177.66 811.41 556.37

(i) Other expenses 5,403.52 5,569.45 5,380.05

Total Expenses 64,198.55 62,248.85 60,437.60

5 Profit before Exceptional and Extraordinary

Items and Tax (3-4) 4,622.35 3,437.71 2,614.15

6 Exceptional Items 0.00 0.00 0.00

7 Profit before Extraordinary Items and Tax (5 ±

6) 4,622.35 3437.71 2,614.15

8 Extraordinary Items 0.00 0.00 0.00

9 Profit before Tax (7 ± 8) 4,622.35 3,437.71 2,614.15

10 Tax Expense:

a) Current Tax (net of MAT Credit) (1,418.84) (698.12) 0.00

b) Deferred Tax (209.10) (253.67)

(307.48)

11 Profit for the year(9 ± 10) 2,994.41 2,485.92 2,306.67

12 Paid-up Equity Share Capital

(Face Value ₹10/- per share) 1,917.69 1,917.69 1,620.10

13 Reserve excluding Revaluation Reserves 21,090.93 18,100.35 12,993.14

14 (i) Earnings Per Share of ₹10/-each

(a) Basic EPS 15.59 12.84 13.36

(b) Diluted EPS 15.59 12.84 13.34


notified under section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts)

Rules, 2014 and Companies (Accounting Standards) Rules, 2006.

34

Summary Cash flow statement for the Financial Year ended March 31, 2017, March 31, 2016 and March 31,

2015*

(in ₹ lakhs)

Particulars For the year ended March 31,

2017 2016 2015

A. CASH FLOW FROM OPERATING ACTIVITIES:

Net Profit before tax as per Statement of Profit and Loss 4,622.35 3,437.71 2,614.15

Adjusted for:

Prior Period Items (Net) 5.58 1.01 11.16

Provision for Doubtful Debts/Advances 39.04 37.32 32.14

Provision for Doubtful Debts Written Back (15.94) (15.42) (11.66)

Loss on fixed assets Sold/Discarded 0.78 25.90 4.96

Depreciation/Amortisation 2,043.12 2,104.90 1,887.22

Finance Costs 1,487.12 1,986.22 1,967.25

Cash Flow from Operating Activities 3,559.70 4,139.93 3,891.07

Operating Profit before Working Capital Changes 8,182.05 7,577.64 6,505.22

Adjusted for:

Decrease/(Increase) in Trade & Other Receivables (898.96) 441.81 (382.95)

Decrease/ (Increase) in Inventories (2,298.52) 1,307.40 (2,159.63)

(Decrease)/Increase in Trade & Other Payables 1,887.65 (960.54) 546.06

(1,309.83) 788.67 (1,996.52)

Cash Generated from Operations 6,872.22 8,366.31 4,508.71

Prior Period Items (Net) (5.57) (1.00) (11.16)

Direct Taxes Paid (926.72) (687.08) (602.56)

Net Cash From Operating Activities 5,939.93 7,678.23 3,894.98

B. CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of Fixed Assets (2,013.47) (1,038.83) (2,834.10)

Proceeds from sale of Fixed Assets 5.37 42.12 416.89

Net Cash Used in Investing Activities (2,008.10) (996.71) (2,417.21)

C. CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from/(Repayment) of Long Term Borrowings (Net) (3,031.81) (1,039.93) (3,282.66)

Proceeds from/(Repayment) of Short Term Borrowings (Net) 1,605.31 (3,315.58) 313.82

Proceeds from compulsorily Convertible Preference Shares 0.00 0.00 3,107.50

Conversion of share warrants 0.00 213.75 487.20

Money received against share warrants 0.00 0.00 71.25

Share Issue expenses 0.00 0.00 (167.82)

Finance Charges (1,526.01) (1,986.42) (2,280.89)

Interim Dividend paid on Preference Shares 0.00 (126.68) 0.00

Dividend paid on Equity shares (230.12) (227.12) (182.23)

Dividend paid on Preference Shares 0.00 (183.90) 0.00

Tax on Dividend Distribution (46.85) (109.46) (30.97)

NETCASH FLOW FROM FINANCING ACTIVITIES: (3,229.48) (6,775.34) (1,964.80)

Net Increase in Cash and Cash Equivalents (A+B+C) 702.35 (93.82) (487.03)

Opening Balance of Cash and Cash Equivalents 219.02 312.83 799.85

Closing Balance of Cash and Cash Equivalents 921.37 219.01 312.82




35

UNAUDITED INTERIM FINANCIAL RESULTS

Summary statement of Profit and Loss for the nine months period ending December 31, 2017 and December

31, 2016*

(in ₹ lakhs)

Particulars For the nine months ended

December 31,

2017 2016

I. Revenue from Operations 54,596.12 49,831.87

II. Other Income 99.85 190.26

III. Total income (I+II) 54,695.97 50,022.13

IV. Expenses

Cost of materials consumed 33,741.85 29,826.56

Purchases of stock-in-trade 1,506.06 1,272.11

Changes in inventories of finished goods, Stock-in -Trade and

work-in-progress

(869.05) (404.44)

Excise duty on sale of goods 363.79 743.83

Employee benefits expense 3,429.06 3,187.66

Finance costs 976.81 1,195.55

Depreciation and amortization expenses 1,458.34 1,534.89

Power & fuel 5,643.29 5,486.62

Other expenses 4,577.43 3,876.32

Total expenses (IV) 50,827.58 46,719.10

V. Profit before exceptional items and tax (III-IV) 3,868.39 3,303.03

VI. Exceptional Items - -

VII. Profit before tax (V-VI) 3,868.39 3,303.03

VIII. ........................................ Tax expense:

(1) Current tax 1,234.68 967.17

(2) Deferred tax 94.32 185.62

IX. Profit for the period (VII-VIII) 2,539.39 2,150.24

X. Other Comprehensive Income

A (i) Items that will not be reclassified to profit or loss

Re-measurement gains on defined benefit obligations 2.54 2.54

(ii) Income tax relating to Items that will not be reclassified

to profit or loss

- -

B (i) Items that will be reclassified to profit or loss - -

(ii) Income tax relating to Items that will be reclassified to

profit or loss

- -

XI. Total Comprehensive Income for the period (IX + X)

(Comprising Profit and Other Comprehensive Income for the

period)

2,541.93 2,152.78

XII. Paid-up equity share capital (Face value of ₹10/-each) 1,917.69 1,917.69

XIII. ........................................ Earnings per equity share (not annualized)

(1) Basic 13.25 11.23

(2) Diluted 13.25 11.23

* as per the unaudited financial results of our Company, subjected to limited review and prepared in accordance

with Ind-AS.

Changes in the accounting policies

Other than as required under the applicable laws and as disclosed below, there have been no changes in our

accounting policies during the last three years:

Financial Year Previous Policy Revised Policy

March 31, 2015 Depreciation on fixed assets is provided on

“Written Down Value Method (WDV)” at the

rates and in the manner specified in Schedule

Depreciation on fixed assets is provided on “Written Down

Value Method (WDV)” except in respect of Building and

Plant & Machinery at Kanpur Unit and Temra (Bilaspur)

36

XIV to the Companies Act, 1956, except in

respect of Building and Plant & Machinery at

Kanpur Unit and Spinning Division at

Bilaspur where depreciation is provided on

“Straight Line Method (SLM)”.

where depreciation is provided on “Straight Line Method

(SLM)”.

Effective April 1, 2014, Depreciation is provided based on

useful life of the assets as provided in Schedule II to the

Companies Act, 2013 except in respect of some assets,

where useful lives different than those prescribed in

Schedule II are used.

March 31, 2015 Individual assets, whose actual cost does not

exceed Rs. 5,000 are depreciated fully within

the year of acquisition.

Individual assets, whose actual cost does not exceed Rs.

10,000 are depreciated fully within the year of acquisition.

37

RISK FACTORS

An investment in Equity Shares involves a high degree of risk. Investors should carefully consider all the information

contained in this Preliminary Placement Document, including the risks and uncertainties described below, before

making an investment decision in the Equity Shares.

The risks described below are those that we consider to be most significant to our business, results of operations

and financial conditions at the date of this Preliminary Placement Document. However, they are not the only risks

and uncertainties relevant to us or the Equity Shares or the industries in which we currently operate. Additional

risks and uncertainties, not presently known to us or that we currently deem immaterial may also impair our business

prospects, results of operations and financial condition. In order to obtain a complete understanding about us,

investors should read this section in conjunction with “Our Business”, “Industry Overview” and “Management’s

Discussion and Analysis of Financial Condition and Results of Operations”, as well as the other financial

information included in this Preliminary Placement Document. If any of the risks described below, or other risks

that are not currently known or are currently deemed immaterial actually occur, our business prospects, results of

operations and financial condition could be adversely affected, the trading price of the Equity Shares could decline,

and investors may lose all or part of the value of their investment. Any potential investor in the Equity Shares should

pay particular attention to the fact that we are subject to a regulatory environment in India which may differ

significantly from that in other jurisdictions. The financial and other related implications of risks concerned,

wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are certain risk

factors where the financial impact is not quantifiable and, therefore, cannot be disclosed in such risk factors. In

making an investment decision, prospective investors must rely on their own examination of us on a consolidated

basis and the terms of the Issue, including the merits and risks involved. Investors should consult their respective

tax, financial and legal advisors about the particular consequences of an investment in this Issue.

This Preliminary Placement Document also contains forward-looking statements that involve risks and

uncertainties. Our results could differ materially from such forward-looking statements as a result of certain factors

including the considerations described below and elsewhere in this Preliminary Placement Document. For further

information, see “Forward-Looking Statements” on page 14.

Unless otherwise indicated, the financial information included herein is based on our Financial Statements for

Fiscal 2015, Fiscal 2016 and Fiscal 2017 and our Unaudited Financial Results for the nine months period ended

December 31, 2017, included in this Preliminary Placement Document. For further information, see “Financial

Information” on page 203.

RISKS ASSOCIATED WITH OUR BUSINESS

1. As a manufacturing company, any shortfall in the supply of our raw materials may adversely affect the pricing

and supply of our products.

Sourcing of raw materials is the key entry barrier for our business. The primary raw material used in our major

manufacturing operations is PET bottle waste and scrap. Our Company consumed 4.52 billion, 4.43 billion and 3.76

billion pet bottles during FY 2017, FY 2016 and FY 2015 respectively in its manufacturing operations. As of

December 31, 2017, we had a network of over two hundred (200) dealers and suppliers for sourcing of raw materials

for our products from India and overseas jurisdictions like Bangladesh, Thailand, South Korea and U.K. These

vendors collect the used PET bottle directly from rag-packers and transfer the material to our Company’s

manufacturing units after sorting and in flakes/bale form. Apart from PET waste, our Company also consumes, in

small proportion, POY waste, off-grade chips, lumps, wiry, etc. generating from virgin polyester plants. Besides

employing the traditional methods, our Company intends to engage into long term arrangements with overseas

suppliers for collection of PET scrap. The prices of the raw materials used by our Company are though volatile but

in the absence of any other significant use, apart from utilization in the RPSF manufacturing process, it provides our

Company the ability to negotiate input raw material prices in times of declining RPSF prices and thus ensuring stable

margins. However, any material shortage or interruption in the domestic or imported supply or deterioration in

quality of the raw materials due to natural causes or other factors could result in increased costs that we may not be

able to pass on to customers would adversely affect our business, results of operations and financial condition. For

instance, in October 2017, China banned import of all kind of PET bottle scrap and washed PET flakes into the

Country as a result of which most of the recycling capacities in China are facing shortage of raw material. There can

be no assurance, that India will not follow such policies, any change in the shortage of raw materials will lead to

increase in price of the raw materials for multiple reasons and any increase in the prices of the raw materials may

have an adverse effect on our business and a consequent negative impact on our business, financial condition and

results of operations. For example, if the price of PET bottle waste and scrap increases and we are not able to increase

38

the price of our finished products manufactured by us, then the margins for our finished products business will be

reduced along with the possibility of a market shift towards alternative products.

Further, an Original Application No. 15/2014 has been filed by Him Jagriti Uttaranchal Welfare Society against the

Union of India & Others before The National Green Tribunal, Principal Bench, New Delhi (“NGT”) praying for

imposition of a ban, inter alia, on the use of plastic packaging in food items, usage with respect to pharmaceuticals

and usage of PET bottles, the same being the primary raw material for manufacturing of recycled polyester staple

fibre. There can be no assurance that the decision of the NGT shall be in favour of the continuing business interests

of our Company and also there can be no assurance that the NGT shall not pass any interlocutory order(s) having

the direct or indirect effect of suspending the usage of PET bottles as a primary raw material for manufacturing of

recycled polyester staple fibre. In the event of the NGT passing any such final judgment or such interlocutory

order(s), our Company would be required to identify alternate sources for procuring similar raw material(s) for

manufacturing of recycled polyester staple fibre and there can be no assurance that such raw material(s) shall be of

equivalent or similar quality as PET Bottles. Further, there can be no assurance that our Company shall be in a

position to purchase such alternative raw material(s) at a price equivalent to or lesser than the prices at which our

Company has historically purchased or is currently purchasing and any increase in the price of the raw materials for

any reason whatsoever may have an adverse effect on our business and a consequent negative impact on our business,

financial condition and results of operations.

Our vendors and suppliers help us in procuring raw materials and majority of them have been associated with our

Company for more than three (3) years. There are no minimum committed volumes of raw materials that our vendors

and suppliers assure us. Any failure of our vendors and suppliers to arrange for raw materials in the necessary

quantities or as per our requirement with respect to schedule, quality, standard and specification, may adversely

affect our production processes, which may in turn result in a material adverse effect on our business, financial

condition and results of operations. Additionally, a material shortage in supply of the raw materials could result in

the failure to meet our sales obligations, which may in turn result in a loss of revenue, customers and cash flows.

Although we have not encountered any significant disruptions in the sourcing and/or supply of our raw materials,

we cannot assure you that such disruptions will not occur and/or we shall continue to be able to source raw materials

in a cost effective manner.

2. Due to availability of comparable products, we have limited ability to influence prices in the markets for our

products and generally are not able to protect our market position or pass on cost increases to our customers.

Our Company’s profitability is susceptible to volatility in Virgin Polyester Staple Fibre (VPSF) prices, particularly

in a declining price scenario. While RPSF realizations are driven by the movement in VPSF prices (which in turn

are driven by crude oil and cotton prices), our Company’s raw material (PET waste) cost is driven by its own demand

supply dynamics. Although, our Company has demonstrated its ability to lower its raw material procurement cost in

times of declining realizations, its ability to do so in a timely manner and on a consistent basis remain crucial for

profitability of our operations. Further, there has been a change in effective tax rates for RPSF under the new GST

regime (18% GST is being levied on RPSF and 5% on PET Waste) which has resulted in an increase in effective

tax rate (net of input credit) for our Company compared to the earlier tax structure of 2% excise duty (without

CENVAT) and 5% VAT in most of the States. This has brought RPSF manufacturers, like our Company at par with

the VPSF manufacturers in terms of taxation, thereby reducing RPSF manufacturers’ price competitiveness (earlier

12.5% excise duty was there on VPSF manufacturers). Going forward, our Company’s ability to ensure optimum

utilization of its enhanced capacities despite increased tax incidence as well as ensure regular availability of PET

waste bottle at competitive prices, will remain pertinent for its contribution margins and hence debt-coverage

indicators. Conversely, when raw material costs decrease, customers start seeking relief in the form of lower sales

prices immediately. There can be no assurance that decreases in the average selling prices of our products will not

have a material adverse effect on our business, financial condition and results of operations. While we strive to

maintain or increase our profitability by reducing costs, these efforts may not be sufficient to offset the effect of

declining prices on operating results.

Increase in raw material and other costs may not necessarily correlate with changes in prices for our products, either

in the direction of the price change or in magnitude. Specifically, timing differences in pricing changes between raw

material prices, which may change daily, and contract product prices, which in many cases are negotiated only

monthly, quarterly or less often, sometimes with an additional lag in effective dates for increases, have had in the

past and may continue to have a negative effect on our profitability. Significant volatility in raw material costs tends

to put pressure on product margins, as sales price increases generally tend to lag behind raw material cost increases.

39

We sell our products in highly competitive markets, and competition in these markets is based primarily on demand

and price. However, competition in our businesses can be based on, among other things, innovation, perceived value,

brand recognition, promotional activities, advertising, special events, new product introductions and other activities.

It is difficult for us to predict the timing and scale of our competitors’ actions in these areas. As a result, to remain

competitive, we must continuously strive to reduce our production, transportation and distribution costs and improve

our operating efficiencies. In our businesses, we actively compete with companies producing the same or similar

products. Due to the nature of our products, competition in these markets is based primarily on price and to a lesser

extent on performance, quality and availability.

Competition from existing and new manufacturers could drive prices for our products lower. Our market position

will also depend on effective marketing initiatives and our ability to anticipate and respond to various competitive

factors affecting the industry, including new products pricing strategies by competitors, changes in customer

preferences and general economic, political and social conditions in the countries in which we do business. Our

competitors may have greater resources than us and/or they may benefit from government-sponsored programs that

subsidize their production costs or provide them with marketing or other advantages. We may also face competition

from new entrants who may have more flexibility in responding to changing business and economic conditions. If

we are unable to respond effectively to these competitive pressures, our competitors may be able to sell their products

at prices lower than our prices, which would have an adverse effect on our market share and results of operations.

We also expect competition to continue to be intense as our existing competitors expand their operations and

introduce new products. Some of our competitors may develop alliances to compete against us and may have more

financial and other resources and manufacture products with greater brand recognition than ours. As a result, we

cannot assure you that we will be able to compete successfully in the future against our existing or potential

competitors and any such failure to compete effectively, including any delay in responding to changes in the industry

and market, together with increased spending on advertising, may affect the competitiveness of our products, which

may result in a decline in our revenues and profitability.

3. Being excessively dependent on volume-based products, our Company may be exposed to profitability and

margins risk.




industry to manufacture 0.90 to 70 denier RPSF in more than two hundred 200 colors/ shades customised around

customer needs and preferences and plan to continue to make constant efforts towards development of new value-

added products which shall be further supported by our ongoing expansion in order to reduce our dependency on

high volume low margin products. Moving towards the strategy of increasing the margins on our products, our

Company has launched its own RPSF brand “Rivivere” which is likely to have a positive impact in creation of its

own brand and getting acceptability of its products with a larger user base along with giving us a higher margin in

comparison to the traditional RPSF. There can, however be no assurance our Company shall not be exposed to such

profitability and margins risk, which may in turn materially adversely affect our business, financial condition and

results of operations.

4. We may be exposed to project risks in relation to the expansion-cum-modernization project of its RPSF plant

at Bilaspur (Uttar Pradesh) that may adversely impact our business and financial condition.

The RPSF capacity utilisation of 87% during Fiscal 2016 necessitated the capacity expansion to cater to our

increasing RPSF demands due to which we have undertaken an expansion-cum-modernization project of our RPSF

plant at Bilaspur (Uttar Pradesh) resulting in total capacity addition of 21,000 MTPA. The project has been funded

through debt and internal accruals in the ratio of 2.28:1 and has already commenced commercial production since

February 1, 2018. Although we have a good track record of operations and past experience of executing similar

projects along with the requisite technological capabilities, the said expansion project may take substantial time in

ramping up the production and marketing of its products and there can be no assurance that adverse social, political

and other conditions shall not adversely affect the scaling up of the expansion project of its RPSF plant at Bilaspur

(Uttar Pradesh). In case our Company is unable to successfully achieve the expansion project of its RPSF plant at

Bilaspur (Uttar Pradesh) the production levels of our Company may experience stagnation, which may in turn

materially adversely affect our business, financial condition and results of operations.

5. Our Company cannot undertake certain actions without seeking approval of our private equity investor,

MCAP India Fund Limited.

40

MCAP India Fund Limited, a company registered and incorporated under the laws of Mauritius (“Investor”)

subscribed to 2,975,877 Equity Shares of our Company vide Share Subscription Agreement dated August 14, 2014

(“Investment Agreement”), as amended by Amendment Agreement dated August 30, 2014 and Second

Amendment Agreement dated September 15, 2014 for the purposes of enabling our Company to utilize the

subscription amount towards capital expenditure and general corporate purposes. Pursuant to the terms of the

Investment Agreement, our Company is not permitted to undertake certain activities including but not limited to

acquisitions by our Company, divestment of stake by our Promoters, changes in capital structure, any capital

expenditure which breached the specified debt equity ratio, certain related party transactions without the prior

approval of the Investor. Although, the Investor has been non-interfering in the affairs of our Company so far and

has not even appointed a nominee director on our Board, despite having the right to do so, however, there is no

assurance that the Investor will never exercise its rights under the Investment Agreement. Exercise of any of its

rights by the Investor in the affairs of our Company, may lead to divergence of views, leading to delays in decision

making and if divergence of views are not resolved, then eventually leading to deadlocks and disputes. Any change

in the relationship with our Investor may material affect our business, financial condition and results of operations.

6. The examination report of our Statutory Auditors relating to audited financial statements for the financial

year 2014-15 contains a qualification for a fraud committed on our Company in relation to imported PET

bottle scrap from an overseas supplier.

Our Company had imported PET bottle Scrap (raw material) from an overseas supplier but later on during inspection

of sealed containers jointly with custom authorities, gravels were found instead of Pet Bottle Scrap in the containers.

Due to this fraud, our Company had suffered a loss to the tune of ₹26,44,757 on account of cost of material paid to

supplier, ocean freight and customs duty. Although our Company has recovered an amount of ₹12,00,000 from

intermediary agent by July, 2016 and a police complaint dated April 23, 2015 was lodged by our Company and the

investigations are currently in progress, there can be no assurance that the suppliers of our Company shall not

commit similar frauds on our Company in the future and commission of any such fraud may have a material affect

our business, financial condition and results of operations. The Statutory Auditors have qualified their examination

report for the financial year 2014-15 in this regard. For further information, please see “Financial Information” on

page 203.

7. We do not have long term contracts with our customers.

We have not executed long term contracts with our domestic or international customers. Our sales are based on

purchase orders that are placed by our customers depending on their requirements, with typical delivery periods

ranging from one to three months. In the absence of long term contracts, there can be no assurance that a particular

customer/ client would continue to source their supplies from us in the future. A reduction in the purchase orders

placed by the customers may adversely affect or business and revenues; and may require us to shift to different

markets and/or look for alternative buyers. Further, any loss of our major customers arising out of competition or

from cheaper sources can lead to reduced margins and our results and operations may be affected.

8. Our operating expenses include fixed costs that are not dependent upon our volume of business. As a result,

any decline in our operating performance may be magnified because we may be unable to reduce expenses

proportionately or at all in response to a potential shortfall in volume of business.

Our operating expenses include various fixed costs, which are as such, not dependent on our volume of business.

Any significant reduction in capacity utilization rates could adversely affect margins for these products and have a

material adverse effect on our business, prospects, results of operations and financial condition. Further, any shortfall

in order bookings may cause significant variation in operating results in any particular quarter, as we would not be

able to reduce our fixed operating expenses in the short term. The effect of any decline in order bookings may

thereby be magnified because a portion of our earnings are committed to paying these fixed costs, which would have

an adverse effect on our market share and results of operations.

9. We voluntarily delisted our equity shares from the U.P. Stock Exchange Limited in 2014.

Due to the trading platform of U.P. Stock Exchange Limited being virtually defunct and non-operational and

incurrence of expenditure on account of payment of annual listing fees to the stock exchange, our Company decided

to voluntarily delist the Equity Shares of our Company from the U.P. Stock Exchange Limited while resorting to

special provisions for voluntary delisting of Equity Shares under Regulation 6 of Chapter III of the Securities and

Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 with effect from August 7, 2014. In terms

41

of the provisions of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, no exit

opportunity was required to be provided to the public shareholders of our Company as the Equity Shares of our

Company would continue to remain listed on BSE Limited, Mumbai, which had nationwide trading terminals and

as such interests of none of the members of our Company were adversely affected. Additionally, we have also

delisted the trading of our equity shares from the Delhi Stock Exchange in the year 2003. There can be no assurance

that the Equity Shares of our Company shall not be delisted from the BSE or the NSE in the future which may

adversely affect our market perception and reputation, which may in turn materially adversely affect our business,

financial condition and results of operations as well as the interests of the investors.

10. Our business is capital-intensive and may require additional debt or equity financing. We cannot assure you

that we will be able to raise such financing on acceptable terms, or at all.

Our business is capital intensive requiring a significant amount of capital to (i) develop, market and distribute our

products and services; (ii) develop, implement new technologies along with upgrading our information technology

systems; (iii) expansion of new capacities to remain competitive. We estimate significant expenditure as part of our

capital expenditure requirement for the Financial Year 2018. The actual amount and timing of our future capital

requirements may also differ from estimates because of reasons such as unforeseen delays or cost overruns in relation

to developing, marketing and distributing our products and services, unanticipated expenses and responding to

regulatory changes and engineering, design and technological changes, among other things. To the extent that our

capital requirements exceed available resources, we will be required to seek additional debt or equity financing.

Additional debt financing could increase our interest expense and may require us to comply with additional

restrictive covenants under our financing agreements. Further, additional equity financing could dilute our earnings

per share and investor’s interest in us which could adversely affect the trading price of the Equity Shares.

Our ability to obtain additional financing on acceptable terms, or at all, will depend on a number of factors, including

our future financial condition, results of operations and cash flows, general market conditions for companies engaged

in our line of business and economic, political and other conditions in the markets where we operate. Any inability

to obtain sufficient financing could result in the delay or abandonment of our development and expansion plans or

an inability to provide appropriate levels of service in all or a portion of our markets. As a result, if adequate capital

is not available, there may be an adverse effect on our business, results of operations and financial condition.

11. Any decrease in demand for our products may adversely affect our business and financial condition.

The sales of our products rely heavily on the demand and preferences of end-user customers of textiles and other

cloth based products and in case the preferences and tastes of end-users for textile products change or if our markets

experience lower or negative growth, demand for our products may decrease and our revenue from sales of our

products may decrease, which may in turn materially adversely affect our business, financial condition and results

of operations. In addition, we make significant decisions, including setting up of facilities, determining the levels of

business that we will seek and accept, production schedules, raw material procurement, personnel requirements and

other resource requirements, based on our estimates of future sales projections. This may require us to increase

staffing, increase capacity and incur other expenses to meet the anticipated demand. However, any decrease in the

demand for our product may result in such expenses causing reductions in our margins and significantly impact our

results and operations. We cannot assure you that we will be able to realise the value of investments made by us on

the basis of our estimates and any such loss may have an adverse impact on our results of operations.

12. Our failure to accurately forecast and manage inventory could result in an unexpected shortfall and/or

surplus of raw material, which could have a material adverse impact on our profitability.

We monitor our inventory levels based on our projections of future demand. Because of the length of time necessary

to produce commercial quantities of our products, we make raw material procurement decisions well in advance of

sales for our products. An inaccurate forecast of demand for any product can result in the unavailability/surplus of

raw material. This unavailability of raw material in high demand may depress sales volumes and adversely affect

customer relationships. Conversely, an inaccurate forecast can also result in an over-supply of raw material, which

may increase costs, negatively impact cash flow, erode margins substantially and ultimately create write-offs of

inventory.

13. Any disruption in production at, or shutdown of, our manufacturing facility could adversely affect our

business, results of operations and financial condition.

42

We manufacture our products from our manufacturing facilities which cater to our domestic and export demand.

Any disruptions due to natural or manmade disasters, workforce disruptions, delay in receipt of or non-receipt of

regulatory approvals, fire, failure of machinery, or any significant social, political or economic disturbances, would

significantly impact our ability to manufacture certain products. Disruptions in our manufacturing activities could

delay production or require us to shut down our manufacturing facility. We may be subject to manufacturing

disruptions due to contraventions by us of any of the conditions of our regulatory approvals, which may require our

facilities to cease, or limit, production until the disputes concerning such approvals are resolved. While we have not

experienced any such disruptions in the past, we cannot assure you that we will not experience work disruptions in

the future and any such disruptions may hinder our normal operating activities and lead to disruptions in our

operations, which could adversely affect our business, results of operations, financial condition and cash flows.

14. We rely on third parties for transportation services and these services are subject to various uncertainties

and risks, and delays in delivery or delivery of non-conforming shipments.

We depend heavily on road transport to deliver our products from our facilities to our customers. For export sale,

we rely on sea borne freight, rail and road transport. We rely on third parties to provide such services. We do not

have long term contracts with such this parties which may affect our ability to deliver our products from our facilities

to our customers in a timely manner. Disruptions of transportation services because of weather-related problems,

strikes, lock-outs, loss of products, inadequacies in road infrastructure and port facilities and other forms of damage

or events could impair our ability to supply our products to our customers. There is no assurance that such disruptions

will not again occur in the future. Any such disruptions could materially adversely affect our business, financial

condition and results of operations. In addition, in the case of a delayed shipment of our products to our customers,

the customer would have the right to reject the shipment or demand significant pricing discounts. Non-conforming

shipments could also give rise to order rejections, discounts or other claims. Further, as a manufacturing business,

our success depends on the smooth supply and transportation of the various raw materials required for our facilities

which is subject to various uncertainties and risks. We use third party transportation providers for the supply of most

of our raw materials, stores, spares and other consumables. Transportation strikes in the future could have an adverse

effect on supplies from our suppliers. In addition, raw materials and products maybe lost or damaged in transit for

various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of raw

materials and products which may also affect our business and results of operation negatively. A failure to maintain

a continuous supply of raw materials could have a material and adverse effect on our business, financial condition

and results of operations.

15. We may be unable to negotiate favourable credit terms from our suppliers.

While we have maintained a long-term relationship with many of our suppliers and we have been able to negotiate

favourable credit terms from them due to increased order sizes and timely payments, we cannot assure you that we

shall be able to maintain such favourable credit terms in future. Further, any change in credit terms or any favourable

credit terms offered only to one or more of our competitors could adversely impact our business and result of

operations.

16. We may be unable to seek compensation from our suppliers for defective components or raw materials.

We are required to source raw materials from suppliers for which advances and even prompt payments may have to

be made. We cannot assure you with a reasonable certainty that the raw materials that we would procure in the future

will not be defective. Further should we receive any low quality or defective raw materials, we may not be in a

position to recover advance payments or claim compensation from our suppliers consequently increasing the

manufacturing costs or reducing the realisation of our finished products.

17. We depend on certain key customers, and our business and financial conditions may be adversely affected

if we are unable to retain these customers.

Our business depends on our relationships with a number of key customers. The revenue concentration from our top

five customers during Fiscal Year 2017 was 14% of our total revenue from operations during the period. There can

be no assurance that we will be able to retain these customers. If one or more of these key customers are unable or

unwilling to continue their business relationships with us, our business may be affected and our financial condition

and results of operations may be adversely affected. Additionally, any deterioration in our relationship with any of

them could also have a significant adverse impact on our business, financial condition and results of operations.

Some of our products are in the nature of commodity products facing highly competitive conditions and are

43

extremely price sensitive. Therefore, any major fluctuations in prices of our products can adversely affect our

competitiveness and lead to loss of customers to competitors.

18. Export destination countries may impose varying duties on yarn, thread or fabrics or enter into free trade

agreements with countries other than India. Any increase in such duties or the entry into free trade

agreements with countries other than India may materially adversely affect our business, financial condition

and results of operations.

We generated ₹396.77 million, ₹388.15 million and ₹339.73 million as revenues from exports in Fiscal Year 2017,

Fiscal Year 2016 and Fiscal 2015, respectively, which represented 5.89%, 6.00% and 5.45% of our revenue from

operations for the respective periods. During such periods, we exported our products to over ten (10) countries and

these export destination countries imposed varying duties on our products. There can be no assurance that the duties

imposed by such countries will not increase. Any change or increase in such duties may adversely affect our

business, financial condition and results of operations.

Additionally, export destination countries may also enter into free trade agreements or regional trade agreements

with countries other than India. Such agreements and alteration of any existing tax treaties may lead to increased

competition or may even place us at a competitive disadvantage compared to manufacturers in other countries and

could adversely affect our business, financial condition and results of operations. Further, changes in import policies

in countries to which we export our products may have a significant adverse impact on our business, financial

condition and results of operations. India is also a party to, and is currently negotiating, free trade agreements with

several countries to whom we regularly export our products. Any revocation or alteration of these bi-lateral

agreements may also adversely affect our ability to export, and consequently, our business, financial condition and

results of operation.

19. Slowdown or shutdown in our manufacturing operations or under-utilization of our manufacturing

facilities could have an adverse effect on our business, results of operations and financial condition.

Our business is dependent upon our ability to manage our manufacturing facilities, which are subject to various

operating risks, including those beyond our control, such as the breakdown and failure of equipment or industrial

accidents and severe weather conditions and natural disasters. Any significant malfunction or breakdown of our

machinery may entail significant repair and maintenance costs and cause delays in our operations in multiple product

lines. If we are unable to repair malfunctioning machinery in a timely manner or at all, our operations may need to

be suspended until we procure machinery to replace the same. Further, as a part of the manufacturing process any

disruption in one section can halt the entire production line and the impact of slowdowns/breakdowns in a single

product may cause disruptions in the overall production value chain and any increased costs in one segment may

have an adverse effect on the profitability of the other product segments. In addition, we may be required to carry

out planned shutdowns of our facilities for maintenance, statutory inspections and testing, or may shut down certain

facilities for capacity expansion and equipment upgrades. We may also face protests from local citizens at our

existing facilities or while setting up new facilities, which may delay or halt our operations.

Although we have not experienced any significant disruptions at our manufacturing facilities in the past, we cannot

assure you that there will not be any disruptions in our operations in the future. Our inability to effectively respond

to such events and rectify any disruption, in a timely manner and at an acceptable cost, could lead to the slowdown

or shut-down of our operations or the under-utilization of our manufacturing facilities, which in turn may have an

adverse effect on our business, results of operations and financial condition.

20. Orders included in our order book may be delayed, modified or cancelled, which could harm our cash flow

position, revenues and income.

Our Order Book status of 7,766 tons of ₹529.71 million as on December 31, 2017 may not necessarily indicate future

income, including as a result of unanticipated variations or scope or schedule adjustments, which could adversely

affect our results of operations. We cannot guarantee that the revenues anticipated in our order book will be realized,

or, if realized, will be realized on time or result in profits. In addition, for those contracts that do not provide for

guaranteed payments, it is possible that contracting parties may default on amounts owed. Any delay, cancellation

or payment default could harm our cash flows, revenues or earnings. In addition, delays may also result from

incomplete specifications or unanticipated difficulties in developing customised solutions for our customers.

Customers may also terminate their projects or contracts with us due to changes in their business plans, insufficient

funding or dissatisfaction with the progress. The unanticipated termination of any contracts in progress or any

decisions by our customers not to proceed with a contracted order may have a material adverse effect on our business,

44

financial condition and results of operations. We cannot assure that any delays in execution and/or termination will

not arise in future due to reasons attributable to us, and thereby materially and adversely affect our business, financial

condition and results of operations. Further, there may be unprecedented increase in the prices of the raw

materials/inputs utilized for the manufacturing of our products which may adversely impact our delivery schedules

due to the loss of time towards negotiating more favourable pricing terms with our raw material suppliers and/or

identifying alternative sources of raw material procurement. There can be no assurance that our efforts expended

towards securing favourable terms (including pricing) of raw material supply and/or identifying alternative sources

of raw material procurement shall be successful, partially or completely, to the satisfaction of our Company which

may lead to our Order Book being delayed, modified or cancelled and any such delay, modification or cancellation

shall adversely affect our business, financial condition and results of operation.

21. If we are unable to introduce new products at competitive rate compared to VPSF and respond to changing

customer preferences in a timely and effective manner, the demand for our products may decline, which

may have an adverse effect on our business, results of operations and financial condition.

The success of our business depends upon our ability to anticipate and identify changes in customer preferences and

offer products that customers require. We constantly seek to develop our research and development capabilities to

distinguish ourselves from our competitors to enable us to introduce new products and different variant of our

existing products, based on customer preferences and demand and to increase our margins. Although, we seek to

identify such trends and introduce new products, we cannot assure you that our products would gain customer

acceptance or that we will be able to successfully compete in such new product segments. Before we can introduce

a new product, we must successfully execute a number of steps, including successful research and development,

arranging the necessary raw materials/inputs, training of our people, effective marketing strategies for our target

customers, while scaling our vendor, production and infrastructure networks to increase or change the nature of our

production capacity. We also depend on the successful introduction of new production and manufacturing processes

to create innovative products, achieve operational efficiencies and adapt to advances in, or obsolescence of our

technology. We cannot assure you that we will be able to successfully make timely and cost-effective enhancements

and additions to our technological infrastructure, keep up with technological improvements in order to meet our

customers’ needs or that the technology developed by others will not render our products less competitive or

attractive. Our failure to successfully adopt such technologies in a cost effective and a timely manner could increase

our costs and lead to us being less competitive in terms of our prices or quality of products we sell.

The development and commercialization process of a new product would require us to spend considerable time and

money. Our ongoing investments in research and development for new products and processes may result in higher

costs without a proportionate increase in revenues. Delays in any part of the process (including delays due to

regulatory intervention) or failure of a product to be successful at any stage could adversely affect our business.

Consequently, any failure on our part to successfully introduce new products and processes may have an adverse

effect on our business, results of operations results and financial condition.

22. Our operations are concentrated in the states of Uttarakhand and Uttar Pradesh and any adverse

developments affecting these states could have an adverse effect on our business, results of operations,

financial condition and cash flows.

We presently operate through our three modern manufacturing units at Kanpur (Uttar Pradesh), Rudrapur

(Uttarakhand), and Bilaspur (Uttar Pradesh) having a cumulative production capacity of 97,800 tonnes per annum

(TPA) for manufacturing of RPSF (at all units), dyed texturized/ twisted yarns (Kanpur unit) and spun yarn (Bilaspur

unit). Considering our business operations are concentrated in the states of Uttarakhand and Uttar Pradesh,

consequently, any significant social, political or economic disruption, or natural calamities or civil disruptions in the

states of Uttarakhand and Uttar Pradesh, or changes in the policies of the state or local governments of these states

or the Government of India, could require us to incur significant capital expenditure and change our business

strategy. The occurrence of, or our inability to effectively respond to any such event, could have an adverse effect

on our business, results of operations, financial condition and cash flows.

23. A shortage or non-availability of electricity, fuel or water and associated price fluctuations may adversely

affect our manufacturing operations and have an adverse effect on our business, results of operations and

financial condition.

Our manufacturing operations require a significant amount and continuous supply of electricity, fuel and water and

any shortage or non-availability may adversely affect our operations. We currently source our water requirements

45

from bore wells and depend on state electricity boards for our energy requirements. Although we have diesel

generators to meet exigencies at all of our facilities, we cannot assure you that our facilities will be operational

during power failures. The industrial consumption of PET coke was prohibited in Delhi, Rajasthan, Haryana and

Uttar Pradesh (NCR region) by the Chairman, Central Pollution Control Board as per the directions of the Supreme

Court of India, Chairman CPCB, vide its order dated November 15, 2017 due to which our Company had to shift

from PET coke to rice husk and Steam coal as alternative source of fuel. Although there were no disruptions in the

business activities and operations of our Company subsequent to the directions of the Supreme Court of India and

the Central Pollution Control Board owing to timely action by our Company, the transition from PET coke to rice

husk and Steam coal as a fuel source resulted in some incremental fuel cost in our Bilaspur facility. There can be no

assurance that our Company shall be in a position to successfully avoid and/or proficiently manage any disruption(s)

in our manufacturing operations at any or all of our facilities in a timely manner or at all due to any failure on our

part to obtain alternate sources of electricity, fuel or water, in a timely fashion, and at an acceptable cost and any

such failure may have an adverse effect on our business, results of operations and financial condition.

24. We introduce new products for our customers and there is no assurance that our new products will be

profitable in the future. Further, we face additional risks as we expand our product offerings and grow our

business.

In order to continue to expand our businesses and profitability, we introduce new products in our existing lines of

business. Failure to consider, identify and provide for all additional risks may result in an adverse financial impact

on us. Such new products and services would result in us incurring additional costs and we cannot guarantee that

such new products and services will be successful once offered, whether due to factors within or outside of our

control, such as general economic conditions, a failure to obtain sufficient financing to support or a failure to

understand customer demand and market requirements or a failure to understand the regulatory and statutory

requirements for such products or lack of management focus on these new products. If we are unable to achieve the

intended results with respect to our offering of new products and services, or manage the growth of our business,

our financial condition, cash flows, results of operations and prospects could be materially adversely affected.

25. Inconsistent Product quality could lead to customer dissatisfaction, hampering reputation, sales and

business which may materially and adversely affect our business and prospects.

We face inherent business risks of exposure to product liability or recall claims in the event that our products fail to

meet the required quality standards or are alleged to result in harm to customers. Some of our manufacturing plants

are accredited with ISO 9001: 2015, ISO 14001: 2015 and OHSAS 18001:2007 certifications and we have prescribed

stringent quality checks and we continue to improve its resource utilisation and minimise in-process rejections by

leveraging quality tests across all facilities. We are focussed on improving quality systems and their effectiveness

to lessen the incidence of such risks and simultaneously improving its operational efficiencies. However, there can

be no assurance that there could not still be some deviation from prescribed quality standards due to factors such as

human error. Despite putting in place strict quality control procedures we cannot assure that our products will always

be able to satisfy our clients/customer’s quality standards. Any negative publicity regarding our Company, or

products, including those arising from any deterioration in quality of our products from our vendors, or any other

unforeseen events could adversely affect our reputation and our operations. Introduction of new products or for any

other reason, any failure on our part to meet our customers' expectation could adversely affect our business, result

of operations and financial condition. Such risks may be controlled, but not eliminated, by adherence to good

manufacturing practices and finished product testing. We have little, if any, control over proper handling once our

products are delivered to our customers. We face the risk of legal proceedings and product liability claims being

brought by various entities, including customers, distributors and government agencies for various reasons including

for defective products sold or services rendered. For further details, please see “Legal Proceedings – Litigations

against our Company” on page 196 of this Preliminary Placement Document. In case we experience a product recall

or are a party to a product liability case, we may incur considerable expense in litigation. We cannot assure you that

we will not experience product recalls or product liability losses in the future. Any product recall, product liability

claim or adverse regulatory action may adversely affect our reputation and brand image, as well as entail significant

costs in excess of available insurance coverage, which could adversely affect our reputation, business, results of

operations and financial condition.

26. Our risk management measures and internal controls, may not be fully effective in mitigating our risks in

all market environments or against all types of risks, which may adversely affect our business and financial

performance.

46

We are exposed to a variety of risks, including liquidity risk, interest rate risk, market credit risk, operational risk,

regulatory and compliance risk, business and continuity risk and legal risk. We have established a system of risk

management and internal controls consisting of an organizational risk management framework, policies, risk

management system tools and procedures that we consider to be appropriate for our business operations, and we

have continued to enhance these systems. However, in case of any inherent limitations in the design and

implementation of our risk management system, including internal controls, risk identification and evaluation,

effectiveness of risk control and information communication, our risk management systems and mitigation strategies

may not be adequate or effective in identifying or mitigating our risk exposure in all market environments or against

all types of risks. Risk management is an ongoing process and embedded in the operating framework of our

Company. Our Board members are regularly informed about the potential risks, their assessment and minimization

procedures who frame a plan for elimination/ minimization of the risk and further laying out the steps for

implementing and monitoring of the risk management plan.

The effectiveness of our risk management is limited by the quality and timeliness of available data. Our hedging

strategies and other risk management techniques may not be fully effective in mitigating our risks in all market

environments or against all types of risk, including risks that are unidentified or unanticipated. Some methods of

managing risks are based upon observed historical market behaviour and information that is accessible regarding

financial markets, customers or other relevant matters that are publicly available. As a result, these methods may not

predict future risk exposures, which could be greater than the historical measures indicated. Other risk management

methods depend upon an evaluation of information regarding markets, customers or other matters. This information

may not in all cases be accurate, complete, current, or properly evaluated. Inaccuracy in estimates of the level of

margin to be maintained by our customers with us for the transactions undertaken by them could result in a shortfall

in margins deposited by our customers with us, which may adversely affect our financial condition.

Management of operational, legal or regulatory risk requires, among other things, policies and procedures to properly

record and verify a number of transactions and events. Operational risks can result from a variety of factors,

including failure to obtain proper internal authorizations, improperly documented transactions, failure of operational

and information security procedures, computer systems, software or equipment, fraud, inadequate training and

employee errors. We attempt to mitigate operational risk by maintaining a comprehensive system of internal

controls, establishing systems and procedures to monitor transactions, maintaining key back-up procedures,

undertaking regular contingency planning and providing employees with continuous training. In addition, some of

our transactions expose us to the risk of misappropriation or unauthorized transactions by our employees and fraud

by our employees, agents, customers or third parties. Our insurance policies, security systems and measures

undertaken to detect and prevent these risks may not be sufficient to prevent or deter such activities in all cases,

which may adversely affect our operations and profitability. Furthermore, we may be subject to regulatory or other

proceedings in connection with any unauthorized transaction, fraud or misappropriation by our representatives and

employees, which could adversely affect our goodwill.

Although we have established policies and procedures, they may not be fully effective. Our future success will

depend, in part, on our ability to respond to new technological advances and industry standards and practices on a

cost-effective and timely basis.

The development and implementation of standards and practices entails significant technical and business risks.

There can be no assurance that we will successfully implement new technologies or adapt our transaction-processing

systems to customer requirements or evolving market standards.

27. We are dependent on our senior management and other key personnel as well as certain intermediaries, and

the loss of, or our inability to attract or retain, such persons could adversely affect our business, results of

operations, financial condition and cash flows.

Our performance depends largely on the efforts and abilities of our senior management and other key personnel. We

believe that the inputs and experience of our senior management, in particular, and other key personnel are valuable

for the development of our business and operations and the strategic directions taken by our Company. For further

information on the experience of our key management personnel, see “Board of Directors and Senior Management”

on page 137. There can be no assurance that these individuals or any other member of our senior management team

will not leave us or join a competitor or that we will be able to retain such personnel or find adequate replacements

in a timely manner, or at all. We may require a long period of time to hire and train replacement personnel when

qualified personnel terminate their employment with our Company. We may also be required to increase our levels

of employee compensation more rapidly than in the past to remain competitive in attracting employees that our

47

business requires. The loss of the services of such persons may have an adverse effect on our business, results of

operations, financial condition and cash flows.

28. We require various licences and approvals for undertaking our business and if we fail to obtain, maintain

or renew our statutory and regulatory licenses, permits and approvals required to operate our business, our

business and results of operations may be adversely affected.

Our operations are subject to government regulations and we are required to obtain and maintain a number of

statutory and regulatory permits, approvals and consents under central, state and local government rules in India,

generally for carrying out our business and for each of our manufacturing facilities.

The introduction of additional government control or newly implemented laws and regulations, depending on the

nature and extent thereof and our ability to make corresponding adjustments, may adversely affect our business,

results of operations and financial condition. In particular, decisions taken by regulators concerning economic

policies or goals that are inconsistent with our interests could adversely affect our results of operations. These laws

and regulations and the way in which they are implemented and enforced may change from time to time and there

can be no assurance that future legislative or regulatory changes will not have an adverse effect on our business,

financial condition, cash flows and results of operations.

Further, certain approvals for our manufacturing facilities are required to be applied or renewed on an ongoing basis,

and accordingly, we have made certain application but not yet obtained the required approval in relation to our

operations from relevant authorities.

The approvals required by us are subject to numerous conditions and we cannot assure you that these would not be

suspended or revoked in the event of non-compliance or alleged noncompliance with any terms or conditions thereof,

or pursuant to any regulatory action. If there is any failure by us to comply with the applicable regulations or if the

regulations governing our business are amended, we may incur increased costs, be subject to penalties, have our

approvals and permits revoked or suffer a disruption in our operations, any of which could adversely affect our

business. In case we fail to comply with these requirements, or a regulator alleges we have not complied with these

requirements, we may be subject to penalties and compounding proceedings.

29. Our substantial indebtedness and the conditions imposed by our financing and other agreements could

adversely affect our ability to conduct our business and operations.

As of December 31, 2017, we had total outstanding debt of ₹2,065.17 million, and our total debt to equity ratio

(including minority interest) was 0.82. Most of our financing arrangements are secured by our movable and

immovable assets. In addition, we may incur substantial indebtedness in the future as we continue to expand our

business operations.

The level of our indebtedness could have several important consequences, including but not limited to the following:

• a substantial portion of our cash flows may be used towards repayment of our existing debt, which will

reduce the availability of cash flows to fund working capital, capital expenditures, acquisitions and other

general corporate requirements;

• our ability to obtain additional financing in the future or renegotiate or refinance our existing indebtedness

on terms favorable to us may be limited;

• fluctuations in market interest rates may affect the cost of our borrowings, as all of our secured

indebtedness is subject to floating rates of interest;

• increase our vulnerability to adverse general economic or industry conditions;

• limit our flexibility in planning for, or reacting to, competition and/or changes in our business or our

industry;

• place us at a competitive disadvantage relative to competitors that have less debt or greater financial

resources;

• restrict us from making strategic acquisitions, introducing new products or services or exploiting business

opportunities;

• impact on our credit ratings; and

• we may have difficulty in satisfying repayments and other restrictive covenants under our existing

financing arrangements.

48

We cannot guarantee that we will be able to generate enough cash flow from operations or that we will be able to

obtain enough capital to service our debt or fund our planned capital expenditures. In addition, adverse changes in

the business conditions affecting us could cause the amount of refinancing proceeds to be insufficient to meet our

interest payments or fully repay any existing debt upon maturity and we may be unable to fund the payment of such

shortfalls. If we cannot obtain alternative sources of financing or our costs of borrowings become significantly more

expensive, then our financial condition and results of operations will be adversely affected.

Moreover, the agreements governing certain of our debt obligations include terms that, in addition to certain

financial covenants, which, amongst others, restrict our ability to make capital expenditures and investments, declare

dividends, effect a scheme of amalgamation or reconstitution, alter our constitutional documents, undertake new

projects, change our management and board of directors, modify our promoter/ promoter group shareholding and

modify our capital structure. Any failure on our part to comply with these terms in our loan agreements would

generally result in events of default under these loan agreements. In such a case, the lenders under each of these

respective loan agreements may, at their discretion, accelerate payment and declare the entire outstanding amounts

under these loans due and payable, and in certain instances, enforce their security which has been constituted over

our various assets and take possession of those assets, which could adversely affect our liquidity and materially and

adversely affect our business and operations. In addition, to the extent that we cannot make payments on accelerated

amounts, such non-payment could result in the cross default and/or cross acceleration of some or all of our other

outstanding indebtedness, and payment of penalty interest, which could likewise adversely affect our liquidity and

materially and adversely affect our business and operations.

Fluctuations in market interest rates may also affect the cost of our borrowings. Since the interest rates on our entire

secured borrowings, based on the marginal cost of funds-based lending rates (MCLR) of the respective lenders, may

be subject to changes or renegotiation and/or escalation on a periodic basis, for which we do not have any interest

rate hedge agreements. The exchange risk on the business and operations of our Company in the ordinary course of

business is hedged only through simple forward contracts typically with SBI, Yes Bank & HDFC Bank. As on

December 31, 2017 only one forward contract of USD 1,00,000 was pending against exports and as on date of this

PPD there is no outstanding forward contract with any bank. Although our Company has historically executed a

derivative hedging instrument during January, 2016 by buying an option for hedging its FCNR-B TL repayment

liability up to December 31, 2016, there can be no assurance that such forward contracts shall be executed in a

number and/or value to sufficiently hedge the exchange risk on the business and operations of our Company or at

all and any such unhedged exposure adversely affect our liquidity and materially and adversely affect our business

and operations.

30. Any downgrade of our credit ratings may increase our borrowing costs and constrain our access to capital

and loan markets and, as a result, may adversely affect our business, financial condition and our results of

operations.

The cost and availability of capital is dependent, among other factors, on our short-term and long-term credit ratings.

Ratings reflect a rating agency’s opinion of our financial strength, operating performance, strategic position, and

ability to meet our obligations. Our long-term debt has been rated by CARE and they have assigned a credit rating

of CARE A-(Single A Minus), and our short-term debt has been assigned credit rating of CARE A2+ (A Two Plus)

by way of letter no. CARE/DRO/RR/2017-18/1492 dated June 29, 2017. ICRA has also conveyed its rating at A-

(ICRA A minus) with a stable outlook and assigned A2+ (ICRA A two plus) to the line of credit of our Company.

Any future performance issues for our Company or the industry may result in a downgrade of our credit ratings,

which may in turn lead to an increase in our borrowing costs and constrain our access to funds and debt markets

and, as a result, may adversely affect our business growth. In addition, any downgrade of our credit ratings could

result in default under our financing arrangements or lenders imposing additional terms and conditions in any future

financing or refinancing arrangements in the future. Any such adverse development may adversely affect our

business operations, future financial performance and the price of our Equity Shares.

31. Any reduction or termination of incentives and benefits available to our Company’s manufacturing facilities

at Bilaspur and Kanpur would adversely impact our liabilities and could have an adverse effect on our


Our Company is exempted from payment of electricity duty equivalent to 7.5% on the power bill amount for its yarn

and fibre manufacturing units at Bilaspur for a period of ten (10) years till the year 2023. Our Company is also

benefiting from the interest rate subsidy of 5%, maximum up to ₹50 lacs per annum, for five (5) years from the Uttar

Pradesh State Government, on the loans availed for new plant & machinery for its Bilaspur RPSF manufacturing

49

facility during Financial year 2015 as well as expansion of RPSF capacity at Kanpur unit during Financial year 2014.

In addition to the interest rate subsidy, our Company is also entitled for interest free loan from the Uttar Pradesh

Government for its spinning unit, RPSF Unit (Bilaspur) and capacity expansion of RPSF at Kanpur Unit to the extent

of SGST deposited in the government account. The interest free loan is repayable in the seventh year from the date

of disbursement and the incentive is available to our Company for a period of ten (10) years from the date of

production of respective manufacturing unit or expanded capacity. Also, our Yarn unit is classified as an MSME

with the Uttar Pradesh Pollution Control Board based on the investments made by our Company in the plants and

machinery. In the event our Company fails to comply with the terms and conditions subject to which the aforesaid

benefits have been extended to our Company or in case the Indian Government enacts laws qualifying or reversing

the aforesaid incentives/benefits in part or in full, our Company shall not be able to completely utilize the aforesaid

incentives and benefits which may have an adverse effect on our business, results of operations and financial

condition.

32. We have not applied for trademark registration of our corporate logo and any failure to protect our

intellectual property rights could adversely affect our business.

We have not applied for a trademark registration for the corporate logo that appears on the cover page of this

Preliminary Placement Document and our competitors could challenge the validity of the usage of the corporate

logo/ trademark by our Company. In case we fail to successfully obtain or enforce our trademark, we may need to

change or rebrand our logos, including our corporate logo. Any such change could adversely affect our branding

and may have an adverse effect on our business, reputation and, consequently, on our results of operation, cash flows

and financial condition. There can be no assurance that we will be able to secure the intellectual property rights of

any such trademarks, service marks or trade names that we use or may use in future. We may be unable to prevent

third parties for infringing or wrongly using our unregistered trademarks, trade names or logos thereby causing

damage to our business prospects, reputation and goodwill. Further, any protective steps taken by us in relation to

our intellectual properties may be inadequate to deter misappropriation of our intellectual property. We may be

subject to the risk of brand dilution and consequently loss of revenue in case of any misuse of our brand name by

our agents or any third party. We may be unable to detect the unauthorized use of, or take appropriate steps to

enforce, our intellectual property rights. Failure to protect our intellectual property and trademarks adequately could

harm our reputation and affect our ability to compete effectively. Further, defending our intellectual property rights

may require significant financial and managerial resources which may adversely affect its business, financial

condition and results of operations.

33. We have in the past entered into related party transactions and may continue to do so in the future. There

can be no assurance that we could not have achieved more favourable terms if such transactions had been

entered into with third parties.

We have entered into transactions with related parties. While we believe that all such transactions have been

conducted on an arms-length basis, there can be no assurance that we would not have achieved more favourable

commercial terms with other parties. Furthermore, we may enter into related party transactions in the future, and

such transactions may potentially involve conflicts of interest. For further information on our related party

transactions, see “Financial Information” on page 203. There can be no assurance that such transactions, individually

or in the aggregate, will always be in the best interests of our minority shareholders and will not have an adverse

effect on our business, results of operations, financial condition and cash flows. In the event any conflict of interest

arises between us, or to the extent that competing products offered by any of our related parties erode our market

share, we may not be able to effectively manage any such conflict or competitive pressures and, consequently, our

business, results of operation and financial condition may be adversely affected.

34. We have experience negative cash flows from our operating activities, investing activities as well as

financing activities in the past.

We have and may, in the future, experience negative cash flows (net). The following table sets forth certain

information relating to our cash flows for the periods indicated below*:

(in ₹ million)

Particulars

Year ended March 31,

Fiscal 2017 Fiscal 2016 Fiscal 2015

Net cash from Operating Activities 593.99 767.82 389.50

Net cash used in Investing Activities (200.81) (99.67) (241.72)

Net cash from Financing Activities (322.95) (677.53) (196.48)

50

Net increase/ (decrease) in Cash and Cash

Equivalents

70.23 (9.38) (48.70)




We cannot assure you that our net cash flows will be positive in the future and we may, in the future, experience

negative cash flows. Negative cash flows over extended periods, or significant negative cash flows in the short term,

could materially impact our ability to operate our business and implement our growth plans. As a result, our inability

to generate sufficient amount of cash from operations may adversely affect our liquidity, our ability to service our

indebtedness and fund our operations as a consequence of which our business, financial condition and results of

operations could be materially and adversely affected. For further details, see “Management’s Discussion and

Analysis of Financial Condition and Results of Operations” on page 76. We cannot assure you that our net cash

flows will be positive in the future.

35. If we are unable to successfully execute our growth strategies, our business, prospects and results of

operations could be materially and adversely affected.

We propose to expand our business by adopting a series of strategies. For further details, see “Our Business – Our

Strategy” on page 119. Our growth depends on our ability to expand our market share and our inability to do so may

adversely affect our growth prospects. Our growth strategies could place significant demand on our management

and our administrative, operational and financial infrastructure. We could also encounter difficulties and delays in

executing our growth strategies due to a number of factors, including, without limitation, delays in implementation,

lack of appropriate infrastructure, unavailability of human and capital resources, or any other risks that we may or

may not have foreseen. Our management may also change its view on the desirability of current strategies, and any

resultant change in our strategies could put significant strain on our resources. Further, we may be unable to achieve

any synergies or successfully integrate any acquired business into our portfolio. Any business that we acquire may

subject us to additional liabilities, including unknown or contingent liabilities, liabilities for failure to comply with

laws and regulations, and we may become liable for the past activities of such businesses.

Additionally, expansion into new geographic regions, including new regions in India and international markets shall

subject us to various challenges, including those relating to our lack of familiarity with the social, political, economic

and cultural conditions of these new regions, language barriers, difficulties in staffing and managing such operations

and the lack of brand recognition and reputation in such regions. We may also encounter other additional anticipated

risks and significant competition in such markets. If we are unable to successfully execute our growth strategies, our

business, prospects and results of operations could be materially and adversely affected.

36. We have commissioned industry reports from certain agencies, which have been used for industry related

data in this Preliminary Placement Document and such data has not been independently verified by us.

We have commissioned the CRISIL Report titled “Assessment of India’s Textile and PET recycling industries”

published on March 12, 2018. The report uses certain methodologies for market sizing and forecasting. Neither we,

nor the BRLM have independently verified such data and therefore, while we believe them to be true, we cannot

assure you that they are complete or reliable. Accordingly, investors should read the industry related disclosure in

this Preliminary Placement Document in this context. Industry sources and publications are also prepared based on

information as of specific dates and may no longer be current or reflect current trends. Industry sources and

publications may also base their information on estimates, projections, forecasts and assumptions that may prove to

be incorrect. While industry sources take due care and caution while preparing their reports, they do not guarantee

the accuracy, adequacy or completeness of the data. Accordingly, investors should not place undue reliance on, or

base their investment decision solely on this information.

37. The average selling price of our products may decrease, which may materially and adversely affect our

results of operations and profitability.

The average selling prices of our products may decrease in the future in response to pricing pressures from

customers, competitive pricing pressures, decline in the prices of Virgin PSF or cotton, excess inventories, increased

sales discounts, technological changes and new product introductions by us or our competitors. The average selling

prices of our products are the highest at the time of introduction, when they utilise the latest technology, and their

prices tend to decrease over time as they become commoditised and the technology becomes more common;

51

eventually, these products are replaced by even newer products which incorporate newer technology. This reduction

in prices impacts the average selling price of our products.

We may experience decreases in future operating results due to the erosion of our average selling prices. If we are

unable to offset any future reductions in our average selling prices by increasing sales volumes, reducing our costs

and expenses, or develop new products or enhancements to existing products, our revenue and profitability will be

materially and adversely affected. We expect to devote more capital to our research and development activities in

order to develop future products and increase spending on our sales and marketing efforts. This continued spending

will have an adverse impact on our results of operations if our net revenue does not continue to grow faster than our

cost of revenue or expenses.

38. Any disruption in our low-cost funding sources would have a material adverse effect on our liquidity and

financial condition.

Our liquidity and profitability are, in large part, dependent upon our timely access to, and costs associated with

raising funds. Our funding requirements historically have been met from a combination of term loans and internal

accruals. Our finance costs were ₹196.73 million, ₹198.62 million, ₹148.71 million and ₹97.68 million in Fiscal

2015, 2016 and 2017 and in the nine months ended December 31, 2017, respectively. As on December 31, 2017, we

have accessed interest free loan of ₹2.30 million from the Uttar Pradesh state government repayable during 2023

which is having substantial saving than the commercial lending rates. Our business depends and will continue to

depend on our ability to access diversified low-cost funding sources.

Our ability to borrow funds on low interest and acceptable terms may also be affected by a variety of factors,

including our credit ratings, the regulatory environment and government policy initiatives in India, liquidity in the

credit markets, the strength of the lenders from whom we borrow, the amount of eligible collateral and accounting

changes that may impact calculations of covenants in our financing agreements. Changes in economic, regulatory

and financial conditions or any lack of liquidity in the market could adversely affect our ability to access funds at

competitive rates, which could adversely affect our liquidity and financial condition.

Pursuing our growth strategy and introducing new product offerings to our customers will have an impact on our

long-term capital requirements. The market for such funds is competitive and our ability to obtain funds at

competitive rates will depend on various factors. If we are unable to access funds at an effective cost that is

comparable to or lower than our competitors, the same shall adversely affect our business and operations. Our ability

to raise funds on acceptable terms and at competitive rates continues to depend on various factors, including the

regulatory environment and policy initiatives in India, liquidity in the market, developments in international markets

affecting the Indian economy, investors’ and/ or lenders’ perception of demand for debt and equity securities, and

our current and future results of operations and financial condition. If we are unable to obtain adequate financing or

financing on terms satisfactory to us and in a timely manner, our ability to grow or support our business and to

respond to business challenges could be limited and our business prospects, financial condition and results of

operations would be materially and adversely affected.

39. We are exposed to foreign exchange fluctuations and other exchange control risks.

We have exposure to foreign exchange related risks in to our business to the extent of borrowings denominated in

foreign currency and also to the extent we do business with international clients including imports of raw materials,

stores & spares and capital equipment. Any appreciation or depreciation of the Indian Rupee against these currencies

can impact our results of operations. We may from time to time be required to make provisions for foreign exchange

differences including mark to margin gains/ losses in accordance with accounting standards. We may experience

foreign exchange losses and gains in respect of transactions denominated in foreign currencies. Any fluctuations in

foreign currency could result in variations in margins for our Company.

The raw material sourcing of our Company is primarily being done domestically because of the strong collection

network, however there is frequent import of some of the raw materials, stores & spares and capital equipment. We

are in a position to gain with currency depreciation by increasing our exports as a result of demand for our products

across the globe. We try to maintain a judicious mix of rupee and forex borrowings which is constantly monitored.

The forex risks are dealt through cautious hedging policies. However, while we selectively hedge the exchange risk

through forward contracts and natural hedging to minimize our foreign currency exchange risks, there can be no

assurance that such measures will enable us to manage our foreign currency risks effectively and in case we are

unable to effectively manage such risks, the same may materially and adversely affect our business, financial

condition and results of operations.

52

40. If we are unable to collect our dues and receivables from our customers, our results of operations and cash

flows could be materially and adversely affected.

Our business depends on our ability to successfully obtain payment from our customers of the amounts they owe us

for the products delivered. Our Company generally extends the benefit of a credit period of up to ninety (90) days

to its customers, however, the same is not uniform and it varies on a case to case basis. Our average credit cycle has

been 23 days, 25 days, 28 days and 32 days in Fiscal 2015, 2016 and 2017 and in the nine months ended December

31, 2017, respectively. Our trade receivable figures as a percentage of gross sale of products were 6.49%, 7.60%,

8.19% and 13.73% in Fiscal 2015, 2016 and 2017 and in the nine months ended December 31, 2017, respectively.

Although we maintain provisions against receivables, actual losses on customer balances could differ from those

that we currently anticipate and as a result we might need to adjust our provisions. We cannot assure you that we

will be able to accurately assess the creditworthiness of our customers. Macroeconomic conditions could also result

in financial difficulties for our customers, including limited access to the credit markets, insolvency or bankruptcy.

Such conditions could cause customers to delay payment, request modifications of their payment terms, or default

on their payment obligations to us, cause us to enter into litigation for non-payment, all of which could increase our

receivables. If we are unable to meet our contractual obligations, we might experience delays in the collection of, or

be unable to collect, our customer balances, and if this occurs, our results of operations and cash flows could be

adversely affected. In addition, if we experience delays in billing and collection for our products, our cash flows

could be adversely affected. Any significant decrease in or discontinuation of products manufactured from our

products by clients in the industry or other industries from which we derive significant revenues in the future may

reduce the demand for our products.

41. We may fail to protect our intellectual property rights or we may be exposed to misappropriation and

infringement claims by third parties, either of which may have a material adverse effect on our business and

reputation.

Our success depends on our ability to protect our core technologies, intellectual property and know-how. We may

be unable to monitor the unauthorised use of our products and technology. If third parties gain unauthorised access

to our proprietary technologies, they may be able to develop and manufacture similar products at a reduced cost,

which may result in a decrease in demand for our products. We also implement third party software obtained from

third parties, which impose restrictions on usage of the product for specific purposes and prohibit reverse engineering

of the software. If we are in breach of such terms, we may be required to pay substantial damages and claims to the

licensors.

As of the date of this Preliminary Placement Document, we have been granted one trade mark. We cannot assure

you that the trademark, granted to us, may not be contested, circumvented or invalidated over the course of our

business. Moreover, the rights granted under any issued patents may not provide us with proprietary protection or

competitive advantages. Our competitors may also be able to develop and obtain patents for technologies that are

similar to or superior to our technologies and we may need to license these technologies. If we are unable to obtain

such licenses on reasonable terms, or at all, our products may lose their competitive advantage.

The measures we take to protect our intellectual property include relying on Indian and foreign laws and initiating

legal proceedings, which may not be adequate to prevent unauthorized use of our intellectual property by third

parties. Notwithstanding the precautions we take to protect our intellectual property rights, it is possible that third

parties may copy or otherwise infringe on our rights, which may have an adverse effect on our business, results of

operations, cash flows and financial condition. Third parties, including our competitors, may claim that our products

infringe their proprietary technology and rights. Such infringement claims may increase as the number of products

and competitors in our market increases and overlaps occur. Such claims and any resulting legal proceeding may

subject us to additional financial burden; divert our management's attention and resources away from our core

business; and if decided against our favour, may restrict us from utilising those technologies and require us to

undertake significant inventory and product write-offs, redesign our products, recall our products already sold and/or

refund the amounts received from selling those products. Furthermore, during the course of such legal proceedings,

confidential information may be disclosed in the form of documents or testimony in connection with discovery

requests, depositions or trial testimony. Disclosure of our confidential information and our involvement in such

proceedings could materially and adversely affect our business.

Furthermore, we cannot be certain that our suppliers have all requisite third-party consents and licences for the

intellectual property used in the components they manufacture. As a result, they may be exposed to risks associated

53

with intellectual property infringement and misappropriation claims by third parties. If a court determines that any

component we have procured from our suppliers infringes the intellectual property rights of any third party, we may

be required to pay damages to such third party and may be prohibited from using such components, either of which

could damage our reputation and could have a material adverse effect on our business and results of operations.

While we take care to ensure that we comply with the intellectual property rights of others, we cannot determine

with certainty whether we are infringing any existing third-party intellectual property rights, which may force us to

alter our offerings. We may also be susceptible to claims from third parties asserting infringement and other related

claims. If similar claims are raised in the future, these claims could result in costly litigation, divert management’s

attention and resources, subject us to significant liabilities and require us to enter into potentially expensive royalty

or licensing agreements or to cease certain offerings. Any of the foregoing could have an adverse effect on our

business, results of operations, cash flows and financial condition.

42. We are subject to counterfeit, cloned and pass-off products, which may reduce our sales and harm the

reputation of our brands.

We are subject to counterfeit, cloned and pass-off products in our businesses. Counterfeit and cloned products are

products manufactured and sold illegally as legitimate products, whereas pass-off products are manufactured and

packaged to resemble legitimate products. In the past few years, advances in technology have contributed to the ease

at which legitimate products can be counterfeited. The sale of counterfeit, cloned and pass-off products have led,

and if left uncurbed, will continue to lead, to lower sales for our businesses. In addition, such products may be

harmful to customers or may be less effective than genuine products, which could harm our brands and reputation.

The proliferation of unauthorized copies of our products, and the time in pursuing claims and complaints about

spurious products could have an adverse effect on our reputation and our business.

43. Competition in the industries in which we operate could result in a reduction in our market share or require

us to incur substantial expenditures on advertising and marketing, either of which could adversely affect

our business, results of operations and financial conditions.

The industries in which we operate are intensely competitive. We compete with several regional and local

companies, as well as organised players such as Alliance Fibres, BLS Ecotech, J B Ecotex, Komal Fibres, Pashupati

Polytex, (Source: CRISIL Report) that may be larger and may have substantially greater resources than we do,

including the ability to spend more on advertising and marketing. We also face competition from new entrants who

may have more flexibility in responding to changing business and economic conditions. Competition in our

businesses can be based on, among other things, pricing, innovation, perceived value, brand recognition, promotional

activities, special events, new product introductions and other activities. It is difficult for us to predict the timing

and scale of our competitors’ actions in these areas. We expect competition to continue to be intense as our existing

competitors expand their operations and introduce new products. Our failure to compete effectively, including any

delay in responding to changes in the industry and market, may affect the competitiveness of our products, which

may result in a decline in our revenues and profitability. Some of our competitors may be larger than us, or develop

alliances to compete against us, have more financial and other resources and have products with greater brand

recognition than ours. Our competitors in certain regions may also have better access or exclusive arrangements to

procure raw materials required in our operations and may procure them at lower costs than us, and consequently be

able to sell their products at lower prices. Some of our international competitors may be able to capitalize on their

overseas experience to compete in the Indian market.

According to All lndia Recycled Fibre & Yarn Manufacturers Association, our Company is the largest PET recycler

in the country in terms of production capacity of manufacturers of Recycled Polyester Staple Fibre in India and

therefore, the large capacities and the strong infrastructure gives us competitive advantage for realising economies

of scale as against our competitors in the unorganized space. However, from the Fiscal 2012 till Fiscal 2017 with

the capacity additions of ~2,000 million kg in the Polyester Filament Yarn (“PFY”) segment as a consequence of

expansion in capacities by Reliance Industries, Garden Silk Mills, JBF Industries, Bhilosa Industries, Wellknown

Polyesters, Filatex, and Raj Rayon, the average utilization of PFY declined from 88% in Fiscal 2012 to 70% in Fiscal

2017. It is expected that the utilization of PFY shall pick up gradually on healthy demand and anticipation of lower

capacity additions in the near term, owing to low utilisation and with the improvement in utilization it is expected

that the players shall augment capacities in the long term. Further, with Reliance Industries Ltd. expanding its

capacity in Dahej, Gujarat by 290 million kg (~20% of installed capacity), the the utilization of manufacturers of

Polyester Staple Fibre (“PSF”) is expected to drop to 64% in fiscal 2018 from 75% in fiscal 2017 and it is expected

to rise steadily thereafter up to fiscal 2020, in line with the expected growth in polyester fibre demand and decline

in imports. (Source: CRISIL Report)

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The PET recycling industry which has ~40 organised players, accounting for 85-90% share of the industry. The

industry grew at the rate of 11% CAGR over the past five years is expected to rise at 9-11% CAGR between fiscals

2017 and 2020. (Source: CRISIL Report.). Our Company has made investments to the tune of ₹204 crore since FY

2013 and has expanded its RPSF capacities by 42,000 MTPA during this period including some capex on Yarn

spinning capacity. Further, our Company has created a unique advantage with its pan-India presence and proximity

to industrial hubs which resulted in an entry barrier for new entrants, however there can be no assurance that our

Company’s competitors and other market players shall not capitalize on high operating rates witnessed by the

industry in Fiscals 2012 to 2017 wherein recycled PSF manufacturers added a considerable 80 kilo tonne of capacity,

taking total capacity to ~480 kilo tonne per annum (KTPA) (Source: CRISIL Report) and in case our competitors

and other market players are successful in penetrating the market of our products thereby reducing our market share

or requiring us to incur substantial expenditures on advertising and marketing, our business, results of operations

and financial conditions could be adversely affected.

Further, in case any new player comes up with such similar products or greener, cheaper products than our Company,

then we could face competitiveness which may lead to price wars in future, affecting our margins. We cannot assure

you that we will be able to compete successfully in the future against our existing or potential competitors or that

our business and results of operations will not be adversely affected by increased competition.

44. Wage pressures and increases in operating costs in India may prevent us from sustaining our competitive

advantage and may reduce our profit margins.

Wage costs as well, as operating costs such as real estate and utilities, in India have historically been significantly

lower than wage costs and operating costs in the United States, Europe and other developed economies; and these

reduced costs have been one of the sources of our competitive strengths. However, wage and operating expense

increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit

margins. Wages in India are increasing at a faster rate than in the developed economies, which could result in

increased employee benefit expenses. We may need to continue to increase the levels of our employee compensation

to remain competitive and manage attrition. Additionally, the cost of real estate and other utilities and operating

expenses is also increasing as India continues to grow. Compensation increases manifest a hike in operational costs

which may result in a material adverse effect on our business and financial condition and result of operations.

45. We are subject to export and import controls that could adversely impact our business.

We are subject to export and import control laws that limit which products we sell and where and to whom, and

which could result in postponements or cancellations of product orders. In addition, various countries regulate the

import of certain technologies and have enacted laws that could limit our ability to distribute our products or could

limit our customers' ability to implement our products in those countries. Changes in our products or changes in

export and import regulations may create delays in the introduction of our products in international markets, prevent

our customers with international operations from deploying our products throughout their global systems or, in some

cases, prevent the export or import of our products to certain countries altogether. Any change in export or import

regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in

the countries, persons or technologies targeted by such regulations, could result in decreased use of our products by,

or in our decreased ability to export or sell our products to, existing or potential customers with international

operations. Delays caused by our compliance with regulatory requirements in obtaining or maintaining any

regulatory approvals that may, in the future, be required to operate our business could materially affect our business

and operating results. We may also be unable to secure components or software for our capital equipment due to

export control laws, as a result of which, our supply chain may be disrupted and we may be unable to provide our

products to customers, which can result in a loss of business for us.

46. Some of our business operations are being conducted on leased premises. Our inability to seek renewal or

extension of such leases may materially affect our business operations.

Some of our business operations are being conducted on premises leased from various third parties. We may also

enter into such transactions with third parties in the future. Any adverse impact on the title, ownership rights,

development rights of the owners from whose premises we operate, breach of the contractual terms of any lease,

leave and license agreements, or any inability to renew such agreements on acceptable terms may materially affect

our business operations. For further details, see “Our Business – Property” on page 126 of this Preliminary

Placement Document.

55

47. Certain of our Directors and certain Key Management Personnel hold Equity Shares in our Company and

are therefore interested in our Company's performance in addition to their normal remuneration or benefits

and reimbursement of expenses incurred.

Certain of our Directors and Key Management Personnel are interested in our Company, in addition to regular

remuneration or benefits and reimbursement of expenses, to the extent of their shareholding. For further details, see

“Board of Directors and Senior Management” and “Capital Structure” on pages 137 and 73, respectively. We cannot

assure you that our Directors and our Key Management Personnel will exercise their rights as shareholders to the

benefit and best interest of our Company.

48. Our operations could be adversely affected by strikes, work stoppages or increased wage demands by our

employees or any other kind of disputes with our employees.

As of February 28, 2018, we employed 2,887 personnel (including contractor workers and trainees) across our

operations Although we have not experienced any material labour unrest, we cannot assure you that we will not

experience disruptions in work due to disputes or other problems with our work force, which may adversely affect

our ability to continue our business operations. Any labour unrest directed against us, could directly or indirectly

prevent or hinder our normal operating activities, and, if not resolved in a timely manner, could lead to disruptions

in our operations. These actions are impossible for us to predict or control and any such event could adversely affect

our business, results of operations and financial condition.

Further, one dispute is pending before the Allahabad High Court against the cancellation of registration of one trade

union, formed in our Company’s Kanpur factory by the jurisdictional Labour department. For further details, please

see “Legal Proceedings – Litigations against our Company” on page 196 of this Preliminary Placement Document.

49. We rely on contract labour for carrying out certain of our operations and we may be held responsible for

paying the wages of such workers, if the independent contractors through whom such workers are hired

default on their obligations, and such obligations could have an adverse effect on our results of operations

and financial condition.

In order to retain flexibility and control costs, we appoint independent contractors who in turn engage on-site contract

labour for performance of certain of our operations in each of our business verticals. Although we do not engage

these laborers directly, we may be held responsible for any wage payments to be made to such laborers in the event

of default by such independent contractor. Any requirement to fund their wage requirements may have an adverse

impact on our results of operations and financial condition. In addition, under the Contract Labour (Regulation and

Abolition) Act, 1970, as amended, we may be required to absorb a number of such contract labourers as permanent

employees. In the event of any non-compliance by contractors with statutory requirements, legal proceedings may

be initiated against us. Thus, any such order from a regulatory body or court may have an adverse effect on our


50. We are subject to various laws and regulations, including environmental and health and safety laws and

regulations in India, which may subject us to increased compliance costs, which may in turn result in an

adverse effect on our financial condition.

Our business and operations are subject to a broad range of environmental, health and safety risks. We, like other

manufacturers in India, are subject to various central, state and local environmental, health and safety of employees

and laws and regulations concerning issues such as damage caused by air emissions, wastewater discharges, solid

and hazardous waste handling and disposal. We are required to obtain and maintain various regulatory approvals

and registrations for our operations, including consents from the local pollution control board in India to establish

and operate manufacturing facilities in India. Further, our Company had moved an application for obtaining the

pollution consent for the Rudrapur Plant on December 1, 2017 for which our Company has received only a

provisional consent from Uttar Pradesh Pollution Control Board up to March 31, 2018. There can be no assurance

that these relevant authorities will issue such permits or approvals in the timeframe anticipated by us. While we

believe we currently have all the permits and approvals required for operating our manufacturing facility, certain of

these approvals require to be renewed periodically, and we cannot assure you that we would be successful in

renewing them in a timely manner or at all. Further, any accidents at our facilities may result in personal injury or

loss of life of our employees, contract laborers or other people, substantial damage to or destruction of property and

equipment resulting in the suspension of operations. Any of the foregoing could subject us to litigation, which may

increase our expenses in the event we are found liable and could adversely affect our reputation. Additionally, the

56

government or the relevant regulatory bodies may require us to shut down our facilities, which in turn could lead to

product shortages that delay or prevent us from fulfilling our obligations to customers.

The adoption of stricter health and safety laws and regulations, stricter interpretations of existing laws, increased

governmental enforcement of laws or other developments in the future may require that we make additional capital

expenditures, incur additional expenses or take other actions in order to remain compliant and maintain our current

operations. Complying with, and changes in, these laws and regulations or terms of approval may increase our

compliance costs and adversely affect our business, prospects, results of operations and financial condition.

We are also subject to the laws and regulations governing relationships with employees in such areas as minimum

wage and maximum working hours, overtime, working conditions, hiring and termination of employees, contract

labour and work permits. There is a risk that we may inadvertently fail to comply with such regulations, which could

lead to enforced shutdowns and other sanctions imposed by the relevant authorities, as well as the withholding or

delay in receipt of regulatory approvals for our new products. We cannot assure you that we will not be involved in

future litigation or other proceedings or be held liable in any litigation or proceedings including in relation to safety,

health and environmental matters, the costs of which may be significant.

These laws, rules and regulations also prescribe for punishments in case of any violations, and such permits or

approvals may impose certain additional conditions on our Company. In case of breach of or non-compliance with

such conditions, we may incur additional costs and liabilities in relation to compliance with these laws and

regulations or any remedial measures in relation thereto and permits or approvals granted to our Company may be

suspended, revoked or cancelled. These additional costs and liabilities could be on account of penalties, fines,

remedial measures and clean-up liabilities or due to compliance with more onerous laws or regulations. Moreover,

the laws and regulations under which we operate are subject to change and any change to these laws and regulations

could adversely affect our business, cash flows and results of operations.

51. We are involved in certain legal proceedings, any adverse developments related to which could materially

and adversely affect our business, reputation and cash flows.

Our Company, Directors and Promoters are involved in certain legal proceedings (as indicated in the table below)

at different levels of adjudication before various courts, tribunals and appellate authorities. We face a significant

risk of litigation, regulatory investigations and similar actions in the ordinary course of our business, including the

risk of lawsuits and other legal actions relating to suitability, claims payments and procedures, product design,

distribution, disclosure, denial or delay of benefits and breaches of fiduciary or other duties. Any such action may

include claims for substantial or unspecified compensatory and punitive damages, as well as civil, regulatory or

criminal proceedings against our directors, officers or employees, and the probability and amount of liability, if any,

may be significant or remain unknown for significant periods of time.

In the event of adverse rulings in these proceedings or consequent actions by regulatory and other statutory

authorities, our Company, Subsidiaries, Directors or Promoters may need to make payments or provisions for future

payments, be subject to other liabilities, harm our reputation or adversely affect our business, financial condition

and results of operations. A summary of the proceedings involving our Company, Subsidiaries, Directors and

Promoters as of the date of this Preliminary Placement Document is provided below:

Nature of cases No. of cases Total amount involved

(in ₹ million)

Litigation involving our Company

Against our Company

Civil cases 11 5.78

Criminal cases - -

Action taken by statutory

and regulatory authorities 1 -

Taxation cases 8 6.88

By our Company

Civil cases 6 8.62

Criminal cases 5 1.16

Litigation involving our Promoter

There are no litigations by or against our promoter

Litigation involving our Directors

57

Nature of cases No. of cases Total amount involved

(in ₹ million)

There are no litigations by or against our Directors

For further details, see “Legal Proceedings” on page 196 of this Preliminary Placement Document. Any decision

against us may have an adverse effect on our profitability and results of operations.

Responding to or defending these regulatory or legal proceedings, regardless of their ultimate outcome, is time

consuming and expensive and can divert the time and effort of our senior management from our business. Moreover,

our provisions for regulatory or legal proceedings may be inadequate. Given the uncertainties and complexity of

many of these regulatory or legal proceedings, their outcome generally cannot be predicted with any reasonable

degree of certainty.

A substantial liability arising from a lawsuit judgment or a significant regulatory action against us or a disruption in

our business arising from adverse adjudications in proceedings against our directors, officers or employees could

have a material adverse effect on our liquidity, business, financial condition and results of operations. Moreover,

even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant harm to

our reputation, which could materially affect our prospects and future growth, including our ability to attract new

customers, retain current customers and recruit and retain employees and agents.

52. We have a number of contingent liabilities, and our profitability could be adversely affected if any of these

contingent liabilities materialises.

Our contingent liabilities as at December 31, 2017 amounted to ₹140.11 million which included provisions for bills

discounted of ₹85.93 million, disputed entry tax demands of ₹3.65 million, disputed income tax demands of ₹0.61

million, disputed service tax demand of ₹0.30 million, disputed purchase tax demands of ₹2.20 million and disputed

VAT demands of ₹0.12 million, claims against our Company not acknowledged as debt of ₹2.46 million and liability

under EPCG licenses of ₹44.84 million. If any of these contingent liabilities materialises, our results of operations

and financial condition may be adversely affected. For further details on our contingent liabilities, see

“Management's Discussion and Analysis of Financial Condition and Results of Operations – Contingent liabilities

and commitments” on pages 89.

53. Our insurance coverage may not be adequate and this may have an adverse effect on our business and

revenues.

We could be held liable for accidents that occur at our manufacturing facilities or otherwise arise out of our

operations. In the event of personal injuries, fires or other accidents suffered by our employees or other people, we

could face claims alleging that we were negligent, provided inadequate supervision or be otherwise liable for the

injuries. Our principal types of coverage include contractors’ all risk insurance policy for erection of plant &

machinery and civil work, boiler and pressure plant insurance policy, electronic equipment insurance policy,

standard fire and special perils insurance policy, machinery breakdown insurance policy, money insurance policy,

burglary insurance policy, marine policy and comprehensive general liability insurance. Apart from the above, our

Company also maintains mediclaim and personal accident policies for its employees not covered under ESI as well

as keyman insurance policy on the lives of two of its executive directors.

For an instance, on April 29, 2014, a fire incident occurred due to leakage of thermic oil in the extruder section of

Korean Production Line at our Company’s Recycled Polyester Staple Fibre Division of Kanpur Unit. Thereafter on

November 10, 2014, a fire occurred in Thermo pack at Rudrapur unit of our Company due to sudden oil leakage.

There can be no assurance that such incidents shall not occur in the future and any claim or liability on our Company

or its promoters, directors and key managerial personnel may materially and adversely affect our business and results

of operations and the market price of the Equity Shares.

While we believe that the insurance coverage which we maintain would be reasonably adequate to cover the normal

risks associated with the operation of our business, we cannot assure you that any claim under the insurance policies

maintained by us will be honored fully, in part or on time, or that we have taken out sufficient insurance to cover all

our losses. In addition, our insurance coverage expires from time to time. We apply for the renewal of our insurance

coverage in the normal course of our business, but we cannot assure you that such renewals will be granted in a

timely manner, at acceptable cost or at all. To the extent that we suffer loss or damage for which we did not obtain

or maintain insurance, and which is not covered by insurance, exceeds our insurance coverage or where our insurance

58

claims are rejected, the loss would have to be borne by us and our results of operations, cash flows and financial

performance could be adversely affected.

Further, our insurance policies are also subject to certain deductibles, exclusions and limits on coverage. We cannot

assure you that the terms of our insurance policies will be adequate to cover any damage or loss suffered by us or

that such coverage will continue to be available on reasonable terms or will be available in sufficient amounts to

cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. A successful

assertion of one or more large claims against us that exceeds our available insurance coverage or changes in our

insurance policies, including premium increases or the imposition or a larger deductible or co-insurance requirement,

could adversely affect our business, financial condition and results of operations and could cause the price of our

Equity Shares to decline.

We do not maintain insurance for business interruption or loss of profit and therefore if any or all of our facilities

are damaged, resulting in our operations being interrupted or we otherwise suffer an interruption to our business, we

would suffer loss of revenues, and our results of operations would be adversely affected.

54. Our Company’s ability to pay dividends in the future will depend on future earnings, financial condition,

cash flows, working capital requirements and required or planned capital expenditures and terms of its

financing arrangements.

Our ability to pay dividends in future will depend on the earnings, financial condition and capital requirements of

our Company. Our business is capital intensive as we are required to innovate from time to time to increase margins,

which may require us to invest all or part of the profits generated by our business operations. Further, we may not

be able to distribute dividends in certain circumstances such as default in payment of interest and/or principal,

amongst others, based on certain of our high cost financing arrangements. While our Company has distributed

dividends during Fiscal Year 2017 and Fiscal Year 2016 and has been a dividend paying company since Fiscal Year

2010, our Company may be unable to pay dividends in the near or medium-term, and our future dividend policy will

depend on our capital requirements and financing arrangements in respect of our projects, financial condition and

results of operations. Any inability to pay dividends in the future may adversely affect the trading price of the Equity

Shares of our Company. For further details, please see “Dividends” on page 75.

55. We have commenced preparation of our financial statements under Indian Accounting Standards (“Ind-

AS”) from the period beginning April 1, 2017. Accounting standards under Ind-AS vary from accounting

standards under Indian GAAP and there can be no assurance that our financial statements prepared and

presented in accordance with Ind-AS do not materially or adversely vary from our historical financial

statements prepared and presented under Indian GAAP, which could adversely affect the trading price of

the Equity Shares.

We are currently preparing our financial statements as per Ind-AS with effect from the period beginning April 1,

2017 in accordance with the notification dated March 30, 2016 by the Ministry of Corporate Affairs, Government

of India. Additionally, Ind-AS differs in certain respects from Indian GAAP and therefore financial statements

prepared under Ind-AS may be substantially different from financial statements prepared under Indian GAAP. There

can be no assurance that our balance sheets, statements of profit and loss, cash flow statements or other financial

statements will not be presented differently under Ind-AS than under Indian GAAP or IFRS, and we have not

conducted a review to identify or determine the extent of any such differences. Our management may also have to

divert significant time and additional resources in order to implement Ind-AS on a timely and successful basis. While

making Ind-AS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing its

management information systems. There can be no assurance that the adoption of Ind-AS by us will not adversely

affect our business prospects, financial condition and results of operations. For further information, see “Summary

of Key Differences between Indian GAAP and Ind-AS” on page 95 of this Preliminary Placement Document.

56. We will continue to be controlled by our Promoters and certain Promoter Group entities after the completion

of the Issue and our Promoters may take or block actions with respect to our business, which may conflict

with our interests or the interests of our minority shareholders.

The pre-Issue shareholding of our Promoters and Promoter Group, as on March 31, 2018, was 45.35%.

Consequently, our Promoters will continue to exercise significant control over us, including being able to control

the composition of our Board of Directors and determine matters requiring shareholder approval or approval of our

Board of Directors. Our Promoters may take or block actions with respect to our business, which may conflict with

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our interests or the interests of our minority shareholders. By exercising their control, our Promoters could delay,

defer or cause a change of our control or a change in our capital structure, delay, defer or cause a merger,

consolidation, takeover or other business combination involving us, discourage or encourage a potential acquirer

from making a tender offer or otherwise attempting to obtain control of us.

57. Statistical and industry data in this document may be incomplete or unreliable.

We have not independently verified data obtained from industry publications and other sources referred to in this

Preliminary Placement Document and therefore, while we believe them to be true, we cannot assure you that they

are complete or reliable. This Preliminary Placement Document includes information derived from CRISIL Report.

Such data may also be produced on different bases from those used in other industry publications. Therefore,

discussions of matters relating to India, its economy and the sectors in which we currently operate in this Preliminary

Placement Document are subject to the caveat that the statistical and other data upon which such discussions are

based may be incomplete or unreliable. Due to possibly flawed or ineffective collection methods or discrepancies

between published information and market practice and other problems, the statistics herein may be inaccurate or

may not be comparable to statistics produced for other economies and should not be unduly relied upon. Further,

there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as may

be the case elsewhere. Neither we, nor the BRLM, nor any other person connected with the Issue has verified the

information in the CRISIL Report and other industry sources, and we cannot guarantee the accuracy, adequacy or

completeness of any such information. In all cases, investors should give consideration as to how much weight or

importance they should attach to, or place on, such facts or statistics. In addition, internal company reports may be

based on a number of variables and have not been verified by independent sources and may be incomplete or

unreliable. Also, please see “Industry Overview” on page 101 of this Preliminary Placement Document.

EXTERNAL RISK FACTORS

58. A slowdown in economic growth in India could cause our business to suffer.

Our performance and the growth of our business are necessarily dependent on the health of the overall Indian

economy. Any slowdown or perceived slowdown in the Indian economy or future volatility in global commodity

prices could adversely affect our business. Additionally, an increase in trade deficit, a downgrading in India’s

sovereign debt rating or a decline in India’s foreign exchange reserves could negatively affect interest rates and

liquidity, which could adversely affect the Indian economy and our business. Any downturn in the macroeconomic

environment in India could also adversely affect our business, results of operations, financial condition and the

trading price of the Equity Shares.

India’s economy could be adversely affected by a general rise in interest rates or inflation, adverse weather

conditions affecting agriculture, commodity and energy prices as well as various other factors. A slowdown in the

Indian economy could adversely affect the policy of the GoI towards our industry, which may in turn adversely

affect our financial performance and our ability to implement our business strategy.

The Indian economy is also influenced by economic and market conditions in other countries, particularly emerging

market conditions in Asia. A decline in India’s foreign exchange reserves and exchange rate fluctuations may also

affect liquidity and interest rates in the Indian economy, which could adversely impact our financial condition. A

loss of investor confidence in other emerging market economies or any worldwide financial instability may adversely

affect the Indian economy, which could materially and adversely affect our business and results of operations and

the market price of the Equity Shares.

Further, other factors which may adversely affect the Indian economy are scarcity of credit or other financing in

India, resulting in an adverse impact on economic conditions in India and scarcity of financing of our developments

and expansions; volatility in, and actual or perceived trends in trading activity on, India’s principal stock exchanges;

changes in India’s tax, trade, fiscal or monetary policies, like application of GST; political instability, terrorism or

military conflict in India or in countries in the region or globally, including in India’s various neighbouring countries;

occurrence of natural or man-made disasters; infectious disease outbreaks or other serious public health concerns;

prevailing regional or global economic conditions, including in India’s principal export markets; and other

significant regulatory or economic developments in or affecting India or its financial services sectors.

59. Political instability or changes in the Government could adversely affect economic conditions in India and

consequently our business.

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Our performance and the market price and liquidity of the Equity Shares may be affected by changes in exchange

rates and controls, interest rates, government policies, taxation, social and ethnic instability and other political and

economic developments affecting India. The GoI has traditionally exercised and continues to exercise a significant

influence over many aspects of the economy. The business of our Company, and the market price and liquidity of

the Equity Shares may be affected by changes in GoI policy, taxation, social and civil unrest and other political,

economic or other developments in or affecting India. Since 1991, successive Indian governments have pursued

policies of economic liberalisation, financial sector reforms including significantly relaxing restrictions on the

private sector. The governments have usually been multi-party coalitions with differing agendas. Any political

instability could affect the rate of economic liberalisation and the specific laws and policies affecting foreign

investment. Other matters affecting investment in the Equity Shares could change as well. A significant change in

India’s economic liberalisation and deregulation policies could adversely affect business and economic conditions

in India generally, and our business in particular, if any new restrictions on the private sector are introduced or if

existing restrictions are increased.

60. Financial instability, economic developments and volatility in securities markets in other countries may also

cause the price of the Equity Shares to decline.

The Indian market and the Indian economy are influenced by economic and market conditions in other countries,

particularly emerging market countries in Asia. Financial turmoil in Europe and elsewhere in the world in recent

years has affected the Indian economy. Although economic conditions are different in each country, investors’

reactions to developments in one country can have adverse effects on the securities of companies in other countries,

including India. Recently, the currencies of a few Asian countries suffered depreciation against the US Dollar owing

to amongst other, the announcement by the US government that it may consider reducing its quantitative easing

measures. A loss of investor confidence in the financial systems of other emerging markets may cause increased

volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial

instability could also have a negative impact on the Indian economy. Financial disruptions may occur again and

could harm our business, future financial performance and the prices of the Equity Shares.

The global credit and equity markets have experienced substantial dislocations, liquidity disruptions and market

corrections in recent years. Since September 2008, liquidity and credit concerns and volatility in the global credit

and financial markets increased significantly with the bankruptcy or acquisition of, and government assistance

extended to, several major US and European financial institutions. These and other related events, such as the

European sovereign debt crisis, have had a significant impact on the global credit and financial markets as a whole,

including reduced liquidity, greater volatility, widening of credit spreads and a lack of price transparency in global

credit and financial markets. In response to such developments, legislators and financial regulators in the United

States and other jurisdictions, including India, have implemented a number of policy measures designed to add

stability to the financial markets.

However, the overall impact of these and other legislative and regulatory efforts on the global financial markets is

uncertain, and they may not have the intended stabilizing effects. In the event that the current difficult conditions in

the global credit markets continue or if there is any significant financial disruption, such conditions could have an

adverse effect on our business, future financial performance and the trading price of the Equity Shares.

61. The Indian tax regime is currently undergoing substantial changes which could adversely affect our

Company’s business and the trading price of the Equity Shares.

The goods and service tax (“GST”) that has been implemented with effect from July 1, 2017 combines taxes and

levies by the GoI and state governments into a unified rate structure, and replaces indirect taxes on goods and services

such as central excise duty, service tax, customs duty, central sales tax, state VAT, cess and surcharge and excise

that were being collected by the GoI and state governments. Since this is a recent development and is undergoing

substantial changes, there could be an adverse impact to our business and consequently affect the trading price of

our Equity Shares.

As regards the General Anti-Avoidance Rules (“GAAR”), the provisions of Chapter X-A (sections 95 to 102) of the

Income Tax Act, 1961, are applicable from assessment year 2019 (Fiscal 2018) onwards. The GAAR provisions

intend to declare an arrangement as an “impermissible avoidance arrangement”, if the main purpose or one of the

main purposes of such arrangement is to obtain a tax benefit, and satisfies at least one of the following tests (i)

creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length; (ii) results,

directly or indirectly, in misuse, or abuse, of the provisions of the Income Tax Act, 1961; (iii) lacks commercial

substance or is deemed to lack commercial substance, in whole or in part; or (iv) is entered into, or carried out, by

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means, or in a manner, that is not ordinarily engaged for bona fide purposes. If GAAR provisions are invoked, the

tax authorities will have wider powers, including denial of tax benefit or a benefit under a tax treaty. In the absence

of any precedents on the subject, the application of these provisions is uncertain. As the taxation regime in India is

undergoing a significant overhaul, its consequent effects on economy cannot be determined at present and there can

be no assurance that such effects would not adversely affect our business, future financial performance and the


Further, the GoI has issued a set of Income Computation and Disclosure Standards (“ICDS”) that will be applied in

computing taxable income and payment of income taxes thereon, effective from April 1, 2016. ICDS apply to all

taxpayers following an accrual system of accounting for the purpose of computation of income under the heads of

“Profits and gains of business/profession” and “Income from other sources”. This is the first time such specific

standards have been issued for income taxes in India, and the impact of the ICDS on our tax incidence is uncertain.

62. Changing laws, rules and regulations and legal uncertainties, including adverse application of corporate

and tax laws, may adversely affect our business, prospects, results of operations and, financial condition.

Our business and financial performance could be adversely affected by changes in law or interpretations of existing,

or the promulgation of new, laws, rules and regulations in India applicable to us and our business. There can be no

assurance that the central or the state governments may not implement new regulations and policies which will

require us to obtain approvals and licenses from the governments and other regulatory bodies or impose onerous

requirements and conditions on our operations.

Uncertainty in the applicability, interpretation or implementation of any amendment to, or change in, governing law,

regulation or policy in the jurisdictions in which we operate, including by reason of an absence, or a limited body,

of administrative or judicial precedent may be time consuming as well as costly for us to resolve and may impact

the viability of our current business or restrict our ability to grow our business in the future. Any unfavourable

changes to the laws and regulations applicable to us could also subject us to additional liabilities.

The application of various Indian tax laws, rules and regulations to our business, currently or in the future, is subject

to interpretation by the applicable taxation authorities. If such tax laws, rules and regulations are amended, new

adverse laws, rules or regulations are adopted or current laws are interpreted adversely to our interests, the results

could increase our tax payments (prospectively or retrospectively) and/or subject us to penalties. Further, changes

in capital gains tax or tax on capital market transactions or sale of shares could affect investor returns. As a result,

any such changes or interpretations could have an adverse effect on our business and financial performance.

63. Differences exist between Indian GAAP, Ind-AS and other accounting principles, which may be material to

investors’ assessments of our financial condition.

Our financial statements, including the financial statements included in this Preliminary Placement Document, are

prepared in accordance with Indian GAAP and Ind-AS. We have not attempted to quantify the impact of other

accounting principles, such as U.S. GAAP or IFRS, on the financial data included in this Preliminary Placement

Document, nor do we provide a reconciliation of its financial statements to those prepared pursuant to U.S. GAAP

or IFRS. U.S. GAAP and IFRS differ in several respects from Indian GAAP and Ind-AS. Accordingly, the degree

to which the Indian GAAP and Ind-AS financial statements included in this Preliminary Placement Document will

provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting

practices. Persons not familiar with Indian accounting practices should, accordingly, consult their own professional

advisors before relying on the financial disclosures presented in this Preliminary Placement Document.

Prospective investors should review the financial results and financial statements summarized in the section

“Financial Information” on page 203 of this Preliminary Placement Document, along with the respective GAAP

accounting policies and consult their own professional advisers for an understanding of the differences between

these accounting principles and those with which they may be more familiar. Accordingly, the degree to which our

financial results and financial statements included in this Preliminary Placement Document will provide meaningful

information is entirely dependent on the reader’s level of familiarity with the present and the earlier GAAP, Ind-AS

applicable in India. Any reliance by persons not familiar with these accounting practices on our financial disclosures

presented in this Preliminary Placement Document should accordingly be limited.

64. Any downgrading of India’s debt rating by a domestic or international rating agency could adversely affect

our ability to raise financing and our business.

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India’s sovereign debt rating could be downgraded due to various factors, including changes in tax or fiscal policy

or a decline in India’s foreign exchange reserves, which are outside our control. Any adverse revisions to India’s

credit ratings for domestic and international debt by domestic or international rating agencies may adversely impact

our ability to raise additional financing, and the interest rates and other commercial terms at which such additional

financing is available. This could have an adverse effect on our business and financial performance, ability to obtain

financing for capital expenditures and the price of the Equity Shares.

65. Our ability to raise foreign capital may be constrained by Indian law.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such

regulatory restrictions could constrain our ability to obtain financings on competitive terms and refinance existing

indebtedness. For an instance, the Reserve Bank of India vide RBI/2017-18/139 A.P. (DIR Series) Circular No. 20

dated March 13, 2018, subject to the conditions prescribed therein, discontinued the practice of issuance of LoUs/

LoCs for trade credits for imports into India with immediate effect which shall adversely affect the ability of our

Company to secure rolling over of its existing buyers credit. There can be no assurance that any such regulatory

measures shall not be taken against our Company by the RBI or any other regulator(s) in the future or the required

regulatory approvals for borrowing in foreign currencies will be granted to our Company without onerous conditions,

or at all. Limitations on foreign debt may have an adverse effect on our business growth, financial condition and

results of operations. Under the foreign exchange regulations currently in force in India, transfers of shares between

non- residents and residents are freely permitted (subject to certain restrictions) if they comply with the pricing

guidelines and reporting requirements specified by the RBI. If the transfer of shares, which are sought to be

transferred, is not in compliance with such pricing guidelines or reporting requirements or falls under any of the

exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders who

seek to convert the Indian Rupee proceeds from a sale of shares in India into foreign currency and repatriate that

foreign currency from India will require a no objection/tax clearance certificate from the income tax authority.

66. Investors may be subject to Indian taxes arising out of capital gains on the sale of our Equity Shares.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are

generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more

than twelve (12) months will be subject to long term capital gains tax, w.e.f April 1, 2018 @ 10% in India if STT

has been paid on the transaction. The STT will be levied on and collected by a domestic stock exchange on which

the Equity Shares are sold. Any gain realized on the sale of equity shares held for more than twelve (12) months to

an Indian resident, which are sold other than on a recognized stock exchange and on which no STT has been paid,

will be subject to long term capital gains tax in India. Further, any gain realized on the sale of listed equity shares

held for a period of twelve (12) months or less will be subject to short term capital gains tax in India. Capital gains

arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption from

taxation in India is provided under a treaty between India and the country of which the seller is resident. Generally,

Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of other countries

may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares. See

“Statement of Tax Benefits” on page 181.

67. A third party could be prevented from acquiring control of us because of the anti-takeover provisions under

Indian law.

There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control of our

Company. Under the takeover regulations, an acquirer has been defined as any person who, directly or indirectly,

acquires or agrees to acquire shares or voting rights or control over a company, whether individually or acting in

concert with others. Although these provisions have been formulated to ensure that interests of

investors/shareholders are protected, these provisions may also discourage a third party from attempting to take

control of our Company. Consequently, even if a potential takeover of our Company would result in the purchase of

the Equity Shares at a premium to their market price or would otherwise be beneficial to our Shareholders, such a

takeover may not be attempted or consummated because of the takeover regulations.

68. It may not be possible for investors to enforce any judgment obtained outside India against us, the Book

Running Lead Manager or any of their directors and executive officers in India respectively, except by way

of a law suit in India.

The enforcement of civil liabilities by overseas investors in the Equity Shares, including the ability to effect service

of process and to enforce judgments obtained in courts outside of India may be adversely affected by the fact that

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our Company is incorporated under the laws of the Republic of India and all of its executive officers and directors

reside in India. As a result, it may be difficult to enforce the service of process upon our Company and any of these

persons outside of India or to enforce outside of India, judgments obtained against our Company and these persons

in courts outside of India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.

Recognition and enforcement of foreign judgments is provided for under Section 13, Section 14 and Section 44A of

the Code of Civil Procedure, 1908 (“Civil Code”) on a statutory basis. Section 44A of the Civil Code provides that

where a certified copy of a decree of any superior court, within the meaning of that Section, in any country or

territory outside India which the Government has by notification declared to be in a reciprocating territory, it may

be enforced in India by proceedings in execution as if the judgment had been rendered by a district court in India.

However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the same nature of

amounts payable in respect of taxes, other charges of a like nature or in respect of a fine or other penalties and does

not apply to arbitration awards (even if such awards are enforceable as a decree or judgment).

The United Kingdom, Singapore and Hong Kong have been declared by the Government to be reciprocating

territories for the purposes of Section 44A of the Civil Code. The United States has not been declared by the

Government of India to be a reciprocating territory for the purposes of Section 44A of the Civil Code. A judgment

of a court of a country which is not a reciprocating territory may be enforced in India only by a suit upon the judgment

under Section 13 of the Civil Code, and not by proceedings in execution. Section 13 of the Civil Code provides that

foreign judgments shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment

has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the

merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect

view of international law or refusal to recognize the law of India in cases to which such law is applicable; (iv) where

the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has

been obtained by fraud; and/ or (vi) where the judgment sustains a claim founded on a breach of any law then in

force in India. The suit must be brought in India within three years from the date of judgment in the same manner

as any other suit filed to enforce a civil liability in India.

Further, there are considerable delays in the disposal of suits by Indian courts. It may be unlikely that a court in India

would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it may be

unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as

excessive or inconsistent with public policy in India. A party seeking to enforce a foreign judgment in India is

required to obtain prior approval from the RBI under FEMA to repatriate any amount recovered pursuant to

execution and any such amount may be subject to income tax in accordance with applicable laws. Any judgment or

award in a foreign currency would be converted into Indian Rupees on the date of the judgment or award and not on

the date of the payment.

69. Inflation in India could have an adverse effect on our profitability and if significant, on our financial

condition.

The annual rate of inflation, was at 3.93% (provisional) for the month of November 2017 (over November 2016) as

compared to 3.59% (provisional) for the previous month and 1.82% during the corresponding month of 2016.

(Source: Index Numbers of Wholesale Price in India, Review for the month of November 2017, published on

December 14, 2017 by Government of India, Ministry of Commerce and Industry) Continued high rates of inflation

may increase our expenses related to salaries or wages payable to our employees or any other expenses. There can

be no assurance that we will be able to pass on any additional expenses to our payers or that our revenue will increase

proportionately corresponding to such inflation. Accordingly, high rates of inflation in India could have an adverse

effect on our profitability and, if significant, on our financial condition.

70. Acts of terrorism, civil disturbance, communal conflicts, regional conflicts and other similar threats to

security could adversely affect our Company’s business, cash flows, results of operations and financial

condition.

Increased political instability and regional conflicts, evidenced by the threat or occurrence of terrorist attacks,

enhanced national security measures, conflicts in several countries and regions in which our Company operates,

strained relations arising from these conflicts and the related decline in customer confidence may hinder our ability

to do business. Any escalation in these events or similar future events may disrupt our Company’s operations or

those of our customers and suppliers. Further, certain events that are beyond the control of our Company, such as

violence or war, including those involving India, the United Kingdom, the United States or other countries, may

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adversely affect worldwide financial markets and could potentially lead to a severe economic recession, which could

adversely affect our business, results of operations, financial condition and cash flows, and more generally, any of

these events could lower confidence in India's economy. Southern Asia has, from time to time, experienced instances

of civil unrest and political tensions and hostilities among neighbouring countries. Political tensions could create a

perception that there is a risk of disruption of services provided by India-based companies, which could have an

adverse effect on our business, future financial performance and price of the Equity Shares. Furthermore, if India

were to become engaged in armed hostilities, particularly hostilities that are protracted or involve the threat or use

of nuclear weapons, the Indian economy and consequently Company's operations might be significantly affected.

India has from time to time experienced social and civil unrest and hostilities, including riots, regional conflicts and

other acts of violence. Events of this nature in the future could have an adverse effect on our ability to develop our

business. As a result, our business, results of operations and financial condition may be adversely affected. These

events have had and may continue to have an adverse impact on the global economy and customer confidence, which

could in turn adversely affect our Company’s revenue, operating results and cash flows. Such incidents could also

create a greater perception that investment in Indian companies involves a higher degree of risk and could have an

adverse effect on our business and the market price of the Equity Shares. The impact of these events on the volatility

of global financial markets could increase the volatility of the market price of securities and may limit the capital

resources available to our Company and to our customers and suppliers.

71. Rights of shareholders under Indian laws may differ from the laws of other jurisdictions.

Our articles of association and Indian law govern our corporate affairs. Indian legal principles related to corporate

procedures, directors’ fiduciary duties and liabilities, and shareholders’ rights may differ from those that would

apply to a company in another jurisdiction. Shareholders’ rights including in relation to class actions, under Indian

law may not be as extensive as shareholders’ rights under the laws of other countries or jurisdictions.

72. An outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere could

adversely affect our business.

The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern, such as swine

influenza, could have a negative impact on the global economy, financial markets and business activities worldwide,

which could adversely affect our business, financial condition, results of operations and the price of our Equity

Shares. The potential impact of a natural disaster such as the H5N1 "avian flu" virus, or H1N1, the swine flu virus,

MERS (Middle East Respiratory Syndrome), Zika, the mosquito virus, on our results of operations and financial

position is speculative and would depend on numerous factors. We cannot assure prospective investors that such

events will not occur in the future or that our business, results of operations and financial condition will not be

adversely affected There can be no assurance that a future outbreak of an infectious disease among humans or

animals or any other serious public health concerns will not have a material adverse effect on our business, financial

condition, results of operations and the price of our Equity Shares.

73. The occurrence of natural or man-made disasters could adversely affect our results of operations, cash flows

and financial condition. Hostilities, terrorist attacks, civil unrest and other acts of violence could adversely

affect the financial markets and our business.

The occurrence of natural disasters, including cyclones, storms, floods, earthquakes, tsunamis, tornadoes, fires,

explosions, pandemic disease and man-made disasters, including acts of terrorism and military actions, could

adversely affect our results of operations, cash flows or financial condition. Terrorist attacks and other acts of

violence or war in India or globally may adversely affect the Indian securities markets. In addition, any deterioration

in international relations, especially between India and its neighbouring countries, may result in investor concern

regarding regional stability which could adversely affect the price of the Equity Shares. In addition, India has

witnessed local civil disturbances in recent years and it is possible that future civil unrest as well as other adverse

social, economic or political events in India could have an adverse effect on our business. These acts may also result

in a loss of business confidence, and adversely affect our business. Such incidents could also create a greater

perception that investment in Indian companies involves a higher degree of risk and could have an adverse effect on

our business and the market price of the Equity Shares.

RISKS RELATING TO THE ISSUE AND THE EQUITY SHARES

74. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

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The Indian securities markets are smaller and may be more volatile than securities markets in more developed

economies. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and

other participants differ, in some cases significantly, from those in the U.S. and Europe. Indian stock exchanges have

in the past experienced substantial fluctuations in the prices of listed securities.

Indian stock exchanges have, in the past, experienced problems that have affected the market price and liquidity of

the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and

strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted

securities from trading, limited price movements and increased margin requirements. Further, disputes have occurred

on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some

cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and

liquidity of the Equity Shares could be adversely affected. A closure of, or trading stoppage on, either the BSE or

the NSE could adversely affect the trading price of the Equity Shares.

75. The Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares after

the Issue.

The Issue Price of the Equity Shares will be determined by our Company in consultation with the BRLM. This price

will be determined on the basis of applicable law and may not be indicative of the market price for the Equity Shares

after the Issue. The market price of the Equity Shares could be subject to significant fluctuations after the Issue and

may decline below the Issue Price. We cannot assure you that you will be able to resell your Equity Shares at or

above the Issue Price. There can be no assurance that an active trading market for the Equity Shares will be sustained

after this Issue, or that the price at which the Equity Shares have historically traded will correspond to the price at

which the Equity Shares will trade in the market subsequent to this Issue.

76. The trading price of our Equity Shares may be subject to volatility and you may not be able to sell the Equity

Shares at or above the Issue Price.

The trading price of our Equity Shares may fluctuate after the Issue due to a variety of factors, including our results

of operations and the performance of our business, competitive conditions, general economic, political and social

factors, the performance of the Indian and global economy and significant developments in India’s fiscal regime,

economic liberalisation, deregulation policies and procedures or programs applicable to our business, adverse media

reports on our Company, volatility in the Indian and global securities market, performance of our competitors, the

Indian real estate industry and the perception in the market about investments in the real estate industry, changes in

the estimates of our performance or recommendations by financial analysts and announcements by us or others

regarding new projects, strategic partnerships, joint ventures, or capital commitments. In addition, if the stock

markets in general experience a loss of investor confidence, the trading price of our Equity Shares could decline for

reasons unrelated to our business, financial condition or operating results. The trading price of our Equity Shares

might also decline in reaction to events that affect other companies in our industry even if these events do not directly

affect us. Each of these factors, among others, could adversely affect the price of our Equity Shares. If the stock

markets experience a loss of investor confidence, the trading price of our Equity Shares could decline for reasons

unrelated to our business, financial condition or operating results. The trading price of our Equity Shares might also

decline in reaction to events that affect other companies in our industry even if these events do not directly affect

us. Each of these factors, among others, may adversely affect the trading price of our Equity Shares.

77. Some of our promoters and promoter group member have pledged a portion of their equity shareholding in

our Company and any sale of such pledged shares by the pledgees may dilute your shareholding and

adversely affect the trading price of the Equity Shares.

Our promoters, Shyam Sunder Sharmma and Sharad Sharma, and promoter group member Vimal Sharma have

pledged 8.34%, 1.89% and 1.64% of their respective shareholding interest in our Company to the Consortium of

Company’s lenders - led by State Bank of India. The pledge has been made to collaterally secure the secured

borrowings of our Company. Any future exercise of pledge on the aforesaid pledged shares by the pledgees may

dilute your shareholding in our Company, adversely affect the trading price of the Equity Shares. In addition, any

perception by investors that such exercise of pledge might occur could also affect the trading price of the Equity

Shares. No assurance may be given that the pledgees shall not exercise their rights under the pledge against the

aforesaid promoters and in the event such right is actually exercised, there can further be no assurance that the

pledgees shall not dispose off the pledged shares. Any disposal of such equity shares or the perception that such

disposal may occur may significantly affect the trading price of the Equity Shares.

66

78. Any future issuance of Equity Shares by our Company or sales of our Equity Shares by any of our

Company’s significant shareholders may adversely affect the trading price of our Equity Shares.

Our Company may be required to finance its future growth and business requirements through additional securities

offerings. Any future issuance of Equity Shares by us could dilute your shareholding. Any such future issuance of

our Equity Shares, including allotments made pursuant to any employee stock option schemes, or sales of our Equity

Shares by any of our significant shareholders may also adversely affect the trading price of our Equity Shares, and

could impact our ability to raise capital through an offering of our securities. There can be no assurance that we will

not issue further Equity Shares or that the shareholders will not dispose of, pledge, or otherwise encumber their

Equity Shares. In addition, any perception by investors that such issuances or sales might occur could also affect the

trading price of our Equity Shares.

79. Recent U.S. tax legislation could result in materially adverse U.S. federal income tax consequences to U.S.

Holders of the equity shares.

Recently enacted U.S. tax legislation will significantly change the U.S. Internal Revenue Code, including taxation

of U.S. corporations, by, among other things, limiting interest deductions, reducing the U.S. corporate income tax

rate, altering the expensing of capital expenditures, adopting elements of a territorial tax system, assessing a

repatriation tax or “toll-charge” on undistributed earnings and profits of U.S.-owned foreign corporations, and

introducing certain anti-base erosion provisions. The legislation is unclear in certain respects and will require

interpretations and implementing regulations by the Internal Revenue Service, as well as state tax authorities, and

the legislation could be subject to potential amendments and technical corrections, any of which could lessen or

increase certain adverse impacts of the legislation. In addition, the regulatory treatment of the impacts of this

legislation will be subject to the discretion of the Federal Energy Regulatory Commission and state public utility

commissions.

80. Your ability to acquire and sell Equity Shares offered in the Issue is restricted by the distribution, solicitation

and transfer restrictions set forth in this Preliminary Placement Document.

No actions have been taken to permit a public offering of the Equity Shares offered in the Issue in any jurisdiction.

As such, your ability to acquire Equity Shares offered in the Issue is restricted by the distribution and solicitation

restrictions set forth in this Preliminary Placement Document. For further information, see “Selling Restrictions” on

page 165. Furthermore, the Equity Shares offered in the Issue are subject to restrictions on transferability and resale.

For further details, see “Transfer Restrictions” on page 171. You are required to inform yourself about and observe

these restrictions. Our representatives, our agents and us will not be obligated to recognize any acquisition, transfer

or resale of the Equity Shares offered in the Issue made other than in compliance with applicable law.

81. Our Company could be an investment company under the U.S. Investment Company Act and as a result the

transferability of the Equity Shares by purchasers in the United States or who are US persons is affected.

Although we have undertaken a determinative analysis, we could be an “investment company” under the U.S.

Investment Company Act. We are not registered under the U.S. Investment Company Act and exemptions from

registration under the U.S. Investment Company Act may not be available to us. In connection with the placing of

the Equity Shares with U.S. persons in this Issue, we are seeking to rely on the exclusion provided under Section

3(c)(7) of the U.S. Investment Company Act. We are making a private placement of Equity Shares to persons in the

United States and U.S. persons who are both U.S. QIBs and Qualified Purchasers on the terms contained herein. If

any Equity Shares are owned by or transferred to a U.S. person who is not a Qualified Purchaser, we may become

subject to the requirement to register under the U.S. Investment Company Act. Failure to register under the U.S.

Investment Company Act when required to so register may lead to fines, penalties, rescission rights for investors

and other adverse consequences for us. We have elected to impose certain additional restrictions on the U.S. Offering

and on transferability of the Equity Shares. The Equity Shares purchased in this Issue will only be transferable in

the manner described in “Transfer Restrictions”.

82. An investor will not be able to sell any of our Equity Shares purchased in the offering other than on a

recognized Indian stock exchange for a period of twelve (12) months from the date of issue of our Equity

Shares.

Pursuant to the SEBI ICDR Regulations, for a period of twelve (12) months from the date of the issue of our Equity

Shares in this offering, investors purchasing our Equity Shares in the offering may only sell their Equity Shares on

67

the NSE or the BSE and may not enter into any off – market trading in respect of their Equity Shares. We cannot be

certain that these restrictions will not have an impact on the price of our Equity Shares. In addition to the above,

investors will be subject to the respective regulations applicable to their operations and any lock-in requirements

prescribed thereunder. This may affect the liquidity of the Equity Shares purchased by investors and it is uncertain

whether these restrictions will adversely impact the market price of the Equity Shares purchased by investors.

83. Foreign investors are subject to foreign investment restrictions under Indian law that limit our Company's

ability to attract foreign investors, which may adversely affect the market price of the Equity Shares.

Under the foreign exchange regulations currently in force in India, transfers of shares between non-residents and

residents and issuances of shares to non-residents are freely permitted (subject to certain exceptions) if they comply

with the requirements specified by the RBI. If such issuances or transfers of shares are not in compliance with such

requirements or fall under any of the specified exceptions, then prior approval of the RBI will be required. We have

undertaken or recorded such transactions in the past based on a bona fide interpretation of the law. There can be no

assurance that our interpretation would be upheld by the Indian regulators. Any change in such interpretation could

impact the ability of our Company to attract foreign investors.

In addition, shareholders who seek to convert the Indian Rupee proceeds from a sale of shares in India into foreign

currency and repatriate that foreign currency from India will require a no-objection or tax clearance certificate from

the income tax authority. Additionally, the Government of India may impose foreign exchange restrictions in certain

emergency situations, including situations where there are sudden fluctuations in interest rates or exchange rates,

where the Government of India experiences extreme difficulty in stabilising the balance of payments, or where there

are substantial disturbances in the financial and capital markets in India. These restrictions may require foreign

investors to obtain the Government of India's approval before acquiring Indian securities or repatriating the interest

or dividends from those securities or the proceeds from the sale of those securities. There can be no assurance that

any approval required from the RBI or any other government agency can be obtained on any particular terms, or at

all.

84. There is no guarantee that the Equity Shares issued pursuant to this Issue will be listed on the BSE and the

NSE in a timely manner, or at all, and any trading closure at the Stock Exchanges may adversely affect the


In accordance with Indian regulations and practice, permission for listing and trading of the Equity Shares issued

pursuant to this Issue will not be granted until after the Equity Shares have been issued and allotted. Approval for

listing and trading will require all relevant documents authorizing the issuing of Equity Shares to be submitted.

There could be a failure or delay in listing the Equity Shares on the BSE and the NSE. Any failure or delay in

obtaining the approval would restrict an investor’s ability to dispose of the Equity Shares. The Stock Exchanges

have in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays

and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and

liquidity of the securities of listed Indian entities, including the Equity Shares, in both domestic and international

markets. A closure of, or trading stoppage on, either of the Stock Exchanges could adversely affect the trading price

of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity

Shares will trade in the future.

85. Applicants in the Issue are not permitted to withdraw their Bids (in terms of quantity of Equity Shares or

the Bid Amount) at any stage after Issue Closing Date.

Pursuant to the SEBI ICDR Regulations, applicants in this Issue are not permitted to withdraw their Bids at any

stage after the Issue Closing Date. The Allotment of Equity Shares in this Issue and the credit of such Equity Shares

to the applicant’s demat account with its depository participant could take approximately seven days and up to ten

(10) days from the Issue Closing Date. However, material adverse changes in international or national monetary

policy, financial, political or economic conditions, our business, results of operation or financial condition may arise

between the Issue Closing Date and the date of Allotment. Occurrence of any such events after the Issue Closing

Date could also affect the market price of the Equity Shares. The applicants shall not have the right to withdraw their

Bids in the event of any such occurrence. Our Company may complete the Allotment of the Equity Shares even if

such events occur, and such events may limit the applicants’ ability to sell the Equity Shares Allotted pursuant to

the Issue or cause the trading price of the Equity Shares to decline.

86. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a

shareholder's ability to sell, or the price at which it can sell Equity Shares at a particular point in time.

68

The Equity Shares will be subject to daily circuit breaker imposed by all stock exchanges in India on all listed

companies which does not allow transactions beyond certain volatility in the price of the Equity Shares. This circuit

breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Stock

Exchanges. The percentage limits on our circuit breakers are set by the Stock Exchanges. The Stock Exchanges are

not required to inform us of the percentage limit of such circuit breakers and may change it without our knowledge.

This circuit breaker effectively limits the upward and downward movements in the price of the Equity Shares. As a

result of this circuit breaker, there can be no assurance regarding the ability of our shareholders to sell the Equity

Shares or the price at which shareholders may be able to sell their Equity Shares at a particular point in time.

87. Investors will be subject to market risks until the Equity Shares credited to the investor’s demat account are

listed and permitted to trade.

Investors can start trading the Equity Shares allotted to them only after they have been credited to an investor’s

demat account, are listed and permitted to trade. Since the Equity Shares are currently traded on the BSE and the

NSE, investors will be subject to market risk from the date they pay for the Equity Shares to the date when trading

approval is granted for the same. Further, there can be no assurance that the Equity Shares allocated to an investor

will be credited to the investor’s demat account in a timely manner or that trading in the Equity Shares will

commence in a timely manner.

88. After this Issue, the price of our Equity Shares may be volatile.

The Issue Price will be determined by us in consultation with the Book Running Lead Manager, based on Bids

received in compliance with Chapter VIII of the SEBI Regulations, and it may not necessarily be indicative of the

market price of the Equity Shares after this Issue is completed. The trading price of the Equity Shares may fluctuate

after this Issue due to a variety of factors, including our results of operations and the performance of our business,

competitive conditions, general economic, political and social factors, the performance of the Indian and global

economy and significant developments in India’s fiscal regime, volatility in the Indian and global securities market,

performance of our competitors, the Indian financial services industry and the perception in the market about

investments in the financial services industry, changes in the estimates of its performance or recommendations by

financial analysts and announcements by us or others regarding contracts, acquisitions, strategic partnerships or

capital commitments. The trading price of the Equity Shares might also decline in reaction to events that affect other

companies in our industry even if these events do not directly affect us. Each of these factors, among others, could

adversely affect the price of the Equity Shares. There can be no assurance that an active trading market for the Equity

Shares will be sustained after this Issue, or that the price at which the Equity Shares have historically traded will

correspond to the price at which the Equity Shares are offered in this Issue or the price at which the Equity Shares

will trade in the market subsequent to this Issue.

69

MARKET PRICE INFORMATION

As on the date of this Preliminary Placement Document, 19,176,877 Equity Shares have been issued, subscribed and

paid-up and outstanding. The Equity Shares have been listed and traded on the BSE since February 13, 1992 and on

the NSE since March 9, 2015.

Since the Equity Shares are actively traded on the Stock Exchanges, the market price and other information for each

of the BSE and the NSE has been given separately.

(i) The following tables set forth the reported high, low and average market prices and the trading volumes of

the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were recorded

for Fiscal Years ended 2018, 2017 and 2016:

BSE

Fiscal

Year

High

(₹) Date of high

Number

of

Equity

Shares

traded

on the

date of

high

Total

turnover

on date

of high

(₹

million)

Low

(₹) Date of low

Number

of

Equity

Shares

traded

on the

date of

low

Total

turnover

on date

of low (₹

million)

Average

of

Closing

Prices

during

the

Period

(₹)

Total

number of

Equity

Shares

traded in

the period

Total

Equity

Shares

traded

in the

period

In

number

In ₹

million

2018 480.00 Jan 16, 2018 18,666 8.67 218.15 April 6, 2017 426 0.09 354.23 1,931,221 671.08

2017 239.85 Sept 19, 2016 30,576 6.91 147.05 Jul 22, 2016 4,956 0.76 189.08 3,530,189 691.15

2016 183.80 Jul 24, 2015 122,476 21.59 109.00 Nov 18, 2015 5,172 0.57 142.59 4,733,273 728.25

NSE

Fiscal

Year High (₹) Date of high

Number

of Equity

Shares

traded on

the date

of high

Total

turnover

on date

of high

(₹

million)

Low

(₹) Date of low

Number

of Equity

Shares

traded

on the

date of

low

Total

turnover

on date of

low (₹

million)

Average

of

Closing

Prices

during

the

Period

(₹)

Total

number of

Equity

Shares

traded in

the period

Total

Equity

Shares

traded

in the

period

In number In ₹

million

2018 479.00 Jan 16, 2018 190,638 87.81 216.65 Apr 7, 2018 13,902 3.11 354.70 7,488,444 2,680.79

2017 239.00 Mar 16, 2017 23,081 5.41 147.50 Apr 8, 2016 1,369 0.20 189.36 7,401,512 1,486.70

2016 196.25 Jul 24, 2017 137,034 24.22 106.65 Nov 13, 2015 2,157 0.24 142.86 8,887,178 1,326.01

(Source: www.bseindia.com and www.nseindia.com)

Notes:

1) Average prices are based on the daily closing prices.

2) High and low prices are based on high and low of the daily prices. In case the price is the same on 2 dates then

the date with the higher volume has been considered.

(ii) The following tables set forth the reported high, low and average market prices and the trading volumes of

the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were recorded

during each of the last six months:

BSE

Month year High (₹) Date of high Number

of Equity

Shares

traded

on date

of high

Total

turnover

on date

of high (₹

million)

Low (₹) Date of low Number

of

Equity

Shares

traded

on date

of low

Total

turnover

on date

of low (₹

million)

Average

of

Closing

Prices

for the

Period

(₹)

Total Equity

Shares traded in

the period

(In

figures)

(In ₹ in

million)

April 2018 409.50 Apr 13, 2018 736 0.29 335.00 Apr 2, 2018 2,951 1.03 384.98 30,164 11.61

http://www.bseindia.com/

http://www.nseindia.com/

70

BSE


of Equity

Shares

traded

on date

of high

Total

turnover

on date

of high (₹

million)


of

Equity

Shares

traded

on date

of low

Total

turnover

on date

of low (₹

million)

Average

of

Closing

Prices

for the

Period

(₹)

Total Equity

Shares traded in

the period

(In

figures)

(In ₹ in

million)

March 2018 355.00 Mar 28, 2018 49,915 16.58 312.65 Mar 9, 2018 2,386 0.77 326.97 138,594 45.66

February 2018 415.00 Feb 1, 2018 4,496 1.80 332.70 Feb 21, 2018 1,970 0.66 355.59 150,158 52.69

January 2018 480.00 Jan 16, 2018 18,666 8,67 390.00 Jan 31, 2018 37,008 14.83 424.66 135,104 58.00

December 2017 429.00 Dec 22, 2017 6,642 2.78 371.00 Dec 8, 2017 66,540 24.84 399.01 150,609 59.22

November 2017 425.00 Nov 24, 2017 11,038 4.46 355.60 Nov 15, 2017 712 0.26 380.37 52,886 20.45

NSE


of

Equity

Shares

traded

on date

of high

Total

turnover

on date of

high (₹

million)


of Equity

Shares

traded on

date of

low

Total

turnover

on date

of low (₹

million)

Average

of

Closing

Prices

for the

Period

(₹)

Total Equity

Shares traded in

the period

In

figures

(In ₹ in

million)

April 2018 412.95 Apr 20, 2018 9,239 3.64 335.25 Apr 2, 2018 6,194 2.17 387.28 189,543 73.69

March 2018 357.50 Mar 28, 2018 96,768 32.20 312.00 Mar 13, 2018 6,900 2.24 327.69 307,085 100.97

February 2018 409.60 Feb 1, 2018 9.538 3.82 331.25 Feb 20, 2018 13,098 4.47 355.03 470,735 167.17

January 2018 479.00 Jan 16, 2018 190,638 87.81 391.25 Jan 31, 2018 95,478 38.24 425.26 956.306 417.92

December 2017 429.90 Dec 22, 2017 37,606 15.79 377.10 Dec 8, 2017 23,758 9.34 399.28 510,279 208.02

November 2017 428.30 Nov 24, 2017 71,124 29.01 365.00 Nov 15, 2017 3,098 1.14 381.02 308,409 119.53

October 2017 408.90 Oct 5, 2017 80,781 32.15 362.50 Oct 30, 2017 13,407 4.98 380.94 446,751 173.08


Notes:

1) Average prices are based on the daily closing prices.

2) High and low prices are based on high and low of the daily prices. In case the price is the same on 2 dates

then the date with the higher volume has been considered.

(iii) The following table sets forth the market price on the Stock Exchanges on August 14, 2017, the first

working day following the approval of the Board of Directors for the Issue on August 12, 2017:

BSE

Open High Low Close Number of Equity

Shares traded

Turnover

(₹ million)

335.60 342.00 326.00 338.65 2,302 0.78

NSE

Open High Low Close Number of Equity

Shares traded

Turnover

(₹ million)

341.00 342.45 323.90 339.20 11,059 3.75






71

USE OF PROCEEDS

The gross proceeds from the Issue will be approximately ₹[●] million. The net proceeds from the Issue, after

deducting fees, commissions and expenses of the Issue, will be approximately ₹[●] million (the “Net Proceeds”).

Subject to compliance with applicable laws and regulations, we intend to utilise the Net Proceeds of the Issue for:

• business purposes;

• future expansion plans, including but not limited to meet capital expenditure and working capital requirements

of our Company;

• repayment of debt;

• exploring acquisition opportunities; and

• general corporate purposes.

Neither our Promoters nor our Directors are making any contribution either as part of the Issue or separately in

furtherance of the objects of the Issue.

The net proceeds are not proposed to be utilised towards any specific project. Accordingly, the project-specific

disclosure requirements under the SEBI ICDR Regulations in relation to the break-up costs, means of financing and

proposed deployment status at each stage, are not applicable.

72

CAPITALISATION STATEMENT

The following tables set forth our capitalization as of and for the nine months period ended December 31, 2017 and

the year ended March 31, 2017, and as adjusted for the Issue. These tables should be read in conjunction with section

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 76

and other financial information contained in section “Financial Information” on beginning on page 203.

(In ₹)

As at March 31, 2017(a) As at December 31,

2017(b) As adjusted for the Issue*

Shareholders’ Fund (Equity)

Share Capital 191,768,770 191,768,770 [●]

Securities Premium Account 438,959,565 438,959,565 [●]

Reserves and surplus (excluding

Securities Premium Account)

1,670,134,089 1,897,739,403 [●]

Total Shareholders’ Funds (A) 2,300,862,424 2,528,467,738 [●]

Debt [●]

Long-term borrowings (B) 367,656,351 856,150,965 [●]

Short-term borrowings 625,293,147 1,019,348,566 [●]

Other borrowings current maturities for

long term borrowings

369,260,528 189,674,742 [●]

Total Debt (C) 1,362,210,026 2,065,174,273 [●]

Total (A+ C) 3,663,072,450 4,593,642,011 [●]

Long Term Debt / Equity Ratio (B/A) 0.16 0.34 [●]

(a) As per the audited financial statements of our Company, prepared in accordance with the accounting standards

notified under section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies

(Accounts) Rules, 2014 and Companies (Accounting Standards) Rules, 2006.

(b) As per the unaudited interim financial statements of our Company, subjected to limited review, prepared in accordance

with Ind-AS.

* will be inserted following the closure of the Issue.

Notes

1. Short-term borrowings are considered as borrowing due within 12 months from the balance sheet date.

2. Long-term borrowings are considered as borrowing other than short term borrowing.

73

CAPITAL STRUCTURE

The Equity Share capital of our Company as at the date of this Preliminary Placement Document is set forth below:

(In ₹, except share data)

Aggregate value at face value

1. AUTHORIZED SHARE CAPITAL (1)

34,000,000 Equity Shares of face value ₹10 each 340,000,000

2,150,000 Preference Shares of face value ₹100 each 215,000,000

TOTAL 555,000,000

2. ISSUED, SUBSCRIBED AND PAID UP CAPITAL BEFORE THE

ISSUE

19,176,877 Equity Shares of face value ₹10 each 191,768,770

3. PRESENT ISSUE IN TERMS OF THIS PRELIMINARY PLACEMENT

DOCUMENT

Up to [●] Equity Shares(2) [●]

4. PAID-UP CAPITAL AFTER THE ISSUE

[●] Equity Shares [●]

TOTAL [●]

5. SECURITIES PREMIUM ACCOUNT

Before the Issue 438,959,565

After the Issue [●]

(1) Our Company has, pursuant to a resolution passed at its Annual General Meeting held on September 25, 2017, reclassified

its Authorised Share Capital into 34,000,000 Equity Shares of ₹10 each and 2,150,000 Preference Shares of ₹100 each

aggregating to ₹555,000,000.

(2) The Issue has been authorised by the Board of Directors vide a resolution passed at its meeting held on August 12, 2017

and by the Shareholders at the Annual General Meeting of our Company on September 25, 2017 pursuant to sections 42

and 62(1)(c) of the Companies Act, 2013.

Share Capital History of our Company

The history of the Equity Share capital of our Company is provided in the following table:

Date of

Allotment

Face

Value (₹)

Issue price

per Equity

Share (₹)

Nature of

Allotment

Nature of

Consideration

Number of

Equity Shares

Allotted

Cumulative

number of

Equity Shares

October 20,

1987

10/-

10/

Initial subscription

to the MoA Cash 70 70

November 8,

1988 10/- 10/- Preferential Issue Cash 190,280 190,350

January 13,


February 21,


January 20,

1992 10/- 10/- Initial Public Offer Cash 2,839,950 3,450,000

May 29,

1993 10/- 15/- Rights Issue Cash 3,450,000 6,900,000

December

24, 1996 10/- 10/- Preferential Issue Cash 2,000,000 8,900,000

December

30, 2005 10/- 15/- Preferential Issue Cash 465,000 9,365,000

March 31,

2008 10/- 15/- Preferential Issue Cash 490,000 9,855,000

March 25,


March 25,

2010 10/- 20/- Preferential Issue Cash 1,950,000 12,320,000

April 1,


74

Date of

Allotment

Face

Value (₹)

Issue price

per Equity

Share (₹)

Nature of

Allotment

Nature of

Consideration

Number of

Equity Shares

Allotted

Cumulative

number of

Equity Shares

March 28,


December 5,


February 21,


August 3,

2015(1) 10/- 114/- Preferential Issue Cash 2,725,877 18,926,877

September

19, 2015(2) 10/- 114/- Preferential Issue Cash 250,000 19,176,877

(1) Allotment made pursuant to the Subscription and Shareholders’ Agreement dated August 14, 2014 along with its Amendment

Agreement dated August 30, 2014 and Second Amendment Agreement dated September 15, 2014 entered into between our

Company, Promoters and MCAP India Fund Limited. Pursuant to a resolution passed by the Board of our Company on

August 3, 2015, 3,107,500 compulsorily convertible preference shares were converted into 2,725,877 Equity Shares of ₹10/-

each at a price of ₹114/- per Equity Share.

(2) Allotment made pursuant to the Subscription and Shareholders’ Agreement dated August 14, 2014 along with its Amendment

Agreement dated August 30, 2014 and Second Amendment Agreement dated September 15, 2014 entered into between our

Company, Promoters and MCAP India Fund Limited. Pursuant to a resolution passed by the Board of our Company on

September 19, 2015, 250,000 warrants were converted into 250,000 Equity Shares of ₹10/- each at a price of ₹114/- per

Equity Share to MCAP India Fund Limited.

Details of allotments made for consideration other than cash in the last one year

Our Company has not issued any Equity Shares for consideration other than cash in the last one year preceding the

date of filing of this Preliminary Placement Document.

75

DIVIDENDS

The declaration and payment of dividends will be recommended by our Board of Directors, at their discretion, subject

to the provisions of the Articles of Association and applicable law, including the Companies Act and will depend on

a number of internal and external factors, including but not limited to the future expansion plans and capital

requirements, profit earned during the financial year, liquidity, applicable legal restrictions and taxes including

dividend distribution tax payable by our Company. In addition, our ability to pay dividends may be impacted by a

number of factors, including restrictive covenants under the loan or financing arrangements our Company is currently

availing of or may enter into to finance our fund requirements for our business activities.

The details of the dividends declared by our Company on equity shares and preference shares in respect of the

Financial Years ended March 31, 2017, March 31, 2016 and March 31, 2015 are set out below. Any amounts paid

as dividends in the past are not necessarily indicative of the future dividend policy or dividend amounts of our

Company.

*Note: Amounts do not include dividend distribution tax

For a summary of certain Indian consequences of dividend distributions to shareholders, see the section titled

“Statement of Tax Benefits” on page 181.

Particulars Fiscal 2017 Fiscal 2016 Fiscal 2015

Issued and paid-up equity share capital (₹ in million) 191.77 191.77 162.01

Dividend per Equity Share (in ₹) 1.20 1.20 1.20

Dividend declared on Equity Shares (in ₹ million) 23.01 23.01 22.71

Dividend declared on Preference Shares (in ₹ million) - 12.67 18.39

Total amount of Dividend declared (in ₹ million)* 23.01 35.68 41.10

76

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following discussion and analysis of our financial condition is based on our audited standalone financial

statements as at and for the years ended March 31, 2017, March 31, 2016 and March 31, 2015 including the notes

thereto and the reports thereon, included in this Placement Document. You should also read “Risk Factors” and

“Forward Looking Statements” on pages 37 and 14, both of which discuss a number of factors and contingencies

that could affect our financial condition, results of operations and cash flows and the titled “Our Business” on page

116, which presents important information about our business. You should also read the audited consolidated

financial statements as at and for the year ended March 31, 2017, March 31, 2016, and March 31, 2015 and the

reviewed financial results for the quarters ended June 30, 2017, September 30, 2017 and December 31, 2017

included in this Placement Document.

The Audited Financial Statements of our Company as at and for the Financial Year ended March 31, 2017, 2016

and 2015, which have been prepared in accordance with Indian GAAP, the accounting standards referred to in

Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. Since April 1,

2017, we have been required to prepare our financial statements in accordance with Ind-AS. Accordingly, the

numbers presented below in respect to the Financial Year ended March 31, 2017, 2016 and 2015 are in accordance

with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 and the numbers

presented in respect to the period subsequent to March 31, 2017 along with comparatives thereof, if any, are in

accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules,

2015. Ind-AS is different in many respects from Indian GAAP. See “Risk Factors— Significant differences exist

between Indian GAAP and Ind-AS, which may be material to investors’ assessments of our financial condition” on

page 61 and “Summary of Key Differences Between Indian GAAP and IND-AS” on page 95. Accordingly, the degree

to which our financial statements included in this Preliminary Placement Document will provide a meaningful

information to a prospective investor is entirely dependent on the reader’s level of familiarity with Indian accounting

processes and practices.

Our financial year ends on March 31 of each year. Accordingly, all references to a particular financial year are to

the 12 months period ended March 31 of that year. Certain industry, technical and financial terms used in this

section have the meanings ascribed to them in the section titled “Definitions and Abbreviations” in this Preliminary

Placement Document.

OVERVIEW


















in any capex.



77















In addition to our regular employees, we also engage technical consultants from time to time to seek advice on


In fiscal 2015, 2016, 2017 and the nine months ended December 31, 2017, revenues from sale of products were

₹6,275.10 million, ₹6,546.06 million, ₹6,842.98 million and ₹5,447.44 million, respectively. In fiscal 2015, 2016,

2017 and the nine months ended December 31, 2017, profit after tax were ₹230.67 million, ₹248.59 million, ₹299.44

million and ₹254.19 million, respectively. As of December 31, 2017, we had firm supply orders for 7,766 tonnes of

RPSF from over 150 customers.

Certain Factors Affecting our Results of Operation.

Our results of operations are affected by a variety of factors that have affected our results in the past and may affect

our results in the future.

Market Conditions Affecting the Recycling industry

Significant portions of our revenue are derived from recycling activities, which may get affected by changes in the

general economic or industry conditions, including disposable income, evolving regulatory requirements,

Government initiatives, trade agreements and other factors. For instance, in October 2017, China banned import of

all kind of PET bottle scrap and washed PET flakes into the Country as a result of which most of the recycling

capacities in China are facing shortage of raw material. There can be no assurance, that India will not follow such

policies, any change in the shortage of raw materials will lead to increase in price of the raw materials for multiple

reasons and any increase in the prices of the raw materials may have an adverse effect on our results of operations.

Price of Raw Materials

The cost of raw materials represents a significant portion of our total expenses. The prices of the raw materials used

by our Company are fluctuating with fluctuations in prices of finished products or because of seasonal factors like

lower collection during rainy season or during winter season in Northern India but company is able to maintain

comparatively stable margins with the scale up of business in addition to such raw materials having no other

significant use apart from utilization in the RPSF manufacturing process thereby giving our Company the ability to

negotiate input raw material prices in times of declining RPSF prices. However, any material shortage or interruption

in the domestic or imported supply or deterioration in quality of the raw materials due to natural causes or other

factors could result in increased costs that we may not be able to pass on to customers. We also import raw materials

and any depreciation in the value of the Rupee increases our total costs of raw materials in Rupee terms.

Capacity Utilization and Operating Efficiencies

Higher capacity utilization results in greater production volumes and higher sales, and allows us to spread our fixed

costs over a larger production numbers of our products, thereby increasing our profit margins. Production in our

manufacturing facilities is also affected by factors like the number of lost days due to periodical maintenance

closures and unscheduled plant shutdowns. While we continue to focus on improving our operational efficiencies

and reducing operating costs, there are a number of factors that are beyond our control and that could impact our

ability to effectively utilize our manufacturing facilities. Any inability to optimally utilize our existing

78

manufacturing capacities or maintain operating efficiencies could impact our business and results of operations.

Macroeconomic Conditions

Our business depends substantially on global economic conditions. Macroeconomic factors, both in India and

globally, such as economic instability, political uncertainty other force majeure events could influence our

performance. In addition, fluctuations in interest rates, exchange rates and inflation rates have a material effect on

key aspects of our operations, including the cost of our raw materials and the costs of borrowing required to fund

our operations. Our business and results of operations are also affected by evolving regulatory requirements,

Government initiatives, trade agreements and other factors that affect the recycling and textiles industries. We expect

that macroeconomic conditions, changes in consumer confidence and interest rates will have a significant impact on

our business and results of operations in future periods.

New Accounting Standards (Ind-AS)

Our audited standalone financial statements for the financial years March 2017, March 2016 and March 2015 that

appear in the Placement Document, have been prepared by our Company in accordance with Indian GAAP. Our

Company adopted Ind-AS from April 1, 2017 with transition date of April 1, 2016. Accordingly, our financial results

for nine-month period ended December 31, 2017 have been prepared in accordance with Ind-AS, as prescribed under

Section 133 of the Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standard) Rules,

2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Prior to April 1, 2017, we prepared our financial statements in accordance with Indian GAAP and the Companies

Act. With effect from April 1, 2017, we adopted Ind-AS notified under the Companies Act. Ind-AS and Indian

GAAP differ in certain significant respects from each other and from International Financial Reporting Standards

and U.S. GAAP and other accounting principles with which prospective investors may be familiar. Further, the

degree to which the financial statements prepared in accordance with Ind-AS and Indian GAAP included in this

Placement Document provide meaningful information is dependent on the reader’s familiarity with the respective

accounting policies. Any reliance by persons not familiar with Indian accounting practices on the financial

disclosures presented in this Placement Document should accordingly be limited. We have conducted a preliminary

review of the impact of Ind-AS on our accounting policies, details of which are disclosed in the section “Summary

of Key Differences between Indian GAAP and Ind-AS” on page 95.

In the Placement Document, certain monetary thresholds have been subjected to rounding adjustments. Any

discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding off.

SIGNIFICANT ACCOUNTING POLICIES

See the section of this Preliminary Placement Document titled “Financial Information” for a description of our

significant accounting policies used in the preparation of our Audited Financial Statements.

REVENUE

We divide our revenue into revenue from operations and other income. The following table presents a breakdown

of our total revenue for the periods indicated:

(in ₹ million)


2017 2016 2015

Revenue from Operations 6,741.77 6,472.86 6,232.48

Sale of products 6,842.98 6,546.06 6,275.10

Other operating revenues 16.56 7.94 13.02

Less: Excise Duty 117.77 81.14 55.64

Other Income 22.55 14.65 17.06

TOTAL REVENUE 6,764.32 6,487.51 6,249.54

Revenue from Operations

Our revenue from operations comprises of sale of products and other operating revenues.

79

Sale of Products

Our sale of products is divided between Manufactured and Traded Goods. revenue from sale of products consists of

revenue from sale of: (i) Polyester Staple Fibre; (ii) Dyed Texturised Yarn; (iii) Spun Yarn; and (iv) Waste and

Scrap. The following table presents a breakdown of our sale of our products for the periods indicated:

(in ₹ million)


2017 2016 2015

Manufactured

Polyester Staple Fibre 5,178.39 4,803.03 4,255.35

Dyed Texturised Yarn 313.04 316.05 407.72

Spun Yarn* 1,124.34 1,299.10 1,408.77

Waste and Scrap 14.70 14.88 17.55

Total Sale of Manufactured Goods 6,630.47 6,433.06 6,089.39

Traded Goods

Polyester Staple Fibre 164.18 43.09 55.54

Yarn 0.00 42.23 87.10

Others 48.33 27.68 43.07

Total Sale of Traded Goods 212.51 113.00 185.71

GROSS SALE OF PRODUCTS 6,842.98 6,546.06 6,275.10

* Own manufacturing as well as conversion of Polyester Staple Fibre into Spun yarn on job work from an outside

party.

Other Operating Revenue

Our operating income comprises of job work receipt, insurance claims received, service tax refund and unspent

liability written back.

Other Income

Other income comprises of interest received, net gain on foreign currency transaction and translation and other non-

operating income.

EXPENSES

Our expenses consist primarily of (i) cost of materials consumed; (ii) purchases of stock-in-trade; (iii) changes in

inventories of finished goods, work-in-progress and stock-in-trade; (iv) employee benefits expense; (v) finance

costs; (vi) depreciation and amortization expense; and other expenses. The following table presents a breakdown of

our total expenses for the periods indicated:

(in ₹ million)


2017 2016 2015

Cost of Materials Consumed 4,112.45 3,905.96 3,992.85

Purchase of Stock-in-Trade 191.73 102.50 163.65

Changes in Inventories of Finished Goods, Work-in-

Progress and Stock-in-Trade

(59.92) 84.35 1.07

Employee Benefits Expenses 440.26 393.21 336.66

Finance Costs 148.71 198.62 196.72

Depreciation and Amortization Expense 204.31 210.49 188.72

Other expenses 1,264.55 1,248.61 1,108.45

Total Expenses 6,302.09 6,143.74 5,988.12

Cost of Materials Consumed

Cost of materials consumed is what is directly attributable to the manufacture of the finished products. The following

table presents the particulars of our cost of raw materials and components consumed for the periods indicated:

(in ₹million)

80


2017 2016 2015

Plastic/ PET bottles scraps 3,397.60 3,216.37 3,281.08

POY/ Texturised/ Twisted Yarn 167.69 159.89 232.37

Colour & Chemicals 479.14 462.98 415.69

Packaging Material & Expenses 68.02 66.72 63.71

Total Cost of Materials Consumed 4,112.45 3,905.96 3,992.85

Purchase of Stock-in-Trade

Purchases of stock-in-trade are products that we acquire from our third-party vendors for further sale without any

processing or carrying out any manufacturing operations and comprises of polyester staple fibre, yarn and plastic

scrap.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade is the difference between the

inventories at the beginning and end of the accounting period.

Employee benefits expense

Employee benefit expense comprises of (i) salaries, wages and bonus, etc.; (ii) contribution to provident and other

funds; and (iii) staff welfare expenses.

Finance costs

Finance costs include primarily interest expense. It also includes other borrowing costs and net loss/ (gain) on foreign

currency transactions and translations.

Depreciation and Amortization expense

Depreciation and amortization expense comprises of depreciation of tangible fixed assets including buildings,

machinery, furniture & fixtures, office equipment and motor vehicles and amortization of software and premium

paid on leasehold land.

Other expenses

Other expenses majorly include manufacturing expenses, administrative expenses and selling expenses. The

following table presents the particulars of our other expenses for the periods indicated:

(in ₹million)


2017 2016 2015

Manufacturing Expenses 996.67 1,000.33 875.12

Consumption of Stores and Spares 190.17 213.25 187.54

Power and Fuel 724.20 691.67 570.44

Processing Charges 37.02 52.79 83.96

Excise Duty* (0.80) (0.71) 0.60

Repairs 46.08 43.33 32.58

Administrative Expenses 86.90 72.85 69.52

Rent 8.29 5.96 5.20

Insurance 9.16 9.72 8.16

Rates and Taxes 1.18 0.82 1.07

Travelling and Conveyance 12.28 12.03 10.42

Printing and Stationery 2.93 3.58 3.56

Postage and Telephones 6.33 5.52 5.26

Payments to Auditor 0.78 0.86 0.77

Cost Auditors’ Remuneration 0.09 0.06 0.06

Listing Fees 0.46 0.58 0.54

81

Directors’ Sitting Fee 0.19 0.20 0.20

Vehicle Running and Maintenance 7.51 6.75 7.56

Legal and Professional charges 17.15 5.38 8.89

Filing fees 0.04 0.04 1.97

Miscellaneous expenses 10.29 10.56 11.44

Prior period items (Net) 0.56 0.10 1.12

Provision for doubtful debts written back (1.59) (1.54) (1.17)

Provision for doubtful debts/ advances 3.90 3.73 3.21

Bad Debts/ Advances Written off 1.10 - -

Loss on fixed assets sold/ discarded 0.08 2.59 0.49

Lease rent 0.09 0.09 0.14

Expenditure towards Corporate Social Responsibility (CSR) 6.08 5.82 0.63

Selling Expenses 180.98 175.43 163.81

Freight and Forwarding charges 155.29 152.62 146.28

Other selling and distribution expenses 25.69 22.81 17.53

Other Expenses - TOTAL 1,264.55 1,248.61 1,108.45

* Represents excise duty related to variation in opening and closing stocks

SUMMARY RESULTS OF OPERATIONS

The following table presents our statement of profit and loss data for Financial Year 2017, Financial Year 2016 and

Financial Year 2015, components of which are expressed as a percentage of total revenue for the corresponding

periods:

(in ₹ million, except percentage of total revenue)


2017 2016 2015

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

I. Revenue from Operations

a. From Sale of Products 6,842.98 101.16% 6,546.06 100.90% 6,275.11 100.41%

b. Other Operating Revenues 16.56 0.24% 7.94 0.12% 13.01 0.21%

Total Revenue from Operations 6,859.54 101.41% 6,554.00 101.02% 6,288.12 100.62%

c. Less: Excise Duty 117.77 1.74% 81.14 1.25% 55.64 0.89%

Revenue from Operations (net) 6,741.77 99.67% 6,472.86 99.77% 6,232.48 99.73%

II. Other Income 22.55 0.33% 14.66 0.23% 17.06 0.27%

III. Total Revenue 6,764.32 100.00% 6,487.52 100.00% 6,249.54 100.00%

IV. EXPENSES

a. Cost of Materials Consumed 4,112.45 60.80% 3,905.96 60.21% 3,992.85 63.89%

b. Purchases of Stock-in-Trade 191.73 2.83% 102.50 1.58% 163.65 2.62%

c. Changes in Inventories of

Finished Goods, Work-in-

Progress and Stock-in-Trade

(59.92) (0.89%) 84.35 1.30% 1.07 0.02%

d. Employee Benefits Expense 440.26 6.51% 393.21 6.06% 336.66 5.39%

e. Finance Costs 148.71 2.20% 198.62 3.06% 196.72 3.15%

f. Depreciation and Amortization

Expense 204.31 3.02% 210.49 3.24% 188.72 3.02%

g. Other expenses 1,264.55 18.69% 1,248.61 19.25% 1,108.45 17.74%

Total Expenses 6,302.09 93.17% 6,143.74 94.70% 5,988.12 95.82%

V. Profit before Tax 462.23 6.83% 343.78 5.30% 261.42 4.18%

VI. Tax Expense:

Current Tax (141.88) (2.10%) (73.37) (1.13%) (54.79) (0.88%)

Less: MAT Credit - 3.55 0.05% 54.79 0.88%

82


2017 2016 2015

Deferred Tax (20.91) (0.31%) (25.37) (0.39%) (30.75) (0.49%)

VII. Profit for the Year 299.44 4.43% 248.59 3.83% 230.67 3.69%

DISCUSSION ON THE RESULTS OF OPERATIONS

Comparison of Financial Year 2017 to Financial Year 2016

Revenue

Our total revenue during the Financial Year 2017 was ₹6,764.32 million, which represented an increase of 4.27%

over our total revenue during Financial Year 2016 of ₹6,487.52 million. The increase in revenue is primarily on

account of volume growth.

Revenue from operations

Our total revenue from operations in Financial Year 2017 was ₹6,859.54 million, which represented an increase of

4.66% over our total revenue from operations in Financial Year 2016 of ₹6,554.00 million. The increase was

primarily due to volume growth.

Excise duty

We paid excise duty in Financial Year 2017 of ₹117.77 million, which represented an increase of 45.14% from

excise duty paid in Financial Year 2016 of ₹81.14 million. This increase was primarily due to expiry of duty holiday

period available to our Rudrapur unit since December 2016.

Revenue from operations (net)

Our total revenue from operations (net) during the Financial Year 2017 was ₹6,741.77 million, which represented

an increase of 4.15% over our total revenue during Financial Year 2016 of ₹6,472.86 million. The increase in

revenue is primarily on account of volume growth.

Other income

Our other income in Financial Year 2017 was ₹22.55 million, which represented an increase of 53.82% from our

other income in Financial Year 2016 of ₹14.66 million. The increase was primarily due to increase in net gain on

foreign currency transaction and translation.

Total Expenses

Our total expenses in Financial Year 2017 were ₹6,302.09 million, which represented an increase of 2.58% over our

total expenses in Financial Year 2016 of ₹6,143.74 million. However, as a percentage of total revenue, our total

expenses decreased from 94.70%in Financial Year 2016 to 93.17% in Financial Year 2017.

Cost of materials consumed, Purchases of Stock-in-trade and Changes in Inventories

Our cost of materials consumed coupled with purchases of stock in trade and changes in inventories of finished

goods, work-in-progress and stock-in-trade was ₹4,244.26 million in Financial Year 2017, which represented an

increase of 3.70% over our cost of materials consumed of ₹4,092.81 million in Financial Year 2016, which is in

consonance to the increase in our revenue from operations. As a percentage of total revenue, our cost of materials

consumed decreased marginally from 63.09% in Financial Year 2016 to 62.74% in Financial Year 2017.


Our employee benefit expense in Financial Year 2017 was ₹440.26 million, which represented an increase of 11.97%

over our employee benefit expense in Financial Year 2016 of ₹393.21 million. This increase was predominantly due

to annual salary increments of all our employees. As a percentage of total revenue, our employee benefit expense

83

grew from 6.06% in Financial Year 2016 to 6.51% in Financial Year 2017.

Finance costs

Our finance costs in Financial Year 2017 was ₹148.71 million, which represented a decrease of 25.13% from our

finance costs in Financial Year 2016 of ₹198.62 million. The decrease was primarily due to repayment of debts as

well as reduction in net loss on foreign currency transactions and translations. As a percentage of total revenue,

finance costs decreased from 3.06% in Financial Year 2016 to 2.20% in Financial Year 2017.

Depreciation and amortization expense

Our depreciation and amortization expense in Financial Year 2017 was ₹204.31 million, which represented a

decrease of 2.94% over our depreciation and amortization expense in Financial Year 2016 of ₹210.49 million. The

marginal decrease was primarily due to lower carrying written down values (opening WDV) of fixed assets being

depreciated at WDV method. As a percentage of total revenue, depreciation and amortization expenses decreased

from 3.24% in Financial Year 2016 to 3.02% in Financial Year 2017.

Other expenses

Our other expenses in Financial Year 2017 were ₹1,264.55 million, which represented an increase of 1.28% over

our other expenses in Financial Year 2016 of ₹1,248.61 million. The marginal increase was primarily due to increase

in rent, legal/ professional expenses and freight & forwarding charges. However, as a percentage of total revenue,

our other expenses decreased from 19.25% in Financial Year 2016 to 18.69% in Financial Year 2017.

Profit before tax

Our profit before tax in Financial Year 2017 was ₹462.23 million, an increase of 34.46% over our profit before tax

in Financial Year 2016 of ₹343.78 million. The increase is due to reasons explained above under various heads for

financial Year 2017.

Net tax expense

Our net tax expense in Financial Year 2017 was ₹162.79 million, as compared to net tax expense in Financial Year

2016 of ₹95.19 million. Our tax expense in Financial Year 2017 increased by 71.02% as compared to Financial Year

2016. The increase was due to increase in profit before tax due to reasons explained above under various heads for

financial Year 2017 and also due to increase in effective tax rate because of expiry of tax holiday period available

to us for one of our manufacturing unit.

Profit for the year

As a result of the foregoing, our profit for the year in Financial Year 2017 was ₹299.44 million, an increase of

20.46% over our profit before tax in Financial Year 2016 of ₹248.59 million.

Comparison of Financial Year 2016 to Financial Year 2015

Revenue

Our total revenue in Financial Year 2016 was ₹6,487.52 million, which represented an increase of 3.81% over our

total revenue in Financial Year 2015 of ₹6,249.54 million.

Revenue from operations

Our total revenue from operations in Financial Year 2016 was ₹6,554.00 million, which represented an increase of

4.23% over our total revenue from operations of ₹6,288.12 million in Financial Year 2015. The increase was

primarily due to volume growth. Volume grew by 20.00% during Financial Year 2016 but due to steep fall in prices

of finished products, tracking the fall in crude oil prices, total revenue could increase moderately by 4.21%.

Excise duty

We paid excise duty in Financial Year 2016 of ₹81.14 million, which represented an increase of 45.83% over excise

84

duty paid in Financial Year 2015 of ₹55.64 million. There was a sharp increase in excise duty because excise duty

was introduced on Recycled PSF since July 11, 2014. There was no excise duty on RPSF prior to this date.

Revenue from Operations (net)

Our revenue from operations (net) during the Financial Year 2016 was ₹6,472.86 million, which represented an

increase of 3.86% over our total revenue during Financial Year 2015 of ₹6,232.48 million. The increase in revenue

was primarily on account of volume growth. Volume grew by 20.00% during Financial Year 2016 but due to steep

fall in prices of finished products, tracking the fall in crude oil prices, total revenue could increase moderately by

3.86%.

Other income

Our other income in Financial Year 2016 was ₹14.66 million, which represents a decrease of 14.07% over our other

income in Financial Year 2015 of ₹17.06 million owing to decrease in interest income.

Total Expenses

Our total expenses in Financial Year 2016 were ₹6,143.74 million, which represented an increase of 2.60% over our

total expenses in Financial Year 2015 of ₹5,988.12 million. The increase in total expenses is in line with the increase

in our revenue from operations. As a percentage of total revenue, our total expenses decreased from 95.82% in

Financial Year 2015 to 94.70% in Financial Year 2016.

Cost of materials consumed, purchases of stock-in-trade and changes in inventories

Our cost of materials consumed coupled with purchases of stock in trade and changes in inventories of finished

goods, work-in-progress and stock-in-trade was ₹4,092.81 million in Financial Year 2016, which represented an

decrease of 1.56% over our cost of materials consumed of ₹4,157.57 million in Financial Year 2016, which is on

account of lower raw material prices. As a percentage of total revenue, our cost of materials consumed decreased

marginally from 66.53% in Financial Year 2015 to 63.09% in Financial Year 2016.

Employee benefit expense

Our employee benefit expense in Financial Year 2016 was ₹393.21 million, which represented an increase of 16.80%

over our employee benefit expense in Financial Year 2015 of ₹336.66 million. The increase was mainly due to an

increase in business volumes as well as general increments in remuneration. As a percentage of total revenue, our

employee benefit expense increased from 5.39% in Financial Year 2015 to 6.06% in Financial Year 2016, which is

in line with the reasons explained above.

Finance costs

Our finance costs in Financial Year 2016 were ₹198.62 million, which increased by 0.97% over our finance cost in

Financial Year 2015 of ₹196.72 million. This increase was primarily due to additional loans tied up for funding the

capacity expansion of RPSF during December 2014. Increase in finance costs was offset to some extent by scheduled

repayment of loans. As a percentage of total revenue, finance costs have, however, decreased to 3.06% during

Financial Year 2016 from 3.15% during Financial Year 2015.


Our depreciation and amortization expense in Financial Year 2016 was ₹210.49 million, which represented an

increase of 11.54% over our depreciation and amortization expense in Financial Year 2015 of ₹188.72 million. The

increase was primarily due to capacity addition of RPSF during December 2014, full impact of which reflected in

Financial Year 2016 only. As a percentage of total revenue, depreciation and amortization expenses increased from

3.02% in Financial Year 2015 to 3.24% in Financial Year 2016 because of the reason stated above.

Other expenses

Our other expenses in Financial Year 2016 were ₹1,248.61 million, which represented an increase of 12.64% over

our other expenses of ₹1,108.45 million in Financial Year 2015. The increase was largely due to an increase in

85

consumption of stores & spares, power & fuel expenses, repairs to machinery, building and others, expenditure

towards corporate social responsibility and selling expenses. As a percentage of total revenue, our other expenses

increased from 17.74% in Financial Year 2015 to 19.25% in Financial Year 2016.

Profit before tax

Our profit before tax in Financial Year 2016 was ₹343.78 million, which represented an increase of 31.50% over

our profit before tax as compared to a profit before tax in Financial Year 2015 of ₹261.42 million. The increase is

due to reasons explained above under various heads for financial Year 2016.

Net tax expense

Our net tax expense in Financial Year 2016 was ₹95.19 million, which represented an increase of 209.56% over our

net tax expense in Financial Year 2015 of ₹30.75 million. The increase was due to an increase in profit before tax

for financial Year 2016 as well as increase in effective tax rate because of scheduled reduction in tax rates available

in one of our manufacturing unit.

Profit for the year

As a result of the foregoing, our profit in Financial Year 2016 was ₹248.59 million, signifying an increase of 7.77%

over our profit in Financial Year 2015 of ₹230.67 million.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs have been to finance our working capital needs, capital expenditure needs as well as

scheduled repayment of borrowings. We have financed our operations primarily by way of cash flow from

operations, long and short-term borrowings as well as equity capital infusion. As at March 31, 2017, we had cash

and cash equivalents of ₹92.14 million.

CASH FLOWS

The following table presents our consolidated net cash flows for the periods indicated:

(in ₹million)


2017 2016 2015

Net cash from Operating Activities 593.99 767.82 389.50

Net cash used in Investing Activities (200.81) (99.67) (241.72)

Net cash from Financing Activities (322.95) (677.53) (196.48)

Net increase (decrease) in Cash and Cash Equivalents 70.24 (9.38) (48.70)

Net cash from Operating Activities

Net cash from operating activities includes cash generated from our operations and net cash inflows or outflows

from changes in operating assets and liabilities.

Net cash from operating activities for Financial Year 2017 was ₹593.99 million. The operating profit before working

capital changes was ₹818.20 million. which was primarily adjusted by an increase of ₹89.90 million in trade &

other receivables, an increase of ₹229.85 million in inventories and increase of ₹188.77 million in trade & other

payables. The cash flow from operations was also adjusted by ₹0.56 million on account of prior period items (net)

and ₹92.67 million on account of direct taxes paid.


capital changes was ₹757.76 million, which was primarily adjusted by decrease of ₹44.18 million in trade & other

receivables, decrease of ₹130.74 million in inventories and a decrease of ₹96.05 million in trade & other payables.

The cash flow from operations was also adjusted by ₹0.10 million on account of prior period items (net) and ₹68.71

million on account of direct taxes paid.


capital changes was ₹650.52 million, which was primarily adjusted by an increase of ₹38.30 million in trade & other

86

receivables, an increase of ₹215.96 million in inventories and increase of ₹54.61 million in trade &other payables.

The cash flow from operations was also adjusted by ₹1.11 million on account of prior period items (net) and ₹60.26

million on account of direct taxes paid.

Net cash used in Investing Activities

Net cash used in investing activities for Financial Year 2017 was ₹200.81 million, primarily on account of the

purchase of fixed assets of ₹201.35 million, which was slightly offset by proceeds from the sale of fixed assets by

₹0.54 million.

Net cash used in investing activities for Financial Year 2016 was ₹99.67 million, primarily on account of the

purchase of fixed assets of ₹103.88 million, which was offset by proceeds from the sale of fixed assets by ₹4.21

million.

Net cash used in investing activities for Financial Year 2015 was ₹241.72 million, primarily on account of purchase

of fixed assets of ₹283.41 million, which was offset by proceeds from the sale/ insurance claim of fixed assets by

₹41.69 million.

Net cash from Financing Activities

Net cash from financing activities primarily includes net cash inflows and outflows from long-term and short-term

borrowings, finance costs, dividends paid and taxes on dividends.

Net cash outflow from financing activities for Financial Year 2017 was ₹322.95 million. Cash used in financing

activities comprised of net repayment of long-term borrowings of ₹303.18 million finance charges of ₹152.60

million, dividend paid on equity shares of ₹23.01 million and tax on dividend distribution of ₹4.69 million and cash

generated from financing activities comprised of net proceeds from short-term borrowings of ₹160.53 million.

Net cash used in financing activities for Financial Year 2016 was ₹677.53 million. Cash used in financing activities

comprised of net repayment of long-term borrowings of ₹103.99 million, net repayment of short-term borrowings

of ₹331.56 million, finance charges of ₹198.64 million, interim dividend paid on preference shares of ₹12.67 million,

dividend paid on equity shares of ₹22.71 million, dividend paid on preference shares of ₹18.39 million and tax on

dividend distribution of ₹10.95 million and cash generated from financing activities comprised of conversion of

share warrants of ₹21.38 million.

Net cash used in financing activities for Financial Year 2015 was ₹196.48 million. Cash used in financing activities

comprised of net repayment of long-term borrowings of ₹328.27 million, share issue expenses of ₹16.78 million,

finance charges of ₹228.09 million, dividend paid on equity shares of ₹18.22 million and tax on dividend distribution

of ₹3.10 million and cash generated from financing activities comprised of net proceeds from short-term borrowings

of ₹31.38 million, proceeds from compulsorily convertible preference shares of ₹310.75 million, conversion of share

warrants of ₹48.72 million, money received against share warrants ₹7.13 million.

SELECTED BALANCE SHEET ITEMS

Fixed assets

Our fixed assets consist of our tangible assets, intangible assets, capital work-in-progress and intangible assets under

development.

Our tangible assets consist of freehold land & site development, leasehold land, buildings, machinery, furniture &

fixtures, office equipment and motor vehicles. Our tangible assets after depreciation/ amortization were ₹2,386.02

million, ₹2,556.50 million and ₹2577.29 million as at March 31, 2017, 2016 and 2015, respectively. Our tangible

assets decreased by 6.67% from March 31, 2016 to March 31, 2017 and by 0.81% from March 31, 2015 to March

31, 2016, primarily as a result of annual depreciation charge (net of additions and disposals of tangible assets).

Our intangible assets consist of our technical know-how and software. Our intangible assets after amortization were

₹1.90 million, ₹1.93 million and ₹1.93 million as at March 31, 2017, 2016 and 2015, respectively. Intangible assets

decreased primarily as a result of annual amortization of value (net of additions to intangible assets).

Our capital work-in-progress were ₹96.53 million, ₹5.40 million and ₹97.85 million as at March 31, 2017, 2016 and

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2015, respectively signifying an increase of 1,688.03% from March 31, 2016 to March 31, 2017 and decreased by

94.48% from March 31, 2015 to March 31, 2016. The increase in capital work-in-progress during Financial Year

2017 is because of expansion of RPSF production capacity at Bilaspur Unit of our Company. Decrease in capital-

work-in progress during Financial Year 2016 is owing to capitalization of capacity expansion of washing line of

Bilaspur Unit, implementation of which was in progress as at March 31, 2015.

Our intangible assets under development increased by 100.16% from March 31, 2016 to March 31, 2017,

representing the implementation of our ERP software program. Since there were no intangible assets under

development as at March 31, 2015, our intangible assets under development grew from Nil to ₹1.14 million from

March 31, 2015 to March 31, 2016.

Current assets and current liabilities

The following table presents our current assets and current liabilities as at the dates indicated:

(in ₹ million)

As at March 31,

2017 2016 2015

Current assets

Inventories 922.54 692.69 823.43

Trade receivables 560.55 497.35 407.36

Cash and Bank Balances 111.81 37.76 159.52

Short-term Loans and Advances 264.94 278.79 279.77

Other current Assets 14.49 23.53 42.00

Total current assets 1,874.33 1,530.12 1,712.08

Current liabilities

Short-term borrowings 625.29 464.76 796.32

Trade payables 338.62 217.30 330.16

Other current liabilities 623.35 517.62 458.86

Short-term provisions 22.35 42.66 55.19

Total current liabilities 1,609.61 1,242.34 1,640.53

Inventories

The value of inventories was ₹922.54 million, ₹692.69 million and ₹823.43 million as at March 31, 2017, 2016 and

2015, respectively. Our inventories consist of raw materials, work-in-progress, finished goods, stock-in-trade and

stores and spares. The following table presents the break-up of our inventories as at the dates indicated:

(in₹ million)

As at March 31,

2017 2016 2015

Raw Materials (including material in-transit) 358.96 203.54 266.49

Work-in-progress 69.36 50.69 61.12

Finished goods 330.84 303.88 383.45

Stock-in-Trade 21.55 7.25 1.60

Stores and Spares 141.83 127.33 110.77

Total inventories 922.54 692.69 823.43

Inventories increased by 33.18% as at March 31, 2017 as compared to March 31, 2016 primarily due to increase in

raw material inventory as well as stock-in-trade inventory. Inventories had however, been decreased as on March

31, 2016 by 15.88% as compared to March 31, 2015 because of lower holding of raw material as well as finished

goods inventories.

Trade receivables

Trade receivables primarily consist of outstanding amounts from customers. Our trade receivables amounted to

₹560.55 million, ₹497.35 million and ₹407.36 million as at March 31, 2017, 2016 and 2015, respectively signifying

an increase of 12.71% as at March 31, 2017 in comparison to the Financial Year 2016 mainly because of slow down

witnessed post-demonetization. Trade receivables also increased by 22.09% as at March 31, 2016 in comparison to

the Financial Year 2015 primarily due to slow down in industry and demand post steep fall in prices of fibre and

88

yarn.

Cash and Bank Balances

Our cash and bank balances include cash and cash equivalents along with other bank balances (in current accounts),

cheques on hand, cash on hand and fixed deposits with banks. Other bank balances consist of unclaimed dividend

accounts and fixed deposits with banks. Our cash and bank balances amounted to ₹111.81 million, ₹37.76 million

and ₹159.52 million as at March 31, 2017, 2016 and 2015, respectively.

Short-term loans and advances

The short-term loans and advances include prepaid expenses & lease rent, security deposits, advances to vendors,

advances to employees and others, insurance claim receivable, credits/ refund of statutory dues and MAT credit

available for set-off. Our short-term loans and advances amounted to ₹264.94 million, ₹278.79 million and ₹279.77

million as at March 31, 2017, 2016 and 2015, respectively. The decrease in our short-term loans and advances from

March 31, 2017 to March 31, 2016 was primarily on account of utilization of MAT credit, while our other current

assets decreased from March 31, 2015 to March 31, 2016 primarily on account of credits/ refund of statutory dues.

Other current assets

Our other current assets consist primarily of export incentives receivables, interest subsidiary and interest

receivables, and discarded fixed assets held for disposal. Other current assets amounted to ₹14.49 million, ₹23.53

million and ₹42.00 million as at March 31, 2017, 2016 and 2015, respectively. The decrease in our other current

assets from March 31, 2016 to March 31, 2017 and from March 31, 2015 to March 31, 2016 was primarily due to

the receipt of pending export initiatives as well as interest subsidy under TUF.

Short-term borrowings

Our short-term borrowings include secured working capital loans from banks and unsecured loans (repayable on

demand) from directors, their relatives/ related parties and others. Short-term borrowings amounted to ₹625.29

million, ₹464.76 million and ₹796.32 million as at March 31, 2017, 2016 and 2015, respectively. The increase in

short term borrowings from March 31, 2016 to March 31, 2017 was primarily to fund increased current assets levels.

The decrease in short term borrowings from March 31, 2015 to March 31, 2016 was primarily due to lower inventory

level as well as decrease in cash and bank balances.

Trade payables

Trade payables amounted to ₹338.62 million, ₹217.30 million and ₹330.16 million as at March 31, 2017, 2016 and

2015, respectively. The increase in trade payables from March 31, 2016 to March 31, 2017 was mainly due to

increased level of raw material inventories. There was however, decrease in trade payables from March 31, 2015 to

March 31, 2016 partly due to reduction in raw material prices and partly with the objective of better negotiations

made with ease in liquidity position.

Other current liabilities

Other current liabilities comprise current maturities of long term debts, interest accrued but not due on borrowings,

interest accrued and due on borrowings, unclaimed dividend, creditors for capital expenditure, advances from

customers, statutory dues, and other payables. Other current liabilities amounted to ₹623.35 million, ₹517.62 million

and ₹458.86 million as at March 31, 2017, 2016 and 2015, respectively. The increase in other current liabilities from

March 31, 2016 to March 31, 2017 was primarily on account of increase in current maturities of long-term loans,

creditors for capital expenditure and other payables. Increase in current liabilities from March 31, 2015 to March

31, 2016 was primarily on account of an increase in current maturities of long-term loans.

Short-term provisions

Our short-term provisions comprise provisions for gratuity and leave encashment, income tax, proposed dividend,

tax on proposed dividend and excise duty. Short-term provisions amounted to ₹22.35 million, ₹42.66 million and

₹55.19 million as at March 31, 2017, 2016 and 2015, respectively. There was decrease in short term provisions from

March 31, 2016 to March31, 2017 primarily due to change in statute because of which provision for proposed

dividend was shifted in the year of actual payment instead of in the year to which dividend relates. Decrease in short

89

term provisions from March 31, 2016 to March31, 2017 is primarily due to reduction in proposed dividend and

associated tax.

Long-term borrowings

Our total long-term borrowings were ₹367.66 million, ₹717.48 million and ₹869.13 million as at March 31, 2017,

2016 and 2015, respectively. Our long-term borrowings consist of secured and unsecured loans from commercial

banks, state government, directors and their relatives, and others both in Indian Rupee as well as in foreign currency.

Most of our financing arrangements are secured by way of mortgage of our factory land and building and

hypothecation of other present and future assets of our Company on a pari passu/ exclusive first charge/ second

charge basis. Our financing agreements and debt arrangements for secured loans set limits on or require us to obtain

consents from lenders before, among other things, undertaking certain projects, issuing new securities, diluting the

shareholding of the promoters, making any change in management or controlling interest, changing our business,

merging, consolidating, selling significant assets or making certain acquisitions or investments or dilution of certain

financial parameters including financial covenants. These restrictive covenants may also affect some of the rights of

our shareholders and our ability to pay dividends if we are in breach of our obligations under the applicable financing

agreement. Further, in the event that we breach any of these conditions or covenants under any financing agreements,

it may lead to a termination of our credit facilities or acceleration of all amounts due under such facilities which may

adversely affect our ability to conduct our business and operations or implement our business plans. Failure to meet

our obligations under the debt financing arrangements could have an adverse effect on our cash flows, business and

results of operations.

INTEREST COVERAGE RATIO

The following tables presents our interest coverage ratio, which is the total of profit before tax and interest costs

divided by interest and other borrowing costs as at the dates indicated:

Particulars As of March 31

2017 2016 2015

Earnings Before Interest and Tax (in ₹ million) 610.95 542.39 458.14

Finance costs (in ₹ million) 148.71 198.62 196.72

Interest coverage ratio (C) = A / B 4.11 2.73 2.33

CONTINGENT LIABILITIES AND COMMITMENTS

The following table presents our contingent liabilities and commitments (as disclosed in our audited financial

statements prepared in accordance with Indian GAAP and to the extent not provided for) as at the dates indicated:

(in ₹million)

Particulars As at March 31,

2017 2016 2015

Contingent Liabilities

Bills discounted under letters of credit and outstanding 74.29 47.41 63.48

Claims against the Company not acknowledged as debt 3.25 3.31 2.25

Disputed tax matters under appeal:

Income tax demand 0.00 1.03 2.82

Entry tax liability 3.65 2.79 2.79

Purchase tax 2.20 2.20 0.00

Service tax 0.30 0.30 0.30

VAT demand 0.20 0.00 0.00

Total Contingent Liabilities 83.89 57.04 71.64

Commitments

Estimated amount of contracts remaining to be executed on

capital account and not provided for (net of advances)

376.79 0.15 12.50

Undertakings given by the Company to fulfill quantified

exports in respect of capital goods imported under the Export

Promotion Capital Goods Scheme of the Government of

India

0.00 206.57 208.03

Total Commitments 376.79 206.72 220.53

90

OFF BALANCE SHEET ARRANGEMENTS

We do not have any 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 exchange rate risk, interest rate

risk, inflation risk and commodity price risk. We are exposed to such risks in the ordinary course of our business.

For further details of such risks, please see “Risk Factors” on page 37.

Exchange Rate Risk

We face exchange rate risks because certain portion of our revenues, expenditure and certain of our obligations are

denominated in foreign currencies. Exchange rate fluctuations could also affect our ability to service our debt

obligations to the extent that our debt repayments are denominated in foreign currencies. While we hedge a portion

of our resulting net foreign exchange exposure and the diversity of our business and operations provides a natural

hedge to some extent, exchange rate fluctuations may, in any event, affect the amount of income and expenditure

we realize or our ability to service debt repayments in a foreign currency.

Interest Rate Risk

We are subject to interest rate risk, primarily because our borrowings (long as well short term) with banks and other

financial institutions are at floating interest rates. Interest rates are highly sensitive to many factors beyond our

control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and

international economic and political conditions, inflation and other factors. Upward fluctuations in interest rates

increase the cost of servicing existing and new debts, which adversely affects our results of operations as well as

loan servicing ability. We do not hedge risks arising out of fluctuations in interest rates.

Commodity Price Risk

We are subject to market risks related to the volatility in the price of finished products. Our financial results can be

affected significantly by fluctuations in these prices, which depend on many factors, including price fluctuations in

virgin PSF, cotton and crude oil prices, demand of our products, changes in the economy and market competition.

If commodity prices were to decrease, we may not be able to reduce the prices of our raw material, which may

reduce our competitiveness, and bearing such increased costs ourselves, which could reduce our net income. If any

of these events were to occur, our results of operations and financial condition may be adversely affected.

Inflation Risk

India has experienced high inflation in the past, though it has moderated presently to some extent. In periods of high

rates of inflation, our costs, such as operating expenses, may increase, which could have an adverse effect on our

results of operations. Inflation may also have an adverse bearing on overall interest rates, which may adversely affect

our finance costs and thus our business operations.

Credit Risk

We are exposed to credit risk on amounts owed to us by our customers, which is unsecured in nature. If they do not

pay us promptly, or not at all pay, it may impact our working capital cycle, and/or we may have to make provisions

for or write off on such amounts.

Changes in accounting policies during the last three years and their effect on the profits and reserves of our

Company

For changes in the accounting policies of our Company during the last three years other than as required under

applicable laws, please see “Summary Financial Information” on page 35.

Reservations, qualifications and adverse remarks in the last five (5) financial years

91

Other than as stated below, there are no reservations, emphasis of matters, qualifications or adverse remarks of auditors

in the last five financial years immediately preceding the year of circulation of this offer letter:

Financial

Year

Report/ Companies

(Auditor Report)

Order, 2003

Reservation in Independent Auditors Report Impact on

Financial

Statements and

Financial

Position of the

Company

2012-13 Companies (Auditor’s

Report) Order, 2003

Slight delay in payment of statutory dues in a few cases. No Impact


Report) Order, 2003’, as

amended by ‘the

Companies (Auditor’s

Report) (Amendment)

Order, 2004

Uses of short term funds to the extent of ₹205,776,690 for

long term investments, based on maturity profile of assets

and liabilities.

No Impact


Report) Order, 2015

During the year ended March 31, 2015, our Company

imported pet bottle scrap (raw material) from an overseas

supplier but during inspection of sealed containers jointly

with custom authorities, gravels were found instead of pet

bottle scrap in containers. Due to this fraud, our Company

suffered a loss of an amount of ₹2,644,757 on account of

cost of material paid to the supplier, ocean freight and

custom duty. Our Company lodged a police complaint and

final report was submitted by police without any recovery.

Our Company, however recovered an amount of ₹1,200,000

from the intermediary agent.

Profitability was

affected by

₹2,644,757 during

the year 2014-15.

RECENT FINANCIAL PERFORMANCE

The following discussion of our Company’s results of operations is based on the Unaudited Interim Financial Results

of our Company for the nine months ended December 31, 2017. The Unaudited Interim Financial Results for the

nine months ended December 31, 2017 are not necessarily indicative of results of operations that may be expected

for the full year and do not reflect the financial results of our Company for the full year.

Summary Results of Operations

The following table presents our statement of profit and loss data (as per Ind AS) for the periods indicated: *

Nine months ended December 31,

2017 2016

(in ₹million, except percent of Total Income)

Amount % of Total

Revenue

Amount % of Total

Revenue

Revenue from operations 5,459.61 99.82% 4,983.19 99.62%

Other income 9.99 0.18% 19.02 0.38%

Total Income 5,469.60 100.00% 5,002.21 100.00%

EXPENSES

Cost of materials consumed 3,374.19 61.69% 2,982.66 59.63%

Purchases of stock-in-trade 150.61 2.75% 127.21 2.54%

Changes in inventories of finished goods, stock-

in-trade and work-in-progress

(86.91) (1.59)% (40.44) (0.81)%

Excise duty on sale of goods 36.38 0.67% 74.38 1.49%

Employee benefits expense 342.91 6.27% 318.77 6.37%

Finance costs 97.68 1.79% 119.55 2.39%

Depreciation and amortization expenses 145.83 2.67% 153.49 3.07%

Power & fuel 564.33 10.32% 548.66 10.97%

Other expenses 457.74 8.37% 387.63 7.75%

Total expenses 5,082.76 92.93% 4,671.91 93.40%

Profit before exceptional items and tax 386.84 7.07% 330.30 6.60%

92

Nine months ended December 31,

2017 2016

(in ₹million, except percent of Total Income)

Exceptional items - -

Profit before tax 386.84 7.07% 330.30 6.60%

Tax expense

Current tax 123.47 2.26% 96.72 1.93%

Deferred tax 9.43 0.17% 18.56 0.37%

Profit for the period 253.94 4.64% 215.02 4.30%

Other comprehensive income 0.25 0.00% 0.25 0.00%

Total comprehensive income for the period 254.19 4.65% 215.27 4.30%

* as per the unaudited financial results of our Company, subjected to limited review and prepared in accordance

with Ind-AS.

Comparison of the nine months ended December 31, 2017 to December 31, 2016

Our financial results for the nine months ended December 31, 2017 and December 31, 2016 have been adjusted on

account of differences in accounting principles adopted by our Company on transition to Ind-AS.

Total Income

Our total income in the nine months period ended December 31, 2017 was ₹5,469.60 million, which represented an

increase of 9.34% over our total income in the nine months period ended December 31, 2016 of ₹5,002.21 million.

Revenue from Operations

Our revenue from operations in the nine months period ended December 31, 2017 was ₹5,459.61 million, which

represented an increase of 9.56% over our revenue from operations in the nine months period ended December 31,

2016 of ₹4,983.19 million. The increase in net sales from operations was primarily due to volume growth, increase

in trading sale was well as other operating revenues.

Other income

Our other income in the nine months period ended December 31, 2017 was ₹9.99 million, which represented a

decrease of 47.48% from our other income in the nine months period ended December 31, 2016 of ₹19.02 million,

owing to decrease in net gain on foreign currency transaction and translation.

Expenses

Our total expenses in the nine months period ended December 31, 2017 was ₹5,082.76 million, which represented

an increase of 8.79% from our total expenses in the nine months period ended December 31, 2016 of ₹4,671.91

million. As a percentage of total revenue, our total expenses as a percentage of total income were relatively flat at

93.40% in the nine months ended December 31, 2016 and 92.93% in the nine months ended December 31, 2017.

Cost of materials consumed, purchase of stock-in-trade and changes in inventories of finished goods, work-in-

progress and stock-in-trade

Our cost of materials consumed, purchases of stock-in trade and changes in inventories was ₹3,437.89 million in the

nine months period ended December 31, 2017, which represented an increase of 12.00% from our cost of materials

consumed in the nine months period ended December 31, 2016 of ₹3,069.43 million. As a percentage of total

revenue, our cost of materials consumed increased from 61.36% in the nine months period ended December 31,

2016 to 62.85% in the nine months period ended December 31, 2017. The increase was primarily due to increase in

raw material prices.

Excise Duty on sale of goods

Our excise duty on the sale of goods in the nine months period ended December 31, 2017 was ₹36.38 million, which

represented a decrease of 51.09% from our excise duty on the sale of goods in the nine months period ended

December 31, 2016 of ₹74.38 million. As a percentage of the total revenue, excised duty on the sale of goods

93

decreased from 1.49% in the nine months ended December 31, 2016 to 0.67% in the nine months period ended

December 31, 2017.The decrease was because of introduction of GST w.e.f. July 1, 2017 in place of excise duty.

Revenue for the nine months period ended December 31, 2017 is net of GST.

Employee benefit expense

Our employee benefit expense in the nine months period ended December 31, 2017 was ₹342.91 million, which

represented an increase of 7.57% from our employee benefit expense in the nine months period ended December

31, 2016 of ₹318.77 million. The increase in employee benefit expense was primarily because of annual increments

as well as increase in gratuity and leave provisions. As a percentage of total revenue, our employee benefit expense

decreased from 6.37% in the nine months period ended December 31, 2016 to 6.27% in the nine months period

ended December 31, 2017.

Finance Cost

Our finance cost in the nine months period ended December 31, 2017 was ₹97.68 million, which represented a

decrease of 18.29% from our employee benefit expense in the nine months period ended December 31, 2016 of

₹119.55 million. The decrease in finance cost was primarily due to scheduled repayments of long-term loans as well

as reduction in interest rates. As a percentage of total revenue, our finance cost decreased from 2.39% in the nine

months period ended December 31, 2016 to 1.79% in the nine months ended December 31, 2017.


Our depreciation and amortization expense in the nine months ended December 31, 2017 was ₹145.83 million, which

represented decrease of 4.99% from our depreciation and amortization expense in the nine months period ended

December 31, 2016 of ₹153.49 million.

Power and Fuel

Our power and fuel expense in the nine months period ended December 31, 2017 was ₹564.33 million, which

represented an increase of 2.86% from our power and fuel expense in the nine months period ended December 31,

2016 of ₹548.66 million. The increase in power and fuel expense was primarily due to increase in power tariff as

well as ban on PET coke by the Central Pollution Control Board which increased our expense on alternate fuel.

Other expenses

Our other expenses in the nine months ended December 31, 2017 was ₹457.74 million, which represented an increase

of 18.09% from our other expenses in the nine months period ended December 31, 2016 of ₹387.63 million. The

increase in other expenses was primarily due to increase in processing charges and freight & forwarding charges.

Profit before tax

Our profit before tax in the nine months period ended December 31, 2017 was ₹386.84 million, which represented

an increase of 17.12% from our profit before tax in the nine months period ended December 31, 2016 of ₹330.30

million. The increase in profit before tax was primarily due to the reasons as explained above. As a percentage of

total revenue, our profit before tax increased from 6.60% in the nine months period ended December 31, 2016 to

7.07% in the nine months period ended December 31, 2017.

Tax expense

Our tax expense in nine months period ended December 31, 2017 was ₹132.90 million, which represented an

increase of 15.28% from our tax expense in nine months period ended December 31, 2016 of ₹115.28 million. The

increase in tax expense is proportional to the increase in profit before tax which was ₹330.30 million for the nine

months period ended December 31, 2016 to ₹386.84 million for the nine months period ended December 31, 2017

signifying an increase of 17.21%.

Profit for the period

As a result of the foregoing, our profit for the nine months period ended December 31, 2017 was ₹253.94 million,

which represented an increase of 18.10% from our profit for the period of nine months period ended December 31,

94

2016 of ₹215.02 million.

MATERIAL DEVELOPMENTS

In the opinion of our board of directors, other than as described in this Preliminary Placement Document, there has

not arisen, since the date of the last financial statements included in this Preliminary Placement Document, any

circumstances that materially and adversely affect our profitability or the value of our assets or our ability to pay our

liabilities within the next 12 months.

95

SUMMARY OF KEY DIFFERENCES BETWEEN INDIAN GAAP AND IND-AS

The following table summarizes certain of the areas in which differences between Indian GAAP and Ind-AS could

be significant to our financial position and results of operations. This summary should not be taken as an exhaustive

list of all the differences between Indian GAAP and Ind-AS. No attempt has been made to identify all recognition

and measurement, disclosures, presentation or classification differences that would affect the manner in which

transactions or events are presented in our Restated Financial Statements (or notes thereto). Certain principal

differences between Indian GAAP and Ind-AS that may have a material effect on our Restated Financial Statements

are summarized below. Our management has not quantified all of the effects of the differences discussed below.

Accordingly, no assurance can be provided to investors that our Restated Financial Statements would not be

materially different if prepared in accordance with Ind-AS.

Potential investors should consult their own professional advisors for an understanding of the differences between

Indian GAAP and Ind-AS and how those differences might affect the financial information disclosed in this

Preliminary Placement Document.

S. No. Ind-AS Particulars Treatment as per Indian GAAP Treatment as per Ind-AS

1. Ind-AS 1 Presentation

of Financial

Statements

Statement of Change in Equity: Under

Indian GAAP, a statement of changes in

equity is not required.

Movements in share capital, retained

earnings and other reserves are

presented in the Schedules to Financial

Statements.

Statement of Change in Equity: Ind-AS

1 requires the presentation of a statement

of changes in equity showing:

a) Transactions with owners in their

capacity as owners, showing separately

contributions by and distributions to

equity holders.

b) The total comprehensive income for the

period. Amounts attributable to owners of

the parent and non- controlling interests

are to be shown separately.

c) Effects of retrospective application or

restatement on each component of equity.

d) For each component of equity, a

reconciliation between the opening and

closing balances separately disclosing

each change.

Other Comprehensive Income: There

is no concept of “other comprehensive

income” under Indian GAAP, which is

required under Ind-AS. The items that

would form part of Other

Comprehensive Income under Ind-AS

are included in the income statement

under Indian GAAP.

Other Comprehensive Income: Ind-AS 1

requires the presentation of a statement of

other comprehensive income as part of the

financial statements. This statement

presents all the items of income and

expense (including reclassification

adjustments) that are not recognized in

profit or loss as required or permitted by

other Ind-ASs.

Other disclosures:

There are no specific disclosure

requirements under Indian GAAP for:

a) Critical judgements made by the

management in applying accounting

policies;

b) Key sources of estimation

uncertainty that have a significant

risk of causing a material adjustment

to the carrying amounts of assets and

liabilities within the next financial

period;

c) Information that enables users of its

financial statements to evaluate the

entity’s objectives, policies and

Other disclosures: Ind-AS 1 requires the

following disclosures:

a) Critical judgements made by the

management in applying accounting

policies;

b) Key sources of estimation uncertainty

that have a significant risk of causing a

material adjustment to the carrying

amounts of assets and liabilities within

the next financial period; and

c) Information that enables users of its

financial statements to evaluate the

entity’s objectives, policies and

processes for managing capital.

96


processes for managing capital.

Extraordinary items: Under Indian

GAAP Extraordinary items are to be

disclosed separately in the statement of

profit and loss and are included in

determination of net profit or loss.

Items of income or expense to be

disclosed as extraordinary should be

distinct from the ordinary activities and

are determined by the nature of the event

or transition in relation to the

business ordinarily carried out by an

entity.

Extraordinary items: Ind-AS prohibits

the presentation of any items of income or

expense as extraordinary, either on the

face of the income statement or in the

notes to accounts.

Change in Accounting Policies: Indian

GAAP requires changes in accounting

policies should be presented in the

financial statements on a prospective

basis (unless transitional provisions” if

any, of an accounting standard require

otherwise) together with a disclosure of

the impact of the same, if material.

If a change in the accounting policy has

no material effect on the financial

statements for the current period, but is

expected to have a material effect in the

later periods, the same should be

appropriately disclosed.

Change in Accounting Policies: Ind-AS

requires retrospective application of

change in accounting policies by adjusting

the opening balance of each affected

component of equity for the earliest prior

period presented and the other

comparative amount for each period

presented as if the new accounting policy

had always been applied, unless

transitional provisions of an accounting

standard require otherwise.

Dividends: Under Indian GAAP,

proposed dividend is shown as

appropriation of profit in profit and loss

account balance forming part of

reserves.

Dividends: As per Ind-AS 10 proposed

dividends are recognised in the period

when declared. It is non-adjusting event.

Ind-AS 1 requires an entity to disclose in

the notes, the amounts of dividends

proposed or declared before the financial

statements were approved for issue but

recognised as a distribution to owners

during the period, and the related amount

per share.

Errors: Under Indian GAAP, prior

period errors are included in

determination of profit or loss for the

period in which the error is discovered

and are separately disclosed in the

statement of profit and loss in a manner

that the impact on current profit or loss

can be perceived.

Errors: As per Ind-AS 8 material prior

period errors shall be corrected

retrospectively in the first set of financial

statements either by restating the

comparative amounts for the prior

period(s) presented in which the error

occurred or if the error occurred before the

earliest prior period presented, restating

the opening balances of assets, liabilities

and equity.

2. Ind-AS

17

Leases Operating lease rentals:

Under Indian GAAP, lease payments

under an operating lease are recognized

as an expense in the statement of profit

and loss on a straight-line basis over the

lease term, unless another systematic

basis is more representative of the time

pattern of the users benefit.

Under Ind-AS 17, lease payments under an

operating lease are recognized as an

expense in the statement of profit and loss

on a straight-line basis over the lease term

unless:

a) another systematic basis is more

representative of the time pattern of the

user’s benefit; or

b) The payments to the lessor are

structured to increase in line with

expected general inflation for cost

increases.

97


Fair valuation of rent deposits:

There is no specific accounting

treatment specified under Indian GAAP

for the accounting of deposits provided

by the lessee under a lease. Deposits are

generally accounted as assets at

historical cost.

Under Ind-AS, in case of an operating

lease, the difference between the nominal

value and the fair value of the deposit

under the lease is considered as additional

rent payable. This is expensed on a

straight-line basis over the term of the

lease.

The lessee also recognizes interest income

using internal rate of return through its

profit and loss over the life of the deposit.

Under Indian GAAP, leasehold land

forms part of fixed assets and is

excluded from the accounting standard

on leases.

Under Ind-AS, leasehold land is covered

under accounting standard for leases (Ind-

AS 17) and a distinction is made in the

treatment of operating leases and finance

leases.

3. Ind-AS

19

Employee

Benefits

Under Indian GAAP, actuarial gains

or losses are part of the income

statement.

Under Ind-AS, actuarial gains or losses are

required to be a part of other

comprehensive income.

4. Ind-AS

12

Income Taxes Deferred taxes P&L vs. Balance Sheet

Approach: AS 22 Accounting for Taxes

on Income is based on the income

statement liability method, which

focuses on timing differences.

Ind-AS 12 Income Taxes is based on the

balance sheet liability method, which

focuses on temporary differences.

Ind-AS

12

Income Taxes Deferred tax on unrealized

intragroup Profits:

Deferred tax is not recognized. Deferred

tax expense is an aggregation from

separate financial statements of each

group entity and no adjustment is made

on consolidation.

Deferred tax assets/Deferred Tax

Liabilities will need to be created on

unrealized intragroup profit. Deferred tax

on unrealized intra group profits is

recognized at the buyer’s rate.

5. Ind-AS

16

Property,

Plant and

Equipment

In most cases, Indian GAAP requires

repairs to be charged off to the profit and

loss account as incurred.

Major repairs and overhaul expenditure

are capitalized under Ind-AS 16 as

replacement costs, if they satisfy the

recognition criteria.

Indian GAAP does not mandate an

annual review of useful lives,

depreciation method and residual values,

but recommends periodic review of

useful lives.

Ind-AS 16 requires estimates of useful

lives, depreciation method and residual

values to be reviewed at least at the end of

financial year.

Any change in depreciation method is

treated as an accounting policy change

under Indian GAAP.

Any change in depreciation method is

treated as a change in estimate under Ind-

AS.

Under Indian GAAP, there is no concept

of indefinite useful life of intangible

assets. Further, Indian GAAP contains a

rebuttable presumption that the life of

intangibles should not exceed ten (10)

years, which is absent in Ind-AS.

Per Under Ind-AS 38, intangible assets can

have indefinite useful lives. Such assets

are required to be tested for impairment

and are not amortized.

Indian GAAP does not contain any

revaluation model for subsequent

measurement of intangible assets.

Under Ind-AS allows revaluation model

for accounting of an intangible asset,

provided an active market exists.

6. Ind-AS -

108

Operating

Segments

Under Indian GAAP, segments are

determined on the basis of geography

and business.

Under Ind-AS, segments are required to be

determined based on the Chief Operating

Decision Maker’s (“CODM”) regular

review of the financial information for

allocating resources and assessing

98


performance.

7. Ind-AS

18

Revenue Under Indian GAAP, revenue is

recognised as follows:

• Sale of goods: When all the

significant risks and rewards of

ownership of goods is passed to

buyer.

• Income from Services: Application

fees, front-end- fees, administrative

fees and processing fees on loans are

recognized when the revenue can be

reliably measured regardless of when

payment is being made.

• Interest: On time proportion basis.

• Dividend: When right to receive

dividend is established.

Under Ind-AS,

• Recognise revenue when all conditions

are met:

- Transfer of significant risks and

rewards of ownership

- Neither continuing managerial

involvement nor effective control

- Reliable measurement of revenue

- Probable future economic benefits

- Reliable measurement of costs

• Effect of multiple element

arrangements.

• Revenue to be presented net of

discounts.

8. Ind-AS

23

Borrowing

Costs

Under Indian GAAP, there is no

reference to effective interest rate w.r.t.

components of borrowing costs.

Under Ind-AS, description of specific

components is linked to effective interest

rates.

9. Ind-AS

20

Accounting

for

Government

Grants and

Disclosure of

Government

Assistance

No such guidance under Indian GAAP. Under Ind-AS, benefit of government

loans with below market rate of interest

should be accounted for as government

grant-measured as the difference between

the initial carrying amount of the loan

determined as per Ind-AS 109 and the

proceeds received.

10. Ind-AS

37

Provisions,

Contingent

Liabilities and

Contingent

Assets

Under Indian GAAP, provisions are

not based on constructive obligations.

Under Ind-AS, provisions are based on

legal or constructive obligations.

11. Ind-AS

110

Consolidated

Financial

Statements

This is a radical change in the Indian

environment, because applying the new

“control” definition may change the

gamut of entities included within a

group. This standard will be significant

to companies that have complex holding

structures and have formed special

purpose vehicles.

Ind-AS 110 establishes a single control

model for all entities (including special

purpose entities, structured entities and

variable interest entities). The

implementation of this standard will

require managements to exercise

significant judgment to determine which

entities are controlled and therefore are

required to be consolidated. It changes the

assessment of whether an entity is to be

consolidated, by revising the definition of

control.

Further proportionate consolidation can be

used only in limited cases of joint control,

while joint ventures would have to be

consolidated using the equity method.

12. Ind-AS

24

Related Party

Disclosures

Definition of related party according to

Ind-AS 24 is more enhanced than AS 18.

Definition of related party according to

Ind-AS 24is more enhanced than AS 18.

AS 18 has no such stipulation on

substantiation of related party

transactions when the same is disclosed

to be on arm’s length basis.

According to Ind-AS 24, an entity

discloses that the terms of related party

transactions are equivalent to those that

prevail in arm’s length transactions, only

if such terms can be substantiated.

13. Ind-AS The effects of The effects of changes in foreign Functional currency is the currency of

99


21 changes in

foreign

exchange rates

exchange rates functional and

presentation currency: Foreign

currency is a currency other than the

reporting currency which is the currency

in which financial Statement is

presented. There is no concept of

functional currency.

primary economic environment in which

the entity operates. Foreign currency is a

currency other than the functional

currency. Presentation currency is the

currency in which the financial statements

are presented.

14. Ind-AS

109

Financial

Instruments

Classification of Financial

Instruments and subsequent

measurement: Under Indian GAAP,

our company classified its assets and

liabilities as short term or long term.

Long term investments are carried at

cost less any permanent diminution in

the value of such investment determined

on a specific identification basis.

Current investment is carried at lower of

cost and fair value.

Liabilities are carried at their transaction

values.

Compulsory convertible preference

shares: currently under Indian GAAP,

compulsory convertible preference

shares are presented under share capital.

Ind-AS 109 requires all financial assets to

be either classified as measured at

amortized cost or measured at fair value

where assets are measured at fair value,

gains and losses are either recognized

entirely in profit or loss, fair value through

profit and loss (FVTPL), or recognized in

other comprehensive income under fair

value through other comprehensive

income (FVTOCI). Financial assets

include equity ad debts investments,

interest free deposits, loans, trade

receivable cash and bank balances etc.

There are two measurement categories for

financial liabilities– FVTPL and

amortized cost.

Compulsory convertible preference

shares: compulsorily convertible

preference shares that meet certain criteria

under Ind-AS 32 are required to be

classified as compound financial

instrument under Ind-AS pursuant to

which our Company will re-classify them

into debt and equity components.

Provision for doubtful debts: Under

Indian GAAP, provisions are made for

specific receivables based on

circumstances such as credit default of

customer or dispute with customer. An

enterprise should assess the provision of

doubtful debts at each period end which,

in practice, is based on the relevant

information such as past experience,

actual financial position and cash flows

of the debtors.

Different methods are used for making

provisions for bad debts, including

ageing analysis and individual

assessment of recoverability.

Provision for doubtful debts: in addition

to the specific provision under Indian

GAAP, under Ind-AS, at each reporting

date, an entity shall assess whether the

credit risk on trade receivables has

increased significantly since initial

recognition. When making the assessment,

an entity shall use the Expected Credit loss

model to provide for a loss allowance over

and above any provision for doubtful debts

in the profit and loss statement. An entity

shall measure expected credit losses to

reflect the following:

• An unbiased and probability weighted

amount that is determined by evaluating

a range of possible outcomes;

• The time value of money; and

• Reasonable and supportable

information that is available without

undue cost or effort at the reporting date

about past events, current conditions

and forecasts of future economic

conditions.

Derivative & hedge accounting:

currently there is no equivalent standard

on hedge accounting except in the case

of forward exchange contracts within the

scope of AS 11 and ICAI guidance note

on derivatives. Under AS 11, foreign

Derivative & Hedge Accounting:

Derivative contracts are fair valued at the

end of each period through P&L unless

hedge accounting option is followed.

Hedge accounting (recognizing the

offsetting effects of fair value changes of

100


currency forward contract premium/

discount is amortised over the forward

contract period. For other derivative

contracts, the ICAI guidance Note (GN)

requires an entity to provide for losses in

respect of all outstanding derivative

contracts by marking them to market at

the balance sheet date. The GN also

permits the use of hedge accounting if

the criteria are met.

both the hedging instrument and the

hedged item in the same period’s profit or

loss) is permitted in certain circumstances,

provided that the hedging relationship is

clearly defined, measurable and actually

effective.

Ind-AS 109 provides for three types of

hedges:

• Fair value hedge: if an entity hedges a

change in fair value of a recognized

asset or liability or firm commitment,

the change in fair values of both the

hedging instrument and the hedged item

are recognized in profit or loss when

they occur;

• Cash flow hedge: if an entity

hedges changes in the future cash flows

relating to a recognized asset or liability

or a highly probable forecast

transaction, then the change in fair value

of the hedging instrument is recognized

in other comprehensive income until

such time as those future cash flows

occur. The ineffective portion of the

gain or loss on the hedging instrument is

recognized in profit or loss in the period

of such change; and

• Hedge of a net investment in a foreign

entity: this is treated as a cash flow

hedge.

A hedge of foreign currency risk in a firm

commitment may be accounted for as a

fair value hedge or as a cash flow hedge.

101

INDUSTRY OVERVIEW

Unless noted otherwise, the information in this section has been obtained or derived from the “Industry report on

assessment of various financial products and services in India” dated March 12, 2018 by CRISIL (the “CRISIL

Report”), as well as other industry sources and government publications. All information contained herein must be

construed solely as statements of opinion. None of our Company, the Book Running Lead Manager or any of their

respective affiliates and any other person connected with the Issue has independently verified this information.

Industry sources and publications generally state that the information contained therein has been obtained from

sources believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed

and their reliability cannot be assured. Industry sources and publications are also prepared based on information

as of specific dates and may no longer be current or reflect current trends. Industry sources and publications may

also base their information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Our

Company and the Book Running Lead Manager do not take any responsibility for the data, projections, forecasts,

conclusions or any other information contained in this section Accordingly, investors must rely on their independent

examination of, and should not place undue reliance on, or base their investment decision solely on this information.

The recipient should not construe any of the contents in this report as advice relating to business, financial, legal,

taxation or investment matters and are advised to consult their own business, financial, legal, taxation, and other

advisors concerning the transaction. The information in this section must be read in conjunction with “Risk Factors”

and “Our Business” on pages 37 and 116, respectively.

The CRISIL Report contains the following disclaimer:

“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this Report

based on the information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL

does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any

errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommendation

to invest / disinvest in any company covered in the Report. CRISIL especially states that it has no financial liability

whatsoever to the subscribers/ users/ transmitters/ distributors of this Report. CRISIL Research operates

independently of, and does not have access to information obtained by CRISIL’s Ratings Division / CRISIL Risk and

Infrastructure Solutions Limited (CRIS), which may, in their regular operations, obtain information of a confidential

nature. The views expressed in this Report are that of CRISIL Research and not of CRISIL’s Ratings Division / CRIS.

No part of this Report may be published / reproduced in any form without CRISIL’s prior written approval”

OVERVIEW OF MACROECONOMIC SCENARIO IN INDIA

Review and outlook of India’s GDP growth

GDP grew at 6.9% CAGR over past five years

India adopted a new base year (fiscal 2012) for calculating GDP, based on which the GDP in nominal terms shot up

from ₹87 trillion in fiscal 2012 to ₹122 trillion in fiscal 2017, representing a CAGR of 6.9%. As per the Central

Statistics Office (CSO), GDP growth for India clocked 7.1% on-year in fiscal 2017, well above the world average

of 3.1%, but down from 8% in fiscal 2016. One of the major reasons for this was demonetisation.

102

The CSO released the first advance estimates of GDP for fiscal 2018 on January 5, 2018. It confirmed that the pace

of the Indian economy has slowed this fiscal, which is attributable mostly to the lingering impact of demonetisation,

transitory disruptions caused by the implementation of the GST, and weak agricultural growth.

CSO pegged real GDP growth for this fiscal at 6.5%, down from 7.1% in last fiscal. With this, growth has slowed

down for the second consecutive year, and is at the lowest level since fiscal 2015.

Gross value added (GVA) growth followed a similar trend, slowing to 6.1% in this fiscal from 6.6% in the last.

These estimates imply that real GDP growth will have to swing from 6% in the first half of this fiscal to 7% in the

second half. Given the low base and the expected waning of the GST impact going ahead, we retain our forecast of

7.5% real GDP growth in fiscal 2019, with private consumption leading the recovery.

Private consumption is the largest contributor to India’s GDP (58%). The nominal per capita GDP growth, which is

used as a proxy for income growth, picked up in fiscal 2017. It rose to 9.6% on-year compared with 8.6% in the

previous year. Correspondingly, nominal per capital private final consumption expenditure, which is used as a proxy

for consumer spending, also grew by 11.2% (despite demonetisation), compared with 8.3% in the previous year.

This indicated a pick-up in consumer demand, after consecutive years of decline in spending growth.

During the first half of fiscal 2018, India’s economy temporarily “decoupled,” decelerating as the rest of the world

accelerated – even as it remained the second-best performer among major countries, with strong macroeconomic

fundamentals. The reason lay in the series of actions and developments that buffeted the economy: demonetisation,

teething difficulties in the new GST, high and rising real interest rates, an intensifying overhang from the TBS Twin

Balance Sheet challenge, and sharp falls in certain food prices that impacted agricultural incomes. In the second half

of the year, the economy witnessed robust signs of revival. Economic growth improved as the shocks began to fade,

corrective actions were taken, and the synchronous global economic recovery boosted exports. For the complete

year, real GDP growth is estimated to slow down to 6.5% in fiscal 2018 from 7.1% in fiscal 2017.

103

OVERVIEW OF PET RECYCLING INDUSTRY IN INDIA

Trends in PET Consumption in India

PET consumption in India to continue growing healthily

Polymer packaging can be broadly categorised into four types, based on material – PP (polypropylene), HDPE (high

density polyethylene), BOPP (biaxially oriented polypropylene), and PET (polyethylene terephthalate). While

BOPP, HDPE, and PP bags come under flexible packaging, HDPE containers, PP containers and jars, and PET

bottles are classified under rigid packaging.

Materials used for plastic packaging

Polyethylene terephthalate is one of the most widely used plastic types today. Currently, PET bottles have a

significant presence in our day-to-day lives through mineral water, soft drinks, and other applications. Over past few

years, PET packaging has been gaining market share from glass and metal packaging segments. Apart from being

lightweight, PET offers several other advantages such as ease of handling and longer shelf life, compared to other

packing materials. This has supported its growth.

During past five years, PET consumption in India has increased at CAGR of 12% to 880,000 tonnes in fiscal 2017,

driven by growth in packaged drinking water, carbonated soft drinks, packed fruit juices, etc. Going forward, PET

consumption in India is expected to grow at CAGR of 8-9% over next three years to 1.1 million tonnes.

Advancements in packaging, growth in end-user industries, and increase in penetration to other product segments

such as healthcare and personal care products, packaged food and beverage markets will be key growth propellors.

Demand growth lower than in past five years due to slow growth in major end-user segments such as carbonated

soft drinks and packaged drinking water on account of high base effect.

104

In India, production capacity of PET products is much higher than consumption: India is a net exporter of PET

preforms to other countries such as Bangladesh, United States of America, Italy, and United Arab Emirates. As of

fiscal 2017, total capacity of PET production is estimated to be at 1,815 kilo tonnes per annum (KTPA). PET prices

are majorly dependent on crude oil prices as raw materials are derived from it. Following a decline in crude oil prices

during 2014–2016, PET prices in Southeast Asia have declined from $1,293 per tonne to $890 per tonne. In 2017,

prices have increased to $1,038 per tonne; in 2018, CRISIL Research expects prices to remain at these levels.

Trends in PET recycling in India

Recycling rate in India is pegged at 65-75% of PET consumption

PET bottles, post use, still carry a lot of value, and recycled PET (r-PET) can be used in a wide variety of

applications. Thus, waste collectors seek post-consumer PET bottles eagerly. Moreover, unscientific disposal of

hazardous and other waste through burning or incineration leads to emission of toxic fumes comprising of Dioxins

& Furans, causing air pollution and associated health related problems. Disposal in water bodies, or in municipal

dumps leads to toxic releases due to leaching in land and water entailing into degradation of soil and water quality.

Hence, there is a need for systematic management of waste in an environmentally sound manner by way of

prevention, minimisation, re use, recycling, recovery, utilisation including co-processing and safe disposal of waste.

In perspective of above mentioned reasons, recycling is the most environment-friendly alternative for plastic waste

disposal, as we can re-utilise the energy content of the polymer in an ecologically acceptable way.

Plastic recycling has been classified into the following four types: – primary, secondary, tertiary, and quaternary:

(i) Primary recycling: It involves processing of waste/scrap into a product with characteristics similar to those

of the original product. For instance, recycling of relatively uncontaminated waste plastics that has

historically taken place in direct manufacturing can be considered as primary recycling.

(ii) Secondary recycling: It involves processing of waste/scrap plastics into materials that have characteristics

different from those of the original plastic products.

(iii) Tertiary recycling: It involves production of basic chemicals and fuels from plastic waste/scrap as part of

municipal waste stream or as a segregated waste

(iv) Quaternary recycling: It retrieves the energy content of waste/scrap plastics by burning/incineration.

Only primary recycling of post-consumer materials or purchased industrial plastic scrap, secondary and tertiary

plastics recycling reduce current waste disposal volumes. Quaternary recycling falls within the term ‘resource

recovery’. Primary recycling of scrap from in-plant operations is commonly practiced and hence excluded from

standard recycling definitions. In India, usage of PET packaging is not only cost-efficient but also environment

friendly as about 65-75% of PET consumption is recycled. Recycling rates achieved in India are comparable to other

developing and developed countries such as China (80-85%), Japan (75-80%), and USA (25-30%).

105

REVIEW AND OUTLOOK OF PET RECYCLING MARKET IN INDIA

PET recycling market growth to trace growth in PET consumption

During the past 5 years, the PET recycling industry grew at a significant pace driven by the growth in PET

consumption in India. Going forward, the growth is expected to remain steady on account of both rise in PET

consumption as well as improvement in recycling rates on account of rising awareness, rise in crude oil prices,

segregation of plastic at source, and availability of infrastructure.

Over past five years, the PET recycling industry grew at CAGR of 11%, tracing the growth in PET consumption in

India. Going forward, the growth is expected to post steady growth of 9-11% on account of rising PET consumption

and recycling rates. Moreover, due to the rising awareness and infrastructure availability, the recycling rate is

expected to improve slightly and support the growth of the industry. Even though application of RPET is limited

compared to Virgin PET, it is widely used as fibre for fabrics, apparel, carpets, among others.

The PET recycling industry is dominated by about 35 organised players who together account for about 85-90% of

the industry. However, there are few unregistered/undocumented players, who supply to local manufacturers without

approvals. Since the supply chain involves activities at a local level, capacities of such players go unobserved at an

industry level. Prior to fiscal 2016, a few players in the industry imported PET scrap from countries such as United

Arab Emirates (UAE), United Kingdom (UK) etc. However, post implementation of Hazardous waste rules-2016,

import of PET bottle and other scrap has been banned to prevent the country from becoming a dumping yard for

industrialized nations.

106

GROWTH DRIVERS FOR PET RECYCLING INDUSTRY

Growth prospects for end-use segments such as beverages (alcoholic and non-alcoholic), FMCG, pharmaceuticals

and industrial products act as key demand drivers for packaging. Over the past few years, PET packaging has been

gaining market share from the glass and metal packaging segments. Glass bottles have been replaced by PET bottles

in the non-alcoholic beverages segment. Growth in end-user sectors will augur well for PET consumption.

Increasing rural demand for small-sized packaged goods

With a view to attract rural consumers, FMCG companies market their products in small packaging. As a result,

FMCG industry has witnessed growing demand from rural areas and smaller cities, which has further driven up

demand for packaging materials. FMCG companies have initiated projects to increase penetration in rural markets,

which is expected to drive the demand for PET packaging. In rural markets, glass bottles are dominant due to their

price advantage. But, these bottles are not easy to store and are used in smaller stock-keeping units (SKUs) which

are consumed at the point of sale. Moreover, with demand shifting towards PET bottles in rural areas as well, players

are focusing on decreasing the share of RGB bottles.

Expected growth in organised retail

While overall retail is projected to grow at a 14-16 per cent CAGR over the next 5 years (2016-17 to 2021- 22),

organised retail is expected to grow at a faster pace, at a CAGR of 23-25 per cent. In addition, penetration of

organised retail is expected to reach 11 per cent in 2021-22 from around 8 per cent in 2016-17. Consequently,

urbanisation and growth of the organised retail segment are expected to boost demand for packaging.

Better affordability levels, health conscious nature of consumers

Over the last few years, per capita disposable incomes of Indian consumers have grown at a healthy rate improving

their affordability. Consumers are also becoming more health conscious. As a result, they increasingly prefer

packaged and branded food/ non-food items over unpacked, non-branded items, which increases demand for PET

packaging.

Improvement in PET consumption

Over the next 3 years, the PET consumption in India is expected to grow at higher single digits driven by rise in end

user segment such as soft drinks, packaged drinking water, etc. Moreover, increased adoption of PET from other

materials such as glass, metal and paper is expected to boost PET consumption. This will boost the availability of

PET scrap, which the key raw material for recycling industry.

Rising recycling awareness and infrastructure

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Over the past few years there has been an improvement in awareness and infrastructure for recycling in terms of

segregation of waste at source through separate bins for waste collection. Moreover, the recent trend of PET bottle

collection through Reverse Vending Machine, directly from the consumers shall help in boosting the recycling rates.

APPLICATIONS OF RECYCLED PET

Currently, recycled PET is predominantly converted into polyester staple fibre (PSF). Apart from this, a small

amount of recycled PET is also being used for making PET straps and PET sheets. PSF is further processed to be

used as fibre fill, clothing, in production of partially oriented yarn, etc.

Key avenues for application of recycled PET

(a) Fibre fill denotes applications where short fibres are used to fill cushions, pillows, etc.

(b) Polyester staple fibre (PSF) is used in making a wide range of fabrics for clothing, upholstery, etc.

(c) Partially oriented yarn (POY) is another type of polyester yarn that is used to produce texturised yarn, for

making fabrics

(d) Non-woven is a fabric-like material made from PSF, used in carpets, curtains, etc.

(e) Monofilaments are mainly used for making mesh fabrics for screen printing, filtering of oil & sand, bracing

wires for agricultural applications, etc.

(f) PET straps are used in packaging, baling, etc. as alternative to metal wires

(g) PET sheets are used for packaging a variety of products such as consumer products and engineering items

RECYCLED PET VALUE CHAIN

PET recycling involves three steps – collection, sorting and processing.

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Collection: The plastic waste is collected by waste collectors from several locations. Municipal solid waste (MSW)

is one main source of plastic waste. Waste collectors also collect directly from locations such as railway stations,

airports, restaurants, and hotels among others. Currently, reverse vending machines (RVM) are being set up to ease

PET bottle collection. RVM allows consumers to directly dispose used empty PET bottles in an automated recycling

machine. While RVM is currently in nascent stages, its wide implementation will improve collection efficiency and

quality of containers, as the bottles are not soiled.

Sorting: Once collected, the plastic waste needs to be segregated based on type of material (PP, HDPE, PET, etc.)

This is executed mostly by visual inspection through touch, pressure, and use of solvents at the kabadiwallahs. Post

classification, the waste is sold to different traders based on type of material, for further processing. The traders

further scrutinise the waste and separate them based on colour. Caps, rings and labels are removed to avoid mixture

of other plastics. Post segregation, the bottles are crushed into bundles (bales) to accommodate more bottles for

transport.

Processing: After arriving at a recycling facility, the bales are subject to a final stream of segregation to adhere to

IS 14535 standards, and then to cleaning. The bottles are fed through several processes to break, wash and dry

resultant flakes. These flakes are melted and spun into fibres of various grades, based on requirement in textiles,

carpets, and pillows among others.

STANDARDS AND SPECIFICATIONS OF PLASTIC RECYCLING

Bureau of Indian Standards (BIS) sets regulations for usage of plastics. The Indian plastic industry has facilitated

the formulation of standards and specifications for plastics recycling in the country. These guidelines are related to

method of recycling of plastic waste and scope of products for which it recycled plastics can be used.

Plastic recycling regulations are majorly governed by three different standards:

• Guidelines for recycling of plastics IS:14534

• Recycled Plastics for Manufacturing of Products Designation IS: 14535

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• Plastic Waste Management Rules, 2016

EVOLVING TRENDS IN PLASTIC RECYCLING GLOBALLY

Over past few years, there have been several advancements in plastic recycling across the globe. These include

innovations from waste processing to the end use of the product.

Currently, segregation of waste is increasingly being planned through detectors and other sophisticated decision and

recognition software to increase accuracy and productivity of automatic sorting. For instance, current FT-NIR

(Fourier Transform Near-Infrared) detectors can operate for up to 8,000 hours, between faults.

Moreover, usage of recycled plastics is strictly restricted in polymers for food products. To expand the application

of recycled PET, there have been plans to introduce multi-layered forms by the players. These multi-layered forms

which have virgin polymer at the ends while the centre is filled with recycled polymer (ABA form – A (Virgin), B

(recycled)). This avoids contact of recycled polymer with food products. However, these bottles will have a slight

deterioration in clarity compared to virgin PET due to presence of Recycled PET. Currently, as per Indian

regulations, usage of recycled material in food-grade plastics is not acceptable.

OVERVIEW OF TEXTILE INDUSTRY IN INDIA

Qualitative overview

Indian textile industry is one of the country’s oldest and most significant industries. In fiscal 2017, the textile sector

accounted for nearly 2% of gross domestic product (GDP), 10% of manufacturing production, and 13% of export

earnings. It is also a significant foreign exchange earner, contributing to around 15% of India’s total exports. In

fiscal 2017, textile and apparel sector employed nearly 45 million people directly and 60 million people indirectly,

including a large number of women and rural population. Thus, the textile industry’s growth and all-round

development has a direct bearing on the nation’s economic improvement. India is the second-largest textile fibre

producer in the world.

The Indian textiles industry is extremely varied, with hand-spun and hand-woven sector at one end of the spectrum,

and the capital-intensive, sophisticated mill sector at the other. The industry is fragmented with a few large players

and numerous small and medium-sized companies. Furthermore, it is vertically integrated and covers a large gamut

of activities ranging from production of its own raw material, namely, cotton, jute, silk and wool to providing high

value-added products such as fabrics and garments to consumers. India also produces large varieties of synthetic

and man-made fibre (MMF) such as filaments and spun yarns, from polyester, viscose, nylon and acrylic which are

used to manufacture fabric as well as garments. Decentralised powerlooms/ hosiery and knitting sectors form the

largest section of the textiles sector. The textiles value chain, in which processed fabrics are converted into ready-

to-wear apparel, begins with 'spinning,' in which fibre is converted into yarn. The yarn spun through spinning is

called spun yarn and yarn that does not require spinning is called filament yarn.

The yarn is then converted into fabric through 'weaving' or 'knitting.' The fabric undergoes various processes

(commonly clubbed under 'processing') like scouring, bleaching, dyeing, washing, and finishing. The fabric

produced after this stage is known as processed fabric and it is suitable for manufacturing ready-made garments.

The final stage of 'garmenting' involves a series of sub-stages such as laying, measuring, cutting and stitching before

the processed fabric is converted into a readymade garment (RMG). The garments are finally marketed through a

range of distribution channels in the domestic market or are exported.

Fabrics are made from natural fibres (cotton, silk, wool) or MMF (polyester, nylon, rayon and viscose yarns). Cotton

fabrics account for more than half of India's total fabric production. MMF is primarily used to produce blended

fabrics and 100% non-cotton fabrics, which are in turn used in RMG, home textiles and other industrial textiles. In

fiscal 2018 (till November 2017), cotton fabric accounted for 60% of overall fabric production in India, followed by

15% for MMF and 12% for blended fabrics.

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MMF is primarily used to produce blended fabrics and 100% non-cotton fabrics, which are, in turn, used in RMG,

home textiles and other industrial textiles. Man-made fibres are used in production of RMG and home textiles,

through intermediaries, such as blended fabrics and 100% non-cotton fabrics.

Healthy domestic demand to propel MMF industry over next three years

Demand for man-made fibres (MMF), which increased at 5.2% CAGR over the past five years, led by strong growth

of ~8% CAGR in exports, is projected to accelerate at 6.5-7.5% CAGR between fiscals 2017 and 2020, this time on

healthy domestic demand. However, in the near term, the industry is expected see turbulence, with demand rising a

modest 2-3% on-year in fiscal 2018. A large part of this slowdown is because of the decline in demand in the first

of the fiscal owing to transitory disruptions caused by the implementation of the Goods and Services Tax (GST).

However, in the second half, domestic demand is expected to recover owing to festive demand and low inventory

levels.

Up to fiscal 2020, most of the products in the MMF space will post healthy growth trajectories:

Polyester filament yarn

• Demand is forecast to grow at 6-7% CAGR led by healthy exports

- Exports are expected to rise at 7-9% CAGR, with textured yarn being the primary driver. However, direct

partially-oriented yarn (POY) exports are declining

- Domestic demand is expected to rise at 6-7% CAGR, driven by the apparel segment and substitution of

other yarns with polyester filament yarn (PFY) owing to cost benefits. A large part of the demand will be

in the home and technical textiles space, which are likely to expand at 10% CAGR

Polyester staple fibre

• Demand for polyester staple fibre (PSF) is projected to increase 5-6% CAGR, led by healthy domestic demand

as well as exports

- Domestic demand is expected to rise at 5-6% CAGR, backed by healthy growth in the blended segment

owing to cost and other qualitative advantages. Within the space, 100% polyester yarn will be the key

driver, given its use in several types of apparel

- Exports are forecast to increase at 5-6% CAGR owing to pick-up in global polyester demand

Viscose staple fibre

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• Viscose staple fibre (VSF) demand expected to rise ~8% CAGR on healthy domestic demand and exports

- On the domestic front, steady growth from end-user segments and increasing branding and marketing

activities from Grasim to help the market record a strong 8-10% CAGR

- Exports, though, are expected to increase at a slower 5-10% CAGR over the next three years as the

product gets diverted for meet domestic demand over the next two years. However, in the long term, with

the expansion of capacities by Grasim, exports will rebound, tracking healthy demand in key importing

countries

In contrast to healthy demand in PFY, PSF and VSF, demand for viscose filament yarn (VFY) is expected to be

subdued.

Viscose filament yarn

• Demand is expected to rise a mere 0-1% CAGR owing to tepid domestic and export demand

- Domestic demand is projected to trend 0-1% CAGR because of increased substitution of VFY with

polyester, which is a competing product, aided by low crude oil prices.

- Exports too will record tepid growth of 0-1% CAGR owing to rising competition from China

SWOT Analysis of MMF Industry

MMF Demand-Supply Outlook

Over the past five years, demand for MMF increased at 5.2% CAGR, led by strong growth in exports (nearly 8%

CAGR). However, in fiscal 2017, demand growth slowed down to 4.6% on-year, as demonetisation affected

domestic demand. Nevertheless, exports rose ~15% on-year owing to India’s rising share to key polyester

destinations, Turkey and Brazil. Subdued polyester prices also supported consumption, as the cotton-polyester price

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differential led to higher substitution of cotton with polyester. Thus, polyester domestic demand was less hit by

demonetisation compared with cotton.

In fiscal 2018, overall demand is expected to record a modest 2-3% growth on-year, owing to demand decline in the

first half post GST (Goods and Services Tax) implementation. However, in the second half, domestic demand is

expected to have recovered, owing to festive demand and low inventory levels. Low polyester prices, aided by low

crude oil prices, will continue to encourage increased substitution of other fibres with polyester. Cotton fibre prices

are expected to be at ₹110-115 per kg vis-à-vis PSF prices of ₹86-89 per kg. Export demand is also expected to be

healthy, with recovery in global polyester demand. Demand (domestic + exports) is expected to increase 6.5-7.5%

CAGR over the next 3 years up to fiscal 2020, led by healthy domestic demand. Product-wise demand drivers are

highlighted below.

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KEY MMF INDUSTRY DEMAND DRIVERS AND RISK FACTORS

The MMF industry primarily caters to the textile industry and the demand for the same is driven by the following

factors:

Population growth

Demand is primarily a function of population growth. Between 2011 and 2030, India’s population is projected to

increase about 1%-1.2% to 1.5 billion. During 2001 to 2011, the population grew at ~1.8% CAGR to about 1.2

billion.

Increasing Income Levels

India’s per-capita income grew at a healthy rate in the three years to 2016-17. It rose 8.2% to ₹103,818 in fiscal

2017 from ₹93,231 in fiscal 2016, and ₹79,412 in fiscal 2014.

The buoyant trend of India’s per capita income growth is expected to continue at a healthy rate. Rising disposable

incomes will be driven by factors such as the implementation of the ‘one rank one scheme’ and sustained low

inflation, thus enabling higher domestic consumption. Higher disposable incomes would aid increase in domestic

travel demand thus acting as an important factor driving demand in the Indian hospitality sector.

Urbanisation: Growing urban population holds the key to future spending

Urbanisation has been increasing at the rate of 2.7% over the past decade. According to Census 2011, India’s urban

population, as a percentage of the total population, stood at 31.2%.

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Increasing retail penetration driving apparel and non-apparel sales

Riding on a high-growth trajectory, organised retail in India is expected to expand at nearly 22-24% per annum over

the next three years. Of total organised retail, clothing and textiles comprise a large share at 24%. Growth of retail

is linked to consumer needs, attitudes and behaviour. Rising incomes, education and global exposure have

contributed to the evolution of the Indian middle class, prompting a gradual shift in their consumption patterns.

The increasing demand for better quality, convenience and higher value for money has increased the demand for

branded goods. People are willing to experiment with new products and different looks. This has further augmented

spending on health and beauty products, apart from apparel, food and grocery items.

Better credit availability and increasing penetration of plastic money to aid spending

With the easy availability of credit, the market for personal loans has seen significant growth in India, pushing up

spending. The ease of making payments with credit and debit cards has led to a sharp increase in consumer spending

in recent years.

KEY RISK FACTORS

Volatile raw material prices

Raw material cost is the largest cost component for a spinning mill, accounting for more than half of a producer’s

operating income. It directly impacts the operating margins of spinning mills. The primary raw material for man-

made fibres is crude oil and its derivatives. The volatility in international crude oil prices is a major problem for

MMF manufacturers. Typically, these costs are passed on to the end consumers. Raw material price fluctuations

impact MMF players due to a manufacturer’s limited ability to fully pass on the price rise as well as the inventory

losses when a sharp price correction happens. Hence, the major determinant of profitability for an MMF player is

management of raw material price fluctuations, which also makes it a key risk for the industry.

Currency risk

Exchange rate fluctuations indirectly impact the pricing power of MMF manufacturers as downstream segments

(RMG and home textiles) are export-oriented and price competitive. Hence, a sharp appreciation of the rupee impacts

the pricing flexibility of mills catering to export-oriented units.

Competition from other fibre options

Industries like cotton yarn also compete for the same end-user segments like RMG and home textiles. The narrowing

gap between cotton yarn and PFY prices due to the increase in international crude oil prices has impacted the overall

competitiveness of the MMF industry.

Reduced government support

Before the implementation of GST, players were paying 12% tax on their produce. Additional benefit was also

provided to Environment-friendly recycled MMF manufacturers who recycled consumer-used PET material for

MMF production were charged 5% taxes only. However, post-GST, all the manufacturers have been kept in the 18%

GST bracket. This additional tax burden cannot be easily passed on to the end consumer given the intense

competition in the market amidst oversupply situation.

Increase in cheaper imports

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Post the GST tax hike, domestic MMF prices have increased, making cheaper Chinese imports more lucrative for

the end-consumers. Moreover, prior to GST, import of textile products had been attracting basic customs duty (BCD)

plus countervailing duty (CVD) and special additional duty (SAD). Post GST, CVD and SAD were withdrawn and

IGST was introduced. Although import duty on MMF Fabric was increased from 10 to 20 per cent; import duty on

MMF yarn has been kept at the old rate. Thus, post GST, there has been a spike in import of MMF yarn, cotton

fabric and MMF fabric. These cheaper imports pose a risk to the MMF industry.

RECENT TRENDS IN THE MMF INDUSTRY

The GST implementation and strict execution have impacted business models of unorganised players. Most of these

players are unable / unwilling to comply with GST norms. Additionally, with the increased tax rates under GST,

many SME players are finding it difficult to survive as they are not able to pass on the increased cost to the end-

consumer given the poorer quality of their products and the intense competition in the industry. Due to this, many

small and unorganised players have shut shop while others have been absorbed by bigger, organised players. Thus,

the share of organised players is increasing in the market.

KEY PLAYERS IN PET RECYCLING INDUSTRY

(a) Alliance Fibres: Alliance Fibres is a company under the Khodiyar Group of Industries. The group has a

presence in filament yarn, textured & twisted dyed yarn and cotton yarn. The group has also presence in the

production of pharmaceutical, food and industrial enzymes. Alliance Fibres was started in 2007 as a backward

integration for the group’s yarn business to generate PSF from polyester and PET waste.

(b) Ganesha Ecosphere: Ganesha Ecosphere has a total capacity of 97,800 tonnes per annum. Our company was

incorporated in 1987 and manufactures recycled PSF, recycled PSY, dyed and texturised/ twisted filament

yarn. According to All lndia Recycled Fibre & Yarn Manufacturers Association, our Company is the largest

PET recycler in the country in terms of production capacity of manufacturers of Recycled Polyester Staple

Fibre in India.

(c) J B Ecotex: JBEL was set up as a limited liability partnership (LLP) firm. The Surat-based company is a part

of Jay Bharat Group, chaired by Mr. Jitendra Arya since 1985. The group operates in various fields such as

polyester mono filament yarn and nylon FDY yarn spinning, Yarn dyeing, green power generation, readymade

garment manufacturing etc. JB Ecotex is the group’s venture into the recycling of PET bottles.

(d) Komal Fibres: Komal Fibres is a Gujarat-based company in the PET recycling market. The company was

incorporated by Mr. Kharag Dudhoria in 1987 to produce PSF from Pet scrap/waste.

(e) Pashupati Polytex: Pashupati Polytex is a producer of recycled PSF from PET scrap. It was established in

2009 and is based out of Kashipur, Uttaranchal.

(f) BLS Ecotech: BLS Ecotech is a Delhi-based PET bottle recycler.

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OUR BUSINESS

Some of the information contained in the following discussion, including information with respect to our plans and

strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section titled

“Forward-Looking Statements” on page 14 for a discussion of the risks and uncertainties related to those statements

and also the section titled “Risk Factors” on page 37, “Financial Information” on page 203 and “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” on page 76 for a discussion of certain

factors that may affect our business, financial condition or results of operations. Our actual results may differ

materially from those expressed in or implied by these forward-looking statements. Our Fiscal ends on March 31 of

each year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year.

Our Company is required to prepare financial statements in accordance with Ind AS for Fiscal 2018 (together with

the corresponding financial statements under Ind AS for Fiscal 2017). Our historical financial statements for Fiscal

2015, Fiscal 2016, and for Fiscal 2017 were originally prepared in accordance with Indian GAAP. Ind AS varies

in many respects from Indian GAAP, and accordingly our Ind AS Unaudited Interim Financial Results for the nine

months ended December 31, 2017 are not comparable with our historical Indian GAAP financial statements for

Fiscal 2015, Fiscal 2016 and Fiscal 2017. For further information, see “Risk Factors” on page 37 of this


In this Preliminary Placement Document, we have therefore included the Indian GAAP Audited Financial

Statements for Fiscal 2015, Fiscal 2016 and Fiscal 2017, and the Ind AS Unaudited Interim Financial Results as of

and for the nine months ended December 31, 2017 and limited reviewed financial results for quarter ended June 30,

2017 and half year ended September 30, 2017. Our Ind AS Unaudited Interim Financial Results for nine months

ended December 31, 2017 also include reconciliation statements of the effect of transition from Indian GAAP to Ind

AS in accordance with Ind AS 101 – First time adoption of Indian Accounting Standards. Indian GAAP and Ind AS

differ in certain respects to IFRS and U.S. GAAP. Accordingly, the degree to which our financial statements included

in this Preliminary Placement Document will provide a meaningful information to a prospective investor is entirely

dependent on such reader’s level of familiarity with Indian accounting processes and practices. For important

information relating to the presentation of financial information, including the transition from Indian GAAP to Ind-

AS financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” on page 76.

Overview


















in any capex.





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In addition to our regular employees, we also engage technical consultants from time to time to seek advise on


In fiscal 2015, 2016, 2017 and the nine months ended December 31, 2017, gross revenues from sale of products

were ₹6,275.10 million, ₹6,546.06 million, ₹6,842.98 million and ₹5,447.44 million, respectively. In fiscal 2015,

2016, 2017 and the nine months ended December 31, 2017, profit after tax were ₹230.67 million, ₹248.59 million,

₹299.44 million and ₹254.19 million, respectively. As of December 31, 2017, we had firm supply orders for 7,766

tonnes of RPSF from over 150 customers.

Competitive Strengths

With a legacy of more than two decades in the PET recycling industry, we believe that following are our principal

competitive strengths:

1. Robust track record and large-scale operations in the PET recycling industry

Our Company having an existing installed capacity of 1,08,600 MTPA for RPSF (out of which 21,000 MTPA started

in February 2018) is the largest PET recycler in India in terms of production capacity of manufacturers of Recycled

Polyester Staple Fibre (“RPSF”) in India (Source: CRISIL Report). Supported by its large scale of operations which

results in economies of scale, our Company has demonstrated healthy and stable profitability over the years. Besides,

our Company has also demonstrated its ability to prevent a sharp decline in contribution margins in times of pressure

on RPSF realisations by reducing our raw material procurement cost. During Financial Year 2017, our Company

processed 4.52 billion PET bottles, which we believe is a domestic record in the PET recycling industry.

We have been able to maintain our leadership position in RPSF segment on account of sizable capacity and

diversified product portfolios. Besides our Company being the largest RPSF player in terms of production capacity,

with the commissioning of our 7,200 MTPA spun yarn facility at Bilaspur (Uttar Pradesh) in Financial Year 2014,

we started manufacturing spun yarn in-house which was done on job work basis earlier. Post commissioning of spun

yarn facility, we have moved up the value chain by converting PET bottles to PET flakes, and making fibre and yarn

from PET flakes.

Our early entry in a low penetrated market has helped us to grow with stability and capture the PET recycling value

chain. We increased our RPSF manufacturing capacity by 121.21% from 39,600 MTPA in Financial Year 2009 to

87,600 MTPA in Financial Year 2016 and the cumulative capacity utilization of our manufacturing plants is 89% in

2017. We believe that, our modern technology machinery yields us better realization as quality is comparable with

virgin polyester. We have also expanded our RPSF capacity at Bilaspur by 21,000 MTPA in February 2018, which

will further add to our strength. Our higher capacity will lead to reduction in fixed manufacturing costs and better

inventory management.

With the track record of over two decades in the industry, our Company has established a strong procurement

network as well as a reasonably diversified client base. While the supplier network has helped our Company get

seamless supplies for its enhanced capacity over the years, steady demand from the established client base has

facilitated satisfactory capacity utilisation levels and scale of operations.

2. Strong PET waste supply network

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The key entry barrier in PET recycling business is the sourcing of PET waste, which is required to maintain an

optimal scale of the business. As on March 31, 2017, we had more than 200 vendors and suppliers in various strategic

locations within India and overseas. Our collection network enables the supply of PET waste from various sources,

ranging from post-consumer scrap to industrial scrap. These vendors collect the used PET bottle and supply it our

manufacturing facilities after sorting and in flakes/bale form. Our collection network helps us to mobilise nearly 250

tonnes of PET waste per day, translating into adequate raw material availability to feed our production lines.

3. Relationship with established players in industry

Our customer base includes a diverse set of industries including OEMs to automobile industry, geo-textiles, medical

and packaging, textiles and non-woven applications. Our Company has more than 400 customers in its portfolio

having annual sales of ₹1,000,000 or more. Our customers base is widespread and with evolving industry and market

trends, we believe that our products have found wide acceptance in the markets across India. We also believe that

our customers have benefited from the high-quality products made available to them at reasonable prices. We further

believe that our Company is well poised to benefit from this strong relationship with the industry players enabling

our Company to provide better services to its customers. Our Company constantly improves its product quality for

meeting customer quality requirements and hence ensures enhancement of value to customers.

Our Company has sales offices at New Delhi, Mumbai, Ludhiana, Panipat, Jaipur, Kolkata and Kanpur which

manages relationships with the customers and helps in finding new customers. We are exporting nearly 5.89% of

our revenue from operations to Belgium, Spain, Italy, Morocco, Bangladesh, Turkey, Portugal, China, Greece and

Nepal. Our top five (5) customers contributed around 14% of our revenues from operations for the period ended

March 31, 2017, thus indicating a fairly diversified customer profile and non-reliance on a few customers for our

revenues. Further, our Company sell our products to various customers in the textile industry and also to wholesalers

and traders.

4. Stable financial position indicating consistent improvement in total operating income, comfortable

profitability margins, solvency indicators and liquidity profile

We continue to report healthy and consistent operating profit margins, which results in comfortable accruals in

relation to our debt obligations, as reflected in the DSCR (debt service coverage ratio) of 1.4 times in Financial Year

2017. Our liquidity profile continues to be stable as reflected in the average utilisation of fund based limits at 50-

60% during the Financial Year 2017. We have been assigned (i) a credit rating of CARE A- (Single A Minus) in

relation to its long-term bank facilities (aggregating to ₹ 259.60 crores) indicating “Stable” outlook; and (ii) a credit

rating of CARE A2+ (A Two Plus) in relation to its short-term bank facilities (aggregating to ₹ 11.80 crores) vide

letter bearing No. CARE/DRO/RR/2017-18/1492 dated June 29, 2017 taking into account, inter-alia, (a) the

improvement in our PBILDT margins by 130 bps to 11.41% during FY 16 (PY: 10.11%) due to fall in raw material

prices and stabilization of expanded recycling capacity of RPSF at Bilaspur (21000 TPA); (b) capital structure and

liquidity profile marked by efficient management of the working capital cycle by using its cash accruals to fund the

working capital requirements with average utilization at around 50% in twelve (12) months ended December 2016;

(c) the experience of the promoters and the management team in RPSF business; (d) integrated operations;

(e)efficient raw material procurement and (f) product distribution network. ICRA has also conveyed its rating at A-

(ICRA A minus) with a stable outlook and assigned A2+ (ICRA A two plus) to the line of credit of our Company

vide its communication D/RAT/2017-18/G-52/5 dated March 30, 2018.

Further, we have delivered consistent growth over the preceding five Financial Years both in terms of financial and

operational metrics. Our net sales, have grown at a CAGR of 11.50% from ₹4,350.49 million for the Financial Year

2013 to ₹6,725.22 million for the Financial Year 2017 and our profit after tax for the year, has grown at a CAGR of

5.56% from ₹241.20 million for the Financial Year 2013 to ₹299.44 million for the Financial Year 2017. Our strong

balance sheet and positive operating cash flows enable us to fund our strategic initiatives, pursue opportunities for

growth and better manage unanticipated cash flow variations. We strive to maintain a robust financial position with

emphasis on having a strong balance sheet and increased profitability.

The table below sets forth some of the financial indicators for Financial Years 2015, 2016 and 2017 and the nine

months period ended December 31, 2017: (in ₹ million)

Particulars Financial Year

2015

Financial Year

2016

Financial Year

2017

Nine months period

ended December

31, 2017

Net Sales 6219.5 6464.9 6725.2 5447.4(1)

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EBITDA

(excluding other

income)

646.8 752.9 815.3 630.6

EBITDA margin 10.4% 11.6% 12.1% 11.6%

PAT 230.7 248.6 299.4 254.2

PAT margin 3.7% 3.8% 4.45% 4.7%

RONW (%) 13.0% 12.4% 13.0% 10.1%(2)

Dividend per share ₹1.20 per Equity

Share

₹1.20 per Equity

Share

₹1.20 per Equity

Share -

(1) excise duty amounting to ₹36.38 Million till 30th June, 2017 has not been deducted from Sales as the same has been shown under

Expenses as per Ind-AS. (2) amount not annualized

For further details on a comparative analysis of our financial position and income from operations, please refer to

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 76.

5. Technical Strength to develop cost effective formulations backed by our strong research and development

team



and critical capability of our Company. With more than twenty (20) member R&D team working on new product

development/quality improvement, the focus of our Company continues to be on maintaining high levels of quality

in products through research and technology development across processes, products and applications. We believe

that our strong research and development team and usage of advanced technology will help us increase our margins

on the products we sell.

6. Experienced senior leadership and technically skilled and motivated employees

We believe that our qualified and experienced senior management team, technically skilled employee base and

established Promoter background have contributed to the growth of our operations and the development of in-house

processes and competencies.

Our Chairman and Managing Director, Shyam Sunder Sharmma has around 53 years of experience in the industry

in which we operate. Our senior management team consists of technically qualified and highly experienced

professionals in the industry we operate in. They bring with them, extensive experience in sales and marketing, order

management, design and engineering, testing, purchase, operations, human resources, finance and after sales

services. We believe that our management framework allows us to maintain the flexibility to address the markets

and the geographies we operate in. We believe in high standards of ethical integrity and we ensure that all our

business functions are carried out in a transparent manner. For further information on our key managerial personnel,

please refer to “Board of Directors and Senior Management” on page 137.

Our human resources policies are aimed towards recruiting and retaining talented employees and facilitating their

integration into our Company and encouraging development of their skills. We believe the strength and quality of

our technically skilled team and the nature of our organizational structure has been instrumental in implementing

our business and growth strategies. We believe that our talented and motivated employees have been key to our

success so far and will further enable us to capitalize on future growth opportunities.

Our Strategies

We intend to grow our business by implementing the following strategies:

1. Increase margins and profitability on the sale of our products




industry to manufacture 0.90 to 70 denier RPSF in more than 200 colors/ shades customised around customer needs

and preferences and plan to continue to make constant efforts towards development of new value-added products

which shall be further supported by our ongoing expansion in order to reduce our dependency on high volume low

margin products. Moving towards the strategy of increasing the margins on our products, our Company has launched

120

its own RPSF brand “Rivivere” which is likely to have a positive impact in creation of its own brand and getting

acceptability of its products with a larger user base along with giving us a higher margin in comparison to the

traditional RPSF. In order to increase our margins and profitability, we also intend to establish long term connection

with overseas suppliers for constant supply of cheaper raw material.

2. Capitalise on market and regulatory driven opportunities

With increased Government focus on domestic manufacturing with the Government’s ‘Make in India’ programme,

the demand for PET resins are further expected to increase as domestic manufacturing is being encouraged in India,

which shall have a beneficial effect on the business operations of our Company. Further, the increased use of PET

resin would lead to generation of more scrap which would further provide an impetus and augment the need for

recycling. PET resins has witnessed robust growth over last five years -increasing usage in various end user

industries such as packaging & bottling, automobile, medical packaging, electrical and electronics, The increased

demand has been driven by replacement of traditional packaging materials like glass, aluminium, paper, metal and

growth in FMCG sector.

The Government of India introduced the plastic waste management rule recently with an extended responsibility for

recycling plastic scraps on all the manufacturers, producers and bulk generators of plastic. This development is

expected to have a positive impact on the industry in the near future. For instance, our Company had tied up for

collecting industrial waste with a large beverage bottling company and presently also working with them in

collection of post-consumer waste. The Plastic Waste Management Rules, 2016 issued by the Ministry of

Environment, Forest and Climate Change puts extended responsibility for collection of plastic scraps on

manufacturers, producers and bulk generators. This shall ensure increased collection of plastic waste, greater

investments in waste collection processes, higher income for waste collectors/ rag pickers, elimination of

intermediaries and transformation of plastic scrap business into organized market. Sensing the opportunity put forth

by new regulations for handling the plastic scrap, we are working towards strengthening and widening our direct

and indirect collection network across the country. With evolving industry and market trends coupled with changing

regulations, our Company stays on-course and adapt to make its business competitive.

Further, in October 2017, China banned import of all kind of PET bottle scrap and washed PET flakes into the

country. China has historically been the pioneer in PET recycling industry across the world and has been one of the

biggest importers of PET waste. Due to this new development, the PET waste suppliers will look out for alternate

procurer of PET waste and We are optimally placed to capitalise on these opportunities. Also, with increasing

environment awareness the preference for traditional wet dyeing of fibres and yarns is being replaced by dope dyed

RPSF and We are working continuously towards developing cost effective and environment friendly variants of

dope dyed shades to capitalize on the opportunity.

3. Targeting new customer accounts and expanding existing customer business

We intend to increase our sales and customer penetration by targeting new customer accounts and expanding our

existing customer accounts in our principal markets by offering our entire range of products. Towards this objective,

we seek to continue to leverage our relationships with our existing customer, who, presently, may be sourcing the

products we manufacture from other vendors. We believe that the recently increased capacity of additional 21,000

MTPA at our Bilaspur manufacturing facility shall also provide us more flexibility in terms of product profile and

further reduce lead time required for timely servicing our customer demands. While we believe our existing

customers provide us with the necessary drivers to generate growth, we intend to continue to focus on new

customers. We also intend to leverage our competencies to increase exports of our products overseas. We constantly

improve our product quality for meeting stringent customer requirements thereby ensuring enhancement value to

our customers. We also believe that we will be able to capitalize on our reputation for quality, consistent performance

and customer satisfaction in our existing markets and product verticals to target new customers.

4. Continue to enhance our brand

We believe that our brand is synonymous with credibility, reliability and efficiency in the industry in which we

operate. We wish to continue to enhance our brand value by continuously delivering quality product and services to

our existing and prospective customers so that we become the preferred RPSF and spun yarn supplier for all our

existing and prospective customers thereby increasing our market share. In order to capitalize on preference for

environmental positives products, our Company is also focussing on large production houses and brands which are

looking for sustainable and quality raw materials for the fabrics and garments being sold by them. Moving towards

121

this strategy, our Company has launched its own brand “Rivivere” for its products which is likely to have a positive

impact in creation of its own brand and getting acceptability of its products with a larger user base.

5. Enhancing Research Based Product Portfolio

We believe that our emphasis on R&D shall be critical to our success and a differentiating factor from our

competitors. We undertake dedicated R&D in our existing products primarily with a focus to improve yields and

process efficiencies. With more than hundred (100) product variants in our Company’s portfolio, we have the

expertise to develop products that meet the requirements of our downstream partners thereby making product

development a significant and critical capability of our Company. Further, with more than twenty (20) member R&D

team working on new product development/quality improvement, the focus of our Company has always been and

shall be so on a going forward basis to maintain high levels of quality in products through modern research and

technology development across processes, products and applications.

6. To increase Spun yarn production on Job work basis

With a view to improve the profitability, our Company is focusing on getting its RPSF converted into Spun Yarn on

job basis from other yarn spinning units. The strategy has been thought of is to keep the asset light model. To this

end, our Company has already executed an agreement with a spinning unit in Haryana, which is producing nearly

150 tons per month of spun yarn for us on job work. On a going forward basis, our Company shall be focussing on

identification of more such units for utilizing their idle capacity to improve the profitability of its business operations.

Our Products

Our PET recycling business value-chain involves a number of stakeholders, from scrap dealers to small traders to

PET consumers. The recycling business model forms an integral part of this value-chain, with particular focus on

how to maximize the PET waste sourcing, improve efficiency in processing and reduce non-PET contamination in

recycling streams. Also, majority of our products, except dyed texturized/ twisted yarn are derived from recycling

of PET waste at various levels of the value chain.

Our product areas comprise of RPSF, spun yarn and dyed texturised yarn. Our RPSF business is our largest product

area and comprised 75.67% of our gross revenue from sale of products in Financial Year 2017.

Our gross sales by product area and as a percentage of total gross sales for each of the last three Financial Years and

the nine months period ended December 31, 2017 is presented in the following table:


2015 2016 2017

Nine months period

ended December 31,

2017

(₹million, except percentage of total revenue)

Product

Areas

Sales % Sales % Sale % Sale %

RPSF 4255.35 67.81% 4803.03 73.37% 5178.39 75.67% 3914.39 71.86%

Spun Yarn 1408.77 22.45% 1299.10 19.85% 1124.34 16.43% 1078.77 19.8%

Dyed

Texturised

Yarn

407.71 6.50% 316.05 4.83% 313.04 4.57% 254.18 4.67%

Others

(including

trading

sale)

203.27 3.24% 127.88 1.95% 227.21 3.33% 200.10 3.67%

Total

Revenues

6275.10

100.00%

6546.06

100.00%

6842.98

100.00%

5447.44

100.00%

The figure below sets out the complete life cycle of manufacturing of our various recycled products, which have

various end use applications:

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Regenerated Polyester Staple Fibre (RPSF)

RPSF is a synthetic man-made fibre made from PET/polyester waste and post consumed PET bottles. RPSF has

many industrial applications because of its special characteristics, especially its resistance to stretching or shrinking

and general strength as a fibre. It also dries quickly, while remaining crisp and strong afterwards, so this material is

easily washed. RPSF resists wrinkles, mildew and general surface damage. This material also holds creases and

pleats well, as long as they have been heat-set first. There is a significantly large domestic as well as overseas market

for RPSF as it finds applications in the numerous areas ranging from technical textiles, non-woven textiles, furniture,

pillows, mattresses, soft toys and yarn spinning.

We manufacture a wide range of RPSF. The different types of RSPF manufactured by our Company and their

applications in the industries are as mentioned below:

Description Application Industry

Solid Fibre Spinning, non-woven Textile & non-woven

Dope dyed Fibre Spinning, non-woven Textile & non-woven

Hollow/ conjugated Stuffing in toys, Pillows etc, Home furnishing

Fire retardant Industrial fabric Technical textile

Short-cut fibre Blending with other fibres/ material Textile, paper & construction

Micro fibre Fine fabric Textile

Trilobal fibre Special effect Textile

The manufacturing of RPSF involves the following broad steps:

Dyed Texturised Yarn

Dyed texturised yarns are created by taking one polyester filament, grouping them along then twisting or air-

entangling them to make them workable. The polyester filament is then dyed and dried. A monofilament yarn has

just one single polyester fibre that is not usually twisted.

The broad steps involved in manufacturing dyed texturised yarn is shown below:

Washing Line

Debaling, Sorting, Washing &

Shredding of Pet Bottles

Dryer Section

Removal of moisture &

heating

Extrusion Section

Heating, melting & extrusion of

flakes into filament , winding

Spinning Section

Drawing, crimping & cutting

Bailing Section

Packing the staple fibre into

bales

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We manufacture a wide range of dyed texturised yarns and its variants. The different types of filament / twisted

yarns manufactured by our Company find their application in Sarees, dress material and various kind of ropes and

cords. Major market for our products is Kanpur, Varanasi and Maunath bhajan.

Spun Yarn

Spun yarns are produced much in the same way as cotton or wool yarn is produced. The long filaments are cut into

small pieces called staple. These are then combined together and spun to create a yarn made up of thousands of short

filaments.

The broad steps involved in manufacturing spun yarn is shown below:

We produce a wide range of spun yarns and its variants. The different types of spun yarns produced by us and their

applications in the industries are as mentioned below:

Description Application Industry

Milange Body Warmers Knitting

Single Yarn Dress material Clothing, knitting and hosiery

Doubled Yarn Suiting, shirting, furnishing fabric Clothing, knitting and hosiery

Our Customers

Our Company has long lasting relationships with our customers who are spread across the country with

approximately 94.11% of our revenue from operations coming from the domestic market and the balance from

export sales. The RPSF manufactured by our Company is measuredly consumed by yarn spinning units. Over one

hundred and fifty (150) spinning units in our country consume our RPSF for making Spun Yarn. Besides yarn

spinning, our Company is supplying RPSF to the manufacturers of non-woven carpets, automobile carpets, geo-

textiles, filter fabric, insulation, fibre fill and a number of other non-woven and industrial textile products. We supply

Spun Yarn, manufactured by us, to customers from hosiery; knitting and power loom segment. and our major

customer base for spun yarn segment is situated at Kanpur, Meerut, Delhi, Surat, Mumbai, Varanasi and Ludhiana.

Further, our Dyed Texturised/ Twisted Yarn is used by manufacturers from saree, power looms and rope & cords

segment.

Raw Materials

We source our raw materials waste from a pool of vendors in India and overseas. We believe that this helps us reduce

our dependence on a few large vendors and thereby minimize risks of supply disruption and cost increases.

Our total costs of materials consumed were ₹4,112.45 million, ₹3,905.96 million and ₹3,992.85 million in Financial

Years 2017, 2016 and 2015, respectively. Our largest raw material purchase is PET waste, which is used in the

manufacturing of our major product category – recycled Polyester Staple Fibre. Apart from PET waste, we also

consume, in small proportion, POY waste, off-grade chips, lumps, wiry, etc. generating from virgin polyester plants

In Financial Year 2017, the cost of PET/ Polyester waste consumed was ₹3,397.60 million and accounted for 82.62%

of the cost of material consumed in the products manufactured by us. Other raw materials that we use in the

manufacturing of our products are POY/ texturized/ twisted yarn, colours, chemicals and packing materials,

infrastructure, power, water etc.

Manufacturing Facilities

Raw Material P.O.Y

TexturisingTwisting/ Doubling Dyeing Winding Packing

Raw material Polyester Staple

Fibre

Preparation of Fibre &

MixingCarding Drawing

Twisting/Roving

Ring Spinning

Winding Packing

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We have three modern manufacturing facilities at Kanpur (Uttar Pradesh), Rudrapur (Uttarakhand) and Bilaspur

(Uttar Pradesh). All our plants are involved in manufacturing of RPSF, while dyed texturized yarns are manufactured

at our Kanpur plant and spun yarn are manufactured at our Bilaspur plant. Our manufacturing facilities are certified

for its quality management, environmental management and occupational health and safety management. Some of

our manufacturing facilities are certified with ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007. The table

below sets out the product wise capacities and capacity utilization of our plants for the last three financial years:

Plant and Capacity (MTPA) 2017 2016 2015

Kanpur (Uttar Pradesh) 30,000 30,000 30,000

Dyed Texturised Yarn 3,000 3,000 3,000

RPSF 27,000 27,000 27,000

Rudrapur (Uttarakhand) 39,600 39,600 39,600

RPSF 39,600 39,600 39,600

Bilaspur (Uttar Pradesh) 28,200 28,200 14,200

RPSF 21,000 21,000 7,000

Recycled Spun Yarn 7,200 7,200 7,200

Total capacity 97,800 97,800 83,800

Average Capacity Utilisation 89% 87% 83%

Research and Development



and critical capability of our Company. With more than twenty (20) member R&D team working on new product

development/quality improvement, the focus of our Company has always been to maintain high levels of quality in

products through innovative research and technology development across processes, products and applications. It is

a constant endeavour of Our R&D team to develop all those qualities in RPSF which are available/ possible in Virgin

PSF while maintaining the quality matching with virgin PSF.

Testing and Quality Assurance

Over a period of time we have developed a strong testing and quality assurance procedures which are imbibed in

our employees from the unit level to senior management. We check the quality of each batch of raw materials used

for production of our products to attain set quality standards. We also conduct a number of tests on the final product

as part of our quality check exercise. These tests include endurance test on our products. We also conduct constant

sample testing for our products. Our tests are updated from time to time to keep pace with changes in standards,

regulations and technological advancements. We have laid down quality check parameters to ensure adherence to

defined process and product specifications.

Our Company is in continuous process industry and the production is carried out in batches for which batch

manufacturing records are maintained. There are standard operating procedures for manufacturing, quality control

and quality assurance of the products manufactured. Our company also has annual and comprehensive maintenance

plans for our equipment and machinery for smooth manufacturing operations. We document our internal processes

and methodologies which ensures that each department and each of our employee are aware of their respective roles

and obligations, and each activity of manufacturing and production is as per the standards of quality that has been

set, thereby ensuring uniformity in all the processes.

Logistics

We have short term agreements with several logistics providers in India who provide transportation of the raw

materials we procure and our products to our customers. The transportation of all our raw material as well as finished

products is made through road transport except in case of exports, where road, rail and sea transportation is involved.

Logistics is a major part of our cost structure and there are frequent variations in fuel pricing. Therefore, instead of

long term contracts, we prefer for short term contracts with third party transporters. In order to insure our products

from unforeseen circumstances while in transit, we obtain transit insurances on selective basis against damage of

goods while in transit.

Human Resources

Employees and Contract Labour

125

We believe that a motivated and empowered employee base is key to our operations and business strategy and have

developed a large pool of skilled and experienced personnel. As of February 28, 2018, we had 2,175 permanent full-

time employees, including 5 executive Directors, and 712 contract labourers and trainees. Our skilled technicians

have significant experience in research, engineering and development field. Our employee policies aim to recruit a

talented and qualified work force, facilitate their integration and encourage development of their skills in order to

facilitate the growth of our operations. The unit wise break-up of our employees as of February 28, 2018 are set out

in the table below:

Unit Staff Workers Contract Employees Trainee Total

Executive Directors 5

Kanpur Unit

- Yarn Division 58 240 0 0 298

- RPSF Division 131 458 0 0 589

Rudrapur Unit 117 124 158 11 410

Bilaspur (Temra) Unit

- Spun Yarn Division 74 520 60 252 906

- RPSF Division 94 182 60 29 365

Bilaspur Washing Unit 56 116 136 6 314

TOTAL 530 1,640 414 298 2,887

We also engage contract labourers in our manufacturing activities. The number of contract labourers vary from time

to time based on the nature and extent of work involved in our on-going orders. All contract labourers engaged at

our facilities are assured minimum wages that are fixed by the State Government.

None of our workmen are a part of any trade union.

Training

We determine the necessary competence of the personnel performing tasks affecting the conformity to product

requirements, and where applicable provide training or get them trained to achieve the necessary competence. We

evaluate the effectiveness of the actions taken, and ensure that the personnel are aware of the relevance and

importance of their activities and they contribute to the achievement of the quality objectives. We maintain

appropriate records of education, skills, training, experience and effectiveness periodically and identify the training

requirements based on the nature and scope of the job.

Health, Safety and Environment

We are committed to complying with applicable occupational health, safety and environmental regulations and other

requirements in relation to the conduct of our operations. Some of our manufacturing facilities are certified for

occupational health and safety management by BSCIC. We believe that accidents and occupational health illness

cases and hazards can be significantly reduced through the proactive and systematic approach including risks and

hazards identification, assessment, analysis and control and by providing appropriate training to employees and

contractors. We work proactively towards minimizing or eliminating the impact of hazards to people and the

environment. Our manufacturing plants are equipped with occupational health and safety centre with medical

facilities where we periodically carry out medical check-ups of all our employees as well as contract labourers

engaged by us. We have also taken medial insurance policy for the employees who are not covered under employees’

state insurance facilities (ESI).

Competition

The industry segments that we operate in are highly competitive and include a number of well-established

manufacturers as well as several small players in the un-organised sector. However, we believe that our significant

presence, production capacities and market share in RPSF’s sales provides us with a strong advantage over

competition, especially in the RPSF product. Other key players in the PET recycling industry are Alliance Fibres,

BLS Ecotech, J B Ecotex, Komal Fibres and Pashupati Polytex. (Source: CRISIL Report)

Sales and Marketing

126

We have our sales offices at New Delhi, Mumbai, Ludhiana, Panipat, Jaipur, Kolkata and Kanpur and our sale orders

are procured by our marketing staff with direct communication with the customers. Our marketing team keeps in

constant touch with existing and potential customers for understanding their needs and preferences in addition to

tracking the market trends on an ongoing basis. Apart from direct sales, some of our sales are also made through

commission agents. With respect to our export sales, our Company procures orders by making overseas visits as

well as through indenting agents. Our sales involve some credit period along with quantity and cash discounts.

Property

Our registered office is situated at Raipur (Rania), Kalpi Road, Kanpur Dehat – 209 304, Uttar Pradesh, India, our

administrative office is situated at 113/216-B, Swaroop Nagar, Kanpur-208002 and our marketing head office is

located at 309, Agarwal Cyber Plaza, Netaji Subhash Place, Pitampura, Delhi-110034. Our registered office is owned

by us, whereas the administrative office and the marketing head offices are on lease. Our manufacturing facilities at

Kanpur and Bilaspur are owned by us whereas our plant at Rudrapur is on a long term lease of ninety (90) years.

Awards and Recognition

Our Company has received the following awards:

Year Award

2010 “Silver Shield” for “Excellence in Financial Reporting” by the Institute of Chartered

Accountants of India.

2011 ‘Business Today- Yes Bank Star SME Award’ in the overall medium category

Information Technology

We have invested in modern information technology to provide information for seamless communication, business

integration, cost reduction and informed decision-making. Till now, we are working on in-house developed ERP

system but in view of the growing business need, we have decided to shift our operation on standard third party ERP

solution, customization and implementation of which is under progress.

Intellectual Property

Our Company has a registered the trademark ‘Rivivere’ in respect of spun polyester fibre for textile use – spun yarn

and textile product - unstitched cloth - pillow cover under classes 23 and 24. For risk relating to our intellectual

property, please refer to “Risk Factors” on page 37 of this Preliminary Placement Document.

Insurance

We have obtained insurance in scope and amounts of coverage that we believe are customarily obtained by

companies in businesses similar to ours for manufacturing-related risks and third-party liabilities. We generally

maintain insurance covering our assets and operations at levels that we believe to be appropriate and consistent with

the practice in our industry.

We typically maintain standard fire and special perils insurance policies for our plants and machineries and buildings

at our manufacturing units to cover risks such as fire and other ancillary perils. We also maintain burglary policy for

our stocks such as raw materials, stock in process, finished goods, semi–finished goods, consumables etc. Under the

marine cargo open policy, we are also provided risk cover for damage to capital goods while in transit within India

or from anywhere in the world to India. In addition, we maintain various inland transit insurance policies that cover

loss or damage to selective products and machineries purchased within India from suppliers while in transit to our

plants. We also maintain a group mediclaim policy for our employees and have also taken keymen insurance policy

on the lives of two of our executive directors.

Although we believe that the amount of insurance currently maintained by us represents an appropriate level of

coverage required to insure our business and operations, and is in accordance with industry standards in India, such

insurance may not provide adequate coverage in certain circumstances and is subject to certain deductibles,

exclusions and limits on coverage.

Environment

127

We are committed to complying with applicable environmental regulations and other requirements in our operations.

We believe that accidents and occupational health hazards can be significantly reduced through the systematic

analysis and control of risks and by providing appropriate training to management, employees and job contractors.

We work proactively towards minimizing or eliminating the impact of hazards to people and the environment and

have executed contracts for disposal of hazardous wastes. Our environment management policy identifies

environmental protection to be an integral part of all our operations. We monitor compliance with laws and

environmental rules and regulations through:

• regular and close monitoring of the operations and maintenance, of our environmental management system;

• pollution reduction at work places and resources conservation through waste reduction in our operations;

• precautions and usage of protective equipment to safe guards our staffs against accidents arising out of our

operations; and

• structured environmental audits

We have has obtained necessary approvals from relevant pollution control boards for operating our business. We

believe that we are in material compliance with all local, state and national laws and regulations concerning

environmental protection and related matters, in all our locations.

Corporate Social Responsibility

Our Company undertakes its CSR activities primarily through its CSR Trust i.e. “Ganesha Memorial Trust”, which

works towards supporting CSR projects in the communities around which it operates for promoting education among

differently abled, eradicating hunger and promoting healthcare including preventive health. We focus on various

corporate social responsibility programs and initiatives like (i) Promotion of Education at pre-school and school

level; (ii) providing environmentally sustainable social infrastructure; (iii) providing better health facilities,

preventive healthcare and combating disease; (iv) eradicating hunger, poverty and malnutrition; and (iv) focussing

on backward/rural areas, preferably in the proximity to our Company’s plants. These projects undertaken by us are

in accordance with Schedule VII to the Companies Act, 2013 and our Company’s CSR policy. We have also adopted

a CSR Policy, through approval of the Board of Directors of our Company.

128

REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the Government

and other regulatory bodies that are applicable to our business. The information detailed below has been obtained

from various legislations, including rules and regulations promulgated by regulatory bodies, and the bye laws of

the respective local authorities that are available in the public domain. The regulations set out below may not be

exhaustive and are merely intended to provide general information to the investors and are neither designed nor

intended to substitute for professional legal advice. The statements below are based on the current provisions of

Indian law, which are subject to change or modification by subsequent legislative, regulatory, administrative or

judicial decisions.

Regulations Pertaining to Plastic Waste Management

The Plastic Waste Management Rules, 2016 (“PWM Rules”)

PWM Rules set up a regulatory framework for manufacture, usage and recycling of plastic bags to ensure

management of plastic waste. Plastic waste means any plastic product such as carry bags, pouches, etc. discarded

after use or after their intended use is over. The rules are applicable to all manufacturers, importer, producer, local

bodies and every waste generator. Rule 13 mandates every manufacturer of plastic carry bags, multi-layered pouches

or sachets and every recycler to seek registration with SPCB. Such registration is valid for a period of 1 year. Further,

the PWM Rules detail aspects of plastic bags such as thickness, colour, classification into virgin or recyclable or

compostable plastics, and responsibilities of municipal authorities. Our Company collects PET Bottles for recycling

it into yarn. The provisions of the abovementioned rule will thus be applicable. The PWM Rules were enacted by

the Government of India with an aim to:

a. Increase minimum thickness of plastic carry bags from 40 to 50 microns and stipulate minimum thickness of

50 micron for plastic sheets also to facilitate collection and recycle of plastic waste, Expand the jurisdiction of

applicability from the municipal area to rural areas, because plastic has reached rural areas also;

b. To bring in the responsibilities of producers and generators, both in plastic waste management system and to

introduce collect back system of plastic waste by the producers/brand owners, as per extended producers’

responsibility;

c. To introduce collection of plastic waste management fee through pre-registration of the producers, importers of

plastic carry bags/multi-layered packaging and vendors selling the same for establishing the waste management

system;

d. To promote use of plastic waste for road construction as per Indian Road Congress guidelines or energy

recovery, or waste to oil etc. for gainful utilization of waste and also address the waste disposal issue; and

e. To entrust responsibility on waste generators, namely payment of user charge as prescribed by local authority,

collection and handing over of waste by the institutional generator and event organizers

Regulations Pertaining to Textile Manufacturing

National Textile Policy – 2000 (“NTP – 2000”) read with Strategic Plan (2011-2016)

The NTP 2000 aims at facilitating the growth of the textile industry to attain and sustain a pre-eminent global

standing in the manufacture and export of clothing. This objective is sought to be achieved by liberalizing controls

and regulations so that the different segments of the textile industry are enabled to perform in a greater competitive

environment. One of the key focus areas of the NTP 2000 is on the implementation, in a time bound manner, of the

Technology Upgradation Fund Scheme (“TUFS”) covering all manufacturing segments of the industry, seeking to

build world class state of the art manufacturing capabilities in conformity with environmental standards.

Additionally, certain sector specific initiatives envisaged under the NTP 2000 include raw materials, clothing,

exports, and knitting. The GoI constituted an expert level committee in December 2013 to review the NTP 2000 and

to formulate a new textile policy to address concerns of adequate skilled work force, labour reforms, attracting

investments in the textile sector and for providing a future road map for the textile and clothing industry. The

Strategic Plan (2011-2016) issued by Ministry of Textiles in February 2011, aims at to have sustainable growth and

development of textiles sector in the country, improve productivity across the entire textiles value chain and promote

growth and development of technical textiles in India.

129

UP Textile Policy

Textile industry plays a significant role in the economy of Uttar Pradesh. Generating the second highest employment

in the state, after agriculture, the sector is labour intensive and offers unlimited potential towards development of

the state. Currently, approximately two third of the raw materials related to textile industry and textile produce

consumed in Uttar Pradesh are procured from other states. The Government of Uttar Pradesh is committed to

promote the traditional handloom & textile industry of the state and continuously strive towards reviving them.

Handloom, textile and silk related units involved in reeling, spinning, weaving, knitting, dyeing, processing, garment

production & packaging and other activities related to technical textiles like industrial textile, furniture lining,

firefighting equipment, bullet proof jackets, parachutes, etc. will be provided incentives like:

a. stamp duty exemption,

b. rebate on commercial taxes, etc;

c. interest subsidy.

Development of clusters and industrial estates will also be promoted in this sector. Textile units in Bundelkhand,

Poorvanchal and Madhyanchal will be provided special incentives. Mega units in textile sector will be provided

incentives on case to case basis. The Uttar Pradesh Textile Policy was published under Industrial Investment and

Employment Promotion Policy of Uttar Pradesh, 2017 by MSME however the same draft is not notified yet.

Textile Committee Act, 1963 (the “Committee”)

The functions of the Committee shall generally be to ensure by such measures, as it thinks fit, standard qualities of

textiles both for internal marketing and export purposes and the manufacture and use of standard type of textile

machinery. The Committee may undertake, assist and encourage, scientific, technological and economic research in

textile industry and textile machinery; promote export of textiles and textile machinery; establish or adopt or

recognize standard specifications for textiles and packing materials used in the packing of textiles or textile

machinery, export and for internal consumption and affix suitable marks on such standardized varieties of textiles

and packing materials.

Textile (Development and Regulation) Order, 2001 (“Textile Order”)

The Textile Order was brought into force by the Central Government under section 3 of the Essential Commodities

Act, 1995 and repealed the Textile (Development and Regulation) Order, 1993. Under the Textile Order every

manufacturer of Textiles, Textile machinery and every person dealing with textiles shall keep books of accounts,

data and other records relating to his business in the matter of production, processing, import, export, supply,

distribution, sale, consumption, etc. and shall furnish such returns or information in respect of their business as and

when directed by the Textile Commissioner.

Labour & Employment Laws

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“the EPFMP Act”)

The EPFMP Act is applicable to the establishment employing more than 20 employees and as notified by the

Government from time to time. All the establishments under the EPFMP Act are required to be registered with the

appropriate Provident Fund Commissioner. Also, in accordance with the provisions of the EPFMP Act, the

employers are required to contribute to the employees’ provident fund the prescribed percentage of the basic wages,

dearness allowances and remaining allowance (if any) payable to the employees. The employee shall also be required

to make the equal contribution to the fund.

Employees’ State Insurance Act, 1948 (the “ESI Act”)

All the establishments to which the ESI Act applies are required to be registered under the ESI Act with the

Employees State Insurance Corporation. This Act requires all the employees of the establishments to which this Act

applies to be insured in the manner provided there under. Employer and employees both are required to make

contribution to the fund. The return of the contribution made is required to be filed with the Employee State Insurance

department.

130

Industrial Disputes Act, 1947 and Industrial Dispute (Central) Rules, 1957

The Industrial Disputes Act, 1947, as amended, provides the procedure for investigation and settlement of industrial

disputes. When a dispute exists or is apprehended, the conciliation officer may settle such dispute, or the appropriate

Government may refer the dispute to a labour court, tribunal or arbitrator, to prevent the occurrence or continuance

of the dispute, or a strike or lock-out while a proceeding is pending. The labour courts and tribunals may grant

appropriate relief including ordering modification of contracts of employment or reinstatement of workmen. The

basic objectives of the Industrial Disputes Act, 1947 are:

a. to provide a suitable machinery for the just, equitable and peaceful settlement of industrial disputes.

b. to promote measures for securing and preserving amity and good relations between employers and employees.

c. to prevent illegal strikes and lockouts.

d. to provide relief to workers against layoffs, retrenchment, wrongful dismissal and victimization.

e. to promote collective bargaining.

f. to ameliorate the conditions of workers.

g. to avoid unfair labour practices.

The Industrial Disputes Act provides for the statutory machinery for conciliation and adjudication of industrial

disputes such as conciliation officers, a board of conciliation, courts of inquiry, labour courts, industrial tribunals,

etc., while the Industrial Disputes (Central) Rules, 1957 lay down the procedure for proper implementation of these

provisions and resolve any dispute which arise in the course of business and protect interest of all the parties involved

therein.

Uttar Pradesh Industrial Disputes Act, 1947 (as applicable to the State of Uttrakhand) (“UP Industrial

Disputes Act”)

UP Industrial Disputes Act, 1947, as amended, provides the procedure for investigation and settlement of industrial

disputes. It also provides for constitution of the labour courts for adjudication of industrial disputes. When a dispute

exists or is apprehended, the State Government may refer the dispute to a labour court to prevent the occurrence or

continuance of the dispute, or a strike or lock-out while a proceeding is pending.

The Factories Act, 1948

The Factories Act, 1948, as amended (“Factories Act”) seeks to regulate the employment of workers in factories and

makes provisions for the health, safety and welfare of the workers while at work in the factory including requiring

adequate maintenance of plant, systems and other places of work, and provision of adequate training and supervision.

The Factories Act defines a ‘factory’ to be any premises which employs 10 or more workers on any day of the

preceding 12 months and in which a manufacturing process is carried on with the aid of power, or premises where

there are at least 20 workers who are engaged in a manufacturing process without the aid of power. Each State

Government has set out rules in respect of the prior submission of plans, their approval for the registration of the

establishment, and licensing of factories.

The UP Factories Rules, 1950

The UP Factories Rules, 1950 (the “Rules”) seek to regulate labour employed in factories in the State of Uttar

Pradesh and makes provisions for the safety, health and welfare of the workers. The Rules also mandate maintenance

of certain statutory registers in the factory.

The Industrial Employment (Standing Orders) Act, 1946, (“Standing Orders Act”)

The Standing Orders Act aims at ensuring that the employers of industrial establishments define (with sufficient

precision) the conditions of employment under them and make the said conditions known to workmen employed by

them. The Standing Orders Act applies to every industrial establishment wherein 100 (one hundred) or more

workmen are employed or were employed on any day of the preceding 12 (twelve) months. As per Section 3 of the

Standing Orders Act, every employer of an establishment to which this Act applies, shall (within 6 months of the

Standing Orders becoming applicable to such establishment) submit draft standing orders to the certifying officer

laying thereunder provisions with respect to each entry provided in the Model Standing Orders (as provided in the

Schedule to the Standing Orders Act). As per Section 5 of the Standing Orders Act, such draft standing orders shall

be adopted by the employer and made applicable to the employees at its establishment, upon being certified by the

certifying officer in accordance with prescribed procedure (that is, after hearing objections, if any, raised by the

concerned employees/trade unions).

131

Employee’s Compensation Act, 1923

Employee’s Compensation Act, 1923, as amended, provides for payment of compensation to employees in case of

injury by accident (including certain occupational disease) arising out of and in the course of his employment and

resulting in disablement or death. The Employee’s Compensation Act is applicable to employees as defined in the

Employee’s Compensation Act, 1923 and includes persons employed in any premises where manufacturing process

is being carried on.

The Apprentices Act, 1961 (“Apprentices Act”)

The Apprentices Act regulates and controls the programme of training of apprentices and matters connected

therewith. The term ‘apprentice’ means a person who is undergoing apprenticeship training in pursuance of a

contract of apprenticeship. ‘Apprenticeship training’ means a course of training in any industry or establishment

undergone in pursuance of a contract of apprenticeship and under prescribed terms and conditions which may be

different for different categories of apprentices. Every person engaging as an apprentice is required to enter into a

contract of apprenticeship with the employer which is reviewed and registered by the apprenticeship advisor.

Trade Unions Act, 1926

The Trade Union Act provide for registration of trade union and law relating to registered trade unions. For the

purpose of Trade Union Act, 1926, trade union means combination, whether temporary or permanent, formed

primarily for the purpose of regulating the relations between workmen and employers or between workmen and

workmen, or between employers and employers, or for imposing restrictive condition on the conduct of any trade

or business etc.

The Minimum Wages Act, 1948

The Minimum Wages Act, 1948, as amended provides a framework for State Governments to stipulate the minimum

wage applicable to a particular industry. The minimum wage may consist of a basic rate of wages and a special

allowance, or a basic rate of wages and the cash value of concessions in respect of supplies of essential commodities,

or an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions,

if any. Workmen are to be paid for overtime at overtime rates stipulated by the appropriate Government.

The Maternity Benefit Act, 1961

The Maternity Benefit Act, 1961, as amended provides that a woman who has worked for at least 80 days in the 12

months preceding her expected date of delivery, is eligible for maternity benefits. Under the Maternity Benefit Act,

a woman working in a factory may take leave for six weeks immediately preceding her scheduled date of delivery

and for this period of absence she must be paid maternity benefit at the rate of the average daily wage. The maximum

period during which a woman shall be paid maternity benefit is 26 weeks. Women entitled to maternity benefit are

also entitled to a medical bonus ₹3,500, if no prenatal and post-natal care has been provided free of charge by the

employer.

The Contract Labour (Regulation and Abolition) Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970, (“CLRA”) requires establishments that employ or have

employed on any day in the preceding 12 months, 20 or more workmen as contract labour to be registered. The

CLRA places an obligation on the principal employer of an establishment to which the CLRA applies to make an

application for registration of the establishment. In the absence of registration, contract labour cannot be employed

in the establishment. Likewise, every contractor to whom the CLRA applies is required to obtain a license and not

to undertake or execute any work through contract labour except under and in accordance with the license issued.

To ensure the welfare and health of contract labour, the CLRA imposes certain obligations on the contractor

including the establishment of canteens, rest rooms, washing facilities, first aid facilities, provision of drinking water

and payment of wages. In the event that the contractor fails to provide these amenities, the principal employer is

under an obligation to provide these facilities within a prescribed time period. A person in contravention of the

provisions of the CLRA may be punished with a fine or imprisonment, or both.

The Payment of Wages Act, 1936

132

The Payment of Wages Act, 1936, as amended, is aimed at regulating the payment of wages to certain classes of

persons employed in certain specified industries and to ensure a speedy and effective remedy against illegal

deductions or unjustified delay caused in paying wages to them. It contains provisions in relation to, inter alia, the

responsibility for payment of wages, fixing of wage periods, time of payment of wages, and maintenance of registers

and records. It applies to the persons employed in a factory, industrial or other establishment or in a railway, either

directly or indirectly, through a sub-contractor. Further, the Payment of Wages Act is applicable to employees

drawing wages up to ₹24,000 per month. The GoI is responsible for enforcement of the Act in railways, mines,

oilfields and air transport services, while the State Governments are responsible for it in factories and other industrial

establishments.

The Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965, as amended provides for payment of minimum bonus to factory employees and

every other establishment in which 20 or more persons are employed and requires maintenance of certain books and

registers and filing of monthly returns showing computation of allocable surplus, set on and set off of allocable

surplus and bonus due.

The Payment of Gratuity Act, 1972

Under the Payment of Gratuity Act, 1972, as amended (“Gratuity Act”), an employee who has been in continuous

service for a period of five years will be eligible for gratuity upon his retirement or resignation, superannuation or

death or disablement due to accident or disease. However, the entitlement to gratuity in the event of death or

disablement will not be contingent upon an employee having completed five years of continuous service. The

maximum amount of gratuity payable may not exceed ₹1,000,000.

Equal Remuneration Act, 1976

Equal Remuneration Act, 1976 provides for payment of equal remuneration to men and women workers and for

prevention discrimination, on the ground of sex, against female employees in the matters of employment and for

matters connected therewith.

The Child Labour (Prohibition & Regulation) Act, 1986

The Child Labour (Prohibition & Regulation) Act, 1986, as amended, (“Child Labour Act”) was enacted to prohibit

the engagement of children below the age of fourteen years in certain specified occupations and processes and to

regulate their conditions of work in certain other employments. The list of such occupations and processes is

progressively being expanded on the recommendation of Child Labour Technical Advisory Committee constituted

under the Act. No child shall be required or permitted to work in any establishment in excess of such number of

hours, as may be prescribed for such establishment or class of establishments. Every child employed in an

establishment shall be allowed in each week, a holiday of one whole day, which day shall be specified by the occupier

in a notice permanently exhibited in a conspicuous place in the establishment and the day so specified shall not be

altered by the occupier more than once in three months.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“SHWW

Act”)

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for the

protection of women at work place and prevention of sexual harassment at work place. The SHWW Act also provides

for a redressal mechanism to manage complaints in this regard. Sexual harassment includes 1 (one) or more of the

following acts or behavior namely, physical contact and advances or a demand or request for sexual favors or making

sexually coloured remarks, showing pornography or any other unwelcome physical, verbal or non-verbal conduct

of sexual nature. The SHWW Act makes it mandatory for every employer of a workplace to constitute an Internal

Complaints Committee which shall always be presided upon by a woman. It also provides for the manner and time

period within which a complaint shall be made to the Internal Complaints Committee i.e. a written complaint is to

be made within a period of 3 (three) months from the date of the last incident. If the establishment has less than 10

(ten) employees, then the complaints from employees of such establishments as also complaints made against the

employer himself shall be received by the Local Complaints Committee. The penalty for non-compliance with any

provision of the SHWW Act shall be punishable with a fine extending to ₹50,000.

Uttar Pradesh Labour Welfare Fund Act, 1965 (Labour Welfare Act”)

133

Section 3 of the Labour Welfare Act provides for establishment of fund which shall consist of all fines realised from

or payable by the employees or unpaid wages after the prescribed period, any grants made to the Fund by the State

Government, any voluntary donation or contribution made to the fund by any person etc.The moneys in the fund

may be utilised for the benefit of the labour to defray expenditure on the community and social education centres

including reading rooms and libraries, public baths and washing places, educational facilities for women and children

and education of adults etc.

Shops and establishments legislations in various states

The provisions of shops and establishment legislations, as may be applicable in a state in which establishments are

set up, regulate the conditions of work and employment and generally prescribe obligations in respect of inter alia

registration, opening, and closing hours, daily and weekly working hours, holiday, leave, health and safety measures,

and wages for overtime work. Our Company’s offices, as may be required, have to be registered under the shops

and establishments legislations of the state where they are located.

Environmental Laws

The Environment (Protection) Act, 1986

The Environment (Protection) Act, 1986 (“EPA”) is an umbrella legislation designed to provide, a framework for

the Government to co-ordinate the activities of various central and state authorities established under other laws,

such as Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution)

Act, 1981. The EPA vests the Government with various powers including the power to formulate rules prescribing

standards for emission of discharge of environment pollutants from various sources, as given under the Environment

(Protection) Rules, 1986, inspection of any premises, plant, equipment, machinery, and examination of processes

and materials likely to cause pollution.

The EPA provides for the protection and improvement of the environment and for matters connected therewith,

including without limitation the standards of quality of air, water or soil for various areas and purposes, the maximum

allowable units of concentration of various environmental pollutants, procedure for handling of hazardous

substances, the prohibition and restrictions on the location of industries and the carrying on of processes and

operations in different areas. Among other things, these laws regulate the environmental impact of construction and

development activities, emission of air pollutants and discharge of chemicals into surrounding water bodies. These

various environmental laws give primary environmental oversight authority to the Ministry of Environment and

Forest (“MoEF”), the Central Pollution Control Board (“CPCB”) and the State Pollution Control Board (“SPCB”).

Penalties for violation of the EPA include fines up to ₹100,000 or imprisonment of up to 5 years, or both.

The Water (Prevention and Control of Pollution) Act, 1974

The Water Act mandates that the previous consent of the SPCB be taken before establishing any industry, operation

or process, or any treatment and disposal system or any extension or addition thereto, which is likely to discharge

sewages or trade effluents into a stream or well or sewer or on land; or bring into use any new or altered outlet for

the discharge of sewage; or begin to make any new discharge of sewage. In addition, a cess is payable under the

Water (Prevention and Control of Pollution) Cess Act, 1977 by a person carrying on any specified industry. The

person in charge is to affix meters of prescribed standards to measure and record the quantity of water consumed.

Furthermore, a monthly return showing the amount of water consumed in the previous month must also be submitted.

The Air (Prevention and Control of Pollution) Act, 1981

The Air Act was enacted for the prevention, control and abatement of air pollution. The State Government may

declare any area as air pollution control area and the previous consent of the SPCB is required for establishing or

operating any industrial plant in such an. Further, no person operating any industrial plant, in any air pollution control

area is permitted to discharge any air pollutant in excess of the standard laid down by the SPCB. The persons

managing industry are to be penalized if they produce emissions of air pollutants in excess of the standards laid

down by the SBCB. The SPCB also makes applications to the court for restraining persons causing air pollution.

Whoever contravenes any of the provisions of the Air Act or any order or direction issued is punishable with

imprisonment for a term which may extend to 3 months or with a fine of ₹10,000 or with both, and in case of

continuing offence with an additional fine which may extend to ₹5,000 for every day during which such

contravention continues after conviction for the first contravention.

134

Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016

The Hazardous Wastes (Management and Handling) (“HWM”) Rules, 2016, allocate the responsibility of the

occupier and operator of the facility that treats hazardous wastes to collect, treat, store or dispose the hazardous

wastes without adverse effects on the environment. Moreover, the occupier and the operator must take steps to ensure

that persons working on the site are given adequate training and equipment for performing their work. Hazardous

wastes can be collected, treated, stored and disposed of only in such facilities as may be authorised for this purpose.

The occupier is liable for damages caused to the environment resulting from the improper handling and disposal of

hazardous waste and any fine that may be levied by the respective SPCB.

Indirect Tax Laws

Income Tax Act, 1961

Income Tax Act, 1961 is applicable to every domestic/ foreign company whose income is taxable under the

provisions of this Act or Rules made under it depending upon its “Residential Status” and “Type of Income”

involved. U/s 139(1) every Company is required to file its Income tax return for every Previous Year by October 31

of the Assessment Year. Other compliances like those relating to Tax Deduction at Source, Fringe Benefit Tax,

Advance Tax, and Minimum Alternative Tax and the like are also required to be complied by every company.

Goods & Service Tax (“GST”)

Goods and Services Tax (GST) is an indirect tax applicable throughout India which replaced multiple cascading

taxes levied by the central and state governments. The GST shall be levied as Dual GST separately but concurrently

by the Union (central tax - CGST) and the States (including Union Territories with legislatures) (State tax - SGST)

/ Union territories without legislatures (Union territory tax- UTGST). The Parliament would have exclusive power

to levy GST. (integrated tax- IGST) on inter-State trade or commerce (including imports) in goods or services. It

was introduced as The Constitution (One Hundred and First Amendment) Act 2017, following the passage of

Constitution 122nd Amendment Bill. The GST is governed by a GST Council and its Chairman is the Finance

Minister of India.

The Uttar Pradesh Goods and Services Tax Act, 2017

The Uttar Pradesh Goods and Services Tax, 2017 (“UPGST”) regulates the levy and collection of tax on the supply

of goods and services within the state by the state government. The UPGST act function in consideration with the

laws of “CGST” and covers all the transaction occurred within the geographical boundaries of the state. The UPGST

mandates every supplier providing the goods and services to be registered within the state, within 30 days from

which it becomes liable for such registration.

Central Goods and Services Tax Act, 2017

The Central Goods and Services Tax Act, 2017 (“CGST Act”) regulates the levy and collection of tax on the intra-

State supply of goods and services by the Central Government or State Governments. The CGST Act amalgamates

a large number of Central and State taxes into a single tax. The CGST Act mandates every supplier providing the

goods or services to be registered within the State or Union Territory it falls under, within 30 days from the day on

which he becomes liable for such registration. Such registrations can be amended, as well as cancelled by the proper

office on receipt of application by the registered person or his legal heirs.

135

The Integrated Goods and Services Tax Act, 2017

The Integrated Goods and Services Tax Act, 2017 (“IGST Act”) regulates the levy and collection of tax on the inter-

State supply of goods and services by the Central Government or State Governments. It also includes the import and

export of Goods and Services. The regime of levy and collection of taxes is governed by the provisions of the IGST

Act. The IGST Act mandates every supplier providing the goods or services to be registered within the State or

Union Territory it falls under, within 30 days from the day on which he becomes liable for such registration. Such

registrations can be amended, as well as cancelled by the proper office on receipt of application by the registered

person or his legal heirs.

Regulation of Foreign Investment in India

Foreign investment in Indian securities is governed by the provisions of the Foreign Exchange Management Act,

1999, as amended (“FEMA”) read with the applicable FEMA Regulations. Consolidated FDI Policy consolidates

and supersedes all previous press notes, press releases and clarifications on FDI issued by the DIPP. Consolidated

FDI Policy will be valid until the DIPP issues an updated circular. Foreign investment is permitted (except in the

prohibited sectors) in Indian companies either through the automatic route or the approval route, where approval

from the Government or the RBI is required, depending upon the sector in which foreign investment is sought to be

made.

Under the automatic route, the foreign investor or the Indian company does not require any approval of the RBI or

Government for investments. Where FDI is allowed on an automatic basis without the approval of the Government,

the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment.

Laws relating to Intellectual Property Rights

Trademarks Act, 1999

The Trademarks Act, 1999 (the “Trademarks Act”) provides for the application and registration of trademarks in

India for granting exclusive rights to marks such as a brand, label and heading and obtaining relief in case of

infringement for commercial purposes as a trade description. Application for registration of a trademark is to be

made to the Controller-General of Patents, Designs and Trademarks who acts as the Registrar of Trademarks for the

purposes of the Trademarks Act. The Trademarks Act prohibits any registration of deceptively similar trademarks.

It also provides for penalties for infringement, falsifying and falsely applying for trademarks. Registered trademarks

are protected by means of an action for infringement, whereas unregistered trademarks may only be protected by

means of the common law remedy of passing off.

Copyright Act, 1957

The Copyright Act, 1957 (the “CR Act”) covers registration of copyrights of original literary, dramatic, musical

and artistic works, cinematographic films and sound recordings. A copyright board has been established under the

CR Act which, pursuant to an amendment in Finance Act, 2017 was subsequently substituted by the appellate board

(“Appellate Board”). The Appellate Board ordinarily hears all proceedings instituted before it under the CR Act.

The Appellate Board is deemed to be a Civil Court for the purposes of sections 345 and 346 of the Code of Criminal

Procedure, 1973 and all proceedings before the Appellate Board are deemed to be judicial proceedings within the

meanings of sections 193 and 228 of the Indian Penal Code, 1860. Infringement of copyright is civil or criminal

offence under the CR Act depending on the circumstances. The Copyright Rules, 1958 came into force along with

the CR Act.

Patents Act, 1970

Patent is a statutory right for the intellectual property relating to an invention, for a limited period granted by the

Government to the patentee in exchange of full disclosure of his invention. The grant of a product patent in India

confers upon the patentee the exclusive right to prevent third parties from the act of making, using, offering for sale,

selling or importing for those purposes the patented product in India; and in case of a process patent it confers upon

the patentee the exclusive right to prevent third parties from using that process, and from the act of using, offering

for sale, selling or importing for those purposes the product obtained directly by that process in India.

Other applicable laws

136

The Legal Metrology Act, 2009 (“Legal Metrology Act”)

The Legal Metrology Act replaces the Standards of Weights and Measures Act, 1976. The Legal Metrology Act

seeks to establish and enforce standards of weights and measures, regulate trade and commerce in weights, measures

and other goods which are sold or distributed by weight, measure or number, and matters connected therewith or

incidental thereto. The key features of the Legal Metrology Act are (a) appointment of Government approved test

centres for verification of weights and measures; (b) permitting the establishments to nominate a person who will

be held responsible for breach of provisions of the Legal Metrology Act; and (c) more stringent punishment for

violation of provisions.

Industries (Development and Regulation) Act, 1951 (“IDRA Act”)

IDRA Act was formulated for the purpose of development and regulation of industries in India. The main objectives

of the Act are to empower the Government (i) to take necessary steps for the development of industries; (ii) to

regulate the pattern and direction of industrial development; (iii) to control the activities, performance and results of

industrial undertakings in the public interest. The IDRA Act applies to the ‘Scheduled Industries’ listed in the First

Schedule of the Act. The IDRA Act provides for establishment of a ‘Central Advisory Council’ for the purpose of

advising the Central Government on matters concerning the development of the industries.

Our Company is subject to various other applicable laws, regulations, rules and guidelines, depending on the nature

of activities carried out by them.

137

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

The composition of the Board of Directors is governed by the provisions of the Companies Act, 2013, the SEBI

Listing Regulations and the rules and regulations prescribed by the Stock Exchanges where the equity shares of our

Company are listed. Our Articles of Association provide that the number of directors shall not be less than three or

more than fifteen unless otherwise approved in a general meeting. At present, our Company has twelve Directors

including five executive Directors, six non-executive independent Directors and one non-executive non-independent

(woman) Director.

The following table provides information about the Directors as of the date of this Preliminary Placement Document:

S.

No. Name, Address, DIN, Term and Nationality Age Designation

1. Shyam Sunder Sharmma

Address: 3/85, Vishnupuri, Kanpur – 208002, Uttar Pradesh, India

DIN: 00530921

Term: September 18, 2015 to September 17, 2018

Nationality: Indian

Occupation: Business

74

years

Chairman and Managing

Director

2. Vishnu Dutt Khandelwal

Address: 14/59, Flat No. 801, Sangeeta Apartment

Civil Lines, Kanpur- 208001, Uttar Pradesh, India

DIN: 00383507

Term: June 19, 2013 to June 18, 2018 (liable to retire by rotation)

Nationality: Indian


69

years

Executive Vice Chairman

3. Sharad Sharma

Address: 3/85, Vishnupuri, Kanpur- 208002, Uttar Pradesh, India

DIN: 00383178

Term: February 1, 2014 to January 31, 2019

Nationality: Indian


51

years

Joint Managing Director

4. Rajesh Sharma

Address: 3/85 Vishnupuri, Kanpur – 208002, Uttar Pradesh, India

DIN: 02228607

Term: June 19, 2013 to June 18, 2018 (liable to retire by rotation)

Nationality: Indian


51

years

Executive Director

5. Gopal Singh Shekhavat

Address: Flat no. 306 Congo B Omex Reviera, Rudrapur, Udham Singh

64

years

Director (Administration)

138

S.


Nagar, Uttarakhand-263153, India

DIN: 06591844

Term: June 1, 2013to May 31, 2018(liable to retire by rotation)

Nationality: Indian


6. Surendra Kumar Kabra

Address:7-1-28,301, Ashwani Apartments

Ameer Pet, Hyderabad – 500016, Telangana, India

DIN:01280980

Term: Consequent term of five (5) years w.e.f. 25th Annual General

Meeting held on September 29, 2014 till conclusion of the 30th Annual

General Meeting to be held in 2019

Nationality: Indian


74

years

Non-executive/

Independent Director

7. Vishwa Nath Chandak

Address: BF- 19, Salt Lake Sector-I

Kolkata – 700064, West Bengal, India

DIN:00313035




Nationality: Indian


80

years

Non-executive/


8. Pradeep Kumar Goenka

Address: 3/194, Vishnupuri, Kanpur- 208002, Uttar Pradesh, India

DIN:00404746




Nationality: Indian

Occupation: Professional

63

years

Non-executive/


9. Anoop Gupta

Address: Row House No- 26, Vasant Vihar

Pokhran Road no.-2, Thane West, Maharashtra – 400601, India

DIN:00153340




60

years

Non-executive/


139

S.


Nationality: Indian


10. Abhilash Lal

Address: C-192, Belvedere Tower, DLF City, Phase-II

Gurgaon –122002, Haryana, India

DIN:03203177




Nationality: Indian


53

years

Non- Executive/


11. Narayanan Subramaniam

Address:1309A, Beverly Park-II, MIG Road, Mehrauli-Gurgaon Road,

DLF Phase II, Gurgaon – 122002, Haryana, India

DIN: 00166621




Nationality: Indian


56

years

Non-Executive/


12. Seema Sharma

Address: 3/85, Vishnupuri, Kanpur – 208002, Uttar Pradesh, India

DIN: 07466530

Term: Appointed on September 8, 2016 (liable to retire by rotation)

Nationality: Indian


45

years

Non-Executive/ Non-


Biographies of the Directors

Shyam Sunder Sharmma, founder of our Company, aged 74 years, Chairman and Managing Director, is a post-

graduate in commerce. He is first generation entrepreneur and textile technocrat having management experience of

over 53 years including 25 years with various Birla Group companies in senior positions. He is associated with our

Company as Chairman since 1989 and was appointed as Managing Director in 1990. He is responsible for looking

into overall management, strategic planning and development of our Company.

Vishnu Dutt Khandelwal, aged 69 years, Executive Vice Chairman, is post-graduate in commerce and his area of

expertise includes marketing and financial management. He possesses a rich experience of over 44 years in textile

yarn trading. He has been serving our Company since inception and was appointed as Executive Vice-Chairman of

our Company in 2008. He is responsible for overseeing the marketing and business development of our Company.

Sharad Sharma, aged 51 years, Joint Managing Director, is a commerce graduate and having more than 30 years

of experience in marketing and distribution. He has been associated with our Company since inception and was

appointed to the Board in 1992 as a Director. He was appointed as Joint Managing Director of our Company in 2004.

140

He is responsible for overseeing day-to-day management and overall operations of our Company.

Rajesh Sharma, aged 51 years, Executive Director, is a commerce graduate and has rich experience spanning over

27 years in plant administration and operations. He is associated with our Company since inception and was

appointed as an Executive Director of our Company in 2008. He is responsible for looking after the administration

and operations of our Company’s Rudrapur and Bilaspur units.

Gopal Singh Shekhavat, aged 64 years, Director (Administration), is a Bachelor in Arts. He has rich experience of

more than 46 years in textile industry. Presently, he looks after the Administration and HR of our Company. He was

appointed to the Board of our Company as a Director (Administration) w.e.f. June 1, 2013.

Surendra Kumar Kabra, aged 74 years, Non-Executive/ Independent Director, is B.Com., LL.B. and is also a

member of the Institute of Chartered Accountants of India. He brings rich professional experience of over 49 years

in the textile industry. He had been the Managing Director for over 11 years in Shree Manufacturing Company Ltd.

and has over 25 years of experience of working in various capacities in Birla Group textile companies. He has been

running his own textile business for the past several years. He was appointed to the Board of our Company in 1994.

Vishwa Nath Chandak, aged 80 years, Non-Executive/ Independent Director, is M.Com., LL.B. and has experience

of over 40 years of working as a Senior President in Eastern Spinning Mills & Industries Ltd. He had also been

associated with Kesoram Industries Ltd. (a B.K. Birla Group company) as a President of its divisions namely

Kesoram Rayon and Hindusthan Heavy Chemicals for several years. He was appointed to the Board of our Company

in 2009.

Pradeep Kumar Goenka, aged 63 years, Non-Executive/Independent Director is a member of the Institute of

Chartered Accountants of India. He brings a rich professional experience of over 41 years in the field of finance and

related consultancy services. He is a practicing Chartered Accountant. He has served on the Board of several listed

and non-listed companies from various industries including manufacturing and financial consultancy. He was

appointed to the Board of our Company in 2006.

Anoop Gupta, aged 60 years, Non-Executive/ Independent Director, is Chartered Accountant and Cost Accountant,

with additional qualifications in law and company secretarial. He has more than three decades of diverse

international experience in areas of business development, corporate finance, strategy, banking, fund management,

investment product engineering, auditing and broad- spectrum business consulting. He has founded Concept

Management Consulting Limited in 1998 and is presently its Managing Director. He was appointed to the board of

our Company in 2012.

Abhilash Lal, aged 53 years, Non-Executive/ Independent Director, is a mechanical engineer and a post- graduate

in management from Indian Institute of Management (IIM), Bangalore. He has rich experience of more than 26

years in all aspects of financial services including banking, consulting, insurance, investments, advisory etc. and had

worked with HSBC for more than 11 years. He was appointed to the Board of our Company as a Non-Executive

Independent Director w.e.f. September 29, 2014.

Narayanan Subramaniam, aged 56 years, Non-Executive/ Independent Director, is a graduate from Indian Institute

of Management, Ahmedabad (IIM-A), Chartered Accountant, Cost & Management Accountant and Company

Secretary. He has rich experience in funding start-ups as well as control transactions in listed entities. He has served

on the Board of several companies with distinction. He is also the Founder Chairman of the Venture Capital

Association of India (VCAI). He was appointed to the Board of our Company as a Non-Executive Independent

Director w.e.f. September 29, 2014.

Seema Sharma, aged 45 years, Non-Executive/ Non-Independent Director, is a Bachelor in Arts and having

administrative experience of approximately three years. She was appointed to the Board as a Non-Executive Director

on September 8, 2016.

Relationship with other Directors

Vishnu Dutt Khandelwal is the brother of Shyam Sunder Sharmma. Sharad Sharma and Rajesh Sharma are the sons

of Shyam Sunder Sharmma. Seema Sharma is the wife of Sharad Sharma and the daughter-in-law of Shyam Sunder

Sharmma.

Borrowing powers of the Board of Directors

141

The Board of Directors is authorised to borrow money upon such terms and conditions as the Board may think fit

and may exceed the aggregate of our paid up capital and free reserves, provided that the aggregate amount of its

borrowings shall not exceed ₹7,500 million, at any time apart from the temporary loans obtained by our Company

from its bankers in the ordinary course of business, as per the discussions by our Board on July 9, 2014 and pursuant

to a Shareholders’ resolution dated September 29, 2014, under Section 180(1)(c) of the Companies Act, 2013.

Interest of the Directors

All of the Directors may be deemed to be interested to the extent of fees and commission, if any payable to them for

attending meetings of the Board and committees. Our Managing Director, Joint Managing Director, Executive Vice-

Chairman, Executive Director & Director (Administration) are interested to the extent of remuneration paid to them

for services rendered by them.

The Directors may also be regarded as interested in our Company to the extent of the Equity Shares, if any, held by

them and also to the extent of any dividend payable to them and other distributions in respect of such Equity Shares

held by them.

Other than as disclosed in this Preliminary Placement Document, there are no outstanding transactions other than in

the ordinary course of business undertaken by our Company in which the Directors are interested parties.

Certain of our Directors may also be regarded as interested in the Equity Shares held by, or subscribed by and allotted

to, the companies, firms and trusts, in which they are interested as directors, members, partners or trustees.

Except as otherwise stated in this Preliminary Placement Document, our Company has not entered into any contract,

agreement or arrangement during the preceding two years from the date of this Preliminary Placement Document in

which any of the Directors are interested, directly or indirectly, and no payments have been made to them in respect

of any such contracts, agreements, arrangements which are proposed to be made with them. Further, as on date of

the Preliminary Placement Document, no Director has taken any loans from our Company.

For details in relation to the related party transactions entered by our Company during the last three Fiscal Years

immediately preceding the date of this Preliminary Placement Document, please see the section "Financial

Information" on page 203.

Shareholding of Directors

Except as stated below, none of our Directors hold any Equity Shares as on March 31, 2018:

S. No. Name Number of

Equity Shares

Percentage of pre-Issue paid up share

capital of the Company (%)

1. Shyam Sunder Sharmma 1,938,927 10.11

2. Rajesh Sharma 1,095,529 5.71

3. Sharad Sharma 875,583 4.57

4. Vishnu Dutt Khandelwal 720,200 3.76

5. Seema Sharma 269,215 1.40

6. Gopal Singh Shekhavat 400 0.00

Terms and Compensation of the Directors

The terms and conditions of the appointment of our Executive Directors are as set out below:

1. Shyam Sunder Sharmma

Particulars Details

Salary ₹200,000 per month

Commission Managing Director is entitled to commission @1% of the net profits of the Company

in the year(s) of adequate profits.

Perquisites • Furnished Accommodation or House Rent allowance.

• Reimbursement of expenses for utilisation of gas, electricity, water, medical

expenses, leave travel concession for self and family including dependents,

club fees.

142

Particulars Details

• Premium towards personal accident insurance and medi-claim and all other

payments in the nature of perquisites and allowances.

• Monetary value of the perquisites in any year shall not exceed 6,00,000/- per

annum without restriction to any sub limit on individual perquisite.

• Reimbursement of entertainment and other expenses actually incurred by the

Managing Director in connection with the business of our Company.

• Use of our Company’s car for official purpose, mobile and basic telephone at

residence not to be included in the computation of perquisites.

• Apart from above, reimbursement of Medical expenses of exceptional nature

incurred on the Managing Director’s treatment and his family at the discretion

of the Board.

Additional Remuneration • In addition to salary, commission &perquisites as specified, the managing

director shall be entitled to receive additional remuneration based upon

quarterly financial performance of our company subject to the condition that

the Total remuneration payable shall not exceed 5% of the net profits and 10%

of the net profits of our Company for the year payable to all managerial

personnel taken together.

• Composition, mode and manner of payment of such additional remuneration

to be finalized in consultation with the Managing Director.

2. Vishnu Dutt Khandelwal

Particulars Details





club fees.



• Monetary value of the perquisites in any year shall not exceed ₹600,000/- per

annum without restriction to any sub-limit on individual perquisite.


Executive Vice Chairman in connection with the business of our Company.




incurred on the Executive Vice Chairman treatment and his family at the

discretion of the Board.

Additional Remuneration • In addition to salary& Perquisites as specified, the Executive Vice Chairman

shall be entitled to receive additional remuneration based upon quarterly

financial performance of our Company subject to the condition that the total

remuneration payable shall not exceed 5% of the net profits and 10% of the

net profits of our Company for the year payable to all the managerial

personnel taken together.


to be finalized in consultation with the Executive Vice Chairman.

3. Sharad Sharma

Particulars Details





club fees.



• Monetary value of the perquisites in any year shall not exceed 600,000/- per

143

Particulars Details

annum without restriction to any sub limit on individual perquisite.


joint Managing Director in connection with the business of our Company.



• Apart from above, reimbursement of medical expenses of exceptional nature

incurred on the joint Managing Director’s treatment and his family at the

discretion of the Board.

Additional Remuneration • In addition to salary& Perquisites as specified, the joint Managing Director

shall be entitled to receive additional remuneration based upon quarterly

financial performance of our Company subject to the condition that the Total

remuneration payable shall not exceed 5% of the net profits and 10% of the net

profits of our Company for the year payable to all managerial personnel taken

together.


to be finalized in consultation with the joint Managing Director.

4. Rajesh Sharma

Particular Details


Perquisites • Furnished accommodation or house rent allowance.



club fees.



• Monetary value of the perquisites in any year shall not exceed 600,000/- per

annum without restriction to any sub-limit on individual perquisite.


Executive Director in connection with the business of our Company.




incurred on the Executive Director treatment and his family at the discretion of

the Board.

Additional Remuneration • In addition to salary & perquisites as specified, the Executive Director shall be

entitled to receive additional remuneration based upon quarterly financial

performance of our Company subject to the condition that the Total

remuneration payable shall not exceed 5% of the net profits and 10% of the net

profits of our Company for the year payable to all managerial personnel taken

together.


to be finalized in consultation with the Executive Director.

5. Gopal Singh Shekhavat

Particular Details

Basic Salary ₹56,000 per month

House Rent Allowance ₹54,000 per month

Medical Allowance ₹25,000 per month

Professional Allowance ₹27,800 per month

Uniform Allowance ₹5,000 per month

Leave and Travel Allowance ₹4,000 per month

Books & Periodicals Allowance ₹1,000 per month

Perquisites Allowed perquisites the aggregate monetary value of which in any year shall not

exceed ₹600,000 per annum. The components of such perquisites shall be as

finalized, from time to time, by the Chairman-cum-Managing Director of our

Company.

144

The following tables set forth all compensation (including sitting fees, salaries, commission and perquisites) paid

by our Company to the Directors during the current Financial Year 2019, FY 2018, FY 2017 and FY 2016 (to the

extent applicable):

Financial Year 2019

No remuneration has been paid to any Directors during the current Financial Year 2019.

Financial Year 2018 (to the extent paid by our Company upto March 31, 2018)

(in ₹)

Name of the Directors Salary & Commission

(including Performance

Linked Remuneration)

Perquisites Sitting Fees Total

Shyam Sunder Sharmma 5,995,000 39,600 - 6,034,600

Vishnu Dutt Khandelwal 4,500,000 32,400 - 4,532,400

Sharad Sharma 4,500,000 39,600 - 4,539,600

Rajesh Sharma 4,500,000 39,600 - 4,539,600

Gopal Singh Shekhavat 1,953,600 46,057 - 1,999,657

Surendra Kumar Kabra - - 40,000 40,000

Vishwa Nath Chandak - - 40,000 40,000

Pradeep Kumar Goenka - - 40,000 40,000

Anoop Gupta - - 30,000 30,000

Abhilash Lal - - 30,000 30,000

Narayanan Subramaniam - - 10,000 10,000

Seema Sharma - - 20,000 20,000

Financial Year 2017

(in ₹)







Sharad Sharma 6,500,000 39,600 - 6,539,600

Rajesh Sharma 6,885,000 39,600 - 6,924,600


Surendra Kumar Kabra 375,000 - 30,000 405,000

Vishwa Nath Chandak 375,000 - 30,000 405,000

Pradeep Kumar Goenka 500,000 - 40,000 540,000

Anoop Gupta 250,000 - 20,000 270,000

Abhilash Lal 250,000 - 20,000 270,000

Narayanan Subramaniam 125,000 - 5,000 130,000

Seema Sharma 500,000 - 20,000 520,000

Financial Year 2016

(in ₹)







Sharad Sharma 6,490,000 39,600 - 6,529,600

Rajesh Sharma 6,910,000 39,600 - 6,949,600


Surendra Kumar Kabra 363,636 - 40,000 403,636

Vishwa Nath Chandak 272,727 - 30,000 302,727

Pradeep Kumar Goenka 363,636 - 40,000 403,636

Anoop Gupta 181,818 - 20,000 201,818

Abhilash Lal 318,182 - 35,000 353,182

Narayanan Subramaniam 71,429 - 5,000 76,429

145





Poonam Garg* 71,429 - 5,000 76,429

Seema Sharma** Nil - Nil Nil

*Ceased to be Director of our Company w.e.f. February 11, 2016 due to withdrawal of her nomination by IFCI

Venture Capital Funds Ltd.

** Appointed as an Additional Director on the Board w.e.f. March 30, 2016 by way of a circular resolution.

Organisational Chart of our Company

Key Managerial Personnel

During the year under review, following are the Key Managerial Personnel of our Company:

Shyam Sunder Sharmma

Chairman and Managing Director

Please refer to his biography on page 139.

Sharad Sharma


Please refer to his biography on page 139.

Gopal Agarwal

Chief Financial Officer

Gopal Agarwal, aged 49 years, is a qualified chartered accountant and has rich experience in the fields of financial

management, accounting, taxation and risk management having more than twenty-five (25) years of professional

experience. He has been associated with our Company since November 18, 1992 and is presently designated as the

Chief Financial Officer of our Company.

146

Bharat Kumar Sajnani

Company Secretary & Compliance Officer

Bharat Kumar Sajnani, aged 36 years, is an M.Com, LLB and FCS having rich experience of more than eleven

(11) years in corporate laws, compliance and secretarial matters. He has been associated with our Company since

2006 and was appointed as our Company Secretary and Compliance Officer of our Company w.e.f. April 21, 2008.

Shareholding of key managerial personnel

S. No. Name Number of

Equity Shares

Percentage of pre-Issue paid up share

capital of the Company (%)

1. Shyam Sunder Sharmma 1,938,927 10.11

2. Sharad Sharma 875,583 4.57

3. Gopal Agarwal 18,433 0.10

4. Bharat Kumar Sajnani 100 0.00

Interest of key managerial personnel

None of our Key Managerial Personnel has been paid any consideration of any nature by our Company, other than

their remuneration. Except to the extent of their shareholding in our Company, our Key Managerial Personnel do

not have any financial or other material interest in the Issue.

Corporate governance

Except as disclosed in this Preliminary Placement Document, our Company is in compliance with the requirements

of all applicable corporate governance norms, including the SEBI Listing Regulations and the SEBI ICDR

Regulations, in respect of corporate governance including constitution of the Board and committees thereof.

The Board of Directors presently consists of twelve Directors. In compliance with the requirements of the SEBI

Listing Regulations, the Board of Directors consists of six Independent Directors.

Committees of the Board

In terms of Regulation 18, Regulation 19 and Regulation 20 of the SEBI Listing Regulations and the relevant

provisions of the Companies Act, 2013, our Company has constituted the following committees of Directors namely:

(i) Audit Committee;

(ii) Nomination and Remuneration Committee;

(iii) Stakeholders’ Relationship Committee;

(iv) Corporate Social Responsibility Committee;

(v) Management Committee

(vi) Capital Raising Committee

The following table sets forth the composition of the members of the committees of the Board of Directors as of the

date of this Preliminary Placement Document:

Committee Members Designation

Audit Committee

i. Pradeep Kumar Goenka

ii. Surendra Kumar Kabra

iii. Vishnu Dutt Khandelwal

iv. Vishwa Nath Chandak

v. Anoop Gupta

vi. Abhilash Lal

Chairman

Member

Member

Member

Member

Member

Nomination and Remuneration Committee

i. Surendra Kumar Kabra

ii. Pradeep Kumar Goenka

iii. Vishwa Nath Chandak

Chairman

Member

Member

Stakeholders’ Relationship Committee

i. Pradeep Kumar Goenka

ii. Shyam Sunder Sharmma


iv. Sharad Sharma

Chairman

Member

Member

Member

Corporate Social Responsibility Committee i. Abhilash Lal Chairman

147

Committee Members Designation

ii. Pradeep Kumar Goenka


iv. Sharad Sharma

Member

Member

Member

Management Committee

i. Shyam Sunder Sharmma

ii. Vishnu Dutt Khandelwal

iii. Sharad Sharma

iv. Pradeep Kumar Goenka

Chairman

Member

Member

Member

Capital Raising Committee

i. Vishnu Dutt Khandelwal

ii. Sharad Sharma

iii. Anoop Gupta

iv. Abhilash Lal

v. Narayanan Subramaniam

Chairman

Member

Member

Member

Member

Policy on disclosures and internal procedure for prevention of insider trading

Our Company has adopted a code of conduct for prevention of insider trading with a view to regulate trading in

securities by the directors and employees of our Company. The said Code requires pre-clearance for dealing in our

Company’s shares and prohibits the purchase or sale of our Company’s shares by the directors and employees while

in possession of unpublished price sensitive information in relation to our Company or its securities. Our Company

has appointed our Company Secretary as the Compliance Officer to ensure compliance of the said Code by all the

directors and employees likely to have access to unpublished price sensitive information.

Other confirmations

None of the Directors, Promoters, key managerial personnel or senior management personnel of our Company have

any financial or other material interest in the Issue.

Except for the profit linked payments payable to our Executive Directors, our Company does not have any bonus or

profit sharing plan with its Directors and Key Managerial Personnel.

None of the Directors or the companies with which they are or were associated as promoters, directors or persons in

control, have been debarred from accessing the capital markets under any order or direction passed by the SEBI or

any other governmental authority.

Related Party Transactions

For details in relation to the related party transactions entered by our Company during the last three Fiscals, including

with regard to loans made or, guarantees given or securities provided, as per the requirements under Accounting

Standard 18 issued by the Institute of Chartered Accountants in India, see the section “Financial Information”

beginning on page 203.

148

PRINCIPAL SHAREHOLDERS

The shareholding pattern of our Company, as on March 31, 2018 is as follows:

(i) Summary statement holding of specified securities:

Category of

shareholder

No. of

shareholders

No. of

fully paid

up equity

shares

held

Total nos.

of shares

held

Shareholding

as a % of

total no. of

shares

(calculated

as per

SCRR, 1957)

As a % of

(A+B+C2)

Number of

Locked in shares

No. of Shares

Pledged or

otherwise

encumbered Number of

equity shares

held in

dematerialized

form No.

(a)

As a

% of

total

Shares

held

(b)

No.

(a)

As a

% of

total

Shares

held

(A) Promoter

& Promoter

Group

16 8,695,936 8,695,936 45.35 711,875 8.19 2,278,000 26.20 8,695,936

(B) Public 10,712 10,480,941 10,480,941 54.65 - 0.00 - 0.00 9,803,280

(C) Non

Promoter-

Non Public

0 0 0 0.00 - 0.00 - 0.00 0

(C1) Shares

underlying

DRs

0 0 0 0.00 - 0.00 - 0.00 0

(C2) Shares

held by

Employee

Trust

0 0 0 0.00 - 0.00 - 0.00 0

Total 10,728 19,176,877 19,176,877 100.00 711,875 3.71 2,278,000 11.88 18,499,216

Note: C = C1 + C2

Grand Total = A+B+C

(ii) Statement showing shareholding pattern of the Promoter and Promoter Group

Category and

name of

shareholder

Nos. of

shareholders

No. of

fully

paid up

equity

shares

held

Total

nos.

shares

held

Shareholding

as a % of

total no. of

shares

(calculated

as per

SCRR, 1957)

As a % of

(A+B+C2)

Number of

Locked in shares

No. of Shares

Pledged or

otherwise

encumbered

Number of

equity shares

held in

dematerialized

form No.

(a)

As a

% of

total

Shares

held(b)

No.

(a)

As a

% of

total

Shares

held

A1) Indian

(a) Individuals/

Hindu

Undivided

Family

14 6,143,935 6,143,935 32.04 711,875 11.59 2,278,000 37.08 6,143,935

Shyam Sunder

Sharmma

1 1,938,927 1,938,927 10.11 0 0.00 1,600,000 82.52 1,938,927

Rajesh Sharma 1 1,095,529 1,095,529 5.71 0 0.00 0.00 1,095,529

Sharad Sharma 1 875,583 875,583 4.57 0 0.00 363,000 41.46 875,583

Vishnu Dutt

Khandelwal

1 720,200 720,200 3.76 0 0.00 0.00 720,200

Vimal Sharma 1 471,250 471,250 2.46 156,250 33.16 315,000 66.84 471,250

149

Category and

name of

shareholder

Nos. of

shareholders

No. of

fully

paid up

equity

shares

held

Total

nos.

shares

held

Shareholding

as a % of

total no. of

shares

(calculated

as per

SCRR, 1957)

As a % of

(A+B+C2)

Number of

Locked in shares

No. of Shares

Pledged or

otherwise

encumbered

Number of

equity shares

held in

dematerialized

form No.

(a)

As a

% of

total

Shares

held(b)

No.

(a)

As a

% of

total

Shares

held

Seema Sharma 1 269,215 269,215 1.40 31,250 11.61 0 0.00 269,215

Ratna Sharma 1 257,825 257,825 1.34 53,125 20.61 0 0.00 257,825

Shyam Sunder

Sharmma HUF

1 107,000 107,000 0.56 100,000 93.46 0 0.00 107,000

Sandeep

Khandelwal

1 106,050 106,050 0.55 85,500 80.62 0 0.00 106,050

Yash Sharma 1 100,000 100,000 0.52 100,000 100.00 0 0.00 100,000

Sharad Sharma

HUF

1 94,731 94,731 0.49 78,125 82.47 0 0.00 94,731

Nirmal

Khandelwal

1 46,875 46,875 0.24 46,875 100.00 0 0.00 46,875

Vishnu Dutt

Khandelwal

HUF

1 37,500 37,500 0.20 37,500 100.00 0 0.00 37,500

Rajesh Sharma

HUF

1 23,250 23,250 0.12 23,250 100.00 0 0.00 23,250

(b) Any Other

Bodies

Corporate

2 2,552,001 2,552,001 13.31 0 0.00 0 0.00 2,552,001

GPL Finance

Limited

1 2,123,201 2,123,201 11.07 0 0.00 0 0.00 2,123,201

Sandeep Yarns

Private Limited

1 428,800 428,800 2.24 0 0.00 0 0.00 428,800

Sub Total A(1) 16 8,695,936 8,695,936 45.35 711,875 8.19 2,278,000 26.20 8,695,936

(A2) Foreign 0 0 0 0.00 0 0.00 0 0.00 0

Total

Shareholding

of Promoter

and Promoter

Group (A) =

(A)(1) + (A)(2)

16 8,695,936 8,695,936 45.35 711,875 8.19 2,278,000 26.20 8,695,936

(iii) Statement showing shareholding pattern of the Public shareholder

Category &

Name of the

Shareholders

No. of

sharehol

ders

No. of

fully paid

up equity

shares

held

Total no.

shares

held

Shareholding

(calculated as a %

of total no. of

shares) as per

SCRR, 1957 As a

% of (A+B+C2)

No. of

Voting

Rights

Total as

a % of

Total

Voting

rights

Number of

Locked in shares Number of

equity shares

held in

dematerialized

form

No.

(a)

As a % of

total

Shares held

(b)

B(1)

Institutions

(a) Mutual

Funds

4 1,377,475 1,377,475 7.18 1,377,475 7.18 0 0.00 1,375,275

SBI Mutual

Fund

1 1,030,175 1,030,175 5.37 1,030,175 5.37 0 0.00 1,030,175

150

Category &

Name of the

Shareholders

No. of

sharehol

ders

No. of

fully paid

up equity

shares

held

Total no.

shares

held

Shareholding

(calculated as a %

of total no. of

shares) as per

SCRR, 1957 As a

% of (A+B+C2)

No. of

Voting

Rights

Total as

a % of

Total

Voting

rights

Number of


equity shares

held in

dematerialized

form

No.

(a)

As a % of

total

Shares held

(b)

Principal

Trustee Co.

Pvt. Ltd. –

Principal

Mutual Fund –

Principal

Emerging

Bluechip Fund

1 345,000 345,000 1.80 345,000 1.80 0 0.00 345,000

(b)Alternate

Investment

Funds

1 56,000 56,000 0.29 56,000 0.29 0 0.00 56,000

(c)Foreign

Portfolio

Investors

1 40,000 40,000 0.21 40,000 0.21 0 0.00 40,000

(d)Financial

Institutions/

Banks

3 7,504 7,504 0.04 7,504 0.04 0 0.00 7,404

Sub Total B(1) 9 1,480,979 1,480,979 7.72 1,480,979 7.72 0 0.00 1,478,679

B(2) Central

Government/

State

Government(s

)/ President of

India

0 0 0 0.00 0.00 0 0.00

B(3) Non-

Institutions

Individual

shareholder

holding

nominal

capital upto

Rs. 2 lacs

10,165 2,501,799 2,501,799 13.05 2,501,799 13.05 0 0.00 1,828,938

Individual

shareholder

holding

nominal

capital in

excess of Rs. 2

lacs

13 1,219,718 1,219,718 6.36 1,219,718 6.36 0 0.00 1,219,718

Sangeeta

Pareekh

1 442,538 442,538 2.31 442,538 2.31 0 0.00 442,538

Madhukar

Sheth

1 222,379 222,379 1.16 222,379 1.16 0 0.00 222,379

Any Other

(specify)

525 5,278,445 5,278,445 27.53 5,278,445 27.53 0 0.00 5,275,945

Bodies

Corporate

162 4,494,865 4,494,865 23.44 4,494,865 23.44 0 0.00 4,492,365

MCAP India

Fund Limited

1 2,975,877 2,975,877 15.52 2,975,877 15.52 0 0.00 2,975,877

Essel Industries

Private Limited

1 575,324 575,324 3.00 575,324 3.00 0 0.00 575,324

Commercial

Advertising

and Marketing

Private Limited

1 291,581 291,581 1.52 291,581 1.52 0 0.00 291,581

NRI 157 73,213 73,213 0.38 73,213 0.38 0 0.00 73,213

HUF 180 242,194 242,194 1.26 242,194 1.26 0 0.00 242,194

Trusts 1 3,300 3,300 0.02 3,300 0.02 0 0.00 3,300

151

Category &

Name of the

Shareholders

No. of

sharehol

ders

No. of

fully paid

up equity

shares

held

Total no.

shares

held

Shareholding

(calculated as a %

of total no. of

shares) as per

SCRR, 1957 As a

% of (A+B+C2)

No. of

Voting

Rights

Total as

a % of

Total

Voting

rights

Number of


equity shares

held in

dematerialized

form

No.

(a)

As a % of

total

Shares held

(b)

Clearing

Members

24 26,768 26,768 0.14 26,768 0.14 0 0.00 26,768

Investor

Education and

Protection

Fund

1 438,105 438,105 2.28 438,105 2.28 0 0.00 438,105

Sub Total B(3) 10,703 8,999,962 8,999,962 46.93 8,999,962 46.93 0 0.00 8,324,601

Total Public

Shareholding

[B = B(1) +

B(2) + B(3)]

10,712 10,480,941 10,480,941 54.65 10,480,941 54.65 0 0.00 9,803,280

(iv) Statement showing shareholding pattern of the Non-Promoter – Non-Public shareholder

Category &

Name of the

Shareholders

No. of

shareholder

No. of

fully paid

up equity

shares

held

Total no.

shares

held

Shareholding %

calculated as per

SCRR, 1957 As a

% of (A+B+C2)

Number of Locked in

shares Number of equity

shares held in

dematerialized form No.

(a)

As a % of total

Shares held

(b)

C1)

Custodian/

DR Holder

0 0 0 0.00 0 0.00 0

C2) Employee

Benefit Trust

0 0 0 0.00 0 0.00 0

(v) Details of disclosure made by the trading members holding 1% or more of the total number of shares

of our Company.

S.

No.

Name of the Trading Member Name of the Beneficial

Owner

No. of

shares

held

% of total no.

of shares

Date of reporting by

the Trading Member

- Nil Nil Nil Nil Nil

152

ISSUE PROCEDURE

The following is a summary intended to present a general outline of the procedure relating to the application,

payment, Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure followed

in the Issue may differ from the one mentioned below, and investors are presumed to have apprised themselves of

the same from our Company or the Book Running Lead Manager. Prospective investors are advised to inform

themselves of any restrictions or limitations that may be applicable to them. Investors that apply in the Issue will be

required to confirm and will be deemed to have represented to our Company, the Book Running Lead Manager and

their affiliates including their respective shareholders, directors, officers, agents and representatives that they are

eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. Our

Company and the Book Running Lead Manager and their respective directors, officers, agents, affiliates and

representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to

acquire the Equity Shares. See sections entitled “Selling Restrictions” and “Transfer Restrictions” beginning on

pages 165 and 171, respectively.

Qualified Institutions Placement

This Issue is being made to eligible QIBs in reliance upon Chapter VIII of the SEBI ICDR Regulations and Section

42 and 62(1)(c) of the Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of

Securities) Rules, 2014, through the mechanism of a QIP. Under Chapter VIII of the SEBI ICDR Regulations and

Section 42 of the Companies Act, 2013, a company may issue equity shares to QIBs provided that certain conditions

are met by the company. Certain of these conditions are set out below:

a) the shareholders of the issuer have passed a special resolution approving such QIP. Such special resolution

must specify (a) that the allotment of securities is proposed to be made pursuant to the QIP and (b) the

Relevant Date;

b) equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, or pursuant

to conversion or exchange of eligible securities, are listed on a recognised stock exchange in India having

nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its

shareholders for convening the meeting to pass the above-mentioned special resolution;

c) the aggregate of the proposed issue and all previous qualified institutions placements made by the issuer in

the same financial year does not exceed five times the net worth (as defined in the SEBI ICDR Regulations)

of the issuer as per the audited balance sheet of the previous financial year;

d) the payment to be made for subscription to the securities shall be made from the bank account of the person

subscribing to such securities and in case of securities to be held by joint holders, the payment for subscription

to the securities shall be paid from the bank account of the person whose name appears first in the application

e) the issuer shall be in compliance with the minimum public shareholding requirements set out in the SCRR;

f) prior to circulating the preliminary placement document the issuer must prepare and record a list of QIBs to

whom the offer will be made. The offer must be made only to such persons whose names are recorded by the

issuer prior to the invitation to subscribe;

g) the issuer shall have completed allotments with respect to any offer or invitation made by the issuer orshall

have withdrawn or abandoned that offer or invitation made by the issuer;

h) the issuer shall offer to each Allottee at least such number of the securities in the issue which would aggregate

to ₹20,000 calculated at the face value of the securities;

i) the explanatory statement to the notice to the Shareholders for convening the general meeting must disclose

the basis or justification for the price (including premium, if any) at which the offer or invitation is being

made;

j) the offer must be made through a private placement offer letter and an application form serially numbered

and addressed specifically to the eligible QIB to whom the offer is made and is sent within 30 days of

recording the names of such QIBs;

153

k) the offering of securities by issue of public advertisements or utilization of any media, marketing or

distribution channels or agents to inform the public about the issue is prohibited.

At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or

any part thereof to be allotted to Mutual Funds remains unsubscribed, it may be allotted to other QIBs.

Prospective investors will be deemed to have represented to us and the Book Running Lead Manager in order to

participate in the Issue that they are outside the United States and purchasing the Equity Shares in an offshore

transaction in accordance with Regulation S and the applicable laws of the jurisdictions where those offers and sales

occur. For further details, please refer to the chapters titled “Selling Restrictions” and “Transfer Restrictions”

beginning on page 165 and 171, respectively, of this Preliminary Placement Document.

Bidders are not allowed to withdraw their Bids after the Bid/Issue Closing Date. Additionally, there is a minimum

pricing requirement for pricing equity shares, offered in a QIP under the SEBI ICDR Regulations. The Issue Price

shall be equal or more than the Floor Price. The Floor Price shall not be less than the average of the weekly high and

low of the closing prices of the issuer’s equity shares quoted on the stock exchange during the two weeks preceding

the Relevant Date. However, a discount of up to 5% of the Floor Price is permitted in accordance with the provisions

of the SEBI ICDR Regulations.

The “Relevant Date” will be the date of the meeting in which the Board or the committee of Directors duly

authorised by the Board decides to open the Issue and “stock exchange” means any of the recognised stock

exchanges in India on which the equity shares of the issuer of the same class are listed and on which the highest

trading volume in such equity shares has been recorded during the two weeks immediately preceding the Relevant

Date.

Our Company has applied for and received the in-principle approval of the Stock Exchanges under Regulation 28(1)

of the SEBI Listing Regulations, for the listing of the Equity Shares on the Stock Exchanges. Our Company has also

delivered a copy of this Preliminary Placement Document to the Stock Exchanges.

Our Company shall also make the requisite filings with the RoC and SEBI within the stipulated period as required

under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014.

The Issue has been authorized by (i) the Board pursuant to the resolution passed on August 12, 2017, and (ii) the

shareholders pursuant to a special resolution on September 25, 2017.

The Equity Shares will be Allotted within 12 months from the date of the shareholders’ resolution approving the

QIP and within 60 days from the date of receipt of subscription money from the successful Bidders. For details of

refund of application money, see the section “Issue Procedure – Pricing and Allocation – Designated Date and

Allotment of Equity Shares”.

The Equity Shares issued pursuant to the QIP must be issued on the basis of this Preliminary Placement Document

and the Placement Document shall contain all material information including the information specified in Schedule

XVIII of the SEBI ICDR Regulations and the requirements prescribed under Form PAS-4. This Preliminary

Placement Document and the Placement Document are private documents provided to only select investors through

serially numbered copies and are required to be placed on the website of the concerned Stock Exchanges and of our

Company with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to

the public or to any other category of investors.

The minimum number of Allottees for each QIP shall not be less than:

• two, where the issue size is less than or equal to ₹2,500,000,000; and

• five, where the issue size is greater than ₹2,500,000,000.

No single Allottee shall be allotted more than 50% of the issue size or less than ₹20,000 of face value of Equity

Shares.

The Issuer is required to furnish a copy of the placement document to each stock exchange on which its equity shares

are listed. Accordingly, our Company shall file a copy of this Preliminary Placement Document, and subsequently

file a copy of the Placement Document with the Stock Exchanges.

154

QIBs that belong to the same group or that are under common control shall be deemed to be a single Allottee. For

details of what constitutes “same group” or “common control”, see “Issue Procedure—Application Process—Bid

Cum Application Form” on page 157.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment

except on the floor of a recognised stock exchange in India. Allotments made to FVCIs, VCFs and AIFs in the Issue

are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements.

The Equity Shares offered hereby have not been and will not be registered under the Securities Act (along

with any state securities laws of the United States) or registered, listed or otherwise qualified in any other

jurisdiction outside India, and unless so registered, may not be offered or sold within the United States except

pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the

Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold

outside the United States in offshore transactions in reliance on Regulation S and the applicable laws of the

jurisdictions where those offers and sales are made. For further information, please see the sections titled

“Selling Restrictions” and “Transfer Restrictions” on page 165 and 171.

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, except in compliance with the applicable laws of such jurisdiction.

Issue Procedure

Our Company and the Book Running Lead Manager shall circulate serially numbered copies of this Preliminary

Placement Document and the serially numbered Bid Cum Application Form, either in electronic or physical form,

to the eligible QIBs and the Bid Cum Application Form will be specifically addressed to such QIBs. In terms of

Section 42(7) of the Companies Act, 2013, our Company shall maintain complete records of the QIBs to whom the

Preliminary Placement Document and the serially numbered Bid Cum Application Form have been dispatched. Our

Company will make the requisite filings with the RoC and SEBI within the stipulated time period as required under

the Companies Act, 2013 and rules made thereunder.

The list of QIBs to whom the Bid Cum Application Form is delivered shall be determined by the Book

Running Lead Manager at its sole discretion. Unless a serially numbered Preliminary Placement Document

along with the serially numbered Bid Cum Application Form is addressed to a particular QIB, no invitation

to subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come into the

possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have

been made to such person and any application that does not comply with this requirement shall be treated as invalid.

QIBs may submit a Bid Cum Application Form, including any revisions thereof, during the Bidding Period to the

Book Running Lead Manager.

QIBs will be, inter alia, required to indicate the following in the Bid Cum Application Form:

• the full official name of the QIB to whom Equity Shares are to be Allotted;

• number of Equity Shares Bid for;

• price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate

that they are agreeable to submit a Bid at “Cut-off Price”; which shall be any price as may be determined by

our Company in consultation with the Book Running Lead Manager at or above the Floor Price or the Floor

Price net of such discount as approved in accordance with the SEBI ICDR Regulations;

• details of the depository account to which the Equity Shares should be credited;

• a representation that it was outside the United States at the time the offer of the Equity Shares was made to

it, when is placed its buy order for the Equity Shares and is acquiring the Equity Shares in an offshore

transaction under Regulation S and it has agreed to certain other representations set forth in the section

“Representations by Investors” and “Transfer Restrictions” beginning on pages 5 and 171, respectively, of

this Preliminary Placement Document and certain other representations made in the Bid Cum Application

Form;

155

• SEBI registration number, if applicable; and

• if you are not a resident of India, then the investment amount will be paid as per the provisions of the Foreign

Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulation, 2017

issued under RBI’s notification no. FEMA 20(R)/ 2017-RB on November 7, 2017.

Note: Each sub-account of an FPI other than a sub-account which is a foreign corporate or a foreign

individual will be considered as an individual QIB and separate Bid Cum Application Forms would be

required from each such sub-account for submitting Bids. FPIs or sub-accounts of FPIs are required to

indicate SEBI FPI/ sub-account registration number in the Bid Cum Application Form.

Once a duly completed Bid Cum Application Form is submitted by a QIB, such Bid Cum Application Form

constitutes an irrevocable offer and cannot be withdrawn after the Bid/Issue Closing Date. The Bid/ Issue Closing

Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice of such date

after receipt of the Bid Cum Application Form.

The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names of

the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect

of each scheme of the Mutual Fund registered with SEBI. All such bids/ applications by or on behalf of various

schemes of a mutual fund shall be treated as a single application, unless the Bids clearly indicate the scheme for

which the Bid has been made.

Upon receipt of the Bid Cum Application Form, after the Bid/Issue Closing Date, our Company shall determine the

final terms, including the Issue Price of the Equity Shares to be issued pursuant to the Issue in consultation with the

Book Running Lead Manager. Upon determination of the final terms of the Equity Shares, the Book Running Lead

Manager will send the serially numbered CAN along with the Placement Document to the QIBs who have been

Allocated the Equity Shares. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for

the QIB to pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The CAN shall contain details

such as the number of Equity Shares Allocated to the QIB and payment instructions including the details of the

amounts payable by the QIB for Allotment of the Equity Shares in its name and the Pay-In Date as applicable to the

respective QIB. Please note that the Allocation will be at the absolute discretion of our Company and will be

based in consultation with the Book Running Lead Manager.

Pursuant to receiving a CAN, each QIB shall be required to make the payment of the entire application monies for

the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer to our Company’s

designated bank account by the Pay-In Date as specified in the CAN sent to the respective QIBs. No payment shall

be made by QIBs in cash. Please note that any payment of application money for the Equity Shares shall be made

from the bank accounts of the relevant QIBs applying for the Equity Shares. Monies payable on Equity Shares to be

held by joint holders shall be paid from the bank account of the person whose name appears first in the application.

Pending Allotment, all monies received for subscription of the Equity Shares shall be kept by our Company in a

separate bank account with a scheduled bank and shall be utilised only for the purposes mentioned in the Preliminary

Placement Document.

Upon receipt of the application monies from the QIBs, our Company shall Allot Equity Shares as per the details in

the CANs sent to the QIBs.

After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository participant

accounts of the successful Bidders, our Company shall apply to the Stock Exchanges for listing and trading approvals

and shall also intimate the details of the Allotment to the Stock Exchanges.

After receipt of the listing approvals of the Stock Exchanges, our Company shall credit the Equity Shares Allotted

pursuant to this Issue into the Depository Participant accounts of the respective Allottees.

Our Company will then apply for the final listing and trading approvals from the Stock Exchanges.

The Equity Shares that would have been credited to the beneficiary account with the Depository Participant of the

QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of final trading and listing approvals

from the Stock Exchanges.

156

Upon receipt of intimation of final listing and trading approval from the Stock Exchanges, our Company shall inform

the Allottees of the receipt of such approval. Our Company and the Book Running Lead Manager shall not be

responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the

Stock Exchanges or any loss arising from such delay or non-receipt. Final listing and trading approvals granted by

the Stock Exchanges are also placed on their respective websites. QIBs are advised to apprise themselves of the

status of the receipt of the permissions from the Stock Exchanges or our Company.

Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations, and not otherwise excluded pursuant

to Regulation 86(1)(b) of the SEBI ICDR Regulations are eligible to invest in the Issue. Under Regulation 86(1)(b)

of the SEBI ICDR Regulations, no Allotment shall be made, either directly or indirectly, to any QIB who is a

promoter or any person related to the Promoter. Currently, the definition of a QIB includes:

i. Mutual Funds, venture capital funds and foreign venture capital funds registered with SEBI;

ii. AIFs registered with SEBI;

iii. Eligible FPIs;

iv. Public financial institutions as defined in Section 2(72) of the Companies Act, 2013;

v. Scheduled commercial banks;

vi. Multilateral and bilateral development financial institutions;

vii. State industrial development corporations;

viii. Insurance companies registered with the Insurance Regulatory and Development Authority;

ix. Provident funds with minimum corpus of ₹250,000,000;

x. Pension funds with minimum corpus of ₹250,000,000;

xi. National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the

Government of India;

xii. Insurance funds set up and managed by army, navy or air force of the Union of India;

xiii. Insurance funds set up and managed by the Department of Posts, India;

xiv. Systematically important non-banking financial companies.

FPIs (other than a sub-account which is a foreign corporate or a foreign individual) are permitted to participate in

the Issue through the Portfolio Investment Scheme and the Foreign Portfolio Investment Scheme, respectively,

subject to compliance with all applicable laws and such that the shareholding of the FPIs does not exceed specified

limits as prescribed under applicable laws in this regard.

Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which

may be specified by the Government from time to time. No single FPI or an investor group (which means the same

set of ultimate beneficial owner(s) investing through multiple entities) can hold 10% or more of our post Issue paid-

up capital. As on March 31, 2018, the aggregate FPI holding is 0.21% of our total paid up capital.

In terms of the SEBI FPI Regulations, the Equity Shares issued to a single eligible FPI or an investor group (which

means the same set of ultimate beneficial owner(s) investing through multiple entities) shall be below 10% of the

post-Issue Equity Share capital of our Company. Further, in terms of the FEMA Regulations, the total holding of

each FPI shall be below 10% of the total paid-up Equity Share capital of our Company and the total holdings of all

FPIs put together shall not exceed 24% of the paid-up Equity Share capital of our Company. The aggregate limit of

24% may be increased up to the sectoral cap by way of a resolution passed by the Board followed by a special

resolution passed by the Shareholders.

157

In terms of the FEMA Regulations, for calculating the aggregate holding of FPIs in a company, holding of all

registered FPIs shall be included.

Restriction on Allotment

Under Regulation 86(1)(b) of the SEBI ICDR Regulations, no Allotment shall be made pursuant to the Issue, either

directly or indirectly, to any QIB being, or any person related to, the Promoters. QIBs which have all or any of the

following rights shall be deemed to be persons related to the Promoters:

• rights under a shareholders’ agreement or voting agreement entered into with the Promoters or persons

related to the Promoters;

• veto rights; or

• a right to appoint any nominee director on the Board.

Provided, however, that a QIB which does not hold any shares in our Company and which has acquired the aforesaid

rights in the capacity of a lender shall not be deemed to be related to the Promoters.

Our Company and the Book Running Lead Manager and any of their affiliates, including their respective directors,

officers, counsel, advisors, representatives or agents are not liable for any amendment or modification or change to

applicable laws or regulations, which may occur after the date of this Preliminary Placement Document. QIBs are

advised to make their independent investigations and satisfy themselves that they are eligible to apply. QIBs are

advised to ensure that any single application from them does not exceed the investment limits or maximum number

of Equity Shares that can be held by them under applicable law or regulation or as specified in this Preliminary

Placement Document. Further, QIBs are required to satisfy themselves that their Bids would not eventually result in

triggering a tender offer under the Takeover Regulations.

Allotments made to FVCIs and VCFs in the Issue are subject to the rules and regulations that are applicable to each

of them respectively, including the extant RBI regulations.

Note: Affiliates or associates of the Book Running Lead Manager who are QIBs may participate in the Issue in

compliance with applicable laws.

Application Process

Bid Cum Application Form

QIBs shall only use the serially numbered Bid Cum Application Forms (which are addressed to them) supplied by

our Company and/or the Book Running Lead Manager in either electronic form or by physical delivery for the

purpose of making a Bid (including revision of a Bid) in terms of this Preliminary Placement Document.

By making a Bid (including the revision thereof) for Equity Shares through Bid Cum Application Forms and

pursuant to the terms of this Preliminary Placement Document, the QIB will be deemed to have made the following

representations and warranties and the representations, warranties and agreements made under the sections entitled

“Notice to Investors”, “Representations by Investors”, “Selling Restrictions” and “Transfer Restrictions” beginning

on pages 3, 5, 165, and 171, respectively:

1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI ICDR Regulations and is not

excluded under Regulation 86 of the SEBI ICDR Regulations, has a valid and existing registration under the

applicable laws in India (as applicable) and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or

indirectly and its Bid Cum Application Form does not directly or indirectly represent the Promoter or

Promoter Group or persons related to the Promoter;

3. The QIB confirms that it has no rights under a shareholders’ agreement or voting agreement with the Promoter

or persons related to the Promoter, no veto rights or right to appoint any nominee director on the Board other

158

than those acquired in the capacity of a lender which shall not be deemed to be a person related to the

Promoter;

4. The QIB acknowledges that it has no right to withdraw its Bid after the closure of the Bid/Issue;

5. The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one year

from Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;

6. The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further

confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable

regulations applicable to the QIB;

7. The QIB confirms that its Bids would not eventually result in triggering a tender offer under the Takeover

Regulations;

8. The QIB confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to it

pursuant to the Issue, together with other Allottees that belong to the same group or are under common

control, shall not exceed 50% of the Issue. For the purposes of this representation:

a. The expression “belongs to the same group” shall derive meaning from the concept of “companies

under the same group” as provided in sub-section (11) of Section 372 of the Companies Act, 1956;

and

b. “Control” shall have the same meaning as is assigned to it by Regulation 2(1)(c) of the Takeover

Regulations;

9. The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account maintained

with the Depository Participant until such time that the final listing and trading approvals for the Equity

Shares are issued by the Stock Exchanges.

10. The Bidder represents that it is outside the United States and is acquiring the Equity Shares in an offshore

transaction in reliance on Regulation S, meeting the requirements of Rule 903 or 904 of Regulation S and it

shall not offer, sell, pledge or otherwise transfer such Equity Shares except in an offshore transaction

complying with Regulation S or pursuant to any other available exemption from registration under the

Securities Act and in accordance with all applicable securities laws of the states of the United States and any

other jurisdiction, including India. The Bidder confirms that it has agreed to certain other representations set

forth in the Bid Cum Application Form. It also confirms all other applicable representations and warranties

included under “Representations by Investors”, “Notice to Investors”, “Selling Restrictions” and “Transfer

Restrictions” beginning on pages 5, 3, 165 and 171 respectively.

QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PAN, THEIR DEPOSITORY

PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND

BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT

THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN

WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB ACCOUNTS

OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB.

If so required by the Book Running Lead Manager, the QIB submitting a bid, along with the Bid Cum Application

Form will also have to submit requisite document(s) to the Book Running Lead Manager to evidence their status as

a QIB. If so required by the Book Running Lead Manager, Escrow Agent or any statutory or regulatory authority in

this regard, including after the Closing Date, the Bidder submitting a Bid and/ or being Allotted Equity Shares in

this Issue, will also have to submit requisite documents to fulfill the KYC norms.

Demographic details such as address and bank account will be obtained from the Depositories as per the Depository

Participant account details given above.

The submission of a Bid Cum Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for

the QIB to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding contract

on the QIB upon issuance of the CAN by our Company in favour of the QIB.

159

Bids by Mutual Funds

The bids made by the asset management companies or custodian of Mutual Funds shall specifically state the names

of the concerned schemes for which the Bids are made. Each scheme/fund of a mutual fund registered with SEBI,

will have to submit separate Application Form.

Each mutual fund will have to submit separate Application Forms for each of its participating schemes. Such

applications will not be treated as multiple bids provided that the bids clearly indicate the scheme for which the bid

has been made. However, for the purpose of calculating the number of allotters/applicants, various schemes of the

same mutual fund will be considered as a single allottee/ applicant.

Bids by Systemically Important NBFCs

In case of application made by Systemically Important NBFCs registered with the RBI (i) the certificate of

registration issued by the RBI under Section 45–IA of the RBI Act, 1934 and (ii) net worth certificate from its

statutory auditors or any independent chartered accountant based on the last audited financial statements is required

to be attached to the application.

The above information is given for the benefit of the Bidders. We and the BRLM are not liable for any amendments

or modification or changes in applicable laws or regulations, which may happen after the date of this Preliminary

Placement Document. Bidders are advised to make their independent investigations and ensure that the number of

Equity Shares Bid for do not exceed the applicable limits under the applicable laws and regulations.

Submission of Bid Cum Application Form

All Bid Cum Application Forms must be duly completed with information including the number of Equity Shares

applied for. All Bid Cum Application Forms duly completed along with payment and a copy of the PAN card or

PAN allotment letter shall be submitted to the Book Running Lead Manager either through electronic form or

through physical delivery at the following address:

Name of the

Book Running

Lead Manager

Address Contact

person

Email Phone (telephone and

fax)

ITI Capital

Limited

(formerly Inga

Capital Limited)

Naman Midtown,

21st Floor, ‘A’ Wing

Senapati Bapat Marg

Elphinstone (West)

Mumbai – 400 013

Maharashtra, India

Pranav

Mahajani

[email protected] Tel: +91 22 4031 3388

Fax: +91 22 4031 3379

The Book Running Lead Manager shall not be required to provide any written acknowledgement of the same.

Permanent Account Number or PAN

Each QIB should mention its PAN allotted under the IT Act in the Bid Cum Application Form. Applications without

this information will be considered incomplete and are liable to be rejected. QIBs should not submit the GIR number

instead of the PAN as the Bid Cum Application Form is liable to be rejected on this ground. The copy of the PAN

card or PAN allotment letter is required to be submitted with the Bid Cum Application Form.

Pricing and Allocation

Build-up of the Book

The QIBs shall submit their Bids (including the revision of bids) through the Bid Cum Application Form within the

Bidding Period to the Book Running Lead Manager. Such Bids cannot be withdrawn after the Bid/ Issue Closing

Date. The book shall be maintained by the Book Running Lead Manager.

Price discovery and Allocation

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Our Company, in consultation with the Book Running Lead Manager, shall determine the Issue Price, which shall

be at or above the Floor Price. Our Company may offer a discount of not more than 5% on the Floor Price in terms

of Regulation 85(1) of the SEBI ICDR Regulations.

After finalisation of the Issue Price, our Company shall update this Preliminary Placement Document with the Issue

details and file the same with the Stock Exchanges as the Placement Document.

Method of Allocation

Our Company shall determine the Allocation in consultation with the Book Running Lead Manager on a

discretionary basis and in compliance with Chapter VIII of the SEBI ICDR Regulations.

Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand.

The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of

10% of the Issue Size shall be undertaken subject to valid Bids being received at or above the Issue Price.

THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD

MANAGER IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS

MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE

DISCRETION OF OUR COMPANY AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF

THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE.

NEITHER OUR COMPANY NOR THE BOOK RUNNING LEAD MANAGER IS OBLIGED TO ASSIGN

ANY REASON FOR ANY NON-ALLOCATION.

All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter

shall be submitted to the Book Running Lead Manager as per the details provided in the respective CAN.

CAN

Based on the Bid Cum Application Forms received, our Company, in consultation with the Book Running Lead

Manager, in their sole and absolute discretion, decide the QIBs to whom the serially numbered CAN shall be sent,

pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable for

Allotment of such Equity Shares in their respective names shall be notified to such QIBs. Additionally, a CAN will

include details of the relevant Escrow Bank Account(s) into which such payments would need to be made, address

where the application money needs to be sent, Pay-In Date as well as the probable designated date, being the date

of credit of the Equity Shares to the respective QIB’s account.

The eligible QIBs would also be sent a serially numbered Placement Document either in electronic form or by

physical delivery along with the serially numbered CAN.

The dispatch of the serially numbered Placement Document and the serially numbered CAN to the QIBs shall be

deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the Book

Running Lead Manager and to pay the entire Issue Price for all the Equity Shares Allocated to such QIB.

QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be Allotted to

them pursuant to the Issue.

Bank Account for Payment of Application Money

Our Company has opened the “Ganesha Ecosphere Ltd-QIP Escrow Account” with the Escrow Bank in terms of

the Escrow Agreement. The QIB will be required to deposit the entire amount payable for the Equity Shares

Allocated to it by the Pay-In Date as mentioned in the respective CAN.

If the payment is not made favouring the “Ganesha Ecosphere Ltd-QIP Escrow Account” within the time stipulated

in the CAN, the Bid Cum Application Form and the CAN of the QIB are liable to be cancelled.

Our Company undertakes to utilise the amount deposited in “Ganesha Ecosphere Ltd-QIP Escrow Account” only

for the purposes of (i) adjustment against Allotment of Equity Shares in the Issue; or (ii) repayment of application

money if our Company has not been able to Allot Equity Shares in the Issue.

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In case of cancellations or default by the QIBs, our Company and the Book Running Lead Manager have the right

to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion.

Payment Instructions

The payment of application money shall be made by the QIBs in the name of “Ganesha Ecosphere Ltd-QIP Escrow

Account” as per the payment instructions provided in the CAN.

Payments are to be made only through electronic fund transfer.

Note: Payments other than through electronic transfer funds including through cheques are liable to be rejected.

Designated Date and Allotment of Equity Shares

The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the “Ganesha Ecosphere Ltd-QIP

Escrow Account” as stated above.

In accordance with the SEBI ICDR Regulations, Equity Shares will be issued, and Allotment shall be made only in

dematerialised form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they so

desire, as per the provisions of the Companies Act and the Depositories Act.

Our Company, at its sole discretion, reserve the right to cancel the Issue at any time up to Allotment without

assigning any reason whatsoever.

Post receipt of the listing approvals of the Stock Exchange, the Issuer shall credit the Equity Shares into the

Depository Participant account of the QIBs.

Following the Allotment and credit of Equity Shares into the QIBs’ Depository Participant accounts, our Company

will apply for final trading and listing approvals from the Stock Exchanges.

The Escrow Bank(s) shall release the monies lying to the credit of the Escrow Bank Account(s) to our Company

after allotment of Equity Shares to the QIBs and receipt of final listing and trading approvals from the Stock

Exchanges.

In case of QIBs who have been Allotted more than 5% of the Equity Shares in the Issue, our Company shall disclose

the name and the number of the Equity Shares Allotted to such eligible QIB to the Stock Exchanges and the Stock

Exchanges will make the same available on their website.

In the event that our Company is unable to issue and Allot the Equity Shares offered in the Issue or on cancellation

of the Issue within 60 days from the date of receipt of application money, our Company shall repay the application

money within 15 days from expiry of 60 days, failing which our Company shall repay that money with interest at

the rate of 12% per annum from expiry of the sixtieth day. The application money to be refunded by our Company

shall be refunded to the same bank account from which application money was remitted by the QIBs.

Other Instructions

Right to Reject Applications

Our Company, in consultation with the Book Running Lead Manager, may reject Bids, in part or in full, without

assigning any reason whatsoever. The decision of our Company and the Book Running Lead Manager in relation to

the rejection of Bids shall be final and binding.

Equity Shares in Dematerialised form with NSDL or CDSL

The Allotment of the Equity Shares in this Issue shall be only in dematerialised form (i.e., not in physical certificates

but be fungible and be represented by the statement issued through the electronic mode).

An eligible QIB applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary

account with a Depository Participant of either NSDL or CDSL prior to making the Bid. Allotment to a successful

eligible QIB will be credited in electronic form directly to the beneficiary account (with the Depository Participant)

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of the eligible QIB.

Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with

NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and CDSL.

The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised form only for all QIBs

in the demat segment of the respective Stock Exchanges.

Our Company will not be responsible or liable for the delay in the credit of Equity Shares to be issued pursuant to

the Issue due to errors in the Bid Cum Application Form or otherwise on part of the eligible QIBs.

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PLACEMENT AND LOCK-UP

Placement Agreement

The Book Running Lead Manager has entered into a Placement Agreement with our Company dated May 2, 2018,

pursuant to which the Book Running Lead Manager has agreed, subject to certain terms and conditions, to manage

the Issue and to act as placement agents in connection with the Issue and procure subscription for the Equity Shares

to be issued pursuant to Chapter VIII of the SEBI ICDR Regulations and the Companies Act, 2013 read with the

rules thereunder.

The Placement Agreement contains customary representations and warranties, as well as indemnities from our

Company and the Book Running Lead Manager, and it is subject to termination in accordance with the terms

contained therein.

Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on the

Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such Equity

Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the

Equity Shares will be able to sell their Equity Shares.

This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the RoC and,

no Equity Shares issued pursuant to the Issue will be offered in India or overseas to the public or any members of

the public in India or any other class of investors, other than QIBs. Our Company shall make the requisite filings

with the RoC and the SEBI within the stipulated period as required under the Companies Act, 2013 and the

Companies (Prospectus and Allotment of Securities) Rules, 2014.

The Equity Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws

in the United States and unless so registered may not be offered or sold in the United States, except pursuant to an

exemption from, or in a transaction not subject to, the registration requirements of U.S. Securities Act and applicable

U.S. state securities law. Accordingly, the Equity Shares are being offered and sold outside the United States in

reliance on Regulation S and the applicable laws of the jurisdictions where those offers, and sales are made. The

Equity Shares are transferable only in accordance with the restrictions described under the “Selling Restrictions”

and “Transfer Restrictions” on pages 165 and 171, respectively.

Affiliates of the Book Running Lead Manager may purchase the Equity Shares and be Allotted Equity Shares for

proprietary purposes and not with a view to distribute or in connection with the issuance of P-Notes. See section

“Representations by Investors” on page 5.

From time to time, the Book Running Lead Manager and its affiliates may engage in transactions with and perform

services of our Company in the ordinary course of business and have engaged, or may in the future engage, in

commercial banking and investment banking transactions with our Company or its affiliates, for which they have

received compensation and may in the future receive compensation.

Relationship with the Book Running Lead Manager

In connection with the Issue, the Book Running Lead Manager or its affiliates may, for their own accounts, subscribe

to the Equity Shares or enter into asset swaps, credit derivatives or other derivative transactions relating to the Equity

Shares to be issued pursuant to the Issue at the same time as the offer and subscription or sale of the Equity Shares,

or in secondary market transactions. As a result of such transactions, the Book Running Lead Manager may hold

long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Issue and

no specific disclosure will be made of such positions.

Affiliates of the Book Running Lead Manager may purchase the Equity Shares and be Allotted Equity Shares for

proprietary purposes and not with a view to distribute or in connection with the issuance of P-Notes. For details,

please see “Representations by Investors” on page 5.

From time to time, the Book Running Lead Manager, and its affiliates and associates have engaged in or may in the

future engage in transactions with and perform services including but not limited to investment banking, advisory,

commercial banking, trading services for our Company or shareholders, as well as to their respective associates and

affiliates, pursuant to which fees and commissions have been paid or will be paid to the Book Running Lead Manager

and its affiliates and associates.

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Lock-up

The Company has undertaken that it will not for a period of one hundred and eighty days from the date hereof

without the prior written consent of the Book Running Lead Manager, directly or indirectly, (a) offer, issue, contract

to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant any option,

right or warrant to purchase, or otherwise transfer or dispose of, any Equity Shares or any securities convertible into

or exercisable for Equity Shares (including, without limitation, securities convertible into or exercisable or

exchangeable for Equity Shares), or file any registration statement under the Securities Act, with respect to any of

the foregoing or (b) enter into any swap or other agreement or any transaction that transfers, in whole or in part,

directly or indirectly, any of the economic consequences associated with the ownership of any of the Equity Shares

or any securities convertible into or exercisable or exchangeable for Equity Shares (regardless of whether any of the

transactions described in clause (a) or (b) is to be settled by the delivery of Equity Shares or such other securities, in

cash or otherwise), or (c) deposit Equity Shares with any other depositary in connection with a depositary receipt

facility or (d) publicly announce any intention to enter into any transaction falling within (a) to (c) above or enter

into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a

sale, issue or offer or deposit of Equity Shares in any depositary receipt facility or publicly announce any intention

to enter into any transaction falling within (a) to (c) above. Provided that the foregoing restriction shall not apply to

an issuance of Equity Shares or options pursuant to any scheme formulated by the Company.

Our Promoters and Promoter Group have agreed during the period commencing on the date hereof and ending one

hundred and eighty days after the date of allotment of the Equity Shares under the Issue, agrees not to, without the

prior written permission of the Book Running Lead Manager, (a) directly or indirectly, offer, lend, sell, contract to

sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant

to purchase, or otherwise transfer or dispose of, any Equity Shares held by the Promoters and Promoter Group or

any securities convertible into or exercisable for any Equity Shares held by the Promoters and Promoter Group

(“Promoter Shares”) or file any registration statement under the Securities Act, as amended, with respect to any of

the foregoing (regardless of whether any of the transactions described in this clause (a) is to be settled by the delivery

of the Equity Shares held by the Promoters and Promoter Group or such other securities, in cash or otherwise); or

(b) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly,

any of the economic consequences associated with the ownership of any of the Equity Shares held by the Promoters

and Promoter Group or any securities convertible into or exercisable or exchangeable for any of the Promoter Shares

(regardless of whether any of the transactions described in this clause (b) is to be settled by the delivery of the

Promoter Shares or such other securities, in cash or otherwise); or (c) deposit any of the Promoter Shares with any

depositary in connection with a depositary receipt facility; or (d) publicly announce any intention to enter into any

transaction falling within (a) to (c) above or enter into any transaction (including a transaction involving derivatives)

having an economic effect similar to that of a sale or deposit of the Promoter Shares in any depositary receipt facility

or publicly announce any intention to enter into any transaction falling within (a) to (c) above, provided, however,

that the foregoing restrictions shall not apply to any sale, transfer or disposition of any of the Promoter Shares by

the undersigned with prior notice to the Book Running Lead Manager to the extent such sale, transfer or disposition

is required by Indian law.

The Promoter and Promoter Group lock-up undertaking shall be substantially in the form as mentioned in the

Placement Agreement and shall be delivered to the Book Running Lead Manager on or prior to the date of the

Placement Agreement and shall be in full force and effect on the Closing Date.

Further, in accordance with the terms of Regulation 88 of the SEBI ICDR Regulations, our Company shall not make

a subsequent QIP until expiry of six months from the date of this Issue.

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SELLING RESTRICTIONS

The distribution of this Preliminary Placement Document and the offer, sale or delivery of the Equity Shares is

restricted by law in certain jurisdictions. Persons who come into possession of this Preliminary Placement

Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to

observe such restrictions. This Preliminary Placement Document may not be used for the purpose of an offer or sale

in any circumstances in which such offer or sale is not authorized or permitted.

General

No action has been taken or will be taken in any jurisdiction by our Company or the Book Running Lead Manager

that would permit a public offering of the Equity Shares or the possession, circulation or distribution of this

Preliminary Placement Document or any other material relating to our Company or the Equity Shares in any

jurisdiction where action for such purpose is required. Accordingly, the Equity Shares may not be offered or sold,

directly or indirectly, and neither this Preliminary Placement Document nor any offering materials or advertisements

in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction except

under circumstances that will result in compliance with any applicable rules and regulations of any such country or

jurisdiction. The Issue will be made in compliance with the applicable SEBI ICDR Regulations. Each purchaser of

the Equity Shares in this Issue will be deemed to have made acknowledgments and agreements as described under

“Notice to Investors – Representations by Investors” and “Purchase and Transfer Restrictions”.

India

This Preliminary Placement Document may not be distributed, directly or indirectly, in India or to residents of India

and any Equity Shares may not be offered or sold, directly or indirectly, in India to, or for the account or benefit of,

any resident of India except as permitted by applicable Indian laws and regulations, under which an offer is strictly

on a private and confidential basis and is limited to eligible QIBs and is not an offer to the public. This Preliminary

Placement Document is neither a public issue nor a prospectus under the Companies Act or an advertisement and

should not be circulated to any person other than to whom the offer is made.

Australia

This Preliminary Placement Document and the offer of Equity Shares are only made available in Australia to persons

to whom a disclosure document is not required to be given under Chapter 6D of the Australian Corporations Act

2001 (the “Australian Corporations Act”) and has not been and will not be lodged or registered with the Australian

Securities & Investments Commission or any other regulatory body or agency in Australia. This Preliminary

Placement Document is not a prospectus, product disclosure statement or any other form of formal “disclosure

document” for the purposes of the Australian Corporations Act and is not required to, and does not, contain all the

information which would be required in a disclosure document under the Australian Corporations Act. (i) The offer

of the Equity Shares under this Preliminary Placement Document is only made to persons to whom it is lawful to

offer the Equity Shares without a disclosure document such as a professional investor or sophisticated investor for

the purposes of Chapter 6D of the Australian Corporations Act; (ii) this Preliminary Placement Document is made

available in Australia to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents

that the offeree is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia

any Equity Shares sold to the offeree within 12 months after their transfer to the offeree under this Preliminary

Placement Document.

Cayman Islands

This Preliminary Placement Document does not constitute an invitation or offer to the public in the Cayman Islands

of the Equity Shares, whether by way of sale or subscription. The Equity Shares are not offered or sold, and will not

be offered or sold, directly or indirectly, to the public in the Cayman Islands.

Dubai International Financial Centre

This Preliminary Placement Document relates to an "exempt offer" in accordance with the Dubai Financial Services

Authority (“DFSA”) Rulebook Markets Module, and which is not subject to any form of regulation or approval by

the DFSA. The DFSA has no responsibility for reviewing or verifying this Preliminary Placement Document or any

other documents in connection with this offer. Accordingly, the DFSA has not approved this Preliminary Placement

Document or any other associated documents nor taken any steps to verify the information set out in this Preliminary

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Placement Document, and has no responsibility for it. The shares to which this Preliminary Placement Document

relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers should conduct their own

due diligence on the shares. If you do not understand the contents of this document you should consult an authorised

financial adviser. This Preliminary Placement Document may only be provided to Professional Clients as defined in

the DFSA Rulebook Conduct of Business Module (“COB Module”). This offer is not directed at Retail Clients as

defined in the COB Module.

European Economic Area

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive

(each, a “Relevant Member State”), the Book Running Lead Manager has represented and warranted that it has not

made and will not make an offer to the public of any Equity Shares which are the subject of the issue of Equity

Shares contemplated by this Preliminary Placement Document in that Relevant Member State, except that the Equity

Shares may be offered to the public in that Member State at any time under the following exemptions under the

Prospectus Directive, if they have been implemented in that Relevant Member State:

1. to any legal entity which is a qualified investor, as defined in the Prospectus Directive (as defined below);

2. to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive

or supplement a prospectus pursuant to Article 16 at the Prospectus Directive), subject to obtaining the prior

consent of the Book Running Lead Manager nominated by the Company for any such offer; or

3. at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no

such offer of the Equity Shares shall result in a requirement for the publication by the Company or the Book

Running Lead Manager of a prospectus or the initial purchaser of a prospectus pursuant to Article 3 of the

Prospectus Directive and each person who initially acquires any Equity Shares or to whom any offer is made

will be deemed to have represented, acknowledged and agreed with the Book Running Lead Manager and the

Company that it is a qualified investor within the meaning of the law of the Relevant Member State implementing

Article 2(1)I of the Prospectus Directive or any measure implementing the Prospectus Directive in any Relevant

Member State.

For the purposes of this provision, the expression “an offer to the public” in relation to any securities in any Relevant

Member State means the communication in any form and by any means of sufficient information on the terms of the

offer and any securities to be offered so as to enable an investor to decide to purchase any securities, as the same

may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State

and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the

2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant

implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means

Directive 2010/73/EU.

Hong Kong

This Preliminary Placement Document has not been approved by the Securities and Futures Commission in Hong

Kong and, accordingly, (i) the Equity Shares have not been offered or sold and will not be offered or sold in Hong

Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures

Ordinance (Cap. 571) of Hong Kong (the “SFO”) and any rules made under that SFO; or (b) in other circumstances

which do not result in the document being a “prospectus” as defined in the Companies (Winding up and

Miscellaneous Provisions) Ordinance (Cap. 32) (the “CWUMPO”) of Hong Kong or which do not constitute an

offer to the public within the meaning of the CWUMPO; and (ii) the Book Running Lead Manager has not issued

or had in its possession for the purposes of the issue of Equity Shares whether in Hong Kong or elsewhere any

advertisement, invitation or document relating to the Equity Shares, which is directed at, or the contents of which

are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws

of Hong Kong), other than with respect to Equity Shares which are or are intended to be disposed of only to persons

outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under the SFO.

Japan

The Equity Shares have not been and will not be registered under the Financial Instruments and Exchange Law of

Japan (Act No. 25 of 1948, as amended; the “FIEA”) The Book Running Lead Manager has represented and agreed

that it will not offer or sell any Equity Shares, directly or indirectly, in Japan or to, or for the benefit of, any resident

167

in Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act No.

228 of 1949, as amended)), or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit

of, a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in

compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan.

Korea

The Equity Shares have not been and will not be registered under the Financial Investment Business and Capital

Markets Act of Korea and none of the Equity Shares may be offered or sold, directly or indirectly, in Korea or to

any resident of Korea or to any persons for reoffering or resale, directly or indirectly, in Korea or to any resident of

Korea (as defined under the Foreign Exchange Transaction Act of Korea and its Enforcement Decree) except

pursuant to an exemption from the registration requirements of the Financial Investment Business and Capital

Markets Act of Korea available thereunder and/or in compliance with applicable laws and regulations of Korea.

Kuwait

This Preliminary Placement Document is not for general circulation to the public in Kuwait. The Equity Shares have

not been licensed for offering in Kuwait by the Kuwait Capital Markets Authority or any other relevant Kuwaiti

government agency. The offering of the Equity Shares in Kuwait on the basis a private placement or public offering

is, therefore, restricted in accordance with Law No. 7 of 2010 and the bylaws thereto (as amended). No private or

public offering of the Equity Shares is being made in Kuwait, and no agreement relating to the sale of the Equity

Shares will be concluded in Kuwait. No marketing or solicitation or inducement activities are being used to offer or

market the Equity Shares in Kuwait.

Malaysia

No prospectus or other offering material or document in connection with the offer and sale of the Equity Shares has

been or will be registered with the Securities Commission of Malaysia pursuant to the Securities Commission Act,

1993 as the offer for purchase of, or invitation to purchase the Equity Shares is meant to qualify as an “excluded

offer or excluded invitation” within the meaning of Section 38 of the Securities Commission Act, 1993. The Book

Running Lead Manager has represented, warranted or agreed that the Equity Shares will not be offered, sold,

transferred or otherwise disposed, directly or indirectly, nor any document or other material in connection therewith

distributed, in Malaysia, other than to persons falling within any one of the categories or person specified in Schedule

2 and/or Schedule 3 of the Securities Commission Act, 1993 who are also persons to whom any offer or invitation

to purchase or sell would be an excluded offer or invitation within the meaning of Section 38 of the Securities

Commission Act, 1993.

Mauritius

The Equity Shares are not being offered to the public in Mauritius and nothing in the Preliminary Placement

Document or any information contained herein may be treated as a prospectus for the purposes of the Securities Act

2005 of Mauritius. The Mauritius Financial Services Commission (FSC) has neither reviewed nor approved the

Preliminary Placement Document and the Company does not hold any licence issued by the FSC. Accordingly, the

Preliminary Placement Document has not been registered with the FSC. Equity Shares are being offered by way of

private placement only to the person to whom such offer has been made.

Only persons licensed by the FSC as, investment dealers, investment advisers or investment bankers conducting

activities as an investment dealer or investment adviser may market and carry out any form of solicitation in

Mauritius in respect to the offer, distribution or sale of the Equity Shares. Where solicitation does not exist, a licensee

as distributors of financial products may distribute the Equity Shares. The Equity Shares may not be offered,

distributed or sold, directly or indirectly, in Mauritius, except as permitted by applicable Mauritius law, including

but not limited to Securities Act 2005 of Mauritius.

The Company has not been authorized (or recognized) and does not intend to seek authorization (or recognition)

with the FSC, and the FSC expresses no opinion as to the matters contained in the Preliminary Placement Document

and as to the merits of an investment in the Company. There is no statutory compensation scheme in Mauritius in

the event of the Company’s failure.

New Zealand

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This Preliminary Placement Document is not a prospectus. It has not been prepared or registered in accordance with

the Securities Act 1978 of New Zealand (the “New Zealand Securities Act”). This Preliminary Placement Document

is being distributed in New Zealand only to persons whose principal business is the investment of money or who, in

the course of and for the purposes of their business, habitually invest money, within the meaning of section 3(2)(a)(ii)

of the New Zealand Securities Act (“Habitual Investors”). By accepting this Preliminary Placement Document, each

investor represents and warrants that if they receive this Preliminary Placement Document in New Zealand they are

a Habitual Investor and they will not disclose this Preliminary Placement Document to any person who is not also a

Habitual Investor.

Oman

By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands,

acknowledges and agrees that this Preliminary Placement Document has not been approved by the Capital Market

Authority of Oman (the “CMA”) or any other regulatory body or authority in the Sultanate of Oman (“Oman”), nor

has the Book Running Lead Manager or any placement agent acting on its behalf received authorisation, licensing

or approval from the CMA or any other regulatory authority in Oman, to market, offer, sell, or distribute interests in

the Equity Shares within Oman.

No marketing, offering, selling or distribution of any interests in the Equity Shares has been or will be made from

within Oman and no subscription for any interests in the Equity Shares may or will be consummated within Oman.

Neither the Book Running Lead Manager nor any placement agent acting on its behalf is a company licensed by the

CMA to provide investment advisory, brokerage, or portfolio management services in Oman, nor a bank licensed

by the Central Bank of Oman to provide investment banking services in Oman. Neither the Book Running Lead

Manager nor any placement agent acting on its behalf advise persons or entities resident or based in Oman as to the

appropriateness of investing in or purchasing or selling securities or other financial products.

Nothing contained in this Preliminary Placement Document is intended to constitute Omani investment, legal, tax,

accounting or other professional advice. This Preliminary Placement Document is for your information only, and

nothing herein is intended to endorse or recommend a particular course of action. You should consult with an

appropriate professional for specific advice on the basis of your situation.

Qatar

This document does not, and is not intended to, constitute an invitation or an offer of securities in the State of Qatar

(including the Qatar Financial Centre) and accordingly should not be construed as such. The Equity Shares have not

been, and shall not be, offered, sold or delivered at any time, directly or indirectly, in the State of Qatar. Any offering

of the Equity Shares shall not constitute a public offer of securities in the State of Qatar.

By receiving this document, the person or entity to whom it has been provided to understands, acknowledges and

agrees that: (i) neither this Preliminary Placement Document nor the Equity Shares have been registered, considered,

authorized or approved by the Qatar Central Bank, the Qatar Financial Markets Authority, the Qatar Financial Centre

Regulatory Authority or any other authority or agency in the State of Qatar; (ii) neither the Company nor persons

representing the Company are authorized or licensed by the Qatar Central Bank, the Qatar Financial Markets

Authority, the Qatar Financial Centre Regulatory Authority, or any other authority or agency in the State of Qatar,

to market or sell the Equity Shares within the State of Qatar; (iii) this Preliminary Placement Document may not be

provided to any person other than the original recipient and is not for general circulation in the State of Qatar; and

(iv) no agreement relating to the sale of the Equity Shares shall be consummated within the State of Qatar.

No marketing of the Equity Shares has been or will be made from within the State of Qatar and no subscription to

the Equity Shares may or will be consummated within the State of Qatar. Any applications to invest in the Equity

Shares shall be received from outside of Qatar. This document shall not form the basis of, or be relied on in

connection with, any contract in Qatar. Neither the Company nor persons representing the Company are, by

distributing this document, advising individuals resident in the State of Qatar as to the appropriateness of investing

in or purchasing or selling securities or other financial products. Nothing contained in this document is intended to

constitute investment, legal, tax, accounting or other professional advice in, or in respect of, the State of Qatar.

Saudi Arabia

Any investor in the Kingdom of Saudi Arabia or who is a Saudi person (a “Saudi Investor”) who acquires Equity

Shares pursuant to the Issue should note that the offer of Equity Shares is an offer to “Sophisticated Investors” (as

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defined in Article 11 of the “Offer of Securities Regulations” as issued by the Board of the Capital Market Authority

resolution number 2-11-2004 dated October 4, 2004 and amended by the Board of the Capital Market Authority

resolution number 1-28-2008 dated August 18, 2008 (the “KSA Regulations”)) for the purposes of Article 9 of the

KSA Regulations. The Book Running Lead Manager has represented, warranted and agreed that the offer of the

Equity Shares will only be directed at Sophisticated Investors.

The offer of Equity Shares shall not therefore constitute a “public offer” pursuant to the KSA Regulations, but is

subject to the restrictions on secondary market activity under Article 17 of the KSA Regulations. Any Saudi Investor

who has acquired Equity Shares as a Sophisticated Investor may not offer or sell those Equity Shares to any person

unless the offer or sale is made through an authorised person appropriately licensed by the Saudi Arabian Capital

Market Authority and (i) the Equity Shares are offered or sold to a Sophisticated Investor; (ii) the price to be paid

for the Equity Shares in any one transaction is equal to or exceeds Saudi Arabian Riyal 1 million or an equivalent

amount; or (iii) the offer or sale is otherwise in compliance with Article 17 of the KSA Regulations.

Singapore

The Book Running Lead Manager has acknowledged that this Preliminary Placement Document has not been

registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Book Running Lead Manager

has represented and agreed that it has not offered or sold any Equity Shares issued pursuant to the Issue or caused

such Equity Shares to be made the subject of an invitation for subscription or purchase and will not offer or sell such

Equity Shares issued pursuant to the Issue or cause such Equity Shares to be made the subject of an invitation for

subscription or purchase, and have not circulated or distributed, nor will they circulate or distribute, this Preliminary

Placement Document or any other document or material in connection with the offer or sale, or invitation for

subscription or purchase, of such Equity Shares issued pursuant to the Issue, whether directly or indirectly, to persons

in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter

289 of Singapore (“SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section

275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to,

and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

• a corporation (which is not an accredited investor) (as defined in Section 4A of the SFA) the sole business of

which is to hold investments and the entire share capital of which is owned by one or more individuals, each of

whom is an accredited investor; or

• a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each

beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of

the SFA) of that corporation to the beneficiaries’ rights and interest (howsoever described) in that trust shall not

be transferred within 6 months after that corporation or that trust has acquired the Equity Shares pursuant to an

offer made under Section 275 except:

• to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section 275(2) of the

SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

• where no consideration is or will be given for the transfer;

• where the transfer is by operation of law;

• as specified in Section 276(7) of the SFA; or

• as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures)

Regulations 2005 of Singapore.

United Arab Emirates (excluding the Dubai International Financial Centre)

This Preliminary Placement Document is not intended to constitute an offer, sale or delivery of shares or other

securities under the laws of the United Arab Emirates (the “UAE”). The Equity Shares have not been and will not

be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and

the Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the

Abu Dhabi Securities market or with any other UAE exchange. the Issue, the Equity Shares and interests therein do

not constitute a public offer of securities in the UAE in accordance with the Commercial Companies Law, Federal

Law No. 8 of 1984 (as amended) or otherwise. This Preliminary Placement Document is strictly private and

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confidential and is being distributed to a limited number of investors and must not be provided to any person other

than the original recipient, and may not be reproduced or used for any other purpose. The interests in the Equity

Shares may not be offered or sold directly or indirectly to the public in the UAE.

By receiving this Preliminary Placement Document, the person or entity to whom this Preliminary Placement

Document has been issued understands, acknowledges and agrees that the Equity Shares have not been and will not

be offered, sold or publicly promoted or advertised in the Dubai International Financial Centre other than in

compliance with laws applicable in the Dubai International Financial Centre, governing the issue, offering or sale

of securities. The Dubai Financial Services Authority has not approved this Preliminary Placement Document nor

taken steps to verify the information set out in it, and has no responsibility for it.

United Kingdom

The Book Running Lead Manager has represented, warranted and undertaken that:

1. it has only communicated or caused to be communicated and will only communicate or cause to be

communicated in the United Kingdom any invitation or inducement to engage in investment activity (within the

meaning of section 21 of the Financial Services and Markets Act 2000 (“FSMA”) received by it in connection

with the issue or sale of any Equity Shares in circumstances in which section 21(1) of FSMA does not apply to

the Company; and

2. it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in

relation to the Equity Shares in, from or otherwise involving the United Kingdom.

United States of America

The Equity Shares offered in the Issue have not been and will not be registered under the Securities Act or any state

securities laws in the United States and may not be offered, sold or delivered in the United States except pursuant to

an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in

accordance with any applicable state securities laws. The Equity Shares are being offered and sold in the Issue only

outside the United States in accordance with Regulation S in accordance with Regulation S and the applicable laws

of the jurisdictions where those offers and sales are made. To help ensure that the offer and sale of the Equity Shares

in the Issue was made in compliance with Regulation S, each purchaser of Equity Shares in the Issue will be deemed

to have made the representations, warranties, acknowledgements and undertakings set forth in “Selling Restrictions”

and “Transfer Restrictions” on page 165 and 171, respectively.

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TRANSFER RESTRICTIONS

Investors are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of the Equity

Shares.

Due to the following restrictions, investors are advised to consult legal counsel prior to making any resale, pledge or

transfer of the Equity Shares, except if the resale of the Equity Shares is by way of a regular sale on the Stock

Exchanges.

Allottees are not permitted to sell the Equity Shares Allotted pursuant to the Issue, for a period of one year from the

date of Allotment, except on the Stock Exchanges. Allotments made to FVCIs, VCFs and AIFs in the Issue are subject

to the rules and regulations that are applicable to them, including in relation to lock-in requirements.

The Equity Shares have not been and will not be registered under the Securities Act, or any state securities laws of

the United States, and unless so registered may not be offered, sold or delivered within the United States except

pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act

and any applicable state securities laws. Accordingly, the Equity Shares are being offered, sold and delivered outside

the United States in offshore transactions in reliance on Regulation S and in compliance with the applicable laws of

each jurisdiction where those offers and sales are made.

If you purchase the Equity Shares in this Issue, by accepting delivery of this Preliminary Placement Document,

submitting a bid to purchase the Equity Shares and accepting delivery of the Equity Shares, you will be deemed to

have represented to and agreed with our Company and the Book Running Lead Manager as follows:

• you have received a copy of the Preliminary Placement Document and such other information as you deem

necessary to make an informed decision and that you are not relying on any other information or the

representation concerning the Company or the Equity Shares and neither the Company nor any other person

responsible for this document or any part of it or the Book Running Lead Manager will have any liability for any

such other information or representation;

• you are authorised to consummate the purchase of the Equity Shares in compliance with all applicable laws and

regulations;

• you will comply with all laws, regulations and restrictions (including the selling restrictions contained in this

Preliminary Placement Document) which may be applicable in your jurisdiction and you have obtained or will

obtain any consent, approval or authorization required for you to purchase and accept delivery of the Equity

Shares, and you acknowledge and agree that none of our Company, the Book Running Lead Manager or any of

their respective affiliates shall have any responsibility in this regard;

• you acknowledge (or if you are a broker-dealer acting on behalf of a customer, your customer has confirmed to

you that such customer acknowledges) that such Equity Shares have not been and will not be registered under

the Securities Act, or with any securities regulatory authority of any state of the United States, and are subject to

restrictions on transfer;

• you and the person, if any, for whose account or benefit you are acquiring the Equity Shares, were located outside

the United States at the time the buy order for the Equity Shares was originated and continue to be located outside

the United States and have not purchased the Equity Shares for the account or benefit of any person in the United

States or entered into any arrangement for the transfer of the Equity Shares or any economic interest therein to

any person in the United States;

• you are not an affiliate (as defined in Rule 405 of the Securities Act) of our Company or a person acting on behalf

of such affiliate; and you are not in the business of buying and selling securities or, if you are in such business,

you did not acquire the Equity Shares from our Company or an affiliate (as defined in Rule 405 of the Securities

Act) thereof in the initial distribution of the Equity Shares;

• you certify that either (A) you are, or at the time the Equity Shares are purchased will be, the beneficial owner

of the Equity Shares and are located outside the United States (within the meaning of Regulation S) or (B) you

are a broker-dealer acting on behalf of your customer and your customer has confirmed to you that (i) such

customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares,

and (ii) such customer is located outside the United States (within the meaning of Regulation S);

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• you are aware of the restrictions on the offer and sale of the Equity Shares pursuant to Regulation S described in

this Preliminary Placement Document and that neither the BSE nor the NSE is a “designated offshore securities

market” within the meaning of Regulation S of the Securities Act;

• the Equity Shares have not been offered to you by means of any “directed selling efforts” as defined in Regulation

S;

• you acknowledge that our Company, the Book Running Lead Manager and their respective affiliates (as defined

in Rule 405 of the Securities Act), and others will rely upon the truth and accuracy of the foregoing

acknowledgements, representations and agreements and agrees that, if any of such acknowledgements,

representations and agreements deemed to have been made by virtue of its purchase of the Equity Shares are no

longer accurate, you will promptly notify our Company and the Lead Manager, and if you are acquiring any of

the Equity Shares as a fiduciary or agent for one or more accounts, you represent that you have sole investment

discretion with respect to each such account and that you have full power to make the foregoing

acknowledgements, representations and agreements on behalf of such accounts;

• you acknowledge that the Equity Shares have not been and will not be registered under the Securities Act or the

securities law of any state of the United States and warrant to our Company, the Book Running Lead Manager

and its respective affiliates that it will not offer, sell, pledge or otherwise transfer the Equity Shares except in an

offshore transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available

exemption from registration under the Securities Act and in accordance with all applicable securities laws of the

states of the United States and any other jurisdiction, including India;

• you represent and warrant to our Company, the Book Running Lead Manager and their respective affiliates that

if it acquired any of the Equity Shares as fiduciary or agent for one or more investor accounts, it has sole

investment discretion with respect to each such account and that it has full power to make the foregoing

acknowledgments, representations and agreements on behalf of each such account;

• the Company, the Book Running Lead Manager, their respective affiliates and others will rely upon the truth and

accuracy of your representations, warranties, acknowledgements and undertakings set out in this document, each

of which is given to (a) the Book Running Lead Manager on its own behalf and on behalf of the Company, and

(b) to the Company, and each of which is irrevocable and, if any of such representations, warranties,

acknowledgements or undertakings deemed to have been made by virtue of your purchase of the Equity Shares

are no longer accurate, you will promptly notify the Company;

• you and any accounts for which you are subscribing to the Equity Shares (i) are each able to bear the economic

risk of the investment in the Equity Shares, (ii) will not look to the Company or the Book Running Lead Manager

or their respective affiliates for all or part of any such loss or losses that may be suffered, (iii) are able to sustain

a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the

investment in the Equity Shares, and (v) have no reason to anticipate any change in its or their circumstances,

financial or otherwise, which may cause or require any sale or distribution by it or them of all or any part of the

Equity Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that

the Equity Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in

this Issue for your own investment and not with a view to distribution;

• you have been provided access to this Preliminary Placement Document which you have read in its entirety;

• you are aware of the restrictions of the offer, sale and resale of the Equity Shares pursuant to Regulation S;

• you agree to indemnify and hold the Company and the Book Running Lead Manager and their respective

affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses)

arising out of or in connection with any breach of these representations and warranties. You will not hold any of

the Company or the Lead Manager and their respective affiliates liable with respect to its investment in the Equity

Shares. You agree that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares; and

• any resale or other transfer, or attempted resale or other transfer, of the Equity Shares made other than in

compliance with the above-stated restrictions will not be recognized by our Company.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the website of SEBI and the Stock

Exchanges and has not been prepared or independently verified by our Company or the Book Running Lead

Manager or any of their respective affiliates or advisors.

The Indian Securities Market

India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai.

The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the number of listed

companies, market capitalization and trading activity.

Indian Stock Exchanges

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the Ministry

of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the “SCRA”) and the

Securities Contracts (Regulation) Rules, 1957 (the “SCRR”). On June 20, 2012, SEBI, in exercise of its powers

under the SCRA and the Securities and Exchange Board of India Act, 1992, as amended from time to time (the

“SEBI Act”), notified the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)

Regulations, 2012 (the “SCR (SECC) Rules”), which regulate inter alia the recognition, ownership and internal

governance of stock exchanges and clearing corporations in India together with providing for minimum

capitalisation requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules along with

various rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock

exchanges, the qualifications for membership thereof and the manner, in which contracts are entered into, settled

and enforced between members of the stock exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and

intermediaries in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent and

unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public

companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies, buy-

backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, Mutual Funds,

FIIs, FPIs, credit rating agencies and other capital market participants have been notified by the relevant regulatory

authority.

Listing of Securities

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws including

the Companies Act, the SCRA, the SCRR, the SEBI Act, the SEBI Listing Regulations, various guidelines and

regulations issued by SEBI and the listing agreements of the respective stock exchanges. The SCRA empowers the

governing body of each recognised stock exchange to suspend trading of or withdraw admission to dealings in a

listed security for breach of or non-compliance with any conditions or breach of company’s obligations under the

listing agreement or for any reason, subject to the issuer receiving prior written notice of the intent of the exchange

and upon granting of a hearing in the matter. SEBI also has the power to amend such equity listing agreements and

bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw recognition

of a recognized stock exchange.

Delisting

SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in

relation to the voluntary and compulsory delisting of equity shares from the stock exchanges. In addition, certain

amendments to the SCRR have also been notified in relation to delisting.

SEBI Listing Regulations

Public limited companies are required under the Companies Act and the SEBI Listing Regulations to prepare, file

with the registrar of companies and circulate to their Shareholders audited annual accounts which comply with the

disclosure requirements and regulations governing their manner of presentation and which include sections relating

to corporate governance under the Companies Act, related party transactions and management’s discussion and

analysis as required under the SEBI Listing Regulations. In addition, a listed company is subject to continuing

disclosure requirements pursuant to the SEBI Listing Regulations.

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SEBI has notified the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on September 2,

2015 which replace the erstwhile listing agreements entered into with the stock exchanges. The SEBI Listing

Regulations have been structured to provide ease of reference by consolidating the listing obligations and disclosure

requirements into one single document across various types of securities listed on the stock exchanges.

Minimum Level of Public Shareholding

Under the SCRR, all listed companies (except public sector undertakings) are required to maintain a minimum public

shareholding of 25%. However, pursuant to another amendment of the SCRR in November 2014, a public company

seeking to get its securities listed shall offer and allot (i) at least 25% of the securities issued by the company if the

post issue capital is less than or equal to ₹16.00 billion, (ii) at least such percentage of the securities issued by the

company equivalent to ₹4.00 billion if the post issue capital of the company is more than ₹16.00 billion but less than

or equal to ₹40.00 billion or (iii) at least 10% the securities issued by the company, if the post issue capital of the

company is above ₹40.00 billion. In case of (ii) and (iii) above, the public shareholding is required to be increased

to 25% within a period of three years from the date of listing of the securities.

Where the public shareholding in a listed company falls below 25% at any time, such company shall bring the public

shareholding to 25% within maximum of 12 months from the date of such fall in shareholding.

Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to apply

daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index-based

market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index movement, at

10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading halt in all equity and

equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the

SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise price

bands of up to 20% movements either up or down. However, no price bands are applicable on scrips on which

derivative products are available or scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.

Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

The BSE is one of the stock exchanges in India on which the Equity Shares are listed. Established in 1875, it is the

oldest stock exchange in India. In 1956, it became the first stock exchange in India to obtain permanent recognition

from the Government under the SCRA. It has evolved over the years into its present status as one of the premier

stock exchanges of India.

NSE

The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked, screen-

based trading facilities with market-makers and electronic clearing and settlement for securities including

government securities, debentures, public sector bonds and units. It has evolved over the years into its present status

as one of the premier stock exchanges of India. The NSE was recognised as a stock exchange under the SCRA in

April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital market

(equities) segment commenced operations in November 1994 and operations in the derivatives segment commenced

in June 2000.

Internet-based Securities Trading and Services

SEBI, vide circular no. SMDRP/POLICY/CIR/6/2000, approved internet trading on January 31, 2000. Internet

trading takes place through order routing systems, which route client orders to exchange trading systems for

execution. Stock brokers interested in providing this service are required to apply for permission to the relevant

stock exchange and to comply with certain minimum conditions stipulated by SEBI and other applicable laws. The

NSE became the first exchange to grant approval to its members for providing internet-based trading services.

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Internet trading is possible on both the ‘equities’ and the ‘derivatives’ segments of the NSE.

Trading Hours

Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST

(excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on public

holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash and

derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.; and (ii)

the stock exchange has in place a risk management system and infrastructure commensurate to the trading hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (or

“BOLT”) facility in 1995. This totally automated screen-based trading in securities was put into practice nation-

wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles

and improving efficiency in Company’s office work.

NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or

“NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth in

the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads.

Takeover Regulations

Disclosure and mandatory open offer obligations for listed Indian companies are governed by the Securities and

Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the

“Takeover Regulations”) which provide specific regulations in relation to substantial acquisitions of shares and

control. The Takeover Regulations came into effect and replaced the Securities and Exchange Board of India

(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the “Takeover Code 1997”). Once the equity

shares of a company are listed on a stock exchange in India, the provisions of the Takeover Regulations will apply

to any acquisition of our company’s shares/voting rights/control. The Takeover Regulations prescribes certain

thresholds or trigger points in the shareholding a person or entity has in the listed Indian company, which give rise

to certain obligations on part of the acquirer. Acquisitions up to a certain threshold prescribed under the Takeover

Regulations mandate specific disclosure requirements, while acquisitions crossing particular thresholds may result

in the acquirer having to make an open offer of the shares of the target company. The Takeover Regulations also

provides for the possibility of indirect acquisitions, imposing specific obligations on the acquirer in case of such

indirect acquisition.

Insider Trading Regulations

The SEBI Insider Trading Regulations 2015 came into force on May 15, 2015. Under the SEBI Insider Trading

Regulations 2015 any person who is a connected person or is in possession of or having access to unpublished price

sensitive information is not permitted to (i) communicate, provide, or allow access to any unpublished price sensitive

information, relating to a company or securities listed or proposed to be listed, to any person including other insiders

except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of

legal obligations; (ii) trade in securities that are listed or proposed to be listed on a stock exchange when in possession

of unpublished price sensitive information subject to certain exceptions.

The SEBI Insider Trading Regulations 2015 has also mandated disclosures, both initial and continual disclosures,

with regard to the holdings in securities and trades carried out by the Promoter, employee, director and their

immediate relatives. The Company at its discretion may also require any other connected person or class of

connected persons to make similar disclosures.

Further, the SEBI Insider Trading Regulations 2015 has envisaged a mechanism of trading window to monitor the

trades carried out by employees of the Company, who pursuant to their role and function have access to unpublished

price sensitive information (designated person). The trading window shall remain closed when the compliance

officer of the company determines that a designated person can reasonably be expected to have possession of

unpublished price sensitive information and no trading can be carried out during this period. The SEBI Insider

Trading Regulations 2015, has also mandated preclearance of trades executed by designated persons and the

immediate relatives exceeding a certain value as prescribed by the Company in its code of conduct to regulate,

monitor and report trading.

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Further, under Section 195 of the Companies Act, 2013, no person, including any director or key managerial

personnel of a company shall enter into insider trading.

Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership details

and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, among other things, the

formation and registration of such depositories, the registration of participants as well as the rights and obligations

of the depositories, participants, companies and beneficial owners. The depository system has significantly improved

the operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February

2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA. Trading in

derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment

of an existing stock exchange. The derivatives exchange or derivatives segment of a stock exchange functions as a

self-regulatory organisation under the supervision of the SEBI.

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DESCRIPTION OF EQUITY SHARES

The following is information relating to the Equity Shares including a brief summary of the Memorandum and

Articles of Association and the Companies Act. Prospective investors are urged to read the Memorandum and

Articles of Association carefully, and consult with their advisers, as the Memorandum and Articles of Association

and applicable Indian law, and not this summary, govern the rights attached to the Equity Shares.

General

The authorized share capital of our Company is ₹555,000,000 divided into 34,000,000 equity shares of ₹10 each

and 2,150,000 Preference Shares of ₹100 each. The issued, subscribed and paid-up capital is ₹191,768,770 consisting

of 19,176,877 fully paid up equity shares of ₹10 each.

Dividends

Under Indian law, a company pays dividends upon a recommendation by its board of directors and approval by a

majority of the shareholders at the AGM held in each financial year. Under the Companies Act unless the board of

directors of a company recommends the payment of a dividend, the shareholders at a general meeting have no power

to declare any dividend. Subject to certain conditions specified under Section 123 of the Companies Act, 2013 and

the rules made there under no dividend can be declared or paid by a company for any financial year except (a) out

of the profits of the company for that year, calculated in accordance with the provisions of the Companies Act; or

(b) out of the profits of the company for any previous financial year(s) arrived at in accordance with the Companies

Act and remaining undistributed; or (c) out of both; or (d) out of money provided by the Central Government or a

state Government for payment of dividend by the Company in pursuance of a guarantee given by that Government.

Further, as per the Companies (Declaration and Payment of Dividend) Rules, 2014, in the absence of profits in any

year, company may declare dividend out of surplus, provided: (a) the rate of dividend declared shall not exceed the

average of the rates at which dividend was declared by it in the three years immediately preceding that year; (b) the

total amount to be drawn from such accumulated profits shall not exceed one-tenth of the sum of its paid up share

capital and free reserves as per the latest audited balance sheet; (c) the amount so drawn shall be first utilized to set

off the losses incurred in the financial year in which the dividend is declared before any dividend in respect of equity

shares is declared; and (d) the balance of reserves after such withdrawal shall not fall below 15% of its paid up share

capital as per the latest audited balance sheet of our company.

In terms of Section 124 of the Companies Act 2013, our Company shall credit the unclaimed dividends to the unpaid

dividend account of our Company, and any money transferred to the unclaimed dividend account of our Company

which remains unpaid and unclaimed for a period of seven years from the date they became due for payment, and

shall be transferred by our Company to the ‘Investor Education and Protection Fund’, established by the GoI, in

accordance with Section 125 of the Companies Act 2013.

The Articles of Association of our Company provide that the Board may set aside, out of the profits of the Company,

such sums as it thinks fit as a reserve or reserves which shall, at the discretion of the Board, be applied for any

purpose to which the profits of the Company may be properly applied, including provision for meeting contingencies

or for equalising dividends; and pending such application, may, at the like discretion, either be employed in the

business of the Company or be invested in such investments (other than Shares of the Company) as the Board may,

from time to time, think fit. The Board may deduct from any dividend payable to any member all sums of money, if

any, presently payable by him to the Company on account of calls or otherwise in relation to the Equity Shares of

the Company.

Capitalisation of Reserves and Issue of Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, the Companies

Act permits the board of directors of a company to issue fully paid up bonus shares to its members out of (a) the free

reserves of our company, (b) the securities premium account, or (c) the capital redemption reserve account. However,

a company may capitalize its profits or reserves for issue of fully paid up bonus shares, provided: (a) its authorized

by articles, (b) it has been, on the recommendation of the board of directors, approved by the Shareholders in a

general meeting, (c) it has not defaulted in payment of interest or principal in respect of public deposits or debt

securities issued by it, (d) it has not defaulted on payment of statutory dues, (e) there are no partly paid shares. The

issue of bonus shares once declared cannot be withdrawn.

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Any issue of bonus shares by a listed company would be subject to the SEBI ICDR Regulations. The relevant SEBI

ICDR Regulations prescribe that no company shall make a bonus issue of equity shares if it has outstanding fully or

partly convertible debt instruments at the time of making the bonus issue, unless it has made reservation of the equity

shares in the same class in favour of the holders of the outstanding convertible debt instruments in proportion to the

convertible part thereof and the equity shares reserved for the holders of fully or partly convertible debt instruments

shall be issued at the time of conversion of such convertible debt instruments on the same terms or same proportion

on which the bonds were issued. Further, for issuance of such bonus shares, a company should not have defaulted

in the payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on

redemption of such debentures. The declaration of bonus shares in lieu of a dividend cannot be made. The bonus

issuance shall be made out of free reserves built out of genuine profits or share premium collected in cash only. The

reserves created by revaluation of fixed assets cannot be capitalised. Further, a company should have sufficient

reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees, such as

contributions to provident funds, gratuities and/or bonuses.

The Articles of Association of our Company provide that the Company may resolve to apply the securities premium

account and the capital redemption reserve account or any other permissible reserve account in paying up of unissued

Equity Shares to be issued to the Shareholders of the Company as fully paid bonus shares.

Alteration of Share Capital

Subject to the provisions of the Companies Act, our Company may increase its subscribed share capital by issuing

new shares on such terms and with such rights as it, by action of its shareholders in a General Meeting, may

determine. According to Section 62 of the Companies Act, 2013 such new shares shall be offered to existing

shareholders in proportion to the paid-up share capital on those shares at that date. The offer shall be made by notice

specifying the number of shares offered and the date (being not less than 15 days and not exceeding 30 days from

the date of the offer) within which the offer, if not accepted, will be deemed to have been declined. After such date

or on receipt of earlier intimation from the persons to whom such notice is given that they decline to accept the

shares offered, the Board may dispose of the shares offered in respect of which no acceptance has been received in

a manner which shall not be disadvantageous to the shareholders of our Company. The offer is deemed to include a

right exercisable by the person concerned to renounce the shares offered to him in favour of any other person subject

to the provisions of FEMA Transfer Regulations, if applicable.

Under the provisions of Section 62(1)(c) of the Companies Act, 2013 and the Companies (Share Capital and

Debentures) Rules, 2014, new shares may be offered to any persons whether or not those persons include existing

shareholders or employees to whom shares are allotted under a scheme of employees stock options, either for cash

or for consideration other than cash, if a special resolution to that effect is passed by the Company’s shareholders in

a general meeting. Our Company may, by an ordinary resolution, from time to time, increase the authorised share

capital by such amount to be divided into shares of such amount as may be specified in the resolution. Such increase

in the share capital shall be subject to compliance with the provisions of the Companies Act and of any other laws

that may be in force.

Under the Articles of Association of our Company and subject to the provisions of the Companies Act, our Company,

by ordinary resolution, may:

(a) increase the share capital by such sum, to be divided into Shares of such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;

Provided that any consolidation and division which results in changes in the voting percentage of

Shareholders shall require applicable approvals under the Act;

(c) convert all or any of its fully paid-up Shares into stock, and reconvert that stock into fully paid-up Shares of

any denomination;

(d) sub-divide its existing Shares or any of them into Shares of smaller amount than is fixed by the

memorandum;

(e) cancel any Shares which, at the date of the passing of the resolution, have not been taken or agreed to be

taken by any Person.

Further, our Company may reduce, in any manner and in accordance with the Companies Act and the rules

prescribed thereunder, the following:

(a) its share capital; and/ or

(b) capital redemption reserve account; and/ or

(c) any securities premium account; and/or

(d) any other reserve in the nature of share capital.

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General Meetings of Shareholders

Not less than 21 days' clear notice in writing of the general meeting is to be given, but shorter notice may be given

if consent in writing is accorded by not less than 95 per cent of the members entitled to vote in case of an annual

general meeting and in case of any other general meeting, with the consent of majority in number of members

entitled to vote holding not less than 95 per cent of such part of the paid-up Share capital of our Company which

gives a right to vote at the meeting. An explanatory statement setting out the material facts concerning each item of

special business shall be annexed to every notice of a general meeting. The quorum requirements for a general

meeting are as prescribed under Section 103 of the Companies Act, 2013, and no business is to be transacted at the

general meeting unless the requisite quorum is present at the commencement of the same and throughout the

meeting. If the quorum is not present within half an hour of the time appointed for a meeting, the meeting, if

convened upon requisition by members, shall stand cancelled; but in any other case it shall stand adjourned to the

same day in the next week at the same time and place or such other time and place as the Board may determine. The

Articles of Association further provide that no business shall be transacted at any adjourned meeting other than the

business left unfinished at the meeting from which the adjournment took place.

The chairman of our Company shall be entitled to take the chair at every general meeting or, if there is no such

chairman, or if at any general meeting he is not present within fifteen minutes after the time appointed for holding

such general meeting or is unwilling to act as chairman, the Directors present shall elect one of their members to be

the chairman of the meeting. If at any meeting no director is willing to act as chairperson or if no director is present

within fifteen minutes after the time appointed for holding the meeting, the members present shall, by poll or

electronically, choose one of their members to be chairperson of the meeting. At any general meeting, unless a poll

is demanded in conformity with Section 109 of the Companies Act 2013, a declaration by the chairman that a

resolution has, on a show of hands been carried, or carried unanimously or by a particular majority or lost and an

entry to that effect in the minute book, should be conclusive evidence of the fact without proof of number or

proportion of votes recorded in favour of or against the resolution.

Voting Rights

Every member present in person shall have one vote on a show of hands, and on poll, the member present in person

or by proxy shall have one vote for each Share of our Company held by him, subject to any rights or restrictions for

the time being attached to any class or classes of Shares. Any member entitled to attend and vote at a general meeting

may do so either personally or through his constituted attorney or through another person as a proxy on his behalf,

for that meeting.

The instrument appointing a proxy is required to be lodged with the Company at least 48 hours before the time of

the meeting. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid

notwithstanding the previous death of the principal or revocation of the proxy or transfer of the share in respect of

which the vote is given provided no intimation in writing of the death, revocation or transfer shall have been received

at the registered office of our Company before the general meeting.

No member is entitled to exercise any voting rights at any meeting of our Company in respect of any shares registered

in his name on which any calls or other sums presently payable by him have not been paid or in regard to which our

Company has and has exercised any right of lien.

Directors

The Articles of Association of our Company provide that unless otherwise determined by the Company at a general

meeting, the number of directors of our Company shall not be less than three and not be more than fifteen. The

directors shall be appointed by our Company in a general meeting subject to the provisions of the Companies Act,

2013, and the Articles of Association.

The Board of Directors has the power to appoint a person as an additional Director, provided that the total number

of Directors do not exceed the maximum strength fixed by for the Board of Directors by the Articles of Association.

Such additional Director shall hold office upto the date of the next annual general meeting of our Company but shall

be eligible for re-election at such meeting. Our Articles of Association also provide that the Board of Directors shall

have the power to appoint any person to act as an alternate Director for a Director during the latter’s absence for a

period of not less than three months from India. The alternate Director shall not hold office for a period longer than

the Director in whose place such alternate Director has been appointed and shall vacate the office on the return of

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the Director.

In terms of the Companies Act, 2013, our Board is required to meet at least four times in a year not exceeding more

than 120 days between two meetings, for undertaking the business of the Company and otherwise regulate its

meetings and proceedings as it thinks fit. The quorum for a meeting of our Board is one-third of the total number of

Directors (any fraction contained in that one-third being rounded off as one) or two Directors, whichever is higher.

Transfer of Shares

The instrument of transfer of any shares in the Company shall be duly executed by or on behalf of both the transferor

and the transferee, and the transferor shall be deemed to remain a holder of the share until the name of the transferee

in entered in the register of members in respect thereof.

Our Company is required to comply with the rules, regulations and requirements of the stock exchange or the rules

made under the Companies Act, or the rules made under the Securities Contracts (Regulation) Act, 1956, as amended

(“SCRA”), or any other law or rules applicable, relating to the transfer or transmission of Shares or debentures.

Buy-back

Our Company may buy back its own shares or other specified securities subject to the provisions of the Companies

Act and any related guidelines issued in connection therewith.

Liquidation Rights

Subject to the applicable provisions of the Companies Act, 2013 and the rules prescribed thereunder, in the event

that our Company is wound up, the liquidator may, with the sanction of a special resolution of the Company and

any other sanction required by the Act, divide amongst the members, in specie or kind, the whole or any part of the

assets of the Company, whether they shall consist of property of the same kind or not. For the aforesaid purpose, the

liquidator may set such value as he deems fair upon any property to be divided as aforesaid and may determine how

such division shall be carried out as between the members or different classes of members. The liquidator may, with

the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the

contributories if he considers necessary, but so that no member shall be compelled to accept any Shares or other

securities whereon there is any liability.

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STATEMENT OF TAX BENEFITS

To,

The Board of Directors

Ganesha Ecosphere Limited

Village Raipur, Rania

Kalpi Road

Kanpur – 209 304

Uttar Pradesh, India

Re: Proposed qualified institutions placement of equity shares of face value ₹10 each (the “Equity

Shares”) of Ganesha Ecosphere Limited (the “Company”) under Chapter VIII of Securities and

Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as

amended (“SEBI ICDR Regulations”) and the Section 42 of the Companies Act, 2013 read with

Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (the “Issue”).

Dear Sir / Madam,

Please find enclosed as Annexure A the tax benefits available to the Company and its shareholders by

virtue of currently applicable statutory and/ or regulatory provisions, including, inter alia, applicable

provisions of the Income Tax Act, 1961 and the Wealth Tax Act, 1957, as amended. We draw attention

to the fact that tax changes enacted by the Finance Act 2018 have not been considered and updated in

Statement of Tax Benefits.

Several of the said possible tax benefits are dependent on the Company and its shareholders fulfilling

certain conditions as prescribed under relevant statutory and/or regulatory provisions. Hence, the ability

of the Company and its shareholders to avail of such tax benefit(s) is dependent upon the Company

fulfilling such conditions, which the Company may or may not, at its sole discretion, choose to fulfil from

time to time.

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 changing tax laws, each shareholder is advised to consult their own tax consultant with

respect to the specific tax implications arising out of their participation in the Issue.

The enclosed annexure is for your information and for inclusion in the preliminary placement document

and the placement document, as amended or supplemented thereto, which the Company intends to submit

to the Registrar of Companies and the Stock Exchange(s) or any other written material in connection with

the proposed Issue. We do not express any opinion or provide any assurance as to whether the Company

or any of its shareholders will currently, or in the future, be able to avail of any or all of the said tax

benefits.

This certificate has been issued at the request of the Company for use in connection with the Issue and

may accordingly be furnished to the Stock Exchanges or any other regulatory authorities, as required.

This certificate may be relied on by the Book Running Lead Manager, legal counsel(s) and other

intermediaries duly appointed in relation to the Issue.

For Narendra Singhania & Co.

Chartered Accountants

Firm Registration no.: 009781N

Name of Partner: Girish Singhania

Membership No.: 092687

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Place: New Delhi

Date: May 2, 2018

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ANNEXURE A

Statement of Tax Benefits available to Ganesha Ecosphere Limited and its shareholders

The information provided below sets out the possible direct tax benefits available to the shareholders of

an Indian company in a summary manner only and is not a complete analysis or listing of all potential tax

consequences of the subscription, ownership and disposal of equity shares, under the current tax laws

presently in force in India. Several of these benefits are dependent on the shareholders fulfilling the

conditions prescribed under the relevant tax laws. Hence, the ability of the shareholders to derive the tax

benefits is dependent upon fulfilling such conditions, which, based on commercial imperatives a

shareholder faces, may or may not choose to fulfill. We do not express any opinion or provide any

assurance as to whether the Company or its shareholders will continue to obtain these benefits in future.

The following overview is not exhaustive or comprehensive and is not intended to be a substitute for

professional advice.

Investors are advised to consult their own tax consultant with respect to the tax implications of an

investment in the shares 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.

Our views expressed in this statement are based on the facts and assumptions as indicated in the statement.

No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our

views are based on the existing provisions of law and its interpretation, which are subject to change from

time to time. We do not assume responsibility to update the views consequent to such changes. Reliance

on this statement is on the express understanding that we do not assume responsibility towards the

investors who may or may not invest in the proposed issue relying on this statement.

This statement has been prepared solely in connection with the offering of Equity shares by the Company

under the Securities and Exchange Board of India (“SEBI”) (Issue of Capital and Disclosure

Requirements) Regulations, 2009, as amended (the Offerings).

STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO GANESHA

ECOSPHERE LIMITED (“the Company”) AND TO ITS SHAREHOLDERS UNDER THE

INCOME TAX ACT, 1961 (“the Act”)

General tax benefits available to the Company

A. Additional Depreciation

1. Under section 32(1)(iia) of the Act, the Company (being a company engaged in the business of

manufacture or production of any article or thing or in the business of generation, transmission or

distribution of power) is entitled to claim additional depreciation of a sum equal to 20% of the actual cost

of any new machinery or plant that is acquired and installed after March 31, 2005 by the Company (other

than ships and aircrafts), subject to conditions specified in said section of the Act.

2. In case the Company sets up an undertaking or enterprise for manufacture or production of any article

or thing, on or after 1st April, 2015 in any backward area notified by the Central Government in this

behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State

of West Bengal, and acquires and installs any new machinery or plant (other than ships and aircraft) for

the purposes of the said undertaking or enterprise during the period beginning on 1st April, 2015 and

ending before the 1st April, 2020 in the said backward area, then, for the purpose of section 32(1)(iia) of

the Act the rate shall be 35% of the actual cost.

B. Investment in new plant and machinery

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3. As per section 32AD of the Act, the Company (being a company which has set up an undertaking or

enterprise for manufacture or production of any article or thing on or after 1st April, 2015 in any backward

area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of

Bihar or in the State of Telangana or in the State of West Bengal,) is entitled to a deduction of 15% of

actual cost of ‘new assets’ acquired and installed during the period beginning on 1st April 2015 and ending

before 1st April, 2020, subject to fulfillment of prescribed conditions.

C. Expenditure on scientific research

4. Under section 35(1)(ii) of the Act, the Company is entitled to weighted deduction for any sum paid to

a research association which has as its object, the undertaking of scientific research or to a university,

college or other institution to be used for scientific research to the extent of one and half times (150%) of

the sum so paid. This weighted deduction is available to amounts paid to approved research association,

university, college or institution [deduction would be restricted to 100% w.e.f 1st April 2020 i.e.

Assessment Year 2021- 22].

5. Under section 35(1)(iia) of the Act, the company is entitled for 100% deduction of any sum paid to a

company registered in India which has as its main object the conduct of scientific research and

development and is approved by the prescribed authority and fulfills such conditions as may be prescribed.

6. Under section 35(iii) of the Act, the company is entitled for 100% deduction of any sum paid to a

research association which has as its object the undertaking of research in social science or statistical

research or to a university, college or other institution to be used for research in social science or statistical

research and is approved by the prescribed authority and fulfills such conditions as may be prescribed.

7. Where the Company pays any sum to a National Laboratory or a University or an Indian Institute of

Technology or specified person referred to in section 35(2AA) of the Act with a specific direction that the

said sum shall be used for scientific research undertaken under a programme approved in this behalf by

prescribed authority, the deduction shall be allowed of a sum equal to one half times (150%) of the sum

so paid [deduction would be restricted to 100% w.e.f 1st April 2020 i.e. Assessment Year 2021-22].

8. As per section 35CCA of the Act, a deduction of the amount of expenditure incurred by way of payment

of any sum to a rural development fund or National Urban Poverty Eradication Fund set up and notified

by the Central Government in this behalf, is allowable to the Company while computing income from

profits and gains of business or profession.

9. As per section 35CCC of the Act, a deduction of a sum equal to 100% of expenditure incurred on

agriculture extension project notified by the Central Board of Direct Taxes is allowable while computing

income from profits and gains of business or profession.

10. As per section 35CCD of the Act, a weighted deduction to the extent of one and one-half times (150%)

of the amount of expenditure incurred (other than cost of land and building) on any skill development

project notified by the Board, is allowable to the company while computing income from profits and gains

of business or profession [restricted to 100% w.e.f 1st April 2020].

11. Subject to certain conditions, section 35D of the Act provides for deduction of specified preliminary

expenditure incurred before the commencement of the business or after the commencement of business

in connection with the extension of the undertaking or in connection with the setting up a new unit. The

deduction allowable is equal to one-fifth of such expenditure incurred for each of the five successive

previous years beginning with the previous year in which the business commences.

12. Under section 35DD of the Act, the Company will be entitled to a deduction equal to one fifth of the

expenditure incurred in connection with Amalgamation or Demerger of an undertaking by way of

amortization over a period of five successive previous years, beginning with the previous year in which

the amalgamation or demerger takes place.

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D. Dividends

13. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O of the

Act received on the shares of any Indian company is exempt from tax. Such dividend is to be excluded

while computing Minimum Alternate Tax (“MAT”) liability as well.

Dividend received by Indian company from specified foreign company (in which it has shareholding of

26% or more) is taxable at 15% (plus applicable surcharge, education cess and higher education cess) as

per section 115BBD of the Act.

As per section 115-O of the Act, tax on distributed profits of domestic companies is chargeable to tax at

15% (plus applicable surcharge, education cess and higher education cess). As per sub-section (1A) to

section 115-O, the domestic Company will be allowed to set-off the dividend received from its subsidiary

company during the financial year against the dividend distributed by it, while computing the Dividend

Distribution Tax (“DDT”) if:

a) the dividend is received from its domestic subsidiary and the subsidiary has paid the DDT payable on

such dividend; or

b) the dividend is received from a foreign subsidiary, the Company has paid tax payable under section

115BBD.

Further, the net distributed profits shall be increased to such amounts as would, after reduction of the tax

on such increased amounts at the specified rate, be equal to the net distributed profits.

However, the same amount of dividend shall not be taken into account for reduction more than once.

14. 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:

Such income is to be excluded while computing MAT liability as well.

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.

E. Capital gains

15. Capital assets may be categorized into short term capital assets or long term capital assets based on

the period of holding. Capital assets, being shares listed in a recognized Stock Exchange in India held for

a period of more than 12 months are considered as long term capital assets. Consequently, capital gains

arising on sale of these assets are considered as long term capital gains (“LTCG”). Capital gains arising

on sale of these assets held for 12 months or less are considered as short term capital gains (“STCG”).

16. Further, capital assets being shares of company not being a share listed in a recognized stock exchange

in India or an immovable property, being land or building or both, held for a period exceeding 24 months

would be considered as long term capital assets.

17. In respect of any other capital assets, the holding period should exceed 36 months to be considered as

long term capital assets

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18. As per section 10(38) of the Act, 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

is chargeable to securities transaction tax (“STT”) will be exempt in the hands of the Company. Such

capital gain exemption would be available without such transaction being subject to STT if such

transaction is undertaken on a recognized stock exchange located in any International Financial Services

Centre and where the consideration is paid or payable in foreign currency.

19. However, LTCG on sale of equity shares in a company, will not be exempt if the transaction of

acquisition, other than the acquisition notified by the Central Government, of such equity share has been

entered on or after 1st October 2004 and such transaction has not been chargeable to STT. Income by way

of LTCG exempt under section 10(38) of the Act shall not be excluded while computing the MAT liability.

20. As per provisions of section 48 of the Act, LTCG arising on transfer of capital assets, other than bonds

and debentures (excluding capital indexed bonds issued by the Government and sovereign gold bonds

issued by Reserve Bank of India) and depreciable assets, is computed by deducting the indexed cost of

acquisition and indexed cost of improvement from the full value of consideration

21. As per the provisions of section 50 of the Act, capital gain on the sale of an asset forming part of a

block of assets in respect of which depreciation has been allowed under this Act shall be computed by

reducing the net sales consideration from the block of asset. If the net sales consideration exceeds the

written down value of the block of assets, such excess would result in STCG. If the net sales consideration

is less than the written down value of the block of assets and the block of assets has been wiped out as a

result of sale of asset, then it would result in STCL.

22. In accordance with section 112 of the Act, LTCG to the extent not exempt under section 10(38) of the

Act would be subject to tax at the rate of 20% (plus applicable surcharge, education cess and higher

education cess) with indexation benefits. However, as per the proviso to section 112 of the Act, if the tax

on LTCG is resulting from transfer of listed securities (other than unit) or zero coupon bonds, then LTCG

will be chargeable to tax at the rate lower of the following:

a. 20% (plus applicable surcharge, education cess and higher education cess) of the capital gains as

computed after indexation of cost; or

b. 10% (plus applicable surcharge, education cess and higher education cess) of the capital gains as

computed without indexation

No deduction under Chapter VIA of the Act shall be allowed from such income.

23. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, LTCG

(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 specified asset”.

A “long term specified asset” means any bond, redeemable after three years and issued on or after 1st day

of April 2007 by the National Highways Authority of India constituted under section 3 of The National

Highways Authority of India Act, 1988 or by the Rural Electrification Corporation Limited, a company

formed and registered under the Companies Act, 1956 or any other bond notified by the Central

Government on this behalf.

The total deduction with respect to investment in the long term specified assets is restricted to Rs. 50

lakhs.

Where the “long term specified asset” are transferred or converted into money within three years from the

date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer

/conversion.

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24. Under section 54EE of the Act and subject to the conditions and to the extent specified therein, LTCG




A “long term specified asset” means a unit or units, issued before 1st April 2019, of such fund as may be

notified by the Central Government in this behalf.


lakhs.

Where the “long term specified asset” are transferred within three years from the date of their acquisition,

the amount so exempted is taxable as capital gains in the year of transfer.

25. The base year for the purpose of indexation is 1st April 2001.

26. As per section 111A of the Act, STCG arising to the Company from the sale of equity share or a unit

of an equity oriented fund, where such transaction is chargeable to STT will be taxable at the rate of 15%

(plus applicable surcharge, education cess and higher education cess). Such concessional rate would be

available without such transaction being subject to STT if such transaction is undertaken on a recognized

stock exchange located in any International Financial Services Centre and where the consideration is paid

or payable in foreign currency.

27. STCG that are not liable to STT would be subject to tax as calculated under the normal provisions of

the Act. No deduction under Chapter VIA of the Act shall be allowed from such income.

28. As per section 10(34A) of the Act, any income arising to the Company being a shareholder on account

of buy back of shares (not being shares listed on a recognized stock exchange in India) referred in section

115QA is exempt from tax.

29. As per section 50CA of the Act, where the consideration for the transfer of shares (other than a quoted

share) of a company is less than the fair market value (FMV) of the share, the FMV of the shares shall be

considered as full value consideration for the purposes of calculation of capital gains under section 48 of

the Act. Quoted share means the share quoted on any recognised stock exchange with regularity from

time to time, where the quotation of such share is based on current transaction made in the ordinary course

of business. Rule 11UA of the Income-tax Rules, 1962 ("the Rules") provides for the method for

determination of the FMV of shares.

F. Set-off and carried forward of losses

30. As per section 70 of the Act, loss in respect of short term capital asset computed for the given year is

allowed to be set off against STCG as well as LTCG computed for the said year. The balance loss, which

is not set off, is allowed to be carried forward for subsequent eight assessment years, for being set off

against subsequent years’ STCG as well as LTCG, in terms of section 74 of the Act.

31. Further, loss in respect of long term capital asset computed for a given year is allowed to be set off

only against the LTCG. The balance loss, which is not set off, is allowed to be carried forward for

subsequent eight assessment years for being set off only against subsequent years’ LTCG, in terms of

section 74 of the Act.

32. Long term capital loss arising on sale of shares entered into on a recognized stock exchange and which

are chargeable to STT, may not be allowed to be set off or carried forward for set off.

33. As per section 72 of the Act, business loss (other than loss on speculation business), if any, for an

assessment year can be carried forward and set off against business profits for eight subsequent years.

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34. Unabsorbed depreciation, if any, for an assessment year can be carried forward indefinitely and set

off against any sources of income in the same year or any subsequent assessment years as per section

32(2) of the Act subject to, the provisions of section 72(2) and section 73(3) of the Act.

G. Deductions from Gross Total Income

35. Subject to the fulfillment of prescribed conditions, the Company is entitled to claim deduction of an

amount equal to thirty per cent of additional employee cost incurred in the course of business in the

previous year, for three assessment years including the assessment year relevant to the previous year in

which such employment is provided under section 80JJAA of the Act.

36. The Company is entitled to a deduction under section 80G of the Act either for whole of the sum paid

as donation to specified funds or institution or 50% of sums paid, subject to limits and conditions as

provided therein.

H. MAT credit

37. As per section 115JAA(1A) of the Act, credit is allowed in respect of any MAT 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 MAT paid and the tax computed as per the normal provisions of

the Act for that assessment year. The MAT credit is allowed to be set-off in the subsequent years to the

extent of difference between MAT payable and the tax payable as per the normal provisions of the Act

for that assessment year.

The MAT credit shall not be allowed to be carried forward beyond fifteenth assessment year immediately

succeeding the assessment year in which tax credit become allowable.

Further, the MAT credit to the extent of difference between the foreign tax credit allowed against MAT

over such credit available against the tax under the normal provisions of the Act shall not be eligible to

be carried forward.

III. Special tax benefits available to Shareholders

I. Special tax benefits to Foreign Portfolio Investors (‘FPIs’)

38. Section 2(14) of the Act provides that any security held by a FPI who has invested in such securities

in accordance with the regulations made under Securities and Exchange Board of India Act, 1992 would

be treated as a capital asset only so that any income arising from transfer of such security by a FPI would

be treated in the nature of capital gains.

39. The provisions of indirect transfer in terms of Explanation 5 to section 9 of the Act shall not apply to

nonresident

investors in Category-I and Category-II FPI registered under Securities and Exchange Board of India

(FPI) Regulations, 2014.

40. Under section 115AD(1)(ii) of the Act, income by way of STCG arising to the FPI on transfer of

shares shall be chargeable at a rate of 30%, where such transactions are not subjected to STT, and at the

rate of 15% if such transaction of sale is entered on a recognised stock exchange in India and is chargeable

to STT.

The above rates are to be increased by applicable surcharge, education cess and higher education cess.

41. Under section 115AD(1)(iii) of the Act income by way of LTCG arising from the transfer of shares

(in cases not covered under section 10(38) of the Act) held in the company will be taxable at the rate of

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10% (plus applicable surcharge, education cess and higher education cess). The benefits of indexation of

cost and of foreign currency fluctuations are not available to FPIs.

42. 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 of the Act.

J. Special tax benefits available to venture capital companies/ funds

43. Under section 10(23FB) of the Act, any income of Venture Capital Company registered with SEBI or

Venture Capital Fund registered under the provision of the Registration Act, 1908 from investment in a

venture capital undertaking, would be exempt from income tax, subject to conditions specified therein.

(Not applicable to income of venture capital fund/company being an investment fund specified in clause

(a) of the Explanation 1 to section 115UB).

Venture capital companies / funds are defined to include only those companies / funds which have been

granted a certificate of registration, before the 21st day of May, 2012 as a venture capital fund or have

been granted a certificate of registration as venture capital fund as a sub-category of Category I Alternative

Investment Fund. Venture capital fund also includes a fund operating as a venture capital scheme made

by the Unit Trust of India established under the Unit Trust of India Act, 1963.

‘Venture capital undertaking’ means a venture capital undertaking as defined in clause (n) of regulation

2 of the Venture Capital Funds Regulations or as defined in clause (aa) of sub-regulation (1) of regulation

2 of the Alternative Investment Funds Regulations.

44. As per section 115U(1) of the Act, any income accruing/arising/received by a person from his

investment in

Venture Capital Company/Venture Capital Fund would be taxable in the hands of the person making an

investment in the same manner as if it were the income accruing/arising/received by such person had the

investments been made directly in the venture capital undertaking.

45. As per section 115U(5) of the Act, the income accruing or arising to or received by the venture capital

company/funds from investments made in a venture capital undertaking if not paid or credited to a person

(who has investments in a Venture Capital Company /Fund) shall be deemed to have been credited to the

account of the said person on the last day of the previous year in the same proportion in which such person

would have been entitled to receive the income had it been paid in the previous year.

K. Special tax benefits to Non-Resident Indians

46. 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.

47. 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, LTCG 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, education

cess and higher education cess), without any indexation benefit.

48. As per section 112(1)(c)(iii) of the Act, in case of non-residents, LTCG to the extent not exempt under

section 10(38) arising from transfer of unlisted securities or shares of the company not being the company

in which the public are substantially interested will be charged to tax at the rate of 10% (plus applicable

surcharge, education cess and higher education cess) without giving benefit of indexation or foreign

exchange fluctuations adjustments. No deduction under Chapter VIA of the Act shall be allowed from

such income.

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49. 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 or debentures 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.

50. 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. If part of such net consideration

is invested within the prescribed period of six months in any specified asset then this exemption would be

allowable on a proportionate basis. Further, if the specified asset 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 is transferred.

51. 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 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.

52. 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.

53. In a situation where the shareholder transfers the shares of the Company, which are held as ‘long-term

capital assets’ and such transaction is not covered by the provisions of section 10(38) of the Act as referred

to earlier, the shareholder can consider availing the benefit as provided in sections 54F, 54EC and 54EE

of the Act. Shareholders being individuals can consider the conditions so stated in sections 54F, 54EC

and 54EE of the Act and examine the availability of the benefit based on their individual tax position.

L. Special tax benefits available to Alternative Investment Fund (Category I and II)

54. Under section 10(23FBA), any income of an investment fund other than the income chargeable under

the head "Profits and gains of business or profession" is exempt from income tax. For this purpose, an

“Investment Fund” means a fund registered as Category I or Category II Alternative Investment Fund and

is regulated under the SEBI (Alternative Investment Fund) Regulations, 2012.

55. As per section 115UB(1) of the Act, any income accruing/arising/received by a person from his

investment in investment Fund would be taxable in the hands of the person making an investment in the

same manner as if it were the income accruing/arising/received by such person had the investments by

the investment fund been made directly by him.

56. Under section 115UB(4) of the Act, the total income of an Investment Fund would be charged at the

rate or rates as specified in the Finance Act of the relevant year where the Investment Fund is a company

or a firm and at maximum marginal rate in any other case.

57. As per section 115UB(6) of the Act, the income accruing or arising to or received by the investment

fund if not paid or credited to a person (who has investments in the investment fund) shall be deemed to

have been credited to the account of the said person on the last day of the previous year in the same

proportion in which such person would have been entitled to receive the income had it been paid in the

previous year.

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M. 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;

• Such other mutual funds set up by public sector banks or public financial institutions or authorised by

the Reserve Bank of India, subject to such conditions as the central government may, by notification

in the Official Gazette, specify in this behalf, will be exempt from income tax.

IV. General tax benefits available to Shareholders

N. Dividend

58. As per section 10(34) of the Act, any income by way of dividends referred to in section 115O received

on the shares of any Indian company is exempt from tax subject to, provisions of section 115BBDA of

the Act.

Section 115BBDA provides that where the total income of a specified assessee, resident in India, includes

any income in aggregate exceeding ten lakh rupees, by way of dividend, tax shall be calculated at the rate

of 10% (plus applicable surcharge, education cess and higher education cess) on such dividend in

aggregate exceeding ten lakh rupees.

"specified assessee" means a person other than,

(i) a domestic company; or

(ii) a fund or institution or trust or any university or other educational institution or any hospital or other

medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of

clause (23C) of section 10; or

(iii) a trust or institution registered under section 12A or section 12AA.

59. Also, section 14A of the Act restricts the claim for deduction of expenses incurred in relation to exempt

income. Thus, any expense incurred to earn exempt dividend income is not an allowable expenditure

O. Capital Gain

60. Capital assets may be categorized into short term capital assets or long term capital assets based on

the period of holding. Capital assets being securities (other than a unit) listed in a recognised Stock

Exchange in India held by the assessee for a period of more than 12 months are considered as long term

capital assets.

Consequently, capital gains arising on sale of these assets are considered as LTCG. Capital gains arising

on sale of these assets held for 12 months or less are considered as STCG.

61. As per section 10(38) of the Act, LTCG 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 recognized stock exchange

of India and is chargeable to STT, will be exempt in the hands of the shareholder.

However, LTCG on sale of equity shares in a company, will not be exempt if the transaction of acquisition,

other than the acquisition notified by the Central Government, of such equity share has been entered on

or after 1st October 2004 and such transaction has not been chargeable to STT. The CBDT has vide

Notification no. F. No. 43/2017 dated 5th June 2017 notified all transactions of acquisition of equity

shares entered into on or after 1st October 2004 which are not chargeable to STT, other than those

specifically listed in the notification.

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62. 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 or debentures 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.

63. As per second proviso to section 48 of the Act, in case of resident shareholders, LTCG arising on

transfer of capital assets, other than bonds and debentures (excluding capital indexed bonds issued by the

Government and sovereign gold bond issued by the Reserve Bank of India) and depreciable assets, is

computed by deducting the indexed cost of acquisition and indexed cost of improvement from the full

value of consideration.

64. For the purpose of computation of ‘Capital Gains’, the ‘cost of acquisition’ as provided under section

55(2)(aa) of the Act would be as under:

a. in relation to the original shares, on the basis of which the shareholder becomes entitled to the right

shares, the amount actually paid for acquiring the original shares;

b. in relation to renouncement of the right by the shareholder in favour of any person, to subscribe the

shares, the cost would be taken as Nil, in the hands of such shareholder;

c. in relation to shares which the shareholder has subscribed on the basis of the said entitlement, the

amount actually paid by him for acquiring such asset;

d. in relation to any shares purchased by any person in whose favour the right to subscribe to such asset

has been renounced, the aggregate of the amount of the purchase price paid by him to the person

renouncing such right and the amount paid by him to the Company for acquiring such shares.

65. In accordance with section 112 of the Act, LTCG to the extent not exempt under section 10(38) of the

Act would be subject to tax at the rate of 20% (plus applicable surcharge, education cess and higher

education cess) with benefit of indexation or foreign exchange fluctuations adjustments. No deduction

under Chapter VIA of the Act shall be allowed from such income.

66. As per section 112(1)(c)(iii) of the Act, in case of non-residents, LTCG to the extent not exempt under

section 10(38) arising from transfer of unlisted securities or shares of the company not being the company

in which the public are substantially interested will be charged to tax at the rate of 10% (plus applicable

surcharge, education cess and higher education cess) without giving benefit of indexation or foreign

exchange fluctuations adjustments. No deduction under Chapter VIA of the Act shall be allowed from

such income.

67. As per the proviso to section 112 of the Act, if the tax on LTCG is resulting from transfer of listed

securities (other than unit) or zero coupon bonds, then LTCG will be chargeable to tax at the rate lower

of the following:

a. 20% (plus applicable surcharge, education cess and higher education cess) of the capital gains as

computed after indexation of the cost; or

b. 10% (plus applicable surcharge, education cess and higher education cess) of the capital gains as

computed without indexation No deduction under Chapter VIA of the Act shall be allowed from such

income

68. The base year for the purpose of indexation is 1st April 2001.

69. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, LTCG


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A “long term specified asset” means any bond, redeemable after three years and issued on or after 1st day

of April 2007 by the National Highways Authority of India constituted under section 3 of The National

Highways Authority of India Act, 1988 or by the Rural Electrification Corporation Limited, a company

formed and registered under the Companies Act, 1956 or any other bond notified by the Central

Government on this behalf.


lakhs. Where the “long term specified asset” are transferred or converted into money within three years

from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer

/conversion

70. As per section 54F of the Act, LTCG (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 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.

71. As per section 54EE of the Act and subject to the conditions and to the extent specified therein, LTCG

(in case not covered under section 10(38) of the Act) arising on the transfer of any long term capital asset

would be exempt from tax, if the sale consideration is invested within six months of the transfer, in units

of a specified fund, issued before 1st April 2019 of such funds as may be notified by the Central

Government.

The total deduction with respect to investment in the long term specified assets is restricted to Rs.50 lakhs.

Further, such units need to be held for a period of three years to avail the exemption.

72. As per section 111A of the Act, STCG arising from the sale of equity shares of the company, where

such transaction is chargeable to STT, will be taxable at the rate of 15% (plus applicable surcharge,

education cess and higher education cess). Further, STCG as computed above that are not liable to STT

would be subject to tax as calculated under the normal provisions of the Act. No deduction under Chapter

VIA of the Act shall be allowed from such income.

73. No income tax is deductible at source from income by way of capital gains in case of residents.

P. Buy Back of shares

74. As per section 10(34A) of the Act, any income arising to the shareholder on account of buy back of

shares (not being shares listed on a recognized stock exchange in India) referred in section 115QA is

exempt from tax.

Q. Business Income

75. On facts of the case, where the investment in equity shares is considered as “stock-in-trade”, the

income on transfer of such equity shares would be chargeable as under the head “Profits or gains from

business or profession”.

76. Under section 36(1)(xv) of the Act, the amount of STT paid by an assessee in respect of taxable

securities transactions offered to tax as "Profits and gains of Business or profession" shall be allowable as

a deduction against such Business Income.

R. Other Income

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77. Under section 56(2)(x) of the Act and subject to exception provided therein, if any person receives

from any person, any property, including, inter alia, shares of a company, without consideration or for

inadequate consideration, the following shall be treated as 'Income from other sources' in the hands of the

recipient:

a. where the shares are received without consideration, aggregate Fair Market Value ("FMV") exceeds

Rs.50,000/-, the whole FMV;

b. where the shares are received for a consideration less than FMV but exceeding Rs. 50,000/-, the

aggregate FMV in excess of the consideration paid.

Rule 11UA of the Income-tax Rules, 1962 ("the Rules") provides for the method for determination of the

FMV of various properties.

S. Set-off and carry forward of losses

78. As per section 70 of the Act, loss in respect of short term capital asset computed for the given year is

allowed to be set off against STCG as well as LTCG computed for the said year. The balance loss, which

is not set off, is allowed to be carried forward for subsequent eight assessment years for being set off

against subsequent years’ STCG as well as LTCG, in terms of section 74 of the Act.

Further, loss in respect of long term capital asset computed for a given year is allowed to be set off only

against the LTCG. The balance loss, which is not set off, is allowed to be carried forward for subsequent

eight assessment years for being set off only against subsequent years’ LTCG, in terms of section 74 of

the Act.

Long term capital loss arising on sale of shares entered into on a recognized stock exchange and which

are chargeable to STT, may not be allowed to be set off or carried forward for set off.

79. As per section 72 of the Act, business loss (other than loss on speculation business), if any, for an

assessment year can be carried forward and set off against business profits for eight subsequent years.

NOTES:

1. The statement of tax benefits enumerated above is as per the Income-tax Act, 1961, as amended by the

Finance Act, 2017.

2. Surcharge is levied on individuals, HUF, association of persons, body of individuals and artificial

juridical person at the rate of 10% on tax where total income exceeds Rs. 50 lacs but does not exceed Rs.

1 crore and at the rate of 15% on tax where the total income exceeds Rs. 1 crore.

3. Surcharge is levied on firm, co-operative society and local authority at the rate of 12% on tax where

the total income exceeds Rs. 1 crore.

4. Surcharge is levied on domestic companies at the rate of 7% on tax where the income exceeds Rs 1

crore but does not exceed Rs. 10 crores and at the rate of 12% on tax where the income exceeds Rs. 10

crores.

5. Surcharge is levied on every company other than domestic company at the rate of 2% on tax where the

income exceeds Rs. 1 crore but does not exceed Rs. 10 crores and at the rate of 5% on tax where the

income exceeds Rs. 10 crores.

6. A 2% education cess and 1% secondary and higher education cess on income tax, inclusive of

applicable surcharge is payable by all categories of taxpayers.

7. Benefit under the Double Taxation Avoidance Agreement (“DTAA”)

a) In respect of non-residents, the tax rates and consequent taxation mentioned above will be further

subject to any benefits available under the DTAA, if any, between India and the country in which the non-

resident is considered resident in terms of such DTAA. As per the provisions of section 90(2) of the Act,

the provisions of the Act would prevail over the provisions of the DTAA to the extent they are more

beneficial to the non-resident.

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b) As per section 90(4) of the Act, the non-residents shall not be entitled to claim relief under section

90(2) of the Act, unless a certificate of their being a resident in any country outside India or specified

territory outside India, is obtained by them from the government of that country or any specified territory.

As per section 90(5) of the Act, the non-resident shall also be required to provide such other information

as mentioned in Form 10F.

8. Several of the above tax benefits are dependent on the shareholders fulfilling the conditions prescribed

under the relevant tax laws and subject to General Anti Avoidance Rules covered under Chapter X-A of

the Act.

9. This statement does not discuss any tax consequences in the country outside India of an investment in

the shares. The shareholders / investors in the country outside India are advised to consult their own

professional advisors regarding possible Income tax consequences that apply to them.

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.

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LEGAL PROCEEDINGS

Our Company is, from time to time, involved in various legal proceedings in the ordinary course of business, which

involve matters pertaining to, amongst others, civil proceedings and tax proceedings. Our Company believes that

the number of proceedings and disputes in which our Company is involved is not unusual for a Company of its size

in the context of doing business in India and in international markets. Except as stated below, our Company is not

involved in any legal proceedings and to the best of its knowledge after making due inquiries, our Company has not

omitted to disclose any legal proceedings which may have a material adverse effect on our Company or may have

a significant effect on the performance of our Company. All terms defined in a particular litigation are for that

particular litigation only.

Litigations against our Company

1. Our Company and others (“appellants”) have filed a Regular First Appeal No. 462 of 2007 before High

Court of Delhi against Harsh Narang (“respondent”) to set aside the order dated May 19, 2007 passed by

the Additional District and Sessions Judge, Delhi directing our Company to refund the security deposit of

₹400,000 to the respondent at the rate of eighteen percent per annum with effect from February 01, 1996 until

realization. The dispute pertains to non-payment of security deposit to the respondent by our Company for

the services provided as a distributor of our Company. The High Court of Delhi vide its order dated August

29, 2007 had stayed the operations of the order dated May 19, 2007 passed by the Additional District and

Sessions Judge, Delhi subject to deposit of fifty percent of the decretal amount by the appellants amounting

to ₹702,144. Aggrieved by the order of the High Court of Delhi, the appellants filed a special leave petition

before the Supreme Court of India on October 01, 2007, but the appeal was not admitted. Hence, the

appellants deposited ₹702,144 in accordance with the order of the Delhi Court dated August 29, 2007. The

matter is currently pending in High Court of Delhi.

2. Devender Singh (“applicant”) has filed an application No. 311 of 2015 before the National Green Tribunal,

New Delhi (“NGT”) on August 25, 2015 against our Company and others (“respondents”) for redressal of

grievances of the local inhabitants belonging to applicant’s constituency due to discharge of effluent from

the industries without proper treatment and prayed before NGT to pass an order to restitute the environment

and punish the respondents for polluting the environment and affecting the lives and livestock of people. The

CPCB and UPPCB have submitted several reports to the NGT mentioning therein that company is compliant

unit and have all necessary pollution controlling devices. The matter is currently pending.

3. Himanshu Chandola (“petitioner”) has filed a writ petition No. 77 of 2017 by way of public interest litigation

before the High Court of Uttarakhand, Nainital on July 05, 2017 against our Company and others

(“respondents”) alleging emission of harmful gases through boiler chimneys for discharging effluents

without proper treatment near Rudrapur District and it was prayed before the High Court of Uttarakhand to

restrain the respondents from spreading pollution in the public area by issuing a writ of mandamus against

them. The matter is currently pending.

4. GPL Polyfils Mazdoor Sangh (“appellant”) has filed the present appeal No. 1354/2010 before the High

Court of Allahabad on April 19, 2010 against the registrar of trade union of Uttar Pradesh and others

(“respondents”) for setting aside the judgement and order dated January 20, 2010 passed by District Judge,

Kanpur as it dismissed the appeal filed by the appellant’s union for registration of the appellant. The appellant

prayed before the High Court of Allahabad to direct the respondents to register the appellant’s union and

issue a certificate of registration under section 9 of the Trade Union Act, 1956 as the respondent vide order

no. 1223-27/T-2 dated June 01, 2004 cancelled the registration of certificate of the appellant’s union. The

matter is currently pending.

5. Dhaniram (“applicant”) has filed an application no. 72 of 2000/ 58 of 2010 under section 33 C(2) of Industrial

Dispute Act, 1947 before the Presiding Officer, Labour Court, Sarvodaya, Kanpur against our Company

alleging his illegal termination of services as a security supervisor/watchman of our Company. The applicant

demanded ₹136,520 to be paid by our Company and alleged that the applicant was entitled to the sum of

₹136,520 as overtime charges because such charges did not form part of his service conditions and were due

to be paid by our Company. The matter is currently pending.

6. Rajendra Prasad (“applicant”) has filed the present application no. 39 of 2013 before the Labour Court (III),

Kanpur against our Company alleging wrongful termination of his services. The applicant has prayed for

reinstatement with continuity of service and full payment of back wages for the period of unemployment

197

amounting to ₹491,035. Our Company has filed a written statement dated July 26, 2013 to the application

alleging that the termination of the applicant was made on account of misconduct and absence from duty

from April 02, 2012 and irregular presence during the period 2009-2011. The matter is currently pending.

7. Rajendra Singh (“applicant”) has filed the present application no. 98/2017 on June 1, 2017 before the

Conciliation Board, Kanpur against our Company alleging illegal termination of his services on September

12, 2016 and praying for payment of back wages quantified at ₹106,953 and reinstatement in services of our

Company. Our Company has filed a reply dated September 11, 2017 to the application alleging that the

termination was made on account of misconduct for abstaining from duty from August 12, 2016 without any

intimation. The matter is currently pending.

8. Hari Kishan Shukla (“applicant”) has filed the present application no.64 of 2016 before the Labour Court

(I), Kanpur on December 01, 2012 against our Company alleging illegal termination of his services with

effect from October 01, 2015 by our Company and praying for back wages from October 2014 quantified at

₹268,375. Our Company has filed a written statement dated May 23, 2017 before the Labour Court alleging

that it is a case of voluntary resignation of the applicant from services of our Company and not termination

of his services. The matter is currently pending.

9. Messers Globe Transport Corporation (“plaintiff”) has filed an O.S No. 632 of 2007 before the Civil Judge

(Senior Division), Kanpur Nagar on May 04, 2007 against our Company. The Plaintiff has alleged that our

Company has not made due payments for using the services of the plaintiff for transportation of goods and

claimed an amount of ₹31,800 towards pending freight charges along with an interest @ 18% per annum.

Our Company has filed a written statement stating that part payment of the amount had been made to the

manager of the plaintiff. The matter is currently pending.

10. The Oriental Insurance Company Ltd. (“appellant”) has filed the first appeal no. 2738 of 2016 on November

04, 2016 before the State Consumer Disputes Redressal Commission, Lucknow, against our Company to set

aside the award passed by the District Consumer Disputes Redressal Forum, Kanpur Nagar on May 31, 2016

awarding ₹371,417 as compensation along with interest of 8% per annum to be paid by the appellant. The

State Consumer Disputes Redressal Commission, Lucknow upheld the award dated May 31, 2016 passed by

the District Consumer Disputes Redressal Forum, Kanpur Nagar on the condition that the appellant shall

deposit the decretal amount of ₹627,827 with the District Consumer Disputes Redressal Forum, Kanpur

Nagar. The amount of ₹627,827 has been deposited with the local Court. The matter is currently pending.

11. A summon was sent to our Company by the Directorate General of Goods and Service Tax Intelligence,

Kanpur Reginal Unit (“DGCEI”) through summon no. DGCEI/KRU/CExF/02/2017/79 dated January 10,

2018, on account of contravention of provisions of Central Excise Act, 1944. Our Company has been

summoned, under section 14 of the Central Excise Act, 1944 for providing evidence/documents for the

inquiry into the tender statement and to provide month wise details of raw material received in the premises

of our Company. Our Company filed a reply to the summon alleging that it has provided the requisite details

as asked by the DGCEI and it is compliant with the Excise Rules and Regulations.

12. Our Company has filed a writ petition no. 1710 of 2008 before the High Court of Uttarakhand at Nainital

against Uttarakhand Power Corporation and others (“UPCL”) challenging the demand of ₹3,651,206 made

by UPCL demanding additional security to be paid by our Company on the basis of Electricity Regulatory

Commission (The Electricity Supply Code) Regulation, 2007. Subsequently, High Court of Uttarakhand at

Nainital passed an order dated July 19, 2017 directing our Company to deposit additional security amounting

to ₹3,651,206 by way of bank guarantee as demanded by UPCL. Aggrieved by the order dated July 19, 2017

passed by the High Court of Nainital, a special appeal has been filed by UPCL before the High Court of

Uttarakhand at Nainital against our Company on the grounds that UPCL required liquid cash to run the

corporation and additional security by way of bank guarantee would not suffice. However, the said appeal

has not been admitted by the Court. The matter is currently pending.

Litigations by our Company

1. Our Company has filed a writ petition No. 27717 of 2001 before High Court of Allahabad on July 25, 2001

against State of Uttar Pradesh and others (“respondents”) alleging wrongful deduction of recovery charges

on the total amount of ₹2,026,590 towards collection charges by the Tehsildar, District Kanpur Nagar when

only a sum of ₹702,569 was recovered by the authority. Therefore, the present writ petition has been filed

before the High Court of Allahabad. The matter is currently pending.

198

2. Our Company has filed criminal complaint no. 10225 of 2017 before Additional Civil Judge, Kanpur Nagar

on March 07, 2017 against M/s Vardhan Narrow Fab (P) Ltd. and Ors. (“opposite parties”) under section

138 of Negotiable Instrument Act, 1881. The opposite parties issued four cheques in favour of our Company

for the payment against the supply of polyester oriented yarn amounting to ₹160,000. However, when the

cheques were presented for encashment, all cheques were dishonoured. Therefore, our Company has filed

the case to prosecute and punish the respondents under section 138 of the Negotiation Instrument Act, 1881

as they have failed to make payment of outstanding dues amounting to ₹316,749. The matter is currently

pending.

3. Our Company has filed petition no. 767 of 2012 before Lok Adalat, Kanpur Dehat against M/s Bharat Sanchar

Nigam Limited and Ors. (“opposite parties”) on December 5, 2012. The dispute pertains to portability of

62 mobile phone connections purchased by our Company from the opposite parties. It has been alleged by

our Company that even after the release of mobile phone connections, our Company was not able to use the

mobile phones properly as the same were not disconnected completely by the opposite parties. Therefore, our

Company has filed the petition to direct the opposite parties to pay a sum of ₹200,000 with interest @12%

per annum for the loss suffered by our Company on account of delay in allowing the portability of mobile

numbers and non-withdrawal of complete services. The matter is currently pending.

4. Our Company has filed a consumer complaint no. 114 of 2015 before the State Consumer Disputes Redressal

Commission, Lucknow, Uttar Pradesh against M/s Elgi Electric and Industries Limited and Ors. (“opposite

parties”). The opposite parties had supplied Bobbin Transport System to our Company to improve the quality

of the products which was not found in order. Hence, our Company has filed the complaint to recover

₹5,399,792 together with pendente lite interest and 18% future interest from the opposite parties and to pay

compensation of ₹1,000,000 on account of supplying defective Bobbin Transport System. The matter is

currently pending.

5. Our Company has filed a complaint before the ACMM (III), Kanpur Nagar on November 08, 2017 under

section 138 of Negotiable Instrument Act, 1881 against M/s Banke Bihari Ji Textiles and Anr. (“opposite

parties”). The opposite parties had paid the sum of ₹531,794 in favour of our Company for the payment

against the supply of polyester thread. However, when the cheques were presented to the bank, the cheques

were dishonoured. Therefore, our Company has filed the present complaint to prosecute and punish the

respondents under section 138 of the Negotiation Instrument Act, 1881 as they have failed to make payment

of outstanding dues. The matter is currently pending.

6. Our Company has filed a consumer complaint no. 880 of 2004 before the Consumer Disputes Redressal

Forum, Kanpur Nagar, on June 15, 2004 against Wan Hai Lines Ltd. (“opposite party”). Our Company had

taken the services of the opposite party for the shipping of imported material from Dubai and delivery of the

material to ICD Kanpur/Delhi, while the goods were locally delivered at the Mumbai port and subsequently

our Company was asked to pay for the local delivery of the goods. Therefore, our Company has filed the

present complaint for realization of demurrage amount of ₹240,000 together with pendent lite interest and

18% future interest from the opposite party. The matter is currently pending.

7. Our Company (“appellant”) has filed an appeal no. 737 of 2013 before the State Consumer Disputes

Redressal Commission, U.P, Lucknow on April 08, 2013, against United India Insurance Co. Ltd.

(“respondent”), for setting aside the order dated March 05, 2013 passed by District Consumer Forum,

Kanpur Nagar in which the district court dismissed the claim of the appellant of ₹702,231 against machinery

insurance. The dispute pertains to the breakdown of the D.G Set policy obtained by the appellant from the

respondent for machinery breakdown. Aggrieved by the order of the District Consumer Forum, Kanpur

Nagar, our Company subsequently filed the present appeal in the State Consumer Dispute Redressal

Commission, U.P, Lucknow. The potential financial implication involved in the matter amounts to ₹377,000.

The matter is currently pending.

8. Our Company (“appellant”) has filed an appeal no. 736 of 2013 before the State Consumer Disputes

Redressal Commission, U.P, Lucknow on April 08, 2013 against the Oriental Insurance Co. Ltd. and Ors.

(“respondent”) for setting aside the order dated March 05, 2013 passed by the District Consumer Forum,

Kanpur Nagar which dismissed the appellants claim for recovery of insurance amount of ₹374,151 on marine

cargo insurance policy. Therefore, the present appeal has been filed before the State Consumer Disputes

Redressal Commission, U.P, Lucknow. The matter is currently pending.

199

9. Our Company has filed a complaint no. 3172 of 2014 before the court of A.C.M.M. (III), Kanpur Nagar on

July 07, 2014 under section 138 of Negotiable Instrument Act, 1881 against Reliance Rug Company and anr.

(“opposite parties”). The opposite parties had paid the sum of ₹244,644 in favour of our Company for the

payment against the supply of polyester stable fibre. However, when the cheques were presented to the bank,

the cheques were dishonoured. Therefore, our Company has filed the complaint to prosecute and punish the

opposite parties under section 138 of the Negotiation Instrument Act, 1881 as they have failed to make

payment of outstanding dues. The matter is currently pending.

10. Our Company has filed a complaint no. 1099 of 2013 before the court of A.C.M.M. (III), Kanpur Nagar on

March 17, 2013 against Vardhan Narrow Fab (P) Ltd. and others (“opposite parties”) for an amount of

₹159,967. Our Company was the supplier of certain goods to the opposite parties, the payments for which

were made by the opposite parties after a substantial delay through cheques and R.T.G.S. Out of the aforesaid

amounts, the final outstanding amount of ₹363,568 was paid through cheques which were dishonoured when

presented for encashment. Subsequently, during pendency of the complaint, the payment was made by the

opposite parties. However, the matter is currently pending.

11. Our Company has filed a complaint before A.C.M.M. Kanpur Nagar on February 06, 2018 under section 138

of the Negotiable Instruments Act, 1881 against M/s Shinga Industrial Corp and others (“opposite parties”).

The opposite parties were the supplier of electrical panel. Our Company had paid a sum of ₹60,000 as advance

against supply. However, the party failed to supply the material and returned the advance through cheques.

When the cheques were presented to the State Bank of India, Sarvodaya Nagar, Kanpur branch, the cheques

were dishonoured. Therefore, our Company has filed the present complaint to prosecute and punish the

opposite parties under section 138 of the Negotiation Instrument Act, 1881 as they have failed to make

payment of outstanding dues. The matter is currently pending.

Litigations against our Directors/ Promoters

None of our Directors are involved in any outstanding litigation as on the date of this Preliminary Placement

Document.

Other than stated, as on the date of this Preliminary Placement Document, there are no litigation or legal action

pending or taken by any ministry or government department or statutory authority against our Promoters during the

last three years and any direction issued by any such ministry or department or statutory authority upon conclusion

of such litigation or legal action.

Taxation Matters (amounts in ₹ million)

Acts material frauds committed against our Company in the last three years, if any, and if so, the action taken

by our Company

Other than as stated below, there have been no material frauds committed against our Company in the last three

years:

During the year ended March 31, 2015, our Company imported pet bottle scrap (raw material) from an overseas

supplier but during inspection of sealed containers jointly with custom authorities, gravels were found instead of pet

bottle scrap in containers. Due to this fraud, our Company suffered a loss of an amount of ₹2,644,757 on account of

Nature of tax involved Number of cases outstanding Amount involved in such proceedings

(to the extent ascertainable)

Direct tax

TDS 1 0.61

Indirect tax

Service Tax 1 0.30

VAT 1 0.12

Purchase Tax 1 2.20

Entry Tax 4 3.65

TOTAL 8 6.88

200

cost of material paid to the supplier, ocean freight and custom duty. Our Company lodged a police complaint and

final report was submitted by police without any recovery. Our Company, however recovered an amount of

₹1,200,000 from the intermediary agent.

Details of default, if any, including therein the amount involved, duration of default and present status, in

repayment

As of date of this Preliminary Placement Document, there are no outstanding default in payment of statutory dues,

repayment of debentures and interest thereon, repayment of deposits and interest thereon and repayment of loan

from any bank or financial institution and interest thereon.

Summary of reservations, emphasis of matters, qualifications or adverse remarks of auditors in the last five

financial years immediately preceding the year of circulation of this offer letter and their impact on the financial

statements and financial position of our Company and the corrective steps taken and proposed to be taken by

our Company for each of the said reservations or emphasis of matters or qualifications or adverse remark

For details regarding reservations, emphasis of matters, qualifications or adverse remarks of auditors in the last five

financial years immediately preceding the year of circulation of this offer letter, refer “Management’s Discussion and

Analysis of Financial Condition and Results of Operations – Reservations, qualifications and adverse remarks in the

last five (5) financial years” on page 90.

Other Confirmations

Other than as stated above, there are no inquiries, inspections or investigations initiated or conducted against our

Company under the Companies Act in the last three years immediately preceding the year of circulation of this PPD.

Further, there are no prosecutions filed, fines imposed or compounding of offences against our Company in the last

three years immediately preceding the year of circulation of this offer letter.

201

STATUTORY AUDITORS

M/s Narendra Singhania & Co., Chartered Accountants are the statutory auditors of our Company as required by the

Companies Act and in accordance with the guidelines issued by the ICAI. The Annual Financial Statements as of

and for the Financial Years 2017, 2016 and 2015 and the quarter ended June 30, 2017, included in this Preliminary

Placement Document have been audited by the Erstwhile Auditor. The Unaudited Interim Financial Results as of

and for the quarter and half year ended September 30, 2017 and quarter and nine months ended December 31, 2017,

included in this Preliminary Placement Document have been reviewed by M/s Narendra Singhania & Co., our

statutory auditors for Fiscal Year 2018. Our Statutory Auditor holds a valid peer review certificate issued by the

Peer Review Board of the ICAI.

Our Company has received consent from the Auditors and the Erstwhile Auditors to include their name as an expert

under Section 26(1)(a)(v) of the Companies Act, 2013 in this Preliminary Placement Document in relation to the

reports of the Auditor and statement of tax benefits dated May 2, 2018 included in this Preliminary Placement

Document. However, the term “expert” shall not be construed to mean an “expert” as defined under the Securities

Act.

202

GENERAL INFORMATION

1. Our Company was incorporated as Ganesh Polytex Limited on October 30, 1987 with the Registrar of

Companies, Uttar Pradesh at Kanpur under the provisions of Companies Act, 1956, vide registration no.

9090 of 1987. The name of our Company was changed to Ganesha Ecosphere Limited on October 7, 2011.

The CIN of our Company is L51109UP1987PLC009090. The registered office of our Company is situated

at Raipur (Rania), Kalpi Road, Kanpur Dehat – 209 304, Uttar Pradesh, India.

2. The Issue was authorised and approved by the Board of Directors on August 12, 2017 and approved by the

shareholders at the annual general meeting of our Company held on September 25, 2017.

3. Our Company has received in-principle approvals to list the Equity Shares to be issued pursuant to the

Issue, on the BSE and the NSE on May 2, 2018.

4. Copies of Memorandum and Articles of Association will be available for inspection between 11:00 am to

5:00 pm on all working days at the Registered Office.

5. Except as disclosed in this Preliminary Placement Document, our Company has obtained necessary

consents, approvals and authorisations required in connection with the Issue.

6. Except as disclosed in this Preliminary Placement Document there has been no material change in the

financial or trading position of our Company since December 31, 2017, the date of the latest limited

reviewed financial results prepared in accordance with Indian Accounting Standards included in this

Preliminary Placement Document, except as disclosed herein.

7. Except as disclosed in this Preliminary Placement Document, there are no legal or arbitration proceedings

against or affecting our Company or its assets or revenues, nor is our Company aware of any pending or

threatened legal or arbitration proceedings, which are, or might be, material in the context of the Issue.

8. M/s Mehrotra Rakesh Kumar & Co., Chartered Accountants were the statutory auditors of our Company

for the Fiscal Year 2017, 2016 and 2015 and have audited the Audited Financial Statements for the

aforementioned Financial Years which have been included in this Preliminary Placement Document and

have consented to the inclusion of their reports in relation thereto in this Preliminary Placement Document.

M/s Narendra Singhania & Co., Chartered Accountants are the present statutory auditors of our Company

and have reviewed the Unaudited Interim Financial Results for the nine-month period ended December 31,

2017 which have been included in this Preliminary Placement Document.

9. Our Company confirms that it is in compliance with the minimum public shareholding requirements as

required under Regulation 38 of the SEBI Listing Regulations.

10. The Floor Price for the Equity Shares under the Issue is ₹396.13 per Equity Share which has been calculated

in accordance with Chapter VIII of the SEBI ICDR Regulations.

11. Our Company may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85 of

the SEBI ICDR Regulations.

12. Details of Compliance Officer:

Name: Bharat Kumar Sajnani

Designation: Company Secretary and Compliance Officer

Address: 113/216B, 1st Floor, Swaroop Nagar, Kanpur

Email: [email protected]

Tel No.: 0512 – 2555504-06

Fax No.: 0512 – 2555293

203

FINANCIAL INFORMATION

S. No. Particulars Page Number

1. Independent Auditors’ Report on Audited Financial Statements for FY 2017 F - 1

2. Audited Financial Statements for FY 2017 (as per Indian GAAP) F - 10





7. Limited Review Report along with the unaudited financial results for quarter and three

months ended June 30, 2017

F - 91

8. Limited Review Report along with the unaudited financial results for quarter and half

year ended September 30, 2017

F - 95

9. Limited Review Report along with the unaudited financial results for quarter and nine

months ended December 31, 2017

F - 101

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NARENDRA SINGHANIA & CO. CHARTERED ACCOUNTANTS

Limited Review Report

Review Report to The Board of Directors of Ganesha Ecosphere Limited

We have reviewed the unaudited financial results of Ganesha Ecosphere Limited ("the Company") for the quarter and nine months ended December 31,2017 which are included in the accompanying 'Statement of Standalone Unaudited Results for the Quarter and Nine Months Ended December 31,2017' together with the notes thereon ("the Statement"). The Statement has been prepared by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015, read with SEBI Circular No. CIR/CFD/FAC/62/2016 dated July 5, 2016. The Statement is the responsibility of the Company's management and has been approved by the Board of Directors. Further, the management is also responsible to ensure that the accounting policies used in the preparation of this Statement are consistent with those used in the preparation of Company's opening unaudited Balance Sheet as at April 1, 2016 prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015, prescribed under section 133 of the Companies Act, 2013 ('IND AS') and other recognised accounting practices and policies. Our responsibility is to issue a report on the Statement based on our review.

We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of Company personnel and

'analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

Based on our review conducted as above, nothing has come to our attention that causes us to believe that the Statement, prepared in accordance with the recognition and nleasurement principles laid down in the applicable IND AS and other recognised accounting practices and policies, has not disclosed the information required to be disclosed in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with SEBI Circular No. CWCFD/FAC/62/2016 dated July 5,2016 including the manner in which it is to be disclosed, or that it contains any material misstatement.

F - 101

The unaudited financial results of the Company for the quarter and nine months ended December 3 1,2016 were reviewed by another fum of Chartered Accountants who, vide their report dated February 1, 2017 expressed an unmodified conclusion on the same. The adjustments to these unaudited financial results for the differences in accounting principles adopted by the Company on transition to the IND AS have been reviewed by us.

For Narendra Singhania & Co. Chartered Accountants Firm Registration No. 009781N

Partner Membership No.: 087931

Place: Kanpur Date: 13 February 2018

F - 102

GANESHA ECOSPHERE LTD. CIN: L51109UPl987PLC009090

Regd. Office: Raipur (Rania), Kalpi Road, Distt Kanpur Dehat (U.P.) E-mail: [email protected], Website: www.ganeshaecosphere.com

Tel. No. 0512-2754183,2555504-06, +9l 9198708383, Fax No. 0512-2555293 Statement of standalone unaudited results for the quarter and nine months ended December 31, 2017

Particulars

i Revenue from operations

(Rs. in Lakhs) Quarter ended I Nine months ended

December 31,2017 1 September 30,2017

(Unaudited)

(cost of materials consumed

December 31,2016

(Unaudited)

Ii Mher income

Ill Total income (I+II)

IV EXPENSES

/purchases of stock-in-trade

I Changes in inventories of finished goods, Sbck-in -Trade and work-in-progress

December 31,2017

18,021.79

49.34

18,071.13

Excise duty on sale of goods


F~nance msts

Depreciation and amortization expenses

Power 8 fuel

December 31,2016

16,872 74

12.26

16,885.00

IVI Exceotional Items 1 - 1 - 1 - 1 - 1 - 1

61.52

16.944.62

Other expenses

Total expenses (IV)

V Profit before exceptional items and tax (Ill-N)

I(1) Current tax

16,883.10

1,712.99

16,678.29

1,392.84

54,596.12 49,831.87

1.522.17

15,758.91

1,126.09

1,274.37

15,787.20

1,157.42

4,577.43

50,827.58

3,868.39

3,876 32

46,719.10

3,303.03

F - 103

1. The above financial results, after review by the Audit Committee, have been approve0 and taken on recom by the Boam of Drecton at ts meetlng neid on FebrLary 13, 2018. Limited review, as requ'red under Regulation 33 of tne SEBl (Lsting Obligations & Disclosure Requirements) Reg,lations, 2015 has been carried out by the Statutory Auditors.

X Other Comprehensive lncome

A (i) ltems that will not be reclassified to profit or loss

Re-measurement gains on defined benefit obligations

(ii) Income tax relating to ltems that will not be reclassified to profit or loss

B ti) ltems that will be reclassified to profit or loss

(ii) lncome tax relating to Items that will be reclassified to profit or loss

XI Total Comprehensive lncome for the period (IX + X) (Comprising Profit and Other Comprehensive Income for the period)

XI1 Paid-up equity share capital (Face value of Rs. 101-each)

Xlll Earnings per equity share (not annualized)

(1) Basic

(2) Diluted

2. The Company has adopted Indian Accounting Standards ("1ndAS")fmm April 1, 2017 and accordingly these financial results have been prepared in accordance with the rewgnition and measurement principles laid down in the lnd AS 34 "Interim Financial Reporting" prescribed under Section 133 of the Companies Act, 2013, read with the relevant rules issued thereunder. The date of transition is April 1,2016. The impact of transition has been accounted for in opening reserves and the comparative period results has been restated accordingly.

3. The format for unaudited quarterly results as prescribed in SEBl's Circular CiWCFD/CMD/15/2015 dated 30 November 2015 has been modified to comply with the requirements of SEBl's circular dated 5 July 2016, IND AS and Schedule Ill (Division 11) to the Companies Act, 2013, which are applicable to companies that are required to comply with IND AS.

0.85

926.56

1,917.69

4.83

4.83

4. The statement does not include lnd AS-compliant results for the previous year ended 31 March 2017 as the same are not mandatory as per SEBl's circular dated 5 July 2016 referred in note 3 above.

0.85

729.29

1,917.69

3.80

3.80

0.85

740.34

1.917.69

3.86

3.86

2.54

2,541.93

1,917.69

13.25

13.25

2,152.78

1.917.69

11.23

11.23

F - 104

5. The reconciliation of net profit or loss reported in accordance with lndtan GAAP to total comprehens~ve income in accordance with IN0 AS

1 December 31,2016 1 December31,2016

Net profit as per prevtous GAAP (Indian GAAP) I 777 57 1 7 1 ~ 0 4 7

(Rs. in Lakhs)

I . . . -, --

Changes consequent to IND AS adootion. net of deferred tax: I

Description

Ib) Recognition of MTM gain on forward contracts I I37 43) 1 IR 79)1

Quarter ended

- . . ~~ ~ ~~.~ I I

Nine months ended

a) Recognition of Government Grant income

c) Actuarial gain on Defined Benefit Plans reclassified to Other Comprehensive Income

3.30

e) Reciass of prior period item to opening retained earnings

lother com~rehensive income. net of lncome-tax I n ~ q I 75d 1

9.45

d) Amortisation of leasehold land 1 f0.41)l H .22)

(0.85)

0.53

.. ~ ~

I I

- -

(2.54)

g) National interest expense on loan from PICUP

6. The Company is engaged in the manufacturing of the products of same type/ class and as such there are no reportable segments as per Indian Accounting Standards for Operating Segments (Ind AS 108), prescribed under Section 133 ofthe Companies Act, 2013 read with relevant rules issued thereunder.

f) Depreciation adjustment due to reclassification of leasehold land and Government Grant for caoital emenditure

( 0 . 4 (0.33)

~, ~ ~ ~~ . ~~

I - -- .

7. The Company has expanded its plant at the Temra Unit which commenced commercial production w.e.f. 1st February. 2018. This will result in an increase in the existing Recycled Polyester Staple Fibre (RPSF) capacity by 21.000 TPA.

Net profit as per IND AS 1 739.49 1 2.150.24

Total comprehensive income for the period

8. Post the applicability of Goods a SeMces Tax (GST) Act with effect from July 1, 2017, revenue from operations is disclosed net of GST in accordance with Indian Accounting Standard - 18 and Schedule Ill to the Companies Act, 2013, whereas till June 30,2017, it included excise duty. Accordingly the revenue from operations for the quarter and nine months ended December31, 2017 is not comparable with the previous periods.

(2.42)

9. Previous periods fgures have been regrouped1 reclassified where considered necessary to conform to current period's classification/ disclosure.

(7.28)

740.34

Date: 13.02.201 8 Place: Kanpur

2,152.78

F - 105

204

DECLARATION

Our Company certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the SEBI ICDR

Regulations have been complied with and no statement made in this Preliminary Placement Document is contrary

to the same. Our Company further certifies that all the statements in this Preliminary Placement Document are true

and correct.

Signed by:

Sharad Sharma


Date: May 2, 2018

Place: Kanpur, Uttar Pradesh

205

DECLARATION

We, the Directors of the Company certify that:

(i) the Company has complied with the provisions of the Companies Act and the rules made thereunder;

(ii) the compliance with the Companies Act and the rules does not imply that payment of dividend or interest or

repayment of debentures, if applicable, is guaranteed by the Central Government;

(iii) the monies received under the offer shall be used only for the purposes and objects indicated in this


Signed by:

Sharad Sharma


I am authorized by the Capital Raising Committee vide resolution dated May 2, 2018, to sign this form and declare

that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of

this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the

attachments thereto is true, correct and complete and no information material to the subject matter of this form has

been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the

Memorandum of Association and the Articles of Association.

It is further declared and verified that all the required attachments have been completely, correctly and legibly

attached to this form.

Signed by:

Sharad Sharma


Date: May 2, 2018

Place: Kanpur, Uttar Pradesh

206

GANESHA ECOSPHERE LIMITED

CIN: L51109UP1987PLC009090

Registered Office: Raipur (Rania), Kalpi Road

Kanpur Dehat – 209 304, Uttar Pradesh, India

Tel: +91-9198708383

Website: www.ganeshaecosphere.com

DETAILS OF COMPLIANCE OFFICER

Bharat Kumar Sajnani

Company Secretary & Compliance Officer

113/216-B, Swaroop Nagar

Kanpur – 208002, Uttar Pradesh, India

Tel: +91-512-2555504-06

Fax: +91-512-2555293

Email: [email protected]

BOOK RUNNING LEAD MANAGER

ITI CAPITAL LIMITED

(Formerly Inga Capital Limited)

Naman Midtown, 21st Floor, ‘A’ Wing

Senapati Bapat Marg, Elphinstone (West)

Mumbai – 400 013, Maharashtra, India

AUDITORS TO OUR COMPANY

NARENDRA SINGHANIA & CO.

Chartered Accountants

E-22, 2nd Floor, Hauz Khas

New Delhi – 110 016, India

DOMESTIC LEGAL COUNSEL TO THE ISSUE

LINK LEGAL INDIA LAW SERVICES

Central Wing, First Floor

Thapar House, 124 Janpath

New Delhi – 110 001, India

INTERNATIONAL LEGAL COUNSEL TO THE BOOK RUNNING LEAD MANAGER

(with respect to Selling and Transfer Restrictions)

Squire Patton Boggs Singapore LLP

10 Collyer Quay, #03-01/03

Ocean Financial Centre

Singapore 049315


mailto:[email protected]

GANESHA ECOSPHERE LIMITED - BSE

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