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DRAFT RED HERRING PROSPECTUS
September 28, 2015
Please see section 32 of the Companies Act, 2013
(This Draft Red Herring Prospectus will be updated upon filing
with the RoC)
Book Built Issue
SANDHAR TECHNOLOGIES LIMITED
Sandhar Technologies Limited (“our Company”) was incorporated as
‘Sandhar Locking Devices Private Limited’ on October 19, 1987, at
New Delhi, as a private limited company under the Companies
Act, 1956. The name of our Company was changed to ‘Sandhar
Locking Devices Limited’ on conversion to a public limited company
and issuance of a fresh certificate of incorporation consequent
upon
change of name, on September 21, 1992. Subsequently, the name of
our Company was changed to ‘Sandhar Technologies Limited’ upon
issuance of a fresh certificate of incorporation consequent
upon
change of name, on November 11, 2005. For further details,
please refer to the chapter “History and Certain Corporate Matters”
on page 161.
Registered Office: C-101 A, Ansal Plaza, HUDCO Place, Khelgaon
Marg, New Delhi – 110 049, India Tel No: +91 11 4051 1800;
Corporate Office: 13, Sector - 44, Gurgaon – 122 002, Haryana,
India. Tel No: +91 124 451 8900; Fax No: +91 124 401 2845;
E-mail: [email protected]; Website: www.sandhargroup.com;
Corporate Identity Number: U74999DL1987PLC029553.
Contact Person: Mr. Arvind Joshi, Wholetime Director, Chief
Financial Officer, Company Secretary and Compliance Officer; Tel
No: +91 124 451 8900; Fax No: +91 124451 8911
PROMOTER OF OUR COMPANY: MR. JAYANT DAVAR
INITIAL PUBLIC ISSUE OF UP TO [●] EQUITY SHARES OF FACE VALUE
`10 EACH (“EQUITY SHARES”) OF SANDHAR TECHNOLOGIES LIMITED
(“COMPANY” OR “ISSUER”) FOR CASH AT A PRICE OF `[●] PER EQUITY
SHARE (INCLUDING A SHARE PREMIUM OF `[●] PER EQUITY SHARE)
AGGREGATING UP TO `[●] MILLION CONSISTING OF A FRESH ISSUE OF UP TO
[●] EQUITY SHARES BY OUR COMPANY AGGREGATING UP TO `3,000 MILLION
(“FRESH ISSUE”) AND AN OFFER FOR SALE AGGREGATING UP TO 5,115,456
EQUITY SHARES BY GTI CAPITAL BETA PVT LTD (“THE SELLING
SHAREHOLDER”) AGGREGATING UP TO `[●] MILLION (“OFFER FOR SALE”).
THE FRESH ISSUE AND THE OFFER FOR SALE ARE TOGETHER REFERRED TO AS
THE “ISSUE”. THE ISSUE WILL CONSTITUTE [●] % OF THE POST-ISSUE
PAID-UP EQUITY SHARE CAPITAL OF
OUR COMPANY.
THE FACE VALUE OF THE EQUITY SHARES IS `10 EACH. THE PRICE BAND,
DISCOUNT, IF ANY, TO RETAIL INDIVIDUAL INVESTORS AND THE MINIMUM
BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING
SHAREHOLDER IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS
(“BRLMs”) AND WILL BE ADVERTISED IN ONE ENGLISH AND ONE HINDI
NEWSPAPER,
EACH OF WIDE CIRCULATION, AT LEAST 5 (FIVE) WORKING DAYS PRIOR
TO THE BID/ ISSUE OPENING DATE. AND SHALL BE MADE AVAILABLE TO THE
BSE LIMITED
AND THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED FOR THE PURPOSE
OF UPLOADING ON THEIR WEBSITES.
In case of revision in the Price Band, the Bid / Issue Period
shall be extended for at least three Working Days after such
revision of the Price Band, subject to the Bid / Issue Period not
exceeding 10 Working Days.
Any revision in the Price Band, and the revised Bid/ Issue
Period, if applicable, shall be widely disseminated by notification
to the BSE Limited (“BSE”) and the National Stock Exchange of India
Limited
(“NSE”), by issuing a press release and also by indicating the
change on the websites of the BRLMs and at the terminals of the
Syndicate Members and by intimation to Self Certified Syndicate
Banks (“SCSBs”)
and Non-Syndicate Registered Brokers.
Pursuant to Rule 19(2)(b)(ii) of the Securities Contracts
(Regulation) Rules, 1957, as amended (the “SCRR”), the Equity
Shares issued in this Issue shall aggregate to at least such
percentage of the post-Issue
Equity Share capital of our Company, calculated at the Issue
Price, that will be equivalent to at least `4,000 million and the
post-Issue capital of our Company at the Issue Price is more than
`16,000 million but less than or equal to `40,000 million. In the
event the post-Issue Equity Share capital of our Company calculated
at the Issue Price is lesser than or equal to `16,000 million, the
Issue will be deemed to be undertaken in terms of Rule 19(2)(b)(i)
of the SCRR. The Issue is being made through the Book Building
Process in accordance with the Securities and Exchange Board of
India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, as amended (“SEBI ICDR
Regulations”), where in terms of Regulations 26 (1), 50% of the
Issue shall be allocated on a proportionate basis to Qualified
Institutional Buyers
(“QIBs”). Our Company may, in consultation with the BRLMs,
allocate up to 60% of the QIB Portion to Anchor Investors (the
“Anchor Investor Portion”) at the Anchor Investor Allocation Price,
on a
discretionary basis, out of which at least one-third will be
available for allocation to domestic Mutual Funds only. In the
event of under-subscription or non-allocation in the Anchor
Investor Portion, the balance
Equity Shares shall be added to the Net QIB Portion. Such number
of Equity Shares representing 5% of the Net QIB Portion shall be
available for allocation on a proportionate basis to Mutual Funds
only, and the
remaining Net QIB Portion shall be available for allocation on a
proportionate basis to all QIBs, including Mutual Funds, subject to
valid Bids being received at or above Issue Price. Further not less
than 15% of
the Issue shall be available for allocation on a proportionate
basis to Non-Institutional Bidders and not less than 35% of the
Issue shall be available for allocation to Retail Individual
Bidders, subject to valid Bids
being received from them at or above the Issue Price such that
subject to availability of Equity Shares, each Retail Individual
Bidder shall be Allotted not less than the minimum Bid Lot, and the
remaining Equity
Shares, if available, shall be allotted to all Retail Individual
Bidders on a proportionate basis. All QIBs (other than Anchor
Investors) and Non-Institutional Investors must compulsorily and
Retail Individual
Bidders may optionally participate in this Issue though the ASBA
process by providing the details of their respective bank accounts
in which the corresponding Bid Amounts will be blocked by the
SCSBs.
RISKS IN RELATION TO THE FIRST ISSUE
This being the first public issue of Equity Shares of our
Company, there has been no formal market for our Equity Shares. The
Face Value of the Equity Shares is `10 and the Floor Price is []
times of the Face Value and the Cap Price is [] times of the Face
Value. The Issue Price# (as determined and justified by our Company
and the Selling Shareholder, in consultation with the BRLMs as
stated in the chapter “Basis
for Issue Price” on page 99 should not be taken to be indicative
of the market price of the Equity Shares after the Equity Shares
are listed. No assurance can be given regarding an active and / or
sustained trading
in the Equity Shares of our Company or regarding the price at
which the Equity Shares will be traded after listing.
GENERAL RISKS
Investment in equity and equity related securities involves a
degree of risk and investors should not invest any funds in this
Issue unless they can afford to take the risk of losing their
investment. Investors are
advised to read the Risk Factors carefully before taking an
investment decision in this Issue. For taking an investment
decision, investors must rely on their own examination of our
Company and the Issue including
the risks involved. The Equity Shares offered in the Issue have
not been recommended or approved by the Securities and Exchange
Board of India (“SEBI”) nor does SEBI guarantee the accuracy or
adequacy of
this Draft Red Herring Prospectus. Specific attention of the
investors is invited to the chapter “Risk Factors” beginning on
page 16.
ISSUER’S AND THE SELLING SHAREHOLDER’S ABSOLUTE
RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts
responsibility for and confirms that this Draft Red Herring
Prospectus contains all information with regard to our Company and
the Issue, which is
material in the context of this Issue; that the information
contained in this Draft Red Herring Prospectus is true and correct
in all material aspects and is not misleading in any material
respect; that the opinions
and intentions expressed herein are honestly held; and that
there are no other facts, the omission of which makes this Draft
Red Herring Prospectus as a whole or any of such information or the
expression of any
such opinions or intentions misleading in any material
respect.
The Selling Shareholder accepts responsibility only for
statements in this Draft Red Herring Prospectus in relation to
itself and the Equity Shares being sold by it through the Offer for
Sale. The Selling Shareholder
does not assume any responsibility for any other statement in
this Draft Red Herring Prospectus, including without limitation,
any and all of the statements made by or relating to our Company or
its business.
LISTING
The Equity Shares offered through this Draft Red Herring
Prospectus are proposed to be listed on the BSE and the NSE. The
in-principle approvals of the Stock Exchanges for listing the
Equity Shares have been
received pursuant to letter no. [●] dated [●] and letter no. [●]
dated [●], respectively. For the purpose of this Issue, [●] shall
be the Designated Stock Exchange.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
ICICI Securities Limited ICICI Centre,
H.T. Parekh Marg, Churchgate,
Mumbai – 400 020,
Maharashtra, India.
Tel: +91 22 2288 2460
Fax: +91 22 2282 6580
Email: [email protected]
Website: www.icicisecurities.com
Investor grievance email:
[email protected]
Contact Person: Mr. Ayush Jain/ Mr.
Vishal Kanjani
SEBI Regn. No.: MB/INM000011179
IDFC Securities Limited
Naman Chambers, C-32,
“G” Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051,
Maharashtra, India.
Tel: +91 22 6622 2600
Fax: +91 22 6622 2501
Email: [email protected]
Website: www.idfccapital.com
Investor grievance email:
[email protected]
Contact Person: Mr. Akshay Bhandari
SEBI Regn. No.: MB/INM000011336
IIFL Holdings Limited 8th Floor, IIFL Centre, Kamala City,
Senapati Bapat Marg, Lower Parel (West),
Mumbai – 400 013,
Maharashtra, India.
Tel: +91 22 4646 4600
Fax: +91 22 2493 1073
Email: [email protected]
Website: www.iiflcap.com
Investor grievance email:
[email protected]
Contact Person: Mr. Gururaj Sundaram/
Mr. Kunur Bavishi
SEBI Regn. No.: MB/INM000010940
Jefferies India Private Limited
42/43, 2 North Avenue, Maker Maxity,
Bandra Kurla Complex,
Bandra (East),
Mumbai – 400 051,
Maharashtra, India.
Tel: +91 22 4356 6000
Fax: +91 22 6765 5595
Email: [email protected]
Website: www.jefferies.com
Investor grievance email:
[email protected]
Contact Person: Mr. Ranjan Prabhu
SEBI Regn. No.: MB/INM000011443
Link Intime India Private Limited C-13, Pannalal Silk Mills
Compound,
L.B.S. Marg Bhandup (West),
Mumbai – 400 078,
Maharashtra, India.
Tel: +91 22 6171 5400
Fax: +91 22 2596 0329
Email: [email protected]
Investor grievance e-mail:
[email protected]
Website: www.linkintime.co.in
Mobile App -blink
Contact Person: Ms. Shanti
Gopalkrishnan
SEBI Regn. Number: INR000004058
BID/ISSUE PROGRAMME#
FOR ALL BIDDERS: ISSUE OPENS ON*: [●]
FOR QIBS: ISSUE CLOSES ON**: [●]
FOR RETAIL AND NON-INSTITUTIONAL BIDDERS: ISSUE CLOSES ON: [●] #
Our Company and the Selling Shareholder, in consultation with the
BRLMs, may offer a discount of up to [●]% (equivalent of `[●]) on
the Issue Price to Retail Individual Investors. *Our Company and
the Selling Shareholder may, in consultation with the BRLMs,
consider participation by Anchor Investors. The Anchor Investor
shall bid on the Anchor Investor Bidding Date i.e. one Working
Day prior to the Bid / Issue Opening Date.
** Our Company and the Selling Shareholder may, in consultation
with the BRLMs, consider closing the Bidding by QIB Bidders one
Working Day prior to the Bid / Issue Closing Date in accordance
with the SEBI
ICDR Regulations.
http://www.jefferies.com/
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Sandhar Technologies Limited
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TABLE OF CONTENTS
SECTION I: GENERAL
......................................................................................................................................
2
DEFINITIONS AND ABBREVIATIONS
.....................................................................................................
2 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
............................................. 12 FORWARD LOOKING
STATEMENTS
...................................................................................................
15
SECTION II: RISK FACTORS
........................................................................................................................
16
SECTION III: INTRODUCTION
....................................................................................................................
40
SUMMARY OF INDUSTRY
.......................................................................................................................
40 SUMMARY OF OUR BUSINESS
...............................................................................................................
46 SUMMARY FINANCIAL INFORMATION
.............................................................................................
52 THE ISSUE
....................................................................................................................................................
61 GENERAL INFORMATION
......................................................................................................................
62 CAPITAL STRUCTURE
.............................................................................................................................
73
SECTION IV: PARTICULARS OF THE OFFER
.........................................................................................
87
OBJECTS OF THE ISSUE
..........................................................................................................................
87 BASIS FOR ISSUE PRICE
..........................................................................................................................
99 STATEMENT OF TAX BENEFITS
.........................................................................................................
102
SECTION V: ABOUT THE COMPANY
.......................................................................................................
116
INDUSTRY OVERVIEW
..........................................................................................................................
116 OUR BUSINESS
.........................................................................................................................................
135 KEY INDUSTRY REGULATIONS AND POLICIES
.............................................................................
155 HISTORY AND CERTAIN CORPORATE MATTERS
.........................................................................
161 OUR SUBSIDIARIES AND JOINT VENTURES
....................................................................................
169 OUR MANAGEMENT
...............................................................................................................................
174 OUR PROMOTER, PROMOTER GROUP AND GROUP COMPANIES
........................................... 191 DIVIDEND POLICY
..................................................................................................................................
199
SECTION VI: FINANCIAL INFORMATION
.............................................................................................
200
FINANCIAL STATEMENTS
....................................................................................................................
200 RELATED PARTY TRANSACTIONS
....................................................................................................
338 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATION
........................................................................................................................................
339 FINANCIAL INDEBTEDNESS
................................................................................................................
363
SECTION VII: LEGAL AND OTHER INFORMATION
...........................................................................
374
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
............................................. 374 LICENSES AND
APPROVALS
................................................................................................................
379 OTHER REGULATORY AND STATUTORY DISCLOSURES
........................................................... 396
SECTION VII: ISSUE INFORMATION
.......................................................................................................
412
ISSUE STRUCTURE
.................................................................................................................................
412 TERMS OF THE ISSUE
............................................................................................................................
417 ISSUE PROCEDURE
.................................................................................................................................
420
SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
.................................. 471
SECTION IX: OTHER
INFORMATION......................................................................................................
487
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
................................................ 487
SECTION X: DECLARATION
......................................................................................................................
489
SECTION XI: DECLARATION BY THE SELLING SHAREHOLDER
.................................................. 490
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Sandhar Technologies Limited
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SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
This Draft Red Herring Prospectus uses certain definitions and
abbreviations which, unless the context otherwise
indicates or implies, the following terms have the meanings
given below. References to statutes, rules, regulations,
guidelines and policies will be deemed to include all amendments
and modifications notified thereto from time to
time.
The words and expressions used but not defined herein shall have
the same meaning as is assigned to such terms
under the SEBI ICDR Regulations, the Companies Act, 2013,
Companies Act, 1956, the SCRA, the Depositories
Act and the rules and regulations made thereunder.
General Terms
Term Description
Sandhar/ our Company or
the Company
Sandhar Technologies Limited, a company incorporated under the
Companies Act, 1956,
and having its registered office at C-101 A, Ansal Plaza, HUDCO
Place, Khelgaon Marg,
New Delhi – 110 049, India.
“We”/ “us”/ “Our”/
“Group”
Unless the context otherwise indicates or implies, refers to our
Company together with our
Subsidiaries and Joint Ventures, on a consolidated basis.
Company Related Terms
Term Description
Articles/ Articles of
Association/ AoA
The articles of association of our Company, as amended.
Auditor / Statutory
Auditor
The statutory auditors of our Company, namely, S.R. Batliboi
& Co. LLP, Chartered
Accountants.
Board/ Board of
Directors
The board of directors of our Company or a duly constituted
committee thereof.
Corporate Office The corporate office of our Company located at
13, Sector - 44, Gurgaon – 122 002,
Haryana, India.
CSR Committee The corporate social responsibility committee of
the Board of Directors.
Director(s) The director(s) of our Company.
Equity Shares The equity shares of our Company of `10 each,
fully paid up, unless otherwise specified in the context
thereof.
Group Companies The entities covered under the applicable
accounting standards, being AS 18 (as
identified under the Restated Unconsolidated Summary Statements)
more
particularly described in the chapter “Our Promoters, Promoter
Group and Group Companies - Our Group Companies” on page 193.
GTI GTI Capital Beta Pvt Ltd
Han Sung Han Sung IMP Co. Limited
Independent
Director(s)
Independent directors on the Board of Directors. For details of
the Independent Directors,
please refer to the chapter “Our Management” on page 174.
ICRA ICRA Limited
JBM Auto JBM Auto Limited
Joint Ventures The joint ventures entered into by our Company
namely, (i) Indo Toolings Private
Limited, (ii) Sandhar Han Sung Technologies Private Limited and
(iii) Sandhar Caama
Components Private Limited (up to June 30, 2015). For details of
the Joint Ventures,
please refer to the chapter “Our Subsidiaries and Joint
Ventures” on page 169.
Key Management
Personnel/ KMP
The officers vested with executive powers, and the officers at
the level immediately below
the Board, as per the SEBI ICDR Regulations and more
particularly listed in the chapter
“Our Management” beginning on page 174.
Memorandum/
Memorandum of
Association/ MoA
The memorandum of association of our Company, as amended.
Promoter The promoter of our Company, namely, Mr. Jayant
Davar.
Promoter Group Includes such persons and entities constituting
promoter group in terms of Regulation 2
(1)(zb) of the SEBI ICDR Regulations and disclosed in the
chapter “Our Promoters,
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Sandhar Technologies Limited
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Term Description
Promoter Group and Group Companies – Promoter Group of our
Company” on page
192.
Registered Office The registered office of our Company located
at C-101 A, Ansal Plaza, HUDCO Place,
Khelgaon Marg, New Delhi – 110 049, India.
Registrar of Companies
/ RoC
The Registrar of Companies, Delhi and Haryana located at 4th
Floor, IFCI Tower, 61,
Nehru Place, New Delhi – 110 019 India.
Selling Shareholder The selling shareholder in the Issue namely,
GTI Capital Beta Pvt Ltd.
Shareholders The shareholders of our Company.
TECFISA Tecnicas de la Fundicion Inyectada SA GTI
Shareholders’
Agreement/ GTI SHA
Shareholders’ Agreement dated March 30, 2012 entered into
between the Promoter, the
Selling Shareholder, our Company and others. For further
details, please refer please refer
to, “History and Certain Corporate Matters – Summary of Key
Agreements” on page 166.
Subsidiaries The subsidiaries of our Company namely, (i) Sandhar
Tooling Private Limited, (ii)
Sandhar Technologies Barcelona, S.L., Spain, (iii) Sandhar Euro
Holdings B.V., the
Netherlands, (iv) PT Sandhar Indonesia, Indonesia, (v) Sandhar
Technologies Poland sp.
z.o.o., Poland, (vi) Sandhar Technologies De Mexico, Mexico, and
(vii) Breniar Project
S.L., Spain. For details of the Subsidiaries, please refer to
the chapter “Our Subsidiaries
and Joint Ventures” on page 169.
Issue Related Terms
Term Description
Allot/ Allotment/ Allotted Allotment/ transfer of Equity Shares
to successful Bidders pursuant to this Issue.
Allotment Advice Note or advice or intimation of Allotment sent
to the Bidders who have been or are to be
Allotted the Equity Shares after the Basis of Allotment has been
approved by the
Designated Stock Exchange.
Allottee A successful Bidder to whom the Allotment is made.
Anchor Investor A QIB, applying under the Anchor Investor
Portion and in accordance with the
requirements specified in the SEBI ICDR Regulations.
Anchor Investor
Allocation Price
The price at which allocation is being done to Anchor Investors
on the Anchor Investor
Bid Period. The Anchor Investor Allocation Price will be decided
by our Company and
the Selling Shareholder in consultation with the BRLMs.
Anchor Investor Bid/
Issue Period
The final day, one Working Day prior to the Bid/ Issue Opening
Date, on which Bids by
Anchor Investors shall be submitted and Allocation to Anchor
Investors shall be
completed.
Anchor Investor Issue
Price
The price at which Equity Shares will be Allotted to the Anchor
Investors in terms of the
Red Herring Prospectus and Prospectus, which price will be equal
to or higher than the
Issue Price but not higher than the Cap Price.
Anchor Investor Portion Up to 60% of the QIB Portion which may
be allocated by our Company and the Selling
Shareholder, in consultation with the BRLMs, to Anchor Investors
on a discretionary
basis.
One-third of the Anchor Investor Portion shall be reserved for
domestic Mutual Funds,
subject to valid Bids being received from domestic Mutual Funds
at or above the Anchor
Investor Allocation Price.
Application Supported by
Blocked Amount/ ASBA
An application, whether physical or electronic, used by ASBA
Bidder to make a Bid
authorising a SCSB, to block the Bid Amount in their ASBA
Account.
Bids by QIBs (except Anchor Investors) and Non-Institutional
Investors should be
compulsorily made through ASBA. Anchor Investors are not
permitted to participate
through the ASBA process.
ASBA Account Account maintained with a SCSB and specified in the
Bid cum Application Form
submitted by the ASBA Bidders for blocking the extent of the
appropriate Bid Amount
specified by an ASBA Bidder in the Bid cum Application Form.
ASBA Bidder(s) Any Bidder, other than an Anchor Investor, who
Bids in the Issue through the ASBA
process.
Bankers to the Issue The Escrow Collection Bank(s), Refund
Bank(s) and Public Issue Bank(s).
Basis of Allotment The basis on which Equity Shares will be
Allotted to successful Bidders under the Issue
and which is described in the chapter “Issue Procedure” on page
420.
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Sandhar Technologies Limited
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Term Description
Bid(s) An indication to make an offer during the Bid/Issue
Period by a Bidder pursuant to
submission of the Bid cum Application Form, or during the Anchor
Investor Bid/ Issue
Period by the Anchor Investors, to subscribe to or purchase the
Equity Shares of our
Company at a price within the Price Band, including all
revisions and modifications
thereto as permitted under the SEBI ICDR Regulations.
The term “Bidding” shall be construed accordingly.
Bid Amount The highest value of optional Bids indicated in the
Bid cum Application Form and payable
by the Bidder/ blocked in the ASBA Account on submission of a
Bid cum Application
Form in the Issue, which shall be net of Retail Discount, as
applicable.
However for Retail Individual Investors applying at the Cut-Off
Price, the Bid amount
shall be Cap Price multiplied by the number of Equity Shares Bid
for by such Retail
Individual Investors and mentioned in the Bid cum Application
Form net of Retail
Discount, if any.
Bid cum Application
Form
The form used by a Bidder, including ASBA Bidders, which is
serially numbered
comprising an eight digit application number, to make a Bid and
which will be considered
as the application for Allotment in terms of the Red Herring
Prospectus and the
Prospectus.
Bid/ Issue Closing Date Except in relation to any Bids received
from Anchor Investors, the date after which the
Syndicate, the Designated Branches and the Non-Syndicate
Registered Brokers will not
accept any Bids, which shall be notified in two national daily
newspapers, one each in
English and Hindi, with wide circulation and in case of any
revision, the extended Bid/
Issue Closing Date also to be notified on the website and
terminals of the Syndicate, the
Non-Syndicate Registered Brokers and SCSBs, as required under
the SEBI ICDR
Regulations.
Our Company and the Selling Shareholder may, in consultation
with the BRLMs, consider
closing the Bid/ Issue Period for QIBs one Working Day prior to
the Bid/ Issue Closing
Date in accordance with the SEBI ICDR Regulations.
Bid/ Issue Opening Date Except in relation to Anchor Investor,
the date on which the Syndicate, the SCSBs and
the Non-Syndicate Registered Brokers shall start accepting
Bids.
Bid/ Issue Period The period between the Bid/ Issue Opening Date
and the Bid/ Issue Closing Date,
inclusive of both days, during which prospective Bidders (except
Anchor Investors) can
submit their Bids, including any revisions thereof. The Bid/
Issue Period shall comprise
of Working Days only. Our Company and the Selling Shareholder,
in consultation with
the BRLMs may consider closing the Bidding by QIB Bidders one
Working Day prior to
the Bid/ Issue Closing Date, which shall be notified in an
advertisement in same
newspapers in which the Bid/ Issue Opening advertisement was
published and in such a
case the Bid/ Issue Period for the QIBs shall be determined
accordingly.
Bid Lot [●] Equity Shares
Bidder Any prospective investor who makes a Bid pursuant to the
terms of the Red Herring
Prospectus and the Bid cum Application Form, including an Anchor
Investor unless stated
or implied otherwise.
Book Building Process/
Method
The book building process as provided under Part A of Schedule
XI of the SEBI ICDR
Regulations, in terms of which this Issue is being made.
Broker Centre Broker centres notified by the Stock Exchanges
where Bidders can submit the Bid cum
Application Forms to a Non-Syndicate Registered Broker.
The details of such Broker Centres, along with the names and
contact details of the Non-
Syndicate Registered Broker are available on the websites of the
respective Stock
Exchanges.
BRLMs/ Book Running
Lead Managers
The book running lead managers to the Issue, in this case being
ICICI Securities Limited,
IDFC Securities Limited, IIFL Holdings Limited and Jefferies
India Private Limited.
CAN/ Confirmation of
Allocation Note
The note or advice or intimation of allocation of Equity Shares
sent to the successful
Anchor Investors who have been allocated Equity Shares after
discovery of the Anchor
Investor Issue Price, including any revisions thereof.
Cap Price The higher end of the Price Band above which the Issue
Price will not be finalized and
above which no Bids will be accepted.
Client ID Client identification number of the Bidder maintained
with one of the Depositories in
relation to demat account.
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Sandhar Technologies Limited
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Term Description
Cut-off Price The Issue Price, as finalised by our Company and
the Selling Shareholder in consultation
with the BRLMs. Only Retail Individual Investors are entitled to
Bid at the Cut-off Price,
for a Bid Amount not exceeding `200,000 (which shall be net of
Retail Discount, if any). No other category of Bidders are entitled
to Bid at the Cut-off Price.
Demographic Details The address, Bidders bank account details,
MICR code and occupation of a Bidder.
Depository A depository registered with SEBI under the
Depositories Act.
Designated Branch Such branches of the SCSBs, which shall
collect Bid cum Application Forms used by
ASBA Bidders, a list of which is available on
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries
or at such
other websites as may be prescribed by SEBI from time to
time.
Designated Date The date on which funds are transferred from the
Escrow Account to the Public Issue
Account or the Refund Account, as appropriate, and instructions
for transfer of the amount
blocked by the SCSB from the bank account of the ASBA Bidder to
the Public Issue
Account are provided, after the Prospectus has been filed with
the RoC, following which
the Board of Directors may Allot Equity Shares to successful
Bidders/Applicants in the
Fresh Issue and the Selling Shareholder shall transfer the
Equity Shares in the Offer for
Sale.
Designated Stock
Exchange/ DSE
[●]
Draft Red Herring
Prospectus or DRHP
This draft red herring prospectus dated September 28, 2015
issued in accordance with
SEBI ICDR Regulations, filed with SEBI and which does not
contain complete particulars
of the price at which the Equity Shares would be Alloted and the
size of the Issue.
Eligible FPIs FPIs from such jurisdictions outside India where
it is not unlawful to make an Issue /
invitation under the Issue and in relation to whom the Red
Herring Prospectus constitutes
an invitation to purchase the Equity Shares offered thereby.
Eligible NRIs NRI(s) from jurisdictions outside India where it
is not unlawful to make an offer or
invitation under the Issue and in relation to whom the Bid cum
Application Form and the
Red Herring Prospectus will constitute an invitation to
subscribe to or purchase the Equity
Shares.
Escrow Account Account opened with the Escrow Collection Banks
for the Issue and in whose favour the
Bidder (except ASBA Bidders) will issue cheques or drafts in
respect of the Bid Amount
when submitting a Bid.
Escrow Agreement Agreement to be entered into by our Company,
the Selling Shareholder, the Registrar to
the Issue, the BRLMs, the Syndicate Members, the Escrow
Collection Bank(s) and the
Refund Bank(s) for collection of the Bid Amounts and where
applicable, refunds of the
amounts collected from the Bidders (excluding the ASBA Bidders),
on the terms and
conditions thereof.
Escrow Collection Banks The banks which are clearing members and
registered with SEBI under the Securities and
Exchange Board of India (Bankers to an Issue) Regulations, 1994,
with whom the Escrow
Account(s) will be opened.
First/ Sole Bidder Bidder whose name shall be mentioned in the
Bid cum Application Form or the Revision
Form and in case of joint Bids, whose name shall also appear as
the first holder of the
beneficiary account held in joint names.
Floor Price Lower end of the Price Band, subject to any revision
thereto, at or above which the Issue
Price and the Anchor Investor Issue Price will be finalised and
below which no Bids will
be accepted.
Fresh Issue The fresh issue of up to [●] Equity Shares
aggregating up to `3,000 million by our Company
General Information
Document/ GID
The General Information Document for investing in public issues
prepared and issued in
accordance with the circular (CIR/ CFD/ DIL/ 12/ 2013) dated
October 23, 2013, notified
by SEBI, suitably modified and included in “Issue Procedure –
General Information
Document for Investing in Public Issues” on page 433.
I-Sec ICICI Securities Limited
IDFC IDFC Securities Limited
IIFL IIFL Holdings Limited
Indian Companies Our Company, Indo Toolings, Sandhar Caama,
Sandhar Han Sung and STPL
Indo Toolings Indo Toolings Private Limited
Insurance Companies Any company registered with Insurance
Regulatory and Development Authority as an
insurance company.
Issue The public issue of up to [●] Equity Shares of face value
of `10 each for cash at a price
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Sandhar Technologies Limited
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Term Description
of `[●] each, aggregating up to `[●] million comprising the
Fresh Issue and the Offer for Sale.
Issue Agreement The agreement dated September 28, 2015 entered
into among our Company, the Selling
Shareholder and the BRLMs, pursuant to which certain
arrangements are agreed to in
relation to the Issue.
Issue Price Final price (less the discount, if any) at which
Equity Shares will be Allotted in terms of
the Red Herring Prospectus. The Issue Price will be decided by
our Company and the
Selling Shareholder in consultation with the BRLMs on the
Pricing Date.
A discount of up to [●]% (equivalent to `[●]) on the Issue Price
may be offered to Retail Individual Investors. The Rupee amount of
the such discount, if any, will be decided by
our Company and the Selling Shareholder, in consultation with
the BRLMs, and which
shall be notified in two national daily newspapers, one each in
English and Hindi, with
wide circulation at least five Working Days prior to the Bid/
Issue Opening Date, and shall
be made available to the Stock Exchanges for the purpose of
uploading on their website.
Issue Proceeds The proceeds of the Issue. For further details,
please refer to the chapter “Objects of the
Issue” on page 87.
Jefferies Jefferies India Private Limited
Listing Agreement The listing agreement to be entered into by
our Company with the Stock Exchanges.
Members of the
Syndicate
The BRLMs and the Syndicate Member(s).
Mutual Funds A mutual fund registered with SEBI under the
Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996.
Mutual Fund Portion 5% of the Net QIB Portion or [●] Equity
Shares available for allocation to Mutual Funds,
out of the Net QIB Portion.
Net QIB Portion The portion of the QIB Portion, less the number
of the Equity Shares Allotted to the
Anchor Investors.
Net Proceeds Proceeds of the Fresh Issue less our Company’s
share of the Issue expenses. For further
information about use of the Issue Proceeds and the Issue
expenses.
Non-Institutional
Investors
All Bidders, including Category III FPIs, that are not QIBs or
Retail Individual Investors
and who have Bid for Equity Shares for a cumulative amount more
than `200,000 (but not including NRIs other than eligible
NRIs).
Non-Institutional Portion Portion of the Issue being not less
than 15% of the Issue consisting of [●] Equity Shares
which shall be available for allocation on a proportionate basis
to Non-Institutional
Investors, subject to valid Bids being received at or above the
Issue Price.
Non-Resident A person resident outside India, as defined under
FEMA and includes an NRI, FII, FPIs
and FVCI.
Non-Syndicate Broker
Centre
A broker centre of the Stock Exchanges with broker terminals,
where in a Non-Syndicate
Registered Broker may accept Bid cum Application Forms, a list
of which is available on
the website of the Stock Exchanges, and at such other websites
as may be prescribed by
SEBI from time to time.
Non-Syndicate
Registered Broker
A broker registered with SEBI under the Securities and Exchange
Board of India (Stock
Brokers and Sub Brokers Regulations), 1992, having office in any
of the Non-Syndicate
Broker Centres, and eligible to procure Bids in terms of the
circular No. CIR/ CFD/ 14/
2012 dated October 4, 2012 issued by SEBI.
Offer for Sale The offer for sale of up to 5,115,456 Equity
Shares by the Selling Shareholder at the Issue
Price aggregating up to `[●] million, in terms of the Red
Herring Prospectus. Price Band Price band of a minimum price of
`[●] per Equity Share (Floor Price) and the maximum
price of `[●] per Equity Share (Cap Price) including any
revisions thereof.
Price Band, discount, if any, to Retail Individual Investors and
the minimum Bid Lot size
for the Issue will be decided by our Company and the Selling
Shareholder in consultation
with the BRLMs and will be advertised, at least five Working
Days prior to the Bid/ Issue
Opening Date, in two national daily newspapers, one each in
English and Hindi, with wide
circulation.
Pricing Date The date on which our Company and the Selling
Shareholder in consultation with the
BRLMs finalise the Issue Price.
Prospectus The prospectus to be filed with the RoC in accordance
with section 26 of the Companies
Act, 2013 and the SEBI ICDR Regulations, containing, inter alia,
the Issue Price that is
determined at the end of the Book Building process, the size of
the Issue and certain other
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Sandhar Technologies Limited
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Term Description
information.
Public Issue Account The bank accounts opened with the Public
Issue Bank(s) by the Selling Shareholder under
section 40(3) of the Companies Act, 2013 to receive money from
the Escrow Accounts
on the Designated Date and where the funds shall be transferred
by the SCSBs from the
ASBA Accounts.
Public Issue Bank(s) The banks which are clearing members and
registered with SEBI under the Securities and
Exchange Board of India (Bankers to an Issue) Regulations, 1994
with whom the Public
Issue Account(s) will be opened.
Qualified Institutional
Buyers or QIBs
Qualified institutional buyers as defined under Regulation
2(1)(zd) of the SEBI ICDR
Regulations.
QIB Portion The portion of the Issue of [●] Equity Shares
required to be allocated to QIBs.
Red Herring Prospectus/
RHP
Red herring prospectus to be issued in accordance with section
32 of the Companies Act,
2013 and the provisions of the SEBI ICDR Regulations, which will
not have complete
particulars of the price at which the Equity Shares will be
offered and the size of the Issue.
Red Herring Prospectus will be registered with the RoC at least
three days before the Bid/
Issue Opening Date and will become the Prospectus upon filing
with the RoC after the
Pricing Date.
Refund Account(s) The account(s) opened with Refund Bank(s),
from which refunds (excluding to the ASBA
Bidders), if any, of the whole or part of the Bid Amount shall
be made.
Refund Banks The banks which are clearing members and registered
with SEBI under the Securities and
Exchange Board of India (Bankers to an Issue) Regulations, 1994
with whom the Refund
Account will be opened.
Refunds through
electronic transfer of
funds
Refunds through electronic transfer of funds means refunds
through NECS, Direct Credit,
NEFT or RTGS, as applicable.
Registrar/ Registrar to
the Issue
Registrar to this Issue, in this case being Link Intime India
Private Limited.
Retail Discount Our Company and the Selling Shareholder, in
consultation with the BRLMs, may decide
to offer a discount of `[●] to the Issue Price to Retail
Individual Investors and which shall be announced at least five
Working Days prior to the Bid/ Issue Opening Date.
Retail Individual Bidders
/ Retail Individual
Investors / RIIs
Individual Bidders, submitting Bids, who have Bid for the Equity
Shares for an amount
not more than `200,000 in any of the bidding options in the
Issue (including HUFs applying through their Karta and Eligible
NRIs and does not include NRIs other than
Eligible NRIs).
Retail Portion/ Retail
Category
The portion of the Issue being not less than 35% of the Issue
available for allocation to
Retail Individual Investor(s) in accordance with the SEBI ICDR
Regulations, subject to
valid Bids being received at or above the Issue Price.
Restated Consolidated
Summary Statements
Restated consolidated statement of assets and liabilities of our
Company as at March 31,
2015, March 31, 2014, March 31, 2013, March 31, 2012 and March
31, 2011, and the
restated consolidated statement of profit and loss and the
restated consolidated statement
of cash flows of our Company, for each of the years ended March
31, 2015, March 31,
2014, March 31, 2013, March 31, 2012 and March 31, 2011 and
included in the section
“Financial Statements” on page 200.
Restated Unconsolidated
Summary Statements
Restated unconsolidated statement of assets and liabilities of
our Company as at March
31, 2015, March 31, 2014, March 31, 2013, March 31, 2012 and
March 31, 2011, and the
restated unconsolidated statement of profit and loss and the
restated unconsolidated
statement of cash flows of our Company, for each of the years
ended March 31, 2015,
March 31, 2014, March 31, 2013, March 31, 2012 and March 31,
2011 and included in
the section “Financial Statements” on page 200.
Revision Form Form used by Bidders, including ASBA Bidders, to
modify the quantity of the Equity
Shares or the Bid Amount in any of their Bid cum Application
Forms or any previous
Revision Form(s).
QIB Bidders and Non-Institutional Investors are not allowed to
lower their Bids (in terms
of quantity of Equity Shares or the Bid Amount) at any
stage.
Self-Certified Syndicate
Bank(s) or SCSB(s)
The banks which are registered with SEBI under the Securities
and Exchange Board of
India (Bankers to an Issue) Regulations, 1994 and offer services
in relation to ASBA,
including blocking of an ASBA Account in accordance with the
SEBI ICDR Regulations
and a list of which is available on the website of SEBI or at
such other website as may be
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Term Description
prescribed by SEBI from time to time.
Share Escrow
Agreement
Agreement to be entered into between the Selling Shareholder,
our Company and the
Escrow Agent in connection with the transfer of Equity Shares
under the Offer for Sale by
the Selling Shareholder and credit of such Equity Shares to the
demat account of the
Allottees.
ST Barcelona Sandhar Technologies Barcelona S.L.
Sub-Syndicate Member A SEBI Registered member of BSE and/ or NSE
appointed by the BRLMs and / or
Syndicate Member(s) to act as a Sub Syndicate Member in the
Issue.
Syndicate Includes the BRLMs and Syndicate Member.
Syndicate Agreement The agreement to be entered into between the
BRLMs, the Selling Shareholder, the
Syndicate Member(s) and our Company in relation to the
collection of Bids (excluding
Bids by ASBA Bidders) in this Issue.
Syndicate ASBA Centres Bidding Centres where an ASBA Bidder can
submit his Bid cum Application Form to the
Syndicate Member and prescribed by SEBI from time to time.
Syndicate Member(s) Intermediary(ies) registered with the SEBI
to act as a syndicate members and who are
permitted to carry on the activity as an underwriter in this
case being [●] and [●].
Transaction Registration
Slip/ TRS
The slip or document issued by member of the Syndicate or the
SCSB (only on demand),
as the case may be, to the Bidder as proof of registration of
the Bid.
Underwriters The BRLMs and the Syndicate Member(s).
Underwriting Agreement The agreement among the Underwriters, the
Selling Shareholder and our Company to be
entered into on or after the Pricing Date.
Working Day All days, other than 2nd and 4th Saturday of the
month, Sunday or a public holiday on
which commercial banks are open for business, provided however,
with reference to (a)
announcement of Price Band; and (b) Bid/Offer Period, “Working
Days” shall mean all
days, excluding Saturdays, Sundays and public holidays, which
are working days for
commercial banks in India.
Technical/ Industry Related Terms / Abbreviations
Term Description
Asst. Assistant
Ashok Leyland Ashok Leyland Limited
Arkay Fabsteel Arkay Fabsteel Systems Private Limited Actis
Group Actis Auto Components Investment Limited and Actis Auto
Investments Limited
Bosch Robert Bosch GmbH
BS IV norms Bharat Stage IV emission norms
Caterpillar Caterpillar India Private Limited CFO Chief
Financial Officer
CGU Cash generating unit
CPD Central procurement division
Denso Denso Auto Body Parts India Private Limited EVAP
Evaporative Emission Control System
Hero Hero MotorCorp Limited
Honda Cars Honda Cars India Limited
Honda Lock Honda Lock Manufacturing Company Limited
Hyundai Construction Hyundai Construction Equipment India
Private Limited
JCB JCB India Limited
JEM Techno JEM Techno Co. Limited, Korea
Komatsu Komatsu India Private Limited
L&T Construction Larsen and Toubro Construction Equipment
Limited
Mahindra Mahindra and Mahindra Limited OEM Original Equipment
Manufacturer
OHV Off-highway vehicle
Royal Enfield Royal Enfield, an unit of Eicher Motors Group
SCID Sandhar Centre for Innovation and Development, Gurgaon
Steady Stream Steady Stream Business Limited, Taiwan
Suzuki Suzuki Motorcycle India Private Limited Tata Motors Tata
Motors Limited
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Sandhar Technologies Limited
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Term Description
TAFE Tractors and Farm Equipment Limited TVS TVS Motor Company
Limited Yamaha India Yamaha Motor Private Limited V.P. Vice
President
Conventional and General Terms/ Abbreviations
Term Description
Act or Companies Act The Companies Act, 1956 and/ or the
Companies Act, 2013, as applicable.
AGM Annual general meeting
AIF(s) Alternative investment funds, as defined in, and
registered with SEBI under the Securities
and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012.
AS Accounting standards issued by the Institute of Chartered
Accountants of India
AY Assessment year
BPLR Bank prime lending rate
BG Bank guarantee
BR Base rate
BSE BSE Limited
Bn/ bn Billion
CAGR Compounded annual growth rate
CC Cash credit
CCI Competition Commission of India
CDSL Central Depository Services (India) Limited
CIN Corporate identity number
CIT Commissioner of Income Tax
CST Act The Central Sales Tax Act, 1956
CST Rules The Central Sales Tax (Registration and Turnover
Rules), 1957
Category I Foreign
Portfolio Investors
FPIs that are registered as “Category I foreign portfolio
investors” under the SEBI FPI
Regulations.
Category II Foreign
Portfolio Investors
FPIs that are registered as “Category II foreign portfolio
investors” under the SEBI FPI
Regulations.
Category III Foreign
Portfolio Investors
FPIs that are registered as “Category III foreign portfolio
investors” under the SEBI FPI
Regulations.
Consolidated FDI
Policy
Consolidated FDI Policy (Circular 1 of 2015) dated May 12, 2015
issued by the
Government of India, Ministry of Commerce and Industry.
Companies Act, 1956 The Companies Act, 1956 (without reference
to the provisions thereof that have ceased
to have effect upon notification of the sections of the
Companies Act, 2013) along with
the relevant rules made thereunder.
Companies Act, 2013 The Companies Act, 2013, to the extent in
force pursuant to the notification of sections
of the Companies Act, 2013, along with the relevant rules made
thereunder.
DIN Director identification number
DIPP Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry,
Government of India
DP ID Depository participant identification
Depositories NSDL and CDSL
Depositories Act The Depositories Act, 1996
EBITDA Earnings before interest, tax, depreciation and
amortisation
EPS Earnings per share
ERP Enterprise resource planning EOU Export oriented unit
Eur/ € Euro, is the official currency of the Eurozone, which
consists of 19 of the 28 member
states of the European Union FCNR Account Foreign currency
non-resident account
FDI Foreign direct investment
FEMA
The Foreign Exchange Management Act, 1999 read with rules and
regulations thereunder
and amendments thereto.
FEMA Regulations The Foreign Exchange Management (Transfer or
Issue of Security by a Person Resident
Outside India) Regulations 2000 and amendments thereto.
FG Finished goods
https://en.wikipedia.org/wiki/Eurozonehttps://en.wikipedia.org/wiki/Member_state_of_the_European_Unionhttps://en.wikipedia.org/wiki/Member_state_of_the_European_Union
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Term Description
FII(s) Foreign Institutional Investors as defined under the SEBI
FPI Regulations.
FPI(s) Foreign Portfolio Investors as defined under the SEBI FPI
Regulations.
Fiscal Year/ Fiscal/ FY Period of 12 months ended March 31 of
that particular year, unless otherwise stated.
FIPB Foreign Investment Promotion Board
FLC Foreign letter of credit
FVCI Foreign Venture Capital Investor, as defined in and
registered with SEBI under the SEBI
FVCI Regulations
GDP Gross Domestic Product
GoI/ Government Government of India
GST Goods and Services Tax
HNI High Net worth Individual
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IPO Initial Public Offering
ILC Inland letter of credit
IRDA Insurance Regulatory and Development Authority
I.T. Act The Income Tax Act, 1961
Indian GAAP Generally Accepted Accounting Principles in
India
Insider Trading
Regulations
The Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations,
2015
KMP/ Key Management
Personnel
Key management personnel defined under section 2(1)(s) of the
SEBI ICDR Regulations
and includes the officers vested with executive powers and the
officers at the level
immediately below the Board and defined more particularly in
“Our Management – Key
Management Personnel” on page 187.
LER Loan equivalent risk
LOC Letters of credit
LOU Letter of undertaking
LLP Act The Limited Liability Partnership Act, 2008
MAT Minimum Alternate Tax
MCA Ministry of Corporate Affairs, Government of India
MICR Magnetic ink character recognition
Mn / mn million
MOU Memorandum of understanding
Mutual Fund(s) Mutual Fund (s) means mutual funds registered
under the Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996.
NA/ N.A. Not Applicable
NAV/ Net Asset Value Net Worth divided by number of issued
Equity Shares.
NAFTA North American Free Trade Agreement
NBFC Non-banking financial company registered with the RBI
NCR National capital region
NECS National electronic clearing services
NEFT National electronic fund transfer
Net Worth Net worth represents sum of equity share capital and
reserves and surplus (including
securities premium, general reserve and surplus in the Statement
of Profit and Loss) and
share application money pending allotment.
NOC No objection certificate.
Notified Sections The sections of the Companies Act, 2013 that
have been notified by the MCA and are
currently in effect.
NR Non-resident
NRE Account Non-resident external account
NRI A person resident outside India, as defined under FEMA and
who is a citizen of India or
a person of Indian origin, such term as defined under the
Foreign Exchange Management
(Deposit) Regulations, 2000
NRO Account Non-resident Ordinary Account
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
OCB/ Overseas
Corporate Body
A company, firm, partnership, society or other corporate body
owned directly or
indirectly to the extent of at least 60% by NRIs including
overseas trusts, in which not
less than 60% of beneficial interest is irrevocably held by NRIs
directly or indirectly and
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Term Description
which was in existence on October 3, 2003 and immediately before
such date had taken
benefits under the general permission granted to OCBs under
FEMA. OCBs are not
allowed to invest in this Issue, except with the specific
permission of the RBI.
p.a. Per annum
P/ E Ratio Price/ earnings ratio
PAN Permanent account number allotted under the Income Tax Act,
1961.
PAT Profit after tax
PBT Profit before tax
PIO Persons of Indian origin
PLR Prime lending rate
RBI The Reserve Bank of India
RBI Act The Reserve Bank of India Act, 1934
RONW Return on Net Worth
R&D Research and development
`/ Rs./ Rupees/ INR Indian Rupees RTGS Real time gross
settlement
SCRA The Securities Contracts (Regulation) Act, 1956
SCRR The Securities Contracts (Regulation) Rules, 1957
SCSB Self-certified syndicate bank
SEBI The Securities and Exchange Board of India constituted
under the SEBI Act.
SEBI Act The Securities and Exchange Board of India Act,
1992
SEBI AIF Regulations The Securities and Exchange Board of India
(Alternative Investment Funds) Regulations,
2012
SEBI FII Regulations The Securities and Exchange Board of India
(Foreign Institutional Investors) Regulations,
1995
SEBI FPI Regulations The Securities and Exchange Board of India
(Foreign Portfolio Investors) Regulations,
2014
SEBI FVCI Regulations The Securities and Exchange Board of India
(Foreign Venture Capital Investors)
Regulations, 2000
SEBI ICDR Regulations The Securities and Exchange Board of India
(Issue of Capital and Disclosure
Requirements) Regulations, 2009
SEBI Takeover
Regulations
The Securities and Exchange Board of India (Substantial
Acquisition of Shares and
Takeovers) Regulations, 2011
SEBI VCF Regulations The erstwhile Securities and Exchange Board
of India (Venture Capital Funds)
Regulations, 1996
Securities Act U.S. Securities Act of 1933
SIA Secretariat of Industrial Assistance, Department of
Industrial Policy & Promotion,
Ministry of Commerce and Industry, Government of India
SPV Special Purpose Vehicle
Sq. ft. / sq. ft. Square feet
Sr. Senior
Stamp Act The Indian Stamp Act, 1899
STT Securities Transaction Tax
State Government The government of a state of the Union of
India
Stock Exchange (s) BSE and/ or NSE, as the context may refer
to
UK The United Kingdom
US / USA/ United States The United States of America
US GAAP Generally Accepted Accounting Principles in the United
States of America
USD/ US$/ U.S.$ United States Dollars
VAT Value added tax
VCFs Venture Capital Funds as defined and registered with SEBI
under the SEBI VCF
Regulations
WIP Work in progress
Notwithstanding the foregoing, any terms and abbreviations used
in the chapters “Statement of Tax Benefits”,
“Financial Statements”, “Outstanding Litigations and Material
Developments” and “Main Provisions of the
Articles of Association” on pages 102, 200, 374 and 471,
respectively, shall have the meanings given to such terms
in these respective chapters.
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PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
Certain Conventions
All references to “India” in this Draft Red Herring Prospectus
are to the Republic of India and all references to
the “U.S.”, “USA” or “United States” are to the United States of
America. Further, all references to following
countries are:
Sr.
No.
Reference Country
1. Indonesia The Republic of Indonesia
2. Mexico The Estados Unidos Mexicanos or the United Mexican
States
3. Netherlands The Kingdom of Netherlands
4. Poland The Republic of Poland or the Rzeczpospolita
Polska
5. Spain The Kingdom of Spain
6. U.K., UK or United Kingdom The United Kingdom of Great
Britain and Northern Ireland
Financial Data
Unless stated or the context requires otherwise, the financial
information in this Draft Red Herring Prospectus is
derived from our Restated Consolidated Summary Statements as of
and for the fiscal years ended March 31, 2015,
2014, 2013, 2012 and 2011 and the Annexures thereto and our
Restated Unconsolidated Summary Statements as
of and for fiscal 2015, 2014, 2013, 2012 and 2011 and annexures
thereto included elsewhere in this Draft Red
Herring Prospectus, which have been prepared in accordance with
the applicable provisions of the Companies
Act, 1956, to the extent applicable, and the Companies Act, 2013
and Indian GAAP and restated in accordance
with the SEBI ICDR Regulations which have been approved by the
Board of Directors on May 28, 2015, on May
23, 2014, on May 31, 2013, on May 19, 2012 and on May 31, 2011,
respectively.
In this Draft Red Herring Prospectus, any discrepancies in any
table between the total and sums of the amount
listed are due to rounding off. All figures in decimals have
been rounded off to the second decimal and all
percentage figures have been rounded off to two decimal places
and accordingly there may be consequential
changes in this Draft Red Herring Prospectus.
Our Company’s fiscal year commences on April 1 and ends on March
31 of the next year; accordingly, all
references to a particular fiscal year, unless stated otherwise,
are to the 12 month period ended on March 31 of
that year.
There are significant differences between Indian GAAP, US GAAP
and IFRS. Our Company does not provide
reconciliation of its financial information to IFRS or US GAAP
financial information. Our Company has not
attempted to explain those differences or quantify their impact
on the financial data included in this Draft Red
Herring Prospectus and we urge investors to consult your own
advisors regarding such differences and their impact
on our Company’s financial data. For details in connection with
risks involving differences between Indian GAAP
and IFRS, please refer to “Risk Factors – 56. Significant
differences exist between Indian GAAP and other
accounting principles, such as US GAAP and IFRS, which may be
material to investors' assessments of our
financial condition” on page 37. Accordingly, the degree to
which the financial information included in this Draft
Red Herring Prospectus will provide meaningful information is
entirely dependent on the reader’s level of
familiarity with Indian accounting policies and practices,
Indian GAAP, the Companies Act and the SEBI ICDR
Regulations. Any reliance by persons not familiar with Indian
accounting policies, Indian GAAP, the Companies
Act, the SEBI ICDR Regulations and practices on the financial
disclosures presented in this Draft Red Herring
Prospectus should accordingly be limited.
Unless the context otherwise indicates, any percentage amounts,
as set forth in “Risk Factors”, “Our Business”
and “Management’s Discussion and Analysis of Financial
Conditional and Results of Operations” on pages 16,
135 and 339 respectively, and elsewhere in this Draft Red
Herring Prospectus have been calculated on the basis
of the Restated Consolidated Summary Statements and Restated
Unconsolidated Summary Statements of our
Company prepared in accordance with the Companies Act, Indian
GAAP and restated in accordance with the
SEBI ICDR Regulations.
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13
Currency and Units of Presentation
All references to:
“Rupees” or “`” or “INR” or “Rs.” are to Indian Rupee, the
official currency of the Republic of India;
“USD” or “US$” are to United States Dollar, the official
currency of the United States of America;
“Euro” or “EUR” are to Euro, the official currency of the
European Union and consequently, the official currency of the
Republic of Poland and the Kingdom of Spain;
“IDR” or “Rp” are to Indonesian Rupiah, the official currency of
the Republic of Indonesia; and
“MXN” is to Mexican Peso, the official currency of the Estados
Unidos Mexicanos or Mexico.
Except otherwise specified, our Company has presented certain
numerical information in this Draft Red Herring
Prospectus in “million” units. One million represents 1,000,000
and one billion represents 1,000,000,000.
Exchange Rates
This Draft Red Herring Prospectus contains conversion of certain
other currency amounts into Indian Rupees that
have been presented solely to comply with the SEBI ICDR
Regulations. These conversions should not be
construed as a representation that these currency amounts could
have been, or can be converted into Indian Rupees,
at any particular rate or at all.
The following table sets forth, for the periods indicated,
information with respect to the exchange rate between
the Rupee and other currencies:
(in `) Currency Closing rates as on March 31,
2011 2012 2013 2014 2015
US $ 45.34 51.97 54.51 59.81 62.60
EUR 63.92 69.36 69.87 82.26 67.93
MXN 3.80 4.06 4.43 4.58 4.19
IDR 0.01 0.01 0.01 0.01 0.01
THB 1.50 1.69 1.86 1.84 1.92
JPY 0.30 0.63 0.58 0.58 0.52
Source: www.oanda.com
In case March 31 of any of the respective years is a public
holiday, the previous calendar day not being a public
holiday has been considered.
Industry and Market Data
We have commissioned the Indian Automobile & Auto Component
Industry Report, September 2015 by ICRA
to obtain an independent assessment of the opportunities,
dynamics and competitive landscape of the automobile
and auto component industry in India. Except for the Indian
Automobile & Auto Component Industry Report,
September 2015, other market and industry data used in this
Draft Red Herring Prospectus has generally been
obtained or derived from publicity available information as well
as industry publications and sources. These
publications typically state that the information contained
therein has been obtained from sources believed to be
reliable but their accuracy and completeness are not guaranteed
and their reliability cannot be assured.
Industry publications generally state that the information
contained in such publications has been obtained from
publicly available documents from various sources believed to be
reliable but their accuracy and completeness
are not guaranteed and their reliability cannot be assured.
Accordingly, no investment decision should be based
on such information. Although we believe the industry and market
data used in this Draft Red Herring Prospectus
is reliable, it has not been independently verified by us, the
Selling Shareholder or the BRLMs or any of their
affiliates or advisors. The data used in these sources may have
been re-classified by us for the purposes of
presentation. Data from these sources may also not be
comparable.
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The extent to which the market and industry data used in this
Draft Red Herring Prospectus is meaningful depends
on the reader’s familiarity with and understanding of the
methodologies used in compiling such data. There are
no standard data gathering methodologies in the industry in
which business of our Company is conducted, and
methodologies and assumptions may vary widely among different
industry sources.
In accordance with the SEBI ICDR Regulations, the section “Basis
for the Issue Price” beginning on page 99
includes information relating to our peer group companies. Such
information has been derived from publicly
available sources, and neither we, the Selling Shareholder, nor
the BRLMs, have independently verified such
information.
Further, in accordance with Regulation 51A of the SEBI ICDR
Regulations, our Company may be required to
undertake an annual update of the disclosures made in the Draft
Red Herring Prospectus and make it publicly
available in the manner specified by SEBI. The extent to which
the market and industry data used in this Draft
Red Herring Prospectus is meaningful depends on the reader’s
familiarity with and understanding of the
methodologies used in compiling such data. There are no standard
data gathering methodologies in the industry
in which the business of our Company is conducted, and
methodologies and assumptions may vary widely among
different industry sources.
Such data involves risks, uncertainties and numerous assumptions
and is subject to change based on various
factors. Accordingly, investment decisions should not be based
solely on such information.
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FORWARD LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain
“forward-looking statements”. These forward-looking
statements can generally be identified by words or phrases such
as “will”, “aim”, “will likely result”, “believe”,
“expect”, “will continue”, “anticipate”, “estimate”, “intend”,
“plan”, “contemplate”, “seek to”, “future”,
“objective”, “goal”, “project”, “should”, “will pursue” and
similar expressions or variations of such expressions.
All statements contained in this Draft Red Herring Prospectus
that are not statements of historical fact constitute
“forward-looking statements”. All statements regarding our
expected financial condition and results of operations,
business, plans, objectives, strategies, goals and prospects are
forward-looking statements.
Forward-looking statements reflect our current views with
respect to future events and are not a guarantee of
future performance. These statements are based on our
management’s beliefs and assumptions, which in turn are
based on currently available information. Although our Company
believes the assumptions upon which these
forward-looking statements are based to be reasonable, any of
these assumptions could prove to be inaccurate,
and the forward-looking statements based on these assumptions
could be incorrect.
Further, the actual results may differ materially from those
suggested by the forward-looking statements due to
risks or uncertainties associated with our expectations with
respect to, but not limited to, regulatory changes
pertaining to the auto component manufacturing sector India in
which our Company operates and our ability to
respond to them.
Important factors that could cause actual results to differ
materially from our expectations include, but are not
limited to, the following:
1. our dependence on a limited number of clients, and a loss of
or significant decrease in business from them; 2. discontinuation
of, the loss of business with respect to, or a lack of commercial
success of, a particular
vehicle model for which we are a significant supplier;
3. failure in implementing our strategies, such as expanding of
product portfolio, increasing wallet share from existing OEM
customers and enhancing innovation and design capabilities;
4. difficulty in integrating and managing strategic investments
and alliances, acquisitions and mergers in the future;
5. inability to accurately forecast demand for our products and
plan production schedules in advance; 6. exposure to foreign
currency exchange rate fluctuations; 7. inability to retain and
hire key employees or to maintain good relations with our
workforce; 8. inability to attract or retain senior management and
key managerial personnel; and 9. any adverse changes to the demand
in the two wheeler market.
We cannot assure investors that the expectation reflected in
these forward-looking statements will prove to be
correct. Given these uncertainties, investors are cautioned not
to place undue reliance on such forward-looking
statements and not to regard such statements as a guarantee of
future performance.
By their nature, certain risk disclosures are only estimates and
could be materially different from what actually
occurs in the future. As a result, actual future gains or losses
could materially differ from those that have been
estimated. Our Company, the Directors, the BRLMs and their
respective affiliates or associates do not have any
obligation to, and do not intend to, update or otherwise revise
any statements reflecting circumstances arising after
the date hereof or to reflect the occurrence of underlying
events, even if the, underlying assumptions do not come
to fruition. In accordance with the SEBI ICDR Regulations, our
Company and the BRLMs will ensure that
investors in India are informed of material developments until
such time as the grant of listing and trading
permissions by the Stock Exchanges for the Equity Shares
allotted pursuant to the Issue. The Selling Shareholder
will ensure that investors are informed of material developments
in relation to statements and undertakings made
by the Selling Shareholder in the Red Herring Prospectus until
the time of the grant of listing and trading
permission by the Stock Exchanges.
All forward looking statements are subject to risks,
uncertainties and assumptions about us that could cause our
actual results to differ materially from those contemplated by
the relevant forward looking statement. For further
discussion of factors that could cause our actual results to
differ from our expectations, please refer to the chapters
“Risk Factors”, “Our Business” and “Management’s Discussion and
Analysis of Financial Condition and Results
of Operation” on pages 16, 135 and 339, respectively.
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SECTION II: RISK FACTORS
Any investment in equity shares involves a high degree of risk.
You should carefully consider all the information
in this Draft Red Herring Prospectus, including the risks,
uncertainties and challenges described below, before
making an investment in our Equity Shares. You should read this
chapter in conjunction with “Our Business”
and “Management's Discussion and Analysis of Financial Condition
and Results of Operations” on pages 135
and 339, respectively, as well as the other financial and
statistical information contained in this Draft Red
Herring Prospectus.
The risks set out in this chapter may not be exhaustive. If any
or a combination of the following risks, or other
risks and uncertainties that are not currently known or are now
deemed immaterial, actually materialize, our
business, financial condition, results of operations, cash flows
and prospects may suffer, the trading price of our
Equity Shares may decline, and all or part of your investment in
our Equity Shares may be lost. Unless otherwise
stated, we are not in a position to specify or quantify the
financial or other risks mentioned here.
Unless stated or the context requires otherwise, the financial
information in this chapter is derived from our
Restated Consolidated Summary Statements as at and for the years
ended March 31, 2015, March 31, 2014,
March 31, 2013, March 31, 2012 and March 31, 2011.
This Draft Red Herring Prospectus contains forward-looking
statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in
these forward-looking statements as a result of
certain factors, including the considerations described below
and elsewhere in this Draft Red Herring Prospectus.
Please refer to “Forward-Looking Statements” on page 15.
Internal Risk Factors
Risks Relating to Our Business
1. We depend on a limited number of customers for a significant
portion of our revenues. The loss of a major customer or
significant reduction in production and sales of, or demand for our
products from, our major
customers may adversely affect our business, financial
condition, results of operations and prospects.
A significant majority of our revenue from operations is from
sales to Original Equipment Manufacturers
(“OEMs”). OEM sales constituted 73.87% of our income from
operations in fiscal 2015. Within OEM sales,
we depend on a limited number of customers for a significant
portion of our revenues. Revenue from our top
five customers constituted 66.53%, 66.71% and 65.91%, of our
income from operations for fiscal 2015, 2014
and 2013, respectively. We do not have firm commitment from our
customers for any particular quantity of
work or price and purchase orders may be amended or cancelled by
the customers.
It is difficult to forecast the success or sustainability of any
strategies undertaken by any of our major
customers in response to the current economic or industry
environment. Unfavorable industry conditions can
also result in an increase in commercial disputes and other
risks of supply disruption. A sustained decline in
the demand for products produced by our OEM customers could
prompt them to cut their production
volumes, directly affecting the demand from OEMs for our
products. In addition to decline in demand for
existing products, insufficient demand for new products launched
by our OEMs may also affect demand for
our products from such OEMs.
Further, it is common for large OEMs to source their parts from
relatively small numbers of vendors, and as
a result, our customers often undertake vendor rationalisation
to reduce costs related to procurement from
multiple vendors. Since we are significantly dependent on
certain key customers for a significant portion of
our sales, the loss of any one of our key customers or a
significant reduction in demand from such customers
could have an adverse effect on our business, results of
operations and financial condition.
2. We may not be successful in implementing our strategies, such
as expanding of product portfolio, increasing wallet share from
existing OEM customers and enhancing innovation and design
capabilities,
which could adversely affect our business, results of operations
and future prospects.
The success of our business depends greatly on our ability to
effectively implement our business and
strategies. Please refer to the chapter “Our Business” on page
135. Even if we have successfully executed
our business strategies in the past, there can be no assurance
that we will be able to execute our strategies on
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17
time and within the estimated budget, or that we will meet the
expectations of targeted customers. We expect
our strategies to place significant demands on our management
and other resources and require us to continue
developing and improving our operational, financial and other
internal controls. Our inability to effectively
manage our business and strategies could have an adverse effect
on our business, financial condition and
profitability.
Our strategy of expanding our product portfolio involves
understanding different product specifications,
technology and other factors, which we may currently be
unfamiliar with. Further, change in product mix
manufactured by us may lead to an increase in costs on account
of cost of raw materials that may be higher
than those required for our existing products. Further,
aggressive positioning by our competitors may prevent
us from successfully pursuing our strategy of increasing our
wallet share from existing OEM customers.
In order to achieve future growth, we need to effectively manage
our expansion projects, accurately assess
new markets, attract new customers, obtain sufficient financing
for our expected capital expenditures, control
our input costs, maintain sufficient operational and financial
controls and make additional capital investments
to take advantage of anticipated market conditions. We may not
be able to achieve growth in revenues and
profits or maintain such rate of growth in the future. If we are
unable to execute our future strategies
effectively, our business and financial results will be
adversely affected. Our inability to manage the
expansion of our business could have an adverse effect on our
business, results of operations and financial
condition.
3. We have undertaken and may continue to undertake strategic
investments and alliances, acquisitions and mergers in the future,
which may be difficult to integrate and manage.
We have pursued and may continue to pursue acquisitions, mergers
and strategic investments and alliances
as a mode of expanding our operations. For example, we currently
have joint venture agreements with Han
Sung and JBM Auto. Further, during fiscal 2006, we acquired
Adeep Locks Limited, Adeep Roloforms
Limited and Agrim Automach Private Limited to complement our
overall strategy for growth. Adeep Locks
Limited, Adeep Roloforms Limited and Agrim Automach Private
Limited were subsequently merged into
our Company in fiscal 2006. For details of our joint venture
agreements, acquisitions and the scheme of
amalgamation, please refer to the chapter “History and Certain
Corporate Matters” on page 161. We also
acquired the business carried on by Mag Engineering Private
Limited in fiscal 2013 and the cabin division
of Arkay Fabsteel Systems Private Limited in fiscal 2015 and
acquired the aluminium die casting of small
parts and mould design business of TECFISA, Spain, into our
Subsidiary, ST Barcelona, in fiscal 2008. For
further details, please refer to the chapter “Our Business” on
page 135. There can be no assurance that the
integration of any future expansion or acquisitions will be
successful or that the expected strategic benefits
of any future expansion, acquisitions, mergers or alliances will
be realised.
Our Company has in the past incurred losses from one of its
joint venture, Sandhar Caama Components
(Private) Limited, wherein our Company had to write down
unamortized goodwill of ` 1.63 million in the Restated Consolidated
Summary Statements. Further, our Company has agreed to waive off
the outstanding
loan amount amounting to `4.35 million and has borne 50% of the
outstanding liability in the books of Sandhar Caama Components
(Private) Limited amounting to ` 1.36 million.
Further, one of our Subsidiaries, PT Sandhar Indonesia is
currently under liquidation on account of non-
viability of the business being undertaken. Our Company has
invested `40.39 million and has a recoverable amount (loans and
advances) of `41.97 million from PT Sandhar, Indonesia, as at March
31, 2015. Our Company has made necessary adjustments in its
Restated Unconsolidated Summary Statements and may not
be able to realise this investment or the recoverable amount
from PT Sandhar, Indonesia.
Going forward, we may continue to pursue further acquisitions,
mergers, investments and expansions to
enhance our operations and technological capabilities. However,
there can be no assurance that we will be
able identify suitable acquisition targets or investment
opportunities on commercially reasonable terms or be
able to raise sufficient funds to finance such strategies for
growth. Further expansion and acquisitions may
require us to incur or assume new debt, expose us to future
funding obligations or integration risks and we
cannot assure you that such expansion or acquisitions will
contribute to our profitability. In addition, there
can be no assurance that we will be able to consummate our
expansions, acquisitions, mergers or alliances in
the future on terms acceptable to us, or at all. Further there
is no assurance that our products manufactured
through technical collaborations and alliances will generate the
expected levels of interest amongst our OEM
customers or that our new ventures will generate return on
investment at expected levels or at all.
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Our failure to successfully integrate an acquired business or
our inability to realise the anticipated benefits
of such expansion or acquisitions could adversely affect our
business, results of operations and financial
condition.
4. If we are unable to accurately forecast demand for our
products and plan production schedules in advance, our business,
cash flows, financial condition, results of operations and
prospects may be adversely affected.
The volume and timing of sales to our customers may vary due to
variation in demand for our customers’
products, our customers’ attempts to manage their inventory,
design changes, changes in their product mix,
manufacturing strategy and growth strategy, and macroeconomic
factors affecting the economy in general
and our customers in particular. Further, decline in demand for
existing products, or insufficient demand for
new products launched by our OEMs may affect demand for our
products from such OEMs. Our inability to
forecast the level of customer demand for our products, process
innovation and value engineering costs as
well as inability to accurately schedule our raw material
purchases and production and manage our inventory
may adversely affect our business and cash flows from
operations. In particular, our inability to accurately