DRAFT RED HERRING PROSPECTUS December 18, 2014 Please read
Section 32 of the Companies Act, 2013 This Draft Red Herring
Prospectus will be updated upon filing of the Red Herring
Prospectus with the RoC Book Built Offer UFO MOVIEZ INDIA LIMITED
Our Company was incorporated as Valuable Media Private Limited
under the provisions of the Companies Act, 1956 pursuant to a
certificate of incorporation dated June 14, 2004 issued by the
Registrar of Companies, Maharashtra at Mumbai.Forfurther detailsin
relation to changes to our name, status and registered address, see
History and Certain Corporate Matters on page 191 of this Draft Red
Herring Prospectus. Corporate Identity Number:
U22120DL2004PLC164728 Registered Office: 1 - B, Sagar Apartments, 6
Tilak Marg, New Delhi 110 001, India. Tel: +91 (11) 4575 0002; Fax:
+91 (11) 4575 0099, Website: www.ufomoviez.comCorporate Office:
Valuable Techno Park, Plot No. 53/1, Road No. 7, MIDC, Marol,
Andheri East, Mumbai 400 093, India. Tel: +91 (22) 4030 5060, Fax:
+91 (22) 4030 5110 Contact Person: Mr. Sameer Chavan (Company
Secretary and Compliance Officer); Tel: +91 (22) 4030 5060; Fax:
+91 (22) 4030 5124; E-mail: [email protected] PROMOTERS OF
OUR COMPANY: MR. SANJAY GAIKWAD, MR. NARENDRA HETE, VALUABLE MEDIA
LIMITED, VALUABLE TECHNOLOGIES LIMITED AND APOLLO INTERNATIONAL
LIMITED.
INITIALPUBLICOFFERINGOF[]EQUITYSHARESOFFACEVALUEOF`10EACH(EQUITYSHARES)OFUFOMOVIEZINDIALIMITED(THEISSUERORTHE
COMPANY)FORCASHATAPRICEOF`[]PEREQUITYSHAREINCLUDINGASHAREPREMIUMOF`[]PEREQUITYSHARE,AGGREGATINGUPTO`7,500
MILLION (THE OFFER) THROUGH AN OFFER FOR SALE BY THE SELLING
SHAREHOLDERS (AS DEFINED HEREINAFTER). THE OFFER SHALL CONSTITUTE
[]% OF THE FULLY DILUTED POST-OFFER PAID UP EQUITY SHARE CAPITAL OF
OUR COMPANY.
THEPRICEBAND,ANYRETAILDISCOUNT*ANDTHEMINIMUMBIDLOTWILLBEDECIDEDBYTHECOMPANY,3IRESEARCH(MAURITIUS)LIMITED(3I
RESEARCH),P5ASIAHOLDINGINVESTMENTS(MAURITIUS)LIMITED(P5),ANDTHEPROMOTERSELLINGSHAREHOLDERS(BEINGMR.SANJAYGAIKWAD,MR.
NARENDRAHETE,VALUABLEMEDIALIMITEDANDVALUABLETECHNOLOGIESLIMITED)INCONSULTATIONWITHTHEGLOBALCOORDINATORSANDBOOK
RUNNINGLEADMANAGERSANDTHEBOOKRUNNINGLEADMANAGERS(COLLECTIVELYMANAGERS),ANDADVERTISEDIN[]EDITIONSOF[],AND[]
EDITIONSOF[](WHICHAREWIDELYCIRCULATEDENGLISHANDHINDINEWSPAPERS,HINDIBEINGTHEREGIONALLANGUAGEOFNEWDELHI,WHEREOUR
REGISTEREDOFFICEISLOCATED)ATLEASTFIVEWORKINGDAYSPRIORTOTHEOFFEROPENINGDATEINACCORDANCEWITHTHESECURITIESAND
EXCHANGEBOARDOFINDIA(ISSUEOFCAPITALANDDISCLOSUREREQUIREMENTS)REGULATIONS,2009,ASAMENDED(THEICDRREGULATIONS)ANDSUCH
ADVERTISEMENTSHALLBEMADEAVAILABLETOBSELIMITED(BSE)ANDNATIONALSTOCKEXCHANGEOFINDIALIMITED(NSE)FORTHEPURPOSEOF
UPLOADING ON THEIR RESPECTIVE WEBSITES. * Discount of ` [] to the
Offer Price may be offered to Retail Individual Investors (Retail
Discount).THE FACE VALUE OF THE EQUITY SHARES IS ` 10 EACH AND THE
OFFER PRICE IS [] TIMES THE FACE VALUE OF THE EQUITY SHARES
IncaseofrevisioninthePriceBand,theOfferPeriod
willbeextendedforaminimumofthreeadditionalWorkingDaysafterrevisionofthePriceBandsubject
to theOfferPeriodnot exceeding10
WorkingDays.AnyrevisioninthePriceBandandtherevisedOfferPeriod,ifapplicable,willbewidelydisseminatedbynotificationtotheNSEandtheBSE,byissuingapressrelease,andalsoby
indicating the change on the websites of the Managers and at the
terminals of the Syndicate Members and Registered Brokers and by
intimation to Self Certified Syndicate Banks (SCSBs). In terms of
Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules,
1957, as amended (SCRR) read with Regulation41 of the ICDR
Regulations, this is an offer for at least 25% of the
post-OffercapitalandisbeingmadethroughtheBookBuildingProcess,wherein50%oftheOffershallbeavailableforallocationonaproportionatebasistoQualifiedInstitutionalBuyers(QIBs).
ProvidedthatourCompany,3iResearch,P5andthePromoterSellingShareholders,inconsultationwiththeManagers,mayallocateupto60%oftheQIBCategorytoAnchorInvestorsona
discretionary basis out of which one-third shall be reserved for
domestic Mutual Funds only subject to valid Bids being received
from domestic Mutual Funds at or above the Anchor Investor
Allocation Price. In the event of under-subscription in the Anchor
Investor Portion, the remaining Equity Shares shall be added to the
Net QIB Category. 5% of the Net QIB Category shall be available for
allocation on a proportionate basis to Mutual Funds only, and the
remainder of the Net QIB Category shall be available for allocation
on a proportionate basis to all QIBs, including Mutual Funds,
subject to valid Bids being received at or above the Offer Price.
Further, not less than 15% of the Offer shall be available for
allocation on a proportionate basis to Non-Institutional Investors
and not less than 35% of the Offer shall be available for
allocation, in accordance with the ICDR Regulations, to Retail
Individual Investors, subject to valid Bids being received at or
above the Offer Price.
Allinvestors,otherthanAnchorInvestors,canparticipateintheOfferthroughtheApplicationsSupportedbyBlockedAmount(ASBA)processbyprovidingthedetailsoftheirrespectivebank
accountsinwhichthecorrespondingBidAmountwillbeblockedbytheSelfCertifiedSyndicateBanks(SCSBs).However,QIBs(excludingAnchorInvestors)andNon-InstitutionalInvestorsare
mandatorily required to submit their Bids by way of ASBA only. For
details, see Offer Procedure on page 454 of this Draft Red Herring
Prospectus. RISKS IN RELATION TO FIRST OFFER This beingthefirst
public offer of EquityShares ofour Company, therehas beenno formal
market for theEquity Shares ofour Company.Thefacevalue of
theEquitySharesis`10 each. TheFloor Price is [] times of the face
value and the Cap Price is [] times of the face value. The Offer
Price is [] times of the face value. The Offer Price (as has been
determined by the Company, 3i Research, P5 and the Promoter Selling
Shareholders in consultation with the Managers, and justified as
stated in the section Basis for Offer Price on page 125 of this
Draft Red Herring Prospectus) should not be taken to be indicative
of the market price of the Equity Shares after the Equity Shares
are listed. No assurance can be given regarding an active and / or
sustained trading in the Equity Shares or regarding the price at
which the Equity Shares will be traded after listing. GENERAL RISKS
Investmentsinequityandequity-relatedsecuritiesinvolveadegreeofriskandinvestorsshouldnotinvestanyfundsintheOfferunlesstheycanaffordtotaketheriskoflosingtheirinvestment.
Investors are advised to read the Risk Factors carefully before
taking an investment decision in the Offer. For taking an
investment decision, investors must rely on their own examination
of the Company andtheOffer,including
therisksinvolved.TheEquitySharesofferedintheOfferhavenotbeenrecommendedorapprovedbytheSecuritiesandExchangeBoardofIndia(SEBI),nordoesSEBI
guarantee the accuracy or adequacy of this Draft Red Herring
Prospectus. Specific attention of the investors is invited to the
section Risk Factors on page 22 of this Draft Red Herring
Prospectus. COMPANYS AND THE SELLING SHAREHOLDERS ABSOLUTE
RESPONSIBILITY Our Company,having made all reasonable inquiries,
accepts responsibilityfor and confirms that this Draft RedHerring
Prospectus contains allinformation withregard toour Company and the
Offer, whichismaterialin the context of theOffer, that
theinformation contained in this Draft Red HerringProspectus is
true and correct in allmaterial aspects and is not misleadingin
anymaterial respect, that the opinions and intentions expressed
herein are honestly held and that there are no otherfacts, the
omission of which makes this Draft Red Herring Prospectus as a
whole or any of such information
ortheexpressionofanysuchopinionsorintentions,misleadinginanymaterialrespect.EachSellingShareholderacceptsresponsibilityonlyforstatementsmadebysuchSellingShareholderinthis
Draft Red Herring Prospectus and confirms that this Draft Red
Herring Prospectus contains all information about itself as a
Selling Shareholder and the Equity Sharesoffered by it in the Offer
and that such statements are true and correct in all material
respects and are not misleading in any material respect. LISTING
The Equity Shares offered throughthe Red Herring Prospectus are
proposed to be listed on NSE and BSE. We have received in-principle
approvalsfrom NSE and BSEfor listing of our Equity Shares pursuant
to letters dated [] and [] respectively. For the purposes of the
Offer, [] shall be the Designated Stock Exchange. GLOBAL
COORDINATORS AND BOOK RUNNING LEAD MANAGERSREGISTRAR TO THE OFFER
Axis Capital Limited 1st Floor, Axis House C-2, Wadia International
Centre, P.B. Marg, Worli Mumbai 400 025 Maharashtra, India
Telephone: + 91 (22) 4325 2183 Facsimile : +91 (22) 4325 3000
E-mail: [email protected]: www.axiscapital.co.in Investor
grievance ID: [email protected] person: Ms. Simran Gadh
SEBI registration number: INM000012029 Citigroup Global Markets
India Private Limited1202, 12th Floor, First International
Financial Centre, G-Block Bandra Kurla Complex, Bandra East, Mumbai
400 051 Maharashtra, India Telephone: + 91 (22) 6175 9999
Facsimile: + 91 (22) 6175 9961 E-mail: [email protected]:
http://www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm
Investor grievance ID: [email protected] person: Mr.
Ankit SrivastavaSEBI registration number: INM000010718 Karvy
Computershare Private Limited Plot no. 17 to 24 Vittal Rao Nagar,
Madhapur Hyderabad 500 081 Telangana, India Telephone: +91 (40)
4465 5000 Facsimile: + 91 (40) 2343 1551 E-mail/Investor grievance
ID: [email protected]: https:\\karisma.karvy.com Contact
person: Mr. M Murali Krishna SEBI registration number:
INR000000221OFFER PROGRAMME FOR ALL BIDDERS:OFFER OPENS ON: []* FOR
QIBS:OFFER CLOSES ON: []** FOR RETAIL AND NON-INSTITUTIONAL
INVESTORS OFFER CLOSES ON [] *Our Company, 3i Research, P5 and the
Promoter Selling Shareholders in consultation with the Managers,
may consider participation by Anchor Investors in accordance with
the ICDR Regulations. The Anchor Investor Bidding Date shall be one
Working Day prior to the Offer Opening Date. ** Our Company, 3i
Research, P5 and the Promoter Selling Shareholders in consultation
with the Managers, may decide to close the Offer Period for QIBs
one Working Day prior to the Offer Closing Date in accordance with
the ICDR Regulations. 2 TABLE OF CONTENTS DEFINITIONS AND
ABBREVIATIONS
.........................................................................................................
3 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
................................................ 17 FORWARD-LOOKING
STATEMENTS
.......................................................................................................
20 RISK FACTORS
...............................................................................................................................................
22 SUMMARY OF OUR BUSINESS
...................................................................................................................
55 SUMMARY OF INDUSTRY
............................................................................................................................
62 SUMMARY FINANCIAL INFORMATION
..................................................................................................
68 THE OFFER
......................................................................................................................................................
81 GENERAL INFORMATION
...........................................................................................................................
83 CAPITAL STRUCTURE
..................................................................................................................................
94 OBJECTS OF THE OFFER
...........................................................................................................................
124 BASIS FOR OFFER PRICE
..........................................................................................................................
125 STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANIES
AND ITS SHAREHOLDERS
..........................................................................................................................................
128 INDUSTRY
......................................................................................................................................................
143 BUSINESS
........................................................................................................................................................
169 REGULATIONS AND POLICIES IN INDIA
..............................................................................................
188 HISTORY & CERTAIN CORPORATE MATTERS
..................................................................................
191 OUR MANAGEMENT
...................................................................................................................................
221 OUR PROMOTERS AND GROUP ENTITIES
...........................................................................................
239 DIVIDEND POLICY
......................................................................................................................................
315 FINANCIAL STATEMENTS
........................................................................................................................
316 FINANCIAL INDEBTEDNESS
.....................................................................................................................
317 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
.................................................................................................................................................
336 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
................................................. 362 GOVERNMENT
AND OTHER APPROVALS
...........................................................................................
402 OTHER REGULATORY AND STATUTORY DISCLOSURES
............................................................... 426
TERMS OF THE
OFFER...............................................................................................................................
445 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
.......................................... 448 OFFER STRUCTURE
....................................................................................................................................
450 OFFER PROCEDURE
...................................................................................................................................
455 MAIN PROVISIONS OF OUR ARTICLES OF ASSOCIATION
............................................................. 501
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
.................................................... 560
DECLARATION
.............................................................................................................................................
563 - 3 - DEFINITIONS AND ABBREVIATIONS
Unlessthecontextotherwiseimpliesorrequires,thetermsandabbreviationsstatedhereundershallhavethe
meaningsasassignedtherewith.Referencestostatutes,rules,regulations,guidelinesandpolicieswill,unless
the context otherwise requires, be deemed to include all
amendments,modifications and replacements notified thereto as of
the date of this Draft Red Herring Prospectus. Company and Selling
Shareholder related terms TermDescription Company,our
CompanyUFOMoviez IndiaLimited,UFOor
Issuer.UFOMoviezIndiaLimited,apubliclimitedcompanyincorporatedunderthe
CompaniesAct,1956andhavingitsregisteredofficeat1-B,Sagar
Apartments, 6 Tilak Marg, New Delhi 110001, India. we, us, or
ourUnless the context otherwise requires or implies, UFO Moviez
India Limited, its Subsidiaries, its Associates and its Joint
Venture, on a consolidated basis. 3i3i Digital Media (Mauritius)
Limited. 3i Research3i Research (Mauritius) Limited. AdventAdvent
Fiscal Private Limited. Articles/Articlesof Association The
articles of association of our Company, as amended. Associates
ScrabbleDigitalLimited,ScrabbleDigitalJLT,ScrabbleVenturesLLC,and
Scrabble Ventures, S. de R.L. de C.V., Mexico. AuditorsorStatutory
Auditor S.R. Batliboi & Associates LLP, Chartered Accountants.
Board/Board of
DirectorsTheboardofdirectorsofourCompany,asconstitutedfromtimetotime
including any committees thereof. Corporate OfficeValuable Techno
Park, Plot No. 53/1, Road No. 7, MIDC, Marol, Andheri East, Mumbai
400 093, India. Director(s)Director(s) on the Board of our Company,
as appointed from time to time. ELCEdridge Limited. EmployeeSelling
Shareholders
AmitK.Mehta;AmitS.Shelar;AshishSadanandMalushte;DaniyalAppa
Parab;DeepakRanjan;DheerendraSinghMuchhal;K.Suvarna;KapilKumar
Agarwal;KetanNatwarlalPithadia;MitaleeV.Patel;MukeshShanker
Sherigar;NitinLionelMonteiro;NitinNohani;PrashantS.Keluskar;Pravin
RamdasVaje;RajendraLaxmanGaikwad;RajeshB.Mishra;RaviSukhadeo
Nakhale; Samir Shantaram Surve; Sanjay Pardeshi Chavan; Sudalaimani
Konar; SudhirVittal Shetty;SwapnilC.Borkar;Vikram
Machaiah;VishnuVithalbhai Patel. Equity SharesEquity shares of our
Company of face value of ` 10 each. ESOP 2006The employee stock
option scheme 2006. ESOP 2010The employee stock option scheme 2010.
ESOP 2014The employee stock option scheme 2014. - 4 -
TermDescription Executive DirectorAn executive Director. Group
EntitiesCompanies,firmsandventurespromotedbyourPromoters,irrespectiveof
whethersuchentitiesarecoveredunderSection370(1)(B)oftheCompanies
Act, 1956, and disclosed in Our Promoters and Group Entities on
page 239. Independent
DirectorAnon-executive,independentDirectoraspertheCompaniesAct,2013and
Clause 49 of the Listing Agreement. Joint VentureMukta V N Films
Limited. Memorandum/ Memorandumof Association The memorandum of
association of our Company, as amended. MVNFLMukta V N Films
Limited. NiftyNifty Portfolio Services Private Limited.
Non-Executive DirectorA non-executive, non-independent Director as
per the Companies Act, 2013 and the Listing Agreement. P5P5 Asia
Holding Investments (Mauritius) Limited.
PromotersMr.SanjayGaikwad,Mr.NarendraHete,ValuableMediaLimited,Valuable
Technologies Limited and Apollo International Limited. Promoter
GroupSuch persons and entities which constitute the promoter group
of our Company pursuant to Regulation 2 (1)(zb) of the ICDR
Regulations. PromoterSelling Shareholders Mr. Sanjay Gaikwad, Mr.
Narendra Hete, Valuable Media Limited and Valuable Technologies
Limited. Registered Office 1 - B, Sagar Apartments, 6 Tilak Marg,
New Delhi 110 001, India. RestatedConsolidated Summary Statements
Restatedconsolidatedsummarystatementsofassetsandliabilitiesasat
September 30, 2014, March 31, 2014, 2013, 2012, 2011 and 2010 and
statement of profit and loss and cash flows for the six months
period ended September 30,
2014andforeachoftheyearsendedMarch31,2014,2013,2012,2011and 2010
for the Company, its Subsidiaries, Associates and Joint Venture.
RestatedUnconsolidated Summary Statements
Restatedunconsolidatedsummarystatementsofassetsandliabilitiesasat
September 30, 2014, March 31, 2014, 2013, 2012, 2011 and 2010 and
statement of profit and loss and cash flows for the six months
period ended September 30,
2014andforeachoftheyearsendedMarch31,2014,2013,2012,2011and 2010
for the Company. RestatedSummary Statements
RestatedConsolidatedSummaryStatementsandRestatedUnconsolidated
Summary Statements collectively. RoC Registrar of Companies, NCT of
Delhi and Haryana. ScrabbleScrabble Entertainment Limited. Selling
Shareholders3i Research,P5,
ValuableMediaLimited,ValuableTechnologies Limited,Mr.
NarendraHete,Mr.SanjayGaikwad,Mr.RaajaKanwar,Mr.PrafullaVaidya, Mr.
Uday Gaikwad, Mr. Rakesh Gupta and the Employee Selling
Shareholders.SDIUScrabble Digital INC. - 5 - TermDescription
SDLScrabble Digital Limited. SDJLTScrabble Digital JLT. SDSSouthern
Digital Screenz India Private Limited. SEILScrabble Entertainment
(Israel) Limited. SEJLTScrabble Entertainment JLT. SELSScrabble
Entertainment (Lebanon) Sarl. SEMLScrabble Entertainment
(Mauritius) Limited. Subsidiary/ Subsidiaries
AsubsidiaryoftheCompanyasofthedateofthisDraftRedHerring
Prospectus,inaccordancewiththeCompaniesAct,2013,andassetoutin
History and Certain Corporate Matters on page 191 of this Draft Red
Herring Prospectus.SVLLCScrabble Ventures LLC. SVMScrabble
Ventures, S. de R.L. de C.V., Mexico. UELCUFO Europe Limited.
UILCUFO International Limited. UFOLPLUFO Lanka (Private) Limited.
UFOMPLUnited Film Organisers (UFO) (Mauritius) Private Limited.
UFONPLUnited Film Organisers Nepal Private Limited. USTPLUFO
Software Technologies Private Limited. Valuable
GroupMr.SanjayGaikwad,Mr.NarendraHete,ValuableTechnologiesLimitedand
Valuable Media Limited. VDSPLValuable Digital Screens Private
Limited. VNFPLV N Films Private Limited. VTLValuable Technologies
Limited. Offer Related Terms TermDescription Allotment / Allot /
Allotted
Unlessthecontextotherwiserequires,thetransferofEquitySharestosuccessful
Bidders pursuant to the Offer. AllotteeA successful Bidder to whom
the Equity Shares are Allotted. Allotment AdviceThe note or advice
or intimation of Allotment, sent to each successful Bidder who
hasbeenoristobeAllottedtheEquitySharesafterapprovaloftheBasisof
Allotment by the Designated Stock Exchange. Anchor
InvestorAQualifiedInstitutionalBuyer,applyingundertheAnchorInvestorPortionin
accordance with the ICDR Regulations. Anchor Investor
BiddingTheday,oneWorkingDaypriortotheOfferOpeningDate,onwhichBidsby
- 6 - TermDescription
DateAnchorInvestorsshallbesubmitted,priortoandafterwhichtheManagerswill
not accept any Bids, and allocation to Anchor Investors shall be
completed.Anchor Investor Allocation
PriceThepriceatwhichEquityShareswillbeallocatedtotheAnchorInvestorsin
terms of the Red Herring Prospectus and the Prospectus. Anchor
Investor Offer Price
ThefinalpriceatwhichEquityShareswillbeAllottedtoAnchorInvestorsin
terms of the Red Herring Prospectus and the Prospectus, which price
will be equal
toorhigherthantheOfferPricebutnothigherthantheCapPrice.TheAnchor
InvestorOfferPricewillbedecidedbytheCompany,3iResearch,P5andthe
Promoter Selling Shareholders in consultation with the Managers.
Anchor Investor
PortionUpto60%oftheQIBCategory,whichmaybeallocatedbyourCompany,in
consultationwiththeManagers,toAnchorInvestorsonadiscretionarybasisin
accordancewiththeICDRRegulations,outofwhichone-thirdshallbereserved
fordomesticMutualFunds,subjecttovalidBidsbeingreceivedfromdomestic
Mutual Funds at or above the Anchor Investor Allocation Price.
Applications Supported by Blocked Amount / ASBA An application,
whether physical or electronic, used by ASBA Bidders to make a Bid
authorising an SCSB to block the Bid Amount in the ASBA Account.
ASBA
AccountAnaccountmaintainedwithanSCSBandspecifiedintheBidcumApplication
Form submitted by an ASBA Bidder, which will be blocked by such
SCSB to the extent of the Bid Amount specified by an ASBA Bidder.
ASBA BidderAnyBidder,otherthananAnchorInvestor,whoBidsthroughASBAin
accordancewiththetermsoftheRedHerringProspectusandtheBidcum
Application Form. Basis of
AllotmentThebasisonwhichtheEquityShareswillbeAllotted,asdescribedinOffer
ProcedureAllotmentProcedureandBasisofAllotmentonpage489ofthis Draft
Red Herring Prospectus.BidAn indication to make an offer during the
Offer Period by a Bidder (other than an Anchor Investor), or on the
Anchor Investor Bidding Date by an Anchor Investor,
pursuanttothesubmissionofaBidcumApplicationForm,topurchase,the
EquitySharesatapricewithinthePriceBand,includingallrevisionsthereto,in
terms of the Red Herring Prospectus and theBid cumApplication Form,
and the term Bidding shall be construed accordingly. Bid AmountIn
relation to each Bid shall mean the highest value of the Bid
indicated in the Bid
cumApplicationFormandpayablebytheBidderuponsubmissionoftheBidin the
Offer, less Retail Discount, as applicable. Bid Lot[] Equity
Shares. Bid cum Application Form The form used by a Bidder,
including an ASBA Bidder, to make a Bid and which
willbeconsideredastheapplicationforAllotmentforthepurposesoftheRed
Herring Prospectus and the Prospectus.
BidderAnyprospectiveinvestorwhomakesaBidpursuanttothetermsoftheRed
HerringProspectusandtheBidcumApplicationForm.Unless,otherwisestated
or implied, the term Bidder shall be deemed to include an ASBA
Bidder and an Anchor Investor. Broker CentreBroker centres notified
by the Stock Exchanges where Bidders can submit the Bid cum
Application Forms to aRegistered Broker and details of which are
available - 7 - TermDescription on the websites of the stock
exchanges.Book Building Process
ThebookbuildingprocessasdescribedinPartA,ScheduleXIoftheICDR
Regulations, in terms of which the Offer is being made. Cap
PriceThe higher end of the Price Band,i.e. ` [], abovewhich the
Offer Priceand the Anchor Investor Offer Price will not be
finalised and above which no Bids will be accepted. CAN or
Confirmation of Allocation Note
ThenoteoradviceorintimationsenttoeachsuccessfulBidder/Applicant
indicatingtheEquityShareswhichmaybeAllotted,afterapprovalofBasisof
Allotment by the Designated Stock Exchange. Controlling
BranchesSuchbranchesoftheSCSBswhichcoordinateBidswiththemembersofthe
Syndicate,RegistrartotheOfferandtheStockExchanges,alistofwhichis
availableonthewebsiteoftheSEBIat
www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognized-Intermediariesand
updatedfromtimetotime,andatsuchotherwebsitesasmaybeprescribedby
SEBI from time to time. Cut-off
PriceTheOfferPrice,asfinalisedbytheCompany,3iResearch,P5andthePromoter
Selling Shareholdersin consultationwith theManagers,which shall
beany price
withinthePriceBand.OnlyRetailIndividualInvestorswhoseBidAmountdoes
not exceed ` 200,000 are entitled to Bid at the Cut-off Price. No
other category of Bidders is entitled to Bid at the Cut-off Price.
Demographic Details
ThedemographicdetailsoftheBidderssuchastheirrespectiveaddresses,
occupation, PAN, MICR Code and bank account details. Designated
BranchesSuchbranchesoftheSCSBswithwhichanASBABidder,notBiddingthrough
Syndicate/SubSyndicateorthroughaRegisteredBroker,maysubmittheBid
cum Application Forms, a list of which is available onthe website
of the SEBI at
www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognized-Intermediariesand
updatedfromtimetotime,andatsuchotherwebsitesasmaybeprescribedby
SEBI from time to time. Designated
DateThedateonwhichfundsaretransferredfromtheEscrowAccounttothePublic
Offer Account or the Refund Account, as appropriate, or the funds
blocked by the
SCSBsaretransferredfromtheASBAAccounttothePublicOfferAccount,as the
case may be. Designated Stock Exchange []. Draft Red Herring
Prospectus This draft red herring prospectus
datedDecember18,2014,issuedin accordance
withtheICDRRegulations,whichdoesnotcontaincompleteparticularsofthe
Offer, including the price at which the Equity Shares will be
Allotted. Eligible
FPIsFPIsfromsuchjurisdictionsoutsideIndiawhereitisnotunlawfultomakean
offer/invitationundertheOfferandinrelationtowhomtheRedHerring
Prospectus constitutes an invitation to purchase the Equity Shares
offered thereby. Eligible NRIsNRIs from jurisdictions outside India
where it is not unlawful to make anoffer or
invitationundertheOfferandinrelationtowhomtheRedHerringProspectus
constitutes an invitation to purchase the Equity Shares offered
thereby. Escrow
AccountsAccountsopenedwiththeEscrowCollectionBank(s)andinwhosefavourthe
Bidders(excludingtheASBABidders)willissuechequesordraftsinrespectof
- 8 - TermDescription the Bid Amount when submitting a Bid. Escrow
AgreementTheagreementtobeenteredintoamongstourCompany,theRegistrartothe
Offer,theManagers,theSyndicateMembers,theSellingShareholders,the
EscrowCollectionBank(s),thePublicOfferAccountBank(s),andtheRefund
Bank(s)forcollectionoftheBidAmountsand,whereapplicable,refundsofthe
amounts collected on the terms and conditions thereof. Escrow
Collection
Bank(s)ThebankswhichareclearingmembersandregisteredwithSEBIundertheBTI
Regulations, with whom the Escrow Account(s) will be opened, being
[]. First
BidderTheBidderwhosenameappearsfirstintheBidcumApplicationFormorthe
Revision Form.Floor PriceThe lower end of the Price Band, i.e. `
[], at or above which the Offer Price and the Anchor Investor Offer
Price will be finalised and below which no Bids, will be accepted.
General Information Document
TheGeneralInformationDocumentforinvestinginpublicissuespreparedand
issued in accordance with the circular (CIR/CFD/DIL/12/2013) dated
October 23,
2013,notifiedbySEBI,suitablymodifiedandincludedinOfferProcedureon
page 454 of this Draft Red Herring Prospectus. Listing AgreementThe
equity listing agreement to be entered into by our Company with
each of the Stock Exchanges, as amended. Managers
TheGlobalCoordinatorsandBookRunningLeadManagers,beingAxisCapital
Limited and Citigroup Global Markets India Private Limited. Mutual
Fund
Portion5%oftheNetQIBCategoryavailableforallocationtoMutualFundsonly,ona
proportionate basis. Net QIB
CategoryTheQIBCategory,availableforallocationtoQIBs,lessthenumberofEquity
Shares allocated to the Anchor Investors, being [] Equity Shares.
Non-Institutional Investors
AllBidders,includingCategoryIIIFPIs,thatarenotQIBsorRetailIndividual
Investors who have Bid for Equity Shares for an amount of more
than` 200,000, (but not including NRIs other than Eligible NRIs).
Non-Institutional Category
TheportionoftheOfferbeingnotlessthan15%oftheOfferavailablefor
allocation to Non-InstitutionalInvestorson aproportionatebasis,
subject to valid Bids being received at or above the Offer Price.
Offer Initial public offering of[]Equity Sharesfor cash at a price
of` [] per Equity Share aggregating up to ` 7,500 million by way of
an offer for sale by the Selling Shareholders pursuant to the terms
of the Red Herring Prospectus. Offer
AgreementTheagreemententeredintoonDecember18,2014amongstourCompany,the
SellingShareholdersandtheManagers,pursuanttowhichcertainarrangements
are agreed to in relation to the Offer. Offer Closing DateExcept in
relation toBids receivedfrom theAnchor Investors, [],thedateafter
whichtheSyndicate,theSCSBsandtheRegisteredBrokerswillnotacceptany
Bids, which shall also be notified in [], an English national
newspaper and [], a Hindi national newspaper (Hindi being the
regional language of New Delhi where
ourRegisteredOfficeislocated),eachwithwidecirculationandincaseofany
revision,theextendedOfferClosingDate,alsotobenotifiedtotheStock
Exchangesbyissuingapressreleaseandalsoindicatingthechangeonthe - 9
- TermDescription websites of theManagers andattheterminals of
theSyndicateMembersand the Registered Brokers and by intimation to
the SCSBs.
TheCompany,3iResearch,P5andthePromoterSellingShareholders,in
consultationwiththeManagers,mayconsiderclosingtheOfferPeriodforQIBs
oneWorkingDaypriortotheOfferClosingDateinaccordancewiththeICDR
Regulations.Offer Opening
DateExceptinrelationtoBidsreceivedfromtheAnchorInvestors,[],thedateon
whichtheSyndicate,theSCSBsandtheRegisteredBrokers,asapplicable,shall
startacceptingBidsfortheOffer,whichshallalsobenotifiedin[],anEnglish
national newspaper and [], a Hindi national newspaper (Hindi being
the regional
languageofNewDelhiwhereourRegisteredOfficeislocated),eachwithwide
circulation. Offer PeriodExcept in relation to Bids received from
the Anchor Investors, the period from and including the Offer
Opening Date to and including the Offer Closing Date during
whichBidderscansubmittheirBids,includinganyrevisionsthereto.TheOffer
Period will comprise Working Days only. Offer
PriceThefinalprice(lessanyRetailDiscount)atwhichtheEquityShareswillbe
Allotted in terms of theRedHerring Prospectus. TheOffer Pricewill
bedecided
bytheCompany,3iResearch,P5andthePromoterSellingShareholders,in
consultationwiththeManagers,onthePricingDate.Adiscountof`[]tothe
OfferPricemaybeofferedtoRetailIndividualInvestors.TheRupeeamountof
the Retail Discount, if any, will be decided by our Company, 3i
Research, P5 and
thePromoterSellingShareholdersinconsultationwiththeManagers,and
advertisedin[],anEnglishnationalnewspaperand[],aHindinational
newspaper (Hindi being the regional language of New Delhi where our
Registered Officeis located),eachwithwidecirculationatleast
fiveWorkingDays prior to
theOfferOpeningDate,andshallbemadeavailabletotheStockExchangesfor
the purpose of uploading on their website. Price BandAny price
between the Floor Price and the CapPrice, inclusive of the Floor
Price and the Cap Price, and includes revisions thereof. The Price
Band, any Retail Discount and theminimum Bid Lot for the Offer will
bedecidedbytheCompany,3iResearch,P5andthePromoterSelling
ShareholdersinconsultationwiththeManagersandwillbeadvertisedin[],an
English national newspaper and [], a Hindi nationalnewspaper (Hindi
being the regional language of New Delhi where our Registered
Office is located), each with wide circulation, at least five
Working Days prior to the Offer Opening Date, with the relevant
financial ratios calculated at the Floor Price and at the Cap Price
and suchadvertisementshallbemadeavailabletotheStockExchangesforthe
purpose of uploading on their websites. Pricing
DateThedateonwhichtheCompany,3iResearch,P5andthePromoterSelling
Shareholders in consultation with the Managers, finalise the Offer
Price. ProspectusThe prospectus to be filed with the RoC in
accordance with Sections 26 and 32 of the Companies Act, 2013,
containing, inter-alia, the Offer Price that is determined
attheendoftheBookBuildingProcessandcertainotherinformation,including
any addenda or corrigenda thereto. Public Offer Account(s)An
account opened in accordance with the provisions of the Companies
Act, 2013, with the Public Offer Account Bank to receive money from
the Escrow Accounts - 10 - TermDescription
andfromtheASBAAccountsmaintainedwiththeSCSBsontheDesignated Date.
Public Offer Account
Bank(s)ThebankswhichareclearingmembersandregisteredwithSEBIundertheBTI
Regulations, with whom the Public Offer Account(s) will be opened,
being []. Qualified Institutional Buyers or QIBs A qualified
institutional buyer, as defined under Regulation 2 (1)(zd) of the
ICDR Regulations. QIB CategoryThe portion of the Offer (including
the Anchor Investor Portion) being 50% of the
OfferwhichshallbeavailableforallocationtoQIBs,includingtheAnchor
Investors. Red Herring Prospectus The red herring prospectus that
will be issued in accordance with Section 32 of the
CompaniesAct,2013,andtheICDRRegulations,whichwillnothavecomplete
particulars,includingthepriceatwhichtheEquityShareswillbeoffered,
including any addenda or corrigenda thereto. Refund
Account(s)TheaccountopenedwiththeRefundBank(s),fromwhichrefunds(excluding
refunds to ASBA Bidders), if any, of the whole or part of the Bid
Amount shall be made. Refund
Bank(s)ThebankswhichareclearingmembersandregisteredwithSEBIundertheBTI
RegulationswithwhomtheRefundAccount(s)willbeopenedandinthiscase
being []. Registered BrokerStock brokers registered with the Stock
Exchanges having terminals in any of the Broker Centresother than
the Syndicate, and eligibleto procureBids in terms of the circular
No. CIR/CFD/14/2012 dated October 4, 2012 issued by SEBI. Registrar
/ Registrar to the Offer Karvy Computershare Private Limited.
Retail
CategoryTheportionoftheOfferbeingnotlessthan35%oftheOfferavailablefor
allocationtoRetailIndividualInvestor(s)inaccordancewiththeICDR
Regulations, subject to valid Bids being received at or above the
Offer Price. Retail DiscountA discount of ` [] that may be offered
to Retail Individual Investors, at the time
ofmakingaBid.Theamountoftheretaildiscountshallbedeterminedbythe
Company,3iResearch, P5 andthePromoter Selling Shareholdersin
consultation with the Managers. Retail Individual
InvestorsIndividualBidders(includingHUFsapplyingthroughtheirkartaandEligible
NRIs) who have not submitted a Bid for Equity Shares for a Bid
Amount of more than ` 200,000 in any of the Bidding options in the
Offer. Revision FormThe form used by the Bidders, including ASBA
Bidders, to modify the quantity of Equity Shares or the Bid Amount
in their Bid cum Application Forms or any prior
RevisionForm(s),asapplicable.QIBsandNon-InstitutionalInvestorsarenot
allowedtolowertheirBids(intermsofquantityofEquitySharesortheBid
Amount) at any stage. Self Certified Syndicate Bank(s) or SCSB(s)
Banks which are registered with SEBI under the BTI Regulations,
which offer the
facilityofASBA,alistofwhichisavailableonthewebsiteoftheSEBIat
www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediariesand
updatedfromtimetotimeandatsuchotherwebsitesasmaybeprescribedby SEBI
from time to time. - 11 - TermDescription Specified Cities or
Specified Locations
BiddingcentreswheretheSyndicateshallacceptBidcumApplicationForms
fromASBABidders,alistofwhichisavailableonthewebsiteoftheSEBI
(http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries)
and updated from time to time and at such other websites as may be
prescribed by SEBI from time to time. Stock ExchangesNSE and BSE.
Syndicate or member of the Syndicate The Managers and the Syndicate
Members. Sub Syndicate The sub-syndicate members, if any, appointed
by the Managers and the Syndicate Members, to collect Bid cum
Application Forms. Syndicate
AgreementTheagreementtobeenteredintoamongsttheSyndicate,ourCompany,the
Selling Shareholders and the Registrar in relation to collection of
Bids in the Offer
(excludingBidsfromASBABiddersprocureddirectlybySCSBsandBids
procured by Registered Brokers).Syndicate Bidding Centres
SyndicateandSubSyndicatecentresestablishedforacceptanceoftheBidcum
Application Form and Revision Forms. Syndicate
Members[].TRSorTransaction Registration Slip The slip or document
issued by the Syndicate/Sub Syndicate, Registered Broker or
anSCSB(onlyondemand),asthecasemaybe,totheBidderasproofof
registration of a Bid. UnderwritersThe Managers and the Syndicate
Members. Underwriting AgreementThe agreement to be entered into
amongst the Underwriters, our Company and the Selling Shareholders
on or after the Pricing Date. Working DayAny day other than
Saturday or Sunday on which commercial banks are open for
businessinMumbai,providedhowever,forthepurposesofthetimeperiod
betweenOfferClosingDateandlistingoftheEquityShares,WorkingDays
shallmeanalldaysotherthanSundaysandbankholidaysinMumbai,in
accordance with the SEBI circular no. CIR/CFD/DIL/3/2010 dated
April 22, 2010. Conventional or general terms and abbreviations
TermDescription A/cAccount. ACITAssistant Commissioner of Income
Tax. AGMAnnual general meeting.
AIFsAlternativeinvestmentfundsasdefinedinandregisteredundertheAIF
Regulations. AIF
RegulationsSecuritiesandExchangeBoardofIndia(AlternativeInvestmentFunds)
Regulations, 2012.
ASAccountingstandardsissuedbytheInstituteofCharteredAccountantsof
India. - 12 - TermDescription A.Y.Assessment year. BPLRBenchmark
prime lending rate. BSEBSE Limited. BTI
RegulationsSecuritiesandExchangeBoardofIndia(BankerstoanIssue)Regulations,
1994. CAGRCompounded Annual Growth Rate. Calendar Year/ year
Unlessthecontextotherwiserequires,shallrefertothetwelvemonthperiod
ending December 31.Category III Foreign Portfolio Investors or
Category III FPIs FPIs who are registered as Category III foreign
portfolio investors under the FPI Regulations. CDSLCentral
Depository Services (India) Limited. CFOChief Financial Officer.
Companies
ActCompaniesAct,1956andtherulesthereunder,totheextentnotrepealed,
and/or the Companies Act, 2013. Companies Act, 1956Companies Act,
1956, as the context requires. Companies Act, 2013Companies Act,
2013 and the rules and clarifications thereunder, to the extent
notified. CITCommissioner of Income Tax. CSRCorporate social
responsibility. DCITDeputy Commissioner of Income Tax. Depositories
Act Depositories Act, 1996. DepositoryNSDL and CDSL. DINDirector
Identification Number. DP/ Depository Participant A depository
participant as defined under the Depositories Act. DP IDDepository
Participants identity number. DTCDraft Direct Taxes Code, 2013.
EBITDAEarningsbeforeinterest,tax,depreciationandamortisation,calculatedas
profit / (loss) for the period excluding depreciation and
amortization expense, finance cost, finance income and tax
expenses. ECBExternal commercial borrowing. EGMExtraordinary
general meeting. EPSEarnings per share (as calculated in accordance
with AS-20). EUREuro. FDIForeign direct investment. - 13 -
TermDescription FEMAForeign Exchange Management Act, 1999,
including the rules and regulations thereunder. FEMA
RegulationsForeignExchangeManagement(TransferorIssueofSecuritybyaPerson
Resident Outside India) Regulations, 2000. FII(s)Foreign
institutional investors, as defined under the FPI Regulations.
Financial Year / Fiscal / FY / F.Y.
PeriodoftwelvemonthsendingonMarch31ofthatparticularyear,unless
stated otherwise.
FPI(s)Foreignportfolioinvestors,asdefinedundertheFPIRegulations,including
FIIs and QFIs, which are deemed to be foreign portfolio investors.
FPI Regulations
SecuritiesandExchangeBoardofIndia(ForeignPortfolioInvestors)
Regulations, 2014.Finance ActFinance Act, 1994. FIPBForeign
Investment Promotion Board.
FVCIForeignventurecapitalinvestors,asdefinedandregisteredwithSEBIunder
the FVCI Regulations. FVCI
RegulationsSecuritiesandExchangeBoardofIndia(ForeignVentureCapitalInvestor)
Regulations, 2000. GDPGross domestic product. GIR NumberGeneral
index registration number. GoIGovernment of India. GSTGoods and
services tax. HCILHughes Communications India Limited. HUFHindu
undivided family. ICAIThe Institute of Chartered Accountants of
India. IFRSInternational Financial Reporting Standards. INRIndian
National Rupees. I.T. ActThe Income Tax Act, 1961. ITATIncome Tax
Appellate Tribunal. ICDR
RegulationsSecuritiesandExchangeBoardofIndia(IssueofCapitalandDisclosure
Requirements) Regulations, 2009. Indian GAAPAccounting principles
generally accepted in India. Insider Trading Regulations
SecuritiesandExchangeBoardofIndia(ProhibitionofInsiderTrading)
Regulations, 1992.IPOInitial public offer. LIBORLondon interbank
offered rate. MATMinimum alternate tax. - 14 - TermDescription
MCAMinistry of Corporate Affairs, Government of India. MICRMagnetic
ink character recognition. Mn / mnMillion. Mutual FundsA mutual
fund registered with SEBI under the Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996. N.A.Not applicable. NAV
NetassetvaluepersharebeingNetWorthattheendofperiod/year excluding
preference share capital and cumulative preference dividend divided
by Total number of equity shares outstanding at the end of the
period/year. NCAERNational Council of Applied Economic Research.
NCTNational Capital Territory. NECSNational electronic clearing
service. NEFTNational electronic fund transfer.Negotiable
Instruments ActNegotiable Instruments Act, 1881. Net WorthEquity
share capital plus Reserves and surplus (including, Securities
Premium, General Reserve, Legal Reserve, Foreign Currency
Translation Reserve, Stock options outstanding and surplus in
statement of Profit and Loss). NOCNo objection certificate.
Non-ResidentApersonresidentoutsideIndia,asdefinedundertheFEMAandincludesa
Non-Resident Indian. NRE
AccountNonresidentexternalaccountestablishedinaccordancewiththeForeign
Exchange Management (Deposit) Regulations, 2000. NRI / Non-Resident
Indian A person resident outside India, as defined under FEMA and
who is a citizen
ofIndiaorapersonofIndianorigin,suchtermasdefinedundertheForeign
Exchange Management (Deposit) Regulations, 2000. NRO
AccountNonresidentordinaryaccountestablishedinaccordancewiththeForeign
Exchange Management (Deposit) Regulations, 2000. NSDLNational
Securities Depository Limited. NSENational Stock Exchange of India
Limited. OCB / Overseas Corporate Body
Acompany,partnership,societyorothercorporatebodyowneddirectlyor
indirectlytotheextentofatleast60%byNRIsincludingoverseastrustsin
which not less than 60% of the beneficial interest is irrevocably
held by NRIs
directlyorindirectlyandwhichwasinexistenceonOctober3,2003and
immediatelybeforesuchdatewaseligibletoundertaketransactionspursuant
tothegeneralpermissiongrantedtoOCBsundertheFEMA.OCBsarenot allowed
to invest in the Offer. P/E RatioPrice/earnings ratio. PANPermanent
account number allotted under the I.T. Act. PLRPrime lending rate.
- 15 - TermDescription QFIQualified foreign investor, as defined
under the FPI Regulations. PSUsPublic Sector Undertakings
(government-owned corporations) RBIReserve Bank of India.
RONWReturn on net worth. Rs. / Rupees / `Indian Rupees. RTGSReal
time gross settlement. SCRASecurities Contracts (Regulation) Act,
1956. SCRRSecurities Contracts (Regulation) Rules, 1957.
SEBISecurities and Exchange Board of India constituted under the
SEBI Act. SEBI ActSecurities and Exchange Board of India Act, 1992.
SEBI ESOP
GuidelinesErstwhileSecuritiesandExchangeBoardofIndia(EmployeeStockOption
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. SEBI
ESOP
RegulationsSecuritiesandExchangeBoardofIndia(ShareBasedEmployeeBenefits)
Regulations, 2014.Securities ActU.S. Securities Act of 1933, as
amended. SICASick Industrial Companies (Special Provisions) Act,
1985. Stock ExchangesBSE and NSE. Takeover RegulationsSecurities
and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011. US/USAUnited States of America. USD
or $ or US $United States Dollar. US GAAPGenerally accepted
accounting principles in the US. U.S. PersonAs defined in
Regulation S under the Securities Act. U.S.
QIBsQualifiedInstitutionalBuyers,asdefinedinRule144AundertheSecurities
Act. VATValue added tax.
VCFsVenturecapitalfundsasdefinedinandregisteredwithSEBIundertheVCF
Regulations. VCF Regulations The erstwhile Securities and Exchange
Board of India (Venture Capital Fund) Regulations, 1996. Unless the
content otherwise requires, the words and expressions used but not
defined in this Draft Red Herring Prospectus will have the same
meaning as assigned to such terms under the Companies Act,the SEBI
Act, the SCRA, the Depositories Act and the rules and regulations
made thereunder.
Notwithstandingtheforegoing,termsinMainProvisionsofourArticlesofAssociation,Statementof
PossibleTaxBenefitsavailabletotheCompaniesanditsShareholdersandFinancial
Statementsonpages 500, 128 and 316, respectively, shall have the
meanings given to such terms in these respective sections. - 16 -
Industry related terms TermDescription 2DTwo dimensional 3DThree
dimensional ATPAverage ticket price. CRISILCRISIL Research, a
division of CRISIL Limited. CRISIL Report
StudyoftheMediaandEntertainmentSectorinIndia,CRISILResearch,
November 2014. CRISCRISIL Risk and Infrastructure Solutions
Limited. D-Cinema Digital Cinema Initiative compliant
DAVPDirectorate of Advertising and Visual Publicity DCIDigital
Cinema Initiative E-Cinema
Acommonlyusedtermtodescribevarioustechnologiesusedtodigitally
deliver movie content other than through D-Cinema.
e-taxEntertainment tax. HIGHigher income group. LIGLower income
group. NOCNetwork operations centre. PFCEPrivate final consumption
expenditure. UFO-M4our UFO-M4 platform. UPSUninterrupted power
supply. VPFVirtual print fee. VPF D-CinemaVirtual print fees from
D-Cinema. VPF E-CinemaVirtual print fees from E-Cinema. VSATVery
small aperture terminal. - 17 - PRESENTATION OF FINANCIAL, INDUSTRY
AND MARKET DATA
AllreferencestoIndiacontainedinthisDraftRedHerringProspectusaretotheRepublicofIndiaandall
references to the U.S. are to the United States of America.
Financial Data
Unlessthecontextrequiresotherwise,thefinancialdatainthisDraftRedHerringProspectusisderivedfrom
our Restated Summary Statements. The Companys Financial Year
commences on April 1, and ends on March 31 of the following year.
In this Draft Red Herring Prospectus, any discrepancies in any
table, graphs or charts between the total and the sums of the
amounts listed are due to rounding-off.
TherearesignificantdifferencesbetweenIndianGAAP,IFRSandU.S.GAAP.Wehavenotattemptedto
explainthosedifferencesorquantifytheirimpactonthefinancialdataincludedherein,andweurgeyouto
consultyour own advisors regarding such differences andtheir impact
on ourfinancialdata.Accordingly, the degree to which the
RestatedSummary Statementsincluded in this Draft RedHerring
Prospectus will provide
meaningfulinformationisentirelydependentonthereadersleveloffamiliaritywithIndianaccounting
practices.AnyreliancebypersonsnotfamiliarwithIndianaccountingpracticesonthefinancialdisclosures
presented in this Draft Red Herring Prospectus should accordingly
be limited. Our Company does not provide a
reconciliationofitsfinancialstatementstoIFRSorU.S.GAAPfinancialstatements.Fordetails,seeRisk
FactorsSignificantdifferencesexistbetweentherequirementsofIndianGAAPandotheraccounting
principles,suchasU.S.GAAPandIFRS,whichmaybematerialtoinvestorsassessmentsofourfinancial
condition. on page 51 of this Draft Red Herring Prospectus. Any
percentage amounts, as set forth in the sections Risk Factors,
Business and Managements Discussion
andAnalysisofFinancialConditionandResultsofOperationsonpages22,169and336ofthisDraftRed
HerringProspectus,respectively,andelsewhereinthisDraftRedHerringProspectus,unlessotherwise
indicated, have been calculated on the basis of our Restated
Consolidated Summary Statements and the Restated Unconsolidated
Summary Statements. Currency and units of presentation All
references to; Rupees Rs. or ` are to Indian Rupees, the official
currency of the Republic of India. US Dollars or US$ or USD are to
United States Dollars, the official currency of the United States
of America. AED are to the official currency of the United Arab
Emirates. NGN are to the official currency of Nigeria. MxP$ are to
the official currency of Mexico.
InthisDraftRedHerringProspectus,ourCompanyhaspresentedcertainnumericalinformationinmillion
units. One million represents 1,000,000. Industry and Market Data
Unless stated otherwise, industry data used throughout thisDraft
Red Herring Prospectus has been obtained or
derivedfrompubliclyavailableinformationaswellasindustrypublications.Industrypublicationsgenerally
state that the information contained in those publications has been
obtained from sources believed to be reliable but that their
accuracy and completeness are not guaranteed and their reliability
cannot be assured. Accordingly, no investment decision should be
made on the basis of such information. Although we believe that the
industry
datausedinthisDraftRedHerringProspectusisreliable,ithasnotbeenindependentlyverifiedbythe
Company, the Selling Shareholders, the Syndicate or any of their
affiliates or advisors. - 18 - Information has been included in
this Draft Red Herring Prospectus from the report titledStudy of
themedia
andentertainmentsectorinIndia,November,2014preparedbyCRISILResearch,adivisionofCRISIL
Limited(theCRISILReport),whichreporthasbeencommissionedbytheCompanyforthepurposesof
confirmingitsunderstandingoftheindustryinconnectionwiththeOfferandwhichincludesthefollowing
disclaimer.
CRISILResearch,adivisionofCRISILLimited(CRISIL),hastakenduecareandcautioninpreparingthis
Report (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
ithasnoliabilitywhatsoevertothesubscribers/users/transmitters/distributorsofthisReport.CRISIL
Researchoperatesindependentlyof,anddoesnothaveaccesstoinformationobtainedbyCRISILsRatings
Division/CRISILRiskandInfrastructureSolutionsLimited(CRIS),whichmay,intheirregularoperations,
obtain information of a confidential nature. The views expressed in
this Report are that of CRISIL Research and
notofCRISILsRatingsDivision/CRIS.NopartofthisReportmaybepublished/reproducedinanyform
without CRISILs prior written approval.
Further,theextenttowhichtheindustryandmarketdatapresentedinthisDraftRedHerringProspectusis
meaningful depends on the readers familiarity with and
understanding of the methodologies used in compiling
suchdata.Therearenostandarddatagatheringmethodologiesintheindustryinwhichweconductour
business, and methodologies and assumptions may vary widely among
different industry sources.
Suchdatainvolvesrisks,uncertaintiesandnumerousassumptionsandissubjecttochangebasedonvarious
factors, including those disclosed in the section Risk Factors on
page 22 of this Draft Red Herring Prospectus. Accordingly,
investment decisions should not be based on such information.
Exchange Rates This Draft Red Herring Prospectus contains
conversions of US$ and other currency amounts into Indian Rupees
thathavebeen presentedsolely to complywith therequirements of the
ICDR Regulations. These conversions
shouldnotbeconstruedasarepresentationthatsuchcurrencyamountscouldhavebeen,orcanbeconverted
into Indian Rupees, at any particular rate, or at all. The exchange
rates of the respective foreign currencies are provided below: (in
`) CurrencySeptember 30, 2014 March 31, 2014 March 31, 2013 March
31, 2012 March 31, 2011 March 31, 2010
US$61.8359.9854.6552.1845.2144.97 AED16.8316.3314.8814.2112.3112.24
NGN0.380.360.350.330.290.30 MxP$4.594.594.444.083.793.64 Source:
www.oanda.com NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES
The Equity Shares have not been recommended by any U.S. federal or
state securities commission or regulatory authority. Furthermore,
theforegoing authoritieshavenot confirmed theaccuracy or determined
theadequacy of this Draft Red Herring Prospectus or approved or
disapproved theEquity Shares. Any representation to the
contraryisacriminaloffenceintheUnitedStates.Inmakinganinvestmentdecisioninvestorsmustrelyon
their own examination of our Company and the terms of the offer,
including the merits and risks involved. The Equity Shares have not
been and will not be registered under the U.S. Securities Act of
1933, as amended
(theSecuritiesAct)oranyotherapplicablelawoftheUnitedStatesand,unlesssoregistered,maynotbe
- 19 - 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 (a) in the United States only to persons
reasonably believed to be qualified institutional buyers (as
defined in Rule 144A under the Securities Act and referred to in
this Draft Red Herring
ProspectusasU.S.QIBs,fortheavoidanceofdoubt,thetermU.S.QIBsdoesnotrefertoacategoryof
institutionalinvestordefinedunderapplicableIndianregulationsandreferredtointheDraftRedHerring
Prospectus asQIBs) in transactions exemptfromthe registration
requirements of theSecuritiesActand (b)
outsidetheUnitedStatesincompliancewithRegulationSandtheapplicablelawsofthejurisdictionwhere
those offers and sales occur. NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION
FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW
HAMPSHIRE REVISED STATUTES (RSA)
WITHTHESTATEOFNEWHAMPSHIRENORTHEFACTTHATASECURITYISEFFECTIVELY
REGISTEREDORAPERSONISLICENSEDINTHE STATEOFNEWHAMPSHIRECONSTITUTESA
FINDINGBYTHESECRETARYOFSTATEOFNEWHAMPSHIRETHATANYDOCUMENTFILED
UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT NOR
THEFACTTHATANEXEMPTIONOREXCEPTIONISAVAILABLEFORASECURITYORA
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY
UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON,
SECURITYORTRANSACTION.ITISUNLAWFULTOMAKE,ORCAUSETOBEMADE,TOANY
PROSPECTIVEPURCHASER,CUSTOMER,ORCLIENTANYREPRESENTATIONINCONSISTENT
WITH THE PROVISIONS OF THIS PARAGRAPH. NOTICE TO PROSPECTIVE
INVESTORS IN THE EUROPEAN ECONOMIC AREA This Draft Red Herring
Prospectus has been prepared on the basis that all offers of Equity
Shares will be made
pursuanttoanexemptionundertheProspectusDirective,asimplementedinMemberStatesoftheEuropean
EconomicArea(EEA),fromtherequirementtoproduceaprospectusforoffersofEquityShares.The
expressionProspectusDirectivemeansDirective2003/71/ECoftheEuropeanParliamentandCouncilEC
(andamendmentsthereto,includingthe2010PDAmendingDirective,totheextentimplementedinthe
Relevant Member State (as defined below)) and includes any relevant
implementing measure in each Relevant Member State. Accordingly,
any person making or intending to make an offer within the EEA of
Equity Shares which are the subject of the placement contemplated
in this Draft Red Herring Prospectus should only do so in
circumstancesinwhichnoobligationarisesforourCompanyoranyoftheUnderwriterstoproducea
prospectus for such offer. None of our Company and the Underwriters
have authorized, nor do they authorize, the making of any offer of
Equity Shares through any financialintermediary, other than the
offers made by the
UnderwriterswhichconstitutethefinalplacementofEquitySharescontemplatedinthisDraftRedHerring
Prospectus. - 20 - FORWARD-LOOKING STATEMENTS All statements
contained in this Draft Red Herring Prospectus that are not
statements of historical fact constitute
forward-lookingstatements.Allstatementsregardingourexpectedfinancialconditionandresultsof
operations,business,plansandprospectsareforward-lookingstatements.Theseforward-lookingstatements
includestatementswithrespecttoourbusinessstrategy,ourrevenueandprofitability,ourprojectsandother
matters discussed in this Draft Red Herring Prospectus regarding
matters that are not historical facts. Investors
cangenerallyidentifyforward-lookingstatementsbyterminologysuchasaim,anticipate,believe,
expect, estimate,intend, objective, plan,project, shall,will,will
continue,will pursue or
otherwordsorphrasesofsimilarimport.Allforward-lookingstatements(whethermadebyusoranythird
party)arepredictionsandaresubjecttorisks,uncertaintiesandassumptionsaboutusthatcouldcauseactual
results to differ materially from those contemplated by the
relevant forward-looking statement.
ForwardlookingstatementsreflectourcurrentviewswithrespecttofutureeventsasofthedateofthisDraft
RedHerringProspectusandarenotaguaranteeoffutureperformance.Thesestatementsarebasedonour
managementsbeliefsandassumptions,whichinturnarebasedoncurrentlyavailableinformation.Although
we believe the assumptions upon which these forward-looking
statements are based are 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
risksoruncertaintiesassociatedwithourexpectationswithrespectto,butnotlimitedto,regulatorychanges
pertainingtotheindustriesinIndiainwhichwehaveourbusinessesandourabilitytorespondtothem,our
ability to successfully implement our strategy, our growth and
expansion, technological changes, our exposure
tomarketrisks,generaleconomicandpoliticalconditionsinIndia,whichhaveanimpactonourbusiness
activities or investments, the monetary and fiscal policies of
India, inflation, deflation, unanticipated turbulence in interest
rates,foreign exchangerates,equity prices or other rates or prices,
theperformance of thefinancial
marketsinIndiaandglobally,changesindomesticlaws,regulationsandtaxes,changesincompetitioninour
industryandincidenceofanynaturalcalamitiesand/oractsofviolence.Importantfactorsthatcouldcause
actual results to differ materially from our expectations include,
but are not limited to, the following: any downturn in the Indian
or international cinema industries; dependence on our relationships
and agreements with movie producers and distributors, and any
failure to maintain these relationships, or to establish and
capitalise on new relationships;
dependenceonourrelationshipsandagreementswithexhibitors,andanyfailuretomaintainthese
relationships, or to establish and capitalise on new relationships;
dependence on our relationships with advertisers, and any failure
to maintain these relationships, or to establish and capitalise on
new relationships; dependence of ouradvertisement revenue on
anumber of factors, including the number of screenings of movies,
which is subject to factors outside of our control; dependence on
certain of our customers who account for a large portion of our
revenues; intense competition and pricing pressure; failure or
disruption of our technology systems on which we rely heavily;
failure to maintain technological advantage; dependence on third
parties to supply digital cinema equipment, installation and
maintenance services; failure or inability to protect our
intellectual property rights; failure to implement growth
strategies; and risks associated with international activities. For
afurther discussion offactors thatcould causeour actualresults to
differ,seeRisk Factors, Business andManagements Discussion and
Analysis of Financial Condition and Results ofOperationson pages22,
169 and 336 of this Draft Red Herring Prospectus, respectively. -
21 - 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
Selling Shareholders, the Directors, the Syndicate and their
respective affiliates or
associatesdonothaveanyobligationto,anddonotintendto,updateorotherwisereviseanystatements
reflectingcircumstancesarisingafterthedatehereoforto
reflecttheoccurrenceofunderlyingevents,evenif theunderlying
assumptions do not cometo fruition.In accordancewith theSEBI
requirements,ourCompany
andtheSellingShareholderswillensurethatinvestorsinIndiaareinformedofmaterialdevelopmentsuntil
such timeas thegrant oflisting and trading permissionsby theStock
Exchanges.Further, in accordancewith Regulation 51A of the ICDR
Regulations, our Company may be required to undertake an annual
updation of the
disclosuresmadeintheRedHerringProspectusandmakeitpubliclyaccessibleinthemannerspecifiedby
SEBI. - 22 - RISK FACTORS An investment in equity shares involves a
high degree of risk. You should carefully consider all the
information
disclosedinthisDraftRedHerringProspectus,includingtherisksanduncertaintiesdescribedbelow,before
making an investment decision in our Equity Shares. The risks
described below are not the only ones relevant to us or our Equity
Shares, the industry in which we operate or India and other regions
we operate in. Additional
risksanduncertainties,notpresentlyknowntousorthatwecurrentlydeemimmaterialmayalsoimpairour
business,resultsofoperationsandfinancialcondition.ToobtainacompleteunderstandingofourCompany,
prospectiveinvestorsshouldreadthissectioninconjunctionwiththesectionstitledBusinessand
Managements Discussion and Analysis of Financial Condition and
Results of Operations on pages 169 and 336, respectively, as well
as the other financial and statistical information contained in
this Draft Red Herring Prospectus. If any of the risks described
below or other risks that are currently not known actually occur,
our business, prospects, financial condition and results of
operations could be adversely affected, the trading price
ofourEquitySharescoulddecline,andprospectiveinvestorsmayloseallorpartoftheirinvestment.You
should consult your tax, financial and legal advisors about the
particular consequences to you of an investment in the Offer.
ProspectiveinvestorsshouldpayparticularattentiontothefactthatourCompanyisincorporatedunderthe
lawsofIndiaandissubjecttoalegalandregulatoryenvironmentwhichmaydifferincertainrespectsfrom
that of other countries.
ThisDraftRedHerringProspectusalsocontainsforward-lookingstatementsthatinvolverisksand
uncertainties.Ouractualresultscoulddiffermateriallyfromthoseanticipatedintheseforward-looking
statementsasaresultofcertainfactors,includingtheconsiderationsdescribedbelowandelsewhereinthis
DraftRedHerringProspectus.PleaseseeForward-LookingStatementsonpage20ofthisDraftRed
Herring Prospectus.
Unlessspecifiedorquantifiedintherelevantrisksfactorsbelow,wearenotinapositiontoquantifythe
financial or other implication of any of the risks described in
this section. Unless otherwise stated, the financial
informationofourCompanyusedinthissectionhasbeenderivedfromtheRestatedConsolidatedSummary
Statements. INTERNAL RISKS Risks Relating to our Business and
Industry 1.Any downturn in theI ndian or international cinema
industries could materially adversely affect our business,
financial condition, results of operations and prospects. Our
success is highly dependent upon our ability to provide services
to, and generate revenues from, movie
producers,distributorsandexhibitors,aswellasfromadvertisersthroughin-cinemaadvertising.These
partiesaredependentonthehealthoftheIndianandinternationalcinemaindustries,whichare
significantly impacted by factors entirely outside of our control.
Such factors include:
Alternativesourcesofentertainmentandentertainmentdelivery.Thecinemaindustrycompetes
with many other sources of entertainment and entertainment
delivery, including television and the
internet.Technologicaladvancementssuchasvideoondemand,mobileandinternetstreaming
anddownloadinghaveincreasedthenumberofentertainmentandinformationdeliverychoices
availabletoconsumersandhaveintensifiedthechallengesposedbyaudiencefragmentation.
Moviesmayalsobereleasedunderalternativemethods,suchasDVDorHDDVD,cable
television,downloadsviatheinternet,videodiscs,videoondemand,satelliteandpay-per-view
services.Theincreasingnumberofchoicesavailabletoaudiencescouldnegativelyimpact
consumer demand for viewing movies in a cinema, and there can be no
assurance that occupancy rates at cinemas will not fall. - 23 -
Thesuccessofmoviesshownincinemas.Thesuccessoffirst-runmoviesthatareshownin
cinemasdependsupontheproductionandmarketingeffortsofmoviestudiosandthe
attractivenessandvaluepropositionofthemoviestoconsumerscomparedtootherformsof
entertainment. Piracy. Movie piracy is extensive in many parts of
the world and is made easier by technological
advancesandtheconversionofmoviesintodigitalformats.Thistrendfacilitatesthecreation,
transmissionandsharingofhighqualityunauthorisedcopiesofmotionpicturesintheatrical
release on DVDs, CDs and Blu-ray discs and the internet. In
particular, unauthorised copying and
piracyareprevalentincountriesoutsideoftheUnitedStates,CanadaandWesternEurope,
includingIndia,whoselegalsystemsmaymakeitdifficultforcontentownerstoenforce
intellectualpropertyrightsandinwhichconsumerawarenessoftheindividualandindustry
consequencesofpiracyislower.Despitethesecurityfeaturesofourdigitalcinemadelivery
platform,withotherfactors,suchasbroadbandconnectivityimprovingand3Ginternet
penetration increasing in India, digital piracy of movies is an
increasing risk.
Generaleconomicconditions.Adeclineingeneraleconomicconditionsmaynegativelyimpact
consumerspending,andanyreductioninconsumerconfidenceordisposableincomeingeneral
could lead to a decline in cinema attendance. A decline in
attendance at cinemas may reduce thenumber of movies produced,
distributed and screened, which would directly affect the revenue
that we receive from content producers and distributors, as well as
reducethenumberofcinemasandscreensinoperation,whichcouldimpacttheamountofrevenueswe
generatefromexhibitors.Further,asustaineddeclineineconomicconditionscouldresultinclosureor
downsizing by, or otherwise adversely impact, content producers,
distributors and exhibitors on whom we
relyforrevenue.Thevalueofourin-cinemaadvertisingbusinesscouldalsobeadverselyaffectedbya
long-term multi-year decline in cinema attendance or even the
perception by advertisers that our platform is
nolongersuitablefortheirneedsduetothedecreasesinattendanceandgeographiccoverage.Therefore,
anydownturnintheoverallIndianandinternationalcinemaindustrieswouldmateriallyadverselyaffect
our business, financial condition, results of operations and
prospects. 2.We and certain of our Promoters, Directors and Group
Entities are involved in certain legal proceedings which may be
determined against us.
We,andcertainofourPromoters,DirectorsandGroupCompanies,areinvolvedincertainlegal
proceedingsandclaims.Theselegalproceedingsarependingatdifferentlevelsofadjudicationbefore
various courts and tribunals. Should any new developments arise,
such as a change in Indian law or rulings against us by courts or
tribunals, we may face losses and we may need to make provisions
inour financial statements, which could increase our expenses and
our liabilities. We can give no assurance that these legal
proceedings will be decided in our favour. Assertion of one or more
legal claims against us could have an adverse effect on our
business, reputation, financial conditions and results of
operation.
Inadditiontotheabove,variouscivilandstatutoryproceedings(includingproceedingsrelatingtodirect,
indirecttaxationandlabourlaws)havealsobeeninitiatedagainstourCompany.Thesearependingat
various levels of adjudication. The details of these proceedings
are given below: Nature and number of proceedings
TaxCivilStatutoryWrit PetitionCriminalMonetary claim, if any, to
the extent ascertainable ( in millions) 4076NilNil279.11 Our
Promoters and certain of our Directors, namely Mr. Sanjay Shankar
Gaikwad and Mr. Ameya Hete are involved in various civil
litigations in their respective capacities as directors in other
companies. For further
details,pleasesee-Theincometaxauthoritieshadcarriedoutsearchandseizureoperationsatthe
premises of certain of our Promoters, including our Promoter
Director, members of our Promoter Group - 24 -
aswellasGroupEntities.Anyadversedeterminationbythetaxauthoritiesinthismattercouldincrease
their tax liability and / or subject them to monetary penalties.
The details of the proceedings against our Promoters and Directors
are given below: Sr. No. Name of the Promoter/DirectorNature and
number of proceedings CriminalTaxCivilStatutoryWrit Petition
Monetary claim, if any, to the extent ascertainable ( in millions)
1.Apollo International LimitedNil102NilNil27.31 2.Mr. Narendra
HeteNil1NilNilNilNil 3.Mr. Sanjay GaikwadNil1NilNilNilNil
4.Valuable Technologies LimitedNil1NilNilNilNil 5.Valuable Media
LimitedNil1NilNilNilNil 6.Mr. Ameya HeteNil1NilNilNilNil 7.Mr.
Raaja KanwarNil3NilNilNil0.32 Various criminal, civil and statutory
proceedings (including direct, indirect taxation and writ
petitions) have
alsobeeninitiatedagainstourSubsidiaries,AssociatesandGroupEntities.Thesearependingatvarious
levels of adjudication. The details of these proceedings are given
below: Sr. No. Name of the SubsidiaryNature and number of
proceedings CriminalTaxCivilStatutoryWrit Petition Monetary claim,
if any, to the extent ascertainable ( in millions) 1.Scrabble
Entertainment LimitedNil8NilNilNil4.55 2.Southern Digital Screenz
Private LimitedNil112NilNil51.01 Sr. No. Name of the Group
EntityNature and number of proceedings
CriminalTaxCivilStatutoryWrit Petition Monetary claim, if any, to
the extent ascertainable (in millions) 1.Valuable Infrastructure
Private LimitedNil1NilNilNilNil 2.Valuable Destinations Private
LimitedNil1NilNilNilNil 3.Valuable Ag- Bio Private
LimitedNil1NilNilNilNil 4.NisargBuildingArt&TechnologyPrivate
Limited Nil1NilNilNilNil 5.Advent Fiscal Private
LimitedNil1NilNilNilNil 6.Nifty Portfolio Services Private
LimitedNil1NilNilNilNil 7.Apollo-EverestKoolSolutionsPrivate
Limited NilNil1NilNilNil 8.ApolloFiegeIntegratedLogisticsPrivate
Limited NilNilNil1Nil` 0.60 9.Clarion Logistics India Private
Limited 1Nil1NilNil` 2.77 10.ALS Container Warehousing
LimitedNilNil1NilNilNil 11.Apollo Logisolutions
LimitedNilNil2NilNil` 6.50 12.Apollo International
FZC1NilNilNilNilNil 12.Kailash Shipping Services Private
LimitedNil2NilNilNil` 6.36 14.Apollo International
PTE3NilNilNilNil` 0.24 15.Clarion Shipping Services
L.L.CNilNil3NilNilAED 2.03 GBP 0.50 Sr. No. Name of the
AssociateNature and number of proceedings
CriminalTaxCivilStatutoryWrit Petition Monetary claim, if any, to
the extent ascertainable - 25 - ( in millions) 1. Scrabble Digital
LimitedNil2NilNilNil3.53
Anadverseoutcomeinanyoralloftheseproceedingscouldhaveanadverseeffectonourbusiness,
prospects,reputationfinancialconditionandresultsofoperations.Furthermore,anycriminalproceedings
thatmaybeinitiatedagainstourDirectorscouldimpairtheirabilitytoserveourCompany.Forfurther
details, see the section titled Outstanding Litigation and Material
Developments on page 362. 3.We depend on our relationships and
agreements with movie producers and distributors, and any failure
to maintain these relationships, or to establish and capitalise on
new relationships, could have a material adverse effect on our
business, prospects, financial condition and results of operations.
We receive revenues from movie producers and distributors for the
secured delivery and screening of their
movies.Ourabilitytoestablishandmaintainourrelationshipsandagreementswithmovieproducersand
distributors iskey to ensuring thesuccess of our business,and
depends on anumber offactors, including the quality, effectiveness
and reliability of our digital cinema distribution platform.
WithrespecttomoviesdeliveredusingourUFO-M4platform,weenterintoreleaseordersin
Indiawithcontentproducers
anddistributorsonamovie-by-moviebasisinsteadofenteringinto
long-term agreements, and we cannot assure that they will continue
to use our services on existing or favourable commercial terms, or
at all.
WithrespecttoourD-Cinemabusiness,weprimarilyrelyonourcontractswithcertainmajor
Hollywood studios and other studios, which are subject to a variety
of risks.Our rights to collect VPF D-Cinemaunder our
agreementswithmajor Hollywood studios (which representsaportion
ofourtotalVPFD-Cinema)areallsettoexpirebetween2018and2019.Wedonotexpectto
extendorrenewthesecontracts,andiftheyarenotextendedorrenewed,weshallbeunableto
continuetocollectVPFD-CinemafrommajorHollywoodstudios.Withrespecttonon-Hollywood
studios, we collect VPF D-Cinema on a movie-by-movie basis instead
of entering into
long-termagreements,andwecannotassureyouthatdistributorswillcontinuetouseourD-Cinema
services on existing or favourable commercial terms, or at all. Any
expiration, termination or non-renewal of our D-Cinema deployment
contracts will have amaterial adverse effect on our business,
prospects, financial condition and results of operations.
Ourfailuretomaintainourrelationshipsandagreementswithmovieproducersanddistributors,orto
establishandcapitaliseonnewrelationshipswiththeseparties,couldharmourbusinessorpreventour
businessfromgrowing,whichcouldhaveamaterialadverseeffectonourbusiness,prospects,financial
condition and results of operations.
4.Wedependonourrelationshipsandagreementswithexhibitors,andanyfailuretomaintainthese
relationships, or to establish and capitalise on new relationships,
could have a material adverse effect on our business, prospects,
financial condition and results of operations.
Wereceiverevenuesfromexhibitorsprimarilythroughequipmentrentalandsalesfordigitalcinema
equipment.Ourabilitytoestablishandmaintainourrelationshipswithexhibitorsiskeytoensuringthe
successofourbusinessanddependsonanumberoffactors,includingthequality,effectivenessand
reliability of our digital cinema distribution platform. These
relationships are also subject to the following risks: Our digital
cinema equipment rental contracts with exhibitors are usually for
afixed-monthly fee
foradurationoffiveto10yearsandthereisnoassurancethatthesecontractsshallberenewed
uponexistingorfavourablecommercialterms,oratall.Further,theserentalcontractsgenerally
allow for exhibitors to terminate for convenience after a period of
three to fiveyears. We rely on our ability to create value and
additional streams of revenue, including from advertising, to
retain - 26 -
ourexhibitorcustomers,butthereisnoassurancethatexhibitorswillnotterminateourrental
contracts prior to their expiration date or continue to renew their
contracts with us.Although our D-Cinema deployment contracts and
other arrangements with movie producers and
distributorsenableustocollectVPFD-Cinemafromthem,theamountofVPFD-Cinemawe
collectdependsonouragreementswithexhibitors.Wedependeitheronourrentalagreements
withexhibitorsorseparateVPFD-Cinemasharingagreements,tocollectVPFD-Cinemaon
behalfofexhibitors.IftheserentalagreementsorVPFD-Cinemasharingagreementsare
terminated, expireor are otherwisenot renewed,wewill beunableto
collectVPF D-Cinemafor
thatparticularexhibitor,whichwoulddirectlyreduceourrevenuesandimpactourresultsof
operations and financial condition. Further, the portion of VPF
D-Cinema we share with exhibitors
issetoutinthesearrangementsandissubjecttonegotiationandtheirinvestmentinD-Cinema
equipment. For example, certain exhibitors that invest in their own
D-Cinema equipment and rely on our D-Cinema deployment contracts to
collect VPF D-Cinema receive a higher portion of VPF
D-CinemathanexhibitorsthatrentD-Cinemaequipmentfromus.If,afternegotiation,their
portion of VPF D-Cinemaincreases,it could directly reduceour
revenues and impact our results
ofoperationsandfinancialcondition.Further,incertaincases,asourrentalagreementsofD-Cinemaequipmentwithexhibitorsexpire,theamountofleaserentalincomewereceivefrom
exhibitors will be reduced and the portion of VPF D-Cinema that we
receive from screens owned by such exhibitors will also be reduced.
Our failure to maintain our relationships with exhibitors, or to
establish and capitalise on newrelationships
withthem,couldharmourbusinessorpreventourbusinessfromgrowing,whichcouldhaveamaterial
adverse effect on our business, prospects, financial condition and
results of operations. 5.We depend on our relationships with
advertisers, and any failure to maintain these relationships, or to
establishandcapitaliseonnewrelationships,couldhaveamaterialadverseeffectonourbusiness,
prospects, financial condition and results of operations.
Wereceiverevenuesfromadvertisersthroughin-cinemaadvertising.Inthefiscalyears2012,2013and
2014andthesixmonthsendedSeptember30,2014,advertisementrevenuecontributed17.84%,20.59%,
23.72% and 22.00% to our total revenue from operations,
respectively. The competition for advertising expenditure is
significant, and advertisers will not continue to do business
withusiftheybelieveourin-cinemaadvertisingplatformisineffectiveoroverlyexpensive.Inaddition,
advertisers generally have set advertising budgets, most of which
are focused on traditional platforms such
astelevisionand,recently,theonlineandmobilemedianetworks.Reductionsinthesizeofadvertisers
budgets due to local or national economic trends, a shift in
spending to new advertising platforms suchas
theinternetandmobileplatforms,reductionincinemaattendance,orotherfactorscouldalsoresultin
lower spending on in-cinema advertising. If we are unable to remain
competitive and provide value to our
advertisingclients,theymayreducetheiradvertisingpurchasesorstopplacingadvertisementswithus,
whichwouldadverselyaffectourrevenueandabilitytogeneratenewadvertisingcustomers.Ourgross
margin on advertisement revenue is generally higher than our other
sources of revenue as wedo not incur
significantadditionalcostforeachadditionaladvertisement.Consequently,changesinouradvertisement
revenue will have a larger percentage impact on our profitability
than changes in some of our other sources of revenue. In addition,
we receive some of our advertising rights pursuant to agreements
with exhibitors and may also share a portion of our advertisement
revenue with them, on a case-by-case basis and subject to
negotiation. If, after negotiation, they deny us a grant of their
advertising rights or their share of advertisement revenue
increases, our business, prospects, financial condition and results
of operations may be adversely affected. Our failure to maintain
our relationships with advertisers, or to establish and capitalise
on new relationships
withthem,couldharmourbusinessorpreventourbusinessfromgrowing,whichcouldhaveamaterial
adverse effect on our business, prospects, financial condition and
results of operations. - 27 - 6.Our advertisement revenue is
dependent on a number of factors, including the number of
screenings of movies, which is subject to factors outside of our
control.
Wegenerateadvertisementrevenuebasedonthenumberofadvertisementsplayedatmoviescreenings.
Therefore, the amount of advertisement revenue we generate is
directly linked to the number of screenings ofmovies atcinemas.Wedo
not control and cannot influence thenumber ofscreenings atacinema,
and
thenumberofscreeningsdependsonvariousexternalfactors,includingthenumberofnewmovies
releasedinaweek,thebox-officesuccessofsuchnewmovies,weatherconditionsindifferentpartsof
India (for example, during extreme winter times, many theatres in
the northern part of India will not screen movies at night) and
specific restrictions by the laws of a region to run only set
number of shows per day. Further, while there are currently no
regulations governing the amount of advertising that can be played
in cinemas prior to or during a movie screening, there is no
assurance that this will not change based on future
regulations.Consequently,anynegativedownturninthesefactorsmaydirectlyaffectouradvertisement
revenuegeneration,aswellasourrelationshipswithadvertisersregardingtheeffectivenessofourin-cinema
advertising platform. 7.Certain of our customers account for a
large portion of our revenues. The loss or reduction in spending by
any of these customers could have an adverse effect on our revenues
and results of operations.
Whileweseektodiversifythesourcesofouradvertisementrevenue,asignificantportionofour
advertisementrevenuearederivedfromouradvertisingcontractswiththeIndianCentralandState
GovernmentsandPublicSectorUndertaking(PSU)customers.Manyofouragreementswiththe
Government and PSU customers are subject to certain terms and
conditions, including, with respect to the
CentralGovernment,anempanelmentprocess,wherebywereceiveapprovaltodobusinesswiththe
CentralGovernment.Ifwefailtoadheretotheseterms,theseagreementsmaybeterminableorour
empanelmentmaynot berenewed. Ifwelose any of these advertising
customers, and ifwe fail to attract new customers, our revenues and
results of operations will be adversely affected.
Further,asignificantportionofourVPFD-CinemaiscollectedfromtheD-CinemascreensofPVR
Cinemas in India. If our relationship with PVR Cinemas
deteriorates, or they demand a higher share of VPF D-Cinema, our
revenues and results of operations will be adversely affected.
8.Wefaceintensecompetitionandifwearenotabletocompeteeffectively,ourbusiness,resultsof
operations and financial condition will be adversely affected.
WefacecompetitionfromothercompaniesinourindustryinIndiaandotherregionsweoperatein,
including competitors thathavealso setup, or plan to setup,
asatellite-based, digital cinemadistribution
network,aswellascompaniesprovidingD-Cinema,E-Cinemaandphysicalmoviedeliverymethods.
Some of our competitors, particularly outside of India, may have
greater financial, technical, marketing and
otherresourcesthanusandthereforetheymaybeinabetterpositionthanustoinvestinnetworksor
platformsortosustainlossesfromsuchinvestments.Inthefuture,wemayalsofacecompetitionfrom
globalcompaniesinIndiaifandwhensuchcompaniesmaketheirforayintotheIndiandigitalcinema
sector.
Themarketforadvertisingisalsoverycompetitive.In-cinemaadvertisingisasmallcomponentofthe
overallIndianadvertisingmarketandthusourin-cinemaadvertisingplatformmustcompetewith
established,largerandbetterknownnationalandlocalmediaplatformssuchascable,broadcastand
satellitetelevisionnetworksandnewlyemergingmediaplatformsincludingontheinternetandmobile
suchasonlinevideoservices.Wecompeteforadvertisingrightsdirectlywithallmediaplatforms,
includingradioandtelevisionbroadcasting,cableandsatellitetelevisionservices,variouslocalprint
media, billboards and internet and mobile platforms and with other
companies that may provide in-cinema
advertising.Weexpectthesecompetitorstodevotesignificantefforttomaintainingandgrowingtheir
respective market shares. We also expect existing competitors and
new entrants to the advertising business to constantly revise and
improve their business models in light of challenges from us or
competing media platforms. - 28 - In the event thatwe are unable to
compete effectively, wemay lose some or all of our share of the
digital
cinemadistributionnetworkmarketorouradvertisementrevenuetothesecompetitorsandourbusiness,
results of operations and financial condition could be adversely
affected. 9.We are exposed to pricing pressure from our customers.
Ourcustomerscontinuallyseektodecreasetheircostsandtoincreasetheirmargins.Therevenuewe
generate from distributors is primarily derived from VPF E-Cinema
and VPF D-Cinema, some of which are
subjecttonegotiation.Therevenuewereceivefromouradvertisingclientsisalsosubjecttonegotiation
andpricingpressure.Additionally,wetypicallysharecertainofourVPFD-Cinemaandadvertisement
revenue with exhibitors which is also subject to negotiation. In
order to obtain and retain the businesses of distributors and
advertisers, we may have to offer discounts or lower our current
fees, and in order to obtain
andretainthebusinessofexhibitors,wemayhavetoofferanincreasedshareofVPFD-Cinemaor
advertisement revenue. The level of fees we receive and that we
share are subject to continuous competitive
pressureasweenterintonewagreementsandrenewouragreementswithdistributors,advertisersand
exhibitors.Increasedcompetitioncouldalsoresultinincreasedpricingpressure.Anyreductioninthe
amount of fees to us, or increase of fees shared with exhibitors,
would directly reduce our revenue. 10.We may not be successful in
implementing our growth strategies.
Ourgrowthstrategiesinvolvegrowingouradvertisingbusinessandleveragingourtechnologyplatform
andrelationshipswithproducers,distributors,exhibitorsandadvertiserstoexpandthemovieexhibition
marketinIndiathroughinnovativemodels.Specifically,withrespecttoouradvertisingbusiness,weare
exploring new in-cinema advertisement products such ascontent
promotions and screen savers, as well as new sources of revenue,
such as advertisements on commercial spaces, movie tickets, seat
covers, ticketing windows, parking lots and other public spaces.
With respect to our exhibition business, we are planning to
expandintoinnovativenon-ticketedexhibitionmodelstoserveunder-penetratedpartsofIndiathrough
CaravanCinemaandClubCinema.Weareworkingwithcontentownersandexhibitorstoscreenhigh-impact
alternatecontent,such as sporting events and award nights and
arealsoworkingwith othermedia firms to form advertising
partnerships. Our success in implementing our growth strategies is
affected
by:thesuccessofournewbusinessinitiatives,includingnewadvertisingopportunities,suchas
content promotion, screen savers and off-screen advertising; our
ability to continue to attract new distributor, exhibitor and
advertising customers; our ability to build or acquire required
technology and software;our ability to attract and retain talent
and qualified personnel; our ability to expand our businesses
through strategic acquisitions and successfully integrate such
acquisitions;our ability to form mutually beneficial partnerships
with other media entities; our ability to grow our prices for
advertising; the general condition of the global economy;our
ability to compete effectively with existing and new competitors in
our lines of business; and changes in our regulatory environment.
Manyofthesefactorsarebeyondourcontrol.Therecanbenoassurancethatwewillsucceedin
implementing our strategies and initiatives and if we do not
succeed, our business, results of operations and financial
condition could be adversely affected. 11.Our proposed acquisition
of Valuable Digital Screens Private Limited could subject us to
business and financial risk. OnDecember18,2014,our
CompanyenteredintoaninvestmentagreementwithValuableTechnologies
Limited (one of our Promoters, referred to herein as VTL), VDSPL
and other parties, to acquire an initial
trancheof80%oftheequitycapital(onapostissuancebasis)ofVDSPLforcashconsiderationof
- 29 -
approximately44.01million.However,closureofthetransaction,includingtransferandissueofequity
sharesofVDSPLtoourCompanyandpaymentofconsideration,aresubjecttosatisfactionofconditions
precedent (includinggrant of a perpetuallicense of thesoftwareused
in digital cinema servers to VDSPL
andtransferofdomainnamenecessarytoconductthebusinessofVDSPLtoVDSPL),whichmaynot
occuruntilalaterdate.Thelongstopdatefortheacquisitionofthefirsttrancheaspertheinvestment
agreementisJanuary15,2015orsuchotherdateasmaybemutuallyagreed.Inaccordancewithand
subject to the terms of the investment agreement, by no later than
August 31, 2018, or such other mutually
agreeddate,ourCompanywillacquiretheremaining20%equityofVDSPLfromVTLforafurther
considerationtobecalculatedinaccordancewiththetermsoftheagreement.VDSPLhastwoprimary
operations:ClubCinemaandCaravanCinema.SeeBusinessRecentDevelopmentsProposed
AcquisitionofValuableDigitalScreensPrivateLimitedandHistory&CertainCorporateMatters
AgreementsinrelationtoValuableDigitalScreensPrivateLimitedonpages170and205,ofthisDraft
Red Herring Prospectus, respectively, for further information on
this acquisition. There is no assurance that the acquisition of
VDSPL shall be completed in amanner contemplated under the
Investment Agreement, or at all, or that the business of VDSPL
shall be successful, or that we will be able to successfully
operate
itsbusinessorintegrateitintoourbusiness,orthatsuchbusinesswillbringusthebenefitsthatwe
anticipateorenhanceourrevenueandanysuchfailureshalladverselyaffectourbusiness,re