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Transcript of CREDITACCESS GRAMEEN LIMITED - sebi.gov.in · Registrar of Companies, West Bengal on March 14,...
DRAFT RED HERRING PROSPECTUS
Dated: January 24, 2018
(This Draft Red Herring Prospectus will be updated upon filing with the RoC)
Please read Section 32 of the Companies Act, 2013
100% Book Built Offer
CREDITACCESS GRAMEEN LIMITED
Our Company was incorporated as Sanni Collection Private Limited (SCPL) on June 12, 1991 at Calcutta, West Bengal, India as a private limited company under the Companies Act, 1956. In
February 2007, the entire shareholding of SCPL was acquired by certain trustees of T. Muniswamappa Trust (TMT), a public charitable trust engaged in the business of providing micro loans
in Karnataka. At the time of the acquisition, SCPL also held a certificate of registration as a non-deposit taking NBFC dated March 30, 1998. Subsequently, in October 2007, the microfinance
business being operated under TMT (including all associated assets, liabilities, goodwill, receivables, loan assets, intellectual property and the brand name Grameen Koota) was transferred to
SCPL. Subsequent to the acquisition of SCPL and the transfer of the microfinance business of TMT to SCPL, SCPL was rebranded under the Grameen name, and pursuant to a resolution of the
shareholders of SCPL, its name was changed from SCPL to Grameen Financial Services Private Limited (GFSPL). A fresh certificate of incorporation consequent upon change of name by the
Registrar of Companies, West Bengal on March 14, 2008, post which the Reserve Bank of India (RBI) granted a certificate of registration dated July 28, 2009 reflecting the change of name.
Subsequently, the RBI granted a fresh certificate of registration dated February 6, 2012 for registration as an NBFC under Section 45 IA of the Reserve Bank of India Act, 1934. Our Company
was granted NBFC-Microfinance Institution (NBFC-MFI) status by the RBI with effect from September 5, 2013. Subsequently, pursuant to a resolution passed by the shareholders of our
Company, the name of our Company was changed to Grameen Koota Financial Services Private Limited, and a fresh certificate of incorporation consequent upon change of name was issued by
the RoC on November 13, 2014. Further, a fresh certificate of registration consequent upon change of name was issued to our Company by the RBI on December 16, 2014. Subsequently, our
Company was converted into a public limited company pursuant to a special resolution passed by our Shareholders at the EGM held on November 27, 2017 and the name of our Company was
changed to Grameen Koota Financial Services Limited (GFSL). A fresh certificate of incorporation consequent upon conversion to a public limited company was issued by the RoC on December
18, 2017. Subsequently, pursuant to a resolution passed by the shareholders of our Company at the EGM held on January 2, 2018, the name of our Company was changed to CreditAccess Grameen
Limited, and a fresh certificate of incorporation consequent upon change of name was issued by the RoC on January 12, 2018. Subsequently, the RBI granted a fresh certificate of registration
dated January 19, 2018, bearing registration number B 02.00252 for registration as an NBFC under Section 45 IA of the Reserve Bank of India Act, 1934 under the name CreditAccess Grameen
Limited. For further details, see History and Certain Corporate Matters on page 151.
Registered and Corporate Office: New No. 49 (Old No. 725), 46th Cross, 8th Block, Jayanagar, Next to Rajalakshmi Kalyan Mantap, Bangalore 560 071, Karnataka, India
Tel: +91 80 2263 7300; Fax: +91 80 2664 3433
Contact Person: Darshana Kothari, Company Secretary and Compliance Officer; E-mail: [email protected]; Website: www.grameenkoota.org
Corporate Identity Number: U51216KA1991PLC053425
OUR PROMOTER: CREDITACCESS ASIA N.V.
INITIAL PUBLIC OFFER OF UP TO [] EQUITY SHARES OF FACE VALUE OF 10 EACH (EQUITY SHARES) OF CREDITACCESS GRAMEEN 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 (OFFER) COMPRISING A FRESH ISSUE OF UP TO [] EQUITY SHARES AGGREGATING UP TO 9,000 MILLION BY OUR COMPANY (FRESH ISSUE) AND AN OFFER FOR SALE OF UP TO 10,281,317 EQUITY SHARES BY OUR PROMOTER, CREDITACCESS ASIA N.V. (PROMOTER SELLING SHAREHOLDER AND SUCH
OFFERED SHARES, THE OFFERED SHARES) AGGREGATING UP TO [] MILLION (OFFER FOR SALE). THE OFFER SHALL CONSTITUTE [] % OF OUR POST-OFFER PAID-UP EQUITY SHARE CAPITAL.
THE FACE VALUE OF EQUITY SHARES IS 10 EACH AND THE OFFER PRICE IS [] TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE PROMOTER SELLING SHAREHOLDER IN CONSULTATION WITH THE BRLMS AND WILL BE
ADVERTISED IN [] EDITIONS OF [], [] EDITIONS OF [] AND [] EDITIONS OF [] (WHICH ARE WIDELY CIRCULATED ENGLISH, HINDI AND KANNADA DAILY
NEWSPAPERS RESPECTIVELY, KANNADA BEING THE REGIONAL LANGUAGE OF KARNATAKA, WHERE OUR REGISTERED OFFICE IS LOCATED) AT LEAST FIVE
WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO BSE LIMITED (BSE) AND NATIONAL STOCK EXCHANGE OF
INDIA LIMITED (NSE, AND TOGETHER WITH BSE, THE STOCK EXCHANGES) FOR THE PURPOSE OF UPLOADING ON THEIR RESPECTIVE WEBSITES.
In case of any revision in the Price Band, the Bid/ Offer Period will be extended by at least three additional Working Days after such revision in the Price Band, subject to the Bid/ Offer Period not exceeding 10 Working Days.
Any revision in the Price Band and the revised Bid/ Offer Period, if applicable, will be widely disseminated by notification to the Stock Exchanges, by issuing a press release, and also by indicating the change on the website of the BRLMs and at the terminals of the other members of the Syndicate.
The Offer is being made in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (SCRR). The Offer is being made through the Book Building Process, in compliance with Regulation 26(1)
of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (SEBI ICDR Regulations), wherein not more than 50% of the Offer shall be allocated on a
proportionate basis to QIBs (QIB Portion), provided that our Company and the Promoter Selling Shareholder, in consultation with the BRLMs, may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis (Anchor Investor Portion), at the Anchor Investor Allocation Price. At least 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 Anchor Investor Allocation Price. In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion. 5% of the Net QIB
Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares
available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Offer shall be available for allocation on a proportionate
basis to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All Bidders, other than Anchor Investors, shall mandatorily participate in this Offer through the Application Supported by Blocked Amount (ASBA) process by providing details of their respective bank account
which will be blocked by the Self Certified Syndicate Banks (SCSBs). Anchor Investors are not permitted to participate in the Offer through ASBA Process. For details, see Offer Procedure on page 251.
RISKS IN RELATION TO THE FIRST OFFER
This being the first public offer of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is 10 and the Floor Price is [] times the face value and the Cap Price is [] times the face value. The Offer Price (determined and justified by our Company and the Promoter Selling Shareholder, in consultation with the BRLMs, on the basis of the assessment of market demand for the Equity Shares by way of the Book Building Process, as stated under Basis for Offer Price on page 88) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can
be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the Offer unless they can afford to take the risk of losing their entire investment. 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 our Company and the Offer, including the risks involved. The Equity Shares in the Offer have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring
Prospectus. Specific attention of the investors is invited to Risk Factors on page 15.
ISSUERS AND PROMOTER SELLING SHAREHOLDERS 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 Offer, which is material in the context of the Offer, 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 Promoter Selling Shareholder accepts responsibility for and confirms that the statements specifically made or confirmed by the Promoter Selling Shareholder in this Draft Red Herring Prospectus to the extent of information specifically pertaining to itself and the Offered Shares, are true and correct in all material aspects and are not misleading in any material respect.
LISTING
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE. Our Company has received an in-principle approval from BSE and NSE for the listing of the Equity Shares pursuant
to letters dated [] and [], respectively. For the purposes of the Offer, the Designated Stock Exchange shall be []. A signed copy of the Red Herring Prospectus and the Prospectus shall be delivered for registration to the RoC
in accordance with Section 26(4) of the Companies Act 2013. For details of the material contracts and documents available for inspection from the date of the Red Herring Prospectus up to the Bid/ Offer Closing Date, see Material Contracts and Documents for Inspection on page 395.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER
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
E-mail: [email protected] Investor grievance E-mail:
Website: www.icicisecurities.com
Contact Person: Shekhar Asnani/ Anurag Byas/ Vishal Kanjani
SEBI Registration No.: INM000011179
Credit Suisse Securities (India) Private
Limited Ceejay House, 9th Floor
Plot F, Shivsagar Estate
Dr. Annie Besant Road Worli, Mumbai 400 018
Maharashtra, India
Tel: +91 22 6777 3885 Fax: +91 22 6777 3820
E-mail:list.grameenkootaipo@credit-
suisse.com
Investor grievance E-mail: list.igcellmer-
[email protected] Website: www.credit-suisse.com Contact Person: Abhay Agarwal
SEBI Registration No.: MB/
INM000011161
IIFL Holdings Limited
10th 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 E-mail: [email protected]
Investor grievance E-mail:
Website: www.iiflcap.com Contact Person: Vishal Bangard/
Pranay Doshi
SEBI Registration No.: INM000010940
Kotak Mahindra Capital Company
Limited 1st Floor, 27 BKC, Plot No. 27
G Block, Bandra Kurla Complex
Bandra (East), Mumbai 400 051 Maharashtra, India
Tel: +91 22 4336 0000
Fax: +91 22 6713 2447 E-mail: [email protected]
Investor grievance E-mail:
Website: www.investmentbank.kotak.com
Contact Person: Ganesh Rane
SEBI Registration No.: INM000008704
Karvy Computershare Private Limited
Karvy Selenium, Tower B Plot 31-32, Gachibowli
Financial District, Nanakramguda
Hyderabad 500 032 Tel: +91 40 6716 2222
Fax: +91 40 2343 1551
E-mail: [email protected] Investor grievance E-mail:
Website: http:// karisma.karvy.com
Contact Person: M. Murali Krishna SEBI Registration No.: INR000000221
BID/ OFFER PROGRAMME
BID/ OFFER OPENS ON [](1)
BID/ OFFER CLOSES ON [](2)
(1) Our Company and the Promoter Selling Shareholder may, in consultation with the BRLMs, consider participation by Anchor Investors in accordance with the SEBI ICDR Regulations. The Anchor Investor
Bidding Date shall be one Working Day prior to the Bid/ Offer Opening Date (2) Our Company and the Promoter Selling Shareholder may, in consultation with the BRLMs, consider closing the Bid/ Offer Period for QIBs one Working Day prior to the Bid/ Offer Closing Date in
accordance with the SEBI ICDR Regulations
http://www.grameenkoota.org/
TABLE OF CONTENTS
SECTION I: GENERAL ........................................................................................................................................................... 1
DEFINITIONS AND ABBREVIATIONS .............................................................................................................................. 1 CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND
CURRENCY OF PRESENTATION ..................................................................................................................................... 10 FORWARD-LOOKING STATEMENTS ............................................................................................................................. 13
SECTION II: RISK FACTORS ............................................................................................................................................. 15
SECTION III: INTRODUCTION.......................................................................................................................................... 42
SUMMARY OF INDUSTRY ................................................................................................................................................ 42 SUMMARY OF OUR BUSINESS ........................................................................................................................................ 46 SUMMARY OF FINANCIAL INFORMATION .................................................................................................................. 53 THE OFFER .......................................................................................................................................................................... 59 GENERAL INFORMATION ................................................................................................................................................ 60 CAPITAL STRUCTURE ...................................................................................................................................................... 68 OBJECTS OF THE OFFER ................................................................................................................................................... 85 BASIS FOR OFFER PRICE .................................................................................................................................................. 88 STATEMENT OF SPECIAL TAX BENEFITS..................................................................................................................... 91
SECTION IV: ABOUT OUR COMPANY ............................................................................................................................ 93
INDUSTRY OVERVIEW ..................................................................................................................................................... 93 OUR BUSINESS ................................................................................................................................................................. 123 REGULATIONS AND POLICIES ...................................................................................................................................... 145 HISTORY AND CERTAIN CORPORATE MATTERS ..................................................................................................... 151 OUR MANAGEMENT ....................................................................................................................................................... 156 OUR PROMOTER AND PROMOTER GROUP ................................................................................................................ 172 OUR GROUP COMPANIES ............................................................................................................................................... 175 RELATED PARTY TRANSACTIONS .............................................................................................................................. 176 DIVIDEND POLICY ........................................................................................................................................................... 177 SELECTED STATISTICAL INFORMATION ................................................................................................................... 178
SECTION V: FINANCIAL INFORMATION .................................................................................................................... 187
FINANCIAL STATEMENTS ............................................................................................................................................. 187 SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IND AS ....................... 188 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
............................................................................................................................................................................................. 191 FINANCIAL INDEBTEDNESS ......................................................................................................................................... 216
SECTION VI: LEGAL AND OTHER INFORMATION .................................................................................................. 218
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS .......................................................................... 218 GOVERNMENT AND OTHER APPROVALS .................................................................................................................. 226 OTHER REGULATORY AND STATUTORY DISCLOSURES ....................................................................................... 228
SECTION VII: OFFER INFORMATION .......................................................................................................................... 245
TERMS OF THE OFFER .................................................................................................................................................... 245 OFFER STRUCTURE ......................................................................................................................................................... 248 OFFER PROCEDURE ........................................................................................................................................................ 251
SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ................................................................. 287
SECTION IX: OTHER INFORMATION ........................................................................................................................... 353
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................................................. 353 DECLARATION ................................................................................................................................................................. 355
1
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
This Draft Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or
implies, shall have the meaning as provided below. References to any legislation, act, regulation, rules, guidelines or policies
shall be to such legislation, act or regulation, rules, guidelines and policies as amended from time to time. In case of any
inconsistency between the definitions given below and the definitions contained in the General Information Document, the
definitions given below shall prevail.
The words and expressions used but not defined herein shall have the meaning as is assigned to such terms under the Companies
Act, the SEBI ICDR Regulations, the SCRA, the Depositories Act or the rules and regulations made thereunder, unless the
context otherwise indicates or implies.
General Terms
Term Description
our Company, the
Company, or the Issuer
CreditAccess Grameen Limited, a public limited company incorporated under the Companies Act, 1956 and
having its registered office at New No. 49 (Old No. 725), 46th Cross, 8th Block, Jayanagar, Next to
Rajalakshmi Kalyan Mantap, Bangalore 560 071, Karnataka, India
we, us or our Unless the context otherwise indicates or implies, refers to our Company
Company and Promoter Selling Shareholder Related Terms
Term Description
2008 ESPP The Grameen Financial Services Private Limited 2008 Employee Stock Purchase Plan
Active Customers Customers that currently have loans outstanding with our Company
ALM Committee The asset liability management committee of our Company
Articles of Association/ AoA Articles of Association of our Company, as amended
Audit Committee The audit committee of our Board as described in Our Management on page 156
Board/ Board of Directors Board of Directors of our Company, including a duly constituted committee thereof
BDOs Business Development Officers
BTA Business transfer agreement dated October 2, 2007 amongst certain trustees of TMT and SCPL
CAA CreditAccess Asia N.V.
CCD Compulsorily convertible debentures of our Company of nominal value 1,000,000 each CCPS Compulsorily convertible cumulative preference shares of our Company of face value of 10 each CGT Compulsory Group Training
CROs Customer Relationship Officers
CSR Committee The corporate social responsibility committee of our Board as described in Our Management on page 156
Customers Active customers and other customers (i) that have been onboarded by our Company but have not yet been
provided a loan; or that have fully repaid their loans but continue to be part of their JLG
DTDs Debenture Trust Deeds entered into by our Company
Director(s) Director(s) of our Company
Eligible Employee (s) An employee of our Company, and Directors, who qualify for issue of options under the ESOP Plan and who
fulfill the conditions as decided by the Nomination and Remuneration Committee
Equity Shares Equity Shares of our Company of face value of 10 each ESOP Plan GKFSPL Employees Stock Option Plan 2011, as amended
Independent Directors Independent directors on our Board, and eligible to be appointed as independent directors under the provisions
of the Companies Act and the Listing Regulation. For details of the Independent Directors, see Our
Management on page 156
IPO Committee IPO Committee of our Board constituted pursuant to the resolution of our Board dated October 4, 2017
Key Management Personnel Key management personnel of our Company in terms of Regulation 2(1)(s) of the SEBI ICDR Regulations
and Section 2(51) of the Companies Act, 2013 and as disclosed in Our Management on page 156
MD & CEO/ Executive
Director
The managing director and chief executive officer of our Company, Udaya Kumar Hebbar
Nomination and
Remuneration Committee
The nomination and remuneration committee of our Board as described in Our Management on page 156
Nominee Directors Directors appointed on our Board by identified Shareholders in accordance with the AoA
Memorandum of
Association/ MoA
Memorandum of Association of our Company, as amended
Offered Shares Up to 10,281,317 Equity Shares offered by the Promoter Selling Shareholder in the Offer for Sale as per its
board resolution dated January 16, 2018 (as amended by its board resolution dated January 22, 2018)
Order Order dated November 22, 2017 issued by the National Company Law Tribunal approving the scheme of
amalgamation of MV Microfin Private Limited with our Company
Promoter The promoter of our Company namely, CAA
Promoter Group The entities constituting the promoter group of our Company in terms of Regulation 2(1)(zb) of the SEBI
ICDR Regulations. For details, see Our Promoter and Promoter Group on page 172
2
Term Description
Promoter Selling
Shareholder
Our Promoter, CAA
Registered Office Registered and corporate office of our Company located at New No. 49 (Old No. 725), 46th Cross, 8th Block,
Jayanagar, Next to Rajalakshmi Kalyan Mantap, Bangalore 560 071, Karnataka, India
Registrar Agreement The agreement dated January 19, 2018, entered into amongst our Company, the Promoter Selling Shareholder
and the Registrar to the Offer, in relation to the responsibilities and obligations of the Registrar to the Offer
pertaining to the Offer
Registrar of Companies/
RoC
Registrar of Companies, Bangalore situated at Karnataka, India
Restated Financial
Statements
The restated financial information of our Company which comprises of the restated summary statement of
assets and liabilities, the restated summary statement of profits and losses and the restated summary statement
of cash flows as at and for the Financial Years ended March 31, 2017, March 31, 2016, March 31, 2015,
March 31, 2014, March 31, 2013 and for the six month period ended September 30, 2017, together with the
annexures thereto
SCPL Sanni Collection Private Limited
Scheme of Amalgamation Scheme of amalgamation filed pursuant to Section 230-232 of the Companies Act, 2013 before the National
Company Law Tribunal for the amalgamation of MV Microfin Private Limited with our Company
Shareholders Equity shareholders of our Company from time to time
Stakeholders Relationship
Committee
The stakeholders relationship committee of our Board as described in Our Management on page 156
Statutory Auditors Statutory auditors of our Company, namely, S.R. Batliboi & Co. LLP, Chartered Accountants
TMT T. Muniswamappa Trust
Offer Related Terms
Term Description
Acknowledgement Slip The slip or document issued by the Designated Intermediary(ies) to a Bidder as proof of registration of the
Bid/ Bid cum Application Form
Allot/ Allotment/ Allotted Unless the context otherwise requires, allotment of the Equity Shares pursuant to the Fresh Issue and transfer
of the Offered Shares by the Promoter Selling Shareholder pursuant to the Offer for Sale to the successful
Bidders
Allotment Advice Note or advice or intimation of Allotment sent to the successful 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 Equity Shares are Allotted
Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion in accordance with the
requirements specified in the SEBI ICDR Regulations and the Red Herring Prospectus
Anchor Investor Allocation
Price
The price at which Equity Shares will be allocated to Anchor Investors in terms of the Red Herring Prospectus
and the Prospectus, which will be decided by our Company and the Promoter Selling Shareholder, in
consultation with the BRLMs
Anchor Investor Bidding
Date
The day, one Working Day prior to the Bid/ Offer Opening Date, on which Bids by Anchor Investors shall be
submitted and allocation to Anchor Investors shall be completed
Anchor Investor Form The form used by an Anchor Investor to Bid in the Anchor Investor Portion in accordance with the
requirements specified under the SEBI ICDR Regulations and the Red Herring Prospectus
Anchor Investor Offer Price Final price at which the Equity Shares will be Allotted to Anchor Investors in terms of the Red Herring
Prospectus and the Prospectus, which price will be equal to or higher than the Offer Price but not higher than
the Cap Price
The Anchor Investor Offer Price will be decided by our Company and the Promoter Selling Shareholder, in
consultation with the BRLMs
Anchor Investor Pay-in Date In case of the Anchor Investor Offer Price being higher than the Anchor Investor Allocation Price, the date
as mentioned in the CAN but not later than two Working Days after the Bid/ Offer Closing Date
Anchor Investor Portion Up to 60% of the QIB Portion which may be allocated by our Company and the Promoter Selling Shareholder,
in consultation with the BRLMs, to Anchor Investors on a discretionary basis in accordance with the SEBI
ICDR Regulations
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 or ASBA
An application, whether physical or electronic, used by Bidders, other than Anchor Investors, to make a Bid
authorising an SCSB to block the Bid Amount in the ASBA Account
ASBA Account An account maintained with an SCSB and specified in the ASBA Form submitted by ASBA Bidders for
blocking the Bid Amount mentioned in the Bid cum Application Form
ASBA Bid A Bid made by an ASBA Bidder
ASBA Bidder(s) Bidders (other than Anchor Investors) in the Offer who intend to submit their Bid through the ASBA process
ASBA Form An application form, whether physical or electronic, used by ASBA Bidders to make Bids which will be
considered as the application for Allotment in terms of the Red Herring Prospectus and the Prospectus
Banker(s) to the Offer Collectively, the Escrow Collection Bank(s), the Public Offer Account Bank(s) and the Refund Bank(s)
3
Term Description
Basis of Allotment Basis on which Equity Shares will be Allotted to successful Bidders under the Offer and which is described
in Offer Procedure on page 251
Bid An indication to make an offer during the Bid/ Offer Period by a Bidder (other than Anchor Investor), or on
the Anchor Investor Bidding Date by an Anchor Investor pursuant to submission of the Bid cum Application
Form to subscribe to or purchase the Equity Shares at a price within the Price Band, including all revisions
and modifications thereto as permitted under the SEBI ICDR Regulations in accordance with the Red Herring
Prospectus and Bid cum Application Form
The term Bidding shall be construed accordingly
Bid/ Offer Closing Date Except in relation to any Bids received from the Anchor Investors, the date after which the Designated
Intermediaries will not accept any Bids for the Issue, which shall be notified in [] editions of the English
national daily newspaper [], [] editions of the Hindi national daily newspaper [], and [] editions of the
Kannada daily newspaper [], each with wide circulation. Our Company may, in consultation with the
BRLMs, consider closing the Bid/ Offer Period for QIBs one Working Day prior to the Bid/ Offer Closing
Date in accordance with the SEBI Regulations which shall also be notified by advertisement in the same
newspapers where the Bid/ Offer Opening Date was published, in accordance with the SEBI ICDR
Regulations
Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid
cum Application Form and unless otherwise stated or implied, includes an ASBA Bidder and Anchor Investor
Bid Amount The highest value of optional Bids indicated in the Bid cum Application Form and payable by the Bidder or
blocked in the ASBA Account of the Bidder as the case may be, upon submission of the Bid
Bid cum Application Form The Anchor Investor Form or the ASBA Form, as the context may require
Bid Lot [] Equity Shares
Bid/ Offer Opening Date Except in relation to any Bids received from the Anchor Investors, the date on which the Designated
Intermediaries shall start accepting Bids for the Offer, which shall be notified in [] editions of the English
national daily newspaper [], [] editions of the Hindi national daily newspaper [], and [] editions of the
Kannada daily newspaper [], each with wide circulation, and in case of any revision, the revised Bid/ Offer
Opening Date also to be notified on the website and terminals of the Syndicate and SCSBs, as required under
the SEBI ICDR Regulations
Bid/ Offer Period Except in relation to Anchor Investors, the period between the Bid/ Offer Opening Date and the Bid/ Offer
Closing Date, inclusive of both days, during which Bidders can submit their Bids, including any revisions
thereof
Bidding Centres Centres at which the Designated Intermediaries shall accept the ASBA Forms, i.e. Designated Branches for
SCSBs, Specified Locations for the Syndicate, Brokers Centres for Registered Brokers, Designated RTA
Locations for RTAs and Designated CDP Locations for CDPs
Book Building Process Book building process, as provided in Schedule XI of the SEBI ICDR Regulations, in terms of which the
Offer is being made
Book Running Lead
Managers or BRLMs
The book running lead managers to the Offer namely, ICICI Securities Limited, Credit Suisse Securities
(India) Private Limited, IIFL Holdings Limited and Kotak Mahindra Capital Company Limited
Broker Centres Broker centres of the Registered Brokers where Bidders can submit the Bid cum Application Forms to
Registered Brokers
The details of such Broker Centres, along with the names and contact details of the Registered Brokers are
available on the respective websites of the Stock Exchanges (www.bseindia.com and www.nseindia.com)
CAN/ Confirmation of
Allocation Note
Notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who have been allocated the
Equity Shares, after the Anchor Investor Bidding Date
Cap Price The higher end of the Price Band, above which the Offer Price and Anchor Investor Offer Price will not be
finalised and above which no Bids will be accepted (including any revisions thereof)
Client ID Client identification number maintained with one of the Depositories in relation to demat account
Collecting Depository
Participant or CDP
A depository participant as defined under the Depositories Act, 1996 and registered with SEBI, who is eligible
to procure Bids at the Designated CDP Locations in terms of circular no. CIR/ CFD/ POLICYCELL/ 11/ 2015
dated November 10, 2015 issued by SEBI
Credit Suisse Credit Suisse Securities (India) Private Limited
Cut-Off Price Offer Price, which shall be any price within the Price Band finalised by our Company and the Promoter
Selling Shareholder in consultation with the BRLMs
Only Retail Individual Bidders are entitled to Bid at the Cut-off Price. QIBs and Non-Institutional Bidders
are not entitled to Bid at the Cut-off Price
Demographic Details The demographic details of the Bidders such as their respective addresses, occupation, PAN, name of the
Bidders father/ husband, investor status, MICR Code and bank account details
Designated Branches Such branches of the SCSBs which shall collect the Bid cum Application Forms used by the ASBA Bidders,
a list of which is available on the website of SEBI at http:// www.sebi.gov.in/ sebiweb/ other/
OtherAction.do?doRecognisedFpi=yes&intmId=35, updated from time to time, or at such other website as
may be prescribed by SEBI from time to time
Designated CDP Locations Such locations of the CDPs where ASBA Bidders can submit the ASBA Forms, a list of which, along with
names and contact details of the Collecting Depository Participants eligible to accept ASBA Forms are
available on the websites of the respective Stock Exchanges (www.bseindia.com and https://
www.nseindia.com/ )
http://www.bseindia/http://www.nseindia/
4
Term Description
Designated Date The date on which the Escrow Collection Banks transfer funds from the Escrow Accounts, and the SCSBs
transfer funds from the ASBA Accounts, to the Public Offer Account or the Refund Account, as appropriate,
in terms of the Red Herring Prospectus
Designated Intermediaries Collectively, the members of the Syndicate, Sub-Syndicate/ agents, SCSBs, Registered Brokers, the CDPs
and RTAs, who are authorised to collect Bid cum Application Forms from the Bidders, in relation to the Offer
Designated RTA Locations Such centres of the RTAs where Bidders can submit the Bid cum Application Forms. The details of such
Designated RTA locations, along with names and contact details of the RTAs are available on the respective
websites of the Stock Exchanges (www.bseindia.com and https:// www.nseindia.com/ ) Designated Stock Exchange []
Draft Red Herring
Prospectus or DRHP
This draft red herring prospectus dated January 24, 2018, issued in accordance with the SEBI ICDR
Regulations, which does not contain complete particulars of the price at which the Equity Shares will be
Allotted and the size of the Offer, including any addenda or corrigenda thereto
Eligible FPIs FPIs from such jurisdictions outside India where it is not unlawful to make an offer / invitation under the
Offer and in relation to whom the Bid cum Application Form and the Red Herring Prospectus constitutes an
invitation to subscribe to the Equity Shares
Eligible NRIs NRIs from such jurisdictions outside India where it is not unlawful to make an offer or invitation under the
Offer and in relation to whom the Bid cum Application Form and the Red Herring Prospectus will constitute
an invitation to purchase the Equity Shares offered there
Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour Anchor Investors can transfer
money through direct credit or NACH or NEFT or RTGS in respect of the Bid Amount when submitting a
Bid
Escrow Agreement The agreement dated [] amongst our Company, the Promoter Selling Shareholder, the Registrar to the Offer,
the BRLMs, the Syndicate Members, the Escrow Collection Bank(s) and the Refund Bank(s) for collection
of the Bid Amounts and where applicable, remitting refunds (if any) on the terms and conditions thereof
Escrow Collection Bank A bank, which is a clearing member and registered with SEBI as a banker to an offer and with whom the
Escrow Account will be opened, in this case being []
First/ sole Bidder The Bidder whose name appears first in the Bid cum Application Form or the Revision Form and in case of
joint Bids, whose name appears as the first holder of the beneficiary account held in joint names
Floor Price The lower end of the Price Band, subject to any revision thereto, at or above which the Offer Price and the
Anchor Investor Offer Price will be finalised and below which no Bids will be accepted and which shall not
be less than the face value of Equity Shares
Fresh Issue The fresh issue of up to [] Equity Shares aggregating up to 9,000 million by our Company pursuant to the terms of the Red Herring Prospectus
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, and updated pursuant to the
circular (CIR/ CFD/ POLICYCELL/ 11/ 2015) dated November 10, 2015, the circular (CIR/ CFD/ DIL/ 1/
2016) dated January 1, 2016 and (SEBI/ HO/ CFD/ DIL/ CIR/ P/ 2016/ 26) dated January 21, 2016, notified
by SEBI and included in Offer Procedure on page 251
ICICI Securities ICICI Securities Limited
IIFL Holdings IIFL Holdings Limited
Kotak Kotak Mahindra Capital Company Limited
Monitoring Agency []
Mutual Fund Portion 5% of the Net QIB Portion or [] Equity Shares which shall be available for allocation to Mutual Funds only
on a proportionate basis, subject to valid Bids being received at or above the Offer Price
Mutual Funds Mutual funds registered with SEBI under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996
Net Proceeds Proceeds of the Fresh Issue less our Companys share of the Offer expenses
For further information about use of the Offer proceeds and the Offer expenses, see Objects of the Offer on
page 85
Net QIB Portion The portion of the QIB Portion less the number of Equity Shares Allotted to the Anchor Investors
Non-Institutional Bidders All Bidders, that are not QIBs or Retail Individual Investors, who have Bid for Equity Shares for an amount
of more than 200,000 Non-Institutional Portion The portion of the Offer being not less than 15% of the Offer consisting of [] Equity Shares which shall be
available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being
received at or above the Offer Price
Non-Resident A person resident outside India, as defined under FEMA and includes FPIs, NRIs, FVCIs and multilateral and
bilateral development financial institutions
Offer The initial public offer of up to [] Equity Shares for cash at a price of [], aggregating up to [] million comprising the Fresh Issue and the Offer for Sale
Offer Agreement The agreement dated January 24, 2017 amongst our Company, the Promoter Selling Shareholder and the
BRLMs, pursuant to which certain arrangements are agreed to in relation to the Offer
Offer for Sale The offer for sale of up to 10,281,317 Equity Shares aggregating up to [] million by the Promoter Selling Shareholder in terms of the Red Herring Prospectus
For further details in relation to Promoter Selling Shareholder, see The Offer on page 59
Offer Price The final price at which Equity Shares will be Allotted in terms of the Red Herring Prospectus
http://www.bseindia/
5
Term Description
The Offer Price will be decided by our Company and the Promoter Selling Shareholder in consultation with
the BRLMs on the Pricing Date in accordance with the Book-Building Process and 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 revisions thereof
The Price Band and the minimum Bid Lot size for the Offer will be decided by our Company and the Promoter
Selling Shareholder in consultation with the BRLMs and will be advertised at least five Working Days prior
to the Bid/ Offer Opening Date, in [] editions of the English national daily newspaper [], [] editions of
the Hindi national daily newspaper [] and [] editions of the Kannada daily newspaper [], each with wide
circulation at least five Working Days prior to the Bid/ Offer Opening Date with the relevant financial ratios
calculated at the Floor Price and at the Cap Price, and shall be made available to the Stock Exchanges for the
purpose of uploading on their respective websites
Pricing Date The date on which our Company and the Promoter Selling Shareholder in consultation with the BRLMs, will
finalise the Offer Price
Prospectus The prospectus to be filed with the RoC on or after the Pricing Date in accordance with Section 26 of the
Companies Act, 2013, and the SEBI ICDR Regulations containing, inter alia, the Offer Price, the size of the
Offer and certain other information, including any addenda or corrigenda thereto
Public Offer Account(s) Account(s) to be opened with the Public Offer Account Bank(s) under Section 40(3) of the Companies Act,
2013, to receive monies from the Escrow Account and ASBA Accounts on the Designated Date
Public Offer Account
Bank(s)
The bank(s) with whom the Public Offer Account(s) will be opened for collection of Bid Amounts from the
Escrow Account and ASBA Accounts on the Designated Date, in this case being []
QIB Portion The portion of the Offer (including the Anchor Investor Portion) being not more than 50% of the Offer or []
Equity Shares to be Allotted to QIBs on a proportionate basis
Qualified Institutional
Buyers or QIBs
Qualified Institutional Buyers as defined under Regulation 2(1)(zd) of the SEBI ICDR Regulations
Red Herring Prospectus or
RHP
The Red Herring Prospectus to be issued in accordance with Section 32 of the Companies Act, 2013 and the
SEBI ICDR Regulations, which will not have complete particulars of the price at which the Equity Shares
shall be allotted (including any addenda or corrigenda thereto) and which shall be filed with the RoC at least
three Working Days before the Bid/ Offer Opening Date and will become the Prospectus upon filing with the
RoC on or after the Pricing Date
Refund Account(s) The account(s) opened with the Refund Bank(s), from which refunds, if any, of the whole or part of the Bid
Amount shall be made
Refund Bank(s) The Banker(s) to the Offer with whom the Refund Account(s) will be opened, in this case being []
Refunds through electronic
transfer of funds
Refunds through NACH, direct credit, NEFT, RTGS or unblocking ASBA Accounts, as applicable
Registered Brokers Stock brokers registered with SEBI and the stock exchanges having nationwide terminals, other than the
Members of the Syndicate and eligible to procure Bids at the Broker Centres in terms of Circular No. CIR/
CFD/ 14/ 2012 dated October 4, 2012 issued by SEBI
Registrar to the Offer/
Registrar
Karvy Computershare Private Limited
Registrar and Share Transfer
Agents or RTAs
Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the Designated RTA
Locations in terms of circular no. CIR/ CFD/ POLICYCELL/ 11/ 2015 dated November 10, 2015 issued by
SEBI
Retail Individual Bidder(s)/
Retail Individual
Investor(s)/ RII(s)/ RIB(s)
Bidders (including HUFs applying through their kartas and Eligible NRIs) whose Bid Amount for Equity
Shares in the Offer is not more than 200,000 in any of the bidding options in the Offer
Retail Portion The portion of the Offer being not less than 35% of the Offer or [] Equity Shares, available for allocation to
Retail Individual Bidders in accordance with the SEBI ICDR Regulations
Revision Form Form used by the 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), as applicable
QIB Bidders and Non-Institutional Bidders are not allowed to modify their Bids (in terms of quantity of
Equity Shares or the Bid Amount) at any stage. Retail Individual Bidders can revise their Bids during the Bid/
Offer Period and withdraw their Bids until the Bid/ Offer Closing Date
Self-Certified Syndicate
Bank(s) or SCSB(s)
The banks registered with SEBI, which offer the facility of ASBA, a list of which is available on the website
of SEBI at https:// www.sebi.gov.in/ sebiweb/ other/ OtherAction.do?doRecognised=yes and updated from
time to time and at such other websites as may be prescribed by SEBI from time to time
Share Escrow Agent Share Escrow agent appointed pursuant to the Share Escrow Agreement, in this case being, []
Share Escrow Agreement The agreement dated [] amongst the Promoter Selling Shareholder, our Company and the Share Escrow
Agent in connection with the deposit of the Offered Shares by the Promoter Selling Shareholder in a share
escrow account and credit of such Equity Shares to the demat account of the Allottees in accordance with the
Basis of Allotment
Specified Locations Bidding centres where the Syndicate shall accept ASBA Forms a list of which is included in the ASBA Form
Stock Exchanges BSE and the NSE
Sub-Syndicate centres The sub-syndicate members, if any, appointed by the BRLMs and the Syndicate Members, to collect Bid cum
Application Forms and Revision Forms
Syndicate Agreement The agreement dated [] amongst the BRLMs, the Syndicate Members, our Company and the Promoter
Selling Shareholder in relation to the collection of Bid cum Application Forms by the Syndicate
6
Term Description
Syndicate Members Intermediaries registered with SEBI who are permitted to carry out activities as an underwriter, namely, []
Syndicate or Members of the
Syndicate
The BRLMs and the Syndicate Members
Underwriters []
Underwriting Agreement The agreement dated [] among the Underwriters, our Company and the Promoter Selling Shareholder to be
entered into on or after the Pricing Date but prior to filing of Prospectus
Working Day All days other than second and fourth Saturdays of the month, Sundays or public holidays, on which
commercial banks in Mumbai are open for business; provided however, with reference to (a) the time period
between the announcement of Price Band the Bid/ Offer Closing Date, Working Day shall mean all days,
except Saturday, Sunday and public holidays on which commercial banks in Mumbai are open for business;
and (b) the time period between the Bid/ Offer Closing Date and the listing of the Equity Shares on the Stock
Exchanges, shall mean all trading days of Stock Exchanges, excluding Sundays and bank holidays, as per the
SEBI Circular SEBI/ HO/ CFD/ DIL/ CIR/ P/ 2016/ 26 dated January 21, 2016
Technical/ Industry Related Terms/ Abbreviations/ Terms relating to our business
Term Description
ALM Asset Liability Management
ANBC Adjusted Net Bank Credit
ATM Automated Teller Machine
AUM Assets Under Management
CIBIL Credit Information Bureau (India) Limited
CIC Credit Information Companies
CBS Core Banking Solutions
CRAR Capital-to-risk weighted assets ratio
CRISIL CRISIL Limited
CRR Cash Reserve Ratio
CSR Corporate Social Responsibility
Cost to Income ratio Operating expense (includes administration expenses, personnel expenses including staff welfare,
depreciation & amortization and bank charges) divided by NII
DB Kit Disbursement Kit
D/ E Debt/ Equity ratio
ECS Electronic Clearing System
eKYC A paperless KYC process, wherein the identity and address of the customer are verified electronically
EMI Equated Monthly Instalment
FDI Policy Consolidated FDI Policy Circular of 2017, issued by the Department of Industrial Policy and Promotion,
Ministry of Commerce and Industry, Government of India, dated August 28, 2017
Gross Non-Performing
Asset or Gross NPA or
GNPA
Gross NPA represents the non-performing portfolio loans outstanding (gross) as of the last day of the relevant
period
Gross NPA Ratio Gross NPA Ratio represents Gross NPA as a percentage of the total portfolio loans outstanding (gross) as of
the last day of the relevant period
GL Group Lending
GLP Gross Loan Portfolio
Gross AUM It represents receivables under financing activities as well as assets securitized/ assigned as of the end of the
relevant period
GRC Grievance Redressal Cell
GRT Group Recognition Test
HO Head Office
IL Individual Lending
JLG Joint Liability Group
KRI Key Risk Indicator
KYC Know-Your-Customer
MFI Micro Finance Institution
MFIN Micro Finance Institution Network
MSE Micro & Small Enterprises
MSME Micro, Small and Medium Enterprises
MUDRA Micro Units Development and Refinance Agency
Master Directions Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking
Company (Reserve Bank) Directions, 2016, as amended from time to time
NBFC Non-Banking Financial Company
NBFC MFI Non-Banking Financial Company Micro Finance Institution
NBFC- ND-SI Systemically Important Non-Deposit Accepting NBFC
NII Net Interest Income
NIM Net Interest Margin
Net AUM It represents the Gross AUM less assets securitized/ assigned as of the end of the relevant period
7
Term Description
Net Non-Performing Asset
or Net NPA or NNPA
Net NPA represents the non-performing portfolio loans outstanding (net) as of the last day of the relevant
period i.e. non-performing portfolio loans outstanding (gross) as reduced by the provision for non-performing
assets
Net NPA Ratio Net NPA represents the Net NPA as a percentage of total portfolio loans outstanding as reduced by the
provision for non-performing assets as of the last day of the relevant period
NPS National Pension Scheme
NNPA Net Non-Performing Asset
NOF Net Owned Funds
Operating expense ratio Operating expense (includes administration expenses, personnel expenses including staff welfare,
depreciation & amortization and bank charges) divided by NII
OQC Operational Quality Control
OSP Outstanding Portfolio
PAR Portfolio at Risk
PD Personal Discussion
PSL Priority Sector Lending
RM Risk Manager
RoAA Return on Average Assets
RoAE Return on Average Equity
RO Risk Officer
RPCs Regional Processing Centres
RRB Regional Rural Bank
RWA Risk Weighted Asset
Rural Area Areas outside the district headquarters or state capitals
SLR Statutory Liquidity Ratio
SRO Self-Regulatory Organisation
Urban Area District headquarters or state capitals
Wilful Defaulter A person categorized as a wilful defaulter by any bank or financial institution or consortium, in accordance
with the guidelines of willful defaulters issued by the RBI and includes an issuer whose director or promoter
is categorized as such
Conventional and General Terms or Abbreviations
Term Description
/ Rs./ Rupees/ INR Indian Rupees AGM Annual general meeting
AIF Alternative Investment Fund as defined in and registered with SEBI under the Securities and Exchange Board
of India (Alternative Investments Funds) Regulations, 2012
AML Anti-money laundering
AS/ Accounting Standards Accounting standards issued by the Institute of Chartered Accountants of India
Banking Regulation Act Banking Regulation Act, 1949
Bn/ bn Billion
BSE BSE Limited
CAGR Compounded Annual Growth Rate
CDSL Central Depository Services (India) Limited
CIN Corporate Identity Number
Companies Act Companies Act, 1956 and Companies Act, 2013, as applicable
Companies Act, 1956 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 Companies Act, 2013, to the extent in force pursuant to the notification of the Notified Sections, along with
the relevant rules made thereunder
Depositories Collectively, the NSDL and the CDSL
Depositories Act The Depositories Act, 1996
DIN Director Identification Number
DP ID Depository Participants Identification
DP/ Depository Participant A depository participant as defined under the Depositories Act
ECB External Commercial Borrowing
EGM Extraordinary General Meeting
EPS Earnings Per Share
Equity Listing Agreement Listing Agreement to be entered into with the Stock Exchanges on which the Equity Shares are to be listed
in the form prescribed under the applicable law
FCNR Foreign Currency Non-Resident
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, as amended, read with rules and regulations thereunder
Financial Year/ Fiscal/
Fiscal Year/ FY
Unless stated otherwise, the period of 12 months ending March 31 of that particular year
FIPB The erstwhile Foreign Investment Promotion Board
FPI(s) Foreign Portfolio Investors as defined under the SEBI FPI Regulations
8
Term Description
FVCI Foreign Venture Capital Investors as defined and registered under the SEBI FVCI Regulations
GDP Gross Domestic Product
GIR General Index Register
GoI/ Government Government of India
GST Goods and Services Tax
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IPC The Indian Penal Code, 1860, as amended
Income Tax Act The Income Tax Act, 1961
India Republic of India
Ind (AS) Indian Accounting Standards (Ind AS)
Indian Accounting Standard
Rules
The Companies (Indian Accounting Standards) Rules, 2015
Indian GAAP Generally Accepted Accounting Principles in India
IPO Initial public offering
IRDA Insurance Regulatory and Development Authority of India
IST Indian Standard Time
IT Information Technology
MCA Ministry of Corporate Affairs, Government of India
MoU Memorandum Of Understanding
Mn/ mn Million
N.A./ NA Not Applicable
NABARD National Bank for Agricultural and Rural Development
NAV Net Asset Value
NBFC-MFI Directions Master Circular Non-Banking Financial Company Micro Finance Institutions (NBFC-MFI) Directions
dated July 1, 2015, updated as on April 20, 2016
NEFT National Electronic Fund Transfer
NR Non-Resident
NRE Account Non-Resident External accounts
NRI A person resident outside India, who is a citizen of India or a person of Indian origin, and shall have the
meaning ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2000
NRO Account Non-Resident Ordinary accounts
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB/ Overseas Corporate
Body
A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least
60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held
by NRIs directly or indirectly and 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 the Offer
p.a. Per annum
P/ E Ratio Price/ Earnings Ratio
PAN Permanent Account Number
PAT Profit After Tax
RBI Reserve Bank of India
RBI Act Reserve Bank of India Act, 1934, as amended
RHP Red Herring Prospectus
RTGS Real Time Gross Settlement
SCRA Securities Contracts (Regulation) Act, 1956, as amended
SCRR Securities Contracts (Regulation) Rules, 1957, as amended
SEBI Securities and Exchange Board of India constituted under the SEBI Act, 1992
SEBI Act Securities and Exchange Board of India Act 1992, as amended
SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investments Funds) Regulations, 2012, as amended
SEBI ESOP Regulations Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended
SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014
SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended
SEBI ICDR Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
SEBI Listing Regulations Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations,
2015, as amended
SEBI Mutual Fund
Regulations
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended
SEBI Portfolio Manager
Regulations
Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, as amended
SEBI Stock Broker
Regulations
Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992, as amended
SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996, as amended
Securities Act U.S. Securities Act, 1933
9
Term Description
SIDBI Small Industries Development Bank of India
Stamp Act Indian Stamp Act, 1899
State Government The government of a state in India
Stock Exchanges Collectively, the BSE and the NSE
Systemically Important
NBFC
A non-banking financial company registered with the Reserve Bank of India and having a net-worth of more
than 5,000 million as per the last audited financial statements STT Securities Transaction Tax
Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
TAN Tax deduction account number
U.S./ USA/ United States United States of America
USD/ US$ United States Dollars
VCFs Venture Capital Funds as defined in and registered with SEBI under the SEBI VCF Regulations
Notwithstanding the foregoing, terms in Statement of Special Tax Benefits, Objects of the Offer, Financial Statements,
Basis for Offer Price, Industry Overview, Regulations and Policies, History and Certain Corporate Matters,
Financial Indebtedness Outstanding Litigation and Material Development, Offer Procedure and Main Provisions of
Articles of Association on pages 91, 85, 187, 88, 93, 145, 151, 258, 260, 293 and 329 respectively, shall have the meaning
given to such terms in such sections.
10
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND
CURRENCY OF PRESENTATION
Certain Conventions
Unless otherwise specified or the context otherwise requires, all references in this Draft Red Herring Prospectus to India are
to the Republic of India, all references to USA, US and United States are to the United States of America, all references
to Netherlands are to the Netherlands, all references to Philippines are to the Republic of the Philippines, all references to
Vietnam are to the Socialist Republic of Vietnam, all references to Thailand are to the Kingdom of Thailand, all references
to Italy are to the Italian Republic, all references to Luxembourg are to the Grand Duchy of Luxembourg and all references
to Indonesia are to the Republic of Indonesia.
Unless stated otherwise, all references to page numbers in this Draft Red Herring Prospectus are to the page numbers of this
Draft Red Herring Prospectus.
Financial Data
Unless stated otherwise or unless the context requires otherwise, and to the extent applicable, the financial data in this Draft
Red Herring Prospectus is derived from our Restated Financial Statements prepared in accordance with the Companies Act and
Indian GAAP and restated in accordance with the SEBI ICDR Regulations.
In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are
due to rounding off. All figures in decimals and all percentage figures, unless otherwise specified, have been rounded off to the
second decimal place and accordingly there may be consequential changes in this Draft Red Herring Prospectus on account of
rounding adjustments.
Our Companys Financial Year commences on April 1 and ends on March 31 of the next year; accordingly, all references to a
particular Financial Year/ Fiscal/ FY, unless stated otherwise, are to the 12 month period ended on March 31 of that year.
We prepare our financial statements in accordance with Indian GAAP, which differs in some material respects from IFRS and
U.S. GAAP. Accordingly, the degree to which our Restated Financial Statements, as included in this Draft Red Herring
Prospectus, will provide meaningful information is entirely dependent on the readers level of familiarity with the Companies
Act, 2013, Indian GAAP and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting practices
on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. We have not made
any attempt to quantify or identify the impact of the differences between Indian GAAP and IND (AS) as applied to our Restated
Financial Statements and it is urged that you consult your own advisors regarding the impact of difference, if any, on financial
data included in this Draft Red Herring Prospectus. We have only included a summary of qualitative differences of certain
items between Indian GAAP and Ind (AS) in this Draft Red Herring Prospectus. For details in connection with risks, see Risk
Factors We may be adversely impacted by the transition to IND (AS) for periods beginning from April 1, 2018 on page 39.
Indian GAAP also differs in certain material respects from Ind (AS) which will be applicable to our Company for financial
periods commencing April 1, 2018. Given that Ind (AS) differs in many respects from Indian GAAP, our financial statements
prepared and presented in accordance with Ind AS relating to any period subsequent to April 1, 2018, may not be comparable
to our historical financial statements prepared under Indian GAAP. In the event that any of our historical financial statements,
including our financial statements for Fiscal Year 2017 are required to be also prepared in accordance with Ind (AS), such
historical Ind (AS) financial statements may vary from our historical India GAAP financial statements, and there can be no
assurance that such variation will not be material. See Summary of Certain Significant differences between Indian GAAP and
Ind AS and Risk Factors - We may be adversely impacted by the transition to IND (AS) for periods beginning from April 1,
2018 on pages 230 and 39.
Any percentage amounts, as set forth in Risk Factors, Our Business and Managements Discussion and Analysis of
Financial Conditions and Results of Operations on pages 15, 123 and 233 respectively, and elsewhere in this Draft Red Herring
Prospectus, to the extent applicable, have been calculated on the basis of our Restated Financial Statements prepared in
accordance with the Companies Act and Indian GAAP and restated in accordance with the SEBI ICDR Regulations.
Currency and Units of Presentation
All references to:
Rupees or or INR or Rs. are to the Indian Rupee, the official currency of the Republic of India.
US$ or USD are to the United States Dollar, the official currency of the United States.
Euro or EUR or are to Euro, the official currency of the European Union.
11
Our Company has presented certain numerical information in this Draft Red Herring Prospectus in million or billion units,
or in absolute number where the number have been too small to present in million unless as stated, otherwise, as applicable.
One million represents 1,000,000, one billion represents 1,000,000,000 and one crore represents 10,000,000. However, figures
sourced from third party industry sources may be expressed in denominations other than millions or may be rounded off to
other than two decimal points in the respective sources, and such figures have been expressed in this Draft Red Herring
Prospectus in such denominations or rounded off to such number of decimal points as prescribed in such respective sources.
Exchange Rates
This Draft Red Herring Prospectus contains conversions 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
the USD (in Rupees per USD):
Currency As on March 31,
2013
( )
As on March 31,
2014
( )
As on March 31,
2015(1)
( )
As on March 31,
2016(1)
( )
As on March 31,
2017(1)
( )
As on September 30,
2017
( ) 1 USD 54.39 60.10 62.59 66.33 64.84 65.35
1 EUR 69.54 82.58 67.51 75.10 69.25 77.06 (Source: RBI website)
(1) In the event that 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
Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has been obtained or derived from
publicly available information as well as industry publications and sources.
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. 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 or the BRLMs or any of their affiliates or advisors. The data used in
these sources may have been reclassified by us for the purposes of presentation. Data from these sources may also not be
comparable. Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various factors,
including those discussed in Risk Factors - Third party industry and industry-related statistical data in this Draft Red Herring
Prospectus may be incomplete, incorrect or unreliable on page 32. Accordingly, investment decisions should not be based
solely on such information.
The sections Summary of Industry, Summary of our Business, Industry Overview, Our Business and Managements
Discussion and Analysis of Financial Conditions and Results of Operations of this Draft Red Herring Prospectus contain data
and statistics from the report titled CRISIL Research - Industry Report on the Micro Finance Industry, January 2018 prepared
by CRISIL Research, which is subject to the following disclaimer:
CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this Report based on the
information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL does not guarantee the
accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results
obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any company covered in
the Report. CRISIL especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/
distributors of this Report. CRISIL Research operates independently of, and does not have access to information obtained by
CRISILs Ratings Division / CRISIL Risk and Infrastructure Solutions Limited (CRIS), which may, in their regular operations,
obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of CRISILs
Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without CRISILs prior written
approval.
In accordance with the SEBI ICDR Regulations, Basis for Offer Price on page 88 includes information relating to our peer
group companies. Such information has been derived from publicly available sources, and neither we, nor the BRLMs have
independently verified such information.
The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the
readers 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.
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Further, in accordance with Regulation 51A of the SEBI ICDR Regulations, and SEBI Listing Regulations, as applicable, our
Company may be required to undertake an annual updation of the disclosures made in this Draft Red Herring Prospectus and
make it publicly available in the manner specified by SEBI.
Time
Unless otherwise stated, all references to time in this Daft Red Herring Prospectus are to Indian Standard Time.
Promoter Selling Shareholders statements
Only statements and undertakings which are specifically confirmed or undertaken by the Promoter Selling Shareholder, as
the case may be, in this Draft Red Herring Prospectus shall, severally and not jointly, deemed to be statements and undertakings
made by the Promoter Selling Shareholder. All other statements and/ or undertakings in this Draft Red Herring Prospectus shall
be statements and undertakings made by our Company even if the same relates to the Promoter Selling Shareholder.
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FORWARD-LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain forward-looking statements. These forward-looking statements generally
can be identified by words or phrases such as aim, anticipate, believe, expect, estimate, intend, objective, plan,
project, will, will continue, will pursue or other words or phrases of similar import. Similarly, statements that describe
our Companys strategies, objectives, plans or goals are also forward-looking statements.
All forward-looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to
differ materially from those contemplated by the relevant forward-looking statement. For the reasons described below, we
cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Therefore,
investors are cautioned not to place under reliance on such forward-looking statements and not to regard such statements as a
guarantee of future performance.
Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties
associated with the expectations with respect to, but not limited to, regulatory changes pertaining to the industry in which our
Company has businesses and its ability to respond to them, its ability to successfully implement its strategy, its growth and
expansion, technological changes, its exposure to market risks, general economic and political conditions in India and globally
which have an impact on its business activities or investments, the monetary and fiscal policies of India, inflation, deflation,
unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the
financial markets in India and globally, changes in laws, regulations and taxes and changes in competition in its industry.
Important factors that could cause actual results to differ materially from our Companys expectations include, but are not
limited to, the following:
our operations being concentrated in Karnataka and Maharashtra;
our microfinance loans being unsecured and are susceptible to certain operation and credit risks;
ability to manage our growth, financial, accounting, administration and infrastructure effectively;
our portfolio and management of non-performing assets and/ or our provisions;
interest rate risk and volatility in interest rates;
our credit ratings our borrowing costs and access to capital and loan markets;
ability to comply with certain financial covenants in our financing documents;
our ability to access capital at competitive rates for our growth;
stability of our internal accounting systems and management of operational errors;
maintenance and expansion of our branch network;
our ability to compete effectively in our businesses;
our underwriting and risk management policies; and
our brand recall.
For further discussion of factors that could cause the actual results to differ from the expectations, see Risk Factors, Our
Business and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 15, 123
and 233, respectively. By their nature, certain market risk disclosures are only estimates and could be materially different from
what actually occurs in the future. As a result, actual gains or losses could materially differ from those that have been estimated.
We cannot assure investors that the expectations 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.
Forward-looking statements reflect the current views of our Company as of the date of this Draft Red Herring Prospectus and
are not a guarantee of future performance. These statements are based on the managements beliefs and assumptions, which in
turn are based on currently available information. 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. Neither our Company, our Directors, the Promoter Selling Shareholder, the
BRLMs nor any of their respective affiliates have any obligation 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.
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In accordance with regulatory requirements, our Company and the BRLMs will ensure that investors in India are informed of
material developments from the date of registration of the Red Herring Prospectus with the RoC until the receipt of final listing
and trading approvals from the Stock Exchanges. The Promoter Selling Shareholder will ensure that it will keep our Company,
the BRLMs and investors informed of material developments in relation to statements and undertakings made by the Promoter
Selling Shareholder with respect to itself and the Offered Shares in the Red Herring Prospectus and the Prospectus until the
time of the grant of final listing and trading approvals by the Stock Exchanges.
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SECTION II: RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider each of the following risk factors
and all other information set forth in this Draft Red Herring Prospectus, including the risks and uncertainties described below,
before making an investment in the Equity Shares. You should read this section together with "Industry Overview", "Our
Business", "Selected Statistical Information", "Regulations and Policies" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 93, 123, 178, 145 and 233, respectively, as well as the financial
statements, including the notes thereto, and other financial information included elsewhere in this Draft Red Herring
Prospectus. You should consult your tax, financial and legal advisors about the particular consequences to you of an investment
in the Equity Shares.
The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties not
presently known to us or that we currently believe to be immaterial may also materially adversely affect our business, prospects,
financial condition and results of operations and cash flows. If any or some combination of the following risks, or other risks
that we do not currently know about or believe to be material, actually occur, our business, financial condition and results of
operations and cash flows could suffer, the trading price of, and the value of your investment in, our Equity Shares could
decline, and you may lose all or part of your investment. In making an investment decision, you must rely on your own
examination of our Company and the terms of this Offer, including the merits and risks involved.
This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and uncertainties. Our results
could differ materially from such forward-looking statements as a result of certain factors, including the considerations
described below and elsewhere in this document.
Unless otherwise indicated or the context requires otherwise, the financial information included herein are based on our
Restated Financial Statements as of and for the years ended March 31, 2013, 2014, 2015, 2016 and 2017, and as of and for the
six months ended September 30, 2017 included in this Draft Red Herring Prospectus. For further information, see "Financial
Statements" on page 187.
INTERNAL RISK FACTORS
Risks Relating to our Business.
1. Our operations are concentrated in Karnataka and Maharashtra and any adverse developments in these states could have an adverse effect on our business, results of operations, financial condition and cash flows.
As of September 30, 2017, we conducted our operations through 440 branches in India, of which 177 branches were
located in Karnataka and 133 branches were located in Maharashtra. As of September 30, 2017, 59.02% of our Gross
AUM originated in Karnataka and 28.39% of our Gross AUM originated in Maharashtra. In the event of a regional
slowdown in the economic activity in these states, or any other developments including political unrest, disruption or
sustained economic downturn that make our products in these states less beneficial, we may experience an adverse
impact on our financial condition and results of operations, which are largely dependent on the performance and other
prevailing conditions affecting the economies of these states. The market for our products in these states may perform
differently from, and be subject to, market and regulatory developments that are different from the requirements in
other states of India. There can be no assurance that the demand for our products will grow or will not decrease in the
future in these states. Further, in the past, there have been instances of irregularities in the functioning of certain NBFCs
in the southern states of India, specifically, Andhra Pradesh (for further details, see "Industry Overview" on page 93).
While NBFC-MFIs are currently regulated by the RBI, the respective state government of these states may pass laws
which impact the business of NBFC-MFIs. There can be no assurance that any such actions taken by the state
governments in Karnataka or Maharashtra will not impact our business, financial condition and results of operations.
2. Microfinance loans are unsecured and are susceptible to various operational and credit risks which may result in increased levels of NPAs, thereby adversely affecting our business, results of operation and financial condition.
The focus customer segment for our micro-loan is women with an annual household income of 160,000 or less in Urban Areas and 100,000 or less in Rural Areas (as required under the Master Directions). Our customers typically have limited sources of income, savings and credit histories and as a result, are usually adversely affected by declining
economic conditions. Further, our JLG Customers do not provide any collateral or security for their borrowings as the
RBI has mandated that loans given by NBFC-MFIs should be collateral free for the purpose of Qualifying Assets.
Such customers generally do not a high level of financial resilience, and, as a result, they can be adversely affected by
declining economic conditions and natural calamities such as floods or droughts. Furthermore, as there is typically
limited financial information available about our focus customer segment and many of