HINDUJA LEYLAND FINANCE LIMITED leyland finance limited ... promoters: ashok leyland limited and...

HINDUJA LEYLAND FINANCE LIMITED Our Company was incorporated on November 12, 2008, as a public limited company under the Companies Act, 1956, with a certificate of incorporation granted by the Registrar of Companies, at Chennai, Tamil

Nadu (the RoC). Our Company received its certificate of commencement of business from the RoC on March 4, 2009. Pursuant to a certificate issued by the Reserve Bank of India (RBI) on March 22, 2010,

our Company was permitted to commence operations as a non-banking financial company (NBFC) under section 45 IA of the Reserve Bank of India Act, 1934. Our Company was originally classified as a

systemically important non-deposit accepting non-banking financial company (SI-NBFC-ND) in the calendar year 2010. Our Company was subsequently granted the status of an NBFC-Asset Finance Company

(NBFC-AFC) by the RBI pursuant to a certificate of registration received on May 12, 2014. For further details, see History and Certain Corporate Matters on page 185.***

Corporate Identity Number: U65993TN2008PLC069837 Registered Office: 1, Sardar Patel Road, Guindy, Chennai 600 032, Tamil Nadu, India Tel: +91 44 3925 2525 Fax: +91 44 3925 2553

Corporate Office: 27-A, Developed Industrial Estate, Guindy, Chennai 600 032, Tamil Nadu, India Tel: +91 44 3925 2533 Fax: +91 44 3925 2553

Contact Person: Mr. S. Ramasamy, Company Secretary and Compliance Officer Tel: +91 44 3925 2527 Fax: +91 44 3925 2553

E-mail: [email protected] Website: www.hindujaleylandfinance.com

PROMOTERS: ASHOK LEYLAND LIMITED AND HINDUJA POWER LIMITED INITIAL PUBLIC OFFERING OF UP TO [] EQUITY SHARES OF FACE VALUE OF ` 10 EACH (THE EQUITY SHARES) OF HINDUJA LEYLAND FINANCE LIMITED (HLFL OR OUR COMPANY OR THE COMPANY OR THE ISSUER) FOR CASH AT A PRICE OF ` [] PER EQUITY SHARE (INCLUDING SHARE PREMIUM OF ` [] PER EQUITY SHARE) (THE OFFER PRICE) AGGREGATING UP TO ` [] MILLION (THE OFFER). THE OFFER COMPRISES A FRESH ISSUE OF UP TO [] EQUITY SHARES AGGREGATING UP TO ` 5,000 MILLION BY OUR COMPANY (THE FRESH ISSUE) AND AN OFFER FOR SALE OF UP TO 26,608,810 EQUITY SHARES AGGREGATING UP TO ` [] MILLION BY EVERFIN HOLDINGS (THE INVESTOR SELLING SHAREHOLDER AND SUCH OFFERED SHARES INVESTOR OFFERED SHARES) (THE OFFER FOR SALE). THE OFFER SHALL CONSTITUTE []% OF THE POST-OFFER PAID-

UP EQUITY SHARE CAPITAL OF OUR COMPANY. OUR COMPANY AND THE INVESTOR SELLING SHAREHOLDER, IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS

(BRLMs), IS CONSIDERING A PRIVATE PLACEMENT OF UP TO 26,000,000 EQUITY SHARES FOR CASH CONSIDERATION AGGREGATING UP TO ` 2,000 MILLION, PRIOR TO FILING OF THE RED HERRING PROSPECTUS WITH THE ROC (PRE-IPO PLACEMENT). IF THE PRE-IPO PLACEMENT IS COMPLETED, THE NUMBER OF EQUITY SHARES ISSUED PURSUANT TO

THE PRE-IPO PLACEMENT WILL BE REDUCED FROM THE FRESH ISSUE, SUBJECT TO A MINIMUM OFFER SIZE OF AT LEAST SUCH PERCENTAGE OF EQUITY SHARES AS IS

EQUIVALENT TO A VALUE OF ` [] MILLION (CALCULATED AT THE OFFER PRICE) BEING OFFERED TO THE PUBLIC.

THE PRICE BAND, ANY RETAIL DISCOUNT AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE INVESTOR SELLING SHAREHOLDER IN CONSULTATION

WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE ADVERTISED IN [] EDITION OF [] (A WIDELY CIRCULATED ENGLISH NATIONAL NEWSPAPER) ), [] EDITION OF [] (A

WIDELY CIRCULATED HINDI NATIONAL NEWSPAPER) AND [] EDITION OF [] (A WIDELY CIRCULATED TAMIL NEWSPAPER, TAMIL BEING THE REGIONAL LANGUAGE IN THE

PLACE 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 UPLOADING ON THEIR RESPECTIVE

WEBSITES.# # Discount of ` [] per Equity Share to the Offer Price may be offered to Retail Individual Bidders (Retail Discount)

THE FACE VALUE OF THE EQUITY SHARE IS ` 10 EACH In case of revision in the Price Band, the Bid/Offer Period will be extended for at least three additional Working Days after revision of the Price Band subject to the Bid/Offer Period not exceeding a total of 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 websites

of the BRLMs, and at the terminals of the members of the Syndicate and by intimation to Self Certified Syndicate Banks (SCSBs), the Registered Brokers, Registrar and Share Transfer Agent to the Offer and Collecting

Depository Participants.

The Offer is being made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulations) Rules, 1957, as amended (SCRR) and in compliance with Regulation 26(1) of the Securities

and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the SEBI ICDR Regulations), wherein 50% of the Offer shall be allocated on a proportionate basis to Qualified

Institutional Buyers (QIBs) (the QIB Portion), provided that our Company and the Investor Selling Shareholder may, in consultation with the BRLMs, allocate up to 60% of the QIB Portion to Anchor Investors on a

discretionary basis (the Anchor Investor Portion), of which one-third is to be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Offer

Price in accordance with the SEBI ICDR Regulations. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proporstionate basis only to Mutual Funds, and the remainder

of the QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), 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 (NIIs) and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders

(RIIs) in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All Investors (except Anchor Investors) shall participate in this Offer only through an Application

Supported by Blocked Amount (ASBA) process. For details, see Offer Procedure on page 423.

RISKS IN RELATION TO THE FIRST OFFER This being the first public issue of the securities of our Company, there has been no formal market for the securities of our Company. The face value of our Equity Shares is ` 10 and the Floor Price and Cap Price are [] times and [] times of the face value of our Equity Shares, respectively. The Offer Price (as determined and justified by our Company and the Investor Selling Shareholder, in consultation with the BRLMs and as stated in Basis

for Offer Price on page 121 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 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 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 have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention

of the investors is invited to Risk Factors on page 17.

ISSUERS AND INVESTOR 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. Further, the Investor Selling Shareholder accepts responsibility only for the statements specifically confirmed and undertaken by the Investor Selling Shareholder with respect to itself and the Investor

Offered Shares and confirms that such statements are true and correct in all material respects and are not misleading in any material respect.

LISTING The Equity Shares issued through the Red Herring Prospectus are proposed to be listed on the Stock Exchanges. We have received in-principle approvals from BSE and NSE for the listing of the Equity Shares pursuant to

letters dated [] and [], respectively. For the purposes of this Offer, [] is the Designated Stock Exchange. A 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.

BOOK RUNNING LEAD MANAGERS

REGISTRAR AND SHARE

TRANSFER AGENT TO THE

OFFER

Axis Capital Limited

1st Floor, Axis House

C 2 Wadia International Centre

Pandurang Budhkar Marg Worli

Mumbai 400 025

Maharashtra, India

Tel: +91 22 4325 2183

Fax: +91 22 4325 3000

Email: [email protected]

Investor Grievance Email:

[email protected]

Website: www.axiscapital.co.in

Contact Person: Ms. Simran Gadh

SEBI Registration No.:

INM000012029

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] Website: www.icicisecurities.com

Investor Grievance Email:

[email protected]

Contact Person: Mr. Rupesh Khant


INM000011179

SBI Capital Markets Limited

202, Maker Tower E, Cuffe Parade

Mumbai 400 005

Maharashtra, India

Tel: +91 22 2217 8300

Fax: +91 22 2217 8332

E-mail: [email protected]

Investor Grievance E-mail:

[email protected]

Website: www.sbicaps.com

Contact Person: Mr. Gitesh

Vargantwar


INM000003531

YES Securities (India) Limited

YES Bank Tower, IFC 2, 19th floor

Senapati Bapat Marg Elphinstone (W)

Mumbai 400 013, Maharashtra, India

Tel: +91 22 3347 9688

Fax: +91 22 2421 4511 E-mail: [email protected]


[email protected] Website: www.yesinvest.in

Contact Person: Mr. Aditya Vora


MB/INM000012227

Karvy Computershare Private Limited

Karvy Selenium Tower B

Plot 31 and 32, Gachibowli

Financial District, Nanakramguda

Hyderabad 500 032

Tel: +91 40 6716 2222

Fax: +91 40 2343 1551

E-mail: [email protected]


[email protected]

Website: www.karisma.karvy.com

Contact Person: Mr. Murali Krishna

SEBI Registration No.: INR000000221

BID/OFFER PERIOD*

BID/OFFER OPENS ON [] BID/OFFER CLOSES ON (FOR QIBs)** []

BID/OFFER CLOSES ON (FOR ALL OTHER BIDDERS) []

* Our Company and the Investor Selling Shareholder, in consultation with the BRLMs, may 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.

** Our Company and the Investor Selling Shareholder, in consultation with the BRLMs, may decide to close the Bid/Offer Period for QIBs one Working Day prior to the Bid/Offer Closing Date, in accordance

with the SEBI ICDR Regulations.

***The company is having a valid Certificate of Registration dated March 22, 2010, issued by the Reserve Bank of India under Section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does

not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed

by the company and for repayment of deposits/discharge of liabilities by the company.

DRAFT RED HERRING PROSPECTUS

Dated March 29, 2016

See Section 32 of the Companies Act, 2013

(This Draft Red Herring Prospectus will be updated upon filing with the RoC)

Book Built Offer

http://www.icicisecurities.com/mailto:[email protected]://www.karvycomputershare.com/default.aspx

1

TABLE OF CONTENTS

SECTION I - GENERAL ..................................................................................................................................... 2

DEFINITIONS AND ABBREVIATIONS ..................................................................................................... 2 CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND

CURRENCY OF PRESENTATION ............................................................................................................ 12 FORWARD-LOOKING STATEMENTS ................................................................................................... 15

SECTION II - RISK FACTORS ....................................................................................................................... 17

SECTION III INTRODUCTION ................................................................................................................... 48

SUMMARY OF INDUSTRY ........................................................................................................................ 48 SUMMARY OF BUSINESS ......................................................................................................................... 61 SUMMARY FINANCIAL INFORMATION .............................................................................................. 67 SELECTED STATISTICAL INFORMATION .......................................................................................... 78 THE OFFER .................................................................................................................................................. 91 GENERAL INFORMATION ....................................................................................................................... 93 CAPITAL STRUCTURE ............................................................................................................................ 102 OBJECTS OF THE OFFER ....................................................................................................................... 118 BASIS FOR OFFER PRICE ...................................................................................................................... 121 STATEMENT OF TAX BENEFITS .......................................................................................................... 124

SECTION IV: ABOUT THE COMPANY ..................................................................................................... 127

INDUSTRY OVERVIEW ........................................................................................................................... 127 OUR BUSINESS .......................................................................................................................................... 155 KEY REGULATIONS AND POLICIES IN INDIA................................................................................. 171 HISTORY AND CERTAIN CORPORATE MATTERS ......................................................................... 185 OUR MANAGEMENT ............................................................................................................................... 193 OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANY ............................................ 213 RELATED PARTY TRANSACTIONS ..................................................................................................... 222 DIVIDEND POLICY ................................................................................................................................... 223

SECTION V FINANCIAL INFORMATION ............................................................................................. 224

FINANCIAL STATEMENTS..................................................................................................................... 224 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS ...................................................................................................................................... 360 FINANCIAL INDEBTEDNESS ................................................................................................................. 388

SECTION VI LEGAL AND OTHER INFORMATION ........................................................................... 390

OUTSTANDING LITIGATION AND OTHER MATERIAL DEVELOPMENTS .............................. 390 GOVERNMENT AND OTHER APPROVALS ........................................................................................ 398 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 400

SECTION VII OFFER RELATED INFORMATION ............................................................................... 415

TERMS OF THE OFFER ........................................................................................................................... 415 OFFER STRUCTURE ................................................................................................................................ 419 OFFER PROCEDURE................................................................................................................................ 423

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ...................................... 468

SECTION VIII PROVISIONS OF THE ARTICLES OF ASSOCIATION.............................................. 469

SECTION IX OTHER INFORMATION .................................................................................................... 584

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 584 DECLARATION ......................................................................................................................................... 586

2

SECTION I - GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates or implies, the following terms shall have the meanings provided below in

this Draft Red Herring Prospectus, and references to any statute or regulations or policies will include any

amendments or re-enactments thereto, from time to time. In case of any inconsistency between the definitions

given below and the definitions contained in the General Information Document (as defined below), the definitions

given below shall prevail.

Unless the context otherwise indicates, all references to HLFL, the Company, our Company and the

Issuer, are to Hinduja Leyland Finance Limited, a company incorporated in India under the Companies Act

1956 with its Registered Office at 1, Sardar Patel Road, Guindy, Chennai 600 032, Tamil Nadu, India.

Furthermore, unless the context otherwise indicates, all references to the terms we, us and our are to

Hinduja Leyland Finance Limited, its Subsidiary and its Associate Company (as defined below) on a consolidated

basis.

Company and Investor Selling Shareholder Related Terms

Term Description

ALL Ashok Leyland Limited

AoA/Articles of Association or

Articles

The articles of association of our Company, as amended

Auditors The statutory auditor of our Company, being M/s B S R & Co. LLP, Chartered Accountants

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

Business Locations Business Locations represent the total locations from which the Company or personnel of

HLF Services Limited conduct our operations as at the end of the relevant year/ period.

CCCPPS 0.0001% compulsorily convertible cumulative participating preference shares with a face

value of ` 37.58154 each Corporate Office The corporate office of our Company, at 27-A, Developed Industrial Estate, Guindy,

Chennai 600 032, Tamil Nadu, India

CEO The chief executive officer of our Company

CFO The chief financial officer of our Company

COO The chief operating officer of our Company

Director(s) The director(s) on our Board

Equity Shares The equity shares of our Company of a face value of ` 10 each Equity Shareholders The holders of the Equity Shares

Everfin Holdings or Everfin or

Investor Selling Shareholder

Everfin Holdings

Everfin SHA Shareholders agreement dated July 17, 2013 executed between our Company, Ashok

Leyland Limited, Ashley Holdings Limited, Ashley Investments Limited, IndusInd

International Holdings Limited, Aasia Management & Consultancy Private Limited,

Hinduja Ventures Limited, Hinduja Realty Ventures Limited, Hinduja Finance Private

Limited, HLF Services Limited, Everfin Holdings, Mr. Vinod K. Dasari, Mr. R. Seshasayee

and Mr. S. Nagarajan and Mr. K. Sridharan

Everfin SSA Share Subscription Agreement dated July 17, 2013 executed between our Company, Ashok

Leyland Limited, Ashley Holdings Limited, Ashley Investments Limited, IndusInd

International Holdings Limited, Aasia Management & Consultancy Private Limited,

Hinduja Ventures Limited, Hinduja Realty Ventures Limited, Hinduja Finance Private

Limited, HLF Services Limited, Everfin Holdings, Mr. Vinod K. Dasari, Mr. R. Seshasayee

and Mr. S. Nagarajan and Mr. K. Sridharan and Everfin Holdings

Group Company The Group Company of our Company, as identified and described in Our Promoters,

Promoter Group and Group Company on page 213

HHFL or Subsidiary or Hinduja

Housing Finance

Hinduja Housing Finance Limited. For details of our Subsidiary, see History and Certain

Corporate Matters on page 185

HLF Services Limited or HSL

or Associate Company

HLF Services Limited. For details of our Associate Company, see History and Certain

Corporate Matters on page 185

Hinduja ESOP 2013 The employee stock option plan, namely, Hinduja Employee Stock Option Plan, 2013,

established by our Company as described in Capital Structure on page 102

HPL Hinduja Power Limited

Investor Offered Shares Up to 26,608,810 Equity Shares being offered by the Investor Selling Shareholder in the

Offer for Sale

3

Term Description

Key Management Personnel Key management personnel of our Company in terms of the Companies Act, 2013 and the

SEBI ICDR Regulations and disclosed in Our Management on page 193

MoA/Memorandum

of Association

The memorandum of association of our Company, as amended

Promoters Ashok Leyland Limited and Hinduja Power Limited

Preference Shareholder The holder of the CCCPPS

Promoter Group Persons and entities constituting the promoter group of our Company, pursuant to Regulation

2(1)(zb) of the SEBI ICDR Regulations

Registered Office The registered office of our Company situated at 1, Sardar Patel Road, Guindy, Chennai 600

032, Tamil Nadu, India

RoC The Registrar of Companies, Chennai, Tamil Nadu

Restated Consolidated Financial

Information

Audited restated consolidated summary statements (together with annexures and notes

thereto) of assets and liabilities as of September 30, 2015 and the audited restated

consolidated summary statements of profit and loss and cash flows for the six month period

ended September 30, 2015 for our Company, its Subsidiary and its Associate Company

Restated Standalone Financial

Information

Audited restated standalone summary statements (together with annexures and notes thereto)

of assets and liabilities as of September 30, 2015, March 31, 2015, March 31, 2014, March

31, 2013, March 31, 2012 and March 31, 2011 and the audited restated standalone summary

statements of profit and loss and cash flows for the six month period ended September 30,

2015 and for each of the Fiscals 2015, 2014, 2013, 2012 and 2011 for our Company

Restated Financial Information Restated Consolidated Financial Information and Restated Standalone Financial Information,

collectively

Offer Related Terms

Term Description

Acknowledgement Slip The slip or document issued by the Designated Intermediary to a Bidder as proof of registration

of the Bid

Allotted/Allotment/Allot Issue and allotment of Equity Shares pursuant to the Fresh Issue and transfer of Investor Offered

Shares offered by the Investor Selling Shareholder pursuant to the Offer for Sale, to the successful

Bidders

Allottee A successful Bidder to whom the Equity Shares are Allotted

Allotment Advice The note or advice or intimation of Allotment, sent to each successful Bidder who has been or is

to be Allotted the Equity Shares after approval of the Basis of Allotment by the Designated Stock

Exchange

Anchor Escrow Account Account opened with the Anchor Escrow Bank for the Offer, wherein the Anchor Investors will

transfer the funds in respect of the Bid Amount when submitting a Bid

Anchor Investor(s) A QIB, that applies under the Anchor Investor Portion in accordance with the requirements

specified in the SEBI ICDR Regulations

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 Investor

Selling Shareholder, in consultation with the BRLMs

Anchor Investor Bidding

Date

The date 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 Offer

Price

The final price at which Equity Shares will be Allotted to Anchor Investors in terms of the Red

Herring Prospectus and the Prospectus, which will be a price 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 Investor Selling Shareholder, in consultation with the BRLMs

Anchor Investor Portion Up to 60% of the QIB Portion, which may be allocated by our Company and the Investor Selling

Shareholder, in consultation with the BRLMs, to Anchor Investors in terms of the Red Herring

Prospectus, on a discretionary basis. One-third of the Anchor Investor Portion is reserved for

domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or

above the Anchor Investor Offer Price

Application Supported by

Blocked Amount/ ASBA

The application (whether physical or electronic) by a Bidder (other than Anchor Investors) to

make a Bid authorizing the relevant SCSB to block the Bid Amount in the relevant ASBA

Account

ASBA Account Account maintained with an SCSB which will be blocked by such SCSB to the extent of the

appropriate Bid Amount in relation to a Bid by a Bidder (other than Anchor Investors) and as

defined in the Bid cum Application Form

Axis Cap Axis Capital Limited

Banker to the

Offer/Anchor Escrow

Bank

The bank which is a clearing member and registered with SEBI as an escrow collection bank,

with whom the Anchor Escrow Account in relation to the Offer for Bids by Anchor Investors

4

Term Description

will be opened and from which a refund of the whole or part of the Bid Amount, if any, shall be

made, in this case being []

Basis of Allotment The basis on which the Equity Shares will be Allotted to successful Bidders under the Offer,

described in Offer Procedure Basis of Allotment on page 457

Bid An indication to make an offer during the Bid/Offer Period by a Bidder, or on the Anchor Investor

Bidding Date by an Anchor Investor, pursuant to submission of a Bid cum Application Form, to

subscribe for or purchase the Equity Shares at a price within the Price Band, including all revisions

and modifications thereto, to the extent permissible under the SEBI ICDR Regulations. The term

Bidding shall be construed accordingly

Bid Amount In relation to each Bid, the highest value of the optional Bids as indicated in the Bid cum

Application Form and payable by the Bidder upon submission of the Bid in the Offer, less Retail

Discount

Bid cum Application

Form

The form of which the Bidder shall make a Bid and which shall be considered as the application

for the Allotment pursuant to the terms of the Red Herring Prospectus and the Prospectus

Bid Lot []

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus

and the Bid cum Application Form, including an Anchor Investor

Bid/Offer Closing Date Except in relation to any Bids received from Anchor Investors, the date after which the Designated

Intermediaries shall not accept any Bids for the Offer, which shall be published in [] edition of

[] (a widely circulated English national newspaper), [] edition of [] (a widely circulated Hindi

national newspaper) and [] edition of [] (a widely circulated Tamil newspaper, Tamil being the

regional language in the place where our Registered Office is located). Our Company and the

Investor Selling Shareholder, in consultation with the BRLMs, may decide to close the Bid/Offer

Period for QIBs one Working Day prior to the Bid/Offer Closing Date, subject to the SEBI ICDR

Regulations

Bid/Offer Opening Date Except in relation to any Bids received from Anchor Investors, the date on which the Designated

Intermediaries shall start accepting Bids for the Offer, which shall be published by our Company

in the [] edition of [] (a widely circulated English national newspaper), [] edition of [] (a

widely circulated Hindi national newspaper) and the [] edition of [] (a widely circulated Tamil

newspaper, Tamil being the regional language in the place where our Registered Office is

located)

Bidding Centers Centers at which the Designated Intermediaries shall accept the Bid cum Application Forms, being

the Designated Branch for SCSBs, Specified Locations for Syndicate, Broker Centres for

Registered Brokers, Designated RTA Locations for RTAs and Designated CDP Locations for

CDPs

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 prospective Bidders (excluding

Anchor Investors) can submit their Bids, including any revisions thereof

Book Building Process The book building process as described in Schedule XI of the SEBI ICDR Regulations, in terms

of which the Offer is being made

Book Running Lead

Managers/BRLMs

The book running lead managers to the Offer, in this case being Axis Cap, I-Sec, SBICAPS and

YES Securities

Broker Centres Broker centres notified by the Stock Exchanges, where Bidders can submit the Bid cum

Application Forms to a Registered Broker. 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)

Cap Price The higher end of the Price Band above which the Offer Price and Anchor Investor Offer Price

will not be finalized and above which no Bids will be accepted, including any revisions thereof

Client ID Client identification number of the Bidders beneficiary account

Collecting Depository

Participant/CDP

A depository participant registered under the Depositories Act, 1996 and 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

Cut-off Price The Offer Price, finalized by our Company and the Investor Selling Shareholder, in consultation

with the BRLMs, which shall be any price within the Price Band. Only RIIs are entitled to Bid at

the Cut-off Price (subject to the Bid Amount being upto ` 200,000, net of Retail Discount, if any). QIBs (including Anchor Investors) and NIIs are not entitled to Bid at the Cut-off Price

Demographic Details The details of the Bidders including the Bidders address, names of the Bidders father/husband,

investor status, occupations and bank account details

Designated Branches Such branches of the SCSBs which may collect the Bid cum Application Form used by Bidders

(other than Anchor Investors), a list of which is available at the website of SEBI

(http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries) and updated

from time to time

5

Term Description

Designated CDP

Locations

Such centers of the Collecting Depository Participants where Bidders can submit the Bid cum

Application Forms. The details of such Designated CDP Locations, along with the names and

contact details of the Depository Participants are available on the respective websites of the Stock

Exchanges (www.nseindia.com and www.bseindia.com) and updated from time to time

Designated Date The date on which the Anchor Escrow Banks transfer the funds from the Anchor Escrow

Account to the Public Offer Account or the Refund Account, as appropriate, and the Registrar

and Share Transfer Agent to the Offer issues instruction to SCSBs for transfer of funds from the

ASBA Accounts to the Public Offer Account in terms of the Red Herring Prospectus and the

Prospectus

Designated Intermediaries Members of the Syndicate, sub-syndicate/agents, SCSBs, Registered Brokers, Brokers, CDPs

and RTAs, who are authorized to collect Bid cum Application Forms from the Bidders, in

relation to the Offer

Designated RTA

Locations

Such centers of the RTAs where Bidders can submit the Bid cum Application Forms. The details

of such Designated RTA Locations, along with the names and contact details of the RTAs are

available on the respective websites of the Stock Exchanges (www.nseindia.com and

www.bseindia.com) and updated from time to time

Designated Stock

Exchange

[]

Draft Red Herring

Prospectus/DRHP

This draft red herring prospectus dated March 29, 2016 filed with SEBI and issued in accordance

with the SEBI ICDR Regulations, which does not contain complete particulars of the price at

which our Equity Shares will be Allotted and the size of the Offer

Eligible NRI A non-resident Indian, resident in a jurisdiction 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 constitutes an invitation to subscribe for the Equity Shares

Escrow Agreement Agreement dated [], 2016 entered into by and among our Company, the Investor Selling

Shareholder, the Registrar to the Offer, the BRLMs and the Anchor Escrow Bank for collection of

the Bid Amounts and where applicable remitting refunds, if any, to the Bidders, on the terms and

conditions thereof

First Bidder The Bidder whose name appears first in the Bid cum Application Form or the Revision Form

Floor Price The lower end of the Price Band, and any revisions thereof, at or above which the Offer Price and

the Anchor Investor Offer Price will be finalized and below which no Bids will be accepted and

which shall not be less than the face value of the Equity Shares

Fresh Issue Fresh issue of up to [] Equity Shares aggregating up to ` 5,000 million by our Company as part of the Offer, in terms of this Draft Red Herring Prospectus

Our Company and the Investor Selling Shareholder, in consultation with the BRLMs, is

considering a Pre-IPO Placement of up to 26,000,000 Equity Shares for cash consideration

aggregating up to ` 2,000 million, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the number of Equity Shares issued pursuant to the Pre-IPO

Placement will be reduced from the Fresh Issue, subject to a minimum Offer size of at least such

percentage of Equity Shares as is equivalent to a value of ` [] million (calculated at the Offer Price) being offered to the public

General Information

Document

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 notified by SEBI and included in Offer Procedure on page 432

I-Sec ICICI Securities Limited

Maximum RII Allottees The maximum number of RIIs that can be allotted the minimum Bid Lot, computed by dividing

the total number of Equity Shares available for Allotment to RIIs by the minimum Bid Lot

Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion) available for allocation to Mutual

Funds only, on a proportionate basis

Net Proceeds Proceeds of the Offer that will be available to our Company, which shall be the gross proceeds of

the Fresh Issue less our Companys share of the Offer expenses. For further details, see Objects

of the Offer on page 118

Net QIB Portion The portion of the QIB Portion less the number of Equity Shares Allotted to the Anchor

Investors

Non-Institutional Portion The portion of the Offer, being not less than 15% of the Offer or [] Equity Shares, available for

allocation on a proportionate basis to NIIs, subject to valid Bids being received at or above the

Offer Price

NIIs All Bidders, including Category III FPIs that are not QIBs (including Anchor Investors) or RIIs

who have Bid for Equity Shares for an amount of more than ` 200,000 (but not including NRIs other than Eligible NRIs)

6

Term Description

Offer Public offer of up to [] Equity Shares for cash at a price of ` [] per Equity Share, aggregating up to ` [] million, comprising a Fresh Issue of up to [] Equity Shares, aggregating up to ` 5,000 million, of our Company and an Offer for Sale of up to 26,608,810 Equity Shares,

aggregating up to ` [] million by the Investor Selling Shareholder Offer Agreement The agreement dated March 29, 2016 entered into by and among our Company, the Investor

Selling Shareholder and the BRLMs, pursuant to which certain arrangements are agreed in relation

to the Offer

Offer for Sale Offer for sale of up to 266,608,810 Equity Shares being offered by the Investor Selling

Shareholder pursuant to the Red Herring Prospectus

Offer Price The final price (less Retail Discount, if any) at which Equity Shares will be Allotted to the

successful Bidders (except Anchor Investors), as determined in accordance with the Book Building

Process and determined by our Company and the Investor Selling Shareholder, in consultation

with the BRLMs in terms of the Red Herring Prospectus on the Pricing Date. A discount of ` [] to the Offer Price may be offered to RIIs. The amount of the Retail Discount will be decided by

our Company and the Investor Selling Shareholder, in consultation with the BRLMs, and

advertised in [] edition of [] (a widely circulated English national newspaper), [] edition of []

(a widely circulated Hindi national newspaper) and [] edition of [] (a widely circulated Tamil


located), at least five Working Days prior to the Bid/Offer Opening Date, and shall be made

available to the Stock Exchanges for the purpose of uploading on their respective websites

Pre-IPO Placement Private placement of up to 26,000,000 Equity Shares for cash consideration aggregating up to ` 2,000 million, which may be undertaken by our Company and the Investor Selling Shareholder, in

consultation with the BRLMs, in favour of such investors as permissible under applicable law, to

be completed prior to filing the Red Herring Prospectus with the RoC and the details of which, if

completed, will be included in the Red Herring Prospectus. If the Pre-IPO Placement is completed,

the number of Equity Shares issued pursuant to the Pre-IPO Placement will be reduced from the

Fresh Issue, subject to a minimum Offer size of at least such percentage of Equity Shares as is

equivalent to a value of ` [] million (calculated at the Offer Price) being offered to the public Price Band Price band of the Floor Price of ` [] and a Cap Price of ` [], including revisions thereof. The

Price Band, any Retail Discount and the minimum Bid lot for the Offer will be decided by our

Company and the Investor Selling Shareholder, in consultation with the BRLMs, and advertised

in the [] edition of [], a widely circulated English national newspaper, [] edition of [] (a

widely circulated Hindi national newspaper) and the [] edition of [] (a widely circulated Tamil


located) 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 which 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 Investor Selling Shareholder, in consultation with the

BRLMs, shall finalize the Offer Price

Prospectus The Prospectus to be filed with the RoC for this Offer on or after the Pricing Date in accordance

with the provisions of Section 26 of the Companies Act, 2013 and the SEBI ICDR Regulations,

containing the Offer Price, the size of the Offer and certain other information, including any

addenda or corrigenda thereto

Public Offer Account The account to be opened with the Banker to the Offer under Section 40(3) of the Companies Act,

2013, to receive monies from the Anchor Investor Escrow Account and the ASBA Accounts on

the Designated Date

QIB Portion The portion of the Offer, being 50% of the Offer or [] Equity Shares available for allocation to

QIBs on a proportionate basis, including the Anchor Investor Portion (in which allocation shall be

on a discretionary basis, as determined by our Company and the Investor Selling Shareholder, in

consultation with the BRLMs), subject to valid Bids being received at or above the Offer Price,

provided that our Company and the Investor Selling Shareholder may, in consultation with the

BRLMs allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis

QIBs A qualified institutional buyer 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 and which shall be filed with the RoC at least three days

before the Bid/Offer Opening Date and will become the Prospectus after filing with the RoC

after the Pricing Date, including any addenda or corrigenda thereto

Refund Account(s) Account opened with the Anchor Escrow Bank from which refunds, if any, of the whole or part of

the Bid Amount shall be made to the Anchor Investors

Registered Brokers Stock brokers registered with the stock exchanges having nationwide terminals, other than the

members of the Syndicate and eligible to procure Bids in terms of Circular no. CIR/CFD/14/2012

dated October 4, 2012, issued by SEBI

7

Term Description

Registrar Agreement The agreement dated March 29, 2016, entered into by and among our Company, the Investor

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 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

Registrar to the Offer Karvy Computershare Private Limited

Retail Portion The portion of the Offer, being not less than 35% of the Offer or [] Equity Shares, available for

allocation to RIIs, which shall not be less than the minimum Bid Lot, subject to availability in the

Retail Portion and the remaining Equity Shares being Allotted on a proportionate basis

Retail Discount A discount of up to [] (equivalent to []% of the Offer Price) that may be offered to RIIs (subject

to the Bid Amount being upto ` 200,000 net of Retail Discount, if any), by our Company and the Investor Selling Shareholder, in consultation with the BRLMs, at the time of making a Bid

RIIs Retail individual bidders (including HUFs and Eligible NRIs) whose Bid Amount for Equity

Shares in the Offer is not more than ` 200,000 Revision Form The form used by Bidders to modify the number of Equity Shares or the Bid Amount in any of

their Bid cum Application Forms or any previous Revision Form, as applicable

SBICAPS SBI Capital Markets Limited

Self Certified Syndicate

Banks or SCSBs

The banks registered with SEBI which offer the ASBA facility, a list of which is available on the

website of SEBI (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

Share Escrow Agreement Agreement to be entered into between the Investor Selling Shareholder, our Company, the

Escrow Agent and the BRLMs in connection with the transfer of the Investor Offered Shares

by the Investor Selling Shareholder and credit of such Equity Shares to the demat accounts of

the Allottees

Specified Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms, a list of which is

included in the Bid cum Application Form

Stock Exchanges BSE Limited and National Stock Exchange of India Limited

Syndicate Agreement The agreement to be entered into by and among the members of the Syndicate, our Company, the

Investor Selling Shareholder and the Registrar and Share Transfer Agent to the Offer in relation

to the collection of Bids in the Offer (other than Bids directly submitted to the SCSBs, to Registered

Brokers at the Broker Centres, to RTAs at Designated RTA Locations and to the CDPs at

Designated CDP Locations)

Syndicate Members Intermediaries registered with SEBI and permitted to carry out activities as an underwriter, in this

case being []

Syndicate or members of

the Syndicate

Collectively, the BRLMs and the Syndicate Members

Underwriters The members of the Syndicate

Underwriting Agreement The agreement among our Company, the Investor Selling Shareholder and the Underwriters, to be

entered into on or after the Pricing Date

Working Day(s) All days, other than Sunday or a public holiday on which commercial banks are open for

business, provided however, with reference to (a) announcement of Price Band; and (b) Bid/

Offer Period, Working Days shall mean all days, excluding Saturdays, Sundays and public

holidays, as notified by SEBI.

For the purpose of the time period between the Bid Closing Date and listing of the Equity Shares

on the Stock Exchanges, Working Days shall mean all days excluding second and fourth

Saturdays, Sundays and bank holidays in India, in accordance with SEBI circular no.

CIR/CFD/DIL/3/2010 dated April 22, 2010 and notification F. No.4/1/7/2015-IR dated August

20, 2015 issued by the Department of Financial Services, Ministry of Finance, Government of

India.

YES Securities YES Securities (India) Limited

Conventional and General Terms and Abbreviations

Term Description

AIF(s) Alternative Investment Funds, as defined in, and registered with SEBI under, the SEBI AIF

Regulations

AGM Annual General Meeting

Authorised Dealers Authorised Dealers registered with RBI under the Foreign Exchange Management (Foreign

Currency Accounts) Regulations, 2000

8

Term Description

Banking Regulation Act Banking Regulation Act, 1949

Bn or Billion Billion

BSE BSE Limited

CAGR Compounded Annual Growth Rate. CAGR is calculated by taking the nth root of the total

percentage growth rate, where n is the number of years in the period being considered

CAR Capital Adequacy Ratio.

Category III FPIs FPIs registered as category III FPIs under the SEBI FPI Regulations, which shall include all other

FPIs not eligible under category I and II foreign portfolio investors, such as endowments, charitable

societies, charitable trusts, foundations, corporate bodies, trusts, individuals and family offices

CCI Competition Commission of India

CDSL Central Depository Services (India) Limited

Companies Act Companies Act, 1956 and/or the 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 Notified Sections)

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

read with the rules, regulations, clarifications and modifications thereunder

Consolidated FDI Policy The current consolidated FDI Policy, effective from May 12, 2015, issued by the DIPP, and any

modifications thereto or substitutions thereof, issued from time to time

Depository A depository registered with SEBI under the Securities and Exchange Board of India (Depositories

and Participants) Regulations, 1996

Depositories Act The Depositories Act, 1996

DIPP Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, GoI

DP ID Depository Participants identity number

DTC Direct Tax Code, 2013

EBITDA Earnings Before Interest, Tax, Depreciation and Amortization

EGM Extraordinary general meeting

EPF Act The Employees Provident Funds and Miscellaneous Provisions Act, 1952

EPS Earnings per share

ESI Act Employees State Insurance Act, 1948

FCNR Account Foreign Currency Non Resident (Bank) account established in accordance with the FEMA

FDI Foreign direct investment

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

FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside

India) Regulations, 2000

FII(s) Foreign Institutional Investors as defined under the erstwhile Securities and Exchange Board of

India (Foreign Institutional Investors) Regulations, 2000, registered with SEBI under applicable

law in India and deemed as FPIs under the SEBI FPI Regulations

Fiscal The period of 12 months commencing on April 1 of the immediately preceding calendar year

and ending on March 31 of that particular calendar year

FPIs A foreign portfolio investor as defined under the SEBI FPI Regulations

FVCI Foreign Venture Capital Investors as defined under the SEBI FVCI Regulations, and registered

with SEBI

GAAR General Anti Avoidance Rules

GDP Gross Domestic Product

GoI The Government of India

GST Goods and Services Tax

HUF(s) Hindu Undivided Family(ies)

ICAI The Institute of Chartered Accountants of India

ICRA ICRA Limited

ICSI The Institute of Company Secretaries of India

ICMAI The Institute of Cost Accountants of India

ICMA The Institute of Cost and Management Accountants

IFSC Indian Financial System Code

IFRS International Financial Reporting Standards

Income Tax Act The Income Tax Act, 1961

IND AS The Indian Accounting Standards referred to in the Companies (Indian Accounting Standard)

Rules, 2015, as amended

Indian Accounting

Standard Rules 2015

The Companies (Indian Accounting Standards) Rules, 2015

India Republic of India

Indian GAAP Generally Accepted Accounting Principles in India

9

Term Description

INR or Rupee or ` or Rs. Indian Rupee, the official currency of the Republic of India

IPO Initial public offering

IRDA Insurance Regulatory and Development Authority

MAT Minimum Alternative Tax

MCA The Ministry of Corporate Affairs, GoI

Mutual Funds Mutual funds registered with SEBI under the Securities and Exchange Board of India (Mutual

Funds) Regulations, 1996

NAV Net asset value

Notified Sections The sections of the Companies Act, 2013 that have been notified by the MCA and are currently in

effect

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

NRE Account Non-Resident External Account established and operated in accordance with the FEMA

NRI Non-Resident Indian

NRO Account Non-Resident Ordinary Account established and operated in accordance with the FEMA

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

Off-Book AUM Total assigned contract balances

P/E ratio Price/Earnings Ratio

PAN Permanent account number

PAT Profit after tax

Prudential Norms The Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms

(Reserve Bank) Directions, 2007 (up to March 31, 2014) and Non-Banking Financial (Non-

Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015

(from April 1, 2014), as amended by Reserve Bank of India from time to time (together referred

to as Prudential Norms).

RBI The Reserve Bank of India

ROA Return on Assets

ROE Return on Equity

RoNW Return on net worth

RTA Road Transport Authority

RTGS Realtime gross settlement

Rule 144A Rule 144A under the U.S. Securities Act

SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,

2002

SCRA The Securities Contracts (Regulation) Act, 1956

SCRR The Securities Contracts (Regulation) Rules, 1957

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

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

SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investments Funds) Regulations, 2012

SEBI ESOP Regulations Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014

SEBI ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2009

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

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

Regulations, 2015

SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996

STT Securities transaction tax

Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)

Regulations, 2011

US$ or USD or US

Dollar

United States Dollar, the official currency of the United States of America

USA or U.S. or US United States of America

U.S. GAAP Generally Accepted Accounting Principles in the United States of America

U.S. Securities Act The United States Securities Act, 1933

VAT Value Added Tax

VCFs Venture capital funds as defined in and registered with SEBI under the SEBI VCF Regulations or

the SEBI AIF Regulations, as the case may be

10

Industry Related Terms

Term Description

ABS Anti-Lock Braking Systems

AUM Assets Under Management

BS II, III, IV Bharat Stage emission norms

CARE CARE Ratings

CARO The Companies (Auditors Report) Order, 2015

CE Construction Equipment

CIBIL The Credit Information Bureau (India) Limited

CPCC Central Process And Control Cell

CRAR Capital to Risk Weighted Assets Ratio

CV Commercial Vehicle

EMI Equated Monthly Installments

EPC Engineering, Procurement, Construction

ERP Enterprise Resource Planning

ERS Electronic Clearance System

EWS Economically Weaker Sections

FOIR Fixed Obligation to Income Ratios

FSI Floor Space Index

FTB First-Time Buyer

GPRS General Packet Radio Service

GVW Gross Vehicle Weight

HAM Hybrid Annuity Model

HFC Housing Finance Company

ICRA ICRA Limited

IMF International Monetary Fund

IT Information Technology

KYC Know Your Customer

LAP Loans Against Property

LCV Light Commercial Vehicle

LIG Lower Income Group

LTV Loan To Value

MCE Mining and Construction Equipment

ME Mining Equipment

MHCV Medium and Heavy Commercial Vehicle

MSME Micro, Small and Medium Enterprises

NBFC Non-Banking Financial Company

NHB National Housing Board

NPA Non-Performing Assets

OEM Other Equipment Manufacturer

PDC Post-Dated Cheque

PNC Pick-and-Carry Cranes

PSB Public Sector Bank

PTC Pass Through Certificate

PV Passenger Vehicle

RTO Regional Transport Office

SCB Scheduled Commercial Banks

SCV Small Commercial Vehicle

SIAM Society of Indian Automobile Manufacturers

SME Small and Medium-Sized Enterprises

SRTO Small Road Transport Operator

SRTU State Road Transport Undertakings

STO Small Truck Owner

T Tonne

YoY Year Over Year

11

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.

Notwithstanding the foregoing, terms in Provisions of the Articles of Association, Statement of Tax Benefits,

Industry Overview, Key Regulations and Policies in India, Financial Statements, Outstanding

Litigation and Other Material Developments and Part B of Offer Procedure, on pages 469, 124, 127, 171,

224, 390, and 433 will have the meanings ascribed to such terms in these respective sections.

12

CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND

CURRENCY OF PRESENTATION

Certain Conventions

All references in this Draft Red Herring Prospectus to India are to the Republic of India. All references in this

Draft Red Herring Prospectus to the U.S., USA or United States are to the United States of America.

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 indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our Restated

Consolidated Financial Information for the six month period ended September 30, 2015 and the Restated

Standalone Financial Information for the six month period ended September 30, 2015 and for the fiscals 2015,

2014, 2013, 2012 and 2011, prepared in accordance with Section 26 of the Companies Act, 2013, and sub-clause

(i), (ii) and (iii) of clause (b) of sub-section (1) of Chapter III of the Companies Act, 2013, read with rule 4 of the

Companies (Prospectus and Allotment of Securities) Rules, 2014, the Generally Accepted Accounting Principles

in India (Indian GAAP) and the Companies Act, and restated in accordance with the SEBI ICDR Regulations.

Our Companys fiscal year commences on April 1 of the immediately preceding calendar year and ends on March

31 of that particular calendar year, so all references to a particular fiscal year are to the 12 month period

commencing on April 1 of the immediately preceding calendar year and ending on March 31 of that particular

calendar year.

There are significant differences between the Indian GAAP, IFRS and the U.S. GAAP. Accordingly, the degree

to which the financial information included in this Draft Red Herring Prospectus will provide meaningful

information is entirely dependent on the readers level of familiarity with Indian accounting practices. Any

reliance by persons not familiar with Indian accounting practices, the Indian GAAP, the Companies Act and the

SEBI ICDR Regulations on the financial disclosures presented in this Draft Red Herring Prospectus should

accordingly be limited. We have not attempted to quantify the impact of the IFRS or the U.S. GAAP on the

financial data included in this Draft Red Herring Prospectus, nor do we provide a reconciliation of our financial

information to those under the U.S. GAAP or the IFRS and we urge you to consult your own advisors regarding

such differences and their impact on our financial data. For details, see Risk Factors Certain companies in

India, including our Company, are required to prepare financial statements under Ind AS. The transition to

Ind AS in India is very recent and still unclear and our Company may be negatively affected by these changes.

on page 44.

Certain figures contained in this Draft Red Herring Prospectus, including financial information, have been subject

to rounding adjustments. All decimals have been rounded off to two decimal points. In certain instances, (i) the

sum or percentage change of such numbers may not conform exactly to the total figure given; and (ii) the sum of

the numbers in a column or row in certain tables may not conform exactly to the total figure given for that column

or row. However, where any figures that may have been sourced from third-party industry sources are rounded

off to other than two decimal points in their respective sources, such figures appear in this Draft Red Herring

Prospectus as rounded-off to such number of decimal points as provided in such respective sources.

Unless the context otherwise indicates, 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 17,

155 and 360 respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated on the basis

of the Restated Financial Information of our Company prepared in accordance with Section 26 of the Companies

Act, 2013, and sub-clause (i), (ii) and (iii) of clause (b) of sub-section (1) of Chapter III of the Companies Act,

2013 read with rule 4 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, the Indian GAAP

and the Companies Act, and restated in accordance with the SEBI ICDR Regulations.

One of our Promoters, Ashok Leyland Limited (ALL), being listed on NSE and BSE, declares, and will be

required to declare its quarterly unaudited consolidated results in accordance with Regulation 33 of the SEBI

Listing Regulations, which may include limited unaudited financial information about us. As these results would

13

be unaudited, under SEBI ICDR Regulations such results cannot be included and do not form part of this Draft

Red Herring Prospectus.

EBIDTA presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and

liquidity that is not required by, or presented in accordance with, Indian GAAP, IFRS or US GAAP. Furthermore,

EBIDTA is not a measurement of our financial performance or liquidity under Indian GAAP, IFRS or US GAAP

and should not be considered as an alternative to net profit/loss, revenue from operations or any other performance

measures derived in accordance with Indian GAAP, IFRS or US GAAP or as an alternative to cash flow from

operations or as a measure of our liquidity. In addition, EBITDA is not a standardised term, hence a direct

comparison of EBITDA between companies may not be possible. Other companies may calculate EBITDA

differently from us, limiting its usefulness as a comparative measure.

Industry and Market Data

Unless stated otherwise, industry and market data used throughout this Draft Red Herring Prospectus has been

obtained from various industry publications and sources, including Overview of Retail NBFC and HFC Credit

dated March 2, 2016, Indian Automobile Industry Report, Special Report dated November 19, 2015 and Indian

Construction Equipment Report, 2015 dated November 19, 2015 issued by ICRA Limited (ICRA). Industry

publications generally state that the information contained in such publications has been obtained from publicly

available documents from various sources believed to be reliable but their accuracy and completeness are not

guaranteed and their reliability cannot be assured. Accordingly, no investment decisions should be made based on

such information. Although we believe that the industry and market data used in this Draft Red Herring Prospectus

is reliable, it has not been independently verified by us, the Investor Selling Shareholder 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. The extent to which the industry and market

data presented in this Draft Red Herring Prospectus is meaningful depends upon 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 we conduct our business and methodologies and assumptions may vary

widely among different market and industry sources. Such data involves risks, uncertainties and numerous

assumptions and is subject to change based on various factors, including those discussed in Risk Factors on

page 17. Accordingly, investment decisions should not be based solely on such information.

In accordance with the SEBI ICDR Regulations, Basis for Offer Price on page 121 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.

The statements and undertakings which are specifically confirmed or undertaken by the Investor Selling

Shareholder in respect of the Investor Offered Shares in this Draft Red Herring Prospectus shall be deemed to be

the only statements and undertakings made by the Investor Selling Shareholder in this Draft Red Herring

Prospectus. 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 Investor Selling Shareholder.

Certain information in the chapters titled Summary of Industry, Summary of Business, Industry Overview

and Our Business on pages 48, 61, 127 and 155 of this Draft Red Herring Prospectus have been obtained from

ICRA which has issued the following disclaimer:

All information contained in the enclosed content has been obtained by ICRA Limited from sources believed by

it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is

true, such information is provided as is without any warranty of any kind, and ICRA Limited in particular, makes

no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such

information. All information contained herein must be construed solely as statements of opinion, and ICRA

Limited shall not be liable for any losses incurred by users from any use of this publication or its contents.

14

Currency and Units of Presentation

All references to Rupees or ` or Rs. are to Indian Rupees, the official currency of the Republic of India. All references to US$, U.S. Dollar, USD or U.S. Dollars are to United States Dollars, the official

currency of the United States of America.

All figures have been expressed in millions. One million represents 10 lakhs or 1,000,000. However, where any

figures that may have been sourced from third-party industry sources are expressed in denominations other than

millions in their respective sources, such figures appear in this Draft Red Herring Prospectus expressed in such

denominations as provided in such respective sources.

Exchange Rates

This Draft Red Herring Prospectus contains conversions of U.S. Dollars into Indian Rupees that have been

presented solely to comply with the requirements of the SEBI ICDR Regulations. These conversions should not

be construed as a representation that such currency amounts could have been, or can be converted into Indian

Rupees, at any particular rate, or at all.

The exchange rates of U.S. Dollars as of September 30, 2015, March 31, 2015, March 28, 2014, March 28, 2013,

March 30, 2012 and March 31, 2011 are provided below:

(In `) Currency As of March 31,

2011

As of March

31, 2012

As of March 31,

2013

As of March 31,

2014

As of March 31,

2015

As of September

30, 2015

1 USD 44.65 51.16(1) 54.39(2) 60.10(3) 62.59 65.74

Source: RBI reference rate sourced from www.rbi.org.in

(1) Exchange rate as on March 30, 2012, as RBI Reference Rate is not available for March 31, 2012 being a Saturday. (2) Exchange rate as on March 28, 2013, as RBI Reference Rate is not available for March 31, 2013, March 30, 2013 and

March 29, 2013 being a Sunday, Saturday and a public holiday, respectively.

(3) Exchange rate as on March 28, 2014, as RBI Reference Rate is not available for March 31, 2014, March 30, 2014 and March 29, 2014 being a public holiday, a Sunday and a Saturday, respectively.

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

15

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, contemplate, expect,

estimate, future, goal, intend, likely to objective, plan, project, will continue, seek to, will

pursue or other words or phrases of similar import. Similarly, statements which describe our strategies,

objectives, plans or goals are also forward-looking statements.

These forward-looking statements are based on our current plans, estimates and expectations and actual results

may differ materially from those suggested by such 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. Certain important factors that would cause actual

results to differ materially include, but are not limited to:

our inability to access ALLs dealership and distribution network.

dependence upon the performance, operations, and prospects of the overall Indian automotive market and, in particular, demand for MHCVs.

our inability to compete effectively in an increasingly competitive industry.

our inability to control or reduce the level of NPAs in our portfolio or inability to provide for such higher levels of NPAs.

our inability to maintain relationships with automotive dealers and motor vehicle OEMs.

failure to effectively manage our growth or sustain our growth strategy.

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 our 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. One of our

Promoters, ALL, being listed on NSE and BSE, declares, and will be required to declare its quarterly unaudited

consolidated results in accordance with Regulation 33 of the SEBI Listing Regulations, which may include limited

unaudited financial information about us. As these results would be unaudited, under SEBI ICDR Regulations

such results cannot be included and do not form part of this Draft Red Herring Prospectus.

For a further discussion of factors that could cause our actual results to differ, see Risk Factors, Our Business

and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 17,

155 and 360, 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 future gains or losses could

materially differ from those that have been estimated. Forward-looking statements reflect our current views as of

the date of this Draft Red Herring Prospectus and are not a guarantee of future performance. Although we believe

that the assumptions on which such statements are based are reasonable, any such assumptions as well as the

statement based on them could prove to be inaccurate.

Neither our Company, nor the Investor Selling Shareholder, nor the Syndicate, nor any of their respective affiliates

will 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. Our Company and the BRLMs will ensure that investors are informed of material developments as

required under applicable law or relevant within the context of the Offer, until the receipt of final listing and

trading approvals for the Equity Shares pursuant to the Offer.

In accordance with SEBI requirements, our Company and the BRLMs will ensure that investors are informed of

material developments until the time of the grant of listing and trading permission by the Stock Exchanges. The

Investor Selling Shareholder shall authorize and reasonably assist the Company in ensuring that investors are

informed of material developments in relation to statements and undertakings made by the Investor Selling

Shareholder in the Red Herring Prospectus and the Prospectus until the time of the grant of listing and trading

permission by the Stock Exchanges. The statements and undertakings which are specifically confirmed or

undertaken by the Investor Selling Shareholder in this Draft Red Herring Prospectus with respect to the Investor

Offered Shares shall be deemed to be the only statements and undertakings made by the Investor 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 Investor Selling Shareholder.Further, in

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accordance with Regulation 51A of the SEBI ICDR Regulations, our Company may be required to annually update

the disclosures made in this Draft Red Herring Prospectus and make such relevant disclosures publicly available

in the manner specified by SEBI.

17

SECTION II - RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all the information

disclosed in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before

making an investment in the Equity Shares. The risks described below are not the only risks relevant to us or

the Equity Shares or the industry in which we currently operate. Additional risks and uncertainties, not presently

known to us or that we currently deem immaterial may also impair our business prospects, results of operations

and financial condition. In order to obtain a complete understanding about us, prospective investors should

read this section in conjunction with the sections Our Business, Selected Statistical Information, and

Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 155,

78 and 360, respectively, as well as the other financial and statistical information included in this Draft Red

Herring Prospectus. If any of the risks described below, or other risks that are not currently known or are

currently deemed immaterial actually occur, our business prospects, results of operations and financial

condition could be adversely affected, the trading price of the Equity Shares could decline, and investors may

lose all or part of the value of their investment. The financial and other related implications of the risk factors,

wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are certain risk

factors where the financial impact is not quantifiable and, therefore, cannot be disclosed in such risk factors.

You should consult your tax, financial and legal advisors about the particular consequences to you of an

investment in this Offer.

This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result

of certain factors, including the considerations described below and elsewhere in this Draft Red Herring

Prospectus. Please see Forward-Looking Statements on page 15.

Until Fiscal 2015, our Company did not have any subsidiaries and no consolidated financial statements were

prepared. In September 2015, we commenced our housing finance business through our wholly owned subsidiary,

Hinduja Housing Finance Limited. Unless otherwise indicated, the financial information included herein are

based on our Restated Standalone Financial Information for Fiscal 2011, Fiscal 2012, Fiscal 2013, Fiscal 2014

and Fiscal 2015 and Restated Consolidated Financial Information as of and for the six months ended September

30, 2015, included in this Draft Red Herring Prospectus. For further details, see Financial Information

beginning on page 224.

Unless the context otherwise requires, in this section, references to we, us, our, or Company refers to

Hinduja Leyland Finance Limited on a standalone basis other than with respect to the six months ended September

30, 2015, when it refers to Hinduja Leyland Finance Limited on a consolidated basis.

INTERNAL RISK FACTORS

1. Our inability to access ALLs dealership and distribution network could have an adverse effect on our business, prospects, results of operations, and financial condition.

Our business depends on the continuity of our relationship with one of our Promoters, ALL. We derive a

significant amount of business as a result of ALLs large distribution network. Our relationship with ALL

assists us in sourcing customers, expanding our operational network and increasing market penetration. AUM

of loans for vehicles manufactured by ALL as a percentage of our total AUM were 44.52%, 42.36%, and

45.99% as of March 31, 2013, 2014 and 2015, respectively, and 47.80% as of September 30, 2015. ALLs

retail customers compose a significant portion of our customer base, and our revenue is also dependent on

ALLs production and sales volume. In the MHCV segment, we finance MHCVs that are manufactured only

by ALL.

As a result, our business depends on the success of ALLs distribution and marketing network and brand

equity, and in particular, on ALLs MHCV business. Our inability to obtain business from ALLs customers

may materially affect our business prospects, results of operations and financial condition.

In addition, our customers may delay or default on their payments due to us on account of technical failures

of their vehicles or construction equipment because they associate these failures with ALL and, in turn, with

us. Any inability of ALL to maintain and expand its own distribution network, increase its sales, and

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effectively respond to competition, or any decline in sale of ALLs vehicles may adversely affect our business,

results of operations and financial condition. ALL is the second largest carrier in the MHCV segment in India

and in Fiscal 2014 and 2015 it had a market share of 25.8% and 28.5%, respectively, of the MHCV segment

(passenger carrier and goods carriers) (Source: IAI Report, 2015). There is no assurance that ALLs market

share will not reduce in the future, and any such negative impact could in turn have a material adverse effect

on our business, prospects, results of operations and financial condition.

2. Our results of operations and financial condition are dependent upon the performance, operations, and prospects of the overall Indian automotive market and, in particular, demand for MHCVs. Any adverse

development in the Indian automotive sector or in government policies affecting this industry, including

the new and used vehicle financing industry, could adversely affect our business and results of operations.

As our business operations primarily relate to financing of new and used commercial and personal vehicles,

our assets and NPAs have, and will likely continue in the future to have, a high concentration of vehicle

financing loans. Our business is dependent on various factors that impact the automotive industry, such as

the demand for vehicles and transportation services in India, the costs of raw materials for manufacture of

vehicles, levy of additional duties and taxes, changes in Indian regulations, customer preferences and

government policies affecting used and new commercial vehicles.

MHCV loans represented 51.20% of our AUM as of September 30, 2015. Our AUM for MHCV finance grew

at a CAGR of 45.68%, from 6,900.65 million in Fiscal 2011 to 31,082.89 million in Fiscal 2015. We have

a greater risk of loan defaults and losses in the event the MHCV segment in particular experiences weak

demand within the commercial vehicles industry, as adverse economic conditions may have a negative effect

on the ability of our borrowers to make timely payments of their loans. In the recent past, demand for MHCVs

has been cyclical. For example, following the impact of global financial crisis in Fiscal 2009, the Indian CV

industry experienced growth of 30% in each of Fiscal 2010 and Fiscal 2011. However, after experiencing

steady growth, the buoyancy in domestic CV industry deteriorated from March 2012 onwards. In fiscal 2012,

the growth slowed to 18.2% and entered into the negative territory in Fiscal 2013 (down 2.0% year-over-

year) and weakened further in Fiscal 2014 (down 20.2% year-over-year) due to a weakening economy and

surplus capacity in the trucking system. (Source: IAI Report, 2015)

Furthermore, demand for finance for used and new commercial vehicles may decline and the ability of

commercial vehicle owners and/or operators to perform their obligations under existing financing agreements

may be adversely affected. As a result, any factor which adversely impacts the automotive industry, demand

for motor vehicle OEMs product and, in particular, demand for MHCVs, may have a impact on our

operations, profitability and/or cash flows. There can be no assurance that we will be able to react effectively

to these or other market developments.

3. Our inability to compete effectively in an increasingly competitive industry may adversely affect our net interest margins, income and market share.

The vehicle finance market is highly fragmented and historically has been serviced by a range of financial

entities, including the captive finance affiliates of OEMs, banks and NBFCs. Many of these competitors have

greater financial resources, may be larger in terms of business volume and may have significantly lower cost

of funds compared to us. Many of these competitors may also have long-standing relationships w

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