USHANTI COLOUR CHEM LIMITED...PROMOTERS OF OUR COMPANY: MAUNAL SHANTILAL GANDHI AND MINkU SHANTILAL...

Draft Red Herring Prospectus Dated: May 07, 2018

Read with Section 26 and 32 of the Companies Act, 2013 100% Book Built Issue

USHANTI COLOUR CHEM LIMITEDOur Company was incorporated under the provisions of Companies Act, 1956 as ‘Ushanti Colour Chem Private Limited’ in Gujarat vide Certificate of Incorporation issued by Registrar of Companies, Gujarat, Dadra and Nagar Haveli, on May 12, 1993. Consequently, it was converted into a public limited company pursuant to special resolution passed at Extra-ordinary General Meeting of our Company held on February 19, 2018 and the name of our Company was changed to ‘Ushanti Colour Chem Limited’ and a fresh certificate of incorporation consequent upon Conversion of Private Limited to Public Limited dated March 07, 2018 was issued by Registrar of Companies, Ahmedabad. The Corporate Identification Number of our Company is U24231GJ1993PLC019444. For further details of Incorporation and Change of Registered Office of our company, please refer to chapter titled “General Information” and “Our History and Certain Other Corporate Matters” beginning on page 65 and page 151 of this Draft Red Herring Prospectus.

Registered Office: 88/8 GIDC, Phase I, Vatva, Ahmedabad- 382445, Gujarat, IndiaTel. No.: 079-25833315; Fax No.: Not Avaliable

Contact Person: Archita Jitendrakumar Shah, Company Secretary and Compliance OfficerEmail: [email protected]; Website: www.ushanti.com

PROMOTERS OF OUR COMPANY: MAUNAL SHANTILAL GANDHI AND MINkU SHANTILAL GANDHI

THE ISSUE

INITIAL PUBLIC OFFER CONSISITING OF FRESH ISSUE OF UPTO 19,26,000* EQUITY SHARES OF FACE VALUE OF Rs. 10/- EACH FULLY PAID CASH AT A PRICE OF Rs. []/- PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [] PER EQUITY SHARE) (THE “ISSUE PRICE”) AGGREGATING UP TO RS []/-** LAkHS (“THE ISSUE”) OF WHICH [] EQUITY SHARES OF FACE VALUE RS. 10/- EACH FOR CASH AT A PRICE OF RS. []/- PER EQUITY SHARE, AGGREGATING RS. [] LAkHS WILL BE RESERVED FOR SUBSCRIPTION BY THE MARkET MAkER TO THE ISSUE (THE “MARkET MAkER RESERVATION PORTION”). THE ISSUE LESS MARkET MAkER RESERVATION PORTION I.E. ISSUE OF UPTO [] EQUITY SHARES OF FACE VALUE OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. [] PER EQUITY SHARE, AGGREGATING RS. [] IS HEREINAFTER REFERED TO AS THE “NET ISSUE”. THE ISSUE AND THE NET ISSUE WILL CONSTITUTE []% AND []%, RESPECTIVELY OF THE FULLY DILUTED POST ISSUE PAID UP EQUITY SHARE CAPITAL OF OUR COMPANY. THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER (“BRLM”) AND WILL BE ADVERTISED IN [] EDITIONS OF THE ENGLISH NATIONAL NEWSPAPER [], [] EDITIONS OF THE HINDI NATIONAL NEWSPAPER [] AND [] EDITIONS OF THE GUJARATI NEWSPAPER [], GUJARATI BEING THE LOCAL LANGUAGE OF GUJARAT, WHERE OUR REGISTERED OFFICE IS SITUATED, EACH WITH WIDE CIRCULATION, AT LEAST 5 (FIVE) WORKING DAYS PRIOR TO THE BID/ ISSUE OPENING DATE WITH THE RELEVANT FINANCIAL RATIOS CALCULATED AT THE FLOOR PRICE AND THE CAP PRICE AND SHALL BE MADE AVAILABLE TO THE EMERGE PLATFORM OF NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE EMERGE”, REFERRED TO AS THE “STOCK EXCHANGE”) FOR THE PURPOSE OF UPLOADING ON THEIR WEBSITE.In case of any revisions in the Price Band, the Bid/Issue Period will be extended by at least three additional Working Days after such revision of the Price Band, subject to the Bid/ Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/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 the terminals of the Syndicate Members (defined herein below).

In terms of SEBI Circular No. CIR/CFD/POLICYCELL/11/2015, all potential investors shall participate in the Offer only through an Application Supported by Blocked Amount (“ASBA”) process providing details about the bank account which will be blocked by the Self Certified Syndicate Banks (“SCSBs”) for the same. For details in this regard, specific attention is invited to the chapter titled “Issue Procedure” beginning on page 232 of this Draft Red Herring Prospectus. A copy of the Red Herring Prospectus/ Prospectus will be delivered for registration to the Registrar of Companies as required under Section 32 and Section 26 of the Companies Act, 2013.

In terms of Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”) the Issue is being made for at least 25% of the post-issue paid-up Equity Share capital of our Company. The Issue is being made in accordance with Chapter XB of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time (“SEBI (ICDR) Regulations”),wherein []% of the Net Issue shall be available for allocation on a proportionate basis to QIBs. 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Net Issue will be available for allocation to Retail Individual Investors, in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Issue Price. All investors shall participate in this Issue mandatorily through the Applications Supported by Blocked Amount (“ASBA”) process by providing details of their respective bank accounts which will be blocked by SCSBs. For details, please refer to the section titled “Issue Information” on page 222 of DRHP.

RISKS IN RELATION TO THE FIRST ISSUE

This being the first public Issue of the Issuer, there has been no formal market for our Equity Shares. The face value of the Equity Shares is Rs.10/- each and the Issue price of Rs. [] per Equity Share is [] times of the face value. The Issue Price (as determined and justified by our Company in consultation with the BRLM as stated in the chapter titled ‘Basis for issue Price’ beginning on page 103 of this Draft Red Herring Prospectus) should not be taken to be indicative of the market price of the Equity Shares after such 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 this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and this Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the section titled ‘Risk Factors’ beginning on page 20 of Draft Red Herring Prospectus.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Issuer and this Issue, which is material in the context of this Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission or inclusion 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.

LISTING

The Equity Shares of our Company issued through this Draft Red Herring Prospectus are proposed to be listed on the EMERGE Platform of National Stock Exchange of India Limited (‘NSE EMERGE’). In terms of the Chapter XB of the SEBI (ICDR) Regulations, 2009, as amended from time to time, our Company has received an In-principle approval letter dated [] from NSE EMERGE for using its name in this Issue document for listing of our shares on the EMERGE Platform of National Stock Exchange of India Limited. For the purpose of this Issue, National Stock Exchange of India Limited shall be the Designated Stock Exchange.

BOOK RUNNING LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

PANTOMATH CAPITAL ADVISORS PRIVATE LIMITED 406-408, Keshva Premises, Behind Family Court,Bandra Kurla Complex, Bandra (East), Mumbai – 400051, Maharashtra, India Tel: +91-22 6194 6700Fax: +91-22 2659 8690Website: www.pantomathgroup.comEmail: [email protected] Grievance Id: [email protected] Person: Unmesh Zagade / Hardik BhutaSEBI Registration No: INM000012110

BIGSHARE SERVICES PRIVATE LIMITED1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis, Makwana Road, Marol, Andheri East, Mumbai 400059, Maharashtra, IndiaTel: +91 22 6263 8200Fax: +91 22 6263 8299Email: [email protected] Website: www.bigshareonline.com Investor Grievance Id:[email protected] Contact Person: Jibu JohnSEBI Registration Number: INR000001385

BID/ISSUE PROGRAMME

BID/ISSUE OPENS ON: [], [] BID/ISSUE CLOSES ON: [], []

*Number of shares may need to be adjusted for lot size upon determination of issue price**Subject to finalisation of basis of Allotment

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SECTION I – GENERAL .................................................................................................................... 3

DEFINITION AND ABBREVIATION ................................................................................................. 3

PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA....................................... 17

FORWARD LOOKING STATEMENT ............................................................................................... 19

SECTION II – RISK FACTORS....................................................................................................... 20

SECTION III - INTRODUCTION.................................................................................................... 42

SUMMARY OF INDUSTRY ............................................................................................................... 42

SUMMARY OF OUR BUSINESS ...................................................................................................... 52

SUMMARY OF FINANCIAL STATEMENTS .................................................................................. 59

THE ISSUE ........................................................................................................................................... 63

GENERAL INFORMATION ............................................................................................................... 65

CAPITAL STRUCTURE ..................................................................................................................... 76

OBJECTS OF THE ISSUE ................................................................................................................... 95

BASIS FOR ISSUE PRICE ................................................................................................................ 103

STATEMENT OF POSSIBLE TAX BENEFITS .............................................................................. 106

SECTION IV – ABOUT THE COMPANY .................................................................................... 109

OUR INDUSTRY ............................................................................................................................... 109

OUR BUSINESS ................................................................................................................................ 125

KEY INDUSTRY REGULATIONS AND POLICIES ...................................................................... 139

OUR HISTORY AND CERTAIN OTHER CORPORATE MATTERS ........................................... 151

OUR MANAGEMENT ...................................................................................................................... 156

OUR PROMOTER AND PROMOTER GROUP .............................................................................. 171

OUR GROUP COMPANIES ............................................................................................................. 175

RELATED PARTY TRANSACTIONS ............................................................................................. 176

DIVIDEND POLICY .......................................................................................................................... 177

SECTION V – FINANCIAL STATEMENTS ................................................................................ 178

FINANCIAL STATEMENTS AS RESTATED ................................................................................. 178

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS ........................................................................................................... 179

FINANCIAL INDEBTEDNESS ........................................................................................................ 195

SECTION VI – LEGAL AND OTHER INFORMATION ........................................................... 199

OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS ...................................... 199

GOVERNMENT AND OTHER STATUTORY APPROVALS ........................................................ 204

OTHER REGULATORY AND STATUTORY DISCLOSURES ..................................................... 211

SECTION VII – ISSUE INFORMATION ..................................................................................... 222

TERMS OF THE ISSUE .................................................................................................................... 222

ISSUE STRUCUTRE ......................................................................................................................... 228

ISSUE PROCEDURE ......................................................................................................................... 232

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES .................................. 275

SECTION VIII – MAIN PROVISIONS OF ARTICLES OF ASSOCIATION .......................... 278

SECTION IX – OTHER INFORMATION .................................................................................... 319

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ........................................... 319

DECLARATION ................................................................................................................................ 321

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The Equity Shares have not been and will not be registered under the U.S Securities Act of 1933,

as amended (“U.S. Securities Act”) or any state securities laws in the United States of America

and may not be offered or sold within the United States or to, or for the account or benefit of,

“U.S. Persons (as defined in Regulation S), except pursuant to exemption from, or in a transaction

not subject to, the registration requirements of the U.S. Securities laws. Accordingly the Equity

Shares are being offered and sold only outside the United States in offshore transaction in reliance

on Regulation S under the U.S Securities Act and the applicable laws of the jurisdiction where

those offers and sale occur.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any

other jurisdiction outside India and may not be offered or sold, and application may not be made

by persons in any such jurisdiction, except in compliance with the applicable laws of such

jurisdiction.

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SECTION I – GENERAL

DEFINITION AND ABBREVIATION

In this Draft Red Herring Prospectus, unless the context otherwise requires, the terms and abbreviations

stated hereunder shall have the meanings as assigned therewith.

COMPANY RELATED TERMS

Term Description

“Ushanti Colour Chem

Limited ” or “Ushanti Colour

Chem”, or “the Company” ,or

“our Company” or “we”, “us”,

“our”, or “Issuer” or the

“Issuer Company”

Unless the context otherwise requires, refers to Ushanti Colour

Chem Limited, a public limited Company incorporated under the

Companies Act, 1956.

“AoA” or “Articles” or

“Articles of Association”

Articles of Association of Ushanti Colour Chem Limited, as

amended from time to time

Audit Committee The committee of the Board of Directors constituted as the

Company’s Audit Committee in accordance with Section 177 of the

Companies Act, 2013

Board of Directors/ the Board

/ our Board/ Director(s)

The Board of Directors of Ushanti Colour Chem Limited, including

all duly constituted Committee(s) thereof

Bankers to the Company Such banks which are disclosed as Bankers to the Company in the

chapter titled “General Information” on page 65 of this Draft Red

Herring Prospectus

Company Secretary and

Compliance Officer

The Company Secretary & Compliance Officer of our Company

being Archita Shah

Director(s) Director(s) of Ushanti Colour Chem Limited, unless otherwise

specified

Equity Shares Equity Shares of our Company of face value of Rs. 10/- each fully

paid up

Equity Shareholders/

shareholders Persons/ Entities holding Equity Shares of our Company

Group Companies Such Companies as are included in the chapter titled ‘Our Group

Companies’ beginning on page 175 of this Draft Red Herring

Prospectus

ISIN International Securities Identification Number. In this case being [●].

Key Managerial Personnel

(KMP)

Key managerial personnel of our Company in terms of Regulation 2

(1) (s) of the SEBI Regulations and as disclosed in the chapter titled

“Our Management” beginning on page 156 of this Draft Red Herring

Prospectus.

“MoA” / “Memorandum /

Memorandum of Association”

The Memorandum of Association of our Company, as amended from

time to time

Nomination and

Remuneration Committee

The committee constituted as the Company’s Nomination &

Remuneration Committee in accordance with Section 177 of the

Companies Act, 2013

NRI/ Non-Resident Indian A person resident outside India, as defined under FEMA and who is

a citizen of India or a Person of Indian Origin as defined under

FEMA (Transfer or Issue of Security by a Person Resident Outside

India) Regulations, 2000.

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Term Description

Person or Persons Any Individual, Sole Proprietorship, Unincorporated Association,

Unincorporated Organization, Body Corporate, Corporation,

Company, Partnership Firm, Limited Liability Partnership Firm,

Joint Venture, or Trust or any other Entity or Organization validly

constituted and/or incorporated in the jurisdiction in which it exists

and operates, as the context requires

“Promoter”, “Promoters” or

“our Promoters”

Promoters of our Company being Maunal Gandhi and Minku

Gandhi.

Promoter Group Includes such persons and entities are constituting our promoter

group in terms of Regulation 2(1) (zb) of the SEBI (ICDR)

Regulations and as enlisted in the chapter titled “Our Promoter and

Promoter Group” beginning on page 171 of this Draft Red Herring

Prospectus

Peer Reviewed Auditor Independent Auditor having a valid Peer Reviewed Certificate in our

case being M/s. N K Aswani & Co., Chartered Accountants

Registered Office The Registered office of our Company situated at 88/8, Phase I

GIDC Vatva, Ahmedabad - 382445, Gujarat, India.

RoC / Registrar of Companies Registrar of Companies, ROC Bhavan, Opp Rupal Park Society,

Behind Ankur Bus Stop, Naranpura, Ahmedabad-380013, Gujarat,

India.

Shareholders Shareholders of our Company

Stakeholders Relationship

Committee

The committee constituted as the Company’s Stakeholders

Relationship Committee in accordance with Section 178(5) of the

Companies Act, 2013

“Statutory Auditor” /

“Auditor”

The Statutory Auditor of our Company, being M/s. ANA &

Associates, Chartered Accountants

“you”, “your” or “yours” Prospective investors in this Issue

ISSUE 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.

Allotment/ Allot/

Allotted

Issue and allotment of Equity Shares of our Company pursuant to the

Issue of the Equity Shares to successful Bidders

Allottee(s) Successful Bidders(s) to whom Equity Shares have been

allotted/transferred

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.

ASBA / Application

Supported by Blocked

Amount

An application, whether physical or electronic, used by Bidders, 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 Bid cum

Application Form submitted by Bidders for blocking the Bid Amount

mentioned in the Bid cum Application Form

ASBA form

An application form, whether physical or electronic, used by Bidders

which will be considered as the application for Allotment in terms of this

Draft Red Herring Prospectus.

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Term Description

ASBA Application

Location(s) / Specified

Cities

Locations at which ASBA Applications can be uploaded by the SCSBs,

namely Mumbai, New Delhi, Chennai, Kolkata, and Ahmedabad.

Banker(s) to the Issue The banks which are clearing members and registered with SEBI as

Banker to an Issue with whom the Public Issue Account will be opened

and in this case being ICICI Bank.

Basis of Allotment

The basis on which Equity Shares will be Allotted to the successful

Bidders under the Issue and which is described under chapter titled “Issue

Procedure” beginning on page 232 of this Draft Red Herring Prospectus.

Bid An indication to make an issue during the Bid/Issue Period by a Bidder

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.

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

Bidding The process of making a Bid.

Bid Amount The highest value of optional Bids indicated in the Bid cum Application

Form and in the case of Retail Individual Bidders Bidding at Cut Off

Price, the Cap Price multiplied by the number of Equity Shares Bid for by

such Retail Individual Bidder and mentioned in the Bid cum Application

Form and payable by the Retail Individual Bidder or blocked in the ASBA

Account upon submission of the Bid in the Issue

Bid cum Application

form

The form used by a Bidder, to make a Bid and which will be considered

as the application for Allotment in terms of the Red Herring Prospectus

Bid Cum Application

Collecting Intermediaries

a SCSB with whom the bank account to be blocked, is maintained

a syndicate member (or sub-syndicate member) If any

a stock broker registered with a recognized stock exchange (and whose

name is mentioned on the website of the stock exchange as eligible for

this activity)(‘broker’) if any

a depository participant (‘DP’) (whose name is mentioned on the website

of the stock exchange as eligible for this activity)

a registrar to an issue and share transfer agent (‘RTA’) (whose name is

mentioned on the website of the stock exchange as eligible for this

activity)

Bid Lot 19,26,000 Equity shares and in multiples of [●] Equity Shares thereafter

Bid/ Issue Closing Date The date after which the Syndicate, the Designated Branches and the

Registered Brokers will not accept any Bids, which shall be notified in

[●] edition of the English national newspaper [●], [●] edition of the Hindi

national newspaper [●], and [●] edition of the Gujarati newspaper [●],

each with wide circulation and in case of any revision, the extended

Bid/Issue Closing Date shall also be notified on the website and terminals

of the Syndicate and SCSBs, as required under the SEBI ICDR

Regulations

Bid/ Issue Opening Date The date on which the Syndicate, the Designated Branches and the

Registered Brokers shall start accepting Bids, which shall be notified in

[●] edition of the English national newspaper [●], [●] edition of the Hindi

national newspaper [●], and [●] edition of the Gujarati newspaper [●],

each with wide circulation, and in case of any revision, the extended

Bid/Issue Opening Date also to be notified on the website and terminals

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Term Description

of the Syndicate and SCSBs, as required under the SEBI ICDR

Regulations.

Bid/ Issue Period The period between the Bid/ Issue Opening Date and the Bid/Issue

Closing Date, inclusive of both days, during which Bidders can submit

their Bids, including any revisions thereof.

Bidding/Collecting

Centre

Centres at which the Designated Intermediaries shall accept the ASBA

Forms, i.e, Designated SCSB Branch for SCSBs, Specified Locations for

Syndicate, Broker 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 Issue is being made

Book Running Lead

Managers or BRLM

The Book Running Lead Manager to the Issue namely Pantomath Capital

Advisors Private Limited, SEBI registered Category – I Merchant Banker

Broker Centres

Broker centres notified by the Stock Exchanges, where the 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 website of National Stock

Exchange of India Limited.

Cap Price The higher end of the Price Band, above which the Issue Price will not be

finalised and above which no Bids will be accepted

CAN or Confirmation of

Allocation Note

The note or advice or intimation sent to each successful Bidder indicating

the Equity Shares which will be Allotted/ transferred, after approval of

Basis of Allotment by the Designated Stock Exchange.

Client ID Client Identification Number maintained with one of the Depositories in

relation to demat account.

Cut-off Price Issue Price, which shall be any price within the Price Band finalised by

our Company in consultation with the BRLM. 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.

Collecting Depository

Participant or CDP

A depository participant as defined under the Depositories Act, 1996,

registered with SEBI and who is eligible to procure Applications at the

Designated CDP Locations in terms of circular no.

CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by

SEBI

Controlling

Branch/Designated

Branch

Such branch of the SCSBs which coordinate Applications under this Issue

by the ASBA Applicants with the Registrar to the Issue and the Stock

Exchanges and a list of which is available at http://www.sebi.gov.in or at

such other website as may be prescribed by SEBI from time to time

Demographic Details The demographic details of the Bidders/Applicants such as their address,

PAN, occupation and bank account details

Depositories

Depositories registered with SEBI under the Securities and Exchange

Board of India (Depositories and Participants) Regulations, 1996, as

amended from time to time, being NSDL and CDSL

Depository Participant A Depository Participant as defined under the Depositories Act, 1996

Designated Date

The date on which the Collection Banks transfer funds from the public

issue accounts, and the SCSBs issue instructions for transfer of funds

from the ASBA Accounts, to the Public Issue Account or the Refund

Account, as appropriate, in terms of the Draft Red Herring Prospectus

following which the Board of Directors may Allot Equity Shares to

http://www.sebi.gov.in/

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Term Description

successful Bidders in the Fresh Issue may give delivery instructions for

the transfer of the respective Offered Shares.

Designated

Intermediary(ies)

Syndicate, Sub-Syndicate Members/agents, SCSBs, Registered Brokers,

CDPs and RTAs, who are authorized to collect ASBA Forms from the

Bidders, in relation to the Issue

Designated RTA

Locations

Such centres of the RTAs where Bidder 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 Exchange (www.nseindia.com) and

updated from time to time

Designated Stock

Exchange Emerge Platform of National Stock Exchange of India Limited.

Designated CDP

Locations

Such centres of the CDPs where Bidders can submit the Bid Cum

Application Forms. The details of such Designated CDP Locations, along

with names and contact details of the Collecting Depository Participants

eligible to accept Bid cum Application Forms are available on the website

of the Stock Exchange (www.nseindia.com) and updated from time to

time

Draft Red Herring

Prospectus or DRHP

The Draft Red Herring Prospectus dated [●] issued in accordance with

section 32 of the Companies Act, 2013 and filed with the Emerge

Platform of National Stock Exchange of India Limited under SEBI

(ICDR) Regulations, which does not contain

First/sole Bidder

Bidder whose name shall be mentioned in the Bid cum Application Form

or the Revision Form and in case of joint Bids, whose name shall also

appear as the first holder of the beneficiary account held in joint names

Floor Price

The lower end of the Price Band, subject to any revision thereto, at or

above which the Issue Price will be finalised and below which no Bids

will be accepted

FII/ Foreign Institutional

Investors

Foreign Institutional Investor (as defined under SEBI (Foreign

Institutional Investors) Regulations, 1995, as amended) registered with

SEBI under applicable laws in India.

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

included in “Issue Procedure” on page 232 of this Draft Red Herring

Prospectus

Listing Agreement The Equity Listing Agreement to be signed between our Company and

the National Stock Exchange of India Limited.

Market Making

Agreement

Market Making Agreement dated [●] between our Company, Book

Running Lead Manager and Market Maker

Market Maker

Market Maker appointed by our Company from time to time, in this case

being Pantomath Stock Brokers Private Limited who has agreed to

receive or deliver the specified securities in the market making process

for a period of three years from the date of listing of our Equity Shares or

for any other period as may be notified by SEBI from time to time

Market Maker

Reservation Portion

The Reserved Portion of Upto [●] Equity Shares of face value of Rs. 10

each fully paid for cash at a price of Rs [●] per Equity Share aggregating

Rs. [●] for the Market Maker in this Issue.

Mutual Fund(s) A mutual fund registered with SEBI under the SEBI (Mutual Funds)

Regulations, 1996, as amended from time to time

http://www.nseindia.com/http://www.nseindia.com/

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Term Description

Mutual Fund Portion

5% of the QIB Portion (excluding the Anchor Investor Portion) i.e. [●]

Equity Shares available for allocation to Mutual Funds, out of the QIB

Portion

NIF

National Investment Fund set up by resolution F. No. 2/3/2005-DD-II

dated November 23, 2005 of Government of India published in the

Gazette of India.

NSE Emerge of NSE/

SME Exchange

The SME Platform of National Stock Exchange of India Limited,

approved by SEBI as an SME Exchange for listing of equity shares

offered under Chapter XB of the SEBI (ICDR) Regulations.

NSE National Stock Exchange of India Limited

Eligible NRI NRIs from such jurisdiction outside India where it is not unlawful to make

an offer or invitation under the Issue and in relation to whom this Draft

Red Herring Prospectus constitutes an invitation to subscribe for the

Equity Shares offered herein on the basis of the terms thereof.

Net Issue

The Issue (excluding the Market Maker Reservation Portion) of Upto [●]

Equity Shares of face value of Rs. 10 each fully paid for cash at a price of

Rs [●] per Equity Share aggregating Rs. [●] by our Company

Net Proceeds

Proceeds of the Fresh Issue less our Company’s share of the Issue

expenses. For further information about use of the Issue Proceeds and the

Issue expenses, see “Objects of the Issue” on page 96

NIF National Investment Fund set up by resolution F. No. 2/3/2005-DD-II

dated November 23, 2005 of Government of India published in the

Gazette of India

Non Institutional Bidders

All Bidders, including Category III FPIs that are not QIBs or Retail

Individual Investors, who have apply for Equity Shares for an amount of

more than Rs. 2,00,000/- but not including NRIs other than Eligible NRIs

Non-Resident

A person resident outside India, as defined under FEMA (Transfer or

Issue of Security by a Person Resident Outside India) Regulations, 2017,

as amended from time to time, and includes FIIs and FPIs

Issue/Issue Size/ Initial

Public Issue/ Initial

Public Offer/ Initial

Public Offering/ IPO

The Initial Public Issue of Upto 19,26,000 Equity Shares of face value of

Rs.10 each for cash at a price of Rs. [●] each, aggregating up to Rs.[●]

comprising the Fresh Issue.

Issue Agreement

The agreement dated April 18, 2018 between our Company and the

BRLM, pursuant to which certain arrangements are agreed to in relation

to the Issue

Issue Price

The final price at which Equity Shares will be Allotted in terms of the

Draft Red Herring Prospectus. The Issue Price will be decided by our

Company in consultation with the BRLM on the Pricing Date in

accordance with the Book-Building Process and the Draft Red Herring

Prospectus

Issue Proceeds

The proceeds of the Issue that is available to our Company. For further

information about use of Issue Proceeds, see “Objects of the Issue” on

page 96 of this Draft Red Herring Prospectus

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 as defined under the Foreign Exchange

Management (Deposit) Regulations, 2000, as amended from time to time.

OCBs are not allowed to invest in this Issue

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Term Description

Other Investors

Investors other than Retail Individual Investors. These include individual

bidders/applicants other than retail individual investors and other

investors including corporate bodies or institutions irrespective of the

number of specified securities applied for

Person/ Persons

Any individual, sole proprietorship, unincorporated association,

unincorporated organization, body corporate, corporation, company,

partnership, limited liability company, joint venture, or trust or any other

entity or organization validly constituted and/or incorporated in the

jurisdiction in which it exists and operates, as the context requires

Price Band

Price band of a minimum price of Rs. [●] per Equity Share (Floor Price)

and the maximum price of Rs.[●] per Equity Share (Cap Price) including

revisions thereof.

The Price Band and the minimum Bid Lot size for the Issue will be

decided by our Company in consultation with the BRLM and will be

advertised at least five Working Days prior to the Bid/ Issue Opening

Date, in [●] edition of the English national newspaper [●], [●] edition of

the Hindi national newspaper [●] and [●] edition of the Gujarati

newspaper [●], each with wide circulation

Pricing date The date on which our Company in consultation with the BRLM, will

finalise the Issue 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 Issue Price, the size of the

Issue and certain other information

Public Issue Account

Account opened with the Banker to the Issue i.e. ICICI Bank under

Section 40 of the Companies Act, 2013 to receive monies from the SCSBs

from the bank accounts of the bidders on the Designated Date.

Public Issue Account

Agreement/ Banker to the

Issue Agreement

Agreement entered on [●] amongst our Company, Book Running Lead

Manager, the Registrar to the Issue and Public Issue Bank/Banker to the

Issue for collection of the Bid Amount on the terms and conditions

thereof.

Qualified Institutional

Buyers or QIBs or QIB

Bidders

Qualified Institutional Buyers as defined under Regulation 2(1)(zd) of the

SEBI (ICDR) Regulations, 2009.

QIB Portion The portion of the Issue being [●]% of the Net Issue, consisting of [●]

Equity Shares, available for Allocation to QIBs (including Anchor

Investors), subject to valid Bids being received at or above the Issue Price

Red Herring Prospectus

or RHP

The Red Herring Prospectus to be issued in accordance with Section 32

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

Regulations, which will not have complete particulars of the price at

which the Equity Shares will be offered and the size of the Issue,

including any addenda or corrigenda thereto.

The Red Herring Prospectus will be registered with the RoC at least three

days before the Bid/ Issue Opening Date and will become the Prospectus

upon filing with the RoC on or after the Pricing Date

Refund Account(s) The account opened with the Refund Bank(s), from which refunds, if any,

of the whole or part of the Bid Amount (excluding refund to Bidders) shall

be made.

Refund Bank(s) / Refund

Banker(s)

Bank which is / are clearing member(s) and registered with the SEBI as

Bankers to the Issue at which the Refund Account will be opened, in this

case being ICICI Bank.

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Term Description

Refund through

electronic transfer of

funds

Refunds through NECS, direct credit, RTGS or NEFT, as applicable

Registered Broker

Individuals or companies registered with SEBI as “Trading Members”

(except Syndicate/Sub-Syndicate Members) who hold valid membership

of NSE having right to trade in stocks listed on Stock Exchanges, through

which investors can buy or sell securities listed on stock exchanges, a list

of which is available on

http://www.nseindia.com/membership/dynaContent/find_a_broker.htm

Registrar /Registrar to the

Issue

Registrar to the Issue, in this case being Bigshare Services Private Limited

having registered office at 1st Floor, Bharat Tin Works Building, Opp.

Vasant Oasis, Makwana Road, Marol, Andheri East, Mumbai - 400059

Registrar and Share

Transfer Agents or RTAs

Registrar and share transfer agents registered with SEBI and eligible to

procure Applications at the Designated RTA Locations in terms of

circular no. CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015

issued by SEBI

Resident Indian

A person resident in India, as defined under FEMA (Transfer or Issue of

Security by a Person Resident Outside India) Regulations, 2017, as

amended from time to time

Retail Individual

Bidder(s)/Retail

Individual

Investor(s)/RII(s)/RIB(s)

Individual Bidders, or minors applying through their natural guardians,

including HUFs (applying through their Karta), who apply for an amount

less than or equal to Rs 2,00,000/-

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)

Reservation Portion The portion of the Issue reserved for category of eligible Bidders as

provided under the SEBI (ICDR) Regulations, 2009

Registrar Agreement

The agreement dated April 18, 2018, entered by our Company and the

Registrar to the Issue in relation to the responsibilities and obligations of

the Registrar to the Issue pertaining to the Issue

Reserved Category /

Categories Categories of persons eligible for making Bids under reservation portion.

SCSB/ Self Certified

Syndicate Banker

Bank which is registered with SEBI under SEBI (Bankers to an Issue)

Regulations, 1994, as amended from time to time, and which Issue the

service of making Bids/Application/s Supported by Blocked Amount

including blocking of bank account and a list of which is available on

http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised

Intermediaries or at such other website as may be prescribed by SEBI

from time to time

SEBI Listing Regulations

Securities and Exchange Board of India (Listing Obligations and

Disclosure Requirements) Regulations, 2015 and includes the agreement

to be entered into between our Company and the Stock Exchange in

relation to listing of Equity Shares on such Stock Exchange.

SEBI (Foreign Portfolio

Investor) Regulations

Securities and Exchange Board of India (Foreign Portfolio Investors)

Regulations, 2014, as amended from time to time

Specified Locations

Bidding centres where the Syndicate shall accept Bid cum Application

Forms from Bidders, a list of which is available on the website of SEBI

(www.sebi.gov.in) and updated from time to time

http://www.nseindia.com/membership/dynaContent/find_a_broker.htmhttp://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised%20Intermediarieshttp://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised%20Intermediarieshttp://www.sebi.gov.in/

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Term Description

Sub-Syndicate members A SEBI Registered member of NSE appointed by the BRLM and/or

Syndicate Member to act as a Sub-Syndicate Member in the Issue

Syndicate Agreement

Agreement dated [●] entered into amongst the BRLM, the Syndicate

Members, our Company in relation to the procurement of Bid cum

Application Forms by Syndicate

Syndicate or Members of

the Syndicate

Intermediaries registered with SEBI who are permitted to carry out

activities as an underwriter, namely, [●]

TRS or Transaction

Registration Slip

The slip or document issued by the Syndicate, or the SCSB (only on

demand), as the case may be, to the Bidder as proof of registration of the

Bid

Underwriter Pantomath Capital Advisors Private Limited

Underwriting Agreement The agreement dated [•] entered into between the Underwriter and our

Company

Working Day

“Working Day” means all days, other than second and fourth Saturday of

the month, Sunday or a public holiday, on which commercial banks in

Mumbai are open for business; provided however, with reference to the

time period between (a) announcement of Price Band; and (b) Bid/ Issue

Period, “Working Day” shall mean all days, excluding all Saturdays,

Sundays or a public holiday, on which commercial banks in Mumbai are

open for business; and with reference to the time period between the Bid/

Issue Closing Date and the listing of the Equity Shares on the Stock

Exchanges, “Working Day” shall mean all trading days of Stock

Exchanges, excluding Sundays and bank holidays

TECHNICAL AND INDUSTRY TERMS

Term Description

CSO Central Statistics Office

EPFO Employees’ Provident Fund Organisation

ESI Employee State Insurance

FDI Foreign Direct Investment

FCNR Foreign Currency Non-Resident

FY Financial Year

GDP Gross Domestic Product

GST Goods and Services Tax

GVA Gross Value Added

IMF International Monetary Fund

INR Indian Rupees Official Currency of India

MSMEs Micro, Small & Medium Enterprises

MYEA Mid-Year Economic Analysis

NITI Aayog National Institution for Transforming India

NMP National Manufacturing Policy

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

WPI Wholesale Price Index

PMGKY Pradhan Mantri Garib Kalyan Yojana

RBI Reserve Bank of India

SEZ Special Economic Zone

TADF Technology Acquisition and Development Fund

TASL Tata Advanced Systems Ltd

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Term Description

UDAY Ujwal DISCOM Assurance Yojana Scheme

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

CONVENTIONAL AND GENERAL TERMS/ABBREVIATIONS

Term Description

A/C Account

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

AS/Accounting Standard Accounting Standards as issued by the Institute of Chartered

Accountants of India

A.Y./AY Assessment Year

AoA Articles of Association

ASBA Application Supported by Blocked Amount

BIFR Board for Industrial and Financial Reconstruction

NSE National Stock Exchange of India Limited

CAGR Compounded Annual Growth Rate

Category I Foreign

Portfolio Investors

FPIs who are registered as – Category I foreign portfolio investors

under the SEBI FPI Regulations

Category II Foreign

Portfolio Investors

FPIs who are registered as – Category II foreign portfolio investors


Category III Foreign

Portfolio Investors

FPIs who are registered as – Category III foreign portfolio investors


CC Cash Credit

CDSL Central Depository Services (India) Limited

CFO Chief Financial Officer

CIN Corporate Identification Number

CS Company Secretary

CST Central Sales Tax

Cm Centimetre

CMD Chairman and Managing Director

CENVAT Central Value Added Tax

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

have ceased to have effect upon notification of the Notified Sections)

and the Companies Act, 2013.

Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the

notification of the notified sections

Depositories NSDL (National Securities Depository Limited) and CDSL (Central

Depository Services Limited); Depositories registered with the SEBI

under the Securities and Exchange Board of India (Depositories and

Participants) Regulations, 1996, as amended from time to time

Depositories Act The Depositories Act, 1996, as amended from time to time.

DGFT Directorate General of Foreign Trade

DIN Director Identification Number

DIPP Department of Industrial Policy & Promotion

DP Depository Participant

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Term Description

DP ID Depository Participant’s Identity

EBIDTA Earnings before interest, depreciation, tax, amortization and

extraordinary items

ECS Electronic Clearing System

EGM Extraordinary General Meeting

EPFA The Employees‘ Provident Funds and Miscellaneous Provisions Act,

1952

ESIC Employee State Insurance Corporation

ESOP Employee Stock Option Plan

ESPS Employee Stock Purchase Scheme

EPS Earnings Per Share

EPF Employees Provident Fund

FCNR Account Foreign Currency Non Resident Account

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act 1999, as amended from time to

time and the regulations framed there under

FII(s) Foreign Institutional Investor, as defined under the FII Regulations and

registered with the SEBI under applicable laws in India

FPI(s) Foreign Portfolio Investor means a person who satisfies the eligibility

criteria prescribed under Regulation 4 and has been registered under

Chapter II of Securities And Exchange Board Of India (Foreign

Portfolio Investors) Regulations, 2014, which shall be deemed to be an

intermediary in terms of the provisions of the SEBI Act,1992

FII Regulations Securities and Exchange Board of India (Foreign Institutional

Investors) Regulations, 1995, as amended from time to time.

FIs Financial Institutions

FIPB The Foreign Investment Promotion Board, Ministry of Finance, GoI

FVCI Foreign Venture Capital Investor registered under the Securities and

Exchange Board of India (Foreign Venture Capital Investor)

Regulations, 2000

FV Face Value

F.Y./FY Financial Year

GAAP Generally Accepted Accounting Principles

GDP Gross Domestic Product

GIR Number General Index Registry number

GoI/ Government Government of India

HNI High Networth Individual

HUF Hindu Undivided Family

ICDR Regulations/ SEBI

Regulations/ SEBI (ICDR)

Regulations/Regulations

SEBI (Issue of Capital and Disclosure Requirements) Regulations,

2009 as amended from time to time

Indian GAAP Generally Accepted Accounting Principles in India

ICAI Institute of Chartered Accountants of India

IFRS International Financial Reporting Standards

IPO Initial Public Offering

IRDA Insurance Regulatory and Development Authority

I. T. Act The Income Tax Act, 1961, as amended.

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Term Description

IT Authorities Income Tax Authorities

IT Rules The Income Tax Rules, 1962, as amended from time to time

INR Indian National Rupee

Key Managerial Personnel

/ KMP

The officers declared as a Key Managerial Personnel and as mentioned

in the chapter titled “Our Management” beginning on page 156 of this

Draft Red Herring Prospectus

KVA Kilovolt-ampere

BRLM Book Running Lead Manager

Ltd. Limited

Mn Million

MoA Memorandum of Association

MoF Ministry of Finance, GoI

MoU Memorandum of Understanding

MD Managing Director

MICR Magnetic Ink Character Recognition

N/A or N.A. Not Applicable

NAV Net Asset Value

NBFC Non Banking Finance Company

Net Worth The aggregate of the paid up share capital, share premium account, and

reserves and surplus (excluding revaluation reserve) as reduced by the

aggregate of miscellaneous expenditure (to the extent not adjusted or

written off) and the debit balance of the profit and loss account

NOC No Objection Certificate

NR Non Resident

NRE Account Non Resident (External) Account

NRI Non Resident Indian, is a person resident outside India, who is a citizen

of India or a person of Indian origin and shall have the same meaning

as ascribed to such term in the Foreign Exchange Management

(Deposit) Regulations, 2000, as amended from time to time

NRO Account Non Resident (Ordinary) Account

NSDL National Securities Depository Limited

NI Act Negotiable Instruments Act, 1881

OCB Overseas Corporate Bodies

p.a. per annum

PAN Permanent Account Number

PAT Profit After Tax

Pvt. Private

PBT Profit Before Tax

P/E Ratio Price Earnings Ratio

QIB Qualified Institutional Buyer

RBI Reserve Bank of India

RBI Act The Reserve Bank of India Act, 1934, as amended from time to time

RoC Registrar of Companies

RoNW Return on Net Worth

Rs. / INR Indian Rupees

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Term Description

SCRA Securities Contracts (Regulation) Act, 1956 as amended from time to

time

SCRR Securities Contracts (Regulation) Rules, 1957

SCSB Self-Certified Syndicate Bank

SEBI Securities and Exchange Board of India

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

time to time

SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investments

Funds) Regulations, 2012

SEBI FII Regulations Securities and Exchange Board of India (Foreign Institutional

Investors) Regulations, 1995

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

Regulations, 1996 as repealed pursuant to the SEBI AIF Regulations

SEBI Insider Trading

Regulations

The SEBI (Prohibition of Insider Trading) Regulations, 2015, as

amended from time to time, including instructions and clarifications

issued by SEBI from time to time

SEBI Takeover

Regulations /Takeover

Regulations / Takeover

Code

Securities and Exchange Board of India (Substantial Acquisition of

Shares and Takeovers) Regulations, 2011

Listing Regulations / SEBI

Listing Regulations/ SEBI

(LODR) Regulations

Securities and Exchange Board of India (Listing Obligations and

Disclosure Requirements) Regulations, 2015

Sub-Account Sub-accounts registered with SEBI under the SEBI (Foreign

Institutional Investor) Regulations, 1995, other than sub-accounts

which are foreign corporate or foreign individuals.

SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended

from time to time

SME Small Medium Enterprise

Sec Section

SSI Undertaking Small Scale Industrial Undertaking

Stock Exchange (s) Emerge Platform of National Stock Exchange of India Limited

STT Securities Transaction Tax

TAN Tax Deduction Account Number

TRS Transaction Registration Slip

TIN Taxpayers Identification Number

TNW Total Net Worth

u/s Under Section

UIN Unique Identification Number

US/ U.S. / USA/ United

States United States of America

USD / US$ / $ United States Dollar, the official currency of the United States of

America

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Term Description

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

America

UOI Union of India

UV Ultraviolet

VAT Value Added Tax

VCF / Venture Capital

Fund

Foreign Venture Capital Funds (as defined under the Securities and

Exchange Board of India (Venture Capital Funds) Regulations, 1996)

registered with SEBI under applicable laws in India.

WDV Written Down Value

WTD Whole-time Director

w.e.f. With effect from

YoY Year over year

Notwithstanding the following: -

i) In the section titled “Main Provisions of the Articles of Association” beginning on page 278 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that

section;

ii) In the section titled “Financial Statements” beginning on page 178 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section;

iii) In the section titled “Risk Factor” beginning on page 20 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section;

iv) In the chapter titled “Statement of Possible Tax Benefits” beginning on page 106 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that chapter; and

v) In the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 179 of this Draft Red Herring Prospectus, defined terms shall

have the meaning given to such terms in that chapter.

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PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

All references to “India” are to the Republic of India and all references to the “Government” are to the

Government of India.

FINANCIAL DATA

Unless stated otherwise, the financial data included in this Draft Red Herring Prospectus are extracted

from the restated financial statements of our Company, prepared in accordance with the applicable

provisions of the Companies Act, Indian GAAP and restated in accordance with SEBI (ICDR)

Regulations, as stated in the report of our Peer Reviewed Auditors, set out in the section titled ‘Financial

Statements as Restated’ beginning on page 178 this Draft Red Herring Prospectus. Our restated financial

statements are derived from our audited financial statements prepared in accordance with Indian GAAP

and the Companies Act, and have been restated in accordance with the SEBI (ICDR) Regulations.

Our fiscal year commences on April 1st of each year and ends on March 31st of the next year. All

references to a particular fiscal year are to the 12 month period ended March 31st of that year. 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 decimals have been rounded off to two decimal points.

There are significant differences between Indian GAAP, IFRS and US GAAP. The Company has not

attempted to quantify their impact on the financial data included herein and urges you to consult your

own advisors regarding such differences and their impact on the Company’s financial data. Accordingly

to what extent, the financial statements included in this Draft Red Herring Prospectus will provide

meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting

practices / Indian GAAP. 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.

Any percentage amounts, as set forth in “Risk Factors”, “Our Business”, “Management’s Discussion

and Analysis of Financial Condition and Results of Operations” and elsewhere in this Draft Red Herring

Prospectus unless otherwise indicated, have been calculated on the basis of the Company’s restated

financial statements prepared in accordance with the applicable provisions of the Companies Act, Indian

GAAP and restated in accordance with SEBI (ICDR) Regulations, as stated in the report of our Peer

Reviewed Auditor, set out in the section titled ‘Financial Statements as Restated’ beginning on page

178 of this Draft Red Herring Prospectus.

CURRENCY OF PRESENTATION

In this Draft Red Herring Prospectus, references to “Rupees” or “Rs.” or “INR” are to Indian Rupees,

the official currency of the Republic of India. All references to “$”, “US$”, “USD”, “U.S. $”or “U.S.

Dollars” are to United States Dollars, the official currency of the United States of America.

All references to ‘million’ / ‘Million’ / ‘Mn’ refer to one million, which is equivalent to ‘ten lacs’ or

‘ten lakhs’, the word ‘Lacs / Lakhs / Lac’ means ‘one hundred thousand’ and ‘Crore’ means ‘ten million’

and ‘billion / bn./ Billions’ means ‘one hundred crores’.

INDUSTRY & MARKET DATA

Unless stated otherwise, Industry and Market data and various forecasts used throughout this Draft Red

Herring Prospectus have been obtained from publically available Information, Industry Sources and

Government Publications.

Industry Sources as well as Government Publications generally state that the information contained in

those publications has been obtained from sources believed to be reliable but their accuracy and

completeness and underlying assumptions are not guaranteed and their reliability cannot be assured.

Although we believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not

been independently verified by the Book Running Lead Manager or our Company or any of their

affiliates or advisors. Such data involves risks, uncertainties and numerous assumptions and is subject

to change based on various factors, including those discussed in the section “Risk Factors” on page 20

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of this Draft Red Herring Prospectus. Accordingly, investment decisions should not be based solely on

such information.

Further, the extent to which the industry and market data presented in this Draft Red Herring Prospectus

is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in

compiling such data. There are no standard data gathering methodologies in the industry in which we

conduct our business, and methodologies and assumptions may vary widely among different industry

sources.

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FORWARD LOOKING STATEMENT

This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward

looking statements can generally be identified by words or phrases such as “aim”, “anticipate”,

“believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will

continue”, “will pursue” or other words or phrases of similar meaning. Similarly, statements that

describe our 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 and property valuations to differ materially from those contemplated by the relevant forward

looking statement.

Important factors that could cause actual results to differ materially from our expectations include, but

are not limited to the following:-

• General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;

• Changes in laws and regulations relating to the sectors / areas in which we operate;

• Increased competition in the sectors / areas in which we operate;

• Factors affecting the Industry in which we operate;

• Our ability to meet our capital expenditure requirements;

• Fluctuations in operating costs;

• Our ability to attract and retain qualified personnel;

• Changes in political and social conditions in India, the monetary and interest rate policies of India and other countries;

• Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

• The performance of the financial markets in India and globally;

• Any adverse outcome in the legal proceedings in which we are involved;

• Our failure to keep pace with rapid changes in technology;

• The occurrence of natural disasters or calamities;

• Other factors beyond our control;

• Our ability to manage risks that arise from these factors;

• Conflict of Interest with affiliated companies, the promoter group and other related parties; and

• Changes in government policies and regulatory actions that apply to or affect our business.

For a further discussion of factors that could cause our actual results to differ, refer to section titled

“Risk Factors” and chapter titled “Management’s Discussion and Analysis of Financial Condition and

Results of Operations” beginning on pages 20 and 179respectively of this Draft Red Herring

Prospectus. 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.

Future looking statements speak only as of the date of this Draft Red Herring Prospectus. Neither we,

our Directors, Book Running Lead Manager, Underwriter 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. In accordance with SEBI requirements, the BRLM and our Company will ensure

that investors in India are informed of material developments until the grant of listing and trading

permission by the Stock Exchange.

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SECTION II – RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider all the

information in this Draft Red Herring Prospectus, including the risks and uncertainties described

below, before making an investment in our Equity Shares. In making an investment decision, prospective

investors must rely on their own examination of our Company and the terms of this issue including the

merits and risks involved. Any potential investor in, and subscriber of, the Equity Shares should also

pay particular attention to the fact that we are governed in India by a legal and regulatory environment

in which some material respects may be different from that which prevails in other countries. The risks

and uncertainties described in this section are not the only risks and uncertainties we currently face.

Additional risks and uncertainties not known to us or that we currently deem immaterial may also have

an adverse effect on our business. If any of the following risks, or other risks that are not currently

known or are now deemed immaterial, actually occur, our business, results of operations and financial

condition could suffer, the price of our Equity Shares could decline, and you may lose all or any part

of your investment. Additionally, our business operations could also be affected by additional factors

that are not presently known to us or that we currently consider as immaterial to our operations.

Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify

or quantify the financial or other implications of any of the risks mentioned herein. Unless otherwise

stated, the financial information of our Company used in this section is derived from our restated

financial statements prepared in accordance with Indian GAAP and the Companies Act, 2013 and its

applicable Companies Act Rules (as amended from time to time) and restated in accordance with the

SEBI ICDR Regulations. To obtain a better understanding, you should read this section in conjunction

with the chapters titled “Our Business” beginning on page 125, “Our Industry” beginning on page 109

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

beginning on page 179 respectively, of this Draft Red Herring Prospectus as well as other financial

information contained herein.

The following factors have been considered for determining the materiality of Risk Factors:

• Some events may not be material individually but may be found material collectively;

• Some events may have material impact qualitatively instead of quantitatively; and

• Some events may not be material at present but may have material impact in future.

The financial and other related implications of risks concerned, wherever quantifiable, have been

disclosed in the risk factors mentioned below. However, there are risk factors where the impact may

not be quantifiable and hence the same has not been disclosed in such risk factors. Unless otherwise

stated, the financial information of the Company used in this section is derived from our financial

statements under Indian GAAP, as restated in this Draft Red Herring Prospectus. Unless otherwise

stated, we are not in a position to specify or quantify the financial or other risks mentioned herein. For

capitalized terms used but not defined in this chapter, refer to the chapter titled “Definitions and

Abbreviation” beginning on page 3 of this Draft Red Herring Prospectus. The numbering of the risk

factors has been done to facilitate ease of reading and reference and does not in any manner indicate

the importance of one risk factor over another.

The risk factors are classified as under for the sake of better clarity and increased understanding:

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INTERNAL RISK FACTORS:

BUSINESS SPECIFIC RISKS:

1. We specialise in only 1 product type, i.e., Blue colour Dyes.

Our Company was into manufacturing various colours of dyestuffs till year 2013. After getting

permission for manufacturing of CPC Blue Crude dyestuff and witnessing the growing demand of our

CPC Blue product, our Company decided to focus into business of manufacturing on one specific

product type and specialise in it, consequently we started manufacturing Turquoise Blue reactive dyes

only with their sub-variants. Although this has led to the growth of our business both in terms of

operational and financial performance in recent years, however, our business model is restricted to a

particular product type and limits the growth to an extent owing to our inability to meet the demand of

customers having requirements of various colour dyes and pigments. Presence substantially in only 1

colour product makes our business comparatively small and prone to competition risks. However, we

market other colour products like Black, Orange and Red also but those are based on specific orders

received and we are not into full-time manufacturing of the same. Customers may not prefer us as their

business partner if they have requirements of multiple colours as we are not in a position to supply them

multi-colour options from under one roof. This may adversely affect our overall business.

2. Our products use raw materials, prices of which have been very volatile in past.

Manufacturing of Dyes requires numerous dye intermediates, such as, Vinyl Sulphur, Phosphorus

Trichloride, Soda Ash. These intermediates form substantial portion of our total production cost. Our

cost of material consumed was approx. 53.93% and 47.72% of our Total Expense for the period ended

31st December, 2017 and financial year ended 31st March, 2017. Although our Company produces one

of the intermediates, we procure majority of our raw materials requirements from third party suppliers.

These chemicals are produced only by domestic producers. We procure our major requirements from

them and till now we have been able to procure it at the normal prevailing rates in market. However,

there have been situations in past where prices of these intermediates have increased by multiple times

causing us to pay abnormal cost for such intermediates adversely affecting our overall profitability

thereby causing working capital crunch. As there are only few producers for these intermediates, we

face a risk of substantial increase in prices by these producers. Occurrence of any such event in future

may affect our business substantially both in terms of operations and financials.

3. Presently our major focus of revenue is on the sale of Blue Dyestuffs and any decrease in the demand for them will adversely affect our business.

Our Company has been focusing only on production of Blue dyestuffs. Our percentage revenue in F.Y.

2016-17 for Blue Dyestuffs was around 90% in F.Y. 2016-17. We being a specialised player in Blue

Reactive Dyes, our focus has remained intact in this segment. Any decrease in demand or our inability

to supply our product on timely basis it may adversely affect our operational and financial performance.

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4. Intense competition from China may affect our business adversely.

Dye manufacturing business is carried majorly in India and China across the globe. Our company faces

tough competition from players situated in China as they have a competitive advantage of

manufacturing dyestuffs at lower cost. Since only 2 countries manufacture dyes, there is an intense

competition between both the countries which are trying to increase their market share. There have been

environmental restrictions on companies in China which has led to shut down of many dye

manufacturers favouring other manufacturers, however, there is no assurance that such restrictions

would kill the competition to our advantage and we will not face any threat from companies in China.

5. Our future growth is majorly dependent on the new manufacturing facility which we are setting up. Any delay in commissioning the new facility may hamper the business operations of our company.

We have been into the business of dyestuffs since 1993, with the experience we possess our company

has built a large customer base. At present, our manufacturing facility is operating at more than 90% of

its installed capacity providing us limited scope to grow within the facility. To capitalize on this fact,

we are setting up a new manufacturing facility spread over an area of 75,060 sq. meters with an annual

production capacity of approx. 16,140 tons including dye intermediates and dyestuffs while the

permitted capacity is approx. 32,800 tons p.a. Hence, our Company is largely dependent on the

upcoming facility for further growth of our business. Our Company has received approval from Gujarat

Pollution Control Board (GPCB) for their consent to establish this facility with the list of intermediates

we intend to manufacture. Our Company has also received the No Objection Certificate from GPCB.

However, any non-compliance with their rules and regulations, unavailability of the required funds for

machineries, or any other internal or external factors within or beyond our control may adversely affect

our expansion plan and may hinder the growth of our business. We may not be able to assure about the

timely commencement of the proposed facility which may also possess a blockage to the growth plans

of the company and cause stress on capital structure of the company.

6. We have not placed orders for 100% of the Plant & Machineries which will be required to be installed in the new manufacturing facility.

Our Company has planned to set-up a new manufacturing facility in which company intends to increase

its production capacity of manufacturing dyes. Further, the company also plans to manufacture certain

intermediates which are required for manufacturing of dyestuffs. For this purpose, the Company has

already acquired land at Saykha Industrial Estate – Dahej and our company has finalised the list of the

machineries which are to be purchased. However, the plant and machineries which are to be installed

are yet to be ordered and none of the machinery has been purchased. Further, we have not entered into

any definitive agreement with any of the suppliers for the purchase of the machineries.

7. We are in business related to chemicals which faces excessive government regulations.

Dye chemical business involves use of numerous toxic acids and its related chemical components.

Usage of such intermediates is hazardous to the environment as a whole. This leads to excessive

government focus and regulations to be followed in such business model. With increased compliances

and regulations, Company faces challenges on many aspects such as control on use of materials,

discharge of effluent treatment which may affect the business directly. Any such non-compliances may

lead to imposition of penalties, fines or imprisonment. Further, operations of the Company may be

suspended; manufacturing licenses may be suspended, withdrawn or terminated.

8. Our Company generates major portion of its revenue from export operations. Any problems in such geographies may affect our business adversely.

Our company manufactures dyestuffs and exports it to many countries like, Turkey, Egypt, Bangladesh,

Pakistan etc. Our company has generated around 58.9% and 59.5% of its total revenue from export

operations for the period ended 31st December, 2017 and for the year ended F.Y. 2016-17. The

company’s performance is largely dependent on the political and economic conditions in these regions.

Any adverse situation in these regions may affect our business substantially. We believe the customer

base which we have created over the years is strong enough to weather any such conditions, however,

we may not guarantee that any problems in these region will not affect our business.

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Consequently, any adverse changes in these economies such as slowdown in the economy, appreciation

of the Indian Rupee vis-à-vis the currencies of these economies, acts of terrorism or hostility targeting

these countries, etc. would directly impact our revenues and results from operations. In the event of

change in policies or laws in these regions with respect to our industry, quality standards, our financial

condition and business operations may be adversely affected. In case of any contingencies in future due

to which we are unable to operate effectively in these markets, our results from operations, revenues

and profitability may be adversely affected.

9. Our manufacturing unit and proposed manufacturing facility is situated on plots that are taken on long-term lease from G.I.D.C., and we will have to comply with the terms and conditions/covenants

laid down in lease agreements with G.I.D.C., noncompliance of the same may affect our business

operations.

Our Company has its manufacturing unit situated at 88/6-8, GIDC Phase I, Vatva, Ahmedabad –

382445, Gujarat, India within G.I.D.C. limits. The said plot is taken on long-term lease from G.I.D.C.

Further, the proposed manufacturing facility at Saykha Industrial Estate of Dahej, Gujarat has also been

taken on long term lease from G.I.D.C. We have been complying with all on-going requirements of

G.I.D.C. and as on date of this Draft Red Herring Prospectus there are no litigations or disputes on our

occupancy of such land with G.I.D.C. However, any defaults in complying with the said terms and

conditions/covenants on our part may be subjected to penal provisions and it may also lead to the

cancellation of such lease, which will adversely affect our business, financial conditions and results of

operations.

10. Delay in schedule of the setting up of facility may subject our Company to risks related to time and cost overrun which may have a material adverse effect on our business, results of operations and

financial condition. Our Company is currently proposing to set-up a new manufacturing facility at Saykha GIDC, Dahej.

For further details regarding to our proposed manufacturing facility, please refer the chapter titled

"Objects of the Issue" on page 96 of this Draft Red Herring Prospectus. We may face risks relating to

the delay in schedule of setting up of facility, complete the project within our estimated budget, failure

of our contractors and suppliers to adhere to our specifications and timelines, and changes in the general

economic and financial conditions in India. Further as and when we complete our set-up work, our

material requirements and costs as well as our staffing requirements and employee expenses may

increase and we may face other challenges in extending our financial and other controls to our unit

managing our consequent growth. In the event that the risks and uncertainties discussed above or any

other unanticipated risks, uncertainties, contingencies or other events or circumstances limit or delay

our efforts to use the Net Proceeds to achieve the planned growth in our business, the use of the Net

Proceeds for purposes identified by our management may not result in actual growth of our business,

increased profitability or an increase in the value of your investment in our Equity Shares.

11. We depend on a limited number of customers for a significant portion of our revenues. The loss of a major customer or significant reduction in production and sales of, or demand for our products from,

our major customers may adversely affect our business, financial condition, results of operations

and prospects.

We derive our entire operational revenues from sale of dyestuffs in the domestic as well as overseas

market. We depend on a limited number of customers for a significant portion of our revenues. Revenue

from our top 10 and top 5 customers constituted 42.87% and 29.20% of our revenue for Financial Year

2016-17. We face competition from both domestic and international manufacturers in the international

market. However, we believe that we have good and long term relationship with our customers, any

loss of customer base or reduction in volume of orders, out of our existing customers, will impact our

overall sales, resulting in a decline in our revenues. While we are constantly striving to increase our

customer base and reduce dependence on any one particular customer, there is no assurance that we

will be able to broaden our customer base in any future periods or that our business or results of

operations will not be adversely affected by a reduction in demand or cessation of our relationship with

any of our major customers.

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12. Our dependence on few suppliers puts us at risk of interruptions in the availability of raw materials, which could adversely affect our business, financial condition and results of operations. Further, we

have not entered into any long-term agreements with our suppliers for raw materials and accordingly

may face disruptions in supply from our current suppliers.

We procure raw materials / intermediates required for the manufacturing of dyestuffs from various

companies in the domestic market. We chose to deal with suppliers on the basis of quality assurance,

cost effectiveness and relationships. Though we prefer to deal with a fixed set of suppliers with whom

we have cordial relationships, there are no fixed suppliers for our raw material purchases and we have

not entered into any fixed supply agreement or MoU or any other arrangement with any of our suppliers.

Our top 10 and top 5 suppliers contributed 70.3% and 50.22% of our Total Purchases for the F.Y. 2016-

17.

These suppliers have accorded their trust and service based on our long operating history in the industry,

our credit worthiness, and our goodwill. However, in the absence of written agreements, our suppliers

are not bound to supply goods to us and can withdraw their commitments from us at any time. There

can be no assurance that there will not be a significant disruption in the supply of raw materials from

current sources, or, in the event of a disruption, that we would be able to locate alternative suppliers of

the raw materials of

USHANTI COLOUR CHEM LIMITED...PROMOTERS OF OUR COMPANY: MAUNAL SHANTILAL GANDHI AND MINkU SHANTILAL...

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