Report on disclosure in offer document_Case Study of Bharti Infra and V Mart
1. Mumbai Educational Trust
MET League of Colleges
Business Law
A Report on Critical Disclosure in Offer
Document
A Case Study of Bharti Infratel Limited and V-Mart Retail Limited
The objective of this report is “To study the present legal and regulatory framework of
offer document, critical disclosures and undertakings" specified by the relevant SEBI
regulations which enable investors to make an informed investment decision. These
regulations are explained in this report with the help of recently floated IPOs of Bharti
Infratel Limited and V-Mart Retail Limited.”
.
Prepared by:
Students of MFM (2011 – 2014)
Nitin Agarwal (61)
Amit Chauhan (63)
Shanmukh Dave (65)
Laxmi Dodeja (69)
Rupesh Gajare (71)
Veena Jirafe (77)
Yashshree Kokate (79)
Bonnie Lobo (81)
March 2013
2. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
A Report on Critical Disclosure in Offer Document
Table of Content
1.
General ..................................................................................................... 3
1.1.
1.2.
Objective of report ......................................................................... 3
1.3.
Scope of Study .............................................................................. 4
1.4.
2.
Introduction .................................................................................... 3
Limitations ..................................................................................... 4
IPO and Process ...................................................................................... 5
2.1.
2.2.
3.
What is IPO ................................................................................... 5
Process of Floating an IPO ............................................................ 6
IPOs performance ................................................................................... 7
3.1.
3.2.
Year wise amount raised through IPOs .......................................... 7
3.3.
4.
Latest IPOs issued since September 2012 .................................... 7
Year wise analysis of succeeded vs failed IPOs ............................ 8
Critical disclosures in offer document................................................... 9
Disclosure 1.
Company Introduction ................................................... 11
Disclosure 2.
Risk factors ................................................................... 13
Disclosure 3.
Capital Structure............................................................ 17
Disclosure 4.
Object of the Issue ........................................................ 20
Disclosure 5.
Basis of issue price ....................................................... 25
Disclosure 6.
Promoter Contribution ................................................... 32
Disclosure 7.
Lock-in requirement ....................................................... 35
Disclosure 8.
Management ................................................................. 40
Disclosure 9.
Dividend Policy .............................................................. 46
Disclosure 10.
Financial Details ............................................................ 48
Disclosure 11.
Litigations ...................................................................... 57
Disclosure 12.
Government Approvals .................................................. 65
Disclosure 13.
IPO Grading .................................................................. 69
Disclosure 14.
Eligibility for the Issue .................................................... 73
Disclosure 15.
Allotment of shares ........................................................ 76
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A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
5.
Recommendation and Conclusion ....................................................... 78
6.
Bibliography .......................................................................................... 81
List of Tables:
Table 1: Issue Details .............................................................................. 10
Table 2: Capital Structure of Bharti Infratel Limited .................................. 17
Table 3: Capital Structure of V-Mart Retail Limited .................................. 18
Table 4: Promoter's Contribution of Bharti Infratel Limited ....................... 32
Table 5: Promoter's Contribution of V-Mart Retail Limited ....................... 33
Table 6: Management details of Bharti Infratel Limited ............................ 40
Table 7: Management details of V-Mart Retail Limited............................. 43
Table 8: Litigation against Bharti Infratel .................................................. 59
Table 9: Litigation for V-Mart Retail Limited ............................................. 61
Table 10: Contingent Liability of V-Mart Retail Limited............................. 62
Table 11: Difference between IPO Rating and IPO Grading .................... 69
Table 12: Financial details of Bharti Infratel Limited for Eligibility ............. 73
Table 13: Financial details of V-Mart Retail Limited for Eligibility ............. 75
List of Figures:
Figure 1: Process of Floating an IPO ......................................................... 6
Figure 2: Latest IPOs issued since September 2012 ................................. 7
Figure 3: Year wise amount raised through IPOs ...................................... 7
Figure 4: Year wise analysis of succeeded vs failed IPOs ......................... 8
Figure 5: Shareholding Pattern before and after Issue for Bharti
Infratel Limited ......................................................................................... 33
Figure 6: Shareholding Pattern before and after Issue for V Mart
Retail Limited .......................................................................................... 34
Figure 7: Total Assets of the Firm ............................................................ 49
Figure 8: Total Liabilities of the Firm ........................................................ 50
Figure 9: Net Worth of the Firm ............................................................... 50
Figure 10: Reserves and surplus ............................................................. 51
Figure 11: Income statement of the firm .................................................. 51
Figure 12: Cash Flow Statement ............................................................. 52
Figure 13: Total Assets of the Firm .......................................................... 53
Figure 14: Total Liabilities of the Firm ...................................................... 53
Figure 15: Net Worth of the Firm ............................................................. 54
Figure 16: Reserves and surplus ............................................................. 54
Figure 17: Income statement of the firm .................................................. 55
Figure 18: Cash Flow Statement ............................................................. 56
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4. MET LEAGUE OF COLLEGES
1.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
General
1.1.
Introduction
The word IPO is very much often used in the issue of shares by the
companies when they want to go for public for the huge amount of investment
into the purpose of the company for achieving the desired objectives.
The word IPO stands for Initial Public Offer and this is unique in more ways
than one since it permanently changes the profile of a company and the way
the promoters and the management need to think thereafter. The
responsibility of living up to the expectation of the market and shareholders is
a mammoth task. Given the fact there is always a temptation for companies
to look at the primary market as source of finance through IPO route, the
regulator SEBI has evolved an IPO code in the form of the SEBI (Disclosure
and Investor Protection) guidelines. SEBI has also brought in several
structural improvements in the way the public offers are made in the primary
market.
Initial Public offer (IPO)is one of the way of raising capital for the companies
which proposed to expand their operations or they want to start a new
venture. As this is the effect way of getting funds from public for the first time
for every company which wants to go public, that company has to follow a
certain set of guidelines which we call as Disclosure and Investor Protection
(DIP) Guidelines. And the process of coming to IPO has been very important
for the company, this project has been describing about the issues procedure
along with the advantages and disadvantages for coming to an IPO. For
better understanding of how the companies have to raise funds, the analysis
of some companies which recently came for an IPO and the success of their
IPO has been clearly explained. The main aim for undertaking this project is
to be aware about how the companies come for an IPO route for raising
funds to achieve the proposed target and another thing is the procedure to be
followed by the company for raising of funds and how to work with all the
parties involved in the IPO process, their duties and responsibilities for the
better results.
The conclusion regarding this project is addressing the students how the
companies come for an IPO with certain procedure and make them aware
about the issues in an IPO.
1.2.
Objective of report
To make aware the intending investors about the procedure what has to
be followed in the issue of securities for public subscription.
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1.3.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
To provide them the guidelines which are to be followed by companies in
an IPO.
To know the key terms and various stages in an IPO process.
About the various parties involved along with the company for making an
IPO.
to look into the aspects of different companies which have come for an
IPO recently along with their respective strengths and weakness.
To know how the share are valued and the different methods of pricing
them in an IPO.
To know the various parties involved in an IPO and their respective
formalities to be completed.
To know the factors which can lead to success or failure of an IPO
Scope of Study
In initial public offering (IPO), the companies have to look into the various
aspect like what guidelines it has to follow, the procedure for coming to public
issue of shares for the proposed objective. So the company has to fulfil
various formalities and regulations specified by the controller SEBI before
coming to an IPO. Scope of this project is limited to the guidelines and
procedures for coming to an IPO along with the factors which leads to the
success or failure of an IPO of different companies. And the scope is limited
to mentioned companies which recently came for an IPO and their strengths
and weakness for succeeding in an IPO.
1.4.
Limitations
The project is prepared in limitation to the availability of data.
The regulations and procedure to be followed is mentioned according to
SEBI rules.
Study is limited to companies which are used in analysis of an IPO
performance at the end.
The data is limited to recent amendments which are to be followed.
The duties mentioned for each and every participant are in consideration
to the recommendations from SEBI.
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2.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
IPO and Process
2.1.
What is IPO
A definition:
Initial Public Offering refers to the selling of shares by a private company
to the public for the first time. Initial Public Offering is a source of funds
raised from the primary market. All subsequent public offerings are known
as Follow-on Public Offerings or Secondary Market Offerings.
An IPO is an abbreviation for Initial Public Offer. When a company goes
public for the first time or issues a fresh stock of shares, it offers it to the
public directly. This happens in the primary market. The primary market is
where a company makes its first contact with the public at large.
Red Herring Prospectus (RHP)
A formal legal document, which is required by and filed with the Securities
and Exchange Commission that provides details about an investment
offering for sale to the public. A prospectus should contain the facts that
an investor needs to make an informed investment decision.
Also known as an "offer document".
RHP contains all the information and factor which can influence the
decision of an investor. Like
1. Where the company will use the funds so raised
2. Companies previous records
3. Promoters track records
4. Companies current, likely profit and EPS
5. Companies future plan
The investor should thoroughly go through RHP before subscribing the
issue. RHP is available at SEBI’s and merchant banker’s website. It may
be available in physical form at broking houses.
Governing Laws
Before 1992, Public issues were governed by Chief Controller of Capital
Issues (CCCI).
In 1992, CCCI has been abolished and SEBI has been formed.
Now IPO is governed by Followings:
1. The Companies Act 1956
2. SEBI (Disclosure & Investor Protection) Guidelines, 2000
3. Securities Contracts (Regulation) Act, 1956
4. Listing norms/Guidelines of NSE/BSE
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2.2.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Process of Floating an IPO
Figure 1: Process of Floating an IPO
1.
2.
3.
4.
5.
6.
7.
Company nominates lead merchant banker(s)
Disclose of securities to be issued & price band for bidding
Appointment of syndicate members
Bidding process
Process normally remains for 5 days
Bids have to be entered within the specified price band
On the closure of the process, the book runners evaluates the price
levels
8. At last the book runners & the issuer decides the final price
9. Allocation of securities is made to the successful bidders
10. Rest gets refund orders.
Sebi wants to shorten IPO bidding period, favours faster listing
PTI Aug 29, 2012, 01.42PM IST
Capital Market regulator Sebi will soon ask companies seeking to raise funds
through Initial Public Offers (IPOs) to complete the bidding process within
a maximum five days and get listed in another five days.
To shorten the entire IPO process, Sebi is also working at faster allotment of
shares to investors and reduce the time -gap between closure of issue and
final listing from 12 days to five days, a senior official said.
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3.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
IPOs performance
3.1.
Latest IPOs issued since September 2012
Figure 2: Latest IPOs issued since September 2012
* AS on date: Thursday, March 14, 2013
Out of all the IPOs issued since Sept 2012, 5 IPOs has negative gain
as on date. Issue price of CARE Ltd. is most expensive, but has a
reasonable gain.
3.2.
Year wise amount raised through IPOs
Figure 3: Year wise amount raised through IPOs
* AS on date: Jan 31, 2013
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IPOs of worth Rs. 238 crore has been floated in the first month of year 2013. In last 5
years, maximum amount of IPOs has been floated in years 2010. In year 2011 least
amount of IPOs has been floated.
3.3.
Year wise analysis of succeeded vs failed IPOs
Figure 4: Year wise analysis of succeeded vs failed IPOs
* AS on date: Jan 31, 2013
310 nos. of IPOs issued since 2007, out of which 15 IPOs failed. In year
2007, maximum nos. of Issues has been floated and only 4 nos. of IPOs has
failed. In year 2007, 104 nos. of Issues raised approx. Rs. 34,000 Crore,
compared to year 2010, only 68 issues offered an amount of worth Rs.
36,000 Crore.
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4.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Critical disclosures in offer document
Following are the major Critical disclosures in an
offer document (IPO)
1.
Company Introduction
2.
Risk factors
3.
Capital Structure
4.
Object of issue
5.
Basis of issue price
6.
Promoter’s Contribution
7.
Lock-in requirement
8.
Management
9.
Dividend Policy
10.
Financial Details
11.
Litigations
12.
Government Approvals
13.
IPO Grading
14.
Eligibility for the Issue
15.
Allotment of shares
Requirements of SEBI guidelines for IPO document are
discussed in the following chapters. We have also
studied Offer Documents of Bharti Infratel Limited and
V Mart Retail Limited. Our analysis and views on
disclosure requirement in the offer document and
suggested amendments of these two offer documents
are discussed in subsequent chapters.
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Issue Details
Table 1: Issue Details
Issue Open
Dec 11, 2012 - Dec 14, 2012
Feb 01, 2013 - Feb 05, 2013
Issue Type
100% Book Built Issue IPO
100% Book Built Issue IPO
Issue Size
:
188,900,000 Equity Shares of
Rs. 10
4,496,000 Equity Shares of
Rs. 10
Issue Size
Rs. 4,155.80 Crore
Rs. 94.42 Crore
Face Value
Rs. 10 Per Equity Share
Rs. 10 Per Equity Share
Issue Price
Rs. 210 - Rs. 240 Per Equity
Share
Rs. 195 - Rs. 215 Per Equity
Share
Market Lot
50 Shares
66 Shares
Minimum
Order
Quantity
50 Shares
66 Shares
Listing At
BSE, NSE
BSE, NSE
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Disclosure 1.
Company Introduction
SEBI Requirements
(Chapter 6 - 6.42.8.1)
In case the issuer company has not come out with any issue in the past ten
years or more, a brief statement about the history and corporate structure
of the issuer company, the main objects of the issuer company and
major events in the past.
Bharti Infratel Limited
Bharti Infratel has reported a sales
standalone turnover of Rs 1,148.50 crore
and a net profit of Rs 151.60 crore for the
quarter ended Dec '12. CRISIL has given a
Credit Rating of 4/5 to Bharti Infratel
Limited IPO
Incorporated in 2006, Bharti
Infratel Limited is a provider of
tower
and
related
infrastructure. Bharti Infratel is
one of the world's largest
telecom tower infrastructure
providers which deploys, owns
and manages telecom towers
and communication structures
for all wireless operators. The
business of Bharti Infratel and
Indus is to acquire, build, own
and operate tower and related
infrastructure.
Bharti Infratel and Indus currently provide access to their towers primarily to
wireless telecommunications service providers. Bharti Infratel's and Indus's
three largest customers are Bharti Airtel (together with Bharti Hexacom),
Vodafone India and Idea Cellular. They are the three leading wireless
telecommunications service providers in India by wireless revenue.
In India, Infratel has over 34,000+ towers, across 18 states, and 11 Telecom
circles, and still growing. Bharti Infratel also has a 42% stake in Indus Towers
which was created as a Joint Venture between Bharti Infratel, Vodafone and
Aditya Birla Telecom to hive off the Towers business in 15 telecom circles.
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V-Mart Retail Limited
Incorporated in 2002, V-mart is a medium-sized hypermarket format retail
chain based in New Delhi. They are multi-brand family store offers apparels,
general merchandise and kirana bazar.
VMRL has established stores
in Metro, Tier-I, Tier-II and
Tier-III
cities
which
are
primarily located as standalone
stores in high-street areas and
shopping hubs of such cities.
V-mart Retail as a public limited entity
The average size of store is
and also crossed the turnover of 1,000
approximately 8,000 Sq. Ft.
million Rs. As the time passes by we took
The company follows the
the shape of a renowned family brand
concept of "value retailing" to
that caters the needs of whole family by
target the strata of the
offering high quality retail products.
population belonging to the
Along with growing customers, we
achieved a turnover of over Rs 2,000
expanding “aspiring class‟ and
million in 2011-12 In the Year 2012 we
“middle class‟ and is based on
have crossed the retail space of 5 lac Sq.
customer’s
socio-economic
Ft.
conditions, purchasing power,
demographic
details
and
customer trends. Its offerings in untapped markets provide customers with a
different shopping experience, comprising of a vast range of value retail
products under a modern ambience and feel of a large retail mall.
V-Mart has more than 62 stores across 53 cities including metro cities with a
total area of more than 4 lac sq.ft. Company's stores are located in prime
cities such as New Delhi, Gujarat, Uttar Pradesh, Bihar, Punjab, Chandigarh,
Haryana, Jammu and Kashmir, Rajasthan and Madhya Pradesh. They are
setting up stores across various small Indian towns and cities including
Sultanpur, Ujjain, Motihari. Their aim is to provide fancy garments at lower
price points in an organised modern retail format to middle and lower middle
classes
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Disclosure 2.
Risk factors
In this section, disclosure about the Internal, External and Issues related
Risks of the company has been given, which helps investors to carefully
analyse the risks before investing into IPO.
SEBI Requirements
As per requirement of extant SEBI (DIP) Guidelines, risk factors and
management perception of those risk factors, if any are required to appear
on the first inner page and shall continue to other subsequent pages, if
required, of the offer document.
6.7.2
The Risk factors shall be classified as those specific to the project and
internal to the issuer company and those which are external and
beyond the control of the issuer company.
6.7.5.1
Risks envisaged by Management.
6.7.5.2
Proposals, if any, to address the risks.
6.7.6
Any ‘notes’ required to be given prominence shall appear immediately after
the Risk factors.
The following clause on general risk shall be incorporated:
"Investment in equity and equity related securities involve a degree of risk
and investors should not invest any funds in this 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 this
offering. For taking an investment decision, investors must rely on their
own examination of the issuer and the offer including the risks involved. The
securities have not been recommended or approved by Securities and
Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or
adequacy of this document."
Bharti Infratel Limited
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There are 53 risks to the business has been given in offer document. We
have enlisted few major risks associated with the Business.
Internal Risks
There are legal proceedings against Bharti Infratel. There can be no
assurance to investors that Bharti Infratel will prevail in these actions.
There are certain proceedings initiated against Bharti Infratel under
the provisions of the Indian Penal Code, 1860 and the Code of
Criminal Procedure, 1973.
A decrease in demand for tower infrastructure in India could materially
and adversely affect operating results.
Bharti Infratel and Indus are heavily dependent on factors affecting
the wireless telecommunications industry in India, in particular the
growth of their key customers.
Licences and permits required in the tower business are varied and
may be difficult to obtain, and once obtained, may be amended or
revoked or may not be renewed.
The business and activities of Bharti Infratel and Indus may be
regulated by the Competition Act, 2002.
Indus is a joint venture which is not operated solely for Bharti Infratel’s
benefit, which exposes Bharti Infratel to certain risks.
Bharti Infratel’s audit report includes specific qualifications with regard
to delayed statutory payments and fraud which have been
appropriately addressed in the restated financial statements.
The loss of any of Bharti Infratel’s or Indus’ major customers would
have a material adverse effect on us.
External Risks
Political instability or changes in the Indian central government could
adversely affect economic conditions in India and consequently, our
business.
Hostilities, terrorist attacks, civil unrest, breaches of law and order and
other acts of violence may adversely affect the business and the
trading price of the Equity Shares.
Investors may be adversely affected due to retrospective tax law
changes by the Indian government affecting Bharti Infratel or the
Group.
Bharti Infratel’s ability to raise foreign capital may be constrained by
Indian law.
Rights of shareholders under Indian law may be more limited than
under the laws of other jurisdictions.
Risks Relating to the Issue
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Bharti Infratel has made a bonus issue in the last one year
Any future issuance of Equity Shares may dilute your shareholding
and sales of the Equity Shares by the Promoter may adversely affect
the trading price of the Equity Shares.
There is no existing market for the Equity Shares, and the company
does not know if one will develop to provide investors with adequate
liquidity.
Investors may be subject to Indian taxes arising out of capital gains on
the sale of the Equity Shares.
There are restrictions on daily movements in the price of the Equity
Shares, which may adversely affect investors’ ability to sell Equity
Shares or the price at which Equity Shares can be sold at a particular
point in time.
Investors may have difficulty enforcing foreign judgments against
Bharti Infratel or its management.
V-Mart Retail Limited
Internal Risk Factors
Company does not have any definitive agreements with vendors for
supply of raw materials, general merchandise goods and apparels.
Further, they do not have fixed terms of trade with majority of vendors
or suppliers for supply of FMCG products.
Losses on account of Shrinkage may have a negative impact on
profitability.
The Company will not receive any proceeds from the Offer for Sale.
Company’s growth strategy to expand into new geographic areas
exposes them to certain risks.
Company has availed unsecured loans, which can be recalled
anytime by their respective lenders.
Company had negative cash flows from operating, financing and
investing activities in certain Years
Company’s expansion plans are subject to the risk of cost and time
overruns, which could have an adverse impact on their results of
operations and financial condition.
Some of lease agreements may have certain irregularities
They have issued Equity Shares during the last one year at a price
that may be below the Issue Price.
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External Risk Factors
Significant differences exist between Indian GAAP and other
accounting principles, such as US GAAP and IFRS, which may be
material to investor’s assessment of Company's financial condition.
Multiplicity of legislations, taxes and levies in addition to changes in
legislation, including changes in direct and indirect tax policies, or
policies applicable to us could adversely affect our results of
operations.
The retail sector is subject to extensive foreign exchange regulations
Natural calamities could have a negative impact on the Indian
economy and cause Company's business to suffer.
The price of our Equity Shares may be highly volatile, or an active
trading market for our Equity Shares may not develop.
Our opinion
Internal and External Risks involved in both the Businesses should be
carefully reviewed before investing. On prima facie, these risks are
associated with the business and will not cause any adverse effects on the
performance of the Company.
However, overcapacity in the industry is expected to limit the demand for
rollout of new towers. Further, regulatory changes and the resultant
uncertainty pose a risk to telecom players as their network rollout plans could
be hampered.
We believe that long term contracts of Bharti Infratel Limited with leading
wireless service providers give strong revenue visibility in future. The
company enjoys market leader position in both tower market share and
tenancy. High capital requirement and comprehensive technology are major
entry barriers for new entrants and it reduces risk for Bharti Infratel on
operational front.
On comparing the risks involved in both the IPOs, Bharti Infratel is better
because the level of risks in Bharti Infratel is less than that in V-Mart Retail as
there is no supplier agreement and also the share price is trading below the
issue price.
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Disclosure 3.
Capital Structure
SEBI Requirements
Clause no. 6.8.3.1
The capital structure shall be presented in the following manner:
a) Authorised, issued, subscribed and
paid up capital (Number of
instruments, description and aggregate nominal value).
b) Size of the present issue, giving separately promoters’ contribution,
firm allotment/ reservation for specified categories and net offer to
public (Number of instruments, description, aggregate nominal value
and issue amount shall be given in that order; Name(s) of group
companies to be given, in case reservation has been made for
shareholders of the group companies; Applicable percentages may be
given in case of book built issue).
c) Paid-up Capital:
i) After the issue.
ii) After conversion of securities (if applicable).
d) Share Premium Account (before and after the issue).
Bharti Infratel Limited
Table 2: Capital Structure of Bharti Infratel Limited
Aggregate value at
face value (Rs.)
Descriptions
A
Authorized share capital
3,500,000,000 Equity Shares of
Rs. 10 each
B
35,000,000,000
Issued, subscribed and paid-up
capital before the issue
1,742,408,730 Equity Shares of
Rs. 10 each
C
Aggregate value at
Issue Price (Rs.)
17,424,087,300
Present issue in terms of the
Red Herring Prospectus
Issue of 188,900,000
Shares of Rs. 10 each
Equity
1,889,000,000
41,723,064,500
Fresh Issue of 146,234,112 Equity
Shares of Rs. 10 each
1,462,341,120
32,299,286,855
Offer for Sale of 42,665,888 Equity
Shares of Rs. 10 each
426,658,880
9,423,777,644
Of which:
D
Securities premium account
Before the Issue
35,968,912,700
After the Issue
66,805,858,435.88
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Descriptions
E
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Aggregate value at
face value (Rs.)
Aggregate value at
Issue Price (Rs.)
Issued, subscribed and paid-up
capital after the issue
1,888,642,842 Equity Shares of
Rs. 10 each
18,886,428,420
V-Mart Retail Limited
Table 3: Capital Structure of V-Mart Retail Limited
Particulars
Nominal Value
(Rs.)
A
Aggregate value at
Issue Price (Rs.)
Authorised Capital
200,000,000
-
-
-
151,980,000
-
-
-
Fresh Issue of 2,761,000 Equity
Shares of Rs. 10 each
27,610,000
579,810,000
Offer for Sale of 1,735,000 Equity
Shares of Rs. 10 each
17,350,000
364,350,000
Total Issue of 4,496,000 Equity
Shares of Rs. 10 each
44,960,000
944,160,000
-
-
-
-
-
-
-
-
-
-
-
-
20,000,000 Equity Shares of the
face value of Rs. 10 each
B
Issued, Subscribed and Paid Up
Share Capital before the Issue
15,197,778 Equity Shares of Rs.
10 each
C
Present Issue in terms of the
Prospectus
Which comprises
QIB Portion
2,248,000 Equity Shares of which:
Anchor Investor Portion
Upto 674,400 Equity Shares
Net QIB Portion
1,573,600 Equity Shares, of
which:
Mutual Fund Portion
Upto 78,680 Equity Shares
Balance for all QIBs
including Mutual Funds
Upto 1,494,920 Equity
Shares
Non-Institutional Portion
MFM (2011 – 2014) – BUSINESS LAW
PAGE 18 OF 82
20. MET LEAGUE OF COLLEGES
Particulars
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Nominal Value
(Rs.)
Aggregate value at
Issue Price (Rs.)
Not less than 674,400 Equity
Shares
Retail Portion
-
-
-
-
179,590,000
-
-
-
392,360,000
-
1,291,560,000
-
Not less than 1,573,600 Equity
Shares
D
Issued, Subscribed and Paid Up
Equity Share Capital after the
Issue
17,958,778 Equity Shares of Rs.
10 each
E
Securities Premium Account
Before the Issue
After the Issue
MFM (2011 – 2014) – BUSINESS LAW
PAGE 19 OF 82
21. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 4.
Object of the Issue
SEBI Requirements
Clause 6.8.4
The object of raising funds through the issue, that is whether for fixed asset
creation and/ or for working capital or any other purpose, shall be disclosed
clearly in the prospectus. (Further, a disclosure to the effect that activities
proposed to be undertaken by the issuer out of the funds raised in the present
issue fall within the main objects listed in the Memorandum of Association
or other charter or instrument governing the issuer shall be made in the
prospectus.)
Bharti Infratel Limited
The Company proposes to utilise the funds which are being raised through
the Fresh Issue towards funding the following objects:
(a) Installation of 4,813 new towers;
(b) Upgradation and replacement on existing towers;
(c) Green initiatives at tower sites; and
(d) General corporate purposes
In addition, the Company expects to receive the benefits of listing of the
Equity Shares on the Stock Exchanges.
Issue Proceeds and Net Proceeds
The details of the proceeds of the Issue are summarised in the table below:
Particulars
Amount (Rs. in
Million)
Gross Proceeds from the Issue
41,723.10
(Less) Issue related expenses
852.9
(Less) Offer for Sale portion
9,423.80
Net proceeds of the Fresh Issue (“Net Proceeds”) 31,446.40
U
Utilisation of the Net Proceeds
The proposed utilisation of the Net Proceeds is set forth in the table below:
Particulars
Amount (Rs. in
Million)
Installation of 4,813 new towers
10,865.60
Upgradation and replacement on existing towers
12,140.80
Green initiatives at tower sites
6,393.60
General corporate purposes
2,046.40
Total Net Proceeds
31,446.40
MFM (2011 – 2014) – BUSINESS LAW
PAGE 20 OF 82
22. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The fund requirements for the Objects and the indicative number of towers
proposed to be installed, upgraded and those proposed for green initiatives
are based on internal management estimates.
Deployment of Net Proceeds
The fund requirements in respect of installation of new towers, upgradation
and replacement on existing towers and green initiatives at the tower sites
operated by the Company as described below are proposed to be entirely
funded from the Net Proceeds.
The Net Proceeds are currently expected to be deployed in accordance with
the schedule set forth below:
(in Million)
Activity
Total
FY
2014
FY
2015
FY
2016
Installation of 4,813 new towers
10,866
5,071
4,253
1,541
Upgradation and replacement on
existing towers
12,141
5,049
5,307
1,785
Green initiatives at tower sites
6,394
2,991
2,768
634
General corporate purposes
2,046
1,023
1,023
-
V-Mart Retail Limited
The objects of the Issue are to finance company’s expansion plans, part sale
of equity shares of the Selling Shareholder and achieve the benefits of listing
on the Stock Exchanges. Companies believe that listing will enhance their
corporate image and brand name.
The Issue comprises of a Fresh Issue by the Company and an Offer for Sale
by the Selling Shareholder.
Offer for Sale
Company will not receive any proceeds from the Offer for Sale by the Selling
Shareholder.
Objects of the Fresh Issue
Company proposes to utilise the funds, which are being raised through the
Fresh Issue towards the following objects:
a) To open 60 new stores;
b) Expansion of distribution centres;
c) Working capital requirements;
d) General Corporate Purposes; and
e) To meet the Issue expenses.
MFM (2011 – 2014) – BUSINESS LAW
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23. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The main object clause of Memorandum of Association of the Company
enables them to undertake the existing activities and the activities for which
the funds are being raised by us through the Fresh Issue.
Fresh Issue Proceeds and Net Proceeds
The details of the proceeds of the Fresh Issue are set forth in the table
below:
Amount
(Rs. in
million)
Sr.
No.
Particulars
1.
Gross proceeds to be raised through the Fresh Issue
(“Fresh Issue Proceeds”)
579.81
2.
Public Issue Expenses
73.16
Net Proceeds of the Fresh Issue (Net Proceeds)
506.65
Utilisation of Net Proceeds
The requirement of funds, as estimated by our management, is set forth in the
table below:
(Rs. in million)
Estimated Amount to be
utilized from Net Proceeds,
Pre-IPO Placement and
Internal Accruals
Particulars
Total
Estimated
Cost
Fiscal
2013
Fiscal
2014
Fiscal
2015
Amount
deployed
as on
December
15, 2012
Estimated
Balance
Amount to
be utilized
from PreIPO
Placement,
Net
Proceeds
and Internal
Accruals
(A) To open 60
new stores
697.04
119.92
285.53
291.59
44.62
652.42
(B) Expansion of
distribution
centres
43.87
9.09
17.18
17.6
0.49
43.38
(C) Working
Capital
100.00
100
-
-
-
100.00
(D) General
Corporate Purpose
-
-
-
-
-
Total
840.91
229.01
302.71
45.11
795.8
MFM (2011 – 2014) – BUSINESS LAW
309.19
PAGE 22 OF 82
24. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The fund requirements of the Objects of the Issue are based on the
estimates of the management and the Company’s current business plan and
have not been independently appraised by any bank or financial institution.
These are based on current conditions and are subject to change due to
changes in external circumstances or costs, or in other financial conditions,
business or strategy. Further, they operate in a highly competitive and
dynamic market condition and may have to revise estimates from time to
time on account of external circumstances or costs and financial condition,
business or strategy. Consequently, our fund requirements may also change
accordingly. Any such change in plans may require rescheduling of
expenditure programs and increasing or decreasing expenditure for a
particular object vis-à-vis the utilisation of Net Proceeds of the Fresh Issue.
In the event of variations in the actual utilisation of funds earmarked for the
purposes set forth above, increased fund requirements for a particular
purpose may be financed by surplus funds, if any, available in respect of the
other purposes for which funds are being raised in the Issue. If surplus funds
are unavailable, the required financing will be done through internal accruals,
through cash flow from our operations and/or debt, as required. Surplus, if
any, from the Net Proceeds remaining unutilized for specific purposes shall
be used for General Corporate Purposes and which amount shall not exceed
25% of the Fresh Issue.
Shortfall of Net Proceeds
In case of a shortfall of Net Proceeds of the Fresh Issue, we intend to meet
the same through internal accruals. The gross proceeds to be raised from
this Issue also include the amount received pursuant to the Pre-IPO
Placement. In the event that the estimated utilisation out of the Net Proceeds
of the Fresh Issue in a Fiscal is not completely met, the same shall be
utilised in the next Fiscal.
Company proposes to meet expenditure towards the Objects of the Issue
entirely out of the proceeds of the Issue and internal accruals.
Means of Finance
Sr. No.
Particulars
Amount in Rs.
million
1
Net Proceeds from the Fresh Issue
506.65
2.
Pre-IPO Placement
262.50
3.
Internal accruals
71.76
Total
840.91
MFM (2011 – 2014) – BUSINESS LAW
PAGE 23 OF 82
25. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Our opinion
Bharti Infratel Limited is generating the fund of Rs. 31,446 million for
installation of new towers and upgrading its existing towers. Out of this only
Rs. 10,865 million (35%) is being utilizing for expansion of business
(Installing New Tower). Entire estimated costs for installation of new towers
and upgradation and replacement on existing towers are generated through
issue of this offer, Bharti Infratel is not using internal accrual of funds to meet
objectives.
V Mart Retails Limited’s expected cost for this objective is Rs. 840.91 million
out of which company is generating Rs. 506.65 million through this issue. The
company has also generated amount of Rs. 262.50 million through Pre-IPO
placement and Rs. 71.76 million though internal accruals. The company has
already deployed Rs. 45.11 million as on Dec 2012. The company
has targeted opening of 25 stores each in FY14 and FY15, which in our
opinion, is aggressive given that in the past five years it has opened an
average of 12 stores per annum. Hence, the utilization of the IPO proceeds
may well be spread over the next three to four years,
thereby suppressing RoE post the IPO for the coming two fiscal years.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 24 OF 82
26. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 5.
Basis of issue price
SEBI Requirements
The basis for issue price/ floor price/ price band shall be disclosed and
justified on the basis of the following information, which shall be also
disclosed separately:
Earnings Per Share, i.e., EPS pre-issue for the last three years, P/E
pre-issue., Average Return on Net Worth in the last three years.,
Minimum Return on Increased Net Worth required to maintain preissue EPS. Net Asset Value per share based on last balance sheet.,
Net Asset Value per share after issue and comparison thereof with the
issue price.,
Comparison of all the accounting ratios of the issuer company as
mentioned above with the industry average and with the accounting
ratios of the peer group.
The face value of shares (including the statement about the issue
price/ floor price/ price band being “X” times of the face value).
Bharti Infratel Limited
The Issue Price has been determined by the Company in consultation with
the JCBRLMs, BRLMs and CBRLMs on the basis of an assessment of
market demand for the offered Equity Shares by the book building process
and on the basis of the following qualitative and quantitative factors. The
Issue Price is 22 times the face value of Equity Shares, the Cap Price is
24 times and the Floor Price is 21 times the face value of Equity Shares.
Qualitative Factors
Competitive Strengths
The Company believes that it has the following competitive strengths:
a) A leading telecommunications infrastructure operator in India, with
large scale, nationwide operations in an industry with entry barriers;
b) Extensive presence in telecommunications Circles with high growth
potential;
c) Long term contracts with the leading wireless telecommunications
service providers in India, providing visibility on future revenues;
d) Comprehensive deployment and operational experience supported by
well-developed processes, systems and IT infrastructure;
e) Strong financial position and access to capital;
f) Relationship with the Bharti group;
g) Indus’ relationship with three wireless service providers; and
h) Experienced management team.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 25 OF 82
27. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Quantitative Factors
Information presented in this section is derived from the restated
unconsolidated and consolidated financial information prepared in
accordance with the Companies Act and SEBI Regulations.
Some of the quantitative factors which may form the basis for computing the
Issue Price are as follows:
1. Basic and Diluted Earnings per Share (“EPS”)
As per the Company’s restated unconsolidated financial statements:
Year Ended March 31
Basic EPS
Diluted EPS
Weight
2012
2.568
2.562
3
2011
2.058
2.055
2
2010
1.657
1.617
1
Weighted Average
2.246
2.236
The Basic and Diluted EPS on an unconsolidated basis for the six month
period ended September 30, 2012 was Rs. 3.811 and Rs. 3.802 respectively
(not annualised)
As per the Company’s restated consolidated financial statements:
Year Ended March 31
Basic EPS
Diluted EPS
Weight
2012
4.309
4.299
3
2011
3.165
3.16
2
2010
1.557
1.519
1
Weighted Average
3.469
3.456
The Basic and Diluted EPS on a consolidated basis for the six month period
ended September 30, 2012 was Rs. 2.643 and Rs. 2.637 respectively (not
annualised).
2. Price Earnings Ratio (P/E) in relation to the Issue price of Rs. 220*
per Equity Share:
Sr.
No.
1
Particulars
Consolidated
Unconsolidated
P/E ratio based on Basic EPS for
the year ended March 31, 2012 at
the Issue Price:
51.1
85.7
* A discount of Rs. 10 to the Issue Price has been offered to Retail Individual
Bidders.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 26 OF 82
28. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
3. Price Earnings Ratio (P/E) in relation to the Cap Price and Floor
Price:
S.
No
Particulars
Consolidated Unconsolidated
1
P/E ratio based on Basic EPS for the
year ended March 31, 2012 at the
Floor Price:
48.7
81.8
2
P/E ratio based on Basic EPS for the
year ended March 31, 2012 at the
Cap Price:
55.7
93.5
4. Return on Net Worth (RoNW)
Year ended March 31 Consolidated (%)
Unconsolidated (%)
Weight
2012
5.2%
3.0%
3
2011
3.9%
2.5%
2
2010
1.9%
1.9%
1
Weighted Average
4.2%
2.7%
The Return on Net Worth on a consolidated and unconsolidated basis for the
six month period ended September 30, 2012 was 3.2% and 4.5%
respectively (not annualised).
5. Minimum Return on Total Net Worth after Issue needed to maintain
Pre-Issue EPS for the year ended March 31, 2012
Based on Basic EPS:
At the Issue Price – 2.7% and 4.6% based on Restated Unconsolidated
and Consolidated financial information respectively.
At the Floor Price – 2.7% and 4.6% based on Restated Unconsolidated
and Consolidated financial information respectively.
At the Cap Price – 2.7% and 4.5% based on Restated Unconsolidated
and Consolidated financial information respectively.
Based on Diluted EPS:
At the Issue Price – 2.7% and 4.6% based on Restated Unconsolidated
and Consolidated financial information respectively.
At the Floor Price – 2.7% and 4.6% based on Restated Unconsolidated
and Consolidated financial information respectively.
At the Cap Price – 2.7% and 4.5% based on Restated Unconsolidated
and Consolidated financial information respectively.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 27 OF 82
29. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
6. Net Asset Value (NAV)
NAV per Equity Share (Consolidated) as at September 30, 2012: Rs. 82.1
per Equity Share
NAV per Equity Share (Unconsolidated) as at September 30, 2012: Rs.
85.3 per Equity Share
NAV per Equity Share after adjusting for the proportionate change in the
number of Equity Shares on account of bonus issue (Consolidated) as at
September 30, 2012: Rs. 82.1 per Equity Share
NAV per Equity Share after adjusting for the proportionate change in the
number of Equity Shares on account of bonus issue (Unconsolidated) as
at September 30, 2012: Rs. 85.3 per Equity Share
Issue price: Rs. 220 per Equity Share (A discount of Rs. 10 to the Issue
Price has been offered to Retail Individual Bidders)
NAV (Consolidated) after the Issue: Rs. 92.8 per Equity Share
NAV (Unconsolidated) after the Issue: Rs. 95.8 per Equity Share
Note: Net Asset Value per Equity Share has been computed as net worth at
the end of the period divided by total number of equity shares outstanding at
the end of the period
7. Comparison with Listed Industry Peers
There are no listed companies in India that engage in a business similar to
that of the Company. Hence, it is not possible to provide an industry
comparison in relation to the Company.
8. The Issue price is 22 times of the face value of the Equity Shares.
V-Mart Retail Limited
The price band was decided by Company and Selling Shareholder in
consultation with the BRLM and advertised at least five Working Days prior to
the Bid/ Issue Opening Date.
The Issue Price has been determined by Company and the Selling
Shareholder in consultation with the BRLM on the basis of an assessment of
market demand for the offered Equity Shares by the book building process
and on the basis of the following qualitative and quantitative factors. The
face value of the Equity Shares of Company is Rs.10 each and the Issue
Price is 21 times the face value.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 28 OF 82
30. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Qualitative Factors
Competitive strengths
First mover advantage in Tier-II and Tier-III cities and to target the
expanding “aspiring class” and “middle class” customer group;
Competitive lease rentals;
Strong and diversified procurement network;
Efficient supply chain management;
Strong IT infrastructure, systems and processes;
Pleasant ambience and a modern shopping environment;
One stop family shop with a large variety of products, adopting store
Concept Classification, customized for the local populace;
Strong background and experience in the retail industry of our Individual
Promoters and our key managerial team;
Strong and diverse project execution expertise; and
Inverted hierarchy model.
Quantitative Factors
The information presented in this section for the financial years ended March
31, 2012; March 31, 2011; and March 31, 2010 and for the eight months
ended November 30, 2012; is derived from Restated Summary Statements
prepared in accordance with Indian GAAP. Investors should evaluate
Company taking into consideration its earnings and based on its growth
strategy. Some of the quantitative factors which may form the basis for
computing the price are as follows:
1) Basic and Diluted Earnings per Share (EPS)
Year ended
Basic
EPS
Diluted Weight
EPS
March 31, 2010
1.79
1.68
1
March 31, 2011
4.75
4.75
2
March 31, 2012
7.92
7.92
3
Weighted Average
5.84
5.82
For the eight months ended November 30, 2012
9.38
9.38
8.61
8.61
For the eight months ended November 30, 2012
(After considering the Pre-IPO Placement) *
* 1,250, 000 Equity Shares were allotted on January 6, 2013 as Pre-IPO
Placement.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 29 OF 82
31. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Note:
The basic and diluted EPS have been calculated in compliance with
Accounting Standard 20 issued by the Institute of Chartered Accountants
of India.
Basic earnings per share are calculated by dividing the net profit or loss
for the period attributable to equity shareholders by the weighted average
number of Equity Shares outstanding during the period.
The face value of each Equity Share is Rs 10 each.
2) Price / Earning (P/E) Ratio in relation to Issue Price of Rs 210
Sr.
No.
Particulars
P/E at Floor
P/E at Cap
Price Rs. 195 Price Rs. 215
P/E at Issue
Price Rs. 210
a)
Based on Basic EPS
of March 31, 2012
24.62
27.15
26.52
b)
Based on weighted
average Basic
EPS
33.39
36.82
35.96
Industry P/E Multiple: from SEBI website
Highest - 189.83
Lowest - 20.71
Average - 105.27
3) Average Return on Net Worth (RONW):
Particulars
RONW %
Weight
Year ended March 31, 2010
6.20
1
Year ended March 31, 2011
14.26
2
Year ended March 31, 2012
20.20
3
Weighted Average
15.89
For the eight months period ended November 30, 2012
19.31
For the eight months period ended November 30, 2012
13.92
(After considering the Pre-IPO Placement)*
* 1,250,000 Equity Shares were allotted on January 6, 2013 as Pre-IPO
Placement. The net worth has been considered after Pre-IPO Placement.
4) Minimum return on increased net worth required for maintaining
pre-issue EPS at March 31, 2012
a) At the higher end of the price band 9.28 %
b) At the lower end of the price band 9.62 %
c) At the Issue Price 9.36 %
MFM (2011 – 2014) – BUSINESS LAW
PAGE 30 OF 82
32. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
5) Net Asset Value (NAV) per Equity Share
Particulars
Amount (Rs)
NAV per Equity Share as of March 31, 2010
54.77
NAV per Equity Share as of March 31, 2011
59.87
NAV per Equity Share as of March 31, 2012
74.44
NAV per Equity Share as of March 31, 2012 (after
considering Bonus Issue on June 15, 2012)*
39.18
NAV per Equity Share as of November 30, 2012
48.56
NAV per Equity Share as of November 30, 2012 (After
considering the Pre-IPO Placement)**
61.83
Issue Price per Equity Share
210.00
6) Comparison of Accounting Ratios with Industry Peers
Name of the
company
Financial
year
ended
Standalone /
Consolidated
Face
Value
(Rs.)
EPS
(Rs.)
Book
Value
RONW
per
(%)
Equity
Share
(Rs.)
Current
Market
Price
P/E
Ratio
V-Mart
Retail
Limited
Pre-Issue
(after issue
of bonus
Equity
Shares)
31-Mar-12
Standalone
10
7.92
20.2
39.18
Not
26.52
Applicable
Shoppers
Stop Limited
31-Mar-12
Consolidated
5
2.31
3.68
62.5
438.5
Pantaloon
Retail (India)
Limited
30-Jun-11
Standalone
2
12.75 8.47
156.08 264
20.71
Trent Limited
31-Mar-12
Consolidated
10
-3.24
16.59
427.14 1,265.80
-76.3
Peer Group
189.83
7) The Issue price will be 21 times of the face value of the Equity
Shares.
The Issue Price has been determined by Company and Selling
Shareholder in consultation with the BRLM on the basis of the demand
from investors for the Equity Shares through the Book Building Process.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 31 OF 82
33. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 6.
Promoter Contribution
SEBI Requirements
4.1.
Promoters’ Contribution in a Public Issue by Unlisted
Companies
4.1.1. In a public issue by an unlisted company,
the promoters
shall contribute not less than 20% of the post issue capital.
4.2. Promoters’ Shareholding in Case of Offers for Sale
4.2.1. The promoters’ shareholding after offer for sale shall not be
less than 20% of the post issue capital.
Promoters’ Contribution in Case of Public Issues
by Listed Companies
4.3.1. In case of public issues by listed companies, the
promoters shall participate either to the extent of 20% of the
proposed issue or ensure post-issue shareholding to the
extent of 20% of the post-issue capital.
4.3.
4.4. Promoters’ Contribution in Case of Composite Issues
4.4.1. In case of composite issues of a listed company, the
promoters’ contribution shall at the option of the promoter(s)
be either 20% of the proposed public issue or 20% of the
post-issue capital.
Bharti Infratel Limited
As on the date of this Prospectus, the Promoter holds 1,500,000,000
Equity Shares, equivalent to 86.09% of the issued, subscribed and paidup Equity Share capital of the Company. Set forth below is the buildup of the shareholding of the Promoter in the Company since the
incorporation of the Company:
Table 4: Promoter's Contribution of Bharti Infratel Limited
Date of
Transaction
November
30, 2006
Nature of
Transaction
No. of Equity
Shares
Allotment to 50,000
the Promoter
and its
nominees
pursuant to
subscription
to the MoA
MFM (2011 – 2014) – BUSINESS LAW
Nature
of
conside
ration
Cash
% of the
pre- Issue
Capital (%)
Negligible
% of the
post- Issue
Capital (%)
Negligible
PAGE 32 OF 82
34. MET LEAGUE OF COLLEGES
Date of
Transaction
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Nature of
Transaction
No. of Equity
Shares
499,950,000
Nature
of
conside
ration
N.A.
August
21, 2008
Bonus issue
August
23, 2012
Total
Bonus issue
% of the
pre- Issue
Capital (%)
28.69
26.47
1,000,000,000
N.A.
57.40
52.95
86.09
79.42
1,500,000,000
% of the
post- Issue
Capital (%)
All the Equity Shares held by the Promoter were fully paid-up on the
respective dates of acquisition of such Equity Shares. None of the Equity
Shares held by the Promoter are pledged.
Post-Issue
Pre-Issue
Figure 5: Shareholding Pattern before and after Issue for Bharti Infratel Limited
V-Mart Retail Limited
Table 5: Promoter's Contribution of V-Mart Retail Limited
Pre Issue
No. of
Shares
%
holding
Post Issue
No. of
Shares
%
holding
Lalit Agarwal
2,194,025
14.44
2,194,025
12.22
Hemant Agarwal
579,500
3.81
579,500
3.23
Madan Agarwal
686,375
4.52
686,375
3.82
Madan Gopal Agarwal (HUF)
1,041,675
6.85
1,041,675
5.80
Lalit M. Agarwal (HUF)
1,277,275
8.40
1,277,275
7.11
Hemant Agarwal (HUF)
423,985
2.79
423,985
2.36
Total (A)
6,202,835
40.81
6,202,835
34.54
2,172,175
14.29
2,172,175
12.10
Sr.
No.
Particulars
A.
Promoters
B.
Promoter Group
Sangeeta Agarwal
MFM (2011 – 2014) – BUSINESS LAW
PAGE 33 OF 82
35. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Uma Devi Agarwal
Pre Issue
No. of
Shares
1,355,460
Smiti Agarwal
%
holding
8.92
Post Issue
No. of
Shares
1,355,460
%
holding
7.55
834,005
5.49
834,005
4.64
Total (B)
4,361,640
28.70
4,361,640
24.29
Total of Promoters and
Promoter Group (A+B)
Sr.
No.
10,564,475
69.51
10,564,475
58.83
Particulars
Pre-Issue
Post-Issue
Figure 6: Shareholding Pattern before and after Issue for V Mart Retail Limited
Our opinion
In Bharti Infratel Limited Promoter’s contribution in Post-Issue Capital is
79.42% which is only 8% less than pre- Issue Capital of 86.09%.
Wherein V Mart Retails Limited Promoter’s contribution in Post-Issue Capital
is58.83% which is only 15% less than pre- Issue Capital of 69.51%.
In both the companies promoter’s contribution after post-issue is less than
20% therefore both the companies are complying with the requirements of
SEBI guideline.
However Bharti Infratel Limited is reducing promoter’s contribution by only
8% compare to 15% of V Mart Retail Limited.
The promoter holding post issue is more in Bharti (80%) than in V-Mart
(60%), which influences an investors confidence towards that particular
company and therefore Bharti Infratel Limited is reasonably better looking
Issue than the other.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 34 OF 82
36. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 7.
Lock-in requirement
SEBI Requirements
4.11.1
In case of any issue of capital to the public the minimum promoters’
contribution shall be locked in for a period of 3 years.
4.12.1
In case of a public issue by unlisted company, if the promoters’
contribution in the proposed issue exceeds the required minimum
contribution, such excess contribution shall also be locked in for a
period of (one year).
4.14.1
(The entire pre-issue capital, other than that locked-in as minimum
promoters’ contribution, shall be locked-in for a period of one year from the
date of allotment (in the proposed public issue).
4.16.1
(Inter-se Transfer of Locked- in Securities)
held by the Promoter /person other than the promoters, prior to Initial Public
Offering (IPO), may be transferred to other Promoter / other shareholder
subject to continuation of lock-in in the hands of transferees for the
remaining period.
4.17.1
The securities which are subject to lock-in shall carry inscription
`nontransferable’ along with duration of specified non-transferable period
mentioned in the face of the security certificate.
Bharti Infratel Limited
Pursuant to the SEBI Regulations, an aggregate of 20% of the post-Issue
Equity Share capital of the Company shall be locked in by the Promoter for a
period of three years from the date of Allotment. All Equity Shares of the
Company held by the Promoter are eligible for Promoter’s contribution.
Accordingly, 379,584,800 Equity Shares, aggregating up to 20% of the postIssue capital of the Company held by the Promoter, shall be locked in for a
period of three years from the date of Allotment in the Issue. Details of the
same are as follows:
MFM (2011 – 2014) – BUSINESS LAW
PAGE 35 OF 82
37. MET LEAGUE OF COLLEGES
Date of
Transaction
and when
made fully
paid-up
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Percentage
of postIssue paidup capital
(%)
21,
50,000
10
10
Negligible
Bonus issue
379,534,800
10
-
20.00
Total
August
2008
Face
Value
(in Rs)
Allotment
pursuant to
subscription
to the MoA
November
30, 2006
No. of
Equity
Shares
Issue/acquis
ition price
per Equity
Share (Rs)
379,584,800
Nature of
Transaction
20.00
The Promoter’s contribution has been brought in to the extent of not less than
the specified minimum lot and from the person defined as ‘promoter’ under
the SEBI Regulations. The Equity Shares that are being locked-in are not
ineligible for computation of Promoter’s contribution under SEBI Regulations.
Details of Equity Shares locked-in for one year
Other than the above Equity Shares that are locked in for three years, the
entire pre-Issue Equity Share capital of the Company, except the Equity
Shares offered in the Offer for Sale and any Equity Shares issued upon
exercise of employee stock options granted by the Company, comprising
1,320,158,042 Equity Shares would be locked-in for a period of one year from
the date of Allotment. As of the date of this Prospectus, none of the employee
stock options granted by the Company have been converted into Equity
Shares.
Lock-in of Equity Shares to be Allotted, if any, to the Anchor Investor
Any Equity Shares allotted to Anchor Investor Portion shall be locked-in for a
period of 30 days from the date of Allotment.
Other requirements in respect of lock-in:
The Equity Shares held by the Promoter which are locked-in for a period of
one year may be pledged only with scheduled commercial banks or public
financial institutions as collateral security for loans granted by such banks or
public financial institutions, provided that such pledge of the Equity Shares is
one of the terms of the sanction of the loan.
The Equity Shares held by persons other than the Promoter prior to the Issue
may be transferred to any other person holding Equity Shares which are
locked-in, subject to the continuation of the lock-in in the hands of transferees
for the remaining period and compliance with the SEBI Takeover
Regulations.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 36 OF 82
38. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The Equity Shares held by the Promoter may be transferred to any person of
the Promoter Group or to any new promoter or persons in control of the
Company, subject to continuation of the lock-in in the hands of the
transferees for the remaining period and compliance with the SEBI Takeover
Regulations.
V-Mart Retail Limited
a) Details of the Promoters contribution locked in for three years:
Pursuant to SEBI Regulations, an aggregate of 20% of the fully diluted postIssue paid up Equity Share capital of Company held by the Promoters shall
be locked in for a period of three years from the date of Allotment of Equity
Shares in the Issue (“Minimum Promoters Contribution”) and the Promoters
shareholding in excess of 20% shall be locked-in for a period of one year.
The details of such lock-in are given below:
Details of the Minimum Promoters Contribution locked in for three years
Date of allotment /
acquisition
No. of Equity
shares locked in
Percentage of postIssue paid up capital
(%)
Lalit Agarwal
1,016,180
5.66
Hemant Agarwal
268,400
1.49
Madan Agarwal
410,463
2.29
Madan Gopal Agarwal
(HUF)
729,173
4.06
Lalit M. Agarwal (HUF)
894,093
4.98
Hemant Agarwal HUF
296,790
1.65
Total
3,615,099
20.13
b) The Equity Shares that are being locked-in are not in-eligible for
computation of Promoter’s contribution under SEBI Regulations. In
this connection, company confirm the following:
The Equity Shares offered for minimum 20% Promoters contribution have
not been acquired in the last three years for consideration out of
revaluation of assets or capitalization of intangible assets or bonus shares
out of revaluation reserves, or unrealised profits of Company or from a
bonus issue against Equity Shares which are otherwise ineligible for
computation of Promoters contribution. The Promoters contribution of
20% of the post -Issue capital does not include Equity Shares allotted to
our Promoters for consideration other than cash.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 37 OF 82
39. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The Equity Shares offered for minimum 20% Promoters contribution do
not include any Equity Shares acquired during the preceding one year at
a price lower than the price at which the Equity Shares are being offered
to the public in the Issue;
The Equity Shares offered for minimum 20% Promoters contribution were
not issued to the Promoters upon conversion of a partnership firm;
The Equity Shares offered for minimum 20% Promoters contribution are
not subject to any pledge; and
In terms of undertaking executed by our Promoter, Equity Shares forming
part of Promoter’s contribution subject to lock in will not be disposed/
sold/ transferred by our Promoter during the period starting from the date
of filing of the Draft Red Herring Prospectus with SEBI till the date of
commencement of lock-in period as stated in the Prospectus.
The Minimum Promoters Contribution has been brought to the extent of not
less than the specified minimum lot and from persons defined as Promoter
under the SEBI Regulations.
Company has obtained consents from Promoters for the lock-in of 3,615,099
Equity Shares, held by them, for a period of 3 years from the date of
Allotment in the Issue and for lock in of the balance pre-Issue Equity Share
capital of Company, held by the Promoters and Promoter Group, for a period
of 1 year from the date of Allotment in the Issue. Equity Shares offered by the
Promoters for the minimum Promoter’s contribution are not subject to pledge.
Other than the Equity Shares locked-in as Promoters contribution for a period
of three years as stated in the table above, the entire pre-Issue capital of
Company, with the exception of Equity Shares which are proposed to be
transferred as part of the Offer of Sale, including the excess of Minimum
Promoters Contribution, as per SEBI Regulations, shall be locked in for a
period of one year from the date of Allotment of Equity Shares in the Issue.
c) Details of share capital locked in for one year
The entire pre-Issue equity share capital of Company shall be locked-in for a
period of one year from the date of Allotment in the Issue. The details of the
Equity Shares locked in for one year are as follows:
Name of the Shareholder
Number of Equity Shares of
the face value of Rs. 10
each allotted
Naman Finance and Investment Private
Limited
1,569,136
Lalit Agarwal
1,177,845
Sangeeta Agarwal
2,172,175
MFM (2011 – 2014) – BUSINESS LAW
PAGE 38 OF 82
40. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Name of the Shareholder
Number of Equity Shares of
the face value of Rs. 10
each allotted
Uma Devi Agarwal
1,355,460
Lalit M. Agarwal (HUF)
383,182
Madan Gopal Agarwal (HUF)
312,502
Smiti Agarwal
834,005
Madan Agarwal
275,912
Hemant Agarwal
311,100
Hemant Agarwal (HUF)
127,195
Writers and Publishers Private Limited
79,167
Antique Finsec Private Limited
100,000
Antique Stock Broking Limited
525,000
Four Dimensions Securities (India)
Limited
52,000
Lata Manek Bhanshali
240,000
Merit Credit Corporation Limited
100,000
Tejal Rohit Kothari
233,000
Total
9,847,679
d) Lock-in of Equity Shares to be issued, if any, to Anchor Investor(s)
Further, any Equity Shares Allotted to Anchor Investors in the Anchor
Investor Portion shall be locked-in for a period of 30 days from the date of
Allotment.
Our opinion
Pursuant to the SEBI Regulations, an aggregate of 20% of the post-Issue
Equity Share capital of the Company shall be locked in by the Promoter for a
period of three years from the date of Allotment.
Accordingly, Bharti Infratel Limited locked in Equity Shares of 379,584,800,
aggregating up to 20% of the post-Issue capital of the Company held by the
Promoter, for a period of three years from the date of Allotment in the Issue.
And V Mart Retail Limited locked in Equity Shares of 3,615,099, aggregating
up to 20.13% of the post-Issue capital of the Company held by the Promoter,
for a period of three years from the date of Allotment in the Issue
MFM (2011 – 2014) – BUSINESS LAW
PAGE 39 OF 82
41. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 8.
Management
SEBI Requirements
6.42.9.1
Name, age, qualifications, Director Identification Number, experience,
address, occupation and date of expiration of the current term of office of
manager, managing director, and other directors (including nominee
directors, whole-time directors), giving their directorships in other
companies.
6.42.9.2
The nature of any family relationship between any of the directors.
6.42.9.3
Any arrangement
or understanding
with major shareholders,
customers, suppliers or others, pursuant to which of the directors was
selected as a director or member of senior management.
6.42.9.4
Details of service contracts entered into by the directors with the issuer
company providing for benefits upon termination of employment and a
distinct negative statement in the absence of any such contract.
Bharti Infratel Limited
Under the Articles of Association, the Company is required to have not
less than three Directors. As on the date of this Prospectus, the Board
comprises of ten Directors.
The following table sets forth details of the Board as of the date of filing the
Red Herring Prospectus:
Table 6: Management details of Bharti Infratel Limited
S. No.
1.
Name, Designation, Father’s Name,
Address, Nationality, Term, Occupation and DIN
Rakesh Bharti Mittal
Father’s Name: Sat Paul Mittal
Designation: Chairman, non-independent and nonexecutive Director
Address: E-26, Vasant Marg, Vasant Vihar, New Delhi
110 057
Occupation: Professional
Nationality: Indian
Term: Liable to retire by rotation
DIN: 00042494
Date of appointment: September 3, 2012
MFM (2011 – 2014) – BUSINESS LAW
Age
(years)
57
PAGE 40 OF 82
42. MET LEAGUE OF COLLEGES
S. No.
2.
3.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Name, Designation, Father’s Name,
Address, Nationality, Term, Occupation and DIN
Akhil Kumar Gupta
Father’s Name: Jagdish Pershad Gupta
Designation: Vice Chairman and Managing Director
Address: B 27, Maharani Bagh, New Delhi 110 065
Occupation: Service
Nationality: Indian
Term: Five years with effect from August 1, 2008
DIN: 00028728
Date of appointment: March 31, 2008
Sarvjit Singh Dhillon
Father’s Name: Kirpa Dhillon
Designation: Non-independent and non- executive
Director
Address: 102B, 4th Floor, The Aralias, DLF Golf Links,
Age
(years)
56
46
DLF Phase - 5, Gurgaon, Haryana 122 009
Occupation: Service
Nationality: British
Term: Liable to retire by rotation
DIN: 00275924
Date of appointment: January 2, 2012
4.
Sanjay Nayar
Father’s Name: Om Prakash Nayar
Designation: Non-independent and non- executive
Director
Address: Flat No. 9, the Rushilla Co- operative
Housing Society Limited, 17/C Carmichael Road,
Mumbai 400 026
Occupation: Service
Nationality: Indian
Term: Liable to retire by rotation
DIN: 00002615
Date of appointment: January 31, 2011
MFM (2011 – 2014) – BUSINESS LAW
52
PAGE 41 OF 82
43. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
S. No.
Name, Designation, Father’s Name,
Address, Nationality, Term, Occupation and DIN
Age
(years)
5.
Narayanan Kumar
Father’s Name: Kallidaikurichi Sankaralinga Iyer
Narayanan
Designation: Independent and non- executive Director
Address: 1, George Avenue, Alwarpet, Chennai 600
018
Occupation: Industrialist
Nationality: Indian
Term: Liable to retire by rotation
DIN: 00007848
Date of appointment: April 29, 2008
62
6.
Vinod Dhall
Father’s Name: Dewan Chand Dhall
Designation: Independent and non- executive Director
Address: Dewan Manohar House, B-88, Sector 51,
Noida 201 301
Occupation: Professional
Nationality: Indian
Term: Liable to retire by rotation
DIN: 02591373
Date of appointment: September 3, 2012
68
7.
Jitender Balakrishnan
Father’s Name: Manjerikandy Balakrishnan
Designation: Independent and non- executive Director
Address: 208, Tower-2, Casa Grande, Senapati Bapat
Marg, Lower Parel, Mumbai 400 013
Occupation: Professional
Nationality: Indian
Term: Liable to retire by rotation
DIN: 00028320
Date of appointment: September 3, 2012
63
8.
Bharat Sumant Raut
Father’s Name: Sumant Vasantrao Raut
Designation: Independent and non- executive director
Address: 8, French Bridge (Raut Bungalow), Mumbai
400 007
Occupation: Professional
Nationality: Indian
Term: Liable to retire by rotation
DIN: 00066080
Date of appointment: September 3, 2012
63
MFM (2011 – 2014) – BUSINESS LAW
PAGE 42 OF 82
44. MET LEAGUE OF COLLEGES
S. No.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Name, Designation, Father’s Name,
Address, Nationality, Term, Occupation and DIN
Age
(years)
9.
Leena Srivastava
Father’s Name: Late Dix Bihari Lal
Designation: Independent and non- executive
Director
Address: L-18/2 DLF Phase II, Gurgaon, Haryana 122
002
Occupation: Service
Nationality: Indian
Term: Liable to retire by rotation
Din: 00005737
Date of appointment: November 5, 2012
52
10.
Murray Philip King
Father’s Name: Clarence King
Designation: Non-independent and non- executive
Director
Address: 48, Spencer Road, Mosman NSW 2088,
Australia
Occupation: Service
Nationality: Australian
Term: Liable to retire by rotation
Din: 06415439
Date of appointment: November 5, 2012
53
V-Mart Retail Limited
Under the Articles of Association, Company is required to have not less than
three directors and not more than twelve directors. Company currently has six
Directors on its Board, of which three are Executive Directors and three are
Non–Executive Directors.
The following table sets forth details regarding our Board of Directors as on
the date of the Prospectus:
Table 7: Management details of V-Mart Retail Limited
Sr.
No.
Name, Designation, Address,
Occupation, Age, DIN and Nationality
1.
Lalit Agarwal Chairman and Managing
Director
Address: B –81, Belvedere Park, DLF
Phase 3, Gurgaon –122 002, Haryana,
India
Occupation: Business
MFM (2011 – 2014) – BUSINESS LAW
Date of Appointment as
Director and Term of
Office
Date of Appointment:
May 30, 2012
Term: Appointed as
Managing Director for a
period of 5 years from
June 01, 2012 to May 31,
PAGE 43 OF 82
45. MET LEAGUE OF COLLEGES
Sr.
No.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Name, Designation, Address,
Occupation, Age, DIN and Nationality
Age: 43 years
DIN: 00900900
Nationality: Indian
2.
3.
4
5
Hemant Agarwal Whole Time Director
Address: D-61, Galaxy Tower, Behind
Grand Bhagwati, Bodakdev, Ahemdabad
-380 054, Gujarat, India Occupation:
Business
DIN: 02242019
Age: 41 years
Nationality: Indian
Madan Agarwal Whole Time Director
Address: B –81, Belvedere Park, DLF
Phase 3, Gurgaon –122 002, Haryana,
India Occupation: Business
DIN: 02249947
Age: 69 years
Nationality: Indian
Krishan Kumar Gupta
Director
(Non Executive, Independent)
Address: C-604, Badhwar Apartments,
Sector
6, Plot 3, Dwarka, New Delhi – 110 075,
Delhi, India
Occupation: Service
DIN: 02602767
Age: 65 years
Nationality: Indian
Aakash Moondhra
Director
(Non Executive, Independent)
Address: BPB-162, Belvedere Park, DLF
Phase III, Gurgaon – 122 002, Haryana,
India
Occupation: Service
DIN: 02654599
Age: 39 years
Nationality: Indian
MFM (2011 – 2014) – BUSINESS LAW
Date of Appointment as
Director and Term of
Office
2017
Date of Appointment:
May, 30, 2012
Term: Liable to retire by
rotation. Appointed as
Whole Time Director for a
period of 5 years from
June 01, 2012 to May 31,
2017
Date of Appointment:
May 30, 2012
Term: Liable to retire by
rotation. Appointed as
Whole Time Director for a
period of 5 years from
June 01, 2012 to May 31,
2017
Date of Appointment:
March
18, 2010
Term: Liable to retire by
rotation
Date of Appointment:
March
18, 2010
Term: Liable to retire by
rotation
PAGE 44 OF 82
46. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Sr.
No.
Name, Designation, Address,
Occupation, Age, DIN and Nationality
6
Kamal Kumar Gupta
Director
(Non Executive, Independent)
Address: House No.144, Sector -28,
Faridabad, Haryana.
Occupation: Practising Chartered
Accountant
DIN: 00086057
Age: 49 years
Nationality: Indian
MFM (2011 – 2014) – BUSINESS LAW
Date of Appointment as
Director and Term of
Office
Date of Appointment:
July 2,
2012
Term: Liable to retire by
rotation
PAGE 45 OF 82
47. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 9.
Dividend Policy
SEBI Requirements
6.10.2
the rates of dividends, if any, paid by the issuer company in respect of each
class of shares in the issuer company for each of the five financial years
immediately preceding the issue of the prospectus,
6.13.2
Mode of payment of dividend
6A.14 Dividends
1) Dividend policy of the Company
2) Rate of Dividend and Amount of Dividend paid for the last five financial
years
3) Regulatory framework in the Country of Incorporation/share listed
concerning Dividends
4) Details of Arrangement with the Depositories for payment of Dividend
to the IDR holders
5) Information about changes, if any, in dividends announced and
dividends paid and time gap between the dividends announced and
dividends paid.
6) Information about Dividend Yield.
7) Taxation aspects of dividend distribution.
Bharti Infratel Limited
The dividend, if any, will depend on a number of factors, including but not
limited to the earnings, capital requirements, contractual restrictions and
overall financial position of the Company.
Subject to the statutory provisions, as applicable, the Company intends to
have a total dividend payout (including dividend distribution and other taxes,
cess, levies, if any relating to the dividend) between 30% to 50% of the net
profit of the Company for the year or 100% of any dividend received by the
Company from its investee company(ies), whichever is higher, subject to
adequate liquidity available at the Company to take care of planned business
activities and expansion plans, capital expenditure and other uses of such
funds including, but not limited to, any debt servicing requirements,
acquisitions, and ensuring an acceptable credit rating, as may be determined,
by the Board from time to time.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 46 OF 82
48. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The Board will review this policy at least once every three financial years
keeping in mind the business environment and requirements of the Company,
its subsidiaries and joint ventures.
The Board has declared interim dividend for Fiscal 2013 as set forth below:
Face value per Equity Share:
Rs. 10
Dividend declared per Equity Share:
Rs. 2.5
Rate of dividend:
25%
V-Mart Retail Limited
Company does not have any formal dividend policy for the Equity Shares and
the declaration and payment of dividend, if any, will depend on a number of
factors, including but not limited to the results of operations, earnings, capital
requirements and surplus, general financial conditions, contractual
restrictions, applicable Indian legal restrictions and other factors considered
relevant by our Board of Directors. The dividends may be paid out of profits
of Company in the year in which the dividend is declared or out of the
undistributed profits or reserves of previous Fiscal years or out of both.
The dividends declared by Company during the last five fiscals are set forth
below
(Rs. in million except share data)
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
2008
2009
2010
2011
2012
Equity Share Capital
55.60
68.53
68.53
73.41
73.41
Face value of the Equity
Shares (in Rs.)
10.00
10.00
10.00
10.00
10.00
Amount of Dividend
Nil
Nil
Nil
2.94
2.94
Dividend Tax
Nil
Nil
Nil
0.49
0.49
Rate of Dividend (%)
Nil
Nil
Nil
4.00%
4.00%
Particulars
Our opinion
Bharti Infratel has proposed to provide 30% - 50% of the profit as dividend
whereas V-Mart does not have any clear dividend policy.
Bharti has declared 25% dividend, (which includes 15% interim upto 31st
March 12 and 10% interim of the current year) whereas V-Mart has provided
a dividend @ 4% which is less as compared to Bharti.
A higher dividend rate attracts the interest of the investors.
MFM (2011 – 2014) – BUSINESS LAW
PAGE 47 OF 82
49. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 10. Financial Details
SEBI Requirements
6.42.10.1
Stand-alone and consolidated financial statements of the issuer
company in respect of the last completed accounting year: (indicating
changes in accounting policies, if any)
a)
profit or loss and assets and liabilities.
b)
limited review of the profit or loss and assets and liabilities as at a
date not earlier than six months prior to the date of the opening
of the issue.
6.42.10.2
For the period between the last date of the balance sheet and profit and
loss account sent to the shareholders and up to the end of the last but one
month preceding the date of the letter of offer following shall be furnished.
a)
b)
c)
Working results of the issuer company under following heads: Sales
/ turnover , Other income, Estimated gross profit / loss, Provision for
depreciation, Provision for taxes., Estimated net profit /loss.
Material changes and commitments, if any affecting financial
position of the issuer company.
Week-end prices for the last four weeks of equity shares.
6.42.10.3
Stock market quotation of shares/ convertible instruments of the
company (high/ low price in each of the last three years and monthly
high/low price during the last six months).
6.42.10.4
Accounting and other ratios:
Earnings per share, Return on Net worth: Net Asset Value per share , on
the basis of Indian Accounting Standards.
6.42.10.5
A Capitalisation Statement showing total debt, net worth, and the
debt/equity ratios before and after the issue is made shall be incorporated.
One standard financial unit shall be used in the Letter of Offer
6.42.11
A statement to the effect that the price has been arrived at in
consultation between the issuer company and the Merchant banker.
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50. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
6.42.14.1
Any material development after the date of the latest balance sheet and
its impact on performance and prospects of the issuer company.
Bharti Infratel Limited
a)
Total Assets of the Firm
Figure 7: Total Assets of the Firm
In the year 2008 – 2009 there was an increase in the Fixed Assets because
the company had invested its capital in Tangible assets for further expansion
of business i.e. Rs 122,638 million was in the year 2007 – 2008 increased to
Rs. 150,789 in the year 2008 – 2009 since then no huge investment was
done in fixed assets.
In the year 2007 – 2008 the Current Assets were more because of the current
investments in mutual funds i.e. Rs.38,017 which fell to Rs. 27,412 million in
the year 2008 – 2009 due to the adverse market fluctuations.
However, the sales of the company had increased considerable from the year
2007- 2008 from Rs. 7057.4 to Rs. 44,091.4 million in the year 2008-2009
which has resulted in increase in the figures for Trade Receivables from
859.1 in the year 2007 – 2008 to Rs 1,715.9 million in the year 2008 – 2009.
The increase in debtors indicated the company had extended its credit period
for 3 years and again made a good recovery from their debtors in the current
year. In the year 2008-2009 there was an increase in the short term loan and
advances since the company had given loans to its subsidiaries.
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51. MET LEAGUE OF COLLEGES
b)
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Total Liabilities of the Firm
Figure 8: Total Liabilities of the Firm
In the year 2007 – 2008 the Noncurrent liabilities were more because of the
Long Term Borrowings which was Rs. 38,705 million. They were paid off over
subsequent years and so the figures were reduced to Rs. 10,729.50 in the
current year.
In the year 2008 – 2009 the other current liabilities were more amounting to
Rs. 49,582 million however in the subsequent years the companies have
meet its liabilities.
c)
Net Worth of the Firm
Figure 9: Net Worth of the Firm
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52. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
The trend of Net worth indicates the company is growing and has a sound
position to meet its financial obligation. Company has made fresh issue of
equity shares in the current year.
d)
Reserves and surplus
Figure 10: Reserves and surplus
The Total of Reserves and Surplus has an increasing trend over the years
except in the year 2008 – 2009 it was Rs. 99,184.8 million because the
company had issued bonus shares
e)
Income statement of the firm
Figure 11: Income statement of the firm
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53. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
In the year 2008 – 2009 the Revenue had increased around 6 times i.e. Rs
44,091.4 million than Rs 7,057.4 in the year 2007 – 2008. In the subsequent
years the change in Income is proportionate with the change in Expenses.
f)
Cash Flow Statement
Figure 12: Cash Flow Statement
In the year 2008 – 2009 the cash generated from operating activity is Rs 470.7 million because the company has given short term loans & advances.
For the subsequent years the cash generated from operating activities is
proportionate with the level of activity of the company.
The figures of Cash flow from Investing Activities of the company are
negative because the company had purchased tangible, intangible assets
and purchased current investments.
The company had taken long term loan in the year 2008 – 2009 which was
repaid over a period of time along with interest and therefore the Net cash
generated from financing activities as on current year stands to Rs. -5064.2
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54. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
V-Mart Retail Limited
a) Total Assets of the Firm
Figure 13: Total Assets of the Firm
The fixed asset has increased over the year indicating that the company is
investing in expansion of business. It has purchased tangible assets and also
taken Long term loans and advances to meet its expansion plans. Company
is efficiently & effectively using FA to generate its revenue.
Current assets are to cover its short term obligations assets. Increasing trend
indicates that the company is meeting of its debts over the years.
b)
Total Liabilities of the Firm
Figure 14: Total Liabilities of the Firm
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55. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Company's short term debts are increasing over years on the other hand its
CA are also increasing to pay off the short term debts. Net working capital i.e
CA - CL is not negative which indicates that co can pay off short term debts
to its creditors within 12 months.
Noncurrent Liabilities are long term Loan which the company has paid off in
subsequent years. We see that the long term debts has gone up in the year
2008 - 2009 and this can be mainly due to the recession but over the years it
has been reduced.
c)
Net Worth of the Firm
Figure 15: Net Worth of the Firm
It is an amount by which the assets exceeds liabilities. We see that over the
years the net worth of the company is increasing. Consistent increase in the
net worth indicates that the company is in good financial health. It also
indicates that the shareholder equity is in the good state over the years.
d)
Reserves and surplus
Figure 16: Reserves and surplus
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56. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Reserves and surplus indicates saving from company's net profit. We can
see co has maintained net profits during the year of recession. It showed an
increasing trend from 10-11 and again for Mar 12 the profit is same. For the
period from Mar - Nov the reserves and surplus has significantly gone up and
company is in the good positions to pay out dividends to its shareholders in
the coming years.
e)
Income statement of the firm
Figure 17: Income statement of the firm
There is a proportionate increase in expenses over a period of years.
The revenue from operations have an increasing trend but in the current year
the revenue has reduced to Rs. 2500.59 millions.
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57. MET LEAGUE OF COLLEGES
f)
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Cash Flow Statement
Figure 18: Cash Flow Statement
The Net cash from Investing activities figures is in negative because the
company has purchased fixed assets including intangible assets.
The Net cash from Financing activities is negative in the year 2009-2010 i.e.
Rs. -41.08 million because the company had borrowed a long term borrowing
amounting to Rs. 33.97 million in the year 2008 – 2009 and paid off in the
year 2009 – 2010 along with interest.
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58. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Disclosure 11. Litigations
SEBI Requirements
-
-
Litigations against the issuer company or against any other company
whose outcome could have a materially adverse effect of the position
of the issuer company.
all the litigations against the directors involving violation of
statutory regulations or alleging criminal offence shall be furnished in
the prospectus.
Outstanding litigations involving the promoter and group companies
1] All pending litigations in which the promoters are involved, defaults to the
financial institutions/ banks, non-payment of statutory dues and dues
towards instrument holders like debenture holders, fixed deposits, and
arrears on cumulative preference shares by the promoters and the
companies/ firms promoted by the promoters, shall be listed in the
prospectus together with the amounts involved and the present status of
such litigations/ defaults. The likely adverse effect of these
litigations/ defaults, etc. on the financial performance of the issuer company
shall also be mentioned.
2] Further, the cases of pending litigations, defaults, etc. in respect of
companies/ firms/ ventures with which the promoters were associated in the
past but are no longer associated shall also be disclosed in case their
name(s) continues to be associated with particular litigation(s).
Bharti Infratel Limited
The details of the outstanding litigation or proceedings involving the
Company, Subsidiary, Promoter, Directors and Group Companies are
described in this section. The Company, on a consolidated basis, is one of
the largest providers of tower and related infrastructure with operations
across India. Due to the nature and extent of operations of the Company, the
Company and Subsidiary are involved in a large number of cases with
respect to its towers which are situated all over India. The Promoter is a
global telecommunications company which currently has operations across
India and in more than 20 countries which also includes 17 countries in Africa
which were acquired from Zain Telecom in 2010. Due to its nature of
operations, the Promoter is regulated by various regulatory authorities who
have the authority to impose penalties for various levels of default.
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59. MET LEAGUE OF COLLEGES
I.
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Litigation against Bharti Infratel
1. Criminal Cases
There have been 68 criminal cases filed against the Company including
cases in relation to its employees before different forums on grounds of inter
alia nuisance, air and noise pollution and other health hazards caused due to
operation of towers, electricity theft through illegal connection, non-payment
of dues for filling diesel on the Company’s sites, dispute over ownership of
land where towers are commissioned, removal of towers and diesel generator
sets, objection to installation of towers in residential areas, unauthorised and
illegal construction of towers, installation of towers in breach of the
notifications issued by the Ministry of Civil Aviation and failure to obtain
permission from relevant authorities for installation of towers. These matters
are pending.
2. Civil Cases
Regulatory Proceedings
Tax Related Cases
Property Related Cases
Environment Related Cases
Labour Related Cases
Consumer Related Cases
Stamp Duty Related Cases
Arbitration Related Cases
Other Civil Cases
3. Notices
Tax Related Notices
Regulatory Notices
Other Notices
Past Penalties
Others
II. Public Interest Litigation and Writ Petitions involving Bharti Infratel
1. Public Interest Litigation
2. Writ Petitions
In addition to the cases disclosed above, there are 69 writ petitions involving
the Company filed before various High Courts and the Supreme Court in
relation to inter alia air and noise pollution caused by the operation of our
towers, threat to human life and loss of memory and injury to body due to
operation of our towers, installation of tower without requisite permission,
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60. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
disputes in relation to the property where our towers are installed, damage to
property on which our towers are installed, nuisance caused in the residential
area where our towers are installed, imposition of tax for obtaining a noobjection certificate for the installation of towers, imposition of stamp duty,
disconnection of electricity, removal of tower, state imposition of tax on entry
of goods into local area, challenging the state legislation for imposition of the
entry tax, imposition of professional tax for each site and charging of fee for
sharing of towers and renewal. These matters are pending.
Litigation by Bharti Infratel
1. Criminal Cases
There are four criminal cases filed by the Company before various forums
in relation to inter alia dishonour of cheque, recovery of dues and fraud.
These matters are pending.
2. Civil Cases
Tax Related Cases
Arbitration Related Cases
Other Civil Cases
In addition to those indicated above, there are nine other civil cases filed by
the Company in relation to inter alia shutting down of power supply,
hindrance in functioning of towers and nuisance caused by the landlord
impeding peaceful possession of the property. These matters are pending.
Apart from the litigation cases described above, the company also
involved in following cases:
Litigation involving BIVL
Litigation involving Directors
Litigation involving Bharti Airtel
Litigation involving the Group Companies
Litigation involving the Group Companies incorporated in India
Table 8: Litigation against Bharti Infratel
Entity
Involved in
the
litigation
Company
Litigation by
our
Company
Litigation
Against our
Civil Cases
Criminal Cases
Notices
Tax Cases
15
4
_
9
398
68
11
69
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61. MET LEAGUE OF COLLEGES
Entity
Involved in
the
litigation
Company
Total
Number of
Cases
Promoter
and/or
Directors
Litigation by
Promoters
and/or
Directors
Litigation
against
Promoters
and/or
Directors
Total
Number of
Cases
Our Group
Entity
Litigations
by our
Group
Entity
Litigations
against our
Group
Entity
Total
number of
cases
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
Civil Cases
Criminal Cases
Notices
Tax Cases
413
72
11
78
1 (Rakesh B.
Mittal)
1
1
_
2 (1. Akhil
Kumar
Gupta
2. Sarvjit
Singh
Dhillon)
3
2
1
1
3
2
1
43
_
_
_
174
1
_
_
217
1
_
_
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62. MET LEAGUE OF COLLEGES
A REPORT ON CRITICAL DISCLOSURES IN OFFER DOCUMENT
V-Mart Retail Limited
Except as stated in table below, there are no outstanding litigations, suits,
criminal or civil prosecutions, proceedings or tax liabilities against Company,
Directors, Promoters and Group Entity and there are no defaults,
nonpayment of statutory dues, over-dues to banks/financial institutions/small
scale undertaking(s), defaults in dues payable to holders of any debenture,
bonds and fixed deposits and arrears of preference shares issued by
Company, defaults in creation of full security as per terms of issue/ other
liabilities, proceedings initiated for economic/ civil/ any other offences
(including past cases where penalties may or may not have been awarded
and irrespective of whether they are specified under paragraph (I) of Part 1 of
Schedule XIII of the Companies Act) other than unclaimed liabilities of
Company and no disciplinary action has been taken by SEBI or any stock
exchanges against Company, our Directors, our Promoters or our Group
Entity that would result in a material adverse effect on our business taken as
a whole.
Further, (i) neither Company nor Promoters, relatives of Promoters, members
of Promoter Group, Group Entity and directors, have been declared as willful
defaulters by the RBI or any other governmental authority, and, (ii) except as
disclosed in this section, there are no violations of securities law committed
by them or penalties imposed on them there under in the past or pending
against them, and adverse finding regarding compliance with securities law.
A brief summary of litigations and potential litigations in which
Company is involved is under:
Table 9: Litigation for V-Mart Retail Limited
Entity
Involved in
the
litigation
Company
Litigation by
our
Company
Litigation
Against our
Company
Total
Number of
Cases
Promoter
and/or
Directors
Litigation by
Civil
Cases
Criminal
Cases
Tax
Cases
Financial
Implications
(Rs.in mil)
Potential
Litigation
Financial
Implications
(Rs. in mil)
1
-
7
7.37
2
10.17
3
9
5
31.27
6
0.67
4
9
12
38.64
8
10.84
-
-
1
0.03
-
-
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