DRAFT RED HERRING PROSPECTUS Dated: April 22, 2015 (The Draft Red Herring Prospectus will be updated upon filing with the RoC) (Please read Section 32 of the Companies Act, 2013)
100% Book Built Offer
SYNGENE INTERNATIONAL LIMITED
Our Company was incorporated as Syngene International Private Limited on November 18, 1993 at Bengaluru, Karnataka as a private limited company under the Companies Act, 1956. Pursuant to a special resolution of the shareholders dated March 26, 2007, our Company was converted into a public limited company and the name of our Company was changed to Syngene International Limited. A fresh certificate of incorporation consequent upon conversion to public limited company was issued on April 19, 2007. For details of change in the name and registered office of our Company, see “History and Certain Corporate Matters” on page 137.
Registered and Corporate Office: Biocon SEZ, Biocon Park, Plot No. 2 & 3, Bommasandra Industrial Area IV Phase, Jigani Link Road, Bommasandra, Bengaluru 560 099, Karnataka, India Contact Person:. Mayank Verma, Company Secretary and Compliance Officer; Tel: (+91 80) 2808 2808; Fax: (+91 80) 2808 3189
E-mail:[email protected]; Website: www.syngeneintl.com Corporate Identification Number: U51909KA1993PLC014937
OUR PROMOTER: BIOCON LIMITED
INITIAL PUBLIC OFFER OF UP TO 22,000,000EQUITY SHARES OF FACE VALUE OF `10 EACH (“EQUITY SHARES”) OF SYNGENE INTERNATIONAL LIMITED (“COMPANY” OR “ISSUER”) FOR CASH AT A PRICE OF `[●] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF `[●] PER EQUITY SHARE) (“OFFER PRICE”) THROUGH AN OFFER FOR SALE BY BIOCON LIMITED (THE “SELLING SHAREHOLDER”) (“OFFER / OFFER FOR SALE”) AGGREGATING UP TO `[●] MILLION INCLUDING A RESERVATION OF 2,000,000 EQUITY SHARES FOR SUBSCRIPTION BY BIOCON SHAREHOLDERS FOR CASH AT A PRICE OF `[●] PER EQUITY SHARE AGGREGATING UP TO `[●] MILLION (THE “BIOCON SHAREHOLDERS RESERVATION PORTION”). THE OFFER WILL CONSTITUTE 11.0% OF OUR POST-OFFER PAID-UP EQUITY SHARE CAPITAL AND THE NET OFFER SHALL CONSTITUTE 10.0% OF OUR POST-OFFER PAID-UP EQUITY SHARE CAPITAL. OUR COMPANY ALONG WITH THE SELLING SHAREHOLDER MAY, IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS (“BRLMS”), OFFER A DISCOUNT OF UP TO [●]% (EQUIVALENT TO `[●]) ON THE OFFER PRICE TO RETAIL INDIVIDUAL BIDDERS AND BIOCON SHAREHOLDERS (“RETAIL DISCOUNT”).
THE FACE VALUE OF THE EQUITY SHARES IS `10 EACH. THE PRICE BAND, RETAIL DISCOUNT AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDER IN CONSULTATION WITH THE BRLMS AND WILL BE ADVERTISED IN [●] EDITIONS OF [●], ●] EDITIONS OF [●] AND [●] EDITIONS OF [●] (WHICH ARE WIDELY CIRCULATED ENGLISH, HINDI AND KANNADA NEWSPAPERS RESPECTIVELY, KANNADA BEING THE LOCAL LANGUAGE OF KARNATAKA, WHERE OUR REGISTERED OFFICE IS LOCATED) AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO THE BSE LIMITED AND THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED FOR THE PURPOSE OF UPLOADING ON THEIR WEBSITES.
In case of any revision to the Price Band, the Bid/Offer Period will be extended by three additional Working Days after such revision of the Price Band, subject to the Bid/Offer Period not exceeding 10
Working Days. Any revision in the Price Band and the revised Bid/Offer Period, if applicable, will be widely disseminated by notification to BSE Limited (“BSE”) and the National Stock Exchange of
India Limited (“NSE”), by issuing a press release, and also by indicating the change on the website of the BRLMs and at the terminals of the other members of the Syndicate.
In terms of Rule 19(2)(b)(iii) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”), this is a Net Offer for atleast 10% of the post Offer paid-up equity share capital of our
Company. The Offer is being made in accordance with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended
(the “SEBI ICDR Regulations”), through the Book Building Process wherein 50% of the Net Offer shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”), provided that
our Company and the Selling Shareholder may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis, out of which one-third shall be reserved for domestic Mutual Funds only, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Offer Price, in accordance with the SEBI ICDR Regulations. 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Offer Price. Further, not less than 15% of the Net Offer shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders in accordance with
the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All potential investors, other than Anchor Investors, may participate in this Offer through an Application
Supported by Blocked Amount (“ASBA”) process providing details of their respective bank accounts which will be blocked by the Self Certified Syndicate Banks (“SCSBs”). QIBs (except Anchor
Investors), Non-Institutional Bidders and Biocon Shareholders Bidding under the Biocon Shareholders Reservation Portion for a Bid Amount of above `200,000 are mandatorily required to utilise the
ASBA process to participate in this Offer. For details, see “Offer Procedure” on page 265.
RISK IN RELATION TO THE FIRST OFFER
This being the first public issue of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is `10 and the Floor Price is [●] times
the face value and the Cap Price is [●] times the face value.The Offer Price (determined and justified by our Company in consultation with the BRLMs as stated in “Basis for Offer Price” on page 88)
should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the Offer unless they can afford to take the risk of losing their entire investment. Investors are advised to read the risk factors carefully before taking an investment decision in the Offer. For taking an investment decision, investors must rely on their own examination of our Company
and the Offer, including the risks involved. The Equity Shares in the Offer have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee
the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the “Risk Factors” on page 16.
ISSUER’S AND SELLING SHAREHOLDER’S ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of the Offer, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission or inclusion of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Further, the Selling Shareholder accepts responsibility that this Draft Red Herring Prospectus
contains all information about itself and the Equity Shares offered as a Selling Shareholder in the context of the Offer for Sale and further assumes responsibility for statements in relation to it and that
such statements are true and correct in all material respects and are not misleading in any material respect.
LISTING
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the BSE and the NSE. Our Company has received an ‘in-principle’ approval from the BSE and the NSE for the listing of the Equity Shares pursuant to letters dated [●] and [●], respectively. For the purposes of the Offer, the Designated Stock Exchange shall be [●].
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER
Axis Capital Limited
1st floor, Axis House
C 2 Wadia International Centre Pandurang Budhkar Marg, Worli Mumbai 400 025
Maharashtra, India Tel: (+91 22) 4325 2183
Fax: (+91 22) 4325 3000 E-mail: [email protected] Investor Grievance E-mail:
[email protected] Website: www.axiscapital.co.in Contact Person: Kanika Goyal SEBI Registration No.: INM000012029
Credit Suisse Securities (India) Private Limited
9th Floor, Ceejay House
Plot F, Shivsagar Estate
Dr. Annie Besant Road, Worli Mumbai 400 018 Maharashtra, India Tel: (+91 22) 6777 3777
Fax: (+91 22) 6777 3820
E-mail: [email protected] Investor Grievance E-mail:
[email protected] Website: https://www.credit-suisse.com/in/IPO/ Contact Person: Mukti Hariharan
SEBI Registration No.: INM000011161
Jefferies India Private Limited
42/43, 2 North Avenue
Maker Maxity, Bandra-Kurla Complex
Bandra (East) Mumbai 400 051 Maharashtra, India Tel: (+91 22) 4356 6000 Fax: (+91 22) 6765 5595 E-mail: [email protected] Investor Grievance E-mail:
[email protected] Website: www. jefferies.com Contact Person: Ranjan Prabhu SEBI Registration No.: INM000011443
Karvy Computershare Private Limited
Karvy Selenium Tower B
Plot 31-32, Gachibowli Financial District, Nanakramguda Hyderabad 500 032
Tel: (+91 40) 6716 2222
Fax: (+91 40) 2300 1153
Email : [email protected]
Investor Grievance E-mail:
[email protected] Website: http:\\karisma.karvy.com Contact Person: M. Murali Krishna SEBI Registration No.: INR000000221
BID/OFFER PROGRAMME
BID/OFFER OPENS ON [●](1)
BID/OFFER CLOSES ON (FOR QIBs) [●](2)
BID/OFFER CLOSES ON (FOR OTHER BIDDERS) [●]
TABLE OF CONTENTS
SECTION I: GENERAL ... 2
DEFINITIONS AND ABBREVIATIONS ... 2
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA... 12
FORWARD-LOOKING STATEMENTS ... 14
SECTION II: RISK FACTORS ... 16
SECTION III: INTRODUCTION ... 44
SUMMARY OF INDUSTRY ... 44
SUMMARY OF OUR BUSINESS ... 47
SUMMARY OF FINANCIAL INFORMATION ... 52
THE OFFER ... 57
GENERAL INFORMATION ... 59
CAPITAL STRUCTURE ... 68
OBJECTS OF THE OFFER ... 87
BASIS FOR OFFER PRICE ... 88
STATEMENT OF TAX BENEFITS ... 91
SECTION IV: ABOUT OUR COMPANY ... 106
INDUSTRY OVERVIEW ... 106
OUR BUSINESS ... 115
REGULATIONS AND POLICIES ... 128
HISTORY AND CERTAIN CORPORATE MATTERS ... 137
OUR MANAGEMENT ... 146
OUR PROMOTER AND PROMOTER GROUP ... 162
OUR GROUP ENTITIES ... 166
RELATED PARTY TRANSACTIONS ... 173
DIVIDEND POLICY ... 174
SECTION V: FINANCIAL INFORMATION ... 175
FINANCIAL STATEMENTS ... 175
FINANCIAL INDEBTEDNESS ... 176
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ... 189
SECTION VI: LEGAL AND OTHER INFORMATION ... 211
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ... 211
GOVERNMENT APPROVALS ... 231
OTHER REGULATORY AND STATUTORY DISCLOSURES ... 239
SECTION VII: OFFER INFORMATION ... 256
TERMS OF THE OFFER ... 256
OFFER STRUCTURE ... 259
OFFER PROCEDURE ... 265
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ... 317
SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION... 318
SECTION IX: OTHER INFORMATION ... 350
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ... 350
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
This Draft Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or implies, shall have the meaning as provided below. References to any legislation, act or regulation shall be to such legislation, act or regulation, as amended from time to time.
General Terms
Term Description
“our Company”, “the Company” “the Issuer”, “we”, “us” or “our” or “Syngene”
Syngene International Limited, a company incorporated under the Companies Act, 1956 and having its Registered and Corporate Office at Biocon SEZ, Biocon Park, Plot No. 2 & 3, Bommasandra Industrial Area IV Phase, Jigani Link Road, Bommasandra, Bengaluru 560 099, Karnataka, India
Company Related Terms
Term Description
Allegro Allegro Capital Private Limited
Articles of Association Articles of Association of our Company, as amended
Auditors/ Statutory Auditors Statutory auditors of our Company, namely, S.R. Batliboi & Associates LLP, Chartered Accountants
Board/ Board of Directors Board of directors of our Company or a duly constituted committee thereof
BRL Biocon Research Limited
Biocon SEZ / BSEZ Biocon Special Economic Zone located at Plot No. 2 & 3, Bommasandra Industrial Area IV Phase, Jigani Link Road, Bommasandra, Bengaluru
CIL / Clinigene Our estwhile Subsidiary, Clinigene International Limited, a company incorporated under the Companies Act, 1956 and having its registered office at Clinigene House, Tower I, Semicon Park, Phase II, Electronics City, Hosur Road, Bangalore 560 100, Karnataka, India
CEO Chief Executive Officer
Director(s) Director(s) of our Company
Equity Shares Equity shares of our Company of face value of `10 each
ESOP 2011 Syngene Employee Stock Option Plan 2011
Executive Directors Executive Directors of our Company
Group Entities Companies, firms, ventures etc. promoted by our Promoter, irrespective of whether such entities are covered under Section 370(1)(B) of the Companies Act, 1956 or not For details, see “Our Group Entities” on page 166
IVF IVF Trustee Company Private Limited, sole trustee of India Value Fund IV
Key Management Personnel Key management personnel of our Company in terms of Regulation 2(1)(s) of the SEBI ICDR Regulations and the Companies Act, 2013 disclosed in “Our Management” on page 146
Managing Director Managing Director of our Company
Memorandum of Association Memorandum of Association of our Company, as amended
MSEZ Mangalore Special Economic Zone
Promoter/ Biocon Promoter of our Company namely, Biocon Limited
For details, see “Our Promoter and Promoter Group” on page 162
Promoter Group Persons and entities constituting the promoter group of our Company in terms of Regulation 2(1)(zb) of the SEBI ICDR Regulations
Registered and Corporate Office Registered and corporate office of our Company located at Biocon SEZ, Biocon Park, Plot No. 2 & 3, Bommasandra Industrial Area IV Phase, Jigani Link Road, Bommasandra, Bangalore 560 099, Karnataka, India
Registrar of Companies/ RoC Registrar of Companies, Bangalore located at 'E' Wing, 2nd Floor, Kendriya Sadana, Koramangala, Bengaluru 560 034, Karnataka, India
Restated Financial Statements The restated financial statements of our Company for the Financial Years ended March 31, 2010, March 31, 2011, March 31, 2012, March 31, 2013 and March 31, 2014 and for the nine months period ended December 31, 2014, which comprises of the restated statement of assets and liabilities, the restated statement of profits and losses and the restated statement of cash flows and notes to the restated statement of assets and liabilities, the restated statement of profits and losses and the restated statement of cash flows
Term Description
Silver Leaf Silver Leaf Oak (Mauritius) Limited
Subsidiary Erstwhile subsidiary of our Company, namely, Clinigene International Limited Syngene Employee Welfare Trust Syngene International Limited Employee Welfare Trust
Offer Related Terms
Term Description
Allot/ Allotment/ Allotted Transfer of Equity Shares to successful Bidders pursuant to this Offer Allottee A successful Bidder to whom the Equity Shares are Allotted
Allotment Advice Note or advice or intimation of Allotment sent to the Bidders who have been or are to be Allotted the Equity Shares after the Basis of Allotment has been approved by the Designated Stock Exchange
Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion in accordance with the SEBI ICDR Regulations
Anchor Investor Allocation Price The price at which Equity Shares will be allocated to Anchor Investors at the end of the Anchor Investor Bid Period
Anchor Investor Bid/ Offer Period The day, one Working Day prior to the Bid/ Offer Opening Date, on which Bids by Anchor Investors shall be submitted
Anchor Investor Offer Price Final price at which the Equity Shares will be Allotted to Anchor Investors in terms of the Red Herring Prospectus and the Prospectus, which price will be equal to or higher than the Offer Price but not higher than the Cap Price
The Anchor Investor Offer Price will be decided by our Company and the Selling Shareholder in consultation with the BRLMs
Anchor Investor Portion Up to 60% of the QIB Portion which may be allocated by our Company and the Selling Shareholder in consultation with the BRLMs to Anchor Investors on a discretionary basis
One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Offer Price
Application Supported by Blocked Amount or ASBA
An application, whether physical or electronic, used by Bidders, other than Anchor Investors, to make a Bid authorising an SCSB to block the Bid Amount in the ASBA Account
ASBA is mandatory for QIBs (except Anchor Investors) and Non-Institutional Bidders participating in the Offer
ASBA Account An account maintained with an SCSB and specified in the Bid cum Application Form submitted by ASBA Bidders for blocking the Bid Amount mentioned in the Bid cum Application Form
ASBA Bid A Bid made by an ASBA Bidder
ASBA Bidder Prospective investors (other than Anchor Investors) in the Offer who intend to submit Bid through the ASBA process
All QIBs (except Anchor Investors), Non-Institutional Bidders and Biocon Shareholders Bidding under the Biocon Shareholders Reservation Portion for a Bid Amount of above `200,000 shall mandatorily participate in the Issue through ASBA
Axis Axis Capital Limited
Banker(s) to the Offer/ Escrow Collection Bank(s)
Banks which are clearing members and registered with SEBI as bankers to an issue and with whom the Escrow Account will be opened, in this case being [●]
Basis of Allotment Basis on which Equity Shares will be Allotted to successful Bidders under the Offer and which is described in “Offer Procedure” on page 265
Bid An indication to make an offer during the Bid/ Offer Period by a Bidder (other than an Anchor Investor) pursuant to submission of the Bid cum Application Form, or during the Anchor Investor Bid/ Offer Period by the Anchor Investors, to subscribe to or purchase the Equity Shares of our Company at a price within the Price Band, including all revisions and modifications thereto as permitted under the SEBI ICDR Regulations The term “Bidding” shall be construed accordingly
Bid Amount The highest value of optional Bids indicated in the Bid cum Application Form and payable by the Bidder/blocked in the ASBA Account upon submission of the Bid in the Offer
For Retail Individual Bidders and Biocon Shareholders Bidding under the Biocon Shareholders Reservation Portion (subject to the Bid Amount being upto `200,000),
Term Description the Bid Amount shall be net of Retail Discount
Bid cum Application Form The form used by a Bidder, including an ASBA Bidder, to make a Bid and which will be considered as the application for Allotment in terms of the Red Herring Prospectus and the Prospectus
Bid/ Offer Closing Date Except in relation to any Bids received from the Anchor Investors, the date after which the Syndicate, the Designated Branches and the Registered Brokers will not accept any Bids, which shall be notified in two national daily newspapers, one each in English and Hindi, and in one Kannada daily newspaper, each with wide circulation
Our Company and the Selling Shareholder may, in consultation with the BRLMs, consider closing the Bid/ Offer Period for QIBs one Working Day prior to the Bid/ Offer Closing Date in accordance with the SEBI ICDR Regulations
Bid/ Offer Opening Date Except in relation to any Bids received from the Anchor Investors, the date on which the Syndicate, the Designated Branches and the Registered Brokers shall start accepting Bids, which shall be notified in two national daily newspapers, one each in English and Hindi, and in one Kannada daily newspaper, each with wide circulation Bid/ Offer Period Except in relation to Anchor Investors, the period between the Bid/ Offer Opening
Date and the Bid/ Offer Closing Date, inclusive of both days, during which prospective Bidders can submit their Bids, including any revisions thereof
Bid Lot [●]
Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form and unless otherwise stated or implied, includes an ASBA Bidder and an Anchor Investor
Biocon Shareholders Individuals and HUFs who are the public equity shareholders of the Promoter, Biocon (excluding such other persons not eligible under applicable laws, rules, regulations and guidelines) as on the date of the Red Herring Prospectus
Biocon Shareholders Reservation Portion
Reservation of 2,000,000 Equity Shares of the face value of `10 each aggregating to
`[y] million in favour of the Biocon Shareholders
Book Building Process Book building process, as provided in Schedule XI of the SEBI ICDR Regulations, in terms of which the Offer is being made
BRLMs or Book Running Lead Managers
The book running lead managers to the Offer namely, Axis Capital Limited, Credit Suisse Securities (India) Private Limited and Jefferies India Private Limited
Broker Centres Broker centres notified by the Stock Exchanges where Bidders can submit the Bid cum Application Forms to a Registered Broker
The details of such Broker Centres, along with the names and contact details of the Registered Broker are available on the respective website of the Stock Exchanges (www.bseindia.com and www.nseindia.com)
CAN/ Confirmation of Allocation Note
Notice or intimation of allocation of the Equity Shares to be sent to Anchor Investors, who will be allocated the Equity Shares, after the Anchor Investor Bid/ Offer Period Cap Price The higher end of the Price Band, above which the Offer Price will not be finalised and
above which no Bids will be accepted
Credit Suisse Credit Suisse Securities (India) Private Limited
Client ID Client identification number of the Bidder’s beneficiary account
Cut-off Price Offer Price, finalised by our Company and the Selling Shareholder in consultation with the BRLMs
Only Retail Individual Bidders and Biocon Shareholders Bidding under the Biocon Shareholders Reservation Portion (subject to the Bid Amount being upto `200,000 net of Retail Discount, if any) are entitled to Bid at the Cut-off Price. No other category of Bidders is entitled to Bid at the Cut-off Price
Designated Branches Such branches of the SCSBs which shall collect the Bid cum Application Forms used by the ASBA Bidders, a list of which is available on the website of SEBI at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries and updated from time to time or at such other website as may be prescribed by SEBI from time to time
Designated Date The date on which the Escrow Collection Banks transfer funds from the Escrow Accounts to the Public Issue Account or the Refund Account, as appropriate, and the SCSBs issue instructions for transfer of funds from the ASBA Accounts, to the Public Issue Account or unblock such amounts, as appropriate, in terms of the Red Herring Prospectus
Designated Stock Exchange [●] Draft Red Herring Prospectus or DRHP
This Draft Red Herring Prospectus dated April 22, 2015 issued in accordance with the SEBI ICDR Regulations, which does not contain complete particulars, including of the price at which the Equity Shares will be Allotted and the size of the Offer
Term Description
Eligible NRI(s) NRI(s) from jurisdictions outside India where it is not unlawful to make an offer or invitation under the Offer and in relation to whom the Red Herring Prospectus will constitute an invitation to subscribe for or purchase the Equity Shares
Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour the Bidders (excluding the ASBA Bidders) will issue cheques or drafts in respect of the Bid Amount when submitting a Bid
Escrow Agent Escrow agent appointed pursuant to the Share Escrow Agreement, namely, [●]
Escrow Agreement Agreement to be entered into by our Company, the Selling Shareholder, the Registrar to the Offer, the BRLMs, the Syndicate Members, the Escrow Collection Bank(s) and the Refund Bank(s) for collection of the Bid Amounts and where applicable, refunds of the amounts collected from the Bidders (excluding the ASBA Bidders), on the terms and conditions thereof
First Bidder Bidder whose name appears first in the Bid cum Application Form and the Revision Form in case of joint Bids, whose name shall also appear as the first holder of the beneficiary account held in joint names
Floor Price The lower end of the Price Band, subject to any revision thereto, at or above which the Offer Price and the Anchor Investor Offer Price will be finalised and below which no Bids will be accepted
General Information Document The General Information Document for investing in public issues prepared and issued in accordance with the circular (CIR/CFD/DIL/12/2013) dated October 23, 2013, notified by SEBI, suitably modified and included in “Offer Procedure” on page 265
Jefferies Jefferies India Private Limited
Mutual Funds Mutual funds registered with SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996
Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion), or 200,000 Equity Shares which shall be available for allocation to Mutual Funds only
Net Offer The Offer less the Biocon Shareholders Reservation Portion
Non-Institutional Bidders All Bidders including Category III Foreign Portfolio Investors that are not QIBs or Retail Individual Bidders and who have Bid for Equity Shares for an amount more than
`200,000 (but not including NRIs other than Eligible NRIs)
Non-Institutional Portion The portion of the Net Offer being not less than 15% of the Net Offer consisting of 3,000,000 Equity Shares which shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Offer Price
Offer / Offer for Sale Public offer for sale of up to 22,000,000 Equity Shares through an offer for sale by the Selling Shareholder at the Offer Price aggregating up to `[●] million in terms of the Red Herring Prospectus. The Offer comprises the Net Offer and the Biocon Shareholders Reservation Portion
Offer Agreement The agreement dated April 22, 2015 between our Company, the Selling Shareholder, the BRLMs, pursuant to which certain arrangements are agreed to in relation to the Offer
Offer Price The final price (less any Retail Discount) at which Equity Shares will be Allotted in terms of the Red Herring Prospectus
The Offer Price will be decided by our Company and the Selling Shareholder in consultation with the BRLMs on the Pricing Date
Price Band Price band of the Floor Price and the Cap Price including any revisions thereof The Price Band, any Retail Discount and the minimum Bid Lot size for the Offer will be decided by our Company and the Selling Shareholder in consultation with the BRLMs and will be advertised, at least five Working Days prior to the Bid/ Offer Opening Date, in [●] edition of the English national newspaper [●], [●] edition of the Hindi national newspaper [●], and [●] edition of Kannada (Kannada being the regional language of Karnataka, where are Registered and Corporate Office is located) newspaper [●], each with wide circulation
Pricing Date The date on which our Company, in consultation with the BRLMs, will finalise the Offer Price
Prospectus The Prospectus to be filed with the RoC after the Pricing Date in accordance with Section 26 of the Companies Act, 2013 and the SEBI ICDR Regulations, containing,
inter-alia, the Offer Price that is determined at the end of the Book Building Process, the size of the Offer and certain other information including any addenda or corrigenda thereto
Public Issue Account(s) Account opened with the Bankers to the Offer under Section 40(3) of the Companies Act, 2013 to receive monies from the Escrow Account(s) and ASBA Accounts on the Designated Date
Term Description
QIB Category/ QIB Portion The portion of the Net Offer (including the Anchor Investor Portion) being 50% of the Net Offer consisting of 10,000,000 Equity Shares which shall be allocated to QIBs (including Anchor Investors)
Qualified Institutional Buyers or QIBs
Qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI ICDR Regulations
Red Herring Prospectus or RHP The Red Herring Prospectus to be issued in accordance with Section 32 of the Companies Act, 2013 and the provisions of the SEBI ICDR Regulations, which will not have complete particulars of the price at which the Equity Shares will be offered and the size of the Offer including any addenda or corrigenda thereto
The Red Herring Prospectus will be registered with the RoC at least three days before the Bid/ Offer Opening Date and will become the Prospectus upon filing with the RoC after the Pricing Date
Refund Account(s) The account opened with the Refund Bank(s), from which refunds, if any, of the whole or part of the Bid Amount (excluding refund to ASBA Bidders) shall be made
Refund Bank(s) [●]
Refunds through electronic transfer of funds
Refunds through NECS, direct credit, RTGS or NEFT, as applicable
Registered Brokers Stock brokers registered with the stock exchanges having nationwide terminals, other than the members of the Syndicate and eligible to procure Bids in terms of the circular No. CIR/CFD/14/2012 dated October 4, 2012 issued by the SEBI
Registrar to the Offer or Registrar Karvy Computershare Private Limited
Retail Discount Discount of up to [●]% (equivalent to `[●]) to the Offer Price that may be offered to Retail Individual Bidders and Biocon Shareholders Bidding under the Biocon Shareholders Reservation Portion (subject to the Bid Amount being upto `200,000 net of Retail Discount) by our Company and the Selling Shareholder in consultation with the BRLMs at the time of making the Bid
Retail Individual Bidder(s) Individual Bidders who have Bid for the Equity Shares for an amount of not more than
`200,000 in any of the bidding options in the Offer (including HUFs applying through their Karta and Eligible NRIs)
Retail Portion The portion of the Net Offer being not less than 35% of the Net Offer consisting of 7,000,000 Equity Shares which shall be available for allocation to Retail Individual Bidder(s) in accordance with the SEBI ICDR Regulations
Revision Form Form used by the Bidders, including ASBA Bidders, to modify the quantity of the Equity Shares or the Bid Amount in any of their Bid cum Application Forms or any previous Revision Form(s) as applicable
QIB Bidders and Non-Institutional Bidders are not allowed to lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage
Self Certified Syndicate Bank(s) or SCSB(s)
The banks registered with SEBI, offering services in relation to ASBA, a list of which is available on the website of SEBI at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries and updated from time to time
Selling Shareholder Biocon Limited
Share Escrow Agreement The agreement to be entered into among the Selling Shareholder, our Company and the Escrow Agent in connection with the transfer of Equity Shares under the Offer for Sale by the Selling Shareholder and credit of such Equity Shares to the demat account of the Allottees
Specified Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms from ASBA Bidders, a list of which is available at the website of the SEBI at www.sebi.gov.in/sebiweb.home/list/5/33/0/0/Recognised-Intermediaries and updated from time to time
Syndicate Agreement Agreement to be entered into among the BRLMs, the Syndicate Members, our Company and the Selling Shareholder in relation to the collection of Bids in the Offer (other than Bids directly submitted to the SCSBs under the ASBA process and Bids submitted to Registered Brokers at the Broker Centres)
Syndicate Members Intermediaries registered with SEBI who are permitted to carry out activities as an underwriter, namely, [●]
Syndicate or members of the Syndicate
The BRLMs and the Syndicate Members
Transaction Registration Slip The slip or document issued by the Syndicate, Registered Brokers, or the SCSB (only on demand), as the case may be, to the Bidder as proof of registration of the Bid
Underwriters The BRLMs and the Syndicate Members
Underwriting Agreement The agreement among the Underwriters, our Company and the Selling Shareholder to be entered into on or after the Pricing Date
Term Description
Working Day Any day, other than Saturdays and Sundays, on which commercial banks in Mumbai are open for business, provided however, for the purpose of the time period between the Bid/ Offer Closing Date and listing of the Equity Shares on the Stock Exchanges, “Working Days” shall mean all days excluding Sundays and bank holidays in Bengaluru or Mumbai in accordance with the SEBI circular no. CIR/CFD/DIL/3/2010 dated April 22, 2010
Technical/Industry Related Terms/ Abbreviations
Term Description
AAALAC Association for Assessment and Accreditation of Laboratory Animal Care
International
API Active Pharmaceutical Ingredient; any substance (or mixture of substances) intended to be used in the manufacture of a drug product and that, when used in the production of a drug, becomes an active ingredient in the drug product. The active ingredient is the biologically active part of a drug and is intended to cause pharmacological activity. When this biological activity takes place, it helps in the diagnosis, cure, mitigation, treatment or prevention of disease or to affect the structure and function of the body. An API can be a chemical molecule or a biomolecule or a combination of both ADC Antibody-drug conjugate; a drug molecule created by linking (or conjugating) an
Antibody to a chemical drug molecule. The combined entity becomes a “second -generation” version of the original drug. An ADC combines the specific targeting properties of the antibody, and the drug-like properties of both the antibody and the chemical drug, for effective action
Antibodies Category of biomolecules, which are produced by living organisms to attack and neutralize an undesired agent such as an infection or a “wayward” protein in the body Biomolecule Any molecule that is present in living organisms, which includes large macro
molecules such as proteins, polysaccharides, lipids, and nucleic acids, and small molecules such as primary metabolites, secondary metabolites, and natural products BA/BE Studies Bioavailability and Bioequivalence Studies; studies conducted to determine the
equality between the test medicine and the medicine that is already available in the market. This is done by performing dissolution tests in laboratory and clinical studies in healthy volunteers. BA/BE studies are required for medicines to be marketed in different countries
Clinical Studies Studies done for NMEs in humans where the safety and efficacy of a new drug is evaluated. Typically clinical trials are done in three phases prior to regulatory approval
CRO Custom Research Organisation
DNA Deoxy ribonucleic Acid; a molecule which encodes genetic information in most known living organisms and many viruses. The genetic information is coded by pairing specific molecules in certain combinations, which are then interpreted by the body
GLP Good Laboratory Practices
GMP Good Manufacturing Practices
IND Investigational New Drug status which when granted by the USFDA to a molecule
allows it to be used for clinical trials. U.S. federal law requires a drug to be the subject of an approved marketing application before it is transported or distributed across state lines in U.S. A clinical trial being conducted in the U.S. requires the NME to be shipped for investigators in many states. IND is the means through which the trial sponsor obtains an exemption from this requirement from the USFDA.
In Vivo This phrase means “in life”, i.e., in living organisms. Animal studies and clinical trials
are two forms of in vivo research. In the discovery and development continuum, animal studies precede testing in humans. Such studies are used to evaluate the safety and toxicological profile of the drug under evaluation
Monoclonal antibodies Highly specific types of antibodies produced artificially using biotechnology, and used in research, diagnostics and as therapeutics (i.e., as drugs)
NME Novel Molecular Entities; a drug (chemical or biomolecule) that is without precedent among regulated and approved drug products. NME designation indicates that a drug in development is not a version or derivative of an existing and previously investigated, trialed and approved substance. If the NME is a chemical molecule, it may be called a New Chemical Entity (NCE) and if it is a biomolecule, it may be called a New Biological Entity (NBE)
Oligonucleotides Single stranded DNA/RNA or short polymer of nucleotides usually less than 50 nucleotides, used in research, genetic testing and forensics. These represent a new therapeutic domain being researched for a variety of diseases
Pharmacovigilance The practice of monitoring the effects of medical drugs after they have been licensed for use, especially in order to identify and evaluate previously unreported adverse
Term Description reactions
Pre-clinical studies Studies conducted before clinical trials (testing in humans) and aimed at generating drug safety. The studies evaluate the pharmacodynamics and pharmacokinetics of drugs in addition to toxicity testing in animals. The studies include: pharmacodynamics studies which try to understand what the drug does to the body, pharmacokinetics studies which try to understand what the body does to the drug, and toxicity studies which intend to collect safety related data on drugs by testing them in various animal species. Typically, in drug development studies animal testing involves two species. The most commonly used models are murine and canine, along with primate and porcine
R&D Research and Development
Recombinant proteins Proteins produced in a laboratory or industrial setting by use of “recombinant DNA” technology, wherein organisms such as bacteria or cells are genetically modified to produce a specific protein that they do not normally produce; unlike proteins are naturally occurring biomolecules (large sized molecules produced by living organisms). Recombinant proteins are commonly used as drugs, often to supplement a deficiency in a patient (e.g. insulin for an insulin-deficient person)
Scientist Our Company’s employees in technical roles whose highest educational degree is in the sciences (Physics, Chemistry, Biology and related areas)
Conventional and General Terms or Abbreviations
Term Description
ACIT Assistant Commissioner of Income Tax
AED Emirati Dirham
AGM Annual General Meeting
AIF Alternative Investment Fund as defined in and registered with SEBI under the SEBI AIF Regulations
Air Act Air (Prevention and Control of Pollution) Act, 1981
AS/ Accounting Standards Accounting Standards issued by the Institute of Chartered Accountants of India
Boilers Act Indian Boilers Act, 1923
BSE BSE Limited
BMW Rules Bio-Medical Waste (Management and Handling) Rules, 1998 Compounded Annual Growth
Rate / CAGR
Annualised average year-over-year growth rate over a specified period of time. Category I Foreign Portfolio
Investors
FPIs who are registered as “Category I foreign portfolio investors” under the SEBI FPI Regulations
Category II Foreign Portfolio Investors
FPIs who are registered as “Category II foreign portfolio investors” under the SEBI FPI Regulations
Category III Foreign Portfolio Investors
FPIs who are registered as “Category III foreign portfolio investors” under the SEBI FPI Regulations which shall include investors who are not eligible under Category I and II foreign portfolio investors such as endowments, charitable societies, charitable trusts, foundations, corporate bodies, trusts, individuals and family offices
CDSL Central Depository Services (India) Limited
Central Excise Act The Central Excise Act, 1944
CENVAT Central Value Added Tax
CESTAT Customs, Excise and Service Tax Appellate Tribunal
CHF Swiss Franc
CIN Corporate Identity Number
CIT Commissioner of Income Tax
CIT(A) Commissioner of Income Tax (Appeals)
Companies Act Companies Act, 1956 and/ or the Companies Act, 2013 as applicable
Companies Act, 1956 Companies Act, 1956, and the rules thereunder (without reference to the provisions thereof that have ceased to have effect upon the notification of the Notified Sections) Companies Act, 2013 The Companies Act, 2013, and the rules and clarifications issued thereunder to the
extent in force pursuant to the notification of the Notified Sections
CPCSEA Committee for the Purpose of Control and Supervision on Experimentaion with
Animals
Customs Act The Customs Act, 1962
DCA Drugs and Cosmetics Act, 1940
DCA Rules The Drugs and Cosmetics Rules, 1945
DCIT Deputy Commissioner of Income Tax
DCWT Deputy Commissioner of Wealth Tax
Term Description shareholders’ funds
Depositories NSDL and CDSL
Depositories Act Depositories Act, 1996
DPCO Drugs (Prices Control) Order, 2013
Drugs Act Drugs (Control) Act, 1950
DIN Director Identification Number
DIPP Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India
DP ID Depository Participant’s Identification
DP/ Depository Participant A depository participant as defined under the Depositories Act
EBITDA Earnings before finance cost, tax, depreciation and amortisation, calculated as total revenue (revenue from operations and other income) less total expenses (expenses other than depreciation and amortisation, finance cost and tax)
Effective Tax Rate Total tax expenses divided by restated profit before tax
EGM Extraordinary General Meeting
EMA European Medicines Agency
EOU Export Oriented Unit
EPF Act Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
EPA Environment Protection Act, 1986
EPS Earnings Per Share
Equity Listing Agreement Listing Agreement to be entered into with each of the Stock Exchanges on which the Equity Shares of our Company are to be listed
ESI Act Employees State Insurance Act, 1948
Explosives Act Explosives Act, 1884
Factories Act Factories Act, 1948
FCNR Foreign Currency Non-Resident
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, and the rules and regulations thereunder FEMA Regulations FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations,
2000 and amendments thereto
FII(s) Foreign institutional investors as defined under the SEBI FPI Regulations FPI(s) Foreign portfolio investors as defined under the SEBI FPI Regulations
Financial Year/ Fiscal/ FY Unless stated otherwise, the period of 12 months ending March 31 of that particular year
FIPB Foreign Investment Promotion Board
FVCI Foreign venture capital investors as defined and registered under the SEBI FVCI Regulations
GDP Gross Domestic Product
GIR General Index Register
GoI or Government Government of India
Gratuity Act Payment of Gratuity Act, 1972
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
ICMR The Indian Council of Medical Research
ID Act Industrial Disputes Act, 1947
IFRS International Financial Reporting Standards
Income Tax Act, IT Act The Income Tax Act, 1961
India Republic of India
Indian GAAP Generally Accepted Accounting Principles in India
IRDA Insurance Regulatory and Development Authority
IST Indian Standard Time
IT Department Department of Income Tax
IT Information Technology
KSPCB Karnataka State Pollution Control Board
KPME Act The Karnataka Private Medical Establishment Act, 2007
LIBOR London Interbank Offered Rate
MICR Magnetic Ink Character Recognition
Minimum Wages Act The Minimum Wages Act, 1948
Mutual Fund (s) Mutual Fund (s) means mutual funds registered under the SEBI (Mutual Funds) Regulations, 1996
MWA Minimum Wages Ac, 1948
Narcotic Acts Narcotic Drugs and Psychotropic Substances Act, 1985
Term Description
NAV Net Asset Value
NECS National Electronic Clearing Services
NEFT National Electronic Fund Transfer
Net Asset Value per Equity Share (Net Worth at the end of the period/year) divided by (Total number of equity shares outstanding at the end of the period/year). Shares allotted to ESOP trust pursuant to the employee share based plan is not included in the shares outstanding at the end of the period/year till the employees have exercised their right to obtain shares, after fulfilling the requisite vesting conditions.
Net Profit Margin Restated profit divided by total revenue
Net Worth Equity share capital plus reserves and surplus (including securities premium, general reserve, stock options outstanding and surplus in statement of profit and loss less amount recoverable from Syngene Employee Welfare Trust)
Non-Resident A person resident outside India, as defined under FEMA and includes a Non Resident Indian, FIIs, and FPIs
Notified Sections The sections of the Companies Act, 2013 that have been notified by the Ministry of Corporate Affairs, Government of India, and are currently in effect
NR Non-resident
NRE Account Non Resident External Account
NRI A person resident outside India, who is a citizen of India or a person of Indian origin, and shall have the meaning ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2000
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB/ Overseas Corporate Body A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly and which was in existence on October 3, 2003 and immediately before such date had taken benefits under the general permission granted to OCBs under FEMA. OCBs are not allowed to invest in the Offer
p.a. Per annum
P/E Ratio Price/ Earnings Ratio
PAN Permanent Account Number
PAT Profit After Tax
Patents Act The Patents Act, 1970
Payment of Bonus Act Payment of Bonus Act, 1965
PCA Act Prevention of Cruelty to Animals Act, 1960
PCB Pollution Control Board
Petroleum Act The Petroleum Act, 1934
Poisons Act The Poisons Act, 1919
PWA Payment of Wages Act, 1936
RBI The Reserve Bank of India
RM Malaysian Ringgit
RoNW Return on Net Worth
` / Rs./ Rupees/ INR Indian Rupees
RTGS Real Time Gross Settlement
SCRA Securities Contracts (Regulation) Act, 1956
SCRR Securities Contracts (Regulation) Rules, 1957
SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992
SEBI Act Securities and Exchange Board of India Act 1992
SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
SEBI ESOP Regulations Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014
SEBI FII Regulations Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995
SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014
SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000
SEBI ICDR Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 Securities Act U.S. Securities Act of 1933, as amended
Term Description
SEZ Special Economic Zone
SEZ Act The Special Economic Zones Act, 2005
sq. ft. Square feet
STT Securities Transaction Tax
State Government The government of a state in India
Stock Exchanges The BSE and the NSE
Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
Trade Marks Act Trade Marks Act, 1999
Trade Unions Act Trade Unions Act, 1926
ULIP Unit Linked Insurance Plan
U.S./ USA/ United States United States of America
USFDA / FDA United States Food and Drug Administration
US GAAP Generally Accepted Accounting Principles in the United States of America
USD/ US$ United States Dollars
US Persons As defined in Regulation S under the Securities Act
US QIBs Qualified Institutional Buyers as defined in Rule 144A under the Securities Act
VAT Value added tax
VCFs Venture Capital Funds as defined in and registered with SEBI under the SEBI VCF Regulations or the SEBI AIF Regulations, as the case may be
Water Act Water (Prevention and Control of Pollution) Act, 1974 Water Cess Act Water (Prevention & Control of Pollution) Cess Act, 1977 Water Cess Rules Water (Prevention & Control of Pollution) Cess Rules, 1978
The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms under the SEBI ICDR Regulations, the Companies Act, the SCRA, the Depositories Act and the rules and regulations made thereunder.
Notwithstanding the foregoing, terms in the “Statement of Tax Benefits”, “Industry Overview”, “Financial
Statements”, “Outstanding Litigation and Material Developments” and “Main Provisions of Articles of
Association” on pages 91, 106, 175, 211 and 318, respectively, shall have the meaning given to such terms in
such sections. Page numbers refer to page number of this Draft Red Herring Prospectus, unless otherwise specified.
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA Certain Conventions
All references in this Draft Red Herring Prospectus to “India” are to the Republic of India. All references to the
“U.S.”, “USA” or “United States” are to the United States of America.
Unless stated otherwise, all references to page numbers in this Draft Red Herring Prospectus are to the page numbers of this Draft Red Herring Prospectus.
Financial Data
Unless stated or the context requires otherwise, the financial data in this Draft Red Herring Prospectus is derived from our Restated Financial Statements prepared in accordance with the Companies Act, Indian GAAP and restated in accordance with the SEBI ICDR Regulations.
In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. All figures in decimals have been rounded off to one decimal and all percentage figures have been rounded off to one decimal place and accordingly there may be consequential changes in this Draft Red Herring Prospectus.
Our Company’s financial year commences on April 1 and ends on March 31 of the next year. Accordingly, all
references to a particular financial year, unless stated otherwise, are to the 12 month period ended on March 31 of that year.
There are significant differences between Indian GAAP, US GAAP and IFRS. Our Company does not provide reconciliation of its financial information to IFRS or US GAAP. Our Company has not attempted to explain those differences or quantify their impact on the financial data included in this Draft Red Herring Prospectus and it is urged that you consult your own advisors regarding such differences and their impact on our
Company’s financial data. For details in connection with risks involving differences between Indian GAAP and
IFRS, see “Risk Factors” on page 16. Accordingly, the degree to which the financial information included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting policies and practices, the Companies Act and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting policies and practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.
Unless the context otherwise indicates, any percentage amounts, as set forth in the “Risk Factors”, “Our
Business” and “Management’s Discussion and Analysis of Financial Conditional and Results of Operations” on
pages 16, 115 and 189 respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated on the basis of the Restated Financial Statements of our Company prepared in accordance with the Companies Act, Indian GAAP and restated in accordance with the SEBI ICDR Regulations.
Currency and Units of Presentation All references to:
x “Rupees” or “`” or “INR” or “Rs.” are to Indian Rupee, the official currency of the Republic of India;
x “USD” or “US$” or “$” are to United States Dollar, the official currency of the United States;
x “Euro” or “€” are to Euro, the official currency of the Eurozone (the monetary union of the European
Union);
x “AED” are to Emirati Dirham, the official currency of United Arab Emirates;
x “CHF” are to Swiss Francs, the official currency of Switzerland; and
x “RM” are to Malaysian Ringgit, the official currency of Malaysia.
Our Company has presented all numerical information in this Draft Red Herring Prospectus in “million” units or in whole numbers where the numbers have been too small to represent in millions. One million represents 1,000,000 and one billion represents 1,000,000,000.
Exchange Rates
This Draft Red Herring Prospectus contains conversions of certain other currency amounts into Indian Rupees that have been presented solely to comply with the SEBI ICDR Regulations. These conversions should not be construed as a representation that these currency amounts could have been, or can be converted into Indian Rupees, at any particular rate or at all.
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the respective foreign currencies:
Currency As on March 31, 2010 (`) As on March 31, 2011 (`) As on March 31, 2012(1) (`) As on March 31, 2013(2) (`) As on March 31, 2014(3) (`) As on December 31, 2014 (`) 1 USD(a) 45.1 44.7 51.2 54.4 60.1 63.3 1 Euro(a) 60.6 63.2 68.3 69.5 82.6 77.0 1 AED(b) 12.2 12.4 14.2 14.9 16.3 17.3 1 CHF(b) 42.3 49.1 57.5 57.1 67.4 64.3 1 RM(b) 13.8 14.9 16.9 17.5 18.3 18.2
(a) (Source: https://rbi.org.in) (b) (Source: www.oanda.com)
(1)
Exchange rate as on March 30, 2012, reference rate is not available for March 31, 2012 being a Saturday.
(2)
Exchange rate as on March 28, 2013, reference rate is not available for March 31, 2013, March 30, 2013 and March 29, 2013 being a Sunday, Saturday and a public holiday, respectively.
(3)
Exchange rate as on March 28, 2014, reference rate is not available for March 31, 2014, March 30, 2014 and March 29, 2014 being a public holiday, a Sunday and a Saturday, respectively.
Industry and Market Data
Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has been obtained or derived from publicly available information as well as industry publications and sources.
Industry publications generally state that the information contained in such publications has been obtained from publicly available documents from various sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe the industry and market data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified by us or the BRLMs or any of their affiliates or advisors. The data used in these sources may have been reclassified by us for the purposes of presentation. Data from these sources may also not be comparable. Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various factors, including those discussed in the “Risk Factors” on page 16. Accordingly, investment decisions should not be based solely on such information.
Certain information in the “Summary of Industry”, “Summary of our Business”, “Industry Overview” and “Our
Business” on pages 44, 47, 106 and 115 has been obtained from various industry sources identified in these sections.
The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful
depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.
There are no standard data gathering methodologies in the industry in which the business of our Company is conducted, and methodologies and assumptions may vary widely among different industry sources.
FORWARD-LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward-looking
statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe our Company’s strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are based on our current plans, estimates, presumptions and expectations and are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement.
Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties or assumptions associated with the expectations with respect to, but not limited to, regulatory changes pertaining to the industry in India in which our Company has businesses and our ability to respond to them, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes and changes in competition in its industry. Important factors that could cause actual results to differ materially from our
Company’s expectations include, but are not limited to, the following:
x our dependence on a limited number of clients, and a loss of or significant decrease in business from them;
x our dependence on the continued outsourcing of R&D by pharmaceutical, biotechnology, agro-chemistry, consumer health, animal health and cosmetic industry companies;
x failure to obtain or retain the various approvals and licenses required to operate our business; x failure to effectively develop and market new services;
x our reliance on third parties for certain services and any disruption, deficiency in service or increase in cost of such services;
x our ability to effectively compete against current and future competitors;
x failure to maintain sufficient insurance coverage to cover all possible economic losses and liabilities associated with our business;
x failure to protect the intellectual property rights of our clients;
x our exposure to risks associated with fluctuations in foreign exchange rates; x our ability to attract and retain our key personnel;
x outcome of legal proceedings pending against us;
x risks arising from changes in interest rates, currency fluctuations and inflation; and x general economic and business conditions in India and other countries.
For further discussion of factors that could cause the actual results to differ from the expectations, see the “Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” on pages 16, 115 and 189, respectively. By their nature, certain market risk disclosures are only
estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated and are not a guarantee of future performance.
Although we believe that the assumptions on which such forward-looking statements are based are reasonable, we cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements and not to regard such statements as a guarantee of future performance.
Forward-looking statements reflect the current views of our Company as of the date of this Draft Red Herring Prospectus and are not a guarantee of future performance. These statements are based on the management’s belief and assumptions, which are based on currently available information. Neither our Company, our Directors, the Selling Shareholder, the BRLMs nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, our Company, the BRLMs and the Selling Shareholder shall ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock
Exchanges for this Offer. Further, in accordance with Regulation 51A of the SEBI ICDR Regulations, our Company may be required to undertake an annual updation of the disclosures made in the Draft Red Herring Prospectus and make it publicly available in the manner specified by SEBI.
SECTION II: RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all the information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually occur, our cash flows, business, financial condition and results of operations could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. The financial and other related implications of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are risk factors where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. 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. Before making an investment decision, investors must rely on their own examination of the offer and us.
This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the considerations described below and elsewhere in this
Draft Red Herring Prospectus. See “Forward-Looking Statements” on page 14.
Internal Risks
1. Our contracts are generally terminable on little or no notice. Any delay in the renewal or the termination of a large contract for services or multiple contracts for services could adversely affect our revenue and profitability.
Our contracts are generally terminable without cause upon 30 to 90 days’ notice by the client. Clients may terminate, cancel or delay contracts for various reasons, including the client’s decision to downsize its product development portfolios, the client’s decision to change their outsourcing strategy and the client’s dissatisfaction with our performance, including the quality or accuracy of the data or reports provided and our ability to meet agreed upon schedules. In addition, certain of our contracts also allow for termination in the event of any change in the beneficial ownership of our Promoter, Biocon, or our Company that results in a change of control. We have experienced termination or cancellation by certain clients in the ordinary course of business. The reasons more frequently given for termination by our clients include a consolidation or merger of the client, the client’s decision to forgo a particular study, the failure of drugs to satisfy efficacy and/or safety requirements, and unexpected or undesired results of drug testing, the performance of our Company or the decision of the client to move their business to a different CRO.
The loss or delay of a programme or large contract or the loss or delay of multiple smaller contracts could adversely affect our business because such terminations could lower our level of resource utilisation, which would reduce our profitability. In the event of termination, our contracts often provide for fees for winding down the project, which include both fees incurred and actual and non-cancellable expenditures and may include a fee to cover a percentage of the remaining professional fees on the project. However, such fees may be insufficient to cover the losses caused to us as a result of such termination. Furthermore, under certain of our contracts, upon termination, our clients may be entitled to take over dedicated research facilities and equipment and seek transfer of scientific personnel involved in the programme. Further, termination by clients as a result of our poor performance may affect our ability to obtain future contracts from the client involved.
2. We are dependent on the continued outsourcing of R&D by pharmaceutical, biotechnology, agro-chemistry, consumer health, animal health and cosmetic industry companies.
We are dependent upon the ability and willingness of our clients to continue to spend on R&D at rates close to or at historical levels and to outsource the services that we provide. We are therefore subject to risks, uncertainties and trends that affect companies in these industries over which we have no control. For example, we have benefited to date from the increasing tendency of our clients to outsource both small and large research programmes. Fluctuations in the R&D budgets of these industry participants could have a significant effect on the demand for our services. R&D budgets fluctuate due to changes in available resources, consolidation of companies, spending priorities and institutional budgetary policies. Our business could be adversely affected by
