RED HERRING PROSPECTUS
Dated: January 19, 2021
(The Red Herring Prospectus will be updated upon filing with the RoC)
Please read Section 32 of the Companies Act, 2013
100% Book Built Offer
STOVE KRAFT LIMITED
Our Company was incorporated as Stove Kraft Private Limited on June 28, 1999 with a certificate of incorporation issued by the Registrar of Companies, Bangalore, Karnataka (“RoC”) as a private
limited company under the Companies Act, 1956. Subsequently, our Company was converted into a public limited company pursuant to a special resolution passed by our Shareholders at the extraordinary
general meeting held on May 28, 2018 and the name of our Company was changed to Stove Kraft Limited. A fresh certificate of incorporation consequent upon change of name was issued by the RoC
on August 13, 2018. For further details in relation to the change in the name and the registered address of our Company, see “History and Certain Corporate Matters” on page 146.
Registered and Corporate Office: 81/1, Medamarana Halli Village, Harohalli Hobli, Kanakapura Taluk, Ramanagar District, 562 112, Karnataka, India
Tel: +91 80 2801 6222; Fax: +91 80 2801 6209
Contact Person: Shashidhar SK, Chief Financial Officer, Company Secretary and Compliance Officer; E-mail: cs@stovekraft.com; Website: www.stovekraft.com
Corporate Identity Number: U29301KA1999PLC025387
OUR PROMOTERS: RAJENDRA GANDHI AND SUNITA RAJENDRA GANDHI
INITIAL PUBLIC OFFER OF UP TO [●] EQUITY SHARES OF FACE VALUE OF ₹10 EACH (“EQUITY SHARES”) OF STOVE KRAFT LIMITED (“COMPANY” OR “ISSUER”) FOR
CASH AT A PRICE OF ₹[●] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ₹[●] PER EQUITY SHARE) AGGREGATING UP TO ₹[●] MILLION (“OFFER”)
COMPRISING OF A FRESH ISSUE OF [●] EQUITY SHARES AGGREGATING UP TO ₹950.00 MILLION ( “FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 8,250,000 EQUITY
SHARES COMPRISING OF UP TO 690,700 EQUITY SHARES BY OUR PROMOTER, RAJENDRA GANDHI, UP TO 59,300 EQUITY SHARES BY OUR PROMOTER, SUNITA
RAJENDRA GANDHI (“PROMOTER SELLING SHAREHOLDERS”), UP TO 1,492,080 EQUITY SHARES BY SEQUOIA CAPITAL INDIA GROWTH INVESTMENT HOLDINGS I
(“SCI-GIH”) AND UP TO 6,007,920 EQUITY SHARES BY SCI GROWTH INVESTMENTS II (“SCI”, TOGETHER WITH SCI-GIH, “INVESTOR SELLING SHAREHOLDERS”) (THE
INVESTOR SELLING SHAREHOLDERS TOGETHER WITH THE PROMOTER SELLING SHAREHOLDERS, THE “SELLING SHAREHOLDERS”), AND SUCH OFFERED SHARES,
THE “OFFERED SHARES”) AGGREGATING UP TO ₹[●] MILLION ( “OFFER FOR SALE”). THE OFFER WILL CONSTITUTE [●]%, OF THE POST ISSUE PAID-UP EQUITY SHARE
CAPITAL OF OUR COMPANY.
THE FACE VALUE OF EQUITY SHARES IS ₹10 EACH. THE OFFER PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE BAND AND THE MINIMUM
BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS, IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE
ADVERTISED IN ALL EDITIONS OF FINANCIAL EXPRESS, ALL EDITIONS OF JANSATTA AND BENGALURU EDITION OF VISHWAVANI (WHICH ARE WIDELY
CIRCULATED ENGLISH, HINDI AND KANNADA DAILY NEWSPAPERS RESPECTIVELY, KANNADA BEING THE REGIONAL LANGUAGE OF KARNATAKA, WHERE OUR
REGISTERED OFFICE IS LOCATED) AT LEAST TWO WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO BSE LIMITED
(“BSE”) AND NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”, AND TOGETHER WITH BSE, THE “STOCK EXCHANGES”) FOR THE PURPOSE OF UPLOADING ON
THEIR RESPECTIVE WEBSITES IN ACCORDANCE WITH SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2018, AS AMENDED (“SEBI ICDR REGULATIONS”).
In case of any revision in the Price Band, the Bid/ Offer Period will be extended by at least three additional Working Days after such revision in the Price Band, subject to the Bid/ Offer Period not exceeding 10
Working Days. In case of force majeure, banking strike or similar circumstances, our Company and the Selling Shareholders may, for reasons to be recorded in writing, extend the Bid/Offer Period for a minimum of
three Working Days 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, shall be widely disseminated by notification to the
Stock Exchanges, by issuing a public notice, and also by indicating the change on the respective websites of the Book Running Lead Managers and at the terminals of the other members of the Syndicate and by
intimation to SCSBs, the Sponsor Bank, Registered Brokers, Collecting Depository Participants and Registrar and Share Transfer Agents
The Offer is being made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”) read with Regulation 31 of the SEBI Issue of Capital
and Disclosure Requirements Regulations, 2018 (“SEBI ICDR”) and is being made in compliance with Regulation 6(2) of the SEBI ICDR Regulations, wherein at least 75% of the Offer shall be allocated on a
proportionate basis to Qualified Institutional Buyers (“QIBs”) (“QIB Category”), provided that our Company and Selling Shareholders may, in consultation with the BRLMs, allocate up to 60% of the QIB Category
to Anchor Investors at the Anchor Investor Allocation Price on a discretionary basis in accordance with the SEBI ICDR Regulations (“Anchor Investor Portion”), of which one-third shall be reserved for domestic
Mutual Funds, subject to valid Bids being received from domestic Mutual Funds only at or above the Anchor Investor Allocation Price. In the event of under-subscription, or non-allocation in the Anchor Investor
Portion, the balance Equity Shares shall be added to the QIB Portion. Further, such number of Equity Shares representing 5% of the QIB Category (excluding the Anchor Investor Portion) shall be available for
allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Category shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual
Funds, subject to valid Bids being received at or above the Offer Price. If at least 75% of the Offer cannot be Allotted to QIBs, the Bid Amounts received by our Company shall be refunded. Further, not more than
15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not more than 10% of the Offer shall be available for allocation to Retail Individual Investors in accordance
with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All Bidders (except Anchor Investors) are required to mandatorily utilise the Application Supported by Blocked
Amount (“ASBA”) process providing details of their respective ASBA accounts, and UPI ID, in case of RIBs, if applicable, in which the corresponding Bid Amounts will be blocked by the SCSBs or under the UPI
Mechanism, as applicable. Anchor Investors are not permitted to participate in the Offer through the ASBA process. For details, see “Offer Procedure” on page 285.
RISKS 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. The Floor Price, Cap Price and Offer Price as
determined and is justified by our Company and the Selling Shareholders, in consultation with the BRLMs, in accordance with the SEBI ICDR Regulations and as stated under “Basis for Offer Price” on page 78)
should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares or regarding
the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
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 the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of
investors is invited to the statement of ‘Risk factors’ given on page number 19 under the section ‘General Risks’.
ISSUER’S AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to our Company and this Offer, which is material in
the context of the Offer, that the information contained in this Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed
herein are honestly held and that there are no other facts, the omission of which makes this 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. Each of the Selling Shareholders, severally and not jointly, accepts responsibility for and confirms that only statements specifically made or confirmed expressly by such Selling Shareholder in
this Red Herring Prospectus solely to the extent of information specifically pertaining to itself and its respective portion of the Offered Shares are true and correct. The Selling Shareholders assume no responsibility
for any other statements, including, inter alia, any of the statements made by or relating to the Company or its business in this Red Herring Prospectus.
LISTING
The Equity Shares offered through this Red Herring Prospectus are proposed to be listed on Stock Exchanges. Our Company has received an ‘in-principle’ approval from BSE and NSE for the listing of the Equity
Shares pursuant to letters dated April 16, 2020 and April 8, 2020, respectively. For the purposes of the Offer, the Designated Stock Exchange shall be BSE Limited. A copy of this Red Herring Prospectus and the
Prospectus shall be delivered to the RoC for filing in accordance with Section 26(4) of the Companies Act 2013. For details of the material contracts and documents available for inspection from the date of this Red
Herring Prospectus up to the Bid/ Offer Closing Date, see “Material Contracts and Documents for Inspection” on page 306.
BOOK RUNNING LEAD MANAGERS
REGISTRAR TO THE OFFER
Edelweiss Financial Services Limited
14th Floor, Edelweiss House
Off CST Road, Kalina
Mumbai 400 098
Maharashtra, India
Tel: + 91 22 4009 4400
Fax: +91 22 4086 3610
E-mail: [email protected]
Investor grievance e-mail:
customers[email protected]
Website: www.edelweissfin.com
Contact Person: Disha Doshi/ Nilesh Roy
SEBI Registration No.: INM0000010650
JM Financial Limited
7th Floor, Cnergy
Appasaheb Marathe Marg
Prabhadevi, Mumbai 400 025
Maharashtra, India
Tel: +91 22 6630 3030
Fax: +91 22 6630 3330
Email: [email protected]
Investor grievance e-mail: grievance.ibd@jmfl.com
Website: www.jmfl.com
Contact Person: Prachee Dhuri
SEBI Registration No.: INM000010361
KFin Technologies Private Limited
Selenium, Tower B
Plot No. 31-32, Financial District
Nanakramguda, Srilingampally
Hyderabad Rengareddi 500 032
Telangana, India
Tel: +91 40 6716 2222
Fax: +91 40 2343 1551
E-mail: stovekraft.ipo@kfintech.com
Investor grievance e-mail: einward.ris.ipo@kfintech.com
Website: www.kfintech.com
Contact Person: M. Murali Krishna
SEBI Registration No.: INR000000221
BID/ OFFER PROGRAMME
BID/ OFFER OPENS ON
January 25, 2021
(1)
BID/ OFFER CLOSES ON
January 28, 2021
(1)
Our Company and the Selling Shareholders may, in consultation with the BRLMs, consider participation by Anchor Investors in accordance with the SEBI ICDR Regulations. The Anchor Investor Bidding Date shall be one Working
Day prior to the Bid/ Offer Opening Date.
TABLE OF CONTENTS
SECTION I: GENERAL .................................................................................................................................................... 1
DEFINITIONS AND ABBREVIATIONS ............................................................................................................................ 1
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND
CURRENCY OF PRESENTATION................................................................................................................................... 10
FORWARD-LOOKING STATEMENTS ........................................................................................................................... 13
OFFER DOCUMENT SUMMARY ................................................................................................................................... 14
SECTION II: RISK FACTORS ....................................................................................................................................... 19
SECTION III: INTRODUCTION ................................................................................................................................... 47
THE OFFER ...................................................................................................................................................................... 47
SUMMARY OF FINANCIAL INFORMATION ................................................................................................................ 48
GENERAL INFORMATION ............................................................................................................................................. 53
CAPITAL STRUCTURE ................................................................................................................................................... 60
OBJECTS OF THE OFFER ............................................................................................................................................... 72
BASIS FOR OFFER PRICE ............................................................................................................................................... 78
STATEMENT OF SPECIAL TAX BENEFITS .................................................................................................................. 81
SECTION IV: ABOUT OUR COMPANY ...................................................................................................................... 89
INDUSTRY OVERVIEW .................................................................................................................................................. 89
OUR BUSINESS ..............................................................................................................................................................119
REGULATIONS AND POLICIES ....................................................................................................................................142
HISTORY AND CERTAIN CORPORATE MATTERS ....................................................................................................146
OUR MANAGEMENT .....................................................................................................................................................153
OUR PROMOTER AND PROMOTER GROUP ...............................................................................................................167
OUR GROUP COMPANIES ............................................................................................................................................170
DIVIDEND POLICY ........................................................................................................................................................172
SECTION V: FINANCIAL INFORMATION................................................................................................................ 173
FINANCIAL STATEMENTS ...........................................................................................................................................173
OTHER FINANCIAL INFORMATION ............................................................................................................................235
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS..................................................................................................................................................................238
CAPITALISATION STATEMENT ..................................................................................................................................254
FINANCIAL INDEBTEDNESS........................................................................................................................................255
SECTION VI: LEGAL AND OTHER INFORMATION............................................................................................... 257
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ...........................................................................257
GOVERNMENT AND OTHER APPROVALS .................................................................................................................265
OTHER REGULATORY AND STATUTORY DISCLOSURES .......................................................................................268
SECTION VII: OFFER INFORMATION ..................................................................................................................... 278
TERMS OF THE OFFER ..................................................................................................................................................278
OFFER STRUCTURE ......................................................................................................................................................281
OFFER PROCEDURE ......................................................................................................................................................285
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES .............................................................. 299
SECTION VIII: DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF ASSOCIATION ......... 300
SECTION IX: OTHER INFORMATION ...................................................................................................................... 306
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .............................................................................306
DECLARATION ............................................................................................................................................................. 309
1
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
This Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or implies,
shall have the meaning as provided below. References to any legislation, act, regulation, rules, guidelines or policies shall be
to such legislation, act or regulation, rules, guidelines and policies as amended from time to time. In case of any inconsistency
between the definitions given below and the definitions contained in the General Information Document, the definitions given
below shall prevail. The words and expressions used but not defined herein shall have the meaning as is assigned to such terms
under the Companies Act, the SEBI ICDR Regulations, the SCRA, the Depositories Act or the rules and regulations made
thereunder, unless the context otherwise indicates or implies.
Notwithstanding the foregoing, the terms not defined but used in “Our Business”, “Statement of Special Tax Benefits”,
“Financial Statements”, “Outstanding Litigation and Material Developments” and “Descriptions of Equity Shares and Terms
of the Articles of Association” on pages 119, 81, 173, 257 and 300, respectively, shall have the meanings ascribed to such terms
in these respective sections.
General Terms
Term
Description
“our Company”, “the
Company”, or “the Issuer”
Stove Kraft Limited, a public limited company incorporated under the Companies Act, 1956 and having its
registered office at 81/1, Medamarana Halli Village, Harohalli Hobli, Kanakapura Taluk, Ramnagar District
562 112, Karnataka, India
“we”, “us” or “our”
Unless the context otherwise indicates or implies, refers to our Company
Company and Selling Shareholders Related Terms
Term
Description
Articles of Association/
AoA
Articles of Association of our Company, as amended
Associate or “our
Associate” or “our
Associate Company”
Pigeon Appliances Private Limited
Audit Committee
The audit committee of our Board. For further details, see in “Our Management” on page 158
Board/ Board of Directors
Board of Directors of our Company, including a duly constituted committee thereof
Baddi facility
Our facility situated at village Buranwala, Tehsil Baddi, Himachal Pradesh
Bengaluru facility
Our facility situated at Medamarana Halli Village, Harohalli Hobli, Kanakapura Taluk, Karnataka
CCD
Compulsorily convertible debentures of our Company of nominal value ₹10 each
Class A Equity Shares
Class A Equity Shares issued to SCI and SCI-GIH pursuant to (i) Investment Agreement dated February 2,
2010 entered into between our Company, our Promoters, Atul Jindal, Stovekraft India, SME Growth Fund
and SCI, as amended by amendment agreement dated March 18, 2010 entered into between our Company,
our Promoters, Atul Jindal, Stovekraft India, SME Growth Fund and SCI; (ii) Series B Investment Agreement
dated September 13, 2013 between our Company, our Promoters, Stovekraft India, SCI and SCI-GIH; and
(iii) Amendment Agreement dated September 27, 2018 and Second Amendment Agreement dated January
29, 2020 entered into between our Company, our Promoters, Stovekraft India and Sequoia
CEO
Chief Executive Officer of our Company
CFO
Chief Financial Officer of our Company
CS
Company Secretary of our Company
CSR Committee
The corporate social responsibility committee of our Board. For further details, see in “Our Management” on
page 160
Director(s)
The director(s) on our Board
ESOP Plan
Employee Stock Option Plan 2018 of our Company
Equity Shares
Equity Shares of our Company of face value of ₹10 each
Executive Director
Executive director of our Company
F&S
Frost and Sullivan (India) Private Limited
F&S Report
Industry report prepared by F&S titled “Kitchen Appliances Market in India” dated December 16, 2019, read
with the revised industry report dated November 24, 2020
Group Company
Companies with which there were related party transactions as disclosed in the Restated Financial Statements
under the applicable accounting standards and also other companies as considered material by our Board, as
identified in the section entitled “Our Group Companies” on page 170
Independent Director(s)
Directors on the Board of our Company who are eligible to be appointed as independent directors as per
Section 149(6) of the Companies Act, 2013
Investor Selling
Shareholders
SCI and SCI-GIH
IPO Committee
The committee constituted by our Board in our Offer. For further details, see “Our Management” on page
161
Key Managerial Personnel
Key managerial personnel of our Company in terms of Regulation 2(bb) of the SEBI ICDR Regulations and
Section 2(51) of the Companies Act, 2013 and as disclosed in “Our Management” on page 153
Managing Director/ MD
The managing director of our Company, Rajendra Gandhi
2
Term
Description
Megasun
Megasun Solar Tech Private Limited
Memorandum of
Association/ MoA
Memorandum of association of our Company, as amended
Nomination and
Remuneration Committee
The nomination and remuneration committee of our Board. For further details, see “Our Management” on
page 160
Offered Shares
Up to 6,007,920 Equity Shares offered by SCI as per its board resolution dated January 10, 2020, as modified
pursuant to the board resolution dated December 14, 2020 and the consent letter dated January 8, 2021, up to
1,492,080 Equity Shares by SCI-GIH as per its board resolution dated January 10, 2020, as modified pursuant
to the board resolution dated December 14, 2020 and the consent letter dated January 8, 2021, up to 690,700
Equity Shares by Rajendra Gandhi in the Offer for Sale as per letter dated January 27, 2020, as modified
pursuant to the letter dated January 7, 2021 and up to 59,300 Equity Shares by Sunita Rajendra Gandhi in the
Offer for Sale as per letter dated January 27, 2020, as modified pursuant to the letter dated January 7, 2021.
PAPL
Pigeon Appliances Private Limited
Promoters
The promoters of our Company namely, Rajendra Gandhi and Sunita Rajendra Gandhi
Promoter Group
Persons and entities constituting the promoter group of our Company in terms of Regulation 2(1)(pp) of the
SEBI ICDR Regulations. For details, see “Our Promoter and Promoter Group” on page 167
Promoter Selling
Shareholders
Rajendra Gandhi and Sunita Rajendra Gandhi, Promoters of our Company
Registered Office and
Corporate Office
The registered and corporate office of our Company located at 81/1, Medamarana Halli Village, Harohalli
Hobli, Kanakapura Taluk, Ramnagar District 562 112, Karnataka, India
Registrar of Companies/
RoC
Registrar of Companies, Karnataka situated at Bengaluru
Restated Financial
Statements
The restated consolidated financial statements of our Company for the six month periods ended September
30, 2020 and September 30, 2019 and for Fiscals 2020, 2019, 2018 (presented in accordance with Ind AS)
which comprises the restated consolidated statement of assets and liabilities, the restated consolidated
statement of profit and loss, the restated consolidated statement of cash flow and the restated consolidated
statement of change in equity and notes thereto.
Sequoia
SCI and SCI-GIH
SCI
SCI Growth Investments II
SCI-GIH
Sequoia Capital India Growth Investment Holdings I
Selling Shareholders
The shareholders of our Company who are selling their Equity Shares in the Offer for Sale namely, Rajendra
Gandhi, Sunita Rajendra Gandhi, SCI and SCI-GIH
Shareholders
Equity shareholders of our Company from time to time
Statutory Auditors
Statutory auditors of our Company, namely, Deloitte Haskins & Sells, Chartered Accountants
Stakeholders’ Relationship
Committee
The stakeholders’ relationship committee of the Board. For further details, see in “Our Management” on page
159
Offer Related Terms
Term
Description
Acknowledgement Slip
The slip or document issued by the Designated Intermediary(ies) to a Bidder as proof of registration of the
Bid/ Bid cum Application Form
Addendum(s)/ Addenda
The first addendum to the Draft Red Herring Prospectus dated November 20, 2020 and the second addendum
to the Draft Red Herring Prospectus dated January 12, 2021 filed with the SEBI, as the case may be
Allot/ Allotment/ Allotted
Unless the context otherwise requires, allotment of the Equity Shares pursuant to the Fresh Issue and transfer
of the respective portion of the Offered Shares by the Selling Shareholders pursuant to the Offer for Sale to
the successful Bidders
Allotment Advice
Note or advice or intimation of Allotment sent to the successful Bidders who have been or are to be Allotted
the Equity Shares after the Basis of Allotment has been approved by the Designated Stock Exchange
Allottee
A successful Bidder to whom the Equity Shares are Allotted
Anchor Investor
A Qualified Institutional Buyer, applying under the Anchor Investor Portion in accordance with the
requirements specified in the SEBI ICDR Regulations and this Red Herring Prospectus who has a Bid for an
amount of at least ₹100 million
Anchor Investor Allocation
Price
The price at which Equity Shares will be allocated to Anchor Investors in terms of this Red Herring Prospectus
and the Prospectus, which will be decided by our Company and the Selling Shareholders, in consultation with
the BRLMs
Anchor Investor
Application Form
Form used by an Anchor Investor to make a Bid in the Anchor Investor Portion and which will be considered
as an application for Allotment in terms of this Red Herring Prospectus and Prospectus
Anchor Investor Bidding
Date
The day being one Working Day prior to the Bid/ Offer Opening Date, on which Bids by Anchor Investors
will be submitted and allocation to Anchor Investors shall be completed
Anchor Investor Escrow
Account
Account opened with the Escrow Collection Bank and in whose favour the Anchor Investors will transfer
money through NACH/NECS/direct credit/NEFT/RTGS in respect of the Bid Amount when submitting a Bid
Anchor Investor Form
The form used by an Anchor Investor to Bid in the Anchor Investor Portion in accordance with the
requirements specified under the SEBI ICDR Regulations and this Red Herring Prospectus
Anchor Investor Offer Price
Final price at which the Equity Shares will be Allotted to Anchor Investors in terms of this 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 Shareholders, in
consultation with the BRLMs
3
Term
Description
Anchor Investor Pay-in
Date
In case of the Anchor Investor Offer Price being higher than the Anchor Investor Allocation Price, the date
as mentioned in the CAN but not later than two Working Days after the Bid/ Offer Closing Date
Anchor Investor Portion
Up to 60% of the QIB Portion or [●] Equity Shares which may be allocated by our Company and the Selling
Shareholders, in consultation with the BRLMs, to Anchor Investors on a discretionary basis in accordance
with the SEBI ICDR Regulations, as applicable.
One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids
being received from domestic Mutual Funds at or above the Anchor Investor Allocation Price
Application Supported by
Blocked Amount or ASBA
An application, whether physical or electronic, used by Bidders, other than Anchor Investors, to make a Bid
and authorising an SCSB to block the Bid Amount in the relevant ASBA Account and will include
applications made by RIBs using UPI Mechanism where the Bid Amount will be blocked upon acceptance of
UPI Mandate Request by RIBs, using the UPI Mechanism
ASBA Account
A bank account maintained with an SCSB by an ASBA Bidder, as specified in the ASBA Form submitted by
ASBA Bidders for blocking the Bid Amount mentioned in the relevant ASBA Form and includes the bank
account of an RIB, which is blocked upon acceptance of a UPI Mandate Request made by the RIBs, using the
UPI Mechanism
ASBA Bid
A Bid made by an ASBA Bidder including all revisions and modifications made thereto as permitted under
the SEBI ICDR Regulations
ASBA Bidder(s)
Bidders (other than Anchor Investors) in the Offer who intend to submit their Bid through the ASBA process
ASBA Form
An application form, whether physical or electronic, used by ASBA Bidders to make Bids which will be
considered as the application for Allotment in terms of this Red Herring Prospectus and the Prospectus
Banker to the Offer
Collectively, the Escrow Collection Bank, the Public Offer Account Bank, the Sponsor Bank and the Refund
Bank
Basis of Allotment
Basis on which Equity Shares will be Allotted to successful Bidders under the Offer
Bid(s)
An indication to make an offer during the Bid/ Offer Period by a Bidder (other than Anchor Investor), or on
the Anchor Investor Bidding Date by an Anchor Investor pursuant to submission of the Bid cum Application
Form to subscribe to or purchase the Equity Shares at a price within the Price Band, including all revisions
and modifications thereto as permitted under the SEBI ICDR Regulations and in terms of this Red Herring
Prospectus and the Bid cum Application Form
The term “Bidding” shall be construed accordingly
Bid/ Offer Closing Date
Except in relation to any Bids received from the Anchor Investors, the date after which the Designated
Intermediaries will not accept any Bids, being January 28, 2021, which shall be notified in all editions of the
English national daily newspaper Financial Express, all editions of the Hindi national daily newspaper
Jansatta and Bengaluru edition of the Kannada daily newspaper Vishwavani (Kannada being the regional
language of Karnataka where our Registered Office is located), each with wide circulation. In case of any
extension, the extended Bid/ Offer Closing Date shall also be notified on the website and terminals of the
Syndicate Members and communicated to the Designated Intermediaries and the Sponsor Bank.
Bidder
Any prospective investor who makes a Bid pursuant to the terms of this Red Herring Prospectus and the Bid
cum Application Form and unless otherwise stated or implied, includes an Anchor Investor
Bid Amount
The highest value of optional Bids indicated in the Bid cum Application Form and payable by the Bidder or
blocked in the ASBA Account of the Bidder as the case may be, upon submission of the Bid
Bid cum Application Form
The Anchor Investor Application Form or the ASBA Form, as the context may require
Bid Lot
[●] Equity Shares
Bid/ Offer Opening Date
Except in relation to any Bids received from the Anchor Investors, the date on which the Designated
Intermediaries shall start accepting Bids for the Offer, being January 25, 2021, which shall be notified in all
editions of the English national daily newspaper Financial Express, all editions of the Hindi national daily
newspaper Jansatta, and Bengaluru edition of the Kannada daily newspaper Vishwavani, (Kannada being the
regional language of Karnataka where our Registered Office is located), each with wide circulation and in
case of any revision, the extended Bid/ Offer Opening Date also to be notified on the website and terminals
of the Syndicate Members and SCSBs, as required under the SEBI ICDR Regulations
Bid/ Offer Period
Except in relation to Anchor Investors, the period between the Bid/ Offer Opening Date and the Bid/ Offer
Closing Date, inclusive of both days, during which Bidders can submit their Bids, including any revisions
thereof in accordance with the SEBI ICDR Regulations and the terms of this Red Herring Prospectus.
Bidding Centres
Centres at which the Designated Intermediaries shall accept the ASBA Forms, i.e. Designated Branches for
SCSBs, Specified Locations for the Syndicate, Brokers Centres for Registered Brokers, Designated RTA
Locations for RTAs and Designated CDP Locations for CDPs
Book Building Process
Book building process, as provided in Schedule XIII of the SEBI ICDR Regulations, in terms of which the
Offer is being made
Book Running Lead
Managers or BRLMs
The book running lead managers to the Offer namely, Edelweiss Financial Services Limited and JM Financial
Limited
Broker Centres
Broker centers notified by the Stock Exchanges where Bidders can submit ASBA Forms to Registered
Brokers
The details of such Broker Centres, along with the names and contact details of the Registered Brokers are
available on the respective websites of the Stock Exchanges (www.bseindia.com and www.nseindia.com)
CAN/ Confirmation of
Allocation Note
Notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who have been allocated the
Equity Shares, after the Anchor Investor Bidding Date
Cap Price
The higher end of the Price Band, above which the Offer Price and Anchor Investor Offer Price will not be
finalised and above which no Bids will be accepted (including any revisions thereof)
Cash Escrow and Sponsor
Bank Agreement
Agreement dated January 18, 2021 entered into amongst our Company, the Selling Shareholders, the Registrar
to the Offer, the BRLMs and the Banker to the Offer for collection of the Bid Amounts from Anchor Investors,
4
Term
Description
transfer of funds to the Public Offer Account and where applicable, refunds of the amounts collected from
Bidders, on the terms and conditions thereof.
Client ID
Client identification number maintained with one of the Depositories in relation to demat account
Collecting Depository
Participant or CDP
A depository participant as defined under the Depositories Act, 1996 registered with SEBI and who is eligible
to procure Bids at the Designated CDP Locations in terms of circular no. CIR/ CFD/ POLICYCELL/ 11/ 2015
dated November 10, 2015 issued by SEBI as per the list available on the websites of BSE and NSE
Cut-Off Price
Offer Price, which shall be any price within the Price Band finalised by our Company and the Selling
Shareholders, in consultation with the BRLMs
Only Retail Individual Bidders are entitled to Bid at the Cut-off Price. QIBs and Non-Institutional Bidders
are not entitled to Bid at the Cut-off Price
Demographic Details
The demographic details of the Bidders such as their respective addresses, occupation, PAN, name of the
Bidder’s father/ husband, investor status, MICR Code, bank account details and UPI ID, wherever applicable
Designated Branches
Such branches of the SCSBs which shall collect the ASBA Forms, a list of which is available on the website
of SEBI at https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34,
updated from time to time, or at such other website as may be prescribed by SEBI from time to time
Designated CDP Locations
Such locations of the CDPs where ASBA Bidders can submit the ASBA Forms, a list of which, along with
names and contact details of the Collecting Depository Participants eligible to accept ASBA Forms are
available on the websites of the respective Stock Exchanges (www.bseindia.com and
https://www.nseindia.com), as updated from time to time
Designated Date
The date on which the Escrow Collection Banks transfer funds from the Escrow Accounts to the Public Offer
Account or the refund Account, as the case may be, and instructions are given to the SCSBs (in case of RIBs
using UPI Mechanism, instructions through the Sponsor Bank) for the transfer of amounts blocked by the
SCSBs in the ASBA Accounts to the Public Offer Account or are unblocked, as appropriate, in terms of this
Red Herring Prospectus following which Equity Shares will be Allotted in the Offer to the successful Bidders
Designated Intermediaries
In relation to ASBA Forms submitted by RIBs by authorising an SCSB to block the Bid Amount in the ASBA
Account, Designated Intermediaries shall mean SCSBs.
In relation to ASBA Forms submitted by RIBs where the Bid Amount will be blocked upon acceptance of
UPI Mandate Request by such RIBs using the UPI Mechanism, Designated Intermediaries shall mean
Syndicate, sub-syndicate/agents, Registered Brokers, CDPs and RTAs.
In relation to ASBA Forms submitted by QIBs and non-institutional Bidders, Designated Intermediaries shall
mean Syndicate, Sub-Syndicate/ agents, SCSBs, Registered Brokers, the CDPs and RTAs
Designated RTA Locations
Such locations of the RTAs where ASBA Bidders can submit the ASBA Forms. The details of such
Designated RTA locations, along with names and contact details of the RTAs are available on the respective
websites of the Stock Exchanges (www.bseindia.com and www.nseindia.com)
Designated Stock Exchange
BSE Limited
Draft Red Herring
Prospectus or DRHP
The draft red herring prospectus dated January 31, 2020, issued in accordance with the SEBI ICDR
Regulations, which did not contain complete particulars of the price at which the Equity Shares will be
Allotted and the size of the Offer, read with the Addendum(s)
Edelweiss
Edelweiss Financial Services Limited
Eligible FPIs
FPIs from such jurisdictions outside India where it is not unlawful to make an offer / invitation under the
Offer and in relation to whom the Bid cum Application Form and this Red Herring Prospectus constitutes an
invitation to subscribe to the Equity Shares
Eligible NRIs
NRIs from such jurisdictions outside India where it is not unlawful to make an offer or invitation under the
Offer and in relation to whom the Bid cum Application Form and this Red Herring Prospectus will constitute
an invitation to purchase the Equity Shares
Escrow Account
Accounts to be opened with the Escrow Collection Bank and in whose favour the Anchor Investors will
transfer money through NACH/direct credit/NEFT/RTGS in respect of the Bid Amount when submitting a
Bid
Escrow Collection Bank
A bank, which is a clearing member and registered with SEBI as a banker to an offer and with whom the
Escrow Account will be opened, in this case being ICICI Bank Limited
First/ sole Bidder
The Bidder whose name appears first in the Bid cum Application Form or the Revision Form and in case of
joint Bids, whose name appears as the first holder of the beneficiary account held in joint names
Floor Price
The lower end of the Price Band, subject to any revision thereto, at or above which the Offer Price and the
Anchor Investor Offer Price will be finalised and below which no Bids will be accepted
Fresh Issue
The fresh issue of up to [●] Equity Shares aggregating up to ₹950.00 million by our Company for subscription
pursuant to the terms of the Draft Red Herring Prospectus
General Information
Document/ GID
The General Information Document for investing in public issues prepared and issued in accordance with the
SEBI circular no. SEBI/HO/CFD/DIL1/CIR/P/2020/37, dated March 17, 2020 and the UPI Circulars, as
amended from time to time. The General Information Document shall be available on the websites of the
Book Running Lead Managers.
JM Financial
JM Financial Limited
Mutual Fund Portion
5% of the Net QIB Portion or [] Equity Shares which shall be available for allocation to Mutual Funds only,
on a proportionate basis subject to valid Bids being received at or above the Offer Price
Mutual Funds
Mutual funds registered with SEBI under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996
Net Proceeds
Proceeds of the Fresh Issue less our Company’s share of the Offer related expenses. For further information
about use of the Offer proceeds and the Offer expenses, see “Objects of the Offer” on page 72
Net QIB Portion
The portion of the QIB Portion less the number of Equity Shares Allotted to the Anchor Investors
5
Term
Description
Non-Institutional Bidders
All Bidders, that are not QIBs or Retail Individual Investors, who have Bid for Equity Shares for an amount
of more than ₹200,000 but not including NRIs other than Eligible NRIs
Non-Institutional Portion
The portion of the Offer being not more than 15% of the Offer consisting of [●] Equity Shares which shall be
available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being
received at or above the Offer Price
Non-Resident
A person resident outside India, as defined under FEMA
Offer
The initial public offer of up to [●] Equity Shares for cash at a price of ₹[●], comprising the Fresh Issue and
the Offer for Sale
Offer Documents
The DRHP filed with the Securities and Exchange Board of India, this Red Herring Prospectus dated January
19, 2021, and the Prospectus to be filed with the RoC.
Offer Agreement
The agreement dated January 31, 2020, as amended pursuant to amendment agreement to the Offer Agreement
dated January 11, 2021, amongst our Company, the Selling Shareholders and the BRLMs, pursuant to which
certain arrangements are agreed to in relation to the Offer
Offer for Sale
The offer for sale of up to 690,700 Equity Shares by our Promoter, Rajendra Gandhi, up to 59,300 Equity
Shares by our Promoter, Sunita Rajendra Gandhi, up to 6,007,920 Equity Shares by SCI and up to 1,492,080
Equity Shares by SCI-GIH aggregating up to ₹[●] million in terms of this Red Herring Prospectus.
For further details in relation to Selling Shareholders, see “The Offer” on page 47
Offer Price
The final price at which Equity Shares will be Allotted in terms of this Red Herring Prospectus and the
Prospectus
The Offer Price will be decided by our Company and the Selling Shareholders, in consultation with the
BRLMs on the Pricing Date in accordance with the Book-Building Process and in terms of this Red Herring
Prospectus
Offer Proceeds
Proceeds of the Offer that are available to our Company and the Selling Shareholders
Price Band
Price band of a minimum price of ₹[●] per Equity Share (Floor Price) and the maximum price of ₹[●] per
Equity Share (Cap Price) including any revisions thereof.
The Price Band and the minimum Bid Lot size for the Offer will be decided by our Company and the Selling
Shareholders, in consultation with the BRLMs and will be advertised at least two Working Days, as per SEBI
ICDR Regulations, prior to the Bid/ Offer Opening Date, in all editions of the English national daily
newspaper Financial Express, all editions of the Hindi national daily newspaper Jansatta and Bengaluru
edition of the Kannada daily newspaper Vishwavani (Kannada being the regional language of Karnataka
where our Registered Office is situated), each with wide circulation with the relevant financial ratios
calculated at the Floor Price and at the Cap Price, and shall be made available to the Stock Exchanges for the
purpose of uploading on their respective websites
Pricing Date
The date on which our Company and the Selling Shareholders, in consultation with the BRLMs, will finalise
the Offer Price
Prospectus
The prospectus to be filed with the RoC on or after the Pricing Date in accordance with Section 26 of the
Companies Act, 2013, the SEBI ICDR Regulations and the SEBI ICDR Regulations, as applicable containing,
inter alia, the Offer Price, the size of the Offer and certain other information, including any addenda or
corrigenda thereto
Public Offer Account
Account(s) to be opened with the Public Offer Account Bank under Section 40(3) of the Companies Act,
2013, to receive monies from the Escrow Account and ASBA Accounts on the Designated Date
Public Offer Account Bank
The bank with whom the Public Offer Account shall be opened and maintained in this case for collection of
Bid Amounts from ASBA Account and Escrow Account, being ICICI Bank Limited
QIB Portion
Portion of the Offer (including the Anchor Investor Portion) amounting to at least 75% of the Offer being [●]
Equity Shares, which shall be available for allocation to QIBs, including the Anchor Investors, subject to
valid Bids being received at or above the Offer Price
Qualified Institutional
Buyers or QIBs
Qualified Institutional Buyers as defined under Regulation 2(1)(ss) of the SEBI ICDR Regulations
Red Herring Prospectus or
RHP
This Red Herring Prospectus dated January 19, 2021 issued in accordance with Section 32 of the Companies
Act, 2013 and the SEBI ICDR Regulations, as amended, which does not have complete particulars of the
price at which the Equity Shares will be allotted and the size of the Offer(including any addenda or corrigenda
thereto) and which shall be filed with the RoC at least three Working Days before the Bid/ Offer Opening
Date and will become the Prospectus upon filing with the RoC on or after the Pricing Date
Refund Account
The account opened with the Refund Bank, from which refunds, if any, of the whole or part of the Bid Amount
shall be made to Anchor Investors
Refund Bank
The Banker to the Offer with whom the Refund Account(s) will be opened, in this case being ICICI Bank
Limited
Refunds through electronic
transfer of funds
Refunds through NACH, direct credit, NEFT, RTGS or unblocking ASBA Accounts, as applicable
Registered Brokers
Stock brokers registered with SEBI under the Securities and Exchange Board of India (Stock Brokers and
Sub Brokers) Regulations, 1992 and the stock exchanges having nationwide terminals, other than the BRLMs
and the Syndicate Members and eligible to procure Bids in terms of Circular No. CIR/ CFD/ 14/ 2012 dated
October 4, 2012 issued by SEBI
Registrar Agreement
The agreement dated January 29, 2020, as amended pursuant to the amendment agreement to the Registrar
Agreement dated January 11, 2021, entered into amongst our Company, the Selling Shareholders and the
Registrar to the Offer, in relation to the responsibilities and obligations of the Registrar pertaining to the Offer
Registrar to the Offer/
Registrar
KFin Technologies Private Limited
6
Term
Description
Registrar and Share
Transfer Agents or RTAs
Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the Designated RTA
Locations in terms of circular no. CIR/ CFD/ POLICYCELL/ 11/ 2015 dated November 10, 2015 issued by
SEBI and the UPI Circulars
Retail Individual Bidder(s)/
Retail Individual
Investor(s)/ RII(s)/ RIB(s)
Individual Bidders (including HUFs applying through their kartas and Eligible NRIs) whose Bid Amount for
Equity Shares in the Offer is not more than ₹200,000 in any of the bidding options in the Offer
Retail Portion
The portion of the Offer being not more than 10% of the Offer or [●] Equity Shares, available for allocation
to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids received
at or above the Offer price
Revision Form
Form used by the Bidders, to modify the quantity of the Equity Shares or the Bid Amount in any of their Bid
cum Application Forms or any previous Revision Form(s), as applicable
QIB Bidders and Non-Institutional Bidders are not allowed to lower or withdraw their Bids (in terms of
quantity of Equity Shares or the Bid Amount) at any stage. Retail Individual Bidders can revise their Bids
during the Bid/ Offer Period and withdraw their Bids until the Bid/ Offer Closing Date
Self-Certified Syndicate
Bank or SCSB
The banks registered with SEBI, which offer the facility of ASBA services, (i) in relation to ASBA, where
the Bid Amount will be blocked by authorising an SCSB, a list of which is available on the website of SEBI
at www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34 and updated from
time to time and at such other websites as may be prescribed by SEBI from time to time, (ii) in relation to
RIBs using the UPI Mechanism, a list of which is available on the website of SEBI at
https://sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=40 or such other website
as updated from time to time
Applications through UPI in the Offer can be made only through the SCSBs mobile applications (apps) whose
name appears on the SEBI website. A list of SCSBs and mobile application, which, are live for applying in
public issues using UPI 2.0 mechanism is provided as Annexure ‘A’ to the SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/85 dated July 26, 2019. The said list shall be updated on SEBI website
Share Escrow Agent
Share Escrow agent appointed pursuant to the Share Escrow Agreement, in this case being, KFin
Technologies Private Limited
Share Escrow Agreement
The agreement dated January 18, 2021 entered into amongst the Selling Shareholders, our Company and the
Share Escrow Agent in connection with the deposit of the Offered Shares by the Selling Shareholders in a
share escrow account and credit of such Equity Shares to the demat account of the Allottees in accordance
with the Basis of Allotment
Specified Locations
Bidding centres where the Syndicate shall accept ASBA Forms a list of which is included in the ASBA Form,
a list of which is available on
https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=35 and updated
from time to time
Sponsor Bank
ICICI Bank Limited, being a Banker to the Offer, appointed by our Company to act as a conduit between the
Stock Exchanges and NPCI in order to push the mandate collect requests and/ or payment instructions of the
RIBs using the UPI Mechanism and carry out other responsibilities, in terms of the UPI Circulars
Stock Exchanges
BSE and NSE
Sub-Syndicate centres
The sub-syndicate members, if any, appointed by the BRLMs and the Syndicate Members, to collect Bid cum
Application Forms and Revision Forms
Syndicate Agreement
The agreement dated January 18, 2021 amongst the BRLMs, the Syndicate Members, our Company and the
Selling Shareholders in relation to the collection of Bid cum Application Forms by the Syndicate
Syndicate Members
Intermediaries registered with SEBI who are permitted to carry out activities as an underwriter, namely,
Edelweiss Securities Limited and JM Financial Services Limited
Syndicate or Members of
the Syndicate
The BRLMs and the Syndicate Members
Underwriters
[●]
Underwriting Agreement
The agreement dated [●] among the Underwriters, our Company and the Selling Shareholders to be entered
into on or after the Pricing Date but prior to filing of Prospectus
UPI
Unified payments interface which is an instant payment mechanism, developed by NPCI
UPI Circulars
The SEBI circular no. SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 1, 2018, SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/50 dated April 3, 2019, SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/76 dated June 28, 2019, SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/85 dated July 26, 2019, circular no.
SEBI/HO/CFD/DCR2/CIR/P/2019/133 dated November 8, 2019, SEBI/HO/CFD/DIL2/CIR/P/2020/50
dated March 30, 2020 and any subsequent circulars or notifications issued by SEBI in this regard
UPI ID
ID created on the UPI for single-window mobile payment system developed by the NPCI
UPI Mandate Request
A request (intimating the RIB, by way of a notification on the UPI linked mobile application as disclosed by
SCSBs on the website of SEBI and by way of an SMS on directing the RIB to such UPI linked mobile
application) to the RIB, initiated by the Sponsor Bank to authorise blocking of funds on the UPI application
equivalent to Bid Amount and subsequent debit of funds in case of Allotment
UPI Mechanism
The bidding mechanism that may be used by RIBs, in accordance with the UPI Circulars to make an ASBA
Bid in the Issue
UPI PIN
The password to authenticate a UPI transaction
Wilful Defaulter
An entity or person categorised as a wilful defaulter by any bank or financial institution or consortium thereof,
in terms of regulation 2(1)(lll) of the SEBI ICDR Regulations
Working Day
All days on which commercial banks in Mumbai are open for business. In respect of announcement of Price
Band and Bid/Issue Period, Working Day shall mean all days, excluding Saturdays, Sundays and public
7
Term
Description
holidays, on which commercial banks in Mumbai are open for business. In respect of the time period between
the Bid/ Issue Closing Date and the listing of the Equity Shares on the Stock Exchanges, Working Day shall
mean all trading days of the Stock Exchanges, excluding Sundays and bank holidays, as per circulars issued
by SEBI, including the UPI Circulars.
Technical/ Industry Related Terms/ Abbreviations/ Terms relating to our business
Term
Description
BPL
Below Poverty Line
C&F
Carrying and Forwarding
CRM
Customer Relationship Management
DMS
Distributor management system
ERP
Enterprise Resource Planning
IR
Infrared
OEM
Original Equipment Manufacturer
ID
Identification
LED
Light-Emitting Diode
LPG
Liquid Petroleum Gas
R&D
Research and development
SMS
Short Message Service
Conventional and General Terms or Abbreviations
Term
Description
SEBI ICDR Regulations
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018,
as amended
₹ / Rs./ Rupees/ INR
Indian Rupees, the official currency of the Republic of India
AGM
Annual general meeting
AIF
Alternative Investment Fund as defined in and registered with SEBI under the Securities and Exchange Board
of India (Alternative Investments Funds) Regulations, 2012
AS/ Accounting Standards
Accounting standards issued by the Institute of Chartered Accountants of India
BIS
Bureau of Indian Standards
BSE
BSE Limited
CAGR
(Ending value/beginning value)^(1/no. of periods)-1, unless specifically stated
Category II FPI
FPIs registered as “Category II foreign portfolio investors” under the Securities and Exchange Board of India
(Foreign Portfolio Investors) Regulations, 2019.
CDSL
Central Depository Services (India) Limited
CIN
Corporate Identity Number
Companies Act
Companies Act, 2013,
Companies Act, 1956
The erstwhile Companies Act, 1956 (without reference to the provisions thereof that have ceased to have
effect upon notification of the sections of the Companies Act, 2013) along with the relevant rules made
thereunder
Companies Act, 2013
Companies Act, 2013, along with the relevant rules made thereunder, as amended
COVID - 19
The Coronavirus disease, a respiratory illness caused by the Novel Coronavirus and a public health
emergency of international concern as declared by the World Health Organization on January 30, 2020 and
a pandemic on March 11, 2020.
Depositories
Collectively, the NSDL and the CDSL
Depositories Act
The Depositories Act, 1996, read with regulations thereunder
DIN
Director Identification Number
DPIIT
Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government
of India (formerly known as Department of Industrial Policy and Promotion or DIPP)
DP ID
Depository Participant’s Identification
DP/ Depository Participant
A depository participant as defined under the Depositories Act
EBITDA
Revenue from operations – (cost of materials consumed + excise duty + purchases of stock-in-trade +
Changed in inventories of finished goods, stock-in-trade and work-in-progress + Employee benefits
expenses+ other expenses), unless specifically stated
ECB
External Commercial Borrowing
EGM
Extraordinary general meeting
EPS
Earnings Per Share
FCNR
Foreign Currency Non-Resident
FDI
Foreign Direct Investment
FEMA
Foreign Exchange Management Act, 1999, as amended, read with rules and regulations thereunder
FEMA Non-Debt
Instruments Rules
Foreign Exchange Management (Non-debt Instruments) Rules, 2019 issued by the Ministry of Finance, GoI
FEMA Regulations 2017
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India)
Regulations, 2017
“Fiscal” or “Financial Year”
or “Fiscal Year” or “FY”
Unless stated otherwise, the period of 12 months ending March 31 of that particular year
FPI(s)
Foreign Portfolio Investors as defined under the SEBI FPI Regulations
8
Term
Description
FVCI
Foreign Venture Capital Investors as defined and registered under the SEBI FVCI Regulations
GDP
Gross Domestic Product
GIR
General Index Register
GoI/ Government
Government of India
GST
Goods and Services Tax
HUF
Hindu Undivided Family
ICAI
The Institute of Chartered Accountants of India
IFRS
International Financial Reporting Standards
Income Tax Act
The Income Tax Act, 1961, read with rules thereunder
India
Republic of India
Ind AS
Indian Accounting Standards (Ind AS)
Indian Accounting Standard
Rules
The Companies (Indian Accounting Standards) Rules, 2015
Indian GAAP
Generally Accepted Accounting Principles in India notified under Section 133 of the Companies Act, 2013
and read together with paragraph 7 of the Companies (Accounts Rules, 2014 and Companies (Accounting
Standards) Amendment Rules, 2016
IPO
Initial public offering
IRDAI
Insurance Regulatory and Development Authority of India
IST
Indian Standard Time
IT
Information technology
MCA
Ministry of Corporate Affairs, Government of India
MoU
Memorandum Of Understanding
Mn/ mn
Million
N.A./ NA
Not Applicable
NAV
Net Asset Value
Net Asset Value per Equity
Share
The Net Assets equals the total assets (what the Company owns) minus the total liabilities (what the Company
owes) and is represented by the Net Worth.
Net Asset Value per Equity Share (in ₹) = Net Asset Value/Net Worth, as restated, at the end of the period/
year divided by the total number of Equity Shares outstanding at the end of the period/ year, respectively.
NACH
National Automated Clearing House
Net Worth
The aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium
account and debit or credit balance of profit and loss account, after deducting the aggregate value of the
accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited
balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation
and amalgamation.
NEFT
National Electronic Fund Transfer
NPCI
National Payments Commission of India
NR
Non-Resident
NRI
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, 2016 or an overseas
citizen of India cardholder within the meaning of section 7(A) of the Citizenship Act, 1955
NSDL
National Securities Depository Limited
NSE
The National Stock Exchange of India Limited
OCB/ Overseas Corporate
Body
A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least
60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held
by NRIs directly or indirectly and which was in existence on October 3, 2003 and immediately before such
date had taken benefits under the general permission granted to OCBs under FEMA. OCBs are not allowed
to invest in the Offer
p.a.
Per annum
P/E Ratio
Price/Earnings Ratio
PAN
Permanent Account Number
PAT
Profit after tax
RBI
Reserve Bank of India
RBI Act
Reserve Bank of India Act, 1934
RoNW
Return on net worth, computed as (net profit/(loss) after tax, as re-stated for the year, attributable to equity
shareholders)/ Net Worth (excluding revaluation reserve) as re-stated at the end of the year
RTGS
Real Time Gross Settlement
SCRA
Securities Contracts (Regulation) Act, 1956
SCRR
Securities Contracts (Regulation) Rules, 1957
SEBI
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 Investments Funds) Regulations, 2012
SEBI ESOP Regulations
Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014
SEBI FPI Regulations
Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019
SEBI FVCI Regulations
Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000
SEBI Listing Regulations
Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations,
2015
SEBI VCF Regulations
Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996
9
Term
Description
Securities Act
U.S. Securities Act, 1933
SIDBI
Small Industries Development Bank of India
State Government
The government of a state in India
Systemically Important
NBFC
A non-banking financial company registered with the Reserve Bank of India and having a net-worth of more
than ₹5,000 million as per the last audited financial statements
STT
Securities Transaction Tax
Takeover Regulations
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011,
as amended
TAN
Tax deduction account number
U.S./ USA/ United States
United States of America
USD/ US$
United States Dollars
VCFs
Venture Capital Funds as defined in and registered with SEBI under the SEBI VCF Regulations
10
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND
CURRENCY OF PRESENTATION
Certain Conventions
Unless otherwise specified or the context otherwise requires, all references in this Red Herring Prospectus to “India” are to the
Republic of India, all references to “USA”, “US” and “United States” are to the United States of America.
Unless the context requires otherwise, all references to page numbers in this Red Herring Prospectus are to the page numbers
of this Red Herring Prospectus.
Financial and other data
Unless stated otherwise or unless the context requires otherwise, and to the extent applicable, the financial data in this Red
Herring Prospectus is derived from our Restated Financial Statements prepared in accordance with the Companies Act and Ind
AS and restated in accordance with the SEBI ICDR Regulations.
In this Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to
rounding off. All figures in decimals and all percentage figures, unless otherwise specified, have been rounded off to the second
decimal place and accordingly there may be consequential changes in this Red Herring Prospectus on account of rounding
adjustments.
Our Company’s Fiscal commences on April 1 and ends on March 31 of the next year; accordingly, all references to a particular
“Fiscal”, unless stated otherwise, are to the 12 month period ended on March 31 of that year.
There are significant differences between Indian GAAP, Ind AS, and IFRS. Our Company does not provide reconciliation of
its financial information to IFRS. Our Company has not attempted to explain those differences or quantify their impact on the
financial data included in this Red Herring Prospectus and it is urged that you consult your own advisors regarding such
differences and their impact on our financial data. Accordingly, the degree to which the financial information included in this
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, the Indian GAAP, Ind AS and the SEBI ICDR Regulations. Any
reliance by persons not familiar with Indian accounting policies and practices on the financial disclosures presented in this Red
Herring Prospectus should accordingly be limited. Our annual financial statements for periods subsequent to April 01, 2016,
have been prepared and presented in accordance with Ind AS. Given that Ind AS differs in many respects from Indian GAAP,
our financial statements prepared and presented in accordance with Ind AS may not be comparable to our historical financial
statements prepared under the Indian GAAP. See “Risk Factors – Significant differences exist between Ind AS and other
accounting principles, such as Indian GAAP, IFRS and U.S. GAAP, which may be material to investors' assessment of our
financial condition” on page 44.
On February 16, 2015, the MCA issued the Ind AS Rules for the purpose of enacting changes to Indian GAAP that are intended
to align Indian GAAP further with IFRS. The Ind AS Rules provide that the financial statements of the companies to which
they apply shall be prepared in accordance with the Indian Accounting Standards converged with IFRS, although any company
may voluntarily implement Ind AS for the accounting period beginning from April 01, 2015. Pursuant to SEBI circular number
SEBI/HO/CFD/DIL/CIR/P/2016/47 dated March 31, 2016, our restated financial information for the six month period ended
September 30, 2020 and September 30, 2019 and for Fiscals 2020, 2019 and 2018 included in this Red Herring Prospectus has
been prepared under the Ind AS.
Unless the context otherwise requires, any percentage amounts, as set forth in “Risk Factors”, “Our Business” and
“Management’s Discussion and Analysis of Financial Conditions and Results of Operations” on pages 19, 119 and 238
respectively, and elsewhere in this Red Herring Prospectus, to the extent applicable, have been calculated on the basis of our
Restated Financial Statements prepared in accordance with the Companies Act and Indian GAAP and restated in accordance
with the SEBI ICDR Regulations.
Currency and Units of Presentation
All references to:
• “Rupees” or “₹” or “INR” or “Rs.” are to the Indian Rupee, the official currency of the Republic of India.
• “US$” or “USD” are to the United States Dollar, the official currency of the United States of America.
• “Euro” or “EUR” or “€” are to Euro, the official currency of the European Union.
Our Company has presented certain numerical information in this Red Herring Prospectus in “million” or “billion” units, or in
absolute number where the number have been too small to present in million unless as stated, otherwise, as applicable. One
million represents 1,000,000, one billion represents 1,000,000,000 and one crore represents 10,000,000. However, figures
sourced from third party industry sources may be expressed in denominations other than million or may be rounded off to other
11
than two decimal points in the respective sources, and such figures have been expressed in this Red Herring Prospectus in such
denominations or rounded off to such number of decimal points as prescribed in such respective sources.
Exchange Rates
This Red Herring Prospectus contains conversions of certain other currency amounts into Indian Rupees that have been
presented solely to comply with the SEBI ICDR Regulations. These conversions should not be construed as a representation
that these currency amounts could have been, or can be converted into Indian Rupees, at any particular rate or at all.
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and
the USD (in Rupees per USD):
(in
`
)
Exchange rate as on:
Currency
September 30, 2020
September 30, 2019
March 31, 2020
March 31, 2019
(2)
March 31, 2018
(1)
1 USD
73.79
70.69
75.39
69.17
65.04
(For information until March 31, 2018, the source is RBI Reference Rate as available on https://www.rbi.org.in/ whereas for information post March 31, 2018,
the source is FBIL Reference Rate as available on https://www.fbil.org.in/)
(1) Exchange rate as at March 28, 2018, as RBI reference rate is not available for March 31, 2018 being a Saturday and March 30, 2018 and March 29,
2018 being public holidays.
(2) Exchange rate as at March 29, 2019, as RBI reference rate is not available for March 31, 2019 and March 30, 2019 being a Sunday and a Saturday,
respectively.
Industry and Market Data
Unless stated otherwise, industry and market data used in this 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 Red Herring Prospectus is
reliable, it has not been independently verified by us, the Selling Shareholders or the BRLMs or any of their affiliates or
advisors. The data used in these sources may have been reclassified by us for the purposes of presentation. Data from these
sources may also not be comparable. Such data involves risks, uncertainties and numerous assumptions and is subject to change
based on various factors, including those discussed in “Risk Factors - Third party industry and industry-related statistical data
in this Red Herring Prospectus may be incomplete, incorrect or unreliable” on page 37. Accordingly, investment decisions
should not be based solely on such information.
The sections “Industry Overview”, “Our Business” and “Management’s Discussion and Analysis of Financial Conditions and
Results of Operations” of this Red Herring Prospectus contain data and statistics from the F&S Report, which is subject to the
following disclaimer:
“This independent market research study on the "Kitchen Appliances Market in India" has been prepared for Stove Kraft
Limited in relation to an initial public offering (“IPO”) in connection with its listing on the leading stock exchange(s).
This study has been undertaken through extensive primary and secondary research, which involves discussing the status of the
industry with leading market participants and experts, and compiling inputs from publicly available sources, including official
publications and research reports. Frost & Sullivan's estimates and assumptions are based on varying levels of quantitative
and qualitative analyses, including industry journals, company reports and information in the public domain.
Frost & Sullivan has prepared this study in an independent and objective manner, and it has taken all reasonable care to ensure
its accuracy and completeness. We believe that this study presents a true and fair view of the industry within the limitations of,
among others, secondary statistics and primary research, and it does not purport to be exhaustive. The results that can be or
are derived from these findings are based on certain assumptions and parameters/conditions. As such, a blanket, generic use
of the derived results or the methodology is not encouraged.
Forecasts, estimates, predictions, and other forward-looking statements contained in this report are inherently uncertain
because of changes in factors underlying their assumptions, or events or combinations of events that cannot be reasonably
foreseen. Actual results and future events could differ materially from such forecasts, estimates, predictions, or such statements.
In making any decision regarding the transaction, the recipient should conduct its own investigation and analysis of all facts
and information contained in the prospectus of which this report is a part and the recipient must rely on its own examination
and the terms of the transaction, as and when discussed. The recipients should not construe any of the contents in this report
as advice relating to business, financial, legal, taxation or investment matters and are advised to consult their own business,
financial, legal, taxation, and other advisors concerning the transaction.
This Frost & Sullivan report is prepared for the Company’s internal use, submission, and sharing with the relevant partners
as well as for inclusion in the Offer Documents, in full or in parts as may be decided by the Company.”
12
In accordance with the SEBI ICDR Regulations, “Basis for Offer Price” on page 78 includes information relating to our listed
industry peers. Such information has been derived from publicly available sources, and neither we, nor the BRLMs have
independently verified such information.
The extent to which the market and industry data used in this 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.
Time
Unless otherwise stated, all references to time in this Red Herring Prospectus are to Indian Standard Time.
13
FORWARD-LOOKING STATEMENTS
This 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 subject to risks, uncertainties and assumptions about us that could cause actual results to
differ materially from those contemplated by the relevant forward-looking statement. For the reasons described below, we
cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Therefore,
investors are cautioned not to place undue reliance on such forward-looking statements and not to regard such statements as a
guarantee of future performance.
Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties
associated with the expectations with respect to, but not limited to, regulatory changes pertaining to the industry in which our
Company has businesses and its ability to respond to them, its ability to successfully implement its strategy, its growth and
expansion, technological changes, its exposure to market risks, general economic and political conditions in India and globally
which have an impact on its business activities or investments, the monetary and fiscal policies of India, inflation, deflation,
unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the
financial markets in India and globally, changes in laws, regulations and taxes and changes in competition in its industry.
Important factors that could cause actual results to differ materially from our Company’s expectations include, but are not
limited to, the following:
• Adverse outcome of the litigation involving the trademark of our marquee brand “Pigeon”;
• Reliance on third party OEMs for the sourcing of some of our products;
• Reliance on our brand portfolio, and our ability to successfully maintain and promote our brand portfolio;
• Adverse impact of the ongoing Covid-19 outbreak on our Company and the industry in which we operate;
• Dependence on third parties for the distribution and sale of our products; and
Several proceedings involving the Company and our Promoter.
For further discussion of factors that could cause the actual results to differ from the expectations, see “Risk Factors”, “Our
Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 19, 119
and 238, respectively. By their nature, certain market risk disclosures are only estimates and could be materially different from
what actually occurs in the future. As a result, actual gains or losses could materially differ from those that have been estimated.
We cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Given
these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements and not to regard
such statements as a guarantee of future performance.
Forward-looking statements reflect the current views of our Company as of the date of this Red Herring Prospectus and are not
a guarantee of future performance. These statements are based on the management’s beliefs and assumptions, which in turn are
based on currently available information. Although we believe the assumptions upon which these forward-looking statements
are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on
these assumptions could be incorrect. Neither our Company, our Directors, the Selling Shareholders, 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.
14
OFFER DOCUMENT SUMMARY
The following is a general summary of the terms of the Offer and is neither exhaustive, nor purports to contain a summary of
all the disclosures in the Draft Red Herring Prospectus, this Red Herring Prospectus or the Prospectus when filed, or all details
relevant to prospective investors. This summary should be read in conjunction with, and is qualified in its entirety by, the more
detailed information appearing elsewhere in this Red Herring Prospectus, including “Risk Factors”, “Objects of the Offer”,
“Industry Overview”, “Our Business”, “Capital Structure”, “The Offer”, “Financial Statements”, “Outstanding Litigation
and Material Developments” ,“Offer Procedure” and “Description of Equity Shares and Terms of Articles of Association” on
pages 19, 72, 89, 119, 60, 47, 173, 257, 285 and 300 respectively.
Primary
business of our
Company
We are a kitchen solutions and an emerging home solutions brand as well as one of the leading brands for kitchen
appliances in India. We are engaged in the manufacture and retail of a wide and diverse suite of kitchen solutions under
our Pigeon and Gilma brands and propose to commence manufacturing of kitchen solutions under the BLACK +
DECKER brand. Our kitchen solutions comprise of cookware and cooking appliances, and our home solutions comprise
various household utilities, including consumer lighting, which enables us to be a one stop shop for kitchen and home
solutions.
The industry in
which our
Company
operates
Our Company primarily operates in the kitchen appliances market which comprises instruments or devices designed for
smooth functioning of kitchen activities. Kitchen appliances are used mainly for food preparation, cooking, storage and
cleaning functions.
Name of
Promoters
Rajendra Gandhi and Sunita Rajendra Gandhi
Offer size
Offer of up to [●] Equity Shares of face value of ₹10 each of our Company for cash at a price of ₹[●] per Equity Share
(including a share premium of ₹[●] per Equity Share) aggregating up to ₹[●] million comprising of a Fresh Issue of [●]
Equity Shares aggregating up to ₹950.00 million and an Offer for Sale of up to 8,250,000 Equity Shares comprising of
up to 690,700 Equity Shares by our Promoter, Rajendra Gandhi, up to 59,300 Equity Shares by our Promoter, Sunita
Rajendra Gandhi, up to 1,492,080 Equity Shares by SCI-GIH and up to 6,007,920 Equity Shares by SCI, aggregating up
to ₹[●] million.
Objects of the
Offer
The objects for which the Net Proceeds from the Offer shall be utilized are as follows:
Particulars
Amount(₹ in million)
Repayment/pre-payment, in full or part, of certain borrowings availed by our Company
760.00
General corporate purposes
(1)
[●]
(1)
To be finalised upon determination of the Offer Price and updated in the Prospectus prior to filing with the RoC. The amount to be
utilised for general corporate purpose shall not exceed 25% of the gross proceeds of the Fresh Issue.
Aggregate pre-
Offer
shareholding of
our Promoter
and Promoter
Group, and
Selling
Shareholders as
a percentage of
our paid up
Equity Share
capital
The aggregate pre-Offer shareholding of our Promoter, Promoter Group and Selling Shareholders as a percentage of the
pre-Offer paid-up Equity Share capital of the Company as on date of this Red Herring Prospectus is set out below:
Name of the Shareholder
Total Equity
Shares
Percentage (%) of
Pre-Offer Capital
Promoters and Promoter Selling Shareholders
Rajendra Gandhi
18,184,619
60.45
Sunita Rajendra Gandhi
259,300
0.86
Total holding of the Promoters (A)
18,443,919
61.31
Promoter Group
Neha Gandhi
1
Negligible
Total holding of the Promoter Group (Other than Promoters) (B)
1
Negligible
Total Holding of Promoter and Promoter Group (A+B)
18,443,920
61.31
Investor Selling Shareholders
SCI
9,252,967
30.76
SCI-GIH
2,297,995
7.64
Total holding of the Investor Selling Shareholders
11,550,962
38.40
For further details, see “Capital Structure” on page 60.
Summary of
Selected
Financial
Information
The details of our share capital, net worth, the net asset value per Equity Share and total borrowings as at September
30, 2020, September 30, 2019 and for March 31, 2020, March 31, 2019 and March 31, 2018 set out below have been
derived from the Restated Financial Statements.
(₹ in million)
Particulars
As at
September 30,
2020
As at
September 30,
2019
As at March 31,
2020
2019
2018
(A) Equity Share
Capital
247.17
247.17
247.17
247.17
189.00
(B) Net Worth
#
(299.43)
(590.29)
(601.81)
(639.46)
(1,801.02)
(C) Revenue
3,288.36
3155.07
6698.61
6,409.38
5,289.52
(D) Restated
profit/(loss) for
287.76
43.89
31.70
7.36
(120.18)
15
the period /
year
(E) Earnings per
share
- Basic
11.64
1.77
1.28
0.33
(6.35)
- Diluted
11.64
1.77
1.28
0.33
(6.35)
(F) Net asset value
per Equity
Share
*
(12.11)
(23.88)
(24.35)
(25.87)
(95.29)
(G) Total
Borrowings (as
per balance
sheet)
3,142.94
3.291.21
3,379.34
3,211.11
3,962.54
# The term Net Worth means the aggregate value of the paid-up share capital and all reserves created out of the profits ,securities
premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses,
deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves
created out of revaluation of assets, write-back of depreciation and amalgamation
* The Net Asset Value of the Company equals the total assets minus the total liabilities, and is represented by the Net Worth, as defined
above
Net Asset Value per equity share (in ₹) = Net Asset Value, as restated, at the end of the period/ year/ number of equity shares outstanding
at the end of the year/ period
For information in relation to the adjusted Net Worth, Adjusted Earnings per share (Basic and Diluted), Adjusted Net
Asset Value per Equity Share and Total Borrowing (adjusted for conversion of the CCDs), see “Basis for Offer
Price”,“Other Financial Information” and “Capitalization Statement” on pages 78, 235, and 254 respectively.
Auditor’s
qualifications
which have not
been given
effect to in the
Restated
Financial
Statements
Our Restated Financial Statements do not contain any qualifications which have not been given effect to.
Summary table
of outstanding
litigations
A summary of outstanding litigation proceedings involving our Company, Promoters, Directors and Group Company
(having a material impact on our Company) as of the date of this Red Herring Prospectus is provided below:
Litigation against our Company
Nature of proceedings
Number of cases
Amount, to the extent quantifiable
(₹ in million)
Criminal cases
1
-
Material civil cases
1
8.09
Tax matters
11
95.15
Actions by statutory and regulatory
authorities
21
56.40
Litigation by our Company
Type of proceeding
Number of cases
Amount, to the extent quantifiable
(₹ in million)
Criminal cases
Nil
Nil
Material civil cases
2
-
Tax matters
Nil
Nil
Litigation against our Promoters
Type of proceeding
Number of cases
Amount, to the extent quantifiable
(₹ in million)
Criminal cases
4
-
Material civil cases
1
6.80
Tax matters
-
-
Actions by statutory and regulatory
authorities
2
-
Litigation by our Promoters
Type of proceeding
Number of cases
Amount, to the extent quantifiable
(₹ in million)
Criminal cases
Nil
Nil
Material civil cases
1
Nil
Tax matters
Nil
Nil
16
Litigation against our Directors
Type of proceeding
Number of cases
Amount, to the extent quantifiable
(₹ in million)
Criminal cases
4
-
Material civil cases
1
6.80
Tax matters
Nil
Nil
Actions by statutory and regulatory
authorities
2
-
Litigation by our Directors
Type of proceeding
Number of cases
Amount, to the extent quantifiable
(₹ in million)
Criminal cases
Nil
Nil
Material civil cases
1
-
Tax matters
Nil
Nil
For further details, see “Outstanding Litigation and Material Developments” on page 257 and the section titled “Group
Companies – Litigation” on page 171.
Risk Factors
For details of the risks applicable to us, see “Risk Factors” on page 19
Summary table
of contingent
liabilities
The details of our contingent liabilities as at September 30, 2020 are set forth in the table below:
Particulars
As of September 30, 2020 (₹ in million)
Contingent liabilities
Indirect tax matters under appeal
62.92
Provident fund claims
9.39
Other disputed claims
2.68
Commitment
Estimated amount of contracts remaining to be
executed on capital account and not provided for
tangible assets (net of advance)
177.45
Total
252.44
For details, please see the section entitled “Financial Statements - Contingent Liabilities” on page 225.
Summary of
related party
transactions
The details of related party transactions of our Company for six month period ended September 30, 2020 and September
30, 2019 and the fiscal years ended March 31, 2020, 2019 and 2018 are set forth in the table below:
Particulars
For the half year ended
For the year ended
September
30, 2020
September
30, 2019
March 31,
2020
March 31,
2019
March
31, 2019
Revenue from operations
SAEPL
0.16
-
0.05
-
7.22
Purchases
SAEPL
0.87
-
-
0.14
6.22
Sales returns
SAEPL
-
-
-
0.37
-
Job work charges
SAEPL
-
-
-
0.59
-
Purchase of property, plant and
equipments
SAEPL
-
-
-
5.59
-
Rent including lease rentals
Mrs. Sunita Rajendra Gandhi
0.36
0.36
0.72
0.72
0.60
Managerial remuneration:
Rajendra Gandhi
3.73
5.66
10.11
9.51
8.73
Neha Gandhi
-
1.23
2.31
2.17
2.01
Vivek Mishra
-
-
-
0.09
0.94
Rehana A. Rajan
-
-
-
0.09
-
Manoj Pannalal Jain
-
-
-
-
5.22
Radhakrishnan
-
-
-
0.11
0.92
Shashidhar SK
2.62
5.58
7.82
6.11
-
Rajiv Mehta Nitinbhai
4.53
1.04
7.33
-
-
Sitting Fee
Shubha Rao Mayya
0.20
0.40
0.80
0.50
-
Lakshmikant Gupta
0.20
0.40
0.65
0.45
-
Rajiv Mehta Nitinbhai
-
0.20
0.20
0.70
-
17
For details, please see the section entitled “Financial Statements – Related Party Transactions” on page 228.
Details of all
financing
arrangements
whereby the
Promoter,
members of the
Promoter
Group, the
directors of our
Promoter, our
Directors and
their relatives
have financed
the purchase by
any other
person of
securities of the
Bank other
than in the
normal course
of the business
of the financing
entity during
the period of six
months
immediately
preceding the
date of the
Draft Red
Herring
Prospectus and
this Red
Herring
Prospectus
Our Promoter, members of our Promoter Group, our Directors and their relatives have not financed the purchase by any
person of securities of our Company other than in the normal course of the business of the financing entity during the
period of six months immediately preceding the date of the Draft Red Herring Prospectus and this Red Herring
Prospectus.
Weighted
average price at
which the
Equity Shares
were acquired
by our
Promoters or
Selling
Shareholders,
in the last one
year
Not applicable as our Promoters have not acquired Equity Shares in the last one year.
The weighted average price at which the Equity Shares were acquired by the Investor Selling Shareholders in the one
year preceding the date of this Red Herring Prospectus is as follows:
Name of the Selling
Shareholders
Number of Equity Shares
Weighted Average price per Equity
Share* (in ₹)
SCI
4,291,362
154.07
SCI-GIH
986,795
266.08
* As certified by the Mishra & Co. Chartered Accountants pursuant to certificate dated January 15, 2021
Average cost of
acquisition of
Equity Shares
of our
Promoters and
our Selling
Shareholders
The average cost of acquisition of Equity Shares of our Promoters and Selling Shareholders is as follows:
Name of the Promoter and
Selling Shareholders
Number of Equity Shares acquired
Average cost of acquisition per Equity
Share* (in ₹)
Promoters and Promoter Selling Shareholders
Rajendra Gandhi
18,184,619
8.49
Sunita Rajendra Gandhi
259,300
3.18
Investor Selling Shareholders
SCI
9,252,967
113.48
SCI-GIH
2,297,995
239.34
*As certified by the Mishra & Co. Chartered Accountants pursuant to certificate dated January 15, 2021.
Size of the pre-
IPO placement
and allottees,
upon
completion of
the placement
Nil
Any issuance of
Equity Shares
in the last one
year for
consideration
other than cash
Our Company has not issued any Equity Share in the last one year from the date of this Red Herring Prospectus, for
consideration other than cash
Any
split/consolidati
on of Equity
Our Company has not split or consolidated the face value of the Equity Shares in the last one year.
18
Shares in the
last one year
19
SECTION II: RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all the information disclosed in
this Red Herring Prospectus, including the risks and uncertainties described below, before making an investment decision in
our Equity Shares. If anyone or a combination of the following risks actually occur, our business, prospects, financial condition
and results of operations could suffer and the trading price of our Equity Shares could decline and you may lose all or part of
your investment. The risks described below are not the only ones relevant to us or our Equity Shares or the industry and regions
in which we operate. Additional risks and uncertainties, not presently known to us or that we currently deem immaterial may
arise or may become material in the future and may also impair our business, results of operations and financial condition. To
obtain a more detailed understanding of our Company, prospective investors should read this section in conjunction with the
sections titled “Our Business” “Industry Overview” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” on pages 119, 89 and 238, respectively, as well as the other financial and statistical information
contained in this Red Herring Prospectus. In making an investment decision, prospective investors must rely on their own
examination of our Company and the terms of the Offer including the merits and risks involved. Potential investors should
consult their tax, financial and legal advisors about the particular consequences to them of an investment in this Offer. Potential
investors should pay particular attention to the fact that our Company is incorporated under the laws of India and is subject to
legal and regulatory environment which may differ in certain respects from that of other countries.
This 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 Red Herring Prospectus. Please see “Forward-Looking Statements” on
page 13.
Unless specified or quantified in the relevant risks factors below, we are not in a position to quantify the financial or other
implication of any of the risks described in this section. Unless otherwise stated, the financial information of our Company used
in this section has been derived from the Restated Financial Statements.
INTERNAL RISK FACTORS
Risks Relating to our Business and our Industry
1.
The trademark for our marquee brand ‘Pigeon’ is the subject matter of litigation, and there can be no assurance that we
will be able to protect the trademark in the future.
Our Company had registered the ‘PIGEON’ trademark in different classes in 2003 and 2005. In 2003, pursuant to an oral
understanding with PAPL, our Associate Company, our Company permitted PAPL to manufacture certain products such as
mixers and grinders under the Pigeon brand for our Company. However, PAPL continued to manufacture under the
‘PIGEON’ trademark without any authorisation, therefore, in 2015, our Company terminated the oral arrangement with
PAPL demanding them to stop manufacture of any item under the Pigeon brand at once. In 2015, our Company filed a suit
before the Additional and Sessions City Civil Judge, at Bengaluru, for seeking perpetual injunction from passing off and
infringement of the ‘PIGEON’ trademark, for the classes registered by us in 2003 and 2005, in relation to unauthorized sale
and manufacture of PIGEON branded products by PAPL. Our Company was granted a temporary injunction in the said suit
and PAPL has been restrained from using the ‘PIGEON’ trademark for, inter-alia, the manufacture and sale of kitchen
electrical and non-electrical appliances. The matter is currently pending, and there can be no assurance that the final
judgement of the court will be favourable to us. For details in relation to the suit, see “Outstanding Litigation and Other
Material Developments- Material outstanding civil litigation by our Company” on page 262. Further, there can be no
assurance that we will be able to successfully protect the trademark against any claims made in the future, and in the event
that there is an adverse claim or judgment passed against us in the future in relation to the trademarks, we may be unable to
use the brand name or derive the benefits associated with the goodwill of the brand name, which could have a material
adverse effect on our business, financial condition and results of operations. During the six month period ended September
30, 2020 and September 30, 2019 and Fiscals 2020, 2019 and 2018, Pigeon branded products contributed 76.90%, 80.86%,
86.20%, 81.24% and 86.89%, respectively to our overall sales. As such, in the event that we are unable to successfully
protect the ‘PIGEON’ trademark, it may have an adverse impact on our business condition and results of operations. Further,
in the past, certain of our trademark applications have been opposed by third parties before the trademark registry. For
details in relation to the applications made for registration of trademarks, see “Government and Other Approvals” on page
265.
2.
We source our raw materials from third parties with whom we do not have long term contract or price guarantees.
Our business operations are significantly dependent on local third parties at all stages of product development and sales.
Further, we import some of our raw material, such as glasses components, aluminum, steel and from foreign suppliers. In
Fiscal 2020, and during the six month period ended September 30, 2020, we imported raw material worth ₹706.81 million
and ₹428.67 million, respectively. Our principal raw materials, aluminum, aluminum derivatives and steel, are sourced from
third party suppliers, and purchased on a purchase order basis. We also source certain equipment such as roller coating line
and channel making machine of LPG unit from foreign suppliers. In the event of a discontinuation or closure of the foreign
20
suppliers for these equipment, we may not be able to source identical raw materials and equipment from local sources which
may lead to increase in production costs and consequently affect the pricing of our products. Non-availability of such raw
materials of identical quality from local suppliers may lead to deterioration in quality of such products, which may lead loss
of our reputation. The quality of our products is primarily derived from the quality of our raw materials, and any deterioration
in the quality of raw materials supplied to us will have an adverse effect on the quality of our products, market reputation
and sales volumes. There can be no guarantee that we will be able to maintain our current line-up of suppliers or adequate
supply of such raw materials at all times. We source our raw materials on the basis of purchase orders, and do not have long
term contracts with our raw material suppliers. An unforeseen shortage of raw materials in the future may adversely impact
our results of operations. Further, due to COVID-19 and the consequent lock down imposed by the GoI (“COVID-19
Lockdown”) our supply of imported products was disrupted. During the period of the initial lockdown (i.e., between March
25, 2020 and May 3, 2020), our Company could, on aggregate import traded goods and raw material valued at approximately
Rs. 14.90 million, as compared to the typical average monthly import of approximately Rs. 150 million. Accordingly, the
revenues generated from our sale of traded products reduced to Rs. 626.51 million for the six month period ended September
30, 2020, as compared to Rs. 935.97 million for the six month period ended September 30, 2019. In the event a subsequent
lockdown is announced due to the pandemic, we may not be able to source adequate and/ or quality raw material at a
reasonable price which will have an adverse impact on our manufacturing operations.
Additionally, the prices of our primary raw materials are volatile and fluctuate based on a number of factors outside our
influence, including the price of steel and aluminium. During the six month period ended September 30, 2020, September
30, 2019 and Fiscals 2020, 2019 and 2018, our cost of goods sold (aggregate of cost of materials consumed, purchase of
stock in trade and changes in inventories of finished goods, work-in-progress and stock-in-trade) was 65.24%, 65.04%,
65.96%, 68.44% and 66.84% of our total revenue from operations, respectively. We depend on a limited number of raw
material suppliers for all of our raw material requirements, and there can be no assurance that we will continue to be able to
source our raw materials from such suppliers in the future in the amounts required for our manufacturing purposes, or at all.
In the event that one or more of our suppliers discontinues the supply of raw materials to us, there is a change in terms which
are less favourable to us, we may not be able to find a new supplier to meet our raw material requirements. Further, there
can be no assurance that the price of our raw materials will not increase in the future or that we will be able to recover such
increases in costs from our customers.
Additionally, prices of certain raw materials used in our products among our product portfolio, including steel and
aluminium, are volatile and are subject to fluctuations arising from changes in domestic and international supply and
demand, labour costs, competition, market speculation, government regulations and periodic delays in delivery. Rapid and
significant changes in such raw materials may affect the production price and consequently the market price of these
products. Additionally, we may be unable to pass the entire impact of the rise in the prices of raw materials to our customers,
which may result in lower profit margins for our business. Further, any increase in the selling price of our products may
adversely impact the demand for our products, our sales and consequently our profit margins.
3.
We rely heavily on our brand portfolio, and our inability to successfully maintain and promote our brand portfolio may
adversely affect our results of operations.
We believe that the market perception of our brands is one of the key factors for the sustained demand of our products
amongst consumers. Our business performance is substantially dependent upon the continued success of our Pigeon and
Gilma brands. We spent ₹49.31 million, ₹119.64 million, ₹316.26 million, ₹227.01 million and ₹161.73 million, on our
business promotion and advertisement expenses during the six month periods ended September 30, 2020. September 30,
2019 and for Fiscals 2020, 2019 and 2018, respectively. A brand’s reputational value is based in large part on consumer
perceptions, and even an isolated incident that causes harm, particularly one resulting in widespread negative publicity,
could adversely influence consumer perceptions and erode consumer trust and confidence in the brand. We believe that
continuing to develop awareness of our brands, through focused and consistent branding and marketing initiatives is
important for our ability to increase our sales volumes and our revenues, grow our existing market share and expand into
new markets and new product categories. Consequently, product defects, consumer complaints, or negative publicity or
media reports involving us, or any of our brands or products or any specific product could harm our brands and reputation
and may dilute the impact of our branding and marketing initiatives and adversely affect our business and prospects.
Negative media coverage regarding the safety or quality of our products or any specific product, and the resulting negative
publicity, could materially and adversely affect the level of consumer recognition of, and trust in us or our brands and our
products. Any negative publicity or disputes involving our brands could materially adversely affect our business, financial
condition and results of operations.
Currently, in addition to brick and mortar stores, we list our products on various e-commerce websites and our customers
are increasingly using such platforms to provide feedback and information about products and store experiences, in a manner
that can be quickly and broadly disseminated. Our brands could be damaged by any negative publicity on social media
platforms or by claims or perceptions about the quality or safety of the products sold at our stores, regardless of whether
such claims or perceptions are true. Any untoward incidents such as litigation or negative publicity, whether isolated or
recurring and whether originating from us or otherwise, affecting our business, or suppliers, can significantly reduce our
brand value and consumer trust.
We believe that a large part of the success of our brands is attributable to the after sales services provided by our in-house
service personnel, and any deficiency in such after sales services may adversely impact the reputation of our brands. Further,
21
we may not be able to collect customer feedback in an adequate or frequent manner, or implement it effectively to improve
our products and services, which may adversely impact the development of products in the future for new product and
market segments.
4.
Our business and results of operations have been, and may continue to be, adversely affected by the ongoing COVID-
19 outbreak and associated responses.
Beginning in December 2019, a new strain of the coronavirus (COVID-19) has spread rapidly throughout the world,
including in India. The World Health Organisation has declared the COVID-19 outbreak a health emergency of international
concern and has categorised the COVID-19 virus outbreak as a pandemic. COVID-19 associated responses have adversely
affected workforces, consumer sentiment, economies and financial markets around the world, including in India, and have
created significant uncertainty for our business. In order to contain the spread of the COVID-19, the Government of India
along with State Governments declared a lockdown of the country, including severe travel and transport restrictions and a
directive to all citizens to shelter in place. COVID-19 and the measures taken to reduce the spread of the virus have had and
are likely to continue to have negative impacts on our business, such as disruptions in our operations, limitations on our
employees’ ability to work and travel, significant changes in the economic or political conditions in India, currency,
commodity and financial market volatility, restrictions in our ability to access and source raw materials as well as products
in which we trade, deteriorations in consumer sentiment, and changes in the behaviour, preferences and needs of our
customers.
As a result of the COVID-19 Lockdown, our manufacturing facilities in Bengaluru and Baddi were closed for 42 and 34
days, respectively, which resulted in ceasing of our manufacturing and sales activities during that period. The manufacturing
activities at our Baddi facility resumed on April 26, 2020, and the manufacturing activities at our Bengaluru facility resumed
on May 4, 2020. Upon resumption of manufacturing activities, our factories worked at reduced capacity during the month
of May 2020, on account of reduced availability of labour due to COVID-19 pandemic. For information regarding the
number of units manufactured in our Bengaluru and Baddi Facilities, please see “Our Business – Bangalore Facility” and
“Our Business – Baddi Facility” on pages 128 and 131 of this Red Herring Prospectus, respectively. The lockdown also
resulted in disruption in our supply of imported products. During the period of the initial lockdown (i.e., between March 25,
2020 and May 3, 2020), our Company could, on aggregate import traded goods and raw material valued at approximately
₹14.90 million, as compared to the typical average monthly import of approximately ₹150 million. Accordingly, the
revenues generated from our sale of traded products reduced to ₹626.51 million for the six month period ended September
30, 2020, as compared to ₹935.97 million for the six month period ended September 30, 2019.
Additionally, the number of C&F agents of our Company reduced from 13 as at October 31, 2019 to nine as at September
30, 2020. This was primarily on account of low sales volume in certain areas where some of the C&F agents did not wish
to continue their operations since it was unviable for them to continue their operations. Further, as a result of lower revenues
during the months of April 2020 and May 2020 and stress on general liquidity situation in the market, the collection of
receivables by Company was impacted. As a matter of abundant caution, our Company utilized the moratorium on interest
and principal, announced by the RBI, with two banks out of the four banks and other financial institutions, with whom our
Company has credit limits. Our Company also had to undertake certain other measures on account of the reduced cash flows,
such as temporary reduction in salaries of certain classes of employees, and discharge of obligations to vendors in a graded
manner.
Given the dynamic nature of this outbreak, the extent to which the COVID-19 and associated responses, the impact on our
business, results of operations and financial condition will depend on future developments, which remain highly uncertain
and cannot be accurately predicted at this time. If the outbreak continues for an extended period, reoccurs or increases in
severity, it could have an adverse effect on economic activity and financial markets in India, and could materially and
adversely affect our business, financial conditions and results of operations and the trading price of the Equity Shares and
other securities. Similarly, any other future public health epidemics or outbreak of contagious disease in India or elsewhere
could also materially and adversely affect our business, cash flows, results of operations and financial condition. See also
“Management’s Discussion and Analysis of Financial Condition and Results of Operations— Factors Affecting Our Results
of Operations”, on page 239.
5.
Our operations are significantly dependent on third parties for the distribution and sales of our products.
We are dependent on third parties in relation to our distribution and sales. All our products are distributed and sold through
third party retail stores and other channels of retail, over which we have limited control. For instance, while we enter into
agreements with C&F agents and distributors in the normal course of business, such agreements are typically not long-term
contracts, and there can be no assurance that our products will continue to have the same geographical outreach as enjoyed
presently. Further, we have limited control over the activities of our C&F Agents from the time that our products are
transported to their warehouse, up to the stage of sale of the products. In the event that the C&F Agents are unable to
accommodate all our products as per the demand of our products for a particular region, or if there are any accidents at the
stage of warehousing or transportation, the insurance obtained by the C&F Agents may not be sufficient to cover the losses
suffered by us. We depend on third party logistics service providers for the transportation of raw materials to our
manufacturing facilities, and for the distribution of finished products to C&F agents. Any disruption in the logistics,
including at the level of the transportation agencies or the C&F agents, may impact our ability to reach the markets with our
finished products within the desired timelines, which may adversely impact our business, financial condition and results of
22
operations.
6.
There are various proceedings involving our Company, our Promoters and our Director which if determined against us
or our Promoters or our Director, may have an adverse effect on our business.
There are outstanding legal proceedings involving our Company and our Promoter, who is also the Managing Director,
which are pending at different levels of adjudication before various courts, tribunals and other authorities. Such proceedings
could divert management time and attention and consume financial resources in their defense or prosecution. The amounts
claimed in these proceedings have been disclosed to the extent ascertainable and quantifiable and include amounts claimed
jointly and severally from our Company. Any unfavorable decision in connection with such proceedings, individually or in
the aggregate, could adversely affect our reputation, business, financial condition and results of operations. The list of such
outstanding legal proceedings as on the date of this Red Herring Prospectus are set out below:
Nature of cases
No. of cases
Total amount involved (in ₹ million)
Against our Company
Criminal cases
1
-
Civil cases
1
8.09
Tax
11
95.15
Actions by statutory and regulatory authorities
21
56.40
Against our Promoters
Criminal cases
4
-
Civil cases
1
6.80
Actions by statutory and regulatory authorities
2
-
Against our Directors
Criminal cases
4
-
Civil cases
1
6.80
Actions by statutory and regulatory authorities
2
-
We cannot assure you that any of these matters will be decided in favour of our Company or in favour of our Promoter who
is also our Managing Director or that no additional liability will arise out of these proceedings. An adverse outcome in any
of these proceedings could have an adverse effect on our business, results of operations and reputation. For details, see
“Outstanding Litigation and Material Developments” on page 257.
7.
Our Promoter and Managing Director, Rajendra Gandhi, may be required to vacate his directorship from our Board.
Our Associate, PAPL, has received a notice dated February 13, 2017 from the RoC under sections 92 and 96 read with
section 403 of the Companies Act, 2013 in relation to the non-filing of annual returns by PAPL for Fiscal 2015. Our
Promoter and Managing Director, Rajendra Gandhi, is one of the directors on the board of PAPL. Under section 164(2) of
the Companies Act, 2013, any person who is or has been a director of a company which has not filed its financial statements
or annual returns for any continuous period of three Fiscals, is ineligible to be re-appointed as a director of that company or
appointed in other company for a period of five years from the date of failure of the company to make the filings. Pursuant
to a reply dated May 16, 2017 to the RoC notice, the directors of PAPL have clarified to the RoC that the delay in filing of
annual returns occurred due to a deadlock in management of PAPL, due to which the accounts were not finalized and the
annual general meeting was not conducted. On April 17, 2018, Rajendra Gandhi received a notice from the RoC, asking
him to show cause as to why PAPL should not be struck off under the provisions of the Companies Act, 2013. In response,
a reply dated May 23, 2018, has been sent to the RoC, requesting the RoC to withdraw the notice. Further, the RoC was
intimated that PAPL had approached the NCLT, Bengaluru bench in this regard, and a copy of the petition filed by PAPL
before the NCLT was also submitted with the RoC. Our Company and our Promoter and Managing Director, Rajendra
Gandhi subsequently also filed an interim application before the NCLT on May 30, 2018 praying NCLT to direct the ROC
to maintain status quo by not striking off PAPL and to not disqualify Rajendra Gandhi from directorships of other
companies, until the disposal of the main petition.
The NCLT by an order on July 18, 2018 directed the ROC to maintain the status quo and not to disqualify Rajendra Gandhi
until the disposal of the petition. Further, the NCLT has directed the appointment of an independent chairman of the Board
and both the parties have filed a memo with the NCLT with a list of issues which the independent chairman would be
required to address. The NCLT pursuant to its order dated December 11, 2019, has appointed an independent chairman for
PAPL. A meeting of the board of directors of PAPL was held on January 13, 2020 where the independent chairman, inter
alia, examined the latest financial statements of PAPL and recommended the appointment of a statutory auditor to audit the
financial statements pertaining to financial year 2015-19. Subsequently, meetings of the board of directors of PAPL were
held on March 27, 2020 and May 4, 2020 and an extraordinary general meeting of the shareholders of PAPL was held on
June 12, 2020 pursuant to which statutory auditors have been appointed to audit the financial statements of PAPL. On June
18, 2020, the independent chairman filed a memo with the NCLT in relation to outstanding fees payable to him by PAPL.
For further details in relation to the petition, pending before the NCLT, see “Outstanding Litigation and Other Material
Developments” on page 257.
While the matter is currently pending before the NCLT and the RoC, in the event that an adverse or a final order is passed
by the NCLT and the interim stay is vacated/dismissed, the RoC may inter alia, include the name of our Managing Director,
Rajendra Gandhi in the list of directors who are disqualified to be reappointed on the board of PAPL or to be appointed on
23
the board of another company. Further, in terms section 167 of the Companies Act, in case of any director incurring
disqualification under section 164(2) of the Companies Act, 2013, the office of such director is required to become vacant
in all other companies. In the event, PAPL and its directors are held to be in violation of section 164(2) of the Companies
Act, 2013, our Promoter and Managing Director, Rajendra Gandhi, may be required to vacate his directorship in our
Company. Our Promoter and Managing Director, Rajendra Gandhi, is instrumental to the growth and operations of our
Company, and his disqualification will have an adverse impact on our business, financial condition and results of operations.
8.
Our Promoter, Rajendra Gandhi, has been named as a respondent in certain criminal and civil proceedings.
Our Promoter, Rajendra Gandhi, has been named as a respondent in certain criminal and civil proceedings. For instance, in
2006, the Karnataka State Pollution Control Board (“KSPCB”) filed a criminal complaint against our Promoter, Rajendra
Gandhi and our Company before the Additional Chief Metropolitan Magistrate, Bengaluru (“ACMM Court”) in relation
to, inter alia, the alleged violation of section 21 of the Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”). The
KSPCB has alleged that our Company operated its erstwhile facility situated at No. 28/1, Adjacent to AGS Layout, 3rd
Main Road, Arehalli Village, Uttarahalli Hobli, Bengaluru without obtaining the requisite consents under Air Act. Further,
criminal proceedings have also been initiated against our Promoter, Rajendra Gandhi by State of Karnataka at the instance
of Deputy Director of Factories, Bangalore Division-3, Bangalore in relation to an accident at our Bengaluru facility, which
caused injuries to our employee.
An FIR has been filed against our Promoter, Rajendra Gandhi, by Raju in relation to an accident that took place in our
Bengaluru facility on November 13, 2018, resulting in two casualties and injury to 13 other workmen. For further details in
relation to these matters, see “Outstanding Litigation and Material Developments” on page 257. For further details in
relation to the accident that took place in our Bengaluru facility on November 13, 2018, see “Risk Factor - There may be a
delay in production at, or shutdown of, any of our manufacturing facilities or at any of the third party manufacturing
facilities we use for the sourcing of our products and packaging material” on page 26. The aforementioned proceedings
against Rajendra Gandhi are currently pending, and there can be no assurance that the relevant judicial forums will dismiss
the complaints or rule in favour of the respondents. Any conviction of Rajendra Gandhi or any decision which is not in
favour of the persons named in the complaints for the alleged offences may lead to negative publicity and affect our business,
reputation and results of operations. For further details, see “Outstanding Litigation and Material Developments” on page
257.
9.
We rely on third party OEMs for the sourcing of some of our products, which are not manufactured by us in India.
We rely upon third-party OEMs for the sourcing of some of our products. For the six month periods ended September 30,
2020 and September 30, 2019 and Fiscals 2020, 2019 and 2018, such traded products contributed 19.21%, 29.82%, 27.59%,
31.63% and 31.50%, respectively, to our total revenues. While such traded products are manufactured on the basis of
specifications provided by us and under the supervision and monitoring of our sourcing team, we have limited control over
the manufacturing and quality control processes, and any defects discovered in such products may have an adverse impact
on our brand reputation and results of operations.
10.
Our manufacturing facilities are situated on land which may be subject to regulatory action and litigation.
As of the date of this Red Herring Prospectus, we have two manufacturing facilities, one in Bengaluru, Karnataka and the
other at Baddi, Himachal Pradesh. Our manufacturing facility in Bengaluru admeasuring 46 acres and five guntas is situated
on several contiguous parcels of land, a majority of which are owned by our Company. Further, in respect of the land parcels
comprising the Bengaluru facility, as of the date of this Red Herring Prospectus:
• 0.30% which is equivalent to five guntas of the land parcels within our factory premises have not been converted
from agricultural use to non-agricultural use;
• 1.80% which is equivalent to 31 guntas of the land parcels which are held by our Company are yet to be registered
in the name of our Company;
• our Company has received show cause notices from the Kanakapura Planning Authority in relation to failure to
obtain the requisite approvals from KPA for carrying our industrial development program on 15.70% of the land
parcels which is equivalent to 6 acres 37 guntas; and
• our Promoter, Rajendra Gandhi, has received a notice from the Tahsildar, Kanakapura Taluk, in relation to
submitting proof of being an agriculturist in relation of holding 2.78% which is equivalent to 1 acre and 5 guntas
of the land parcels which are marked for agricultural use Subsequently, pursuant to the order dated March 13,
2020 passed by the Sub-Divisional Magistrate, Ramanagara Sub-Division, Ramanagara the notice received
against Rajendra Gandhi has been withdrawn and no further action has been taken against our Promoter by any
regulatory authority in this regard.
The fair market value of the land parcels which are owned by the Promoter and third parties are not mentioned in the balance
sheet. However, the fair market value of the land parcels on which notices have been received is ₹131.58 million. Further,
the total value of the lands of the Company is ₹867.08 million.
24
In the event that our Company or our Promoter, Rajendra Gandhi are held to be in violation of the aforementioned regulatory
requirements, it may result in inter alia, the underlying land parcel being forfeited by the government authorities and the
eviction of our Company from the premises. Further, it may result in an order against our Company to discontinue the use
of the underlying land parcel and restoring the land to its original condition. While no part of the land for which we have
received notices forms part of the factories in our manufacturing facilities, a substantial portion of our manufacturing activity
is undertaken at our Bengaluru Facility, and for the six month period ended September 30, 2020 and Fiscal 2020, it
contributed 79.75% and 72.29%, respectively, to our overall production volumes. There can be no assurance that the
regulatory authorities will not pass an adverse order against our Company or our Promoter, Rajendra Gandhi, or that our
Company or our Promoter may be able to obtain the requisite approvals within the prescribed timelines or at all. Any impact
on the underlying lands on which our manufacturing facilities are built will have an adverse impact on our business, financial
condition and results of operations. Further, in the event that we are required to set up our manufacturing facilities at any
other place, we may not achieve the current economies of scale, and may incur high raw material cost, transportation cost,
high rent, high warehouse charges, which in turn impact profitability.
11.
Expansion into new geographic regions and markets may subject us to various challenges.
We intend to increase the sales and distribution of our products in Indian states where large markets exist for the segments
in which we operate, as well as introduce new products and brands in the states where we currently operate. However, for
the products manufactured and sold by us under our Gilma brand, we have limited experience and knowledge of operating
in states outside of southern India, and our foray into new geographies, or into new brands or products in the existing
geographies may be subject to high barriers to entry including existing competition, local laws and market dynamics.
Further, we may not be able to effectively assess the level of promotional marketing required in a particular state, and the
recognition of our brands and products in such states may not be in the manner or to the extent anticipated by us. Our
expansion into new geographies may also be challenging on account of our lack of familiarity with the social, political,
economic and cultural conditions of these new regions, language barriers, difficulties in staffing and managing such
operations and the lack of brand recognition and reputation in such regions. We may also encounter other additional
anticipated risks and significant competition in such markets. Due to our limited experience in undertaking certain types of
markets or offering certain services, our entry into new business segments or new geographical areas may not be successful,
which could hamper our growth and damage our reputation. We may be unable to compete effectively for products in these
segments.
Further, our new business or projects may turn out to be mutually disruptive and may cause an interruption to our business
as a result. If we are unable to successfully execute our growth and expansion strategies, our business, prospects and results
of operations could be materially and adversely affected. For instance, during this Fiscal, we started trading in products such
as the pulse oximeter and manufacturing products such as infrared thermometers, floor mops and handy vegetable choppers.
Our Company has limited experience in these product categories, and we cannot assure you that we will be able to maintain
or expand any of these business or product lines. Further, some of these product categories may be regulated, and we cannot
assure you that all registrations and licenses required for undertaking the manufacturing and trading activities will be
obtained by our Company within the required timelines, or at all. For further details in relation to the key approvals required
for undertaking our business and the status of the approvals, see “Government and other Approvals” on page 265.
12.
The BLACK + DECKER Brand License Agreement contains certain onerous provisions and a failure to comply with
certain provisions could result in adverse consequences including an event of default.
The BLACK + DECKER Brand License Agreement has been entered into between our Company and Stanley Black &
Decker, Inc. and The Black and Decker Corporation (collectively referred to as “B&D”) in relation to licensing of certain
proprietary trademarks held by B&D (“Black + Decker Marks”) to use such Black + Decker Marks for the purpose of
manufacturing, distributing, marketing and selling blenders and juicers, breakfast appliances, small cooking appliances and
small domestic appliances in India. The products falling under the BLACK + DECKER Brand License Agreement are new
to our Company’s operations and our Company has not previously dealt with these products. Under the terms of the BLACK
+ DECKER Brand License Agreement, our Company is required to get all the products that it intends to sell under the Black
+ Decker Marks approved by B&D at the development stage and is also required to maintain certain quality standards,
failing which B&D can unilaterally terminate the BLACK + DECKER Brand License Agreement. Additionally, our
Company is required to achieve minimum total sales per year as laid out in the BLACK + DECKER Brand License
Agreement, failing which B&D may at its sole discretion terminate the BLACK + DECKER Brand License Agreement.
Further, in terms of the BLACK + DECKER Brand License Agreement we are, inter alia, required to submit to B&D a
marketing plan for marketing of the BLACK + DECKER products. Additionally, in case we launch products comparable to
products that are selling under the BLACK + DECKER Agreement, then we will be required to either maintain comparable
or exceed quality standards of the manufacture of the products under the BLACK + DECKER Brand License Agreement.
This may lead to the suppression of our own product range.
The BLACK + DECKER Brand License Agreement stipulates that B&D shall have no liability to our Company or any other
person on account of any injury, loss or damage or any other liability, costs, etc. imposed upon our Company or any other
person resulting from the production, use or sale of any licensed product, or any labelling, packaging, advertising or
promotional activities with respect to the licensed products. Our Company has also agreed to indemnify B&D and its
officers, agents, representatives, etc. against claims, demands, damages, liabilities, expenses, losses and costs, etc. arising
out of the usage of the licensed products. In the event that we are not able to comply with the provisions of the BLACK +
25
DECKER Brand License Agreement, including for any reason beyond our control, our business, financial condition and
results of operations may get adversely impacted. Further, the BLACK + DECKER Brand License Agreement also imposes
a non-compete obligation on our Company, and for the duration of the BLACK + DECKER Brand License Agreement and
for a period of one year thereafter on prohibiting the sale of all the products licensed to our Company under brands which
are competitive to the BLACK + DECKER brand. The non-compete enforced by the BLACK + DECKER Brand License
Agreement only pertains to such products that are competitive to the BLACK + DECKER brand. Our inability to
manufacture and sell certain products under brands which may be considered ‘competitive’ with the Black + Decker Marks
during the term of the agreement and after its expiry, may hamper our ability to cater to our existing customers and also
restrict our ability to develop and manufacture new product and product lines, which may have an adverse impact on our
financial condition and results of operations.
13.
Our sales may be negatively impacted by increasing competition from companies and local firms with products similar
to ours.
The kitchen cookware appliance business and our associated retail business operates in a highly competitive environment.
We compete with other retailers that market products similar to ours. We compete with national businesses that utilize a
similar retail store strategy, as well as local unorganized kitchen cookware appliance manufacturers. The sales growth in
the kitchen cookware appliances industry has encouraged the entry of many new competitors, new business models, and an
increase in competition from established companies, many of whom are willing to spend significant funds and/ or reduce
pricing in order to gain market share.
The competitive challenges facing us include:
• anticipating and quickly responding to changing consumer demands or preferences better than our
competitors;
• fragmented market divided between big players accounting for about half of the market and small and
regional players;
• maintaining favourable brand recognition and achieving customer perception of value;
• effectively marketing and competitively pricing our products to consumers in diverse market segments;
• effectively managing and controlling our costs and pricing to effectively compete with regional players;
• adopting a balance between high quality and pricing;
• effectively managing increasingly competitive promotional activity;
• effectively attracting new customers;
• developing new innovative shopping experiences in retail stores;
• developing innovative, high-quality products in colours and styles that appeal to consumers of varying age
groups, tastes, regions, and in ways that favourably distinguish us from our competitors; and
• effectively managing our supply chain and distribution strategies in order to provide our products to our
consumers on a timely basis and minimize returns, replacements and damaged products
In light of the many competitive challenges facing us, we may not be able to compete successfully. Increased competition
could reduce our sales and impact our business condition and results of operations.
14.
Our Group Company SAEPL is engaged primarily in manufacturing, importing and exporting of components for
domestic and other appliances. Any conflict of interest which may occur between the business of SAEPL and us may
adversely affect our business, prospects, results of operations and financial condition.
SAEPL is engaged primarily in the business of manufacturing, importing and exporting of components for domestic and
other appliances such as heating stoves for domestic application and jugs for consumer durables, a line of business similar
to that of ours. Currently, SAEPL have not entered into any non-compete agreement with us. We will endeavour to take
adequate steps to address any conflict of interest by adopting the necessary procedures and practices as permitted by
applicable law, to address any conflict which may arise in the future. We cannot assure you that our Promoters will not
favour the interests of SAEPL over our interests or that we will be able to suitably resolve any such conflict without an
adverse effect on our business or operations.
15.
A land parcel forming part of our unit situated at our unit II of our manufacturing facility situated at
Medamaranahalli Village, Harohalli Hobli, Kanakapura Taluk is a premise not owned by us which exposes us to certain
risks.
26
A vacant land parcel bearing survey number 81/4 admeasuring 5,445 sq. feet (5 guntas), and forming part of our unit II of
manufacturing facility situated at Medamaranahalli Village, Harohalli Hobli, Kanakapura Taluk is a premise which is in our
possession currently but is not owned by us and for which we have paid an advance consideration of ₹0.10 million to
Lakshmamma (“Seller”) out of the total consideration of ₹0.31 million for the land. Additionally, the Seller is not related
to the Promoters, Promoter Group/Directors/KMPs of the Company. We enjoy the possession and use of this land through
an advance payment receipt in our favor by the owner of such land parcel and the land is in the process of being transferred
to our Company. There can be no assurance that we will, in the future, be able to own the land completely. In the event we
fail to complete the transfer of the property in our name, in time or at all, our operations may be disrupted which may
adversely affect our business, financial condition and results of operations.
16.
Our Company has experienced negative cash flows from operating activities in the past. Sustained negative cash flow
could impact our growth and business.
Our cash flows from operating activities, investing activities and financing activities in the six month period ended
September 30, 2020 and September 30, 2019 as well as all of the three preceding Fiscals is set forth below:
(₹ in million)
Particulars
Fiscal
Six months ended
September 30, 2020
Six months ended
September 30, 2019
2020
2019
2018
Net cash generated from/(used in)
operating activities
496.68
(95.37)
155.78
131.72
113.04
Net cash used in investing activities
(253.27)
(121.53)
(272.57)
(68.11)
(61.49)
Net cash generated from (used in)
financing activities
(340.57)
(7.32)
(18.39)
217.63
(52.97)
Net (decrease)/increase in cash & cash
equivalents
(97.16)
(224.22)
(135.18)
281.24
(1.42)
Cash flows of a company are a key indicator to show the extent of cash generated from the operations of a company to meet
capital expenditure, pay dividends, repay loans and make new investments without raising finance from external resources.
If we are not able to generate sufficient cash flows, it may adversely affect our business and financial operations. For further
details, see “Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” on pages 173 and 238, respectively.
17.
There may be a delay in production at, or shutdown of, any of our manufacturing facilities or at any of the third party
manufacturing facilities we use for the sourcing of our products and packaging material.
The success of our manufacturing activities depends inter alia, on the productivity of our workforce, compliance with
regulatory requirements and the continued functioning of our manufacturing processes and machinery. Disruptions in our
manufacturing activities could delay production or require us to shut down the affected manufacturing facility. Moreover,
some of our products are permitted to be manufactured at only such facility which has received specific approvals, and any
shut down of such facility will result in us being unable to manufacture such product for the duration of such shut down. In
the last three Fiscals, the manufacturing facilities of our Company have experienced the following interruptions:
(₹ in million)
Fiscal
Interruption
Financial Impact
During the six month period
ended September 30, 2020
Our Bengaluru and Baddi facilities were shut down for 33 and 25 days,
respectively due to the nationwide lockdown announced by the GoI on account
of COVID-19.
149.00
2020
Our Bengaluru and Baddi facilities were shut down for nine days each due to
the nationwide lockdown announced by the GoI during March, 2020 on
account of COVID-19.
45.55
2019
A fire accident in our Bengaluru facility on November 13, 2018 which caused
the Bengaluru facilities to remain closed for one day.
13.85
2018
Nil
Nil
Any interruptions in our manufacturing facilities may result in a loss of business and profits, and in certain cases, may also
adversely impact our employees and workmen. For instance, there was an electrically induced fire accident occurred at the
roller coating unit plant in unit II of the Company’s Bengaluru manufacturing facility on November 13, 2018. The accident
was caused by the finishing machine and the aluminum powder dust extractor system. As a result, a total of 15 people were
injured because of the Accident, out of which two (including one who was an employee of the independent contractor) have
subsequently deceased.
Any such events in the future may result in us being unable to meet with our contractual commitments, which will have an
adverse effect on our business, results of operation and financial condition. Any interruption at our manufacturing facilities,
including natural or man-made disasters, workforce disruptions, regulatory approval delays, fire, failure of machinery or the
failure of power sources such as electricity at our manufacturing facilities for a prolonged period could reduce our ability to
meet the conditions of our contracts and earnings for the affected period, which could affect our business, prospects, results
of operations and financial condition.
27
Further, all of our manufacturing activities are undertaken across two facilities, i.e. in Bengaluru, Karnataka and Baddi,
Himachal Pradesh. A temporary or permanent shut down of either of our manufacturing facilities, the disruption of services
at either of our manufacturing facilities, or our inability to acquire or establish additional manufacturing units may adversely
impact our ability to continuously operate in a profitable manner, or at all.
Additionally, we rely on certain third party contract manufacturers outside India for the sourcing of several types of products
such as LED emergency lights, batons, water bottles, flask, electric kettle, chimney, iron and chopper for our PIGEON
brand. Further, we also rely on certain third party manufacturers in India for sourcing our packaging material. In the event
that there are disruptions in the manufacturing facilities of such third party contract manufacturers, it will impact our ability
to deliver such products and meet with our contractual commitments. If these third party manufacturing facilities cease to
be available to us at costs acceptable to us or we experience problems with, or interruptions in, such services, and we are
unable to find other facilities to provide similar manufacturing capacity on comparable terms and on a timely basis, our
operations would be disrupted and our financial condition and results of operations could be adversely affected
18.
Our Company has recorded restated losses, negative Net Worth and negative EPS, in the past.
During the last three Fiscals, there have been certain instances when we have experienced losses, or when our Net Worth
and EPS have been negative.
(₹ in million)
Fiscal
Restated profit/
(loss) for the period/
year
Net Worth*
EPS
Six month period ended September 30, 2020
287.76
(299.43)
11.64
2020
31.70
(601.81)
1.28
2019
7.36
(639.46)
0.33
2018
(120.18)
(1,801.02)
(6.35)
Profits/ Losses, Net Worth and EPS are parameters used for the determination of the financial well-being of a company, and
we cannot assure you that we will not incur losses in the future or that our Net Worth, EPS or any other financial parameter,
which may have an adverse impact on the trading price of our Equity Shares post-listing, will not be low or negative. In the
past, we have experienced negative Net Worth on account of fair valuation of the CCDs issued by the Company. Further,
our failure to generate profits may adversely affect the market price of our Equity Shares, restrict our ability to pay dividends
and impair our ability to raise capital and expand our business.
19.
Our net debt to equity ratio as of September 30, 2020 was 0.77 (on a fully diluted basis).
Our net debt to equity ratio as of September 30, 2020 was 0.77 (on a fully diluted basis, i.e. after considering the outstanding
CCDs as at September 30, 2020 of ₹ 1,847.47 million to represent an element of equity, and not that of debt). For details,
see “Financial Statements – Note 33.1 – Capital Management” on page 213. The debt to equity ratio is an indicator of the
extent of financial leverage of a company. Depending on our working capital requirements, which are usually high in the
retail industry in order to maintain inventory levels, and any unforeseen future capital requirements, our Company may avail
additional financial assistance which may impact our debt to equity ratio, which may also have an impact on the trading
price of our Equity Shares post-listing.
20.
Our inability or failure to maintain a balance between optimum inventory levels and our product offering may adversely
affect our business, results of operations and financial condition.
We strive to keep optimum inventory at retail stores, C&F agents and distributers to control our costs and working capital
requirements. To maintain an optimal inventory, we monitor our inventory levels based on our projections of demand as
well as on a real-time basis. Our hub and spoke model of distribution also enables us to fulfill large orders from our
distribution centers directly, and replenish our stocks with minimal lead time. However, unavailability of products, due to
high demand or inaccurate forecast, may result in loss of sales and adversely affect our customer relationships. Conversely,
an inaccurate forecast can also result in an over-supply of products, which may increase inventory costs, negatively impact
cash flow, reduce the quality of inventory, shrinkages and ultimately lead to reduction in margins. Further, some of our
products can become obsolete in terms of designs, and any inventory that we hold with respect to old designs may not get
sold or replaced by our suppliers. Any of the aforesaid circumstances could have a material adverse effect on our business,
results of operations and financial condition.
21.
Our Promoters and one of our Directors have provided personal guarantees for financing facilities availed by our
Company and may in the future provide additional guarantees and any failure or default by our Company to repay such
facilities in accordance with the terms and conditions of the financing agreements could trigger repayment obligations
on them, which may impact their ability to effectively service their obligations as our Promoters and Directors and
thereby, adversely impact our business and operations.
Our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi, and our Director, Neha Gandhi, have personally guaranteed
the repayment of certain loan facilities taken by us. Our Promoters have guaranteed the principal amounts for all our
outstanding facilities. Additionally, Neha Gandhi, our Director, is a co-guarantor with our Promoters for the principal
amounts availed from RBL Bank Limited and IDFC First Bank Limited. For further details, please see “History and Certain
28
Corporate Matters- Guarantees issued by our Promoters” on page 151. Our Promoters may continue to provide such
guarantees and other security post listing. In case of a default under our loan agreements, any of the guarantees provided by
our Promoters may be invoked, which could negatively impact the reputation and net worth of our Promoters. In addition,
our Promoters may be required to liquidate their shareholding in our Company to settle the claims of the lenders, thereby
diluting their shareholding in our Company.
Furthermore, in the event that our Promoters withdraw or terminate their guarantees, our lenders for such facilities may ask
for alternate guarantees, repayment of amounts outstanding under such facilities, or even terminate such facilities. We may
not be successful in procuring guarantees satisfactory to the lenders, and as a result may need to repay outstanding amounts
under such facilities or seek additional sources of capital, which could affect our financial condition and cash flows.
22.
Due to the geographic concentration of our sales in the Southern regions of India, our results of operations and financial
condition are subject to fluctuations in regional economic conditions.
As of September 30, 2020, all of our 65 Gilma branded franchisee stores are located in south India. See “Our Business” on
page 119. During the six month periods ended September 30, 2020 and September 30, 2019 and Fiscals 2020, 2019 and
2018, the revenues from our sales in southern Indian states accounted for 47.76%, 61.74%, 50.84%, 60.50% and 61.54%,
respectively of our total income, respectively. Our concentration of sales in these regions heightens our exposure to adverse
developments related to competition, as well as economic and demographic changes in these regions, which may adversely
affect our business prospects, financial conditions and results of operations. Any adverse development that affects the
performance of the showrooms located in these regions could have a material adverse effect on our business, financial
condition and results of operations. Any event negatively affecting these states, including but not limited to economic
downturn, natural disasters or political unrest, could have a material adverse effect on our business and results of operations.
23.
Our business is operating under various laws which require us to obtain approvals from the concerned
statutory/regulatory authorities in the ordinary course of business and our inability to obtain, maintain or renew requisite
statutory and regulatory permits and approvals for our business operations could materially and adversely affect our
business, prospects, results of operations and financial condition
Our operations at our manufacturing facilities in Bengaluru, Karnataka and Baddi, Himachal Pradesh are subject to extensive
government regulation and in respect of our existing operations, we are required to obtain and maintain various statutory
and regulatory permits, certificates and approvals including, inter alia, environmental approvals, factories licenses, labour
related, tax related approvals and mandatory certifications under the Bureau of Indian Standards Act, 2016. For details in
relation to the key regulations and laws applicable to our operations, see “Regulations and Policies” on page 142.
In respect of our manufacturing facilities, we have made applications for certain approvals. We have also made applications
for trademark registrations and applications for renewal of trademark registrations under the Trade Marks Act, 1999.
Additionally, an application for renewal of authorisation for handling hazardous waste under the provisions of the Hazardous
and Other Wastes (Management and Transboundary Movement) Rules, 2016 is pending before the Karnataka State Pollution
Control Board for our manufacturing unit situated in Bengaluru, Karnataka and an application for renewal of the fire NOC
in relation to our Bengaluru facility is pending with the Karnataka Fire and Emergency Services. Further, our Company has
made an application to the Karnataka State Pollution Control Board for the expansion of consent for operation on account
of increase in the manufacturing units in the Bengaluru facilities which is still pending. Our Company has also made an
application before the Director of Legal Metrology, Department of Consumer Affairs, Government of India, for the model
approval for the infrared thermometers, under the Legal Metrology Act, 2009. Additionally, certain mandatory certifications
are required for some of the products of our Company from the Bureau of Indian Standards and Bureau of Energy Efficiency.
These certifications expire in the normal course of business. For example, the ISO 4250:1980 certification for mixers has
expired and our Company has made an application dated November 2, 2020 for its renewal which is currently pending.
There can be no assurance that the relevant authorities will issue such permits, approvals, licenses or registrations, in time
or at all. Failure or delay in obtaining or maintaining or renew the required permits, approvals, licenses or registrations
within applicable time or at all may result in interruption of the operations of our Company. For more information, see
“Government and Other Approvals” on page 265.
Further, the relevant authorities may also initiate penal action against our Company, restrain its operations, impose fines/
penalties or initiate legal proceedings for inability to obtain approvals in a timely manner or at all, or suspend or revoke
licenses in the event of non-compliance with the licensing conditions. For instance, our Company has been issued show
cause notices by the Additional Director General of Foreign Trade (“DGFT”) under the provisions of Foreign Trade
(Development and Regulation) Act, 1992 (“FT Act”) read with the Foreign Trade (Regulation) Rules, 1993 (“FT Rules”),
alleging non-fulfilment of certain export obligations. For details, see “Outstanding Litigation and Material Developments –
Litigation involving our Company - Outstanding actions initiated by regulatory and statutory authorities” on page 259.
While we have subsequently submitted the requisite documents and details with the DGFT, our Company is yet to receive
the Export Obligation Discharge Certificate in respect of the alleged non-compliances. In the event that our Company is
held to be in violation of the FT Act and/ or FT Rules pursuant to these show-cause notices or any future non-compliances,
it may have adverse implications on us, including inter alia, the suspension of our import and export license, placement of
our Company under the ‘denied entity list’, which may have an adverse impact on our business condition and results of
operations.
29
Additionally, our Company has also received a notice dated March 28, 2019 from the Karnataka Fire and Emergency
Services, Ramanagara District (“Fire Department”), alleging certain deficiencies in the installation of firefighting
equipment at our Bengaluru manufacturing facility, and non-compliance by our Company with the recommendations issued
by the Fire Department pursuant to the safety recommendation certificate issued to our Company. Pursuant to this notice,
the Fire Department had directed us to install firefighting equipment within seven days from the date of the receipt of the
notice. For further details, see “Outstanding Litigation and Material Developments - Litigation Involving our Company -
Outstanding actions initiated by regulatory and statutory authorities” on page 259. Pursuant to a letter dated April 8, 2019,
our Company responded to the Fire Department notice had asked for an extension of timeline for installation of the requisite
firefighting equipment at our Bengaluru manufacturing facility premises. As of the date of this Red Herring Prospectus, we
are yet to comply with the directions under the notice, and we cannot assure you that no legal action will be initiated against
our Company by the Fire Department, for such non-compliance.
Any delay in compliance, failure or delay in obtaining such approvals could have a material adverse effect on the business,
financial condition and profitability of our Company. For details of the applications for approvals made by our Company,
see “Government and Other Approvals – Approvals for which applications have” on page 266. There can be no assurance
that the relevant authorities will issue or renew any expired permits or approvals in time or at all. Failure or delay in obtaining
approvals or failure by us to obtain, maintain or renew the required permits or approvals within applicable time or at all may
result in interruption of our operations.
We cannot assure you that in the future, these approvals may not be suspended or revoked in the event of the regulations
governing our business being amended or non-compliance or alleged non-compliance with any terms or conditions thereof,
or pursuant to any regulatory action. If there is any failure by us to comply with the applicable regulations or if the
regulations governing our business are amended, we may incur increased costs, be subject to penalties, or suffer disruption
in our activities, any of which could adversely affect our business.
Additionally, if we fail to obtain or renew any applicable approvals, licenses, registrations and permits in a timely manner,
we may not be able to undertake our business activities and expand our business operations, as planned, or at all, which
could affect our business and results of operations. Conducting our business operations without holding the relevant
approval, license, registrations or permits may subject us to penalties. Furthermore, our government approvals and licenses
are subject to numerous conditions, some of which may be onerous and may require us to incur substantial expenditure. Our
failure to comply with existing or increased regulations, or the introduction of changes to existing regulations, could
adversely affect our business, financial and other conditions, profitability and results of operations.
24.
We have no control over our Associate, PAPL, and have not been able to obtain any information from PAPL for the
purposes of the Offer for the purposes of this Red Herring Prospectus.
As of the date of this Red Herring Prospectus, our Company has one associate company as defined under the Companies
Act, 2013, namely PAPL. While our Company is one of the shareholders in PAPL holding 37.46% of the issued and paid
up capital of PAPL, as per the annual audited accounts of PAPL dated July 4, 2014 for Fiscal 2014, and one of our Promoters,
Rajendra Gandhi, is a director on the board of directors of PAPL, in the past, we have not been able to communicate with,
or obtain any information from PAPL. Further, as of the date of this Red Herring Prospectus, there are certain proceedings
involving our Company and PAPL which are ongoing, and during the pendency of which we may not be able to
communicate with or obtain any information from PAPL for the purposes of the Offer. For further details, see “Risk Factor
– Our Promoter and Managing Director, Rajendra Gandhi, may be required to vacate his directorship from our Board.”
and “Outstanding Litigation and Material Developments” on pages 22 and 257, respectively. Further, please note that our
promoter, Mr. Rajendra Gandhi did not resign from the board of PAPL in order to protect our Company’s investment in
PAPL. Additionally, it is important to have a representative of our Company on the board of PAPL to secure our Company
from any unilateral decision taken by the board of PAPL and to keep our Company appraised of the condition, operations
and/ or ongoing compliances of PAPL. On account of our inability to communicate with PAPL, we cannot assure you that
(a) PAPL has not been refused listing of any securities at any time by any of the recognized stock exchanges in India or
abroad; (b) any unsecured loans having been availed by PAPL, which may be recalled by the lenders at any time; and (c)
PAPL will ensure compliance with Regulation 60 of the SEBI ICDR Regulations in relation to public communications,
publicity materials, advertisements and research reports.
25.
We have entered into retail and franchisee agreements for the sale of our products, and such agreements may impose
onerous conditions upon us.
We do not own any retail stores, and the sale of our products is undertaken from brick and mortar retail outlets (organized
and unorganized), multi-retail stores and online retail platforms. Further, the sale of our Gilma products is exclusively
undertaken from Gilma branded franchisee stores. Our agreements with retailers and franchisees may impose conditions
which are unfavourable to us, including, inter alia:
• the ability of the retailer to reject and return such products at our Company’s expense which do not conform
to the agreed specifications in terms of packaging and labeling requirements specified by the retailer;
30
• our Company indemnifying the retailer, its affiliates, officers, directors and agents against any claim arising
directly or indirectly from any death or injury to any person, damage to any property or any other damage
or loss due to any defect in or use of the our products;
• the retailer not being liable to our Company for any consequential, special, punitive or indirect damages,
including lost profits or opportunities;
• the retailer having the right to terminate the agreement at any time without assigning any reasons; and
• the obligation of our Company to pay defective/ return merchandise allowance, adequate to cover all costs
associated with the returned merchandise incurred by the retailers.
In the past, there have been instances where retailers have imposed penalties on us for the delay in manufacture of certain
products as per the specified timelines. In Fiscal 2019 we paid a total of ₹11.20 million for 89 instances and in Fiscal 2020
we paid a total of ₹5.12 million for eight instances of delay in supplying certain products as per specified timelines. In the
event that any of the conditions as stated above, or any other condition specified in the respective retailer agreements are
imposed upon us, it may result in an adverse impact on our business, prospects, financial condition and results of operations.
Further, the activities of our franchisees could have a material adverse effect on our goodwill and our brands.
26.
If we are unable to service our debt obligations in a timely manner or to comply with various financial and other
covenants and other terms and conditions of our financing agreements, it may adversely affect our business, prospects,
results of operations and financial condition.
As of November 30, 2020 our Company had total indebtedness in the form of short term and long term borrowings of
₹1,529.21 million. Our indebtedness could have several important consequences, including but not limited to the following:
• a portion of our cash flows may be used towards repayment of our existing debt, which will reduce the availability
of our cash flows to fund working capital, capital expenditures, acquisitions and other general corporate
requirements;
• our ability to obtain additional financing in the future at reasonable terms may be restricted;
• fluctuations in market interest rates may affect the cost of our borrowings, as some of our indebtedness is at variable
interest rates;
• there could be a material adverse effect on our business, financial condition and results of operations if we are unable
to service our indebtedness or otherwise comply with financial and other covenants specified in the financing
agreements; and
• we may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding
to changing business, regulatory and economic conditions, in particular, we have certain foreign currency
denominated borrowings that could be adversely affected in case of foreign exchange fluctuations.
For further details, see “Financial Indebtedness” on page 255.
Many of our financing agreements also include various conditions and covenants that require us to obtain consent of the
lenders prior to carrying out certain activities or entering into certain transactions. Under these financing agreements, we
also require consent of the lenders for undertaking an initial public offering of our Equity Shares including consequential
corporate actions. As on the date of this Red Herring Prospectus, we have received consents from all such lenders. Typically,
restrictive covenants under our financing agreements relate to obtaining prior consent of the lender for, among others, change
in the capital structure, change in management, amendment of constitutive documents, any merger, reorganization or similar
action, and a failure to observe the restrictive covenants under our financing agreements or to obtain necessary consents
required thereunder may lead to the termination of our credit facilities, levy of penal interest, acceleration of all amounts
due under such facilities and the enforcement of any security provided. In the event of a breach or non-compliance of
relevant terms of our financing arrangements, we may be required to seek waivers from the respective lenders for such
breaches or non-compliances. Further, we are required to comply with certain financial covenants on an ongoing basis under
our financing agreements, and the non-compliance with, or breach of, such financial covenants may result in an event of
default under our financing agreements.
We cannot assure you that we will be able to obtain such amendments or waivers on satisfactory terms, or at all, and the
relevant lenders could, inter-alia, impose penal and default interests, accelerate the maturity of our obligations and declare
all amounts payable in respect of the facility to be due and payable immediately or otherwise on demand. Further, during
any period in which we are in default, we may be unable to obtain further financing or any refinancing of our debt could be
at higher rates of interest with more onerous covenants. In addition, lenders may be able to sell our assets charged under
such financing arrangements to enforce their claims. Any acceleration of amounts due under such facilities may
automatically trigger cross default provisions under our other financing agreements. We may have to dedicate a substantial
portion of our cash flow from operations to make payments under such financing agreements, thereby reducing the
31
availability of cash for our working capital requirements and other general corporate purposes, or if required, undertake a
sale of our assets. For further details, see “Financial Indebtedness” on page 255. Any of these circumstances could adversely
affect our business, credit rating, prospects, results of operations and financial condition. Moreover, any such action initiated
by our lenders could result in the price of the Equity Shares being adversely affected.
27.
Our Company is yet to receive dues amounting to ₹150.11 million from one of its customers.
One of our customers owes our Company an amount of ₹150.11 million as on August 31, 2020 (net of provisions under
expected credit loss model), which has been due for payment for more than nine months. While, the customer has provided
our Company with an email dated September 2, 2020 specifying the delay in payment is on account of the COVID-19
pandemic and further assuring payment to our Company in the near future and a subsequent letter dated October 7, 2020
confirming the outstanding balance as of August 31, 2020, we cannot assure you when our Company will receive these
outstanding dues or whether we will receive them at all. Our Company has continued transactions with this customer, based
on assured payment terms and is in constant interaction with them to realize this outstanding amount. In the event of non-
payment by the customer, there maybe an adverse impact on the financial statements and the cash flows of our Company.
28.
We have entered into a share purchase agreement for a substantial shareholding in Megasun which may not
consummate or may not be successful
We have entered into a share purchase agreement with Microsun, Sohan K. Jain, Dinesh P. Jain and Other Purchasers,
wherein our Company is in the process of purchasing 45% of the paid up equity share capital of Megasun. This acquisition
would make Megasun our associate. For details, see “History and Certain Corporate Matters” on page 146. While our
Company has paid the entire consideration, certain conditions precedent specified in the share purchase agreement have not
yet been fulfilled and therefore, the equity shares of Megasun have not been transferred to our Company yet. We cannot
assure you if all the conditions precedent will be met and the equity shares of Megasun will be transferred to our Company
at all, or whether we will be able to receive the consideration back from the transferors, in the event of the termination of
the share purchase agreement for non-satisfaction of the conditions precedent, or any other reason. There can be no assurance
that we will be able to achieve the strategic purpose of such acquisition or operational integration or our targeted return on
investment.
29.
Our financial condition may be adversely affected if any of our contingent liabilities materialise.
As of September 30, 2020, we had the following contingent liabilities and commitments:
(₹ in million)
Particulars
As of September 30, 2020
Contingent liabilities
Indirect tax matters
62.92
Provident fund claims
9.39
Other disputed claims
2.68
Commitment
Estimated amount of contracts remaining to be executed on capital account
and not provided for tangible assets (net of advance)
177.45
Total
252.44
In the event that any of our contingent liabilities materialise, our business, financial condition and results of operations may
be adversely affected. Furthermore, there can be no assurance that we will not incur similar or increased levels of contingent
liabilities in the future
30.
There are certain restrictive covenants in the Investment Agreement, the non-compliance of which could have a material
adverse effect on our business, results of operations and financial condition.
Our Company and our Promoters have entered into an Investment Agreement with, inter alia, SCI and SCI-GIH. The
Investment Agreement has covenants which, inter alia, required us to obtain consents from various regulatory authorities,
terminate certain agreements with our existing vendors, issuance of additional shares to certain entities and re-execute all
our dealership contracts. While we believe that we have complied with such covenants there can be no guarantee that SCI
or SCI-GIH or any other party to the Investment Agreement would not initiate actions against us for breach of any of the
covenants under the Investment Agreement which could consequently have a material adverse effect on our business, results
of operations and financial condition. For further details in relation to the Investment Agreement, please see “History and
Certain Corporate Matters- Summary of Key Agreements and Shareholders’ Agreements” on page 149.
31.
We may be exposed to potential liabilities from any personal injury claims alleging any deficiency in our products or in
counterfeit products of an inferior quality.
Our business may be adversely affected by litigation and complaints from customers or government authorities resulting
from deficiencies in our products. For instance, some of our customers have filed cases in relation to, inter alia, alleged
defects in our products. We could also incur significant liabilities if a lawsuit or claim results in a decision against us and
substantial litigation costs in relation to these lawsuits. For further details in relation to consumer claims filed against our
Company, see “Outstanding Litigation and Material Developments” on page 257. Further, our business could be harmed in
32
the event of the sale of any defective or misbranded product. Our products are also exposed to the risk of being counterfeited
by third parties using or copying our packaging to sell their products. For instance, our Company has instituted proceedings
against PAPL in relation to the unauthorised use of our ‘PIGEON’ trademark by PAPL. For further details, see “Outstanding
Litigation and Material Developments” on page 257. These products may be formulated differently and may be of an inferior
quality as compared to our products. However, we may be subject to potential liabilities, including reputational harm, in
relation to such counterfeit products as well. For further details, see “Outstanding Litigation and Material Developments”
and “Risk Factor - The trademark for our marquee brand ‘Pigeon’ is the subject matter of litigation, and there can be no
assurance that we will be able to protect the trademark in the future” on pages 257 and 19, respectively.
32.
Our inability to manage our growth could disrupt our business and have an adverse effect on our profitability.
Our growth strategies such as expanding into new geographies or expanding the brand portfolio through the launch of new
products are subject to and involve risks and difficulties, many of which are beyond our control and, accordingly, there can
be no assurance that we will be able to implement our strategy or growth plans successfully, or complete them within the
budgeted cost and timelines. Our success in implementing our growth strategies may be affected by:
• our ability to identify trends and demands in the kitchen appliances’ industry, and develop new and more
personalised and innovative products;
• our ability to identify new markets in different jurisdictions to expand to and distributors to partner with in such
markets;
• acceptance by our target consumer base of our new products;
• our ability to maintain the quality of our products and provide continuous after sale services to our customers;
• our ability to increase our existing consumer base; and
• the general condition of the Indian and global economy
Further, implementing our strategies and managing growth of our business will impose a significant demand on our
management time and other resources. On account of changes in market conditions, industry dynamics, changes in
regulatory policies or any other relevant factors, our growth strategies and plans may undergo substantial changes and may
even include limiting or foregoing growth opportunities if the situation so demands. Separately, our growth strategy involves
adoption of advanced technologies to firm up our production processes, and expand our distribution and manufacturing
initiative. We may be unable to identify, or implement new technologies associated with manufacture of kitchen and home
care products in an optimal manner. Any inability on our part to manage our growth or implement our strategies effectively
could have a material adverse effect on our business, results of operations and financial condition.
33.
Our retail business is subject to seasonal volatility, which may affect our results of operations and financial condition.
Our business and the kitchen appliances industry in general is subject to seasonality. Generally, we witness an increase in
sales in the second half of the Fiscal and sales generally decline during the first quarter of the Fiscal. Accordingly, our
revenue in the first two quarters may not accurately reflect the revenue trend for the whole Fiscal. Our business is also
affected by certain festivals which lead to an increase in our sales and by retailers reducing their purchases from us in first
quarter of a particular Fiscal. The seasonality of our business operations and kitchen appliances industry in general, may
cause fluctuations in our results of operations and financial condition.
34.
Our Promoter and Managing Director, Rajendra Gandhi, is involved in one or more ventures which are in the same
line of business as that of our Company.
Our Promoter and Managing Director, Rajendra Gandhi is involved in PAPL which are in the same line of business as that
of our Company. He is currently a director of PAPL. For details see “Our Promoter and Promoter Group – Common
Pursuits” on page 168. Thus, there can be no assurance that our Promoter will be able to address conflicts of interests that
arise because of his positions in such ventures, in an impartial manner. Also, there can be no assurance that our Promoter
will not in future engage in any competing business activity or acquire interests in competing ventures. If so, this conflict
of interest will remain in the future and in the absence of a non-compete arrangement, we may not be able to suitably resolve
any such conflict without an adverse effect on our business or operations. Additionally, our Promoter and Managing
Director, Rajendra Gandhi is involved in a litigation against PAPL. For details, see “Risk Factor - Our Promoter and
Managing Director, Rajendra Gandhi, may be required to vacate his directorship from our Board” on page 22.
35.
There have been instances of erroneous form filings in relation to allotment of Equity Shares of our Company and
transfers of Equity Shares of our Company, in relation to which the share transfer forms are not available in our
Company’s records. Further, there has been an instance of delay in filing of annual report by our Group Company.
We manage our internal compliance by monitoring and evaluating internal controls, and ensuring all relevant statutory and
regulatory compliances. However, there can be no assurance that deficiencies in our internal controls will not arise, or that
we will be able to implement, and continue to maintain, adequate measures to rectify or mitigate any such deficiencies in
33
our internal controls, in a timely manner or at all. For instance, we have made erroneous form filings of form PAS-3 in
relation to allotment of Equity Shares made on September 23, 2018 pursuant to the conversion of CCDs, for which we have
approached the RoC pursuant to letters dated December 20, 2019 and September 30, 2020 requesting for the error to be
rectified along with all the necessary documents. While the RoC has acknowledged the request, the rectification remains
pending as on the date of this Red Herring Prospectus. Further, we are unable to trace certain corporate and other documents
in relation to our Company including share transfer forms in relation to transfer of Equity Shares by and to our Promoters,
either in our Company’s records or in the records of our Promoters. The details of such share transfers are as follows:
(i) transfer of 20,000 Equity Shares made on November 10, 2003 from Satishchandra Karanath to Sunita Rajendra
Gandhi;
(ii) transfer of 10,000 Equity Shares made on November 10, 2003 from Nivedita S.to Sunita Rajendra Gandhi;
(iii) transfer of 5,000 Equity Shares made on November 10, 2003 from M/S Karmet Engineering to Sunita Rajendra
Gandhi; and
(iv) transfer of 100,000 Equity Shares made on March 26, 2006 from Venkatesh Gowda to Rajendra Gandhi;
In the absence of such records, we have relied on annual returns, minutes of the Board of Directors of our Company and
statutory registers in order to ascertain details of such transfers. While we believe that the transfers were undertaken in a
valid manner in terms of applicable laws and our AoA, we cannot assure you that the share transfer forms in relation to such
transfers of such Equity Shares were filed with us in a timely manner or at all. Further, our Group Company, Shinag Allied
Enterprises Private Limited has not filed its financial statements and annual report for Fiscal 2020 with the registrar of
companies within the timelines prescribed under the Companies Act. While our Group Company has not received any
communication from the statutory authorities in relation to the delay as on date. We cannot assure you that no legal action
will be initiated against our Group Company or that no penalties will be levied on our Group Company. Further, we cannot
assure you that our Group Company has not suffered losses during the most recent fiscal, and that there will be no significant
notes by its auditors in the audited financial statements for the most recent fiscal.
For further details in relation to notices received by our Company from statutory authorities, see “Outstanding Litigation
and Material Developments – Litigation involving our Company - Notices issued by Statutory Authorities” on page 259. In
the event of any delayed filings in relation to the aforementioned allotments or failure to make the requisite filings, our
results of operations and financial condition may be adversely affected due to regulatory proceedings and any penalty or
fines levied on us on account of such non-compliances. As we continue to grow, there can be no assurance that there will
be no other instances of statutory non-compliance/ delays.
36.
Uncertain nature regarding the kitchen cookware appliances market, economic conditions and other factors beyond our
control could adversely affect demand for our products and services, our costs of doing business and our financial
performance.
Our financial performance depends significantly on the stability of the kitchen appliances market in general and kitchen
cookware appliance markets in particular, as well as general economic conditions, including changes in gross domestic
product. Adverse conditions in or uncertainty about these markets, or the economy could adversely impact our customers’
confidence or financial condition, causing them to determine not to purchase kitchen appliances and products, or delay
purchasing or payment for those products and services. Other factors beyond our control, including the availability of, the
state of the credit markets, consumer credit, and general economic sentiment and other conditions beyond our control, could
further adversely affect demand for our products, our costs of doing business and our financial performance. The kitchen
appliances market is dynamic in nature, with frequent innovations to suit customer preferences. In the event that we are
unable to continuously innovate our product portfolio in line with the technological developments in the kitchen appliances
industry and on the basis of shifts in consumer preferences, our products may become obsolete, which may have an adverse
impact on our sales and results of operations.
37.
Any disruptions in our logistics or supply chain network and other factors affecting the distribution of our merchandise
could adversely impact our operations, business and financial condition.
Our supply chain and logistics network is focused around warehouses that are owned and operated by our carrying and
forwarding agents. Their warehouses act as storage facilities for onward delivery of our merchandise to all our customers.
Any material disruption at these warehouses for any reason may damage our products stored at such warehouses and
adversely affect our supply chain network and logistics operations, thereby affecting our results of operations. Further, in
the event that we are not able to engage warehouses at an affordable cost, then we may incur additional cost associated with
such inventory, which may impact our profitability.
We use third party logistic providers for the delivery of products from our manufacturing plants to our distributors. Any
disputes with such third party logistic providers would result in disruption of the distribution process of our products and
will have an adverse effect on the deliveries from our warehouses to our customers. Additionally, any disruption in our
logistics or supply chain network could adversely affect our ability to deliver inventory in a timely manner, which could
impair our ability to meet customer demand for products and result in lost sales, increased supply chain costs or damage to
our reputation.
34
38.
We depend heavily on our Key Managerial Personnel, and loss of the services of one or more of our key executives or
Key Managerial Personnel could weaken our management team.
Our success depends on the skills, experience and efforts of our Key Managerial Personnel and on the efforts, ability and
experience of key members of our management staff. Our Promoter, Rajendra Gandhi, is a first generation entrepreneur
with over 20 years of experience in the kitchen appliances and home utility products industry. Our Key Managerial Personnel
have extensive experience in retail sales, enterprise sales, channel sales and kitchen appliance industry that are critical to
the operation of our business. For further details, see “Our Management” on page 153.
In the event that our Promoter terminates his association with our Company, or in case there is a loss of one or more Key
Managerial Personnel of our Company or any of our other management staff, it could weaken our management expertise
significantly and our ability to undertake our business operations efficiently in a significant manner. Individuals with
industry-specific experience are scarce, and the market for such individuals is highly competitive. As a result, we may not
be able to attract and retain qualified personnel with comparable skill and expertise to replace or succeed our Key Managerial
Personnel or other key employees, promptly or at all. To see the changes in our Key Managerial Personnel for the last three
years, see “Our Management - Changes in the Key Managerial Personnel” on page 166. We may take a long period of time
to hire and train replacement personnel when skilled personnel terminate their employment with our Company. We may
also be required to increase our levels of employee compensation more rapidly than in the past to remain competitive in
attracting skilled employees that our business requires. Any inability on our part to attract and retain qualified personnel
could have a material adverse effect on our business, financial condition and results of operations.
39.
We have recently entered markets for non-core products, in which we have limited experience.
While we have historically been a manufacturer and retailer of kitchen appliances, in 2016, we entered the LED products
market under our Pigeon brand. Further, in 2020, we have also entered into the markets of manufacturing IR thermometers,
trading pulse oximeter under our Gilma brand, and manufacturing floor mops. For the six month period ended September
30, 2020 and Fiscal 2020, our LED products business contributed 6.40% and 4.70%, respectively. Further, for the six month
period ended September 30, 2020, our IR thermometer business contributed 2.34%, our pulse oximeter business contributed
0.74% and our floor mops business contributed 1.39% to the total revenues of our Company. We did not have any prior
experience in the LED products market before this venture, and therefore there can be no assurance that we will be able to
maintain and expand our LED product portfolio in a sustainable manner. Further, the LED product market in India is a
highly competitive space, and there can be no assurance that we will be able to introduce new product ranges in the LED
segment as per our strategy or compete with the existing players in the market, or at all. In the event that we are not able to
operate our LED business in a sustainable manner, it will have an adverse impact on our results of operations and financial
condition. Similarly, we have no prior experience in products such as IR thermometers and pulse oximeters, the competition
for which is very high in the market to due to the ongoing COVID-19 pandemic. Further, we have also entered other non-
core markets with products such as chairs, heating products, etc. in which we have no prior experience, and there can be no
assurance that we will be able to operate in the markets for these products in a sustainable and profitable manner. In the
event that we are required to expend additional resources towards establishing and consolidating our presence in non-core
markets, it may have an adverse impact on our business condition and results of operations.
40.
Our business depends on the performance of its information technology systems and any interruption or abnormality in
the same may have an adverse impact on our business operations and profitability.
We have a SAP enterprise support system (“SAP System”) which integrates and collates data of purchase, sales, reporting,
accounting, stocks, etc. We utilise our information technology systems to monitor all aspects of our business and rely to a
significant extent on such systems for the efficient operation of our business, including, monitoring of inventory levels,
allocation of products to our stores and budget planning. Our information technology systems may not always operate
without interruption and may encounter abnormality or become obsolete, which may affect our ability to maintain
connectivity with our stores and warehouses. We cannot assure you that we will be successful in developing, installing,
running and migrating to new software system or systems as required for our overall operations and in staying
technologically competitive with our peers. Even if we are successful in this regard, significant capital expenditures may be
required, and we may not be able to benefit from the investment immediately. All of these may have a material adverse
impact on our operations and profitability. The SAP System deployed by us has been purchased. The regular maintenance
and upgrade of the SAP System is carried out by the vendor, at costs to be incurred by the Company. Any failure in this
SAP System may necessitate the Company to switch to a different system, implementation of which may result in significant
costs to the Company.
Also, our Company cannot guarantee that the level of security it presently maintains is adequate or that its systems can
withstand intrusions from or prevent improper usage by third parties. Our Company’s failure to continue its operations
without interruption due to any of these reasons may adversely affect our Company’s results of operations.
41.
Our Statutory Auditor’s report may contain certain adverse remarks.
There is no assurance that our audit report or annexure there on for any future fiscal periods will not contain comments or
any other qualifications or otherwise affect our results of operations in such future fiscal periods. Investors should consider
these remarks in evaluating our financial position, cash flows and results of operations. Any such qualifications in the
35
auditors’ report on our financial statements in the future may also adversely affect the trading price of the Equity Shares.
For details on these adverse remarks, see “Financial Statements” on page 173.
42.
The emergence of modern trade channels in the form of hypermarkets, supermarkets and online retailers may adversely
affect our pricing ability, and result in temporary loss of retail shelf space and disrupt sales of kitchen appliances, which
may have an adverse effect on our results of operations and financial condition.
India has recently witnessed the emergence of hypermarkets, supermarkets and online retailers and the market penetration
of large scaled organized retail in India is likely to increase further. While we believe this provides us with an opportunity
to improve our supply chain efficiencies and increase the visibility of our brands, it also increases the negotiating position
of such stores. We cannot assure you that we will be able to negotiate new distribution agreements or renegotiate our existing
distribution agreements, specially our pricing or credit provisions, on terms favourable to us, or at all. Any inability to enter
into distribution agreements and on terms favourable to us, may have an adverse effect on our pricing and margins, and
consequently adversely affect our results of operations and financial condition.
From time to time, retailers change distribution centers that supply products to some of their retail stores. If a new
distribution center has not previously distributed our products in that region, it may take time to get a retailer’s distribution
center to begin distributing new products in its region. Even if a retailer approves the distribution of products in a new
region, product sales may decline while the transition in distribution takes place. If we do not get approval to have our
products offered in a new distribution region or if getting this approval takes longer than anticipated, our sales and operating
results may suffer.
43.
The proceeds from Offer for Sale will not be available to us.
This Offer comprises of a Fresh Issue of Equity Shares by our Company and an Offer for Sale of Equity Shares by the
Selling Shareholders. Out of the four Selling Shareholders, two Selling Shareholders are Rajendra Gandhi and Sunita
Rajendra Gandhi, who are our Promoters. All the proceeds from the Offer for Sale will be remitted to the Selling
Shareholders in proportion to the Equity Shares offered by them in the Offer for Sale, and such proceeds will not be available
to our Company.
44.
We have issued Equity Shares at prices that may be lower than the Offer Price in the last 12 months.
During the last 12 months, we have issued and allotted (i) 2,412,235 and 1,879,122 Equity Shares upon conversion of
2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI; (ii) 986,790 Equity Shares upon conversion of
1,197,770 Series B CCDs held by SCI-GIH; (iii) 5 Equity Shares each to SCI and SCI-GIH pursuant to the reclassification
of 5 Class A Equity Shares held by SCI and SCI-GIH, each; and (iv) 85,747 Equity Shares to the employees of our
Company on exercise of vested stock options under the ESOP Plan, at prices which may be lower than the Offer Price.
For further details, see “Capital Structure – Notes to the Capital Structure – Share capital history of our Company – Equity
share capital” on page 60.
45.
We have entered into, and will continue to enter into, related party transactions.
In the ordinary course of our business, we enter into and will continue to enter into transactions with related parties. While
we believe that all such related party transactions that we have entered into are legitimate business transactions conducted
on an arms’ length basis, there can be no assurance that we could not have achieved more favorable terms had such
arrangements not been entered into with related parties. Further, we cannot assure you that these or any future related party
transactions that we may enter into, individually or in the aggregate, will not have an adverse effect on our business, financial
condition, results of operations and prospects, including because of potential conflicts of interest or otherwise. Further, the
transactions we have entered into and any future transactions with our related parties have involved or could potentially
involve conflicts of interest which may be detrimental to our Company. There can be no assurance that our Directors and
executive officers will be able to address these conflicts of interests or others in an impartial manner.
46.
We may be subject to labour unrest, operating risks, slowdowns, increased wage costs, and shut-downs.
Our manufacturing activities are labour intensive and consequently our success depends upon maintaining good relations
with our workforce. As of September 30, 2020, we had 3,156 permanent employees engaged across various operational and
business divisions in India. India has stringent labour legislations that protect the interests of workers, including legislation
that set forth detailed procedures for the establishment of unions, dispute resolution and employee removal, and legislations
that imposes certain financial obligations on employers upon retrenchment. Our employees are not unionized currently.
However, there is no assurance that our employees will not seek unionization in the future. In the event that employees at
our manufacturing facilities take any steps to unionise, it may become difficult for us to maintain flexible labour policies,
and may increase our costs and adversely affect our business.
Further, our business operations, specifically our processing facilities are subject to certain operating risks, such as
breakdown or failure of equipment, power supply or processes, reduction or stoppage of water supply, performance below
expected levels of efficiency, obsolescence and natural disasters. Additionally, we have also been the subject of legal
proceedings initiated by our ex-employees and relatives of our ex-employees in relation to certain accidents at the premises
of our manufacturing units. For further details, please see “Outstanding Litigation and Material Developments –
36
Outstanding criminal litigations against our Promoters” and “Outstanding Litigation and Material Developments–
Outstanding criminal litigations against our Company” on page 257 and 259, respectively. Our operations are also
susceptible to industrial accidents arising from improper handling of combustible materials, improper operation of
machinery, human errors or other reasons at our manufacturing facilities or during transportation. Any strikes or lock-outs,
work stoppages, slowdowns, shut downs, supply interruptions or costs or other factors beyond our control, may disrupt our
operations and could negatively impact our financial performance or financial condition. For more information, see “Risk
Factor – There may be a delay in production at, or shutdown of, any of our manufacturing facilities or at any of the third
party manufacturing facilities we use for the sourcing of our products and packaging material” on page 26. Additionally,
our inability to recruit employees, in particular skilled employees and retain our current workforce could have a material
adverse effect on our business, financial condition and profitability. There can be no assurance that we will not experience
slowdowns or shutdowns in the manner described above, or in any other manner, in the future, for reasons which are beyond
our control. Any slowdown or shutdown will adversely impact our results of operations, market share and financial
condition.
47.
We appoint contract labour for carrying out certain of our operations and we may be held responsible for paying the
wages of such workers, if the independent contractors through whom such workers are hired default on their obligations,
and such obligations could have an adverse effect on our results of operations and financial condition.
In order to retain flexibility and control costs, our Company appoints independent contractors who in turn engage on-site
contract labour for performance of certain of our operations. Although our Company does not engage these labourers
directly, we may be held responsible for any wage payments to be made to such labourers in the event of default by such
independent contractor. Any requirement to fund their wage requirements may have an adverse impact on our results of
operations and financial condition and we may also be subject to legal proceedings in this regard. In addition, under the
Contract Labour (Regulation and Abolition) Act, 1970, as amended, we may be required to absorb a number of such contract
labourers as permanent employees. Thus, any such order from a regulatory body or court may have an adverse effect on our
business, results of operations and financial condition.
48.
Our funding requirements and proposed deployment of the Net Proceeds of the Offer have not been appraised by a bank
or a financial institution and if there are any delays or cost overruns, our business, financial condition and results of
operations may be adversely affected.
We intend to use the Net Proceeds of the Fresh Issue for the purposes described in “Objects of the Offer” on page 72. The
objects of the Fresh Issue have not been appraised by any bank or financial institution. The proposed utilisation of Net
Proceeds is based on current conditions, internal management estimates, contracts and are subject to changes in external
circumstances or costs, or in other financial condition, business or strategy, as discussed further below. Based on the
competitive nature of our industry, we may have to revise our business plan and/ or management estimates from time to
time and consequently our funding requirements may also change. Our internal management estimates may exceed fair
market value or the value that would have been determined by third party appraisals, which may require us to reschedule or
reallocate our project and capital expenditure and may have an adverse impact on our business, financial condition, results
of operations and cash flows.
Further, pending utilization of Net Proceeds towards the Objects of the Offer, our Company will have the flexibility to
deploy the Net Proceeds and to deposit the Net Proceeds them temporarily in deposits with one or more scheduled
commercial banks included in Second Schedule of Reserve Bank of India Act, 1939. Accordingly, prospective investors in
the Offer will need to rely upon our management’s judgment with respect to the use of Net Proceeds.
49.
Any variation in the utilisation of the Net Proceeds or in the terms of any contract as disclosed in the Red Herring
Prospectus would be subject to certain compliance requirements, including prior shareholders’ approval.
We propose to utilise the Net Proceeds for repayment/ pre-payment, in full or part, of certain borrowings availed by our
Company and other general corporate purposes. For further details of the proposed objects of the Offer, see “Objects of the
Offer” on page 72. At this stage, we cannot determine with any certainty if we would require the Net Proceeds to meet any
other expenditure or fund any exigencies arising out of competitive environment, business conditions, economic conditions
or other factors beyond our control. In accordance with Section 27 of the Companies Act, 2013, we cannot undertake any
variation in the utilisation of the Net Proceeds or in the terms of any contract as disclosed in the Red Herring Prospectus
without obtaining the shareholders’ approval through a special resolution. In the event of any such circumstances that require
us to undertake variation in the disclosed utilisation of the Net Proceeds, we may not be able to obtain the shareholders’
approval in a timely manner, or at all. Any delay or inability in obtaining such shareholders’ approval may adversely affect
our business or operations.
Further, our Promoters or controlling shareholders would be required to provide an exit opportunity to the shareholders who
do not agree with our proposal to change the objects of the Offer or vary the terms of such contracts, at a price and manner
as prescribed by SEBI. Additionally, the requirement on Promoters or controlling shareholders to provide an exit opportunity
to such dissenting shareholders may deter the Promoters or controlling shareholders from agreeing to the variation of the
proposed utilisation of the Net Proceeds, even if such variation is in the interest of our Company. Further, we cannot assure
you that the Promoters or the controlling shareholders of our Company will have adequate resources at their disposal at all
times to enable them to provide an exit opportunity at the price prescribed by SEBI.
37
In light of these factors, we may not be able to undertake variation of objects of the Offer, or vary the terms of any contract
referred to in the Red Herring Prospectus, even if such variation is in the interest of our Company. This may restrict our
Company’s ability to respond to any change in our business or financial condition by re-deploying the unutilised portion of
Net Proceeds, if any, or varying the terms of contract, which may adversely affect our business and results of operations.
50.
We may not be able to derive the expected benefits of the deployment of the Net Proceeds, in a timely manner, or at all.
Our Company intends to use a certain portion of the Net Proceeds for the purposes of repayment / prepayment in full or in
part, of certain of the borrowings availed by the Company. Our estimates for the proposed expenditure are based on several
variables, a significant variation in any one or a combination of which could have an adverse effect. The details in this
regard have been disclosed in the section titled “Objects of the Offer” on page 72. While the utilisation of Net Proceeds for
repayment/ prepayment of the borrowings would help us to reduce our cost of debt and enable the utilisation of our funds
for further investment in business growth and expansion, these objects will not result in the creation of any tangible assets
for our Company.
51.
Information relating to our installed capacities and the historical capacity utilization of our manufacturing facilities
included in this Red Herring Prospectus is based on various assumptions and estimates and future production and
capacity utilization may vary.
Information relating to our installed capacities and the historical capacity utilization of our owned manufacturing facilities
included in this Red Herring Prospectus is based on various assumptions and estimates of our management, including
proposed operations, assumptions relating to availability and quality of raw materials and assumptions relating to potential
utilization levels and operational efficiencies. Actual utilization rates may differ significantly from the estimated installed
capacities or historical estimated capacity utilization information of our facilities. Undue reliance should therefore not be
placed on our installed capacity or historical estimated capacity utilization information for our existing facilities included in
this Red Herring Prospectus.
52.
Third party industry and industry-related statistical data in this Red Herring Prospectus may be incomplete, incorrect
or unreliable.
This Red Herring Prospectus includes information that is derived from the F&S Report, pursuant to an engagement with
our Company. Neither we, nor any of the BRLMs have independently verified the data obtained from the official and
industry publications and other industry sources referred in this Red Herring Prospectus and therefore, while we believe
them to be true, there can be no assurance that they are complete or reliable. Such data may also be produced on different
bases from those used in the industry publications we have referenced. In particular, neither we, nor any of the BRLMs, nor
any other person associated with the Offer has verified the information from the F&S Report, which has been prepared
pursuant to an engagement between Frost & Sullivan and our Company. The F&S Report is subject to certain disclaimers
set out in “Certain Conventions, Presentation of Financial Industry and Market Data and Currency of Presentation” on
page 10. Therefore, discussions of matters relating to India, its economy and our industry in this Red Herring Prospectus
are subject to the caveat that the statistical and other data upon which such discussions are based may be incomplete or
unreliable. Industry sources and publications are also prepared based on information as of specific dates and may no longer
be current or reflect current trends. Industry sources and publications may also base their information on estimates,
projections, forecasts and assumptions that may prove to be incorrect. While industry sources take due care and caution
while preparing their reports, they do not guarantee the accuracy, adequacy or completeness of the data or report and do not
take responsibility for any errors or omissions or for the results obtained from using their data or report. We cannot assure
you that Frost & Sullivan’s assumptions are correct or will not change and accordingly our position in the market may differ
from that presented in this Red Herring Prospectus. Accordingly, investors should not place undue reliance on, or base their
investment decision on this information. See “Industry Overview” on page 89.
53.
Our inability to procure and/ or maintain adequate insurance cover in connection with our business may adversely affect
our operations and profitability.
Our Company’s operations at our manufacturing facilities and warehouses are subject to inherent risks such as fire, strikes,
loss-in-transit of our products, accidents and natural disasters. In addition, many of these operating and other risks may
cause personal injury, damage to, or destruction of our properties and may result in suspension of operations and imposition
of civil and/ or criminal penalties. Whilst we believe that we maintain adequate insurance coverage amounts for our business
and operations, our insurance policies do not cover all risks and are subject to exclusions and deductibles, and may not be
sufficient to cover all damages, whether foreseeable or not. If any or all of our manufacturing facilities and warehouses are
damaged in whole or in part, our operations may get interrupted, totally or partially, for a temporary period. Additionally,
our insurance policies do not cover communicable diseases. There can be no assurance that our insurance policies will be
adequate to cover the losses that may be incurred as a result of such interruption or the costs of repairing or replacing the
damaged facilities. Our inability to procure and/ or maintain adequate insurance cover in connection with our business could
adversely affect our operations and profitability. For more details on the insurance policies availed by us, please see “Our
Business - Insurance” on page 138.
54.
Our Promoters and certain of our Key Managerial Personnel are interested in the Company's performance in addition
to their normal remuneration or benefits and reimbursement of expenses incurred. Additionally, our Promoter, Rajendra
38
Gandhi is interested in land acquired and proposed to be acquired by the Company and our Head – Corporate Planning
Venkitesh N. is a partner in Revalve Systems from which our Company purchases aluminium gas valves
Our Promoters and members of our Promoter Group have received the following amounts from our Company in the last
three Fiscals and six month period ended September 30, 2020:
(₹ in million)
Period
Remuneration
paid/payable
Rent
paid/payable
Royalty paid/payable
per annum
Amount payable or paid for using
intellectual property rights
September 30, 2020
Rajendra Gandhi
3.73
Nil
Nil
Nil
Neha Gandhi
Nil
Nil
Nil
Nil
Sunita Rajendra Gandhi
Nil
0.36
Nil
Nil
September 30, 2019
Rajendra Gandhi
5.66
Nil
Nil
Nil
Neha Gandhi
1.23
Nil
Nil
Nil
Sunita Rajendra Gandhi
Nil
0.36
Nil
Nil
Fiscal 2020
Rajendra Gandhi
10.11
Nil
Nil
Nil
Neha Gandhi
2.31
Nil
Nil
Nil
Sunita Rajendra Gandhi
Nil
0.72
Nil
Nil
Fiscal 2019
Rajendra Gandhi
9.51
Nil
Nil
Nil
Neha Gandhi
2.17
Nil
Nil
Nil
Sunita Rajendra Gandhi
Nil
0.72
Nil
Nil
Fiscal 2018
Rajendra Gandhi
8.73
Nil
Nil
Nil
Neha Gandhi
2.01
Nil
Nil
Nil
Sunita Rajendra Gandhi
Nil
0.60
Nil
Nil
Further, our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi are interested, to the extent of their shareholding in
our Company. Our Promoter, Rajendra Gandhi, is interested to the extent of his role as a partner in Saya Industries, from
whom our Company has bought our manufacturing plant situated in Baddi pursuant to a slump sale agreement dated March
31, 2016. For further details, see “History and Certain Corporate Matters - Slump sale agreement dated March 31, 2016
entered into between our Company and Saya Industries” on page 148. The acquisition from Saya Industries was undertaken
on the basis of commercial negotiations amongst the parties to the slump sale agreement, and the consideration was not
determined on the basis of any independent valuation. While an independent valuation was not statutorily prescribed, we
cannot assure you that the transaction could have been undertaken on terms more favourable to our Company, had an
independent valuation been undertaken by us.
Our Key Managerial Personnel Rohit Mago and Rajiv Mehta Nitinbhai are entitled to receive a part of profit of our Company
as per their terms of appointment.
Additionally, our Company purchases aluminium gas valves from Revalve Systems, a partnership firm in which one of our
key managerial personnel, Venkitesh N., is a partner. The purchase information for Fiscal 2020 and the six month period
ended September 30, 2020 with regards to Revalve Systems is as follows:
As of
Amount
of total
purchase
of AGV
(₹ in
million)
Amount of
total purchase
of AGV from
Revalve
Systems (₹ in
million)
Percentage (%) of
amount of total
purchase of AGV from
Revalve Systems
against the amount of
total purchase of AGV
Amount of total
purchase of raw
materials (₹ in
million)
Percentage (%) of amount
of total purchase of AGV
from Revalve Systems
against the amount of
total purchase of raw
materials
September 30,
2020
2.87
2.87
100
1,730.74
0.20
September 30,
2019
34.63
24.55
99.20
1,640.16
1.50
March 31, 2020
15.85
15.66
98.80
3,322.85
0.50
For further details, see “Capital Structure”, “Our Management” and “Our Promoter and Promoter Group” on pages 60,
153 and 167 of this Red Herring Prospectus, respectively.
55.
Certain of our existing shareholders may continue to have rights over our Company after completion of the Offer.
Sequoia will have the right to nominate one director on our Board until such time that Sequoia continues to hold 5.00% of
the fully diluted share capital of our Company. Further, in the event of successful completion of the Offer, such right shall
be exercisable upon receipt of shareholders’ approval through a special resolution by the Shareholders in the first general
meeting of the Company held after the successful completion of the Offer. For further details on their shareholding and their
right to appoint nominee directors, see “History and Certain Corporate Matters - Summary of Key Agreements and
39
Shareholders’ Agreements - Shareholders’ Agreements with our Company” on page 149. By virtue of their nominee director
on our Board, Sequoia may continue to influence the decisions made by our Board after the successful completion of the
Offer, and there can be no assurance that the Sequoia nominee director shall act in the best interests of all shareholders at
all times.
56.
We may not be able to pay dividends in the future.
We have not paid any dividends to our equity shareholders in the past. There can be no assurance that we will pay any
dividends in the future and, if we do, as to the level of such future dividends. Dividends distributed by us will attract dividend
distribution tax at rates applicable from time to time. The declaration, payment and amount of any future dividends is subject
to the discretion of our Board, and will depend upon various factors, inter alia, our earnings, financial position, capital
expenditures and availability of profits, restrictive covenants in our financing arrangements and other prevailing regulatory
conditions from time to time. Any of these factors may thus restrict our ability to pay dividends in the future.
57.
Depreciation of the Rupee against foreign currencies may have a material adverse effect on our results of operations
and currency exchange rate fluctuations may affect the value of the Equity Shares.
We are exposed to foreign exchange risks by virtue of being an exporter of our products and by maintaining overseas
marketing and distribution. During the six month periods ended September 30, 2020 and September 30, 2019 and Fiscals
2020, 2019 and 2018 export sales accounted for 17.90%, 6.68%, 7.64%, 8.67% and 5.57%, of our revenue from operations,
respectively. While the Company selectively hedges its foreign exchange exposure, based on currency movements, we do
not have a policy of hedging any foreign currency exposure, and given the expansion of our export business and our
international production and distribution interests, we may not be able to fully hedge our exposure on suitable terms or
adequately predict the necessary level of hedging. For instance, for Fiscal 2020, we source products contributing 27.59% of
our total revenues from China, pursuant to USD and CNY transactions, and any depreciation in the value of the Indian
Rupee will impact our input cost. Further, for the six month period ended September 30, 2020 we have ₹320.81million
unhedged foreign exchange exposure and no hedged foreign exchange exposure.
The exchange rate between the Indian Rupee and the U.S. dollar has changed substantially in recent years and may fluctuate
substantially in the future. Fluctuations in the exchange rate between the U.S. dollar and the Indian Rupee may affect the
value of your investment in the Equity Shares. Specifically, if there is a change in relative value of the Indian Rupee to the
U.S. dollar, each of the following values will also be affected:
• the U.S. dollar equivalent of the Indian Rupee trading price of the Equity Shares in India;
• the U.S. dollar equivalent of the proceeds that you would receive upon the sale in India of any of the Equity Shares;
and
• the U.S. dollar equivalent of cash dividends, if any, on the Equity Shares, which will be paid only in Indian Rupees.
You may be unable to convert Indian Rupee proceeds into foreign currencies or the rate at which any such conversion could
occur could fluctuate. In addition, our market valuation could be seriously harmed by the devaluation of the Indian Rupee,
if non-Indian investors analyse our value based on the foreign currency equivalent of our financial condition and results of
operations.
58.
Substantially all of our property and assets are subject to security interests. Further, the manufacture of our products is
also undertaken at other third party premises, which may be subject to security interests.
Substantially all of our property and assets are subject to mortgage or other security interests to secure our payment
obligations to our lenders. If we fail to satisfy our debt service obligations as they become due, the lenders could exercise
their creditors’ rights, including foreclosing our property and assets subject to mortgage and other security interests. If this
occurs, we would not be able to continue to utilize the property and assets subject to foreclosure and our operations would
be disrupted during such foreclosure. If we are unable to source funds to repay such indebtedness within the time period
specified by the creditors, the creditors could sell our property and assets to third parties. We may not be able to repurchase
or locate alternative property and assets at commercially reasonable terms, or at all, to continue our operations.
Further, the manufacture of our traded products is undertaken by third parties at their premises, which may be subject to
adverse security interests or encumbrances which we may not be aware of. In the event that there is an enforcement of
security interests associated with the properties of manufacturers from whom we source our traded products, the manufacture
of our products at such premises may be disrupted, causing a material adverse impact on our business, financial condition
and results of operations.
59.
Increased environmental regulation and changing consumer environmental awareness could affect our operations.
Manufacturing enterprises in India, including us, are subject to central and state environmental related laws and regulations.
Our operations are also subject to significant environmental regulations, especially applicable to every state in which we
operate. Actions by central, state or local governments in India concerning environmental matters could result in laws or
regulations that could increase the cost of producing the products manufactured by us or otherwise adversely affect demand
40
for our products. We must comply with environmental regulations relevant to our operations such as, among others, waste
disposal, soil groundwater contamination and air emissions. Presently, a criminal proceeding, initiated by KSPCB, is
pending against our Company and our Promoter, Rajendra Gandhi for alleged violations of environmental laws. For further
details in relation to the said notices see “Outstanding Litigation and Material Developments” on page 257.
In addition, certain governmental authorities may adopt ordinances prohibiting or restricting the use or disposal of certain
products that are among the types of products produced by us. If such prohibitions or restrictions were to be widely adopted,
such regulatory and environmental measures could adversely affect demand for our products, impose additional compliance
costs on us and have a material adverse effect upon us. Moreover, there can be no assurance that we will be able to maintain
our environmental licenses and permits in order to be able to continue our operations. If any of our facilities are shut down
pursuant to any judicial or executive order from any judicial, regulatory or governmental body, we will need to incur costs
arising from compliance with regulations, appealing decisions affecting those facilities, resuming production and continuing
to pay labour and other costs. Additionally, a decline in consumer preference for our products due to environmental
considerations could have a material adverse effect upon our business. We could, therefore, be materially adversely affected
by existing environmental requirements.
EXTERNAL RISK FACTORS
60.
A slowdown in economic growth in India could cause our business to suffer.
Our performance and the growth of our business are necessarily dependent on the health of the overall Indian economy. As
a result, a slowdown in the Indian economy could adversely affect our business. India’s economy could be adversely affected
by a general rise in interest rates, inflation, natural calamities, such as earthquakes, tsunamis, floods and drought, increases
in commodity and energy prices, and protectionist efforts in other countries or various other factors. For instance, in periods
prior to Fiscal Year 2016, India experienced a slowdown in economic growth due to a variety of factors, including
unsustainably high current account deficit, capital outflows and consequent exchange rate pressures. Similarly, during 2020,
the overall economy was adversely affected on account of the impact of COVID-19 across industries and sectors. For further
details, see "Risk Factor - Our business and results of operations have been, and may continue to be, adversely affected by
the ongoing COVID-19 outbreak and associated responses” on page 21. Despite the recent signs of an economic turnaround
in the Indian economy, there is no assurance that growth will not slow down again or that inflation will not increase further
in the future. It is difficult to gauge the impact of these fundamental economic changes on our business. Any slowdown in
the Indian economy or future volatility in global commodity prices could adversely affect our business.
61.
Changing laws, rules and regulations and legal uncertainties, including adverse application of tax laws and regulations,
in India may adversely affect our business and financial performance.
Our business and financial performance could be adversely affected by unfavourable changes in, or interpretations of
existing laws, or the promulgation of new laws, rules and regulations applicable to us and our business. Please see the section
“Regulations and Policies” on page 142.
The regulatory and policy environment in which we operate is evolving and subject to change. There can be no assurance
that the Government of India may not implement new regulations and policies which will require us to obtain approvals and
licenses from the Government and other regulatory bodies, or impose onerous requirements, conditions, costs and
expenditures on our operations. Any such changes and the related uncertainties with respect to the implementation of the
new regulations may have a material adverse effect on our business, financial condition and results of operations. In addition,
we may have to incur capital expenditures to comply with the requirements of any new regulations, which may also
materially harm our results of operations. Any changes to such laws, including the instances briefly mentioned below, may
adversely affect our business, financial condition, results of operations and prospects:
• The Government of India has implemented a comprehensive national GST regime with effect from July 1, 2017
that will combine taxes and levies by the Central and State Governments into a unified rate structure. The
implementation of this new structure may be affected by any disagreement between certain state governments,
which could create uncertainty. Any such future amendments may affect our overall tax efficiency, and may result
in significant additional taxes becoming payable.
• The General Anti Avoidance Rules (“GAAR”) were notified by way of an amendment to the Income Tax Act,
1961, and came into effect from April 1, 2017. While the intent of this legislation is to prevent business
arrangements set up with the intent to avoid tax incidence under the Income Tax Act, 1961, certain exemptions
have been notified, viz., (i) arrangements where the tax benefit to all parties under an arrangement is less than ₹30
million, (ii) where FIIs have not taken benefit of a double tax avoidance tax treaty under Section 90 or 90A of the
Income Tax Act, 1961 and have invested in listed or unlisted securities with SEBI approval, (iii) where a non-
resident has made an investment, either direct or indirect, by way of an offshore derivative instrument in an FII.
Further, investments made up to March 31, 2017 shall not be subject to GAAR provided that GAAR may apply to
any business arrangement pursuant to which tax benefit is obtained on or after April 1, 2017, irrespective of the
date on which such arrangement was entered into.
41
• The Government of India has announced the union budget for Fiscal 2021 which introduced various amendments
having an impact across various sectors including the industry in which we operate. We cannot predict whether
any amendments made pursuant to the Finance Act would have a material adverse effect on our business, financial
condition and results of operations. Unfavourable changes in or interpretations of existing, or the promulgation of
new, laws, rules and regulations including foreign investment and stamp duty laws governing our business and
operations could result in us being deemed to be in contravention of such laws and may require us to apply for
additional approvals. For instance, the Supreme Court of India has in a decision clarified the components of basic
wages which need to be considered by companies while making provident fund payments, which resulted in an
increase in the provident fund payments to be made by companies. Any such decisions in future or any further
changes in interpretation of laws may have an impact on our results of operations. We have not determined the
impact of these recent and proposed laws and regulations on our business. Uncertainty in the applicability,
interpretation or implementation of any amendment to, or change in, governing law, regulation or policy in the
jurisdictions in which we operate, including by reason of an absence, or a limited body, of administrative or judicial
precedent may be time consuming as well as costly for us to resolve and may impact the viability of our current
business or restrict our ability to grow our business in the future. Further, if we are affected, directly or indirectly,
by the application or interpretation of any provision of such laws and regulations or any related proceedings, or are
required to bear any costs in order to comply with such provisions or to defend such proceedings, our business and
financial performance may be adversely affected.
62.
If there is any change in tax laws or regulations, or their interpretation, such changes may significantly affect our
financial statements for the current and future years.
Any change in Indian tax laws could have an effect on our operations. For instance, the Taxation Laws (Amendment)
Ordinance, 2019, a new tax ordinance issued by India’s Ministry of Finance on September 20, 2019, prescribes certain
changes to the income tax rate applicable to companies in India. According to this new ordinance, companies can henceforth
voluntarily opt in favor of a concessional tax regime (subject to no other special benefits/exemptions being claimed), which
would ultimately reduce the effective tax rate for Indian companies from 34.94% to approximately 25.17%. While we have
opted for the concessional regime, any such future amendments may affect our other benefits such as exemption for income
earned by way of dividend from investments in other domestic companies and units of mutual funds, exemption for interest
received in respect of tax free bonds, and long-term capital gains on equity shares if withdrawn by the statute in the future,
and the same may no longer be available to us. Any adverse order passed by the appellate authorities/ tribunals/ courts would
have an effect on our profitability.
In addition, we are subject to tax related inquiries and claims. We may be particularly affected by claims from tax authorities
on account of income tax assessment and GST that combines taxes and levies by the central and state governments into one
unified rate with effect from July 1, 2017. We cannot predict whether any new tax laws or regulations impacting our services
will be enacted, what the nature and impact of the specific terms of any such laws or regulations will be or whether, if at all,
any laws or regulations would have an adverse effect on our business.
The Government of India will be announcing the union budget for Fiscal 2022 shortly, pursuant to which the Finance Act
may undergo various amendments. We cannot assure you of the impact that any amendments which are introduced pursuant
to the new budget will have on our business and operations or on the industry in which we operate. In addition, unfavourable
changes in or interpretations of existing, or the promulgation of new laws, rules and regulations including foreign investment
laws governing our business, operations and group structure could result in us being deemed to be in contravention of such
laws or may require us to apply for additional approvals. We may incur increased costs relating to compliance with such
new requirements, which may also require management time and other resources, and any failure to comply may adversely
affect our business, results of operations and prospects. Uncertainty in the applicability, interpretation or implementation of
any amendment to, or change in, governing law, regulation or policy, including by reason of an absence, or a limited body,
of administrative or judicial precedent may be time consuming as well as costly for us to resolve and may affect the viability
of our current business or restrict our ability to grow our business in the future.
63.
Financial difficulty and other problems in certain financial institutions in India could have a material adverse effect on
our business, results of operations, cash flows and financial condition.
We are exposed to the risks of the Indian financial system which may be affected by the financial difficulties faced by
certain Indian financial institutions whose commercial soundness may be closely related as a result of credit, trading,
clearing or other relationships. This risk, which is sometimes referred to as “systemic risk”, may adversely affect financial
intermediaries, such as clearing agencies, banks, securities firms and exchanges with which we interact on a daily basis.
Any such difficulties or instability of the Indian financial system in general could create an adverse market perception about
Indian financial institutions and banks and adversely affect our business. In Fiscal 2011, Indian government agencies
initiated proceedings against certain financial institutions, alleging bribery in the loans and investment approval process,
which impacted market sentiment. Similar developments in the future could negatively impact confidence in the financial
sector and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
42
64.
We may be affected by competition laws, the adverse application or interpretation of which could adversely affect our
business.
The Competition Act, 2002, of India, as amended (“Competition Act”) regulates, inter alia, practices having an appreciable
adverse effect on competition in the relevant market in India (“AAEC”). Under the Competition Act, any formal or informal
arrangement, understanding or action in concert, which causes or is likely to cause an AAEC is considered void and may
result in the imposition of substantial penalties. Further, any agreement among competitors which directly or indirectly
involves the determination of purchase or sale prices, limits or controls production, supply, markets, technical development,
investment or the provision of services or shares the market or source of production or provision of services in any manner,
including by way of allocation of geographical area or number of customers in the relevant market or directly or indirectly
results in bid-rigging or collusive bidding is presumed to have an AAEC and is considered void. The Competition Act also
prohibits abuse of a dominant position by any enterprise.
On March 4, 2011, the Government notified and brought into force the combination regulation (“Merger Control”)
provisions under the Competition Act with effect from June 1, 2011. These provisions require acquisitions of shares, voting
rights, assets or control or mergers or amalgamations that cross the prescribed asset and turnover based thresholds to be
mandatorily notified to and pre-approved by the Competition Commission of India (the “CCI”). Additionally, on May 11,
2011, the CCI notified Competition Commission of India (Procedure in regard to the transaction of business relating to
combinations) Regulations, 2011, as amended, which sets out the mechanism for implementation of the Merger Control
regime in India.
The Competition Act aims to, among others, prohibit all agreements and transactions which may have an AAEC in India.
Consequently, all agreements entered into by us could be within the purview of the Competition Act. Further, the CCI has
extra-territorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if such
agreement, conduct or combination has an AAEC in India. However, the impact of the provisions of the Competition Act
on the agreements entered into by us cannot be predicted with certainty at this stage. However, since we pursue an acquisition
driven growth strategy, we may be affected, directly or indirectly, by the application or interpretation of any provision of
the Competition Act, or any enforcement proceedings initiated by the CCI, or any adverse publicity that may be generated
due to scrutiny or prosecution by the CCI or if any prohibition or substantial penalties are levied under the Competition Act,
it would adversely affect our business, results of operations and prospects.
65.
Our Equity Shares have never been publicly traded, and after the Offer, the Equity Shares may experience price and
volume fluctuations, and an active trading market for the Equity Shares may not develop. Further, the price of our
Equity Shares may be volatile, and you may be unable to resell your Equity Shares at or above the Offer Price, or at all.
Prior to the Offer, there has been no public market for our Equity Shares, and an active trading market on the Indian Stock
Exchanges may not develop or be sustained after the Offer. Listing and trading does not guarantee that a market for our
Equity Shares will develop, or if developed, the liquidity of such market for the Equity Shares. The Offer Price of the Equity
Shares is proposed to be determined through a book-building process which will be based on numerous factors, and may
not be indicative of the market price of the Equity Shares at the time of commencement of trading of the Equity Shares or
at any time thereafter. The market price and liquidity for the Equity Shares may be subject to significant fluctuations and
may also decline below the Offer Price in response to, among other factors:
• volatility in the Indian and other global securities markets;
• problems such as temporary closure, broker default and settlement delays experienced by the Indian Stock
Exchanges;
• the performance and volatility of the Indian and global economy;
• financial instability in emerging markets that may lead to loss of investor confidence;
• risks relating to our business and industry, including those discussed in this Red Herring Prospectus;
• strategic actions by us or our competitors;
• investor perception of the investment opportunity associated with our Equity Shares and our future performance;
• adverse media reports about us, our Shareholders, Associate Company or our Group Company;
• future sales of our Equity Shares;
• variations in our quarterly results of operations;
• differences between our actual financial and operating results and those expected by investors and analysts;
• our future expansion plans;
43
• perceptions about our future performance or the performance of the retail industry generally;
• changes in the estimates of our performance or recommendations by financial analysts;
• significant developments in India’s economic liberalisation and deregulation policies; and
• significant developments in India’s fiscal and environmental regulations.
There has been significant volatility in the Indian stock markets in the recent past, and our Equity Share price could fluctuate
significantly as a result of market volatility. A decrease in the market price of our Equity Shares could cause you to lose
some or all of your investment. There can be no assurances that Bidders who are Allotted Equity Shares through the Offer
will be able to resell their Equity Shares at or above the Offer Price.
66.
QIBs and Non-Institutional Investors are not permitted to withdraw or lower their Bids (in terms of quantity of Equity
Shares or the Bid Amount) at any stage after submitting a Bid, and Retail Individual Investors are not permitted to
withdraw their Bids after Bid/Offer Closing Date.
Pursuant to the SEBI ICDR Regulations, QIBs and Non-Institutional Investors are required to block the Bid Amount on
submission of the Bid and are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the
Bid Amount) at any stage after submitting a Bid. Similarly, Retail Individual Investors can revise or withdraw their Bids at
any time during the Bid/Offer Period and until the Bid/Offer Closing Date, but not thereafter. Therefore, QIBs and Non-
Institutional Investors will not be able to withdraw or lower their Bids following adverse developments in international or
national monetary policy, financial, political or economic conditions, our business, results of operations, cash flows or
otherwise at any stage after the submission of their Bids.
67.
You may not be able to immediately sell any of the Equity Shares you subscribe to in this Offer on an Indian stock
exchange.
The Equity Shares will be listed on the Stock Exchanges. In accordance with applicable Indian laws, permission for listing
of the Equity Shares will not be granted until after the Equity Shares in this Offer have been Allotted and submission of all
other relevant documents authorising the issuing of the Equity Shares. There could be failure or delays in listing the Equity
Shares on the Stock Exchanges.
Further, certain actions must be completed before the Equity Shares can be listed and commence trading. Investors’ book
entry, or “demat” accounts with Depository Participants are expected to be credited with Equity Shares within one Working
Day of the date on which the Basis of Allotment is approved by the Designated Stock Exchange. Thereafter, upon receipt
of listing and trading approval from the Stock Exchanges, trading in the Equity Shares is expected to commence within six
Working Days from the Bid/ Offer Closing Date.
We cannot assure you that the Equity Shares will be credited to the investors’ demat account, or that the trading in the Equity
Shares will commence in a timely manner or at all. Any failure or delay in obtaining the approvals would restrict your ability
to dispose of the Equity Shares.
68.
Holders of Equity Shares may be restricted in their ability to exercise pre-emptive rights under Indian law and thereby
may suffer future dilution of their ownership position.
Under the Companies Act, a company having share capital and incorporated in India must offer its holders of equity shares
pre-emptive rights to subscribe and pay for a proportionate number of equity shares to maintain their existing ownership
percentages before the issuance of any new equity shares, unless the pre-emptive rights have been waived by adoption of a
special resolution. However, if the laws of the jurisdiction the investors are located in do not permit them to exercise their
pre-emptive rights without our filing an offering document or registration statement with the applicable authority in such
jurisdiction, the investors will be unable to exercise their pre-emptive rights unless we make such a filing. If we elect not to
file a registration statement, the new securities may be issued to a custodian, who may sell the securities for the investor’s
benefit. The value the custodian receives on the sale of such securities and the related transaction costs cannot be predicted.
In addition, to the extent that the investors are unable to exercise pre-emptive rights granted in respect of the Equity Shares
held by them, their proportional interest in us would be reduced.
69.
Any future issuance of Equity Shares may dilute your shareholdings, and sales of our Equity Shares by our Promoter or
other major shareholders may adversely affect the trading price of the Equity Shares.
There is a risk that we may be required to finance our growth or strengthen our balance sheet through additional equity
offerings. Any future equity issuances by us, may lead to the dilution of investors’ shareholdings in our Company. In
addition, any sales of substantial amounts of our Equity Shares in the public market after the completion of this Offer,
including by SCI and SCI-GIH (whose post-Offer shareholding is exempt from statutory lock-in on account of being a
foreign venture capital investor) or our Promoter or other major shareholders, or the perception that such sales could occur,
could adversely affect the market price of our Equity Shares and could materially impair our future ability to raise capital
through offerings of our Equity Shares. Our Promoters currently hold an aggregate of 61.31% of our outstanding Equity
Shares. After the completion of the Offer, our Promoters will continue to hold a significant portion of our outstanding Equity
44
Shares. We cannot predict what effect, if any, market sales of our Equity Shares held by our Promoters or other major
shareholders or the availability of these Equity Shares for future sale will have on the market price of our Equity Shares.
70.
It may not be possible for investors outside India to enforce any judgment obtained outside India against our Company
or our management or our Associate or affiliates in India, except by way of a suit in India.
Our Company is incorporated as a public limited company under the laws of India and all of our directors and executive
officers reside in India. Further, certain of our assets, and the assets of our executive officers and directors, may be located
in India. As a result, it may be difficult to effect service of process outside India upon us and our executive officers and
directors or to enforce judgments obtained in courts outside India against us or our executive officers and directors, including
judgments predicated upon the civil liability provisions of the securities laws of jurisdictions outside India.
India has reciprocal recognition and enforcement of judgments in civil and commercial matters with only a limited number
of jurisdictions, which includes the United Kingdom, Singapore and Hong Kong. In order to be enforceable, a judgment
from a jurisdiction with reciprocity must meet certain requirements of the Indian Code of Civil Procedure, 1908 (the “Civil
Code”). The Civil Code only permits the enforcement of monetary decrees, not being in the nature of any amounts payable
in respect of taxes, other charges, fines or penalties. Judgments or decrees from jurisdictions which do not have reciprocal
recognition with India cannot be enforced by proceedings in execution in India. Therefore, a final judgment for the payment
of money rendered by any court in a non-reciprocating territory for civil liability, whether or not predicated solely upon the
general laws of the non-reciprocating territory, would not be enforceable in India. Even if an investor obtained a judgment
in such a jurisdiction against us, our officers or directors, it may be required to institute a new proceeding in India and obtain
a decree from an Indian court. However, the party in whose favour such final judgment is rendered may bring a fresh suit
in a competent court in India based on a final judgment that has been obtained in a non-reciprocating territory within three
years of obtaining such final judgment. Further, there are considerable delays in the disposal of suits by Indian courts. It is
unlikely that an Indian court would award damages on the same basis or to the same extent as was awarded in a final
judgment rendered by a court in another jurisdiction if the Indian court believed that the amount of damages awarded was
excessive or inconsistent with public policy in India. In addition, any person seeking to enforce a foreign judgment in India
is required to obtain prior approval of the RBI to repatriate any amount recovered pursuant to the execution of the judgment.
71.
Any adverse change in India’s sovereign credit rating by an international rating agency could adversely affect our
business, results of operations and cash flows.
In November 2016, Standard & Poor’s, an international rating agency, reiterated its negative outlook on India’s credit rating.
It identified India’s high fiscal deficit and heavy debt burden as the most significant constraints on its rating, and
recommended the implementation of reforms and containment of deficits. Standard & Poor’s affirmed its outlook on India’s
sovereign debt rating to “stable”, while reaffirming its “BBB-” rating. In May 2017, Fitch, another international rating
agency, affirmed India’s sovereign outlook to “stable” and affirmed its rating as “BBB-”. While in November 2017 Moody's
Investors Service (“Moody”) upgraded the Sovereign Credit Rating of India to Baa2 from Baa3, upgraded the Government
of India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from
positive, going forward, the sovereign ratings outlook will remain dependent on whether the government is able to transition
the economy into a high-growth environment, as well as exercise adequate fiscal restraint. India’s sovereign rating decreased
from Baa2 with a “negative” outlook to Baa3 with a “negative” outlook by Moody’s and from BBB with a “stable” outlook
to BBB with a “negative” outlook (Fitch) in June 2020; and from BBB “stable” to BBB “negative” by DBRS in May 2020.
As of September 2020, India’s sovereign rating from S&P is BBB- with a “stable” outlook. Any further adverse change in
India’s credit ratings by international rating agencies may adversely impact the Indian economy and consequently our
business.
72.
The requirements of being a listed company may strain our resources.
We are not a listed company and have not, historically, been subjected to the increased scrutiny of our affairs by
shareholders, regulators and the public at large that is associated with being a listed company. As a listed company, we will
incur significant legal, accounting, corporate governance and other expenses that we did not incur as an unlisted company.
We will be subject to the Listing Regulations which will require us to file audited annual and unaudited quarterly reports
with respect to our business and financial condition. If we experience any delays, we may fail to satisfy our reporting
obligations and/or we may not be able to readily determine and accordingly report any changes in our results of operations
as promptly as other listed companies.
Further, as a listed company, we will need to maintain and improve the effectiveness of our disclosure controls and
procedures and internal control over financial reporting, including keeping adequate records of daily transactions. In order
to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial
reporting, significant resources and management attention will be required. As a result, our management’s attention may be
diverted from our business concerns, which may adversely affect our business, prospects, financial condition and results of
operations. In addition, we may need to hire additional legal and accounting staff with appropriate experience and technical
accounting knowledge, but we cannot assure you that we will be able to do so in a timely and efficient manner.
73.
Significant differences exist between Ind AS and other accounting principles, such as Indian GAAP, IFRS and U.S.
GAAP, which may be material to investors' assessment of our financial condition.
45
The Restated Financial Statements for the six month periods ended September 30, 2020 and September 30, 2019 and Fiscals
2020, 2019 and 2018 included in this Red Herring Prospectus have been prepared under Ind AS notified under the
Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013 to the extent
applicable. In accordance with Ind AS 101 First-time Adoption of Indian Accounting Standard, we have presented
reconciliation from Indian GAAP to Ind AS. Please refer to “Financial Statements” on page 173. Except as otherwise
provided in the “Financial Statements” with respect to Indian GAAP, no attempt has been made to reconcile any of the
information given in this Red Herring Prospectus to any other principles or to base the information on any other standards.
Ind AS differs from other accounting principles with which prospective investors may be familiar, such as Indian GAAP,
IFRS and U.S. GAAP. Accordingly, the degree to which the financial statements included in this Red Herring Prospectus
will provide meaningful information is entirely dependent on the reader’s level of familiarity with Ind AS. Persons not
familiar with Ind AS should limit their reliance on the financial disclosures presented in this Red Herring Prospectus.
In addition, our Restated Financial Statements may be subject to change if new or amended Ind AS accounting standards
are issued in the future or if we revise our elections or selected exemptions in respect of the relevant regulations for the
implementation of Ind AS.
74.
A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian economy, which could
adversely affect our financial condition.
A decline or future material decline in India’s foreign exchange reserves could impact the valuation of the Rupee and could
result in reduced liquidity and higher interest rates which could adversely affect our borrowing rates and future financial
performance.
75.
Rights of shareholders of companies under Indian law may be more limited than under the laws of other jurisdictions.
Our Articles of Association, composition of our Board, Indian laws governing our corporate affairs, the validity of corporate
procedures, directors’ fiduciary duties, responsibilities and liabilities, and shareholders’ rights may differ from those that
would apply to a company in another jurisdiction. Shareholders’ rights under Indian law may not be as extensive and wide-
spread as shareholders’ rights under the laws of other countries or jurisdictions. Investors may face challenges in asserting
their rights as shareholder in an Indian company than as a shareholder of an entity in another jurisdiction.
76.
You may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.
Under the Income Tax Act, 1961, capital gains arising from the sale of equity shares in an Indian company are generally
taxable in India except any gain realised on the sale of shares on a stock exchange held for more than 12 months will not be
subject to capital gains tax in India if the STT has been paid on the transaction. The STT will be levied on and collected by
an Indian stock exchange on which equity shares are sold. Any gain realised on the sale of shares held for more than 12
months to an Indian resident, which are sold other than on a recognised stock exchange and as a result of which no STT has
been paid, will be subject to long term capital gains tax in India. Further, any gain realised on the sale of shares on a stock
exchange held for a period of 12 months or less will be subject to short term capital gains tax. Further, any gain realised on
the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital gains tax in India.
Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption
from taxation in India is provided under a treaty between India and the country of which the seller is resident. Generally,
Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of other countries may be
liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares. Additionally, the
Finance Act, 2020 ("Finance Act") does not require dividend distribution tax ("DDT") to be payable in respect of dividends
declared, distributed or paid by a domestic company after March 31, 2020, and accordingly, such dividends would not be
exempt in the hands of the shareholders, both resident as well as non-resident.
77.
Government regulation of foreign ownership of Indian securities may have an adverse effect on the price of the Equity
Shares.
Foreign ownership of Indian securities is subject to government regulation. In accordance with foreign exchange regulations
currently in effect in India, under certain circumstances the RBI must approve the sale of the Equity Shares from a non-
resident of India to a resident of India or vice-versa if the sale does not meet certain requirements specified by the RBI.
Additionally, any person who seeks to convert the Rupee proceeds from any such sale into foreign currency and repatriate
that foreign currency from India is required to obtain a no-objection or a tax clearance certificate from the Indian income
tax authorities. As provided in the foreign exchange controls currently in effect in India, the RBI has provided that the price
at which the Equity Shares are transferred be calculated in accordance with internationally accepted pricing methodology
for the valuation of shares at an arm’s length basis, and a higher (or lower, as applicable) price per share may not be
permitted. We cannot assure investors that any required approval from the RBI or any other government agency can be
obtained on terms favourable to a non-resident investor in a timely manner or at all. Because of possible delays in obtaining
requisite approvals, investors in the Equity Shares may be prevented from realizing gains during periods of price increase
or limiting losses during periods of price decline.
78.
A third party could be prevented from acquiring control of our Company because of anti-takeover provisions under
Indian law.
46
There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control of our Company,
even if a change in control would result in the purchase of your Equity Shares at a premium to the market price or would
otherwise be beneficial to you. Such provisions may discourage or prevent certain types of transactions involving actual or
threatened change in control of our Company. Under the Takeover Regulations, an acquirer has been defined as any person
who, directly or indirectly, acquires or agrees to acquire shares or voting rights or control over a company, whether
individually or acting in concert with others. Although these provisions have been formulated to ensure that interests of
investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control of
our Company. Consequently, even if a potential takeover of our Company would result in the purchase of the Equity Shares
at a premium to their market price or would otherwise be beneficial to its stakeholders, it is possible that such a takeover
would not be attempted or consummated because of the Indian takeover regulations.
79.
Foreign investors are subject to foreign investment restrictions under Indian law that limits our ability to attract foreign
investors, which may adversely impact the market price of the Equity Shares.
Under the foreign exchange regulations currently in force in India, transfers of shares between non-residents and residents
are freely permitted (subject to certain exceptions) if they comply with the pricing guidelines and reporting requirements
specified by the RBI or in the alternate, the pricing is in compliance with the extant provisions of the SEBI ICDR
Regulations. If the transfer of shares is not in compliance with such pricing guidelines or reporting requirements or falls
under any of the exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders
who seek to convert the Rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign
currency from India will require a no objection or a tax clearance certificate from the income tax authority. Further, in
accordance with Press Note No. 3 (2020 Series), dated April 17, 2020, issued by the Department for Promotion of Industry
and Internal Trade, Government of India, investments where the beneficial owner of the Equity Shares is situated in or is a
citizen of a country which shares land border with India, can only be made through the Government approval route, as
prescribed in the Consolidated FDI Policy. These investment restrictions shall also apply to subscribers of offshore
derivative instruments. We cannot assure investors that any required approval from the RBI or any other Government agency
can be obtained on any particular terms or at all. For further details, please see “Restrictions on Foreign Ownership of Indian
Securities” on page 299.
80.
Natural calamities could have a negative effect on the Indian economy and cause our business to suffer.
India has experienced natural calamities such as earthquakes, tsunami, floods and drought in the past few years. The extent
and severity of these natural disasters determines their effect on the Indian economy. Further prolonged spells of below
normal rainfall or other natural calamities in the future could have a negative effect on the Indian economy, adversely
affecting our business and the price of our Equity Shares.
81.
Civil disturbances, regional conflicts and other acts of violence in India and abroad may disrupt or otherwise adversely
affect the Indian economy.
Certain events that are beyond the control of our Company, such as violence or war, including those involving India, the
United Kingdom, the United States or other countries, may adversely affect worldwide financial markets and could
potentially lead to a severe economic recession, which could adversely affect our business, results of operations, financial
condition and cash flows, and more generally, any of these events could lower confidence in India's economy. Southern
Asia has, from time to time, experienced instances of civil unrest and political tensions and hostilities among neighbouring
countries. Political tensions could create a perception that there is a risk of disruption of services provided by India-based
companies, which could have an adverse effect on our business, future financial performance and price of the Equity Shares.
Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that are protracted or involve the
threat or use of nuclear weapons, the Indian economy and consequently Company's operations might be significantly
affected. India has from time to time experienced social and civil unrest and hostilities, including riots, regional conflicts
and other acts of violence. Events of this nature in the future could have an adverse effect on our ability to develop our
business. As a result, our business, results of operations and financial condition may be adversely affected.
Investors may contact any of the Book Running Lead Managers, who have submitted due diligence certificate to SEBI, for any
complaints, information or clarification pertaining to the Offer. For further information regarding grievances in relation to the
Offer, see “General Information” on page 53.
47
SECTION III: INTRODUCTION
THE OFFER
The following table summarises the Offer details:
Equity Shares Offered
Offer of Equity Shares
Up to [●] Equity Shares, aggregating up to ₹[●] million
of which
Fresh Issue
(1)
Up to [●] Equity Shares, aggregating up to ₹950.00 million
Offer for Sale
(2)
Up to 8,250,000 Equity Shares, aggregating up to ₹ [●] million
The Offer consists of:
A) QIB Portion
(3)(4)
Not less than [●] Equity Shares
of which:
Anchor Investor Portion
Not more than [●] Equity Shares
QIB Portion (assuming the Anchor Investor Portion is fully
subscribed)
[●] Equity Shares
of which:
Mutual Fund Portion (5% of the QIB Portion)
[●] Equity Shares
Balance for all QIBs including Mutual Funds
[●] Equity Shares
B) Non-Institutional Portion
Not more than [●] Equity Shares
C) Retail Portion
Not more than [●] Equity Shares
Pre and post-Offer Equity Shares
Equity Shares outstanding prior to the Offer
30,080,631 Equity Shares
Equity Shares outstanding after the Offer
[●] Equity Shares
Use of Net Proceeds
See “Objects of the Offer” on page 72 for information about the use
of the proceeds from the Fresh Issue. Our Company will not receive
any proceeds from the Offer for Sale
Allocation to bidders in all categories, except the Anchor Investor Portion and the Retail Portion, if any, shall be made on a
proportionate basis. The allocation to each Retail individual Bidder shall not be less than minimum Bid Lot, subject to
availability of shares in the Retail Portion, and the remaining available Equity Shares, if any, shall be Allocated on a
proportionate basis. For further details, see “Offer Procedure - Basis of Allotment” on page 285.
(1) The Fresh Issue has been authorized by a resolution of our Board of Directors dated January 23, 2020 and a special resolution of our Shareholders at
the EGM held on January 24, 2020. Subsequently, our Board of Directors has pursuant to a resolution dated January 8, 2021 approved the reduction of
the Fresh Issue size from ₹1,450.00 million to up to ₹950.00 million.
(2) The Offer for Sale has been authorised by the Selling Shareholders as follows:
Selling Shareholder
Number of Equity Shares offered
in the Offer for Sale
Date of consent/authorisation/resolution
SCI
6,007,920
Board resolution dated January 10, 2020 as modified pursuant to the board
resolution dated December 14, 2020 and consent letter dated January 8, 2021
SCI-GIH
1,492,080
Board resolution dated January 10, 2020 as modified pursuant to the board
resolution dated December 14, 2020 and consent letter dated January 8, 2021
Rajendra Gandhi
690,700
Consent letter dated January 27, 2020 as modified pursuant to the consent letter
dated January 7, 2021
Sunita Rajendra Gandhi
59,300
Consent letter dated January 27, 2020 as modified pursuant to the consent letter
dated January 7, 2021
Each Selling Shareholder severally and not jointly confirms that their respective portion of the Offered Shares, have been held by it for a period of at
least one year prior to the filing of the Draft Red Herring Prospectus with SEBI, and that such Offered Shares are eligible for being offered for sale in
the Offer as required by Regulation 8 of the SEBI ICDR Regulations.
(3) Our Company and the Selling Shareholders may, in consultation with the BRLMs, allocate up to 60% of the QIB Portion 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 only at or above the Anchor Investor Allocation Price. In the event of under-subscription in the Anchor Investor Portion, the
remaining Equity Shares shall be added to the QIB Portion. For details, see “Offer Procedure” on page 285.
(4) Subject to valid Bids being received at or above the Offer Price, under-subscription, if any, in any category except the QIB Portion, would be allowed to
be met with spill over from any other category or combination of categories at the discretion of our Company and the Selling Shareholders, in consultation
with the BRLMs and the Designated Stock Exchange. Under-subscription, if any, in the QIB Portion will not be allowed to be met with spill-over from
other categories or a combination of categories. In the event of under-subscription in the Offer, Equity Shares offered pursuant to the Fresh Issue shall
be allocated prior to Equity Shares offered pursuant to the Offer for Sale. However, after receipt of minimum subscription of 90% of the Fresh Issue,
Equity Shares offered pursuant to the Offer for Sale shall be allocated prior to Equity Shares offered pursuant to the Fresh Issue. For further details, see
“Offer Structure” on page 281.
48
SUMMARY OF FINANCIAL INFORMATION
The following tables set forth summary financial information derived from our Restated Financial Statements. The Restated
Financial Statements have been prepared, based on financial statements for the six month period ended September 30, 2020
and September 30, 2019 and for Fiscals 2020, 2019 and 2018. The Restated Financial Statements have been prepared in
accordance with the Companies Act, Ind AS and restated in accordance with the SEBI ICDR Regulations.
The summary financial information presented below should be read in conjunction with our “Financial Statements”, the notes
thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 173 and
238, respectively.
RESTATED STATEMENT OF ASSETS AND LIABILITIES
(in
`
million)
Particulars
As at
September
30, 2020
September
30, 2019
March 31,
2020
March 31,
2019
March 31,
2018
Non-current assets
Property, plant and equipment
1,995.70
1,814.64
1,928.89
1,787.16
1,821.45
Right-of-use assets
-
31.72
-
-
-
Capital work-in-progress
6.55
2.77
42.27
9.48
6.08
Intangible assets
34.29
3.92
2.95
4.71
6.32
Intangible assets under development
-
15.39
33.40
7.82
-
Financial assets
Investments
-
-
-
-
-
Other financial assets
37.45
51.35
50.33
50.96
38.01
Deferred tax assets
-
-
-
-
-
Non-current tax asset (net)
2.16
2.39
2.46
46.57
47.14
Other non-current assets
150.32
13.61
18.24
13.66
30.92
Total non-current assets
2,226.47
1,935.79
2,078.54
1,920.36
1,949.92
Current assets
Inventories
1,366.28
1,284.64
1,165.94
974.14
1,051.38
Financial assets
Trade receivables
1,036.25
1,428.15
1,030.34
896.56
795.52
Cash and cash equivalents
52.90
61.02
150.06
285.24
4.00
Bank balances other than cash and cash
equivalents as above
47.84
40.70
44.09
29.55
33.81
Loans
18.44
3.26
3.52
4.52
0.27
Other financial assets
27.62
12.90
13.25
19.12
10.79
Other current assets
209.19
168.31
227.17
127.77
90.73
Total current assets
2,758.52
2,998.98
2,634.37
2,336.90
1,986.50
Total assets
4,984.99
4,934.77
4,712.91
4,257.26
3,936.42
EQUITY AND LIABILITIES
Equity
Equity share capital
247.17
247.17
247.17
247.17
189.00
Other equity
(546.60)
(837.46)
(848.98)
(886.63)
(1,990.02)
Equity attributable to owners of the Company
(299.43)
(590.29)
(601.81)
(639.46)
(1,801.02)
Non-controlling interests
-
2.24
2.27
2.17
2.14
Total equity
(299.43)
(588.05)
(599.54)
(637.29)
(1,798.88)
Liabilities
Non-current liabilities
Financial liabilities
Borrowings
2,054.39
2,061.75
2,048.25
2,100.26
3,113.05
Lease liabilities
-
19.39
-
-
-
Other financial liabilities
74.05
90.87
108.27
96.01
148.27
Deferred tax liability
-
-
-
-
-
Provisions
64.06
52.88
62.74
46.12
34.14
Total non-current liabilities
2,192.50
2,224.89
2,219.26
2,242.39
3,295.46
Current liabilities
Financial liabilities
Borrowings
941.33
1,114.06
1,220.55
999.44
809.58
Lease liabilities
2.59
12.70
2.49
-
-
Trade payables
Total outstanding dues of micro enterprises and
small enterprises
36.18
70.97
46.61
59.87
40.28
Total outstanding dues of creditors other than
micro enterprises and small enterprises
1,725.18
1,776.31
1,462.75
1,281.14
1,411.32
Other financial liabilities
312.15
232.83
291.96
237.66
110.21
Provisions
18.20
15.44
16.84
15.02
16.07
Other current liabilities
56.29
66.87
48.35
53.92
52.24
49
Particulars
As at
September
30, 2020
September
30, 2019
March 31,
2020
March 31,
2019
March 31,
2018
Current tax liabilities (net)
-
8.75
3.64
5.11
0.14
Total current liabilities
3,091.92
3,297.93
3,093.19
2,652.16
2,439.84
Total liabilities
5,284.42
5,522.82
5,312.45
4,894.55
5,735.30
Total equity and liabilities
4,984.99
4,934.77
4,712.91
4,257.26
3,936.42
50
RESTATED STATEMENT OF PROFIT AND LOSS
(in
`
million)
Particulars
For the half year ended
For the year ended
September 30,
2020
September 30,
2019
March 31,
2020
March 31,
2019
March 31,
2018
Income
Revenue from operations
3,288.36
3,155.07
6,698.61
6,409.38
5,289.52
Other income
6.73
19.26
30.53
16.60
56.33
Total Income
3,295.09
3,174.33
6,729.14
6,425.98
5,345.85
Expenses
Cost of materials consumed
1,600.45
1,526.30
3,232.38
3,175.40
2,411.19
Purchase of stock in trade
614.78
722.39
1,287.63
1,326.00
1,203.26
Changes in inventories of finished
goods, work-in-progress and stock-in-
trade
(70.05)
(196.72)
(101.33)
(114.78)
(78.96)
Excise duty
-
-
-
-
53.33
Employee benefits expenses
312.50
393.32
820.11
697.95
590.87
Finance cost
100.95
101.43
209.01
179.20
169.35
Depreciation and amortization
expenses
68.65
57.85
124.10
123.38
112.25
Other expenses
380.05
522.23
1,121.90
1,026.59
1,010.11
Total expenses
3,007.33
3,126.80
6,693.80
6,413.74
5,471.40
Restated Profit/(Loss) before tax
287.76
47.53
35.34
12.24
(125.55)
Tax expense / (benefit):
Current tax expense
-
3.64
3.64
4.60
-
Current tax expense relating to prior
period / year
-
-
-
0.28
(5.37)
Deferred tax
-
-
-
-
-
Net tax expense / (benefit)
-
3.64
3.64
4.88
(5.37)
Restated profit/(loss) for the period /
year
287.76
43.89
31.70
7.36
(120.18)
Other comprehensive income
Items that will not be reclassified to
profit or loss
Remeasurements of the defined
benefit Plans - Gains / (losses)
13.07
(1.68)
(2.56)
1.64
1.75
Income tax impact
-
-
-
-
-
Items that will not be reclassified to
profit or loss (net of tax)
13.07
(1.68)
(2.56)
1.64
1.75
Items that will be reclassified to profit
or loss
Fair value changes on cash flow
hedges
-
-
-
0.05
1.24
Income tax impact
-
-
-
-
-
Items that will be reclassified to
profit or loss (net of tax)
-
-
-
0.05
1.24
Total other comprehensive income for
the period / year
13.07
(1.68)
(2.56)
1.69
2.99
Total restated comprehensive income
for the period / year
300.83
42.21
29.14
9.05
(117.19)
Restated profit/(loss) for the period /
year attributable to:
Owners of the Company
287.73
43.82
31.60
7.33
(120.00)
Non controlling interests
0.03
0.07
0.10
0.03
(0.18)
Total
287.76
43.89
31.70
7.36
(120.18)
Other restated comprehensive income
for the period / year attributable to:
Owners of the Company
13.07
(1.68)
(2.56)
1.69
2.99
Non controlling interests
-
-
-
-
-
Total
13.07
(1.68)
(2.56)
1.69
2.99
Total restated comprehensive income
for the period / year attributable to:
Owners of the Company
300.80
42.14
29.04
9.02
(117.01)
Non controlling interests
0.03
0.07
0.10
0.03
(0.18)
Total
300.83
42.21
29.14
9.05
(117.19)
Earnings per share
Basic (in Rs.) (Face value of Rs.10 each)
11.64
1.77
1.28
0.33
(6.35)
Diluted (in Rs.) (Face value of Rs.10
each)
11.64
1.77
1.28
0.33
(6.35)
51
RESTATED STATEMENT OF CASH FLOWS
(in
`
million)
Particulars
For the half year ended
For the year ended
September 30,
2020
September 30,
2019
March 31,
2020
March 31,
2019
March 31, 2018
Cashflow from operating activities
Restated Profit / (Loss) before tax
287.76
47.53
35.34
12.24
(125.55)
Adjustments for :
Depreciation and amortisation
expense
68.65
57.85
124.10
123.38
112.25
Provision for doubtful trade and
other receivables, loans and advances
and bad debts written off (net)
28.22
27.44
40.30
22.07
59.65
Liability no longer required written
back
-
(0.76)
(3.19)
(12.36)
(41.85)
Provision for Warranty
-
-
-
-
9.06
Interest on deposit with bank
(1.68)
(1.22)
(2.81)
(1.66)
(1.80)
Government grant (EPCG Scheme)
-
-
-
-
(2.52)
(Profit) / loss on fair valuation of
derivative instruments
(0.66)
(1.16)
(2.11)
4.03
(1.33)
Fair valuation of Compulsorily
Convertible Debentures
-
-
-
-
153.80
(Profit) / loss on sale of property,
plant and equipment
(0.53)
(0.26)
(0.25)
(0.13)
1.02
Finance cost
93.56
84.46
181.30
179.20
152.89
Unrealised exchange difference on
lease liabilities
0.10
(0.20)
(0.50)
-
-
Employees share option cost
recorded on grants
1.58
7.03
8.61
-
-
Unrealised exchange difference on
foreign currency transactions and
translation (net)
(0.45)
(0.05)
10.79
(7.82)
2.98
Operating cash profit before
changes in working capital
476.55
220.66
391.58
318.95
318.60
Changes in working capital
Adjustment for (increase)/ decrease
in operating assets :
Other financial assets
(15.46)
7.86
7.90
(16.88)
43.79
Inventories
(200.34)
(310.50)
(191.80)
77.24
(325.11)
Trade receivables
(33.92)
(559.04)
(172.42)
(123.50)
(247.93)
Other assets
(3.90)
(14.25)
(85.89)
(24.62)
(12.47)
Adjustment for increase/ (decrease)
in operating liabilities:
Other financial liabilities
3.48
(10.12)
(7.24)
(22.39)
18.35
Trade payables
249.92
507.39
164.34
(92.04)
343.34
Other current liabilities
7.94
12.95
(5.57)
1.68
(25.85)
Provisions
15.75
5.50
15.88
12.62
0.41
Cash generated from/(used in)
operations
500.02
(139.55)
116.78
131.06
113.13
Net income taxes (paid) / refund
received
(3.34)
44.18
39.00
0.66
(0.09)
Net cash generated from/(used in)
operating activities (A)
496.68
(95.37)
155.78
131.72
113.04
Cashflows from investing activities
Capital expenditure on property,
plant and equipments (including
capital advance)
(251.07)
(111.15)
(260.79)
(74.43)
(63.18)
Proceeds from sale of property,
plant and equipments
0.80
0.34
0.35
0.13
2.32
Interest received on bank deposits
0.75
0.43
2.41
1.93
1.93
Movement of margin money
deposit with banks (net)
(3.75)
(11.15)
(14.54)
4.26
(2.56)
Net cash generated from/(used in)
investing activities (B)
(253.27)
(121.53)
(272.57)
(68.11)
(61.49)
Cash flows from Financing activities
Proceeds from long-term
borrowings
33.07
123.56
145.74
250.00
125.00
Repayment of long-term
borrowings
9.75
(158.08)
(198.62)
(38.76)
(56.56)
52
Particulars
For the half year ended
For the year ended
September 30,
2020
September 30,
2019
March 31,
2020
March 31,
2019
March 31, 2018
Proceeds/(repayment) from short-
term borrowing (net)
(279.22)
114.33
215.86
191.87
26.76
Payment of lease liabilities
-
(3.45)
(6.95)
-
-
Finance cost
(104.17)
(83.68)
(174.42)
(185.48)
(148.17)
Net cash generated from / (used in)
financing activities (C)
(340.57)
(7.32)
(18.39)
217.63
(52.97)
Net Increase / (Decrease) in cash
and cash equivalents (A+B+C)
(97.16)
(224.22)
(135.18)
281.24
(1.42)
Cash and cash equivalents at the
beginning of the period / year
150.06
285.24
285.24
4.00
5.42
Cash and cash equivalents at the
end of the period / year* (Refer note
9(a))
52.90
61.02
150.06
285.24
4.00
* Comprises:
(a) Cash on hand
0.53
0.58
0.63
0.55
0.82
(b) Balances with banks:
in current accounts
52.37
60.44
149.43
89.69
3.18
in fixed deposits
-
-
-
195.00
-
Total
52.90
61.02
150.06
285.24
4.00
53
GENERAL INFORMATION
Our Company was incorporated as Stove Kraft Private Limited on June 28, 1999 with a certificate of incorporation issued by the
RoC as a private limited company under the Companies Act, 1956. Subsequently, our Company was converted into a public
limited company pursuant to a special resolution passed by our Shareholders at the EGM on May 28, 2018, and the name of our
Company was changed from Stove Kraft Private Limited to Stove Kraft Limited and a fresh certificate of incorporation
consequent upon change of name was issued to our Company by the RoC on August 13, 2018.
Registered and Corporate Office
Stove Kraft Limited
81/1, Medamarana Halli Village
Harohalli Hobli, Kanakapura Taluk
Ramanagar District 562 112
Karnataka, India
Corporate Identity Number: U29301KA1999PLC025387
Registration number: 025387
For details in relation to changes in the Registered Office, see “History and Certain Corporate Matters” on page 146.
Address of the RoC
Our Company is registered with the RoC situated at the following address:
Registrar of Companies
“E” Wing, 2
nd
Floor
Kendriya Sadana
Koramangala
Bengaluru 560 034
Karnataka, India
Board of Directors
Our Board comprises the following:
Name
Designation
DIN
Address
Rajendra Gandhi
Managing Director
01646143
203, Olympus 1, Prestige Acropolis, No. 20, Hosur Road, Bengaluru 560
029, Karnataka, India
Bharat Singh
Nominee Director
08222884
723, Ranka Heights, Domlur Layout, 7
th
cross, Bengaluru, 560 071,
Karnataka, India
Neha Gandhi
Executive Director
07623685
203, Olympus 1, Prestige Acropolis, Hosur Road, Koramangala,
Bengaluru, 560 029, Karnataka, India
Rajiv Mehta
Nitinbhai
Whole Time Director
(designated as CEO)
00697109
Flat no. 7 & 8, Aquaforte Apt, No - 12 Kensington Road, Halasuru,
Bengaluru, 560 042, Karnataka, India
Lakshmikant Gupta
Chairman and Independent
Director
07637212
A-202, The Icon DLF Phase V, Gurgaon, 122 009, Haryana, India
Shubha Rao Mayya
Independent Director
08193276
No.60/45, 6th Cross, Cambridge Layout, Ulsoor, Bengaluru 560 008,
Karnataka, India
For further details of our Directors, see “Our Management” on page 153.
Chief Financial Officer, Company Secretary and Compliance Officer
Shashidhar SK
81/1, Medamarana Halli Village
Harohalli Hobli, Kanakapura Taluk
Ramanagar District 562 112, Karnataka
Tel: +91 80 280 16284
E-mail: shashidhar.sk@stovekraft.com
54
Book Running Lead Managers
Book Running Lead Managers
Edelweiss Financial Services Limited
14th Floor, Edelweiss House
Off CST Road, Kalina
Mumbai 400 098
Maharashtra, India
Tel: + 91 22 4009 4400
E-mail: skl.ipo@edelweissfin.com
Investor grievance e-mail:
customerservice.mb@edelweissfin.com
Website: www.edelweissfin.com
Contact Person: Disha Doshi/ Nilesh Roy
SEBI Registration No.: INM0000010650
JM Financial Limited
7th Floor, Cnergy
Appasaheb Marathe Marg
Prabhadevi, Mumbai - 400 025
Maharashtra, India
Tel: +91 22 6630 3030
E-mail: skl.ipo@jmfl.com
Investor grievance email:
grievance.ibd@jmfl.com
Website: www.jmfl.com
Contact Person: Prachee Dhuri
SEBI Registration No.: INM000010361
Syndicate Members
Edelweiss Securities Limited
Edelweiss House, Off CST Road
Kalina, Mumbai 400 098
Maharashtra, India
Tel: +91 22 4063 5569
E-mail: prakash.boricha@edelweissfin.com
Website: www.edelweissfin.com
Contact person: Prakash Boricha
SEBI registration number: INZ000166136
JM Financial Services Limited
Ground Floor 2, 3 and 4, Kamanwala Chambers
Sir P. M. Road, Fort
Mumbai 400 001
Maharashtra, India
Tel: +91 22 6136 3400
E-mail: surajit.misra@jmfl.com/ deepak.vaidya@jmfl.com/ tn.kumar@jmfl.com/ sona.verghese@jmfl.com
Website: www.jmfinancialservices.in
Contact Person: Surajit Misra/ Deepak Vaidya/ T. N. Kumar/ Sona Verghese
SEBI Registration No.: INZ000195834
Indian Legal Counsel to our Company
Cyril Amarchand Mangaldas
3
rd
floor, Prestige Falcon Tower
Brunton Road, Craig Park Layout
Bengaluru 560 025
Karnataka, India
Tel: +91 80 2558 4870
Legal Counsel to the BRLMs as to Indian Law
L&L Partners
*
1
st
& 9
th
Floor, Ashoka Estate
Barakhamba Road
New Delhi 110 001, India
Tel: +91 11 4121 5100
*
Formerly known as Luthra & Luthra Law Offices
Legal Counsel to the Investor Selling Shareholders as to Indian Law
AZB & Partners
Plot No. A-8, Sector 4
Noida 201301
National Capital Region Delhi
Tel: + 91 120 417 9999
55
Statutory Auditors to our Company
Deloitte Haskins & Sells
19
th
Floor, 46 - Prestige Trade Tower
Palace Road, High Grounds
Bengaluru 560 001, Karnataka, India
Tel: +91 80 6188 6000
E-mail: jatrasi@deloitte.com
Firm Registration No.008072S
Peer review no: 008781
Registrar to the Offer
KFin Technologies Private Limited
Selenium, Tower B
Plot No. 31-32, Financial District
Nanakramguda, Serilingampally
Hyderabad Rangareddi 500 032
Telangana, India
Tel: +91 40 6716 2222
E-mail: stovekraft.ipo@kfintech.com
Investor grievance e-mail: einward.ris@kfintech.com
Website: www.kfintech.com
Contact Person: M. Murali Krishna
SEBI Registration No.: INR000000221
Banker to the Offer/ Escrow Collection Bank/ Refund Bank/ Public Offer Account Bank/ Sponsor Bank
ICICI Bank Limited
Capital Market Division, 1st Floor,
122, Mistry Bhavan, Dinshaw Vachha Road,
Backbay Reclamation, Churchgate,
Mumbai 400 020
Tel: +91 22 6681 8911/ 23/ 24
E-mail: kmr.saurabh@icicibank.com
Website: www.icicibank.com
Contact Person: Saurabh Kumar
SEBI Registration No.: INB100000004
Bankers to our Company
Standard Chartered Bank
#112, “Serenity”
Koramangala Industrial Area
5th Block, Koramangala
Bangalore 560 095
Tel: +91 80 6707 9462/ 6707 9461
Email: sameepa.bahera@sc.com/ parmeshwar.sha[email protected]m
Contact Person: Sameepa Bahera/ Parmeshwar Sharma
Website: www.sc.com/in
ICICI Bank Limited
1, Commissariat Road
Ground Floor
Bengaluru 560 025
Karnataka, India
Tel : +91 8971806272
Email : gopichand.p@icicibank.com
Contact Person: Gopichand Rao P
Website : www.icicibank.com
Designated Intermediaries
Self Certified Syndicate Banks
The banks registered with SEBI, which offer the facility of ASBA services (i) in relation to ASBA, where the Bid Amount will
be blocked by authorising an SCSB, a list of which is available on the website of SEBI at
https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34 and updated from time to time and
at such other websites as may be prescribed by SEBI from time to time, (ii) in relation to RIBs using the UPI Mechanism, a list
of which is available on the website of SEBI at
https://sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=40 or such other website prescribed by SEBI
as updated from time to time.
Applications through UPI in the Offer can be made only through the SCSBs mobile applications (apps) whose name appears
on the SEBI website. A list of SCSBs and mobile application, which, are live for applying in public issues using UPI mechanism
is provided as Annexure ‘A’ to the SEBI circular no. SEBI/HO/CFD/DIL2/CIR/P/2019/85 dated July 26, 2019. The said list
shall be updated on SEBI website.
Syndicate SCSB Branches
56
In relation to Bids (other than Bids by Anchor Investor and RIBs) submitted to a member of the Syndicate, the list of branches
of the SCSBs at the Specified Locations named by the respective SCSBs to receive deposits of Bid cum Application Forms
from the members of the Syndicate is available on the website of the SEBI
(https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=35) and updated from time to time.
For more information on such branches collecting Bid cum Application Forms from the Syndicate at Specified Locations, see
the website of the SEBI http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes as updated from time to
time.
Registered Brokers
The list of the Registered Brokers eligible to accept ASBA forms from Bidders (other than RIBs), including details such as
postal address, telephone number and e-mail address, is provided on the websites of BSE and NSE at
www.bseindia.com/Markets/PublicIssues/brokercentres_new.aspx? and
www.nseindia.com/products/content/equities/ipos/ipo_mem_terminal.htm, respectively, as updated from time to time.
Registrar and Share Transfer Agents
The list of the RTAs eligible to accept ASBA Forms from Bidders (other than RIBs) at the Designated RTA Locations, including
details such as address, telephone number and e-mail address, is provided on the websites of the Stock Exchanges at
http://www.bseindia.com/Static/Markets/PublicIssues/RtaDp.aspx?expandable=6 and
http://www.nseindia.com/products/content/equities/ipos/asba_procedures.htm, respectively, as updated from time to time.
Collecting Depository Participants
The list of the CDPs eligible to accept ASBA Forms from Bidders (other than RIBs) at the Designated CDP Locations, including
details such as name and contact details, is provided on the websites of the Stock Exchanges at
http://www.bseindia.com/Static/Markets/PublicIssues/RtaDp.aspx?expandable=6 and
http://www.nseindia.com/products/content/equities/ipos/asba_procedures.htm, respectively, as updated from time to time.
Experts
Except as stated below, our Company has not obtained any expert opinions:
Our Company has received written consent from the Statutory Auditors namely, Deloitte Haskins & Sells, Chartered
Accountants, to include their name in this Red Herring Prospectus and as an “Expert” as required under Section 26(5) of the
Companies Act, 2013 read with the SEBI ICDR Regulations and as defined under Section 2(38) of the Companies Act, 2013,
in respect of the examination reports of the Statutory Auditors on the Restated Financial Statements dated November 19, 2020
and the statement of special direct tax benefits dated January 15, 2021 included in this Red Herring Prospectus and such consent
has not been withdrawn as on the date of this Red Herring Prospectus. However, the term “expert” and consent thereof shall
not be construed to mean an “expert” or consent as defined under the Securities Act.
Our Company has also received written consent from Mishra & Co., Chartered Accountants, to include their name in this Red
Herring Prospectus and as an “Expert” as required under Section 26(5) of the Companies Act, 2013 read with the SEBI ICDR
Regulations and as defined under Section 2(38) of the Companies Act, 2013, in respect of the statement of special indirect tax
benefits dated January 15, 2021, included in this Red Herring Prospectus and such consent has not been withdrawn as on the
date of this Red Herring Prospectus. However, the term “expert” shall not be construed to mean an “expert” as defined under
the Securities Act.
In relation to our Bengaluru facility, our Company has received written consent from G. Shyam Sunder & Associates dated
November 16, 2020, Chartered Engineers to include their names in this Red Herring Prospectus and as “expert” as defined
under section 2(38) of the Companies Act in respect of the certificate dated November 16, 2020 and such consent has not been
withdrawn as on the date of this Red Herring Prospectus.
Further, in relation to our Baddi facility, our Company has received written consent from Parashar & Co dated November 18,
2020, Chartered Engineers to include their names in this Red Herring Prospectus and as “expert” as defined under section 2(38)
of the Companies Act in respect of the certificate dated November 18, 2020 and such consent has not been withdrawn as on the
date of this Red Herring Prospectus.
Monitoring Agency
In terms of the proviso to Regulation 41(1) of the SEBI ICDR Regulations, our Company is not required to appoint a monitoring
agency for this Offer.
Filing
A copy of the Draft Red Herring Prospectus was filed with the Securities and Exchange Board of India (Southern Regional
Office) located at Overseas Towers, 7
th
Floor, 756-L, Anna Salai, Chennai 600 002.
57
A copy of this Red Herring Prospectus and Prospectus, along with the material contracts and documents referred to in this Red
Herring Prospectus and Prospectus will be filed with the RoC at the office of the Registrar of Companies located at “E” Wing,
2
nd
Floor, Kendriya Sadana, Koramangala, Bengaluru 560 034, Karnataka, India.
Inter-se allocation of Responsibilities
The following table sets forth the inter-se allocation of responsibilities for various activities among the BRLMs for the Offer:
S. No.
Activities
Responsibility
Coordinator
1.
Capital structuring with the relative components and formalities such as
type of instruments, allocation between primary and secondary, etc.
Edelweiss and JM
Financial
Edelweiss
2.
Pre-Issue due diligence of the Company’s operations/ management/
business plans/ legal etc. Drafting and design of the DRHP, RHP and
Prospectus. Ensure compliance with stipulated requirements and
completion of prescribed formalities with the Stock Exchanges, RoC and
SEBI including finalization of RHP, Prospectus and RoC filing of the
same, follow up and coordination till final approval from all regulatory
authorities
Edelweiss and JM
Financial
Edelweiss
3.
Drafting and approval of statutory advertisements
Edelweiss and JM
Financial
Edelweiss
4.
Drafting and approval of other publicity material including non-statutory
advertisement, corporate advertisement, brochure, etc. and filing of
media compliance report with SEBI
Edelweiss and JM
Financial
JM Financial
5.
Appointment of all other intermediaries (e.g. Registrar(s), Printer(s) and
Banker to the Offer, Advertising agency etc.) including coordinating all
agreements to be entered with such parties
Edelweiss and JM
Financial
Edelweiss
6.
International Institutional Marketing of the Issue, which will cover, inter
alia:
• International Institutional Marketing strategy
• Finalising the list for division of investors for meetings and
• Finalizing international road show and investor meeting schedules
Edelweiss and JM
Financial
Edelweiss
7.
Preparation of road show presentation and FAQs
Edelweiss and JM
Financial
Edelweiss
8.
Domestic Institutional Marketing of the Issue, which will cover, inter
alia:
• Finalising the list for division of investors for meetings
• Finalizing domestic road show schedules and investor meeting
schedules
Edelweiss and JM
Financial
JM Financial
9.
Non-institutional marketing of the Issue which will cover, inter alia,
formulating marketing strategies for Non-institutional Investors
Edelweiss and JM
Financial
JM Financial
10.
Retail Marketing of the Issue, which will cover, inter alia,
• Formulating marketing strategies, preparation of publicity budget
• Finalizing Media and PR strategy
• Finalizing centres for holding conferences for press and brokers etc.
• Finalizing collection centres; and
• Follow-up on distribution of publicity and Issue material including
form, prospectus and deciding on the quantum of the Issue material
Edelweiss and JM
Financial
Edelweiss
11.
Managing the book and finalization of pricing in consultation with the
Company and the Selling Shareholders
Edelweiss and JM
Financial
JM Financial
12.
Coordination with Stock-Exchanges for book building software, bidding
terminals, mock trading and intimation to stock exchanges for anchor
portion etc. and deposit of 1% security deposit
Edelweiss and JM
Financial
JM Financial
13.
Post-issue activities, management of escrow accounts, finalization of the
basis of allotment based on technical rejections, Basis Advertisement,
listing of instruments, demat credit and refunds/ unblocking of funds,
payment of the applicable STT, coordination with SEBI and Stock
Exchanges for refund of 1% security deposit and coordination with
various agencies connected with the post-issue activity such as registrars
to the issue, bankers to the issue, SCSBs, including responsibility for
execution of underwriting arrangements, as applicable
Edelweiss and JM
Financial
JM Financial
Book Building Process
Book Building Process, in the context of the Offer, refers to the process of collection of Bids from investors on the basis of this
Red Herring Prospectus, the Bid cum Application Forms and the Revision Forms within the Price Band. The Price Band and
minimum bid lot size will be decided by our Company and the Selling Shareholders, in consultation with the BRLMs, and
advertised in all editions of Financial Express, all editions of Jansatta and Bengaluru edition of Vishwavani, which are widely
circulated English, Hindi and Kannada daily newspapers respectively (Kannada being the regional language of Karnataka where
our Registered Office is located) at least two Working Days prior to the Bid/ Offer Opening Date, in accordance with SEBI
ICDR Regulations, and shall be made available to the Stock Exchanges for the purpose of uploading on their respective
58
websites. The Offer Price shall be determined by our Company and the Selling Shareholders, in consultation with the BRLMs
after the Bid/ Offer Closing Date. The principal parties involved in the Book Building Process are:
(1) our Company;
(2) the Selling Shareholders;
(3) the BRLMs;
(4) the Syndicate Members;
(5) the Registrar to the Offer;
(6) the Escrow Collection Banks;
(7) the SCSBs;
(8) the CDPs;
(9) the RTAs; and
(10) the Registered Brokers.
All Bidders (other than Anchor Investors) shall mandatorily participate in the Offer only through the ASBA process.by
providing the details of their respective bank accounts in which the corresponding Bid Amount will be blocked by the
SCSBs. In addition to this, RIBs may participate through the ASBA process by either (a) providing the details of their
respective ASBA Account in which the corresponding Bid Amount will be blocked by the SCSBs; or (b) through the
UPI Mechanism. Anchor Investors are not permitted to participate in the Offer through the ASBA process
In accordance with the SEBI ICDR Regulations, QIBs (other than Anchor Investors) Bidding in the QIB Portion and
Non-Institutional Bidders Bidding in the Non-Institutional Portion are not allowed to withdraw or lower the size of their
Bids (in terms of the quantity of the Equity Shares or the Bid Amount) at any stage. Retail Individual Bidders can revise
their Bids during the Bid/ Offer Period and withdraw their Bids until the Bid/ Offer Closing Date. Further, Anchor
Investors cannot withdraw their Bids after the Anchor Investor Bidding Date. Allocation to the Anchor Investors will
be on a discretionary basis. For further details, see “Offer Structure” and “Offer Procedure” on pages 281 and 285,
respectively.
Our Company will comply with the SEBI ICDR Regulations, and any other directions issued by SEBI in relation to this Offer.
In this regard, our Company and the Selling Shareholders have appointed the BRLMs to manage this Offer and procure Bids
for this Offer.
The Book Building Process is in accordance with guidelines, rules, regulations prescribed by SEBI. Bidders are advised to
make their own judgment about an investment through this process prior to submitting a Bid.
Bidders should note the Offer is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges,
which our Company shall apply for after Allotment; and (ii) the final approval of the RoC after the Prospectus is registered
with the RoC.
For further details on method and procedure for Bidding, see “Offer Structure” and “Offer Procedure” on page 281 and 285 of
this Red Herring Prospectus, respectively.
Underwriting Agreement
After the determination of the Offer Price and allocation of Equity Shares, but prior to the filing of the Prospectus with the RoC,
our Company and the Selling Shareholders intend to enter into an Underwriting Agreement with the Underwriters for the Equity
Shares proposed to be offered through the Offer. The underwriting shall be to the extent of the Bids uploaded, subject to
Regulation 40 of the SEBI ICDR Regulations. The Underwriting Agreement is dated [●]. Pursuant to the terms of the
Underwriting Agreement, the obligations of the Underwriters will be several and will be subject to certain conditions specified
therein.
The Underwriters have indicated their intention to underwrite the following number of Equity Shares:
(This portion has been intentionally left blank and will be completed before filing the Prospectus with the RoC.).
Name, address, telephone number and e-mail address of the
Underwriters
Indicative Number of Equity
Shares to be Underwritten
Amount Underwritten
(₹ in million)
[●]
[●]
[●]
59
The above-mentioned is indicative underwriting and will be finalised after determination of Offer Price and Basis of Allotment
and subject to the provisions of the SEBI ICDR Regulations.
In the opinion of our Board (based on representations made by the Underwriters), the resources of the Underwriters are sufficient
to enable them to discharge their respective underwriting obligations in full. The Underwriters are registered with SEBI under
Section 12(1) of the SEBI Act or registered as brokers with the Stock Exchange(s). Our Board of Directors/ IPO Committee, at
its meeting held on [●], has accepted and entered into the Underwriting Agreement mentioned above on behalf of our Company.
Allocation among the Underwriters may not necessarily be in proportion to their underwriting commitment.
Notwithstanding the above table, the Underwriters shall be severally responsible for ensuring payment with respect to the Equity
Shares allocated to investors procured by them. In the event of any default in payment, the respective Underwriter, in addition
to other obligations defined in the Underwriting Agreement, will also be required to procure purchases for or purchase of the
Equity Shares to the extent of the defaulted amount in accordance with the Underwriting Agreement. The Underwriting
Agreement has not been executed as on the date of this Red Herring Prospectus and will be executed after the determination of
the Offer Price and allocation of Equity Shares, but prior to the filing of the Prospectus with the RoC.
The extent of underwriting obligations and the Bids to be underwritten in the Offer shall be as per the Underwriting Agreement
60
CAPITAL STRUCTURE
The share capital of our Company, as of the date of this Red Herring Prospectus is set forth below:
(In ₹, except share data)
Aggregate value at Face
Value
Aggregate value at Offer
Price*
A
AUTHORIZED SHARE CAPITAL
(1)
40,000,005 Equity Shares
400,000,050
-
B
ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL BEFORE THE OFFER POST THE CONVERSION OF CCDs
AND RECLASSICATION OF CLASS A EQUITY SHARES
(4)
30,080,631 Equity Shares
300,806,310
C
PRESENT OFFER IN TERMS OF THIS RED HERRING PROSPECTUS
Offer of up to [●] Equity Shares
[●]
[●]
of which
Fresh Issue of up to [●] Equity Shares
(2)
[●]
950.00 million
Offer for Sale of up to 8,250,000 Equity Shares
(3)
82,500,000
[●]
D
ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL AFTER THE OFFER
[●] Equity Shares (assuming full subscription in the Offer)
[●]
E
SECURITIES PREMIUM ACCOUNT
Before the Offer
(4)
2,901.06 million
After the Offer
*
[●]
* To be finalized upon determination of the Offer Price.
(1) For details in relation to the changes in the authorised share capital of our Company, see “History and Certain Corporate Matters – Amendments to our
Memorandum of Association” on page 147.
(2) The Fresh Issue has been authorized by a resolution of our Board of Directors dated January 23, 2020, and a special resolution of our Shareholders
passed at their EGM dated January 24, 2020. Subsequently, our Board of Directors has pursuant to a resolution dated January 8, 2021 approved the
reduction of the Fresh Issue size from ₹1,450.00 million to up to ₹950.00 million.
(3) The Selling Shareholders, severally and not jointly, have authorised their respective participation in the Offer for Sale. For details of authorisations
received for the Offer for Sale, see “The Offer
”
on page 47.
(4) As disclosed in the Draft Red Herring Propspectus, (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI were to be converted to
2,251,484 and 2,280,886 Equity Shares respectively; and (ii) 1,197,770 Series B CCDs held by SCI-GIH were to be converted to 1,197,770 Equity Shares,
prior to the filing of the Red Herring Prospectus with the RoC, in accordance with Regulation 5(2) of the SEBI ICDR Regulations. Subsequently, based
on the conversion notices each dated January 8, 2021 provided each by SCI and SCI-GIH, in accordance with the terms of the CCDs, and after taking
into account the adjustments as provided for in the Series A Investment Agreement and Series B Investment Agreement, each, as amended: (i) 2,610,898
Series A CCDs and 2,280,886 Series B CCDs held by SCI have been converted into 2,412,235 and 1,879,122 Equity Shares, respectively; and (ii)
1,197,770 Series B CCDs held by SCI-GIH have been converted to 986,790 Equity Shares. The Equity Shares resulting from the conversions have been
allotted to SCI and SCI-GIH, as applicable, pursuant to a resolution of our Board of Directors dated January 8, 2021. Additionally, 5 Class A Equity
Shares held by SCI and SCI-GIH, each, have been reclassified to 5 Equity Shares, each, pursuant to a resolution of our Board of Directors dated January
8, 2021 and a special resolution passed by our Shareholders in their extraordinary general meeting dated January 9, 2021. Further, the Investor Selling
Shareholders severally and not jointly confirm that the Equity Shares allotted to them pursuant to the conversion of the CCDs and reclassification of
Class A Equity Shares are eligible for being offered for sale in the Offer as required by Regulation 5(2) of the SEBI ICDR Regulations.
Notes to the capital structure
1. Share capital history of our Company
(a) Equity share capital
The history of the Equity share capital of our Company is provided in the following table:
Date of
allotment
No. of
Equity
Shares
allotted
Face
value per
Equity
Share (₹)
Issue
price per
Equity
Share (₹)
Nature of
considera
tion
Reason/ Nature of
allotment
Cumulative
number of
Equity
Shares
Cumulative
paid-up
Equity Share
capital
(₹)
June 18, 1999
200
10
10
Cash
Subscription to the
MOA
(1)
200
2,000
December 27,
1999
69,800
10
10
Cash
Preferential
allotment
(2)
70,000
700,000
March 31, 2003
230,000
10
10
Cash
Preferential
allotment
(3)
300,000
3,000,000
March 31, 2004
100,000
10
100
Cash
Preferential
allotment
(4)
400,000
4,000,000
January 7, 2008
1,000,000
10
10
Cash
Preferential
allotment
(5)
1,400,000
14,000,000
April 11, 2008
100
10
10
Cash
Preferential
allotment
(6)
1,400,100
14,001,000
March 31, 2009
3,000,000
10
NA
NA
Bonus issue to the
shareholders as on
4,400,100
44,001,000
61
Date of
allotment
No. of
Equity
Shares
allotted
Face
value per
Equity
Share (₹)
Issue
price per
Equity
Share (₹)
Nature of
considera
tion
Reason/ Nature of
allotment
Cumulative
number of
Equity
Shares
Cumulative
paid-up
Equity Share
capital
(₹)
March 31, 2008
out of the reserves
of the Company
(7)
March 31, 2009
14,500,000
10
10
Cash
Preferential
allotment
(8)
18,900,100
189,001,000
September 23,
2018
4,733,516
10
-
-
Conversion of
CCDs
(9)
23,633,616
236,336,160
September 23,
2018
1,083,111
10
-
-
Conversion of
CCDs
(10)
24,716,727
247,167,270
January 8, 2021
2,412,235
10
-
-
Conversion of
CCDs
(11)
27,128,962
271,289,620
January 8, 2021
1,879,122
10
-
-
Conversion of
CCDs
(12)
29,008,084
290,080,840
January 8, 2021
986,790
10
-
-
Conversion of
CCDs
(13)
29,994,874
299,948,740
January 8, 2021
85,747
10
150
Cash
Allotment under
our Company’s
ESOP Plan
(14)
30,080,621
300,806,210
January 9, 2021
5
10
Reclassification of Class A Equity
Shares
(15)
30,080,626
300,806,260
January 9, 2021
5
10
Reclassification of Class A Equity
Shares
(16)
30,080,631
300,806,310
Total
30,080,631
(1) 100 Equity Shares allotted to Rajendra J. Gandhi, and 100 Equity Shares allotted to Satishchandra Karanth
(2) 34,900 Equity Shares allotted to Rajendra J. Gandhi, 19,900 Equity Shares allotted to Satishchandra Karanth, 10,000 Equity
Shares allotted to Nivedita S, and 5,000 Equity Shares allotted to Karmet Engineering Private Limited
(3) 182,500 Equity Shares allotted to Rajendra J. Gandhi and 47,500 Equity Shares allotted to Sunita Gandhi
(4) 100,000 Equity Shares allotted to IN Venkatesh Gowda
(5) 1,000,000 Equity Shares allotted to Rajendra J. Gandhi
(6) 100 Equity Shares allotted to SIDBI Trustee Company Limited A/c SME Growth Fund
(7) 2,823,200 Equity Shares allotted to Rajendra J. Gandhi and 176,800 shares allotted to Sunita Gandhi as bonus issue by
capitalisation of securities premium account and profit and loss account.
(8) 14,000,000 Equity Shares allotted to Rajendra J. Gandhi and 500,000 Equity Shares allotted to Atul Jindal
(9) 4,733,516 Equity Shares allotted to SCI on conversion of 5,489,147 Series A CCDs
(10) 1,083,111 Equity Shares allotted to SCI-GIH on conversion of 1,083,111 Series B CCDs
(11) 2,412,235 Equity Shares allotted to SCI on conversion of 2,610,898 Series A CCDs
(12) 1,879,122 Equity Shares allotted to SCI on conversion of 2,280,886 Series B CCDs
(13) 986,790 Equity Shares allotted to SCI-GIH on conversion of 1,197,770 Series B CCDs
(14) 85,747 Equity Shares allotted to 26 employees of our Company on exercise of the vested stock options held by them
(15) 5 Equity Shares allotted to SCI on reclassification of 5 Class A Equity Shares
(16) 5 Equity Shares allotted to SCI-GIH on reclassification of 5 Class A Equity Shares
(b) Class A Equity Share capital
The following is the history of the Class A Equity Share capital of our Company:
Date of
allotment
No. of Class
A Equity
Shares
allotted
Face value
per Class A
Equity
Shares (₹)
Issue price
per Class
A Equity
Shares (₹)
Nature of
consideration
Nature of
allotment
Cumulative
number of
Class A
Equity
Shares
Cumulative
paid-up
Class A
Equity
Share
capital
(₹)
March 23,
2010
5
10
61.73
Cash
Preferential
allotment
(1)
5
50
September
30, 2013
5
10
219.21
Cash
Preferential
allotment
(2)
10
100
(1) 5 Class A Equity Shares, were allotted to SCI. Subsequently, these Class A Equity Shares have been reclassified to 5 ordinary
Equity Shares pursuant to a resolution of our Board of Directors dated January 8, 2021 and a special resolution passed by our
Shareholders in their extraordinary general meeting dated January 9, 2021
(2) 5 Class A Equity Shares, were allotted to SCI-GIH. Subsequently, these Class A Equity Shares have been reclassified to 5 ordinary
Equity Shares pursuant to a resolution of our Board of Directors dated January 8, 2021 and a special resolution passed by our
Shareholders in their extraordinary general meeting dated January 9, 2021
As on the date of this Red Herring Prospectus, there are no outstanding Class A Equity Shares. .
(c) Compulsorily Convertible Debentures
The following is the history of the Series A and Series B CCDs of our Company:
62
Date of allotment
of CCDs
Name of the
allottee
Nature/reason
for allotment
Number of CCDs
allotted
(1)
Issue price (₹)
Conversion
price^ (₹)
SERIES A
(1)
March 23, 2010
SCI
Preferential
allotment
8,100,045
61.73
69.97
SERIES B
(2)
September 30,
2013
SCI
Preferential
allotment
1,140,443
219.21
266.08
September 30,
2013
SCI-GIH
Preferential
allotment
1,140,438
219.21
221.17
February 21, 2014
SCI
Preferential
allotment
1,140,443
219.21
266.08
February 21, 2014
SCI-GIH
Preferential
allotment
1,140,443
219.21
266.08
^Based on the conversion notices each dated January 8, 2021 provided each by SCI and SCI-GIH, in accordance with the terms of the
CCDs, and after taking into account the adjustments as provided for in the Series A Investment Agreement and Series B Investment
Agreement, the average conversion price works out to INR 69.97 for the Series A CCDs and INR 253.23 for the Series B CCDs
(1) Subsequently, 5,489,147 and 2,610,898 Series A CCDs held by SCI have been converted to 4,733,516 and 2,412,235 Equity Shares,
respectively, which were alloted on September 23, 2018 and January 8, 2021, respectively.
(2) Subsequently, 1,083,111 and 1,197,770 Series B CCDs held by SCI-GIH have been converted to 1,083,111 and 986,790 Equity
Shares, respectively, which were allotted on September 23, 2018 and January 8, 2021, respectively. Further, 2,280,886 Series B
CCDs held by SCI were converted to 1,879,122 Equity Shares which were allotted on January 8, 2021.
As on the date of this Red Herring Prospectus, there are no outstanding CCDs.
2. Issue of Equity Shares for consideration other than cash or bonus or out of revaluation reserves
(a) Except as disclosed below, our Company has not issued any Equity Shares for consideration other than cash
or by way of bonus issuance as of the date of this Red Herring Prospectus
S. No.
Name of the
Allottee
Date of
Allotment
No. of Equity
Shares
Issue
Price (₹)
Any benefits
accrued to our
Company
Reason
1.
Rajendra Gandhi
March 31,
2009
2,823,200
NA
-
Bonus issue
2.
Sunita Rajendra
Gandhi
March 31,
2009
176,800
NA
-
Bonus issue
3. History of the equity share capital held by our Promoters
As on the date of this Red Herring Prospectus, our Promoters hold 18,443,919 Equity Shares constituting 61.31% of
the issued, subscribed and paid-up Equity Share capital of our Company.
(a) Build-up of our Promoters shareholding in our Company:
Date of
allotment/
transfer
Number of
Equity
Shares
Face
Value
per
Equity
Share
(₹)
Issue/
Acquisition /
Transfer
price per
Equity
Share (₹)
Nature of
Consideration
Nature of
Transaction
Percentage
(%) of pre-
Offer
Equity
Share
Capital
Percentage
(%) of post-
Offer
Equity
Share
Capital
Rajendra Gandhi
June 18, 1999
100
10
10
Cash
Subscription to
the MOA
0.00
[●]
December 27,
1999
34,900
10
10
Cash
Preferential
allotment
0.12
[●]
March 31, 2003
182,500
10
10
Cash
Preferential
allotment
0.61
[●]
March 26, 2006
100,000
10
10
Cash
Transfer of
Equity Shares
from Venkatesh
Gowda
0.33
[●]
January 7, 2008
1,000,000
10
10
Cash
Preferential
allotment
3.32
[●]
March 31, 2009
14,000,000
10
10
Cash
Preferential
allotment
46.54
[●]
March 31, 2009
2,823,200
10
10
NA
Bonus Issuance
9.39
[●]
August 1, 2011
500,000
10
10
Cash
Transfer of
Equity Shares
from Atul Jain
1.66
[●]
63
Date of
allotment/
transfer
Number of
Equity
Shares
Face
Value
per
Equity
Share
(₹)
Issue/
Acquisition /
Transfer
price per
Equity
Share (₹)
Nature of
Consideration
Nature of
Transaction
Percentage
(%) of pre-
Offer
Equity
Share
Capital
Percentage
(%) of post-
Offer
Equity
Share
Capital
November 11,
2011
(1)
10
10
Cash
Transfer of
Equity Shares
to Vimal
Kumar Jain
(0.00)
[●]
June 8, 2012
100
10
54.95
Cash
Transfer of
Equity Shares
from SIDBI
Trustee
Company
Limited A/c
SME Growth
Fund
0.00
[●]
September 30,
2013
(228,089)
10
219.21
Cash
Transfer of
Equity Shares
to SCI*
(0.76)
[●]
September 30,
2013
(228,089)
10
219.21
Cash
Transfer of
Equity Shares
to SCI-GIH
**
(0.76)
[●]
December 16,
2013
1
10
10
Cash
Transfer of
Equity Shares
from Sripal
Kumar Jain
0.00
[●]
September 11,
2018
(1)
10
10
Cash
Transfer to
Neha Gandhi
(0.00)
[●]
September 21,
2018
(1)
10
10
Cash
Transfer to
Senthil Kumar
R.
(0.00)
[●]
September 21,
2018
(1)
10
10
Cash
Transfer to
Venkitesh N
(0.00)
[●]
Sub Total (A)
18,184,619
60.45
[●]
Sunita Rajendra Gandhi
November 10,
2000
20,000
10
10
Cash
Transfer of
Equity Shares
from
Satishchandra
Karanath
0.07
[●]
November 10,
2000
10,000
10
10
Cash
Transfer of
Equity Shares
from Nivedita
S.
0.03
[●]
November 10,
2000
5,000
10
10
Cash
Transfer of
Equity Shares
from M/S
Karmet
Engineering
0.02
[●]
March 31, 2003
47,500
10
10
Cash
Preferential
allotment
0.16
[●]
March 31, 2009
176,800
10
10
NA
Bonus Issuance
0.59
[●]
Sub Total (B)
259,300
0.86
[●]
Total (A)+(B)
18,443,919
61.31
[●]
* SCI-GIH is a company incorporated in Republic of Mauritius on July 12, 2006 vide registration no. 64032 C1/ GBL and holds a
Category 1 Global Business Licence issued by the Financial Services Commission, Republic of Mauritius and has its registered office
at 5
th
Floor, Ebene Esplanade, 24 Bank Street, Cybercity, Ebene, Mauritius – 72201. It has obtained SEBI certificate vide Registration
no. IN/ FVCI/06-07/54 dated October 16, 2006 for making foreign venture capital investments
#
**
SCI is a company incorporated in Republic of Mauritius on March 24, 2009 vide registration no. 087162 C1/ GBL and holding a
Category 1 Global Business Licence issued by the Financial Services Commission, Republic of Mauritius, and has its registered office
at Sanne House, Twenty Eight, Bank Street, Cybercity, Ebene, Mauritius – 72201. SCI generally invests under Foreign Direct Investment
route and has not been issued any license by SEBI
All the Equity Shares held by our Promoters were fully paid-up on the respective dates of acquisition of such
Equity Shares. None of the Equity Shares held by our Promoters are pledged.
(b) Build-up of our Selling Shareholders’ Shareholding in our Company
64
Date of
allotment/
transfer
Number of
Equity
Shares
Face
Value
per
Equity
Share
(₹)
Issue/
Acquisition /
Transfer
price per
Equity
Share (₹)
Nature of
Consideration
Nature of
Transaction
Percentage
(%) of pre-
Offer
Equity
Share
Capital
Percentage
(%) of post-
Offer
Equity
Share
Capital
SCI
March 23,
2010
5 Class A
Equity
Shares
10
61.73
Cash
Preferential
allotment
0.00
[●]
September 30,
2013
2,28,089
10
219.21
Cash
Transfer of
shares
0.76
[●]
September 23,
2018
4,733,516
10
-
-
Conversion of
Series A CCDs
15.74
[●]
January 8, 2021
2,412,235
10
-
-
Conversion of
Series A CCDs
8.02
[●]
January 8, 2021
1,879,122
10
-
-
Conversion of
Series B CCDs
6.25
[●]
January 9, 2021
5
10
Reclassification of Class A equity shares
0.00
[●]
SCI-GIH
September 30
2013
5 Class A
Equity
Shares
10
219.21
Cash
Preferential
allotment
0.00
[●]
September 30
2013
2,28,089
10
219.21
Cash
Transfer of
shares
0.76
[●]
September 23,
2018
1,083,111
10
-
-
Conversion of
Series B CCDs
3.60
[●]
January 8, 2021
986,790
10
-
-
Conversion of
Series B CCDs
3.28
[●]
January 9, 2021
5
10
Reclassification of Class A equity shares
0.00
[●]
Further, there are no contractual or legal restrictions on the Selling Shareholders in disposing of/offering the
shares of our Company.
(c) Details of Promoters’ contribution and lock-in:
Pursuant to Regulations 14 and 16 of the SEBI ICDR Regulations, an aggregate of not less than 20% of the
fully diluted post-Offer equity share capital of our Company held by our Promoters shall be considered as
minimum Promoters contribution and locked-in for a period of three years from the date of Allotment and
our Promoters shareholding in excess of 20% shall be locked in for a period of one year from the date of
Allotment.
The Equity Shares that are being locked-in for the computation of Promoters’ contribution are not and will
not be ineligible for computation of minimum Promoters contribution under Regulation 15 of the SEBI ICDR
Regulations. In this regard, our Company confirms that the Equity Shares being locked-in do not and shall
not consist of:
(i) Equity Shares acquired during the three years preceding the date of the Draft Red Herring Prospectus
(a) for consideration other than cash and revaluation of assets or capitalization of intangible assets;
or (b) resulting from a bonus issue by utilisation of revaluation reserves or unrealized profits of our
Company or from a bonus issue against Equity Shares which are ineligible for computation of
minimum Promoters’ contribution;
(ii) Equity Shares acquired by our Promoters during the one year preceding the date of the Draft Red
Herring Prospectus, at a price lower than the price at which Equity Shares are being offered to the
public in the Offer.
Further, we confirm that our Company has not been formed by conversion of one or more partnership firms,
and hence no Equity Shares have been allotted to our Promoters in the one year immediately preceding the
date of the Draft Red Herring Prospectus pursuant to conversion from a partnership firm.
The lock-in of the Promoters’ contribution would be created as per applicable laws and procedures and details
of the same shall also be provided to the Stock Exchanges before the listing of the Equity Shares.
In this regard, our Promoters specifically confirm that the Equity Shares held by our Promoters that are offered
as part of the minimum Promoters’ contribution are not subject to any pledge or any other encumbrance and
that all the Equity Shares held by our Promoters are in dematerialized form. Further, the entire shareholding
of our Promoters is held in dematerialised form as on the date of filing this Red Herring Prospectus.
65
The details of the Equity Shares held by our Promoters and locked-in as minimum Promoter’s contribution
are given below:
Name of the
Promoter
No. of
Equity
Shares
Date of
allotment/
transfer of
Equity Shares
and when
made fully
paid-up
Nature of
Transaction
Face
Value per
Equity
Share (₹)
Offer/
Acquisition
Price per
Equity
Share (₹)
Percentage
(%) to Pre-
Offer Paid-
up Capital
Percentage
(%) to Post-
Offer Paid-
up Capital
[●]
[●]
[●]
[●]
[●]
[●]
[●]
[●]
TOTAL
Our Promoters have given consent to include such number of Equity Shares held by them as may constitute
20% of the fully diluted post-Offer equity share capital of our Company as minimum Promoters’ contribution.
Our Promoters have agreed not to sell, transfer, charge, pledge or otherwise encumber in any manner the
Equity Shares forming part of the minimum Promoters’ contribution from the date of filing the Draft Red
Herring Prospectus, until the expiry of the lock-in period specified above, or for such other time as required
under SEBI ICDR Regulations, except as may be permitted, in accordance with the SEBI ICDR Regulations.
(d) Details of share capital locked-in for one year:
In terms of the Regulation 17 of the SEBI ICDR Regulations, in addition to the Equity Shares proposed to be
locked-in as part of our minimum Promoters’ contribution as stated above, the entire pre-Offer equity share
capital of our Company will be locked-in for a period of one year from the date of Allotment except the
Offered Shares. In terms of Regulation 17(c) of the SEBI ICDR Regulations, Equity Shares held by SCI-GIH
as on the date of this Red Herring Prospectus, shall not be subject to lock-in for one year as is applicable to
other shareholders of our Company, since SCI-GIH is a FVCI. Any unsubscribed portion of the Offered
Shares would also be locked in as required under the SEBI ICDR Regulations. The Equity Shares, if any,
allotted to eligible employees (who will continue to be employees of the Company as on the date of the
Allotment) under the ESOP Plan shall not be subject to lock-in.
(e) Other requirements in respect of lock-in:
Pursuant to Regulation 21 of the SEBI ICDR Regulations, Equity Shares held by our Promoter(s)
and locked-in, as mentioned above, may be pledged as collateral security for a loan granted by a scheduled
commercial bank, a public financial institution, NBFC-SI or a housing finance company, subject to the
following:
(i) With respect to the Equity Shares locked in for one year from the date of Allotment, such pledge of
the Equity Shares must be one of the terms of the sanction of the loan; and
(ii) with respect to the Equity Shares locked in as Promoter’s Contribution for three years from the date
of Allotment, the loan must have been granted to our Company for the purpose of financing one or
more of the objects of the Offer, which is not applicable in the context of this Offer.
However, the relevant lock in period shall continue post the invocation of the pledge referenced above,
and the relevant transferee shall not be eligible to transfer the Equity Shares till the relevant lock in
period has expired in terms of the SEBI ICDR Regulations.
Further, pursuant to Regulation 22 of the SEBI ICDR Regulations, Equity Shares held by our Promoters,
which are locked-in in accordance with Regulation 16 of the SEBI ICDR Regulations, may be transferred to
any member of the Promoter Group, or to a new promoter or persons in control of our Company subject to
continuation of the lock-in in the hands of the transferee for the remaining period and compliance with the
Takeover Regulations, as applicable and such transferee shall not be eligible to transfer them till the lock-in
period stipulated in SEBI ICDR Regulations has expired.
(f) Lock-in of Equity Shares Allotted to Anchor Investors:
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.
4. Details of the Equity Share capital held by the Promoters and members of the Promoter Group in our Company
As of the date of this Red Herring Prospectus, the Promoter and members of the Promoter Group hold 18,443,920
Equity Shares, constituting 61.31% of the issued, subscribed and paid-up Equity Share capital of our Company in the
following manner:
66
Name of the Shareholder
Total Equity Shares
Percentage (%) of Pre-Offer
Capital
Percentage (%) of Post-Offer
Capital
Promoters
Rajendra Gandhi
18,184,619
60.45
[●]
Sunita Rajendra Gandhi
259,300
0.86
[●]
Total Holding of the Promoters
(A)
18,443,919
61.31
[●]
Promoter Group
Neha Gandhi
1
Negligible
[●]
Total Holding of the Promoter
Group (Other than Promoters)
(B)
1
Negligible
[●]
Total Holding of Promoter and
Promoter Group (A+B)
18,443,920
61.31
[●]
67
5. Shareholding Pattern of our Company
The table below presents the pre-Offer shareholding pattern of our Company as on date of this Red Herring Prospectus:
Catego
ry
(I)
Category
of
Sharehol
der
(II)
Number
of
Sharehold
ers
(III)
No. of fully paid
up Equity
Shares held
(IV)
No. of
Partly
paid-
up
Equit
y
Share
s held
(V)
No. of
shares
underl
ying
Deposi
tory
Receip
ts
(VI)
Total nos.
shares held
(VII) =
(IV)+(V)+ (VI)
Shareholdi
ng as a %
of total no.
of shares
(calculated
as per
SCRR,
1957)
(VIII)
As a % of
(A+B+C2)
Number of Voting Rights held in each
class of securities
(IX)
No. of
Shares
Underlyi
ng
Outstan
ding
converti
ble
securities
(includin
g
warrants
)
(X)
Sharehol
ding , as
a %
assumin
g full
conversi
on of
converti
ble
securities
(as a
percenta
ge of
diluted
share
capital)
(XI)=
(VII)+(X
)
As a %
of
(A+B+C
2)
Number of
Locked in
shares
(XII)
Number
of Shares
pledged
or
otherwise
encumbe
red
(XIII)
Number of
Equity
Shares held
in
demateriali
zed form
(XIV)
No of Voting Rights
Total
as a %
of
(A+B+
C)
No.
(a)
As a
% of
total
Share
s held
(b)
N
o.
(a
)
As a
% of
total
Share
s held
(b)
Class:
Equity
Shares
Class:
Others
Total
(A)
Promoter
and
Promoter
Group
3
18,443,920
-
-
18,443,920
61.31%
18,443,92
0
-
18,443,92
0
61.31%
-
-
-
-
-
-
18,443,920
(B)
Public
30
11,636,711
-
-
11,636,711
38.68%
11,636,71
1
-
11,636,71
1
38.68%
-
-
-
-
-
-
11,636,711
(C)
Non
Promoter
- Non
Public
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(C1)
Shares
underlyin
g DRs
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(C2)
Shares
held by
the
Employe
e Trusts
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
33
30,080,631
-
-
30,080,631
100.00
30,080,63
1
-
30,080,63
1
100,00
-
-
30,080,631
68
6. Details of Equity Shareholding of the major Shareholders of our Company
(a) The Shareholders holding 1% or more of the paid-up Equity Share capital of the Company, as on as on date
of this Red Herring Prospectus are set forth in the table below:
S.
No.
Name of the Shareholder
No. of Equity Shares (pre-
Offer)
Percentage of shareholding (%) (pre-
Offer)
1.
Rajendra Gandhi
18,184,619
60.45
2.
SCI*
9,252,967
30.76
3.
SCI-GIH*
2,297,995
7.63
Total
29,735,581
98.84
* As disclosed in the Draft Red Herring Prospectus, (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI were to be
converted to 2,251,484 and 2,280,886 Equity Shares respectively; and (ii) 1,197,770 Series B CCDs held by SCI-GIH were to be
converted to 1,197,770 Equity Shares, prior to the filing of the Red Herring Prospectus with the RoC, in accordance with Regulation
5(2) of the SEBI ICDR Regulations. Subsequently, based on the conversion notices each dated January 8, 2021 provided each by SCI
and SCI-GIH, in accordance with the terms of the CCDs, and after taking into account the adjustments as provided for in the Series A
Investment Agreement and Series B Investment Agreement, each, as amended: (i) 2,610,898 Series A CCDs and 2,280,886 Series B
CCDs held by SCI have been converted into 2,412,235 and 1,879,122 Equity Shares, respectively; and (ii) 1,197,770 Series B CCDs
held by SCI-GIH have been converted to 986,790 Equity Shares. The Equity Shares resulting from the conversions have been allotted
to SCI and SCI-GIH, as applicable, pursuant to a resolution of our Board of Directors dated January 8, 2021. Additionally, 5 Class A
Equity Shares held by SCI and SCI-GIH, each, have been reclassified to 5 Equity Shares, each, pursuant to a resolution of our Board
of Directors dated January 8, 2021 and a special resolution passed by our Shareholders in their extraordinary general meeting dated
January 9, 2021.
(b) The Shareholders holding 1% or more of the paid-up Equity Share capital of the Company, as of 10 days
prior to the date of this Red Herring Prospectus are set forth in the table below:
S.
No.
Name of the Shareholder
No. of Equity Shares (pre-
Offer)
Percentage of shareholding (%) (pre-
Offer)
1.
Rajendra Gandhi
18,184,619
60.45
2.
SCI*
9,252,967
30.76
3.
SCI-GIH*
2,297,995
7.63
Total
29,735,581
98.84
* As disclosed in the Draft Red Herring Propspectus, (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI were to
be converted to 2,251,484 and 2,280,886 Equity Shares respectively; and (ii) 1,197,770 Series B CCDs held by SCI-GIH were to be
converted to 1,197,770 Equity Shares, prior to the filing of the Red Herring Prospectus with the RoC, in accordance with Regulation
5(2) of the SEBI ICDR Regulations. Subsequently, based on the conversion notices each dated January 8, 2021 provided each by SCI
and SCI-GIH, in accordance with the terms of the CCDs, and after taking into account the adjustments as provided for in the Series A
Investment Agreement and Series B Investment Agreement, each, as amended: (i) 2,610,898 Series A CCDs and 2,280,886 Series B
CCDs held by SCI have been converted into 2,412,235 and 1,879,122 Equity Shares, respectively; and (ii) 1,197,770 Series B CCDs
held by SCI-GIH have been converted to 986,790 Equity Shares. The Equity Shares resulting from the conversions have been allotted to
SCI and SCI-GIH, as applicable, pursuant to a resolution of our Board of Directors dated January 8, 2021. Additionally, 5 Class A
Equity Shares held by SCI and SCI-GIH, each, have been reclassified to 5 Equity Shares, each, pursuant to a resolution of our Board of
Directors dated January 8, 2021 and a special resolution passed by our Shareholders in their extraordinary general meeting dated
January 9, 2021.
(c) The Shareholders holding 1% or more of the paid-up Equity Share capital of the Company, as of one year
prior to the date of this Red Herring Prospectus are set forth in the table below:
S.
No.
Name of the Shareholder
No. of Equity Shares (pre-
Offer)
Percentage of shareholding (%)
(pre-Offer)
1.
Rajendra Gandhi
18,184,619
59.73
2.
SCI
9,493,980
(1)
31.18
3.
SCI-GIH
2,508,975
(2)
8.24
Total
30,187,574
99.15
(1)
Including 2,251,484 and 2,280,886 Equity Shares, which were proposed to be allotted to SCI pursuant to conversion of 2,610,898
Series A CCDs and 2,280,886 Series B CCDs, respectively, which were held by SCI as of one year prior to the date of this Red Herring
Prospectus. Subsequently, based on a conversion notice dated January 8, 2021, in accordance with the terms of the CCDs, and after
taking into account the adjustments as provided for in the Series A Investment Agreement and Series B Investment Agreement, each, as
amended, the 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI have been converted into 2,412,235 and 1,879,122
Equity Shares, respectively.
(2)
Including 1,197,770 Equity Shares, which were proposed to be allotted to SCI-GIH pursuant to conversion of 1,197,770 Series B
CCDs which were held by SCI-GIH as of one year prior to the date of this Red Herring Prospectus. Subsequently, based on a conversion
notice dated January 8, 2021, in accordance with the terms of the CCDs, and after taking into account the adjustments as provided for
in the Series A Investment Agreement and Series B Investment Agreement, each, as amended, 1,197,770 Series B CCDs held by SCI-GIH
have been converted to 986,790 Equity Shares.
(d) The Shareholders holding 1% or more of the paid-up Equity Share capital of the Company, as of two years
prior to the date of this Red Herring Prospectus are set forth in the table below:
S.
No.
Name of the Shareholder
No. of Equity Shares (pre-
Offer)
Percentage of shareholding (%) (pre-
Offer)
1.
Rajendra Gandhi
18,184,619
59.73
69
S.
No.
Name of the Shareholder
No. of Equity Shares (pre-
Offer)
Percentage of shareholding (%) (pre-
Offer)
2.
SCI
(1)
9,493,980
(1)
31.18
3.
SCI-GIH
(2)
2,508,975
(2)
8.24
Total
30,187,574
99.15
(1)
Including 2,251,484 and 2,280,886 Equity Shares, which were proposed to be allotted to SCI pursuant to conversion of 2,610,898
Series A CCDs and 2,280,886 Series B CCDs, respectively, which were held by SCI as of two year prior to the date of this Red Herring
Prospectus. Subsequently, based on a conversion notice dated January 8, 2021, in accordance with the terms of the CCDs, and after
taking into account the adjustments as provided for in the Series A Investment Agreement and Series B Investment Agreement, each, as
amended, the 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI have been converted into 2,412,235 and 1,879,122
Equity Shares, respectively.
(2)
Including 1,197,770 Equity Shares, which were proposed to be allotted to SCI-GIH pursuant to conversion of 1,197,770 Series B
CCDs which were held by SCI-GIH as of two year prior to the date of this Red Herring Prospectus. Subsequently, based on a conversion
notice dated January 8, 2021, in accordance with the terms of the CCDs, and after taking into account the adjustments as provided for
in the Series A Investment Agreement and Series B Investment Agreement, each, as amended, 1,197,770 Series B CCDs held by SCI-GIH
have been converted to 986,790 Equity Shares.
7. Details of Equity Shares and ESOPs held by our Directors and Key Managerial Personnel in our Company
Other than as set out below, none of our Directors or Key Managerial Personnel hold Equity Shares or ESOPs as of
the date of this Red Herring Prospectus.
Name
No. of Equity
Shares
Pre-Offer (%)
Number of
employee stock
options
outstanding
Post-Offer (%)
Rajendra Gandhi
18,184,619
59.73
Nil
[●]
Neha Gandhi
1
0.00
Nil
[●]
Rajiv Mehta Nitinbhai
30,081
0.10
270,725
[●]
Venkitesh N.
1
0.00
200,000
[●]
Senthil Kumar R.
1
0.00
32,658
[●]
Hemant Kumar Kothari
1,500
0.00
23,361
[●]
Shashidhar S.K.
Nil
Nil
50,000
[●]
8. As of the date of the filing of this Red Herring Prospectus, the total number of our Shareholders is 33.
9. Except as disclosed in this Red Herring Prospectus, our Company has not made any bonus issue of any kind or class
of securities since incorporation. For further details see, “- Share Capital History of our Company” on page 60.
10. Employee stock option plans
Our Company, pursuant to the resolution passed by our Board and our Shareholders’ resolutions dated July 10, 2018
and September 10, 2018 respectively adopted the ESOP Plan. Pursuant to the ESOP Plan, options to acquire Equity
Shares may be granted to eligible employees (as defined in the ESOP Plan).
Pursuant to the resolution passed by the Nomination and Remuneration Committee dated September 21, 2018, grant
of up to 813,000 options under the ESOP Plan was approved. As on date of this Red Herring Prospectus, 747,780
options have been granted to 51 eligible employees of the Company under the ESOP Plan. Further details are as
follows:
Particulars
Details
Options granted
747,780
Exercise Price on options
₹150 per employee stock options
Pricing Formula
DCF – Discounted Cash Flow Approach
Vesting period
Options granted under the ESOP Plan shall vest not earlier than one year and not later
than maximum vesting period of five years from the date of grants.
Options vested and not exercised
194,333
Options exercised
85,747
The total number of equity shares
arising as a result of options
85,747
Options forfeited/ lapsed
19,553
Variation of terms of options
NA
Money realized by exercise of options
(Rs.)
12,862,050
Total number of options in force as on
the date of this Red Herring Prospectus
662,033
Employee-wise detail of options
granted to
A. Key managerial personnel
Name of the key managerial
personnel
Number of
options granted
70
Particulars
Details
Venkitesh N
200,000
Senthil Kumar R
32,658
Hemant Kumar Kothari
23,261
Shashidhar Sk
50,000
Rajiv Mehta Nitinbhai
270,725
TOTAL
576,644
B. Any other employee who receive
a grant in any one year of options
amounting to 5% or more of the
options granted during the year
NA
C. Identified employees who were
granted options during any one
year equal to exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the Company at
the time of grant
NA
Fully diluted Earnings per Equity Share
– (face value ₹10 per Equity Share)
pursuant to issue of Equity Shares on
exercise of options calculated in
accordance with Ind AS 33 ‘Earnings
per Share’ as on March 31, 2020 and as
at September 30, 2020 on a consolidated
basis
As on 31
st
March 2020
#
: ₹1.28 per Equity Share
As on 30th Sept 2020
*#
: ₹11.64 per Equity Share
*
Not annualised
#
As per Restated Financial Statement as at September 30, 2020. EPS has been
calculated before giving effect to conversion of the CCDs into Equity Shares)
Lock-in
Nil
Difference, if any, between employee
compensation cost calculated using the
intrinsic value of stock options and the
employee compensation cost calculated
on the basis of fair value of stock options
and its impact on profits and on the
Earnings per Equity Share – (face value
₹10 per Equity Share)
(₹150-₹24.47) =₹125.53 per option
Impact on profit and Earnings per
Equity Share –(face value ₹10 per
Equity Share) of the last three years if
the accounting policies prescribed in
the SEBI ESOP Regulations had been
followed in respect of options granted
in the last three years
NA
Description of the pricing formula
method and significant assumptions
used during the year to estimate the fair
values of options, including weighted-
average information, namely, risk-free
interest rate, expected life, expected
volatility, expected dividends and the
price of the underlying share in market
at the time of grant of the option.
As per the DCF approach followed by the Chartered Accountant, the forecast cash
flows are discounted back to the present date, generating a present value for the cash
flow stream of the business. A terminal value at the end of the explicit forecast period
is then determined and that value is also discounted back to the valuation date to give
an over-all value for the business. Management estimates that both cash generated
units are expected to work for a foreseeable period without interruption both in terms
of raw material supply and continuous sales orders. The management has estimated
a five-year period to be reasonable for explicit forecasts. The forecast for all the
periods are made from 1st April and the financial year ends on 31st March every
year. All the periods are full periods of 12 months ending on 31st March.
Risk free rate-6.50%
Equity Risk Premium-8.46%
Beta-1.00
Cost of Equity-14.96%
Intention of Key Managerial Personnel
and whole time directors who are the
holders of Equity Shares allotted on
exercise of options granted to sell their
shares within three months after the date
of listing of Equity Shares pursuant to
the Offer
No
71
Particulars
Details
Intention to sell Equity Shares arising
out of the ESOP Scheme within three
months after the listing of Equity Shares
by directors, key managerial personnel
and employees having Equity Shares
arising out of the ESOP Scheme,
amounting to more than 1% of the issued
capital (excluding outstanding warrants
and conversions)
Not Applicable.
Note: The details above have been certified by Mishra & Co., Chartered Accountants pursuant to certificate dated January 15, 2021.
11. All Equity Shares issued pursuant to the Offer will be fully paid up at the time of Allotment and there are no partly
paid up Equity Shares as on the date of this Red Herring Prospectus.
12. An oversubscription to the extent of 1% of the net offer can be retained for the purposes of rounding off to the nearest
multiple of minimum Allotment lot while finalising the Basis of Allotment in accordance with SEBI ICDR
Regulations.
13. Our Company presently does not intend or propose or is under negotiation or consideration to alter its capital structure
for a period of six months from the Bid/ Offer Opening Date, by way of split or consolidation of the denomination of
Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly
or indirectly for Equity Shares) whether on a preferential basis or by way of issue of bonus shares or on a rights basis
or by way of further public issue of Equity Shares or qualified institutions placements or otherwise. However, if our
Company enters into acquisitions, joint ventures or other arrangements, our Company may, subject to necessary
approvals, consider raising additional capital to fund such activity or use Equity Shares as currency for acquisitions or
participation in such joint ventures. Provided, however, that the foregoing restrictions do not apply to: (a) the issuance
of any Equity Shares under this Offer; and (b) the issuance of Equity Shares to employees pursuant to the ESOP Plan.
14. Neither our Company nor our Directors have entered into any buy-back and/ or standby arrangements for purchase of
Equity Shares from any person. Further, the BRLMs have not made any buy-back and/ or standby arrangements for
purchase of Equity Shares from any person.
15. The BRLMs and their affiliates may engage in transactions with and perform services for our Company in the ordinary
course of business or may in the future engage in commercial banking and investment banking transactions with our
Company and/ or our Subsidiaries, for which they may in the future receive customary compensation.
16. No person connected with the Offer, including, but not limited to, the BRLMs, our Company, the Selling Shareholders,
Promoter, Promoter Group, the members of the Syndicate, our Company or the Directors shall offer any incentive,
whether direct or indirect, in any manner, whether in cash or kind or services or otherwise to any Bidder for making a
Bid.
17. Except for the outstanding options granted pursuant to the ESOP Plan, as of the date of this Red Herring Prospectus,
there are no outstanding convertible securities or any other right which would entitle any person any option to receive
Equity Shares.
18. Our Company shall ensure that transactions in the Equity Shares by the Promoters and the members of the Promoter
Group between the date of filing this Red Herring Prospectus with the RoC and the Bid/Offer Closing Date, if any,
shall be reported to the Stock Exchanges within 24 hours of such transaction.
19. Except for the Fresh Issue and any grants of options and allotment of Equity Shares that may be made under the ESOP
Plan, there will be no further issue of Equity Shares whether by way of issue of bonus shares, preferential allotment,
rights issue or in any other manner during the period commencing from the filing of this Red Herring Prospectus with
RoC until the Equity Shares have been listed on the Stock Exchanges or all application monies have been refunded,
as the case may be.
20. Except for the issuance of Equity Shares (i) upon conversion of 2,610,898 Series A CCDs and 2,280,886 Series B
CCDs held by SCI to 2,412,235 and 1,879,122 Equity Shares, respectively; (ii) upon conversion of 1,197,770
Series B CCDs held by SCI-GIH to 986,790 Equity Shares; (iii) reclassification of 5 Class A Equity Shares held
by SCI and SCI-GIH, each to 5 Equity Shares, each; and (iv) 85,747 Equity Shares allotted to the employees of
our Company on exercise of vested stock options, our Company has not issued any Equity Shares which may be at
a price lower than the Offer Price during a period of one year preceding the date of this Red Herring Prospectus. For
information, see “-- Share capital history of our Company – (a) Equity Share Capital” on page 60.
72
OBJECTS OF THE OFFER
The Offer comprises of the Fresh Issue and the Offer for Sale.
Offer for Sale
Each of the Selling Shareholders will be entitled to their respective portion of the proceeds from the Offer for Sale. Our
Company will not receive any proceeds from the Offer for Sale. All fees and expenses in relation to the Offer other than the
listing fees (which shall be borne by our Company) shall be shared amongst our Company and the Selling Shareholders in
proportion to the Equity Shares being offered or sold by them, respectively, pursuant to the Offer and in accordance with
applicable laws. However, for ease of operations, expenses of the Selling Shareholders may, at the outset, be borne by our
Company on behalf of the Selling Shareholders in relation to their respective portion of the Offer for Sale, and the Selling
Shareholders agree that they will reimburse our Company for all such expenses, upon successful completion of the Offer, in
accordance with applicable laws.
Objects of the Fresh Issue
Our Company proposes to utilise the Net Proceeds from the Fresh Issue towards funding the following objects:
1. Repayment/pre-payment, in full or part, of certain borrowings availed by our Company; and
2. General corporate purposes.
The main objects and objects incidental and ancillary to the main objects set out in the Memorandum of Association enable us
(i) to undertake our existing business activities (ii) to undertake the activities proposed to be funded from the Net Proceeds, as
well as the activities towards which the loans proposed to be repaid from the Net Proceeds were utilised. Further, our Company
expects that the listing of the Equity Shares will enhance our visibility and our brand image among our existing and potential
customers.
Net Proceeds
The details of the proceeds from the Fresh Issue are summarized in the following table:
Particulars
Estimated amount (₹ in million)
Gross proceeds of the Fresh Issue
(1)
950.00
(Less) Fresh Issue expenses
(1)
[●]
Net Proceeds of the Fresh Issue (the “Net Proceeds”)
[●]
(1) To be finalised upon determination of the Offer Price and updated in the Prospectus prior to filing with the RoC
Requirement of Funds, Schedule of Implementation and Utilisation of Net Proceeds
The Net Proceeds are proposed to be utilised in accordance with the details provided in the following table:
Particulars
Amount (₹ in million)
Repayment/ pre-payment, in full or part, of certain borrowings availed by our Company
760.00
General corporate purposes
(1)
[●]
Total
[●]
(1) To be finalised upon determination of the Offer Price and updated in the Prospectus prior to filing with the RoC. The amount to be utilised for general
corporate purposes shall not exceed 25% of the gross proceeds of the Fresh Issue
Utilisation of Net Proceeds
We propose to deploy the Net Proceeds for the aforesaid purposes in accordance with the estimated schedule of implementation
and deployment of funds set forth in the table below:
(₹ in million)
Particulars
Total estimated
amount/
expenditure
Estimated
Utilisation from
Net Proceeds
(1)
Estimated
Utilisation from
Internal Accruals
Estimated schedule of
deployment of Net Proceeds in
Fiscal 2021
Fiscal 2022
Repayment/pre-payment, in full or part,
of certain borrowings availed by our
Company
760.00
760.00
-
760.00
-
General corporate purposes
(1)
[●]
[●]
[●]
[●]
[●]
Total
[●]
[●]
[●]
[●]
[●]
(1)
To be finalised upon determination of the Offer Price and updated in the Prospectus prior to filing with the RoC
In the event of the estimated utilisation of the Net Proceeds in a scheduled Fiscal being not undertaken in its entirety, the
remaining Net Proceeds shall be utilised in subsequent Fiscals, as may be decided by our Company, in accordance with
applicable laws. Further, if the Net Proceeds are not completely utilised for the objects during the respective periods stated
above due to factors such as (i) economic and business conditions; (ii) increased competition; (iii) delay in procuring and
73
operationalizing assets; (iv) timely completion of the Offer; (v) market conditions outside the control of our Company; and (vi)
any other commercial considerations, the remaining Net Proceeds shall be utilised (in part or full) in subsequent periods as may
be determined by our Company, in accordance with applicable laws.
The deployment of funds indicated above is based on management estimates, current circumstances of our business and
prevailing market conditions, which are subject to change. The deployment of funds described herein has not been appraised
by any bank or financial institution or any other independent agency. See “Risk Factors - Our funding requirements and
proposed deployment of the Net Proceeds of the Offer have not been appraised by a bank or a financial institution and if there
are any delays or cost overruns, our business, financial condition and results of operations may be adversely affected.” on page
36. We may have to revise our funding requirements and deployment from time to time on account of various factors, such as
financial and market conditions, competition, business and strategy and interest/exchange rate fluctuations and other external
factors, which may not be within the control of our management. This may entail rescheduling the proposed utilisation of the
Net Proceeds and changing the allocation of funds from its planned allocation at the discretion of our management, subject to
compliance with applicable law. For further details, see “Risk Factors – Our funding requirements and proposed deployment
of the Net Proceeds of the Offer have not been appraised by a bank or a financial institution and if there are any delays or cost
overruns, our business, financial condition and results of operations may be adversely affected.” on page 36.
Subject to applicable laws, in the event of any increase in the actual utilisation of funds earmarked for the purposes set forth
above, such additional funds for a particular activity will be met by way of means available to us, including from internal
accruals and any additional equity and/or debt arrangements from existing and future lenders. We believe that such alternate
arrangements would be available to fund any such shortfalls. Further, if the actual utilisation towards any of the stated objects
is lower than the proposed deployment, the balance remaining may be utilised towards future growth opportunities, and/or
towards funding any of the other existing objects (if required), and/or general corporate purposes, subject to applicable laws.
Details of the Objects of the Offer
1. Repayment/ pre-payment of certain borrowings, in full or part, availed by our Company
Our Company has entered into various financial arrangements with banks, financial institutions and other entities. The
loan facilities entered into by our Company includes borrowing in the form of, inter alia, term loans, working capital
facilities, vehicle loans and equipment finance loan. For further details, see “Financial Indebtedness” on page 255. As at
November 30, 2020, the amount outstanding under our fund based and non-fund based working capital and loan facilities
was ₹1,529.21 million. Our Company proposes to utilise an estimated amount of ₹760.00 million from the Net Proceeds
towards full or partial repayment or pre-payment of certain borrowings availed by our Company. Our Company may avail
further loans after the date of this Red Herring Prospectus.
Given the nature of these borrowings and the terms of repayment, the aggregate outstanding amounts under these
borrowings may vary from time to time and our Company may, in accordance with the relevant repayment schedule, repay
or refinance some of its existing borrowings prior to Allotment. Accordingly, our Company may utilise the Net Proceeds
for part prepayment of any such refinanced facilities or repayment of any additional facilities obtained by it. However, the
aggregate amount to be utilised from the Net Proceeds towards prepayment or repayment of borrowings (including
refinanced or additional facilities availed, if any), in part or full, would not exceed ₹760.00 million. We believe that such
repayment/ pre-payment will help reduce our outstanding indebtedness, debt servicing costs and enable utilisation of our
accruals for further investment in our business growth and expansion. Additionally, we believe that the leverage capacity
of our Company will improve our ability to raise further resources in the future to fund our potential business development
opportunities and plans to grow and expand our business.
The following table provides details of certain of the borrowings availed by our Company, which are currently proposed
to be fully or partially repaid or pre-paid from the Net Proceeds:
S.
No.
Name of
the
Lender
Nature of
Borrowing and
date of the
Sanction
Letter/Document
Purpose
(1)
Amount
Sanctioned
(
2)
Amount
Outstanding as
at November 30,
2020
(2)**
Interest Rate
Repayment Date /
Schedule
Pre-payment
penalty
(₹ in million)
1.
HDFC
Bank
Limited
Cash credit on
demand and
Working Capital
demand loan and
non-fund based
limits, pursuant to
sanction letter
dated November
16, 2018 and loan
agreement dated
February 1, 2019
Our Company
has availed
this loan to
meet its
working
capital
requirement
450.00
408.16
9.50% p.a.
The facilities are
repayable on demand
and the working
capital demand loan
is repayable
maximum in 180
days.
Nil
2.
Tata
Capital
Financial
Services
Channel finance
under the
Hindalco
corporate program
Our Company
availed this
loan to meet
its working
100.00
74.57
10.00% p.a.
90 days from the date
of each disbursement
4.00% of the
amount
sanctioned
along with
74
S.
No.
Name of
the
Lender
Nature of
Borrowing and
date of the
Sanction
Letter/Document
Purpose
(1)
Amount
Sanctioned
(
2)
Amount
Outstanding as
at November 30,
2020
(2)**
Interest Rate
Repayment Date /
Schedule
Pre-payment
penalty
(₹ in million)
pursuant to
sanction letter
dated October 15,
2020
Channel finance
under the Jindal
Aluminium
corporate program
pursuant to
renewed sanction
letter dated
October 15, 2020
capital
requirements
applicable
GST
3.
Tata
Capital
Financial
Services
Equipment
Finance pursuant
to sanction letter
dated July 17,
2019
Our Company
has availed
the loan to
meet capital
expenditure
requirement
80.00
54.27
11.75% p.a.
48 months
1.00% on the
amount
prepaid
4.
Standard
Chartered
Bank
Working capital
facility (overdraft
and pre-shipment
financing under
export order)
pursuant to loan
agreement dated
May 9, 2008 and
sanction letters
dated December
10, 2015
Our Company
availed this
loan to meet
its working
capital
requirements
350.00*
194.00
Effective
interest rate
overdraft –
10.55% p.a.
Repayable on
demand
Nil
5.
RBL
Bank
Limited
Working capital
facility pursuant
to sanction letter
dated September
16, 2019 and loan
agreement dated
September 19,
2019
Our Company
availed this
loan to meet
its working
capital
requirements
350.00*
196.56
Effective
interest rate
cash credit
10.15% p.a.
Repayable on
demand
Nil
6.
IDFC
First Bank
(i) Working
capital
(ii) Working
capital term
loan
(iii) Term loan
all pursuant to
sanction letter
dated March 25,
2019 and loan
agreement dated
March 27, 2019
Our Company
availed this
loan to meet
its working
capital
requirements
and availed
the term loan
to take over
the term loan
availed from
South Indian
Bank
(i) 100.00
(ii) 250.00
(iii) 108.30
(i) 84.46
(ii) 161.51
(iii) 81.63
9.75% p.a.
10.40% p.a
10.40% p.a
(i) On maturity
date
(ii) 36 monthly
instalments
without any
moratorium
(iii) 52 monthly
instalments
without any
moratorium
Nil
7.
BMW
Financial
Services
Private
Limited
Retail finance
(auto loan)
pursuant to
facility agreement
dated December
28, 2017, bearing
contract number
CN00146260
Our Company
has availed
this loan to
purchase
automotive
vehicles
4.06
1.90
8.51% p.a.
60 months
Nil
8.
BMW
Financial
Services
Private
Limited
Retail finance
(auto loan)
pursuant to
facility agreement
dated December
28, 2017, bearing
contract number
CN00147264
Our Company
has availed
this loan to
purchase
automotive
vehicles
4.06
1.90
8.51% p.a.
60 months
Nil
9.
HDFC
Bank
Limited
Auto Premium
Loan pursuant to a
sanction letter
dated October 22,
Our Company
has availed
this loan to
purchase
3.99
3.33
8.80% p.a.
60 months
5% and 3% of
the part
payment
amount in case
75
S.
No.
Name of
the
Lender
Nature of
Borrowing and
date of the
Sanction
Letter/Document
Purpose
(1)
Amount
Sanctioned
(
2)
Amount
Outstanding as
at November 30,
2020
(2)**
Interest Rate
Repayment Date /
Schedule
Pre-payment
penalty
(₹ in million)
2019
automotive
vehicles
part
prepayment is
within 13-24
months and
post 24
months,
respectively of
the first EMI
10.
Electronic
a Finance
Limited
Equipment
Finance pursuant
to sanction letter
dated July 22,
2020
Our Company
has availed
the loan to
meet capital
expenditure
requirement
21.40
19.49
12.25% p.a.
24 months
5%, 4% and
3% on the
outstanding
principal for
the first 12
months, 13 to
24 months and
25 months
onward,
respectively.
11.
HDFC
Bank
Limited
Vehicle loan as
per sanction letter
dated September
29, 2020
Our Company
has availed
this loan to
purchase
automotive
vehicles
5.95
5.84
8.20% p.a.
48 months
NIL
Total Amount Outstanding as on November 30,
2020
1,827.76
1,287.62
*Includes an overdraft facility. The total aggregate amount of the combined facility and its sub limits shall not exceed ₹350 million.
** The amount outstanding as at November 30, 2020 consists of only fund based working capital and loan facilities.
(1)
Our Statutory Auditors have confirmed that the above borrowings have been utilised for the purpose for which they were availed pursuant to certificate
dated January 11, 2021.
(2)
As certified by Mishra & Co., Chartered Accountants pursuant to certificate dated January 10, 2021.
Our Company may consider the following factors for identifying the loans that will be repaid out of the Net Proceeds:
(i) Costs, expenses and charges relating to the facility including interest rates involved;
(ii) Presence of onerous terms and conditions under the facility;
(iii) Ease of operation of the facility;
(iv) Levy of any prepayment penalties and the quantum thereof;
(v) Provisions of any law, rules, regulations governing such borrowings;
(vi) Terms of pre-payment to lenders, if any;
(vii) Mix of credit facilities provided by lenders; and
(viii) Other commercial considerations including, among others, the interest rate on the loan facility, the amount of
the loan outstanding and the remaining tenor of the loan.
In the ordinary course of business, due to various operational benefits, our Company may explore possibilities of other
banks participating in existing loans either in full or in part, including the loans mentioned above. One of our financing
facilities provide for the levy of prepayment penalties. Given the nature of these borrowings and the terms of
prepayment, the aggregate outstanding loan amounts may vary from time to time. In the event that there are any
prepayment penalties required to be paid under the terms of the relevant financing agreements, such prepayment
penalties shall be paid by our Company out of its internal accruals. We will take such provisions also into consideration
while deciding repayment and/ or pre-payment of loans from the Net Proceeds.
2. General Corporate Purposes
Our Company proposes to deploy the balance Net Proceeds aggregating to ₹[●] million towards general corporate
purposes, subject to such utilisation not exceeding 25% of the Gross Proceeds of the Fresh Issue, in compliance with
Regulation 7(2) of the SEBI ICDR Regulations. The general corporate purposes for which our Company proposes to
utilise the Net Proceeds include sales, capital expenditure, meeting our working capital requirements, marketing and
business development expenses, expansion of facilities and meeting exigencies and expenses incurred by our Company
in the ordinary course of business. In addition to the above, our Company may utilise the Net Proceeds towards other
expenditure (in the ordinary course of business) considered expedient and as approved periodically by the Board or a
76
duly constituted committee thereof, subject to compliance with necessary provisions of the Companies Act. The
quantum of utilisation of funds towards each of the above purposes will be determined by our Board, based on the
amount actually available under this head and the business requirements of our Company, from time to time. Our
Company’s management, in accordance with the policies of the Board, shall have flexibility in utilising surplus
amounts, if any. In the event that we are unable to utilise the entire amount that we have currently estimated for use
out of Net Proceeds in a Fiscal, we will utilise such unutilised amount in the next Fiscal.
Offer Expenses
The total expenses of the Offer are estimated to be approximately ₹[●] million. The Offer related expenses include fees payable
to the BRLMs and legal counsel, fees payable to the auditors, brokerage and selling commission, commission payable to
Registered Brokers, SCSBs’ fees, Registrar’s fees, printing and stationery expenses, advertising and marketing expenses and
all other incidental and miscellaneous expenses for listing the Equity Shares on the Stock Exchanges.The break-up of the Offer
expenses is as follows:
Activity
Estimated
expenses
(1)(5)
(₹ in million)
As a % of the total
estimated Offer
expenses
(1)
As a % of the
total Offer
size
(1)
BRLMs fees and commissions (including underwriting commission, brokerage and
selling commission)
[●]
[●]
[●]
Commission/processing fee for SCSBs and Banker to the Offer and fees payable to
the Sponsor Bank for Bids made by RIBs using the UPI Mechanism
(2)
[●]
[●]
[●]
Brokerage and selling commission for members of Syndicate, and Registered
Brokers, RTAs and CDPs
(3)
[●]
[●]
[●]
Fees payable to the Registrar to the Offer
[●]
[●]
[●]
Fees payable to the other advisors to the Offer
[●]
[●]
[●]
Others
- Listing fees, SEBI filing fees, BSE & NSE processing fees, book building
software fees
[●]
[●]
[●]
- Printing and stationery
[●]
[●]
[●]
- Advertising and marketing expenses
[●]
[●]
[●]
- Miscellaneous
[●]
[●]
[●]
Total estimated Offer expenses
[●]
[●]
[●]
(1) To be incorporated in the Prospectus post finalisation of the Offer Price
(2) Selling commission payable to the SCSBs on the portion for Retail Individual Bidders and Non-Institutional Bidders which are directly procured by the
SCSBs, would be as follows:
Portion for Retail Individual Bidders*
0.35% of the Amount Allotted (plus applicable taxes)
Portion for Non-Institutional Bidders*
0.20% of the Amount Allotted (plus applicable taxes)
*Amount Allotted is the product of the number of Equity Shares Allotted and the Offer Price.
No additional uploading/processing fees shall be payable by our Company and the Selling Shareholders to the SCSBs on the applications directly
procured by them.
The Selling Commission payable to the SCSBs will be determined on the basis of the bidding terminal id as captured in the bid book of BSE or NSE.
Processing fees payable to the SCSBs of Rs. 10 per valid Bid cum Application Form (plus applicable taxes) on the portion for Retail Individual Bidders
and Non-Institutional Bidders which are procured by the members of the Syndicate/sub-Syndicate/Registered Broker/RTAs/ CDPs and submitted to SCSB
for blocking
(3) The Processing fees for applications made by Retail Individual Bidders using the UPI Mechanism would be as follows: Sponsor Bank will be entitled to
processing fee of ₹8 per each valid Bid cum Application Form for Bids made by RIBs using UPI Mechanism. The Sponsor Bank shall be responsible for
making payments to third parties such as the remitter bank, NPCI and such other parties as required in connection with the performance of its duties
under applicable SEBI circulars, amendments, the Syndicate Agreement and other applicable laws.
(4) Selling commission on the portion for Retail Individual Bidders (using UPI mechanism) and Non-Institutional Bidders which are procured by the
Members of syndicate (including their sub-Syndicate Members), RTAs, CDPs or for using 3-in1 type accounts- linked online trading, demat & bank
account provided by some of the brokers which are members of Syndicate (including their Sub-Syndicate Members) would be as follows:
Portion for Retail Individual Bidders*
0.35% of the Amount Allotted (plus applicable taxes)
Portion for Non-Institutional Bidders*
0.20% of the Amount Allotted (plus applicable taxes)
* Amount Allotted is the product of the number of Equity Shares Allotted and the Offer Price
The Selling Commission payable to the Syndicate/ sub-Syndicate Members will be determined on the basis of the application form number / series,
provided that the application is also bid by the respective Syndicate / sub-Syndicate Member. For clarification, if a Syndicate ASBA application on the
application form number / series of a Syndicate/ sub-Syndicate Member, is bid by an SCSB, the Selling Commission will be payable to the SCSB and not
the Syndicate/ sub-Syndicate Member.
The payment of Selling Commission payable to the sub-brokers / agents of Sub-Syndicate Members are to be handled directly by the respective sub
Syndicate Member.
The Selling Commission payable to the RTAs and CDPs will be determined on the basis of the bidding terminal id as captured in the bid book of BSE or
NSE.
(5) Uploading Charges/ Processing Charges of Rs.30/- valid application (plus applicable taxes) are applicable only in case of bid uploaded by the members
of the Syndicate, RTAs and CDPs:
• for applications made by Retail Individual Investors using the UPI Mechanism
(6) Uploading Charges/ Processing Charges of Rs.10/- valid application (plus applicable taxes) are applicable only in case of bid uploaded by the members
of the Syndicate, RTAs and CDPs:
• for applications made by Retail Individual Investors using 3-in-1 type accounts
• for Non-Institutional Bids using Syndicate ASBA mechanism / using 3- in -1 type accounts,
(7) The Bidding/uploading charges payable to the Syndicate / Sub-Syndicate Members, RTAs and CDPs will be determined on the basis of the bidding
terminal id as captured in the bid book of BSE or NSE.
(8) For Registered Brokers: Selling commission payable to the registered brokers on the portion for Retail Individual Bidders & Non-Institutional Bidders
which are directly procured by the Registered Brokers and submitted to SCSB for processing would be as follows: Portion for Retail Individual Bidders
& Non-Institutional Bidders: ₹ 10/- per valid application* (plus applicable taxes)
77
(9) The commissions and processing fees shall be payable within 30 Working Days post the date of the receipt of the final invoices of the respective
intermediaries by the Company.
Means of finance
The fund requirements set out for the aforesaid objects of the Offer are proposed to be met entirely from the Net Proceeds.
Accordingly, our Company confirms that there is no requirement to make firm arrangements of finance through verifiable
means towards at least 75% of the stated means of finance, excluding the amount to be raised from the Fresh Issue and existing
identifiable accruals as required under the SEBI ICDR Regulations.
Interim use of Net Proceeds
Our Company, in accordance with the policies established by the Board from time to time, will have flexibility to deploy the
Net Proceeds. Pending utilisation for the purposes described above, our Company will deposit the Net Proceeds only with one
or more scheduled commercial banks included in Second Schedule of Reserve Bank of India Act, 1934 as may be approved by
our Board or IPO Committee. In accordance with Section 27 of the Companies Act, 2013, our Company confirms that it shall
not use the Net Proceeds for buying, trading or otherwise dealing in the shares of any other listed company.
Monitoring of Utilisation of Funds
In terms of the proviso to Regulation 41(1) of the SEBI ICDR Regulations, our Company is not required to appoint a monitoring
agency for this Offer.
Our Company will disclose the utilisation of the Net Proceeds under a separate head in our balance sheet along with the relevant
details, for all such amounts that have not been utilised. Our Company will indicate investments, if any, of unutilised Net
Proceeds in the balance sheet of our Company for the relevant Fiscals subsequent to receipt of listing and trading approvals
from the Stock Exchanges.
Pursuant to Regulation 32(3) of the SEBI Listing Regulations, our Company shall, on a quarterly basis, disclose to the Audit
Committee the uses and applications of the Net Proceeds. On an annual basis, our Company shall prepare a statement of funds
utilised for purposes other than those stated in this Red Herring Prospectus and place it before the Audit Committee and make
other disclosures as may be required until such time as the Net Proceeds remain unutilised. Such disclosure shall be made only
until such time that all the Net Proceeds have been utilised in full. The statement shall be certified by the statutory auditor of
our Company. Furthermore, in accordance with Regulation 32(1) of the SEBI Listing Regulations, our Company shall furnish
to the Stock Exchanges on a quarterly basis, a statement indicating (i) deviations, if any, in the actual utilisation of the proceeds
of the Fresh Issue from the objects of the Fresh Issue as stated above; and (ii) details of category wise variations in the actual
utilisation of the proceeds of the Fresh Issue from the objects of the Fresh Issue as stated above. This information will also be
published in newspapers simultaneously with the interim or annual financial results and explanation for such variation (if any)
will be included in our Director’s report, after placing the same before the Audit Committee.
Variation in Objects
In accordance with Sections 13(8) and 27 of the Companies Act and applicable rules, our Company shall not vary the objects
of the Offer without our Company being authorised to do so by the Shareholders by way of a special resolution through postal
ballot. In addition, the notice issued to the Shareholders in relation to the passing of such special resolution (“Postal Ballot
Notice”) shall specify the prescribed details as required under the Companies Act and applicable rules. The Postal Ballot Notice
shall simultaneously be published in the newspapers, one in English and one in Kannada, being the local language of the
jurisdiction where the Registered Office is situated in accordance with the Companies Act and applicable rules. Our Promoters
or controlling shareholders will be required to provide an exit opportunity to such Shareholders who do not agree to the proposal
to vary the objects, at such price, and in such manner, in accordance with our AoA, and the SEBI ICDR Regulations.
Other Confirmations
Except to the extent of the proceeds received pursuant to the Offer for Sale portion, none of our Promoter, Directors, KMPs,
Promoter Group or Group Company will receive any portion of the Offer Proceeds.
78
BASIS FOR OFFER PRICE
The Offer Price will be determined by our Company and the Selling Shareholders, in consultation with the BRLMs, on the
basis of assessment of market demand for the Equity Shares offered through the Book Building Process and on the basis of
quantitative and qualitative factors as described below. The face value of the Equity Shares is ₹10 each and the Offer Price is
[●] times the Floor Price and [●] times the Cap Price. Investors should also refer to “Our Business”, “Risk Factors”, “Financial
Statements” and “Other Financial Information” on pages 119, 19, 173 and 235, respectively, to have an informed view before
making an investment decision.
Qualitative Factors
We believe the following business strengths allow us to successfully compete in the industry:
• A one stop shop for well recognized, award winning portfolio of kitchen solutions brands with a diverse range of
products across consumer preference;
• Widespread, well connected distribution network with a presence across multiple retail channels and a dedicated after-
sales network;
• Strong manufacturing capability with efficient backward integration;
• Consistent focus on quality and innovation;
• Professional management with successful track record and extensive experience in the kitchen solutions industry, and
a young and dynamic workforce; and
• Strong track record and financial stability.
For further details, see “Our Business - Competitive Strengths” and “Risk Factors” on pages 121 and 19, respectively.
Quantitative Factors
Some of the information presented below relating to our Company is based on the Restated Financial Statements prepared in
accordance with Indian AS and the Companies Act and restated in accordance with the SEBI ICDR Regulations. For details,
see “Financial Statements” on page 173.
Some of the quantitative factors which may form the basis for computing the Offer Price are as follows:
1. Adjusted Basic and Diluted Earnings Per Share (“EPS”)
Fiscal / Period
Basic EPS (in ₹)
Diluted EPS (in ₹)
Weight
2018
(4.95)
(4.95)
1
2019
0.27
0.27
2
2020
1.05
1.05
3
Weighted Average
(0.21)
(0.21)
Six month period ended September 30, 2019*
1.46
1.46
Six month period ended September 30, 2020*
9.57
9.57
* Not annualized
Note:
1. Adjusted Basic and Diluted EPS Calculation has been done in accordance with Indian Accounting Standard – 33 “Earnings per Share”
prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended,
(“Ind AS”) and other accounting principles generally accepted in India. The ratios have been computed as below:
a. Adjusted Basic EPS (in ₹) = Net profit, after tax, as restated for the year/ period, attributable to equity shareholders/ Adjusted
Weighted average number of equity shares outstanding during the year/ period
b. Adjusted Diluted EPS (in ₹) = Net profit, after tax, as restated for the year/ period, attributable to equity shareholders/ Adjusted
Weighted average number of dilutive equity shares outstanding during the year/ period
2. Adjusted Weighted average number of equity shares outstanding is the weighted average number of ordinary shares outstanding during the
period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares bought back
or issued during the period multiplied by a time-weighting factor. The time-weighting factor is the number of days that the shares are
outstanding as a proportion of the total number of days in the period
3. Adjusted Weighted average number of equity shares takes in to account consequent increase in capital pursuant to allotment of Equity Shares
on account of (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI have been converted into 2,412,235 and 1,879,122
Equity Shares, respectively; and (ii) 1,197,770 Series B CCDs held by SCI-GIH have been converted to 986,790 Equity Shares. (iii) 5 Class
A Equity Shares held by SCI and SCI-GIH, each, have been reclassified to 5 Equity Shares (iv) 85,747 Equity Shares pursuant to the ESOPs
exercised
4. Weighted average = Aggregate of year-wise weighted EPS divided by the aggregate of weights i.e. [(EPS x Weight) for each fiscal] / [Total
of weights]
79
5. In the computation of EPS, 727,253 out of 813,000 options, which have not been not granted or vested or exercised, have not been
considered as part of outstanding options at the end of the year/period, in line with Indian Accounting Standard 33 -"Earning per Share”,
as the fair value of equity share is less than the exercise price
2. Price/ Earning (“P/ E”) ratio in relation to Price Band of ₹[●] to ₹[●] per Equity Share
(a) P/ E based on basic and diluted EPS for the year ended March 31, 2020 at the lower end of the Price Band
are [●] and [●], respectively.
(b) P/ E based on basic and diluted EPS for the year ended March 31, 2020 at the higher end of the Price Band
are [●] and [●], respectively.
(c) Industry P/ E ratio
Particulars
P/ E
Highest
284.29
Lowest
42.25
Average
123.82
Note:
1. The industry high and low has been considered from the industry peer set provided later in this chapter. The industry composite has been
calculated as the arithmetic average P/ E of the industry peer set disclosed in this section. For further details, see “-Comparison with listed
industry peers” hereunder
2. P/E figures for the peer are computed based on closing market price as on January 18, 2021, divided by diluted EPS (on consolidated basis)
based on the annual report of the company for Fiscal 2020
3. Return on Adjusted Net Worth (“RoNW”)
Fiscal
RoNW (%)
Weight
2018
N.M.
1
2019
0.60
2
2020
2.51
3
Weighted Average
1.46
Six month period ended September
30, 2019*
3.45
-
Six month period ended September
30, 2020*
18.43
-
* Not annualized
Note:
1. N.M.= Not Meaningful
2. Adjusted RoNW = Net profit after tax, as restated for the year/ period, attributable to equity shareholders/ Adjusted Net worth (excluding
revaluation reserve), as restated, at the end of the year/ period
3. Weighted average = Aggregate of year-wise weighted EPS divided by the aggregate of weights i.e. [(EPS x Weight) for each year] / [Total
of weights]
4. Adjusted Net Worth is defined as: the aggregate value of the paid-up share capital and all reserves created out of the profits, securities
premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses,
deferred expenditure and miscellaneous expenditure not written off but does not include reserves created out of revaluation of assets, write-
back of depreciation and amortisation, as considered form the audited balance sheet for the respective year/period, adjusted with the
consequent increase in capital pursuant to the allotment of Equity Shares on account of (i) 2,610,898 Series A CCDs and 2,280,886 Series B
CCDs held by SCI have been converted into 2,412,235 and 1,879,122 Equity Shares, respectively; and (ii) 1,197,770 Series B CCDs held by
SCI-GIH have been converted to 986,790 Equity Shares. (iii) 5 Class A Equity Shares held by SCI and SCI-GIH, each, have been reclassified
to 5 Equity Shares (iv) 85,747 Equity Shares pursuant to the ESOPs exercised
5. In the computation of RoNW, 727,253 out of 813,000 options, which have not been not granted or vested or exercised, have not been
considered as part of outstanding options at the end of the year/period, as the fair value of equity share is less than the exercise price
4. Adjusted Net Asset Value per Equity Share of face value of ₹10 each (“NAV”)
Financial year ended
Restated
Financial Statement (₹)
As on March 31, 2020
41.84
As on September 30, 2020
51.89
Offer Price
[●]
After the Offer
• At the Floor Price
[●]
• At the Cap Price
[●]
Note:
1. Adjusted NAV = Adjusted Net Asset Value, as restated, at the end of the period/ year/ Adjusted Number of equity shares outstanding at the
end of the year/ period
2. Offer Price per Equity Share will be determined on conclusion of the Book Building Process
3. Adjusted Net Asset Value is defined as Adjusted Net Assets of the company equals the total assets (what the company owns) minus the total
liabilities (what the company owes), as considered form the audited balance sheet for the respective year/period, adjusted with the consequent
increase in capital pursuant to the allotment of Equity Shares on account of (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held
by SCI, have been converted into 2,412,235 and 1,879,122 Equity Shares, respectively; and (ii) 1,197,770 Series B CCDs held by SCI-GIH
80
have been converted to 986,790 Equity Shares (iii) 5 Class A Equity Shares held by SCI and SCI-GIH, each, have been reclassified to 5 Equity
Shares (iv) 85,747 Equity Shares pursuant to the ESOPs exercised, and is represented by the adjusted Net Worth, as defined above.
4. Adjusted number of equity shares outstanding at the end of the year/ period is the number of equity shares outstanding at the end of the
respective year/ period as per the audited balance sheet, as adjusted with consequent increase in capital pursuant to the allotment of Equity
Shares on account of (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI, have been converted into 2,412,235 and
1,879,122 Equity Shares, respectively; and (ii) 1,197,770 Series B CCDs held by SCI-GIH have been converted to 986,790 Equity Shares In
the computation of Net Asset Value, 727,253 out of 813,000 options, which have not been not granted or vested or exercised, have not been
considered as part of outstanding options at the end of the year/period, as the fair value of equity share is less than the exercise price
5. Comparison with Listed Industry Peers
S.No.
Name of the
company
Face
Value
(₹)
Closing
price
(₹)
(1)
Revenue
from
operations
(₹ in
million)
(2)
EPS (₹)
NAV
(4)
(₹ per
share)
P/E
(5)
RoNW
(6)
(%)
Basic
Diluted
(3)
1.
Stove Kraft
Limited*
10
-
6,698.61
1.05
1.05
41.84
[●]
2.51%
Peer Group
2.
TTK Prestige
10
5,981.05
20,729.9
133.13
133.13
942.56
44.93
14.12%
3.
Hawkins
Cookers
10
5,792.35
6,738.73
137.09
137.09
264.11
42.25
51.91%
4.
Butterfly
Gandhimathi
Appliances
10
520.25
6,786.95
1.83
1.83
107.32
284.29
1.70%
Source: All the financial information for listed industry peers mentioned above is on a consolidated basis, wherever applicable and is sourced
from the annual reports of the respective company for the Fiscal 2020
* Financial information for Stove Kraft Limited is derived from the Restated Financial Statements for the financial year ended March 31,
2020 and as adjusted for the conversion of CCDs, reclassification of Class A Equity Shares and allotment of Equity Shares pursuant to the
ESOPs exercised.
Note:
1. Closing price refers to price on NSE on January 18, 2021, and for Hawkins refers to price on BSE on January 18, 2021
2. Revenue refers to revenue from operations for Fiscal 2020
3. Net asset value (in ₹ per equity share) = Net Asset Value (Net Worth), at the end of the period/ year/ Number of equity shares outstanding
at the end of the year/ period
4. P/E ratio has been computed based on the closing market price of equity shares on January 18, 2021 divided by the diluted EPS
5. Return on Net Worth is computed as net profit after tax divided by closing net worth as on March 31, 2020. Net worth has been computed
as a sum of share capital and reserves and surplus (excluding revaluation reserves, wherever applicable)
6. The Offer Price will be [●] times of the face value of the Equity Shares
The Offer Price of ₹[●] has been determined by our Company and the Selling Shareholders, in consultation with the
BRLMs, on the basis of market demand from investors for Equity Shares through the Book Building Process and is
justified in view of the above qualitative and quantitative parameters.
Investors should read the above mentioned information along with “Our Business”, “Risk Factors” and “Financial Statements”
on pages 119, 19 and 173, respectively, to have a more informed view. The trading price of the Equity Shares could decline
due to the factors mentioned in “Risk Factors” and you may lose all or part of your investments.
81
STATEMENT OF SPECIAL TAX BENEFITS
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
82
STATEMENT OF SPECIAL DIRECT TAX BENEFITS AVAILABLE TO STOVE KRAFT LIMITED AND ITS
SHAREHOLDERS
STATEMENT OF SPECIAL DIRECT TAX BENEFITS
To,
The Board of Directors
Stove Kraft Limited
81/1, Medamarana Halli Village,
Harohalli Hobli, Kanakapura Taluk,
Harohalli – 562112,
Karnataka, India
Dear Sirs,
Sub: Statement of possible special direct tax benefits available to Stove Kraft Limited (“the
Company”) and its shareholders.
We refer to the proposed issue of the shares of Stove Kraft Limited (“the Company”). We enclose herewith
the statement showing the current position of special tax benefits available to the Company and to its
shareholders as per the provisions of the Income-tax Act, 1961, as amended by the Finance Act 2020, as
applicable to the assessment year 2021-22 relevant to the financial year 2020-21 for inclusion in the Red
Herring Prospectus (“RHP”) and Prospectus (collectively, the “Offer Documents”) for the proposed issue of
shares and offer for sale.
Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions
prescribed under the relevant provisions of the Income-tax Act, 1961. Hence, the ability of the Company
or its shareholders to derive these direct tax benefits is dependent upon their fulfilling such conditions,
which is based on business imperatives the Company may face in the near future and accordingly, the
Company or its shareholders may or may not choose to fulfil.
The benefits discussed in the enclosed statement are neither exhaustive nor conclusive. The contents
stated in the Annexure are based on the information and explanations obtained from the Company and on
basis of our understanding of the business activities and operations of the Company. This statement is
only intended to provide general information to guide the investors and is neither designed nor intended
to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and
the changing tax laws, each investor is advised to consult their own tax consultant with respect to the
specific tax implications arising out of their participation in the issue. We are neither suggesting nor are
we advising the investor to invest money or not to invest money based on this statement.
We do not express any opinion or provide any assurance whether:
• The Company or its Shareholders will continue to obtain these possible special income-tax benefits in
future;
• The conditions prescribed for availing the possible special income-tax benefits have been/would be
met;
• The revenue authorities/courts will concur with the views expressed herein.
We hereby give our consent to include the enclosed statement regarding the tax benefits available to the
Company and to its shareholders in the Offer Documents for the proposed public issue/offer for sale of
shares which the Company intends to submit to the Securities and Exchange Board of India, the registrar
of companies, Bengaluru at Karnataka and the stock exchange(s) provided that the below statement of
limitation is included in the offer document.
LIMITATIONS
Our views expressed in the statement enclosed are based on the facts and assumptions indicated above.
No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our
views are based on the information, explanations and representations obtained from the Company and on
the basis of our understanding of the business activities and operations of the Company and the
interpretation of the existing tax laws in force in India and its interpretation, which are subject to change
from time to time. We do not assume responsibility to update the views consequent to such changes.
83
Reliance on the statement is on the express understanding that we do not assume responsibility towards
the investors who may or may not invest in the proposed issue relying on the statement.
This statement has been prepared solely in connection with the offering of Equity shares by the Company
under the Securities and Exchange Board of India (“SEBI”) (Issue of Capital and Disclosure Requirements)
Regulations, 2018, as amended (the Issue).
Yours faithfully,
For Deloitte Haskins & Sells
Chartered Accountants
(Firm Registration Number: 008072S)
Subramanian Krishnamani
Partner
(Membership No.206440)
Place: Bengaluru
Dated: January 15, 2021
UDIN: 21206440AAAAAB1958
84
STATEMENT OF SPECIAL DIRECT TAX BENEFITS AVAILABLE TO STOVE KRAFT LIMITED AND
ITS SHAREHOLDERS
I. Special tax benefits available to the Company
1. Claim for Additional Depreciation
• Under Section 32(1)(iia) of the Act, the Company (being a company engaged in the business of
manufacture of kitchen appliances) is entitled to claim additional depreciation of a sum equal to 20% of
the actual cost of any new machinery or plant that is acquired and installed after March 31, 2005, by the
Company (other than ships and aircrafts) subject to conditions specified in said section of the Act. However,
if the Company exercises the option of the concessional income tax rate as prescribed under section
115BAA of the Act, the above benefit shall not be available.
2. Deductions from Gross Total Income
• Deduction in respect of employment of new employees
Subject to the fulfilment of prescribed conditions, the Company is entitled to claim a deduction of an
amount equal to thirty per cent of additional employee cost (relating to specified category of employees)
incurred in the course of business in the previous year, for three assessment years including the
assessment year relevant to the previous year in which such employment is provided under section 80JJAA
of the Act.
The Company will be eligible to claim the above deduction even if it opts for concessional tax rate under
section 115BAA of the Act.
3. Exemptions under section 10 of the Act
The share of profits of the Company in the partnership firm is exempted from income-tax in the hands of
the Company under section 10(2A) of the Act.
However, if the Company incurs any expenses to incur the above income, the same shall be subject to a
disallowance under section 14A of the Act.
II. Special tax benefits available to Shareholders
Apart from the tax benefits available to each class of shareholders as such, there are no special tax benefits
for shareholders
NOTES:
1. The above benefits are as per the current tax law as amended by the Finance Act, 2020.
2. This statement does not discuss any tax consequences in the country outside India of an investment
in the shares. The shareholders/investors in the country outside India are advised to consult their own
professional advisors regarding possible Income tax consequences that apply to them.
3. Surcharge is to be levied on domestic companies at the rate of 7% where the income exceeds INR one
crore but does not exceed INR ten crores and at the rate of 12% where the income exceeds INR ten
crores.
If the Company opts for concessional income tax rate under section 115BAA of the Act, the surcharge
shall be levied at the rate of 10% irrespective of the amount of total income.
4. Health and Education Cess at 4% on the tax and surcharge is payable by all category of taxpayers.
5. If the Company opts for the concessional income tax rate as prescribed under section 115BAA of the
Act, it will not be allowed to claim any of the following deductions/ exemptions:
- Deduction under the provisions of section 10AA (deduction for units in Special Economic Zone)
- Deduction under clause (iia) of sub-section (1) of section 32 (Additional depreciation)
85
- Deduction under section 32AD or section 33AB or section 33ABA (Investment allowance in backward
areas, Investment deposit account, site restoration fund)
- Deduction under sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-
section (2AA) or sub-section (2AB) of section 35 (Expenditure on scientific research)
- Deduction under section 35AD or section 35CCC (Deduction for specified business, agricultural
extension project)
- Deduction under section 35CCD (Expenditure on skill development)
- Deduction under any provisions of Chapter VI-A other than the provisions of section 80JJAA
(Deduction in respect of employment of new employees) and 80M (Deduction in respect of certain
inter-corporate dividends);
- No set-off of any loss carried forward or depreciation from any earlier assessment year, if such loss
or depreciation is attributable to any of the deductions referred above. However, if there is a
depreciation allowance which has not been given full effect to before AY 2020-21, corresponding
adjustment shall be made to the written down value of such block of assets as on the 1 April 2019,
if the option is exercised for AY 2020-21;
- No set-off of any loss or allowance for unabsorbed depreciation deemed so under section 72A, if
such loss or depreciation is attributable to any of the deductions referred to in clause
Further, if the Company opts for concessional income tax rate under section 115BAA, the provisions of
section 115JB regarding Minimum Alternate Tax (MAT) are not applicable. Further, such Company will
not be entitled to claim tax credit relating to MAT.
6. The above statement of possible direct tax benefits sets out the provisions of the law in a summary
manner only and is not a complete analysis or listing of all potential tax consequences of the purchase,
ownership and disposal of shares.
86
STATEMENT OF POSSIBLE SPECIAL INDIRECT TAX BENEFITS AVAILABLE TO THE COMPANY, AND
ITS SHAREHOLDERS
To,
The Board of Directors,
Stove Kraft Limited
81/1 Medamarana Halli Village,
Harohalli Hobli, Kanakapura Taluk,
Ramnagar District – 562 112
Karnataka, India
Sub: Proposed initial public offering of equity shares of Rs. 10 each (the "Equity Shares") of Stove Kraft Limited (the
"Company" and such offering, the "Offer")
This report is issued in accordance with the terms of our engagement letter dated January 6, 2020.
The accompanying Statement of Possible Special Indirect Tax Benefits available to the Company and its shareholders
(hereinafter referred to as “the Statement”) under the indirect tax laws, including the Central Goods and Services Tax Act,
2017, as amended, Integrated Goods and Services Tax Act, 2017, as amended, respective State Goods and Services Tax Act,
2017, as amended, Goods and Services Tax (Compensation to States) Act, 2017, as amended, Customs Act, 1962, as amended,
Customs Tariff Act, 1975, as amended, the rules and regulations there under, as amended by the Finance Act, 2020 i.e.,
applicable for the Financial Year 2020-2021 relevant to the assessment year 2021-2022 (collectively referred as “Indirect Tax
Regulations”) for inclusion in the red herring prospectus (“RHP”) and prospectus (collectively, the “Offer Documents”) for
the proposed issue of equity shares and offer for sale.
1. Pursuant to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations
2018, as amended (the ‘ICDR Regulations’) and the Companies Act 2013 (the ‘Act’), the Statement, presents, in all
respects, the possible special indirect tax benefits available to the Company and the shareholders of the Company, as at
the date of our report.
2. Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance with the
Act and the Regulations in connection with the Offer.
3. Several of the benefits mentioned in the accompanying statement are dependent on the Company or its shareholders
fulfilling the conditions prescribed under the relevant provisions of the tax laws. Hence, the ability of the Company or
its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which may or may not be
fulfilled.
4. The Statement is only intended to provide general information to the investors and is neither designed nor intended to
be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing
tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications
arising out of their participation in the Offer.
Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time.
Opinion
5. In our opinion, the Statement presents in all respects, the possible special indirect tax benefits available to the Company
and it’s shareholders in accordance with the Indirect Tax Regulations as at the date of our report.
We do not express any opinion or provide any assurance whether:
i. The Company or its shareholders will continue to obtain these special indirect tax benefits per the Statement in
future;
ii. The conditions prescribed for availing these special tax benefits per the Statement have been/ would be met with;
iii. the revenue authorities/ courts will concur with our views expressed herein.
This report may be relied on by the Book Running Lead Managers and the legal counsel appointed in relation to the Offer. We
undertake to immediately inform the Company and the Book Running Lead Managers appointed as such for the purpose of
the Offer, of any changes to the information included herein till the date the Equity Shares commence trading on the relevant
stock exchanges where the Equity Shares are proposed to be listed (the "Stock Exchanges"). In the absence of any such
communication, the information stated in this report should be taken as updated information until the date of commencement
of listing and trading of the Equity Shares on the Stock Exchanges, pursuant to the Offer.
87
All capitalized terms used but not defined herein shall have the meaning assigned to them in the Offer Documents.
For Mishra & Co.
Chartered Accountants
Firm Registration No. 012355S
Nilamadhab Mishra
Proprietor
Membership No. 223157
Place, Date: Bengaluru, 15 January 2021
UDIN: 21223157AAAAAW4303
88
STATEMENT OF POSSIBLE SPECIAL INDIRECT TAX BENEFITS AVAILABLE TO THE COMPANY, AND
ITS SHAREHOLDERS
Benefits available to Stove Kraft Limited (“Company”) and the shareholders of the Company under the indirect tax laws,
including Central Goods and Services Tax Act, 2017, as amended, Integrated Goods and Services Tax Act, 2017, as amended,
respective State Goods and Services Tax Act, 2017, as amended, Goods and Services Tax (Compensation to States) Act,
2017, as amended, Custom Act, 1962, as amended, Customs Tariff Act, 1975, as amended, the rules and regulations there
under, as amended by the Finance Act, 2020 and the Finance (No.2) Act, 2019 i.e., applicable for the Financial Year 2020-
2021 relevant to the assessment year 2021-2022 (collectively referred as “Indirect Tax Regulations”).
1. Special Tax Benefits available to the Company
None.
2. Special Tax Benefits available to the shareholders of the Company
None.
89
SECTION IV: ABOUT OUR COMPANY
INDUSTRY OVERVIEW
Unless noted otherwise, the information in this section is obtained or extracted from the F&S Report on our request. Neither
we nor any other person connected with the Offer have independently verified this information. The data may have been re-
classified by us for the purposes of presentation. Industry sources and publications generally state that the information
contained therein has been obtained from sources generally believed to be reliable, but that their accuracy, completeness and
underlying assumptions are not guaranteed and their reliability cannot be assured. Industry sources and publications are also
prepared based on information as of specific dates and may no longer be current or reflect current trends. Industry sources
and publications may also base their information on estimates, projections, forecasts and assumptions that may prove to be
incorrect. Accordingly, investors must rely on their independent examination of, and should not place undue reliance on, or
base their investment decision solely on this information. The recipient should not construe any of the contents in this report as
advice relating to business, financial, legal, taxation or investment matters and are advised to consult their own business,
financial, legal, taxation, and other advisors concerning the transaction. Unless noted otherwise, the information in this section
is obtained or extracted from F&S Report on our request.
1. INTRODUCTION
1.1 Globally, the kitchen appliances market comprises instruments or devices designed for smooth functioning of kitchen
activities. Kitchen appliances are used mainly for food preparation, cooking, storage and cleaning functions. The
Global Kitchen Appliances Market is expected to touch $253.4 billion by 2020, registering a CAGR of 6.4% during
the forecast period 2014-2020.
1.2 The global kitchen appliances market can be segmented based on product structure into two categories - ‘Large/Major
appliances’ which include refrigerator, dishwasher, microwaves, cooktops, ovens, hobs, and kitchen chimneys; and
‘Small/Minor appliances’ which include food processors, mixer grinders, blenders and juicers, coffee machines,
kettles, grills and fryers.
2. INDIA’S GROWTH STORY: FAVORABLE MACROECONOMIC INDICATORS
2.1 Expected GDP growth and rise in population will affect the consumer dynamics in the country:
The long-term growth prospective of the Indian economy is positive due to its young population, corresponding low
dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. With its
Gross Domestic Product (GDP) growth averaging 7.5 % between 2014-15 and 2016-17, India is the world's sixth-
largest economy by nominal GDP and the third-largest by purchasing power parity (PPP).
Exhibit 1: India GDP and its Growth Rate, 2017-2022 (Value in $ billion and % respectively)
Source: Frost & Sullivan analysis
Currently, about 60% of India's GDP is driven by domestic private consumption and it continues to remain the world's
6th largest consumer market. The Gross Domestic Product (GDP) in India was worth 2875.14 billion US $ in 2019,
according to official data from the World Bank and projections from Trading Economics. The GDP value of India
represents 2.39% of the world economy. Indian retail industry is one of the fastest growing in the world. The country
is among the highest in the world in terms of per capita retail store availability and is the fifth largest and preferred
retail destination globally, with increasing participation from foreign and private players which has given a boost to
the Indian retail industry.
2.2 Growing Income of Indian Nationals:
2.2.1 India's GDP Per Capita reached US $ 2,256 in March 2020 compared with US $ 1,845 in March 2017. As per latest
data of the World Economic Outlook report of the International Monetary Fund (IMF), which ranks over 200 countries
2,439
2,654
2,870
3,224
3,556
3,923
6.7%
7.4%
7.8%
7.9%
8.1%
8.2%
2017 2018F 2019F 2020F 2021F 2022F
GDP (USD Bn) at Constant Prices GDP Growth Rate (%)
90
across the world in terms of their respective per capita GDP based on purchasing power parity (PPP, India has moved
up one position to rank 126 among the countries listed by IMF.
Source: https://www.livemint.com/Money/5MFOB8LlF5NMPYcGAnTZpI/India-up-one-place-on-Per-Capita-GDP-terms-to-
126-Qatar-No.html
Exhibit 2: Per Capita Gross National Disposable Income (in US $)
Note: The fiscal years refer to year ending in March
Source: Ministry of Statistics and Programme Implementation, ASSOCHAM and Frost & Sullivan analysis
Increase in the overall per capita income has resulted in the rise of per capita disposable income
in the country; is expected to grow at a CAGR of 7% until 2025.
Tier-II and tier-III cities will be the upcoming high disposable-income cities with greater
purchasing power parity, high Internet penetration, and increasingly brand-conscious young
population.
2.2.2 Increasing proportion of working population and younger age group in India is expected to intensify use of technology
and seek convenience while shopping:
Exhibit 3: India Population Trends, 2017-2025F
Note: The fiscal years refer to year ending in March
Source: Health Nutrition and Population Statistics
1,845
2,256
2,596
3,270
2017 2020 2022F 2025F
91
2.2.3 India has a relatively young demographic profile, with a median age of 27.3 years; 850 million of the country’s
population will be in the age group of 35 years or below, making India the globe’s youngest population by 2020. And,
these Indian millennials are all set to take the center-stage in consumer markets and redefine India’s consumption story
with their increasing representation (currently 47%) in the working age population.
2.2.4 As per a recent ASSOCHAM study, tier-II and tier-III cities would be the upcoming high disposable income cities
with greater purchasing power parity, higher internet penetration and an increasingly brand-conscious young
population
Growing Urbanization in India:
2.2.5 There has been a drastic increase in urban towns and cities in the country over the past five years. Almost 10 million
people migrate to cities and towns every year. The urban population as a percentage of India’s total population is
estimated to increase from the current 32.8% (2017) to 35% by 2020, in turn driving greater exposure to modern
amenities. (Source: http://www.worldometers.info/world-population/india-population/)
High economic growth and increasing opportunities in the cities have led to urbanization. The rate of urbanization
during 2017 over 2016 was recorded at 2.5%. It is anticipated that around 38% of the total Indian population will live
in urban areas in 2025.
Exhibit 5: Rate of Urbanization in India: 2017-2025F
Source: Frost & Sullivan analysis
2.2.6 Apart from changing lifestyles and working styles urbanization has led to growth in the organized retail sector; this in
turn has led to change in consumer buying behavior. Rise in urbanization in India has also led to its people having
more additional disposable income as compared to before which in turn translates into a greater opportunity for overall
retail spending in India. And with food capturing the biggest share in the Indian consumer’s expenditure pie, it is all
the more evident that the Kitchen Appliances and Cookware market would be a direct beneficiary of the growing trend
of urbanization.
92
Exhibit 6: Average percentage expenditure by households in India, 2017
Source: Frost & Sullivan analysis
2.2.7 Increase in the overall per capita income has resulted in the rise of per capita disposable income in the country, which
is expected to grow at a CAGR of 7% until 2025. Tier-II and tier-III cities will be the upcoming high disposable-
income cities with greater purchasing power parity, high internet penetration, and increasingly brand-conscious young
population.
3. RISE OF THE INDIAN MIDDLE CLASS LEADING TO CHANGING CONSUMER BEHAVIOR
3.1 According to NCAER (National Council of Applied Economic Research), India's middle class population was 267
million (53 million households) in 2016. Further ahead, by 2025-26 the number of middle class households in India is
likely to more than double from the 2015-16 levels to 547 million individuals (or 113.8 million households)
representing about 37% of India’s population.
Exhibit 7: Middle Class population in India, 1985-2025
Source: NCAER
3.2 By 2025, India is expected to rise from the 12
th
to the 5
th
largest consumer durables market in the world.
1
2
5
13
20
37
0
100
200
300
400
500
600
1985 1995 2005 2010 2015 2025F
Population of middle-income class (million) Share of middle-income in total population (%)
51.0
4.7 4.7
10.5
7.4
6.9
5.0
9.8
45.0
5.9
4.6
11.1
8.7
6.8
5.0
12.5
Food Housing Health Transport Education Clothing Durables Others
All India Urban
CAGR 8.5%
93
Exhibit 8: Indian Households, by income (in US $ ’000)
Note: Income distribution is calculated in constant 2015 dollars; $1=INR 65. Because of rounding not all % add up to 100
Source: Goldman Sachs Group. BCG CCI Proprietary income database
3.3 Key driver of growth for the Indian consumer appliances market is the country’s burgeoning middle class population,
along with a relatively small proportion of its affluent class. This growth in India’s consumer market demand is driven
primarily by rising disposable incomes in Indian households, and easy access to credit which induces a growing
purchasing power. Increasing electrification of rural areas, along with rising influence of social media and popularity
of online sales are also likely to aid growth in demand. Around two-thirds of the total revenue is generated from urban
population and rest is generated from rural population.
Exhibit 9: Annual Growth (%) in Indian consumer’s Household spending (2004-05 prices)
Consumption categories
FY 94 to FY 05
FY 05 to FY 15
FY 15 to FY 21
Food
3.0
4.2
5.3
Apparel & Footwear
3.3
6.1
6.2
Healthcare
7.1
8.2
8.3
Education
11.5
8.9
8.9
Conveyance
8.7
9.1
9.1
Non-food FMCG
4.9
4.1
5.0
Durable goods
9.8
10.1
10.3
Consumer services
10.6
6.8
6.9
Others
8.4
5.8
6.8
Total
5.0
5.7
6.7
Source: Indian Consumer Market 2020 – Structure, Size, Growth and Intensity, Rajesh Shukla and Mridusmita Bordoloi, 2015,
PRICE
Exhibit 10: Trend in the Indian Middle Class Population
Source: Frost & Sullivan analysis
3.4 In India, the greatest consumer spending in near future is expected to yield from the country’s ‘urban mass’, which
comprises 129 million working people with undergraduate degrees in non-labor intensive work, blue collar and
migrant workers, with an annual average earning of over US $3,200. The maximum consumer spending is likely to
occur on food, housing, consumer durables, and transport and communication sectors.
3.5 Overall consumer spending in India is anticipated to grow at 14% (much higher than the anticipated annual global
growth of 5.5%) and expand 3.6 times from US $991 billion in 2010 to US $3.6 trillion by 2020. By 2020, India will
constitute 5.8% of global consumption more than double the 2.7% it now represents. (Source: CMIE). Significant
increase in disposable income and easy financing schemes have led to shortened product replacement cycles and
evolving lifestyles where consumer durables, including kitchen appliances, are perceived as utility items rather than
luxury possessions.
3.6 Rural India – The Emerging Consumer Market:
94
There has been considerable improvement in living standards of rural population since the last few decades and, India’s
per capita GDP in rural regions has grown at a Compound Annual Growth Rate (CAGR) of 6.2% since 2000 (Source:
www.ibef.org).
Exhibit 11: Distribution of average monthly income in households across rural India in 2015
(in INR)
Source: www.statista.com
3.7 Recent researches have indicated that rural consumers are particularly aspiring or striving to purchase branded high
quality products in their day-to-day living. Consequently, Consumer Appliances manufacturers in India are optimistic
about growth of the country's rural consumer markets, which is expected to be faster than urban consumer markets.
Exhibit 12: Indian Consumer Spends: Types of Household Expenditures – Urban vs. Rural
Note: Consumer services include expenses on entertainment, conveyance, health, education, etc. Other expenses include Loan
payments, remittances sent and non-routine expenditures such as those on weddings and house repairs. Consumer durables category
includes down payment on vehicles purchased
Source: ICE360⁰
1
Survey, 2016 from People Research on India’s Consumer Economy (PRICE)
4. EMERGENCE OF DIGITAL INDIA AND ITS IMPACT ON CONSUMER BEHAVIOUR
4.1 As per the latest report from IAMAI (Internet and Mobile Association of India), as on December 2017, overall internet
penetration is 35% of total population. The total number of Internet users in India was estimated to be 481 million in
December 2017, a growth of 11.34% over December 2016 estimated figures. The number of internet users is expected
to reach 500 million by June 2018.
1
The ICE 360° survey is representative at the level of economic clusters. Urban India has been divided into four clusters: Metros (population: more than 5
million), Boom towns (population: 2.5 to 5 million), Niche cities (population: 1 to 2.5 million) and other urban towns (population: less than 1 million). Based
on a district development index, rural India has been sub-divided into three different clusters: ‘Developed rural’ category includes districts such as Bathinda
(Punjab) and Kangra (Himachal Pradesh). ‘Emerging rural’ includes districts such as Latur (Maharashtra) and Kamrup (Assam), a nd ‘under-developed rural’
includes districts such as Kalahandi (Odisha) and Bastar (Chhattisgarh).
27%
30%
20%
16%
6%
1%
0%
Up to
5,000
5,001-
7,500
7,501-
10,000
10,001-
20,000
20,001-
50,000
50,001-
100,000
Above
100,000
Share of Households →
95
4.2 Urban India witnessed a growth of 9.66% from December 2016 and is estimated to have around 295 million internet
users as on December 2017. On the other hand, Rural India witnessed a growth of 14.11% from December 2016 and
is estimated to have around 186 million Internet users as on December 2017. As per a recent study by Google India,
Internet is influencing consumer behavior as 7 out of 10 buyers know the exact brand and model they want to buy with
the help of online research before entering the store. Also, 40% of the respondents claimed they took help of online
information for making purchase decisions for technology products. (Source: http://www.thehindu.com/sci-
tech/technology/internet/%E2%80%98Consumer-behavior-is-changing-with-Internet-
penetration%E2%80%99/article12514687.ece)
4.3 Even though widespread internet usage is still a relatively recent phenomenon in India, most observers agree that it is
changing everything—social relationships, shopping habits, even societal norms. Internet is not just helping create
awareness but is substantially impacting decisions of final purchases. Secondly, digital’s impact is becoming pervasive
across all consumer segments. India’s initial digital consumers were male, millennial, and mostly metro-based. The
future looks very different. It is gradually impacting decisions in small towns and rural India, as well and mobiles are
emerging as a strong medium to connect to the Internet. By 2020, half of all internet users will be rural, 40% will be
women, and 33% will be 35 or older. (Source: “The Changing Connected Consumer in India” - BCG article, April
2015.
“The Rising Connected Consumer in Rural India” - BCG Focus, July 2016)
4.4 Third, internet penetration has been and continues to be mobile first. Four out of five users go online with mobile
devices. Today, these devices are a mix of smartphones (with 3G or better connections) and feature phones with
primarily 2G connections, but the trend is toward faster connections and more capable devices. Internet penetration in
rural India will grow with introduction of low cost smartphones coupled with affordable 3G/4G data tariff. As exposure
to internet increases, there will be greater usage of e-commerce across India.
Exhibit 1: Internet penetration in India, 2017-2025F
Source: Frost & Sullivan analysis
4.5 Indian E-Commerce market growth is estimated to reach the US $200 Billion-mark and M-Commerce will contribute
to 73% of the overall market by 2025 led by huge investments across the sector. Digital transformation has led to a
changing business environment across all operations in an organization. Organizations across various verticals and
processes are adopting digital technologies to leverage the opportunities it provides in increasing efficiencies across
areas like customer experience, operational processes and business models.
4.6 Much of the growth in the e-commerce industry in india, has been triggered by increasing internet and smartphone
penetration. By 2022, smartphone users are expected to reach 859 million, whereas, E-commerce sector is expected to
grow 1,200% by 2026. Smartphone shipments in India increased 8% y-o-y to reach 152.5 million units in 2019, thereby
making it the fastest growing market among the top 20 smartphone markets in the world.
4.7 Thus, ‘Digitization’ by investing in right technologies is the first step toward accelerating business process and
providing global consistency in services. Organizational level strategy outlining the use and Return on Investment
(ROI) across various digital technologies will serve stakeholders across the value chain and speed up delivery, which
is critical for growth and better customer experience.
4.8 A young demographic profile, rising internet penetration and relative better economic performance are the key drivers
of this sector. The Government of India's policies and regulatory frameworks such as 100% Foreign Direct Investment
(FDI) in B2B E-commerce and 100% FDI under automatic route under the marketplace model of B2C E-commerce
96
are expected to further propel growth in the sector. As per the new FDI policy, online entities through foreign
investment cannot offer the products which are sold by retailers in which they hold equity stake.
4.9 In February 2019, the Government released the Draft National E-Commerce Policy, which encourages FDI in the
marketplace model of E-commerce. Further, it states that the FDI policy for E-commerce sector has been developed
to ensure a level playing field for all participants. According to the draft, a registered entity is needed for E-commerce
sites and apps to operate in India. Government also proposed the National E-commerce Policy to set up the lawful
agenda on cross-border data flow – no data will be shared with foreign Governments without any prior authorisation
from the Indian Government. Through its Digital India campaign, the Government of India is aiming to create a trillion-
dollar online economy by 2025. (Source: https://www.ibef.org/industry/ecommerce-presentation)
Exhibit 2: E-Commerce Landscape: market size and forecast for India, 2016-2025F (US $ Bn)
Source: Frost & Sullivan analysis Time Series represents Calendar years. F=Forecast
4.10 Access to a variety of products online and enhanced shopping experience would drive the e-commerce industry. Apart
from mobile phones and apparel, Electronic Consumer Appliances are expected to be the most significant categories
in e-commerce.
Exhibit 3: Growth of E-Commerce Industry in India, Info graphic
15
39
50
68
93
130
200
2016 2017 2018F 2019F 2020F 2022F 2025F
15
39
50
68
93
130
200
2016 2017 2018F 2019F 2020F 2022F 2025F
CAGR (2016-2025): 33%
97
Source: www.ibef.org
4.11 E-commerce market expected to reach US $200 billion by 2025, with Consumer Electronics as the top segment
contributing 36% to the online retail market. Average spend per online shopper expectedly will rise to US $444 by
2025. Cash on Delivery (CoD) will be most preferred payment option for next 5 years, although a significant increase
in Mobile wallets will take place
Exhibit 4: Online Retail in India, 2017-2025F
Source: Frost & Sullivan analysis
4.12 The rise of smartphones is also expected to boost m-commerce sales while innovation and customer experience would
lead to greater penetration in markets across India. The evolving needs of the consumer are focused toward a quick
and easy shopping experience. Manufacturing companies in India are also investing heavily in technologies to stay
ahead, vis-à-vis competition.
98
Exhibit 5: E-Commerce Best Practices: The future
Source: Frost & Sullivan analysis
4.13 While researching online, before making a purchase, consumers primarily look for prices of the products, followed by
product photographs, specifications, videos, product reviews, locating stores and visiting product comparison sites.
While it is true that the technology vertical is one of the early adopters of digital advertising medium there is also
tremendous scope and opportunity for manufacturing industry players to fully leverage the digital medium to engage
buyers online. E-commerce provides a huge selling platform for consumer appliance manufacturers. With the advent
of e-commerce platforms like Amazon, Flipkart, Paytm and Snapdealin India, the online channel is evolving as the
fastest growing channel for sales of kitchen appliances. This is largely driven by increasing internet & smartphone
penetration, heavy discounting of products& availability of options to choose from. Top brands in the market have
separate online sales & marketing strategy for their kitchen appliance sales.
5. INDIA GOVERNMENT’S POLICIES FAVOURABLE FOR THE CONSUMER APPLIANCES INDUSTRY
5.1 Implementation of Goods and Services Tax (GST) in 2017
As per current GST structure, the lower tax brackets of ‘5%’, ‘12%’ and ‘18%’ are the standard rates for commonly
used Indian kitchen items. The highest tax slab of 28% will be applicable to items, which were earlier taxed at 30-31%
(excise duty plus VAT). GST places Large Domestic Appliances and Consumer durables category in the highest tax
slab of 28%.
Exhibit 22: Tax Rate on Kitchen Goods and Appliances, after introduction of GST in 2017
5% GST
12% GST
18% GST
28% GST
• LPG for Domestic Supply
• Household Copper articles
• Copper Utensils
• Steel Cutlery
• Aluminium utensils
• Aluminium counters and
tables
• Kerosene Burner
• Kerosene Stoves of Iron
and Steel
• Steel/Iron Small household
articles
• Pressure cooker
• Non-stick
• LPG Stoves/ Cooktops
• Aluminium Cans
• Aluminium Boxes
• Glass table-ware
• Ceramic table-ware
• Kitchen Bottles, Flasks
• Preserving jars of glass
• Small Kitchen Appliances
• Refrigerators
• Freezers
• Non-Electric Large
Domestic Appliances
Source: http://www.timesnownews.com/business-economy/gst-on-kitchen- appliances-know-your-new-tax-brackets/64619
On the demand side, the GST aims to bring more transparency in the system as consumers will know the actual prices
of the products they purchase.
5.2 Transformational Shift from ‘Unorganized’ to ‘Organized’ Sector in Indian manufacturing industries
On the supply side, implementation of GST aims at reducing several tax burdens on manufacturers and fosters their
growth through more production. Key industry participants from the Indian manufacturing sector have acknowledged
the introduction of GST is expected to be very beneficial to the organized industrial sector, and that it’s a huge attempt
by the government toward formalizing a large unorganized part of the manufacturing sector and the economy in
general.
5.3 ‘Make in India’ initiative:
The Indian manufacturing industry has emerged as one of the high growth sectors in India, and the launch of ‘Make
in India’ initiative further propelled and gave this sector the necessary boost. To put more thrust on ‘Make in India’
drive, in the 2018 union budget, the government increased the basic custom duty on some key electronic items, which
includes LED lamps, one of the product segments catered to essentially by Kitchen appliances manufacturing
companies like Stove Kraft Limited.
99
Exhibit 23: Government impetus for ‘Make in India’ in Consumer Durables Sector:
Scheme/Policy
Benefits Available
Electronics Manufacturing
clusters:
Subsidies on infrastructure cost to set up special manufacturing zones
Modified Special Incentive
Package Scheme (MSIPS):
Subsidy for investments in capital expenditure of 20% for investments in Special Economic
Zones and 25% in non-special economic zones
Investment allowances and
deductions:
Investment allowance (additional depreciation) at the rate of 15% to electronics manufacturing
companies investing more than INR 250 million in plants and machinery. This benefit was
available for three years, i.e. for investments made up to March 31, 2017.
Source: https://www.ibef.org/industry/manufacturing-sector-india.aspx
5.4 Foreign Direct investment (FDI) in India:
To fulfil its objective of reducing dependence on imports by 2020, the Govt. of India has allowed 100% FDI in the
electronics hardware manufacturing sector through the automatic route and 51% FDI in Multi-brand retail. Under the
automatic route in the ESDM (Electronic System Design & Manufacturing) sector, 100% FDI is allowed, with Special
preference to foreign companies setting up manufacturing units in India. This proved to be a key attraction for foreign
investors, and also enabled consumer appliance manufacturers, especially those in the Kitchen Appliances industry.
Some early instances of such acquisitions in the Indian kitchen appliances market are as follows:
• Phillips invest in Preethi Appliance (Source: https://timesofindia.indiatimes.com/business/india-
business/Philips-acquires-city-based-Preethi/articleshow/7356376.cms);
• Reliance Equity Advisors invest in Butterfly Gandhimathi (Source: Source:https://www.business-
standard.com/article/companies/anil-ambani-s-pe-firm-picks-up-13-7-in-butterfly-112031600050_1.html);
• In December 2017, ‘Black & Decker’, a wholly owned subsidiary of the listed American firm Stanley Black
& Decker, expanded its licensing program to India, through a commercial tie up with Stove Kraft Limited., a
leading Kitchen appliances maker in India.
• In mid-2017, TTK Prestige, another leading kitchen appliance manufacturer in India, launched UK based
kitchen ware brand ‘Judge’, in India in an attempt to the less affluent consumer segment.
• Whirlpool to acquire Elica PB India (Source: https://economictimes.indiatimes.com/industry/cons-
products/durables/whirlpool-plans-to-acquire-49-in-elica-pb/articleshow/64425720.cms);
• Bajaj Electricals to acquire Nirlep Appliances (Source:
https://www.thehindubusinessline.com/companies/bajaj-electricalsto-acquire-cookware-brand-nirlep-
appliances/article24173189.ece);
• Amicus Capital invests in Wonderchef (Source: https://www.vccircle.com/amicus-capital-partners-invests-
10-3-mn-in-sanjeev-kapoors-wonderchef/)
5.5 Increasing Residential Electricity Consumption in Indian households
Majority of kitchen appliances – both large and small types, are electricity driven; electricity consumption in Indian
homes has tripled since 2000. The percentage of households with access to electricity has increased from 55% in 2001
to more than 80% in 2017
5.6 India Government’s initiatives toward enhancing rural electrification
The India government has recently approved the ‘Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)’, an
integrated scheme covering all aspects of rural power distribution. This has led to intensive electrification of Indian
villages from 14,956 in 2013-14 to 63,330 in 2016-17, i.e. increase of 5 times. The overall intensive electrification is
expected to bring in overall socio-economic development in rural areas, mainly in terms of improved connectivity to
all villages and rural households, more access to mass communication media (radio, telephone, television) and
increased agricultural productivity, among others.
Exhibit 6: Progress in Rural Electrification – 2013-14 vs. 2016-17
100
Source: Frost & Sullivan analysis
Consumer appliances market is also expected to witness higher penetration with growing rural electrification
endeavors. The Indian Government’s continued push for rural electrification could benefit a host of consumer durables
and electronics makers, mainly Food preparation and other Kitchen Appliances. Also the recently introduced ‘Pradhan
Mantri Sahaj Bijli Har Ghar Yojna (Saubhagya)’ scheme, which promises electricity to every Indian household by
2018, is likely to shed more light on profitability of consumer appliances makers over the next few years.
5.7 ‘Pradhan Mantri Ujjwala Yojana (PMUY)’ - India Government’s aim to provide clean cooking fuel to families
that are below poverty line:
5.7.1 The scheme was initiated to persuade families who are under below poverty line to stop using firewood and other
traditional cooking based on unclean cooking fuels or on fossil fuels, by providing free of cost LPG (cooking gas)
connections to women from BPL Households.
5.7.2 Under this scheme the Indian Government initially made a target to provide 5 Crore LPG connections to under
privileged women.
5.7.3 Launch of this scheme will also provide a great boost to the ‘Make in India’ campaign as the key manufacturers of
cylinders, gas stoves, regulators, and gas hose are domestic (Source: http://www.pmujjwalayojana.com/about.html)
5.7.4 Cooktop gas oven manufacturers, like Stove Kraft Limited, perceive this increase in LPG users as an opportunity to
grow their market size since increase in LPG users will directly garner more number of gas stove/cooktop users in the
country.
5.7.5 One of the leading kitchen appliance manufacturers, Stove Kraft Limited, has partnered with oil and gas companies
such as Indian Oil, HPCL and BPCL, as a co-branding initiative and provides cooktops with new gas connection for
any of these oil and Gas companies. ‘Pradhan Mantri Ujjwala Yojana’, has helped Stove Kraft Limited. to increase
volume sales and also spread its reach into the country’s interiors.
6. THE INDIAN KITCHEN APPLIANCES MARKET ANALYSIS
6.1 Indian appliance and consumer electronics (ACE) market reached INR 2.05 trillion (US $31.48 billion) in 2017. It is
expected to increase at 9% CAGR to reach INR 3.15 trillion (US $48.37 billion) in 2022. Urban markets account for
the major share (65%) of total revenues in the consumer durables sector in India The key ‘Large’ and ‘Small’ Cooking
Appliances categories, which are covered in the scope of this report, the current market value is estimated at about
INR 148.5 billion, which is set to reach INR 238.0 billion by end 2022, growing at a CAGR of about 9.9%.
6.2 The kitchen appliances industry has traditionally been skewed toward unorganized players while a handful of
organized players have dominated major regions and key urban markets. Urban markets account for a major share of
total revenues in the consumer durables sector in India whereas rural markets have only now begun to contribute
recently.
6.3 Considering ‘zonal’ market representation, ‘South’ India contributes to about 35% of the total kitchen appliance
market in India, followed by ‘West’ zone. ‘East’ zone, currently, has the least penetration of Kitchen appliances market
with ~10-12% contribution, where, high-value and niche products like food processor, air fryer etc. have negligible
sales due to affordability issues which pose a challenge for growth in the region
6.4 Major players currently operating in the Indian kitchen appliances market include TTK Prestige, Stove Kraft Limited,
Gandhimathi Appliances Ltd, Hawkins, Bajaj Electricals, Preethi Industries Ltd., Glen, Faber, Kaff Appliances, Inalsa,
IFB, Panasonic, and Phillips, etc.
6.5 Key Drivers: Indian Kitchen Appliances Market
6.5.1 Lifestyle: Industry experts believe the most important current market trend is the stylizing of cookware in order to
transform the product from a functional kitchen tool to making it a part of an aspirational lifestyle, especially for
1,197
14,956
6,015
63,330
Electification of… Intensive electrification…
2013-14 2016-17
<5.02 times>
time____>
101
affluent, urban consumers. Consumers moving into new houses or remodelling their existing home often prefer the
latest collections to match the interior of their kitchens.
6.5.2 Need for space utilization: In earlier times, cookware used in the kitchen used to require a lot of space, it was difficult
to handle and heavy; thus emerged the concept of ‘modular kitchen’. Manufacturers have now introduced compact
designs and portable cookware especially for small homes, apartments and traveling purposes. Minimalism is the latest
trend, the appearance of minimalism—sleek design, neutral colors, matte finishes—also appeals to consumers because
it veils the appliances’ convoluted interiors, making the complex look simple.
6.5.3 Change in cooking approach: Apart from the cookware, there has also been a change in the cooking approach.
Cooking is no more restricted to women. Earlier women were considered as the synonym for home cooks, but the
picture has changed today; the role of the cook is played by men as well and it is equally accepted in the society.
6.5.4 Health and environment concerns: As the society changed it also helped to change consumption patterns. Now
consumers are gradually moving toward the healthy path. Indians are looking for healthier options not only in their
choice of food but also in their choice of kitchen appliances. Initially, India readily accepted Teflon coated Non-stick
cookware as this cookware uses less oil. A similar seeking for natural organic food, helped cold pressed juicers gain a
foothold in the market as its process doesn’t destroy enzymes and nutrients in a juice.
Another important trend is the growing tendency to question the safety of non-stick coatings in cookware. Leading
Kitchen appliance manufacturers such as Stove Kraft are working diligently to create a coating that is safe to use for
the households. For health safety concerns, consumers have also started avoiding the use of plastic. Researches have
proved that the toxic compound found in the plastic causes health problems like cancer, obesity infertility etc. Such
aspirations include catering to ‘green’ concerns for environmental friendliness and the health and the safety of the
products offered.
6.5.5 Technological advancement: The kitchen appliances industry is increasingly becoming a technology driven market.
Very often there are new innovations and updates expanding the industry. Technological evolution is transforming the
supply of products such as hoods or hobs, which become more and more hi-tech and connected. In addition,
manufacturers of major and small appliances have conceived new devices that meet the need of consumers to live
better.
New technologies are applied to cooking hobs like even heating and temperature controls of the burners, easy cleaning,
and hoods/chimneys with more efficient ventilation mechanisms etc. Consequently, the life cycle of products has been
considerably shortened and accordingly, the need for a continuous renewal is felt more frequently.
6.5.6 Growth of E-commerce and easy financing options: Current market trends are reflective of what’s on the customer’s
mind as they choose how to equip and furnish their homes. It all started with Non-stick cookware and 50 years later,
the cookware market keeps on developing. This market has advanced on the back of rising disposable income, growing
sales infrastructure in the form of specialist stores and innovations, coupled with e-commerce players, increasing
popularity of modular kitchens and convenience associated with such appliances. More than just satisfying the
functional needs of the Indian consumer, modern retail in this sector has emerged to cater to the diverse needs of the
customer – convenience, fashion or price.
Besides, e-commerce companies also offer a range of kitchen appliances with easy financing, like low EMI and
discounts to generate more sales, which also contribute toward increased demand. As per industry expert’s views,
Modern Retail chains such as Big Bazar, Croma, Reliance Digital, etc. significantly contribute toward increasing
product awareness of modern consumer appliances among consumers, thereby boosting the demand for kitchen
appliances in India.
6.5.7 Mass Media: Consumers are now more aware of cookware through reality programs and cooking shows on Television,
and modern format retail chains today provide a wide range of alternatives at each value point in variety of consumer
appliances. Increasing number of cooking based shows on television is also encouraging people to buy food
preparation appliances and to try out new recipes. Mass manufacturing has also empowered cookware to be delivered
at lower costs, which in turn has extended the range of customer choice.
6.5.8 Influence of Social Media: To take this approach at the global level, social media also played a very important role.
In this technological savvy world, people have started experimenting and with the help of media taking it viral. Latest
apps have also acted as a key support to help people across the world to promote their various ideas, recipes,
innovations, methods and style of cooking digitally and reaching out for the maximum exposure possible.
6.5.9 Property developers and builders as influencers: are increasingly providing built-in kitchens (Sometimes as an
option) in order to have a competitive edge. If not built-in kitchens, developers are providing the modularity to have a
built-in kitchen. The concept of hiring a third party Kitchen designer is also on the rise especially in urban pockets.
Also there has been an increase in the number of Kitchen specialty stores, Premium retailers and Multi branded outlets
which have been a great influence in the growth of kitchen appliances, especially large, built-in appliances.
102
6.5.10 Increase in premium residential constructions: Share of premium residential construction was 7% in 2010, has
increased to 10% in 2015 giving rise to higher adoption of modern kitchen appliances.
6.6 Large Cooking Appliances:
6.6.1 Large cooking appliances include Cooker Hoods, Cooking Hobs (either built-in or freestanding) and Cooktops. Retail
Volume sales of Large Cooking Appliances category as a whole, has witnessed a growth at a CAGR of 6.0% through
2015-2020, to reach sales of 14.2 million units in 2020. In terms of Retail Sales ‘Value’ growth, the category has
grown at an even higher CAGR of 9.2% through the same period, to reach sales of about INR 111 billion in 2020.
6.6.2 The overall growth momentum of the ‘Large Cooking Appliances category’ Retail sales is expected to continue the
forecast period of 2020 to 2025. In terms of Retail Volume, the category is expected to grow at a CAGR of about 8.7%
through 2021-2025, to clock 21.7 million unit sales by end of 2025. Retail Value sales, also is expected to continue on
its higher growth trajectory, at a CAGR of 12.5% through 2021-2025, to reach INR 201 billion by end of 2025.
Exhibit 26: Large Cooking Appliances: Market Size (by Volume and Value)
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast
6.6.3 Large Cooking Appliances’ category, primarily include the following appliances:
• Cooker Hood (colloquially known as ‘Kitchen Chimney’),
• Cooking Hob (Built-In and Free-Standing versions), and,
• Cooktops
Exhibit 27: Large Cooking Appliances: Volume ('000 Units) Trend by sub-segments
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 28: Large Cooking Appliances: Value (INR billion) Trend by sub-segments
14,209
15,453
16,817
18,313
19,955
21,761
110.96
124.92
140.73
158.62
178.91
201.90
2020 2021F 2022F 2023F 2024F 2025F
Volume ('000 units) Value (INR billion)
1,751
1,988
2,257
2,563
2,910
3,305
10,432
11,176
11,973
12,826
13,741
14,721
284
310
339
369
403
440
1,742
1,979
2,248
2,554
2,901
3,296
2020 2021 F 2022 F 2023 F 2024 F 2025F
Cook Tops Free-Standing Hobs Built-in Hobs Cooker Hoods
103
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
6.6.4 Large Cooking Appliances are almost exclusively sold through Store-Based retailing, which accounted for 98.6% of
the category’s total retail volume sales. Remaining 1.4% was sold through Non-Store based retailing.
Exhibit 29: Large Cooking Appliances: Average Unit Price (in INR) Trend by sub-segments
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast
COOKER HOODS (colloquially referred to as ‘Kitchen Chimney’)
Cooker Hoods
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
1,742
3,296
13.6%
Retail Value (INR Million)
25,344
`52,388
15.6%
Average Price (in INR)
14,549
15,896
2.4%
Market Leader (2020)
Faber
(23.0% Retail Volume Share)
Stove Kraft Ltd.’s Share (2020)
Pigeon, Gilma
(3.8% Retail Volume Share)
6.6.5 ‘Cooker Hoods’ or ‘Kitchen Chimneys’ has become an almost essential appliance in modern Indian kitchens as they
help to avoid the fumes of the food from spreading into the kitchen and to other attached rooms.
Exhibit 33: Brand Share 2020 (by Volume): Cooker Hoods (Kitchen Chimney)
104
Source: Euro-monitor and Frost & Sullivan analysis
6.6.6 The starting price of a kitchen hood in Indian market is around INR 6000. In 2020, the average retail unit price stood
at ~ INR 14,500. By end of 2025, the average price is expected to touch INR 15,896 per unit, growing at a CAGR of
about 2.4%.
COOKING HOBS (‘Built-in’ and ‘Free-Standing’ versions)
Built-In Hobs
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
284
440
9.1%
Retail Value (INR Million)
4,732
7,924
10.9%
Average Price (in INR)
16,640
18,026
2.2%
Market Leader (2020)
Faber
(23.0% Retail Volume Share)
Stove Kraft Ltd.’s Share (2020)
Pigeon, Gilma
(4.8% Retail Volume Share)
Free-Standing Hobs*
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
10,432
14,721
7.1%
Retail Value (INR Million)
55,276
89,022
10.0%
Average Price (in INR)
5,299
6,047
3.4%
Market Leader (2020)
Stove Kraft Ltd.
(20.3% Retail Volume Share)
Stove Kraft Ltd.’s Share (2020)
Pigeon
(20.3% Retail Volume Share)
*Including LPG Gas Stoves
6.6.7 ‘Cooking Hobs’ are built-in appliance and are to be set in the kitchen counter by cutting the slab according to the
dimension of the gas hob.
6.6.8 Hobs are usually available in 3 burners or 4 burners with one small, one large and two medium-sized burners to adjust
different sizes of vessels. The most popular options in India: gas and electric hobs:
6.6.9 ‘Free-standing’ Hobs are much more prevalent in Indian households. The brand Pigeon (from the house of Stove Kraft
Ltd.) has grown at 8.4% CAGR over 2015-2020 and Stove Kraft Ltd. is the current market leader with 20.3% retail
volume share in 2020. It is followed closely by TTK Prestige Ltd. which garnered 16.2% market share in 2020.
Exhibit 31: Brand Share 2020 (By Volume): 'Free-Standing' Hobs
105
Source: Euro-monitor and Frost & Sullivan Analysis
Exhibit 32: Brand Share 2020 (By Volume): Built-In Hobs
Source: Euro-monitor and Frost & Sullivan Analysis
COOKTOPS:
Cooktops
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
1,751
3,305
13.6%
Retail Value (INR Million)
25,606
52,564
15.5%
Average Price (in INR)
14,626
15,905
2.4%
Market Leader (2020)
Stove Kraft Ltd.
(25.0% of Retail Volume Share)
Stove Kraft Ltd.’s Share (2025)
Pigeon, Gilma
(25.0% of Retail Volume Share)
6.6.10 Cooktops are essentially Cooking Stoves. They are most frequently used and essential tool in most Indian kitchens. A
cooktop can be a free-standing unit or ‘built-in’ with one or more burners or smooth tops with circular rings. Cooktops
are categorized, based on their nature of fuel usage – gas or electricity and their appearance/design.
6.6.11 India cooktops market stood at INR 25.6 billion in 2020, and is expected to grow at a CAGR of 15.5%, in retail value
terms, to reach INR 52.6 billion by the end of 2025, on the back of increasing consumer spending on smart kitchen
appliances due to the increasing number of working women coupled with busy lifestyle, rising awareness for indoor
pollution, and increasing demand for innovative smart electrical appliances across the country.
Exhibit 30: Brand Share 2020 (By Volume): Cooktops
106
Source: Euro-monitor and Frost & Sullivan Analysis
6.6.12 India Cooktops market is dominated by these major players, namely – Stove Kraft Ltd., Franke Faber India Ltd., TTK
Prestige Ltd., Sunflame Enterprises Private Limited, Butterfly Gandhimathi Appliances Ltd., Elica PB India Private
Limited, Bajaj Electricals Ltd., Philips India Ltd, among others. In this segment, indigenous brands like Stove Kraft
Ltd. followed by Sunflame has registered prominent market share in 2020. Stove Kraft Ltd. is the leading brand in this
segment with 25.0% retail volume share and it sells its cooktops through the brand routes of Pigeon and Gilma, as well
as by OEM and exports.
6.7 Small Cooking Appliances
6.7.1 Successful marketing by leading companies TTK Prestige, Stove Kraft Limited, Bajaj Electricals etc. and others has
created a market for small cooking appliances in India
Exhibit 37: Small Cooking Appliances: Market Size (by Volume & Value)
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
6.7.2 Small Cooking Appliances are also almost exclusively sold through Store-Based retailing. In 2020, 97.4% of total
retail volume sales were registered through Store-based retailing, and the remaining 2.6% only was sold through Non-
Store based retailing.
Exhibit 38: Small Cooking Appliances: Volume ('000 Units) Trend by sub-segments
107
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 39: Small Cooking Appliances: Value (INR billion) Trend by sub-segments
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Pressure Cooker
Pressure Cooker
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
31,697
45,273
7.4%
Retail Value (INR Million)
17,728
27,239
9.0%
Average Price (in INR)
559
602
2.1%
Market Leader (2020)
TTK Prestige
(48.2% Retail Volume Share)
Stove Kraft Ltd.’s Share (2020)
Pigeon
(11.4% Retail Volume Share)
6.7.3 A pressure cooker is an airtight cooking device that enables the cooking liquid (mostly water) to heat and build up
steam pressure inside the vessel, which in turn makes the food moist and enables quick cooking.
6.7.4 Depending on the type of material, Pressure Cookers can be of Aluminium, Stainless Steel or Hard Anodized.
Exhibit 40: Pressure Cooker: Market Size by Volume (‘000 units) & Value Growth Forecast (INR billion)
108
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
6.7.5 The retail sales ‘Value’ of the pressure cooker market in India stands at INR 17.7 billion in 2020, growing at a healthy
CAGR of about 9% through 2015-2020. Stove Kraft Ltd., TTK Prestige and Hawkins have a dominant position in the
market for pressure cookers.
Exhibit 41: Brand Share (by Volume) 2020: Pressure Cookers
Source: Euro-monitor and Frost & Sullivan Analysis
Electric Rice Cookers
Electric Rice Cookers
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
2,186
2,995
6.5%
Retail Value (INR Million)
4,421
6,140
6.8%
Average Price (in INR)
2,023
2,050
0.9%
Market Leader (2020)
Panasonic
(35.0% Retail Volume share)
Stove Kraft Ltd.’s Share (2020)
Pigeon, B&D
(4.7% Retail Volume share)
6.7.6 A rice cooker is an electrical kitchen appliance used essentially for cooking of rice. However, it can be used to make
other food that needs to be steamed, such as dumplings, idli, dhokla, steamed vegetables for salads etc.
6.7.7 A key driver of the global rice cookers market is that they cook rice by evenly keeping the grain separate, neither
undercooking nor overcooking.
Exhibit 44: Electric Rice Cookers: Market Size by Volume (‘000 units) & Value Growth Forecast (INR billion)
CAGR 7.4%
CAGR 9.0%
109
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast
Exhibit 45: Brand Share (by Volume) 2020: Electric Rice Cookers
Source: Euro-monitor and Frost & Sullivan Analysis
Panasonic Home Appliances led the Electric Rice cooker market in 2020 with about 35.0 market share, followed by
TTK Prestige at 26.8%. Stove Kraft Ltd. garners a healthy market share of 4.7% offering Electric Rice Cookers,
predominantly through its flagship brand ‘Pigeon’. It has also initiated sales of premium category through ‘Black &
Decker’ brand (as per licensing agreement).
Food Preparation Appliances
BLENDERS:
Blenders
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
1,229
1,713
6.9%
Retail Value (INR Million)
3,623
5,063
6.9%
Average Price (in INR)
2,948
2,955
0.7%
Market Leader (2020)
Phillips
(44.6% of Retail Volume share)
Stove Kraft Ltd.’s Share (2020)
Pigeon
(0.5% of Retail Volume share)
6.7.8 Blenders are multipurpose appliances that have a variety of uses in the kitchen. The major function in home and bar
application is geared toward ice crushing. Blenders also emulsify softer food ingredients such as yogurt and fruit,
which ultimately results in a thick consistency and smooth texture. Blenders are essentially appliances which are used
in kitchen to blend smoothies, juices, puree vegetables in the soup, blend batter for pancakes etc. and also chop down
vegetables to some extent.
Exhibit 52: Blenders: Market Size by Volume ('000 units) and Value (in INR billion)
CAGR 6.5%
CAGR 6.8%
110
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast
Exhibit 53: Brand Share (by Volume) 2020: Blenders
Source: Euro-monitor and Frost & Sullivan Analysis
6.7.9 While Stove Kraft Ltd., offers ‘Hand-Blenders’ through its flagship brand ‘Pigeon’, however, it is its premium offering
through ‘Black & Decker’ brand route, that has picked up higher sales value in 2020.
FOOD PROCESSORS
Food Processors
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
2,309
3,218
6.9%
Retail Value (INR Million)
12,283
18,257
8,3%
Average Price (in INR)
5,321
5,673
1.9%
Market Leader (2020)
Phillips
(25.6% Retail Volume Share)
Stove Kraft Ltd.’s Share (2020)
B&D
Setting footsteps in the category
Food processor is a versatile kitchen appliance which is used to facilitate repetitive tasks in the preparation of food. It
can perform multiple operations like chopping, grinding, puree, shredding, cutting and blending.
Exhibit 54: Food Processors: Market Size by Volume ('000 units) and Value (in INR billion)
CAGR 6.2%
CAGR 6.3%
111
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 55: Brand Share (by Volume) 2020: Food Processors
Source: Euro-monitor and Frost & Sullivan Analysis
JUICE EXTRACTORS
Juice Extractors
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
249
348
6.9%
Retail Value (INR Million)
970
1,431
8.1%
Average Price (in INR)
3,895
4,109
1.8%
Market Leader (2020)
Bajaj
(25.7% Retail Volume share)
Stove Kraft Ltd.’s Share (2020)
Pigeon,
B&D
(3.8% Retail Volume share)
Juice extractors are kitchen appliances that extract the juice from whole fruits and vegetables, while the pulp and skin
are left behind. A Centrifugal juicer can be noisy, and, because they are fast, and tend to heat up, is considered to
somewhat affect nutritional value of the juice.
Exhibit 48: Juice Extractors: Market Size by Volume ('000 units) and Value (in INR billion)
CAGR 6.2%
CAGR 7.6%
112
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 49- Brand Share (by Volume) 2020: Juice Extractors
Source: Euro-monitor and Frost & Sullivan Analysis
MIXER-GRINDER
Mixer-Grinder
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
13,860
19,484
7.1%
Retail Value (INR Million)
44,352
64,477
7.8%
Average Price (in INR)
3,200
3,309
1.3%
Market Leader (2020)
Bajaj
(21.1% Retail Volume share)
Stove Kraft Ltd.’s Share (2020)
Pigeon
(2.7% Retail Volume share)
A mixer is a kitchen device that uses a gear-driven mechanism to rotate a set of "beaters" in a bowl containing the food
or liquids to be prepared by mixing them. It is a kitchen appliance intended for mixing, folding, beating, and whipping
food ingredients.
Exhibit 50: Mixer-Grinder: Market Size by Volume ('000 units) and Value (in INR billion)
CAGR 6.9%
CAGR 8.1%
113
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 51: Brand Share (by Volume) 2020: Mixer-Grinder
Source: Euro-monitor and Frost & Sullivan Analysis
Other Non-Cooking Small Appliances:
In Indian households, there are two key categories in non-cooking small appliances that are slowly gaining foothold,
mainly through the urban consumers’ kitchen –
• Coffee Maker, and
• Electric Kettle
COFFEE MAKER:
Coffee Maker
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
327
455
6.8%
Retail Value (INR Million)
1,238
2,333
13.5%
Average Price (in INR)
3,786
5,125
6.9%
Market Leader (2020)
Bajaj
(29.1% Retail Volume share)
Stove Kraft Ltd.’s Share (2020)
B&D
(6.6% Retail Volume share)
Coffee machines are electrical appliances used to brew coffee and work on different types of brewing processes.
Exhibit 46: Coffee-Maker: Market Size by Volume ('000 units) and Value (in INR billion)
CAGR 7.1%
CAGR 7.8%
114
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 47: Brand Share (by Volume) 2020: Coffee Maker
Source: Euro-monitor and Frost & Sullivan Analysis
ELECTRIC KETTLE
Electric Kettle
2020
2025F
CAGR (2020-2025F)
Electric Kettle
757
1,024
6.2%
Retail Volume (‘000 units)
1,482
2,307
9.3%
Retail Value (INR Million)
1,958
2,254
3.5%
Average Price (in INR)
Market Leader (2020)
Bajaj
(23.8% Retail Volume share)
Stove Kraft Ltd.’s Share (2020)
Pigeon, B&D
(21.1% Retail Volume share)
Exhibit 42: Electric Kettle: Market Size by Volume ('000 units) and Value (in INR billion)
CAGR 6.8%
CAGR 13.5%
115
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast
6.7.10 An Electric Kettle is a metallic pot specifically used for the boiling of water. The electric kettle has a spout, a lid and
a handle. An electric kettle is just like the conventional kettle which was used in early times, but it is heated with the
help of electricity.
6.7.11 In year 2020, Electric Kettles market recorded 0.75 million units’ retail volume sales clocking total retail sales value
of INR 1.48 billion. The category value sale is expected to grow at a CAGR of about 9.3% over forecast period 2021-
2025 to reach value sales of INR 2.30 billion by end 2025.
Exhibit 43: Brand Share (by Volume) 2020: Electric Kettles
Source: Euro-monitor and Frost & Sullivan Analysis
6.7.12 Bajaj Electricals recorded the highest (retail volume) market share in 2020, followed by Phillips India and brand
‘Pigeon’ from the house of Stove Kraft Ltd. Stove Kraft Ltd. also initiated sales of premium range ‘Electric Kettles’
through the ‘Black & Decker channel.
7. BRIEF OVERVIEW OF NON-STICK COOKWARE MARKET IN INDIA
Non-Stick Cookware
2020
2025F
CAGR (2020-2025F)
Retail Volume (‘000 units)
7,117
11,389
9.9%
Retail Value (INR Million)
9,646
20,977
16.8%
Average Price (in INR)
1,355
1,842
7.0%
Market Leader (2020)
TTK Prestige
(58.2% Retail Volume Share)
Stove Kraft Ltd.’s Share (2020)
Pigeon
(18.9% Retail Volume share)
CAGR 6.2%
CAGR 9.3%
116
7.1 The term ‘Non-stick’ in cookware, usually refers to the surface which is coated with a synthetic polymer called
Polytetrafluoroethylene (PTFE) or with ceramic, anodized aluminium, enamelled iron which decreases the ability of
other materials to stick to it. The term ‘Teflon’ coating has become synonymous with Non-stick coating in the market.
Hence, non-stick cookware is often also addressed as Teflon coated cookware.
Exhibit 34: Non-Stick Cookware: Market Size by Volume ('000 units) and Value (in INR billion)
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Exhibit 35: Brand Share (by Volume) 2020: Non-Stick Cookware
Source: Euro-monitor and Frost & Sullivan Analysis
7.2 In 2020, Stove Kraft Ltd. sold about 0.77 million non-stick cookware. It sells ‘Non-stick cookware’ mainly through
its ‘Pigeon’ brand route. In terms of Retail Sales value, Stove Kraft Ltd. registered total sales of INR 776 million for
its ‘Non-Stick Cookware’ category through brand Pigeon.
7.3 Most popularly used Non-stick cookware includes Tawa, followed by Kadai and frying pan. The latest trend-setting
Hard anodized and ceramic non-stick cookware register prominent usage in Southern India, along with regional
cuisine-making cookware like ‘Appachetty’ and ‘Paniyarakkal’.
Exhibit 36: Types of Non-Stick Cookware used in Indian Kitchen, 2020
CAGR 9.9%
CAGR 16.8%
117
Source: Euro-monitor and Frost & Sullivan Analysis
7.4 Nirlep Appliances Limited, established in 1968, marked the launch of Non-Stick technology in India. Today, Nirlep
and Stove Kraft Limited are the only players to have a roller coating line. While Stove Kraft Limited 's roller coating
line is completely automated, that of Nirlep is only partially automated.
7.5 In South India, TTK Prestige dominates the market, followed closely by Stove Kraft Limited, both having very strong
brand equity in the region.
7.6 Stove Kraft Limited enjoys a prominent position in the Non-Stick cookware market, especially in the Southern region.
Stove Kraft Limited also offers a special range of non-stick cookware which is induction cook-safe. The range includes
the usual Pans, Tawa, and Pots and also offers special cookware like Appachetty and Paniyarakkal, focussed on
catering to the regional cuisine of Southern India.
7.7 In its continuous bid for innovation aimed at product efficiency and user convenience, Stove Kraft Limited’s latest
offerings include a new MIO
TM
non-stick cookware range, which is developed using latest Italian technology that
ensures high durability and smoothness of the products. The cookware in this range has 5 layer ‘Scandia’ coating,
comes with 1 year Warranty and includes Tawa, Kadai, Appachetty, Square Griddle as well as 2, 4, 6 and 8 piece gift
sets.
8. BRIEF OVERVIEW OF SOME HOUSEHOLD UTILITY PRODUCTS
Most manufacturers operating in the Kitchen Appliances market in India, especially those which manufacture small
kitchen appliances and food preparation appliances, are also involved in manufacturing and trading of some common
Household utility items, the market for which is primarily unorganized, dominated by small local/regional players
and Chinese manufacturers.
8.1 Floor Mop and Bucket
About 21% urban households in India currently use floor mop and bucket, which amounts to about 17 million units of
the product being used in urban India. In terms of retail sales value, urban market size is estimated to be around INR
37 billion in 2017-18.
8.2 Dustbin
Dustbin usage is almost universal across all urban households in India. Current retail volume of dustbins (all types
included), is estimated to be about 114 million. In terms of retail sales value, urban market size is estimated to be
around INR 216 billion in 2018-19.
8.3 Ladders
Ladders are commonly used in households for attending to ceiling fixtures like lights, fan etc., or for placing or taking
off things from shelves/lofts located at significant height. In terms of retail sales value, urban market size is estimated
to be around INR 58 billion in 2019-20.
Source: Primary research & data analysis by Frost & Sullivan
8.4 Clothes Drying Stand
8.4.1 Use of clothes-drying stands in Indian households is still in its preliminary stage, as most still prefer to use the balcony
or roof railings and ropes attached to them, for hanging washed clothes to dry. Currently, just about 28% of urban
118
Indian households use clothes drying stand, which amounts to about 24 million units of the product being used in
urban India. In terms of retail sales value, urban market size is estimated to be around INR 52 billion in 2018-19.
8.4.2 Clothes Drying Stands are usually made of metal – iron, steel, or aluminium. Average Retail unit price starts from
around INR 1,000, and can range up to INR 10,000.
8.5 Water Bottles and Flasks
Water bottles are used for transporting and storage of drinking water, and almost all urban households currently have
at least one or more water bottles. In terms of retail sales value, the current market estimates of the overall Water Bottle
and flask categories are INR 242 billion and INR 250 billion and INR 144 billion, respectively, in 2019-20.
8.6 Emergency Lamps
With the increasing adoption of emergency lighting in residential areas, companies are focusing on increasing their
portfolios dedicated to this sector. Small (portable) emergency lamps usage penetration in urban Indian households is
estimated to be about 23%, which translates to market volume of 20 million. In value terms it’s estimated at INR 71
billion in 2019-20.
9. SNAPSHOT: KEY PRODUCT CATEGORIES IN INDIAN KITCHEN APPLIANCES MARKET
*Forecast Period: 2017-2022 (Data Source: Euro-monitor and Frost & Sullivan Analysis)
Source: Euro-monitor and Frost & Sullivan analysis. Time Series represents Calendar years. F=Forecast.
Product
Categories:
Market
Size:
Retail
Volume
(2020)
Market
Size:
Retail
Volume
(2025F)
CAGR*
(2020-
2025F)
Market
Size:
Retail
Value
(2020)
Market
Size:
Retail
Value
(2025F)
CAGR*
(2020-
2025F)
Market
Leader
Company
(2020)
Market
Share of
Market
Leader
(2020)
Market
Share of
Stove
Kraft Ltd.
(2020)
‘000 units
‘000
units
%
INR
million
INR
million
%
%
%
Large Cooking Appliances
14,209
21,761
8.7%
1,10,958
201,898
12.5%
1
Cook Tops
1,751
3,305
13.6%
25,606
52,564
15.5%
Stove Kraft
Ltd.
25.0%
25.0%
2
Free-Standing Hobs
10,432
14,721
7.1%
55,276
89,022
10.0%
Stove Kraft
Ltd.
20.3%
20.3%
3
Built in Hobs
284
440
9.1%
4,732
7,924
10.9%
Faber
23.0%
4.8%
4
Cooker Hoods
1,742
3,296
13.6%
25,344
52,388
15.6%
Faber
23.0%
3.8%
Non-Stick Cookware
1
Non-Stick Cookware
7,117
11,389
9.9%
9,646
20,977
16.8%
TTK Prestige
58.2%
18.9%
Small Cooking Appliances
52,613
74,511
7.2%
86,098
1,27,247
8.1%
1
Pressure Cooker
31,697
45,273
7.4%
17,728
27,239
9.0%
TTK Prestige
48.2%
11.4%
2
Electric Kettle
757
1,024
6.2%
1,482
2,307
9.3%
Bajaj
23.8%
21.1%
3
Electric Rice Cooker
2,186
2,995
6.5%
4,421
6,140
6.8%
Panasonic
35.0%
4.7%
4
Coffee Maker
327
455
6.8%
1,238
2,333
13.5%
Bajaj
29.1%
6.6%
5
Juice Extractor
249
348
6.9%
970
1,431
8.1%
Bajaj
25.7%
3.8%
6
Mixer Grinder
13,860
19,484
7.1%
44,352
64,477
7.8%
Bajaj
21.1%
2.7%
7
Blender
1,229
1,713
6.9%
3,623
5,063
6.9%
Phillips
44.6%
0.5%
8
Food Processor
2,309
3,218
6.9%
12,283
18,257
8.3%
Phillips
25.6%
-
119
OUR BUSINESS
Some of the information in the following section, especially information with respect to our plans and strategies, contain
forward-looking statements that involve risks and uncertainties. You should read the section titled “Forward Looking
Statements” on page 13 for a discussion of the risks and uncertainties related to those statements and also the section titled
“Risk Factors” on page q9 for a discussion of certain factors that may affect our business, financial condition or results of
operations. Our actual results may differ materially from those expressed in or implied by these forward looking statements.
Our Financial Year ends on March 31 of each year, and references to a particular Financial Year are to the twelve month
period ended March 31 of that year. Unless otherwise stated or the context otherwise requires, the financial information used
in this section is derived from our Restated Financial Statements included in this Red Herring Prospectus on page 173.
You should carefully consider all the information in this Red Herring Prospectus, including this section, “Risk Factors”,
“Industry Overview”, “Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” on pages 19, 89, 173 and 238, respectively, before making an investment in the Equity Shares. In this
section, any reference to the “Company” “we”, “us” or “our” refers to Stove Kraft Limited, unless otherwise specified. Unless
otherwise stated, the financial information of our Company used in this section has been derived from our Restated Financial
Statement. Unless noted otherwise, some of the information in this section is obtained or extracted from F&S Report on our
request.
Overview
We are a kitchen solutions and an emerging home solutions brand. Further, we are one of the leading brands for kitchen
appliances in India, and are one of the dominant players for pressure cookers and amongst the market leaders in the sale of free
standing hobs and cooktops (Source: F&S Report, sponsored by our Company) We are engaged in the manufacture and retail
of a wide and diverse suite of kitchen solutions under our Pigeon and Gilma brands, and propose to commence manufacturing
of kitchen solutions under the BLACK + DECKER brand, covering the entire range of value, semi-premium and premium
kitchen solutions, respectively. Our kitchen solutions comprise of cookware and cooking appliances across our brands, and our
home solutions comprise various household utilities, including consumer lighting, which not only enables us to be a one stop
shop for kitchen and home solutions, but also offer products at different pricing points to meet diverse customer requirements
and aspirations.
During the six month periods ended September 30, 2020 and September 30, 2019 and for Fiscals 2020, 2019 and 2018 our
Pigeon branded products contributed 76.90%, 80.86%, 86.20%, 81.24% and 86.89% to our overall sales, respectively and were
amongst the leading brands in the market for certain products such as free standing hobs, cooktops, non-stick cookware, LPG
gas stoves and induction cooktops (Source: F&S Report, sponsored by our Company). Similarly, during the six month periods
ended September 30, 2020 and September 30, 2019 and for Fiscals 2020, 2019 and 2018 our Gilma branded products
contributed 5.43%, 2.36%, 2.54%,3.75% and 5.58% to our overall sales, respectively and our BLACK + DECKER products
contributed 1.50%, 2.37%, 2.70%,2.67% and 0.88% to our overall sales, respectively. Our Gilma portfolio comprises chimneys,
hobs and cooktops across price ranges and designs. We believe we have been able to leverage the distribution network of our
Pigeon branded products, and their brand recall value to enter new product segments and markets. In 2016, we further
diversified the Pigeon brand by launching LED products under it and in 2019, we commenced manufacturing LED products at
our Bengaluru Facility. We maintain a continuous focus on the development of our brands, and invest significant resources
towards their growth and outreach. Further, our dedication to R&D, quality and customer satisfaction, our in-house servicing
capabilities and our owned maintenance and service network also contribute to the market perception of our brands and
products.
Our flagship brands, Pigeon and Gilma, have enjoyed a market presence of over 15 years and enjoy a high brand recall amongst
customers for quality and value for money. Pigeon has been listed as one of the “India’s Most Admired Brands 2016” by White
Page International. As a result of our co-branding initiatives over eight years with LPG companies such as Indian Oil
Corporation Limited and Hindustan Petroleum Corporation Limited to utilize their sale and distribution channels, our Pigeon
brand has enjoyed a wide customer outreach and continues to have a high brand recall value. As on the date of this Red Herring
Prospectus, we manufacture and retail a wide and diverse range of affordable (value segment), quality products under our
Pigeon brand, including, inter alia, cookware, cooking appliances and household utilities (including consumer lighting). We
currently offer a wide range of products such as chimney, hobs and cooktops under the Gilma brand, which is targeted at the
semi-premium segment.
In addition to our established presence in the value and semi-premium segments through the Pigeon and Gilma brands, we also
entered the premium segment in 2016 pursuant to our exclusive BLACK + DECKER Brand Licensing Agreement with Stanley
Black & Decker, Inc. and The Black and Decker Corporation, which enables us to exclusively retail, and provide post-sales
services in relation to, a wide range of products such as blenders and juicers, breakfast appliances, small cooking appliances
and small domestic appliances (as defined under the BLACK + DECKER Brand Licensing Agreement) in India under the
BLACK + DECKER brand, up to December 31, 2027. We are yet to commence manufacturing under the BLACK + DECKER
brand. As of September 30, 2020, we manufacture 79.75% of our Pigeon and Gilma branded products (in terms of number of
units) at our well-equipped and backward integrated manufacturing facilities at Bengaluru (Karnataka) and Baddi (Himachal
Pradesh), which enables us to control and monitor the quality and costs. Our Bengaluru Facility is spread over approximately
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46 acres and five guntas, out of which 30 acres and one gunta is available for future expansion. As of September 30, 2020, it
had an installed annual production capacity of 38.40 million units, with the capability to manufacture products in the pressure
cookers, non-stick cookware (roller coated and spray coated), LPG stoves, mixer grinders, LED bulbs, iron and induction
cooktops categories. Similarly, as of September 30, 2020, our Baddi Facility, focused on the Oil Company Business, which
includes manufacturing and co-branding of products with such Companies, (“OCB”) has an installed capacity of 2.80 million
units per annum, with the capability to manufacture products such as LPG stoves and inner lid cooker.
For certain product categories and sub-categories which do not enjoy economies of scale in India, we engage in sourcing from
third party OEMs predominantly from outside India. For sourced products, we have a dedicated team to undertake inspection
and ensure that such products are built to suit our specifications in terms of design and quality. For the six month periods ended
September 30, 2020 and September 30, 2019 and for Fiscals 2020 and 2019, such products which are retailed under our brands
but sourced from third-party manufacturers, such as chimneys, hobs, irons, air coolers, kettles, water bottles, flasks, chairs, rice
cookers, IR thermometers, pulse oximeters etc., contributed 19.20%, 29.80%, 27.60% and 31.40% to our turnover, respectively.
We have a separate distribution network for each of our Pigeon, Gilma and BLACK + DECKER brands. Further, there is a
separate distribution network for the Pigeon LED products. As of September 30, 2020, our manufacturing facilities in Bengaluru
and Baddi are well connected with nine strategically located C&F agents. Additionally, we have 651 distributors in 27 states
and five union territories of India and 12 distributors for our products that are exported as of September 30, 2020. As of
September 30, 2020, the C&F agents and distributors are, in turn, connected with a dealer network comprising of over 45,475
retail outlets, which are driven through a sales force of 566 personnel. We have entered into commercial arrangements with
retail chains such as Metro Cash And Carry India Private Limited for the sale of our Pigeon branded products from several of
their retail outlets in India. Further, we have also entered into agreements with e-commerce platforms such as Flipkart India
Private Limited for the sale of our products on their portals. Outside of India, we export our products which are manufactured
by us to retail chains in the United States of America and Mexico.
Our Gilma brand products are sold through exclusively branded outlets owned and operated by franchisees. As of September
30, 2020, there were 65 such stores spread across four states and 28 cities and towns, with a presence in the urban market in
south India. Gilma stores are designed to be ‘experience’ stores.
As of September 30, 2020, we have a dedicated service team of 118 personnel to address service calls for all our brands. Our
CRM software enables us to track customer requests, pre-installation and post-sales support to ensure customer satisfaction.
Specifically, for our Gilma products, we have a mobile application which enables our customers to register themselves and
raise requests for installation and post-sales services through the app. For Pigeon and BLACK + DECKER products, our
customers can reach our Company through toll free numbers, giving missed calls, sending us emails on the customer care ID,
sending an SMS to our dedicated number or through our dealers and trade partners.
Our Company was founded by our Promoter, Rajendra Gandhi, a first generation entrepreneur with over 21 years of experience
in the kitchen appliances industry. We believe that the sector-specific experience and expertise of our senior management has
contributed significantly in the growth of our Company.
For the six month periods ended September 30, 2020, September 30, 2019 and Fiscals 2020 and 2019 our revenue from
operations as per our Restated Financial Statements was ₹3,288.36 million, ₹3,155.07 million, ₹6,698.61 million and ₹6,409.38
million, respectively, EBITDA was ₹450.63 million, ₹187.55 million, ₹337.92 million and ₹298.22 million, respectively and
restated profit for the period / year was, ₹287.76 million, ₹43.89 million, ₹31.70 million and ₹7.36 million, respectively.
Between Fiscals 2018 and 2020, our EBITDA increased from ₹99.72 million in Fiscal 2018 to ₹337.92 million in Fiscal 2020.
Our EBITDA stood at ₹450.63 million for the six month period ended September 30, 2020.
Impact of COVID-19
The outbreak of COVID-19 was declared a global pandemic on March 11, 2020 by the World Health Organization. The
COVID-19 pandemic and associated responses of the GoI to reduce the spread of COVID-19, have adversely affected
workforces, consumer sentiment, economies and financial markets around the world, including in India.
The COVID-19 pandemic and the associated responses have also adversely impacted our business and operations, including in
the following manner:
• On account of the pandemic-imposed lockdown and other related measures by GoI, our manufacturing facilities in
Bengaluru and Baddi were shut down for 42 days and 34 days, respectively, which resulted in ceasing of our manufacturing
and sales activities during that period. The manufacturing activities at our Baddi facility resumed on April 26, 2020, and
the manufacturing activities at our Bengaluru facility resumed on May 4, 2020. Further, on May 4, 2020, our sales activities
for our products resumed and specifically when one of our product, viz., floor mops was included in the list of essential
products by the GoI. Upon resumption of manufacturing activities, our factories worked at reduced capacity during the
month of May 2020, on account of reduced availability of labour due to COVID-19 pandemic;
• The lockdown also resulted in disruption in our supply of imported products. During the period of the initial lockdown
(i.e., between March 25, 2020 and May 3, 2020), our Company could, on aggregate import traded goods and raw material
valued at approximately ₹14.90 million, as compared to the typical average monthly import of approximately ₹150 million.
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Accordingly, the revenues generated from our sale of traded products reduced to ₹626.51 million for the six month period
ended September 30, 2020, as compared to ₹935.97 million for the six month period ended September 30, 2019;
• The number of C&F agents of our Company reduced from 13 as at October 31, 2019 to nine as at September 30, 2020.
This was primarily on account of low sales volume in certain areas where some of the C&F agents did not wish to continue
their operations since it was unviable for them to continue their operations;
• As a result of lower revenues during the months of April 2020 and May 2020 and stress on general liquidity situation in
the market, the collection of receivables by Company was impacted. As a matter of abundant caution, our Company utilized
the moratorium on interest and principal, announced by the RBI, with two banks out of the four banks and other financial
institutions, with whom our Company has credit limits. Further, our Company had to undertake certain other measures on
account of the reduced cash flows, such as temporary reduction in salaries of certain classes of employees, and discharge
of obligations to vendors in a graded manner. However, we continued to discharge our statutory obligations with respect
to dues against direct and indirect taxes and labour laws, in accordance with the COVID-19 relief measures were
implemented by the GoI.
Our Company has also taken several steps to adapt our business and operations to the COVID-19 pandemic, including amongst
others, the following:
• We initiated the manufacture of new products, such as infrared thermometers, floor mops and handy vegetable choppers
for which we have increased our production capacity and have started new manufacturing units at our Bengaluru facility.
We also started importing oximeters under our Gilma brand, and have sold over 42,000 units as at September 30, 2020;
• We have continued increasing our distribution network, in spite of the COVID-19 pandemic, in order to benefit from
increased demand for certain products and to take advantage of new business opportunities. As a result, our operations
have now expanded to 27 states and five union territories as at September 30, 2020, as compared to 24 states and two
union territories as at October 31, 2019. Our distributors have increased from 429 as at October 31, 2019 to 651 as at
September 30, 2020, and our Gilma stores have increased from 62 as at October 31, 2019 to 65 as at September 30,
2020. Further, our retail outlets have increased from 38,090 as at October 31, 2019 to 45,475 as at September 30, 2020;
• We also have succeeded in reducing our operating expenses following the COVID-19 pandemic through, among other
factors, the streamlining of our workforce. Accordingly, while the number of sales and marketing personnel have reduced
from 701 as at October 31, 2019 to 566 as at September 30, 2020, during the same period, our number of factory workers,
plant team and management team has increased from 1,704 to 2,272 and our number of contractual labourers has
increased from 441 to 692. Overall, the aggregate number of permanent employees increased from 2,868 as at October
31, 2019 to 3,156 as at September 30, 2020; and
During COVID-19, our Company has implemented an upgraded enterprise resource planning system, i.e., SAP S4Hana,
which has helped us to undertake better analytics, streamline business processes and at large increase efficiency of teams
across different functions of our Company. Our Company has implemented costing, production planning, quality and
plant maintenance modules on and above existing modules in SAP S4Hana as part of integrated process. For information,
see “Our Business – Information Technology” on page 138.
Our Competitive Strengths
A one stop shop for well recognized, award winning portfolio of kitchen solutions brands with a diverse range of products
across consumer preferences.
Since our inception in the year 1999, we have grown from a single brand small LPG stove manufacturing company to become
one of India’s leading manufacturers of kitchen appliances, with revenue from operations of ₹3,288.36 million and ₹6,698.61
million for the six month period ended September 30, 2020 and Fiscal 2020, and a presence in 27 states and five Union
Territories of India and 14 countries across the world. Our brand portfolio, comprising of the Pigeon, Gilma and BLACK +
DECKER brands caters to the value, semi-premium and premium customer segments in the kitchen solutions industry, and
allows our customers to engage with the brand specifically designed for their budget and lifestyle. Our award winning Pigeon
brand is well established in the Indian kitchen appliances industry. As a result of our co-branding initiatives of over eight years
with LPG companies such as Indian Oil Company Limited and Hindustan Petroleum Corporation Limited to utilize their sale
and distribution channels, the Pigeon brand has enjoyed a wide customer outreach and continues to have a high brand recall
value. In this regard, the Pradhan Mantri Ujjwala Yojana, which is a scheme of the Ministry of Petroleum & Natural Gas, GoI
for providing LPG connections to women from BPL households, has enabled us to increase volume sales and reach the interior
regions of the country (Source: F&S Report, sponsored by our Company). We believe that the existing market presence and
strength of the Pigeon brand has been instrumental in enabling us to successfully enter into home solutions vertical with
products like LED products in 2016.
Our Gilma brand is focussed on offering the semi-premium experience to our customers with a wide variety of products such
as chimneys, hobs, glass cooktops etc. In September 2016, we entered into the BLACK + DECKER Brand Licensing Agreement
with Stanley Black & Decker, Inc. and The Black and Decker Corporation, a diversified global provider of hand tools, with a
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large presence in the small domestic appliances space. We believe that our tie-up with Stanley Black & Decker, Inc. and The
Black and Decker Corporation will enable us to penetrate the premium segment of the kitchen appliances industry, and
contribute significantly in the recognition, demand and growth of our overall brand portfolio.
We engage in a wide range of marketing and advertising activities, including in-shop displays, merchandising, kiosks, live
demo stands, social media marketing, which enable us to maintain the popularity and recall value of our brand portfolio. We
also maintain an in-house team of seven personnel who continuously engage with various publications, TV channels and other
media to coordinate our marketing efforts. We believe that we have undertaken the diversification of our product portfolio on
the basis of the needs of the customers, and we regularly seek their insights and feedback to ensure that our product range is
optimized to suit the needs of our customers.
Widespread, well connected distribution network with a presence across multiple retail channels and a dedicated after-sales
network.
We believe that the integration of our supply chain and distribution network with our manufacturing facilities provides us with
a competitive advantage over other players in the Indian kitchen appliances industry. As of September 30, 2020, our
manufacturing facilities in Bengaluru and Baddi are well connected with nine strategically located C&F agents. Additionally,
we have 651 distributors in 27 states and five union territories of India as of September 30, 2020. The C&F agents and
distributors are, in turn, connected with a dealer network comprising of over 45,475 retail outlets, which are driven through a
sales force of 566 personnel as on September 30, 2020. In addition to independent third-party retail stores, we have also
partnered with major Indian retailers for the sale of our products, and for Fiscal 2020, our products are available in retail chains
such as Metro Cash And Carry India Private Limited. We have also partnered with e-commerce retailers such as Flipkart India
Private Limited for the sale of our Pigeon branded products on their portals. As of September 30, 2020, our Gilma brand
products are sold exclusively through 65 Gilma stores located across 28 cities and towns in four states. Internationally, our
products were exported to 14 countries including UAE, Qatar, Bahrain, Kuwait, Tanzania, Uganda, Nepal, Sri Lanka,
Bangladesh, Oman, Ghana, United States of America, Mexico and Saudi Arabia in Fiscal 2020 and the six month period ended
September 30, 2020. Further, we supply our products to retail chains in the United States of America and Mexico and we also
undertake original equipment manufacturing for retail chains in the United States of America under their brands. In Fiscal 2016,
our inherent skill to scale led us to foray into a new line of business, i.e. LED products. Our Company started trading in LED
products and in a span of 36 months, achieved a revenue of ₹499 million. This led to our Company beginning the manufacturing
of LED products in June, 2019 and achieving total revenue of ₹218.64 and ₹330.65 million during the six month period ended
September 30, 2020 and Fiscal 2020, respectively. In June 2015, we obtained design registration in relation to our super cooker,
which further showcases our innovative approach.
We strive to balance product availability and inventory levels such that we can continue to deploy resources in a value-creating
manner, and believe that our wide presence generates economies of scale and contributes to the effective cost structure of our
Company. We believe that even with our vast geographical outreach, our operations have the ability to quickly respond to a
complex web of suppliers and trade customers, changing consumer preferences and constantly fluctuating demand. Our sales
team, comprising of 566 employees as of September 30, 2020, are constantly monitored and well connected through sales force
automation. We have also implemented BIZOM, a secondary sales software which enables us to track and capture the secondary
movement of our field sales executives and servicing engineers in the market in real time. We have also implemented the
‘Bizom’ software across our operations for the real time distribution management. Being technology driven enables us to gain
a deep understanding of the market trends in the kitchen solutions industry and shifts in customer preferences, and enables us
to expand strategically and with agility.
We strive to ensure that the quality of our products is complemented by the after-sales services provided to our customers across
segments, through a dedicated centralized CRM, and a large team of in-house service personnel to cater to the requirements of
our customers. We utilise a distributor management system (DMS), which helps the organisation to track secondary and tertiary
sales and maintain inventory level at the distributor’s centre. As of September 30, 2020, our servicing team comprised of 118
employees, with full in-house capabilities.
Strong manufacturing capability with efficient backward integration.
We believe the scale at which we undertake the manufacture of our products, combined with our raw material sourcing,
packaging, transportation practices and quality control, enables us to derive higher margins from the sale of our products. Our
Bengaluru Facility is a large facility for the manufacture of kitchen solutions, which is spread over approximately 46 acres and
five guntas out of which 30 acres and one gunta is available for future expansion. It is an integrated facility comprising of 12
manufacturing units, tailored to manufacture pressure cookers, non-stick cookware, hard anodized cookware, mixer grinders,
induction cooktops, LPG stove, glass cooktops, IR thermometer and handy vegetable chopper. Further, our Company has also
commenced manufacturing LED products in our Bengaluru Facility. For Fiscal 2020, it had an aggregate production capacity
of 19.50 million units per annum and as of September 30, 2020, the aggregate production capacity increased to 38.40 million
units per annum. It is also one of the few facilities in India to have a fully automated roller coating line for the manufacture of
non-stick cookwares (Source: F&S Report, sponsored by our Company). Our manufacturing facilities are backward integrated.
We have the ability to manufacture components such as bakelite handles, sheet metal components, moulded parts, die cast parts,
moulds, dies and fixtures in house for the manufacture of our products. We believe the backward integration of our
manufacturing facilities has reduced our dependence on third party suppliers and OEMs for such components.
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Our Baddi Facility, which has been operational since 2005 and engaged with our Company ever since, and has an annual
installed capacity of 2.80 million units per annum as of Fiscal 2020, with the capability to manufacture products in the LPG
stove and glass cooktop categories. Both our manufacturing facilities are ISO 9001:2015 certified for implementing quality
management systems.
Consistent focus on quality and innovation.
We believe that quality is a pre-requisite for a positive consumer experience and long-term brand loyalty. This philosophy has
formed the foundation of the expansion and diversification of our product portfolio since our inception. Our focus on quality is
maintained at all stages – right from the sourcing of raw materials, which is undertaken from manufacturers to the product
development and manufacturing stage, which is subject to a rigorous review and monitoring process undertaken at our
Bengaluru Facility. For products which are sourced by us from third party OEMs, we have a dedicated sourcing team and
quality assurance team based out of China, which closely monitors the quality of such products. Our efforts to maintain the
quality of our products have been well recognized in the industry, and we have been awarded the ‘Gold Award’ by Quality
Circle Forum of India (Bengaluru chapter) in the years 2013 and 2014.
Over the years, based on our experience we have focussed on investing in experience based product innovations that are most
relevant in creating the best consumer experience. The year on year expansion and optimisation of our product portfolio has
also been innovative, and we have added segments based on shifts in consumer preferences and market demand. As of
September 30, 2020, we have a dedicated in-house R&D facility, comprising of 13 personnel, and we have progressively
increased our investment in R&D in the last few years. To further our efforts in innovation, in the past, we had also entered into
tie-ups with foreign companies for technology enablement and tech knowhow agreements with them from Fiscal 2013 to Fiscal
2015. As a result of our focus on innovation, we developed the ‘Super Cooker’ which has a registered design and is customizable
into products with multiple utilities. We have also developed the ‘Super Storm Advanced’ mixer grinder, with forced air cooling
technology, and the ‘Infinity’ glass cooktops with a fastener free body.
Professional management with successful track record and extensive experience in the kitchen solutions industry, and a
young and dynamic workforce.
We are a professionally managed company with a track record of corporate governance and robust internal controls. Our strong
corporate culture that originates from the founder of our Company, Rajendra Gandhi, who is a first generation entrepreneur
with over 21 years of experience in the kitchen appliances and home appliances industry. We have a qualified and competent
leadership team. Our wholetime director and CEO, Rajiv Mehta Nitinbhai was the managing director of Puma Sports India
Private Limited and has previously worked with Arvind Limited. Our Chief Financial Officer, Company Secretary and
Compliance Officer, Shashidhar SK, has over 25 years of experience in the corporate finance and corporate governance fields,
and has previous experience of working with inter alia WaterHealth India Private Limited, Tata Advanced Materials Limited
and Craigmore Textiles Private Limited, our head of corporate planning, Venkitesh N., has over 25 years of experience in the
manufacturing sector, having previously worked with BPL Limited. Our Company’s management team has an average of more
than 22 years of experience.
While core functions are centralized, we have focused management teams as well as shared management teams which manage
the different brand portfolios, and our product heads have significant expertise in their respective product categories. In addition
to the experience of the senior management and staff, we believe we benefit significantly from the youth and dynamism of our
workforce, which comprises of a majority of young professionals such as Rohit Mago and Manoj N.G. who are also part of our
Key Managerial Personnel. For further details, see “Our Management- Brief profiles of our Key Managerial Personnel” on
page 165.
Strong track record and financial stability.
We have maintained a strong track record of growth over the years through expansion of brand portfolio, distribution network,
improved procurement costs and increase in sales growth. Our operational efficiencies and efficient supply chain network has
resulted in better control of operational expenses and thereby enabled rise in profits after tax. Further, we have been able to
capitalize on our existing logistics, supply chain network and backward integrated manufacturing facilities to utilize our capital
efficiently.
Over the past few years, we have added manufacturing and warehousing infrastructure, scaled up our retail franchise operations,
added a number of new product categories and entered new customer segments. We believe that these initiatives have prepared
a strong base for future growth. Our restated profit for the six month periods ended September 30, 2020 and September 30,
2019 and for Fiscals 2020 and 2019 was ₹287.76 million, ₹43.89 million, ₹31.70 million and ₹7.36 million, respectively.
Strategies
Increase our geographical reach and expansion of addressable market
We continually seek to enhance our addressable market through our network of 45,475 retail outlets, 651 distributors and nine
C&F agents across the country, as of September 30, 2020. Our erstwhile sales channel comprised of super distributors and their
business partners and was limited to the extent of their reach. However, since 2014, we have started appointing C&F agents to
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undertake our stocking and distribution, enabling us to reach our customers faster by reducing transportation time, optimise
inventory, and limit trade over-dues.
Toward this objective, we have also engaged a leading management consulting firm to undertake a project to improve our
distribution operations and productivity of our salesforce, as part of improving our sales, collect and analyse secondary sales
data. We believe that this project will enhance our network, penetration, distribution and effectively, maximise revenues from
the sale of our products.
Further, a large untapped customer base has surfaced with the advent of several Government initiatives such as Pradhan Mantri
Ujwala Yojana, which provides for free LPG connections (Source: F&S Report, sponsored by our Company). These initiatives
will provide us with an opportunity to increase our market share. As one of the leading cooktop manufacturers in the country
(Source: F&S report, sponsored by our Company), we look forward to leverage this vast network of rural households.
Scale up branding, promotional and digital activities
Our wide spread presence and scale of operations allows us to increasingly focus on branding and promotional activities to
enhance our visibility in the cookware and kitchen appliances industry. While our consumer brands are well established and
enjoy a high brand recall amongst our customers, we seek to continue to enhance brand awareness and customer loyalty through
our promotion and marketing efforts such as increased advertising in print and social media, retail branding, product branding,
hyperlocal activities, factory visits for our trade partners, substantially increasing our digital presence and engagements,
generating contemporary educational content and engaging in brand associations.
With 481 million internet users in India as on December 2017 (Source: F&S Report, sponsored by our Company), there is
access to information. The digital platform and social media has enabled us to reach and engage with a wider audience and also
customise product offering to our prospective customers. We believe that our consumer-focused products and product
information along with our well recognized brands increase customer confidence in our products and influences our customers'
buying decisions.
Expand our portfolio in the existing product categories
Our product portfolio under the brand Pigeon consists of four categories - cookware, cooktops and other solutions, small kitchen
appliances and home utilities aiding different functions and utilities in the kitchen and home. We have consistently focused on
expanding and optimising our product range to offer utility, a range of features and value for money. We seek to utilise our
research and development capabilities to develop new products to cater to the evolving requirements of a large customer base
and cover newer customer segments.
India has a relatively young demographic profile, with a median age of 27.3 years and 850 million of the country’s population
will be in the age group of 35 years or below, making India the globe’s youngest population by 2020 (Source: F&S Report,
sponsored by our Company). With increase in overall per capita income (Source: F&S Report, sponsored by our Company)
they have a significant impact on kitchen appliances and cookware market (Source: F&S Report, sponsored by our Company).
Being technology driven enables us to gain a deep understanding of the market trends in the kitchen solutions industry and
shifts in customer preferences, and enables us to expand strategically and with agility.
During the six month periods ended September 30, 2020 and September 30, 2019 and for Fiscals 2020, 2019 and 2018, traded
products contribute to 19.21%, 29.82%, 27.59%, 31.63% and 31.50%, respectively, of our sale of products. We propose to
expand our presence in existing product categories by increasing the emphasis on manufacturing a greater proportion of our
products, and reducing our reliance on traded products. For instance, while we entered the LED segment in 2016 as retailers,
we have since increased our manufacturing capabilities for LED products, and reduced our dependence on traded products.
Invest in new plants and increase automation in existing manufacturing facilities
We have two backward integrated manufacturing facilities in Bengaluru and Baddi with dedicated plants for each of our core
product categories - LPG cooktops, aluminum pressure cookers, non-stick cookware, induction cooktops, handy vegetable
chopper, floor mops and mixer grinders. These robust facilities with a constant focus on technology upgradation are equipped
to manufacture a wide and diverse range of products, as well as several components used in our products. We propose to
increase the level of automation at our facilities as we believe that would enable us to achieve greater efficiency in reducing
time taken for and the cost of manufacturing our products, from design to commercial production and, in our in-house testing
and quality assurance processes, resulting in higher profit margins.
The increase in per capita disposable incomes is fuelling the growth of newer segments of categories and products across
different demographics. To enhance our market share, we propose to invest in new plants, with high degree of automation,
specifically for the manufacture of new classes of products where economies of scales are rapidly evolving viz. electric irons,
wet grinders, stainless steel pressure cookers, bucket mops etc. We also intend to focus on manufacturing value added products
across product verticals ensuring our presence in each rung of the value chain. We have introduced a new line of cookers to
service the increasing demand for these products. To further our aim of greater efficiency, we have also automated our roller
coating unit in the Bengaluru Facility to increase productivity.
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Focus on and augment our LED consumer lighting business
Owing to the increasing government initiatives to boost LED adoption and growing awareness regarding lower power
consumption of LED lighting products, the LED lighting market is expected to grow significantly in India. We seek to capture
this growing demand for LED lighting products with our range of consumer lighting products including bulbs, battens,
downlight and panels. In a short span of three years, we have leveraged the strength of our brand ‘Pigeon’ and our capabilities
to scale up a large distribution network in the southern states of India. We will continue to introduce a wider range of LED
lighting products for different end-use segments and expand to newer and broader geographies. Further, we are leveraging our
manufacturing strength and have established a fully automated LED assembly unit for LED bulb and battens in our Bengaluru
Facility.
Increase exports
During the six month period ended September 30, 2020 and in Fiscal 2020, our export sales contributed to 17.90% and 7.64%,
respectively, of our revenue from operations. With our manufacturing and technological competence in non-stick cookware,
we are globally competitive to cater to both the developed and the developing markets. Our presence is currently spread across
14 countries including USA, Mexico, UAE, Qatar, Bahrain, Kuwait, Tanzania, Uganda, Nepal, Sri Lanka, Bangladesh, Oman,
Ghana and Saudi Arabia. We seek to expand our global reach, through constant innovation and increased customer acceptance
of our products in international markets.
Our Products and Brands Overview
Our products are sold under three brands, viz. Pigeon, Gilma and BLACK + DECKER to cater to the value, semi-premium and
premium customer segments, respectively. Set out below is a brief overview of the class of products retailed under each of the
brands:
Pigeon
Pigeon, which is our value for money brand, offers a wide array of products under various sub-categories. Set out below is an
overview of the products currently offered by us under the Pigeon brand:
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Cookware
Cooktops and other kitchen
solutions
Small appliances
Other products
• Pressure cookers
• Titanium Hard anodized
cookware
• Wondercast cookware
• Non-stick cookware
• Electric rice cookers
• Hobs
• Glass cooktops
• Stainless steel cooktops
• Induction cooktops
• Chimneys
• Mixer Grinders
• Rice cookers
• Electric kettles
• Toasters
• Sandwich makers
• Knives
• Steam irons
• Juicers
• Food steamers
• Electric grills
• Handy vegetable chopper
• Emergency lamps
• Water bottles and flasks
• Aluminum ladders
• Cloth dryers
• Dustbins
• Floor mops
• Tiffin box
Some of our marquee innovative products, such as the Super Cooker, Infinity glass cooktops and Super Storm Advanced mixer
grinder, are sold under the Pigeon brand. The Pigeon ‘super cooker’ is an innovative offering which provides the functionalities
of straining, serving, induction cooking compatibility and non-stick, energy efficient cooking in a single product.
Gilma
Our Gilma brand, which focuses on the semi-premium customer segment, is sold exclusively through Gilma branded stores
which are designed to offer the customer a modular kitchen experience. Currently, the Gilma portfolio comprises of chimneys,
hobs and cooktops across price ranges and design offerings. We believe that our Gilma products combine premium design with
effective performance, offered at a competitive price. While Gilma chimneys come built with higher suction power and a
lifetime warranty, the hobs offer features such as anti-rust stainless steel body, energy efficiency and one touch auto ignition.
Similarly, Gilma LPG stoves are designed keeping in mind thermal efficiency, durability and portability. Gilma LPG stoves
use toughened glass and brass burners, and come with a two year warranty. Additionally, the Company has recently entered
into the market of IR thermometer and pulse oximeters since July 2020 and August 2020, respectively, which, during the six
month period ended September 30, 2020 has contributed 2.34% and 0.74%, respectively to our overall sales.
The Gilma range of kitchen sinks come in two variants – glass and stainless steel. These sinks are stain resistant, easy to clean
with sound absorbers. The sinks are built with an extra thick body for durability, and come with a 25 year guarantee to ensure
customer satisfaction.
BLACK + DECKER
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BLACK + DECKER is a renowned name internationally in the field of, inter alia, kitchen appliances. Presently, we offer the
following products under the BLACK + DECKER brand, aimed at the premium segment of customers:
Small appliances
Other products
• Food processors
• Juicers
• Hand blenders
• Hand mixers
• Mini choppers
• Oven toaster grills
• Rice cookers
• Coffee makers
• Toasters
• Sandwich makers
• Kettles
• Steam irons
• Dry irons
• Water heaters
• Oil fin radiators
Pigeon LED
In 2016, we entered a new segment by launching the Pigeon brand of LED products, which are designed for better heat
dissipation and voltage surge protection. Presently, the products sold under the Pigeon LED brand include LED bulbs, battens,
and downlights.
Our Manufacturing Facilities
As of the date of this Red Herring Prospectus, we have two manufacturing facilities, one each in Bengaluru, Karnataka and
128
Baddi, Himachal Pradesh. Both our manufacturing facilities are ISO 9001:2015 certified for implementing quality management
systems. Our manufacturing facilities also have a high level of backward integration, and our ability to manufacture bakelite
handles, critical components, and mould & die in-house ensures that our manufacturing process is not dependent on third party
suppliers and OEMs.
Bengaluru
Our Bengaluru Facility is a large facility for the manufacture of kitchen solutions, which is spread over approximately 46 acres
and five guntas, out of which 30 acres and one gunta is available for future expansion. The Bengaluru Facility is situated on
several contiguous parcels of land, a majority of which are owned by our Company. Out of the 46 acres and five guntas, 43
acres and 14 guntas is in the name of our Company and 31 guntas in the name of certain third parties which are yet to be
transferred in the name of our Company. Further, in respect of the land parcels comprising the Bengaluru Facility, as of the
date of this Red Herring Prospectus:
• 0.30% which is equivalent to five guntas of the land parcels within our factory premises have not been converted from
agricultural use to non-agricultural use;
• 1.80% which is equivalent to 31 guntas of the land parcels which are held by our Company are yet to be registered in
the name of our Company;
• our Company has received show cause notices from the Kanakapura Planning Authority in relation to failure to obtain
the requisite approvals from KPA for carrying our industrial development program on 15.70% of the land parcels
which is equivalent to 6 acres 37 guntas; and
• our Promoter, Rajendra Gandhi, had received a notice from the Tahsildar, Kanakapura Taluk, in relation to submitting
proof of being an agriculturist in relation of holding 2.78% which is equivalent to 1 acre and 5 guntas of the land
parcels which are marked for agricultural use. Subsequently, pursuant to the order dated March 13, 2020 passed by
the Sub-Divisional Magistrate, Ramanagara Sub-Division, Ramanagara the notice received against Rajendra Gandhi
has been withdrawn and no further action has been taken against our Promoter by any regulatory authority in this
regard.
For further details, see “Risk Factors - Our manufacturing facilities are situated on land which may be subject to regulatory
action and litigation” on page 23.
The Bengaluru Facility is an integrated facility comprising of 12 manufacturing units, tailored to manufacture cookware,
cooktops, pressure cookers, mixer grinders, non-stick cookware, LED bulbs, floor mops, handy vegetable chopper, IR
thermometer and induction cooktops. Each unit is headed by an experienced unit head who is in-charge of production, purchase,
inventory and quality. Further, the Bengaluru Facility also houses a research and development department for the designing,
engineering and testing of new products before they are launched in the market.
129
The following table sets forth information relating to the aggregate installed production capacities for our products manufactured at our manufacturing facilities as of September
30, 2020, March 31, 2020, March 31, 2019 and March 31, 2018 at our Bengaluru Facility:
Number of units manufactured are in million
Produ
cts
As at March 31, 2018
As at March 31, 2019
As at March 31, 2020
As at September 30, 2019
As at September 30, 2020
Installe
d
Capacit
y (in
mn
units of
the
product
p.a.)
No. of
Units
manufa
ctured
Capa
city
Utilis
ation
(%)
(1)
Installed
Capacity
(in mn
units of
the
product
p.a.)
No. of
Units
manufa
ctured
Capacit
y
Utilisati
on
(%)
(1)
Installe
d
Capacit
y (in mn
units of
the
product
p.a.)
No. of
Units
manufa
ctured
Capacit
y
Utilisati
on
(%)
(1)
Installed
Capacity
(in mn
units of
the
product
p.a.)
No. of
Units
manufa
ctured
Capacit
y
Utilisati
on
(%)
(1)
Installe
d
Capacit
y (in mn
units of
the
product
p.a.)
No. of Units
manufacture
d
Capacit
y
Utilisati
on
(%)
(1)
Pressu
re
Cooke
r
3.00
1.70
57
3.00
2.17
72
4.80
2.70
56
3.60
1.56
43
4.80
0.97
20
LPG
Stoves
2.40
0.44
18
2.40
0.42
17
2.40
0.67
27
2.40
0.40
17
2.40
0.19
8
Non
Stick-
Spray
Coatin
g
2.40
1.27
53
2.40
1.66
69
2.40
0.91
38
2.40
0.53
22
2.40
0.34
14
Non
Stick-
Roller
Coatin
g
6.00
1.85
31
6.00
3.47
58
6.00
4.16
69
6.00
2.04
34
9.00
3.21
36
Mixer
Grind
er
0.60
0.27
45
0.60
0.31
52
0.60
0.34
57
0.60
0.19
31
0.60
0.08
14
Induct
ion
Cookt
ops
0.20
0.04
20
0.60
0.32
53
0.90
0.61
27%
0.90
0.31
34
1.20
0.26
22
Iron
Nil
Nil
Nil
Nil
Nil
Nil
0.60
0.03
6
0.60
0.05
8
0.60
0.05
8
LED
Bulbs
(
2)
Nil
Nil
Nil
Nil
Nil
Nil
3.00
2.07
69
3.00
0.5
0
12.00
2.17
18
Floor
mops
(
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
0.60
0.08
13
130
(1) Calculation of Utilized Capacity (%): Actual Production during the Year /Period /Installed Capacity during the Year /Period *100.
(2) Production of LED bulbs began in June, 2019.
(3) Production of floor mops started from May, 2020.
(4) Production of handy vegetable choppers started from May, 2020.
(5) Production of IR Thermometer started from July, 2020.
3)
Handy
vegeta
ble
chopp
er
(4)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
3.60
0.56
16
IR
Therm
omete
r
(5)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1.20
0.10
22
Total
14.60
5.57
38%
15.00
8.35
56%
20.70
11.47
55%
19.50
5.59
29%
38.40
8.03
21%
131
As of Fiscal 2020 and the six month period ended September 30, 2020, our Bengaluru Facility had an operational
capacity of 38.40 million units per annum. It is also one of the few facilities in India to have a fully automated
roller coating line for the manufacture of non-stick cookwares (Source: F&S Report, sponsored by our Company)
As a result, our Bengaluru Facility has both spray coating and roller coating capabilities for the manufacture of
non-stick cookware, which has enabled us to increase the production of non-stick cookware with greater
productivity and minimize rejection.
Baddi
Our Baddi Facility, has been operational since 2005 and engaged with our Company ever since. As of September
30, 2020, it had an installed capacity of 2.80 million units per annum with the capability to manufacture products
in the LPG stove and glasstops categories. We believe that our Baddi Facility benefits from its strategic location,
as most LPG stove manufacturers are located in northern India which enables the facility to source raw material
and skillful resources in an efficient manner.
132
The following table sets forth information relating to the aggregate installed production capacities for our products manufactured at our manufacturing facilities as of September
30, 2020, March 31, 2020, March 31, 2019 and March 31, 2018 at our Baddi Facility:
Produc
t
As at March 31, 2018
As at March 31, 2019
As at March 31, 2020
As at September 30, 2019
As at September 30, 2020
Install
ed
Capac
ity (in
millio
n units
of the
produ
ct per
annu
m)
Number of
Units
manufactu
red (in
million)
Capacit
y
Utilisati
on
(%)
(1)
Install
ed
Capac
ity (in
millio
n units
of the
produ
ct per
annu
m)
Number of
Units
manufactu
red (in
million)
Capacit
y
Utilisati
on
(%)
(1)
Install
ed
Capac
ity (in
millio
n units
of the
produ
ct per
annu
m)
Number of
Units
manufactu
red (in
million)
Capacit
y
Utilisati
on
(%)
(1)
Install
ed
Capac
ity (in
millio
n units
of the
produ
ct per
annu
m)
Number of
Units
manufactu
red (in
million)
Capacit
y
Utilisati
on
(%)
(1)
Install
ed
Capac
ity (in
millio
n units
of the
produ
ct per
annu
m)
Number of
Units
manufactu
red (in
million)
Capacit
y
Utilisati
on
(%)
(1)
LPG
Stove
1.80
0.77
45
1.80
1.03
57
1.80
0.34
19
1.80
0.25
14
1.80
0.15
8
Inducti
on
Cookto
p
(2)
0 .75
0.11
15
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Inner
Lid
Cooker
(
3)
Nil
Nil
Nil
Nil
Nil
Nil
1.00
0.32
32
1.00
0.14
14
1.00
0.32
32
Total
2.55
0.88
35%
1.80
1.03
57%
2.80
0.66
24%
2.80
0.39
14%
2.80
0.47
17%
(1) Calculation of Utilized Capacity (%): Actual Production during the Year /Period /Installed Capacity during the Year /Period *100.
(2) In Fiscal 2017-18 the product shifted to the Bengaluru Facility completely.
Production of inner lid cookers started in May, 2019.
133
Manufacturing Processes
Our manufacturing facilities are well equipped to ensure end-to-end manufacturing capabilities. Set out below is a brief
overview of the manufacturing process followed in relation to different kinds of products:
Pressure Cookers
The manufacturing process for pressure cookers is fully automated, with skilled and trained staff operating the assembly line
machinery. The quality check at various points ensures that there are minimal defects in the end product. Pursuant to this
process, our Company is able to manufacture pressure cookers at an average rate of 19,205 units per day, including the
Bengaluru and Baddi facilities as of September 30, 2020.
LPG Stove or Glass Cooktops
The manufacturing process for LPG stoves and glass cooktops is similar to the one adopted for pressure cookers, with the
difference being that it also involves spot welding – where metal components are welded together through the application of
pressure and heat, and buffing – which entails polishing of the welded product before assembly.
Non Stick – Spray
In case of the non-stick spray process, aluminum circles are pressed together to form the shape of the desired product, following
which the product undergoes buffing and sun blasting to create roughness on the inner side of the formation. Subsequently, the
unfinished product goes through the coating section where interior coating and exterior coating is undertaken, following which
our in-house manufactured handles are fixed and the product is packed for dispatch.
Non Stick – Roller Coating
This is a much advanced manufacturing process than the non-stick spray coating process. It is completely automated, where the
interior and exterior coating of circles is undertaken before pressing to form the shape of the desired end product. Post forming,
our in-house manufactured handles are fixed and the product is packed for dispatch.
Mixer
134
Different components of the mixer, such as the outer body, jars and motors are manufactured in-parallel by us. Subsequently,
the components are assembled and the product is run through a quality test, following which the products are packed for
dispatch.
Induction Cooktop
We source the components for our induction cooktops from third parties, and undertake the assembly and quality testing of the
products in-house, prior to packaging them for distribution.
LED Bulbs
We procure the top and bottom moulding from third party suppliers which is then assembled with the in-house manufactured
parts, tested and packaged prior to distribution.
Floor Mops
We manufacture certain plastic parts in our Bengaluru Facility which is then assembled with the mop stick and cotton cloth
sourced from third parties and packaged in-house.
Handy Vegetable Chopper
The bowl and plastic parts are manufactured in-house in our facilities, assembled with components such as blades obtained
Moulding of
bucket & other
plastic parts
* In-house
Inward of Mop
stick & cotton
cloth
* Purchased
Assembly
* in-house
Packaging
Moulding of
bowl & other
plastic parts
* In-house
Inward of
Blades &
components
* Purchased
Assembly
* in-house
Packaging
Top & Bottom Body
Moulding
• Purchased
PCB & SMT
Manufacturing
• In-house
Ageing
Assembly &
Packing
• In-house
135
from third parties, packaged and distributed.
IR Thermometer
We procure all components from third parties and only carry out the assembly, testing and packaging of the IR thermometers.
Our Geographical Presence
As of the date of this Red Herring Prospectus, our products under the Pigeon, Gilma, BLACK + DECKER and Pigeon LED
brands are available in the following geographies:
As of September 30, 2020, the state-wise number of retail outlets in which our products are available is set out below:
State/ Union
Territory
Pigeon OM
Pigeon LED
GILMA
B&D
Dealers
Dealers
Franchise
Dealers
Andhra Pradesh
1,041
2,290
18
20
Telangana
942
19
Karnataka
3,204
3,023
19
-
Kerala
2,610
832
6
17
TN
4,609
2,908
3
40
Procuement of all components Assembly & Testing Packing
136
State/ Union
Territory
Pigeon OM
Pigeon LED
GILMA
B&D
Dealers
Dealers
Franchise
Dealers
MP and
Chhattisgarh
2,536
233
-
-
Gujarat
1,511
-
-
-
Maharashtra
3,005
574
-
344
Rajasthan
2,057
493
-
33
Delhi
818
-
-
150
Greater Punjab
2,249
-
-
109
Haryana
673
-
-
31
Uttar Pradesh and
Uttarakhand
1,531
979
-
29
West Bengal
2,353
-
-
-
Bihar
527
-
-
-
Jharkhand
875
86
-
-
Orissa
847
-
-
-
NE
1,281
615
-
-
Total
32,669
12,033
65
773
Further, either under the Pigeon brand or as OEM manufacturers, our products are also sold internationally in the following
countries:
Marketing, Sales and Distribution
We have entered into advertising and marketing agreements with third party agencies for the creative marketing of our brands
and products. We ensure that our product packaging design includes images and written content on the product features,
specifications, highlights, etc. All packaging designs are based on the brand guidelines of specific brands. Our marketing
initiatives comprise of in-shop displays, merchandising, kiosks, live demo stands, social media marketing, including e-mailers,
customer engagement programs and brand visibility, and circulation of offer leaflets, brochures, postures, standees, banners,
posters. Our marketing agency also engages in making product application videos and creatives for press releases and outdoor
advertisement.
Each of the states where our products are retailed has a sales head, who reports to the national head of sales. The distribution
of our products is undertaken through a network of C&F agents, which are spread across the country. As of September 30,
137
2020, we have entered into agreements with nine C&F agents which in turn cover the following territories:
Name of C&F agent
Location
Territories covered
Sri Bhagavathy Traders Private Limited
Kumbalam, Kerala
South Kerala
KRR Agencies
Kondotty, Kerala
North Kerala
Jatin Associates
Jaipur, Rajasthan
Rajasthan
Mani Distributors
Indore, Madhya Pradesh
Madhya Pradesh
Namo Enterprises
Ahmedabad, Gujarat
Gujarat
Pawan Enterprises
Mumbai, Maharashtra
Maharashtra
Professional Logistics Solutions
Chandigarh, Delhi
Chandigarh, Punjab, Himachal Pradesh,
Haryana and Jammu and Kashmir, New
Delhi, Uttar Pradesh and Uttarakhand
Shradha Industries
Raipur, Chhattisgarh
Chhattisgarh
Vikas Sales Supplies
Kolkata, West Bengal
West Bengal
The branded business for our southern region (Pigeon and BLACK + DECKER) are serviced from the master warehouse situated
in our Bengaluru Facility. For BLACK + DECKER, business for eastern Indian states is serviced from a warehouse in Kolkata,
business in western Indian states is serviced from a warehouse situated in Mumbai and business for Punjab, Haryana, Himachal
Pradesh, Chandigarh and Jammu & Kashmir is serviced by a C&F agent located in Zirakpur, Punjab. Pigeon brand products
are serviced through all the C&F agents listed above, and serviced from the master warehouse situated in our Bengaluru Facility.
For modern retail stores and e-commerce platforms, our distribution is presently serviced from the master warehouse in our
Bengaluru Facility. We rely on third party logistic service providers for the transport of our products from our warehouse to the
C&F agents.
Servicing
Our Company has a dedicated service team and service franchisees to address service calls for our Pigeon, Gilma and BLACK
+ DECKER branded products. As of September 30, 2020, our service team comprised of 118 employees and we have service
franchise agreements with 170 service providers. Our CRM software enables us to track customer requests, pre-installation and
post-sales support to ensure customer satisfaction. Specifically for Gilma products, we have a mobile application which enables
our customers to register themselves and raise requests for installation and post sales services through the app. Basis the
customer’s request, the call is assigned to either the service executive or service franchisee, as the case may be. For Gilma
products, we have different models of servicing in different states, and as of September 31, 2020, our Gilma service model is
as follows:
S. No.
State
Service
Model
Service
Incharge
Service
Employees
Service
Franchisee
Total
1.
Andhra Pradesh
Franchisee
1
5
5
11
2.
Bihar
Franchisee
0
1
7
8
3.
Chhattisgarh
Franchisee
0
1
3
4
4.
Delhi
Franchisee
1
1
5
7
5.
Gujarat
Franchisee
1
2
8
11
6.
Haryana
Franchisee
0
0
8
8
7.
Himachal Pradesh
Franchisee
0
1
0
1
8.
Jammu and Kashmir
Franchisee
0
1
1
2
9.
Jharkhand
Franchisee
1
1
7
9
10.
Karnataka
Franchisee
2
12
17
9
11.
Kerala
Owned
1
28
0
29
12.
Madhya Pradesh
Franchisee
1
1
12
14
13.
Maharashtra
Franchisee
1
2
13
16
14.
North East (Meghalaya,
Mizoram, Tripura, Manipur And
Assam)
Owned
1
4
0
5
15.
Orissa
Franchisee
1
2
5
8
16.
Punjab (Including Chandigarh)
Franchisee
2
2
6
7
17.
Rajasthan
Franchisee
1
1
12
14
18.
Tamil Nadu
Franchisee
2
2
19
9
19.
Telangana
Franchisee
1
1
7
9
20.
Telangana
Franchisee
1
1
3
5
21.
Uttar Pradesh
Franchisee
1
2
20
23
22.
Uttarakhand
Franchisee
0
1
1
2
23.
West Bengal
Franchisee
1
4
9
14
24.
Corporate office
0
13
0
13
Total
19
89
170
278
For our Pigeon and BLACK + DECKER products, our customers can reach our Company through toll free numbers, giving
missed calls, sending us emails on the customer care ID, sending an SMS to our dedicated number or through our dealers and
trade partners. The service to our end customer is provided through Company technicians. All calls are registered at a centralized
138
call centre and thereafter allocated to respective branches based on mapping. At the outlet level, the branch service in-charge/
coordinators manually allocate calls to service technicians to attend servicing and installation requests.
Competition
The Indian kitchen solutions and appliances market is highly competitive. We face competition from various domestic and
multinational companies in India. Amongst listed players, our major competitors in the cookware, cooktops and small kitchen
appliances segments include TTK Prestige Limited, Hawkins Cookers Limited, Butterfly Gandhimati Appliances Limited and
Bajaj Electricals Limited. Amongst unlisted companies, our major competitors include Preethi Kitchen Appliances Private
Limited, Franke Faber Private Limited and Sunflame Enterprises Private Limited. Additionally, we face competition from a
number of regional, unorganized manufacturers and retailers (Source: F&S Report, sponsored by our Company).
Intellectual Property
We have registered certain business names and logos as trademarks under various classes with the Registrar of Trademarks in
India, under the Trade Marks Act, 1999. Some of the registrations include “ ”, “GILMA”, including for our corporate
logo, “ ”. For details of our intellectual property rights, see “Government and Other Approvals” on page 265 of
this Red Herring Prospectus.
Our ‘PIGEON’ trademark is subject matter of a litigation with PAPL, our Associate. For details, please see “Outstanding
Litigation and Other Material Developments” on page 257 and “Risk Factors - The trademark for our marquee brand ‘Pigeon’
is the subject matter of litigation, and there can be no assurance that we will be able to protect the trademark in the future” on
page 19.
Human Resources
As of September 30, 2020, we had 3,156 permanent employees on the payroll of our Company. The following table sets forth
the break-up as of September 30, 2020:
S. No.
Departments
No. of Employees
1.
Sales and marketing
566
2.
Finance, accounts and administration
86
3.
Supply chain management and procurement
114
4.
Factory workers, plant team and management team
2,272
5.
Service
118
Total
3,156
In addition to the employees listed above, we also engage contract labourers to facilitate our manufacturing operations. As of
September 30, 2020, we engaged 692 contract workers.
Further, following are the indicative range of remunerations we pay our employees and the number of employees falling under
each range as of Fiscal 2020:
Range of salaries in FY 20 (in ₹ lakhs p.a.)
No. of employees falling in the range
No. of factory workers and apprentices
falling in the range
Up to 3
480
2,163
3-5
349
11
5-10
67
Nil
10-25
70
Nil
25-50
9
Nil
Above 50
7
Nil
Total
982
2,174
Insurance
We maintain insurance policies for our manufacturing and retail business which is customary for our industry. These include
policies in relation to burglary insurance, money insurance, personal accident, fire and special perils insurance and Directors’
and Officers’ liability insurance. Additionally, we maintain mediclaim insurance policies for our employees and our key
managerial personnel.
Information Technology
We have implemented a company-wide SAP enterprise support system. This system is used to manage and co-ordinate all
resources, information and functions of the business on a real-time basis. The SAP enterprise system helps in integration of
different functional areas to ensure proper communication, productivity, quality and efficiency in decision making. It further
helps in tracking customer demands and assisting in maintaining optimum inventory levels. We have a dedicated IT team which
139
is involved in maintaining this SAP enterprise system.
Property
Our registered and corporate office situated at 81/1, Medamaranahalli Village, Harohalli, Hobli, Kanakapura Taluk, Ramanagar
District 562 112, Karnataka, India, is owned by us. Our manufacturing facilities are located on max of freehold and leasehold
land.
Details of the properties owned and leased by the Company are set out below:
140
Sl.
Address of the
Property
Survey
Number
Date of
Acquisition
/Transfer
to
Company
Name of Seller
Consideration
Paid (Amount
in ₹)
Name
of
Lessor
Rent
Payable
Per
Annum
(Amount
in ₹)
Relation of
lessor/seller to
promoter/promoter
group/director/KMP
1.
89/2A3
Medamaranahalli
Village Harohalli
Hobli,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
89/2A3
December
4, 2013
Rajendra
Gandhi
400,000/-
NA
NA
Rajendra Gandhi is
the Promoter
2.
81/1,
Medamarana
Halli Village
Harohalli Hobli,
Kanakapura
Taluk Bangalore
Rural District,
562 112,
Karnataka, India
81/1 and
89/2B
December
4, 2013
Rajendra
Gandhi
4,185,335/-
NA
NA
Rajendra Gandhi is
the Promoter
3.
89/2A4,
Medamarana
Halli Village
Harohalli Hobli,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
89/2A4
February 6,
2013
Ramakrishna
and others
2,250,000/-
NA
NA
NA
4.
81/3,
Medamarana
Halli Village
Harohalli Hobli,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
81/3
(old
number
81/1)
February 3,
2011
Munivenkatappa
and others
9,500,000/-
NA
NA
NA
5.
81/4,
Medamarana
Halli Village
Harohalli Hobli,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
81/4(old
number
81/1)
February
10, 2011
Lakshmi Devi
and others
5,425,000/-
NA
NA
NA
6.
81/2,
Medamarana
Halli Village
Harohalli Hobli,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
81/2
February
10, 2011
Lakshmi Devi
and others
NA
NA
NA
7.
81/5,
Medamarana
Halli Village
Harohalli Hobli,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
81/5(old
number
81/1)
August 26,
2010
H.P. Sunkoji
Rao Huliyar and
others
15,000,000/-
NA
NA
NA
8.
73, 87/1, 88/1,
88/2A, 88/2B,
88/3, 89/1, 119,
122/2, 122/3, and
73, 87/1,
88/1,
88/2A,
88/2B,
November
28, 2011
Mohamed
Maqbool
Hussain and
106,500,000/-
NA
NA
NA
141
*This land admeasuring 2 Acres 5 Guntas is in process of being acquired and an agreement to sell dated November 23, 2020 (“Agreement”)
has been entered into. The owners of the land have given our Company the possession to this land in accordance with the Agreement. Further
our Company has paid 60% of the land value amounting to ₹8.93 million to the Dasayya & Others and they have agreed to receive the
balance compensation of ₹5.95million after the completion of acquisition proceedings by to Karnataka Industrial Areas Development Board
(“Board”).
123/2 Harohalli
Industrial Area,
Kanakapura
Taluk
Ramanagar
District, 562 112,
Karnataka, India
88/3,
89/1,
119,
122/2,
122/3,
123/2
others
9.
28/2, Khatha No.
559, Arrehalli
Village Uttrahalli
Hobli, 560 061,
Bangalore,
Karnataka, India
28/2
February 4,
2002
N Vinay
450,000/-
NA
NA
NA
10.
307/2, Village
Burranwala
Road, Barotiwala
Tehsil Kasauli
District Solan,
Himachal
Pradesh
307/2
June 5,
2004
Prem Chand and
others
5,606,002/-
NA
NA
NA
11.
71,
Medamaranahalli
Village,
Harohalli,
Kanakapura
Taluk,
Ramanagara
District, 562 112,
Karnataka, India
71 (old
number
71/16A
and
71/17)
August 28,
2020
Ramakka and
others
1,65,59,680/-
NA
NA
NA
12.
81/6
Medamaranahalli
Village,
Harohalli,
Kanakapura
Taluk,
Ramanagara
District, 562 112,
Karnataka, India
81/6
(old
survey
number
81/1)
September
8, 2020
Rajendra
Gandhi
60,01,000/-
NA
NA
Rajendra Gandhi is
the Promoter
13.
71/20P,
Medamaranahalli
Village,
Harohalli,
Kanakapura
Taluk,
Ramangara
District, 562 112,
Karnataka, India
71/20P`
November
23, 2020*
Dasayya &
Others
89,25,000/-
NA
NA
NA
142
REGULATIONS AND POLICIES
Given below is a summary of certain sector-specific relevant laws and regulations as prescribed by the Government of India
or state governments which are applicable to our Company. The information in this chapter has been obtained from
publications available in the public domain. The description of the applicable laws and regulations as given below has been
provided in a manner to provide general information to the investors is indicative and is not exhaustive, and shall not be treated
as a substitute for professional legal advice. The statements below are based on the current provisions of applicable law, which
are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions.
Our Company is primarily engaged in the business of retail and manufacture of kitchen solutions and products. For further
details, see “Our Business” on page 119.
Under the provisions of various Central Government and state government statutes and legislations, our Company is required
to obtain, and periodically renew certain licenses or registrations, and to seek statutory permissions to conduct our business and
operations. For further details, see “Government and Other Approvals” on page 265.
I. Regulations regarding foreign investments
Under the current consolidated FDI Policy, effective from October 15, 2020, issued by the Department for Promotion
of Industry and Internal Trade (“DPIIT”) (formerly known as Department of Industrial Policy and Promotion)
including any modifications thereto or substitutions thereof, issued from time to time (the “Consolidated FDI Policy”)
and the FEMA Non-Debt Instruments Rules, 100% FDI through automatic route is permitted in the manufacturing
sector. Additionally, trading under the Consolidated FDI Policy is also under the automatic route and FDI is permitted
up to 100% therein. Trading under the Consolidated FDI Policy includes sale of goods/ merchandise to retailers,
industrial, commercial, institutional or other professional business users or to other wholesalers and related
subordinated service providers.
With effect from April 1, 2020, the aggregate limit is the sectoral caps applicable to Indian company as laid out in
paragraph 3(b) of Schedule I of FEMA Non-Debt Instruments Rules, with respect to paid-up equity capital on fully
diluted basis or such same sectoral cap percentage of paid-up value of each series of debentures or preference shares
or share warrants.
Further, in accordance with Press Note No. 3 (2020 Series), dated April 17, 2020 issued by the DPIIT and the Foreign
Exchange Management (Non-Debt Instruments) Amendment Rules, 2020, which came into effect from April 22, 2020,
any investment, subscription, purchase or sale of equity instruments by entities of a country which shares a land border
with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country,
will require prior approval of the Government of India, as prescribed in the Consolidated FDI Policy and the FEMA
Non-Debt Instruments Rules.
II. Environmental laws and regulations
We are subject to various environmental laws and regulations as the operation of our establishments might have an
impact on the environment. The basic purpose of such statutes is to control, abate and prevent pollution. In order to
achieve these objectives, Pollution Control Boards (“PCBs”), have been set up in each state and at a central level.
Establishments, as prescribed under various regulations are required to obtain consent orders from the PCBs. These
consent orders are required to be renewed periodically.
Water (Prevention and Control of Pollution) Act, 1974 (“Water Act”)
The Water Act prohibits the use of any stream or well for the disposal of polluting matter, in violation of the standards
set out by the concerned state PCB. The Water Act also provides that the consent of the concerned state PCB must be
obtained prior to establishing any industry, operations or any treatment and disposal system, which is likely to
discharge sewage or effluent into a water body.
Water (Prevention & Control of Pollution) Cess Act, 1977 (“Water Cess Act”) and Water (Prevention & Control
of Pollution) Cess Rules, 1978 (“Water Cess Rules”)
The Water Cess Act has been enacted to provide for the levy and collection of a cess on water consumed by persons
carrying on certain industries by local authorities constituted under the Water Act, with a view to augment the resources
of the central and state PCBs for the prevention and control of water pollution. The Water Cess Rules have been
notified under Section 17 of the Water Cess Act and provide, inter alia, standards for meters and places where they
are to be affixed and the furnishing of returns by consumers.
Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”)
The Air Act requires that any industry or institution emitting smoke or gases must apply in a prescribed form and
obtain consent from the state PCB prior to commencing any activity. The state PCB is required to grant, or refuse,
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consent within four months of receipt of the application. The consent may contain conditions relating to specifications
of pollution control equipment to be installed.
Environment (Protection) Act, 1986 (“EPA”)
The EPA has been enacted with the objective of protecting and improving the environment and for matters connected
therewith. As per the EPA, the Central Government has been given the power to take all such measures for the purpose
of, inter alia, protecting and improving the quality of the environment and to prevent environmental pollution. Further,
the Central Government has been given the power to give directions in writing to any person, officer or any authority
for any of the purposes of the EPA. Such directions include, inter alia, the power to direct the closure, prohibition or
regulation of any industry, operation or process.
Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (“Hazardous Waste
Rules”)
An “occupier” has been defined as a person who has control over the affairs of a factory or premises, or any person in
possession of hazardous waste. In terms of the Hazardous Waste Rules, occupiers have been, inter alia, made
responsible for safe and environmentally sound handling of hazardous and other wastes generated in their
establishments and are required to obtain license/ authorisation from concerned PCBs, for handling, generating,
collecting, processing, treating, packaging, storing, transporting, using, recycling, recovering, pre-processing, co-
processing, offering for sale, transfer, or disposal of the hazardous and other wastes.
III. Industrial and Labour Laws
Shops and establishments legislations in various states
The provisions of shops and establishment legislations, as may be applicable in a state in which establishments are set
up, regulate the conditions of work and employment and generally prescribe obligations in respect of, inter alia,
registration, opening, and closing hours, daily and weekly working hours, holiday, leave, health and safety measures,
and wages for overtime work.
The Factories Act, 1948 (“Factories Act”)
The Factories Act defines a “factory” to cover any premises which employs ten or more workers and in which
manufacturing process is carried on with the aid of power and, any premises where there are at least twenty workers
even though there is no electrically aided manufacturing process being carried on. Each state government has rules in
respect of the prior submission of plans and their approval for the establishment of factories, and registration and
licensing of factories. The Factories Act provides that an occupier of a factory i.e. the person who has ultimate control
over the affairs of the factory and in the case of a company, any one of the directors, must ensure the health, safety
and welfare of all workers. There is a prohibition on employing children below the age of fourteen years in a factory.
The occupier and the manager of a factory may be punished in accordance with the Factories Act for different offences
in case of contravention of any provision thereof and in case of a continuing contravention after conviction, an
additional fine for each day of contravention may be levied.
In addition to the Factories Act, the employment of workers, depending on the nature of activity, is regulated by a
wide variety of generally applicable labour laws. The following is an indicative list of labour laws applicable to the
business and operations of Indian companies engaged in manufacturing activities:
• Code on Wages, 2019;
• Contract Labour (Regulation and Abolition) Act, 1970;
• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
• Employees’ State Insurance Act, 1948;
• Payment of Gratuity Act, 1972;
• Maternity Benefit Act, 1961;
• Industrial Disputes Act, 1947;
• Employees Compensation Act, 1923;
• Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013;
• Industrial Employment (Standing Order) Act, 1946; and
144
• Child Labour (Prohibition and Abolition) Act, 1986.
IV. Tax Laws
The tax related laws that are applicable to our Company include the Central Goods and Services Tax Act, 2017,
Karnataka Goods and Services Tax Act, 2017, Customs Act, 1962, Income Tax Act, 1961, the Income Tax Rules,
1962 and Finance Act, 2018.
V. Other applicable laws and policies
The Legal Metrology Act, 2009 (“Legal Metrology Act”)
The Legal Metrology Act replaces the Standards of Weights and Measures Act, 1976. The Legal Metrology Act seeks
to establish and enforce standards of weights and measures, regulate trade and commerce in weights, measures and
other goods which are sold or distributed by weights, measures or numbers, and matters connected therewith or
incidental thereto. The key features of the Legal Metrology Act are (a) appointment of government approved test
centres for verification of weights and measures; (b) permitting the establishments to nominate a person who will be
held responsible for breach of provisions of the Legal Metrology Act; and (c) more stringent punishment for violation
of provisions.
Drugs and Cosmetics Act, 1940 (“DCA”) and the Drugs and Cosmetics Rules, 1945 (“DCA Rules”)
The DCA regulates the import, manufacture, distribution and sale of drugs and cosmetics (including thermometers)
and prohibits the import, manufacture and sale of certain drugs and cosmetics which are, inter alia, misbranded,
adulterated, spurious or harmful. The DCA Rules specify the requirement of a license for the manufacture or sale of
any drug or cosmetic including for the purpose of examination, testing or analysis. It further mandates that every
person holding a license must keep and maintain such records, registers and other documents as may be prescribed
which may be subject to inspection by the relevant authorities.
Trade Marks Act, 1999 (“Trade Marks Act”)
The Trade Marks Act provides for the application and registration of trademarks in India. The purpose of the Trade
Marks Act is to grant exclusive rights to marks such as a brand, label and heading, and to obtain relief in case of
infringement of such marks. An application for the registration of trademarks has to be made to Controller-General of
Patents, Designs and Trade Marks who is the Registrar of Trade Marks for the purposes of the Trade Marks Act. It
also provides for penalties for infringement, falsifying, and falsely applying trademarks and using them to cause
confusion among the public.
Design Act, 2000 (“Design Act”)
The Design Act, which came into force in May 2001, along with the rules made thereunder consolidate and amend the
law relating to protection of designs. A design refers to the features of shape, configuration, pattern, ornamentation or
composition of lines or colours applied to any article, in two or three dimensional or both forms, by an industrial
process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal
to and are judged solely by the eye. In order to register a design, it must be new or original and must not be disclosed
to the public anywhere in India or any other country by publication in tangible form or by use or in any other way prior
to the filing date. A design should be significantly distinguishable from known designs or combination of known
designs in order for it to be registered. A registered design is valid for a period of 10 years after which the same can
be renewed for a second period of five years, before the expiration of the original period of 10 years. After such period,
the design is made available to the public by placing it in the public domain.
The Bureau of Indian Standards Act, 2016 (“BIS Act”)
The BIS Act provides for the establishment of the Bureau of Indian Standards (“BIS”) for the development of the
activities, inter alia, standardization, marking and quality certification of goods. Functions of the BIS include, inter-
alia, (a) recognizing as an Indian standard, any standard established for any article or process by any other institution
in India or elsewhere; (b) specifying a standard mark to be called the Bureau of Indian Standards Certification Mark
which shall be of such design and contain such particulars as may be prescribed to represent a particular Indian
standard; and (c) conducting such inspection and taking such samples of any material or substance as may be necessary
to see whether any article or process in relation to which the standard mark has been used conforms to the Indian
Standard or whether the standard mark has been improperly used in relation to any article or process with or without
a license. The BIS certification IS 2347:2017 is an applicable standard for domestic pressure cookers. Further, we are
required to obtain mandatory BIS certification for certain of our products. For details, see “Government and Other
Approvals” on page 265.
Foreign Trade (Development and Regulation) Act, 1992 (“FTA”)
145
The FTA seeks to increase foreign trade by regulating imports and exports to and from India. The FTA read with the
Indian Foreign Trade Policy, 2015-20 provides that no person or company can make exports or imports without having
obtained an importer exporter code number unless such person or company is specifically exempted. An application
for an importer exporter code number has to be made to the Office of the Director General of Foreign Trade, Ministry
of Commerce. An importer-exporter code number allotted to an applicant is valid for all its branches, divisions, units
and factories.
Foreign Trade Policy 2015-20 (“EXIM Policy”)
Under the FTA, the Government of India is empowered to periodically formulate the EXIM Policy and amend it
thereafter whenever it deems fit. All exports and imports have to be in compliance with such EXIM Policy. The EXIM
Policy provides for certain schemes for the promotion of export of finished goods and import of inputs.
Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012
(“Compulsory Registration Order”)
The Compulsory Registration Order mandates that the manufacturing, storage, import, sale or distribution of goods
which do not meet the specified standard and/or bear a self-declaration confirming conformance to relevant Indian
Standard is prohibited. The only exception is for those goods which are manufactured for export. Further, any sub-
standard or defective goods must be deformed beyond use by the manufacturer and disposed of as scrap. The
Compulsory Registration Order is issued by the Department of Electronics and Information Technology, Ministry of
Communication and Information Technology, Government of India (“DEIT”).
For details of approvals obtained in accordance with applicable regulations, see “Government and Other Approvals”
on page 265.
146
HISTORY AND CERTAIN CORPORATE MATTERS
Brief history of our Company
Our Company was incorporated as Stove Kraft Private Limited on June 28, 1999 with a certificate of incorporation issued by
the RoC at Bengaluru, Karnataka, India as a private limited company under the Companies Act, 1956 and commenced its
business on June 28, 1999. Subsequently, our Company was converted into a public limited company pursuant to a special
resolution passed by our Shareholders at the EGM on May 28, 2018, and the name of our Company was changed from Stove
Kraft Private Limited to Stove Kraft Limited and a fresh certificate of incorporation consequent upon change of name was
issued to our Company by the RoC on August 13, 2018.
Changes in Registered Office
Except as disclosed below, there have been no changes in the registered office of our Company since the date of its
incorporation:
Effective date of
change of Registered
Office
Details of the address of Registered Office
October 30, 2000
From No: 34, I
st
Main 4
th
Cross, Arakere Mico Layout, 1
st
stage, Bengaluru 560 076, Karnataka, India to No: 58/2,
Subramanyapura Road, Chickallasandra, Bengaluru, 560 061, Karnataka, India
January 30, 2001
From No.: 58/2, Subramanyapura Road, Chickallasandra, Bengaluru 560 061, Karnataka, India to No. 28/1,
Adjacent to AGS Layout, 3
rd
Main Road, Arehalli Village, Uttarahalli Hobli, Bengaluru 560 061, Karnataka India
May 1, 2009
From No. 28/1, Adjacent to AGS Layout, 3
rd
Main Road, Arehalli Village, Uttarahalli Hobli, Bengaluru 560 061
Karnataka India to 81/1, Medamarana Halli Village, Harohalli Hobli, Kanakapura Taluk, Ramanagar District 562
112, Karnataka, India
The changes in the address of the Registered Office were to¸ inter alia, ensure greater operational efficiency and for
administrative convenience.
Main Objects of our Company
The main objects contained in the MoA of our Company are as follows:
1. To carry on the business of manufacturers, importers, exporters, buyers, sellers and dealers in all kinds and varieties
of metal components and metals, heating stoves for domestic and other applications, tools and jigs of various
composition for consumer durables, automobile, electrical and electronic industries.
2. To carry on the business of Mechanical Engineers, structural engineers, automobile engineers, electrical engineers,
aviation engineers, chemical engineers, refrigeration, air conditioning, insulating and heating engineering activities
and/or services and engineers in all branches of work whatsoever, steel makers, fabricators, iron founders, welders,
tool makers, brass, copper, aluminium and other metal founders, iron and steel converters, smiths, wood workers,
carpenters, builders, wheel wrights castings, tube, pipe and tool makers, moulders, fitters, saddlers, galvanizers,
enamellers, smelters, electroplaters, painters, japanners, annealers, silver platers, nickel platers, varnishers,
vulcanisers, packing case makers, containers, drums, pressure vessel makers in all their respective branches, repair,
convert, alter, let on loan or hire and deal in plant and equipment, machinery of all kind of tools, appliances,
instruments, implements, rolling stock, mechanical and electrical and electronic appliances.
3. To carry on the business of manufacturers, importers, exporters, dealers and distributors of electrical and electronic
goods, Electrical Cables, Wires, instruments, apparatus, generators, transformers, futurities and fittings, machinery
and equipment’s operated by electricity, other domestic, commercial and industrial appliances, goods and
equipment’s used in generation, transmission and distribution of electricity and components, parts, accessories (all
allied products of all and or any kind of the aforesaid items.
4. To carry on the business of assembling, fabricating, repairing, processing or altering of the electrical and electronic
articles and apparatus of every nature and description including the electrical and electronic household /domestic
items.
5. To carry on the business of manufacturing, buying, selling, distributing, importing, exporting and dealing in all types
of Plastics, Polymers, PVC Compounds, elastomer, Polypropylene, Polyethylene, Bakelite, thermoplastic and raw
materials for them.
6. To carry on the business of manufacturers, importers, exporters, dealers and distributors of Electrical Cables, Wires,
Instruments, wires made of aluminum, copper, steel, iron, and other metals including Jelly Filled Cables and
components.
The main objects as contained in the MoA enable our Company to carry on the business presently being carried out and the
activities proposed to be undertaken pursuant to the objects of the Offer. For further details, see “Objects of the Offer” on page
72.
147
Amendments to the MoA of our Company in last 10 years
Set out below are the amendments to our MoA in the last 10 years of our Company:
Date of
Shareholders’
Resolution
Particulars
February 2, 2010
Clause V of the MoA was amended to reflect the re-classification of equity share capital from ₹200,000,000 divided
into 20,000,000 Equity Shares of ₹10 each to ₹200,000,000 divided into 19,999,995 Equity Shares of ₹10 each
and 5 Class A Equity Shares of ₹10 each.
September 16, 2013
Clause V of the MoA was amended to reflect the increase and re-classification in the authorized share capital of
the Company from ₹200,000,000 divided into 19,999,995 Equity Shares of ₹10 each and 5 Class A Equity Shares
of ₹10 each to ₹200,000,050 divided into 19,999,995 Equity Shares of ₹10 each and 10 Class A Equity Shares of
₹10 each.
September 10, 2018
Clause V of the MoA was amended to reflect the increase in the authorized share capital of the Company from
₹200,000,050 divided into 19,999,995 Equity Shares of ₹10 each and 10 Class A Equity Shares of ₹10 each to
₹400,000,050 divided into 39,999,995 Equity Shares of ₹10 each and 10 Class A Equity Shares of ₹10 each.
July 25, 2019
Clause III of the MoA was amended to include the following additional main objects of the Company:
“3. To carry on the business of manufacturers, importers, exporters, dealers and distributors of electrical and
electronic goods, Electrical Cables, Wires, instruments, apparatus, generators, transformers, futurities and
fittings, machinery and equipment’s operated by electricity, other domestic, commercial and industrial
appliances, goods and equipment’s used in generation, transmission and distribution of electricity and
components, parts, accessories (all allied products of all and or any kind of the aforesaid items.
4. To carry on the business of assembling, fabricating, repairing, processing or altering of the electrical and
electronic articles and apparatus of every nature and description including the electrical and electronic
household /domestic items.
5. To carry on the business of manufacturing, buying, selling, distributing, importing, exporting and dealing
in all types of Plastics, Polymers, PVC Compounds, elastomer, Polypropylene, Polyethylene, Bakelite,
thermoplastic and raw materials for them.
6. To carry on the business of manufacturers, importers, exporters, dealers and distributors of Electrical
Cables, Wires, Instruments, wires made of aluminum, copper, steel, iron, and other metals including Jelly
Filled Cables and components.”
January 9, 2021
Clause V of the MoA was amended to reflect the change in the authorized share capital of the Company from
₹400,000,050 divided into 39,999,995 Equity Shares of ₹10 each and 10 Class A Equity Shares of ₹10 each to
₹400,000,050 divided into 40,000,005 Equity Shares of ₹10 each.
Major events, milestones and achievement of our Company
The table below sets forth the key events in the history of our Company:
Calendar Year
Particulars
1999
Our Company was incorporated as Stove Kraft Private Limited
2001
Granted trademark registrations for our brand Gilma
2003
Granted trademark registrations for our brand Pigeon
2004
Commenced manufacturing at our Baddi unit
2008
• SIDBI purchased 100 Equity Shares in our Company
• Received factory license for commencing operations for our Unit I at our Bengaluru Facility
2010
Investment into our Company by SCI
2010
Recorded total revenues of more than ₹3,000 million
2011
Recorded total revenues of more than ₹5,000 million
2011
Implemented SAP Business One at our manufacturing facilities
2013
Bought and installed Roller Coating Line and Finishing Lines machine at our Bengaluru Facility
2013
Investment into our Company by SCI and SCI-GIH
2014
Commenced exports to a retailer in the USA
2014
Received factory license for commencing operations for our unit II of our Bengaluru Facility
2015
Certificate of registration of design was granted for our product ‘Pressure cooker’ granted by the Patent Office,
Government of India
2016
Implementation of quality management system in accordance with ISO 9001:2008 for the scope of design and
development, manufacture and supply of LPG stoves, pressure cookers, non-stick cook wares, mixer grinders and
trading of kitchen and home appliances, by TUV-SUD South Asia Private Limited
2016
Entered into licensing agreement with Stanley Black & Decker, Inc. and The Black and Decker Corporation
2016
Acquisition of manufacturing unit from Saya Industries
2017
Best fill rate accreditation received from Flipkart for our Pigeon products list on Flipkart’s Big Billion Day
2018
Achieved sales of 9.1 million total units in Fiscal 2018
2019
Commenced the manufacture of Pigeon LED products at the Bengaluru facility
2019
Commenced the manufacture of inner lid cookers in the Baddi facility
148
Calendar Year
Particulars
2020
Commenced the manufacture of infrared thermometers, floor mops and handy vegetable choppers and trading of
pulse oximeters
Awards and Accreditations
We have received the following awards and accreditations:
Calendar Year
Awards and Accreditations
2012
• Awarded a “Star Performer” award (2011-12) in the Domestic Appliances and Parts thereof, Small Enterprises
Category by EEPC India
2013
• Gold Award by Quality Circle Forum of India, Bengaluru Chapter
2014
• Gold Award by Quality Circle Forum of India, Bengaluru Chapter
2015
• Award for being the Presenting Sponsor for ‘Tiecon Hubli 2015’
• Silver Award by Quality Circle Forum of India, Bengaluru
2016
• Award for “Highest Selling Non-Fuel Partner in the kitchenware category (2015-2016)” by Indian Oil
• Pigeon listed as one of the “Most Admired Brands 2016” by White Page International
• Award for “Overall Highest Export/Import and Bonding-2016” by Marigold Logistics Private Limited
• Certificate of Quality Management System in accordance with ISO 9001: 2008 for the scope of design and
development, manufacture & supply of LPG stoves, pressure cookers, non-stick cook wares, mixer grinders
and trading of kitchen and home appliances, by the certification body of TUV SUD South Asia Private Limited
Details regarding acquisition of business/ undertakings, mergers, amalgamation, revaluation of assets, if any in the last
10 years
Except as stated below, our Company has neither acquired any entity, business, undertaking, nor undertaken any merger,
amalgamation or revaluation of assets in the last 10 years:
Our Company has entered into a share purchase agreement dated November 7, 2020 entered between our Company, Microsun
Solar Tech Private Limited, Sohan K. Jain, Dinesh P. Jain, Sindhu Manoj Kumar Jain, Rishab Manoj Jain, Manju Mutha, Ashish
Jain, A. Ankitha and Megasun to acquire 45% equity shares in Megasun. As on date, this acquisition is yet to be completed.
For information, see “Risk Factor - We have entered into a share purchase agreement for a substantial shareholding in Megasun
which may not consummate or may not be successful” on page 31.
Capacity creation and location of our plants
Our manufacturing plants are located in Bengaluru, Karnataka and Baddi, Himachal Pradesh. For further details in relation to
the location of our plants and capacity creation, see “Our Business” on page 119.
Slump sale agreement dated March 31, 2016 entered into between our Company and Saya Industries (“Saya Industries”)
(“Slump Sale Agreement”)
Our Company entered into the Slump Sale Agreement with Saya Industries in relation to the purchase of the unit of Saya
Industries (a partnership between our Company and Rajendra Gandhi which was dissolved by dissolution deed dated March
31, 2018) situated at village Buranwala, Tehsil Baddi, Himachal Pradesh (“Unit”), with all its tangible and intangible assets
(including its goodwill, copyrights, trademarks, brand tenancy rights) and liabilities (including contingent liabilities, permits,
contracts, consumables, etc.), as a going concern on an as-is-where-is basis. Saya Industries was engaged in the business of,
inter alia, the manufacturing and trading of LPG stoves at its Unit. Pursuant to the Slump Sale Agreement, the books of accounts,
documents and records pertaining to the Unit, possession of the assets of Saya Industries and relevant contracts pertaining to
the Unit were transferred to our Company. Further, our Company also undertook to employ all employees of Saya Industries
as employees of our Company. Pursuant to the Slump Sale Agreement, the total consideration for the transfer of the Unit was
₹75 million. No independent valuation was undertaken by our Company while acquiring Saya Industries.
Capital raising activities through equity and debt
Except as mentioned in “Capital Structure” on page 60, our Company has not raised any capital through equity issuances. For
details on the outstanding debt facilities of our Company as on November 30, 2020, see “Financial Indebtedness” on page 255.
Our Shareholders
Our Company has 33 Shareholders as of the date of this Red Herring Prospectus. For further details, regarding our Shareholders,
see “Capital Structure” on page 60.
Common Pursuits
There are common pursuits between us and our Associate. For details, see “Our Business” and “Risk Factors” on pages 119
and 119, respectively. We have and shall adopt necessary procedures and practices as permitted by law to address any conflict
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situations, as and when they may arise. For further details of related business transactions and their significance on the financial
performance of our Company, see “Financial Statements” on page 173.
Significant Sales and Purchases
Other than as disclosed in “Financial Statements” on page 173, there are no sales/ purchases between our Company and our
Associate, where such sales or purchases exceed, in value, the aggregate of 10% of the total sales or purchases of our Company
as on the date of the last financial statements.
Additionally, in the past, our Company has entered into certain purchase transactions with our Associate, PAPL, of which
Rajendra Gandhi is a director. For further details see “Financial Statements” on page 173.
Our Associate
As on the date of this Red Herring Prospectus, our Company has one Associate, PAPL. Unless stated otherwise, information
contained herein in relation our Associate is as on the date of this Red Herring Prospectus. Our Company holds 7,500 shares of
₹10 each aggregating to 37.46% of the issued and paid up share capital of PAPL, as per the annual audited accounts of PAPL
dated July 4, 2014 for Fiscal 2014.
Summary of Key Agreements and Shareholders’ Agreements
Shareholders Agreements
Investment Agreement dated February 2, 2010 entered into between our Company, our Promoters, Atul Jindal, Stovekraft
India, SME Growth Fund (“SGF”) and SCI (together with SME Growth Fund “Investors”) (“Series A Investment
Agreement”) as amended by amendment agreement dated March 18, 2010 entered into between Company, our Promoters,
Atul Jindal, Stovekraft India, SME Growth Fund and SCI (“Series A Amendment Agreement”); Series B Investment
Agreement dated September 13, 2013 between our Company, our Promoters, Stovekraft India, SCI and SCI-GIH (together
with SCI “Investors” or “Sequoia”)(“Series B Investment Agreement”); Amendment Agreement dated September 27, 2018
(“Amendment Agreement”) and Second Amendment Agreement dated January 29, 2020 (“Second Amendment
Agreement”) entered into between Company, our Promoters, Stovekraft India and Sequoia (together the “Amendment
Agreements”)
In terms of the Series A Investment Agreement dated February 2, 2010, SCI was allotted 5 fully paid-up Class A Equity Shares
and 8,100,045 CCDs for an aggregate consideration of ₹500 million.
The Series A Investment Agreement confers certain rights and obligations upon our Promoters, SGF and Sequoia including,
inter alia, a put option to Sequoia on the shares allotted to it, rights in relation a first offer to Sequoia prior to issuance of
additional capital by our Company, a right of first refusal in relation to transfers proposed to be effected by our Promoters and
right of first offer of proposed transfers by the Investors, a tag along right to the Investors in relation to transfer of shares held
by our Promoters, affirmative voting rights in relation to certain reserved matters and rights to our Promoters, Sequoia and SGF
to nominate directors on the Board. The Series A Investment Agreement also mandated that no changes to the Company’s
capital structure shall be effected without the prior written consent of the Investors. Additionally, the Company was also
required to redeem 219,999,000 debentures held by SGF on or prior to February 26, 2010 which were subsequently redeemed
by SGF on March 31, 2009. Additionally, the CCDs issued under the Series A Investment Agreement have been issued for a
maximum of 19 years with interest at a coupon rate of 0.0000001%. Additionally, the CCDs holders have a right to convert
them into equity shares of our Company at the option of the holders of the CCDs. Furthermore, the conversion price was ₹71.58
for the Series A CCDs as per the Series A Investment Agreement and ₹219.21 for the Series B CCDs as per the Series B
Investment Agreement. For further details in relation to the conversion notices and the final conversion price, please see
“Capital Structure – Notes to the capital structure – Share capital history of our Company – Compulsorily Convertible
Debentures” on page 61.
Our Company has executed the Series A Amendment Agreement in which, inter alia¸ the parties amended certain terms of the
Series A Investment Agreement, including mandating our Company to obtain trademark registrations for ‘Pigeon’,
‘WonderCast’ and ‘Gilma Spagnol Cucine’, changing closing conditions and including certain definitions and substitution of
clauses pertaining to the covenants of the Company.
Subsequently, pursuant to the Series B Investment Agreement, Rajendra Gandhi transferred 228,089 Equity Shares held by him
to SCI for a consideration of ₹50.00 million and our Company allotted series B CCDs to SCI for a consideration of ₹250 million.
Additionally, Rajendra Gandhi transferred 228,089 Equity Shares held by him to SCI-GIH for a consideration of ₹50.00 million
and the Company allotted series B CCDs and 5 fully paid-up Class A Equity Shares to SCI-GIH for a consideration of ₹200.00
million. The Series B Investment Agreement also amended certain terms of the Series A Investment Agreement including, inter
alia, addition of SCI-GIH as a party to the Series A Investment Agreement, including Series B CCDs in the CCDs issued and
allotted in the Series A Investment Agreement, increasing the number of directors allowed to be nominated to the board by our
Promoters and amendment of certain definitions as stated in the Series A Investment Agreement. Additionally, the CCDs issued
under the Series B Investment have been issued for a maximum of 19 years with interest at a coupon rate of 0.0000001%.
Additionally, the CCDs holders have a right to convert them into equity shares of our Company at the option of the holders of
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the CCDs. Further, on receipt of notices of conversion from SCI and SCI-GIH, and by a board resolution dated September 23,
2018, 5,489,149 Series A CCDs held by SCI and 1,083,111 CCDs held by SCI-GIH have been converted into 4,733,516 Equity
Shares and 1,083,111 Equity Shares respectively. For further details in relation to these allotments, see “Capital Structure-
Share Capital History of our Company” on page 60.
Further, our Company has also executed the Amendment Agreement, which inter alia, provides for the termination of the Series
A Investment Agreement, together with the Series A Amendment Agreement and the Series B Investment Agreement with
effect from the date of listing of the Equity Shares of our Company pursuant to the Offer. Additionally, it also provides for a
right to Sequoia, subject to approval of the post-Offer shareholders in the first general meeting of our Company pursuant to the
Offer, to nominate 1 (one) director on the board of directors of our Company, until such time Sequoia holds 5.00% (Five
percent) of the fully diluted post-Offer equity share capital of our Company.
The Second Amendment Agreement further amended the exit trigger date and the listing date to the date which is 12 months
from the date on which the final observations are issued by SEBI on the Draft Red Herring Prospectus, or such later date as
maybe mutually agreed in writing between the Company and the Investors.
Other Agreements
Except as disclosed below, our Company has not entered into any material contract other than in the ordinary course of business
carried on or intended to be carried on by our Company.
1. License agreement dated September 1, 2016 entered into between our Company and Stanley Black & Decker,
Inc.(“SBD”) and The Black and Decker Corporation (“TBDC”) ( SBD and TBDC collectively “B&D”) (“License
Agreement”)
Our Company has entered into the License Agreement with B&D in relation to licensing of certain proprietary
trademarks held by B&D (“Black + Decker Marks”) for the purpose of manufacturing, distributing, marketing and
selling blenders and juicers, breakfast appliances, small cooking appliances and small domestic appliances. Pursuant
to the License Agreement, B&D has granted a non-transferable, non-sub licensable, exclusive license to use in India
the Black + Decker Marks for the licensed products with packaging materials and advertising materials therefor, and
to sell, distribute and advertise the licensed products in India. Pursuant to the License Agreement, our Company is
required to provide B&D with an annual marketing plan with respect to each of the licensed products, including the
marketing timetable, sales projections, advertising expenditures, product return rates, etc. on a product by product
basis. Our Company has also agreed to commit a percentage of its annual total sales of licensed products towards
marketing and promotion of licensed products. The License Agreement mandates that the licensed products may only
be sold through channels of trade specified in the License Agreement. Further, our Company is required to maintain,
at its expense, a toll-free customer support number to address consumer complaints in relation to the licensed products.
The License Agreement stipulates that B&D shall have no liability to our Company or any other person on account of
any injury, loss or damage or any other liability, costs, etc. imposed upon our Company or any other person resulting
from the production, use or sale of any licensed product, or any labelling, packaging, advertising or promotional
activities with respect to the licensed products. Our Company has also agreed to indemnify B&D and its officers,
agents, representatives, etc. against claims, demands, damages, liabilities, expenses, losses and costs, etc. arising out
of the usage of the licensed products or the Black + Decker Marks. The License Agreement is valid up to December
31, 2027, with B&D having the right to terminate it at any time upon the occurrence of the events of default specified
in the License Agreement, upon the failure of our Company to cure such defaults within a 30 day period. Further,
during the term of the Agreement and for a period of one year after the expiration of the License Agreement or its
termination, our Company is prohibited from developing or selling in India, any products on the lines of the licensed
products, which may be considered competitive with The Black + Decker Marks or any brands owned or licensed by
B&D. Pursuant to the License Agreement, for each contract year, our Company is required to pay B&D royalties at a
fixed rate on all total sales of licensed products. Further, for the first 10 contract years, B&D is also entitled to
guaranteed minimum royalty payments as specified in the License Agreement. Pursuant to the License Agreement,
the suitability, styles, designs, packaging, contents, workmanship and quality of all licensed products is required to be
approved by B&D in writing prior to the development, manufacture, distribution, publication, production, sale or use
thereof. Further, prior to the shipping of any licensed product to a distributor or customer, our Company is required to
furnish to B&D three production samples for each licensed product along with the packaging material, for the approval
of B&D.
2. Energy Purchase Agreement dated April 28, 2016 entered into between our Company and Vyshali Energy Private
Limited (“Vyshali”) (“EPA”)
Our Company has entered into an EPA with Vyshali for the purchase of 6,000,000 units per annum from a 100 MW
wind based power generation project (“Project”) being developed by Vyshali. Pursuant to the EPA, our Company will
purchase the agreed units from Vyshali on the basis of a monthly plan devised by our Company, priced at Bangalore
Electricity Supply Company Limited (“BESCOM”) rates minus 55 paisa per unit. Additionally, we are required to
comply with a minimum energy purchase of 80% of the total contracted energy, and a failure to do so would make us
liable to be penalized by Vyshali as per the terms of the EPA, which may result in inter alia penalty for the shortfall,
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as per the terms of the EPA. Further, the EPA provides for force majeure events including, inter alia, load shedding
by BESCOM explosion, and accident which would discharge Vyshali from performing its obligations under the EPA
to the extent it is affected by such force majeure events. The rates which have been agreed upon, under the EPA are
liable to be changed in case there is an increase in cost because of an imposition of any levy, surcharge or tax on the
sale price under the EPA. In case such change in price is not agreed to by both the parties, pursuant to providing notices
as given under the EPA, our Company and Vyshali have the option to terminate the EPA. Our Company is required
to, inter alia, maintain a valid bank guarantee, a failure of which would be an event of default. Vyshali Energy Private
Limited and Greenko Wind Projects Private Limited are not related to the Promoters, Directors and Key Managerial
Personals of our Company.
3. Subscription and Shareholders’ Agreement dated April 28, 2016 entered into between our Company, Greenko Wind
Projects Private Limited (“Greenko”) and Vyshali (“SSA”)
Our Company has entered into a SSA with Greenko and Vyshali, wherein our Company has agreed to subscribe to
10,800 shares of Vyshali, aggregating to 1.08% of the paid up equity share capital of Vyshali for a consideration of ₹
0.10 million .Our Company is not entitled to any dividends as a result of its shareholding in Vyshali. All transactions
of our Company with Vyshali are to be conducted on an arm’s length basis. Additionally, our Company is not allowed
to transfer its shares in Vyshali, without Greenko’s prior written consent. This SSA can be terminated, inter alia, by
mutual consent amongst the parties.
4. Share Purchase Agreement dated April 28, 2016 entered into between Company, Greenko and Vyshali (“SPA”)
Our Company has, entered into an SPA with Greenko and Vyshali, pursuant to which our Company has agreed to sell
its entire shareholding in Vyshali to Greenko in the event of termination of the SSA. Further, this sale of its shares of
Vyshali held by our Company, shall also be effected if the EPA is terminated for any reason.
5. Share Purchase Agreement dated November 7, 2020 entered between our Company, Microsun Solar Tech Private
Limited (“Microsum”), Sohan K. Jain, Dinesh P. Jain, Sindhu Manoj Kumar Jain, Rishab Manoj Jain, Manju
Mutha, Ashish N. Jain, A. Ankitha (“Other Purchasers”) and Megasun.
Our Company has entered into a SPA with Microsun, Sohan K. Jain, Dinesh P. Jain and Other Purchasers, wherein
our Company has agreed to purchase to 74,250 shares of Megasun, aggregating to 45% of the paid up equity share
capital of Megasun for a consideration of ₹3.73 million. The SPA can be terminated, inter alia, by mutual consent
amongst the parties.
Guarantees issued by our Promoters
Except as stated below, our Promoters have not provided any guarantee in relation to the loans availed by our Company:
Personal guarantee issued by our Promoters in favour of Standard Chartered Bank
Pursuant to loan agreement dated May 9, 2008, and subsequent sanction letter dated October 4, 2019, our Company has availed
a working capital facility from Standard Chartered Bank (“SCB”) amounting to ₹350.00 million. Our Promoters have executed
a guarantee agreement dated May 9, 2008, as amended by a supplemental guarantee dated August 9, 2012, where our Promoters
have agreed to pay any amounts due to SCB by our Company in case of a default by our Company. Additionally, our Promoters
shall be the considered the principal debtors under this facility if SCB invokes this guarantee.
Personal guarantee issued by our Promoters in favour of the Tata Capital Financial Services Limited
Pursuant to a continuation sanction letter dated October 15, 2020, our Company has availed a working capital facility from Tata
Capital Financial Services Limited (“TCFSL”) amounting to ₹100 million. Our Promoters have executed a letter of guarantee
dated August 31, 2018 pursuant to which our Promoters have guaranteed to repay the facility amount to TCFSL on the terms
and conditions contained in the letter of guarantee. Further, our Promoters have agreed to pay the amount of the facility along
with interest to TCFSL if there is a default in the payment of the principal amount or interests on the facility. Additionally, this
guarantee would remain in full force and operative until all dues of our Company have been full discharged.
Personal Guarantee issued by our Promoters in favour of HDFC Bank Limited
Pursuant to sanction letter dated November 16, 2018 and loan agreement dated February 1, 2019, our Company has availed a
working capital facility from HDFC Bank Limited (“HDFC”) amounting to ₹450.00 million. Our Promoters have executed a
guarantee agreement dated January 4, 2019, where our Promoters have agreed to pay any amounts due to HDFC by our
Company in case of a default by our Company.
Personal Guarantee issued by our Promoter in favour of RBL Bank Limited
Pursuant to sanction letter dated September 16, 2019 and loan agreement dated September 19, 2019, our Company has availed
a working capital facility from RBL Bank Limited (“RBL”) amounting to ₹350.00 million. Our Promoters and our Director,
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Neha Gandhi have executed a guarantee agreement dated September 19, 2019, where our Promoters and Neha Gandhi have
agreed to pay any amounts due to SCB by our Company in case of a default by our Company.
Personal Guarantee issued by our Promoter in favour of IDFC First Bank Limited
Pursuant to sanction letter and loan agreement dated March 25, 2019, our Company has availed a working capital and term loan
facility from IDFC First Bank Limited (“IDFC”) amounting to ₹458.30 million. Our Promoters and our Director, Neha Gandhi
have executed a guarantee agreement dated March 27, 2019 , where our Promoters and Neha Gandhi have agreed to pay any
amounts due to SCB by our Company in case of a default by our Company.
Personal Guarantee issued by our Promoters in favour of Electronica Finance Limited
Pursuant to sanction letter dated August 5, 2020, our Company has availed a loan facility from Electronica Finance Limited
(“Electronica”) amounting to ₹21.40 million (“Facility Amount”). Our Promoters have executed a deed of guarantee dated
July 24, 2020, with Electronica, where our Promoters have agreed to pay the total Facility Amount due to Electronica by our
Company in case of a default by our Company.
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OUR MANAGEMENT
Board of Directors
In terms of our Articles of Association, our Company is required to have not less than three Directors and not more than 15
Directors.
As on the date of this Red Herring Prospectus, our Board comprises of six Directors.
The following table sets forth details regarding our Board as on the date of this Red Herring Prospectus:
Sr. No.
Name, designation, address, date of birth, age, occupation, term, period of
directorship and DIN
Other directorships
1.
Rajendra Gandhi
Designation: Managing Director
Address: 203, Olympus 1, Prestige Acropolis, No. 20, Hosur Road, Bengaluru,
560 029, Karnataka, India
Date of Birth: December 27, 1967
Age: 53 years
Occupation: Business
Term: Liable to retire by rotation
Period of Directorship: Director since 1999
DIN: 01646143
Domestic Companies
• Pigeon Appliances Private Limited
2.
Bharat Singh
Designation: Nominee Director
Address: 723, Ranka Heights, Domlur Layout, 7
th
cross, Bengaluru, 560 071,
Karnataka, India
Date of Birth: November 10, 1977
Age: 43 years
Occupation: Service
Term: Not liable to retire by rotation
Period of Directorship: Director since September 21, 2018
DIN: 08222884
Domestic Companies
• Curatio Health Care (I) Private Limited
• Kids Clinic India Private Limited
• La Renon Healthcare Private Limited
• Wildcraft India Private Limited
Body Corporate
• Near Pte. Limited
3.
Neha Gandhi
Designation: Executive Director
Address: 203, Olympus 1, Prestige Acropolis, Hosur Road, Koramangala,
Bengaluru, 560 029, Karnataka, India
Date of Birth: June 4, 1993
Age: 27 years
Occupation: Business
Term: Liable to retire by rotation
Period of Directorship: Director since September 30, 2016
DIN: 07623685
Nil
4.
Rajiv Mehta Nitinbhai
Domestic Companies
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Sr. No.
Name, designation, address, date of birth, age, occupation, term, period of
directorship and DIN
Other directorships
Designation: Whole Time Director (designated as CEO)
Address: Flat No. 7 & 8, Aquaforte Apt, 12 Kensington Road, Halasuru,
Bengaluru, 560 042, Karnataka, India
Date of Birth: April 18, 1978
Age: 42 years
Occupation: Business
Term: For a period of four consecutive years from September 3, 2019
Period of Directorship: Director since May 11, 2018
DIN: 00697109
• Kan Dfy Sports Private Limited
• Unicorn Contractors and Developers
Private Limited
5.
Lakshmikant Gupta
Designation: Chairman and Independent Director
Address: A-202, The Icon DLF Phase V, Gurgaon, 122 009, Haryana, India
Date of Birth: October 6, 1967
Age: 53 years
Occupation: Self-employed
Term: For a period of five consecutive years from June 1, 2018. Further, he was
appointed as the Chairman with effect from December 23, 2019
Period of Directorship: Director since May 11, 2018
DIN: 07637212
Nil
6.
Shubha Rao Mayya
Designation: Independent Director
Address: No. 60/45, 6th Cross, Cambridge Layout, Ulsoor, Bangalore 560 008,
Karnataka, India
Date of Birth: June 12, 1963
Age: 57 years
Occupation: Professional
Term: For a period of five consecutive years from August 30, 2018
Period of Directorship: Director since August 30, 2018
DIN: 08193276
Domestic Companies
• Ace Manufacturing Systems Limited
• Happiest Minds Technologies Limited
Relationship between our Directors
Except Rajendra Gandhi, who is the father of Neha Gandhi, none of our directors are related to each other.
Brief Biographies of our Directors
Rajendra Gandhi is the Managing Director of our Company. He has cleared the S.S.L.C. examination conducted by the
Karnataka Secondary Education Examination Board. He is the founder of our Company and has been on the Board since 1999.
He is involved in the day to day affairs of our Company.
Bharat Singh is a nominee Director of SCI and SCI-GIH on the Board of our Company. He holds a bachelor’s degree in
commerce from the University of Delhi and is a chartered accountant with the Institute of Chartered Accountants of India. He
has previously worked as the chief financial officer of Pilani Soft Labs Private Limited (also known as redBus) and SBI Business
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Process Management Services Private Limited (formerly known as GE Capital Business Process Management Service Private
Limited).
Neha Gandhi is an Executive Director of our Company. She holds a bachelor’s degree in business administration from Christ
University, Bengaluru and has completed a post graduate certificate programme in sales and marketing management from
MICA (formerly Mudra Institute of Communications, Ahmedabad). She has served as a graduate trainee at Viacom 18 Media
Private Limited.
Rajiv Mehta Nitinbhai is a Whole Time Director designated as the Chief Executive Officer of our Company. He holds a
bachelor’s degree in chemical engineering from University of Mumbai and master’s degree in science from University of
Pennsylvania, and in business administration from INSEAD. He has previously served as the chief executive officer of Arvind
Limited and managing director of Puma Sports India Private Limited. He has also been a director of Fourseven Services Private
Limited. He also serves as a director on the board of directors of Unicorn Contractors and Developers Private Limited and Kan
Dfy Sports Private Limited.
Lakshmikant Gupta is an Independent Director of our Company. He holds a bachelor’s degree in economics from Hans Raj
College, University of Delhi and a post-graduate diploma in business management from Institute of Management Technology,
Ghaziabad. He has previously been associated with Ibibo Group Pte Limited, Procter & Gamble Gulf FZE, LG Electronics
India Private Limited and Girnar Software Private Limited. He is also a partner of CMOnow Marketing Consulting LLP.
Shubha Rao Mayya is an Independent Director of our Company. She holds a bachelor’s degree in commerce from the
University of Mumbai and is a chartered accountant with the Institute of Chartered Accountants of India. She has previously
worked with ICICI Limited, ICICI Prudential Life Insurance Company Limited and Tata Consultancy Services Limited. She
also serves as a Director on the board of Ace Manufacturing System Limited and Happiest Minds Technologies Limited.
Terms of appointment of our Executive Directors
Rajendra Gandhi
The terms of appointment are as per the appointment letter dated March 23, 2015, as amended by the appointment letters dated
March 31, 2016, April 1, 2017, April 1, 2018, July 18, 2019 and July 27, 2020. (“MD Appointment Letter”).
Term
Liable to retire by rotation
Compensation and benefits
• Total gross compensation of ₹9.28 million per annum includes, inter alia, house rent allowance of
₹0.14 million per month, medical allowance of ₹0.015 million and conveyance allowance ₹0.019
million per annum.
• Benefits inter alia include gratuity, bonus, employer provident fund (including administration
charges).
Termination
As per the MD Appointment Letter, Rajendra Gandhi’s employment as Managing Director can be
terminated either at his instance or by the Company by giving a sixty days prior notice or basic salary for
like period in lieu thereof.
Neha Gandhi
The terms of appointment are as per the appointment letter dated September 30, 2016, as amended by appointment letters dated
April 1, 2017, April 1, 2018 and July 18, 2019.
Term
Liable to retire by rotation
Compensation and benefits
• Total compensation of ₹2.36 million includes, inter alia, house rent allowance of ₹0.38 million,
medical allowance of ₹0.015 million and conveyance allowance ₹0.019 million per annum.
• Benefits include official conveyance, coverage under group health insurance policy and group
personal accident policy.
Termination
Neha Gandhi’s employment as Executive Director can be terminated either on her instance or by the
Company by giving a sixty days prior notice or basic salary for like period in lieu thereof.
Rajiv Mehta Nitinbhai
The terms of appointment are as per the employment and confidentiality agreement between our Company and Rajiv Mehta
Nitinbhai dated September 3, 2019 (“Employment Agreement”)
Term
Liable to retire by rotation;
For a period of four consecutive years from September 3, 2019 as the Chief Executive Officer of the
Company
Compensation and benefits
• Fixed remuneration: ₹12 million per annum;
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• Variable compensation: 1.25% of the audited profit before tax of our Company; and
• 300,806 options or 1% of the diluted cap table granted under the ESOP Plan with a strike price of
₹150 per option. For details on the ESOP Plan, please see “Capital Structure” on page 60
Termination
Rajiv Mehta Nitinbhai’s employment as Chief Executive Officer can be terminated either on (i) his own
accord by paying the Company the balance of his four years contracted salary; or (ii) by the Company for
‘cause’ which includes him being involved in any offence involving moral turpitude, breach of any
provisions of his agreement with the Company and gross negligence or wilful misconduct; or (iii) by the
Company ‘without cause’ after the Company pays him the balance four years contracted salary
Pursuant to a resolution passed by the board in its meeting held on September 24, 2019, our Company revised the remuneration
paid to our Executive Directors above the threshold permitted under the Companies Act, 2013 read along with Schedule V of
the Companies Act, 2013.
Remuneration to our Executive Directors and Whole Time Director
The following table sets forth the details of the remuneration paid to our Executive Directors and Whole Time Director for
Fiscal 2020:
S.No.
Name of the Director
Gross Remuneration (including deferred compensation) (₹ in
million)
1.
Rajendra Gandhi
10.11
2.
Neha Gandhi
2.31
3.
Rajiv Mehta Nitinbhai
7.33
Remuneration to our Independent Directors
Our Company has, pursuant to a board resolution dated July 26, 2018, fixed ₹100,000 as sitting fees payable to our Independent
Director, Lakshmikant Gupta for attending the meetings of our Board and pursuant to a resolution dated August 30, 2018 and
a shareholders’ resolution dated September 10, 2018 fixed ₹100,000 as sitting fees payable to our Independent Director Shubha
Rao Mayya for attending the meetings of our Board.
The details of remuneration paid to the Independent Directors of our Company in Fiscal 2020 are set forth in the table below:
S. No.
Name of the Director
Sitting fees paid (₹ in million)
1.
Rajiv Mehta Nitinbhai
*
0.20
2.
Lakshmikant Gupta
0.65
3.
Shubha Rao Mayya
0.80
*Rajiv Mehta Nitinbhai subsequently became an executive director with effect from September 3, 2019.
Bonus or profit sharing plan for the Directors
Except for Rajiv Mehta Nitinbhai, Chief Executive Officer of our Company, who is eligible to receive 1.25% share of the
Company’s audited profit before tax, none of our Directors are party to any bonus or profit-sharing plan of our Company.
Service Contracts with Directors
Except certain statutory benefits payable upon termination of employment in our Company to Rajendra Gandhi and Neha
Gandhi in their capacity employees of our Company, and Rajiv Mehta Nitinbhai who will receive balance of the four year
contract salary upon termination by the Company without cause pursuant to the employment agreement dated September 3,
2019, none of our Directors have entered into a service contract with our Company pursuant to which they are entitled to any
benefits upon termination of employment.
Arrangement or understanding with major Shareholders, customers, suppliers or others
Other than our Director, Bharat Singh who has been nominated to our Board by SCI pursuant to the investment agreement dated
February 2, 2010 entered into between our Company, our Promoters, Atul Jindal, Stovekraft India, SME Growth Fund and SCI
as amended by amendment agreement dated March 18, 2010 entered into between Company, our Promoters, Atul Jindal,
Stovekraft India, SME Growth Fund and SCI, there is no arrangement or understanding with the major Shareholders, customers,
suppliers or others, pursuant to which any of our Directors has been appointed on the Board. For further details, “History and
Certain Corporate Matters - Summary of Key Agreements and Shareholders’ Agreements” on page 149.
Borrowing Powers of Board
In accordance with the Articles of Association, subject to applicable law, and pursuant to a resolution passed by the Shareholders
of our Company on July 12, 2018, our Board is authorised to borrow such sum or sums of money or monies for the purposes
of the business of our Company as may be required from time to time either in foreign currency and/ or in Indian rupees, on
such terms and conditions and with or without security as our Board may think fit, which together with the monies already
borrowed by our Company, may exceed the aggregate for the time being of the paid up capital of our Company and its free
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reserves, provided that the total amount of money/ monies so borrowed by our Board shall not at any time exceed the limit of
₹3,500 million.
Shareholding of Directors in our Company
The shareholding of our Directors in our Company as of the date of filing of this Red Herring Prospectus is set forth below:
Name of Director
Number of Equity Shares
Pre-Offer Percentage
Shareholding (%)
Post-Offer Percentage
Shareholding (%)
Rajendra Gandhi
18,184,619
60.45
[●]
Neha Gandhi
1
0.00
[●]
Rajiv Mehta Nitinbhai
30,081
0.10
[●]
Total
18,214,701
60.55
[●]
Interest of Directors
Our Independent Directors may be deemed to be interested in our Company to the extent of sitting fees payable to them for
attending meetings of our Board or any committee thereof. All our Directors may be deemed to be interested in our Company
to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association and their
respective terms of appointment, and to the extent of remuneration paid to them for services rendered as an officer or employee
of our Company.
Except as disclosed in “Our Promoter and Promoter Group” on page 167 in relation to Rajendra Gandhi, our Directors have
no interest in any property acquired or intended to be acquired by our Company or in any transaction for acquisition of land,
construction of building and supply of machinery. Further, none of our Directors are related to an entity from which our
Company has acquired land or proposes to acquire land.
Certain of our Directors may also be regarded as interested in the Equity Shares, and dividends and other distributions payable
in relation to such Equity Shares, if any, held by them or their relatives or Equity Shares that may be subscribed by or allotted
to them, their relatives or to the companies, firms and trusts, in which they are interested as directors, members, partners, trustees
and promoters, pursuant to this Offer. Bharat Singh, our nominee Director may be deemed to be interested to the extent of
shareholding of SCI in our Company.
Except, Rajendra Gandhi, our Managing Director, who is also a promoter of our Company, none of our Directors have any
interest in the promotion of our Company.
Except as stated in this sub-section and “Our Promoter and Promoter Group” on page 167, our Directors do not have any other
interest in our business or our Company.
Changes in our Board in the last three years
The changes in our Board in the last three years preceding the date of filing of this Red Herring Prospectus are as follows:
Name
Date of Appointment/ Resignation/
Re-designation/Cessation
Reason
Rajiv Mehta Nitinbhai
May 11, 2018
Appointed as an additional Independent Director
Lakshmikant Gupta
May 11, 2018
Appointed as an additional Independent Director
Rajiv Mehta Nitinbhai
June 1, 2018
Re-designated as an Independent Director
Lakshmikant Gupta
June 1, 2018
Re-designated as an Independent Director
Shubha Rao Mayya
August 30, 2018
Appointed as an Additional Director (Independent)
Abhay Kumar Pandey
September 21, 2018
Resigned as a non-executive nominee Director
Bharat Singh
September 21, 2018
Appointed as a nominee Director
Shubha Rao Mayya
September 10, 2018
Re-designated as an Independent Director
Rajiv Mehta Nitinbhai
September 3, 2019
Re-designated as Whole Time Director
Lakshmikant Gupta
December 23, 2019
Appointed as Chairman
Rajendra Gandhi
March 17, 2020
Reappointed as Managing Director
Corporate Governance
In addition to the corporate governance provisions under the Companies Act, 2013, which are currently applicable to us, the
corporate governance provisions of the SEBI Listing Regulations will also become applicable to us immediately upon the listing
of the Equity Shares on the Stock Exchanges.
Our Company undertakes to take all necessary steps to continue to comply with all applicable requirements of SEBI Listing
Regulations and Companies Act.
Currently, our Board has six Directors, including two women directors. In compliance with the requirements of SEBI Listing
Regulations, we have three Executive Directors, two Independent Directors and one nominee Director on our Board. The
Chairperson of the Board is Lakshmikant Gupta, who is a non-executive Independent Director.
158
Committees of our Board
Our Company is in compliance with corporate governance norms prescribed under the SEBI Listing Regulations in relation to
Board level committees.
In addition to the committees of our Board detailed below, our Board may from time to time, constitute committees for various
functions.
Audit Committee
The members of the Audit Committee are:
Shubha Rao Mayya (Chairperson);
Lakshmikant Gupta (Member); and
Rajendra Gandhi (Member);
The Audit Committee was constituted by a meeting of our Board held on September 21, 2018 and re-constituted by a meeting
of our Board held on September 24, 2019. The scope and function of the Audit Committee is in accordance with Section 177
of the Companies Act, 2013 and SEBI Listing Regulations and its terms of reference include the following:
a. Oversight the Company’s financial reporting process and disclosure of its financial information to ensure that the
financial statements are correct, sufficient and credible;
b. Recommending to the Board, the appointment, re-appointment, and replacement, remuneration, and terms of
appointment of the internal auditor, cost auditors and statutory auditor and the fixation of audit fee;
c. Reviewing and monitoring the auditor’s independence and performance and the effectiveness of audit process;
d. Approving payments to the statutory, internal and cost auditors for any other services rendered by statutory auditors,
internal and cost auditors;
e. Reviewing with the management, the annual financial statements and auditor’s report thereon before submission to
the Board for approval, with particular reference to:
i) Matters required to be stated in the Director’s responsibility statement to be included in the Board’s report in
terms of Section 134(3)(c) of the Companies Act, 2013;
ii) Changes, if any, in accounting policies and practices and reasons for the same;
iii) Major accounting entries involving estimates based on the exercise of judgment by management;
iv) Significant adjustments made in the financial statements arising out of audit findings;
v) Compliance with listing and other legal requirements relating to financial statements;
vi) Disclosure of any related party transactions;
vii) Modified opinions in the draft audit report.
f. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;
g. Scrutiny of inter-corporate loans and investments;
h. Valuation of undertakings or assets of the Company, wherever it is necessary;
i. approval or any subsequent modification of transactions of the listed entity with related parties;
j. Evaluating internal financial controls and risk management systems; and
k. Approval or any subsequent modification of transactions of the Company with related parties, provided that the audit
committee may make omnibus approval for related party transactions proposed to be entered into by the Company
subject to such conditions as may be prescribed;
Explanation: The term "related party transactions" shall have the same meaning as provided in Clause 2 (zc) of the
SEBI Listing Regulations and/or the applicable Accounting Standards and/or the Companies Act, 2013.
l. Reviewing with the management, the statement of uses/application of funds raised through an issue (public issue,
rights issue, preferential issue, etc.), the statement of funds utilised for purposes other than those stated in the offer
159
document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds
of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
m. Evaluating undertakings or assets of the Company, wherever necessary;
n. Establishing a vigil mechanism for directors and employees to report their genuine concerns or grievances;
o. Reviewing, with the management, the performance of statutory and internal auditors and adequacy of the internal
control systems;
p. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department,
staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal
audit;
q. Discussion with internal auditors on any significant findings and follow up thereon;
r. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected
fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
s. Discussion with statutory auditors, internal auditors, secretarial auditors and cost auditors before the audit commences,
about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
t. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in
case of non-payment of declared dividends) and creditors;
u. Approval of appointment of the chief financial officer (i.e., the whole-time Finance Director or any other person
heading the finance function or discharging that function) after assessing the qualifications, experience and
background, etc. of the candidate;
v. Approval of the appointment of chief financial officer after accessing the qualifications, experience qualifications,
experience and background, etc. of the candidate;
w. Reviewing the functioning of the whistle blower mechanism, in case the same is existing;
x. reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary
exceeding rupees 100 crore or 10% of the asset size of the subsidiary, whichever is lower including existing loans /
advances / investments existing as on the date of coming into force of this provision;
y. Carry out other functions as is mentioned in the terms of reference of the audit committee;
z. Carrying out any other functions as provided under the Companies Act, the Listing Regulations and other applicable
laws; and
aa. To formulate, review and make recommendations to the Board to amend the Audit Committee charter from time to
time.
The Audit Committee shall mandatorily review the following information:
a. management discussion and analysis of financial condition and results of operations;
b. statement of significant related party transactions (as defined by the Audit Committee) submitted by management;
c. management letters/letters of internal control weaknesses issued by the statutory auditors;
d. internal audit reports relating to internal control weakness;
e. the appointment and removal of the Chief Internal Auditor, shall be subject to review of the Audit Committee;
f. statement of deviations:
i. quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to the stock
exchange(s) in terms of regulation 32(1) of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015
ii. annual statement of funds utilised for purposes other than those stated in the offer document / prospectus / notice
in terms of regulation 32(7) of the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015
Stakeholders Relationship Committee
160
The members of the Stakeholders Relationship Committee are:
Lakshmikant Gupta (Chairman);
Shubha Rao Mayya (Member); and
Rajendra Gandhi (Member)
The Stakeholders Relationship Committee was constituted by our Board at their meeting held on September 21, 2018 and re-
constituted by our Board at their meeting held on September 24, 2019. The terms of reference of the Stakeholders’ Relationship
Committee include the following:
a. Resolving the grievances of the security holders of the Company including complaints related to transfer/transmission
of shares, non-receipt of annual report, non-receipt of declared dividends, issue of any new/ duplicate certificates,
general meetings etc.
b. Review of measures taken for effective exercise of voting rights by shareholders.
c. Review of adherence to the service standards adopted by the Company in respect of various services being rendered
by the Registrar & Share Transfer Agent.
d. Review of the various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends
and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the company
Nomination and Remuneration Committee
The members of the Nomination and Remuneration Committee are:
Lakshmikant Gupta (Chairman);
Shubha Rao Mayya (Member); and
Bharat Singh (Member)
The Nomination and Remuneration Committee was constituted by a meeting of our Board held on September 21, 2018 and re-
constituted by a meeting of our Board held on September 24, 2019. The scope and function of the Nomination and Remuneration
Committee is in accordance with Section 178 of the Companies Act, 2013 and the SEBI Listing Regulations. The terms of
reference of the Nomination and Remuneration Committee include:
a. Formulating the criteria for determining qualifications, positive attributes and independence of a director and
recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other
employees;
b. Formulating criteria for evaluation of independent directors and the Board;
c. Devising a policy on Board diversity;
d. Identifying persons who are qualified to become directors or who may be appointed in senior management in
accordance with the criteria laid down, recommend to the Board their appointment and removal and recommend to the
Board their appointment and removal;
e. whether to extend or continue the term of appointment of the independent director, on the basis of the report of
performance evaluation of independent directors.
f. recommend to the board, all remuneration, in whatever form, payable to senior management.
Corporate Social Responsibility Committee
The members of the CSR Committee are:
Rajendra Gandhi (Chairman);
Shubha Rao Mayya (Member); and
Lakshmikant Gupta (Member)
The CSR Committee was constituted by our Board at their meeting held on September 21, 2018. The terms of reference of the
CSR Committee include the following:
161
a. Formulating and recommending to the Board the corporate social responsibility policy of the Company, including any
amendments thereto in accordance with Schedule VII of the Companies Act, 2013 and the rules made thereunder;
b. Identifying corporate social responsibility policy partners and corporate social responsibility policy programmes;
c. Recommending the amount of corporate social responsibility policy expenditure for the corporate social responsibility
activities and the distribution of the same to various corporate social responsibility programmes undertaken by the
Company;
d. Identifying and appointing the corporate social responsibility team of the Company including corporate social
responsibility manager, wherever required;
e. Delegating responsibilities to the corporate social responsibility team and supervise proper execution of all delegated
responsibilities;
f. Reviewing and monitoring the implementation of corporate social responsibility programmes and issuing necessary
directions as required for proper implementation and timely completion of corporate social responsibility programmes;
and
b. Performing such other duties and functions as the Board may require the corporate social responsibility committee to
undertake to promote the corporate social responsibility activities of the Company.
IPO Committee
The members of the IPO Committee are:
Rajendra Gandhi (Chairman);
Bharat Singh (Member); and
Shubha Rao Mayya (Member)
The IPO Committee was constituted by our Board of Directors on September 21, 2018. The IPO Committee has been authorised
to approve and decide upon all activities in connection with the Offer, including, but not limited to, to approve the Draft Red
Herring Prospectus, this Red Herring Prospectus and the Prospectus, to decide the terms and conditions of the Offer, including
the Price Band and the Offer Price, to appoint various intermediaries, negotiating and executing Offer related agreements and
to submit applications and documents to relevant statutory and other authorities from time to time. The terms of reference of
the IPO Committee are as follows:
a. To make applications where necessary, to the RBI and any other governmental or statutory authorities as may be
required in connection with the Offer and accept on behalf of the Board such conditions and modifications as may be
prescribed or imposed by any of them while granting such approvals, permissions and sanctions as may be required;
b. To finalize, settle, approve, adopt and file, in consultation with the BRLMs, where applicable, the DRHP, the RHP the
Prospectus, the preliminary and final international wrap and any amendments, supplements, notices, addenda or
corrigenda thereto, and take all such actions as may be necessary for the submission and filing of these documents
including incorporating such alterations/corrections/ modifications as may be required by SEBI, the RoC or any other
relevant governmental and statutory authorities or in accordance with Applicable Laws;
c. To decide along with the Selling Shareholders and in consultation with the BRLMs on the size, timing, pricing and all
the terms and conditions of the Offer, including the price band, bid period, Offer price, and to accept any amendments,
modifications, variations or alterations thereto;
d. To appoint and enter into and terminate arrangements with the BRLMs, underwriters to the Offer, syndicate members
to the Offer, brokers to the Offer, escrow collection bankers to the Offer, refund bankers to the Offer, registrars, legal
advisors, auditors, and any other agencies or persons or intermediaries to the Offer and to negotiate, finalise and amend
the terms of their appointment, including but not limited to the execution of the mandate letter with the BRLMs and
negotiation, finalization, execution and, if required, amendment of the offer agreement with the BRLMs;
e. To negotiate, finalise and settle and to execute and deliver or arrange the delivery of the DRHP, the RHP, the
Prospectus, offer agreement, syndicate agreement, underwriting agreement, share escrow agreement, cash escrow
agreement and all other documents, deeds, agreements and instruments as may be required or desirable in relation to
the Offer;
f. To approve suitable policies on insider trading, whistle-blowing, risk management, and any other policies as may be
required under the Listing Regulations or any other Applicable Laws;
162
g. To approve any corporate governance requirements, code of conduct for the Board, officers and other employees of
the Company that may be considered necessary by the Board or the IPO Committee or as may be required under the
Listing Regulations or any other Applicable Laws;
h. To seek, if required, the consent of the lenders of the Company, parties with whom the Company has entered into
various commercial and other agreements, all concerned government and regulatory authorities in India or outside
India, and any other consents that may be required in relation to the Offer or any actions connected therewith;
i. To open and operate bank accounts in terms of the escrow agreement and to authorize one or more officers of the
Company to execute all documents/deeds as may be necessary in this regard;
j. To open and operate bank accounts of the Company in terms of Section 40(3) of the Companies Act, 2013, as amended,
and to authorize one or more officers of the Company to execute all documents/deeds as may be necessary in this
regard;
k. To authorize and approve incurring of expenditure and payment of fees, commissions, brokerage, remuneration and
reimbursement of expenses in connection with the Offer;
l. To issue receipts/allotment letters/confirmation of allotment notes either in physical or electronic mode representing
the underlying Equity Shares in the capital of the Company with such features and attributes as may be required and
to provide for the tradability and free transferability thereof as per market practices and regulations, including listing
on one or more stock exchange(s), with power to authorize one or more officers of the Company to sign all or any of
the aforestated documents;
m. To authorize and approve notices, advertisements in relation to the Offer in consultation with the relevant
intermediaries appointed for the Offer;
n. To do all such acts, deeds, matters and things and execute all such other documents, etc., as may be deemed necessary
or desirable for such purpose, including without limitation, to finalise the basis of allocation and to allot the shares to
the successful allottees as permissible in law, issue of allotment letters/confirmation of allotment notes, share
certificates in accordance with the relevant rules;
o. To take all actions as may be necessary and authorized in connection with the Offer for Sale and to approve and take
on record the transfer of Equity Shares in the Offer for Sale;
p. To do all such acts, deeds and things as may be required to dematerialise the Equity Shares and to sign and / or modify,
as the case maybe, agreements and/or such other documents as may be required with the National Securities Depository
Limited, the Central Depository Services (India) Limited, registrar and transfer agents and such other agencies,
authorities or bodies as may be required in this connection and to authorize one or more officers of the Company to
execute all or any of the aforestated documents;
q. To make applications for listing of the Equity Shares in one or more stock exchange(s) for listing of the Equity Shares
and to execute and to deliver or arrange the delivery of necessary documentation to the concerned stock exchange(s)
in connection with obtaining such listing including without limitation, entering into listing agreements and affixing
the common seal of the Company where necessary;
r. To settle all questions, difficulties or doubts that may arise in regard to the Offer, including such issues or allotment
and matters incidental thereto as it may deem fit and to delegate such of its powers as may be deemed necessary and
permissible under Applicable Laws to the officials of the Company; and
s. To negotiate, finalize, settle, execute and deliver any and all other documents or instruments and to do or cause to be
done any and all acts or things as the IPO Committee may deem necessary, appropriate or advisable in order to carry
out the purposes and intent of this resolution or in connection with the Offer and any documents or instruments so
executed and delivered or acts and things done or caused to be done by the IPO Committee shall be conclusive evidence
of the authority of the IPO Committee in so doing.
t. To approve the list of ‘group of companies’ of the Company, identified pursuant to the materiality policy adopted by
the Board, for the purposes of disclosure in the DRHP, RHP and Prospectus;
u. Deciding the pricing and all other related matters regarding the Pre-IPO Placement, including the execution of the
relevant documents with the investors in consultation with the BRLMs and in accordance with applicable laws;
v. To accept and appropriate the proceeds of the Offer in accordance with the applicable laws;
w. To approve code of conduct as may be considered necessary by the IPO Committee or as required under applicable
laws, regulations or guidelines for the Board, officers of the Company and other employees of the Company;
163
x. appointing, in consultation with the BRLMs, the registrar and other intermediaries to the Offer, in accordance with the
provisions of the SEBI ICDR Regulations and other Applicable Laws including legal counsels, banks or agencies
concerned and entering into any agreements or other instruments for such purpose, to remunerate all such
intermediaries/agencies including the payments of commissions, brokerages, etc. and to terminate any agreements or
arrangements with such intermediaries/ agents;
y. appointing the BRLMs in accordance with the provisions of the SEBI ICDR Regulations and other Applicable Laws;
z. To approve of the implementation of any corporate governance requirements that may be considered necessary by the
Board or the IPO Committee or as may be required under the applicable laws or the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, as amended and listing agreements to be entered into by the Company
with the relevant stock exchanges, to the extent allowed under law; and
aa. To withdraw the DRHP or RHP or to decide not to proceed with the Offer at any stage in accordance with the SEBI
ICDR Regulations and applicable laws
.
164
Management Organisation Chart
Board of Directors
Rajendra Gandhi-
Managing Director
Rajiv Mehta, CEO
Manoj NG, NSH- GT-
Pigeon
Shashidhar SK, CFO & CS
Senthil Kumar R, Head-
Mfg
Venkitesh N, Head-
Corporate Planning
Rohit Mago, CEO-Baddi Hemant Kothari, CBA
165
Key Managerial Personnel
Apart from our Managing Director, Rajendra Gandhi, and our Executive Director, Neha Gandhi, the following persons are the
Key Managerial Personnel of our Company:
Brief profiles of our Key Managerial Personnel
Rajendra Gandhi, our Managing Director, Neha Gandhi, our Executive Director, Rajiv Mehta Nitinbhai, our Chief Executive
Officer and Shashidhar SK, our Chief Financial Officer, company secretary and compliance officer are also key managerial
personnel of our Company as defined under Section 2(51) of the Companies Act, 2013.
Shashidhar SK is the Chief Financial Officer, Company Secretary and Compliance Officer of our Company. He holds a
bachelor’s degree in commerce from Bangalore University. He is a Chartered Global Management Accountant (CGMA) and
Fellow Chartered Management Accountant (FCMA) as certified by the Chartered Institute of Management Accountants
(“CIMA”). Additionally, he is also a Fellow member of the Institute of Company Secretaries of India and a Fellow of the
Institute of Cost Accountants of India. Prior to joining our Company, he worked with WaterHealth India Private Limited as
their Chief Financial Officer- Global, Tata Advanced Materials Limited as their Chief Financial Officer and Company
Secretary, Craigmore Textiles Private Limited (part of the Inlaks Group), K.G. Gluco Biols Limited and Carrier Transicold
India Private Limited. He has over 25 years of experience in the corporate finance and corporate secretarial field. He joined our
Company on July 2, 2018. During Fiscal 2020, he was paid a gross compensation of ₹8.24 million.
Venkitesh N. is the Head – Corporate Planning of our Company. He holds a bachelor’s degree in technology from University
of Kerala. He has more than 25 years of experience in the manufacturing sector. Prior to joining our Company, he was associated
with BPL Limited for 13 years. Venkitesh N. joined our Company on January 4, 2007. During Fiscal 2020, he was paid a gross
compensation of ₹3.50 million.
Senthil Kumar R. is the Head - Manufacturing our Company. He holds a bachelor’s degree in engineering from University of
Madras. He has over 30 years of experience in manufacturing. Prior to joining our Company, he worked with BPL Limited.
Senthil Kumar R. joined our Company on April 1, 2011. During Fiscal 2020, he was paid a gross compensation of ₹3.03 million.
Rohit Mago is the Chief Executive Officer of our Company’s manufacturing unit located at Baddi. He has passed the
examination for the bachelor’s degree in science conducted by Government Autonomous Science College, Jabalpur. He also
holds a master’s degree in business administration from Rani Durgavati Vishwavidyalya, and a post-graduate certificate in
retail management from XLRI Jamshedpur. He has over 18 years of experience in various industries. Prior to joining our
Company, he worked with Hindustan Petroleum Corporation Limited for 14 years. Rohit Mago joined our Company on October
10, 2017. During Fiscal 2020, he was paid a gross compensation of ₹5.72 million.
Hemant Kumar Kothari is the Chief Business Analyst of our Company. He holds a bachelor’s degree in commerce from the
University of Calcutta and a post graduate diploma in management from the Globsyn Business School and, has completed a
Franklin Covey course on “The Seven Habits of Highly Effective People”. He has 11 years of experience in planning and
corporate affairs. He is an associate of the Institute of Cost and Works Accountants of India and also holds an advanced diploma
in management accounting from Chartered Institute of Management Accountants. Prior to joining our Company, he worked
with Sahaj eVillage Limited. He joined our Company on May 18, 2015. During Fiscal 2020, he was paid a gross compensation
of ₹1.95 million.
Manoj N.G. is the National Sales Head – Pigeon division of our Company. He holds a bachelor’s degree in science from the
University of Calicut and a post graduate diploma in business administration from Xavier Institute of Management &
Entrepreneurship, Bangalore. He has more than 16 years of experience in the durable consumer goods sector. Prior to joining
our Company, he worked with Samsung India Electronics Private Limited, Panasonic India Limited, MIRC Electronics Limited,
IFB Industries Limited, BPL Limited and TCL India Holdings Private Limited. Manoj NG joined our Company on April 2,
2018. During Fiscal 2020, he was paid a gross compensation of ₹5.67 million.
All the Key Managerial Personnel are permanent employees of our Company.
Relationship among Key Managerial Personnel and with Directors of our Company
Except for Rajendra Gandhi, who is the father of Neha Gandhi, none of the Key Managerial Personnel are related to each other.
Further, except for Rajendra Gandhi, who is the father of Neha Gandhi, none of the Key Managerial Personnel are related to
the Directors of our Company.
Shareholding of Key Managerial Personnel
Except as disclosed below, none of our Key Managerial Personnel hold any Equity Shares as of the date of filing of this Red
Herring Prospectus:
Name
Number of Equity Shares
Pre-Offer Shareholding (%)
Post-Offer Shareholding (%)
Rajendra Gandhi
18,184,619
60.45
[●]
Neha Gandhi
1
0.00
[●]
166
Name
Number of Equity Shares
Pre-Offer Shareholding (%)
Post-Offer Shareholding (%)
Rajiv Mehta Nitinbhai
30,081
0.10
[●]
Venkitesh N
1
0.00
[●]
Senthil Kumar R.
1
0.00
[●]
Hemant Kumar Kothari
1,500
0.00
[●]
Total
18,216,203
60.55
[●]
Bonus or profit sharing plan of the Key Managerial Personnel
Except Rohit Mago, Chief Executive Officer of our Company’s unit at Baddi, who is eligible to receive 25% share of the
Company’s annual profit before tax from the business operations of our Baddi Facility, and Rajiv Mehta Nitinbhai, Chief
Executive Officer of our Company, who is eligible to receive 1.25% share of the Company’s audited profit before tax, there is
no bonus or profit sharing plan for the Key Managerial Personnel. Our Company makes certain performance linked bonus
payment for each Fiscal to certain Key Managerial Personnel as per their respective terms of employment.
Interests of Key Managerial Personnel
Except as stated below, and as stated in relation to Rajendra Gandhi, in “– Interest of Directors” and “Our Promoter and
Promoter Group” on pages 157 and 167, respectively, and with regard to Neha Gandhi, in “ – Interest of Directors” on page
157 and as stated in relation to Senthil Kumar R. and Venkitesh N in “Capital Structure”, the Key Managerial Personnel do not
have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per
their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business.
Our Company purchases aluminium gas valves from Revalve Systems, a partnership firm in which one of our Key Managerial
Personnel, Venkitesh N., is a partner.
Service Contracts with Key Managerial Personnel
Except certain statutory benefits payable upon termination of their employment in our Company, or on superannuation, none
of our Key Managerial Personnel have entered into any service contract with our Company pursuant to which they are entitled
to benefits upon termination of employment.
Changes in the Key Managerial Personnel in the last three years
The changes in the Key Managerial Personnel in the last three years preceding the date of filing of this Red Herring Prospectus
are as follows:
Name
Designation
Date of change
Reason for change and reason for
resignation
Radhakrishnan S.
Chief Financial Officer
January 19, 2018
Appointment
Kumaravelu Chandrasekar
Vice President - Operations
January 19, 2018
Appointment
Kiran Prabhakar Joshi
Business Head – Gilma
March 12, 2018
Appointment
Anand Singh
SCM – Head
May 21, 2018
Resignation due to personal reason
Manoj N.G.
National Sales Head – Pigeon division
April 2, 2018
Appointment
Radhakrishnan S.
Chief Financial Officer
April 12, 2018
Resignation due to personal reason
Vivek Mishra
Company Secretary
April 30, 2018
Redesignated as Legal Head with
effect from May 1, 2018
Ravikumar Mylsamy
National Sales Head - Modern Retail
May 7, 2018
Appointment
Rehana Anna Rajan
Company Secretary and Compliance
Officer
May 15, 2018
Appointment
Shashidhar SK
Chief Financial Officer
July 2, 2018
Appointment
Kamal Aneja
Business Head-Pigeon division
July 10, 2018
Appointment
Rehana Anna Rajan
Company Secretary and Compliance
Officer
July 27, 2018
Resignation due to personal reason
Shashidhar SK
Company Secretary and Compliance
Officer
July 27, 2018
Appointment
Kumaravelu Chandrasekar
Vice President - Operations
November 23, 2018
Resignation due to personal reasons
Tamal Krishna Chaudhari
President – Black & Decker
December 31, 2018
Resignation due to personal reasons
Kiran Prabhakar Joshi
Business Head – Gilma
January 31, 2019
Resignation due to personal reasons
Ravikumar Mylaswamy
National Sales Head - Modern Retail
May 16, 2019
Resignation due to personal reasons
Rajiv Mehta Nitinbhai
Chief Executive Officer
September 3, 2019
Appointment
Kamal Aneja
Business Head-Pigeon division
September 30, 2019
Resignation due to personal reasons
Vivek Mishra
Legal head
September 30, 2019
Resignation due to personal reasons
Senthil Kumar R
Head – Manufacturing
October 1, 2019
Re-designation
Mahesh C.
Chief Operating Officer
March 25, 2020
Resignation due to personal reasons
ESOP Plan
For details regarding our ESOP Plan, see “Capital Structure” on page 60.
167
OUR PROMOTER AND PROMOTER GROUP
Rajendra Gandhi and Sunita Rajendra Gandhi are the Promoters of our Company. Our Promoters hold an aggregate of
18,443,919 Equity Shares, aggregating to 61.31% of the pre-Offer issued, subscribed and paid-up Equity Share capital of our
Company. For further details, see “Capital Structure” on page 60.
Rajendra Gandhi
Rajendra Gandhi (DIN: 01646143), born on December 27, 1967 and aged 53 years, is
the Managing Director of our Company. He is a resident Indian national. For further
details in respect of his address, educational qualifications, professional experience,
posts held in the past and other directorships, see “Our Management” on page 153.
His permanent account number is ABLPG5270E and his aadhar card number is
811061561579. He does not hold a driver’s license.
Rajendra Gandhi holds 18,184,619 Equity Shares in our Company. Other than as
disclosed in “History and Certain Corporate Matters” and “Our Management” on
pages 146 and 153, respectively.
Sunita Rajendra Gandhi
Sunita Rajendra Gandhi (DIN: 01676100), born on August 11, 1971 and aged 49 years,
is a resident Indian national. She resides at 203, Olympus 1, Prestige Acropolis, Hosur
Road, Adugodi, Bengaluru, 560 029, Karnataka, India. She is not involved in the day
to day management of our Company. She has completed her senior secondary
certificate examination from SS Jain V High School, Secunderabad.
Her permanent account number is ADUPG6366L and her aadhar card number is
783627377862. She holds a driver’s license no. 7102/99.
Sunita Rajendra Gandhi holds 259,300 Equity Shares in our Company. Sunita Rajendra
Gandhi is not involved in any other venture. She is not a director in any Company.
Our Company confirms that the permanent account number, bank account number and passport number of Rajendra Gandhi
and Sunita Rajendra Gandhi has been submitted to the Stock Exchanges at the time of filing of the Draft Red Herring Prospectus.
Interests of Promoters
Our Promoters are interested in our Company to the extent that they have promoted our Company and to the extent of their
shareholding in our Company and the dividends payable, if any, and any other distributions in respect of the Equity Shares held
by them. For details regarding the shareholding of our Promoters in our Company, see “Capital Structure” and “Our
Management” on pages 60 and 153, respectively.
Except as disclosed in “Financial Statements” on page 173, no sum has been paid or agreed to be paid to any of our Promoters
or to the firms or companies in which they are interested as members in cash or shares or otherwise by any person, either to
induce them to become or to qualify them, as directors or otherwise for services rendered by such Promoter(s) or by such firms
or Companies in connection with the promotion or formation of our Company.
Our Promoter, Rajendra Gandhi, is interested (i) in slump sale agreement dated March 31, 2016 for purchase of all rights, title
and interest of Saya Industries of which he was a partner in the unit situated in Buranwala, Baddi, Himachal Pradesh, together
with all assets and liabilities by our Company; and (ii) in lands bearing re-survey number 89/2A and 89/2A3 (total area
admeasuring 2 acres), 81/1 (total area admeasuring 2 acre), 89/2B (total area admeasuring 1 acre 24 guntas) forming part of
Unit I of the manufacturing facility of our Company situated at Medamaranahalli Village, Harohalli Hobli, Kanakapura Taluk,
Bengaluru which were acquired by the Company. Except as disclosed in this section and in “Financial Statements” on page
173, our Promoters have no interest in any property acquired by our Company during the two years preceding the date of this
Red Herring Prospectus, or proposed to be acquired, or in any transaction by our Company for acquisition of land, construction
of building or supply of machinery.
Business and other Interests
Our Promoters are interested in our Company to the extent of any other transactions or business arrangements of our Company
with our Promoters, or their relatives, or entities in which our Promoters hold shares or interest, or entities in which our
Promoters are members of the board of directors or firms in which our Promoters or relatives of our Promoters are directly or
indirectly interested. For details regarding the shareholding of our Promoters and the members of our Promoter Group in our
168
Company, directorship of Rajendra Gandhi, and guarantees extended by our Promoters, see “Capital Structure”, “Our
Management” and “Financial Indebtedness” on pages 60, 153, and 255, respectively, and for business transactions between
our Company and our Promoters, or their relatives or entities in which our Promoters or their relatives are directly or indirectly
interested, see “Financial Statements – Related Party Transactions” on page 228.
Payment of benefits to our Promoters or our Promoter Group
Except as stated in this section, “Our Management”, and “Financial Statements” on pages 153 and 173 respectively, no amount
or benefit has been paid or given to our Promoters or Promoter Group during the two years preceding the filing of this Red
Herring Prospectus nor is there any intention to pay or give any amount or benefit to our Promoters or Promoter Group.
Litigation involving our Promoters
Except as stated in “Outstanding Litigation and Material Developments” on page 257, there is no litigation involving our
Promoters as on the date of this Red Herring Prospectus.
Common Pursuits
Our Promoter, Rajendra Gandhi, is a director of PAPL which is in the same line of business as the Company.We have and shall
adopt necessary procedures and practices as permitted by law to address any conflict situations, as and when they may arise.
For further details of related business transactions and their significance on the financial performance of our Company, see
“Financial Statements - Related Party Transactions” on page 228.
Companies or firms with which our Promoters have disassociated in the last three years
Except as disclosed below, our Promoters have not disassociated themselves from any company or firm in the three years
immediately preceding the date of this Red Herring Prospectus.
S. No.
Name of Promoter
Name of entity
Reason for disassociation
Date of disassociation
1.
Rajendra Gandhi
Saya Industries
Dissolution of Saya Industries
March 31, 2018
2.
Rajendra Gandhi
Pronova Ventures LLP*
Resignation as partner and cessation of
interest in the limited liability
partnership
March 16, 2018
3.
Rajendra Gandhi
Stove Kraft India
Dissolution of Stove Kraft India
April 1, 2020
*Pronova Ventures LLP is not a group company and not in a similar line of business as our Company.
Our Promoter Group
In addition to the Promoters named above, the following individuals and entities form part of the Promoter Group of the
Company.
A. Natural persons who are part of the Promoter Group
Name of Promoter
Name of relative
Relationship
Rajendra Gandhi
Sanjay J Gandhi
Brother
• R Meena
• Vijaya Kataria
• Sarala Prakash
• Sangeetha
Sisters
Kunal Gandhi
Son
Neha Gandhi
Daughter
Palak Rajendra Gandhi
Daughter
I Sukhi Bai
Spouse’s Mother
Rajesh Jain
Spouse’s Brother
J Lalith Jain
Spouse’s Brother
• Sushila Subhashchand Jain
• Kavitha Mahendar
• N Babitha
• Komal Pravin Mutha
Spouse’s Sisters
Sunita Rajendra Gandhi
I Sukhi Bai
Mother
• Rajesh Jain
Brother
• J Lalith Jain
Brother
• Sushila Subhashchand Jain
• Kavitha Mahendar
• N Babitha
• Komal Pravin Mutha
Sisters
Kunal Gandhi
Son
169
Name of Promoter
Name of relative
Relationship
Neha Gandhi
Daughter
Palak Rajendra Gandhi
Daughter
Sanjay J Gandhi
Spouse’s Brother
• R Meena
• Vijaya Kataria
• Sarala Prakash
• Sangeetha
Spouse’s Sisters
B. Entities forming part of the Promoter Group
The entities forming a part of our Promoter Group are as follows:
• Jain Overseas (partnership firm)
• Sprouts Angels LLP;
• Jain Realty (partnership firm);
• Lalith Kumar Jain Jeevraj (HUF);
• Jeevraj Rajesh Kumar Jain (HUF);
• Jeevraj Jain (HUF);
• Misirilal (HUF); and
• Rickhabchand (HUF).
170
OUR GROUP COMPANIES
In terms of SEBI ICDR Regulations, our Board passed a resolution dated January 23, 2020 approving the materiality policy for
the identification of group companies of our Company. As per the materiality policy, the following companies will be
considered group companies – (i) such companies with which there were related party transactions as per the Restated Financial
Statements of our Company; and (ii) such other companies as are otherwise considered material by the Board.
Accordingly, Shinag Allied Enterprises Private Limited (“SAEPL”) has been identified as a Group Company and our Board
has approved that other than SAEPL there are no companies which are considered material by the Board to be identified as a
group company.
Unless otherwise specified, all information in this section is as of the date of this Red Herring Prospectus.
A. Details of our Group Company
1. Shinag Allied Enterprises Private Limited (“SAEPL”)
Corporate Information
SAEPL was incorporated on March 1, 2017 under the Companies Act, 2013 as a private limited company pursuant to
the conversion of Shinag Allied Enterprises, a partnership firm. It has its registered office at Khata No. 141/117/A, Sy
No. 215/4, Gabbadi Village, Kanakapura Taluk, Harohalli Hobli, Ramanagar, 562 112, Bengaluru, Karnataka, India.
The corporate identity number of SAEPL is U28994KA2017PTC100965.
Nature of Activities
SAEPL is engaged, inter alia, in the business of manufacturing, importing and exporting all kinds and varieties of
metal components and metals, heating stoves for domestic and other applications, tools and jugs for consumer durables.
SAEPL is not a listed company.
Our Promoters have no interest in SAEPL.
Financial Information
The following information has been derived from the audited financial statements of Shinag Allied Enterprises Private
Limited for the previous three fiscals
Particulars
Fiscal 2019
Fiscal 2018
Fiscal 2017*
Equity Capital
5,000,000.00
5,000,000.00
N.A.
Reserve and Surplus (excluding
revaluation reserves)
29,163.00
2,973,510.00
Sales and other income
428,041,040.00
494,585,341.00
Profit after tax
(2,944,347.00)
2,973,510.00
Basic earnings per share
(5.89)
5.95
Diluted earnings per share
(5.89)
5.95
Net asset value (networth)
5,029,163.00
7,973,510.00
Number of equity shares
500,000.00
500,000.00
Net asset per share
10.06
15.95
*SAEPL was incorporated on March 1, 2017 and therefore there is no financial information for fiscal 2017
SAEPL is in process of getting its accounts audited. As on date, the audit of SAEPL for Fiscal 2020 is not completed.
Significant notes of auditors of SAEPL for the last three Financial Years
SAEPL does not have any significant notes of auditors in its audited financial statements for Fiscal 2019 and 2018.
The audited financial statements of SAEPL for Fiscal 2020 are not available as of date. For further details, see "Risk
Factor - There have been instances of erroneous form filings in relation to allotment of Equity Shares of our Company
and transfers of Equity Shares of our Company, in relation to which the share transfer forms are not available in our
Company’s records. Further, there has been a delay in filing annual returns by our Group Company" on page 32.
Sick or Defunct Group Company
As on date of this Red Herring Prospectus, our Group Company is not defunct and no application has been made to
the registrar of companies for striking off the name of our Group Company during the five years preceding the date of
filing of this Red Herring Prospectus and the Draft Red Herring Prospectus with SEBI. Further, our Group Company
does not fall under the definition of sick companies under the erstwhile SICA, and as on the date of this Red Herring
Prospectus, no winding up proceedings are pending against our Group Company. Further, our Group Company has
171
not been declared as insolvent or bankrupt under the Insolvency and Bankruptcy Code, 2016 and there are no
insolvency or bankruptcy proceedings initiated against our Group Company.
Common Pursuits amongst the Group Company and our Company
Our Group Company is in the same line of business as our Company. We shall adopt necessary procedures and
practices as permitted by law to address any instances of conflict of interest, as and when they may arise. For further
details, see “Risk Factors- Our Group Company SAEPL is engaged primarily in manufacturing, importing and
exporting of components for domestic and other appliances. Any conflict of interest which may occur between the
business of SAEPL and us could adversely affect our business, prospects, results of operations and financial
condition.” on page 25.
Related Business Transactions with the Group Company and significance on the financial performance of our
Company
For further information, see “Financial Statements” on page 173.
Litigation
Our Group Company is not party to any pending litigation which will have material impact on our Company.
172
DIVIDEND POLICY
The declaration and payment of dividends will be recommended by the Board of Directors and approved by the Shareholders,
at their discretion, subject to the provisions of the Articles of Association and applicable law, including the Companies Act,
2013. The dividend, if any, will depend on a number of factors, including but not limited to the earnings, capital requirements,
contractual obligations, applicable legal restrictions and overall financial position of our Company. Our Company has no formal
dividend policy.
In addition, our ability to pay dividends may be impacted by a number of factors, including restrictive covenants under the loan
or financing arrangements our Company is currently availing of or may enter into to finance our fund requirements for our
business activities. For further details, see “Financial Indebtedness” on page 255.
We have not declared any dividends in the last three Fiscals, during the six month period ended September 30, 2020, and at any
time subsequently, prior to the filing of this Red Herring Prospectus.
173
SECTION V: FINANCIAL INFORMATION
FINANCIAL STATEMENTS
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INDEPENDENT AUDITOR’S REPORT ON RESTATED CONSOLIDATED FINANCIAL
INFORMATION
The Board of Directors
STOVE KRAFT LIMITED
81/1, Medamarana Halli Village, Harohalli Hobli Industrial Area,
Kanakapura Taluk, Ramanagara District,
Bangalore- 562112,
Karnataka, India
Dear Sirs,
1. We have examined the attached Restated Consolidated Financial Information of Stove Kraft
Limited (hereinafter referred to as the “Company”, the “Parent”) and its partnership firms (the
Parent and its partnership firms together referred to as the “Group") comprising the Restated
Consolidated Statements of Assets and Liabilities as at September 30, 2020 and 2019, March
31, 2020, 2019 and 2018, the Restated Consolidated Statements of Profit and Loss (including
other comprehensive income), the Restated Consolidated Statements of Changes in Equity, the
Restated Consolidated Statements of Cash Flows for the six month periods ended September 30,
2020 and 2019 and for the years ended March 31, 2020, 2019 and 2018, the Summary
Statement of Significant Accounting Policies, and other explanatory information thereon
(collectively, the “Restated Consolidated Financial Information”), as approved by the Board of
Directors of the Company at their meeting held on November 19, 2020 for the purpose of
inclusion in the addendum to the draft red herring prospectus (“Addendum”), Red Herring
Prospectus (“RHP”) and Prospectus (Collectively, the “Offer Documents”) prepared by the
Company in connection with its proposed Initial Public Offer of equity shares (the “IPO”) prepared
in terms of the requirements of:
a) Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended ("the Act");
b) the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2018 as amended (the "ICDR Regulations"); and
c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the
Institute of Chartered Accountants of India (“ICAI”), as amended (the “Guidance Note”).
2. The Company’s Board of Directors is responsible for the preparation of the Restated Consolidated
Financial Information for the purpose of inclusion in the Offer Documents to be filed with the
Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited
and the Registrar of Companies, Karnataka situated at Bengaluru, in connection with the
proposed IPO. The Restated Consolidated Financial Information have been prepared by the
management of the Company on the basis of preparation stated in note 2.1 to the Restated
Consolidated Financial Information. The Management’s responsibility includes designing,
implementing and maintaining adequate internal control relevant to the preparation and
presentation of the Restated Consolidated Financial Information. The Management is also
responsible for identifying and ensuring that the Group complies with the Act, the ICDR
Regulations and the Guidance Note.
3. We have examined such Restated Consolidated Financial Information taking into consideration:
a) The terms of reference and terms of our engagement agreed upon with you in accordance
with our engagement letter dated November 17, 2020 in connection with the proposed IPO
of the Company;
b) The Guidance Note. The Guidance Note also requires that we comply with the ethical
requirements of the Code of Ethics issued by the ICAI;
174
c) Concepts of test checks and materiality to obtain reasonable assurance based on verification
of evidence supporting the Restated Consolidated Financial Information; and
d) The requirements of Section 26 of the Act and the ICDR Regulations. Our work was
performed solely to assist you in meeting your responsibilities in relation to your compliance
with the Act, the ICDR Regulations and the Guidance Note in connection with the proposed
IPO.
4. These Restated Consolidated Financial Information have been compiled by the Management from:
a) audited special purpose interim consolidated Ind AS financial statements of the Group as at
and for the six month periods ended September 30, 2020 and 2019 prepared in accordance
with the recognition and measurement principles of Indian Accounting Standard (Ind AS) 34
"Interim Financial Reporting", issued by Institute of Chartered Accountants of India and other
accounting principles generally accepted in India (together, the “Special Purpose interim
Consolidated Ind AS Financial Statements”), which have been approved by the Board of
directors of the Company at their meetings held on November 19, 2020 and January 31,
2020 respectively.
b) audited consolidated Ind AS financial statements of the Group as at and for the years ended
March 31, 2020 and 2019 which includes the comparative Ind AS financial information as at
and for the year ended March 31, 2018 prepared in accordance with Ind AS as prescribed
under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules
2015, as amended, and other accounting principles generally accepted in India, which have
been approved by the Board of Directors of the Company at their meetings held on July 27,
2020 and June 19, 2019 respectively. The Comparative Ind AS financial statements as at
and for the year ended March 31, 2018 have been prepared by making Ind AS adjustments
to the audited consolidated financial statements of the Group as at and for the year ended
March 31, 2018, prepared in accordance with the accounting standards notified under the
section 133 of the Companies Act, 2013 (the “Consolidated Indian GAAP Financial
Statements”), which was approved by the Board of directors of the Company at their meeting
held on September 21, 2018.
5. For the purpose of our examination, we have relied on the auditors’ reports issued by us dated
November 19, 2020, January 31, 2020, July 27, 2020 and June 19, 2019 on the consolidated financial
statements of the Group as at and for the six month periods ended September 30, 2020 and 2019
and as at and for the years ended March 31, 2020 and 2019 as referred in Paragraph 4 above.
6. The audit report on the consolidated Ind AS financial statements/consolidated Indian GAAP financial
statements issued by us included following matter under ‘Report on Other Legal and Regulatory
Requirements’ section of the audit report:
a) As at and for the year ended March 31, 2020:
On the basis of the written representations received from the directors as on March 31, 2020
taken on record by the Board of Directors, in respect of one of the directors, disqualification
was attracted u/s 164 (2) of the Act however the company has received an order to maintain
status quo of the directorship of the director from National Company Law Tribunal as referred
in note no. 45 and all other directors are not disqualified as on March 31, 2020 from being
appointed as director in the term of section 164(2) of the Act.
175
b) As at and for the year ended March 31, 2019:
On the basis of the written representations received from the directors as on March 31, 2019
taken on record by the Board of Directors, in respect of one of the directors, disqualification was
attracted u/s 164 (2) of the Act however the company has received an order to maintain status
quo of the directorship of the director from National Company Law Tribunal as referred in note
no. 46 and all other directors are not disqualified as on March 31, 2019 from being appointed as
director in the term of section 164(2) of the Act.
c) As at and for the year ended March 31, 2018:
On the basis of the written representations received from the directors as on March 31, 2018
taken on record by the Board of Directors, in respect of one of the directors, disqualification
was attracted u/s 164 (2) of the Act however the company has received an order to maintain
status quo of the directorship of the director from National Company Law Tribunal as referred
in note no. 44 and all other directors are not disqualified as on March 31, 2018 from being
appointed as director in the term of section 164(2) of the Act.
7. The audit report on the special purpose consolidated Ind AS financial statements and consolidated
Ind AS financial statements included following other matter paragraph:
a) As at and for the six month period ended September 30, 2020:
“Due to the health risk imposed by the COVID-19 outbreak, we were not able to physically
participate in the physical verification of inventory that was carried out by the management
as at September 30, 2020. Consequently, we have performed alternate procedures to audit
the existence of inventory as per the guidance provided in SA 501 “Audit Evidence –
Specific Considerations for Selected Items” and have obtained sufficient appropriate audit
evidence to issue our unmodified opinion on these special purpose interim consolidated Ind
AS financial statements.
Our opinion is not modified in respect of this matter.”
b) As at and for the year ended March 31, 2020:
“Due to COVID-19 related lockdown we were not able to participate in the physical
verification of inventory that was carried out by the management subsequent to the year
end. Consequently, we have performed alternate procedures to audit the existence of
inventory as per the guidance provided in SA 501 “Audit Evidence – Specific Considerations
for Selected Items” and have obtained sufficient appropriate audit evidence to issue our
unmodified opinion on these consolidated financial statements.
Our opinion is not modified in respect of this matter.”
8. The audit report on the consolidated Indian GAAP financial statements for the year ended March 31,
2018 included an Emphasis of Matter paragraph in relation to uncertainty relating to the outcome of
the income tax matters under appeal with various appellate forums in case of the partnership firm
(i.e. Stovekraft India). Our opinion is not modified in respect of this matter.
9. Based on our examination and according to the information and explanations given to us, we report
that the Restated Consolidated Financial Information:
a. have been made after incorporating adjustments for the changes in accounting policies, material
errors and regrouping/reclassifications retrospectively in six month period ended September 30,
2019 and in respective financial years ended March 31, 2020, 2019 and 2018 to reflect the same
accounting treatment as per the accounting policy and grouping/classifications followed as at
and for the six month period ended September 30, 2020;
176
b. do not require any adjustment for modification as there is no modification in the underlying audit
reports; and
c. have been prepared in accordance with the Act, the ICDR Regulations and the Guidance Note.
10. We have complied with the relevant applicable requirements of the Standard on Quality Control
(SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial
Information, and Other Assurance and Related Services Engagements.
11. The Restated Consolidated Financial Information do not reflect the effects of events that occurred
subsequent to the respective dates of our reports on the audited consolidated financial statements
mentioned in paragraph 4 above.
12. This report should not in any way be construed as a reissuance or re-dating of any of the previous
audit reports issued by us, nor should this report be construed as a new opinion on any of the
financial statements referred to herein.
13. We have no responsibility to update our report for events and circumstances occurring after the date
of the report.
14. Our report is intended solely for use of the Board of Directors of the Company for inclusion in the
Offer Documents to be filed with Securities and Exchange Board of India, BSE Limited, National Stock
Exchange of India Limited and Registrar of Companies, Karnataka in connection with the proposed
IPO. Our report should not be used, referred to, or distributed for any other purpose except with our
prior consent in writing. Accordingly, we do not accept or assume any liability or any duty of care for
any other purpose or to any other person to whom this report is shown or into whose hands it may
come without our prior consent in writing.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm’s Registration No. 008072S)
Jaideep S. Trasi
Partner
(Membership No. 211095)
(UDIN: 20211095AAAADD2118)
Place: Bangalore
Date : November 19, 2020
177
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
3(a)
1,995.70 1,814.64 1,928.89 1,787.16 1,821.45
Right-of-use assets
3(b)
- 31.72 - - -
6.55 2.77 42.27 9.48 6.08
3(c)
34.29 3.92 2.95 4.71 6.32
Intangible assets under development - 15.39 33.40 7.82 -
4
- - - - -
5
37.45 51.35 50.33 50.96 38.01
Deferred tax assets
46
- - - - -
Non-current tax asset (net)
5A
2.16 2.39 2.46 46.57 47.14
6
150.32 13.61 18.24 13.66 30.92
2,226.47 1,935.79 2,078.54 1,920.36 1,949.92
7
1,366.28 1,284.64 1,165.94 974.14 1,051.38
8
1,036.25 1,428.15 1,030.34 896.56 795.52
9(a)
52.90 61.02 150.06 285.24 4.00
9(b)
47.84 40.70 44.09 29.55 33.81
10
18.44 3.26 3.52 4.52 0.27
11
27.62 12.90 13.25 19.12 10.79
12
209.19 168.31 227.17 127.77 90.73
2,758.52 2,998.98 2,634.37 2,336.90 1,986.50
4,984.99 4,934.77 4,712.91 4,257.26 3,936.42
13(a)
247.17 247.17 247.17 247.17 189.00
13(b)
(546.60) (837.46) (848.98) (886.63) (1,990.02)
(299.43) (590.29) (601.81) (639.46) (1,801.02)
14
- 2.24 2.27 2.17 2.14
(299.43) (588.05) (599.54) (637.29) (1,798.88)
15
2,054.39 2,061.75 2,048.25 2,100.26 3,113.05
Lease liabilities
36
- 19.39 - - -
16
74.05 90.87 108.27 96.01 148.27
Deferred tax liability
46
- - - - -
17
64.06 52.88 62.74 46.12 34.14
2,192.50 2,224.89 2,219.26 2,242.39 3,295.46
18
941.33 1,114.06 1,220.55 999.44 809.58
Lease liabilities
36
2.59 12.70 2.49 - -
19
36.18 70.97 46.61 59.87 40.28
1,725.18 1,776.31 1,462.75 1,281.14 1,411.32
20
312.15 232.83 291.96 237.66 110.21
21
18.20 15.44 16.84 15.02 16.07
22
56.29 66.87 48.35 53.92 52.24
Current tax liabilities (net)
22A
- 8.75 3.64 5.11 0.14
3,091.92 3,297.93 3,093.19 2,652.16 2,439.84
5,284.42 5,522.82 5,312.45 4,894.55 5,735.30
4,984.99 4,934.77 4,712.91 4,257.26 3,936.42
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Jaideep S Trasi
Partner
Membership Number: 211095 DIN: 01646143 DIN: 00697109
Membership Number: FCS 7119
Place: Bengaluru
Date : November 19, 2020
Place: Bengaluru
Date : November 19, 2020
Total equity
Other financial liabilities
Provisions
Total liabilities
Borrowings
Trade payables
See accompanying notes 1 to 46 forming part of the restated consolidated financial information.
Liabilities
Non-current liabilities
Financial liabilities
Other financial liabilities
Provisions
Total equity and liabilities
Total current liabilities
Other current liabilities
Borrowings
Equity share capital
Other equity
Total non-current liabilities
Current liabilities
Financial liabilities
Equity attributable to owners of the Company
Non-controlling interests
Total outstanding dues of micro enterprises and small enterprises
Total outstanding dues of creditors other than micro enterprises and small enterprises
Restated Consolidated Statement of Assets and Liabilities
Other financial assets
Investments
Current assets
Inventories
Financial assets
As atNote
No.
Non-current assets
Property, plant and equipment
Particulars
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
For and on behalf of the Board of Directors
Capital work-in-progress
Intangible assets
Financial assets
Other current assets
Bank balances other than cash and cash equivalents as above
Other financial assets
Other non-current assets
Total non-current assets
Trade receivables
Cash and cash equivalents
Loans
EQUITY AND LIABILITIES
Equity
Total current assets
Total assets
Rajendra Gandhi
Managing Director
Shashidhar SK
Chief Financial Officer & Company Secretary
Rajiv Mehta
Chief Executive Officer
178
30-Sep-20
30-Sep-19
31-Mar-20
31-Mar-19
31-Mar-18
Income
23
3,288.36 3,155.07 6,698.61 6,409.38 5,289.52
24
6.73 19.26 30.53 16.60 56.33
3,295.09 3,174.33 6,729.14 6,425.98 5,345.85
25
1,600.45 1,526.30 3,232.38 3,175.40 2,411.19
26
614.78 722.39 1,287.63 1,326.00 1,203.26
Changes in inventories of finished goods, work-in-progress and stock-in-trade
27
(70.05) (196.72) (101.33) (114.78) (78.96)
- - - - 53.33
28
312.50 393.32 820.11 697.95 590.87
29
100.95 101.43 209.01 179.20 169.35
30
68.65 57.85 124.10 123.38 112.25
31
380.05 522.23 1,121.90 1,026.59 1,010.11
3,007.33 3,126.80 6,693.80 6,413.74 5,471.40
287.76 47.53 35.34 12.24 (125.55)
46
- 3.64 3.64 4.60 -
Current tax expense relating to prior period / year - - - 0.28 (5.37)
- - - - -
- 3.64 3.64 4.88 (5.37)
287.76 43.89 31.70 7.36 (120.18)
13.07 (1.68) (2.56) 1.64 1.75
Income tax impact - - - - -
13.07 (1.68) (2.56) 1.64 1.75
- - - 0.05 1.24
Income tax impact - - - - -
- - - 0.05 1.24
13.07 (1.68) (2.56) 1.69 2.99
300.83 42.21 29.14 9.05 (117.19)
287.73 43.82 31.60 7.33 (120.00)
0.03 0.07 0.10 0.03 (0.18)
287.76 43.89 31.70 7.36 (120.18)
13.07 (1.68) (2.56) 1.69 2.99
- - - - -
13.07 (1.68) (2.56) 1.69 2.99
300.80 42.14 29.04 9.02 (117.01)
0.03 0.07 0.10 0.03 (0.18)
300.83 42.21 29.14 9.05 (117.19)
34
11.64 1.77 1.28 0.33 (6.35)
34
11.64 1.77 1.28 0.33 (6.35)
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Jaideep S Trasi
Partner
Membership Number: 211095 DIN: 01646143 DIN: 00697109
Membership Number: FCS 7119
Place: Bengaluru
Date : November 19, 2020
Diluted (in Rs.) (Face value of Rs.10 each)
Earnings per share
See accompanying notes 1 to 46 forming part of the restated consolidated financial information.
Total restated comprehensive income for the period / year attributable to:
Owners of the Company
Non controlling interests
Total
Basic (in Rs.) (Face value of Rs.10 each)
Remeasurements of the defined benefit Plans - Gains / (losses)
Items that will be reclassified to profit or loss
Fair value changes on cash flow hedges
Total restated comprehensive income for the period / year
Purchase of stock in trade
Total other comprehensive income for the period / year
Net tax expense / (benefit)
Restated profit/(loss) for the period / year
Other comprehensive income
Items that will not be reclassified to profit or loss
Tax expense / (benefit):
Current tax expense
Deferred tax
Items that will not be reclassified to profit or loss (net of tax)
Items that will be reclassified to profit or loss (net of tax)
Restated Profit/(Loss) before tax
Revenue from operations
Restated Consolidated Statement of Profit and Loss
Note
No.
For the year endedParticulars For the half year ended
Excise duty
Employee benefits expenses
Finance cost
Depreciation and amortization expenses
Other expenses
Total expenses
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Total
Non controlling interests
Restated profit/(loss) for the period / year attributable to:
Owners of the Company
Non controlling interests
Total
Other restated comprehensive income for the period / year attributable to:
Owners of the Company
Other income
Total Income
Expenses
Cost of materials consumed
Place: Bengaluru
Date : November 19, 2020
For and on behalf of the Board of Directors
Rajendra Gandhi
Managing Director
Rajiv Mehta
Chief Executive Officer
Shashidhar SK
Chief Financial Officer & Company Secretary
179
30-Sep-20
30-Sep-19
31-Mar-20
31-Mar-19
31-Mar-18
247.17 247.17 247.17 189.00 189.00
Changes in equity share capital during the period / year
- - - 58.17 -
247.17
247.17
247.17
247.17
189.00
Items of other
comprehensive
income
Retained
earnings
Securities
Premium
Share
options
outstanding
account
Cashflow hedge
reserve
(1,871.72) (1.29) (1,873.01) 2.54 (1,870.47)
(120.00) - - - (120.00) (0.18) (120.18)
1.75 - - - 1.75 - 1.75
- - - - - (0.22) (0.22)
- - - 1.24 1.24 - 1.24
(1,989.97)
-
-
(0.05)
(1,990.02)
2.14
(1,987.88)
(1,989.97)
- -
(0.05) (1,990.02) 2.14
(1,987.88)
7.33 - - - 7.33 0.03 7.36
- 1,094.37 - - 1,094.37 - 1,094.37
1.64 - - - 1.64 - 1.64
- - - 0.05 0.05 - 0.05
(1,981.00)
1,094.37
-
-
(886.63)
2.17
(884.46)
(1,981.00) 1,094.37
- -
(886.63) 2.17
(884.46)
43.82 - - - 43.82 0.07 43.89
(1.68) - - - (1.68) - (1.68)
- - 7.03 - 7.03 - 7.03
(1,938.86)
1,094.37
7.03
-
(837.46)
2.24
(835.22)
(1,938.86) 1,094.37 7.03
-
(837.46) 2.24
(835.22)
(12.22) - - - (12.22) 0.03 (12.19)
(0.88) - - - (0.88) - (0.88)
- - 1.58 - 1.58 - 1.58
(1,951.96)
1,094.37
8.61
-
(848.98)
2.27
(846.71)
(1,951.96) 1,094.37 8.61
-
(848.98) 2.27
(846.71)
287.73 - - - 287.73 0.03 287.76
- - - - - (2.30) (2.30)
13.07 - - - 13.07 - 13.07
- - 1.58 - 1.58 - 1.58
(1,651.16)
1,094.37
10.19
-
(546.60)
-
(546.60)
In terms of our report attached
For and on behalf of the Board of Directors
For Deloitte Haskins & Sells
Chartered Accountants
Jaideep S Trasi
Rajendra Gandhi
Rajiv Mehta
Partner Managing Director Chief Executive Officer
Membership Number: 211095 DIN: 01646143 DIN: 00697109
Shashidhar SK
Chief Financial Officer & Company Secretary
Membership Number: FCS 7119
Place: Bengaluru Place: Bengaluru
Date : November 19, 2020 Date : November 19, 2020
Restated Profit for the period
Remeasurement of defined benefit obligation [Gain/(Loss)]
Share option recorded on grant during the period
Balance as at 30 September 2020
Restated Profit for the period
Remeasurement of defined benefit obligation [Gain/(Loss)]
Share option recorded on grant during the period
Balance as at 31 March 2020
Balance as at 01 April 2020
Adjustment on account of dissolution of the partnership firm
Balance as at 01 October 2019
Balance as at 30 September 2019
Balance as at 01 April 2019
Restated Profit for the period
Remeasurement of defined benefit obligation [Gain/(Loss)]
Share option recorded on grant during the period
Balance as at 31 March 2019
Restated Loss for the year
Balance as at 01 April 2017
Remeasurement of defined benefit obligation
Fair value changes on cash flow hedge
Premium on shares issued during the year
Remeasurement of defined benefit obligation
Fair value changes on cash flow hedge
Balance as at 31 March 2018
Balance as at 01 April 2018
Restated Profit for the year
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Particulars
Other equity
Total
other
equity
As atParticulars
Restated Consolidated Statement of Changes in Equity
Attributable
to owners
of the Parent
Non
Controlling
interest
Reserve and surplus
Minority interest adjusted during the year
Equity share capital
Opening balance
See accompanying notes 1 to 46 forming part of the restated consolidated financial information.
Add: Issued during the period / year
Closing balance
180
30-Sep-20
30-Sep-19
31-Mar-20
31-Mar-19
31-Mar-18
287.76
47.53
35.34
12.24
(125.55)
68.65 57.85 124.10 123.38 112.25
28.22 27.44 40.30 22.07 59.65
- (0.76) (3.19) (12.36) (41.85)
Provision for Warranty - - - - 9.06
(1.68) (1.22) (2.81) (1.66) (1.80)
- - - - (2.52)
(0.66) (1.16) (2.11) 4.03 (1.33)
- - - - 153.80
(0.53) (0.26) (0.25) (0.13) 1.02
93.56 84.46 181.30 179.20 152.89
0.10 (0.20) (0.50) - -
1.58 7.03 8.61 - -
(0.45) (0.05) 10.79 (7.82) 2.98
476.55
220.66
391.58
318.95
318.60
(15.46) 7.86 7.90 (16.88) 43.79
(200.34) (310.50) (191.80) 77.24 (325.11)
(33.92) (559.04) (172.42) (123.50) (247.93)
(3.90) (14.25) (85.89) (24.62) (12.47)
3.48 (10.12) (7.24) (22.39) 18.35
249.92 507.39 164.34 (92.04) 343.34
7.94 12.95 (5.57) 1.68 (25.85)
15.75 5.50 15.88 12.62 0.41
500.02 (139.55) 116.78 131.06 113.13
(3.34) 44.18 39.00 0.66 (0.09)
496.68 (95.37) 155.78 131.72 113.04
(251.07) (111.15) (260.79) (74.43) (63.18)
0.80 0.34 0.35 0.13 2.32
0.75 0.43 2.41 1.93 1.93
(3.75) (11.15) (14.54) 4.26 (2.56)
(253.27) (121.53) (272.57) (68.11) (61.49)
33.07 123.56 145.74 250.00 125.00
9.75 (158.08) (198.62) (38.76) (56.56)
(279.22) 114.33 215.86 191.87 26.76
- (3.45) (6.95) - -
(104.17) (83.68) (174.42) (185.48) (148.17)
(340.57) (7.32) (18.39) 217.63 (52.97)
(97.16) (224.22) (135.18) 281.24 (1.42)
150.06 285.24 285.24 4.00 5.42
52.90 61.02 150.06 285.24 4.00
0.53 0.58 0.63 0.55 0.82
52.37 60.44 149.43 89.69 3.18
in fixed deposits - - - 195.00 -
52.90 61.02 150.06 285.24 4.00
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Jaideep S Trasi
Partner
Membership Number: 211095 DIN: 01646143
Place: Bengaluru
Date : November 19, 2020
For the half year ended
The cash flow statement has been prepared under the indirect method as set out in Indian Accounting Standard (IndAS 7) - Statement of cash flows.
See accompanying notes 1 to 46 forming part of the restated consolidated financial information.
in current accounts
Total
* Comprises:
(a) Cash on hand
(b) Balances with banks:
Cash and cash equivalents at the end of the period / year* (Refer note 9(a))
Net cash generated from/(used in) investing activities (B)
Cash flows from Financing activities
Repayment of long-term borrowings
(Amount in Rupees Millions except for share data or as otherwise stated)
Other financial liabilities
Trade payables
Other current liabilities
Provisions
Movement of margin money deposit with banks (net)
Cash generated from/(used in) operations
Net income taxes (paid) / refund received
Net cash generated from/(used in) operating activities (A)
Cashflows from investing activities
Proceeds/(repayment) from short-term borrowing (net)
Proceeds from long-term borrowings
Finance cost
Net cash generated from / (used in) financing activities (C)
Net Increase / (Decrease) in cash and cash equivalents (A+B+C)
Cash and cash equivalents at the beginning of the period / year
Interest received on bank deposits
Other financial assets
Inventories
Trade receivables
Other assets
Adjustment for increase/ (decrease) in operating liabilities:
Adjustment for (increase)/ decrease in operating assets :
Unrealised exchange difference on lease liabilities
Employees share option cost recorded on grants
Capital expenditure on property, plant and equipments (including capital advance)
Proceeds from sale of property, plant and equipments
(Profit) / loss on sale of property, plant and equipment
Finance cost
Unrealised exchange difference on foreign currency transactions and translation (net)
Operating cash profit before changes in working capital
Changes in working capital
Fair valuation of Compulsorily Convertible Debentures
For the year ended
Payment of lease liabilities
Stove Kraft Limited
Particulars
Restated Consolidated Financial Information
Restated Consolidated Statement of Cashflows
Provision for doubtful trade and other receivables, loans and advances and bad debts written off
(net)
Cashflow from operating activities
Restated Profit / (Loss) before tax
Adjustments for :
Depreciation and amortisation expense
Liability no longer required written back
Interest on deposit with bank
Government grant (EPCG Scheme)
(Profit) / loss on fair valuation of derivative instruments
Place: Bengaluru
Date : November 19, 2020
For and on behalf of the Board of Directors
Rajendra Gandhi
Managing Director
Shashidhar SK
Rajiv Mehta
Chief Executive Officer
DIN: 00697109
Chief Financial Officer & Company Secretary
Membership Number: FCS 7119
181
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
1. Corporate information
Stove Kraft Limited (the ‘Company’ / ‘SKL’) is a company domiciled in India, with its registered office situated
at Bengaluru. It is engaged primarily in the business of manufacturing of pressure cookers, LPG stoves, non-stick
cookware, wick stoves and trading of other kitchen, home and electrical appliances under the brand names
“Pigeon”, “Pigeon LED”, “Black and Decker” and “Gilma”.
The Company changed its name from Stove Kraft Private Limited to Stove Kraft Limited on August 13, 2018.
The Restated Consolidated Ind AS Financial Information have been authorised for issuance by the Company's
Board of Directors on November 19, 2020.
2. Basis for preparation and presentation and summary of significant accounting policies
2.1 Basis of preparation and presentation
The Restated Consolidated Financial Information of the Company and its partnership firms (together known
as the “Group”) comprise of the Restated Consolidated Statement of Assets and Liabilities as at September
30, 2020, September 30, 2019, March 31, 2020, March 31, 2019 and March 31, 2018, the Restated
Consolidated Statement of Profit and Loss (including Other Comprehensive Income), Restated Consolidated
Statement of changes in equity and the Restated Consolidated Statement of Cash Flows for the six month
periods ended September 30, 2020 and September 30, 2019 and for the years ended March 31, 2020, March
31, 2019, and March 31, 2018, and the Summary of Significant Accounting Policies and explanatory notes
(collectively, the ‘Restated Consolidated Financial Information’). These restated consolidated Financial
information have been prepared by the management of the Company for the purpose of inclusion in the
addendum to the draft red herring prospectus (“Addendum”), Red Herring Prospectus (“RHP”) and
Prospectus (Collectively, the “Offer Documents”) prepared by the Company in connection with its proposed
Initial Public Offer (“IPO”) in terms of the requirements of:
(a) Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");
(b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2018, as amended ("ICDR Regulations"); and
(c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of
Chartered Accountants of India (ICAI) , as amended (the “Guidance Note”).
These Restated Consolidated Financial Information have been compiled by the Management from:
a) audited special purpose interim consolidated Ind AS financial statements of the Group as at and for the
six month periods ended September 30, 2020 and 2019 prepared in accordance with the recognition and
measurement principles of Indian Accounting Standard (Ind AS) 34 "Interim Financial Reporting",
issued by Institute of Chartered Accountants of India and other accounting principles generally accepted
in India (together, the “Special Purpose interim Consolidated Ind AS Financial Statements”), which have
been approved by the Board of directors of the Company at their meetings held on November 19, 2020
and January 31, 2020 respectively; and
b) audited consolidated Ind AS financial statements of the Group as at and for the years ended March 31,
2020 and 2019 which includes the comparative Ind AS financial information as at and for the year ended
March 31, 2018 prepared in accordance with Ind AS as prescribed under Section 133 of the Act read
with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles
generally accepted in India, which have been approved by the Board of Directors of the Company at their
meetings held on July 27, 2020 and June 19, 2019 respectively. The Comparative Ind AS financial
statements as at and for the year ended March 31, 2018 have been prepared by making Ind AS
adjustments to the audited consolidated financial statements of the Group as at and for the year ended
March 31, 2018, prepared in accordance with the accounting standards notified under the section 133 of
the Companies Act, 2013 (the “Consolidated Indian GAAP Financial Statements”), which was approved
by the Board of directors of the Company at their meeting held on September 21, 2018.
182
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
The Group has voluntary opted to additionally disclose the comparative figures for the six month period
ended September 30, 2019 in relation to statement of profit and loss, statement of cash flows and statement
of changes in equity and as at September 30, 2019 in relation to statement of assets and liabilities.
These Restated Consolidated Financial Information do not reflect the effects of events that occurred
subsequent to the respective dates of board meeting on the audited consolidated financial statements/ audited
special purpose interim consolidated Ind AS financial statements mentioned above.
The Group has decided to voluntarily adopt Ind AS for the financial year ended March 31, 2019 onwards. In
accordance with the transition provision specified under Ind AS 101, the date of transition to Ind AS is April
01, 2017.
The Restated Consolidated Financial Information for the periods ended September 30, 2020, September 30,
2019 and for the year ended March 31, 2018 have been compiled by the Company from the Special Purpose
Consolidated Financial Statement prepared under Ind AS.
The Restated Consolidated Financial Information for the year ended March 31, 2020 and March 31, 2019 has
been compiled by the Company from the Consolidated Financial Statements prepared under Ind AS.
First-time adoption of Ind AS
The Group has prepared the opening Consolidated Balance Sheet as per Ind AS as of April 1, 2017 by
recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets
or liabilities which are not permitted by Ind AS, by reclassifying items from previous Indian GAAP to Ind
AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities.
However, this principle is subject to the certain exception and certain optional exemptions availed by the
Group as detailed below.
a. Deemed cost for property, plant and equipment and intangible assets:
The Group has elected to use fair value of its property, plant and equipment and intangible assets in
its Opening Ind AS Balance sheet as deemed cost.
b. Deemed cost for investment in partnership firms and associate:
The Group has elected to continue with the carrying value of all of its partnership firms and associate
recognised as of transition date measured as per the previous GAAP and use that carrying value as
its deemed cost as of the transition date.
c. Derecognition of Financial Assets and Liabilities:
The Group has applied the derecognition requirements of financial assets and financial liabilities
prospectively for transactions occurring on or after the transition date.
d. Impairment of financial assets:
The Group has applied the impairment requirements of Ind AS 109 retrospectively; however, as
permitted by Ind AS 101, it has used reasonable and supportable information that is available without
undue cost or effort to determine the credit risk at the date that financial instruments were initially
recognised in order to compare it with the credit risk at the transition date. Further, the Group has
not undertaken an exhaustive search for information when determining, at the date of transition to
Ind ASs, whether there have been significant increases in credit risk since initial recognition, as
permitted by Ind AS 101.
183
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
e. Past Business Combination
The Group has elected not to apply Ind AS 103 Business Combination retrospectively to past
business combinations that occurred before the transition date of April 1, 2017.
2.1.1 Basis of Consolidation
The Consolidated financial statements incorporate the financial statements of the Company and the entities
controlled by the Company and its partnership firms. Control is achieved when the Group:
has power over the investee
is exposed to, or has rights, to variable returns from its involvement with the investee; and
ability to use its power to effect its returns
The Company reassess whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
Consolidation of a Partnership firm begins when the Company obtains control over the partnership firm and
ceases when the Company loses control of the partnership firm. Specifically, income and expenses of a
partnership firm acquired or disposed of during the year are included in the consolidated statements of profit
and loss and other comprehensive income from the date the Company gains control until the date when the
Company ceases to control partnership firm.
Profit or loss and each component of other comprehensive income are attributed to the owners of the
Company and to the non-controlling interests. Total comprehensive income of partnership firms is attributed
to the owners of the Company and to the non-controlling interests even if this results in the non-controlling
interests having deficit balance.
Where necessary, adjustments are made to financial statements of partnership firms to bring their accounting
policies in line with the Group's accounting policies.
The financial statements of the Company and its partnership firms have been combined on a line-by-line basis
by adding together like items of assets, liabilities, income, expenses and cash flows after eliminating intra-
group balances, intra-group transactions and resulting unrealised profits or losses.
All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
The consolidated financial statements include the financial statements of Stove Kraft Limited and its
partnership firms as set out below.
Name of the
partnership firm
Country of
Incorporation
% of holding
For the six month
period ended
September 30, 2020
2019-20
2018-19
2017-18
Stovekraft India
(Partnership firm)
India
-#
99%
99%
99%
Saya Industries
(Partnership firm)
India
-
-
-*
95%
* During the year 31 March 2018, Saya Industries got dissolved.
# During the period ended September 30, 2020, Stovekraft India (Partnership firm) got dissolved on
September 22, 2020.
184
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
2.2 Summary of significant accounting policies
The Restated Consolidated Financial Information have been prepared on the historical cost basis except for
certain financial instruments that are measured at fair values at the end of each reporting period, as explained
in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating the fair value of an asset or a
liability, the Group takes into account the characteristics of the asset or liability if market participants would
take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3
based on the degree to which the inputs to the fair value measurements are observable and the significance
of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below:
(a) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable.
i. Sale of goods
Revenue from sale of goods is recognised when control of the products being sold is transferred to our
customer and when there are no longer any unfulfilled obligations. The performance obligations in the
contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on
customer terms.
Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade
discounts, volume rebates, loyalty benefits and any taxes or duties collected on behalf of the government such
as goods and services tax, etc. Accumulated experience is used to estimate the provision for such discounts
and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not
occur.
ii. Export entitlement
Government incentives are accrued for based on fulfilment of eligibility criteria for availing the incentives
and when there is no uncertainty in receiving the same.
iii. Interest Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount on initial recognition.
185
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
(b) Property, Plant and Equipment
Property, Plant and Equipment are carried at cost less accumulated depreciation and impairment losses, if
any. The cost of Property, Plant and Equipment comprises its purchase price, net of any trade discounts and
rebates, any import duties, other taxes (other than those subsequently recoverable from the tax authorities),
any directly attributable expenditure on making the asset ready for its intended use, and other incidental
expenses.
An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement
of an item of Property, Plant and Equipment is determined as the difference between the sales proceeds and
the carrying amount of the asset and is recognised in statement of profit and loss.
Depreciation on Property, Plant and Equipment has been provided on the straight-line method as per the
useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories
of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into
account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past
history of replacement, anticipated technological changes, manufacturers warranties and maintenance
support, etc. Individual assets costing less than Rs.5,000/- are depreciated in full in the year of purchase.
Asset
Useful life in years
Leasehold Improvements
3-5 years or over the lease period
whichever is lower
Office Equipment's
5 Years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate accounted for on a prospective basis.
(c) Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses, if any. Amortisation is recognised on a straight-line basis
over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end
of each reporting period, with the effect of any changes in estimate being accounted for on a prospective
basis.
The useful lives of intangible assets that is considered for amortization of intangible assets are as follows:
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use
or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference
between the net disposal proceeds and the carrying amount of the asset, are recognised in statement of profit
and loss when the asset is derecognised.
(d) Inventories
Inventories are valued at the lower of weighted average cost and the net realizable value. Cost includes
purchase cost and all other charges in bringing the inventories to their present location and condition including
octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include
appropriate proportion of overheads.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale.
Intangible Asset
Useful life in years
Computer Software
6
186
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
(e) Financial Instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through
profit or loss are recognised immediately in statement of profit and loss.
A. Financial Assets:
i. Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a
business model whose objective is to hold these assets in order to collect contractual cash flows and
contractual terms of financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
The effective interest method is a method of calculating the amortised cost of a financial asset and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees and points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial asset, or where appropriate a shorter period, to the net carrying amount on initial recognition.
ii. Financial Assets at fair value through other comprehensive Income
Financial assets are measured at fair value through other comprehensive income ('FVTOCI') if these financial
assets are held within business model whose objective is achieved by both collecting contractual cash flows
on specified dates that are solely payments of principal and interest on the principal amount outstanding and
selling financial assets.
iii. Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss ('FVTPL') unless it is measured at amortised
cost or fair value through other comprehensive income on initial recognition. The transaction cost directly
attributable to the acquisition of financial assets and liabilities measured at fair value through profit or loss
are immediately recognised in the statement of profit and loss.
iv. Impairment of financial assets
In accordance with Ind AS 109 - Financial Instruments, the Group applies expected credit loss (ECL) model
for measurement and recognition of impairment loss. The Group follows ‘simplified approach’ for
recognition of impairment loss allowance on trade receivable.
The application of simplified approach does not require the Group to track changes in credit risk. Rather, it
recognises impairment loss allowance based on lifetime ECLs at each reporting period, right from its initial
recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Group determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not
increased significantly, 12 months ECL is used to provide for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If in subsequent period, credit quality of the instrument
improves such that there is no longer a significant increase in credit risk since initial recognition, then the
entity reverts to recognising impairment loss allowance based on 12 months ECL.
187
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life
of a financial instrument. The 12 months ECL is a portion of the lifetime ECL which results from default
events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Group in accordance with the
contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original
Expected Interest Rate (EIR). When estimating the cash flows, an entity is required to consider:
i. All contractual terms of the financial instrument (including prepayment, extension etc.) over the
expected life of the financial instrument. However, in rare cases when the expected life of the
financial instrument cannot be estimated reliably, then the entity is required to use the remaining
contractual term of the financial instrument;
ii. Cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
As a practical expedient, the Group uses a provision matrix to determine impairment loss on portfolio
of its trade receivable. The provision matrix is based on its historically observed default rates over
the expected life of the trade receivable and is adjusted for forward- looking estimates. At every
reporting date, the historical observed default rates are updated and changes in forward-looking
estimates are analysed.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as
income/expense in the statement of profit and loss. This amount is reflected under the head other
expenses in the statement of profit and loss. The balance sheet presentation for various financial
instruments is described below:
Financial assets measured at amortised cost, contractual revenue receivables:
ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance
sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Group
does not reduce impairment allowance from the gross carrying amount.
v. Derecognition of financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and
the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised
in other comprehensive income and accumulated in equity is recognised in statement of profit and loss if such
gain or loss would have otherwise been recognised in statement of profit and loss on disposal of that financial
asset.
vi. Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets that are measured at amortised cost and FVTPL, the
exchange difference are recognised in statement of profit and loss.
B. Financial liabilities and equity instruments
Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and
an equity instrument.
188
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
i. Equity Instrument
An equity instrument is a contract that evidences residual interest in the assets of the Group after deducting
all of its liabilities. Equity instruments recognised by the Group are recognised at the proceeds received net
off direct issue cost.
ii. Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at
FVTPL.
iii. Financial liabilities at FVTPL
Financial liability has been designated at FVTPL where it forms part of a contract containing one or more
embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in the Statement of profit and loss.
iv. Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at
amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that
are subsequently measured at amortised cost are determined based on the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees and points paid or received that form an integral part of
the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
v. Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the
end of each reporting period, the foreign exchange gains and losses are determined based on the amortised
cost of the instruments and are recognised in Statement of Profit and Loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as
at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in
the Statement of profit and loss.
vi. Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognised
and the consideration paid and payable is recognised in statement of profit and loss.
C. Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risks, including foreign exchange forward contracts and cross currency interest rate
swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in the Statement of profit and loss immediately unless the derivative is designated and effective
189
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
as a hedging instrument, in which event the timing of the recognition in Statement of profit and loss depends
on the nature of the hedging relationship and the nature of the hedged item. Derivatives are carried as financial
assets when the fair value is positive and as financial liabilities when the fair value is negative.
D. Embedded derivatives
Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind
AS 109 are treated as separate derivatives when their risks and characteristics are not closely related to those
of the host contracts and the host contracts are not measured at FVTPL.
E. Hedge Accounting
The Group designates certain hedging instruments as either fair value hedges or cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash
flows of the hedged item attributable to the hedged risk.
i. Fair value hedges
Changes in fair value of the designated portion of derivatives that qualify as fair value hedges are recognised
in Statement of profit and loss immediately, together with any changes in the fair value of the hedged asset
or liability that are attributable to the hedged risk. The change in the fair value of the designated portion of
hedging instrument and the change in the hedged item attributable to the hedged risk are recognised in the
statement of profit and loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised,
or when it no longer qualifies for hedge accounting.
ii. Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging
reserve. The gain or loss relating to the ineffective portion is recognised immediately in statement of profit
and loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to
(effective portion as described above) are reclassified to statement of profit and loss in the periods when the
hedged item affects profit or loss, in the same line as the recognised hedged item.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised,
or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive
income and accumulated in equity will be recognised in statement of profit and loss on such event.
(f) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and at banks and short-term deposits with an original
maturity of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(g) Foreign Currency transactions and translations
The functional currency of the Group is Indian Rupee (Rs.).
190
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. At
the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the
rates prevailing at that date. Exchange differences arising on settlement or translation of monetary items are
recognised in the statement of profit and loss in the year in which they arise.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date when the fair value was determined.
(h) Employee Benefits
Defined Contribution Plan
The Group's contribution to provident fund and employee state insurance scheme are considered as defined
contribution plans and are recognised as an expense when employees have rendered service entitling them to
the contributions.
Defined Benefit Plan
For defined benefit plans in the form of gratuity (un-funded), the cost of providing benefits is determined
using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting
period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling
(if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance
sheet with a charge or credit recognised in other comprehensive income in the period in which they occur.
Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and
is not reclassified to the statement of profit and loss. Past service cost is recognised in the statement of profit
and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as
follows:
• service cost (including current service cost, past service cost, as well as gains and losses on curtailments
and settlements);
• net interest expense or income; and
• re-measurement
The Group presents the first two components of defined benefit costs in the statement of profit and loss in the
line item “Employee benefit expenses. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in
the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value
of any economic benefits available in the form of refunds from the plans or reductions in future contributions
to the plans.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services
rendered by employees are recognised during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are expected to occur within twelve months
after the end of the period in which the employee renders the related service.
Long-term employee benefits
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of
the estimated future cash outflows expected to be made by the Group in respect of services provided by the
employees up to the reporting date.
191
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
(i) Borrowing Costs
Borrowing costs include:
(i) interest expense calculated using the effective interest rate method,
(ii) exchange differences arising from foreign currency borrowings to the extent that they are regarded
as an adjustment to interest costs.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended use or
sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in Statement of profit and loss in the period in which they are
incurred.
(j) Leases
The Company as a Lessee:
The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in
exchange for a consideration.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-
of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the Company’s incremental
borrowing rate.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that
have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease
payments associated with these leases as an expense over the lease term.
(k) Income Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before
tax’ as reported in the statement of profit and loss because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible. The Group’s current tax is calculated
using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
192
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences and the carry forward of unused tax losses
can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises
from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Current and deferred tax for the period
Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case, the current and deferred
tax are also recognised in other comprehensive income or directly in equity respectively.
(l) Provisions and Contingent Liabilities
A provision is recognised when the Group has a present obligation as a result of past events and it is probable
that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate
can be made. The amount recognised as a provision is the best estimate of the consideration required to settle
the present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of
money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best
estimates.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. Contingent liabilities are not recognised but are
disclosed in the Notes to the Financial Statements. Contingent assets are not recognised in the financial
statements.
(m) Impairment of non-financial assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest Group of cash-generating units for which
a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
193
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in the Statement of profit and loss.
(n) Earnings per share (EPS)
Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Group
by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number
of equity shares considered for deriving basic EPS and also weighted average number of equity shares that
could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares
are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity
shares are determined independently for each period presented.
(o) Share issue expense
The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they
are incremental costs directly attributable to the equity transaction.
(p) Share-based compensation
Equity-settled share-based payments to employees and others providing similar services are measured at the
fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note 39.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in the statement of profit and loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
(q) Segment
Segments have been identified taking into account the nature of services, the differing risks and returns, the
organisational structure and the internal reporting system.
2.3 Use of estimates and management judgments
In application of the accounting policies, which are described in note 2.2, the management of the Group is
required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised if the revision affects only that
period, or in the period of revision and future periods if the revision affects both current and future periods.
In particular, information about significant areas of estimation, uncertainty and critical judgements used in
applying accounting policies that have the most significant effect on the amounts recognised in the financial
statements is included in the following notes:
1. Useful life of property, plant and equipment and intangible assets
The useful life of the assets are determined based on technical advice, taking into account the nature of the
asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers warranties and maintenance.
194
Stove Kraft Limited
Notes to Restated Consolidated Financial Information
(Amounts in Rupees Millions except for share data or otherwise stated
2. Impairment
An impairment loss is recognised for the amount by which an asset’s or cash-generating unit’s carrying
amount exceeds its recoverable amount. To determine the recoverable amount, management estimates
expected discounted future cash flows from each asset or cash-generating unit.
3. Deferred tax
Deferred income tax liabilities are recognised for all taxable temporary differences. Deferred income tax asset
are recognised to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
4. Fair value
Management uses valuation techniques in measuring the fair value of financial instruments where active
market quotes are not available. In applying the valuation techniques, management makes maximum use of
market inputs and uses estimates and assumptions that are, as far as possible, consistent with observable data
that market participants would use in pricing the instrument. Where applicable data is not observable,
management uses its best estimate about the assumptions that market participants would make. These
estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the
reporting date.
5. Post-retirement benefit plans
The obligation arising from the defined benefit plan is determined on the basis of actuarial assumptions which
include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount
rate is determined with reference to market yields at each financial year end on the government bonds.
6. Provisions and contingencies
The recognition and measurement of other provisions are based on the assessment of the probability of an
outflow of resources, and on past experience and circumstances known at the reporting date. The actual
outflow of resources at a future date may therefore vary from the figure estimated at end of each reporting
period.
195
Note
No.
3(a)
Particulars Land Buildings Plant and
machinery
Furniture and
fixtures
Lease hold
improvements*
Computers Office
equipments
Vehicles Total
Gross carrying amount
Deemed Cost as at 01 April 2017 843.28 389.43 582.89 19.81 6.91 8.50 12.21 14.42 1,877.45
Additions - 2.05 39.11 0.20 2.57 0.68 1.92 10.17 56.70
Disposals - - (8.67) (0.40) - (0.08) - (0.29) (9.44)
Gross carrying amount as at 31 March 2018 843.28 391.48 613.33 19.61 9.48 9.10 14.13 24.30 1,924.71
Accumulated depreciation
Depreciation expense for the year - 15.54 78.55 2.78 2.55 4.01 3.27 2.66 109.36
Eliminated on disposal of assets - - (5.40) (0.37) - (0.08) - (0.25) (6.10)
Accumulated depreciation as at 31 March 2018 - 15.54 73.15 2.41 2.55 3.93 3.27 2.41 103.26
Carrying amount as at 31 March 2018 843.28 375.94 540.18 17.20 6.93 5.17 10.86 21.89 1,821.45
Gross carrying amount
Opening balance as at 01 April 2018 843.28 391.48 613.33 19.61 9.48 9.10 14.13 24.30 1,924.71
Additions 1.20 4.49 89.15 0.68 - 1.19 0.27 - 96.98
Disposals - - (12.20) - - - - - (12.20)
Gross carrying amount as at 31 March 2019 844.48 395.97 690.28 20.29 9.48 10.29 14.40 24.30 2,009.49
Accumulated depreciation
Opening accumulated depreciation - 15.54 73.15 2.41 2.55 3.93 3.27 2.41 103.26
Depreciation expense for the year - 15.88 89.35 2.92 2.27 3.78 3.35 3.43 120.98
Eliminated on disposal of assets - - (1.91) - - - - - (1.91)
Accumulated depreciation as at 31 March 2019 - 31.42 160.59 5.33 4.82 7.71 6.62 5.84 222.33
Carrying amount as at 31 March 2019 844.48 364.55 529.69 14.96 4.66 2.58 7.78 18.46 1,787.16
Gross carrying amount
Opening balance as at 01 April 2019 844.48 395.97 690.28 20.29 9.48 10.29 14.40 24.30 2,009.49
Additions - 21.27 56.36 0.48 - 0.51 1.34 - 79.96
Disposals - - (0.76) - - (0.86) (0.08) - (1.70)
Gross carrying amount as at 30 September 2019 844.48 417.24 745.88 20.77 9.48 9.94 15.66 24.30 2,087.75
Accumulated depreciation
Opening accumulated depreciation - 31.42 160.59 5.33 4.82 7.71 6.62 5.84 222.33
Depreciation expense for the period - 8.12 38.48 1.09 0.86 0.87 1.36 1.62 52.40
Eliminated on disposal of assets - - (0.76) - - (0.86) - - (1.62)
Accumulated depreciation as at 30 September 2019 - 39.54 198.31 6.42 5.68 7.72 7.98 7.46 273.11
Carrying amount as at 30 September 2019 844.48 377.70 547.57 14.35 3.80 2.22 7.68 16.84 1,814.64
Gross carrying amount
Opening balance as at 01 October 2019 844.48 417.24 745.88 20.77 9.48 9.94 15.66 24.30 2,087.75
Additions - 10.23 155.67 0.10 - 1.11 0.85 5.34 173.30
Disposals - - - - - - - - -
Gross carrying amount as at 31 March 2020 844.48 427.47 901.55 20.87 9.48 11.05 16.51 29.64 2,261.05
Accumulated depreciation
Opening accumulated depreciation - 39.54 198.31 6.42 5.68 7.72 7.98 7.46 273.11
Depreciation expense for the period - 8.39 43.25 2.21 0.77 0.68 1.89 1.90 59.09
Eliminated on disposal of assets - - (0.04) - - - - - (0.04)
Accumulated depreciation as at 31 March 2020 - 47.93 241.52 8.63 6.45 8.40 9.87 9.36 332.16
Carrying amount as at 31 March 2020 844.48 379.54 660.03 12.24 3.03 2.65 6.64 20.28 1,928.89
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Property, plant and equipment
196
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
3(a)
Particulars Land Buildings Plant and
machinery
Furniture and
fixtures
Lease hold
improvements*
Computers Office
equipments
Vehicles Total
Gross carrying amount
Opening balance as at 01 April 2020 844.48 427.47 901.55 20.87 9.48 11.05 16.51 29.64 2,261.05
Additions - 4.50 114.18 - - 13.56 0.13 - 132.37
Disposals - - (0.27) - - - - - (0.27)
Gross carrying amount as at 30 September 2020 844.48 431.97 1,015.46 20.87 9.48 24.61 16.64 29.64 2,393.15
Accumulated depreciation
Opening accumulated depreciation - 47.93 241.52 8.63 6.45 8.40 9.87 9.36 332.16
Depreciation expense for the period - 8.54 49.74 1.14 0.76 1.63 1.57 1.91 65.29
Eliminated on disposal of assets - - -^ - - - - - -
Accumulated depreciation as at 30 September 2020 - 56.47 291.26 9.77 7.21 10.03 11.44 11.27 397.45
Carrying amount as at 30 September 2020 844.48 375.50 724.20 11.10 2.27 14.58 5.20 18.37 1,995.70
^ Not reported due to round off
Asset Fair value
hierarchy
Land
Level-3
All other items of Property, Plant and Equipment
Level-3
Amount
Land Value as per previous GAAP as on transition date 164.14
Add : - Fair Value adjustment 679.14
Land Value as per Ind AS as on transition date 843.28
* Leasehold improvements made in the premises which is taken on lease by the franchisee.
Property, plant and equipment
Refer note 15 (i), (ii), (iii), (iv) and (vi) and note 18(i) for details of mortgage and hypothecation.
The Group has elected to fair value all of its property, plant and equipment as of transition date and use that value as its deemed cost as of the transition date.
Except for land, the fair value approximates the carrying value of all other items of Property, Plant and equipment.
Particulars
Basis of valuation
The fair value of land has been computed using market approach. The market approach uses prices and other relevant information generated
by market transactions involving identical or comparable assets, liabilities or a group of assets and liabilities such as business.
The Group has considered the following inputs for valuation of land:
(i) Guideline value provided by Karnataka Industrial Area Development Board (KIADB)
(ii) References with neighbourhood and real estate agents for similar land.
The valuation has been done on the basis of costs as of transition date including costs upto the date of installation after considering average
depreciation.
197
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
3(b) Right of use of assets
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18 31-Mar-16 31-Mar-15
Gross carrying amount
Opening balance - - - - - - 35.09
Additions - 35.69 35.69 - - - -
Disposals - - (25.75) - - - (35.09)
Gross carrying amount (Closing Balance) - A - 35.69 9.94 - - - -
Accumulated amortisation
Opening accumulated amortisation - - - - - - 19.14
Amortisation expense for the period / year - 3.97 9.94 - - - 15.95
Eliminated on disposal of assets - - - - - - (35.09)
Accumulated amortisation (Closing Balance) - B - 3.97 9.94 - - - -
Carrying amount (A-B) - 31.72 - - - - -
Particulars
The above note should be read with Significant Accounting Policies forming part of the Restated consolidated financial information in Note 2 and Note 11 to the Statement of Adjustments to the Consolidated Financial Statements
(Note 45)
As at
198
Note
No.
3(c)
Computer software
7.93
1.28
-
9.21
2.89
-
2.89
6.32
9.21
0.79
-
10.00
2.89
2.40
-
5.29
4.71
10.00
0.69
-
10.69
5.29
1.48
-
6.77
3.92
10.69
0.22
-
10.91
6.77
1.19
-
7.96
2.95
10.91
34.70
-
45.61
7.96
3.36
-
11.32
34.29
The fair value approximates the carrying value of all the intangible assets.
Accumulated amortisation
Opening accumulated amortisation as at 01 April 2019
Amortisation expense for the period
Eliminated on disposal of assets
Accumulated amortisation as at 30 September 2019
The Group has elected to fair value all of its intangible assets as of transition date and use that value as its deemed cost as of the transition date.
Gross carrying amount
Opening balance as at 01 October 2019
Additions
Disposals
Gross carrying amount as at 31 March 2020
Accumulated amortisation
Opening accumulated amortisation as at 01 October 2019
Amortisation expense for the period
Amortisation expense for the period
Eliminated on disposal of assets
Accumulated amortisation as at 30 September 2020
Carrying amount as at 30 September 2020
Additions
Disposals
Gross carrying amount as at 30 September 2020
Accumulated amortisation
Gross carrying amount
Opening balance as at 01 April 2019
Additions
Disposals
Gross carrying amount as at 30 September 2019
Opening accumulated amortisation as at 01 April 2020
Eliminated on disposal of assets
Accumulated amortisation as at 31 March 2020
Carrying amount as at 31 March 2020
Gross carrying amount
Opening balance as at 01 April 2020
Carrying amount as at 30 September 2019
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Intangible assets
Particulars
Amortisation expense for the year
Accumulated amortisation as at 31 March 2018
Accumulated amortisation
Opening accumulated amortisation as at 01 April 2018
Gross carrying amount
Opening balance as at 01 April 2018
Disposals
Amortisation expense for the year
Additions
Disposals
Gross carrying amount as at 31 March 2019
Accumulated amortisation
Carrying amount as at 31 March 2019
Carrying amount as at 31 March 2018
Accumulated amortisation as at 31 March 2019
Gross carrying amount as at 31 March 2018
Gross carrying amount
Eliminated on disposal of assets
Eliminated on disposal of assets
Deemed Cost as at 01 April 2017
Additions
199
Note
No.
4
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
- - - - -
- - - - -
-
-
-
-
-
-
-
-
-
-
Note
(i)
5
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
37.45 51.35 50.33 50.96 38.01
1.18 1.18 1.18 1.18 1.18
(1.18) (1.18) (1.18) (1.18) (1.18)
37.45
51.35
50.33
50.96
38.01
37.45 51.35 50.33 50.96 38.01
5A
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
2.16 2.04 2.46 46.57 47.14
- 0.35 - - -
2.16
2.39
2.46
46.57
47.14
6
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
(Unsecured considered good unless otherwise stated)
Capital advances
Considered good 132.61 - - - -
Considered doubtful 0.91 - - - -
Less: Allowance for doubtful advance (0.91) - - - -
132.61 - - - -
Considered good 7.89 7.58 8.33 7.58 11.04
Considered doubtful 3.54 3.54 3.54 3.54 -
(3.54) (3.54) (3.54) (3.54) -
7.89
7.58
8.33
7.58
11.04
2.96 3.41 2.96 3.91 18.19
11.81 11.81 11.81 11.81 11.81
(11.81) (11.81) (11.81) (11.81) (11.81)
2.96 3.41 2.96 3.91 18.19
- 0.50 - 0.36 0.50
2.82 - 2.82 - -
4.04 2.12 4.13 1.81 1.19
150.32 13.61 18.24 13.66 30.92
Considered doubtful
Less: Allowance for doubtful balances
Prepaid rent on discounting of security deposits
Prepaid expense
Total
Provident fund paid under protest
Considered good
Other financial assets (Non-Current)
7,500 (7500 as at 30 September 2019, 31 March 2020, 2019 & 2018) Equity shares of Rs.
10/- each fully paid up in Pigeon Appliances Private Limited (Refer note (i) below)
Less: Impairment loss allowance (Refer note (i) below)
In equity instruments of associate (carried at cost)
Total
Aggregate amount of un-quoted investments
The Company had invested a sum of Rs. 0.08 for 37.5% paid-up equity share capital of Pigeon Appliances Private Limited (PAPL). The business operations of
PAPL is controlled by the majority shareholders of PAPL. During the FY 2014-15, the Company had noted certain irregularities in the business operations of
PAPL and use of trademarks registered in the name of the Company, without the consent of the Company. The Company had initiated legal action against PAPL
for irregularities noted in the business operations and unauthorized use of trademarks. On prudence basis, investments in equity share capital of PAPL had been
provided.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Investments
Particulars As at
Particulars
(Unsecured considered good unless otherwise stated)
Security deposits
As at
Total
Considered Doubtful
Less: Allowance for doubtful security deposits (Refer Note 33.5)
Other non-current assets
Tax paid under protest
Balance with government authorities
Considered good
Particulars
Less: Allowance for doubtful balances
Non-current tax asset (net)
Particulars
Advance income tax (net of provision of Rs NIL)
Tax deducted at source and tax collected at source receivable
Total
(Unsecured considered good unless otherwise stated)
As at
As at
200
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
7
(Lower of cost and net realizable value)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
464.43 420.97 387.84 343.10 466.84
112.27 48.75 58.57 12.84 81.12
99.52 70.52 61.61 31.98 0.59
217.90 297.93 383.89 246.83 157.70
233.20 340.31 219.12 278.70 244.63
238.96 106.16 54.91 60.69 100.50
1,366.28
1,284.64
1,165.94
974.14
1,051.38
8
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
1,158.07 1,514.64 1,128.72 973.82 919.88
(121.82) (86.49) (98.38) (77.26) (124.36)
1,036.25 1,428.15 1,030.34 896.56 795.52
Refer note 33.5 for credit risk
9(a)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
0.53 0.58 0.63 0.55 0.82
52.37 60.44 149.43 89.69 3.18
In fixed deposits -
-
- 195.00 -
52.90 61.02 150.06 285.24 4.00
9(b)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Balances with banks:
47.84 40.70 44.09 29.55 33.81
47.84 40.70 44.09 29.55 33.81
(i)
10
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
18.44 3.26 3.52 4.52 0.27
18.44 3.26 3.52 4.52 0.27
As at
As at
As at
Goods-in-transit (acquired for trading)
Total
Bank balances other than cash and cash equivalents as above
Raw materials, components and packing materials
Raw material-in-transit
Work-in-progress
Finished goods (manufactured)
Stock-in-trade (acquired for trading)
Inventories
Particulars As at
Cash on hand
Balances with banks:
Trade receivables Considered good - Unsecured
As atParticulars
Particulars
Cash and cash equivalents
Less: Allowance for doubtful receivables
Total
Refer note 18(i) for details of hypothecation.
Trade receivables
The average credit period on sale goods ranges from 60 to 120 days.
Refer note 18(i) and (ii) for details of hypothecation.
In current accounts
Total
Total
Particulars
Note
in earmarked accounts: balance held as margin money (Refer note (i) below)
Total
Loans (Current)
Refer note 18(i) and (ii) for details of hypothecation.
Balances in earmarked accounts represent margin money deposits for non-fund based limits with banks, which are available for use to settle a liability for not
more than 12 months from the Balance sheet date.
Particulars
(Unsecured considered good)
Advance to employees
201
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
11
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
(Unsecured considered good unless otherwise stated)
- - - - 1.21
4.00 4.00 4.00 10.99 -
18.35 7.90 8.64 7.92 9.10
1.54 1.00 0.61 0.21 0.48
3.73 - - - -
27.62 12.90 13.25 19.12 10.79
12
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
46.97 56.82 69.77 53.14 9.09
(Unsecured considered good unless otherwise stated)
Capital advances
Considered good - 30.54 22.41 4.32 10.34
Considered doubtful - 0.96 0.91 2.38 2.60
Less: Allowance for doubtful advance - (0.96) (0.91) (2.38) (2.60)
- 30.54 22.41 4.32 10.34
122.96 43.94 55.12 44.13 37.21
8.79 8.74 8.79 9.46 55.18
(8.79) (8.74) (8.79) (9.46) (55.18)
122.96 43.94 55.12 44.13 37.21
39.26 37.01 79.87 26.18 34.09
209.19 168.31 227.17 127.77 90.73
Refer note 18(i) and (ii) for details of hypothecation.
Note (i) : The company has so far incurred share issues expenses of Rs. 59.87 as at September 30, 2020 (including audit fee of Rs. 12.5) in connection with
proposed public offer of equity shares of which company has received the reimbursement of Rs. 24.97 from Sequioa Capital. These expenses shall be adjusted
against securities premium to the extent permissible under section 52 of the Companies Act, 2013 on the successful completion of Initial Public Offer (IPO). The
entire amount net of reimbursement has been carried forward and disclosed under the head 'Other current assets' as Prepaid expenses.
Interest accrued on deposit with banks
As at
Total
Prepaid expense (Refer note (i) below)
Advances to suppliers / service providers
Considered good
Considered Doubtful
Less: Allowance for doubtful advances
Total
Refer note 18(i) and (ii) for details of hypothecation.
Other current assets
Balance with government authorities
Particulars As at
Advance paid towards purchase of investment*
*Pursuant to board meeting dated July 27, 2020 and investment term sheet dated August 13, 2020 entered into between the Company and Megasun Solar Tech
Private Limited, the Company has paid an amount of Rs. 3.73 as advance towards purchase of investments in Megasun Solar Tech Private Limited.
Government Incentive receivable
Derivatives designated as hedges:
Cross currency interest rate swap
Other financial assets (Current)
Insurance claim receivable
Particulars
202
Note
No.
13(a)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
400.00 400.00 400.00 200.00 200.00
-* -* -* -* -*
400.00 400.00 400.00 200.00 200.00
247.17 247.17 247.17 247.17 189.00
-* -* -* -* -*
247.17
247.17
247.17
247.17
189.00
* Not reported due to Round Off
(i)
Number of
shares
Rs. Number of
shares
Rs.
Equity shares of Rs. 10/- each
Closing balance as at 31 March 2017 (Proforma) 18,900,100 189.00 10
-*
Add/(Less): movement during the year - - - -
Closing balance as at 31 March 2018 18,900,100 189.00 10 -*
Outstanding balance as at 01 April 2018 18,900,100 189.00 10
-*
Add/(Less): Issued during the year 5,816,627 58.17 - -
Closing balance as at 31 March 2019 24,716,727 247.17 10 -*
Outstanding balance as at 01 April 2019 24,716,727 247.17 10
-*
Add/(Less): movement during the period - - - -
Closing balance as at 30 September 2019 24,716,727 247.17 10 -*
Outstanding balance as at 01 Octoberl 2019 24,716,727 247.17 10
-*
Add/(Less): movement during the period - - - -
Closing balance as at 31 March 2020 24,716,727 247.17 10 -*
Outstanding balance as at 01 April 2020 24,716,727 247.17 10
-*
Add/(Less): movement during the period - - - -
Closing balance as at 30 September 2020 24,716,727 247.17 10 -*
* Not reported due to Round Off
(ii)
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
24,716,727 (24,716,727 as at 30 September 2019, 31 March 2020 and 2019, 18,900,100
as at 31 March 2018) Equity shares of Rs. 10/- each
10 (10 as at 30 September 2019, 31 March 2020, 2019 and 2018) Class A Equity shares of
Rs. 10/- each
10 (10 as at 30 September 2019, 31 March 2020, 2019 and 2018) Class A Equity shares of
Rs. 10/- each
Issued, subscribed and fully paid up capital
Notes to Restated Consolidated Financial Information
Reconciliation of the number of equity shares and amount outstanding at the beginning and at the end of the reporting period / year:
Equity share capital
39,999,995 (39,999,995 as at 30 September 2019, 31 March 2020 and 2019, 19,999,995
as at 31 March 2018) Equity shares of Rs. 10/- each
Total
As at
Total
Authorised
Class A equity shares are held by SCI Growth Investments II ('Sequoia'). The voting rights of Sequoia in relation to the Class A equity shares at every resolution placed
before the shareholders of the Company at any General Meetings of the Company shall be equal to 43.36%. In the event the Board declares dividend, then the dividend
payable on the outstanding Compulsorily Convertible Debentures (CCD's) (which have not been converted) shall be equal to the dividend declared and calculated based
on the number of Equity Shares to be issued to Sequoia on conversion of the CCD's.
Equity shares of Rs. 10/-
each
Particulars
Terms/rights attached to:
Equity share holders:
The holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive any of
the remaining assets of the Company, after distribution to all other parties concerned. The distribution will be in proportion to number of equity shares held by the
shareholders.
Class A Equity share holders:
Class A Equity shares of
Rs. 10/- each
Particulars
203
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
(iii)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
18,184,619 18,184,619 18,184,619 18,184,619 18,184,622
73.57% 73.57% 73.57% 73.57% 96.21%
4,961,605 4,961,605 4,961,605 4,961,605 -
20.07% 20.07% 20.07% 20.07% -
1,311,200 1,311,200 1,311,200 1,311,200 -
5.30% 5.30% 5.30% 5.30% -
5 5 5 5 5
50.00% 50.00% 50.00% 50.00% 50.00%
5 5 5 5 5
50.00% 50.00% 50.00% 50.00% 50.00%
13(b)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
- - - - (0.05)
1,094.37 1,094.37 1,094.37 1,094.37 -
10.19 7.03 8.61 - -
(1,651.16) (1,938.86) (1,951.96) (1,981.00) (1,989.97)
(546.60)
(837.46)
(848.98)
(886.63)
(1,990.02)
Particulars
Retained earnings
Total
Cash flow hedging reserve
As at
Securities Premium
Share options outstanding account
As at
Particulars
Details of shares held by each shareholder holding more than 5% shares:
Other equity
Equity share of Rs. 10/- each
Class A Equity share of Rs. 10/- each
SCI Growth Investments II
Sequoia Capital India Growth Investment Holdings I
% of holding
No. of shares
% of holding
% of holding
Rajendra Gandhi
No. of shares
No. of shares
SCI Growth Investments Holdings I
SCI Growth Investments II
No. of shares
% of holding
No. of shares
% of holding
204
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
(A)
- - - (0.05) (1.29)
- - 0.05 1.24
-
-
-
-
(0.05)
(B)
Opening balance 1,094.37 1,094.37 1,094.37 - -
-
1,094.37
-
1,094.37
1,094.37
1,094.37
1,094.37
-
(C)
8.61 - - - -
- 14.40 14.40 - -
1.58 (7.37) (5.79) - -
10.19
7.03
8.61
-
-
(D)
(1,951.96) (1,981.00) (1,981.00) (1,989.97) (1,871.72)
287.73 43.82 31.60 7.33 (120.00)
13.07 (1.68) (2.56) 1.64 1.75
(1,651.16)
(1,938.86)
(1,951.96)
(1,981.00)
(1,989.97)
(546.60)
(837.46)
(848.98)
(886.63)
(1,990.02)
(i) Cash flow hedging reserve
(ii) Securities premium
(iii) Share options outstanding account
(iv) Retained Earnings
14
30-Sep-20
30-Sep-19
31-Mar-20
31-Mar-19
31-Mar-18
Opening balance
2.27 2.17 2.17 2.14 2.54
Add : Restated profit/(loss) for the period / year 0.03 0.07 0.10 0.03 (0.18)
Add : Minority interest adjusted during the period / year - - - - (0.22)
Adjustment on account of dissolution of the partnership firm (2.30) - - - -
Closing Balance - 2.24 2.27 2.17 2.14
Opening balance
As at
Opening balance
Securities Premium
Closing balance (B)
Add/(Less) : Securities Premium account on conversion of CCDs to Equity
Closing balance (A)
Particulars
Add/(Less) : Deferred stock compensation expense
Share options outstanding account
Closing balance (C)
Closing balance (D)
Grand total (A+B+C+D)
Share options outstanding account is used to record the expenses towards share based payment to employees recognised on straight line basis over the vesting period till
date, less any transfer to other reserves.
Non-controlling interests
Retained earnings are the profits/(loss) that the Company has earned till date, less any transfers to other reserves and other distributions paid to its equity shareholders.
Add/(Less) : Amounts recorded on grants during the period / year
As at
Add : Remeasurement gain / (loss) of defined benefit obligation recognised in Other
Comprehensive Income
The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments
entered into for cash flow hedges.
Securities premium is used to record the premium received on issue of shares.
Retained earnings
Opening balance, as restated
Add : Restated profit / (loss) for the period / year
Particulars
Cash flow hedging reserve
Add : Profit / (Loss) on hedging instruments
205
Note
No.
15
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
147.64 192.93 162.32 247.90 105.09
49.43 17.27 32.12 - -
9.85 4.08 6.34 4.89 7.96
1,847.47 1,847.47 1,847.47 1,847.47 3,000.00
2,054.39 2,061.75 2,048.25 2,100.26 3,113.05
Note
(i)
(ii)
(iii)
(iv)
Term loan from financial institutions [Refer note (iii)]
The Group had borrowed (a) Rs.10 vehicle loan from BMW Financial Services. Rate of interest is 9.11% per annum which is repayable in 36 equal monthly
instalments; (b) Rs.8 towards vehicle loan from BMW Financial Services. Rate of interest is 8.51% per annum which is repayable in 60 equal monthly instalments; (c)
Rs.3.99 towards vehicle loan from HDFC Bank Ltd. Rate of interest is 8.8% per annum which is repayable in 60 equal monthly instalments; and (d) Rs.5.94 towards
vehicle loan from HDFC Bank Ltd. Rate of interest is 8.2% per annum which is repayable in 48 equal monthly instalments.
Security: Exclusive hypothecation on the vehicles purchased from above loans.
Borrowings (Non-current)
Particulars
The Group had taken the Term Loan (TL) from South Indian Bank (SIB) of Rs. 125 during the FY 2017-18. Rate of interest is 12 month marginal cost of fund based
lending rate (MCLR) + 2% spread which is subject to yearly reset which is repayable in 60 equal instalments. Repayment of term loan obtained from SIB started from
July 2018.
During the half year ended September 30, 2019, the Group has taken a term loan from IDFC of Rs. 99.99 to take over the outstanding TL of Rs. 99.99 from South
Indian Bank with the same repayment schedule. The Outstanding TL of Rs. 99.99 of South Indian Bank is paid on 1st July 2019.
Security: Equitable mortgage of vacant industrial land of the company located at Harohalli, Ramanagara District and personal guarantee of Mr. Rajendra Gandhi, Mrs.
Sunita Rajendra Gandhi and Ms. Neha Gandhi.
Unsecured (at fair value through profit or loss)
Stove Kraft Limited
Restated Consolidated Financial Information
The Group had taken the working capital term loan from IDFC First Bank (IDFC) of Rs. 250 during the FY 2018-19. Rate of interest is 12 month marginal cost of
fund based lending rate (MCLR) + 2.25% spread which is subject to yearly reset which is repayable in 36 equal instalments. Repayment of term loan obtained from
IDFC started from April 2019.
During the half year ended September 30, 2019, the Group has taken the term loan from IDFC of Rs. 99.99 to take over the outstanding TL of Rs.99.99 million from
South Indian Bank with the same repayment schedule and also additional Cash Credit facility of Rs. 100. The Outstanding TL of Rs.99.99 million of South Indian Bank
is paid on 1st July 2019.
Security: Equitable mortgage of vacant industrial land of the company located at Harohalli, Ramanagara District and personal guarantee of Mr. Rajendra Gandhi, Mrs.
Sunita Rajendra Gandhi and Ms. Neha Gandhi.
The Group has availed the Equipment Finance facility from Tata Capital Financial Services Limited ("TCFSL") for (a) Rs. 80 during the FY 2019-20 with tenor of 48
months and the floating interest rate @ 11.75% p.a; and (b) Rs. 21.4 during the period with tenor of 24 months & the floating interest rate @ 12.25% p.a.
Security: Exclusive charge on equipments purchased out of TCFSL facility and irrevocable and unconditional personal guarantee of Mr. Rajendra Gandhi and Mrs.
Sunita Rajendra Gandhi.
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
6,089,554 (6,089,554 as at 30 September 2019, 31 March 2020, 2019 and 12,661,812 as at
31 March 2018) Compulsorily Convertible Debentures (CCD) of Rs. 10/- each [Refer note
(v) below]
As at
Total
Secured (at amortised cost)
Term loan from bank [Refer note (i), (ii) and (vi)]
Vehicle Loan [Refer note (iv)]
206
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
(v)
(vi)
As at As at
1-Apr-20
Acquisition/
(Conversion
)
Foreign
exchange
movement
Fair value
change/
others
30-Sep-20
(a) Non current Borrowings
Borrowings from bank 257.28 4.94 - - - 262.22
Borrowings from other financial institution 54.04 11.16 26.72 - - 91.92
Compulsorily convertible debentures(CCD) 1,847.47 - - - - 1,847.47
(b) Current Borrowings
1,220.55 (279.22) - - - 941.33
Total Borrowings 3,379.34 (263.12) 26.72 - - 3,142.94
As at As at
31-Mar-19
Acquisition/
(Conversion
)
Foreign
exchange
movement
Fair value
change/
others
30-Sep-19
(a) Non current Borrowings
Borrowings from bank 356.24 (55.41) - - - 300.83
Borrowings from other financial institution 7.96 20.89 - - - 28.85
Compulsorily convertible debentures(CCD) 1,847.47 - - - - 1,847.47
(b) Current Borrowings
999.44 114.33 - 0.29 - 1,114.06
Total Borrowings 3,211.11 79.81 - 0.29 - 3,291.21
As at As at
31-Mar-19
Acquisition/
(Conversion
)
Foreign
exchange
movement
Fair value
change/
others
31-Mar-20
(a) Non current Borrowings
Borrowings from bank 356.24 (98.96) - - 257.28
Borrowings from other financial institution 7.96 46.08 - - - 54.04
Compulsorily convertible debentures(CCD) 1,847.47 - - - 1,847.47
(b) Current Borrowings
999.44 215.86 - 5.25 - 1,220.55
Total Borrowings 3,211.11 162.98 - 5.25 - 3,379.34
Particulars Financing
Cash Flow
Non-cash changes
6,089,554 (6,089,554 as at 31 March 2020, September 2019 and 31 March 2019 and 12,661,812 as at 31 March 2018) Compulsorily Convertible Debentures (CCD)
of Rs. 10/- each: The following are the terms of the issue:
Interest: The holders of the CCD shall be entitled to receive interest at a coupon rate of 0.0000001% per annum.
Dividends rights: Until conversion of all CCD into Equity Shares, in the event the Board declares dividend, then such additional interest shall be payable on the
outstanding CCD (which have not been converted) which shall be equal to the dividend declared and calculated based on the number of Equity Shares to be issued to
the holders of CCD on conversion of the outstanding CCD.
Conversion: In accordance with the terms and conditions agreed with holders of CCD, each CCD is either (a) compulsorily convertible into equity shares of the
company , at any time after the closing date into such number of fully paid shares as is determined by the conversion ratio and at a price defined in the Investment
Agreement or (b) compulsorily convertible into equity shares of the company upon the earlier of the proposed filing of the draft red herring prospectus in connection
with the Qualified IPO by the company or the date as mentioned in the Investment Agreement.
Buy back: The holder of the instrument has right to sell back the CCDs to company after four years from the closing dates.
Exit to CCD holders: At any time after the expiry of the fourth anniversary from the closing date, the Company, the Promoters and the Investors shall cause a
transaction that would give liquidity to CCD holders investment in the Company (‘Exit Option’). At any time after the expiry of the fourth anniversary from the closing
date the Company, the Promoters and the CCD holders shall jointly determine to provide one or more of the below mentioned Exit Options:
(a) The Company shall conduct the Qualified IPO; or
(b) The Company shall buy back, some or all outstanding CCD's; or
(c) The holders of CCD's shall be entitled to transfer the CCD's to a third party.
The holders of CCD have confirmed that they shall convert the outstanding number of CCDs into fully paid equity share capital of the Company before the filing of the
red herring prospectus with Securities and Exchange Board of India.
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
Financing
Cash Flow
Non-cash changesParticulars
Particulars Financing
Cash Flow
Non-cash changes
During the year ended 31 March 2019 5,489,147 Series A CCDs were converted into 4,733,516 equity shares (Exchange Ratio - 1 CCD being converted into 0.86
equity shares) and 1,083,111 Series B CCDs were converted into 1,083,111 equity shares (Exchange Ratio - 1 CCD being converted into 1 equity shares)
The Group has borrowed USD 4 long-term loan from a bank, for the purpose of expansion and modernization. Rate of interest is 3 months London interbank offered
rate (LIBOR) + 3.5% and repayable in 16 equal quarterly instalments.
Security: First exclusive equitable mortgage of the immovable property (both present and future) of the Group and hypothecation of the movable property (both present
and future) of the Group and personal guarantee of Mr. Rajendra Gandhi (Managing Director) and Mrs. Sunita Rajendra Gandhi.
The Group has entered into 'Cross-Currency Rate Swap' arrangement (Swap arrangement) for payment of interest and repayment of above mentioned long-term loan.
As per the Swap arrangement, the Group is paying interest at fixed rate and receiving interest at floating rate. The terms of Swap arrangement is from June 27, 2013 to
27 June 2018. The loan is fully repaid during the FY 2018-19
207
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
As at As at
31-Mar-18
Acquisition/
(Conversion
)
Foreign
exchange
movement
Fair value
change/
others
31-Mar-19
(a) Non current Borrowings
Borrowings from bank 141.25 214.99 - - 356.24
Borrowings from other financial institution 11.71 (3.75) - - - 7.96
Compulsorily convertible debentures(CCD) 3,000.00 - (1,152.53) - 1,847.47
(b) Current Borrowings
809.58 191.87 - (2.01) - 999.44
Total Borrowings 3,962.54 403.11 (1,152.53) (2.01) - 3,211.11
As at
As at
31-Mar-17
Acquisition/
(Conversion
)
Foreign
exchange
movement
Fair value
change/
others
31-Mar-18
(a) Non current Borrowings
Borrowings from bank 81.04 65.00 - (4.79) - 141.25
Borrowings from other financial institution 8.27 3.44 - - - 11.71
Compulsorily convertible debentures(CCD) 2,846.20 - - - 153.80 3,000.00
(b) Current Borrowings
781.19 26.76 - 1.63 - 809.58
Total Borrowings 3,716.70 95.20 - (3.16) 153.80 3,962.54
16
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
74.05 90.87 108.27 96.01 148.27
74.05 90.87 108.27 96.01 148.27
17
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
5.72 4.02 6.79 2.53 -
42.77 40.64 44.91 35.30 30.50
15.57 8.22 11.04 8.29 3.64
64.06 52.88 62.74 46.12 34.14
(i)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
19.57 16.19 16.19 10.84 7.62
7.89 6.80 15.44 15.38 9.06
0.59 0.53 0.09 0.71 0.45
(1.89) (7.28) (12.15) (10.74) (6.29)
26.16 16.24 19.57 16.19 10.84
18
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
886.75 912.12 1,098.60 885.72 809.58
54.58 201.94 121.95 113.72 -
941.33 1,114.06 1,220.55 999.44 809.58
Note
(i)
(ii)
Opening balance
Compensated absence
Provision (Non-current)
Provision for employee benefits:
As at
As at
The warranty expenditure is expected to be incurred over the warranty life of the products, as contracted, which varies from 6 months to 5 years.
As at
Additions during the period / year
Borrowings (Current)
Particulars
Total
From financial institutions (Refer note (ii) below)
Security: Exclusive charge on the trade receivables which is discounted by the financial institution and also secured by personal guarantee of Mr. Rajendra Gandhi and
Mrs. Sunita Rajendra Gandhi.
Gratuity (Refer note 35)
Provision for warranties (Refer note (i) below)
Total
Unwinding of interest on discounting of provision
Reversed / utilisation during the period / year
The Group has made provision for various contractual obligations based on its assessment of the amount it estimates to incur to meet such obligations against the sales
made by the Group in the current period and previous years, the details of which are given below:
Closing balance
Warranty Provision
From banks (Refer note (i) below)
Total
Financing
Cash Flow
Particulars
Security deposits received
Particulars
Other financial liabilities (Non-current)
Non-cash changes
Non-cash changes
As at
Particulars
Secured loans repayable on demand from banks are in the nature of working capital loans which are secured by way of hypothecation of inventory, receivables and
other current assets, charge over property, plant and equipments of the company along with equitable mortgage of immovable properties. Loans repayable on demand
from banks is also secured by personal guarantee of Mr. Rajendra Gandhi, Mrs. Sunita Rajendra Gandhi and Ms. Neha Gandhi.
Secured loans repayable on demand from banks (at amortised cost)
Particulars
Note
Financing
Cash Flow
Particulars
208
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
19
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
36.18 70.97 46.61 59.87 40.28
1,725.18 1,776.31 1,462.75 1,281.14 1,411.32
1,761.36 1,847.28 1,509.36 1,341.01 1,451.60
(a)
(b)
20
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
114.58 107.90 94.96 108.34 35.01
29.01 5.92 13.25 - -
3.63 1.58 2.33 3.07 4.90
88.46 65.28 50.76 70.26 39.13
1.04 5.59 4.50 6.14 1.99
- 1.61 0.66 2.77 -
67.33 36.93 110.25 40.35 12.00
8.10 8.02 15.25 6.73 17.18
312.15 232.83 291.96 237.66 110.21
21
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
1.85 1.42 2.11 3.24 4.80
5.76 6.00 6.20 3.88 4.07
10.59 8.02 8.53 7.90 7.20
18.20 15.44 16.84 15.02 16.07
22
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
4.67 10.94 16.68 16.12 28.46
14.44 33.32 17.40 18.78 14.72
37.18 22.61 14.27 19.02 9.06
56.29 66.87 48.35 53.92 52.24
22A
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
- 8.75 3.64 5.11 0.14
- 8.75 3.64 5.11 0.14
As at
As at
Total
Gratuity (Refer note 35)
Compensated absence
Statutory remittances
Advance received from customers
Deferred revenue
As at
As at
Term loan from financial institutions (Refer note 15(iii))
As at
Other financial liabilities (Current)
Other payables:
Derivative liabilities
Provision - others:
Total
Interest accrued but not due on borrowings
For warranty (Refer note 17(i))
Total
Security deposits received
Total
Provisions (Current)
Payable on purchase of property, plant and equipment
Interest Payable on security deposits
Particulars
Particulars
Other current liabilities
Provision for employee benefits:
Trade payables
Particulars
Particulars
Current maturities of non current borrowings
Term loan from banks (Refer note 15(i), (ii) and (vi))
Vehicle Loan (Refer note 15(iv))
Total
Current tax liabilities (net)
Particulars
The Group's exposure to currency and liquidity risk related to trade payable is disclosed in Note 33.
Provision for income tax
Other than Acceptances
Total outstanding dues of micro enterprises and small enterprises (Refer Note 32)
Total outstanding dues of creditors other than micro enterprises and small enterprises
Trade Payables are non-interest bearing and are normally settled between 60 to 150 days
209
Note
No.
23
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Sale of products [including excise duty - Refer Note (i)] 3,261.42 3,139.20 6,666.22 6,349.96 5,252.46
Other operating revenue:
Sale of scrap 10.76 7.94 15.37 24.29 26.83
Duty drawback 16.18 7.93 17.02 35.13 6.98
Mould development charges - - - - 3.25
Total 3,288.36 3,155.07 6,698.61 6,409.38 5,289.52
Note
(i)
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Manufactured 2,634.91 2,203.23 4,826.99 4,341.22 3,597.73
Traded 626.51 935.97 1,839.23 2,008.74 1,654.73
Total 3,261.42 3,139.20 6,666.22 6,349.96 5,252.46
24
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Interest income (Refer note (i) below) 1.88 12.38 14.08 1.97 3.67
Miscellaneous income - 1.87 2.95 2.14 6.07
Fair Value changes on derivative instruments 0.66 1.16 2.11 - -
Gain on financial instruments designated at FVTPL - - - - 1.33
Net gain on foreign currency transactions and translation - - - - 0.89
Profit on sale of property, plant and equipment 0.53 0.26 0.25 0.13 -
Liability no longer required written back
3.64
0.76
8.31
12.36
41.85
Income tax refund amount
0.02
2.83
2.83
-
-
Government grants - - - - 2.52
Total 6.73 19.26 30.53 16.60 56.33
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Interest from banks on deposits 1.68 1.22 2.81 1.66 1.80
Interest on income tax refund - 11.06 11.07 - -
Interest income on financial assets designated at amortised cost 0.20 0.10 0.20 0.17 0.23
Interest on trade receivables - - - 0.14 1.64
Total 1.88 12.38 14.08 1.97 3.67
For the half year ended Particulars
Stove Kraft Limited
Restated Consolidated Financial Information
Revenue from operations
For the year ended
For the year ended
For the half year ended Particulars
For the half year ended
For the half year ended Particulars
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Sale of products includes
Other income
Refer Note 37 for disaggregated revenues from contracts with customers by geography.
Performance obligations and remaining performance obligations:
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an
explanation as to when the Company expects to recognize these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not
disclosed the remaining performance obligation related disclosures for contracts that have original expected duration of one year or lesser.
For the year ended
For the year ended
Note (i) - Interest income comprises:
210
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
25
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Opening stock 446.41 355.94 355.94 547.96 301.81
Add: Purchases 1,730.74 1,640.08 3,322.85 2,983.38 2,657.34
2,177.15
1,996.02
3,678.79
3,531.34
2,959.15
Less: Closing stock (576.70) (469.72) (446.41) (355.94) (547.96)
Total
1,600.45
1,526.30
3,232.38
3,175.40
2,411.19
26
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Purchase of traded goods 614.78 722.39 1,287.63 1,326.00 1,203.26
Total
614.78
722.39
1,287.63
1,326.00
1,203.26
27
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Inventories at the end of the period / year:
Finished goods 217.90 297.93 383.89 246.83 157.70
Work-in-progress 99.52 70.52 61.61 31.98 0.59
Stock-in-trade 472.16 446.47 274.03 339.39 345.13
789.58
814.92
719.53
618.20
503.42
Inventories at the beginning of the period / year:
Finished goods 383.89 246.83 246.83 157.70 156.22
Work-in-progress 61.61 31.98 31.98 0.59 0.09
Stock-in-trade 274.03 339.39 339.39 345.13 268.15
719.53
618.20
618.20
503.42
424.46
(Increase) / decrease
(70.05)
(196.72)
(101.33)
(114.78)
(78.96)
28
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Salaries and wages 274.61 343.87 726.17 613.53 523.48
Contributions to provident fund (Refer note 35) 17.89 20.11 38.45 27.67 27.41
Gratuity expense (Refer note 35) 7.12 7.10 15.67 11.22 10.80
Share-based payments to employees 1.58 7.03 8.61 - -
Staff welfare expenses 11.30 15.21 31.21 45.53 29.18
Total 312.50 393.32 820.11 697.95 590.87
29
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Interest expense on:
Borrowings 81.49 72.61 144.93 128.02 126.68
Lease liability - 0.10 0.56 - -
Others 12.07 11.65 35.81 25.96 26.21
Provisions - 0.53 - 0.71 0.45
Other borrowing cost:
Interest on statutory dues - - - 0.37 -
Bank charges and other processing charges 7.39 16.54 27.71 24.14 16.01
Total 100.95 101.43 209.01 179.20 169.35
For the half year ended Particulars
For the half year ended Particulars
For the half year ended Particulars
For the half year ended Particulars
For the year ended
For the year ended
Cost of materials consumed
Purchase of stock in trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade
Employee benefits expenses
Finance cost
For the year ended
For the year ended
For the year ended
For the half year ended Particulars
211
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
30
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Depreciation expenses (Refer note 3(a)) 65.29 52.40 111.49 120.98 109.36
Amortization of right-of-use assets (Refer note 3(b)) - 3.97 9.94 - -
Amortization of intangible assets (Refer note 3(c)) 3.36 1.48 2.67 2.40 2.89
Total 68.65 57.85 124.10 123.38 112.25
31
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Job work charges 34.03 51.12 67.83 71.06 58.07
Power and fuel 35.92 31.58 69.88 56.92 54.23
Rent including lease rentals (Refer note 36) 8.76 1.28 6.14 3.46 14.35
Repairs and maintenance
Buildings 6.34 6.89 14.78 14.20 13.72
Plant and machinery 14.49 15.29 31.40 31.65 20.54
Others 1.41 1.84 3.22 2.90 2.91
Insurance 2.80 4.00 7.86 3.91 1.80
Rates and taxes 3.75 5.91 15.44 9.37 11.43
Communication 3.11 2.82 6.86 7.03 8.61
Travelling and conveyance 12.09 45.04 100.29 78.74 69.96
Printing and stationery 0.44 0.61 1.14 1.85 1.63
Freight and forwarding 109.73 111.72 240.70 240.16 195.66
Sales commission 40.90 44.30 90.70 134.44 114.85
Business promotion and advertisement expenses 49.31 119.64 316.26 227.01 161.73
Legal and professional fees 7.80 16.94 38.16 45.20 34.83
Payment to auditors comprises (excluding service tax/GST)*
For statutory audit 1.75 1.87 3.62 2.37 2.47
Other - - - 0.06 -
Out-of-pocket expense 0.05 0.29 1.11 0.65 0.42
Net loss on foreign currency transactions and translation 4.60 5.41 12.54 30.98 -
Allowances for doubtful trade and other receivables, loans and advances (net) and balance
written off
28.22 27.44 40.30 22.07 59.65
Provision for warranty (Refer note 17(i)) 7.89 6.80 15.44 15.38 9.06
Loss on sale of property, plant and equipment - - - - 1.02
Royalty 2.46 4.79 10.04 5.41 3.94
Fair value changes on derivative instruments - - - 4.03 -
Loss on financial liability designated at FVTPL - - - - 153.80
Miscellaneous expenses 4.20 16.65 28.19 17.74 15.43
Total 380.05 522.23 1,121.90 1,026.59 1,010.11
32
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
32.44 64.91 37.70 53.46 35.90
0.43 1.65 4.34 0.94 0.24
- - - - -
3.31 4.41 4.57 5.48 3.26
3.74 6.06 8.91 6.42 3.50
0.59 1.20 1.25 1.14 2.75
For the half year ended Particulars
(iv) the amount of interest due and payable for the period of delay in making payment (which have
been paid but beyond the appointed day during the period) but without adding the interest specified
under this Act;
For the half year ended Particulars
For the half year ended Particulars
(i) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to
any supplier as at the end of each accounting period;
(ii) interest due thereon remaining unpaid to any supplier as at the end of the accounting period
(iii) the amount of interest paid by the buyer in terms of section 16, along with the amounts of the
payment made to the supplier beyond the appointed day during each accounting period;
Depreciation and amortization expenses
Other expenses
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management.
This has been relied upon by the auditors.
For the year ended
For the year ended
For the year ended
*Excludes Rs. 12.5 Million pertaining to fee for Initial Public Offer which is disclosed under prepaid expenses (Share issue expenses) under the head other current
assets referred to in Note 12.
Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
(v) the amount of interest accrued and remaining unpaid at the end of each accounting period; and
(vi) the amount of further interest remaining due and payable even in the succeeding years, until
such date when the interest dues as above are actually paid to the small enterprise, for the purpose
of disallowance as a deductible expenditure under section 23.
212
Note
No.
33
33.1
Gearing ratio
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Debt (i) 3,142.94 3,291.21 3,379.34 3,211.11 3,962.54
Less: Cash and bank balances (100.74) (101.72) (194.15) (314.79) (37.81)
Net Debt (A) 3,042.20 3,189.49 3,185.19 2,896.32 3,924.73
Total Equity (B) (299.43) (590.29) (601.81) (639.46) (1,801.02)
Net debt to equity ratio (A/B) (Refer note (ii) below) - - - - -
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Debt (Gross) 3,142.94 3,291.21 3,379.34 3,211.11 3,962.54
Less: Outstanding CCD 1,847.47 1,847.47 1,847.47 1,847.47 3,000.00
Less: Cash and bank balances
100.74 101.72 194.15 314.79 37.81
Revised Net Debt (A) 1,194.73 1,342.02 1,337.72 1,048.85 924.73
Total Equity (299.43) (590.29) (601.81) (639.46) (1,801.02)
Add: Outstanding CCD
1,847.47 1,847.47 1,847.47 1,847.47 3,000.00
Revised Total Equity (B) 1,548.04 1,257.18 1,245.66 1,208.01 1,198.98
Net debt to equity ratio (A/B) 0.77 1.07 1.07 0.87 0.77
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Financial assets
Measured at amortised cost
Trade receivables 1,036.25 1,428.15 1,030.34 896.56 795.52
Cash and bank balances 100.74 101.72 194.15 314.79 37.81
Loans 18.44 3.26 3.52 4.52 0.27
Other financial assets 65.07 64.25 63.58 70.08 47.59
Measured at fair value through other comprehensive income (FVTOCI)
Derivative instruments designated in a cash flow hedge - - - - 1.21
Financial liabilities
Measured at fair value through profit or loss (FVTPL)
Borrowings 1,847.47 1,847.47 1,847.47 1,847.47 3,000.00
Derivatives financial liability - 1.61 0.66 2.77 -
Measured at amortised cost
Borrowings (including current maturities of non-current borrowings) 1,295.47 1,443.74 1,531.87 1,363.64 962.54
Trade Payables 1,761.36 1,847.28 1,509.36 1,341.01 1,451.60
Other financial liabilities 238.98 206.69 289.03 219.49 218.57
33.2
Capital management
Categories of financial instruments
Fair value hierarchy
(i) Debt is defined as non-current borrowings, current maturities of non-current borrowings and current borrowings (borrowings as detailed in notes 15 and 18 and current
maturities of non-current borrowings as detailed in note 20).
The holders of CCD have confirmed that they shall convert the outstanding number of CCDs into fully paid equity share capital of the Company before the filing of the red
herring prospectus with Securities and Exchange Board of India.
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
The Group manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt
and equity balance.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Financial instruments
The Group reviews the capital structure on a semi-annual basis to ensure that it is in compliance with the required covenants.
The gearing ratio at end of the reporting period/year was as follows.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following
three levels:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(ii) The net debt to equity ratio as at September 30, 2020 has not been computed as the accumulated losses have exceeded the paid up capital and other free reserves as at
that date. The Company however, for the purpose of its internal reporting, considers the outstanding compulsorily convertible debentures (“CCD”) as at September 30, 2020
of Rs. 1847.47 (Rs. 1847.47 as at March 31, 2020 and 2019 and Rs. 3,000.00 as at March 31, 2018) to represent an element of equity, whereby the revised position of the
net debt to equity ratio would be :
As atParticulars
Particulars As at
As at
The capital structure of the Group consists of net debt and total equity of the Group consists of net debt (borrowings as detailed in notes 15 and 18 and current maturities of
long-term borrowings as detailed in note 20, offset by cash and bank balances) and total equity.
213
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Financial assets
Cross currency interest rate swaps Level - 2 Note 2 - - - - 1.21
Financial liabilities
Borrowings Level - 3 Note 3 1,847.47 1,847.47 1,847.47 1,847.47 3,000.00
Derivative Instruments Level - 2 Note 1 - 1.61 0.66 2.77 -
1
2
3
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Increase in discount rate by 1% 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Decrease in discount rate by 1% 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Opening balance 1,847.47 1,847.47 1,847.47 3,000.00 2,846.20
- - - (1,152.53) -
(Gains) or losses:
- Recognised in Statement of Profit and Loss* - - - - 153.80
Closing balance 1,847.47 1,847.47 1,847.47 1,847.47 3,000.00
33.3
As at
Particulars Valuation as at
Change in discount rate:
Fair valuation techniques and inputs used
Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis
Note
The fair value of derivative contracts are determined using forward exchange rates at the balance sheet date.
Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a
rate that reflects the credit risk of various counterparties.
The Group is exposed to foreign exchange risk due to
a) debt availed in foreign currency ;
b) exposure arising from transactions relating to purchase of goods including capital goods, revenues, expenses, etc., to be settled in foreign currencies.
The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the
Group's policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives
and non-derivative financial instruments, and the investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial
instruments, for speculative purposes.
The Group's risk management is carried out by Treasury department under policies laid down by the management. The Group's activities expose it to market risk (which
includes currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. Treasury department monitors the risk exposures on a periodical basis and
reports to the Board of directors on the risks that it monitors and policies implemented to mitigate risk exposures.
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts
Note (i) - The value of series A and series B CCDs is not impacted as both are carried at their maximum value.
Basis of
valuation
Fair value
hierarchy
The fair value is determined at a present value which discounts the potential future cash flows.
The management considers that the carrying amount of financial assets and financial liabilities recognised in these financial statements at amortised cost approximate their
fair values.
Sensitivity of unobservable inputs used in Level 3 Fair value measurements
Foreign currency risk management
Financial risk management objectives
Particulars As at
Conversion of Compulsory Convertible Debentures (CCD) to equity shares during the period / year
Reconciliation of Level 3 fair value measurements
*The above said gain / loss on fair valuation of CCD is recognised in Consolidated Statement of Profit and Loss.
214
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
33.3.1
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
USD - - - - -
INR - - - - -
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
USD - 1.94 0.12 3.03 -
INR - 139.72 8.81 209.77 -
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
USD 156.19 430.93 194.27 207.44 333.85
EURO 4.86 2.42 30.91 - -
RMB 104.69 63.67 45.55 3.93 -
USD 55.07 39.25 69.60 42.79 38.84
EURO - - - - -
33.3.2
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Appreciation of USD (5.06) (19.58) (6.23) (8.43) (14.75)
Depreciation of USD 5.06 19.58 6.23 8.43 14.75
33.4
As at
As at
Particulars Increase/(decrease) in equity as at
Financial instruments affected by changes in foreign exchange rates include trade receivables, trade payables, advance to suppliers and current borrowings. The following
table details the Group's sensitivity to a 5% increase and decrease in INR against the USD. 5% is the sensitivity rate used when reporting foreign currency risk internally to
key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The impact on account of 5%
appreciation/depreciation in exchange rate of USD against INR is given below.
Particulars
The carrying amount of the Group's foreign currency denominated monetary liabilities (Payables) and assets (Receivables) as at the end of the reporting period are as
follows :
Trade payables hedged with forward contracts with maturity less than 120 days
As at
The Group is mainly exposed to the currency USD
Trade receivables hedged with forward contracts with maturity less than 120 days
Trade receivables
Payable (including short-term borrowings)
Forward foreign exchange contracts
Contracts not designated as cash flow hedge
It is the policy of the Group to enter into forward foreign exchange contracts to cover the risk associated with trade receivables and trade payables
The following table details the forward foreign currency contracts outstanding at the end of the reporting period:
Curr
ency
Curr
ency
The impact on equity has been arrived at by applying the effects of appreciation / deprecation effects of currency on the net position (Assets in foreign currency - Liabilities
in foreign currency) in the respective currencies.
Particulars
Curr
ency
Particulars
Foreign currency sensitivity analysis
For the purposes of the above table, it is assumed that the carrying value of the financial assets and liabilities as at the end of the respective financial years remains constant
thereafter. The exchange rate considered for the sensitivity analysis is the exchange rate prevalent as at each period / year end.
The Group has also taken an INR loan at variable interest rate, interest being index linked, that is their cost is linked to changes in the Marginal Cost of fund based lending
rate (MCLR).
The sensitivity analysis might not be representative of inherent foreign exchange risk due to the fact that the foreign exposure at the end of the reporting period might not
reflect the exposure during the period / year.
Interest rate risk
The Group has taken a loan in foreign currency at variable interest rate, interest being index linked, that is their cost is linked to changes in the London inter-bank offer rate
(LIBOR). The Group has entered into a cross currency interest swap to hedge the variable interest risk and foreign currency risk and converted it into a fixed INR interest
loan and thereby the Group interest rate is fixed and not subject to any further risks.
215
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Fixed-rate instruments
Financial assets
Balance held as margin money 47.84 40.70 44.09 29.55 33.81
Fixed deposit held as cash and cash equivalents - - - 195.00 -
Financial liabilities
Borrowings from bank and other financial institutions 13.48 5.66 8.67 7.96 27.96
Security deposit received 162.51 156.15 159.03 166.27 187.40
223.83
202.51
211.79
398.78
249.17
Variable-rate instruments
Financial liabilities
Borrowings from bank and other financial institutions 1,281.99 1,438.08 1,523.20 1,355.68 934.58
1,281.99
1,438.08
1,523.20
1,355.68
934.58
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Increase of 100 bps on variable rate instruments (6.96) (5.96) (11.22) (7.89) (9.50)
Decrease of 100 bps on variable rate instruments 6.96 5.96 11.22 7.89 9.50
Outstanding receive floating pay fixed contracts Contracted
fixed
interest rate
Nominal
amounts
(In Rs.)
Fair value
assets /
(liabilities)
(In Rs.)
As at 30 Sept 19
Less than 1 year - - -
1 to 2 years - - -
2 to 5 years - - -
Total - - -
As at 31 Mar 19
Less than 1 year - - -
1 to 2 years - - -
2 to 5 years - - -
Total - - -
As at 31 Mar 18
Less than 1 year 12.25% 15.00 1.21
1 to 2 years - - -
2 to 5 years - - -
Total 12.25% 15.00 1.21
Increase/(decrease) in profit/equity as atParticulars
As at
At the reporting date the interest rate profile of the group's interest-bearing financial instruments is as follows:
A change of 100 basis points ("bps") in interest rate at the reporting date would have increased/ (decreased) equity and profit and loss by the amount shown below. This
analysis assumes that all other variables remain constant.
The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is the local interbank rate in the currency of the loan. The Group will settle the
difference between the fixed and floating interest rate on a net basis.
The line-item in the balance sheet that includes the above instrument is "Other financial assets".
The Group is not subject to any other material interest rate risks
Cash Flow Hedge
Interest rate sensitivity analysis
The following table detail the nominal amounts and remaining terms of interest rate swap contracts outstanding at the end of the reporting period.
216
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
33.5
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Opening Provision 98.38 77.26 77.26 124.36 94.58
Change in Provision 23.44 9.23 21.12 (47.10) 29.78
Closing Provision 121.82 86.49 98.38 77.26 124.36
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Outstanding for more than 6 months 124.71 84.11 62.95 117.05 141.18
Others 911.54 1,344.04 967.39 779.51 654.34
Total
1,036.25
1,428.15
1,030.34
896.56
795.52
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Opening Provision 1.18 1.18 1.18 1.18 1.18
Change in Provision - - - - -
Closing Provision 1.18 1.18 1.18 1.18 1.18
< 1 year 1-3 years > 3 years Total Carrying
value
Borrowings 2,936.02 185.38 21.54
3,142.94
3,142.94
Trade payables 1,761.83 - -
1,761.83
1,761.83
Other Financial Liabilities 164.93 74.05 -
238.98
238.98
< 1 year 1-3 years > 3 years Total Carrying
value
Borrowings 3,076.93 189.51 24.77
3,291.21
3,291.21
Trade payables 1,847.28 - -
1,847.28
1,847.28
Other Financial Liabilities 115.82 90.87 -
206.69
206.69
< 1 year 1-3 years > 3 years Total Carrying
value
Borrowings 3,178.56 179.24 21.54
3,379.34
3,379.34
Trade payables 1,509.36 - -
1,509.36
1,509.36
Other Financial Liabilities 180.76 108.27 -
289.03
289.03
As atParticulars
Particulars As at
Credit risk
Liquidity risk
Liquidity risk is the risk that the Group could be unable to meet its short term financial demands. Ultimate responsibility for liquidity risk management rests with the
management, which has established an appropriate liquidity risk management framework for the management of the Group's short-term, medium-term and long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by
continuously monitoring forecast and actual short term and long term cash flows, and by matching the maturity profiles of financial assets and liabilities.
Liquidity analysis for non derivative financial liabilities
Particulars As at 31-Mar-2020
The interest rate for borrowings with variable interest rate is in the range of 10.5 % to 12.5%. The interest rate for borrowings with fixed interest rate is 12.25%. Interest rate
for security deposit classified as other financial liabilities is 9%.
Particulars As at 30-Sept-2020
The interest rate for borrowings with variable interest rate is in the range of 11 % to 15.15%. The interest rate for borrowings and security deposits (included as part of other
financials liabilities) with fixed interest rate is 12.25% and 12% respectively.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only
dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. Credit exposure is controlled by counterparty limits. Ongoing
credit evaluation is performed on the financial condition of accounts receivable. The concentration of credit risk is limited due to the fact that the customer base is large and
unrelated. The Group does not hold any collaterals to cover its risk associated with trade receivables.
Credit risk also arises from cash and cash equivalents, financial instruments and deposits with banks and financial institutions. The credit risk on derivative financial
instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
Reconciliation of expected credit loss - Trade receivables
Reconciliation of loss allowance provision for security deposits
Particulars As at
The interest rate for borrowings with variable interest rate is in the range of 11 % to 15.15%. The interest rate for borrowings and security deposits (included as part of other
financials liabilities) with fixed interest rate is 12.25% and 12% respectively.
The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table have been drawn
up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group is required to pay. The table include both interest and
principal cash flows. The contractual maturity is based on the earliest date on which the Group would be required to pay.
As at 30-Sept-2019Particulars
217
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
< 1 year 1-3 years > 3 years Total Carrying
value
Borrowings 2,958.32 220.12 32.67
3,211.11
3,211.11
Trade payables 1,341.01 - -
1,341.01
1,341.01
Other Financial Liabilities 123.48 96.01 -
219.49
219.49
< 1 year 1-3 years > 3 years Total Carrying
value
Borrowings 3,851.70 55.61 57.68
3,964.99
3,211.11
Trade payables 1,451.06 - -
1,451.06
1,451.60
Other Financial Liabilities 215.57 1.45 1.55
218.57
218.57
33.6
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Secured term loan facilities
amount used
262.22 300.83 257.28 356.24 141.20
amount unused
- - - - -
Secured cash credit facility
amount used
941.33 1,114.06 1,220.55 999.44 809.58
amount unused
20.97 35.94 119.65 149.92 -
Secured non-fund based bank facilities
amount used
104.71 98.25 114.00 122.58 195.80
amount unused
199.29 51.75 49.60 27.42 48.62
As atParticulars
The interest rate for borrowings with variable interest rate is in the range of 11 % to 15.15%. The interest rate for borrowings and security deposits (included as part of other
financials liabilities) with fixed interest rate is 12.25% and 12% respectively.
The interest rate for borrowings with variable interest rate is in the range of 11 % to 15.15%. The interest rate for borrowings and security deposits (included as part of other
financials liabilities) with fixed interest rate is 12.25% and 12% respectively.
Financing Facilities
As at 31-Mar-2019Particulars
As at 31-Mar-2018Particulars
218
Note
No.
34
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Basic
Net profit/(loss) after tax attributable to the equity shareholders (A) 287.73 43.82 31.60 7.33 (120.00)
Weighted average no. of equity shares outstanding (B) 24,716,727 24,716,737 24,716,727 21,927,944 18,900,110
Face value per share (Rs.) 10.00 10.00 10.00 10.00 10.00
Basic earning per shares (A/B) (Rs.)
11.64
1.77
1.28
0.33
(6.35)
Diluted
Net profit/(loss) after tax attributable to the equity shareholders (C) 287.73 43.82 31.60 7.33 (120.00)
Weighted average number of equity shares outstanding for Diluted EPS 24,716,727 24,716,737 24,716,727 21,927,944 18,900,110
Add: Effect of Compulsorily Convertible Debentures (CCD's) (Refer note
(i) below)
- - - - -
Weighted average number of equity shares for Diluted EPS (D) 24,716,727 24,716,737 24,716,727 21,927,944 18,900,110
Face value per share (Rs.) 10.00 10.00 10.00 10.00 10.00
Diluted earnings per share (C/D) (Rs.)
11.64
1.77
1.28
0.33
(6.35)
*Basic and Diluted Earnings per share for the half year ended 30 September 2020 and 30 September 2019 is not annualised.
Stove Kraft Limited
Restated Consolidated Financial Information
Earnings per share
For the year endedFor the half year ended Particulars
Note (i) : The conversion of CCDs into equity shares is contingent on various factors and since there exist uncertainty over conversion of CCDs into equity
shares, these are not considered in the computation of diluted earnings per share.
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
219
Note
No.
35
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Employer’s contribution to provident fund 17.89 20.11 38.45 27.67 27.41
Employee State Insurance Scheme 3.81 5.75 10.10 10.65 7.79
1
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Discount Rate
6.26%
6.60%
6.56%
7.31% 7.31%
Salary Escalation
6.00%
6.00%
6.00%
6.00% 10.00%
Attrition rate
25.00%
25.00%
25.00%
25.00% 18.00%
For the half year ended Particulars
Stove Kraft Limited
Restated Consolidated Financial Information
The Group makes Provident fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the
said schemes, the Group is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the
Group are at rates specified in the rules of the Scheme. The Group recognises the amount paid / payable to such funds in the Restated Consolidated statement of
profit and loss. The contributions made by the Group towards these schemes are as follows:
Salary Growth: Salary hikes that are higher than the assumed salary escalation will result in to an increase in Obligation at a rate that is higher than expected.
Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption then the Gratuity benefits will be paid earlier than expected.
Since there is no condition of vesting on the death benefit , the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the
assumed salary growth and discount rate.
Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the Gratuity benefits will be paid earlier than
expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
Following tables sets out the un-funded status of defined benefit plan and amount recognised in Consolidated Financial Information
Assumptions
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Employee benefit
Defined contribution plans
No other post-retirement benefits are provided to these employees.
B. Liquidity Risk:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from
the Group there can be strain on the cash flows.
The Group offers gratuity, a defined employee benefit scheme to its employees. Following are the risks associated with the plan:
A. Actuarial Risk:
It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Defined benefit plans
For the half year ended Particulars For the year ended
For the year ended
D. Legislative Risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the
Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit
Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
C. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect
is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan
benefits and vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in
the yields as at the valuation date.
220
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
2
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Present value of obligation as at the beginning of period / year 51.11 39.18 39.18 34.57 28.45
Interest cost 1.59 1.27 2.50 2.38 1.97
Current service cost 5.53 5.83 13.17 8.84 7.99
Past service cost - - - 0.84
Benefits paid (0.35) (2.76) (3.81) (4.97) (2.93)
Actuarial (gain)/loss of obligations (9.36) 3.12 0.07 (1.64) (1.75)
Present value of obligation as at the end of the period / year 48.52 46.64 51.11 39.18 34.57
3
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Fair value of plan assets at beginning of period / year - - - - -
Expected return of plan assets - - - - -
Contributions - - - - -
Benefit Paid - - - - -
Actuarial gain / (loss) on plan assets - - - - -
Fair value of plan assets at end of period / year
-
-
-
-
-
4
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Present value of obligations as at the end of period / year 48.52 46.64 51.11 39.18 34.57
Fair value of plan assets as at the end of the period / year - - - - -
Funded status (48.52) (46.64) (51.11) (39.18) (34.57)
Net balance sheet asset/ (liability) recognized at the end of period / year (48.52) (46.64) (51.11) (39.18) (34.57)
Current Portion 5.76 6.00 6.20 3.88 4.07
Non-Current Portion 42.77 40.64 44.91 35.30 30.50
5
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Current service cost 5.53 5.83 13.17 8.84 7.99
Interest cost 1.59 1.27 2.50 2.38 1.97
Past service cost - - - - 0.84
Expenses recognized in consolidated statement of profit and loss 7.12 7.10 15.67 11.22 10.80
As atParticulars
As atParticulars
For the half year ended
Expenses recognized in consolidated statement of profit and loss
As atParticulars
For the year ended
Fair value of plan assets
Amounts recognized in consolidated balance sheet
Change in present value of obligation
221
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
6
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Actuarial (gains) / losses arising from changes in demographic assumptions - 8.55 - 2.36 (3.36)
Actuarial (gains) / losses arising from changes in financial assumptions 0.88 (6.05) 2.30 (10.51) 2.52
Actuarial (gains) / losses arising from experience adjustments (10.24) 0.62 (2.22) 6.51 (0.91)
Actuarial (gains) / losses in Other Comprehensive Income (9.36) 3.12 0.08 (1.64) (1.75)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Effect on DBO due to 100 bps increase in Discount Rate 45.71 44.08 48.13 37.73 33.06
Effect on DBO due to 100 bps decrease in Discount Rate 51.69 49.50 54.46 42.50 36.24
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Effect on DBO due to 100 bps increase in salary escalation rate 51.35 49.19 54.12 42.26 35.96
Effect on DBO due to 100 bps decrease in salary escalation rate 45.91 44.28 48.34 37.91 33.28
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Effect on DBO due to 100 bps increase in attrition rate 48.18 46.37 50.80 39.82 34.27
Effect on DBO due to 100 bps decrease in attrition rate
48.89
46.92
51.44
40.15
34.89
7
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Year 1 6.01 6.26 6.50 4.95 4.07
Year 2 6.60 5.03 4.84 4.06 3.11
Year 3 4.01 5.95 6.47 3.07 2.55
Year 4 3.35 3.41 3.45 4.61 2.03
Year 5 3.45 2.87 3.45 2.32 2.36
Year 6 to 10 14.87 16.17 17.11 13.95 5.08
Particulars
Particulars As at
As atParticulars
As at
For the half year ended
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in
assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Expected future cash outflows (undiscounted) towards the plan are as follows:
For the year ended
For the year ended
Components of defined benefit costs recognised in Other Comprehensive Income
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years. There has been no change in the process used by
the Group to manage its risks from prior periods.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit
method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
For the half year ended Particulars
222
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
36
Transition
The following is the break-up of current and non-current lease liabilities :
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Current lease liability 2.59 12.70 2.49 - -
Non Current lease liability - 19.39 - - -
Total
2.59
32.09
2.49
-
-
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Rent including lease rentals 8.76 1.28 6.14 3.46 14.35
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Opening Balance
2.49
-
-
-
-
Additions - 35.69 35.69 - -
Deletions - - (25.75) - -
Finance cost accrued during the period / year - 0.10 0.56 - -
Payment of lease liabilities - (3.51) (9.34) - -
Translation difference (net) 0.10 (0.19) 1.33 - -
Closing balance 2.59 32.09 2.49 - -
Contractual maturities of lease liabilities
Less than one year 2.59 12.70 2.49 - -
One to five years - 19.39 - - -
More than five years - - - - -
Total 2.59 32.09 2.49 - -
Effective 01 April 2019, the Group adopted Ind AS 116 "Leases" using the modified retrospective method and has taken the cumulative adjustment to retained
earnings, on the date of initial application. Consequently, the Group recorded the lease liability and the right of use asset at the present value of the lease payments
discounted at the incremental borrowing rate at the date of initial application. In accordance with this, the comparatives have not been retrospectively adjusted. In
adopting Ind AS 116, the Group has applied the below practical expedients:
- The Group has applied a single discount rate to a portfolio of leases with reasonably similar characteristics
- The Group has treated the leases with remaining lease term of less than 12 months as if they were "short term leases"
- The Group has not applied the requirements of Ind AS 116 for leases of low value assets.
- The Group has excluded the initial direct costs from measurement of the right-of-use asset at the date of transition
- The Group has used hindsight, in determining the lease term if the contract contains options to extend or terminate the lease
The above statement should be read with Significant Accounting Policies forming part of the Restated consolidated financial information in Note 2 and Note 11 to
the Statement of Adjustments to the Consolidated Financial Statements (Note 45).
Lease payments on short-term expensed in Statement of Profit and Loss
Lease
The Group has entered into operating lease arrangements for office premises and showrooms, which are cancellable at the option of the either party after giving prior
notice. Lease payment recognized in the statement of profit and loss against such operating lease arrangements:
As at
For the year ended Particulars For the half year ended
Particulars
As at
The following is the movement in lease liabilities and contractual maturities of lease liabilities
The Group does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease
liabilities as and when they fall due.
223
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
37
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Manufactured product sales
Kitchen appliances 2,346.46 2,132.09 4,570.98 4,311.22 3,593.30
Home appliances 288.45 71.14 256.01 30.00 4.43
Total (a) 2,634.91 2,203.23 4,826.99 4,341.22 3,597.73
Traded product sales
Kitchen appliances 390.69 640.14 1,313.75 1,478.37 1,163.42
Home appliances 235.82 295.83 525.48 530.37 491.31
Total (b) 626.51 935.97 1,839.23 2,008.74 1,654.73
Total (a+b) 3,261.42 3,139.20 6,666.22 6,349.96 5,252.46
a.
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
India 2,672.69 2,928.49 6,154.27 5,794.26 4,957.80
Others 588.73 210.71 511.95 555.70 294.66
Total 3,261.42 3,139.20 6,666.22 6,349.96 5,252.46
b.
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
India 2,186.86 1,882.04 2,048.10 1,840.58 1,864.77
Others - - - - -
Total 2,186.86 1,882.04 2,048.10 1,840.58 1,864.77
c.
Revenue from major customers
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
One customer 28.61% 16.67% 15.96% 11.58% 7.29%
* Non-current assets exclude financial assets, deferred tax assets and non-current tax assets.
Revenue earned within India and outside India are as follows:
Non-current assets* within India and outside India are as follows:
For the year ended
For the year ended
No. of customers
Particulars
For the half year ended Particulars
Particulars As at
For the half year ended
The Group predominantly operates in India.
Geographical information:
For the year ended
For the half year ended
Revenue from customers of the Group which is individually more than 10 percent of the Group's total revenue.
The following is an analysis of the Group's revenue from its major products
Revenue from major products and services:
Segment reporting
Information reported to Chief Operating Decision Maker (CODM) for the purpose of segment performance focuses on manufacturing and trading of kitchen and
home appliances.
224
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
38
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Contingent liabilities
Indirect tax matters under appeal 62.92 75.90 62.92 65.08 59.92
Other disputed claims 2.68 2.68 2.68 2.68 2.68
Provident fund claims 9.39 9.39 9.39 9.39 9.39
Commitment
Estimated amount of contracts remaining to be executed on capital account and not
provided for tangible assets (net of advances)
177.45 59.22 44.22 18.94 27.81
39 Share-based payment arrangements
A. Description of share-based payment arrangements
i. Share option programmes (equity-settled)
Employees Stock Option Plan 2018:
B. Measurement of fair values
Fair value of share options granted in the year
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
C. Reconciliation of outstanding share options
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Number of
options
Number of
options
Number of
options
Number of
options
Number of
options
Option outstanding at the beginning of the period / year 588,272 755,328 755,328 -
Granted during the period / year - - - 755,328 -
Exercised during the period / year - - - - -
Forfeited during the period / year - (167,056) (167,056) - -
Expired during the period / year - - - - -
Options outstanding at the end of the period / year 588,272 588,272 588,272 755,328 -
Exercisable at the end of the period / year
- -
The share option outstanding at the end of the reporting period had a weighted average exercise price of Rs. 150 and weighted average remaining contractual life of
5.46 years.
The weighted average fair value of the share options granted is Rs. 24.47. The fair value of the employee share options has been measured using the Black-Scholes
formula. Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value.
The requirement that the employee has to save in order to purchase shares under the share purchase plan has been incorporated into the fair value at grant date by
applying a discount to the valuation obtained. The discount has been determined by estimating the probability that the employee will stop saving based on historical
behaviour.
Option granted under
employee stock option plan
2018
99.25
150.00
For the half year ended For the year endedEmployees stock option plan:
7.52%
33.81%
5 years
0.00
Inputs into the model
Contingent liabilities and commitment
Particulars As at
The Company has share option scheme “Stove Kraft Employee Stock Option Plan 2018", for employees of the Company. In accordance with the terms of the plan
the Company may grant options to the eligible employees, as approved by the shareholders of the Company and the Nomination and Remuneration Committee (the
"Committee"). Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of
the option. The option carry neither a right to dividends nor voting rights.
Under this plan 755,328 options are granted and would normally vest over a maximum period of 5 years from the date of the grant (October 01, 2018) in
proportions specified in 'Stove Kraft Employee Stock Option Plan 2018' scheme. Options would vest essentially on passage of time and in addition to this, the
committee may also specify certain performance criteria subject to satisfaction of which the option would vest. The estimated contractual life of the options vesting
period is 5 years.
The number and weighted average exercise prices of share options under the share option programmes were as follows:
225
Note
No.
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
40
41
42
(a)
(b)
The Group has a net deferred tax asset with respect to certain timing differences. These have not been recognised as the recognition criteria have not been met in
accordance with the accounting policies followed by the Group. The Group has not recognized the net deferred tax asset on the accumulated losses as there is no
reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Mr. Rajendra Gandhi, Managing Director of the Company, is also a Non-Executive Director on the Board of Pigeon Appliances Private Limited (referred as PAPL).
As a result of certain disputes, which have arisen between PAPL and the Company, PAPL has not filed its annual financial statements for financial years 2014-15,
2015-16 and 2016-17 as required in terms of Section 137 of the Companies Act, 2013. The last date for PAPL to file annual financial statements with the Registrar
of Companies (ROC) for the financial year 2016-17 expired on October 30, 2017, as a result of which the provisions pertaining to disqualification of Directors
under section 164 (2) and vacation of Office of Director under section 167 (1) of the Companies Act, 2013, was attracted. The Company and Mr. Rajendra Gandhi
filed a petition before the National Company Law Tribunal (NCLT), Bangalore, on 22 November 2017 against PAPL, followed by another interim application on 30
May 2018, praying, inter alia, that the NCLT direct the ROC to maintain status quo by not disqualifying Mr. Rajendra Gandhi from directorships of other companies
(other than PAPL), until the disposal of the main petition. The NCLT, in its interim order, dated 18 July 2018, has directed the ROC, not to disqualify Mr. Rajendra
Gandhi as a Director on the Board of the Company.
Deferred Tax - The timing differences mainly relates to carried forward business losses, unabsorbed depreciation and current depreciation resulting in net deferred
tax asset at end of each year. This has not been recognised as a matter of prudence.
Current Tax - During the period / year, the Group does not have taxable income as per regular computation and as per Minimum Alternate Tax under section 115 JB
of the Income Tax Act, 1961.
The Company was contesting the order no. 21/2010 on SKL and certain provision (net of amounts recoverable from the Promoter) had been accounted in the
financial statements. During the year 2017-18, this matter has been settled in favour of the Company.
During 2007, the Company (SKL) had entered into an agreement to take over the business of M/s Vardhaman Enterprises (“VE”) a sole proprietorship firm owned
by the Mr. Rajendra Gandhi, the Promoter and Managing Director of the Company.
The Directorate General of Central Excise Intelligence (DGCEI) had issued show cause notice(s) to SKL and M/s VE on January 16, 2009 and February 24, 2009
respectively, for alleged removal of goods without payment of proper excise duty and wrongful availment of Cenvat credit for the period 2004 to 2007. The
Commissioner of Central Excise Bangalore, vide order No.’s 20/2010 and 21/2010 dated March 31, 2010 confirmed demands for non-payment of excise duty
amounting to Rs 26.88 and Rs 67.84 on VE and SKL respectively (including interest and penalty). Further, in the order no. 21/2010 the Commissioner has also
disallowed Cenvat credit reversal of Rs 7.50 and imposed a penalty of an equivalent amount to be recovered from the said Promoter.
226
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Note
No.
Notes to Restated Consolidated Financial Information
43
Particulars
Amount in Rs.
Million
0.34
5.00
5.34
6.67
0.23
6.52
- Bank balances other than cash and cash equivalent as above 0.46
- Other financial assets 0.01
0.88
14.77
Net assets transferred (C) = [(B) - (A)] 9.43
Non controlling interest (D ) 2.30
Net assets transferred from Stovekraft India(E) = [(D) - (C)] 7.13
Consideration received other than cash 7.13
Gain/(loss) on dissolution -
Total Assets (B)
The details of nest assets of partnership firm as on date of dissolution is as follows:
Liabilities:
- Trade payables
- Other current liabilities
Total Liabilities (A)
Assets:
- Property, plant and equipment
- Other financial assets
- Cash and cash equivalents
- Other current assets
The Management of Stovekraft India (the firm) decided to discontinue the manufacturing operations in the firm and with effective from
January 03, 2015, the manufacturing operations in the firm had been discontinued. Stove Kraft Limited (SKL), the majority partner in the
firm, has not yet decided on alternative business plans for the firm, if any. SKL has the assured continuous financial support to the firm to
meet its obligations. Pending decision on the future business plan for the firm and based on the financial support from SKL, the financial
statements of the firm till financial year ended March 31, 2020 have been prepared under the historical cost convention except for property,
plant and equipment of the firm which were fair valued.
During the current period, Stovekraft India (partnership firm) has been dissolved and registered the dissolution deed on September 22, 2020.
As per the dissolution deed any loss or the assets of the partnership are insufficient to meet the liabilities and debts of the partnership then
227
Note
No.
44
Sl. No Name of the related party
1
Key managerial personnel (KMP):
Mr. Rajendra Gandhi (From 28 June 1999 onwards) Managing Director (MD)
Ms. Neha Gandhi (From 30 September 2016) Relative of MD and Director
Mrs. Shubha Rao Mayya (From 30 August 2018) Independent Director
Mr. Lakshmikant Gupta (From 11 May 2018) Independent Director
Mr. Rajiv Mehta (From 11 May 2018 to 02 September 2019) Independent Director
Mr. Rajiv Mehta (From 03 September 2019) Chief Executive Officer Cum Director
Mr. Bharath Singh (From 21 September 2018) Nominee Director
Mr. Shashidhar SK (From 27 July 2018) Company Secretary
Ms. Rehana A. Rajan (From 11 May 2018 to 26 July 2018) Company Secretary
Mr. Vivek Mishra (From 22 March 2016 to 30 April 2018) Company Secretary
Mr. Manoj Pannalal Jain (From 01 April 2017 to 22 December 2017) Chief Financial Officer
Mr. Radhakrishnan (From 19 January, 2018 to 06 April, 2018) Chief Financial Officer
Mr. Shashidhar SK (From 02 July 2018) Chief Financial Officer
2
Enterprises owned or significantly influenced by KMP or their relatives:
Shinag Allied Enterprises (SAE) MD's brother's wife is a Proprietor
Shinag Allied Enterprises Private Limited (SAEPL) MD's brother's wife is a Director
Pigeon Appliances Private Limited (PAPL) Company is shareholder and MD is director
3
Relative of KMP
Mrs. Sunita Rajendra Gandhi Relative of MD
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
0.16 - 0.05 - 7.22
0.87 - - 0.14 6.22
- - - 0.37 -
- - - 0.59 -
- - - 5.59 -
Rent including lease rentals
Mrs. Sunita Rajendra Gandhi 0.36 0.36 0.72 0.72 0.60
Managerial remuneration:
Mr. Rajendra Gandhi 3.73 5.66 10.11 9.51 8.73
Ms. Neha Gandhi - 1.23 2.31 2.17 2.01
Mr. Vivek Mishra - - - 0.09 0.94
Ms. Rehana A. Rajan - - - 0.09 -
Mr. Manoj Pannalal Jain - - - - 5.22
Mr. Radhakrishnan - - - 0.11 0.92
Mr. Shashidhar SK 2.62 5.58 7.82 6.11 -
Mr. Rajiv Mehta 4.53 1.04 7.33 - -
Sitting Fee
Mrs. Shubha Rao Mayya 0.20 0.40 0.80 0.50 -
Mr. Lakshmikant Gupta 0.20 0.40 0.65 0.45 -
Mr. Rajiv Mehta - 0.20 0.20 0.70 -
Purchases
SAEPL
Sales returns
SAEPL
Job work charges
SAEPL
Purchase of property, plant and equipments
SAEPL
For the year endedFor the half year ended Particulars
Revenue from operations
SAEPL
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Restated Consolidated Statement of Transactions with Related Parties and Balances
A. List of related parties:
Note: Related parties mentioned above is as identified by the Group relied upon by the auditors.
B. Transactions with related parties
Nature of relationship
228
Note
No.
44
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Notes to Restated Consolidated Financial Information
Restated Consolidated Statement of Transactions with Related Parties and Balances
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
- 0.29 0.29 0.29 0.29
3.47 - - - 1.68
3.42 3.38 3.42 3.38 4.81
4.99 - - - -
- 2.68 2.68 2.68 -
- 0.06 - 0.06 0.05
Remuneration payable
Mr. Rajendra Gandhi 0.48 0.83 1.25 0.76 0.60
Ms. Neha Gandhi - 0.22 0.33 0.18 0.15
Mr. Vivek Mishra - - - - 0.07
Mr. Radhakrishnan - - - - 0.36
Mr. Shashidhar SK 0.44 0.57 1.15 2.28 -
Mr. Rajiv Mehta 0.59 0.52 1.11 - -
Sitting fees payables
Mr. Lakshmikant Gupta - - - 0.05 -
Mr. Rajiv Mehta - - - 0.30 -
Particulars
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Short-term benefits 10.45 13.14 26.37 17.51 17.18
Post-employment benefits (Refer Note (i) below) 0.43 0.37 1.20 0.57 0.64
Share based payment - 0.51 0.51 - -
Total
10.88
14.02
28.08
18.08
17.82
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
- - - 35.00 -
- - - - 4.11
- - - - 0.88
- (85.21) (88.27) 2.59 3.81
0.51 6.80 9.82 2.60 (13.97)
- - - - (0.66)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
- - - - 0.49
- 0.88 0.88 0.88 0.88
- 9.33 9.29 87.74 81.46
Receivables
Mr. Rajendra Gandhi
F. On consolidation the following balances with related parties have been eliminated :-
For the half year ended Particulars
As atParticulars
Trade payable
Mrs. Sunita Rajendra Gandhi
Note (i) Post-employment benefit excludes Gratuity which cannot be separately identified from the composite amount advised by the actuary.
Stovekraft India
Share of profit/(loss)
E. On consolidation the following transactions with related parties have been eliminated :-
C. Balances with related parties
PAPL
SAEPL
Trade receivables
SAEPL
Payable on purchase of property, plant and equipment
SAEPL
Rent Payable
Stovekraft India
Investments
Stovekraft India
Stovekraft India
Saya Industries
Particulars
D. The remuneration of directors and other members of Key Management Personnel during the year was as follows:
For the year endedFor the half year ended
Purchase of property, plant and equipments
Stovekraft India
Expenses paid on behalf of related parties
Stovekraft India
Rent including lease rentals
Stovekraft India
As at
Trade payable
Stovekraft India
Rent payable
Investments in / (drawings) from
For the year ended
229
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Note
No.
Notes to Restated Consolidated Financial Information
45 Ind AS adoption reconciliations
45.1 Reconciliation of Equity
As at April 1,
2017
Proforma
189.00 189.00
230.78 204.97
419.78 393.97
1
(2,873.38) (2,719.58)
2
(1.26) (6.05)
3
- (1.33)
4
(0.16) (0.18)
5
3.03 1.88
6
(1.08) 5.19
7
2.52 -
8
679.14 679.14
10
(15.15) (15.15)
(1,786.56) (1,662.11)
45.2
29.18
1
(153.80)
3
1.33
4
0.02
5
1.15
6
(6.27)
7
2.52
9
(1.75)
(127.62)
9
1.75
2
1.24
(124.63)
Reconciliation of statement of cash flow:
There are no material adjustments to the statement of cash flows as reported under previous GAAP.
Loss as per Ind AS
Other Comprehensive Income:
Recognition of actuarial (loss)/gain on defined benefit obligation in Other Comprehensive Income
Hedge accounting of derivative instruments
Total comprehensive income as per Ind AS
Profit/(Loss) as per previous GAAP
Add/(Less): Ind AS adjustments
Impact on fair valuation of Compulsorily Convertible Debentures (CCD)
Fair valuation of derivatives
Fair valuation of security deposits
Discounting of provisions
Revenue Impact (net)
Government grants
Recognition of actuarial loss/(gain) on defined benefit obligation in Other Comprehensive Income
Equity as per Ind AS
Reconciliation of total comprehensive income
Particulars Sl.
No.
For the year
ended
31-Mar-18
Equity as per previous GAAP
Add/(Less): Ind AS adjustments
Impact on fair valuation of Compulsorily Convertible Debentures (CCD)
Hedge accounting of derivative instruments
Fair valuation of derivatives
Fair valuation of security deposits
Discounting of provisions
Revenue Impact (net)
Government grants
Impact on fair valuation of Property, plant and equipment
Adjustment on account of purchase of additional stake in partnership firm
Reserves
Particulars Sl.
No.
Share capital
As at March 31,
2018
230
Note
No.
Notes to Restated Consolidated Financial Information
45 Ind AS adoption reconciliations - Continued
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
300.83 42.21 29.14 8.04 29.18
1
- - - - (153.80)
3
- - - - 1.33
4
- - - - 0.02
5
- - - - 1.15
6
- - - - (6.27)
7
- - - - 2.52
Impact on account of adoption of Ind AS 116
11
- - - 1.01 7.44
2
- - - - 1.24
300.83 42.21 29.14 9.05 (117.19)
Restated Equity
As at
30 Sep, 2020
As at
30 Sep, 2019
As at 31
March, 2020
As at 31
March, 2019
As at 31
March, 2018
As at April
1, 2017*
247.17 247.17 247.17 247.17 189.00 189.00
(546.60) (837.46) (848.98) (873.18) 230.78 204.97
(299.43) (590.29) (601.81) (626.01) 419.78 393.97
1 - - - -
(2,873.38) (2,719.58)
2 - - - -
(1.26) (6.05)
3 - - - -
- (1.33)
4 - - - -
(0.16) (0.18)
5 - - - -
3.03 1.88
6 - - - -
(1.08) 5.19
7 - - - -
2.52 -
8 - - - -
679.14 679.14
10 - - - -
(15.15) (15.15)
Impact on account of adoption of Ind AS 116
11 - - -
(13.45) (14.46) (21.90)
(299.43)
(590.29)
(601.81)
(639.46)
(1,801.02)
(1,684.01)
Equity as per Restated Consolidated Financial Information
* adjusted with brought forward baalnce of Equity as at April 1, 2017
Fair valuation of security deposits
Discounting of provisions
Revenue Impact (net)
Adjustment on account of purchase of additional stake in partnership firm
Impact on fair valuation of Property, plant and equipment
Government grants
Add/(Less): Ind AS adjustments
Impact on fair valuation of Compulsorily Convertible Debentures (CCD)
Impact of hedge accounting on derivative instruments
Hedge accounting of derivative instruments
Restated Total Comprehensive Income/ (Loss) as per Restated
Consolidated Financial Information
Particulars
Equity share capital
Equity as per audited acconts
Reconciliation of total comprehensive income
Fair valuation of derivatives
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Disclosure of adjustments to the Consolidated Financial Statements required under ICDR regulations
Particulars Sl.
No.
For the year endedFor the period ended
Revenue Impact (net)
Government grants
Total comprehensive income/ (loss) for the period/ year as per
Consolidated IndAS Financial Statements (Net profit / (loss) for the
year as per Consolidated Financial Statements for March 2018)
Add/(Less): Ind AS adjustments
Impact on fair valuation of Compulsorily Convertible Debentures (CCD)
Fair valuation of derivatives
Fair valuation of security deposits
Discounting of provisions
Sl
No.
Other Equity
231
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Note
No.
Notes to Restated Consolidated Financial Information
45 Ind AS adoption reconciliations - Continued
Sl.
No.
1
2
3
4
5
6
7
8
9
10
11
On transition to Ind AS 116, the adoption of new standard resulted in cumulative effect of Rs. 21.90 which was debited to retained earnings, net of taxes
as at 01 April 2017. The effect of this adoption is insignificant on the profits before tax, profit for the period and earnings per share. The Company has
discounted lease payments using the incremental borrowing rate applicable for the respective year in which the lease contract is initiated, which is
ranging from 10% to 11.5% for measuring the lease liability.
i. The Group has received duty waiver on import of capital goods against meeting export obligation prescribed by the custom authorities. Under Ind AS
this benefit has been accounted as government grant and the cost of duty is included as part of the capital asset.
ii. The Group has received capital contribution for establishing a manufacturing unit. Under Indian GAAP, the Group has considered it as a government
grant and accounted as capital reserve. However under Ind AS 20, when there are no conditions attached or when conditions are attached, Group has to
recognise income in such period when the conditions are fulfilled. Consequently the Group has recognised the capital contribution received as income.
Under previous GAAP, property, plant and equipment were measured at cost. Under Ind AS, the Group has elected the option of fair valuing the items of
property, plant and equipment basis the requirements of Ind AS 101, First Time Adoption of Indian Accounting Standards for deriving the carrying value
of these property, plant and equipment (‘deemed cost’).
Under previous GAAP, actuarial gains and losses on defined benefit obligation were recognised in Consolidated Statement of profit and loss. Under Ind
AS, the actuarial gains and losses is recognised in other comprehensive income.
Under previous GAAP, Group had recognised goodwill on acquisition of additional share of capital in partnership firm. However, under Ind AS any
difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid should be recognised
directly in equity.
Under previous GAAP, discounting of provisions was not permitted. Under Ind AS, provisions are measured at discounted amounts, to give effect to time
value of money.
i. Under previous GAAP, the sale of scrap and purchase of the processed raw material are considered as different transactions. Under Ind AS, the sale of
scrap and purchase of processed raw material from job worker has to be considered as a single transaction. Hence the sale of scrap and purchase of
processed raw material are to be presented net as job worker charges.
ii. Under previous GAAP, certain types of discounts and sales schemes offered by entities to their customers were classified as expense and recorded
under other expense. Under Ind AS, these have been reduced from revenue. Such re-classifications will not have an impact on the net profits reported by
the Group.
iii. The Group provides Customer loyalty programmes and the loyalty points are linked to sale transaction. The customer can redeem the award credits by
either availing the benefit under the scheme or can adjust the amount against future payable amount. Under previous GAAP, provision was created
towards such outstanding loyalty points and these were recorded as expense and corresponding liability was recorded under trade payables. Under Ind
AS, the entity identifies the points which is pending to be redeemed as at the reporting date and the defers the revenue to the extent of fair value of these
points and thereby the provision created under previous GAAP for accrual of points is reversed under Ind AS.
The Group has foreign currency forward contracts to hedge its foreign currency exposure which were not fair valued. Under Ind AS 109, Financial
Instruments, foreign currency forward contracts are fair valued and the resultant gain/loss is recognised in the Consolidated Statement of profit and loss.
Under previous GAAP, security deposits were recorded at their transaction value. Under Ind AS, security deposit being a financial asset is recognised at
their fair value. Accordingly, the Group has discounted these deposits for the respective lease period and difference between the discounted value (fair
value) and the transaction value of security deposit has been recognised as prepaid rent.
The prepaid rent is amortised over the lease term and interest income is recorded on the fair value of the security deposit at the interest rate which was
used for discounting of the security deposit. The difference in rent expense and interest income have been adjusted with retained earnings as at the
transition date and with profit for the respective period.
Explanatory notes
The Group had issued Compulsorily Convertible Debentures (CCDs), the instrument provides the holder an option get it converted into equity shares. As
per the terms of the instrument, CCDs will get converted into variable number of equity shares, the holder of the instrument has also right to sell back the
CCDs to Group after four years from the closing dates. In accordance with Ind AS 32 Financial Instruments - Presentation, the instrument is assessed as a
financial liability, the option given to the holder is treated as an embedded derivative and this derivative is fair valued at each reporting date. In
accordance with Ind AS 109 Financial Instruments, Group has measured this instrument as a whole at fair value through profit or loss at each reporting
dates and recognised the fair value changes in statement of profit and loss.
The Group has taken a cross currency interest rate swap (derivative) to hedge a foreign currency floating interest rate loan. It has designated the
derivative under cash flow hedging relationship.
Under previous GAAP, at the end of every reporting date, the Group restated the foreign currency borrowing and recognised gain or loss on restatement
of borrowing under MTM receivable in Balance sheet. However under Ind AS 109 Financial Instruments, the gain or loss on restatement of borrowing is
recorded in cash flow hedging reserve (under other comprehensive income).
232
Stove Kraft Limited
Restated Consolidated Financial Information
(Amount in Rupees Millions except for share data or as otherwise stated)
Note
No.
46
(i)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Current tax
In respect of current period / year - 3.64 3.64 4.60 -
In respect of prior period / year - - - 0.28 (5.37)
- 3.64 3.64 4.88 (5.37)
Deferred tax expense
Origination and reversal of temporary differences - - - - -
- - - - -
- 3.64 3.64 4.88 (5.37)
(ii)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
287.76 47.53 35.34 12.24 (125.55)
34.94% 34.94% 34.94% 34.94% 34.61%
100.54 16.61 12.35
4.28
-
- - 0.00
0.45
-
- - 0.00
(0.13)
-
(100.54) (12.97) (11.08) - -
- - - 0.28 (5.37)
- 3.63 1.27 4.88 (5.37)
(a)
(iii)
Net balance
April 1,
2020
Recognised
in profit or
loss
Recognised
in OCI
Net Deferred
tax asset
Deferred
tax liability
Deferred tax assets/ (liabilities)
Property, plant and equipment (383.90) 15.56 - (368.34) - -
Employee benefits 20.97 (1.37) - 19.60 - -
Provision for doubtful debts 34.37 2.18 - 36.55 - -
Other items 6.84 2.30 - 9.14 - -
Deferred tax assets/ (liabilities) (321.72) 18.67 - (303.05) - -
Set off tax losses/ Deferred tax assets not recognised 321.72 (18.67) - 303.05 - -
Net deferred tax assets (Liabilities) - - - - - -
Net balance
April 1,
2019
Recognised
in profit or
loss
Recognised
in OCI
Net Deferred
tax asset
Deferred
tax liability
Deferred tax assets/ (liabilities)
Property, plant and equipment (379.60) (43.91) - (423.51) - -
Employee benefits 15.71 2.49 - 18.20 - -
Provision for doubtful debts 26.99 3.23 - 30.22 - -
Other items 5.66 0.01 - 5.67 - -
Deferred tax assets/ (liabilities)
(331.24)
(38.18)
-
(369.42)
-
-
Set off tax losses/ Deferred tax assets not recognised 331.24 38.18 - 369.42 - -
Net deferred tax assets (Liabilities) - - - - - -
Unused tax losses not recognised as deferred tax assets
Different tax rates used for long-term capital gains
For the year ended
Movement in deferred tax balances
For the half year ended September 30, 2019Particulars
For the year ended
Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate:
Total income tax expense recognised in the statement of profit and loss
For the half year ended Particulars
The tax rate used in the reconciliations above is the corporate tax rate payable by corporate entities in India on taxable profits under the Indian tax law.
The tax expense recognised for the period / years mentioned above pertains to Stovekraft India, a partnership firm. The actual tax expense of the
Company is zero considering the unabsorbed tax losses and depreciation.
Income tax recognised in the statement of profit and loss
Adjustments recogised in the current period/ year in relation to current tax of
prior years
Particulars For the half year ended September 30, 2020
Notes to Restated Consolidated Financial Information
Restated Consolidated Statement of Tax Summary
Income tax recognised in the statement of profit and loss
For the half year ended Particulars
Expenses that are not deductible in determining taxable profit
Tax effect of:
Tax using the Company’s domestic tax rate (Refer Note (a) below)
Company’s domestic tax rate
Profit before tax
233
Net balance
April 1,
2019
Recognised
in profit or
loss
Recognised
in OCI
Net Deferred
tax asset
Deferred
tax liability
Deferred tax assets/ (liabilities)
Property, plant and equipment (379.60) (4.30) - (383.90) - -
Employee benefits 15.71 5.26 - 20.97 - -
Provision for doubtful debts 26.99 7.38 - 34.37 - -
Other items 5.66 1.18 - 6.84 - -
Deferred tax assets/ (liabilities) (331.24) 9.52 - (321.72) - -
Set off tax losses/ Deferred tax assets not recognised 331.24 (9.52) - 321.72 - -
Net deferred tax assets (Liabilities) - - - - - -
Net balance
April 1,
2018
Recognised
in profit or
loss
Recognised
in OCI
Net Deferred
tax asset
Deferred
tax liability
Deferred tax assets/ (liabilities)
Property, plant and equipment (382.62) 3.02 - (379.60) - -
Employee benefits 13.63 2.08 - 15.71 - -
Provision for doubtful debts 43.04 (16.05) - 26.99 - -
Other items 3.75 1.91 - 5.66 - -
Deferred tax assets/ (liabilities)
(322.20)
(9.04)
-
(331.24)
-
-
Set off tax losses/ Deferred tax assets not recognised 322.20 9.04 - 331.24 - -
Net deferred tax assets (Liabilities) - - - - - -
Net balance
April 1,
2017
Recognised
in profit or
loss
Recognised
in OCI
Net Deferred
tax asset
Deferred
tax liability
Deferred tax assets/ (liabilities)
Property, plant and equipment (378.93) (3.69) - (382.62) - -
Employee benefits 11.46 2.17 - 13.63 - -
Provision for doubtful debts 32.73 10.31 - 43.04 - -
Other items 2.64 1.11 - 3.75 - -
Deferred tax assets/ (liabilities)
(332.10)
9.90
-
(322.20)
-
-
Set off tax losses/ Deferred tax assets not recognised 332.10 (9.90) - 322.20 - -
Net deferred tax assets (Liabilities) - - - - - -
(iv)
30-Sep-20 30-Sep-19 31-Mar-20 31-Mar-19 31-Mar-18
Difference between book value and tax base of Property, plant and equipment (1,054.22) (1,212.10) (1,098.73) (1,086.45) (1,105.58)
Disallowance relating to employee benefits 56.10 52.08 60.01 44.95 39.37
Provision for doubtful debts 104.61 86.49 98.38 77.26 124.36
Others 26.16 16.24 19.57 16.19 10.84
Unabsorbed depreciation and tax losses 1,459.69 1,534.80 1,546.02 1,587.62 1,721.14
Net unrecognized timing differences
592.34 477.51 625.25 639.57 790.13
Tax impact 206.96 166.84 218.46 223.47 273.45
(v)
(vi)
(vii)
No deferred tax adjustments were considered necessary to be recognised in respect of timing differences associated with investments in partnership
firms.
No deferred tax adjustments were required in respect of amounts recognised in Other Comprehensive Income in view of the nature of items included
therein and the availability of unabsorbed tax losses (including tax depreciation)
The Group has a net deferred tax asset with respect to certain timing differences. These timing difference mainly relates to carried forward business
losses, unabsorbed depreciation and as a matter of prudence, the Group has not recognised deferred tax asset on these timing differences (Refer note 42).
Particulars For the year ended March 31, 2019
Particulars For the year ended March 31, 2018
For the year ended
Unrecognized timing differences and tax losses and tax depreciation
Particulars For the year ended March 31, 2020
For the half year ended Particulars
234
235
OTHER FINANCIAL INFORMATION
The accounting ratios required under Clause 11 of Part A of Schedule VI of the SEBI ICDR Regulations are given below:
Particulars
For the six
month period
ended September
30, 2020*
For the six month
period ended
September 30,
2019*
Fiscal
2020
Fiscal
2019
Fiscal
2018
Basic Earnings/ (loss) per Equity Share (in ₹)
(Refer Note 1)
11.64
1.77
1.28
0.33
(6.35)
Diluted Earnings/ (loss) per Equity Share (in ₹)
(Refer note 2)
11.64
1.77
1.28
0.33
(6.35)
Return on Net Worth (%) (Refer to note 3)
N.M.
N.M.
N.M.
N.M.
N.M.
Net Asset Value Per Equity Share (in ₹) (Refer
Note 4)
(12.11)
(23.88)
(24.35)
(25.87)
(95.29)
EBITDA (in ₹ million) (Refer note 5)
450.63
187.55
337.92
298.22
99.72
*Not annualised
Notes: The ratios have been computed as under:
1. Basic EPS (in ₹) = Net profit, after tax, as restated for the year/ period, attributable to equity shareholders/ weighted average number of equity
shares outstanding during the year/ period. The EPS Calculation has been done in accordance with Indian Accounting Standard – 33 “Earnings
per Share” prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as
amended, (“Ind AS”) and other accounting principles generally accepted in India
2. Diluted EPS (in ₹) = Net profit, after tax, as restated for the year/ period, attributable to equity shareholders/ weighted average number of dilutive
equity shares outstanding during the year/ period. The EPS Calculation has been done in accordance with Indian Accounting Standard – 33
“Earnings per Share prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules,
2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India
3. Return on Net Worth Ratio = Net profit after tax, as restated for the year/ period, attributable to equity shareholders/ net worth (excluding
revaluation reserve), as restated, at the end of the year/ period.
4. Net assets value per equity share (in ₹) = Net Asset Value, as restated, at the end of the period/ year/ number of equity shares outstanding at the
end of the year/ period
5. EBITDA = Revenue from operations – (cost of materials consumed + excise duty + purchases of stock-in-trade + Changed in inventories of
finished goods, stock-in-trade and work-in-progress + Employee benefits expenses+ other expenses), unless specifically stated
Accounting and other ratios shall be based on the financial information derived from the Restated Financial Statements.
6. N.M. = Not Meaningful
The accounting ratios set out below have been derived from the Restated Financial Statements and as adjusted for the
conversion of CCDs, reclassification of Class A Equity Shares and allotment of Equity Shares pursuant to the ESOPs
exercised:
Particulars
For the six
month
period
ended
September
30, 2020
For the six
month
period
ended
September
30, 2019
Fiscal
2020
Fiscal
2019
Fiscal
2018
A.
Adjusted Basic Earnings/ (loss) per Equity Share (in ₹) (Refer
note A)
9.57
1.46
1.05
0.27
(4.95)
B.
Adjusted Diluted Earnings/ (loss) per Equity Share (in ₹)
(Refer notes B)
9.57
1.46
1.05
0.27
(4.95)
C.
Return on Adjusted Net Worth (%) (Refer note C)
18.43
3.45
2.51
0.60
N.M.
D.
Adjusted Net Asset Value Per Equity Share (in ₹) (Refer note
D)
51.89
42.22
41.84
40.59
2.44
E.
EBITDA (₹ in million) (Refer note E)
450.63
187.55
337.92
298.22
99.72
Note A: Adjusted Earnings per Share (EPS) – Basic
Particulars
For the six
month
period
ended
September
30, 2020
For the six
month
period
ended
September
30, 2019
For the
year ended
March 31,
2020
For the
year ended
March 31,
2019
For the
year ended
March 31,
2018
(i)
Restated profit/(loss) after tax attributable to owners of the
Company (₹ in million)
287.73
43.82
31.6
7.33
(120.00)
(ii)
Adjusted weighted average no. of equity shares outstanding
(no. of shares)
3,0,080,631
30,080,631
30,080,631
27,291,848
24,264,004
Face value per share (₹)
10.00
10.00
10.00
10.00
10.00
Adjusted Basic Earnings per share (i)*10^6/ (ii) (in ₹)
(Refer Notes 1, 2, 3 & 4)
9.57
1.46
1.05
0.27
(4.95)
236
Note B: Adjusted Earnings per Share (EPS) – Diluted
Particulars
For the six
month
period
ended
September
30, 2020
For the six
month
period
ended
September
30, 2019
For the
year ended
March 31,
2020
For the
year ended
March 31,
2019
For the
year ended
March 31,
2018
(i)
Restated Net profit/(loss) after tax attributable to owners of the
Company (₹ in million)
287.73
43.82
31.6
7.33
(120.00)
(ii)
Adjusted weighted average no. of equity shares outstanding for
Diluted EPS (no. of shares)
30,080,631
30,080,631
30,080,631
27,291,848
24,264,004
Face value per share (₹)
10.00
10.00
10.00
10.00
10.00
Adjusted Diluted Earnings per share (i)*10^6/ (ii) (in ₹ )
(Refer Notes 1, 2, 3 & 4)
9.57
1.46
1.05
0.27
(4.95)
Note C: Computation on Return on Adjusted Net Worth (%)
(₹ in million, except percentages)
Particulars
For the six
month period
ended
September 30,
2020
For the six
month period
ended
September
30, 2019
For the
year ended
March 31,
2020
For the
year ended
March 31,
2019
For the
year ended
March 31,
2018
(i)
Restated Net profit/(loss) after tax attributable to
owners of the Company
287.73
43.82
31.60
7.33
(120.00)
Adjusted Net-worth:
- Equity share capital
247.17
247.17
247.17
247.17
189.00
- Equity share capital allotted up on conversion
compulsorily convertible debentures
52.78
52.78
52.78
52.78
52.78
- Equity share capital allotted up on exercise of
employee stock options
0.86
0.86
0.86
0.86
0.86
(ii)
Total adjusted equity share capital
300.81
300.81
300.81
300.81
242.64
Other Equity
- Cash flow hedging reserve
-
-
-
-
(0.05)
- Securities Premium
1,094.37
1,094.37
1,094.37
1,094.37
-
- Securities Premium on equity share capital allotted
up on conversion compulsorily convertible debentures
1,794.69
1,794.69
1,794.69
1,794.69
1,794.69
- Securities Premium on equity share capital allotted
upon exercise of employee stock options
12.00
12.00
12.00
12.00
12.00
- Share options outstanding account
10.19
7.03
8.61
-
-
- Retained Earnings
(1,651.16)
(1,938.86)
(1,951.96)
(1,981.00)
(1,989.97)
(iii)
Total adjusted other equity
1,260.09
969.23
957.71
920.06
(183.33)
(iv)
Adjusted Net-worth
1,560.90
1,270.04
1,258.52
1,220.87
59.31
Return on adjusted net-worth % -(i)/ (iv) *100
18.43
3.45
2.51
0.60
NM
Note D: Composition of Adjusted Net Asset Value per Equity Share
(₹ in million, except number of shares and per share data)
Particulars
For the six month
period ended
September 30,
2020
For the six month
period ended
September 30,
2019
For the
year ended
March 31,
2020
For the
year ended
March 31,
2019
For the
year ended
March 31,
2018
(i)
Adjusted number of equity shares outstanding
at the end of year/period
30,080,631
30,080,631
30,080,631
30,080,631
24,264,014
Adjusted Net Asset Value:
- Equity share capital
247.17
247.17
247.17
247.17
189.00
- Equity share capital allotted up on conversion
compulsorily convertible debentures
52.78
52.78
52.78
52.78
52.78
- Equity share capital allotted upon exercise of
employee stock options
0.86
0.86
0.86
0.86
0.86
(ii)
Total adjusted equity share capital
300.81
300.81
300.81
300.81
242.64
Other Equity
- Cash flow hedging reserve
-
-
-
-
(0.05)
- Securities Premium
1,094.37
1,094.37
1,094.37
1,094.37
-
- Securities Premium on equity share capital
allotted up on conversion compulsorily
convertible debentures
1,794.69
1,794.69
1,794.69
1,794.69
1,794.69
- Securities Premium on equity share capital
allotted up on exercise of employee stock
options
12.00
12.00
12.00
12.00
12.00
- Share options outstanding account
10.19
7.03
8.61
-
-
- Retained Earnings
(1,651.16)
(1,938.86)
(1,951.96)
(1,981.00)
(1,989.97)
(iii)
Total adjusted other equity
1,260.09
969.23
957.71
920.06
(183.33)
(iv)
Adjusted Net Asset Value (ii) + (iii)
1,560.90
1,270.04
1,258.52
1,220.87
59.31
237
Adjusted Net Asset Value Per Equity Share (iv
)*10^6/ (i)
51.89
42.22
41.84
40.59
2.44
Note E: Statement showing Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) as per Restated Financial Statements
(₹ in million)
Particulars
For the six month
period ended
September 30, 2020
For the six month
period ended
September 30, 2019
For the year
ended March
31, 2020
For the year
ended March
31, 2019
For the year
ended March
31, 2018
(i)
Revenue from operations
3,288.36
3,155.07
6,698.61
6,409.38
5,289.52
Less:
(ii)
Cost of materials consumed
1,600.45
1,526.30
3,232.38
3,175.40
2,411.19
(iii)
Purchase of stock in trade
614.78
722.39
1,287.63
1,326.00
1,203.26
(iv)
Changes in inventories of
finished goods, work-in-
progress and stock-in-trade
(70.05)
(196.72)
(101.33)
(114.78)
(78.96)
(v)
Excise duty
-
-
-
-
53.33
(vi)
Employee benefits expenses
312.50
393.32
820.11
697.95
590.87
(vii)
Other expenses
380.05
522.23
1,121.90
1,026.59
1,010.11
EBITDA {(i) – [(ii) + (iii) + (iv)
+ (v) + (vi) + (vii)]}
450.63
187.55
337.92
298.22
99.72
Notes: The ratios have been computed as under:
1. The EPS Calculation has been done in accordance with Indian Accounting Standard – 33 “Earnings per Share” prescribed under section 133 of
the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting
principles generally accepted in India
2. Equity Shares that are issued and allotted upon the conversion of CCDs and exercise of ESOPs are included in the calculation of basic earnings
per share
3. In the computation of diluted EPS 727,253 out of 813,000 options, which have not been not granted or vested or exercised, have not been considered
as part of outstanding options at the end of the year/period, in line with Indian Accounting Standard 33 -"Earning per Share”, as the fair value of
equity share is less than the exercise price
4. Adjusted Basic and Adjusted Diluted EPS and other numbers for the half year ended September 30, 2020 and September 30, 2019 are not
annualised.
5. N.M. = Not Meaningful
6. Accounting and other ratios shall be based on the financial information derived from the Restated Financial Statements. Including adjustments
made for the conversion of CCDs and Allotment of ESOPs, to the extent applicable
In accordance with the SEBI ICDR Regulations the audited standalone financial statements of the Company for March 31,
2020, March 31, 2019 and March 31, 2018, (collectively, the “Audited Financial Statements”) are available on our
website at https://stovekraft.com/investors/
Our Company is providing a link to this website solely to comply with the requirements specified in the SEBI ICDR
Regulations. The Audited Financial Statements do not constitute, (i) a part of this Red Herring Prospectus; or (ii) a
prospectus, a statement in lieu of a prospectus, an offering circular, an offering memorandum, an advertisement, an offer
or a solicitation of any offer or an offer document or recommendation or solicitation to purchase or sell any securities under
the Companies Act, the SEBI ICDR Regulations, or any other applicable law in India or elsewhere. The Audited Financial
Statements should not be considered as part of information that any investor should consider subscribing for or purchase
any securities of our Company and should not be relied upon or used as a basis for any investment decision. None of our
Company or any of its advisors, nor BRLMs or the Selling Shareholders, nor any of their respective employees, directors,
affiliates, agents or representatives accept any liability whatsoever for any loss, direct or indirect, arising from any
information presented or contained in the Audited Financial Statements, or the opinions expressed therein.
238
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion is intended to convey management’s perspective on our financial condition and results of operations
for the six month periods ended September 30, 2020, September 30, 2019 and Fiscals 2020, 2019 and 2018. You should read the
following discussion and analysis of our financial condition and results of operations in conjunction with our Restated Financial
Statements and the sections entitled “Summary of Financial Information” and “Financial Statements” on pages 48 and 173,
respectively. This discussion contains forward-looking statements and reflects our current views with respect to future events
and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in
the section entitled “Risk Factors” on page 19. Actual results could differ materially from those contained in any forward-looking
statements and for further details regarding forward-looking statements, kindly refer to the section entitled “Forward-Looking
Statements” on page 13. Unless otherwise stated, the financial information of our Company used in this section has been derived
from the Restated Financial Statements.
Our Fiscal year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular Fiscal year
are to the 12-month period ended March 31 of that year.
You should carefully consider all the information in this Red Herring Prospectus, including this section, “Risk Factors”,
“Industry Overview” and “Financial Statements” on pages 19, 89 and 173, respectively, before making an investment in the
Equity Shares. In this section, any reference to the “Company” “we”, “us” or “our” refers to Stove Kraft Limited, unless
otherwise specified. Unless otherwise stated, the financial information of our Company used in this section has been derived
from our Restated Financial Statement. Unless noted otherwise, some of the information in this section is obtained or extracted
from F&S Report on our request.
Overview
We are a kitchen solutions and an emerging home solutions brand. Further, we are one of the leading brands for kitchen appliances
in India, and are one of the dominant players for pressure cookers and amongst the market leaders in the sale of free standing
hobs and cooktops (Source: F&S Report, sponsored by our Company) We are engaged in the manufacture, trade and retail of a
wide and diverse suite of kitchen solutions under our Pigeon and Gilma brands, and propose to commence manufacturing of
kitchen solutions under the BLACK + DECKER brand, covering the entire range of value, semi-premium and premium kitchen
solutions, respectively. Our kitchen solutions comprise of cookware and cooking appliances across our brands, and our home
solutions comprise various household utilities, including consumer lighting, which not only enables us to be a one stop shop for
kitchen and home solutions, but also offer products at different pricing points to meet diverse customer requirements and
aspirations.
During the six month periods ended September 30, 2020 and September 30, 2019 and for Fiscals 2020, 2019 and 2018 our Pigeon
branded products contributed 76.90%, 80.86%, 86.20%, 81.24% and 86.89% to our overall sales, respectively and were amongst
the leading brands in the market for certain products such as free standing hobs, cooktops, non-stick cookware, LPG gas stoves
and induction cooktops (Source: F&S Report, sponsored by our Company). Similarly, during the six month periods ended
September 30, 2020 and September 30, 2019 and for Fiscals 2020, 2019 and 2018 our Gilma branded products contributed 5.43%,
2.36%, 2.54%, 3.75% and 5.58% to our overall sales, respectively and our BLACK + DECKER products contributed 1.50%,
2.37%, 2.70%, 2.67% and 0.88% to our overall sales, respectively. Our Gilma portfolio comprises chimneys, hobs and cooktops
across price ranges and designs. We believe we have been able to leverage the distribution network of our Pigeon branded
products, and their brand recall value to enter new product segments and markets. In 2016, we further diversified the Pigeon
brand by launching LED products under it and in 2019, we commenced manufacturing LED products at our Bengaluru Facility.
We maintain a continuous focus on the development of our brands, and invest significant resources towards their growth and
outreach. Further, our dedication to R&D, quality and customer satisfaction, our in-house servicing capabilities and our owned
maintenance and service network also contribute to the market perception of our brands and products.
Our flagship brands, Pigeon and Gilma, have enjoyed a market presence of over 15 years and enjoy a high brand recall amongst
customers for quality and value for money. Pigeon has been listed as one of the “India’s Most Admired Brands 2016” by White
Page International. As a result of our co-branding initiatives over eight years with LPG companies such as Indian Oil Corporation
Limited and Hindustan Petroleum Corporation Limited to utilize their sale and distribution channels, our Pigeon brand has
enjoyed a wide customer outreach and continues to have a high brand recall value. As on the date of this Red Herring Prospectus,
we manufacture and retail a wide and diverse range of affordable (value segment), quality products under our Pigeon brand,
including, inter alia, cookware, cooking appliances and household utilities (including consumer lighting). We currently offer a
wide range of products such as chimney, hobs and cooktops under the Gilma brand, which is targeted at the semi-premium
segment.
In addition to our established presence in the value and semi-premium segments through the Pigeon and Gilma brands, we also
entered the premium segment in 2016 pursuant to our exclusive BLACK + DECKER Brand Licensing Agreement with Stanley
Black & Decker, Inc. and The Black and Decker Corporation, which enables us to exclusively retail, and provide post-sales
services in relation to, a wide range of products such as blenders and juicers, breakfast appliances, small cooking appliances and
small domestic appliances (as defined under the BLACK + DECKER Brand Licensing Agreement) in India under the BLACK +
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DECKER brand, up to December 31, 2027. We are yet to commence manufacturing under the BLACK + DECKER brand. As of
September 30, 2020, we manufacture 79.75% of our Pigeon and Gilma branded products (in terms of number of units) at our
well-equipped and backward integrated manufacturing facilities at Bengaluru (Karnataka) and Baddi (Himachal Pradesh), which
enables us to control and monitor the quality and costs. Our Bengaluru Facility is spread over approximately 46 acres and five
guntas, out of which 30 acres and one gunta is available for future expansion. As of September 30, 2020, it had an installed annual
production capacity of 38.40 million units, with the capability to manufacture products in the pressure cookers, non-stick
cookware (roller coated and spray coated), LPG stoves, mixer grinders, LED bulbs, iron and induction cooktops categories.
Similarly, as of September 30, 2020, our Baddi Facility, focused on the Oil Company Business, which includes manufacturing
and co-branding of products with such Companies, (“OCB”) has an installed capacity of 2.80 million units per annum, with the
capability to manufacture products such as LPG stoves and inner lid cooker.
For certain product categories and sub-categories which do not enjoy economies of scale in India, we engage in sourcing from
third party OEMs predominantly from outside India. For sourced products, we have a dedicated team to undertake inspection and
ensure that such products are built to suit our specifications in terms of design and quality. For the six month periods ended
September 30, 2020, September 30, 2019 and Fiscals 2020 and 2019, such products which are retailed under our brands but
sourced from third-party manufacturers, such as chimneys, hobs, irons, air coolers, kettles, water bottles, flasks, chairs, rice
cookers, IR thermometers, pulse oximeters etc., contributed 19.20%, 29.80%, 27.60% and 31.60% to our turnover, respectively.
We have a separate distribution network for each of our Pigeon, Gilma and BLACK + DECKER brands. Further, there is a
separate distribution network for the Pigeon LED products. As of September 30, 2020, our manufacturing facilities in Bengaluru
and Baddi are well connected with nine strategically located C&F agents. Additionally, we have 651 distributors in 27 states and
five union territories of India and 12 distributors for our products that are exported as of September 30, 2020. As of September
30, 2020, the C&F agents and distributors are, in turn, connected with a dealer network comprising of over 45,475 retail outlets,
which are driven through a sales force of 566 personnel. We have entered into commercial arrangements with retail chains such
as Metro Cash And Carry India Private Limited for the sale of our Pigeon branded products from several of their retail outlets in
India. Further, we have also entered into agreements with e-commerce platforms such as Flipkart India Private Limited for the
sale of our products on their portals. Outside of India, we export our products which are manufactured by us to retail chains in
the United States of America and Mexico.
Our Gilma brand products are sold through exclusively branded outlets owned and operated by franchisees. As of September 30,
2020, there were 65 such stores spread across four states and 28 cities and towns, with a presence in the urban market in south
India. Gilma stores are designed to be ‘experience’ stores.
As of September 30, 2020, we have a dedicated service team of 118 personnel to address service calls for all our brands. Our
CRM software enables us to track customer requests, pre-installation and post-sales support to ensure customer satisfaction.
Specifically, for our Gilma products, we have a mobile application which enables our customers to register themselves and raise
requests for installation and post-sales services through the app. For Pigeon and BLACK + DECKER products, our customers
can reach our Company through toll free numbers, giving missed calls, sending us emails on the customer care ID, sending an
SMS to our dedicated number or through our dealers and trade partners.
Our Company was founded by our Promoter, Rajendra Gandhi, a first generation entrepreneur with over 21 years of experience
in the kitchen appliances industry. We believe that the sector-specific experience and expertise of our senior management has
contributed significantly in the growth of our Company.
For the six month periods ended September 30, 2020, September 30, 2019 and Fiscals 2020 and 2019 our revenue from operations
as per our Restated Financial Statements was ₹3,288.36 million, ₹3,155.07 million, ₹6,698.61 million and ₹6,409.38 million,
respectively, EBITDA was ₹450.63 million, ₹187.55 million, ₹337.92 million and ₹298.22 million, respectively and restated
profit for the period / year was, ₹287.76 million, ₹43.89 million, ₹31.70 million and ₹7.36 million, respectively. Between Fiscals
2018 and 2020, our EBITDA increased from ₹99.72 million in Fiscal 2018 to ₹337.92 million in Fiscal 2020. Our EBITDA stood
at ₹450.63 million for the six month period ended September 30, 2020.
Factors Affecting Our Results of Operations
Our business and results of operations are affected by a number of important factors that we believe will continue to affect our
business and results of operations in the future. These factors include the following:
Availability of raw materials
Our business operations are significantly dependent on local third parties at all stages of product development and sales. Further,
we import some of our raw material, such as glasses, aluminum, steel and glass lids from foreign suppliers. Our principal raw
materials, being aluminum, aluminum derivatives and steel, are sourced from third party suppliers, and purchased on a purchase
order basis. Change in prices of aluminium and steel in the domestic and international markers impact our raw material costs.
We also source certain equipment and machinery, such as roller coating lines and channel making machine of LPG unit from off-
shore suppliers. In the event of a discontinuation or closure of the foreign suppliers for these equipments, we may not be able to
source such equipment from local sources which may lead to increase in production costs and consequently affect the pricing of
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our products. Further, any adverse fluctuation in foreign exchange rates will in turn impact the prices of the raw materials and
our operating margins, results of operations and financial condition
We source our raw materials on the basis of purchase orders, and do not have long term contracts with our raw material suppliers.
We depend on a limited number of raw material suppliers for all of our raw material requirements. There may be an unforeseen
shortage of raw materials in the future which may impact our results of operations.
Dependence on third parties for distribution of our products
We are dependent on third parties in relation to our distribution and sales. All our products are distributed and sold through third
party retail stores and other channels of retail, over which we have limited control. For instance, while we enter into agreements
with C&F agents and distributors in the normal course of business, such agreements are typically not long-term contracts. As of
September 30, 2020, we have entered into agreements with nine C&F Agents. Further, the sale of our Gilma products is
exclusively undertaken from Gilma branded franchisee stores. Over the last three Fiscals, we have also reduced our dependency
on our co-branding initiatives with LPG companies.
We constantly seek to grow our product reach to under-penetrated geographies, increase the penetration of our products in
markets in which we are currently present and widen the portfolio of our products available in those markets by growing our
distribution network. Our success is dependent on our ability to successfully appoint new distributors to expand our network and
effectively manage our existing distribution network. Further, we may also face disruptions in the delivery of our products for
reasons beyond our control, including poor handling by distributors of our products, transportation bottlenecks, natural disasters
and labour issues, which could lead to delayed or lost deliveries.
Seasonality of business
Our business and the kitchen solutions industry in general is subject to seasonality. Generally, we witness an increase in sales in
the second half of the Fiscal and sales generally decline during the first quarter. Our business is also affected by certain festivals
which lead to an increase in our sales and by retailers reducing their purchases from us in first quarter of a particular Fiscal. As
a result, comparisons of our sales and operating results over different quarterly periods during the same financial year may not
necessarily be meaningful.
Changing consumer preferences
The kitchen appliances and kitchen cookware market in India is evolving and consumers may be tempted to shift their choices
and preferences when new products are launched or various marketing and pricing campaigns of different brands are introduced.
Our future growth depends on availability of, the state of the credit markets, consumer credit, and general economic sentiment.
While we believe our current products are in line with changing consumer preferences, our growth would be dependent on our
ability to respond to such changing consumer preferences more effectively and successfully. The success of our products depends
on our ability to innovate our product portfolio in line with the technological developments in the kitchen solutions industry and
on the basis of shifts in consumer preferences.
Competition
The kitchen cookware appliance business and our associated retail business with Gilma operates in a highly competitive
environment. We compete with other retailers that market products similar to ours. We compete with national businesses that
utilize a similar retail store strategy, as well as local unorganized kitchen cookware appliance manufacturers. Many of our
competitors may have substantially greater financial and other resources and may be better established with greater brand
recognition than us.
The expansion of our business in existing and new markets is dependent on our ability to introduce distinctive brands and products
that differentiate us from our competitors. In addition, significant increase in advertising expenditures and promotional activities
by our competitors may require us to similarly increase our marketing expenditure for our business and engage in effective pricing
strategies.
Our Critical Accounting Policies (as per our Restated Financial Statements)
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised net of sales tax / goods
and service tax.
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following
conditions are satisfied.
• our Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
241
• our Company retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the Company; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Government incentives are accrued for based on fulfilment of eligibility criteria for availing the incentives and when there is no
uncertainty in receiving the same.
Sales of goods that result in discount vouchers/coupons/loyalty points for customers are accounted for as multiple element
revenue transactions and the fair value of the consideration received or receivable is allocated between the sale of goods and the
discount vouchers/coupons/loyalty issued. The consideration allocated to the discount vouchers/coupons/loyalty points is
measured by reference to their fair value. Such consideration is not recognised as revenue at the time of the initial sale transaction
– but is deferred and recognised as revenue when the discount vouchers/coupons/loyalty points are redeemed and the Company's
obligations have been fulfilled.
Effective April 1, 2018, the Company adopted IND AS 115, ‘Revenue from Contracts with Customers’ using the modified
retrospective method. In accordance with this, the comparatives have not been retrospectively adjusted and no material impact
was recognised.
Revenue from sale of goods is recognised when control of the products being sold is transferred to our customer and when there
are no longer any unfulfilled obligations.
The performance obligations in the contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance
depending on customer terms.
Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume
rebates, loyalty benefits and any taxes or duties collected on behalf of the government such as goods and services tax, etc.
Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only recognised to the extent
that it is highly probable a significant reversal will not occur.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's
net carrying amount on initial recognition.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of
property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other
taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the
asset ready for its intended use, other incidental expenses.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in
statement of profit and loss.
Depreciation on property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in
Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets
has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset,
the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties
and maintenance support, etc. Individual assets costing less than ₹5,000 are depreciated in full in the year of purchase.
Asset
Useful life in years
Leasehold Improvements
3-5 years, or over the lease period, whichever is lower
Office Equipment's
5 Years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective basis.
Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The
242
estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
The useful lives of intangible assets that is considered for amortization of intangible assets are as follows:
Intangible Asset
Useful life in years
Technical know how
5 Years
Computer Software
6 Years
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains
or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognised in statement of profit and loss when the asset is derecognised.
Inventories
Inventories are valued at the lower of weighted average cost and the net realizable value. Cost includes all charges in bringing
the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
Financial Instruments
Financial assets and financial liabilities are recognised when our Company becomes a party to the contractual provisions of the
instruments.
Foreign Currency transactions and translations
The functional currency of our Company is Indian Rupee (₹).
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. At the end of each
reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-
monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated.
Exchange differences on monetary items are recognised in statement of profit and loss in the period in which they arise.
Provisions and Contingent Liabilities
A provision is recognised when our Company has a present obligation as a result of past events and it is probable that an outflow
of resources will be required to settle the obligation in respect of which a reliable estimate can be made. The amount recognised
as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time
value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent assets are not recognised in the financial statements.
Principal Components of our Statement of Profit and Loss
The following descriptions set forth information with respect to the key components of our Restated Financial Statements.
Our Revenue
Revenue from Operations
Our revenue from operations consists of sale of products (including excise duty) and other operating revenue. Sale of products
(including excise duty) primarily consists of sale of cookware and cooking appliances across our brands, and our home solutions
comprise various household utilities, including consumer lighting under the Pigeon, Gilma and BLACK+DECKER brands which
are either manufactured or traded by us.
Our other operating revenue consist of sale of scrap, duty drawback and mould development charges.
Other Income
The key components of our other income are liabilities earlier provided by us but are reversed now, interest income from banks
on deposits, fair value changes in derivative instruments, gain on financial instruments designated as FVTPL, net gain on foreign
243
currency transactions, income tax refunds, profit on sale of property, plant and equipment, government grants and miscellaneous
income.
Our Expenditure
Our expenses primarily consist of the following:
Cost of materials consumed primarily consists of consumption of raw materials, primarily aluminum, aluminum
derivatives, paints, wires, bakelite powder, packing material for products manufactured by us;
Purchases of stock in trade consists of cost of procurement of traded products, primarily LED lights, water bottle, flask,
electric kettle, chimney, iron and copper for our Pigeon brand and products under BLACK + DECKER brand;
Changes in inventories of finished goods, work-in-progress and stock-in-trade (increase) / decrease are an adjustment
of the opening and closing stock of finished goods, work-in-progress and stock-in-trade at the end of the Fiscal;
Excise duty is the excise duty paid to the government on the manufacture of our products. Due to the implementation of
GST, excise duty was payable till June 30, 2017 for Fiscal 2018;
Employee benefit expense consists of salaries and wages, contribution to provident and other funds, gratuity expense,
share based payments to employees and staff welfare expenses;
Depreciation and amortisation expenses comprises of depreciation expenses for all existing and new property, plant and
equipment added during the year. Amortisation expenses primarily includes amortisation of intangible assets;
Finance costs includes interest expense on borrowings, lease liability, interest paid to others, provisions and other
borrowing costs which include interest on statutory dues and bank charges and other processing charges; and
Other expenses primarily includes expenses on freight and forwarding, business promotion & advertisement expenses,
insurance, printing and stationery, repairs and maintenance, rentals (including lease rentals), communication, legal and
professional fees, sales commission, loss on financial liability designated as FVTPL, travelling and conveyance, power
and fuel, provision for doubtful trade and other receivables, loans and advances (net),balance written off and job work
charges and miscellaneous expenses.
Tax (Expenses) / Benefit
Elements of our tax (expenses) / benefit are as follows:
Deferred tax: Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Other Comprehensive Income
The other comprehensive income consists of (i) items that will not be reclassified to the statement of profit or loss which consists
of remeasurement of the net defined benefit plans – gains / (losses); and (ii) all the items of income and expense that will be
reclassified to the statement of profit or loss which consists of fair value changes net of cash flow hedges.
Total Comprehensive Income / (loss)
Total comprehensive income / (loss) consists of profit / loss after tax for the year and other comprehensive income.
Our Results of Operations
The following table sets forth a breakdown of our restated consolidated results of operations for Fiscal 2020, 2019 and 2018, and
for the six month period ended September 30, 2020 and September 30, 2019, and each item as a percentage of our total income
for the periods indicated.
Particulars
Six month period ended
September 30, 2020
Six month period
ended September 30,
2019
Fiscal 2020
Fiscal 2019
Fiscal 2018
₹ in million
(%) of Total
Income
₹ in
million
(%) of
Total
Income
₹ in
million
(%) of
Total
Income
₹ in
millio
n
(%) of
Total
Income
₹ in
millio
n
(%) of
Total
Incom
e
244
Particulars
Six month period ended
September 30, 2020
Six month period
ended September 30,
2019
Fiscal 2020
Fiscal 2019
Fiscal 2018
₹ in million
(%) of Total
Income
₹ in
million
(%) of
Total
Income
₹ in
million
(%) of
Total
Income
₹ in
millio
n
(%) of
Total
Income
₹ in
millio
n
(%) of
Total
Incom
e
Revenue from
operations
3,288.36
99.80
3,155.07
99.39
6,698.61
99.55
6,409.
38
99.74
5,289.
52
98.95
Other income
6.73
0.20
19.26
0.61
30.53
0.45
16.60
0.26
56.33
1.05
Total income
3,295.09
100.00
3,174.33
100.00
6,729.14
100.00
6,425.
98
100.00
5,345.
85
100.00
Expenses
Cost of materials
consumed
1,600.45
48.57
1,526.30
48.08
3,232.38
48.04
3,175.
40
49.42
2,411.
19
45.10
Purchases of stock
in trade
614.78
18.66
722.39
22.76
1,287.63
19.14
1,326.
00
20.63
1,203.
26
22.51
Changes in
inventories of
finished goods,
work-in-progress
and stock-in-trade
(70.05)
(2.13)
(196.72)
(6.20)
(101.33)
(1.51)
(114.7
8)
(1.79)
(78.96
)
(1.48)
Excise duty
-
-
-
-
-
-
-
-
53.33
1.00
Employee benefits
expense
312.50
9.48
393.32
12.39
820.11
12.19
697.95
10.86
590.87
11.05
Finance cost
100.95
3.06
101.43
3.20
209.01
3.11
179.20
2.79
169.35
3.17
Depreciation &
amortisation
expenses
68.65
2.08
57.85
1.82
124.10
1.84
123.38
1.92
112.25
2.10
Other expenses
380.05
11.53
522.23
16.45
1,121.90
16.67
1,026.
59
15.98
1,010.
11
18.90
Total expenses
3,007.33
91.27
3,126.80
98.50
6,693.80
99.47
6,413.
74
99.81
5,471.
40
102.35
Restated Profit /
(Loss) before
exceptional items
and tax
287.76
-
47.53
35.34
-
12.24
0.19
(125.5
5)
(2.35)
Exceptional items
-
-
-
-
-
-
-
-
-
Restated Profit /
(Loss) before tax
287.76
8.73
47.53
1.50
35.34
0.53
12.24
0.19
(125.5
5)
(2.35)
Tax expense /
(benefit):
Current tax
expense
-
-
3.64
0.11
3.64
0.05
4.60
0.07
-
-
Current tax
expense relating
to prior year
-
-
-
-
-
-
0.28
0.00
(5.37)
(0.10)
Deferred tax
-
-
-
-
-
-
-
-
-
-
Net tax expense /
(benefit)
-
3.64
0.11
3.64
0.05
4.88
0.08
(5.37)
(0.10)
Restated Profit /
(Loss) after tax
for the period/
year
287.76
8.73
43.89
1.39
31.70
0.48
7.36
0.11
(120.1
8)
(2.25)
Other
Comprehensive
Income
Items that will not
be reclassified to
statement of profit
and loss
Remeasurements
of the defined
13.07
0.40
(1.68)
(0.05)
(2.56)
(0.04)
1.64
0.03
1.75
0.03
245
Particulars
Six month period ended
September 30, 2020
Six month period
ended September 30,
2019
Fiscal 2020
Fiscal 2019
Fiscal 2018
₹ in million
(%) of Total
Income
₹ in
million
(%) of
Total
Income
₹ in
million
(%) of
Total
Income
₹ in
millio
n
(%) of
Total
Income
₹ in
millio
n
(%) of
Total
Incom
e
benefit Plans -
Gains / (losses)
Items that will be
reclassified to
statement of profit
and loss
Fair value changes
on cash flow
hedges
-
-
-
-
-
0.05
0.00
1.24
0.02
Total Other
Comprehensive
Income/(Loss) for
the period/ year
13.07
0.40
(1.68)
(0.05)
(2.56)
(0.04)
1.69
0.03
2.99
0.06
Total restated
comprehensive
income / (loss)
for the period/
year
300,83
9.13
42.21
1.34
29.14
0.44
9.05
0.14
(117.1
9)
(2.19)
Six month period ended September 30, 2020 compared to six month period ended September 30, 2019
Total income: We recorded a total income of ₹3,295.09 million during the six month period ended September 30, 2020, an
increase of 3.80% over our total income of ₹3,174.33 million during the six month period ended September 30, 2019. This
increase was mainly due to the following:
• Revenue from operations: Our revenue from operations increased by 4.22% from ₹3,155.07 million during the six month
period ended September 30, 2019 to ₹3,288.36 million during the six month period ended September 30, 2020. This
increase was primarily due to the following factors:
o Increase in export Sales from ₹210.71 million to ₹588.73 million;
o Increase in ecommerce sales from ₹853.46 million to ₹1,272.88 million; and
o Increase in LED sales from ₹145.77 million to ₹216.46 million
• Other income: Our other income decreased by 65.05% from ₹19.26 million during the six month period ended
September 30, 2019 to ₹6.73 million during the six month period ended September 30, 2020. The decrease in other
income was primarily attributable to the lack of one time interest on income tax refund during the six month period
ended September 30, 2019.
• Total expenses: Our total expenses were ₹3,007.33 million during the six month period ended September 30, 2020, a
decrease of 3.82% over our total expenses of ₹3,126.80 million during the six month period ended September 30, 2019.
This decrease was mainly due to the following factors:
o Cost of materials consumed: Our cost of materials consumed totaled to ₹1,600.45 million during the six month
period ended September 30, 2020, an increase of 4.86% over ₹1,526.30 million during the six month period
ended September 30, 2019. The increase was due to increase in revenue from operations by 4.22%
o Purchase of stock in trade: Our purchase of stock in trade totaled to ₹614.78 million during the six month
period ended September 30, 2020, a decrease of 14.90% from ₹722.39 million during the six month period
ended September 30, 2019. The decrease was due to a decrease in revenue from traded goods from ₹935.97
million during the six month period ended September 30, 2019 to ₹626.51 million during the six months ended
September 30, 2020;
o Changes in inventories of finished goods, work-in-progress and stock-in-trade: There was an increase in
inventories of finished goods, work-in-progress and stock-in trade of ₹70.05 million during the six month
period ended September 30, 2020, as compared to ₹196.72 million during the six month period ended
September 30, 2019. This was primarily due to increase in raw materials, components, packing materials and
raw material in transit from ₹469.72 million during the six month period ended September 30, 2019 to ₹576.70
million during the six month period ended September 30, 2020. This increase is attributable to higher
manufacturing activity during the busy season. There was also a reduction in manufactured finished goods from
₹297.93 million to ₹217.90 million during the same period;
246
o Excise Duty: We did not pay any excise duty during six month period ended September 30, 2020 and for six
month period ended September 30, 2019;
o Employee benefits expense: Our employee benefit expense totaled ₹312.50 million during the six month period
ended September 30, 2020, a decrease of 20.55% over ₹393.32 million during the six month period ended
September 30, 2019. This decrease was primarily due to rationalization of white collar head count and
temporary reduction in employee benefit expenses resulting from the lockdown announced by the GoI on
account of the COVID-19 pandemic;
o Finance cost: Our finance cost totaled ₹100.95 million during the six month period ended September 30, 2020,
a decrease of 0.47% over our finance cost of ₹101.43 million during the six month period ended September 30,
2019. This decrease was primarily due to reduction in working capital borrowings as a result of net cash
generated from operating activities during the period ;
o Depreciation and amortisation expenses: Our depreciation and amortization expenses totaled to ₹68.65 million
during the six month period ended September 30, 2020, an increase of 18.67% over the same expenses during
the six month period ended September 30, 2019 totaling to ₹57.85 million. This increase was primarily due to
capitalization of plant and machinery and intangible assets.
o Other expenses: Our other expenses totaled ₹380.05 million during the six month period ended September 30,
2020, a decrease of 27.23% over other expenses of ₹522.23 million during the six month period ended
September 30, 2019. This decrease was primarily due to our decision to reduce job work charges, travelling
and conveyance amounts, expenses associated with business promotion and advertisement and miscellaneous
expenses due to the COVID-19 pandemic.
Restated Profit/(Loss) before tax: As a result of the factors outlined above, our profit before tax increased by 505.43% from
₹47.53 million during the six month period ended September 30, 2019 to ₹287.76 million during the six month period ended
September 30, 2020.
Tax expense / (benefit).
Current tax expense for the current year: We recorded a current tax expense of NIL during the six month period ended
September 30, 2020 as compared to a current tax expense of ₹3.64 million during the six month period ended September
30, 2019.
Current tax expense relating to prior year: We did not record any deferred tax during the six month period ended September 30,
2020 and the six months period ended September 30, 2019. Net tax expense / (benefit): As a result of the factors outlined above,
we recorded a net tax expense of NIL during the six month period ended September 30, 2020 as compared to a net tax benefit of
₹3.64 million during the six month period ended September 30, 2019.
Restated Profit/(Loss) for the period / year: As a result of the factors outlined above, our restated profit/ (loss) for six month
period ended September 30, 2020 totaled to ₹287.76 million during the six month period ended September 30, 2020 from a profit
after tax of ₹43.89 million during the six month period ended September 30, 2019.
Total Other Comprehensive Income for the period / year: We recorded other comprehensive profit of ₹13.07 million during the
six month period ended September 30, 2020, as compared to a total other comprehensive loss of ₹1.68 million during the six
month period ended September 30, 2019. This increase was primarily due to re-measurement of defined benefit plan.
Total restated comprehensive income for the period / year: As a result of the factors outlined above, our total comprehensive
income for six month period ended September 30, 2020 totaled to ₹300.83 million, as compared to a total comprehensive income
of ₹42.21 million during the six month period ended September 30, 2019.
Fiscal 2020 compared to Fiscal 2019
Total income: We recorded a total income of ₹6,729.14 million in Fiscal 2020, an increase of 4.72% over our total income of
₹6,425.98 million in Fiscal 2019. This increase was mainly due to the following:
• Revenue from operations: Our revenue from operations increased by 4.51% from ₹6,409.38 million in Fiscal 2019 to
₹6.698.61 million in Fiscal 2020. This increase was primarily due to the following factors:
o increase in revenue of Pigeon branded products across various channels of distribution;
o sales from ecommerce platforms increased from ₹1,275.20 million in Fiscal 2019 to ₹1,730 million in Fiscal
2020;
o sales from modern trade increased from ₹639.50 million in Fiscal 2019 to ₹830 million in Fiscal 2020;
247
o In accordance with its strategy of focusing on its brand business and progressively reducing our business with
governmental and quasi-governmental bodies, the Company reduced its sales from oil company business from
₹693.6 million in Fiscal 2019 to ₹200 million Fiscal 2020
• Other income: Our other income increased by 83.92% from ₹16.60 million in Fiscal 2019 to ₹30.53 million in Fiscal
2020. The increase in other income was primarily on account of one time interest on income tax refund of ₹11.07 million.
• Total expenses: Our total expenses were ₹6,693.80 million in Fiscal 2020, an increase of 4.37% over our total expenses
of ₹6,413.74 million in Fiscal 2019. This increase was mainly due to the following factors:
• Cost of materials consumed: Our cost of materials consumed totaled to ₹3,232.38 million in Fiscal 2020, an increase of
1.79% over ₹3,175.40 million in Fiscal 2019. The increase was due higher material consumption;
• Purchase of stock in trade: Our purchase of stock in trade totaled to ₹1,287.63 million in Fiscal 2020, a decrease of
2.89% over ₹1,326.00 million in Fiscal 2019. The decrease was due to decrease in revenue from traded products by
8.44% from ₹ 2,008.74 million in Fiscal 2019 to ₹ 1,839.23 million Fiscal 2020;
• Changes in inventories of finished goods, work-in-progress and stock-in-trade: There was an increase in inventories of
finished goods, work-in-progress and stock-in trade of ₹101.33 million in Fiscal 2020, as compared to ₹114.78 million
in Fiscal 2019. This was primarily due to increase in finished goods, work in progress and stock in trade from ₹618.20
million in Fiscal 2019 to ₹719.53 million in Fiscal 2020;
• Excise Duty: We did not pay any excise duty during Fiscal 2020 and Fiscal 2019;
• Employee benefits expense: Our employee benefit expense totaled ₹820.11 million in Fiscal 2020, an increase of 17.50%
over ₹697.95 million in Fiscal 2019. This increase was primarily due to increase in salaries and wages from ₹613.53
million in Fiscal 2019 to ₹726.17 million in Fiscal 2020, as a result of rise in both direct and indirect headcount and
salary revisions.
• Finance cost: Our finance cost totaled ₹209.01 million in Fiscal 2020, an increase of 16.64% over our finance cost of
₹179.20 million in Fiscal 2019. This increase was primarily due to an addition to the and higher utilization of both the
fund and non-fund based working capital facilities as well as the full year impact of interest on term loan availed in
Fiscal 2018
• Depreciation and amortisation expenses: Our depreciation and amortisation expenses totaled to ₹124.16 million in
Fiscal 2020, an increase of 0.63% over the same expenses in Fiscal 2019 totaled to ₹123.38 million. This increase was
primarily due to additions to property plant and equipment ₹253.26 million in Fiscal 2020.
• Other expenses: Our other expenses totaled ₹1,121.90 million in Fiscal 2020, an increase of 9.28% over other expenses
of ₹1,026.59 million in Fiscal 2019. This increase was primarily due to an increase in (i) power and fuel expenses by
₹12.96 million; (ii) travelling and conveyance costs by ₹21.55 million; (iii) rates and taxes by ₹6.07 million; (iv) business
promotion and advertisement expenses by ₹89.25 million; (v) allowances for doubtful trade and other receivables, net
loans and advances and balance written off by ₹18.23 million. Additionally, there was a reduction in sales commission
by ₹43.74 million and a reduction in net loss on foreign currency transaction and translation by ₹18.44 million.
Restated Profit/(Loss) before tax: As a result of the factors outlined above, our restated profit before tax increased by 188.73%
from ₹12.24 million in Fiscal 2019 to ₹35.34 million in Fiscal 2020
Tax expense / (benefit).
Current tax expense for the current year: We recorded a current tax expense of ₹3.64 million in Fiscal 2020 as compared
to a current tax expense of ₹4.60 million in Fiscal 2019.
Current tax expense relating to prior year: We recorded current tax expense relating to a prior year of NIL, during Fiscal
2020 as compared to current tax expense relating to prior year of ₹0.28 million in Fiscal 2019.
Deferred tax: We did not record any deferred tax in Fiscals 2020 and 2019.
Net tax expense / (benefit): As a result of the factors outlined above, we recorded a net tax expense of ₹3.64 million in Fiscal
2020 as compared to a net tax expense of ₹4.88 million in Fiscal 2019.
Restated Profit/(Loss) for the period / year: As a result of the factors outlined above, our profit after tax for Fiscal 2020 totaled
at ₹31.70 million in Fiscal 2020 from a profit after tax of ₹7.36 million in Fiscal 2019.
248
Total Other Comprehensive Income for the period / year: We recorded other comprehensive loss of ₹2.56 million in Fiscal 2020
as compared to a total other comprehensive income of ₹1.69 million in Fiscal 2019. This decrease was a result of gains/(losses)
from re-measurements of defined benefit plans.
Total restated comprehensive income for the period / year: As a result of the factors outlined above, our total comprehensive
income for Fiscal 2020 totaled to ₹29.14 million, as compared to a total comprehensive income of ₹9.05 million in Fiscal 2019.
Fiscal 2019 compared to Fiscal 2018
Total income: We recorded a total income of ₹6,425.98 million in Fiscal 2019, an increase of 20.21% over our total income of
₹5,345.85 million in Fiscal 2018. This increase was mainly due to the following:
• Revenue from operations: Our revenue from operations increased by 21.17% from ₹5,289.52 million in Fiscal 2018 to
₹6,409.38 million in Fiscal 2019. This increase was primarily due to the following factors:
o Our revenue from sale of products (including excise duty) increased by 20.89% from ₹5,252.46 million in
Fiscal 2018 to ₹6,349.96 million in Fiscal 2019. The following is a brand wise break up of our revenue from
sale of products (including excise duty):
Brand
Revenue from sale of products (including excise duty)
(₹ in million)
Percentage
increase /
(decrease)
Fiscal 2019
Fiscal 2018
Pigeon
5168.70
4,413.80
17.10%
Gilma
256.80
311.73
(17.62%)
BLACK + DECKER
179.3
49.41
362.88%
The increase in revenue from sale of products was primarily due to increase in volumes and revenue in all
product categories, namely cookware, cooktops and appliances under the Pigeon brand and small domestic
appliances in the Black & Decker brand. The revenue under the Gilma brand is lower than the previous fiscal
as our Company continues to restructure the business.
• Other operating revenue: Our other operating revenue increased by 60.33% from ₹37.06 million in Fiscal 2018 to ₹59.42
million in Fiscal 2019. This increase was primarily due to an increase in duty drawback from ₹6.98 million in Fiscal
2018 to ₹35.13 million in Fiscal 2019.
• Other income: Our other income decreased by 70.53% from ₹56.33 million in Fiscal 2018 to ₹16.60 million in Fiscal
2019. The other income during Fiscal 2018 was higher on account of a write-back of a tax liability, which was no longer
required.
• Total expenses: Our total expenses were ₹6,413.74 million in Fiscal 2019, an increase of 17.22% over our total expenses
of ₹5,471.40 million in Fiscal 2018. This increase was mainly due to the following factors:
• Cost of materials consumed: Our cost of materials consumed totaled to ₹3,175.40 million in Fiscal 2019, an increase
of 31.69% over ₹2,411.19 million in Fiscal 2018. The increase was due to an increase in revenues;
• Purchase of stock in trade: Our purchase of stock in trade totaled to ₹1,326.00 million in Fiscal 2019, an increase of
10.20% over ₹1,203.26 million in Fiscal 2018. The increase was due to an increase in the trading revenues;
• Changes in inventories of finished goods, work-in-progress and stock-in-trade: There was an increase in inventories of
finished goods, work-in-progress and stock-in trade of ₹114.78 million in Fiscal 2019, as compared to an increase of
₹78.96 million in Fiscal 2018. This was primarily due to an enhancement of the scale and level of operations;
• Excise Duty: We did not pay any excise duty during Fiscal 2019, as compared to the excise duty paid during Fiscal
2018, totaling to ₹53.33 million. This was on account of introduction of GST from July 2017, in place of excise duties;
• Employee benefits expense: Our employee benefit expense totaled ₹697.95 million in Fiscal 2019, an increase of 18.12%
over ₹590.87 million in Fiscal 2018. This increase was primarily due to new recruitments and salary increases;
• Finance cost: Our finance cost totaled ₹179.20 million in Fiscal 2019, an increase of 5.82% over our finance cost of
₹169.35 million in Fiscal 2018. This increase was primarily due to higher level of borrowings for working capital and
processing fee paid for new banking facilities;
• Depreciation and amortisation expenses: Our depreciation and amortisation expenses totaled ₹123.38 million in Fiscal
2019, an increase of 9.92% over depreciation and amortisation expenses of ₹112.25 million in Fiscal 2018. This increase
was primarily due to fresh capital expenditure incurred by our Company during Fiscal 2019;
249
• Other expenses: Our other expenses totaled ₹1,026.59 million in Fiscal 2019, an increase of 1.63% over other expenses
of ₹1,010.11 million in Fiscal 2018. This increase was primarily due to foreign currency realized and unrealized
transaction and transaction losses.
Tax expense / (benefit).
Current tax expense for the current year: We recorded a current tax expense of ₹4.60 million in Fiscal 2019 as compared
to a current tax expense of ₹NIL in Fiscal 2018.
Current tax expense relating to prior year: We recorded current tax expense relating to a prior year of ₹0.28 million,
during Fiscal 2019 as compared to current tax expense of ₹5.37 million in Fiscal 2018.
Deferred tax: We did not record any deferred tax in Fiscals 2020 and 2019.
Net tax expense / (benefit): As a result of the factors outlined above, we recorded a net tax expense of ₹4.88 million in Fiscal
2019 as compared to a net tax benefit of ₹5.37 million in Fiscal 2018.
Restated Profit/(Loss) for the period / year: As a result of the factors outlined above, our profit after tax for Fiscal 2019 totaled
at ₹7.36 million in Fiscal 2019 from a loss after tax of ₹120.18 million in Fiscal 2018.
Total Other Comprehensive Income for the period / year: We recorded other comprehensive income of ₹1.69 million in Fiscal
2019 as compared to a total other comprehensive income of ₹2.99 million in Fiscal 2018. This was primarily due to increase in
number of employees and workers.
Total restated comprehensive income for the period / year: As a result of the factors outlined above, our total comprehensive
income for Fiscal 2019 totaled to ₹9.05 million, as compared to a total comprehensive loss of ₹117.19 million in Fiscal 2018.
Liquidity and Capital Resources
Capital Requirements
For Fiscals 2020, 2019 and 2018, and for the six month period ended September 30, 2019 and September 30, 2020 we met our
funding requirements, including capital expenditure, satisfaction of debt obligations, investments, taxes, working capital
requirements and other cash outlays, principally with funds generated from operations and optimisation of operating working
capital, with the balance principally met using external borrowings from banks.
The following table sets forth information on cash and cash equivalents as at the dates indicated:
Particulars
As at
September
30, 2020
As at
September
30, 2019
As at March 31
2020
2019
2018
(₹ in million)
Cash and cash equivalents
52.90
61.02
150.06
285.24
4.00
The following table sets forth certain information concerning our cash flows for the periods indicated:
Particulars
Six month period
ended September
30, 2020
Six month
period ended
September 30,
2019
Fiscal 2020
Fiscal 2019
Fiscal
2018
(₹ inimillion)
Net cash generated from /(used) in
operating activities
496.68
(95.37)
155.78
131.72
113.04
Net cash generated from /(used) in
investing activities
(253.27)
(121.53)
(272.57)
(68.11)
(61.49)
Net cash generated from/(used) in
financing activities
(340.57)
(7.32)
(18.39)
217.63
(52.97)
Net Cash Flow from Operating Activities
For the six month period ended September 30, 2020, our net cash generated from operating activities was ₹496.68 million which
primarily comprised of operating cash profit before changes in working capital of ₹476.55 million, cash generated from reduction
in working capital of ₹23.47 million and net income paid of ₹3.34 million.
250
For the six month period ended September 30, 2019, our net cash used in operating activities was ₹95.37 million which primarily
comprised of operating cash profit before changes in working capital of ₹220.66 million, cash used for increase in working capital
of ₹360.21 million and net income tax refund received of ₹44.18 million.
For Fiscal 2020, our net cash flow generated from operating activities was ₹155.78 million which primarily from operating cash
profit before changes in working capital of ₹391.58 million, cash used for increase in working capital of ₹274.80 million and net
income tax refund received of ₹39.00 million.
For Fiscal 2019, our net cash flow from operating activities was ₹131.72 million which was primarily generated from reduction
of inventories.
For Fiscal 2018, our net cash flow from operating activities was ₹113.04 million which primarily comprised of (i) restated loss
before tax of ₹125.55 million which was adjusted for, primarily among other things, depreciation of ₹112.25 million, fair
valuation of compulsorily convertible debentures of ₹153.80 million and finance cost of ₹152.89 million partially offset by
liability no more required written back of ₹41.85 million; (ii) changes in working capital; and (iii) net income taxes (paid) / refund
received. Changes in working capital primarily included, inter-alia, increase in trade receivables of ₹247.93 million due to
increased sales and enhanced credit terms to modern retailers, ecommerce and distributors, increase in inventories of ₹325.11
million due to increase in traded products and higher inventory level of BLACK+DECKER products, increase in trade payables
of ₹343.34 million due to renegotiated payment terms and increase in import vendors due to increase in trading volumes. For
Fiscal 2018 no net income taxes (paid) / refund received were recorded in net cash flow from operating activities.
Net Cash Flow from Investing Activities
For the six month period ended September 30, 2020, our net cash used in investing activities was ₹253.27 million which primarily
consisted of investments in property, plant and equipment, primarily additions to the cooker line, LED including PCB, chopper
assembly, machining, moulding and building.
For the six month period ended September 30, 2019, our net cash used in investing activities was ₹121.53 million which primarily
comprised of expenditure towards new fixed assets, mainly in plant and machinery.
For Fiscal 2020, our net cash used in investing activities was ₹272.57 million which primarily comprised of investment in plant
and machinery of ₹155.67 million, in buildings of ₹10.23 million and in vehicles of ₹5.34 million.
For Fiscal 2019, our net cash used in investing activities was ₹68.11 million which primarily comprised of expenditure towards
new fixed assets, mainly plant and machinery.
For Fiscal 2018, our net cash used in investing activities was ₹61.49 million which primarily comprised of capital expenditure
on fixed assets (including capital advance) of ₹63.18 million.
Net Cash Flow from Financing Activities
For the six month period ended September 30, 2020, our Net cash used in financing activities was ₹340.57 million which primarily
comprised repayment of short term borrowings of ₹279.22 million and finance cost of ₹104.17 million.
For the six month period ended September 30, 2019, our net cash used in financing activities was ₹7.32 million which primarily
comprised of net repayment of long term borrowing of ₹34.52 million and net increase in working capital borrowings of ₹114.33
million and finance cost of ₹83.68 million.
For Fiscal 2020, our net cash flow from financing activities was ₹18.39 million which primarily comprised net repayment of long
term borrowings of ₹52.88 million, net increase in working capital borrowings of ₹215.86 million and finance cost of ₹174.42
million
For Fiscal 2019, our net cash flow from financing activities was ₹217.63 million which primarily comprised of working capital
term loans from banks.
For Fiscal 2018, our net cash used in financing activities was ₹52.97 million which primarily comprised of finance cost of ₹148.17
million offset by repayment of long term borrowings of ₹56.56 million and net increase in working capital borrowings of ₹26.76
million.
Capital Expenditures
Our capital expenditures over the years are mainly related to setting up new manufacturing facility at Bengaluru for the
manufacture of pressure cookers, press machines for roller coating and LPG units, channel forming machine for glass cooktops
and deployment of new hard anodized tanks, LED including PCB unit, chopper assembly, [machining] and moulding,
construction work for our new office building and other civil works.
251
The table below provides details of our net cash outflow on capital expenditures for the periods stated on a restated consolidated
basis.
Particulars
Six month period ended
September 30, 2020
Six month period ended
September 30, 2019
Fiscal 2020
Fiscal 2019
Fiscal 2018
(₹ in million)
Capital expenditure on
property, plant and
equipment (including
capital advance)
(251.07)
(111.15)
(260.79)
74.43
63.18
Planned Capital Expenditures
Our planned capital expenditures for Fiscal 2021 primarily relate to installation of new injection moulding machine, chopper
assembly, PCB plant, enhancement in production capacity of existing plants and expansion of the factory building.
The anticipated source of funding for our planned capital expenditures is combination of cash from our operations and financial
assistance from scheduled commercial banks and financial institutions. For further information, see “Objects of the Offer” on
page 72.
Indebtedness
As of November 30, 2020, we had fund and non-fund based borrowings. For further details see “Financial Indebtedness” on page
255.
Contractual Obligations
The table below sets forth, as of September 30, 2020, we had contractual obligations with definitive payment terms:
Particulars
As at September 30, 2020
Carrying value
Total
Less than 1
year
More than 1
year
(₹ in million)
Borrowings
3,142.94
3,142.94
2,936.02
206.92
Compulsorily convertible debentures
1,847.47
1,847.47
1,847.47
-
Other financial liabilities
238.98
238.98
164.93
74.05
Contingent Liabilities and commitment
As of September 30, 2020, we had the following contingent liabilities and commitments:
Particulars
AsatSeptember 30, 2020
(₹ in million)
Contingent liabilities
- Indirect tax matters under appeal
62.92
- Other disputed claims
2.68
- Direct tax matters under appeal
Nil
- Provident fund claims
9.39
- Tax liability towards pending C form
Nil
- Bank guarantee
Nil
Commitment
Estimated amount of contracts remaining to be executed on capital account and not provided for tangible
assets (net of advances)
177.45
Total
252.44
Our contingent liabilities may become actual liabilities. In the event that any of our contingent liabilities become non-contingent,
our business, financial condition and results of operations may be adversely affected. Furthermore, there can be no assurance that
we will not incur similar or increased levels of contingent liabilities in the current fiscal year or in the future.
Market Risks
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Group's
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
Commodity Price Risk
252
We are exposed to fluctuations in the price of aluminum, aluminum derivatives and steel. The market price of these commodities
fluctuate due to certain factors, such as government policy and level of demand and supply in the market and price movement
domestically and internationally. Therefore, fluctuations in the prices of aluminum, aluminum derivatives and steel may have a
significant effect on our business, results of operations and financial condition.
Interest Rate Risk
We have floating rate and marginal cost of fund based lending rate indebtedness with banks and thus are exposed to market risk
as a result of changes in interest rates. Upward fluctuations in interest rates increase the cost of both existing and new debt. We
monitor the movement of interest rates on an ongoing basis.
Foreign Exchange Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. We transact business primarily in Indian Rupees and our exports are in U.S. dollars. We also import traded
products from China designated in US Dollars and Chinese Yuan. As on the six month period ended September 30, 2020, the
amount of total traded products imported from China stood at ₹614.78 million which is 26.21% of the total purchases of the
Company which stood at ₹2,345.52 million. As a result, we have foreign currency trade payables and receivables and are therefore
exposed to foreign exchange risk. Certain of our transactions act as a natural hedge as a portion of both our assets and liabilities
are denominated in similar foreign currencies. For the remaining exposure to foreign exchange risk we adopt a policy of selective
hedging based on the risk perception of our management.
Liquidity risk
Liquidity risk is the risk that we will encounter difficulties in meeting the obligations associated with our financial liabilities that
are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, to the extent possible,
that we will have sufficient liquidity to meet our liabilities when they are due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to our reputation. We manage liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching
the maturity profiles of financial assets and liabilities.
Credit risk
We are exposed to credit risk from our operating activities, primarily from trade receivables. We typically extend credit terms of
30 days to our distributors and franchisees and 60 days to modern retail and e-commerce platforms. If the counterparties do not
pay promptly, or at all, we may have to make provisions for or write-off such amounts. However, as of September 30, 2020, our
OEM exports, e-commerce and certain general trade receivables are on channel finance program. As of March 31, 2020, 2019
and 2018 and for the six month period ended September 30, 2020 and September 30, 2019, our trade receivables on a restated
consolidated basis were ₹1,030.34 million, ₹896.56 million, ₹795.52 million, ₹1,036.25 million and ₹1,428.15 million,
respectively. As at Fiscals 2020, 2019 and 2018, and the six month period ended September 30, 2020 and September 30, 2019,
our trade receivables considered doubtful were ₹98.38 million, ₹77.26 million, ₹124.36 million, ₹121.82 million and ₹86.49
million, respectively.
Inflation Risk
In recent years, India has experienced relatively high rates of inflation. While we believe inflation has not had any material impact
on our business and results of operations, inflation generally impacts the overall economy and business environment and hence
could affect us.
Total turnover of each major industry segment in which our Company operated
We are engaged in the business of manufacturing and trading of kitchen appliances. For the purpose of reporting we operate as a
single segment under the provisions of Ind AS 108 'Operating Segments' as the nature of products, the production and distribution
process, class of customers and the regulatory environment is similar for all the segments.
Unusual or Infrequent Events or Transactions
Except as described in this Red Herring Prospectus, there have been no events or transactions to our knowledge that have in the
past or may in the future affect our business operations or financial performance which may be described as “unusual” or
“infrequent”.
253
Known Trends or Uncertainties
Other than as described in “Risk Factors” and this “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” on pages 19 and 238, respectively, to our knowledge there are no known trends or uncertainties that have or had
or are expected to have a material adverse impact on our revenues or income from continuing operations.
Future Relationships between Expenditure and Income
Other than as described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” on pages 19 and 238, respectively, to our knowledge there are no known factors which we expect will have a material
adverse impact on our operations or finances.
New Product or Business Segments
Other than as described in “Our Business” on page 119, there are no other business segments in which we operate / intend to
diversify.
Competitive Conditions
We expect competitive conditions in our industry to further intensify as new entrants emerge and as existing competitors seek to
emulate our business model and offer similar products. For further details, please refer to “Risk Factors” and “Our Business” on
pages 19 and 119, respectively.
Significant Developments after September 30, 2020
Other than the (i) conversion of 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI to 2,412,235 Equity
Shares and 1,879,122 Equity Shares, respectively; (ii) conversion of 1,197,770 Series B CCDs held by SCI-GIH to 986,790
Equity Shares; and (iii) reclassification of 5 Class A Equity Shares held by SCI and SCI-GIH, each to 5 Equity Shares,
each, there have been no material developments that have occurred since September 30, 2020 till the date of this Red
Herring Prospectus involving our Company, which (i) requires adjustments in the audited accounts for the period up to
September 30, 2020 or which (ii) materially and adversely affects, or is likely to affect, the Company's operations, trading
or profitability, or the value of its assets, or its ability to pay its material liabilities within the next 12 months on a
consolidated basis.
254
CAPITALISATION STATEMENT
The following table sets forth our Company’s capitalisation as at September 30, 2020, on the basis of our Restated Financial
Statements, and as adjusted for:
(i) conversion of the CCDs, reclassification of Class A Equity Shares and allotment of Equity Shares pursuant to the
ESOPs exercised; and
(ii) proposed Offer including the impact post conversion of the CCDs, reclassification of Class A Equity Shares and
the allotment of Equity Shares on exercise of ESOPs pursuant to the Board Resolution dated January 8, 2021
This table should be read in conjunction with the sections titled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations”, “Financial Statements” and “Risk Factors” on pages 238, 173 and 19, respectively.
(₹ in million, except financial ratios)
Particulars
Pre-Offer
as at
September
30, 2020
(A)
Adjustments for
conversion of the
CCDs, reclassification
of Class A Equity
Shares and allotment
of Equity Shares
pursuant to exercise of
ESOPs
2, 3, 4
(B)
Pre-Offer - As
adjusted for
conversion of the
CCDs, reclassification
of Class A Equity
Shares and allotment
of Equity Shares
pursuant to exercise of
ESOPs
(C) = (A) + (B)
As adjusted
for the
proposed
Offer
1
(i)
Current Borrowings
941.33
-
941.33
[●]
(ii)
Non-current Borrowings
(including current maturities of non-
current borrowings)
2,201.61
(1,847.47)
354.14
[●]
(iii)
Total Borrowings (iii) = (i) + (ii)
3,142.94
(1,847.47)
1,295.47
[●]
(iv)
Equity share capital
247.17
53.64
300.81
[●]
(v)
Other equity
(546.60)
1,806.69
1,260.09
[●]
(vi)
Equity attributable to owners of the
Company (vi) = (iv) + (v)
(299.43)
1,860.33
1,560.90
[●]
(vii)
Total Borrowings/ Equity attributable
to owners of the Company (vii) = (iii)/
(vi)
(10.50)
-
0.83
[●]
(viii)
Non-current Borrowings/ Equity
attributable to owners of the
Company (viii) = (ii)/ (vi)
(7.35)
-
0.23
[●]
Note 1 - The corresponding post Offer capitalisation data for each of the amounts given in the above table is not determinable at this stage pending the completion
of the Book Building Process and hence the same has not been provided in the above statement.
Note 2 - (i) 2,610,898 Series A CCDs and 2,280,886 Series B CCDs held by SCI have been converted into 2,412,235 and 1,879,122 Equity Shares, respectively;
and (ii) 1,197,770 Series B CCDs held by SCI-GIH have been converted to 986,790 Equity Shares, pursuant to a resolution of our Board of Directors dated
January 8, 2021
Note 3 - 5 Class A Equity Shares held by SCI and SCI-GIH, each, have been reclassified to 5 Equity Shares, each, pursuant to a resolution of our Board of
Directors dated January 8, 2021 and a special resolution passed by our Shareholders in their EGM dated January 9, 2021
Note 4 - Certain Eligible Employees of our Company have exercised a total of 85,747 options and a total of 85,747 Equity Shares have been allotted at ₹150 per
Equity Share, pursuant to a resolution of our Board of Directors dated January 8, 2021. The above statement is adjusted to effect the allotment of these 85,747
Equity Shares.
255
FINANCIAL INDEBTEDNESS
Our Company has availed loans in the ordinary course of business for the purposes of, inter alia, purchase/import of raw
materials, packing material, stores and spares and meeting working capital requirements. Our Promoters provide personal
guarantees in relation to these loans as and when required. For the Offer, our Company has obtained the necessary consents
required under the relevant loan documentations for undertaking activities, including, inter alia, for change in its capital
structure, change in its shareholding pattern, reconstitution of the board of directors and change or amendment to the
constitutional documents of our Company.
Pursuant to a resolution dated July 12, 2018 passed by our Shareholders, our Company is authorised to borrow any sum or sums
of money from time to time, with or without security and on such terms and conditions as our Board may deem fit, provided
the total amount of monies including money already borrowed by our Company (excluding temporary loans obtained from
bankers of our Company in the ordinary course of business) shall not at any time exceed the limit of ₹3,500 million, irrespective
of the fact that such aggregate amount of borrowings outstanding at any one time may exceed the aggregate for the time being
of the paid up capital of our Company and its free reserves not set apart for any specific purpose.
Set forth below is a brief summary of our aggregate borrowings as of November 30, 2020 on a consolidated basis:
Category of borrowings
Sanctioned amount (₹
in million)
Outstanding amount (₹ in
million) as on November 30, 2020
Term loans
459.70
316.90
Working Capital Facilities
*
Fund-based and non-fund based working capital
1,350.00
1,199.34
Vehicle Loan
18.06
12.97
Total
1,827.76
1,529.21
*
Working Capital Facilities typically include sub-limits for other facilities like Letter of Credit, Overdraft facility, cash credit, Guarantees, including others
Note: The details above have been certified by Mishra & Co., Chartered Accountants pursuant to certificate dated January 15, 2021.
Principal terms of the borrowings availed by us:
1. Interest: In terms of the loans availed by the Company, the interest rate is typically a spread between 10% and 12.50%
per annum including the base rate of a specified lender, as applicable. The spread varies among different loans.
2. Tenor: The tenor of the term loan availed by us is 60 months and the tenor of the cash credit facilities availed by is 12
months.
3. Security: In terms of our borrowings where security needs to be created, we are typically required to:
a) create security by way of hypothecation on our Company’s present and future book-debts;
b) create pari-passu charges with other lenders on some of our properties and plants and machinery;
c) create equitable mortgage over some of our properties; and
d) create charges on our movable and immovable assets including our equipment, machinery, etc.
Additionally, our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi, and our Director, Neha Gandhi, have
provided personal guarantees as security in relation to the facilities availed by us.
The details above are indicative and there may be additional requirements for creation of security under the various
borrowing arrangements entered into by us.
4. Re-payment: The working capital facilities are typically repayable on demand. However, in certain cases, our lenders
may have a right to modify or cancel the facilities without prior notice and require immediate repayment of all
outstanding amounts.
5. Penalty: The loans availed by our Company contain provisions prescribing penalties for delayed payment or default
in the repayment obligations or for diversion of short term funds to long term funds. These penalties typically range
from 1% p.a. to 2% p.a.
6. Prepayment and Pre-closure: Our Company may prepay part or full amount with notice and certain pre-payment
charges as may be applicable in accordance with the terms and conditions agreed upon with a specific lender. The
prepayment charge is typically 2% to 3% of the amount being prepaid. Further, our Company may also be subject to
pre-closure charge which typically varies from 2% to 5% of either outstanding and undisbursed amount, or the
sanctioned amount.
7. Events of Default: Borrowing arrangements entered into by our Company contain standard events of default,
including:
256
a) Change in capital structure or shareholding pattern of the borrower from current levels without prior
permission of the lender;
b) Change or amendment to the constitutional documents without the prior approval of the lender;
c) Creation of any further charge on the fixed assets of our Company without prior approval of the lender;
d) Violation of any term of the relevant agreement or any other borrowing agreement entered into by our
Company with the lender;
e) Transfer of the controlling interest or drastic changes in the management set-up including the resignation of
the promoter directors without prior notice being given to the lender;
f) Approaching the capital markets for mobilisation of additional resources in the form of equity or debt without
prior permission of the lender; and
g) Diversion of funds for purposes other than the sanctioned purpose.
The details above are indicative and there may be additional terms that may amount to an event of default under the various
borrowing arrangements entered into by us.
Additionally our Company is required to ensure that the aforementioned events of default and other events of default, as
specified under the various binding documents and agreements entered into by our Company for the purpose of availing of
loans are not triggered.
257
SECTION VI: LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
Except as disclosed in this section, there is no outstanding (i) criminal proceeding; (ii) action taken by regulatory or statutory
authorities; (iii) disciplinary action including penalty imposed by the SEBI or stock exchanges against our Promoters in the
last five Fiscals, including outstanding action; (iv) claims related to direct and indirect taxes in a consolidated manner; and
(v) details of any other pending litigation as determined to be material as per a policy approved by the Board of Directors, in
each case involving our Company, Promoters and Directors (“Relevant Parties”).
For the purpose of material litigation in (v) above, our Board has considered and adopted the following policy on materiality
with regard to outstanding litigation pursuant to Board resolution dated January 23, 2020 to be disclosed by our Company in
this Red Herring Prospectus:
(a) Pre-litigation notices: Notices received by the Relevant Parties from third parties (excluding statutory/regulatory/tax
authorities or notices threatening criminal action) shall not be evaluated for materiality until such time that the
Relevant Parties are impleaded as defendants in litigation proceedings before any judicial forum; and
(b) De minimis monetary threshold for civil litigation: Pending litigation involving the Relevant Parties, other than
criminal proceedings, statutory and regulatory actions and taxation matters, shall be considered material if the
monetary amount of the claim by or against the entity or person in any such proceeding exceeds 0.1% of the total
income of the Company as per the last annual Restated Financial Statements. For the purposes of disclosure in the
Offer Documents, it is clarified that the de minimis threshold for all outstanding civil litigation involving the Relevant
Parties is ₹6.73 million. However, in the event of pending civil litigation wherein a monetary liability is not
quantifiable, such litigation shall be considered as material only in the event that the outcome of such litigation has a
bearing on the operations, performance, prospects or reputation of the Company.
Further, except as stated in this section, there are no (i) outstanding dues to creditors of our Company as determined to be
material by our Board of Directors, in accordance with SEBI ICDR Regulations; (ii) outstanding dues to micro, small and
medium enterprises and other creditors, including material creditors as defined under the materiality policy; and (iii)
disciplinary actions taken including penalty imposed by the SEBI or a recognised stock exchange against our Promoters in the
last five Fiscals”.
I. Litigation involving our Promoters
A. Outstanding criminal litigation against our Promoters
1. A criminal complaint bearing CC No. 35390/2006 (“Complaint”) has been filed by the Karnataka State Pollution
Control Board (“KSPCB”) before the court of the Additional Chief Metropolitan Magistrate, Bengaluru (“ACMM
Court”) against our Company and our Promoter, Rajendra Gandhi. Pursuant to the Complaint, the KSPCB has alleged
the violation of, inter alia, Section 21 of The Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”) by our
Company. The KSPCB has alleged that our Company had operated our erstwhile facility situated at No. 28/1, adjacent
to AGS layout, 3
rd
main road, Arehalli Village, Uttarahalli Hobli, Bengaluru without obtaining the requisite consents
under Air Act. Pursuant to an order, the ACMM Court took cognizance of the alleged offence and issued a non-bailable
warrant against our Promoter, Rajendra Gandhi. Subsequently, pursuant to an order of the ACMM Court dated January
22, 2011, our Promoter, Rajendra Gandhi was enlarged on bail. Subsequently, our Company submitted an application
for discharge to the ACMM Court, submitting, inter alia, that the Complaint was made by an officer, not authorised
by the KSPCB and therefore and was in violation of Section 43 of the Air Act, which requires a complaint alleging
violation of Section 37 of the Air Act to be made by the concerned pollution control board or an officer authorised by
such board. In response, the KSPCB filed objections dated February 18, 2017 with the ACMM Court, seeking the
quashing of our application for discharge. On March 31, 2017, the ACMM Court passed its order in relation to the
Complaint, and held that the Complaint filed was maintainable and the application for discharge of the Complaint was
rejected. Aggrieved by the order, our Company filed an interlocutory application bearing number I.A. No. 1/2017 and
a criminal petition 3097/2017 before the High Court of Karnataka (“HC Application”), for the quashing of the
Complaint. Pursuant to its order dated April 17, 2017, the High Court of Karnataka has ordered a stay on the
proceedings before the ACMM Court until further notice. The matter is currently pending.
2. A first information report bearing number 305 of 2018 (“FIR”) has been filed by Raju (“Complainant”) before the
Principal Civil Judge (Jr. Division) & JMFC Court, against our Promoter Rajendra Gandhi. The FIR has been filed in
relation to the accident at our Bengaluru facility on November 13, 2018. Pursuant to the FIR, the Complainant had
accused our Promoter of causing hurt by act of endangering life or personal safety. Further, the Complainant has also
alleged that one of the factory workers was forced by the factory supervisor to operate certain machines in the factory,
even though the employee did not have any technical experience, which led to the accident and caused severe injury
to the said employee. The matter is currently pending.
3. An FIR bearing number bearing number 319 of 2018 and a criminal complaint bearing number CC 259 of 2019 has
been filed by Sarojamma (“Complainant”) before the Additional Civil Judge (Sr. Division) and the Chief Judicial
258
Magistrate Court, Kanakapura, Ramanagara District, against our Promoter, Rajendra Gandhi. Pursuant to the FIR the
Complainant has alleged that due to the failure of the security measures adopted by our Company in our factory
premises, the Complainant’s son got hurt due to which his left arm was amputated till elbow. The matter is currently
pending.
4. A criminal complaint bearing CC No. 350/2013 (“Complaint”) has been filed by the State of Karnataka at the instance
of Deputy Director of Factories, Bangalore Division-3, Bangalore (“Complainant”) before the court of the Judicial
Magistrate of First Class, Kanakapura (“JMFC Court”) against our Promoter, Rajendra Gandhi and an ex-employee
of our Company. This Complaint has been filed in relation to an accident at our factory premises situated at 81/1
Medamarana Halli, Harohalli Industrial Area, Kanakapura taluk, Ramanagara District, which caused injuries to our
ex-employee, Jayarathnamma, who alleged that the accident occurred inter alia, because: (i) there was no provision
of photo electronic sensors on the Hydraulic Power Press Machine (“Machine”) being operated by her; (ii) the
Machine was not tested by a competent person for safe working periodically once in 12 months; and (iii) the Machine
was being operated without providing fixed safety guards on the backside and between the tool and the dye. The
Complainant has alleged violation of the Karnataka Factories Rules, 1969 read with the provisions of the Factories
Act, 1948. The matter is currently pending.
B. Outstanding actions initiated by regulatory and statutory authorities against our Promoters
1. Our Promoter, Rajendra Gandhi received two notices bearing numbers KSPCB/RO-RMN/F NO. 98 & 964/2016-
17/116 dated May 13, 2019 (“May Notice”) and PCB/WMC/2418/HWM/2019-20/3793 dated October 3, 2019
(“October Notice”) from the Karnataka State Pollution Control Board (Regional Office – Ramanagara) (“KSPCB”).
Pursuant to the show cause notices the KSPCB has alleged non-compliance by our Company under the provisions of
the Water (Prevention and Control of Pollution) Act, 1974 and Hazardous and Other Wastes (Management &
Transboundary Movement) Rules, 2016. The KSPCB, during a routine inspection of the Harohalli Industrial Area had
discovered that a transporter belonging to our Company had disposed solid waste on a vacant plot of land. Our
Company, pursuant to a reply letter dated May 20, 2019, has replied to the May Notice, stated that (i) the transporter
had dumped the solid waste unintentionally; and (ii) the officials from the Company visited the dumping site and has
cleared the solid waste and has sent the solid waste to Gomti incinco for incineration. Our Company has also stated
that it is currently disposing all the hazardous waste from its factory premises to authorised Karnataka State Pollution
Control Board incinerator.
Further, our Company, pursuant to a reply letter to the October Notice stated inter alia that the Company is not aware
of dumping of waste and has removed all unwanted waste and such waste was sent for incineration. The matters are
currently pending.
C. Material outstanding civil litigation by our Promoters
1. A company petition bearing number 36/BB/2018 dated November 22, 2017 (“Petition”) has been filed by our
Promoter, Rajendra Gandhi, and our Company, before the National Company Law Tribunal bench at Bengaluru
(“NCLT”) against our Associate, PAPL and its director, Anraj Bhandari, in relation to, inter alia, PAPL not conducting
its AGM as mandated under the Companies Act since 2015, and adopting and approving financial statements for the
financial year ended March 31, 2015 and March 31, 2016. Pursuant to the Petition filed under Section 97(1), Section
241 and Section 244 of the Companies Act, our Company has represented before the NCLT that as PAPL has not
conducted its AGM as mandated under the Companies Act, the same can lead to a violation of the Companies Act,
2013. Pursuant to this Petition, our Company has prayed for (i) appointment of an independent chairman on the board
of PAPL; (ii) holding of AGMs for the financial year ended 2014-15, 2015-16 and 2016-2017 and filing of relevant
forms with the RoC as required under section 97(1) of the Companies Act, 2013; (iii) directing the ROC to not list the
name of our Promoter, Rajendra Gandhi, as a defaulting director until the disposal of the petition; (iv) permission to
our Company to purchase shares of Anraj Bhandari and remove him from the board of PAPL; and (v) any other
permanent remedy as may be decided by the NCLT. The NCLT directed to issue a notice and to serve a copy of the
petition to the Registrar of Companies, Bengaluru (“RoC”). On April 17, 2018, Rajendra Gandhi received a notice
from the RoC, asking him to show cause as to why PAPL should not be struck off under the provisions of the
Companies Act, 2013. In response, a reply dated May 23, 2018, has been sent to the RoC, requesting the RoC to
withdraw the notice, until final disposal of the Petition. Subsequently, our Company filed an interim application
bearing no. I.A. 71/2018 before the NCLT praying to direct the RoC to not to disqualify Rajendra Gandhi from acting
as a director in other companies, pending disposal of the main Petition. In I.A. 71/2018, the NCLT has passed an order
dated May 30, 2018, impleading the RoC, Karnataka as a respondent. Further, the NCLT has issued an order on July
18, 2018 directed the ROC to maintain the status quo and not to disqualify Rajendra Gandhi as a director until the
disposal of the Petition. Our Company has also filed a memo dated December 11, 2019 before the NCLT and the
NCLT pursuant to an order dated December 11, 2019, has appointed an independent chairman on the Board of PAPL
(“Independent Chairman”) and the first meeting of the Independent Chairman and the meeting of the board of
directors of PAPL was held on January 13, 2020. Pursuant to the meeting, the Independent Chairman examined the
latest financial statements of PAPL, recommended the appointment of a statutory auditors to audit the financial
statements pertaining to financial year 2014-15 to 2018-19, discussed the appointment of valuer, etc. Further, a second
meeting and a third meeting was also conducted on April 3, 2020 (“2
nd
Meeting”) and May 4, 2020 (“3
rd
Meeting”),
respectively. Pursuant to the 2
nd
Meeting and 3
rd
Meeting, matters inter alia the resignation of Sharma and Pagaria,
259
statutory auditors of PAPL was noted and approval was accorded for the appointment of Brahmayya & Co., Chartered
Accountants, Bangalore as the statutory auditors of PAPL for the period of five years commencing from financial year
2014-15, etc. Subsequently, in terms of the 4
th
status report dated August 6, 2020, the Independent Chairman has
mentioned in the report that the fee due to the Independent Chairman raised against the invoices dated July 13, 2020
and August 4, 2020 was not paid. The Independent Chairman has filed status reports to the NCLT in this regard. The
matter is currently pending.
D. Outstanding material civil litigation against our Promoter
1. A civil suit bearing number 34 of 2020 has been filed by Jay Gee Ayurvedic and Cosmetics Industries and others
(“Plaintiffs”) before the High Court of Himachal Pradesh at Shimla (“High Court”), against our Promoter, Rajendra
Gandhi and Stovekraft India (formerly, a partnership firm which was dissolved with effect from April 1, 2020)(the
“Defendants”). In terms of the civil suit, the Plaintiffs have alleged that the Defendants had entered into an agreement
for sale dated March 20, 2017 (“First Agreement”) for a purchase of land located at Waka Mauja Burhanwala, Tehsil
Baddi, Solan, Himachal Pradesh (“Property”) for a total consideration of `29.00 million. Subsequently, the Plaintiffs
also paid `5.00 million as earnest money. However, it is alleged that a fresh agreement was entered into amongst the
Plaintiffs and Stovekraft India dated May 8, 2017 superseding the First Agreement, wherein, the agreement provided
specific clauses for obtaining permission under the Himachal Pradesh Tenancy and Land Reforms Act, 1972 for
purchase/sale of the Property, which made it impossible for the Defendants to obtain such permission due to time
constraints and since no such permission was obtained from the applicable authorities for the purchase/sale of the
Property, the agreement dated May 8, 2017 was mutually rescinded. The Plaintiffs have alleged that the earnest money
paid to the Defendants has been fortified. Pursuant to this petition, the Plaintiffs have prayed before the High Court,
to direct the Defendants to pay a sum of `6.80 million along with future interest of 12% per annum. The matter is
currently pending
II. Litigation involving our Company
A. Outstanding criminal litigation against our Company
1. For details in relation to CC No. 35390/ 2006 against, amongst others, our Company, see “- Litigation involving our
Promoter - Outstanding criminal litigation against our Promoters” on page 257.
B. Material outstanding civil litigation against our Company
1. Our Associate Company, PAPL, has filed a suit bearing number O.S. 5217/2017in the court of the Additional City
Civil Judge, Bengaluru (“ACCJ”) in relation to alleged outstanding dues amounting to ₹8.09 million with an interest
of 18% p.a. to be paid by our Company to PAPL for mixer grinders manufactured and supplied to our Company from
time to time on credit basis. Our Company has filed written statements in response to the suit, claiming that the suit is
not maintainable and is liable to be dismissed due to suppression of facts. The matter is currently pending.
C. Outstanding actions initiated by regulatory and statutory authorities
1. Our Company submitted an accident report dated November 19, 2011 to the Deputy Director, Division-4, Department
of Factories and Boilers Industrial Safety and Health, Bangalore (“Deputy Director”) in relation to an accident at our
factory unit situated at 81/1 Medamarana Halli, Harohalli Industrial Area, Kanakapura taluk, Ramanagara District,
which led to injuries to our worker, Lakshmamma (“Complainant”). The Deputy Director in the accident investigation
report dated December 23, 2011 (“Notice 1”) observed that certain provisions of the Factories Act, 1948 and the
Karnataka Factories Rules, 1969 had been breached by our Company. Our Company replied to Notice 1 on January 4,
2012 and stated inter alia that the Company has not violated any provision of the Factories Act, 1948 and Karnataka
Factories Rules, 1969 and sought to drop all the proceedings. Further, the Complainant filed an application before the
Commission for Schedule Caste and Schedule Tribe at Bengaluru (“SC/ST Commission”) claiming an amount of ₹3
million. Our Promoter, Rajendra Gandhi, was issued summons by the SC/ST Commission in case no. 43/2018 to be
present on February 16, 2018. The matter is currently pending.
2. A show cause notice dated October 20, 2016 was received by our Company from the Kanakapura Planning Authority
(“KPA”) in respect of the land admeasuring, in aggregate, 6 acres, 37 guntas, in survey numbers 81/2, 81/3, 81/4, and
81/1, Medamaranahalli, Harohalli Hobli, Kanakapura Taluk (“Property”), alleging that the building was an illegal
construction due to non-obtaining of requisite approvals from the KPA for carrying on industrial developmental
programmes on the land. The show-cause notice called upon our Company to submit relevant documents within 7
days. Our Company vide letter dated November 4, 2016, clarified that the industry was being carried on after obtaining
necessary approvals, permissions and licenses from concerned statutory authorities since 2008, including the
appropriate conversion orders, and that property taxes were being paid regularly. Our Company requested one month
to trace certain documents, and to furnish them to the KPA, in compliance with the notice dated October 20, 2016.
A further notice dated December 16, 2016 was received by our Company from the KPA stating that since the extension
of time, up to December 4, 2016, had passed and no documents had been received by KPA, the industry should be
stopped immediately and our Company was given 7 days from receipt of the notice to show cause as to why action
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should not be taken by the authority to bring the land to its original state. Our Company responded vide a letter dated
December 27, 2016, provided, inter alia, the relevant conversion orders, plan approval from the village panchayat,
licenses and no objection certificates from various statutory authorities, general licenses from the village panchayat
and single window clearance obtained from the managing director, KUM and member secretary, state level single
window clearance committee. Further, our Company also undertook to file applications in the due course, along with
the ‘as-built plan’ for regularization under the Akrama-Sakrama Scheme (framed under Section 76FF of the Karnataka
Town and Country Planning Act, 1961), once the same is implemented. Subsequently we received a notice dated
January 25, 2017 and our Company replied vide letter dated February 4, 2017 pleading for no orders to be issued
against our Company under the Karnataka Town and Country Planning Act, 1961 and to not issue any direction for
demolition or removal of industry and/or industrial building in the Property. Subsequently, our Company has received
a notice dated November 27, 2020 (“November Notice”), pursuant to which the KPA has responded stating that there
is no applicable provision to regularize/legalize an illegal construction of the building and directed (i) to stop the illegal
industrial activity conducted without seeking approval from the KPA in survey no. 81 at Medamaranahalli village; (ii)
vacate the alleged illegal buildings; and (iii) bring the lands to its original form. Thereafter, no further notices have
been received from the KPA. Pursuant to a letter dated December 15, 2020, our Company has responded to the
November Notice stating inter alia (i) the construction of our Company’s industrial sheds/ buildings was completed
in the year 2013 after obtaining the required approval of the village panchayat in the absence of any town planning
authority then; (ii) our Company has been operational before the master plan of Kanakapura Planning Area came into
existence and our Company had obtained all requisite approvals and no objection certificates from the relevant
authorities; (iii) our Company did not violate any provisions of the Karnataka Town and Country Planning Act, 1961
and in case there have been any inadvertent non-compliances in such case our Company has asked the KPA to
regularise such non-compliance, by collecting applicable fee.
3. A notice dated May 17, 2018 was received by our Company from the Regional PF Commissioner-I (“PF
Commissioner”), allegedly in relation to non-payment of employee provident fund (“EPF”) contribution on
applicable components of basic wages such as inter alia, conveyance allowance and special allowances totalling to
`28.30 million for the period from September 2014 to December 2017 and for non-enrolment of certain eligible
employees as required for under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF
Act”). Our Company filed a reply dated August 30, 2018 with the PF Commissioner stating that the Company has
already paid EPF contribution on the basic wages and dearness allowance and allowances such as, inter alia,
conveyance allowance and special allowance are outside the scope of definition of basic wages as provided for in the
EPF Act, and requested to drop the enquiry proceedings. The matter is currently pending.
4. The Employees’ Provident Fund Organisation, Karnataka (“EPFO”) has sent a notice dated December 23, 2019,
issued on December 26, 2019 (“Notice”) to our Company, alleging a delay in the payment of employee provident fund
contributions by our Company for the period between January 19, 2017 to December 23, 2019. The Notice alleges that
there was a delay in the remittance of contributions by our Company in terms of the Employees Provident Fund Scheme
1952, Employees’ Pension Scheme, 1995 and Employees Deposit Linked Insurance Scheme, 1976. Pursuant to the
Notice, the EPFO has directed our Company to pay an aggregate amount of ₹3.54 million by way of penalty for the
delay in remittance and the amount of interest on the belated payments. The matter is currently pending.
5. A notice dated November 10, 2009 was received by our Company from Regional Provident Fund Commissioner-II
the (“RPFC-II”) allegedly in relation to default in payment of provident fund and non-enrolment of employees for the
period November 2007 to August 2011. Pursuant to an order dated June 16, 2014, the RPFC-II ordered the Company
to pay an amount of ₹9.38 million towards payment of unpaid provident fund dues. Additionally, pursuant to an order
dated September 3, 2014, the RPFC-II directed State Bank of India (“SBI”), with whom our Company has a bank
account, to pay the amount of ₹9.38 million due on behalf of our Company and also attach the bank account of the
Company maintained with the SBI. A writ petition bearing number 45239/2014 dated September 17, 2014 was filed
in the High Court of Karnataka (“High Court”) by our Company praying for a stay on the order passed by the RPFC-
II. The High Court, pursuant to an order dated September 17, 2014, granted an interim stay on the order of the RPFC-
II attaching our Company’s bank account. Subsequently, our Company also filed a petition before the EPF Appellate
Tribunal (“EPFAT”) praying to set aside the order dated June 16, 2014 passed by the RPFC-II on September 3, 2014.
On September 17, 2014, the EPFAT, New Delhi passed an order directing the Company to deposit 30% of the amount
allegedly unpaid towards payment of provident fund. Subsequently, this case has been transferred to the Central
Government Industrial Tribunal. The matter is currently pending hearing at the Central Government Industrial
Tribunal.
6. Two show cause notices dated September 6, 2019 (“SCNs”) were received by our Company from the Additional
Director General of Foreign Trade, Bengaluru under the Ministry of Commerce and Industry, Government of India
(“DGFT”). Our Company had obtained an export promotion capital goods authorisation bearing number 0730009025
(“License 1”) and 0730009026 (“License 2”) dated June 15, 2010 (together the “Licenses”). One of the conditions
under these Licenses and the Handbook of Procedures (2004-09) was that the Company shall export certain
manufactured items by use of imported capital goods within six years from the date of issue of the Licenses. Further,
our Company was also required to furnish installation certificate issued by the central excise authority or by
independent chartered engineer, confirming the installation and use of capital goods within six months from the date
of completion of the imports and submit a progress report of export made towards fulfilment of export obligations
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within 3 months on completion of a particular year/block year. Our Company failed to furnish the required documents
under the stipulated time period. Pursuant to the SCNs, the DGFT required us to explain the reasons as why the name
of the Company should not be placed under the denied entity list refusing issuance of further license and renewal of
old license in terms of Rule 7 of the Foreign Trade (Regulation) Rules, 1993 read with Section 9 of the Foreign Trade
(Development and Regulation) Act, 1992. Further, pursuant to a redemption letter dated February 12, 2020, the DGFT
has observed that the stipulated export obligation in License 2 has been met in full and consequently the export
obligation has been discharged for the said license. The matter in relation to License 1 is currently pending.
7. Two notices dated November 14, 2018 were received by our Company from the Department of Labour, Government
of Karnataka (“Labour Department”) highlighting certain deficiencies and non-compliances under the provisions of
Contract Worker (Prohibition and Regulation) Act, 1970 and Karnataka Covenant, 1974; Minimum Wages Act, 1948
and Rules; Equal Wages Act, 1948 and Rules; Bonus Disbursement Act, 1965 and Rules; Equal Wages Act, 1976 and
Rules; Karnataka Labour Welfare Fund Act, 1965; Karnataka Industrial Establishments (National and festival
holidays) Act, 1963 and Karnataka Rules, 1964 (“Acts”). The deficiencies and non-compliances under these Acts
included inter alia non submission of Form XII and the contract labour register, Form XXV for the year 2017-18, non-
submission of overtime registers etc. Pursuant to letters dated December 6, 2018, our Company has responded to the
Labour Department stating reasons against such non compliances. The matters are currently pending.
8. A notice dated March 28, 2019 was received by our Company (“Fire Notice”) from the Karnataka Fire and Emergency
Services, Ramanagara District (“Fire Department”), alleging certain deficiencies such as not installing equipment
other than small fire extinguishers and not following the advice given by the Fire Department even after getting a
safety recommendation certificate. The Fire Department has advised to install the fire safety equipment given in the
safety recommendation certificate within seven days of receipt of the Fire Notice, failing which the District Officer,
Ramanagara shall be taking legal action against our Company. Our Company, pursuant to a letter dated April 8, 2019
has stated that the Company is in the process of installing the firefighting equipment, viz., fire hydrant, fire buckets,
sprinkler system and fire detection system and has requested for an extension of time line to comply with the
requirements of the Fire Notice.
9. Two show cause notices dated December 4, 2018 was received by our Company (“Labour Notices”) from the Deputy
Director of Factories, (Division 4) Bengaluru highlighting certain deficiencies in our factories’ Unit 1 and Unit 2,
which included, inter alia, non-availability of the trained personnel on first aid and not producing the certificate
required under Section 45(3) of the Factories Act, 1948, not providing suitable arrangements to the factory workers
for sitting, who were working in a standing position, contravening the provision of Section 44(1) of the Factories Act,
1948 read with Rule 92 of the Karnataka Factories Rules, 1969; non availability of Creche room, as required under
Section 48(1) of the Factories Act, 1948; non availability of suitable firefighting equipment for fighting fires as
required under Rule 71(10)(a) of the Karnataka Factories Rules, 1969, non-availability of canteen in the factory
contravening provisions of Section 46(1) of the Factories Act, 1948 etc. Our Company has, pursuant to replies to the
Labour Notices dated January 5, 2019, has inter alia stated that, the Company had operated a Creche room for women
employees and since none of the women employees used the Creche room, the Company had to subsequently dismantle
the crèche room; the Company has centralized canteen for both Unit 1 and Unit 2; the Company has a first aid trained
personnel and the first aid boxes have been placed in the factory premises with easy access; since the nature of the
work in the factory involved working in an assembly line, hence the scope of sitting and working is not a possibility,
etc. The matters are currently pending.
10. Two show cause notices dated February 22, 2019 was received by our Company (“Water Notices”) from the
Karnataka State Pollution Control Board (“KSPCB”). Pursuant to these Water Notices, the KSPCB has sought
information from our Company in relation to the consumption of ground water at our factories. Our Company has
pursuant to the letters dated March 1, 2019 has replied to the Water Notices, stating the actual quantity of water used
for domestic, process/cooling/boilers, entertainment and other purposes at our factory premises. The matters are
currently pending.
11. A notice dated March 7, 2020 was received by our Company from the Employees State Insurance Corporation (“ESI
Notice”) alleging our Company for non-payment of contributions in terms of section 39 and section 40 of the
Employee’s State Insurance Act, 1948 (“ESI Act”) read with rule 51 of the ESI (Central) Rules, 1950. In terms of the
ESI Notice, our Company had failed to pay contributions to a tune of `7.95 million from May 1, 2016 till November
30, 2019. Subsequently, our Company had appeared before the applicable authority under the ESI Act and in terms of
a subsequent notice dated August 20, 2020, our Company was given an opportunity to appear along with the relevant
records including inter alia wage register, general ledger and cash book, etc. The matter is currently pending.
12. Two show cause notices dated May 27, 2020 was received by our Company (“Pollution Notices”) from the Karnataka
State Pollution Control Board (“KSPCB”). Pursuant to the Pollution Notices, the KSPCB has alleged our Company
for non-compliance under the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control
of Pollution) Act, 1981 and the Hazardous & Other Waste (Management and Trans Boundary Movement) Rules, 2016
for inter alia not obtaining required authorization for waste disposal as per the Hazardous & Other Waste
(Management and Trans Boundary Movement) Rules, 2016 by not earmarking a separate area for the storage of raw
materials, finished products and scraps and storing the same in an open area, not obtaining registration under the Plastic
Waste Management Rules, 2016, etc. Pursuant to a reply dated June 13, 2020, our Company has responded to the
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Pollution Notices stating that it is in compliance with the applicable laws. The matters are currently pending.
13. A notice dated June 15, 2020 was issued to our Company by the Karnataka State Pollution Control Board (“KSPCB”)
for alleged non-compliance with the provisions of the Water (Prevention and Control of Pollution) Act, 1974 and the
Air (Prevention and Control of Pollution) Act, 1981. In terms of the said notice, our Company had allegedly and
indiscriminately disposed off solid and hazardous waste material on vacant plants in the Harohalli Industrial Area,
Bengaluru. The KSPCB, pursuant to the said notice has inter alia asked our Company to show cause as to why (i) the
operations our Company should not be closed down; (ii) direct the Bangalore Electricity Supply Company Limited to
disconnect the power supply, until further orders etc. Pursuant to a reply dated July 20, 2020, our Company has
responded to the said notice, stating that the waste which was disposed off in the Harohalli Industrial Area was
unintentional and the Company after receiving the intimation of the said disposal has cleared the area. The matter is
currently pending.
14. The Employees’ Provident Fund Organisation, Bangalore had sent a notice dated November 7, 2020 (“EPFO Notice”)
(formerly notice dated February 7, 2020 against diary number 13/2020, which was changed to diary number 134/2020
pursuant to an order dated November 13, 2020) to our Company alleging delay in remittances made by us during the
period from April 1, 1996 to March 31, 2019. In terms of sections 6, 6A and 6C of the Employees’ Provident Fund
and Miscellaneous Provisions Act, 1952 read with the applicable provisions of the Employees’ Provident Fund
Scheme, 1952, Employees’ Pension Scheme, 1995 and the Employees’ Deposit Linked Insurance Scheme, 1976, our
Company is required to remit the contributions along with the administrative charges within 15 days of the close of
every month. In terms of the EPFO Notice, our Company is required to pay `0.15 million for the alleged non-
compliance. The matter is currently pending.
15. A notice dated November 17, 2020 (“Notice”) has been issued by the Office of the Official Liquidator, High Court of
Karnataka, Ministry of Corporate Affairs, Government of India to our Company, in relation to the liquidation of
Magnum Intergrafiks Private Limited (“Intergrafiks”). Pursuant to the Notice, our Company has been identified as a
trade debtor to Intergrafiks and has been directed to pay an amount of `4.08 million together with interest at 18% per
annum against the debt within 15 days from the date of receipt of the Notice. Pursuant to the reply letter dated
December 7, 2020, our Company has asked clarifications and has asked the Deputy Official Liquidator, High Court
of Karnataka to inter alia share the following details (i) the business terms agreed/ entered by and between our
Company and Intergrafiks; (ii) ledger copy/ account statement of Intergrafiks to verify the claim; (iii) detailed list of
sale, purchase and/ or services being availed by our Company.
D. Material outstanding civil litigation by our Company
1. An original suit bearing number O.S. 2997/2015 (“Petition”) dated March 30, 2015 has been filed by our Company
before the Additional City Civil Judge, at Bengaluru (“Court”) against our Associate, PAPL (“Defendant”), in
relation to infringement of our ‘PIGEON’ trademark. Our Company has alleged that such infringement was a result of
unauthorised sale and manufacture of kitchen electrical and non-electrical appliances and utensils under the trademark
‘PIGEON’ by the Defendant. Our Company further alleged that, during 2003, our Company, had permitted the
Defendant to use our ‘PIGEON’ trademark in relation to certain products manufactured by it. Subsequently in 2015,
our Company and our Promoter, Rajendra Gandhi, who is currently a director on the board of directors of PAPL, had
requested the Defendant to stop using our trademark for the manufacture of its products. Upon becoming aware of the
unauthorised sale and manufacture of kitchen electrical and non-electrical appliances and utensils under our mark, our
Company has filed this Petition. The Defendant, by way of objections, alleged that, inter alia, the said trademark is a
generic name and the use of same was known to our Company. Subsequently, the Court vide its order dated April 17,
2015 granted an ex parte ad-interim injunction in favour of our Company, restraining the Defendants from, inter alia,
infringing and passing off our ‘PIGEON’ trademark, in relation to the manufacture and sale of kitchen electrical and
non-electrical appliances bearing our ‘PIGEON’ trademark, and also ordered the court commissioner to seize the
products being our trademark ‘PIGEON’ from the premises of the Defendants. Subsequently, the Court, pursuant to
an order dated August 18, 2015, granted temporary injunction and restrained the defendant from infringing and passing
off the trademark ‘PIGEON’ in relation to selling and manufacturing household electrical and non-electrical kitchen
appliances, utensils, spare parts, components and accessories under the brand name ‘PIGEON’ pending disposal of the
petition. This matter is currently pending.
2. For details in relation to company petition 36/BB/2018 filed by our Company, amongst others, see “Litigation
involving our Promoters - Outstanding civil litigation by our Promoters” on page 259.
III. Litigation involving our Directors
A. Outstanding Criminal litigation against our Directors
1. For details in relation to CC No. 35390/ 2006 against, amongst others, our Director, Rajendra Gandhi, see “Litigation
involving our Promoters- Outstanding criminal litigation against our Promoters” on page 257.
2. For details in relation to FIR 305 of 2018 against, our Director, Rajendra Gandhi, see “Litigation involving our
Promoters- Outstanding criminal litigation against our Promoters” on page 257.
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3. For details in relation to CC No. 350/2013 against, amongst others, our Director, Rajendra Gandhi see “-Litigation
involving our Promoters - Outstanding criminal litigation against our Promoters” on page 257.
4. For details in relation to FIR 319 of 2018 against amongst others, our Director, Rajendra Gandhi see “-Litigation
involving our Promoters - Outstanding criminal litigation against our Promoters” on page 257.
B. Outstanding actions initiated by regulatory and statutory authorities against our Directors
1. For details in relation to notice bearing number KSPCB/RO-RMN/F NO. 98 & 964/2016-17/116 dated May 13, 2019
and PCB/WMC/2418/HWM/2019-20, 3793 dated October 3, 2019 see “Litigation involving our Promoters-
Outstanding actions initiated by regulatory and statutory authorities against our Promoters” on page 258.
C. Material outstanding civil litigation by our Directors
1. For details in relation to company petition filed by our Director, Rajendra Gandhi, amongst others, see “Litigation
involving our Promoters- Outstanding Civil Litigation by our Promoter” on page 258.
D. Outstanding material civil litigation against our Director
1. For details in relation to civil suit bearing number 34 of 2020, filed against our Director, Rajendra Gandhi, amongst
others, see “Litigation involving our Promoters- Outstanding material civil litigation against our Promoter” on page
259.
Tax Proceedings
Our Company in involved in certain direct and indirect tax proceedings, in relation to inter alia, allegedly for wrongful
availment of input service credit under the provisions of the CENVAT Credit Rules, 2004 and non-payment of applicable
central excise duty. Except as disclosed below, there are no outstanding tax proceedings involving our Company, Directors or
Promoters.
Nature of case
Number of cases
Amount involved
(₹ in million)
Company
Direct Tax
Nil
Nil
Indirect Tax
11
95.15
Directors
Direct Tax
Nil
Nil
Indirect Tax
Nil
Nil
Promoters
Direct Tax
Nil
Nil
Indirect Tax
Nil
Nil
Outstanding dues to Small Scale Undertakings and other Creditors
As of September 30, 2020, our Company owed outstanding dues of ₹1,761.36 million to a total of 896 creditors, out of which,
our Company owed outstanding dues of ₹36.18 million to a total of 58 micro, small and medium enterprises as defined under
the Micro, Small and Medium Enterprises Development Act, 2006.
For the purpose of material creditors to be disclosed in this Red Herring Prospectus, our Board has considered and adopted the
following policy pursuant to a board resolution dated January 23, 2020:
Outstanding dues to any creditor of the Company which exceed 5% of the trade payables of the Company as at September 30,
2020 being ₹88.07 million, based on the latest Restated Financial Statements, shall be considered material.
As per the above policy, the outstanding amount owed to small scale undertakings and material creditors as on September 30,
2020, by our Company is as follows:
Material Creditors
Number of cases
Amount involved (₹ in
million)
Micro, Small and Medium Enterprises*
58
36.18
Material Creditors
1
111.75
Other creditors
837
1,613.43
Total
896
1,761.36
* Entities that are identified as "Micro, Small and Medium Enterprises" under the Restated Financial Statements are considered as micro small and medium
enterprises.
The details pertaining to outstanding dues towards our material creditors are available on the website of our Company at
https://www.stovekraft.com/upload/pdf/List_of_Creditor_as_30th_Sept_2020.pdf. It is clarified that information provided on
the website of our Company is not a part of this Red Herring Prospectus and should not be deemed to be incorporated by
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reference. Anyone placing reliance on any other source of information including our Company’s website, www.stovekraft.com,
would be doing so at their own risk.
Material Developments since the last balance sheet
Except as stated in “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Significant
Developments after September 30, 2020” on page 253, there have been no circumstances that have arisen, since the date of the
last financial information disclosed in this Red Herring Prospectus, any which materially and adversely affect, or are likely to
affect, our operations or profitability taken as a whole or the value of our consolidated assets or our ability to pay our liabilities
within the next 12 months.
Defaults in respect of dues payable
Our Company has no outstanding defaults in relation to statutory dues payable or any defaults in payments of loans.
265
GOVERNMENT AND OTHER APPROVALS
Our Company has received the necessary consents, licenses, permissions, registrations and approvals from the Government of
India, various governmental agencies and other statutory and/ or regulatory authorities required for carrying out our present
business activities and except as mentioned below, no further material approvals are required for carrying on our present
business activities. Unless otherwise stated, these approvals or licenses are valid as of the date of this Red Herring Prospectus
and in case of licenses and approvals which have expired, we have either made an application for renewal or are in the process
of making an application for renewal. For further details in connection with the applicable regulatory and legal framework,
within which we operate, see “Regulations and Policies” on page 142.
The objects clause of the Memorandum of Association enables our Company to undertake its present business activities.
I. Approvals in relation to the Offer
For details of the approvals and authorization obtained by our Company in relation to the Offer, see “Other Regulatory
and Statutory Disclosures - Authority for the Offer” on page 268.
II. Incorporation details of our Company
(i) Certificate of incorporation dated June 28, 1999 issued by the RoC to our Company in the name of Stove
Kraft Private Limited.
(ii) Fresh certificate of incorporation dated August 13, 2018 issued by the RoC to our Company consequent upon
conversion to a public company in the name of Stove Kraft Limited.
(iii) Our Company was allotted a corporate identity number U29301KA1999PLC025387.
III. Material Approvals in relation to our business operations
(i) Approvals in relation to our manufacturing operations:
(a) Employment related laws
We have obtained the relevant registrations under the Factories Act, 1948, Karnataka Shops and
Commercial Establishments Act, 1961, Industrial Employment (Standing Orders) Act, 1946,
Payment of Gratuity Act, 1972, and the Contract Labour (Regulation and Abolition) Act, 1970. We
have also obtained a registration and license to work in a factory taken from the Himachal Pradesh
Labour Department in relation to our Baddi facility.
We have also obtained registration under the Employees’ Provident Fund and Miscellaneous
Provisions Act, 1952, and have been allotted code number 25633 for our units in Karnataka, and
103039 for the unit in Baddi. We have also obtained registration under the Employees’ State
Insurance Act, 1948, and have been allotted code number 53000402900000999 for our units in
Karnataka and code number 14001530510000699 for our unit at Baddi.
(b) Environmental regulations
We have obtained relevant consents from the relevant regulatory authorities for establishment and
operations of our manufacturing units under the Water (Prevention and Control of Pollution) Act,
1974 and Air (Prevention and Control of Pollution) Act, 1981. We have obtained relevant
authorization from the regulatory authority in respect of our manufacturing unit at Baddi under the
Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and have
applied for such authorization in respect of our unit I in Karnataka. Further, we have applied for a
renewal fire NOC in respect of our Bengaluru facility which is pending with the Karnataka Fire and
Emergency Services.
(c) Other approvals
We have also obtained registrations as electrical installation certificates under the Central Electricity
Authority (Measures relating to Safety and Electric Supply) Regulations, 2010, certificate of
registration under the Legal Metrology (Packaged Commodity) Rules, 2011, as applicable under the
relevant central and state legislations. We have also obtained the importer exporter code for our
operations.
IV. Material Approvals for our business operations under tax legislations
We are required to register under various national tax laws and state specific tax laws such as the Income Tax Act,
1961, state specific sales tax, goods and services tax, and state professional tax legislations. We have obtained the
266
necessary licenses and approvals from the appropriate regulatory and governing authorities in relation to such tax laws,
including PAN AADCS9958B, TAN BLRS04606A, GST registration number 29AADCS9958B1ZY for our unit in
Bangalore, Karnataka, and GST registration number 02AADCS9958B1ZE for our unit in Baddi, Himachal Pradesh.
V. Intellectual Property Rights
Our Company has obtained the following trademark registrations as on the date of this Red Herring Prospectus:
S. No
Trade mark
Trademark
No.
Class
Certificate no.
Date of application
Date of expiry
1.
STOVEKRAFT (Logo)
2230467
21
1120776
November 8, 2011
November 8, 2021
2.
STOVEKRAFT (Logo)
2230461
7
1151769
November 8, 2011
November 8, 2021
3.
STOVEKRAFT
2230468
21
1120709
November 8, 2011
November 8, 2021
4.
STOVEKRAFT
2230463
9
1156048
November 8, 2011
November 8, 2021
5.
STOVEKRAFT
2230464
9
1120968
November 8, 2011
November 8, 2021
6.
STOVEKRAFT
2230462
7
1650052
November 8, 2011
November 8, 2021
7.
STOVEKRAFT (Logo)
2230465
11
1650177
November 8, 2011
November 8, 2021
8.
STOVEKRAFT
2230466
11
1648293
November 8, 2011
November 8, 2021
9.
GILMA
1067551
11
RLC/112191
December 18, 2001
December 18, 2021
10.
GILMA
1067552
21
RLC/112194
December 18, 2001
December 18, 2021
11.
GILMA
2474753
7
1922981
February 8, 2013
February 8, 2023
12.
GILMA
2158656
20
1300251
June 13, 2011
June 13, 2021
13.
GILMA
2554705
6
1198630
June 26, 2013
June 26, 2023
14.
GILMA
2474752
9
2018614
February 8, 2013
February 8, 2023
15.
PIGEON
1198490
21
RLC/170361
May 13, 2003
May 13, 2023
16.
PIGEON
1198491
11
RLC/170360
May 13, 2003
May 13, 2023
17.
PIGEON (Label)
1397584
7
RLC/190608
November 7, 2005
November 7, 2025
18.
PIGEON (Label)
1397585
11
RLC/190610
November 7, 2005
November 7, 2025
19.
PIGEON (Label)
1397586
21
1245655
November 7, 2005
November 7, 2025
20.
PIGEON
2474754
7
1373620
February 8, 2013
February 8, 2023
21.
PIGEON
2554706
9
2096203
June 26, 2013
June 26, 2023
22.
PIGEON (LED)
3449481
11
2278088
January 4, 2017
January 4, 2027
23.
PIGEON (LED)
3449482
35
2217163
January 4, 2017
January 4, 2027
24.
PIGEON (Logo)
2554707
9
2289673
June 26, 2013
June 26, 2023
25.
Master Cuisine
3785511
8
1986037
March 22, 2018
March 22, 2028
26.
Master Cuisine
3785512
11
1986038
March 22, 2018
March 22, 2028
27.
Master Cuisine
3785526
21
1985775
March 22, 2018
March 22, 2028
International Trademarks
28.
PIGEON (with device)
NA
7
37781
January 4, 2015
January 2, 2022
29.
PIGEON (with device)
NA
9
37782
January 4, 2015
January 2, 2022
30.
PIGEON (Logo)
NA
11
38495
January 8, 2015
January 8, 2022
Our Company has obtained the following design registrations under the Design Rules, 2001:
S. No
Design
Design No.
Class
Certificate no.
Date of issue
Date of expiry
1.
STOVEKRAFT –
Pressure Cooker
257872
07-02
38736
June 9, 2015
June 9, 2025
Our Company has applied for the following design registration, which is pending approval as on the date of this Red
Herring Prospectus:
S. No.
Design
Application No.
Class
Date of renewal
application
1.
Mixer Grinder
254931
07-04
June 27, 2013
Our Company has applied for the following trademark registrations, which are currently pending as on the date of this
Red Herring Prospectus:
S. No.
Trade mark
Temporary trade mark
no. for pending
applications
Class
Date of application
1.
PIGEON
2554708
12
June 26, 2013
2.
PIGEON - Logo
2554709
12
June 26, 2013
3.
MIO – Pigeon - Logo
2777315
21
July 21, 2014
4.
BELLISSIMA and PIGEON - Logo
2777316
21
July 21, 2014
5.
Master Cuisine
3785510
7
March 22, 2018
6.
Master Cuisine
4197897
8
June 5, 2019
7.
Master Cuisine
4197896
7
June 5, 2019
8.
Master Cuisine (Logo)
4197898
11
June 5, 2019
9.
Master Cuisine (Logo)
4197899
21
June 5, 2019
267
S. No.
Trade mark
Temporary trade mark
no. for pending
applications
Class
Date of application
10.
GILMA
4532982
10
June 16, 2020
11.
PIGEON
4680692
20
September 30, 2020
12.
GILMA
4532981
9
June 16, 2020
13.
PIGEON
4513676
8
May 29, 2020
14.
Pigeon (Logo)
4513677
8
May 29, 2020
15.
Pigeon (Logo)
4680693
20
September 30, 2020
The applications for trademarks made by our Company have been objected in the ordinary course of the application
process in respect of which our Company has filed the requisite documents, that are currently pending, with the
Registrar of Trade Marks.
Our Company has applied for the following patent certification as on the date of this Red Herring Prospectus:
S. No.
Patent
Application
number
Date of application
1.
Stackable cookware
16/566.941
November 9, 2019
2.
Stainless steel vacuum bottle – double wall
201941043983
October 10, 2019
3.
Stackable cookware
201941030650
June 30, 2019
4.
Stackable frying pans and sauce pans
16/567.006
November 9, 2019
Further, our Company is required to obtain mandatory certification from Bureau of Indian Standards and Bureau of
Energy Efficiency for certain of our products such as electric irons, LED Lamps etc. Some of the BIS certifications
applicable to us for which we have obtained certificates are as follows:
S. No.
Products
Certifications
Date of Expiry
BIS
1.
Wrought Aluminium – Utensils specification
IS 1660: 2009
April 18, 2021
2.
Domestic pressure cooker
IS 2347: 2015
January 27, 2022
3.
Electric iron
IS 302 (Part 2 – Sec 3): 2007
March 18, 2021
4.
Room heaters
IS 302 (Part 2 – Sec 30): 2007
October 17, 2021
5.
Hand blender
IS 302 (Part 2 – Sec 14): 2009
June 5, 2021
6.
LED hand lamp
IS 10322 (Part 5 – Sec 6) : 2013
August 28, 2021
7.
Self-Ballasted LED lamps for general lighting
services
IS 16102 (Part 1): 2012
July 30, 2021 for certain
models and October 19,
2022 for certain models
8.
Fixed general purpose LED Luminaries
IS 10322 (Part 5 - Sec 1): 2012
February 19, 2021 for
certain models;
November 19, 2021 for
certain models and
October 21, 2022 for
certain models
Our Company has applied for the renewal of the following BIS certifications as on the date of this Red Herring
Prospectus:
S. No.
Product
Certification applied for
Date of application
1.
Domestic gas stoves used
with liquefied petroleum
gases
IS 4246:2002
July 29, 2020
2.
Domestic electric food –
Mixers (liquidizers and
grinders)
IS 4250: 1980
November 2, 2020
Our Company has applied for the renewal of the following BEE certifications as on the date of this Red Herring
Prospectus:
S. No.
Product
Certification applied for
Date of application
1.
LED Lamps
-
December 30, 2020
Our Company has applied for the following approvals as on the date of this Red Herring Prospectus:
S. No.
Product
Description
1.
Infrared thermometer
Model approval under the Legal Metrology Act, 2009
268
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Offer
Our Board has approved the Offer pursuant to the resolution passed at its meeting held on January 23, 2020 and our Shareholders
have approved the Offer pursuant to a resolution passed at the EGM held on January 24, 2020 under Section 62(1)(c) of the
Companies Act, 2013. The Draft Red Herring Prospectus was approved by the Board in its meeting held on January 31, 2020.
Our Board has approved this Red Herring Prospectus pursuant to its resolution dated January 18, 2021.
For details on the authorisation of each of the Selling Shareholders in relation to the Offer, see “The Offer” on page 47.
Our Company has received in-principle approvals from BSE and NSE for the listing of the Equity Shares pursuant to letters
dated April 16, 2020 and April 8, 2020, respectively.
For the purpose of the offer, BSE Limited will be the Designated Stock Exchange.
Prohibition by SEBI or other Governmental Authorities
Our Company, Promoters, members of the Promoter Group, the Selling Shareholders, our Directors and our persons in control
of our Company are not prohibited from accessing the capital markets or debarred from buying, selling or dealing in securities
under any order or direction passed by SEBI or any securities market regulator in any jurisdiction or any other authority/court.
Each Selling Shareholders in respect of itself confirms that it has not been prohibited from accessing the capital markets under
any order or direction passed by SEBI or any other regulatory or governmental authority in India.
Prohibition by RBI
None of our Company, our Promoters and our Directors have been identified as a Wilful Defaulter.
Our Promoters or Directors have not been declared as fugitive economic offenders.
Compliance with Companies (Significant Beneficial Ownership) Rules, 2018.
Our Company, the Promoters, members of the Promoter Group and each of the Selling Shareholders is in compliance with the
Company (Significant Beneficial Owner) Rules, 2018, to the extent applicable.
Directors associated with the securities market.
None of our Directors are associated with the securities market in any manner. Further, there are no outstanding actions against
our Directors initiated by SEBI in the previous five years preceding the date of this Red Herring Prospectus.
Eligibility for the Offer
Our Company is eligible for the Offer in accordance with Regulation 6(2) of the SEBI ICDR Regulations, which states as
follows:
“An issuer not satisfying the condition stipulated in sub-regulation (1) shall be eligible to make an initial public offer only if
the issue is made through the book-building process and the issuer undertakes to allot, at least seventy five percent of the net
offer to qualified institutional buyers and to refund the full subscription money if it fails to do so.”
We are an unlisted company, not satisfying the conditions specified in Regulation 6(1) of the SEBI ICDR Regulations and are
therefore required to Allot at least 75% of the Offer to QIBs to meet the conditions detailed of Regulation 6(2) of the SEBI
ICDR Regulations. In the event we fail to do so, the full application monies shall be refunded to the Bidders, in accordance
with the SEBI ICDR Regulations.
Our Company is in compliance with the conditions specified in Regulation 5 of the SEBI ICDR Regulations, to the extent
applicable. The details of our compliance with Regulation 5 of the SEBI ICDR Regulations are as follows:
(a) Neither our Company nor the Promoters, members of the Promoter Group, the Directors or the Selling Shareholders
are debarred from accessing the capital markets by the SEBI;
(b) None of the Promoters or Directors are promoters or directors of companies which are debarred from accessing the
capital markets by the SEBI;
(c) Neither our Company nor the Promoters or Directors is a wilful defaulter;
(d) None of our Promoters or Directors is a fugitive economic offender;
269
(e) Other than the options granted under the ESOP Plan, there are no outstanding warrants, options or rights to convert
debentures, loans or other instruments convertible into, or any other right which would entitle any person any option
to receive Equity Shares, as on the date of this Red Herring Prospectus.
Our Company confirms that it is also in compliance with the conditions specified in Regulation 7(1) of the SEBI ICDR
Regulations, to the extent applicable, and will ensure compliance with the conditions specified in Regulation 7(2) of the SEBI
ICDR Regulations, to the extent applicable.
The Selling Shareholders confirm that they are in compliance with Regulation 8 of the SEBI ICDR Regulations.
Further, our Company shall ensure that the number of prospective Allottees to whom the Equity Shares will be Allotted shall
not be less than 1,000 in compliance with Regulation 49(1) of the SEBI ICDR Regulations, failing which the entire application
monies shall be refunded forthwith in terms of applicable laws. In case of delay, if any, in refund/ unblocking the ASBA
Accounts within such timeline as prescribed under applicable laws, our Company shall be liable to pay interest on the
application money in accordance with applicable laws. The Selling Shareholders shall provide all required information, support
and cooperation to the Company in this respect.
DISCLAIMER CLAUSE OF SEBI
IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS
TO SEBI SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED
OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL
SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE OFFER IS PROPOSED TO BE MADE
OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED
HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGERS, BEING EDELWEISS FINANCIAL
SERVICES LIMITED AND JM FINANCIAL LIMITED (“BRLMS”), HAVE CERTIFIED THAT THE
DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND
ARE IN CONFORMITY WITH THE SEBI ICDR REGULATIONS. THIS REQUIREMENT IS TO FACILITATE
INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED
OFFER.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE DRAFT RED HERRING PROSPECTUS. THE BRLMs ARE EXPECTED TO EXERCISE
DUE DILIGENCE TO ENSURE THAT THE COMPANY AND THE SELLING SHAREHOLDERS DISCHARGE
THEIR RESPONSIBILITIES ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BRLMs
HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED JANUARY 31, 2020 IN THE FORMAT
PRESCRIBED UNDER SCHEDULE V(A) OF THE SEBI ICDR REGULATIONS.
THE FILING OF THIS RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY AND
ANY PERSON WHO HAS AUTHORISED THE ISSUE OF THIS RED HERRING PROSPECTUS FROM ANY
LIABILITIES UNDER THE COMPANIES ACT, 2013, OR FROM THE REQUIREMENT OF OBTAINING SUCH
STATUTORY AND/ OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER.
SEBI FURTHER RESERVES THE RIGHT TO TAKE UP AT ANY POINT OF TIME, WITH THE BRLMS, ANY
IRREGULARITIES OR LAPSES IN THIS RED HERRING PROSPECTUS.
All legal requirements pertaining to this Offer will be complied with at the time of filing of this Red Herring Prospectus with
the Registrar of Companies in terms of Section 32 of the Companies Act, 2013. All legal requirements pertaining to this Offer
will be complied with at the time of filing of the Prospectus with the Registrar of Companies in terms of sections 26, 32, 33(1)
and 33(2) of the Companies Act, 2013.
Disclaimer from our Company, our Directors, the Selling Shareholders and BRLMs
Our Company, our Directors, the Selling Shareholders and the BRLMs accept no responsibility for statements made otherwise
than in this Red Herring Prospectus or in the advertisements or any other material issued by or at our instance and anyone
placing reliance on any other source of information, including our Company’s website www.stovekraft.com, or the respective
websites of our Promoters, Promoter Group or any affiliate of our Company would be doing so at his or her own risk. The
Selling Shareholders, its respective directors, affiliates, associates, and officers accept no responsibility for any statements made
in this Red Herring Prospectus other than those statements or undertakings specifically made or confirmed by the Selling
Shareholders in relation to itself and its respective proportion of the Offered Shares.
The Offer for Sale of the Equity Shares in the Offer shall not, under any circumstances, create any implication that there has
been no change in the affairs of our Company or any of the Selling Shareholders since the date of this Red Herring Prospectus
or that the information contained herein is correct as of any time subsequent to this date.
270
Caution
The BRLMs accept no responsibility, save to the limited extent as provided in the Offer Agreement and the Underwriting
Agreement.
All information shall be made available by our Company and the BRLMs to the Bidders and the public at large and no selective
or additional information would be made available for a section of the investors in any manner whatsoever, including at road
show presentations, in research or sales reports, at the Bidding Centres or elsewhere.
None among our Company, any of the Selling Shareholders or any member of the Syndicate shall be liable for any failure in
(i) uploading the Bids due to faults in any software/ hardware system or otherwise; or (ii) the blocking of Bid Amount in the
ASBA Account on receipt of instructions from the Sponsor Bank on account of any errors, omissions or non-compliance by
various parties involved in, or any other fault, malfunctioning or breakdown in, or otherwise, in the UPI Mechanism.
Investors who Bid in the Offer will be required to confirm and will be deemed to have represented to our Company, the Selling
Shareholders, the Underwriters and their respective directors, officers, agents, affiliates, and representatives that they are
eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares and will not issue,
sell, pledge, or transfer the Equity Shares to any person who is not eligible under any applicable laws, rules, regulations,
guidelines and approvals to acquire the Equity Shares. Our Company, the Selling Shareholders, the Underwriters and their
respective directors, officers, agents, affiliates, and representatives accept no responsibility or liability for advising any investor
on whether such investor is eligible to acquire the Equity Shares.
The BRLMs and their respective associates and affiliates in their capacity as principals or agents may engage in a wide range
of transactions with, and perform services for, our Company, the Selling Shareholders, their respective affiliates or associates
or third parties in the ordinary course of business and have engaged, or may in the future engage, in commercial banking and
investment banking transactions with our Company, the Selling Shareholders and their respective directors, officers, agents,
group company, affiliates or associates or third parties, for which they have received, and may in the future receive,
compensation.
Disclaimer in respect of Jurisdiction
This Offer is being made in India to persons resident in India (who are competent to contract under the Indian Contract Act,
1872, as amended), including Indian nationals resident in India, HUFs, companies, other corporate bodies and societies
registered under the applicable laws in India and authorised to invest in shares, domestic Mutual Funds, Indian financial
institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), or trusts under applicable
law and who are authorised under their constitution to hold and invest in equity shares, multilateral and bilateral development
financial institutions, state industrial development corporations, insurance companies registered with IRDA, provident funds
(subject to applicable law) and pension funds, National Investment Fund, insurance funds set up and managed by army, navy
or air force of Union of India, insurance funds set up and managed by the Department of Posts, GoI, systemically important
NBFCs registered with the RBI) and permitted Non-Residents including FPIs and Eligible NRIs, AIFs, FVCIs, and other
eligible foreign investors, if any, provided that they are eligible under all applicable laws and regulations to purchase the Equity
Shares. This Red Herring Prospectus does not constitute an offer to sell or an invitation to subscribe to Equity Shares offered
hereby, in any jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person
into whose possession this Red Herring Prospectus comes is required to inform him or herself about, and to observe, any such
restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) in Bengaluru only.
Invitations to subscribe to or purchase the Equity Shares in the Offer will be made only pursuant to this Red Herring Prospectus
if the recipient is in India or the preliminary offering memorandum for the Offer, which comprises this Red Herring Prospectus
and the preliminary international wrap for the Offer, if the recipient is outside India. No person outside India is eligible to bid
for Equity Shares in the Offer unless that person has received the preliminary offering memorandum for the Offer, which
contains the selling restrictions for the Offer outside India.
The Equity Shares offered in the Offer have not been and will not be registered, listed or otherwise qualified in any
jurisdiction except India and may not be offered or sold to persons outside of India except in compliance with the
applicable laws of each such jurisdiction. In particular, the Equity Shares have not been and will not be registered under
the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or the laws of any state of the United States and
may not be offered or sold in the United States (as defined in Regulation S under the U.S. Securities Act (“Regulation
S”)) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S.
Securities Act and applicable state securities laws. The Equity Shares are being offered and sold only outside the United
States pursuant to Regulation S.
Bidders are advised to ensure that any Bid from them does not exceed investment limits or the maximum number of Equity
Shares that can be held by them under applicable law. Further, each Bidder where required must agree in the Allotment Advice
that such Bidder will not sell or transfer any Equity Shares or any economic interest therein, including any off-shore derivative
instruments, such as participatory notes, issued against the Equity Shares or any similar security, other than in accordance with
applicable laws
271
Each purchaser of the Equity Shares in the Offer in India shall be deemed to:
• Represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Members that it was
outside the United States (as defined in Regulation S) at the time the offer of the Equity Shares was made to it and it was
outside the United States (as defined in Regulation S) when its buy order for the Equity Shares was originated.
• Represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Members that it did not
purchase the Equity Shares as result of any “directed selling efforts” (as defined in Regulation S).
• Represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Members that it bought
the Equity Shares for investment purposes and not with a view to the distribution thereof. If in the future it decides to
resell or otherwise transfer any of the Equity Shares, it agrees that it will not offer, sell or otherwise transfer the Equity
Shares except in a transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available
exemption from registration under the U.S. Securities Act.
• Represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Members that if it
acquired any of the Equity Shares as fiduciary or agent for one or more investor accounts, it has sole investment discretion
with respect to each such account and that it has full power to make the foregoing representations, warranties,
acknowledgements and agreements on behalf of each such account.
• Represents and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Members that if it
acquired any of the Equity Shares for one or more managed accounts, that it was authorized in writing by each such
managed account to subscribe to the Equity Shares for each managed account and to make (and it hereby makes) the
representations, warranties, acknowledgements and agreements herein for and on behalf of each such account, reading
the reference to “it” to include such accounts.
• Agree to indemnify and hold our Company, the Selling Shareholders, the BRLMs and the Syndicate Members harmless
from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection
with any breach of these representations, warranties or agreements. It agrees that the indemnity set forth in this paragraph
shall survive the resale of the Equity Shares.
• Acknowledge that our Company, the Selling Shareholders, the BRLMs, the Syndicate Members and others will rely
upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and agreements.
Disclaimer Clause of BSE
As required, a copy of the Draft Red Herring Prospectus was submitted to BSE. The disclaimer clause as intimated by BSE to
us is as set forth below:
“BSE Limited (“the Exchange”) has given dated April 16, 2020 permission to this Company to use the Exchange’s name in
this offer document as one of the stock exchanges on which this company’s securities are proposed to be listed. The Exchange
has scrutinized this offer document for its limited internal purpose of deciding on the matter of granting the aforesaid permission
to this Company. The Exchange does not in any manner: -
a. warrant, certify or endorse the correctness or completeness of any of the contents of this offer document; or
b. warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or
c. take any responsibility for the financial or other soundness of this Company, its promoters, its management or any
scheme or project of this Company;
and fit should not for any reason be deemed or construed that this offer document has been cleared or approved by the Exchange.
Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent
inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which
may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything
stated or omitted to be stated herein or for any other reason whatsoever”.
Disclaimer Clause of NSE
As required, a copy of the Draft Red Herring Prospectus was submitted to NSE. The disclaimer clause as intimated by NSE to
us is as set forth below:
“As required, a copy of this Offer Document has been submitted to National Stock Exchange of India Limited (hereinafter
referred to as NSE). NSE has given vide its letter Ref.: NSE/LIST/763 dated April 08, 2020 permission to the Issuer to use the
Exchange’s name in this Offer Document as one of the Stock Exchanges on which this Issuer’s securities are proposed to be
listed. The Exchange has scrutinized this draft offer document for its limited internal purpose of deciding on the matter of
granting the aforesaid permission to this Issuer. It is to be distinctly understood that the aforesaid permission given by NSE
272
should not in any way be deemed or construed that the offer document has been cleared or approved by NSE; nor does it in any
manner warrant, certify or endorse the correctness or completeness of any of the contents of this offer document; nor does it
warrant that this Issuer’s securities will be listed or will continue to be listed on the Exchange; nor does it take any responsibility
for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent
inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which
may be suffered by such person consequent to or in connection with such subscription /acquisition whether by reason of
anything stated or omitted to be stated herein or any other reason whatsoever.”
Filing
A copy of the Draft Red Herring Prospectus has been filed with SEBI at Overseas Towers, 7
th
Floor, 756-L, Anna Salai, Chennai
600 002, Tamil Nadu, India and electronically on the platform provided by SEBI.
A copy of this Red Herring Prospectus, along with the documents required to be filed under Section 32 of the Companies Act,
2013 would be delivered for registration to the Registrar of Companies and a copy of the Prospectus to be filed under Section
26 of the Companies Act, 2013 would be delivered for filing with RoC at the office of the Registrar of Companies, Bengaluru
situated at “E” Wing, 2nd Floor, Kendriya Sadana, Koramangala, Bengaluru 560 034, Karnataka, India.
Listing
The Equity Shares issued through this Red Herring Prospectus are proposed to be listed on BSE and NSE. Applications will be
made to the Stock Exchanges for obtaining permission for listing and trading of the Equity Shares. BSE Limited will be the
Designated Stock Exchange with which the Basis of Allotment will be finalised.
273
Price information of past issues handled by the BRLMs
A. Edelweiss Financial Services Limited
1. Price information of past issues handled by Edelweiss:
S.
No.
Issue Name
Issue Size
(₹ million)
Issue
price (₹)
Listing Date
Opening
Price on
Listing
Date
(in ₹)
+/- % change in closing
price, [+/- % change in
closing benchmark]- 30
th
calendar days from listing
+/- % change in closing
price, [+/- % change in
closing benchmark]- 90
th
calendar days from
listing
+/- % change in closing
price, [+/- % change in
closing benchmark]- 180
th
calendar days from listing
1
Burger King India
8,100.00
60.00
December 14, 2020
112.50
146.5% [7.41%]
Not Applicable
Not Applicable
2
Equitas Small Finance Bank
5,176.00
33.00
November 2, 2020
31.10
5.45% [12.34%]
Not Applicable
Not Applicable
3
Mazagon Dock Shipbuilders Limited
4,436.86
145.00
October 12, 2020
214.90
18.90% [5.87%]
52.90% [20.25%]
Not Applicable
4
Angel Broking Limited
6,000.00
306.00
October 5, 2020
275.00
-2.32% [2.70%]
10.02% [21.86%]
Not Applicable
5
Route Mobile Limited
6,000.00
350.00
September 21, 2020
717.00
105.81% [5.74%]
231.04% [22.31%]
Not Applicable
6
Prince Pipes and Fittings Limited
5,000.00
178.00
December 30, 2019
160.00
0.14% [-1.63%]
-44.33% [-29.34%]
-35.00% [-15.28%]
7
IndiaMART InterMESH Limited
4,755.89
973.00**
July 4, 2019
1180.00
26.36% [-7.95%]
83.82% [-4.91%]
111.64% [2.59%]
8
Polycab India Limited
13,452.60
538.00^
April 16, 2019
633.00
15.36% [-5.35%]
14.70% [-1.99%]
23.76% [-4.09%]
9
Aavas Financiers Limited
16,403.17
821.00
October 8, 2018
750.00
-19.32% [1.76%]
2.42% [3.67%]
38.82% [12.74%]
10
Fine Organic Industries Limited
6,001.69
783.00
July 2, 2018
815.00
5.72% [6.56%]
35.20% [2.56%]
50.21% [1.90%]
Source: www.nseindia.com
^Polycab India Limited – employee discount of ₹53 per equity share to the offer price was offered to the eligible employees bidding in the employee reservation portion. All calculations are based on the offer price of ₹538 per equity
share
** IndiaMART InterMESH Limited - A discount of ₹97 per equity share was offered to eligible employees bidding in the employee reservation portion. All calculations are based on the offer price of ₹973 per equity share
Notes
1. Based on date of listing.
2. % of change in closing price on 30
th
/ 90
th
/ 180
th
calendar day from listing day is calculated vs issue price. % change in closing benchmark index is calculated based on closing index on listing day vs closing index on 30
th
/ 90
th
/
180
th
calendar day from listing day.
3. Wherever 30
th
/ 90
th
/ 180
th
calendar day from listing day is a holiday, the closing data of the previous trading day has been considered.
4. The Nifty 50 index is considered as the benchmark index
5. Not Applicable. – Period not completed
6. Disclosure in Table-1 restricted to 10 issues.
2. Summary statement of Disclosure:
274
Fiscal
Year
Tota
l no.
of
IPOs
Total
amount
of funds
raised
(₹ Mn.)
No. of IPOs trading at discount -
30
th
calendar days from listing
No. of IPOs trading at premium - 30
th
calendar days from listing
No. of IPOs trading at discount - 180
th
calendar days from listing
No. of IPOs trading at premium - 180
th
calendar days from listing
Over
50%
Between
25-50%
Less than
25%
Over
50%
Between 25-
50%
Less than
25%
Over
50%
Between 25-
50%
Less than
25%
Over
50%
Between 25-
50%
Less than
25%
2020-21*
5
29,712.86
-
-
1
2
-
2
-
-
-
-
-
-
2019-20
3
23,208.49
-
-
-
-
1
2
-
1
-
1
-
1
2018-19
3
57,206.02
-
1
1
-
-
1
-
1
-
1
1
-
The information is as on the date of the document
1. Based on date of listing.
2. Wherever 30
th
and 180
th
calendar day from listing day is a holiday, the closing data of the previous trading day has been considered.
3. The Nifty 50 index is considered as the Benchmark Index.
*
For the financial year 2020-21- 5 issues have been completed. All issues have completed 30 days of which 3 issues have completed 90 days
B. JM Financial Limited
1. Price information of past issues handled by JM Financial Limited:
Sr.
No.
Issue name
Issue Size
(₹ million)
Issue
price
(₹)
Listing
Date
Opening
price on
Listing Date
(in ₹)
+/- % change in closing
price, [+/- % change in
closing benchmark] - 30
th
calendar days from listing
+/- % change in closing
price, [+/- % change in
closing benchmark] - 90
th
calendar days from listing
+/- % change in closing price,
[+/- % change in
closing benchmark] - 180
th
calendar days from listing
1.
Burger King India Limited
8,100.00
60.00
December 14, 2020
112.50
146.50% [7.41%]
Not Applicable
Not Applicable
2.
Equitas Small Finance Bank Limited
5,176.00
33.00
November 02, 2020
31.10
5.45% [12.34%]
Not Applicable
Not Applicable
3.
UTI Asset Management Company Limited
21,598.84
554.00
October 12, 2020
500.00
-10.43% [5.87%]
-0.60% [20.25%]
Not Applicable
4.
Mazgaon Dock Shipbuilders Limited
4,436.86
145.00
October 12, 2020
214.90
18.90% [5.87%]
52.90% [20.25%]
Not Applicable
5.
Prince Pipes and Fittings Limited
5,000.00
178.00
December 30, 2019
160.00
+0.14% [-1.63%]
-44.33% [-29.34%]
-35.00% [-15.28%]
6.
Ujjivan Small Finance Bank Limited
7
7,459.46
37.00
December 12, 2019
58.75
+41.08% [+2.38%]
+10.27% [-12.70%]
-16.62% [-15.07%]
7.
Spandana Sphoorty Financial Limited
12,009.36
856.00
August 19, 2019
825.00
-0.56% [-2.14%]
+52.76% [+7.61%]
+17.32%[+9.59%]
8.
Metropolis Healthcare Limited
12,042.88
880.00
April 15, 2019
958.00
+3.75% [-4.01%]
+21.39% [-1.18%]
+45.93% [-3.30%]
9.
Chalet Hotels Limited
16,411.80
280.00
February 7, 2019
294.00
+1.14% [-0.31%]
+24.41% [+3.87%]
+10.77% [-1.87%]
10.
HDFC Asset Management Company Limited
28,003.31
1,100.00
August 6, 2018
1,726.25
+58.04% [+1.17%]
+30.61% [-7.32%]
+23.78% [-4.33%]
Source: www.nseindia.com for price information and prospectus/basis of allotment for issue details
Notes:
1. Opening price information as disclosed on the website of NSE.
2. Change in closing price over the issue/offer price as disclosed on NSE.
3. Change in closing price over the closing price as on the listing date for benchmark index viz. NIFTY 50.
4. In case of reporting dates falling on a trading holiday, values for the trading day immediately preceding the trading holiday have been considered.
5. 30
th
calendar day has been taken as listing date plus 29 calendar days; 90
th
calendar day has been taken as listing date plus 89 calendar days; 180
th
calendar day has been taken a listing date plus 179 calendar days.
6. Restricted to last 10 issues.
7. A discount of ₹2 per Equity Share was offered to Eligible Ujjivan Financial Services Limited Shareholders bidding in Ujjivan Financial Services Limited Shareholders Reservation Portion
8. Not Applicable – Period not completed
3. Summary statement of price information of past issues handled by JM Financial Limited:
Financial
Year
Total
no. of
IPOs
Total funds
raised
(₹ Millions)
Nos. of IPOs trading at discount on as
on 30
th
calendar days from listing
date
Nos. of IPOs trading at premium on
as on 30
th
calendar days from listing
date
Nos. of IPOs trading at discount as
on 180
th
calendar days from listing
date
Nos. of IPOs trading at premium as
on 180
th
calendar days from listing
date
275
Over
50%
Between
25% - 50%
Less than
25%
Over 50%
Between
25%-50%
Less than
25%
Over 50%
Between
25%-50%
Less than
25%
Over 50%
Between
25%-50%
Less than
25%
2020-2021
4
39,311.70
-
-
1
1
-
2
-
-
-
-
-
-
2019-2020
4
36,400.83**
-
-
1
-
1
2
-
1
1
-
1
1
2018-2019
4
68,856.80
-
-
1
1
-
2
-
1
-
1
-
2
**Spandana Sphoorty Financial Limited raised ₹11,898.49 million as against the issue size of Rs. 12,009.36 million
Track record of past issues handled by the BRLMs
For details regarding the track record of the BRLMs, as specified in circular reference CIR/ MIRSD/ 1/ 2012 dated January 10, 2012 issued by SEBI, see the websites of the BRLMs,
as set forth in the table below:
S. No
Name of the BRLM
Website
1.
Edelweiss Financial Services Limited
www.edelweissfin.com
2.
JM Financial Limited
www.jmfl.com
276
Consents
Consents in writing of: (a) all the Selling Shareholders, our Directors, our Company Secretary and Compliance Officer,
our Chief Financial Officer, Statutory Auditor, Mishra & Co., Chartered Accountants, legal counsels appointed for the
Offer, Bankers to our Company, the BRLMs, F&S, the Registrar to the Offer, in their respective capacities, have been
obtained; and (b) the Syndicate Members, the Banker to the Offer/ Escrow Collection Bank/ Refund Bank, Sponsor
Bank to act in their respective capacities, have been obtained and will be filed along with a copy of this Red Herring
Prospectus with the RoC as required under the Companies Act, 2013 and such consents have not been withdrawn up to
the time of delivery of this Red Herring Prospectus.
Expert to the Offer
Except as stated below, our Company has not obtained any expert opinions:
Our Company has received written consent from the Statutory Auditors namely, Deloitte Haskins & Sells, Chartered
Accountants, to include their name in this Red Herring Prospectus as required under Section 26(5) of the Companies
Act, 2013 read with SEBI ICDR Regulations and as an “Expert” as defined under Section 2(38) of the Companies Act,
2013, in respect of the reports of the Statutory Auditors on the Restated Financial Statements dated November 19, 2020
and the statement of special direct tax benefits dated January 15, 2021, included in this Red Herring Prospectus and such
consent has not been withdrawn as on the date of this Red Herring Prospectus. However, the term “expert” and consent
thereof shall not be construed to mean an “expert” or consent as defined under the Securities Act.
Our Company has received written consent from Mishra & Co., Chartered Accountants, to include their name in this
Red Herring Prospectus as required under Section 26(5) of the Companies Act, 2013 read with SEBI ICDR Regulations
and as an “Expert” as defined under Section 2(38) of the Companies Act, 2013, in respect of the statement of special
indirect tax benefits dated January 15, 2021, included in this Red Herring Prospectus and such consent has not been
withdrawn as on the date of this Red Herring Prospectus. However, the term “expert” shall not be construed to mean an
“expert” as defined under the Securities Act.
In relation to our Bengaluru facility, our Company has received written consent from G. Shyam Sunder & Associates,
Chartered Engineers, dated November 16, 2020, to include their names in this Red Herring Prospectus and as “expert”
as defined under section 2(38) of the Companies Act in respect of the certificate dated November 16, 2020 and such
consent has not been withdrawn as on the date of this Red Herring Prospectus.
In relation to our Baddi facility, our Company has received written consent from Parashar & Co., Chartered Engineers
dated November 18, 2020 to include their names in this Red Herring Prospectus and as “expert” as defined under section
2(38) of the Companies Act in respect of the certificate dated November 18, 2020 and such consent has not been
withdrawn as on the date of this Red Herring Prospectus.
Particulars regarding public or rights issues by our Company during the last five years
Our Company has not made any public or rights issues during the five years preceding the date of this Red Herring
Prospectus.
Previous issues of Equity Shares otherwise than cash or by way of bonus issues
Except as disclosed in this Red Herring Prospectus, our Company has not issued any Equity Shares other than for cash
or by way of a bonus issue.
Mechanism for redressal of investor grievances
The Registrar Agreement provides for retention of records with the Registrar to the Offer for a period of at least eight
years after completion of the Offer or such later period as may be prescribed under Applicable Laws, to enable the
investors to approach the Registrar to the Offer for redressal of their grievances.
All grievances relating to the Offer may be addressed to the Registrar to the Offer, giving full details such as name,
address of the applicant, number of Equity Shares applied for, amount paid on application and the bank branch or
collection centre where the application was submitted.
All grievances relating to the ASBA process may be addressed to the Registrar to the Offer with a copy to the relevant
Designated Intermediary with whom the Bid cum Application Form was submitted. The Bidder should provide complete
details such as name of the sole/ first Bidder, ASBA Form number, the Bidder’s, DP ID, Client ID, UPI ID (for RIIs
who make the payment of Bid Amount through the UPI mechanism) linked to the ASBA, PAN, date of the ASBA Form,
address of the Bidder, number of Equity Shares applied for, the name and address of the Designated Intermediary where
277
the ASBA Form was submitted by the ASBA Bidder and the ASBA Account number in which the amount equivalent
to the Bid Amount is blocked. Further, the Bidder shall also enclose the Acknowledgement Slip from the Designated
Intermediaries in addition to the documents/ information mentioned hereinabove. The Registrar to the Offer shall obtain
the required information from the SCSBs for addressing any clarifications or grievances of ASBA Bidders.
All grievances of the Anchor Investors may be addressed to the Registrar to the Offer, giving full details such as name
of the sole/ first Bidder, Anchor Investor Form number, DP ID, Client ID, PAN, date of the Anchor Investor Form,
address of the Anchor Investor, number of Equity Shares applied for, Bid Amount paid on submission of the Anchor
Investor Form and the name and address of the BRLM where the Anchor Investor Form was submitted by the Anchor
Investor.
Our Company has not received investor complaints during the period of three years preceding the date of this Red
Herring Prospectus or the Draft Red Herring Prospectus. No investor complaint is pending against the company as on
date of this Red Herring Prospectus.
Further, with respect to the Bid cum Application Forms submitted with the Registered Brokers, the investor shall also
enclose the acknowledgment from the Registered Broker in addition to the documents/ information mentioned
hereinabove.
Subject to the obligations of the BRLMs under Regulations 24 and 52 of the SEBI ICDR Regulations, our Company,
the Selling Shareholders, the BRLMs and the Registrar to the Offer accept no responsibility for errors, omissions,
commission of any acts of the Designated Intermediaries including any defaults in complying with its obligations under
the SEBI ICDR Regulations.
Our Company is in the process of obtaining authentication on SCORES and has made an application dated January 8,
2021 for registration under SCORES in relation to redressal of investor grievances through SCORES.
Disposal of investor grievances by our Company
Our Company estimates that the average time required by our Company or the Registrar to the Offer or the SCSB in
case of ASBA Bidders, for the redressal of routine investor grievances shall be 10 Working Days from the date of receipt
of the complaint. In case of non-routine complaints and complaints where external agencies are involved, our Company
will seek to redress these complaints as expeditiously as possible.
Our Company has appointed a Stakeholders’ Relationship Committee comprising Lakshmikant Gupta, Shubha Rao
Mayya and Rajendra Gandhi as members. For details, see “Our Management” on page 153.
Our Company has also appointed Shashidhar SK, as the Chief Financial Officer, Company Secretary and Compliance
Officer of our Company for the Offer and he may be contacted in case of any pre-Offer or post-Offer related problems
at the following address:
Stove Kraft Limited
81/1, Medamarana Halli Village
Harohalli Hobli, Kanakapura Taluk
Ramnagar District 562 112
Karnataka, India
Tel: +91 8028016222
Fax: +91 8028016209
E-mail: cs@stovekraft.com
Website: www.stovekraft.com
278
SECTION VII: OFFER INFORMATION
TERMS OF THE OFFER
The Equity Shares being issued and transferred pursuant to this Offer shall be subject to the provisions of the Companies
Act, the SEBI ICDR Regulations, the SCRA, the SCRR, the Memorandum and Articles of Association, the SEBI Listing
Regulations, the terms of this Red Herring Prospectus, the Prospectus, the Abridged Prospectus, Bid cum Application
Form, the Revision Form, the CAN, the Allotment Advice and other terms and conditions as may be incorporated in the
Allotment Advice and the other documents/ certificates that may be executed in respect of the Offer. The Equity Shares
shall also be subject to applicable laws, guidelines, rules, notifications and regulations relating to the issue of capital and
listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the
RBI, RoC and/ or other authorities, as in force on the date of the Offer and to the extent applicable or such other
conditions as may be prescribed by SEBI, the RBI, the Government of India, the Stock Exchanges, the RoC and any
other authorities while granting their approval for the Offer.
The Offer
The Offer comprises of a Fresh Issue and an Offer for Sale by the Selling Shareholders. All fees and expenses relating
to the Offer other than the listing fees (which will be borne by our Company) shall be shared amongst our Company and
the Selling Shareholders in accordance with applicable law. However, for ease of operations, expenses of the Selling
Shareholders in relation to their respective portion of the Offer for Sale may, at the outset, be borne by our Company on
behalf of the Selling Shareholders, and the Selling Shareholders agree that they will reimburse our Company all such
expenses, upon successful completion of the Offer, in accordance with applicable law.
Ranking of the Equity Shares
The Equity Shares being issued and transferred pursuant to the Offer shall be subject to the provisions of the Companies
Act, the MoA and AoA and shall rank pari-passu in all respects with the existing Equity Shares including in respect of
the rights to receive dividend. The Allottees upon Allotment of Equity Shares under the Offer, will be entitled to dividend
and other corporate benefits, if any, declared by our Company after the date of Allotment in accordance with applicable
law. For further details, see “Description of Equity Shares and Terms of the Articles of Association” on page 300.
Mode of payment of dividend
Our Company shall pay dividends, if declared, to our Shareholders in accordance with the provisions of Companies Act,
2013, the Memorandum and Articles of Association, the SEBI Listing Regulations and other applicable laws. All
dividends, if any, declared by our Company after the date of Allotment (pursuant to the transfer of Equity Shares from
the Offer for Sale), will be payable to the Allottees, in accordance with applicable law. For further details, in relation to
dividends, see “Dividend Policy” and “Description of Equity Shares and Terms of the Articles of Association” on pages
172 and 300, respectively.
Face value, Price Band and Offer Price
The face value of each Equity Share is ₹10 and the Offer Price at the lower end of the Price Band is ₹[●] per Equity
Share and at the higher end of the Price Band is ₹[●] per Equity Share. The Anchor Investor Offer Price is ₹[●] per
Equity Share.
The Price Band and the minimum Bid Lot size for the Offer will be decided by our Company and the Selling
Shareholders, in consultation with the BRLMs and advertised in all editions of the English national daily newspaper
Financial Express, all editions of the Hindi national daily newspaper Jansatta and the Bengaluru edition of Kannada
daily newspaper Vishwavani, (Kannada being the regional language of Karnataka where our Registered Office is
situation) each with wide circulation, at least two Working Days, as per the SEBI ICDR Regulations, prior to the Bid/
Offer Opening Date and shall be made available to the Stock Exchanges for the purpose of uploading the same on their
websites. The Price Band, along with the relevant financial ratios calculated at the Floor Price and at the Cap Price, shall
be pre-filled in the Bid cum Application Forms available on the websites of the Stock Exchanges.
The Offer will constitute [●]% of post-Offer, paid-up Equity Share capital of the company.
At any given point of time there shall be only one denomination of Equity Shares.
Compliance with disclosure and accounting norms
Our Company shall comply with all applicable disclosure and accounting norms as specified by SEBI from time to time.
279
Rights of the Equity Shareholders
Subject to applicable laws, rules, regulations and guidelines and the Articles of Association, our Equity Shareholders
shall have the following rights:
• Right to receive dividends, if declared;
• Right to attend general meetings and exercise voting rights, unless prohibited by law;
• Right to vote on a poll either in person or by proxy or e-voting, in accordance with the provisions of the
Companies Act;
• Right to receive offers for rights shares and be allotted bonus shares, if announced;
• Right to receive surplus on liquidation, subject to any statutory and preferential claim being satisfied;
• Right of free transferability of Equity Shares, subject to applicable laws including any RBI rules and
regulations; and
• Such other rights, as may be available to a shareholder of a listed public company under the Companies Act,
the terms of the SEBI Listing Regulations and the Memorandum and Articles of Association of our Company.
For a detailed description of the main provisions of the Articles of Association of our Company relating to voting rights,
dividend, forfeiture and lien, transfer, transmission and/ or consolidation/ splitting, see “Description of Equity Shares
and Terms of the Articles of Association ” on page 300.
Allotment of Equity Shares in dematerialised form
Pursuant to Section 29 of the Companies Act, 2013, the Equity Shares shall be Allotted only in dematerialised form.
Hence, the Equity Shares offered through this Red Herring Prospectus can be applied for in the dematerialised form
only.
The trading of the Equity Shares shall only be in dematerialised form. In this context, two agreements have been signed
amongst our Company, the respective Depositories and the Registrar to the Offer:
• Agreement dated May 9, 2018 amongst NSDL, our Company and the Registrar to the Offer; and
• Agreement dated May 30, 2018 amongst CDSL, our Company and the Registrar to the Offer.
Market Lot and Trading Lot
Since trading of the Equity Shares is in dematerialised form, the tradable lot is one Equity Share. Allotment in this Offer
will be only in electronic form in multiples of [●] Equity Share subject to a minimum Allotment of [●] Equity Shares.
Joint holders
Subject to our AoA, where two or more persons are registered as the holders of the Equity Shares, they shall be entitled
to hold the same as joint tenants with benefits of survivorship.
Jurisdiction
Exclusive jurisdiction for the purpose of this Offer is with the competent courts/ authorities in Bengaluru.
Nomination facility to investors
In accordance with Section 72 of the Companies Act, 2013 read with the Companies (Share Capital and Debentures),
Rules, 2014, the sole Bidder, or the First Bidder along with other joint Bidders, may nominate any one person in whom,
in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity
Shares Allotted, if any, shall vest to the exclusion of other persons, unless the nomination is varied or cancelled in the
prescribed manner. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original
holder(s), shall be entitled to the same advantages to which he or she would be entitled if he or she were the registered
holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the
prescribed manner, any person to become entitled to equity share(s) in the event of his or her death during the minority.
A nomination shall stand rescinded upon a sale/ transfer/ alienation of Equity Share(s) by the person nominating. A
280
buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the
prescribed form available on request at our Registered Office or to the registrar and transfer agents of our Company.
Any person who becomes a nominee by virtue of the provisions of Section 72 of the Companies Act, 2013 shall upon
the production of such evidence as may be required by our Board, elect either:
a) to register himself or herself as the holder of the Equity Shares; or
b) to make such transfer of the Equity Shares, as the deceased holder could have made.
Further, our Board may at any time give notice requiring any nominee to choose either to be registered himself or herself
or to transfer the Equity Shares, and if the notice is not complied with within a period of 90 days, our Board may
thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity Shares, until the
requirements of the notice have been complied with.
Since the Allotment of Equity Shares in the Offer will be made only in dematerialized mode there is no need to make a
separate nomination with our Company. Nominations registered with respective Depository Participant of the applicant
would prevail. If the investor wants to change the nomination, they are requested to inform their respective Depository
Participant.
Minimum subscription
In the event our Company does not receive (i) a minimum subscription of 90% of the Fresh Issue, and (ii) a subscription
in the Offer equivalent to at least the minimum number of securities as specified under Rule 19(2)(b) of the SCRR,
including through devolvement of Underwriters, as applicable, within 60 days from the Bid/Offer Closing Date, on the
date of closure of the Offer or withdrawal of applications, or if the subscription level falls below the threshold
under Rule 19(2)(b) of the SCRR mentioned above after the Bid/Offer Closing Date; or after technical rejections;
or if the listing or trading permission is not obtained from the Stock Exchanges for the Equity Shares so offered
under the offer document, our Company shall forthwith refund the entire subscription amount received. If there is a
delay beyond 15 days, our Company and our Directors, who are officers in default, shall pay interest at the rate of 15%
per annum, or as may be prescribed under applicable law. In case of under-subscription in the Offer, the Equity Shares
in the Fresh Issue will be issued prior to the Equity Shares in the Offer for Sale.
Further, our Company shall ensure that the number of prospective Allottees to whom the Equity Shares be Allotted shall
not be less than 1,000 in compliance with Regulation 49(1) of SEBI ICDR Regulations.
Undersubscription, if any, in any category except the QIB portion, would be met with spill-over from the other categories
at the discretion of our Company, in consultation with the Book Running Lead Managers, and the Designated Stock
Exchange.
Arrangements for Disposal of Odd Lots
There are no arrangements required for disposal of odd lots since the Equity Shares will be traded only in dematerialized
form and the market lot for the Equity Shares will be one Equity Share.
Restrictions, if any on Transfer and Transmission of Equity Shares
Except for the lock-in of the pre-Offer capital of our Company, lock–in of the minimum Promoter’s Contribution and
the Anchor Investor lock-in as provided in “Capital Structure” on page 60 and except as provided in the Articles of
Association there are no restrictions on transfer of Equity Shares. For details, see “Description of Equity Shares and
Terms of the Articles of Association” on page 300.
281
OFFER STRUCTURE
Initial public offer of up to [●] Equity Shares for cash at price of ₹[●] (including a premium of ₹[●] per Equity Share)
aggregating up to [●] comprising of a Fresh Issue of up to [●] Equity Shares aggregating up to ₹ 950.00 million by our
Company and Offer of Sale of up to 8,250,000 Equity Shares aggregating up to ₹[●] million by the Selling Shareholders.
The Offer will constitute [●]% of the post-Offer paid-up Equity Share capital of our Company.
The Offer is being made through the Book Building Process.
Particulars
QIBs
(1)
Non-Institutional Bidders
Retail Individual Bidders
Number of
Equity Shares
available for
Allotment/
allocation
(2)
Not less than [●] Equity Shares
Not more than [●] Equity Shares
available for allocation or Offer
less allocation to QIB Bidders
and Retail Individual Bidders
Not more than [●] Equity Shares
available for allocation or net offer
less allocation to QIBs and Non-
Institutional Bidders
Percentage of
Offer Size
available for
Allotment/
allocation
At least 75% of the Offer Size being
available for allocation to QIBs.
However, up to 5% of the Net QIB
Portion will be available for allocation
proportionately to Mutual Funds only.
Mutual Funds participating in the
Mutual Fund Portion will also be
eligible for allocation in the remaining
QIB Portion. The unsubscribed portion
in the Mutual Fund Portion will be
available for allocation to QIBs
Not more than 15% of the Offer
or the Offer less allocation to
QIBs and Retail Individual
Bidders shall be available for
allocation
Not more than 10% of the Offer or
Offer less allocation to QIBs and
Non-Institutional Bidders shall be
available for allocation
Basis of
Allotment/
allocation if
respective
category is
oversubscribed
Proportionate as follows (excluding the
Anchor Investor Portion):
(a) up to [●] Equity Shares shall be
available for allocated on a
proportionate basis to Mutual
Funds only; and
(b) [●] Equity Shares shall be
allotted on a proportionate basis
to all QIBs, including Mutual
Funds receiving allocation as per
(a) above.
Our Company and the Selling
Shareholders, in consultation with the
BRLMs, may allocate up to [●] Equity
Shares to Anchor Investors at the
Anchor Investor Allocation Price on a
discretionary basis of which one-third
shall be available for allocation to
Mutual Funds only, subject to valid
Bids being received from the domestic
Mutual Funds at or above the Anchor
Investor Allocation Price.
Proportionate
Allotment to each Retail Individual
Bidder shall not be less than the
minimum Bid lot, subject to
availability of Equity Shares in the
Retail Portion and the remaining
available Equity Shares is any, shall
be allotted on a proportionate basis.
For details see “Offer Procedure”
on page 285.
Minimum Bid
Such number of Equity Shares and in
multiples of [●] Equity Shares
thereafter such that the Bid Amount
exceeds ₹200,000
Such number of Equity Shares
and in multiples of [●] Equity
Shares thereafter such that the
Bid Amount exceeds ₹200,000
[●] Equity Shares
Maximum Bid
Such number of Equity Shares not
exceeding the size of the Offer, subject
to applicable limits, applicable to each
Bidder
Such number of Equity Shares
not exceeding the size of the
Offer (excluding the QIB
portion), subject to applicable
limits, applicable to each Bidder
Such number of Equity Shares so
that the Bid Amount does not
exceed ₹200,000
Mode of
Allotment
Compulsorily in dematerialized form
Bid Lot
[●] Equity Shares and in multiples of [●] Equity Shares thereafter
Allotment Lot
A minimum of [●] Equity Shares and thereafter in multiples of [●] Equity Shares.
Trading Lot
One Equity Share
Who can apply
(3)
(4)
Public financial institutions as
specified in Section 2(72) of the
Companies Act 2013, scheduled
commercial banks, mutual funds,
VCFs, AIFs and FVCIs registered with
the SEBI, FPIs (other than individuals,
Resident Indian individuals,
Eligible NRIs, HUFs (in the
name of Karta), companies,
corporate bodies, scientific
institutions, societies and trusts,
and FPIs who are individuals,
Resident Indian individuals,
Eligible NRIs and HUFs (in the
name of Karta)
282
Particulars
QIBs
(1)
Non-Institutional Bidders
Retail Individual Bidders
corporate bodies and family offices),
public financial institutions, schedules
commercial banks, multilateral and
bilateral development financial
institutions, state industrial
development corporation, insurance
company registered with IRDAI,
provident fund with minimum corpus
of ₹250 million, pension fund with
minimum corpus of ₹250 million
National Investment Fund set up by the
Government of India, insurance funds
set up and managed by army, navy or
air force of the Union of India,
insurance funds set up and managed by
the Department of Posts, India and
systemically important NBFCs
corporate bodies and family
offices.
Terms of
Payment
Full Bid Amount shall be blocked by the SCSBs in the bank account of the ASBA Bidder or by the Sponsor
Bank through the UPI Mechanism (only for Retail Individual Bidders) that is specified in the ASBA Form at
the time of submission of the ASBA Form
(4)
Mode of Bidding
Only through the ASBA process (except for Anchor Investors).
(1) Our Company and the Selling Shareholders may, in consultation with the BRLMs, allocate up to 60% of the QIB Portion to Anchor Investors
on a discretionary basis in accordance with the applicable SEBI ICDR Regulations. One-third of the Anchor Investor Portion shall be reserved
for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price Anchor Investor Allocation
Price. In the event of under-subscription or non-Allotment in the Anchor Investor Portion, the balance Equity Shares in the Anchor Investor
Portion shall be added to the QIB Portion. For details, see “Offer Structure” on page 281.
(2) Subject to valid Bids being received at or above the Offer Price. This is an Offer in terms of Rule 19(2)(b) of the SCRR.
(3) In case of joint Bids, the Bid cum Application Form should contain only the name of the first Bidder whose name should also appear as the first
holder of the beneficiary account held in joint names. The signature of only such first Bidder would be required in the Bid cum Application
Form and such first Bidder would be deemed to have signed on behalf of the joint holders
(4) Full Bid Amount shall be payable by the Anchor Investors at the time of submission of the Anchor Investor Application Forms provided that any
difference between the Anchor Investor Allocation Price and the Anchor Investor Offer Price shall be payable by the Anchor Investor pay-in
date as indicated in the CAN. For details of terms of payment applicable to Anchor Investors, see General Information Document.
Bidders will be required to confirm and will be deemed to have represented to our Company, the Selling Shareholders,
the Underwriters, their respective directors, officers, agents, affiliates and representatives that they are eligible under
applicable law, rules, regulations, guidelines and approvals to Bid and acquire the Equity Shares.
Subject to valid Bids being received at or above the Offer Price, under-subscription, if any, in the Non-Institutional
Portion or the Retail Portion would be allowed to be met with spill-over from other categories or a combination of
categories at the discretion of our Company and the Selling Shareholders, in consultation with the BRLMs and the
Designated Stock Exchange, on a proportionate basis. However, under-subscription, if any, in the QIB Portion will not
be allowed to be met with spill-over from other categories or a combination of categories. For further details, see “Terms
of the Offer” on page 278.
Withdrawal of the Offer
Our Company and the Selling Shareholders severally and not jointly, in consultation with the BRLMs, reserve the right
not to proceed with the Fresh Issue, and each Investor Selling Shareholder, severally and not jointly, reserves the right
not to proceed with the Offer for Sale, in whole or in part thereof, to the extent of their respective portion of the Offered
Shares, after the Bid/ Offer Opening Date but before the Allotment. In such an event, our Company would issue a public
notice in the newspapers in which the pre-Offer advertisements were published, within two days of the Bid/ Offer
Closing Date or such other time as may be prescribed by SEBI, providing reasons for not proceeding with the Offer and
inform the Stock Exchanges simultaneously. The BRLMs, through the Registrar to the Offer, shall instruct the SCSBs
and the Sponsor Bank, as applicable, to unblock the bank accounts of the ASBA Bidders within one Working Day from
the date of receipt of such instruction and also inform the Banker to the Offer to process refunds to the Anchor Investors,
as the case may be. Our Company shall also inform the same to the Stock Exchanges on which Equity Shares are
proposed to be listed. The notice of withdrawal will be issued in the same newspapers where the pre-Offer
advertisements have appeared and the Stock Exchanges will also be informed promptly.
If our Company and/or the Selling Shareholders withdraw the Offer after the Bid/ Offer Closing Date and thereafter
determines that it will proceed with an issue/ offer for sale of the Equity Shares, our Company shall file a fresh draft red
herring prospectus with SEBI. Notwithstanding the foregoing, this Offer is also subject to obtaining the final listing and
trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment, and the final RoC
approval of the Prospectus after it is filed with the RoC.
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Bid/ Offer Programme
BID/ OFFER OPENS ON
January 25, 2021
(1)
BID/ OFFER CLOSES ON
January 28, 2021
(1) Our Company and the Selling Shareholders may, in consultation with the BRLMs, consider participation by Anchor Investors. The Anchor
Investor Bidding Date shall be one Working Day prior to the Bid/ Offer Opening Date in accordance with the SEBI ICDR Regulations
An indicative timetable in respect of the Offer is set out below:
Event
Indicative Date
Bid/ Offer Closing Date
January 28, 2021
Finalisation of Basis of Allotment with the Designated Stock Exchange
On or about February 2, 2021
Initiation of refunds (if any, for Anchor Investors)/ unblocking of funds in ASBA Accounts*
On or about February 3, 2021
Credit of Equity Shares to demat accounts of Allottees
On or about February 4, 2021
Commencement of trading of the Equity Shares on the Stock Exchanges
On or about February 5, 2021
*In case of any delay in unblocking of amounts in the ASBA Accounts (including amounts blocked through the UPI Mechanism) exceeding four
Working Days from the Bid/Offer Closing Date, the Bidder shall be compensated at a uniform rate of ₹100 per day for the entire duration of delay
exceeding four Working Days from the Bid/Offer Closing Date by the intermediary responsible for causing such delay in unblocking. The BRLMs
shall, in their sole discretion, identify and fix the liability on such intermediary or entity responsible for such delay in unblocking.
The above timetable is indicative other than the Bid/ Offer Opening Date and the Bid/ Offer Closing Date and
does not constitute any obligation on our Company or the Selling Shareholders or the BRLMs.
Whilst our Company shall ensure that all steps for the completion of the necessary formalities for the listing and
the commencement of trading of the Equity Shares on the Stock Exchanges are taken within six Working Days
of the Bid/ Offer Closing Date or such other period as may be prescribed by SEBI (and the Selling Shareholders
shall extend reasonable cooperation with respect to its Offered Shares), the timetable may change due to various
factors, such as extension of the Bid/ Offer Period by our Company and the Selling Shareholders, revision of the
Price Band or any delay in receiving the final listing and trading approval from the Stock Exchanges. The
commencement of trading of the Equity Shares will be entirely at the discretion of the Stock Exchanges and in
accordance with the applicable laws.
In terms of the UPI Circulars, in relation to the Offer, the BRLMs will submit reports of compliance with T+6 listing
timelines and activities, identifying non-adherence to timelines and processes and an analysis of entities responsible for
the delay and the reasons associated with it.
SEBI is in the process of streamlining and reducing the post issue timeline for IPOs. Any circulars or notifications from
SEBI after the date of this Red Herring Prospectus may result in changes to the above mentioned timelines. Further, the
offer procedure is subject to change to any revised SEBI circulars to this effect.
Except in relation to the Bids received from the Anchor Investors, Bids and any revision in Bids shall be accepted only
between 10.00 a.m. and 5.00 p.m. Indian Standard Time (“IST”) during the Bid/ Offer Period (except the Bid/ Offer
Closing Date) at the Bidding Centres and the Designated Branches mentioned on the Bid cum Application Form.
On the Bid/ Offer Closing Date, the Bids and any revision in the Bids shall be accepted only between 10.00 a.m. and
3.00 p.m. IST. The Bids shall be uploaded until (i) 4.00 p.m. IST in case of Bids by QIBs and Non-Institutional Bidders,
and (ii) until 5.00 p.m. IST or such extended time as permitted by the Stock Exchanges, in case of Bids by Retail
Individual Bidders after taking into account the total number of applications received up to the closure of timings and
reported by the BRLMs to the Stock Exchanges.
It is clarified that Bids not uploaded on the electronic bidding system of the Stock Exchanges or in respect of
which the full Bid Amount is not blocked by the SCSBs or not blocked under the UPI Mechanism in the relevant
ASBA Account, as the case may be, would be rejected.
Due to limitation of time available for uploading the Bids on the Bid/ Offer Closing Date, Bidders are advised to submit
their Bids one day prior to the Bid/ Offer Closing Date and, in any case, no later than 1.00 p.m. IST on the Bid/ Offer
Closing Date. Any time mentioned in this Red Herring Prospectus is IST. Bidders are cautioned that, in the event a large
number of Bids are received on the Bid/ Offer Closing Date, as is typically experienced in public offerings, some Bids
may not get uploaded due to lack of sufficient time. Such Bids that cannot be uploaded will not be considered for
allocation under this Offer. Bids will be accepted only on Working Days. None among our Company, the Selling
Shareholders or any member of the Syndicate is liable for any failure in (i) uploading the Bids due to faults in any
software/ hardware system or otherwise; or (ii) the blocking of Bid Amount in the ASBA Account on receipt of
instructions from the Sponsor Bank on account of any errors, omissions or non-compliance by various parties involved
in, or any other fault, malfunctioning or breakdown in, or otherwise, in the UPI Mechanism.
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In case of any discrepancy in the data entered in the electronic book vis-a-vis the data contained in the physical Bid cum
Application Form, for a particular Bidder, the details as per the Bid file received from the Stock Exchanges may be
taken as the final data for the purpose of Allotment. In case of discrepancy in the data entered in the electronic book vis-
a-vis the data contained in the physical or electronic Bid cum Application Form, for a particular ASBA Bidder, the
Registrar to the Offer shall ask for rectified data.
Our Company and the Selling Shareholders, in consultation with the BRLMs, reserve the right to revise the Price Band
during the Bid/ Offer Period, provided that the Cap Price shall be less than or equal to 120% of the Floor Price and the
Floor Price shall not be less than the face value of the Equity Shares. The revision in the Price Band shall not exceed
20% on either side i.e. the Floor Price can move up or down to the extent of 20% of the Floor Price and the Cap Price
will be revised accordingly.
In case of such revision in the Price Band, the Bid/ Offer Period shall be extended for at least three additional
Working Days after such revision, subject to the Bid/ Offer Period not exceeding 10 Working Days. In case of
force majeure, banking strike or similar circumstance, we may extend the Bidding Period for a minimum period
of three working days, not exceeding 10 working days. Any revision in Price Band, and the revised Bid/ Offer
Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges, by issuing a public
notice and also by indicating the change on the websites of the BRLMs and the terminals of the other Syndicate
Members and intimated to the Designated Intermediaries and Sponsor Bank. However, in case of Revision of
price Band, the Bid lot shall remain the same.
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OFFER PROCEDURE
ll Bidders should read the General Information Document for Investing in Public Issues prepared and issued in
accordance with the circular bearing number SEBI/HO/CFD/DIL1/CIR/P/2020/37 dated March 17, 2020, notified by
SEBI and updated pursuant to the UPI Circulars (the “General Information Document”) which highlights the key
rules, processes and procedures applicable to public issues in general in accordance with the provisions of the
Companies Act, the SCRA, the SCRR and the SEBI ICDR Regulations which is part of the abridged prospectus
accompanying the Bid cum Application Form. The General Information Document is available on the websites of the
Stock Exchanges and the BRLMs. Please refer to the relevant provisions of the General Information Document which
are applicable to the Offer.
Additionally, all Bidders may refer to the General Information Document for information in relation to (i) Category of
investors eligible to participate in the Offer; (ii) maximum and minimum Bid size; (iii) price discovery and allocation;
(iv) Payment Instructions for ASBA Bidders/Applicants; (v)Issuance of CAN and allotment in the Offer; (vi) General
instructions (limited to instructions for completing the Bid Form); (vii) Submission of Bid cum Application Form; (viii)
Other Instructions (limited to joint bids in cases of individual, multiple bids and instances when an application would
be rejected on technical grounds); (ix) applicable provisions of the Companies Act, 2013 relating to punishment for
fictitious applications; (x) mode of making refunds; (xi) Designated Date; (xii) electronic registration of Bids; and (xiii)
interest in case of delay in allotment or refund.
SEBI vide its circular no. SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 1, 2018 read with its circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/50 dated April 3, 2019, has introduced an alternate payment mechanism using
Unified Payments Interface (“UPI”) and consequent reduction in timelines for listing in a phased manner. From
January 1, 2019, the UPI Mechanism for RIBs applying through Designated Intermediaries was made effective along
with the existing process and existing timeline of T+6 days. (“UPI Phase I”). The UPI Phase I was effective till June
30, 2019.
With effect from July 1, 2019, SEBI vide its circular no. SEBI/HO/CFD/DIL2/CIR/P/2019/76 dated June 28, 2019, read
with circular bearing number SEBI/HO/CFD/DIL2/CIR/P/2019/85 dated July 26, 2019 with respect to Bids by RIBs
through Designated Intermediaries (other than SCSBs), the existing process of physical movement of forms from such
Designated Intermediaries to SCSBs for blocking of funds has been discontinued and only the UPI Mechanism for such
Bids with existing timeline of T+6 days was mandated for a period of three months or launch of five main board public
issues, whichever is later (“UPI Phase II”). Subsequently, however, SEBI vide its circular no.
SEBI/HO/CFD/DIL2/CIR/P/2020/50 dated March 30, 2020 extended the timeline for implementation of UPI Phase II
until further notice. The final reduced timeline of T+3 days will be made effective using the UPI Mechanism for
applications by RIBs (“UPI Phase III”), as may be prescribed by SEBI. The Offer will be undertaken pursuant to the
processes and procedures under UPI Phase II, subject to any circulars, clarification or notification issued by the SEBI
from time to time.
Our Company, the Selling Shareholders and the BRLMs do not accept any responsibility for the completeness and
accuracy of the information stated in this section and are not liable for any amendment, modification or change in the
applicable law which may occur after the date of this Red Herring Prospectus. Bidders are advised to make their
independent investigations and ensure that their Bids are submitted in accordance with applicable laws and do not
exceed the investment limits or maximum number of the Equity Shares that can be held by them under applicable law
or as specified in this Red Herring Prospectus and the Prospectus.
Further, our Company and the Syndicate are not liable for any adverse occurrences consequent to the implementation
of the UPI Mechanism for application in this Offer.
Book Building Procedure
The Offer is being made through the Book Building Process in accordance with Regulation 6(2) of the SEBI ICDR
Regulations wherein at least 75% of the Offer shall be Allotted to QIBs on a proportionate basis, provided that our
Company and the Selling Shareholders, in consultation with the BRLMs may allocate up to 60% of the QIB Category
to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations, of which one-third shall
be reserved for domestic Mutual Funds, subject to valid Bids being received from them at or above the Anchor Investor
Allocation Price. 5% of the QIB Category (excluding the Anchor Investor Portion) shall be available for allocation on
a proportionate basis to Mutual Funds only, and the remainder of the QIB Category 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. If at least 75% of the Offer cannot be Allotted to QIBs, then the entire
application money shall be refunded forthwith. Further, not more than 15% of the Offer shall be available for allocation
on a proportionate basis to Non-Institutional Investors and not more than 10% of the Offer shall be available for
286
allocation to Retail Individual Investors in accordance with the SEBI ICDR Regulations, subject to valid Bids being
received at or above the Offer Price.
Under-subscription, if any, in any portion except in the QIB Portion, would be allowed to be met with spill-over from
any other portion or combination of portions, at the discretion of our Company and the Selling Shareholders, in
consultation with the BRLMs and the Designated Stock Exchange and subject to applicable laws.
The Equity Shares, on Allotment, shall be traded only in the dematerialised segment of the Stock Exchanges.
Bidders should note that the Equity Shares will be Allotted to all successful Bidders only in dematerialised form.
The Bid cum Application Forms that do not have the details of the Bidders’ depository account, including DP
ID, Client ID, UPI ID as applicable, and PAN and UPI ID (for RIBs using the UPI Mechanism), shall be treated
as incomplete and will be rejected. Bidders will not have the option of being Allotted Equity Shares in physical
form.
Phased implementation of UPI Mechanism
SEBI has issued the UPI Circulars in relation to streamlining the process of public issue of inter alia, equity shares.
Pursuant to the UPI Circulars, the UPI Mechanism has been introduced in a phased manner as a payment mechanism
(in addition to mechanism of blocking funds in the account maintained with SCSBs under ASBA) for applications by
RIBs through Designated Intermediaries with the objective to reduce the time duration from public issue closure to
listing from six Working Days to upto three Working Days. Considering the time required for making necessary changes
to the systems and to ensure complete and smooth transition to the UPI payment mechanism, the UPI Circulars have
introduced the UPI Mechanism in three phases in the following manner:
Phase I: This phase was applicable from January 1, 2019 until March 31, 2019 or floating of five main board public
issues, whichever was later. Subsequently, the timeline for implementation of Phase I was extended till June 30, 2019.
Under this phase, an RIB had the option to submit the ASBA Form with any of the Designated Intermediary and use
his/ her UPI ID for the purpose of blocking of funds. The time duration from public issue closure to listing continued to
be six Working Days.
Phase II: This phase has become applicable from July 1, 2019 and the continuation of this phase has been extended until
March 31, 2020. Under this phase, submission of the ASBA Form by RIBs through Designated Intermediaries (other
than SCSBs) to SCSBs for blocking of funds has been discontinued and is replaced by the UPI Mechanism. However,
the time duration from public issue closure to listing continues to be six Working Days during this phase. Subsequently,
SEBI vide its circular no. SEBI/HO/CFD/DIL2/CIR/P/2020/50 dated March 30, 2020 extended the timeline for
implementation of UPI Phase II until further notice.
Phase III: The commencement period of Phase III is yet to be notified. In this phase, the time duration from public issue
closure to listing is proposed to be reduced to three Working Days.
For further details, refer to the General Information Document available on the websites of BRLMs.
Bid cum Application Form
Copies of the ASBA Form and the abridged prospectus will be available with the Designated Intermediaries at the
relevant Bidding Centres and our Registered Office. An electronic copy of the ASBA Form will also be available for
download on the websites of NSE (www.nseindia.com) and BSE (www.bseindia.com), at least one day prior to the Bid/
Offer Opening Date.
Copies of the Anchor Investor Application Form will be available at the offices of the BRLMs.
All Bidders (other than Anchor Investors) shall mandatorily participate in the Offer only through the ASBA process.
Anchor Investors are not permitted to participate in the Offer through the ASBA process.
RIBs bidding using the UPI Mechanism must provide the UPI ID in the relevant space provided in the Bid cum
Application Form and the Bid cum Application Form that does not contain the UPI ID are liable to be rejected.
ASBA Bidders must provide bank account details or the UPI ID, as applicable, in the relevant space provided in the
ASBA Form and authorisation to block funds in their respective ASBA Accounts in the relevant space provided in the
ASBA Form and the ASBA Forms that do not contain such details are liable to be rejected.
ASBA Bidders shall ensure that the Bids are submitted on ASBA Forms bearing the stamp of the Designated
Intermediary, submitted at the Bidding Centres only (except in case of electronic ASBA Forms) and the ASBA Forms
287
not bearing such specified stamp are liable to be rejected. RIBs using UPI Mechanism, may submit their ASBA Forms,
including details of their UPI IDs, with the Syndicate, Sub-Syndicate members, Registered Brokers, RTAs or CDPs.
RIBs authorising an SCSB to block the Bid Amount in the ASBA Account may submit their ASBA Forms with the
SCSBs. ASBA Bidders (except RIBs) must provide bank account details and authorisation to block funds in the relevant
space provided in the ASBA Form and ASBA Forms that do not contain such details are liable to be rejected. Further,
ASBA Bidders other than RIBs bidding using the UPI Mechanism, must ensure that the ASBA Account has sufficient
credit balance such that an amount equivalent to the full Bid Amount can be blocked by the SCSB at the time of
submitting the Bid.
The prescribed colour of the Bid cum Application Form for the various categories is as follows:
Category
Colour of Bid cum
Application Form
*
Resident Indians (including relevant QIBs, Non-Institutional Investors, Retail Individual Bidders and
Eligible NRIs applying on a non-repatriation basis)
White
Non-Residents including Eligible NRIs applying on a repatriation basis, FPI, FVCIs, registered multilateral
and bilateral development financial institutions
Blue
Anchor Investors
White
*
Other than electronic Bid cum Application Form
In case of ASBA forms, the relevant Designated Intermediaries shall capture and upload the relevant bid details
(including UPI ID in case of ASBA Forms under the UPI Mechanism) in the electronic bidding system of the Stock
Exchanges.
For RIBs using UPI Mechanism, the Stock Exchanges shall share the Bid details (including UPI ID) with the Sponsor
Bank on a continuous basis through API integration to enable the Sponsor Bank to initiate UPI Mandate Request to
RIBs for blocking of funds. The Sponsor Bank shall initiate request for blocking of funds through NPCI to RIBs who
shall accept the UPI Mandate Request for blocking of funds on their respective mobile applications associated with UPI
ID linked bank account. For all pending UPI Mandate Requests, the Sponsor Bank shall initiate requests for blocking
of funds in the ASBA Accounts of relevant Bidders with a confirmation cut-off time of 12:00 pm on the first Working
Day after the Bid/ Offer Closing Date (“Cut-Off Time”) or any other time prescribed under applicable law. Accordingly,
RIBs Bidding through the UPI Mechanism should accept UPI Mandate Requests for blocking off funds prior to the Cut-
Off Time and all pending UPI Mandate Requests at the Cut-Off Time shall lapse.
For ASBA Forms (other than RIBs using UPI Mechanism), Designated Intermediaries (other than SCSBs) shall submit/
deliver the ASBA Forms to the respective SCSB where the Bidder has an ASBA bank account and shall not submit it
to any non-SCSB bank or any Escrow Collection Bank.
Participation by Promoters, Promoter Group, BRLMs, associates and affiliates of the BRLMs, the Syndicate
Members, persons related to Promoter and Promoter Group
The BRLMs and the Syndicate Member(s) shall not be allowed to purchase Equity Shares in this Offer in any manner,
except towards fulfilling their underwriting obligations. However, associates and affiliates of the BRLMs and the
Syndicate Member(s) may subscribe to or purchase Equity Shares in the Offer, in the QIB Portion or in Non-Institutional
Portion as may be applicable to such Bidders. Such Bidding and subscription may be on their own account or on behalf
of their clients. All categories of investors, including associates or affiliates of BRLMs and Syndicate Member(s), shall
be treated equally for the purpose of allocation to be made on a proportionate basis.
Neither (i) the BRLMs or any associates of the BRLMs (except Mutual Funds sponsored by entities which are associates
of the BRLMs or insurance companies promoted by entities which are associate of BRLMs or AIFs sponsored by the
entities which are associate of the BRLMs or FPIs (other than individuals, corporate bodies and family offices),
sponsored by the entities which are associates of the BRLMs nor; (ii) any “person related to the Promoter and members
of the Promoter Group” shall apply in the Offer under the Anchor Investor Portion.
For the purposes of this section, a QIB who has any of the following rights shall be deemed to be a “person related to
the Promoter and members of the Promoter Group”: (a) rights under a shareholders’ agreement or voting agreement
entered into with the Promoter and members of the Promoter Group; (b) veto rights; or (c) right to appoint any nominee
director on our Board.
Further, an Anchor Investor shall be deemed to be an associate of the BRLMs, if: (a) either of them controls, directly or
indirectly through its subsidiary or holding company, not less than 15% of the voting rights in the other; or (b) either of
them, directly or indirectly, by itself or in combination with other persons, exercises control over the other; or (c) there
is a common director, excluding a nominee director, amongst the Anchor Investor and the BRLMs. The members of the
Promoter Group will not participate in the Offer.
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Bids by Mutual Funds
With respect to Bids by Mutual Funds, a certified copy of their SEBI registration certificate must be lodged along with
the Bid cum Application Form. Failing this, our Company and the Selling Shareholders reserve the right to reject any
Bid without assigning any reason thereof.
Bids made by asset management companies or custodians of Mutual Funds shall specifically state names of the
concerned schemes for which such Bids are made.
In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered
with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple
Bids, provided that the Bids clearly indicate the scheme concerned for which the Bid has been made.
No Mutual Fund scheme shall invest more than 10% of its net asset value in equity shares or equity related
instruments of any single company provided that the limit of 10% shall not be applicable for investments in case
of index funds or sector or industry specific schemes. No Mutual Fund under all its schemes should own more
than 10% of any company’s paid-up share capital carrying voting rights.
Bids by HUFs
Bids by Hindu Undivided Families (or HUFs) should be made in the individual name of the Karta. The Bidder/Applicant
should specify that the Bid is being made in the name of the HUF in the Bid cum Application Form/Application Form
as follows:
“Name of sole or first Bidder/Applicant: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name
of the Karta”.
Bids/Applications by HUFs will be considered at par with Bids from individuals.
Bids by Eligible NRIs
Eligible NRIs may obtain copies of the Bid cum Application Form from the Designated Intermediaries. Eligible NRI
Bidders Bidding on a repatriation basis by using the Non-Resident Forms should authorise their respective SCSBs to
block their Non-Resident External (“NRE”) accounts or Foreign Currency Non-Resident (“FCNR”) Accounts, and
eligible NRI Bidders Bidding on a non-repatriation basis by using Resident Forms should authorise their respective
SCSBs to block their Non-Resident Ordinary (“NRO”) accounts for the full Bid Amount or if using the UPI mechanism,
they should approve the Mandate Request generated by the Sponsor Bank to authorise blocking of funds equivalent to,
at the time of the submission of the Bid cum Application Form.
Eligible NRIs Bidding on non-repatriation basis are advised to use the Bid cum Application Form for residents (White
in colour). Eligible NRIs Bidding on a repatriation basis are advised to use the Bid cum Application Form meant for
Non-Residents (Blue in colour). Participation by NRIs shall be subject to FEMA Regulations. NRIs applying in the
Offer using UPI Mechanism are advised to enquire with the relevant bank whether their bank account is UPI linked
prior to making such application. For details of investment by NRIs, see “Restriction in Foreign Ownership of Indian
Securities” on page 299 of this Red Herring Prospectus. Participation of eligible NRIs shall be subject to FEMA Non-
Debt Instruments Rules.
Bids by FPIs
In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or its investor group (which means
multiple entities registered as FPI and having common ownership directly or indirectly of more than 50% or common
control) must be below 10% of our post-Offer Equity Share capital on a fully diluted basis. Further, in terms of the
FEMA Non-Debt Instrument Rules, the total holding by each FPI, of an investor group, shall be below 10% of the total
paid-up Equity Share capital of our Company (on a fully diluted basis) and the total holdings of all FPIs put together
could be upto 100%, being the sectoral cap, of the paid-up Equity Share capital of our Company (on a fully diluted
basis).
In case of Bids made by FPIs, a certified copy of the certificate of registration issued under the SEBI FPI Regulations
is required to be attached to the Bid cum Application Form, failing which our Company reserves the right to reject any
Bid without assigning any reason. FPIs who wish to participate in the Offer are advised to use the Bid cum Application
Form for Non-Residents (Blue in colour).
In terms of the FEMA Regulations, for calculating the aggregate holding of FPIs in a company, holding of all registered
FPIs shall be included.
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With effect from April 1, 2020, the aggregate limits for FPI investments are the sectoral caps applicable to our Company
(i.e. up to 100% under the automatic route).
The FEMA Non-Debt Instruments Rules was enacted on October 17, 2019 in supersession of the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, except as respects
things done or omitted to be done before such supersession. FPIs are permitted to participate in the Offer subject to
compliance with conditions and restrictions which may be specified by the Government from time to time.
To ensure compliance with the above requirement, SEBI, pursuant to its circular dated July 13, 2018, has directed that
at the time of finalisation of the Basis of Allotment, the Registrar shall (i) use the PAN issued by the Income Tax
Department of India for checking compliance for a single FPI; and (ii) obtain validation from Depositories for the FPIs
who have invested in the Offer to ensure there is no breach of the investment limit, within the timelines for issue
procedure, as prescribed by SEBI from time to time.
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of the SEBI
FPI Regulations, an FPI, may issue, subscribe to or otherwise deal in offshore derivative instruments (as defined under
the SEBI FPI Regulations as any instrument, by whatever name called, which is issued overseas by a FPI against
securities held by it in India, as its underlying) directly or indirectly, only in the event (i) such offshore derivative
instruments are issued only by persons registered as Category I FPIs; (ii) such offshore derivative instruments are issued
only to persons eligible for registration as Category I FPIs; (iii) such offshore derivative instruments are issued after
compliance with ‘ know your client’ norms; and (iv) such other conditions as may be specified by SEBI from time to
time.
In case the total holding of an FPI increases beyond 10% of the total paid-up Equity Share capital, on a fully diluted
basis or 10% or more of the paid-up value of any series of debentures or preference shares or share warrants issued that
may be issued by our Company, the total investment made by the FPI will be re-classified as FDI subject to the
conditions as specified by SEBI and RBI in this regard and our Company and the investor will be required to comply
with applicable reporting requirements.
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of the SEBI
FPI Regulations, an FPI is permitted to issue, subscribe to, or otherwise deal in offshore derivative instruments, directly
or indirectly, only if it complies with the following conditions:
(a) such offshore derivative instruments are issued only by persons registered as Category I FPIs;
(b) such offshore derivative instruments are issued only to persons eligible for registration as Category I FPIs;
(c) such offshore derivative instruments are issued after compliance with the ‘ know your client’ norms as specified
by SEBI; and
(d) such other conditions as may be specified by SEBI from time to time.
An FPI is required to ensure that the transfer of an offshore derivative instruments issued by or on behalf of it, is subject
to (a) the transfer being made to persons which fulfil the criteria provided under the SEBI FPI Regulations (as mentioned
above from points (a) to (d)); and (b) prior consent of the FPI is obtained for such transfer, except in cases, where the
persons to whom the offshore derivative instruments are to be transferred, are pre-approved by the FPI.
Bids by following FPIs, submitted with the same PAN but with different beneficiary account numbers, Client IDs and
DP IDs shall not be treated as multiple Bids:
• FPIs which utilise the multi investment manager (“MIM”) structure;
• Offshore derivative instruments which have obtained separate FPI registration for ODI and proprietary
derivative
• investments;
• Sub funds or separate class of investors with segregated portfolio who obtain separate FPI registration;
• FPI registrations granted at investment strategy level/sub fund level where a collective investment scheme or
fund has multiple investment strategies/sub-funds with identifiable differences and managed by a single
investment manager;
• Multiple branches in different jurisdictions of foreign bank registered as FPIs;
• Government and Government related investors registered as Category 1 FPIs; and
• Entities registered as collective investment scheme having multiple share classes.
The Bids belonging to any of the above mentioned seven structures and having same PAN may be collated and identified
as a single Bid in the Bidding process. The Equity Shares allotted in the Bid may be proportionately distributed to the
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applicant FPIs (with same PAN). In order to ensure valid Bids, FPIs making multiple Bids using the same PAN, and
with different beneficiary account numbers, Client IDs and DP IDs, are required to provide a confirmation along with
each of their Bid cum Application Forms that the relevant FPIs making multiple Bids utilize any of the above-mentioned
structures and indicate the name of their respective investment managers in such confirmation. In the absence of such
confirmation from the relevant FPIs, such multiple Bids shall be rejected.The FPIs who wish to participate in the Issue
are advised to use the Bid cum Application Form for non-residents.
Bids by SEBI registered VCFs, AIFs and FVCIs
The SEBI FVCI Regulations and the SEBI AIF Regulations prescribe, inter-alia, the investment restrictions applicable
to the VCFs, FVCIs and AIFs registered with SEBI.
The holding by any individual VCF registered with the SEBI in one venture capital undertaking should not exceed 25%
of the corpus of the VCF. Further, VCFs and FVCIs can invest only up to 33.33% of the investible funds by way of
subscription to public offerings.
Category I and category II AIFs cannot invest more than 25% of the investible funds in one investee company. A
category III AIF cannot invest more than 10% of the investible funds in one investee company. A venture capital fund
registered as a category I AIF, as defined in the SEBI AIF Regulations, cannot invest more than one0thirdsof its corpus
by way of subscription to an initial public offering of a venture capital undertaking. Additionally, the VCFs which have
not re-registered as an AIF under the SEBI AIF Regulations shall continue to be regulated by the SEBI VCF Regulations
until the existing fund or scheme managed by the fund is wound up and such funds shall not launch any new scheme
after the notification of the SEBI AIF Regulations.
There is no reservation for Eligible NRIs, FPIs and FVCIs and all Bidders will be treated on the same basis with other
categories for the purpose of allocation.
Further, according to the SEBI ICDR Regulations, the shareholding of VCFs, category I AIFs, category II AIFs and
FVCIs held in a company prior to making an initial public offering would be exempt from lock-in requirements only if
the shares have been held by them for at least one year prior to the time of filing of a draft offer document with SEBI.
All non-resident investors should note that refunds (in case of Anchor Investors), dividends and other
distributions, if any, will be payable in Indian Rupees only, and net of bank charges and commission.
Our Company, the Selling Shareholders and the BRLMs will not be responsible for loss, if any, incurred by the
Bidder on account of conversion of foreign currency.
Bids by limited liability partnerships
In case of Bids made by limited liability partnerships registered under the Limited Liability Partnership Act, 2008, a
certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008, must be attached to
the Bid cum Application Form. Failing this, our Company and the Selling Shareholders reserve the right to reject any
Bid without assigning any reason thereof.
Bids by banking companies
In case of Bids made by banking companies registered with the RBI, certified copies of (i) the certificate of registration
issued by RBI, and (ii) the approval of such banking company’s investment committee are required to be attached to the
Bid cum Application Form, failing which our Company and the Selling Shareholders reserve the right to reject any Bid
by a banking company without assigning any reason thereof.
The investment limit for banking companies in non-financial services companies as per the Banking Regulation Act,
1949, as amended (the “Banking Regulation Act”), and the Master Direction - Reserve Bank of India (Financial
Services provided by Banks) Directions, 2016, dated May 26, 2016, as amended, individually shall not exceed 10% of
the bank’s paid-up share capital and reserves as per the last audited balance sheet or a subsequent balance sheet,
whichever is lower. However, a banking company would be permitted to invest in excess of 10% but not exceeding 30%
of the paid-up share capital of such investee company if (i) the investee company is engaged in non-financial activities
permitted for banks in terms of Section 6(1) of the Banking Regulation Act, or (ii) the additional acquisition is through
restructuring of debt/corporate debt restructuring/strategic debt restructuring, or to protect the bank’s interest on
loans/investments made to a company. A banking company is required to submit a time-bound action plan for disposal
of such shares within a specified period to the RBI. A banking company would require a prior approval of the RBI to
make (i) investment in a subsidiary and a financial services company that is not a subsidiary (with certain exceptions
prescribed), and (ii) investment in a non-financial services company in excess of 10% of such investee company’s paid-
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up share capital as stated in 5(a)(v)(c)(i) of the Reserve Bank of India (Financial Services provided by Banks) Directions,
2016.
Bids by SCSBs
SCSBs participating in the Offer are required to comply with the terms of the SEBI circulars dated September 13, 2012
and January 2, 2013. Such SCSBs are required to ensure that for making applications on their own account using ASBA,
they should have a separate account in their own name with any other SEBI registered SCSB. Further, such account
shall be used solely for the purpose of making application in public issues and clear demarcated funds should be available
in such account for such applications.
Bids by insurance companies
In case of Bids made by insurance companies registered with the IRDAI, a certified copy of certificate of registration
issued by IRDAI must be attached to the Bid cum Application Form. Failing this, our Company and the Selling
Shareholders reserve the right to reject any Bid without assigning any reason thereof.
The exposure norms for insurers, prescribed under the Insurance Regulatory and Development Authority (Investment)
Regulations, 2016 (the “IRDA Investment Regulations”), are broadly set forth below:
The maximum exposure limit, in the case of an investment in equity shares, cannot exceed the lower of an amount of
10% of the investment assets of a life insurer or general insurer, and the amount calculated under (a), (b) and (c) below,
as the case may be.
(a) Limit for the investee company: The lower of: (i) 10%* of the outstanding equity shares (face value); and (ii)
10% of such funds and reserves as specified under the IRDA Investment Regulations, in case of a life insurer,
or 10% of the approved investments and other investments as permitted under the Insurance Act and the IRDA
Investment Regulations, in case of a general insurer (including reinsurer or a health insurer), as the case may
be;
(b) Limit for the entire group of the investee company: Not more than: (i) 15% of such funds and reserves as
specified under the IRDA Investment Regulations, in case of a life insurer, or 15% of the approved investments
and other investments as permitted under the Insurance Act and the IRDA Investment Regulations, in case of
a general insurer (including reinsurer or a health insurer); or (ii) 15% of the investment assets in all companies
belonging to the group, whichever is lower; and
(c) Limit for the industry sector to which the investee company belongs: Not more than: (i) 15% of the such funds
and reserves as specified under the IRDA Investment Regulations, in case of a life insurer, or 15% of the
approved investments and other investments as permitted under the Insurance Act and the IRDA Investment
Regulations, in case of a general insurer (including a re-insurer or a health insurer); or (ii) 15% of the investment
asset, whichever is lower.
* The above limit of 10% shall stand substituted as 15% of outstanding equity shares (face value) for insurance companies with
investment assets of ₹2,500,000 million or more and 12% of outstanding equity shares (face value) for insurers with investment
assets of ₹500,000 million or more but less than ₹2,500,000 million.
Insurance companies participating in this Offer shall comply with all applicable regulations, guidelines and circulars
issued by the IRDAI from time to time.
Bids by provident funds/ pension funds
In case of Bids made by provident funds/ pension funds with minimum corpus of ₹250 million, subject to applicable
laws, a certified copy of a certificate from a chartered accountant certifying the corpus of the provident fund/ pension
fund must be attached to the Bid cum Application Form. Failing this, our Company and the Selling Shareholders reserve
the right to reject any Bid, without assigning any reason thereof.
Bids under power of attorney
In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies,
eligible FPIs, AIFs, Mutual Funds, insurance companies, insurance funds set up by the army, navy or air force of India,
insurance funds set up by the Department of Posts, Government of India or the National Investment Fund and provident
funds with a minimum corpus of ₹250 million (subject to applicable laws) and pension funds with a minimum corpus
of ₹250 million (subject to applicable laws), Systemically Important NBFCs (as defined under in RBI regulations) a
certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified
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copy of the memorandum of association and articles of association and/ or bye laws must be lodged along with the Bid
cum Application Form, as the case may be. Failing this, our Company and the Selling Shareholders reserve the right to
accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof.
Our Company and the Selling Shareholders, in consultation with the BRLMs in their absolute discretion, reserve the
right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid cum Application
Form.
Bids by Systemically Important Non-Banking Financial Companies
In case of Bids made by Systemically Important Non-Banking Financial Companies, a certified copy of the certificate
of registration issued by the RBI, a certified copy of its last audited financial statements on a standalone basis and a net
worth certificate from its statutory auditor(s), must be attached to the Bid cum Application Form. Failing this, our
Company reserve the right to reject any Bid, without assigning any reason thereof. Systemically Important Non-Banking
Financial Companies participating in the Offer shall comply with all applicable legislations, regulations, directions,
guidelines and circulars issued by RBI from time to time.
Bids by Anchor Investors
In accordance with the applicable SEBI ICDR Regulations, the key terms for participation by Anchor Investors are
provided below:
(i) Anchor Investor Application Forms will be made available for the Anchor Investor Portion at the offices of the
BRLMs;
(ii) The Bid must be for a minimum of such number of Equity Shares so that the Bid Amount exceeds ₹100 million.
A Bid cannot be submitted for over 60% of the QIB Portion. In case of a Mutual Fund, separate Bids by
individual schemes of a Mutual Fund will be aggregated to determine the minimum application size of ₹100
million;
(iii) One-third of the Anchor Investor Portion will be reserved for allocation to domestic Mutual Funds;
(iv) Bidding for Anchor Investors will open one Working Day before the Bid/ Offer Opening Date, i.e., the Anchor
Investor Bidding Date, and will be completed on the same day;
(v) Our Company and Selling Shareholders, in consultation with the BRLMs will finalize allocation to the Anchor
Investors on a discretionary basis, provided that the minimum number of Allottees in the Anchor Investor
Portion will not be less than:
a. maximum of two Anchor Investors, where allocation under the Anchor Investor Portion is up to ₹100
million;
b. minimum of two and maximum of 15 Anchor Investors, where the allocation under the Anchor Investor
Portion is more than ₹100 million but up to ₹2,500 million, subject to a minimum Allotment of ₹50 million
per Anchor Investor; and
c. in case of allocation above ₹2,500 million under the Anchor Investor Portion, a minimum of five such
investors and a maximum of 15 Anchor Investors for allocation up to ₹2,500 million, and an additional 10
Anchor Investors for every additional ₹2,500 million, subject to minimum allotment of ₹50 million per
Anchor Investor.
(vi) Allocation to Anchor Investors will be completed on the Anchor Investor Bidding Date. The number of Equity
Shares allocated to Anchor Investors and the price at which the allocation is made will be made available in
the public domain by the BRLMs before the Bid/ Offer Opening Date, through intimation to the Stock
Exchanges.
(vii) Anchor Investors cannot withdraw or lower the size of their Bids at any stage after submission of the Bid;
(viii) If the Offer Price is greater than the Anchor Investor Allocation Price, the additional amount being the
difference between the Offer Price and the Anchor Investor Allocation Price will be payable by the Anchor
Investors on the Anchor Investor Pay-in Date specified in the CAN. If the Offer Price is lower than the Anchor
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Investor Allocation Price, Allotment to successful Anchor Investors will be at the higher price, i.e., the Anchor
Investor Offer Price;
(ix) Equity Shares Allotted in the Anchor Investor Portion will be locked in for a period of 30 days from the date
of Allotment;
(x) Neither the (i) BRLMs (s) or any associate of the BRLMs (other than mutual funds sponsored by entities which
are associate of the BRLMs or insurance companies promoted by entities which are associate of the BRLMs
or Alternate Investment Funds (AIFs) sponsored by the entities which are associates of the BRLMs or FPIs,
other than individuals, corporate bodies and family offices, sponsored by the entities which are associate of the
BRLMs) nor (ii) the Promoters, Promoter Group or any person related to the Promoters or members of the
Promoter Group shall apply under the Anchor Investors category. For further details, please see “-Participation
by Promoters, Promoter Group, BRLMs, associates and affiliates of the BRLMs, the Syndicate Members,
persons related to Promoter, Promoter Group” on page 287;
Bids made by QIBs under both the Anchor Investor Portion and the QIB Portion will not be considered
multiple Bids;
For more information, see the General Information Document.
Electronic Registration of Bid
For information, please see the General Information Document.
In accordance with existing regulations, OCBs cannot participate in the Offer.
The above information is given for the benefit of the Bidders. Our Company, the Selling Shareholders, the
BRLMs and the Syndicate Members are not liable for any amendments or modification or changes in applicable
laws or regulations, which may occur after the date of this Red Herring Prospectus. Bidders are advised to make
their independent investigations and ensure that any single Bid from them does not exceed the applicable
investment limits or maximum number of the Equity Shares that can be held by them under applicable law or
regulation or as specified in this Red Herring Prospectus.
General Instructions
Do’s:
1. Check if you are eligible to apply as per the terms of this Red Herring Prospectus and under applicable law,
rules, regulations, guidelines and approvals. All Bidders (other than Anchor Investors) should submit their bids
to the relevant Designated Intermediaries through the ASBA process only;
2. Ensure that you have Bid within the Price Band;
3. Read all the instructions carefully and complete the Bid cum Application Form in the prescribed form;
4. Ensure that the details about the PAN, DP ID, Client ID and UPI ID (as applicable) are correct and the Bidder’s
depository account is active, as Allotment of the Equity Shares will be in the dematerialised form only;
5. Ensure that your Bid cum Application Form bearing the stamp of a Designated Intermediary is submitted to
the Designated Intermediary at the Bidding Center within the prescribed time;
6. If you are an ASBA Bidder, the first applicant is not the ASBA Account holder, ensure that the Bid cum
Application Form is signed by the ASBA Account holder. Ensure that you have mentioned the correct ASBA
Account number or the bank account linked UPI ID which is UPI 2.0 certified by the NPCI (with maximum
length of 45 characters including the handle) as applicable, in the Bid cum Application Form;
7. Ensure that the signature of the First Bidder in case of joint Bids, is included in the Bid cum Application Forms;
8. Ensure that you have accepted the UPI Mandate Request received from the Sponsor Bank prior to 12:00 p.m.
of the Working Day immediately after the Bid/ Offer Closing Date;
9. Retail Individual Bidders not using the UPI Mechanism, should submit their Bid cum Application Form directly
with SCSBs and not with any other Designated Intermediary;
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10. Ensure that you request for and receive a stamped acknowledgement counterfoil or acknowledgment specifying
the application number as a proof of having accepted Bid cum Application Form for all your Bid options from
the concerned Designated Intermediary;
11. Ensure that the name(s) given in the Bid cum Application Form is/ are exactly the same as the name(s) in which
the beneficiary account is held with the Depository Participant. In case of joint Bids, the Bid cum Application
Form should contain the name of only the First Bidder whose name should also appear as the first holder of the
beneficiary account held in joint names;
12. Ensure that you use only your own bank account linked UPI ID (only for RIBs using the UPI Mechanism) to
make an application in the Offer;
13. Ensure that you request for and receive a stamped acknowledgement of the Bid cum Application Form for all
your Bid options from the concerned Designated Intermediary. Retail Individual Bidders using UPI
Mechanism, may submit their ASBA Forms with Syndicate Members, Registered Brokers, RTAs or CDPs and
should ensure that the ASBA Form contains the stamp of such Designated Intermediary;
14. Ensure that you have funds equal to the Bid Amount in the ASBA Account maintained with the SCSB or UPI
linked bank account, before submitting the Bid cum Application Form under the ASBA process to any of the
Designated Intermediaries;
15. Ensure that you submit revised Bids to the same Designated Intermediary, through whom the original Bid was
placed and obtain a revised Acknowledgement Slip;
16. Except for (i) Bids on behalf of the Central or State Governments and the officials appointed by the courts,
who, in terms of circular dated June 30, 2008 of SEBI, may be exempt from specifying their PAN for
transacting in the securities market, and (ii) Bids by persons resident in the state of Sikkim, who, in terms
circular dated July 20, 2006 of the SEBI, may be exempted from specifying their PAN for transacting in the
securities market, all Bidders should mention their PAN allotted under the Income Tax Act. The exemption for
the Central or the State Government and officials appointed by the courts and for investors residing in the State
of Sikkim is subject to (a) the Demographic Details received from the respective depositories confirming the
exemption granted to the beneficial owner by a suitable description in the PAN field and the beneficiary account
remaining in “active status”; and (b) in the case of residents of Sikkim, the address as per the Demographic
Details evidencing the same. All other applications in which PAN is not mentioned will be rejected;
17. Ensure that the Demographic Details are updated, true and correct in all respects;
18. Ensure that thumb impressions and signatures other than in the languages specified in the Eighth Schedule to
the Constitution of India are attested by a Magistrate or a Notary Public or a Special Executive Magistrate
under official seal;
19. Ensure that the category and the investor status is indicated;
20. Ensure that in case of Bids under power of attorney or by limited companies, corporates, trusts, etc., relevant
documents are submitted;
21. Ensure that Bids submitted by any person resident outside India should be in compliance with applicable
foreign and Indian laws;
22. Bidders should note that in case the DP ID, Client ID, UPI ID (if applicable) and PAN mentioned in their Bid
cum Application Form and entered into the online bidders system of the Stock Exchanges by the relevant
Designated Intermediary, as the case may be, matches with the DP ID, Client ID and PAN available in the
Depository database;
23. Ensure that you have correctly signed the authorisation/ undertaking box in the Bid cum Application Form, or
have otherwise provided an authorisation to the SCSB or Sponsor Bank, as applicable, via electronic mode, for
blocking funds in the ASBA Account equivalent to the Bid Amount mentioned in the Bid cum Application
Form, as the case may be, at the time of submission of the Bid. In case of RIBs submitting their Bids and
participating in the Offer through the UPI Mechanism, ensure that you authorise the mandate raised by the
Sponsor Bank for blocking of funds equivalent to application amount and subsequent debit of funds in case of
Allotment;
24. Ensure that while Bidding through a Designated Intermediary, except RIBs using the UPI Mechanism, the
ASBA Form is submitted to a Designated Intermediary in a Bidding Centre and that the SCSB where the ASBA
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Account, as specified in the ASBA Form, is maintained has named at least one branch at that location for the
Designated Intermediary to deposit ASBA Forms (a list of such branches is available on the website of SEBI
at www.sebi.gov.in);
25. Ensure that the Bid cum Application Forms are delivered by the Bidders within the time prescribed as per the
Bid cum Application Form and this Red Herring Prospectus;
26. RIBs who wish to revise their Bids using the UPI Mechanism, should submit the revised Bid with the
Designated Intermediaries to whom the original bid was submitted, pursuant to which RIBs should ensure
acceptance of the UPI Mandate Request received from the Sponsor Bank to authorise blocking of funds
equivalent to the revised Bid Amount in the RIB’s ASBA Account;
27. RIBs bidding using the UPI mechanism, shall ensure that you approve the Mandate Request generated by the
Sponsor Bank to authorise blocking of funds equivalent to application amount and subsequent debit of funds
in case of allotment, in a timely manner;
28. RIIs bidding using the UPI mechanism, shall ensure that the bank, with which it has its bank account, where
the funds equivalent to the application amount are available for blocking is UPI 2.0 certified by NPCI; and
29. RIIs bidding using the UPI mechanism should mention valid UPI ID of only the Applicant (in case of single
account) and of the first Applicant (in case of joint account) in the Bid cum Application Form; and
30. Bids by Eligible NRIs, HUFs and any individuals, corporate bodies and family offices who are FPIs and
registered with SEBI for a Bid Amount of less than ₹200,000 would be considered under the Retail Category
for the purposes of allocation and Bids for a Bid Amount exceeding ₹200,000 would be considered under the
Non-Institutional Category for allocation in the Offer;
The Bid cum Application Form is liable to be rejected if the above instructions or any other condition as specified in
this Red Herring Prospectus, as applicable, are not complied with.
Don’ts:
1. Do not Bid for lower than the minimum Bid size;
2. Do not Bid/ revise Bid Amount to less than the Floor Price or higher than the Cap Price (including any revisions
thereof);
3. Do not pay the Bid Amount in cheques, demand drafts, by cash, money order, by postal order or by stock
invest;
4. Do not send Bid cum Application Forms by post; instead submit the same to the Designated Intermediary only;
5. If you are a QIB or Non-Institutional Bidder, do not Bid at Cut-off Price;
6. Do not withdraw or lower the size of your Bid (in terms of number of Equity Shares Bid for, or Bid Amount)
at any stage, if you are a QIB or a Non-Institutional Bidder;
7. Do not instruct your respective SCSBs to release the funds blocked in the ASBA Account under the ASBA
process;
8. Do not Bid for a Bid Amount exceeding ₹200,000 (for Bids by Retail Individual Bidders);
9. Do not fill up the Bid cum Application Form such that the Equity Shares Bid for exceeds the Offer size and/ or
investment limit or maximum number of the Equity Shares that can be held under the applicable laws or
regulations or maximum amount permissible under the applicable regulations or under the terms of this Red
Herring Prospectus;
10. Do not submit Bid for an amount more than funds available in your ASBA Account;
11. Do not submit Bids on plain paper or on incomplete or illegible Bid cum Application Forms or on Bid cum
Application Forms in a colour prescribed for another category of Bidder;
12. Do not submit a Bid in case you are not eligible to acquire Equity Shares under applicable law or your relevant
constitutional documents or otherwise;
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13. Do not Bid if you are not competent to contract under the Indian Contract Act, 1872 (other than minors having
valid depository accounts as per Demographic Details provided by the depository);
14. Do not submit more than one Bid cum Application Form for each UPI ID in case of RIBs bidding through the
Designated Intermediaries using the UPI Mechanism;
15. If you are a RIB using the UPI Mechanism, do not submit more than one Bid cum Application Form for each
UPI ID in case of RIBs using UPI;
16. Do not link the UPI ID with a bank account maintained with a bank that is not UPI 2.0 certified by the NPCI
in case of Bids submitted by RIB Bidder using the UPI Mechanism;
17. Anchor Investors should not bid through the ASBA process;
18. Do not Bid on another Bid cum Application Form and the Anchor Investor Application Form, as the case may
be, after you have submitted a Bid to any of the Designated Intermediaries;
19. Do not submit ASBA Form to any Designated Intermediary that is not authorised to collect the relevant ASBA
Form or to our Company
20. Do not Bid on another Bid cum Application Form after you have submitted a Bid to a Designated Intermediary;
21. Do not send ASBA Forms by post. Instead submit the same to only a Designated Intermediary;
22. Do not link the UPI ID with a bank account maintained with a bank that is not UPI 2.0 certified by the NPCI
in case of Bids submitted by RIBs using the UPI Mechanism;
23. Do not Bid on a physical ASBA Form that does not have the stamp of a Designated Intermediary;
24. Do not submit the GIR number instead of the PAN;
25. If you are RIB and are using UPI mechanism, do not submit the ASBA Form directly with SCSBs;
26. Do not submit a Bid using the UPI, if you are not a RIB;
27. Do not submit incorrect details of the DP ID, Client ID and PAN or provide details for a beneficiary account
which is suspended or for which details cannot be verified by the Registrar to the Offer;
28. Do not submit Bids to a Designated Intermediary at a location other than the Bidding Centers;
29. If you are a RIB which is submitting the ASBA Forms with any of the Designated Intermediaries, do not use
any third party bank account or third party linked bank account UPI ID;
30. RIBs bidding using the UPI mechanism should mention valid UPI ID of only the Applicant (in case of single
account) and of the first Applicant (in case of joint account) in the Bid cum Application Form; and
31. Do not bid if you are an OCB.
The Bid cum Application Form is liable to be rejected if the above instructions or any other condition as mentioned in
this Red Herring Prospectus, as applicable, are not complied with.
Payment into Escrow Account for Anchor Investors
Our Company and the Selling Shareholders, in consultation with the BRLMs will decide the list of Anchor Investors to
whom the CAN will be sent, pursuant to which the details of the Equity Shares allocated to them in their respective
names will be notified to such Anchor Investors. Anchor Investors are not permitted to Bid in the Offer through the
ASBA process. Instead, Anchor Investors should transfer the Bid Amount (through direct credit, RTGS, NACH or
NEFT). For Anchor Investors, the payment instruments for payment into the Escrow Account should be drawn in favour
of:
(a) In case of resident Anchor Investors: “STOVE KRAFT LTD IPO - ANCHOR R”
(b) In case of Non-Resident Anchor Investors: “STOVE KRAFT LTD IPO - ANCHOR NR”
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Anchor Investors should note that the escrow mechanism is not prescribed by SEBI and has been established as an
arrangement between our Company, the Selling Shareholders, the Syndicate, the Escrow Collection Bank and the
Registrar to the Offer to facilitate collections from Anchor Investors
Method of allotment as may be prescribed by SEBI from time to time
Our Company will not make any allotment in excess of the Equity Shares through the Offer document except in case of
oversubscription for the purpose of rounding off to make allotment, in consultation with the Designated Stock Exchange.
Further, upon oversubscription, an allotment of not more than one per cent of the Offer may be made for the purpose of
making allotment in minimum lots. The allotment of Equity Shares to applicants other than to the Retail Individual
Bidders and Anchor Investors shall be on a proportionate basis within the respective investor categories and the number
of securities allotted shall be rounded off to the nearest integer, subject to minimum Allotment being equal to the
minimum application size as determined and disclosed. The allotment of Equity Shares to each Retail Individual Bidders
shall not be less than the minimum bid lot, subject to the availability of shares in Retail Individual Bidders portion, and
the remaining available Equity Shares, if any, shall be allotted on a proportionate basis. The Allotment of Equity Shares
to Anchor Investors shall be on a discretionary basis subject to applicable law.
Pre-Offer Advertisement
Subject to Section 30 of the Companies Act 2013, our Company shall, after filing this Red Herring Prospectus with the
RoC, publish a pre-Offer advertisement, in the form prescribed by the SEBI ICDR Regulations, in all editions of
Financial Express, all editions of Jansatta and Bengaluru edition of Vishwavani (which are English, Hindi and Kannada
daily newspapers, (Kannada being the regional language of Karnataka where our Registered Office is located), each
with wide circulation. Our Company shall, in the pre-Offer advertisement state the Bid/ Offer Opening Date and the the
Bid/ Offer Closing Date. This advertisement, subject to the provisions of Section 30 of the Companies Act 2013, shall
be in the format prescribed in Part A of Schedule X of the SEBI ICDR Regulations.
The above information is given for the benefit of the Bidders/applicants. Our Company, the Selling Shareholders
and the BRLMs are not liable for any amendments or modification or changes in applicable laws or regulations,
which may occur after the date of this Red Herring Prospectus. Bidders/applicants are advised to make their
independent investigations and ensure that the number of Equity Shares Bid for do not exceed the prescribed
limits under applicable laws or regulations.
Signing of the Underwriting Agreement and the RoC Filing
(a) Our Company, the Selling Shareholders and the Syndicate intend to enter into an Underwriting Agreement on
or immediately after the finalisation of the Offer Price, but prior to filing of the Prospectus.
(b) After signing the Underwriting Agreement, an updated Red Herring Prospectus will be filed with the RoC in
accordance with applicable law, which then would be termed as the ‘Prospectus’. The Prospectus will contain
details of the Offer Price, the Anchor Investor Offer Price, Offer size, and underwriting arrangements and will
be complete in all material respects.
Names of entities responsible for finalising the basis of allotment in a fair and proper manner
The authorised employees of the Stock Exchanges, along with the BRLMs and the Registrar, shall ensure that the basis
of allotment is finalised in a fair and proper manner in accordance with the procedure specified in SEBI ICDR
Regulations.
Depository Arrangement
For information, please see “Terms of the Offer” on page 278.
Undertakings by our Company
Our Company undertakes the following:
• the complaints received in respect of the Offer shall be attended to by our Company expeditiously and
satisfactorily;
• all steps for completion of necessary formalities for listing and commencement of trading at all Stock
Exchanges where the Equity Shares are proposed to be listed are taken within six Working Days from the Bid/
Offer Closing Date, or any other timelines prescribed;
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• the funds required for making refunds (to the extent applicable)/ unblocking to unsuccessful Bidders as per the
modes disclosed, shall be made available to the Registrar to the Offer by our Company;
• that where the refunds are made through electronic transfer of funds, a suitable communication shall be sent to
the unsuccessful Bidders within six Working Days Bid/ Offer Closing Date giving details of the bank where
the refunds shall be credited along with the amount and the expected date of electronic credit of refund;
• promoter’s contribution, shall be brought in advance before the Bid/Offer Opening Date and the balance, if
any, shall be brought in on a pro rata basis before calls are made on the Allottees;
• except for the Fresh Issue and any grants of options and allotment of Equity Shares that may be made under
the ESOP Plan, no further issue of the Equity Shares shall be made till the Equity Shares offered through this
Red Herring Prospectus are listed or until the Bid monies are refunded/ unblocked in ASBA Account on
account of non-listing, under-subscription, etc.; and
• adequate arrangements shall be made to collect all Bid cum Application Forms by Bidders.
Undertakings by each of the Selling Shareholders
Each Selling Shareholder, severally, with respect to itself only (and not in respect of any other person), undertakes that:
• the Equity Shares being offered by it under the Offer for Sale have been held by it for a minimum period as
specified in Regulation 8 of the SEBI ICDR Regulations;
• it shall not have any recourse to the proceeds from the Offer for Sale until final listing and trading approvals
have been received by the Company from the Stock Exchanges;
• it shall not offer, lend, pledge, charge, transfer or otherwise encumber, sell, dispose off any of the Offered
Shares being offered pursuant to the Offer until such time that the lock-in (if applicable) remains effective save
and except as may be permitted under the SEBI ICDR Regulations;
• it shall provide all reasonable assistance to our Company, as may be reasonably required and necessary in
accordance with Applicable Law, for completion of the necessary formalities in relation to the Equity Shares
being offered by it pursuant to the Offer;
• it shall, severally and not jointly, reimburse our Company for expenses incurred, on behalf of such Selling
Shareholder, in relation to their respective portion of the Offered Shares pursuant to the Offer in the manner
agreed to amongst the Selling Shareholders and our Company, upon successful completion of the Offer and in
accordance with applicable laws; and
• in relation to itself as a Selling Shareholder and the Equity Shares being offered by it under the Offer for Sale,
it shall comply with all applicable laws, including but not limited to the SEBI ICDR Regulations and the
Companies Act 2013, and the rules and regulations made thereunder, in relation to the Offer.
Utilisation of Offer Proceeds
The Selling Shareholders along with our Company, severally and not jointly, declare that:
• all monies received out of the Offer shall be credited/ transferred to a separate bank account other than the bank
account referred to in sub-section (3) of Section 40 of the Companies Act 2013;
• details of all monies utilised out of the Fresh Issue shall be disclosed, and continue to be disclosed till the time
any part of the Offer proceeds remains unutilised, under an appropriate head in the balance sheet of our
Company indicating the purpose for which such monies have been utilised; and
• details of all unutilised monies out of the Fresh Issue, if any shall be disclosed under an appropriate separate
head in the balance sheet indicating the form in which such unutilised monies have been invested.
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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the Government of India and
FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment
can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment
may be made. The responsibility of granting approval for foreign direct investment under the Consolidated FDI Policy
and FEMA has been entrusted to the concerned ministries / departments.
The Government has from time to time made policy pronouncements on FDI through press notes and press releases.
The DPIIT, issued the consolidated policy on foreign direct investment by way of circular no. DPIIT File Number
5(2)/2020-FDI Policy dated the October 15, 2020, which, with effect from October 15, 2020 (“Consolidated FDI
Policy”), consolidates and supersedes all previous press notes, press releases and clarifications on FDI issued by the
DPIIT that were in force and effect as on October 15, 2020. The Government proposes to update the consolidated circular
on the Consolidated FDI Policy once every year and therefore, the Consolidated FDI Policy will be valid until the DPIIT
issues an updated circular.
The transfer of shares between an Indian resident and a non-resident does not require the prior approval of the RBI,
provided that (i) the activities of the investee company are under the automatic route under the Consolidated FDI Policy
and transfer does not attract the provisions of the SEBI Takeover Regulations; (ii) the non-resident shareholding is
within the sectoral limits under the FDI Policy; and (iii) the pricing is in accordance with the guidelines prescribed by
SEBI and RBI. For information in relation to bids by FPIs, please see “Offer Procedure – Bids by FPIs” on page 288 of
this Red Herring Prospectus.
Long term investors like sovereign wealth funds, multilateral agencies, endowment funds, insurance funds, pension
funds and foreign central banks may purchase securities subject to such terms and conditions as may be specified by the
RBI and the SEBI.
Further, in accordance with Press Note No. 3 (2020 Series), dated April 17, 2020 issued by the DPIIT and the Foreign
Exchange Management (Non-debt Instruments) Amendment Rules, 2020 which came into effect from April 22, 2020,
any investment, subscription, purchase or sale of equity instruments by entities of a country which shares a land border
with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country,
will require prior approval of the Government of India, as prescribed in the Consolidated FDI Policy and the FEMA
Non-Debt Instruments Rules. Each Bidder should seek independent legal advice about its ability to participate in the
Offer. In the event such prior approval of the Government of India is required, and such approval has been obtained, the
Bidder shall intimate our Company and the Registrar in writing about such approval along with a copy thereof within
the Offer Period.
As per the existing policy of the Government, OCBs cannot participate in the Offer.
In terms of the FDI Policy, 100% foreign direct investment is permitted under the automatic route for manufacturing
companies.
The above information is given for the benefit of the Bidders. Our Company and the BRLMs are not liable for
any amendments or modification or changes in applicable laws or regulations, which may occur after the date of
this Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the
number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.
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SECTION VIII: DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF ASSOCIATION
Capitalized terms used in this section have the meanings that have been given to such terms in the Articles of Association of our
Company. Pursuant to Schedule I of the Companies Act, 2013 and the SEBI ICDR Regulations, the main provisions of the Articles
of Association of our Company are detailed below:
The Articles of Association of the Company comprise of two parts, Part A and Part B, which parts shall, unless the context otherwise
requires, co-exist with each other. In case of inconsistency between Part A and Part B, the provisions of Part A shall be applicable,
except in relation to the provisions of the Investment Agreement dated February 2, 2010 as amended by amendment agreement
dated March 18, 2010, Series B Investment Agreement dated September 13, 2013, Amendment Agreement dated September 27,
2018 and Second Amendment Agreement dated January 29, 2020, which have been included in Part B, when provisions of Part B
shall be applicable. Part B of the Articles of Association shall automatically terminate and cease to have any force and effect from
the date of listing of Equity Shares of the Company on a recognized stock exchange in India pursuant to an initial public offering
of the Equity Shares of the Company, without any further action, including any corporate action, by the Company or by the
shareholders.
PART A
The authorized share capital of the Company shall be such as stated under Clause V of the Memorandum of Association. The
Company has the power to increase its authorised or issued and paid-up share capital in accordance with the Companies Act, 2013,
any other applicable laws and the provisions of the AoA, from time to time. The share capital of the Company may be classified
into shares with differential rights as to dividend, voting or otherwise in accordance with the applicable provisions of the Companies
Act, 2013, the rules framed thereunder and any other applicable law.
Alteration of Share Capital
The Company may, by ordinary resolution, from time to time, subject to Section 61 of the Companies Act, alter the conditions of
Memorandum of Association as follows:
a. Increase the share capital by such amount as it thinks expedient;
b. Consolidate and divide all or any its share capital into shares of larger amount than its existing shares;
Provided that no consolidation and/ or division should result in changes in the voting percentage of Shareholders unless it
is approved by the Tribunal on an application made in the prescribed manner
c. Sub- divide its existing shares or any of them into shares of smaller amount than is fixed by Memorandum of Association,
so however that, in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced
share shall be the same as it was in the case of the share from which the reduced share is derived;
d. Cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its Share Capital by the amount of the shares so cancelled. A cancellation of shares in
pursuance of this clause shall not be deemed to be a reduction of Share Capital within the meaning of the Companies Act,
2013. ; and
e. Convert all or any one its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any
denomination.
Allotment of Shares
Subject to the provisions of Section 62 and any other applicable provisions of the Companies Act, 2013 these Articles, the shares
in the capital of the Company shall be under the control of the Board who may issue, allot or otherwise dispose of the same to such
persons, on such terms and conditions as the Board may think fit and may issue the shares of the Company, subject to Section 53
of the Companies Act, 2013, either at a premium or at par or at a discount.
Subject to applicable law, the Directors are authorised to issue Equity Shares or Debentures (whether or not convertible into Equity
Shares) for offer and allotment to such of the officers, employees and workers of the Company as the Directors may deem fit or the
trustees of such trust as may be set up for the benefit of the officers, employees and workers in accordance with the terms and
conditions of such scheme, plan or proposal as the Directors may formulate. Subject to the consent of the stock exchanges and
SEBI, the Directors may impose the condition that the Equity Shares or Debentures of the Company so allotted shall not be
transferable for a specified period.
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Forfeiture and Lien
The Company shall have a first and paramount lien upon all the shares / debentures (whether fully paid up or not) for all money
(whether presently payable or not), or payable at a fixed time in respect of the share/ debenture. The Company’s lien shall extend
to all dividends payable and bonuses declared in respect of the shares and to all interest and premium payable in respect of the
debenture.
If a member fails to pay any call, or instalment on any part or any money due in respect of any shares either by way of principal or
interest on or before the day appointed for the payment of the same or any extension thereof, the Board may at any time thereafter,
during such time as the call or instalment remain unpaid or a judgment or decree in respect thereof remain unsatisfied, serve notice
on such shareholder or his legal representatives requiring him to pay the same together with any interest that may have accrued and
expenses that may have been incurred by the Company by reasons of such non-payment.
Power to issue new certificate
Upon any sale, re-allotment or other disposal, the certificate or certificates originally issued in respect of the relevant shares shall,
(unless the same shall on demand by the Company have been previously surrendered to it by the defaulting Shareholder), stand
cancelled and become null and void and the Board shall be entitled to issue a new certificate or certificates in respect of the said
shares to the person entitled thereto.
The Board may, at any time, before any share so forfeited shall have been sold, reallotted or otherwise disposed of, annul the
forfeiture thereof upon such conditions as it thinks fit.
Transfer of Shares
A common form of transfer shall be used in case of transfer of shares. In accordance with Section 56 of the Companies Act, 2013
and the rules prescribed thereunder and such other conditions as may be prescribed under law, every instrument of transfer of shares
held in physical form shall be in writing. In case of transfer of shares where the Company has not issued any certificates and where
the shares are held in dematerialized form, the provisions of the Depositories Act shall apply.
Every instrument of transfer shall be presented to the Company duly stamped for registration accompanied by such evidence as the
Board may require to prove the title of the transferor, his right to transfer the shares. Every registered instrument of transfer shall
remain in the custody of the Company until destroyed by order of the Board.
Further, subject to the provisions of Sections 58 and 59 of the Companies Act, 2013, the Articles and other applicable provisions
of the Companies Act, 2013 or any other Law for the time being in force, the Board may, refuse to register the transfer of, or the
transmission by operation of law of the right to, any securities or interest of a Shareholder in the Company. The Company shall,
within 30 (thirty) days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may
be, was delivered to the Company, send a notice of refusal to the transferee and transferor or to the Person giving notice of such
transmission, as the case may be, giving reasons for such refusal.
Transmission of shares
The executors or administrators or holder of a succession certificate or thee legal representatives of a deceased shareholder (not
being one of two or more joint holders) shall be the only shareholder recognised by the Company as having any title to the shares
registered in the name of such shareholder and, and the Company shall not be bound to recognize such executors or administrators
or holders of succession certificate or the legal representatives unless such executors or administrators or legal representatives shall
have first obtained probate or letters of administration or succession certificate, as the case may be, from a duly constituted court in
India. The Board may in its absolute discretion dispense with production of probate or letters of administration or succession
certificate, upon such terms as to indemnity or otherwise as the Board may in its absolute discretion deem fit and register the name
of any person who claims to be absolutely entitled to the shares standing in the name of a deceased shareholder, as a shareholder.
Certificate
A certificate, issued under the common seal of the Company, specifying the shares held by any Person shall be prima facie evidence
of the title of the Person to such shares. Where the shares are held in depository form, the record of Depository shall be the prima
facie evidence of the interest of the beneficial owner.
Particulars of every certificate issued shall be entered in the register maintained in the form set out in the Companies Act. Upon
receipt of certificate of Securities on surrender by a Person who has entered into an agreement with the Depository through a
participant, the Company shall cancel such certificates and shall substitute in its record, the name of the Depository as the registered
owner in respect of the said Securities and shall also inform the Depository accordingly. If any certificate be worn out, defaced,
mutilated or torn or if there be no further space on the back thereof for endorsement of transfer, then upon production and surrender
thereof to the Company, a new certificate may be issued in lieu thereof, and if any certificate is lost or destroyed then upon proof
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thereof to the satisfaction of the Company and on execution of such indemnity as the Company deems adequate, being given, a new
certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate, within a period of 30 days from the
receipt of such lodgement. Every certificate under the Articles shall be issued without payment of fees if the Directors so decide, or
on payment of such fees (not exceeding Rupees two for each certificate) as the Directors shall prescribe. Provided that, no fee shall
be charged for issue of a new certificate in replacement of those which are old, defaced or worn out or where there is no further
space on the back thereof for endorsement of transfer.
Provided that, no fee shall be charged for issue of a new certificate in replacement of those which are old, defaced or worn out or
where there is no further space on the back thereof for endorsement of transfer.
Borrowing Powers
Subject to the provisions of Sections 73, 179 and 180, and other applicable provisions of the Act and these Articles, the Board may,
from time to time, at its discretion by resolution passed at the meeting of a Board:
(i) accept or renew deposits from Shareholders;
(ii) borrow money by way of issuance of Debentures;
(iii) borrow money otherwise than on Debentures;
(iv) accept deposits from Shareholders either in advance of calls or otherwise; and
(v) generally raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company.
Issue of Bonus Shares
Bonus shares may be issued out of the share premium account as per section 52 of the Companies Act, 2013 and capital redemption
reserve to the shareholders of the Company, subject to provisions of the Companies Act, 2013.
General Meetings
In accordance with the provisions of the Companies Act, 2013 the Company shall in each year hold a General Meeting specified as
its Annual General Meeting and shall specify the meeting as such in the notices convening such meetings. Further, not more than
15 (fifteen) months gap shall exist between the date of two Annual General Meetings. All General Meetings other than Annual
General Meetings shall be Extraordinary General Meetings.
Meetings of Directors
The Board shall hold regular meetings at the registered office of the Company at least once in every 3 (three) months, and at least
4 (four) such meetings shall be held in every calendar year. Notice in writing of every meeting to the Directors shall ordinarily be
given by a Director at least 10 (ten) Business Days prior to the meeting together with the agenda, and the relevant documents for
the same, unless all Directors agree to meet at a shorter notice.
The quorum for any meeting of the Board shall be the presence, in person, of such number of Directors as required under the Act,
subject to the presence of the Sequoia Director (unless waived in writing by Sequoia) and at least one Promoter Director (unless
waived in writing by either of the Promoters).
Subject to the provisions of the Companies Act, the control of the Company shall be vested in the Board who shall be entitled to
exercise all such powers and to do all such acts and things as may be exercised or done by the Company and are not hereby or by
law expressly required or directed to be exercised or done by the Company in the general meeting but subject nevertheless to
provisions of any law and of these presents, from time to time, made by the Company in general meeting, provided that no regulation
so made shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made.
Managing Directors
All appointments, remuneration and other terms of appointment of whole time Directors or managing directors shall be subject to
the written consent of Investors in accordance with Articles 83 to 87 (including both Articles) (Reserved Matters) and applicable
law.
Appointment of Directors
(a) Subject to the applicable provisions of the Companies Act, the number of Directors of the Company shall not be less than
3 (three) and not more than 15 (fifteen). The Company shall also comply with the provisions of the Companies Act and
the provisions of the SEBI Listing Regulations. The Board shall have an optimum combination of executive and non-
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executive Directors including Independent Directors with at least 1 (one) woman Director, as may be prescribed by Law
from time to time.
(b) On and from the date on which the Equity Shares are listed on the stock exchange, pursuant to the initial public offering
of Equity Shares, and subject to shareholders’ approval in the first EGM held post listing of the Equity Shares pursuant to
such initial public offering, for so long as Sequoia holds 5% or more of the paid up equity share capital of the Company
on a fully diluted basis, Sequoia shall have the right to nominate one director on the Board of the Company.
Extra-ordinary general meeting
All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings. The General Meetings
shall be held in accordance with the Secretarial Standards as made applicable and governed by the Companies Act, 2013 and the
AoA. The Board may, whenever they think fit, call an extra ordinary general meeting and it shall do so upon a requisition received
from such number of shareholders who hold, on the date of receipt of the requisition, not less than one-tenth of such of the paid-up
share capital of the Company as on that date carries the right of voting.
Votes of Members
No Shareholder shall be entitled to vote either personally or by proxy at any General Meeting or meeting of a class of Shareholders
either upon a show of hands or upon a poll in respect of any shares registered in his name on which calls or other sums presently
payable by him have not been paid or in regard to which the Company has exercised any right of lien.
On a poll, the voting rights of holder of equity shares shall be in proportion to his share in the paid-up equity share capital of the
Company. A member may exercise his vote at a meeting by electronic means in accordance with the Companies Act and shall vote
only once.
A body corporate, whether or not a Company within the meaning of the Companies Act, 2013 being a Shareholder may vote either
by a proxy or by a representative duly authorised in accordance with Section 113 of the Companies Act, 2013 and such
representative shall be entitled to exercise the same rights and powers, (including the right to vote by proxy), on behalf of the body
corporate which he represents as that body could have exercised if it were an individual Shareholder.
A person becoming entitled to a share shall not before being registered as member in respect of the share be entitled to exercise in
respect thereof any right conferred by membership in relation to meeting of the Company.
No member shall be entitled to exercise any voting rights either personally or by Proxy at any meeting of the Company in respect
of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to
which the Company has exercised any right or lien.
Dividend
Subject to Section 123 of the Companies Act, 2013, the Company in a general meeting may declare the dividend to be paid to the
shareholders according to their rights and interest in the profits. No Dividends shall exceed the amount recommended by the Board,
but the Company in General Meeting may, declare a smaller Dividend, and may fix the time for payments not exceeding 30 (thirty)
days from the declaration thereof.
Dividend shall be declared or paid any out of profits of the financial year arrived at after providing for depreciation in accordance
with the provisions of Section 123 of the Companies Act, 2013 or out of the profits of the Company for any previous financial year
or years arrived at after providing for depreciation.
The Board may, from time to time, pay to the members such interim dividends as in their judgment the position of the Company
justifies.
Unpaid or Unclaimed Dividend
Any dividend remaining unpaid or unclaimed after having been declared shall be dealt in accordance with the provisions of the
applicable law.
Where the Company has declared a dividend but which has not been paid or claimed within 30 (Thirty) days from the date of
declaration to any shareholder entitled to the payment of the dividend, the Company within 7 (Seven) days from the date of expiry
of the said period of 30 (Thirty) days, open a special account in that behalf in any scheduled bank and transfer to the said special
account, the total amount of the dividend which remains unpaid or in relation to which no divided warrant has been posted.
Any money transferred to the said special account of the Company which remains unpaid or unclaimed for a period of 7 (Seven)
years from the date of such transfer, shall be transferred by the Company to the Fund known as “Investor Education and Protection
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Fund” established under the Companies Act and the Company shall comply with all other requirement as specified in the Companies
Act or other applicable laws in respect of such unpaid or unclaimed dividend.
No unclaimed or unpaid dividend shall be forfeited by the Board before the claim becomes barred by law and the Company shall
comply with the provisions of the applicable laws in respect of such dividend.
Winding Up
Subject to the provisions of applicable law, if the Company is wound up and the assets available for distribution among the members
as such are insufficient to repay the whole of the paid - up capital, such assets shall be distributed so that as nearly as may be the
losses shall be borne by the members in proportion to the capital paid-up or which ought to have been paid- up at the commencement
of the winding-up on the shares held by them respectively.
Indemnity
Subject to the provisions of Section 197 of the Companies Act, 2013 every Director, manager and other officer or employee of the
Company shall be indemnified by the Company against any liability incurred by him and it shall be the duty of the Directors to pay
out from the funds of the Company all costs, losses and expenses which any Director, manager, Officer or employee may incur or
become liable to by reason of any contract entered into by him on behalf of the Company or in any way in the discharge of his
duties and in particular, and so as not to limit the generality of the foregoing provisions against all liabilities incurred by him as
such Director, manager, officer or employee in defending any proceedings, whether civil or criminal in which judgement is given
in his favour or he is acquitted or in connection with any application under Section 463 of the Companies Act, 2013, in which relief
is granted by the court and the amount for which such indemnity is provided shall immediately attach as a lien on the property of
the Company and have priority as between the shareholders over all the claims.
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PART B
Part B of the Articles of Association of the Company provide for the rights and obligations of the parties to the Investment
Agreement dated February 2, 2010 entered into between our Company, our Promoters, Atul Jindal, Stovekraft India, SGF and SCI
(“Series A Investment Agreement”) as amended by amendment agreement dated March 18, 2010 entered into between Company,
our Promoters, Atul Jindal, Stovekraft India, SGF and SCI; Series B Investment Agreement dated September 13, 2013 between our
Company, our Promoters, Stovekraft India, SCI and SCI-GIH (“Series B Investment Agreement”); Amendment Agreement dated
September 27, 2018 (“Amendment Agreement”) and Second Amendment Agreement dated January 29, 2020 (“Second
Amendment Agreement”) entered into between Company, our Promoters, Stovekraft India and Sequoia. Until commencement of
listing and trading of the equity shares of the Company on BSE Limited and/or National Stock Exchange of India Limited, in case
of any inconsistency between Part A and Part B of the Articles, the provisions of Part B shall prevail over Part A.
Part B of the Articles of Association shall terminate and shall be deemed to fall away without any further action immediately on
the commencement of listing and trading of the equity shares of the Company on BSE Limited and/or National Stock Exchange of
India Limited in accordance with applicable laws. If the Equity Shares do not get listed and commence trading on BSE Limited
and/or the National Stock Exchange of India Limited by March 31, 2020, or any such extended date as may be mutually agreed
between the parties to Series A Investment Agreement and Series B Investment Agreement.
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SECTION IX: OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The copies of the following contracts which have been entered or are to be entered into by our Company (not being contracts entered
into in the ordinary course of business carried on by our Company or contracts entered into more than two years before the date of
this Red Herring Prospectus) which are or may be deemed material will be attached to this Red Herring Prospectus/ Prospectus
which will be filed with the RoC. Copies of the contracts and also the documents for inspection referred to hereunder, may be
inspected at the Registered Office between 10 a.m. and 5 p.m. on all Working Days from date of this Red Herring Prospectus until
the Bid/ Offer Closing Date (except for such documents executed after the Bid/ Offer Closing Date).
A. Material Contracts for the Offer
1. Offer Agreement dated January 31, 2020, as amendment pursuant to the amendment to the Offer Agreement dated
January 11, 2021 between our Company, the Selling Shareholders and the BRLMs.
2. Registrar Agreement dated January 29, 2020, as amended pursuant to the amendment agreement to the Registrar
Agreement dated January 11, 2021 between our Company, the Selling Shareholders and the Registrar to the Offer.
3. Cash Escrow and Sponsor Bank Agreement dated January 18, 2021 between our Company, the Selling
Shareholders, the Registrar to the Offer, the BRLMs, the Escrow Collection Bank, the Public Offer Account Bank,
the Sponsor Bank and the Refund Bank.
4. Share Escrow Agreement dated January 18, 2021 between the Selling Shareholders, our Company and the Share
Escrow Agent.
5. Syndicate Agreement dated January 18, 2021 amongst the BRLMs, the Syndicate Members, our Company and
the Selling Shareholders.
6. Underwriting Agreement dated [●] between our Company, the Selling Shareholders and the Underwriters.
B. Material Documents
1. Certified copies of the updated Memorandum and Articles of Association of our Company as amended from time
to time.
2. Certificate of incorporation dated June 28, 1999 issued by the RoC to our Company, in the name of Stove Kraft
Private Limited.
3. Fresh certificate of incorporation dated August 13, 2018 issued by RoC at the time of conversion from a private
limited company into a public limited company.
4. Resolutions of the Board of Directors dated January 23, 2020 and January 8, 2021, authorising the Offer and other
related matters.
5. Shareholders’ resolution dated January 24, 2020, in relation to this Offer and other related matters.
6. Resolution of the Board of Directors dated January 31, 2020 approving the Draft Red Herring Prospectus.
7. Resolution of the Board of Directors dated January 18, 2021 approving this Red Herring Prospectus.
8. Resolutions of the board of directors of SCI and SCI-GIH each dated January 10, 2020, modified pursuant to
board resolutions each dated December 14, 2020 and consent letters each dated January 8, 2021 authorising the
Offer for Sale and consent letters of Rajendra Gandhi and Sunita Rajendra Gandhi each dated January 27, 2020,
as modified pursuant to consent letters dated January 7, 2021 each.
9. Copies of the annual reports of our Company for the last three Fiscals.
10. F&S consent letter dated January 16, 2020 and December 24, 2020, along with the industry report titled ‘Kitchen
Appliances Market in India’ dated December 16, 2019 read with the revised industry report dated November 24,
2020;
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11. The examination report dated November 19, 2020 of the Statutory Auditor, on our Company’s Restated Financial
Statements, included in this Red Herring Prospectus along with the Restated Financial Statements.
12. Written consent of the Directors, the BRLMs, the Syndicate Members, Domestic Legal Counsel to our Company,
Legal Counsel to the BRLMs as to Indian Law, Special International Legal Counsel to the BRLMs, Registrar to
the Offer, Escrow Collection Bank, Public Offer Account Bank, Refund Bank, Sponsor Bank, Bankers to our
Company, Chief Financial Officer, Company Secretary and Compliance Officer as referred to in their specific
capacities.
13. Consent letters dated November 16, 2020 and November 18, 2020, received from G Shyam Sunder & Associates
and Parashar & Co., Chartered Engineers, respectively, to include their name as required under Section
26(1)(a)(v) of the Companies Act, 2013 in this Red Herring Prospectus and as an "expert" as defined under Section
2(38) of the Companies Act, 2013.
14. Written consents of the Statutory Auditors, Deloitte Haskins & Sells, Chartered Accountants, and from Mishra &
Co., Chartered Accountants to include their name as required under Section 26(5) of the Companies Act, 2013 in
this Red Herring Prospectus and as an "expert" as defined under Section 2(38) of the Companies Act, 2013.
15. Certificate dated January 10, 2021 issued by Mishra & Co., Chartered Accountants certifying the details and
outstanding balances of the loans to be repaid from the Net Proceeds
16. Certificate dated January 11, 2021 issued by our Statutory Auditors, Deloitte Haskins & Sells, Chartered Accounts
certifying the details of utilization of loans for the purposes for which they were availed.
17. The statement of special direct tax benefits dated January 15, 2021 from the Statutory Auditor.
18. The statement of special indirect tax benefits dated January 15, 2021 from Mishra & Co., Chartered Accountants.
19. Slump Sale Agreement dated March 31, 2016 entered into between our Company and Saya Industries.
20. Investment Agreement dated February 2, 2010 entered into between our Company, our Promoters, Atul Jindal,
Stovekraft India, SME Growth Fund and SCI, as amended by amendment agreement dated March 18, 2010
entered into between our Company, our Promoters, Atul Jindal, Stovekraft India, SME Growth Fund and SCI.
21. Partnership deed dated July 01, 2011 for Stovekraft India executed between our Company and our Promoter,
Rajendra Gandhi
22. Deed of dissolution of Stovekraft India, partnership firm, between our Company and our Promoter, Rajendra
Gandhi dated September 2, 2020 and effective from April 1, 2020;
23. Series B Investment Agreement dated September 13, 2013, between our Company, our Promoters, Stovekraft
India, SCI and SCI-GIH.
24. Amendment Agreement dated September 27, 2018 entered into between Company, our Promoters, Stovekraft
India and Sequoia.
25. Second Amendment dated January 29, 2020, entered into between Company, our Promoters, Stovekraft India and
Sequoia.
26. Energy Purchase Agreement dated April 28, 2016 entered into between our Company and Vyshali Energy Private
Limited.
27. Subscription and Shareholders’ Agreement dated April 28, 2016 entered into between our Company, Greenko
Wind Projects Private Limited and Vyshali Energy Private limited.
28. Share Purchase Agreement dated April 28, 2016 entered into between our Company, Greenko Wind Projects
Private Limited and Vyshali Energy Private Limited.
29. Share purchase agreement dated November 7, 2020 by and between our Company, Microsun Solar Tech Private
Limited, Sohan K. Jain, Dinesh P. Jain, Sindhu Manoj Kumar Jain, Rishab Manoj Jain, Manju Mutha, Ashish N.
Jain, A. Ankitha and Megasun.
30. License Agreement dated September 1, 2016 entered into between our Company and The Black + Decker
Corporation.
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31. Personal guarantee issued by our Promoters in favour of Standard Chartered Bank dated May 9, 2008.
32. Personal guarantee issued by our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi, in favour of Tata
Capital Financial Services Limited dated August 31, 2018.
33. Personal guarantee issued by our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi, in favour of HDFC
Bank Limited dated January 4, 2019.
34. Personal guarantee issued by our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi, and Director, Neha
Gandhi in favour of RBL Bank Limited dated September 19, 2019.
35. Personal guarantee issued by our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi, and Director, Neha
Gandhi in favour of IDFC First Bank Limited dated March 27, 2019.
36. Personal guarantee issued by our Promoters, Rajendra Gandhi and Sunita Rajendra Gandhi in favour of
Electronica Finance Limited dated July 24, 2020.
37. Tripartite agreement dated May 9, 2018, between our Company, NSDL and the Registrar to the Offer.
38. Tripartite agreement dated May 30, 2018, between our Company, CDSL and the Registrar to the Offer.
39. Appointment letter dated March 23, 2015 as amended by appointment letters dated March 31, 2016, April 1,
2017, April 1, 2018, July 18, 2019 and July 27, 2020 for the appointment of our Managing Director, Rajendra
Gandhi.
40. Appointment letter dated September 30, 2016, as amended by appointment letters dated April 1, 2017, April 1,
2018 and July 18, 2019 for the appointment of our Executive Director, Neha Gandhi.
41. In principle listing approvals dated April 16, 2020 and April 8, 2020, issued by BSE and NSE, respectively.
42. Due diligence certificate dated January 31, 2020, addressed to SEBI from the BRLMs.
43. SEBI observation letter bearing number SRO/Issues/SG/10444/1/2020 dated April 30, 2020.
Any of the contracts or documents mentioned in this Red Herring Prospectus may be amended or modified at any time if so required
in the interest of our Company or if required by the other parties, without notice to the shareholders subject to compliance of the
provisions contained in the Companies Act and other relevant statutes.
309
DECLARATION
We hereby certify and declare that all relevant provisions of the Companies Act, the rules/guidelines/regulations issued by the
Government of India or the regulations or guidelines issued by SEBI, established under section 3 of the SEBI Act, as the case may
be, have been complied with and no statement made in this Red Herring Prospectus is contrary to the provisions of the Companies
Act, the SCRA, SCRR, the SEBI Act or rules or regulations made there under or guidelines issued, as the case may be. We further
certify that all the statements in this Red Herring Prospectus are true and correct.
SIGNED BY DIRECTORS OF OUR COMPANY
Rajendra Gandhi
(Managing Director)
_____________________________
Bharat Singh
(Nominee Director)
_____________________________
Neha Gandhi
(Executive Director)
_____________________________
Rajiv Mehta Nitinbhai
(Whole Time Director and CEO)
_____________________________
Lakshmikant Gupta
(Chairman and Independent Director)
_____________________________
Shubha Rao Mayya
(Independent Director)
_____________________________
SIGNED BY CHIEF FINANCIAL OFFICER
______________________________
Shashidhar SK
Place: Bengaluru
Date: January 19, 2021
310
DECLARATION BY THE INVESTOR SELLING SHAREHOLDER
We, Sequoia Capital India Growth Investment Holdings I, hereby confirm that all statements and undertakings specifically made
or confirmed by us in this Red Herring Prospectus about or in relation to ourselves, as one of the Selling Shareholders and our
respective Offered Shares, are true and correct. Sequoia Capital India Growth Investment Holdings I assumes no responsibility for
any other statements, including, any of the statements made by or relating to the Company or any Selling Shareholder in this Red
Herring Prospectus.
_____________________________
Signed for and on behalf of SEQUOIA CAPITAL INDIA GROWTH INVESTMENT HOLDINGS I
Name: Aslam Koomar
Designation: Director
Date: January 19, 2021
311
DECLARATION BY THE INVESTOR SELLING SHAREHOLDER
We, SCI Growth Investments II, hereby confirm that all statements and undertakings specifically made or confirmed by us in this
Red Herring Prospectus about or in relation to ourselves, as one of the Selling Shareholders and our respective Offered Shares, are
true and correct. SCI Growth Investments II assumes no responsibility for any other statements, including, any of the statements
made by or relating to the Company or any Selling Shareholder in this Red Herring Prospectus.
_____________________________
Signed by and on behalf of SCI GROWTH INVESTMENTS II
Name: Sangeeta Bissessur
Designation: Director
Date: January 19, 2021
312
DECLARATION BY THE PROMOTER SELLING SHAREHOLDER
The undersigned Selling Shareholder hereby confirms and certifies that all statements, disclosures and undertakings made by such
Selling Shareholder in this Red Herring Prospectus about or in relation to himself in connection with the Offer for Sale, and the
Equity Shares being offered by him pursuant to the Offer for Sale are true and correct.
SIGNED BY THE SELLING SHAREHOLDER
RAJENDRA GANDHI
_________________________
Name: RAJENDRA GANDHI
Date: January 19, 2021
Place: Bangalore
313
DECLARATION BY THE PROMOTER SELLING SHAREHOLDER
The undersigned Selling Shareholder hereby confirms and certifies that all statements, disclosures and undertakings made by such
Selling Shareholder in this Red Herring Prospectus about or in relation to herself in connection with the Offer for Sale, and the
Equity Shares being offered by her pursuant to the Offer for Sale are true and correct.
SIGNED BY THE SELLING SHAREHOLDER
SUNITA RAJENDRA GANDHI
_________________________
Name: SUNITA RAJENDRA GANDHI
Date: January 19, 2021
Place: Bangalore
