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DRAFT RED HERRING PROSPECTUS August 6, 2015 Please refer section 32 of the Companies Act, 2013 This Draft Red Herring Prospectus will be updated upon filing with the RoC Book Built Offer ALKEM LABORATORIES LIMITED Alkem Laboratories Limited (“Company”) was incorporated as a private limited company ‘Alkem Laboratories Private Limited’ on August 8, 1973 at Patna under the Companies Act, 1956 and subsequently became a deemed public limited company under section 43A(2) of Companies Act, 1956 on October 26, 1988. Pursuant to our Company passing a resolution under section 21 of Companies Act, 1956 and upon issuance of a fresh certificate of incorporation consequent on change of name dated August 21, 2001, the name of our Company was changed to ‘Alkem Laboratories Limited’ with effect from October 26, 1988. Pursuant to an order passed by the Company Law Board, Kolkata, the registered office of our Company was shifted from state of Bihar to Maharashtra in the year 2007. For further details, please refer to the chapter “History and Certain Corporate Matters” on page 158. Registered Office and Corporate Office: Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, Maharashtra, India. Tel No:+91 22 3982 9999; Fax No:+91 22 2492 7190 Contact Person: Mr. Manish Narang, Senior Vice President, Legal, Company Secretary and Compliance Officer; Tel No:+91 22 3982 9999; Fax No:+91 22 2492 7190 E-mail: [email protected]; Website: www.alkemlabs.com; Corporate Identity Number: U00305MH1973PLC174201. PROMOTERS OF OUR COMPANY: MR. SAMPRADA SINGH, MR. BASUDEO N. SINGH AND INDIVIDUALS IDENTIFIED AS PROMOTERS AND LISTED IN THE CHAPTER “OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES” ON PAGE 194. INITIAL PUBLIC OFFERING OF UPTO 12,853,442 EQUITY SHARES OF FACE VALUE `2 EACH (“EQUITY SHARES”) OF OUR COMPANY FOR CASH AT A PRICE OF `[●] PER EQUITY SHARE THROUGH AN OFFER FOR SALE, BY THE SELLING SHAREHOLDERS (DEFINED SUBSEQUENTLY) AGGREGATING UP TO `[●] MILLION (“OFFER”). THE OFFER INCLUDES A RESERVATION OF UP TO [●] EQUITY SHARES, AGGREGATING UP TO `[●] MILLION, FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED SUBSEQUENTLY) ON A COMPETITIVE BASIS (“EMPLOYEE RESERVATION PORTION”). THE OFFER LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE “NET OFFER”. THE OFFER AND THE NET OFFER WILL CONSTITUTE UP TO 10.75% AND [●] %, RESPECTIVELY, OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY. THE FACE VALUE OF THE EQUITY SHARES IS ` 2 EACH. THE OFFER PRICE IS ` [●] PER EQUITY SHARE AND IS [●] TIMES OF THE FACE VALUE THE PRICE BAND, DISCOUNT, IF ANY, TO RETAIL INDIVIDUAL INVESTORS AND ELIGIBLE EMPLOYEES AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS (“GCBRLMs”) AND WILL BE ADVERTISED IN ONE ENGLISH, HINDI AND MARATHI NEWSPAPERS (MARATHI BEING THE REGIONAL LANGUAGE OF MAHARASHTRA WHERE OUR REGISTERED OFFICE IS LOCATED), EACH WITH WIDE CIRCULATION, AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE. In case of revision in the Price Band, the Bid/ Offer Period shall be extended for at least three Working Days after such revision of the Price Band, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band, and the revised Bid/ Offer Period, if applicable, shall be widely disseminated by notification to BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release and also by indicating the change on the websites of the GCBRLMs and at the terminals of the Syndicate member(s). Pursuant to Rule 19(2)(b)(iii) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”), the Offer is being made for at least 10% of the post-Offer paid-up Equity Share capital of our Company. The Offer is being made through the Book Building Process in compliance with regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (“SEBI ICDR Regulations”), wherein 50% of the Net Offer shall be allocated on a proportionate basis to qualified institutional buyers (“QIBs”). Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, allocate up to 60% of the QIB Portion to Anchor Investors (“Anchor Investor Portion”) at the Anchor Investor Offer Price, on a discretionary basis, out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remaining Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above Offer Price. Further, not less than 15% of the Net Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Investors in accordance with SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. Further, [●] Equity Shares shall be reserved for allocation on a proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Offer Price. All QIBs (other than Anchor Investors) and Non-Institutional Investors must compulsorily and Retail Individual Investors and Eligible Employees may optionally participate in this Offer through the ASBA process by providing the details of their respective bank accounts in which the corresponding Bid Amounts will be blocked by the SCSBs. For further details please refer to the chapter “Offer Procedure” on page 476. RISKS IN RELATION TO THE FIRST ISSUE This being the first public offering of Equity Shares of our Company, there has been no formal market for the Equity Shares. The face value of the Equity Shares is `2 and the Floor Price is [] times of the face value and the Cap Price is [] times of the face value. The Offer Price (as determined and justified by our Company and the Selling Shareholders in consultation with the GCBRLMs as stated in “Basis for Offer Price” on page 99) 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 of our Company or regarding the price at which the Equity Shares will be traded after listing. GENERAL RISKS Investment in equity and equity related securities involves 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 Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer including the risks involved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the chapter “Risk Factors”on page 18. COMPANY’S AND THE SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of this Offer; that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held; and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Each Selling Shareholder accepts responsibility only for statements in this Draft Red Herring Prospectus in relation to itself and the Equity Shares being sold by them through the Offer for Sale. The Selling Shareholders do not assume any responsibility for any other statement in this Draft Red Herring Prospectus, including without limitation, any and all of the statements made by or relating to the Company or its business. LISTING The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on BSE and NSE. The in-principle approvals from each of BSE and NSE for listing the Equity Shares have been received pursuant to letter no. [●] dated [●] and letter no. [●] dated [●], respectively. For the purpose of this Offer, [●] shall be the Designated Stock Exchange. A copy of the Red Herring Prospectus and the Prospectus shall be delivered for registration to RoC 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 the Red Herring Prospectus up to the Bid/ Offer Closing Date, please refer to the chapter “Material Contracts and Documents for Inspection” on page 549. GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER Nomura Financial Advisory and Securities (India) Private Limited Ceejay House, Level 11, Plot F, Shivsagar Estate, Worli, Mumbai – 400 018, Maharashtra, India. Tel.: +91 22 4037 4037 Fax: +91 22 4037 4111 Email: [email protected] Website: www.nomuraholdings.com/ company/group/asia/india/index.html Investor grievance email: [email protected] Contact Person: Mr. Shreyance Shah SEBI Regn. No.: INM000011419 Axis Capital Limited 1 st Floor, Axis House, C-2 Wadia International Centre, P.B. Marg, Worli, Mumbai – 400 025, Maharashtra, India. Tel.: +91 22 4325 2183 Fax: +91 22 4325 3000 Email: [email protected] Website:www.axiscapital.co.in Investor grievance email: [email protected] Contact Person:Ms. Lakha Nair SEBI Regn. No.:INM000012029 J.P. Morgan India Private Limited J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz (East), Mumbai – 400 098, Maharashtra, India. Tel.: +91 22 6157 3000 Fax: +91 22 6157 3911 Email: [email protected] Website:www.jpmipl.com Investor grievance email: [email protected] Contact Person: Ms. Prateeksha Runwal SEBI Regn. No.:INM000002970 Edelweiss Financial Services Limited 14 th Floor, Edelweiss House, Off. C.S.T. Road, Kalina, Mumbai – 400 098, Maharashtra, India. Tel: +91 22 4086 3535 Fax +91 22 4086 3610 Email: al.ipo@edelweissfin.com Website:www.edelweissfin.com Investor grievance email: customerservice.mb@edelweissfin.com Contact Person : Mr. Anshul Bansal/ Mr. Siddharth Shah SEBI Regn. No.: INM0000010650 Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai – 400 078, Maharashtra, India. Tel: +91 22 6171 5400 Fax: +91 22 2596 0329 E-mail: [email protected] Website: www.linkintime.co.in Investor Grievance E-mail: [email protected] Contact Person: Mr. Sachin Achar SEBI Regn. No.: INR000004058 BID/ OFFERPROGRAMME # FOR ALL BIDDERS: OFFER OPENS ON: [●] FOR QIBs: OFFER CLOSES ON ** : [●] FOR ALL BIDDERS, OTHER THAN QIBs: OFFER CLOSES ON: [●] # Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, may offer a discount of up to [●]% (equivalent of `[●]) on the Offer Price to Retail Individual Investors and Eligible Employees. Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, consider participation by Anchor Investors. The Anchor Investor shall bid in the Anchor Investor Bid/ Offer Period i.e. one Working Day prior to the Bid/ Offer Opening Date. ** Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, consider closing the Bidding by QIB Bidders one Working Day prior to the Bid/ Offer Closing Date in accordance with the SEBI ICDR Regulations.
Transcript
  • DRAFT RED HERRING PROSPECTUSAugust 6, 2015

    Please refer section 32 of the Companies Act, 2013This Draft Red Herring Prospectus will be updated upon fi ling with the RoC

    Book Built Offer

    ALKEM LABORATORIES LIMITEDAlkem Laboratories Limited (“Company”) was incorporated as a private limited company ‘Alkem Laboratories Private Limited’ on August 8, 1973 at Patna under the Companies Act, 1956 and

    subsequently became a deemed public limited company under section 43A(2) of Companies Act, 1956 on October 26, 1988. Pursuant to our Company passing a resolution under section 21 of Companies Act, 1956 and upon issuance of a fresh certifi cate of incorporation consequent on change of name dated August 21, 2001, the name of our Company was changed to ‘Alkem Laboratories Limited’ with

    effect from October 26, 1988. Pursuant to an order passed by the Company Law Board, Kolkata, the registered offi ce of our Company was shifted from state of Bihar to Maharashtra in the year 2007. For further details, please refer to the chapter “History and Certain Corporate Matters” on page 158.

    Registered Offi ce and Corporate Offi ce: Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, Maharashtra, India. Tel No:+91 22 3982 9999; Fax No:+91 22 2492 7190Contact Person: Mr. Manish Narang, Senior Vice President, Legal, Company Secretary and Compliance Offi cer; Tel No:+91 22 3982 9999; Fax No:+91 22 2492 7190

    E-mail: [email protected]; Website: www.alkemlabs.com; Corporate Identity Number: U00305MH1973PLC174201.

    PROMOTERS OF OUR COMPANY: MR. SAMPRADA SINGH, MR. BASUDEO N. SINGH AND INDIVIDUALS IDENTIFIED AS PROMOTERS AND LISTED IN THE CHAPTER “OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES” ON PAGE 194.

    INITIAL PUBLIC OFFERING OF UPTO 12,853,442 EQUITY SHARES OF FACE VALUE `2 EACH (“EQUITY SHARES”) OF OUR COMPANY FOR CASH AT A PRICE OF `[●] PER EQUITY SHARE THROUGH AN OFFER FOR SALE, BY THE SELLING SHAREHOLDERS (DEFINED SUBSEQUENTLY) AGGREGATING UP TO `[●] MILLION (“OFFER”). THE OFFER INCLUDES A RESERVATION OF UP TO [●] EQUITY SHARES, AGGREGATING UP TO `[●] MILLION, FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED SUBSEQUENTLY) ON A COMPETITIVE BASIS (“EMPLOYEE RESERVATION PORTION”). THE OFFER LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE “NET OFFER”. THE OFFER AND THE NET OFFER WILL CONSTITUTE UP TO 10.75% AND [●] %, RESPECTIVELY, OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY.

    THE FACE VALUE OF THE EQUITY SHARES IS ` 2 EACH. THE OFFER PRICE IS ` [●] PER EQUITY SHARE AND IS [●] TIMES OF THE FACE VALUE THE PRICE BAND, DISCOUNT, IF ANY, TO RETAIL INDIVIDUAL INVESTORS AND ELIGIBLE EMPLOYEES AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS (“GCBRLMs”) AND WILL BE ADVERTISED IN ONE ENGLISH, HINDI AND MARATHI NEWSPAPERS (MARATHI BEING THE REGIONAL LANGUAGE OF MAHARASHTRA WHERE OUR REGISTERED OFFICE IS LOCATED), EACH WITH WIDE CIRCULATION, AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE.In case of revision in the Price Band, the Bid/ Offer Period shall be extended for at least three Working Days after such revision of the Price Band, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band, and the revised Bid/ Offer Period, if applicable, shall be widely disseminated by notifi cation to BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release and also by indicating the change on the websites of the GCBRLMs and at the terminals of the Syndicate member(s).Pursuant to Rule 19(2)(b)(iii) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”), the Offer is being made for at least 10% of the post-Offer paid-up Equity Share capital of our Company. The Offer is being made through the Book Building Process in compliance with regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (“SEBI ICDR Regulations”), wherein 50% of the Net Offer shall be allocated on a proportionate basis to qualifi ed institutional buyers (“QIBs”). Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, allocate up to 60% of the QIB Portion to Anchor Investors (“Anchor Investor Portion”) at the Anchor Investor Offer Price, on a discretionary basis, out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remaining Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above Offer Price. Further, not less than 15% of the Net Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Investors in accordance with SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. Further, [●] Equity Shares shall be reserved for allocation on a proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Offer Price. All QIBs (other than Anchor Investors) and Non-Institutional Investors must compulsorily and Retail Individual Investors and Eligible Employees may optionally participate in this Offer through the ASBA process by providing the details of their respective bank accounts in which the corresponding Bid Amounts will be blocked by the SCSBs. For further details please refer to the chapter “Offer Procedure” on page 476.

    RISKS IN RELATION TO THE FIRST ISSUEThis being the fi rst public offering of Equity Shares of our Company, there has been no formal market for the Equity Shares. The face value of the Equity Shares is `2 and the Floor Price is [•] times of the face value and the Cap Price is [•] times of the face value. The Offer Price (as determined and justifi ed by our Company and the Selling Shareholders in consultation with the GCBRLMs as stated in “Basis for Offer Price” on page 99) 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 of our Company or regarding the price at which the Equity Shares will be traded after listing.

    GENERAL RISKSInvestment in equity and equity related securities involves 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 Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer including the risks involved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specifi c attention of the investors is invited to the chapter “Risk Factors”on page 18.

    COMPANY’S AND THE SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITYOur Company, having made all reasonable inquiries, accepts responsibility for and confi rms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of this Offer; that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held; and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.Each Selling Shareholder accepts responsibility only for statements in this Draft Red Herring Prospectus in relation to itself and the Equity Shares being sold by them through the Offer for Sale. The Selling Shareholders do not assume any responsibility for any other statement in this Draft Red Herring Prospectus, including without limitation, any and all of the statements made by or relating to the Company or its business.

    LISTINGThe Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on BSE and NSE. The in-principle approvals from each of BSE and NSE for listing the Equity Shares have been received pursuant to letter no. [●] dated [●] and letter no. [●] dated [●], respectively. For the purpose of this Offer, [●] shall be the Designated Stock Exchange. A copy of the Red Herring Prospectus and the Prospectus shall be delivered for registration to RoC 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 the Red Herring Prospectus up to the Bid/ Offer Closing Date, please refer to the chapter “Material Contracts and Documents for Inspection” on page 549.

    GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER

    Nomura Financial Advisory and Securities (India) Private LimitedCeejay House, Level 11, Plot F, Shivsagar Estate, Worli, Mumbai – 400 018,Maharashtra, India.Tel.: +91 22 4037 4037Fax: +91 22 4037 4111Email: [email protected]: www.nomuraholdings.com/company/group/asia/india/index.htmlInvestor grievance email: [email protected] Person: Mr. Shreyance ShahSEBI Regn. No.: INM000011419

    Axis Capital Limited1st Floor, Axis House, C-2 Wadia International Centre, P.B. Marg, Worli, Mumbai – 400 025, Maharashtra, India.Tel.: +91 22 4325 2183Fax: +91 22 4325 3000Email: [email protected]:www.axiscapital.co.inInvestor grievance email: [email protected] Person:Ms. Lakha NairSEBI Regn. No.:INM000012029

    J.P. Morgan India Private LimitedJ.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz (East), Mumbai – 400 098, Maharashtra, India.Tel.: +91 22 6157 3000Fax: +91 22 6157 3911Email: [email protected]:www.jpmipl.comInvestor grievance email: [email protected] Person: Ms. Prateeksha Runwal SEBI Regn. No.:INM000002970

    Edelweiss Financial Services Limited14th Floor, Edelweiss House, Off. C.S.T. Road, Kalina,Mumbai – 400 098,Maharashtra, India.Tel: +91 22 4086 3535Fax +91 22 4086 3610Email: al.ipo@edelweissfi n.comWebsite:www.edelweissfi n.comInvestor grievance email: customerservice.mb@edelweissfi n.comContact Person : Mr. Anshul Bansal/ Mr. Siddharth ShahSEBI Regn. No.: INM0000010650

    Link Intime India Private LimitedC-13, Pannalal Silk Mills Compound, L.B.S. Marg,Bhandup (West),Mumbai – 400 078, Maharashtra, India.Tel: +91 22 6171 5400Fax: +91 22 2596 0329E-mail: [email protected]: www.linkintime.co.in Investor Grievance E-mail: [email protected] Person: Mr. Sachin AcharSEBI Regn. No.: INR000004058

    BID/ OFFERPROGRAMME#

    FOR ALL BIDDERS: OFFER OPENS ON: [●]FOR QIBs: OFFER CLOSES ON**: [●]FOR ALL BIDDERS, OTHER THAN QIBs: OFFER CLOSES ON: [●]

    #Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, may offer a discount of up to [●]% (equivalent of `[●]) on the Offer Price to Retail Individual Investors and Eligible Employees. Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, consider participation by Anchor Investors. The Anchor Investor shall bid in the Anchor Investor Bid/ Offer Period i.e. one Working Day prior to the Bid/ Offer Opening Date.** Our Company and the Selling Shareholders may, in consultation with the GCBRLMs, consider closing the Bidding by QIB Bidders one Working Day prior to the Bid/ Offer Closing Date in accordance with the SEBI ICDR Regulations.

    mailto:[email protected]:[email protected]

  • Alkem Laboratories Limited

    1

    TABLE OF CONTENTS

    SECTION I: GENERAL ...................................................................................................................................... 2

    DEFINITIONS AND ABBREVIATIONS .................................................................................................... 2 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ............................................. 14 FORWARD LOOKING STATEMENTS ................................................................................................... 17

    SECTION II: RISK FACTORS ........................................................................................................................ 18

    SECTION III: INTRODUCTION .................................................................................................................... 43

    SUMMARY OF INDUSTRY ....................................................................................................................... 43 SUMMARY OF OUR BUSINESS ............................................................................................................... 45 SUMMARY FINANCIAL INFORMATION ............................................................................................. 51 THE OFFER .................................................................................................................................................. 58 GENERAL INFORMATION ...................................................................................................................... 60 CAPITAL STRUCTURE ............................................................................................................................. 71

    SECTION IV: PARTICULARS OF THE OFFER ......................................................................................... 98

    OBJECTS OF THE OFFER ........................................................................................................................ 98 BASIS FOR OFFER PRICE ........................................................................................................................ 99 STATEMENT OF TAX BENEFITS ......................................................................................................... 102

    SECTION V: ABOUT THE COMPANY ....................................................................................................... 115

    INDUSTRY OVERVIEW .......................................................................................................................... 115 OUR BUSINESS ......................................................................................................................................... 129 KEY INDUSTRY REGULATIONS AND POLICIES ............................................................................. 149 HISTORY AND CERTAIN OTHER CORPORATE MATTERS .......................................................... 158 OUR SUBSIDIARIES ................................................................................................................................. 163 OUR MANAGEMENT ............................................................................................................................... 174 OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES ......................................... 194 DIVIDEND POLICY .................................................................................................................................. 212

    SECTION VI: FINANCIAL INFORMATION ............................................................................................. 213

    FINANCIAL STATEMENTS .................................................................................................................... 213 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

    OF OPERATIONS ...................................................................................................................................... 358 FINANCIAL INDEBTEDNESS ................................................................................................................ 382

    SECTION VII: LEGAL AND OTHER INFORMATION ........................................................................... 398

    OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ............................................. 398 LICENSES AND APPROVALS ................................................................................................................ 435 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 451

    SECTION VII: OFFER INFORMATION ..................................................................................................... 467

    OFFER STRUCTURE................................................................................................................................ 467 TERMS OF THE OFFER .......................................................................................................................... 473 OFFER PROCEDURE ............................................................................................................................... 476

    SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION .................................. 526

    SECTION IX: OTHER INFORMATION...................................................................................................... 549

    MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 549

    SECTION X: DECLARATION BY THE SELLING SHAREHOLDERS.................................................. 551

    SECTION XI: DECLARATION ..................................................................................................................... 552

  • Alkem Laboratories Limited

    2

    SECTION I: GENERAL

    DEFINITIONS AND ABBREVIATIONS

    This Draft Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise

    indicates or implies, the following terms have the meanings given below. References to statutes, rules, regulations,

    guidelines and policies will be deemed to include all amendments and modifications notified thereto from time to

    time.

    The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms

    under the SEBI ICDR Regulations, the Companies Act, the SCRA, the Depositories Act and the rules and

    regulations made thereunder.

    Notwithstanding the foregoing, including any terms and abbreviations used in the chapters “Statement of Tax

    Benefits”, “Financial Statements”, “Outstanding Litigations and Material Developments”, “Our Business” and

    “Main Provisions of the Articles of Association” on pages 102, 213, 398, 129 and 526, respectively, shall have the

    meanings given to such terms in these respective chapters.

    General Terms

    Term Description

    Alkem/ our Company or

    the Company

    Alkem Laboratories Limited, a company incorporated under the Companies Act, 1956,

    and having its registered office at Alkem House, Senapati Bapat Marg, Lower Parel,

    Mumbai – 400 013, Maharashtra, India.

    “We”/ “us”/ “Our” Unless the context otherwise indicates or implies, refers to our Company together with

    our Subsidiaries, on a consolidated basis.

    Company Related Terms

    Term Description

    Articles/ Articles of

    Association/ AoA

    The articles of association of our Company, as amended.

    Auditor / Statutory

    Auditor

    The statutory auditors of our Company, namely, B S R & Co. LLP, Chartered

    Accountants. Board/ Board of

    Directors

    The board of directors of our Company or a duly constituted committee thereof.

    Ascend Our Subsidiary, Ascend Laboratories LLC

    Cachet Our Subsidiary, Cachet Pharmaceuticals Private Limited

    Corporate Office The corporate office of our Company located at Alkem House, Senapati Bapat Marg,

    Lower Parel, Mumbai – 400 013, Maharashtra, India.

    CSR Committee The corporate social responsibility committee of the Board of Directors.

    Director(s) The director(s) of our Company.

    Enzene Our Subsidiary Enzene Biosciences Limited

    Equity Shares The equity shares of our Company of `2 each, fully paid up, unless otherwise specified in the context thereof.

    Group Our Company along with our Subsidiaries

    Group Companies The companies, firms and ventures promoted by our Promoters and disclosed in the

    chapter “Our Promoters, Promoter Group and Group Companies - Our Group

    Companies” on page 194.

    Independent

    Director(s) Independent directors on the Board of Directors. For details of the Independent

    Directors, please refer to the chapter “Our Management” on page 174.

    Indchemie Our Subsidiary Indchemie Health Specialities Private Limited

    Memorandum/

    Memorandum of

    Association/ MoA

    The memorandum of association of our Company, as amended.

    OAIL Olympic Agro Industries Limited

    Pharmacor Our Subsidiary, Pharmacor Pty Ltd, Australia

    Promoters The promoters of our Company namely, (i) Samprada Singh, (ii) Samprada Singh

    (HUF), (iii) Balmiki Prasad Singh, (iv) Manju Singh, (v) Sarandhar Singh, (vi)

    Srinivas Singh, (vii) Satish Kumar Singh, (viii) Premlata Singh, (ix) Sarvesh Singh,

  • Alkem Laboratories Limited

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    Term Description

    (x) Annapurna Singh, (xi) Sandeep Singh, (xii) Inderjit Arora; (xiii) Basudeo N.

    Singh, (xiv) Rekha Singh, (xv) Dhananjay Kumar Singh, (xvi) Madhurima Singh,

    (xvii) Divya Singh, (xviii) Aniruddha Singh, (xix) Mritunjay Kumar Singh, (xx)

    Seema Singh, (xxi) Meghna Singh, (xxii) Shrey Shreeanant Singh and (xxiii)

    Archana Singh.

    Promoter Group Includes such persons and entities constituting promoter group in terms of Regulation

    2 (1)(zb) of the SEBI ICDR Regulations and mentioned in the chapter “Promoter,

    Promoter Group and Group Companies” on page 194.

    Registered Office The registered office of our Company located at Alkem House, Senapati Bapat Marg,

    Lower Parel, Mumbai – 400 013, Maharashtra, India.

    Registrar of

    Companies / RoC

    The Registrar of Companies, Mumbai located at 100, Everest, Marine Drive Mumbai

    – 400 002, Maharashtra, India.

    Shareholders The shareholders of our Company.

    Shareholders’

    Agreement

    Shareholders’ Agreement dated July 13, 2015 entered into between the Promoters

    and the Company. For further details, please refer please refer to, “History and

    Certain Corporate Matters – Summary of Key Agreements – Shareholders

    Agreement” on page 161.

    Shareholder’s Group 1 The shareholder’s group 1 consists of certain of our Promoters, namely (i) Samprada

    Singh, (ii) Samprada Singh (HUF), (iii) Balmiki Prasad Singh, (iv) Manju Singh, (v)

    Sarandhar Singh, (vi) Srinivas Singh, (vii) Satish Kumar Singh, (viii) Premlata Singh,

    (ix) Sarvesh Singh, (x) Annapurna Singh, (xi) Sandeep Singh and (xii) Inderjit Arora.

    Shareholder’s Group 2 The shareholder’s group 2 consists of certain of our Promoters, namely (i) Basudeo

    N. Singh, (ii) Rekha Singh, (iii) Dhananjay Kumar Singh, (iv) Madhurima Singh, (v)

    Divya Singh, (vi) Aniruddha Singh, (vii) Mritunjay Kumar Singh, (viii) Seema Singh,

    (ix) Meghna Singh, (x) Shrey Shreeanant Singh and (xi) Archana Singh.

    Selling Shareholders The selling shareholders to the Offer namely, (i) Nawal Kishore Singh, (ii) Jayanti

    Sinha, (iii) Rajesh Kumar, (iv) Rekha Singh, (v) Anju Singh, (vi) Anita Singh, (vii)

    Rajeev Ranjan, (viii) Prerana Kumar, (ix) Prabhat N Singh, (x) Deepak Kumar Singh,

    (xi) Kishore Kumar Singh, (xii) Lalan Kumar Singh, (xiii) Tushar Kumar, (xiv)

    Krishna Singh, (xv) Alok Kumar, (xvi) Ashok Kumar, (xvii) Madan Kumar Singh,

    and (xviii) Raj Kumar Singh.

    Subsidiaries The subsidiaries of our Company namely, (i) Cachet Pharmaceuticals Private

    Limited, (ii) Indchemie Health Specialities Private Limited, (iii) Enzene Biosciences

    Limited, (iv) Alkem Real Estate LLP, (v) Alkem Laboratories (Nigeria) Limited, (vi)

    Alkem Laboratories (Pty) Limited, (vii) Alkem Laboratories Corporation, (viii)

    Alkem Pharma GmbH, (ix) S&B Holdings BV, (x) Pharmacor Pty Ltd., (xi)

    ThePharmaNetwork LLC, (xii) Ascend Laboratories Sdn Bhd, (xiii) Ascend

    Laboratories SpA, (xiv) Pharmacor Limited, (xv) ThePharmaNetwork LLP, (xvi)

    Alkem Laboratories Korea, Inc., (xvii) S&B Pharma Inc. (xviii) Ascend Laboratories

    LLC and (ix) Ascend Laboratories (UK) Limited.

    Offer Related Terms

    Term Description

    Allot/ Allotment/

    Allotted

    Transfer of Equity Shares to successful Bidders pursuant to this Offer.

    Allotment Advice Note or advice or intimation of Allotment sent to the Bidders who have been or are

    to be Allotted Equity Shares after the Basis of Allotment has been approved by the

    Designated Stock Exchange.

    Allottee A successful Bidder to whom the Allotment is made.

    Anchor Investor A QIB, applying under the Anchor Investor Portion and in accordance with the

    requirements specified in the SEBI ICDR Regulations.

    Anchor Investor

    Allocation Price

    The final price at which allocation is being done to Anchor Investors on the Anchor

    Investor Bid Period. The Anchor Investor Allocation Price will be decided by our

    Company and the Selling Shareholders in consultation with the GCBRLMs.

    Anchor Investor Bid/

    Offer Period

    The final day, one Working Day prior to the Bid/ Offer Opening Date, on which Bids

    by Anchor Investors shall be submitted and Allocation to Anchor Investors shall be

    completed.

    Anchor Investor Offer The final price at which Equity Shares will be Allotted to the Anchor Investors in

  • Alkem Laboratories Limited

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    Term Description

    Price terms of the Red Herring Prospectus and Prospectus, which price will be equal to or

    higher than the Offer Price but not higher than the Cap Price.

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

    Shareholders, in consultation with the GCBRLMs, to Anchor Investors on a

    discretionary basis.

    One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds,

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

    Anchor Investor Allocation Price.

    Application Supported

    by Blocked Amount/

    ASBA

    An application, whether physical or electronic, used by ASBA Bidder to make a Bid

    authorising a SCSB, to block the Bid Amount in their ASBA Account.

    Bids by QIBs (except Anchor Investors) and Non-Institutional Investors should be

    compulsorily made through ASBA. Anchor Investors are not permitted to participate

    through the ASBA process.

    ASBA Account Account maintained with a SCSB and specified in the Bid cum Application Form

    submitted by the ASBA Bidders for blocking the extent of the appropriate Bid

    Amount specified by an ASBA Bidder in the Bid cum Application Form.

    ASBA Bidder(s) Any Bidder, other than an Anchor Investor, who Bids in the Offer through the ASBA

    process.

    Axis Axis Capital Limited

    Bankers to the Offer The Escrow Collection Bank(s), Refund Bank(s) and Public Issue Bank(s).

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

    Offer and which is described in the chapter “Offer Procedure” on page 476.

    Bid(s) An indication to make an offer during the Bid/ Offer Period by a Bidder (other than

    Anchor Investors) or during the Anchor Investor Bid/ Offer Period by the Anchor

    Investors, to purchase the Equity Shares from Selling Shareholders at a price within

    the Price Band, including all revisions and modifications thereto.

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

    payable by the Bidder/ blocked in the ASBA Account on submission of a Bid cum

    Application Form in the Offer, which shall be net of Employee Discount and Retail

    Discount for Eligible Employees and Retail Individual Investors, as applicable.

    However for Eligible Employees applying in the Employee Reservation Portion and

    the Retail Individual Investors applying at the Cut-Off Price, the Bid amount shall be

    Cap Price multiplied by the number of Equity Shares Bid for by such Eligible

    Employee/ Retail Individual Investors and mentioned in the Bid cum Application

    Form net of Employee/ Retail Discount as the case may be.

    Bid cum Application

    Form

    The form used by a Bidder, including ASBA Bidders, which is serially numbered

    comprising an eight digit application number, to make a Bid and which will be

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

    and the Prospectus.

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

    the Syndicate, the Designated Branches and the Non-Syndicate Registered Brokers

    will not accept any Bids, which shall be notified in two national daily newspapers,

    one each in English and Hindi, and in one Marathi daily newspaper, each with wide

    circulation and in case of any revision, the extended Bid/ Offer Closing Date also to

    be notified on the website and terminals of the Syndicate, the Non-Syndicate

    Registered Brokers and SCSBs, as required under the SEBI ICDR Regulations.

    Our Company and the Selling Shareholders may, in consultation with the GCBRLMs,

    consider closing the Bid/ Offer Period for QIBs one Working Day prior to the Bid/

    Offer Closing Date in accordance with the SEBI ICDR Regulations which shall be

    notified in two national daily newspapers, one each in English and Hindi, and in one

    Marathi daily newspaper, each with wide circulation.

    Bid/ Offer Opening

    Date

    Except in relation to Anchor Investor, the date on which the Syndicate, the SCSBs

    and the Non-Syndicate Registered Brokers shall start accepting Bids which shall be

    notified in two national daily newspapers, one each in English and Hindi, and in one

    Marathi daily newspaper, each with wide circulation.

  • Alkem Laboratories Limited

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    Term Description

    Bid/ Offer Period The period between the Bid/ Offer Opening Date and the Bid/ Offer Closing Date,

    inclusive of both days, during which prospective Bidders (except Anchor Investors)

    can submit their Bids, including any revisions thereof. The Bid/ Offer Period shall

    comprise of Working Days only. Our Company and the Selling Shareholders, in

    consultation with the GCBRLMs may consider closing the Bidding by QIB Bidders

    one Working Day prior to the Bid/ Offer Closing Date, which shall be notified in an

    advertisement in same newspapers in which the Bid/ Offer Opening advertisement

    was published and in such a case the Bid/ Offer Period for the QIBs shall be

    determined accordingly.

    Bid Lot [●] Equity Shares

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

    Prospectus and the Bid cum Application Form, including an Anchor Investor unless

    stated or implied otherwise.

    Book Building Process/

    Method

    The book building process as provided under Part A of Schedule XI of the SEBI

    ICDR Regulations, in terms of which this Offer is being made.

    Broker Centre Broker centres notified by the Stock Exchanges where Bidders can submit the Bid

    cum Application Forms to a Non-Syndicate Registered Broker.

    The details of such Broker Centres, along with the names and contact details of the

    Non-Syndicate Registered Broker are available on the websites of the respective

    Stock Exchanges. CAN/ Confirmation of

    Allocation Note

    The note or advice or intimation of allocation of Equity Shares sent to the successful

    Anchor Investors who have been allocated Equity Shares after discovery of the

    Anchor Investor Offer Price, including any revisions thereof.

    Cap Price The higher end of the Price Band above which the Offer Price will not be finalized

    and above which no Bids will be accepted.

    Client ID Client identification number maintained with one of the Depositories in relation to demat account.

    Cut-off Price The Offer Price, as finalised by our Company and the Selling Shareholders in

    consultation with the GCBRLMs. Only Retail Individual Investors and Eligible

    Employees bidding in the Employee Reservation Portion are entitled to Bid at the

    Cut-off Price, for a Bid Amount not exceeding `200,000 (which shall be net of Employee Discount/ Retail Discount, as applicable). No other category of Bidders

    are entitled to Bid at the Cut-off Price.

    Demographic Details The address, Bidders bank account details, MICR code, name, status and occupation

    of a Bidder

    Depository A depository registered with SEBI under the Depositories Act.

    Designated Branch Such branches of the SCSBs, which shall collect Bid cum Application Forms used

    by ASBA Bidders, a list of which is available on http://www.sebi.gov.in/ /cms/sebi_data/attachdocs/1365051213899.html or at such other websites as may be

    prescribed by SEBI from time to time.

    Designated Date The date on which funds are transferred from the Escrow Account to the Public Issue

    Account or the Refund Account, as appropriate, and instructions for transfer of the

    amount blocked by the SCSB from the bank account of the ASBA Bidder to the

    Public Issue Account are provided, after the Prospectus is filed with the RoC,

    following which the Selling Shareholders shall transfer the Equity Shares in the Offer

    for Sale.

    Designated Stock

    Exchange/ DSE

    [●]

    Draft Red Herring

    Prospectus or DRHP

    This draft red herring prospectus dated August 6, 2015 issued in accordance with the

    SEBI ICDR Regulations, filed with SEBI and which does not contain complete

    particulars of the price at which the Equity Shares would be Alloted and the size of

    the Offer.

    Edelweiss Edelweiss Financial Services Limited

    Eligible Employees All or any of the following:

    (a) a permanent and full time employee of our Company and Subsidiaries (excluding

    such employees who are not eligible to invest in the Offer under applicable laws,

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    Term Description

    rules, regulations and guidelines including Promoters and employees who are part

    of the Promoter Group) as of the date of filing of the Red Herring Prospectus with

    the RoC and who continues to be an employee of our Company, until the

    submission of the Bid cum Application Form, in accordance with applicable law;

    and

    (b) a Director of our Company (excluding Promoters who are Directors11 of our

    Company) who is eligible to apply under the Employee Reservation Portion under

    applicable law.

    An employee of our Company, who is recruited against a regular vacancy but is on

    probation as on the date of submission of the Bid cum Application Form will also be

    deemed a ‘permanent and a full time employee’.

    The maximum Bid Amount under the Employee Reservation Portion by an Eligible

    Employee shall not exceed `200,000 on a net basis.

    Eligible Employees may be given a discount, at the discretion of our Company and

    the Selling Shareholders, in consultation with the GCBRLMs in accordance with

    Regulation 29 of the SEBI ICDR Regulations.

    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 Red Herring Prospectus

    constitutes an invitation to purchase the Equity Shares offered thereby

    Eligible NRIs NRI(s) from jurisdictions outside India where it is not unlawful to make an offer or

    invitation under the Offer and in relation to whom the Bid cum Application Form and

    the Red Herring Prospectus will constitute an invitation to subscribe to or purchase

    the Equity Shares

    Employee Discount Our Company and the Selling Shareholders, in consultation with the GCBRLMs,

    may offer a discount of up to [●]% (equivalent of `[●]) to the Offer Price to Eligible Employees and which shall be announced at least five Working Days prior to the Bid/

    Offer Opening Date.

    Employee Reservation

    Portion Reservation of up to [●] Equity Shares aggregating up to `[●] million, available for allocation to Eligible Employees on a proportionate basis.

    Escrow Account Account opened with the Escrow Collection Banks for the Offer and in whose favour

    the Bidder (except ASBA Bidders) will issue cheques or drafts in respect of the Bid

    Amount when submitting a Bid.

    Escrow Agreement Agreement to be entered into by our Company, the Selling Shareholders, the

    Registrar to the Offer, the GCBRLMs, the Syndicate member(s), the Escrow

    Collection Bank(s) and the Refund Bank(s) for collection of the Bid Amounts and

    where applicable, refunds of the amounts collected from the Bidders (excluding the

    ASBA Bidders), on the terms and conditions thereof.

    Escrow Collection

    Banks

    The banks which are clearing members and registered with SEBI under the Securities

    and Exchange Board of India (Bankers to an Issue) Regulations, 1994, with whom

    the Escrow Account(s) will be opened.

    First / Sole Bidder Bidder whose name shall be mentioned in the Bid cum Application Form or the

    Revision Form and in case of joint Bids, whose name shall also appear as the first

    holder of the beneficiary account held in joint names.

    Floor Price 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.

    GCBRLMs/ Global Co-

    ordinators and Book

    Running Lead

    Managers

    The global co-ordinators and book running lead managers to the Offer, in this case

    being Nomura Financial Advisory and Securities (India) Private Limited, Axis

    Capital Limited, J.P. Morgan India Private Limited and Edelweiss Financial Services

    Limited.

    General Information

    Document/ GID

    The General Information Document for investing in public issues prepared and issued

    in accordance with the circular (CIR/ CFD/ DIL/ 12/ 2013) dated October 23, 2013,

    notified by SEBI, suitably modified and included in “Offer Procedure – General

    Information Document for Investing in Public Issues” on page 488.

  • Alkem Laboratories Limited

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    Term Description

    Insurance Companies Any company registered with Insurance Regulatory and Development Authority as

    an insurance company.

    JPM/ J.P. Morgan J.P. Morgan India Private Limited.

    Listing Agreement The listing agreement to be entered into by our Company with the Stock Exchanges.

    Mutual Funds A mutual fund registered with SEBI under the Securities and Exchange Board of

    India (Mutual Funds) Regulations, 1996.

    Mutual Fund Portion 5% of the Net QIB Portion or [●] Equity Shares available for allocation to Mutual

    Funds, out of the Net QIB Portion.

    Net Offer The Offer minus the Employee Reservation Portion.

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

    Anchor Investors.

    Non-Institutional

    Investors

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

    Investors and who have Bid for Equity Shares for a cumulative amount more than

    `200,000 (but not including NRIs other than eligible NRIs). Non-Institutional

    Portion

    Portion of the Offer being not less than 15% of the Net Offer consisting of [●] Equity

    Shares which shall be available for allocation on a proportionate basis to Non-

    Institutional Investors, subject to valid Bids being received at or above the Offer

    Price.

    Nomura Nomura Financial Advisory and Securities (India) Private Limited.

    Non-Resident A person resident outside India, as defined under FEMA and includes an NRI, FII,

    FPIs and FVCI.

    Non-Syndicate Broker

    Centre

    A broker centre of the Stock Exchanges with broker terminals, where in a Non-

    Syndicate Registered Broker may accept Bid cum Application Forms, a list of which

    is available on the website of the Stock Exchanges, and at such other websites as may

    be prescribed by SEBI from time to time.

    Non-Syndicate

    Registered Broker

    A broker registered with SEBI under the Securities and Exchange Board of India

    (Stock Brokers and Sub Brokers) Regulations, 1992, having office in any of the Non-

    Syndicate Broker Centres, and eligible to procure Bids in terms of the circular No.

    CIR/ CFD/ 14/ 2012 dated October 4, 2012 issued by SEBI.

    Offer/ Offer for Sale Initial public offering of up to 12,853,442 Equity Shares of face value of `2 each for cash at a price of ̀ [●] each by way of an Offer for Sale, aggregating up to `[●] million.

    The Offer comprises of Net Offer to the public aggregating up to `[●] million and Employee Reservation Portion.

    Offer Agreement The agreement dated August 6, 2015 entered into among our Company, the Selling

    Shareholders and the GCBRLMs, pursuant to which certain arrangements are agreed

    to in relation to the Offer.

    Offer Price Final price at which Equity Shares will be Allotted in terms of the Red Herring

    Prospectus. The Offer Price will be decided by our Company and the Selling

    Shareholders in consultation with the GCBRLMs on the Pricing Date.

    A discount of up to [●]% (equivalent of `[●]) per Equity Share on the Offer Price may be offered to Retail Individual Investors and Eligible Employees. The Rupee amount

    of the such discount, if any, will be decided by our Company and the Selling

    Shareholders, in consultation with the GCBRLMs, and advertised in [●] editions of

    [●], [●] editions of [●]and [●] editions of [●] (which are widely circulated English,

    Hindi and Marathi newspapers, Marathi being the regional language of Maharashtra

    where our Registered Office is located), at least five Working Days prior to the Bid/

    Offer Opening Date, and shall be made available to the Stock Exchanges for the

    purpose of uploading on their website.

    Offer Proceeds The proceeds of the Offer. For further details, please refer to the chapter “Objects of

    the Offer” on page 98.

    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.

    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 GCBRLMs and will

    be advertised, at least five Working Days prior to the Bid/ Offer Opening Date, in

  • Alkem Laboratories Limited

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    Term Description

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

    newspaper [●] and [●] edition of the Marathi newspaper [●], each with wide

    circulation.

    Pricing Date The date on which our Company and the Selling Shareholders in consultation with

    the GCBRLMs finalise the Offer Price.

    Prospectus The prospectus to be filed with the RoC in accordance with section 26 of the

    Companies Act, 2013 and the SEBI ICDR Regulations, containing, inter alia, the

    Offer Price that is determined at the end of the Book Building process, the size of the

    Offer and certain other information.

    Public Issue Account The bank accounts opened with the Public Issue Banks by the Selling Shareholders

    under section 40(3) of the Companies Act, 2013 to receive money from the Escrow

    Accounts on the Designated Date and where the funds shall be transferred by the

    SCSBs from the ASBA Accounts.

    Public Issue Banks The banks which are clearing members and registered with SEBI under the Securities

    and Exchange Board of India (Bankers to an Issue) Regulations, 1994 with whom the

    Public Issue Account(s) will be opened.

    Qualified Institutional

    Buyers or QIBs

    Qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI ICDR

    Regulations.

    QIB Portion The portion of the Offer of [●] Equity Shares required to be allocated to QIBs.

    Red Herring

    Prospectus/ RHP

    Red herring prospectus to be issued in accordance with section 32 of the Companies

    Act, 2013 and the provisions of the SEBI ICDR Regulations, which will not have

    complete particulars of the price at which the Equity Shares will be offered and the

    size of the Offer.

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

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

    after the Pricing Date.

    Refund Account The account(s) opened with Refund Bank(s), from which refunds (excluding to the

    ASBA Bidders), if any, of the whole or part of the Bid Amount shall be made.

    Refund Banks The banks which are clearing members and registered with SEBI under the Securities

    and Exchange Board of India (Bankers to an Issue) Regulations, 1994 with whom the

    Refund Account will be opened.

    Refunds through

    electronic transfer of

    funds

    Refunds through electronic transfer of funds means refunds through NECS, Direct

    Credit, NEFT or RTGS, as applicable.

    Registrar/ Registrar to

    the Offer

    Registrar to this Offer, in this case being Link Intime India Private Limited.

    Restated Consolidated

    Financial Information

    Consolidated financial statement of assets and liabilities as at March 31, 2015, 2014,

    2013, 2012 and 2011 and statement of profit and loss and statement of cash flows for

    each of the years ended March 31, 2015, 2014, 2013, 2012 and 2011 for our

    Company, its Subsidiaries read alongwith all the notes thereto, restated in accordance

    with the SEBI ICDR Regulations, which have been prepared and presented under the

    historical cost convention using the accrual system of accounting in accordance with

    the Indian GAAP and requirements of Companies Act, 1956 (up to March 31, 2014)

    and notified sections, schedules and rules of the Companies Act (w.e.f. April 1, 2014)

    including accounting standards as prescribed by the Companies (Accounting

    Standard) Rules, 2006 as per Section 211(3c) of the Companies Act, 1956 (which are

    deemed to be applicable as Section 133 of Companies Act read with Rule 7 of

    Companies (Accounts) Rules, 2014, to the extent applicable) and included in the

    section “Financial Statements” on page 213

    Restated Standalone

    Financial Information

    Standalone financial statement of assets and liabilities as at March 31, 2015, 2014,

    2013, 2012 and 2011 and statement of profit and loss and statement of cash flows for

    each of the years ended March 31, 2015, 2014, 2013, 2012 and 2011 for our Company

    read alongwith all the notes thereto, restated in accordance with the SEBI ICDR

    Regulations, which have been prepared and presented under the historical cost

    convention using the accrual system of accounting in accordance with the Indian

    GAAP and requirements of Companies Act, 1956 (up to March 31, 2014) and

    notified sections, schedules and rules of the Companies Act (w.e.f. April 1, 2014)

    including accounting standards as prescribed by the Companies (Accounting

  • Alkem Laboratories Limited

    9

    Term Description

    Standard) Rules, 2006 as per Section 211(3c) of the Companies Act, 1956 (which are

    deemed to be applicable as Section 133 of Companies Act read with Rule 7 of

    Companies (Accounts) Rules, 2014, to the extent applicable) and included in the

    section “Financial Statements” on page 213

    Retail Discount Our Company and the Selling Shareholders, in consultation with the GCBRLMs,

    may decide to offer a discount of `[●] per Equity Share to the Offer Price to Retail Individual Investors and which shall be announced at least five Working Days prior

    to the Bid/ Offer Opening Date.

    Retail Individual

    Bidders / Retail

    Individual Investors /

    RIIs

    Individual Bidders, submitting Bids, who have Bid for Equity Shares for an amount

    not more than `200,000 in any of the bidding options in the Net Offer (including HUFs applying through their Karta and Eligible NRIs and does not include NRIs other

    than Eligible NRIs).

    Retail Portion/ Retail

    Category

    The portion of the Offer being not less than 35% of the Net Offer available for

    allocation to Retail Individual Investor(s) in accordance with the SEBI ICDR

    Regulations, subject to valid Bids being received at or above the Offer Price.

    Revision Form Form used by Bidders, including ASBA Bidders, to modify the quantity of the Equity

    Shares or the Bid Amount in any of their Bid cum Application Forms or any previous

    Revision Form(s).

    QIB Bidders and Non-Institutional Investors are not allowed to lower their Bids (in

    terms of quantity of Equity Shares or the Bid Amount) at any stage.

    Self-Certified Syndicate

    Bank or SCSBs

    The banks which are registered with SEBI under the Securities and Exchange Board

    of India (Bankers to an Issue) Regulations, 1994 and offer services in relation to

    ASBA, including blocking of an ASBA Account in accordance with the SEBI ICDR

    Regulations and a list of which is available on http:/ / www.sebi.gov.in/ sebiweb/

    home/ list/ 5/ 33/ 0/ 0/ Recognised Intermediaries or at such other website as may be

    prescribed by SEBI from time to time.

    Share Escrow

    Agreement

    Agreement to be entered into between the Selling Shareholders, our Company and the

    Escrow Agent in connection with the transfer of Equity Shares under the Offer for

    Sale by the Selling Shareholders and credit of such Equity Shares to the demat account

    of the Allottees.

    Specified Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms

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

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

    Sub Syndicate

    member(s)

    A SEBI Registered member of BSE and/ or NSE appointed by the GCBRLMs and /

    or Syndicate member(s) to act as a Sub Syndicate member(s) in the Offer.

    Syndicate Includes the GCBRLMs and Syndicate member(s).

    Syndicate Agreement The agreement to be entered into between the GCBRLMs, the Selling Shareholders,

    the Syndicate member(s) and our Company in relation to the collection of Bids

    (excluding Bids by ASBA Bidders) in this Offer.

    Syndicate ASBA

    Centres

    Bidding Centres where an ASBA Bidder can submit his Bid cum Application Form

    to the Syndicate member(s) and prescribed by SEBI from time to time.

    Syndicate member(s) An intermediary registered with the SEBI to act as a syndicate member(s) and who

    is permitted to carry on the activity as an underwriter in this case being [●].

    Transaction Registration

    Slip/ TRS

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

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

    U.S. QIB Qualified institutional buyers, as defined in Rule 144A under Securities Act.

    Underwriters The GCBRLMs and the Syndicate member(s).

    Underwriting

    Agreement

    The agreement among the Underwriters, the Selling Shareholders and our Company

    to be entered into on or after the Pricing Date.

    Working Day Any day, other than Saturdays and Sundays, on which commercial banks in Mumbai

    are open for business, provided however, for the purpose of the time period between

    the Bid/ Offer Closing Date and listing of the Equity Shares on the Stock Exchanges,

    “Working Days” shall mean all days excluding Sundays and bank holidays in

    Mumbai in accordance with the SEBI Circular no. CIR/ CFD/ DIL/ 3/ 2010 dated

    April 22, 2010.

  • Alkem Laboratories Limited

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    Technical/ Industry Related Terms / Abbreviations

    Term Description

    Asst. Assistant

    ANDA Abbreviated New Drug Application

    APIs Active pharmaceutical ingredients

    C&F Clearing and Forwarding

    CDSCO Central Drugs Standard Control Organization of India

    CEO Chief Executive Officer

    CFO Chief Financial Officer

    cGMP Current Good Manufacturing Practices

    DESI Drug Efficacy Study Implementation

    DPCO 2013 Department of Pharmaceuticals released the revised Drugs (Price Control) Order,

    2013

    DCGI Drug Controller General of India

    DMF Drug Master Files

    EMA European Medicine Agency

    EPCG Export Promotion Capital Goods

    Fax Facsimile

    FDA Food and drugs administration

    FDC Drugs Fixed dose combination drugs

    FSSAI Food Safety and Standards Authority of India

    FTFs First-to-files

    GCP Good clinical practices

    GLP Good laboratory practices

    GMP Good manufacturing processes

    ICDS Income Computation and Disclosure Standards

    IMS Health IMS Health Information and Consulting Services India Private Limited

    NDA New drug application

    NHAM National Health Assurance Mission

    NLEM National List of Essential Medicines

    NPPA National Pharmaceutical Pricing Authority

    Sr. Senior

    Tel. Telephone

    TGA Therapeutic Goods Administration, Australia

    WHO World Health Organisation

    UCPMP Uniform Code of Pharmaceutical Marketing Practices

    UK-MHRA The Medicines and Healthcare Products Regulatory Agency in the United Kingdom

    USFDA United States Food and Drug Administration

    V.P. Vice President

    Conventional and General Terms/ Abbreviations

    Term Description

    AGM Annual general meeting

    AIF(s) Alternative investment funds, as defined in, and registered with SEBI under the

    Securities and Exchange Board of India (Alternative Investment Funds) Regulations,

    2012.

    AS Accounting standards issued by the Institute of Chartered Accountants of India

    AY Assessment year

    BPLR Bank prime lending rate

    BG Bank guarantee

    BR Base rate

    BSE BSE Limited

    Bn/ bn Billion

    CAGR Compounded annual growth rate

    CC Cash credit

    CCI Competition Commission of India

    CDSL Central Depository Services (India) Limited

  • Alkem Laboratories Limited

    11

    Term Description

    CIN Corporate identity number

    CIT Commissioner of Income Tax

    CLB Company Law Board

    CSR Corporate social responsibility

    CST Central Sales Tax

    CST Act The Central Sales Tax Act, 1956

    CST Rules The Central Sales Tax (Registration and Turnover) Rules, 1957

    Category I Foreign

    Portfolio Investors

    FPIs that are registered as “Category I foreign portfolio investors” under the SEBI

    FPI Regulations.

    Category II Foreign

    Portfolio Investors

    FPIs that are registered as “Category II foreign portfolio investors” under the SEBI

    FPI Regulations.

    Category III Foreign

    Portfolio Investors

    FPIs that are registered as “Category III foreign portfolio investors” under the SEBI

    FPI Regulations.

    Consolidated FDI

    Policy

    Consolidated FDI Policy (Circular 1 of 2015) dated May 12, 2015 issued by the

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

    Government of India, and any modifications thereto or substitutions thereof, issued

    from time to time.

    Companies Act, 1956 The 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/

    Companies Act, 2013

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

    sections of the Companies Act, 2013, along with the relevant rules made thereunder.

    Competition Act The Competition Act, 2002

    DCA and Rules Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945

    DIN Director identification number

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

    Government of India

    DP ID Depository participant identification

    Depositories NSDL and CDSL

    Depositories Act The Depositories Act, 1996

    EPS Earnings per share

    EOU Export oriented unit

    Europe MAA Europe Marketing Authorisation Application

    FCNR Account Foreign currency non-resident account

    FDI Foreign direct investment

    FEMA

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

    thereunder and amendments thereto

    FEMA Regulations The Foreign Exchange Management (Transfer or Issue of Security by a Person

    Resident Outside India) Regulations 2000 and amendments thereto.

    FII(s) Foreign Institutional Investors as defined under the SEBI FPI Regulations. FPI(s) Foreign Portfolio Investors as defined under the SEBI FPI Regulations.

    fiscal year/ Fiscal/ FY Period of 12 months ended March 31 of that particular year, unless otherwise stated.

    FIPB Foreign Investment Promotion Board

    FLC Foreign letter of credit

    FVCI Foreign Venture Capital Investor, as defined in and registered with SEBI under the

    SEBI FVCI Regulations

    GAAR General anti-avoidance rule

    GDP Gross domestic product

    GoI/ Government Government of India

    GST Goods and Services Tax

    HNI High net worth individual

    HUF Hindu undivided family

    ICAI Institute of Chartered Accountants of India

    IFRS International Financial Reporting Standards

    IPO Initial public offering

    ILC Inland letter of credit

    IRDA Insurance Regulatory and Development Authority

    I.T. Act The Income Tax Act, 1961

  • Alkem Laboratories Limited

    12

    Term Description

    Indian GAAP Generally Accepted Accounting Principles in India

    Ind AS Indian Accounting Standard

    Insider Trading

    Regulations

    The Securities and Exchange Board of India (Prohibition of Insider Trading)

    Regulations, 2015

    KMP/ Key Management

    Personnel/ Key

    Managerial Personnel

    Key management personnel defined under section 2(1)(s) of the SEBI ICDR

    Regulations and includes the officers vested with executive powers and the officers

    at the level immediately below the Board and defined more particularly in “Our

    Management – Key Management Personnel” on page 190.

    LER Loan equivalent risk

    Libor London interbank offer rate

    LOC Letters of credit

    LOU Letter of undertaking

    LLP Act The Limited Liability Partnership Act, 2008

    MAT Minimum alternate tax

    MCA Ministry of Corporate Affairs, Government of India

    MICR Magnetic ink character recognition

    Mn / mn Million

    MOU Memorandum of understanding

    Mutual Fund(s) Mutual Fund(s) means mutual funds registered under the Securities and Exchange

    Board of India (Mutual Funds) Regulations, 1996.

    NA/ N.A. Not Applicable

    NAV/ Net Asset Value Net Asset Value being paid up equity share capital plus free reserves (excluding

    reserves created out of revaluation) less deferred expenditure not written off

    (including miscellaneous expenses not written off) and debit balance of Profit and

    Loss account, divided by number of issued Equity Shares.

    NCR National capital region

    NECS National electronic clearing services

    NEFT National electronic fund transfer

    Net Worth Net worth means the aggregate of the paid up share capital, share premium account,

    and reserves and surplus (excluding revaluation reserve).

    NOC No objection certificate.

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

    currently in effect.

    NR Non-resident

    NRE Account Non-resident external account

    NRI An individual resident outside India who is a citizen of India or is an ‘Overseas

    Citizen of India’ cardholder within the meaning of Section 7 (A) of the Citizenship

    Act, 1955.

    NRO Account Non-resident ordinary account

    NSDL National Securities Depository Limited

    NSE National Stock Exchange of India Limited

    OCB/ Overseas

    Corporate Body

    A company, firm, 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 this Offer, except with the specific

    permission of the RBI.

    p.a. Per annum

    P/ E Ratio Price/ earnings ratio

    PAN Permanent account number allotted under the Income Tax Act, 1961.

    PAT Profit after tax

    PBT Profit before tax

    PCFC Packing Credit in Foreign Currency

    PIO Persons of Indian origin

    PLR Prime lending rate

    RBI The Reserve Bank of India

    RBI Act The Reserve Bank of India Act, 1934

  • Alkem Laboratories Limited

    13

    Term Description

    RONW Return on Net Worth

    `/ Rs./ Rupees/ INR Indian Rupees

    RTGS Real time gross settlement

    SAP Systems, Applications and Products in Data Processing

    SCRA The Securities Contracts (Regulation) Act, 1956

    SCRR The Securities Contracts (Regulation) Rules, 1957

    SCSB Self-certified syndicate bank

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

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

    SEBI AIF Regulations The Securities and Exchange Board of India (Alternative Investment Funds)

    Regulations, 2012

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

    Regulations, 1995

    SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors)

    Regulations, 2014 SEBI FVCI Regulations The Securities and Exchange Board of India (Foreign Venture Capital Investors)

    Regulations, 2000

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

    Requirements) Regulations, 2009

    SEBI Takeover

    Regulations

    The Securities and Exchange Board of India (Substantial Acquisition of Shares and

    Takeovers) Regulations, 2011

    SEBI VCF Regulations The erstwhile Securities and Exchange Board of India (Venture Capital Funds)

    Regulations, 1996

    Securities Act U.S. Securities Act of 1933, as amended

    SIA Secretariat of Industrial Assistance, Department of Industrial Policy & Promotion,

    Ministry of Commerce and Industry, Government of India

    SPV Special Purpose Vehicle

    Sr. Senior

    STT Securities transaction tax

    State Government The government of a state of the Union of India

    Stock Exchange(s) BSE and/ or NSE, as the context may refer to

    UK The United Kingdom

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

    US GAAP Generally Accepted Accounting Principles in the United States of America

    USD/ US$/ U.S.$ United States Dollars

    VAT Value added tax VCFs Venture Capital Funds as defined and registered with SEBI under the SEBI VCF

    Regulations

  • Alkem Laboratories Limited

    14

    PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

    Certain Conventions

    All references to “India” in this Draft Red Herring Prospectus are to the Republic of India and all references to

    the “U.S.”, “USA” or “United States” are to the United States of America. Further, all references to following

    countries are:

    Sr. No. Reference Country

    1. Australia The Commonwealth of Australia

    2. Chile The Republic of Chile

    3. Germany The Federal Republic of Germany

    4. Kenya The Republic of Kenya

    5. Malaysia The Federation of Malaysia

    6. Netherlands The Kingdom of Netherlands

    7. Nigeria The Federal Republic of Nigeria

    8. Philippines The Republic of the Philippines

    9. South Africa The Republic of South Africa

    10. South Korea The Republic of Korea

    11. U.K., UK or United Kingdom The United Kingdom of Great Britain and Northern Ireland

    Financial Data

    Unless stated otherwise, the financial information in this Draft Red Herring Prospectus is derived from our

    Restated Consolidated Financial Information and Restated Standalone Financial Information. The above stated

    financial information is restated in accordance with the SEBI ICDR Regulations, which have been prepared and

    presented under the historical cost convention using the accrual system of accounting in accordance with the

    Indian GAAP and requirements of Companies Act, 1956 (up to March 31, 2014) and notified sections, schedules

    and rules of the Companies Act (w.e.f. April 1, 2014) including accounting standards as prescribed by the

    Companies (Accounting Standard) Rules, 2006 as per Section 211(3c) of the Companies Act, 1956 (which are

    deemed to be applicable as Section 133 of Companies Act read with Rule 7 of Companies (Accounts) Rules, 2014,

    to the extent applicable).

    In this Draft Red Herring Prospectus, all figures in decimals have been rounded off to the first decimal and all

    percentage figures have been rounded off to one decimal places and accordingly there may be consequential

    changes in this Draft Red Herring Prospectus.

    Our Company’s fiscal year commences on April 1 and ends on March 31 of the next year; accordingly, all

    references to a particular fiscal year, unless stated otherwise, are to the 12 month period ended on March 31 of

    that year.

    There could be significant differences between Indian GAAP, US GAAP and IFRS. The reconciliation of the

    financial information to IFRS or US GAAP financial information has not been provided. Our Company has not

    attempted to explain those differences or quantify their impact on the financial data included in this Draft Red

    Herring Prospectus and we urge investors to consult your own advisors regarding such differences and their

    impact on our Company’s financial data. For details in connection with risks involving differences between

    Indian GAAP and IFRS, please refer to “Risk Factors – Significant differences could exist between Indian GAAP

    and other accounting principles, such as U.S. GAAP and IFRS, which may affect investors’ assessments of our

    Company’s IND IFRS financial condition” on page 39. Accordingly, the degree to which the financial

    information included in this Draft Red Herring Prospectus will provide meaningful information is entirely

    dependent on the reader’s level of familiarity with Indian accounting policies and practices, Indian GAAP, the

    Companies Act and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting

    policies, Indian GAAP, the Companies Act, the SEBI ICDR Regulations and practices on the financial

    disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.

    Unless the context otherwise indicates, any percentage amounts, as set forth in “Risk Factors”, “Our Business”,

    “Management’s Discussion and Analysis of Financial Conditional and Results of Operations” on pages 18, 129

    and 358 respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated on the basis of

    the Restated Consolidated Financial Information and Restated Standalone Financial Information of our

    Company.

    https://upload.wikimedia.org/wikipedia/commons/5/50/RepChile.ogg

  • Alkem Laboratories Limited

    15

    Currency and Units of Presentation

    All references to:

    “Rupees” or “`” or “INR” or “Rs.” are to Indian Rupee, the official currency of the Republic of India;

    “USD” or “US$” are to United States Dollar, the official currency of the United States of America;

    “Euro” or “EUR” are to Euro, the official currency of the European Union and consequently, the official currency of the Kingdom of Netherlands; and

    All references to the following currencies refer to the official currencies of countries mentioned below:

    Sr. No. Currency Country 1. Australian dollar or AUD or $ Australia

    2. Chilean peso or CLP or $ Chile

    3. Euro or EUR or € Germany

    4. Kenyan shilling or KES or Sh Kenya

    5. Malaysian ringgit or MYR or RM Malaysia

    6. Euro or EUR or € Netherlands

    7. Nigerian naira or NGN or ₦ Nigeria

    8. Philippine peso or PHP or ₱ Philippines

    9. South African rand or ZAR or R South Africa

    10. South Korean won or KRW or ₩ South Korea

    11. British pound or GBP or £ U.K., UK or United Kingdom

    Except otherwise specified, our Company has presented certain numerical information in this Draft Red Herring

    Prospectus in “million” units. One million represents 1,000,000 and one billion represents 1,000,000,000.

    Exchange Rates

    This Draft Red Herring Prospectus contains conversion 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 other currencies:

    (in `) Currency As on March 31,

    2011 2012 2013 2014 2015

    1 USD(1) 44.6 50.9 54.3 59.9 62.5

    1 AUD(2) 46.1 52.9 56.6 55.3 47.5

    1 Chilean peso(3) 0.1 0.1 0.1 0.1 0.1

    1 €(4) 63.4 67.9 69.5 82.7 67.2

    100 Kenyan shilling(5) 53.6 61.3 63.5 69.3 67.6

    1 RM(6) 14.9 16.9 17.4 18.3 16.8

    1 NGN(7) 0.3 0.3 0.3 0.4 0.3

    1 Philippine peso(8) 1.0 1.2 1.3 1.3 1.4

    1 Rand(9) 6.6 6.6 5.9 5.7 5.1

    1 KRW(10) 0.0 0.0 0.0 0.1 0.1

    1 £(11) 71.8 81.5 82.2 99.8 92.5 Source:

    (1) Foreign Exchange Dealer Association of India - Fedai.org.in (2) Foreign Exchange Dealer Association of India - Fedai.org.in (3) Oanda.com (4) Foreign Exchange Dealer Association of India - Fedai.org.in

    https://en.wikipedia.org/wiki/Chilean_pesohttps://en.wikipedia.org/wiki/Kenyan_shillinghttps://en.wikipedia.org/wiki/Malaysian_ringgithttps://en.wikipedia.org/wiki/Nigerian_nairahttps://en.wikipedia.org/wiki/Philippine_pesohttps://en.wikipedia.org/wiki/South_African_randhttps://en.wikipedia.org/wiki/South_Korean_wonhttps://en.wikipedia.org/wiki/Pound_sterlinghttps://en.wikipedia.org/wiki/Chilean_pesohttps://en.wikipedia.org/wiki/Kenyan_shillinghttps://en.wikipedia.org/wiki/Philippine_peso

  • Alkem Laboratories Limited

    16

    (5) Foreign Exchange Dealer Association of India - Fedai.org.in (6) Oanda.com (7) Oanda.com (8) Oanda.com (9) Foreign Exchange Dealer Association of India - Fedai.org.in (10) Oanda.com (11) Foreign Exchange Dealer Association of India - Fedai.org.in

    In case March 31 of any of the respective years is a public holiday, the previous calendar day not being a public

    holiday has been considered.

    Industry and Market Data

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

    or derived from publicly available information as well as various 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. Accordingly, no investment decision should be based

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

    is reliable, it has not been independently verified by us, the Selling Shareholders or the GCBRLMs or any of

    their affiliates or advisors. The data used in these sources may have been re-classified by us for the purposes of

    presentation. Data from these sources may also not be comparable.

    The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful

    depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.

    There are no standard data gathering methodologies in the industry in which business of our Company is

    conducted, and methodologies and assumptions may vary widely among different industry sources.

    Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various

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

    This Draft Red Herring Prospectus includes industry related information from a report published by CRISIL

    Research, a division of CRISIL Limited. CRISIL Research (“CRISIL”) has consented to the use of such

    information in the Draft Red Herring Prospectus subject to the following disclosure:

    CRISIL Research, a division of CRISIL Limited (“CRISIL”) has taken due care and caution in preparing this

    report (“Report”) based on the Information obtained by CRISIL from sources which it considers reliable

    (“Data”). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and

    is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report

    is not a recommendation to invest / disinvest in any company covered in the Report. CRISIL especially states that

    it has no liability whatsoever to the subscribers / users / transmitters/ distributors of this Report. CRISIL Research

    operates independently of, and does not have access to information obtained by CRISIL’s Ratings Division /

    CRISIL Risk and Infrastructure Solutions Ltd (“CRIS”), which may, in their regular operations, obtain

    information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of

    CRISIL’s Ratings Division / CRIS. No part of this Report may be published/reproduced in any form without

    CRISIL’s prior written approval.

  • Alkem Laboratories Limited

    17

    FORWARD LOOKING STATEMENTS

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

    statements can generally be identified by words or phrases such as “will”, “aim”, “will likely result”, “believe”,

    “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”,

    “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions.

    All statements contained in this Draft Red Herring Prospectus that are not statements of historical fact constitute

    “forward-looking statements”. All statements regarding our expected financial condition and results of operations,

    business, plans, objectives, strategies, goals and prospects are forward-looking statements.

    Forward-looking statements reflect our current views with respect to future events and are not a guarantee of

    future performance. These statements are based on our management’s beliefs and assumptions, which in turn are

    based on currently available information. Although our Company believes the assumptions upon which these

    forward-looking statements are based to be reasonable, any of these assumptions could prove to be inaccurate,

    and the forward-looking statements based on these assumptions could be incorrect.

    Further, the actual results may differ materially from those suggested by the forward-looking statements due to

    risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes

    pertaining to the pharmaceutical industry in India in which our Company operates and our ability to respond to

    them.

    Important factors that could cause actual results to differ materially from our expectations include, but are not

    limited to, the following:

    1. Price fluctuation due to Drug Prices Control Order and NLEM; 2. Our ability to successfully implement our strategy, growth and expansion plans; 3. Our ability to identify market trends and customer preferences early on and to leverage this information

    successfully;

    4. The outcome of legal or regulatory proceedings that our Company is or might become involved in; 5. Contingent liabilities, environmental problems and uninsured losses; 6. Government approvals; 7. Changes in government policies and regulatory actions that apply to or affect our business; 8. Developments affecting the Indian economy; and 9. Uncertainty in global financial markets.

    We cannot assure investors that the expectation 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.

    By their nature, certain risk disclosures are only estimates and could be materially different from what actually

    occurs in the future. As a result, actual future gains or losses could materially differ from those that have been

    estimated. Our Company, the Directors, the GCBRLMs and their respective affiliates or associates do not have

    any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising

    after the date hereof or to reflect the occurrence of underlying events, even if the, underlying assumptions do not

    come to fruition. In accordance with the SEBI ICDR Regulations, our Company and the GCBRLMs will ensure

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

    permissions by the Stock Exchanges for the Equity Shares allotted pursuant to the Offer. Each of the Selling

    Shareholders will ensure that investors are informed of material developments in relation to statements and

    undertakings made by such Selling Shareholder in the Red Herring Prospectus until the time of the grant of listing

    and trading permission by the Stock Exchanges.

    All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause our

    actual results to differ materially from those contemplated by the relevant forward looking statement. For further

    discussion of factors that could cause our actual results to differ from our expectations, please refer to the chapters

    “Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results

    of Operation” on pages 18, 129 and 358, respectively.

  • Alkem Laboratories Limited

    18

    SECTION II: RISK FACTORS

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

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

    making an investment in the Equity Shares. If any or some combination of the following risks actually occur,

    our business, prospects, results of operations and financial condition could suffer, the trading price of the

    Equity Shares could decline and you may lose all or part of your investment. In addition, the risks set out in this

    section may not be exhaustive and additional risks and uncertainties not presently known to us, or which we

    currently deem to be immaterial, may arise or may become material in the future. Unless specified in the relevant

    risk factor below, we are not in a position to quantify the financial implication of any of the risks mentioned below.

    Any potential investor in the Equity Shares should pay particular attention to the fact that we are subject to

    extensive regulatory environment that may differ significantly from one jurisdiction to other. In making an

    investment decision, prospective investors must rely on their own examination of us on a consolidated basis and

    the terms of the Offer including the merits and the risks involved. To obtain a complete understanding of our

    business, you should read the sections “Our Business” and “Management’s Discussion and Analysis of Financial

    Condition and Result of Operations” on pages 129 and 358, respectively. If our business, result of operations or

    financial condition suffers, the price of the Equity Shares and the value of your investments in the Equity Shares

    could decline.

    This Draft Red Herring Prospectus also contains forward looking statements, which refers to future events that

    produce known and unknown risks, uncertainties and other factors, many of which are beyond our control, which

    may cause the actual results to be materially different from those expressed or implied by the forward looking

    statements. Please refer to the chapter “Forward Looking Statements” on page 17.

    In this section, unless the context otherwise requires, a reference to our “Company” refers to Alkem Laboratories

    on a stand-alone basis and “we”, “us” and “our” refers to Alkem Laboratories Limited, and our Subsidiaries on

    a consolidated basis. Unless otherwise stated or the context otherwise requires, the financial information used in

    this section is derived from our Restated Consolidated Financial Information and Restated Standalone Financial

    Information, as applicable.

    Risks relating to our Business

    1. There are outstanding litigations involving our Company, our Promoters, our Directors and our Subsidiaries.

    Our Company, our Promoters, our Directors and our Subsidiaries are involved in certain legal proceedings

    which are pending at different levels of adjudication before various courts, tribunals and appellate authorities.

    We cannot provide assurance that these legal proceedings will be decided in our favour. Decisions in such

    proceedings adverse to such person/ entity’s interests may have a significant adverse effect on our business,

    results of operations, cash flows and financial condition.

    A summary of the pending civil and criminal proceedings involving our Company, our Promoters, our

    Directors and our Subsidiaries is provided below:

    Litigations against our Company

    Category Company

    No. of

    Proceedings

    Amount, to the extent quantifiable (` million)

    Criminal Complaints 20 2.4

    Civil Proceedings 16 2.2

    Tax Proceedings (Direct and Indirect) 73 1,324.7

    Labour Matters 23 3.3

    Litigations by our Company

    Category Company

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Proceedings 45 56.2

    Civil Proceedings 11 28.9

    Labour Matters 6 Nil

  • Alkem Laboratories Limited

    19

    Litigations against Indchemie

    Category Subsidiaries

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 5 Nil

    Civil Proceedings Nil Nil

    Tax Proceedings (Direct and Indirect) 3 2.7

    Labour Matters Nil Nil

    Litigations by Indchemie

    Category Subsidiaries

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 25 2.4

    Civil Proceedings 1 Nil

    Labour Matters Nil Nil

    Litigations against Cachet

    Category Subsidiaries

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 3 Nil

    Civil Proceedings Nil Nil

    Tax Proceedings (Direct and Indirect) 17 110.1

    Labour Matters 1 0.4

    Litigations by Cachet

    Category Subsidiaries

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 9 8.5

    Civil Proceedings Nil Nil

    Labour Matters Nil Nil

    Litigations against our Promoters

    Category Promoters

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 18 2.1

    Civil Proceedings 2 Nil

    Tax Proceedings (Direct and Indirect) Nil Nil

    Labour Matters Nil Nil

    Litigations against our Directors

    Category Directors

    No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 18 2.1

    Civil Proceedings 2 Nil

    Tax Proceedings (Direct and Indirect) Nil Nil

    Labour Matters Nil Nil

    For further details of legal proceedings involving the Company, our Promoters, our Directors and our

    Subsidiaries, please refer to the chapter “Outstanding Litigation and Material Developments” on page 398.

    In addition to the aforementioned legal proceedings there are notice


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