ALKEM LABORATORIES LIMITED · RED HERRING PROSPECTUS November 27, 2015 Please refer section 32 of...

RED HERRING PROSPECTUSNovember 27, 2015

Please refer section 32 of the Companies Act, 2013Book 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 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 7190Contact 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 298,913 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 10.50%, 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, 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.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, 298,913 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 though 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 482.

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 107) 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 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 RESPONSIBILITYOur Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of this Offer; that the information contained in this Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held; and that there are no other facts, the omission of which makes this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.Each Selling Shareholder accepts responsibility only for statements in this 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 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 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 dated August 12, 2015 and letter dated August 18, 2015, respectively. For the purpose of this Offer, BSE shall be the Designated Stock Exchange. A copy of this 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 this Red Herring Prospectus up to the Bid/ Offer Closing Date, please refer to the chapter “Material Contracts and Documents for Inspection” on page 555.

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 Limited J.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: [email protected]: www.edelweissfin.comInvestor grievance email: [email protected] 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/ OFFER PROGRAMME#

FOR ALL BIDDERS: OFFER OPENS ON: Tuesday, December 8, 2015FOR ALL BIDDERS: OFFER CLOSES ON: Thursday, December 10, 2015

* 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 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.

A copy of this Red Herring Prospectus and written consents of various intermediaries as enumerated in “Material Contracts and Documents for Inspection” on page 555 has been delivered to the ROC, in terms of Sections 23,26 and 32 of the Companies Act, 2013 along with the requisite endorsed/certified copies of all requisite documents.

mailto:[email protected]:[email protected]

Alkem Laboratories Limited

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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 .................................................................................................................... 45

SUMMARY OF INDUSTRY ....................................................................................................................... 45 SUMMARY OF OUR BUSINESS ............................................................................................................... 47 SUMMARY FINANCIAL INFORMATION ............................................................................................. 54 THE OFFER .................................................................................................................................................. 65 GENERAL INFORMATION ...................................................................................................................... 67 CAPITAL STRUCTURE ............................................................................................................................. 79

SECTION IV: PARTICULARS OF THE OFFER ....................................................................................... 106

OBJECTS OF THE OFFER ...................................................................................................................... 106 BASIS FOR OFFER PRICE ...................................................................................................................... 107 STATEMENT OF TAX BENEFITS ......................................................................................................... 110

SECTION V: ABOUT THE COMPANY ....................................................................................................... 114

INDUSTRY OVERVIEW .......................................................................................................................... 114 OUR BUSINESS ......................................................................................................................................... 128 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 .................................................................................................................................. 204

SECTION VI: FINANCIAL INFORMATION ............................................................................................. 205

FINANCIAL STATEMENTS .................................................................................................................... 205 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS ...................................................................................................................................... 361 FINANCIAL INDEBTEDNESS ................................................................................................................ 389

SECTION VII: LEGAL AND OTHER INFORMATION ........................................................................... 404

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ............................................. 404 LICENSES AND APPROVALS ................................................................................................................ 440 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 456

SECTION VII: OFFER INFORMATION ..................................................................................................... 473

OFFER STRUCTURE................................................................................................................................ 473 TERMS OF THE OFFER .......................................................................................................................... 479 OFFER PROCEDURE ............................................................................................................................... 482

SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION .................................. 532

SECTION IX: OTHER INFORMATION...................................................................................................... 555

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 555

SECTION X: DECLARATION BY THE SELLING SHAREHOLDERS.................................................. 557

SECTION XI: DECLARATION ..................................................................................................................... 558


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SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

This 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 110, 205, 404, 128 and 532, 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 entities covered under the applicable accounting standard and such companies

considered material by the Board of Directors of our Company, more particularly

described in the chapter “Our Promoters, Promoter Group and Group Companies -

Our Group Companies” on page 201.

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


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Term Description

(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, (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 “Promoters,

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 to, “History and Certain Corporate

Matters – Summary of Key Agreements” 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 Laboratories (Nigeria) Limited, (v) Alkem Laboratories (Pty)

Limited, (vi) Alkem Laboratories Corporation, (vii) Alkem Pharma GmbH, (viii)

S&B Holdings BV, (ix) Pharmacor Pty Ltd., (x) ThePharmaNetwork LLC, (xi)

Ascend Laboratories Sdn Bhd, (xii) Ascend Laboratories SpA, (xiii) Pharmacor

Limited, (xiv) ThePharmaNetwork LLP, (xv) Alkem Laboratories Korea, Inc., (xvi)

S&B Pharma Inc. (xvii) Ascend Laboratories LLC and (xviii) 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


4

Term Description

completed.

Anchor Investor Offer

Price

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

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

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

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 Banks, Refund Bank and Public Issue Banks.

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 482.

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 for Eligible

Employees.

However for Eligible Employees applying in the Employee Reservation Portion, the

Bid amount shall be Cap Price multiplied by the number of Equity Shares Bid for by

such Eligible Employee and mentioned in the Bid cum Application Form net of

Employee Discount.

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 this 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.

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.

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


5

Term Description

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 this 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). 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

BSE

Draft Red Herring

Prospectus or DRHP

The 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,

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

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

the RoC and who continues to be an employee of our Company and an resident in

India, until the submission of the Bid cum Application Form, in accordance with


6

Term Description

applicable law; and

b. a Director of our Company (excluding Promoters who are Directors of our Company) who is eligible to apply under the Employee Reservation Portion under

applicable law and is a resident in India.

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 this 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

this 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 298,913 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 dated November 26, 2015 entered into by our Company, the Selling

Shareholders, the Registrar to the Offer, the GCBRLMs, the Syndicate Member, the

Escrow Collection Banks and the Refund Bank 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 495.

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 Regulations Securities and Exchange Board of India (Listing Obligations and Disclosure


7

Term Description

Requirements) Regulations, 2015

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 125,545 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 1,883,179

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 this 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 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 all editions of Business Standard (English national); (ii)

all editions of Business Standard (Hindi national), each with wide circulation, and

Mumbai edition of the Marathi newspaper, Navshakti (a regional newspaper with

wide circulation at the place where the 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 106.

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 all

editions of Business Standard (English national); (ii) all editions of Business Standard

(Hindi national), each with wide circulation, and Mumbai edition of the Marathi

newspaper, Navshakti, a regional newspaper with wide circulation at the place where


8

Term Description

the Registered Office is located.

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 6,277,264 Equity Shares required to be allocated to QIBs.

Red Herring

Prospectus/ RHP

This Red herring prospectus dated November 27, 2015 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.

This Red Herring Prospectus will become the Prospectus upon filing with the RoC

after the Pricing Date.

Refund Account The account opened with Refund Bank, 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 as at six months period ended September 30, 2015 and

September 30, 2014 and the statement of profit and loss and statement of cash flows

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

six months period ended September 30, 2015 and September 30, 2014, 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

chapter “Financial Statements” on page 205.

Restated Standalone

Financial Information

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

2013, 2012 and 2011 and as at six months period ended September 30, 2015 and

September 30, 2014 and the statement of profit and loss and statement of cash flows

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

six months period ended September 30, 2015 and September 30, 2014, 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


9

Term Description

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 chapter

“Financial Statements” on page 205.

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 or 4,394,086 Equity

Shares 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

The Agreement dated November 26, 2015 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 to act as a Sub Syndicate member(s) in the Offer.

Syndicate Includes the GCBRLMs and Syndicate Member.

Syndicate Agreement The agreement dated November 26, 2015 entered into between the GCBRLMs, the

Selling Shareholders, the Syndicate Member 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 and prescribed by SEBI from time to time.

Syndicate Member An intermediary registered with the SEBI to act as a syndicate member and who is

permitted to carry on the activity as an underwriter in this case being Edelweiss

Securities Limited.

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.

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 All days, other than 2nd and 4th Saturday of the month, Sunday or a public holiday on

which commercial banks are open for business, provided however, with reference to

(a) announcement of Price Band; and (b) Bid/Offer Period, “Working Days” shall

mean all days, excluding Saturdays, Sundays and public holidays, which are working

days for commercial banks in India.


10

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


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


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

RONW Return on Net Worth


13

Term Description

`/ `/ 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


14

PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

Certain Conventions

All references to “India” in this 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 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 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 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 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 41. Accordingly, the degree to which the financial information included

in this Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level

of familiarity with Indian accounting policies and practices, 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 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, 128

and 361 respectively, and elsewhere in this 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


15

Currency and Units of Presentation

All references to:

“Rupees” or “`” or “INR” or “`” 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 Red Herring

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

Exchange Rates

This 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, As at September 30,

2011 2012 2013 2014 2015 2014 2015

1 USD(1) 44.6 50.9 54.3 59.9 62.5 61.8 65.6

1 AUD(2) 46.1 52.9 56.6 55.3 47.5 53.8 46.1

1 Chilean peso(3) 0.1 0.1 0.1 0.1 0.1 0.1 0.1

1 €(4) 63.4 67.9 69.5 82.7 67.2 77.7 73.5

100 Kenyan shilling(5) 53.6 61.3 63.5 69.3 67.6 69.1 62.6

1 RM(6) 14.9 16.9 17.4 18.3 16.8 18.8 14.8

1 NGN(7) 0.3 0.3 0.3 0.4 0.3 0.4 0.3

1 Philippine peso(8) 1.0 1.2 1.3 1.3 1.4 1.4 1.4

1 Rand(9) 6.6 6.6 5.9 5.7 5.1 5.5 4.7

1 KRW(10) 0.0 0.0 0.0 0.1 0.1 0.1 0.1

1 £(11) 71.8 81.5 82.2 99.8 92.5 99.9 99.6 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 (5) 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


16

(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 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 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 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 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

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 (“CRISIL Research, 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.


17

FORWARD LOOKING STATEMENTS

This 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 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 this 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, 128 and 361, respectively.


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 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 128 and 361, 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 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 22 2.1

Civil Proceedings 18 2.4

Tax Proceedings (Direct and Indirect) 81 1,197.5

Labour Matters 30 3.7

Litigations by our Company

Category Company

No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Proceedings 48 33.7

Civil Proceedings* 16 111.0

Labour Matters 6 Nil

*Please note that the conversion for an amount in USD has been done at the rate of ` 65.6 per USD which was the


19

exchange rate prevailing on September 30, 2015.

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) 2 0.3

Labour Matters Nil Nil

Litigations by Indchemie



Civil Proceedings 1 Nil


Litigations against Cachet


No. of Proceedings Amount, to the extent quantifiable (` million) Criminal Complaints 7 Nil

Civil Proceedings 1 0.4

Tax Proceedings (Direct and Indirect) 18 128.6


Litigations by Cachet





Litigations against ThePharmaNetwork LLC & Ascend Laboratories LLC


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

Civil Proceedings* 4 23.1

Tax Proceedings (Direct and Indirect) Nil Nil


*Please note that the conversion for amounts in USD has been done at the rate of ` 65.6 per USD which was the exchange rate prevailing on September 30, 2015.

Litigations by ThePharmaNetwork LLC & Ascend Laboratories LLC


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



Litigations against our Promoters

Category Promoters


Civil Proceedings 1 Nil


20

Category Promoters

No. of Proceedings Amount, to the extent quantifiable (` million) Tax Proceedings (Direct and Indirect) Nil Nil


Litigations by our Promoters

Category Promoters

No. of Proceedings Amount, to

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