GMR ENERGY LIMITED - Securities and Exchange Board of … · DRAFT RED HERRING PROSPECTUS Dated...

DRAFT RED HERRING PROSPECTUS

Dated March 28, 2014

Please read Section 32 of the Companies Act, 2013

(The Draft Red Herring Prospectus will be updated upon filing with the RoC)

Book Built Issue

GMR ENERGY LIMITED

Our Company was originally incorporated on October 10, 1996 as a private unlimited company by the name Tanir Bavi Power Company. On December 10, 1997, our status was changed to a private limited

company and pursuant to which the name was changed to Tanir Bavi Power Company Private Limited. Further, on September 29, 2003, our name was changed from Tanir Bavi Power Company Private Limited to GMR Energy Private Limited. Subsequently, the status of our Company was changed from a private limited company to a public limited company on September 30, 2003 and a fresh certificate

of incorporation was issued. For details regarding change in the registered office see History and Corporate Structure on page 197.

Registered Office: Skip House, 25/1 Museum Road, Bengaluru 560 025, Karnataka, India; Tel: (91 80) 4053 4000; Fax: (91 80) 2227 9353

Company Secretary and Compliance Officer: V. Mohana; Tel: (91 80) 4043 2000; Fax: (91 80) 4043 2180

Email: [email protected] ; Website: www.gmrgroup.in

PROMOTERS: WE ARE PROMOTED BY GMR INFRASTRUCTURE LIMITED, GMR ENERGY PROJECTS (MAURITIUS) LIMITED AND GMR RENEWABLE ENERGY LIMITED

PUBLIC ISSUE OF [] EQUITY SHARES OF FACE VALUE OF `10 EACH (THE EQUITY SHARES) OF GMR ENERGY LIMITED, (THE COMPANY OR THE

ISSUER) FOR CASH AT A PRICE OF ` [] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ` [] PER EQUITY SHARE) AGGREGATING TO ` []

MILLION CONSISTING OF A FRESH ISSUE OF [] EQUITY SHARES AGGREGATING UP TO ` 14,500 MILLION (THE FRESH ISSUE) AND AN OFFER FOR SALE

OF UP TO 110,554,848 EQUITY SHARES BY THE SELLING SHAREHOLDERS (AS DEFINED IN DEFINITIONS AND ABBREVIATIONS) AGGREGATING UP TO `

[] MILLION (THEOFFER FOR SALEAND TOGETHER WITH THE FRESH ISSUE, THEISSUE). THE ISSUE WILL CONSTITUTE []% OF THE FULLY DILUTED

POST ISSUE PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY.

THE FACE VALUE OF THE EQUITY SHARES IS ` 10 EACH AND THE ISSUE PRICE IS [] TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE BAND

AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE

ADVERTISED AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ ISSUE OPENING DATE. In case of revision in the Price Band, the Bid/Issue Period will be extended by at least three additional Working Days after such revision of the Price Band, subject to the Bid/Issue Period not exceeding ten Working Days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the BSE Limited (BSE) and the National Stock Exchange

of India Limited (NSE together with the BSE referred to as the Stock Exchanges), by issuing a press release, and also by indicating the change on the website of the Book Running Lead Managers

(BRLMs), the Syndicate Members and the Self Certified Syndicate Banks (SCSBs). In terms of Rule 19(2)(b)(ii) of the Securities Contracts (Regulation) Rules, 1957, as amended (the SCRR), this is an Issue for at least []% of the post-Issue capital where the post-Issue capital of our

Company calculated at the Issue Price will be more than ` 40,000 million. The Issue is being made through the Book Building Process wherein not more than 50.00% of the Issue shall be available for allocation on a proportionate basis to Qualified Institutional Buyer (QIB), provided that our Company and the Selling Shareholders may allocate up to 30.00% of the QIB Portion to Anchor Investors on a

discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which

allocation is being done to other Anchor Investors. In the event of under-subscription in the Anchor Investor Portion, the remaining Equity Shares shall be added to the QIB Portion. 5.00% of the QIB

Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15.00% of the Issue shall be

available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35.00% of the Issue shall be available for allocation to Retail Individual Bidders, subject to valid Bids being

received at or above the Issue Price. QIBs (other than Anchor Investors) and Non-Institutional Bidders shall mandatorily participate in the Issue through the Application Supported by Blocked Amount (ASBA) process only providing the details of the bank account which will be blocked by the SCSBs to the extent of the Bid Amount for the same. Retail Individual Bidders may also participate in the

Issue through the ASBA process. Anchor Investors are not permitted to participate in the Issue through the ASBA process. For details, see Issue Procedure on page 460.

RISK IN RELATION TO THE FIRST ISSUE

This being the first public issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is ` 10 each. The Floor Price is [] times of the face value and the Cap Price is [] times of the face value. The Issue Price (determined and justified by our Company in consultation with the BRLMs as stated under Basis for Issue

Price on page 110) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the

Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their entire investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of our Company

and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI

guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to see Risk Factors on page 17. ISSUERS AND 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 Issue, which is material in the context of the Issue, 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. Further, each Selling Shareholder accepts that this Draft Red Herring Prospectus contains all information about it as the

Selling Shareholder in the context of the Offer for Sale and assumes responsibility only for statements in relation to such Selling Shareholder included in this Draft Red Herring Prospectus. LISTING

The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received an in-principle approval from each of BSE and NSE for the listing of

the Equity Shares pursuant to the letters dated [] and [], respectively. For the purposes of the Issue, the Designated Stock Exchange shall be []. BOOK RUNNING LEAD MANAGERS

DSP Merrill Lynch Limited 8

th Floor, Mafatlal Center

Nariman Point

Mumbai 400 021

Maharashtra, India

Tel: (91 22) 6632 8000

Fax: (91 22) 2204 8518

Email: [email protected]

Investor grievance email:

[email protected]

Website: www.dspml.com

Contact Person: Mr. Abhinandan Prasad

SEBI Registration No.: INM000011625

ICICI Securities Limited

ICICI Centre, H.T. Parekh Marg Churchgate, Mumbai 400 020

Maharashtra, India

Tel: (91 22) 2288 2460/70

Fax: (91 22) 2282 6580



[email protected]

Website: www.icicisecurities.com

Contact Person: Mr. Ayush Jain / Mr. Gaurav Goyal


Kotak Mahindra Capital Company Limited

27 BKC, 1st Floor, Plot No. C-27, G Block, Bandra Kurla Complex

Bandra (East), Mumbai 400 051,

Maharashtra, India

Tel: (91 22) 4336 0000

Fax: (91 22) 6713 2447



[email protected]

Website: www.investmentbank.kotak.com

Contact Person: Mr. Ganesh Rane

SEBI Registration No.: INM000008704^

Macquarie Capital (India) Private Limited

92, Level 9, 2 North Avenue Maker Maxity, Bandra Kurla Complex

Bandra (E), Mumbai 400 051

Maharashtra, India

Tel: (91 22) 6720 4000

Fax: (91 22) 6720 4301


Investor grievance id:

[email protected]

Website: www.macquarie.in/mgl/in

Contact Person: Mr. Vivek Agarwal


BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE

Nomura Financial Advisory & Securities

(India) Limited

Ceejay House, Level 11

Dr. Annie Besant Road

Worli, Mumbai 400 018 Maharashtra, India

Tel: (91 22) 4037 4037

Fax: (91 22) 4037 4111


Investor grievance email: investorgrievances-

[email protected]

Website:

http://www.nomuraholdings.com/company/group/

asia/india/index.html

Contact Person: Mr. Sumit Sukhramani


Standard Chartered Securities (India) Limited

2nd Floor, 23-25, M.G. Road

Fort, Mumbai 400 001

Maharashtra, India

Tel: (91 22) 4205 6119 Fax: (91 22) 4205 5999


Investor grievance email: [email protected]

Website: www.standardcharteredsecurities.co.in

Contact Person: Mr. Nikhil Tulsyan


Yes Bank Limited

IFC, Tower II, 18th Floor , Senapati

Bapat Marg, Elphinstone (W), Mumbai

400 013, Maharashtra, India

Tel: (91 22) 3366 9000 Fax: (91 22) 2421 4508



[email protected]

Website: www.yesbank.in

Contact Person: Dr. Dhanraj Uchil / Mr. Ankur

Singla

SEBI Registration No.: No: MB / INM 0000

10874^^

Karvy Computershare Private Limited

Plot Nos. 17-24

Vittal Rao Nagar, Madhapur

Hyderabad 500 081

Andhra Pradesh, India Toll Free No.1-800-3454001

Tel: (91 40) 4465 5000

Fax: (91 40) 2343 1551


Website: http:\\karisma.karvy.com

Contact Person: Mr. M. Murali Krishna

SEBI Registration No.: INR000000221

BID/ ISSUE PROGRAMME*

BID/ISSUE OPENS ON: []* BID/ISSUE CLOSES ON: []** * Our Company and the Selling Shareholders may, in consultation with the BRLMs, consider participation by Anchor Investors in accordance with the SEBI Regulations. The Anchor Investor Bid/ Issue Date shall be one

Working Day prior to the Bid/ Issue Opening Date.

** Our Company and the Selling Shareholders may, in consultation with the BRLMs, consider closing the Bid/Issue Period for QIBs, one Working Day prior to the Bid/Issue Closing Date in accordance with the SEBI

Regulations.

^The SEBI registration certificate as merchant banker for Kotak Mahindra Capital Company Limited has expired on January 31, 2014. An application dated October 31, 2013 for renewal of the said certificate of

registration has been made to SEBI.

^^The SEBI registration certificate as merchant banker for YES Bank Limited has expired on January 9, 2014. An application dated October 8, 2013 for renewal of the said certificate of registration had been made to SEBI. SEBI has approved the application and issued a letter dated March 20, 2014. The certificate of permanent registration will be issued by SEBI in due course.

http://www.gmrgroup.in/

TABLE OF CONTENTS

SECTION I: GENERAL ...................................................................................................................................... 1

DEFINITIONS AND ABBREVIATIONS .......................................................................................................... 1 CERTAIN CONVENTIONS: USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND CURRENCY

OF PRESENTATION ........................................................................................................................................13 FORWARD-LOOKING STATEMENTS ..........................................................................................................15

SECTION II: RISK FACTORS ........................................................................................................................ 17

SECTION III: INTRODUCTION ..................................................................................................................... 60

SUMMARY OF INDUSTRY ............................................................................................................................60 SUMMARY OF OUR BUSINESS ....................................................................................................................63 SUMMARY FINANCIAL INFORMATION ....................................................................................................69 THE ISSUE ........................................................................................................................................................75 GENERAL INFORMATION ............................................................................................................................76 CAPITAL STRUCTURE ...................................................................................................................................85 OBJECTS OF THE ISSUE ................................................................................................................................99 BASIS FOR ISSUE PRICE ..............................................................................................................................110 STATEMENT OF TAX BENEFITS ................................................................................................................113

SECTION IV: ABOUT THE COMPANY ...................................................................................................... 124

INDUSTRY OVERVIEW ...............................................................................................................................124 OUR BUSINESS..............................................................................................................................................147 REGULATIONS AND POLICIES ..................................................................................................................181 HISTORY AND CORPORATE STRUCTURE ..............................................................................................197 OUR MANAGEMENT ....................................................................................................................................230 OUR PROMOTERS ........................................................................................................................................244 GROUP ENTITIES ..........................................................................................................................................252 DIVIDEND POLICY .......................................................................................................................................274

SECTION V: FINANCIAL STATEMENTS .......................................................................................... FI-F120

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS .................................................................................................................................................275 FINANCIAL INDEBTEDNESS ......................................................................................................................302

SECTION VI: LEGAL AND OTHER INFORMATION ............................................................................. 360

OUTSTANDING LITIGATION AND DEFAULTS .......................................................................................360 GOVERNMENT APPROVALS ......................................................................................................................421 OTHER REGULATORY AND STATUTORY DISCLOSURES ...................................................................436

SECTION VII: ISSUE RELATED INFORMATION ................................................................................... 453

TERMS OF THE ISSUE ..................................................................................................................................453 ISSUE STRUCTURE ......................................................................................................................................456 ISSUE PROCEDURE ......................................................................................................................................460

SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ................................... 515

SECTION IX: OTHER INFORMATION ...................................................................................................... 695

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .........................................................695 DECLARATION .............................................................................................................................................698

1

SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates or implies, the following terms have the following meanings in this Draft

Red Herring Prospectus, and references to any statute or regulations or policies shall include amendments

thereto, from time to time:

Term Description

We, us, our, the Issuer Unless the context otherwise indicates or implies, refers to GMR Energy Limited on a

consolidated basis including its subsidiaries, joint ventures and associates

Company, our Company, GMR

Energy

GMR Energy Limited, a company incorporated under the Companies Act, 1956 and

having its registered office at Skip House, 25/1 Museum Road, Bengaluru 560 025,

Karnataka, India

Company Related Terms

Term Description

Articles Articles of Association of our Company

Auditors The statutory auditors of our Company, S.R. Batliboi & Associates LLP, Chartered

Accountants

Ascent Capital Ascent Capital Advisors India Private Limited, a company incorporated and existing

under the Companies Act, 1956 and having its registered office at 16th floor,

Concorde Block, UB City, Vittal Mallya Road, Bengaluru 560 001, Karnataka, India

Bajoli Holi Hydropower/GMR Bajoli

Holi

GMR Bajoli Holi Hydropower Private Limited

Board / Board of Directors Board of Directors of our Company

BSL/PT BSL PT Barasentosa Lestari

CCPS Compulsorily Cumulative Convertible Preference Shares

Claymore Claymore Investments (Mauritius) Pte. Ltd, a company incorporated under the laws

of Mauritius and having its registered office at Les Cascades, Edith Cavell Street,

Port Louis, Mauritius

DIAL Delhi International Airport Private Limited

Directors Directors of our Company, unless otherwise specified

EMCO Thermal Power Project 600 MW Thermal Power Project developed by EMCO in Chandarpur District,

Maharashtra

GAPL GMR Aviation Private Limited

GECL GMR Energy (Cyprus) Limited

GMR Ambala Chandigarh /Ambala

Chandigarh Road Project

GMR Ambala-Chandigarh Expressways Private Limited

GMR (Badrinath) Hydro GMR (Badrinath) Hydro Power Generation Private Limited

GMR Chhattisgarh GMR Chhattisgarh Energy Limited

GETL/GMR Energy Trading GMR Energy Trading Limited

GMR Holdings GMR Holdings Private Limited

GMR Hyderabad Multiproduct GMR Hyderabad Multiproduct SEZ Limited

GMR Infrastructure/GIL GMR Infrastructure Limited

GMR Infrastructure Mauritius GMR Infrastructure (Mauritius) Limited

GMR Jadcherla GMR Jadcherla Expressways Private Limited

GMR Kamalanga GMR Kamalanga Energy Limited

GMR Krishnagiri SEZ GMR Krishnagiri SEZ Limited

GMR Londa Hydropower GMR Londa Hydropower Private Limited

GMR Mining GMR Mining and Energy Private Limited

GMR Pochanpalli GMR Pochanpalli Expressways Private Limited

GMR Power /GPCL GMR Power Corporation Limited

GMR Projects GMR Projects Private Limited

2

Term Description

GMR Rajamundry GMR Rajamundry Energy Limited

GMR Upper Karnali GMR Upper Karnali Hydropower Limited

Group GMR Energy Limited, its subsidiaries, joint ventures and associates

Group Entities/Group Companies Includes those companies, firms, ventures, etc. promoted by the Promoters of the

Issuer, irrespective of whether such entities are covered under Section 370 (1)(B) of

the Companies Act

Himtal Hydro Himtal Hydro Power Company Private Limited

Homeland Homeland Energy Group Limited

IDFC PE Fund III IDFC Private Equity Fund III, a unit scheme of the IDFC Infrastructure Fund 3 (being

a trust created under the Indian Trusts Act, 1882 and a venture capital fund registered

under the Securities and Exchange Board of India (Venture Capital Funds)

Regulations 1996) having its office at 201, Naman Chambers, C-32, G-Block, Bandra

Kurla Complex, Bandra East, Mumbai 400 051, Maharashtra, India

IDFC IDFC Limited, a company incorporated under the provisions of the Companies Act,

1956 and having its registered office at KRM Tower, 8th Floor, No.1, Harrington

Road, Chetpet, Chennai 600 031, Tamil Nadu, India and an office at Naman

Chambers, C-32, G-Block, Bandra - Kurla Complex, Bandra (East), Mumbai 400

051, Maharashtra, India

IAL IDFC Investment Advisors Limited, a public limited company incorporated under the

Companies Act, 1956 and registered as a portfolio manager under the Securities and

Exchange Board of India (Portfolio Managers) Regulations, 1993 and having its

registered office at 6th Floor, One India Bulls Centre, 841 Jupiter Mills Compound,

Senapati Bapat Marg, Elphinstone (West), Mumbai 400 013, Maharashtra, India

IIF India Infrastructure Fund

Investor Grievance Committee The committee of the Board of Directors constituted as our Companys Investor

Grievance Committee in accordance with Clause 49 of the Listing Agreement to be

entered into with the Stock Exchanges

ISGIA stanbul Sabiha Gken Uluslararas Havaliman Yatrm Yapm ve letme A..

ISGIA GH stanbul Sabiha Gken Uluslararas Havaliman Yer Hizmetleri A.

Kamalanga Thermal Power Project 1050 MW Power Project developed by GMR Kamalanga in Odisha

Key Management Personnel/KMP Those individuals described in Our Management Key Management Personnel

Memorandum Memorandum of Association of our Company

MW Mega Watt

ONGC Limited Oil and Natural Gas Corporation Limited

Operating Those power plants that have achieved commercial operation

PPA Power Purchase Agreement

Promoters GMR Infrastructure Limited, GMR Energy Projects (Mauritius) Limited and GMR

Renewable Energy Limited

Promoter Group Includes such persons and entities constituting our promoter group pursuant to

Regulation 2 (1)(zb) of the SEBI Regulations

Registered Office of our Company Skip House, 25/1 Museum Road, Bengaluru 560 025, Karnataka, India

RIL Reliance Industries Limited

Selling Shareholders Claymore, IDFC PE Fund III, IDFC, IAL and Ascent Capital

Subsidiaries or individually known

as Subsidiary

1. Badrinath Hydro Power Generation Private Limited*

2. EMCO Energy Limited

3. GMR (Badrinath) Hydro Power Generation Private Limited

4. GMR Bajoli Holi Hydropower Private Limited

5. GMR Chhattisgarh Energy Limited

6. GMR Coastal Energy Private Limited

7. GMR Consulting Services Private Limited

8. GMR Energy (Cyprus) Limited

9. GMR Energy (Mauritius) Limited

10. GMR Energy (Netherlands) B. V.

11. GMR Kamalanga Energy Limited

3

Term Description

12. GMR Lion Energy Limited

13. GMR Mining & Energy Private Limited

14. GMR Power Corporation Limited

15. GMR Rajamundry Energy Limited

16. GMR Upper Karnali Hydropower Company Public Limited

17. Himtal Hydro Power Company Private Limited

18. GMR Londa Hydro Power Private Limited

19. GMR Kakinada Energy Private Limited

20. PT Barasentosa Lestari

21. PT Duta Sarana Internusa

22. PT Dwikarya Sejati Utama

23. PT Unsoco

24. GMR Vemagiri Power Generation Limited

25. SJK Powergen Limited

26. Homeland Energy Group Limited

27. GMR Gujarat Solar Power Private Limited

28. Marsyangdi Transmission Company Private Limited

29. Karnali Transmission Company Private Limited

30. GMR Bundelkhand Energy Private Limited

31. GMR Hosur Energy Limited

32. GMR Uttar Pradesh Energy Private Limited

33. GMR Maharashtra Energy Limited

34. GMR Indo Nepal Power Corridors Limited

35. GMR Indo Nepal Energy Links Limited

36. Aravali Transmission Service Company Limited

37. Maru Transmission Service Company Limited

38. Homeland Energy Corporation

39. Homeland Energy (Swaziland) (Pty) Limited

40. Homeland Mining & Energy (Botswana) (Pty) Limited

41. Homeland Coal Mining (Pty) Limited

42. Corpclo 331 (Pty) Limited

43. Ferret Coal Holdings (Pty) Limited

44. Wizard Investments (Pty) Limited

45. Ferret Coal (Kendal) (Pty) Limited

46. Manoka Mining (Pty) Limited

47. GMR Coal Resources Pte. Limited

* Our Company has made an application dated April 17, 2013 to the Registrar of

Companies, Uttarakhand for striking off the name of the company under Section 560

of the Companies Act, 1956 read with Fast Track Exit Mode (FTE), 2011.

SEPCO SEPCO Electric Power Construction Corporation

Ultra Mega Power Projects Projects that have an expected capacity of approximately 4,000 MW each

Under Development Those power plants that are at earlier stages of development

Under Implementation Those power plants that are under construction or for which financing have been

obtained

Vemagiri Power/VPGL/ Vemagiri

Power Plant

GMR Vemagiri Power Project

Issue Related Terms

Term Description

Allotment/ Allot/ Allotted Unless the context otherwise requires, the allotment of the Equity Shares pursuant to

the Fresh Issue and transfer of the Equity Shares pursuant to the Offer for Sale to the

4

Term Description

successful Bidders

Allottee A successful Bidder to whom the Equity Shares are Allotted

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

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

Designated Stock Exchange

Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion, with a

minimum Bid of ` 100.00 million

Anchor Investor Bid/ Issue Period The day, one Working Day prior to the Bid/Issue Opening Date, on which Bids by

Anchor Investors shall be submitted and allocation to Anchor Investors shall be

completed

Anchor Investor Issue Price Final price at which the Equity Shares will be issued and Allotted to Anchor

Investors in terms of the Red Herring Prospectus and the Prospectus, which price

will be equal to or higher than the Issue Price, but not higher than the Cap Price. The

Anchor Investor Issue Price will be decided by our Company and the Selling

Shareholders in consultation with the BRLMs

Anchor Investor Portion Up to 30% of the QIB Portion, which may be allocated by our Company and the

Selling Shareholders, in consultation with the BRLMs, to Anchor Investors on a

discretionary basis. One-third of the Anchor Investor Portion shall be reserved for

domestic Mutual Funds, subject to valid Bids being received from domestic Mutual

Funds at or above the price at which allocation is being done to Anchor Investors

Application Supported by Blocked

Amount/ASBA

A process of submitting the Bid cum Application Form, whether physical or

electronic, used by Bidders, other than Anchor Investors, to make a Bid authorising a

SCSB to block the Bid Amount in the ASBA Account maintained with the SCSB.

ASBA is mandatory for QIBs (except Anchor Investors) and the Non-Institutional

Bidders participating in the Issue

ASBA Account An account maintained with the SCSB and specified in the Bid cum Application

Form submitted by an ASBA Bidder for blocking the Bid Amount mentioned in the

Bid cum Application Form

ASBA Bidder Prospective investors (except Anchor Investors) in this Issue who intend to submit

Bid through the ASBA process

Banker(s) to the Issue/Escrow

Collection Bank(s)

Banks which are clearing members and registered with SEBI as bankers to an issue

and with whom the Escrow Account will be opened, in this case being []

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

Issue and which is described in Issue Procedure- Basis of Allotment

Bid An indication to make an offer during the Bid/Issue Period by a Bidder pursuant to

submission of the Bid cum Application Form, or during the Anchor Investor

Bid/Issue Period by the Anchor Investors, to subscribe to the Equity Shares of our

Company or purchase the Equity Shares from the Selling Shareholders at a price

within the Price Band, including all revisions and modifications thereto

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

Bid cum Application Form The form used by a Bidder, including an ASBA Bidder, to make a Bid and which

will be considered as the application for Allotment in terms of the Red Herring

Prospectus and the Prospectus

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

which the Syndicate, the Designated Branches and the Registered Brokers will not

accept any Bids for the Issue, which shall be notified in [] edition of English

national newspaper [], [] edition of Hindi national newspaper [], and [] edition

of [] a Kannada newspaper, each with wide circulation

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

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

Bid/Issue Closing Date in accordance with the SEBI Regulations

Bid/ Issue Opening Date Except in relation to any Bids received from the Anchor Investors, the date on which

the Syndicate, the Designated Branches and the Registered Brokers shall start

accepting Bids for the Issue, which shall be notified in [] edition of English national

newspaper [], [] edition of Hindi national newspaper [], and [] edition of [] a

Kannada newspaper, each with wide circulation

Bid/ Issue Period Except in relation to Anchor Investors, the period between the Bid/Issue Opening

Date and the Bid/Issue Closing Date, inclusive of both days, during which

prospective Bidders can submit their Bids, including any revisions thereof

5

Term Description

Bid Lot []

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

Prospectus and the Bid cum Application Form

Book Building Process The book building process, as provided in Schedule XI of the SEBI Regulations, in

terms of which this Issue is being made

Broker Centres Broker centres notified by the Stock Exchanges, where Bidders can submit their Bid

cum Application Forms to a Registered Broker. The details of such Broker Centers,

along with the names and contact details of the Registered Brokers are available on

the websites of the respective Stock Exchanges

BRLMs/Book Running Lead

Managers

The book running lead managers to the Issue, being DSP Merrill Lynch Limited,

ICICI Securities Limited, Kotak Mahindra Capital Company Limited, Macquarie

Capital (India) Private Limited, Nomura Financial Advisory & Securities (India)

Limited, Standard Chartered Securities (India) Limited and Yes Bank Limited

CAN / Confirmation of Allocation

Note

Notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who

have been allocated the Equity Shares, after the Anchor Investor Bid/Issue Period

Cap Price The higher end of the Price Band, above which the Issue Price will not be finalised

and above which no Bids will be accepted

Controlling Branches Such branches of SCSBs which coordinate Bids under the Issue with the BRLMs, the

Registrar and the Stock Exchanges, a list of which is available on the website of

SEBI at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-

Intermediaries

Cut-off Price The Issue Price, finalised by our Company in consultation with BRLMs. Only Retail

Individual Bidders are entitled to Bid at the Cut-off Price. QIBs and Non-

Institutional Bidders are not entitled to Bid at the Cut-off Price

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

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

http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries

Designated Date The date on which the funds are transferred from the Escrow Account or the amount

blocked by the SCSBs is transferred from the ASBA Accounts, as the case may be,

to the Public Issue Account or the Refund Account, as appropriate, after the

Prospectus is filed with RoC, following which the Board of Directors shall Allot the

Equity Shares to successful Bidders in the Fresh Issue and the Selling Shareholders

shall give delivery instructions for the transfer of the Equity Shares constituting the

Offer for Sale

Designated Stock Exchange []

Draft Red Herring Prospectus or

DRHP

This Draft Red Herring Prospectus dated March 28, 2014 issued in accordance with

Section 32 of the Companies Act, 2013 and the SEBI Regulations, which does not

contain complete particulars of the price at which the Equity Shares will be Allotted

and the size of the Issue

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

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

the Red Herring Prospectus constitutes an invitation to subscribe to or purchase the

Equity Shares

Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour the

Bidders (excluding the ASBA Bidders) will issue cheques or drafts in respect of the

Bid Amount when submitting a Bid

Escrow Agent The escrow agent appointed pursuant to the Escrow Agreement, being []

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

Registrar to the Issue, the BRLMs, the Syndicate Members, the Escrow Collection

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

applicable, refunds of the amounts collected to the Bidders (excluding the ASBA

Bidders) on the terms and conditions thereof

First Bidder Bidder whose name appears first in the Bid cum Application Form or any revisions

thereof

Floor Price The lower end of the Price Band, subject to any revision thereto, at or above which

the Issue Price will be finalised and below which no Bids will be accepted

Fresh Issue The fresh issue of [] Equity Shares aggregating up to ` 14,500 million by our

Company

6

Term Description

Issue Public issue of [] Equity Shares for cash at a price of ` [] each aggregating up to `

14,500 million comprising of the Fresh Issue and the Offer for Sale pursuant to the

terms of the Red Herring Prospectus

Issue Agreement The agreement dated March 28, 2014 between our Company, the Selling

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

in relation to the Issue

Issue Price The final price at which the Equity Shares will be issued and Allotted in terms of the

Red Herring Prospectus. The Issue Price will be decided by our Company in

consultation with BRLMs on the Pricing Date

Issue Proceeds The proceeds of the Issue available to the Company and the Selling Shareholders.

For further information about use of the Issue Proceeds, see Objects of the Issue on page 99

Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion), or [] Equity Shares

which shall be available for allocation to Mutual Funds only

Net Proceeds Proceeds of the Fresh Issue less our Companys Issue expenses. For further

information about the Issue expenses, see Objects of the Issue on page 99

Non-Institutional Bidders All Bidders, including Category III foreign portfolio investors that are not QIBs or

Retail Individual Investors and who have Bid for the Equity Shares for an amount

more than ` 200,000 (but not including NRIs other than Eligible NRIs)

Non-Institutional Portion The portion of the Issue being not less than 15% of the Issue consisting of [] Equity

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

Institutional Bidders, subject to valid Bids being received at or above the Issue Price

Offer for Sale The offer for sale of up to 110,554,848 Equity Shares by the Selling Shareholders at

the Issue Price, pursuant to the terms of the Red Herring Prospectus

Orissa Shall mean the State of Odisha and vice versa

Price Band Price Band of a minimum price of ` [] per Equity Share (Floor Price) and the

maximum price of ` [] per Equity Share (Cap Price), including any revisions

thereof. The Price Band and the minimum Bid Lot size for the Issue will be decided

by our Company in consultation with the BRLMs and advertised, at least five

Working Days prior to the Bid/Issue Opening Date, in [] edition of English national

newspaper [], [] edition of Hindi national newspaper [], and [] edition of [] a

Kannada newspaper [], each with wide circulation

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

BRLMs will finalise the Issue Price

Prospectus The Prospectus to be filed with the RoC in accordance with section 60 of the

Companies Act, 1956 containing, inter alia, the Issue Price that is determined at the

end of the Book Building Process, the size of the Issue and certain other information

Public Issue Account Account opened with the Bankers to the Issue to receive monies from the Escrow

Account and from the ASBA Account on the Designated Date

QIB Portion The portion of the Issue (including the Anchor Investor Portion) amounting to not

more than 50.00% of the Issue being [] Equity Shares, which shall be available for

allocation to QIBs, including the Anchor Investors

Qualified Foreign Investors or QFIs A person who has opened a dematerialized account with a qualified depository

participant as a qualified foreign investor

Qualified Institutional Buyers or

QIBs

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

Regulations

Red Herring Prospectus or RHP The Red Herring Prospectus issued in accordance with section 32 of the Companies

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

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

Issue. The Red Herring Prospectus will be filed with the RoC at least three Working

Days before the Bid/Issue Opening Date and will become the Prospectus upon filing

with the RoC after the Pricing Date

Refund Account(s) The account opened with the Refund Bank(s), from which refunds, if any, of the

whole or part of the Bid Amount (excluding refunds to ASBA Bidders) shall be

made

Refund Bank(s) []

Refunds through electronic transfer Refunds through NECS, Direct Credit, RTGS or NEFT, as applicable

7

Term Description

of funds

Registered Brokers Stock brokers registered with the Stock Exchanges having nationwide terminals,

other than the members of the Syndicate

Registrar Agreement The agreement dated March 28, 2014 between our Company, the Selling

Shareholders and the Registrar to the Issue in relation to the responsibilities and

obligations of the Registrar to the Issue pertaining to the Issue

Registrar to the Issue/Registrar Registrar to the Issue, in this case being Karvy Computershare Private Limited

Retail Individual Bidder(s) Individual Bidders who have Bid for the Equity Shares for an amount not more than

` 200,000 in any of the bidding options in the Issue (including HUFs applying

through their Karta and Eligible NRIs)

Retail Portion The portion of the Issue being not less than 35.00% of the Issue consisting of []

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

Retail Individual Bidder(s), which shall not be less than the minimum Bid Lot,

subject to availability in the Retail Portion and the remaining Equity Shares to be

Allotted on a proportionate basis

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

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

previous revision form(s). Kindly note that QIBs and Non-Institutional Bidders are

not allowed to lower their Bid once submitted

Self Certified Syndicate Bank(s) or

SCSB(s)

The banks registered with SEBI, offering services in relation to ASBA, a list of

which is available on the website of SEBI at http://www.sebi.gov.in/sebiweb /home

/list/5/33/0/0/Recognised-Intermediaries

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

of which is available at the website of the SEBI (www.sebi.gov.in) and updated from

time to time

Syndicate Agreement The agreement to be entered into amongst the BRLMs, the Syndicate Members, our

Company and the Selling Shareholders in relation to the collection of Bids in this

Issue (other than Bids directly submitted to the SCSBs under the ASBA process and

Bids submitted to the Registered Brokers)

Syndicate Members Intermediaries registered with the SEBI who are permitted to carry out activities as

an underwriter, namely, []

Syndicate/ members of the Syndicate BRLMs and the Syndicate Members

TRS/Transaction Registration Slip The slip or document issued by the Syndicate, or the SCSB (only on demand), as the

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

Underwriters BRLMs and the Syndicate Members

Underwriting Agreement The agreement amongst the Underwriters, our Company and the Selling

Shareholders to be entered into on or after the Pricing Date

Working Days 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/Issue 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

Conventional and General Terms/ Abbreviations

Term Description

A/c Account

AGM Annual General Meeting

AIF Alternative Investment Fund as defined in and registered with SEBI under the

Securities and Exchange Board of India (Alternative Investments Funds)

Regulations, 2012

APCPDCL Central Power Distribution Company of Andhra Pradesh Limited

APSPDCL Southern Power Distribution Company of Andhra Pradesh Limited

APEPDCL Eastern Power Distribution Company of Andhra Pradesh Limited

APERC Andhra Pradesh Electricity Regulation Commission

APNPDCL Northern Power Distribution Company of Andhra Pradesh Limited

http://www.sebi.gov.in/sebiweb

8

Term Description

APGENCO Andhra Pradesh Generation Company

APPCC Andhra Pradesh Power Coordination Committees

APSEB Andhra Pradesh State Electricity Board

AP Transco Andhra Pradesh Transmission Company

APTRANSCO Transmission Corporation of Andhra Pradesh Limited

AS/Accounting Standards Accounting Standards issued by the Institute of Chartered Accountants of India

AY Assessment Year

BESCOM Bengaluru Electricity Supply Company Limited

BPCL Bharat Petroleum Corporation Limited

BPLR Benchmark Prime Lending Rate

BSE BSE Limited

CAGR Compounded Annual Growth Rate

Category I foreign portfolio

investor(s)

Includes government and government related investors such as central banks,

governmental agencies, sovereign wealth funds and international or multilateral

organisations or agencies

Category II foreign portfolio

investor(s)

Includes (i) appropriately regulated broad based funds such as mutual funds,

investment trusts, insurance/reinsurance companies;

(ii) appropriately regulated persons such as banks, asset management companies,

investment managers/ advisors, portfolio managers;

(iii) broad based funds that are not appropriately regulated but whose investment

manager is appropriately regulated:

Provided that the investment manager of such broad based fund is itself registered as

Category II foreign portfolio investor:

Provided further that the investment manager undertakes that it shall be responsible

and liable for all acts of commission and omission of all its underlying broad based

funds and other deeds and things done by such broad based funds under these

regulations.

(iv) university funds and pension funds; and

(v) university related endowments already registered with SEBI as foreign

institutional investors or sub-accounts.

Explanation 1- For the purposes of this clause, an applicant seeking registration as a

foreign portfolio investor shall be considered to be appropriately regulated if it is

regulated or supervised by the securities market regulator or the banking regulator of

the concerned foreign jurisdiction, in the same capacity in which it proposes to make

investments in India.

Explanation 2- A) For the purposes of this clause, broad based fund shall mean a

fund, established or incorporated outside India, which has at least 20 investors, with

no investor holding more than 49% of the shares or units of the fund:

Provided that if the broad based fund has an institutional investor who holds more

than 49% of the shares or units in the fund, then such institutional investor must

itself be a broad based fund.

B) For the purpose of clause A of this Explanation, for ascertaining the number of

investors in a fund, direct investors as well as underlying investors shall be

considered.

C) For the purpose of clause B of this Explanation, only investors of entities which

have been set up for the sole purpose of pooling funds and making investments, shall

be considered for the purpose of determining underlying investors

Category III foreign portfolio

investor(s)

FPIs registered as category III FPIs under the SEBI FPI Regulations which shall

include investors who are not eligible under Category I and II foreign portfolio

investors such as endowments, charitable societies, charitable trusts, foundations,

corporate bodies, trusts, individuals and family offices

CBI Central Bureau of Investigation

CDM An arrangement under the Kyoto Protocol allowing industrialised countries with a

green house gas reduction commitment to invest in ventures that reduce emissions in

developing countries as an alternate to more expensive emission reductions in their

own countries

9

Term Description

CDSL Central Depository Services (India) Limited

CIN Corporate identity number

Client ID Client identification number of the Bidders beneficiary account

Companies Act/Act Companies Act, 1956 and/or the Companies Act, 2013, as applicable

Companies Act, 1956 Companies Act, 1956, as amended (without reference to the provisions thereof that

have ceased to have effect upon the notification of the Notified Sections)

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

Notified Sections

CIT Commissioner Income Tax

Depositories NSDL and CDSL

Depositories Act Depositories Act, 1996 as amended from time to time

DIN Director Identification Number

DIPP Department of Industrial Policy and Promotion

DP/ Depository Participant A depository participant as defined under the Depositories Act, 1996

DP ID Depository participants identification

EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation

EGM Extraordinary General Meeting

EPS Earnings Per Share i.e., profit after tax for a fiscal year divided by the weighted

average outstanding number of equity shares at the end of that fiscal year

ECS Electronic Clearing Service

Electricity Act Electricity Act, 2003

FCNR Foreign currency non-resident

Factories Act Factories Act, 1948

FBT Fringe Benefit Tax

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act, 1999 read with rules and regulations thereunder

and amendments thereto

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

Outside India) Regulations, 2000

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

Financial Year/ Fiscal/ FY Period of twelve months ended March 31 of that particular year

FIPB Foreign Investment Promotion Board

FVCI Foreign Venture Capital Investors as defined and registered with SEBI under the

SEBI FVCI Regulations

GDP Gross Domestic Product

GIR General index register

GE General Electric

GAIL Gas Authority of India Limited

GoI/Government Government of India

GRIDCO GRID Corporation of Orissa Limited

HHIL Hyundai Heavy Company Limited

HNI High Networth Individual

HPCL Hindustan Petroleum Corporation Limited

HPGCL Haryana Power Generation Corporation Limited

HUF Hindu Undivided Family

IFRS International Financial Reporting Standards issued by International Accounting

Standards Board

IFCI Industrial Finance Corporation of India

IRG Internal Resource Generation

ISO International Organization for Standardization

IT Information Technology

10

Term Description

I.T. Act The Income Tax Act, 1961, as amended from time to time

ITAT Income Tax Appellate Tribunal

ITES Information Technology Enabled Services

Indian GAAP Generally Accepted Accounting Principles in India

Indonesian Rupiah, Rp Indonesian Rupiah

IPO Initial Public Offering

Investment Company Act United States Investment Company Act of 1940

KEB Karnataka Electricity Board

KIADB Karnataka Industrial Areas Development Board

KPSE Korea Plant Service and Engineering Company Limited

KPTCL Karnataka Power Transport Corporation Limited

Kwh Kilowatt hour

LC Letter of Credit

LIBOR London Interbank Offered Rate

LLP Act Limited Liability Partnership Act, 2008

LSHS Low sulphur Heavy Stock

Mn / mn Million

MOEF Ministry of the Environment and Forests

MICR Magnetic ink character recognition

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

India (Mutual Funds) Regulations, 1996

MoU Memorandum of Understanding

National Investment Fund National Investment Fund set up by resolution F. No. 2/3/2005-DD-II dated

November 23, 2005 of the GoI, published in the Gazette of India

NAV 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

NCT National Capital Territory

NECS National Electronic Clearing Service

NEFT National Electronic Fund Transfer

Notified Sections The sections of the Companies Act, 2013 that have come into effect on August 30,

2013 and September 12, 2013

NH National Highway

NHAI National Highways Authority of India

NOC No Objection Certificate

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

FIIs registered with SEBI and FVCIs registered with SEBI

NRE Account Non Resident External Account

NRI A person resident outside India, who is a citizen of India or a person of Indian origin,

and shall have the meaning ascribed to such term in the Foreign Exchange

Management (Deposit) Regulations, 2000

NRO Account Non Resident Ordinary Account

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

NTP National Tariff Policy

OHSAS Occupational Health and Safety Advisory Services

OCB/Overseas Corporate Body A company, partnership, society or other corporate body owned directly or indirectly

to the extent of at least 60% by NRIs including overseas trusts, in which not less than

60% of beneficial interest is irrevocably held by NRIs directly or indirectly and

which was in existence on October 3, 2003 and immediately before such date had

taken benefits under the general permission granted to OCBs under FEMA

11

Term Description

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

PGCIL Power Grid Corporation of India Limited

PIO Persons of Indian Origin

PLF Plant Load Factor

PLR Prime Lending Rate

PTC Power Trading Corporation India Limited

QIB Qualified Institutional Buyer

RBI The Reserve Bank of India

REC Rural Electrification Corporation

Registration Act Registration Act, 1908

RoC Registrar of Companies

RONW Return on Net Worth

Rupees/Rs./` Indian Rupees

RTGS Real Time Gross Settlement

SCRA Securities Contracts (Regulation) Act, 1956, as amended from time to time

SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time

SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992

SEBI Act Securities and Exchange Board of India Act 1992, as amended from time to time

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

Regulations, 2012

SEBI ESOP Guidelines Securities and Exchange Board of India (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999

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

Regulations, 1995

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

2014

SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investor)

Regulations, 2000

SEBI Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

from time to time

SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011, as amended

SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996

as repealed pursuant to the SEBI AIF Regulations

Securities Act United States Securities Act, 1933

SICA Sick Industrial Companies (Special Provisions) Act, 1985

Sq. Ft./sq. ft. Square feet

State Government The government of a State in India

Sec. Section

SEZ Special Economic Zone

Stamp Act The Indian Stamp Act, 1899

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

South African Rand, R, ZAR South African Rand

T&D Transmission and Distribution

TDS Tax Deduction at Source

TNEB Tamil Nadu Electricity Board

T.P. Act Transfer of Property Act, 1882

UIN Unique Identification Number

12

Term Description

Urban Land Ceiling Act The Urban Land (Ceiling and Regulation) Act, 1976

US / USA United States of America

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

USD / US$ United States Dollars

United States QIBs Qualified Institutional Buyers, as defined in Rule 144A under the Securities Act

VAT Value added tax

VCFs Venture capital funds as defined in and registered with SEBI under the SEBI VCF

Regulations or the SEBI AIF Regulations as the case may be

Industry Related Terms

Term Description

AAI Airport Authority of India

BOT Build, Operate and Transfer

BOOT Build, Own, Operate and Transfer

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

CERs Certified Emission Reductions

CDM Clean Development Mechanism

COD Commercial Operation Date

EIA Environmental Impact Assessment

EMP Environmental Management Plan

EPC Engineering Procurement and Construction Agreement

MW Megawatts

MTPA Million Tons Per Annum

OMDA Operation Management and Development Agreement

13

CERTAIN CONVENTIONS: USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND

CURRENCY OF PRESENTATION

All references to India contained in this Draft Red Herring Prospectus are to the Republic of India, all

references to the U.S., U.S.A or the United States are to the United States of America. All references to

Indonesia are to the Republic of Indonesia. All references to South Africa are to the Republic of South

Africa. All references to Nepal are to the Federal Democratic Republic of Nepal. All references to Maldives

are to the Republic of Maldives. All references to Turkey are to the Republic of Turkey. All references to

Mauritius are to the Republic of Mauritius. All references to Cyprus are to the Republic of Cyprus. All

references to Singapore are to the Republic of Singapore. All references to Spain are to the Kingdom of

Spain.

Financial Data

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

consolidated financial statements for the Fiscals ended March 31, 2009, 2010, 2011, 2012 and 2013, and for the

six months period ended September 30, 2013 prepared in accordance with the requirements of the Companies

Act and Indian GAAP and restated in accordance with the SEBI Regulations and set out in Financial

Statements on page F-11. Our financial year commences on April 1 and ends on March 31. So all references to

a particular fiscal year are to the twelve-month period ended on March 31 of that year. In this Draft Red Herring

Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to

rounding off. All decimals have been rounded off to two decimal points.

There are significant differences between Indian GAAP, IFRS and U.S. GAAP. Our financial statements and

reported earnings could be different in a material manner from those which would be reported under IFRS or

U.S. GAAP. The reconciliation of the financial statements 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 it is urged that you consult your own advisors

regarding such differences and their impact on our Companys financial data. Accordingly, the degree to which

the financial statements included in this Draft Red Herring Prospectus will provide meaningful information is

entirely dependent on the readers level of familiarity with Indian accounting policies and practices, Indian

GAAP, the Companies Act and the SEBI Regulations. Any reliance by persons not familiar with Indian

accounting policies and practices, including Indian GAAP, the Companies Act and the SEBI Regulations, on the

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

Currency and Units of Presentation

All references to Rupees, ` or Rs. are to Indian Rupees, the official currency of the Republic of India. All

references to US$ or United States Dollars are to the official currency of the United States of America. All

references to Rp or Indonesian Rupiah or IDR are to Indonesian Rupiah, the official currency of

Indonesia. All references to R or ZAR or Rand are to South African Rand, the official currency of South

Africa. All references to NPR is to Nepalese Rupee, the official currency of Nepal. All references to YTL

is to Turkish Lira, the official currency of Turkey. All the numbers in the document, have been presented in

million or in whole numbers where the numbers have been too small to present in millions.

Unless otherwise indicated, any percentage amounts, as set forth in Risk Factors, Our Business,

Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 17, 147

and 275 respectively, and elsewhere in this Draft Red Herring Prospectus have been calculated on the basis of

the consolidated financial statements prepared in accordance with the Indian GAAP and restated in accordance

with the SEBI Regulations.

Exchange Rates

This Draft Red Herring Prospectus contains conversions of certain US Dollar and other currency amounts into

Indian Rupees that have been presented solely to comply with the requirements of the SEBI Regulations. These

conversions should not be construed as a representation that those US Dollar or other currency amounts could

have been, or can be, converted into Indian Rupees at any particular conversion rate.

The following table sets forth, for the periods indicated, information with respect to the exchange rate between

the Rupee and various other currencies.

(` In Million)

14

Currency Rate for exchange

into ` as on March 25,

2014

Rate for exchange into

` as on March 28,

2013(3)

Rate for exchange


2012(3)

Rate for exchange


2011

1 USD(1) 60.494 54.389 51.157 44.650

1CDN(2) 53.998 53.444 51.043 45.940

100 IDR(2) 0.531 0.557 0.556 0.512

1 Rand(2) 5.614 5.912 6.639 6.582

1 NPR(2) 0.617 0.626 0.622 0.625

1 YTL(2) 27.181 30.099 28.575 28.857

Source: (1) RBI; (2) Bloomberg; (3) If March 31, is a holiday, the closing price of the previous trading day has been considered

Industry and Market Data

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

or derived from publicly available information as well as industry publications and sources. Industry

publications generally state that the information contained in those publications have been obtained from

sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability

cannot be assured. Although we believe that industry data used in this Draft Red Herring Prospectus is reliable,

it has not been independently verified. Such data involves risks, uncertainties and numerous assumptions and is

subject to change based on various factors, including those discussed in Risk Factors on page 17.

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

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

meaningful depends on the readers familiarity with and understanding of the methodologies used in compiling

such data. There are no standard data gathering methodologies in the industry in which we conduct our business,

and methodologies and assumptions may vary widely among different industry sources. In addition, certain data

in relation to our Company used in this Draft Red Herring Prospectus has been obtained or derived from reports

published, or studies conducted, by CRISIL Limited and differs in certain respects from our restated

consolidated financial statements as a result of, inter alia, the methodologies used in compiling such data.

Accordingly, no investment decision should be made based on such information.

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

factors, including those discussed in Risk Factors on page 17. Accordingly, investment decisions should not

be based solely on such information.

In accordance with the SEBI Regulations, the Basis for the Issue Price on page 110 includes information

relating to our peer group companies. Such information has been derived from publicly available sources, and

neither we, nor the BRLMs have independently verified such information.

Further, in accordance with Regulation 51A of the SEBI Regulations, our Company may be required to

undertake an annual updation of the disclosures made in the Draft Red Herring Prospectus and make it publicly

available in the manner specified by SEBI.

Definitions

For definitions, see Definitions and Abbreviations on page 1. In Main Provisions of the Articles of

Association on page 515, defined terms have the meaning given to such terms in the Articles of Association.

15

FORWARD-LOOKING STATEMENTS

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 and prospects are forward-looking statements. These forward-looking statements include

statements with respect to our business strategy, our revenue and profitability, our projects and other matters

discussed in this Draft Red Herring Prospectus regarding matters that are not historical facts. The investors can

generally identify forward looking statements by words or phrases such as aim, anticipate, believe,

expect, estimate, intend, objective, plan, project, may, will, will continue, will pursue,

will likely result, or other words or phrases of similar import. All forward looking statements (whether made

by us or any third party) are predictions and are subject to risks, uncertainties and assumptions about us that

could cause actual results to differ materially from those contemplated by the relevant forward-looking

statement. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking

statements.

Forward-looking statements reflect current views as of the date of this Draft Red Herring Prospectus and are not

a guarantee of future performance. These statements are based on the managements beliefs and assumptions,

which in turn are based on currently available information. Although we believe the assumptions upon which

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

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

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 industry in India and our ability to respond to them, our ability to successfully implement our

strategy, our development plan, our growth and expansion, technological changes, our exposure to market risks,

general economic and political conditions in India and overseas, which have an impact on our business activities

or investments, the monetary and fiscal policies of India and other jurisdictions in which we operate, inflation,

deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices,

the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes,

changes in competition in our industry and incidence of any natural calamities and/or acts of violence. Important

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

the following:

Our inability to estimate our future performance because of limited operating history;

Inability to obtain and retain adequate numbers of skilled and educated employees;

Failure to commence operations of our projects as expected;

Our inability to raise the necessary funding for our capital expenditures, including for the development of our projects;

Inability of our offtakers to meet their payment obligations to us under the relevant PPAs;

Our inability to establish new offtake arrangements;

Unavailability of fuel for our power plants;

Certain inherent construction, financing and operational risks in relation to our projects;

The monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates;

A liquid market fails to develop for our Equity Shares;

Changes in the foreign exchange control regulations in India;

Foreign exchange rates, equity prices or other rates or prices;

The performance of the financial markets in India;

General economic and business conditions in India;

16

The ability to successfully implement our strategy;

Changes in laws and regulations that apply to our clients, suppliers and the power generation and trading and construction and property development sectors;

Increasing competition in and the conditions of our clients, suppliers and the power generation and trading; and

Changes in political conditions in India;

Our dependence on our Key Management Personnel and Promoters;

Conflicts of interest with affiliated companies, the Group Entities and other related parties;

Contingent liabilities, environmental problems and uninsured losses;

Government approvals;

Changes in government policies and regulatory actions that apply to or affect our business;

Developments affecting the Indian economy; and

Our ability to manage risks that arise from these factors.]

For further discussion of factors that could cause our actual results to differ, see Risk Factors, Our Business

and Managements Discussion of Financial Condition and Results of Operations on pages 17, 147 and 275,

respectively.

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 Selling Shareholders, our Directors, the BRLMs, other members of the Syndicate

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

requirements, our Company, the Selling Shareholders (in respect of its own information and information relating

to the Equity Shares being Offered for Sale by the Selling Shareholders included in this Draft Red Herring

Prospectus) and the BRLMs 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.

17

SECTION II: RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all the information

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

investment in our Shares.

If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually

occur, our business, results of operations, cash flows and financial condition could suffer, the price of our

Shares could decline, and all or part of your investment may be lost. The risks and uncertainties described in

this section are not the only risks and uncertainties we currently face. Unless otherwise stated, we are not in a

position to specify or quantify the financial or other risks mentioned herein. The numbering of the risk factors

has been done to facilitate ease of reading and reference and does not, in any manner, indicate a ranking of risk

factors or the importance of one risk factor over another. In making an investment decision, prospective

investors must rely on their own examination of the Company and the terms of the Issue, including the risks

involved.

This Draft Red Herring Prospectus contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result

of certain factors, including the considerations described below and elsewhere in this Draft Red Herring

Prospectus.

Risks Associated with our Natural Gas Based Power Generation Business

1. We may be unable to ensure uninterrupted supply of natural gas to our natural gas-based power plants, which may have an adverse effect on our business, results of operation, cash flows and financial

condition.

We have two operational natural gas-based power plants, at Kakinada and Vemagiri in Andhra Pradesh,

with an aggregate capacity of 623 MW. For the Kakinada Power Plant, we have received a firm allocation

from the Ministry of Petroleum and Natural Gas of India ("MoPNG") for natural gas in a quantity which is

expected to be sufficient to fuel 75% of the power plant's capacity. Accordingly, we have entered into a fuel

supply agreement with Reliance Gas ("Reliance"), Niko (NECO) Ltd ("Niko") and BP Exploration (Alpha)

Limited ("BP") for the supply of natural gas to the Kakinada Power Plant, which will expire in March 2014.

Additionally, GVPGL, our Subsidiary that operates the Vemagiri Power Plant, has entered into a fuel

supply agreement with Reliance, Niko and BP, which expired in March 2014, to supply natural gas in a

quantity that we expect to be sufficient to fuel 90% of the power plant's capacity. Reliance sources natural

gas from the Krishna-Godavari Basin. Reliance's obligations under the fuel supply agreements are subject

to the availability of natural gas from the Krishna-Godavari Basin. The allocation of natural gas by Reliance

from Krishna-Godavari Basin has a priority ranking based on which it is allocated to various contracted

procurers. For instance, in fiscal year 2013 owing to the lower availability of natural gas, we received only

enough natural gas to run the Kakinada Power Plant at a plant load factor ("PLF") of 19.6% and the

Vemagiri Power Plant at a PLF of 26.9%. As a result, our income from the sale of electrical energy declined

from Rs. 20,404.52 million in fiscal year 2012 to ` 13,727.40 million in fiscal year 2013. In addition, since

March 1, 2013, we have not received any natural gas supply to run our Kakinada and Vemagiri Power

Plants, owing to a shortfall of natural gas in the Krishna-Godavari Basin. The shortfall in supply of natural

gas from the Krishna-Godavari Basin may continue in the future. If we are unable to source natural gas in

sufficient quantities to operate our natural gas based power plants at their optimum PLF or at all, our

business, reputation, financial condition, cash flows and results of operations could be materially and

adversely affected. The gas supply agreements for the Kakinada Power Plant and Vemagiri Power Plant

both expired in March 2014 and we are currently in discussions regarding the extension of the agreements

for a further five years, subject to new pricing terms. There can be no assurance that we will succeed in

discussions regarding the extension of the fuel supply agreements with respect to our Kakinada and

Vemagiri Power Plants. Although we have committed agreements for an alternative supply of gas for these

plants, since March 1, 2013, we have not been receiving any supply of natural gas under this arrangement,

and we may be unable to make alternate arrangements for the supply of natural gas for these power plants.

The audit report in respect of our audited consolidated financial statements as at and for the period ended

September 30, 2013 included an emphasis of matter regarding (i) the cessation of operations and losses

incurred by us and GMR Vemagiri Power Generation Limited, our subsidiary, and the consequent erosion

of net worth resulting from the unavailability of adequate supply of natural gas and (ii) the rescheduling of

the commercial operation date and the repayment of certain project loans by GREL pending linkage of

natural gas supply. The emphasis of matter notes that continued uncertainty exists as to the availability of

adequate supply of natural gas which is necessary to conduct operations at varying levels of capacity in the

18

future and the appropriateness of the going concern assumption is dependent on the ability of the aforesaid

entities to establish consistent profitable operations as well as raising adequate finance to meet their short

term and long term obligations.

We do not have natural gas allocation for our Rajahmundry Power Project. We have put the active

construction of this power project on hold from July 1, 2012, owing to the non-availability of natural gas.

Owing to the scarcity of natural gas in India, on 19 March 2012, the Central Electricity Authority of India

issued a notification advising parties not to plan power plants based on natural gas until fiscal year 2016. As

at financial closure, our estimated total cost for the Rajahmundry Power Project was ` 32,500 million. As at

March, 2013, we estimated our total cost of the Rajahmundry Power Project to be ` 40,600 million based

on a CoD of 1 April 2014. The cost overrun of ` 8,100 million was primarily on account of the two-year

delay in securing fuel for this power project resulting in a delay in achieving commercial operations. Due to

this delay, we have incurred additional interest and preservation costs to maintain the power project during

its non-operational period. The audit reports in respect of our audited consolidated financial statements as at

and for the period ended September 30, 2013 and year ended March 31, 2013 were qualified to indicate that

our capitalization of indirect expenditure and borrowing costs (net of income earned on temporary

investments) in the amount of ` 2,823.86 million and ` 1,836.70 million for the period July 1, 2012 to

March 31, 2013 and April 1, 2013 to September 30, 2013, respectively, incurred on the construction of the

Rajahmundry Power Plant, where active construction work has been put on hold pending securing supply of

the requisite natural gas for the project, is not in accordance with the relevant accounting standards. The

audit report in respect of our financial audited consolidated financial statements as at and for the period

ended Septemrber 2013 states that had we not capitalized the aforesaid expenditures, our loss after tax and

minority interest for the year ended March 31, 2013 would have been ` 2,823.86 million higher and for the

period ended September 30, 2013 would have been ` 1,836.70 million higher. Cumulatively, our losses for

the period July 1, 2012 to September 30, 2013 would have been ` 4,660.56 million higher.

There can be no assurance that we will receive sufficient natural gas supply to operate our natural gas-based

power plants or that in the case of delays or failures of natural gas supply attributable to the suppliers or the

applicable natural gas reserves, we will be adequately compensated. Consequently, the commissioning of

our power plants under construction and development may be delayed. In the event that the commissioning

of our projects is delayed beyond the timelines specified in our government approvals, our approvals will

lapse and we will be required to obtain fresh approvals which may not be obtained in a timely manner or at

all. If a supplier fails or is unable to deliver natural gas to us as scheduled, or the natural gas supply to one

or more of our operating power plants is otherwise delayed or disrupted, we may not be able to make

alternative arrangements, either in a timely manner or at all, and any such alternative arrangements may be

more costly to us, and we may not be able to produce power in sufficient quantities to cover our costs or at

all. The occurrence of any of the foregoing events would materially and adversely impact our business,

financial condition, results of operations and cash flows.

2. Increases in natural gas costs may materially and adversely affect our operating results and cash flows if we are unable to pass on such increases to our customers in a timely manner.

For fiscal years 2011, 2012 and 2013 and the six months ended September 30, 2013, consumption of fuel of

our gas based Vemagiri power plant was Rs. 4,544.18 million, Rs. 3,968.21 million, Rs. 2,697.93 million

and Rs. 1,894.81 million, which represented 67.23%, 66.79%, 69.15% and 77.59% of total expenses of

Vemagiri Power Plant for the period. . For fiscal years 2011, 2012 and 2013 and the six months ended

September 30, 2013, consumption of fuel of our gas based Kakinada power plant was Rs. 1,836.92 million,

Rs. 2,336.04 million, Rs. 1,033.01 million and Rs. 39.85 million, which represented 37.08%, 43.50%,

26.75% and 2.36% of total expenses of Kakinada Power Plant for the period. The decline in our natural gas

costs in fiscal year 2013 and the six months ended September 30, 2013 is reflective of the lower availability

of natural gas during those years. As such, our results of operation and cash flows are sensitive to the

fluctuation in natural gas prices. Under the current natural gas pricing policy, the price of natural gas is

determined by the Government of India based on a number of factors, including but not limited to well-head

price, cost of transportation, general market conditions and applicable VAT and taxes. In June 2013, the

Government of India revised the natural gas price upwards. In January 2014, the Government of India

announced the Domestic Natural Gas Pricing Guidelines, 2013 that will come in to effect from April 2014.

Under these guidelines the price for natural gas will be determined based on international prices prevailing

at the time and will be determined on a quarterly basis. While the PPA with respect to the Vemagiri Power

Plant avails us the option to pass through fuel costs to our customers, the PPA with respect to the Kakinada

Power Plant does not, and when executed, the PPA with respect to the Rajahmundry Power Project may not,

avail us the option to pass through fuel costs to our customers. The Government of India increases the price

of natural gas without providing a corresponding increase in subsidies, and/or without making

19

corresponding adjustments to the on-grid tariffs for natural gas-based power plants. Going forward, the

price for natural gas may fluctuate according to global natural gas prices. In the event we are unable to pass

on the increase in the cost of natural gas to our customers, our business, financial condition, cash flows and

results of operations may be materially and adversely affected.

3. We do not have any natu

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