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RED HERRING PROSPECTUS
Dated August 27, 2014
Please read Section 32 of the Companies Act, 2013
Book Built Issue
SHARDA CROPCHEM LIMITED
Our Company was incorporated as Sharda Worldwide Exports Private Limited on March 12, 2004, at Mumbai, as a private limited company under the Companies Act,
1956, as amended (the “Companies Act, 1956”). Our Company changed its name to Sharda Cropchem Private Limited on September 18, 2013. Thereafter, our Company
was converted into a public limited company on September 18, 2013 and consequently, the name of our Company was changed to Sharda Cropchem Limited. For details of
changes in the name of our Company, see “History and Certain Corporate Matters” on page 139.
Registered and Corporate Office: Domnic Holm, 29th Road, Bandra (West), Mumbai 400 050
Tel: (91 22) 6678 2800; Fax: (91 22) 6678 2828
Contact Person: Jetkin N. Gudhka, Company Secretary and Compliance Officer
Email: [email protected]; Website: www.shardacropchem.com/
Corporate Identity Number: U51909MH2004PLC145007
Promoters of our Company: Ramprakash V. Bubna, Sharda R. Bubna, Ashish R. Bubna and Manish R. Bubna PUBLIC OFFER OF 22,555,124 EQUITY SHARES OF FACE VALUE OF ` 10 EACH (THE “EQUITY SHARES”) OF SHARDA CROPCHEM LIMITED
(THE “COMPANY”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE THROUGH AN OFFER FOR SALE BY THE SELLING SHAREHOLDERS
(AS DEFINED IN THE SECTION “DEFINITIONS AND ABBREVIATIONS”) AGGREGATING UP TO ` [●] MILLION (THE “OFFER”). THE OFFER WILL
CONSTITUTE 25% OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY. FOR DETAILS OF THE EQUITY SHARES
OFFERED BY EACH SELLING SHAREHOLDER, SEE “DEFINITIONS AND ABBREVIATIONS – OFFER RELATED TERMS” ON PAGE 2.
THE FACE VALUE OF EQUITY SHARES IS ` 10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY
AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS (THE “BRLMS”) AND WILL BE
ADVERTISED AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/OFFER OPENING DATE.
In case of any revisions in the Price Band, the Bid/Offer Period will be extended by at least three additional Working Days after such revision of the Price Band, subject to
the Bid/Offer Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Offer Period, if applicable, will be widely disseminated by
notification to 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 BRLMs, the Syndicate Members and the Self Certified Syndicate Banks (“SCSBs”).
In terms of Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”), this is an Offer for at least 25% of the post-Offer capital. The Offer
is being made through the Book Building Process wherein 50% of the Offer shall be available for Allocation on a proportionate basis to Qualified Institutional Buyers
(“QIBs”), provided that our Company and the Selling Shareholders may allocate up to 30% of the QIB Category to Anchor Investors on a discretionary basis. 5% of the QIB
Category (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Category
shall be available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or
above the Offer Price. Further, not less than 15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of
the Offer shall be available for allocation to Retail Individual Investors in accordance with the SEBI Regulations, subject to valid Bids being received at or above the Offer
Price. All potential investors, other than Anchor Investors, may participate in this Offer through an Application Supported by Blocked Amount (“ASBA”) process providing
details of their respective bank accounts which will be blocked by SCSBs. QIBs (except Anchor Investors) and Non-Institutional Investors are mandatorily required to utilise
the ASBA process to participate in this Offer. Kindly note that Allotment, amongst other conditions mentioned in this Red Herring Prospectus, shall be undertaken upon
receipt of Bids equivalent to at least 25% of the Offer (including Bids received under the Anchor Investor Portion) from Mutual Funds and/or Insurance Companies. For
details, see “Offer Procedure” on page 414.
RISK IN RELATION TO THE FIRST OFFER
This being the first public offer 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 per
Equity Share. The Floor Price is [●] times the face value and the Cap Price is [●] times the face value. The Offer Price (determined and justified by our Company and the
Selling Shareholders in consultation with the BRLMs as stated under the section “Basis for Offer Price” on page 85) should not be taken to be indicative of the market price
of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at
which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of
losing their entire investment. Investors are advised to read the risk factors carefully before taking an investment decision in 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 the contents of this Red Herring
Prospectus. Specific attention of the investors is invited to the section “Risk Factors” on page 18.
COMPANY’S AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to our
Company and the Offer, which is material in the context of the Offer, that the information contained in this Red Herring Prospectus is true and correct in all material aspects
and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which
makes this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Each
Selling Shareholder, severally and not jointly, assumes responsibility only for statements in relation to such Selling Shareholder included in this Red Herring Prospectus.
LISTING
The Equity Shares offered through this 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 May 2, 2014 and April 30, 2014, respectively. For the purposes of the Offer, the Designated
Stock Exchange shall be NSE.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER
Edelweiss Financial Services Limited
14th
Floor, Edelweiss House
Off C.S.T. Road, Kalina
Mumbai 400 098
Tel: (91 22) 4009 4400
Fax: (91 22) 4086 3610
Email: [email protected]
Investor Grievance Email:
Website: www.edelweissfin.com
Contact Person: Abhishek Agarwal
SEBI Registration No.: INM0000010650
IDFC Securities Limited
Naman Chambers
C-32, G Block
Bandra Kurla Complex
Bandra (East), Mumbai 400 051
Tel: (91 22) 6622 2600
Fax: (91 22) 6622 2501
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.idfccapital.com
Contact Person: Akshay Bhandari
SEBI Registration No.: MB/INM000011336
Karvy Computershare Private Limited
Plot No. 17-24
Vittal Rao Nagar
Madhapur
Hyderabad 500 081
Tel: (91 40) 4465 5000
Fax: (91 40) 2343 1551
Email : [email protected]
Website: http:\\karisma.karvy.com
Contact Person: M. Murali Krishna
SEBI Registration No.: INR000000221
BID/ OFFER PROGRAMME*
BID/OFFER OPENS ON: September 5, 2014* BID/OFFER CLOSES ON: September 9, 2014
* 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/Offer Period shall be one Working Day prior to the Bid/ Offer Opening Date.
http://www.shardacropchem.com/mailto:[email protected]://www.linkintime.co.in/
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TABLE OF CONTENTS
SECTION I: GENERAL ...................................................................................................................................... 1
DEFINITIONS AND ABBREVIATIONS ......................................................................................................... 1 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA .................................................... 11 FORWARD-LOOKING STATEMENTS ........................................................................................................ 17
SECTION II: RISK FACTORS ........................................................................................................................ 18
SECTION III: INTRODUCTION .................................................................................................................... 45
SUMMARY OF INDUSTRY ........................................................................................................................... 45 SUMMARY OF BUSINESS ............................................................................................................................ 48 SUMMARY FINANCIAL INFORMATION ................................................................................................... 53 THE OFFER ..................................................................................................................................................... 63 GENERAL INFORMATION ........................................................................................................................... 64 CAPITAL STRUCTURE ................................................................................................................................. 73 OBJECTS OF THE OFFER .............................................................................................................................. 84 BASIS FOR OFFER PRICE ............................................................................................................................. 85 STATEMENT OF TAX BENEFITS ................................................................................................................ 88
SECTION IV: ABOUT THE COMPANY ..................................................................................................... 101
INDUSTRY OVERVIEW .............................................................................................................................. 101 OUR BUSINESS ............................................................................................................................................ 121 REGULATIONS AND POLICIES ................................................................................................................. 136 HISTORY AND CERTAIN CORPORATE MATTERS ................................................................................ 139 SUBSIDIARIES ............................................................................................................................................. 144 MANAGEMENT ........................................................................................................................................... 157 PROMOTERS AND PROMOTER GROUP .................................................................................................. 178 GROUP COMPANIES ................................................................................................................................... 181 RELATED PARTY TRANSACTIONS ......................................................................................................... 187 DIVIDEND POLICY ..................................................................................................................................... 188
SECTION V: FINANCIAL INFORMATION ............................................................................................... 189
FINANCIAL STATEMENTS ........................................................................................................................ 189 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS ............................................................................................................................................... 312
SECTION VI: LEGAL AND OTHER INFORMATION ............................................................................. 337
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ..................................................... 337 GOVERNMENT AND OTHER APPROVALS ............................................................................................. 342 OTHER REGULATORY AND STATUTORY DISCLOSURES .................................................................. 393
SECTION VII: OFFER INFORMATION ..................................................................................................... 406
TERMS OF THE OFFER ............................................................................................................................... 406 OFFER STRUCTURE .................................................................................................................................... 409 OFFER PROCEDURE ................................................................................................................................... 414 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ............................................... 463
SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION .................................. 464
SECTION IX: OTHER INFORMATION ..................................................................................................... 496
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ........................................................ 496 DECLARATION ............................................................................................................................................ 498
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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, shall have the meaning as provided below. References to any legislation, act or regulation
shall be to such legislation, act or regulation as amended from time to time.
General Terms
Term Description
“Our Company”, “The
Company”
Sharda Cropchem Limited, a company incorporated under the Companies
Act, 1956 and having its Registered Office at Domnic Holm, 29th
Road,
Bandra (West), Mumbai 400 050
“We”, “our” or “us” Unless the context otherwise indicates or implies, refers to the Company
together with its Subsidiaries
Company Related Terms
Term Description
Articles/ Articles of
Association
Articles of Association of our Company
Associate Associate of our Company, namely, Sharda Private (Thailand) Limited
Auditors/ Statutory Auditors Statutory auditors of our Company, namely, S. R. Batliboi & Co. LLP,
Chartered Accountants
Belts Conveyor belts, V belts and timing belts
Board/ Board of Directors Board of directors of our Company or a duly constituted committee thereof
Director(s) Director(s) of our Company
Equity Shares Equity shares of our Company of face value of ` 10 each fully paid-up
Europe Includes Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Macedonia, Malta, Netherlands, Norway,
Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey and United Kingdom
Group Companies Companies, firms and ventures promoted by our Promoters, irrespective of
whether such entities are covered under Section 370(1)(B) of the Companies
Act, 1956 or not. For details, see “Group Companies” on page 181
Key Management
Personnel/KMP
Key management personnel in terms of Regulation 2(1)(s) of the SEBI
Regulations and disclosed in the section “Management” on page 157
Latin America Includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador,
Guatemala, Panama, Paraguay, Peru and Uruguay
Listing Agreement Listing agreement to be entered into by our Company with the Stock
Exchanges
Memorandum of Association Memorandum of Association of our Company
NAFTA Canada, Mexico and United States
Promoters Promoters of our Company, namely, Ramprakash V. Bubna, Sharda R. Bubna,
Ashish R. Bubna and Manish R. Bubna. For details, see “Promoters and
Promoter Group” on page 178
Promoter Group Persons and entities constituting the promoter group of our Company in terms
of Regulation 2(1)(zb) of the SEBI Regulations
Registrar of Companies/RoC Registrar of Companies, Mumbai located at 100, Everest, Marine Drive,
Mumbai 400 002
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Term Description
Registered Office/ Corporate
Office
The registered office as well as corporate office of our Company is located at
Domnic Holm, 29th
Road, Bandra (West), Mumbai 400 050
Rest of the World Australia, Bahrain, Bangladesh, Barbados, China, Hong Kong, India,
Indonesia, Israel, Malaysia, New Zealand, Pakistan, Philippines, South Korea,
Taiwan, Thailand and Vietnam in Asia; Algeria, Egypt, Eritrea, Ivory Coast,
Kenya, Libya, Morocco, South Africa, Sudan, Tanzania, Tunisia, Zambia and
Zimbabwe in Africa; Jordan, Lebanon, Saudi Arabia and United Arab
Emirates in the Middle East and Georgia, Jamaica, Moldova, Russian
Federation, Trinidad and Tobago and Ukraine
Shareholders Shareholders of our Company
Subsidiaries Subsidiaries of our Company, namely, Axis Crop Science Private Limited,
Euroazijski Pesticidi d.o.o., Sharda Balkan Agrochemicals Limited, Sharda
Benelux BVBA, Sharda Bolivia S.R.L., Shardacan Limited, Sharda Chile
SpA, Sharda Colombia S.A., Sharda Costa Rica SA, Sharda Cropchem
Espana, S.L., Sharda De Guatemala, S.A., Sharda De Mexico S DE RL DE
CV, Sharda Del Ecuador CIA. Ltda., Sharda Do Brasil Comercio De Produtos
Quimicos E Agroquimicos LTDA, Sharda Europe BVBA, Sharda Hellas
Agrochemicals Limited, Sharda Hungary Kft, Sharda International Africa
(Pty) Ltd, Sharda International DMCC, Sharda Italia SRL, Sharda Malaysia
SDN. BHD., Sharda Peru SAC, Sharda Polska SP. ZO.O, Sharda Spain, S.L.,
Sharda Swiss SARL, Sharda Ukraine LLC, Sharda USA LLC, Sharda
Uruguay S.A., Shardarus LLC, Shardaserb DO.O, Sharzam Limited, Sharpar
S.A., Siddhivinayak International Limited and Sharda Poland SP.ZO.O (with
effect from May 30, 2014). For details, see “Subsidiaries” on page 144
Offer Related Terms
Term Description
Allotment/ Allot/ Allotted Unless the context otherwise requires, the transfer of the Equity Shares
pursuant to the Offer to the successful Bidders. Please note that in addition to
the conditions as stated in this Red Herring Prospectus, Allotment is also
subject to receipt of Bids equivalent to at least 25% of the Offer (including
Bids received under the Anchor Investor Portion) from Mutual Funds and/or
Insurance Companies.
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 million
Anchor Investor Bid/ Offer
Period
The day, one Working Day prior to the Bid/Offer Opening Date, on which
Bids by Anchor Investors shall be submitted and allocation to Anchor
Investors shall be completed
Anchor Investor Offer Price Final price at which the Equity Shares will be Allotted to Anchor Investors in
terms of this Red Herring Prospectus and the Prospectus, which price will be
equal to or higher than the Offer Price, but not higher than the Cap Price. The
Anchor Investor Offer Price will be decided by our Company and the Selling
Shareholders in consultation with the BRLMs
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
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Term Description
Application Supported by
Blocked Amount/ASBA
An application, 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 Investors
participating in the Offer
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 Offer who intend to
submit Bid through the ASBA process
Banker(s) to the Offer/Escrow
Collection Bank(s)
Banks which are clearing members and registered with SEBI as bankers to an
offer and with whom the Escrow Account will be opened, in this case being,
Axis Bank Limited, HDFC Bank Limited, IndusInd Bank Ltd and Yes Bank
Limited
Basis of Allotment Basis on which the Equity Shares will be Allotted to successful Bidders under
the Offer and which is described in the section “Offer Procedure” on page 414
Bid An indication to make an offer during the Bid/ Offer Period by a Bidder
pursuant to submission of the Bid cum Application Form, or during the
Anchor Investor Bid/ Offer Period by the Anchor Investors, to 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 this Red
Herring Prospectus and the Prospectus
Bid/ Offer Closing Date Except in relation to any Bids received from the Anchor Investors, the date
after which the Syndicate, the Designated Branches and the Registered
Brokers will not accept any Bids for the Offer, which shall be notified in two
national daily newspapers, one each in English and Hindi and in one Marathi
daily newspaper, each with wide circulation
Bid/ Offer Opening Date Except in relation to 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 Offer, 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 Except in relation to Anchor Investors, the period between the Bid/Offer
Opening Date and the Bid/Offer Closing Date, inclusive of both days, during
which prospective Bidders can submit their Bids, including any revisions
thereof
Bid Lot [●]
Bidder Any prospective investor who makes a Bid pursuant to the terms of this 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 Offer is being made
Broker Centres Broker centers 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 Offer, namely, Edelweiss and IDFC
Securities
CAN/Confirmation of Notice or intimation of allocation of the Equity Shares sent to Anchor
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Term Description
Allocation Note Investors, who have been allocated the Equity Shares, after the Anchor
Investor Bid/Offer Period
Cap Price The higher end of the Price Band, above which the Offer Price will not be
finalised and above which no Bids will be accepted
Cut-off Price The Offer Price, finalised by our Company and the Selling Shareholders in
consultation with BRLMs. Only Retail Individual Investors are entitled to Bid
at the Cut-off Price. QIBs and Non-Institutional Investors 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 Account, as the
case may be, to the Public Offer Account or the Refund Account, as
appropriate, after the Prospectus is filed with the RoC
Designated Stock Exchange NSE
Draft Red Herring Prospectus
or DRHP
The Draft Red Herring Prospectus dated February 13, 2014 issued in
accordance with the SEBI Regulations, which did not contain complete
particulars of the price at which the Equity Shares will be transferred and the
size of the Offer
Edelweiss Edelweiss Financial Services Limited
Eligible NRI(s) NRI(s) from jurisdictions outside India where it is not unlawful to make an
offer or invitation under the Offer and in relation to whom the Bid cum
Application Form and this Red Herring Prospectus constitutes an invitation to
purchase the Equity Shares
Engagement Letter The engagement letter dated October 8, 2013 between our Company, the
Selling Shareholders and the BRLMs
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 Share Escrow Agreement, in this
case being, Karvy Computershare Private Limited
Escrow Agreement The agreement dated August 26, 2014 entered into between our Company, the
Selling Shareholders, the BRLMs, the Syndicate Members, the Escrow
Collection Bank(s), the Refund Bank and the Registrar to the Offer 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 The Bidder whose name appears first in the Bid cum Application Form
Floor Price The lower end of the Price Band, subject to any revision thereto, at or above
which the Offer Price will be finalised and below which no Bids will be
accepted
IDFC Securities IDFC Securities Limited
Mutual Fund Portion 5% of the QIB Category (excluding the Anchor Investor Portion), or 394,715
Equity Shares which shall be available for allocation to Mutual Funds only
Net Proceeds Proceeds of the Offer less the Offer expenses. For further information about
the Offer expenses, see “Objects of the Offer” on page 84
Non-Institutional Investors 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
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Term Description
Eligible NRIs)
Non-Institutional Category The portion of the Offer being not less than 15% of the Offer, comprising of
3,383,269 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
Offer The offer for sale of 22,555,124 Equity Shares comprising of an offer for sale
of, (i) 14,320,495 Equity Shares by HEP Mauritius Limited; (ii) 4,117,314
Equity Shares by Ramprakash V. Bubna; and (iii) 4,117,315 Equity Shares by
Sharda R. Bubna, for cash at a price of ` [●] per Equity Share aggregating to `
[●] million, pursuant to the terms of this Red Herring Prospectus
Offer Agreement The agreement dated February 13, 2014 between our Company, the Selling
Shareholders and the BRLMs, pursuant to which certain arrangements are
agreed to in relation to the Offer
Offer Price The final price at which the 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 BRLMs on the Pricing Date.
Provided that for the purposes of the Anchor Investors, this price shall be the
Anchor Investor Offer Price
Offer Proceeds The proceeds of the Offer. For details, see “Objects of the Offer” on page 84
Price Band Price Band of a minimum price of ` [●] per Equity Share (Floor Price) and the
maximum price of ` [●] per Equity Share (Cap Price), including any revisions
thereof. The Price Band and the minimum Bid Lot size for the Offer will be
decided by our Company and the Selling Shareholders in consultation with the
BRLMs and advertised, at least five Working Days prior to the Bid/ Offer
Opening Date, in English national daily newspaper, Financial Express, Hindi
national daily newspaper, Jansatta, and Marathi newspaper Navshakti, each
with wide circulation
Pricing Date The date on which our Company and the Selling Shareholders in consultation
with the BRLMs will finalise the Offer Price
Prospectus The Prospectus to be filed with the RoC in accordance with Section 26 of the
Companies Act, 2013, 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 Offer Account Account opened with the Bankers to the Offer to receive monies from the
Escrow Account and from the ASBA Account on the Designated Date
QIB Category The portion of the Offer (including the Anchor Investor Portion) amounting to
50% of the Offer being 11,277,561 Equity Shares, which shall be Allotted 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
This Red Herring Prospectus dated August 27, 2014 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 Offer. This Red Herring
Prospectus will become the Prospectus upon filing with the RoC after the
Pricing Date
Refund Account(s) The account opened with the Refund Bank, from which refunds, if any, of the
whole or part of the Bid Amount (excluding refunds to ASBA Bidders) shall
be made
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Term Description
Refund Bank Axis Bank Limited
Refunds through electronic
transfer of funds
Refunds through NECS, NEFT, Direct Credit or RTGS, as applicable
Registered Brokers Stock brokers registered with the Stock Exchanges having nationwide
terminals, other than the members of the Syndicate
Registrar Agreement The agreement dated January 29, 2014 between our Company, the Selling
Shareholders and the Registrar to the Offer in relation to the responsibilities
and obligations of the Registrar to the Offer pertaining to the Offer
Registrar to the
Offer/Registrar
Registrar to the Offer, in this case being Karvy Computershare Private
Limited
Restated Consolidated
Summary Statements
Restated consolidated summary statements of assets and liabilities as at March
31, 2014, 2013, 2012, 2011 and 2010 and statement of profit and loss and cash
flows for each of the years ended March 31, 2014, 2013, 2012, 2011 and 2010
for the Company and its Subsidiaries and an Associate
Restated Summary Statements Collectively, the Restated Consolidated Summary Statements and the Restated
Unconsolidated Summary Statement
Restated Unconsolidated
Summary Statements
Restated unconsolidated summary statements of assets and liabilities as at
March 31, 2014, 2013, 2012, 2011 and 2010 and statement of profit and loss
and cash flows for each of the years ended March 31, 2014, 2013, 2012, 2011
and 2010 for the Company
Retail Individual Investor(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 Offer (including
HUFs applying through their Karta and Eligible NRIs)
Retail Category The portion of the Offer being not less than 35% of the Offer comprising of
7,894,294 Equity Shares which shall be available for allocation to Retail
Individual Investor(s), which shall not be less than the minimum Bid Lot,
subject to availability in the Retail Category 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 Investors 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
Selling Shareholders HEP Mauritius Limited, Sharda R. Bubna and Ramprakash V. Bubna
Share Escrow Agreement The agreement dated August 22, 2014 entered into amongst our Company, the
Selling Shareholders, the BRLMs and the Escrow Agent in connection with
the transfer of Equity Shares under the Offer by the Selling Shareholders and
credit of such Equity Shares to the demat accounts of the Allottees
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 dated August 26, 2014 entered into amongst the BRLMs, the
Syndicate Members, our Company, the Selling Shareholders and the Registrar
to the Offer in relation to the collection of Bids in this Offer (excluding Bids
from Bidders applying through the ASBA process or Bids submitted to the
Registered Brokers)
Syndicate Members Intermediaries registered with the SEBI who are permitted to carry out
activities as an underwriter, in this case being, Edelweiss Securities Limited
and Sharekhan Limited
Syndicate/ members of the BRLMs and the Syndicate Members
http://www.sebi.gov.in/sebiweb
-
7
Term Description
Syndicate
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 Bidders 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
Delhi or Mumbai are open for business, provided however, for the purpose of
the time period between the Bid/Offer Closing Date and listing of the Equity
Shares on the Stock Exchanges, “Working Days” shall mean all days
excluding Sundays and bank holidays in Delhi or Mumbai in accordance with
the SEBI circular no. CIR/CFD/DIL/3/2010 dated April 22, 2010
Technical/Industry Related Terms
Term Description
ASs Active substances
AIs or GAIs Active ingredients or generic active ingredients
BRIC countries Brazil, Russian Federation, India and China
CAP Common Agriculture Policy
CSO Central Statistical Organization
DAC Department of Agriculture & Cooperation
EU European Union
G20 Group of Twenty Finance Ministers and Central Bank Governors
GDP Gross Domestic Product
GM Genetically modified
HT Herbicide tolerant
IPR Intellectual Property Rights
IR Insect resistant
M&A Mergers and Acquisitions
MAI Makhteshim Agan
MNCs Multi National Corporations
OECD Organisation for Economic Co-operation and Development
PCO Pest control operators
R&D Research and development
WTO World Trade Organization
Rio +20 Summit United Nations conference on Sustainable development, held in Rio de Janeiro
(Brazil) in June 2012
Conventional Terms/ Abbreviations
Term Description
AGM Annual general meeting
AIF Alternative Investment Fund as defined in and registered with SEBI under the
Securities and Exchange Board of India (Alternative Investments Funds)
Regulations, 2012
AS/Accounting Standards Accounting Standards issued by the Institute of Chartered Accountants of
-
8
Term Description
India
BSE BSE Limited
CAGR Compounded annual growth rate
Category I foreign portfolio
investor(s)
FPIs who are registered as “Category I foreign portfolio investors” under the
SEBI FPI Regulations
Category II foreign portfolio
investor(s)
FPIs who are registered as “Category II foreign portfolio investors” under the
SEBI FPI Regulations
Category III foreign portfolio
investor(s)
FPIs who are registered as “Category III foreign portfolio investors” under the
SEBI FPI Regulations
CDSL Central Depository Services (India) Limited
CIN Corporate identity number
Client ID Client identification number of the Bidder’s 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
CSR Corporate social responsibility
Debtor-Turnover Ratio Trade Receivable / Revenue from operations X 365
Depositories NSDL and CDSL
Depositories Act Depositories Act, 1996
DIN Director identification number
DP ID Depository participant’s identification
DP/Depository Participant A depository participant as defined under the Depositories Act
EBITDA Earnings before interest, tax, depreciation and amortisation
EGM Extraordinary general meeting
EPS Earnings per share
FCNR Foreign currency non-resident
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/
Fiscal Year
The period of 12 months ending March 31 of that particular year
FIPB Foreign Investment Promotion Board
FPI(s) A foreign portfolio investor who has been registered pursuant to the SEBI FPI
Regulations provided that any FII or QFI who holds a valid certificate of
registration shall be deemed to be a foreign portfolio investor till the expiry of
the block of three years for which fees have been paid as per the SEBI FII
Regulations
FVCI Foreign venture capital investors as defined and registered with SEBI under
the SEBI FVCI Regulations
GDP Gross domestic product
-
9
Term Description
GIR General index register
GoI/Government Government of India
HUF Hindu undivided family
ICAI The Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
Income Tax Act/ I.T. Act The Income Tax Act, 1961
Indian GAAP Generally Accepted Accounting Principles in India
Insurance Companies Insurance companies as registered with the Insurance Regulatory and
Development Authority
IPO Initial public offering
LLP Act Limited Liability Partnership Act, 2008
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
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
NECS National Electronic Clearing Service
NEFT National Electronic Fund Transfer
Notified Sections The sections of the Companies Act, 2013 that have been notified by the
Ministry of Corporate Affairs, Government of India
NR/ Non-Resident A person resident outside India, as defined under the FEMA and includes an
NRI, FPIs 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
OCB/Overseas Corporate
Body
A company, partnership, society or other corporate body owned directly or
indirectly to the extent of at least 60% by NRIs including overseas trusts, in
which not less than 60% of beneficial interest is irrevocably held by NRIs
directly or indirectly and which was in existence on October 3, 2003 and
immediately before such date had taken benefits under the general permission
granted to OCBs under FEMA. OCBs are not allowed to invest in the Offer
p.a. Per annum
P/E Ratio Price/earnings ratio
PAN Permanent account number
PAT Profit after tax
RBI Reserve Bank of India
RoNW Return on net worth
`/Rs./Rupees Indian Rupees
RTGS Real time gross settlement
SCRA Securities Contracts (Regulation) Act, 1956
-
10
Term Description
SCRR Securities Contracts (Regulation) Rules, 1957
SEBI The Securities and Exchange Board of India constituted under the SEBI Act,
1992
SEBI Act Securities and Exchange Board of India Act, 1992
SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investments Funds)
Regulations, 2012
SEBI FII Regulations Securities and Exchange Board of India (Foreign Institutional Investors)
Regulations, 1995 as repealed pursuant to the SEBI FPI Regulations
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 Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009
SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011
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
Stock Exchanges BSE and NSE
UK United Kingdom
US/United States/U.S.A. United States of America
US GAAP Generally Accepted Accounting Principles in the United States of America
USD/US$ United States Dollars
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
-
11
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
All references to “India” contained in this Red Herring Prospectus are to the Republic of India and all references
to the “U.S.”, “U.S.A” or the “United States” are to the United States of America. Except in “Industry
Overview”, all references to Europe, Latin America, NAFTA and Rest of the World shall be to such terms as
defined in the section “Definitions and Abbreviations – Company Related Terms” on page 1.
Financial Data
Unless the context provides otherwise, financial data included in this Red Herring Prospectus is derived from
the Restated Unconsolidated Summary Statements or the Restated Consolidated Summary Statements prepared
in accordance with sub-clause (i), (ii) and (iii) of clause (b) of sub-section (1) of section 26 of Chapter III of the
Companies Act, 2013 read with rule 4 of the Companies (Prospectus and Allotment of Securities) Rules, 2014
and the SEBI Regulations. In this Red Herring Prospectus, any discrepancies in any table between the total and
the sums of the amounts listed are due to rounding off.
Our Company’s Financial Year or Fiscal commences on April 1 and ends on March 31 of the next year, so all
references to particular Financial Year or Fiscal, unless stated otherwise, are to the 12 months period ended on
March 31 of that year.
There are significant differences between Indian GAAP, US GAAP and IFRS. The reconciliation of the
financial information to US GAAP or IFRS 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 it is urged that you consult your own advisors regarding such differences and their impact on
our Company’s financial data. Accordingly, the degree to which the financial information included in this Red
Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity
with Indian accounting practices, Indian GAAP, the Companies Act and the SEBI Regulations. Any reliance by
persons not familiar with Indian accounting practices, Indian GAAP, the Companies Act, the SEBI Regulations
on the financial disclosures presented in this Red Herring Prospectus should accordingly be limited.
Unless the context provides otherwise, any percentage amounts, as set forth in the sections “Risk Factors”, “Our
Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages
18, 121 and 312, respectively, and elsewhere in this Red Herring Prospectus have been calculated on the basis of
the Restated Summary Statements prepared in accordance with sub-clause (i), (ii) and (iii) of clause (b) of sub-
section (1) of section 26 of Chapter III of the Companies Act, 2013 read with rule 4 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014 and the SEBI Regulations.
Currency and Units of Presentation
All references to
“€” are to Euro, the official currency of the euro zone, which consists of 18 of the 28 member states of the
European Union, namely, Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy,
Latvia, Luxemburg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain;
“AED” are to United Arab Emirates Dirham, the official currency of United Arab Emirates;
“BOB” are to Boliviano, the official currency of Bolivia;
“BRL” are to Real, the official currency of Brazil;
“CAD” are to Canadian Dollars, the official currency of Canada;
“CHF” are to Swiss franc, the official currency of Switzerland;
“COP” are to Colombian Peso, the official currency of Colombia;
“CRC” are to Colon, the official currency of Costa Rica;
“GTQ” are to Quetzal, the official currency of Guatemala;
“HRK” are to Kuna, the official currency of Croatia;
-
12
“HUF” are to Forint, the official currency of Hungary;
“ZMK” are to Kwacha, the official currency of Zambia;
“MXN” are to Mexican Peso, the official currency of Mexico;
“PEN” are to Nuevo Sol, the official currency of Peru;
“PHP” are to Philippine Peso, the official currency of Philippines;
“PLN” are to Zloty, the official currency of Poland;
“PYG” are to Guaraní, the official currency of Paraguay;
“RUB” are to Russian Ruble, the official currency of Russia;
“THB” are to Baht, the official currency of Thailand;
“UAH” are to Hryvnia, the official currency of Ukraine;
“USD” or “US Dollar” are to United States Dollars, the official currency of United States of America;
“UYU” are to Uruguayan Peso, the official currency of Uruguay;
“RM” are to Ringgit, the official currency of Malaysia; and
“ZAR” are to South African Rand, the official currency of South Africa.
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 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.
Name of
company
Currency Closing rates in `as of
March
31,
2014
December
31, 2013
March
31,
2013
December
31, 2012
March
14,
2012
December
31, 2011
March
31,
2011
December
31, 2010
March
31,
2010
December
31, 2009
March
31,
2009
December
31, 2008
Sharda Balkan
Agrochemicals
Limited(1)
EUR - 85.32 - 72.36 - 68.79 - 59.63 - - - -
Shardacan
Limited(2)
CAD - 58.07 - 55.02 - 55.06 - - - - - -
Sharda Costa
Rica SA(2)
CRC 0.11 - 0.11 - - - - - - - - -
Sharda De
Guatemala,
S.A.(2)
GTQ - 7.70 - 6.92 - - - - - - - -
Sharda Del
Ecuador CIA.
Ltda.(1)
USD - 61.85 - 54.76 - 53.15 - 44.86 - 46.65 - -
Sharda Do
Brasil
Comercio De
Produtos
Quimicos E
Agroquimicos
LTDA (1)
BRL - 26.21 - 26.75 - 28.49 - 27.05 - - - -
Sharda Hellas
Agrochemicals
Limited(1)
EUR - 85.32 - 72.36 - 68.79 - 59.63 - - - -
Sharda
Hungary Kft(2)
HUF - 0.29 - 0.25 - - - - - - - -
Sharda USD 60.08 - 54.41 - - - - - - - - -
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13
Name of
company
Currency Closing rates in `as of
March
31,
2014
December
31, 2013
March
31,
2013
December
31, 2012
March
14,
2012
December
31, 2011
March
31,
2011
December
31, 2010
March
31,
2010
December
31, 2009
March
31,
2009
December
31, 2008
International
DMCC(1)
Sharda
International
FZE(1)
USD - - - - 49.87 - 44.72 - 45.37 - 50.98 -
Sharda Italia
SRL(1) and (2)
EUR - 85.32 - 72.36 - - - - - - - -
Sharda Peru
SAC(2)
PEN - 21.73 - 21.40 - 20.03 - 15.97 - 16.01 - -
Sharda Polska
SP.ZO.O(2)
PLN - 20.49 - 17.71 - 15.83 - 15.14 - 16.21 - -
Sharda Spain,
S.L. (1)
EUR - 85.32 - 72.36 - - - - - - - -
Sharda Swiss
SARL(1)
CHF - 69.65 - 59.93 - 56.48 - 47.82 - - - -
Sharda
Ukraine
LLC(2)
UAH - 7.36 - 6.79 - 6.69 - 5.62 - 5.76 - -
Sharda USA
LLC(1)
USD - 61.85 - 54.76 - 53.15 - 44.86 - 46.65 - 48.00
Shardarus
LLC(1)
RUB - 1.88 - 1.80 - 1.66 - 1.47 - 1.54 - 1.67
Shardaserb
DO.O(2)
RSD - 0.74 - 0.64 - - - - - - - -
Sharzam
Limited(2)
ZMK - 0.01 - 0.01 - - - - - - - -
Sharda Chile
SpA(1)
USD 60.08 - - - - - - - - - - -
Sharda
Cropchem
Espana, S.L.(1)
EUR 82.59 - - - - - - - - - - -
(1) Source of exchange rate: www.mecklai.com (2) Source of exchange rate: www.oanda.com
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14
Name of
company
Curren
cy
Average rates in `as of
Marc
h 31,
2014
Decemb
er 31,
2013
April 1,
2013 to
Septemb
er 30,
2013
January
1, 2013
to
Septemb
er 30,
2013
Octob
er 13,
2012to
March
31,
2013
April
1,
2012
to
Marc
h 31,
2013
May 9,
2012to
Decemb
er 31,
2012
April
11, 2012
to
Decemb
er 31,
2012
March
7, 2012
to
Decemb
er 31,
2012
Februar
y 20,
2012 to
Decemb
er 31,
2012
Februar
y 8,
2012 to
Decemb
er 31,
2012
January
20, 2012
to
Decemb
er 31,
2012
January
1, 2012
to
Decemb
er 31,
2012
April
1,
2011
to
Marc
h 14,
2012
March
4, 2011
to
Decemb
er 31,
2011
January
1, 2011
to
Decemb
er 31,
2011
April
1,
2010
to
Marc
h 31,
2011
May 31,
2010 to
Decemb
er 31,
2010
March
31, 2010
to
Decemb
er 31,
2010
March
1, 2010
to
Decemb
er 31,
2010
January
1, 2010
to
Decemb
er 31,
2010
April
1,
2009t
o
Marc
h 31,
2010
June 11,
2009 to
Decemb
er 31,
2009
May 13,
2009 to
Decemb
er 31,
2009
January
12, 2009
to
Decemb
er 31,
2009
January
1, 2009
to
Decemb
er 31,
2009
April
1,
2008
to
Marc
h 31,
2009
January
1, 2008
to
Decemb
er 31,
2008
Sharda
Balkan
Agrochemic
als
Limited(1)
EUR - 78.84 - 78.64 - - - - - - - - 70.58 - - 64.21 - 58.43 - - - - - - - - - -
Shardacan
Limited(2)
CAD - 56.55 - 58.03 - - - - - - - - 53.54 - 49.14 - - - - - - - - - - - - -
Sharda
Costa Rica
SA(2)
CRC 0.11 0.11 - 0.10 - - - - - - - - - - - - - - - - - - - - - - -
Sharda De
Guatemala,
S.A.(2)
GTQ - 7.31 - 7.34 - - - - 6.61 - - - - - - - - - - - - - - - - - - -
Sharda Del
Ecuador
CIA.
Ltda.(1)
USD - 58.31 - 58.82 - - - - - - - - 53.95 - - 49.00 - - - - 45.75 - - - - 47.68 - -
Sharda Do
Brasil
Comercio
De Produtos
Quimicos E
Agroquimic
os LTDA (1)
BRL - 26.48 - 27.33 - - - - - - - - 27.62 - - 27.77 - - 26.13 - - - - - - - - -
Sharda
Hellas
Agrochemic
als
Limited(1)
EUR - 78.84 - 78.64 - - - - - - - - 70.58 - - 64.21 - 58.43 - - - - - - - - - -
Sharda
Hungary
Kft(2)
HUF - 0.27 - 0.26 - - - - - - 0.24 - - - - - - - - - - - - - - - - -
Sharda
Internationa
l DMCC(1)
USD 60.45 59.07 - - 54.33 - - - - - - - - - - - - - - - - - - - - - -
Sharda
Internationa
l FZE(1)
USD - - - - - - - - - - - - - 47.83 - - 45.58 - - - - 47.55 - - - - 46.12 -
Sharda
Italia SRL(1)
and (2)
EUR - 78.84 - 78.57 - - - 69.92 - - - - - - - - - - - - - - - - - - - -
Sharda Peru
SAC(2)
PEN - 21.57 - 21.80 - - - - - - - - 20.72 - - 18.00 - - - - 15.99 - 15.94 - - - - -
Sharda
Polska
SP.ZO.O(2)
PLN - 19.10 - 18.82 - - - - - - - - 16.77 - - 15.49 - - - - 15.67 - - - 16.18 - - -
Sharda
Spain, S.L.
(1)
EUR - 78.84 - 67.71 - - - - - 68.51 - - - - - - - - - - - - - - - -
Sharda
Swiss
SARL(1)
CHF - 64.79 - 64.61 - - - - - - - - 58.21 - - 52.15 - - - 45.17 - - - - - - - -
Sharda
Ukraine
LLC(2)
UAH - 7.08 - 7.02 - - - - - - - - 6.74 - - 6.15 - - - - 5.69 - 5.99 - - - -
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15
Name of
company
Curren
cy
Average rates in `as of
Marc
h 31,
2014
Decemb
er 31,
2013
April 1,
2013 to
Septemb
er 30,
2013
January
1, 2013
to
Septemb
er 30,
2013
Octob
er 13,
2012to
March
31,
2013
April
1,
2012
to
Marc
h 31,
2013
May 9,
2012to
Decemb
er 31,
2012
April
11, 2012
to
Decemb
er 31,
2012
March
7, 2012
to
Decemb
er 31,
2012
Februar
y 20,
2012 to
Decemb
er 31,
2012
Februar
y 8,
2012 to
Decemb
er 31,
2012
January
20, 2012
to
Decemb
er 31,
2012
January
1, 2012
to
Decemb
er 31,
2012
April
1,
2011
to
Marc
h 14,
2012
March
4, 2011
to
Decemb
er 31,
2011
January
1, 2011
to
Decemb
er 31,
2011
April
1,
2010
to
Marc
h 31,
2011
May 31,
2010 to
Decemb
er 31,
2010
March
31, 2010
to
Decemb
er 31,
2010
March
1, 2010
to
Decemb
er 31,
2010
January
1, 2010
to
Decemb
er 31,
2010
April
1,
2009t
o
Marc
h 31,
2010
June 11,
2009 to
Decemb
er 31,
2009
May 13,
2009 to
Decemb
er 31,
2009
January
12, 2009
to
Decemb
er 31,
2009
January
1, 2009
to
Decemb
er 31,
2009
April
1,
2008
to
Marc
h 31,
2009
January
1, 2008
to
Decemb
er 31,
2008
Sharda USA
LLC(1)
USD - 58.27 - 58.82 - - - - - - - - 53.96 - - 49.00 - - - - 45.75 - - - - 47.68 - 44.06
Shardarus
LLC(1)
RUB - 1.84 - 1.87 - - - - - - - - 1.73 - - 1.56 - - - - 1.50 - - - - 1.60 - 1.64
Shardaserb
DO.O(2)
RSD - 0.69 - 0.69 - - - - - - - 0.63 - - - - - - - - - - - - - - - -
Sharzam
Limited(2)
ZMK - 0.01 - 0.01 - - 0.01 - - - - - - - - - - - - - - - - - - - - -
Sharda
Chile SpA(1)
USD 61.02 - - - - - - - - - - - - - - - - - - - - - - - - - - -
Sharda
Cropchem
Espana,
S.L. (1)
EUR 83.55 - - - - - - - - - - - - - - - - - - - - - - - - - - -
(1) Source of exchange rate: www.mecklai.com (2) Source of exchange rate: www.oanda.com
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16
Industry and Market Data
Unless stated otherwise, industry and market data used in this Red Herring Prospectus have been obtained or
derived from publicly available information as well as industry publications and sources. Industry publications
generally state that information contained in those publications has been obtained from sources believed to be
reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured.
Accordingly, no investment decision should be made solely on the basis of such information. Although we
believe that industry data used in this 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 the section “Risk Factors” on page 18. Accordingly, investment decisions
should not be based solely on such information. In the sections “Summary of Industry” and “Industry
Overview” on pages 45 and 101, all sales information included from the source “Phillips McDougall,
AgriService 2014 v1.0” is presented at the distributor level, with currency conversions performed using average
year exchange rates.
The extent to which market and industry data used in this Red Herring Prospectus is meaningful depends on the
reader’s familiarity with and understanding of 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.
Definitions
For definitions, see “Definitions and Abbreviations” on page 1. In the section “Main Provisions of the Articles
of Association” on page 464, defined terms have the meaning given to such terms in the Articles of Association.
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FORWARD-LOOKING STATEMENTS
This Red Herring Prospectus contains certain “forward-looking statements”. These forward-looking statements
generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”,
“intend”, “objective”, “plan”, “project”, “will”, “will continue”, “will pursue” or other words or phrases of
similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-
looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions about us
that could cause actual results to differ materially from those contemplated by the relevant forward-looking
statement.
Actual results may differ materially from those suggested by the forward-looking statements due to risk or
uncertainties. Certain important factors that could cause actual results to differ materially from our expectations
include, but are not limited to, the following:
Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;
Inability to successfully obtain registrations in a timely manner or at all;
Unfavourable climatic conditions adversely affecting the agricultural industry;
Introduction of alternative crop protection measures;
Inability to maintain or manage relationships with third parties, being manufacturers or formulators.
For further discussion on factors that could cause actual results to differ from expectations, see “Risk Factors”,
“Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
on pages 18, 121 and 312, respectively. By their nature, certain market risk disclosures are only estimates and
could be materially different from what actually occurs in the future. As a result, actual gains or losses could
materially differ from those that have been estimated.
Forward-looking statements reflect current views as of the date of this Red Herring Prospectus and are not a
guarantee of future performance. These statements are based on the management’s beliefs and assumptions,
which in turn are based on currently available information. Although we believe the assumptions upon which
these forward-looking statements are based are reasonable, any of these assumptions could prove to be
inaccurate, and the forward-looking statements based on these assumptions could be incorrect. Neither our
Company, the Selling Shareholders, our Directors, the BRLMs nor any of their respective affiliates have any
obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or
to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. Our
Company will ensure that the investors in India are informed of material developments until the time of the
grant of listing and trading permission by the Stock Exchanges.
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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, cash flows and financial condition could suffer, the trading price of the Equity
Shares could decline and you may lose all or part of your investment. Investors 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.
We have described the risks and uncertainties that our management believes are material, but these risks and
uncertainties may not be the only ones we face. Some risks may be unknown to us and other risks, currently
believed to be immaterial, could be or become material. To obtain a complete understanding of our business,
you should read this section in conjunction with the sections “Our Business”, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Financial Statements” on pages 121, 312 and
189, respectively.
This Red Herring Prospectus also contains forward-looking statements, which refer to future events that involve
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. See “Forward-Looking Statements” on page 17. Unless specified or quantified in the relevant risk
factors below, we are not in a position to quantify the financial or other implications of any of the risks
described in this section.
Internal Risk Factors
1. There are outstanding criminal proceedings against one of our Promoter and Independent Director.
There are four criminal proceedings pending against Ramprakash V. Bubna, our Promoter, Chairman
and Managing Director, in his capacity of non-executive director of Piramal Financial Services Limited
(“PFSL”), before the Metropolitan Magistrate, Ahmedabad under Section 138 of the Negotiable
Instruments Act, 1881, as amended (the “NI Act”) in relation to dishonour of cheques issued by PFSL
to various entities. For further details, see “Outstanding Litigation and Material Developments -
Litigation involving our Promoters – Litigation against Ramprakash V. Bubna – Criminal Cases” on
page 339. Further, there are two criminal proceedings pending against M. S. Sundara Rajan, our Non-
Executive and Independent Director, in his capacity of an independent director of Varun Industries
Limited (“VIL”), before various forums including Metropolitan Magistrate, Mumbai under Section 138
of the NI Act in relation to dishonour of cheques issued by VIL to various entities. For further details,
see “Outstanding Litigation and Material Developments - Litigation involving our Directors –
Litigation against M. S. Sundara Rajan – Criminal Cases” on page 340.
We cannot assure you that these proceedings will be decided in favour of our Promoter or our
Independent Director involved therein. An adverse outcome in the above mentioned proceedings could
have an adverse effect on the ability of our Promoter and Independent Director, who are involved in the
above proceedings, to serve our Company, which may have a material adverse effect on our business,
prospects, financial condition and results of operations. Further, such an adverse outcome may also
have an adverse effect on our reputation and may affect our future business.
2. There are outstanding legal proceedings involving us, our Promoters, Subsidiaries and Directors.
There are outstanding legal proceedings involving us, our Promoters, Subsidiaries and Directors. These
proceedings are pending at different levels of adjudication before various courts, tribunals and other
authorities, from which further liability may arise. A summary of such outstanding legal proceedings as
of the date of this Red Herring Prospectus is as follows:
Litigation against our Company
Sr.
No.
Nature of cases No. of outstanding cases Amount involved
(in ` millions) 1. Direct tax 3 416
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Sr.
No.
Nature of cases No. of outstanding cases Amount involved
(in ` millions) 2. Indirect tax 1 78.51
Litigation against our Directors
Sr.
No.
Nature of cases Litigation against No. of outstanding
cases
Amount involved
(in ` millions) 1. Criminal Ramprakash V. Bubna 4 40.33
2. Criminal M. S. Sundara Rajan 2 29.20
Litigation against our Subsidiaries
Sr.
No.
Nature of cases Litigation against No. of outstanding
cases
Amount involved
1. Civil Sharda Europe BVBA 1 -
2. Civil Sharda Bolivia S.R.L. 1 -*
3. Indirect Tax Sharda de Mexico S De RL DE CV
1 7.75 million MXN
* For details on the amount involved in this matter, see “Outstanding Litigation and Material Developments – Litigation involving Subsidiaries –Sharda Bolivia S.R.L. - Litigation against Sharda Bolivia – Civil Cases”
Litigation against our Promoters
Sr.
No.
Nature of cases Litigation against No. of outstanding
cases
Amount involved
(in ` millions) 1. Criminal Ramprakash V. Bubna 4 40.33
For further details of outstanding legal proceedings involving us, our Promoters, Subsidiaries and
Directors, see “Outstanding Litigation and Material Developments” on page 337.
3. We operate our agrochemical business in a highly regulated sector and if we fail to comply with the regulations prescribed by the authorities of the jurisdictions in which we operate, our business,
results of operations, cash flows and financial condition could be adversely affected.
We operate our agrochemical business in a highly regulated sector and are subject to extensive
regulations and stringent registration conditions. We are required to obtain specific registration from
the authorities in each jurisdiction in which we distribute formulations or generic active ingredients and
the procedural and regulatory requirements to obtain such registrations differ in each jurisdiction. Most
of the applicable regulations are stringent and they may continue to be stricter in the future. The
penalties for non-compliance with these regulations can vary from revocation or suspension of the
registration to imposition of fines or confiscation of the formulations or generic active ingredients in
such jurisdictions.
Further, we also explore opportunities and venture into new jurisdictions. We may have limited
experience and knowledge of the market and regulatory conditions in such jurisdictions. Also, we are
subject to additional risks in relation to complying with a wide variety of local laws, including
restrictions on the import and export of certain intermediates, chemicals, technologies and multiple and
possibly overlapping tax structures. Additionally, regulatory and procedural requirements are subject to
change and as a result, may, at times, be unclear or inconsistent. Consequently, there is an increased
risk that we may inadvertently fail to comply with such regulations or procedures, which could lead to
a variety of sanctions being imposed by the relevant authorities, as well as withholding or delay in
receipt of regulatory approvals for formulations or generic active ingredients. Further, any adverse
change in the regulatory environment in the future may subject us to increased obligations and may
adversely affect our business, cash flows and results of operations.
If we fail to comply with applicable statutory, regulatory or procedural requirements for obtaining
registrations in different jurisdictions, there could be a delay in the grant of registrations and
consequently delay in the distribution of formulations or generic active ingredients and we may lose the
identified business opportunity. Moreover, if we fail to comply with various conditions attached to
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such registrations and permissions once received, the relevant regulatory body may suspend, curtail or
revoke our ability to distribute such formulations or generic active ingredients. If we fail to obtain or
comply with the conditions in such registrations and other related approvals, in a timely manner or at
all, our business, results of operations, cash flows and financial condition could be adversely affected.
4. As part of our strategy, we propose to launch new formulations and generic active ingredients, primarily, pursuant to our own registrations from time to time. The process of seeking registrations
for any formulation or generic active ingredient is complex, expensive and time consuming. If we
are unable to successfully obtain registrations in a timely manner or at all, we may lose the market
opportunities which may result in our delay or failure to recover the costs incurred towards seeking
registrations and other related activities and may adversely affect our operations and profitability.
We, primarily, distribute formulations and generic active ingredients pursuant to our own registrations.
We have, in the past, and will, in the future, continue to focus on seeking registrations for formulations
and generic active ingredients in our own name. The legal and procedural requirements for seeking
registrations differ in each jurisdiction. Amongst the regulated markets including Europe, the United
States, Brazil and Japan, the process and regulatory requirements to seek registrations for formulations
or generic active ingredients are fairly complex and stringent.
Further, the registration process is capital intensive and requires large financial commitment. We invest
substantial capital inter alia on creating the dossier, the registration fees, data compensation cost,
particularly, in the United States, field trials, fees to consultants, laboratories and other intermediaries
to ensure compliance with applicable regulatory requirements, safety standards and effectiveness of the
formulation on crops. In addition to seeking registration of formulations and generic active ingredients
in the Company’s name, the Company also incurs significant expenditure for seeking registrations of
formulations and generic active ingredients in the name of its Subsidiaries as well as certain third
parties including distributors, consultants and Group Companies for which the Company derives
economic benefits. For further details in relation to cost incurred in the registration process, see
“Industry Overview” on page 101.
Further, obtaining registration for formulations or generic active ingredients is a time consuming
process. Registration of formulations or generic active ingredients is dependant upon the result of
different tests. Certain jurisdictions require field trials of the formulations on crops in different climatic
and soil conditions and accordingly such field trial are necessarily spread over a span of time and
across different geographic areas. Further, in the past, we have experienced delays in obtaining
registration on account of various factors such as change in applicable laws and discrepancy in dossiers
submitted. If we are unable to obtain the necessary registration for formulations or generic active
ingredients in a timely manner or at all, we may lose the market opportunity. Consequently, our returns
may be lower than anticipated which may result in our failure to recover the costs incurred towards
seeking the registration, which could adversely affect our growth, profitability, financial condition and
market position.
5. We are required to obtain, renew and maintain statutory and regulatory permits, registrations, licenses and approvals for our business operations from time to time. Any failure or delay to obtain
or renew them may adversely affect our operations.
We require certain statutory and regulatory permits, licenses and approvals to carry out our business
operations and applications for their renewal need to be made within certain timeframes. Particularly
for our agrochemical business, we are required to hold registrations for formulations and generic active
ingredients across jurisdictions in which we operate and some of such registrations may be subject to
periodical renewal by the authorities. The period after which renewal is required and the procedure for
renewal varies from jurisdiction to jurisdiction. While we have applied renewal for a few of these
approvals, registrations and permits, we cannot assure you that we will receive these approvals and
registrations in a timely manner or at all. Further, if we are unable to renew or obtain necessary
permits, licenses and approvals on acceptable terms, in a timely manner or at all, our business,
operations and financial conditions may be adversely affected. For further details, see “Government
and Other Approvals” on page 342.
6. We offer diversified range of formulations and generic active ingredients to protect different kind of crops in the agricultural industry, which is seasonal and cyclical in nature. Accordingly, if the
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agricultural industry in the regions in which we operate is adversely affected by unfavourable
climatic conditions, the demand for formulations or generic active ingredients in such region could
be adversely affected.
Our agrochemical business is heavily dependent on the agricultural industry which, in turn, is subject to
soil and climatic conditions, rainfall, seasonal and other weather factors, which make the performance
of the agricultural sector as a whole or the levels of production of a particular crop relatively
unpredictable. Further, global warming and other changes to the weather pattern are being witnessed
globally which may make it difficult for us to place reliance on weather forecasts and growth
opportunities.
The weather can affect the presence of diseases and pest infestations in the short term on a regional
basis, and accordingly, may negatively affect the demand for formulations and generic active
ingredients. Further, on account of seasonality of the agricultural industry, our operating results may
fluctuate from quarter to quarter and the sales pattern of the formulations or generic active ingredients
across the world may also be different from our projections and estimates.
Accordingly, if the agricultural sector in the regions where we operate, and particularly the crops to
which our formulations or generic active ingredients cater are adversely affected by unfavourable soil
or climatic conditions, poor rainfall, seasonal fluctuations, commodity crop price fluctuations or any
other extraneous events, the demand for formulations or generic active ingredients and hence the
results of our agrochemical operations and our business, financial condition, cash flows and results of
operations could be adversely affected.
7. Our results of operations are subject to risks arising from exchange rate fluctuations.
Whilst our reporting currency is Indian Rupees, we transact a significant portion of our business in
several other foreign currencies, primarily, in U.S. Dollars, Euros and British Pound. Accordingly,
substantial portion of our revenues are denominated in foreign currencies. Moreover, due to the time
gap between the accounting of sales and realisation of payment, the foreign exchange rate at which the
sale is recorded in the books of account may vary with the foreign exchange rate at which the cash is
realised by us, thereby benefiting or adversely affecting us, depending on the depreciation or
appreciation of Rupee.
We also source formulations and generic active ingredients in their finished form from third party
manufacturers, primarily, in China or India, for onward sale. Further, we procure generic active
ingredients for the preparation and sale of formulations wherein we outsource the process of
preparation of formulations to third party formulators, primarily, in Europe and United States.
Accordingly, the prices or fees we pay for procurement, preparation of formulations and seeking
registrations are denominated in foreign currencies, predominantly in U.S. Dollars and Euros.
Similarly, substantial part of our revenue from operations for non-agrochemicals is denominated in
U.S. Dollars, Euros and Australian Dollars and payment for their procurement is predominantly made
in U.S. Dollars. Further, due to the time gap between the accounting of purchases and actual payments,
the foreign exchange rate at which the purchase is recorded in the books of account may vary with the
foreign exchange rate at which the payment is made, thereby benefiting or affecting us, depending on
the appreciation or depreciation of Rupee.
As of Fiscals 2014 and 2013, unhedged foreign exchange exposure on an unconsolidated basis in
relation to (i) receivables for goods aggregated to ` 2,531.41 million and ` 2,518.85 million,
respectively; (ii) payables for goods and services aggregated to ` 1,591.36 million and ` 1,536.03
million, respectively; and (iii) payables for capital expenses aggregated to ` 584.94 million and `
626.95 million, respectively. We are, therefore, exposed to risks arising from exchange rate
fluctuations.
Since a substantial portion of our revenue and expenditure is in foreign currencies, we enjoy a natural
hedge to a certain extent. With res