Sub Section‐ I Issues by Indian Companies in India This sub‐section attempts to cover the basic concepts and questions related to issuance of securities by unlisted Indian companies1 offering the shares to public and by listed Indian companies2. For full particulars of laws governing primary markets, please refer to the Acts/Regulations/Guidelines appearing in the Legal Framework Section . FAQs are presented under following 12 broad headings. 1. Different kinds of issues 2. Types of offer documents 3. Issue requirements 4. Pricing of the issue 5. Understanding book building 6. Investment in Public/Rights issues 7. Categories of Investors 8. Intermediaries involved in the issue process 9. Guide to understand an offer document 10. SEBI’s role in an issue 11. New terms 12. Additional information

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“Unlisted Company” means a company which is not a listed company. “Listed Company” means a company which has any of its securities offered through an offer document listed on a recognized stock exchange and also includes Public sector Undertakings whose securities are listed on a recognized stock exchange.

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 1. Different kinds of issues What are the different kinds of issues which can be made by an Indian company in India? Primarily, issues made by an Indian company can be classified as Public, Rights, Bonus and Private Placement. While right issues by a listed company and public issues involve a detailed procedure, bonus issues and private placements are relatively simpler. The classification of issues is as illustrated below: (a) Public issue (i) (ii) Initial Public offer (IPO) Further public offer (FPO)

(b) Rights issue (c) Bonus issue (d) Private placement (i) (ii) Preferential issue Qualified institutional placement

Issues

Public Issue

Rights Issue

Bonus Issue

Private Placement

IPO

FPO

Preferential Issue

Fresh Issue

Fresh Issue

Qualified Institutional Placement

Offer for sale

Offer for Sale

(a) Public issue: When an issue / offer of securities is made to new investors for becoming part of shareholders’ family of the issuer3 it is called a public issue. Public issue can be further classified into Initial public offer (IPO) and Further public offer (FPO). The significant features of each type of public issue are illustrated below: 3

Entity making an issue is referred as “ Issuer”

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(i) Initial public offer (IPO): When an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer’s securities in the Stock Exchanges. (ii) Further public offer (FPO) or Follow on offer: When an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, it is called a FPO. (b) Rights issue (RI): When an issue of securities is made by an issuer to its shareholders existing as on a particular date fixed by the issuer (i.e. record date), it is called an rights issue. The rights are offered in a particular ratio to the number of securities held as on the record date. (c) Bonus issue: When an issuer makes an issue of securities to its existing shareholders as on a record date, without any consideration from them, it is called a bonus issue. The shares are issued out of the Company’s free reserve or share premium account in a particular ratio to the number of securities held on a record date. (d) Private placement: When an issuer makes an issue of securities to a select group of persons not exceeding 49, and which is neither a rights issue nor a public issue, it is called a private placement. Private placement of shares or convertible securities by listed issuer can be of two types: (i) Preferential allotment: When a listed issuer issues shares or convertible securities, to a select group of persons in terms of provisions of Chapter XIII of SEBI (DIP) guidelines, it is called a preferential allotment. The issuer is required to comply with various provisions which inter‐alia include pricing, disclosures in the notice, lock‐in etc, in addition to the requirements specified in the Companies Act. (ii) Qualified institutions placement (QIP): When a listed issuer issues equity shares or securities convertible in to equity shares to Qualified Institutions Buyers only in terms of provisions of Chapter XIIIA of SEBI (DIP) guidelines, it is called a QIP.

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 2. Types of Offer Documents (ODs) (a) What is an offer document? ‘Offer document’ is a document which contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue etc and is used for inviting subscription to the issue being made by the issuer. ‘Offer Document’ is called “Prospectus” in case of a public issue or offer for sale and “Letter of Offer” in case of a rights issue. (b) I hear various terms like draft offer document, Red Herring prospectus etc, what are they and how they are different from each other? Terms used for offer documents vary depending upon the stage or type of the issue where the document is used. The terms used for offer documents are defined below: Draft offer document: is an offer document filed with SEBI for specifying changes, if (i) any, in it, before it is filed with the Registrar of companies (ROCs). Draft offer document is made available in public domain including SEBI website, for enabling public to give comments, if any, on the draft offer document. (ii) Red herring prospectus is an offer document used in case of a book built public issue. It contains all the relevant details except that of price or number of shares being offered. It is filed with RoC before the issue opens. (iii) Prospectus is an offer document in case of a public issue, which has all relevant details including price and number of shares being offered. This document is registered with RoC before the issue opens in case of a fixed price issue and after the closure of the issue in case of a book built issue. (iv) Letter of offer is an offer document in case of a Rights issue and is filed with Stock exchanges before the issue opens. (v) Abridged prospectus is an abridged version of offer document in public issue and is issued along with the application form of a public issue. It contains all the salient features of a prospectus. (vi) Abridged letter of offer is an abridged version of the letter of offer. It is sent to all the shareholders along with the application form. (vii) Shelf prospectus is a prospectus which enables an issuer to make a series of issues within a period of 1 year without the need of filing a fresh prospectus every time. This facility is available to public sector banks /Public Financial Institutions. (viii) Placement document is an offer document for the purpose of Qualified Institutional Placement and contains all the relevant and material disclosures.

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 3. Issue Requirements (a) Are there any entry requirements for an issuer to make an issue / offer to public? If yes, what are these? SEBI has laid down entry norms for entities making a public issue/ offer. The same are detailed below Entry Norms: Entry norms are different routes available to an issuer for accessing the capital market. (i) An unlisted issuer making a public issue i.e (making an IPO) is required to satisfy the following provisions: Entry Norm I (commonly known as “Profitability Route”) The Issuer Company shall meet the following requirements: (a) Net Tangible Assets of at least Rs. 3 crores in each of the preceding three full years. (b) Distributable profits in atleast three of the immediately preceding five years. (c) Net worth of at least Rs. 1 crore in each of the preceding three full years. (d) If the company has changed its name within the last one year, atleast 50% revenue for the preceding 1 year should be from the activity suggested by the new name. (e) The issue size does not exceed 5 times the pre‐ issue net worth as per the audited balance sheet of the last financial year To provide sufficient flexibility and also to ensure that genuine companies do not suffer on account of rigidity of the parameters, SEBI has provided two other alternative routes to the companies not satisfying any of the above conditions, for accessing the primary Market, as under: Entry Norm II (Commonly known as “QIB Route”) (a) Issue shall be through book building route, with at least 50% to be mandatory allotted to the Qualified Institutional Buyers (QIBs). (b) The minimum post‐issue face value capital shall be Rs. 10 crores or there shall be a compulsory market‐making for at least 2 years Entry Norm III (commonly known as “Appraisal Route”) (a) The “project” is appraised and participated to the extent of 15% by Financial Institutions / Scheduled Commercial Banks of which at least 10% comes from the appraiser(s). (b) The minimum post‐issue face value capital shall be Rs. 10 crores or there shall be a compulsory market‐making for at least 2 years. In addition to satisfying the aforesaid entry norms, the Issuer Company shall also satisfy the criteria of having at least 1000 prospective allotees in its issue. 5

 (ii)

A listed issuer making a public issue (FPO) is required to satisfy the following requirements :

(a) If the company has changed its name within the last one year, atleast 50% revenue for the preceding 1 year should be from the activity suggested by the new name. (b) The issue size does not exceed 5 times the pre‐ issue net worth as per the audited balance sheet of the last financial year Any listed company not fulfilling these conditions shall be eligible to make a public issue by complying with QIB Route or Appraisal Route as specified for IPOs. (iii) Certain category of entities which are exempted from the aforesaid entry norms, are as under : (a) Private Sector Banks (b) Public sector banks (c) An infrastructure company whose project has been appraised by a Public Financial Institution or IDFC or IL&FS or a bank which was earlier a PFI and not less than 5% of the project cost is financed by any of these institutions. (b) Is a listed company making a rights issue required to satisfy any entry norm? No, there is no entry norm for a listed company making a rights issue (c) Besides entry norms, are there any mandatory provisions which an issuer is expected to comply before making an issue? An issuer making a public issue is required to inter‐alia comply with the following provisions mentioned in the guidelines: Minimum Promoter’s contribution and lock‐in: In a public issue by an unlisted issuer, the promoters shall contribute not less than 20% of the post issue capital which should be locked in for a period of 3 years. “Lock‐in” indicates a freeze on the shares. The remaining pre issue capital should also be locked in for a period of 1 year from the date of listing. In case of public issue by a listed issuer [i.e. FPO], the promoters shall contribute not less than 20% of the post issue capital or 20% of the issue size. This provision ensures that promoters of the company have some minimum stake in the company for a minimum period after the issue or after the project for which funds have been raised from the public is commenced. IPO Grading: IPO grading is the grade assigned by a Credit Rating Agency registered with SEBI, to the initial public offering (IPO) of equity shares or other convertible securities. The grade represents a relative assessment of the fundamentals of the IPO in relation to the other listed equity securities. Disclosure of “IPO Grades”, so obtained is mandatory for companies coming out with an IPO. For more details on IPO Grading please refer to the sub‐section on “IPO Grading”. 6

 4. Pricing of an Issue (a) Who fixes the price of securities in an issue? Indian primary market ushered in an era of free pricing in 1992. SEBI does not play any role in price fixation. The issuer in consultation with the merchant banker on the basis of market demand decides the price. The offer document contains full disclosures of the parameters which are taken in to account by merchant Banker and the issuer for deciding the price. The Parameters include EPS, PE multiple, return on net worth and comparison of these parameters with peer group companies. (b) What is the difference between “Fixed price issue” and “Book Built issue”? On the basis of Pricing, an issue can be further classified into Fixed Price issue or Book Built issue. Fixed Price Issue: When the issuer at the outset decides the issue price and mentions it in the Offer Document, it is commonly known as “Fixed price issue”. Book built Issue: When the price of an issue is discovered on the basis of demand received from the prospective investors at various price levels, it is called “Book Built issue”. For more explanation on Book Built Issues please refer to the section titled “Understanding Book Building”

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 5. Understanding Book Building: (a) What is book Building? Book building is a process of price discovery. The issuer discloses a price band or floor price before opening of the issue of the securities offered. On the basis of the demands received at various price levels within the price band specified by the issuer, Book Running Lead Manager (BRLM) in close consultation with the issuer arrives at a price at which the security offered by the issuer, can be issued. (b) What is a price band? The price band is a band of price within which investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. The price band can be revised. If revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days. (c) How does Book Building work? Book building is a process of price discovery. A floor price or price band within which the bids can move is disclosed at least two working days before opening of the issue in case of an IPO and atleast one day before opening of the issue in case of an FPO. The applicants bid for the shares quoting the price and the quantity that they would like to bid at. After the bidding process is complete, the ‘cut‐off’ price is arrived at based on the demand of securities. The basis of Allotment is then finalized and allotment/refund is undertaken. The final prospectus with all the details including the final issue price and the issue size is filed with ROC, thus completing the issue process. Only the retail investors have the option of bidding at ‘cut‐off’. (d) How does “cut‐off” option works for investors? “Cut‐off” option is available for only retail individual investors i.e investors who are applying for securities worth up to Rs 1,00,000/‐ only. Such investors are required to tick the cut‐off option which indicates their willingness to subscribe to shares at any price discovered within the price band. Unlike price bids (where a specific price is indicated) which can be invalid, if price indicated by applicant is lower than the price discovered, the cut‐off bids always remain valid for the purpose of allotment (e) Can I change/revise my bid? Yes, you can change or revise the quantity or price in the bid using the form for changing/revising the bid that is available along with the application form. However, the entire process of changing or revising the bids shall be completed within the date of closure of the issue. 8

(f) Can I cancel my Bid? Yes, you can cancel your bid anytime before the finalization of the basis of allotment by approaching/ writing/ making an application to the registrar to the issue. (g) What proof can I request from a trading member or a syndicate member for entering bids? The syndicate member returns the counterfoil with the signature, date and stamp of the syndicate member. You can retain this as a sufficient proof that the bids have been accepted by the trading / syndicate member for uploading on the terminal. 6. Categories of Investors (a) Whether the investors are categorized? If yes, how the allotment is made to different categories? Investors are broadly classified under following categories‐: (i) Retail individual Investor (RIIs) (ii) Non‐Institutional Investors (NIIs) (iii) Qualified Institutional Buyers (QIBs) “Retail individual investor” means an investor who applies or bids for securities for a value of not more than Rs. 1,00,000. “Qualified Institutional Buyer” shall mean: a) a public financial institution as defined in section 4A of the Companies Act, 1956; b) a scheduled commercial bank; c) a mutual fund registered with the Board; d) a foreign institutional investor and sub‐account registered with SEBI, other than a sub account which is a foreign corporate or foreign individual; e) a multilateral and bilateral development financial institution; f) a venture capital fund registered with SEBI; g) a foreign venture capital investor registered with SEBI; h) a state industrial development corporation; i) an insurance company registered with the Insurance Regulatory and Development Authority (IRDA); j) a provident fund with minimum corpus of Rs. 25 crores; k) a pension fund with minimum corpus of Rs. 25 crores); l) National Investment Fund set up by resolution no. F. No. 2/3/2005‐DDII dated November 23, 2005 of Government of India published in the Gazette of India.” Investors who do not fall within the definition of the above two categories are categorized as “Non‐Institutional Investors” Allotment to various investor categories is provided in the guidelines and is detailed below: In case of Book Built issue 1. In case an issuer company makes an issue of 100% of the net offer to public through 100% book building process— 9

 (a) Not less than 35% of the net offer to the public shall be available for allocation to retail individual investors; (b) Not less than 15% of the net offer to the public shall be available for allocation to non‐institutional investors i.e. investors other than retail individual investors and Qualified Institutional Buyers; (c) Not more than 50% of the net offer to the public shall be available for allocation to Qualified Institutional Buyers: 2. In case of compulsory Book‐Built Issues at least 50% of net offer to public being allotted to the Qualified Institutional Buyers (QIBs), failing which the full subscription monies shall be refunded. 3. In case the book built issues are made pursuant to the requirement of mandatory allocation of 60% to QIBs in terms of Rule 19(2)(b) of Securities Contract (Regulation) Rules, 1957, the respective figures are 30% for RIIs and 10% for NIIs. In case of fixed price issue The proportionate allotment of securities to the different investor categories in an fixed price issue is as described below: 1. A minimum 50% of the net offer of securities to the public shall initially be made available for allotment to retail individual investors, as the case may be. 2. The balance net offer of securities to the public shall be made available for allotment to: a. Individual applicants other than retail individual investors, and b. Other investors including corporate bodies/ institutions irrespective of the number of securities applied for. (b) What are “firm allotment investor categories”? SEBI (DIP) guidelines provide that an issuer making an issue to public can allot shares on firm basis to some categories as specified below: (i) Indian and Multilateral Development Financial Institutions, (ii) Indian Mutual Funds, (iii) Foreign Institutional Investors including Non‐Resident Indians and Overseas Corporate Bodies and (iv) Permanent/regular employees of the issuer company. (v) Scheduled Banks It may be noted that OCBs are prohibited by RBI to make investment. (c) Which are the investor categories to whom reservations can be made in a public issue on competitive basis? Reservation on Competitive Basis is when allotment of shares is made in proportion to the shares applied for by the concerned reserved categories. Reservation on competitive basis can be made in a public issue to the following categories: 10

(i) (ii) (iii) (iv)

(v) (vi) In a public issue by a listed company, the reservation on competitive basis can be made for retail individual shareholders and in such cases the allotment to such shareholders shall be on proportionate basis (d) Is there any discretion while doing the allotment amongst various investor categories as per the permissible allocations? No, there is no discretion in the allotment process. All allottees are allotted shares on a proportionate basis within their respective investor categories.

Employees of the company Shareholders of the promoting companies in the case of a new company and shareholders of group companies in the case of an existing company Indian Mutual Funds Foreign Institutional Investors (including non resident Indians and overseas corporate bodies) Indian and Multilateral development Institutions Scheduled Banks

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 7. Investment in public Issues/ rights issues: (a) Where can I get application forms for applying/ bidding for the shares? Application forms for applying/bidding for shares are available with all syndicate members, collection centers, the brokers to the issue and the bankers to the issue. In case you intend to apply through new process introduced by SEBI i.e APPLICATIONS SUPPORTED BY BLOCKED AMOOUNT (ASBA), you may get the ASBA application forms form the Self Certified Syndicate Banks. For more details on “ASBA process” please refer to the sub‐section titled “Understanding Applications Supported by Blocked Amount (ASBA) Process” (b) Whom should I approach if the information disclosed in the offer document appears to be factually incorrect? The document is prepared by Merchant Banker(s), registered with SEBI. They are required to do the due diligence while preparing an offer document. The draft offer document submitted to SEBI is put on website for public comments. In case, you find any instance of misinformation/ lack of information, you may send your complaint to Lead Manager to the issue and/ or to SEBI, at this address: Securities & Exchange Board of India, C4 A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai‐ 400051. (c) Is it compulsory for me to have a Demat Account? As per the requirement, all the public issues of size in excess of Rs.10 crore, are to made compulsorily in demat mode. Thus, if you intend to apply for an issue that is being made in a compulsory demat mode, you are required to have a demat account and also have the responsibility to put the correct DP ID and Client ID details in the bid/application forms. You can also refer to FAQs relating to demat available in the URL http://investor.sebi.gov.in/faq/dematfaq.html in the Investor Education section of the SEBI website. (d) Is it compulsory to have PAN? Yes, it is compulsory to have PAN. Any investor who wants to invest in an issue should have a PAN which is required to be mentioned in the application form. It is to be distinctly understood that the photocopy of the PAN is not required to be attached along with the application form at the time of making an application. (e) For how many days an issue is required to be kept open? The period for which an issue is required to be kept open is: For Fixed price public issues: 3‐10 working days For Book built public issues: 3‐7 working days extendable by 3 days in case of a revision in the price band For Rights issues : 15‐30 days. 12

 (f) When do I get the allotment/ refund of shares? For Fixed price public issues: 30 days of the closure of the issue For Book built public issues : 15 days of the closure of the issue For Rights issues : 15 days of the closure of the issue (g) How can I know about the demand for an issue at any point of time? The status of bidding in a book built issue is available on the website of BSE/NSE on a consolidated basis. The data regarding bids is also available investor category wise. After the price has been determined on the basis of bidding, the public advertisement containing, inter alia, the price as well as a table showing the number of securities and the amount payable by an investor, based on the price determined, is issued. However, in case of a fixed price issue, information is available only after the closure of the issue through a public advertisement, issued within 10 days of dispatch of the certificates of allotment/ refund orders. (h) How will I get my refund in an issue? You can get refunds in an issue through various modes viz. registered/ordinary post, Direct Credit, RTGS (Real Time Gross Settlement), ECS (Electronic Clearing Service) and NEFT (National Electronic Funds Transfer). As stated above, if you are residing in one of the 68 centers as specified by Reserve Bank of India, then you will get refunds through ECS only except where you are otherwise disclosed eligible under Direct Credit and RTGS. If you are residing at any other center, then you will continue to get refunds through registered/ordinary post. You are therefore advised to read the instructions given in the prospectus/ abridged prospectus/ application form about centers. For more details, you may read subsection on “Electronic Clearing Scheme for Refunds”. (i) When will the shares allotted to me get listed? In book built public issue the listing of shares will be done within 3 weeks after the closure of the issue. In case of fixed price public issue, it will be done within 37 days after closure of the issue. (j) How will I know which issues are coming to the market? The information about the forthcoming issues may be obtained from the websites of Stock Exchanges. Further the issuer coming with an issue is required to give issue advertisements in an English national Daily with wide circulation, one Hindi national newspaper and a regional language newspaper with wide circulation at the place where the registered office of the issuer is situated. (k) Where to I get the copies of the offer document? The soft copies of the offer documents are put up on the website of Merchant banker and on the website of SEBI under Reports/Documents section 13

[ http://www.sebi.gov.in/Index.jsp?contentDisp=Section&sec_id=5 ]. Copies of the offer documents in hard form may be obtained from the merchant banker or office of SEBI, SEBI Bhawan, Plot No. C4‐A “G” Block, BKC, Bandra (E), Mumbai ‐ 400051 on a payment of Rs 100 through Demand Draft made in favor of Securities & Exchange Board of India. (l) How do I find the status of offer documents filed by issuers with SEBI? SEBI updates the processing status of offer documents on its website every week under the section http://www.sebi.gov.in/Index.jsp?contentDisp=PrimaryMarket in SEBI website. The draft offer documents are put up on the website under Reports/Documents section. The final offer documents that are filed with SEBI/ROC are also put up for information under the same section. (m) Whom do I approach if I have grievances in respect of non receipt of shares, delay in refund etc.? You can approach the compliance officer of the issue, whose name and contact number is mentioned on the cover page of the Offer Document. You can also address your complaints to SEBI at the following address: Office of Investor Assistance & Education, Securities & Exchange Board of India, C4A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai‐ 400051.

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 8. Intermediaries involved in the Issue Process (a) Which are the intermediaries involved in an issue? Intermediaries which are registered with SEBI are Merchant Bankers to the issue (known as Book Running Lead Managers (BRLM) in case of book built public issues), Registrars to the issue, Bankers to the issue & Underwriters to the issue who are associated with the issue for different activities. Their addresses, telephone/fax numbers, registration number, and contact person and email addresses are disclosed in the offer documents. (i) Merchant Banker: Merchant banker does the due diligence to prepare the offer document which contains all the details about the company. They are also responsible for ensuring compliance with the legal formalities in the entire issue process and for marketing of the issue. (ii) Registrars to the Issue: They are involved in finalizing the basis of allotment in an issue and for sending refunds, allotment etc. (iii) Bankers to the Issue: The Bankers to the Issue enable the movement of funds in the issue process and therefore enable the registrars to finalize the basis of allotment by making clear funds status available to the Registrars. (iv) Underwriters: Underwriters are intermediaries who undertake to subscribe to the securities offered by the company in case these are not fully subscribed by the public, in case of an underwritten issue.

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 9. Guide to understand an Offer Document This sub‐section attempts to inform the structure of presentation of the content in an offer document. The basic objective is to help the reader to navigate through the content of an offer document. (a) Cover Page Under this head full contact details of the Issuer Company, lead managers and registrars, the nature, number, price and amount of instruments offered and issue size, and the particulars regarding listing. Other details such as Credit Rating, IPO Grading, risks in relation to the first issue, etc are also disclosed if applicable. (b) Risk Factors Under this head the management of the issuer company gives its view on the Internal and external risks envisaged by the company and the proposals, if any, to address such risks. The company also makes a note on the forward looking statements. This information is disclosed in the initial pages of the document and also in the abridged prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision. (c) Introduction Under this head a summary of the industry in which the issuer company operates, the business of the Issuer Company, offering details in brief, summary of consolidated financial statements and other data relating to general information about the company, the merchant bankers and their responsibilities, the details of brokers/syndicate members to the Issue, credit rating (in case of debt issue), debenture trustees (in case of debt issue), monitoring agency, book building process in brief, IPO Grading in case of First Issue of Equity capital and details of underwriting Agreements are given. Important details of capital structure, objects of the offering, funds requirement, funding plan, schedule of implementation, funds deployed, sources of financing of funds already deployed, sources of financing for the balance fund requirement, interim use of funds, basic terms of issue, basis for issue price, tax benefits are also covered. (d) About us Under this head a review of the details of business of the company, business strategy, competitive strengths, insurance, industry‐regulation (if applicable), history and corporate structure, main objects, subsidiary details, management and board of directors, compensation, corporate governance, related party transactions, exchange rates, currency of presentation and dividend policy are given. (e) Financial Statements Under this head financial statement and restatement as per the requirement of the Guidelines and differences between any other accounting policies and the Indian 16

Accounting Policies (if the Company has presented its Financial Statements also as per either US GAAP/IFRS) are presented. (f) Legal and other information Under this head outstanding litigations and material developments, litigations involving the company, the promoters of the company, its subsidiaries, and group companies are disclosed. Also material developments since the last balance sheet date, government approvals/licensing arrangements, investment approvals (FIPB/RBI etc.), technical approvals, and indebtedness, etc. are disclosed. (g) Other regulatory and statutory disclosures Under this head, authority for the Issue, prohibition by SEBI, eligibility of the company to enter the capital market, disclaimer statement by the issuer and the lead manager, disclaimer in respect of jurisdiction, distribution of information to investors, disclaimer clause of the stock exchanges, listing, impersonation, minimum subscription, letters of allotment or refund orders, consents, expert opinion, changes in the auditors in the last 3 years, expenses of the issue, fees payable to the intermediaries involved in the issue process, details of all the previous issues, all outstanding instruments, commission and brokerage on, previous issues, capitalization of reserves or profits, option to subscribe in the issue, purchase of property, revaluation of assets, classes of shares, stock market data for equity shares of the company, promise vis‐à‐vis performance in the past issues and mechanism for redressal of investor grievances is disclosed. (h) Offering information Under this head Terms of the Issue, ranking of equity shares, mode of payment of dividend, face value and issue price, rights of the equity shareholder, market lot, nomination facility to investor, issue procedure, book building procedure in details along with the process of making an application, signing of underwriting agreement and filing of prospectus with SEBI/ROC, announcement of statutory advertisement, issuance of confirmation of allocation note("can") and allotment in the issue, designated date, general instructions, instructions for completing the bid form, payment instructions, submission of bid form, other instructions, disposal of application and application moneys, , interest on refund of excess bid amount, basis of allotment or allocation, method of proportionate allotment, dispatch of refund orders, communications, undertaking by the company, utilization of issue proceeds, restrictions on foreign ownership of Indian securities, are disclosed. (i) Other Information This covers description of equity shares and terms of the Articles of Association, material contracts and documents for inspection, declaration, definitions and abbreviations, etc.

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 10. SEBI’s Role in an Issue What is SEBI’s role in an issue? Any company making a public issue or a rights issue of securities of value more than Rs 50 lakhs is required to file a draft offer document with SEBI for its observations. The validity period of SEBI’s observation letter is twelve months only i.e the company has to open its issue within the period of twelve months starting from the date of issuing the observation letter. There is no requirement of filing any offer document / notice to SEBI in case of preferential allotment and Qualified Institution Placement (QIP). In QIP, Merchant Banker handling the issue has to file the placement document with Stock Exchanges for making the same available on their websites. Given below are few clarifications regarding the role played by SEBI: (a) Till the early nineties, Controller of Capital Issues used to decide about entry of company in the market and also about the price at which securities should be offered to public. However, following the introduction of disclosure based regime under the aegis of SEBI, companies can now determine issue price of securities freely without any regulatory interference, with the flexibility to take advantage of market forces. (b) The primary issuances are governed by SEBI in terms of SEBI (Disclosures and Investor protection) guidelines. SEBI framed its DIP guidelines in 1992. The SEBI DIP Guidelines over the years have gone through many amendments in keeping pace with the dynamic market scenario. It provides a comprehensive framework for issuing of securities by the companies. (c) Before a company approaches the primary market to raise money by the fresh issuance of securities it has to make sure that it is in compliance with all the requirements of SEBI (DIP) Guidelines, 2000. The Merchant Banker are those specialised intermediaries registered with SEBI, who perform the due diligence and ensures compliance with DIP Guidelines before the document is filed with SEBI. (d) Officials of SEBI at various levels examine the compliance with DIP guidelines and ensure that all necessary material information is disclosed in the draft offer documents. Still there are certain mis‐conceptions prevailing in the mind of investors about the role of SEBI which are clarified here in under: (a) Does SEBI recommend any Issue? It should be distinctly understood that SEBI does not recommend any issue nor does it take any responsibility either for the financial soundness of any scheme or the project for which the issue is proposed to be made. (b) Does SEBI approve the contents of an issue? Submission of offer document to SEBI should not in any way be deemed or construed that the same has been cleared or approved by SEBI. The Lead manager certifies that the disclosures made in the offer document are generally adequate and are in conformity 18

with SEBI guidelines for disclosures and investor protection in force for the time being. This requirement is to facilitate investors to take an informed decision for making investment in the proposed issue. (c) If SEBI has issued observations on the offer document, does it mean that my investment is safe? The investors should make an informed decision purely by themselves based on the contents disclosed in the offer documents. SEBI does not associate itself with any issue/issuer and should in no way be construed as a guarantee for the funds that the investor proposes to invest through the issue. However, the investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment.

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 11. New Terms (a) Green‐shoe Option Green Shoe Option is a price stabilizing mechanism in which shares are issued in excess of the issue size, by a maximum of 15%. From an investor’s perspective, an issue with green shoe option provides more probability of getting shares and also that post listing price may show relatively more stability as compared to market volatility. (b) Safety Net In a safety net scheme or a buy back arrangement the issuer company in consultation with the lead merchant banker discloses in the RHP that if the price of the shares of the company post listing goes below a certain level the issuer will purchase back a limited number of shares at a pre specified price from each allottee. (c) Open book/closed book In an open book building system the merchant banker along with the issuer ensures that the demand for the securities is displayed online on the website of the Stock Exchanges. Here, the investor can be guided by the movements of the bids during the period in which the bid is kept open. Indian Book building process provides for an open book system. In the closed book building system, the book is not made public and the bidders will have to take a call on the price at which they intend to make a bid without having any information on the bids submitted by other bidders. (d) Hard underwriting Hard underwriting is when an underwriter agrees to buy his commitment before the issue opens. The underwriter guarantees a fixed amount to the issuer from the issue. Thus, in case the shares are not subscribed by investors, the issue is devolved on underwriters and they have to bring in the amount by subscribing to the shares. The underwriter bears a risk which is much higher than soft underwriting. (e) Soft underwriting Soft underwriting is when an underwriter agrees to buy the shares at stage after the issue the issue is closed. The risk faced by the underwriter as such is reduced to a small window of time. (f) Differential pricing When one category of investors is offered shares at a price different from the other category it is called differential pricing. An issuer company can allot the shares to retail individual investors at a discount of maximum 10% to the price at which the shares are offered to other categories of public. (g) Basis of Allocation/Basis of Allotment 20

 After the closure of the issue, for eg a book built public issue, the bids received are aggregated under different categories i.e., firm allotment, Qualified Institutional Buyers (QIBs), Non‐Institutional Buyers (NIBs), Retail, etc. The oversubscription ratios are then calculated for each of the categories as against the shares reserved for each of the categories in the offer document. Within each of these categories, the bids are then segregated into different buckets based on the number of shares applied for. The oversubscription ratio is then applied to the number of shares applied for and the number of shares to be allotted for applicants in each of the buckets is determined. Then, the number of successful allottees is determined. This process is followed in case of proportionate allotment. Thus allotment to each investor is done based on proportionate basis in both book built and fixed price public issue. (h) Fast Track Issues (FTI) SEBI has introduced FTI in order to enable well‐established and compliant listed companies satisfying certain specific entry norms/conditions to access Indian Primary Market in a time effective manner. Such companies can proceed with FPOs / Right Issues by filing a copy of RHP / Prospectus with the RoC or the Letter of Offer with designated SE, SEBI and Stock Exchanges. Such companies are not required to file Draft Offer Document for SEBI comments and to Stock Exchanges. Entry Norms for companies seeking to access Primary Market through FTI’s in case aggregate value of securities including premium exceeds Rs. 50 lacs: The shares of the company have been listed on any stock exchange having nationwide terminals for a period of at least three years immediately preceding the date of filing of offer document with RoC/ SE. (ii) The “average market capitalisation of public shareholding” of the company is at least Rs. 10,000 crores for a period of one year up to the end of the quarter preceding the month in which the proposed issue is approved by the Board of Directors / shareholders of the issuer; (iii) The annualized trading turnover of the shares of the company during six calendar months immediately preceding the month of the reference date has been at least two percent of the weighted average number of shares listed during the said six months period; (iv) The company has redressed at least 95% of the total shareholder / investor grievances or complaints received till the end of the quarter immediately proceeding the month of the date of filing of offer document with RoC/ SE. (v) The company has complied with the listing agreement for a period of at least three years immediately preceding the reference date; (vi) The impact of auditors’ qualifications, if any, on the audited accounts of the company in respect of the financial years for which such accounts are disclosed in the offer document does not exceed 5% of the net profit/ loss after tax of the company for the respective years. (vii) No prosecution proceedings or show cause notices issued by the Board are pending against the company or its promoters or whole time directors as on the reference date; and (viii) The entire shareholding of the promoter group is held in dematerialised form as on the reference date. 21

(i)

 12. Additional Information (a) Where do I get data on primary issues? (issuer, total issues, issue size, the intermediaries, etc., during a given period) SEBI brings out a monthly bulletin that is available off the shelf at bookstores. A digital version of the same is available on the SEBI website under the “News/Publications” section. The Bulletin contains all the relevant historical figures of intermediary issue and intermediary particulars during the given period placed against historical figures. (b) What are the relevant regulations and where do I find them? The SEBI Manual is SEBI authorized publication that is a comprehensive databank of all relevant Acts, Rules, Regulations and Guidelines that are related to the functioning of the Board. The details pertaining to the Acts, Rules, Regulations, Guidelines and Circulars are placed on the SEBI website under the “Legal Framework” section. The periodic updates are uploaded onto the SEBI website regularly. (c) Will SEBI answer my queries online in case of doubts and clarifications? The “Feedback” section on the SEBI website has a provision for the visitors to ask questions on clarifications on smaller issues pertaining to the availability of information and a facility for users to provide feedback on the same. However, if the queries are legal in nature, they are to be referred to SEBI under the SEBI (Informal Guidance) Scheme, 2003.

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